This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on May 7, 2004, basing its approval solely on the facts and circumstances stated herein.

 
May a county purchase asphalt from a corporation in which the chancery clerk has a material financial interest?

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:

Code Section 25-4-103(a), (b), (c), (d), (g)(i)(v), (h), (k)(i)(ii) and (p)(i) states, in pertinent part:
 

“(a) ‘Authority’ means any component unit of a governmental entity.

(b) ‘Benefit’ means any gain or advantage to the beneficiary, including any gain or advantage to a third person pursuant to the desire or consent of the beneficiary.

(c) ‘Business’ means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company,  self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a  nonprofit corporation or other such entity, association or organization receiving public funds.

(d) ‘Business with which he is associated’ means any business of which a public servant or his relative is an officer, director, owner, partner, employee or is a holder of more than ten percent (10%) of the fair market value or from which he or his relative derives more than One Thousand Dollars ($1,000.00) in annual income or over which such public servant or his relative exercises control.

 (g) ‘Government’ means the state and all political entities thereof, both collectively and separately, including but not limited to:

(i) Counties; 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.

(k) ‘Material financial interest’ means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other.  Notwithstanding the foregoing, the following shall not be deemed to be a material financial interest with respect to a business with which a public servant may be associated:

(i)  Ownership of any interest of less than ten percent (10%) in a business where the aggregate annual net income to the public servant therefrom is less than One Thousand Dollars ($1,000.00);

(ii) Ownership of any interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant therefrom is less than Five Thousand Dollars ($5,000.00).

 (p) ‘Public servant’ means:

(i) Any elected or appointed official of the government.”

Code Section 25-4-105(3)(a) and (4)(b)(c)(d) states, in pertinent part:
 

“(3) No public servant shall:

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the  governmental entity of which he is a member, officer, employee or agent.

(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his relative:

(b) May be a contractor or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which he is a member, officer, employee or agent where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods, services or property involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

(c) May be a subcontractor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which is a subcontractor with any authority of the governmental entity of which he is a member, officer, employee or agent where the primary contract is let to the lowest and best bidder after competitive bidding or where such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

(d) May be a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which is a contractor, subcontractor or vendor with any  authority of the governmental entity of which he is a member, officer, employee or agent: (i) where such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws; or (ii) where the contractual relationship involves the further research, development, testing, promotion or merchandising of an intellectual property created by the public servant.”

Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion.
 

The County Board of Supervisors has asked me to request an opinion from your Commission on the following question: The newly elected Chancery Clerk is a part owner in an Asphalt Company.  He is also vice president of that company.  That company has been supplying the County with asphalt for eight years.  It is the only asphalt company located in the County.  The problems in obtaining asphalt from the next nearest asphalt plant which is located in another state, and owned by APAC are two fold.  First, the hot mix plant located in a city in our County is approximately 26 miles roundtrip from the County shop.  The APAC plant is several more miles roundtrip from the County shop.  The reduction in mileage in man hours are easily reflected by those numbers.  For example, for a truck to leave the city out of state there would be an additional hauling charge of $2.00 per ton.  Trailer trucks can haul 25 tons so this would mean $50.00 per load that the County would have to pay.

Second, asphalt is a temperature-related product and there are times when hauling from long distances can result in problems with job completion.  Cold joints, a common problem, often results from asphalt not arriving to the job site in a timely manner.  During the hot summer this usually isn’t a problem, but during the fall, winter, and early spring with colder temperatures and sudden rain showers minimum delivery time often makes the difference in an asphalt job being properly completed.  The solution is more trucks, more workers and ultimately more expense to offset this and keep the jobs flowing.  In addition, traveling from the County to the APAC facility in the out of state city often requires delays at the weight scales on the Highway, again increasing time between loading and arrival at the job site.

The County needs to know whether, in this situation, it is a violation for the County to contract with the Asphalt Company for the purchase of asphalt.

The Commission’s staff also contacted the requestor for additional information which indicated the chancery clerk has a material financial interest in the asphalt company.

Based solely on the facts and circumstances presented by the requestor and other information mentioned hereafter, the Commission’s opinion is as follows.

Section 25-4-105(3)(a), Miss. Code of 1972, quoted above, prohibits a public servant, like a chancery clerk, from having a material financial interest in a business which is a contractor, subcontractor or vendor to the county. However, several exceptions to this rule may be found in Section 25-4-105(4).

First, a county official, or his company, may be a contractor or vendor to an authority of county government other than the authority in which he works, if the contract is let to the lowest and best of at least three competitive bidders. § 25-4-105(4)(b). Here the authority in question  includes the general county government which encompasses the board of supervisors and the office of the chancery clerk. While an asphalt contract would be let by the board of supervisors, the chancery clerk would be involved in the approval and payment of the contract through his or her positions as secretary of  the board and as county treasurer. Thus, an asphalt contract with the county would directly involve the chancery clerk’s office and would not qualify for this exception.

Similarly, the chancery clerk’s asphalt company could legally be a subcontractor with an authority other than the chancery clerk’s office, when the general contract was let to the lowest and best of at least three competitive bidders. § 25-4-105(4)(c). As the primary contract would directly involve the chancery clerk’s office, so would any subcontracts executed pursuant thereto, making the Subsection (4)(c) exception inapplicable as well.

The third exception to consider is contained in Section 25-4-105(4)(d). That paragraph would allow the chancery clerk’s company to be a contractor, subcontractor or vendor to any authority of county government if the goods or services involved are reasonably available from two or fewer commercial sources, provided the transactions also comply with the public purchases laws. That is the factual question upon which this opinion hinges - whether asphalt is reasonably available to the county from two or fewer commercial sources.

Mere inconvenience does not make availability unreasonable. The Commission has repeatedly found geographic boundaries like city limits and county lines do not necessarily affect reasonable availability. Neither would the state line limit the availability of a product in a county which borders the sister state. Nor would increased costs incurred by using an alternative source necessarily make the use of that source unreasonable.

However, the requestor is correct in referring to hot mix asphalt as a “temperature-related product”. It is common knowledge that hot mix asphalt must be applied while it is still hot, so that the acceptable distance is limited between the plant where the asphalt is produced and the job site where the paving will be done. Thus, if there are only one or two hot mix asphalt plants within an acceptable distance of a job site, then that plant or plants would qualify for the exception contained in Section 25-4-105(4)(d).

The Commission staff contacted asphalt paving experts in government and in the private sector for information about the limitations on transporting hot mix asphalt. These experts all advised the common rule of thumb is that hot mix asphalt can be transported a maximum of about fifty miles. This distance limitation is approximate and can be affected by insulation, air temperature and other weather conditions, as well as factors affecting transport time such as traffic.

The Commission notes the requestor mentions only two available sources for hot mix asphalt, yet information obtained from an asphalt paving trade group indicates there are five more hot mix asphalt plants located in adjoining counties and another two in nearby counties, all of which lie within fifty miles of the county seat in question. Therefore, the Commission finds as a matter of fact that there are more than two commercial sources of hot mix asphalt reasonably available to the county in question. Consequently, the exception found in Section 25-4-105(4)(d) is not applicable in this instance, and the asphalt business partly owned by the chancery clerk is therefore prohibited by Code Section 25-4-105(3)(a) from being a contractor, subcontractor or vendor to the county.
 
 

Scott Rankin
Executive Director