Attorneys for the state were in federal court Wednesday to defend the constitutionality of a new law passed by voters that sought to limit foreign influence on Maine elections.
Last November, Maine voters overwhelmingly approved a ballot initiative that prohibits companies from spending money on referendum campaigns if they are partially owned by a foreign government. The initiative was a direct response to the tens of million of dollars spent by Hydro-Quebec and other energy companies to defeat a 2021 referendum on Central Maine Power's controversial transmission corridor.
But a U.S. District Court judge blocked the law earlier this year, saying it could violate the free speech rights of U.S.-based companies that have as little as 5% of foreign government ownership.
Joshua Dunlap, an attorney for Central Maine Power, which is challenging the law, repeated that argument on Wednesday during oral arguments before the First Circuit Court of Appeals in Boston.
"The central issue in the case is this: can the government silence U.S. citizens, U.S. companies like CMP from speaking simply because a foreign public pension fund owns 5% of the company?" Dunlap said. "The answer to that question is no."
Corporate spending on elections has exploded in the 14 years since the U.S. Supreme Court ruled in Citizens United that companies, labor unions and other groups can spend unlimited amounts on elections. Federal law does prohibit foreign governments and foreign-owned companies from spending money to influence the outcome of candidate races but makes no mention of referendum questions.
Supporters of Question 2 on last year's ballot argued that foreign influence should be limited in both cases. Jonathan Bolton, an assistant attorney general representing the Maine Ethics Commission which was charged with implementing the law, said last year's vote sent a clear signal.
"The fact again that this initiative was passed by 86% of the vote — a historic margin, no initiative has ever passed by that much in Maine — shows that there is a huge concerns by voters," Bolton said.
The foreign influence law would potentially apply to multiple companies that have spent big on policy fights over energy in Maine.
Hydro-Quebec, which is wholly owned by the province of Quebec, spent more than $22 million to defend its corridor project with CMP during the 2021 referendum launched by opponents of the project. That referendum passed but was subsequently overturned by the courts, allowing CMP, Hydro-Quebec and its partners to continue work on the New England Clean Energy Connect project.
Versant Power is a subsidiary of a company owned by the city of Alberta, Canada. And CMP is partially owned by a sovereign wealth fund that is controlled overseas, although company officials have previously argued that the new foreign influence law would not affect the company.
Several justices suggested the low, 5% threshold could have a quote "chilling effect" on corporate spending because ownership ratios can change regularly. One judge asked how a hypothetical CEO of a publicly traded company could reasonably navigate the law — which carries criminal penalties for violations — if a foreign government's stake in the company was 4.8% one day and 5.2% soon thereafter.
Tim Woodcock, an attorney representing five Maine voters who challenged the law, said Citizens United made clear that civic discourse belongs to the people, not the government.
"The electors' position is the government cannot tell them where they can get that information," Woodcock said. "And if they want to get information from a particular source, they should be able to get it from that source without risk of criminal penalty."
But Bolton, the state's attorney arguing the case, countered that Maine has a strong interest in policing foreign government influence in referendum elections.
"Because that is the most core, active democratic self-government that you can imagine, which is deciding what laws are going to be governed by all of us," Bolton said. "In that situation, if anything, the government interest is even stronger in making sure that it is people within our domestic political community, and not foreign governments, that are having the discussion about how we are going to be governed at a very fundamental level."
Enforcement of the foreign influence law has been suspended while the case is playing out in the courts.
