For decades, U.S. law has banned foreign individuals and companies from making donations to influence American elections. But this summer, the Federal Election Commission (FEC) took a vote that could open the floodgates for foreign money to influence one realm of politics—state and local ballot initiatives, which the agency says are outside the purview of federal campaign finance law.
The FEC’s decision came after a complaint was filed against Sandfire, a Canadian subsidiary of an Australian mining company. In 2018, the company made a donation of $17,857 to a ballot measure committee that was opposing a Montana proposal that would have established new environmental standards for hard rock mining in the state and a donation of $270,000 to the Montana Mining Association, which made expenditures related to the measure. Sandfire and the ballot measure opposition campaign did not deny that the foreign company made donations, instead arguing to the FEC that the federal prohibition on foreign donations only applied to candidate elections and not to issue-based ballot measures.
Federal statute states that “a foreign national shall not, directly or indirectly, make a contribution or a donation of money or other thing of value, or expressly or impliedly promise to make a contribution or a donation, in connection with any Federal, State, or local election.” The term “foreign national” applies to non-U.S. individuals, governments, political parties, corporations, and “other combination[s] of persons organized under the laws of or having its principal place of business in a foreign country.”
According to Axios, which first reported the decision, Democratic FEC chair Shana Broussard, who was nominated by President Trump last year upon a recommendation from Sen. Chuck Schumer (D-N.Y.), voted with the panel’s three Republican members to dismiss the complaint.
That the federal prohibition on foreign donations might not apply to ballot measure campaigns has been known by lawmakers, and in 2019 the House of Representatives adopted an amendment from Rep. Katie Porter (D-Calif.) to H.R. 1 to close this loophole. That bill has been stuck in the Senate ever since due to unanimous Republican opposition and it stands little chance of passing unless Senate Democrats adjust the chamber’s procedural rules to circumvent a filibuster or more Democrats are elected to Congress in the future. Porter has since proposed her amendment as a stand-alone bill with more than a dozen co-sponsors.
However, in the wake of the FEC’s decision, some Republicans are getting behind the idea of amending the law to state clearly that the foreign donations ban applies to ballot measures. Legislation to close the loophole was introduced in the House on Nov. 3 by Rep. Brain Fitzpatrick (D-Penn.) with six Republican co-sponsors and four Democratic co-sponsors. Kirsten Gillibrand (D-N.Y.) has introduced an identical bill in the Senate, though without any co-sponsors.
The House bill has been referred to the Committee on Administration. No members of the committee have signed on as co-sponsors.
“It is great to see bipartisan legislative support for stopping foreign interests from pouring money into state and local ballot measures,” said Brendan Fischer, director of federal reform at Campaign Legal Center.
Chris Melody Fields Figueredo, the executive director of the Ballot Initiative Strategy Center, told Sludge the group is monitoring what the impact of the decision will be. “While we are alarmed, we are awaiting FEC guidance on how this new rule will be enforced, allowing us to better understand how we can address this challenge,” said Figueredo. “If members of Congress are concerned about free and fair elections, then they should also take steps to pass the John Lewis Voting Rights and Freedom to Vote Acts which are critical to ensure that the American people have a voice in our democracy.”
The Freedom to Vote Act, which the Senate voted against debating on Oct. 20, also contains language extending the foreign donation ban to ballot measure campaigns in addition to other measures designed to stop foreign donors from influencing U.S. elections. The bill would prohibit foreign nationals from making disbursements for broadcast ads that identify candidates within 60 days of an election or discuss a national legislative issue of public importance in an election year, and for online ads that promote, support, attack or oppose the election of a clearly identified candidate for federal, state, or local office. The bill would also create a penalty of up to five years in prison for using a corporation or other entity to conceal the activity of a foreign national.