UPDATE: FEC Candidate Loan Repayment Limitation Ruled Unconstitutional in Supreme Court Ruling

0

On May 16, 2022, the United States Supreme Court ruled that limiting repayment of candidates’ own campaign loans to $250,000 (codified as 52 U.S.C § 30116(j)) is unconstitutional. The plaintiffs, Ted Cruz for the Senate and Senator Ted Cruz, filed suit against the Federal Election Commission (“FEC”), claiming that the reimbursement limitation unconstitutionally infringes the senator’s First Amendment rights, campaign and anyone who may seek to make post-election contributions.

In concluding that the loan repayment limit was unconstitutional, the Majority called the limitation a “barrier” to a First Amendment candidate’s rights. Specifically, the Court noted that personal loans were a “ubiquitous campaign finance tool.[ ]because the bulk of seed money for many ongoing campaigns is personal loans from candidates to kick off the campaign. The ability to lend money to campaigns, the Court pointed out, is essential for new candidates and challengers, as they often fight uphill battles against incumbents. Notably, the Court unanimously found that the loan repayment limit to some extent infringed on First Amendment nominees’ rights.

Since the loan repayment limit violated campaign speech protected by the First Amendment, the Court then considered whether the loan repayment limit was justified by “allowable interest.” While the Court did not rule on the level of review required, it made it clear that the government could not meet its burden under any standard of review. First, the Court noted the government’s inability to provide a single case of quid pro quo corruption due to the lack of a loan repayment limit, although most states do not have a loan repayment limit. . Instead, the government relied on articles that speculated about potential problems that could arise without the limitation on loan repayments. In response to this, the Court stated that “[g]government cannot seek to limit the appearance of mere influence or access” and that while “the line between quid pro quo corruption and general influence can sometimes appear vague[,]”the first amendment” requires [the Court] err on the side of protecting political speech rather than suppressing it. Second, the Court also rejected the government’s argument that using contributions to repay a loan amounts to a “gift,” stating this because applicants are already repaid in full for their loans. As such, increasing the amount a candidate can be reimbursed does not increase counterparty issues. Third, the Court attacks the government’s argument that the Court should show “legislative deference” in this case on two grounds: (1) the Court shows deference to the legislature, particularly in situations where the legislation may have been passed to “insulate lawmakers from genuine electoral contestation” is inappropriate; and (2) the Court’s role is “to decide whether a particular legislative choice is constitutional,” not be beholden to legislators.

Concretely, this participation allows candidates to lend unlimited resources to their own campaign, and then to be reimbursed by the campaign. We expect the FEC to issue further guidance to campaign committees in the near future.

Share.

Comments are closed.