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Law 360: New York Legislation And Regulation To Watch In 2016

By Pete Brush, 12/24/15

Law360, New York (December 24, 2015, 8:38 PM ET) — Empire State attorneys will be watching to see whether state lawmakers take the future of the daily fantasy sports wagering industry out of the courts by affirmatively legalizing it. Convictions of top elected officials, meanwhile, will increase pressure to step up the oversight of Albany, where a potentially nasty fight over billions in infrastructure dollars also looms.

In New York City real estate attorneys are monitoring an effort to redo zoning laws so that plans to raise dizzying Midtown high-rises don’t end up blotting out the sun over Central Park.

Here are eight legislative and regulatory issues that lawyers expect to come to the fore across New York state in 2016:

Daily Fantasy Sports Carveout

With DraftKings Inc. and FanDuel Inc. locked in a court battle with Attorney General Eric Schneiderman over whether their operations are legal under New York’s anti-gambling laws, which forbid wagers on games that hinge on a material element of chance, pro-business Republicans in Albany are pushing for a law that would exempt the daily fantasy sports industry.

Suffolk County Republican Assemblyman Dean Murray sponsors bills A08588 and A08587, which would obviate the high-stakes litigation. One bill carves out an exception for the games so that they are not subject to the “contest of chance” analysis. Another would broadly authorize fantasy sports wagers via a constitutional amendment.

“I expect to have discussions with my colleagues on daily fantasy sports when the legislative session convenes in January,” said Sullivan County Republican Sen. John J. Bonacic, who chairs the Senate’s racing and gaming committee. Bonacic added that the idea of consumer protections may also be in order.

Consumer safeguards could placate Albany Democrats, including Rockland County Assemblyman Ken Zebrowski, who worries that the industry’s relentless advertising fosters problem gambling. One idea gaining traction would be to raise the age to 21 for New Yorkers who want to bet in DFS contests.

The Dreaded LLC Loophole

Calls for fixing New York state’s lax campaign finance laws — especially the treatment of limited-liability companies as if they were individual people for the purposes of donations — have never been louder.

The LLC loophole, which allows for essentially unlimited giving, was front-and-center in the trials of former New York State Assembly Speaker Sheldon Silver and former New York State Senate Leader Dean Skelos.

“The conviction of two individuals isn’t a permanent solution to Albany’s systemic rot,” said attorney Lawrence Norden of the Brennan Center’s democracy program.

Bills to close the loophole, S60A and A6975B, are sponsored by state Democrats including New York City Sen. Dan Squadron and Assemblyman Brian Kavanagh. But some Republicans, including Erie County Sen. Michael Ranzenhofer have pushed back.

The wildcard is Democratic Gov. Andrew Cuomo, who has of late renewed calls for reform. But many Albany watchers see the governor’s status as greatest beneficiary of the loophole as a paralyzing check on his will to act.

Eliminating Lawmakers’ Outside Income

Other policymakers see growing potential for a more sweeping fix in the form of a full-time Legislature.

“There is much more support now for eliminating outside employment for legislators,” said Manhattan Assembly Democrat Richard N. Gottfried. “There is a growing awareness that there is too much potential for someone’s outside activities to have an inappropriate influence.”

No less an authority than Manhattan U.S. Attorney Preet Bharara, who put Silver and Skelos on trial, has backed the idea.

“Common sense will tell you it is much harder to disguise a bribe or a kickback as a referral if you don’t have the ability to have the same kinds of outside income,” he told WNYC radio on Dec. 14.

Dollars for Crumbling Upstate Infrastructure

An October deal between Cuomo and Mayor Bill de Blasio to work $8.3 billion into future state budgets to fund greater New York City’s public transportation system has galvanized upstate lawmakers including Republican Southern Tier Sen. Tom O’Mara, who says roads and bridges across the Empire State’s vast reaches are getting shorted.

“The upstate infrastructure demands are going to be the key sticking point for the State Senate in getting a budget passed,” said policy expert Arthur “Jerry” Kremer. “Upstate Republicans have every intention of holding the budget hostage.”

Cuomo and legislative leaders likely will have to find a way to fund needs that Senate Republicans say are going unmet.

“Motorists keep delivering billions of dollars in taxes and fees to the state every year that are supposed to be dedicated to maintaining local roads and bridges,” O’Mara said in a statement.

A $15 Minimum Wage

The coming spring budget season could also be complicated by Cuomo’s effort to hike the state’s minimum hourly wage to $15. The governor on Dec. 18 outlined a plan to phase in the first-in-the-nation rate for state workers over several years.

“That’s a statement of policy, with the hope that the Legislature will keep up with him,” Dykema Gossett PLLC labor and employment partner Robert A. Boonin said.

The sheer number of bills in the hopper in Albany relating to the minimum wage is impressive. Among them is S.3559, sponsored by Manhattan Democratic Sen. Adriano Espaillat, which would index future wage hikes to inflation. Other bills give localities the option to raise the wage.

A 2013 budget-season deal put the state’s minimum hourly wage on track to rise to $9 by the end of 2015 but did not index future increases to inflation.

“It’s a feel-good item,” Boonin said. “But $15 is very, very high. The question is whether employers can afford it.”

Indian Point’s Slow Burn

A Dec. 14 unplanned shutdown of Entergy Corp.’s Indian Point Reactor 3 — one of two reactors that push 2,000-megawatts of juice onto downstate’s electricity-hungry grid — triggered a complaint from Cuomo about an “unexpected incident.”

The governor’s statement played into the larger politics of the fate of the plant, which is a crucial power source but also poses potential danger to millions of people. Indian Point will keep operating as its re-application processes comes to a head in 2016.

“Gov. Cuomo thinks this is just a nuclear power plant that’s in the wrong place,” said Arnold & Porter LLP environmental partner Ed McTiernan, a former administration official. “He’s committed to somehow phasing out Indian Point.”

The state has some leverage but the federal Nuclear Regulatory Commission holds the high cards when it comes to relicensing. Many believe the endgame for Indian Point will parallel a deal that settled the future New Jersey’s Oyster Creek plant, which agreed to a phased shutdown rather than install pricey and unsightly cooling towers.

“The New Jersey settlement is the model,” McTiernan said.

Retail Medical Clinics

Medical offices that open up inside pharmacies and supermarkets to deliver “drop-in, episodic care,” as Gottfried described it, have raised concern that the traditional doctor’s office could come under threat especially if a big retailer like Wal-Mart made a push into the growing health care delivery model.

In order to check big retail from undermining traditional Empire State medical practices, lawmakers including Gottfried have sponsored legislation, A.1411A, that would restrict the kinds of care such clinics could provide and hammer out how corporate ownership of such clinics would work.

“The State Senate has been open to that legislation,” said Gottfried, who sees “very definite” potential for the bill to move forward if Assembly Democrats can agree to provisions that would allow corporations to own — as opposed to simply leasing out — retail clinics.

Throwing Shade on Billionaires’ Row

Modern techniques have allowed for higher and slimmer construction to sprout up around New York City. But plans for as many as six skyscrapers along Manhattan’s 57th Street — referred to by real estate pros as billionaires’ row — have activists and city lawmakers worried about shadows darkening Central Park’s Sheep Meadow.

“On the Chinese calendar, 2016 is the Year of the Monkey. But if you look around in New York City it’s really going to be the year of the crane,” quipped attorney Kenneth Weissenberg, an EisnerAmper real estate services group co-chair.

Current zoning laws, which manage building heights based on floor-area ratios, can allow towers as high as 1,700 feet — as high as the spire atop One World Trade Center.

“There’s pressure on the City Council to start looking at this,” Weissenberg said.

Manhattan’s Community Board 5 has launched what it called “The Central Park Sunshine Task Force” and sources said the City Council also will likely field legislation to study the issue. The City Council gets final approval of zoning changes, which flow through the de Blasio administration via the City Planning Commission.

–Editing by Jeremy Barker.