OPINION NUMBER - 081

ADOPTED - 1985/06/21

SUBJECT - Conflict of Interest; The Board of Directors of a County Agricultural Society questions whether they are subject to the provisions of the Accountability and Disclosure Act relating to conflicts of interest.

REQUESTED BY: Alan M. Wood, counsel for the Douglas County Agricultural Society, Inc.

QUESTION: The Douglas County Agricultural Society, Inc., is considering hiring as its full-time manager, Mr. Jon Manz, a member of the Society's Board of Directors. The Board inquires whether the provisions of the Nebraska Political Accountability and Disclosure Act apply to the Society generally, and specifically whether the conflict of interest provisions of the act would apply in the case of the Board's hiring Mr. Manz as general manager of the Agricultural Society.

CONCLUSION

It is the opinion of the Commission that the members of the Board of Directors of the Douglas County Agricultural Society are not public officials subject to the requirements of the Nebraska Political Accountability and Disclosure Act.

ANALYSIS

I. Potential Conflicts of Interest

Section 49-1493, R.R.S., 1943 and Accountability Commission Rule 2 specifically list the public officials and employees governed by Section 49-1499, R.R.S. 1943 concerning potential conflicts of interest. It is clear that neither the Accountability Act nor Rule 2 require members of an agricultural society board of directors to comply with the potential conflicts of interest provisions in Section 49-1499.

II. Actual Conflicts of Interest

Section 49-14,101(3), R.R.S., 1943 provides: "No public official or public employee shall use that person's 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 or herself, a member of his or her immediate family, or a business with which the individual is associated."

Section 49-14,101(5) provides that: ". . . any person violating the provisions of this section shall be guilty of a Class III misdemeanor."

In previously construing Section 49-14,101(3), this Commission looked to the legislative intent embodied in the law. Section 49-1402(3) deems it "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."

In Advisory Opinion 77, we observed that: "Neither {49-1402(3)} 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 provide public officers from becoming involved in conflicts of interest." (emphasis added)

The issue raised is whether members of the Douglas County Agricultural Society are "public officials" or "public officers" regulated by the provisions of the Accountability Act, and specifically Section 49-14,101(3).

The Douglas County Agricultural Society is a private, non-profit corporation organized under the Nebraska Non-Profit Corporation Act, Sections 21-1901, et seq., R.R.S., 1943. Under Section 21-1901(7), the Board of Directors is defined as "the group of persons vested with the management of the corporation."

Under Sections 2-201, et seq., R.R.S., 1943, concerning county agricultural societies and county fairs, societies such as the Douglas County Society may, be raising $1000 or more through dues paid by its members, become eligible for funds raised through a property tax to be levied by the county. Such funds are to be used by the societies, as provided in Section 2-202, in putting on the annual county fair.

Section 2-201, et seq. of the Nebraska Statutes delegates the following powers and duties to county agricultural societies:

1. the duty to offer and award premiums for agricultural improvements;

2. to promote agriculture and manufacturing interests in the state;

3. to publish a list of its awards;

4. to report annually to the State Board of Agriculture;

6. the duty to account to the county board the disbursement of all county monies received;

7. the right to purchase, sell and exchange property, with approval of the district court.

"Public official" is defined in Section 49-1443 of the Accountability Act as:

". . . an official in the executive branch, an official in the legislative branch, or an elected or appointed official in the judicial branch of the state government or a political subdivision thereof;" (emphasis added).

The plain meaning of this section indicates that in order for the members of the Board of the Douglas County Agricultural Society (Ag Society) to qualify as "public officials" under Section 49-14,101(3), they would have to be either officials of the legislative or executive branch of state government (which they are not), or elected or appointed officials in either the judicial branch of state government, or a political subdivision of the State. They are clearly not officials in the judicial branch. The question, thus, becomes whether they may be considered officials of a political subdivision.

It is the position of the Commission that the members of the Board of Directors of the Ag Society are not public officials by any reasonable understanding of the word, whether or not the Society if considered a political subdivision of the State, and therefore that Section 49-14,101(3) of the Nebraska Accountability and Disclosure Act, which is aimed at the conduct of public employees and officials, is not applicable to the Board's members.

In its request for an advisory opinion, the Ag Society calls to the Commission's attention the recent Nebraska Supreme Court case of Nixon v. Madison County Agricultural Society, 217 Neb. 37, 348 N.W. 2d 119. There, the Court held that the Madison County Agricultural Society, a Nebraska non-profit corporation organized pursuant to Sections 2-201, et seq. R.R.S., is a "public body" subject to the requirements of the Nebraska Public Meetings law, Sections 84-1408 to 1414 R.R.S., 1943. Said the Court, ". . . the statutory provisions which grant such a society the right to receive support from the public revenue give it a public character," (emphasis added). 217 Neb. at 39.

Plaintiff Nixon in his brief to the Court argued that, because agricultural societies by statute enjoy powers not available to other private corporations, including the power of eminent domain and the power to levy, receive, and expend public monies, the societies take on the character of a governmental subdivision. He further argued that, because the Nebraska Public Meetings law was designed to open the decision-making processes of government, it should be liberally construed.

"In the case at bar, public policy concerns require a declaration that the Ag Society must comply with the Nebraska Public Meetings Act. Any other conclusion will strip citizens of the opportunity to participate in the important functions of government as it disburses public monies and levies taxes." Brief of Plaintiff-Appellee at 19.

The Commission believes that the purpose of the Public Meetings law and the Accountability and Disclosure Act are distinct, and therefore the Court's holding in Nixon, supra, is not determinative of the question here considered.

Indeed, Section 49-1402 of the Act asserts the legislative finding that the protections provided in the Act are ". . .essential to the proper operation of democratic government . . ." (emphasis added). However, in focusing the statutory conflict of interest regulations on public officials and employees, the legislature sought, by its plain language, to regulate those persons who are in a position of public trust.

Speaking of public officers, the Supreme Court of Nebraska has said, "They stand in a fiduciary relationship to the people whom they have been elected or appointed to serve." State v. Douglas, 217 Neb. 511, 349 N.W. 2d 870.

The people who make up the Board of Directors of the Douglas County Agricultural Society have not been elected or appointed by the public, or by the state, or by the county. Rather, they are chosen by and accountable to the members of the Society. In the absence of a duty on the part of the Board to the public based on public office and a public trust, the purposes of the Act do not require that officers of a private, non-profit corporation such as the Society adhere to the requirements of the Accountability Act.