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 single 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 single 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 single source or to individuals or property affiliated with the single source, as well as an appeal procedure from denials of requests for such exemptions.
This emergency re-adoption is necessary because the source of funding reporting requirement is continuous and ongoing. The first filings under the new disclosure requirements occurred in January 2013. The next filing deadline is July 15, 2014, which covers the period January 1, 2014 through June 30, 2014. JCOPE seeks to amend this emergency rule and keep it in effect until it adopts as final a version of the regulations, which will be informed by the revised rulemaking process.
By setting forth when and how sources of funding must be disclosed by Client Filers, as well as the narrow standards for exemptions from the mandated disclosure, this emergency rule provides the clarity that is imminently needed by the public and regulated population to ensure compliance with PIRA’s statutory provisions and effective dates.
Subject:
Source of Funding reporting.
Purpose:
To implement reporting that will inform the public of efforts to influence government decision making by lobbying entities.
Substance of emergency/revised 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). Finally, with respect to filers who do have tax-exempt status under I.R.C. § 501(c)(4), PIRA provides an appeal from denials of a request for an exemption. 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 certain denials of requests for such exemptions.
This notice is intended
to serve as both a notice of emergency adoption and a notice of revised rule making. The notice of proposed rule making was published in the State Register on October 23, 2013, I.D. No. JPE-43-13-00021-EP. The emergency rule will expire May 8, 2014.
Emergency rule compared with proposed rule:
Substantial revisions were made in section 938.6(a).
Text of rule and any required statements and analyses may be obtained from:
Robert Cohen, Director of Ethics and Lobbying Compliance, Joint Commission on Public Ethics, 540 Broadway, Albany, New York 12207, (518) 408-3976, email: regs@jcope.ny.gov
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
30 days after publication of this notice.
Revised 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 single 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 single 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 single 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 single 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 single 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 single source or to individuals or property affiliated with the single 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 narrow standards for exempting single sources from disclosure, these rules provide comprehensive reporting requirements for lobbyists and clients.
3. Needs and benefits: The proposed revised rulemaking is limited in its scope. Under the current rule, Part 938.6(a) provides that any entity whose request for exemption is denied is entitled to an appeal before an independent hearing officer. The proposed revision tracks the statutory language in that it amends the rule to provides that the only entities entitled to an appeal are those requesting an exemption pursuant to Part 938.4(a). Entities that have tax exempt status under I.R.C. § 501(c)(4) and apply for an exemption pursuant to Part 938.4(b) will, under the proposed revision, not be entitled to an appeal before an independent hearing officer.
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 revised 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 revised 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 revised 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 revised rulemaking pertains to a new lobbying disclosure requirement that specifically relates to lobbying activity 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 upon adoption.
Revised Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement
Changes made to the last published rule do not necessitate revision to the previously published Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement.
Assessment of Public Comment
The Public Integrity Reform Act of 2011 (“PIRA”) amended the Legislative Law to require source of funding disclosure for certain lobbyists and clients who devote substantial resources to lobbying in New York State. PIRA also mandated that the Commission promulgate regulations to implement this new disclosure requirement. The regulations were published as a final rule in the State Register on August 14, 2013. The regulations were then amended and adopted on an emergency basis on October 8, 2013. The Notice of Emergency Adoption and Proposed Rulemaking was published in the State Register on October 23, 2013. On January 6, 2014 the regulations were readopted on an emergency basis. The Notice of Emergency Adoption was published in the State Register on January 22, 2014.
Subsequent to the publication of the October 23, 2013 Notice, the Commission received comments from two entities during the public comment period. One entity criticized the amendment to Part 938.8 that made materials submitted in support of an exemption publicly available. According to the comment, the change creates a “chilling effect” on an entity’s ability to meet the requirements for an exemption. The entity also was critical of what it saw as an “overly politicized” exemption process. The regulations provide a mechanism by which an applicant for an exemption can request that certain materials be kept confidential. This provision, in the Commission’s view, is sufficient to ensure that entities will not be deterred from applying for an exemption.
The other entity criticized the inclusion of “clear and convincing evidence” in Part 938.4(a). According to the comment, the “clear and convincing” language is not found in the statute and “makes the threshold for obtaining a donor exemption too high.” Additionally, the entity opined that Part 938.4(b) should be amended to include the following language: “its primary activities involve areas of public concern, including the area of civil rights and civil liberties.” Notably, the proposed amendments to Part 938 published on October 23, 2013 did not pertain to Part 938.4. The entity also commented that “the proposed 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 requirements.” This comment is unclear and appears to be based on a misapprehension of the regulations. Finally, the entity noted that the regulations do not include any deadline within which the Commission is obliged to act upon an application for an exemption. The entity suggested a 45-day deadline for such action by the Commission. The Commission rejected the recommendation as untenable.
