Advisory Opinion No. 96-81

Re: Diane Cardegna, Esq.

A. QUESTION PRESENTED

The appointed members of the Contractor's Registration Board requests an advisory opinion as to whether they may solicit a bid, be solicited or in any other way contract with a homeowner for a residential project if (a) a member of the Board previously issued a notice of violation against a contractor involved with the project; or (b) the Board adjudicated an appeal of a complaint concerning either a registered or non-registered contractor involved with the project. They also request an opinion as to whether a Board member may participate in an adjudication of a violation ticket if that member issued the violation ticket and, if not, whether recusal would satisfy the relevant provisions of the Code of Ethics.

B. SUMMARY

It is the opinion of the Rhode Island Ethics Commission that the Code of Ethics, specifically R.I. Gen. Laws §§ 36-14-5(a), 5(b), and 5(d), prohibits members of the Contractor's Registration Board from contracting with or in any other way accepting employment from a homeowner for a project in which the Board either issued a notice of violation or considered an adjudication involving a registered or non-registered contractor. Further, it is the opinion of the Commission that the process proposed by the Board whereby a Board member who issues a violation ticket recuses himself or herself from the Board's later consideration of such ticket clearly complies with any requirements under the Code of Ethics.

C. DISCUSSION

1. Facts

The Contractor's Registration Board (Board), a seven member panel appointed by the Governor, is an administrative agency that regulates residential building contractors pursuant to R.I. Gen. Laws § 5-65-1 et seq. (All residential building contractors are required to register annually with the Board and pay a $60.00 registration fee.) The Board is comprised of four registered contractors, a licensed architect, a member of the Building Code Standards Committee, and a member of the general public. See R.I. Gen. Laws § 5-65-14.

As part of its regulation duties, the Board adjudicates claims filed by consumers against contractors under the procedures set forth in the Administrative Procedures Act, R.I. Gen. Laws § 42-35-1 et seq. The procedures for adjudications are as follows: (a) after receiving a complaint, the Board schedules a hearing before a hearing officer; (b) following the hearing, the hearing officer issues a "proposed order" appealable to the full Board; (c) the full Board considers appeals during a regularly scheduled monthly meeting; and (d) the Board issues a final order which is appealable to the Superior Court.

In addition to adjudicating complaints, the Board also regulates residential builders by enforcing complaints that a contractor failed to register with the Board and/or committed other violations (e.g., had insufficient insurance coverage, or hired non-registered subcontractors). Investigators for the Board, following an on-site inspection, issue violation tickets and assess a fine against residential builders who violate the Board's rules and regulations. After receiving such a ticket, the alleged violator may request a hearing before a hearing officer. As with complaints, the hearing officer issues a proposed order which is appealable to the full Board and, after the Board's consideration, to the Superior Court.

Faced with budget cuts, the Board recently reduced its investigative staff from four investigators to one, thereby limiting the Board's ability to investigate claims and enforce non-registered builder complaints through the issuance of violation tickets. Given the lack of investigative resources, the Board, pursuant to R.I. Gen. Laws § 5-65-16(c), provided themselves with the authority to personally issue violation tickets on job-sites. (This provision provides the Board with the authority to "administer oaths, issue notices and subpoenas in the name of the Board, compel the attendance of witnesses and the production of evidence, hold hearings and perform such other acts as reasonably necessary to carry out its duties under the Chapter.") The Board, however, has stayed the enforcement of its vote pending the resolution of several issues. The Board now seeks guidance from this Commission concerning whether, assuming Board members are authorized to issue violation tickets, members of the Board can (a) perform services on a project in which another Board member has issued a notice of violation; (b) solicit a bid or contract on a project involving either a non-registered or registered contractor if the Board had adjudicated an appeal involving that project; and (c) be solicited for a bid or contract on a job involving either a registered or a non-registered builder if the Board has adjudicated an appeal concerning that project.

2. Analysis

Under the Code of Ethics, the members of the Board may not participate in any matter in which they have an interest, financial or otherwise, which is in substantial conflict with the proper discharge of their duties in the public interest. See R.I. Gen. Laws §§ 36-14-5(a), 36-14-7(a). 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 individual, 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). Pursuant to R.I. Gen. Laws § 36-14-5(d), the members are also prohibited from using their public position or confidential information received through their position to obtain financial gain, other than that provided by law, for themselves, a business associate, or any business in which the member is employed or which the member represents. Also, members of the Board may not accept other employment which either impairs their independence of judgment as to their official duties, or require or induce them to disclose confidential information acquired in the course of their official duties. Further, it is the policy of the Code that all public officials avoid the "appearance of impropriety" and not use their position for private gain or advantage. See R.I. Gen. Laws § 36-14-1.

The first question raised in this advisory opinion request concerns whether members of the Board may perform services for a home-owner on a project if (a) another member of the Board issued a notice of violation or (b) the Board adjudicated an appeal concerning either a registered or non-registered builder involved with the project. After considering this request and the relevant provisions of the Code of Ethics, it is our opinion, for the reasons specified below, that members of the Board would violate the Code of Ethics if they contracted with or accepted employment from a homeowner for a project in which the Board adjudicated a complaint against a registered or nonregistered contractor previously involved with the project or issued a notice of violation.

Members of a professional board who participate in disciplinary matters involving individuals who are their regular competitors for business, such as the one here, must walk a fine line; they must be scrupulously circumspect and exercise the appropriate diligence and caution. In the very least, the acceptance of employment by a member on a project that either had been considered or was under consideration by the Board would create an appearance of impropriety.

Also, if they accepted employment on the projects at issue, the members would risk violating a number provisions of the Code. First, if they knew that they could seek employment on a project under their consideration, the members would have an interest in substantial conflict with their official duties since it is possible that they would financially benefit if a homeowner decided to hire a new contractor, thereby implicating the prohibitions set forth in R.I. Gen. Laws § 36-14-5(a). Second, the members "independence of judgment" could be impaired, in violation of R.I. Gen. Laws § 36-14-5(b), if they knew that they could accept employment on a matter under their consideration. Finally, given their positions, we believe that the members are privy to confidential information relating to projects that could be used for their financial benefit, thereby triggering the prohibitions set forth in R.I. Gen. Laws § 36-14-5(d).

In sum, given the ethical implications raised by their request, we advise the members of the Board not to accept a contract or other employment on a project that they considered on appeal, are to consider on appeal, or regarding which they issued a notice of violation.

As to the second question, whether a member of the Board may participate in the adjudication of a violation ticket if that member issued the ticket at issue, we conclude that the process proposed by the Board whereby a member who issues such a ticket recuses himself or herself from the Board's later consideration of such ticket clearly complies with any requirements under the Code of Ethics. The Commission does not address whether recusal would satisfy the violator's due process rights.

Code Citations:

36-14-1

36-14-5(a)

36-14-5(b)

36-14-5(d)

36-14-7(a)

Keywords:

outside employment

competitor(s)