Questions of ethics rose to the forefront in May of 2005, when several sitting legislators were arrested in a sting operation, Operation Tennessee Waltz, and charged with accepting bribes for legislative favors.

Legislators were alarmed and embarrassed. Many legislators, including me, asked for a "special" session, and Governor Bredesen convened such a session, correctly called "the first extraordinary session of the One Hundred and Fourth General Assembly," in January 2006.

For nearly one month, both houses worked on this bill. There were 136 amendments offered in the Senate and 105 amendments in the House. Because the amended versions voted out of the Senate and House were quite different, a conference committee-- composed of six Senate Republicans, six Senate Democrats, six House Republicans, and six Democrat Republicans-- met, and reconciled the differences into a conference committee report. This reconciled ethics bill was 114 pages in length.

There were eleven minority reports filed in the Senate. A minority report may be filed by a member of the conference committee, if he or she feels the conference committee report is inadequate or improper. Passage of all minority reports failed to be considered, because the Senate sponsors could not obtain the required signature of one House conference committee member.

On February 6, 2006, the Senate passed this bill by a 27 to 6 vote; the House passed the bill by a 90 to 5 vote, with two present but not voting. The bill was then ready for the governor's action. He almost certainly will sign the bill into law.

This bill provides-- among other things-- the following:

CAMPAIGN FINANCE REFORM-- incumbent office holders, new candidates, and campaign committees:

• An Ethics Commission is created.
• Candidates must file quarterly contribution and expenditure statements in election years and semiannual contribution and expenditure statements in non-election years in addition to other reporting, with the goal of making campaign contributions as transparent to the public as possible. In some cases, electronic filing will be required, to make reports promptly available on the Internet.
• Campaign records must be kept at least two years, to permit auditing.
• Contributions exceeding 100-dollars must include the name, address, occupation and employer of the contributor.
• Any campaign pledges must be reported in a timely manner.
• All expenditure statements must explain the purpose of the expenditure.
• Non-compliance with regulations will result in stiffer penalties.
• Campaign funds may not be used for personal use.
• Audits of financial records will be performed on; all candidates for governor, who receive at least ten percent of the vote; two percent of the candidates for the General Assembly, based upon random selection of districts by lots; one candidate from each of the Supreme Court, Court of Appeals, and Criminal Court of Appeals, based upon random selection of names by lots; and any candidate who files a contribution statement with more than 30 percent of such candidate's contributions reported as unitemized contributions and such contributions total over $5,000.
• Cash contributions are limited to $50.00 per person, per election, and any political campaign committee or PAC is prohibited from making a cash contribution.
• An individual can contribute no more than $101,400 to all candidates and political action committees (PACs) every two years, with maximum aggregate contributions to candidates of $40,000 and maximum aggregate contributions to PACs of $61,400. These limits will be adjusted to reflect changes in the consumer price index.
• Members of the General Assembly and the governor may not raise campaign funds during a legislative session and any extraordinary session.

CAMPAIGN FINANCE REFORM-- caucuses:

• Every General Assembly must make quarterly contribution and expense reports, if expenditures made or contributions received exceed $1,000.

CAMPAIGN FINANCE REFORM-- multicandidate political campaign (action) committees (PACs):

• PACs shall file quarterly contribution reports, which shall be posted on the Internet.
• All PACs shall certify the names of the PAC's officers to the registry, and there shall be at least one officer other than the treasurer.
• Any PAC which does not pay a civil penalty within 30 days shall be prohibited from receiving contributions, making expenditures to support or oppose candidates, and making expenditures to other PACs and the treasurers and officers of any such PAC are prohibited from forming another PAC or serving as an officer for another PAC until the penalty is paid.
• A PAC shall be prohibited from making cash contributions to any candidate or to another PAC.
• PACs that are controlled by parties or caucuses for members of the General Assembly and the governor shall not raise funds during a regular or extraordinary session of the General Assembly.

ETHICS COMMISSION:

• The Commission shall have six members, three each from the Republican and Democratic parties, two each appointed by the governor and the speakers of both houses. Commissioners shall serve four-year terms.
• Commissioners shall not engage in political activities.
• The Commission shall have jurisdiction over lobbyist registration and disclosure, conflict of interest disclosures, and complaints alleging misuse of office for personal financial gain by members of the General Assembly.
• The Commission shall provide annual ethics courses for supervisory personnel in the Executive branch, members of the General Assembly, lobbyists, and lobbyist employers; and an orientation course for newly elected or appointed members. Members and lobbyists shall attend the courses. The Commission shall provide separate, relevant manuals regarding ethics statutes and administrative rules for persons impacted by this statute.
• The Commission shall develop a system of electronic filing for registrants and allow public access to lists compiled from documents filed by lobbyists and employers of lobbyists, and persons required to file conflict of interest disclosures.
• Tennessee citizens may file complaints with the Commission. Complaints shall be maintained confidential until either the alleged violator requests that the information be made public, the Commission finds probable cause of a violation, or 60 days after a finding of no probable cause, but the person making the complaint is not under a duty of confidentiality. If there is probable cause of a violation, the Commission shall hold a public hearing. If the Commission determines that there is not probable cause of a violation, the complaining party may request a hearing. However, if the complaining party does not prevail in the hearing, the Commission may order the complaining party to pay the alleged violator's attorney fees and costs. No action shall be taken on a citizen's complaint, and the Commission shall not initiate a complaint, against any candidate for a 30-day period preceding the election.
• The commission shall be authorized to assess penalties, or the alleged violation may be reported to the house in which the member serves for disciplinary action.

CONSULTING SERVICES BY LOCAL OFFICIALS:

• "Consulting services" is redefined to permit local government officials to consult with local governments they do not represent.

CONFLICT OF INTEREST DISCLOSURES:

• Members of the General Assembly and their spouses, the governor, members of the governor's cabinet, cabinet level staff, the secretary of state, comptroller of the treasury, treasurer, and such persons' spouses shall disclose annual sources of income of $200 or more. Any person who contracts with the state and pays $200 or more to the governor, members of the governor's cabinet, cabinet level staff, the secretary of state, comptroller of the treasury, treasurer, or any such person's spouse for consulting services regarding contracts to which the state of Tennessee is not a party and for which the work is done outside Tennessee is required to disclose the payment to the Ethics Commission within five days of entering into the contract.
• Any member of the General Assembly, member-elect of the General Assembly, governor, member of the governor's staff, secretary of state, treasurer, or comptroller of the treasury who is employed by a business entity that employs a lobbyist to lobby legislative or administrative action that is under consideration by such official shall make a declaration in the same manner as is required of any such official who is considering action on legislation or administrative action on a matter that is lobbied by a sibling, spouse, or child of the official. Any member of the General Assembly may declare a personal interest through the voting board as an alternative to a verbal declaration. Other financial disclosure requirements are defined.

LOBBYING REGISTRATION AND REGULATIONS:

• All persons who lobby for compensation, whether the legislative or executive branch of state government, shall be required to register as a lobbyist. Any salaried individual whose lobbying is incidental to that person's regular employment is retained, or any person who receives only reimbursement for expenses for ten days or less per year as compensation for lobbying is exempt from the lobbying regulations. Any person who receives only reimbursement for expenses for more than ten days per year as compensation for lobbying shall be required to register as a lobbyist and pay the registration fee, but is exempt from the professional privilege tax levied on lobbyists.
• The following are not considered to be lobbying activities: (1) Communication with an elected official under any of the following circumstances: (a) Public officials who are performing their official duties; (b) A licensed attorney acting in a representative capacity for a client in appearing before an official in the executive branch in order to determine the client's rights or obligations in a contested case, administrative proceeding, or rule making procedure; (c) Any reporter who is reporting the news to the general public; (d) Any employee of a school board, municipal utility, utility district, or any governmental entity who is designated to lobby on behalf of the employing governmental entity; (e) Communications by a vendor or contractor who is selling or marketing goods to a governmental entity, except the prohibition against gifts to officials and other prohibitions applicable to lobbyists will apply to any such vendors and contractors; (f) Communications with officials in the executive branch by any person to influence the outcome of a decision related to the issuance of a bond, grant, lease, loan, or incentive through the department of economic and community development; and (g) Communications with officials in the executive branch by any person, who is not otherwise required to register as a lobbyist, to influence the outcome of a decision related to an economic development package. (2) Participation in an ordinary and routine permitting, licensing, or compliance decision by an official in the executive branch of state government.

EMPLOYERS OF LOBBYISTS:

• Any person who provides compensation to a lobbyist for lobbying activities is an employer of a lobbyist. However, any school board, municipal utility, utility district, or any governmental entity that employs a contractor to perform lobbying services is not an employer of a lobbyist for purposes of this act. Also, any person who employs a lobbyist and the only compensation provided to the lobbyist is reimbursement for expenses for 10 or less days per year is not required to register as an employer of a lobbyist. The individual employees, officers, directors, or members of a corporation, labor organization, association, or membership organization (other than the chief executive officer, chief financial officer, or comparable individuals within any such corporation or organization) are not considered employers of lobbyists. Also, for the purpose of registration and disclosure, a lobbying firm is not deemed to be an "employer." Generally, the conduct that is prohibited for lobbyists by present law is prohibited for employers of lobbyists, but conditions apply for lobbying expenses and gifts.

LOBBYING REGISTRATION AND REPORTING REQUIREMENTS:

• All lobbyists and employers of lobbyists shall electronically register with the Ethics Commission, and shall include the names and contact information of each lobbyist who is authorized to represent the employer. Each lobbyist registration shall include the names of any relatives of the lobbyist who are officials in the executive or legislative branch; subject matters lobbied for employers; and the extent of any direct business arrangement between the lobbyist and any candidate for office or any official in the legislative or executive branch. Lobbying firms shall file consolidated registrations that cover their employees and members.
• Within specified increments, employers of lobbyists must file semiannual disclosures regarding the aggregate total amount of funds expended for lobbying activities. Any expenditure in excess of $400,000 must be rounded to the nearest increment of $50,000.
• Registrations for lobbyists and employers of lobbyists, expenditure statements for lobbyists, and photographs of lobbyists shall be posted on the Ethics Commission's Internet Website.

LOBBYISTS' PROHIBITIONS:

• Contingency fees for lobbying services are prohibited.
• Lobbyists are prohibited from serving on any state board, commission, or governmental entity that has jurisdiction over the activities of any employer of the lobbyist; and are prohibited from serving on the state or county election commission or any county election commission, except lobbyists who currently serve on election commissions may continue serving unless there is an interruption in such service.
• No member of the General Assembly, governor, member of the governor's cabinet, or cabinet level staff within the governor's office shall be permitted to act as a lobbyist for twelve months following his or her departure from office.
• A lobbyist, lobbyist's employer, or persons acting for them shall pay no more than fair market value for good or services to office holders or candidates for office.
• Lobbyist shall be prohibited from offering or making campaign contributions, including in-kind contributions, to the governor or members of the General Assembly or candidates for such offices.
• Any out-of-state travel expenses paid by lobbyists or lobbyists' employers shall be limited to expenses associated with appearing at conferences that are sponsored and paid for or reimbursed by organizations of government officials or such officials' staff. Subject to a per-person, per-event maximum limit of $50.00, the expenses that lobbyists and employers may pay on behalf of an official for in-state events are restricted to expenses associated with events to which every member of the General Assembly is invited. A copy of the invitation shall be sent to the Ethics Commission and the per-person cost of the event and the aggregate cost of the event shall be reported to the Commission. Expenses for food, beverages, entertainment, refreshments, and amenities may be paid for events where an official or an official's immediate family member is a speaker or part of a panel discussion with the same $50.00 maximum. It is not prohibited for an employer of a lobbyist to provide an invited member with food, refreshments, meals, or beverages in connection with an in-state event, if the value of such items to the official does not exceed $50.00 per event, per day, and the cumulative annual value of all such items provided to such official by such employer of a lobbyist does not exceed $100; and, an officer or management-level employee, other than a lobbyist, of the employer participates in the event; and, the member receives no per diem (state payment for lodging and meals) for the day of the event. These limits will be adjusted to the nearest $1.00 every two years to reflect increases in the consumer price index.
• The present law factors for determining what constitutes a gift given in friendship for non-business purposes are replaced with authorization for the Ethics Commission to determine which types of gifts from a lobbyist to a government official are acceptable. The present law exemption from the general prohibition against gifts from lobbyists to government officials for gifts that are benefits of participation in charitable events is retained. Lobbyists shall disclose the cost of any food, refreshments, or entertainment and the name of the person providing such gift that are provided to an official by a person who is not a lobbyist or employer of a lobbyist but who is providing the gift at such lobbyist's direction or suggestion.

PENALTIES:

• This act applies the present law civil penalties for violations committed by lobbyists to employers of lobbyists. The penalty for a delinquent filing or fee is $25.00 per day, to a maximum of $750. The penalty for knowingly filing false information, or employing an unregistered lobbyist, or making a prohibited gift is up to $10,000, although, the penalty for an initial violation of the gift prohibition is the greater of $25.00 or 200 percent of the value of the gift. In addition to the civil penalties, there are graduated criminal penalties for intentional violations. A first offense is a Class C misdemeanor, a second offense a Class B misdemeanor, and a third offense a Class A misdemeanor.

AUDITS:

• The Ethics Commission shall randomly audit at least 2 percent of the registration statements and reports from lobbyists. The ethics commission shall audit the registration statements of any lobbyist or employer of a lobbyist upon a finding of probable cause. Audit and investigatory information acquired by the Ethics Commission is confidential to the same extent that tax information acquired by the Department of Revenue is confidential.

LOCAL GOVERNMENT ETHICAL STANDARDS:

• All local government entities shall be required to adopt ethical standards by resolution or ordinance no later than June 30, 2007. All county school boards shall be governed by ethical standards established by the county governing body, municipal school boards will be governed by ethical standards established by the municipal governing body, and special school districts will be governed by ethical standards established by the board of education for the special school district. The local government ethical standards shall be no less restrictive than any existing laws on the subject. Each local government entity shall file a copy of the ethical standards that the entity adopts with the Ethics Commission.
• The Municipal Technical Advisory Service (MTAS) and the county Technical Advisory Service (CTAS) shall develop model ethical standards for municipalities and counties, respectively. Any municipality or county which adopts the model ethical standards is not required to file a copy of such entity's ethical standards with the Ethics Commission.
• Any member of a governing body of any local government entity which fails to adopt ethical standards as required shall be subject to removal from office. Any violation of ethical standards by officials or employees of local government entities shall continue to be enforced pursuant to present law.

MISCELLANEOUS PROVISIONS:

• All meetings of the 104th General Assembly, including committee and subcommittee meetings, shall be open to the public, if there is a quorum present and public business within the jurisdiction of the committee is deliberated and decided. Future General Assemblies are encouraged to continue this practice.
• This bill requires any person who is elected to a state or local office, as a condition of such person's election, to agree to forfeiture of TCRS benefits, if such person is convicted in any state or federal court of a felony arising out of that person's official capacity, constituting malfeasance in office.
• It is legislative intent that the following practices continue: (a) Recording of floor sessions and committee meeting by the secretary of state and by legislative staff. Further, this bill expresses the legislative intent that the secretary expand recording operations to fully record the proceedings of the General Assembly and its committees and subcommittees; (b) Posting final action votes taken on legislation in committees and subcommittees on the General Assembly's Internet Website; and (c) Posting instructions to look up final action votes on the Website. Also, this bill expresses the legislative intent that final action votes taken in floor sessions of both houses be posted on the Website.
• The House shall act to improve its technological capabilities to increase public access to the House's proceedings.
• The director or legislative administration will post quarterly reports on the General Assembly's Internet Website that identify per diem and travel and expense reimbursements made to each member. The commissioner of finance and administration shall post a similar report on the state's Internet Website that identifies out-of-state travel and expense reimbursements made to the governor, any member of the governor's cabinet, and cabinet level staff, unless the out-of-state travel occurred to recruit economic development in Tennessee and the commissioner determines that publication of the information could hurt contract negotiations or put the state at a competitive disadvantage in negotiations. The initial reports will be posted by May 15, 2006.
• This bill enacts the "Tennessee General Assembly Uniform Nepotism Policy Act of 2006". This bill shall apply a nepotism policy to employees of the General assembly that is similar to the nepotism policy for state employees, whereby no employee shall be placed in a supervisory position over such employee's relative. Any conflicts of the nepotism policy caused by marriage will be resolved by a transfer, whenever possible. The nepotism policy is not retroactive.
• Any person who is convicted of accepting or receiving a bribe in another state or under federal law is prohibited from holding office in Tennessee to the same extent as if the crime were committed in Tennessee.

CAUTION: This brief summary of a complicated, intricately worded 114-page bill does not cover all of the bill's provisions and may, through its abbreviation, impart an unintended implication. This summary is intended for general information only, and NOT as an encyclopedic, authoritative guide for permissible, legal, and ethical activities. Refer to the text of the entire bill (conference committee report) for information, rather than relying on this summary.