Colorado appeals court refuses to revive campaign finance rule

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— The Colorado Court of Appeals agreed Thursday that the Republican secretary of state probably exceeded her authority when she imposed a campaign finance rule requiring labor unions and other groups to get each member's permission to make political contributions from dues.

But the three-judge panel kept the rule in place through Monday to give the state time to decide whether to ask the Colorado Supreme Court to review the ruling.

Secretary of State Gigi Dennis said in a statement she had not decided whether to appeal to the state Supreme Court.

"We continue to believe implementation of the campaign finance rule requiring small-donor groups to get permission before transferring members' dues to political campaigns is the right thing to do," she said. "This rule furthers the intent of the voters when they adopted Amendment 27 imposing campaign finance restrictions in 2002."

If she doesn't appeal, the case will go back to Denver District Judge John McMullen for a trial to determine the validity of the rule.

Dennis had argued the rule was necessary to ensure openness in politics and avoid the appearance of corruption. Democrats argued it unfairly restricted their ability to raise donations.

Dennis imposed the rule two months ago, with control of the Legislature, the governorship and at least one seat in Congress considered up for grabs in the November election.

McMullen had determined that the rule would make it difficult for the plaintiffs, which include two teachers' unions, to seek and obtain permission from members to make political contributions. He said that essentially turned the groups' fundraising efforts into "opt-in" programs, while U.S. Supreme Court rulings have said such programs can legally assume members want to participate.

McMullen said that violated the plaintiffs' constitutional rights and that the plaintiffs probably would win if the case went to trial.

The appeals court judges agreed "in a big way," plaintiffs' attorney Mark Grueskin said.

"They held that the secretary exceeded her authority in enacting the rule, that there was no basis for the rule in the Constitution and as a matter of fact flew in the face of what the U.S. Supreme Court has said," Grueskin said. "The Supreme Court has been very clear that the process that organizations like the plaintiffs have been using is the constitutional way of going about it."

For now, he said, the legal battles affect only the named plaintiffs: the Colorado Education Association, the American Federation of Teachers Local 858, political committees those unions formed, four members of those unions and one state legislator who is running for re-election.

But if a trial determines that the rule is invalid, that decision would cover all people and entities affected by the rule, Grueskin said.

At least one other union, the Service Employees International Union, has several hundred thousand dollars ready to donate to candidates and political causes through its political committee if the rule is invalidated, Local 105 President Mitch Ackerman said. He said if there were a court ruling invalidating the rule, it could come too late to allow his union and others to funnel more money to their political committees.

At issue are small-donor committees, created by Amendment 27, a campaign-finance law voters approved in 2002. Such committees can give up to $4,000 to candidates in state legislative races, or 10 times more than individuals can contribute.

"(Dennis) may not get her way ultimately," Ackerman said. "But she's managed to delay the participation of the small-donor committees in the way that the voters of Colorado established with Amendment 27, and when you're 40 days out from an election, delaying participation is in effect limiting participation."

Analysts say Democrats have benefited more than Republicans from the committees because they are often created by Democratic-leaning groups such as labor unions, which can funnel portions of membership dues into their small-donor committees.

In the 2004 election, when Democrats took control of both chambers of the Legislature for the first time in about 40 years, small-donor committees spent about $1 million on state legislative races. Before the new rule was imposed this year, small-donor committees had spent at least $1.3 million, according to state records.

In arguments earlier this week, Assistant Attorney General Jason Dunn said the rule was intended to ensure that members of unions and other organizations know their dues might be used for political purposes. He said while many unions offer dissenting members a refund, that process was too cumbersome.

But the appeals court agreed with the trial judge that process is appropriate under numerous U.S. Supreme Court rulings.

"The burden is on the employee to make his or her objection known," the ruling said. "Here, however, the secretary's rule presumes dissent by requiring an affirmative statement each year, which is inconsistent with the case law we have cited."

The ruling said the new rule reversed that presumption, "thus denying the First Amendment rights of a majority of union members for the benefit of a minority of putative dissenting members."

The case is No. 06CA1944.

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