AO 2022-15: Authorized committee may reinstate candidate loans previously converted to contributions
Pursuant to provisions of law recently invalidated by the Supreme Court, an authorized committee may reinstate and repay candidate loans that it previously converted to candidate contributions. The committee may use funds currently on hand or raise funds to retire the loans, so long as there are net debts outstanding.
Background
Harley Rouda was a candidate in the 2018 primary election for California's 48th Congressional District. During the primary election period, he loaned $1,625,000 to his principal campaign committee, Harley Rouda for Congress (the committee). The committee repaid $472,127.93 prior to or within 20 days of the primary election. Consistent with post-election repayment limitations in place at the time, the committee repaid an additional $250,000 during 2018 and 2019. Mr. Rouda forgave the remaining personal loan amounts and the committee converted them to contributions. The committee and Mr. Rouda state that had the post-election repayment limits not been in place, Mr. Rouda would not have forgiven the 2018 loans.
In light of the Supreme Court's decision this year in FEC v. Cruz, which invalidated the loan repayment limitations, the Committee asks if it may reinstate Mr. Rouda’s loans and repay him with funds it currently has on hand or raises to retire debt.
Analysis
The Commission considered three prior advisory opinions to determine how to give retroactive effect to FEC v. Cruz. In one prior advisory opinion, the Commission examined the “nature of the transaction” and permitted an authorized committee to amend disclosure reports previously reporting contributions from a candidate to instead report that activity as the candidate's loan of personal funds to the committee. In another instance, the Commission examined the nature of the transaction and allowed a campaign to recharacterize a contribution as an advance and repay the candidate from an unanticipated refund.
Considering the Supreme Court's decision in FEC v. Cruz and the nature of Mr. Rouda’s loan transactions as reported on the Committee’s disclosure reports before and after a Request for Additional Information from the Commission, the Commission concluded that the Committee may reinstate the loans previously converted to candidate contributions pursuant to the now-invalid regulations. The Commission further concluded that the Committee may repay Mr. Rouda's reinstated loans with funds currently on hand as well as from funds raised for 2018 primary debt retirement. The Commission also provided guidance on how to report the reinstated loans.
Date issued: August 31, 2022; Length: 6 pages