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Colorado Department of State v. Unite for Colorado.

2024 COA 31. No. 23CA0989. Election Law—Initiative and Referendum—Fair Campaign Practices Act—Colorado Constitution Article 28, § 2(10)—Issue Committees—Major Purpose—Disclosure.

March 28, 2024

Unite for Colorado (Unite) is a nonprofit issue advocacy corporation that was formed in Colorado in November 2019. Unite began operating in January 2020 with only two employees, Zvonek, an executive manager, and Kennedy, a registered agent and board member. Unite spent over $4 million to support or oppose three ballot initiatives on Colorado’s 2020 ballot, which constituted approximately 23.44% of its total expenditures. Unite did not register with the Colorado Department of State (DOS) or disclose its contributions and expenditures. In August 2020, two registered voters filed a campaign finance complaint with the DOS against Unite alleging that Unite was an issue committee that had failed to comply with Colorado’s disclosure and registration requirements. After a hearing, an administrative law judge (ALJ) found that Unite had a major purpose of supporting or opposing the ballot initiatives, as evidenced by its “continuous” spending, which “constituted a considerable portion of its total activities,” and by its “funding [of] written and broadcast communications.” The DOS entered a final order concluding that Unite had a major purpose of supporting or opposing the ballot initiatives and ordered Unite to comply with the statutory obligations of an issue committee and pay a fine of $40,000. The DOS then filed a complaint in district court to judicially enforce the final agency order. The district court reversed the final agency decision, concluding that the DOS erred by considering Unite’s ballot initiative efforts in the aggregate rather than on a proposition-by-proposition basis, as required by statute, so the final decision was arbitrary, capricious, and contrary to law.

On appeal, the DOS argued that the district court erred by concluding that it was not authorized to consider an entity’s aggregated ballot activity. The Fair Campaign Practices Act (FCPA) requires that ballot initiative advocacy groups (issue committees) register with the DOS and disclose their contributions and expenditures. Under the 2020 FCPA, an “issue committee” is any group that has a major purpose of ballot initiative advocacy or has accepted or made contributions or expenditures over $200 to support or oppose any ballot initiative. It is undisputed that an organization must satisfy both subsections to qualify as an issue committee. Further, CRS § 1-45-103(12)(a) provides that the statutory definition of “issue committee” has the same meaning as that set forth in Colo. Const. art. 28, § 2(10). Nothing in the constitutional text precludes the DOS from considering an entity’s ballot spending in the aggregate. Accordingly, the DOS had authority to consider Unite’s ballot initiative spending in the aggregate for the purpose of assessing whether Unite had a major purpose of ballot initiative advocacy. Further, considering the seven factors relevant to the “major purpose” analysis in 2020—including the organization’s structure, purposes, activities, and expenditures—the DOS’s final decision that Unite had a major purpose of ballot initiative advocacy in 2020 complied with the operative legal framework.

Unite contended that the registration and disclosure requirements in CRS § 1-45-108(1)(a)(I), (3.3), as applied to Unite, unconstitutionally compel speech and burden anonymous speech and association. However, the state has an informational interest in knowing who supports or opposes Colorado’s ballot initiatives, and in what financial amount. Here, because the undisclosed spending exceeded $4 million, the state’s informational interest was substantial, and the regulatory disclosure regime was narrowly tailored to the government’s asserted interest. Further, Unite provided no evidence that it would lose contributions based on the disclosure requirement or that it had to spend exorbitant amounts of time or money to comply. Therefore, the registration and disclosure requirements were constitutional as applied to Unite.

Unite also argued that the 2020 “major purpose” test is unconstitutionally vague, as evidenced by the General Assembly’s later repeal of the framework in favor of a bright-line rule. However, the 2020 framework sufficiently put Unite on notice that it could be fined for its failure to register and disclose, notwithstanding the district court’s disagreement with the agency’s interpretation of law.

Lastly, Unite asserted that the DOS’s interpretation amounted to a new rule of law that it applied retroactively to Unite. However, the DOS’s consideration of Unite’s pattern of conduct, including all of its ballot initiative advocacy, in finding that it had a major purpose of supporting or opposing any ballot initiative was consistent with the multifactor analysis under controlling law at the relevant time and was not novel.

The judgment was reversed and the case was remanded with instructions to reinstate the DOS’s final decision.

Official Colorado Court of Appeals proceedings can be found at the Colorado Court of Appeals website.

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