After the U.S. Supreme Court's April 1978 *Bellotti* decision struck down Massachusetts's ban on corporate spending in ballot-question campaigns, is South Dakota's parallel statute (SDCL 12-25-2) still enforceable? Should the South Dakota AG wait for a state court to invalidate it, or should the AG declare it unenforceable now?
Plain-English summary
On April 26, 1978, the United States Supreme Court decided First National Bank of Boston v. Bellotti, striking down a Massachusetts statute that banned corporate spending to influence ballot-question outcomes. The 5-4 majority held that the First Amendment protects corporate speech on ballot questions just as it protects individual speech, and that bans on corporate ballot-question speech are unconstitutional restrictions of that protected expression.
South Dakota had its own ban on corporate ballot-question spending, codified at SDCL 12-25-2. The State Ethics Commission, through Mrs. Herseth, asked AG William Janklow whether the South Dakota statute remained enforceable. The 1978 general election was approaching, and corporations were watching to see whether they could spend.
Janklow's answer rejected the safe-but-evasive route. He could have said that only a state court could declare SDCL 12-25-2 unconstitutional, that until that happened the statute remained presumptively valid, and that the Ethics Commission should enforce it pending judicial review. That would have pushed the question to the courts and let Janklow avoid taking a politically loaded stand.
He took the harder route. The Supremacy Clause, he wrote, binds "the Judges in every State" to follow federal constitutional law as the supreme law of the land. The AG's office is not a court but it is an executive enforcement actor whose obligation to follow federal law is no less than that of state judges. Where the U.S. Supreme Court has squarely held that a category of state statute is unconstitutional, the AG cannot in good faith continue to enforce the state statute and wait for a state court to catch up. He cited a 1973-74 AGR predecessor opinion taking the same position.
The practical effect: SDCL 12-25-2 was a dead letter as of April 26, 1978. Corporations could spend on the 1978 South Dakota ballot questions without fear of state prosecution. The Legislature would need to revise the statute in January 1979 if it wanted to comply with Bellotti (perhaps by replacing the ban with a disclosure requirement, which Bellotti signaled was permissible).
Janklow drew a careful line at one point: Bellotti did not decide whether corporate spending on candidate campaigns could still be regulated. The footnote in the majority opinion specifically reserved that question. So the South Dakota statutes restricting corporate spending in candidate races (separate from SDCL 12-25-2) remained intact and enforceable.
The opinion is structurally interesting beyond its substantive holding. It is a rare instance of an AG declaring a duly-enacted statute unenforceable on his own initiative, rather than waiting for a court. Janklow defended that stance: ignoring Bellotti would invite the judiciary to do the AG's job, which is itself an administrative duty. The constitutional question had been answered by the highest court, and there was no point pretending otherwise.
Currency note
This opinion was issued in 1978. Subsequent statutory amendments, court decisions, or later AG opinions have substantially changed the landscape of corporate political speech law. Treat this page as historical context, not current legal advice. The most consequential later development is Citizens United v. FEC, 558 U.S. 310 (2010), which extended the corporate-speech analysis to candidate elections as well as ballot questions. South Dakota's campaign finance law has been thoroughly revised since 1978 (see modern SDCL chapters 12-27 and 12-25), and Initiated Measure 22 (2016) and its successor legislation made further changes. Modern questions about corporate political spending in South Dakota should be verified against current statutory and case law, not this 1978 opinion.
What the opinion meant at the time
For the State Ethics Commission, the opinion answered an urgent practical question. The commission was charged with enforcing the campaign-finance statutes. After Bellotti, continued enforcement of SDCL 12-25-2 would have invited lawsuits the state would lose. Janklow's opinion gave the commission cover to stand down on that statute while continuing to enforce other limits that survived Bellotti.
For South Dakota corporations contemplating spending on 1978 ballot questions (notably any tax-related referenda then under consideration), the opinion removed the legal uncertainty. They could spend, subject only to ordinary corporate-governance rules about shareholder approval and fiduciary duty.
For the 1979 Legislature, the opinion was a planning signal. The Legislature would need to repeal or substantially revise SDCL 12-25-2 to bring the statute book into line with the new federal-constitutional landscape. Disclosure-based regimes (requiring corporations to report ballot-question spending) were a plausible replacement compatible with Bellotti.
For state's attorneys, the opinion meant declining to bring SDCL 12-25-2 prosecutions. Any such prosecution would have been immediately enjoined under federal law, and the state's attorneys would have been wasting resources.
Common questions
Q: Can a state AG declare a statute unenforceable on his own?
A: Not in the formal sense of striking it from the books, but in the practical sense of refusing to enforce it, yes. AG enforcement discretion includes the power to decline to prosecute or to advise that a statute will not be defended. The statute remains on the books until the Legislature repeals it or a court declares it unconstitutional. Bellotti gave Janklow the federal-constitutional ground he needed to decline enforcement.
Q: What was the practical risk of enforcing SDCL 12-25-2 post-Bellotti?
A: Any prosecution would have been immediately enjoined under 42 U.S.C. § 1983 as a violation of the First Amendment. The state would have paid attorney's fees and damages. Worse, the state's enforcement would have been an obvious end-run around a directly-on-point U.S. Supreme Court decision, embarrassing the AG and possibly the state.
Q: Did Bellotti protect all corporate political speech?
A: No. Bellotti addressed ballot-question speech specifically. The Court explicitly reserved the candidate-election question, and corporate candidate-spending bans remained in place for decades after, until Citizens United in 2010.
Q: Did the 1979 South Dakota Legislature follow up?
A: South Dakota's campaign-finance code was revised after Bellotti, eventually replacing the flat corporate ban on ballot-question spending with disclosure requirements. The exact legislative sequence is best traced through SDCL chapter 12-25's modern legislative history rather than relied upon from this 1978 opinion.
Q: How did the dissenters in Bellotti see the issue?
A: Justices White, Brennan, and Marshall argued that corporate political spending lacks the individual-expression connection that justifies First Amendment protection. Justice Rehnquist (in a separate dissent) argued that states could legitimately limit corporate political activity because corporations are state-chartered creatures whose powers can be conditioned by the chartering state. Both dissents lost, but they framed arguments that resurfaced in later corporate-speech debates.
Background and statutory framework
The Massachusetts statute in Bellotti prohibited corporate political spending on ballot questions unless the question "materially affected" the corporation's business, property, or assets. The state Supreme Judicial Court had upheld the law on the theory that corporations only got First Amendment protection for speech tied to their own business interests. The U.S. Supreme Court reversed, holding that the First Amendment's protection runs to the speech itself, not to the identity of the speaker; if the speech is informative and contributes to public discourse, it is protected regardless of whether the speaker is a corporation, union, association, or individual.
SDCL 12-25-2 was the South Dakota analog. By banning corporate contributions to support or defeat any ballot issue, it ran directly afoul of Bellotti's holding. Janklow recognized this and acted accordingly.
The Supremacy Clause (Article VI of the U.S. Constitution) makes federal constitutional law the "supreme Law of the Land" and binds the judges of every state. By extension, state executive officials cannot enforce state statutes that conflict with federal constitutional law, even before a state court has formally declared the state statute invalid. Janklow's opinion is one of several South Dakota AG opinions across the years invoking the Supremacy Clause as a basis for declining to enforce state statutes invalidated by Supreme Court decisions.
The State Ethics Commission existed (and exists) to enforce campaign-finance and conflict-of-interest rules at the state level. Its question to the AG was practical rather than theoretical: with a general election coming, should it threaten enforcement against corporations spending on ballot questions, or stand down? Janklow told it to stand down.
Source
Original opinion text
Corporate contributions on behalf of ballot questions
Dear Mrs. Herseth:
On behalf of the State Ethics Commission, you have asked:
QUESTION:
The State Ethics Commission would appreciate it if you would state whether you believe SDCL 12-25-2 is enforceable and valid in regard to corporations contributing to the support or defeat of ballot issues in light of the United States Supreme Court decision, April 26, 1978, re: First National Bank of Boston v. Francis X. Bellotti.
As you point out, the answer to your question has been drastically affected by the recent decision of the United States Supreme Court in the case of First National Bank of Boston, et al., v. Francis X. Bellotti, et al., 98 S.Ct. 1407 (1978).
The Supreme Court held that corporations must be allowed to spend unlimited funds to support or oppose ballot issues, no matter what their subject. To ban such expenditures, it said, violates the corporations' First Amendment right to free speech. Because this opinion of the United States Supreme Court is contrary to SDCL 12-55-2, I will discuss a few of the highlights of the decision.
The United States Supreme Court on April 26, 1978, struck down a Massachusetts law that prohibited corporations from spending to influence the outcome of ballot initiatives.
In the five-four decision, the Court decided that state laws banning corporate spending in this area are an unconstitutional restriction on the First Amendment guarantee of free speech. The Court opinion said:
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.
The high court reversed a 1977 decision by the Massachusetts Supreme Judicial Court upholding the constitutionality of the ban on corporate spending when it involves issues which do not "materially affect" the corporation's business income, property or assets. Only then, the state court said, may the corporation claim the right of free speech as exercised through the First and Fourteenth Amendments.
Left unanswered, however, is whether it is constitutional to ban corporate contributions aimed at electing candidates to public office. In a footnote, the court majority cautioned that its decision "implies no comparable right in the quite different context of participating in a political campaign for an election to public office."
The court refused to "survey the outer boundaries of the First Amendment's protection of corporate speech, or address the abstract question whether corporations have the full measure of rights that individuals enjoy. . . ."
The Massachusetts law was challenged by a coalition of five corporations led by the First National Bank of Boston. They wanted the right to spend to defeat a referendum question that would have given the Legislature the right to impose a graduated income tax on state residents. State law prohibited such spending to "influence" or "affect" the vote on a referendum question that is "solely" concerned with the taxation of individual income, property, or transactions.
Other plaintiffs in the case were New England Merchant's National Bank, the Gillette Company, the Digital Equipment Company, and the Wyman-Gordon Company.
In their dissent, Justices White, Brennan, and Marshall criticized the majority ruling as "a drastic departure from the Court's prior decisions" in the area of political activities by special interests such as corporations and unions. They added:
[C]orporate expenditures designed to further political causes lack the connection with individual self-expression which is one of the principal justifications for the constitutional protection of speech provided by the First Amendment. Ideas which are not a product of individual choice are entitled to less First Amendment protection.
The dissent went on:
The question in the present case, as viewed by the Court, "is whether the corporate identity of the speaker deprives this proposed speech of what otherwise would be its clear entitlement to protection," which it answers in the negative. But the Court has previously held in Buckley v. Valeo, that the interest in preventing corruption is insufficient to justify restrictions upon individual expenditures relative to candidates for political office. If the corporate identity of the speaker makes no difference, all the Court has done is to reserve the formal interment of the Corrupt Practices Act in similar state statutes for another day.
In his separate dissent, Justice Rehnquist said, "The free flow of information is in no way diminished by the Commonwealth's decision to permit the operation of business corporations with limited rights of political expression. All natural persons, who owe their existence to a higher sovereign than the Commonwealth, remain as free as before to engage in political activity."
In oral argument before the United States Supreme Court, the State of Massachusetts justified the law on three separate grounds:
- Preserving the integrity of the initiative process as the people's process.
- Protecting the interest of the minority shareholders of a corporation involved who, for one reason or another, may oppose such expenditures.
- Preventing even the appearance of impropriety by suggestions that the political process is dominated by business interest.
The Supreme Court ruled, however, that, "However weighty these interests may be in the context of partisan candidate elections, they either are not implicated in this case or are not served at all, or in other than a random manner [by the Massachusetts statute]. . . ."
As for the oft-stated fear that corporations are so wealthy that they "may drown out other points of view," the Court said:
If appellee's arguments were supported by record or legislative findings that corporate advocacy threatened imminently to undermine democratic processes, thereby denigrating rather than serving First Amendment interests, these arguments would merit our consideration. But there has been no showing that the relative voice of corporations has been overwhelming or even significant in influencing referenda in Massachusetts, or that there has been any threat to the confidence of the citizenry in government.
Nor does the law protect corporate shareholders, the Court said. It found the law too broad in that it would prohibit political initiative expenditures by a corporation "even if its shareholders unanimously authorize the contribution or expenditure." It is too narrow, too, the Court said, because it prohibits referendum spending while allowing spending to influence the passage or defeat of various proposals in the Legislature. Nor does it prohibit the use of corporate funds for speaking out on issues until and unless these issues become the subject of referenda, even though "the displeasure of disapproving shareholders is unlikely to be any less," the Court said.
The particular history of the Massachusetts law, moreover, "suggests . . . the legislature may have been concerned with silencing corporations on a particular subject."
The majority seemed to be strongly hinting that the law could be judged unconstitutional on equal protection grounds as well:
Excluded from its provisions . . . are entities or organized groups in which numbers of persons may hold an interest or membership, and which often have resources comparable to those of large corporations. Minorities in such groups or entities may have interests with respect to institutional speech quite comparable to those of minority shareholders in a corporation. Thus the exclusion of Massachusetts business trusts, real estate investment trusts, labor unions, and other associations undermines the plausibility of the State's purported concern for the persons who happen to be shareholders in the banks and corporations covered by [the law]. . . .
While it might be expedient for this office to take the position that Bellotti did not automatically strike down the ban on corporate expenditures on political questions in South Dakota and to hold that any change must be made either by the electorate, or by a decision of a court of proper jurisdiction holding that the South Dakota statute lacks a compelling state interest in accordance with the holding of the United States Supreme Court, or by the Legislature, 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. In this case, the obligation rests solely on the Attorney General. In the absence of a judicial determination by our Court, the Attorney General has the responsibility of rendering his opinion on the law.
I am not unmindful of the many decisions that only a court has the power to declare a state statute unconstitutional; however, article VI of the United States Constitution declares without qualification that:
This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.
When there is a conflict between this supreme law and the acts of Congress, the acts of the state legislatures and the constitutions of the states, the United States Constitution prevails. This position is one which is consistent with the previous Attorney General's opinions (1973-74 AGR 90.)
It is particularly important that a decision be made at this time in the light of the rapidly approaching general election, and due to the fact that the Legislature will not meet until January of 1979.
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.
Respectfully submitted,
William J. Janklow
Attorney General
WJJ:RVJ:mam