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Federal Election Commission | United States of America

Schaefer v. FEC (02-1255)

Summary

On July 8, 2002, Michael Schaefer, a 2002 Congressional primary candidate in Arizona , asked the U.S. District Court for the District of Arizona to find unconstitutional the Federal Election Campaign Act's (the Act):

  • Definition of "contribution;"
  • Limits on individual contributions; and
  • Prohibition on corporate contributions.

Mr. Schaefer alleges that these provisions of the Act favor incumbent candidates and violate Article I of the Constitution and the First and Tenth amendments.

Background

Under the Act, a contribution includes "any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office." 2 U.S.C. §431(8)(A)(i). A bank loan made in the ordinary course of business is not a contribution. However, the endorsement or guarantee of a loan is considered a contribution in the amount that each endorser or guarantor is liable. 2 U.S.C. §§431(8)(B)(vii) and 431(8)(B)(vii)(I). The Act limits contributions from individuals to candidates to $1,000 per election and prohibits corporations from making any contribution or expenditure to influence a federal election. 2 U.S.C. §§441a(a)(1) and 441b.

Court complaint

Mr. Schaefer claims that he is unable to obtain a sufficient loan for his campaign because the endorsement or guarantee of the loan would be considered a contribution from each individual endorser or guarantor and thus subject to the Act's contribution limits. Moreover, his family's corporation cannot endorse or guarantee the loan because of the ban on corporate contributions. In his complaint, Mr. Schaefer alleges that these provisions of the Act "appear to be protection of the incumbents, by the incumbents and for the incumbents," because, he asserts, incumbent candidates have greater access to funds from other sources, such as political action committees and party committees.

Mr. Schaefer asks the court for declaratory judgment that:

  • He has the right to finance his campaign with personal or borrowed funds from any source; and
  • A guarantor of a loan is not a contributor in a case where there is no evidence that the loan is intended to be forgiven rather than repaid.

Source: FEC Record — September 2002

This information is not intended to replace the law or to change its meaning, nor does this information create or confer any rights for or on any person or bind the Federal Election Commission or the public.

The reader is encouraged also to consult the Federal Election Campaign Act of 1971, as amended (52 U.S.C. 30101 et seq.), Commission regulations (Title 11 of the Code of Federal Regulations), Commission advisory opinions and applicable court decisions.