Appeals Court Considers New Maine Law Blocking Foreign Spending in Elections and Referendums

A temporary injunction halting enforcement of a Maine law blocking foreign spending in local and state elections and referendums was up for consideration by the First Circuit Court of Appeals in Boston Wednesday.

In November of 2023, Maine voters overwhelmingly approved a measure prohibiting foreign governments — as well as entities with at least 5 percent ownership by a foreign government — from campaigning either for or against both candidates and ballot questions, with 86.33 percent voting in support of it.

The measure also requires the media to do their “due diligence” to determine whether or not the entity behind an advertisement is owned by a foreign government when making decisions about what to air or print.

Almost immediately after the law was approved by voters, four lawsuits were filed in opposition to it.

Shortly thereafter, a federal judge temporarily blocked enforcement of the law under a consolidated case brought by a range of individuals and organizations, including Central Maine Power (CMP), Versant and ENMAX Corporation, the Maine Press Association and the Maine Association of Broadcasters, as well as a group of Maine voters and electors.

[RELATED: Federal Judge Halts Enforcement of Ban on Foreign Election Spending in Maine]

Because CMP and Versant are both partially owned by foreign governments. CMP, is the subsidiary of Avangrid Networks, which is owned by the Spain-based Iberdrola, whose largest investor is the Qatari sovereign wealth fund. Versant is a subsidiary of ENMAX, whose sole shareholder is the city of Calgary, Alberta in Canada.

Both foreign-controlled companies could be prohibited under this law from spending on elections in Maine, despite their inherent ties to the state. (CMP has previously suggested that they would not be impacted by the law.)

However, the rule could, for example, have prevented the electrical utilities from spending money to defend themselves from a recent ballot initiative that would have led to the forced sale of CMP- and Versant-owned property to a state-run utility.

In March of this year, United States District Court Judge Nancy Torresen issued a temporary injunction halting enforcement of the law approved last November.

One of the claims that was critical to Torresen’s decision to issue the preliminary injunction was the suggestion that the law was preempted by the Federal Election Campaign Act (FECA), as it could potentially be construed as applying not only state and local elections, but to federal ones as well.

The other essential argument that factored into Torresen’s decision was the First Amendment challenges levied against the law by CMP and Versant.

“The loss of First Amendment rights, even briefly, constitutes irreparable injury,” Torresen said. “On the balance of hardships, the Plaintiffs’ ‘interest in avoiding interference with their rights to free speech outweighs the [State’s] interest in enforcing an unconstitutional [law].’”

Although a number of other claims were made by the plaintiffs concerning the law, Torresen said that these two arguments alone were enough to warrant a preliminary injunction temporarily barring the state from enforcing the measure.

Consequently, she explained that she did not find it necessary to address the other arguments presented in favor of enjoining the provision in her ruling.

While lawyers for Maine have argued that the State has a strong interest in preventing foreign governments from interfering in local referendums and elections, those challenging the laws have suggested that the government is seeking to “silence” U.S. corporations and is limiting the availability of information for voters.

“The fact again that this initiative was passed by 86% of the vote — a historic margin, no initiative has ever passed by that much in Maine — shows that there is a huge concerns by voters,” Jonathan Bolton — the assistant attorney general representing Maine in this case — said Wednesday.

“Because that is the most core, active democratic self-government that you can imagine, which is deciding what laws are going to be governed by all of us,” Bolton said. “In that situation, if anything, the government interest is even stronger in making sure that it is people within our domestic political community, and not foreign governments, that are having the discussion about how we are going to be governed at a very fundamental level.”

Tim Woodcock — the attorney representing the Maine voters who challenged the law — emphasized that civil discourse belongs to the people, not the government.

“The electors’ position is the government cannot tell them where they can get that information,” Woodcock said. “And if they want to get information from a particular source, they should be able to get it from that source without risk of criminal penalty.”

During Wednesday’s session, several Justices on the First Circuit Court of Appeals, suggested that the 5 percent threshold in the law may have “chilling effect” on corporations interested in participating in the electoral process since ownership ratios can change frequently.

“The thing to do is to overcorrect because there are criminal penalties associated with this and just stay away from the line,” said Justice Seth Aframe. “That’s bad because it removes free speech from the system.”

In response to these concerns, assistant attorney general Bolton said that fluctuations could exist at any percent-threshold and that 5 percent can at times equal billions of dollars.

Justice Aframe also raised concerns about the statute’s definition of foreign ownership, suggesting that the lack of clarity creates a “classic chill problem.”

Bolton countered these arguments by pointing out the context in which the referendum was brought forward, wherein there were record levels of spending aimed at halting construction of a highly controversial power transmission corridor in western Maine.

Media outlets have also argued that the decision would place an extraordinary, perhaps insurmountable burden on them to prove that certain sources of information or buyers of advertising were not in some way backed by or linked to foreign sources.

The circuit executive for the appeals court told the Portland Press Herald that it can typically take about three months for a written decision to be issued following oral arguments.

Once the appeal of the injunction has been settled, the case is reportedly expected to return to the U.S. District Court in Portland for further proceedings.