March 14, 2019
Digest: If a judicial candidate determines he/she is legally permitted to repay his/her personal loan after the election, it is ethically permissible for him/her to use his/her remaining unexpended campaign funds, raised before election day, to do so.
Rules: Election Law §§ 3-104(1)(b); 14-114(6)(a)-(b); Judiciary Law § 212(2)(l); 22 NYCRR 100.0(Q); 100.5(A)(1)(c); 100.5(A)(2); Opinions 18-116; 18-49; 18-45; 16-29/16-50; 14-148; 14-34; 08-43; 05-136; 03-122; 03-119; 98-132/98-136; 96-31; 94-21; 90-195; 89-05; Matter of Espada 2001 v New York City Campaign Fin. Bd., 59 AD3d 57 (1st Dept 2008); Board of Elections 1977 Opinion No. 10.
Before election day, the inquiring judge funded his/her election campaign through a combination of (a) campaign contributions solicited and received by his/her campaign committee and (b) a several-thousand dollars loan of his/her own personal funds. The judge has ceased all campaign activities and is preparing to wind up his/her campaign. He/she anticipates that the amount remaining after paying all outstanding legally owed debts to third parties will be more than de minimis but less than the amount he/she loaned to the campaign before the election. The judge would like to use such unexpended campaign funds to repay a portion of his/her personal loan, but once he/she has done so, there will be no remaining funds to return pro rata to contributors. Accordingly, the judge requests reconsideration of Opinion 18-116.
A judge or non-judge candidate for elective judicial office may participate in his/her own campaign for judicial office during the applicable window period, subject to certain limitations (see 22 NYCRR 100.0[Q] [defining “window period”]; 100.5[A][c]; 100.5[A]).
A judicial candidate must “dispose of any remaining campaign funds and close his/her campaign account as soon as practicable following the end of the window period” (Opinion 16-29/16-50; see also Opinion 14-148). One permissible way to dispose of unexpended campaign funds at the conclusion of the window period, regardless of amount, is to return them pro rata to all contributors (see Opinion 18-116). We now consider whether a candidate may dispose of unexpended campaign funds after the election by repaying a personal loan he/she made to the campaign before the election.
Interpretation of Election Law § 14-114(6)(a)
Opinion 18-116 explicitly “assume[d],” based on the inquiry received, that a judge’s loan to his/her own campaign “became a contribution under Election Law § 14-114(6)(a) after the election.” We then advised that the judge “may include his/her contribution in the calculations when returning unexpended campaign funds pro rata . . . to all campaign contributors after the window period ends” (Opinion 18-116).
The inquiring judge in the present inquiry was surprised to see this interpretation of Election Law § 14-114(6)(a), as it conflicts with his/her prior understanding of the law. The state board of elections apparently concurs with the inquirer’s legal interpretation. Indeed, a deputy counsel for the board of elections recently advised, in a writing dated February 7, 2019 (emphasis in original):
Election Law § 14-114 regulates campaign contribution limits for state and local candidates. The purpose of Election Law § 14-114(6)(a) is to ensure a loan is not used as an artifice to evade a contribution limit. As such, an outstanding balance of a loan after Election Day should be deemed a contribution for campaign contribution limit purposes only. This section should not be used to prevent a committee from satisfying a loan subsequent to Election Day.
The deputy counsel’s informal view appears consistent with a much earlier formal board of elections opinion (Board of Elections 1977 Opinion No. 10) interpreting the identically worded paragraphs1 in the predecessor statute:
It is the opinion of the Board that since section 479 of the Election Law establishes contributions and receipts limitations to contributions to candidates, the provisions of section 479(f) establish contribution limitations of loans which are not repaid by the date of a primary, general or special election. Such unpaid loans are deemed to be a contribution in order to prevent contributors who have reached their contribution limitations from exceeding their contribution limitations by giving money to candidates or their committees as a loan knowing that the loan will never be repaid. Therefore, a loan by a person, firm, association or corporation, other than in the regular course of the lender's business, which is not repaid by the date of the primary, general or special election, is considered to be a contribution only for the purpose of computing the maximum amount of the money which may be contributed by the lender to the candidate or political committee under the other appropriate section of section 479 of the Election Law. The converting of the loans into a contribution for limitation purposes does not affect the underlying obligations of the borrower to repay the loan.
As always, we are tasked with interpreting the Rules Governing Judicial Conduct and providing ethical advice, rather than interpreting statutes and providing legal advice (see e.g. Judiciary Law § 212[l]; Opinions 18-116; 18-45 [“To the extent unsettled, [legal] questions may be raised and addressed by persons with standing in the appropriate legal venue and/or through the appellate process.”]).
We have said that a judge has “the inherent power to interpret the appropriate provisions of governing law” and need not “defer to an inconsistent legal interpretation offered by another branch of government which would require the judge to participate in conduct the judge has concluded is unlawful” (Opinion 14-34). Nonetheless, we note the state board of elections is the agency that administers article 14 of the Election Law, and we understand that its views on election law matters may be entitled to deference in some circumstances (see Election Law § 3-104[b] [“The state board of elections shall have jurisdiction of, and be responsible for, the execution and enforcement of the provisions of article fourteen of this chapter….”]; Matter of Espada 2001 v New York City Campaign Fin. Bd., 59 AD3d 57, 64 [1st Dept 2008] [“Where statutory language suffers from some ‘fundamental ambiguity,’ courts routinely defer to an agency’s construction of a statute it administers”]).
Clearly, a judicial candidate who makes a good-faith legal determination that his/her own pre-election loan to his/her campaign is not “deemed … a contribution” under Election Law § 14-114(6)(a) need not rely on our assumption in Opinion 18-116 that it is (see e.g. Opinion 18-49 [“a judge who makes a good-faith legal determination concerning his/her legal authority to act on these submissions necessarily acts ethically, even if the decision is reversed on appeal”]).
Accordingly, if this judge determines he/she is legally permitted to repay his/her loan after the election, it is ethically permissible for him/her to use his/her remaining unexpended campaign funds, raised before the election, to do so.
Effect on Prior Opinion 18-116
In our prior opinion, we advised that a judicial candidate “may include his/her contribution in the calculations when returning unexpended campaign funds pro rata” to all contributors after the window period ends (Opinion 18-116). As noted above, our jurisdiction is limited to interpreting the Rules Governing Judicial Conduct. Thus, if a judge or judicial candidate concludes the statutory interpretation assumption we articulated in Opinion 18-116 is legally incorrect, he/she need not defer to that assumption. To that extent, we hereby modify Opinion 18-116.
In at least two other respects, however, Opinion 18-116 remains in effect.
First, we reaffirm that “if the candidate’s personal loan was the campaign’s sole funding source, he/she may return all the [remaining unexpended campaign] funds entirely to him/herself” after the window period ends (Opinion 18-116). This remains true regardless of the loan’s post-election legal status (i.e. regardless of whether the loan is legally deemed a contribution for all purposes or legally remains a loan subject to repayment). That is, if the candidate’s personal loan to the campaign may legally be repaid after the election, then clearly a judicial candidate who fully self-funded his/her campaign through a personal loan may use his/her remaining unexpended campaign funds after the window period ends to repay the loan.2
Second, we also reaffirm our advice that, if a judge makes an outright contribution (rather than a loan) to his/her campaign, he/she may “may include his/her contribution in the calculations when returning unexpended campaign funds pro rata” to all contributors after the window period ends (Opinion 18-116).
Caution: Limitations on Post-Election Fund-Raising
We emphasize that the inquiring judge does not propose to engage in any post-election fund-raising. Thus, the present opinion only discusses use of unexpended campaign funds remaining at the conclusion of the campaign, after the candidate has paid any outstanding legal obligations to third parties for expenses incurred in the campaign. It does not consider, contemplate, or address any post-election fund-raising to repay a candidate’s loan to his/her campaign.
Prior opinions state that a judicial candidate may not engage in post-election fund-raising to repay a loan made by the candidate or his/her spouse (see e.g. Opinions 05-136; 03-119; 96-31; 94-21; 89-05), but only to pay outstanding campaign debts to third parties (see e.g. Opinions 03-122; 96-31).3 Nor may the candidate’s campaign committee hold a post-election fund-raiser to reimburse the candidate for expenditures personally made by the judge for an induction party (see Opinion 90-195). These opinions do not mention or otherwise rely on Election Law § 14-114 or former Election Law § 479. Accordingly, we have no reason to reconsider them at this time, and they remain in effect.
1 That is to say, the two paragraphs of former Election Law § 479(f), as quoted in Board of Elections 1977 Opinion No. 10, are word-for-word identical to current Election Law § 14-114(6)(a)-(b).
2 An entirely self-funded campaign does not involve any fund-raising, whether pre- or post-election (cf. Opinion 08-43 [“A candidate for election to judicial office who finances his/her entire campaign with personal funds and neither solicits nor accepts any campaign contributions from any source is not ethically required to form a campaign committee.”]).
3 The campaign committee may use pre-election campaign funds to reimburse the judge for his/her legitimate campaign expenditures (see Opinions 98-132/98-136; 03-119 n.1)