Recent Supreme Court ruling shakes up campaign finance law and leaves future restrictions in doubt | Hogan Lovells

Antonio G Ginting

Earlier this week, the US Supreme Court held that Section 304 of the Bipartisan Campaign Reform Act of 2002 (BCRA) was unconstitutional. Senator Ted Cruz (R-TX) challenged the law as unconstitutional following his re-election in 2018. The Court held that the current legal limit ($250,000) on the amount of money a candidate’s committee can reimburse the candidate to repay a personal loan violated the First Amendment’s free speech guarantees by infringing political expression. The Court’s majority opinion emphasizes the Court’s current skepticism surrounding overly broad campaign finance restrictions.

Background

Section 304 prohibits campaigns from remimbursing candidates more than $250,000 for personal loans made by the candidate using contributions given following the date of an election. Plaintiffs argues that the loan-repayment limit unconstitutionally infringes the First Amendment rights of Senator Cruz and his campaign, as well as anyone interested in making post-election contributions.

The Court’s Opinion

Chief Justice Roberts, in a 6-3 opinion, wrote that the challenged law “burdens core political speech without proper justification.” The Court heavily grounded its opinion in the First Amendment, reasoning that preventing actual corruption—or the appearance of it— via “quid pro quo” transactions is the only “permissible ground for restricting political speech.”

The Court made clear that it will not rubber stamp any future or existing campaign finance restrictions. , the Court focused on the FEC’s inability to find “a single case of quid pro quo corruption” in relation to loan-repayments. The Government must provide specific “record evidence or legislative findings” highlighting the specific problem its restrictions seek to remedy. The FEC fell short of this burden. According to the Court, the FEC failed demonstrate that “Section 304 furthers a permissible anticorruption goal, rather than the impermissible objective of simply limiting the amount of money in politics,” resulting in an unjustifiable burden on free speech.

What’s Next?

Federal Election Commission v. Cruz is the latest in a series of decisions in which the Court has loosened campaign finance restrictions in pursuit of expanding political expression and free speech. Although the Court’s opinion is narrowly focused on the issue of candidates lending personal funds to their campaigns, the decision’s aftershock will surely affect the future trajectory of campaign finance law more generally. The Court’s reasoning seemed to reject all but the narrowest of campaign finance restrictions and placed the burden squarely with the Government to justify its restrictions. Absent a legitimate, tailored restriction to remedy anticorruption, future campaign finance restrictions are likely to meet a similar fate.

Stay tuned for further updates from Hogan Lovells following Federal Election Commission v. Cruz’s effect of the regulatory landscape. Our Political Law Compliance team is guiding many clients as they navigate campaign finance and other campaign/election-related issues.

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