OPINION NUMBER - 077
ADOPTED - 1985/02/15
SUBJECT - Conflicts of Interest: a state senator who is a practicing attorney and who owns a title insurance company questions whether his action on legislation relating to the practice of law and title insurance potential or actual conflicts of interest.
REQUESTED BY: The Honorable Chris Beutler, State Senator
QUESTION: You have requested the Commission's opinion covering conflicts of interest under Sections 49-1499 and 49-14,101, R.R.S., 1943. You have asked 2 questions: (1) Whether as a practicing attorney occasionally engaging in the practice of probate law, you would have a potential or actual conflict of interest regarding the following pending legislation:
LR28, concerning a proposed constitutional amendment allowing Nebraska law school graduates to practice without taking a bar examination; LR30, concerning a constitutional amendment allowing Nebraska law school graduates to practice without being members of any bar association. LB73, concerning fees to be charged by attorneys practicing in the probate area;
(2) Whether, as a title insurance agent and owner-officer-employee of a title company where two of the four licensed title insurance agents are licensed abstractors, you have a potential or actual conflict of interest regarding: LB104, redefining the term "title insurance agent;"
LB47, concerning regulation of the title abstracting business; and LB194, which would require title insurance agents to be licensed abstractors.
Based on the information provided, it is the opinion of the Commission that you do not have a potential or and actual conflict of interest regarding LR28, LR30, LB104 or LB47.
A potential, but not an actual, conflict may exist concerning your actions on LB73 and 194. See analysis.
I. Potential Conflicts of Interest:
Section 49-1499, R.R.S., 1943, identifies a potential conflict of interest as a situation in which a public official, including a member of the Legislature, in the discharge of his or her official duties, would be required to take any action or make any decision that may cause financial benefit or detriment to: (a) the member; (b) a member of his or her immediate family as defined in Section 49-1425; or, (c) a business with which he or she is associated as defined in Section 49-1408, where that benefit or detriment would be distinguishable from the effect of the action on the general public, or a broad segment of the general public.
Section 49-1499 prescribes the actions a public official should take as soon as he or she is aware, or should reasonably be aware of a potential conflict of interest situation. That section generally requires a public official who is not a member of the Legislature to remove himself or herself from actions or decisions on the matter involving the potential conflict.
Section 49-1499(2)(a) which relates to potential conflicts of interest matters where the public official is a member of the Legislature requires only disclosure of a potential conflict. A member may abstain from voting, deliberating, or taking other action on the matter, but is not required to do so. When a member chooses to take official action on a matter involving a potential conflict, he or she must disclose the reason(s) why, despite the conflict, he or she intends to vote or otherwise participate.
It is the Commission's position that a potential conflict of interest, as described in Section 49-1499 of the Nebraska Political Accountability and Disclosure Act, exists for a public official when it is reasonably foreseeable that taking action or making a decision on a matter may cause financial benefit or detriment to the official, or other persons as outlined above.
This reasonably foreseeable approach is supported by the "or should reasonably be aware" language in 49-1499. In order to constitute a potential conflict of interest, a foreseeable financial gain or loss must additionally by distinguishable from the effects the official's action will have on the general public, or a broad segment of it. We interpret this provision to mean that not every situation in which benefits or detriments could foreseeably result from the official's action creates a potential conflict of interest. Rather, the official, his family members, or a business with which he is associated must stand to financially gain or lose something beyond or apart from the effects upon the public at large.
This interpretation of Section 49-1499 recognizes that, in a representative, citizen-legislature, there will always exist certain inherent conflicts of interest which are considered naturally occurring and unavoidable. Conflicts which may arise because a legislator is a parent, a homeowner, a taxpayer, or a consumer, for example, are unlikely to cause a senator to act in a manner contrary to the public interest, and the Act is not concerned with these. Rather, it is concerned with disclosure of the possibility that a decision-maker may realize private financial gains or losses from his or her official actions. And, in potential conflict situations involving employees or public officials who are not legislators, removal from action on the matter is required.
Specifically concerning LR's 28 and 30, which are proposed constitutional amendments to relieve Nebraska law school graduates from the requirements of maintaining bar association membership and paying dues, and passing the bar examination, it does not appear reasonably foreseeable that your taking action on these measures would cause you or your family members or a business with which you are associated financial gain or loss since you are currently practicing law in Nebraska and, presumably, are a member of the bar association. Therefore, there appears to be no potential conflict, based on the information you have given us.
Similarly, based on the information you have provided, we can envision no potential conflict of interest which would arise from your acting on LB104, which would merely redefine the term "title insurance agent" in a technical sense, or LB47, which would regulate title abstractors generally. We would advise you to consider the standards set out above in determining whether our interpretation here is reasonable in view of your knowledge of the facts pertaining to your specific business and financial interests.
Concerning LB73, which provides that probate attorneys must charge an hourly rate, and that their maximum rate for probate work may not exceed their average hourly rate, the Commission does not have sufficient information about your legal practice to draw a conclusion as to whether a potential conflict would arise by your acting on the bill. We can advise, however, that in view of your own knowledge of your law practice and the financial effect the bill could have on it, a potential conflict would arise if a reasonable person in your position would be able to determine that a financial benefit or detriment may accure to you or your law practice as a result of your action or decision on the bill.
Finally, LB194 would require Nebraska title insurance agents to be licensed as abstractors under Section 76-509 to 76-528, R.R.S., 1943. Since both you and another person employed by your title company are title insurance agents, whether or not a potential conflict of interest exists would depend on whether or not the requirements of LB194 may foreseeably cause a financial benefit or detriment to you or your title business.
If benefits or detriments are possible as a result of your action on either LB73 or LB194, it is the position of the Commission that the potential benefits or detriments resulting from your position as a probate lawyer or as a title insurance agent would be beyond or apart from the effects which could be felt by the general public, or a broad segment of it, and thereby constitute a potential conflict.
If, in view of this opinion, a potential conflict of interest exists as to actions or decisions you would be required to make regarding these pieces of legislation, the act requires you to file a Potential Conflict of Interest Statement with the Commission and take other actions, specified in 49-1499(1) and (2), R.R.S., 1943.
This opinion applies to the legislation in its present form (as introduced), and would not necessarily apply to the same bills in amended form.
II. Further Explanation of Actual Conflicts of Interest:
In its Advisory Opinion No. 69, this Commission applied Section 49-14,101(3) R.R.S., 1943, prohibiting the use of one's public office to obtain financial gain, to state senators. It is our interpretation of the act that, although under Section 49-1499, a senator retains the right to take action on a matter before the legislature even if he or she is in a situation of a potential conflict of interest, a senator's action or vote on a matter where an actual conflict of interest exists may constitute a violation of Section 49-14,101(3), or evidence of a violation of that section.
Section 49-1402(3) of the Nebraska Political Accountability and Disclosure Act provides that it is "essential to the proper operation of democratic government . . . that public office or employment not be used for private gain other than the compensation provided by law." Neither this statement nor 49-14,101(3) are qualified, but rather, both clearly prohibit the use of public office for private financial gain, and the act generally seeks to prevent public officers from becoming involved in conflicts of interest.
With regard to section 49-14,101(3), that section provides that no public official shall use his or her public office to obtain financial gain (other than his or her normal compensation) for himself or herself, a member of his or her family, or a business with which the official is associated. In interpreting this provision, we look first to the plain meaning of the words chosen by the Legislature. In addition, we look to case law interpreting this provision, we look first to the plain meaning of the words chosen by the Legislature. In addition, we look to case law interpreting similar statutes in other states.
Use of Office: We interpret "to use one's office" as meaning to make use of or employ the office to one's service. Such use would include employing or converting to one's service, in the case of a state senator, any of the incidents to and privileges of office, including the right to participate in, act, or vote on a matter where the action taken is the proximate if not the direct cause of obtaining ascertainable financial gain.
As an example of use of office for financial gain by a senator, consider a recent Oregon case, Groener v. Oregon Government Ethics Commission, 59 OR. App. 459, 651 P2d 736 (1982). Groener, a state senator, had used his influence as chairman of the Senate Labor Committee to acquire work for a private employment training and counseling business directly from the state Worker's Compensation Department. The senator, a paid consultant to the employment training business, arranged social meetings between officials in the Department and the private vendor, including a complimentary trip to Las Vegas. He also intervened when the department later disapproved the vendor's application to do contract work with the department.
The Oregon Ethics Commission charged the Senator with using his office for financial gain under section 244.040 of the Oregon Code of Ethics, which states, "No public official shall use his official position or office to obtain financial gain for himself, other than official salary, honoraria, or reimbursement of expenses, or for any member of his household or for any business with which he or a member of his household is associated."
The Commission also fined the senator under the penalties provision of the statute. The Oregon Court of Appeals found that the Ethics Commission's interpretation of the act was within its authority to enforce the ethics code, and within the legislative policy behind the act, and that the statute was not unconstitutionally vague.
Financial Gain: As mentioned above, the Act does not qualify the term "financial gain" in any way -- it does not specify a certain amount of gain that is required to constitute a violation of Section 49-14,101(3). However, the case law indicates that courts will not prevent an official from participating in matters where his interest is remote, uncertain, contingent, speculative or de minimus. See: Copple v. City Lincoln, 202 Neb. 152, 274 N.W. 2d 520 (1979); Atherton v. Concord, 109 N.H. 164, 245 A 2d 387 (1968); County of Nevada v. MacMillen, 114 Cal. Rpter. 345 (Cal. 1974).