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'Millionaire' Decision Leaves Races in Limbo

The Supreme Court today struck down a portion of the 2002 Bipartisan Campaign Reform Act known as the "millionaire's amendment," which was designed to give a financial leg-up to congressional candidates facing opponents who funnel more than $350,000 into their own campaigns.

The fact that the ruling comes in the middle of a heated election year means that races all over the country are now in something of a legal no-man's land. According to the Federal Election Commission, 39 candidates so far this cycle have filed paperwork with the agency indicating that they have given enough money to their own campaigns to trigger the "millionaire" provision, automatically allowing their opponents to accept donations of up to $6,900 rather than the usual $2,300.

So what do candidates in those races do now?

It is important to note that, at the moment, the Supreme Court's ruling only affects House races, not Senate races. The existing law applies to both kinds of contests, but today's decision was based on a challenge filed by Jack Davis, the wealthy Democratic candidate running in the upstate New York district being vacated by retiring Rep. Tom Reynolds (R-N.Y.). Rick Hasen, a law professor at Loyola Law School in Los Angeles and the author of the Election Law blog, said that because Davis is a House candidate, the ruling technically only affects House races for now. A Senate candidate affected by the provision would now need to file a legal challenge in a lower court, which would presumably use today's Supreme Court decision to make a similar ruling.

But that doesn't mean that Senate candidates squaring off against millionaires should keep accepting $6,900 contributions, nor should House candidates in the same situation, even though the rules are now unclear.

"If I were a candidate facing a millionaire I'd be very wary of accepting a contribution of over $2,300, but it's going to take an FEC ruling or a court decision to really displace this," Hasen said. "There's going to be a lag now."

Even if new rules or laws are put on the books and candidates running against wealthy opponents stop taking larger contributions, it's not clear what will happen to the money those candidates have already accepted. Can they keep the $6,900 contributions they took before today's ruling?

In its decision today, the Supreme Court remanded the case back to U.S. District Court for further consideration. That court could issue a more detailed ruling on what will happen next, and the FEC -- which is now back up and running -- could write new rules. Another remedy could be for Congress, which wrote the unconstitutional law in the first place, to try to fix its own mess.

Kenneth Gross, an election law expert at Skadden, Arps, Slate, Meagher & Flom, said Congress should step in to "cure" the problem. "But I'm not sure what the cure would be," he said.

UPDATE 4:15 PM: Gross e-mails to share his view of what happens now: "Whatever the law was until the date of the opinion was the law. As of the date of the opinion, the law is struck down and no longer effective. So for the higher [contribution] amounts taken prior to today, those candidates can keep it. No refunds would be required. But that is it. Starting today the challengers to those spending under the millionaire's amendment can only take up to the $2,300 limit per election."

By Ben Pershing  |  June 26, 2008; 3:40 PM ET
Categories:  2008 Campaign , Ethics and Rules , Fundraising Circuit  
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