STATE OF MINNESOTA
ETHICAL PRACTICES BOARD

. . . . . . . . .

Friday, January 26, 1996

. . . . . . . . .

Blazing Star Room, Ground Level, Centennial Office Building

. . . . . . . . .

MINUTES

The Board meeting was called to order by Chair Sillers.

Members present: Anderson, Carpenter, Owens Hayes, Rodriguez, Sillers, Wilson
Others present: Olson, Goldsmith, Swanson, Maloney, staff; Murray, counsel, Becicka, co-counsel.

MINUTES (December 8, 1995)

Ms. Owens Hayes' MOTION: To approve the December 8, 1995, minutes as drafted.

Vote on MOTION: Unanimously passed by four members present (Anderson, Rodriguez absent.)

CORRESPONDENCE RELATING TO ADVISORY OPINION #220 - Law Firm Employee Reunion (approved by the Board on October 13, 1995) (see October 13th Board minutes)

Board members reviewed a letter from Senator John Marty dated December 19, 1995, (see copy attached.) Senator Marty expresses concern about the Board's interpretation of "membership in a group" under Minn. Stat. 10A.071, subd. 3 (b) (1). Senator Marty feels that the Board's interpretation of "membership in a group" has effectively added words to the statute that are not in it. He further requests that the Board take another look at it's interpretation of the language in all future advisory opinions.

Ms. Owens Hayes expressed that the Board is obligated to interpret the statutes as the legislature has written them. Counsel Murray noted that Minn. Ch. 645 states that in order to take legislative intent into consideration, the intent must be recorded in legislative history. Ms. Olson said she has talked with Senator Marty and he is aware of the Board's concerns in interpreting Minn. Stat. 10A.071.

Requests for the following advisory opinions are nonpublic data.

ADVISORY OPINION #219 - Contribution Limits (laid over from the October 13, November 17, and December 8, 1995, meetings) (see October 13th Board minutes)

Ms. Wilson's MOTION: To lay over discussion of this matter to the next Board meeting.

Vote on MOTION: Unanimously passed by four members present (Anderson, Rodriguez absent.)

ADVISORY OPINION #224 - Lobbyist principal definition, Lobbyist definition (laid over from the December 8, 1995, Board meeting at the request of the questioner).

Ms. Owens Hayes recused herself from the discussion on this matter.

The Board reviewed a draft response to the advisory opinion request from an official who asks if the University of Minnesota is within the group of entities which can be lobbyist principals and whether all employees of the University are excluded from the definition of a lobbyist.

Board members discussed and agreed to certain amendments to the draft advisory opinion.

Ms. Wilson's MOTION: To approve Advisory Opinion #224 as amended in discussion.

Vote on MOTION: Unanimously passed by five members (Owens Hayes abstained).

SUMMARY: ADVISORY OPINION #224 as signed by Chair Douglas Sillers January 26, 1996: Under Minnesota Statutes, §10A.01, subd. 28, the University of Minnesota is not included in the types of entities which may be lobbyist principals. The University of Minnesota is a public higher education system, whose employees cannot be defined as lobbyists based on their activities as University employees.

ADVISORY OPINION #225 Allocation of campaign expenditures and noncampaign disbursements.

The Board reviewed and discussed a draft response to the advisory opinion request from an official who asks for an opinion on the allocation of costs of production and distribution between campaign expenditures and noncampaign disbursements for a publication which includes both informational material and fundraising solicitations.

Ms. Owens Hayes' MOTION: To approve Advisory Opinion #225 as drafted.

Vote on MOTION: Unanimously passed by four members present (Anderson, Rodriguez absent).

SUMMARY: ADVISORY OPINION #225 as signed by Chair Douglas Sillers January 26, 1996: Where a candidate's end of session report includes a fundraising component and a constituent services component, the cost of production and distribution of the piece must be allocated between campaign expenditures and noncampaign disbursements on a reasonable basis. It is reasonable to allocate production costs of a single piece on the basis of the percentage of each component making up the piece. Where distribution costs are not directly related to the size of the piece, it is reasonable to allocate those costs in proportion to the cost of distributing each component separately.

ADVISORY OPINION #226 - Gift of services to public official.

The Board reviewed and discussed a draft response to the advisory opinion request from a representative of a lobbyist principal who asks if a specific gift to an official from a lobbyist principal is permitted under Minn. Stat. 10A.071.

Ms. Owens Hayes' MOTION: To approve Advisory Opinion #226 as drafted.

Vote on MOTION: Unanimously passed by four members present (Anderson, Rodriguez absent).

SUMMARY: ADVISORY OPINION #226 as signed by Chair Douglas Sillers January 26, 1996: A black and white calendar produced by a lobbyist principal and containing informational material only, which is available for sale for $5.00, is exempt from the Minn. Stat. § 10A.071 prohibition of gifts to officials because it is informational material of unexceptional value.

ADVISORY OPINION #227 - Gift of free admission to public performance.

The Board reviewed and discussed a draft response to the advisory opinion request from an official who asks if attendance at an event is permitted under Minn. Stat. 10A.071.

Ms. Wilson's MOTION: To approve Advisory Opinions #227 as drafted.

Vote on MOTION: Unanimously passed by four members present (Anderson, Rodriguez absent).

SUMMARY: ADVISORY OPINION #227 as signed by Chair Douglas Sillers January 26, 1996: An official is not prohibited by Minn. Stat. § 10A.071 from attending a free public performance merely because a lobbyist principal has contributed to the funding of the performance.

ADVISORY OPINION #228 - Campaign expenditure limit, Campaign expenditures.

The Board reviewed and discussed a draft response to the advisory opinion request from an official who asks an opinion relating to the fact that the official may have exceeded the 1995 campaign expenditure limit during a portion of the year, and whether the official may purchase a computer with campaign funds in 1996.

Ms. Carpenter's MOTION: To approve Advisory Opinions #228 as drafted.

Vote on MOTION: Unanimously passed by four members present (Anderson, Rodriguez absent).

SUMMARY: ADVISORY OPINION #228 as signed by Chair Douglas Sillers January 26, 1996: A candidate who has exceeded the applicable calendar year campaign expenditure limit for a time during the year, but who has through legal means reduced total expenditures to an amount below the limit by the end of the year is not in violation of Minn. Stat. § 10A.25, subds. 2 and 6. A candidate who purchases a computer with campaign funds must report the entire purchase price as a campaign expenditure.

The Board commended Mr. Goldsmith on the excellent job he did on presenting the advisory opinion requests; and preparing the background material and draft responses for Board consideration.

STANDING COMMITTEE REPORTS

Legislative Recommendations - Ms. Olson reported that all six of the Board's recommendations have been introduced in a senate bill and five of the six are in a bill before the house. Ms. Olson noted that she presented testimony before the Senate Committee on January 25th. Staff is currently preparing fiscal notes on four bills that would impact the Board including public subsidy for the Metropolitan Council, filings of economic interest disclosure by the governing boards of certain pension plans, return of all or a part of public subsidy money from a candidate committee if the candidate is found guilty of violating Minn. Stat. Ch. 211B.

Rules Subcommittee - Mr. Goldsmith told Board members that no requests for public hearing had been received as of January 25,1996, the last day requests could be submitted.

The Board considered a change to Minn. Rules pt. 4502.0100 making technical corrections to the definition of "Adjournment sine die."

Ms. Carpenter's MOTION: To accept the suggested language change as proposed by the legislative recommendations and rules subcommittee.

Vote on MOTION: Unanimously passed by five members present (Rodriguez absent.)

The Board considered withdrawing Minn. Rules pt. 4512.0100 which defines "insignificant value."

Ms. Carpenter's MOTION: To withdraw Minn. Rules pt. 4512.0100 as recommended by the legislative recommendations and rules subcommittee.

Vote on MOTION: Unanimously passed by five members present (Rodriguez absent) (see copy of proposed rules changes attached).

The Board considered the Certificate of the Resolution Adopting Rules as presented by staff.

Ms. Wilson's MOTION: RESOLVED, that the Proposed Permanent Rules Relating to Ethics Rules Revision, as published in the State Register on December 26, 1995, and as modified by Board action on January 26, 1996, are approved and adopted, pursuant to authority vested in the Ethical Practices Board by Minnesota Statutes 10A.02, subd. 13.

Jeanne Olson, The Executive Director of the Ethical Practices Board, is hereby authorized and directed to sign the findings of fact, conclusions of law, and order adopting the rules and further is authorized to modify the rule 4503.0100, subpart 2 and to withdraw rule 4512.0100, subpart 4 in consistent with the Board's separate action taken on January 26, 1996.

Further the Executive Director is authorized and directed to modify such other rules as are required to obtain the approval of the attorney general so long as such modifications do not significantly change the meaning or effect of the rule and to perform all other necessary acts to provide that the rule shall have the force and effect of law.

Vote on MOTION: Unanimously passed by five members present (Rodriguez absent).

CHAIR'S REPORT

New Board Member - Chair Sillers welcomed the newly appointed Board member, G. Barry Anderson to the Board.

Board Confirmation Hearings - Confirmation hearings for Mr. Anderson, Ms. Carpenter, Ms. Rodriguez, and Ms. Wilson have not been scheduled.

Next Board meeting - Friday, February 23, 1996.

LEGAL COUNSEL'S REPORT

Counsel Murray reported on the following legal matter in which the Board is represented by Richard Slowes, Assistant Solicitor General:

. Rosenstiel et. al. v. Sillers -No decision has been issued in this matter to date.

Counsel Murray reported on the following legal matters:

. Novak v. Ethical Practices Board - Judge Campbell ruled in favor of Senator Novak on all issues. The Board's Motion for Summary Judgment was denied, and its counterclaim for the $11,000 fine was dismissed with prejudice. Judge Campbell's reasoning was based on the concept that the statute in question was subject to more than one interpretation, and that it was "settled that a penalty cannot be predicated upon a statute capable of more than one interpretation."

. Ethical Practices Board v. William Davis - The William Davis v. United States Postal Service has been settled. Counsel Murray is awaiting the judge's decision before pursuing the Board's case.

. Miscellaneous Pending Matters - Counsel Murray provided the Board with a written report on the status of other matters pending with the Attorney General's office (see attached written report).

EXECUTIVE DIRECTOR'S REPORT

Board Member List - Ms. Olson called attention to the fact that an updated list of Board members was being provided to all members. Ms. Olson told members that the Ethical Practices Board now had a home page on the Worldwide Web and asked if members would like the member list on the web.

Mr. Anderson's MOTION: Direct staff to include Board members names and appointment information on the Worldwide Web.

Vote on MOTION: Unanimously passed.

Workshops - Ms. Olson reported that approximately 60 people attended a campaign finance workshop on January 17, 1996, and approximately 25 lobbyists attended a lobbyist seminar on January 24, 1996.

Staffing Matters - Ms. Olson announced that Ms. Swanson, Office Manager, had completed a satisfactory performance review and been awarded an achievement award and Mr. Maloney, Programs Assistant, had completed a satisfactory performance review and been awarded an increase from step 11 to step 12.

Enforcement Report

. Reconciliation Program

The Board reviewed the final report on the reconciliation program and commended Mr. Maloney and the rest of staff on the project. Out of an initial 1,800 possible reporting errors, 798 discrepancies were found and letters to 600 committees sent asking for clarification. Only one committee has failed to resolve a discrepancy to date and staff has been assured by the treasurer of that committee that an amendment to the committee report will be filed.

. Waiver Requests

CAMPAIGN FINANCE PROGRAM - Principal Campaign Committee - Nonfiling of timely notice of large contribution received just before the Special General Election (laid over from December 8, 1995, Board meeting)

Helen A. Gould, treasurer, Volunteers for (Robert) Gunther, 1-3320 26A, $250; first waiver request. Two committees made in-kind expenditures on behalf of this committee without consulting the candidate or the treasurer of this committee before making the expenditures. The treasurer read an ad in a local shopper pamphlet. Ms. Gould contacted the paper to find out the cost of the ad to properly report it on the committee's report. The treasurer contacted both committees during completion of the report. She was informed of two advertisements placed on behalf of this committee resulting in in-kind contributions. The treasurer states, in both cases, it was due to her initial contacts that enabled her to include the two in-kind expenditures on the committee's final report. Ms. Gould has paid the $250 late filing fee. She requests, if her waiver is granted, the $250 to be returned to the candidate's committee.

Ms. Carpenter's MOTION: Move to approve Ms. Gould's request to waive the $250 late filing fee due to extenuating circumstances and direct staff to refund the $250 fee to Ms. Gould.

Vote on MOTION: Unanimously passed.

Ms. Owens Hayes' MOTION: Direct staff to notify the committees that made in-kind expenditures of more than $20 on behalf of the Volunteers for Gunther that making such expenditures without the consent of the candidate or treasurer is prohibited by Minn. Stat. 10A.17, subds. 2 and 5.

Vote on MOTION: Unanimously passed.

ECONOMIC INTEREST PROGRAM - Original Statement of Economic Interest due 10/27/95

Ruth M. Shuman (Minnesota Technology Incorporated Board of Directors), $25; first waiver request.

Ms. Owens Hayes' MOTION: Move to approve Ms. Shuman's request to waive the $25 late filing fee due to extenuating circumstances.

Vote on MOTION: Unanimously passed.

. Nonpayment of late filing fee for Lobbyist Disbursement Report due 4/17/95 (laid over from December 8, 1995, Board meeting).

This matter is before the Board for the authorization of a third certified letter to be sent for nonpayment of a late filing fee. At the November 10, 1995, Board meeting the board denied this individual's request for a waiver. The lobbyist listed below has been sent two late filing fee notices, including notice that this matter would be referred to the Board at its meeting of January 26, 1996. Staff has had telephone contact with this lobbyist and the executive director of this association. Both individuals stated the late filing fee would be paid.

Mary Lewis Grow, (Citizens for a Safer Minnesota), $50

Ms. Rodriguez' MOTION: Move to send Third Official Notice of Delinquency to Ms. Lewis Grow.

Vote on MOTION: Unanimously passed.

. Nonfiling of the amended Registration and Statement of Organization

This matter is before the Board for the authorization of a third certified letter to be sent for nonfiling of the registration and statement of organization. The former treasurer has resigned. Staff sent correspondence to the president requesting her to amend the Registration and Statement of Organization showing the new treasurer of this committee. Ms. Dammer has been sent two notices, including notice that the matter would be referred to the Board at its meeting of January 26, 1996. Staff has had telephone contact with Ms. Dammer. Ms. Dammer indicated an amended registration and statement of organization would be sent.

Connie Dammer, president, AFL-CIO Southeast Central Labor Council, 3-0088

Ms. Wilson's MOTION: Move to send Third Official Notice of Delinquency to Ms. Dammer.

Vote on MOTION: Unanimously passed.

. Board Recommendations on Cases at Attorney General's Office

Information about the following individuals, currently at the Attorney General's Office, is included for the Board to review and to make recommendations for further action (laid over from 12/8/95, Board meeting).

Carol DeRaad, Joseph Hunter, Greg Knutson, Gloria Sneed, and Richard F. Verhagen

Ms. Carpenter's MOTION: Close cases on Carol DeRaad, Gloria Sneed, and Richard F. Verhagen as counsel advises and place in file as de minimus; should subsequent problem arise, if the statute of limitations has not run, the matter may be added to the subsequent case; refer Joseph Hunter and Greg Knutson to revenue recapture.

Vote on MOTION: Unanimously passed.

. Board Recommendation on Unknown Address

Chris McDonald, treasurer, (Chris) McDonald Volunteer Committee, 1-2829 63B, committee registered with the Board on 7/20/92. The January 31, 1995, annual report, covering the period 1/1/94 through 12/31/94, is the last report filed for this committee. Report due January 31,1996, covering the period 1/1/95 through 12/31/95, was returned to the Board office with no forwarding address. Staff and the assistant attorney general's office have been unable to locate the treasurer, Chris McDonald.

Ms. Rodriguez' MOTION: Direct staff to: 1) administratively terminate the (Chris) McDonald Volunteer Committee; 2) place all correspondence in the committee files; and 3) retain the files in the active file should the committee terminate or become active in the future.

Vote on MOTION: Unanimously passed.

. Payment of late filing fees

George W. Bateman, treasurer, (George) Bateman for Representative, #1-2493 37B, $471.07 (paid through Chapter 13 bankruptcy; $5,494.17 return of public financing remains to be paid for 1990). The Board is on a payment plan through the bankruptcy trustee. It is valid until 1997. Partial repayment of the return of public subsidy based on the 9/19/90 Affidavit of Contributions and the 1/31/91 Report of Receipts and Expenditures.

George Gregorich, treasurer, (George) Gregorich Campaign Fund, #1-3213 7A, $50.55. $25 monthly installment payments began October 1, 1995, subsequent payments due the 1st of each month until the $250 late filing fee is paid. $25 payments received on October 5, 1995, November 8, 1995, December 11, 1995. and $50.55 payment received on January 18, 1996. The $50.55 payment represents the $25 payment due January 1, 1996, and February 1, 1996. The next $25 payment is due March 1, 1996. Late filing fee for the late filing of the Pre-Primary Election Report of Receipts and Expenditures due 9/6/94.

Brian M. Bergson, (Former Member House of Representatives), $100; James C. Bernstein, (State Board of Technical Colleges), $100; Maria J. Deliz, (Barber Examiners Board), $100, all for the late filing of the of the Supplementary Statement of Economic Interest due 4/17/95 (Laid over from 12/8/95, Board meeting).

Mary J. Schmidt Sullivan, (Independent Business Association of Minnesota), $100 - Late filing of the Lobbyist Disbursement Report due 4/17/95 (Laid over from 12/8/95, Board meeting).

Paul Peterson, treasurer, (Steve) Boynton for Senate, #1-3269 33, $100, Late filing fee of the Report of Receipts and Expenditures, Special Election Senate District 33, due 4/13/95.

All payments have been deposited in the general fund of the state under Minn. Stat. §10A.34.

. Payment of Civil Penalty

(Stephanie) Klinzing Action Campaign Committee, #1-2732 19B - The Board investigated in executive session on October 13, 1995, the committee's acceptance of aggregate contributions, during 1994, from certain types of contributors, which exceeded the applicable aggregate contribution limit. On December 11, 1995, the (Stephanie) Klinzing Action Campaign Committee paid a civil fine of $2,942.52, two times the excess amount. Stephanie Klinzing entered into a conciliation agreement with the Board to remedy the matter that was signed by the Board Chair on November 8, 1995.

Volunteers for (Betty) McCollum, #1-2695 55B - The Board investigated in executive session on November 17, 1995, the committee's acceptance of aggregate contributions, during 1994, from certain types of contributors, which exceeded the applicable aggregate contribution limit. On December 7, 1995, the Volunteers for (Betty) McCollum paid a civil fine of $192, one times the excess amount. Representative McCollum entered into a conciliation agreement with the Board to remedy the matter that was signed by the Board Chair on December 5, 1995 (laid over from 12/8/95, Board meeting).

(John) Tuma for State Representative, #1-2965 25A - The Board investigated in executive session on November 17, 1995, the committee's acceptance of aggregate contributions which exceeded the applicable political party contribution limit of $5,000 by $100. On December 7, 1995, the (John) Tuma for State Representative committee paid a civil fine of $100, one times the excess amount by which the contributions exceeded the applicable limit. Representative Tuma entered into a conciliation agreement with the Board to remedy the matter that was signed by the Board Chair on December 8, 1995 (laid over from 12/8/95, Board meeting).

(Jim) Tunheim Volunteer Committee, #1-1461 1A - The Board investigated in executive session on November 17, 1995, the committee's acceptance of aggregate contributions, during 1994, from certain types of contributors, which exceeded the applicable aggregate contribution limit. On December 18, 1995, the (Jim) Tunheim Volunteer Committee paid a civil fine of $308, two times the excess amount. Representative Tunheim entered into a conciliation agreement with the Board to remedy the matter that was signed by the Board Chair on December 20, 1995.

All payments of civil fines have been deposited in the general fund of the state under Minn. Stat. §10A.28.

. Conciliation Agreement

(Skip) Carlson Volunteer Committee, #1-3319 52A - The Board investigated in executive session on December 8, 1995, the committee's acceptance of aggregate contributions, during the special election in House District 52A in 1995, from certain types of contributors, which exceeded the statutory limit under Minn. Stat. §10A.27, subd. 11 (1994 Supplement). Representative (Skip) Carlson entered into a conciliation agreement with the Board and agreed to pay a civil fine of $68. The conciliation agreement was signed by the Board Chair on January 6, 1996.

(Steve) Smith Volunteer Committee, #1-2385 34A - The Board investigated in executive session on December 8, 1995, the committee's acceptance of aggregate contributions, during 1994, from certain types of contributors, which exceeded the statutory limit under Minn. Stat. §10A.27, subd. 11 (1994 Supplement). Representative (Steve) Smith entered into a conciliation agreement with the Board and agreed to pay a civil fine of $400. The conciliation agreement was signed by the Board Chair on January 3, 1996.

Financial Report and Agency Deposits - Mr. Goldsmith submitted reports covering through December, 1995.

REPORT FROM EXECUTIVE SESSION

Complaint by Minnesota Grocers Association regarding fifteen Respondents

Mr. Goldsmith reported that the Board issued Findings of Fact, Conclusions of Law and Orders in fifteen matters resulting from a complaint filed by the Minnesota Grocers Association (complete findings, conclusions and orders in each matter are attached). Based on the Board's Order that the matter be entered into the public record, Mr. Goldsmith reported the results as follows:

Brian Bates: The Board found that no probable cause existed to believe that the Respondent had violated the provisions of Minn. Stat. Chapter 10A.

Chisago County Public Health Department; Dakota County Public Health Department; Mille Lacs County Public Health Nursing Services; Polk County Community Health Services -

The Board found that no probable cause existed to believe that the Respondents had violated the provisions of Minn. Stat. Chapter 10A.

Itasca Heart Project; Minneapolis Urban League; Minnesota Prevention Resource Center; Minnesota River Valley Tobacco Control Task Force; Wright to the Heart of Health Coalition and Community Health Foundation of Wright County - The Board found that no probable cause existed to believe that the Respondents had violated the provisions of Minn. Stat. Chapter 10A.

Rochester/Olmsted County ASSIST Coalition; Tri-County ASSIST Coalition - The Board found that no probable cause existed to believe that the Respondents had violated the provisions of Minn. Stat. Chapter 10A.

Washington County Department of Health, Environment and Land Management - The Board found that no probable cause existed to believe that the Respondent had violated the provisions of Minn. Stat. Chapter 10A.

Association for Non-Smokers Rights Minnesota; - The Board found that no probable cause existed to believe that the Respondent had violated the provisions of Minn. Stat. Chapter 10A.

Minnesota Coalition for a Smoke-Free 2000 - The Board found that there was probable cause to believe that the Respondent had failed to disclose a $40.00 disbursement to its lobbyist for reporting purposes. The Board ordered that proper disclosure be made and an amended lobbyist disbursement report be filed.

Complaint and Investigation regarding Minneapolis Mayor Sharon Sayles Belton - Mr. Goldsmith reported that the Board in executive issued Findings of Fact, Conclusions of Law and an Order in the matter of the complaint and investigation regarding Minneapolis Mayor Sharon Sayles Belton. (The complete Findings, Conclusions and Order are attached.)

Based on the Board's order that the matter be entered into the public record, Mr. Goldsmith reported that the Board found no probable cause to believe that Mayor Sharon Sayles Belton violated the provisions of Minn. Stat., §10A.071.

ADJOURNMENT

Meeting adjourned.

Respectfully submitted,

Elsa Carpenter, Secretary

(minutes by staff)

If you would like to receive any attachment referred to in these minutes please contact the board office