Judge puts brakes on new law banning foreign government spending on referendums

A federal judge is delaying the implementation of a voter-approved law in Maine that aimed to close an election law loophole by stopping foreign government spending on state referendum races.

U.S. District Judge Nancy Torresen issued a preliminary injunction on Thursday, the day before the new law was to go into effect, after lawsuits by Maine’s two largest electric utilities and organizations representing newspapers and broadcasters. Torresen concluded there was enough merit in their arguments to delay the law until litigation is completed in federal court.

Federal law already bans foreign influence in candidate elections, but many Maine voters were irked over $22 million spent by a Canadian utility to fight state referendums on a hydropower transmission project. Mainers voted overwhelmingly in November to close the loophole and ban foreign governments, or companies with 5% or more foreign government ownership, from donating to future referendums.

The plaintiffs sued on constitutional grounds. The media outlets contended the law requires them to police advertisements and “substantially burdens core political speech and the freedom of the press.”

But the judge focused her decision on arguments brought by the utilities, both of which have foreign ownership.

Versant's owner is ENMAX, which is owned by the city of Calgary, in Alberta, Canada. Central Maine Power, meanwhile, is a subsidiary of a privately owned Spanish utility, Iberdrola, but minority shareholders include two foreign governments, Norway’s central bank Norges Bank and the government-owned Qatar Investment Authority.

In her decision, Torresen wrote that the 5% foreign-ownership trigger in the law appeared to be arbitrary, though the state pointed out that the figure is borrowed from federal requirements for special disclosures in publicly traded companies.

She suggested the figure was unlikely to survive the U.S. Supreme Court's ruling in Citizens United that corporations have a First Amendment right to engage in political speech, which includes some campaign-related spending.

“I agree that a 5% foreign ownership threshold would prohibit a substantial amount of protected speech,” the judge wrote.