Advisory Opinion No. 2000-35

Re: Henry duPont

A. QUESTION PRESENTED

The petitioner, a New Shoreham Town Councilor, a municipal elected position, requests an advisory opinion as to whether he may appear before the Town Council and other municipal boards to provide information regarding his company’s participation in the Department of Energy’s (DOE) Small Wind Turbine Field Verification Program, in which the Town will be invited to participate.

A. SUMMARY

It is the opinion of the Rhode Island Ethics Commission that the petitioner, a New Shoreham Town Councilor, a municipal elected position, may appear before the Town Council to provide information regarding his company’s participation in the Department of Energy’s (DOE) Small Wind Turbine Field Verification Program, in which the Town will be invited to participate. In this instance, the Commission specifically finds that it would be a substantial hardship to the Town if, because of the petitioner’s status as a Council member, it were denied the opportunity to participate in the DOE’s program. See R.I. Gen. Laws § 36-14-5(e). Therefore, he may appear before the Council and other municipal boards to provide information and answer any questions about the program. However, he should recuse from the Council’s consideration of any matters regarding the program and/or his company. See R.I. Gen. Laws §§ 36-14-5(a), 5(d) and 7(a). Further, Section 5(h) of the Code requires that any contractual agreement between the Town and/or School Department and the petitioner and/or his company regarding the DOE’s program or turbine installation must be publicly noticed and the financial details disclosed.

A. DISCUSSION

1. Facts

The petitioner, a member of the New Shoreham Town Council, is the principal in Offshore Services, Ltd., a Block Island company engaged in the design, installation and maintenance of renewable energy systems in New England. He advises that in April of 1999 he responded to a U.S. Department of Energy (DOE) Request for Proposals (RFP) to install and monitor five small wind turbines on Block Island. The turbines would be relied upon by the DOE to evaluate the cost effectiveness of this source of renewable energy in the field over a three-year period. The petitioner proposed two residential sites, one commercial site, and two municipal sites for locating the turbines, including the Town Transfer Station and the Block Island School. The Department of Energy announced that the petitioner’s proposal would receive an award under the new Federal Government’s “Wind Powering America” Program and is one of only a dozen projects proposed under the program.

The petitioner represents that, pursuant to a cooperative agreement with the DOE, the federal government would pay for eighty percent of the total $311,769.00 project cost, or roughly $249,000.00, and the participants would pay the remaining twenty percent share of $62,354. He indicates that the turbines cost approximately $12,000.00 each and that the commercial and residential site hosts would pay $12,000.00 per turbine to Offshore. He further advises that the Town’s reduced cost would be $10,000.00 per turbine, for a total of $20,000.00, and would be payable to his company from the monthly electrical savings generated over the three years of the program. In other words the Town would only "pay" money to Offshore that it saved in energy costs as a result of using the turbines.

Pursuant to the agreement the government would retain title to the turbines during the program period. At the end of that period the government would abandon the turbines in place and transfer title to the site owners, including the Town. The petitioner estimates that the turbines’ life expectancy is between twenty and thirty years, and that the Town may be able to save over $300,000.00 in electric power over that time. The DOE’s RFP does not require municipal sites for the program and, if the Town cannot or elects not to participate, the petitioner may propose other commercial or residential sites. He advises that he would have to appear before the School Committee regarding approval for the turbine at the School site. He indicates that the Town and/or School Department may have to obtain variances to install the turbines, and that the Council appoints the members of the Zoning Board. Finally, he advises that he would have to appear before the Council to present the program for its consideration regarding the proposed Transfer Station site.

2. Analysis

Under the Code of Ethics, the petitioner may not participate in any matter in which he has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of his duties in the public interest. See R.I. Gen. Laws §§ 36-14-5(a), 36-14-7(a). An official will have an interest in substantial conflict with his official duties if it is likely that a “direct monetary gain” or a “direct monetary loss” will accrue, by virtue of the public official’s activity, to himself, a family member, a business associate, an employer, or any business which the official represents. See R.I. Gen. Laws § 36-14-7(a). The Code further prohibits him from using his public position or confidential information received through his position to obtain financial gain, other than that provided by law. See R.I. Gen. Laws § 36-14-5(d). Finally, the Code provides that while serving and for a period of one year after a person has officially terminated his or her position with any state or municipal agency, that person shall not appear before the state or municipal agency on which the person had served. R.I. Gen. Laws §§ 36-14-5(e)(1) and 5(e)(4). The legislative intent of this revolving door provision presumably is to minimize any influence the former public official may have with respect to his former agency/employer. The only exceptions to Section 5(e)’s strict prohibitions are those allowed by this Commission in cases of hardship.

The statutory prohibitions contained within Section 5(e) are stricter than virtually any other provisions in the Code of Ethics. In most instances under the Code public officials and employees may address potential conflicts of interest by recusing from participation in related discussions and votes. However, absent an express finding by this Commission that a hardship exists, the prohibitions in section 5(e) are absolute. In other words, recusal is not an option unless the Commission determines that it is justified by a hardship. In cases of hardship the Commission may allow exceptions to this blanket prohibition. The Commission has granted such hardship exceptions in the past when a matter involved the “vested property rights” of an official or employee. As interpreted by the Commission, vested property rights have included pre-existing ownership interests in real property that were a) the official’s or employee’s principal residence, or b) the official’s or employee’s place of business.

This petitioner’s request falls squarely within the parameters and, hence, prohibitions of Section 5(e)(1). Here, he represents that by participating in the program with the DOE and Offshore, the Town may be able to save more than $300,000.00 in electrical costs over the life of the turbines. Further, the DOE would pay for eighty percent of the cost and the Town would be able to pay its proportional share from electrical savings generated on a monthly basis. In effect, the project would more than pay for itself and there would be no out-of-pocket costs to the Town. However, in order for the Town to consider participating in the program, the petitioner would have to appear before the Council to present the specifics of the project and enter a contract with the Town for installation of the turbine at the Transfer Station site. Absent a hardship exception he would be prohibited from making those appearances.

Pursuant to Section 5(e) of the Code, the petitioner may not appear before his own board within one year of the official severance of his position with the Council. However, the Commission concludes that the circumstances presented in this limited situation justify a finding of hardship. While previous situations in which the Commission has found hardships to exist have involved principal places of residence or business, it clearly would be a hardship to the Town if it were precluded from participating in this federally funded program solely because the petitioner and/or his company may not appear before the Council. Here, the petitioner is the only Block Island recipient of the DOE grant for the project, it is expected to result in savings for the Town, and the turbines would be provided to the Town at a reduced cost. Additionally, the town is not obligated to participate in the program simply by the petitioner presenting it with the opportunity. However, the petitioner may not participate and/or vote in the Council’s consideration of any matters relating to the program and/his company. R.I. Gen. Laws §§ 36-14-5(a), 5(d), and 7(a). Notice of recusal should be filed with both the Ethics Commission and the Town of New Shoreham in accordance with R.I. Gen. Laws § 36-14-6.

Further, the Code of Ethics does not preclude the petitioner/his company from appearing before the School Committee regarding the School’s proposed turbine site, given that School Committee members are elected, rather than appointed by the Council. The Code also does not bar the petitioner/his company from appearing before other municipal boards, such as zoning and planning, to answer any questions about the program or in the event that the Town and/or School Department must obtain zoning variances. That the petitioner may be called upon to participate in the reappointment of a zoning board member who previously took action on the Town and/or School Department’s variance application is too remote to trigger the prohibitions contained in R.I. Gen. Laws §§ 36-14-5(a) and 7(a).

Finally, Section 5(h) of the Code provides that no person subject to the Code nor any business associate of said person may enter into a contract with a municipal agency unless “the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded.” R.I. Gen. Laws § 36-14-5(h). This section further provides that “contracts for professional services which have been customarily awarded without competitive bidding shall not be subject to competitive bidding if awarded through a process of public notice and disclosure of financial details.” Id. The petitioner’s request does not fall within the professional services exception of section 5(h). That exception normally covers contracts for legal, medical, architectural or accounting services.

However, the Commission previously concluded that a state employee need not comply with the competitive bidding requirements of section 5(h) if his business was the sole supplier for the product and the contract complied with the State Purchases Act criteria for sole source procurement. See A.O. 98-33 (concluding that the Legal Counsel to the Commissioner of Higher Education and Rhode Island College could contract with Rhode Island College to sell a unique computer software program developed by him and his business associate to assist with legal audits of schools and universities without open and public bidding provided that the contract complied with the State Purchases Act criteria for sole source procurement). Similarly, R.I. Gen. Laws § 45-55-8, regarding the award of municipal contracts, provides that a contract may be awarded for a supply, service or construction item without competitive bidding when the purchasing officer determines that there is only one source for the supply, service or item. See R.I. Gen. Laws § 45-55-8.

As the petitioner/his company is the sole recipient under the DOE’s cooperative agreement, presumably the Town purchasing officer would find that he/his company would meet the criteria for a municipal sole source procurement. To the extent the petitioner/his company meet the criteria for municipal sole source procurement under state law, any requirement by the Commission that they contract only after open and public bidding would contravene state law and put form over substance. Thus, in this limited circumstance, the Code will not be violated if the petitioner/his company and the Town and/or School Department contract without open and public bidding, provided that the contractual terms and financial details of any contracts are publicly noticed.

Code Citations:

36-14-5(a)
36-14-5(d)
36-14-5(e)
36-14-6
36-14-7(a)

Related Advisory Opinions:

99-126
99-125
99-108
99-94
99-76
99-49
99-42
99-10
98-112
98-96
98-87
98-33
98-13
97-146
97-73
97-18
96-102
96-85
96-84
94-13

Keywords:

Contracts
Grants
Hardship exception
Revolving door