Filing Number: 07-05
Subject: Voting Conflict
Keywords: conflict, developer, elected official, land use, non delegable, outside employer, public notice, recusal
Decision By: Commissioners: John McMahon Kathryn Denhardt, V. Eugene McCoy, Mark Murowany, Ernest Price
Contact Email: admin@nccethics.org
 
Status: Active

Question:

            An official requests guidance on two issues:
 
Question 1:  whether he may vote on a land use ordinance brought before his agency by an unrelated developer if the official's outside employer represents a client who is a potential partner to the developer in the same matter;
 
Question 2:  whether he may vote if the developer chooses a partner who is not represented by his outside employer.

Conclusion:

            Question 1:  The official should not vote on the ordinance if his outside employer represents a client that has a potential or actual financial interest in the matter. However, if he decides that the public interest requires him to cast his non-delegatable vote, he must follow the procedure described in Code Section 2.03.103(A)(2) and provide a written description of the ethical issue to the Commission and read that communication into the public record before he votes. If he abstains from vote he must simply declare on the public record the reason for his abstention.
 
            Question 2:   In this unusual circumstance where the law constrains the official's discretion regarding the vote on this matter, if the outside employer's client loses its bid for partnership with the developer and has no reasonable expectation of future financial interest in the matter, the official may vote after he discloses on the public record the outside employer's client's previous interest in the subject matter of the ordinance.

Facts:

            A County official with a non-delegatable duty to vote on a major subdivision plan is an employee of an outside business that represents clients in land ownership matters. An ordinance is expected to come before the official's agency for vote regarding land which is currently owned by a developer. Under current law, if the subdivision plans are certified to comport with the County land use code, the official's agency is required to approve the ordinance. The official's outside employer represents one of several purchasers who have made offers to buy the land or partner with the developer. The official expects the developer to choose a partner prior to the date of the vote. If so, the partner will then have a direct financial interest in the ordinance at the time of the vote.

Code or Prior Opinion:

Code provisions
 
            The conflict of interest rules at New Castle County Code Section 2.03.103(A)(1) and (B)(1) prohibit the use of official authority by a County official or employee "for the personal or private benefit of himself or herself, a member of his or her immediate family or a business with which he or she is associated."1 These conflict rules mean that an official or employee may not exercise any authority derived from his or her County position in matters involving his or her immediate family members or businesses associated with him or those family members, other than in those situations in which the employee or immediate family are affected in a manner like the general public, or an industry or occupation or group which includes them.
 
            The Ethics Code's conduct rules at Section 2.03.104(A) also recite prohibitions affecting the exercise of County authority by an official when direct financial conflict is not at issue. That subsection prohibits exercise of official authority which creates an appearance that the decisions or actions of a County official or his or her department are influenced by factors other than the merits of the matter for decision. This prohibition exists because such conduct undermines public confidence in the impartiality of the governmental body with which the employee or official is associated.2
 
            However, when a conflict or an appearance of impropriety exists but an official's duty cannot be delegated, such as when a specified elected official is required by law to perform an official act or vote, Section 2.03.103(A)(2) permits official action as long as promptly after becoming aware of a conflict of interest, the official files a written statement with the Commission fully disclosing the personal or private interest and explaining why it is not possible to delegate responsibility for the matter to another person. If the matter is one in which the legal and/or statutory responsibility requires the person to vote upon the issue, the written statement filed with the Commission shall be read into the public record prior to the time the person's vote is cast. Any person choosing to abstain from voting on an issue where he or she has a conflict shall state the reasons for his or her conflict on the record; an abstaining voter need not file the written statement with the Commission required when acting on, rather than abstaining from, an issue involving a conflict.3
 
Prior Commission Opinions
 
            The Ethics Commission has long ruled that outside employment is not a problem "where there is no nexus between an employee's or official's County job and secondary employment". See Advisory Opinion 94-05. However, when that nexus does exist, the Code may impose restrictions on the exercise of authority.
 
            In Advisory Opinion 99-01, the Commission ordered an official to recuse himself from a vote in which a client of his or of his law firm had a financial interest in the matter to be voted upon. In that case, the law firm represented the client on the matter to be voted upon and the Commission determined that the conflict of interest rules would be violated if the official voted because the "official would be using his office to further his and his firm's pecuniary interest". It further concluded that the perception that the County official was voting to increase his or his firm's success or to please his or his firm's clients would also exist thereby creating an appearance of impropriety.
 
            In that Opinion the Commission also discussed a fact situation similar to that at issue here. It found that there would be
 
A more difficult issue if the vote was upon a matter in which a current client of his or his firm has a financial interest, if the County official and his firm do not represent the client in that matter. The Commission again recommends recusal in this circumstance, if the county official knows or reasonably should have know of the client's financial interest in the County Council matter. . . . Under these circumstances an appearance of impropriety would be created by his voting upon such a matter. . . . [I]t may appear that the County official's vote was made to foster favorable client relations or in exchange for the client providing the County official or his firm with the client's business, if he were to vote on a matter when his or his firm's clients had a financial interest in the matter. Such an appearance undermines the public trust. A.O. 99-01 at p. 4.
 
            In Advisory Opinion 00-01 the Commission determined that an official should recuse himself in accord with Code provisions when a matter benefiting the official's private employer was at issue because the public may believe the official was voting on the matter for a reason other than its merits. 
 
            In Advisory Opinion 04-11, an official was instructed to divest himself of sponsorship and vote on a matter in which a client of his spouse had a pecuniary interest, even though the spouse was not representing the client before the official's agency. The Commission found that even though there was no conflict of interest, a reasonable member of the public would believe that official authority was being used to advance the spouse's interests.
 
            In Order 05-04, the Commission determined that an official's vote on a matter benefiting a client of his spouse violated the conduct rules by creating an appearance that the official's ability to cast an impartial vote was impaired because of the spouse's business relationship with the client.

Analysis:

            The Commission is persuaded that the first question asked by the requester has been answered in its prior opinions. If the outside employer's client has a potential financial interest in the ordinance as a prospective purchaser, the official must recuse himself from vote in order to avoid creating the appearance that his exercise of authority is not impartial. When he abstains from vote because of the conflict, he must explain the situation on the public record. Since the official may not delegate his vote, he can choose to vote despite the conflict if he determines that the public interest requires him to vote. However, he must comply with the procedure recited in Section 2.03.103(A)(2) by sending a written statement to the Commission describing the ethical issue, which must also be read into the public record before he casts his vote.
 
            The second question is more difficult to answer. In a matter where the official has unfettered discretion to exercise his vote, he would be advised to recuse himself because of the appearance that he could use his vote to punish the developer for rejecting the client of his outside employer. However, in this case, regardless of the choice of partner, the official is required to vote in favor of the ordinance if an executive department certifies that the subdivision plan is in accord with County law. At most, his vote can contribute to delaying that approval by twice returning the ordinance for review of specified areas of compliance. Under these conditions, the Commission thinks that simple disclosure on the public record of the outside employer's client's former relationship with the developer before the vote would be sufficient to dissipate any suspicion of impropriety.

Finding:

            The official should not vote on the ordinance if his employer represents a client which has a potential or actual financial interest in the matter. If he decides that the public interest requires him to cast his non-delegatable vote, he must follow the procedure described in Code Section 2.03.103(A)(2) and provide a written description of the ethical issue to the Commission and read that communication into the public record before he votes. If he abstains from vote he must simply declare on the public record the reason for his abstention.
 
            In this unusual circumstance where the law constrains the official's discretion regarding the vote on this matter, if the outside employer's client loses its bid for partnership with the developer and has no reasonable expectation of future financial interest in the matter, the official may vote after he discloses on the public record the outside employer's client's previous interest in the subject matter of the ordinance.
 
            In issuing this Advisory Opinion, the Ethics Commission is applying the New Castle County Code of Ethics, which establishes the minimum level of ethical conduct required of County officials and employees. The Commission cautions, however, that each County department, board, or other unit of County government is free to, and may impose as part of its own policy, additional or greater restrictions on its officials and employees than those set forth in this Opinion.
 
            BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION ON THIS 11th DAY OF APRIL 2007.
 
_________________________
John McMahon, Chairperson
 
Decision: Unanimous

Footnotes:

1New Castle County Code Section 2.03.102 defines Business as "any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self-employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. That section defines the phrase business with which he or she is associated as "any business in which the person is a director, officer, owner or employee; or a business in which a member of the person's immediate family is a director, officer, owner or has a financial interest." New Castle County Code Section 2.03.103. Prohibitions relating to conflicts of interest, states in pertinent part:
A.     Restrictions on exercise of official authority.
1.     No County employee or official knowingly or willfully shall use the authority of his or her office or employment or any confidential information received through his or her holding County office or employment for the personal or private benefit of himself or herself, a member of his or her immediate family or a business with which he or she is associated. This prohibition does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the County official or employee, a member of his or her immediate family or a business with which he or she or a member of his or her immediate family is associated. There will be a rebuttable presumption of a knowing or willful violation of this section if the action benefits the County official or employee, his or her spouse, or his or her dependent children (whether by blood or by law).
. . .
B.     Restrictions on representing another's interest before the County.
1.     No County employee or County official may represent or otherwise assist any private enterprise with respect to any matter before the County Department with which the employee or official is associated by employment or appointment.
2.     No County official may represent or otherwise assist any private enterprise with respect to any matter before the County. This prohibition is to be considered personal to the County official and is not, for purposes of the New Castle County Ethics Code only, deemed to impact other members of a firm, business or other employer by which the County official is employed.
3.     This subsection shall not preclude any County employee or County official from appearing before the County or otherwise assisting any private enterprise with respect to any matter in the exercise of his or her official duties.

2 New Castle County Code Sec. 2.03.104. Code of conduct.
A. No County employee or County official shall engage in conduct which, while not constituting a violation of Section 2.03.103(A)(1) [conflict of interest], undermines the public confidence in the impartiality of a governmental body with which the County employee or County official is or has been associated by creating an appearance that the decision or action of the County employee, County official or governmental body are influenced by factors other than the merits.

3 New Castle County Code Section 2.03.103. Prohibitions relating to conflicts of interest, in pertinent part:
A.     Restrictions on exercise of official authority.
. . .
2.     In any case where a person has a legal and/or statutory responsibility with respect to action or nonaction on any matter where the person has a personal or private interest and there is no provision for the delegation of such responsibility to another person, the person may exercise responsibility with respect to such matter, provided that promptly after becoming aware of such conflict of interest, the person files a written statement with the Commission fully disclosing the personal or private interest and explaining why it is not possible to delegate responsibility for the matter to another person. If the matter is one in which the legal and/or statutory responsibility requires the person to vote upon the issue, the written statement filed with the Commission shall be read into the public record prior to the time the person's vote is cast. Any person choosing to abstain from voting on an issue where [he] or she has a conflict shall state the reasons for his or her conflict on the record; an abstaining voter need not file the written statement with the Commission required when acting on, rather than abstaining from, an issue involving a conflict.