IN RE McCULLOCH v. NEW YORK STATE ETHICS COMMISSION

DAN LAMONT, J.

Petitioner George M. McCulloch brings this CPLR Article 78 proceeding seeking a judgment: (1) annulling the determination of the respondent, the New York State Ethics Commission, that petitioner knowingly and intentionally violated Public Officers Law ("POL") § 73 Pub. Off. (8)(a)(ii); and/or (2) a judgment declaring POL § 73 Pub. Off. (14) to be unconstitutional and declaring the determination of the respondent null and void.

The respondent has submitted an Answer asserting the following objections in point of law: (a) the petition raises a substantial evidence question requiring transfer to the Appellate Division; and (b) the petitioner lacks standing to assert the Sixth and Seventh claims set forth in the petition. The Answer also asserts several affirmative defenses.

While an employee of the Tug Hill Commission, a state agency, petitioner prepared a federal HUD Community Development Block Grant ("Grants) application for a wastewater treatment system in the Town of Forestport ("Town"). The Town was awarded the Grant — which included a $16,000 fee for its administration. While still working for the Tug Hill Commission, the petitioner administered the Grant for the Town until he left State employment in May of 1994.

Petitioner then began work in the private sector as a principal in a firm called the MWD Group. The Town terminated its contract with the Tug Hill Commission with its express agreement, and then hired petitioner to complete the administration of the Grant through his private company. Petitioner agreed to complete the project for $4,500 — the amount then remaining of the $16, 000 originally allotted in the Grant for administration fees. Petitioner then completed the administration of the Grant. Petitioner did not appear before or render any services before the Tug Hill Commission or any state agency.

In July of 1998, respondent Ethics Commission received correspondence from the Tug Hill Commission alerting respondent to potential violations of the Public Officers Law ("POL") regarding the foregoing activities of petitioner. Respondent Ethics Commission investigated the matter and determined that there was reasonable cause to believe that petitioner had violated POL § 73 (8)(a)(ii). Specifically, the undisputed facts clearly established that the petitioner had continued to work for the Town for a fee administering the same Grant which he had secured and administered for the Town while employed by the Tug Hill Commission.

The respondent Ethics Commission issued a Notice of Reasonable Cause dated January 27, 1999. The petitioner moved to dismiss the charges, and the respondent filed a cross motion for summary judgment. In a decision dated May 17, 1999, the hearing officer denied both of the motions and determined that an appearance before a State agency is not required in order for a former State employee to violate POL § 73 (8)(a)(ii). In a decision dated June 28, 1999, the hearing officer determined that petitioner "was intimately involved" with the Town's Grant. The hearing officer further found that "it defies common sense to claim that [petitioner's actions] fail to rise to the level of personal participation" and that petitioner had violated POL § 73 (8)(a)(ii).

On September 13, 1999, a hearing was conducted to determine whether a penalty would be imposed. In a decision dated September 20, 1999, the hearing officer recommended a sanction of $4,500. In assessing this penalty, the hearing officer also determined that the petitioner's conduct was not wilful. By Decision and Notice of Civil Assessment dated October 27, 1999, respondent found petitioner's conduct knowing and intentional, but modified the penalty downward to $2, 000. The petitioner commenced the instant CPLR Article 78 proceeding on February 8, 2000.

POL § 73 (8)(a), in relevant part, states:

"(i) No person who has served as a state officer or employee shall within a period of two years after the termination of such service or employment appear or practice before such state agency or receive compensation for any services rendered by such former officer or employee on behalf of any person, firm, corporation or association in relation to any case, proceeding or application or other matter before such agency. "

"(ii) No person who has served as a state officer or employee shall after the termination of such service or employment appear, practice, communicate or otherwise render services before any state agency or receive compensation for any such services rendered by such former officer or employee on behalf of any person, firm, corporation or other entity in relation to any case, proceeding, application or transaction with respect to which such person was directly concerned and in which he or she personally participated during the period of his or her service or employment, or which was under his or her active consideration." (emphasis supplied)

Statutes § 92, in part, states:

"a. Generally [ — ] The primary consideration of the courts in the construction of statutes is to ascertain and give effect to the intention of the Legislature.

"b. Ascertainment of Intention [ — ] The intention of the Legislature is first to be sought from a literal reading of the act itself, but if the meaning is still not clear the intent may be ascertained from such facts and through such rules as may, in connection with the language, legitimately reveal it."

Statutes § 94, in part, states:

"The legislative intent is to be ascertained from the words and language used, and the statutory language is generally construed according to its natural and most obvious sense without resorting to an artificial or forced construction.

This Court holds and determines that a literal reading of the statute and it's most obvious sense requires that the words "any such services" in subdivision (ii) be construed as applying to the words "appear, practice, communicate or otherwise render services beforeany state agency" (emphasis supplied) (see, Statutes § 254) This interpretation gives the clear language of the statute the plain meaning which it expresses (A.J. Temple Marble Tile Inc. v. Union Carbide Marble Care Inc., 87 N.Y.2d 574, 580). This Court also notes that nearly identical language immediately follows the phrase "receive compensation for any services" in section (i) and the phrase "receive compensation for any such services" in section (ii), to wit: "rendered by such former officer or employee on behalf of any person, firm, corporation or [(i) association] [(ii) other entity]".

Giving the words within the statute such a literal meaning does not render POL § 73 (8)(a)(ii) meaningless. This Court holds and determines that paragraph (i) of such statute restricts a former employee of a state agency from appearing or practicing before such state agency within a period of two years after termination of service — regardless of the subject matter of the appearance and that paragraph (ii) of the section restricts any former employee from practicing or appearing before any state agency for life regarding any matter which was directly related to that person's former employment. This meaning of the statute, using every part and word thereof, provides a purpose for the words "such services" and clearly does not eviscerate the obvious purpose of paragraph (i) (seePeople v. Giordano, 87 N.Y.2d 441, 448).

The Court of Appeals in Forti v. New York State Ethics Commission, 75 N.Y.2d 596, 605 addressed the scope and reach of the new Ethics in Government Act containing POL § 73 Pub. Off. (8)(a). Although the Court of Appeals did not specifically address the issue raised herein, this Court finds that the following excerpt from the decision directly supports this Court's holding:

"[T]he duration of the statutory ban on severed executive branch employees practicing before their former agencies on matters which they were directly involved during their government service was extended to a lifetime disqualification." ( Forti v. New York State Ethics Commission, supra, at 606) (emphasis supplied)

Accordingly, this Court holds and determines that POL § 73 (8)(a)(ii) does not proscribe or prohibit the conduct of the petitioner at issue because he clearly did not) appear or practice before any state agency. The question before the Court is one of pure (statutory reading and analysis. Therefore, the respondent's numerous reported decisions submitted in support of it's position are not entitled to any deference since there is little basis to rely on any special competence or expertise of the Commission in the interpretation of this statute (see Seittelman v. Sabol, 91 N.Y.2d 618, 625, citing Kurcsics v. Merchants Mut. Ins Co., 49 N.Y.2d 451, 459).

This Court recognizes that what petitioner did appears improper and may well be improper and unethical; however, this Court holds and determines that what petitioner did is not a violation of POL § 73 (8)(a)(ii). Therefore, this Court holds and determines that the respondent's determination is affected by an error of law (CPLR § 7803 (3)). Accordingly, the petition should be and the same is hereby granted, and the respondent's determination dated October 27, 1999, is hereby vacated and annulled.

This memorandum shall constitute both the Decision and Judgment of the Court. All papers, including this Decision and Judgment, are being returned to the petitioner's attorney. The signing of this Decision and Judgment shall not constitute entry or filing under CPLR § 2220. Legal counsel are not relieved from the applicable provisions of that section respecting filing, entry and notice of entry.

It is adjudged that the petition is granted and the respondent's determination dated October 27, 1999 is vacated and annulled.