A federal judge has halted enforcement of a voter-approved law designed to bar foreign government-owned entities from spending money to influence Maine referendums.
The 40-page decision by U.S. District Judge Nancy Torresen is not the final ruling, but suggests that she views significant portions of the law — backed by 86% of Maine voters in November — could include domestically held corporations and, as a result, are unconstitutional.
"Based on this analysis, I find that a substantial number of the Act’s applications are likely unconstitutional judged against the Act’s plainly legitimate sweep. It is therefore likely facially invalid," Torresen wrote.
The law is the result of a citizen's initiative last year in response to record spending on a 2021 ballot campaign aimed at halting Central Maine Power's transmission corridor through western Maine. The effort originally targeted a multimillion-dollar electioneering effort by Hydro-Quebec, which is wholly owned by the government of Quebec. But its list of opponents grew to include CMP and Versant Power, a subsidiary of ENMAX which is owned by the government of Calgary, Alberta. The law was also opposed by the Maine Press Association and the Maine Association of Broadcasters in part because they viewed it as thrusting them into a quasi-enforcement role to make sure political advertisers don't attempt to circumvent the foreign electioneering ban.
Torresen's order does not address the concerns raised by media organizations, but it does begin to tackle some of the legal and constitutional arguments that may ultimately determine whether the new law will stand.
Torresen wrote that those arguments need more scrutiny, including whether corporate spending on elections affirmed as constitutionally protected speech in the 2010 landmark Citizens United decision by the U.S. Supreme Court extends to foreign-owned companies that want to influence referendum elections.
Supporters of the law argue that the Citizens United ruling does not extend to companies owned by foreign governments, and also that the law aims to close a loophole that currently allows those companies to influence state and local referendum campaigns. Such companies are already prohibited from contributing to candidate campaigns under the Federal Election Campaign Act, or FECA, but the legal challenge to the new law could turn on whether those prohibitions should or were meant to apply to referendum campaigns.
Versant has argued that Congress did not intend to implicate foreign-government owned companies in FECA, but Torresen suggested that the federal law did not prohibit states from going further to guard against foreign electioneering.
"Ultimately, whether the Act is in conflict with FECA’s prohibition on foreign participation in state and local candidate elections is a close question," she wrote, "but I believe it is likely that Congress intended FECA’s prohibition as a floor, and it did not intend to prohibit states from doing more to regulate foreign government influence on state and local elections."
However, Torresen also suggested that foreign electioneering ban might be "overly inclusive" because it could include domestically held corporations with some foreign government ownership.
The law prohibits any entity or business with at least 5% ownership by a foreign government or government-influenced entity from spending money on state or local elections. But Torresen wrote that the 5% threshold seemed "arbitrary" and might sweep in domestic companies and run counter to the Citizens United ruling.
"I agree that a 5% foreign ownership threshold would prohibit a substantial amount of protected speech," she wrote. "I cannot reconcile the Supreme Court’s holding in Citizens United with a law that would bar a company like CMP — incorporated in Maine, governed by a Board of Directors comprised of United States citizens and run by United States citizen executive officers who reside in Maine — from campaign spending."
CMP originally contended last year that it would not be affected by the foreign electioneering ban, but it lobbied against the bill when the Legislature considered enacting it. In challenging the law passed by voters, it argues that the law would suppress its free speech rights.
CMP is a subsidiary of Avangrid and the Spanish company Iberdrola. The Qatari government has a 3.7% stake in Avangrid and an 8.7% share in Iberdrola.
Protect Maine Elections, the group that spearheaded the referendum campaign, emphasized Torresen's view that states might have license to ban electioneering by foreign governments while chastising the law's opponents for working against voters' decision in November.
“The court leaves little doubt that Maine can prevent foreign governments from interfering with our elections,” said John Brautigam, an attorney working on the group's behalf said in a statement. "The next step in the lawsuit will allow for more detailed judicial consideration, and we remain confident in the constitutionality of the law as enacted by 86% of the Maine voters.”
Protect Maine Elections chairman and state Sen. Rick Bennett, R-Oxford, said CMP, Versant, the Maine Association of Broadcasters and the Maine Press Association "ought to be ashamed of themselves."
“These people are enabling foreign governments, and entities that they own, control, and influence, to threaten the integrity of our elections," he said. "Maine voters delivered the clearest of messages on Election Day, telling these monied interests that we are taking our government back. It’s time for these organizations and their governing boards to heed the will of their customers and stakeholders, the people of Maine.”
