Sen. Ted Cruz (R-TX). Senate Judiciary Committee confirmation hearing for William Barr to become the next U.S. Attorney General, on Tuesday, Jan. 15, 2019. Photo: Diego M. Radzinschi/ALM

When he battled for his seat in the tight 2018 race against Beto O'Rourke, Sen. Ted Cruz, R-Texas, infused his campaign with $5,000 from his own bank account and $255,000 from a loan he secured with personal assets.

But his campaign could only repay $250,000 of the loan because a federal law restricts how much and when campaigns are allowed to repay candidates who self-fund their campaigns. That restriction is an unconstitutional violation of free speech by political candidates, campaigns and potential donors who want to pitch in to repay self-funding candidates, alleges Cruz and his campaign in a new lawsuit filed Monday, asking the U.S. District Court for the District of Columbia to overturn part of the Bipartisan Campaign Reform Act.

“It restricts the political speech of candidates and their campaign committees by limiting the time period in which the candidate may raise money to communicate his or her political message and by effectively limiting the candidate's ability to lend the campaign necessary funds,” alleges the April 1 complaint in Ted Cruz for Senate v. Federal Election Commission.

FEC spokesman Myles Martin declined to comment, and so did Cooper & Kirk associate John D. Ohlendorf of Washington, D.C., who represents Cruz and his campaign along with firm partner Chuck Cooper, who didn't return a message seeking comment before deadline.

The complaint explained that the Bipartisan Campaign Reform Act, an amendment to the Federal Election Campaign Act, says if a candidate takes out loans for his campaign, then his or her campaign committee can't repay any loan over $250,000 after the election is over. The Federal Election Commission has found the law restricts a campaign's repayments of candidate's loans and personal funds. The FEC has said a campaign must repay candidate loans within 20 days after the election, or else the money is seen as a campaign contribution.The civil penalty for a violation is $5,000 minimum, up to a max of whatever amount the candidate contributed or spent. The civil penalty doubles for a knowing or willful violation, which can also bring a criminal penalty of up to five years in prison.

On election day, Cruz's committee had $2.2 million, but also owed $2.5 million, so there were about $406,000 in outstanding debts. The campaign paid vendors and met other obligations rather than repaying Cruz's $260,000 loans. When the 20-day deadline to repay Cruz's loans passed, the campaign still owed him the money. In December 2018 the campaign made four repayments on Cruz's loan that totaled the statutory max of $250,000. This means the campaign still owes him $5,000 on the loan and $5,000 of his personal funds. However, the campaign can't repay that money because of the provision in the BCRA that Cruz now contends is unconstitutional. If the law were not in place, Cruz and his campaign would seek donations to cover the remaining $10,000.

Cruz argues that the law stops a candidate's ability to fund his campaign personally by placing a $250,000 cap on amounts the campaign is allowed to pay back to the candidate. He claims that criminalizing personal financing of a campaign infringes the candidate's right to spend money on political speech. Potential donors looking to support the candidate by donating after the election to pay back the pre-election funds are also affected.

The complaint says the U.S. Supreme Court has consistently found such regulations unconstitutional. It has invalidated other provisions of the BCRA, including in the 2010 case Citizens United v. FEC and five other cases between 2003 and 2014. Yet in one 2008 case, Davis v. FEC, the high court found that the loan repayment restriction that Cruz is now challenging was valid, added the complaint.

Cruz has requested a three-judge district court to handle his lawsuit. He's suing the FEC and its four commissioners for declaratory relief to invalidate Section 304 of the BCRA and the FEC regulations that implemented it, by finding them an unconstitutional violation of free speech for himself, his campaign and donors. He's seeking injunctive relief against enforcement of the law. Cruz seeks to recover costs, expenses and attorney fees.

“The government has no interest that can justify the challenged loan repayment restriction's infringement of plaintiff's First Amendment right to freedom of speech,” said the complaint. “The statute is unconstitutional on its face and as applied to the plaintiffs.”