Final Report to
THE MICHIGAN LAW REVISION COMMISSION
on
THE PROPOSED GOVERNMENT ETHICS ACT OF 1999
Contents of Report
Appendix A: Financial Disclosure Provisions (if Elected) 85 Appendix B: Government Ethics Laws in the United States - Chart 100
The Proposed Michigan Government Ethics Act of 1999
In the Spring of 1998, the Michigan Law Revision Commission ("Commission") initiated a comprehensive review of Michigan ethics laws and commissioned a research project on the topic. This Report conveys the summary findings and conclusions of that research. In its charge, the Commission stated that it is particularly interested in knowing how Michigan's ethics laws compare with those of its sister states, and how Michigan law can be changed (1) to better define what is and is not a conflict of interest, (2) to provide procedures for determining whether a conflict exists, and (3) to prescribe penalties for violations. This Report addresses these and other matters in its fifty state survey of ethics laws, described in Part II, and in its proposed Government Ethics Act of 1999 ("Act"), which would replace the existing Michigan contractual conflicts of interests laws and ethics laws. The proposed Act is set out in Part III and explained in detail in Part IV of this Report.
In the past twenty-five years, due in large part to problems exposed by the events of Watergate, the federal government and many states have undertaken to adopt or revise government ethics laws and standards. As noted by the public interest group Common Cause, "relatively few states had comprehensive or effective ethics laws on the books [in the early 1970s]. Today, this is no longer the case. Most states have enacted ethics laws that constrain public officials from using their positions in government for private gain.... On the other hand, not all ethics laws passed ... were comprehensive.... There is clearly a need to revise and strengthen some state laws." (1) This Report concludes that Michigan is among the states whose ethics laws need to be revised.
Ethics laws in Michigan are inadequate in several key respects. First, they do not elucidate a clearly defined, comprehensive set of conflict-of-interest and revolving-door standards; second, they fail to require even minimal transactional disclosure by public officials and employees of potential conflicts; and third, they do not provide for a strong and independent Ethics Board to enforce the statutes. This ethics "triad" - a clearly defined list of proscribed activities, disclosure, and a strong, independent Ethics Board - is the backbone to an effective ethics law.
The proposed Act fixes these deficiencies. The Act is quite simple in its format and language: Chapter One contains definitions and miscellaneous provisions, Chapter Two is the actual Code of Ethics that sets forth a clearly defined list of proscribed activities, Chapter Three details the penalties for violations of the Act, and Chapter Four contains provisions on how the proposed Act shall be administered by the newly-constituted Ethics Board. Appendix A contains optional language on annual disclosure should the Legislature elect to include an annual disclosure requirement in the legislation, and Appendix B is a comparative table of ethics laws in the fifty states.
It may seem counterintuitive at first glance, but public officials should not fear the adoption of a comprehensive code of ethics - indeed, a comprehensive code of ethics is much preferable to the alternative, where officials "lack guidance as to what they may and may not do, and consequently too often fall prey to accusations by self-proclaimed ethics 'experts' of unspecified 'unethical' conduct." (2) In short, the advantage to the public official of a clearly-worded, succinct code of ethics is the certainty that it engenders. In the words of one commentator, "bereft of a comprehensive, comprehensible Code and ... an agency to authoritatively interpret ... ethics laws, ... government officials faced with ethical dilemmas search in vain for counsel." (3)
Michigan's laws concerning ethics in government can be found primarily under one of the following statutory headings: Conflict of Interest (4), Contracts of Public Servants with Public Entities, (5) and Standards of Conduct for Public Officers and Employees. (6) There are also a number of context-specific provisions scattered throughout the statutes. (7) The Legislature likelywill choose to retainthese context-specific provisions to the extent they supplement and complement the proposed Act. To the extent a particular context-specific provision conflicts with the proposed Act, the Legislature will need to consider amending the provision either to make it comply with the proposed Act or to note that the specific provision is intended to prevail over the proposed Act.
One of the most curious aspects of Michigan's existing government ethics legislation is the narrow scope of its coverage. For example, while the Conflict of Interest and Contracts With Public Entities statutes cover state executive, legislative and judicial officials/employees (as well as officials/employees of political subdivisions of the state), the old Standards of Conduct provisions cover only the state executive branch. This Report takes the position that any revision of the Standards of Conduct should include all branches of state government, including the state legislative branch, the judiciary and officials/employees of political subdivisions. (8)
As far as they go, however, the existing Standards of Conduct are actually quite comprehensive and simply drafted. The Standards of Conduct proscribe the state executive official or employee from (1) divulging confidential information, (2) representing his or her own opinion as that of the government, (3) unauthorized use of resources, (4) accepting things of value that might tend to influence the public official or employee, (5) using official position for personal gain, (6) holding incompatible offices, and (7) participating in a transaction where there is a conflict of interest. (9)
Another problem with the Michigan ethics laws is that there are no disclosure requirements, a significant deficiency. This Report advocates a very simple transactional disclosure, since overly-intrusive disclosure requirements - including annual financial disclosure - may have the undesired effect of chilling the willingness of good people to serve in state and local government. Moreover, this Report opts for a system of transactional disclosure in favor of mandatory annual disclosure on the reasoning that annual financial disclosure creates a reporting system that is entirely too cumbersome and expensive to administer. The marginal benefits to be gained by such a system of annual reporting simply do not justify the expense. (10)
This Report's proposed Act is a hybrid of a number of sources. Several government ethics advocacy organizations have proposed model ethics legislation over the last couple decades, some parts of which have been incorporated into this Report's proposal. (11) Significant portions of the proposed Act are modeled after an Act previously passed by the Michigan Legislature and signed into law by the governor in 1975, but which was later struck down by the Michigan Supreme Court for "embracing more than one object." (12) Language from this previous act is quite instructional, since it was considered previously and deemed to be acceptable by the Legislature. Finally, the proposed Act derives substantial guidance from the ethics statutes in a number of Michigan's sister states.
There are sure to be objections to the proposed Act. First, it will require a substantial amount of money to properly administer the Act. Specifically, in order to do its job effectively, the newly-constituted Ethics Board will need considerable resources. As a basis for comparison, the state of Ohio budgeted $660,000 for its six-member Ohio Ethics Commission in 1992, which funded eleven staffmembers, and even then it was considered to be underfunded. (13) The good news is that undoubtedly a significant percentage of these resources went to administering Ohio's annual financial reporting (14) - a reporting system not required in this Proposed Act. This Report does not attempt to estimate the amount of resources needed to administer the Act. To be sure, the proposed Act gives the newly-constituted Ethics Board heavy responsibilities, but it should not add appreciably to the administrative burden of other governmental entities.
This Report represents the first step in what promises to be a long process of discussion by legislators, executive policymakers, and many others. The experiences of a couple other states in revising ethics laws are instructive: "During the past few years, Ohio's Ethics Laws have been the subject of intense scrutiny, analysis, and political debate.... These reforms...were the product of a long process of debate and compromise...." (15) Similarly, "[f]rom 1990 through 1992, the [New York State Temporary State Commission on Local Government Ethics] ... was charged with enforcing the 1987 Ethics in Government Act, with aiding municipalities in addressing their ethics concerns, and with proposing new ethics legislation." (16) If the experiences of these two states are any guide, the process of effecting a wholesale change of the Michigan ethics laws will be a task of substantial magnitude. Bearing in mind that reality, this Report thus seeks merely to get the ball rolling by providing an Ethics Act framework that incorporates certain basic fundamentals, and that will serve as a point-of-departure for the Legislature in its task of establishing a comprehensive, workable Government Ethics Act. (17)
II. Fifty State Survey and Comparison of Ethics Laws
This Part of the Report conducts a survey and comparison of ethics laws in the fifty United States. Ethics laws can be divided into two major groups: laws that impose (1) restrictions on certain conduct; and (2) disclosure requirements. To provide a basis for comparison of ethics laws, this survey's methodology reviews each state's ethics laws for eleven different key provisions - seven addressing "restrictions on conduct" (group (1)); and four addressing "disclosure requirements" (group (2)). The Report then constructs four separate state cohorts (consisting of (1) all fifty states; (2) states located in the federal Sixth Circuit; (3) states located in the Midwest; and (4) the ten most heavily populated states), and compares both the existing and proposed Michigan ethics laws against the states in each of those cohorts.
First, regarding the seven "restrictions on conduct" provisions, the survey asks whether the state explicitly restricts:
With regard to the four "disclosure" provisions, the survey asks whether the state requires written disclosure of:
The survey's methodology then assigns values ranging from 1 - 5 to each response, depending on how comprehensive the coverage (18) is of the particular state provision. If there is no coverage at all, the answer is assigned a value of "1"; if the provision excludes three or more classes of public officials or employees, but does cover at least one class, it is assigned a value of "2"; if the provision excludes two classes, it is assigned a value of "3"; if the provision excludes only one class of public officials or employees, it is assigned a value of "4"; and if the provision covers all classes of public officials and employees, without exception, it is assigned a value of "5". See Appendix B for a spreadsheet summary of the results of the Survey. (19)
An examination of the data in four cohorts reveals the following information.
(1) Among the 50 states:
(2) Among the four Sixth Circuit states (Michigan, Ohio, Kentucky, and Tennessee):
(3) Among the seven Midwestern states (Michigan, Ohio, Indiana, Illinois, Wisconsin, Minnesota, Iowa):
(4) Among the ten most populous states (California, New York, Texas, Pennsylvania, Illinois, Ohio, Michigan, New Jersey, North Carolina): (38)
In sum, these data make the convincing case that the enactment of the proposed Government Ethics Act would bring Michigan into a leadership posture vis-a-vis its sister states in several respects. With regard to the Group I "restrictions on conduct" requirements, under the proposed Act Michigan is at the top of the list of those states setting high standards for its public officials and employees. At the same time, with regard to the Group II '"disclosure" requirements, the proposed Act is rigorous in its requirement that public officials and employees disclose conflicts and receipt of items of value on a transactional basis, but does not require annual disclosure of real property holdings and outside income. As practiced in some states, annual disclosure of real property and outside income is extremely detailed and often overly intrusive. This is an important point, for the proposed Act is sensitive to the possibility that overly aggressive ethics provisions (particularly the annual disclosure requirements) might have a tendency to alienate and drive some individuals away from public service. The proposed Act hence attempts to strike the proper balance between setting objective, high standards for all public officials and employees on one hand, and not making the disclosure requirements of the Act unrealistically strict on the other.
III. Draft Language of the Proposed Government Ethics Act of 1999 (45)
AN ACT to establish high standards of ethical conduct for public officials and public employees of the State of Michigan and its political subdivisions; to afford public officials and public employees of the State of Michigan and its political subdivisions clear guidance on such standards; to promote public confidence in the integrity of the governance and administration of the State of Michigan and its political subdivisions and their agencies and administrative offices; to facilitate consideration of potential ethical problems before they arise, minimize unwarranted suspicion, and enhance the accountability of government to the people by requiring public disclosure by public officials and public employees of relevant transactions; to specify penalties for violations; and to provide for the fair and effective administration of this law through the establishment of a state Ethics Board. This Act shall be known by and may be cited as the "Michigan Government Ethics Act."
CHAPTER ONE. DEFINITIONS; GENERAL PROVISIONS.
For the purposes of this Act:
(1). "Anything of value" includes any gift, financial benefit, or other thing that is pecuniary or compensatory in value to a person, and also includes but is not limited to, any valuable act, advance, award, contract, compensation, contribution, deposit, emolument, employment, favor, fee, forbearance, fringe benefit, gratuity, honorarium, loan, offer, payment, perquisite, privilege, promise, reward, remuneration, service, subscription, or the promise that any of these things will be conferred in the future, if such thing or act of value is conferred or performed without the lawful exchange of consideration which is at least equal in value to the thing or act conferred or performed. For purposes of this definition, the following items do not constitute "anything of value":
(2). "Associated," when used with reference to an outside employer or business, means receiving compensation or having an ownership interest as provided in the definition of "outside employer or business" in this Act.
(3). "Confidential Information" means that information deemed to be privileged or confidential by regulation or practice of the unit of government with which the public official or employee is affiliated.
(4). "Customer or client" means (a) any person to whom a public official or public employee has supplied goods or services during the previous twelve months having a value greater than $1,000 in the aggregate, or (b) any person to whom a public official's or public employee's outside employer or business has supplied goods or services during the previous twelve months having, in the aggregate, a value greater than $1,000, but only if the official or employee knows the outside employer or business supplied the goods or services.
(5). "Ethics Board" means the Ethics Board established pursuant to Section 401 of this proposed Act.
(6). "Gift" and "financial benefit" fall within the definition for "anything of value" as defined within this Act.
(7). "Governmental Entity" includes both the State and its Political Subdivisions.
(8). "Immediate family" means a spouse, child, grandchild, brother, sister, parent, or grandparent of the public official or public employee, or a person claimed as a dependent on the public official's or public employee's latest individual state income tax return.
(9). "Matter" means, unless the context of this Act indicates otherwise, any act or potential act in which the discretionary decision of a public body, official or employee may result in anything of value to a person.
(10). "Ministerial act" means an action performed in a prescribed manner without the exercise of judgment or discretion as to the propriety of the act.
(11). "Outside employer or business" means:
For purposes of this definition, "compensation" shall not include reimbursement for necessary expenses, including travel expenses.
(12). "Person" shall include both individuals and entities.
(13). "Political subdivision" includes all public bodies corporate within but not including the state, including all agencies thereof or any non-incorporated body within the state of whatever nature, including all agencies thereof, or any court, department, board, agency, institution, commission, authority, division, council, college, university, school district, intermediate school district, special district, or other public entity of the State, a City, Village, Township, or County.
(14). "Public employee" means an individual employed by a governmental entity.
(15). "Public official" means an elected or appointed individual in the executive branch of the state government or political subdivision thereof, an elected or appointed individual in the state legislative branch or political subdivision thereof, or an elected or appointed official in the judicial branch of the state government or a political subdivision thereof; any elected or appointed member of a board of education; and an elected or appointed member of a governing body of a state institution of higher education. The definition applies whether the individual is paid or unpaid, and applies without limitation to all members of any office, administration, agency, board, bureau, council, commission, committee, department, or division of the state government or political subdivision thereof which possesses any sort of final decisionmaking authority. For purposes of this definition, "public officer" means the same as "public official."
(16). "Subordinate" of a public official or public employee shall mean another public official, or public employee or other employee over whose activities he or she has direction, supervision, or control.
This proposed Act repeals and replaces Act No. 318 of the Public Acts of 1968, M.C.L. §§ 15.301-15.310 (Conflict of Interest); Act No. 317 of the Public Acts of 1968, M.C.L. §§ 15.321-15.330 (Contracts of Public Servants With Public Entities); and Act No. 196 of the Public Acts of 1973, M.C.L. §§ 15.341-15.348 (Standards of Conduct for Public Officers and Employees).
This Act shall take effect on January 1, 2001.
Pursuant to article 3, section 8 of the Michigan Constitution, the state supreme court shall rule on the constitutionality of this act before January 1, 2001.
(1) Cities, Villages, Townships, and Counties should have the opportunity to exercise the primary role in establishing and enforcing ethics regulations for local public officials and public employees.
(2) A City, Village, Township, or County may adopt a local ethics ordinance that includes the substance of Section 101, Chapter Two, and Chapter Three of this proposed Act. To have effect, any such proposed local ethics ordinance must be approved by the Ethics Board pursuant to this Section. If the local governmental entity does not have an ethics ordinance that has been approved by the Ethics Board, public officials and employees within that local governmental entity will be subject to the proposed Act.
(3) To be approved under this Section, a local ethics ordinance must create a local ethics oversight board, which will perform functions similar to those performed by the proposed Act's Ethics Board. The ethics ordinance should be vest ample authority in the ethics oversight board to enforce the ordinance, much as the proposed Act's Chapter Four vests such authority in the Ethics Board. Such authority should include, at a minimum, the power to collect and review transactional disclosure statements; the power to investigate alleged ethics violations; the power to impose or recommend sanctions; the power to issue advisory opinions; and the power to engage in training and education efforts.
(4) A local ethics ordinance created under this Section may be more restrictive than the proposed Act.
(5) Prior to the adoption, or as soon as possible following the adoption of a local ethics ordinance, the City, Village, Township, or County shall submit to the Ethics Board a copy of the ordinance that it determines meets the requirements of this Section. If the local governmental entity has an existing ordinance that it contends is at least as restrictive as the proposed Act, that ordinance may be submitted to the Ethics Board at any time. The Ethics Board, in consultation with the Ethics Subcommittee of the Michigan Municipal League, shall review ethics ordinances submitted under this Section to assure their adequacy. If the Ethics Board finds that an ordinance is not in compliance with this Section, the Ethics Board, in consultation with the Ethics Subcommittee of the Michigan Municipal League, shall work with the local governmental entity to bring the ordinance into compliance and inform the entity of the failure to comply and in what ways the submitted ordinance is deficient. Unless the local governmental entity receives notice within 90 days of submittal that the ordinance they submit to the Ethics Board under this subsection is not in compliance, the ordinance shall be considered to be approved by the Ethics Board.
(6) A City, Village, Township, or County may adopt, submit to the Ethics Board, and obtain approval of an ethics ordinance based on the proposed Act or an equivalent ordinance as provided in this Section by [date]. If a City, Village, Township, or County does not have an approved ordinance by [date], the proposed Act shall apply to that local governmental entity. Notwithstanding any other provision of this Section, a City, Village, Township, or County may adopt an ethics ordinance at any time, and upon the approval of the Ethics Board, that ordinance shall take the place of the proposed Act.
(7) The Ethics Board, in consultation with the Ethics Subcommittee of the Michigan Municipal League, shall assist Cities, Villages, Townships, and Counties in developing ordinances that meet the requirements of this Section.
(1). No existing right or remedy shall be lost, impaired, or affected by reason of this proposed Act.
(2). If any provision of this proposed Act is held by a court of competent jurisdiction to be invalid, that decision shall not affect the validity and effectiveness of the remaining provisions of this Act.
CHAPTER TWO. CODE OF ETHICS
(1) A public official or public employee shall not use that person's public office, or take or fail to take any action, in order to obtain anything of value, except as allowed by law, for himself or herself or any other person or entity.
(2) A person who knowingly violates Section 201 is guilty of a misdemeanor, punishable by a fine of not more than $1,000, or imprisonment for not more than 90 days, or both, and any additional penalties as specified in Chapter Three of this proposed Act.
(1) A public official or public employee shall not solicit nor accept anything of value in connection with his or her official responsibilities.
(2) A person shall not offer or give to a public official or public employee or any of the following persons anything of value in connection with the official's or employee's official responsibilities:
(3) A person who knowingly violates Section 202 is guilty of either a misdemeanor, punishable by a fine of not more than $1,000, or imprisonment of not more than 90 days, or both; or a felony in the case of bribery, punishable by a fine of not more than $5,000, or imprisonment in the state prison of not more than 10 years, or both; and any additional penalties as specified in Chapter Three of the proposed Act.
(1) A state public official or employee shall not represent for compensation any other person in any matter that person has before the unit of state government with which the official or employee is directly affiliated.
(2) A public official or employee of a political subdivision with a population of 25,000 or more shall not represent for compensation any other person in any matter that person has before the political subdivision.
(3) A public official or employee of a political subdivision with population of less than 25,000 may not represent for compensation any other person in a matter that person has before the political subdivision, unless the legislative body of the political subdivision approves, by formal resolution, of the representation.
(4) A person who knowingly violates Section 203 is guilty of a misdemeanor, punishable by a fine of not more than $1,000, or imprisonment for not more than 90 days, or both, and any additional penalties as specified in Chapter Three of this proposed Act.
Public officials and public employees and former public officials and public employees shall not disclose any confidential information or use it primarily to further anyone's personal interests, except to the extent permitted by law.
A person who knowingly violates Section 204 is subject to the provisions of Chapter Three of this proposed Act.
A public official or public employee shall not knowingly request or knowingly authorize anyone else to request any subordinate of the official or employee, unless that subordinate is a political appointee, to participate in an election campaign or contribute to a political committee.
A person who knowingly violates Section 205 is subject to the provisions of Chapter Three of the proposed Act.
(1) A public official or public employee, a member of that individual's immediate family, or outside employer or business with which the individual is associated shall not enter into a contract valued at $1,500.00 or more with the governmental body with which the public official or employee is affiliated unless the contract is awarded through an open and public competitive process which includes prior public notice and subsequent availability for public inspection of the proposals considered and the contract awarded.
(2) Any public official or public employee who has or later acquires an interest in any actual or proposed contract with the government body with whom the public official or public employee is affiliated shall publicly disclose the nature and extent of that interest as required by Section 210 (Transactional Disclosure) of the proposed Act.
(3) Voidability of contract. A contract or agreement which is executed in violation of this section or the constitutional provisions that it implements shall be voidable only if the person who entered into the contract or took assignment thereof had actual knowledge of the prohibited conflict. In the case of a person other than an individual, the actual knowledge must be that of an individual or body finally approving the contract.
A contract involving prohibited conflict of interest under this section shall be voidable only by a decree of a court of proper jurisdiction. Any such decree shall provide for the reimbursement of any person for the reasonable value of moneys, goods, material, labor, or services furnished under the contract, to the extent that the state has benefitted thereby. This provision shall not prohibit the parties from arriving at an amicable settlement.
(4) A person who knowingly violates any portion of Section 206 is guilty of a misdemeanor, punishable by a fine of not more than $1,000, or imprisonment for not more than 90 days, or both; or a felony, punishable by a fine of not more than $5,000, or imprisonment in the state prison of not more than 10 years, or both; and any additional penalties as specified in Chapter Three of the proposed Act.
(1) A former public official shall not appear or practice before the government body with which he or she was affiliated, except on his or her own behalf, or receive compensation for working on any matter before that government body, for a period of one year after the termination of his official service. The restriction does not apply where the former public official performed only ministerial acts on the relevant subject matter while working for the government body. For purposes of this Section only, the restriction does not apply to former public officials who served the government body in an unpaid capacity.
(2) A person who knowingly violates Section 207 is guilty of a misdemeanor, punishable by a fine of not more than $1,000, or imprisonment for not more than 90 days, or both; and any additional penalties as specified in Chapter Three of the proposed Act.
(1). No person, whether or not a public official or public employee, shall induce or attempt to induce a public official or public employee to violate any of the provisions of this Chapter.
(2). Any person, whether or not a public official or employee, who intentionally or knowingly violates any provision of this Chapter shall be subject to being enjoined from entering into any contract with the state or political subdivision, as the case may be, for a period not to exceed two years.
(3). Nothing in this section shall be construed to prohibit any person from receiving a service or benefit, or from using a facility, which is generally available to the public, provided the person does so in the same manner or degree which is available to the general public.
(4). Under this section, a corporation, partnership, or other entity shall not be held vicariously liable for the actions of an employee unless the employee acted in the execution of company policy or custom.
(5). A person who knowingly violates Section 208 is guilty of either a misdemeanor, punishable by a fine of not more than $1,000, or imprisonment of not more than 90 days, or both; or a felony, punishable by a fine of not more than $5,000, or imprisonment in the state prison of not more than 10 years, or both, and any additional penalties as specified in Chapter Three of the proposed Act.
(1) A public official or public employee shall promptly recuse himself or herself from acting formally or informally on a matter before the state or political subdivision with which he or she is affiliated when he or she knows that acting on the matter, or failing to act on the matter, may result in a violation of this Chapter Two of the proposed Act.
(2) Pursuant to Section 210 of the proposed Act, when a public official or public employee is required to recuse himself or herself from acting (or refraining from acting) on a matter, he or she shall file a transactional disclosure statement with the Ethics Board.
(3) A person who knowingly violates Section 209 is guilty of a misdemeanor, punishable by a fine of not more than $1,000, or imprisonment for not more than 90 days, or both, and any additional penalties as specified in Chapter Three of the proposed Act.
(1) Whenever a public official or public employee is required to recuse himself or herself under Section 209 of this proposed Act, he or she
(2) A person who knowingly violates Section 210 is subject to the Provisions of Chapter Three of the proposed Act.
The provisions of this Chapter shall not prohibit or require conduct specifically authorized by statute, rule, regulation, or Constitution of the State of Michigan or of the United States.
CHAPTER THREE. PENALTIES; INJUNCTIVE RELIEF.
Any public official or public employee who engages in any action that violates any provision of this proposed Act may be warned or reprimanded or suspended or removed from office or employment, or be subject to any other sanction authorized by law or collective bargaining agreement, by the appointing authority or person or body authorized by law to impose such sanctions. A warning, reprimand, suspension, removal, or other authorized sanction may be imposed in addition to any other penalty contained in this proposed Act or in any other provision of law.
Any public official or public employee who violates any provision of this proposed Act may be subject to a civil fine of up to $1,500 for each violation, in addition to any other penalty contained in any other provision of law or in this proposed Act, other than a civil forfeiture pursuant to Section 304 of this chapter. This civil fine shall be imposed by a court of appropriate jurisdiction or the appointing authority or person or body authorized by law to impose such sanctions.
Any person, whether or not a public official or employee, who violates any provision of this proposed Act shall be liable in damages to the governmental entity for any losses or increased costs incurred by the governmental entity as a result of the violation. Such damages may be imposed by a court of appropriate jurisdiction in addition to any other penalty contained in any other provision of law or in this Act, other than a civil forfeiture pursuant to Section 304 of this chapter.
To the extent allowed by law, any person, whether or not a public official or employee, who intentionally or knowingly violates any provision of this proposed Act may be subject to a civil forfeiture to the governmental entity of a sum equal to three times the value of any financial benefit he or she received as a result of the conduct that constituted the violation. A civil forfeiture may be imposed by a court of appropriate jurisdiction in addition to any other penalty contained in any other provision of law or in this Act, other than a civil fine pursuant to Section 302 or damages pursuant to Section 303 of this chapter.
To the extent allowed by law, any person, whether or not a public official or employee, who violates a provision of this Act which specifies a criminal penalty for such violation, shall be subject to criminal prosecution.
Any person, whether or not a public official or employee, who violates any provision of this proposed Act may be subject to an action or special proceeding, as appropriate, in a court of proper jurisdiction for injunctive relief to enjoin that person from violating this Act or to compel that person to comply with the provisions of the Act.
CHAPTER FOUR. ADMINISTRATIVE PROVISIONS.
(1). The Board of Ethics is created as an autonomous entity.
(2). The Board of Ethics shall consist of 7 members appointed by the governor as follows:
(3). The terms shall expire on March 31 of the year in which the terms are designated to expire. A member of the Board shall serve for an initial term of 4 years, or until the member's successor is appointed and qualified except that of those members first appointed:
(4). An individual shall not serve more than 2 full 4-year terms on the Board.
(5). A vacancy occurring other than by the expiration of a term of office shall be filled for the unexpired term of that office. A vacancy occurring on the Board shall be filled within 30 days in the manner in which that position was originally filled.
(6). The Board shall elect a chairperson and a vice-chairperson. The vice-chairperson shall act as chairperson in the absence of the chairperson or if the office of the chairperson becomes vacant. A meeting may be called by the chair or by a majority of the Board.
(7). Four members of the Board constitute a quorum and the concurrence of at least 4 members is required for any action or recommendation of the Board. The votes shall be by a record roll call. Notice of the meetings of the Board shall be made public.
(8). The attorney general and state personnel director shall serve ex officio without the right to vote.
(9). Members of the Board shall serve without compensation but shall be reimbursed for their actual and necessary expenses incurred in the performance of their duties.
(10). With the consent of the civil service commission, the state personnel director shall provide clerical or administrative assistance from the department of civil service as the Board may, from time to time, request.
(11). For purposes of this section, time served on the currently existing Board of Ethics formed pursuant to M.C.L. § 15.344 shall not count toward time served on the Board of Ethics formed pursuant to Section 401 of this proposed Act.
A member of the Ethics Board shall not, while a member of the Board:
(1). Hold elective public office or elective political party office.
(2). Accept appointment to or become a candidate for public office or elective political party office.
(3). Be employed as or act as a lobbyist.
(4). Participate in any election campaign. An Ethics Board member may, however, make campaign contributions. Section 403. Ethics Board: Removal of Members.
An Ethics Board member may be removed from office by the governor pursuant to Art. V, § 10 of the Michigan Constitution, after written notice and opportunity for reply. Additional grounds for removal shall be failure to meet the qualifications and restrictions set forth in sections 401 and 402 of this proposed Act or for other violation of this Act.
(1). The Ethics Board may only act with respect to the public officials and public employees covered by this Act.
(2). The termination of a public official's or employee's term of office or employment with the governmental entity shall not affect the jurisdiction of the Ethics Board with respect to the requirements imposed on him or her by this Act.
(3). The Ethics Board shall have the following powers and duties:
(4). When a recommendation to an appropriate authority is made by the Ethics Board which affects a classified employee (ie, civil service), the authority shall initiate appropriate proceedings in accordance with such recommendation and pursuant to the rules of the appropriate civil service commission.
(5). The Board of Ethics shall preserve all statements, reports, records, and other documents relating to Board of Ethics activities, including documents filed with the Board, for a period of 5 years. After 5 years the statements, reports, records and other documents shall be destroyed.
The Ethics Board shall review transactional disclosure statements filed pursuant to Section 210 of the proposed Act as necessary to carry out the requirements of this proposed Act.
(1). Upon receipt of a sworn complaint alleging a violation of this proposed Act, or upon determining on its own initiative that a violation of this Act may exist, the Ethics Board shall have the power and duty to conduct any investigation necessary to carry out the provisions of this Act. In conducting any such investigation, the Ethics Board may administer oaths or affirmations, subpoena witnesses, compel their attendance, and require the production of any books or records which it may deem relevant and material.
(2). If it is determined by a majority vote of the Board that there is reason to believe that the Act was violated, the Board shall initiate appropriate investigative proceedings to determine whether a violation occurred. The Board shall mail a notice of the investigation and the nature of the alleged violation to a person under investigation within 5 days after the decision to undertake an investigation is made. Every 60 days thereafter until the matter is terminated, the Board shall mail to the complainant and to the alleged violator notice of the action taken to date by the Board together with the reasons for the action or nonaction.
(3). Except as otherwise required by law, the Board's actions and the records relative to an investigation shall be confidential until the Board makes a final determination under this Section.
(4). Proceedings of the Board in conducting investigations shall be in accordance with Act No. 306 of the Public Acts of 1969, as amended, and shall be by closed session except that the session or hearing shall be open if the alleged violator requests an open session or hearing, and except as required otherwise by the Michigan Open Meetings Act (M.C.L. §§ 15.261-15.275).
(5). All governmental entities shall cooperate with the Board in the conduct of its investigations.
(6). When the Ethics Board concludes its investigative proceedings it shall determine if this Act was violated. If the Board determines that the Act was not violated the records and actions relative to the investigation and determination shall remain confidential unless the person investigated requests in writing that the records and actions be made public. If the Board determines that the Act was violated, the Board shall make a recommendation of sanction to the appropriate authority designated in Section 407.
(1). Disciplinary action.
In its discretion, after a hearing providing for due process procedural requirements and subject to any applicable provisions of law and collective bargaining agreements, the Ethics Board may recommend appropriate disciplinary action pursuant to Section 301 of this proposed Act. The recommendation of the Ethics Board shall be made to the appointing authority or person or body authorized by law to impose or recommend such sanctions. For purposes of this Act, the appointing authority or person or body authorized by law to impose or recommend sanctions for various individuals are as follows:
The Board shall conduct and complete the hearing with reasonable promptness, unless in its discretion the Board refers the matter to the authority or person or body authorized by law to impose disciplinary action or unless the Board refers the matter to the appropriate prosecutor. If such a referral is made, the Board may adjourn the matter pending determination by the authority, person, body, or prosecutor.
(2). Civil fine.
In its discretion and after a hearing providing for due process procedural requirements, the Ethics Board, pursuant to Section 302 of this Act and to the extent allowed by law, may recommend that a civil fine, not to exceed $1,500 for each violation, be imposed upon a public official or employee found by the Board to have violated this Act. The recommendation of the Ethics Board shall be made to the appointing authority or person or body authorized by law to impose or recommend such sanctions. The Board shall conduct and complete the hearing with reasonable promptness. The civil fine shall be payable to the governmental unit with whom the public official or employee is affiliated.
(3). Damages.
The state or the political subdivision with which the public official or employee is affiliated, or the Ethics Board on behalf of the state or political subdivision, may initiate an action or special proceeding, as appropriate, in the court of appropriate jurisdiction to obtain damages, as provided in subsection 303 of this Act.
(4). Civil forfeiture.
The state or the political subdivision with which the public official or employee is affiliated, or the Ethics Board on behalf of the state or political subdivision, may initiate an action or special proceeding, as appropriate, in the court of appropriate jurisdiction to obtain civil forfeiture, as provided in Section 304 of this Act.
(5). Prosecutions.
As provided in Section 305 of this Act, the Ethics Board may refer to the appropriate prosecutor possible criminal violations of this Act. Nothing contained in this Act shall be construed to restrict the authority of the appropriate prosecutor to prosecute a violation of this Act or of any other law. The appropriate prosecutor for all state public officials and employees is the attorney general alone.
(6). Injunctive relief.
(1). Upon written application and upon a showing of compelling need by the applicant, the Ethics Board may in exceptional circumstances grant the applicant a waiver of any of the provisions of this Act.
(2). Waivers may only be granted at an open session after public notice in the official newspaper designated by the state or political subdivision thereof, for the publication of laws, notices, and other matters required by law to be published, that such waiver is being considered. Waivers shall be in writing and shall state the grounds upon which they are granted. Within 10 days after granting a waiver, the Ethics Board shall publish a notice in the official newspaper setting forth the name of the person requesting the waiver and a general description of the nature of the waiver. All applications, decisions, and other records and proceedings relating to waivers shall be indexed and maintained on file by the Ethics Board.
(1). Upon the written request of any public official or employee, the Ethics Board may render a written advisory opinion with respect to the interpretation or application of this proposed Act. Any other person may similarly request an advisory opinion but only with respect to whether his or her own action might violate a provision of this Act.
(2). Advisory opinions and requests for advisory opinions shall be indexed and maintained on file by the Ethics Board.
(3). Any person who has submitted to the Ethics Board a written request for an advisory opinion may bring and maintain a civil action by right against the Board to compel it to issue the advisory opinion. The complaint shall clearly identify the matters or proceedings before the Board that are involved. No action shall be prosecuted or maintained pursuant to this section unless (a) it shall appear by and as an allegation in the petition or complaint that at least six months have elapsed since the filing of the request and that the Ethics Board has failed to file any determination in the matter, and (b) the action is commenced within ten months after the submission of the request for the advisory opinion.
(4). An advisory opinion rendered by the Ethics Board, until and unless amended or revoked, shall be binding upon the Ethics Board in any subsequent proceeding concerning the person who requested the opinion and who acted in good faith, unless he or she omitted or misstated a material fact. The opinion may also be relied upon by the person, and may be introduced and used as a defense, in any civil action brought by the Ethics Board or the state or political subdivision thereof.
(1). There is created a special committee of the legislature on Ethics to consist of 3 members to the senate and 3 members of the house of representatives, at least 1 of whom from each house shall be a member of the minority party, to be appointed in the same manner as standing committees of the senate and the house. The members of the special committee shall serve without compensation, but shall be entitled to actual and necessary expenses while on the business of the committee. The special committee may establish, by majority vote, its rules and procedures.
(2). The special committee shall act upon a recommendation made by the Ethics Board pursuant to section 407 of this Act. Specifically, the special committee shall conduct such further investigation it deems necessary and issue a report and recommendation to the appropriate house of the legislature.
Any person aggrieved by a decision of the Ethics Board may seek judicial review and relief in a court of appropriate jurisdiction.
The Ethics Board shall:
(1) through the secretary of state and county clerks and other necessary means, make information concerning this Act available to public officials and employees of the state of Michigan and of all political subdivisions thereof, to the public, and to persons interested in doing business with the state or with any political subdivision, and
(2) together with the secretary of state and county clerks, develop educational materials and an educational program for public officials and employees of the state and its political subdivisions on the provisions of the proposed Act.
(1). The Ethics Board shall prepare and submit an annual report to the governor, who will then disseminate the report, summarizing the activities of the Board. The report may also recommend changes to the text or administration of the proposed Act.
(2). The Ethics Board shall periodically review the Act and the Board's rules, regulations, and administrative procedures to determine whether they promote integrity, public confidence, and participation in state and local government and whether they set forth clear and enforceable common sense standards of conduct.
(1). The only records of the Ethics Board which shall be available for public inspection are those whose disclosure is required by law.
(2). No meeting or proceeding of the Ethics Board concerning misconduct, nonfeasance, or neglect in office by a public official or employee shall be open to the public, except upon the request of the official or employee or as required by law.
(1). Within 90 days after the effective date of this Act, and thereafter as appropriate, the Ethics Board shall transmit to the secretary of state and county clerks, in a suitable form, copies of those provisions of this Act which the Ethics Board deems necessary for posting and distribution. Within ten days after receipt of those copies, the secretary of state and county clerks shall:
(2). Every public official or employee elected or appointed thereafter shall be furnished a copy of those provisions within ten days after entering upon the duties of his or her position.
(3). Failure of the secretary of state or county clerks to comply with the provisions of this section or failure of any public official or employee to receive a copy of the provisions of this act shall have no effect on the duty of compliance with this Act or on the enforcement of its provisions.
(4). From time to time the Ethics Board shall transmit to the secretary of state and county clerks, in a form suitable for distribution, copies of special reports and technical studies relating to this Act and its administration.
IV. Section-By-Section Explanation of the Draft Language (46)
A. Preamble.
The point of ethics laws for state and local officials is to improve both the perception and the reality of integrity in government and to encourage, not discourage, citizens from participating in that government. This proposed Act seeks to fulfill those goals.
Other Michigan State statutes, such as the Civil Service Acts of the state and of its political subdivisions, regulate ethics in certain aspects of state and local government. (47) Longstanding Michigan common law addresses the scope of the obligations owed by public officials to the entity they serve. (48) The Attorney General's Office has also written a number of opinions interpreting the State's existing conflict of interest statutes (49) and public officials' common law fiduciary duty. (50)
The proposed Act presented in this Report primarily addresses conflicts between the public and private interests of officials and employees. With regard to statutes governing incompatibility of public offices (so-called "Two Hats" provisions), this Report recommends retaining the existing Michigan Incompatible Offices Act. (51) This proposed Act would supercede the Two-Hats provision in M.C.L.§ 15.342(6), however. (52)
As noted above, an ethics law rests upon a triad of provisions: an understandable and comprehensive Code of Ethics, sensible disclosure, and a reasonable enforcement mechanism. Removal of any of those three legs threatens to topple the entire ethics structure.
Furthermore, an unintelligible ethics law cannot be obeyed or enforced. This Report's proposed Act, therefore, places heavy emphasis upon easily understandable organization, contents, and word usage, particularly in those provisions that directly affect the activities of officials. An ethics law must be user friendly. Otherwise, it fails in its essential purpose of providing guidance to officials and confidence to citizens.
For that reason, this draft legislation is divided into two parts. The first part (Chapters 1-3) contains the provisions directly concerning the conduct of public officials and public employees. The second part (Chapter Four) contains the provisions for administering the ethics law. Except for attorneys and Ethics Board members, public officials and employees would not often have occasion to consult the second part; the provisions of concern to officials and employees are therefore grouped into the first three chapters of the proposed Act.
B. Chapter One: "Definitions; General Provisions"
The definitions in this Act are kept to a minimum and do not add to the official's duties imposed by the plain meaning of the Code of Ethics. However, in light of the fact that some violations involve potential criminal penalties, it is important to provide ample detail to assure that public officials and employees understand what sorts of behavior are covered by the proposed Act.
101(1). The proposed Act includes a relatively objective enumeration of what is and is not included in the definition of "anything of value." Where the potential for criminal prosecution is involved, it seems wise to make foreseeable exemptions explicit rather than rely solely on the common sense and good judgment of prosecutors to refrain from prosecuting technical violations. The objective standard is provided as opposed to a subjective standard, which might provide the alternative definition of "anything of value" as:
anything, regardless of its monetary value, perceived or intended by either the one who offers it or the one to whom it is offered to be sufficient in value to influence a public official or public employee in the performance or non-performance of an official action.
A major problem with this subjective standard is the difficulty of proving a person's state of mind. By contrast, the objective standard provided in Section 101(1) is preferable from a simplicity standpoint and because it is easier to prove than the more subjective standard. An alternative objective definition is included in, for example, one model act (COGEL § 204.01) (53):
101(4). An employee of a large corporation may not know many of the customers or clients of his or her employer and should not be penalized for that understandable ignorance. For that reason, the "knows" language is included in the definition.
101(14). The definition for public employee (as well as that for public official) is virtually identical to the definition of that term in 1975 P.A. 227, which was an ethics act passed by the legislature and signed by the governor in 1975, only to be struck down by the Michigan Supreme Court for "embracing more than one object." (54)
The definition also tracks the definition for "public employee" under the Incompatible Offices Act, (55) as does the definition for "public official."
The question can be raised whether the definition for "public employee" is too broad; i.e., is it really necessary to subject employees with little decisionmaking authority to the strictures of the proposed Act? This Report concludes that it makes more sense to define "public employee" broadly, lest any potential violations fall through the cracks. In actual practice, such employees with little decisionmaking authority will seldom be confronted with ethics act issues.
101(15). The definition for "public official" includes unpaid as well as paid officials. Especially at the municipal level it is the unpaid officials, such as zoning and planning board members, who often wield the greatest power. This proposed Act regulates not only executive and legislative officials and employees but also judicial officials and employees.
In repealing these three statutory sections and replacing them with one consolidated section, the proposed Act simplifies and clarifies the ethics rules in Michigan.
One matter which must be addressed is whether the proposed Act might "embrace more than one object" (56) in violation of the Michigan Constitution. The Michigan Supreme Court applied the "one object" constitutional provision in striking down an earlier piece of ethics legislation enacted by the legislature in 1975. (57) That legislation created [a] political ethics commission as an autonomous entity within the department of state and provided for its composition, powers and duties; provided requirements for the establishment of candidate committees (defining 'candidate' to include an elected officeholder) and provided for the filing of statements or organization and reporting of contributions and expenditures; set maximum limits on expenditures by candidates for certain offices; established a state campaign fund with a diversion of certain taxpayer-designated portions of income tax revenues to the fund for distribution to qualifying gubernatorial candidates; proscribed conflicts of interest; required designated individuals to file financial disclosures for themselves and members of their immediate families; required the registration and reporting of lobbying activities; and provided for the repeal of five existing laws. (58)
In striking down 1975 P.A. No. 227, the court explained that "[s]ome of the concepts sought to be obtained by the enactment have no necessary connection with each other.... For example, the creation of a state campaign fund for gubernatorial candidates is foreign to and incongruous with regulation of lobbying activities; the financial disclosure provisions aimed at preventing unethical conduct are foreign to and incongruous with the organization of a campaign committee." (59) Moreover, "the Act specifically repealed five individual and distinct acts. They concerned the licensing and regulation of legislative agents; the corrupt practice section of the general election law; two specific conflict of interest statutes; and an ethics act." (60)
This Report takes the position that the proposed Act does not embrace more than one object, and that the legislation is therefore valid. All objects contemplated by the proposed Act relate to one topic and one topic alone: the establishment of a single comprehensive Ethics Act that can be understood by a person of reasonable intelligence who may be called upon to comply with its terms. As noted by the court itself in In re Request for Advisory Opinion, "This Court cannot engage in idle speculation as to whether, for instance, the provision relating to ethical conduct and conflict of interest contracts would on their own merits have been adopted by the Legislature, nor those relating campaign contributions and expenditures, nor those establishing the state campaign fund for gubernatorial elections, nor those regulation (sic) lobbyists." (61) This comment, by grouping together the ethics and conflict of interest provisions in the first phrase, suggests that the court considers the separate provisions concerning conflict of interest and ethics as comprising a single object, while it considers the various other campaign finance and lobbying provisions of 1975 P.A. 227 to be separate objects.
Moreover, the fact that the proposed Act contains a provision repealing existing statutes in addition to proposing new legislation does not bump the Act into the status of "embracing more than one object." In order to streamline and consolidate legislation, any old legislation that addresses the same topics must be repealed. Nor does the mere fact that the proposed Act repeals three individual and distinct acts necessarily suggest it embraces more than one object in violation of Art. 4, § 24. The court recognizes that, in the interests of revision, consolidation and classification of the laws, it sometimes makes sense to repeal two or more separate (though substantively related) acts within a subsequent single act. (62)
In short, the constitutional provision mandating that a law shall not embrace more than one object has never been intended to create a formalistic barrier to the "revis[ion], consolidat[ion] and classif[ication] of the laws with respect to a particular object." (63) The Michigan Supreme Court has suggested elsewhere that legislation amounting to establishment of a code, or unified law, does not violate Art. 4, § 24 of the Constitution. (64) Because the Act proposed in this Report essentially creates a new "code of ethics", it does not "embrace more than one object" and is hence constitutional.
The Michigan Constitution allows the legislature to ask the state Supreme Court for an advisory opinion on the constitutionality of a particular piece of legislation on "solemn occasions." In light of the nature of this proposed Act in making wholesale changes to how government ethics laws are structured and monitored, it might be well to seek an advisory opinion from the court.
The proposed Act potentially affects, for example, the following Michigan constitutional provisions: Art. III, § 2 (Separation of Powers - under the Act the Ethics Board would have the power to investigate and make recommendations for (but not itself impose) penalties for legislative and judicial officers) (issue is whether it is constitutional to create an "autonomous" entity (proposed Act § 401) that has authority across the various branches); Art. IV, § 7 (Qualification for legislative office) and Art. IV § 16 (Each house of legislature is the "sole judge of qualifications" of its members) (issue is same as above; also whether the proposed Act's § 513 Special Committee of Legislature on Ethics is in proper compliance with these provisions); Art. IV, § 10 (prohibits "substantial" conflict of interest by legislators and state officers - issue is whether the proposed Act's provisions constitute sufficiently "substantial" conflicts (especially in light of the specified de minimis amounts in the proposed Act Sections 101 and 206), and if not, whether the constitution in fact allows the Legislature to prohibit less than "substantial" conflicts); Art. V, § 10 (Governor's ground for removal or suspension of officers - issue is whether the proposed Act's Section 403 exceeds the restrictions of this constitutional provision by specifying certain additional grounds for removal); Art. VI, § 30 (Judicial Tenure Commission - issue is whether the proposed Act's Sections 406 and 407 procedures allowing the Ethics Board to investigate and make recommendations concerning judges comply with this constitutional provision); Art. XI, § 7 (Impeachment of civil officers - issue is whether the proposed Act's provisions for removal of legislators from office comply with this constitutional provision).
See also supra notes 56-60 and accompanying text for a discussion of the Art. 4, § 24 "one object" requirement. It is this Report's considered position that the proposed Act does in fact comply with each of these constitutional provisions.
In recognition of the principle that local governmental entities should have the primary responsibility for establishing and enforcing ethics regulations for local public officials and public employees, this Section gives a City, Village, Township or Township the opportunity to "opt-out" of the proposed Act, so long as this local governmental entity enacts an ethics ordinance of its own that meets with the approval of the Ethics Board. To pass muster, a local ordinance must include the substance of Section 101 and Chapters Two and Three of the proposed Act, and must create an ethics oversight board that would perform functions similar to those performed by the Ethics Board under Chapter Four of the proposed Act.
Under this Section the Ethics Board is required to perform its ordinance review and approval function in consultation with the Ethics Subcommittee of the Michigan Municipal League.
Section 106(2) emphasizes the fact that if one or more of the provisions of the proposed Act are struck down by the Michigan Supreme Court, the remaining provisions are still effective.
C. Chapter 2: "Code of Ethics"
A Code of Ethics is the heart and soul of any ethics law. The Code must be easy for lay persons to understand and apply because, as noted above, its primary purpose is to provide guidance to officials and citizens.
The provisions of the Code of Ethics must be read together with the definitions in section 101.
Section 201 is modeled upon 1975 P.A. 227 § 169.121(3) (65) and several model acts, including COGEL §§ 204, 210 and Davies § 100(1). (66)
This provision prohibits a public official from misusing public office. Sometimes inaction personally benefits an official or his or her close associates - for example, when a code enforcement official fails to cite his or her brother for a zoning violation. For that reason, the provision also prohibits the official from refraining from acting. In either case, the official must recuse himself or herself pursuant to Section 209.
This section does not prohibit the public official or public employee from receiving governmental entity services or benefits, or use of governmental entity facilities, that are generally available on the same terms and conditions to residents or a class of residents in the state or local community. An official or employee should be able to receive from the governmental entity the same services and benefits as any other resident, provided that the official does not receive any preferential treatment. Nor does this section prohibit a public official or public employee from performing ministerial acts. The village clerk may, for example, issue a fishing license to her brother.
The penalty provision (subsection 201(2)) is modeled upon a similar provision in 1975 P.A. 227 § 169.121(3), which was enacted by the legislature and signed into law by the governor but struck down by the Michigan Supreme Court for encompassing more than one object. (67)
An alternative to specifying penalties within each individual Section of the Code of Ethics would provide a general "Penalty" provision which might state, for example: "Section 212. Penalties. A person who knowingly violates any provision in this Chapter is subject to the provisions of Chapter Three of the proposed Act."
This proposed Act opts to include the penalty provision within each independent Section in order to remove any doubt about what the penalty is for each particular violation.
Section 202, which is modeled upon several model acts (including COGEL § 216; Davies § 100(3)) and 1975 P.A. 227 § 169.121(1),(2), very simply prohibits acceptance of anything of value in connection with official responsibilities. The simplicity of this provision should provide clear direction to public officials and employees on the matter of gifts and other items accepted in connection with their jobs.
Section 202(2) applies to private citizens and entities. Under current Michigan law, absent outright bribery (M.C.L. §§ 750.117, 750.121), the occasional dishonest private citizen or company that induces a governmental entity official to violate ethics laws runs no risk of penalty. For example, hoping to keep a village's business, a bank might give a personal loan to the village treasurer at a below-market interest rate. Quite possibly, the official will lose his or her job as a result, however, absent outright bribery, the bank will lose nothing. The proposed Act takes the position that private citizens, vendors, developers, and providers must take some responsibility for public officials and public employees complying with ethics laws.
Subsection 101(1) excludes from the definition of "anything of value" a number of items.
The penalty provision (subsection 202(3)) provides that violation of this section results in either a misdemeanor or felony, allowing the Ethics Board a measure of discretion to consider the severity of the violation. The relevant Michigan bribery statutes (M.C.L. §§ 750.117, 750.118, 750.121) provide that such violations constitute a felony, as did 1975 P.A.227 (§§ 169.121, 169.178). The Legislature may wish to follow the lead of these other statutes and mandate that a public official or employ who violates this Section is automatically guilty of a felony; however, it is the position of the proposed Act that it would be desirable to leave greater flexibility with the Board of Ethics to consider the circumstances of each particular case in determining what sanction it will recommend.
Section 203 distinguishes between the state and political subdivisions with a population of 25,000 or more on one hand, and political subdivisions with population of less than 25,000 on the other, by providing that officials or employees of the latter may represent another person before the political subdivision as long as the local legislature gives its approval of the representation by formal resolution. This exception provides for the unique circumstances and limited resources that sometimes exist in smaller communities.
If the Legislature decides that it does not wish to include such an exception, it should be noted that if the provision creates a particular hardship, under Section 408 the Ethics Board retains the flexibility to grant a waiver of this or any other provision of the proposed Act. On balance, however, the proposed Act takes the position that the local legislature in these smaller communities should have the de-centralized authority to determine for itself if it wishes to allow a local public official or employee to represent another person before the political subdivision.
This subsection is not intended to prevent representation of constituents by elected officials without compensation in matters of public advocacy. After all, elected officials are elected to serve their constituents. Thus, for example, when a resident complains to a town board member that the town highway department blocks the resident's driveway with snow, the board member must be able to pursue that complaint with the proper town authorities.
In addition to the limited exceptions for local representation, the proposed Act's exclusion for actions authorized by state or federal law (Section 211) would permit an official to represent or assist persons in an official capacity. See also supra comments to Section 201 regarding the receipt of state or local services or benefits generally available to residents of the state or local jurisdiction and, in matters of public advocacy, the representation of constituents by elected officials without compensation.
The bar on representation does not prohibit an official from participating in the fee that his or her business associate receives from such appearances or representation.
The penalty provision (subsection 203(4)) is modeled upon model acts and a similar provision in 1975 P.A. 227 § 1975 PA 227 §§ 169.125(3), 169.175. (68) The parallel "representation" provision in that Act (1975 PA 227 § 169.125(3)) actually specifies that such representation is a felony, punishable by a fine of not more than $10,000, or imprisonment for not more than 3 years (or both) - a penalty that this Report considers too harsh.
This provision applies to all confidential information (as defined or recognized in practice by the unit of government with which the public official or employee is affiliated), however acquired, and prohibits use of confidential information primarily to further anyone's personal interests. Public officials may (and must) use confidential information to further the public's interest, but in doing so, they often coincidentally further someone else's personal interests.
Confidential information may be disclosed as permitted by law (Section 211), including the state whistleblower law. (69)
The Legislature may wish to provide explicitly that the penalty for violation of Section 204 is a misdemeanor (punishable by a fine of not more than $1,000, or imprisonment for not more than 90 days, or both, and any additional penalties specified in Chapter Three) if it determines that breach of confidentiality rises to the level of a crime.
The Code of Ethics bars political solicitation of subordinates by an official, except when the subordinate is a political appointee.
Section 205 does not restrict voluntary political contributions or political activity by any official. The section merely prohibits an official from putting the political bite on a subordinate.
This section supercedes and incorporates many elements of M.C.L. §§ 15.301-310 (Conflict of Interest) and M.C.L. 15.321-15.330 (Contracts of Public Servants with Public Entities), and incorporates parts of 1975 P.A. 227 (§169.123) and certain model acts (including Davies § 104; COGEL § 218).
As structured, this section is sympathetic to the unique circumstances in many small, rural communities, where members of the legislative body, or other elected or appointed officials, may well own the only hardware store, gas station, or snow plowing service in the area. If the section were to bar such contracts outright, the political subdivision would need either to ignore the prohibition against contracts with political subdivision officials or obtain the goods and services at a significantly higher price from distant vendors. Under this section, the public official or public employee is able to contract with the political subdivision as long as the proper process requirements of subsection 206(1) and disclosure requirements of subsection 206(2) are observed. The $1,500 de minimis requirement is imposed in part to comply with the constitutional requirement of Art. IV, § 10 that prohibits "substantial" conflicts of interest by legislators and state officers. Also with regard to the $1,500 threshold, the Legislature may wish to provide an escalator clause based on the Consumer Price Index or some other measure.
The Legislature may wish to exempt from the requirements of this section those contracts otherwise covered by Section 206 where the public official has not been involved in such a way as to raise ethical questions. Possible language to this effect in subsection 206(1) would state: "This section does not apply to a contract when the public official or public employee does not solicit the contract, does not take part in the negotiations for or in the approval of the contract or an amendment thereto, and does not in any way represent either party in the transaction." This language was included in 1975 P.A. 227 § 169.123.
Section 206, following the evident intent of section 10 of article 4 of the constitution of 1963, is aimed at preventing public officials and public employees from engaging in certain activities under circumstances creating a substantial conflict of interest, but is not intended to penalize innocent contractors. Thus, under subsection 206(3), contracts are voidable, not void. The voidability provision models a similar provision in 1975 P.A. 227 § 169.123. The requirement in this subsection that only a court of proper jurisdiction may decree a contract voidable provides further protection to innocents.
The penalty provision (subsection 206(4)), which draws from several sources, including Davies § 104, specifies that a violation constitutes a misdemeanor or, for especially egregious violations, a felony. Interestingly, 1975 P.A. 227 § 169.123 did not specify what penalties would apply if a public official or employee entered into a prohibited contract.
Section 207 applies only to those former officials who served in a paid capacity, on the reasoning that unpaid volunteers should not be penalized for their previous public service. This revolving door provision restricts only the former official; it does not restrict his or her business associates. Thus, for example, a former mayor may not work on matters for or before his or her municipality for one year, but all of the mayor's colleagues in his or her new firm could. Consistent with the Section 203 "Representation" provision, Section 207 does not prohibit the former official from profiting from his or her associates' business with the government body with which he or she was affiliated during that one year.
A business whose owner and sole employee is a former official would be effectively barred for one year from appearing before the governmental entity on behalf of customers or clients. However, if this or any other bar included in Section 207 creates a particular hardship, the Ethics Board could grant a waiver under Section 408.
Moreover, Section 207 only restricts appearances by the former official on behalf of customers or clients. The official may appear on his or her own behalf, for example, to seek a zoning variance for his or her own home.
Finally, Section 207 only applies to officials or employees with some discretionary authority. Employees who perform only ministerial actions are not subject to those restrictions.
The penalty provision (subsection 207(2)) is modeled upon a similar provision in 1975 P.A. 227 § 169.125(4).
Like Section 202 of this Chapter, Section 208 applies to public officials/employees and private citizens alike. See comments to Section 202.
Under Section 208(2), anyone who intentionally or knowingly violates a provision of the Government Ethics Act's Code of Ethics (i.e., Chapter Two), including a private business that induces a public official or employee to violate the Code of Ethics, may be enjoined from doing business with the state or political subdivision for a period not to exceed two years. That penalty would be imposed by the court in a proceeding initiated by the governing body of the governmental entity or the Ethics Board, as specified in Section 407(6).
Section 208(4) is included to address a likely concern of the business community that an entire corporation may be penalized for the illicit and unauthorized acts of an individual employee in one division or corporate subsidiary.
This provision requires that the official entirely refrain from participating in the matter. Mere abstention from voting on the matter is not sufficient. Because recusal involves a conflict of interest, the public official should file a transactional disclosure form under Section 210. This requirement is largely for the protection of the public official or employee as a means of officially documenting the individual's compliance with ethics standards.
As noted by the Michigan Supreme Court, "disclosure assists in preserving the integrity of the political process. It is legitimate for the Legislature to provide a means for effectively investigating possible conflicts of interest. Disclosure requirements promote integrity, fairness and public confidence in government as well as providing the citizens with information concerning an officeholder's integrity and fitness for office." (70)
Transactional disclosure provides pinpoint disclosure when a conflict actually arises and should constitute an important focus of disclosure. As structured, Section 210 requires prompt disclosure anytime the public official or employee is required to recuse himself or herself under Section 209. Failure to so disclose subjects the individual to the penalties and sanctions of Chapter Three of this proposed Act.
The transactional disclosure requirement of Section 210 serves the desired goal of "provid[ing] a means of indicating to officials, the public, and the press where potential conflicts may arise," (71) and of helping to foster a climate of mutual trust between public officials and those whom they serve. After all, "ethics in government is not merely the absence of corruption but the presence of trust.... Ethics laws and enforcement efforts aimed solely at deterring corruption fail to apprehend that simple truth. Indeed, they foster the notion, unjustified in fact, that public officials are inherently dishonest. Such a policy not only fails to achieve its narrow goal of combating corruption but also destroys trust in municipal officials and thus ultimately undermines both the perception and reality of integrity in government. The purpose of ethics laws lies not in the promulgation of rules nor in the amassing of information nor even in the punishment of wrongdoers, but rather in the creation of a more ethical government, in perception and in fact....In the end, the touchstone of integrity in government, and the ultimate test of the [ethics legislation's] success, reside in the willingness of good citizens to serve in state and local government. Laws and agencies that chill that willingness to serve do far more harm than good. When, however, good citizens clamor to join the ranks of state and local officials, the ethical health of the state and local communities run strong." (72)
This Section highlights the fact that the proposed Act's Code of Ethics (i.e., Chapter Two) does not require or prohibit conduct specifically authorized by the constitutions and laws of the State of Michigan or of the United States.
E. Chapter Three: "Penalties; Injunctive Relief"
This chapter, combined with the penalty provisions included within the individual sections of Chapter Two, provides clear penalties for violations of the proposed Act. One of the major problems with the existing Michigan ethics laws is that penalties for violations are unclear and inconsistent. For example, under M.C.L. § 15.308, a violation by a state official of the "Conflict of Interest" provisions (M.C.L. §§ 15.301-15.310) results in "appropriate disciplinary action by the governor if he is an administrative officer of the state or if he be a judicial officer of the state, then by the governor on a concurrent resolution adopted by 2/3 of the members elected to and serving in each house of the legislature." The statute gives no direction or definition for what might be "appropriate disciplinary action", creating a situation of unacceptable ambiguity. M.C.L. § 15.327 provides that "any person violating the provisions of this act [i.e., Contracts of Public Servants With Public Entities (M.C.L. §§ 15.321-15.330)] is guilty of a misdemeanor." Finally, with regard to violations of Standards of Conduct [Imposed] for Public Officers and Employees (M.C.L. §§ 15.341-15.348), M.C.L. § 15.345(1)(a) provides that an executive board of ethics shall "make recommendations concerning individual cases to the appointing authority with supervisory responsibility for the person whose activities have been investigated," and M.C.L. § 15.345(4) requires that when the board makes a recommendation to the board of ethics concerning an unclassified employee or appointee, (73) "the appointing authority shall take appropriate disciplinary action which may include dismissal." Once again, there is no discussion in the statute of what might be "appropriate disciplinary action," which creates uncertainty and ambiguity.
By contrast, this proposed Act provides an appropriate range of penalties for ethical improprieties.
Under the proposed Act, the Ethics Board only recommends disciplinary action, civil fines, damages, or civil forfeiture under Sections 401, 402, 403, and 404 to the appointing authority or other person or body authorized to recommend or impose sanctions, in conjunction with a court of appropriate jurisdiction, where necessary.
In conjunction with Section 407(1), under Section 301 the appointing authority or person or body authorized by law to take disciplinary action (specified in Section 407(1)) may reprimand, remove or suspend a public official or employee either upon the recommendation of the Ethics Board or upon its own initiative.
Section 302 operates in conjunction with Section 407(2). Under Section 302, the Ethics Board may recommend that the appointing authority or person or body authorized by law assess a maximum civil fine of $1,500 against a public official or employee. This sum will normally be sufficient; however, under Section 303 the official may be assessed damages, by a court of appropriate jurisdiction, in addition to the civil fine. To avoid unfairness, the Act precludes imposition of both a civil fine and a civil forfeiture under Section 304.
Section 303 operates in conjunction with Section 407(3). Under Section 303 persons other than public officials and employees may be assessed damages by a court of appropriate jurisdiction for violations of, for example, Section 202(2) or Section 208. Public officials and employees may be assessed damages under Section 303 either together with or instead of any civil fines imposed under Section 302. Section 303 recognizes the government's right to obtain damages from an individual whose unlawful acts have resulted in loss to the public fisc. To avoid unfairness, the Act precludes imposition of both damages and civil forfeiture under Section 304.
Section 304 operates in conjunction with Section 407(4), which provides that either the Ethics Board or the government may seek civil forfeiture of up to three times the amount the person violating the Act benefitted financially from the violation. Like Section 303, Section 304 applies to government officials/employees and other persons as well. It is envisioned that Section 304 would be utilized for especially egregious violations of the proposed Act.
Section 305 operates in conjunction with Section 407(5), as well as all other provisions in this proposed Act in which the specified penalty is a misdemeanor and/or felony, in providing that a person in violation of the proposed Act may be prosecuted for that violation, with the caveat (in Section 407(5)) that only the attorney general may prosecute state officials and employees.
Section 306 operates in conjunction with Section 407(6) in providing that a person violating this proposed Act may be subject to an action or special proceeding in the appropriate court in order to enjoin the violation or to compel compliance with the Act. As specified in Section 407(6), an action or special proceeding may be initiated by either the Ethics Board, the state, the political subdivision with which the person is affiliated, or any resident, official or employee of the state with proper standing.
F. Chapter Four. "Administrative Provisions"
Chapter Four contains the provisions for administering the proposed Government Ethics Act. Generally, only those persons charged with administering the law will need to consult Chapter Four.
This section is based in part on 1975 P.A. 227 § 169.31, and is also substantively quite similar to existing M.C.L. § 15.344 (which would be repealed under this proposed Act), the section that specifies details about the executive board of ethics formed under legislation titled "Standards of Conduct for Public Officers and Employers."
The terms of office of members are staggered to provide continuity in the work and philosophy of the board. Terms of office are sufficiently long to ensure the members acquire expertise but not so long as to discourage persons from serving on the board. In addition, so that Ethics Board members do not become entrenched on the board, the Act contains a term limitation.
Section 401(10) comes directly from existing M.C.L.§ 344(3), which allows the Ethics Board to request, and the state personnel director to provide, with the consent of the civil service commission, clerical or administrative assistance from the ranks of civil service workers.
Section 402 is based upon 1975 P.A. 227 § 169.33.
This Section prohibits certain conduct by a member of the Ethics Board during the time that individual sits on the Board. This provision is designed to strengthen both the perception and the reality of a nonpartisan Board of Ethics. Some state statutes and model acts prohibit the conduct for some specified time before or after the time of the member's service on the Board, but it is the position of this proposed Act that such a requirement is too restrictive.
An Ethics Member may be removed by the governor, pursuant to Art. V, § 10 of the Michigan Constitution.
This Section is based largely upon 1975 P.A. 227 § 169.35.
The Ethics Board may appoint an executive secretary pursuant to subsection 404(3)(b) to assist it in accomplishing its duties.
The requirement in subsection 404(3)(i) that the Board will be advised on legal matters by the attorney general is modeled after existing M.C.L. § 15.345.
Classified state and local government civil service are folded into the proposed Act to the extent that the Ethics Board may conduct investigations and then recommend sanctions (if any) to the individual civil service commission to act upon in accordance with the rules of the civil service commission. This is similar to the approach taken under the existing statutes governing Standards of Conduct for Public Officers and Employees ("Powers and Duties of the Board" section (M.C.L. § 15.345(3) and (4)).
Section 405 requires the Ethics Board to review disclosure statements as it sees fit.
This Section is modeled largely on 1975 P.A. 227 § 169.38, and sets out the Ethics Board's powers and duties of investigation. It also contains key procedural protections both for the person charged with violating the Act and the complainant (if any). For example, Section 406(2) requires the Board to give notice to the subject of an investigation within 5 days after the Board decides to investigate that individual, and to inform the individual (and the complainant) of the progress of the investigation every 60 days thereafter until the investigation is terminated. In order to protect the privacy of the individual being investigated, Sections 406(3), 406(4) and 406(6) require that the Board's records and proceedings related to the investigation be kept closed to the extent allowed by law, unless the person being investigated requests that the records and actions be made public.
Section 407(1) provides that the Ethics Board itself has no authority to actually take disciplinary action; rather, the Board issues a recommendation to the person or body authorized to take (or to recommend) the disciplinary action.
Section 407(2) provides that the Ethics Board may issue a recommendation that the authorized person or body impose (or recommend) a civil fine. There are two schools of thought regarding the imposition of fines. One, the Ethics Board itself is vested with the power to impose penalties, if allowed under constitutional separation of power issues; and two, the Board makes recommendations to an appropriate authority, which reviews the Board's recommendation and then either dismisses the matter or itself imposes penalties. The advantage of the first model is that by vesting the power to impose fines in a neutral outside Ethics Board, chances are slight that there would be even the perception of "cronyism" attached to its proceedings and recommendations. On the other hand, it is possible that the authority will have perspectives and insights on particular matters that the Ethics Board may not, and it would seem proper to allow the authority to bring those perspectives to bear in some way. However, there is a constitutional question whether an independent Ethics Board is itself able under Art. III, § 2 to impose penalties upon officials and employees of separate branches of governmental entities. (See supra comment to Section 104.) Due to these separation of powers issues, the proposed Act opts instead to provide that the Ethics Board investigate and merely recommend a particular sanction - a role for the Board that is more certain to survive constitutional scrutiny. This approach is consistent with 1975 P.A. 227 § 169.135, which was enacted by the legislature and signed into law by the governor, but was struck down by the Michigan Supreme Court as contemplating more than one object. (74)
Section 407(3) provides that either the Ethics Board or the state, or the political subdivision of the state with which the alleged violator is affiliated, may initiate an action to obtain damages pursuant to Section 303.
Section 407(4) provides that either the Ethics Board or the state, or the political subdivision of the state with which the alleged violator is affiliated, may initiate an action to obtain civil forfeiture pursuant to Section 304.
Section 407(5) provides that the Ethics Board may refer information about violations of the Proposed Act to the appropriate prosecutor with recommended criminal penalties, as specified by Section 305 and various other provisions of the proposed Act, and specifies that the appropriate prosecutor for state officials and employees is the attorney general.
Section 407(6) provides that any one of several entities may initiate an action or special proceeding in a court of appropriate jurisdiction to seek injunctive relief to enjoin a violation or to compel compliance with the proposed Act, as provided in Section 306. Subsection 407(6)(a) provides that the Ethics Board or the state, or the political subdivision of the state with which the alleged violator is affiliated, may initiate the proceedings; while subsection 407(6)(b) provides that, subject to the restrictions of subsection 407(6)(c), any resident, official, or employee of the state or political subdivision may initiate the proceedings. Because allegations of unethical conduct raise sensitive questions that cannot be left unresolved, subsection 407(6)(c) addresses the failure of the Ethics Board to act on a matter before it, and acknowledges the right of a citizen or official, within limitations, to seek the aid of the court in compelling an official to comply with ethics laws or in determining what obligations those laws impose where the Ethics Board has failed to act. This subsection does not give the citizen or official a right to seek to enjoin the Ethics Board itself. Subsection 407(6)(c) requires the plaintiff or petitioner first to submit a sworn complaint to the Ethics Board and then to wait until at least six months have elapsed since the filing of the complaint, but no longer than ten months after the filing of the complaint with the Ethics Board, before initiating an action in court. This "exhaustion of administrative remedies" requirement is necessitated by the excessive cost the state might otherwise incur as a result of repeated lawsuits. The fact that subsection 407(6)(c) gives the plaintiff or petitioner the right to initiate a proceeding does not relieve that person of the usual requirements that he or she have standing to sue in the particular instance.
While a provision for waivers of ethics provisions is dangerous because it opens the door to the wholesale gutting of ethics laws, encourages political pressure on the Ethics Board by various individuals and groups within the community, and leads to charges of partiality, all of which undercut the perception of the Ethics Board as an impartial, nonpartisan body of high integrity, the provision is necessary to allow the board flexibility to accommodate the inevitable special circumstances that arise.
To minimize the risks, Section 408 sets a high standard for granting a waiver ("compelling need" and "exceptional circumstances"), requires that notice of the waiver application and any waiver granted be published in the state's or political subdivision's official newspaper, and requires that any consideration of a waiver occur at an open session.
To avoid burdening the Ethics Board with requests for advisory opinions, this proposed Act permits a private citizen to request an advisory opinion only as to the permissibility of his or her own conduct. Any public official, on the other hand, may request an advisory opinion with respect to his own, a subordinate's, a superior's, or even a colleague's conduct.
This section addresses formal advisory opinions. The Ethics Board remains free at any time to answer questions of anyone with respect to the proposed Act.
Recognizing that persons requesting advisory opinions need quick answers to their ethics questions, Section 409 acknowledges the right of a person to seek judicial assistance in compelling the Ethics Board to respond to a request for an advisory opinion or in answering the question posed, once six months have elapsed, but no more than ten months have passed, since submission of the request to the board. An official against whom a complaint has been made, or who is otherwise under investigation by the Ethics Board, may immediately request an advisory opinion as to the propriety of his or her conduct and, if that opinion is not forthcoming within six months, may proceed under section 409.
Much of the language in Section 409(3) concerning civil action to compel performance of duties by the Ethics Board comes from 1975 P.A. 227 § 169.46, which was previously enacted by the legislature and signed by the governor, only to be overturned by the Michigan Supreme Court for encompassing more than one object. (75)
This section is similar to existing M.C.L. § 15.307, except that it does not give the committee of the legislature authority to issue advisory opinions (this function remains with the Ethics Board under Section 409).
As noted in the comments to Section 407(6), the fact that Section 411 gives the plaintiff or petitioner the right to seek judicial review and relief does not relieve that person of the usual requirements that he or she have standing to sue in the particular instance.
Educating officials and the public on the new ethics laws will be among the most important functions of an Ethics Board, but the task will require significant resources.
The Board has the power and the responsibility to revisit the ethics laws and to propose changes as needed to improve their administration.
Any Ethics Board inquiry, including inquiries into complaints that later prove meritless, may compromise an official's career. For that reason, the proposed Act permits the Ethics Board to disclose only those records for which disclosure is mandated by the state Freedom of Information Law (M.C.L. 15.231-15.246). That law provides that an agency may deny access to certain records.
Similarly, the proposed Act does not allow an Ethics Board to open its meetings to the public, except as required by the state Open Meetings Law or if requested by the target of the investigation. The Open Meetings Law provides that a public body may "meet in a closed session" to discuss "the dismissal, suspension, or disciplining of, or to hear complaints or charges brought against, or to consider periodic personnel evaluation of, a public official, employee, staff member, or individual agent, if the named person requests a closed hearing." M.C.L. § 15.268(a). The Act presumes that the person under investigation desires a closed hearing, and as a result makes such executive sessions mandatory.
Failure to post or distribute does not affect the enforcement of those laws or the duty of officials to comply with them.
This proposed Act permits the Ethics Board to select provisions of the Act for distribution and posting. For example, the Board of Ethics may decide that only the Code of Ethics itself (Chapter 2 of the Act) should be posted but that Chapters 2-3 should be distributed to the state and local public officials and employees.
Sample Annual Disclosure Provisions (if elected)If the Legislature were to decide to require annual disclosure of certain personal assets (i.e., real property holdings and outside income), the following provides possible language for such provisions. A separate chapter could be created for the annual disclosure. This Report recommends against the adoption of an annual disclosure requirement on the reasoning that the administrative expense and burden of such a requirement far outweigh any benefits gained. Moreover, such annual disclosure requirement, though much less onerous than the requirements in some other states, can have the tendency to chill the willingness of good people to serve in state and local government. (76)
CHAPTER FIVE: ANNUAL DISCLOSURE
(1). Public officials and employees required to file.
(a) The following public officials and public employees shall file statements of the information required by subsection 501(4) with the secretary of state:
(b) The following public officials and public employees shall file statements of the information required by subsection 501(4) with the clerk of the county in which the individual works:
(c) Upon the request of the Ethics Board the Secretary of State or clerk of the county shall provide to the Board copies of the statements filed pursuant to Sections 501(a) and (b).
Comment on Section 501(1). Public Officials and Employees Required to File.:
Grossly intrusive financial disclosure requirements have rightly given annual disclosure a bad reputation. The difficulty in drafting an annual disclosure provision is in determining where to draw lines. Specifically, which public officials and officials should be required to file? Of those, which should be required to file the complete report, and which will be allowed to file the abridged report? What information should be included in the annual report? All of these are difficult questions, and should be considered carefully by the legislature if it elects to include an annual disclosure requirement.
In the interest of clarity, Section 501(1) sets forth job categories in considerable detail, but in the interest of succinctness does not list each individual job title. The job titles are those that were listed in 1975 P.A. 227, some of which no longer exist or were re-titled. The list would need to be culled before passage of any legislation. Included in the categories specified in section 501(1) would be, among others, the following "state officials" who are covered under the current Michigan Conflict of Interest statute (M.C.L.§ 15.303): "person[s] occupying one of the following offices established by the constitution: governor; lieutenant governor; secretary of state; state treasurer; attorney general; auditor general; superintendent of public instruction; member of the state board of education; regent of the University of Michigan; trustee of Michigan State University; governor of Wayne State University; member of a board of control of one of the other institutions of higher education named in section 4 of article 8 of the constitution or established by law as therein provided; president of each of the foregoing universities and institutions of higher learning; member of the state board for public community and junior colleges; member of the supreme court; member of the court of appeals; member of the state highway commission; director of the state highway commission; member of the liquor control commission; member of the board of state canvassers; member of the commission on legislative apportionment; member of the civil service commission; state personnel director; or member of the civil rights commission; together with his principal deputy who by law under specified circumstances, may exercise independently some or all of the sovereign powers of his principal whenever the deputy is actually exercising such powers."
Other than those state employees of the executive branch who have policy-making authority, public employees are not required to file annual reports.
Because individual circumstances may vary or change from time to time, sections 501(1)(a)(13) and 501(1)(b)(11) give the board of ethics the authority to add to or subtract from the list of individuals who must provide annual disclosure.
(2) Time for Filing.
An individual specified in subsections (1)(a) and (1)(b) shall file his or her annual disclosure statement of information required in Section 501(4) with the secretary of state or county clerk, respectively:
Comment on Section 501(2). Time for Filing.
The specified date of May 1 should provide adequate time for an official to file.
(3). Notice; Right to Cure.
Comments on Section 501(3). Notice; Right to Cure.:
Some persons fear that an annual statement requirement may trap officials who simply forget to file an amendment when, for example, they sell real property they own. Accordingly, Section 501(3) provides a cure period of thirty days to any official who has failed to file an annual disclosure statement. Such a cure period provides some protection for officials who inadvertently fail to file or disclose. While there is a danger that such an opportunity to cure undermines the effectiveness of the annual disclosure requirement and imposes unnecessary administrative burdens on the Ethics Board, the proposed Act takes the position that, on balance, notions of basic fairness require that officials should be afforded this right to cure.
This right to cure comes at a cost, however, in the sense that it places a significant administrative burden on the secretary of state and county clerks to send letters to all officials who have failed to file by the due date or who have filed deficient statements. If the Legislature wishes to reduce the administrative burden to the secretary of state and the county clerks, it could simply delete Section 501(3).
(4). Contents of annual disclosure statement.
The following interests in subsections 501(4)(a), (b), (c) shall be listed by all persons required to file an annual disclosure statement under subsection 501(1). For purposes of this Section, the interest of a spouse or any other party shall be considered to be the same as the interest of the person making the statement if the interest is constructively controlled by the person making the statement:
Comments on Section 501(4). Contents of Annual Disclosure Statement.:
By requiring financial disclosure of the required interests by the person making the statement and of the spouse or any other party only if the interest is constructively controlled by the person making the statement, Section 501(4) addresses the concerns of the Michigan Supreme Court in Advisory Opinion on Constitutionality of 1975 P.A. 227 (Questions 2-10). (77) In that opinion, the court held that language requiring individuals to file information "for themselves and what they know or have reason to know about members of their immediate families" is unconstitutionally vague, explaining that "as the statute imposes criminal penalties for violations, due process requires that the statute provide adequate notice to a person of ordinary intelligence of conduct that is illegal.... We believe that the quoted language lacks the specificity required to alert individuals to the responsibility imposed upon them to discover the information required to be disclosed. While we [support the position]...that immediate family were included in the disclosure provisions in order to prevent the individual from circumventing the disclosure provisions by transferring an interest held that individual to a member of his immediate family, we believe the same result may be accomplished with more precise language." (78) Section 501(4) provides such precise language.
As for the information required to be provided, Section 501(4) adopts the substance of the requirements contained in a previous attempt by the Michigan legislature to update ethics laws, 1975 P.A. 227 § 160.132(1). (79) The Michigan Supreme Court determined that these requirements survive constitutional scrutiny:
[The information required is] sufficiently narrow and necessary to the accomplishment of the state interest. [They] contain certain threshold limits. Small amounts of income, debt, real estate and gifts need not be disclosed. Even when the threshold limits are reached the exact numerical amounts or values need not be disclosed to the public.... There are also broad exceptions to the required disclosure of creditors. Accounts payable, debts arising out of retail installment transactions or from loans made by financial institutions in the ordinary course of business, loans from a relative within the third degree of consanguinity, and land contracts that have been properly recorded with the county clerk or the register of deeds need not be included. (80)
Indeed, Section 501(4) is not as onerous as the similar provision in 1975 P.A. 227, for Section 501(4) does not require disclosure of "the original amount and the amount outstanding, the terms of repayment, and the security given for each debt required to be reported," (81) nor does it require disclosure of additional information concerning businesses "of which the filer or a member of the filer's immediate family was a partner or held more than a 10% equity interest in that preceding calendar year," (82) nor does it require information about creditors. (83) As an additional check, the Board of Ethics may, under Section 408, grant waivers from filing or from disclosing certain information on the annual disclosure statement in the rare instances in which such filing or disclosure may prove overly intrusive.
Another objection the Michigan Supreme Court had to 1975 P.A. 227 was that it required the same degree of annual financial disclosure of all listed individuals, regardless of the level of responsibility and discretion possessed by each. The court concluded that the creation of this single class amounted to "an arbitrary, capricious, and unreasonable grouping and, therefore, a violation of the equal protection clause.... As we conclude that the classification is overbroad, the entire statutory scheme ... for disclosure by public officials must fall." (84)
If elected, the annual disclosure requirements of the proposed Act (Section 501) addresses this concern in four ways. First, Subsection 501(4) draws its classifications more narrowly - i.e., it requires differing levels of disclosure for filers with differing levels of responsibility and discretion. Specifically, not all filers are required to disclose information about "anything of value" they received during the preceding year - only those filers who might be particularly susceptible to inappropriate gratuities were included. Second, as noted above, the quantity of information required to be disclosed even by filers who might be "particularly susceptible" is considerably less than that which was required of all filers under 1975 P.A. 227. Third, the only public employees required to file are those employees of the state executive branch who have nonclerical decisionmaking authority (subsection 501(1)(a)(12)), and even then those employees are responsible only for the reduced filing. And fourth, the proposed Act provides a "small community exemption" in Section 501(7), whereby officials of a community satisfying specified criteria need not comply with the Section 501 annual disclosure requirements. (85)
These minimal requirements suffice because many conflicts of interest arise either with respect to the official's real property ("May I vote to make the land adjoining my brother's home a park?"), information of which is required in subsection 501(4)(a), or with respect to the official's non-municipal business or employment, information of which is required in subsection 501(4)(b). Moreover, any problem that might be created by the minimal reporting requirements are minimized by the fact that the Ethics Board has the authority to subpoena additional information from the filer if necessary (Section 4069(l)).
(5). Public Inspection
The secretary of state and clerks of the counties shall make the annual statements filed under Section 501 available for public inspection during regular office hours. On request of the Ethics Board, the secretary of state and clerks of the counties shall provide to the Board copies of the statements filed pursuant to this Act .
Comments on Section 501(5). Public Inspection.:
The public inspection requirement is important to the function of fostering public trust in government, by demonstrating that public officials have "nothing to hide." The public inspection requirement of Section 501(5) is modeled upon 1975 P.A. 227 § 169.131(6).
If the Legislature wishes to provide additional protections to filers against potential abuse resulting from this provision, it could add an additional paragraph requiring any person who wishes to view the statements to fill out a form, which would then be forwarded to the filer. (86) Possible language for such a paragraph might read:
Each person examining a statement must first fill out a form prepared by the Secretary of State identifying the examiner by name, occupation, address and telephone number, and listing the date of examination and reason for examination. The Secretary of State shall supply such forms to the county clerks annually and replenish such forms upon request. The Secretary of State or county clerk shall promptly notify each person required to file a statement under this Act of each instance of an examination of his or her statement by sending a duplicate original of the identification form filled out by the person examining the statement.
(6). Penalty
Comments on Section 501(6). Penalty.:
Subsection 501(6)(b) provides some protection to the person who has failed to timely file a satisfactory statement in the event the secretary of state or the county clerk has not sent the "notice of failure to file" in a timely fashion.
Another consideration is how far the proposed Act should go in specifying sanctions in the event of noncompliance with the annual disclosure requirement. The Act opts merely to state that those not filing or filing deficient statements will be subject to specified penalties and forfeiture. A more aggressive alternative, used by some model acts and states, might provide that the attorney general or state's attorney for the county for which the filing is required to bring an action against any person who has filed a deficient statement or who has failed to file within 30 days of the secretary of state's or county clerk's actual notice of the failure to file an adequate statement.
(7). Small Community Exemption.
Section 501 does not apply to an individual listed in subsection 501(1)(b) of a city, village, or township which does not employ more than two full-time employees and does not maintain a regular office, if the legislative body of the city, village, or township approves this exemption by ordinance or resolution and delivers the ordinance or resolution to the board of ethics. "Regular office" means an office open to the public at specified prearranged times for at least 20 hours a week.
Comments on Section 501(7). Small Community Exemption.:
Section 501(7) exempts officials of very small communities from the annual disclosure requirements, if they so elect.
(1). Within 90 days after the effective date of this Act, and by the end of the month of March each year thereafter, the secretary of state shall:
(2). Within 90 days after the effective date of this Act, and by the end of the month of March each year thereafter, all county clerks shall:
(3). Within 60 days after the effective date of this Act, and by the end of the month of February each year thereafter, all municipal, village, and township clerks shall cause to be filed with the clerk of the county in which the municipality, village, or township is located the names, titles, and addresses of the public officials and employees from the municipality, village, or township who are required to file annual disclosure statements with the county clerk pursuant to section 501(1)(b).
Comments on Section 502. Designation of Public Officials and Employees Required to File Annual Disclosure Statements
It becomes quickly apparent in reviewing the annual disclosure provisions of the proposed Government Ethics Act (i.e., Sections 501, 502) that administering such a system will require substantial added tasks and the cooperation of many officials at all levels of state and local government. With the decentralization envisioned by these provisions, there would be the inevitable mixed quality of compliance and cooperation. The Ethics Board will not have as much control over the process. That said, arguably the sanctions provided for in the Act for violations and noncompliance, combined with selective direct oversight by the Board from time to time in a certain percentage of counties, will assure reasonable quality. An alternative, which would add substantially to the Ethics Board's own administrative burden (and hence, its expenses), would involve having all persons required to file under Section 501 file directly with the Ethics Board, instead of with the secretary of state and individual county clerks. This is the approach adopted in Ohio.
Section 502 requires the state and each political subdivision to identify affirmatively which public officials and employees are required to file annual disclosure statements under Section 501 of the proposed Act. Section 502 sets up a stepped system, whereby under Section 502(3) the municipal, village and township clerks are first required, by the end of February each year, to assemble and forward to the county clerk the names, titles, and addresses of persons within their respective jurisdictions who are required to file annual disclosure statements with the county clerk pursuant to Section 501(1)(b). Thereafter, under Section 502(2) the county clerks are required, by the end of March each year, to do two things: (i) assemble and forward to the Ethics Board the names and titles of all persons who are required to file statements with the county clerk pursuant to Section 501(1)(b); and (ii) notify all such persons of their responsibility to file. Section 502(1) is the parallel provision for the secretary of state, whereby by the end of March each year the secretary of state is required to: (i) assemble and forward to the Ethics Board the names and titles of all persons who are required to file statements with the secretary of state pursuant to Section 501(1)(a); and (ii) notify all such persons of their responsibility to file.
As noted above, the disadvantage of requiring the county clerks (rather than municipal clerks) in section 502(2) to forward the names to the Ethics Board and notify the individuals is the fact that this creates a considerable administrative burden for the county clerks in accumulating the names and titles of filers from every political subdivision within the county. Section 502(3) hence requires each municipal clerk to provide the county clerk with names and titles of those individuals in that particular municipality who are required to file.
(1). The secretary of state and clerks of the counties shall transmit promptly to the Ethics Board those annual disclosure statements requested by the Board pursuant to Section 501(3)(c).
(2). The secretary of state and clerks of the counties shall index and maintain on file for at least seven years all disclosure statements filed pursuant to Section 501.
Comments on Section 502. Submission and Maintenance of Disclosure Statements.:
The Ethics Board has authority to request and receive individual statements as needed from the secretary of state and the individual county clerks, each of whom are responsible for keeping statements on file for a period of seven years.
1. A Model Ethics Law for State Government, Common Cause 1 (1989).
2. Mark Davies, Article 18 of New York's General Municipal Law: The State Conflicts of Interest Law for Municipal Officials, 59 Alb. L. Rev. 1321, 1340 (1996).
3. Mark Davies, 1987 Ethics in Government Act: Financial Disclosure Provisions for Municipal Officials and Proposals for Reform, 11 Pace L. Rev. 243, 265 (1991). On this point, one feature of this Report's proposed Act is the section allowing government officials and employees to seek the advice of the Ethics Board on those occasions when they have questions. See infra Section III, Section 409 (Advisory Opinions).
4. 4 M.C.L. §§ 15.301-15.310. These sections, created by P.A. 1968, No. 318, Effective September 1, 1968, constitute the implementing legislation for Article 4, §10 of the Michigan Constitution. Article 4, § 10 of the Constitution prohibits contractual conflicts of interest:
No member of the legislature nor any state officer shall be interested directly or indirectly in any contract with the state or any political subdivision thereof which shall cause a substantial conflict of interest.
5. 5 M.C.L. §§ 15.321-15.328.
6. 6 M.C.L. §§ 15.341-15.348 [hereinafter "old State Ethics Act"].
7. 7 See, e.g., M.C.L. §§ 4.411 et seq. (Michigan Lobbyist Registration Act); M.C.L. §§ 169.201 et seq. (Michigan Campaign Finance Act); M.C.L. §§ 432.201 et seq. (Michigan Gaming Control and Revenue Act); M.C.L. §§ 460.1 et seq. (Public Service Commission), all of which set out certain reporting and other requirements. See also Memorandum for the Michigan Law Revision Commission from Kevin Kennedy, Public Officials, Conflicts of Interest, and Removal from Office 15-17 (March 10, 1998) (citing, e.g., "M.C.L. § 38.1540 (members of the municipal employees retirement board and employees of the retirement system are prohibited from having any beneficial interest, direct or indirect, in any investment of the retirement system); M.C.L. § 46.30 (a member of the county board of commissioners is prohibited from having any direct or indirect interest in any contract or other business transaction with the county during the time for which he or she is elected and for one year thereafter unless the contract has been approved by three-fourths of the members of the board); M.C.L. § 49.160 (special prosecuting attorney may be appointed by the Supreme Court, Court of Appeals, or circuit court if prosecuting attorney is disqualified by reason of conflict of interest); M.C.L. § 125.288(4) (a member of township board of appeals shall disqualify himself or herself from a vote in which the member has a conflict of interest; failure of a member to so disqualify himself or herself from a vote in which the member has a conflict of interest constitutes misconduct in office); M.C.L. § 124.1422(cc) (the state housing development authority may adopt a code of ethics with respect to its employees that requires disclosure of financial interests, defines and precludes conflicts of interest, and establishes reasonable post-employment restrictions for a period of up to one year after an employee terminates employment with the authority); M.C.L. § 247.812 (neither a member of the State Transportation Commission, the director, nor any officer of the department shall be interested directly or indirectly in any contract with the state or any political subdivision thereof which shall cause a substantial conflict of interest); M.C.L. § 259.808(2) (board member of airport authority shall not be interested directly or indirectly in a contract with the board); M.C.L. § 324.21541(11) (a member of the Michigan underground storage tank financial assurance board shall abstain from voting on any matter in which that member has a conflict of interest); M.C.L. § 325.2008 (the health planning council shall adopt bylaws that include procedures for removal and replacement of members and voting procedures which protect against conflicts of interest); M.C.L. § 331.1212(3) (trustees of a municipal health facilities corporation shall be considered public servants subject to M.C.L. §§ 15.321 to 15.330; a board of trustees may establish policies and procedure requiring disclosure of relationships which may give rise to conflicts of interest); M.C.L. § 333.18413 (a registered sanitarian shall not engage in or have any interest in any work, project, or operation prejudicial to his or her professional interest); M.C.L. § 333.22213 (members of public health commission shall adopt bylaws that include voting procedures that protect against conflicts of interest); M.C.L. § 333.22226(3)(d) (a regional certificate of need review agency shall avoid conflicts of interest in its review of all applications for a certificate of need); M.C.L. § 338.2310 (building inspectors who perform instructional duties for educational purposes and provide contractual inspection and consulting services in construction code enforcement shall not be considered to have a conflict of interest; an inspector shall not be permitted to inspect his or her own work in a governmental subdivision); M.C.L. § 388.1769b (a board member of a school district, intermediate school district, public school academy, or public school academy corporation shall abstain from voting on any contract in which the board member has a conflict of interest); M.C.L. § 400.584(2)(a) (members of the commission for older Michiganians shall not participate in the selection, award, or administration of a contract if, to his or her knowledge, any of the following has a financial interest in that contract: another commission member, a member of a commission member's immediate family, a commission member's partner, or an organization with whom any of these persons is negotiating or has any arrangement concerning prospective employment); M.C.L. § 436.18(1) (a person who holds or whose spouse holds a law enforcement job shall not be issued a liquor license or have an interest, directly or indirectly, in a license); M.C.L. § 456.522a (a cemetery commissioner, or the commissioner's spouse or child, shall not have a financial interest in a cemetery, a supplier of cemetery services or cemetery memorials, or a funeral establishment); M.C.L. § 487.315 (a commissioner, deputy commissioner, or examiner of the bureau of banking shall not be a shareholder, either directly or indirectly, of an institution subject to the banking code, an out-of-state bank, national bank, or any affiliate or subsidiary thereof, and shall not borrow money from an institution subject to the act, except for a home mortgage loan); M.C.L. § 487.1511(3) (a licensee under the Michigan Bidco Act has a potential conflict of interest when providing, inter alia, financing assistance to a principal shareholder, director, officer, relative, controlling person or affiliate of a principal shareholder of the licensee) M.C.L. § 801.204(1) (a member of the county board of commissioners of a work farm, factory, or shop, or an employee of a work farm, factory, or shop shall not be interested, directly or indirectly, in a contract, purchase, sale for or on account of the work farm, factory or shop).
See also Executive Order No. 1993-2 (Feb. 3, 1993) (members and employees of the Michigan Jobs Commission are subject to M.C.L. §§ 15.301 to 15.321); Executive Reorganization Order No. 1992-5 (June 29, 1992) (the State Child Abuse and Neglect Prevention Board shall develop procedures to assure that grants or transfers made by it to the Department of Social Services are free of any conflict of interest); Executive Orders Nos. 1996-9 and 1996-10 (Nov. 22, 1996) (restrictions on appointments to the Michigan Gaming Control Board and of the Interim Executive Director in order to avoid conflicts of interest); Administrative Order No. 1996-11 of the Michigan Supreme Court (anti-nepotism policy to avoid conflicts of interest in the hiring of relatives as court personnel).").
8. This Report takes the position that the establishment of an Ethics Board with investigative authority but with no authority to itself impose penalties (i.e., the Board only recommends sanctions to the appropriate authority (see infra Part III, Section 407) does not run afoul of Michigan Constitution Art. III, Sec. 2 (the "Separation of Power" provision). See infra Part IV, Comments on Section 104.
9. M.C.L. § 15.342.
10. 10 Consistent with this Report's theme that government ethics legislation should be intended to be primarily preventive and not punitive in nature, the proposed disclosure requirements are not onerous in their scope and detail; rather, they are designed to point out specific potential transactional conflicts of interest to the disclosing individual and to the Ethics Board, thus allowing the individual to monitor his or her behavior proactively. See infra Part III, Section 210.
Should the Legislature favor instituting a system of annual financial reporting for specified public officials, Appendix A provides sample language for the necessary provisions.
11. 11 The proposed Ethics Act most closely resembles in form and substance the model legislation provided in Mark Davies, Keeping the Faith: A Model Local Ethics Law - Content and Commentary, 21 Fordham Urb. L.J. 61 (1993). The Davies model was selected as the basic template for the proposed Act due to its superior clarity and simplicity of organization, despite the fact that it specifically was intended for local government. Other major influences include A Model Law for Campaign Finance, Ethics and Lobbying Regulation, Council on Governmental Ethics Laws (COGEL)(1995); Model State Conflict of Interest and Financial Disclosure Law, National Municipal League (1979); A Model Ethics Law for State Government, Common Cause (1989); State Legislative Ethics, National Conference of State Legislatures (1976).
12. In re Advisory Opinion (Being 1975 P.A. 227), 240 N.W.2d 193, 396 Mich. 123 (1976). See infra notes 57-60 and accompanying text.
13. Jack P. Desario and David E. Freel, 30 Akron Law Review 129, 133 (1996). The Ohio Ethics Commission was authorized for fifteen staff positions, but successive budget cuts reduced that number to the eleven in 1992, the lowest level of staffing since 1977. "The subsequent loss of sufficient staff and resources clearly hampered the efforts of the Commission to perform its obligations - a fact recognized by some newspaper editorials." Id. at 134.
14. Approximately 7,200 individual financial disclosure statements were filed with the Ohio Ethics Commission in 1994. Id. at 131. The Ohio Ethics Commission had jurisdiction over an estimated 16,000 public officials and 500,000 public employees as of 1994. Id.
15. Desario and Freel, supra note 13 at 129.
16. Davies, supra note 11 at 61.
17. The Ethics Roundtable of the Michigan Municipal League and Mr. David Caylor, retired city attorney of El Paso, Texas and former Chair of the Ethics Section of the International Municipal Lawyers Association, provided many helpful written comments on an earlier draft of this Report.
18. "Coverage" refers to the scope of public officials and employees subject to the provision. For example, a provision might only cover paid executive branch public officials, excluding everyone else, including, for example, executive branch public employees, unpaid appointees and officials, all legislative branch public officials and employees, all judicial branch public officials and employees, etc., in which case the provision would be assigned a value of "2". By contrast, another state's laws might cover all public officials and employees, without exception.
19. It must be noted, however, that while the empirical comparison of ethics laws in the fifty states in this section and Appendix B has its merits, it also has inherent limitations. A spreadsheet such as that shown in Appendix B, while it can effectively show objective data (e.g., in providing a basis of comparison for measuring existing state laws against proposed state laws), it cannot show subjective matters such as accessibility and clarity of drafting - matters with which the Proposed Act excels vis-a-vis other states.
20. When the values for all 11 provisions are averaged, Michigan's average is 2.27. The five states with the most comprehensive ethics laws are Washington (5.00), South Carolina and Alabama (4.91), and Massachusetts and Arizona (4.63). The five states with the least comprehensive ethics laws are North Carolina (1.18), Vermont (1.55), South Dakota and Maine (1.64), and New Hampshire (1.73).
21. Michigan's average for the seven Group 1 provisions is 3.00.
22. Indeed, Michigan is one of only six states with zero "financial disclosure" requirements. The other states are Georgia, Idaho, Indiana, North Carolina, and Wyoming.
Some other general observations about the entire survey:
23. When the values for all 11 provisions are averaged, Michigan's average applying the proposed Act would be 3.91.
24. Michigan's average would be 5.00 for those seven Group 1 provisions. Six other states (Arizona, Massachusetts, Rhode Island, South Carolina, Texas, and Washington) also have a 5.00 average for the seven "restrictions on conduct" provisions. See Appendix A.
25. Under the proposed Act, Michigan has values of "1" on the first two "disclosure" provisions (disclosure of real property and of outside income), "5" on the third (disclosure of gifts), and "1" on the fourth (disclosure of creditors). The proposed Act does not require disclosure of real property, unrelated outside income, and creditors on the belief that such a requirement approaches the line of overintrusiveness. The Report's position is that transactional disclosure is more than adequate (Appendix A provides sample language for annual disclosure if the legislature disagrees with this assessment).
26. The overall averages for all eleven provisions are: Kentucky (3.27), Ohio (3.09), Michigan (2.27), Tennessee (1.91).
27. The averages for the seven Group 1 provisions are: Michigan (3.0), Kentucky (2.71), Ohio (2.0), Tennessee (1.85).
28. The averages for the four Group 2 provisions are: Ohio (5.00), Kentucky (4.25), Tennessee (2.00), Michigan (1.00).
29. Under the proposed Act, Michigan's overall average for all eleven provisions would be 3.91, as compared to 3.27 for Kentucky, 3.09 for Ohio, and 1.91 for Tennessee.
30. Under the proposed Act, Michigan's average for the seven Group 1 provisions is 5.0, as compared to 2.71 for Kentucky, 2.0 for Ohio, and 1.85 for Tennessee.
31. Under the proposed Act, Michigan's average for the four Group 2 provisions is 2.00, as compared to 5.00 for Ohio, 4.25 for Kentucky, and 2.00 for Tennessee.
32. The overall averages for all eleven provisions are: Wisconsin (4.45), Illinois (3.64), Iowa (3.36), Ohio (3.09), Minnesota (2.36), Michigan (2.27), Indiana (2.09).
33. The averages for the seven Group 1 provisions are: Wisconsin (4.14), Iowa (3.86), Michigan (3.00), Illinois (2.86), Indiana (2.71), Ohio (2.00), Minnesota (1.86).
34. The averages for the four Group 2 provisions are: Wisconsin (5.00), Illinois (5.00), Ohio (5.00), Minnesota (3.25), Iowa (2.50), Indiana (1.00), Michigan (1.00).
35. Under the proposed Act, Michigan's overall average for all eleven provisions is 3.91, as compared to 4.45 for Wisconsin, 3.64 for Illinois, 3.36 for Iowa, 3.09 for Ohio, 2.36 for Minnesota, and 2.09 for Indiana.
36. Under the proposed Act, Michigan's average for the seven Group 1 provisions is 5.00, as compared to 4.14 for Wisconsin, 3.86 for Iowa, 2.86 for Illinois, 2.71 for Indiana, 2.00 for Ohio, and 1.86 for Minnesota.
37. Under the proposed Act, Michigan's average for the four Group 2 provisions is 2.00, as compared to 5.00 for Wisconsin, Illinois and Ohio, 3.25 for Minnesota, 2.50 for Iowa, and 1.00 for Indiana.
38. The ten largest states in order of population (1990 census) are California (29.8 million), New York (18 million), Texas (17 million), Florida (12.9 million), Illinois (11.9 million), Pennsylvania (11.9 million), Ohio (10.8 million), Michigan (9.3 million), New Jersey (7.7 million), and North Carolina (6.6 million).
39. The overall averages for all eleven provisions are: Florida (4.27), Texas (4.27), Illinois (3.64), New Jersey (3.18), Ohio (3.09), California (2.82), New York (2.64), Michigan (2.27), Pennsylvania (2.27), North Carolina (1.18).
40. The averages for the seven Group 1 provisions are: Texas (5.00), Florida (4.43), Michigan (3.00), Illinois (2.86), New Jersey (2.86), California (2.14), Ohio (2.00), New York (1.86), Pennsylvania (1.71), North Carolina (1.29).
41. The averages for the four Group 2 provisions are: Illinois (5.00), Ohio (5.00), California (4.00), Florida (4.00), New York (4.00), New Jersey (3.75), Pennsylvania (3.25), Texas (3.00), Michigan (1.00), North Carolina (1.00).
42. Under the proposed Act, Michigan's overall average for all eleven provisions is 3.91, as compared to 4.27 for Florida and Texas, 3.64 for Illinois, 3.18 for New Jersey, 3.09 for Ohio, 2.82 for California, 2.64 for New York, 2.27 for Pennsylvania, and 1.18 for North Carolina.
43. Under the proposed Act, Michigan's average for the seven Group 1 provisions is 5.00, as compared to 5.00 for Texas, 4.43 for Florida, 2.86 for Illinois and New Jersey, 2.14 for California, 2.00 for Ohio, 1.86 for New York, 1.71 for Pennsylvania, and 1.29 for North Carolina.
44. Under the proposed Act, Michigan's average for the four Group 2 provisions is 2.00, as compared to 5.00 for Illinois and Ohio, 4.00 for California, Florida and New York, 3.75 for New Jersey, 3.25 for Pennsylvania, 3.00 for Texas, and 1.00 for North Carolina.
45. As noted above (see note 11), the draft language and section-by-section explanation of the draft language (Parts III and IV) of this Report draws particularly heavily from the model ethics law devised by the New York State Temporary Commission on Local Government Ethics, as set forth in Mark Davies, Keeping the Faith: A Model Local Ethics Law - Content and Commentary, 21 Fordham Urb. L.J. 61 (1993). A good portion of the draft language and explanation of Parts III and IV of this Report is taken verbatim from the model act as set out in that article. This Report does not attribute each verbatim use of the model act's language within this Parts III and IV, because to do so would detract from the presentation of the proposed Act by overrunning it with footnotes. The author wishes to give proper attribution to Mark Davies and the New York Commission on Local Government Ethics for its work.
46. See supra note 45.
47. This proposed Act applies to civil servants, but only to the extent it does not supercede the State Civil Service Act or the Civil Service Acts of any political subdivisions. See, e.g., M.C.L. § 38.401 et seq.; M.C.L. § 38.451 et seq.; M.C.L. § 38.501 et seq.; M.C.L. § 51.351 et seq.
48. See, e.g., People v. Township of Overyssel, 11 Mich. 222, 225 (1863)(stating that at common law public servants are agents who owe a fiduciary duty to the public entity that they serve); Woodward v. City of Wakefield, 236 Mich. 417, 420; 210 N.W. 322,323 (1926)("it is the policy of the law to keep municipal officials far enough removed from temptation as to insure the exercise of their unselfish interest in behalf of he municipality"); Abrahamson v. Wendell, 72 Mich. App. 80, 83, 249 N.W.2d 302, 304 (1976) ("decisionmakers ... must seek to avoid even the appearance of impropriety").
49. See Memorandum for the Michigan Law Revision Commission from Kevin Kennedy, Public Officials, Conflicts of Interest, and Removal from Office 9-13 (March 10, 1998) (citing, e.g., "1977-1978 Mich. Op. Att'y Gen. 265, 1977-1978 Mich. OAG No. 5243 (a retired city employee who receives a pension from the city may serve as a member of the city council, but if a change in the retirement plan is before the council, the retiree must disclose this interest, abstain from voting, and the change must meet the approval of 2/3 of the full membership without the vote of the retiree)"). See also 1979-1980 Mich. Op. Att'y Gen. 44, 1979-1980 Mich. OAG No. 5442; 1979-1980 Mich. Op. Att'y Gen. 162, 1979-1980 Mich. OAG No. 5489; 1979-1980 Mich. Op. Att'y Gen. 719, 1979-1980 Mich. OAG No. 5682; 1979-1980 Mich. Op. Att'y Gen. 732, 1979-1980 Mich. OAG No. 5689; 1979-1980 Mich. Op. Att'y Gen. 688, 1979-1980 Mich. OAG No. 5681; 1979-1980 Mich. Op. Att'y Gen. 703, 1979-1980 Mich. OAG No. 5685; 1979-1980 Mich. Op. Att'y Gen. 1088, 1979-1980 Mich. OAG No. 5819; 1981-1982 Mich. Op. Att'y Gen. 218, 1981-1982 Mich. OAG No. 5916; 1983-1984 Mich. Op. Att'y Gen. 110, 1983-1984 Mich. OAG No. 6151;1983-1984 Mich. Op. Att'y Gen. 238, 1983-1984 Mich. OAG No. 6206; 1987-1988 Mich. Op. Att'y Gen. 197, 1987-1988 Mich. OAG No. 6468; 1989-1990 Mich. Op. Att'y Gen. 27, 1989-1990 Mich. OAG No. 6563; 1989-1990 Mich. Op. Att'y Gen. 80, 1989-1990 Mich. OAG No. 6615; 1991-1992 Mich. Op. Att'y Gen. 149, 1991-1992 Mich. OAG No. 6751;1991-1992 Mich. Op. Att'y Gen. 190, 1991-1992 Mich. OAG No. 6736; 1994 Mich. OAG No. 6802; 1995 Mich. OAG No. 6858.
50. See Memorandum for the Michigan Law Revision Commission from Kevin Kennedy, Public Officials, Conflicts of Interest, and Removal from Office 15-17 (March 10, 1998) (citing, e.g., "1977-1978 Mich. Op. Att'y Gen. 720, 1977-1978 Mich. OAG No. 5404 (concluding that if a city councilperson's loyalties would be divided by virtue of taking part in a decision whether or not to grant a corporation, of which the councilperson is an employee, tax relief that is otherwise permitted by statute, s/he must abstain from voting on matters which would require choosing between the duties owed); 1981-1982 Mich. Op. Att'y Gen. 439, 1981-1982 Mich. OAG No. 6005 (a member of a city council who is employed by a corporation seeking quasi-judicial action, e.g., a zoning variance, from the city council is in a conflict of interest and may not participate in or vote upon such official action; the rule of necessity may not be applied to permit otherwise disqualified members to participate, or be counted for quorum purposes, in quasi-judicial municipal action)").
51. M.C.L. §§ 15.181-15.185 ("Incompatible Offices Act").
This Report recommends retaining the existing Incompatible Offices Act due to its succinctness and comprehensiveness. The Incompatible Offices Act prohibits a public official or public employee from holding two or more public offices simultaneously that results in any of the following with respect to the offices held:
1. The subordination of one public office to another; 2. The supervision of one public office by another; or 3. A breach of duty of public office. M.C.L. § 15.181.
Under the Incompatible Offices Act, "the term 'public officer' means a person who is elected or appointed to (i) an office established under the state constitution of 1963, (ii) a public office of a city, village, township, or county, or (iii) a department, board, agency, institution, commission, authority, division, council, college, university, school district, intermediate school district, special district, or other public entity of this state or a city, village, township, or county in this state." Id. See, e.g., Detroit Area Agency on Aging v. Office of Services to the Aging, 210 Mich. App. 708, 534 N.W.2d 229 (1974)(vacation of one office will solve a public official's dilemma of two incompatible offices; that is not necessarily the case in conflict of interest situations); Wayne County Prosecutor v. Kinney, 184 Mich. App. 681, 458 N.W.2d 674 (1990)(occupation of the offices of city council member and paid volunteer firefighter violates the Incompatible Offices Act); Contesti v. Attorney General, 164 Mich. App. 271, 416 N.W.2d 410 (1987)(when township's board of trustees and school district are in a contractual relationship, offices of township trustee and school district superintendent are incompatible for purposes of the Incompatible Offices Act).
Moreover, the Michigan Constitution itself prohibits dual office holding by members of the Legislature: "No person holding any office, employment or position under the United States or this state or political subdivision thereof, except notaries public and members of the armed forces reserve, may be a member of either house of the legislature." Mich. Const. Art. 4, § 8.
Finally, The Attorney General's Office has developed an extensive body of opinions on compatibility of public office as well. See Memorandum for the Michigan Law Revision Commission from Kevin Kennedy, Public Officials, Conflicts of Interest, and Removal from Office 22-24 (March 10, 1998) (citing, e.g., "1981-1982 Mich. Op. Att'y Gen. 672, 1981-1982 Mich. OAG No. 6075 (a member of the Legislature is precluded from accepting employment by a community college district)"). See also 1983-1984 Mich. Op. Att'y Gen. 354, 1983-1984 Mich. OAG No. 6527; 1979-1980 Mich. Op. Att'y Gen. 339, 1979-1980 Mich. OAG No. 5261; 1981-1982 Mich. Op. Att'y Gen. 185, 1981-1982 Mich. OAG No. 5906; 1983-1984 Mich. Op. Att'y Gen. 73, 1983-1984 Mich. OAG No. 6135;1983-1984 Mich. Op. Att'y Gen. 66, 1983-1984 Mich. OAG No. 6134; 1983-1984 Mich. Op. Att'y Gen. 175, 1983-1984 Mich. OAG No. 6180; 1983-1984 Mich. Op. Att'y Gen.274, 1983-1984 Mich. OAG No. 6214; 1991-1992 Mich. Op. Att'y Gen.76, 1991-1992 Mich. OAG No. 6695; 1991-1992 Mich. Op. Att'y Gen.139, 1991-1992 Mich. OAG No. 6717; 1991-1992 Mich. Op. Att'y Gen.175, 1991-1992 Mich. OAG No. 6730; 1991-1992 Mich. Op. Att'y Gen.193, 1991-1992 Mich. OAG No. 6738;1991-1992 Mich. Op. Att'y Gen.205, 1991-1992 Mich. OAG No. 6743; 1993 OAG No. 6748;1993 OAG No. 6753; 1994 OAG No. 6781; 1994 OAG No. 6794; 1995 OAG No. 6834; 1995 OAG No. 6890; 1996 OAG No. 6913; 1997 OAG No. 6931.
52. As previously noted, the proposed Act would supercede the entire Act prescribing Standards of Conduct for Public Officers and Employers (i.e., M.C.L. §§ 15.341 - 15.346, sometimes referred to as the "Code of Ethics" (M.C.L. § 15.342a states, "This act is intended as a code of ethics for public officers and employees [of the executive branch]....")). Specifically with regard to the Two-Hats provision, M.C.L. §15.342(6) states that "Except as provided in section 2a, a public officer or employee shall not engage in or accept employment for a private or public interest when that employment is incompatible or in conflict with the officer's or employee's official duties, or when that employment may tend to impair his or her independence of judgment or action in the performance of official duties." The existence of this additional language beyond M.C.L. § 15.181 et seq. regarding dual office holding is redundant and serves only to complicate matters. This Report thus suggests that M.C.L. § 15.181 et seq. alone should govern the matter of potential incompatibility of office.
53. See supra note 11.
54. See infra notes 57-60 and accompanying text.
55. M.C.L. §§ 15.181 - 15.185. See supra note 51 and accompanying text.
56. "No law shall embrace more than one object, which shall be expressed in its title." Mich. Const. Art. 4, § 24.
57. See In re Request for Advisory Opinion, 240 N.W.2d 193, 396 Mich. 123 (1976). In this Advisory Opinion the court was responding to the first of ten questions posed to it by the House of Representatives concerning the Constitutionality of 1975 P.A. 227.
See also Advisory Opinion on Constitutionality of 1975 P.A. 227 (Questions 2-10), 242 N.W.2d 3, 396 Mich. 465 (1976) (supplementing its earlier Advisory Opinion on P.A. 227 by addressing questions 2-10 propounded by the House of Representatives). Eight of the nine questions addressed by the court in this supplemental Advisory Opinion are beyond the scope of the proposed Act, and thus irrelevant to this discussion. The one question addressed in the supplemental Advisory Opinion that would be relevant to the proposed Act if the Legislature were to decide to require financial disclosure (see infra Appendix A) is Certified Question VII, concerning the constitutionality of certain financial disclosure requirements. In its response to this question, the court found unconstitutional certain provisions of Public Act 227 that required a broad range of individuals to conform to a single standard for disclosing certain financial information. The court suggested that while the requirements as enacted were acceptable as to some of the named persons, creation of a broad single class was overbroad and thus in violation of the equal protection clause. Advisory Opinion on Constitutionality of 1975 P.A. 227 (Questions 2-10), 242 N.W.2d at 21. See infra Appendix A, notes 77-80 and accompanying text for discussion of the proposed Act's financial disclosure requirements (if elected) in light of the court's analysis in its response to Certified Question VII.
58. In re Request for Advisory Opinion, 240 N.W.2d at 193 (internal citations omitted).
59. Id. at 196.
60. Id. at 195.
61. Id. at 196.
62. The fact that the adoption of a comprehensive Ethics Act requires the repeal of three individual acts is also proof of the disorganization of current Michigan law - i.e., similar subjects are dealt with in three different statutory sections.
In any event, if the Legislature is concerned that in this case including the repeal of the three sets of statutes with the proposed Act pushes the legislation into "embracing more than one object", it would be an easy enough matter to separate the repeals into one or more separate bills.
63. In re Request for Advisory Opinion, 240 N.W.2d at 195. As noted long ago by Justice Cooley,
People ex rel. Drake v. Mahaney, 13 Mich. 481, 494-95 (1865).
Surely the proposed Act is not the sort of bill described by Justice Cooley in this passage; rather, the Act embraces the single object of creating a single ethics act that can be understood and applied by the very people whom it would affect.
64. Advisory Opinion re Constitutionality of 1972 P.A. No. 294, 389 Mich. 441, 208 N.W.2d 469 (1973).
65. See supra notes 57-60 and accompanying text.
66. See supra note 11.
67. See supra notes 57-60 and accompanying text.
68. See supra notes 57-60 and accompanying text.
69. Whistle-Blowers' Protection Act, M.C.L. § 361 et seq.
70. Advisory Opinion on Constitutionality of 1975 P.A. 227 (Questions 2-10), 396 Mich. 465, 505-506, 22 N.W.2d 3, 19-20 (1976).
71. Mark Davies, 1987 Ethics in Government Act: Financial Disclosure Provisions for Municipal Officials and Proposals for Reform, 11 Pace L. Rev. 243, 264 (1991).
72. Id. at 266-67.
73. When the board's recommendation affects a classified employee (i.e., a civil servant), M.C.L. § 15.345(3) requires that the appointing authority proceed in accordance with the recommendation and the rules of the civil service commission.
74. See supra notes 55-58 and accompanying text.
75. See supra notes 57-60 and accompanying text.
76. See, e.g., Mark Davies, Keeping the Faith: A Model Local Ethics Law - Content and Commentary, 21 Ford. Urb. L.J. 61, 95 (1993) (opining that "officials strenuously object to disclosing their finances,"and stating that onerous New York state financial disclosure requirements "have already caused the resignation of over 200 officials around the state").
77. 396 Mich. 465, 507, 242 N.W.2d 3, 20 (1976).
78. Id.
79. See supra notes 57-60 and accompanying text.
80. Advisory Opinion on Constitutionality of 1975 P.A. 227 (Questions 2-10), 396 Mich. 465, 506-507, 242 N.W.2d 3, 20 (1976).
81. 1975 P.A. 227 § 169.132(1)(e).
82. 1975 P.A. 227 § 169.132(2).
83. (If the Legislature does wish to require selected individuals to disclose information on creditors, the proposed Act would suggest the following language be added to Section 501(4):
84. Advisory Opinion on Constitutionality of 1975 PA 227 (Questions 2-10), 396 Mich. 465, 508-09, 242 N.W.2d 3, 21 (1976).
85. This small community exemption is modeled on 1975 PA 227 § 169.131(8).
86. This is the approach taken by the Illinois disclosure statute (Ill. Laws 4A-106).
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