Advisory Opinion No. 2002-63

Re: Ross L. Aker

QUESTION PRESENTED

The petitioner, an Exeter Town Councilor, a municipal elected position, requests an advisory opinion as to whether and to what extent he may participate in Town Council matters regarding property owned by the State of Rhode Island, given the fact that he and the Rhode Island Department of Environmental Management (“DEM”) are in negotiations for the sale of land owned by petitioner to the State of Rhode Island.

RESPONSE

It is the opinion of the Rhode Island Ethics Commission that the Code of Ethics does not prohibit or restrain the petitioner, an Exeter Town Councilor, a municipal elected position, from participating in Town Council matters regarding property owned by the State of Rhode Island, notwithstanding the fact that he and the DEM are in negotiations for the sale of land owned by petitioner to the State of Rhode Island.

The petitioner is the President of the Exeter Town Council. He represents that he and his wife own approximately 120 acres of land bordering the Arcadia Land Management Area. He currently is in negotiations with the DEM to sell this land to the State of Rhode Island. The petitioner represents that the Town Council expects to consider issues regarding other State owned land that would involve the appearance of representatives of State agencies, such as the Rhode Island Economic Development Corporation and the DEM, before the Council. He asks whether and to what extent the Code of Ethics requires his recusal from the Council’s consideration of State-related matters, given his relationship with the DEM and the State relative to the sale of his land.

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. See R.I. Gen. Laws § 36-14-5(a). An official will have an interest in substantial conflict with his official duties if it is reasonably foreseeable that a "direct monetary gain" or a "direct monetary loss" will accrue, by reason of his official activity, to the official, a family member, a business associate, an employer or any business which the public official represents. See R.I. Gen. Laws § 36-14-7(a); Commission Regulation 36-14-6001. Furthermore, a public official may not use his or her public office to obtain financial gain, other than that provided by law, for himself or for any business associate. See R.I. Gen. Laws § 36-14-5(d). Applying these provisions, if the State of Rhode Island is considered to be the petitioner’s “business associate” under the Code, he would be prohibited from participating in State-related matters pending before the Town Council.

In past advisory opinions, the Commission has held that the buyer and seller in a real estate transaction are considered “business associates” under the Code of Ethics. See A.O. 2002-56 (petitioner and The Nature Conservancy are considered business associates under the Code of Ethics based upon their present rights and obligations pursuant to a promissory note and two unexpired purchase options); A.O. 98-18 (opining that a Zoning Board member must recuse from participating and voting on a petition by the American Legion, Post No. 15 regarding the conveyance of a land parcel, given that the he is the intended purchaser of said parcel). In the instant matter, although petitioner and the State of Rhode Island are similarly joined to achieve a common financial objective, the Code of Ethics does not consider public entities such as the State or its agencies to be a “business associate.”

The Code defines “business associate” as a “person joined together with another person to achieve a common financial objective[.]” R.I. Gen. Laws § 36-14-2(3) (emphasis added). The term “person” is defined in the Code as “an individual or business entity[.]” R.I. Gen. Laws § 36-14-2(7). The Code does not provide a definition of “individual.” However, Blacks Law Dictionary defines an “individual” as “a single person as distinguished from a group or class.” Clearly, the State of Rhode Island would not fall under the definition of “individual.”

Under § 36-14-2(2), the Code defines the term “business” as a “sole proprietorship, partnership, firm, corporation, holding company, joint stock company, receivership, trust or any other entity recognized in law through which business for profit or not for profit is conducted.” The term “business entity” is used in chapter 14.1 of the Code, entitled “State Vendors Providing Goods or Services to Public Officials,” to mean “a sole proprietorship, partnership, firm, corporation, holding company, joint stock company, receivership, trust, or any other entity recognized in law through which business for profit is conducted.” R.I. Gen. Laws § 36-14.1-1(1). The most expansive definition of “business entity” found outside of the Code of Ethics is in R.I. Gen. Laws §17-25-3(1), which states that a “business entity” means “any corporation, whether for profit or not for profit, domestic corporation or foreign corporation . . . financial institution, cooperative association, receivership, trust, holding company, firm, joint stock company, public utility, sole proprietorship, partnership [or] limited partnership . . . .” The State of Rhode Island is not included in this laundry list of business entities.

Accordingly, the State of Rhode Island is not a business as defined under Rhode Island law, and cannot therefore be considered a “business associate” under the Code of Ethics. This is consistent with past advisory opinions determining that a municipality cannot be considered a “business” under the Code. See A.O. 2002-55 (concluding, inter alia, that the Town of Richmond is not a “business”); A.O. 97-17 (finding, inter alia, that the definition of "business" does not extend to public entities such as the Warren Town Council or the Bristol County Water Authority).

Because the State of Rhode Island is not considered a “business associate,” notwithstanding its negotiations to purchase the petitioner’s real estate, the Code of Ethics does not prohibit the petitioner from participating in Town Council matters relating to, or even benefiting, the State and/or its departments. However, to the extent any such matters involve potential direct or indirect benefit to himself, his family, other business associates, his employer or any business the petitioner represents, the petitioner is required to recuse from participation and vote. Notice of recusal should be filed with the Town Council and with the Ethics Commission in accordance with R.I. Gen. Laws § 36-14-6.

Code Citations:

36-14-2(2)
36-14-2(3)
36-14-2(7)
36-14-5(a)
36-14-5(d)
36-14-6
36-14-6001
36-14-7(a)
36-14.1-1(1)

Related Advisory Opinions:

2002-56
2002-55
98-18
97-17

Keywords:

Business Associate