Bipartisan group on Capitol Hill aims to close foreign money loophole on ballot initiatives

By Fredreka Schouten, CNN

A bipartisan group of House members is pushing legislation to stop foreign nationals from financing ballot initiatives after federal regulators recently concluded that the federal ban on foreign campaign money only applies to candidate elections.

The move on Capitol Hill comes after the Federal Election Commission, by a 4-2 vote, dismissed a complaint against the Canadian arm of an Australian mining company that helped underwrite efforts to kill a 2018 ballot initiative in Montana. The initiative, which failed, would have imposed tougher environmental standards on mining operations.

Federal law bans foreign nationals from donating to candidate-focused federal, state and local elections but does not specifically address ballot initiatives, Shana Broussard, the Democratic chairwoman of the Federal Election Commission, said in a statement, explaining the decision.

Broussard sided with the commissions’ three Republican members to dismiss the complaint against the mining company. But she also urged Congress to expand the foreign money prohibition to cover state and local ballot initiatives.

The recent flurry of activity on Capitol Hill shows “there is reason to be optimistic that Congress will finally step in to close the federal loophole,” said Erin Chlopak, senior director of campaign finance at the nonpartisan Campaign Legal Center and a former FEC official.

The new bill by a group of Republican and Democratic House members would extend the ban on foreign donations to state and local ballot initiatives and referendums.

One of its sponsors, Rep. Mike Gallagher, a Wisconsin Republican, called the FEC’s decision “shortsighted and dangerous,” saying it could open the door to efforts by the “Chinese Communist Party to influence our democratic process.”

Pennsylvania GOP Rep. Brian Fitzpatrick, a lead sponsor, said the bill would ensure that state and local elections are “decided solely by American voters.”

The other co-sponsors: Republican Rep. Jaime Herrera Beutler of Washington state and Democratic Reps. Stephanie Murphy of Florida, Dean Phillips of Minnesota and Jared Golden of Maine.

Last week, New York Sen. Kirsten Gillibrand, a Democrat, introduced a similar bill.

Campaign-finance watchdogs long have sounded alarms about the ballot initiative loophole and the potential for foreign actors to exploit it. The FEC has considered the issue in the past, and the recent decision involving Montana affirms the position held by many election experts that the foreign money ban doesn’t apply to ballot measures.

In 2015, for instance, the FEC for declined to take action against a Luxembourg-based porn distributor. The distributor had helped finance opposition to a successful, Los Angeles-area ballot initiative that required actors in adult films to wear condoms.

The six-member commission deadlocked 3-3, ending any potential enforcement action in that case.

In the absence of a clear federal prohibition, some states have moved to ban foreign spending on ballot initiatives.

Eight states so far — Idaho, California, Colorado, Maryland, Nevada, North Dakota, South Dakota and Washington — have enacted laws that bar foreign money going into state and local ballot measures, according to a research by Aaron McKean, legal counsel at the Campaign Legal Center.

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