The Corporate Power Reset

On May 14, Hawaii’s state legislature recorded an unexpected victory for opponents of corporate power: when Hawaii’s State Senate Bill 2471 goes into effect in 2027, it will be illegal for corporations to spend money to influence elections in Hawaii. This will be the first test of a legal strategy focused on state corporate charters and the powers they grant to “artificial persons.” 

Along with proposed ballot initiatives in other states like Montana, Hawaii’s new law removes political spending from the set of powers granted to corporations under state law. This novel strategy represents a creative effort to limit corporate power, and could be a model for pro-democracy advocates who should be looking for opportunities to expand the legal field of play and put the forces of reaction and oligarchy on the defensive.

Since the Supreme Court’s Citizens United decision in 2010, opponents of corporate election influence have looked for ways to stem the relentless growth of corporate donations to Political Action Committees (PACs) and “dark money”—money raised by anonymous donors and purportedly spent independently of candidates. These funds are typically donated to 501(c)(4) “social welfare” organizations, which can accept anonymous donations, and that then funnel the funds to PACs, avoiding any transparency rules which apply to PACs and candidates. Hawaii’s law is aimed at curbing this spending by amending the law which defines the powers of for-profit corporations as well as 501(c)(4)s, and any other “artificial person” created by legal fiat—including unions and non-profits. State law generally defines the powers granted to these institutions quite broadly, but with this law Hawaii’s legislature has simply carved out political spending and explicitly removed it from the list of granted powers.

Many believed it would take a Constitutional amendment to limit corporate campaign spending given the sweeping nature of the Citizens United decision. But legal scholar Vincent Buccola argued otherwise in a 2016 paper. Buccola’s argument is that states grant powers to corporations via their corporate charters. Early in American legal history, corporate charters were granted case-by-case to specific businesses by the state legislature. Then in the nineteenth century states competed for business by adopting uniform corporate charters which granted expansive powers. But states never gave up the right to define the powers given to corporations. Hence they have the right to remove political spending from these powers. 

Buccola’s legal theory was picked up by Tom Moore of the Center for American Progress, who called it the “Corporate Power Reset.” “The Court has held that states may define, limit, or revoke corporate powers for any reason, or for no reason at all,” wrote Moore, drawing on a decision in Greenwood v. Freight Co. from 1882 which held “That body [the state legislature] need give no reason for its action in the matter.” In other words, there are essentially no Constitutional limits on a state’s ability to regulate the powers given to corporations. And this power extends to not-for-profit entities such as 501(c)(4)s, and even to corporations chartered in other states. According to Moore, the Supreme Court’s decision in Paul v. Virginia in 1869 held that states can decline to grant powers even to entities founded outside their borders.

The corporate power reset was first proposed in a state ballot initiative in Montana by a bipartisan group called the Transparent Election Initiative led by former state Commissioner of Political Practices Jeff Mangan. Mangan dubbed the ballot measure “The Montana Plan,” grounding the plan in Montana’s history of anti-corruption measures. For a full century before Citizens United, corporations were banned from spending money in Montana elections thanks to the state’s Corrupt Practices Act. 

Montana’s Corrupt Practices Act was passed in 1912 against the backdrop of a wave of Progressive Era reforms, and a series of scandals linked to Montana’s infamous “copper kings”—mining magnates such as William A. Clark, who bought himself a US Senate seat in 1899 by bribing state legislators. At the turn of the century, a group called the Montana People’s Power League formed to advocate for primary elections, the direct election of senators, and limitations on political spending. Rather than trust the compromised state legislature, the League spearheaded a direct ballot initiative to pass the Corrupt Practices Act, which, among other reforms, capped total spending on political campaigns and made corporate donations to candidates illegal.

One hundred years later, the Supreme Court ruled that Montana’s Corrupt Practices Act was inconsistent with the precedent set by the Citizens United decision—Montana law violated the free speech rights of corporations. In his dissent Justice Stephen Breyer noted the unique history of corporate consolidation and corruption in Montana. Breyer argued, drawing on the plain facts of history which should have informed the court’s decision in Citizens United, “that independent expenditures by corporations did in fact lead to corruption and the appearance of corruption in Montana.” Nevertheless, the majority ruled in an unsigned decision that the Corrupt Practices Act was unconstitutional, paving the way for a sharp expansion in corporate spending in Montana’s politics.

Independent expenditures on elections totaled more than $4 billion in 2024, and in Montana outside groups spent nearly $140 million on the US Senate race between incumbent Democrat Jon Tester and successful Republican challenger Tim Sheehy. Shock at the amounts in play in a largely rural state has driven interest in the Transparent Election Initiative and the Montana Plan. As of June the initiative has collected enough signatures to qualify for the ballot, raising hopes that this November Montana may join Hawaii as the second state to attempt to limit corporate election spending since Citizens United.

With the passage of Hawaii’s state bill, and active legislation in 14 other states, it now appears that the Montana Plan is going national. It remains to be seen how the conservative-dominated Supreme Court will view this apparent end-run around the Citizens United decision. But even if it is struck down, the initiative promises to force corporate lobbyists and their allies to defend ground previously considered safe. And the terms of this particular fight favor pro-democracy advocates, since limiting election spending polls extremely well across partisan lines. It was in the interest of politicians who benefitted from corporate spending to throw up their hands and say Citizens United was the law of the land. That may be true, but if Hawaii’s legal strategy holds up, it may no longer matter.

More broadly, the corporate power reset in Hawaii and Montana should encourage liberals and pro-democracy advocates to seek out and pursue creative legal strategies drawn from our country’s long history of disputation and reform—such as the treasure trove of proposals found in Liberal Currents’ own Reconstruction Papers. If we are to reclaim some of the victories of the Reconstruction and Progressive eras we will need to choose multiple lines of attack—to “flood the zone,” if you will—so we should be agile and entrepreneurial, looking for avenues in corporate law, tax law, election law, or whatever sources are available. When a strategy appears successful, we should replicate it relentlessly in every state. The reforms of the first Progressive Era should remind us that democracy is popular, corruption is scandalous, and structural reform is possible with persistence and creativity. Hawaii and Montana are now showing the way toward a resurgence of pro-democracy, anti-corporate, populist reform. It’s up to the rest of the country to follow.

Featured image is "Protest at the Wisconsin State Capitol on March 12, 2011," CC BY-SA 2.0 Lena 2011.