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Public Utilities, As Well As Other Entities That Regularly
Negotiate With, Appear Before And Attempt To Influence Regulators,
Are Reminded Of The Importance Of Complying With Applicable Ethics
Laws When Dealing With Public Officials And Employees Of State
Agencies. Seemingly Minor Violations Can Be Easy To Overlook,
Particularly Those Regarding Improper Expenditures, And May
Nevertheless Result In Hefty Monetary Fines And Unwanted
Publicity.
The Case Of National Grid Provides A Timely Example. The Utility
Recently Executed A Settlement With New York State Regulators Under
Which It Has Agreed To Pay $1.6 Million To Stave Off A Formal
Enforcement Action By The New York State Public Service Commission
(Psc).1 Over The Course Of An 18-Month Investigation
Involving A Review Of Expense Records Submitted By All Utilities
Regulated By The Psc, The New York State Office Of The Inspector
General Uncovered Numerous Violations By National Grid Of Section
73(5) Of The Ny Public Officers Law From 2002 To 2010. Prior To
2007, Public Officers In New York Were Not Allowed To Receive, And
No Person Was Allowed To Give, More Than $75 Annually In Gifts
Intended To Influence Their Actions.2 However, The New
York State Ethics Commission Had Concluded That Gifts From Certain
Entities Could Be Considered Per Se Intended To Influence.
State Law Was Subsequently Amended So That No Gift Could Have More
Than "Nominal" Value. Over An Eight Year Period, National
Grid Employees Allegedly Had Provided Regulators With Gifts,
Including Meals And Free Games Of Golf, Amounting To At Least
$7,000. In Addition To Fining National Grid, The New York State
Department Of Public Service (Dps) Also Intends To Request That
Each Major Utility In New York Review And Submit Its Ethics
Training For Review. After Dps Approves The Ethics Training, Each
Utility Must Provide Targeted Training To All Employees Who
Interact With Dps.
While Every State's Laws Will Be Unique, Most Every State
Has Some Kind Of Ethics Law Governing Expenditures On Behalf Of
Public Employees. In Pennsylvania, For Example, The Public Official
And Public Employees Act Prohibits, Among Other Things, The Giving
Or Receiving Of "Anything Of Monetary Value" To A Public
Employee On The Understanding That It Is Meant To Influence
Official Action.3 This Includes Gifts To A Member Of The
Employee's Immediate Family Or A Business With Which He Is
Associated. New Jersey Has A Self-Described "Zero
Tolerance" Policy Which Provides That, Except With Respect To
Unsolicited Gifts Of Trivial Or Nominal Value, No Public Officers
And Employees, Or Their Immediate Family Members And Business
Associates, Shall Accept (And Must Furthermore Report) Gifts Or Any
Other Thing Of Value Received And Which Are In Any Way Related To
Their Public Duties.4 Maryland's Ethics Requirements
Are Slightly More Relaxed. Although Public Officials May Not
Solicit Any Gift, There Are Exceptions Made For The Types Of Gifts
They May Receive Under Specified Circumstances, Including Meals And
Ceremonial Gifts.5
The National Grid case provides an excellent opportunity for
regulated utilities to review currently applicable law and revisit
internal policies and training procedures. Companies also may
consider undertaking a more formal internal audit under the
supervision of counsel in order to ensure they are currently in
full compliance.
Footnotes
1 The settlement agreement remains subject to the approval
of the PSC at its next meeting in August 2012.
2 All Department of Public Service staff are considered
"public officers" under New York State law.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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