  The typical optical-UV continuum slopes observed in many type 1 AGN are
redder than expected from thin accretion disk models. A possible resolution to
this conundrum is that many AGN are reddened by dust along the line of sight.
To explore this possibility, we stack 5000 SDSS AGN with luminosity
L~10^45erg/s and redshift z~0.4 in bins of optical continuum slope alpha_opt
and width of the broad H$\beta$ emission line. We measure the EW of the NaID
absorption feature in each stacked spectrum. We find a linear relation between
alpha_opt and EW(NaID), such that EW(NaID) increases as alpha_opt becomes
redder. In the bin with the smallest H$\beta$ width, objects with the bluest
slopes that are similar to accretion disk predictions are found to have
EW(NaID)=0, supporting the line-of-sight dust hypothesis. This conclusion is
also supported by the dependence of the $H\alpha/H\beta$ line ratio on
alpha_opt. The implied relationship between alpha_opt and dust reddening is
given by E(B-V)~0.2(-0.1-alpha_opt), and the implied reddening of a typical
type 1 AGN with alpha_opt=-0.5 is E(B-V)~0.08mag. Photoionization calculations
show that the dusty gas responsible for reddening is too ionized to produce the
observed features. Therefore, we argue that the sodium absorption arises in
regions of the host ISM which are shielded from the AGN radiation, and the
correlation with alpha_opt arises since ISM columns along shielded and
non-shielded sightlines are correlated. This scenario is supported by the
similarity of the E(B-V)-NaID relation implied by our results with the relation
in the Milky-Way found by previous studies.
