A proposal to prohibit corporate political donations could also prohibit contributions by workers’ unions, some unions argue.
Senate Bill 2471, which passed third reading in the state House of Representatives Tuesday, challenges the verdict of Citizens United v. Federal Election Commission, a 2010 U.S. Supreme Court case that found that it is unconstitutional to pass laws prohibiting political spending by corporations.
Nonetheless, SB2471 attempts to do just that, albeit through a technicality: while the Citizens United verdict found that impinging on a corporation’s First Amendment rights is unconstitutional, limits on a corporation’s powers are not. Therefore, the bill’s language specifies that a corporation recognized in Hawai‘i can only wield powers granted by the state.
Those state-authorized “artificial-person powers” would include the power to sue, to purchase and own property, to make contracts, lend money and more. They explicitly exclude the power to “engage in election activity or ballot-issue activity.”
A House hearing on the measure in March removed language that differentiates charitable and political donations, which Rep. Scot Matayoshi (D-Kāne‘ohe) said at the time would allow nonprofits and unions to make political donations while still preventing corporations from doing so. However, several unions have opposed the measure out of concern that the bill still limits their ability to engage in elections.
Jeffrey Masatsugu, representing the International Union of Painters and Allied Trades District Council 50, submitted testimony last week opposing the measure, writing that it is unclear whether trade unions will be prohibited from taking electoral action.
Masatsugu pointed to language in the latest versions of the measure that allow incorporated nonprofits to carry out “election activity” via candidate and noncandidate committees. Whether that applies to unions, however, is an open question, Masatsugu wrote, but the state statutes regarding unincorporated nonprofits can be interpreted to apply to trade unions, which would leave them unable to make political donations.
Two other construction unions — the Hawai‘i Building and Construction Trades Council and the Plumbers and Fitters UA Local 675 — also opposed the measure on similar grounds.
However, other prominent unions — including the Hawai‘i Government Employees Association, the largest union in the state — have remained mum on the measure one way or the other.
Nonetheless, the bill still has at least one staunch opponent: the state Department of the Attorney General, which has repeatedly warned that the measure will most likely provoke a legal challenge at cost to the state taxpayer.
Last week, the Attorney General also argued against the argument that stripping a corporation of its power is different from stripping it of its rights. In a letter, the Department of the Attorney General called that “an untested legal theory … that collapses in upon itself upon further examination.
“The operative theory behind this bill is that states have the ability to define corporate powers and can strip certain powers to speak based upon the content of that speech,” read the AG’s letter. “This bill then contradicts its own theory by saying that foreign corporations authorized to transact business in Hawai‘i … are also subject to the provisions of the bill. However, Hawai‘i has no ability to define the corporate powers of foreign corporations.”
Nonetheless, the bill passed third reading in the House on Tuesday with only two representatives — Republicans Garner Shimizu and Elijah Pierick — voting against it.
The HGEA did not respond to Aloha State Daily’s requests for comment.
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