Why Is Financial Disclosure of Federal Judges Important?
Financial disclosure by public officials began in the aftermath of Watergate, a political scandal that ultimately led to President Richard Nixon’s resignation. After Watergate, the nation was ready to focus on integrity. Conflicts of interest affecting public officials were to be avoided; unethical persons should not enter public service. The Ethics in Government Act of 1978 (“Act”) was enacted; its purpose was “to increase public confidence in the level of integrity of federal government officials.” https://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/ethics-government-act-1978. The Act included financial disclosure by judicial branch officials.
Over the years, the Act was amended a number of times to clarify, among other things, that federal judges should not preside over a case in which they, their spouses or their minor children held even a de minimis interest (for instance, a share of stock) in one of the parties. If judges had such an interest, they followed the procedure of “recusal,” or no longer hearing the matters, referring them to the clerk of the court for random reassignment to other judges. Separate from the judge maintaining records of his/her interests in various entities, the court clerks also maintained the financial reports as a type of “second eye.” Individuals or litigants had the ability to contact court clerks and determine whether any judge should recuse on a particular matter because of a financial interest.
Over the last fifteen years, with the advent of the computer age, the Judicial Conference of the United States, which reviews and discusses “administrative and policy issues affecting the federal court system….[and makes] recommendations to Congress concerning legislation involving the Judicial Branch,” has required that federal courts use conflict-checking computer software to help identify cases where a judge might have a financial interest.
(https://www.uscourts.gov/about-federal-courts/governance-judicial-conference#:~:text=Judicial%20Conference%20of%20the%20United%20States&text=It%20convenes%20twice%20a%20year,legislation%20involving%20the%20Judicial%20Branch; and https://www.uscourts.gov/news/2021/10/26/judiciary-takes-action-ensure-high-ethical-standards-and-transparency.)
Nevertheless, on September 28, 2021, the Wall Street Journal discovered that over 130 federal judges had heard cases where they should have recused, because they or certain family members held a financial interest in one of the parties involved in the proceeding. https://www.wsj.com/articles/131-federal-judges-broke-the-law-by-hearing-cases-where-they-had-a-financial-interest-1163283442. In October 2021, Judge Jennifer Walker Elrod, Chair of the Codes of Conduct Committee of the Judicial Conference, testified before the US House Judiciary Committee on Courts, that federal courts took financial disclosure issues seriously and had created various training programs, reflecting the importance the judiciary placed on ethical issues. She stated that “[h]igh ethical standards and transparency are essential to an independent Judiciary and to maintaining the public’s trust.” https://www.uscourts.gov/news/2021/10/26/judiciary-takes-action-ensure-high-ethical-standards-and-transparency.
However, legislation was soon enacted in an effort to solve the problem. The Courthouse Ethics and Transparency Act, which was signed by President Biden in May 2022, required online publication of financial disclosure reports of federal judges. The reports, available in a database, were to be “searchable, sortable, and downloadable…..for access by the public.” https://www.congress.gov/bill/117th-congress/senate-bill/3059/text. Redaction of the reports was permitted to ensure the security of judicial officers.
The new law now allows litigants to get access to a database as a further check to ensure that a federal judge will recuse when a financial interest is discovered. Although legislation introduced in the US House went further and focused on the issue of gifts and how they should be disclosed, the Senate bill that was ultimately signed by the President did not include the issue.
Recent concern has been raised as to the efficacy of the financial disclosure reports filed by federal judges and whether gifts, in particular, are being appropriately disclosed. (See https://www.propublica.org/article/clarence-thomas-scotus-undisclosed-luxury-travel-gifts-crow, by Joshua Kaplan, Justin Elliot, and Alex Mierjeski, published online on April 6, 2023.) There is a Code of Conduct, which includes ethical canons, that covers all federal judges, except for US Supreme Court Justices. It is the Code that requires federal judges to avoid even the appearance of impropriety. On the other hand, the Act, as amended, has a more limited scope: it covers all federal judges, including US Supreme Court Justices, and requires that annual financial disclosure reports be filed. 5 U.SC. §§13101, 13103(10).
Under an earlier version of the Act, all federal judges disclosed gifts, “except that any food, lodging, or entertainment received as ‘personal hospitality of an individual’ [emphasis added] did need not to be reported.” 5 U.S.C. §13104(a)(2)(A). Hence, if a federal judge received hospitality from a corporation or other entity, not an individual, that might be a problem. But what was “personal hospitality” of an individual?
In January 2023, the Judicial Conference Committee on Financial Disclosure acted, revising its regulations to resolve any ambiguities. The revised regulations became effective on March 14, 2023. First, if a federal judge receives a gift that is “personal hospitality of an individual,” that gift need not be disclosed if it is given by an individual (not a corporation or organization), and includes staying “at the personal residence of that individual or his or her family or on property or facilities owned by that individual or his or her family.” [Emphasis added.) (https://www.uscourts.gov/rules-policies/judiciary-policies/ethics-policies/financial-disclosure-report-regulations; Guide to Judiciary Policy, Vol. 2, Ethics and Judicial Conduct, Pt. D: Financial Disclosure, §§170, 330.30.) Second, the definitional section also states that a “judicial officer,” covered by the regulations, includes Justices of the Supreme Court.
It would now appear that luxury accommodations at a resort, a private jet to a remote location, or a cruise on a yacht must now be disclosed. Information to be disclosed, for instance, would be who provided the gifts, the gifts’ values (one would assume the fair market values), was there a purpose or agenda for the trip, and who else attended the meetings or events? The revised regulations, however, only focus on disclosure, not whether the federal judge has avoided even the appearance of impropriety. Some are requesting that the Code of Conduct be expanded to include Justices of the US Supreme Court. (https://www.uscourts.gov/judges-judgeships/code-conduct-united-states-judges.)
The Act also has civil and criminal penalties in place, if a federal judge should willfully fail or falsify a financial disclosure report, or willfully fail to provide additional information as requested. Upon referral by the Judicial Conference Committee on Financial Disclosure, it is the US Attorney General that would pursue any civil or criminal action against a recalcitrant judge. (https://www.uscourts.gov/rules-policies/judiciary-policies/ethics-policies/financial-disclosure-report-regulations; Guide to Judiciary Policy, Vol. 2, Pt. D, §620; 5 U.S.C. §§102, 104(a)(1), 104(a)(2), 104(b)). However, would civil or criminal penalties ever be brought against a federal judge?
It seems more must be done to ensure the public has confidence in the honesty and integrity of federal judges. The independence of the judiciary is at stake.