Business Council Initial Input

Joint Commission on Public Ethics Invitation for Public Comment on Lobbyist/Client Disclosure Rules

March 21, 2012

Ms. Ellen Biben
Executive Director
Joint Commission on Public Ethics
540 Broadway
Albany, NY 12207

Dear Ms. Biben:
We look forward to working with you and the Joint Commission on Public Ethics, as you begin work on implementing the “Public Integrity Reform Act of 2011.”

The Business Council has been engaged with the prior commissions charged with implementing and enforcing the Lobbying Act, and has been one of the few business organizations to regularly provide written comments on proposed commission guidance, regulations and policies. In doing so, our objective has been to assure that any implementation regulations or policies are consistent with statutory provisions and legislative intent, and to assure that advocacy organizations are provided with straightforward, workable compliance requirements.

There are three provisions in the 2011 legislation that are of particular interest to us.

First, we support the amendments to Legislative Law 1-c(j)(ii), which extended the Lobby Act’s longstanding “gift” exemption for complementary attendance at widely attended events, when offered by the event’s sponsor. The 2011 amendments redefine widely attended events as those with at least twenty five participants other than those related to the governmental entity in which an invited public official serves, and where speakers or attendees address issues of public interest as a significant activity at such event.

Based on our discussions with Administrative and legislative officials as this legislation was being reviewed earlier this year, it is clear that this provision is intended to authorization events – including legislative receptions - where public officials and members of the public come together in an non-formal setting, but with the express purpose of discussing key legislative issues and public policy concerns.

Unfortunately, the prior commission adopted policies that, contrary to then-existing legislative language and intent, had the effect of prohibiting such events if they did not have formal agendas. Even after several detailed discussions with commission staff, we were left with no clear sense of compliance obligations under their stated policy. We find the new legislative language to be sufficiently clear as to legislative intent, and recommends against any new regulations on this point that would restrict legislative intent.

Second, in this Commission’s initial public meeting, the Chair said the Commission would be developing regulations implementing Legislative Law sections 1-h(c)(4) and 1-j(c)(4), which require entities that are both the registered client and lobbyist to disclose the names of, and amounts received by, any source that contributed more than $5,000 that was “used to fund . . . lobbying activities,” if the organization spends more than $50,000 in reportable lobbying expenses and that amount is at least three percent of the entity’s total spending. While this provision was directed at ad hoc organizations, with ambiguous backing and unnamed sources of financial support, it will also apply to trade associations and similar organizations that register the organization itself as its principal lobbyist.

At the time of its passage, we questioned the scope of this mandate, and whether it would produce much in the way of new public information regarding organizations like ours whose leadership, membership and advocacy platform are openly available. (Our board of directors, staff and general members are listed on our web site.) Regardless, this provision raises compliance issues for established organizations like ours that do not segregate revenues for lobbying and non-lobbying activities, but report a calculated share of total spending as reportable lobbying expense.

For trade associations and similar organizations, we recommend that the implementation rules, at most, require disclosure of income sources whose contributions to the organization multiplied by the percentage of their lobby expenses over total expenses exceed the $5,000 threshold. This approach sets forth a reasonable standard for what constitutes “funds used for lobbying”. As example, for an association reports 15 percent of its budget as lobby expense, then only those members that contribute over $33,333 would be subject to this disclosure (i.e., 15% of $33,333 = $5000). 

Third, concerns have been raised about the ability to comply with new requirements that lobbyist’s statements of registration and semi-annual reports identify any reportable business relationships that the lobbyist has either directly with a statewide elected official, state officer, state employee, member of the legislature or legislative employee, and any business relationships with an entity in which the lobbyist “knows or has reason to know” that a statewide elected official, state officer, state employee, member of the legislature or legislative employee is a proprietor, partner, director, officer or manager, or owns or controls ten percent or more of the stock of such entity (or one percent in a publicly traded company.)

Such relationships with high profile public officials will be obvious. However, with more than 200,000 New York State employees, concerns have been raised about how the “reason to know” test will be applied to contracts with entities that have public official involvement. Our thought is that a “reasonable person” test should apply here.

Moreover, it is unclear whether this new requirement would trigger the need to amend existing lobbyist registrations. Clarification on this point would also be helpful.

I look forward to meeting with you. Also, please feel free to contact me at your convenience if we can provide you with any additional information on these or other regulatory or compliance issues on which we can be of help.

Best wishes as JCOPE gets up and running.


copy to Commission Board members