The following advisory opinion is issued in response to an inquiry from [ ], former Assistant Counsel at the Department of Economic Development (“DED”). His inquiry concerns the application of Public Officers Law §73(8), the revolving door statute, to himself and to [ ], [a senior official] in the [ ] Regional Office of the Urban Development Corporation (“UDC”) d/b/a Empire State Development Corporation (“ESDC”). Specifically, [the first requesting individual] asks whether, within two years of leaving State service, he may, as a former DED employee, appear before the UDC d/b/a ESDC and its subsidiaries; and whether, upon leaving State service with UDC d/b/a ESDC, [the second requesting individual] may appear before DED and the subsidiaries of UDC d/b/a/ ESDC within two years of leaving State service.
Pursuant to the authority vested in the New York State Ethics Commission (“Commission”) by §94(15) of the Executive Law, the Commission hereby renders its opinion that for the purposes of the revolving door restrictions, [the second requesting individual] and [the first requesting individual] may not appear before DED or UDC d/b/a/ ESDC but may appear before the subsidiaries of UDC and the New York State Mortgage Loan Enforcement Corporation.
DED was authorized by constitutional amendment in 1943, to be established as New York’s nineteenth State Department.1 DED is responsible for administering the State’s Economic Development Law which provides for the general promotion of business and industry in the State. The agency also develops State economic strategies, compiles data relating to the current business condition, provides technical and financial assistance to businesses through a network of regional offices, and publicizes the attractions, and the economic and industrial advantages of the State.2
UDC is a public benefit corporation, created pursuant to New York Unconsolidated Laws §6254 et seq. As a public benefit corporation, UDC falls within the definition of “State agency” for purposes of Public Officers Law §§73, 73-a and 74. The UDC engages in four principal activities: economic and real estate development; State facility financing; housing portfolio maintenance; and privatization initiatives.3
By statute, UDC is authorized to organize subsidiary corporations pursuant to the Business Corporation Law, the Not-for-Profit Corporation Law and the Private Housing Finance Law [Unconsolidated Laws §6262(1)]. These subsidiaries are established to manage specific projects or economic development activities in the State. There are currently ten subsidiaries, which include the Lower Manhattan Development Corporation, the 42nd Street Development Corporation and the Queens West Development Corporation.4 In some cases, UDC provides technical, administrative and staff support to its subsidiaries.
In 1995, ESDC was established to streamline the functions of UDC and its subsidiaries and to create an “identity” that more accurately reflects the statutory jurisdiction and overall mission of UDC. In addition to the UDC and its subsidiaries, ESDC incorporated into its authority the New York State Job Development Authority (“JDA”), a public benefit corporation; the New York State Mortgage Loan Enforcement Corporation (“NYSMLEC”), a public authority; and the now defunct New York State Science and Technology Foundation. UDC, JDA and NYSMLEC refer to the corporate entity by corporate name, i.e. UDC “doing business as” or d/b/a ESDC. ESDC, as a legal corporate entity, has a board of directors. Charles Gargano, Commissioner of DED, also serves as Chairman of ESDC.5
Empire State Development (“ESD”) is a “catch-all” name and refers to ESDC (i.e. UDC, JDA, NYSMLEC and the subsidiaries of UDC) and DED. ESD has no legal corporate identity.
[The second requesting individual] is a UDC d/b/a ESDC employee serving in one of ten regional offices across the State. While the statutory jurisdiction for the regional offices is with DED, the State website identifies the offices as those of ESD, which serve as “one stop centers to assist companies located outside of the state and those already in the state. . . . This network of offices is the foundation of our economic development organization.”
In essence, the regional offices “market” ESD within the specific State regions by providing domestic and foreign businesses, developers and local governments with information regarding loans and grant assistance, research and cost-benefit analyses. The regional offices provide information which span the programs of DED, UDC and the other public entities which make up ESDC, however, the regional offices generally do not interface with the ten subsidiaries of UDC, unless a subsidiary is located within a particular region. Rather, the regional offices serve as a “conduit” to the services and programs of DED, which are primarily based in Albany, New York, and the loans, grants and other economic development programs operated by UDC d/b/a/ ESDC based in New York City. Typically, the regional office will work with the central offices in Albany and New York City to compile an incentive package that meets the needs of a client business/developer seeking to locate, expand or upgrade its operations in the State.
As [a senior official] in the [ ] regional office, [the second requesting individual] is responsible for providing business financial information and support to businesses, developers and other interested parties in a seven county area. [The second requesting individual] manages a staff of eight employees, including both DED and UDC d/b/a/ ESDC employees; represents ESD to the region and other external entities and provides assistance to Gargano as required. According to the request letter, [the second requesting individual] “does not actively or routinely manage significant projects or matters involving [other public entities that are a part of ESDC or the subsidiaries of UDC]. He only manages projects for the Corporation [UDC d/b/a/ ESDC].” [The second requesting individual] has indicated, however, that he and his staff regularly interact with DED central office personnel regarding the projects and activities within his region. This interaction includes working with DED’s Empire Zone, International Trade, Small Business Assistance (“SBA”) and Minority and Women’s Business Development (“MWBD”) programs. He also works with the JDA program, a public benefit corporation under the auspices of ESDC.
[The second requesting individual] has been an employee of UDC d/b/a ESDC since 1997. He currently reports to a Senior Vice President of UDC d/b/a ESDC. He is paid by UDC d/b/a ESDC and the terms of his employment, including benefits, compensation, attendance rules, time cards and disciplinary procedures are governed by UDC d/b/a/ ESDC. [The second requesting individual] serves as the highest ranking employee in the [ ] regional office.
[The second requesting individual] is contemplating leaving State service to work as a consultant to a firm that develops real estate projects. He wishes to appear before DED and the subsidiaries of UDC.
[The first requesting individual] served as an Assistant Counsel at DED from [ ] to [ ]. During his tenure at DED, he provided legal assistance to several of DED’s programs including the SBA and MWBD, wrote memorandum and briefings to the General Counsel or senior staff members regarding State laws and regulations, drafted legislation for DED initiatives, and approved “member item” requests to ensure conformance with State law. In March 1999, [the first requesting individual] was transferred to the [ ] regional office, where his “role transformed into a business development specialist by advising existing and prospective businesses on the programs of [DED and UDC d/b/a ESDC].” In this capacity, [the first requesting individual] states that he had no management responsibilities over programs or employees of DED or UDC d/b/a ESDC. The terms of [the requesting individual’s] employment including benefits, compensation, and time cards were governed by DED.
[The first requesting individual] seeks to work for a firm that assists clients in obtaining approvals and incentives from municipal and State agencies, which would require appearing before UDC d/b/a ESDC and the subsidiaries of UDC.
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.
This provision, known as the “two-year bar,” 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 prohibits former State officers and employees from appearing, practicing or rendering services for compensation in relation to any case, proceeding, application or other matter before their former agency for two years following their separation from State service.
The issue before the Commission is what constitutes the “former agency” for employees of DED and UDC d/b/a ESDC. The difficult question raised by the request is whether the structure of, interaction with, and jurisdiction of DED and UDC and its subsidiaries created under the statutory jurisdiction of UDC which, together, operate under an umbrella corporation (i.e. “ESDC”), necessitates the designation of “multiple” former agencies for the requesting employees.
The Commission has previously considered the issue of whether a former State employee could have multiple former agencies. In Advisory Opinion 90-22, the Commission was asked to consider the former agency of an individual employed by one State agency who was assigned to serve as administrator of a second State agency for eleven years. In analyzing the duties and responsibilities of the individual, the Commission noted that approximately fifteen percent of the employee’s State duties related to the second State agency, including administering the agency’s program and supervising its employees. The Commission concluded that, despite the fact that the individual was paid by the first State agency, his duties to the second were sufficiently significant and regular so as to constitute an additional former agency for purposes of the Public Officers Law §73(8)(a)(i).
The Commission has also, on occasion, defined “former agency” by function of programs and operations. When legislation merged the functions of the Medical Care Facilities Finance Agency (“MCFFA”) into the Dormitory Authority (“DA”), a former MCFFA employee was barred for two years from appearing or rendering compensated services on a matter before the DA if that matter was within the authority of MCFFA prior to the merger. The former employee could otherwise appear before the DA [Advisory Opinion No. 96-7]. Likewise, where the Medicaid program was transferred from the Department of Social Services (“DSS”) to the Department of Health (“DOH”), an individual formally employed in the Medicaid Unit of DSS was barred from both DSS and the unit of DOH that assumed responsibility for the Medicaid program [Advisory Opinion No. 97-1].
In two opinions most closely aligned in structure and operation, although not identical to the instant case, the Commission considered whether employees of the Metropolitan Transportation Authority (“MTA”) should have as their former agency both the MTA and its affiliated agencies.6 In Advisory Opinion No. 95-33, the Commission held that, for other than certain "senior" employees, the former agency of MTA employees would be the MTA only. For senior employees, the Commission held that, "[t]he heads of MTA's 11 departments and the directors who are their immediate subordinates, whose current responsibilities include actively and routinely managing significant projects or matters involving one or more MTA affiliates or subsidiaries may be considered to be an employee of the MTA and the other MTA entity. This determination shall be made on a case-by-case basis."
In Advisory Opinion No. 99-1, the Commission followed up on its earlier opinion when it considered the former agency of an MTA employee who was not a “senior” employee as identified in Advisory Opinion No. 95-33, and whose job responsibilities centered around the capital program of an MTA subsidiary, the New York City Transit Authority (“TA”). In that case, the Commission held that while it had made reference to specific senior positions within the MTA who would have more than one former agency, this was not an all-inclusive list. In fact, the opinion noted that since Advisory Opinion No. 95-33 was issued, the duties and responsibilities of many MTA employees, and employees of its affiliates and subsidiaries, had transcended the particular agency where they were employed. Accordingly, in applying a duty-based analysis, the Commission concluded that the MTA employee who managed activities related to the development and implementation of TA’s capital program, including capital needs assessment and prioritization of capital projects and who conferred with TA staff on a daily basis, should have as her former agency both the MTA and the TA.
In the instant case, the Commission must combine both a duty-based analysis with a functional analysis in rendering its determination. With regard to [the second requesting individual], as the most senior person in the ESD [ ] regional office, he is responsible for marketing the programs of both DED and UDC d/b/a ESDC, with the exception of its ten subsidiaries and the NYSMLEC. He supervises both DED and UDC d/b/a ESDC employees and has regular contact with the central offices of both DED and UDC d/b/a/ ESDC concerning various programs and personnel issues and interacts with executive staff, as required. Although he is paid by UDC d/b/a ESDC, he is in charge of a regional office under the statutory authority of DED which, since the creation of ESDC in 1995, has expanded the information and services it provides to include those under the auspices of UDC. The Commission concludes that the former agency of [the second requesting individual] is both DED and UDC d/b/a ESDC. [The second requesting individual] may, however, appear before the ten subsidiaries of UDC d/b/a ESDC and the NYSMLEC as his duties and the function of his regional office does not extend to these entities.
With regard to [the first requesting individual], as a former DED employee, that agency should be considered his former agency. In [the requesting individual’s] words, when he was transferred to the [ ] regional office his “role transformed into a business development specialist by advising existing and prospective businesses on the programs of [DED and UDC d/b/a ESDC].” In this capacity, [the first requesting individual] had regular contact with, most significantly, the loans and grants personnel of the UDC d/b/a ESDC and the JDA. Like [the second requesting individual], although [the first requesting individual] was paid by one entity, DED, his duties encompassed service to and regular contact with both DED and UDC d/b/a ESDC with the exception of the subsidiaries to ESDC and the NYSMLEC. As a business development specialist assigned to the [ ] regional office, it was his responsibility to market all the programs of ESD. Accordingly, [the requesting individual’s] former agency should also include UDC d/b/a ESDC. He may appear before the subsidiaries of UDC and NYSMLEC as he did not, in the course of his job duties, have contact with these entities.
The Commission further concludes that the application of this opinion is limited to the requesting individuals and takes into account in its findings that the [ ] regional office did not have contact with UDC’s ten subsidiaries or the NYSMLEC. The determination of what constitutes a former agency for other employees of DED and UDC d/b/a ESDC must be made on a case-by-case basis.
The Commission concludes that for the purposes of the revolving door restrictions, [the two requesting individuals] may not appear before DED or UDC d/b/a/ ESDC but may appear before the subsidiaries of UDC and the NYSMLEC.
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.
Dated: June 19, 2002
4 The other subsidiaries are the Harlem Community Development Corporation; New York Empowerment Zone Corporation; Pennsylvania Station Development Corporation; Times Square Subway Development Corporation; Brooklyn Bridge Park Development Corporation; Erie County Stadium Corporation; and USA Niagara Falls Development Corporation.
affiliated agencies of the MTA include the Triborough Bridge and Tunnel
Authority, New York City Transit Authority, Long Island Rail Road, Metropolitan
Suburban Bus Authority, Metro-North Commuter Railroad and the MTA Card Company.
The MTA's board of directors also serves as the board of each of the affiliated