Supreme Court takes up dispute between Ted Cruz and FEC

Washington — The Supreme Court on Thursday said it will hear a dispute between Republican Senator Ted Cruz of Texas and the Federal Elections Commission (FEC) over campaign finance rules limiting the repayment of a candidate’s personal loans to their campaigns.

The appeal from the FEC of a lower court decision is one of five cases the high court added to its docket as it prepares to begin its new term Monday. The legal battle over the campaign finance restrictions joins high-profile cases involving abortion, the Second Amendment and religious liberty that the justices will weigh this term.

Cruz’s dispute with the FEC centers around a provision of the Bipartisan Campaign Reform Act of 2002 that sets a $250,000 cap on the amount of money raised after Election Day that a campaign may use to repay debt owed to the candidate. Federal law allows a campaign to borrow money from either a third-party lender or from the candidate himself, but the Texas senator argues the $250,000 repayment limit violates the First Amendment.

Cruz argued the FEC’s loan-repayment limit “forces a candidate to think twice before making those loans in the first place.”

According to filings with the Supreme Court, Cruz lent his reelection campaign $260,000 as part of his bid to defeat Democrat Beto O’Rourke in the 2018 midterm elections. While his campaign raised more than $35 million in all, and had roughly $2.38 million in cash-on-hand after the election, Cruz’s lawyers told the Supreme Court it was not enough to repay loans from the candidate and satisfy the campaign’s other creditors.

In the 20 days after the election, the committee used its cash-on-hand to repay its creditors first. Then, in December 2018, it repaid Cruz $250,000, leaving $10,000 outstanding. Because more than 20 days had lapsed since the election, the remaining $10,000 debt could not be repaid, according to the FEC.

Cruz challenged the loan-repayment limit in April 2019 as a violation of the First Amendment and sued the FEC in the U.S. District Court in the District of Columbia. But the commission argued he and his campaign committee did not have the legal standing to sue and moved to dismiss the claims. 

The federal district court denied the FEC’s request and concluded not only that Cruz had standing to sue, because he had suffered a “$10,000 financial injury,” but that the loan-repayment limit violates the First Amendment. The limit, the court said, burdens the exercise of political speech.

The FEC asked the Supreme Court to toss out the lower court’s decision and send the case back for further consideration.

In a one-line order, the court said that “further consideration of the question of jurisdiction is postponed to the hearing of the case on the merits.”

The justices will likely hear arguments in the dispute between Cruz and the FEC in early 2022.