New York State
Ethics Commission


Advisory Opinion No. 98-19: Application of the lifetime bar restrictions of Public Officers Law §73(8)(a)(ii) to a former State employee who wishes to be a member of a Council which he had a role in establishing while in State service.

Introduction

The following advisory opinion is issued in response to a request by [ ], a former employee of the Public Service Commission ("PSC"). He asks whether he may, pursuant to the post employment restrictions of Public Officers Law §73(8)(a), become a member of the New York State Reliability Council ("Council"), an entity about to be created which he had a role in establishing while in State service.

Pursuant to the authority vested in it by Executive Law §94(15), the New York State Ethics Commission ("Commission") renders its opinion that the restrictions of the lifetime bar would prohibit [the requesting individual] from accepting an appointment to membership on the Council upon its being established, as he would be rendering services in relation to a transaction in which he personally participated while in State service.

Background

[The requesting individual] was employed by the PSC from [ ] until [ ]. Prior to his having separated from State service, he was Chief of [ ]. He had previously held the position of Chief of [ ].

[The requesting individual's] inquiry stems from the major changes now taking place in the electric power industry, as it moves from an industry of heavily regulated monopolies into a basically unregulated competitive environment. During the latter years of his State service, [the requesting individual] was part of the PSC staff team of approximately 80 employees who were involved in the agency's lengthy and complex generic deregulation proceeding. One of the orders issued in that proceeding authorized the State's seven regulated electric utilities, together with the New York Power Authority, to submit a filing to the Federal Energy Regulatory Commission ("FERC") for authorization to form two new private oversight bodies -- an Independent System Operator ("ISO") and the Council.

While a PSC employee, [the requesting individual] was involved in the effort to create these new bodies. He participated in discussions as the group leader of a team of 20 PSC employees who negotiated with the utilities. They considered issues such as whether there should be an entity like the Council and, if such an entity were to be created, what its role should be. After the PSC authorized the utilities to initiate the FERC proceeding, [the requesting individual] actively participated in that proceeding on behalf of the PSC. Specifically, he worked on the PSC's formal submission to FERC, which supported the utilities' proposal to create the ISO and the Council.

In June 1998, FERC approved the formation of both entities. It ordered that an independent selection committee be formed to choose their initial members. The selection committee, which has 18 members, including two members chosen from the PSC's staff, is currently engaged in this task. It has expressed an interest in appointing [the requesting individual] as a member of the Council. [The requesting individual] has stated that he was approached by the committee. If appointed, [the requesting individual] would be paid for his services.

The ISO and the Council will function as two separate and distinct entities. The Council will be an unincorporated association formed by agreement among the transmission providers. It will have primary responsibility for setting bulk power system reliability rules that address the reliability needs of the State.

The ISO will have responsibility for the day-to-day operation of the power system and will have the discretion to develop operating procedures based on the reliability rules adopted by the Council.

The Council will be governed by an Executive Committee consisting of 13 members. It is anticipated that [the requesting individual] would be a member of that committee. Eight of the committee's members will be representatives of transmission providers. The ISO Board will develop procedures for the selection of the remaining five members. The Council will adopt local reliability rules, but either the ISO or the Council may request that the PSC review any such rule. A local rule may be modified or eliminated only by an order of the PSC or FERC.

Disputes between the ISO and the Council regarding reliability rules will go to the PSC for resolution. However, the PSC will have no authority to modify or change ISO tariffs, or grant any additional rights to or impose any additional obligations on any party.

While the FERC order authorizing the two new bodies provides the PSC with the authority to attend all ISO board meetings, it is silent as to the PSC's right to attend Council meetings. Nonetheless, [the requesting individual] anticipates that someone from the PSC will attend Council meetings as an observer.

[The requesting individual] argues that the lifetime and two year bars should not preclude his becoming a member of the Council. Since it was not in existence at the time of his employment with the PSC and does not yet exist, he takes the position that there is no lifetime bar restriction.

With respect to the two year bar, the Council will fall under the jurisdiction of FERC, although [the requesting individual] concedes that there remains an unresolved issue as to whether the PSC will also have jurisdiction over the Council. He acknowledges that there will be future interaction between the Council and the PSC, as the FERC order specifically provides that a dispute between the ISO and the Council is to be presented to the PSC for an opinion, subject to an appeal to FERC. However, [the requesting individual] notes that it seems unlikely that any interaction will take place within two years of his retirement, which occurred in October 1997. The initial function of the Council will be to adopt the reliability rules currently utilized by the PSC and to monitor the ISO's compliance with those rules. [The requesting individual] states that it will take some period of time for the ISO to operate before its level of compliance can be evaluated. Should a question arise regarding compliance, the agreement approved by FERC contemplates an effort between the ISO and the Council to resolve the difference before it is submitted to the PSC. Thus, it is unlikely that the Council will have a matter before the PSC before October 1999.

Applicable Statutes

Public Officers Law §73(8)(a)(ii) 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.

Discussion

This paragraph contains the "lifetime bar," which is part of 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 prohibits a former State officer or employee from rendering services for compensation 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 the individual's State service or which was under his or her active consideration during that period.(1)

The question presented by [the requesting individual's] inquiry is whether the PSC's efforts that led to the establishment of the Council, in which he unquestionably participated, and the implementation of FERC's order creating the Council are part of the same transaction. If they are, the lifetime bar would preclude [the requesting individual's] serving as a member.

The Commission's prior opinions demonstrate that, in the context of the restrictions of the lifetime bar, a single transaction can change in nature and over a period of time. In Advisory Opinion No. 93-2, a former State employee who worked on legislation was barred from working on regulations implementing a bill that was enacted. The Commission said:

Legislation serves as the framework for drafting regulations. Regulations are the devices by which legislative directives and intent are executed. Regulations must follow the programmatic outline articulated by the Legislature in statute. By necessity, regulations implementing legislation affect the very parties addressed by the legislation. Regulations are inextricably connected to the enabling legislation they seek to effectuate. The knowledge, experience and expertise gained in drafting a statute become invaluable tools when seeking to shape the regulations needed to accomplish the mission of that statute. This knowledge may also be used to influence and effectuate significant policy determinations that were not otherwise articulated or successfully incorporated into the original statute. Certainly, the use of "insider" knowledge in either manner constitutes the very evil that Public Officers Law §73(8) is designed to address.

Other Commission opinions are to similar effect. In Advisory Opinion No. 95-6, the Commission precluded an engineer who had worked on the early stages of a major landfill project while working for the Department of Environmental Conservation from working on the remedial aspects of the project. While in State service, he had worked on the investigation of the problems of the landfill, as well as on other aspects, but during those years, the project did not progress to the remedial stage. After he left State service, a new consent order was signed which set forth the remedial requirements. The engineer sought to work on the remediation, which was to be implemented pursuant to the consent order. In holding that the lifetime bar precluded this work, the Commission said that "despite all the intervening events, the essence of the transaction -- its subject and purpose, the parties interested and affected, the ultimate goal -- remains constant."

Advisory Opinion No. 97-9 concerned a former employee of the Department of Transportation who worked on the initial phase of a highway interchange project. The project was first proposed in the 1970's and was eventually considered to be a three stage project. The first stage was completed in 1989 and proved to be adequate to handle the traffic for some years. However, in 1997, it was decided that the second and third stages were needed. An engineer who had worked on the initial stage while in State service was held to be barred from working as a private contractor on the latter stages. The Commission examined the history of the project and said that "the individual stages of the project cannot each be viewed as a separate transaction."

Finally, in Advisory Opinion No. 95-4, the Commission considered whether employees of a Metropolitan Transportation Authority ("MTA") subsidiary corporation, which was created to support an integrated system wide automated fare collection network using the MetroCard, could become employees of a joint venture formed to further implement and market the MetroCard. The MTA proposed that those employees who would be needed by the joint venture should be permitted to be employed by the venture.

The MTA argued that they would not be working on the same transaction. In essence, the MTA argued that Phase I, the initial start-up, conceptualization, organization and development of the venture -- all of which took place while the individuals were employed at the subsidiary -- is a different transaction from the Phase II implementation and operational stages, which would take place after the venture was created.

In rejecting the MTA's argument, the Commission stated:

While conceptually, Phase I and Phase II might be distinct, the Commission finds that the actual activities of the MetroCard system will mostly be enhanced and expanded when the system is transferred from [the subsidiary] to the Venture.

The Commission then examined Advisory Opinion No. 93-2, discussed above, and said:

"While the instant case does not involve a law, it does involve the continued implementation of the MetroCard system and the expansion of that system. This is all part of the same transaction."

All of these precedents lead the Commission to conclude that [the requesting individual's] efforts to create the Council while he served at the PSC and his serving as a member of the Council during its formative stage would constitute his participation in the same transaction. The transaction here -- the creation of the Council -- is one that [the requesting individual] helped begin and that is not yet complete. Indeed, under the circumstances, if [the requesting individual] were allowed now to serve on the Council, the appearance might exist that he had worked to establish a private entity as a sinecure for post-government employment. Accordingly, the restrictions of the lifetime bar prohibit [the requesting individual] from accepting an appointment to membership on the Council, at least at this time. We leave open the question whether [the requesting individual] could be appointed to the Council at some future date when it is established and its business on-going.

Conclusion

The Commission concludes that lifetime bar restrictions prohibit [the requesting individual] from serving on the Council upon its being established, as he would be rendering services in relation to the same transaction in which he personally participated 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.

All concur:

Paul L. Shechtman, Chair

Robert J. Giuffra, Jr.
Henry G. Gossel
O. Peter Sherwood, Members

Dated: November 23, 1998


Endnote

1. There is also a two year bar, contained in Public Officers Law §73(8)(a)(i), that would preclude [the requesting individual] from, until October 1999, appearing, practicing or rendering services in relation to any matter before the PSC, his former agency. Since, as will be discussed, [the requesting individual] is barred at this time by the lifetime bar from serving on the Council, the Commission need not consider whether he would be precluded from such service by the two year bar.



URL: http://www.nysl.nysed.gov/edocs/ethics/98-19.htm