November 22, 2021

Brian Martel, Communications Deputy Director, Wolf-PAC
Samuel Fieldman, National Counsel, Wolf-PAC

“A cornerstone principle of federal campaign-finance law is that foreign nationals are barred from directly or indirectly making a contribution… or an expenditure, in connection with a federal, state, or local election.” — Commissioner Ellen L. Weintraub, Statement of Reasons of Commissioner Ellen L. Weintraub, Federal Election Commission, MUR 7523, October 29, 2021

In a pair of recent decisions, the Supreme Court and the Federal Election Commission seem intent on selling our republic to foreign powers. In the matter of Sandfire Resources, the FEC declared that foreign corporations can influence state and local ballot initiatives. Citizen initiatives have been a bright spot of direct democracy in what’s becoming a dubious representative system. However, the institutions set up explicitly to defend our republican form of government have not been helpful.

FEC welcomes foreign money in US ballot measures

In Sandfire, a Montana citizen’s initiative would have controlled pollution resulting from hard-rock mining (I-186). The initiative failed, but only after a foreign corporation poured hundreds of thousands of dollars into the fight. This was Sandfire Resources America, the Canadian subsidiary of Australian-based Sandfire Resources. They contributed almost $300,000 to fight the initiative. Much of this money went through the Montana Mining Association (MMA), essentially laundering these foreign contributions. The FEC ruled to dismiss the complaint against Sandfire, and allow such foreign interference in our political processes.

Their ruling was based on the 1971 Federal Election Campaign Act (FECA), but apparently considers the letter rather than the spirit of that law. FEC commissioners ruled that campaigns for ballot initiatives are not elections. Therefore, FECA restrictions on foreign money influencing elections don’t apply. The ruling states that no connection existed between any candidate and the MMA or the campaign against the initiative.

Supreme Court creates loophole for foreign donations in APF v. Bonta

Before July 1 of this year, California had a law that required nonprofits to disclose their donors to the state. However, in Americans for Prosperity Foundation (APF) v. Bonta, the Supreme Court struck down that law. Their ruling focused on the First Amendment rights of the nonprofit’s donors. The ruling stated that disclosure would violate their right to free association, opening the door to harassment of those donors. Harassment did occur, some of which was serious. However, this was a law enforcement issue. Law enforcement responded appropriately, and the harassment did not result from disclosure to the state. Claimants made no assertion that the government wasn’t protecting their first amendment rights. Most significantly, this ruling sets a dangerous precedent, endangering disclosure laws everywhere. This threatens the public’s right to know in whose interest they’re being governed. It also opens the door to more foreign influence.

Possible congressional remedy only partially helps

Unlike the Supreme Court decision, the FEC ruling does not concern a constitutional question. It can be fixed by Congress. Two bills have already been introduced. In the Senate on November 3, Kristen Gillibrand introduced the Stop Foreign Interference in Ballot Measures Act, S.3136. This bill now has a companion bill in the House, introduced as H.R.1516 by Katie Porter. These bills amend the original 1971 Act, now explicitly including language prohibiting “…contributions and donations by foreign nationals in connection with State or local initiatives or referenda.” The bills have attracted significant bipartisan support, and Marco Rubio plans on introducing a similar bill in the Senate.

Federal interference in Montana… again

The founders designed a system of limited government with checks and balances between the three branches, but also between state and federal governments. It’s deeply disturbing that the FEC would strike down an effort in Montana to control foreign influence on our political process. Montana is no stranger to the Federal Government telling them how to run their elections. In 2012, in American Tradition Partnership (ATP) v. Bullock, the Supreme Court threw out a century of effective campaign finance law in Montana in a single-paragraph decision without even the courtesy of oral argument.

The only long-term fix

Although Congress can restore the prohibition on foreign money in American ballot measures, although they can fix the Sandfire ruling with ordinary legislation, Supreme Court decisions like AFP v. Bonta and ATP v. Bullock could make any such fix impossible to enforce. The Court has proved an unreliable ally of representative democracy, destroying the ability of states and of Congress to protect our Republic from foreign powers and special interests. Only a Constitutional Amendment can overturn such rulings from the Supreme Court.

Article V of the Constitution provides a way forward, as the people through state legislatures can call a convention to propose just such an amendment. This route is perfectly safe, as any proposal must be ratified by three-quarters of the states. As a very likely scenario, Congress would be forced to propose an amendment should we approach two thirds of the states making the call for an Article V convention.

References

Federal Election Commission. (2021a, November). Factual and Legal Analysis in the Matter of Sandfire Resources (MUR: 7523). https://s3.documentcloud.org/documents/21096628/fec-ballot-measure-ruling.pdf

Federal Election Commission. (2021b, October). Statement of Reasons of Commissioner Ellen L. Weintraub (No. MUR752300112). https://www.fec.gov/files/legal/murs/7523/7523_27.pdf

Lucas, F. (2021, November 5). Congress making bipartisan push to stop foreign money in US ballot initiatives. Fox News. Retrieved November 22, 2021, from https://www.foxnews.com/politics/congress-push-stop-foreign-money-us-ballot-initiatives

Ninety-second Congress of the United States of America. (1972, February). Federal Election Campaign Act of 1971 (Public Law 92–225). https://www.govinfo.gov/content/pkg/STATUTE-86/pdf/STATUTE-86-Pg3.pdf

One Hundred Seventeenth Congress of the United States of America. (2021a, March 2). Stop foreign interference in ballot measures act. Congress.Gov. Retrieved November 22, 2021, from https://www.congress.gov/bill/117th-congress/house-bill/1516/text

One Hundred Seventeenth Congress of the United States of America. (2021b, November 2). Stop foreign interference in ballot measures act. Congress.Gov. Retrieved November 22, 2021, from https://www.congress.gov/bill/117th-congress/house-bill/1516/text

Oyez. (n.d.). American Tradition Partnership, Inc. v. Bullock. Retrieved November 22, 2021, from https://www.oyez.org/cases/2011/11-1179

Shen, J. (2021). Disclosure law struck down by Supreme Court. Wolf-PAC Daily Wolf. Retrieved November 22, 2021, from https://wolf-pac.com/court-strikes-down-disclosure-law/

Wolf-PAC. (2019, April 15). The solution. Retrieved November 22, 2021, from https://wolf-pac.com/the_solution/