September 5, 1980
Honorable Joseph H. Barnett
Majority Leader
South Dakota House of Representatives
Box 1269
Aberdeen, South Dakota 57401
Official Opinion No. 80-60
SDCL 12-25-2 and Political Contributions by Labor Unions and Trade Associations on Ballot Issues
Dear Representative Barnett:
You have requested an official opinion from this office in regard to the following factual situation:
FACTS:
Because of the number of ballot issues which will be presented in the upcoming general election, it would be desirable to have your official opinion concerning the validity of the restrictions contained in SDCL 12-25-2, which prohibits contributions by trade associations and labor unions from dues for political campaigns. There does not seem to be any doubt about the constitutionality of that restriction insofar as it relates to individual candidates for public office. However, in light of the United States Supreme Court's decision in First National Bank of Boston v. Francis X. Bellotti, 435 U.S. 765, 98 S. Ct. 1407, 55 L.Ed.2d 707, reh. Denied 438 U.S. 907 (1978), there would seem to be uncertainty as to the constitutionality of that restriction with respect to ballot issues.
I note the earlier decision from your office under Official Opinion 78-38 holding that the restriction on corporate contributions on ballot issues is invalid and unconstitutional in light of the Bellotti decision, but it would appear to me that the intent and rationale of Bellotti may well go further and apply as equally to labor unions and trade associations as to corporations. The essence of the holding in Bellotti seems to be that corporations have the right to free speech on ballot issues, which may not be abridged by state legislatures; and I question whether any distinction can be made in this regard between corporations and other types of entities.
While it is realized that, whenever possible, the Attorney General's Office has had a policy of not giving opinions which state that legislative statutes are unconstitutional, it seems to me that this is a matter of sufficient and urgent public interest to justify an exception and one in which a precedent has already been established through Official Opinion 78-38.
Because of the large number of ballot issues facing South Dakota voters this year, it is a likelihood that contributions will be solicited of trade associations and labor unions by groups both proposing and opposing the various issues.
Based on the above facts, you ask the following question:
QUESTION:
May trade associations and labor unions lawfully make political contributions on ballot issues, notwithstanding SDCL 12-25-2?
SDCL 12-25-2 provides:
No candidate, committee or political party shall receive any contribution of any valuable consideration except from an individual, association or a political party; and it shall be unlawful for any corporation to 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.
My immediate predecessor expressed his opinion that in light of the United States Supreme Court's decision in First National Bank of Boston v. Bellotti, 435 U.S. 765, 98 S.Ct. 1407, 55 L.Ed.2d 707 (1978), the ban on corporate contributions on ballot issues implicit in SDCL 12-25-2 was unconstitutional. Rather than amending SDCL 12-25-2, the 1979 South Dakota Legislature, in apparent response to Official Opinion 78-38, enacted SDCL 12‑25‑12.1, which provides:
For the purposes of this chapter, contribution of valuable consideration does not include administration of and solicitation of contributions for a political committee established by a corporation or association, or the use of a corporation's or association's real or personal property located on its business premises.
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.
Two related questions remain: (1) May trade associations and labor unions make direct contributions (sidestepping PAC's) on ballot issues, notwithstanding SDCL 12-25-2 and 12-25-12.1? and (2) If so, may trade associations and labor unions make political contributions on ballot issues out of dues or treasury funds? In order to address these issues I would be forced to declare, by attorney general fiat, the constitutionality or unconstitutionality of state law, in contravention of a longstanding policy of my office. My predecessor departed from this policy only due to compelling circumstances; i.e., the pronouncement by the United States Supreme Court that restrictions on corporate contributions for ballot issues violated the First Amendment of the United States Constitution. Here, however, there is no controlling precedent which compels me to assess the constitutional issues you raise. The case law interpreting campaign financing legislation tends to support the conclusion that unions and associations are subject to the same protections and restrictions as corporations. The Bellotti court, in dicta, stated:
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. (Emphasis added.)
435 U.S. 778, 98 S.Ct. at 1416
The Bellotti court went on to state:
Rather, it (the Massachusetts restriction) amounts to an impermissible legislative prohibition of speech based upon the identity of the interests that spokemen may represent in public debate over controversial issues and a requirement that the speaker have a sufficiently great interest in the subject to justify communication.
. . .
In the realm of protected speech, the legislature is constitutionally disqualified from dictating the subjects about which persons may speak and the speakers who may address a public issue. Police Department of Chicago v. Mosley, 408 U.S. 92, 96, 92 S.Ct. 2286, 2290 (1972). If a legislature may direct business corporations to 'stick to business,' it also may limit other corporations--religious, charitable, or civil--to their respective 'business' when addressing the public. Such power in government to channel the expression of views is unacceptable under the First Amendment. Especially where, as here, the legislature's suppression of speech suggests an attempt to give one side of a debatable public question an advantage in expressing its view to the people, the First Amendment is plainly offended.
435 U.S. at 785-787, 98 S.Ct. at 1420-1421
Finally, the Bellotti court clearly indicates that ballot issues are to be given preferred treatment, in the sense that while restrictions on contributions to individual candidates are permissible, restrictions on contributions for ballot issues are impermissible:
Referenda are held on issues, not candidates for public office. The risk of corruption perceived in cases involving candidate elections, . . . simply is not present in a popular vote on a public issue. To be sure, corporate advertising may influence the outcome of the vote; this would be its purpose. But the fact that advocacy may persuade the electorate is hardly a reason to suppress it: The Constitution 'protects expression which is eloquent no less than that which is unconvincing.'
435 U.S. at 791, 98 S.Ct. at 1423. See also, Schwartz v. Romnes, 495 F.2d 844, 852.3 (2nd Cir. 1974); Citizens Against
Rent Control v. City of Berkeley, 160 Cal. Rptr. 448 (Cal. App.
1980); Frias v. Board of Trustees of Ector County, 584 S.W.2d
944 (Tex. Civ. App. 1979).
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.' Let’s Help Florida v. Smathers, 453 F. Supp. 1003, 1001, Fn. 7 (D.C.N.D. Fla. 1978). But see, Richman, Political Expression by Artificial Persons in Referendum Campaigns, 1979 ANNUAL SURVEY OF AMERICAN LAW 285, 298 (1979). In my opinion PAC's 'protect union members holding political views contrary to those supported by the union from use of funds contributed by them to promote acceptance of those opposing views.' United States v. Pipefitters Local Union, 434 F.2d 116 (5th Cir. 1970), rev'd other grounds, 407 U.S. 385, 92 S.Ct 2243, 33 L.Ed.2d 11. See also, Federal Election Committee v.
NEA, 457 F. Supp. 1102 (D.C.D.C. 1978), which struck down the NEA's reverse check-off dues structure on the grounds that it violated the 'knowing free choice' requirement of the Federal Election Campaign Act of 1971, 2 U.S.C.A. § 441b(6)(3)(4). PAC's, in my opinion strike a reasonable balance between competing First Amendment interests; the free flow of information, and the effective association of individuals.
Given the lack of compelling precedents, I decline to issue an official opinion regarding the constitutionality of direct contributions by trade associations and labor unions out of dues or treasury funds. That determination will be left to the courts.
In response to your specific question, it is my opinion that trade associations and labor unions may lawfully make political contributions on ballot issues through political action committees (SDCL 12-25-12.1), notwithstanding SDCL 12-25-2.
Respectfully submitted,
Mark V. Meierhenry
Attorney General
