STATE OF MINNESOTA

ETHICAL PRACTICES BOARD

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Friday, September 20, 1996

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Blazing Star Conference Room

Ground Floor, Centennial Office Building

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MINUTES

Meeting was called to order by Chair Rodriguez.

Members present: Anderson, Owens Hayes, Pauly, Rodriguez, Slocum, Wilson.

Others present: Olson, Goldsmith, Swanson, Maloney, staff; Becicka, Gretz, counsel.

MINUTES (August 23, 1996)

Ms. Owens Hayes' MOTION: To approve the draft of the August 23, 1996, minutes.

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

CHAIR'S REPORT

Board Meeting Schedule - Next Board meeting: Friday, October 25, 1996.

Board Objectives - (see June 21st, July 26th, and August 23rd minutes)

Board members reviewed a draft copy of 1997 Board Objectives.

Ms. Owens Hayes' MOTION: To adopt the 1997 Board Objectives as drafted.

Ms. Wilson's MOTION: To adopt certain language changes to the objectives.

Ms. Owens Hayes accepted Ms. Wilson's motion as an amendment to her motion.

Ms. Owens Hayes' MOTION: To adopt the 1997 Board Objectives as amended in discussion.

Vote on MOTION: Unanimously passed by five members. (Anderson absent) (See copy attached)

EXECUTIVE DIRECTOR'S REPORT

Campaign finance seminars (see July 26th and August 23rd minutes) - Board members reviewed materials from the campaign finance seminars held in August including a summary of the evaluations that seminar attendees were asked to complete. Ms. Olson reported that approximately 300 people attended the seminars.

Board publications - The Annual Report for fiscal year 1996 and the Lobbyist Disbursement Summary, July, 1995 through June, 1996, were available for Board review.

Board office rental matters (see May 31st and June 21st minutes) - Ms. Olson reported that the Building Construction Division, Department of Administration, has informed her that they will be removing the asbestos, taking down the existing wall and finishing off the storage room space for future client/staff use at no expense to the Board. This additional space will increase the monthly rent payments.

Council on Governmental Ethics Laws (COGEL) - A copy of The COGEL Guardian was available for each Board member.

COGEL is soliciting comments about the prospect of inviting vendors to display goods and services at annual meetings. These goods and services would be mainly publications and software. Vendors would not be permitted to offer free samples, host hospitality rooms, or sponsor any part of the meeting. Any additional facility charges for vendors would be paid by the vendors. Board members agreed by consensus that inviting vendors under these circumstances would be beneficial to conference participants.

Staff priorities - Staff was directed by Chair Rodriguez to assist clients with research issues only to the extent that this service may be provided consistent with other office priorities. Clients should be guided to filed public information and told that staff assistance is available as office priorities permit.

Biennial Budget FY 98/99 - The narrative pages for the Biennial Budget FY 98/99 were available for Board review. In addition to the Biennial Operating Budget, the Board will be requesting a one-time appropriation of approximately $115,000 to $125,000 for a client services/technology initiative. This initiative will support the development, production, and distribution of software to assist political committees and funds in accounting for their campaign finance activities and reporting them to the Board.

Enforcement Report

Mr. Maloney presented the following enforcement matters for Board action:

Consent Items:

Board Action: Authorization of third certified letter for nonpayment of late filing fees and subsequent legal enforcement action in the event the fee is not paid. Two notices have previously been sent to each client. To date, the following lobbyists have not paid the accrued late filing fees for the Lobbyist Disbursement Report due 7/15/96.

Richard D. Aspenwall, self, $15.

Mark J. Oyaas, Corporation for Supportive Housing, $30.

Mark J. Oyaas, Greater Minneapolis Convention and Visitors Association, $30.

Mark J. Oyaas, Piper Jaffray Companies Incorporated, $30.

Board Action: Authorization of certified letter for nonfiling of Report of Receipts and Expenditures and subsequent legal enforcement in the event the report is not filed. Two notices have previously been sent to each client. To date, the following 20 committees have not filed the Pre-primary Report of Receipts and Expenditures due 9/3/96:

(Harvey) Guttmann for Senate Committee, Campaign to Elect (Marilyn) Jackson, (Anthony) Muehlbauer Volunteer Committee, (Dean) Urdahl for 15B Volunteer Committee, 10th Senate District DFL, 19th Senate District DFL, 43rd Senate District DFL, 66A House District RPM, AFSCME Local 2938, Grant County IR Women, Gun Owners Political Action Committee, IBPAT - PAT Legislative and Educational Committee, Metropolitan Good Government Coalition, Minnesota CAP - PAC, Minnesota NOW PAC, Minnesotans for Term Limits, Paul Revere PAC, Political Education Fund of Local 21, Republican National State Elections Committee-Operating, Sierra Club Political Committee

Ms. Pauly's MOTION: To authorize the actions specified in the consent matters.

Vote on MOTION: Unanimously passed.

Discussion Items

. Waiver Requests - Campaign Finance Program - Report of Receipts and Expenditures due 9/3/96

First waiver requests

David P. Gerhardt, treasurer, Isanti County RPM, 2-0096, $200, report filed 9/13/96.

Ms. Wilson's MOTION: To grant Mr. Gerhardt's request to waive the $200 late filing fee due to extenuating circumstances.

Ms. Wilson withdrew her MOTION.

Ms. Owens Hayes' MOTION: To grant Mr. Gerhardt's request to waive the $200 late filing fee due to extenuating circumstances.

Vote on MOTION: Unanimously passed.

James H. Stock, treasurer, Stevens County RPM, 2-0367, $200, report filed 9/16/96.

No motion was made.

Thomas Schulz, treasurer, Wadena County DFL, 2-0109, $50, report filed 9/13/96.

No motion was made.

Andrew F. Brevig, treasurer, 13th Senate District RPM, 4-0743, $150, filed 9/16/96.

No motion was made.

Erv Bernard, treasurer, ACM-PAC, 4-0660, $50, filed 9/10/96. Committee terminated with this report.

Ms. Wilson's MOTION: To grant Mr. Bernard's request to waive the $50 late filing fee due to extenuating circumstances.

Ms. Wilson withdrew her MOTION.

Ms. Owens Hayes' MOTION: To grant Mr. Bernard's request to waive the $50 late filing fee due to the fact the committee has terminated its registration with the Board.

Vote on MOTION: Unanimously passed.

Ardith Lussier, treasurer, AFSCME Local 34 PEOPLE, 4-0753,$250, filed 9/16/96.

No motion was made.

Patricia A. Moe, treasurer, Best and Flanagan Political Fund, 3-0313, $100, filed 9/12/96.

No motion was made.

Carol J. Carlson, treasurer, Minnesota State Council of H.E.R.E. Unions, 3-0060, $100, filed 9/13/96.

No motion was made.

Second Waiver Requests

Robert Krogman, treasurer, Northwest Petroleum NPPAC, 4-0069, $50, filed 9/12/96. First waiver request of $50 was granted on November 26, 1990, for the late filing of the Report of Receipts and Expenditures due October 29, 1990.

Ms. Owens Hayes' MOTION: To grant Mr. Krogman's request to waive the $50 late filing fee due to extenuating circumstances.

Vote on MOTION: Unanimously passed.

Ronald M. Ryan, treasurer, St. Paul Police Relief Association Political Fund, 3-0075, $150, filed 9/13/96. First waiver request of $150 was granted on October 26, 1994, for the late filing of the Report of Receipts and Expenditures due September 6, 1994.

No motion was made.

Lobbyist Program - Lobbyist Disbursement Report due 7/15/96

Fourth Waiver Request

Francis X. Viggiano, (Minnesota State University Student Association), $70; filed 9/9/96. First waiver request of $20 was granted on March 25, 1988, for the late filing of the Lobbyist Disbursement Report due January 15, 1988. Second waiver request was denied on July 23, 1992, for the late filing of the Lobbyist Disbursement Reports due January 15, 1991, April 15, 1991, and January 15, 1992. Third waiver request was denied on November 10, 1994, for the late filing of the Lobbyist Disbursement Report due January 15, 1992.

No motion was made.

. Request to Withdraw Registration

Jeffrey L. Ross, treasurer, Association of Trial Lawyers of America PAC, 4-0720. Committee registered with the Board on 9/13/94. The committee has not made any contributions to a committee covered by 10A since 1994. Requests the termination retroactive to December 31, 1995. This committee will continue to operate as a federal committee. The most recent filed report 1/31/96, annual report, for the period covered 1/1/95 through 12/31/95, shows that the committee has a cash balance of $375,234.60.

Ms. Wilson's MOTION: To accept the request from the Association of Trial Lawyers of America PAC to withdraw the committee registration with the Ethical Practices Board with an ending cash balance of more than $100.

Vote on MOTION: Unanimously passed.

. Proposal for Installment Payments

Ken Smith, (Fathers Who Care), registered as a lobbyist with the Board on 1/17/92. A $100 late filing fee accrued for the late filing of the lobbyist disbursement report due 4/15/96. The most recent filed lobbyist disbursement report, 7/15/96, report, for the period covered 4/1/96 through 6/30/96 discloses no money spent on lobbying efforts. Mr. Smith states that he cannot afford to pay the lump sum $100 late filing fee. He would like to make payments of $25 per month until the $100 late filing fee is paid off. Mr. Smith made a $25 payment on September 19, 1996.

Ms. Owens Hayes' MOTION: To: 1) accept Mr. Smith's request make payments of $25 per month until the $100 late filing fee is paid; and 2) direct staff to inform Mr. Smith that if a payment is missed, the full amount of remaining payments will be due immediately.

Vote on MOTION: Unanimously passed.

Mr. Maloney presented the following enforcement matters for Board information:

Informational Items

. Payment of late filing fees

George W. Bateman, treasurer, (George) Bateman for Representative, #1-2493 37B, $180.08 (paid through Chapter 13 bankruptcy $3,838.38 return of public financing remains to be paid for 1990). The Board is on a payment plan, valid until 1997, through the bankruptcy trustee. 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.

Albert A. Garcia, (Classic Affairs dba Sheiks Gentleman's Club), $40; Albert A. Garcia, (Knutson/Barton), $40; Albert A. Garcia, (Miller and Schroeder Financial Incorporated), $40; Albert A. Garcia, (Minneapolis Firefighters Relief Association), $40; Albert A. Garcia, (Minneapolis Taxi Federation), $40; and Albert A. Garcia, (Municipal Parking Incorporated), $35, all for the late filing of the Lobbyist Disbursement Report due 1/16/96.

Ken Smith, (Fathers Who Care), $25 - Partial payment of proposed installment payment schedule for a $100 for the late filing of the Lobbyist Disbursement Report due 4/15/96.

John E. Diehl, (Joint Commission on Accreditation of Healthcare), $20; and John E. Diehl, (Minnesota Society for Respiratory Care), $20, both for the late filing of the Lobbyist Disbursement Report due 7/15/96.

Lyn Burton, treasurer, Neighbors for (Matt) Entenza, #1-2958 64A, $5 for the late filing of the Statement of Economic Interest due 7/22/96.

John M. Hollander, (Committee not registered - state representative race), $100 for the late filing of the Statement of Economic Interest due 7/30/96.

John R. Medicraft, treasurer, Roseau County RPM, #2-0354, $50; R. Scott Hawkins, treasurer, Clean Water Action Voter Education Project, #4-0389, $100; Frank Boerboon, treasurer, Firefighters Association of Minneapolis Political Fund, #3-0016, $100; Steven Osterkamp, treasurer, The Araz Group, #4-0556, $100; and Peter Thrane, treasurer, The St. Paul Volunteer Committee for Good Local Government, #4-0040, $100, all for the late filing of the Report of Receipts and Expenditures due 9/3/96.

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

Financial Report and Agency Deposits - No report.

ADVISORY OPINION REQUESTS

Requests for the following advisory opinions are nonpublic data.

Advisory Opinion #244 - Commercial use of Ethical Practices Board Data (laid over from August 23, 1996, meeting) (see August 23rd, minutes)

The Board reviewed a draft response to the advisory opinion request and a staff memo providing an alternate opinion to the request.

Ms. Owens Hayes' MOTION: To direct staff to draft an advisory opinion to allow public data from the Ethical Practices Board files to be used as proposed by the requester.

The Board discussed the legal implications of Minn. Stat. §10A.02, subd. 8e, which prohibits use for a "commercial purpose" of information copied from reports or statements filed with the Board. The Board considered whether the requester's proposed use of the data would be commercial use or use for a political activity. Based on Board discussion Mr. Anderson made the following amendment to Ms. Owens Hayes motion:

Mr. Anderson's AMENDED MOTION: To direct staff to draft an advisory opinion to: 1) allow public data from the Ethical Practices Board files to be used on world wide web sites providing political information to citizens; and 2) request that an appropriate notice be included on the site stating that the commercial use of the data is prohibited by statute, so that visitors to the site do not inadvertently violate the law. The Board should consider adopting a rule relating to political activity as a rational for use of Board information on the web site.

Ms. Owens Hayes accepted Mr. Anderson's amendment to her motion.

Vote on MOTION: Unanimously passed.

SUMMARY: ADVISORY OPINION #244 as signed by Chair Carolyn Rodriguez, October 12, 1996: The use of Ethical Practices Board data on a worldwide web site providing political information to citizens is related to political activity and is not prohibited under Minn. Stat. § 10A.02, subd. 8e.

Advisory Opinion #247 - Political committee use of free world wide web page

The Board reviewed a draft response to an advisory opinion request from the chair of a political committee, who asks if a political committee, including a principal campaign committee, may accept free world wide web home page space under the terms described in the facts without violating the provisions of Minnesota Statutes, chapter 10A.

Mr. Anderson's MOTION: To approve Advisory Opinion #247 as drafted.

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

SUMMARY: ADVISORY OPINION #247 as signed by Chair Carolyn Rodriguez, September 20, 1996: Use by a party unit or a principal campaign committee of a service provided without charge to the public and to civic organizations does not result in a contribution to the committee or a gift to the candidate.

Advisory Opinion #248 - Campaign Expenditures and noncampaign disbursements

The Board reviewed a draft response to an advisory opinion request from a candidate for public office who asks: 1) if contributions received by a principal campaign committee can be used to educate and inform other legislators and candidates about legislative issues in which the requester is interested; 2) how to determine if the provision of written material is a constituent service; and 3) if a principal campaign committee may accept contributions from non-corporate entities which are not registered with the Board.

Ms. Owens Hayes' MOTION: To approve Advisory Opinion #248 as drafted.

The Board agreed to certain language changes to the opinion.

Mr. Anderson's MOTION: Direct staff to draft an advisory opinion to state that the facts given in the advisory opinion are vague and difficult to respond to and if the facts were more specific the answer to the advisory opinion may be different.

Mr. Anderson withdrew his motion.

Ms. Owens Hayes' MOTION: To approve Advisory Opinion #248 as amended in discussion.

Vote on MOTION: Unanimously passed.

SUMMARY: ADVISORY OPINION #248 as signed by Chair Carolyn Rodriguez, September 20, 1996: Costs associated with educating candidates and legislators on issues of interest to a public official are not included in the noncampaign disbursements defined in Minn. Stat. § 10A.01, subd. 10c. However, appropriate use of campaign funds is governed primarily by Minn. Stat., chapter 211B, which is not within the Board's jurisdiction. Constituent services are defined in Minn. Rules, part 4503.0100, subp. 6, and must actually provide a service to the constituent. Certain contributions from entities not registered with the Board may be accepted by principal campaign committees if statutory requirements are met.

Request for the following advisory opinion is public data.

Advisory Opinion #246 - Gift to officials of guide to the Minnesota legislature

The Board reviewed a draft response to an advisory opinion request from Sarah Janacek, president and sole shareholder of Minnesota Political Press, Inc., a Minnesota corporation which publishes Politics in Minnesota: The Directory. The Directory is a 500-plus page guide which includes legislative district maps; profiles of districts including information about major employers and special district concerns; and demographic and voting information by district. Ms. Janacek asks if the gift of a copy of The Directory to an official is prohibited under Minn. Stat. § 10A.071.

Mr. Anderson's MOTION: To approve Advisory Opinion #246 as drafted.

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

SUMMARY: ADVISORY OPINION #246 as signed by Chair Carolyn Rodriguez, September 20, 1996: A gift to officials by a lobbyist of a legislative directory falls within the exception to the gift prohibition as information to assist an official in the performance of official duties.

LEGAL COUNSEL'S REPORT

Board members reviewed memos from Counsel Gretz outlining the status of cases which have been turned over to the Attorney General's office. (See memo attached).

LEGISLATIVE RECOMMENDATIONS AND RULES SUBCOMMITTEE REPORT

Subcommittee Chair Ms. Owens Hayes presented the draft rules and a draft resolution authorizing initiation of the formal part of the rulemaking procedure as approved by the subcommittee at its meeting of September 12, 1996.

Ms. Owens Hayes MOTION: To adopt the following resolution:

Resolved, that Jeanne Olson, the Executive Director of the Ethical Practices Board, is hereby granted the authority and directed to take the following actions with respect to the Board's 1996 rulemaking procedure related to amendments to Minnesota Rules, chapters 4501, 4503, 4510, 4511 (new) and 4512:

develop the final draft of the rules proposal based on the draft approved by the Board at its meeting of September 20,1996;

develop a plan for giving notice of the rulemaking procedure and notice of solicitation of comments associated therewith;

prepare and sign public notices consistent with the plan and otherwise complete the plan in accordance with the provisions of the Administrative procedures act;

prepare and sign the Board's Notice of Intent to Adopt Rules Without a Hearing and/or Notice of Hearing on Proposed Rules, or Dual Notice as permitted by Minn. Stat. §14.22, subd. 2, and Statement of Need and Reasonableness.

Further resolved, that the Executive Director shall cause any required documents to be duly published in the State Register and distributed to all persons who have registered their names with the Board for the purpose of receiving notice of rulemaking proceedings and shall perform any necessary acts to initiate the rulemaking comment period and to assure the orderly progress of the Board's rulemaking procedure.

Vote on MOTION: Unanimously passed.

Ms. Owens Hayes reported that the Legislative Recommendations Subcommittee will on October 18th at 8:30 a.m. to discuss process and procedures. Interested persons will be invited to participate in a second meeting.

PUBLIC SUBSIDY CERTIFICATION

Mr. Anderson's MOTION: To instruct and authorize the Executive Director to distribute party account public subsidy payments to all eligible candidates, subject to the State Canvassing Board certifying the results of the primary. In the event of a change based on the Canvassing Board certification, the Executive Director shall make appropriate changes in the list of candidates to be paid. In the event of a legal contest to any election, the Executive Director shall defer distribution of the payment for that district until further action of the Board.

Vote on MOTION: Unanimously passed by five members (Slocum absent) (see memo attached).

ADJOURNMENT

Meeting adjourned.

Respectfully submitted,
Nancy Wilson, Secretary

(Minutes by staff)

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