May 15, 1989
Michael A. Jackley, Esq.
Meade County State's Attorney
1425 Sherman Street
Sturgis, South Dakota 57785
OFFICIAL OPINION NO. 89-12
Corporate contributions regarding municipal ballot measures
Dear Mr. Jackley:
You have requested my official opinion on the following factual situation:
FACTS:
Your office received reports that corporate entities did contribute to at least one of the entities or committees involved in an election. (Violation of SDCL 12-25-2) This evidently took place in relation to a referendum issue and election concerning the issuance of bonds for a civic center for the City of Sturgis. The report is on file at Sturgis City Hall in the City Auditor's Office.
Based upon the above facts, you have asked the following question:
QUESTION:
May corporations be prohibited by the provisions of SDCL 12-25-2 from contributing to political action committees (PAC's) involved in a municipal ballot measure?
IN RE QUESTION:
SDCL 12-25-2 appears, on its face, to restrict such contributions. To note a side issue of passing importance, the provisions of SDCL 12-25-6.1 mandate that ch. 12-25, including SDCL 12-25-2, apply to all elections, including municipal elections, as confirmed in Attorney General Report 77-91. The statute reads as follows:
No candidate, committee or political party may receive any contribution of any valuable consideration except from an individual, association or a political party. No corporation may contribute or attempt to contribute any valuable consideration to any candidate, committee or political party.
Associations may contribute any valuable consideration out of funds contributed for the purpose of making political contributions but may not make contributions out of dues or treasury funds.
A violation of this section is a Class 2 misdemeanor. The term "committee" includes political action committees by virtue of SDCL 12-25-1(4).
There remains, however, the deeper question of the statute's propriety under the First Amendment (right to free speech) to the United States Constitution.
The issue of direct corporate contributions toward passage or defeat of ballot measures was addressed by the United States Supreme Court in the case of First National Bank of Boston, et al. v. Francis X. Bellotti, et al., 435 U.S. 765, 98 S.Ct. 1407, 55 L.Ed.2d 707 (1978). The Supreme Court held:
It is the type of speech indispensable to decisionmaking in a democracy, and this is no less true because the speech comes from a corporation rather than an individual. The inherent worth of the speech in terms of its capacity for informing the public does not depend upon the identity of its source, whether corporation, association, union, or individual.
Id., 435 U.S. at 777, 98 S.Ct. at 1416, 55 L.Ed.2d at 718. The high court made it clear that direct corporate contributions to impact ballot issues are regarded as First Amendment speech and thus are constitutionally protected.
The Bellotti decision became the focal point of official opinions issued by my predecessors. In Attorney General Report 78-38, Attorney General William J. Janklow concluded, "In my opinion, the effect of the Supreme Court's decision in Bellotti, beyond any doubt is to nullify the present South Dakota ban on corporate spending to influence ballot questions." Id. Obviously, Attorney General Janklow felt that SDCL 12-25-2 is a legal twin to the condemned Massachusetts law.
Of course, the United States Supreme Court did not directly address the South Dakota statute in Bellotti, but that court's decision has wide, though indirect, impact. After analyzing Bellotti, Attorney General Janklow continued, ". . . it is my opinion that to ignore the ruling would be to disregard reality and we would again be inviting the judiciary to fulfill an obligation which is properly an administrative duty of the State of South Dakota." Id. Thus, the Bellotti decision affected South Dakota law, even though only by implication.
Other organizations' contributions to PAC's to influence ballot issues was addressed by my immediate predecessor two years later. In Attorney General Report 80-60, Attorney General Mark V. Meierhenry determined first that, "In my opinion SDCL 12-25-12.1 clearly provides a vehicle through which trade associations and labor unions, acting through political action committees (PAC's), may lawfully make political contributions on ballot issues." Id. The opinion went on to examine specific questions not at issue here. That opinion is important, however, because it, unlike Bellotti or the Janklow opinion, addressed an organization's indirect contributions via another organization (PAC). Attorney General Meierhenry stated, "However, I find nothing in the case law which compels me to conclude that PAC's may not be required as a `conduit for speech of the contributor.'" Id. He believed labor unions and trade associations have a First Amendment right to indirect, monetary expression on election issues.
My study of current national case law on this issue has revealed two cases of interest. First, a sister state's supreme court has upheld that state's restrictions on corporate contributions to certain PAC's to influence candidate elections. After identifying three kinds of PAC's and approving contributions to "conduit" and "independent" PAC's, the Supreme Court of Minnesota addressed "partisan" PAC's. It said, "If a corporation can select a slate of candidates, solicit the contributions of its employees, then make large contributions to particular campaigns through a PAC, it can exert the same disproportionate influence that it could have with a donation directly from its treasury." Minnesota Ass'n. of Commerce, Etc. v. Foley, 316 N.W.2d 524,529 (Minn. 1982). While Foley represents the most recent ruling generally on issue, its use here is diluted because it addresses legal concerns of undue corporate influence in election of individuals.
The most recent case on direct point is Frias v. Board of Trustees of Ector County Independent School District, 584 S.W.2d 944 (Tex. 1979). There, the Court of Civil Appeals of Texas examined corporate contributions to a PAC promoting passage of a school bond issue. The court cited Bellotti and noted that the Attorney General of Texas had opined that an article of the Texas Election Code similar to SDCL 12-25-2 was unconstitutional. Although the attorney general's opinion did not distinguish between direct corporate expenditures and indirect expenditures through PAC's, the Texas appeals court agreed with the opinion and specifically extended the ruling to encompass corporate contributions to political action committees for ballot issues.
Bellotti and its progeny, including my predecessors' opinions and other states' case law, lead me to conclude that South Dakota cannot ban corporate contributions to PAC's whose purpose is to influence ballot issues. Further, as Attorney General Janklow noted, it is an exercise in futility to enforce an impliedly unconstitutional statute until it is specifically overruled by a court. In my opinion, no enforcement agency of this State should attempt to apply SDCL 12-25-2 to corporate contributions in the Sturgis municipal bond election.
Respectfully submitted,
ROGER A. TELLINGHUISEN
ATTORNEY GENERAL
RAT:ss
