PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:
Proposed Action:
Addition of Part 198 to Title 19 NYCRR.
Statutory authority:
General Business Law, section 899-bbb(12)(a)
Subject:
Document destruction contractors.
Purpose:
To adopt implementing regulations for Article 39-G of the General Business Law.
Text of proposed rule:
Part 198 is added to 19 NYCRR to be entitled and read as follows:
19 NYCRR PART 198 Document Destruction Contractors
Section 198.1 Fingerprinting: principals and officers
Fingerprints taken pursuant to General Business Law section 899-bbb shall be taken by a method prescribed by the Division of Criminal Justice Services.
Section 198.2 Investigation
Within five business days after receipt of an application for registration as a document destruction contractor, the Department of State shall transmit to the Division of Criminal Justice Services two sets of fingerprints and the fees required pursuant to subdivision eight-a of section eight hundred thirty-seven of the executive law for the cost of the Division's full search and retain procedures. The required fees shall be paid by the applicant upon submitting the completed application to the Department of State. The Division of Criminal Justice Services shall ascertain whether or not the applicant has been charged with or convicted of a crime and shall provide a criminal history report to the Department of State. The Department of State may cause to be conducted an investigation to verify the information contained in the criminal history report and the application for a document destruction contractor license. The Department, in consultation with the Division, may waive such background checks, investigations and fees if in its opinion, the applicant has been subject to previous background checks and investigation requirements which meet or exceed the requirements of this section.
Section 198.3 Supervisory responsibility
Each registered document destruction contractor shall supervise its employees and their business activities. Such supervision shall include but not be limited to regular, frequent and consistent personal guidance, instruction, oversight and superintendence by such contractor with respect to its general business and all matters relating thereto.
Section 198.4 Business and employee records
(a) Each registered document destruction contractor shall keep and maintain for a period of at least three years all records of each transaction it performs; provided, however, that with respect to any transaction which is the subject of litigation, upon the expiration of such three-year period, such records shall be continue to be retained for the duration of the litigation and any pending appeal. Litigation shall include investigation or administrative action by the Department of State, initiated by complaint from the general public or by the department.
(b) Each registered document destruction contractor shall maintain employee and business records at a central location within New York State. For purposes of this Part, business records shall include all company and personnel records pertaining exclusively to the conduct of business in New York State.
(c) Each registered document destruction contractor shall prepare and retain as a business record a statement of services and charges which have been agreed upon between such contractor and its customer, a copy of which shall be provided to such customer after it has been signed by both parties. The statement of services and charges shall also identify and name any employee who will be providing the consumer with document destruction services.
Section 198.5 Employee responsibility
Any person who is or has been an employee of a registered document destruction contractor shall not divulge to anyone other than his or her employer, except as may be required by law, any information acquired by him or her during such employment in respect to any of the work to which he or she shall have been assigned by such employer.
Section 198.6 Registration revocation and suspension
A document destruction contractor, or the principal of any document destruction firm, company, partnership, corporation or organization registered under Article 39-G of the General Business Law which has its registration revoked or suspended by the Department of State shall be ineligible to re-register as a document destruction contractor for the period of such revocation or suspension. A document destruction contractor whose license has been revoked or suspended shall be prohibited from acting as a principal of any document destruction contractor firm, company, partnership, corporation or organization or from employing other persons to conduct document destruction services for the period of the revocation or suspension.
Section 198.7 Notice of criminal conviction
A registered document destruction contractor who is convicted of a crime as defined in the Penal Law in this State or an offense which would constitute a crime if committed in New York in any other state or Federal or foreign jurisdiction, shall give notice of such conviction to the Department of State, Division of Licensing Services, at its Albany Office, by certified mail, return receipt requested, within 10 days from date of conviction.
Section 198.8 Statement of licensure
All documents or receipts issued by a registered document destruction contractor shall contain the unique identification number issued to such individual or business and the phrase "registered with the N.Y.S. Department of State.''
Section 198.9 Enforcement
All principals and employees of registered document destruction contractors shall be subject to the enforcement provisions contained in Article 39-G of the General Business Law.
Text of proposed rule and any required statements and analyses may be obtained from:
Whitney Clark, NYS Department of State, Division of Licensing Services, Alfred E. Smith Office Building, 80 South Swan Street, Albany, NY 12231, (518) 473-2728, email: whitney.clark@dos.state.ny.us
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
45 days after publication of this notice.
This action was not under consideration at the time this agency's regulatory agenda was submitted.
Regulatory Impact Statement
1. Statutory authority:
General Business Law Article 39-G, section 899-bbb (12)(a) authorizes the Secretary of State to promulgate such rules and regulations as are deemed necessary to effectuate the purposes of the article, which article contains new licensing/registration requirements for the discipline entitled "document destruction contractors".
2. Legislative objectives:
General Business Law, Article 39-G, requires the Department of State to register and regulate document destruction contractors. The proposed regulations compliment the recently implemented federal Disposal Rule (16 CFR Part 682) and New York's Disposal Law (Chapter 65 of the Laws of 2006), which require businesses to take appropriate steps when disposing of personal information. The proposed rule would ensure that information required to be destroyed under these laws is disposed of properly by a contractor registered with the State of New York.
3. Needs and benefits:
The statutory intent behind Article 39-G is identity theft protection. Identity thieves have been known to sort through the trash of residences and businesses to collect Social Security numbers, financial account numbers and other personally identifiable information that could be used to commit identity theft. The proposed rule would limit the amount of sensitive documents subject to misappropriation by ensuring the availability of qualified document destruction contractors.
General Business Law Article 39-G § 899-bbb requires a document destruction contractor earning more than five hundred dollars in total contracts over a consecutive twelve month period to meet certain requirements to register with the Department of State. The proposed rule sets forth specific regulations concerning the application process, record keeping and procedures for registration revocation and suspension.
4. Costs:
a. Costs to regulated parties:
The costs to the regulated public for complying with the law include payment of an application fee for obtaining a registration as a document destruction contractor in the amount of $50.00 for each biennial registration, and a fee for obtaining the required fingerprinting and background search in the amount of $75.00. If DCJS cannot read the fingerprint cards due to the quality of the prints, the cost for obtaining an additional set of fingerprint cards is $75.00. The fee to renew an existing registration is $50 and there is a change notice/request form processing fee of $10 required for a change of personal name, residence or business address, or for a duplicate registration. The regulated public will likely incur costs associated with record retention for those registrants who do not possess sufficient on-site storage for records. The cost of storage facilities varies depending on various factors such as location and size. It is estimated that the starting price for an off-site storage unit is approximately $40.00 per month. It is not anticipated that the regulated public will incur any other costs.
b. Costs to the Department of State:
The Department of State does not anticipate any additional costs to the agency to implement and continue to administer the rules' requirements. The Department of State currently licenses and regulates in excess of twenty-eight different occupations. The Department did not hire additional staff to assist with the implementation and administration of the new document destruction contractor licensing requirements. As a result, existing staff will absorb the functions necessary to support the program and the regulations established by this rulemaking.
5. Local government mandates:
The rules do not impose any program, service, duty or responsibility upon any county, city, town, village, school district or other special district.
6. Paperwork:
The rules clarifies the already mandated statutory requirement that all applications for licensure be accompanied by two sets of fingerprint cards for all principals and officers; prospective registrants/licensees are already required to satisfactorily complete applications for registration, with accompanying documentation. The rule delineates and specifies the paperwork and record keeping requirements imposed on registrants by General Business Law Article 39-G. The statute mandates, in part, that document destruction contractors be subject to investigation and to supply documentation upon request, and this rule clarifies the requirements for document retention. The rule also requires that advertisements and certain business records contain the registration number and/or a statement that the registrant is registered with the Department of State.
7. Duplication:
This rule does not duplicate, overlap or conflict with any other state or federal requirement.
8. Alternatives:
The Department of State considered not proposing any regulations; however, since subpart12 of § 899-bbb requires that the Secretary of State shall promulgate such rules and regulations as are deemed necessary to effectuate the purposes of the legislation, it was deemed appropriate and necessary that the Department of State propose regulations to clarify the legislation. It was decided that not having any regulations would disadvantage both the regulated public and the Department of State insofar as certain vague statutory provisions would remain undefined and result in confusion and difficulties with enforcement. As a result, the Department of State is only proposing those regulations deemed necessary at this point in time, and has determined to hold in abeyance the possible need to file additional regulations to clarify and/or define other statutory issues.
9. Federal standards:
There are no federal standards regulating the registration of document destruction contractors, although there are federal standards regulating the disposal of personal information implemented in a federal Disposal Rule (16 CFR Part 682), and New York has a Disposal Law (Chapter 65 of the Laws of 2006), which comports with the federal requirements. The proposed rulemaking does not exceed any existing federal standard.
10. Compliance schedule:
The rule making will be effective as of the date of adoption. Prospective registrants/licensees are already required to register pursuant to the statutory provisions of Article 39-G on or before October 1, 2008, are on notice of the Secretary's power to enact regulations in concert therewith, and will therefore be able to comply with this rule as of its effective date.
Regulatory Flexibility Analysis
1. Effect of rule:
The proposed rulemaking create a framework for the successful process of businesses registering for approval to act as document destruction contractors, and to employ qualified workers to conduct services related thereto, as well as to allow for the continued qualifications for renewal of same, and the responsibilities of the companies for document preparation and retention, for ensuring the qualifications of workers, and for the standards by which such businesses shall operate.
The rule does not apply to local governments.
2. Compliance requirements:
The business of document destruction is now being regulated under the auspices of the Department of State (DOS), and any companies or persons meeting the criteria for registration must do so. The proposed rules are intended to amplify the legislation, and to clarify specifics as to the requirements for registration. Further, pursuant to the statute, the Department is required to publish and makes available a list of registered document destruction contractors who have properly qualified and registered with the Department. By statute, the list of registered document destruction contractors is to be made available to any interested parties by way of online viewing on the Department's website, and also by permitting an interested party to obtain a copy thereof, at a cost to be determined by the Department, which the rules now clarify to be a minimal amount. The proposed rules provide the mechanism for compliance.
3. Professional services:
Small businesses will not need professional services in order to comply with this rule.
4. Compliance costs:
Registrant licensees will not incur any significant compliance costs associated with these rules, although there will be compliance costs associated with obtaining the requisite fingerprints of the principals, officers and/or qualifers for the registrant contractors, and for producing the proper identification cards. The rules do not mandate that any businesses will incur significant expense beyond the expenses made necessary in order to comply with the statutory requirements.
5. Economic and technological feasibility:
Small businesses will not incur any additional costs or require technical expertise as a result of the implementation of these rules, beyond the requirements already placed upon small businesses which are required to comply with the statute.
6. Minimizing adverse economic impact:
DOS did not identify any alternatives which would provide relief for registrant contractors, at the same time, be less restrictive and less burdensome on them in terms of compliance.
7. Small business and local government participation:
No comment has been received to the enacted legislation, and no comment has yet been received from the anticipated registrant pool, or the public. Simultaneously with the adopting of the rulemaking as an emergency adoption, the proposed rulemaking has been posted on the Department's website, in an attempt to alert any interested parties, and to seek public comment.
Rural Area Flexibility Analysis
These rules do not impose any adverse impact on rural areas. The rules complement the statutory adoption of the new licensing category of document destruction contractors, such that the procedures for obtaining and renewing registration in this area of business employment will be clear and readily apparent to the public. The Department of State has not received any objection to these procedures from approved providers.
Job Impact Statement
The proposed rule will not have a substantial adverse affect on jobs and employment opportunities for licensed document destruction contractors insofar as Article 39-G of the General Business Law already requires that such qualifying companies register with the Secretary of State. This rule making merely codifies the procedure to obtain Department of State approval to offer and provide services as a registered document destruction contractor.
