New York State
ETHICS COMMISSION


Advisory Opinion No. 92-12: Application of Public Officers Law §74 to [a State employee] who seeks to engage in business activities associated with a field over which he has enforcement authority.




INTRODUCTION

The following advisory opinion is issued in response to an inquiry from a [State employee] who wishes to engage in an outside activity to provide services as a [ ] consultant, which is associated with the [specific] business over which he has enforcement authority.

Pursuant to its authority under Executive Law §94(15), the State Ethics Commission ("Commission") hereby renders its opinion that Public Officers Law §74 precludes the [State employee] from engaging in a business activity for compensation when in his State position he has regulatory responsibilities over those who would be his private competitors.


BACKGROUND

A New York State Department of Civil Service job announcement, [for the State employee's position] indicates that [State employees in this job title] are responsible for inspecting or supervising the inspection of the operations of distributors and users of [certain materials] in connection with [State agency's] programs [ ]. To perform such services, [these State employees] must have a working knowledge of [specific subjects] and the laws, rules and regulations pertaining to the inspection and use of [certain materials]. Incumbents in the position:

. . . enforce State and Federal regulations governing sale and use of [certain materials]. . . . inspect the [ ] operations of manufacturing distributors and users; inspect materials and labels to insure that they conform to legal requirements; and insure the proper registration of applicator businesses, observing their operations and record keeping, and checking the safeguards required in their equipment. . . . conduct training and would conduct examinations for certification and recertification of [certain] applicators; review applications for [specific] permits; and inspect both the locations and the applicators before and after such treatment. . . . would provide information to the public and investigate complaints from the public; collect samples of [certain materials] for test purposes, determining whether damage or deterioration has occurred; and make recommendations for disposal of surplus and deteriorated [products].. . . . might confiscate or sequester improper or illegal materials; might provide information for use in court prosecution; might be called as a witness.
In his request for an advisory opinion, the [State employee] states that he intends to open a consulting service which includes three elements: (a) identifying [specific things], (b) providing [certain] information and (c) recommending alternative [ ] measures to be taken by the [customer]. He anticipates performing these services on evenings and weekends. The [State employee] indicated that, although there may be an appearance of a conflict, as a [ ] consultant, he would recommend a range of [ ] methods and not any specific [ ] product. He also stated that he would not recommend any specific [ ] applicator or business since, [in his State position], he directly regulates the community.


Statutory Background

The code of ethics, found in Public Officers Law §74, provides minimum standards against which State officers and employees are expected to gauge their behavior. It is directed at addressing the conflict between the obligation of public service and private, often personal, financial interest.

As [State agency] employees, [individuals in this job title] are governed by §74. The rule with respect to conflicts of interest is contained in Public Officers Law §74(2):

No officer or employee of a state agency . . . should have any interest, 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.

Following the rule with respect to conflicts of interest, Public Officers Law §74(3) provides standards of conduct which address not only actual but apparent conflicts of interest. For present purposes, the following paragraphs are relevant:

(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.

(g) An officer or employee of a state agency should abstain from making personal investments in enterprises which he has reason to believe may be directly involved in decisions to be made by him or which will otherwise create substantial conflict between his duty in the public interest and his private interest.

(h) 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.


DISCUSSION

The Commission has held that under certain circumstances, Public Officers Law §74 prohibits a State officer or employee from engaging in an outside activity over which the individual has regulatory or enforcement responsibility. For example, in Advisory Opinion No. 92-3, the Commission found that §74 prohibited Environmental Conservation Officers ("ECOs") from engaging in certain business activities for profit over which they have official enforcement responsibility. The Commission stated that:

[s]uch involvement would constitute an interest in substantial conflict with the proper discharge of the ECO's duties because he or she would be enforcing the laws pertaining to his or her own business, businesses of colleagues as well as that of his or her competitors. The public would reasonably question whether an ECO so involved was performing his or her duties in the public's interest or in his or her own interest.

Similarly, the Commission's Advisory Opinion No. 91-4 prohibits employees of an agency with job responsibilities directly or indirectly relating to the oversight of day care centers from serving on the board of directors of the day care center, regardless of whether they were compensated for their board activities. In that opinion, the Commission held that:

. . . service on the board of directors of the (day care center) by any (agency) employee with direct or indirect job responsibilities regarding inspection, certification, licensing, regulation or fiscal oversight of day care centers, because of the regulatory and statutory obligations of (the agency) toward all day care centers, is a violation of Public Officers Law §74, because it creates the appearance of impropriety under §74(3)(h). It is not unreasonable to conclude that (agency) employees with responsibilities relating to day care centers could be perceived as influenced in the execution of their duties by the fact that they are sitting on the board of the day care center provided largely for (the agency's) employees' children. This rule limiting participation by policymakers and employees with direct or indirect responsibility regarding day care centers applies to membership on any day care corporation board, not just to (the agency's day care center).
The perception that an individual may be motivated in the performance of his or her job duties by a private interest concerning that day care center, rather than the public interest involving the enforcement of the statutes and regulations relating to day care centers in an unbiased and professional manner, leads to a violation of Public Officers Law §74. The conflict between private interest and public interest, whether real or perceived, supports the finding of such a violation.

In each of the cited opinions, the Commission prohibited the outside activity because the employees had some direct or indirect regulatory or enforcement responsibility over the proposed activity. Here, the [State employee] seeks to engage in an activity over which neither he nor his agency has direct regulatory or enforcement authority, but which is closely related to activities over which the Department does have regulatory jurisdiction. The Commission must determine, therefore, whether Public Officers Law §74 prohibits the [State employee] from engaging in a private activity so closely related to his regulatory responsibility for the State.

The rule with respect to conflicts of interest contained in Public Officers Law §74(2) prohibits an officer or employee of a State agency from engaging in any business or professional activity which is in substantial conflict with the proper discharge of his duties in the public interest. The Commission determines that, although the [State employee] proposes to undertake only the consulting aspect of the [specific] business, the distinction between the sale of [ ] consulting and the sale of [ ] applications is immaterial because the [State employee] and the private [ ] business have the same market [persons in need of (specific assistance)] and those in the [specific business] are, to a significant degree, regulated by the [State employee]. As a result, the [State employee], in his official capacity, could inspect the specific sites treated by [ ] his competitors. The Commission concludes that such outside activity would thus substantially conflict with the proper discharge of the [State employee's] duties in the public interest in violation of §74(2).

Public Officers Law §74(3)(d) prohibits State officers and employees from using or attempting to use their State positions to secure unwarranted privileges for themselves or others. Although [individuals in this job title] do not regulate [ ] consulting, their regulatory responsibility includes determining whether those engaged in the [specific] businesses are using registered [products] and applying those [products] properly. Through his official duties, [the State employee] is in a position to obtain significant information concerning his business competition and persons in need of [specific] consulting. For example, the [State employee] might use his State position to develop lists of potential clients to approach and solicit business. His non-State competitors would not have the same opportunity. The Commission concludes that the [State employee's] State position enables him to gain special advantage over his competitors which, if used, would violate §74(3)(d).

Similarly, Public Officers Law §74(3)(g) directs a State employee to abstain from making personal investments in enterprises which he has reason to believe may be directly involved in decisions to be made by him or which will otherwise create substantial conflict between his duty in the public interest and his private interest. In Advisory Opinion No. 90-5, the Commission found that a State employee may not engage in outside employment as a photographer and copy writer if his outside assignments were to involve groups with which he had an association by virtue of his State job responsibilities. The Commission reasoned:

. . . one cannot work for the State during the day and develop relationships with clients, who are subject to regulation or oversight by the Department, for private profit at night.
In the instant case, the [State employee] is in a position to develop client lists through his State employment. Further, by inspecting the work of competitors, the [State employee] could allow personal business interests to interfere with his professional judgment. Therefore, the Commission determines in the present case that it would be a violation of Public Officers Law §74(3)(g) if a [State employee] were involved in private [specific] consulting because of the potential that he could use his official State position as a means to recruit potential business for his private consulting service and to inspect the work of private business competitors as a [State agency] employee.

Public Officers Law §74(3)(h) prohibits State officers and employees from pursuing a course of conduct that raises suspicion among the public that they are engaged in activities that are in violation of the public trust. Those in the [specific] business may well argue that the [State employee] in question is regulating most of their business activities while at the same time competing for the balance of the business. They could be concerned the [State employee] in question may more zealously enforce [State agency's] regulations against his competitors than against others. Therefore, because the potential for all of the aforementioned problems exists, the Commission concludes that there would be a reasonable basis for suspicion among the public that the [State employee] would be engaged in activities that are in violation of his or her public trust if a [State employee in this job title] were to engage in the [specific] consulting business.


CONCLUSION

The rule with respect to conflicts of interest found in Public Officers Law §74(2) prohibits a State officer or employee from having any interest or from engaging in any business which is in substantial conflict with the proper discharge of his duties in the public interest. Applying the standards found in §74(3) the Commission finds that the [State employee] may not engage in a private [specific] consulting business.

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

All concur:

Joseph M. Bress, Chair

Barbara A. Black
Angelo A. Costanza
Donald A. Odell, Members

Dated: July 2, 1992


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