Judge halts enforcement of new law banning foreign spending on elections

A federal judge issued a preliminary injunction Thursday blocking the March 1 enactment of a law Maine voters passed in November that bans foreign spending on state and local referendum campaigns.

Judge Nancy Torresen issued the injunction in U.S. District Court in Portland, responding to separate lawsuits that were filed in December by Maine’s two largest power companies and groups representing Maine media outlets.

Torresen’s action prevents the state from enforcing the law until she issues a final judgment in the case. It also provides a preview of her future ruling.

“I find that a substantial number of the act’s applications are likely unconstitutional judged against the act’s plainly legitimate sweep,” Torresen wrote. “It is therefore likely facially invalid.”

Voters approved citizens initiative Question 2 on the Nov. 7 ballot 86% to 14%. The new law aims to close what advocates say is a loophole in state campaign finance law that allows foreign governments to spend money to influence state and local referendum campaigns.

It prohibits any entity or business with at least 5% ownership by a foreign government or government-influenced entity from spending money on state or local elections.

The measure was spurred by foreign government spending in a referendum campaign two years ago over the future of a planned electricity corridor in western Maine.

It was largely aimed at Central Maine Power and Versant Power. Both filed lawsuits to block its enforcement, as did the Maine Association of Broadcasters and the Maine Press Association over censorship concerns.

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Avangrid, the parent company of Central Maine Power Co., is a subsidiary of the Spanish energy giant Iberdrola. The Qatari government has a 3.7% stake in Avangrid and an 8.7% share in Iberdrola. Avangrid was part of a group that spent more than $42 million to defeat the 2021 referendum that sought to block the controversial transmission corridor through western Maine.

Versant is owned by Enmax, which is owned by and headquartered in the city of Calgary in Alberta, Canada.

All three lawsuits name Attorney General Aaron Frey and the Maine Commission on Governmental Ethics and Election Practices as defendants. The commission is responsible for assessing penalties for violations of the new law.

JUDGE QUESTIONS OWNERSHIP THRESHOLD

In her injunction, Torresen called the 5% foreign ownership threshold arbitrary and said it would prohibit a substantial amount of protected speech.

“I cannot reconcile the Supreme Court’s holding in Citizens United with a law that would bar a company like CMP – incorporated in Maine, governed by a board of directors comprised of United States citizens and run by United States citizen executive officers who reside in Maine – from campaign spending,” Torresen wrote. “The 5% threshold would deprive the United States citizen shareholders – potentially as much as 95% of an entity’s shareholders – of their First Amendment right to engage in campaign spending. Simply put, it would be overinclusive.”

The power companies’ lawsuits say the statute infringes on their First Amendment rights to free speech and hinder their public engagement. Versant executives welcomed the judge’s action.

“We remain concerned that Question 2 may prohibit Versant Power from participating in referendum campaigns that could significantly affect our state’s energy future, despite the fact that we’re a long-standing locally operated essential services provider that employs more than 500 Mainers,” said Judy Long, a company spokesperson.

CMP didn’t respond to a request for comment.

The media associations argued in their lawsuit that the law violates the First and 14th amendments and “substantially burdens core political speech and the freedom of the press.” They also questioned the requirement placed on media companies to have “due diligence policies, procedures and controls” in place to screen for foreign ownership among potential campaign advertisers.

“We’re grateful that the judge upheld the rights of free speech – agreeing with (Gov. Janet Mills) when she correctly vetoed this legislation last year for the same reasons,” said Tim Moore, president and CEO of the Maine Association of Broadcasters. “Whatever the intent, laws that can’t pass constitutional muster are dangerous to a free society – because they always have unintended consequences – as this law would have.”

Courtney Spencer, Maine Press Association president and vice president of advertising for the Maine Trust for Local News, also appreciated the judge’s action.

“Our point of view is the implementation of that law would violate our right to choose what we publish,” Spencer said. “It’s also unwieldy for publishers to adhere to. The responsibility would be on us to vet advertisers. How are we ever going to be able to figure out the ownership of every advertiser involved in a campaign?”

Spencer said her organization also worries that the law could wind up restricting the content of stories, editorials and columns.

“It’s unconstitutional and it’s too broad,” she said.

PROPONENTS PUSH BACK

Proponents of the law weren’t celebrating the injunction, including Kaitlin LaCasse, campaign manager for Protect Maine Elections.

“The only opponents to this initiative are the very foreign entities that are seeking to preserve their power and multinational media corporations that are the biggest beneficiaries in the political spending arms race each cycle,” LaCasse said in a statement. “These lawsuits are an insult to the people of Maine – 86% of whom voted in support of this measure – and it is outrageous that anyone would stand with these foreign entities instead of the Maine voters seeking to protect our elections.”

Sen. Rick Bennett, R-Oxford, chair of the Protect Maine Elections effort, said opponents of the law are enabling foreign governments, and entities they own, control and influence, to threaten the integrity of Maine elections.

“The board members of CMP, Versant, the Maine Associations of Broadcasters and the Maine Press Association ought to be ashamed of themselves,” Bennett said in a statement. “Maine voters delivered the clearest of messages on election day, telling these monied interests that we are taking our government back. It’s time for these organizations and their governing boards to heed the will of their customers and stakeholders, the people of Maine.”

John Brautigam, former assistant attorney general and campaign finance lawyer involved in the Protect Maine Elections effort, said the next step in the lawsuit will allow for more detailed judicial consideration.

“We remain confident in the constitutionality of the law as enacted by 86% of the Maine voters,” he said.