Advisory Opinion No. 2018-45 Rhode Island Ethics Commission Advisory Opinion No. 2018-45 Approved: August 21, 2018 Re: The Town of New Shoreham Zoning Board of Review QUESTION PRESENTED: The Town of New Shoreham Zoning Board of Review (“the Zoning Board”), by and through Donald J. Packer, the New Shoreham Solicitor, requests an advisory opinion regarding whether the Zoning Board of Review may hear and decide an application for a special use permit for a utility facility pursuant to the Rule of Necessity, given that conflicts of interest prevent the Zoning Board of Review from achieving a necessary quorum of five (5) active members. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Town of New Shoreham Zoning Board of Review may utilize the Rule of Necessity, subject to the procedures outlined below, to achieve a quorum of five (5) active members to hear and decide an application for a special use permit for a utility facility, given that three (3) of the seven (7) Zoning Board members have conflicts of interest requiring their recusals. The Town Solicitor for the Town of New Shoreham Zoning Board of Review (“Zoning Board”), writing on behalf of the Zoning Board, represents that the Zoning Board consists of five (5) regular members and two (2) alternates, for a total of seven (7) members. He states that before the Zoning Board is an application for a special use permit for a utility facility (“Application”) filed by Ballard’s Oil Company, Inc. (“Ballard’s Oil”), one of the two fuel oil storage businesses servicing New Shoreham, better known as Block Island. The Solicitor explains that the Application pertains to a property (“Property”) owned by the Estate of Marjorie McGinnes (“Estate”), on which Ballard’s Oil wishes to establish its oil distribution center. The Solicitor advises that three (3) of the seven (7) members of the Zoning Board, Elizabeth Conner, Katharine Atwater Butcher, and Andrew Transue, have conflicts and have recused from the matter. He states that there remain only four (4) active members permitted to participate in the review of the Application. However, the Solicitor further explains that pursuant to R.I. Gen. Laws § 45-24-57(2)(i) “five (5) active members” of the Zoning Board must be present to conduct the hearing.[1] Therefore, the Solicitor represents that the Zoning Board is unable to conduct its statutorily assigned duties and seeks permission to invoke the Rule of Necessity to allow the participation of one or more conflicted members to achieve a quorum. Under the Code of Ethics, a public official may not participate in any matter in which he or she has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of his or her duties in the public interest. R.I. Gen. Laws § 36-14-5(a). A substantial conflict of interest occurs if a public official has reason to believe or expect that he or she or any family member or business associate, or any business by which he or she is employed, will derive a direct monetary gain or suffer a direct monetary loss by reason of his or her official activity. Section 36-14-7(a). More specifically, a public official is prohibited from using his or her public position to obtain financial gain, other than that provided by law, for him- or herself, a family member, business associate, or any business by which he or she is employed or represents. Section 36-14-5(d). A business associate is defined as “a person joined together with another person to achieve a common financial objective.” Section 36-14-2(3). A person is defined as “an individual or a business entity.” Section 36-14-2(7). The Ethics Commission has recognized and permitted a Rule of Necessity exception in matters where recusals inhibit governmental process, such as where the majority of public body members must recuse themselves and a resulting failure of a quorum renders the entity unable to act. Public bodies may not, on their own, invoke the Rule of Necessity. Rather, public bodies are required to seek an advisory opinion from the Ethics Commission permitting the use of the Rule of Necessity each time conflicts of interest would inhibit their necessary governmental processes. Indeed, the Ethics Commission has previously considered and applied the Rule of Necessity to proceedings before the Smithfield Zoning Board of Review in Advisory Opinion A.O. 2008-9, opining that the 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 had conflicts of interest requiring their recusals. See also A.O. 2000-74 (opining that the Westerly Housing Authority may utilize the Rule of Necessity in order to achieve a quorum, given that the majority of its commissioners had conflicts and were required to recuse). Here, the Solicitor represents that the Zoning Board’s Chairperson, Elizabeth Conner, is employed as a part-time bookkeeper for Ballard’s Oil, the applicant. As such, she is prohibited by the Code of Ethics from participating in discussions and decision-making relative to the Application, given that she is employed by the applicant, who stands to be financially impacted by the approval or disapproval of the Application. See, e.g., A.O. 2006-23 (opining that a member of the Coventry Planning Commission was required to recuse from any matter before the Planning Commission that involved his employer or the interests of his employer); A.O. 2004-38 (opining a member of the New Shoreham Town Council was prohibited from participating in either the Town Council’s review of the petitioner’s employer’s liquor license or those of his employer’s direct competitors). Next, the Solicitor states that the Vice-Chairperson of the Zoning Board, Katharine Atwater Butcher (“Butcher”), who in her private capacity is the principal broker of a real estate company, leases her office space from the Estate. The Ethics Commission has consistently found that the landlord/tenant relationship constitutes a “business associate” relationship as that term is defined in the Code of Ethics. See, e.g., A.O. 2013-10; A.O. 2012-22; A.O. 2011-44; A.O. 2011-36; A.O. 2006-9. Therefore, Butcher is prohibited by the Code of Ethics from participating in discussions and decision-making relative to Ballard’s Oil application, given that such actions would have a financial impact upon the Estate, her business associate. Lastly, the Solicitor states that the second alternate member, Andrew Transue (“Transue”), was the owner of A. Transue Corporation, a construction company, until 2011 when he sold the business to his son, for which he holds a promissory note. Transue states that A. Transue Corporation leases portion of the Property, where it stores its equipment. Furthermore, evident from the map provided by the Town, attached hereto, is that Ballard’s Oil proposes to install its oil storage tank on the Property immediately adjacent to A. Transue Corporation. During a phone conversation with Transue’s son, he stated that he stands to benefit from the approval of the Application, as A. Transue Corporation will be the contractor hired to conduct the site development for the installation of Ballad’s Oil storage tank. Commission Regulation 36-14-5004[2] contains specific regulations aimed at curbing nepotism. Pursuant to Commission Regulation 36-14-5004(b)(1), a public official may not participate in any matter as part of his public duties if “any person within his or her family” is a participant or party to the matter, or if there is reason to believe that a family member will be financially impacted or will obtain an employment advantage. See Commission Regulation 36-14-5004(b)(2)(A). The phrase “any person within his or her family” expressly includes “son.” See Commission Regulation 36-14-5004(a)(2). Therefore, Transue is prohibited by the Code of Ethics from participating in discussions and decision-making relative to Ballard’s Oil application, given that such actions would have a financial impact upon his son. In the instant matter, three (3) of the seven (7) Zoning Board members have conflicts of interest requiring their recusals. Thus, given the legal requirement that there be participation of five (5) Zoning Board members to hear and vote on the Application, and based on our review of prior advisory opinions, it is appropriate for the Ethics Commission to apply the Rule of Necessity. Under the Rule of Necessity, 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. Here, the four (4) Zoning Board members who have not asserted a conflict are required to participate. Zoning Board member, Elizabeth Conner, who is employed as a part-time bookkeeper for Ballard’s Oil, the applicant, shall remain disqualified and continue to recuse. Alternate Zoning Board member, Andrew Transue, shall also recuse because his son would be financially impacted by the Zoning Board’s decision to approve the Application because A. Transue Corporation would be the contractor hired to conduct the site development for the installation of Ballad’s Oil storage tank. Furthermore, Andrew Transue has a financial interest in A. Transue Corporation by virtue of holding a promissory note for the sale of A. Transue Corporation to his son. Accordingly, it is the opinion of the Ethics Commission that Zoning Board member, Katharine Atwater Butcher has the least conflict of interest. She does not stand to be personally financially impacted by the Zoning Board’s decision. Rather, her conflict of interest stems from a business association, in which her business associate and landlord, the Estate, may be financially impacted by the Zoning Board’s decision. Ms. Butcher shall, prior to participation in the matter, file a conflict of interest statement disclosing her interest in the matter, and affirm that despite this interest she is willing and able to participate fairly, objectively and in the public interest. See section 36-14-6. The other two, non-participating members shall continue to recuse from participation and voting on the matter. 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) § 36-14-2(7) § 36-14-5(a) § 36-14-5(d) § 36-14-6 § 36-14-7(a) Commission Regulation 36-14-5004 Other Related Authority § 45-24-57 Related Advisory Opinions: A.O. 2013-10 A.O. 2012-22 A.O. 2011-44 A.O. 2011-36 A.O. 2008-9 A.O. 2006-23 A.O. 2006-9 A.O. 2004-38 A.O. 2000-74 Keywords: Recusal Rule of Necessity [1] See R.I. Gen. Laws § 45-24-57, entitled “Administration – Powers and duties of zoning board of review,” reads in relevant part that “[f]ive (5) active members are necessary to conduct a hearing. As soon as a conflict occurs for a member, that member shall recuse himself or herself, shall not sit as an active member, and shall take no part in the conduct of the hearing. Only five (5) active members are entitled to vote on any issue[.]” [2] In May 2018, the Ethics Commission codified the Code of Ethics into the Rhode Island Code of Regulations (“RICR”), a uniform state code containing the rules and regulations of the various Rhode Island agencies. In order to do so, the Ethics Commission reformatted and renumbered the Code of Ethics. As a result, Regulation 36-14-5004 now corresponds to Regulation 520-RICR-00-00-1.3.1 Prohibited Activities - Nepotism (36-14-5004).