Central Maine Power Company, et al. v. Maine Commission on Governmental Ethics and Election Practices , et al.
(First Circuit Court of Appeals)
At issue is whether a Maine statute, entitled “An Act to Prohibit Campaign Spending by Foreign Governments,” is facially overbroad under the First Amendment when it categorically prohibits any corporation with 5% foreign government ownership from engaging in any campaign contributions and expenditures for political candidates and ballot initiatives.
The First Amendment, however, protects a corporation’s right to engage in campaign spending as a form of core political speech. “[T]he Government may not suppress political speech on the basis of the speaker’s corporate identity.” Citizens United v. Fed. Election Comm’n, 558 U.S. 310, 365 (2010) (striking down federal statutory ban on corporate expenditures for political candidates). The Act contravenes Citizens United precisely because it does suppress a corporation’s political speech on the basis of the speaker’s corporate identity. Specifically, the Act bans a corporation’s campaign spending solely because the corporation has some foreign minority shareholders, without requiring the Government to prove any actual foreign influence over the corporation’s campaign spending decisions.
The parties dispute the applicable standard of review. Laws that burden a corporation’s political speech are generally subject to strict scrutiny, requiring the government to prove that any restriction furthers a compelling interest and is narrowly tailored to achieve that interest. However, the Supreme Court has drawn a distinction between the First Amendment protections afforded campaign expenditures (in which the corporation pays for its own political speech, subject to strict scrutiny) and those afforded campaign contributions (in which the political recipient uses corporate donations to pay for its speech, subject to a lesser standard of review, under which the state must demonstrate a sufficiently important interest and must employ means closely drawn to avoid unnecessary abridgement of associational freedoms).
However, the Government in this case has failed under either standard of review. Even assuming arguendo that the Government has a compelling interest in preventing foreign influence over Maine elections, the means selected fail to achieve that objective. The Government has not shown, with any of the hard evidence that the First Amendment requires, that there is an actual problem of foreign minority shareholders influencing or controlling corporations’ campaign spending decisions in Maine elections. A corporation’s foreign minority shareholders could simply be passive investors who have no interest or involvement whatsoever in the corporation’s campaign spending decisions. And mere conjecture is inadequate to carry the Government’s First Amendment burden.
As a result, the 5% foreign-ownership provision of the Act is facially, and fatally, overbroad under the First Amendment, because a substantial number of the law’s applications are unconstitutional, judged in relation to the statute’s potentially legitimate sweep. Indeed, it is unclear whether the Act’s 5% provision has any “legitimate sweep” so far, as an empirical matter, because the Government has failed to identify any examples of foreign minority shareholders actually influencing a corporation’s campaign spending in a Maine election.
In this connection, the Supreme Court in Citizens United indicated that, to avoid such facial overbreadth under the First Amendment, a campaign finance law would have to require “predominate” foreign ownership of a domestic corporation (i.e., well above 50% foreign ownership) to justify a categorical ban on the corporation’s campaign spending. The Act’s paltry 5% foreign-ownership threshold falls far below the “predominate” foreign ownership that Citizens United would require to support a constitutionally viable presumption that such a corporation is subject to foreign influence or control in its campaign spending decisions. Therefore, the Act’s categorical ban on campaign spending for all corporations with 5% foreign government ownership violates the First Amendment.
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