Central Maine Power Company v. ME Comm'n on Gov't Ethics and Election Practices
U.S. Court of Appeals for the First Circuit
Central Maine Power Company v. ME Comm'n on Gov't Ethics and Election Practices
Opinion
United States Court of Appeals
For the First Circuit
No. 24-1265
CENTRAL MAINE POWER COMPANY; VERSANT POWER; ENMAX CORPORATION;
MAINE PRESS ASSOCIATION; MAINE ASSOCIATION OF BROADCASTERS; JANE
P. PRINGLE, individually and in her capacity as a registered
voter and elector; KENNETH FLETCHER, individually and in his
capacity as a registered voter and elector; BONNIE S. GOULD,
individually and in her capacity as a registered voter and
elector; BRENDA GARRAND, individually and in her capacity as a
registered voter and elector; LAWRENCE WOLD, individually and in
his capacity as a registered voter and elector,
Plaintiffs, Appellees,
v.
MAINE COMMISSION ON GOVERNMENTAL ETHICS AND ELECTION PRACTICES;
WILLIAM J. SCHNEIDER, in his official capacity as Chairman of
the Maine Commission on Governmental Ethics and Election
Practices; DAVID R. HASTINGS, III, in his official capacity as a
Member of the Maine Commission on Governmental Ethics and
Election Practices; SARAH LECLAIRE, in her official capacity as
a Member of the Maine Commission on Governmental Ethics and
Election Practices; DENNIS MARBLE, in his official capacity as a
Member of the Maine Commission on Governmental Ethics and
Election Practices; BETH N. AHEARN, in her official capacity as
a Member of the Maine Commission on Governmental Ethics and
Election Practices; AARON M. FREY, in his official capacity as
Attorney General for the State of Maine,
Defendants, Appellants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Nancy Torresen, U.S. District Judge]
Before
Montecalvo, Howard, and Aframe,
Circuit Judges.
Jonathan R. Bolton, Assistant Attorney General of Maine, with
whom Aaron M. Frey, Attorney General, Thomas A. Knowlton, Deputy
Attorney General, and Paul Suitter, Assistant Attorney General,
were on brief, for appellants.
Joshua D. Dunlap, with whom Nolan L. Reichl, Katherine E.
Cleary, and Pierce Atwood LLP were on brief, for appellee Central
Maine Power Company.
Paul McDonald, with whom John A. Woodcock III and Bernstein
Shur were on brief, for appellees Versant Power and ENMAX
Corporation.
Timothy C. Woodcock, with whom P. Andrew Hamilton and Eaton
Peabody were on brief, for appellees Jane P. Pringle, Kenneth
Fletcher, Bonnie S. Gould, Brenda Garrand, and Lawrence Wold.
Sigmund D. Schutz, Alexandra A. Harriman, and Preti Flaherty
on brief for appellees Maine Press Association and Maine
Association of Broadcasters.
Amira Mattar, John Bonifaz, Ben Clements, and Courtney
Hostetler on brief for Free Speech For People as amicus curiae
supporting appellants.
Tara Molloy, David Kolker, Campaign Legal Center, Peter L.
Murray, Sean R. Turley, and Murray Plumb & Murray on brief for
Protect Maine Elections as amicus curiae supporting appellants.
Shannon Liss-Riordan, Jack Bartholet, and Lichten &
Liss-Riordan, P.C. on brief for Corporate and Securities Law
Experts as amici curiae supporting appellants.
Ben Robbins and Daniel B. Winslow on brief for New England
Legal Foundation as amicus curiae supporting appellees.
David T. Raimer, E. Stewart Crosland, Ethan D. Beck, and Jones
Day on brief for Maine State Chamber of Commerce as amicus curiae
supporting appellees.
Charles Miller on brief for Institute for Free Speech as
amicus curiae supporting appellees.
Katie Townsend, Mara Gassmann, Julia Dacy, Scott D. Dolan,
and Petruccelli, Martin & Haddow, LLP on brief for The Reporters
Committee for Freedom of the Press as amicus curiae supporting
appellees Maine Press Association and Maine Association of
Broadcasters.
July 11, 2025
MONTECALVO, Circuit Judge. In 2023, Maine voters passed
by ballot initiative "An Act to Prohibit Campaign Spending by
Foreign Governments" ("the Act") with the expressed purpose of
prohibiting foreign governments and "foreign government-influenced
entit[ies]" from contributing to or otherwise influencing
candidate elections and ballot initiatives.1 Me. Rev. Stat. Ann.
tit. 21-A, § 1064 (2024). To accomplish the Act's aim of
preventing what its supporters refer to as "foreign interference"
in elections, the Act also requires media platforms to conduct due
diligence to ensure that they do not distribute a public
communication that violates this prohibition. Those who violate
the Act may be subject to civil penalties, criminal penalties, or
both.
Several companies and individuals, including Central
Maine Power ("CMP"), Versant Power and Enmax Corporation
("Versant"), Maine Press Association and Maine Association of
Broadcasters ("Press and Broadcasters"), and several individuals
("Electors") filed suit against state officials and entities
responsible for enforcing the Act (collectively, "Maine"),
including the Maine Commission on Governmental Ethics and Election
Practices (the "Ethics & Election Commission"). The challengers
A second section of the initiative, aimed at promoting an
1
anticorruption amendment to the U.S. Constitution that would limit
spending in state and federal elections, was not challenged in
this case and is not at issue.
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contended that the Act was facially invalid under the First
Amendment and thus moved for a preliminary injunction enjoining
the Act in its entirety. The district court granted the
preliminary injunction, and Maine appealed. We affirm.
I. Factual Background
The Act aims to limit the influence of foreign
governments in Maine's elections, including both candidate
elections and referenda. Tit. 21-A, § 1064. The Act was
overwhelmingly popular with voters, 86% of whom approved it as a
ballot question after other attempts to enact similar legislation
failed. To explain why the Act has proven controversial despite
its support among Maine voters, we first sketch some of the
specific facts leading up to the ballot question before turning to
the language of the Act itself.
CMP and Versant, two of the plaintiffs here, are the two
primary utility companies operating in Maine. The present case
stems in large part from a contentious fight over the construction
of an energy transmission line that, if completed, would run
through the state of Maine, thereby connecting Canadian
electricity to Massachusetts. The project, known as the "CMP
Corridor," is a joint project between two companies: CMP and H.Q.
Energy Services (U.S.) Inc. ("HQUS"), which is a subsidiary of a
Canadian public utility called Hydro-Québec. Unfortunately for
supporters of the CMP Corridor, the project was unpopular with
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many Maine voters who, in multiple elections, aimed to stop its
development through ballot initiatives. Maine voters also
considered (but ultimately rejected) a ballot initiative that
proposed to seize CMP's and Versant's assets through eminent domain
and replace the companies with a quasi-governmental entity.
The companies that would have been negatively impacted
by these ballot initiatives -- including CMP, HQUS, and
Versant -- opposed their passage. They did so, in part, by
contributing substantial amounts of money to political action
committees and ballot question committees. Specifically, between
2013 and 2023, CMP and its affiliates contributed nearly
$73 million combined, and HQUS contributed around $22 million.
Versant contributed over $16 million in just the time between
August 2020 and the end of 2023.
These campaign contributions were substantially higher
than other corporate contributions in the state, and some Maine
voters and legislators took issue with these companies'
contributions based on, to varying degrees, the companies' foreign
ownership. For example, at first glance, CMP might seem an
unlikely target since it is incorporated in Maine and has operated
there for over 125 years. Despite its ties to the state, however,
CMP's parent company is wholly owned by a publicly traded company,
Avangrid Inc. ("Avangrid"). At the time of this suit's filing,
81.6% of Avangrid's shares were owned by a Spain-based corporation,
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Iberdrola, S.A.2 Further, Qatar's sovereign wealth fund owned
somewhere between 7 to 11% of CMP in light of its 8.7% ownership
interest in Iberdrola, S.A. and 3.7% ownership interest of
Avangrid. HQUS, for its part, is wholly owned by the province of
Québec in Canada.
Versant, like CMP, is incorporated in Maine and has
operated exclusively there for a century. But Versant's parent
company is wholly owned by a foreign entity -- the City of Calgary
in Alberta, Canada. Versant's operations, however, are subject to
domestic control pursuant to a stipulation approved by the Maine
Public Utilities Commission that prohibits Calgary from
participating in operations or management decisions.
The companies' ownership structures led their opponents
to characterize the companies' campaign spending as foreign
interference in domestic elections. Believing such foreign
involvement improper, opponents set out to ban it, including by
supporting legislation that would prohibit political spending by
companies "influenced" by foreign governments or companies.
Several attempts to enact legislation failed, in part due to
concerns by Maine's Governor that such restrictions might be
unconstitutional. Finally, the Act was submitted as a ballot
question in 2023 and approved by Maine voters.
2 Iberdrola now owns 100% of Avangrid.
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II. The Act's Language
The Act states that "[a] foreign government-influenced
entity may not make, directly or indirectly, a contribution,
expenditure, independent expenditure, electioneering
communication or any other donation or disbursement of funds to
influence the nomination or election of a candidate or the
initiation or approval of a referendum." Tit. 21-A, § 1064(2). A
"foreign government-influenced entity" is defined as:
(1) A foreign government; or
(2) A firm, partnership, corporation,
association, organization or other entity with
respect to which a foreign government or
foreign government-owned entity:
(a) Holds, owns, controls or otherwise
has direct or indirect beneficial
ownership of 5% or more of the total
equity, outstanding voting shares,
membership units or other applicable
ownership interests; or
(b) Directs, dictates, controls or
directly or indirectly participates in
the decision-making process with regard
to the activities of the firm,
partnership, corporation, association,
organization or other entity to influence
the nomination or election of a candidate
or the initiation or approval of a
referendum, such as decisions concerning
the making of contributions,
expenditures, independent expenditures,
electioneering communications or
disbursements.
Id. § 1064(1)(E). "Foreign government-owned entity," in turn, is
defined as "any entity in which a foreign government owns or
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controls more than 50% of its equity or voting shares." Id.
§ 1064(1)(F).
Subsection 2's prohibition on campaign spending is
supplemented by the Act's following three subsections.
Subsection 3 prohibits "knowingly solicit[ing], accept[ing] or
receiv[ing] a contribution or donation prohibited by
subsection 2." Id. § 1064(3). Subsection 4 prohibits "knowingly
or recklessly provid[ing] substantial assistance" in the making of
"a contribution or donation" or "an expenditure, independent
expenditure, electioneering communication or disbursement
prohibited by subsection 2," as well as in the "solicitation,
acceptance or receipt of a contribution or donation prohibited by
subsection 2." Id. § 1064(4). Subsection 5 prohibits
"structur[ing] or attempt[ing] to structure" a transaction "to
evade the[se] prohibitions and requirements." Id. § 1064(5).
A knowing violation of subsections 2 through 5 is a class
C crime under Maine law. Id. § 1064(9). Class C crimes are
punishable by up to five years' imprisonment. Me. Rev. Stat. Ann.
tit. 17-A, § 1604(1)(C) (2024).
The Act also requires that specified media platforms
conduct due diligence to ensure that they do not distribute any
prohibited communications (e.g., election-related communications
paid for by a foreign government-influenced entity):
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Each television or radio broadcasting station,
provider of cable or satellite television,
print news outlet and Internet platform shall
establish due diligence policies, procedures
and controls that are reasonably designed to
ensure that it does not broadcast, distribute
or otherwise make available to the public a
public communication for which a foreign
government-influenced entity has made an
expenditure, independent expenditure,
electioneering communication or disbursement
in violation of this section. If an Internet
platform discovers that it has distributed a
public communication for which a foreign
government-influenced entity has made an
expenditure, independent expenditure,
electioneering communication or disbursement
in violation of this section, the Internet
platform shall immediately remove the
communication and notify the [Ethics &
Election Commission].
Tit. 21-A, § 1064(7); see also id. § 1001(1).
The Act also requires that whenever a foreign
government-influenced entity "finance[s] a [permissible] public
communication . . . to influence the public or any . . . local
official or agency" concerning government policy or government
relations with a foreign country or political party, that
communication must contain the words: "Sponsored by [the name of
the entity]," followed by the label of a "foreign
government-influenced entity" or a "foreign government." Id.
§ 1064(6).
A violation of the Act may be penalized by a fine of not
more than $5,000 or "double the amount of the contribution,
expenditure, independent expenditure, electioneering
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communication, donation or disbursement involved in the violation,
whichever is greater." Id. § 1064(8). The Ethics & Election
Commission has the discretion to assess the penalty and "shall
consider, among other things, whether the violation was
intentional and whether the person that committed the violation
attempted to conceal or misrepresent the identity of the relevant
foreign government-influenced entity." Id.
III. Procedural History
On December 12, 2023, after the ballot initiative
passed, CMP filed this lawsuit against Maine and moved for a
preliminary injunction. As relevant here, CMP alleged that the
Act violated the First Amendment and that any constitutional
provisions could not be severed. Versant soon filed a complaint
making these same arguments and arguing that federal law preempted
the Act, in addition to raising other claims. The Press and
Broadcasters then filed a complaint challenging
subsection 7 -- the due diligence requirement -- as
unconstitutionally vague and a violation of the First Amendment.
Finally, the Electors filed a complaint bringing a variety of
federal and state constitutional claims based on their rights as
voters to receive and consider political speech. The cases were
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soon consolidated and each complainant, like CMP, moved for a
preliminary injunction.
After reviewing the submissions of the parties and amici
curiae, the district court held a hearing on February 23, 2024 and
granted the motions for a preliminary injunction a few days later,
shortly before the Act was scheduled to go into effect. Cent. Me.
Power Co. v. Me. Comm'n on Governmental Ethics & Election Pracs.,
721 F. Supp. 3d 31, 37 (D. Me. 2024). Given the compressed time frame, however, the district court issued the preliminary injunction based on only CMP's and Versant's motions.Id.
In its order, the district court noted that First
Amendment facial challenges based on overbreadth "succeed if 'a
substantial number of the law's applications are unconstitutional,
judged in relation to the statute's plainly legitimate sweep.'"
Id. at 49(cleaned up) (quoting Wash. State Grange v. Wash. State Republican Party,552 U.S. 442
, 449 n.6 (2008)). The court laid out the familiar four-part framework for deciding whether to grant a preliminary injunction, noting that the first factor of likelihood of success on the merits is the most important part of the analysis in the First Amendment context.Id.
at 42 (citing Sindicato Puertorriqueño de Trabajadores v. Fortuño,699 F.3d 1, 10
(1st Cir. 2012) (per curiam)).
The district court then turned to its analysis and began
with Versant's claim that the Act was preempted by federal law.
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Id. As to that argument, it held that, to the extent that the Act
covered foreign spending in elections for federal office, it was
likely preempted by the Federal Election Campaign Act's ("FECA")
preemption provision. Id. at 42-43; see52 U.S.C. § 30143
(a). In
contrast, the district court held that the Act was likely not
preempted as to state and local elections. Cent. Me. Power Co.,
721 F. Supp. 3d at 43-49.
The district court then turned to the merits of the
challengers' First Amendment arguments with respect to
(1) referenda and (2) state and local candidate elections. As a
threshold matter, the parties disagreed about the applicable level
of scrutiny. Maine argued that the more lenient standard of
"exacting scrutiny" applied, but the district court agreed with
the Act's challengers that the Act was properly subject to strict
scrutiny.3 Id. at 50 (citing Fortuño, 699 F.3d 1). The district court thus held that, to prevail, Maine had to show that the Act furthered a compelling interest and was narrowly tailored to achieve that interest.Id.
(citing Citizens United, 558 U.S. at
340).
3Maine uses the term "'closely drawn' scrutiny" (quoting
Nixon v. Shrink Mo. Gov't PAC, 528 U.S. 377, 387(2000)), but we use the term "exacting scrutiny" for the same concept. See Daggett v. Comm'n on Governmental Ethics & Election Pracs.,205 F.3d 445, 454
(1st Cir. 2000) (discussing the Supreme Court's reference to "exacting scrutiny"); see also Fortuño,699 F.3d at 11
(describing
Daggett as "applying exacting scrutiny to limits on direct
contributions").
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With respect to the former, the district court found
that Maine had a compelling interest in limiting foreign government
influence in state candidate elections and assumed without
deciding that Maine also had a compelling interest in limiting
foreign government influence in state referenda. Id. at 50-51. In contrast, the district court found that Maine lacked a compelling interest in limiting the appearance of foreign government influence in state elections.Id. at 51-52
.
Accordingly, the district court next considered whether
the Act was narrowly tailored to achieve the state's compelling
interest in limiting foreign government influence in state
candidate elections and referenda. On that point, the district
court held that subsection 2's prohibition on spending in state
elections by foreign governments was likely narrowly tailored
because federal law provides no protections against foreign
government spending in state referenda (as opposed to state
candidate elections). Id. at 52; see tit. 21-A, § 1064(1)(E)(1).
However, the district court held that subsection 2's prohibition
on spending by entities with at least 5% foreign ownership was
likely not narrowly tailored. Cent. Me. Power Co., 721 F. Supp.
3d at 52-53; see tit. 21-A, § 1064(1)(E)(2)(a). The district court
reasoned that the 5% definition seemed arbitrary and had the impact
of prohibiting political speech from corporations with potentially
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95% U.S. citizen ownership. Cent. Me. Power Co., 721 F. Supp. 3d
at 52-53.
Similarly, the district court deemed insufficiently
tailored subsection 2's application to entities in which a foreign
government or foreign government-owned entity "[d]irects,
dictates, controls or directly or indirectly participates in the
decision-making process" of the entity "to influence the
nomination or election of a candidate or the initiation or approval
of a referendum." Id. at 54-55 (alteration in original) (quoting
tit. 21-A, § 1064(1)(E)(2)(b)). In the district court's view,
this definition's focus on conduct initially seemed to fit the
requisite interest more closely. Id. at 54. However, Maine
defended the statutory text by referring to definitions in the
Ethics & Election Commission's since-revised rules, which appeared
to impermissibly broaden the Act's application beyond the
"participation" requirement. Id. The court noted that the rules
seemed to allow for the possibility that "influence" might
encompass domestic corporations receiving unsolicited
communications from foreign governments, which would then prohibit
those domestic corporations from campaign spending. Id. at 55.
The district court thus held that this definition was likely not
narrowly tailored because it would "stifle" domestic speech
regardless of actual foreign influence. Id.
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In the end, because the district court determined that
a substantial number of the Act's applications likely violated the
First Amendment, and the remaining factors favored a preliminary
injunction, it enjoined the Act in its entirety. Id. at 55-56.
In doing so, the district court expressly noted Maine severability
law but declined to sever given the expedited and preliminary
nature of the proceeding; instead, the court reserved the issue
for later consideration. Id. at 55.
Maine timely appealed, arguing that the district court
abused its discretion as to its holdings regarding preemption, the
applicable level of scrutiny, the state's compelling interest, and
whether the Act was narrowly tailored. Maine also argued that the
Act was not facially invalid, the injunction was overly broad, and
the district court abused its discretion in reserving its decision
on severability. Since March 21, 2024, the proceedings have been
stayed pending appeal.
IV. Discussion
A. Preliminary Injunction Analysis
This court reviews the grant of a preliminary injunction
for abuse of discretion. Fortuño, 699 F.3d at 10. "Under that rubric, findings of fact are reviewed for clear error and issues of law are reviewed de novo."Id.
(quoting Wine & Spirits Retailers, Inc. v. Rhode Island,418 F.3d 36, 46
(1st Cir. 2005)).
"[A] facial challenge to a statute presents a question of
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law . . . ." Id.at 11 (citing New Eng. Reg'l Council of Carpenters v. Kinton,284 F.3d 9, 19
(1st Cir. 2002)).
Courts weigh four factors in considering whether to
issue a preliminary injunction: "(1) the plaintiff's likelihood of
success on the merits; (2) the potential for irreparable harm in
the absence of an injunction; (3) whether issuing the injunction
will burden the defendants less than denying an injunction would
burden the plaintiffs and (4) the effect, if any, on the public
interest." Id.at 10 (quoting Jean v. Mass. State Police,492 F.3d 24, 26-27
(1st Cir. 2007)). But the first factor -- likelihood of success on the merits -- is the "linchpin" of the analysis in the First Amendment context.Id.
If the
movants are likely to succeed, then "irreparable injury is
presumed." Id. at 11.
Facial challenges are "hard to win." Moody v. NetChoice,
LLC, 603 U.S. 707, 723(2024). Although this "very high bar" is lowered somewhat in the First Amendment context, the standard is "still rigorous" and facial challenges are still "disfavored."Id. at 723, 744
. In the First Amendment context, "[t]he question is whether 'a substantial number of the law's applications are unconstitutional, judged in relation to the statute's plainly legitimate sweep.'"Id. at 723
(cleaned up) (quoting Ams. for Prosperity Found. v. Bonta,594 U.S. 595
, 615 (2021)). In other
words, a law "may be struck down in its entirety . . . only if the
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law's unconstitutional applications substantially outweigh its
constitutional ones." Id. at 723-24.
B. The Applicable Level of Scrutiny
In general, "[l]aws that burden political speech
ordinarily are subject to strict scrutiny, requiring the
government to prove that any restriction 'furthers a compelling
interest and is narrowly tailored to achieve that interest.'"
Fortuño, 699 F.3d at 11(quoting Citizens United, 558 U.S. at 340). Citing Fortuño, the district court reviewed the entirety of the Act under strict scrutiny. Cent. Me. Power Co., 721 F. Supp. 3d at 50. On appeal, Maine argues that the district court should have applied the somewhat more lenient standard of "exacting scrutiny," which requires that restrictions on speech be "closely drawn to match a sufficiently important interest." Daggett v. Comm'n on Governmental Ethics & Election Pracs.,205 F.3d 445, 454
(1st Cir. 2000) (internal quotations omitted) (quoting Nixon v. Shrink Mo. Gov't PAC,528 U.S. 377, 387-88
(2000)). Maine advances
two arguments to support this contention, which we take in turn.
1. Level of Scrutiny for Restrictions on Contributions
Maine first argues that exacting, rather than strict,
scrutiny should apply to the Act's restrictions on contributions.
For support, Maine points to this court's precedent applying
exacting scrutiny to contribution limits. See id. In response,
CMP and Versant acknowledge that exacting scrutiny applies to
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stand-alone limitations on contributions. See Buckley v. Valeo,
424 U.S. 1, 20-21(1976). They nevertheless contend that exacting scrutiny is inappropriate here because the Act bans a wide range of spending, including contributions as well as expenditures, restrictions of which are typically subject to strict scrutiny (citing Fortuño,699 F.3d at 12
). CMP additionally argues that
the level of scrutiny is irrelevant because the Act would not
withstand even a lower level of scrutiny.
At the outset, we note that Maine is correct that
exacting scrutiny generally applies to limits on contributions. A
less demanding form of scrutiny is appropriate for regulations on
contributions because, as the Supreme Court explained,
"contributions lie closer to the edges than to the core of
political expression." FEC v. Beaumont, 539 U.S. 146, 161(2003). Therefore, "a contribution limit involving 'significant interference' with associational rights" is not subject to strict scrutiny but instead "passes muster if it satisfies the lesser demand of being 'closely drawn to match a sufficiently important interest.'"Id.
at 162 (quoting Nixon,528 U.S. at 387-88
); see also Fortuño,699 F.3d at 12
(noting that "regulations designed 'to ensure against the reality or appearance of corruption,' such as those capping direct contributions to political candidates" are subject to exacting scrutiny (quoting Citizens United, 558 U.S. at 357)); Minn. Chamber of Com. v. Choi,765 F. Supp. 3d 821
, 847-49,
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857 (D. Minn. 2025) (applying different levels of scrutiny to a
law containing separate restrictions on contributions and
expenditures).
CMP and Versant point out that the Act bans a wide
variety of political spending: "contribution[s], expenditure[s],
independent expenditure[s], electioneering communication[s and]
any other donation[s] or disbursement[s] of funds." Tit. 21-A,
§ 1064(2). But we agree with CMP that we need not resolve whether
strict scrutiny should apply to the Act in its entirety, because
the plaintiffs have demonstrated a likelihood of success on the
merits even if the contribution ban is evaluated under the somewhat
lower standard of exacting scrutiny. We therefore assume without
deciding that exacting scrutiny applies to the portion of the Act
restricting contributions.4 See Beaumont, 539 U.S. at 161-62.
4CMP argues that we would have to overturn Fortuño to apply
anything other than strict scrutiny to any aspect of the Act. But
Fortuño does not control here. The law in Fortuño created detailed
requirements with which corporations and unions had to comply to
make campaign contributions or political expenditures. 699 F.3d
at 5. There, we applied strict scrutiny to the entire law because it "impose[d] substantial burdens on the very process through which a [speaker] determine[d] whether and how to exercise its free speech rights," "reach[ing] deep into the mechanics of an organization's own self-governance" and "regulat[ing] the if and how of a[n organization]'s political speech."Id. at 12
(emphasis
added). In contrast, the Act contains a more straightforward
restriction on contributions and does not regulate the process by
which decisions about speech are made.
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2. Level of Scrutiny for Restrictions on Political Spending by
Foreign Citizens
Next, despite acknowledging that restrictions on
expenditures generally receive strict scrutiny, Maine argues that
the remainder of the Act -- including limits on
expenditures -- should be subjected to exacting scrutiny because
the Act restricts non-citizens' participation in our nation's
democracy. Maine argues that cases like Citizens United and
Fortuño did not concern what level of scrutiny applied to laws
targeting foreign government influence in American elections and
are therefore inapposite.
It is helpful to begin our discussion by sketching out
the overarching legal framework regarding restrictions on
corporate spending, including restrictions on foreign
corporations. On the one hand, Citizens United makes clear that
federal and state governments "may not suppress political speech
on the basis of the speaker's corporate identity." 558 U.S. at
365. In contrast, "foreign organizations operating abroad have no
First Amendment rights." Agency for Int'l Dev. v. All. for Open
Soc'y Int'l, Inc., 591 U.S. 430, 436 (2020). This case falls in
the middle of the spectrum and calls on us to consider at which
point a domestic corporation has sufficient foreign ownership or
control that the First Amendment analysis changes.
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To make its argument for a lower level of scrutiny, Maine
relies heavily on Foley v. Connelie, in which the Supreme Court
rejected an equal protection challenge to a state law that limited
police jobs to U.S. citizens. 435 U.S. 291, 292-93(1978). The Court subjected the law to rational basis review, noting that a lower level of scrutiny applied to classifications involving non-citizens where the law prohibited non-citizens "from participation in [a state's] democratic political institutions" or where the state law was "firmly within a State's constitutional prerogatives"; for example, the right to vote, to run for elective office, or to serve on a jury.Id.
at 295-96 (quoting Sugarman v. Dougall,413 U.S. 634, 648
(1973)). Maine seizes on this language
to assert that Foley supports a lower level of scrutiny for
restrictions on foreign entities' political speech. Crucially,
however, Maine does not argue that the First Amendment's
protections do not apply at all to these U.S. corporations, even
those with some level of foreign ownership.
In response, Versant and CMP seek to distinguish Foley
by noting that it involved an equal protection claim, not the First
Amendment, id. at 294, and that restrictions on domestic
corporations' speech trigger strict scrutiny under Citizens
United, 558 U.S. at 355, 362. We are not persuaded that Foley
applies to this case and accordingly, as we explain below, we apply
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Citizens United to the restrictions on spending other than
contributions.
This is an issue of first impression for this court, and
although other courts have faced similar inquiries, we are aware
of only one to have decided the issue. In Choi, a federal district
court held that a similar law, which would have barred corporations
with some foreign ownership from political spending in state and
local candidate elections and ballot questions, violated the First
Amendment. 765 F. Supp. 3d at 832-33. The district court held
that the standard levels of scrutiny under the First Amendment
still applied, reasoning that "no case holds that a corporation
ceases to be 'American' by virtue of any quantum of foreign
ownership." Id. at *12. Other courts facing similar arguments
have avoided deciding the applicable level of scrutiny. See Bluman
v. FEC, 800 F. Supp. 2d 281, 285-86(D.D.C. 2011) (noting that determining proper level of scrutiny for federal law barring foreign nationals from making various types of contributions, donations, and expenditures related to candidate elections presented a complex question but concluding that the law withstood even strict scrutiny, thereby avoiding question of applicable level of scrutiny), aff'd,565 U.S. 1104
(2012) (summarily affirming); see also OPAWL - Bldg. AAPI Feminist Leadership v. Yost,118 F.4th 770
, 772-73, 777 (6th Cir. 2024) (declining to
decide appropriate level of scrutiny for Ohio law barring foreign
- 23 -
nationals from contributing to candidates in state elections or
spending money on ballot initiatives because law withstood all
possible levels of scrutiny); cf. id. at 786-87 (Davis, J.,
dissenting) (agreeing that court did not need to decide applicable
level of scrutiny but concluding that was so because law failed
both intermediate and strict scrutiny). We find that Foley is
inapplicable in this situation, as the Choi court did, and explain
our reasoning below.
First, as discussed, Foley involved a Fourteenth
Amendment equal protection challenge and not a First Amendment
challenge. 435 U.S. at 294; see also Choi, 765 F. Supp. 3d at 849. Second, Foley is factually distinct: it involved a challenge to a state law that limited police jobs to U.S. citizens.435 U.S. at 292-93
. The Court applied rational basis review because states could permissibly exclude non-citizens from participation in certain democratic institutions.Id. at 295-96
. The Court upheld the challenged law after "examin[ing] [the] position in question to determine whether it involve[d] discretionary decisionmaking, or execution of policy, which substantially affect[ed] members of the political community."Id. at 296
.
Thus, Foley's test, formulated in response to a law
concerning state employment, does not help guide our decision about
the appropriate level of scrutiny here. All of the examples that
Foley gives as permissible to reserve to U.S. citizens are roles
- 24 -
that individual citizens play in our democracy -- juror, voter,
political candidate, public servant -- because these "lie at the
heart of our political institutions" and impact "the right to
govern." Id. at 295-97. We do not find this discussion
sufficiently applicable to the context of political speech
restrictions on a wide range of speakers, including corporations,
to persuade us to lower the typical level of scrutiny for the
entire Act.
Because the Act applies to domestic actors as well as
foreign actors, the First Amendment's protections apply. The Act's
restrictions on contributions must withstand exacting scrutiny,
see Nixon, 528 U.S. at 387-88, and its remaining burdens on
political speech must withstand strict scrutiny, see Citizens
United, 558 U.S. at 340.
C. Maine's Proposed State Interests
Below, the district court determined that Maine has a
compelling interest in limiting foreign government influence in
candidate elections.5 Cent. Me. Power Co., 721 F. Supp. 3d at
5 The district court relied on Bluman in making this
determination, and the parties now dispute whether that case is
controlling here. Cent. Me. Power Co., 721 F. Supp. 3d at 50-51
(citing Bluman, 800 F. Supp. 2d at 282-83, 285, 288, 292 n.4). The Supreme Court summarily affirmed Bluman and, accordingly, there is some question as to whether its conclusion is binding or merely persuasive. See Anderson v. Celebrezze,460 U.S. 780
, 784
n.5 (1983) (holding that "the precedential effect of a summary
affirmance extends no further than 'the precise issues presented
and necessarily decided by those actions.'" (quoting Ill. State
- 25 -
50-51. Given the "initial stage of the case," the district court
assumed, without deciding, that Maine likely also has a compelling
interest in limiting foreign government influence in referenda
elections. Id. at 51. However, the district court rejected
Maine's argument that it has a compelling interest in limiting the
appearance of foreign government influence in both candidate and
referenda elections. Id. at 51-52. On appeal, Maine contends
that the district court erred in not recognizing all of its
proposed compelling interests, while CMP maintains that none of
these proposed interests are compelling. Versant also challenges
the district court's decision to assume, without deciding, a
compelling interest in limiting foreign government influence in
referenda elections.
As noted above, the district court applied strict
scrutiny to the entirety of the Act, but we think it unnecessary
to decide that strict scrutiny should apply to the Act's
contribution limits, which would fail even exacting scrutiny. We
therefore must consider whether Maine's proposed interests are
compelling, in the strict scrutiny analysis, or sufficiently
Bd. of Elections v. Socialist Workers Party, 440 U.S. 173, 182-83(1979))); Auburn Police Union v. Carpenter,8 F.3d 886, 894
(1st Cir. 1993) (cautioning that "summary dispositions 'should not be understood as breaking new ground but as applying principles established by prior decisions to the particular facts involved'" (quoting Mandel v. Bradley,432 U.S. 173, 176
(1977))). However,
we need not reach this dispute because we assume that all of
Maine's proposed interests are compelling.
- 26 -
important, in the exacting scrutiny analysis. But we may
streamline those analyses because no matter the level of scrutiny,
the plaintiffs have established a likelihood of success in
establishing that the law is not sufficiently related to any of
these proposed state interests. We therefore assume, without
deciding, that each of Maine's proposed interests is sufficiently
compelling.
D. Tailoring
Having assumed that Maine has the requisite interests in
preventing foreign influence or the appearance of foreign
influence in its elections, we turn to the question of whether, at
this stage of the litigation, Maine is likely to succeed in showing
the required fit between the Act's provisions and the state's
interests.
For the Act's restrictions on all spending other than
contributions, we ask whether Maine is likely to succeed in showing
that the Act "serves [the] compelling state interest[s] in a
narrowly tailored manner." We the People PAC v. Bellows, 40 F.4th
1, 19 (1st Cir. 2022). In other words, we first consider the fit between the invoked interest and the Act's restrictions and how the law advances the compelling interest. See id. at 19-20. The restriction on speech must be "actually necessary" to achieve the compelling interest. See United States v. Alvarez,567 U.S. 709, 725
(2012) (plurality opinion) (quoting Brown v. Ent. Merchs.
- 27 -
Ass'n, 564 U.S. 786, 799(2011)). "There must be a direct causal link between the restriction imposed and the injury to be prevented."Id.
Courts consider the "record evidence or legislative findings" that demonstrate the necessity of curtailing First Amendment rights to fix a problem. FEC v. Ted Cruz for Senate,596 U.S. 289
, 307 (2022) (quoting Colo. Republican Fed. Campaign Comm. v. FEC,518 U.S. 604, 618
(1996)). Courts also "consider whether the rule is either under- or overinclusive." Does 1-6 v. Mills,16 F.4th 20
, 33 (1st Cir. 2021). "[U]nderinclusiveness can raise 'doubts about whether the government is in fact pursuing the interest it invokes, rather than disfavoring a particular speaker or viewpoint.'" Williams-Yulee v. Fla. Bar,575 U.S. 433
, 448 (2015) (quoting Brown,564 U.S. at 802
).
Similarly, for the Act's restrictions on contributions,
we consider whether Maine is likely to succeed in showing that the
Act is "narrowly tailored to serve a sufficiently important
governmental interest." Gaspee Project v. Mederos, 13 F.4th 79, 85 (1st Cir. 2021) (citing Ams. for Prosperity, 594 U.S. at 608). Although the Supreme Court has previously referred to the required relationship as "closely drawn," see Beaumont,539 U.S. at 162
, the Court has clarified that the required fit amounts to narrow tailoring, see Ams. for Prosperity, 594 U.S. at 608; see also McCutcheon v. FEC,572 U.S. 185, 197
(2014) (plurality opinion)
- 28 -
(describing exacting scrutiny as "a lesser but still 'rigorous
standard of review'" (quoting Buckley, 424 U.S. at 29)). Under exacting scrutiny, the restrictions need not "be the least restrictive means of achieving their ends," but they must be "narrowly tailored to the government's asserted interest." Ams. for Prosperity, 594 U.S. at 608. This tailoring is required because, "[i]n the First Amendment context, fit matters." Id. at 609 (quoting McCutcheon,572 U.S. at 218
). Even outside of strict scrutiny, "we still require a fit that is not necessarily perfect, but reasonable; [and] that represents not necessarily the single best disposition but one whose scope is in proportion to the interest served."Id.
(quoting McCutcheon,572 U.S. at 218
).
Therefore, although we apply exacting scrutiny to the Act's
restrictions on contributions and strict scrutiny to the remainder
of the Act's restrictions, our analysis of the fit looks largely
the same.
As a reminder, the Act's central prohibition on campaign
spending forbids a "foreign government-influenced entity" from
making "a contribution, expenditure, independent expenditure,
electioneering communication or any other donation or disbursement
of funds to influence" a candidate election or a referendum. Tit.
21-A, § 1064(2). The Act provides three definitions for "foreign
government-influenced entity": a foreign government; an entity
that is 5% or more owned, directly or indirectly, by a foreign
- 29 -
government or a foreign government-owned entity (meaning it is
itself more than 50% owned by a foreign government); and an entity
in which a foreign government or foreign government-owned entity
"[d]irects, dictates, controls or directly or indirectly
participates in the decision-making process" regarding the
entity's political speech. See id. § 1064(1)(E), (F). We analyze
the Act with respect to each of these three definitions.
1. Prohibition on Spending by a Foreign Government
The first of the three definitions of "foreign
government-influenced entity" is simply "[a] foreign government,"
id. § 1064(1)(E)(1), as defined in the Act, id. § 1064(1)(D).6 The
district court held that subsection 2's ban on campaign spending
by foreign governments is likely narrowly tailored and thus
constitutional. Cent. Me. Power Co., 721 F. Supp. 3d at 52. No
party challenges this conclusion, but we note it because it is
relevant to comparing the Act's "plainly legitimate sweep" with
its unconstitutional applications. Moody, 603 U.S. at 723 (quoting
6The Act defines "foreign government" as including "any
person or group of persons exercising sovereign de facto or de
jure political jurisdiction over any country other than the United
States or over any part of such country." Tit. 21-A, § 1064(1)(D).
The term also includes "any subdivision of any such group and any
group or agency to which such sovereign de facto or de jure
authority or functions are directly or indirectly delegated" and
"any faction or body of insurgents within a country assuming to
exercise governmental authority, whether or not such faction or
body of insurgents has been recognized by the United States." Id.
- 30 -
Ams. for Prosperity, 594 U.S. at 615). We therefore move to the
next two definitions.
2. Prohibition on Spending by an Entity with 5% or More Foreign
Ownership
The second definition is "[a] firm, partnership,
corporation, association, organization or other entity with
respect to which a foreign government or foreign government-owned
entity . . . [h]olds, owns, controls or otherwise has direct or
indirect beneficial ownership of 5% or more of the total equity,
outstanding voting shares, membership units or other applicable
ownership interests." Id. § 1064(1)(E)(2)(a). The district court
held that the Act's restrictions with respect to this 5% ownership
threshold are likely not narrowly tailored and therefore
unconstitutional, for several reasons. Cent. Me. Power Co., 721
F. Supp. 3d at 52. First, the district court determined that this
5% foreign ownership threshold is overinclusive because it would
prohibit a substantial amount of protected speech. Id. at 53.
For example, the Act prohibits campaign spending by CMP, a company
incorporated in Maine and run by United States citizens. Id.
Second, the district court noted that the 5% ownership threshold
seems to be arbitrarily chosen. Id. Finally, the court observed
that Maine had not yet offered any "evidence that a foreign
government or foreign government-influenced entity with less than
full ownership of a domestic entity ha[d] exerted influence over
- 31 -
that entity's election spending in Maine." Id. The district court
thus concluded that this 5% threshold provision is likely not
narrowly tailored to a compelling interest in preventing foreign
influence in candidate or referenda elections. Id.
On appeal, Maine argues that the district court erred in
underestimating the potential influence that a shareholder who
owns 5% or more of a corporation may wield over that corporation's
decision-making. That includes the shareholder's ability to sell
off all of its stock at once if dissatisfied, which would be a
major event for a corporation. Maine argues that a shareholder
with well under 50% ownership -- and even under 10%
ownership -- can use that influence to accomplish significant
changes in a corporation. Because of this possibility, Maine
argues, the Act is not overinclusive. Maine also contests the
need for evidence showing actual influence, arguing that corporate
managers' fiduciary duties to their shareholders will prompt them
to anticipate and infer the interests of their largest
shareholders. Maine disputes that the 5% threshold was arbitrarily
chosen, pointing to federal laws that require special disclosures
for any person who owns 5% or more of the equity of a corporation.
See 15 U.S.C. § 78m(d). Finally, Maine points to restrictions in
other states and cities that use the 5% ownership threshold to
demonstrate that such a threshold is commonly used.
- 32 -
We agree with the district court that this 5% foreign
ownership threshold for triggering the Act's prohibition on a wide
range of political speech is likely not narrowly tailored to the
stated compelling interests in preventing foreign influence or its
appearance. Regarding subsection 2's ban on contributions, we
similarly think that the 5% foreign ownership threshold is likely
not closely drawn to match its sufficiently important state
interests.
The law is overinclusive because -- as the district
court pointed out -- it silences U.S. corporations that have their
own First Amendment rights: CMP and Versant were founded in Maine,
have operated exclusively there for over a century, and are
entirely run by U.S. citizens. See Mills, 16 F.4th at 33. To
illustrate why the law is overinclusive, we will look at the
strongest evidence in Maine's favor: the evidence that HQUS, a
subsidiary of a foreign government's utility company, was the third
highest contributor to political action and ballot question
committees in Maine over the last decade. The company's owner,
Hydro-Québec, and the province of Québec do not have any First
Amendment rights. See Agency for Int'l Dev., 591 U.S. at 436.
Subsection 2's ban applies to HQUS because of the 5% definition.
But HQUS is 100% indirectly owned by a foreign government, as is
Versant. Maine's evidence therefore does not demonstrate why the
5% threshold -- as opposed to 100%, or 50%, or any other
- 33 -
number -- is narrowly tailored to its interests in preventing
foreign influence in its elections. See Cruz, 596 U.S. at 307
(noting that courts consider the record evidence or legislative
findings demonstrating why restricting First Amendment rights is
needed). Maine has not shown that the Act's curtailment of First
Amendment rights in this way is necessary.
The prohibition is overly broad, silencing U.S.
corporations based on the mere possibility that foreign
shareholders might try to influence its decisions on political
speech, even where those foreign shareholders may be passive owners
that exercise no influence or control over the corporation's
political spending. See Choi, 765 F. Supp. 3d at 852 ("It is not
enough . . . to explain how foreign minority shareholders could
exercise influence over corporations."); see also Cruz, 596 U.S.
at 307 (deeming the absence of record evidence "significant").
CMP offers a helpful illustration. CMP is captured by the 5%
definition because Qatar's sovereign wealth fund indirectly owns
7 to 11% of CMP. But Maine has shown no evidence that Qatar itself
has tried to influence CMP's decisions regarding political speech.
True, CMP and its affiliates have spent a lot of money -- nearly
$73 million -- in Maine's elections over the past decade. But in
that time, CMP faced two ballot initiatives aimed at removing its
permit for the CMP Corridor -- after $450 million had already been
spent on construction -- in addition to a ballot question that
- 34 -
sought to seize all of its assets through eminent domain. The
record suggests that CMP's spending was motivated by its desire to
protect the company's own interests, rather than the independent
interests of Qatar.
With this context, we cannot find that Maine's interest
in avoiding the appearance or possibility of Qatar's influence
justifies entirely silencing CMP's speech in the face of public
referenda that could have such detrimental outcomes to its future
as a company. See Citizens United, 558 U.S. at 339 (striking down
a restriction on political speech where the "purpose and effect
[was] to silence entities whose voices the Government deems to be
suspect").
In the face of these examples, the 5% threshold starts
to look either like an end-run around Citizens United, aimed at
silencing a large swath of corporations merely because they are
corporations, or an effort to shape the ongoing debate in Maine
about its two primary utility companies by silencing one
side -- the companies themselves. See First Nat'l Bank of Bos. v.
Bellotti, 435 U.S. 765, 785 (1978) (striking down a prohibition on
political speech where it appeared that the legislature aimed to
silence one side of the debate on particular ballot questions).
Neither is permissible under the First Amendment.
At oral argument, Maine defended the 5% definition by
pointing out that the record showed only two particular companies
- 35 -
in Maine with between 5 and 50% foreign ownership. But we are not
persuaded that this demonstrates narrow tailoring. Instead, it
suggests that the Act was targeted at particular companies. See
Williams-Yulee, 575 U.S. at 448 (noting that underinclusiveness
may indicate that the government seeks to disfavor a particular
speaker); see also Citizens United, 558 U.S. at 340 (laws may
violate the First Amendment when they "identif[y] certain
preferred speakers").
Finally, we note that the amount of uncertainty as to
which corporations are covered by the law will potentially have a
chilling effect. The Act does not set any particular moment in
time for determining the level of foreign ownership, which -- for
publicly traded corporations -- can fluctuate throughout the
course of a day.7 As a consequence, U.S. corporations with First
Amendment protections will likely choose not to speak at all rather
than risk criminal penalties.8
7 Indeed, CMP's ownership changed while this appeal was
pending.
8 Maine cited similar provisions from other states that
restrict political speech based on foreign ownership of
corporations, but these are not persuasive. The St. Petersburg
law has been preempted by the Florida legislature. Fla. Stat.
§ 106.08(11) (2023). The Minnesota law, which applied to companies with only 1% foreign ownership, Minn. Stat. § 211B.15(d), was struck down as a violation of the First Amendment. Minn. Chamber of Com. v. Choi,765 F. Supp. 3d 821
, 858 (D. Minn. 2025). While Alaska has a similar 5% threshold,Alaska Stat. § 15.13.068
(e)(5)(A) (2018), it does not appear to have faced a
constitutional challenge. Neither has Seattle's ordinance, which
- 36 -
We are sympathetic to Maine and amici on the difficulty
of ascertaining when foreign shareholders are wielding influence
over a domestic corporation's decisions on political speech. That,
however, does not alter our conclusion that the Act likely sweeps
far too broadly to be narrowly tailored.9 See Citizens United,
558 U.S. at 362 (noting in dicta that the provision at issue, which
was "not limited to corporations or associations that were created
in foreign countries or funded predominately by foreign
shareholders," would still be overbroad even if the government had
"a compelling interest in limiting foreign influence over our
political process").
3. Prohibition on Spending by an Entity with Direct or Indirect
Foreign Participation in the Decision-making Process
The third and final definition of "foreign
government-influenced entity" is:
A firm, partnership, corporation,
association, organization or other entity with
respect to which a foreign government or
foreign government-owned entity . . .
[d]irects, dictates, controls or directly or
indirectly participates in the
decision-making process with regard to the
activities of the firm, partnership,
has a lower threshold. See Seattle, Wash., Mun. Code §§ 2.04.010,
.370, .400 (2025).
9 We also agree with the district court that the federal
securities law that Maine cites does not provide a persuasive
analogy here, as that law requires a particular disclosure at the
5% ownership threshold but does not indicate that 5% is necessarily
a proxy for control. See Cent. Me. Power Co., 721 F. Supp. 3d at
53; 15 U.S.C. § 78m(d)(1)-(3).
- 37 -
corporation, association, organization or
other entity to influence the nomination or
election of a candidate or the initiation or
approval of a referendum, such as decisions
concerning the making of contributions,
expenditures, independent expenditures,
electioneering communications or
disbursements.
Tit. 21-A, § 1064(1)(E)(2)(b). We will refer to this as the
"actual participation" definition as a shorthand.
The district court held that the Act's restrictions on
the entities encompassed by this definition were not narrowly
tailored and were likely unconstitutional. Cent. Me. Power Co.,
721 F. Supp. 3d at 54-55. The district court noted that this
definition seemed, "[a]t first blush," to be a closer fit to
Maine's interest than the previous 5% definition. Id. at 54. But
Maine defended this provision by pointing to the Ethics & Election
Commission's then-proposed rules, and the district court observed
that those proposed rules seemed to broaden the Act by eliminating
the statutory requirement that the foreign government or foreign
government-owned entity actually "participate[]" in the
decision-making process. Id. at 54-55. Therefore, in response to
Maine's reliance on these proposed rules to defend the statute,
the district court found that this category was "overly broad" and
"likely to stifle the speech of domestic corporations regardless"
of actual foreign influence. Id. at 55. However, the district
court noted that its conclusion might change if the Ethics &
- 38 -
Election Commission adopted new rules indicating that actual
participation was required. Id. at 55 n.21.
Maine argues on appeal that the definition in
§ 1064(1)(E)(2)(b) mirrors a federal regulation implementing FECA.
See 11 C.F.R. § 110.20(i). Maine also focuses, as it did below,
on the Ethics & Election Commission's rules and argues that the
proposed rules discussed in the district court's decision have
since been rewritten to clarify and narrow the definition of
"participate." Finally, Maine asserts that there are no less
restrictive means to achieve its compelling interest, as it would
not be able to enforce a law that targets only foreign governments
and must be able to regulate "the U.S.-based recipients of such
influence."
We start with Maine's argument based on the text of the
statute: that the Act's "actual participation" definition was
"lifted almost verbatim" from a federal regulation. That federal
regulation states:
A foreign national shall not direct, dictate,
control, or directly or indirectly participate
in the decision-making process of any person,
such as a corporation, labor organization,
political committee, or political
organization with regard to such person's
Federal or non-Federal election-related
activities, such as decisions concerning the
making of contributions, donations,
expenditures, or disbursements in connection
with elections for any Federal, State, or
local office or decisions concerning the
administration of a political committee.
- 39 -
11 C.F.R. § 110.20(i). Certainly, the verbs used in the Maine
statute are almost the same. See tit. 21-A, § 1064(1)(E)(2)(b)
("[d]irects, dictates, controls or directly or indirectly
participates"). But the subjects of the two provisions -- "a
foreign national" as opposed to "a foreign government or foreign
government-owned entity" -- are not. The federal regulation
defines "foreign national" as including:
(1) a government of a foreign country and a
foreign political party;
(2) a person outside of the United States,
unless it is established that . . . such
person is not an individual and is organized
under or created by the laws of the United
States or of any State or other place subject
to the jurisdiction of the United States and
has its principal place of business within the
United States; and
(3) a partnership, association, corporation,
organization, or other combination of persons
organized under the laws of or having its
principal place of business in a foreign
country.
22 U.S.C. § 611(b) (defining "foreign principal"); see11 C.F.R. § 110.20
(a)(3)(i) (defining "[f]oreign national" as equivalent to22 U.S.C. § 611
(b)'s definition of "foreign principal").
There is some overlap between the Act's definition of a
"foreign government or foreign government-owned entity" and the
federal regulation's definition of "foreign national." For
example, both use substantially the same definition of "foreign
government." Compare tit. 21-A, § 1064(1)(D), with 22 U.S.C.
§ 611(e). But the federal provision also encompasses corporations
- 40 -
organized or with their principal places of business abroad, many
of which have no First Amendment rights. See Agency for Int'l
Dev., 591 U.S. at 436. The Maine statute, on the other hand,
encompasses entities at least 50% owned by a foreign
government -- even if those entities are U.S. corporations, which
the federal definition expressly excludes. See 22 U.S.C.
§ 611(b)(2). The Act thus applies to a broader swath of U.S.
corporations than the federal provision and is therefore less
tailored. In light of the different scope of the two provisions,
we find unpersuasive Maine's argument that is premised on the
provisions' alleged similarity.
In looking at the "actual participation" definition as
a whole, we agree with the district court that it appears more
tailored than the 5% threshold to Maine's interest in limiting
foreign influence or its appearance in state and local elections,
because it focuses on conduct. But Maine has made no effort to
defend the statute on its own terms, other than its alleged
similarity to a federal regulation, which we dismissed above as
unpersuasive. We thus remain concerned that the "actual
participation" definition applies to too broad a swath of speakers
with First Amendment rights to be narrowly tailored. For the same
reasons, we think that the "actual participation" definition as
- 41 -
applied to the Act's ban on contributions is not narrowly tailored
to match a sufficiently important state interest.10
E. Additional Provisions and Potential Overbreadth of the
Injunction
Maine argues that, even if two of the three definitions
of "foreign government-influenced entity" have unconstitutional
applications, the district court erred in finding the Act facially
invalid because the Act's overbreadth is not "substantial . . .
relative to its plainly legitimate sweep." In support of this
argument, Maine notes that the court held that the Act was likely
constitutional as applied to foreign governments. Maine argues
that, if the 5% threshold is too low, the Act is still
constitutional as applied to entities with a higher percentage of
foreign ownership. In addition, Maine specifically endorses the
constitutionality of the disclaimer provision. See tit. 21-A,
§ 1064(6).
As discussed, most of the applications of the Act's
central provision, subsection 2, are likely unconstitutional due
to the overly broad definitions of "foreign government-influenced
10 Maine argues that the Ethics & Election Commission's new
rules clarify that the statutory term "directly or indirectly
participate" is sufficiently narrow and that these new rules render
the "actual participation" definition constitutional. These rules
were not before the district court, see Cent. Me. Power Co., 721
F. Supp. 3d at 55 n.21, and we thus conclude that the district
court acted within its discretion in issuing its injunction based
on an earlier iteration of them.
- 42 -
entity." Regarding the 5% definition, to the extent that Maine
implies that the court should have chosen a different threshold of
foreign ownership to which the Act should apply, we disagree. We
will set aside the issue that we are a federal court reviewing a
state law that the state's own court has not yet interpreted, which
in itself would be reason to tread cautiously. Cf. United States
v. Stevens, 559 U.S. 460, 474 (2010) ("Because [the challenged
law] is a federal statute, there is no need to defer to a state
court's authority to interpret its own law."). Courts "will not
rewrite a law to conform it to constitutional requirements." Id.
at 481(cleaned up) (quoting Reno v. Am. C.L. Union,521 U.S. 844, 884-85
(1997)). "[D]oing so would constitute a 'serious invasion of the legislative domain' and sharply diminish [the legislature's] 'incentive to draft a narrowly tailored law in the first place.'"Id.
(citation omitted) (first quoting United States v. Nat'l Treasury Emps. Union,513 U.S. 454
, 479 n.26 (1995); and then quoting Osborne v. Ohio,495 U.S. 103, 121
(1990)).
Moving past subsection 2, most of the substantive
provisions of the Act are entwined with that provision.
Subsections 3, 4, and 5 prohibit soliciting, accepting, or
assisting in transactions that are prohibited under subsection 2,
or structuring transactions to evade subsection 2's prohibitions.
See tit. 21-A, § 1064(2)-(5). Subsection 9 provides criminal
penalties for violating subsections 2 through 5. Id. § 1064(9).
- 43 -
Subsection 8 provides civil penalties for violating any of the
Act's subsections. Id. § 1064(8). Given how the Act is structured
around subsection 2's constitutionally problematic ban (as the
definitions currently stand), the overwhelming majority of
applications of these other subsections are necessarily
unconstitutional as well.
The remaining substantive provisions are subsection 6,
which requires a specific disclaimer on any permissible public
communications pertaining to a range of political speech by foreign
government-influenced entities, and subsection 7, which requires
media platforms to conduct due diligence to ensure that they have
not published any public communications that violate this Act.
Id. § 1064(6), (7). But even if we assume that both subsections 6
and 7 are constitutional, a substantial number of the statute's
applications are still likely unconstitutional as compared to the
statute's plainly legitimate sweep. See Moody, 603 U.S. at 723.
F. Reserving the Question of Severability
After concluding that two of the three central
provisions of the Act are likely to fail under strict scrutiny,
the district court held that the Act was likely facially invalid
because a substantial number of the Act's applications were
unconstitutional as compared to its plainly legitimate sweep.
Cent. Me. Power Co., 721 F. Supp. 3d at 55. The district court
declined to sever the Act, given the rushed nature of the
- 44 -
proceedings, until the parties had a chance to brief the issue of
whether particular portions were severable under Maine law. Id.
Maine argues on appeal that the district court abused
its discretion by not analyzing severability. Maine further argues
that the definitions of "foreign government-influenced entity" are
easily severable from the rest of the Act and that the district
court should not have enjoined subsection 6's disclaimer
requirement without analyzing its constitutionality.
However, while Maine raises colorable arguments
concerning the Act's severability under state law, it points to no
federal or state authority that required the district court to
consider that question at the preliminary injunction stage. We
leave the issue of severance for the district court to decide in
the first instance.
G. Preemption
Issues of federal preemption are questions of statutory
interpretation that we review de novo. See DiFiore v. Am.
Airlines, Inc., 646 F.3d 81, 85 (1st Cir. 2011).
The district court concluded that FECA explicitly
preempted the Act to the extent that it might be read to apply to
federal elections. Cent. Me. Power Co., 721 F. Supp. 3d at 43.
Maine agrees that the Act does not apply to foreign spending in
elections for federal office, but it argues here, as it did below,
that this result should be reached through statutory
- 45 -
interpretation rather than preemption. However, Maine only
disputes the district court's preemption holding to the extent
that it informed the district court's ultimate conclusion, in
considering the motions for a preliminary injunction, that the
plaintiffs were likely to succeed on the merits of their First
Amendment claim.
In response, Versant urges us to affirm the district
court's holding that federal law expressly preempts the Act from
applying to federal elections, noting that this holding may well
have contributed to the district court's conclusion that a
substantial number of the statute's applications were likely
unconstitutional and therefore the law was likely facially
invalid. Versant also worries that a future Ethics & Election
Commission will reverse course and apply the Act to federal
elections, unconstrained by any limiting statutory language.
We do not read the district court's decision that a
substantial number of the statute's applications are likely
unconstitutional -- and that plaintiffs were likely to succeed on
the merits -- as hinging on its determination that the statute was
preempted as to federal candidate elections. The district court
determined that subsection 2's ban on campaign spending was likely
unconstitutional as it applied to the two broadest of the three
statutory definitions because only the "foreign government"
definition was likely narrowly tailored. Cent. Me. Power Co., 721
- 46 -
F. Supp. 3d at 52, 55; see tit. 21-A, § 1064(1)(E). As explained,
we have determined no error as to these conclusions and,
accordingly, it is not necessary to discuss the merits of the
preemption determination in affirming the injunction.
V. Conclusion
For the foregoing reasons, we affirm the judgment of the
district court.
-Concurring Opinion Follows-
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AFRAME, Circuit Judge, concurring. I write separately
for two reasons: first, to state my view that Maine's asserted
government interests for its law are inadequate; and second, to
identify a possible vagueness problem caused by the law's
definition of foreign government.
A. Maine's Interests
I agree with the Court that the plaintiffs will likely
prevail on their First Amendment challenges to Maine's law because
the law sweeps too broadly into areas of protected speech by
American companies. I would, however, reach that conclusion by
following a somewhat different path.
I would not assume that Maine's interest in limiting
"foreign government influence" or "the appearance of such
influence" on political speech by American companies is a
compelling or even important government interest. Rather, as I
see it, First Amendment principles dictate that the government's
only compelling or important interest in this realm is to prevent
actual participation by foreign persons and entities in the
American political process, i.e., in "activities 'intimately
related to the process of democratic self-government,'" Bluman v.
FEC, 800 F. Supp. 2d 281, 287(D.D.C. 2011) (quoting Bernal v. Fainter,467 U.S. 216, 220
(1984)), aff'd,565 U.S. 1104
(2012),
or the appearance of such participation. Anything less
impermissibly interferes with the rights of Americans to engage in
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political speech. Therefore, I would conclude that Maine's law
likely is significantly overbroad because none of the restrictions
at issue are commensurate with this far more limited government
interest.
The Supreme Court has repeatedly stated that the
"'[d]iscussion of public issues and debate on the qualifications
of candidates [is] integral to the operation' of our system of
government." Ariz. Free Enter. Club's Freedom Club PAC v. Bennett,
564 U.S. 721, 734 (2011) (quoting Buckley v. Valeo,424 U.S. 1, 14
(1976) (per curiam)); see, e.g., Eu v. S.F. Cnty. Democratic Cent. Comm.,489 U.S. 214, 223
(1989); Garrison v. Louisiana,379 U.S. 64
, 74–75 (1964). As such, "the First Amendment 'has its fullest and most urgent application' to speech uttered during a campaign for political office." Eu,489 U.S. at 223
(quoting Monitor Patriot Co. v. Roy,401 U.S. 265, 272
(1971)). This principle applies equally to candidate-based and issue-based elections. McIntyre v. Ohio Elections Comm'n,514 U.S. 334, 347
(1995).
The Supreme Court also has emphasized that "political
speech does not lose First Amendment protection 'simply because
its source is a corporation.'" Citizens United v. FEC, 558 U.S.
310, 342(2010) (quoting First Nat'l Bank of Boston v. Bellotti,435 U.S. 765, 784
(1978)). That is because "[c]orporations . . . ,
like individuals, contribute to the 'discussion, debate, and the
dissemination of information and ideas' that the First Amendment
- 49 -
seeks to foster." Pac. Gas & Elec. Co. v. Pub. Util. Comm'n of
Cal., 475 U.S. 1, 8(1986) (plurality opinion) (quoting Bellotti,435 U.S. at 783
); see Citizens United,558 U.S. at 342-43
. Thus, the political speech of American corporations should be treated no differently than the speech of American "natural persons." Citizens United,558 U.S. at 343
(quoting Bellotti,435 U.S. at 776
).
The Maine law bans, among other things, American
corporate political speech that is influenced or appears to be
influenced by a "foreign government" or a "foreign
government-owned entity." See Me. Rev. Stat. Ann. tit. 21-A,
§ 1064(1)(D)-(F), (2) (2024). In other words, the law seeks to
limit what American companies may say in Maine political campaigns
because foreign sources may supply some of the information that
helps to shape an American company's speech choices. That, in my
view, presents a serious constitutional problem.
For over a half a century, the Supreme Court has
recognized that "the Constitution protects the right to receive
information and ideas . . . regardless of their social worth."
Stanley v. Georgia, 394 U.S. 557, 564(1969). The First Amendment also recognizes that an important "manifestation of the principle of free speech," "enjoyed [alike] by business corporations generally and by ordinary people," Hurley v. Irish-Am. Gay, Lesbian & Bisexual Grp. of Bos.,515 U.S. 557, 573-74
(1995), is the
- 50 -
"choice[] of what to say and what to leave unsaid," id.at 573 (quoting Pac. Gas & Elec. Co.,475 U.S. at 11
).
Maine seems to be concerned that foreign governments
will influence the outcome of Maine elections by inducing American
companies to spread foreign-sponsored messages to the electorate
through an American speaker. But the Maine law does not seek to
silence only foreign speech; it also seeks to suppress the speech
of American companies that might have been swayed by it. Such
targeting of an American speaker's right to engage in core
political speech is anathema to the First Amendment: "Those who
seek to censor or burden free expression often assert that
disfavored speech has adverse effects[, b]ut the 'fear that people
w[ill] make bad decisions'" based on arguments and information
provided by others generally "cannot justify content-based burdens
on speech." Sorrell v. IMS Health Inc., 564 U.S. 552, 577(2011) (quoting Thompson v. W. States Med. Ctr.,535 U.S. 357, 374
(2002)).
Every speaker's choice of what to say is influenced by
many factors, including information and opinions gleaned from
external sources. Generally, we trust counterspeech, not
government regulation of the speaker, to dissuade people from
adopting bad or false ideas that a speaker may offer. See United
States v. Alvarez, 567 U.S. 709, 726-28 (2012) (plurality opinion).
Allowing Maine to silence an American speaker because it does not
- 51 -
like a source of information which may have influenced that speaker
does not square with the basic First Amendment principles
recognizing the rights to receive information and to speak one's
ideas. See Sorrell, 564 U.S. at 577. I would reject out of hand
the interest Maine appears to assert in silencing an American
speaker on political matters.
To be clear, that does not mean that Maine is powerless
to prevent foreign government speech in its elections. There was
much debate in this appeal about whether the Supreme Court's
summary affirmance in Bluman binds this Court. I find that debate
irrelevant because, even if it does not bind our disposition of
this case, Bluman articulates a proper understanding of the
contours of the government's permissible interest in restricting
foreign participation in American elections.
Bluman recognized that the government "has a compelling
interest for purposes of First Amendment analysis in limiting the
participation of foreign citizens in activities of American
democratic self-government, and in thereby preventing foreign
influence over the U.S. political process." Bluman, 800 F. Supp.
2d at 288. Maine seizes on the phrase "foreign influence over the
U.S. political process" as supporting the broad governmental
interest that it proposes. But in so doing, Maine isolates that
phrase from the rest of the quoted sentence and the case more
generally.
- 52 -
Bluman involved a direct restriction on a foreign
citizen making a political contribution or independent spending in
a political campaign. See id. at 282-83. Bluman held that these acts -- the actual giving to a candidate or independent spending by a foreign citizen -- may be constitutionally proscribed to protect our democratic processes from foreign influence.Id. at 288-89
. In other words, Bluman held that the government may close off "activities 'intimately related to the process of democratic self-government'" from foreign participation.Id.
at 287 (quoting Bernal,467 U.S. at 220
). Thus, Bluman holds only that the government may forbid foreign persons or entities from actually participating in the American political process. Id.; see Agency for Int'l Dev. v. All. for Open Soc'y Int'l, Inc.,591 U.S. 430
,
436 (2020) (recognizing that First Amendment rights do not extend
to foreign organizations operating abroad).
But Maine incorrectly reads Bluman to go further. It
reads Bluman as authorizing the government to prevent an American
company from itself speaking because it consults or has some other
contact with a foreign government before it decides what to say.
That is a misreading of Bluman. Bluman does not support the
regulation of this sort of secondhand foreign influence on the
American political process.
In line with Bluman, Citizens United seems to have
adopted, in the corporate context, the same interest in preventing
- 53 -
actual foreign participation in the American political process, or
the appearance thereof. See Citizens United, 558 U.S. at 362. One of the government's arguments in Citizens United against extending First Amendment rights to corporations was that it would allow "foreign individuals or associations [to] influenc[e] our Nation's political process." Seeid.
The Supreme Court stated that, even if there were such
a compelling interest, it would only extend to "corporations or
associations that were created in foreign countries or funded
predominately by foreign shareholders." Id. at 362. The Court's explanation suggests that any government interest in restricting corporate political speech would be limited to situations where the foreign corporations were themselves speaking or where the American company was predominantly funded by foreign shareholders such that these shareholders in effect controlled or appeared to control the company's speech. Seeid.
Maine's asserted interest, however, is far broader insofar as it suggests that a foreign government's influence over an American company, even when small, provides grounds for silencing an American company. Citizens United does not contemplate such an interest. Seeid.
In sum, this case presents an important question about
when the government may prohibit speech in a political campaign by
an American corporation. Maine asserts that it has the power to
do so whenever it appears that a foreign government might have
- 54 -
influenced an American company's speech choice. But absent foreign
government control, it is the American company that ultimately
decides what to say. That decision by an American speaker is
protected by the First Amendment. While I agree with the Court
that Maine's law would infringe on the First Amendment even if
Maine's asserted interests were compelling or important, I would
say now that they are not.
B. Vagueness
I also want to raise a concern about potential vagueness
in Maine's law because, even after today's ruling, the case remains
in its early stages. My vagueness concern relates to the law's
definition of "foreign government." See tit. 21-A, § 1064(1)(D).
The "foreign government" definition plays a central role
in the Maine law's application. The law prohibits, and even
criminalizes, otherwise constitutionally protected political
speech by American companies that are "foreign
government-influenced entities." See tit. 21-A, § 1064(2). Each
method by which an American company becomes a "foreign
government-influenced entity" leads back to the law's definition
of "foreign government." See id. § 1064(1)(D)-(F). Thus, under
Maine's scheme, an American company must determine whether it has
a relevant relationship with a "foreign government."
The statute defines "foreign government" as follows:
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"Foreign government" includes any person or
group of persons exercising sovereign de facto
or de jure political jurisdiction over any
country other than the United States or over
any part of such country and includes any
subdivision of any such group and any group or
agency to which such sovereign de facto or de
jure authority or functions are directly or
indirectly delegated. "Foreign government"
includes any faction or body of insurgents
within a country assuming to exercise
governmental authority, whether or not such
faction or body of insurgents has been
recognized by the United States.
Id. § 1064(1)(D).
Maine borrowed this definition from the Foreign Agents
Registration Act's definition of "government of a foreign
country." See 22 U.S.C. § 611(e). The Foreign Agents Registration Act, inter alia, prohibits a person from acting as an "agent of a foreign principal" -- which includes acting as an agent of the "government of a foreign country,"id.
§ 611(b)(1),
(c)(1) -- unless the person first files a registration with the
Attorney General. Id. § 612(a).
There are a handful of cases holding that the Foreign
Agents Registration Act's registration requirement comports with
the Constitution. See, e.g., United States v. Peace Info. Ctr.,
97 F. Supp. 255, 262 (D.D.C. 1951) ("The statute under
consideration neither limits nor interferes with freedom of
speech. It does not regulate expression of ideas. Nor does it
preclude the making of any utterances. It merely requires persons
- 56 -
carrying on certain activities to identify themselves by filing a
registration statement."); Att'y Gen. v. Irish N. Aid Comm., 346
F. Supp. 1384, 1389-90(S.D.N.Y. 1972) (holding that the registration requirement is constitutional); Att'y Gen. v. Irish N. Aid Comm.,530 F. Supp. 241, 253
(S.D.N.Y. 1981) (same). Because the registration requirement does not implicate constitutional rights and contains a specific-intent mens rea for the criminal penalties arising from a failure to register, see22 U.S.C. § 618
(a), vagueness concerns about identifying a "government of a foreign country,"id.
§ 611(b)(1), (e), may not be substantial in the registration context. See Screws v. United States,325 U.S. 91, 102
(1945) (stating that a statute is not likely to be vague when a conviction requires a specific intent to violate the statute); Vill. of Hoffman Ests. v. Flipside, Hoffman Ests., Inc.,455 U.S. 489, 494-95
(1982) (stating that when a law
"implicates no constitutionally protected conduct," a statute is
impermissibly vague only if it is "vague in all of its
applications").
But the context into which Maine has imported the
"government of a foreign country" definition is quite different.
Here, as discussed, the Maine law has obvious and substantial
constitutional implications under the First Amendment. According
to the law, whether an American company is silenced from engaging
in political speech depends on whether that company maintains a
- 57 -
covered relationship with a "foreign government." Tit. 21-A,
§ 1064(1)(E), (2).
Because of the Maine law's First Amendment implications,
it is essential that the definition of "foreign government" be
sufficiently clear to provide American companies with adequate
notice of when they must desist from otherwise protected speech.
That is especially so where a company's wrong assessment of its
speech rights exposes it to criminal penalties under a mens rea
standard that is less protective than specific intent -- the Maine
law imposes a mens rea of "knowing," which typically indicates a
general intent crime. Tit. 21-A, § 1064(9); Bryan v. United
States, 524 U.S. 184, 193 (1998) ("[U]nless the text of the statute
dictates a different result, the term 'knowingly' merely requires
proof of knowledge of the facts that constitute the offense."
(footnote omitted)).
The Supreme Court raised similar concerns in Reno v.
ACLU, 521 U.S. 844(1997). Reno recognized that vagueness "raise[s] special First Amendment concerns because of its obvious chilling effect on free speech." Reno,521 U.S. at 871-72
. These concerns are heightened when criminal penalties are involved because "criminal sanctions may well cause speakers to remain silent rather than communicate even arguably unlawful words."Id. at 872
. "[S]tandards of permissible statutory vagueness are [thus]
strict in the area of free expression." Keyishian v. Bd. of
- 58 -
Regents of Univ. of N.Y., 385 U.S. 589, 604(1967) (quoting NAACP v. Button,371 U.S. 415, 432
(1963)). "First Amendment freedoms need breathing space to survive, [and therefore] government may regulate in the area only with narrow specificity."Id.
(quoting NAACP,371 U.S. at 433
).
I am concerned that Maine's law fails to regulate with
the required "narrow specificity." Keyishian, 385 U.S. at 604(quoting NAACP,371 U.S. at 433
). The definition of "foreign
government," the fulcrum on which the law pivots, is exceedingly
broad. It covers "de facto . . . political jurisdiction" exercised
by a "group" or "any subdivision of any such group" over "any part
of [any] country" other than the United States. Tit. 21-A,
§ 1064(1)(D). It also reaches "any faction or body of insurgents
within a country assuming to exercise governmental authority,
whether or not such faction or body of insurgents has been
recognized by the United States." Id.
We live in a complex world. Are the Houthis a "foreign
government" in Yemen under Maine's foreign government definition?
How about MS-13 in El Salvador? Boko Haram in Nigeria? Or even
kibbutzim in Israel? The hard calls are everywhere and endless.
That Maine requires each company to monitor what groups
or people may be purchasing its shares is difficult enough. But
the law also requires each company to make granular judgments about
the power that each "group," "subdivision of . . . such group," or
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"body of insurgents" has within any part of any country at any
time. Id. It would be a tall task for our State Department to
make these determinations. It seems to me it would be almost
impossible for a business or media group confidently to make such
judgments in constantly changing political environments.
As I see it, there is a likelihood that the "foreign
government" definition, the linchpin provision of Maine's law, is
sufficiently vague that people "of common intelligence must
necessarily guess at its meaning and differ as to its application."
Baggett v. Bullitt, 377 U.S. 360, 367(1964) (emphasis added). If I am right, a company otherwise wishing to participate in a Maine election would likely abstain from political speech entirely -- especially given the criminal penalties that may attach from an inaccurate evaluation of the political situation in a faraway place at any given time. See tit. 21-A, § 1064(9). It is precisely to avoid such chilling of speech that the Supreme Court has closely policed statutory vagueness in areas implicating free expression. See NAACP,371 U.S. at 432-33
. As this case
returns to the district court, I urge consideration of this
potential vagueness problem.
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Reference
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