Montana voters approve corporate spending ban; opponents sue in federal court

Initiative 194 passed 65% to 34% and takes effect Jan. 1 absent court order

Montana voters on Tuesday approved Initiative 194, the measure known as The Montana Plan that changes state code to prohibit any incorporated entity in Montana from spending money to influence state, local and federal elections. The measure passed 65% to 34%, with 97% of the vote counted as of Nov. 5, according to the Associated Press. Without court intervention, the law takes effect on Jan. 1, 2027.

The challenge arrived the same night. The lawsuit was filed in federal court at 11:15 p.m. Tuesday, 18 minutes before the Associated Press called the race. The plaintiffs are the Montana Republican State Central Committee, the Montana-based Frontier Institute, the Montana-based Frontier Action Fund, the Montana Family Institute and the Montana Family Foundation. Their complaint alleges the initiative violates First Amendment rights to freedom of speech, freedom of assembly and freedom of the press, and asks the court to enjoin the law.

Montana Attorney General Austin Knudsen and Secretary of State Christi Jacobsen are the defendants. A spokesperson for Knudsen declined to comment, saying the attorney general had not been served as of 11:30 a.m. Thursday. Jacobsen’s office has not responded to a request for comment.

“I-194 harms everyone,” the complaint alleges. “It silences organizations, preventing them from sharing information essential to their purposes.”

The complaint alleges the new law harms the plaintiffs and other organizations by restricting their ability to communicate about ballot measures and advocate for candidates. It argues the initiative’s “vague terms” make it unclear which actions are prohibited, and says provisions in the law “deprive plaintiffs, their donors, and their audiences of the rights of speech, assembly, petition and association.”

The Montana GOP, according to the complaint, “relies on contributions to its independent-expenditure account by corporations and other entities” to support candidates. The complaint states Initiative 194 “will significantly reduce the funds the Montana GOP needs to make independent expenditures, and thus harm its ability to fulfill its mission.”

Citizens United — the landmark 2010 U.S. Supreme Court ruling recognizing that First Amendment protections extend to corporations — is cited 11 times in the 57-page complaint. “A law like I-194 is a ban on an organization’s speech,” the complaint reads.

The measure drew high-profile support: former U.S. Transportation Secretary Pete Buttigieg traveled to Butte to bolster the initiative. Opposition came mostly in the form of op-eds from groups claiming the measure would prevent local businesses from participating in the political process.

Several people involved in organizing efforts for Initiative 194 said the lawsuit does not come as a surprise.

“We expected a lawsuit from day one, and we’ve been waiting for this moment,” Jeff Mangan, founder and president of the Transparent Election Initiative, the group behind The Montana Plan and similar initiatives in other states, said in a statement. “Montana voters overwhelmingly made their voices heard, we’re confident in the legal foundation of this initiative and ready for the fight ahead.”

In promoting the ballot measure, Mangan and the Transparent Election Initiative have asserted that Initiative 194 is not incompatible with the Supreme Court ruling, but rather “takes a different legal approach.” Tom Moore, a senior fellow at the Center for American Progress whose white paper in part inspired Mangan to push the initiative in Montana, said the initiative relies on a centuries-old legal framework in which corporations are defined as “creatures of state law.” States, Moore said, can at any time change what powers a corporation does or does not have.

“People were really afraid that corporations, given too long a leash, would go terrorize the countryside, and a lot of people, clearly the voters of Montana, think that that’s what’s happened,” Moore said. He said states have reserved the authority to pull corporations back in, refashion their powers and then send them back out. “Nowhere in any case did it ever say that a state has to give the capacity to spend in politics,” he said, referring to Citizens United.

Moore said the specific question of a state’s ability to decline to extend certain powers to corporations has not been challenged. He said he can envision the lawsuit over the Montana law eventually coming before the U.S. Supreme Court, adding that it could take months or years to resolve.

The Hawaii Legislature passed a similar law via legislative bill in May, which is now in litigation. Moore said leaders from dozens of other states have approached his organization with interest in adopting similar initiatives.