This Report summarizes cases granted review on September 30, 2021 (Part I).
Case Granted Review: Federal Election Comm’n v. Ted Cruz for Senate, 21-12
Federal Election Comm’n v. Ted Cruz for Senate, 21-12. Section 304 of the Bipartisan Campaign Reform Act of 2002 provides that when a candidate for federal office lends money to his own election campaign there is a $250,000 cap on the amount of post-election contributions that the campaign may use to repay the debt owed to the candidate. Under review is a three-judge district court ruling that Section 304 violates the First Amendment; the Supreme Court will also address whether appellees have standing to challenge the provision.
In 2018, appellee Senator Ted Cruz ran for reelection. The day before the general election, Senator Cruz lent his committee (also an appellee) $260,000—$10,000 more than the maximum amount that BCRA’s loan-repayment provision allows to be repaid with post-election contributions. After the election, the committee had approximately $2.2 million in cash on hand. The committee could have used those pre-election funds to repay Senator Cruz in whole or in part, but it chose not to do so. Once the 20-day deadline to do so elapsed, an FEC regulation required that $10,000 of the prior $260,000 loan be recharacterized as a contribution from Senator Cruz to his campaign. The committee then repaid Senator Cruz $250,000. But because the committee had waited until 20 days had elapsed, it could not repay the remaining $10,000. On April 1, 2019, appellees sued the Commission in federal district court, alleging that BCRA’s loan-repayment limit violates the First Amendment. The FEC moved to dismiss the claims before a three-judge court had been convened, arguing that appellees lacked standing to sue. The district court concluded that Senator Cruz had standing to sue because he had suffered a “$10,000 financial injury” due to BCRA’s loan-repayment limit. 2019 WL 8272774. The FEC argued that, because the committee could easily have used pre-election contributions to repay all or part of Senator Cruz’s loan during the 20-day post-election window, Senator Cruz’s injury was self-inflicted. The court rejected that contention, stating that “[t]he flaw in the FEC’s argument [wa]s that it would require Senator Cruz to avoid an injury by subjecting himself to the very framework he alleges is unconstitutional.”
The three-judge district court subsequently granted appellees’ motion for summary judgment and held that BCRA’s loan-repayment limit violates the First Amendment. 2021 WL 2269415. The court explained that the limit “burdens candidates who wish to make . . . personal loans” to their campaigns by “constrain[ing] the repayment options available to the candidate.” The court suggested that, as a result of the limit, a candidate could be “inhibited from making a personal loan . . . out of concern that she will be left holding the bag on any unpaid campaign debt.” Applying heightened scrutiny, the district court then concluded that the government had not adequately justified this burden on political speech. The court concluded that the FEC had “fail[ed] to demonstrate that quid pro quo corruption or its appearance arises from post-election contributions to retire a candidate’s personal debt.” The court also deemed the limit “over inclusive” because it “applies across the board to winning and losing candidates, although any purported anticorruption rationale applies only to winning candidates.” And the court found the limit “substantially underinclusive” because “[a] person may contribute to retire any outstanding campaign debt, with the exception of a candidate’s personal loans over $250,00.”
The FEC argues in its jurisdictional statement that appellees lack standing and that Section 304 is constitutional. As to jurisdiction, the FEC asserts that, “[a]lthough the loss of $10,000 constituted injury, that injury was not fairly traceable to the FEC’s enforcement of the loan-repayment limit. That is so for two separate reasons: (1) that injury was not traceable to the enforcement of the specific statutory provision that the district court held unconstitutional, and (2) the injury was self-inflicted.” On the former point, the FEC maintains that “by the time the three-judge district court ruled on the merits of appellees’ First Amendment challenge to BCRA’s loan-repayment limit, the record made clear that appellees had used pre- rather than post-election contributions to repay Senator Cruz $250,000. At that point, any continued reliance on the contrary allegation in appellees’ complaint was unwarranted.” And “[b]ecause the prior $250,000 repayment to Senator Cruz was made using pre-election funds, nothing in BCRA’s loan-repayment provision stops the committee from raising post-election contributions and using those contributions to repay the remaining $10,000 owed to Senator Cruz.” (Appellees flatly deny the factual allegations behind this argument.) On the merits, the FEC asserts that “the loan-repayment limit imposes at most a modest burden on First Amendment rights,” and that “the use of post-election contributions to repay personal loans creates a heightened risk of actual and apparent quid pro quo corruption.” Among the reasons that is so, the Commission argues, is that “money that repays a personal loan after an election effectively goes into the candidate’s pocket. A payment that adds to a candidate’s personal wealth (and that can accordingly be used for personal purposes) poses a greater threat of quid pro quo corruption than a payment that merely adds to a campaign’s treasury (and that can accordingly be used only for campaign purposes).”
[Editor’s note: Some of the language in the background section of the summary above was taken from the petition for writ of certiorari and brief in opposition.]