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Legislative Options After Citizens United v. FEC: Constitutional and Legal Issues

First Amendment Rights

Because foreigners located abroad generally lack First Amendment rights,79 it seems possible that some restrictions upon campaign expenditures or other political speech by foreign-owned corporations could be upheld.80 Also, the United States has a strong sovereign and constitutional interest in limiting political participation to members of its polity. The nature of these restrictions may, however, depend upon corporate structure and related considerations, as courts attempt to reconcile the corporation’s “foreignness” with the general corporate rights to political speech recognized in Citizens United. Some commentators have suggested that the Court’s intention, in finding that an outright ban on corporate expenditures could not be justified as a protection against foreign influence, “is clear: it does not want to license too broad a ban on all corporate independent expenditures when there is no reason to think that foreign nationals exercise control over the decision making.”81 Such commentators are probably correct in suggesting that restrictions targeting small percentages of ownership, without the possibility of control, are more suspect than restrictions targeting wholly owned subsidiaries of foreign governments.82 Beyond the identity of the foreign owners and the degree of ownership, other considerations could include whether foreign ownership is unitary or dispersed (i.e., does a single foreign owner own the entire interest, or are there multiple owners?); whether ownership is direct or indirect; and what, beyond ownership, suffices for control. 83

Certain restrictions upon the political speech of foreign-owned or -controlled corporations could also potentially be challenged on First Amendment grounds by U.S. citizens. Courts have recognized that some restrictions on the speech of foreigners can abridge First Amendment rights of U.S. citizens by, for example, denying them use of funds to finance this speech. In Mendelsohn v. Meese, a U.S. district court upheld a challenged statute that prevented two U.S. citizens from using funds from the Palestine Liberation Organization (PLO) to finance their speaking

79 Palestine Info. Office v. Schultz, 674 F. Supp. 910, 919 (D.D.C. 1987) (upholding application of the Foreign Missions Act, 22 U.S.C. §§ 4301-4313, to close down an information office found to represent a foreign entity); Pauling v. McElroy, 164 F. Supp. 390, 393 (D.D.C. 1958) (“The protection of the Constitution of the United States does not extend to … nonresident aliens.”).

80 While the majority in Citizens United noted that it did not reach the question of “whether the Government has a compelling interest in preventing foreign individuals or associations from influencing our Nation’s political process,” this statement was dicta and does not necessarily mean that strict scrutiny would inevitably be applied to restrictions on the political speech of foreign corporations. Citizens United, slip op., at 46-47.

81

Gerken supra note 57.

82 Some commentators have suggested that foreign governments represent a special case, for purposes of constitutional rights, because their independent sovereignty places them entirely outside the constitutional structure. See, e.g., Lee M. Caplan, The Constitution and Jurisdiction over Foreign States: The 1996 Amendment to the Foreign Sovereign Immunities Act in Perspective, 41 VA. J. INTL L. 369, 399 (2001) (“[F]oreign states, whether acting in a public or private capacity, remain political entities that seek to further the public interests of the government. In other words, they always act qua sovereign. Regardless of the form in which a foreign state participates in the world market, i.e., through its national bank or a government-owned corporation, and regardless of the commercial nature of the transaction at issue, the foreign state acts at all times to improve its wealth or viability. By nature, the foreign state can never shirk the essential attributes of sovereignty.”).

83 While many proposed bills treat ownership as synonymous with control, some bills recognize forms of control that are independent of ownership. See, e.g., H.R. 4522, § 2 (amending the definition of “foreign national” to include corporations with foreign principals on the board of directors, or whose debt or other obligations are directly or indirectly held by foreign principals); S. 2959, § 2 (amending the definition of “foreign national” to include corporations where foreign principals have the “power to direct, dictate, control, or directly or indirectly participate in the decisionmaking process of the corporation with respect to activities in connection with a[n] … election,” or which received a majority of its gross receipts for the prior fiscal year from two or more “foreign principals or individuals”).

Congressional Research Service

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