STATE OF NEW YORK
STATE ETHICS COMMISSION

Advisory Opinion No. 89-6:

Whether §§73 or 74 of the Public Officers Law prohibit [a high-level State employee] of [a State agency] from participating in uncompensated representation, in his personal capacity and as president of a not-for-profit homeowners' organization, with a State agency or agencies over which his employing State agency has substantial influence and responsibility.

INTRODUCTION

The following advisory opinion is issued in response to an inquiry whether [a high level policy-maker of] the [State agency] may appear and represent himself, in his personal capacity and in his capacity as the unpaid president of a not-for-profit homeowners' organization, before a State agency or agencies over which he has substantial influence without a conflict of interest under §73 or the appearance of a conflict of interest in violation of §74 of the Public Officers Law.

Pursuant to the authority vested in the New York State Ethics Commission ("Commission") by §94 of the Executive Law, the Commission hereby renders its opinion that the actions of the [State employee] in his appearances and representation on behalf of himself and the not-for-profit homeowners' organization of which he is president with regard to the State Department(s) over which he may assert substantial influence in his position as [], create a potential appearance of a conflict of interest in violation of §74 of the Public Officers Law.

BACKGROUND

The facts set forth in the request for an advisory opinion provide that the [State employee] of the [State agency] purchased a home in 1987 located in the Town of []. Not long after moving into their homes in this development, the homeowners discovered that their wells were contaminated with methane gas. To address the situation, the homeowners formed a not-for-profit organization. The [State employee] was elected president to serve without compensation.

The association decided to retain an attorney and commenced litigation against the real estate broker and the builder of the homes. After the formation of the homeowners' association, the homeowners discovered that their wells were also contaminated. Investigation of possible sources of the contamination led to a storage facility used by a [State Department]. It is currently planned that the [County] Health Commission will be convening a meeting or meetings with representatives of the [State Department which owned the storage facility], another [State Department], the Town of [], the [] County Health Department and the homeowners' association to discuss the source of the contamination of the well water.

DISCUSSION

The [State employee] holds the chief administrative position below the [head] of the [State agency] and is involved in the investigation, supervision and coordination of the [] fiscal operations of [the two State agencies] involved.

If, as indicated in the request for opinion, the Department [which owned the facility] (or, therefore, the State of New York) has any liability for the contamination which is occurring in the neighborhood of [the development], there is potential for, at least, the appearance of a conflict of interest under §74 of the Public Officers Law if the requesting individual were to appear as the association's president at any meeting with a State Department. The question of an actual conflict under §73 of that law does not appear to exist as long as any "appearance" as the president of the association was not compensated.

Under §73(7), no State employee (other than in the discharge of his or her official duties) may receive, directly or indirectly, any compensation in any form for appearing or rendering services on behalf of himself or others in relation to any matter before a State agency in connection with the granting of money. One could reasonably conclude that a meeting with the Department [which owned the facility] concerning the liability for and possible correction of the contamination issue in the [development] will involve the discussion of or request for State funds to rectify the situation. Any appearances or services rendered for compensation by a State employee clearly would be barred. Uncompensated appearances are not so barred.

Although a clear conflict of interest under §73 may not be involved, there are questions about the appearance of a conflict if the [State employee] were to engage in certain activities as the association's president. Under §74 of the Public Officers Law,

. . . (n)o officer or employee of a state agency . . . should have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his duties in the public interest.
This rule with respect to conflicts of interest is further explained by standards set forth in §74(3). Three of these standards are particularly pertinent:
c. No officer or employee of a state agency . . . should disclose confidential information acquired by him in the course of his official duties nor use such information to further his personal interests . . . .

d. No officer or employee of a state agency . . . should use or attempt to use his official position to secure unwarranted privileges or exemptions for himself or others . . . .

e. An officer or employee of a state agency . . . should endeavor to pursue a course of conduct which will not raise suspicion among the public that he is likely to be engaged in acts that are in violation of his trust . . . .

For the [State employee] to hold the position of president of the homeowners' association under the circumstances herein raises the potential of an appearance of a conflict of interest under these statutory standards. In his job, the requesting individual is in a position to propose, recommend modification of, approve expenditures for and review the fiscal operations of the [State Departments] involved. In the position as president of the homeowners' association, the requesting individual is representing his own personal interests and the interests of others concerning the possible liability of the Department [which owned the facility] to all affected homeowners. There is clear potential for expenditure of State funds, with conceivable approval required of the [State agency], to rectify the contamination problem.

The standards set out in §74 are the measure by which one may determine if the rule against conflicts of interest may have been breached. The position of [State employee] in the [State agency] is publicly known both to the local citizens and the officials from both the [State Departments] involved. Although the requesting individual might appear as president of the homeowners' association at meetings where representatives of State agencies were present and clearly identify himself as solely representing the claims of the homeowners involved, the position of public servant and private citizen cannot be so easily separated in this case where the issues involved are related to State agency involvement and State expense.

In the position of [State employee] to the [State agency], one necessarily has information concerning the fiscal position and budgetary capability of the Department [which owned the facility] to address the contamination problem in the [development], whether or not the Department is liable for the injury, and has authority over the approval of its budget and budgetary expenditures.

In addition, there is similar knowledge of and authority over the budget of the [State Department]. So-called "insider" information about the budgets of these departments could be used to further the goals of rectifying the contamination problem. Representatives of each of these departments may find it difficult to take any position against the association or the [State employee], even though he is acting in a personal capacity, both because of the responsibility held by the [State employee] as a State official and the authority such official has over the departments. Further, the public might raise a question as to whether special treatment was received by the homeowners and the [State employee] because of his position.

CONCLUSION

Given the foregoing circumstances, the Commission concludes that, in order to avoid any appearance of a conflict of interest or a violation of §74 of the Public Officers Law, the [State employee] should refrain from any involvement as president of the homeowners' association in any meetings which include representatives of State departments on this matter or which include any discussion or resolution of the contamination problem. He should not be named in any litigation concerning the instant circumstances in his official capacity as president of the association. However, he is free, as any citizen of the State, to commence litigation against the State or one of its departments in his individual capacity or as a named party with others. Such action would not create the appearance of a conflict of interest nor would it constitute a conflict of interest.

Further, because the [State agency] might become involved in approving either an expenditure or provision of State funds to the Department [which owned the facility] to correct the contamination of the local well water, and because it is known that the requesting party will be personally affected by the outcome of these circumstances, it is the opinion of the Commission that the [State employee] should recuse himself from any involvement or decision-making on the [fiscal circumstances] of the Department as it relates to the approval or seeking of funds to address the contamination problem or any determination as to the reallocation of funds for such purpose.

This opinion, until and unless amended or revoked, is binding on the Commission in any subsequent proceeding concerning the person who requested it and who acted in good faith, unless material facts were omitted or misstated by the person in the request for an opinion.

All concur:

Elizabeth D. Moore, Chair

Joseph J. Buderwitz, Jr.
Angelo A. Costanza
Norman Lamm
Robert B. McKay, Members

Dated: July 28, 1989