Researcher: TA Page 1 5/4/22
OLR Bill Analysis
sSB 431 (File 477, as amended by Senate "A")*
AN ACT CONCERNING REFERENDA, INDEPENDENT
EXPENDITURES AND CERTAIN OTHER POLITICAL SPENDING.
SUMMARY
This bill prohibits foreign nationals from making contributions or
expenditures under the state’s campaign finance laws. It similarly
prohibits a person from soliciting, accepting, or receiving a contribution
or covered transfer from a foreign national.
Under current law, the State Elections Enforcement Commission
(SEEC) must dismiss a complaint if it does not issue a final decision on
it within one year after receipt, with certain exceptions. The bill narrows
the circumstances under which the dismissal requirement applies. With
certain exceptions, the bill instead requires the commission to dismiss
after one year any complaint it receives on or after July 1, 2022, for which
it has not (1) found reason to believe a state election law violation
occurred and (2) initiated a contested case proceeding.
*Senate Amendment “A” removes provisions in the original bill (File
477, §§ 2-16) that, among other things, (1) codified “independent
expenditure political committees” (IE-only PACs); (2) expanded IE
disclosure requirements and increased the maximum penalties for
failing to file IE reports; (3) eliminated aggregate individual
contribution limits to certain committees; and (4) expanded disclaimer
requirements for referenda and party candidate listings.
EFFECTIVE DATE: Upon passage for the foreign national provisions
and July 1, 2022, for provisions on SEEC complaints.
§§ 1 & 17 — FOREIGN NATIONALS
Federal law generally prohibits foreign nationals from making
contributions, donations, or IEs in connection with federal, state, or local
elections (see BACKGROUND). The bill explicitly prohibits foreign 2022SB-00431-R01-BA.DOCX
Researcher: TA Page 2 5/4/22
nationals (as defined in the bill, see below) from making contributions
(or expressly or impliedly promising to do so) or expenditures that are
subject to the state’s campaign finance laws. It similarly prohibits a
person from soliciting, accepting, or receiving a contribution or covered
transfer from a foreign national. By law, a “covered transfer” is, with
certain exceptions, any donation, transfer, or payment of funds by a
person to a recipient that (1) makes IEs or (2) transfers funds to another
person that makes IEs (CGS § 9-601(29)).
The bill’s prohibitions expand upon those in federal law by, among
other things, explicitly applying them to referenda. The bill also subjects
additional persons to the prohibitions by defining “foreign national” for
purposes of state campaign finance laws more broadly than federal law
does (see BACKGROUND).
Definitions (§ 1)
Foreign National. Under the bill, “foreign national” includes (1) a
foreign principal (as defined in federal law, see below) and any agent or
segregated fund of the principal; (2) an individual who is not a U.S.
citizen or national or lawfully admitted for permanent residence; and
(3) certain entities with foreign owners (see below).
Under the bill, a “foreign owner” is an entity in which a foreign
national holds, owns, controls, or otherwise has directly or indirectly
acquired beneficial ownership of at least 50% of the total equity or
outstanding voting shares, other than interests held in a widely held,
diversified fund (i.e., a pooled investment that, among other things, has
at least 100 investors, with no investor able to exercise control over the
investment’s financial interests).
The bill deems an entity to be a foreign national if it meets any of the
below criteria:
1. one “foreign owner” or “foreign national” (as described above)
holds, owns, controls, or has directly or indirectly acquired
beneficial ownership of at least 5% of the total equity or
outstanding voting shares; 2022SB-00431-R01-BA.DOCX
Researcher: TA Page 3 5/4/22
2. multiple foreign owners or nationals hold, own, control, or have
directly or indirectly acquired beneficial ownership of at least
20% of the total equity or outstanding voting shares, other than
interests held in a widely held, diversified fund (as described
above);
3. any foreign owner or national directly or indirectly participates
in decisions to engage in any activity subject to state campaign
finance laws, including the Citizens’ Election Program; or
4. (a) at least 20 % of the organization’s income in the most recent
taxable year is from one or more foreign owners and (b) the
organization is a tax-exempt 501(c)(4) entity.
Foreign Principal. Under federal law, “foreign principal” (deemed
to be a foreign national under the bill) includes the following:
1. a government of a foreign country and a foreign political party;
2. a person outside of the United States unless it is established that
the person is (a) an individual and a U.S. citizen domiciled within
the United States or (b) not an individual, has its principal place
of business in the United States, and is organized under, or
created by, the United States, a state, or other place subject to U.S.
jurisdiction;
3. a partnership, association, corporation, organization, or other
combination of persons organized under the laws of, or having
its principal place of business in, a foreign country (22 U.S.C. §
611(b)).
§ 18 — SEEC INVESTIGATIONS
By law, SEEC receives complaints from the secretary of the state,
registrars of voters, town clerks, and individuals under oath about
alleged election law violations. It investigates and holds hearings as it
deems appropriate (CGS § 9 -7b(a)(1)). The bill narrows the
circumstances under which SEEC must dismiss a complaint within one
year after receiving it. 2022SB-00431-R01-BA.DOCX
Researcher: TA Page 4 5/4/22
Time Limit
Currently, SEEC must dismiss a complaint it receives on or after
January 1, 2018, if it does not issue a final decision on it within one year
after receiving the complaint. However, the deadline must be extended
if specified actions delay the final decision’s issuance.
The bill relaxes this requirement for SEEC complaints received on or
after July 1, 2022. It instead requires the commission to dismiss after one
year any complaint for which it has not (1) found reason to believe a
state election law violation occurred and (2) initiated a contested case
proceeding.
The bill also (1) requires that the deadline for making this finding be
extended for the same reasons that the final decision deadline must be
extended under current law and (2) establishes additional reasons for
extending this deadline. As under current law, the one-year deadline
must be extended by the length of the delay.
Extensions
Under current law, the one-year deadline for SEEC to issue a final
decision must be extended if its issuance is delayed for any of the
following reasons:
1. extension or continuance granted to a respondent by SEEC or its
staff before issuing the decision;
2. issuance of a subpoena in connection with the complaint;
3. litigation in state or federal court related to the complaint; or
4. consultation with the chief state’s attorney, attorney general, U.S.
Department of Justice, or U.S. attorney for Connecticut.
The bill similarly requires an extension, for these same reasons, of the
one-year deadline for finding reason to believe that an election law
violation occurred and initiating a contested case. (SEEC regulations
generally prohibit the commission from proceeding with a contested
case unless it finds, by a majority vote of a quorum, reason to believe 2022SB-00431-R01-BA.DOCX
Researcher: TA Page 5 5/4/22
that a violation occurred (Conn. Agencies Regs., § 9-7b-35).)
The bill also requires an extension if the finding and commencement
are delayed because of an investigation by SEEC or its staff involving a
potential state election law violation by a foreign national (as defined in
the bill, see above).
BACKGROUND
Foreign Nationals and Related Federal Law
Foreign Nationals. Federal campaign finance law defines a “foreign
national” as any of the following:
1. a government of a foreign country and a foreign political party;
2. a person outside of the United States unless it is established that
the person is (a) an individual and a U.S. citizen domiciled within
the United States or (b) not an individual, has its principal place
of business in the United States, and is organized under, or
created by, the United States, a state, or other place subject to U.S.
jurisdiction;
3. a partnership, association, corporation, organization, or other
combination of persons organized under the laws of, or having
its principal place of business in, a foreign country; or
4. an individual who is not a U.S. citizen or national and is not
lawfully admitted for permanent residence (52 U.S.C. § 30121(b)
and 22 U.S.C. § 611(b)).
Prohibited Activities. Federal law prohibits a foreign national from,
among other things, directly or indirectly making:
1. in connection with a federal, state, or local election, a contribution
or donation of money or anything of value; an express or implied
promise to make a contribution or donation; or an expenditure or
IE; or
2. a contribution or donation to a federal, state, or local political
party’s committee. 2022SB-00431-R01-BA.DOCX
Researcher: TA Page 6 5/4/22
It similarly prohibits a person from soliciting, accepting, or receiving
any contribution or donation described above from a foreign national
(52 U.S.C. § 30121 and 11 C.F.R. § 110.20).
2021 FEC Ruling. In 2021, the Federal Elections Commission (FEC)
dismissed a complaint alleging that foreign nationals made prohibited
contributions opposing a ballot initiative in Montana. In doing so, the
commission concluded that spending related to referenda and other
issue-based ballot measures is outside of federal law’s purview because
it is not in connection with an election (i.e., a regular or special election,
primary, runoff, or a party convention or caucus). It noted that federal
law applies to spending on ballot measures only if the measure is
inextricably linked with the election of any candidate (FEC, MUR 7523
Stop I-186).
COMMITTEE ACTION
Government Administration and Elections Committee
Joint Favorable
Yea 14 Nay 5 (03/28/2022)