States and Localities Move to Block Campaign Finance Contributions from Foreign-Influenced Corporations

Twelve states have jumped on the bandwagon of attempting to regulate foreign national and “foreign influenced” corporation participation in campaign finance activity via legislation. The trend started in 2017 with the adoption of a local ordinance in St. Petersburg, Florida, and picked up steam in 2023 with Minnesota’s omnibus election reform bill (MN HF 3), and then via ballot measure in Maine in November 2023. Similar foreign-influenced corporation bills were introduced in California, Hawaii, Massachusetts, New York, Virginia, and Washington in 2023 along with narrower bills prohibiting foreign national activity in Congress, Connecticut, Oregon, and Illinois. This legislative activity has spread to include introductions of similar bills in Hawaii (reintroduction), Georgia, and Oklahoma in 2024.

January 2024 also saw an appeal by Ohio Secretary of State Frank LaRose for the Ohio General Assembly to pass a foreign campaign funding bill. Only 12 days after Secretary LaRose issued his appeal, the Ohio Senate obliged with the introduction of legislation (OH SB 215) to prohibit foreign nationals, including corporations organized under the laws of a non-US jurisdiction, from making a contribution or independent expenditure in connection with an Ohio election.

What is a “Foreign Influenced” Corporation?

While legislative texts may vary from bill to bill, there are some commonalities. The Center for American Progress (CAP), a progressive think tank in Washington, D.C. and proponent of these bills, summarized the criteria as:

• The U.S. corporation has a single foreign shareholder who owns or controls 1% or more of the corporation’s equity;

• The U.S. corporation has multiple foreign shareholders that own or control 5% or more, in the aggregate, of the corporation’s equity; or,

• The U.S. corporation has any foreign entity that participates in the corporation’s decision-making processes concerning election-related spending in the United States.

A 2019 report from CAP claims that these criteria would disqualify 98% of the 111 companies (109) composing the S&P 500 that the report studied from engaging in political activity at the state level. It is unclear from that analysis what implications this would have for the broader corporate community.

What Do These Bills Do?

Generally, the foreign-influenced bills prohibit contributions to political committees, independent expenditure committees, and ballot measure committees by foreign-influenced corporations and provide penalties for those doing so. Some of them impose a reporting and certification burden on those corporations that do contribute while others focus their attention on foreign nationals and principals and may rely on citizen or watchdog complaints to find violators. In all instances, there are penalties to the contributor, the recipient committees or both for violations of the statutes.

Why Is This Legislation Being Introduced?

Federal law (52 USC §30121(a)) already prohibits foreign nationals from making contributions in connection with a federal, state, or local election. These laws take it a step further and restrict activity based on affiliations with foreign entities. 

Proponents of foreign-influenced laws argue that they close a loophole opened up by the U.S. Supreme Court’s decision in Citizens United v. Federal Election Commission (2010). Opponents argue that the laws will chill protected political speech by American entities that may have an interest in the candidate being supported/opposed or the ballot measure being voted on. Proponents of the narrower laws argue that they prohibit foreign nationals from influencing the will of the people of the state. The wide variety of states introducing this legislation makes it difficult to point to one impetus for introduction. Moreover, members of both major political parties have introduced the legislation in the states referenced above. One thing is clear, there is anxiety among policymakers about foreign influence in American elections. 

Current Legislative Status

We look at all of the bills introduced to limit foreign national and corporate activity in elections below but a few stand out as worthy of mention. Legal challenges in Maine and Minnesota, enacted bills in Georgia and Oregon, and continued legislative activity in New York, Hawaii, and Illinois make these states the most important to watch for the remaining 2024 sessions.

• New York - (SB 371/AB 2633) Introduced on January 4, 2023 (Senate), the bill passed the Senate on January 8, 2024 and awaits action in the Assembly. New York is one of the states permitting corporate contributions meaning that this legislation could prohibit foreign influenced corporations from giving directly (or indirectly) to candidates.

• Illinois - (SB 290) Introduced on February 2, 2023, the bill was referred to the Subcommittee on Elections on February 8, 2024 and has a third reading deadline of May 3, 2024. Illinois’ bill would affect foreign nationals and any entity in which a foreign national “holds, owns, controls, or otherwise has direct or indirect beneficial ownership of 50% or more of the total equity, outstanding voting shares, membership units, or other applicable ownership interests.”

• Oklahoma - (HB 3815/SB 1769) Introduced on January 18, 2024 (House) and January 17, 2024 (Senate). The bill was amended by the House Elections and Ethics Committee and voted “Do Pass” unanimously. Oklahoma’s bill prohibits a foreign principal from making independent expenditures (directly or indirectly) in support of or opposition to a candidate or ballot measure or petition. The prohibition includes the sponsoring of political advertising or electioneering communications.

• Georgia - (SB 368) Introduced on January 22, 2024, a substitute to the introduced bill was passed by substitute by the Senate on February 27, 2024. This bill passed the House on March 21 and was sent to the governor on April 2. Georgia’s bill requires foreign agents to register with the state and prohibits foreign nationals from making campaign contributions to political committees.

• Washington - (SB 5284) Introduced on January 11, 2023, a floor amendment in the House replaced the original bill text on February 12, 2024. The floor amendment removed the foreign influenced language and replaced it with a repeal of existing law that requires political committees to receive a certification that no foreign nationals were involved in campaign contributions. The Washington State Legislature adjourned sine die on March 7, 2024 without agreement between the House and Senate on bill language killing the bill for 2024. 

• Hawaii - (SB 3243) Introduced on January 24, 2024, unanimously approved by the Judiciary Committee on February 23, 2024. The bill passed second reading with amendments on March 19. Hawaii’s bill “prohibits foreign entities and foreign-influenced business entities from making contributions, expenditures, electioneering communications, or donations for election purposes.”

• Massachusetts - (SB 430) Introduced on February 16, 2023, accompanied a study order to the Joint Committee on Election laws on February 15, 2024. Study order was discharged to the committee on Senate Rules on February 20, 2024. Massachusetts’ bill prohibits foreign influenced corporations from making independent expenditures or electioneering communications or making contributions to ballot question committees.

• California - (AB 83) Introduced on December 16, 2022, died in Assembly on February 1, 2024. California’s bill would have prohibited foreign influenced contributions or expenditures connected with an election or ballot measure.

• Oregon - (HB 2693) Introduced January 9, 2023, as of June 25, 2023 the bill remains in the Rules Committee and is likely dead. Oregon’s bill would have prohibited foreign nationals and foreign controlled entities from making contributions or expenditures connected with an election or ballot measure. A portion of this legislation was included in HB 4024 which passed both chambers in March 2024 and prohibits foreign nationals, foreign corporations, or foreign entities from making candidate contributions or giving to a fund to be used for candidate campaign independent expenditures.

• Virginia - (HB 1648) Introduced January 11, 2023, as of February 7, 2023 the bill died in the Committee on Privileges and Elections. Virginia’s bill would have prohibited a foreign influenced corporation from making an independent expenditure or contribution to a candidate or other political committee.

• Connecticut - (SB 1188) Introduced on March 3, 2023, as of May 16, 2023 the bill has been tabled for the Senate Calendar. Connecticut’s bill would have prohibited a foreign national or corporation with foreign ownership (5% singular ownership, 20% multiple beneficial ownership) from making contributions or expenditures. Connecticut’s bill also included the separate segregated fund (PAC) of a foreign national or corporation.

• Ohio - (SB 215) Introduced on January 23, 2024, as of February 28, 2024 the bill was passed by the Senate and awaits action in the House. Ohio’s bill would prohibit foreign nationals from contributing to campaign committees or making independent expenditures in connection with an election in Ohio.

• U.S. Federal Government - (HR 1118) Introduced February 21, 2023, as of February 21, 2023 the bill remains in the Committees on House Administration, Ways and Means, and Judiciary. The federal bill would have prohibited foreign nationals from contributing to campaigns related to ballot initiatives and referenda, among other things.

• Minnesota - (HF 3) Foreign influence provisions stayed by the United States District Court for the District of Minnesota following a lawsuit by the Minnesota Chamber of Commerce.

• Maine - (Question 2) Stayed by the United States District Court for the District of Maine following lawsuits filed by the Maine Association of Broadcasters, Maine Press Association, Central Maine Power, and Versant.

Localities Test the Waters, Too

St. Petersburg, Florida (2017), Seattle, Washington (2020), and San Jose, California (2022), are currently the only known localities with foreign-influenced ordinances on the books. Organizations such as Free Speech for the People, League of Women Voters, and others have promised to continue the effort to pass local foreign-influenced ordinances. 

Just like at the state level, local foreign-influenced legislation has been controversial. In 2021, Florida passed a preemption law that effectively nullified the St. Petersburg ordinance and prohibits other Florida localities from implementing their own rules that may be stricter than the state’s rules.

What’s Next?

State and local attempts to control the amount of money in politics will continue beyond the 2024 sessions and it appears a target for them is corporations owned by a foreign principal or, more broadly, a corporation influenced by a foreign individual or individuals. Ultimately, we expect to see the First Amendment questions presented with these regulatory attempts to be adjudicated by the courts (a process that has already started in Minnesota and Maine) therefore, it could be several years before a ruling with any kind of nationwide authority is handed down to clarify the constitutionality of these bills.