Conflict of Interest LawTown of Hanson

March 28, 2012

Presented by Gregg J. Corbo

All materials © Copyright 2011 Kopelman and Paige, P.C. All rights reserved.

Introduction

General Laws c.268A was enacted in 1963.

The conflict of interest law seeks to prevent conflicts between private interests and public duties, foster integrity in public service, and promote the public’s trust and confidence in that service by placing restrictions on what municipal employees may do on the job, after hours and after leaving public service.

Introduction

Key Definitions Section 17 – Divided Loyalties Section 19 – Self Dealing and Nepotism Section 23(b)(2) – Misuse of Position and Gifts Section 23(b)(3) – Appearance of Conflict Recusal Rule of Necessity Recent Changes and Summary

Key Statutory Definitions Municipal Employee – a person performing services for

or holding an office, position, employment or membership in a municipal agency, whether by election, appointment, contract of hire, or engagement, whether serving with or without compensation on a full, regular, part-time, intermittent or consultant basis, but excluding Town Meeting members and members of a charter commission

In other words, essentially anyone performing services for the Town or holding a municipal position, whether paid or unpaid, including full- and part-time employees, elected officials and volunteers is subject to the conflict of interest law.

Key Statutory Definitions Special Municipal Employee – a position is eligible

to be designated as “special” if it is unpaid, or if it is part-time and the employee is allowed to have another job during normal working hours, or if the employee was not paid for working more than 800 hours during the preceding 365 days.

Some areas of the law are less restrictive for special municipal employees.

An employee can only achieve “special” status if the position has been assigned as such by a vote of the Board of Selectmen.

Key Statutory Definitions

Official Responsibility – the direct administrative or operating authority, whether intermediate or final and either exercisable alone or with others, and whether personal or through subordinates, to approve, disapprove, or otherwise direct agency action

Key Statutory Definitions

Participate – participate in agency action or in a particular matter personally and substantially as a municipal employee, through approval, discretion, recommendation, the rendering of advice, investigation or otherwise.

Participation includes discussing as well as voting on a matter.

Key Statutory Definitions

Particular Matter – any judicial or other proceeding, application, submission, request for ruling or other determination, claim, controversy, charge, accusation, arrest, decision, determination, finding, but excluding petitions of the Town for special laws related to their governmental organizations.

Key Statutory Definitions

Financial Interest – Although this term is not defined in the statute, Commission precedent directs that a financial interest will be found if it is direct and immediate, regardless of whether it is large or small, positive or negative, as compared to remote or speculative.

Key Statutory Definitions

Immediate Family – municipal employees, their spouses, and each of their parents, children, brothers, and sisters.

Example – employee’s wife’s brother is immediate family; employee’s sister’s husband is not immediate family

Section 17 – Divided Loyalties Section 17 generally prohibits municipal

employees from appearing before Town boards or officials on behalf of anyone other than the Town.

A municipal employee, however, may always represent his own personal interests, even before his own board, on the same terms and conditions as any other member of the public.

Section 17 (a) – Compensation Section 17(a) prohibits a municipal

employee from directly or indirectly receiving or requesting compensation from anyone other than the Town in a matter in which the Town has a direct and substantial interest.

For example, a full-time health agent cannot be compensated by a private party for preparing a septic system plan that is going to be submitted to the Board of Health.

Section 17(c) - Agency

Section 17(c) prohibits a municipal employee from acting as an agent or attorney for anyone other than the Town with regard to a particular matter.

For example, a member of the Board of

Selectmen cannot represent a private client with respect to a subdivision plan pending before the Planning Board.

Section 17 – Special Municipal Employee Exemptions

Special municipal employees are exempt from these prohibitions unless the matter is one in which: The employee has ever participated as

such; Is, or within one year has been a subject

of his official responsibility; or Is pending in the municipal agency in

which the employee is serving.

Section 19 – Self Dealing and Nepotism

Section 19 prohibits a municipal employee from participating as such in a particular matter in which the employee, the employee’s immediate family, business or employer has a financial interest.

There is no exemption for special municipal employees.

Section 19 – Self Dealing and Nepotism

For example, if a Selectman’s wife is the Town’s health agent, that Selectman cannot participate in setting the health agent’s salary.

For example, if planning Board member is an abutter to a property that is being subdivided, the member cannot participate in proceedings on the subdivision plan.

Section 19 – Self Dealing and Nepotism Abutters – Property owners are presumed to

have a financial interest in matters affecting abutting property; this presumption applies to: Property directly abutting the employee’s

property If the employee is a “party in interest” under G.L.

c.40A (property located directly across the street or an abutter to an abutter within 300 feet)

If the employee is a “person aggrieved” for purposes of the Wetland Protection Act

If the matter would otherwise affect the employee’s property value, rights, or utilization.

Section 19 – Financial Interest - Exemptions Section 19(b)(1) - Appointed employee may advise

appointing authority of nature and circumstances of matter and make full disclosure of financial interest.

Employee may thereafter participate only if appointing authority, at it’s sole discretion, determines in writing in advance of participation that interest “is not so substantial to be deemed likely to affect the integrity of the services which the Town may expect from the employee.”

For abutters, the request must be supported by an opinion from a qualified appraiser that the project will not affect his financial interest.

Section 19 – Financial Interest - Exemptions There are two other less frequently utilized

exemptions An elected municipal official making demand

bank deposits of municipal funds in a bank by which the official is employed may file a written disclosure.

“If the particular matter involves a determination of general policy and the interest of the municipal employee or members of his immediate family is shared with a substantial segment of the population.” The State Ethics Commission has concluded that a substantial segment of the population is 10%.

Section 23 – Code of Conduct Section 23 establishes standards of conduct for all

employees. The standards include prohibitions on:

Accepting employment inconsistent with public office

Accepting employment that would require disclosure of confidential information acquired in the employee’s public position

Improperly disclosing materials that are exempted from the definition of Public Records (G.L. c.4, §7, cl.26), which materials were acquired in the employee’s public position, or using such materials for the employee’s personal interest.

Section 23(b)(2) – Misuse of Position

Section 23 prohibits a municipal employee from using or attempting to use his official position to secure unwarranted privileges or exemptions for himself or others which are of substantial value and which are not available to similarly situated individuals.

Substantial Value is anything worth $50.00 or more, calculated by determining the fair market value, or face value, whichever is greater.

The Commission recently enacted detail regulations on gifts.

Section 23 (b)(3)– Appearance of Conflict

Section 23(b)(3) often known as the “appearance section” prohibits a municipal employee from acting or failing to act under circumstances that would cause a reasonable person to conclude that such act results from bias, improper influence, kinship, etc.

However, if the employee first files a written disclosure of the relevant facts with the appointing authority, or, if elected, files a disclosure with the Town Clerk or in some other manner that is public in nature, such a conclusion is deemed “unreasonable”.

Recusal If a municipal employee has a conflict of interest

pursuant to Section 17, 19 or 23, he may not participate in the matter in any respect.

Such an employee cannot be counted for purposes of obtaining a quorum.

Although the employee is encouraged to leave the room, he is not required to do so.

The member should, however, announce that he is recusing himself and leave the table.

The member may speak on the matter from the audience under the same circumstances as any other member of the public.

Rule of Necessity The so-called “rule of necessity” may be

invoked if a multiple member board is unable to act because a quorum of members are disqualified from acting under the conflict of interest law.

To invoke the rule, the board must state that it cannot act due to disqualifications and each conflicted member must disclose their conflict.

The rule of necessity cannot be invoked based on absences.

If invoked, conflicted members may participate.

Recent Changes to the Conflict of Interest Law

In 2009, the Conflict of Interest Law was amended.

Penalties for receiving, or offering, any gift or gratuity of substantial value for or because of an official act have been increased to a maximum of $50,000 or up to five years in prison.

Recent Changes to the Conflict of Interest Law

Increased penalties for violating G.L. c.268A, §§17, 18, 19, and 20 increased to a fine of up to $10,000 or five years in prison.

Recent Changes to the Conflict of Interest Law

General Laws c.268A, §21 now allows SEC to order restitution of up to $25,000 after an administrative adjudicatory hearing. SEC may rescind or cancel action taken by a municipality if it determines, after a hearing, that violation of law “substantially influenced the action taken” by the municipality.

Recent Changes to the Conflict of Interest Law General Laws c.268A, §23 was amended to

require minimum levels of training. Annually, all municipal employees must be

provided with a summary of law and employee must sign a written acknowledgement of receipt.

All municipal employees must complete a training program within 30 days of assuming position, and every two years thereafter; notice of completion must be provided to, and maintained by, Town Clerk;

Town must designate senior-level employee to act as liaison with SEC and provide SEC with name of person

Recent Changes to the Conflict of Interest Law - Regulations

Amendments also included direction to, and authorization for, the Commission to issue regulations.

Regulations have been promulgated and are found at 930 CMR 1.00 – 7.00

930 CMR 5.00, et seq. - exemptions applicable to gifts

930 CMR 6.00, et seq. - exemptions unrelated to gifts

Summary

Conflict of Interest Law imposes many restrictions on activities of public officials.

Care should be taken to explore the application of the law to any particular matter prior to participation.

Pursuant to Section 22, any municipal employee can request a confidential opinion from Town Counsel.

Resources

The State Ethics Commission website has links to statutes, regulations, and educational materials, and may be accessed at the following link: www.mass.gov/ethics

Contact Information

Gregg J. Corbo, Esq.Kopelman and Paige, P.C.101 Arch Street, 12th FloorBoston, MA 02110(617) 556-0007gcorbo@k-plaw.com