New York State
Ethics Commission


Advisory Opinion No. 94-7: Application of Public Officers Law §73(7)(a), §74 and the Commission's regulations on outside activities.

Introduction

The following advisory opinion is issued in response to an inquiry from [a State agency official] at [a State agency], concerning the Commission's prior denial of part of the outside activity request of [an employee] of [the State agency]. [The State agency official] 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) and §74 preclude [the State employee] from engaging in outside employment as [ ] director for [a county facility].

Background

[ ]. [The State employee] has been designated by [the State agency] as serving in a policymaking position. Pursuant to the Commission's regulations on outside activities, 19 New York Code of Rules and Regulations ("NYCRR") Part 932, applicable to State employees designated as policymakers who wish to engage in outside employment for which more than $4,000 is expected to be received, [the State employee] on October 18, 1993, after having received [the State agency's] approval, requested the Commission's approval to serve as [ ] director of the [county facility]. By letter dated October 19, 1993, the Commission requested additional information from [the State employee] relative to his proposed outside employment.

By letter dated October 24, 1993, [the State employee] supplied the Commission with the requested information and made an additional request for permission to be appointed to the faculty of [a State University of New York ("SUNY") campus].

Regarding his outside employment at the [county facility], [the State employee] supplied a copy of the position description for [ ] director, which states, in relevant part, that he is to assume "overall responsibility of the [county facility's] [specific] program" and requires his "participation in developing [specific] policies and procedures." In his letter, [the State employee] stated that [the State agency] licenses and surveys the [county facility] although "there is no relationship between [the county facility] and the [State facility]."

[Statute] provides for the licensing of [county facilities]. Pursuant to [ ], a [county facility] must receive a certificate of approval every two years. [Statute] provides that the Commissioner of [the State agency] shall conduct periodic inspections (surveys) of [county facilities].

At a minimum, the [county facility] staff must include a [ ] director [ ] who shall be a member of the [county facility's] interdisciplinary [ ] team [ ]. The [county facility] must annually report to [the State agency] the names and addresses of the members of the [county facility's] interdisciplinary team [ ]. The governing board of the [county facility] must ensure that the [ ] director develops criteria and procedures [ ] and that the [county facility's] current operating policies and procedures are retained on file at the [county facility's] principal office [ ]. [ ].

By a second letter dated November 9, 1993, [the State employee] informed the Commission that he is not currently receiving compensation for serving as the [ ] director but "that there may be compensation planned for that position in the future."

On December 23, 1993, the Commission issued an informal advisory opinion to [the State employee] (with a copy to [the State agency official]) in which the Commission concluded that Public Officers Law §73(7)(a) precluded [the State employee] from serving as a compensated [ ] director of the [county facility] because, in performing his duties for the [county facility], it is likely that he would be appearing before [the State agency] and/or rendering services for compensation in matters before [the State agency] that could have a bearing on whether the [county facility] retains its [State agency] certificate of approval. The Commission also concluded that [State employee] could not serve even if he were not compensated because the public could reasonably perceive that because of his policymaking position with [the State agency], the [county facility] would receive preferential treatment from [the State agency] with regard to surveys conducted of the facility and other issues related to the [county facility's] continued licensure by the agency. There would, therefore, be a violation of Public Officers Law §74.

Concerning his proposed service as [a faculty member] at [the SUNY campus], the Commission requested that [the State employee] complete an Outside Activity Request and submit it to his appointing authority for approval and, if applicable, to the Commission.

By letter dated January 7, 1994, [the State agency official], on behalf of [the State agency], responded to the Commission's informal advisory opinion. Concerning the Commission's application of Public Officers Law §73(7)(a), [the State agency official] argued that this law does not apply as long as [the State employee] is not receiving compensation from [the county facility].

With respect to Public Officers Law §74, [the State agency official] argued that, while the [State facility] was regulated by [the State agency], [the State agency's] organizational structure insures that there "could be no reason for the intermingling of regulatory policymaking with institutional operations." [The State agency official] contended that if the public could perceive that there is a conflict between [the State employee] serving as [ ] director of the [county facility], then the public would have the same concerns about his serving [the State agency] as Chief of [ ] Services for the [State facility]. [The State agency official] also made two other arguments: (1) individuals designated as policymakers in [the State agency] operated facilities are policymakers only in relation to the operation of those facilities and not the agency as a whole; and (2) since the government-to-government exception to the revolving door provision of Public Officers Law §73(8) would allow [the State employee] to work at the [county facility] after he left [the State agency], the same reasoning should apply to [the State employee's] current outside employment, as the [county facility] is operated by [ ] County.

Applicable Statutes and Regulation

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.

Public Officers Law §74 sets forth the Code of Ethics for State officers and employees. Section 74(2) contains the rule with respect to conflicts of interest:

No 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.

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. Of relevance to this inquiry are the following:

. . . .
  1. 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.

    . . . .

  2. An officer or employee of a state agency . . . should not by his conduct give reasonable basis for the impression that any person can improperly influence him or unduly enjoy his favor in the performance of his official duties, or that he is affected by the kinship, rank, position or influence of any party or person.

    . . . .

  3. 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.

    . . . .

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.

Discussion

Public Officers Law §73(7)(a) prohibits State officers and employees from engaging in compensated appearances or rendering of services in relation to a case, proceeding, application or other matter before any State agency involving, inter alia, licensing. There need not be a connection between the employee's State job duties and the outside work for there to be a §73(7)(a) violation;(1) rather, the Commission must find that the State employee appeared or rendered services for compensation before any State agency regarding any of the categories of activities listed in §73(7)(a). See Advisory Opinion No. 92-6.

In the instant case, [the State employee's] outside activity as [ ] director for the [county facility], which would include "overall responsibility for the [county facility's] [specific] program" and "developing [specific] policies and procedures", would cause him to either appear and/or render services in connection with [the State agency] surveys of the [county facility] and the [county facility's] continued licensure by [the State agency]. Since §73(7)(a) prohibits compensated activities, the statute would apply and bar [the State employee] from his [county facility] position or rendering services for compensation on behalf of the [county facility] if he were to receive payment of any kind for his work as [ ] director.

Public Officers Law §74 applies to activities, even if uncompensated, that have even the appearance of a conflict of interest; an actual conflict is not necessary for a violation of the law. In the instant case, the public could reasonably perceive that the [county facility], by virtue of [the State employee's] policymaking position with [the State agency], could receive preferential treatment from [the State agency]. For example, the [county facility's] admission, discharge, and operating policies which [the State employee] is responsible for establishing will be reviewed by [State agency] surveyors as part of the [county facility's] continued licensure by the State agency.

In Advisory Opinion No. 90-25, the Commission held that a policymaking employee may not serve as an uncompensated member of the board of directors of a private, not-for-profit entity licensed, certified or regulated by the employee's State agency. The same concern that was present in Advisory Opinion No. 90-25, namely the appearance of a conflict of interest resulting from a policymaker's service to an entity that is licensed by the policymaker's State agency, exists in the instant matter.

In Advisory Opinion No. 91-3, the Commission did permit certain employees of OMRDD to engage in outside employment for not-for-profit providers of services which are licensed by OMRDD. However, such permission was limited to non-policymaking employees. As the Commission stated in that Advisory Opinion:

Even if the policymaker is not in the line of authority to regulate or oversee the provider of services by which the policymaker is employed or has a business relationship, the appearance exists that the individual could influence other policymakers to render decisions favorable to the outside organization. There remains the potential appearance that the provider has retained the policymaker in order to gain influence with the State agency, to obtain unwarranted privileges, to obtain insider or other confidential information, or has provided the outside employment or contract as a reward to ensure that the policymaker will influence licensing or rate setting decisions favorable to the provider.

The Commission does not find merit in [the State agency official's] suggestion that if there is the appearance of a conflict of interest by virtue of his position at his outside employer, the [county facility], then the same appearance is present by virtue of his position at the [State facility], which, like the [county facility], is regulated by [the State agency]. Clearly, his responsibility as a full-time State employee and director of a [State agency] operated facility is to his employing agency and, eventually, the public. At his outside employment at a non-State facility which is licensed by his State agency, his responsibility is to the operator of that facility.

The Commission also rejects the argument that [the State employee] is a policymaker only in terms of his position at the [State facility]. While the designation as a policymaker pertains to an individual employee's State position, the ramifications of such designation are broader. The Commission has treated the category of policymaker as one which receives a higher level of scrutiny, particularly with respect to outside activities. See Advisory Opinion Nos. 91-7, and 92-17.

Finally, the government-to-government exception to the revolving door restriction is contained only in Public Officers Law §73(8). It has no application by its explicit language to §73(7)(a) or §74.

Conclusion The Commission concludes that the outside activity request is denied to the extent that [the State employee] requests permission to serve as [ ] director of the [county facility]. The Commission will consider his request to serve on the faculty of [the SUNY campus] once the appropriate Outside Activity Request is received.

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

Barbara A. Black,
Angelo A. Costanza,
Robert E. Eggenschiller,
Donald A. Odell, Members

Dated: May 3, 1994


Endnotes

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



URL: http://www.nysl.nysed.gov/edocs/ethics/94-07.htm