UPDATE: San Jose looks to limit foreign influence in elections

San Jose is moving to draft laws that limit foreign influence in elections and close some campaign contribution loopholes.

On Tuesday, the City Council voted 9-1 to write an ordinance to prohibit foreign-influenced corporations or donors, with no stake in San Jose, from making contributions to local elections. It came before the council with intentions to be applied to the general election in November. The ordinance will come back to council later this year.

Foreign-influenced is defined as more than 1% ownership by a single foreign national or more than 5% ownership by multiple foreign nationals. That would prevent nearly every member of the S&P 500 from making political expenditures in city elections, including Silicon Valley giants Apple, Alphabet (Google) and Meta, according to nonpartisan nonprofit Free Speech for People.

The effort is part of a larger discussion happening at council to make campaigns more fair and transparent following a heated and costly 2020 election. San Jose has toyed with the idea of a pilot program to publicly finance campaigns and make campaign mailers disclose who the top donors are in an effort to show who is paying for ads.

Councilmember Dev Davis was the lone dissenting voice, claiming the half a million dollars required to implement such a policy could be better spent on policing or other city problems such as homelessness. Councilmember Maya Esparza was not present for the vote.

“I feel like we are talking out of both sides of our mouth,” Davis said, pointing to the council’s previous vote to study expanding voting rights to noncitizens. “(We are) in search of a solution that we have readily admitted today that we don’t have, so I’m very concerned about this.”

However, many councilmembers and public commenters disagreed, including representatives from Working Partnerships USA, the Council on American Islamic Relations and several unions.

Jaria Jung, a representative from state Asm. Alex Lee’s office, said such a law limiting foreign influence is “crucial” to protecting our democracy and highlighted a similar bill by Lee making its way through the state Legislature.

Councilmember Sergio Jimenez, one of four councilmembers to put this idea forward, said limiting foriegn influence is “the very core of our democracy.”

“This is in fact happening and I have no interest in waiting until it happens in San Jose to put something in place,” Jimenez said, pointing to a case where a Mexican national funneled nearly half a million dollars in local San Diego elections through these loopholes.

Federal and state laws already prohibit foreign individuals—other than green card holders—governments, companies and other groups from making contributions or independent expenditures to candidates. However, foreign companies with domestic subsidiaries can make donations as long as the donations are made by a U.S. citizen or permanent resident.

Cities such as Seattle, Washington and St. Petersburg, Florida have implemented stricter campaign finance rules to limit outside influence. San Jose is looking to model its regulations after those cities.

It’s not clear how much influence foreign corporations or entities have in San Jose politics, or which corporations these rules would impact, said Mark Vanni, senior deputy city attorney, who noted a full analysis has not been done.

However, Michael Sozan, senior fellow at the Center for American Progress, said such money has already been spent in San Jose—pointing to the thousands of dollars donated by Chevron to the now dissolved Silicon Valley Organization PAC and thousands spent by Lyft in San Jose candidate races in 2020.

San Jose Mayor Sam Liccardo said he supports limiting foriegn influence, but is worried about future litigation. He said it may be unconstitutional because it limits corporation contributions which violates Citizens United—a 2010 Supreme Court decision that asserted corporations are people and gave them the greenlight to spend unlimited amounts on political ads and political action committees.

“I don’t have a problem doing the right thing knowing we are going to get sued,” Liccardo said. “I have a problem doing the right thing if we know it’s illegal.”

Sozan said these thresholds are defensible and that there haven’t been legal challenges in other cities who have implemented similar laws. Free Speech for People Legal Director Ron Fein agreed.

“A corporation spending money in U.S. elections doesn’t qualify as an ‘association of citizens’ if it has major foreign investors,” Fein said, noting he would provide free legal services if the city is sued.

Contact Jana Kadah at [email protected] or @Jana_Kadah on Twitter.