DTE Energy, Consumers Energy sue to block Michigan's voter-approved donation ban

Proposal 2 passed with over 80% support and restricts utility political giving

Michigan’s largest utilities, DTE Energy and Consumers Energy, sued in federal court Thursday to stop implementation of new restrictions on their political giving, two days after state voters approved the limits with more than 80% support. The companies argue that Proposal 2, passed in Tuesday’s election, violates their free speech rights and other provisions of the U.S. Constitution. They filed the complaint in the U.S. District Court for the Western District of Michigan.

Proposal 2 would prohibit direct or indirect contributions to Michigan politicians by the utilities and by companies with more than $250,000 in state government contracts, along with immediate family members and other people with close connections to those companies. Michigan corporations are already barred from giving directly to candidates. The measure would extend that ban to an affected company’s president, CEO, treasurer and similar officials, its board members and people with “substantial” ownership — and to their family members.

Contributions to four categories would be restricted: the governor, attorney general, state legislators and candidates for those offices; state and local party committees; committees that make contributions to candidates, other than independent expenditure or ballot question committees; and members of the Michigan Public Service Commission. Company officials and immediate family members also could not donate to entities affiliated with elected officials or candidates that pay for their travel, meals, conference fees or other expenses.

The utilities argue the proposal violates the free speech and association rights guaranteed by the First Amendment and the Fourteenth Amendment’s due process clause. Opposition groups had already argued the measure would infringe free speech rights; the complaint adds that the law is too vague, both in its reasons for why utilities should not continue donating to candidates and in which people working at or with the companies it covers. It also contends the law violates the Fourteenth Amendment’s equal protection clause by “impermissibly” targeting utilities “and a broad swath of people associated with utilities.”

Absent an injunction, the companies “will be forced to choose between surrendering their rights to political association and risking substantial penalties for exercising them,” their attorneys wrote in the complaint. Policymakers and voters, the attorneys argued, benefit from hearing Consumers’ perspective on debates over reliability, affordability and clean energy “even if they may sometimes disagree with it.”

The suit seeks a court order barring the state from enforcing the law. It names Michigan Bureau of Elections Director Jonathan Brater, Attorney General Dana Nessel and Secretary of State Jocelyn Benson — now the governor-elect — as defendants.

The utilities’ complaint is already the second lawsuit over Proposal 2. The Mackinac Center for Public Policy announced its own legal challenge Tuesday night, after it became clear that voters had approved the measure.

The U.S. Supreme Court has generally held that political spending by corporations is protected speech, most notably in Citizens United v. Federal Election Commission, but courts have looked more favorably on narrowly tailored proposals aimed at limiting corruption. Proposal 2 does not prohibit contributions to the independent expenditure super PACs allowed under Citizens United. It does include language anticipating a legal challenge: “If any portion is found void, invalid or unenforceable, the remaining portions remain in effect.”

Maura Cowley, manager of the Michiganders for Money Out of Politics campaign, said the lawsuit was “no surprise.” The campaign argues the law will “end pay-to-play politics” in Lansing. “The corporations bankrolling our opposition have been gearing up for this lawsuit since Proposal 2 first qualified for the ballot, if not before,” Cowley said in a statement. The group is “confident Proposal 2 will withstand legal scrutiny, and we were fully expecting and are prepared to take on this and any legal challenge,” she said.

Consumers Energy spokesperson Katie Carey said in a statement that the law “unfairly targets a Michigan business,” along with its employees and their families. “Michiganders should not lose their First Amendment rights because of where they work,” Carey said.

One of the plaintiffs is the 86-year-old mother of DTE’s treasurer, who the suit says would be barred from donating to political candidates “even though she has no role at any utility.”

Consumers and DTE have spent on political races through employee-funded political action committees and “dark money” nonprofits that are not required to disclose their donors. The proposal would require disclosure by groups that reference candidates or ballot issues in so-called issue ads.