Maryland Lawmakers Consider Bill to Prohibit Election Spending by Foreign-Influenced Corporations

Maryland’s lawmakers are current considering an important bill that would prohibit spending by foreign-influenced corporations in Maryland elections. Although the legislation is still in early stages, Maryland has taken an important step toward protecting the state’s democratic self-government.

The legislation, introduced in the House of Delegates by Delegate Julie Palakovich-Carr (H.B. 34) and in the Senate by Senator Clarence Lam (S.B. 87), would prohibit corporations from spending money in Maryland elections if more than 1 percent ownership is held by a single foreign investor or more than 5 percent ownership is held by an aggregate of foreign investors. It is similar to the legislation that recently passed in Seattle, which Free Speech For People helped to draft, and proposes the same thresholds and definitions for foreign-influenced corporations.

Earlier this week, Free Speech For People participated in a panel of experts to testify in support of Maryland’s proposed legislation, and to urge the committees currently considering the bills to report them favorably out of committee. Panelists included Federal Election Commission Chair Ellen Weintraub, Center for American Progress Senior Fellow Michael Sozan, Common Cause Maryland Policy Manager Tierra Bradford, and Free Speech For People Counsel Courtney Hostetler. In our written and oral testimony, we explained why the legislation is constitutional and why the thresholds are both reasonable and necessary to protect Maryland’s elections.

Federal law already prohibits foreign actors—including individuals, governments, and businesses—from spending any money directly or indirectly to influence federal, state, or local elections. But a 2010 Supreme Court decision, Citizens United v. Federal Election Commission, created a loophole in the law when it invalidated a separate law that banned corporate political spending. As a result, foreign interests can now leverage their ownership interest in U.S. corporations to influence the corporation’s political activities. Through this spending, foreign-influenced corporations currently have the ability to wield significant influence over U.S. elections, including elections that directly affect the lives of people living in Maryland.

But though Citizens United created this loophole, nothing in that decision prohibits lawmakers from closing it. Citizens United held that a corporation is an “association of citizens,” and that First Amendment rights held by citizens individually therefore flow to the association. But under the theory of Citizens United, a foreign-influenced corporation is an association of citizens and foreign actors. And with regard to political spending, the First Amendment rights held by citizens do not flow to foreign actors.

This became clear in Bluman v. Federal Election Commission, a decision authored by now-Justice Kavanaugh while he was a circuit judge. Bluman, which the Supreme Court affirmed, held that political contributions and independent expenditures are “part of the overall process of democratic self-government” that the United States has a compelling interest in protecting, and that it can protect this interest by placing a complete ban on foreign actors spending any money to influence U.S. elections.

Maryland state lawmakers have a compelling interest to protect the democratic self-government of its municipalities and the state, and they can do so by closing the loophole that allows corporations held in part by foreign actors to influence its elections. If Maryland moves forward, it will join the cities of St. Petersburg and Seattle, both of which have passed similar legislation, and the state of Massachusetts, which is currently considering such legislation.

Read more about the Maryland legislation.

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