PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of Part 938 of Title 19 NYCRR.
Statutory authority:
Legislative Law, art. 1-A, sections 1-j(c)(4) and 1-h(c)(4); and Executive Law, section 94(9)(c)
Finding of necessity for emergency rule:
Preservation of general welfare.
Specific reasons underlying the finding of necessity:
The Public Integrity Reform Act of 2011 (“PIRA”) was enacted in August 2011. PIRA established the new “source of funding” disclosure requirement, which became effective on June 1, 2012. The purpose of source of funding disclosure requirements is to promote transparency so that the public can appreciate the actual parties in interest who are substantially influencing the governmental decision making process.
The Source of Funding disclosure requirement was created by amending the Legislative Law to include a requirement that Client Filers, which are lobbyists and clients of lobbyists who spend at least $50,000 in reportable compensation and expenses and 3% of total expenditures on lobbying activities in New York State in a calendar year or twelve-month period (the “$50,000/3% expenditure threshold”), disclose the sources of funding over $5,000 from each source used for such lobbying activities in New York State. PIRA mandates that JCOPE promulgate regulations implementing this new disclosure requirement. PIRA also provides that JCOPE shall specify a procedure for filers to seek an exemption if disclosure of a particular source—or, in the case of certain organizations with tax-exempt status under I.R.C. § 501(c)(4), a class of sources—would cause harm, threats, harassment, or reprisals to the source(s) or to individuals or property affiliated with the source(s), as well as an appeal procedure from denials of requests for such exemptions.
This emergency adoption is necessary because applications for an exemption from the source of funding disclosure requirements are pending with JCOPE. Until such time as JCOPE determines how to treat the materials submitted in support of a request for an exemption and the substantive standard to be applied in determining if the request is to be granted, the requesting entities are not required to disclose their sources of funding. Consequently, the timely and relevant disclosure of statutorily required information may be forestalled until the regulations are in effect.
Subject:
Source of Funding reporting.
Purpose:
To implement reporting that will inform the public iof efforts to influence government decision making by lobbying entities.
Substance of emergency rule:
The Public Integrity Reform Act of 2011 (“PIRA”) authorizes JCOPE to exercise the powers and duties set forth in Executive Law Section 94 with respect to lobbyists and clients of lobbyists as such terms are defined in article one-A of the Legislative Law. PIRA also amended the Legislative Law to include a requirement that lobbyists and clients of lobbyists who spend at least $50,000 in reportable compensation and expenses and 3% of total expenditures on lobbying activities in New York State in a calendar year or twelve-month period (the “expenditure threshold”), disclose the sources of funding over $5,000 from each source used for such lobbying activities in New York State. PIRA mandates that JCOPE promulgate regulations implementing this new disclosure requirement. PIRA also provides that JCOPE shall specify a procedure in these regulations for filers to seek an exemption if the filer can establish that there is a substantial likelihood that disclosure of a particular source - or, in the case of certain organizations with tax-exempt status under I.R.C. § 501(c)(4), a class of sources - would cause harm, threats, harassment, or reprisals to the source(s) or to individuals or property affiliated with the source(s), as well as an appeal procedure from denials of requests for such exemptions. Thus, these regulations provide comprehensive reporting requirements that set forth when and how sources of funding must be disclosed by lobbyists and clients who meet the expenditure threshold, articulate narrow standards for exempting sources from disclosure and establish an appeal process for denials from such exemptions.
This notice is intended
to serve only as a notice of emergency adoption. This agency intends to adopt the provisions of this emergency rule as a permanent rule, having previously submitted to the Department of State a notice of proposed rule making, I.D. No. JPE-43-13-00021-EP, Issue of October 23, 2013. The emergency rule will expire March 7, 2014.
Text of rule and any required statements and analyses may be obtained from:
Shari Calnero, Senior Counsel, Joint Commission on Public Ethics, 540 Broadway, Albany, NY 12207, (518) 408-3976, email: scalnero@jcope.ny.gov
Regulatory Impact Statement
1. Statutory authority: Legislative Law Section 1-h(c)(4) requires certain registered lobbyists whose lobbying activity is performed on its own behalf and not pursuant to retention by a client, and who meet the “$50,000-3% Expenditure Threshold” (referred to herein), to report the names of each source of funding over $5,000 from a source used to fund lobbying activities in New York State. Similarly, Legislative Law Section 1-j(c)(4) requires certain clients who have retained, employed or designated a registered lobbyist, and who meet the “$50,000-3% Expenditure Threshold,” to report the names of each source of funding over $5,000 from a source used to fund lobbying activities in New York State. These lobbyists and clients are referred to in the proposed revised regulation and herein as “Client Filers.” The statute also provide that, in certain circumstances, Client Filers can seek an exemption from disclosing one or more of their sources provided certain criteria for exemption are met. Legislative Law Sections 1-h(c)(4) and 1-j(c)(4) direct the Joint Commission on Public Ethics (“JCOPE”) to promulgate regulations to implement these requirements. More generally, Executive Law Section 94(9)(c) directs JCOPE to adopt, amend, and rescind rules and regulations to govern JCOPE procedures.
2. Legislative objectives: The Public Integrity Reform Act of 2011 (“PIRA”) established JCOPE. PIRA authorizes JCOPE to exercise the powers and duties set forth in Executive Law Section 94 with respect to lobbyists and clients of lobbyists as such terms are defined in article one-A of the Legislative Law. PIRA also amended the Legislative Law to include a requirement that Client Filers who spend at least $50,000 in reportable compensation and expenses and 3% of total expenditures on lobbying activities in New York State in a calendar year or twelve-month period (the “$50,000/3% Expenditure Threshold”), disclose the sources of funding over $5,000 from each source used for such lobbying activities in New York State. PIRA mandates that JCOPE promulgate regulations implementing this new disclosure requirement. PIRA also provides that JCOPE shall specify a procedure for filers to seek an exemption if the filer can establish that disclosure of a particular source—or, in the case of certain organizations with tax-exempt status under I.R.C. § 501(c)(4), a class of sources—would cause harm, threats, harassment, or reprisals to the source or to individuals or property affiliated with the source, as well as an appeal procedure from denials of requests for such exemptions. By setting forth when and how sources of funding must be disclosed by lobbyists and clients who meet the statutory conditions, as well as the standards and procedures for exempting sources from disclosure, these rules strike an appropriate balance between disclosure and confidentiality.
3. Needs and benefits: The proposed rulemaking is limited in its scope as it applies solely to provisions related to exemptions to the source of funding disclosure requirement. The first proposed revision is to Part 938.4, which contains, among other provisions, the substantive standard JCOPE is to apply when considering whether to grant a request for an exemption from the disclosure requirements. Currently, a filer must demonstrate that disclosure will cause a “reasonable probability” of harm or reprisals to specified individuals or entities. The proposed rulemaking would, in order to comport with the statutory language in Legislative Law article 1-A sec. 1-h(c)(4)(ii), change the “reasonable probability” standard to a “substantial likelihood.”
The second proposed revision is to Part 938.8, which concerns the confidentiality of information submitted by filers in connection with a request for an exemption from the disclosure requirements. Under the current regulations, such materials are confidential and are not, therefore, publicly available. The proposed rulemaking provides for more transparency by significantly altering this provision to make all information submitted in connection with an application for an exemption or in support of an appeal from a denial of an exemption publicly available. The proposed rulemaking does allow for a filer to make a request to JCOPE to treat specified exemption-related information as confidential under circumstances where such treatment is merited. The decision to grant such a request would lie within the sole discretion of JCOPE.
4. Costs:
a. costs to regulated parties for implementation and compliance: Minimal.
b. costs to the agency, state and local government: No costs to state and local governments. Moderate administrative costs to the agency during the implementation phase.
c. cost information is based on the fact that there will be no costs to regulated parties and state and local government. The cost to the agency is based on the estimated increase in staff resources to implement the regulations.
5. Local government mandate: The proposed regulation does not impose new programs, services, duties or responsibilities upon any county, city, town, village, school district, fire district or other special district.
6. Paperwork: This proposed regulation may require the preparation of additional forms or paperwork. Such additional paperwork is expected to be minimal, and many filers will complete any additional forms online.
7. Duplication: This proposed regulation does not duplicate any existing federal, state or local regulations.
8. Alternatives: PIRA created an affirmative duty on JCOPE’s part to promulgate these regulations, therefore there is no alternative to conducting a formal rulemaking.
9. Federal standards: The proposed rulemaking pertains to lobbying disclosure requirement in New York State. These regulations do not exceed any federal minimum standard with regard to a similar subject area.
10. Compliance schedule: Compliance will take effect immediately.
Regulatory Flexibility Analysis
A Regulatory Flexibility Analysis for Small Businesses and Local Governments is not submitted with this Notice of Emergency Adoption and Proposed Rulemaking since the proposed rulemaking will not impose any adverse economic impact on small businesses or local governments, nor will it require or impose any reporting, record-keeping or other affirmative acts on the part of these entities for compliance purposes. The New York State Joint Commission on Public Ethics Commission (“JCOPE”) notes that while it is authorized by the Public Integrity Reform Act of 2011 (“PIRA”) to enforce the reporting requirements of the Article 1-A of the Legislative Law, which requires those public corporations that conduct lobbying activity to register and report expenses in accordance with the law, these regulations do not impose any adverse economic impact on those public corporations for compliance purposes. JCOPE makes these findings based on the fact that the source of funding regulations affect certain lobbyists and clients that meet a high financial threshold. Small businesses and local governments are not affected in any way by these regulations.
Rural Area Flexibility Analysis
A Rural Area Flexibility Analysis is not submitted with this Notice of Emergency Adoption and Proposed Rule Making since the proposed rule making will not impose any adverse economic impact on rural areas, nor will compliance require or impose any reporting, record-keeping or other affirmative acts on the part of rural areas. The Joint Commission on Public Ethics makes these findings based on the fact that the source of funding regulations affect only certain lobbyists and clients that meet a high financial threshold. Rural areas are not affected in any way.
Job Impact Statement
A Job Impact Statement is not submitted with this Notice of Emergency Adoption and Proposed Rule Making since the proposed rulemaking will have no impact on jobs or employment opportunities. The Joint Commission on Public Ethics makes this finding based on the fact that the proposed rule making applies only to certain lobbyists and clients that meet a high financial threshold. This regulation does not apply, nor relate to small businesses, economic development or employment opportunities.
Assessment of Public Comment
The Commission received public comments from two entities. One entity objected to the change in the regulation to make public the materials submitted in support of an application for an exemption from the source of funding disclosure obligations. The other entity provides comments on four aspects of the regulations. The first comment concerned the “clear and convincing” language in Sections 938.4(a) and (b). Specifically, the entity expressed the view that this evidentiary standard was too high and does not provide sufficient protection for donors. Second, the entity requested that the regulatory provisions concerning exemptions to the disclosure requirements specifically include the following language from the implementing statute: “the area of civil rights and civil liberties.” Third, the entity commented that Section 938.8 is problematic because it fails to contain explicit protection for any donor names that may be included within an application for exemption from donor disclosure. Finally, the entity commented that the regulations should include a deadline within which the Commission is obligated to act upon an exemption from the disclosure requirements.
