Report and Recommendations of the Task Force on Integrity in State and Local Government June 14, 2017 Table of Contents Chapter 4 of the Resolves of 2016 ................................................................................................................ ii Task Force Membership ............................................................................................................................... iii A. Introduction & Executive Summary .............................................................................................. - 1 - B. Task Force Proceedings ................................................................................................................. - 3 - C. The State Ethics Commission ........................................................................................................ - 4 State Ethics Commission Established ................................................................................................ - 4 Commission Structure ....................................................................................................................... - 4 Commission Authority ...................................................................................................................... - 4 - D. The Ethics Laws ............................................................................................................................. - 6 Overview of the Conflict of Interest Law (G.L. c. 268A) .................................................................... - 6 Overview of the Financial Disclosure Law (G.L. c. 268B) .................................................................. - 6 Overview of the State Ethics Commission’s Regulations (930 CMR 1.00, et seq) ............................ - 7 - E. Recommendations ........................................................................................................................ - 8 1: Expanded Regulatory Authority ................................................................................................... - 8 2A: Further Study of the Proposals for Statutory Changes Received by the Task Force ................. - 8 2B: Further Study of the Proposals for Policy Changes Received by the Task Force ...................... - 12 - F. Conclusion ................................................................................................................................... - 13 - Appendix ................................................................................................................................................. - 14 - i Chapter 4 of the Resolves of 20161 RESOLVE ESTABLISHING A TASK FORCE ON INTEGRITY IN STATE AND LOCAL GOVERNMENT Resolved, That there shall be established, pursuant to section 2A of chapter 4 of the General Laws, a special legislative commission known as the Task Force on Integrity in State and Local Government. The task force shall be comprised of the following 13 members: the chair of the house committee on ethics or a designee; the chair of the senate committee on ethics or a designee; the chairs of the joint committee on state administration and regulatory oversight or their designees; the attorney general or her designee; a member of the house of representatives appointed by the minority leader of the house of representatives; a member of the senate appointed by the minority leader of the senate; the chief legal counsel to the governor; the chief legal counsel to the senate; the chief legal counsel to the house of representatives; and 3 members with expertise on issues relating to ethics or public integrity to be appointed as follows: 1 member to be appointed by the governor, 1 member to be appointed by the president of the senate and 1 member to be appointed by the speaker of the house of representatives. The chairs of the joint committee on state administration and regulatory oversight and chairs of the house and senate committees on ethics shall serve as co-chairs of the task force. The task force shall conduct an investigation and study of the existing legal and regulatory framework governing the conduct of state, county and municipal elected officials and appointed public employees, including a review of: (i) the Conflict of Interest Law, chapter 268A of the General Laws; (ii) the Financial Disclosure Law, chapter 268B of the General Laws; and (iii) the regulations of the state ethics commission, 930 CMR 1.00 et seq., and associated processes. The task force shall confer with representatives of the various state offices responsible for overseeing the state ethics laws, as well as with academics, practitioners and others with expertise in these areas. The task force shall file a report with the governor, the president of the senate and the speaker of the house of representatives regarding the results of its investigation and study on or before June 1, 2017. The report shall include: (i) an assessment of the current legal and regulatory structures, education and training, and advisories and processes of the State Ethics Commission; (ii) recommendations for amendments to any current law, rule or regulation; and (iii) recommendations for legislation, if any, which shall be filed with the clerk of the house of representatives. 1 As amended by St. 2017, c. 5 §§ 20 to 24A, inclusive. ii Task Force Membership Senator Cynthia S. Creem Co-Chair Co-Chair R~presentative r Joan B. Lovely Co-Chair Peter V. Kocot Co-Chair Representative Shawn Dooley Senate Minority Leader's Appointee Hause Minority Leader's Appointee Mr. Lon F. Povich, Esq. Governor's Appointee Chief Legal Counsel to the Governor iii Ms. Stephanie Lovell, Esq. Senate President's Appointee Senate Counsel r. James C. Kennedy, Esq. Speaker's Appointee Chief Legal Counsel to the House of Representatives Ms. Mariya Treisman, Esq. Attorney General's Designee iv A. Introduction & Executive Summary The Task Force on Integrity in State and Local Government (“Task Force”) was assigned to conduct an investigation and study of the existing legal and regulatory framework governing the conduct of state, county and municipal elected officials and appointed public employees, including a review of the Conflict of Interest Law (G.L. c. 268A), the Financial Disclosure Law (G.L. c. 268B) and the regulations of the State Ethics Commission. The Task Force held seven public hearings between January 17, 2017 and May 31, 2017 and received oral and written testimony from the Executive Director and General Counsel of the State Ethics Commission; two members of the State Ethics Commission, the Honorable Barbara A. Dortch-Okara and the Honorable Regina L. Quinlan; members of the legislature; government entities; nonprofit organizations; and members of the public.2 The Commission reported on the number of inquiries its staff receives about the application of the law, as well as its enforcement actions where violations are found. The Commission noted that, since the implementation of new education and training requirements in 2009, the number of inquiries to the Commission has increased dramatically. Commission staff observed that there are a number of circumstances in which the questions posed to it do not fit neatly into the current statutory and regulatory framework. We explored the provisions of the ethics laws and their underlying rationales and reviewed certain exceptions to those laws that the State Ethics Commission has established through its existing regulatory power, and the motivations behind those exceptions. We also received specific recommendations for statutory and policy changes from Task Force members, and benefited from the Commission’s review of and feedback on those recommendations. We heard from the State Ethics Commission that, in its opinion, the single most important result that could come from this Task Force would be the granting of full regulatory authority to the Commission. There is consensus among the members of the Task Force that expanded regulatory authority is advisable and that such change must be accomplished by a statutory amendment. There is, however, a lack of agreement regarding the precise scope of that expanded regulatory authority and how the Commission should be authorized to implement it. We also heard, from multiple parties, concerns and requests for clarification of certain provisions in the statutes. In addition, we extended to our own members and interested stakeholders the opportunity to submit their proposals for changes to both the Conflict of Interest Law and the Financial Disclosure Law, and asked that the State Ethics Commission create a comprehensive list of those proposals, indicating, as to each, whether the Commission believes that each suggested change could be accomplished by a regulation, if the Commission had or were granted adequate regulatory authority, or whether it could only be accomplished by a statutory amendment. The Commission submitted its response to that request on May 25, 2017. 2 The Task Force is also scheduled to meet on June 14, 2017 to vote on our Report and Recommendations. -1- At its May 31, 2017 meeting, the Task Force did not discuss or vote on the merit of each proposed change. Nor did it determine whether each proposed change would best be accomplished by statutory amendment or regulation. Instead, the Task Force voted to recommend that the House and Senate Committees on Ethics and the Joint Committee on State Administration and Regulatory Oversight conduct further study of the individually proposed changes presented to the Task Force to date. RECOMMENDATIONS Therefore, the Task Force on Integrity in State and Local Government recommends the following: (i) Amendment of the General Laws to expand regulatory authority for the State Ethics Commission; the extent of such expansion, in form and scope, shall be determined by the General Court and the Governor; and (ii) Continued study by the House and Senate Committees on Ethics and by the Joint Committee on State Administration and Regulatory Oversight of the proposals presented to the Task Force to date. -2- B. Task Force Proceedings3 DATE TOPICS DISCUSSED January 17, 2017   February 1, 2017       February 15, 2017   February 28, 2017  March 21, 2017 April 25, 2017 May 31, 2017     June 14, 2017   Procedural and organizational issues of the Task Force Overview of the State Ethics Commission, the Conflict of Interest Law and the Financial Disclosure Law Corrupt gifts (G.L. c. 268A, § 2) Gifts of substantial value for official acts (G.L. c. 268A, § 3) Gifts for or because of official position (G.L. c. 268A, § 23(b)(2)(i)) Gifts from lobbyists (G.L. c. 268B, § 6) Related regulatory exemptions (930 CMR 5.00 et seq.) Public employees acting as agents in government matters and receiving private compensation (G.L. c. 268A, §§ 4, 11, 17) Former public employers and their business partners (G.L. c. 268A, §§ 5, 12, 18) Public employees who have financial interests in government contracts (G.L. c. 268A, §§ 7, 14, 20) Financial interests of public employees and their relatives or associates (G.L. c. 268A, §§ 6, 6A, 13, 19) Standards of conduct (G.L. c. 268A, § 23) State Ethics Commission Memorandum dated March 20, 20174 State Ethics Commission Memorandum dated April 25, 20175 Proposed changes to the Conflict of Interest and Financial Disclosure Laws submitted by individual members of the Task Force on May 12, 2017; and the State Ethics Commission’s compilation of and comment on those proposals, as requested by the Task Force6 Content of Task Force report to be submitted. Task Force review and vote on report 3 Recordings of all Task Force hearings may be found on the General Court’s website, https://malegislature.gov/Events, under the Hearing & Events tab. 4 Hereinafter referred to as the “SEC Memo dated March 20, 2017.” This memorandum was requested by the Task Force on February 28, 2017, and includes a list of proposed changes to the Conflict of Interest Law and Financial Disclosure Law and a list of proposed regulations the Commission would adopt if granted full regulatory authority. 5 Hereinafter referred to as the “SEC Memo dated April 25, 2017.” This memorandum was requested by the Task Force on March 21, 2017, and includes additional recommendations for statutory changes, an overview of areas of the Conflict of Interest Law that the Commission believes could be addressed by statutory revision and materials that were before the Commission for consideration at its meeting on January 25, 2017. 6 The proposals include inquiries made by Senator Creem to the State Ethics Commission dated May 12, 2017; recommendations submitted to the Task Force by Representative Kocot, Representative Markey and House Counsel, James Kennedy on May 12, 2017, hereinafter referred to as “Recommendations of Rep. Kocot, Rep. Markey and House Counsel”; and recommendations submitted to the Task Force by Pam Wilmot on April 26, 2017. The recommendations submitted by Pam Wilmot were also included in the testimony of Peter Sturges, submitted to the Task Force on April 25, 2017, and are hereinafter referred to as “Recommendations of CCMA.” -3- C. The State Ethics Commission State Ethics Commission Established The State Ethics Commission was established in 1978 as part of a package of amendments to the Conflict of Interest Law, which was previously a criminal statute enforced by the Attorney General and District Attorneys, and the new Financial Disclosure Law (G.L. c. 268B).7 Since its inception, the Commission has been the primary civil enforcement agency for violations of the Conflict of Interest Law and has been exclusively responsible for administering the Financial Disclosure Law. Commission Structure The Commission is a non-partisan body composed of five members: three appointees of the Governor, one appointee of the Secretary of the Commonwealth and one appointee of the Attorney General. The Commission also employs staff to aid in its mission, and currently has twenty employees.8 Staff is generally assigned to one of three practice areas: the Legal Division, the Enforcement Division, or the Public Education and Communications Division. The Legal Division addresses inquiries from public employees subject to the state’s ethics laws and provides advice to individual employees, as well as to state, municipal and corporation counsel. In Fiscal Year 2016, the Legal Division received more than 6,000 inquiries – the highest in division history.9 The Enforcement Division is responsible for investigating and resolving alleged violations of the state’s ethics laws. The Commission estimates that it receives between 800 and 1,200 complaints each year, the majority of which allege violations at the municipal level.10 Approximately 30% of the complaints that the Enforcement Division investigates are found to have sufficient merit to warrant further action. The Public Education and Communication Division develops and implements all statutorily required training for public employees, and generally furthers the Commission’s focus on education and the principle that education about the law is the best form of enforcement. Commission Authority The State Ethics Commission has the authority to investigate alleged violations of the Conflict of Interest Law and the Financial Disclosure Law. While the structure of the Commission has remained unchanged since 1978, the Commission’s specific duties have evolved as the result of various amendments to the Conflict of Interest Law and Financial Disclosure Law enacted from 1978 to the present. Most notably, upon statutory amendment in 2009, the Commission was given (i) responsibility for implementing 7 See St. 1978, c. 210. Executive Director David Wilson stated at the January 17, 2017 Task Force meeting that one position was vacant at that time and the Commission was hoping to add another position. 9 See Written Testimony of David A. Wilson dated January 17, 2017. 10 See Written Testimony of David A. Wilson dated January 17, 2017, and oral testimony of David A. Wilson at the January 17, 2017 Task Force meeting. 8 -4- expanded education and training requirements, (ii) power to issue a mandatory summons, and (iii) authority to levy higher civil penalties against those who violate the ethics laws.11 The Commission’s enabling legislation, Chapter 210 of the Acts of 1978, also gave the Commission the power to “prescribe and publish, pursuant to the provisions of chapter 30A, rules and regulations to carry out the purposes of [G.L. c. 268B], including rules governing the conduct of proceedings hereunder.”12 This limited grant of regulatory authority allowed the Commission to interpret and implement the Financial Disclosure Law and to structure its proceedings. The Commission did not receive authority to issue regulations relating to the Conflict of Interest Law (G.L. c. 268A) until 2004, and such authority was limited in scope. In 2004 the legislature directed the Commission to: prescribe and publish, pursuant to chapter 30A, rules and regulations…to carry out chapter 268A; provided, however, that the rules and regulations shall be limited to providing exemptions from the provisions of sections 3 to 7, inclusive, sections 11 to 14, inclusive, sections 17 to 20, inclusive, and section 23 of said chapter 268A….13 The act further stated: It is the intent of this act to authorize the state ethics commission to establish reasonable exemptions from chapter 268A of the General Laws. The establishment of such exemptions shall not be the basis for inferring that any conduct, items or other matters not so exempted are prohibited, permitted, restricted or otherwise regulated by said chapter 268A.14 Soon thereafter, the Commission issued regulations establishing a number of individualized exemptions related to public employees receiving gifts, including travel expenses and incidental hospitality pertaining to their official positions and legitimate public purposes, and certain government and educational benefits. In 2009, the Commission was again tasked with adopting new regulations.15 The 2009 act required the Commission to define “substantial value,” provided that substantial value shall not be less than $50, and to establish certain specific exemptions from the Conflict of Interest Law regarding ceremonial or familial gifts or other situations that do not present a genuine risk of a conflict or the appearance of a conflict of interest.16 11 See St. 2009, c. 28, §§ 61 to 63, inclusive, 66 to 80, inclusive, 84, 88, 89, 97. See G.L. c. 268B, § 3(a), as appearing in St. 1978, c. 210, § 20. 13 See G.L. c. 268B, § 3(a), as appearing in St. 2004, c. 399, § 1. 14 See St. 2004, c. 399, § 2. 15 See St. 2009, c. 28. 16 See G.L. c. 268A, § 3(f), regarding gifts, and G.L. c. 268A, § 23(f), regarding privileges and exemptions, as most recently amended by St. 2009, c. 28. 12 -5- D. The Ethics Laws Overview of the Conflict of Interest Law (G.L. c. 268A) The structure of the Conflict of Interest Law includes enumerated sections that generally relate to one of three classes of public employees: municipal employees, county employees or state employees. Those sections—while not identical—serve as counterparts to the others. Many of the law’s key terms are defined in the statute.17 Others, over time, have been interpreted by the courts of the Commonwealth or the State Ethics Commission.18 The terms, prohibitions and requirements of the law affect public employees both in their official capacities and in their private lives. The Conflict of Interest Law makes clear that public employees should: (1) not use their official positions for their own financial benefit, or to benefit their families, businesses or other organizations with which they are closely affiliated;19 (2) not advocate for others before their same level of government, because of the state, county, or municipality’s interests in that issue;20 (3) not accept gifts or gratuities given to them because of their official actions or positions;21 (4) not have contracts with their level of government, i.e., an inside track to additional government monies by virtue of their public position;22 (5) not abuse the power of their public positions to benefit or punish others unfairly;23 (6) publicly disclose any circumstances that would cause others to believe they may be biased in their official roles;24 and (7) be restricted from taking certain actions after they leave public service (e.g., actions directed toward their previous public employer and implicating their prior work as a public employee).25 Overview of the Financial Disclosure Law (G.L. c. 268B) The Financial Disclosure Law requires candidates for public office (i.e., an office chosen at the state election), public officials, and state and county employees holding “major policymaking positions” to file annual statements of financial interest (SFIs) with the State Ethics Commission.26 The Commission noted that the Financial Disclosure Law tries to strike a balance between public employees’ and officials’ privacy interests and transparency in government. SFIs allow the public to scrutinize the finances of certain public officials to learn whether other parties or interests may potentially hold sway over an 17 G.L. c. 268A, § 1. See, e.g., Graham v. McGrail, 370 Mass. 133 (1976); EC-COI-12-1; EC-COI-07-2. 19 See G.L. c. 268A, §§ 6, 13, 19. 20 See G.L. c. 268A, §§ 4, 11, 17. 21 See G.L. c. 268A, §§ 2, 3, 23(b)(2)(i); G.L. c. 268B, § 6. 22 See G.L. c. 268A, §§ 7, 14, 20. 23 See G.L. c. 268A, § 23(b)(2)(ii). 24 See G.L. c. 268A, § 23(b)(3). 25 See G.L. c. 268A, §§ 5, 12, 18. 26 See G.L. c. 268B, § 5. 18 -6- individual who has been elected or appointed to serve the public or may otherwise be in a position to exert authority. Certain positions are defined by statute as major policy-making positions, including judges and agency or department heads. Other positions may be designated as major-policy making by the head of their respective agency, board, etc. Approximately 4,000 individuals filed SFIs in 2016.27 Individuals required to file an SFI must disclose a wide array of information regarding their income and assets, including outside business interests, property ownership, gifts received and debts owed. SFIs are filed annually in May, reflecting the filers’ interests over the course and at the close of the previous calendar year. Once filed, the statements are available to the public for inspection. Overview of the State Ethics Commission’s Regulations (930 CMR 1.00, et seq) The Commission’s regulations can be broadly categorized into four areas:28 (1) (2) (3) (4) Practice and procedure;29 Statements of financial interest;30 Exemptions related to gifts;31 Exemptions unrelated to gifts.32 As discussed above, the Commission has had regulatory authority to interpret and implement the Financial Disclosure Law and to structure its proceedings since its inception in 1978. As the scope of regulatory authority expanded over time to include, in limited fashion, the Conflict of Interest Law, the Commission added regulations accordingly. In 2010, the Commission promulgated new regulations differentiating between “exemptions related to gifts” and “exemptions unrelated to gifts.” The exemption categories have been augmented and clarified since 2010, but remain in essentially the same format. The Commission’s exemptions that are not related to gifts predominantly address the following topics: (1) financial interests in government contracts; (2) public employees acting as agents or attorneys for others in matters in which their level of government (i.e., state, county or municipal) has a direct and substantial interest; and (3) financial interests in particular matters in which a public employee is involved as a public employee. 27 See Written Testimony of David A. Wilson dated January 17, 2017. There are two regulations that do not fit into these categories: 930 CMR 3.02 (disclosures containing confidential information); and 930 CMR 7.00 (defining governmental body for purposes of G.L. c. 268A, § 5(e)). 29 See 930 CMR 1.00 to 1.03, inclusive; 930 CMR 3.01. 30 See 930 CMR 2.00 to 2.06, inclusive; 930 CMR 4.00 and 4.01. 31 See 930 CMR 5.00 to 5.12, inclusive. 32 See 930 CMR 6.00 to 6.27, inclusive. 28 -7- E. Recommendations 1: Expanded Regulatory Authority The State Ethics Commission testified to the Task Force that “[i]n the Commission’s view, the most important single improvement that this Task Force could recommend to promote public understanding of the law would be to give the Commission full regulatory authority; that is, the authority to issue regulations interpreting the conflict of interest law.”33 There is consensus among the members of the Task Force that some form of expanded regulatory authority is advisable, and that such change must be accomplished by statutory amendment. There is, however, no agreement regarding the precise scope of that expanded regulatory authority and how the Commission should be authorized to implement it. As a result, we recommend that the General Court and the Governor determine the form and scope of expanded regulatory authority that would be best suited to strengthen, update and clarify the Conflict of Interest Law to protect the interests and the people of the Commonwealth, while allowing the Commission appropriate flexibility to carry out its statutory mandate. 2A: Further Study of the Proposals for Statutory Changes Received by the Task Force The Task Force received testimony and proposals from a number of stakeholders, including, but not limited to, the Commissioners and staff of the State Ethics Commission, individual Task Force members, legislators and public employees, and members of the public. While the Task Force is appreciative of these individuals’ submissions, the Task Force has not debated the merit of or voted on any of the individual proposals it received, other than the Commission’s request for expanded regulatory authority discussed above. It also did not determine whether these proposals should be implemented by statutory amendment or regulation. Therefore, the Task Force recommends the continued study of these submissions by the House and Senate Committees on Ethics and by the Joint Committee on State Administration and Regulatory Oversight. The submissions summarized below, and contained fully in the appendix to this report, represent only the positions of their respective authors. The Task Force takes no position on the content of any submission. We summarize them as a practical inventory only. Submissions are listed in conjunction with the chapter and section of law to which they refer. 33 See Written Testimony of David A. Wilson dated January 17, 2017, p. 5. -8- G.L. c. 268A §1   Amend the definition of “municipal employee” to delete “elected” before “members of town meeting.”34 Amend the definition of “county employee” to exclude members of a charter commission. 35     Add a definition of “regional municipal agency.” 36 Amend definition of “special municipal employee.”37 Amend definitions of “special county employee” and “special municipal employee.”38 Add definitions for the following terms used in Chapter 268A:39 o “Acting as agent” o “Adjudicatory” o “Business organization” o “Constituent” o “Financial interest” o “General legislation” o “General policy” o “In relation to a particular matter” o “Inherently incompatible” o “Ministerial” o “Partner” o “Public notice” o “Official authority” o “Official dealings” o “Otherwise than as provided by law” o “Party” o “Person” o “Public office” o “Public Official” o “Quasi-judicial” o “Regional municipal agency” o “Substantial value” o “Similarly situated individuals” o “Substantial segment” o “Unwarranted exemption” o “Unwarranted privilege” 34 See SEC Memo dated March 20, 2017; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. See SEC Memo dated March 20, 2017; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 36 See SEC Memo dated March 20, 2017; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 37 See SEC Memo dated April 25, 2017; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 38 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 39 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 35 -9- §440 §645 §6A §6B §7 §8B §17 §20 §21  Amend statute to allow appointed state employees to appear for others before a state agency other than the one in which they serve, for only ministerial matters, and without compensation.41  Allow appointed state employees to appear for others before a state agency other than the one in which they serve, without compensation, with certain approvals and disclosures.42  Clarify when members of the General Court may appear before state agencies for outside compensation; by, for example, establishing uniform parameters for “quasi-judicial” proceedings, and eliminating a loophole that could allow someone to appear for a paying client so long as they do not receive compensation for a particular appearance.43  Clarify the scope of the exemption that allows state employees to also serve in municipal roles.44 Amend to allow elected state officials to participate in certain matters in which they or a member of their immediate family, but not any outside business interests, may have a financial interest; with disclosure.46 Amend to reflect current interpretation of section and add definitions.47 Amend section to apply only to “immediate family.”48   Revise to more clearly identify prohibited conduct.”49 Amend to delete an out-of-date reference to the “general salary schedule” contained in G.L. 30, § 46.50  Amend to delete out-of-date reference to “mentally retarded persons.”51 Amend to update reference by striking “telecommunications and cable” and replacing it with “the department of public utilities.”52 Revise to address issues specific to employees of regional municipal entities.53 Revise to address issues specific to employees of regional municipal entities.54 Amend to allow private right of action regarding violations on the municipal level.55 40 Changes proposed to § 4 in Recommendations of Rep. Kocot, Rep. Markey and House Counsel may also apply to § 11 (for county employees) and § 17 (for municipal employees). 41 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 42 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 43 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 44 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 45 Changes to § 6 in Recommendations of Rep. Kocot, Rep. Markey and House Counsel may also apply to § 13 (for county employees) and § 19 (for municipal employees). 46 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 47 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 48 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 49 See SEC Memo dated March 20, 2017; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 50 See SEC Memo dated April 25, 2017; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 51 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 52 See SEC Memo dated March 20, 2017. 53 See SEC Memo dated April 25, 2017; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 54 See SEC Memo dated April 25, 2017; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 55 See Recommendations of CCMA; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. - 10 - §23 §27 $28 §30  Amend subsection (b)(2) to clarify the scope.56  Amend subsection (b)(3).57  Amend regarding appearance of conflict and private circumstances.58 Amend to require distribution of summaries of the law every two years.59 Amend to require online training in years in which summary is not required to be distributed.60 Add new section to require the Commission to develop an electronic reporting system for public disclosures.61 G.L. c. 268B §1 §3 §4 §5   Amend the definition of “amount.”62 Amend the definition of “major policymaking position” to delete reference to out of date statute.63  Amend the definition of “business.”64  Amend the definition of “gift.”65  Amend to provide the Commission with full regulatory authority over the Conflict of Interest Law.  Amend subsection (d).66  Amend subsection (f).67  Amend subsection (j).68 Amend subsection (a).69  Amend to: (i) require electronic filing; (2) eliminate confusing references to “third degree of consanguinity”; and (3) require reporting of out of state real estate.70  Amend to require electronic filing and to require the Commission to create an electronic system for filing such statements.71 56 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. See SEC Memo dated March 20, 2017; Recommendations of CCMA; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 58 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 59 See SEC Memo dated March 20, 2017. 60 See SEC Memo dated March 20, 2017. 61 See Recommendations of CCMA. 62 See SEC Memo dated March 20, 2017; Recommendations of CCMA; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 63 See SEC Memo dated March 20, 2017; Recommendations of CCMA; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 64 See SEC Memo dated March 20, 2017; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 65 See Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 66 See Recommendations of CCMA. 67 See SEC Memo March 20, 2017. 68 See SEC Memo dated March 20, 2017. 69 See SEC Memo dated March 20, 2017; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 70 See SEC Memo dated March 20, 2017. 71 See Recommendations of CCMA. 57 - 11 - G.L. c. 23K §68  Add the following paragraph: A municipal employee serving as a member of an advisory committee or subcommittee created by this section shall not violate section four of chapter two hundred sixty-eight A by expressing the views of his employing municipality or regional planning agency during committee or subcommittee meetings or by receiving his usual compensation as a municipal employee or by performing the usual duties of his municipal employment, including acting as agent or attorney for the municipality or regional planning agency, in relation to particular matters in which he participated or which are, or in the prior year have been, a subject of his official responsibility as a member of the advisory committee or subcommittee or which are pending before the advisory committee or subcommittee.72 2B: Further Study of the Proposals for Policy Changes Received by the Task Force Over the course of its proceedings, the Task Force received a number of submissions that were not accompanied by any draft statutory language. We are characterizing those recommendations as “proposals for policy changes” simply for ease of reference. Therefore, consistent with the recommendation made above in Section E.2A, the Task Force recommends the continued study of these submissions by the House and Senate Committees on Ethics and by the Joint Committee on State Administration and Regulatory Oversight. The submissions summarized below, and contained fully in the appendix to this report,73 represent only the positions of their respective authors. The Task Force takes no position on the content of any submission. We summarize them as a practical inventory only. If a submission appears to implicate a particular statute, it is cited for organizational purposes only. G.L. Implicated Policy Proposal G.L. c. 268B, § 3  G.L. c. 268A, § 1  G.L. c. 268A, §§ 4, 11, 17 G.L. c. 268A, §§ 4   Provide a regulatory definition for currently undefined statutory terms in the Conflict of Interest Law.74 Simplify and explain existing statutory definitions of some terms in Conflict of Interest Law.75 Provide a “plain English” explanation of the prohibition against acting as an agent or attorney.76 Amend G.L. c. 268A, § 4 to clarify the legislators’ exemption and ensure it allows legislators who are also attorneys to practice before the Massachusetts Commission Against Discrimination.77 72 See Testimony of the Massachusetts Gaming Commission submitted January 17, 2017. The oral testimony of Representative Kenneth Gordon presented at the February 15, 2017 Task Force meeting was not accompanied by written testimony. 74 See SEC Memo dated March 20, 2017. 75 See SEC Memo dated March 20, 2017. 76 See SEC Memo dated March 20, 2017; Recommendations of Rep. Kocot, Rep. Markey and House Counsel. 73 - 12 - G.L. c. 268A, §§ 7, 14, 20 G.L. c. 268A, § 23(b)(2)  Provide a “plain English” explanation of the prohibition against having a financial interest in a public contract.78  G.L. c. 268A, §§ 3, 23(b)(2)  Provide a “plain English” explanation of situations in which public officials may not use their official positions because it is inherently coercive or abusive.79 Prohibit organizations that retain lobbyists from paying for legislators’ travel.80 F. Conclusion Upon filing with the Governor, the President of the Senate and the Speaker of the House of Representatives, this Report and Recommendations shall be forwarded to the House and Senate Committees on Ethics and the Joint Committee on State Administration and Regulatory Oversight, for their consideration, consistent with the recommendations made above. 77 See oral testimony of Rep. Gordon at the February 15, 2017 Task Force Meeting; Written testimony of Rep. Livingstone dated February 28, 2017. 78 See SEC Memo dated March 20, 2017. 79 See SEC Memo dated March 20, 2017. 80 See Written Testimony of Massachusetts Peace Action dated February 1, 2017. - 13 - Appendix A. Written Testimony of David A. Wilson dated January 17, 2017 B. Recommendations of the Massachusetts Gaming Commission dated January 17, 2017 C. Written Testimony of David A. Wilson dated February 1, 2017 D. Written Testimony of Eva Moseley, Massachusetts Peace Action, dated February 1, 2017 E. Email from Susan McLucas dated February 1, 2017 F. Written Testimony of David A. Wilson dated February 15, 2017 G. Letter from Representative Jay D. Livingstone dated February 23, 2017 H. Written Testimony of David A. Wilson dated February 28, 2017 I. Memorandum of the State Ethics Commission dated March 20, 2017 J. Memorandum of the State Ethics Commission dated April 25, 2017 K. Written Testimony of Peter Sturges, Common Cause Massachusetts, including recommendations of Common Cause Massachusetts dated April 25, 2017; also submitted by Pam Wilmot L. Inquiries from Senator Cynthia S. Creem to the State Ethics Commission dated May 12, 2017 M. Recommendations to the Task Force submitted by Representative Christopher M. Markey, Representative Peter V. Kocot and House Counsel, James C. Kennedy, dated May 12, 2017 N. Memorandum of the State Ethics Commission dated May 25, 2017 - 14 - Ms. Jennifer Grace Miller, Esq. Senate President's Appointee Senate Counsel Ms. Pamela Wilmot, Esq. Mr. James C. Kennedy, Esq. Speakers Appointee Chief Legal Counsel to the House of Representatives Ms. Mariya Treisman, Esq. Attorney General's Designee iv APPENDIX A • ! Testimony for Task Force on Integrity in State and Local Govemment David A. Wilson, Acting Executive Director Initial Task Force Meeting January 17, 2017 On behalf of the members of the State Ethics Commission, thank you for the opportunity to participate in this first meeting of the Task Force on Integrity in State and Local Government. The Commission is honored to assist in the important work to be done by this Task Force. I would like to take this oppmtunity to first give you an overview of the Commission's work, and then to describe our plan to provide you with the Commission's ideas conceming possible improvements to the laws. Overview of Commission's Work The Commission was created in 1978 as an independent state agency responsible for administering the conflict of interest and financial disclosure laws, G.L. c. 268A and 2688, and for investigating alleged violations of, and serving as the primary civil enforcement agency for, those laws. The Conunission consists of five members, eachofwhom may setve one five-year tetm. The Govemor appoints our Chair and two of our Commissioners, and the other two are appointed by the Secretary of State and the Attorney General. The Commission is non-pmtisanno more than three members overall and no more than two of the govemor' s appointees may be of the same political patty. Cunently, our Chair is Judge Barbara Dmtch-Okara, formerly the Chief J\Jstice for Administration and Management of the Trial Court. Our other Commissioners are Judge Regina L. Quinlan, formerly of the Superior Comt; Judge David A. Mills, formerly of the Appeals Court; Thomas J. Sartory ofthe law fil1n of Goulston & Stons, P.C.; and Maria J. Krokidas of the law fil1n Krokidas & Bluestein. The Commission meets once per month in a 1 public meeting; the next meeting will be this Thursday, January 19, 2017. As Acting Executive Director I am responsible to the Commissioners for administration of the agency, atld am one of 20 cunent Commission employees. The Commission has three divisions: Legal, Enforcement, and Public Education and Communications. Most Commission employees are assigned to one of the three divisions. The Legal Division is staffed with six attorneys (several of whom have additional duties outside the Division at the moment), one staff member who is the Statements of Financial Interests administrator, and one administrative assistant. The Division is led by the Commission's General Counsel Deirdre Roney. The Legal Division responds to requests for advice concerning the conflict of interest and financial disclosure laws. Anyone with a question about how to comply with these laws can obtain fi·ee, confidential advice from the Legal Division. During Fiscal Year 2016, the Division responded to 6,257 requests for advice, the highest 11\Jmber in the Division's history. The number of requests for advice has increased substantially since passage of the 2009 Ethics Reform Act; for comparison, in FY 2008, prior to that act, the Division received 4,101 requests for advice. The Act included requirements for training and education concerning the conflict of interest law that have significantly increased public awareness of the conflict of interest law, and of the availability offi·ee advice fimn us. The Legal Division's time standards require that telephone calls requesting advice be retumed the same day, email requests be answered within a few days, and requests for written opinions be answered within 30 days, and we work hard to meet those goals. The Legal Division also administers the financial disclosure law, which requires state and county elected officials and candidates, and persons who hold major policymaking positions at 2 the state and county level, to file annual Statements of Financial Interests ("SFis") with the Commission. Approximately 4,000 SF Is were filed with the Commission during the most recent filing season in May (like tax returns, SFis are filed in spring for the previous calendar year). We are currently in the final stages of a project to replace our former electronic filing application with a new, improved electronic filing application, using capital bond funding. The new system was used by the majority of filers to file during the filing season tllis past May, and is significantly easier to use than the old system. The new system, when complete, will also allow members of the press and the public to request SFis electronicallyt1sing the system, and will automatically redact information required to be redacted before we can produce SFis. This aspect of the new system is expected to greatly reduce the amo1mt of staff time needed to comply with public records requests, and enable tls to respond to such requests faster. The Commission's Enforcement Division is currently staffed with three attorneys (one of whom will statt work next week), five investigators (one position is cutTently vacant), and an administrative assistant. The Enforcement is led by its new chief, Motlica Brookman. The Enforcement Division investigates alleged violations of the conflict of interest and financial disclosure laws; it receives between 800 and 1,200 complaints annually alleging such violations. Complaints alleging matters within the Conunission's jJcation requirements and handles an average of 1,700 phone calls and emails from public employees concerning these requirements. The Division collects the summary acknowledgments and online training program 4 .... completion certificates for over 340 elected state and county officials. Possible Improvements to the Law The Commission welcomes the creation of this Task Force to examine the conflict of interest and financial disclosure laws and to detennine whether they need to be updated, strengthened or clarified to ensure that their prohibitions and restrictions are clear to the tens of thousands of state, mtmicipal and county employees who are subject to those laws. Educating public employees about how the conflict of interest and financial disclosure laws apply to them has been a critical part of the Commission's mission since the agency's creation, and we welcome the opporttmity to suggest improvements that will assist us in carrying out that mission. Much ofthe Commission's work is required by statute to be confidential. Requests for advice are required to be kept confidential, understandably, since public employees are more likely to seek advice about how to comply with the law if they know that their inquiry will remain confidential. Enforcement investigations are also required to be kept confidentiai1Jnless and until an adjudicatory proceeding is counnenced, and !Ius again makes sense, given the potential impact that allegations of violation ofthe law can have upon a ·public employee. However, the result of these req11irements of confidentiality is that mtJch of the Commission's advice, and the educatioimlletters it sends, are not accessible to the public. In the Commission's view, the most important single improvement that this Task Force could recommend to promote public understanding of the law would be to give the Commission full regulatory authority: that is, the authority to issue regulations interpreting the conflict of interest law. At present, the Commission's regulatory authority is limited to creating exemptions from the conflict of interest law. Full regulatory authority would enable the Commission to 5 engage in a public rule-making process to codify existing precedent. Not only would the public be able to participate in that process, the end result would be a set of regulations that would be far more accessible to the public than the current body of Commission precedent- much of 1vhich is subject to confidentiality requirements, as noted above. The 2009 ethics reform act directed the Commission to create exemptions in the area of gifts, and the Commission responded with the regulations set forth in 930 CMR 5.00, which explain the goveming principles in the area of gifts to public employees, and create a variety of exemptions from those requirements. Full regul.atory authority would enable the Commission to propose mles codifying its numerous confidential precedents through a public process, during which the Conunission would solicit broad public comment, and incorporate those comments in the final product. The end result would be a significant improvement in the accessibility ofthe law in this area. Commission staff have been working to prepare a list of possible improvements to the conflict of interest and financial disclosures laws in addition to fhll regulatory authority. Some potential amendments have been disclbiUll A. Dortcl;..Oit law. Any municipal employees or garniQB licensee representatives appointed to serve on these committees would not be compensated for such service, and, tlter<~fore, would be "special state employees" as a result of their committee membership, i.e., the conflict law would apply less restrictively to them than it would to "stale employees" in ceria in respects. It is our underst1111ding that with respect to municipal employees serving as committee members, your main concern Is that such municipal employees would be at risk of violating Section 4 of the conflict law lfthelr municipal employee duties included participating in gaming· related matters. Section 4 prohibits a special state employee from receiving compensation from, or acting as agent or attorney for, someone other than the state (Including a municipality), in connection with a particular matter, if he participated as a special state employee in the matter or if he has, or in the past year has had, official responsibility for the matter as a special state Phone: 617 ·371·9500 or 888-485-4766 www.mass.gov/elhics employee. You note that any municipal employee who potentially would be appointed to a gaming advisory CQmmittee most likely would have gaming-related duties in their municipal roles due to the fact that municipalities have a very llmited number of employees with this expertise, and those individuals would be the obvious choice of the municipalities to serve on the gaming advisory CQmmittees. Although the gaming statute does not explicitly require the appointment of municipal employeea to any oftheae committees, you expressed your beliefthat the Legislature intended or expected that municipal employees would be appointed to serv(l on theae committees because those individuals are uniquely qualified to advise the Gaming Commission on the potential effects of gaming policies on the municiplllities that employ them and would provide the most valuable input. · With that in mind, we discussed whether a legislative solution would be appropriate to address this Issue. Assuming the Legislature agt"ees that It was (or is) their intent that municipal employees be able to serve and fully participate as members of the various gaming advisory commlttm, the Ethics Commission would not oppose legislation that would allow municipal employees to be paid by their municipalities for work relating to gaming and gaming mitigation matters whlle those employm lllso served as members of any oftbe gaming advisory . CQmmittees. To the extent that this is consistent with the legislative intent, we think this Is a viable solution because even though the municipal employees would be able to work on gaming issues in their municipal positions and represent the interests of entitles other than the state, they would still be repreaenting public interests, i.e., the Interests of their munlclpnHUes. As we discussed, we think the best way to accomplish the above would be to amend the Gaming Commission's enabling act by adding the following language to section 68 ofG.L. c. 231{: A municipal employee serving as a member of an advisory committee or subcommittee created by this section shall not violate section four of chapter two hundred sixty-eight A by expressing the views of his employing municipality or regional planning agency during committee or subcommittee meetings or by recaivinghis \!sua! compensation as a municipal employee or by performing the usual duties of his municipal employment, Including acting as agent or Pl!omey for the munloipality or regional planning agenc.y, in relation to particular matters in which he participated or which are, or In the prior year have been, a subject ofhls official responsibility as a member of the advisory committee or subcommittee or which arc pending before the advisory commit!~ or subcommittee. Thank you for bringing these issues to our attention. If we can provide additional assistanca, or if you would like to discuss this further, please let me know. Sincerely, Executive Director 2 2017 Community Mitigation Fund Frequently Asked Questions Question: Can communities submit a joint application for a transportation planning grant? Response: There is no provision in the 2017 Community Mitigation Fund Guidelines ("Guidelines") for joint applications by municipalities for transportation planning grants. Howeve"' each community should feel free to Include in its narrative how its application could work with one or more applications from a neighboring community. The Commission has encouraged communities to work regionally. Indee0 we required Regional Planning Agency notification ofplanning proposals to encourage communities to work together. The Guidelines state: "[T]he Commission will make available funding for certain transportation planning activities for all communities eligible to receive funding from the Community Mitigation Fund in Regions A & B and for the Category 2 facility, including each Category 1 and Category 2 host community and each designated surrounding community, each community which entered Into a nearby community agreement with a licensee, and any community that petitioned to be a surrounding community to a gaming licensee, each community that is geographically adjacent to a host community." Underlining added "No application for a transportation planning grant shall exceed $150,000 .... " "[T]he Commission will evaluate requests for planning funds (including both the use of Reserve Planning Funds and Transportation Planning Grant Funds) after taking into consideration Input the applicant has received from the local Regional Planning Agency ("RPA") or any such Interested parties. Although there is no prerequisite for using RPA's for planning projects, consultation with RPA's is required to enable the Commission to better understand how planning funds are being used efficiently across the region of the facility. Please provide details about the applicant's consultation with the RPA or any such interested parties .... " " ... Factors used by the commission to evaluate transportation planning grant applications may Include but not be limited to: Any demonstration of regional benefits from a mitigation award;" Please note that all final decisions regarding Community Mitigation Fund grants and interpretations of its Guidelines are made by the Commission. APPENDIX TASK FORCE ON INTEGRITY IN STATE AND LOCAL GOVERNMENT Meeting 2 - February 1, 2017- Outline of Testimony of David A. Wilson, Acting Executive Director, State Ethics Commission Subject Gifts - anything of value give11 without equivalent market value being given in return. 930 CMR 5.04: Definitions. (e.g., free or reduced conference expenses and event attendance). Goveming Law General L'lws c. 268A, sections 2, 3, 23(b)(2)(i), and G.L. c. 268B, section 6, and Commission Regulations 930 CMR 5.00. Introduction · I have been invited to provide you with a brief ove1view of the laws and regulations under the Commission's jurisdiction dealing with gifts to public employees. Ove1view of Gift Laws - the Statutes Gifts to public employees are subject to restrictions under both the conflict of interest law (G.L. c. 268A) and the financial disclosure law (c. 268B). The conflict of interest law gift prohibitions of c. 268A, sections 2 and 3, although enacted in 1962, are modern versions of fairly ancient prohibitions. The prohibitions of c. 268A, section 23(b)(2)(i) and of c. 268B,·section 6 are much more recent in origin. G.L. c. 268A, Section 2. Corrupt Gifts Section 2 prohibits "corrupt gifts." A public employee violates section 2 when he or she "directly or indirectly, corruptly asks, demands, exacts, solicits, seeks, accepts, receives or agrees to receive anything of value for himself or for any other person or entity, in return for (I) being influenced in his performance of any official act or any act within his official responsibility, or (2) being influenced to commit or aid in committing, or to collude in, or allow any frmid, or make opportunity for the commission of any fraud, on the commonwealth or on a state, county or municipal agency, or (3) being induced to do or omit to do any acts in violation of his official duty." (The provider of the "corrupt gift" also violates section2.) '· In short, section 2 prohibits bribes. Bribes involve a corrupt bargain or quid pro quo relating to official acts. Any amount ofvaluc received is a bribe if corruptly received. Public employees cannot receive them and no one may give them. This has been the case in Massachusetts since early colonial times. Section 2 has not changed since it was enacted in 1962, except that its penalties have increased. Criminal violations of section 2 are punishable by fines of up to $100,000 and 10 years imprisonment. The Commission may impose a civil penalty of up to $25,000 for scction2 violations. The Commission is not empowered to adopt regulatory exemptions to section 2. Example: You are seeking the Board of Selectmen's approval for a beer and wine license for your new res·taurant. A selectman asks for $10,000 to vote in favor. You agree to pay. This is a corrupt gift or bribe. You and the selectmen have violated section2. G.L. c. 268A, Section3. Gifts of Substantial Value Connected to Official Acts Section 3 prohibits gifts of substantial value connected to official acts. A public employee violates section 3 when he or she "knowingly" "otherwise than as provided by law for the proper discharge of official duty, directly or indirectly, asks, demands, exacts, solicits, seeks, accepts, receives or agrees to receive anything of substantial value: (i) for himself for or because of any official act or act within his official responsibility performed or to be pe1formed by him; or (ii) to influence, or attempt to influence, him in au official act taken." (The provider of the gift also violates section 3.) In short, section 3 prohibits gifts (e.g., gratuities and tips) of substantial value to public employees that are connected to the public employees' official acts (whether for or because of or to influence those official acts). Substantial value is $50 or more. The giving and receipt of gifts and gratuities in connection with official acts by public employees has been prohibited in Massachusetts since colonial times. Example: You are seeking the Board of Selectmen's approval for a beer and wine license for your restaurant. By a narrow vote the selectmen approve your license. In gratih1de, you treat the selectmen who voted in favor of your application to dinner at your pricey new restaurant (value in excess of $50 per diner). The dinners are each gifts of substantial given because of official acts performed (i.e., approval of your license). You and the selectmen have violated section 3. (Section 3 would also be violated if, the night before the vote, you treated the selectmen to dinner with the intention of influencing their vote in your favor by ingratiating yourself with them- but without any corrupt agreement or quid pro quo.) 2 From its enactment in 1962 unti12009, section 3 was unchanged. In 2009, Ethics Reform added: "knowingly" and "to influence, or attempt to influence him in an official act taken," and increased the penalty for a criminal violation to "a fine of not more than $50,000, or by imprisonment ii1 the state prison for not more than 5 years, or in a jail or house of correction for not more than 2 'h years, or both." The Commission may impose a civil penalty of up to $10,000 for civil violations of section 3. In addition, 2009 Ethics Reform added to section 3, "(f) The state ethics commission shall adopt regulations: (i) defining "substantial value,"; provided, however, that "substantial value" shall not be less than $50; (ii) establishing exclusions for ceremonial gifts; (iii) establishing exclusions for gifts given solely because of family or friendship; and (iv) establishing additional exclusions for other situations that do not present a genuine risk of a conflict or the appearance of a conflict of interest." (The regulations which the Commission has adopted pursuant to this section will be discussed below.) . G.L. c. 268A, Section 23(b)(2)(i), Gifts For or Because of Official Position Section 23(b)(2)(i) provides "No current officer or employee of a state, county or municipal agency shall knowingly, or with reason to know: ... solicit or receive anything of substantial value for such officer or employee, which is not otherwise authorized by statute or regulation, for or because of the officer or employee's official position". In short, section 23(b)(2)(i) prohibits a public employee's solicitation or receipt of anything of substantial value given because of the employee's official position unless it is authorized by statute or regulation. The Commission may impose a civil penalty of up to $10,000 for civil violations of section 23(b)(2)(i). Example: A well-known, high-ranking city official regularly lunches at a l1igh-end restaurant in the city which does not charge him for his meals because of his city position. The meals exceed $50 in value. The official has violated section 23(b)(2)(i). Section 23(b)(2)(i) was added to the conflict of interest law in 2009, together with "(f) The state ethics commission shall adopt regulations: (i) defining substantial value; provided, however, that substantial value shall not be less than $50; (ii) establishing exclusions for ceremonial privileges and exemptions; (iii) establishing exclusions for privileges and exemptions given solely because of family or friendship; and (iv) establishing additional exclusions for other situations that do not present a genuine risk of a conflict or the appearance of a conflict of interest. (The regulations which the Commission has adopted pursuant to this section will be discussed below.) 3 G,L, c. 268B, Section 6. Gifts from Lobbyists (Note: section does not apply to all public employees, but only to "public employees" and "public officials" as defined in c. 268B, i.e., elected state officials and those in major policymaking positions) Section 6, of the financial disclosure law, G. L. c. 268B, which was enacted in 1978, provides, after amendment in2009, "No executive or legislative agent shall knowingly and willfully offer or give to any public official or public employee or a member of such person's immediate family, and no public official or public employee or member of such person's immediate family shall knowingly and willfully solicit or accept from any executive or legislative agent. any gift of any kind or nature". In short, section 6 prohibits public officials' or public employees2 (as defined in G. L. c. 268B) and their immediate family 3 (as defined in c. 268B) from seeking or receiving any gift from a legislalive4 or executive agent5 (i.e., lobbyist) (as defined in G.L. c. 3, section39). The Commission may impose a civil penalty of up to $10,000 for civil violations of section 6 of G.L. c. 268B. 111 PubJic officiaP', a person who holds a public office. nPublic office", a position for which one Is nominated at a state primary or chosen at a stale election, excluding the posilions of senator and representalive in congress and !he office of regional district school commillee member elected district-wide. · 2 11 3 "Immediate family", a spouse and any dependent children residing in the reporting person's household. Public employee 11 , a person who holds a major policy making position in a governmental body; provided, however, that a person who receives no compensation other than reimbursements for expenses, or any person serving on a governmental body that lms no authority to expend public funds other than to approve reimbursements for expenses shall not he considered a public employee for the purposes of this chapter; provided, further, that the members of the board of bar examiners shall not be considered public employees for the purposes of this chapter. 4 11 Legislative agent 1\ a person who for compensation or reward engages in legislative lobbying, wltich includes at leastllobbying communicaHon with a government employee made by said person. The term 11legislative agent 11 shall include a person who, as part of his regular and usual business or professional activities and not simply incidental thereto, engages in legislative lobbying, whether or not any compensation in addition to the salary for such activities is received for such services. For purposes of this definition a person shall be presumed to be engaged legislative lobbying that is simply incidental to his regular and usual business or professional activities if he: (i) engages in legislative lobbying for not more than 25 hours during any reporting period; and (ii) receives less than $2,500 during any reporting peiiod for legislative lobbying. 5 "Executive agcne', a person who for compensation or reward engages in executive lobbying, which includes at Icast1lobbying communication with a government employee made by said person. Tho term 11cxccutivo agcnt 11 shall include a person who, as part of his regular and usual business or professional activities and not simply incidental thereto, engages in executive lobbying, whether or not any compensation in addition to the salriry for such activities is received for such services. For the pnrposc.• of this definition a person shall be presumed Ia be engaged in executive lobbying that is simply incidental to his regular and usual business or professional activities if he: (i) engages in execnlive lobbying for not more than 25 hours during any reporting period; and (ii) receives less than $2,500 during any reporting period for executive lobbying. 4 Example: A legislator mtd a legislative agent discuss over lunch the merits a pending bill which the agent's client wishes to pass and the legislative agent picks up the check, which is less than $50. Both violate section 6. Section 6 further provides "provided, however, that the state ethics commission shall promulgate regulations: (i) establisl1ing exclusions for ceremonial gifts; (ii) establishing exclusions for gifts given solely because of family or friendship; and (iii) establishing additional exclusions for other situations that do not present a genuine risk of a conflict or the appearance of a conflict of interest." (The regulations which the Commission has adopted pursuant to this section will be discussed below.) Overview of Gift Laws - Regulations Gift Regulations - 930 CMR 5.00 et sq. Pursuant to the authority and direction of G. L. c. 268A, sections 3(f) and 23(!), and c. 268B, section6, the Commission has since 2009 adopted regulations in 930 CMR5.01et seq.: (i) defining "substantial value," (ii) establishing exclusions for ceremonial gifts; (iii) establishing exclusions for gifts given solely because of family or friendship; and (iv) establishing additional exclusions for other situations that do not present a genuine risk of a conflict or the appearance of a conflict of interest." NOTE: None of these exclusions allow conduct prohibited by section 2, the "corrupt gift" or bribery section of the conflict of interest law. 1. "Substantial value" is defined in section5.05 as "$50 or more" based on the gift's "fair market value at the time of the gift, cost or face value, whichever is greater." This section also explains how "substantial value" is determined. See also, section5.07: Gifts Worth ·Less Than $50 (except those from a lobbvist) Are Not Prohibited But a Disclosure May be Required. 2. "Ceremonial gift~," see 930 CMR 5.08(9): Ceremonial Gifts and Privileges. 3. "Solely Family or Friendship gifts," see 930 CMR 5.06: No violation and No Exemption Needed: Gifts Unrelated to Official Action, Position or Pedormance of Duties. But see special rule for lobbyist gifts at 930 CMR 5.09. 5 4. "Situations that do not present a genuine risk of conflict or an appearance of conflict," see 930 CMR 5.08: Gifts Worth $50 or More and Related to Official Action or Position: Exemptions. This section creates fifteen (15) exemptions to the prohibitions against gifts of substantial value related to official actions or positions: (i) Travel Expenses (930 CMR 5.08(2) This regulation permits public employees to accept travel expenses of substantial value where their doing so serves a legitimate public purpose outweighing any special non-work related benefit to the public employee or to the provider of the travel expenses. The regulation broadly defines "legitimate public purpose" as, "intended to promote the interests of the Commonwealth, a county, or a municipality." (a) Paid by Domestic Public Agency A public employee may accept payment, waiver or reimbursement of travel expenses of substantial value provided by a domestic public agency on the state, county municipal or federal level for any purpose in furtherance of the employing agency's mission and in accordance with its procedures. No disclosure is required. (b) Paid by Non-Public or Foreign Entity or Federally Recognized Tribe A public employee may accept payment, waiver or reimbursement of travel expenses from a non-public or foreign entity or federally recognized tribe if a prior written determination/disclosure is made that acceptance will serve a legitimate public purpose outweighing any special non-work-related benefit to the employee or to the person providing the reimbursement, waive or payment. Non-elected public employees must obtain the determination of their appointing authority. Elected officials make their own determination. (c) In-state Travel for Educational Purposes Unless the giver is a lobbyist, a public employee may accept reimbursement, waiver or payment of travel expenses of su~stantial value at an in-state educational program provided that the employee has a good faith belief that his or her attendance will serve a legitimate public purpose outweighing any special non-work related benefit to the employee or the person providing the 6 reimbursement, waiver or payment. Disclosure is not required unless a matter involving the giver is before the public employee within six months before or after the gift. (ii) Incidental Hospitality That Serves a Public Purpose (930 CMR 5.08(3)) Elected public employees and their staff may accept waiver, payment or reimbursement of their expenses to attend weekday informational programs during regular business hours at which incidental hospitality is provided and where their attendance serves a legitimate public purpose. No disclosure is required for daytime events. For aU other events: a written determination/disclosure is required (by the elected official or appointing authority) that the public employee's attendance at the event serves a legitimate public purpose that outweighs any non-work-related benefit to the employee or to the person providing the waiver payment of expenses. (iii) Legitimate Speaking Engagements (930 CMR 5.08(4)) A public employee invited to participate in a legitimate speaking engagement in whole or in part because of his official position may accept waiver or reimbursement of his travel expenses required for his participation. Honoraria may be accepted only under certain conditions. No disclosure required. (iv) Honorary Degrees (930 CMR 5.08(5)) A public employee may accept an honorary degree from a public or private institution given in whole or in part for his official duties or position, provided no monetary award of substantial value is included. May accept travel expenses reimbursement for self and guests to attend ceremony. Disclosure is not reqnired unless a matter involving the giver is before the public employee within six months before or after the gift. (v) Awards for Meritorious Public Service or Lifetime Achievement (930 CMR 5.08(6)) A public employee may accept a lifetime achievement or meritorious public service award from a program that makes the award on a regular basis and may accept reimbursement of travel expenses for himself and his guests in order to attend the award ceremony. The employee may accept a monetary award if the employee has not had and does not expect to have official dealings with the awarding entity or any sponsor of the award. Disclosure is not required unless a 7 matter involving the giver comes before the public employee within six months after the gift. (vi) Public Employee Discounts and Waived Membership Fees (930 CMR 5.08(7)) Public employees may accept discounts of substantial value available to all public employees generally or all public employees from a city, town, county or state or geographic area and may accept reduced or waived membership fees in a professional organization offered to all similarly situated public employees in that profession. Teacher discounts for school supplies okay. No disclosure required. (vii) Gifts Among Public Employees (930 CMR 5.08(8)) Public employees may generally give and accept personal gifts from their colleagues. They may also give gifts to their subordinates. Gifts from subordinates to their superiors are strictly limited. No disclosure required. (viii) Ceremonial Gifts and Privileges (930 CMR 5.08(9)) A public employee performing a ceremonial function at an event may accept free admission to the event (e.g., making opening remarks, throwing out the first pitch, cutting a ribbon, or turning over the first shovel of dirt). The employee may also accept an unsolicited gift customary to the occasion (e.g. a baseball hat, ball or an engraved shovel). No disclosure required. (ix) Retirement Gifts (930 CMR 5.08(10)) A retired or retiring public employee may accept gifts of substantial value "appropriate to the occasion" from members of the public (not lobbyists) reflecting general good will and not as a reward for any specific past action. No disclosure required. (x) Unsolicited Perishable Items (930 CMR 5.08(11)) If a public employee receives unsolicited perishable or impractical to return items such as flowers, fruit baskets or candy, the item may be put out for the general public or given to charity. No disclosure required. (xi) Admission to Political Campaign Events for Elected Officials and their Staff Members (930 CMR5.08(12)) · Elected public officials and their staff may accept free admission to political campaign events. No disclosure required. 8 (xii) Gifts Received and Held Temporarily as Part of Charitable Activity (930 CMR 5.08(13)) A public employee participating in her agency's charitable activity may receive (except from a lobbyist) and temporarily hold donations of substantial value pending their distribution. No disclosure required . . (xiii) Class Gifts to Teachers (930 CMR 5.08(14)) Public school teachers may accept a class gift or gifts totaling $150 per year. No disclosure required for class gifts. Disclosure required for individual gifts. (xiv) Passes to School Events (930 CMR 5.08(15)) Public school employees and officials may accept from the district passes of substantial value for the district's sports or entertainment events. No disclosure required. (xv) Drawings (930 CMR 5.08(16)) A public employee may accept a prize from a random drawing, including a drawing at an event to which the employee's agency paid her admission. No disclosure required. 5.09: Gifts from Lobbyists Not Related to Official Action or Position (2) Exemption. Lobbyists, as defined in 930 CMR 5.04, are not prohibited from giving, and Public officials and public employees, as defined in M.G.L. c. 268B, § 1, are llOt prohibited from accepting, the following from a lobbyist or the lobbyist's spouse, if the gift is purchased with the giver's personal funds and not with funds belonging to the giver's employer, client, or institution, the public employee reasonably believes that only the giver's personal funds were used, and the gift is given and received solely because of family or established personal friendship: (a) meals in the donor's home; and (b) gifts on occasions of religious significance including, for example, confirmations and bar mitzvahs; and occasions of personal significance including weddings, engagements, the birth or adoption of a child, and the illness or death of a relative. A birthday is not an "occasion of personal significance" for purposes of this exemption. 9 Example: A childhood friend of a State Representative is a lobbyist. Over the years, the two have exchanged gifts on the occasion of significant life events such as weddings and the births of their children. The lobbyist \JSCS her personal funds to purchase two place settings, worth $300, as a wedding present for the Representative's daughter. The gift is not prohibited. (c) A public employee may accept any gift or inheritance from a lobbyist who is a member of the public employee's immediate family, other relative, intended spouse, or member of the public employee's household, if the gift is purchased with the giver's personal funds and not with funds belonging to the giver's employer, client, or institution, and is given and received solely because of the family or comparable relationship. 5.10: Political Campaign Contributions: Exemption from Disclosure A contribution made and reported in accordance with M.G.L. c. 55 is not required to be the subject of a separate, additional disclosure pursuant to M.G.L. c. 268A, § 23(b)(3). A person acting within this exemption remains subject to the other prohibitions of M.G.L. c. 268A, including, but not limited to,§§ 3 and 23(b)(2). 10 APPENDIX t• .-~-~ -~ '_/ Peace HC 1on :_ . MASSACHUSETT~ TESTIMONY BEFORE THE TASK FORCE ON INTEGRITY IN STATE AND LOCAL GOVERNMENT STATE HOUSE, FEBRUARY 1; 2017 .. Good morning. My name is Eva Moseley, and I'm testifying on behalf of Massachusetts Peace Action. My testimony concerns a loophole in the Conflict of Interest Law and Ethics· Commission regulations that allows legislators to receive very substantial gifts from lobbying organizations. The problem came to our attention in the context of a particular situation involving gifts given by the Jewish Community Relations Council of · Greater Boston (JCRC). As you may know, JCRC is a lobbying organization, called a '.'client'-' under the Massachusetts Lobbying Law. JCRC retains individuals tb lobby on its behalf before the state legislature, and as such, is required to register with the Secretary of the··. Commonwealth. One of JCRC's announced objectives during 2016 was to secu_re passage of bir:tding · legislation "to reject the BDS campaign." ("BDS" stands for boycott, divestment and sanctions, aimed at pressuring Israel to change its "policies towards the Palest.inians). In July 2016, an anti-BDS amendment, reported in the Jewish Advocate as "written by the JCRC," was introduced and withdrawn the same day. The following day, JCRC issued a statement vowing to bring up similar legislation in the next legislative session, · expressing confidence that it would pass. So in July 2016 every Massachusetts legislator was on notice that he or she would soon be required to ~onsider legislation of great Interest toJCRC .. The month before the next legislative session:... the current one ~- began, JCRC took 12 Massachusetts representatives on· a free nine-day study trip to Israel. The travelers returned on December i2,2016. On December 20, the Jewish Advocate reported that JCRC was "finalizing the language" of a new bill to combat BDS. It was indeed filed on January 20, 2017,- as SD.922 and HD.T79, and JCRC launched an intense f 'Y1 ®masspeaceaotlon . /masspee.ceaclion :!nassn'eic~a~tidn.~r4 ' - - ' .:. ' ' ~c: lobbying campaign for it. This is a classic conflict of Interest. No lobbying organization, including JCRC, should be allowed to give a gift of substantial value to the same legislators who have been, are, or will soon be acting on specific legislation of great interest to that organization. Similarly, legl~lators should not be allowed to accept gifts in such circumstances .. Several factors make the conflict especially serious in this case: the value of the gift (over $4,000 per legislator), the closeness-in timing between the gift and future legislative action, and thatJCRC is not only lobbyist but also drafter of the bill. A similar conflict of Interest had occurred in 2015. Just three weeks after the Massachusetts Senate adopted an anti-BDS resolution written by JCRC, JCRC announced that It was taking one-quarter of the Senate on a free ten-day study trip to Israel. The Massachusetts Conflict of Interest Law and Ethics Commission regulations prohibit gifts to legislators of $50 or more. The. regulations contain an exception for travel, provided a legislator files a public disclosure stating that the trav.el serves a "legitimate public purpose," and that this purpose outweighs any conflict of lnteres.t. [930 CMR 5.08(2)(d)2]. We recognize that travel can serve a public purpose. But when that travel is paid for by a regis"tered lobbying organization with specific business before the legislature, the conflict of interest outweighs any public purpose that might be· served. Such conflicts should not be allowed to continue. · Moreover, the disclosure form does not as~ whether the organization paying for travel is a registered lobbying organization with specific business before the legislature. In the absence of such relevant information, It is hard to see how the legislator has any basis for weighing ethical Implications. In summary, we urge the Task Force to investigate changes in law or regulation to end the practice of registered lobbying organizations paying for legislators' travel. Since most legislative travel is not pa·id for by lobbying organizations, this change would not affect most such travel. We would gladly work with the Task Force to suggest concrete changes for this purpose: fhank you. t'i ,--·t - ;.: ___.-· e.A1U~se(~~:"s~!:~mber ofMassachusetts Peace Action esmoseley@mindsp\:in?com : . Susan T. Nicholson, Esq., susantnicholson@comcast.net APPENDIX Downey, Justin (HOU) From: Sent: To: Subject: Susan Mclucas Wednesday, February 01, 2017 2:18PM Downey, Justin (HOU) junkets to Israel I was at the hearing this morning about the ethics of gifts to legislators and heard about the exemption for travel expenses and how legislators are the ones to decide if a trip has a legitimate public interest. I am at all not in agreement with this system. All these legislators, who get all-expense-paid trips to Israel and then vote on legislation designed to shield Israel from the reasonable anger of people trying to help the Palestinians have some rights, should not be allowed to e1~oy those trips and become influenced by the Israeli point of view. I heard a lot of hand wringing about whether legislators had to declare every last cup of coffee (It was agreed that they didn't) but no one seemed too concerned about all-expenses-paid trips to Israel. It's so clearly unethical. I hope you all can see this. Susan McLucas Somerville, MA (617) 776-6524 1 APPENDIX TASK FORCE ON INTEGRITY IN STATE AND LOCAL GOVERNMENT Meeting 3 -February 15, 2017- Testimony of David A. Wilson, Acting Executive Director, State Ethics Commission Good morning. On behalf of the State Ethics Commission, thank you for once again affording us the oppottunity to speak with you about the conflict of interest law. I understand that you plan to focus today on three areas in which the conflict of interest law imposes restrictions on current and former public employees: (1) public employees acting as agents in government matters and receiving private compensation; (2) former public employees and their business partners; and (3) public employees who have financial interests in govemment contracts. These three topics, and especially the first and third, are among the least intuitive and most confusing parts of the conflict of interest law. They generate many requests for advice fi-om our office. I would like to address each of today' s three topics in two ways. First, I would like to give a very brief explanation of the restrictions in each of the three areas. Second, since the focus of this Task Force is on identifying areas where the law can be improved, I would like to give you an example of uncertainty or confusion in each area, and some thoughts on how the uncertainty or confusion might be addressed. I. Public Employees Acting as Agents in Government Matters and Receiving Private Compensation - G.L. c. 268A. Sections 4, 11 and 17 ' . A. Explanatwn The basic principle behind the sections of the conflict of interest law dealing with public employees acting as private agents in government matters and receiving private compensation is to prevent divided loyalties. In other words, a public employee is supposed to be entirely loyal to his or her public employer, and is not supposed to act on behalf of someone else in a matter where the public employer has an interest. In short, generally when the government is involved in a matter, a government employee must be on the government's side. The sections of the 1 conflict of interest law that impose this restriction are Section 4, which applies to state employees; Section I I, which applies to county employees; and Section I 7, which applies to municipal employees. (These sections apply less restrictively to "special" state, county and municipal employees, however, in the interest of brevity those lesser restrictions will not be discussed here.) Sections 4, 1 I and 17 of the conflict of interest law prohibit divided loyalties in two ways. First, a public employee mav not be paid by someone other than his or her public employer to work on any particular matter in which the public employer is a party, or has a direct and substantial interest (otherwise than as provided by law for the proper discharge of his or her official duties). For example: • A government attorney who defends a public agency in litigation cannot receive a bonus for a successful result from a private party that was a codefendant with the public agency in the litigation. • A municipal inspector cannot be paid by a restaurant for having found code violations at a competing restaurant. In addition to the restrictions on receiving private compensation, sections 4, 1 I and I 7 also prevent divided loyalties in a second way: by prohibiting public employees from acting as agent or attorney for anyone other than their public employer in any particular matter in which the public employer is a patty, or has a direct and substantial interest (othetwise than in the proper discharge of his or her official duties). "Acting as agent or attorney" means acting on behalf of someone. This means that, for example, a state employee generally may not represent a private party in dealings with the state, whether or not the employee is paid by the private patty to do so. A municipal employee generally cannot speak on behalf of a private party with an agency or employee of his employing municipality about a particular matter involving the municipality, even if he is willing to do so without private payment. For example: • A Selectman cannot act as the spokesman for his neighborhood association in _ making a presentation to the town Conservation Commission. 2 ( • An employee of the state Department of Revenue cannot submit an application for grant funding to the state Department of Elementary and Secondary Education on behalf of a nonprofit on whose board she serves. B. Area of Uncertainty The restrictions I have just described are not obvious in every situation. Also, they capture some conduct that most people do not think involves an actual conflict of interest. For these reasons, over the years, these three sections of the law have been amended many times to add exemptions (Section 4- 6; Section 11 - 5; Section 17- 5). The Commission has also created a number of exemptions from these sections of the law (930 CMR 6.00 et seq.- 12). Still, areas of uncertainty and confusion remain. One such area is Section 4's treatment of state legislators. In general, Section 4 prohibits state employees from communicating with state agencies on behalf of other persons or entities. The section, however, applies differently to state legislators (and to governor's councilors). For state legislators, communicating with state agencies on behalf of constituents is an important part of their job. ·For example, a state legislator may need to communicate with a state agency about a constituent who has been unable to obtain a hearing on a request for benefits. Or, a state legislator may wish to advocate in favor of a state agency's making a decision that will benefit his or her district. The law recognizes that these actions by state legislators are appropriate by exempting them from the general Section 4 restrictions that apply to other state employees. Instead, state legislators are prohibited by Section 4 from appearing for compensation (other than their legislative salaries) before state agencies, with certain exceptions. One of the exceptions, and an area of uncertainty, is in "quasijudicial" proceedings. A state legislator is permitted under Section 4 to appear for non-legislative compensation before a state agency in a "quasi-judicial" proceeding. Section 4 gives a definition of what proceedings are "quasi-judicial," but it does not specify which agencies' proceedings are "quasijudicial." Therefore, a state legislator who wants to know how that part of Section 4 applies has to ask the Ethics Commission, and we in tum have to look at the procedures of the particular agency and apply the statutory definition. The Commission has a body of internal decisions as to whether particular proceedings are quasi-judicial or not, but it can take some work to find it on 3 our website. The Commission does not currently have the authority to eliminate the uncertainty in this area by writing a regulation that would clarifY when state legislators can represent clients before state agencies; full regulatory authority would enable the Commission to do that. 2. Former Public Employees and Business Partners - G.L. c. 268A, Sections 5, 12 and 18 A. Explanation Turning to the nexttopic on the Task Force's agenda for today, Sections 5, 12, and 18 of the conflict of interest law place restrictions on what former public employees may do for their new employers. In general, a former public employee cannot work for a new employer on any particular matter that he personally worked on at his public job. In addition, after a public employee leaves his public job, there is a one-year cooling off peiiod during which he cannot communicate with his former public employer about any particular matter that was under his official responsibility in his former public job. The sections of the conflict of interest law that impose these restrictions are Section 5 for state employees, Section 12for county employees, and Section 18 for municipal employees. Moreover, some of these restrictions apply to the partners offmmer public employees. A partner of a former public employee may not, for one year after her partner's departure from public employment, act as agent or attorney for anyone in any particular matter on which the partner worked personally while in public employment. (These sections also restrict acts of private agencies by pattners of current public employees, which will not be discussed here in the interest of brevity.) B. Area of Uncertainty The Commission is frequently asked for advice about how the restrictions on former public employees apply in particular situations involving what may or may not be partnership an·angements. For example, are these restrictions applicable if a finn is organized as an LLC rather than a traditional partnership? What if people are refened to as "partners" in promotional materials or on a firm's website, even if they do not have an ownership interest in the firm? The Commission has precedent on these questions, and in many cases it is available on our website, but fmding the answer requires reading these precedents or asking a Commission 4 ( attorney for an opinion. This is another area where full regulatory authority would allow the Commission to codifY existing precedent. The public notice and comment requirements for mlemaking would ensure that existing precedent could be re-examined in light of any criticisms that were raised. 3. Public Employees Who Have Financial Interests in Govermnent Contracts- G. L. c. 268A, Sections 7, 14 and 20 A. Explanation Today's final topic is the sections of the law that impose restrictions on government employees having financial interests in government contracts. Section 7 of the law provides that . a state employee may not have a fmancial interest in a state contract, unless an exemption applies. Sections 14 and 20 of the law apply these restrictions respectively to county and municipal employees. (These sections apply less restrictively to "special" state, county and municipal employees, however, in the interest of brevity those lesser restrictions will not be discussed here.) These sections of the law sweep broadly. For example, they apply in every situation in which someone has multiple positions with the same public employer, such as when a state employee wants to take a.second paid position with the state, or even a second paid position with a private employer that is paid for with state funds. These sections also apply in situations in which a public employee wants to enter into a contract with his or her public employer. For example, these restrictions apply if a police officer who has a private businyss selling unifonns wants to sell to his own town. They also apply if a municipal employee wants to sell real estate to her own town, or purchase surplus propetty from her own town. There is general agreement that Sections 7, 14 and 20 are the least intuitive, and most confusing, sections of the conflict of interest law. Over time these prohibitions have been found to apply to prohibit some types of conduct that not only does not strike most people as wrong, but may even be desirable. For that reason, many exemptions from these sections of the law have been created both by the Legislature (Section 7- 10; Section 14- 4; Section 20 -14) and by the Commission (930 CMR 6.00 et seq.- 13). Just to list all the existing exemptions to these three sections would be a lengthy task and will not be done here. 5 I . The Commission's limited regulatory authority means that it can create exemptions as it becomes aware of situations where these restrictions should not apply, but it cannot simplify or explain the law. B. Area of Uncertainty One area of siguificant uncertainty and confusion that affects numerous public employees is the application of Sections 7, 14 and 20 to the employees of regional public entities. The conflict of interest law dates back to 1962, before most regional entities existed. As currently drafted, the law has specific provisions that apply to state, county, and municipal entities, but no provisions that apply to regional entities. Examples of regional entities are regional school districts that encompass numerous municipal school districts, educational collaboratives, or regional public health authorities. Under court precedent, a public agency that is made up of multiple municipalities that have come together for some purpose, such as a regional school district, must be considered a regional municipal entity. The employees of such an entity must be considered to be the employees of every member municipality. Educational collaboratives not infrequently may have dozens of member municipalities that have come together, for instance, to supply specialized educational services on a regional basis. For purposes of the conflict of interest law, each employee of such a collaborative is considered an employee of every participating municipality. It is difficult to apply the restriction on having a financial interest in a municipal contract to employees of regional municipal entities. Here's how it works, under the law as it currently stands: A person who teaches for an educational collaborative is an employee of each of the member municipalities. For that reason, she is prohibited from having a financial interest in a contract with any of those member municipalities. This means that she cannot be hired by any of those member municipalities to provide services during the summer, or after regular school hours. Two specific types of situations of which we are aware where this is problematic are as follows: 6 (1) Member school district wishes to hire educational collaborative teacher to provide services to a particular student during the summer, but cannot due to the prohibition against having a financial interest in a contract with the same municipality. (2) Member school district wishes to hire educational collaborative teacher to provide professional development, but cannot for the same reason. The main existing exemption potentially available in these types of situations requires the permission of the employing municipality for the employee to have multiple municipal jobs. This mechanism can be made to work when dealing with a single municipality, and a municipal employee who wants a second job with the same town. It is unworkable when it requires a teacher to get such permission from 20 different towns that are members of the regional district or collaborative. A number of times over the past few years the Commission has attempted to come up with solutions to the problem just described, but has been unable to do so because of its limited regulatory authority. Extending full regulatory authority to the Commission would enable it to come up with a sensible, workable set of rules for regional entities. ( 7 APPENDIX HOUSE OF REPRESENTATIVES STATE HOUSE~ BOSTON 02133·1054 Committees: Housing Community Development and Small Business JAV D. LIVINGSTONE STATE REPRESENTATIVE State Administration and Regulatory Oversight Environment, Natuml Resources and Agriculture 8TH SUFFOLK DISTRICT STATE HOUSE. ROOM 136 IEL (617) 722-2396 Jay.Uvingstone@MAhouse.gov February 23,2017 The Honorable Peter Kocot Chairman, Joint Committee on State Administration and Regulatory Oversight State House, Room 22 Boston, MA 02133 The Honorable Christopher Markey Chairman, House Committee on Ethics State House, Room 527A Boston, MA 02133 Re: Taskforce on Integrity in State and Local Government Dear Chairman Kocot and Markey: Thank you for your work regarding a review of the State's conflict of interest laws. I think it is appropriate to take a comprehensive look at the laws and how the various laws and interpretations of them interrelate. One specific provision thai I think deserves closer examination is M.G.L. 268A, Sec. 4(c)(3) and particularly its definition of a "quasi-judicial proceeding." The current definition provides that a proceeding is quasi-judicial if it is (1) adjudicatory and (2) "the action of the state agency in [sic] appealable to the courts." I understand the Ethics Commission interprets this definition to mean that the particular proceeding needs to be directly appealable. This means if there is a two-step, agency process- even an adversarial one- the first part of the process does not qualify as a quasi-judicial proceeding. In other words, the Ethics Commission interprets this to mean "the action of the state agency at the conclusion of the pruticular proceeding is directly appealable to the comts." The Ethics Commission has used this interpretation to exclude prelirninruy MCAD proceedings from the definition. I think its interpretation and this result are inappropriate. It seems the purpose of the cunent exceptions, which include court proceedings as well adjudicatory agency proceedings, should cover all adjudicatory agency proceedings as long as the final agency decision is appealable to court, which would cover MCAD proceedings. Such an interpretation would fulfill the pUl'pose of the law and create more consistency across agencies with adjudicatory proceeding, whether there is a one-step · or multiple-step process. --.·.-.-.·· Thank you for your consideration. Respectfully, ~~ State Representative gtb Suffolk District .. ·'···.. : APPENDIX TASKFORCE ON INTEGRITY IN STATE AND LOCAL GOVERNMENT Meeting 4- February 28, 2017- Testimony of David A. Wilson, Executive Director, State Ethics Commission Good morning. On behalf of the State Ethics Commission, thank you for once again affording us the opportunity to speak to you about the conflict of interest law. I understand that today you plan to focus on two areas in which the law imposes restrictions on public employees: (1) financial interests of public employees and their relatives or associates; and (2) the standards of conduct. As I did at the last Task Force meeting, I would like to address each of these topics in two ways. First, I will give a very brief explanation of how each restriction works. Second, I will give you an example of uncertainty or confusion in each area, and some thoughts on how the uncertainty or confusion might be addressed. I understand that you also intend to examine the Commission's structure and authority as established by its enabling law, G. L. c. 268B. I addressed those topics in my testimony to the Task Force on January 11, 2017, and will be happy to address questions on those topics further. 1. Financial Interests of Public Employees and their Relatives or Associates- G. L. c. 268A, sections 6, 6A, 13 and 19 A. Explanation !,-:/ The basic principle behind the sections of the conflict of interest law that deal with public employees and their financial interests, and the financial interests of persons and entities who are their relatives or other close associates, is relatively straightforward and intuitive. Public employees are prohibited from participating in their public roles in govemment business in which they have a personal financial interest; and are also prohibited from participating in their 1 public roles in government business in which their immediate family members, and other persons ( and entities with whom they are closely associated, have a financial interest. In other words, the conflict of interest law attempts to ensure that governmental decisions serve the public interest rather than the private interests of governmental decision-makers and their close associates by keeping public employees out of matters in which they might be tempted to make decisions based on personal advantage rather than the public interest. The sections of the conflict of interest law that impose this restriction are Section 6, which applies to state employees; Section 13, which applies to county employees; and Section 19, which applies to municipal employees. These sections are commonly referred to as the "anti-nepotism" sections of the conflict of interest law. The law defines which relationships are so close that a public employee has to stay out of matters involving someone with whom he or she has such a relationship. A public employee has to stay out of matters in which any of the following has a reasonably foreseeable fmancial interest: • The public employee herself • Member of public employee's immediate family: parents, children, siblings, spouse, spouse's parents, children, siblings • Business organization of which public employee director, officer, trustee, or employee • Potential employer The law gives public agencies the ability to grant their employees exemptions from this section of the law, if the agency determines that the public employee's interest, or that of the 2 ~- 1 family member or other associate, is not so substantial that it is likely to affect the integrity of the public employee's services. This mechanism requires that the public employee make a written disclosure about the fmancial interest to the head of his or her agency in advance of participating, and obtain written permission from the agency head. (NOTE: Forms for making these disclosures are available on the Commission's website.) The following are examples of how the law works in this area. • A state employee cannot participate in a hiring process in which his child is a candidate for employment by the state agency. • A selectman cannot participate in making decisions about a municipal contract if his private employer is one of the entities competing to be awarded the municipal contract. Some public employees make decisions that affect large numbers of people, including themselves. For example, state legislators may make decisions about legislation that affects everyone who lives in the Commonwealth. City councilors may make decisions about municipal water systems that affect everyone who lives in their city. The law creates exemptions to allow these kinds of necessary public work to be done. State legislators are allowed to vote on general legislation that affects everyone in the Commonwealth the same way, such as general legislation that changes the tax code. (NOTE: If the general legislation would have a substantial effect on the legislator's financial interests greater than that on the general public, the legislator would need to do a written disclosure to the State Ethics Commission under Section 6A prior to patiicipating in the legislation. A form for making the required disclosure is available on the Commission's website.) Municipal employees are allowed to participate in municipal decisions that involve general policy decisions that affect substantial segments of the population. 3 B. Area of Uncertainty ( As I just mentioned, the prohibition that prohibits municipal employees from participating in patiicular matters in which they have a reasonably foreseeable financial interest does not apply if the patiicular matter involves a determination of "general policy," and the public employee's financial interest, or that of his family member, is shared with a "substantial segment" of the population of the municipality. The conflict of interest law defines some of the terms that it uses, but it does not define the term "general policy" or the term "substantial segment." So, what do these tenns mean? How would a municipal employee who wanted to understand the law figure out whether this exemption applied to him? Over the years, the Commission has had occasion to apply these terms and to give them meaning in the context of particular situations. At one point, the Commission was asked whether a decision by a Board of Selectmen to adopt a "residential factor" which would have the effect of applying a higher annual tax rate to commercial property than to residential property could be considered to be a determination of "general policy." The Commission determined that it would. The Commission also determined that where that classification would affect 10% of the town's population, that amounted to a "substantial segment" of the town's population. The Commission makes its interpretations of the law publicly available in various ways. The decision interpreting the law that I just described is a public opinion that is available on the Commission's website, w1vw.mass.gov/ethics, where anyone can look at it. Almost all the Commission's public decisions, including all that are considered to have precedentia1 weight, are available on our website. There are a few opinions from the Commission's earliest years of existence, 1978-1982, that are not available on the website; we make those available when they are requested, which may happen a couple of times per year (we have to redact identifying 4 information before making some types of Commission opinions publicly available). Someone who wanted to learn about how the Commission interprets the terms "general policy" and "substantial segment" of the population and understand how they applied to him could also call our Legal Division, and receive free, confidential advice about how the law applied to their specific situation. Thus, there are ways that a municipal employee could proceed in order to determine whether a matter in which he wishes to participate is a determination of "general policy" in which a "substantial segment" of the population has a fmancial interest. Full regulatory authority would enable the Commission to craft regulations explaining how the law is interpreted that .would be easier to find and understand than hunting through Commission precedent. 2. "Standards of Conduct"- G. L. c. 268A, section 23 A. Explanation Now I will tum to Section 23 of the conflict of interest law. Section 23 is titled "standards of conduct" and it applies to all state, county, and municipal employees in the Commonwealth, including those with volunteer and part time positions. The standards of conduct for public employees include a number of different provisions, which I will explain in tum. I. Inherently incompatible emplovment Public employees are prohibited, by Section 23(b )(1) of the law, from accepting other employment involving compensation of substantial value, the responsibilities of which are "inherently incompatible" with the responsibilities of their public offices. The Commission has interpreted this restriction to be intended to prevent the impairment of a public employee's 5 independence of judgment in the performance of his official duties that may result from cettain types of ptivate employment. The following are examples of situations where the Conunission has determined that proposed private employment was inherently incompatible with an existing public position: • A municipal police officer may not be hired for private security work in his employing municipality outside of the municipal detail system established by the town, because of the danger that the officer's judgment in the performance of his police duties might be compromised by his duty to his private employer. • A state legislator with a private goverrunent relations consulting business may not advise a private client on how to lobby his legislative colleagues. 2. Misuse of Official Position- Section23(b)(2) One of the single most important sections of the conflict of interest law is Section 23(b )(2) of the law. Any system of govemmental ethics rules must include a prohibition against abuse of power. The Massachusetts conflict of interest law, G.L. c. 268A, deals with this subject in Section 23 (b)(2), which, in broad terms, prohibits the misuse of official position. The Ethics Commission receives numerous complaints alleging misuse of official position each year, and it also receives numerous inquities Ji"om public officials anxious not to misuse their position or even appear to have done so. There is a substantial body of Commission precedent interpreting Section 23(b)(2) in numerous different contexts. Section 23(b)(2) of the law prohibits public employees from asking for or accepting anything of substantial value for themselves because of their public position, unless some statute authorizes them to do so. Ih addition, Section 23(b)(2) prohibits public employees from using their official position to obtain ''unwarranted privileges or exemptions" of substantial value for 6 ( themselves or anyone else, if the unwarranted privileges or exemptions are not properly available to similarly situated individuals. The Commission's most recent public adjudicatory case provides a good example of the kind of conduct forbidden by Section 23(b)(2). A police lieutenant was called to the scene of an incident in which an officer under his command was found intoxicated by the side of a state highway, having been observed driving down it the wrong way. The evidence showed that a civilian found by the police in those circumstances would have been arrested, pursuant to written department policy. The lieutenant did not arrest his subordinate but instead had her driven home. The Commission found that that conduct violated Section 23(b)(2) of the law. 3. Appearance of Conflict of Interest- Section 23(b )(3) Our conflict of interest law seeks to prevent not only actual conflicts of interest but even the appearance of such conflicts. The section of the law that implements this objective is Section 23(b)(3) of the law. Section 23(b)(3) requires public employees to avoid conduct that creates a reasonable impression that any person may improperly influence them, or unduly enjoy their official favor, or that they are likely to act, or fail to act, because of kinship, rank, position, or undue influence of any party or person. A reasonable impression of favoritism or bias may arise, for example, when a public employee acts on matters involving the financial interest of a 'friend or a family member who is not an "immediate" family member. The conflict of interest law allows public employees to act on such matters, even if it creates the appearance of a conflict, if they openly admit all the facts surrounding the appearance of bias prior to any official action. Specifically, Section 23(b)(3) states that if a reasonable person having knowledge of the relevant circumstances would 7 conclude that a public employee could be improperly influenced, the public employee can dispel this impression of favoritism by disclosing all the facts that would lead to such a conclusion. An appointed public employee must make such a disclosure in writing to the person or board who appointed her to her public job. An elected public employee must make such a disclosure in a writing that is filed in a public place, such as a municipal clerk's office or, for state officers, with the Commission. (NOTE: A fonn for use in making a Section 23(b)(3) disclosure is available on the Commission's website.) The following are examples of situations in which such a disclosure would be appropriate: o A municipal Conservation Commission is reviewing an application. The application is supported by a study prepared by a consulting engineer who is also advising a member of the Conservation Connnission on her own home renovation project. The engineer's participation in the process would create a reasonable basis for the impression that the Conservation Commission member would unduly favor the engineer. To dispel this appearance ofbias, the Conservation Commission member should disclose their relationship in writing to her appointing authority prior to acting on the matter. o A longtime friend of a state agency head applies for a job with the agency. If the agency head is involved in the hiring process, it may appear to a reasonable person that he would be biased in favor of his friend. To dispel that appearance, the agency head must file a disclosure of the relationship with his appointing authority. The appointing authority may then determine whether to take any further steps to avoid the appearance of a conflict. 4. False Claims -Section 23(b)(4) 8 Public employees are prohibited from presenting false or fraudulent claims to their employers for any payment or benefit of substantial value by Section 23(b)(4) of the law. An example of the kind of conduct prohibited by this section of the law would be submitting a request to use sick leave to cover time away from a public job, when the time would in fact be spent working on a second job. (NOTE: Section 26 imposes civil penalties on one who with fraudulent intent violates Sections 23(b )(2) or (4), or causes another to violate those sections, or offers or gives privileges or exemptions in violation of Sections 23(b)(2) or (4) with a total value of more than $1,000 in any 12 month period.) 5. Use of Confidential Information- Section 23( c) Section 23 also regulates public employees' use of confidential information that they learn in the context of their public employment. A public employee may not accept employment or engage in any business or professional activity that will require disclosure of confidential information that the employee learned in his public position. The public employee also may not improperly disclose materials or data that are not considered public records, when the employee acquired that information in the course ofhis official duties. Finally, a public employee may not use such confidential information to further his or her own personal interests. B. Area of Uncertainty The restrictions described above, and in particular those dealing with misuse of official position and appearance of a conflict, have resulted in the creation of a significant body of Commission precedent, as the Commission has been asked to determine whether the law was violated in particular circumstances, or to give advice about how to avoid violations of the law. I would like to give an example of a particular kind of situation in which these restrictions apply; 9 what the Commission has done to make accessible its precedents in this area; and what more might be done. Private dealings between official superiors and official subordinates are an area rife with the possibility of conflict of interest issues, and specifically, violations of Section 23(b)(2) and 23(b )(3) of the law. Examples of such situations are the school superintendent who asks the high school shop instructor to build a private deck on the superintendent's home, or the state agency manager who asks her direct reports to contribute to her favorite private charity. Situations in which a public employee uses the power he or she has over someone by virtue of the public employee's official position to ask for something when the target can't really say no very frequently result in complaints to the Commission. Several years ago, to make its precedents in this area more accessible, the Commission directed its staff to prepare an advisory explaining the law in this area. Commission Advisory 14-1: Public Employees' Ptivate Business Relationships And Other Private Dealings With Those Over Whom They Have Official Authority Or With Whom They Have Official Dealings, available on the Commission's website at http://www.mass.gov/ethics/education-and-trainingresources/educational-matetials/advisories/advis01y-14-1.html, is the result. The Advisory explains how the conflict of interest law applies to situation in which a public official wishes to enter into any type of private dealing with persons who are either under the public official's. anthority, or are having dealings with the public official. However, Commission advisories are purely educational in character, and do not have the force oflaw. Full regulatory authority would give the Commission the ability to create definitions of undefined statutory terms and give the Commission the ability to go throngh a pnblic process of developing interpretations of the law. 10 APPENDIX ~ - ~ Commonwealth of Massachusetts STATE ETHICS COMMISSION One Ashburton Place- Room 619 Boston, Massachusetts 02108 Han. Barbara A. Dm1ch-Okara (ret.) Chair David A. Wilson Executive Director To: From: Re: Date: Task Force on Integrity in State and Local Government State Ethics Commission Proposed Legislative and Regulatory Changes March 20, 2017 At the last Task Force meeting on February 28, 2017, the Task Force requested that the Commission provide (I) a list of proposed changes to Chapters 268A and 268B, and (2) a list of proposed regulations that the Commission would adopt if granted full regulatory authority, with an anticipated time frame within which that work could be completed. The Commission discussed these requests at its meeting on March 16, 2017, and voted to authorize the Executive Dit:ector to provide the Task Force with the materials that follow. A list of potential changes to Chapters 268A and 268B that the Commission requests that the Task Force consider is set fmth at pp. 1-8 of this memorandum. The Commission may request that the Task Force consider additional changes to these laws if time permits. A list of areas that the Commission could address if granted full regulatory authority is set fmth below at p. 8 of this memorandum. The Commission estimates that at its current level of staffing, the work on these regulations, from commencement to promulgation, would take approximately 18 months to two years. Potential changes to c. 268A and 268B 1. C. 268A, Section l(d): amend definition of "county employee" to exclude members of a charter commission, so that this definition mirrors definition of "municipal employee." Statutory language with changes redlined: Section l(d): "County employee", a person performing services for or holding an office, position, employment, or membership in a county agency, whether by election, appointment, contract of hire or engagement, whether serving with or without compensation, on a full, regular, part-time, intermittent, or consultant basis. but excluding members of a charter commission. Page2 2. C. 268A, Section l(g): amend definition of "municipal employee" to delete "elected" before "members oftown meeting," to clarify that all town meeting members, whether elected or not, are not subject to c. 268A. Statutory language with change red lined: Section 1(g): "Municipal employee," a person perfonning services for or holding an office, position, employment or membership in a municipal agency, whether by election, appointment, contract of hire or engagement, whether serving with or without compensation, on a full, regular, part-time, intermittent, or consultant basis, but excluding (1) eleeted members of a town meeting and (2) members of a charter commission established under Article LXXXIX of the Amendments to the Constitution. 3. C. 268A, Section 1: add definition of "regional municipal agency" New language: "Regional municipal agency," any municipal agency of two or more member municipalities. The governing body of a regional municipal agency may designate as a "special municipal employee" any employee of the regional municipal agency who satisfies the critel'ia for such designation set forth in section one(n) of chapter two hundred and sixty-eight A. 4. C. 268A, Section 8B: amend to update reference to name of agency. Statutory language with changes redlined: Section 8B. No member of the commonwealth utilities commission, appointed pursuant to section 2 of chapter 25, or the commissioner of the department of public utilitiesteleeormmmieations and eable shall, within one year after his service has ceased or terminated on said commission, be employed by, or lobby said commission on behalf of, any company or regulated industry over which said commission had jul'isdiction during the tenure of such member of the commission. 5. C. 268A, Section 23(b)(3): Amend to better address appearing to favor or disfavor someone Statutory language with changes redlined: Section 23(b). No current officer or employee of a state, county or municipal agency shall knowingly, or with reason to know: [subsections I and 2 omitted] (1) Act in a mmmer which would cause a reasonable person, having knowledge of the relevant circumstances, to conclude that any person can improperly influence him or unduly enjoy his favor or suffer his disfavor in the performance of his official duties, or that he is likely to act officially or fail to act officially as a result of kinship, rank, position, or undue influence of any party or person. It shall be unreasonable to so conclude if prior to taking official action, or failing to take official action at the time for such action, such officer or employee has disclosed in writing to his appointing authority or, if no appointing authority exists, has discloseddiseloses in a manner which is public in nature, the facts which would Page 3 othetwise lead to such a conclusion and then fairly and impartially performs his official actions and duties; or 6. C. 268A, section 27: Amend to make requirement of distribution of summaries of the law every two years, rather than every year. Statutory language with changes redlined: Section 27. The commission shall prepare, and update as necessary, summaries of this chapter for state, county, and municipal employees, respectively, which the commission shall publish on its official website. Every state, county and municipal employee shall, within 30 days of becoming such an employee, and eft aft ammal sa sis every two years in the even numbered years thereafter, be furnished with a summary of this chapter prepared by the commission and sign a written acknowledgment that he has been provided with such a summary. Municipal employees shall be furnished with the summary by, and file an acknowledgment with, the city or town clerk. Appointed state and county employees shall be furnished with the summary by, and file an acknowledgment with, the employee's appointing authority or his designee. Elected state and county employees shall be furnished with the summary by, and file an acknowledgment with, the commission. The commission shall establish procedures for implementing this section and ensuring compliance. 7. C. 268A, section 28: Amend to make coordinate with requirement of distribution of summaries of the law every two years, so that requirement to complete online training applies in years in which summary is not required to be distributed. Statutory language with changes redlined: Section 28. The state ethics commission shall prepare and update from time to time the following online training programs, which the commission shall publish on its official website: ( 1) a program which shall provide a general introduction to the requirements of this chapter; and (2) a program which shall provide information on the requirements of this chapter applicable to former state, county, and municipal employees. Every state, county and municipal employee shall, within 30 days after becoming such an employee, and every 2 years in the odd nlimbered years thereafter, complete the online training program. Upon completion of the online training program, the employee shall provide notice of such completion to be retained for 6 years by the appropriate employer. The commission shall establish procedures for implementing this section and ensuring compliance. 8. C. 268B, Section 1: definition of "amount": add additional categories of value so that amounts reported on statements of financial interest may be reported more accurately Statutory language with changes redlined: Section !. "Amount": a category of value, rather than an exact dollar figure, as follows: Page 4 greater than $1,000, but not more than $5,000; greater than $5,000 but not more than $1 0,000; greater than $10,000 but not more than $20,000; greater than $20,000 but not more than $40,000; greater than $40,000 but not more than $60,000; greater than $60,000 but not more than $1 00,000; greater than $100,000 but not more than $250,000; greater than $250,000 but not more than $500,000; greater than $500,000 but not more than $1 ,000,000; greater than $1,000,000 but not more than $5,000,000; greater than $5,000,000. 9. C. 268B, Section 1: definition of"major policymaking position": amend to delete reference to out of date statute Statutory language with changes redlined: Section I. "Major policymaking position": the executive or administrative head of a governmental body, all members of the judiciary, any person whose salary Gftllals or elleeeds that of a state employee elassified in step 1 ofjob group XXV of tile general salary sehedHle eontaiAed in seetion '16 of ehapter 30 ailE! who reports directly to said executive or administrative head. except a person whose duties consist primarily of administrative tasks such as scheduling, record keeping, document handling. word processing and typing, and similar tasks, and, the head of each division, bureau or other major administrative unit within such governmental body and persons exercising similar authority. 10. C. 268B, Section 1: definition of "business": expressly exclude some family trusts. Current statutmy language with potential changes redlined: Section 1. "Business", any corporation, partnership, sole proprietorship, firm, franchise, association, organization, holding company, joint stock company, receivership, business or real estate trust or any other legal entity organized for profit or charitable purposes, but excluding trusts created solely for the purpose of holding property where the filer, or a family member of the filer, resides. 11. C. 268B, Section 3: amend to give Commission full regulatory authority. Statutory language with changes redlined: Section 3. The commission shall: (a) Prescribe and publish, pursuant to chapter 30A, mles and regulations: (1) to catTy out this chapter, including rules governing the conduct or proceedings hereunder; and (2) to carry out chapter 268A. including but not limited to ; proyided, ho·.vever, that tile mles aAElregulatioAs shall ee limitea to providing exemptions from the provisions ofseetions 3 to 7, ine!Hsive, seetioAs II to 14, ine!Hsive, seetions 17 to 20, inelasive, and seetion 23 of said chapter 268A. Page 5 12. C. 268B, Section 3(1): amend requirement that all statements of financial interest be inspected to provide that it shall be at discretion of Commission. Current statut01y language with potential changes redlined: Section 3. The commission shall [subsections (a) through (e) omitted) (f) develop methods iflSj'leet all statements effiflafleial interests filed with the eemn1issien in erder to ascertain whether any reporting person required to file a statement of financial interests pursuant to section five of this chapter has failed to file such a statement or has filed a deficient statement. If, upon inspection, it is ascettained that a reporting person has failed to file a statement of financial interests, or if it is ascettained that any such statement filed with the commission fails to conform to the requirements of section five of this chapter, then the commission shall, in writing, notify the delinquent; such notice shall states in detail the deficiency and the penalties for failure to file a statement of financial interests. 13. C. 268B, Section 3G): amend to require designating official to inform public employee who is required to file of that obligation, and to give Commission updated contact information upon filer's departure from agency. Statutory language with changes redlined: Section 3. The commission shall [subsections (a) through (i) omitted] 0) on or before February I" of each year the executive director of the commission shall request a list of all major policymaking positions for the governmental bodies below from the persons listed below: (1) the house of representatives, the speaker of the house; (2) the senate, the president of the senate; (3) the state secretary's office, the state secretary; (4) the attorney general's office, the attomey general (5) the state auditor's office, the state auditor; (6) the treasurer and receiver's office, the state treasurer; (7) for each co uti of the commonwealth, the chief judge of such co uti; (8) for each executive office in the commonwealth and all governmental bodies within such executive office, the secretary for such executive office; (9) the governor's office, the governor; (1 0) the lieutenant govemor's office, the lieutenant governor; (11) for each county, the chainnan of the county commissioners; (12) for each authority or other governmental body not covered by clauses one through eleven above, the executive or administrative head of such authority or governmental body; and such persons shall furnish such lists within sixty days. Designating officials shall inform persons designated as holding major policymaking positions that they have been so designated, and are required to file statements of financial interests pursuant to Page6 section five of this chapter, at the time that said lists are furnished to the commission. The executive director may add any position that he determines to be a major policymaking position in such governmental body to such list. Any person aggrieved by such action of the executive director may appeal such action to the commission. Designating officials shall inform the commission when a person who has been so designated leaves state employment. and shall provide contact information for the depmting employee to the commission at that time. 14. C. 268B, Section 4(a): amend to eliminate requirement that preliminary investigation be opened upon receipt of sworn complaint. Statutory language with changes redlined: Section 4. (a) Upon reeeipt of a svtorn eomplaint sigt~ea tmaerthe penalties ofpeljury, or :1pon receipt of evidence which is deemed sufficient by the commission, the commission shall initiate a preliminary inquiry into any alleged violation of chapter 268A or 268B. At the commencement of a preliminary inquiry into any such alleged violation, the general counsel shall notify the attorney general in order to avoid overlapping civil and criminal investigations. All commission proceedings and records relating to a preliminary inquity or initial staff review used to determine whether to initiate an inquiry shall be confidential, except that the general counsel may turn over to the attomey general, the United States Attorney or a district attorney of competent jurisdiction evidence which may be used in a criminal proceeding. The general counsel shall notify any person who is the subject of the preliminaty inquiry of the existence of such inquiry and the general nature of the alleged violation within 30 days of the commencement of the inquiry. 15. C. 268B, Section 5: amend to (1) require electronic filing, (2) eliminate confusing references to "third degree of consanguinity," and (3) requiring reporting of out of state real estate. Statutory language with changes redlined: Section 5. (a) Every candidate for public office shall file a statement of financial interest for the preceding year electronically with the commission on or before the date on which a certificate of nomination or nomination papers for such candidate are submitted to the state secretary. Every candidate for public office who has not filed nomination papers with the state secretary, but on whose behalf a statement of organization of a political committee has been filed with the director of campaign and political finance under section five of chapter fifty-five, and who is seeking public office by the so-called "write in" or "sticker" method, shall within three days after such filing file a statement of financial interests with the commission. (b) Every public official shall file a statement of financial interests for the preceding calendar year electronically with the commission on or before the last Tuesday in May of the year in which such public official first enters such public office and of each yeat· that such public official holds such office, and on or before May first of the year after such public official leaves such office; provided, however, that no public official shall be required to file a statement of financial interests for the year in which he ceased to be a Page? public official if he served for less than thirty days in such year. (c) Every public employee shall file a statement of financial interests for the preceding calendar year electronically with the commission within thirty days after becoming a public employee, on or before May first of each year thereafter that such person is a public employee and on or before May first of the year after such person ceases to be a public employee; provided, however, that no public employee shall be required to file a statement of financial interests for the year in which he ceased to be a public employee if he served less than thirty days in such year. [subsections d through f omitted] (g) Reporting persons shall disclose, to the best of their knowledge, the following infmmation for the preceding calendar year, or as of the last day of said year with respect to information required by clauses (2), (3) and (6) below; such persons shall also disclose the same information with respect to their immediate family provided, however, that no amount need be given for such information with regard to the reporting person's immediate family: [subsections (g) (I) and (2) omitted] (1) The name and address of each creditor to whom more than one thousand dollars was owed and the original amount, the amount outstanding, the terms of repayment, and the general nature of the security pledged for each such obligation except that the original amount and the amount outstanding need not be repmted for a mortgage on the repmting person's primary residence; provided, however, that obligations arising out of retail installment transactions, educational loans, medical and dental expenses, debts incurred in the ordinary course of business, and any obligation to make alimony or suppmt payments, shall not be repotted; and provided, further, that such information need not be repmted if the creditor is a relative eftlle l'eperting persen v<'ithin the third degree sf eensanguinity 81' affinity the repmting person's parent, grandparent, great grandparent, child, grandchild, great grandchild, aunt, uncle, sister, brother, niece, nephew, or the spouse of any such relative; [subsections (g)(4) and (5) omitted] (6) the description, as appearing on the most recent tax bill, and the amount of assessed value of all real propetty !seated withill tile eemmenwealth, in which a direct or indirect financial interest was held, which has an assessed value greater than one thousand dollars; and, if the property was transfened during the year, the name and address of the person furnishing consideration to the repmting person or receiving it from him in respect to such transfer; [subsection (g)(7) omitted] (8) The name and address of any creditor who has forgiven an indebtedness of over one thousand dollars, and the amount forgiven; provided, however, that no such information need be reported if the creditor is a relative within the third degl'ee efeensangHiHity er affinity efthe reperting flersen, erthe speuse efsueh a relative the repmting person's parent, grandparent, great grandparent, child, grandchild, great grandchild, aunt, uncle, sister, brother, niece, nephew. or the spouse of any such relative; [subsections (g)(9) and (l 0) omitted, and two final paragraphs] The commission may in its discretion exempt individuals from the requirement of filing Page 8 electronically in cases where that requirement would cause hardship. Areas Commission Could Address With Full Regulatory Authority I. Definition of significant statutory terms that are not currently defined by c. 268A a. Acting as agent b. Business organization c. Financial interest d. Financial interest, directly or indirectly, in a contract made by a state, county, or municipal agency e. General policy f. Partner g. Public notice h. Othetwise than as provided by law i. Similarly situated individuals J. Substantial segment k. Unwarranted privilege 2. Simplify and explain existing statutory definitions of some terms a. Immediate family b. Special state, county, and municipal employee c. Ministerial d. Quasi-judicial 3. Sections 4, 11, 17 (prohibition against acting as agent or attorney): a. Provide a plain English explanation of the prohibited conduct, with examples of what is and is not prohibited b. Address issues of regional municipal entities 4. Sections 7, 14, 20 (prohibition against having a financial interest in a public contract): a. Provide a plain English explanation of the prohibited conduct, with examples of what is and is not prohibited b. Address issues of regional municipal entities 5. Section 23(b)(2): provide a plain English explanation of situations in which use of official position is prohibited because it is inherently coercive or abusive APPENDIXJ Commonwealth of Massachusetts STATE ETHICS COMl\1ISSION One Ashburton Place- Room 619 Bosto·n, Massachusetts 02 t08 Hon. Barbara A. Dortch-Okara (ret.) Chair David A. \Vilson Executive Director To: From: Re: Date: Task Force on· Integrity in State and Local Govemment State Ethics Commission Response to Task Force requests April 25, 2017 The conflict of interest law, G.L. c. 268A, was first enacted more than fifty years ago to eliminate undesirable pressures on public employees and public officials resulting from potentially conflicting influences of private and public interests. The various sections of the law address situations in which public employees may be subjected to such influences to the detriment of their ability to perform their public functions. The law imposes restrictions on acting in such situations to prevent such conflicts of interests, and thereby promote the public's conftdence in the integrity of govemment. This Task Force is charged with investigating and studying the conflict of interest law, the financial disclosure law, and the regulations of the State Ethics Commission. In addition, Speaker of the House Robeti A. DeLeo, who filed the Resolve establishing the Task Force, wrote in suppoti of that Resolve, that the purpose of this examination is to determine whether these laws and regulations "need to be updated, strengthened or clarified to ensure that their prohibitions and restrictions are clear to the tens of thousands of state, municipal and county employees who are subject to the laws." In fmtherance of that objective, the Task Force has so far met five times (January 17, February I, February 15, Febmary 28, and March 21, 2017), and is scheduled to meet again on Apri125, 2017. In the four months since the Task Force was first convened, Commissioners and staff of the State Ethics Commission have devoted considerable time to fully suppotting its efforts. The Commission's Executive Director David Wilson and General Counsel Deirdre Roney have attended every Task Force meeting, provided written testimony at each, and responded to questions raised by Task Force members. The Commission's Chair, Hon. Barbara A. Dortch-Okara (ret.), and Vice Chair, Hon. Regina Quinlan (ret.), attended the March 21, 2017 Task Force meeting and answered questions from Task Force members. Over the past four months, in testimony and in written submissions, in addition to describing and explaining the conflict of interest and financial disclosure laws, the Commission and the Commission staff have made numerous recommendations to the Task Force regarding how to update, strengthen and clarify the laws. Page 2, April25, 2017 Ethics Commission memo to Task Force The most significant among these recommendations is that the single most important improvement in the conflict of interest law that this Task Force could recommend would be to give the Commission full regulatory authority; that is, authority to issue regulations interpreting the conflict of interest law. With this authority, the Commission would follow an open public process to promulgate accessible and understandable regulations clarifying the restrictions imposed by the sometimes difficult language of the statute. As it has done in the past, the Commission would go well beyond the required public comment and public hearing processes, and would solicit and incorporate in its new regulations ideas from affected stakeholders throughout the Commonwealth. This authority would give the Commission the ability to better serve the public by clarifying the law for stakeholders and making transparent the Commission's intetpretation of the statute. In addition to its request for fi.Jll regulatory authority, the Commission has provided the Task Force with several recommendations for specific potential changes to the existing language of the statute. On March 20, 2017, the Commission provided a list of recommended statutory changes for the March 21 ''Task Force meeting. At that meeting, the Task Force requested that the Commission provide any additional recommendations for changes to Chapters 268A and 268B at the April 25, 2017 Task Force meeting. Tabs A and B hereto are provided in response to that request. Tab A supplements the list of recommended changes that the Commission provided to the Task Force on March 20 111, and sets fotth three additional potential amendments to c. 268A proposed by the Commission for the Task Force's consideration, including proposed draft language. The first of these changes would amend the statutory definition of"special" municipal employees to require municipalities to-provide updated infonnation about positions they have designated as "special" to the Commission. Second, Section 7 would be amended to delete an out-of-date statutory reference. Third, sections 17 and 20 would be amended to address problems specific to employees of regional municipal entities. At the last Task Force meeting, some Task Force members asked the Commission to identify areas of the law as to which the Commission believes that there are issues that could be addressed by statutory revision, even if the Commission had not yet prepared proposed draft statutory language. Tab B is provided in response to that request.' Tab B lists sections of the law, the values protected by those sections, and issues that have arisen in their interpretation. Inclusion of a section on this list should not be understood as a statement by the Commission that the section is essentially deficient and not the fundamentally sound expression of a vitally important principle of law. The existing statutes were enacted because the restrictions they impose, which were modeled on similar federal provisions, were believed to serve the beneficial purpose of preventing 1 Tab B includes issues related to Sections 4 and 7 of the law, as requested by Mr. Kennedy. Mr. Kennedy asked if the Commission has any concerns with respect to Section 6 and its prohibition on state legislators participating officially in local property matters in which they have a financial interest as abutters; the Commission is not seeking any change in that prohibition. Page 3, April 25, 2017 Ethics Commission memo to Task Force public employees from making decisions tainted by conflicts of interest; and they still serve that purpose. This does not mean that all of the statutory restrictions are entirely well expressed or easily understood; they are not. It may be that the curr-ent restrictions should be somewhat simplified in order for there to be better public understanding of the law; but this must be done in a thoughtful way that is consistent with, and does not undercut, the values represented by those restrictions. To that end, Tab B includes a statement of the values protected by each indicated section oflaw. The Commission's hope is that any proposed revisions will be consistent with those values. If the Task Force wishes to give further consideration to any of these issues, the Commission will be happy to assist in drafting statutory language. The Task Force will observe that there is substantial overlap between this list, and the list provided by the Commission to the Task Force on March 20111, of issues that the Commission would address through an open and thoughtful public regulatory process if granted full regulatory authority. Senator Creem asked the Commission to address whether the Statements of Financial Interests required by G.L. c. 268B, Section 5 should include reporting of Individual Retirement Accounts. The Cmmnission shares Senator Creem's concerns and intends to address them; it does not believe that doing so would require any statutmy change. Representative Dooley asked the Commission to give further consideration to the proposed amendment to G.L. c. 268B, Section 1, which would exclude family llusts from the definition of"business"; the Commission will do so, and will advise the Task Force if there are futther changes to the proposed amendment. Finally, Mr. Kennedy requested that the Commission provide to the Task Force the materials that were before the Commission for consideration at its meeting on January 25, 2017. Attached hereto as Tab C are those materials. Tab A Tab A to April 25, 2017 Memorandum of State Ethics Commission Recommended additional changes to C. 268A (Tab A) 1. C. 268A, Section l(n): amend definition of "special" employee to include requirement that municipalities provide updated list of specials to Commission. Current statut01y language with potential changes redlined: Section l(n): "Special municipal employee", a municipal employee who is not a mayor, a member of the board of aldennan, a member of the city council, or a selectman in a town with a population in excess often thousand persons and whose position has been expressly classified by the city council, or board of alderman if there is no city council, or board of selectmen, as that of a special employee under the te1ms and provisions of this chapter; provided, however, that a selectman in a town with a population of ten thousand or fewer persons shall be a special municipal employee without being expressly so classified. All employees who hold equivalent offices, positions, employment or membership in the same municipal agency shall have the same classification; provided, however, no municipal employee shall be classified as a "special municipal employee" · unless he occupies a position for which no compensation is provided or which, by its classification in the municipal agency involved or by the terms of the contract or conditions of employment, permits personal or private employment during normal working hours, or unless he in fact does not earn compensation as a municipal employee for an aggregate of more than eight hundred hours during the preceding three hundred and sixty-five days. For this purpose compensation by the day shall be considered as equivalent to compensation for seven hours per day. A special municipal employee shall be in such status on days for which he is not compensated as well as days on which he earns compensation. All employees of any city or town wherein no such classification has been made shall be deemed to be "municipal employees" and shall be subject to all the provisions of this chapter with respect thereto without exception. E;lcllllllll)it;ipali(y §JmJJJllf PJQ_yi d c_d_llcrei tl_wjtJiilU!J<:lts_Qnn\l!.c t im()_gJ[cl':Slldtsl :1ssjl}ga ti QllJms_l;Jr,;r,;nniadg~ In favor of change: Cun·ently, municipalities are not required to infonn the Commission of "special" designations. The Commission, from time-to-time, has reached out to all municipalities to collect this information, but this has not been done on a consistent basis. Consequently, the list of special designations maintained by the Commission is incomplete and inaccurate. This requirement would remove the unnecessary step of having the Commission reach out to the municipalities first in order to obtain this information, and instead require municipalities to provide it automatically. It is helpfi.Jl not only to the Commission, but also to those under the Commission's jurisdiction, for the Commission to have a complete and accurate list of special designations, because, amongst other things, advice can be provided more accurately. The Commission is cun·ently exploring ways in which this infonnation could be provided electronically to the Commission and made available on the Commission's website, to make the process as easy as possible, and promote transparency of this information. 2. C. 268A, Section 7: eliminate out of date statutory reference. Tab A to April 25, 2017 Memorandum of State Ethics Commission Current statut01y language with potential change redlined: This section shall not prohibit a state employee from being employed on a part-time basis by a facility operated or designed for the care of mentally ill or mentally retarded persons, public health, cmTectional facility or any other facility principally funded by the state which provides similar services and which operates on an uninterrupted and continuous basis; provided that such employee does not participate in, or have official responsibility for, the financial management of such facility, that he is compensated for such part-time employment for not more than four hours in any day in which he is otherwise compensated by the commonwealth, andat-tHat<:Hvhiell-doesnot-exeeed-tlwt-HfaJJtHte GHljlloyeeFieF-Io-tlleeomnlerleement-ofmJTpersenal-erpriva!eelnployment,-or (2 )-in-taet-Eloe&-Hffi eaRHJompensatien-as-&;,'Ountyemployee-fer-an-aggregate-ef.moreihan-eigllt-lmHdred heuffi duFing-thB-jJreeeEiiHI,"-4ree-lmmhetl-and-si!Hy-fi¥&{1Hy&j~_part time or less. FoF tffi&t)Ufl*l&eeompensafie&by-tfiedey-shaU-beeonsidered-a&-equi-vateHt-to-€0mpensation feH>e¥e&hoUf&j)eH!ay.-A special county employee shall be in such a status on days for which he is not compensated as well as days on which he eams compensation. Section 1(n): "Special municipal employee", a municipal employee who is not a mayor, a member of the board of alderman, a member of the city council, or a selectman in a town with a population in excess of ten thousand persons-Hml-\vhese-pooitien-llas-heen '*j)ress-ly-clnssifieti-hy-!heeity-emmei!,er-boaHl-f!faklernlaH--if-thefei&-ne-eit;t/-eGUaeil,eF lioard-ef.seloatmen,as-thaH>Hl--s!Jeeial-empleyee-tmdeF-!he-tef!tl&,'tndprtwisiem;-efthi;; cllf!tJt<:w; provided, however, that a selectman in a town with a population of ten thousand or fewer persons shall be a special municipal employee without being expressly so classified. All employees who hold equi.valent offices, positions, employment or membership in the same municipal agency shall have the same classification; provided, however, no municipal employee shall be classified as a "special municipal employee" unless he occupies a position for which no compensation is provided or which, by its classification in the municipal agency involved or by the tenus of the contract or conditions of employment, permits personal or private employment during nonnal working hours, or-unless-!li:l-in-.ffiet-doBstJoh3am-eempensatien11&H-nlmlieipal-empley€e t"t1r-a~t-aggregai:.u ,>.!.'R'IlR'"·' "" l yy- -~>='IV r-. ~h' ~"""-"t'"'"'fi"'\'!'•w u'C~vT!. .._, '""'~! TVt"t Ut1 ·l'""'·(·a~'l Lltt 1.: '..,.. Uv Ivtfla well as days on which he cams 1. • etnpln.y-Bcs~2--£tnd--shatl-ho-BuBjcet-tn--al-l-fhs-provisinns-ofthis-e:±1Hp£Br--vrit!t·-FB-speet-t-!-Bt~tn :t,\ti-fhGHt-{::\-X.t:Bp~ftH-1-: Section l(o): "Special state employee", a state employee" (1) Who is perfonning services or holding an office, position, employment or membership for which no compensation is provided, or (2) Who is not an elected oftlcial and a. Occupies a position which, by its classification in the state agency involved or by the terms of the contract or conditions of employment, pennits personal or private employment during nonnal working hours,pmvideElthahJise!HsttFe-efsueh elassifieatielrHfiJenHission-is-fiJed-·iH-\H~tingwilh-i:he-siaie-eihiw-eemrnissHIH pFier-h1ilte-oommene-'1lf.Qihis_ emp[oyg.r.1~tlw!h©I COl\ll@tlSl}!<;lllill:J!E\i,'lJ~~.;ific.JlJlJlCarancc or not_, before any state agency, unless: (4) The pmiicular matter before the state agency is ministerial in nature; or (5) The appearance is before a court of the commonwealth; or (6) The appearance is in a quasi-judicial proceeding. For the purposes of this paragraph, a matter is ~'ministerial" _if it involves acting pursuant to someone else's direction without exercising one's owqjwlgrrumt; ministerial functions include, but are not limited to, the filing or amendment of: tax returns, applications for pennits or licenses, incorporation papers, or other documents. For the purposes of this paragraph, a proceeding shall be considered quasi-judicial if: (4) The action of the state agency is adjudicatory in nature; and (5) The action of the state agency is appealable to the courts; and (6) Both sides are entitled to representation by counsel and such counsel is neither the attorney general nor the counsel for the state agency conducting the proceeding. A special state employee shall be subject to paragraphs (a) and (c) only in relation to a pmiicular matter (a) in which he has at any time participated as a state employee, or (b) which is or within one year has been a subject of his official responsibility, or (c) which is pending in the state agency in which he is serving. Clause (c) of the preceding sentence shall not apply in the case of a special state employee who serves on no more than sixty clays during any period of three hundred and sixty-five consecutive days. This section shall not prevent a state employee from taking uncompensated action, not inconsistentwith the faithful perfonnance of his duties, to aid or assist any person who is the subject of disciplinary or other personnel administration proceedings with respect to those proceedings. Draft 1/24/17 Proposals drafted by Commission staff only -not yet approved or voted on by Commission This section shall not prevent a state employee, including a special employee, from acting, with or without compensation, as agent or attomey for or otherwise aiding or assisting members of his immediate family or any person for whom he is serving as guardian, executor, administrator, trustee or other personal fiduciary except in those matters in which he has participated or which are the subject of his official responsibility; provided, that the state official responsible for appointment to his position approves. This section shall not prevent a present or former special state employee from aiding or assisting another person for compensation in the perfonnance of work under a contract with or for the benefit of the commonwealth; provided, that the head of the special state employee's department or agency has certified in writing that the interest of the conunonwealth requires such aid or assistance and the certification as been filed with the state ethics commission. This section shall not prevent a state employee from giving testimony under oath or making statements required to be made under penalty for perjury or contempt. This section shall not prohibit a state employee from holding an elective or appointive office in a city, town or district, nor in any way prohibit such an employee from perfonning the duties of or receiving the compensation provided for such office. No such elected or appointed official may vote or act on any matter which is within the purview of the agency by which he is employed or over which such employee has official responsibility. This section shall not prevent a state employee, other than an employee in the depmiment of revenue, from requesting or receiving compensation from anyone other than the commonwealth in relation to the filing or amending of state tax returns. Draft 1/24/17 Proposals drafted by Commission staff only -not yet approved or voted on by Commission Potential changes to c. 268A and 268B Items for further discussion 1. C. 268A, Section 7: substantial redraft Current stalutoJ)' language: ,Section 7. A state employee who has a financial interest, directly or indirectly, in a contract made by a state agency, in which the commonwealth or a state agency is an interested party, of which interest he has knowledge or has reason to know, shall be punished by a fine of not more than S 10,000, or by imprisonment in the state prison for not more than 5 years, or in a jail or house of conection for not more than2 Y, years, or both. This section shall not apply if such financial interest consists of the ownership of less than one per cent of the stock of a corporation. This section shall not apply (a) to a state employee who in good faith and within thirty days after he learns of an actual or prospective violation of this section makes full disclosure of his fmancial interest to the contracting agency and terminates or disposes of the interest, or (b) to a state employee other than a member of the general court who is not employed by the contracting agency or an agency which regulates the activities of the contracting agency and who does not participate in or have official responsibility for any of the activities of the contracting agency, if the contract is made after public notice or where applicable, through competitive bidding, and if the state employee files with the state ethics commission a statement making full disclosure of his interest and the interests of his immediate family in the contract, and if in the case of a contract for personal services (1) the services will be provided outside the nonnal working hours of the state employee, (2) the services are not required as pa1i of the state employee's regular duties, the employee is compensated for not more than five hundred hours during a calendar year, and (3) the head of the contracting agency makes and files with the state ethics commission a written certification that no employee of that agency is available to perfonn those services as a part of their regular duties, or (c) to the interest of a member of the general court in a contract made by an agency other than the general court or either branch thereof, if his direct and indirect interests and those of his immediate family in the corporation or other commercial entity with which the contract is made do not in the aggregate amount to ten per cent of the total proprietary interests therein, and the contract is made through competitive bidding and he files with the state ethics commission a statement making full disclosure of his interest and interests of his immediate family or (d) to a special state employee who does not participate in or have official responsibility Proposals dmfted by Commission staff only -not yet approved or voted 011 Draft 1/24/17 by Commission for any of the activities of the contracting agency and who files with the state ethics commission a statement making full disclosure of his interest and the interests of his immediate family in the contract, or (e) to a special state employee who files with the state ethics commission a statement making full disclosure of his interest and the interests of his immediate family in the contract, if the govemor with the advice and consent of the executive council exempts him. This section shall not apply to a state employee who provides services or furnishes supplies, goods and materials to a recipient of public assistance, provided that such services or such supplies, goods and materials are prO\:ided in accordance \Vith a schedule of charges promulgated by the depatiment of transitional assistance or the division of health care policy and finance and provided, further, that such recipient has the right under law to choose and in fact does choose the person or finn that will provide such services or fi.!mish such supplies, goods and materials. This section shall not prohibit a state employee from teaching or perfonning other related duties in an educational institution of the commonwealth; provi>led, that such employee does not participate in, or have official responsibility for, the financial management of such educational institution; and provided, further, that such employee is so employed on a pmt-time basis. Such employee may be compensated for such services, notwithstanding the provisions of section twenty-one of chapter thirty. This section shall not prohibit a state employee from being employed on a part-tinie basis by a facility operated or designed for the care of mentally ill or mentally retarded persons, public health, correctional facility or any other facility principally fimcled by the state which provides similar sen'ices and which operates on an unintem1pted and continuous basis; provided that such employee does not participate in, or have official responsibility for, the financial management of such facility, that he is compensated for such part-time employment for not more than four hours in any clay in which he is otherwise compensated by the commonwealth, and at a rate which does not exceed that of a state employee classified in step one of job group XX of the general salary schedule contained in section forth-six of chapter thitiy, and that the head of the facility makes and files with the state ethics commission a written certification that there is a critical need for the services of the employee. Such employee may be compensated for such services, notwithstanding the provisions of section twenty-one of chapter thirty. This section shall not preclude an officer or employee of the Massachusetts Port Authority from eligibility for any residential sound insulation program or the bayswater environmental program provided that the officer or employee has no responsibility for the administration for that program from which he is to receive the benefit. Draft 1/24/17 Proposals drafted by Commission staff only -not yet approved or voted on by Commission Potentia/nell' statutory language: Syction 7. A stt)te emplovee mav not acquire an additional compen_sated_q_ftice or pgsition with. or perfonn_ work und<,Jr a contract with. or enter into or otherwise_ acquire a lllmncial interest intl_s;_ontract with, the exccutive__office or agenc_y_whiclllie serves. or an executive oftice orj_lgency in the activities of which hepl!rticipates_QI forwhich h0is resnonsible.l!nless there has been public notice_ of the employment or contractual Ql1POrtunitv~ or thrrt emnlovmcnt or contractual oJmortunity was created by means of an Qpen compctitiye_process. or he was elected to that additional oft1ce or p_9sition. _A ~tate emplovee who acquires an additional compensated state positiong_r_gffice,Jlrs_ontractual QJJf!Ortunity with the state~ pursuant to this section, shall J)crequiredl!J_his orher l!JlPQjnting authoritvjg_t_lisclose his OJJl'.~!:_other st\jtc o!lk-geneml-salafy-sehef-ehapter-thirty,-and that the head of the facility makes and files with the state ethics commission a written certi!lcation that there is a critical need for the services of the employee. Such employee may be compensated for such services, notwithstanding the provisions of section twenty-one of chapter thirty. APPENDIX Task Force on Integrity in State and Local Government Testimony of Peter Sturges, Chailman, Conunon Cause Massachusetts Tuesday, April 25, 2017 Senator Creem, Representative Markey and members of the Task Force on Integrity in State and Local Government (the "Task Force"), thank you for your work over the past several months on this task force. Thank you, as well, for giving me the opportunity to testifY today. I also want to commend Speaker DeLeo and President Rosenberg for establishing this Task Force to review the conflict of interest and financial disclosure law, G.L. c. 268A and 268B, in order to strengthen and clarifY these laws. My name is Peter Sturges. I am here to testifY on behalf of Common Cause Massachusetts and currently serve as its chairman. As you may know, I was also the executive director of the State Ethics Commission from 2000 to 2007 and served on the Governor Patrick's Task Force on Ethics, along with task force member Pam Wilmot, the executive director of Common Cause Massachusetts. The Governor's task force proposed a number of significant changes to the conflict of interest and financial disclosure laws, most of which were enacted as Chapter 28 of the Acts of 2009, that helped to strengthen and clarifY these laws. It is my hope that this task force will fmther that effmt significantly. Attached to my testimony are specific statutory proposals that Common Cause Massachusetts is recommending to the conflict of interest and financial disclosure laws. We believe that these changes will help achieve the goal of this task force. Along with each statutory recommendation, we've included a brief comment explaining our reasons for the specific proposal. Full Regulatory Authority: No other reform would accomplish more to implement the Task Force's goal of clarifYing and strengthening the conflict of interest law. This change would amend section 3 of chapter 268B, which establishes the State Ethics Commission and currently provides the Commission with full regulatory authority to catTy out the financial disclosure law but only partial regulatory authority to create exemptions to the conflict of interest law. This proposal would substantially strengthen Testimony of Peter Sturges, Chairman, Common Cause Massachusetts April25, 2017 Page 2 of4 the conflict of interest law by giving the Commission full authority to issue regulations to carry out the purposes of the conflict of interest law. Frankly, in our view, such authority is essential for any ethics agency to have to be effective. As members of the Task Force, along with the Commission's Executive Director David Wilson and its General Counsel Deidre Roney, have noted on a number of occasions during the Task Force's hearing, full regulatory authority would make it possible for the Commission to engage in a public rulemaking process to codify, and simplify, existing precedent. Because regulations are by their nature written in more straightforward language, they would help clarify and simplify the law. Similarly, because the regulatory process would be public, it would provide an oppotiunity to promote public understanding and acceptance of the Commission and the conflict of interest law. Indeed, granting the Commission full regulatory authority is, perhaps, the single most significant change that the Task Force could make to strengthen and clarify the conflict of interest law. When amending the statute to provide for full regulatory authority, however, it is critical that the specific language currently granting the power to create exemptions not be deleted. This is because the power to carry out the purposes of the conflict of interest law likely does not include to ability to create exemptions. Hence, a Court might well conclude that its deletion was intended to remove this authority. This would be an extraordinary mistake in view of the way this power has made it possible for the Commission to address some significant shortfalls in a conflict of interest law. Disclosure: As has been discussed during the Task Force's hearings, appointed public employees file conflict of interest disclosures with their appointing authority while elected public employees file such disclosures in a manner that is public in nature. As a result, disclosure filed by appointed public employees are filed throughout the Commonwealth and in many different locations in municipalities without any required consistency. Similarly, this is true for elected officials who are required to file such Testimony of Peter Sturges, Chairman, Common Cause Massachusetts April 25, 2017 Page 3 of 4 disclosures in a manner that is public in nature. State legislators, for example, may file such disclosures with the Commission, the Senate or House clerk, or, arguably, just keep them available for inspection in their offices. As a result of the current law and practice, gaining access to disclosures is not easy. Common Cause Massachusetts believes that conflict of interest disclosures, like campaign finance disclosures, should be readily \ available online and easily searchable. Our proposal would provide for such disclosure. At the same time, our proposal would also clarify an apparent conflict between the existing disclosure law and the public records law. Like conflict of interest disclosures, Statement of Financial Interests or SFI' s filed pursuant to the financial disclosure law are also not easily accessible. In the SFI case, this is ttue for two reasons. First, a person requesting a copy of an SFI, that is, the requester, must make a request in writing and must provide identification. Next, after receiving the request, the Commission must notify the filer. It is a burdensome two-step process that for some also creates a chilling effect. The proposed changes would make SFI disclosures accessible online to anyone and without identification. We recognize that our proposals for direct online filing and disclosure would require some initial funding. In the long tetm, however, we believe that it would significantly reduce costs, such as staff time and materials, at the state and local government. This is because there would be no time or personal required to file, copy or, if mandated by statute, redact disclosures or take other actions to make them available to the public. I'd like to address briefly three other issues. Substantial Value: Some years ago, the Commission drafted regulations that provided that no disclosure was required for gifts of less than substantial value, that is, $50.00. The Commission then changed the regulation so that a determination whether ·disclosure is required has to be made for any gift regardless of amount. We find this Testimony of Peter Sturges, Chairman, Common Cause Massachusetts April 25, 2017 Page 4 of4 impractical and believe that many others see this as an over-reach by the Commission. Moreover, the impact of an ethics provision that most perceive as overly broad actually ends up undercutting respect for the law and the agency that must advise and enforce it. Further, to my knowledge, the Commission has never, and I can't imagine that it ever would, prosecute a case involving a gift of less than substantial value. Municipal Private Right of Action: Prior to 2009, Section 21(a) along with its counterparts for state and county government, sections 9(a) and 15(a), respectively were interpreted by the Supreme Judicial Cowt as providing a private right of action. See Everett Town Taxi v. Aldermen of Everett, 366 Mass. 534 (1974). In 2009, the Legislature amended section 9(a) only. The amendment was subsequently interpreted by the SJC as removing this private right of action. See Leder v. Superintendent of Schools of Concord & Concord-Carlisle Regional School District, et. a!., 465 Mass. 305 (2013). Although the provision is not used often, we believe it impmtant that the conflict of interest law provide a private right of action for alleged violations at all levels of government. Statement of Financial Interests - Statutory Amounts: This change is similar to the proposals that the Commission and Common Cause have made in the past. Its purpose is simply to bring the SFI category amounts up to date. It does this in two ways. First, it simplifies reporting by compressing the cunent values into fewer categories, e.g. $1,000 to $10,000 instead of$5,000. Second, it adds categories between $100,000 and $5,000,000. Common Cause has supported this change in the past continues to do so. Again, thank you for the oppmtunity to testifY today on behalf of Common Cause Massachusetts. 2017 Task Force on Integrity- CCMA Recommendations I. G.L. c. 268A- Conflict oflnterest Law (1) Full Regulatory Authority Section 3. The commission shall: (a) Prescribe and publish, pursuant to chapter 30A, tules and regulations: (1) to catTy out this chapter, including mles governing the conduct or proceedings hereunder; and (2) to carry out chapter 268A; incluclin~r provided, however, that tho mles and regulations shall be limited to providing exemptions from the provisions of section 3 to 7, inclusive, sections 11 to 14, inclusive, sections 17 to 20, inclusive, and section 23 of said chapter 268A. Comment: This change amends section 3 of chapter 268B. It is included here because it relates solely to chapter 268A, the conflict of interest law. It would give the Commission authority to issue regulations to catTy out the purposes of the conflict of interest law, an authority that any ethics agency must have to be effective. It is also one of the stated reasons for the Task Force. The specific language granting the power to create exemptions must not be deleted. The power to carry out the purposes of the statute does not include to ability to create exemptions and there is no reason to delete the provision in any case. (2) Gifts of Less than Substantial Value- No Disclosure Required (3) act in a manner which would cause a reasonable person, having knowledge of the relevant circumstances, to conclude that any person can improperly influence or unduly enjoy his favor in the performance of his official duties, or that he is likely to act or fail to act as a result of kinship, rank, position or undue influence of any party or person. It shall be umeasonable to so conclude (a) if such officer or employee has disclosed in writing to his appointing authority or, if no appointing authority exists, discloses in a manner which is public in nature, the facts which would otherwise lead to such a conclusion or (b) such o!Iicer or employee's action involves the accepting of an unsolicited gift that is not of substantial value; or Comment: Some years ago, the Commission drafted regulations that provided that no disclosure was required for gifts of less than substantial value, i.e. $50.00. The Commission then changed the regulation so that a "reasonable person/appearance" detennination has to be made for any gift regardless of amount. We find this impractical and many find it an over-reach, which actually ends up undercutting respect for the Commission and the law. Moreover, the Commission has never, and we can't imagine that it ever would, prosecute a case involving a gift of less than substantial value. 2017 Task Force on Integrity- CCMA Recommendations Page 2 (3) Online Disclosure Section 30. The commission shall develop Hn electronic reporting system for the submission. retrieval. storage and public disclosure of all disclosures required to be filed pursuant to this chapter. Once such electronic reporting svstem has been developed. all disclosures required to bv filed by this chapter shall be tiled electronicallv in accordance with regulations adopted by the commission. Such regulations shall provide that appointing authorities will receive notification of any electronically filed disclosure prior to such disclosures being made available to the public if such disclosure is required to be filed with an appointing authority. Such regulations shall provide that appointing authorities mav withhold or redact materials or data within such disclosures that fall within the exemptions to the definition of public records in subparagraphs (a) through (u). inclusive, of section 7(26) of chapter 4 of the General Laws. Comment: Appointed public employees file conflict of interest disclosures with their appointing authority while elected public employees file such disclosures in a manner that is public in nature. Legislators, for example, could file such disclosures with the Commission, the Senate or House clerk, or, arguably, just keep them available for inspection in their offices. In any case, accessing these disclosures is not easy. Conflict of interest disclosures, like campaign finance activity, should be readily available online and easily searchable. The first sentence of the proposed language tracks the language from the campaign finance law. (4) Restore Municipal Private Right of Action Section 21. (a) In addition to any other remedies provided by law, a fmding by the eommission pursuant to an adjudicatory proceeding that there has been any violation of sections 2, 3, 8, 17 to 20, inclusive, or section 23, which has substantially influenced the action taken by any municipal agency in any particular matter, shall be grounds for avoiding, rescinding or canceling the action of said municipal agency :1pon request by said murrieipal agency on such terms as the interests of the mllllicipality and innocent third persons shall require. Comment: Prior to 2009, Section 21(a) along with its coll!lterparts for state and county government, sections 9(a) and 15(a), respectively was interpreted by the SJC as providing a private right of action. See Everett Town Taxi v. Aldermen of Everett, 366 Mass. 534 (1974). In 2009, the Legislature amended section 9(a) only. The amendment was interpreted by the SJC as removing this private right of action. See Leder v. Superintendent of Schools of Concord & Concord-Carlisle Regional School District, et. a!., 465 Mass. 305 (2013). Although the provision is not used often, We believe it impmiant for the conflict of interest law to provide a private right of action for alleged violations at all levels of government. 2017 Task Force on Integrity- CCMA Recommendations Page 3 II. G.L. c. 268B- Financial Disclosure Law Full Regulatory Authority- See (1) above. SFI Categories Section 1. "Amount": a category of value, rather than an exact dollar figure, as follows: greater than $1,000, but not more than $10.000: greater than $10.000 but not more than $50,000: greater than $50.000 but not more than $1 00,000; greater than$ I 00,000 but not more than $250,000: greater than $250.000 but not more than $500.000; greater than $500,000 but not more than $I .000.000: greater than$ I .000.000 but not more that $5.000,000: greater than $5,000,000. Comment: This change brings the SFI category amounts up to date. It does this in two ways. First, it compresses the current values into fewer categories, e.g. $1,000 to $10,000 instead of$5,000. Second, it adds categories between $100,000 and $5,000,000, as does the Commission staffs recommendations. Common Cause has suppmied this change in the past. SFI Online Disclosure Section 3. The commission shall .... (d) make statements and reports filed with the commission available for public inspection and copying dming regular office hours upon the written request of any individual who provides identification acceptable to tile commission, including nis affiliation, if any, at a charge not to exceed the actual administrative and material costs required in reproducing said statements and repmis; provided, however, that the commission shall be authorized, in its discretion, to exempt from public disclosure those portions of a statement of financial interest filed pursuant to section 5 which contain the home address of the filer; and provided, further, that tile commission snail forward a copy of said request to the person whose statement has been eJ