Advisory Opinion No. 2006-6 Advisory Opinion No. 2006-6 Re: Mary Jane Balser QUESTION PRESENTED The petitioner, a member of the New Shoreham Town Council, a municipal elected position, and a member of the Board of License Commission, requests an advisory opinion as to whether she may participate and/or vote on matters regarding alcoholic beverage and entertainment licenses in the Town given that she is a holder of a Class A alcoholic beverage license and does business with Class B alcoholic beverage establishments. RESPONSE 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, and a member of the Board of License Commission, may not participate and/or vote on matters regarding alcoholic beverage and entertainment licenses in the Town given that she is a holder of a Class A alcoholic beverage license and does business with Class B alcoholic beverage establishments since such matters are likely to impact her private financial interests. See R.I. Gen. Laws §§ 36-14-5(a), 7(a) and (d). The petitioner advises that she is a Councilor-at-Large for the Town of New Shoreham (“the Town”). She informs that the Town is governed by a five personTown Council (the “Council”) with members referred to as the First and Second Wardens and three Councilors-at-Large. The petitioner advises that the Council also sits as the Town’s Board of License Commission and among the licenses it issues and supervises are those of retail alcoholic beverage dealers in package stores (Class A) or per drink on premises licenses (Class B). The petitioner advises that the Council, acting as the Board of License Commission, is the only public body in the Town with the authority to consider such licensing matters. The petitioner represents that she is a principal owner and the Vice President of Maclac Enterprises, Inc., d/b/a the Block Island Grocery and Seaside Market (“Maclac”). She represents that Maclac is the holder of a Class A alcoholic beverage license. The petitioner informs that Maclac sells groceries to virtually the entire population of the Town, including the Town’s alcoholic beverage licensees. Further, the petitioner advises that Maclac holds the Town’s only Pepsi Cola franchise which sells Pepsi Cola products to all but two of the Town’s Class B licensees and also services their soda gun systems. Additionally, the petitioners states that her husband holds a beer line cleaning license and, as such, cleans the beer lines at some of the Town’s Class B licensees. She advises that her husband offers these services free of charge, but indicates that he has accepted courtesy dinners from some of the Class B licensees as compensation for his services, which the petitioner attends from time to time. In addition, the petitioner advises that one of Maclac’s tenants, fellow Town Council member John A.L. Sisto, is a chef employed by a Class B licensee. Given all of the above representations, the petitioner asks whether the Code of Ethics requires her recusal from the following matters that come before the Board of License Commission: 1. The issuance and/or renewal of Class A alcoholic beverage licenses to entities including Maclac; 2. The issuance and/or renewal of Class B alcoholic beverage licenses; 3. The issuance and/or renewal of outdoor entertainment licenses, special event licenses, extended house licenses to Class B licensees; and 4. The establishment of a cap on the number of both Class A and Class B alcoholic beverage licenses in the Town. Under the Code of Ethics, the petitioner may not participate in any matter in which she has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of her duties in the public interest. Substantial conflict is defined as a "direct monetary gain or a direct monetary loss" that accrues, by virtue of the public official's activity, to that official, a family member, a business associate, an employer, or any business which the public official represents. See R.I. Gen. Laws §§ 36-14-5(a), 7(a). The Code defines “business associate” as a person joined together with another person to achieve a common financial objective. See R.I. Gen. Laws § 36-14-2(3). Additionally, the Code provides that the petitioner shall not use her office to obtain financial gain other than as provided by law for herself, any person within her family, any business associate, or any business by which she is employed or which she represents. See R.I. Gen. Laws § 36-14-5(d). The Commission has issued previous advisory opinions addressing similar issues. The Commission has advised members of town and city councils with interests in restaurants/liquor establishments that the law did not prohibit them from serving on the town or city council and, generally, from considering matters relating to the zoning or licensing of restaurants and bars. The Commission has advised, however, that when an issue came before the council involving a competing business that was in reasonably close proximity to the official’s own, or that otherwise directly impacted the business in which the official had an economic interest, recusal was required in accordance with R.I. Gen. Laws § 36-14-6. See, e.g., A.O. 2002-23 (finding that a Coastal Resource Management Council (CMRC) member may not participate in the CRMC’s consideration of matters involving Waites Wharf, given that such matters likely would impact his private financial interests as the owner of another marina that is in close proximity); A.O. 99-9 (advising a member of the Narragansett Town Council who owns a restaurant holding a liquor license that he should not participate in matters that directly affect his business and further advising that a direct impact is presumed for any establishment within a close proximity to or otherwise in direct competition with his restaurants); A.O. 96-70 (finding that a member of the Newport City Council must recuse himself from zoning or licensing matters that concern other restaurants, bars and businesses that are in close proximity to or otherwise directly impact the petitioner’s business); A.O. 94-24 (concluding that the Mayor of Central Falls, as a member of the Board of Licenses Commission and as a part-owner of a family business holding a liquor license, should not participate in decisions involving his family’s competitors). Here, the petitioner’s business, Maclac, is not only the holder of a Class A alcoholic beverage license, it also holds the only Pepsi Cola franchise, which sells to all but two of the Town’s Class B licensees. Accordingly, the petitioner is considered to be a “business associate” of all but two of the Class B licensees. In a similar advisory opinion, the Commission advised another member of the New Shoreham Town Council who also owned a business which held a liquor license issued by the Town, that he must recuse on any and all Board of License Review matters pertaining to liquor licenses in the Town. See A.O. 99-122. The Commission found that given the limited and defined size of the Town, it was reasonably foreseeable that matters regarding the issuance and/or supervision of a liquor licenses with the Town may have a direct financial impact upon the petitioner’s company, as well as a financial impact upon its competitors. Id. However, in 2004, the Commission opined that a blanket prohibition on reviewing all liquor licensing matters may have been overly broad. Instead, the Commission found that rather than applying a blanket prohibition, 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 A.O. 2004-38. In the instant matter, it is reasonably foreseeable that matters concerning the licensing of Class A and Class B establishments seeking to apply for or to renew alcoholic beverage and/or entertainment licenses would have a direct financial impact on the petitioner given her vast business interests in the Town. Furthermore, given these business interests, the petitioner’s competitors and her business associates’ competitors would also be financially impacted by any official action taken by the petitioner pertaining to said licenses. Accordingly, the petitioner must recuse from participating and/or voting on matters concerning the issuance or renewal of any alcoholic beverage and/or entertainment licenses. Notice of recusal should be filed with both the Ethics Commission and the Town of New Shoreham Town Council in accordance with R.I. Gen. Laws § 36-14-6. Finally, the petitioner has requested guidance from the Commission regarding the Rule of Necessity if the Commission opines that she is required to recuse based upon the facts presented in this opinion. Specifically, the petitioner questions whether she would be in violation of the Code of Ethics if the Council “compels” her to vote on these matters by invoking the Rule of Necessity. To be absolutely clear, neither the Code of Ethics nor the invocation of the Rule of Necessity can compel the petitioner to vote on any matter if she believes such vote would be improper or would cause even the slightest appearance of impropriety. Furthermore, the facts as represented by the petitioner in this opinion are not yet ripe for a discussion of the Rule of Necessity. Code Citations: 36-14-2(3) 36-14-5(a) 36-14-5(d) 36-14-6 36-14-7(a) Related Advisory Opinions: 2004-38 2002-23 99-9 Keywords: Business interest Competitor(s) Recusal