What We Do

Campaign Reforms - Corporate Spending in Ballot Initiatives: Montana

Ballot initiatives were designed as a means for citizens to take charge when the state legislature is unwilling or unable to act on important policy issues. But over the last 15 years in Montana, heavy corporate spending — often funded by just a handful of out-of-state corporate giants — time and again has defeated citizen-sponsored initiatives to improve public health, clean up the environment, and increase the minimum wage.

In 1996, Montana citizens responded by approving I-125, a ballot initiative prohibiting corporations from spending their general treasury funds in initiative campaigns. Corporations could still participate by using money raised from individual corporate officers, shareholders and employees who support the corporation's political agenda, but no longer could engage in unlimited spending using the corporate checkbook.

Because a corporation's funds result from profit-making activities rather than public support for the corporation's political agenda, I-125 was a reasonable measure that protects the fairness of the initiative process while still allowing for some corporate participation. But, as soon as it passed, I-125 came under attack on First Amendment grounds by a group of businesses led by the Montana Chamber of Commerce. The federal district court allowed I-125's sponsors — the Montana chapters of PIRG and Common Cause, the League of Women Voters of Montana, and other reformers — to intervene. The National Voting Rights Institute joined with Helena attorney Jonathan Motl to defend the initiative on behalf of these intervenors.

At the trial, Motl and NVRI presented comprehensive evidence that corporate spending on Montana ballot initiatives had overwhelmed opposing citizen voices, distorted the political process and undermined citizens' confidence in the ballot initiative process. We argued that I-125's limits on corporate spending were permissible under a crucial 1990 Supreme Court ruling which recognized that states may act to limit "the corrosive effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public's support for the corporation's political ideas." That ruling, Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), upheld limits on corporate independent expenditures in candidate elections.

On September 26, 2000, in a divided 2-1 ruling, the Ninth Circuit panel ruled that I-125 is unconstitutional on First Amendment grounds. Montana Chamber of Commerce v. Argenbright, 226 F.3d 1049 (9th Cir. 2000). Over a cogent dissent by Circuit Judge Michael Daly Hawkins, the majority found that the question of the constitutionality of I-125 was controlled by First National Bank of Boston v. Bellotti, a 1978 U.S. Supreme Court ruling which struck down a Massachusetts law barring all corporate spending in ballot initiative campaigns, even spending by a corporation's political action committee. Montana's I-125, by contrast, applies only to a corporation's general treasury funds, as did the law at issue in Austin, a ruling which the Supreme Court issued twelve years after Bellotti.

Judge Hawkins' dissenting opinion pointed out the majority's failure to take proper account of the Supreme Court's 1990 Austin decision, and concluded that I-125 "is justified by Montana's asserted interest in eliminating what its people have determined to be distorting effects of corporate wealth on the electoral process." In light of that dissent and the importance of the issue, the Institute filed a petition for writ of certiorari seeking review by the United States Supreme Court in May 2001. The State of Montana, represented by the state attorney general's office, joined us in seeking Supreme Court review. Those petitions were denied on October 1, 2001. Despite this setback for Montana's I-125, Judge Hawkins' dissent demonstrates that there are strong legal arguments for the constitutionality of limits on corporate general treasury spending on ballot initiatives which may support future efforts by reformers in states outside of the Ninth Circuit.

NVRI's briefs in Montana Chamber of Commerce v. Argenbright.