Court weighs Maine's fight over foreign spending in state politics

(The Center Square) — A federal appeals court panel is weighing a legal challenge to a voter-approved Maine law that bans foreign corporations from spending money on state politics.

The case before the First Circuit Court of Appeals in Boston, which heard oral arguments on Wednesday, stems from a lawsuit filed by Central Maine Power and Versant Power arguing that the 2023 law barring foreign governments and companies they influence from spending on state elections and campaigns violates the First Amendment and federal laws.

Voters in the November 2023 elections overwhelmingly approved Question 2, which called for banning entities with at least 5% foreign ownership from spending money to influence ballot measures or candidate elections.

The law was blocked earlier this year by a U.S. District Court judge who sided with plaintiffs in the case that argued it would violate the free speech rights of U.S. corporations which have a small amount of foreign ownership.

On Wednesday, attorneys for both sides of the legal fight were in federal court urging the appeals panel to uphold or reject the lower court's ruling.

"The central issue in the case is this: can the U.S. government silence U.S. citizens, U.S. companies like CMP, from speaking simply because a foreign public pension fund owns 5% of the company?" Joshua Dunlap, attorney for the plaintiffs, said in oral arguments. "The answer to that question is no."

But Jonathan Bolton, an assistant Maine attorney general, defended the new law, saying it is reasonable and supported by an overwhelming majority of the state's 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 concern by voters," Bolton said in arguments.

Maine is among 10 states that have taken steps to ban foreign spending on ballot questions and elections. Supporters of the restrictions on campaign spending argued that Question 2 closes a "loophole" in Maine law that allows foreign governments to spend money on elections. Under federal and state election laws, foreign entities can't contribute to political candidates.

The effort was initially prompted by Hydro-Quebec's efforts to promote the construction of a 145-mile hydropower transmission line, which the Canadian company wants to develop with Central Maine Power, Maine's largest utility.

Companies aligned with the project spent tens of millions of dollars on advertising ahead of the 2021 elections in another ballot effort to convince Maine voters not to reject the project, making it the most expensive ballot question in state history.

Foreign companies also spent money on TV and digital ads to sway the state's voters on another referendum that would allow the state to take over two privately owned U.S. power companies with ties to Spain and Canada. Voters ultimately rejected that referendum.

Two media groups, the Maine Association of Broadcasters and the Maine Press Association, also filed a lawsuit seeking to overturn the law. They argue that a provision of Question 2 unfairly targets news outlets for publishing or broadcasting political speech. The outcome of that legal challenge is also pending.