A federal judge has blocked the Jan. 1 start of a new Minnesota campaign finance law aimed at curbing foreign corporate influence, saying that it impinged on free speech rights of corporations.
U.S. District Court Judge Eric Tostrud granted the request Wednesday from the Minnesota Chamber of Commerce to block a provision in a broader 2023 election law.
Tostrud wrote that the law would forbid some businesses with foreign ownership from exercising their First Amendment free speech rights in state elections and on ballot questions.
The judge noted that those who violate the law could face both civil and criminal penalties. “Important here, the extent of foreign ownership necessary to trigger the statute’s prohibitions is not great: a foreign ownership interest of as little as 1% may qualify,” Tostrud’s 34-page order said.
The provision, now paused, would put new election spending restrictions on companies with foreign ownership, prohibiting them from making political contributions in Minnesota. The law defined a foreign-influenced company as having a single foreign investor that owns 1% or more of its equity, or multiple foreign investors that control 5% or more of the company’s equity.
Doug Loon, president of the Minnesota Chamber, said the ruling is important. “With this injunction in place, businesses can continue to exercise their ability — as people in the eyes of the law — to participate in the democratic process without the fear of being prosecuted,” he said in a statement.
Tostrud said he granted the restraining order because the chamber is likely to succeed after a trial in blocking the law. “Preventing foreign influence on Minnesota elections is a compelling state interest in the abstract,” the judge wrote, adding that the U.S. Constitution requires a more narrow tailoring of any law that burdens free speech.
State Rep. Emma Greenman, DFL-Minneapolis, and the sponsor of the elections bill, criticized the ruling.
“This is a troubling trend of judicial decisions more concerned with safeguarding the unbridled political spending power of foreign-influenced corporations than preserving the actual power of American voters to shape the trajectory of our democracy,” she said in a statement.
She said the decision “supercharges” the U.S. Supreme Court’s 2010 ruling in Citizens United that found corporations and unions to be collections of people with free speech rights, allowing them to spend money to advocate for candidates and issues.
Free Speech for People, a national nonprofit that filed a friend-of-the-court brief defending the law, said the injunction was disappointing, but noted the law had not been struck down. After a full trial on the merits, Free Speech said it expects the law to be upheld.
Federal law currently prohibits any spending by foreign governments, individuals or entities on U.S. elections. A loophole allows a corporation registered in the United States with significant foreign ownership to spend money on federal, state and local elections.
Tostrud has been on the bench since 2018. He was appointed by former President Donald Trump.