Seattle Passes Campaign Finance Restriction Targeting Corporate Donations

Seattle was the site of unprecedented corporate campaign spending in municipal elections last year. Amazon donated nearly $1.5 million to the Seattle Chamber of Commerce’s political action committee, seeking to unseat city council members who favored higher taxes on large corporations. But despite the investment, five of the seven candidates backed by the pro-business PAC lost their elections.

On Monday, during the first full meeting of the city council in the new year, the city council took aim at Amazon and other corporations that made significant donations last year. City council members voted unanimously to pass the “Clean Campaigns Act,” a measure that would bar “foreign-influenced” corporations from donating to municipal elections.

The bill defines these companies as those where a single foreign owner holds at least 1% of the stocks in a corporation or multiple foreign owners hold at least 5% of the stocks. The bill bars these companies from contributing directly to campaigns or PACs. In addition to Amazon, the bill would also affect companies like AT&T, Starbucks, Expedia, and Comcast, all of which were among the top 20 corporate contributors to PACs in the 2019 municipal elections.

For campaigns at the federal level, Federal Election Commission rules state that foreign nationals are not allowed to make any campaign contributions, nor are domestic subsidiaries of foreign corporations allowed to let foreign nationals participate in “any decision to make donations, contributions, disbursements or expenditures” in an election. 

Corporations in general are also not allowed to contribute directly to federal candidate campaigns, although since the 2010 Citizens United decision by the Supreme Court, they can give unlimited money to so-called super PACs, like the Seattle Chamber of Commerce one, which independently support candidates. Some in the Seattle government, including the bill’s sponsor, Council President M. Lorena González (who was absent from the vote because of the birth of her child) have framed the bill as “closing a loophole” in campaign expenditure rules to ensure elections are free of foreign influence. 

“We have an epidemic of big money in our elections, and this step helps to address the appearance and risk of corruption,” González said in a statement.

Mayor Jenny Durkan said the bill is a response to the 2010 Citizens United decision.

Kamaria Hightower, a spokesperson for the mayor, said that Durkan supports the legislation. “Mayor Durkan believes the Citizens United decision has generated outside spending that has disrupted our representative democracy and favored special interests over the voice of the people,” Hightower said. “While this bill will likely have legal challenges, the Mayor supports the Clean Campaigns Act and agrees that we need to continue to take steps to ensure transparency in our elections.”

In a legal memo prepared for the Washington State Democratic Central Committee by Perkins Coie, an international law firm headquartered in Seattle, attorneys expressed doubt that the legislation will survive legal challenges. 

“Whenever a regulation burdens a speaker’s core political speech, including the ability to make independent expenditures, the regulation is subject to strict scrutiny,” the memo reads. “The City’s proposal is unlikely to survive such scrutiny, as federal courts have not recognized a compelling interest in restricting the speech of ‘foreign-influenced’ individuals or entities, nor in regulating U.S. companies with a nominal amount of foreign ownership.”

Jim Manley, an attorney with the libertairan Pacific Legal Foundation, told Reuters the bill was “an unconstitutional backdoor ban on U.S. companies speaking about local elections.”

Cindy Black, the executive director of Fix Democracy First, an advocacy organization that first brought the bill to González, said that even if stockholders own a nominal amount of a company, they can still have a significant influence. “If you own 1% of a big company, you can get the CEO on the phone, call meetings, push an issue, influence opinion,” Black said. “The courts have upheld that foreign money in elections isn’t okay at any level, but you can have foreign influence through investments. It’s a loophole.”

The biggest spender in the 2019 Seattle races was Civic Alliance for a Sound Economy, the political action committee run by the Seattle Chamber of Commerce, which received $2.66 million in contributions. Amazon donated the most money, spending $1.5 million total. Seattle Chamber of Commerce’s chief of staff, Markham McIntyre, expressed disappointment in the city council’s decision. “It’s disconcerting to see the Seattle City Council pick and choose who gets a voice in local elections and when,” he said in a statement.

Seattle isn’t the first place to take action on donations from corporations with some foreign ownership. In 2017, St. Petersburg, Florida limited the spending of corporations with 5% foreign ownership by a single individual or 20% foreign ownership by multiple individuals. The idea was also proposed in New York City, Connecticut, and Massachusetts. In 2018, Alaska passed a law with the same percentage threshold as St. Petersburg to limit foreign spending in state and local elections.

Another measure to restrict corporate funding of elections has not yet been brought for a vote in the Seattle City Council’s campaign finance reform committee. Also proposed by González, the bill would limit the amount a single individual or corporation could donate to a Super PAC to $5,000 per year. 

Independent Super PACs spent $3.8 million in the 2019 Seattle elections, more than the $3.2 million spent by all of the candidate’s campaigns combined.

Black said that while the Fix Democracy First prefers election policies like limited election cycles, publically funded candidates, and equal air time, a move to restrict PAC donations could be a first step. “We know the influx of money into PACs is skyrocketing,” she said. “Challenging independent expenditures is an appropriate response to deal with this. It’s about defending democracy.”