On May 16, 2022, the U.S. Supreme Court decided Federal Election Comm’n v. Ted Cruz for Senate, No. 21-12, holding that the federal statute that prohibits repaying campaign-finance loans over $250,000 with money raised after the election is unconstitutional under the Free Speech Clause. The majority held that “[t]his limit on the use of post-election funds increases the risk that candidate loans over $250,000 will not be repaid in full, inhibiting candidates from making such loans in the first place.”
Pursuant to Section 304 of the Bipartisan Campaign Reform Act of 2002, and its implementing regulations, a political candidate who lends money to his or her campaign may be repaid only up to $250,000 in funds raised after the election. Any additional amount the candidate lent the campaign must be repaid within 20 days of the election, using pre-election funds. After 20 days, the campaign must treat any un-repaid portion of the loan above $250,000 as a contribution.
Senator Ted Cruz loaned his 2018 reelection campaign committee $260,000. After he won reelection, the campaign repaid him $250,000, and Senator Cruz and the committee sued in federal court, claiming that the limits on repaying the additional $10,000 were unconstitutional. A three-judge district court agreed “that the loan-repayment limitation burdens political speech without sufficient justification,” and the FEC appealed directly to the Supreme Court.
The Supreme Court affirmed by a 6-3 vote. The Court first held that Cruz and the committee have standing because “the Committee’s present inability to repay the final $10,000 of Cruz’s loans constitutes an injury in fact both to Cruz and to his Committee.” On the merits, the Court first ruled that the repayment restriction “burdens core political speech without proper justification.” The Court pointed to empirical data showing that Section 304 “has predictably restricted a candidate’s speech on behalf of his own candidacy.” The Court did not decide the precise level of First Amendment scrutiny to apply, because it held that the restriction was not justified under any potential standard. The Court noted that it has “recognized only one permissible ground for restricting political speech: the prevention of ‘quid pro quo’ corruption or its appearance.” The Court noted that the FEC failed to “point to ‘record evidence or legislative findings’ demonstrating the need” for the restriction, and was “unable to identify a single case of quid pro quo corruption in this context” even though “most States do not impose a limit on the use of post-election contributions to repay candidate loans.”
Chief Justice Roberts authored the Court’s opinion, in which Justices Thomas, Alito, Gorsuch, Kavanaugh, and Barrett joined. Justice Kagan filed a dissenting opinion in which Justices Breyer and Sotomayor joined.