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California Judge Leaves Door Open For Outing Of Dark Money Donors

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California's campaign finance watchdog is seeking records from the Arizona group, Americans for Responsible Leadership (ARL) to make sure that the group complied with state disclosure laws when it contributed $11 million earlier this month to the Small Business Action Committee PAC (SBAC). The SBAC is opposing California's Proposition 30, Gov. Jerry Brown's tax-hike initiative, and supporting Proposition 32, which would prohibit labor unions' from raising political money from payroll deductions.

As a registered 501(c)4 "social welfare" organization, ARL can and does keep its donors secret. On Tuesday, a Sacramento Superior Court judge sided with California's watchdog agency, the California Fair Political Practices Commission, which wants the Arizona group to immediately produce records and answer questions related to the donation. Judge Shelleyanne Chang tentatively granted the commission's application for a preliminary injunction, and is expected to finalize her decision on Wednesday, when lawyers for the two sides appear in court.

The commission's request asked for the records to be turned over within 24 hours of the ruling, but, according to The Los Angeles Times, ARL is expected to appeal.

As Judge Chang's ruling detailed, the watchdog has argued that it wants to verify whether the group solicited funds and received contributions over $1,000, which would qualify it as a committee under California law, and require it to file a "supplemental pre-election statement" no later than 12 days before election day. Furthermore, the commission wants to know if ARL "earmarked" the contribution specifically for the SBAC. If so, ARL would have had to inform the SBAC, which would then be required to disclose the donor or donors before election day.

Americans for Responsible Leadership has not disputed the commission's authority to conduct an audit. Instead, the group has argued that state law only authorizes audits after an election, pointing to a section of California code that reads:

"...no audit or investigation of any candidate, controlled committee, or committee primarily supporting or opposing a candidate or a measure in connection with a report or statement required by Chapter 4 of this title, shall begin until after the last date for filing the first report or statement following the general, runoff or special election for the office for which the candidate ran, or following the election at which the measure was adopted or defeated..."

The watchdog commission, though, turned the tables on the way dark money groups use 501(c)4 status, by arguing ARL is neither a "candidate, controlled committee, or [a] committee primarily supporting or opposing a candidate or a measure." Judge Chang agreed, ruling that the section of law cited by ARL does not limit the watchdog's ability to audit the group.

Even if an audit goes forward, ARL's donors would not necessarily become public. In dismissing the group's arguments that turning over documents would violate it and its donors' First Amendment Rights, the court pointed to the fact that even if the commission's audit finds more disclosure is required, the records of the audit will not be public. But in also dismissing ARL's arguments alluding to the Supreme Court's Citizens United decision, Judge Chang left open the possibility that ARL's donors could eventually be revealed.

"The Court is simply concluding that the FPPC, under its statutory authority can conduct an audit to determine whether [ARL] has complied with applicable California law and regulations and whether, under applicable California regulations, the FPPC can determine whether the donors' identities must be disclosed," the ruling reads. "Nothing in Citizens United prohibits this state-mandated disclosure."

TPM last week reported on ARL's donation, the unlikely cast of Arizona Republicans tied to the group, and its sudden political spending spree.