142 S.Ct. 1638

Supreme Court of the United States.

FEDERAL ELECTION COMMISSION, Appellant

v.

Ted CRUZ for Senate, et al.

No. 21-12

|

Argued January 19, 2022

|

Decided May 16, 2022

CHIEF JUSTICE ROBERTS delivered the opinion of the Court.

*1645 In order to jumpstart a fledgling campaign or finish strong in a tight race, candidates for federal office often loan money to their campaign committees. A provision of federal law regulates the repayment of such loans. Among other things, it bars campaigns from using more than $250,000 of funds raised after election day to repay a candidate’s personal loans. This limit on the use of post-election funds increases the risk that candidate loans over $250,000 will not be repaid in full, inhibiting candidates from making such loans in the first place. The question is whether this restriction violates the First Amendment rights of candidates and their campaigns to engage in political speech.

I

A

Candidates for federal office may, consistent with federal law, use various sources to fund their campaigns. A candidate may spend an unlimited amount of his own money in support of his campaign. [citation omitted] His campaign—a legal entity distinct from the candidate himself—may borrow an unlimited amount from third-party lenders or from the candidate himself. [citations omitted] And campaigns may, of course, accept contributions directly from other organizations or from individuals, subject to monetary limitations. Individual contributions are capped at $2,900 for the primary and $2,900 for the general election. [citations omitted] Campaigns may continue to receive contributions after election day, so long as those contributions go toward repaying campaign debts. [citation omitted]

Section 304 of the Bipartisan Campaign Reform Act of 2002 (BCRA)…further restricts the use of post-election funds. Under that provision, a candidate who loans money to his campaign may not be repaid more than $250,000 of such loans from contributions made to the campaign after the date of the election…To implement that limit, the Federal Election Commission (FEC) has *1646 promulgated regulations establishing three rules pertinent here: First, a campaign may repay up to $250,000 in candidate loans using contributions made “at any time before, on, or after the date of the election.” [citation omitted] Second, to the extent the loans exceed $250,000, a campaign may use pre-election funds to repay the portion exceeding $250,000 only if the repayment occurs “within 20 days of the election.” [citation omitted] And third, if more than $250,000 remains unpaid when the 20-day post-election deadline expires, the campaign must treat the portion above $250,000 as a contribution to the campaign, precluding later repayment. [citation omitted]

B

Appellee Ted Cruz represents Texas in the United States Senate. This case arises from his 2018 reelection campaign, which was, at the time, the most expensive Senate race in history. Before election day, Cruz loaned $260,000 to the other appellee here, Ted Cruz for Senate (Committee). At the end of election day, however, the Committee was in the red by approximately $340,000. [citation omitted] It eventually began repaying Cruz’s loans, but by that time the 20-day post-election window for repaying amounts over $250,000 had closed. [citation omitted] The Committee accordingly repaid Cruz only $250,000, leaving $10,000 of his personal loans unpaid.

Cruz and the Committee filed this action in the United States District Court for the District of Columbia, alleging that Section 304 of BCRA violates the First Amendment. They also raised challenges to the FEC’s implementing regulation.  [citation omitted] A three-judge panel was convened to hear the case. [citation omitted]

The three-judge District Court granted Cruz and his Committee summary judgment on their constitutional claim, holding that the loan-repayment limitation burdens political speech without sufficient justification…The District Court also ordered that appellees’ challenges to the regulation, previously held in abeyance, be dismissed as moot. The Government appealed directly to this Court..

II

[Jurisdiction discussion omitted]

III

A

The First Amendment “has its fullest and most urgent application precisely to the conduct of campaigns for political office.” [citation omitted]  It 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.” [citation omitted] This broad protection, we have explained, “reflects our profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open.” [citation omitted]

The Government seems to agree with appellees that the loan-repayment limitation abridges First Amendment rights, at least to some extent,…and we reach the same conclusion. This provision, by design and effect, burdens candidates who wish to make expenditures on behalf of their own candidacy through personal loans. [citations omitted] By restricting the sources of funds that campaigns may use to repay candidate loans, Section 304 increases the risk that such loans will not be repaid. That in turn inhibits candidates from loaning money to their campaigns in the first place, burdening core speech.

The data bear out the deterrent effect of Section 304. After BCRA was passed, there appeared a “clear clustering of [candidate] loans right at the $250,000 threshold.” [citation omitted] There was no such clustering before the loan-repayment limitation went into effect. The Government’s evidence in the District Court, moreover, reflects that the percentage of loans by Senate candidates for exactly $250,000 has increased tenfold since BCRA was passed. [citation omitted] Section 304, then, has altered “the propensity of many politicians to make large loans.” [citation omitted] In *1651 doing so, it has predictably restricted a candidate’s speech on behalf of his own candidacy. [citation omitted]

Quite apart from this record evidence, the burden on First Amendment expression is “evident and inherent” in the choice that candidates and their campaigns must confront. [citations omitted] Although Section 304 “does not impose a cap on a candidate’s expenditure of personal funds, it imposes an unprecedented penalty on any candidate who robustly exercises that First Amendment right.” [citation omitted] That penalty, of course, is the significant risk that a candidate will not be repaid if he chooses to loan his campaign more than $250,000. And that risk in turn may deter some candidates from loaning money to their campaigns when they otherwise would, reducing the amount of political speech. This “drag” on a candidate’s First Amendment right to use his own money to facilitate political speech is no less burdensome “simply because it attaches as a consequence of a statutorily imposed choice.” [citation omitted]

The “drag,” moreover, is no small matter. Debt is a ubiquitous tool for financing electoral campaigns. The raw dollar amount of loans made to campaigns in any one election cycle is in the nine figures, “significantly exceeding” the amount of independent expenditures... And personal loans from candidates themselves constitute the bulk of this financing. [citation omitted] In fact, candidates who self-fund usually do so using personal loans. [citation omitted]

The ability to lend money to a campaign is especially important for new candidates and challengers. As a practical matter, personal loans will sometimes be the only way for an unknown challenger with limited connections to front-load campaign spending. [citation omitted] And early spending—and thus early expression—is critical to a newcomer’s success. [citation omitted] A large personal loan also may be a useful tool to signal that the political outsider is confident enough in his campaign to have skin in the game, attracting the attention of donors and voters alike. [citation omitted]  By inhibiting a candidate from using this critical source of campaign funding, however, Section 304 raises a barrier to entry—thus abridging political speech.

…[T]he extent of the burden may vary depending on the circumstances of a particular candidate and particular election. But there is no doubt that the law does burden First Amendment electoral speech, and any such law must at least be justified *1652 by a permissible interest. [citation omitted]

B

With those First Amendment costs in mind, we turn to whether the loan-repayment limitation is justified. The parties debate whether strict or “closely drawn” scrutiny should apply in answering that question. [citation omitted] We need not resolve this dispute because, under either standard, the Government must prove at the outset that it is in fact pursuing a legitimate objective. [citation omitted] It has not done so here.

1

This Court has recognized only one permissible ground for restricting political speech: the prevention of “quid pro quo” corruption or its appearance. [citations omitted] We have consistently rejected attempts to restrict campaign speech based on other legislative aims... [T]the First Amendment…prohibits such attempts to tamper with the “right of citizens to choose who shall govern them.” [citations omitted]

The Government argues that the contributions at issue raise a heightened risk of corruption because of the use to which they are put: repaying a candidate’s personal loans. It also maintains that post-election contributions are particularly troubling because the contributor will know—not merely hope—that the recipient, having prevailed, will be in a position to do him some good.

We greet the assertion of an anticorruption interest here with a measure of skepticism, for the loan-repayment limitation is yet another in a long line of “prophylaxis-upon-prophylaxis approach[es]” to regulating campaign finance. [citations omitted] Individual contributions to candidates for federal office, including those made after the candidate has won the election, are already regulated in order to prevent corruption or its appearance. Such contributions are capped at $2,900 per election,… and nontrivial contributions must be publicly disclosed…The… contributions at issue remain subject to these requirements. [citation omitted] And the requirements are themselves prophylactic measures, given that “few if any contributions to candidates will involve quid pro quo arrangements.” [citation omitted] *1653 Such a prophylaxis-upon-prophylaxis approach…is a significant indicator that the regulation may not be necessary for the interest it seeks to protect. [citations omitted]

There is no cause for a different conclusion here. Because the Government is defending a restriction on speech as necessary to prevent an anticipated harm, it must do more than “simply posit the existence of the disease sought to be cured.” [citations omitted] It must instead point to “record evidence or legislative findings” demonstrating the need to address a special problem…We have “never accepted mere conjecture as adequate to carry a First Amendment burden.”[citations omitted]

Yet the Government is unable to identify a single case of quid pro quo corruption in this context—even though most States do not impose a limit on the use of post-election contributions to repay candidate loans. [citations omitted] Our previous cases have found the absence of such evidence significant. [citations omitted]

The Government instead puts forward a handful of media reports and anecdotes that it says illustrate the special risks associated with repaying candidate loans after an election. But as the District Court found, those reports “merely hypothesize that individuals who contribute after the election to help retire a candidate’s debt might have greater influence with or access to the candidate.” [citation omitted] That is not the type of quid pro quo corruption the Government may target consistent with the First Amendment. [citation omitted]

[O]ur cases make clear that “the Government may not seek to limit the appearance of mere influence or access.” [citation omitted] [I]nfluence and access “embody a central feature of democracy—that constituents support candidates who share their beliefs and interests, and candidates who are elected can be expected to be responsive to those concerns.” [citation omitted].

To be sure, the “line between quid pro quo corruption and general influence may seem vague at times, but the distinction must be respected in order to safeguard basic First Amendment rights.” [citation omitted] And in drawing that line, “the First Amendment requires us to err on the side of protecting political speech rather than suppressing it.” [citations omitted]

*1654

In the absence of direct evidence, the Government turns elsewhere. It contends that a scholarly article, a poll, and statements by Members of Congress show that these contributions carry a heightened risk of at least the appearance of corruption. Essentially all the Government’s evidence, however, concerns the sort of “corruption,” loosely conceived, that…is not legitimately regulated under the First Amendment.

***

All the [evidence on which the Government relies] is pretty meager, given that we are considering restrictions on “the most fundamental First Amendment activities”—the right of candidates for political office to make their case to the American people. [citation omitted] In any event, the legislative *1655 record helps appellees just as much as the Government…

***

3

Perhaps to make up for its evidentiary shortcomings, the Government falls back on what it calls a “common sense” analogy: Post-election contributions used to repay a candidate’s loans are akin to a “gift” because they “add to the candidate’s personal wealth” as opposed to the campaign’s treasury. [citation omitted]

***

But this forgets that we are talking about repayment of a loan, not a gift…

*** 

In the end, it remains our role to decide whether a particular legislative choice is constitutional. [citations omitted] And here the Government has not shown that [the federal statute] furthers a permissible anticorruption goal, rather than the impermissible objective of simply limiting the amount of money in politics.

* * *

For the reasons set forth, we conclude that [the federal statute] burdens core political speech without proper justification. *1657 The judgment of the District Court is affirmed.

It is so ordered.