Federal Judge Weighs Challenge to Hawaii Corporate Election Spending Ban

A federal judge in Hawaii recently heard arguments in a legal battle over Act 11, a state law that bans corporate election spending. Before hearing arguments, U.S. District Judge Leslie Kobayashi indicated she was inclined to rule that a local think tank has standing to challenge the measure. The lawsuit was brought by the Grassroot Institute of Hawaii, which wants the court to block the law before it takes effect.

Supporters view Act 11 as a response to the U.S. Supreme Court’s Citizens United ruling. Instead of directly regulating spending, the law amends Hawaii’s corporate code to strip corporations, nonprofits, and unions of the power to spend money supporting or opposing candidates or certified ballot measures. Violations of the statute can carry severe penalties, including corporate dissolution.

Arguments Over Standing and Application

During the hearing, Deputy Solicitor General Ewan Rayner argued that the state’s law would not actually apply to the think tank’s regular activities. He noted that Act 11 only targets spending on ballot measures after they have been certified for the ballot. Much of the group’s advocacy, according to the state, involves getting measures onto the ballot or relies on exemptions for news and commentary.

Judge Kobayashi expressed skepticism regarding the state’s test. She pointed out that the group has a long history of community involvement and exercising First Amendment rights on political questions. The judge also noted during the hearing that the organization’s activities involve the essence of political speech.

Constitutional Questions and Corporate Powers

The state argued that Hawaii has the inherent authority to decide what powers corporations may exercise, suggesting the state is declining to grant certain powers rather than restricting existing rights. The state maintained that most of the group’s speech, such as publishing research and lobbying lawmakers, remains untouched.

Lawyers representing the nonprofit warned that allowing states to condition corporate existence on forgoing political speech sets a dangerous precedent. Judge Kobayashi questioned how the state’s reasoning applied to an organization whose entire mission is designed around political discourse and educating the public on limited government.

What This Means for Organizations

Act 11 is scheduled to take effect on July 1, 2027. If the law goes into effect as written, organizations that spend funds on certified ballot measures could face drastic consequences, including corporate dissolution. Groups engaged in public policy or ballot measure advocacy should closely monitor the litigation.

Organizations and businesses wanting to understand how corporate code changes affect their advocacy work should consider consulting an attorney. Legal counsel can help assess whether current fundraising, event hosting, or publishing activities could trigger enforcement under new state rules.

This article is general information based on Courthouse News Service and court or agency records available at publication time. It is not legal advice; laws and deadlines differ by state and by case. Published October 14, 2026.