Advisory Opinion No. 2010-18 Rhode Island Ethics Commission Advisory Opinion No. 2010-18 Re: Peter O. Masterson QUESTION PRESENTED The Petitioner, a member of the Board of the Kent County Water Authority, a regionally appointed position, requests an advisory opinion as to what restrictions the Code of Ethics places on him if the firm he performs consulting work for, La Framboise Well Drilling Company, subcontracts with a water park developer who may appear before the Kent County Water Authority. RESPONSE It is the opinion of the Ethics Commission that the Petitioner and La Framboise Well Drilling Company are business associates as that term is defined in the Code of Ethics, and, accordingly, the Petitioner is bound by all of the restrictions in the Code pertaining to business associates, specifically, R.I. Gen. Laws § 36-14-5(a), (d), (e) and (f). The Petitioner has been a member of the Board of the Kent County Water Authority (“KCWA”), a public benefit corporation water supplier, for approximately eleven years, and was appointed to serve in that position by the Town of East Greenwich. He states that the KCWA provides a public water supply to the towns of West Warwick, Coventry, East Greenwich, part of North Kingstown, and part of the cities of Cranston and Warwick. He further states that in 2007 and 2008, a developer came before the KCWA seeking approval from the KCWA for water allocation regarding a proposed water park to be located in West Warwick and known as “Shipwreck Falls,” which the KCWA approved in both instances. More recently, a request came before the KCWA for water allocation for a water park to be located in West Warwick and known as 7th Wave Theme Park, which the KCWA also approved. The Petitioner recused from this most recent vote by the KCWA. In his private capacity, the Petitioner serves as a consultant to an entity know as “La Framboise Well Drilling Company” (“La Framboise”), which the Petitioner states provides expert services in the area of geo-thermal heating and cooling exchange. The Petitioner represents that he signed a letter of engagement with La Framboise on July 30th of 2008, and that he receives a monthly retainer from La Framboise to consult on various local projects. In a telephone conversation with Commission Staff subsequent to the receipt of his written request for an advisory opinion, the Petitioner stated that he had recently suggested to Paul Framboise, President of La Framboise, that he call the current developer of the proposed water park to explore whether or not La Framboise may be a suitable subcontractor if the project goes forward. The Petitioner further represented that if the water park comes to fruition, La Framboise would likely submit a bid to subcontract as to the geo-thermal services. The Petitioner stated that if La Framboise is selected as a successful subcontractor on the project, the Petitioner would likely become an employee of La Framboise, working on-site at the water park. Given this set of facts, the Petitioner requests an advisory opinion as to what restrictions the Code of Ethics places on him as a member of the Board of the KCWA if La Framboise subcontracts with the water park developer. The Code of Ethics provides that the Petitioner shall not have any interest, financial or otherwise, direct or indirect, or engage in any employment or transaction that is in substantial conflict with the proper discharge of his duties in the public interest. See R.I. Gen. Laws § 36-14-5(a). A substantial conflict of interest occurs if the Petitioner has reason to believe or expect that he or any family member or business associate, or any business by which he is employed will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. See R.I. Gen. Laws § 36-14-7(a). Section 5(b) of the Code of Ethics prohibits a person subject to the Code from accepting other employment that will impair his independence of judgment as to his official duties or require or induce him to disclose confidential information acquired in the course of his official duties. See R.I. Gen. Laws § 36-14-5(b). Additionally, the Code provides that the Petitioner shall not use his public office or confidential information received through his holding any public office to obtain financial gain, other than that provided by law, for himself, a business associate or any business by which the Petitioner is employed. See R.I. Gen. Laws § 36-14-5(d). Additionally, when a business associate of any person subject to the Code represents himself before the agency of which the person is a member, the official must recuse himself from voting or otherwise participating in his agency's consideration of the matter at issue. See R.I. Gen. Laws § 36-14-5(f). A "business associate" is an individual or business entity joined together with another individual or business entity to achieve a common financial objective. See R.I. Gen. Laws § 36-14-2(3); 36-14-2(7). Finally, pursuant to R.I. Gen. Laws § 36-14-5(e)(1) and (2), the Petitioner may not represent himself or any other “person” before any state or municipal agency of which he is a member or by which he is employed. A “person” is defined as an individual or business entity. R.I. Gen. Laws § 36-14-2(7). Given the current set of facts, it is the opinion of the Ethics Commission that this Petitioner is in an ongoing business association with La Framboise by way of his monthly retainer for consulting services. While at this time it is uncertain whether or not the water park project will go forward, and, if it does, whether or not La Framboise will be involved in the project as a subcontractor, it is clear that in any matter in which La Framboise is involved, there are a number of prohibitions in the Code that the Petitioner is subject to as a member of the Board of the KCWA. First, the Petitioner must recuse from participation in any matter in which La Framboise represents itself before the KCWA, based on R.I. Gen. Laws § 36-14-5(f), given the Petitioner’s business association with that entity. See A.O. 2009-23 (opining that a member of the Smithfield Town Council must recuse if an attorney he currently has a business association with appears before the Town Council, based on section 5(f)). Additionally, the Petitioner is required to recuse from any matter coming before the KCWA, including matters pertaining to the water park, or any other matter in which it is reasonably foreseeable that there will be a financial to impact the Petitioner himself or La Framboise. See A.O. 2008-45 (opining that a member of the Woonsocket Planning Board may not participate in the Planning Board’s consideration of an application by CVS to develop a store site in Woonsocket, given that the company owned by the Petitioner performed various repairs and maintenance for CVS, and thus was a business associate of that entity). If and when such matters come before the KCWA, the Petitioner must recuse in accordance with R.I. Gen. Laws § 36-14-6. Furthermore, pursuant to R.I. Gen. Laws § 36-14-5(e), the Petitioner may not represent himself, La Framboise, or any other person or business or act as an expert witness before the KCWA, while he is a member of the Board of that entity, and for one year after his separation from service. See A.O. 2005-15 (opining that the Principal Civil Engineer for the Department of Environmental Management (“DEM”) was not prohibited by the Code of Ethics from accepting part-time employment with a private firm that submits work to DEM, provided that, among other things, he did not appear before any division of the DEM regarding this work). Section 5(e)’s prohibitions are stricter than virtually any other provisions in the Code. In most instances under the Code, public officials and employees may address potential conflicts of interest by declining to participate in related discussions and votes. This is not the case with section 5(e). Absent an express finding by the Commission that a hardship exists, a public official may not appear before their own agency. Finally, the Petitioner is advised that this opinion solely addresses the application of the Code of Ethics. It does not, and cannot, address whether any other statute, ordinance, regulation, ruling or policy prohibits such conduct. The Ethics Commission does not exercise jurisdiction over those other provisions of law and, therefore, is not empowered to issue advisory opinions addressing or interpreting their effect. Code Citations: § 36-14-5(a) § 36-14-5(b) § 36-14-5(d) § 36-14-5(e) § 36-14-5(f) § 36-14-7(a) Related Advisory Opinions: A.O. 2009-23 A.O. 2008-45 A.O. 2005-15 Keywords: Business Associate