OPINION NUMBER - 079

ADOPTED - 1985/04/19

SUBJECT - Conflicts of Interest

REQUESTED BY: The Honorable John DeCamp, State Senator

QUESTION: A state senator, who represents as an attorney and as a consultant, individuals who are working to form a corporation in another country or territory to operate a video lottery in such other jurisdictions where video lottery operations are not forbidden, asks whether his support of or opposition to LB144, a legislative bill repealing the prohibition on cities and counties which desire to conduct video lotteries, creates a potential or actual conflict of interest.

CONCLUSION

Based upon the facts presented, and assuming that (a) the senator is acting in the traditional attorney-client relationship, (b) that his role as "consultant" is not that of an employee, and (c) that he has no ownership interest in the client's corporation, the Commission is of the opinion that no actual or potential conflict of interest arises in his support or opposition to LB144.

If the senator's relationship goes beyond that of the traditional attorney-client relationship, and his support or opposition of LB144 could cause financial benefit or detriment to him or a business with which he is associated by reason of that relationship, a potential conflict of interest may exist.

FACTS

Senator DeCamp is an attorney licensed to practice law in the State of Nebraska. As such an attorney, he represents and has represented individuals, both residing within and without the State of Nebraska, who are working to form a corporation in another country or territory to operate a video lottery in other jurisdictions where video lottery operations are legal. One or more of his clients previously engaged in video lottery activity in the State of Nebraska while such operations were legal. The purpose of LB144 is to repeal the prohibition on cities and counties which desire to conduct video lotteries, by allowing those cities and counties which were conducting video lotteries on December 31, 1984 to recommence operating the same, and by allowing any other city or county to conduct a video lottery if a vote of the residents of said governmental subdivision authorizes the same.

ANALYSIS

I. Actual Conflict of Interest

In Advisory Opinions Nos. 77 and 69, this Commission discussed the prohibition against actual conflicts of interest under Section 49-14, 101 (3). On page four of Opinion 77, it was stated that "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 when an actual conflict of interest exists may constitute a violation of Section 49-14,101(3), or evidence of a violation of that section."

Based upon the facts as presented in Senator DeCamp's letter of March 11, 1985, he would not have an actual conflict of interest.

II. Potential Conflicts

Potential conflicts of interest are addressed in Section 49-1499. As stated in Advisory Opinion 77, page two:

Section 49-1499 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 to make a 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(2)(a) which relates to potential conflict of interest matters where the public official is a member of the Legislature requires only disclosure of 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 reasons why, despite the conflict, he or she intends to vote or otherwise participate.

The Commission then went on to adopt the "reasonably foreseeable" approach which was restated in Opinion 78. That statement is as follows:

"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 Section 49-1499. In order to constitute a potential conflict of interest, a foreseeable financial gain or loss must additionally be 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 is he 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."

Based upon the assumption that Senator DeCamp is engaged only in the traditional attorney-client relationship and the information furnished us in the requesting letter, it would not appear that there is potential conflict involving any financial benefit to the senator, or to a member of his immediate family, as defined in Section 49-1425.

Similarly, under the same assumption, it would not appear that there is any benefit or detriment to a business with which he is associated as defined in Section 49-1408. The Commission has interpreted that section as exempting an attorney from the definition of "business with which the individual is associated." Thus, even if the senator's legal clients stood to gain or lose financially from his actions on LB144, his vote would not be deemed a potential conflict of interest.

In summary, only Senator DeCamp knows the full extent of his relationship with or interest in any legal entities that intend to operate video lotteries in the State of Nebraska. Although not the law in Nebraska, we feel the following quote from Thomas Jefferson contained in Luce, Legislative Procedure at page 366, is sound ethical and moral advice, and worthy of consideration by all members of the Legislature:

"It is an ancient rule that members of a law making body shall not vote on matters in which they have a personal interest." Jefferson, referring to Hatsell, said, "Where the private interests of a member are concerned in a bill or questions, he is to withdraw. And where such an interest has appeared, his voice has been disallowed, even after a division. In a case so contrary not only to the laws of decency, but to the fundamental principle of the social compact, which denies to any man to be a judge in his own cause, it is for the honor of the House that this rule of immemorial observance should be strictly adhered to."