Glenn Coffee & Associates, PLLC

Transcription

1 Glenn Coffee & Associates, PLLC Mailing Address: Street Address: Post Office Box N. Robinson Oklahoma City, OK Oklahoma City, OK (405) Glenn Coffee November 13, 2014 To: From: Re: Bobby Stem, Executive Director, The Association of Oklahoma General Contractors Glenn Coffee Oklahoma Ethics Rules as applied to an Oklahoma company that wishes to provide meals to employees of a regulating State Agency. You have asked that we prepare a memorandum discussing four questions as they relate to the Oklahoma Ethics Rules for a company under contract with the Oklahoma Department of Transportation and the limitations on giving things of value to state employees and state officers of the agency. In particular, you have requested our legal opinion regarding: 1. Does a company s membership with The Association of Oklahoma General Contractors preclude them from being able to provide things of value (meal) to the state employee because the Association is a lobbyist principal? 2. If not, can these companies provide the meals although they are directly overseen by these state employees? 3. If yes, do the $100 annual limits apply here? ($50 bi annually) 4. Some companies are wholly owned by one family, or one parent company. IS the limit on the parent company, or on each individual sub-company? Facts An Oklahoma company, who is in the primary business of building roads and bridges, would like to be able to provide a meal twice a year to employees of the Oklahoma Department of 1

2 Transportation ( ODOT ). The meals would range in value between $10.00 and $25.00 per person, per event. The ODOT employees oversee the projects built by the contractor. Although there is not direct regulation, there is direct oversight of the projects. This oversight can result in financial benefit or burden to the contractor. The contractors who wish to do this are members of a lobbyist principal, The Association of Oklahoma General Contractors ( AOGC ). The AOGC employs a lobbyist, Bobby Stem, who also sits as the Executive Director. The Law As I know you are aware, the Oklahoma Ethics Rules have undergone significant revision during the last year. Thus, in order to most fully answer your questions, we will analyze each question under the current Oklahoma Ethics Rules ( current Rules ), which will remain in effect until December 31, 2014, as well as the new Oklahoma Ethics Rules ( new Rules ), effective January 1, It is important to note the change between the current Rules and the new Rules as it pertains to things of value. Under the current Rules, there is a list of sixteen (16) items that constitute things of value, subject to certain limitations. As will be further discussed below, the current Rules allow for a state officer or employee to receive a thing of value in this case a meal so long as the aggregate value of things received does not exceed one hundred dollars ($100) per year. Of interest, the new Rules have eliminated the term things of value and now, except for gifts specifically permitted, all other gifts are prohibited. Specifically, Rule 4 of the new Rules defines gift as property transferred to or service provided for another without compensation of equal value. Rule 4 deals with the ethical conduct for state officers and employees and conflicts of interest between their public duties and private economic interests. The new Rules, which go into effect on January 1, 2015, state the following in regard to what is considered permissible gifts for State Officers and Employees to accept from a Vendor 1 : 1. A state officer or employee may accept meals having an aggregate market value of Twenty Dollars ($20.00) or less per occasion, provided that the aggregate market value of individual gifts received from any individual or other entity does not exceed Fifty Dollars ($50.00) during any calendar year. Where the market value of a meal exceeds Twenty Dollars ($20.00) on a single occasion, the state officer or employee may not pay the excess value over Twenty Dollars ($20.00) in order to accept that portion of the gift 1 Under the current Rules, the company would have been considered a business for the basis of interpreting the Rules. The new Rules address vendors, defined as any seller or prospective seller of any property or service to the State of Oklahoma. See Rule 4 definitions. The company is considered a vendor under the new Rules for the purpose of this analysis, as they are under contract with a state agency for their services. Page 2

3 worth Twenty Dollars ($20.00). The value of a meal shall include its price, plus any applicable tax but shall not include a gratuity. 2. A state officer or employee may accept a gift given under circumstances that make it clear that the gift is motivated by a family relationship or a personal relationship rather than the state officer or employee s status as a state officer or employee. Relevant factors in making such a determination include, but are not limited to, the history and nature of the relationship and whether the family member or friend personally pays for the gift. 3. A state officer or employee may accept a gift given to all state employees or to all employees of his or her agency provided the gifts are customary within the industry and the costs of the gifts do not significantly exceed amounts that are customary within the industry. 4. A state officer or employee may accept a book, written materials, audio tapes, videotapes and other informational or promotional material related to the performance of the state officer or employee s official duties. 5. A state officer or employee may accept opportunities and benefits available to the public generally and on the same terms available to the public. Outside of these specified circumstances, gifts between vendors and state officers or employees are explicitly prohibited. Analysis Question 1: Does the company s membership with The Association of Oklahoma General Contractors (AOGC) preclude them from being able to provide things of value (meal) to the state employee because the Association is a lobbyist principal? No. The Association of Oklahoma General Contractors (AOGC) is the lobbyist principal. Under both the current Rules and the new Rules, neither the individual members nor their companies are considered the lobbyist principal on the basis of their affiliation with a lobbyist principal. In other words, it is the association that is the lobbyist principal, not the individual members or their respective companies. Because AOGC is a lobbyist principal as defined in the Rules, they must comply with specific Ethics Rules regarding limitations when providing things of value (current Rules) or gifts (new Rules) to state employees. The individual members face no such restrictions based solely on their membership with the Association. However, as will be explained below, there are other Ethics Rules that apply to state employees that affect a state officer or employee s ability to accept a thing of value or gifts from a company that does business with the state. Page 3

4 Questions 2 and 3: Can the company provide meals to state employees although they are directly overseen by these state employees? If so, does the $100 annual limit apply? The current Rule that regulates a state employee s ability to accept a meal or thing of value is found at 257:20-1-9(3)(c), which states: (1) No state officer, state employee or an immediate family member if such state officer or state employee shall, directly or indirectly ask, demand, exact, solicit, seek, accept, assign receive or agree to receive things of value in a calendar year which, in aggregate, are valued at more than one hundred dollars ($100) from a person who the state officer or state employee should know (B) is seeking to do business or doing business with the governmental entity of which the state officer s or state employee s office or employment is a part; or (C) has an economic interest in actions or matters before or affecting the governmental entity of which the state officer s or state employee s office or employment is a part. In essence, under the current Rules, because the company is currently doing business with the state officer s or employee s office is a part even if only by virtue of the office having regulatory authority the state officers and employees cannot receive something of value over $ per calendar year from the company. By contrast, new Rule 4.9 states the following: No state officer or state employee shall accept any gift for himself or herself or his or her family member from any vendor or vendor s agent at any time the vendor is doing business with the state officer or state employee s agency through a contract involving property of services, subject to following exceptions: 1. A state officer or employee may accept meals having an aggregate market value of Twenty Dollars ($20.00) or less per occasion, provided that the aggregate market value of individual gifts received from any individual or other entity does not exceed Fifty Dollars ($50.00) during any calendar year. Where the market value of a meal exceeds Twenty Dollars ($20.00) on a single occasion, the state officer or employee may not pay the excess value over Twenty Dollars ($20.00) in order to accept that portion of the gift worth Twenty Dollars ($20.00). The value of a meal shall include its price, plus any applicable tax but shall not include a gratuity. (Emphasis added.) Page 4

5 Under the new Rules, the company can still provide meals to state employees that they are in direct oversight of, however, under the new Rules the company is considered a vendor and there are limitations regarding what state employees and officers may accept from vendors during the time in which there is an active contract between the vendor and the state officer or employee s employer. As quoted above, the new Rules allow for state employees to receive a meal from a vendor, but it is subject to two important limitations: (1) the aggregate value of a meal can never be more than twenty dollars ($20) per occasion, and (2) an individual cannot accept more than fifty dollars ($50) worth of meals in a calendar year. Thus, the company should now be aware that the new Rules decrease the amount per calendar year that can be spent on an individual from one hundred dollars ($100) to fifty dollars ($50), as well as place an aggregate per occasion cap at twenty dollars ($20). As long as the company does not exceed the per occasion limit, or total aggregate amount allowed per calendar year, they may provide meals to state officers and state employees they are under direct oversight of without violating the new Rules. Question 4: For companies that are wholly owned by one parent company, is the limit on the parent company, or on each individual sub company? The Rules treat a parent company and their sub companies as one entity. Limits are on the parent company and each sub company as one entity. Rules 257:10-1-2(f)(1)(C) of the current Rules explicitly states that entities that are in a parentsubsidiary relationship are treated as a single entity for contribution limit purposes. The new Rule on point, Rule 2.26, is even broader in scope, stating that the definition of a corporation shall include a corporation, its parent, subsidiary, branch, division, department or local unit of such corporation. Example of this definition under the new Rules: A parent company has three individual sub companies: sub company A, sub company B and sub company C. Sub company A provides a state employee with a meal valued at $ Two weeks later, sub company B provides the same state employee with a meal valued at $ Three months after that, the parent company provides the state employee with a meal valued at $ This would bring the aggregate market value of gifts received by the state employee to $ If sub company C wanted to provide that state employee with a meal at any time during the same calendar year the state employee s meal could cost no more than $5.00. Thus, companies must be mindful that the yearly total of any meals provided to a state employee must be with added to the total amount spent by any affiliated subsidiary/branch, and must not exceed the yearly aggregate of one hundred dollars ($100) under the current Rules or fifty ($50) under the new Rules. Page 5

6 Conclusion A company s membership with an Association that is a lobbyist principal does not subject them to the limitations and restrictions provided under the current Rules or the new Rules, as they pertain to lobbyist principals and state officers and employees. However, for the purpose of this analysis, the company in question is subject to limits outlined in both the current and new Rules as they pertain to persons and companies doing business with government entities. There are two major changes to take note of between the current Rules and the new Rules as they relate to what a state officer or state employee may receive from a company that the state officer or state employee s agency is doing business with, to wit: 1) The new Rules eliminates the term things of value and the accompanying list of items and in place specifically prohibits all gifts, with the exception for gifts specifically permitted. 2) The new Rules consider meals provided to state officers and employees by a vendor doing business with the State of Oklahoma permissible so long as the specified limits are followed. As a reminder, there is now a $20.00 limit per meal, per occasion and a reduced aggregate total market value of $50.00 per state officer or employee per year. Finally, under both the current and new Rules a parent company and its sub companies are grouped together and considered one entity subject to the same aggregate limits on gifts in circumstances where the Rules apply. I trust that this answers your questions, but if you need any additional assistance on this or any other matter I hope you will not hesitate to contact me. Sincerely, Glenn Coffee Page 6