The Montana "Transparent Election Initiative": Part 1

Can a state undermine Citizens United via the backdoor of limiting corporate powers?

The Center for American Progress and a group of Montana politicians are trying to undo Citizens United by amending the state constitution to limit the scope of corporate powers. As Tom Moore of CAP explains:

Corporations have only the powers that states give them—no more. States stopped being choosy about the powers they granted to their corporations in the mid-1800s. But every single state retained the authority to be as choosy as they like. Every single state retains the authority to decide to no longer grant its corporations the power to spend in politics.

This is certainly true. “It is elementary that a corporation has only such powers as are expressly granted by its charter or by statute and such as may impliedly be derived from its corporate purposes.”¹

Building on that premise, the proponents have offered up a ballot initiative that:

would amend Article XIII of the Montana Constitution to redefine the powers of artificial "persons," including corporations. It defines their powers as only those the constitution expressly grants and provides that artificial persons have no power to spend money or anything of value on elections or ballot issues. It affirms that the people of Montana never intended for artificial persons to have the power to spend on elections or ballot issues. [It] provides that actions beyond those expressly granted powers are void.

The operative language of the proposed amendment states:

This section retracts all Artificial Persons' powers and re-grants only those powers that the people deem necessary or convenient to carry out an Artificial Person's lawful business or charitable purposes, as described in (3)(e). Powers related to Election Activity or Ballot-Issue Activity shall not be deemed necessary or convenient to those purposes.

Artificial person is broadly defined to encompass pretty much any non-natural legal person.

I think this proposal is bad policy. But that’s a question for another day. Today’s question is whether the proposal is lawful.

I think the legality of the proposal turns on several questions:

1. Can Montana define the powers of Montana corporations so as to preclude them from making political contributions, as a matter of corporate law?

2. Would such a definition be constitutional?

3. Can Montana deny the power to contribute to Montana political campaigns to out-of-state corporations, as a matter of corporate law?

4. Would such a denial be constitutional?

Lastly, we’ll touch on the question of whether any of this matters?

In this post, I tackle the first two questions.

I should warn you that this post is more in the nature of musings that definitie answers.