OPINION NUMBER - 061
ADOPTED - 1983/12/16
SUBJECT - Conflicts of Interest
REQUESTED BY: Richard H. Hansen Legal Counsel, Department of Environmental Control, P.O. Box 94877, Lincoln, Nebraska 68509
The request for advisory opinion enclosed a copy of a proposed contract between the Department of Environmental Control and the University of Nebraska Department of Civil Engineering for the Department of Civil Engineering to render consulting services to the Department of Environmental Control. It describes the Department of Civil Engineering as the consultant and requires, among other matters, the consultant to "support" a graduate student working one-third time during the term of the contract. It does not require the services of specific people or provide for the compensation of those who will render services.
A member of the Environmental Control Council is an employee of the Department of Civil Engineering. He is an expert in the field to which the contract pertains and participated in the preparation of the proposal which will result in the contract in question. Part of the cost of the contract is based upon services he will perform during the summers of 1984 and 1985. He will be paid summer school salaries as authorized by procedures of the Board of Regents. The total amount of the contract as far as the Department of Environmental Control is concerned is $35,000 derived from a federal grant. The University Department of Civil Engineering will expend a minimum of $6,000 for the performance of this contract.
The request for advisory opinion states that DEC is not bound to let bids for this contract in that federal regulations allow grants and agreements with institutions of higher education without public bidding.
The request for advisory opinion states that it is an application pursuant to Section 49-14,100 for an advisory opinion concerning the ethical implications of a member of the Environmental Control Council entering into a contract with the Department of Environmental Control. As we understand the facts the member of the Environmental Control Council is not entering into this contract directly with the DEC nor will he be an independent contractor with the University. Section 49-14,100 provides that any person who is in doubt as to the propriety of action proposed to be taken by him may apply to the Commission for an advisory opinion relating thereto. Section 49-14,123(10) authorizes the Commission to issue advisory opinions on the requirements of the Accountability Act upon the request of a person or governmental body directly covered or affected by the Act. In view of this request being made by the General Counsel for the DEC, we respond in terms of the applicability of the Accountability Act to the DEC in entering into this contract as well as its applicability to actions that might be taken by the member of the Environmental Control Council.
It is our understanding that the Environmental Control Council has two primary powers. One is to submit to the Governor a list of names from which the Governor shall appoint the Director of Environmental Control. The other is to adopt rules and regulations which set forth standards of air, water and land quality to be applicable to the air, waters and land of this state and portions thereof. The Director, and not the Council, has the power to make grants to political subdivisions in accordance with priorities established by the Council. Section 81-1503(7).
Even though it appears that the Environmental Control Council does not administer the DEC, it must be conceded that by reason of its rule-making power it has some control over the grants and contracts entered into by the DEC.
The relevant sections of the Accountability Act are 49-1499, 49-14,101(3), 49-14,101(4), 49-14,102, 49-14,103 and 49-14,104.
The member of the Environmental Control Council is a public official by reason of his being a member thereof, and his is a public employee by reason of being employed by the University. See Section 49-1436, 49-1442 and 49-1443.
1. As far as the DEC entering into this contract is concerned, Section 49-14,102 provides that, except as otherwise provided by law, no public official or public employee, a member of that individual's immediate family, or a business with which he is associated shall enter into a contract valued at $2000 or more, in any one year, with a governmental body unless the contract is awarded through an open and public process which includes prior public notice and subsequent availability for public inspection . . . of the proposals and the contract awarded. This section does not require public bidding. It does require, however, that there be at least public notice prior to the granting of the contract. Cf. Sections 81-107 to 81-1721, the Nebraska Consultants' Competitive Negotiations Act, specifically Section 81-1712.
There are several questions involved. The first is how does Section 49-14,102 bear upon DEC? The thrust of Section 49-14,102 is that no public official or public employee or a business with which either is associated shall enter into such a contract with a government body. Thus if there would be a violation of this section, it would not be by the DEC but rather the public official or employee or his business association. However, Section 49-14,103 provides that a contract in violation of Section 49-14,102 may be voidable depending on the actual knowledge of the individual or body finally approving the contract, i.e., the Director of Environmental Control. An action to void such a contract is not within the jurisdiction of the Accountability Commission but a matter for a court of proper jurisdiction in an action brought by a citizen. See Section 49-14,103.
The second question is whether Section 49-14,102 applies to the member of the Environmental Control Council or a business with which he is associated which in turn bears upon whether he or the University would be in violation of Section 49-14,102 and whether the DEC contract would be voidable under Section 49-14,103.
Section 49-1407 defines a business in terms of activities or entities which are non-governmental. Section 49-1408 then defines a business with which an individual is associated as including an employee. The question remains, however, as to whether a government body or entity, the University, is a business. Section 49-1496(2) pertaining to what must be set forth in a Statement of Financial Interests provides in two parts that (a) a public official must set forth the name and address and the nature of association with any business with which the individual was associated . . . and (b) the name and address and nature of business of a person, "including a government, political subdivision, or body corporate," from whom any income in the value of $1000 or more was received during the proceeding calendar year and the nature of the services rendered. The inclusion of the words, "including a government, political subdivision, or body corporate," were added by an amendment to the Accountability Act by LB 535, section 17, in 1980. They were not part of the original Act. These words modify the word "person" in Section 49-1496(2)(b), as distinguished from "person" as defined in Section 49-1438, but do not modify the word "business" or "business with which the individual was associated." Under these circumstances and in view of the fact that the definition of "business" in Section 49-1407 does not specifically include a government body, i.e., the University, Section 49-14,102 may not be applied to the University as a business with which the individual as a public official or public employee is associated.
2. As far as the actions of the member of the Environmental Control Council are concerned, several questions come to mind. If the adoption of rules or standards are required in order to provide for the letting of the contract, there would be a question as to whether his participation in the deliberations and voting on such a standard would be a use of his public office in violation of Section 49-14,101(3). Section 49-14,101(3) provides that a public official or public employee shall not use his public office or any confidential information received through 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.
Even though the University would not be a business with which he is associated as defined by the Accountability Act and as indicated above, the proposal for this contract envisions his being compensated for his performance of the contract for the University. It would appear that so long as he is not to be compensated separate and apart from his University salary that there would be no violation of this section because his compensation would be as provided by law. In other words, his participation or vote as a member of the Environmental Control Council would not permit him to obtain an unlawful financial gain.
Nevertheless, since he is a member of the Environmental Control Council, he would be required to file a Statement of Potential Conflict pursuant to the provisions of Section 49-1499 should he find himself in a position of having to take action as a member of the ECC which would affect this contract. Our advice and prescription pursuant to Section 49-1499 would be for him not to participate or vote on any such standard or rule, not because it would benefit a business with which he is associated, but because such action would benefit him, although indirectly, and would evidence a violation of Section 49-14,101 (3).
3. Also presented is the question of whether his making the proposal on behalf of the University constitutes an action in violation of Section 49-14,101(3) if he is to receive a financial gain from having done so, namely being paid for summer school performing the contract. Our answer to this question is that there would not be a violation of Section 49-14,101 (3) so long as his compensation is provided by law, namely a University authorized salary for summer school as distinguished from payment upon an independent contract with the University. In this regard Section 49-14,101(4) provides that no public official or public employee shall use personnel, resources, property or funds under that official's care and control other than in accordance with prescribed constitutional, statutory and regulatory procedures, or use such items, other than compensation provided by law, for personal financial gain. If our understanding is correct, that he will not be paid separate and apart from his University salary for performing such services and that any compensation he is paid to work on this contract will be pursuant to the regulations and procedures of the Board of Regents authorizing summer school pay, then not only would such compensation be as provided by law but the use of University personal, resources, property or funds under his official care and control to perform the contract would be in accordance with prescribed regulatory procedures.
Finally there is a question as to whether by submitting the proposal for the contract in question he is representing a person or acting as an expert witness for compensation before a governmental body in violation of Section 49-14,104. Our response is no because he appears to be acting in his official capacity on behalf of the University and will not be compensated other than by authorized salary as an employee of the University for performing the contract as distinguished from representing the University to obtain the contract. In addition his representation is not of a person as defined in Section 49-1438 in that the University is a government body and not included in the definition of person in Section 49-1438.