Matthew Sanderson Weighs in on Foreign Influence on State Legislatures

As states continue to grapple with how to address foreign influence in elections, the conversation shouldn't be a partisan one, according to Ohio Senate Majority Floor Leader Theresa Gavarone.

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Ohio is one of more than 30 states that have passed laws barring foreign nationals from making contributions to state ballot measures, according to Caplin & Drysdale Member Matthew Sanderson.

"We have had a perpetual worry about foreign influence over our governance process, over our elections. At the same time, we have a very open system that prizes speech, that prizes discourse, that prizes participation and viewpoints from every corner," Sanderson quipped about the juxtaposition between First Amendment rights and the concerns dating back to the country's founding about foreign interference in U.S. democracy.

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But domestic subsidiaries of foreign corporations are treated as domestic actors at the federal level, Sanderson said, creating an avenue for influencing state proposals. "Even if it's wholly owned by a foreign corporation, as long as it's separately incorporated, and as long as the donation comes from domestically-derived business activities, and as long as U.S. citizens or green card holders direct the funds, a domestic subsidiary- even a wholly owned subsidiary of a foreign corporation - can make a contribution or expenditure," said Sanderson, who specializes in election law.

While the Foreign Agent Registration Act requires anyone who becomes an agent of a foreign government or other entity, along with foreign corporations, NGOs (non-government organizations) and individuals, to register with the federal government, exemptions vary.

"Those who are working on behalf of foreign governments and foreign political parties have very narrow exemptions, and most likely have to register. Those who are working on behalf of foreign corporations and foreign NGOs have broad exemptions and most likely do not need to register," Sanderson said.

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Six other states have recently passed or proposed their own "foreign agents laws," Sanderson said, which tend to focus on direct lobbying by foreign agents and not broader campaign efforts. A law passed in Arkansas in 2025, however, will soon buck that trend by requiring all representatives of and entities that receive funding from "hostile foreign principals" to register with the Arkansas secretary of state. "Hostile foreign principals" are defined broadly as foreign governments and political parties - countries including China, Russia, North Korea and Iran - and people and organizations from those countries.

"I think you see a lot of legislative energy around passing laws, around investigating these issues by the legislative branch - but also at the federal, state and local level I think there's been an unprecedented push over the past five years to investigate and prosecute efforts to influence elections or policy actions. Failure to register under FARA, for example," Sanderson said.

"But up until this year, there had been a multi-agency foreign influence task force at the federal level that worked closely with state and local authorities as well," he added. In early 2025, the Department of Justice disbanded a Federal Bureau of Investigation task force used to investigate foreign and domestic agents accused of working to influence American politics.

"I don't know what the next iteration of that will be, but the issue is not going away," Sanderson continued.

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