Advisory Opinion No. 2004-38

Re: John A. L. Sisto

A. QUESTION PRESENTED

The petitioner, a member of the New Shoreham Town Council, a municipal elected position, requests an advisory opinion regarding whether he may participate in the Town Council's review of Liquor and Entertainment Licenses given his private employment at a restaurant holding a Class B liquor license.

B. SUMMARY

It is the opinion of the Rhode Island Ethics Commission that the petitioner, a member of the New Shoreham Town Council, a municipal elected position, may not participate in the Town Council's review of the petitioner's employer’s liquor license, nor those of his employer’s direct competitors.

C. DISCUSSION

1. Facts

The petitioner is a member of the New Shoreham Town Council. The Town Council sits as the Board of License Commissioners to review new and renewal applications for liquor and entertainment licenses. The petitioner represents that in his private employment he works as a chef at The Beachhead Tavern, the holder of a Class B liquor license. The petitioner represents that his employment is seasonal and part-time, approximately 10 hours per week. Also during the off-season, the petitioner works 30 hours per week at a grocery store. Given his employment at an establishment holding a liquor license from the Town, the petitioner asks whether and to what extent he may participate in the Town Council's review of liquor license applications.

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 will have an interest in substantial conflict with his official duties if he has reason to believe or expect that a “direct monetary gain” or a “direct monetary loss” will accrue, by virtue of the official’s activity, to himself, a family member, a business associate, or any business by which the official is employed or represents. R.I. Gen. Laws § 36-14-7(a). The Code further prohibits an official from using his public office or confidential information received though his holding public office to obtain financial gain, other than that provided by law, for himself or any person within his family, any business associate or any business by which he is employed or represents. R.I. Gen. Laws § 36-14-5(d).

In A.O. 99-122, the Commission addressed a similar issue with respect to a New Shoreham First Warden sitting as a member of the Board of License Review, who owned a business that held a liquor license issued by the Town. The Commission advised the petitioner that he must recuse on any and all Board of License Review matters pertaining to liquor licenses in the Town. The Commission found that given the limited and defined size of the municipality at issue (Block Island), it was reasonably foreseeable that matters regarding the issuance and/or supervision of liquor licenses within the Town may have a direct financial impact upon the petitioner’s company, as well as a financial impact upon its competitors.

In reviewing our advice in A.O. 99-122, we find that the blanket prohibition on reviewing all liquor licensing matters may have been overly broad. This same issue has been raised in many other settings, and rather than applying a blanket prohibition the Commission has stated that recusal is required when the issue before the public body either directly impacts the business related to the public official, or involves a competing business that is in reasonably close proximity. See e.g. A.O. 2004-13 (Scituate Town Councilor who leases his property to persons running a family restaurant with a Class BV liquor license may participate in Town's issuance of a Class C liquor license for a saloon located three miles from Councilor's property); A.O. 2002-23 (CRMC member who is owner of Brown & Howard Wharf Marina on Newport Harbor may not participate in CRMC matters pertaining to Waites Wharf, a competitor within 1,500 feet of the petitioner's property); A.O. 2000-62 (concluding, inter alia, that Providence Tourism Council Deputy Director, also a minority stockholder in a Providence restaurant, may participate in matters involving the restaurant industry in Providence, or individual members of that industry, provided that such matters do not directly impact his restaurant and/or his personal financial interests); A.O. 99-9 (Narragansett Town Councilor who owns restaurant holding liquor license could not participate in matters directly affecting his business, and further advising that direct impact is presumed for any establishment within a close proximity to or otherwise in direct competition with his restaurant); A.O. 96-101 (Chief of Police for City of Pawtucket, who is also a part-owner of a Pawtucket establishment holding a Class B liquor license, must recuse on liquor enforcement activities affecting his own establishment and any of its direct competitors); A.O. 96-70 (requiring Newport City Councilor/Board of License Commissioner who owns a restaurant holding liquor license to recuse himself from zoning or licensing matters that concern competitors); A.O. 96-24 (recognizing that an Alternate Member of the Newport Zoning Board of Review who is part owner and operator of a hotel and landlord to a restaurant and dance club, may not participate in matters affecting other hotels or matters affecting restaurant, dance clubs, or bed and breakfasts that are located within 500 feet of the petitioner’s businesses).

Consistent with the reasoning of these other advisory opinions, this Commission does not believe that the petitioner should be prohibited from participating in any liquor licensing matters on Block Island solely by reason of his employment by a license holder. Rather, pursuant to the reasoning of past opinions applying sections 5(a) and (d) of the Code, the petitioner must recuse on any licensing matters that are likely to result in a direct financial impact upon his employer or on its direct competitors. Clearly, this requires the petitioner to recuse on the license renewal of his employer. Recusal is also required as to licensing matters involving his employer’s direct competitors, as such matters are also likely to financially impact the petitioner's employer. The identification of these direct competitors by the Commission is not possible at this time given the record before us. Factors to be considered include the types of licenses sought and proximity of the license holders to the petitioners' employer. Other relevant factors may also be considered. The petitioner is invited to seek further guidance from the Commission on these questions if necessary.

Code Citations:

36-14-5(a)

36-14-5(d)

36-14-6

36-14-7(a)

36-14-7001

Related Advisory Opinions:

2004-13

2002-30

2002-23

2001-57

2000-62

99-122

99-9

98-151

96-70

96-61

96-24

Keywords:

Employer

Competitors

Licensing