New York State
Ethics Commission


Advisory Opinion No. 96-15: Application of the government-to-government exception of Public Officers Law §73(8)(e) to employees of the New York State Association of Counties.

INTRODUCTION

The following advisory opinion is issued in response to a request submitted by [ ], an Assistant Counsel with the New York State Department of Social Services ("Department"). He asks whether the "government-to- government exception" contained in Public Officers Law §73(8)(e) would permit a former Department employee to appear before the Department within two years of his leaving State service and to work on transactions on which he worked while in State service if he becomes an employee of the New York State Association of Counties ("NYSAC"), a not-for-profit corporation comprised of county governments and the City of New York.

Pursuant to its authority under Executive Law §94(15), the New York State Ethics Commission ("Commission") hereby renders its opinion that NYSAC is not a governmental agency, and §73(8)(e) is not applicable to its employees. Accordingly, a former Department employee who works for NYSAC would be precluded by Public Officers Law §73(8)(a)(i) from appearing, practicing or rendering services for compensation before the Department for two years following his or her termination from State service; and by §73(8)(a)(ii) from appearing, practicing, communicating or rendering services before any State agency or receiving compensation for services on behalf of NYSAC in relation to any case, proceeding, application or transaction with respect to which the individual was directly concerned and in which he or she personally participated or which was under his or her active consideration while in State service.

BACKGROUND

[The requesting individual's] request concerns the application of §73(8)(e) to an Assistant Counsel with the Department of Social Services who manages the Department's Bureau of Medicaid Law. Recently, he has worked under the Deputy Commissioner for Health and Long-Term Care on issues involving "federal Medicaid reform, the proposed transfer of Medicaid-related functions from the Department of Social Services to the Department of Health, and the Executive Budget."(1) The Department has designated the employee as serving in a policymaking position.

The question presented in the request concerns how the revolving door statute would apply should the individual become an employee of NYSAC, a not-for-profit association comprised of county governments and the City of New York.

Structure of NYSAC

County Law §232 recognizes NYSAC as one of several associations dedicated to "the promotion of better county government." The statute authorizes each county board of supervisors to appropriate and pay an annual fee to provide for the organization's actual and necessary expenses.(2)

NYSAC is governed by a board of directors of locally elected officials from the various counties of the State. An executive director and staff of 12 full-time employees carry out the work of the Association at the direction of the board. The employees of NYSAC are employees of the Association rather than of any particular governmental entity, and they are not subject to the Civil Service Law. All hiring is conducted by NYSAC, and employees are directed and supervised by its personnel. All payroll and personnel matters are handled by the administrative staff of NYSAC. Its employees are not covered by the provisions of Public Officers Law §17 or §18, which provide for the defense and indemnification of officers and employees of the State and public entities.

NYSAC is denominated as a "political subdivision" for purposes of the Retirement and Social Security Law.(3) Accordingly, its employees are eligible to participate in the New York State and Local Employees Retirement System. NYSAC has also opted to participate in the State's health insurance programs, which are made available to "subdivisions or quasi-public organizations of the State."(4) With regard to purchasing, NYSAC is a "public association" permitted to make purchases through State contracts administered by the Division of Standards and Purchase in the Office of General Services.(5)

By letter dated May 9, 1996, the New York State Department of Taxation and Finance informed NYSAC that it was qualified for sales and use tax exemptions for its purchases under Tax Law §1116(a)(1), which provides for exemptions for the State of New York, its agencies, instrumentalities, public corporations and political subdivisions. NYSAC has also received an informal determination from the Internal Revenue Service that its income is exempt from Federal taxes pursuant to Internal Revenue Code §115. That section excludes from the gross income of a taxpayer income that is derived from the exercise of an essential government function and accrues to an instrumentality or political subdivision of a state.

The Individual making Request

If the Department employee who is the subject of this opinion were to become an employee of NYSAC, he would be expected to "provide legal reviews and analysis of current federal and State law and pending legislation, regulations and policy on both the federal and State levels" and "assist the executive director in bringing the counties' concerns to the appropriate appointed and elected officials at the State and federal levels of government." He would also provide legal advice to NYSAC and its individual members with respect to contracts and projects involving the members, either individually or in groups. One such contract is between NYSAC and the Department, under which NYSAC will "review county eligibility and payment records and State payment files with respect to medical care and other assistance furnished to persons under the joint State/local medical assistance and cash assistance programs."(6)

As a NYSAC employee, the individual may be required to physically appear before the Department, his former agency, within two years of leaving State service. It is more likely, however, that the Department would have occasion to review the work product (i.e., draft legislation, federal waivers) of the former employee during this period.(7)

[The requesting individual] asks whether the post-employment restrictions contained in Public Officers Law §§73(8)(a)(i) and (ii) would prohibit the former Department employee from appearing before the Department on behalf of NYSAC or working on transactions on which he worked while in State service. He suggests that the employee could engage in these activities because §73(e), which exempts employees of the federal, State and local governments from the revolving door restrictions, is applicable. He argues that the State and NYSAC share the same mission -- to serve the public at large. As such, the individual, as a NYSAC employee, would not be trading on his knowledge and contacts gained in the public sector to the benefit of a private client. Rather, the employee would continue to serve the public on behalf of local governments. These are the reasons that underlie the so called "government-to-government" exception contained in Public Officers Law §73(8)(e).

APPLICABLE STATUTES

Public Officers Law §73(8)(a)(i) provides:

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.

Public Officers Law §73(8)(a)(ii) provides:

No person who has served as a state officer or employee shall after termination from 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 or she personally participated during the period of his or her service or employment, or which was under his or her active consideration.

Public Officers Law §73(8)(e) provides:

This subdivision shall not apply to any appearance, practice, communication or rendition of services before any state agency . . . or to the receipt of compensation for any such services, rendered by a former state office 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.

Section 73(8)(a), which is 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. It contains a two year absolute bar on a former employee's appearing, practicing or rendering services for compensation in relation to any matter before his or her former agency; and a lifetime bar, which prohibits former employees from appearing, practicing, communicating or rendering services anywhere, in relation to any case, proceeding, application or transaction involving a matter in which they were directly concerned and personally participated or which was under their active consideration while in State service.

Section 73(8)(e), the government-to-government exception, was adopted as an amendment to the revolving door statute.(8) It exempts a former employee from the two year and lifetime bars when carrying out official duties as an elected official or employee of a federal, state or local government or one of its agencies.

DISCUSSION

The legal question before the Commission is whether an employee of NYSAC, a not-for-profit association serving county governments and the City of New York, comes within the exception of Public Officers Law §73(8)(e).

In Advisory Opinion No. 89-5, the Commission first considered the issue of the applicability of the revolving door statue to a former State employee serving in a governmental capacity.(9) Relying on prior opinions of the Attorney General, the Commission held:

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.

Following the issuance of this opinion, the Commission urged that its conclusion be codified, and subdivision (e) was added to §73(8) by Chapter 242 of the Laws of 1989. The Commission has since had several occasions to consider the application of the government-to-government exception.

The Commission interpreted the then new subdivision in Advisory Opinion No. 89-7. It opined that the government-to-government exception applies only to government officials and employees, and does not apply to paid consultants of government entities. The Commission held that "where 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."

In Advisory Opinion No. 90-23, the Commission held that public school districts constitute local government agencies for purposes of the government-to-government exception. In distinguishing them from private schools for the deaf or blind, the Commission noted that while the private schools are closely regulated by the State Education Department and receive State funding to support the expenses of certain "State pupils," they are organized and maintained by private individuals or corporations. In contrast, public schools are organized and maintained as institutions of government.

In Advisory Opinion No. 94-8, the Commission concluded that the government-to-government exception authorized a former State employee to serve by appointment on a local planning board and have contacts with his former agency within two years of having left State service. In that opinion, the Commission relied on a State Comptroller's opinion(10) which held that a member of a regional planning board is a "public officer" since, under the General Municipal Law, he exercises "sovereign power." Given his exercise of this power, the Commission equated his appointed status to that of an employee covered by the government-to-government exception.

In the case of NYSAC, it is clear that the association is not a government or governmental entity. As a not-for-profit association whose membership represents the interests of counties within New York State and the City of New York, its mission is not to carry out governmental functions or to serve the "public-at-large," but to represent the interests of its members, officials of local government.

The question, therefore, is whether, despite this structure, NYSAC's employees can be equated to government employees. The Commission concludes that they cannot be so equated.

In Advisory Opinion No. 94-8, discussed above, the Commission's equating of an appointed officer of a regional planning board to a government employee was based upon the Comptroller's finding that the officer, as a board member, would be exercising sovereign power. The Comptroller reached this conclusion by examining the statutory powers of the board, which was established under the General Municipal Law. Section 239-d of that law gives such boards the power to adopt master plans and to impose other planning concepts on localities within its region.

NYSAC, like the regional planning board, is authorized by statute. However, NYSAC has not been granted authority by the Legislature to exercise sovereign power. County Law §232 only authorizes counties to pay dues to the organization. Thus, the Commission's basis for equating a regional planning board member to a government employee for purposes of the government-to-government exception is not found in the case of NYSAC and its employees.

In addition, one of NYSAC's important functions is lobbying. It often lobbies State agencies on issues where others with very different positions are also seeking to be heard. For an individual to be able to lobby his or her former agency within two years of leaving State service or on a matter on which he or she had worked while in State service would strike at the heart of the revolving door statute. The government-to-government exception should not be read to allow for such practices unless the governmental nature of employer at issue is clear.

CONCLUSION

The Commission concludes that NYSAC is not a governmental agency, and Public Officers Law §73(8)(e) is not applicable to its employees. Accordingly, a former Department employee who works as an employee of NYSAC would be precluded by Public Officers Law §73(8)(a)(i) from appearing, practicing or rendering services for compensation before the Department for two years following his or her termination from State service; and by §73(8)(a)(ii) from appearing, practicing, communicating or rendering services before any State agency or receiving compensation for services on behalf of NYSAC in relation to any case, proceeding, application or transaction with respect to which the individual was directly concerned and in which he or she personally participated or which was under his or her active consideration while in 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 or related supporting documentation.

Concur:

Evans V. Brewster
Angelo A. Costanza,
Donald A. Odell, Members

Dissent:

Robert E. Eggenschiller, Member

Eggenschiller, R., dissenting. I cannot agree that employees of NYSAC are not covered by the government-to-government exception. As we examine NYSAC, we find that it has many attributes of a government agency.

As noted in the majority opinion, NYSAC's employees participate in the New York State Employees Retirement System by virtue of its statutory designation as a "political subdivision" of the State. NYSAC, like government entities, makes contributions on behalf of its employees. No private entity can join the system.

NYSAC has also opted to participate in the State's health insurance program, a benefit available to "subdivisions or quasi-public organizations of the State." In addition, NYSAC may purchase goods through State contracts and has been granted an exemption from sales and use tax by the Department of Taxation and Finance. If the Comptroller, the Tax Department and the Office of General Services recognize NYSAC as a government entity, so should this Commission.

In sum, since NYSAC has all of these indicia of governmental status, it is both logical and consistent for the Commission to designate NYSAC as a governmental entity for purposes of the government-to-government exception.

Dated: July 18, 1996


Endnotes

1. Request letter dated [ ], 1996.

2. The requesting individual, in his letter of request, states that NYSAC is "closely affiliated" with its founding county governments and the City of New York. This appears to be his description rather than a legal relationship. A number of State agencies have created separate, closely affiliated not-for-profit corporations to receive federal funds and participate in federally assisted programs. These corporations are recognized by statute (State Finance Law §53-a). They include: Youth Research, Inc., The Research Foundation for Mental Hygiene, Inc., Health Research, Inc., and The Research Foundation of the State University of New York. The Commission has previously held that these corporations are not State agencies and their employees are not subject to the provisions of the Public Officers Law (Advisory Opinion Nos. 91-21, 93-3).

3. Retirement and Social Security Law §131.

4. Civil Service Law §163(2).

5. General Municipal Law §109-a.

6. The subject employee did not participate in the drafting, negotiating, or execution of this contract on behalf of the Department nor was it under the employee's active consideration. Request letter dated [ ], 1996.

7. The Commission has previously held that the submission of a former employee's work product to his or her former agency constitutes a prohibited appearance for purposes of the two year bar [Advisory Opinion Nos. 90-21; 91-9].

8. Chapter 242 of the Laws of 1989.

9. This opinion predated the enactment of §73(8)(e).

10. 18 Op. State Compt. 327 (1962).



URL: http://www.nysl.nysed.gov/edocs/ethics/96-15.htm