Transparent Election Initiative

A bipartisan team of former Montana officials have unveiled an oddly simple yet startlingly robust legal mechanism for undoing Citizens United that pares back the list of corporate powers granted by state corporation law. They have drafted a constitutional initiative (text here) and are steering it toward Montana’s 2026 ballot.

Ever since the Supreme Court’s landmark decision in Citizens United v. Federal Election Commission in 2010, America has been told that only the Court or a constitutional amendment could stem corporate and dark money in politics. Not so.

Citizens United (558 U.S. 310) held that lawmakers cannot regulate a corporation’s right to spend independently in elections. But regulations are just one tool in the legislative toolbox. Another extraordinarily powerful tool has gone largely unexamined until now: every state’s virtually unlimited authority to define the powers it grants its corporations.

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.

No state has exercised its clear power to exclude political spending from the powers it grants its corporations. “Why not?” asks University of Chicago law professor Vincent S.J. Buccola. “One possibility is that the average legislator thinks cases such as Citizens United and Hobby Lobby were sensibly decided. This might be true—it is unlikely—but in any event it is uninteresting. Another possibility is that legislators do not know their own legislative authority. If so, maybe they will soon discover it.”

The Montana Plan, which was announced on June 18 (press release here; video here), is an attempt to ignite that discovery.

Under the Plan, Montana would no longer grant its corporations the power to spend money in politics. And because out-of-state corporations can only exercise the powers that domestic corporations can exercise, it would also remove political spending power from every out-of-state corporation that operates in Montana.

The difference between regulating rights and declining to grant powers is not semantic. It is doctrinal. It is foundational. And this may make The Montana Plan the most promising new strategy to eliminate corporate and dark money in politics since the day Citizens United was decided.

The Montana Plan

Under The Montana Plan, corporations would still be able to form freely and pursue their business goals under the power of Montana law. But they would do so without a power that the people of Montana had decided no state-created entity needs: the power to pour money into politics.

“Washington’s paralysis has left Americans cynical, but federal gridlock need not bind the states,” says Marc Racicot, former Montana governor and former chairman of the Republican National Committee. “By declining to hand out corporate political-spending powers from the outset, Montana can chart a constitutional course others may follow—showing that bold, effective, and principled reform is still possible across party lines.”

The constitutional initiative under development in Montana would revoke all previously granted corporate powers and then regrant them in a positive, carefully defined way, with political spending powers omitted.

This structure draws upon two centuries of Supreme Court jurisprudence regarding corporate powers. The Court has held that states may define, limit, or revoke corporate powers for any reason, or for no reason at all. “That body need give no reason for its action in the matter,” the Court held in Greenwood v. Freight Co. (105 U.S. 13, 17 (1882)). “The validity of such action does not depend on the necessity for it, or on the soundness of the reasons which prompted it.”

This doctrine applies with equal force to “foreign corporations,” those chartered out of state but doing business within Montana. As the Court held in Paul v. Virginia (75 U.S. (8 Wall.) 168, 181 (1869)), a corporation “can have no legal existence beyond the limits of the sovereignty where created,” and any other state may decline to grant it powers that are “prejudicial to their interests or repugnant to their policy.”

Montana’s draft initiative simply applies that doctrine. It extends no power to spend in politics to any domestic or foreign corporation, full stop. That would end corporate political activity within the state: local, state, and federal. And because all dark money flows through corporations organized under section 501(c) of the tax code, it would shut down all dark money in Montana’s politics as well.

The draft defines “election activity” and “ballot-issue activity” precisely, then revokes all previously granted powers and regrants only those necessary to conduct business, excluding political spending entirely. This avoids interpretive ambiguity and invites narrow judicial review.

Jeff Mangan, Montana’s former Commissioner of Political Practices, is leading the effort to get The Plan on the ballot through the Transparent Election Initiative. The Plan has the support of some heavy legal and policy hitters, including Harvard Law’s John Coates, former Yale Law dean Robert Post, and NYU Law professor (and former SEC commissioner) Rob Jackson. Robert F. Williams, former head of the Center for State Constitutional Studies at Rutgers Law, terms it “spectacularly important.” Issue One, End Citizens United, Public Citizen, and Free Speech for People are among the organizations supporting it.

What Citizens United Didn’t Touch

The legal strategy behind the Montana Plan draws strength from the limits of Citizens United itself. Every campaign-finance case the Court has ever decided involved a fully empowered corporation—a company that had already been granted the power to act and was now asserting a right. The Court held that the government could not infringe that right.

But what if the corporation had never been granted the power in the first place? When states issue powers to corporations, they are defining what kind of creature they are creating, not limiting speech. And courts have long held that state legislatures have plenary authority to define the powers of corporations within their borders.

This includes the power to change those definitions. Every corporation chartered in Montana is chartered subject to the legislature’s reserved power to alter, amend, or revoke the law under which it was formed. As the Supreme Court held in Hamilton Gaslight Co. v. Hamilton (146 U.S. 258, 270 (1892)), the legislature may act “whatever may be the motive of the legislature, or however harshly such legislation may operate in the particular case upon the corporation or parties affected by it.”

Naturally, those scarred by years of campaign-finance-law warfare immediately raise First Amendment concerns, and especially that this approach may constitute an unconstitutional condition. But this approach does not regulate rights. It redefines entities before any rights are vested in anyone or anything.

Under this approach, incorporators simply receive from the state a corporate entity that has been granted a list of powers the state has chosen to define. It’s just a shorter list than it has been for the last century. Even existing corporations cannot complain; as the Court held in Hamilton Gaslight, “The corporation, by accepting the grant subject to the legislative power so reserved by the constitution, must be held to have assented to such reservation.”

The doctrine of unconstitutional conditions applies only when a right is traded away in exchange for a government benefit. And it only applies when “the Government has placed a condition on the recipient of the subsidy rather than on a particular program or service,” as the Court explained in Rust v. Sullivan (500 U. S. 173, 193 (1991)), “thus effectively prohibiting the recipient from engaging in the protected conduct outside the scope of the federally funded program.”

No one is prohibited from engaging in protected conduct outside the scope of their ownership of a corporation when they choose to form a corporation that a state has decided not to endow with political-spending powers. They may not receive every possible right, but nothing requires the government to hand out every possible right with every program it creates.

It’s hard to overstate how much law the Court would have to torch to overturn this approach. For starters, it would have to scrap the foundation of corporation law itself: that corporations are creatures of state law. The Court would in essence have to invent a “natural law of corporations.” Since Dartmouth College v. Woodward (17 U.S. 250 (1819)), the law has been clear: a corporation exists only because a state says so. Handing corporations powers its creating state did not grant would toss centuries of corporate-law doctrine aside and land the Court in radical, uncharted ground.

Why Montana

Montana has a long history of standing up to corporate power. Its Corrupt Practices Act of 1912, enacted after a bruising era of copper-king dominance, stood for a century before being overturned by the U.S. Supreme Court in American Tradition Partnership v. Bullock (567 U.S. 516 (2012) (per curiam)), a summary reversal applying Citizens United.

“For over a century, Montana’s Corrupt Practices Act ensured elections were about people, not unlimited corporate spending and control,” says former Montana Gov. Steve Bullock (D), the defendant in that case. “When the Supreme Court discarded Montana’s history after Citizens United, the Court tied our hands. The Montana Plan unties them—by letting Montanans decide what corporations have the power to do in our state. This honors our history of fair play and returns the power back to the voters, where it belongs.”

Montana never lost its power to define the legal characteristics of the corporations it creates. And unlike in Bullock, this initiative does not regulate campaign finance. It declines to grant a corporate power. That places it outside the ambit of Citizens United entirely.

What’s Next

The Montana team published the text of the initiative on July 28 and is set to submit it to the Secretary of State on August 1. With the effort launched in Montana, the team is preparing to support interest from activists and legislators in other states who want to adapt Montana’s effort for use in their states. Every state in the nation holds the same underlying authority Montana holds. Some allow direct initiatives, others do not, but the legal foundation exists everywhere.

“Montanans don’t wait for Washington to fix what’s broken,” says former Sen. Jon Tester (D-MT). “By harnessing our sovereign power over corporate charters, we can lead a state-by-state march that finally sidelines dark money everywhere. The Montana Plan is the spark; other states can carry the torch.”

Once a few states reclaim their sovereign power over corporations, a century-long spell will break, and Americans in every state will be able to see that the corporations they create do, in fact, answer to them, and that the people need not let their creations destroy their democracy.

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