In 2017, North Central incurred a significant net loss. The board of directors of Northern Central is required by law to raise customer water rates if the company experiences two straight years of losses. The board may also approve a rate increase if the company experiences intermittent losses or if it has reason to believe that it must raise rates to cover the costs of future operations. North Central has three directors. One director is concerned about the net loss in 2017 and rising operating expenses in 2020 and has proposed a customer rate increase in 2020. However, the other two directors, who are good personal friends, have effectively been able to block this proposal. It is believed that one of these directors plans to run for political office in 2020 and does not want to potentially be held responsible for any rate increases. Briefly describe if you think that the actions of these two directors are 1) legal and 2) ethical, based on the information provided, and why.