STATE OF FLORIDA
DIVISION OF
ADMINISTRATIVE HEARINGS
IN RE:
GEORGE STUART, )
) CASE
NO. 93-0044EC
Respondent. )
_________________________)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly
designated hearing officer, Mary Clark, held a formal hearing in the above-styled
case on April 19, 1993, in Tallahassee, Florida.
APPEARANCES
For the Commission Virlindia
Doss, Esquire
on Ethics Department of
Legal Affairs
The Capitol, PL-01
Tallahassee, Florida 32399-1050
For Respondent: W. Dexter
Douglass, Esquire
Post Office Box 1674
Tallahassee, Florida 32302-1674
STATEMENT OF THE ISSUES
The issue for disposition is whether Respondent violated Article II,
Section 8(e), Florida Constitution, by personally representing his private
employer for compensation before the Orlando-Orange County Expressway Authority
while serving as a State Senator. After
admissions and stipulation of the parties, the single issue of law and fact is
whether the Orlando-Orange County Expressway Authority is a "state
agency" for purposes of Article II, Section 8(e), Florida Constitution.
PRELIMINARY STATEMENT
The controversy in this forum was initiated by complaints of
Respondent's violations of various provisions of Article II, Section 8, Florida
Constitution and Part III, Chapter 112, Florida Statutes.
After investigations, on June 5, 1992 the Commission entered its order
finding probable cause of the single violation described in the statement of
issues above. No probable cause was
found as to the remaining alleged violations: "Accordingly, these
allegations were dismissed and will not be at issue at the public
hearing."
The case was referred by the Commission to the Division of
Administrative Hearings on January 5, 1993 for a public hearing and a
recommended order, and the hearing was set after consultation with counsel for
the parties.
On April 13, 1993 the parties filed their prehearing stipulation, which
stipulation disposed of most of the material facts in issue. Those stipulated facts are incorporated
here.
At the hearing the Advocate presented no witnesses and two
exhibits: OOCEA Official Statement
1988; and Drexel, Burnham Lambert Proposal to serve as Co-Manager Underwriter
for the Central Connector Project, Orlando-Orange County Expressway Authority,
August 12, 1988; both were received in evidence.
Respondent testified in his own behalf and presented two exhibits,
received in evidence: Declaratory Statement of the Department of Community
Affairs; and a memorandum by Julie Costas, Ethics Commission Staff Attorney,
dated May 21, 1992.
The parties also submitted a joint exhibit: The Report of Investigation
and Supplemental Report of Investigation, conducted by Commission on Ethics
staff and considered by the Commission in its determination of probable cause
in this case.
After hearing the parties filed proposed recommended orders, including
proposed findings of fact and conclusions of law. The facts previously stipulated and material facts proposed by
the parties are adopted here.
FINDINGS OF FACT
1. Respondent, George Stuart,
served as State Senator from District 14, the Orlando area, from 1978 until
November 1990.
2. On September 22, 1986,
Respondent was hired by the brokerage firm, Drexel Burnham Lambert, to serve in
the company's municipal bond finance division.
He served as vice president of the division until December 29, 1989.
3. Respondent was compensated
for his services, which services included calling on clients to explain how
Drexel Burnham could assist in their bond issues and to urge the issuer to
select Drexel Burnham as an underwriter.
4. The Orlando-Orange County
Expressway Authority (OOCEA, or Authority) was created in 1983 by section
348.753, F.S. It has five members,
three of whom are appointed by the Governor; the fourth member is chair of the
Orange County Board of County Commissioners, and the fifth member is the
district secretary for the Department of Transportation for the district which
includes Orange County.
5. OOCEA is limited in its
operation to Orange County. Its budget
has no legislative oversight and it is not operated with state funds
appropriated to meet its budget. Tolls
collected by the Authority are used for construction, financing and operation
of its expressway system. Once built,
the roads are operated and maintained by the Department of Transportation.
6. OOCEA members are required to
file financial disclosure statements.
OOCEA participates in the Florida Retirement System.
7. Bonds issued by the OOCEA are
tax exempt. The Authority's General
Counsel, J. Fennimore Cooper, advised that the Florida Constitution requires
legislative approval for revenue bond issues; and in 1986, he sent a letter to
Respondent seeking assistance in obtaining the necessary appropriations proviso
language to approve various projects of the Authority.
8. In 1988 when OOCEA decided to
issue bonds to finance its Central Connector Project, legislative approval was
again required and the necessary language was provided by its General Counsel to
its registered lobbyist, Bobby Hartnett.
9. The OOCEA received the
legislative approval for the project during the Special Session on June 8,
1988. Chapter 88-557, Laws of Florida,
containing appropriations act proviso language, includes this section:
Section 59. The
Orlando-Orange County Ex-
pressway Authority is hereby authorized to
construct the Central Connector and the
Southern Connector of the Expressway System
as part of the authority's 20-year capital
projects plan.
These extensions shall each
be financed with revenue bonds issued by the
Division of Bond Finance of the Department
of General Services on behalf of the author-
ity pursuant to s. 11, Art. VII of the
State Constitution and the State Bond Act,
ss. 2156.57-215.83, Florida Statutes.
10. Respondent met with the
chairman of the OOCEA to express Drexel Burnham's interest in serving as a co-managing
underwriter for the issue and to ask for a request for proposal to which Drexel
Burnham could respond. Respondent made
a similar visit to the executive director of the Authority. A September 23, 1988 contact by Respondent
was specifically regarding the Central Connector bond issue.
On August 12, 1988, Respondent, as vice president of the Municipal Bond
Finance Division and Ander Crenshaw, as first vice president, submitted Drexel
Burnham's "Proposal to Serve as Co-Managing Underwriter for the Central
Connector Project" to the Authority.
11. Respondent received
compensation for all representations he made for Drexel Burnham, including this
one.
12. The Authority received
twenty-two proposals and ultimately selected nine co-managers, one of which was
Drexel Burnham. Drexel Burnham co-managed
a small percent of the issue and received $59,940 total compensation. The total amount of the bond issue was
$140,600,000.00. The Department of
General Services, Division of Bond Finance, served as agent for the OOCEA's
1988 bond issue.
13. In his contacts with OOCEA,
Respondent did not consider there was any ethical proscription. He avoided Cabinet-level bond issues and
called on cities, hospital districts, or airport authorities. He considered OOCEA a similar local agency.
CONCLUSIONS OF LAW
14. The Division of
Administrative Hearings has jurisdiction in this proceeding pursuant to Section
120.57(1), F.S. and Rule 34-5.010, F.A.C.
15. Article II, Section 8(e),
Florida Constitution provides:
No member of the legislature or statewide
elected officer shall personally represent
another person or entity for compensation be-
fore the government body or agency of which
the individual was an officer or member for
a period of two years following vacation of
office. No member
of the legislature shall
personally represent another person or entity
for compensation during term of office before
any state agency other than judicial trib-
unals. Similar
restrictions on other public
officers and employees may be established
by law.
(emphasis added)
16. It is not in dispute here
that the Respondent, George Stuart, approached the OOCEA and asked it to
consider his employer, Drexel Burnham, to underwrite the Authority's 1988 bond
issue. It is not disputed that he was
compensated for his efforts, or that he was a State Senator at the time. The only dispute is whether the OOCEA is a
state agency for purposes of this constitutional prohibition.
17. Chameleon-like, an agency
may assume a legal character based upon the particular statutory or regulatory
background against which it is examined.
For example, in AGO 80-29, the Attorney General reviewed numerous
statutes in responding to the query, "For what purpose is the Florida
State Commission on Hispanic Affairs a state agency?" Attorney General Opinion 74-387 recognized
that the Pasco County Expressway Authority qualified as a special district
under Section 218.31, Florida Statutes.
However, the opinion also observes, "The expressway authority is
unquestionably a 'state agency' for certain purposes". In the Declaratory Statement submitted as
Respondent's Exhibit 1, the Department of Community Affairs notes with respect
to the Seminole County Expressway Authority, "the classification of the
authority as a state entity for one purpose does not preclude it from being a
local one for another."
18. The most obvious background
against which the OOCEA should be examined is the statute which created it,
which provides, in pertinent part:
There is hereby created and established a
body politic and corporate, an agency of the
state, to be known as the Orlando-Orange
County Expressway Authority . . . .
(Section 348.753(1), F.S., emphasis added)
19. I am aware of no reason to
differentiate between the terms "state agency" and "agency of
the state." Although the
legislature sometimes uses one phrase and sometimes the other, the courts and
the Attorney Generals' opinions use the terms interchangeably.
20. In a bond validation case
involving OOCEA, Pepin v. Division of Bond Finance, 493 So.2d 1013 (Fla. 1986),
the court states:
The Orlando-Orange County Expressway Authority
(Authority) is a state agency created by
section 348.753(1), Florida Statutes (1985),
a portion of the Florida Transportation Code.
Section 344.01 et seq., Fla.Stat.
(emphasis added)
21. In the Pasco County
Expressway Authority opinion just cited, AGO 74-387, the reason the Attorney
General said the Authority was "unquestionably a state agency for certain
purposes" was that "[it] was so designated by the statute by which it
was created, s. 348.82 . . . . " That statutes uses precisely the same
language as that cited above for creation of OOCEA.
22. In AGO 57-208, the Attorney
General found the Jacksonville Expressway Authority a state agency required to
follow the bid and contract procedures set out in Chapters 283 and 287, Florida
Statutes. This conclusion was reached
primarily in reliance on the Authority's establishment, by statute, as an
"agency of the state". In AGO
89-56, the Attorney General found the Seminole County Expressway Authority a
state agency for purposes of Section 11.45, Florida Statutes, requiring the
Auditor General to audit state agencies.
In AGO 75-56, the same office found the Sarasota-Manatee County Airport
Authority not to be a state agency for purposes of Chapter 287. The distinction was explained as follows:
. . . "each of these governmental agencies
[the Jacksonville Expressway Authority and
the State Turnpike Authority] was expressly
designated in the creating statute as a state
agency. No such designation is made by Chapter
31263, supra, as
to the Sarasota Manatee
County Airport Authority."
The statutes creating the Pasco
County Expressway Authority, the Jacksonville Expressway Authority [Section
2(9) and 3, Chapter 29996, Florida Statutes (1955)] and the Seminole County
Expressway Authority, did not call these entities "state agencies",
but rather each is designated "an agency of the state." There is no distinction.
21. Thus, the first reason to
consider the OOCEA a state agency is because it is defined as such.
22. In Spangler v. Florida State
Turnpike Authority, 106 So.2d 421 (Fla. 1958), the Florida Supreme Court, using
the terms interchangeably, found the Florida Turnpike Authority to be both a
state agency and an agency of the state, entitled to sovereign immunity. The conclusion was based on six facts.
1. The Authority performed an
essential governmental function.
2. The revenues upon which it
operated, albeit derived from tolls, were public revenues because they were
devoted entirely to a public purpose.
3. Members of the authority were
commissioned state officers, one a liaison with the State Road Department.
4. The Authority issued
securities which were tax exempt.
5. The Authority had eminent
domain power.
6. The Authority built roads
which became part of the state highway system.
23. The circumstances of the
OOCEA are virtually the same. It
performs an essential government function; its toll revenues are used to build,
finance and operate the expressway system; three of its members are appointed
by the Governor; one member is the chair of the Board of County Commissioners,
and one is the local district secretary of the Department of Transportation;
the Authority's bonds are tax exempt; it has eminent domain power [Section
348.754(2)(j), Florida Statutes]; and its roads are operated and maintained by
the Department of Transportation. OOCEA
is a state agency because, in a general sense, it behaves like one.
24. Finally, there are
compelling public policy reasons to consider the OOCEA a state agency for
purposes of Article II, Section 8(e).
25. In Myers v. Hawkins, 362
So.2d 926, 930 (Fla. 1978) the Supreme Court stated:
. . . we are always obliged to interpret a
constitutional term in light of the primary
purpose for which it has been adopted. Both
Myers and the amici recognize that the Sun-
shine Amendment was evolved to establish an
arsenal of protections against the actual
and apparent conflicts of interest which can
arise among public officials, and that Sec-
tion 8(e) was designed specifically to pre-
vent those who
have plenary budgetary and
statutory control over the affairs of public
agencies from potentially influencing agency
decisions (or giving the appearance of having
an influence) when they appear before the
agencies as compensated advocates for others.
(emphasis added)
While the legislature does not
directly appropriate funds to the Authority nor directly control its budget, it
must approve the projects funded with the very life blood of that agency, its
revenue bonds. The Florida Constitution
requires:
Section 11. State
bonds; revenue bonds-
(e) Each project,
building, or facility to
be financed or refinanced with revenue bonds
issued under this section shall first be
approved by the Legislature by an act relat-
ing to appropriations or by general law.
Such approval power approaches
"plenary control".
26. In determining that OOCEA is
a "state agency" for purposes of Article II, Section 8(e), I am
cognizant of the myriad opinions of the Commission on Ethics cited by both
parties. None is precisely on point and
none may be effectively considered an interpretation entitled to great weight
or deference. Considered as a whole,
they underscore the principle with which this discussion began, that the
character of an agency may be as many faceted as the variety of legal standards
against which it is measured.
27. Given that principle,
Respondent's unwitting trespass into proscribed activity may be understandable,
but it is nonetheless a violation.
28. Other ethical violations
require intent or knowledge. See, for example, section 112.313(2),(4) and (6);
and section 112.3143(2), (3) and (4), F.S.
Intent or knowledge is not a necessary element here.
29. No penalty is recommended
because no authority for a penalty is found.
Respondent was not charged with a violation of section 112.3141, F.S.,
which section has been repealed. Its
successor penalty provisions of section 112.317, F.S. were enacted after
Respondent's violation occurred.
RECOMMENDATION
Based on the foregoing, it is hereby
RECOMMENDED that the Commission on Ethics issue its Final Order and
Public Report finding that Respondent, George Stuart, violated Article II,
Section 8(e), Florida Constitution, by representing Drexel Burnham Lambert
before the Orlando-Orange County Expressway Authority for compensation while
serving as State Senator.
DONE AND ENTERED this 10th day of August, 1993, in Tallahassee, Florida.
_________________________________
MARY CLARK
Hearing Officer
Division of Administrative Hearings
The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the
Division of Administrative Hearings
this 10th day of August, 1993.
COPIES FURNISHED:
COPIES FURNISHED:
Virlindia Doss, Esquire
Department of Legal Affairs
The Capitol, PL-01
Tallahassee, Florida 32399-1050
W. Dexter Douglass, Esquire
Post Office Box 1674
Tallahassee, Florida 32302-1674
Bonnie Williams, Executive Director
Ethics Commission
Post Office Box 6
Tallahassee, Florida 32302-0006
Phil Claypool, General Counsel
Ethics Commission
Post Office Box 6
Tallahassee, Florida 32302-0006
NOTICE OF RIGHT TO
SUBMIT EXCEPTIONS:
All parties have the right to submit written exceptions to this
Recommended Order. All agencies allow
each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within
which to submit written exceptions. You
should contact the agency that will issue the final order in this case
concerning agency rules on the deadline for filing exceptions to this
Recommended Order. Any exceptions to
this Recommended Order should be filed with the agency that will issue the
final order in this case.