New York State
Ethics Commission


Advisory Opinion No. 99-15: 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 the lifetime bar restrictions of Public Officers Law 73(8)(a)(ii) preclude him from becoming a member of the New York State Reliability Council ("Council"), an entity 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 do not prohibit [the former State employee] from accepting an appointment to membership on the Council, because it has evolved from the formative to the operational stage. The operation of the Council is not a transaction on which he worked while in State service.

BACKGROUND

[The former State employee] was employed by the PSC from [ ] until [ ]. He had a major role in the deregulation of the power industry within the State and in proposals to establish the Council. The Council's primary responsibility is to set bulk power system reliability rules that address the reliability needs of the State. In Advisory Opinion No. 98-19, the Commission addressed whether the post-employment restrictions permitted [the former State employee] to serve as a member of the Council. (See that opinion for further background information.)

Based on [the former State employee's] duties at the PSC with respect to the establishment of the Council, the Commission concluded in Advisory Opinion No. 98-19 that [the former State employee's] efforts to create the Council while in State service and his subsequent service as a member of the Council during its formative stage would constitute his participation in the same transaction, which was barred by the lifetime bar of Public Officers Law 73(8)(a)(ii). The Commission identified the barred transaction as the creation of the Council which had not yet been completed. The Commission expressed concern about the appearance that [the former State employee] worked to establish a private sector entity while in State service so he could serve there as a member after his State service.

The Commission left open the question of whether [the former State employee] could be appointed to the Council at a future time "when it is established and its business is on-going."

All initial positions on the Council were filled, and the Council has held six meetings to date. At the initial May 10, 1999 meeting, the members were introduced to each other and provided their backgrounds. A series of slides were presented as a part of an orientation on the purpose and responsibilities of the Council. Options were discussed concerning the corporate structure of the Council, and the election of officers. A small ad hoc working group was formed to prepare draft scopes and responsibilities for subcommittees. A first set of by-laws was proposed to be drafted. Staffing proposals were also discussed as was the need for outside counsel. A list of local reliability rules would be provided by transmission owners for future review and approval by the Council.

At its second meeting on June 16, 1999, officers were elected. A protocol for standardized electronic transmittals was established. The Council discussed other items to be incorporated in the final by-laws that would concern the form of the corporation, membership in the Council, liability of members, and whether meetings would be open to the public. Further discussions took place concerning membership on the reliability rules subcommittee and the compliance monitoring subcommittee, and a draft of the reliability rules was received by the members.

The Council's third meeting took place on July 21, 1999. The decision by the Council to establish itself as a limited liability company was discussed, as was the need to file a Certificate of Formation. The Council discussed and provided comments on the Council's operating agreement which establishes its by-laws. A status report was provided on the activities of the Reliability Rules Subcommittee noting that it had already held one meeting and that another meeting was scheduled. A further draft of the reliability rules was reviewed and an interim set of rules was adopted. Status reports on the activities of Installed Capacity Working Group and the Compliance Monitoring Subcommittee were also provided.

At its fourth meeting held on August 11 and 12, the Council approved the Certificate of Formation establishing the Council. The Council also thoroughly discussed the draft Operating Agreement which established the by-laws. A tax exempt filing was prepared for submittal to the IRS. The Council also discussed the draft Reimbursement Agreement and the selection of outside legal counsel and an accounting firm. The Council agreed that it should operate under a code of conduct similar to that of the independent system operators. The Reliability Rules Subcommittee reported that it held several meetings and conference calls to finalize its recommendations concerning the Interim Reliability Rules and was working on the final rules. The Installed Capacity Working Group and the Compliance Monitoring Subcommittee, both of which were scheduled to conduct their first meetings, also reported to the Council.

At its September 10, 1999 meeting, the Council discussed comments on the draft operating agreement, tax exempt filing document and the Reimbursement Agreement. The Council selected outside legal counsel and an accounting firm. The Council also discussed whether all subcommittee and working group meetings would be opened up to all market participants. The Council also heard from the Reliability Rules Subcommittee, and the Installed Capacity Working Group.

The Council has also met on October 6, 1999 but the minutes from that meeting are not available as of this writing.

As a result of the merger of Orange and Rockland Utilities and Consolidated Edison, one of the positions on the Council has become vacant and is to be filled by a person unaffiliated with any active participants in the State's electricity market. [The former State employee] now requests the Commission's opinion on whether he may interview for the position and accept it if offered.

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 or she personally participated during the period of his or her 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.

The question before the Commission is whether the Council is beyond the formative stage, participation in which by [the former State employee] is barred during his lifetime. The Commission notes that the Council has met six times; it has established its officers, selected outside counsel and an accounting firm. More importantly, it has determined that its corporate structure be a limited liability company and has filed a Certification of Formation. It has applied to the IRS for tax-exempt status. The Council has at all of its meetings discussed and reviewed comments on its draft Operating Agreement which shall include its by-laws. Subcommittees have been formed, members selected and they have begun to carry out the work of the Council. In particular, the Reliability Rules Subcommittee has provided the Council with interim Reliability Rules, which have been issued, and recommended Initial Reliability Rules that the Council has also agreed to issue.

The Commission is satisfied that (although certain items of its formation are not yet complete) the Council is now in its operational stages, particularly since it has issued its initial Reliability Rules. Even for those items not yet finalized, the Council has performed significant work after detailed discussions, particularly in reference to the Council's Operating Agreement which included its by-laws.

The Commission also notes that the vacancy [the former State employee] seeks to fill was created by the merger of two utilities, an event into which [the former State employee] had no input because it took place after his departure from the PSC. Thus, there can be no inference that he had any involvement while in State service in creating a position for himself on the Council. Therefore, the Commission concludes that [the former State employee] may serve as a member of the Council.

CONCLUSION

The Commission concludes that lifetime bar restrictions do not prohibit [the former State employee] from joining the Council since it has passed from its formative to its operational stage. The operation of the Council is not a transaction on which he worked 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 Shechtman, Chair
Robert J. Giuffra, Jr.
Henry G. Gossel
Lynn Millane
O. Peter Sherwood, Members

Dated: October 27, 1999


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URL: http://www.nysl.nysed.gov/edocs/ethics/99-15.htm