State legislators have introduced two bills in both houses of the Massachusetts state legislature to abolish super PACs and to prohibit spending by foreign-influenced corporations in Massachusetts elections.

State Senator Jo Comerford is the lead sponsor of Senate bill SD 634, State Senator Mark Montigny is the lead sponsor of Senate Bill SD 759, and State Representative Erika Uyterhoeven is the lead sponsor of House bill HD 1031, all of which will require corporations that spend money in Massachusetts elections to certify they are not foreign-influenced, or owned in whole or a significant part by foreign investors.  Senator Comerford and Representative Uyterhoeven have also introduced companion bills, SD 635 and HD 1146, and Representative Mike Day has introduced HD 1515, all of which will establish limits on contributions to political action committees, thereby abolishing super PACs in state elections.

The Bills

Political Spending by Foreign-Influenced Corporations 

Bill S.454:  “An Act to limit political spending by foreign-influenced corporations”
Bill S.482:  “An Act to limit political spending by foreign-influenced corporations”
Bill H.839: “An Act to limit political spending by foreign-influenced corporations”

The nation has witnessed money from corporations with significant foreign ownership flowing into our elections as a result of the U.S. Supreme Court’s 2010 ruling in Citizens United v. FEC, which swept away longstanding precedent barring corporate money in our political process.  For example, in May 2016, Uber teamed up with fellow ride-hailing service Lyft to drench Austin, Texas, in $9 million worth of election spending in the hope of overturning a city law requiring drivers to submit to fingerprint-based criminal background checks. Then, just weeks later, Uber disclosed an unprecedented $3.5 billion investment from the Saudi Arabian government, meaning that the Saudi Kingdom owns more than five percent of the company, along with a seat on its board of directors.  In 2019, Amazon spent over 1.5 million dollars to try to influence the outcome of the Seattle City Council elections that year.  That amount was more than the combined total amount of money raised by candidates not supported by Amazon. More than 5% of Amazon is foreign-owned.  In January 2020, the Seattle City Council enacted a ban on political spending by foreign-influenced corporations based on the same model as the Massachusetts bill.

In Congress, Senator Warren and Representative Pramila Jayapal have proposed the Anti-Corruption and Public Integrity Act, which includes a provision to ban foreign-owned and partially foreign-owned corporations from spending on United States elections, including on a State or local ballot initiative or referendum.

Limits on Contributions to Super PACs 

Bill S.455: “An Act relative to political contributions”
Bill H.840: “An Act relative to political contributions”
Bill H.772: “An Act relative to political contributions”

Under Massachusetts law, there is a limit of $1,000 per year on how much a person can contribute to a political campaign, but there is a huge loophole: there are no limits at all on contributions to “independent expenditure PACS,” also known as “super PACs.” Massachusetts used to have contribution limits that would apply to super PACs, but the legislature repealed them. This bill would limit any person’s contributions to a super PAC to $5,000 per year. We need limits on contributions to super PACs to help prevent corruption and the appearance of corruption.

Contrary to a common misconception, the Supreme Court’s Citizens United decision does not prevent states from limiting contributions to super PACs. In March 2010, the U.S. Court of Appeals for the D.C. Circuit in SpeechNow.org v. FEC opened the door to super PACs by holding that the federal law limiting contributions to political committees to $5,000 per person each year could not be applied to a political committee that promised to make only “independent expenditures.”  While some federal appellate circuits have followed the SpeechNow ruling, the U.S. Court of Appeals for the First Circuit, which has jurisdiction over federal cases in Maine, Massachusetts, New Hampshire, Puerto Rico, and Rhode Island, has yet to rule on this question, nor has the U.S. Supreme Court or the Massachusetts Supreme Judicial Court.

Letters of Support

Read testimony in support from scholars in support of our proposed legislation in 2016-17 to limit foreign-influenced corporate spending from Massachusetts elections. We anticipate similar testimony in this session.

*Appendix to the Statement of Albert W. Alschuler to the Joint Committee on Election Laws on H.2082 

For more on the legal theory and background of this legislation, read the letters of support from scholars in support of the St. Petersburg Ordinance to limit foreign-influenced corporate spending and abolish super PACs in local elections:

Reports

Quantifying Foreign Institutional Block Ownership at Publicly Traded 
U.S. Corporations by John C. Coates, Ron Fein, Kevin Crenny and L. Vivian Dong

FSFP Coates-Fein-Crenny-Dong PNG

Since the Supreme Court’s 2010 Citizens United decision invalidated restrictions on corporate political spending, considerable public and policymaker interest has developed in the potential for U.S. elections to be

influenced by foreign interests through U.S. corporations. On the one hand, existing federal law (the Federal Election Campaign Act) already prohibits political spending in federal, state, or local elections by corporations that are incorporated outside the U.S., or which have their principal place of business abroad. On the other hand, current law still allows substantial avenues for foreign influence over corporate political spending by U.S.-incorporated and -based corporations.

Lawmakers in Congress and members of the Federal Election Commission have expressed interest in addressing this phenomenon. As of yet, federal reform proposals have failed to advance. A more likely near-term prospect for new policy measures is at the state and local level. Local governments (notably in St. Petersburg, Florida) are now contemplating measures to address this concern.

This paper focuses on ownership of significant blocks of stock as a potential mechanism for foreign influence over corporate political spending. We found that roughly one in eleven (9%) companies in the S&P 500 has one or more foreign institutions each owning five percent or more blocks of stock, nine have foreign institutions with ten percent or more blocks, five have a foreign institution with more than fifteen percent, and three have foreign institutions with more than 20% blocks. Three firms have multiple foreign institutional blockholders. This is the first recent empirical analysis of the level of foreign institutional blockholder ownership of publicly traded corporations.

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The SpeechNow Case and the Real World of Campaign Finance by Stephen R. Weissman Ph.D.

FSFP Weissman Report final 10-24-16

In the U.S. Court of Appeals for the D.C. Circuit’s SpeechNow decision, which created super PACs, the court theorized that contributions to so-called “independent expenditure committees” could not possibly result in corruption. In the real political world, however, as this study shows, top donors to super PACs and other independent spenders are not only contributing to these groups. They are simultaneously giving directly to the very candidates who benefit from their contributions to independent spending. The typical two-track donor supports multiple candidates in this fashion.

Thus, while independent spendinggroups are legally restrained from coordinating with their beneficiaries, donors to such groups are legally permitted to financially coordinate with these same candidates within certain contribution limits. When donors amplify their legally limited direct contributions to candidates with unlimited indirect support via independent spending groups, an “anti-corruption interest in limiting contributions to an independent expenditure group” certainly arises. These unlimited contributions intensify the dangers of quid pro quo corruption and its appearance that contribution limits were established to prevent.

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The SpeechNow Case and the Real World of Campaign Finance: Undermining Federal Limits on Contributions to Political Parties Pt. II by Stephen R. Weissman Ph.D.

This report explores the top 100 individual and 50 organizational donors to independent groups in the 2012 and 2014 elections. It focuses on those who gave to one or more of the six official national party committees and also contributed to unofficial party-linked Super PACs active in the same election(s).

There are federal limits on how much a donor can give to an official party committee per year, but following the SpeechNow ruling, there are no set limits on contributions to party-linked super PACs. For example, in 2014, the maximum a donor could give to a party committee per year was $32,400; assuming a donor who gave to all three committees of one party, that’s $97,200 to party committees. Under federal law, $97,201 would be illegal—too high a risk of quid pro quo corruption—but that same donor can give millions to party-linked super PACs. In essence, donors can multiply their legal direct party contributions by giving to party-linked super PACs at levels far beyond what Congress has determined is necessary (and the Supreme Court has so far upheld) to protect against corruption. This pattern of giving completely undermines the limits on contributions to parties.

he large donors surveyed in this study made very substantial contributions to their preferred party committees. The size of these contributions, while within legal limits, assured that these donors would be noticed by party fundraisers, many of whom were themselves candidates and elected officials. When these donors simultaneously embellished their financing by massively subsidizing independent Super PACs linked to the same parties in the same elections, they intensified the danger of corruption and its appearance.

By ignoring such political realities, the SpeechNow decision has helped undermine federal contribution limits, the primary means of federal regulation of campaign financing.

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In The News

 

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