Closer Look: JCOPE’s Reportable Business Relationship Guidelines

As part of the 2011 ethics reform legislation (Chapter 399 of 2011), the Lobbying Act (Legislative Law Article 1-A) was amended to require lobbyists to report certain business relationships with public officials.

At its July 31, 2012 meeting, JCOPE commissioners approved “proposed guidelines” regarding the disclosure of “reportable business relationships” that lobbyists and clients have with public officials and employees, setting forth what must be reported by a lobbyist in their biennial registration statements and by clients in their semi-annual reports.

JCOPE’s proposed guidelines on reportable business relationships can be viewed here. [The Commission’s guidelines as to what must be reported are identical for both lobbyists and clients; only the reporting periods differ because the reporting requirements are different for lobbyists and clients.]

The complexity of the new rule may pose some compliance challenges in the lobbying community.  But given the breadth of the statutory mandate, this may be unavoidable.

The key terms in JCOPE‘s proposed guidelines are “business relationship,” “compensation,” and “state person.”

A “business relationship” is a formal or information agreement between a lobbyist/client and a “state person” or a firm in which a “state person” has a substantial interest.

Compensation means “any salary, fee, gift, payment, benefit, loan, advance or any other thing of value paid, owed, given or promised.”

The term “state person” includes any state officer or employee, member of the legislature or legislative employee.

To try to pull it all together — where a lobbyist or client has provided compensation to a state person, and that compensation exceeds $1,000 annually, then the lobbyist or client is required to disclose to JCOPE “either the actual or anticipated amount of Compensation, including expenses, to be paid by virtue of the Business Relationship.”

Got that?  Good, because the potential penalty for failure to file is a pretty substantial one – a civil penalty of up to $25,000 (plus late fees) for a late filing, or a civil penalty of the greater of $50,000 or five times the amount it failed to report.

JCOPE has invited public comment on these proposed guidelines until August 16, 2012. According to the materials on their web site, “The Commission expects that approval and adoption of final guidelines will occur when the Commission next convenes.” That meeting has not yet been scheduled.