The U.S. Supreme Court on Monday declined to hear the Albuquerque-based Rio Grande Foundation’s challenge of Santa Fe’s campaign disclosure requirements in a case stemming from a failed city ballot initiative in 2017 that would have imposed a tax on sugar-laden beverages.

The decision upholds a U.S. District Court ruling in January 2020 in favor of the city, which now prohibits organizations that spend more than $500 on political campaigning from shielding details about financial contributions.

At the time the lawsuit was filed, the threshold was $250.

The disclosure requirement is aimed at preventing what is known as “dark money” from influencing elections.

The foundation, which asked the court the declare the city’s requirements unconstitutional, first appealed its case to the 10th District Court of Appeals in Denver, which rejected the case in October 2021, and then filed an appeal with the Supreme Court.

City spokesman Dave Herndon wrote in an email, “The Supreme Court’s denial of certiorari leaves the city’s important transparency provision in place. In several cases, the Supreme Court has recognized that disclosure is a constitutional means of protecting voters’ right to know about the sources of election-related spending.”

The Rio Grande Foundation, a conservative-leaning think tank, was accused of creating an online video that was critical of the so-called soda tax — a controversial proposal that would have imposed a 2 cents-per-ounce tax on sugary beverages. The video prompted an investigation into the foundation’s possible violations of the city’s campaign finance code.

The foundation complied with a city order and disclosed two relatively minor donations of $7,700. Later, however, it sought to invalidate the city’s regulations through the lawsuit, which said the rules create a “chilling effect” on political contributions and, thus, free speech.

In addition, the lawsuit prompted then-City Councilor Carmichael Dominguez to propose changes to the city code that would have removed the disclosure requirement for people and groups spending money on advertisements for ballot initiatives.

Dominguez, who had said the measure was designed to avoid a costly legal battle, later withdrew the proposal. Under IRS rules for nonprofits, they are prohibited from spending money to campaign for or against candidates for public office — but nothing prevents organizations from weighing in on political issues.

The failed city ballot initiative on the soda tax, for instance, was marked by millions of dollars in campaign spending by both advocates and opponents.

Foundation President Paul Gessing wrote in an email Monday, “The Court’s decision was unfortunate, but it is hard to get to the Supreme Court and they have been particularly reluctant to make sweeping decisions on free speech and campaign finance issues in recent years.”



He noted the lawsuit was denied by the appeals court “ ‘on lack of ‘standing,’ not necessarily the merits of the case itself.”

The Rio Grande Foundation will continue its “public policy mission,” Gessing wrote, but will “more carefully consider restrictive local campaign finance rules if/when we choose to engage in efforts to educate voters on local ballot measures.”

Asked for an estimate on court costs in the case, Gessing wrote, “We were represented in the Santa Fe case pro bono by the Goldwater Institute out of Arizona.”

Gessing’s organization also sued New Mexico Secretary of State Maggie Toulouse Oliver in federal court in 2019 over a new state law requiring stricter financial disclosure requirements for political issue advertisements. The case is pending.

The lawsuit against the city argues the foundation did not create a website or video campaigning against the soda tax but used social media to direct people to “www.NoWaySantaFe.com, and an associated YouTube video that explained the tax to voters.”

“The Foundation did not pay any money for the website or video,” the lawsuit said.

According to the lawsuit, the organization had spent $1,500 on postcards about the soda tax but opted not to mail them to Santa Fe voters after learning about the city’s donor disclosure rules.

Requiring nonprofits “to disclose their donors is a major burden and, accordingly, we are choosing not to speak rather than expose the privacy of our donors, including exposing them to potential harassment,” the lawsuit said.

The federal appeals court said the Rio Grande Foundation failed to show speech would be silenced by the city’s campaign finance regulations.

The city’s defense was supported by several advocacy groups for transparency in political spending, including the Brennan Center for Justice, New Mexico Ethics Watch, the League of Women Voters and Common Cause.

Herndon said the city spent just $1,390.70 fighting the case, which was used for printing its arguments for the Supreme Court. The nonprofit Campaign Legal Center, which is focused on promoting transparency in elections, worked on the case with the City Attorney’s Office, Herndon added.