Ted Cruz Wins Challenge Against FEC Over Campaign Finance Restriction

Sen. Ted Cruz (R-Texas) at a Senate hearing on Capitol Hill in Washington, on March 23, 2021. (Greg Nash/Pool/AFP via Getty Images)

A federal court has delivered a win to Sen. Ted Cruz (R-Texas) who sued the Federal Election Commission (FEC) over a federal cap on post-election contributions candidates can use to repay personal loans they make to their campaign.

Cruz brought the lawsuit in an attempt to strike down section 304 of the Bipartisan Campaign Reform Act of 2002, which allows a campaign to only repay $250,000 of a candidate’s pre-election loans with post-election contributions. Any balance of the personal loan that exceeds $250,000 will be treated as “as a contribution by the candidate.”

In 2018, Cruz made two loans totaling $260,000 to his campaign a day prior to the election. Under the law, the campaign could either repay the loans using pre-election funds within twenty days of the election or repay the maximum $250,000 with post-election contributions. This meant the $10,000 balance of the loan was deemed a campaign contribution from Cruz.

Cruz and his campaign argued that such a limit violates the First Amendment as it restricts political speech. Meanwhile, the FEC argued that Cruz lacked the capacity—or legal stand—to bring a lawsuit on the matter.

The commission also argued in a court filing that the cap was necessary "to mitigate the heightened risk of quid pro quo corruption and its appearance resulting from already-elected officeholders soliciting contributions for their own personal benefit."

The three-judge panel on Thursday agreed with Cruz, ruling that "the loan-repayment limit burdens political speech and thus implicates the protection of the First Amendment."

"Because the government has failed to demonstrate that the loan-repayment limit serves an interest in preventing quid pro quo corruption, or that the limit is sufficiently tailored to serve this purpose, the loan repayment limit runs afoul of the First Amendment. We therefore grant summary judgment for Senator Cruz and his campaign," DC Circuit Court of Appeals Judge Neomi Rao, who was appointed to preside over trial court matters, wrote in the opinion (pdf). She was joined by Judges Amit Mehta and Timothy Kelly in the unanimous decision.

A spokesperson for Cruz said in a statement to The Epoch Times: "Today’s unanimous decision was a resounding victory for the First Amendment and free speech.  The existing FEC rules benefited incumbent politicians and the super wealthy and they made it harder for challengers to run, and the court rightly struck them down as unconstitutional."

The FEC's press office said it did not comment on pending litigation.

Over the years, several federal courts have issued rulings that said to have chipped away at campaign finance rules, including the 2010 Supreme Court decision Citizens United v. FEC. In that decision, the 5-4 panel ruled that political spending was a form of protected speech under the First Amendment and that the federal government "may not suppress political speech on the basis of the speaker's corporate identity."

Article updated with statements from Cruz's office and FEC.