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Supreme Court finds limit on candidate loan repayments unconstitutional in FEC v. Ted Cruz for Senate (596 U.S. ____(2022)) – FEC.gov

On May 16, 2022, the United States Supreme Court affirmed the District Court’s judgment in FEC v. Ted Cruz for Senate that Section 304 of the Bipartisan Campaign Reform Act (BCRA), which limits the repayment of candidate loans, is unconstitutional.

Background

On April 1, 2019, Ted Cruz for Senate and Senator Ted Cruz (plaintiffs) filed suit against the Commission alleging that Section 304 of BCRA (52 U.S.C. § 30116(j)) violates the First Amendment. That section prohibits campaigns from repaying more than $250,000 in personal loans from the candidate to the campaign using contributions made after the date of an election. Plaintiffs argued that the repayment limit unconstitutionally burdens the First Amendment rights of the Senator, his campaign, and anyone seeking to make post-election contributions.

On June 3, 2021, a three-judge panel of the United States District Court for the District of Columbia ruled the repayment limitation unconstitutional. The Commission appealed this decision to the United States Supreme Court (the Court).

Analysis

The Court noted that the First Amendment safeguards the ability of a candidate to use personal funds to finance campaign speech, protecting his freedom “to speak without legislative limit on behalf of his own candidacy” (quoting Buckley v. Valeo, 424 U. S. 1, 54 (1976)). By increasing the risk that candidate loans will not be repaid, Section 304 inhibits candidates from loaning money to their campaigns and as a result burdens core speech. This burden was not only “evident and inherent,” but also borne out by data showing that, since the passage of Section 304, there appeared a “clear clustering” of candidate loans right at the $250,000 threshold. The Court stated that the provision’s “’drag’ on a candidate’s First Amendment right to use his own money to facilitate political speech” was particularly important for new candidates and challengers since “[as] a practical matter, personal loans will sometimes be the only way for an unknown challenger with limited connections to front-load campaign spending.”

The Court stated that there was no doubt that the law burdened First Amendment electoral speech, and that the prevention of “quid pro quo” corruption (or its appearance) is the only permissible ground for restricting such speech. The government argued that the use of post-election contributions to repay a candidate’s personal loans poses a greater risk of corruption because those payments personally enrich a candidate, contributors know their post-election contribution will most likely be used to personally enrich the candidate since the election has ended, and contributors also know that recipient candidates who won will be positioned to benefit the donor. The Court rejected that argument, noting that contributions are already regulated and limited on a per-election basis. Because of this, and the absence of concrete evidence of corruption or its appearance, it found Section 304 burdens core political speech without proper justification. Accordingly, the Court upheld the District Court’s judgment.

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