New York State
Ethics Commission


Advisory Opinion No. 94-13: Application of the lifetime bar provision of Public Officers Law §73(8) to a former Research Scientist.

Introduction

The following advisory opinion is issued in response to a request by [ ], a former Research Scientist employed by the New York State Department of Health ("DOH"), for an opinion as to how the lifetime restrictions of Public Officers Law §73(8) apply to his current scientific endeavors.

Pursuant to its authority under Executive Law §94(15), the Commission concludes that Public Officers Law §73(8) does not apply to [the requesting individual] because his current scientific endeavors are not the same "transactions" for purposes of applying the lifetime bar provision of §73(8).

Background

[The requesting individual] was a Research Scientist with DOH [ ], and a Research Scientist at DOH's closely affiliated not-for-profit research corporation, Health Research, Inc. ("HRI"), [ ].(1) [ ]. When [the requesting individual] came to DOH, it was with the understanding that he would continue his work [ ]. According to DOH, [the requesting individual] had no management authority or responsibility while employed by DOH and was not considered an agency policymaker.

During his employment with DOH [ ], [the requesting individual] discovered a [vaccine technology]. This concept became part of a pioneer patent that DOH applied for on behalf of [the requesting individual]. [The requesting individual] started to reduce this concept to practice at the DOH laboratory [ ].

[ ], DOH assigned the State's rights to the [vaccine technology], as developed by [the requesting individual], to HRI [ ] with the intent that the private sector would commercially develop the technology.(2) According to DOH, it pursued the joint venture route because of the special nature of the technology. As the Commission noted in its Advisory Opinion No. 93-3:

. . . DOH was anxious to have the vaccine [technology] developed and looked to the private sector because of the public health significance of the vaccine technology, the fact that the technology was a generic approach that could lead to the creation of a multitude of products, the expense and time required to develop actual vaccine products and the commercial realities of the vaccine industry in the United States. [pp. 13-14.]

DOH officials also recognized that there were limitations to [the requesting individual's] ability to reduce the technology to practice because DOH lacked certain expertise [ ] and the necessary capital for the type and amount of research required to bring a product to market.

[ ], a [ ] pharmaceutical corporation, [ ], first became interested in pursuing a joint arrangement with DOH for developing [the requesting individual's] technology. An agreement between [the pharmaceutical corporation] and DOH/HRI was signed in [ ].(3) [The requesting individual] asserted (and DOH and HRI officials confirmed) that he was not part of the negotiating team; however, all the parties to the agreement recognized that [the requesting individual's] scientific expertise was integral to the joint venture's success. [The requesting individual] stated that he was made aware of the exact terms of the agreement only three to four days before the agreement was signed.

Pursuant to the agreement, [ ], a newly created corporation formed pursuant to the joint venture, received exclusive, royalty-free rights to the [vaccine technology] in return for HRI's holding a declining percentage of [the corporation's] outstanding stock over time and [the pharmaceutical corporation's] providing a cash investment over time [ ]. To guarantee its interests, DOH/HRI had four of the eight seats on the [corporation's] board of directors.

Until 1989, when it moved to its own facilities and hired its own personnel, [the corporation] conducted its activities utilizing State employees at DOH's Wadsworth Center for Laboratories and Research ("Wadsworth") through a research contract with HRI.

[The requesting individual] who, [ ], had transferred from DOH to HRI, left HRI and commenced work at [the corporation's] newly opened facility [ ]. At the time of his transfer, [the requesting individual] had not developed a marketable product. [The requesting individual] became the director of research at [the corporation] and had overall responsibility for [the corporation's] laboratory and the progress of research.

Since 1990, [the corporation] has developed a product that "is in the mode for licensure"; i.e., there are license applications pending before the Food and Drug Administration. [The corporation], under [the requesting individual's] direction, performs research toward the goal of obtaining a marketable product, but there is also continuing research toward trying to appreciate and understand the [ ] virus. [The requesting individual] is the named principal investigator on several grants from the National Institute of Health to perform such research.

According to [the requesting individual], there are currently two product-oriented applications of the technology: human and veterinary vaccines. On the human side, [the requesting individual] has a clinical testing candidate vaccine [ ]. [The requesting individual] believes that his greatest success in the last few years at [the corporation] has been to design safe "vectors" that can be utilized in developing vaccine candidates. [The corporation] conducts research at other centers affiliated with [the pharmaceutical corporation] and under contractual arrangements with private testing laboratories. [The requesting individual] states that there are hundreds of people employed in fields connected with his original discovery.

[The requesting individual] has authored hundreds of articles in scientific publications since the late 1960s. He is the inventor on scores of patents. [The requesting individual] assigned all inventions made while he was an employee of DOH/HRI to HRI which in turn has licensed the inventions to [the corporation]. [The requesting individual] has assigned those inventions made while employed by [the corporation] to [the corporation].

Applicable Statute

The lifetime bar provision of Public Officers Law §73(8) provides:

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).

Discussion

Public Officers Law §73(8), generally referred to as the "revolving door" provision, sets the ground rules for what individuals may do with the knowledge, experience and contacts gained from public service after they terminate their employment with a State agency. Public Officers Law §73(8) contains two restrictions on the post-employment activities of former State officers and employees -- the two year absolute bar and the lifetime bar. Since the two year bar has lapsed in [the requesting individual's] case, this opinion will focus on the application of the lifetime bar.

The lifetime bar contains a permanent prohibition against appearances and the rendition of services pertaining to any case, application, proceeding, or transaction in which the officer or employee was directly concerned and personally participated or which were under his or her active consideration while in State service.

The issue before the Commission is whether [the requesting individual], by virtue of his position and responsibilities as director of research for [the corporation], is receiving compensation in relation to any case, proceeding, application or transaction with respect to which he was directly concerned and in which he personally participated during the period of his employment at DOH or which was under his active consideration. In [the requesting individual's] situation, it appears from the information supplied to the Commission that no particular "case, proceeding, or application" will be implicated by [the requesting individual's] current scientific endeavors. The Commission must focus its attention on whether the word "transaction" encompasses [the requesting individual's] current scientific endeavors on behalf of [the corporation].

In Advisory Opinion No. 91-2, the Commission first defined the term "transaction" as it refers to lifetime barred matters. The Commission noted:

Comparing the language of the lifetime bar with the two-year bar proscribed by §73(8) of the Public Officers Law, the Commission notes that the two-year bar precludes certain services "in relation to any case, proceeding or application or other matter"; the lifetime bar speaks to "case, proceeding, application or transaction." It seems clear that the two-year bar, which is absolute with respect to a former employee's former State agency, was meant to prohibit the widest possible scope of activities. The lifetime bar, which applies to the prohibited activities before all State agencies, is narrower in scope. The prohibited acts are very specific. (emphasis in original.)

Also in Advisory Opinion No. 91-2, the Commission stated that, "[i]t is permissible for former employees to draw on their information concerning 'old' transactions if the information bears a relationship to current transactions." In Advisory Opinion No. 91-18, the Commission reiterated its position that Public Officers Law §73(8) does not preclude a former State officer or employee from appearing, practicing, communicating, or rendering services for compensation on new and separate matters or transactions, notwithstanding the fact that the State employee may have been directly concerned or personally participated in a similar or related transaction while he or she was in State service.

In Advisory Opinions Nos. 92-10, 93-2 and 93-13, the Commission considered whether there was a lifetime barred transaction with respect to two pieces of legislation. The Commission found it relevant that both pieces had the "same subject and purpose, parties interested and affected, and the ultimate goal of the legislation remained fairly constant."

Thus, Advisory Opinion No. 91-2 helped to define the term "transaction." Advisory Opinion No. 91-18 specifically permitted former State employees to render services for compensation on "new transactions" that may rely on "old transactions." Advisory Opinions Nos. 92-10, 93-1 and 93-13 set forth certain standards to be applied in assessing whether two pieces of legislation can be considered the same "transaction."

In the case of [the requesting individual], DOH has explained to the Commission how it believes these opinions should be interpreted in the context of the ongoing nature of scientific research. The Commission has not previously considered the lifetime bar in this context. DOH explained:

Since [the requesting individual] and other former state scientists do not appear before the state (in fact, most former state scientists have no contact at all with the state), the applicability of the lifetime prohibition must rely on an impermissible interpretation of 'transaction' encompassing a scientist's entire area of research. 'Transaction' is not defined in the [Ethics in Government] Act, nor does the Act's language suggest that scientific research is a 'transaction'. In the context of the sentence in which it appears, 'transaction' means a business dealing involving a former state employee, having the same limited scope as a scientific case, proceeding, or application. 'Transaction' cannot apply to scientific research, which by its nature extends over years and even generations.

. . . .

Research scientists cannot be treated like lawyers and other professionals in state service. A lawyer handles easily identifiable discrete issues such as specific regulations, legislative proposals, cases in litigation or government projects. Research, by contrast, is broad and ongoing. It cannot be viewed as reaching a defined end. It cannot be neatly divided into cases, bills, regulations, or issues. It continually meanders through the twists and turns of hypothesis, experiment, analysis and refinement.

The special nature of the work of research scientists is recognized by the federal government's ethics law which permits the Office of Government Ethics ("OGE") to exempt former federal employees from the federal "revolving door." For example, OGE permitted a former federal research scientist to continue his research in collaboration with scientists at his former federal agency because it would serve the national interest and because "his involvement is needed on so continuous and comprehensive a basis that other potential remedial procedures would be burdensome and impractical."(4)

The special nature of this work was also cited by the NYS Office of Alcoholism and Substance Abuse Services ("OASAS"), which, like DOH, has employees who conduct scientific research. OASAS provided:

Research scientists are somewhat unique employees in that the very nature of their research requires a great deal of expertise and, very frequently, many years of continuous research on a single subject. The research is not easily divided into components which would begin and end with a single employer. But rather, the research is unique to the scientist and frequently independent of the employer of that scientist. For example, foundation grant money for research projects is generally given to an individual researcher. If the researcher should accept new employment the research grant funds would follow the researcher and not remain with the employing agency. Extending the prohibitions of §73(8) to include a prohibition on the continuation of a particular piece of research in another setting regardless of any future relationship to the state goes far beyond the intent of §73(8).

To illustrate the ongoing nature of scientific research as applied to [the requesting individual's] case, DOH has further explained:

[The requesting individual] began his research 20 years ago with a relatively simple inquiry into the genetic structure of the [ ] virus, with no particular goal in mind other than to increase general knowledge [ ]. The data and concepts that derived from that early beginning have broadened into studies [ ], and countless other issues now being studies by hundreds of scientists and technicians around the world, including [the requesting individual] and his team at [ ]. To break down this continuum of research into specific transactions is impossible and unnecessary.

DOH's has also noted [the requesting individual's] extensive list of scientific publications about [his research] which extend from the late 1960s (and prior to his employment with DOH) until the present day.

The Commission at this time is not prepared to accept the argument of DOH and OASAS, and simply exempt research scientists from any lifetime bar provisions of Public Officers Law §73(8).

In the unique case of [the requesting individual], the Commission finds that his current scientific endeavor is not covered by the lifetime bar because this endeavor is not the same "transaction" for purposes of Public Officers Law §73(8). In reaching this conclusion, the Commission notes the specific and possibly unique circumstances of [the requesting individual's] case. The [ ] technology has been his lifetime work, having begun long before his employment with DOH; [the requesting individual's] transfer to [the corporation] was specifically negotiated by DOH in furtherance of the agency's goal of having his technology applied to marketable vaccines.

Part of the "uniqueness" of [the requesting individual's] situation is that DOH/HRI transferred its patent rights to [the corporation] along with [the requesting individual's] services. This step was unusual for DOH/HRI which has traditionally licensed its patents to the private sector. If DOH/HRI had not done so, then [the requesting individual] might well have been prevented from leaving DOH and profiting from the patents he developed there.(5)

In sum, the Commission concludes that in [the requesting individual's] case, the lifetime bar of Public Officers Law §73(8) does not apply to his current scientific endeavors on behalf of [the corporation].

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

All concur:

Joseph M. Bress, Chair

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

Dated: June 21, 1994


Endnotes

1. The background information upon which this opinion is based has been culled from interviews conducted by Commission staff with [the requesting individual] and DOH officials (Counsel, Director of Wadsworth Center for Laboratories and Research, Director of HRI,

[ ]). The Commission also referred to its Advisory Opinion No. 93-3 with respect to details of the joint venture agreement.

2. This assignment was consistent with DOH's policy for the transfer of technology.

3. For a full discussion of the terms and circumstances of the joint venture agreement, see Advisory Opinion No. 93-3.

4. OGE Opinion 89 x 4.

5. DOH has provided the Commission with the current copy of the DOH/HRI patent and technology transfer agreement that each research scientist is required to sign upon commencing employment. DOH also provided a copy of a similar patent and copyright agreement that [the requesting individual] signed [ ]. The agreements provide that anything invented, conceived, or discovered, whether patentable or not, by the scientist during his or her employment with DOH/HRI is the property of DOH/HRI. Pursuant to the agreement, the scientist is obligated to promptly disclose to DOH/HRI the existence and nature of such invention and assign to DOH/HRI any rights, titles and interests in said inventions.



URL: http://www.nysl.nysed.gov/edocs/ethics/94-13.htm