A Little-Noticed Supreme Court Ruling Could Help Build A Dam Against Foreign Money In American Elections

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Just this month, a Trump Super PAC was fined by the FEC for soliciting foreign donations. States are trying to stop this kind of foreign money from flowing into U.S. elections. Massachusetts is trying to limit foreign corporate political spending in is its elections through new legislation. And the U.S. Supreme Court, it appears, is actually on their side.

This may come as a surprise: The Roberts Court has repeatedly opened the doors to more money in politics. And Justice Alito famously disagreed with President Obama who, during the 2010 state of the union, scolded the Justices to their face about their ruling in Citizens United. “Last week, the Supreme Court reversed a century of law to open the floodgates for special interests — including foreign corporations — to spend without limit in our elections. Well I don’t think American elections should be bankrolled by America’s most powerful interests, or worse, by foreign entities.” In response Justice Alito shook his head and mouthed the words “not true.”

The intervening decade would demonstrate that President Obama was right about corporate money coming into American elections. During the last federal election in 2020, there was $100 million in corporate money spent, which was up from the $70 million in corporate money spent during the federal midterm election in 2018.

This corporate political spending trend continued this year in state elections. In the California governor’s recall in 2021, for example, business trade association spent millions and more money came in directly from businesses. So far in Virginia, millions of corporate political dollars have been spent in the fight over who will be governor as well as who will control the legislature, including from Dominion Energy, Altria (formerly Philip Morris), Amazon, and Verizon.

Meanwhile, a little noticed case that came out during the height of the pandemic could have a big impact on whether and how foreign corporations play in American elections. The Supreme Court in United States Agency for International Development v. Alliance for Open Society International, Inc. (“Open Society II”), a case completely unrelated to elections, decided that “[i]n short, plaintiffs’ foreign affiliates are foreign organizations, and foreign organizations operating abroad have no First Amendment rights.”

Foreign nationals (the human kind) have long been barred from spending in U.S. elections under 52 U.S.C. § 30121. That is why election law experts had their hair on fire about the question of Russian interference the 2016 election. And even the Roberts Supreme Court in a case called Bluman v. FEC upheld the constitutionality of the ban on foreign nationals’ spending money in American elections.

But the law has been as clear as mud between 2010’s Citizens United and 2020’s Open Society II about whether that foreign ban naturally applied to foreign corporations as well as humans. In two cases, the state of California and the FEC took the position that the foreign ban did apply to foreign corporations. In the California case, a foreign pornographer spent in an LA election about mandated condom usage in porn. (He was against it.) He and his foreign company spent illegally in that LA election. California went after him and he had to pay a $61,500 fine. Then in the 2016 election a foreign company called American Pacific International Capital spent illegally $1.3 million in support of Jeb Bush’s failed effort to become president. The FEC issued a civil fine to the corporation of $550,000.

While Congress is going nowhere fast in passing elections reform, including ones that would keep foreign meddling in elections at bay, states and localities have been doing their best to keep foreign corporate money out of their elections. For example, under a Washington State law that went into effect in 2020 “[n]o contribution, expenditure, political advertising, or electioneering communication may be made or sponsored by a foreign national, financed in any part by a foreign national, or have a foreign national involved in the decision-making in any way.” Similar laws were passed in North Dakota and New Hampshire.

Meanwhile, Montana enacted S.B. 326 into law on May 8, 2019, thereby creating a state cause of action for violations of a foreign-national contribution ban that is consistent with the restriction under current federal law. In Massachusetts this year there are several bills pending that would limit electoral spending by foreign-influenced corporations.

Localities have also acted. In 2020, for instance, Seattle city council unanimously voted to limit foreign controlled corporations from spending in their election.

These state and local efforts to keep foreign money out have generated criticism that they would violate the First Amendment rights of corporations under Citizens United to spend money in politics. That’s why the Open Society II case is so important: it indicates that foreign corporations cannot raise First Amendment objections to U.S. laws or policies. Thus, a law that bans foreign corporations from spending in U.S. elections cannot be challenged by a foreign corporation as a violation of free speech. According to Open Society II, foreign corporations have no such rights to assert. This means reforms like those in St. Petersburg, Washington State and pending in Massachusetts are on firmer constitutional ground.

Ciara Torres-Spelliscy is a Professor of Law at Stetson University College of Law, a Fellow at the Brennan Center and the author of the book, Political Brands.

Correction: This article originally referred to a St. Petersberg, Florida ban on foreign corporate spending in elections that has since been repealed.