SB1222 - 562R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 16, chapter 6, article 1.2, Arizona Revised Statutes, is amended by adding section 16-916.01, to read:

START_STATUTE16-916.01. Public service corporation contributions; corporation commission; prohibition; definitions

A. A public service corporation, an affiliate of a public service corporation or a principal of a public service corporation or its affiliate may not contribute directly or indirectly to a corporation commission candidate or candidate committee.

B. A corporation commission candidate may not accept or solicit contributions directly or indirectly from a public service corporation, an affiliate of a public service corporation or a principal of a public service corporation or its affiliate.

C. For the purposes of this section:

1. "Affiliate" or "affiliate of a public service corporation" means any person or entity that controls, is controlled by or is under common control with a public service corporation or any person or entity that accepts contributions from a public service corporation or the separate segregated fund of a public service corporation within the same calendar year in which the person or entity also makes any contribution to a corporation commission candidate.

2. "Control" means to possess, directly or indirectly, the power to direct or to cause the direction of the management or policies of another person or entity, whether through voting power, ownership, contract or otherwise.

3. "Principal" means:

(a) An agent, a director, manager, partner, officer or owner of a public service corporation or an affiliate of a public service corporation.

(b) The spouse or dependent child of any person listed in subdivision (a) of this paragraph.

(c) A political committee that is established, maintained, controlled or funded by a public service corporation or an affiliate of a public service corporation.

4. "Public service corporation" has the same meaning prescribed in article XV, section 2, Constitution of Arizona. END_STATUTE

Sec. 2. Title 16, chapter 6, article 1.3, Arizona Revised Statutes, is amended by adding section 16-923, to read:

START_STATUTE16-923. Coordinated public service corporation expenditures; covered expenditures; firewall; definitions

A. Notwithstanding section 16-922, an expenditure by a public service corporation, an affiliate of a public service corporation or a principal of a public service corporation or its affiliate is not an independent expenditure if the expenditure is a coordinated public service corporation expenditure. A coordinated public service corporation expenditure is deemed to be an in-kind contribution to the corporation commission candidate. All of the following apply to coordinated public service corporation expenditures:

1. The following constitute coordinated public service corporation expenditures:

(a) Any payment by a public service corporation, an affiliate of a public service corporation or a principal of a public service corporation or its affiliate for a communication that republishes, disseminates or distributes in whole or part an advertisement or other campaign material created or prepared by a corporation commission candidate, unless the advertisement or other campaign material is used to oppose the corporation commission candidate that created or prepared the material.

(b) Any covered expenditure that is made by a public service corporation, an affiliate of a public service corporation or a principal of a public service corporation or its affiliate in cooperation or consultation with or at the request or suggestion of a corporation commission candidate.

2. A payment or expenditure is not a coordinated public service corporation expenditure if the payment or expenditure is for a candidate debate or forum conducted pursuant to procedures adopted by the secretary of state or is for a communication that solely promotes a candidate debate or forum and is made by or on behalf of the person sponsoring the debate or forum.

B. Notwithstanding section 16-922, if a public service corporation, an affiliate of a public service corporation or a principal of a public service corporation or its affiliate makes a covered expenditure in cooperation or consultation with or at the request or suggestion of a corporation commission candidate, that covered expenditure is not an independent expenditure and is deemed to be an in-kind contribution to the corporation commission candidate if any of the following applies:

1. The expenditure is made pursuant to any express or implied agreement with, or any general or particular understanding with or pursuant to any request by or communication with, the corporation commission candidate regarding the expenditure.

2. During the four years preceding the expenditure, the person making the expenditure was directly or indirectly established, maintained, controlled or principally funded by the corporation commission candidate or an immediate family member of the corporation commission candidate. For the purposes of this paragraph, "immediate family member" means a parent, child, sibling, spouse, domestic partner, father-in-law or mother-in-law of the corporation commission candidate.

3. During the four years preceding the expenditure, the corporation commission candidate solicited funds for the person making the expenditure, provided nonpublic fundraising information or strategy to the person, appeared as a speaker or featured guest at a fundraiser for the person or gave permission to be featured in fundraising efforts for the person.

4. The expenditure is based on nonpublic information about the corporation commission candidate's campaign needs or plans that the corporation commission candidate or candidate committee directly or indirectly provided to the person making the expenditure, such as information about campaign messaging, strategy, fundraising, planned expenditures or polling data. a communication between the person making the expenditure and the corporation commission candidate or candidate committee that is solely for the purpose of discussing the person's position on a policy matter or discussing whether the person will endorse the corporation commission candidate and that does not include nonpublic information about the corporation commission candidate's campaign needs or plans does not constitute coordination.

5. During the four years preceding the expenditure, the person making the expenditure, except for accounting or legal services, employed or otherwise retained the services of a person who, at any time during the same four-year period, met any of the following criteria:

(a) Had executive or managerial authority for the corporation commission candidate committee, whether paid or unpaid.

(b) Was authorized to raise or spend monies for the corporation commission candidate and who had nonpublic information from the corporation commission candidate about the campaign's plans or needs.

(c) Provided the corporation commission candidate with professional services related to campaign or fundraising strategy, other than accounting or legal services.

C. For the purposes of subsections A and B of this section, A corporation commission candidate includes:

1. An employee or independent contractor, if the employee or independent contractor had executive or managerial authority for the corporation commission candidate or candidate committee at any time during the four years preceding the expenditure.

2. An agent of the corporation commission candidate or candidate committee, whether paid or unpaid, at any time during the four years preceding the expenditure, without regard to whether the agent is acting within the scope of the agency when engaged in the conduct prescribed in subsection B of this section.

D. Notwithstanding subsection B, paragraph 5 of this section, a covered expenditure is not a coordinated public service corporation expenditure if a person establishes and maintains a firewall that complies with this subsection. A person who relies on a firewall to disprove coordination bears the burden of proof that the firewall was in existence and effective at all relevant times. If strategic nonpublic information passes through a firewall, any resulting expenditure is deemed a coordinated expenditure, without regard to the existence of a firewall, if the expenditure would otherwise constitute a coordinated expenditure as prescribed by subsection B, paragraph 5 of this section. A person establishing a firewall that is intended to disprove coordination must do all of the following:

1. Keep separate the specific persons who provide a service to the person related to the expenditure from other distinct, specific persons who have engaged or will engage in any activity prescribed in subsection B, paragraph 5 of this section with the corporation commission candidate that benefits from the person's expenditures.

2. Forbid each owner, executive, manager and supervisor of the person to simultaneously oversee the work of persons who are separated by a firewall.

3. Prohibit the flow of strategic nonpublic information:

(a) Between the person and the corporation commission candidate supported by the expenditures.

(b) Between the specific persons who are being separated by the firewall.

4. Provide for physical and technological separations to ensure that strategic nonpublic information does not pass between the person and the corporation commission candidate supported by the expenditure and between the specific persons who are being separated by the firewall.

5. Memorialize both the general firewall policy and any specific firewall established pursuant to that policy in writing and distribute it to all relevant personnel and consultants before any relevant work is performed and provide the firewall policy to the secretary of state on request.

6. Comply with the firewall policy.

E. For the purposes of this section:

1. "Corporation commission candidate":

(a) Means a person who is a candidate for the corporation commission at the time of an expenditure, without regard to whether the person was a candidate for the corporation commission at the time of the conduct prescribed by subsection A or D of this section.

(b) Includes the corporation commission candidate committee.

2. "Covered expenditure" means payment for any of the following:

(a) An advertisement or other campaign material that either expressly advocates for the nomination or election of the corporation commission candidate or against the nomination or election of an opponent of the corporation commission candidate.

(b) An advertisement or other campaign material that promotes or supports the corporation commission candidate, or attacks or opposes an opponent of the corporation commission candidate, regardless of whether the advertisement expressly advocates the election or defeat of a corporation commission candidate.

(c) Any material that refers to a clearly identified corporation commission candidate at any time beginning one hundred twenty days before a primary election date through the general election date and that is disseminated to at least five hundred individuals in this state.

(d) Research, design or production costs, data analytics, creating or purchasing mailing or social media lists or other activities related to expenditures prescribed in subdivisions (a), (b) and (c) of this paragraph. END_STATUTE