Maine considers closing loophole that allows foreign government spending on referendums

Maine voters are poised to decide whether to ban foreign influence in elections, many of them irked over the $22 million a Canadian utility spent to fight state referendums on a hydropower transmission project.

Hydro Quebec, owned by the Canadian province, exploited an election law loophole to fight attempts to stop the project on which the utility stood to gain $10 billion.

If voters grant their approval on Nov. 7, Maine would be the 10th state to close the loophole in federal election law that bans foreign entities from spending on candidate elections, yet allows donations for local and state ballot measures, said Aaron McKean, legal counsel for the nonprofit, nonpartisan Campaign Legal Center in Washington, D.C., which supports the Maine proposal.

Maine is the latest state to address foreign influence in elections.

A Minnesota election law approved this year includes a prohibition on donations from “foreign-influenced” entities in elections, while Florida and Idaho over the last three years have approved laws to prevent foreign influence on referendums, McKean said. Municipalities including Seattle and Portland, Maine, have adopted provisions, as well.

Daniel Weiner, a campaign finance expert at the Brennan Center for Justice, said the reality of foreign influence is that it’s generally more about dollars and cents than grand geopolitical strategy.

“It’s often not some nefarious spy master in the Kremlin,” Weiner said. “It’s a wealthy foreign corporation that has economic interest in the U.S. and wants to influence policy.”

Maine represents a prime example after Hydro Quebec spent eye-watering amounts of money on the most expensive referendum in state history focused on the utility's cross-border transmission project with Central Maine Power. A Hydro Quebec spokesperson said the spending was necessary to counter attacks from “out-of-state oil and gas companies — or groups funded by them.” CMP, which contributed even more money, is owned by a Spanish utility that is not government owned.

Maine voters rebuked the $1 billion project in a referendum in 2021, but it was nonetheless allowed to move forward after a jury concluded that the referendum violated the developer's constitutional rights.

Similar instances of foreign influence in elections have come up in other states.

In Montana, an Australian mining company’s Canadian subsidiary gave $18,000 to a political action committee and more than $270,000 to a mining association that funds the PAC in a 2018 referendum aimed at creating stricter environmental standards on hard rock mining. The referendum was defeated.

And in California, companies based in Luxembourg and Cyprus provided $325,000 to help defeat a 2012 Los Angeles initiative aimed at requiring actors in adult movies to use condoms, resulting in fines by the state’s campaign finance watchdog.

The Maine referendum on the Nov. 7 ballot would ban foreign governments, or companies with 5% or more foreign government ownership, from donating to future referendum races.

Republican state Sen. Rick Bennett, who led the campaign to put the proposal on the ballot, said there’s strong backing in Maine for banning all foreign governments — not just Canada and Hydro Quebec — from influencing referendums even though the proposal came up short in the Legislature following a veto by Democratic Gov. Janet Mills.

The governor cited concerns about the proposal’s constitutionality and said it was so broad it could silence “legitimate voices, including Maine-based businesses.” The Maine Press Association and Maine Association of Broadcasters also opposed the proposal, saying it would put them in a difficult position of vetting campaign ads to ensure compliance.

The Maine proposal is straightforward by targeting foreign governments and companies owned by them, while leaving untouched foreign-based corporations with no government ownership.

That means the ban on foreign spending would apply to Versant, Maine’s second-biggest electric utility, because it’s owned by Calgary, a city in Alberta, Canada. But the state's largest electric utility, Central Maine Power, a subsidiary of Spanish utility Iberdrola, said it wouldn't be subject to the provision. It said minority shareholders owned by foreign governments, Norway's central bank Norges Bank and the government-owned Qatar Investment Authority, together fall below the 5% threshold. Also on the ballot is a separate referendum that would oust both investor-owned utilities and replace them with a nonprofit utility.

The idea of foreign influence in U.S. elections is something that unites people in an era of deep partisan divisions. “In a time of political polarization, it’s an issue where there’s bipartisan support,” said Sarah Walker, policy and legal advocacy director for the Ballot Initiative Strategy Center in Washington, D.C.

Bennett said concerns about foreign interference in elections were first voiced by George Washington, the nation’s first president. Closing the referendum loophole is a step states can take on their own without federal action, he said.

“It is a commonsensical thing," he said. “Of course we shouldn’t have foreign governments meddling in our elections.”

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