S1630

SENATE, No. 1630

STATE OF NEW JERSEY

INTRODUCED OCTOBER 28, 1996

By Senators CODEY and ADLER

An Act concerning ethical standards applicable to certain State officials and employees, amending and supplementing P.L.1971, c.182 (C.52:13D-12 et seq.), supplementing Title 2C of the New Jersey Statutes, and making an appropriation.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 10 of P.L.1971, c.182 (C.52:13D-21) is amended to read as follows:

10. (a) The Executive Commission on Ethical Standards created pursuant to P.L.1967, chapter 229 is continued and established in the Department of Law and Public Safety and shall constitute the first commission under this act.

(b) The commission shall be composed of seven members appointed by the Governor from among State officers and employees serving in the Executive Branch. Each member shall serve at the pleasure of the Governor during the term of office of the Governor appointing him and until his successor is appointed and qualified. The Governor shall designate one member to serve as chairman and one member to serve as vice-chairman of the commission.

(c) Each member of the said commission shall serve without compensation but shall be entitled to be reimbursed for all actual and necessary expenses incurred in the performance of his duties.

(d) The Attorney General shall act as legal adviser and counsel to the said commission. He shall upon request advise the commission in the rendering of advisory opinions by the commission, in the approval and review of codes of ethics adopted by State agencies in the Executive Branch and in the recommendation of revisions in codes of ethics or legislation relating to the conduct of State officers and employees in the Executive Branch.

(e) The said commission may, within the limits of funds appropriated or otherwise made available to it for the purpose, employ such other professional, technical, clerical or other assistants, excepting legal counsel, and incur such expenses as may be necessary for the performance of its duties.

(f) The said commission, in order to perform its duties pursuant to the provisions of this act, shall have the power to conduct investigations, hold hearings, compel the attendance of witnesses and the production before it of such books and papers as it may deem necessary, proper and relevant to the matter under investigation. The members of the said commission and the persons appointed by the commission for such purpose are hereby empowered to administer oaths and examine witnesses under oath.

(g) The said commission is authorized to render advisory opinions as to whether a given set of facts and circumstances would, in its opinion, constitute a violation of the provisions of this act [or of], a code of ethics promulgated pursuant to the provisions of this act, or an Executive Order in which the Governor has granted the commission jurisdiction over the provisions of the Executive Order.

(h) The said commission shall have jurisdiction to initiate, receive, hear and review complaints regarding violations, by any State officer or employee or, special State officer or employee in the Executive Branch, of the provisions of this act or of any code of ethics promulgated pursuant to the provisions of this act, or of any Executive Order in which the Governor has granted the commission jurisdiction over the provisions of the Executive Order. Any complaint regarding a violation of a code of ethics or an executive order may be referred by the commission for disposition in accordance with subsection 12(d) of this act.

(i) The commission shall prepare and publish, prior to May 1 in each year, an annual report to the Governor and the Legislature which describes its activities during the preceding year.

(j) The commission shall conduct an ethics orientation program for the following officers and employees within 30 days of commencement of their duties: the head of a principal department, the assistant or deputy heads of a principal department, including an assistant commissioner or deputy commissioner, as well as any officer or employee of a principal department having responsibilities for ethics matters. Attendance by these officials and employees shall be mandatory.

(k) The commission shall require a State officer or employee or special State officer or employee in the Executive Branch to provide a written delegation of decision-making responsibility to another appropriate officer or employee whenever the commission determines that the potential exists for ethical violations in regard to certain matters.

[(i)] (l.) Any State officer or employee or special State officer or employee in the Executive Branch found [guilty by the commission of violating] by the commission to have violated any provision of this act [or of], a code of ethics promulgated pursuant to the provisions of this act, or an Executive Order in which the Governor has granted the commission jurisdiction over the provisions of the Executive Order shall be fined not less than [$100.00]$500 nor more than [$500.00]$1,500, which penalty may be collected in a summary proceeding pursuant to [the Penalty Enforcement Law (N.J.S. 2A:58-1)] "the penalty enforcement law" (N.J.S.2A:58-1 et seq.), and may be: reprimanded and ordered to pay restitution where appropriate; suspended from his office or employment by order of the commission for a period of not in excess of 1 year; or barred from holding any public office or employment in this State in any capacity whatsoever for a period not in excess of one year. If the commission finds that the conduct of such officer or employee constitutes a willful and continuous disregard of the provisions of this act [or of], a code of ethics promulgated pursuant to the provisions of this act, or an Executive Order in which the Governor has granted the commission jurisdiction over the provisions of the Executive Order, it may order such person removed from his office or employment and may further bar such person from holding any public office or employment in this State in any capacity whatsoever for a period of not exceeding 5 years from the date on which he was found [guilty] by the commission to have violated any provision of P.L.1971, c.182, a code, or an executive order.

(cf: P.L.1971, c.182, s.10)

2. Section 11 of P.L.1971, c.182 (C.52:13D-22) is amended to read as follows:

11. (a) The Joint Legislative Committee on Ethical Standards created pursuant to the provisions of P.L.1967, chapter 229, as continued and established pursuant to P.L.1971, c.182, is continued and established in the Legislative Branch of State Government with the addition of the public members as set forth in this section.

(b) The joint committee shall be composed of 12 members as follows: four members of the Senate appointed by the President thereof, no more than two of whom shall be of the same political party; four members of the General Assembly, appointed by the Speaker thereof, no more than two of whom shall be of the same political party; and four public members, one appointed by the President of the Senate, one appointed by the Speaker of the General Assembly, one appointed by the Minority Leader of the Senate and one appointed by the Minority Leader of the General Assembly. No public member shall be a lobbyist or legislative agent as defined by the "Legislative Activities Disclosure Act of 1971," P.L.1971, c.183 (C.52:13C-18 et seq.), a full-time State employee or an officer or director of any entity which is required to file a statement with the Election Law Enforcement Commission, and no former lobbyist or legislative agent shall be eligible to serve as a public member for one year following the cessation of all activity by that person as a legislative agent or lobbyist. The legislative members shall serve until the end of the two-year legislative term during which the members are appointed. The public members shall serve for terms of two years and until the appointment and qualification of their successors. The terms of the public members shall run from the second Tuesday in January of an even-numbered year to the second Tuesday in January of the next even-numbered year, regardless of the original date of appointment. Notwithstanding the terms of the public members as established in this section, the public members first appointed shall serve from their initial appointments, all of which shall be made not later than the 60th day following the effective date of this act, until the second Tuesday in January of the next even-numbered year. Vacancies in the membership of the joint committee shall be filled in the same manner as the original appointments, but for the unexpired term only. Public members of the joint committee shall serve without compensation, but shall be entitled to be reimbursed for all actual and necessary expenses incurred in the performance of their duties.

(c) The joint committee shall organize as soon as may be practicable after the appointment of its members, by the selection of a chairman and vice chairman from among its membership and the appointment of a secretary, who need not be a member of the joint committee.

(d) The Legislative Counsel in the Office of Legislative Services shall act as legal adviser to the joint committee. He shall, upon request, assist and advise the joint committee in the rendering of advisory opinions by the joint committee, in the approval and review of codes of ethics adopted by State agencies in the Legislative Branch, and in the recommendation of revisions in codes of ethics or legislation relating to the conduct of members of the Legislature or State officers and employees in the Legislative Branch.

(e) The joint committee may, within the limits of funds appropriated or otherwise available to it for the purpose, employ other professional, technical, clerical or other assistants, excepting legal counsel, and incur expenses as may be necessary to the performance of its duties.

(f) The joint committee shall have all the powers granted pursuant to chapter 13 of Title 52 of the Revised Statutes.

(g) The joint committee is authorized to render advisory opinions as to whether a given set of facts and circumstances would, in its opinion, constitute a violation of the provisions of this act, of a code of ethics promulgated pursuant to the provisions of this act or of any rule of either or both Houses which gives the joint committee jurisdiction and the authority to investigate a matter.

(h) The joint committee shall have jurisdiction to initiate, receive, hear and review complaints regarding violations of the provisions of this act or of a code of ethics promulgated pursuant to the provisions of this act. It shall further have such jurisdiction as to enforcement of the rules of either or both Houses of the Legislature governing the conduct of the members or employees thereof as those rules may confer upon the joint committee. A complaint regarding a violation of a code of ethics promulgated pursuant to the provisions of this act may be referred by the joint committee for disposition in accordance with subsection 12(d) of this act.

(i) Any State officer or employee or special State officer or employee in the Legislative Branch found guilty by the joint committee of violating any provisions of this act, of a code of ethics promulgated pursuant to the provisions of this act or of any rule of either or both Houses which gives the joint committee jurisdiction and the authority to investigate a matter shall be fined not less than $500.00 nor more than $1,500.00, which penalty may be collected in a summary proceeding pursuant to "the penalty enforcement law" (N.J.S.2A:58-1 et seq.), and may be reprimanded and ordered to pay restitution where appropriate [and may be]; suspended from his office or employment by order of the joint committee for a period not in excess of 1 year; or barred from holding any public office or employment in this State in any capacity whatsoever for a period not in excess of one year. If the joint committee finds that the conduct of such officer or employee constitutes a willful and continuous disregard of the provisions of this act, of a code of ethics promulgated pursuant to the provisions of this act or of any rule of either or both Houses which gives the joint committee jurisdiction and the authority to investigate a matter, it may order such person removed from his office or employment and may further bar such person from holding any public office or employment in this State in any capacity whatsoever for a period of not exceeding 5 years from the date on which he was found guilty by the joint committee.

(j) A member of the Legislature who shall be found guilty by the joint committee of violating the provisions of this act, of a code of ethics promulgated pursuant to the provisions of this act or of any rule of either or both Houses which gives the joint committee jurisdiction and the authority to investigate a matter shall be fined not less than $500.00 nor more than $1,500.00, which penalty may be collected in a summary proceeding pursuant to "the penalty enforcement law" (N.J.S.2A:58-1 et seq.), and shall be subject to such further action as may be determined by the House of which he is a member. In such cases the joint committee shall report its findings to the appropriate House and shall recommend to the House such further action as the joint committee deems appropriate, but it shall be the sole responsibility of the House to determine what further action, if any,

shall be taken against such member.

(cf: P.L.1991, c.505, s.1)

3. Section 12 of P.L.1971, c.182 (C.52:13D-23) is amended to read as follows:

12. (a) The head of each State agency, or the principal officer in charge of a division, board, bureau, commission or other instrumentality within a department of State Government designated by the head of such department for the purposes hereinafter set forth, shall within six months from the date of enactment, promulgate a code of ethics to govern and guide the conduct of the members of the Legislature, the State officers and employees or the special State officers and employees in the agency to which said code is applicable. Such code shall conform to the general standards hereinafter set forth in this section, but it shall be formulated with respect to the particular needs and problems of the agency to which said code is to apply. Notwithstanding any other provisions of this section, the New Jersey members to any interstate agency to which New Jersey is a party and the officers and employees of any State agency which fails to promulgate a code of ethics shall be deemed to be subject to a code of ethics the provisions of which shall be paragraphs (1) through (6) of subsection (e) of this section.

(b) A code of ethics formulated pursuant to this section to govern and guide the conduct of the State officers and employees or the special State officers and employees in any State agency in the Executive Branch, or any portion of such a code, shall not be effective unless it has first been approved by the Executive Commission on Ethical Standards. When a proposed code is submitted to the said commission it shall be accompanied by an opinion of the Attorney General as to its compliance with the provisions of this act and any other applicable provision of law. Nothing contained herein shall prevent officers of State agencies in the Executive Branch from consulting with the Attorney General or with the Executive Commission on Ethical Standards at any time in connection with the preparation or revision of such codes of ethics.

(c) A code of ethics formulated pursuant to this section to govern and guide the conduct of the members of the Legislature, State officers and employees or special State officers and employees in any State agency in the Legislative Branch, or any portion of such code, shall not be effective unless it has first been approved by the Legislature by concurrent resolution. When a proposed code is submitted to the Legislature for approval it shall be accompanied by an opinion of the chief counsel as to its compliance with the provisions of this act and any other applicable provisions of law. Nothing contained herein shall prevent officers of State agencies in the Legislative Branch from consulting with the Chief Legislative Counsel or the Joint Legislative Committee on Ethical Standards at any time in connection with the preparation or revision of such codes of ethics.

(d) Violations of a code of ethics promulgated pursuant to this section shall be cause for removal, suspension, demotion or other disciplinary action by the State officer or agency having the power of removal or discipline. When a person who is in the classified civil service is charged with a violation of such a code of ethics, the procedure leading to such removal or discipline shall be governed by any applicable provisions of the Civil Service Law and the Rules of the Department of Civil Service. No action for removal or discipline shall be taken under this subsection except upon the referral or with the approval of the Executive Commission on Ethical Standards or the Joint Legislative Committee on Ethical Standards, whichever is authorized to exercise jurisdiction with respect to the complaint upon which such action for removal or discipline is to be taken.

(e) A code of ethics for officers and employees of a State agency shall conform to the following general standards:

(1) No State officer or employee or special State officer or employee should have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity, which is in substantial conflict with the proper discharge of his duties in the public interest.

(2) No State officer or employee or special State officer or employee should engage in any particular business, profession, trade or occupation which is subject to licensing or regulation by a specific agency of State Government without promptly filing notice of such activity with the Executive Commission on Ethical Standards, if he is an officer or employee in the Executive Branch, or with the Joint Legislative Committee on Ethical Standards, if he is an officer or employee in the Legislative Branch. A State officer or employee or a special State officer or employee who possesses a license issued by a State agency which entitles the officer or employee to engage in a particular business, profession, trade or occupation shall file notice of that fact with the Executive Commission or the Joint Committee, as appropriate.

(3) No State officer or employee or special State officer or employee should use or attempt to use his official position, or permit another to use an official position, to secure unwarranted privileges or advantages for [himself or others] any person.

(4) No State officer or employee or special State officer or employee should act in his official capacity in any matter wherein he has a direct or indirect personal financial interest that might reasonably be expected to impair his objectivity or independence of judgment.

(5) No State officer or employee or special State officer or employee should undertake any employment or service, whether compensated or not, which might reasonably be expected to impair his objectivity and independence of judgment in the exercise of his official duties.

(6) No State officer or employee or special State officer or employee should accept any gift, favor, service or other thing of value under circumstances from which it might be reasonably inferred that such gift, service or other thing of value was given or offered for the purpose of influencing him in the discharge of his official duties.

(7) No State officer or employee or special State officer or employee should knowingly act in any way that might reasonably be expected to create an impression or suspicion among the public having knowledge of his acts that he may be engaged in conduct violative of his trust as a State officer or employee or special State officer or employee.

(8) Rules of conduct adopted pursuant to these principles should recognize that under our democratic form of government public officials and employees should be drawn from all of our society, that citizens who serve in government cannot and should not be expected to be without any personal interest in the decisions and policies of government; that citizens who are government officials and employees have a right to private interests of a personal, financial and economic nature; that standards of conduct should separate those conflicts of interest which are unavoidable in a free society from those conflicts of interest which are substantial and material, or which bring government into disrepute.

(f) The code of ethics for members of the Legislature shall conform to subsection (e) hereof as nearly as may be possible.

(cf: P.L.1987, c.432, s.6)

4. (New section) As used in sections 4 through 9 of P.L. , c. (C. ) (now pending before the Legislature as this bill):

"public employee" means any person holding any of the following offices in the Executive Branch of State government:

the Governor;

the head of a principal department;

the assistant or deputy heads of a principal department including all assistant and deputy commissioners of such department;

the head and assistant heads of a division of a principal department, or any person exercising substantially similar authority for any board or commission which is organized as in, but not of, a principal department or any independent authority;

the executive or administrative head of any board or commission which is organized as in, but not of, a principal department or any independent authority;

the following members of the staff of the Office of the Governor:

Chief of Staff;

Chief Policy Advisor;

Director of Communications;

Counsel to the Governor;

Executive Assistant to the Governor;

any deputy or principal administrative assistant to any of the aforesaid;

members of the State Board of Agriculture;

members of the State Board of Education;

members of the Commission on Higher Education;

members of the State Parole Board; and

presidents of the State colleges and universities.

"public officer" means a member of any of the following boards, commissions, independent authorities or public corporations:

Atlantic City Convention Center Authority;

New Jersey Building Authority;

Capital City Redevelopment Corporation;

Casino Reinvestment Development Authority;

Educational Facilities Authority;

New Jersey Economic Development Authority;

New Jersey Highway Authority;

New Jersey Transportation Trust Fund Authority;

New Jersey Turnpike Authority;

North Jersey District Water Supply Commission;

Passaic Valley Sewerage Commission;

Passaic Valley Water Commission;

New Jersey Public Broadcasting Authority;

South Jersey Port Corporation;

New Jersey Sports and Exposition Authority;

Pinelands Commission;

Hackensack Meadowlands Development Commission;

Council on Affordable Housing;

Agriculture Development Committee;

Health Care Facilities Financing Authority;

Election Law Enforcement Commission;

Hazardous Waste Facilities Siting Commission;

Health Care Administration Board;

Hospital Rate Setting Commission;

Low-Level Radioactive Waste Disposal Facility Siting Board;

Merit System Board;

New Jersey State Council on the Arts;

New Jersey Housing and Mortgage Finance Agency;

New Jersey Commission on Science and Technology;

New Jersey Racing Commission;

New Jersey Transit Corporation;

New Jersey Urban Enterprise Zone Authority;

Public Employment Relations Commission;

South Jersey Food Distribution Authority;

South Jersey Transportation Authority;

State Lottery Commission;

State Planning Commission;

Tidelands Resource Council;

Urban Development Corporation;

Wastewater Treatment Trust;

Water Supply Authority; and

State Athletic Control Board;

"public officer" also means any New Jersey member of the following interstate agencies:

Atlantic States Marine Fisheries Commission;

The Delaware River and Bay Authority;

Delaware River Basin Commission;

Delaware River Joint Toll Bridge Commission;

Delaware River Port Authority;

Delaware Valley Regional Planning Commission;

Interstate Sanitation Commission;

Northeast Interstate Low Level Radioactive Waste Commission;

Palisades Interstate Park Commission;

Port Authority of New York and New Jersey;

The Port Authority Trans-Hudson Corporation;

South Jersey Port Corporation; and

Waterfront Commission of New York Harbor.

"government instrumentality" means the Legislative, Judicial and Executive Branches of State government, including any office, department, division, bureau, board, commission, council, authority or agency therein and any county, municipality, district, public authority, public agency or other political subdivision or public body in the State.

"State agency" means any of the principal departments in the Executive Branch of State government, and any division, board, office, commission or other instrumentality within or created by such department, and any independent State authority, commission, instrumentality or agency.

"relative" means a son, daughter, grandson, granddaughter, father, mother, grandfather, grandmother, great-grandfather, great-grandmother, brother, sister, nephew, niece, uncle, or aunt; relatives by adoption, half-blood, marriage or re-marriage shall be treated as relatives of the whole kinship.

5. (New section) A public employee or public officer shall file, not later than May 15 in each calendar year, a sworn and duly notarized statement which is current as of five days prior to the date of filing. Each statement shall include the following information:

a. the name and position of the public employee or public officer;

b. any occupation, trade, business or profession which the public employee or public officer, or the spouse or dependent children of the public employee or public officer, is eligible to engage in and which is subject to licensing or regulation by a State agency, whether or not this activity is actually engaged in;

c. a list of all assets having a value of more than $1,000, both tangible and intangible, in which a direct or indirect interest is held by the public employee or public officer, or by the spouse or dependent children of the public employee or public officer, valued as of the statement date; provided, however, that when the value cannot be determined as of that date, a separate valuation date shall be specified for the particular asset. Where stocks and bonds are involved, there shall be included the name of the company, mutual fund, holding company or government agency issuing them, except that whenever such interest exists through ownership in a mutual fund or holding company, the stocks held by such mutual fund or holding company need not be listed; whenever such interest exists through a beneficial interest in a trust, the stocks and bonds held in such trust shall be listed only if the public employee or public officer has knowledge of what stocks and bonds are so held. Where more than 10 percent of the stock of a corporation is held, the percentage of ownership shall be stated. The list shall include any direct or indirect interest, whether vested or contingent, in any contract made or executed by a government instrumentality. In the case of real estate interests, there shall be given the location, size, general nature and acquisition date of any real property in New Jersey in which any direct, indirect, vested or contingent interest is held, together with the names of all individuals or entities who share a direct or indirect interest therein and the name of any government instrumentality that is a tenant of such property or that has before it an application, complaint or proceeding directly affecting such property. Assets of a public employee and the spouse of the public employee shall be listed according to the following value categories:

greater than $1,000, but not more than $5,000;

greater than $5,000, but not more than $25,000;

greater than $25,000, but not more than $50,000;

greater than $50,000, but not more than $100,000;

greater than $100,000, but not more than $250,000;

greater than $250,000.

The value of the assets of the dependent children of a public employee, or of a public officer, or of the spouse or dependent children of a public officer, need not be disclosed unless specifically requested by the Governor or the Executive Commission on Ethical Standards;

d. a list of all liabilities of the public employee or public officer, and the spouse or dependent children of the public employee or public officer, valued by category in the same manner as required by subsection c. of this section, except liabilities which are:

less than $10,000 and owed to a relative;

less than $1,000 and owed to any other person;

loans secured by a personal motor vehicle, household furniture or appliances where the loan did not exceed the purchase price of the item and the outstanding balance did not exceed $10,000 as of the close of the preceding calendar year; or

revolving charge accounts where the outstanding liability does not exceed $10,000 as of the close of the preceding calendar year;

e. a list of all liabilities otherwise subject to disclosure pursuant to subsection d. of this section of the public employee or public officer, or of the spouse or dependent children of the public employee or public officer which have been forgiven by the creditor within 12 months of the statement date, including for each forgiven liability the name of the creditor to whom such liability was owed;

f. a list of all sources of income of the public employee or public officer, and of the spouse or dependent children of the public employee or public officer, including all compensated employment of whatever nature, all directorships or other fiduciary positions for which compensation has or will be claimed, all capital gains including a description of the individual sources of such gains, all contractual arrangements producing or expected to produce income, and honoraria, lecture fees and other miscellaneous sources of income including, but not limited to interest, dividends, royalties and rents. Statements filed before July 1 of any year shall disclose sources of income for the preceding calendar year. Statements filed after July 1 of any year shall provide this information for the twelve-month period immediately preceding the filing date; the exact amounts of such income received shall be listed; not required to be reported as a source of income are:

cash gifts in an aggregated amount of less than $100 received during the preceding twelve months from a person;

non-cash gifts with an aggregated fair market value of less than $200 received during the preceding twelve months from a person; and

gifts with an aggregated cash or fair market value of less than $3,000 received during the preceding twelve months from a relative;

and

g. a list of any offices, trusteeships, directorships or positions of any nature, whether compensated or uncompensated, held by the public employee or public officer, or by the spouse or dependent children of the public employee or public officer, with any firm, corporation, association, partnership or business. If any firm, corporation, association, partnership or business does business with or is licensed, regulated or inspected by a State agency or does business with a casino license holder or applicant, the State agency or the casino license holder or applicant shall be identified.

6. (New section) Each statement shall contain a certification by the public employee or public officer that the public employee or public officer has read the statement, that to the best knowledge and belief of the public employee or public officer it is true, correct and complete and that the public employee or public officer has not and will not transfer any asset, interest or property for the purpose of concealing it from disclosure while retaining an equitable interest therein.

7. (New section) a. Within 120 days from the effective date of P.L. , c. (now pending before the Legislature as this bill), any public employee or public officer who has not already done so pursuant to Executive Order of the Governor shall file the signed and notarized statement required herein with the Office of the Governor and one copy of that statement bearing an original signature and notarization with the Executive Commission on Ethical Standards. The commission shall review each statement to determine its conformity with the relevent laws and shall file and maintain a copy of it for public inspection and copying in accordance with the procedures set forth in P.L.1963, c.73 (C.47:1A-1 et seq.).

b. Each prospective public employee and public officer shall, before assuming the office to which he or she has been appointed, satisfy the filing requirements of section 5 of P.L. , c. (C. ) (now pending before the Legislature as this bill), unless the Attorney General grants to that employee or officer an extension of the filing deadline. An extension shall not be granted more than twice and shall not be of more than thirty days each.

c. Updated statements shall be filed on the May 15 next succeeding the submission of the original statement and each May 15 thereafter.

8. (New section) The Executive Commission on Ethical Standards shall keep the approved statements on file for so long as the person submitting such statement is a public employee or public officer of this State and for five years thereafter.

9. (New section) The Executive Commission on Ethical Standards shall have the primary responsibility for assuring the proper administration and implementation of the financial disclosure requirements applicable to public employees and public officers and shall have the power to perform the acts necessary and convenient to this end, including, but not limited to, preparing and distributing forms and instructions to be utilized by public employees and public officers.

10. (New section) As used in sections 10 through 18 of P.L. c. (C. ) (now pending before the Legislature as this bill):

"member of the immediate family" means a spouse, child, parent or sibling residing in the same household;

"asset" means property of any kind, real and personal, tangible and intangible, having a value greater than $1,000;

"interest" in closely held corporation, partnership, sole proprietorship or similar business entity means any ownership or control of any profits or assets of such business entity;

"doing business with any federal, State or local government entity" means business or commercial transactions involving the sale, conveyance or rental of any goods or services, and shall not include such activities as compliance with regulatory procedures; and

"State agency" means any of the principal departments of State government and any entity allocated therein in conformance with N.J. Const. (1947), Art. V, Sec. IV, para. 1.

11. (New section) Whenever the Executive Commission on Ethical Standards permits a blind trust to be utilized by a State officer or employee, or by the spouse or dependent child of a State officer or employee, the trust shall contain the following characteristics:

a. the trust shall not contain investments or assets in which the holder's ownership right or interest is required to be recorded in a public office or those assets whose permanency makes transfer by the trustee improbable or impractical; these investments or assets would include, but not be limited to, businesses, real estate, security interests in personal property and mortgages;

b. the trust shall contain a clear statement of its purpose, namely, to remove from the grantor control and knowledge of investment of trust assets so that conflicts between the grantor's responsibilities and duties as a State officer or employee and the State officer's or employee's private business or financial interests will be eliminated;

c. the trust shall be irrevocable, and shall be terminated only upon the death of the State officer or employee or upon termination from State office or employment, whichever shall first occur;

d. the trustee shall be directed not to disclose to the grantor any information about any of the assets in the trust;

e. the trustee shall be required either to: prepare and file the grantor's personal income tax returns, withholding from distribution of the trust's net income amounts sufficient to pay the grantor's tax; and further to participate in the audit of the grantor's returns during the period of the trust with authority to compromise the grantor's tax liability; or submit to the grantor, for income tax purposes, a certification of income paid without identifying the assets producing such income;

f. among its other powers, the trustee shall have authority to determine whether any of the assets originally transferred to the trustee are to be sold and, if so, when;

g. a provision shall be included in the trust agreement prohibiting the trustee from investing the trust property in corporations or businesses which it knows do a significant amount of business with the State of New Jersey or from knowingly making any investment in a corporation, business or venture over which the grantor has regulatory or supervisory authority by virtue of the grantor's position as a State officer or employee;

h. the grantor shall retain no control over the trustee nor shall the grantor be permitted to make any recommendations or suggestions as to the trust property;

i. the trustee shall be a commercial trustee and not a natural person;

j. the principal benefit to be retained by the grantor shall be the right to receive income from the assets transferred to the trust;

k. the trust shall not become effective until submitted and approved by the Executive Commission on Ethical Standards; and

l. the trust agreement shall provide that the trustee will give the Executive Commission on Ethical Standards access to any records or information related to the trust which is necessary for the performance of the commission's duties.

12. (New section) A copy of the executed blind trust agreement shall be filed with the Executive Commission on Ethical Standards and with the head of the department in which the State officer or employee holds office or employment. Attached to such copy shall be a brief statement outlining the business or financial interests from which the State officer or employee seeks removal and the actual or potential conflicts of interest, or appearance of such conflicts, which are sought to be avoided by use of the trust agreement.

13. (New section) a. A State officer or employee who is required by law to submit financial disclosure statements to the Executive Commission on Ethical Standards shall not retain any interest in any closely-held corporation, partnership, sole proprietorship, or similar business entity doing business with any federal, State, interstate or local government entity, except as provided in subsection d. of this section.

b. Any State officer or employee who is employed on the effective date of P.L. , c. (now pending before the Legislature as this bill), and who retains any interest in any closely-held corporation, partnership, sole proprietorship, or similar business entity doing business with any federal, State, interstate or local government entity, shall notify the Executive Commission on Ethical Standards as to the interest, and interest of the spouse of the State officer or employee, in such a business entity within 120 days of that effective date, unless the officer or employee has already done so pursuant to Executive Order of the Governor. The Executive Commission on Ethical Standards shall review this disclosure statement to determine whether a business entity in which the State officer or employee has an interest is engaged in government-related business and whether the holdings are in compliance with the applicable law. The Executive Commission on Ethical Standards shall notify the State officer or employee of its findings as soon as possible. The State officer or employee shall be afforded 120 days after the date of notification to effectuate the orderly disposition of any asset, or to demonstrate to the Executive Commission on Ethical Standards that the business entity has ceased to do business with a government entity in a prohibited manner.

c. No State agency shall employ a State officer or employee who holds any interest in any closely-held corporation, partnership, sole proprietorship or similar business entity doing business with any federal, State, interstate, or local government entity, except as provided in subsection d. of this section. An individual seeking employment in such a position shall divest a covered asset only in the manner provided herein. No State officer or employee shall obtain any prohibited interest in a business entity during the officer's or employee's tenure.

d. The provisions of subsections a., b. and c. of this section shall not apply to any purchase, sale, contract, or agreement with any government entity other than a State agency, which is made or awarded after public notice and competitive bidding as provided by the Local Government Contracts Law, P.L.1971, c.198 (C.40A:11-1 et seq.), or such similar provisions contained in the public bidding laws or regulations applicable to any government entity in this State or any other jurisdiction, provided that any such purchase, sale, contract or agreement, including a change in orders and amendments thereto, shall receive the prior approval of the Executive Commission on Ethical Standards. The provisions of subsections a., b. and c. of this section shall apply where the purchase, sale, contract or agreement is authorized by any of the exceptions provided in section 5 of P.L.1971, c.198 (C.40A:11-5), or such similar provisions contained in the public bidding laws or regulations of any other jurisdiction.

14. (New section) No State officer or employee or special State officer or employee who is required by law to submit a financial disclosure statement to the Executive Commission on Ethical Standards shall retain any interest in any closely-held corporation, partnership, sole proprietorship or similar business entity unless the Executive Commission on Ethical Standards shall have first determined that the employee or officer may retain such an interest in such business entity.

Each State officer or employee or special State officer or employee who was employed or appointed prior to the effective date of P.L. , c. (now pending before the Legislature as this bill) shall notify the Executive Commission on Ethical Standards as to an interest held by the officer or employee, or by the spouse of the officer or employee in any such business entity, within 120 days of that effective date, unless the officer or employee has already done so pursuant to Executive Order of the Governor. The Executive Commission on Ethical Standards shall review the disclosure statement and shall determine, as soon as possible, whether the employee or officer may retain such interest in the business entity. The employee or officer shall be afforded 120 days after the date of notification to effectuate the orderly disposition of any asset or to demonstrate that the business entity has ceased the business activity in question.

After the effective date of P.L. , c. (now pending before the Legislature as this bill), no State agency shall employ or appoint any State officer or employee or special State officer or employee to a position if the officer or employee holds any interest in any closely-held corporation, partnership, sole proprietorship or similar business entity, unless the Executive Commission on Ethical Standards has reviewed such interest and determined that the officer or employee may retain such an interest. A person seeking such employment or appointment shall disclose to the Executive Commission on Ethical Standards the person's interest, or the interest of the person's spouse, in any such business entity as soon as practicable, and the Executive Commission on Ethical Standards shall render a determination no later than 30 days after receiving such disclosure, or at its next regularly scheduled meeting. No person seeking employment or appointment to a position shall divest a covered asset in a manner other than as permitted herein.

15. (New section) The Executive Commission on Ethical Standards shall review all financial disclosure statements as they may from time to time be submitted by State officers or employees and special State officers or employees to determine whether the covered persons have obtained ownership or interest in any assets that give rise to a present or potential conflict of interest, or a present or potential appearance of a conflict of interest.

16. (New section) Each State officer or employee or special State officer or employee shall amend the officer's or employee's financial disclosure statement within 30 days of gaining knowledge: a. that the officer's or employee's spouse's has acquired an interest in any closely-held corporation, partnership, sole proprietorship or similar business entity; or b. of the commencement of any business activity covered by the provisions of P.L. , c. (now pending before the Legislature as this bill) and as determined by the Executive Commission on Ethical Standards, including, for example, a change in business plan authorizing business activity with a federal, State, interstate or local government entity by a business in which the officer or employee or the employee's or officer's spouse has an interest.

17. (New section) Any State officer or employee or special State officer or employee who acquires a prohibited interest by way of inheritance, bequest or similar circumstances beyond the control of the officer or employee shall follow the procedures for disclosure and disposition set forth in P.L. , c. (now pending before the Legislature as this bill).

18. (New section) All required divestitures shall be subject to the following conditions:

divestiture must occur within the time periods prescribed above;

ownership or control of the asset may not be transferred to a member of the immediate family of the State officer or employee or special State officer or employee; and

the terms and conditions of any conveyance of ownership and control of the asset shall not contain any provisions regarding the return of the asset to the State officer or employee or special State officer or employee subsequent to leaving State service.

19. (New section) It shall be a crime of the third degree for a public servant to:

a. knowingly make, or cause or permit another public servant to make, a false entry in, or false alteration of, any record, document or thing belonging to, or received or kept by, the government for information or record, or required by law to be kept by others for information of the government;

b. make, present, offer for filing, or use any record, document or thing, or cause or permit another public servant to do so, knowing it to be false, and with purpose that it be taken as a genuine part of information or records referred to in subsection a. of this section; or

c. purposely and unlawfully destroy, conceal, remove, mutilate, or otherwise impair the verity or availability of any such record, document or thing, or purposely and unlawfully cause or permit another public servant to do so.

20. (New section) The first annual report submitted by the Executive Commission on Ethical Standards to the Governor and the Legislature, pursuant to subsection (i) of section 10 of P.L.1971, c.182 (C.52:13D-21), shall include the commission's recommendations as to whether legislation should be enacted which prohibits the spouse or other family member of a State officer or employee or of a special State officer or employee from holding employment in an industry over which the officer or employee has regulatory responsibility.

21. There is appropriated from the General Fund of the State $300,000 to the Executive Commission on Ethical Standards to effectuate the purposes of this act.

22. This act shall take effect immediately.

STATEMENT

This bill implements certain recommendations regarding the ethical standards applicable to certain State officials and employees which were made by the State Commission of Investigation in its report entitled "Insurance Interests and Licensure of Former Insurance Commissioner Andrew J. Karpinski", issued in October, 1996. Specifically, the bill:

(1) gives the Executive Commission the authority to issue advisory opinions on, and enforce, certain Executive Orders;

(2) directs the Executive Commission to submit an annual report to the Governor and the Legislature;

(3) establishes an ethics orientation program for new, high-level State officers;

(4) provides that certain State officer or employees must delegate certain decision-making responsibilities, in writing, to avoid conflicts of interest;

(5) makes the penalties which may be imposed upon officers and employees of the Executive Branch for ethics violations consistent with the penalties which currently may be applied to officers and employees of the Legislative Branch by increasing fines and authorizing the Executive Commission to reprimand violators and order restitution, where appropriate;

(6) allows both the Executive Commission and the Joint Committee on Ethical Standards to bar an officer or employee from public office or employment for up to one year;

(7) requires officers and employees to report to the Executive Commission the possession of any license issued by a State agency;

(8) codifies the provisions of Executive Order No. 2 (Whitman) of 1994 concerning financial disclosure, use of blind trusts, divestiture of assets and interest in a closely-held corporation by officers and employees;

(9) requires financial disclosure statements filed with the Executive Commission to include exact amounts of income from each source;

(10) provides that it shall be a crime of the third degree for a public servant to tamper with public records;

(11) directs the Executive Commission to include in its next annual report its recommendations on the need for legislation regulating employment by the spouse or other family members of a high level State officer in an industry over which that officer has regulatory responsibilities; and

(12) appropriates $300,000 to the Executive Commission to offset the additional expenses associated with complying with the bill.

Implements certain recommendations of the State Commission of Investigation concerning ethical standards applicable to certain State officials and employees; appropriates $300,000.