Ethics reform was a dominant theme of Andrew Cuomo’s 2010 campaign for Governor. The Governor and legislative leaders have now announced an agreement on sweeping new ethics reform legislation, entitled the Public Integrity Reform Act of 2011 (PIRA 2011).

This legislation will: (i) restructure the ethics oversight bodies of New York State, for the first time creating a unified commission with jurisdiction to oversee and investigate the conduct of employees and elected officials of both the Executive and Legislative branches of government; (ii) expand disclosure of the outside activities of public officers, including requiring disclosure of the names of clients of certain public officials who have outside business activities; (iii) require State agencies to disclose the names of persons and firms who appear before those agencies, even if the persons are not lobbyists; (iv) clarify the State’s gift laws; (v) require lobbyists to complete triennial training programs; (vi) revise State election laws to facilitate greater enforcement and to require more disclosure of independent expenditures; and (vii) to provide, for the first time, that public officials who commit crimes related to their official positions are subject to the loss of their public pensions. Most notably, however, may be the new requirement for trade associations and certain other advocacy groups to publicly disclose the names of the contributors and the amounts those members contributed for the lobbying effort.  

Although the bill has not been acted on, and there may still be revisions, any person or firm that interacts with New York State government, and all lobbyists and State public officials should become aware of the requirements of this legislation and should consider the steps that they should take to comply with New York’s new and more complicated ethics and lobbying laws.  

  1. A new Joint Commission on Public Ethics is created. This act effectively eliminates the current Commission on Public Integrity (COPI) and creates the Joint Commission on Public Ethics (JCOPE) with authority to oversee and investigate the conduct of employees and elected officials in both branches of government, as well as lobbyists. Despite this change, the Legislative Ethics Commission (LEC) will have authority to impose penalties on legislators and legislative branch employees who violate their ethical obligations or fail to file the required disclosure forms. All of the appointments to JCOPE are expected to occur within four months of this act becoming law.
  2. Increased Disclosure. The major theme of this legislation is increased disclosure by both public officials and members of the private sector who interact with government. There will now be:
    1. New disclosures by all State agencies, public authorities, boards, commissions, departments, or divisions. Beginning in 2013, an online and downloadable database will disclose information regarding all firms and individuals who appear before these entities regarding any matter pertaining to: (i) a procurement; (ii) a ratemaking proceeding; (iii) a regulatory matter; (iv) a judicial or quasi-judicial proceeding; or (v) an attempt to have a regulation repealed or amended.  
    2. Increased disclosures by public officers. Financial disclosure statements of public officers will require greater and more precise disclosure of salary and investment information. Additionally, for business conducted after July 2012, many public officials, including elected officials and state employees, will be required to disclose of the names of clients or customers to whom they personally provide services or have referred to their firm, assuming the representation is related to some sort of interactions with the State and results in fees greater than $10,000.  
    3. Increased disclosures by lobbyists and clients of lobbyists.
      1. Funding Sources of Organizations. Beginning in late 2012, certain lobbying entities will be required to disclose the organization’s funding sources. This provision will most directly affect unincorporated associations and trade organizations that may now be required to publicly disclose the names of contributors and the amounts contributed. For example, the Acme Chamber of Commerce would likely be required to disclose the names and contribution levels of the participating businesses that contribute more than $5,000 towards the lobbying effort. Notably, the law provides for a very limited exception to this disclosure requirement for 501(c)(3) corporations and certain 501(c)(4) entities.  
      2. Business relationships. Under PIRA 2011, lobbyists and clients of lobbyists will be required to disclose to JCOPE any “reportable business relationships,” with public officials and identify with which public officials they have these relationships.  
  3. Amendments to the Definition of Lobbying and Gifts
    1. Upon enactment of this legislation, the definition of lobbying activity is expanded to include attempts to introduce a bill or to prevent the introduction of a bill, even if the individual has no further involvement in the process. Communications regarding the introduction or adoption of a resolution is also reportable lobbying activity.  
    2. PIRA 2011 replaces the 2007 law’s exclusion to the definition of the term “gift” for food or beverage of “nominal value” with a new exclusion for “food and beverage valued at $15 or less.” The new law will also make the widely-attended event exclusion more accessible.  
  4. JCOPE Investigations. JCOPE will have the broadened authority to investigate not only the statewide elected officials and their staff, but also candidates and the members of the legislature and the legislative staff. This is the first time a single entity would have investigatory powers over both the legislative and executive branches to conduct a full investigation to determine if there is a substantial basis to find a violation of law by a state officer during their service or within one year of separation from state service.
  5. Campaign Finance Enforcement and Disclosure of Independent Expenditures. The State Board of Elections (BOE), no later than January 2012, is required to promulgate regulations regarding disclosure of independent expenditures. This will require the BOE to come up with a process for corporations, individuals, political committees, and other entities, to disclose independent expenditures made for communications that expressly identify a political candidate or ballot proposal. This arguably is an expansion of previous policy that required independent expenditures to be reported to the board if communications included explicit electoral advocacy. The act also increases penalties for intentionally violating campaign contribution limits and for repeatedly failing to file disclosure reports.
  6. Public Officer Pension Reform. Public officers, elected or hired after the law’s enactment, who commit crimes related to their public offices, may have their pensions reduced or forfeited.

Conclusion

PIRA 2011 dramatically changes the landscape for public officials who have outside businesses. For the first time, the public will be able to determine close to the exact amount that public officials earn from outside activities, whether those outside activities are related to State business, and, to the extent that they exist, the business relationships between lobbyists and public officials. Entities that lobby on their own account will also face new disclosure requirements. Whether these changes result in better government, or in increased public confidence in government remains to be seen. What is clear is that the new rules pose substantial compliance issues for entities that do business with New York State government, public officials, and those who are contemplating public service.