STATE OF NEW YORK
STATE ETHICS COMMISSION

Advisory Opinion No. 90-22: Determination of "former agency" for purposes of application of the post-employment restrictions of §73(8) of the Public Officers Law.

INTRODUCTION

The following advisory opinion is issued in response to an inquiry from the Director of Human Resources Management for the [State agency], concerning an employee retiring from [State agency] who was assigned, as part of his duties while with [State agency], to work as the administrative officer for the [Trust] ("[Trust]"), a statutorily created public benefit corporation.

The Commission must determine whether the [Trust], in addition to [State agency], is to be considered the employee's former employing agency at the time of his retirement from State service, for purposes of applying the post-employment proscriptions contained in §73(8) of the Public Officers Law; and, what effect the post-employment restrictions will have on the former employee if the [Trust] wishes to employ or retain him after his retirement.

Pursuant to the authority vested in the New York State Ethics Commission ("Commission") by §94(15) of the Executive Law, the Commission hereby renders its Opinion that both [the State agency] and the [Trust] are the individual's "former state agency," for the purposes of applying §73(8). If the individual becomes an employee of the [Trust], instead of a consultant or independent contractor, the post-employment restrictions of §73(8) do not apply, because such employment would fall within the government-to-government exception to the post-employment restrictions.1

However, the two-year "revolving door" bar would act to preclude both [the State agency] and the [Trust] from selecting the individual to be an independent contractor or consultant. The lifetime bar will apply to services rendered by the former employee on any transaction before any State agency with respect to which the individual was directly concerned and in which he personally participated or which was under his active consideration during his service to both [the State agency] and the [Trust].

BACKGROUND

In 1968, the New York State Legislature created the [Trust], a public benefit corporation governed by a board, consisting of the chairperson of the State Council [ ], the Commissioner of [the State agency], and the Commissioner of [another State agency], all of whom were appointed to their positions by the Governor.2 As a public benefit corporation with at least one gubernatorial appointee, the [Trust], by definition, is considered a State agency under §§73, 73-a and 74 of the Public Officers Law.3

The purpose of the [Trust] is to receive and administer private gifts, devises and bequests of real and personal property donated to further [public welfare] purposes.4 The [Trust] is created to benefit the people of the State of New York to preserve and improve [certain] resources constituting their natural heritage and in furtherance of their welfare and prosperity, and is a "public purpose trust" in that the trust performs an essential governmental function in the exercise of the powers conferred upon it.5

In order to perform this essential governmental function, the [Trust] may, whenever it is in the public interest and after prior approval of the Director of the Budget, request the temporary assignment and transfer of certain employees of any board, commission, agency or department of the State or its political subdivisions. The transfer may occur so long as it does not interfere with the performance of duties and functions of the lending agency. The assignment does not affect civil service status, continuity of service, retirement plan status, right to compensation, grade or compensation or other rights or privileges of any employee who is so transferred.6 At the time of this inquiry, four staff members at [the State agency] had, as part of their [State agency] responsibilities, an administrative role vis-a-vis the [Trust].

The employee of [State agency] who is the subject of this opinion, serves in [a State agency title] and was assigned for the past 11 years to administer the [Trust] pursuant to [statute].7 The individual was paid by [the State agency] and received no compensation directly from the [Trust] for the services he rendered. The duty statement which accompanied this request for opinion provides that the individual was responsible, with respect to the [Trust], to:

[a]dminister the [Trust], a public benefit corporation created to receive and administer private gifts and bequests of real and personal property donated to further conservation outdoor recreation and historic preservation purposes. Because the trust has no employees, the incumbent provides administrative services under the direction of the Board and the Assistant Commissioner for Administration and Fiscal Affairs who functions as Chief Executive Officer. Directs the expenditure investment and audit of all [Trust] funds, including annual State appropriations of over $5 million dollars . . .8
The employee spent approximately fifteen percent of his work time on matters pertaining to the [Trust]. He was assigned on a temporary basis to the [Trust], pursuant to [statute], and that assignment was formalized through a resolution of the Board of the [Trust].

The Director of Personnel for [the State agency] characterized the work done by the individual on behalf of the [Trust] as ministerial. However, the individual had the authority to make judgments and recommendations concerning the expenditure of [Trust] funds, had the authority to sign letters on behalf of the [Trust] and was considered the [Trust's] administrative officer. Although he was not paid by the [Trust] for his services, he clearly served as an officer and agent for the [Trust]. His supervisor for his [Trust] duties was the Comptroller/Treasurer of the [Trust] and a Deputy Commissioner of [the State agency].

The individual was selected to act as administrator to the [Trust] because of his knowledge of administration in [State agency] matters. He prepared material for the Board of the [Trust] to review and had frequent interaction with the Board of the [Trust] concerning matters such as [bequests]. The individual was located in the [State agency] offices while completing all [Trust] assignments.

The subject employee, according to the request for opinion, has decided to retire from State service in the immediate future. He is interested in returning to work for the [Trust] following his retirement from State service. [The State agency] has asked whether he may be hired by the [Trust] following his retirement as a contractor or must be hired as an actual employee of the [Trust] in consideration of the post-employment restrictions contained in §73(8) of the Public Officers Law.

DISCUSSION

The 1987 Ethics in Government Act brought significant changes to the post-employment restrictions contained in §73 of the Public Officers Law.9 According to the memorandum in support of the 1987 legislation, the Ethics in Government Act is designed to limit opportunities for abuse of official positions and eliminate any appearance of undue influence. By its comprehensive provisions, the Act reaches almost all State government officials and employees.

The portion of the Act relevant to post-employment activities is commonly referred to as the "revolving door" provision, found in §73(8) of the Public Officers Law. The purpose of the "revolving door" proscriptions is to preclude the possibility that a former State employee may leverage his or her knowledge, experience or contacts gained as a result of State service to his or her advantage or that of a client, thereby securing unwarranted privileges, consideration or action.

The Attorney General has stated that the purpose of the "revolving door" section, as it existed prior to the 1987 amendments, is to address "the ethics problems that arise when a State employee leaves State service to work in the private sector."10

The post-employment restrictions of §73(8) of the Public Officers Law provide the following:

No person who has served as a state officer or employee shall within a period of two years after the termination of such service or employment appear or practice before such state agency or receive compensation for any services rendered by such former officer or employee on behalf of any person, firm, corporation or association in relation to any case, proceeding or application or other matter before such agency. No person who has served as a state officer or employee shall after the termination of such service or employment appear, practice, communicate or otherwise render services before any state agency or receive compensation for any such services rendered by such former officer or employee on behalf of any person, firm, corporation, or other entity in relation to any case, proceeding, application or transaction with respect to which such person was directly concerned and in which he personally participated during the period of his service or employment, or which was under his or her active consideration. . . . (Emphasis added.)
The restrictions are divided into two components, the two-year bar and the lifetime bar. The two-year bar is absolute with respect to activities before the former employing agency. The lifetime bar is absolute with respect to certain subject matters on which the former State officer or employee worked without regard to the State agency involved.

Application of the post-employment restrictions depends upon the employment status of the affected individual after his termination from State service. The employee who is terminating State service by retirement desires to choose either to return to employment by the [Trust] as a consultant or as an actual employee.

If the former employee is hired by the [Trust], he then becomes an employee of a governmental entity, the [Trust], a State agency under §§73, 73-a and 74, as discussed above11. The Commission determined, in Advisory Opinion No. 89-5, that the post-employment restrictions contained in §73(8) do not apply when an individual changes his employment from one governmental entity to another, without regard to whether that move took place by means of termination, retirement or transfer. The Commission stated, in relevant part, concerning such a public-to-public employment transfer:

In the matter currently before the Commission, the individual intends to transfer his employment from State government to municipal government. In both situations, the "client" is the same: the public-at-large. There would be no benefit to the public if a former State employee, serving the citizens of this State in another public employment capacity, as a local government employee, were precluded from appearing or practicing before his or her former State agency.

The "evil" to be avoided--the misuse of knowledge and contacts to the benefit of a private client--would not be a possibility in the case now before us. Application of §73(8) is triggered when a State officer or employee leaves State (or "public") service, and joins the non-governmental (or "private") sector.

The Commission concludes that the two year ban on appearance, practice or receiving compensation for services rendered before an individual's former employing agency does not apply in the case of a State employee who transfers employment from one State agency to another; or to one who terminates employment with a State agency and takes employment with the legislative or judicial branch of government or with any municipal government as long as he or she is acting within the proper discharge of his or her official duties.

With respect to the lifetime ban on appearances, a similar reasoning applies.

This interpretation of §73(8) was codified by an amendment to the subdivision by Chapter 242 of the Laws of 1989, which states:
[T]his subdivision shall not apply to any appearance, practice, communication or rendition of services before any state agency, or either house of the legislature, or to the receipt of compensation for any such services, rendered by a former state officer or employee . . . which is made while carrying out official duties as an elected official or employee of a federal, state or local government or one of its agencies.
If the [Trust] chose to retain the former employee as an independent contractor to provide services to the [Trust], the Commission must determine whether the [Trust] is a "former state agency" for the purposes of applying the revolving door provisions. The Commission first must determine if the subject individual was a "state officer or employee" of not only [the State agency], but also the [Trust], during his State service.

The individual was paid by [the State agency] during his tenure in State service and had significant job responsibilities with [the State agency], which included planning, directing and coordinating the activities of the [a unit in the State agency].12 The individual received all of the benefits of an employee of [the State agency], and [the State agency] considered him to be employed by the agency13. There is no question that [the State agency] is a "former state agency" as contemplated in §73(8) of the Public Officers Law.

But the inquiry does not stop there. The Commission must determine whether the relationship the individual had with the [Trust] was also one of employment or service. Section 73(8) provides that the "revolving door" proscriptions apply to officers or employees who "[s]erved as a state officer or employee within a period of two years. . . ." (Emphasis added.) The subject individual worked as administrator of the [Trust] for 11 years. Despite the representations by [the State agency] staff that the assignment was temporary and ministerial in nature, the Commission finds that the individual's position with the [Trust] was a significant and regular assignment.14 He was responsible for at least $5 million in appropriations. He was the chief administrator, who acted under the express direction of the Board of the [Trust] and the [Trust's] Chief Executive Officers. He made recommendations to the Board of the [Trust], and was able to sign correspondence concerning the [Trust]. Although the individual did not receive a separate paycheck issued by the [Trust], compensation is not a required component to be subject to the restrictions under §73(8). The "revolving door" restrictions will apply when it can be shown that there is continuing "service" to a State agency. All duties performed on behalf of the [Trust] by the individual were performed as part of his State duties.

Even considering that the [Trust] did not pay the individual, the status of an unpaid State officer of a public benefit corporation is not a category of State officer or employee exempted by definition in §73(1) from application of the "revolving door" provision.15 The fact that [the State agency], not the [Trust], compensated the individual does not preclude a finding by the Commission that the [Trust] is also a former State agency, for purposes of §73(8). To find otherwise would result in a State employee serving one agency, compensated by another and escaping the "revolving door" limitation with the first agency. Such "use" of the system, even if unintended, cannot be permitted to effect an evasion of the ethical requirements of this subdivision. The post-employment limitation was enacted to prevent the use of "insider knowledge" and private contacts to one's personal benefit or the benefit of others.

Considering that the individual served as the administrator for the [Trust], the level of responsibility which he exercised on behalf of the [Trust], his significant contact with the [Trust], and the duration of his assignment to the [Trust], the Commission determines that the individual was in service to the [Trust], as the term service is understood for the purposes of §73(8) of the Public Officers Law. As a consequence of this determination, the [Trust] must also (in addition to [the State agency]) be considered the "former state agency" of this employee, as contemplated in §73(8) of the Public Officers Law, of this employee.

The Commission reached a similar conclusion in its Advisory Opinion No. 90-12, in which an employee was employed by a State Commission while on leave without pay from a State agency. In that opinion, the Commission stated the following:

[S]ection 73(8) of the Public Officers Law was enacted to deter persons employed by the State of New York from taking advantage of their public position to secure personal gain at the State's expense. The Ethics in Government Act sought to restore the public trust in State government by limiting opportunities for abuse of official positions and by eliminating any appearance of undue influence. It is not uncommon for persons employed by the State of New York to serve the State in dual capacities. Such service is not precluded as long as the employment or affiliation "is not in substantial conflict with the proper discharge of (a person's) duties in the public interest." The provisions of the Ethics Law apply to a person serving in such dual capacities and the "revolving door" provision, at termination, applies to that individual's appearances, etc., before each of the agencies from which he or she terminated. . . .
In accordance with its determination in Advisory Opinion No. 90-12, the Commission determines that the former employee is subject to the "revolving door" proscriptions with respect to both the [Trust] and [the State agency].

The effect of such a determination is that, for two years after termination from State service, the individual may not appear or practice, or render any services for compensation before either [the State agency] or the [Trust] in relation to any case, application, proceeding or other matter. The Commission has determined that the process of contracting with a State agency necessarily violates the two-year bar, because such contracting would require contact with the former employing agency which constitutes a prohibited appearance under §73(8) of the Public Officers Law.16 Therefore, neither [the State agency] nor the [Trust] may retain the individual as a contractor for two years subsequent to his termination, and he is prohibited from practicing or appearing or receiving compensation for services rendered on a matter before [the State agency] or the [Trust] for a period of two years subsequent to his termination.

The determination that the [Trust] and [the State agency] are both the "former state agency" for the purposes of §73 is not material to the application of the lifetime bar provision. The lifetime bar applies with regard to all State agencies in relation to an appearance, practice or rendering of services in any case, proceeding, application or transaction with respect to which the terminating individual was directly concerned and in which he personally participated during the period of his service or employment, or which was under his active consideration. The lifetime bar would apply in relation to any matter in which the individual was directly concerned and in which he personally participated during the period of his service, or which was under his active consideration during such period, whether the work was for [the State agency] or the [Trust]. In the instant inquiry, the individual may avoid the consequences of application of the two-year bar and the lifetime bar contained in §73(8) of the Public Officers Law were he to become an employee of the [Trust].

CONCLUSION

The Commission concludes that the government-to-government exception to the "revolving door" applies in this case if the individual, after his retirement from State service, becomes an employee of the [Trust]. In addition, the Commission has determined that, for the purposes of applying §73(8), the "former state agency" of this individual is both [the State agency] and the [Trust], and therefore the two-year bar will apply to his post-State employment activities in relation to both [the State agency] and the [Trust]. The lifetime bar will apply to all State agencies with regard to any matters in which the individual was directly concerned and personally participated, or which were under his active consideration during the time of his State service.

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 opinion.

All concur:

Elizabeth D. Moore, Chair

Angelo Costanza
Norman Lamm
Donald A. Odell, Members

Dated: November 15, 1990


ENDNOTES

1. [The [Trust] is a public benefit corporation with at least one member appointed by the Governor, and is a State agency under §73 of the Public Officers Law.

2. [Cite to statute creating the [Trust] is omitted.]

3. Section 73(1)(g) of the Public Officers Law defines the term "state agency" to include "[a]ny public benefit corporation . . . at least one of whose members is appointed by the governor. . . ." Inasmuch as all three members of the [Trust] are ex officio State office holders appointed by the Governor, the [Trust] is a State agency. When the Governor appoints an individual to serve, for example, as the Commissioner of [State agency], he, in effect, appoints that individual to all the entities on which that Commissioner sits by virtue of statute, Executive Order or proclamation. Therefore, for purposes of determining "state agency" status of the [Trust] under the cited definition, it is not critical whether the Governor directly appointed the individual to serve as a member of the [Trust] or whether he appointed the individual to serve as a State agency head, who by statute serves as a member of the [Trust]. The [Trust] fits the definition of "state agency" by having not only one, but all, of its members appointed by the Governor.

4. [Statutory cite omitted.]

5. [Statutory cite omitted.]

6. [Statutory cite omitted.]

7. [Duty description omitted.]

8. Member item appropriations to the [Trust] have reached as high as $21 million for hundreds of projects.

9. The Ethics in Government Act was enacted pursuant to Chapter 813 of the Laws of 1987, effective January 1, 1989, and amended by Chapter 108 of the Laws of 1988 and Chapter 242 of the Laws of 1989.

10. Att'y Gen. Op. No. 84-F20 and 84-F12.

11. [Statutory cite omitted.]

12. Job description provided by [the State agency], created December 1982.

13. The letter requesting this opinion stated, "An employee of [the State agency], . . . who is about to retire, serves as an unpaid officer of the Trust."

14. Section 73(1)(d) of the Public Officers Law defines a "ministerial matter" as "[a]n administrative act carried out in a prescribed manner not allowing for substantial personal discretion." As indicated herein, the subject individual was not engaged in ministerial manners for the [Trust].

15. Section 73(1)(i)(iv) of the Public Officers Law makes it clear that only members of a public benefit corporation who receive compensation other than on a per diem basis are considered State officers for the purposes of §73 and, consequently, the "revolving door" provision.

16. Advisory Opinion No. 89-7 provided that the narrow government-to-government exception to the "revolving door" restriction does not extend to "paid" consultants or retained representatives of the governmental entity. "[W]here the former employee is retained as a consultant or representative of the municipality and no employment relationship exists, the revolving door provision applies to prohibit such conduct before one's former agency."