[House Report 118-318]
[From the U.S. Government Publishing Office]
118th Congress } { REPORT
HOUSE OF REPRESENTATIVES
1st Session } { 118-318
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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\
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\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).
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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\
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\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).
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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\
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\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.
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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\
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\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.
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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\
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\18\Id.
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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\
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\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.
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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\
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\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.
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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.
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\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.
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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\
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\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).
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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\
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\29\Oversight of the Federal Election Commission: Hearing Before
the H. Comm. on Admin., 118th Cong. (2023).
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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\
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\30\U.S. Const. art. I, Sec. 8, cl. 3.
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Article I, Section 8, Clause 4--``To
establish an uniform Rule of Naturalization, . . .
throughout the United States;''\31\
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\31\U.S. Const. art. I, Sec. 8, cl. 4.
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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\
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\32\U.S. Const. art. IV, Sec. 4.
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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\
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\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.
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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]