CONFLICT OF INTEREST
WATER MANAGEMENT DISTRICT GENERAL COUNSEL'S SPOUSE'S LLC
OWNING PROPERTY REGULATED BY DISTRICT
To: Name withheld at person's request (South Florida Water Management District)
A prohibited conflict of interest would not be created under Sections 112.313(3) or 112.313(7)(a), Florida Statutes, where the spouse of the General Counsel of a Water Management District owns an interest in a company owning property subject to the District's regulation.
Would a prohibited conflict of interest exist were your husband to own an interest in a company which owns property subject to the regulation of the South Florida Water Management District?
Your question is answered in the negative.
You state that prior to your employment with the South Florida Water Management District, which you serve as General Counsel, your husband formed a limited liability company ("LLC") in which you and he jointly owned a one-half interest, with his parents owning the other one-half interest. This LLC purchased an 85-acre tract of land within the boundaries of the District, and at the time the land was being used as an orange grove and was the subject of an existing District-issued water use general permit.
Following hurricanes and the discovery of citrus canker, and still prior to your employment with the District, the trees on the land were burned and the LLC received compensation. In addition, the LLC entered into a contract with the USDA to participate in a conservation program. You relate that pursuant to the contract, the plan is to work with the USDA to build a system that will allow the property to use surface water to supply a portion of its irrigation. You anticipate that, in time, a change of use permit and other permits from the District will be required in order to construct the irrigation system and use the property for growing crops.
Finally, you advise that prior to your employment with the District, you transferred your interest in the LLC to your husband. In addition, you advise that you have not interacted, and do not intend to interact, with any District staff regarding the LLC or the subject tract of land.
Section 112.313(3), Florida Statutes, states:
DOING BUSINESS WITH ONE'S AGENCY.—No employee of an agency acting in his or her official capacity as a purchasing agent, or public officer acting in his or her official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his or her own agency from any business entity of which the officer or employee or the officer's or employee's spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or the officer's or employee's spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to the officer's or employee's own agency, if he or she is a state officer or employee, or to any political subdivision or any agency thereof, if he or she is serving as an officer or employee of that political subdivision.
This section would prohibit you from acting in an official capacity as a purchasing agent to purchase, rent, or lease goods, services or realty for the District from the LLC, and would prohibit your acting in a private capacity to rent, lease, or sell goods, services, or realty to the District. However, nothing in the information you have provided suggests that any sale or lease of the LLC's property to the District is contemplated. Section 112.313(7)(a), Florida Statutes, provides:
CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.—No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he or she is an officer or employee…; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his or her private interests and the performance of his or her public duties or that would impede the full and faithful discharge of his or her public duties.
The first part of Section 112.313(7)(a) prohibits you from having an employment or contractual relationship with a business entity doing business with or subject to the regulation of the District. The second part prohibits you from having any contractual relationship which would create a continuing or frequently recurring conflict between your private interests and the performance of your public duties, or would impede the full and faithful discharge of your public duties.
For both parts of Section 112.313(7)(a), the threshold issue is the existence of a contractual relationship. A membership interest in an LLC is a "contractual relationship" as the term is used in the statute. See, CEO 08-7. However, once you transferred your interest in the LLC to your husband, you no longer had a contractual relationship with that company, and we have not considered the marital relationship itself to constitute an "employment or contractual relationship" within the meaning of the prohibition. CEO 92-43. Thus, the threshold requirement of the prohibition is not met.
While your husband does have a contractual relationship with the LLC, in a number of opinions we have said that the conflict of interest provision in Section 112.313(7)(a) only applies to the official—not to his or her spouse. See, CEO 92-43 and the opinions cited therein. In CEO 11-4 we stated,
The majority of the provisions of the Code of Ethics for Public Officers and Employees address conflicts of interest arising out of the actions and interests of the public officer or employee, rather than those of his or her relatives. For example, the standard that addresses prohibited employment and contractual relationships (Section 112.313(7), Florida Statutes) applies only to employment and contractual relationships of the public officer or employee.
In CEO 05-7, we found that a prohibited conflict of interest would be created under Section 112.313(7)(a) were a member of a medical case management team to be employed by and part owner of a group home for the developmentally disabled, because his agency regulated such group homes and his job responsibilities involved inspections of group homes, cost plans for residents, and investigation of complaints. But we found no conflict of interest would be created were the employee's wife to own and operate the group home independently, saying, "[a]s the employee would have no employment or contractual relationship outside his public employment, Section 112.313(7) would not apply."
However, as we did in CEO 05-7, we caution that you also are governed by the following provisions within the Code of Ethics for Public Officers and Employees:
DISCLOSURE OR USE OF CERTAIN INFORMATION. -- A current or former public officer, employee of an agency, or local government attorney may not disclose or use information not available to members of the general public and gained by reason of his or her official position, except for information relating exclusively to governmental practices, for his or her personal gain or benefit or for the personal gain or benefit of any other person or business entity. [Section 112.313(8), Florida Statutes.]
MISUSE OF PUBLIC POSITION.--No public officer, employee of an agency, or local government attorney shall corruptly use or attempt to use his or her official position or any property or resource which may be within his or her trust, or perform his or her official duties, to secure a special privilege, benefit, or exemption for himself, herself, or others. This section shall not be construed to conflict with s. 104.31. [Section 112.313(6), Florida Statutes.]
The term "corruptly" is defined as follows:
Corruptly means done with a wrongful intent and for the purpose of obtaining, or compensating or receiving compensation for, any benefit resulting from some act or omission of a public servant which is inconsistent with the proper performance of his or her public duties. [Section 112.312(9), Florida Statutes.] Sections 112.313(6) and (8) prohibit you from using your public position or resources within your trust to further your husband's private business activity, and from imparting information gained through your official position and not available to the general public for the benefit of your husband or the LLC. Accordingly, we find that a prohibited conflict of interest is not created under Sections 112.313(3) or 112.313(7)(a), Florida Statutes, where your husband owns an interest in a company which owns property subject to the regulation of the Water Management District.1
ORDERED by the State of Florida Commission on Ethics meeting in public session on February 3, 2012 and RENDERED this 8th day of February, 2012.
Robert J. Sniffen, Chairman
Our finding herein precludes the need to determine whether the "sole source" exemption of Section 112.313(12)(e), Florida Statutes, would apply to your situation.