Dark Money Critics Wield Corporate Law Against Citizens United

Organizers of a novel movement to banish political dark money using state authority over corporations are making strides toward putting their plan in front of voters for the first time in this year’s midterm elections.

Supporters in 23 states are working to advance campaign finance limits rooted in a foundational but overlooked fact of corporate law: Businesses owe their powers to chartering statutes that reserve the right to alter them. The idea is to remove the ability to spend on politics from the law authorizing corporations, trade associations, nonprofits, and other business entities to operate in the first place.

One of the country’s least populous places is emerging as a critical test after Montana’s top elections official last week gave organizers a green light to start gathering signatures for a voter referendum backed by former Sen. Jon Tester (D) and other state political heavyweights. To the former FEC lawyer behind the initiative, taking the issue directly to the public is a way to bypass a legislative process that can be plagued by inertia and special interest bartering.

“Montana is the main play because you don’t have to appeal to labor or the Chamber of Commerce or party leadership,” said Tom Moore, now a senior fellow at the Center for American Progress. “People don’t like when you take money out of their pockets.”

If the “Montana Plan” is successful, Moore and other supporters see it as a model for other states, given the public’s generally sour view of the US Supreme Court’s 2010 Citizens United ruling, which effectively ended campaign finance regulation. It would also trigger immediate legal challenges from opponents who view the strategy as an unconstitutional gambit to limit political speech.

A coalition of industry groups led by the Montana Mining Association has already filed an emergency petition asking the state supreme court to block the measure, offering a potential dry run of the legal battle that will inevitably play out at the nation’s highest court if any of the proposals become law.

“Montana cannot condition the privilege of doing business in Montana on the loss of First Amendment rights,” the filing said.

State-by-State Approach

Montana voters are being asked to effectively ban organizations from contributing “anything of value” to candidates, political parties, and state or local ballot issues. Any violation of the law, the proposed ballot question says, means “forfeiting all privileges to do business in Montana.”

Lawmakers in 10 other states have introduced bills mirroring the Montana plan since December. The legislation stalled in Virginia this session, but proposals are active in California, Georgia, Maryland, Minnesota, Missouri, New York, Rhode Island, Washington state, and Hawaii, where a version has already cleared one chamber.

There are also about a dozen states where supporters have taken other preliminary steps, unveiling draft bills or starting to organize ballot drives.

Each state’s proposal takes a two-pronged approach: Businesses chartered there would be unable to spend on elections at all, while those chartered elsewhere would be unable to spend in the state. The dynamic means organizers don’t need to win over Delaware, where nearly 70% of the Fortune 500 are incorporated, to have a major impact on campaign finance.

Curbing corporate giving wouldn’t stop ultra-wealthy donors like Elon Musk from throwing their financial weight behind the candidates and ballot measures they support. But, Moore said, blocking them from going through shadowy shell companies would unmask their influence.

“One miracle at a time,” he said.

Citizens United general counsel Michael Boos assailed the plan as a move “to gut free speech rights.”

“Attacks on the freedom of speech have become a top priority for Democrats ever since the Citizens United case was decided and will continue as long as the left is losing ground in the marketplace of ideas,” Boos said.

That’s a preview of the attack wave ready to greet the first state proposal across the finish line.

Constitutional scholar Ilya Shapiro predicted the Montana Plan would fare poorly in court, describing it as “too cute” and “a solution in search of a problem.” Shapiro, who has repeatedly defended the Citizens United ruling over the years, said the many elections over the last decade and a half that were lost by the better-resourced candidate prove money “is not the be-all, end-all” critics make it out to be.

He cited the “unconstitutional conditions” doctrine—the argument already being made by the trade groups challenging Montana’s referendum—as a promising attack point.

“To enjoy one right that you’re entitled to, the ability to form corporations, you have to give up another, the right to free speech,” he said. “I don’t think this would survive contact with the federal courts.”

The unconstitutional-conditions concept is relatively incoherent in the corporate law context, said Hofstra University law professor Daniel Greenwood. That might make it an attractive option for a Supreme Court where “doctrine doesn’t seem to have the power it once had,” he acknowledged.

“Doing business in a state is a privilege, and usually the court says privileges are not rights,” Greenwood said. “Occasionally they discover some privilege is an unconstitutional condition, and nobody I know understands where that line is.”

Powers vs. Rights

Or the courts could skip that analysis and just determine the initiative directly infringes corporate speech.

That’s the tack suggested by Floyd Abrams, the prominent First Amendment attorney at Cahill Gordon & Reindel LLP who helped win the Citizens United case. Abrams said in an email that he views the measure as an unconstitutional end run around the Supreme Court.

There’s “no reason to think that the Citizens United ruling would not bar states from imposing the very limits on speech that limit the federal government,” he wrote.

But the distinction between corporate rights and powers is more than a technicality, said University of Pennsylvania law professor Jill Fisch.

The general-purpose corporation we take for granted would have been unrecognizable until the early 20th century, when New Jersey loosened the limits that always defined corporate purpose and power. Other states followed, for competitive rather than legal reasons.

“None of those original limits was viewed as impermissible,” Fisch said.

The principle is embodied in an 1819 opinion by Chief Justice John Marshall declaring that a corporation “possesses only those properties which the charter of its creation confers upon it.”

The ruling prompted every state to pass laws or constitutional amendments—all effectively still on the books—clarifying that chartering statutes can be changed at will.

Those laws would be thrown into doubt by a decision rejecting the Montana plan, according to Greenwood, who said the measure’s best chance is if it’s “very clearly about regulating Montana corporations.”

“A court that wants to intervene has doctrines they can pull on if they want to stretch,” Greenwood said. “But I think even this Supreme Court would have some qualms about saying the First Amendment constitutionalizes corporate law. That’s a big imperial jump.”

Montana Politics

The Montana ground game is being quarterbacked by Jeff Mangan, a former lawmaker and state elections regulator.

The initiative has the backing of several local political VIPs, including ex-governors of both parties and Tester, who lost a close election to a well-funded opponent in 2024. Mangan and Moore are trying to add the measure to a midterm ballot that recently gained an open Senate seat with the last-second withdrawal by Republican incumbent Steve Daines.

Mangan thinks the measure will garner broad support in a state that has a long history of acting against corporate political spending. He cited the passage of 1980s-era lobbying restrictions, the state’s Corrupt Practices Act of 1912, and a largely symbolic 2012 referendum directing Montana’s officials to oppose Citizens United.

First the measure has to win a place on the ballot, which requires roughly 30,000 signatures by June 19. Mangan has also been pushing a parallel initiative that would amend the state’s constitution, but that version—which needs twice as many signatures—is currently before Montana’s Supreme Court after the state’s Republican attorney general rejected it.

Mangan’s team is now coordinating across other states, an expansion that dovetails with Moore’s hope of using a court win to build momentum.

“The politics is going to shift pretty quickly,” Moore said. “This is a strong enough issue to elect people on.”

If the campaign moves from the ballot box to the courts, supporters are betting the Supreme Court might think twice about rejecting a popular effort to rein in one of its least-loved precedents, especially if it risked what Moore called a “huge systemic disruption” to corporate law.

“I’m not going to convince this Supreme Court they’d enjoy eating a spider, but I think we can convince them it’s better than drinking a glass of cyanide,” he said. “That’s the day it starts rolling in every other state.”