CPI-32-10-00005-P Limitations on the Offering and Receipt of Gifts

8/11/10 N.Y. St. Reg. CPI-32-10-00005-P

NEW YORK STATE REGISTER

VOLUME XXXII, ISSUE 32

August 11, 2010

RULE MAKING ACTIVITIES

PUBLIC INTEGRITY, COMMISSION ON

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. CPI-32-10-00005-P

Limitations on the Offering and Receipt of Gifts

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Addition of Part 934 to Title 19 NYCRR.

Statutory authority:

Executive Law, section 94(16)(a); Legislative Law, sections 1-c and 1-m; Public Officers Law, section 73(5)

Subject:

Limitations on the offering and receipt of gifts.

Purpose:

To provide rules on the limitations on the offering and receipt of gifts.

Substance of proposed rule (Full text is posted at the following State website:www.integrity.org):

The Public Employees Ethics Reform Act of 2007 amended, inter alia, Legislative Law § 1-c(j), the provision of law most directly applicable to gifts, by replacing the $75.00 limitation with "nominal value" and providing for exclusions to the limitations on gifts. Legislative Law § 1-m prohibits gifts to public officials, unless it is not reasonable to infer that the gift was intended to influence the public official. The proposed rules, which are required by Executive Law § 94(16)(a), provide guidance to those lobbyists and clients of lobbyists subject to the jurisdiction of the Commission on Public Integrity concerning the offering, giving, or receipt of gifts.

Text of proposed rule and any required statements and analyses may be obtained from:

Kathleen H. Burgess, New York State Commission on Public Integrity, 540 Broadway, Albany, New York 12207, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. Statutory authority: Section 94(16)(a) of the Executive Law directs the New York State Commission on Public Integrity to promulgate rules concerning limitations on the offering and receipt of gifts by persons subject to its jurisdiction. Legislative Law § 1-c(j) defines "gift" and sets forth exclusions from the definition of gift. Legislative Law § 1-m prohibits an individual or entity required to be listed on a statement of registration from offering or giving gifts of more than nominal value to public officials.

2. Legislative objectives: The Public Employee Ethics Reform Act of 2007 (“the Act”), Chapter 14 of the Laws of 2007, was intended to "ensure that New York State officials adhere to the highest ethical standards, in an effort to restore public trust and confidence in government." The Act established the Commission on Public Integrity ("Commission") through the merger of the former New York State Ethics Commission and the former New York Temporary State Commission on Lobbying.

The Act amended the Legislative Law in several significant ways. First, the $75.00 limit on the value of a gift, which was set forth in Legislative Law § 1-m, was eliminated and the definition of "gift" in Legislative Law § 1-c(j) was amended to include "anything of more than nominal value." Second, while Legislative Law § 1-m still prohibits gifts to public officials by lobbyists, clients or other individual or entity required to be listed on registration statement, this section now provides that a gift could be permissible if "under circumstances it is not reasonable to infer that the gift was intended to influence such public official." Third, the exclusions to the definition of "gift" have been amended to include, in several instances, criteria that must be met in order for the exclusion to be applicable. For examples, for a plaque, certificate or other ceremonial item to be excluded from the definition of "gift," the item must be publicly presented, or intended to be publicly presented; in recognition of public service; and similar to the types of items that are customarily bestowed.

Public Officers Law § 73(5)(b) is new. This section references Legislative Law §§ 1-c(j) and 1-m, and prohibits a Statewide elected official, State officer or employee, individual whose name has been submitted by the Governor to the Senate for confirmation to become a State officer or employee, or member of the Legislature or Legislative employee from accepting any gift from a lobbyist or client or other individual or entity required to be listed on registration statement, under circumstances where it is reasonable to infer that the gift was intended to influence such public official.

Public Officers Law § 73(5)(c) is also new. This section also references Legislative Law §§ 1-c(j) and 1-m and essentially prohibits a Statewide elected official, State officer or employee, individual whose name has been submitted by the Governor to the Senate for confirmation to become a State officer or employee, or member of the Legislature or Legislative employee from allowing a third party, which such public official designates or recommends, to accept a gift, as defined in Legislative Law § 1-c, on his or her behalf, from a lobbyist or client or other individual or entity required to be listed on a registration statement, under circumstances where it is reasonable to infer that the gift was intended to influence such public official.

The proposed rules, which are required by Executive Law § 94(16)(a), provide guidance to lobbyists and clients, who are subject to the jurisdiction of the Commission, concerning the offering and giving of gifts to any public official. By setting forth conditions under which gifts may be offered or given, these rules establish parameters of acceptable conduct for covered individuals.

3. Needs and benefits: The proposed rule-making is necessary to fulfill the Commission's statutory mandate. The Act amended Executive Law § 96(16)(a) to require the Commission to promulgate regulations concerning gifts. This is a new requirement. In addition, these regulations are necessary because, heretofore, there were opinions by both the former New York State Ethics Commission and the New York Temporary State Commission on Lobbying pertaining to gifts. These opinions are affected by the Act's amendments to the Legislative Law and the Public Officers Law. In light of the Commission's expanded jurisdiction to include State officers and employees, and lobbyists and clients, these rules attempt to consolidate and harmonize the Commission's interpretation of the Public Officers Law and the Legislative Law in light of these changes by the Act.

The Act amended, inter alia, Legislative Law §§ 1-c(j) and 1-m, which are the provisions of law directly applicable to gifts to public officials by lobbyists and clients. Prior to the Act, Legislative Law § 1-c(j) defined a gift as "anything of value given to a public official," subject to seven exclusions including: complimentary attendance at charitable or political events, or widely-attended events; plaques, certificates and other ceremonial items; honorary degrees from colleges or universities; promotional items, gifts from family members; contributions reportable under the Election Law; and travel reimbursement. This section had to be read in tandem with Legislative Law § 1-m, which prohibited lobbyists and clients from offering or giving a gift to any public official that had a value greater than $75.00.

The former New York Temporary State Commission on Lobbying issued eleven opinions interpreting Legislative Law §§ 1-c(j) and 1-m that pertained to lobbyists and clients offering and giving gifts to public officials. The former New York State Ethics Commission issued Advisory Opinion No. 94-16, which sets forth parameters, consistent with Public Officers Law §§ 73 and 74, to guide State officers and employees concerning the receipt of gifts from other individuals and entities, including lobbyists.

The Act amended the Legislative Law in several regards. First, the $75.00 limit on the value of a gift, which was set forth in Legislative Law § 1-m, was eliminated and the definition of "gift" in Legislative Law § 1-c(j) was amended to include "anything of more than nominal value." Second, Legislative Law § 1-m provides that a gift to a public official from a lobbyist or client could be permissible if "under circumstances it is not reasonable to infer that the gift was intended to influence such public official." Third, the exclusions to the definition of "gift" have been amended to include, in several instances, criteria that must be met in order for the exclusion to be applicable.

In light of the amendments to the Legislative Law and the Public Officers Law, the Commission decided to reexamine Advisory Opinion No. 94-16 and issued Advisory Opinion No. 08-01. The Commission determined that an advisory opinion was the appropriate means to address these provisions of law that were modified by the Act and set forth guidance to those individuals under the Commission's jurisdiction. For example, the Act eliminated the $75.00 limit on gifts that a lobbyist or client can offer or give and replaced it with "nominal value." The $75.00 limit was a bright line to distinguish whether an item given to a public official was a gift. Since this limitation was eliminated, the Commission determined that guidelines were necessary to assist affected persons ascertain whether an item was of "nominal value," and therefore not a gift, since the Act does not define "nominal value." The Commission set forth guidelines in Advisory Opinion No. 08-01 to, among other issues, define "nominal value." These guidelines are the basis for the proposed regulations.

Legislative Law § 1-c(j) sets forth the framework for determining whether an item is a gift. A "gift" is anything of more than nominal value given to a public official. A gift may be in the form of money, service, loan, travel, lodging, meals, refreshments, entertainment, discount, forbearance, promise, or in any other form. This section then sets forth 11 exclusions to the definition of gift. Therefore, a lobbyist or client may offer or give to a public official such an item because it is not considered a "gift" to the public official.

In Advisory Opinion No. 08-01, the Commission concluded that those items will be exceptions to the definition of gift when offered by a lobbyist or client to a public official. The Commission set forth standards that are applicable in determining whether anything of more than value offered or given to a public official would be excluded from the definition of gift. The Commission codified these standards in this proposal.

Public Officers Law § 73(5) was amended by adding subdivisions (b) and (c), which references Legislative Law § § 1-c(j) and 1-m. Public Officer Law § 73(5)(b) prohibits a Statewide elected official, State officer or employee, individual whose name has been submitted by the Governor to the Senate for confirmation to become a State officer or employee, or member of the Legislature or Legislative employee from accepting any gift, as defined in Legislative Law § 1-c(j), from a lobbyist or client of a lobbyist, unless it can be reasonably inferred that the gift was not intended to influence such individuals in the performance of their official duties. The Commission concluded that exclusions to the definition of "gift" delineated in Legislative Law § 1-c(j) when offered by lobbyists or clients to public officials will be considered permissible gifts when offered by "disqualified sources," which includes lobbyists, to State officers and employees.

Public Officers Law § 73(5)(c) prohibits a Statewide elected official, State officer or employee, individual whose name has been submitted by the Governor to the Senate for confirmation to become a State officer or employee, or member of the Legislature or Legislative employee from allowing a third party, which such public official designates or recommends, to accept a gift, as defined in Legislative Law § 1-c, on his or her behalf, from a lobbyist or client or other required to be listed on a registration statement, where it is reasonable to infer that the gift was intended to influence the public official. The principle underlying this statute is consistent with the Ethics Commission's conclusion in Advisory Opinion No. 94-16: an impermissible gift to a State officer or employee may not be given by the donor to a third party, including a family member of the State officer or employee, or any other person or entity, including a charitable organization designated or recommended by the State officer or employee. The Commission reaffirmed this principle and concluded that a gift that could not be given to a State officer or employee by a disqualified source may not be directed by the State officer or employee to a third party, including (a) the State officer or employee's spouse, parent, sibling, child, relative or friend, and (b) to any other person or entity designated by the State officer or employee, including a charitable entity, on behalf of such officer or employee. An otherwise impermissible gift is not permissible because it is given to a third party at the public official's direction. This principle is codified in this proposal.

Public Officers Law § 74, sets forth the Code of Ethics, which applies to officers and employees of State agencies as well as members of the Legislature and legislative employees, including per diem and unpaid members of boards and authorities, and employees of closely affiliated corporations. This section explicitly prohibits individuals from soliciting, accepting or receiving a gift of any value if to do so would constitute a substantial conflict with the proper discharge of his or her duties in the public interest or if it would cause the State officer or employee, members of the Legislature and legislative employees, including per diem and unpaid members of boards and authorities, or employees of closely affiliated corporations to violate any of the standards of § 74(3).

The State and the public will benefit because the proposed rules will establish uniformity concerning the limitation on offering of gifts by lobbyists and clients to public officials, and will serve to promote public trust and confidence in government.

4. Costs:

a. costs to regulated parties for implementation and compliance: None.

b. costs to the agency, state and local government: None.

c. cost information is based on the fact that the proposed rule-making involves primarily reporting and due diligence requirements and the elimination of confusing and outdated references currently contained in the regulation. There are no costs associated with these changes.

5. Local government mandate: None.

6. Paperwork: None.

7. Duplication: None.

8. Alternatives: The Commission considered alternatives in determining the definition of "nominal value." The Commission surveyed other state's ethics laws that have employed "nominal value" in their gift laws. Some states define "nominal" by either a dollar amount. For example, South Carolina's statute states that nominal value is not to exceed ten dollars, while the West Virginia Ethics Commission concluded that "nominal gift means a gift with a monetary value of twenty-five dollars ($25.00) or less." Other states define "nominal" by examples of what would constitute "nominal." The State of Washington, for example, permits "unsolicited advertising or promotional items of nominal value, such as pens and note pads," while Alabama allows "promotional items commonly distributed to the general public and food or beverages of a nominal value."

The Commission also looked to how "nominal" is commonly defined. Webster's Dictionary defines it as "trifling, insignificant." Webster's Online Thesaurus describes "nominal" as "so small or unimportant as to warrant little or no attention." Black's Law Dictionary indicates "nominal" is "often with the implication that the thing named is so small, slight, or the like, in comparison to what might properly be expected, as scarcely to be entitled to the name: e.g., a nominal price [citation omitted]."

The Commission noted that the legislative purpose intended by eliminating the $75 limitation for gifts was to obviate the improper influence, or the appearance of improper influence, that may be brought to bear on State officers and employees and public officials who are offered gifts from individuals or businesses with an interest in the State employee's or public official's duties. Therefore, the Commission adopted a narrow construction of the term "nominal value." "Nominal value" is considered such a small amount that acceptance of an item of nominal value could not be reasonably interpreted or construed as attempting to influence a State employee or public official. Therefore, items of insignificant value, as, for example, a regular cup of coffee or a soft drink, are considered nominal. Nominal value would not include a meal nor would it include an alcoholic beverage.

The Commission reconsidered the definition of a "widely attended event" and the standards for determining whether attendance at such is related to the official duties and responsibilities of the invited public official from those set forth in Advisory Opinion No. 08-01. The Commission's initially defined a "widely attended event" as one that is "open to members from throughout a given industry or profession or if those in attendance represent a range of persons interested in a given matter." This definition would permit, for example, an association of professionals from a single industry to invite public officials to a meeting of its membership, and it could be considered a "widely attended event." While the association may have a large number of members in attendance at the event, the membership may not be representative of a range of interests.

In order for complimentary food, beverage or attendance to be excluded from the definition of a gift, the Commission determined that it is necessary that a widely attended event have a large number of persons in attendance and include persons who represent differing interests. As discussed further below, the proposed definition states that a "widely attended event" is to be "open to a large number of persons from a given industry or profession, including invitees who represent a broad and diverse range of interests in a given subject matter. The event must provide the opportunity for an exchange of ideas and opinions among those in attendance."

The proposed amendments are primarily based upon concepts set forth in a United States Office of Government Ethics memorandum (DO-07-047, December 5, 2007) providing guidance to federal officials regarding the circumstances under which they may permissibly accept complimentary attendance at a widely attended gathering. The federal provisions are substantially the same as those proposed in these regulations.

The first modification to the definition of a "widely attended event" provides that an event must include "…invitees who represent a broad and diverse range of interests …." The consideration of diversity of interests is intended to address concerns that such events can be viewed as solely promoting an organization's products, goals or agenda.

The second modification to the definition is the addition of the requirement that the event must provide the opportunity for an exchange of ideas and opinions among attendees. One of the justifications for allowing a gift exception for widely attended events has been the opportunity for public officials to exchange ideas and opinions with a variety of individuals in an informal setting. The amendment is intended to insure that in order to qualify for the gift exception the event must provide such an opportunity.

There are four modifications to the standards for determining whether the acceptance of complimentary attendance at a widely attended event is a permissible gift. These proposed changes are intended to provide additional guidance to governmental entities to assist in the determination of whether attendance at an event is related to a State officer or employee's duties and responsibilities and to provide a documentary record of such a determination.

The first proposed amendment provides that if complementary attendance to an event is offered by a source other than the sponsor, the offer would be an impermissible gift if under the circumstances it would be reasonable to infer that the offer was intended to influence or reward the public official.

The second proposed amendment provides that the governmental entity must consider the relevance of attendance at the event to the duties and responsibilities of the invitee.

The third proposed amendment restates the requirement that the event provide an opportunity for the exchange of ideas and opinions.

The fourth proposed amendment adds a new requirement that the governmental entity, in each instance, make a written finding that the public official's attendance at the event has been approved in accordance with factors set forth in the regulations. These written findings would be available for subsequent review by the Commission and others.

The Commission approved the draft proposed regulations at a public meeting on December 2, 2008. Staff subsequently posted the draft proposed regulations on the Commission's website and noted that the draft proposed regulations, pursuant to the State Administrative Procedure Act were being reviewed by the Governor's Office of Regulatory Reform prior to commencing a formal notice and comment period. Interested individuals were invited to submit informal comments to the Commission for consideration. On January 9, 2009, Commission staff sent a notice to all ethics officers and lobbyists advising them of the gift restrictions with respect to receptions and other widely attended events, suggesting that they view the Commission's draft proposed regulations for guidance, as well as contacting Commission staff for advice. At the February 28, 2009 Commission meeting, the Commission amended the definition of "widely attended event" in the draft proposed regulations. These modifications were also posted on the Commission's website.

9. Federal standards: The proposed rule-making pertains to the limitations on the receipt of gifts by persons subject to its jurisdiction and does not exceed any federal minimum standard with regard to a similar subject area.

10. Compliance schedule: No additional time would be required to achieve compliance with this rule. Compliance with the rule would take place upon adoption.

Regulatory Flexibility Analysis

A regulatory flexibility analysis for small businesses and local governments is not submitted with this notice because the proposed rule-making 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 Commission on Public Integrity makes these findings based on the fact that the regulations pertaining to the limitations on the receipt of gifts affect only lobbyists and their clients. Small businesses and local governments are not affected in any way.

Rural Area Flexibility Analysis

A rural area flexibility analysis is not submitted with this notice because 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 New York State Commission on Public Integrity makes these findings based on the fact that the regulations pertaining to the limitations on the receipt of gifts affect only lobbyists and their clients. Rural areas are not affected in any way.

Job Impact Statement

A Job Impact Statement is not submitted with this Notice because the proposed rule-making will have no impact on jobs or employment opportunities. The New York State Commission on Public Integrity makes this finding based on the fact that the proposed rule-making applies to limitations on the receipt of gifts by lobbyists and their clients only. It does not apply, nor relate to small businesses, economic development or employment opportunities.