New York State
Ethics Commission


Advisory Opinion No. 96-19: Application of the lifetime bar of Public Officers Law §73(8) to a former employee of the Consumer Protection Board.

INTRODUCTION

The following advisory opinion is issued in response to a request submitted by [ ], who formerly served as [a senior employee] for the New York State Consumer Protection Board (CPB). [The requesting individual] asks whether the lifetime bar restrictions of Public Officers Law §73(8) would prohibit him from representing [the client], a marketer and broker of electricity services, before the Public Service Commission (PSC) in two types of matters.

Pursuant to the authority vested in it by the Executive Law §94(15), the New York State Ethics Commission (Commission) hereby renders its opinion that the lifetime bar restrictions do not prohibit [the requesting individual] from representing [the client] before the PSC in the PSC's review of plans to be filed by five electric utilities, as the proceedings related to those plans will not be the same proceedings or transactions as the Competitive Opportunities proceeding, which was under [the requesting individual's] active consideration while he was in State service. These restrictions do prohibit [the requesting individual's] representation of [the client] in three petitions for competition pilot programs which the PSC will consider within a pending Long Island Lighting Company (LILCO) rate proceeding, as the CPB participated in the LILCO proceeding and it was under [the requesting individual's] active consideration.

APPLICABLE LAW

The lifetime bar found in Public Officers Law §73(8)(a)(ii) limits certain post-employment activities by former State employees. It 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.

This subdivision permanently prohibits former State employees from appearing, practicing, communicating or otherwise rendering services before any State agency or receiving compensation at any time with respect 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 employed by the State.

BACKGROUND

[The requesting individual] was employed by the CPB from [date] to [date].(1) As [a senior employee] for the CPB, he supervised the agency's participation in electric, gas and telephone proceedings before the PSC in accordance with the policies established by the agency's Executive Director and Deputy Executive Director. In some instances, he served as the CPB's attorney in PSC proceedings. He also represented the CPB in appellate litigation challenging PSC decisions.


ISSUE 1: THE COMPETITIVE OPPORTUNITIES PROCEEDING

THE PROCEEDING

The Commission has previously had occasion to consider the Competitive Opportunities proceeding in its Advisory Opinion No. 95-11. The proceeding was established by the PSC to seek ways the electric industry could be restructured in light of increasing competitive options facing consumers, considering the need to lower rates for all customers in order to spur economic development in the State and to avoid jeopardizing safe and reliable electric service. An investigation of these matters was begun in 1993 in Case 93-M-0229, as the PSC considered guidelines for the implementation of flexible pricing and the use of negotiated contracts for customers facing competitive options. The PSC adopted guidelines which have been in place since 1994 (Case 93-M-0229, Opinion No. 94-15 [issued July 11, 1994]).

The PSC then instituted, on August 9, 1994, Phase II of Case 93-M-0229. The objective of this Phase was to identify regulatory and ratemaking practices that would assist in the transition to a more competitive electric industry. The PSC urged the parties to work collaboratively to assist in identifying comprehensive principles which would guide the transition.

On November 30, 1994, the PSC changed the case number of the Competitive Opportunities proceeding to Case 94-E-0952 to reflect the limitation of the subject matter to electric service, as Case 93-M-0229 was originally instituted to address both gas and electric service. The Commission has previously held, in Advisory Opinion No. 95-11, that the PSC's action did not result in the creation of a new proceeding for purposes of the lifetime bar. Upon closing Case 93-M-0229, the PSC incorporated its record into Case 94-E-0952 and stated that the change was for administrative purposes in order to correctly identify the proceeding as pertaining to electric service only.

After considering the parties' efforts and issuing proposed principles for comment, the PSC, on June 7, 1995, adopted final principles to form the basis of the framework for movement toward a more competitive electric marketplace. The parties were asked to continue to work collaboratively for the remainder of the proceeding, and a recommended decision was issued on December 21, 1995. This decision set forth a proposed model for restructuring the electric industry, and it identified specific questions for parties to address in briefs to be filed. Briefs were subsequently submitted and oral argument was held.

The PSC then issued its Opinion No. 96-12, in which it established the generic policies that it will apply in evaluating the specific restructuring plans of each of the State's seven major electric utilities. The generic policies are in the areas of Competition, Wholesale and Retail Competition, System Reliability, Strandable Costs, Environmental and Public Policy, Market Power/Corporate Structure, and Obligation to Serve/Customer Protections. In order to implement these policies, the PSC directed five of the seven electric utilities to submit filings by October 1, 1996 to address issues such as the utilities' structure, retail access proposals, long-term rate plans, public programs, market power and energy services.(2)

[The requesting individual] wishes to represent [the client], a marketer and broker of electricity services, before the PSC in the proceedings for the review of the proposed restructuring plans, to be filed on or before October 1, 1996, by Central Hudson Gas and Electric Corporation ("Central Hudson"), Consolidated Edison Company of New York ("Con Edison"), New York State Electric and Gas Corporation ("NYSEG"), Orange and Rockland Utilities, Inc. ("Orange & Rockland"), and Rochester Gas and Electric Corporation ("RG&E").

[The requesting individual] states that the PSC's Secretary, John C. Crary, has informed him that he anticipates that each of the filings by the five electric utilities will be assigned a new case number and will be considered in a separate docket.

During [the requesting individua's] tenure at the CPB, the agency participated in the PSC's Competitive Opportunities proceeding. [The requesting individual] supervised the work of the CPB's attorneys and technical experts in that case. He unquestionably had the matter under his active consideration.

DISCUSSION

If the PSC considers each of the five electric utilities' proposed plans in five new and separate proceedings with new case numbers, as appears likely, each of those proceedings will be distinct from the Competitive Opportunities proceeding. Thus, [the requesting individual] will not be barred by their being the same "case, proceeding [or] application" as the one in which he participated while in State service. However, the lifetime bar would apply if the multiple proceedings were all part of the same "transaction". The question, then, is whether, together, they constitute one "transaction".

To answer this question, the Commission looks to the substance of the matter rather than its procedural context. For example, the Commission has previously held that bills introduced in different legislative sessions may constitute the same transaction, particularly when they affect the same or substantially the same population and present the same issues (Advisory Opinion No. 92-20).

In the Competitive Opportunities proceeding, the PSC developed generic principles to form the framework for movement toward a more competitive electric marketplace. As stated by the PSC, Opinion No. 96-12 "sets forth our vision of the future regulatory regime and the goals we expect to be achieved, and describes the strategies that should be used to accomplish the goals". Having determined its goals and strategies, the PSC will now turn to the application of the generic principles to each utility on a case-by-case basis in the context of each company's individual circumstances.

In Advisory Opinion No. 95-7, the Commission held that successive utility rate cases should be considered different transactions for purposes of the lifetime bar, as the PSC, in fixing rates for a specified future period, must re-estimate every component of a utility's revenue requirements for the new rate period.(3)

The circumstances here are similar. In the proceedings in which [the requesting individual] would represent [the client], the PSC would examine, for the first time, the application of the generic principles to each utility's proposed plan. Each utility must address unique issues, such as its structure, market power, public programs and long-term rate plans. While the generic principles announced in the Competitive Opportunities proceeding will be applied, each application must examine every component of a utility's plan on a case-by-case basis. Completely new issues will be presented to the PSC. Thus, each proceeding would constitute a transaction separate from the Competitive Opportunities proceeding.

Since these transactions will not be the same as the Competitive Opportunities proceeding, in which [the requesting individual] participated, the lifetime bar would not prohibit him from representing [the client] before the PSC in its review of the filings of the plans of the five electric utilities.


ISSUE 2: [THE CLIENT'S] PETITIONS FOR COMPETITION PILOT PROGRAMS

THE PETITIONS AND PROCEEDINGS

[The client] has sponsored three petitions for competition pilot programs in the LILCO service area that would be implemented by the Village of [A], the Village of [B], and the [ ] Group of Long Island [ ]. Each petition was given its own docket number [ ]. Comments on the [Village A] and [Village B] petitions were filed by LILCO, Con Edison, and a consortium of large businesses, and were incorporated into the respective dockets. Comments on the [Group] petition were filed by LILCO and were incorporated into that proceeding's docket. During [the requesting individual's] tenure at the CPB, the agency did not comment on or otherwise participate in any of these three proceedings.

To date, the PSC has not taken any substantive action on the three petitions. However, it has decided, in Opinion No. 96-12, to refer them to the pending LILCO rate case. That determination was made in the context of the PSC's generic consideration of pilot programs for developing information about how electricity competition will operate in practice. In Opinion No. 96-12, the PSC stated that it favored certain retail access pilot programs, and it referred previously filed petitions for pilot programs to the two existing rate cases (i.e., those of Niagara Mohawk and LILCO).

The pending LILCO rate case to which the [Village A], [Village B] and [the Group] petitions were referred, Case 96-E-0132, was first initiated by a PSC order dated February 12, 1996. It directed LILCO to show cause why some or all of four specific rate reducing measures should not be adopted (i.e, disposition of an $81 million property tax refund received by LILCO in January 1996; an adjustment to rates reflecting $25.9 million in overearnings for the 1994-95 rate year; disposition of overcollections of $67.5 million in various expense and revenue items for the 1994-95 rate year; and disposition of anticipated overcollections in Fuel Adjustment Clause charges). LILCO responded to the PSC's show cause order, and other parties, including the CPB, then filed comments on LILCO's response.

On April 25, 1996, the PSC determined that its focus on the four specific rate reduction measures was too limited and that a more comprehensive investigation of LILCO's rates and finances was warranted. It directed LILCO to file financial and other information sufficient to provide the basis for setting new rates for the company for a single rate year beginning January 1, 1997 and for adopting a three year rate plan for the period 1997 to 1999. LILCO submitted a filing on June 24, 1996 which the PSC characterized as "incomplete" in a July 18, 1996 order. A supplemental rate filing was due on September 27, 1996.

In the July 18, 1996 order, the PSC initiated an expedited procedure for setting temporary rates for LILCO, which was scheduled to be completed before the PSC's September 11, 1996 public session. The [client] petitions were not to be considered within the temporary rate reduction determination.

DISCUSSION

[The requesting individual] wishes to represent [the client] before the PSC in its review of [the client's] three petitions for competition pilot programs that would be implemented by [Village A], Village B] and [the Group]. Since the PSC has referred the petitions to the LILCO rate case for consideration in that proceeding, and since the CPB participated in the LILCO rate proceeding while [the requesting individual] served as its [senior employee], [the requesting individual] would seem to be seeking to appear in the same proceeding in which he participated while in State service. He presents two arguments as to why the lifetime bar should not prohibit his representation of [the client].

First, [the requesting individual] argues that he is seeking to participate only in the review of [the client's] petitions and not in the general determination of LILCO's rates. Second, he argues that the nature of the LILCO rate case has changed so materially since his tenure at the CPB that it is essentially a new inquiry. This argument relies on the PSC's February 12, 1996 order, which mentioned only four potential factors which might lead to a rate reduction, and contrasts it with the PSC's subsequent order of April 25, 1996 [ ], which determined that a comprehensive rate investigation based on detailed rate plans for specific future periods was warranted. It is [the requesting individual's] position that the LILCO rate proceeding at this point is wholly distinguishable from the PSC's inquiry prior to April 25, 1996, and it will be based upon filings that were not made until after he left the CPB.

The Commission must reject these arguments based upon its holding in Advisory Opinion No. 95-11. The Commission held in that Opinion that the statutory language of §73(8)(a)(ii) that bars a former employee from appearing in the same proceeding as one in which he participated while in State service does not permit the Commission to divide a proceeding into various parts or phases. Thus, the LILCO rate proceeding may not be subdivided so as to separate the [the client] petitions from the other aspects of the proceeding, nor may the proceeding be deemed to have changed so materially that the Commission will deem it a new proceeding.(4)

CONCLUSION

The lifetime bar restrictions do not prohibit [the requesting individual] from representing [the client] before the PSC in the PSC's review of the plans to be filed by five electric utilities, as the proceedings related to those plans will not be the same proceedings or transactions as the Competitive Opportunities proceeding, which was under [the requesting individual's] active consideration while he was in State service. These restrictions do prohibit [the requesting individual's] representation of [the client] in the three petitions for competition pilot programs which the PSC will consider within a pending LILCO rate proceeding, as the CPB participated in the LILCO proceeding and it was under [the requesting individual's] active consideration.

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.

All Concur:

Evans V. Brewster
Angelo A. Costanza
Robert E. Eggenschiller
Donald A. Odell, Members

Dated: September 18, 1996


Endnotes

1. While [the requesting individual] remained on the payroll until [date], he actually ceased reporting to work on [earlier date] and had no involvement in the CPB's operations after that date. For purposes of the lifetime bar, [the requesting individual] could not have personally participated in or actively considered a matter after [earlier date].

2. Two of the seven electric utilities, Niagara Mohawk and LILCO, were not directed to file restructuring plans because their rates and structure were already under PSC review.

3. Likewise, in Advisory Opinion No. 95-15, the Commission held that each new cost trending index submitted to the Office of Real Property Services is a new transaction since it does not modify existing indices but, rather, is completely recalculated.

4. The decision to include the three petitions in the one pending rate proceeding was made by the PSC. For the Commission to divide this proceeding would cause it to, in essence, act contrary to the PSC's determination in an area where the PSC is the agency with expertise.



URL: http://www.nysl.nysed.gov/edocs/ethics/96-19.htm