This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on March 2, 2001, basing its approval solely on the facts and circumstances stated herein.
May an employee of a natural gas district serve as an alderman of a town that participated in the creation of the district and that receives significant funding from the district?
State law restricts the Mississippi Ethics Commission to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890. Therefore, this opinion does not address the Mississippi laws outside the Commission's jurisdiction nor the governmental entity's internal rules and regulations.
The pertinent conflict of interest laws to be considered here are:
Constitutional Section 109 states:
"No public officer or member of the legislature shall be interested, directly or indirectly, in any contract with the state, or any district, county, city, or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member, during the term for which he shall have been chosen, or within one year after the expiration of such term."
Code Section 25-4-101 states:
"The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust. Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments."
Code Section 25-4-103(f)(i)(ii), (g)(ii)(v), (h), (l) and (p)(i)(ii)(iii) states:
"(f) 'Contract' means:
(i) Any agreement to which the government is a party; or
(ii) Any agreement on behalf of the government which involves the payment of public funds.
(g) 'Governmental' means the state and all political entities thereof, both collectively and separately, including but not limited to:
(ii) Municipalities; and
(v) Any department, agency, board, commission, institution, instrumentality, or legislative or administrative body of the state, counties or municipalities created by statute, ordinance or executive order including all units that expend public funds.
(h) 'Governmental entity' means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.
(l) 'Pecuniary benefit' means benefit in the form of money, property, commercial interests or anything else the primary significance of which is economic gain. Expenses associated with social occasions afforded public servants shall not be deemed a pecuniary benefit.
(p) 'Public servant' means:
(i) Any elected or appointed official of the government;
(ii) Any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or
(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government."
Code Section 25-4-105(1) and (2) states:
"(1) No public servant shall use his official position to obtain pecuniary benefit for himself other than that compensation provided for by law, or to obtain pecuniary benefit for any relative or any business with which he is associated.
(2) No public servant shall be interested, directly or indirectly, during the term for which he shall have been chosen, or within one (1) year after the expiration of such term, in any contract with the state, or any district, county, city or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member."
Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion.
I am writing to seek an opinion on my present situation. Four (4) years ago, I ask for this same opinion and I was advised that it was satisfactory with your commission.
I am an alderman for the town and I am employed by the Natural Gas District as a serviceman. I would like to seek another term as alderman for my town but I feel that I do need an opinion from your commission. The deadline to run is March 1, 2001.
A Local and Private Law in 1950 established the Natural Gas District as a separate political subdivision of the State of Mississippi. The District is managed by a five (5) person board of directors, consisting of the mayors of three municipalities and two (2) elected representatives of two counties.
The Town's city hall is housed in the Natural Gas Building in the Town. The city hall and the Gas District offices are separate and distinct. The City does not transact any business for the Gas District and likewise, the Gas District does not transact any business for the City.
There are no implied or written agreements between the Town and the Natural Gas District of any type.
At the desecration of the Board of Directors, the District may make distributions to the cities from retained earnings if they so desire.
As a serviceman for the Gas District, I work under the manager in the office located in the Town and in no way does my work with the Gas District ever conflict with my job and/or performance as an Alderman for the Town as they are separate jobs.
As stated before, I would like an opinion before March 1, 2001 deadline to qualify for Alderman.
In addition to the requestor's facts, the Commission's staff has obtained the following general and specific supplemental information.
The general supplemental information is as follows. The Natural Gas District was established by ordinances adopted by the Town and two other municipalities in 1950. Also in 1950, the Mississippi Legislature by a Local and Private Law created and declared the Natural Gas District to be a valid political subdivision of the State of Mississippi. The Local and Private Law validated the organization of the Natural Gas District as originally adopted in the municipalities' ordinances which called for the Gas District's board to consist of the mayors of the three municipalities. In 1991, the Mississippi Legislature amended §77-15-1, 1972 MCA (amended), to add two members to the Natural Gas District's board. The two additional board members are residents of the two counties the gas system serves. The two county board members are elected by gas system users residing outside of the three municipalities. The Local and Private Law that creates the Natural Gas District provides that the District shall continue to exist as a political subdivision and does not provide for its dissolution.
The specific supplemental information is as follows and was provided by Town and District personnel. The Natural Gas District has unilaterally provided funding to the Town, and the other two municipalities, since 1969. By resolution, the Natural Gas District's board of directors authorized the distribution of a percentage of its gross revenues to the three municipalities on a monthly basis. The Gas District during its 1999-2000 fiscal year funded the Town in an amount totaling approximately $47,700.00. The Gas District during the first six months of the 2000-2001 fiscal year funded the Town in an amount totaling approximately $12,800.00. The Natural Gas District has reduced the percentage of gross revenues that it pays the Town during its current fiscal year due to increase revenues brought on by higher gas prices and has also informed the Town that it is changing the formula to a percentage of its net revenues effective July 2001. There are no written contracts existing between the Town and the Natural Gas District. However, there is an implied agreement whereby the Town is allowed by the Natural Gas District to occupy a portion of the District's building for use as a city hall.
The Commission formally adopts Advisory Opinion No. 93-044-E in response to this request and by attachment incorporates it into this opinion.
Based solely on the facts and circumstances presented by the requestor, the Commission's opinion is as follows.
The natural gas district is by state law considered a political subdivision of the state. Therefore, the definition of a "governmental entity" set forth in Code Section 25-4-103(h), cited above, includes the natural gas district, as well as, the town.
The state conflict of interest laws do not as such prohibit an employee of a one governmental entity from being a member of the board of a separate governmental entity.
However, a circumstance can exist that would cause a violation of the state conflict of interest laws should an employee of one governmental entity be a member of the board of a separate governmental entity.
That circumstance involves the existence of contracts between the two governmental entities, in this case the natural gas district and the town, in which the public servant, as an employee of the natural gas district and as an alderman of the town, would have a private pecuniary interest.
Constitutional Section 109 and Code Section 25-4-105(2), both cited above, provide that no member of a governmental body, including an alderman, may have an interest, direct or indirect, in any contract authorized by the board of which he is a member during his term and for one year thereafter.
In addition, the requestor is advised that the Mississippi Supreme Court had held that an order of a public official's board that appropriates funds that directly or indirectly benefit the public official through a governmental contract is part of the contract authorization process.(1)
As an example, should the town enter into an interlocal agreement with the natural gas district to provide a service to the town for which the town would pay the natural gas district and such service was directly or indirectly related to the duties of the requestor as a natural gas district employee, then Constitutional Section 109 and Code Section 25-4-105(2) would prohibit the requestor as the town's alderman from simultaneously being employed by the natural gas district when the interlocal agreement or any funding associated with the interlocal agreement was authorized by the town's governing board during the requestor's term or within one year thereafter.
The requestor is advised that a recusal or an abstention will not prevent a violation of Constitutional Section 109 and Code Section 25-4-105(2). Even without a board member's vote, the authorization by the member's board nonetheless results in a contract in which the board member has a prohibited interest.
In this instance, the funding, although substantial, flows from the natural gas district to the town. In addition, the implied agreement provides the town a benefit from the natural gas district in that the district provides spaces to the town for operation of its city hall.
The State Supreme Court in Johnston v. Reeves & Co., 72 So. 925 (Miss. 1916), held that if a position is a public office it is not held by contract.
Certainly, there is no question that an alderman who is elected by the voters is a public officer and thereby does not hold his position with the town by contract.
Since the position of alderman is one of public office and thereby not held by contract, the requestor is not in violation of Constitutional Section 109 and Code Section 25-4-105(2) due to the continued funding of the town by the natural gas district or the continued providing of space to the town by the district.
Notwithstanding the above, the requestor is advised to remain keenly aware of the above cited Code Section 25-4-105(1).
Code Section 25-4-105(1) prohibits public servants from using their official positions to obtain a pecuniary benefit for themselves, a relative or a business with which they are associated.
To avoid using their official positions to obtain a pecuniary benefit, the public servants must totally and completely recuse themselves from subject matters providing the pecuniary interests. An abstention is a vote with the majority of the governmental entity's board and therefore does not qualify as a recusal.
A total and complete recusal requires that the public servant not only avoid debating, discussing or taking action on the subject matter during the official meeting, but also avoid discussing the subject matter with other board members, staff or any other person prior to and after the official meeting. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means.
Also to properly recuse oneself from a matter, the public servant must leave the room or area where such discussions, considerations and/or actions take place. The minutes of the governmental entity's board should state the public servant left the meeting by showing him or her absent for that matter.
Therefore as set forth in the attached advisory opinion , the requestor is advised that the only way he can be certain to avoid violating Code Section 25-4-105(1) is to recuse himself from all matters coming before the town's governing board that concern the natural gas district.
Again, the requestor is reminded that a recusal will not prevent a violation of Constitutional Section 109 and Code Section 25-4-105(2).
The issue presented by the requestor also must be viewed as it relates to Code Section 25-4-101, set forth above. This code section sets the tone for the conflict of interest laws as the Legislature's "Declaration of Public Policy." This public policy can be summarized as any circumstance having the potential of creating suspicion among the public and reflecting unfavorably upon the state or local government should be closely reviewed by public servants with the intent to reduce or eliminate any suspicion on the part of the public which detracts from the public's trust in state or local government.
A natural gas district employee simultaneously serving as a town's alderman is a circumstance that has the potential of creating suspicion among the public and reflecting unfavorably upon the town when the natural gas district was created by the town, when the town's mayor serves on the district's board of directors, and when the natural gas district unilaterally provides significant funding to the town.
In many circumstances similar to this instance, a board member of a governmental entity can totally and completely recuse himself from all matters coming before his governing board that concern his governmental entity employer and thereby comply with the public policy mandate set forth in Code Section 25-4-101.
However in this instance, there are concerns related to the public policy mandate set forth in Code Section 25-4-101 that a recusal does not adequately address.
First, an alderman has a fiduciary responsibility and a trustee's duty to at all times act in the best interest of the municipality he is elected to serve. As an employee of the natural gas district, there will always be a question of whether the requestor has the town's interest or his own interest first in regard to the district's continued funding of the town. The Commission has been advised that the natural gas district has recently informed the municipalities that it is revising the formula it uses to calculate its payments to the municipalities from gross revenues to net revenues. The ability of the natural gas district to increase its employees compensation is obviously affected by the revenues it retains. Therefore, an alderman who fails to actively and forcefully lobby the district to maintain the town's current funding because of a recusal only enhances the public's concerns about his public interest versus his private interest.
Secondly, there is a question of how effectively the requestor can lobby the natural gas district's board members on behalf of the town as its alderman when they are the requestor's employers. Related to this issue, is the question of the mayor and his influence over the requestor as an alderman due to the mayor being a member of district's board and thereby the requestor's employer.
Based on the above concerns, it is unclear to the Commission how the
requestor can fulfill his fiduciary responsibility and trustee's duty at
all times as an alderman as required by law while employed by the natural
gas district. The Commission advises the requestor to give serious consideration
to these concerns before deciding to continue his candidacy for reelection
to the position of alderman.
Ronald E. Crowe
Executive Director