Court: Homeowners group exempt from disclosure

By Jimy Valenti

A federal appellate court ruling brings more questions than answers after the court ruled that a small group of Douglas County homeowners who fought annexation in 2006 did not need to disclose their finances.

The U.S. 10th Circuit Court of Appeals ruled last week that Colorado’s process requiring ballot initiative groups to register as an issue committee was so onerous that it stifled the first amendment rights of six Parker North residents.

In an effort to fight annexation of 300 homes in unincorporated Douglas County into the city of Parker, six residents spent $782 on signs, a banner, postcards and postage from 2005 to 2006.

Voters approved an amendment to the Colorado Constitution that says any group of two or more people who spend $200 or more to support or oppose a ballot initiative must register as an issue committee and make their finances public.

The court focused on the small scale of the Douglas County resident’s operation, but did not make clear what the threshold is for requiring disclosure.

“There is virtually no proper governmental interest in imposing disclosure requirements on ballot-initiative committees that raise and expend so little money, and that limited interest cannot justify the burden that those requirements impose on such a committee,” the court ruled.

The court also said ballot issues unlike politicians are incorruptible. It said there is no need for concern that fundraising could change a law enacted through a ballot initiative, as could be the case for people in elected office.

The Arlington, Va. based Institute for Justice represented the Parker North residents. In a release, the Libertarian legal group said the court’s ruling could overturn similar laws in other states.

“This ruling means that grassroots political activists in Colorado and the other states that compose the 10th Circuit can speak freely without fear of being sued by their political opponents,” said Steve Simpson, an Institute for Justice attorney who represented the neighbors in Parker North. “The Court recognized that the states have little or no interest in requiring groups that simply wish to speak out for and against ballot issues to register and comply with complicated disclosure rules.”

Secretary of State spokesman Rich Coolidge said their office doesn’t know if it will appeal the decision. The Secretary of State has 15 days to ask for a re-hearing or 90 days to decide if they want to appeal the ruling to the U.S. Supreme Court. Coolidge said his office is discussing the case with the Attorney General to determine the right course for Colorado.

“The challenge is every time an issue committee wants to move forward and fundraise we don’t want to end up in court every time there is a challenge to whether they have to report or not,” Coolidge said.

Colorado Ethics Watch Director Luis Toro said he hopes the SOS appeals the ruling. He said the court is inviting more litigation because it did not establish a line when the state can legally require disclosure. Toro believes the line was drawn when voters created the $200 threshold.

“Somebody has to make the judgment call,” Toro said. “Should it be the court or should it be the voters?”

Colorado Common Cause Executive Director Jenny Flanagan said the $200 threshold works. Her organization helped to enact the state’s current disclosure laws. Flanagan said the Institute for Justice is a long time opponent of campaign finance reform and that its goal was to strike down Colorado’s campaign finance laws. Flanagan said they failed.

“The ruling was limited to the unique facts of this case,” Flanagan said. “The silver lining here is that the law still stands in Colorado. Our disclosure laws are still valid and still apply.”

Toro said the state’s disclosure laws are vital to Colorado voters. Ethics Watch is currently pursuing a case against the people who supported Amendment 102 — the bail bonds amendment.

Toro said some voters believed 102 was only a bail bond industry scam to increase profits while others argued it was a necessary measure. He said in this case disclosure would have been highly relevant.

“As if it isn’t hard enough to pursue these cases, just look at Doug Bruce, now we have to worry that people will run to federal court and claim its not important enough to disclose their finances,” Toro said.