Provides that the state board of elections may institute an adjudicatory proceeding for the purpose of determining whether a violation has taken place

Summary of provisions

A. CIVIL ENFORCEMENT

This bill adds to the enforcement powers of the state board of elections, enumerated in section 3-104 of the election law, by allowing the board to proceed administratively when it determines that a violation of article 14 has occurred. The board is authorized to assess a civil penalty, as set forth in section 14-126 of the election law, following the hearing.

Section 14-126 of the election law is amended to increase the civil penalty provision from a maximum of one hundred dollars to ten thousand dollars and to make clear that it is applicable to ALL violations of article 14, rather than just failures to file. The power of the State Board and other boards to proceed judicially for civil penalties under section 3-104 is amended to conform with the change in section 14-126.

A new section 3-105 is created in the election law to set forth the procedures to be followed in conducting an administrative proceeding, issuing a determination, and assessing a civil penalty. Except as specifically provided, the hearing shall be conducted pursuant to article 3 of the state administrative procedure act. The board is required to randomly select hearing officers from an active list of at least six qualified attorneys. Such hearing officers must meet the qualifications established by the board pursuant to regulations designed to ensure objectivity and independence, and are to be paid as independent contractors on a PER DIEM basis at a rate fixed by the board.

Following the hearing, the hearing officer shall submit a report to the board and, after reviewing that report, the Board shall make a determination as to whether a violation has occurred and, when appropriate, shall impose a civil penalty. The board shall promulgate regulations setting forth factors to be considered in setting such penalty amounts.

B. ENFORCEMENT BY VILLAGE CLERK

Sections two, six and seven of the bill extend to the village clerk the powers to enforce the requirements of article 14 of the election law which powers are currently possessed by the state board and local boards of elections. Section six amends subdivision five of section 3-104 to empower the village clerk to institute a civil proceeding for civil penalties against a village candidate or committee which violates the campaign finance requirements set forth in article 14. Section eight of the bill amends subdivision one of section 14-126 to include village clerks in the list of petitioners who can seek civil penalties in a judicial proceeding. Section seven amends section 16-114 of the bill to extend to village clerks the power to institute a judicial proceeding seeking an order that a candidate or committee required to file with the village make that filing.

C. ENFORCEMENT OF CORPORATE CONTRIBUTION LIMITS

Section five of the bill adds a new subdivision four to section 14-118 to affirmatively state that treasurers of political committees are obligated to ensure that they do not accept more than $5,000 from any corporate contributor. The bill specifically requires that excess corporate contributions be returned within 10 days of receipt. Moreover, the bill requires treasurers who receive contributions of $1,000 or more from a corporation to notify that corporation of the statutory limit of $5,000 per year.

D. MISCELLANEOUS PROVISIONS

Section four of the bill amends subdivision two of section 14-116 to clarify that the corporate contribution limit of $5,000 per calendar year does not apply to contributions for the purpose of promoting or defeating a ballot issue.

Justification

A. CIVIL ENFORCEMENT

The state board of elections investigates approximately 50 matters each year, with about 30 to 40 percent of those matters relating to violations of the campaign finance law, as set forth in article 14 of the election law. In many instances, the board concludes that while a violation has occurred, criminal prosecution is not warranted because of the inability to establish criminal intent, the existence of extenuating circumstances, or the insignificance of the offense.

Under current law, when such a conclusion is reached, the board often has no choice but to refer it to the district attorney regardless of merit or drop the matter altogether. While the former solution places an unnecessary burden on prosecutors and threatens a minor violator with a disproportionate sanction, the latter solution sends a message of indifference to candidates and their committees and eliminates the chance that similar violations will be deterred in the future. By providing the board with an additional, alternative enforcement tool -- the power to impose civil penalties following an administrative hearing -- compliance with campaign finance requirements should substantially improved.

Further, by making clear that these penalties are available for ALL article 14 violations, an impediment to effective enforcement by the board will be removed -- and by establishing an administrative review procedure, a more appropriate forum to litigate these matters will be provided. However, such reforms would prove meaningless without an increase in the amount of the maximum civil penalty allowed by law. Given the cost of litigating these matters in any forum and the nominal deterrent effect of $100 civil penalty, it would be difficult to justify civil enforcement absent a change in the penalty amount. Consequently, to insure effective enforcement of New York State's campaign finance law, this bill increases the maximum civil penalty amount the state board may assess to $10,000.

B. ENFORCEMENT BY VILLAGE CLERK

Existing law provides for state board and local board-initiated lawsuits to enforce the filing requirements of article 14 of the election law. The practice has been for the state board to institute proceedings in those instances in which the filing should have been made at its office and to refer to local boards of elections violations involving local filings. In addition, there are numerous instances brought to the attention of the state board each year where the violation involved a village election; however, the law makes no reference to lawsuits initiated by village clerks. This provision corrects that oversight, and would therefore enhance enforcement at the village level.

C. ENFORCEMENT OF CORPORATE CONTRIBUTION LIMITS

One of the most difficult compliance issues this board encounters relates to the $5,000 annual limit on political contributions by corporations. The board currently uses a manual system to tabulate corporate contributions and its computerization plans will increase the board's detection capacity. However, once they are identified as exceeding the limit, many corporations claim they were unaware of the limit and that sanctioning them would be unfair. The bill recognizes that notification to politically active corporations of the limit will improve compliance and, if ignored, will facilitate the board's enforcement efforts. Those most able to reach politically active corporations are obviously the treasurers of the political committees to which the corporations contribute. Because it is reasonable to expect that significant contributions ($1,000 or more) will be acknowledged in writing anyway, this requirement will pose no extra burden on treasurers.

D. MISCELLANEOUS PROVISIONS

Existing law which prohibits corporations from contributing more than $5,000 in a calendar year makes no distinction between contributions in support or opposition of candidates and contributions to promote the success or defeat of a ballot issue. The United States Supreme Court, in FIRST NATIONAL BANK OF BOSTON V. BELLOTTI , 435 U.S. 716 (1978) ruled that there could be no limits on the latter. This bill conforms New York law to the BELLOTTI case.

Fiscal impact

This bill will have no fiscal impact on the state this year.

Effective date

The first April after which the bill shall have become law, except that the state board of elections shall immediately promulgate rules and regulations to implement adjudicatory hearings.