Advisory Opinion No. 2021-27 Rhode Island Ethics Commission Advisory Opinion No. 2021-27 Approved: April 6, 2021 Re: Keith J. Stover QUESTION PRESENTED: The Petitioner, a member of the New Shoreham Town Council, a municipal elected position, whose spouse serves on the Board of Directors of Block Island Health Services, Inc. (“BIHS”), requests an advisory opinion regarding: 1) whether he must recuse himself when his spouse or another BIHS Board member appears before the Town Council; and 2) what restrictions the Code of Ethics places upon his ability to participate in the Town Council’s vote on the Town budget, given that it contains an annual appropriation to BIHS. The Petitioner is a newly elected member of the New Shoreham Town Council (“Town Council”). His spouse, Susan Stover, is a member of the Board of Directors of Block Island Health Services, Inc. (“BIHS”) and serves as its Secretary. BIHS is a private, non-profit corporation which oversees operation of the Block Island Medical Center (“Medical Center”), the sole medical facility located in the Town of New Shoreham (“Town” or “Block Island”). The Petitioner informs that the Medical Center provides primary care, 24/7 urgent care, physical therapy, and visiting specialist services, among other things, to the Block Island community. The Petitioner states that the Town provides annual financial support to BIHS in recognition of its crucial role in providing on-Island medical services to year-round residents, as well as seasonal residents and visitors. During FY 2021, the Town provided $310,000 in such funding to BIHS, and the proposed FY 2022 Town budget recommends an allocation of $337,500. Additionally, as part of its efforts to ensure that medical care is available on Block Island, the Town leases the property from which the Medical Center operates to BIHS for the nominal amount of one dollar ($1.00). The Petitioner advises that his spouse may occasionally appear before the Town Council to provide an update on BIHS activities[1] or to advocate for its annual appropriation. The Petitioner states that his spouse is not compensated for her BIHS service, and he represents that neither he nor his spouse has any financial interest in the outcome of any Town Council decisions regarding BIHS. Based upon these facts, the Petitioner seeks guidance from the Ethics Commission regarding: 1) whether he must recuse himself when his spouse or another BIHS Board member appears before the Town Council; and 2) what restrictions the Code of Ethics places upon his ability to participate in the Town Council’s vote on the Town budget, given that it contains an annual appropriation to BIHS. Under the Code of Ethics, a public official may not participate in any matter in which he has an interest, financial or otherwise, that is in substantial conflict with the proper discharge of his duties or employment in the public interest. R.I. Gen. Laws § 36-14-5(a). A public official has an interest which is in substantial conflict with the proper discharge of his duties in the public interest if he has reason to believe or expect that he or any person within his family, his business associate, or any business by which he is employed or represents will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. Section 36-14-7(a). A public official also may not use his public office or confidential information received though his public office to obtain financial gain, other than that provided by law, for himself or any person within his family, his business associate or any business by which he is employed or represents. Section 36-14-5(d). A “business associate” is defined as any individual or entity joined with a public official “to achieve a common financial objective.” Section 36-14-2(3). The Code of Ethics further provides that a public official must also recuse himself from participation when any person within his family “appears or presents evidence or arguments before his . . . municipal agency.” Commission Regulation 520-RICR-00-00-1.2.1(A)(1) Additional Circumstances Warranting Recusal (36-14-5002) (“Regulation 1.2.1”). A public official also may not participate in any matter as part of his public duties if he has reason to believe or expect that any person within his family is a party to or a participant in such matter, or will derive a direct monetary gain or suffer a direct monetary loss, or obtain an employment advantage. Commission Regulation 520-RICR-00-00-1.3.1(B)(1) Prohibited Activities – Nepotism (36-14-5004) (“Regulation 1.3.1”). Finally, a public official may not participate in discussion or decision-making relative to a budgetary line item that would affect the employment, compensation or benefits of his family member. Commission Regulation 1.3.1(B)(3)(A). The Ethics Commission has repeatedly concluded that public officials are “business associates” of the entities for which they serve either as members of the Board of Directors or in other leadership positions that permit them to affect the financial objectives of the organization. See, e.g., A.O. 2014-14 (opining that the Director of the Rhode Island Department of Environmental Management (“DEM”), who was also a Director of the Rhode Island Boy Scouts (“Boy Scouts”), was a business associate of the Boy Scouts and was, thus, required to recuse from participating in any DEM decisions that would financially impact the Boy Scouts, as well as from any matters in which a Boy Scout representative appeared to represent the organization’s interests); A.O. 2009-10 (opining that a member of the Middletown Town Council was required to recuse from matters concerning the Middletown Historical Society, given that she was the Treasurer of the Historical Society, and thus its business associate). If a public official holds such a leadership position, the Ethics Commission has required the official to recuse if the interests of the organization would be affected by any action to be taken by his public agency. The Ethics Commission has also concluded that a public official is not required to recuse from matters that cause a financial impact solely upon his family member’s business associate without a corresponding financial impact upon his family member. See A.O. 2013-33 (opining that a member of the Cumberland Town Council was not prohibited by the Code of Ethics from participating when an attorney who was his spouse’s business associate represented another person before the Town Council); A.O. 2002-41 (opining that a Westerly Town Council member could participate in the consideration of matters involving an individual with whom his father had business dealings in a real estate broker/client relationship, as the Petitioner’s relationship with the individual was too remote to trigger the prohibitions set forth in the Code of Ethics). In Advisory Opinion 2012-25, the Ethics Commission previously concluded that the Code of Ethics required a New Shoreham Town Council member, who served as the interim administrator of BIHS, to recuse from any Town Council decision-making regarding BIHS and the Medical Center based upon his own business association with BIHS. Therein, the Ethics Commission noted that the petitioner’s spouse also served on BIHS’s Board of Directors and, therefore, was its business associate. However, it concluded that the spouse’s business association with BIHS, on its own, would not trigger the recusal provisions of the Code of Ethics because it was unlikely that any official action by the Town Council regarding BIHS would have a financial impact upon the petitioner’s spouse as an unpaid Board member. See also A.O. 2019-55(opining that the Mayor of the City of Pawtucket was not prohibited from taking official actions regarding the approval or disapproval of the Pawtucket Soup Kitchen’s application for Community Development Block Grant funds, notwithstanding his spouse’s service on its Board of Directors, where his spouse was not compensated for her service, had not signed the application, and would not appear before him regarding said application); A.O. 2019-46 (opining that a Jamestown Zoning Board of Review member was not prohibited from participating in the Board’s discussions and decision-making relative to a matter involving the Jamestown Historical Society, on which Board of Trustees his wife served, where there was no indication that the petitioner’s official actions would have any direct financial impact upon his wife). Similarly, the instant Petitioner’s spouse serves on BIHS’s Board of Directors and, therefore, is its business associate under the Code of Ethics. As she is not compensated for her service, the Petitioner has no reason to believe or expect that she will be financially impacted, directly or otherwise, by reason of any official action that he may take as a Town Council member with respect to the Town’s annual appropriation to BIHS. Accordingly, the prohibitions set forth in sections 5(a), 5(d), and Regulation 1.3.1 would not require the Petitioner’s recusal from participation in Town Council discussions and votes regarding the Town budget, including as to any specific line item relating to its annual appropriation to BIHS. Although the aforesaid provisions of the Code of Ethics do not prohibit the Petitioner from participating in Town Council decision-making relative to the annual budget, Regulation 1.2.1(A)(1) requires the Petitioner’s recusal when his spouse appears or presents evidence or arguments before the Town Council. In the event that the Petitioner’s spouse appears before the Town Council, whether to advocate on behalf of BIHS’s annual appropriation or to provide updates as to BIHS activities, the Petitioner must recuse in accordance with section 36-14-6. In the absence of a personal appearance before the Town Council, said requirement endures where the Petitioner’s spouse submits a written request to the Town Council on behalf of BIHS. While the Petitioner must recuse himself during the Town Council’s consideration of his spouse’s testimony or request on behalf of BIHS, no such requirement attaches to matters presented or requested by other BIHS Board members. Based on the Petitioner’s representations, the application of the Code of Ethics, and a review of prior advisory opinions, it is the opinion of the Ethics Commission that the Petitioner is not generally prohibited from participating in Town Council decision-making relative to the Town’s annual appropriation to BIHS, including as an individual line item within the Town budget. Yet, in the event that the Petitioner’s spouse appears before the Town Council on behalf of BIHS, either personally or through submission of a written request, the Petitioner must recuse himself. Notice of recusal shall be filed with both the Town Council and the Ethics Commission in accordance with section 36-14-6. 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) § 36-14-6 § 36-14-7(a) 520-RICR-00-00-1.2.1 Additional Circumstances Warranting Recusal (36-14-5002) 520-RICR-00-00-1.3.1 Prohibited Activities – Nepotism (36-14-5004) Related Advisory Opinions: A.O. 2019-55 A.O. 2019-46 A.O. 2019-40 A.O. 2014-14 A.O. 2013-33 A.O. 2012-25 A.O. 2009-10 A.O. 2008-69 A.O. 2007-16 A.O. 2003-2 A.O. 2002-41 Keywords: Budgets Business Associate Family Member Nepotism Recusal