ADVISORY OPINION 2009-6

Application of General Statutes § 1-84 (p) to Routine Exchanges Between Supervisors and Subordinates in State Service

Introduction

The Citizen’s Ethics Advisory Board issues this advisory opinion in response to a request for an opinion submitted by an employee of the Department of Transportation (“DOT”) and a request regarding similar issues submitted by an employee of the Department of Information Technology (“DOIT”).  In those requests, the DOT and DOIT employees asked a series of hypothetical questions concerning General Statutes § 1-84 (p), a gift provision of the Code of Ethics for Public Officials, Chapter 10, Part I, of the General Statutes.

Section 1-84 (p) is a three-part provision that limits gift-giving between certain individuals in state service, and it provides as follows:

(1) No public official or state employee or member of the immediate family of a public official or state employee shall knowingly accept, directly or indirectly, any gift costing one hundred dollars or more from a public official or state employee who is under the supervision of such public official or state employee.

(2) No public official or state employee or member of the immediate family of a public official or state employee shall knowingly accept, directly or indirectly, any gift costing one hundred dollars or more from a public official or state employee who is a supervisor of such public official or state employee.

(3) No public official or state employee shall knowingly give, directly or indirectly, any gift in violation of subdivision (1) or (2) of this subsection.

In Advisory Opinion No. 2006-6, when asked to interpret § 1-84 (p), we concluded that the monetary limit imposed by this section is a per-gift—not per-year—amount.

Questions

The DOT and DOIT employees ask several questions regarding the application of § 1-84 (p).  Each question which is based on a specific scenario set forth below assumes that the exchange is between a supervisor and a subordinate and is restricted by § 1-84 (p).  Each scenario also assumes that no other exception to the definition of gift applies.[1]

Conclusion

            It is the opinion of the Citizen’s Ethics Advisory Board that: (1) the value of any gift between a supervisor and subordinate relative to General Statutes § 1-84 (p) is to be determined by the rules for valuing gifts as set forth at § 1-81-20 (d) of the Regulations of Connecticut State Agencies; (2) in determining if separate gifts have been provided for purposes of gift giving between supervisor and subordinate relative to § 1-84 (p) we adopt a “per person per occasion or transaction” standard; and (3) the rules for valuing gifts set forth at § 1-81-20 (d) of the Regulations of Connecticut State Agencies apply in full to gift giving between supervisor and subordinate relative to § 1-84 (p).

Analysis

Pursuant to General Statutes § 1-79 (e), “gift” is defined as “anything of value, which is directly and personally received, unless consideration of equal or greater value is given in return,” though there are numerous exceptions to this definition.[2]  Section 1-84 (p) imposes a per-gift limit on gifts of $99.99.

In assessing the value of any such benefit, we look to § 1-81-20 (d) of the Regulations of Connecticut State Agencies, which states that to determine the value of any such benefit for purposes of § 1-79 (e), the following rules shall apply:

(1) the value of the benefit equals the cost to the donor or payor if the benefit was obtained by the donor or payor in a marketplace transaction;

(2) when (1), above, is not applicable the value equals the fair market value of the benefit as determined by its replacement cost, i.e., the cost of purchasing the same or a similar item in a marketplace transaction;

(3) when (1) and (2), above, are not applicable, the recipient may use any reasonable method to determine value (e.g., appraisal of unique item);

(4) when (1), (2), and (3), above, are not applicable, the value of the benefit is indeterminable.  If the value of a benefit is indeterminable, an individual subject to Subsection (j) of Section 1-84 or Subsection (m) of Section 1-84 shall not accept the item, unless its value is clearly insignificant. [3]

Scenario A:

1.         The petitioner asks, “I am a State employee.  I have been out on medical leave following an operation.  Another employee volunteers to mow my grass, which I normally do myself.  Is this a gift?  When I was having the grass mowed, the fee was $35.  Is this a gift of $35?”

Based on the facts presented, the lawn mowing benefit was not obtained in a marketplace transaction and § 1-81-20 (d) (1) would not apply.  We then look to § 1-81-20 (d) (2).  We assume that under these facts, $35 represents the replacement cost in a marketplace transaction.  If so, $35 would be the value of the benefit under § 1-81-20 (d) (2).  The benefit would be a gift pursuant to § 1-79 (e).  However, this would not be a gift in violation of § 1-84 (p) because the value of the gift did not meet or exceed $100.

2.         Based on the same facts the petitioner further asks, “If they did this three separate times, is this one or three ‘gifts’?”  Because § 1-84 (p) is a per-gift limitation, it is relevant to distinguish when a benefit may be considered as one or multiple gifts.

This standard is not explicit in the Code of Ethics for Public Officials.  However, the Code of Ethics for Lobbyists, Chapter 10, Part II, of the General Statutes, contains analogous gift definitions and exceptions as well as extensive itemization and reporting requirements.[4]  The regulations governing lobbyist itemization and reporting of benefits for public officials repeatedly reference a “per person per occasion or transaction” standard when reporting the value of benefits exempt from the definition of “gift.”[5]  While this standard has only been expressly adopted by regulation for purposes of lobbyist reporting of benefits to public officials, we believe it provides a consistent standard for the regulatory framework of the Codes of Ethics.  We hereby adopt this “per person per occasion or transaction” standard in determining whether benefits should be considered as one or multiple gifts under § 1-84 (p).  If the benefit was part of a single occasion or transaction it will be considered one gift.  If the benefits were provided during multiple occasions or transactions the benefit shall be considered multiple gifts.  The “per person per occasion or transaction” standard shall be applied based on the totality of the circumstances.[6]

Under the limited facts presented, the petitioner describes the occurrence as having taken place at “three separate times.”  As such, we assume that these separate times do not represent one agreement, and thus that this qualifies as a separate occasion or transaction and would be considered three gifts each valued at $35.  If this represented one agreement, this would qualify as one occasion or transaction and thus be considered as one gift.

3.         Finally, under this scenario the petitioner asks, “What if the recipient has a large yard and the commercial estimate is $200?”  We again look to the valuation method of § 1-81-20 (d).  In the hypothetical, the service is not obtained in a marketplace transaction, so we look to the second valuation method of § 1-81-20 (d) (2).  Under this method, the value of the benefit is the replacement cost in a marketplace transaction: in this situation, it is $200.  Accordingly, this would be a gift in violation of § 1-84 (p) because this exceeds the $99.99 gift limit between supervisors and subordinates.

Scenario B:

The petitioner asks, “I am a state employee.  Another state employee offers to help me build a personal computer out of parts I buy.  This labor/technical expertise might cost $200 at a local computer store. Is this a $200 gift in violation of the Code?”

We look to the same analysis and valuation method used in Scenario A.  In this instance, the first valuation method of § 1-81-20 (d) (1) is not applicable because the benefit was not obtained in a marketplace transaction.  We then look to the second valuation method of § 1-81-20 (d) (2) and assess the value as the replacement cost in a marketplace transaction.  The facts presented suggest a likely replacement cost in a marketplace transaction of $200.  If this can be established, the value of the gift is $200 and this gift would be prohibited by § 1-84 (p) because it meets or exceeds $100 in value.

The petitioner has added the qualifier “might” before assigning a value of $200.  If the second valuation method of assigning a replacement cost based on a marketplace transaction is not applicable, then the parties may look to the third valuation method and use any reasonable method to determine the value, in this instance, of the labor/technical expertise.  If the first three valuation methods are not applicable, we then look to § 1-81-20 (d) (4): “If the value of a benefit is indeterminable, an individual subject to Subsection (j) of Section 1-84 or Subsection (m) of Section 1-84 shall not accept the item, unless its value is clearly insignificant.” In short, subsections (j) and (m) contain gift limitations between public servants and lobbyists, persons regulated by the state or doing business with the state.  This fourth valuation rule of § 1-81-20 (d) (4) does not reference individuals subject to § 1-84 (p).  For the purpose of providing a consistent valuation method for gifts under our regulatory framework, we hereby adopt § 1-81-20 (d) (4) for application to § 1-84 (p).  If, after following these methods, it is determined that the labor/technical expertise has a replacement cost of $100 or more, or the value cannot be established as clearly insignificant, then this would constitute an impermissible gift between supervisor and subordinate.

Scenario C:

The petitioner asks, “I have a licensed electrician working on my staff. I ask if he will install an electrical outlet for a pool, which requires a licensed professional and a permit. The quotes from electricians are all over $500.  He agrees to do this as a ‘favor’ for $200. Is this a gift in violation of the Code?”

Once more, we look to the valuation methods prescribed by § 1-81-20 (d). Based on the limited facts presented, the donor would not have obtained the benefit in a marketplace transaction, so we look to the second valuation method.  Pursuant to § 1-81-20 (d) (2), “the value equals the fair market value of the benefit as determined by its replacement cost, i.e., the cost of purchasing the same or a similar item in a marketplace transaction[.]”  The value of the replacement cost is $500.  The difference between the value of $500 and the payment of $200 is $300. Thus, this receipt of discounted labor would be an impermissible $300 gift between supervisor and subordinate.[7]

Scenario D:

The petitioner asks, “A supervisor is at a subordinate’s house for lunch and the subordinate asked for some help moving a piece of furniture because it is heavy.  Does this constitute a gift?”

In addressing this question we apply the same valuation method prescribed by § 1-81-20 (d).  The first valuation method is not applicable because the benefit was not obtained in a marketplace transaction.  We then look to the second valuation method of replacement price in a marketplace transaction, and there are insufficient facts presented to determine this benefit’s replacement cost. If the replacement cost in a marketplace transaction can be determined and is less than $100, this is not a gift in violation of § 1-84 (p).

If the second method is not applicable, the parties may look to the third valuation method and use any reasonable method to assign value to, in this instance, the labor of moving the furniture.  If any reasonable method values this benefit under $100, this is not a gift in violation of § 1-84 (p). If no reasonable method is applicable, the gift may not be accepted unless its value is clearly insignificant, i.e., $10 or less. The question of whether this benefit is a gift in violation of § 1-84 (p) depends on whether the value meets or exceeds $100 and relies on facts not before this body because of the lack of hypothetical facts regarding marketplace value or the outcome of reasonable valuation methods.

Scenario E:

The petitioner asks, “A subordinate asked to borrow a tool for the weekend, is the rental value of that tool now a gift?” The responses to valuing the benefit of the “rental value” in this scenario are identical to those in Scenario D. We note that under the first three valuation methods only gifts valued at $100 or more are prohibited by § 1-84 (p).  In the unlikely occurrence that no reasonable method is available, then under the fourth method, the benefit may still be accepted if the value is clearly insignificant.

Scenario F:

The petitioner asks, “A subordinate asks for advice or instruction on how to build or repair something.  It requires you to be present in order to give proper instruction. Is this a gift?”  The responses to valuing the benefit of labor or training in this scenario are identical to those in Scenario D. We note that under the first three valuation methods only gifts valued at $100 or more are prohibited by § 1-84 (p).  In the unlikely occurrence that no reasonable method is available, then under the fourth method, the benefit may still be accepted if the value is clearly insignificant.

Scenario G:

The petitioner asks, “A subordinate loans you a DVD movie for the weekend.  Is this a gift?”  The responses to valuing the loaned property in this scenario are identical to those in Scenario D. We note that under the first three valuation methods only gifts valued at $100 or more are prohibited by § 1-84 (p).  In the unlikely occurrence that no reasonable method is available, then under the fourth method, the benefit may still be accepted if the value is clearly insignificant.

Scenario H:

The petitioner asks, “A subordinate invites you to a July 4^th picnic at his or her lake house and supplies food, drink and swimming, etc. Are those gifts?”  In determining the value of a gift we only examine those items directly and personally received.  Pursuant to § 1-92-54 of the Regulations of Connecticut State Agencies, in relevant part:

(a)       … Directly and personally received means that the recipient accepted the opportunity to partake of or utilize the item.  For example, if an individual attends a reception, the entire per person cost incurred by the donor to provide food and/or beverage must be attributed to the attendee, regardless of the amount actually consumed unless the attendee declines to partake of any of the food or beverage offered.

(b)            In assessing the value of food and/or beverage provided at a reception or party, overhead costs such as in-house planning costs, invitations, rental fees, and decorations are not to be considered directly and personally received.

Under the facts presented, the overhead of maintaining the lake house and organizing the party would not be part of the items directly and personally received.[8]  Only the food and drink would be included in determining the value of the benefit.

By order of the Board,

_____/s/_________________________

Robert Worgaftik, Chairperson

Dated ___July 23, 2009__________