CONFLICT OF INTEREST

CONTRACT BETWEEN COUNTY COMMISSIONER'S AGENCY AND EMPLOYER
REINSTATED PURSUANT TO LITIGATION SETTLEMENT AGREEMENT

To: Robert B. Shillinger, County Attorney (Monroe County)

SUMMARY:

A member of the Monroe County Board of County Commissioners will not have a prohibited conflict of interest if a contract between her Board and her private employer that was executed prior to her appointment to office is reinstated through a litigation settlement agreement and if options written into that contract are then exercised to extend the contract. Analysis is also provided regarding whether the Commissioner will have a prohibited conflict of interest if amendments are made to the terms of the contract, and guidance is provided concerning potential voting conflicts. Referenced are CEO 76-118, CEO 77-14, CEO 77-126, CEO 78-86, CEO 81-2, CEO 82-10, CEO 84-107, CEO 90-24, CEO 96-31, CEO 96-32, CEO 97-11, CEO 02-14, CEO 02-19, CEO 03-17, CEO 08-4, CEO 09-1, CEO 12-13, CEO 17-4, CEO 19-7, CEO 20-8, and CEO 20-10.

QUESTION 1:

Will a prohibited conflict of interest be created for a member of the Monroe County Board of County Commissioners if a terminated contract between the County and the member's employer that was originally executed before the member's appointment to the Board is reinstated to settle litigation between the employer and the County?

This question is answered in the negative.

You write your letter of inquiry on behalf of Holly Merrill Raschein,^[1] a current member of the Board of County Commissioners of Monroe County (Board). In your letter, you explain a sequence of events concerning the County's vendor agreement with AshBritt, Inc. (Ashbritt), a provider of emergency management and disaster relief services. On June 21, 2017, the County contracted with AshBritt for disaster relief services. The term of the contract was five years (expiration date of June 20, 2022), but the contract also contained options for the County to renew the agreement in one-year increments for up to five additional years (latest possible expiration date of June 20, 2027), with all other terms remaining the same. On October 25, 2017, however, AshBritt sued the County and, on August 18, 2018, the County terminated the contract with AshBritt. On December 1, 2020, AshBritt hired Ms. Raschein as its new director of government relations. In that role, she is not an owner, officer, or corporate director of AshBritt. On September 24, 2021, Governor DeSantis appointed Ms. Raschein to a vacant seat on the Board. On June 20, 2022, the expiration date passed for the original five-year term of the contract between the County and Ashbritt. On July 25, 2022, AshBritt made an offer to settle its litigation against the County. On August 23, 2022, Commissioner Raschein won the open primary for the special election to fill the remaining two years of the unexpired term to which she had originally been appointed. On August 31, 2022, AshBritt amended its settlement offer.

Under the terms of the July 25, 2022 settlement offer, Ashbritt would dismiss all claims with prejudice and waive payments for additional fees, including attorney's fees, and, in exchange, the County would reinstate the June 21, 2017 contract and exercise its option to extend the term of the contract for one additional year. The terms of the August 31, 2022 amended settlement offer are identical, except it stipulates the County will agree to exercise all five of its options to extend the term of the contract by one year, for a total of five years. Under the terms of the amended settlement agreement, once the options to extend the agreement are exercised, the contract would be set to expire on June 20, 2027. In subsequent communications with Commission staff, you indicate it remains unclear whether the settlement agreement will be rendered as part of a judicial order, though you expect that AshBritt would prefer this and you expect the County will have no objection to it.

It is expected that on November 15, 2022, Commissioner Raschein will begin serving a two-year term (after which the seat will return to its normal election cycle). In mid-December 2022, you expect the Board to consider AshBritt's settlement offer in a closed, attorney-client session. You and Commissioner Raschein have exchanged correspondence and participated in video conferences with Commission staff about her ethical obligations and you have informed Commission staff that Commissioner Raschein will not be participating in the closed attorney-client session, and will follow the procedures for a voting conflict under Section 112.3143, Florida Statutes, relating to any votes pertaining to AshBritt or the litigation (more on that below).

With this background, you ask whether a conflict of interest will be created for Commissioner Raschein if the County accepts the original settlement agreement or the amended settlement agreement.

Relevant to this inquiry, Section 112.313(7)(a), Florida Statutes, states:

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 clause of this statute prohibits a public officer or employee from having any employment or contractual relationship with a business entity or an agency that is regulated by or is doing business with his or her agency. The second clause of Section 112.313(7)(a) prohibits a public officer or employee from having employment or a contractual relationship that would create a continuing or frequently recurring conflict of interest or would create an impediment to the full and faithful discharge of his or her public duties.

We first review Commissioner Raschein's employment with AshBritt under the first clause of Section 112.313(7)(a). In your request for an ethics opinion, you detail two separate contractual agreements requiring analysis: (1) the settlement agreement extinguishing the lawsuit AshBritt brought against the County; and (2) the 2017 contract between the County and AshBritt for disaster relief services that will be reinstated under the terms of the proposed settlement agreement.

We address the settlement agreement first. We have not previously had the opportunity to address whether a settlement agreement could create a conflict of interest for a public officer or employee under the first clause of Section 112.313(7)(a). We have said in the past that an agency and business entity are not "doing business" when they commence or participate in a lawsuit against each other. See CEO 17-4 (citing CEO 77-14). In practical terms, a settlement of an active lawsuit before the courts is a necessary part of the lawsuit—its end—and represents resolution of the conflict. Because a settlement agreement is part of a lawsuit, and a lawsuit does not constitute "doing business," we find that an agreement to settle a lawsuit that has been filed in the courts also does not constitute "doing business." Therefore, the settlement agreement between the County and AshBritt does not create a prohibited conflict of interest under the first clause of Section 112.313(7)(a) for Commissioner Raschein.

We next address the 2017 contract for disaster relief services. It is clear that if this contract is reinstated, Commissioner Raschein will have employment with a business entity (AshBritt) that is doing business with her agency (the County). There may, however, be an exception available to negate the conflict.

In certain situations when a conflict of interest under the first clause of Section 112.313(7)(a) is present, the conflict can be negated by an application of Section 112.316, Florida Statutes,^[2] if the public officer's or public employee's private employment or contractual relationship and the "doing business" relationship between the business entity and the agency both predate the public officer's office holding or the public employee's public employment. CEO 82-10; CEO 96-31; CEO 96-32; CEO 02-14; CEO 02-19; CEO 81-4, footnote 6; and CEO 09-1. In our numerous opinions on this topic, we have referred to this negation of the conflict of interest as "grandfathering." For example, in CEO 19-7, a preexisting business relationship between a water management district and a corporation was found not to be a prohibited conflict of interest under Section 112.313(7)(a) for a shareholder of the corporation who was later appointed to the governing board of the water management district. Even when preexisting contracts are "grandfathered," renewals and amendments to those contracts are considered new contracts no longer benefiting from the application of "grandfathering," unless "the renewal is for a time certain provided for in the original [contract] and the terms of the renewal remain the same as those of the original contract." CEO 09-1 (citing CEO 03-17).

We find that grandfathering is available to negate the prohibited conflict of interest under the first clause of Section 112.313(7)(a). The contract was originally executed on June 21, 2017, and Commissioner Raschein's employment with AshBritt began on December 1, 2020; both events predate her appointment to the Board on September 24, 2021. Although the contract for disaster relief services was not continuously in effect, having been terminated in 2018, we find that the contract represents a meeting of the minds between the County and AshBritt that occurred in a conflict-free environment for Commissioner Raschein, long before she was appointed to the Board. Thus, the termination and subsequent reinstatement of the contract does not affect the availability of "grandfathering" to negate the conflict.

The exercise of the options to extend the reinstated contract also do not vitiate the availability of "grandfathering." The options were included in the terms of the original contract and merely extend the term of the deal for a time certain, while leaving all other terms unchanged. We allowed similar extension options to be exercised in CEO 03-17 and CEO 09-1 without vitiating the availability of "grandfathering"; we allow it here for the same reasons.

For these reasons, the prohibited conflict of interest created under the first clause of Section 112.313(7)(a) by the reinstatement of the 2017 contract is negated by "grandfathering."

Lastly, we must analyze Commissioner Raschein's employment with AshBritt under the second clause of Section 112.313(7)(a). We see no indication that the second clause of Section 112.313(7)(a) poses a prohibited conflict of interest for her, given that there is nothing obvious about her private role that would tempt her to dishonor her public responsibilities. Previous contacts with Commission staff indicate that she does not represent AshBritt's interests before the County Commission or County staff. As Commission staff wrote to you in a March 8, 2022 letter, such communications made on behalf of AshBritt would violate the second clause of Section 112.313(7)(a) by creating a continuing and frequently recurring conflict between her public duties and her private employment; potentially tempting her to dishonor her public responsibilities. See Zerweck v. Commission on Ethics, 409 So. 2d 57 (Fla. 4th DCA 1982); see also CEO 77-126, CEO 78-86, and CEO 20-8, Question 1.^[3]

We understand that you and Commissioner Raschein have been in regular contact with Commission staff to clarify her ethical obligations in light of her ongoing employment with AshBritt. In those communications, Commission staff have provided guidance for complying with the voting conflict law, specifically when votes on the litigation between AshBritt and the County are presented to the Board. You did not specifically ask about voting conflicts in the instant ethics inquiry, but we take this opportunity to endorse what has already been communicated to you about voting conflicts^[4] because you indicate votes about the settlement agreement will be presented to the Board in mid-December 2022.

QUESTION 2:

Will a prohibited conflict of interest be created for a member of the Monroe County Board of County Commissioners if a terminated contract between the County and the member's employer that was originally executed before the member's appointment to the Board is reinstated to settle litigation between the employer and the County, but with many contract provisions amended to include new terms, some mandated by state law and others required by the Federal government to make the contract eligible for Federal reimbursement?

This question is answered as follows.

In communications subsequent to your initial request for a formal advisory opinion, you have indicated that the County is considering a scenario whereby it settles the matter as described in Question 1, above, but, additionally, as part of the settlement of the lawsuit, the parties agree to amend certain provisions of the 2017 contract.

As you have explained in written and telephonic communications with Commission staff, the Federal Emergency Management Agency (FEMA) has authority to reimburse certain eligible contracts for disaster relief services between disaster relief service providers and state or local governments when those contracts contain particular terms. FEMA provides suggested language for these contract provisions, but the suggested language need not be used word-for-word to effectuate eligibility for the reimbursement. According to you and your staff, because the wording of the suggested language is somewhat fungible, the phrasing of the amendments is technically negotiable, though, historically, the disaster relief companies that have contracted with the County have never attempted to negotiate the wording when the County has proposed amendments to remain eligible for FEMA reimbursement.

You explain that FEMA now requires more terms in disaster relief contracts to be eligible for reimbursement than it did when the 2017 contract was executed and, because of that, there is a compelling reason to amend the 2017 contract to include the additional terms suggested by FEMA—so the County will be eligible for the reimbursement of costs by FEMA. If the County and AshBritt reinstate the 2017 contract without amending it to comport to the FEMA requirements, the contract will be enforceable, but the County will not be eligible for Federal reimbursement for the disaster relief services provided by AshBritt. According to you and your staff, reinstating the 2017 contract without the amendments means forgoing reimbursements from FEMA, which, in turn, means the County could potentially incur tens of millions of dollars in otherwise-reimbursable costs.

Compliance with the FEMA requirements for reimbursement would require amending the 2017 contract to add terms spanning many topics: those requiring adherence to the standards of certain Federal laws, including the Contract Work Hours and Safety Standards Act, the Clean Air Act, the Byrd Anti-Lobbying Amendment, the Resource Conservation and Recovery Act, and the Energy Policy and Conservation Act; those requiring compliance with certain standards prohibiting contractors from purchasing communication devices produced by Huawei Technologies Company or ZTE Corporation; and those allowing the Department of Homeland Security to access and inspect records and the vendor's staff.

According to you, if the 2017 contract is reinstated, the County also will be required by state laws implemented since 2017 to include additional terms that must be incorporated into certain vending contracts. These additions are separate and apart from the changes necessary to achieve FEMA reimbursement. These nondiscretionary terms, which are required by state law and set out in Section 287.135, Florida Statutes, include County options for early termination of the contract if AshBritt is placed on the "Scrutinized Companies that Boycott Israel List," the "Scrutinized Companies with Activities in Sudan List," or the "Scrutinized Companies with Activities in the Iran Petroleum Energy Sector List," or if AshBritt has been engaged in business operations in Cuba or Syria.

With this background, you ask whether the reinstatement of the 2017 contract will still benefit from the "grandfathering" described in the discussion of Question 1 if the contract is amended to comport to the FEMA requirements for reimbursement or the separate requirements set forth in state law.

We have consistently opined that "[t]he essential purpose of s. 112.313(7) is to prevent a public officer from using [his or her] official position to secure business for [his or her] private employer." CEO 76-118. We have kept this in mind whenever we have applied "grandfathering" to negate a conflict of interest resulting from the mechanical application of Section 112.313(7)(a) to a contract executed by a public agency before the public officer or employee assumed their public position. We have even applied grandfathering to allow contracts negotiated before one's assumption of public office or employment to be renewed after one's assumption of public office or employment. Prior to 2002, we allowed these contracts to be renewed without vitiating their grandfathered status when the terms of the contract remained "substantially identical" to the original contract. See, e.g., CEO 76-118 (allowing the extension of a loan between the City and a bank to benefit from grandfathering "so long as the annual renegotiation of terms remains substantially the same as those in the original contract"); CEO 96-31 (allowing the assignment of a leasehold of city-owned property from one corporation to another owned by a member of the City council to benefit from grandfathering "as long as the terms of the lease agreement remain substantially identical to the terms of the lease agreement that was originally signed by the City"); and CEO 97-11 (allowing the renewal of a contract between the County and a County commissioner's law firm with an upward adjustment in the fees paid to benefit from grandfathering "as long as the terms of the contract remain substantially the same" [emphasis added]).

In 2002, we departed from that reasoning, instead requiring the terms of a contract to remain exactly "the same" to maintain grandfathering through a renewal occurring after the public officer or employee's assumption of their public position. See CEO 02-14 (allowing the extension of a school district's contract with an investment banking firm that marketed district bonds to benefit from grandfathering "provided the terms of the contract remain the same as those of the original") [emphasis added]. We have, since then, reiterated our view that the terms of a contract must remain precisely "the same" to maintain grandfathering. See CEO 03-17, footnote 6 ("We recognize that it might be difficult for the terms of a renewal to remain the same in your situation due to the original lease's providing for a renegotiation of rental rates regarding a renewal. However, since the issuance of CEO 96-31, we have clearly and recently stated our view that the terms of a renewal must remain the same." [emphasis in original]); see also CEO 08-4, footnote 6 and CEO 09-1.

In the scenario presented here, the terms to be added to the 2017 contract to achieve eligibility for FEMA reimbursement will create numerous, new obligations for the parties, particularly for AshBritt, and create new rights for early termination by the County. Furthermore, those addition of the terms will have the effect of creating a stronger business opportunity for the Commissioner's private employer, AshBritt, by ensuring the effective availability of a surety that will guarantee the reimbursement of tens of millions of dollars coming from the Federal government. Because the amended contract will not be the same as when it was executed in 2017, we find the inclusion of the terms to achieve eligibility for FEMA reimbursement would create a prohibited conflict of interest for the Commissioner under the first part of Section 112.313(7)(a) that cannot be negated by an application of grandfathering.

We contrast the inclusion of the FEMA terms, which is discretionary and potentially subject to negotiation, with the inclusion of the terms required by state law. Because you indicate the state law terms are required by law to be included in the contract, and given that their inclusion would confer no benefit on the private interests of the Commissioner's employer, we find that their inclusion would not vitiate grandfathering. Therefore, the addition of the state law terms will not create a prohibited conflict of interest for the Commissioner under the first part of Section 112.313(7)(a), provided that the rest of the contract remains the same.

Your questions are answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on December 2, 2022, and RENDERED this 7th day of December, 2022.

____________________________________

John Grant, Chair

^[1]When summarizing the chronology of events, we refer to her as Ms. Raschein when referencing events occurring before her appointment to the Board of County Commissioners and as Commissioner Raschein when referencing events occurring after her appointment.