[House Report 118-318]
[From the U.S. Government Publishing Office]


118th Congress }                                          { REPORT 
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                          { 118-318

======================================================================
 
                  STOP FOREIGN FUNDS IN ELECTIONS ACT

                                _______
                                

 December 14, 2023.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

        Mr. Steil, from the Committee on House Administration, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 3229]

    The Committee on House Administration, to whom was referred 
the bill (H.R. 3229) to amend the Federal Election Campaign Act 
of 1971 to apply the prohibition against contributions and 
donations by foreign nationals in connection with elections to 
contributions or donations in connection with ballot 
initiatives and referenda, having considered the same, reports 
favorably thereon with amendments and recommends that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Committee Action.................................................     5
Committee Consideration..........................................     6
Committee Votes..................................................     6
Statement of Constitutional Authority............................     6
Committee Oversight Findings.....................................     6
Statement of Budget Authority and Related Items..................     7
Congressional Budget Office Estimate.............................     7
Performance Goals and Objectives.................................     7
Duplication of Federal Programs..................................     7
Advisory on Earmarks.............................................     7
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     7
Applicability to Legislative Branch..............................     7
Section-by-Section Analysis......................................     8
Changes in Existing Law Made by the Bill, as Reported............     8

    The amendments (stated in terms of the page and line 
numbers of the introduced bill) are as follows:
    Page 2, line 3, strike ``referenda'' and insert ``referenda 
and recall elections''.
    Page 2, line 7, strike ``referendum'' and insert 
``referendum or recall election''.

                          Purpose and Summary

    H.R. 3229, Stop Foreign Funds in Elections Act, introduced 
by Representative Brian Fitzpatrick (PA-01) and co-sponsored by 
Representative Jared Golden (ME-02) prohibits foreign nationals 
from making a contribution or donation of money or other thing 
of value, or to make an express or implied promise to make a 
contribution or donation to a State or local ballot initiative, 
referendum, or recall election. Federal law currently does not 
prohibit these specific types of spending by foreign nationals 
in State or local popular legislative activities. As such, this 
legislation is needed to rectify this problem.

                  Background and Need for Legislation


                               BACKGROUND

    Congress created the Federal Election Commission (``FEC'') 
in 1974\1\ and gave it the authority to enforce all civil 
violations of federal campaign finance law.\2\ The agency is a 
bipartisan commission of six commissioners who serve single, 
non-renewable six-year terms, though many commissioners ``hold 
over'' until a new commissioner is appointed.\3\ No more than 
three commissioners may be affiliated with the same political 
party.\4\ Commissioners are appointed by the president, 
traditionally upon the recommendation of Senate leadership, and 
are subject to confirmation by the United States Senate.\5\ For 
the FEC to act, a majority vote of the commissioners is 
required.\6\
---------------------------------------------------------------------------
    \1\Federal Election Campaign Act Amendments of 1974, 52 U.S.C. 
Sec. 30106 (1974).
    \2\Id. at Sec. Sec. 30106(b)(1), 30107(e).
    \3\Id. at Sec. 30106(a)(2)(A)-(B). Commissioners are allowed to 
serve holdover terms in the event a replacement is not confirmed before 
their term expires. One commissioner has been at the FEC since 2002, 15 
years longer than the standard term.
    \4\Id. at Sec. 30106(a)(2)(A).
    \5\Id. at Sec. 30106(a)(1).
    \6\Id. at Sec. 30106(c).
---------------------------------------------------------------------------
    The FEC is tasked with enforcing the Federal Election 
Campaign Act (``FECA''). Under FECA, foreign nationals\7\ are 
prohibited from, directly or indirectly, making a contribution 
or donation of money or other thing of value, or making an 
express or implied promise to make a contribution or donation, 
in connection with a Federal, State, or local election 
(``foreign national spending prohibition'').\8\ Foreign 
nationals are also prohibited from contributing or donating to 
political party committees\9\ and from making expenditures, 
including independent expenditures, or disbursements for 
electioneering communications.\10\
---------------------------------------------------------------------------
    \7\Foreign national is defined as ``(1) a foreign principal, as 
such term is defined by section 611(b) of title 22, except that the 
term ``foreign national'' shall not include any individual who is a 
citizen of the United States; or (2) an individual who is not a citizen 
of the United States or a national of the United States (as defined in 
section 1101(a)(22) of title 8) and who is not lawfully admitted for 
permanent residence, as defined by section 1101(a)(20) of title 8.'' 
See 52 U.S. Code Sec. 30121(b).
    \8\Id. at Sec. 30121(a)(1)(A).
    \9\Id. at Sec. 30121(a)(1)(B).
    \10\Id. at Sec. 30121(a)(1)(C).
---------------------------------------------------------------------------
    The Supreme Court has consistently held that spending money 
in connection with political activities, including making 
donations or expenditures, qualifies as protected speech under 
the First Amendment.\11\ Although the court has never squarely 
been presented with the question, it previously affirmed a 
three-judge court's decision, authored by then-Judge Kavanaugh, 
that upheld the prohibition with respect to foreign nationals 
who wanted to make contributions to federal and State 
candidates.\12\
---------------------------------------------------------------------------
    \11\See Buckley v. Valeo, 424 U.S. 1 (1976); Davis v. FEC 554 U.S. 
724 (2008); Citizens United v. FEC, 558 U.S. 310 (2010); McCutcheon v. 
FEC, 572 U.S. 185 (2014); FEC v. Ted Cruz for Senate, 596 U.S. 289 
(2022).
    \12\See Bluman v. FEC, 800 F. Supp. 2d 281, 288 (D.D.C. 2011), 
aff'd, 565 U.S. 1104 (2012). Importantly, the three-judge decision did 
not rely on Congress' power under the Elections Clause of Article I, 
Section 4 to justify the foreign national spending prohibition. Cf. 
Report: The Elections Clause: States' Primary Constitutional Authority 
Over Elections, Comm. on H. Admin. (Republicans) (Aug. 12, 2021), 
https://republicanscha.house.gov/sites/republicans.cha.house.gov/files/
documents/
Report_The%20Elections%20Clause_States%20Primary%20Constitutional%20 
Authority%20over%20Elections%20%28Aug%2011%202021%29.pdf.
---------------------------------------------------------------------------
    In October 2018, the FEC was asked to investigate 
allegations that foreign businesses unlawfully donated to two 
Montana state political committees in opposition to a Montana 
ballot initiative. The 2018 general election in Montana 
featured a ballot initiative (``I-186''), which asked voters 
whether they wanted to ``establish new requirements for a hard 
rock mine permits based on standards for water quality in land 
restoration plans.''\13\ According to a complaint filed with 
the FEC, Sandfire, a Canadian subsidiary of Sandfire NL, an 
Australian company, made donations totaling almost $300,000 for 
the purpose of opposing I-186.\14\ $270,000 were donated to an 
``incidental committee'',\15\ MMA, established for the purpose 
of opposing I-186, and $17,857 was donated to a state ballot 
issue committee, Stop I-186.\16\ The complaint alleged ``that 
Sandfire NL is the source of the donations made by Sandfire, 
asserting that `[a]ccording to its public filings, Sandfire 
Resources America has no sources of revenue in the United 
States, and a cash flow of zero.'''\17\
---------------------------------------------------------------------------
    \13\Montana I-186, Requirements for Permits and Reclamation Plans 
of New Hard Rock Mines Initiative (2018), Ballotpedia, (last accessed 
Dec. 11, 2023), https://ballotpedia.org/Montana_I-
186,_Requirements_for_Permits_and_Reclamation_Plans_of_New_Hard_Rock_Min
es_Initiative_ (2018).
    \14\See FEC Factual and Legal Analysis, MUR 7523 (Stop I-186 to 
Protect Mining and Jobs), (Oct. 4, 2021), available at https://
www.fec.gov/ files/legal/murs/7523/7523_23.pdf.
    \15\Under Montana law, ``incidental committee'' means a political 
committee that is not specifically organized or operating for the 
primary purpose of supporting or opposing candidates or ballot issues 
but that may incidentally become a political committee by receiving a 
contribution or making an expenditure. See MCA 13-1-101(22)(a).
    \16\FEC Factual and Legal Analysis, MUR 7523, supra note 14.
    \17\Id.
---------------------------------------------------------------------------
    The FEC was asked to review whether Sandfire and Sandfire 
NL violated the foreign national spending prohibition by 
donating to MMA and Stop I-186, as well as whether the 
committees violated the same provision for accepting foreign 
donations. The FEC dismissed both allegations.\18\
---------------------------------------------------------------------------
    \18\Id.
---------------------------------------------------------------------------
    In dismissing the complaint, the FEC first considered how 
FECA and Supreme Court precedent define ``election'' to 
determine whether these donations fell within the meaning of 
the statute. Under FECA, an election is defined as ``a general, 
special, primary, or runoff election'' as well as ``a 
convention or caucus of a political party which has authority 
to nominate a Candidate.''\19\ FEC regulations specify that an 
``[e]lection means the process by which individuals, whether 
opposed or unopposed, seek nomination for election, or 
election, to Federal office.''\20\ In addition, Supreme Court 
precedent makes clear that FECA ``regulates only candidate 
elections, not referenda or other issue-based ballot 
measures.''\21\ Consistent with the above, the FEC concluded 
FECA does not prohibit spending relating only to ballot 
initiatives because such spending is ``not in connection with'' 
elections.\22\
---------------------------------------------------------------------------
    \19\52 U.S.C. Sec. 30101(1).
    \20\11 C.F.R. Sec. 100.2(a).
    \21\McIntyre v. Ohio Elections Com'n, 514 U.S. 334, 356 (1995) 
(citing Buckley v. Valeo, 424 U.S. 1, 80 (1976)); see also First Nat. 
Bank of Boston v. Bellotti, 435 U.S. 765 (1978) (``Referenda are held 
on issues, not candidates for public office.'').
    \22\FEC Factual and Legal Analysis, MUR 7523, supra note 14.
---------------------------------------------------------------------------
    After finding that the definition of ``elections'' under 
FECA does not encompass spending related only to ballot 
initiatives, the FEC considered the facts of Sandfire and 
Sandfire NL's donations. First, the FEC found that Sandfire and 
Sandfire NL appeared to be foreign nationals under the law.\23\ 
Second, the FEC concluded that these entities made donations to 
pure ballot initiative committees to fund an advertising 
campaign to oppose I-186, but that no candidates were involved 
with the campaign.\24\ And finally, the complaint did not 
provide ``any information that suggested any candidate was 
involved in the operation of the ballot measure committees, 
fundraising for the ballot measure committees, or otherwise 
linked their candidacy to the passage or failure of the ballot 
measure.''\25\
---------------------------------------------------------------------------
    \23\Id. The definition of foreign national includes foreign 
principal, which is defined under 22 U.S.C. Sec. 611(b)(3) and includes 
``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.''
    \24\FEC Factual and Legal Analysis, MUR 7523, supra note 14.
    \25\Id.
---------------------------------------------------------------------------
    Based on these facts and the applicable law, the FEC 
dismissed the complaint, reasoning that Sandfire and Sandfire 
NL's donations constituted spending relating only to ballot 
initiatives, a permissible activity, because it was not linked 
to an office-seeking candidate at the federal, state, or local 
level.

                          NEED FOR LEGISLATION

    Representative Fitzpatrick and Golden's H.R. 3229, the Stop 
Foreign Funds in Elections Act, would update FECA to prohibit 
foreign nationals from making a contribution or donation of 
money or other thing of value, or to make an express or implied 
promise to make a contribution or donation in support or 
opposition to a State or local ballot initiative, referendum, 
or recall election.
    The House of Representatives should pass this legislation 
to prevent a similar situation to what occurred in Montana.
    Despite strong political differences among the 
commissioners, a nearly identical piece of legislation was one 
of the FEC's highest-priority bipartisan legislative 
recommendations in 2022.\26\ In addition to the ballot 
initiative prohibition, the FEC also recommended prohibiting 
foreign spending in support or opposition to State or local 
referenda or recall elections. As described above, the FEC has 
concluded that these two popular legislative activities and 
voters' recall of a public official do not constitute 
``elections'' under FECA and that any prohibition on foreign 
national spending in support or opposition should be express in 
the statutory text.
---------------------------------------------------------------------------
    \26\Legislative Recommendations of the Federal Election Commission 
2022, FEC (Dec. 15, 2022), available at https://www.fec.gov/resources/
cms-content/documents/legrec2022.pdf.
---------------------------------------------------------------------------
    The Stop Foreign Funds in Elections Act accepts the 
entirety of the FEC's proposal, but also adds a rule of 
construction that prevents the FEC from treating a State or 
local election or State or local ballot initiative or referenda 
as an ``election'' under FECA, including the imposition of any 
reporting or registration requirements. However, even though 
these activities would not constitute ``elections'', the FEC 
would enforce this new prohibition in the same way it currently 
enforces the existing prohibition on foreign national 
contributions.

                            Committee Action


                       INTRODUCTION AND REFERRAL

    On May 11, 2023, Representative Brian Fitzpatrick (PA-01) 
joined by Representative Jared Golden (ME-02), introduced H.R. 
3229, Stop Foreign Funds in Elections Act. The bill was 
referred to the U.S. House of Representatives Committee on 
House Administration.

                                HEARINGS

    For the purposes of clause 3(c)(6)(A) of House Rule XIII, 
in the 118th Congress, the Committee on House Administration 
held two full committee hearings to develop H.R. 3229.
          1. On May 11, 2023, the Committee held a full 
        committee hearing titled, ``American Confidence in 
        Elections: Protecting Political Speech.'' The hearing 
        took place almost a decade to the day since the 
        Internal Revenue Service scandal involving then Acting 
        Director of Exempt Organizations Lois Lerner 
        apologizing for inappropriately targeting conservative 
        organizations' applications for tax-exempt status.\27\ 
        It focused on the importance of enhancing protections 
        for political speech and donor privacy to protect 
        individuals and groups from retribution, harassment, or 
        intimidation based on their beliefs. Witnesses 
        included: Ms. Harmeet K. Dhillon, Managing Partner, 
        Dhillon Law Group Inc., Ms. Audrey Perry Martin, 
        Partner, The Gober Group, Mr. Justin Riemer, Principal, 
        Riemer Law, LLC, Mr. Bradley A. Smith, Chairman and 
        Founder, Institute for Free Speech, and Mr. Stephen 
        Spaulding, Vice President for Policy & External 
        Affairs, Common Cause.\28\
---------------------------------------------------------------------------
    \27\Matt Nese, It's Been 10 Years Since the IRS's Tea Party 
Scandal. Will Congress Finally Act?, Reason Foundation (May 10, 2023), 
https://reason.com/2023/05/10/its-been-10-years-since-the-irss-tea-
party-scandal-will-congress-finally-act/.
    \28\American Confidence in Elections: Protecting Political Speech: 
Hearing Before the H. Comm. On Admin., 118th Cong. (2023).
---------------------------------------------------------------------------
          2. On September 20, 2023, the Committee held a full 
        committee hearing titled, ``Oversight of the Federal 
        Elections Commission.'' The hearing represented the 
        first traditional oversight hearing of the Federal 
        Election Commission in more than a decade.\40\ The 
        committee heard testimony from all six commissioners 
        and the agency's inspector general. The first panel of 
        witnesses included the Honorable Dara Lindenbaum, 
        Chairwoman, the Honorable Sean Cooksey, Vice Chairman, 
        the Honorable Shana Broussard, Commissioner, the 
        Honorable Allen Dickerson, Commissioner, the Honorable 
        Ellen Weintraub, Commissioner, and the Honorable James 
        Trainor, Commissioner. The second panel featured Mr. 
        Christopher Skinner, Inspector General.\29\
---------------------------------------------------------------------------
    \29\Oversight of the Federal Election Commission: Hearing Before 
the H. Comm. on Admin., 118th Cong. (2023).
---------------------------------------------------------------------------

                        Committee Consideration

    On November 30, 2023, the Committee on House Administration 
met in open session and ordered the bill, H.R. 3229, Stop 
Foreign Funds in Elections Act, favorably reported, as amended, 
with a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of House rule XIII, the 
following vote occurred during the Committee's consideration of 
H.R. 3229:
          1. Vote on an amendment in the nature of a substitute 
        to H.R. 3229 offered by Mr. Steil, adopted by voice 
        vote.
          2. Vote on an amendment to H.R. 3229, offered by Mr. 
        Morelle, adopted by voice vote.
          3. Vote to report H.R. 3229 favorably, as amended, to 
        the House of Representatives, passed by voice vote.

                 Statement of Constitutional Authority

    Congress has the power to enact this legislation pursuant 
to the following:
           Article I, Section 8, Clause 3--``To 
        regulate Commerce with foreign Nations, and among the 
        several States, and with the Indian Tribes;''\30\
---------------------------------------------------------------------------
    \30\U.S. Const. art. I, Sec. 8, cl. 3.
---------------------------------------------------------------------------
           Article I, Section 8, Clause 4--``To 
        establish an uniform Rule of Naturalization, . . . 
        throughout the United States;''\31\
---------------------------------------------------------------------------
    \31\U.S. Const. art. I, Sec. 8, cl. 4.
---------------------------------------------------------------------------
           Article IV, Section 4--``The United States 
        shall guarantee to every State in this Union a 
        Republican Form of Government, and shall protect each 
        of them against Invasion; . . .''\32\
---------------------------------------------------------------------------
    \32\U.S. Const. art. IV, Sec. 4.
---------------------------------------------------------------------------
           Article I, Section 8, Clause 18--``To make 
        all Laws which shall be necessary and proper for 
        carrying into Execution the foregoing Powers, and all 
        other Powers vested by this Constitution in the 
        Government of the United States, or in any Department 
        or Officer thereof.''\33\
---------------------------------------------------------------------------
    \33\U.S. Const. art. I, Sec. 8, cl. 18. In U.S. v. Singh, the 
United States Court of Appeals for the Ninth Circuit held that the 
foreign national spending prohibition was justified under Congress' 
powers to provide for a uniform rule of naturalization, and was 
necessary and proper to the exercise of its immigration and foreign 
relations powers. See 924 F. 3d 1030, 1042-1043 (2019). Importantly, 
the court did not rely on the Elections Clause of Article I, Section 4 
to justify the prohibition. Cf Report: The Elections Clause: States' 
Primary Constitutional Authority Over Elections, Comm. on H. Admin. 
(Republicans) (Aug. 12, 2021), https://republicanscha.house.gov/ sites/
republicans.cha.house.gov/files/documents/
Report_The_%20Elections%20Clause_States 
%20Primary%20Constitutional%20Authority%20over%20Elections%20%28Aug%2011
 %202021%29.pdf.
---------------------------------------------------------------------------

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of House rule XIII, the 
Committee advises that the findings and recommendations of the 
Committee, based on oversight activities under clause 2(b)(1) 
of rule X of the Rules of the House of Representatives, are 
incorporated in the descriptive portions of this report.

            Statement of Budget Authority and Related Items

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives and section 308(a)(I) of the 
Congressional Budget Act of 1974, the Committee provides the 
following opinion and estimate with respect to new budget 
authority, entitlement authority, and tax expenditures. The 
Committee believes that there will be no additional costs 
attributable to H.R. 3229.

                  Congressional Budget Office Estimate

    With respect to the requirement of clause 3(c)(3) of rule 
XIII of the Rules of the House of Representatives, a cost 
estimate provided by the Congressional Budget Office pursuant 
to section 402 of the Congressional Budget Act of 1974 was not 
made available to the Committee in time for the filing of this 
report. The Chairman of the Committee shall cause such an 
estimate to be printed in the Congressional Record if it is 
received by the Committee.

                    Performance Goals and Objectives

    The performance goals and objectives of H.R. 3229 are to 
prohibit foreign nationals from making a contribution or 
donation of money or other thing of value, or to make an 
express or implied promise to make a contribution or donation 
or anything of value to a State or local committee supporting 
or opposing a ballot initiative, referendum, or recall 
election.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of House rule XIII, no provision 
of H.R. 3229 establishes or reauthorizes a program of the 
federal government known to be duplicative of another federal 
program.

                          Advisory on Earmarks

    In accordance with clause 9 of House rule XXI, H.R. 3229 
does not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits as defined in clauses 
9(d), 9(e), or 9(f) of House rule XXI.

                       Federal Mandates Statement

    An estimate of federal mandates prepared by the Director of 
the Congressional Budget Office pursuant to section 423 of the 
Unfunded Mandates Reform Act was not made available to the 
Committee in time for the filing of this report. The Chairman 
of the Committee shall cause such an estimate to be printed in 
the Congressional Record if it is received by the Committee.

                      Advisory Committee Statement

    H.R. 3229 does not establish or authorize any new advisory 
committees.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                      Section-by-Section Analysis


Section 1

    This section provides a short title for H.R. 3229, the Stop 
Foreign Funds in Elections Act.

Section 2

    Section 2(a) amends the Federal Election Campaign Act of 
1971 to prohibit foreign nationals from making a contribution 
or donation of money or other thing of value, or to make an 
express or implied promise to make a contribution or donation 
to a State or local ballot initiative, referendum, or recall 
election.
    Section 2(b) adds a rule of construction in line with the 
new language under section 2(a) that prevents State or local 
elections or State or local ballot initiative or referenda from 
being treated like an ``election'' under the Federal Election 
Campaign Act.
    Section 2(c) provides an effective date when the 
legislation becomes law. Contributions and donations made by 
foreign nationals that fall within the meaning of the amended 
language in section 2(a) are prohibited on or after the date of 
the law's enactment.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

                 FEDERAL ELECTION CAMPAIGN ACT OF 1971




           *       *       *       *       *       *       *
TITLE III--DISCLOSURE OF FEDERAL CAMPAIGN FUNDS

           *       *       *       *       *       *       *



            contributions and donations by foreign nationals

  Sec. 319. (a) Prohibition.--It shall be unlawful for--
          (1) a foreign national, directly or indirectly, to 
        make--
                  (A) a contribution or donation of money or 
                other thing of value, or to make an express or 
                implied promise to make a contribution or 
                donation, in connection with a Federal, State, 
                or local election, including a State or local 
                ballot initiative or referendum or recall 
                election;
                  (B) a contribution or donation to a committee 
                of a political party; or
                  (C) an expenditure, independent expenditure, 
                or disbursement for an electioneering 
                communication (within the meaning of section 
                304(f)(3)); or
          (2) a person to solicit, accept, or receive a 
        contribution or donation described in subparagraph (A) 
        or (B) of paragraph (1) from a foreign national.
  (b) As used in this section, the term ``foreign national'' 
means--
          (1) a foreign principal, as such term is defined by 
        section 1(b) of the Foreign Agents Registration Act of 
        1938 (22 U.S.C. 611(b)), except that the term ``foreign 
        national'' shall not include any individual who is a 
        citizen of the United States; or
          (2) an individual who is not a citizen of the United 
        States or a national of the United States (as defined 
        in section 101(a)(22) of the Immigration and 
        Nationality Act) and who is not lawfully admitted for 
        permanent residence, as defined by section 101(a)(20) 
        of the Immigration and Nationality Act (8 U.S.C. 
        1101(a)(20)).

           *       *       *       *       *       *       *


                                  [all]