New York State
Ethics Commission


Advisory Opinion No. 92-6: Application of Public Officers Law §73(7)(a) and the Commission's regulations on outside activities.

Introduction

The following advisory opinion is issued in response to an inquiry from [ ] a policy-making employee of the [State Agency A], concerning the Commission's prior denial, in part, of his outside activity request. The requesting individual asks that the Commission reconsider its prior determination.

Pursuant to the authority vested in the New York State Ethics Commission ("Commission") by Executive Law §94(15), the Commission hereby renders its opinion that the provisions of Public Officers Law §73(7)(a) preclude [the requesting individual] from appearing or rendering service for compensation in particular matters before State agencies on behalf of his private consulting business.

Background

The requesting individual serves as [ ], a policy-making position. On May 21, 1990, the Commission received from the individual a request for approval to engage in outside activities pursuant to the Commission's regulations contained in 19 New York Code of Rules and Regulations ("NYCRR") Part 932. The requesting individual asked for approval to serve as the sole proprietor of an [ ] consulting practice.

In his attachment to the outside activity request, the individual stated that he does not provide, through his outside employment, professional services to [State Agency A]. The individual did state that he has "on occasion and expected to continue to provide services to entities or people who do business either supportive or adversary with other state agencies." The requesting individual also stated that he anticipated rendering professional [ ] consulting services to [a corporation] concerning closure of [a site] in New York.(1)

Pursuant to 19 NYCRR Part 932.4(c), the Commission makes its determination to approve or disapprove an outside activity request based upon whether the proposed outside activity interferes with or is in conflict with the proper and effective discharge of such individual's duties on behalf of the State. In making its determination, the Commission considers the provisions of Public Officers Law §§73 and 74.

Based upon the requesting individual's assertions, the Commission issued a letter on August 17, 1990, which addressed the implications of Public Officers Law §73(7)(a) on the requesting individual's outside activity request.(2) The Commission wrote:

You would be prohibited from appearing or rendering services for [the corporation] in relation to any permit, license or other permission that [the corporation] is required to obtain from any State agency [ ] to perform the closure of the [site] . . . . The prohibition on appearing or rendering services would encompass, but would not be limited to, the preparation of reports, providing testimony, or other professional services.

The requesting individual stated that, as a result of the Commission's letter, he discontinued his relationship with [the corporation] and transferred the bulk of his prior work for [the corporation] to two or more consulting [ ] firms.

By letter dated August 22, 1991, the requesting individual asked the Commission to reconsider its determination.(3) In sum, the requesting individual acknowledged that he may not engage in outside consulting work prohibited by Public Officers Law §73(7)(a). He has requested, however, the Commission's approval to perform certain work on behalf of [the corporation] in its efforts to close [the site] that will place him in contact with [State Agency B]. According to [State Agency B], in order to close the [site], [the corporation] must submit [ ] applications to the agency [ ].

[The corporation] has asked the requesting individual to complete the development of the [ ] data base on which much of the company's knowledge and communication with [State Agency B] about [the site] depend. [The corporation] has also asked the requesting individual to update certain data that have yet to be fully analyzed by [the corporation] or [State Agency B]. The requesting individual states that he feels a strong professional commitment to engage in the outside consulting activities for [the corporation] because his prior work has been challenged by [State Agency B].(4)

According to the requesting individual, in the late 1970's [the corporation] began to close its private water supply system in the [area]. Private citizens filed a legal action against [the corporation's] proposal to close their water supply system, claiming the quality of groundwater available to their wells was damaged due to [the corporation's] many decades of [ ] operations.(5) The requesting individual conducted an investigation on behalf of [the corporation] which included a comprehensive study of the general historical condition of groundwater resources in the [area]. The requesting individual has developed [ ] analysis methods for a wide range of matters of concern to [the corporation] and wrote reports of his findings that have been cited by others. This initial work preceded [State Agency B's] involvement with [ ] concerns surrounding [the site].

In 1981, [the corporation] submitted an application to [State Agency B] to drill two [ ] wells. The requesting individual was invited and paid by [the corporation] to meet with [State Agency B] to discuss several issues of concern. According to the requesting individual, much of his prior research and data for [the corporation] about groundwater in the [area] became pertinent as [State Agency B] became more involved. As a result of these meetings between representatives of [the corporation] and [State Agency B], the requesting individual was asked to prepare a draft [report] at [the corporation's] expense to be submitted to [State Agency B]. The draft [report] was expanded at [State Agency B's] request to address the issue of the closure of [the site] in addition to [the corporation's] original proposal to drill two [ ] wells. [State Agency B] staff subsequently asked the requesting individual to amend the draft [report] to address additional issues on behalf of [the corporation]. At all times during the preparation of the draft [report], [the corporation] compensated the requesting individual for his work.

The additional work on the draft [report] incorporated much of the requesting individual's prior work for [the corporation].(6) The requesting individual asserts that the work became considerable in scope and led to clarification and definition of most of the matters now central to ongoing communications between [the corporation] and [State Agency B] concerning the closure of [the site]. While [State Agency B] did not completely agree with his findings, the requesting individual asserts that [State Agency B] would freely call him to review data, its validity and meaning. [State Agency B] said that it found that many of the requesting individual's assumptions were valid, but that certain calculations in the draft [report] were flawed.(7) The closure of [the site] remains a controversial and contentious issue between [the corporation] and [State Agency B]. According to [State Agency B], the matter of the closure has not been resolved and may have to be litigated in the appropriate forum.

Applicable Statute

Public Officers Law §73(7)(a) states the following:

No . . . state officer or employee, other than in the proper discharge of official duties . . . shall receive, directly or indirectly, or enter into any agreement express or implied for, any compensation, in whatever form, for the appearance or rendition of services by himself or another in relation to any case, proceeding, application or other matter before a state agency where such appearance or rendition of services is in connection with:

. . . .

(iv) the obtaining of grants of money or loans;

. . . .

(v) licensing.

The term licensing, as defined in Public Officers Law §73(1)(b), means:

[A]ny state agency activity . . . respecting the grant, denial, renewal, revocation, enforcement, suspension, annulment, withdrawal, recall, cancellation or amendment of a license, permit or other form of permission conferring the right or privilege to engage in . . . any business or activity regulated by a regulatory agency, as defined herein, which in the absence of such license, permit or other form of permission would be prohibited.

Discussion

In his letter of August 22, 1991, the requesting individual argues (1) that there is no connection between his duties for [State Agency A] and his contemplated outside employment for [the corporation]; (2) that he has no control over how [the corporation] might use his data in the company's presentations before State agencies; (3) that the nature of his work as an [ ] consultant concerns objective matters of scientific laws and methods, measurable observations and quantitative methods of analysis and design; and (4) that much of the proposed outside consulting services involve work conducted for [the corporation] prior to [State Agency B's] interest in [the site] or which was performed at [State Agency B's] request.

In response to those arguments, the Commission concludes (1) whether a connection exists between his [State Agency A] duties and his outside work is immaterial to the issue of whether his work for [the corporation] may violate Public Officers Law §73(7)(a); (2) while he may have no control over how [the corporation] uses his work product, he has reason to know it will be used in connection with [the corporation's] application for what amounts to a license from [State Agency B]; (3) the nature of the work does not affect the determination of whether the work would violate Public Officers Law §73(7)(a) other than it is not an appearance in connection with a ministerial matter;(8) (4) the amount of the work which preceded [the corporation's] submissions to [State Agency B] and which was not a supporting basis for such submission is not subject to the denial described below. The Commission's denial extends only to those services performed in relation to an application or a matter before [State Agency B] after January 1, 1989.(9)

Public Officers Law §73(7)(a) prohibits State officers and employees from engaging in compensated appearances and rendition of services in relation to a case, proceeding, application or other matter before any State agency involving, among other things, licensing. There need not be a connection between the employee's duties on behalf of his or her State agency and the outside work for there to be a violation;(10) rather, the Commission must find that the State employee appeared or rendered service for compensation regarding any of the categories of activities contained in the statute which are before any State agency. Thus, in the instant case, the Commission must determine whether the requesting individual's work for [the corporation] for incorporation into material referred to [State Agency B] amounts to rendering services on an application or in relation to a matter before a State agency, and if so, if such services are in connection with licensing.

While in the instant case the requesting individual argues that he has no control over how [the corporation] uses his data, the Commission concludes that it is more than likely that his work will be before the [State Agency B] regarding the closure of [the site] and he knows that his work product will be submitted to [State Agency B] to support [the corporation's] position. The requesting individual has rendered this type of service in the past and has full knowledge of why [the corporation] retained him. This is not the situation where an individual has no reason to believe that his work will come before a State agency or the use of that work has a completely uncontemplated purpose. As noted earlier, [the corporation] must submit numerous documents to [State Agency B] for permission to close [the site]; the requesting individual's work will more than likely be a part of the information submitted to support [the corporation's] position.

The broad definition of the term "licensing" as contained in Public Officers Law §73(1)(b) specifically includes State agency activity "respecting . . . permission conferring the right or privilege . . . to engage in . . . any activity regulated by a regulatory agency." [State Agency B] regulates the closure of [the site in question]. The three applications that [the corporation] must submit to [State Agency B] to close [the site] are a form of permission encompassed by the definition of "licensing." Therefore, the rendition of services by the requesting individual in relation to the applications to close [the site] is covered by Public Officers Law §73(7)(a).

The requesting individual's argument that his outside consulting is totally objective and involves only scientific or "hard data" has no merit. Section 73(7)(a) makes no distinction for the nature of the outside work to be performed.

The requesting individual's argument that much of his work preceded [State Agency B's] interest in [the site] is similarly of no consequence. The requesting individual may receive compensation for his work conducted on behalf of [the corporation] prior to January 1, 1989, even if this work is presented to [State Agency B] following this date. But any further consideration or review of this prior work which would be presented after January 1, 1989, to [State Agency B] in relation to the closing of [the site], cannot be performed by the requesting individual unless he performs such services without compensation. Furthermore, "without compensation" means that the requesting individual cannot be compensated for other [non-State related] work in a manner which is actually compensation for State related work.(11)

Conclusion

The Commission concludes that the outside activity request is denied to the extent that [the corporation] utilizes any of the requesting individual's outside consulting work for which he is compensated in its submissions to [State Agency B], because the requesting individual would be rendering services for compensation in relation to an application or a matter before [State Agency B] in violation of Public Officers Law §73(7)(a).

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

All concur:

Joseph M. Bress, Chair

Angelo A. Costanza
Donald A. Odell, Members


Dated: March 19, 1992


Endnotes

1. [Footnote deleted].

2. The Commission's letter also discussed the implication of Public Officers Law §73(3)(a) which prohibits State officers and employees from receiving compensation for appearing or rendering service against the interests of the State in the court of claims. The requesting individual has not objected to this limitation on his outside activity.

3. The requesting individual states that he will not engage in outside employment for compensation with [the corporation] pending his receipt of a response from the Commission.

4. The requesting individual states that he has received the approval of his appointing authority to engage in the proposed outside activity subject to the approval of the Commission.

5. According to [State Agency B], the citizens were successful in their action against [the corporation]. The matter is currently on appeal.

6. [The corporation] submitted a draft [report] in November 1985.

7. For example, the requesting individual concluded that [the corporation] has increased groundwater discharge by over 700 million gallons per year. [State Agency B] calculated that figure to be 900 million gallons.

8. See Public Officers Law §73(7)(c).

9. The Commission's jurisdiction commenced on January 1, 1989.

10. If such a connection exists, there may be an appearance of a conflict of interest prohibited by Public Officers Law §74(2).

11. See Advisory Opinion No. 90-14 which discusses the concept of "net revenues" referred to in Public Officers Law §73(10). Where, as here, the State employee is disqualified by §73(7)(a) from performing compensated services on a matter before a State agency, his private employer/client may not compensate the State employee for his non-State related work at a rate which exceeds its value, in order to "make up" for not paying the State employee for the services rendered on the matter before the State agency.


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