The Federal Election Commission has ruled foreign donors can finance U.S. referendum campaigns, opening the door to foreign spending on fights over high-profile policy issues, Axios has learned.

Why it matters: Foreign nationals are barred from donating to U.S. political candidates or committees. But the FEC’s decision — allowing them to support ballot committees — provides another avenue for foreigners to directly influence U.S. voters and domestic policy.

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• A major question stemming from the decision is whether foreign nationals are now permitted to spend money to influence the actual mechanisms of the U.S. democratic process.
• That would include congressional redistricting, which is frequently subject to ballot referenda.
• The FEC’s ruling did not address that question, meaning it will likely be litigated in future fights at the commission.

The decision only concerns federal law; states remain free to outlaw foreign funding for state-registered ballot committees.

• Seven states already do so. . . .

The backstory: The decision stemmed from a 2018 complaint alleging a Canadian subsidiary of Australian firm Sandfire Resources illegally financed a measure to block new restrictions on hard rock mining in Montana.

• David Brooks, the executive director of Montana Trout Unlimited and one of the complainants in the case, called the FEC ruling “surprising and scary” in an emailed statement to Axios.
• “Are we, as U.S. citizens, really OK with letting foreign money go directly to state lawmaking via citizen initiative campaigns?” . . .

What they’re saying: “This FEC decision reflects a big loophole in the federal ban on foreign money in U.S. elections,” said Brendan Fischer, the director of federal and FEC reforms at the Campaign Legal Center.

(Excerpt from Axios.