Advisory Opinion No. 2016-45 Rhode Island Ethics Commission Advisory Opinion No. 2016-45 Approved: December 6, 2016 Re: Melissa Hutchinson QUESTION PRESENTED: The Petitioner, a member of the Tiverton Planning Board, a municipal appointed position, requests an advisory opinion regarding whether she may participate in the Planning Board’s discussions and voting relative to applications for subdivisions and land development projects in which her business associate appears as an expert witness for the applicant. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the Tiverton Planning Board, a municipal appointed position, is prohibited by the Code of Ethics from participating in the Planning Board’s discussions and voting relative to applications for subdivisions and land development projects in which her business associate appears as an expert witness for the applicant. The Petitioner is a member of the Planning Board in the Town of Tiverton (“the Town”). She notes that one aspect of the Planning Board’s function is to sit in a quasi-judicial capacity in deciding whether to approve, approve with conditions, or deny applications for subdivisions and land development projects in the Town. She asserts that, because such applications often involve complex engineering issues, many applicants hire the services of a professional engineer to present to the Planning Board as an expert witness. The Petitioner represents that one such professional engineer based in the Town, Thomas Principe, frequently appears before the Planning Board as an expert witness in subdivision and land development applications. In her private capacity, the Petitioner is a professional architect with an office located in the Town, offering architectural services to the greater Rhode Island area. The Petitioner states that she has worked with Mr. Principe on development projects in the past but is not currently doing so. She notes that because both she and Mr. Principe are based in Tiverton, they frequently refer work and clients to one another. She declares that it is reasonably foreseeable that she and Mr. Principe will continue to refer work to one another going forward and that such referrals are common enough that it would amount to a “significant financial hardship” were the Petitioner not able to continue making and receiving such referrals going forward. The Petitioner states that upon the advice of the Town’s legal counsel, and out of an abundance of caution, to date she has recused from participating in Planning Board applications where Mr. Principe has been retained to present an application as an expert witness. This has led to the Petitioner’s recusal from a substantial portion of the Planning Board’s workload because Mr. Principe appears so frequently. The Petitioner asserts that her frequent recusals have made it difficult for the Planning Board to achieve a quorum and to approve applications since a quorum of the nine-member board requires the presence of five members, and a vote to approve an application requires the affirmative vote of at least five members regardless of how many members are present. According to the Petitioner, her frequent recusals combined with other member absences and a current vacancy have made the Planning Board approval process difficult for applicants. Based on the above representations, the Petitioner asks whether the Code of Ethics requires her recusal from all applications where Mr. Principe has been hired to present to the Planning Board as an expert witness. If such recusal is required, the Petitioner asks whether there are any exceptions to allow her participation based on the financial hardship she would endure if she ceased making and receiving referrals. Finally, she asks whether she might be permitted to participate in Planning Board matters in cases where her recusal would create a failure of a quorum to act. Under the Code of Ethics, a public official shall not participate in any matter in which she has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of her duties in the public interest. R.I. Gen. Laws § 36-14-5(a). The Petitioner will have an interest in substantial conflict with her official duties if she has reason to believe or expect that a “direct monetary gain” or a “direct monetary loss” will accrue, by virtue of her official activity, to herself, a family member, a business associate, an employer, or any business which she represents. See Section 36-14-7(a). Furthermore, a public official shall not in any way use her public office to obtain financial gain, other than that provided by law, for herself, her family, her business associate or employer. Section 36-14-5(d). Finally, and more specifically, a public official must recuse herself from participation in a matter when her business associate appears or presents evidence or arguments before her agency. Commission Regulation 36-14-5002(a)(2). A business associate is defined as “a person joined together with another person to achieve a common financial objective.” Section 36-14-2(3). Summarizing the above provisions of the Code of Ethics, the Ethics Commission has found that the existence of a financial nexus between a public official and an individual or entity creates a business association between the two, disqualifying the public official from involvement in matters that involve or financially impact the individual or entity. See A.O. 2010-16 (member of the East Greenwich Planning Board, who in his private capacity is the publisher of a local news and information web site, must recuse when an entity that advertises on his web site appears before the Planning Board, because the petitioner is in a current business association with that entity). However, once a business association has ended, and provided that there are no further business dealings anticipated, a public official is no longer prohibited by the Code of Ethics from participating in matters that involve or financially impact his or her former business associate. For example, in Advisory Opinion 96-62, a member of the Jamestown Planning Board asked the Ethics Commission whether he could participate in Planning Board matters where a friend and attorney who had represented the petitioner in the past appeared before the Planning Board as the attorney for applicants. Given that there was no current business associate relationship between the petitioner and the attorney, nor any anticipated relationship in the near future, there was no longer a financial nexus between them and they did not fall within the "business associate" definition provided in the Code of Ethics. Accordingly, the Code of Ethics did not prohibit the petitioner’s participation. See also A.O. 2004-31 (opining that a member of the Jamestown Town Council may participate in the Council’s discussion and vote provided that there is no ongoing or anticipated business association between the petitioner and the engineering firm appearing before the Council); 2003-54 (Warren Planning Board member who is an architectural illustrator may participate in the Board’s consideration of an application by a developer for whom the petitioner had performed work, given that no business association currently existed between the parties and it was not foreseeable that they would engage in business projects within the near future). In the present case, the Petitioner informs that she and Mr. Principe have worked together professionally in the past on projects and that they refer financially lucrative work to each other with enough frequency that it would be a “significant financial hardship” if such referrals ceased. Under these circumstances, there is an ongoing financial nexus between the Petitioner and Mr. Principe and they are considered to be business associates. For that reason, the Code of Ethics requires that the Petitioner recuse from participating in any Planning Board matters that financially impact Mr. Principe or involve him as a party, representative or expert witness. Following such recusal, a conflict of interest statement must be filed with the Ethics Commission in accordance with section 36-14-6. Given the impact of her frequent recusals on the work of the Planning Board, and in light of the significant financial hardship the Petitioner would endure if she ceased accepting referrals from Mr. Principe, the Petitioner asks whether there is any exception to allow her participation when Mr. Principe represents applicants before the Planning Board. If not, then she asks whether she might nevertheless be permitted to participate in Planning Board matters involving Mr. Principe when the Planning Board is unable to achieve a quorum due to her recusal. The Code of Ethics does not provide for a hardship exception to those sections of the Code applicable here, namely sections 36-14-5(a) & (d) and Regulation 5002. Although a hardship exception is expressly included in the provisions of section 36-14-5(e), which prohibits a public official from representing herself or others before her own board, there is no hardship exception that would exempt a public official from recusing from matters that involve or financially impact herself, her family, her employer or her business associate. Furthermore, although the Ethics Commission has very infrequently applied a “Rule of Necessity” exception in situations where a public body is unable to act or achieve a quorum due exclusively to recusals based on actual conflicts of interest, the instant facts as represented do not support its application. Under the Rule of Necessity, upon application to the Ethics Commission, the official or officials determined to have the least conflict may be permitted to participate so that an important governmental function can be accomplished. See A.O. 2008-9 (Town of Smithfield Zoning Board of Review may utilize the Rule of Necessity to achieve a quorum of five (5) active members to hear and decide an appeal from a decision of the Planning Board, given that three (3) of the seven (7) Zoning Board members have conflicts of interest requiring their recusals). In the instant case, however, the Planning Board’s quorum issues appear to be partially attributable to a vacancy and to general member absences rather than because of multiple conflicts of interest and recusals. In such circumstances, the “necessity” of the Petitioner’s participation in Mr. Principe’s applications could be ameliorated by the Town Council through an appointment to fill the vacant seat on the Planning Board, or by urging absent Planning Board members to attend regularly. In summary, given her business relationship with Mr. Principe, the Petitioner must continue to recuse from participation in the Planning Board’s discussions and voting relative to applications for subdivisions and land development projects in which Mr. Principe appears as an expert witness for the applicant. There is no hardship exception available to allow the Petitioner’s participation under these circumstances, and the facts do not support the application of the Rule of Necessity. This Advisory Opinion is strictly limited to the facts stated herein and relates only to the application of the Rhode Island Code of Ethics. Under the Code of Ethics, advisory opinions are based on the representations made by, or on behalf of, a public official or employee and are not adversarial or investigative proceedings. Finally, this Commission offers no opinion on the effect that any other statute, regulation, ordinance, constitutional provision, charter provision, or canon of professional ethics may have on this situation. Code Citations: § 36-14-2(3) § 36-14-5(a) § 36-14-5(d) § 36-14-5(e) § 36-14-7(a) § 36-14-6 Regulation 36-14-5002 Related Advisory Opinions: A.O. 2010-16 A.O. 2008-9 A.O. 2004-31 A.O. 2003-54 A.O. 96-62 Keywords: Business association Hardship Recusal Rule of Necessity