OPINION NUMBER - 045

ADOPTED - 1981/08/21

SUBJECT - Conflict of Interests; Appearance of Conflict

REQUESTED BY: Vernon Elting, RR #1, Bruning, NE 68322

QUESTION: May an inspector employed by the Department of Agriculture purchase "reject" seed corn from seed companies whose seed products are subject to inspection and other governmental action by him and the Department?

CONCLUSION

Yes. Appearance of conflict of interests, in and of itself, is not a violation of the Nebraska Political Accountability and Disclosure Act.

FACTS

The individual involved is employed as an inspector for the Bureau of Plant Industry, Department of Agriculture. His duties include conducting inspections and obtaining samples of various seed products sold by dealers and seed companies in the area assigned to him. All samples taken by him are submitted to the State Laboratory in Lincoln where analysis is performed to determine if the product meets label guarantees. Any products not meeting label guarantees are tagged by him as "off-sale" after being instructed to do so by the Bureau of Plant Industry.

He wants to purchase what is known as "reject" corn from such seed companies for the production of gasohol. "Reject" corn is corn which has lost its viability as seed and is not genetically suitable for planting.

"Reject" corn purchased by him may include corn from which he has taken samples, tested by the laboratory in Lincoln and which, in turn, he would tag as off-sale pursuant to the instructions from the Bureau of Plant Industry. He has advised the Commission, however, that less than 1% of all "reject" corn would consist of corn tagged as "off-sale". He has further advised the Commission that it is the seed company which determines whether or not to treat such "off-sale" corn as "reject" because the seed company has the option to mix it with other seed or take other actions which might otherwise make it proper for sale as seed

However, in order to dispose of "off-sale" corn, the seed company must have an authorization from the Bureau of Plant Industry, which will not give such authorization unless the nature of the disposition is stated, such as treating such corn as "reject", dumping it in a landfill, or sale to a named person for a stated purpose, which could include a sale to such inspector for the production of gasohol.

In any case, "reject" corn may not be offered for sale as seed and is no longer subject to inspection or other action by the Department of Agriculture, although we are advised that other governmental agencies, including federal, may have some jurisdiction over the disposition of "reject" corn. Ordinarily, it is either dumped or sold for non-seed purposes, such as gasohol production. We are further advised that "reject" corn is usually accumulated, perhaps up to four years, by the seed company and held apart in separate bins, and that it is from such separate bins that such purchases would usually be made.

In addition, the inspector has entered into a "Contract of Sale" with one such seed company, which contract provides, among other matters, as follows: "Seller shall, for the sum of one (1) dollar ($1.00) and other good and valuable consideration, from time to time, sell to Buyer at Seller's premises, certain quantities of seed corn and grain sorghum seed which Seller can no longer use in its operations (hereinafter referred to as "Salvage Seed"). Seller shall notify Buyer, from time to time, of the quantity of Salvage Seed it desires to sell to Buyer and the date by which such quantity of Salvage Seed it desires to sell to Buyer and the date by which such quantity of Salvage Seed must be removed from Seller's premises. Seller shall not, during the term of this Agreement, be required to sell any minimum quantity of Salvage Seed to Buyer, nor shall Buyer be required to purchase any minimum quantity of Salvage Seed from Seller."

ANALYSIS

This appears to be a case of a government official or employee doing business in his private capacity with a firm he and his agency regulate. It may therefore be said that an appearance of a conflict of interests exists. Section 49-1402, the Legislature's findings of fact and declaration of intent for the adoption of the Nebraska Political Accountability and Disclosure Act, condemns, as a statement of public policy, not only the use of public office for private gain, but even the appearance of "a substantial conflict between the private interests of a public official and his duties as such official." However, the prohibition provisions of the Act, such as section 49-14,101, do not make appearance of conflict a violation in and of itself. In fact, government officials may even do business with the government, including their own agencies, if the contract is awarded through an open and public process. See section 49-14,102.

Section 49-14,101 consists of four substantive parts. The first two subsections are prohibitions against any person offering or giving, or a public official or employee receiving, anything of value based on an agreement that a governmental action or judgement would be influenced thereby. These two subsections are, in effect, bribery statutes, and proof of such transactions is, of course, difficult. Evidence of surrounding circumstances, including appearances, would usually be involved.

Subsection (4) provides that no public official or employee shall use resources under that individual's official care and control in an unauthorized manner or for personal financial gain. Subsection (4) situations could involve such things as use of a government automobile or the charging of mileage to the government to transact personal business, such as making a trip, the primary purpose of which is to consumate a sale and not conduct government business.

Subsection (3) of section 49-14,101 provides that no public official or public employee shall use that person's public office or any confidential information received from the holding of a public office to obtain financial gain, other than compensation provided by law, for himself, a member of his immediate family, or a business with which he is associated.

A subsection (3) violation must have the element of not only a financial gain, which for the sake of this opinion we assume exists, but also a governmental action or actions or other use of office connected to realizing a financial gain.

As we understand the fact situation, such purchases of "reject" seed would not ordinarily involve the direct purchase of "off-sale" seed, although it is conceivable that such a purchase could include seed that at one time was "off-sale" and with respect to which the inspector exercised governmental functions. It is the contention of the inspector and his immediate superior that his functions are primarily of a ministerial nature in connection with placing seed "off-sale" and authorizing the disposition thereof. Even if such governmental actions are ministerial, if they are performed in such a way whereby the government employee may have an advantage over others interested in the purchase of such "reject" seed or specifically calculated to benefit him to the exclusion of others, a violation could be involved. It is difficult to point to a specific situation in which this might occur. However, it is submitted that if the inspector uses governmental information, which may not necessarily be confidential, but is not generally available to other perspective purchasers of "reject" seed, in affecting a purchase, such as making his offer and striking a deal at the time he places such seed "off-sale," a violation could exist.

As far as the Contract of Sale is concerned, it appears to us that it is really a contract to make a contract because the sale price is not agreed to in the contract in question and must be negotiated each time the seed company makes an offer to sell "reject" seed to the inspector. It further appears that the seed company is not required to offer its "reject" seed to the inspector to the exclusion of others or to give him the right of first refusal. Unless such contract binds the seed company to first make an offer to him before anyone else, we cannot say that it gives him a special advantage over others or infer that it was awarded to him simply because of his public office, a situation which would, to say the least, constitute an appearance of "substantial" conflict. The rest of the provisions of the contract spell out terms of delivery, warranties and other terms and conditions, which would apply if otherwise an offer is made and a price agreed to. From what we know at this time, it appears that, even with such contract, the situation is not materially different from that of the inspector or his superiors in the Department buying viable seed for planting purposes in the ordinary course of business.