New rules for the return of loans to candidates | Perkins coie

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Last month, a three-judge federal district court ruled unconstitutional a provision in the 2002 Bipartisan Campaign Reform Act (BCRA) that limited the amount of money a nominee’s designated committee could raise after the election to pay off personal loans provided by the authorities. candidate for the same election.[1] Prior to this ruling, candidates who provided or guaranteed personal loans for their campaigns were prohibited from raising more than $ 250,000 to pay off this debt after the election date for which the debt was received. The Federal Election Commission (FEC) has appealed the decision to the US Supreme Court, but has not yet tried to reverse the decision while the appeal is pending.[2] Unless the Supreme Court overturns that ruling, there will be no limit on the amount of money a campaign can raise after the election to pay off a candidate’s campaign loans.

A lawsuit filed by Senator Ted Cruise and his 2018 campaign committee contested section 304 of the BCRA, according to which a candidate who received personal loans in connection with a candidate’s campaign could not repay more than $ 250,000 of personal loans provided in connection with the election. using contributions made to the campaign after the date of that election.[3] Under FEC rules, personal loans, including loans from a third party that were approved or guaranteed by the candidate, or secured by the candidate’s personal funds, could be fully repaid from the contributions that were made to the committee. on or before election dayprovided that any amount over $ 250,000 is refunded within 20 days of the election.[4] After the 20-day period, the campaign was to consider any outstanding personal loans in excess of $ 250,000 (less any cash paid out on the day after the election) as a candidate’s contribution to the committee. …[5] The campaign could repay up to $ 250,000 in personal loans from campaign contributions. after election date[6]

The court ruled that limiting the payment of personal loans burdens the First Amendment candidates’ interests in the costs of supporting their campaigns, restricting political expression and association for candidates and their sponsors. The FEC argued that the restriction served the government’s compelling interests, as there is an increased risk and semblance of corruption for a favor, where campaigns can raise funds to pay off debts owed personally to a candidate after a candidate has been elected and held federal office.[7] The court disagreed, finding that there was insufficient evidence that post-election contributions to pay off personal debts to a candidate posed an increased risk of corruption for the service.[8] The court also found that the impugned law was not sufficiently adapted to prevent corruption, as it restricts the repayment of loans for both winning and losing candidates, and also because the $ 250,000 limit arbitrarily allowed the repayment of loan installments after the election within the but no more a hat.[9]

If the decision remains in effect, campaigns can raise an unlimited amount of contributions to pay off a candidate’s personal loans both before and after the election. In any event, funds collected after the elections to settle the outstanding campaign debts must be collected in accordance with the contribution limits that apply to the elections in connection with which the debt arose. For example, a donor that pledged $ 1,000 in a candidate’s primary may be able to provide an additional $ 1,900 in outstanding principal after the primary. However, the donor will have to indicate a contribution to pay off the debt. A donor who has already set a cap for the primary will not be able to provide more funds to pay off debt in that same election.

The court did not indicate how the decision, if it remains in effect, would affect candidates who have already written off personal loans in excess of $ 250,000 in order to comply with the now invalidated law. Any candidates wishing to raise funds to pay off personal debts incurred in past electoral cycles should consult a lawyer.

Footnotes

[1] Ted Cruz, Senate vs. FEC, # 1: 19-CV-00908, 2021 WL 2269415 (DDC June 3, 2021).

[2] Notice of Appeal, Ted Cruz from Senate v. FEC, # 1: 19-CV-00908, 2021 WL 2269415 (DDC June 13, 2021).

[3] 52 USCA § 30115 (j).

[4] 11 CFR § 116.11 (b) (1), (c) (1).

[5] Identifier. § 116.11 (c) (2).

[6] Identifier. § 116.11 (b) (3), (c) (2).

[7] Ted Cruz, Senate vs. FEC, # 1: 19-CV-00908, 2021 WL 2269415 17 (DDC June 3, 2021).

[8] Identifier. at 24.

[9] Identifier. at 26.

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