Untitled Texas Attorney General Opinion ( 2007 )

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
September 11, 2007
Mr. Glenn Lewis Opinion No. GA-0567
Chair, Board of Regents
Texas Southern University Re: Whether a member of the Legislature may
3100 Cleburne Avenue provide insurance services to a state university
Houston, Texas 77004 (RQ-0576-GA)
Dear Mr. Lewis:
Texas Southern University ("TSU") has asked whether a member of the Texas Legislature
(the "Legislator") may provide insurance services to a state university.! TSU's Office of General
Counsel informed us that the Legislator entered into insurance contracts with TSU prior to the
person's election to the Texas House ofRepresentatives. See Request Letter, supra note 1, at 1. The
Office of General Counsel also informed us that the contracts were awarded through "arms-length
competitive bidding." Id. While the Office of General Counsel informed us about the types of
insurance coverage purchased with the contracts, it did not provide any details about the contracts
such as the duration ofthe contracts or terms governing renewal, modification, or amendment ofthe
contracts. See id. Nor did it provide details regarding the Legislator's interest in the contracts. See
id. Without all pertinent facts regarding the contracts, we can only opine on the question in general
terms.
TSU is concerned specifically about article III, section 18, Texas Constitution, and
subchapter C, chapter 572, Government Code. 2 See Request Letter, supra note 1, at 1-2. In
pertinent part, article III, section 18 provides that a member of the Legislature shall not "be
interested, either directly or indirectly, in any contract with the State, or any county thereof,
authorized by any law passed during the term for which [the member] was elected." TEX. CONST.
art. III, § 18. Section 572.051(3), Government Code, prohibits a state officer from accepting
"employment or compensation that could reasonably be expected to impair the officer's . . .
independence ofjudgment in the performance ofthe officer's ... official duties." TEX. GOV'TCODE
ANN. § 572.051(3) (Vernon 2004). We consider each provision in tum.
ISee Letter from Ms. Tammye Curtis-Jones, on behalf of the Office of General Counsel, Texas Southern
University, to Opinion Committee, Office of the Attorney General, at 1 (Mar. 5, 2007) (on file with the Opinion
Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].
2you do not inquire, and thus we do not opine, about Texas Penal Code, chapter 36's applicability. See
generally TEX. PEN. CODE ANN. ch. 36 (Vernon 2003 & Supp. 2006).
Mr. Glenn Lewis - Page 2 (GA-0567)
I. Texas Constitution, article III, section 18
Article III, section 18 is intended to prevent a member of the Legislature from personally
profiting from holding office. See Damon v. Cornett, 781 S.W.2d 597,600 (Tex. 1989) (stating the
clause is intended to "prevent improper financial gain by members of the legislature"); see also
Washington v. Walker County, 708 S.W.2d 493, 496 (Tex. App.-Houston [1st Dist.] 1986, writ
refd n.r.e.) ("Art. III, sec. 18 was intended to prevent personal gain and profit by members of the
legislature as a result ofthe office they hold."). By its plain language, article III, section 18 involves:
(1) a member ofthe Legislature; (2) who has a direct or indirect interest in any contract; (3) with the
State or county thereof; and (4) which contract is authorized by any law passed during the term for
which the member was elected. See TEX. CaNST. art. III, § 18; see also Republican Party ofTex.
v. Dietz, 940 S.W.2d 86, 89 (Tex. 1997) (stating that when interpreting the state constitution, we
must look at its literal text and give effect to its plain language). Thus, whether article III, section
18 is. a bar to existing or future contracts requires a. determination about the existence of each
element.
A threshold matter here, and the first element of the' constitutional prohibition, is that the
prohibition applies to only a member of the Legislature. See TEX. CaNST. art. III, § 18. The Texas
Supreme Court has defined the phrase "member of the legislature" in the context of article III,
section 18 to mean "a person who is currently serving in the legislature." Damon, 781 S.W.2d at
599. In formulating the definition, the court distinguished a current member from a former member
and held that article III, section 18 did not bar contracts of former members. See ide The court
rejected an "overbroad judicial interpretation" of article III, section 18 and reasoned that the
prohibition was not meant to "place a lifetime 'mark of Cain' on every citizen who is willing to
benefit our state by serving in the legislature." Id. at 600. Analogously, the prohibition should not
be given an overbroad interpretation here such that its "mark of Cain" is placed on a person who has
yet to be elected, thus serving as a deterrent to future legislative service: A member-a person
currently serving-is distinguishable from a person not yet elected to the Legislature. We thus
believe that article III, section 18 does not bar any contract with a person before the person becomes
a member of the Legislature. Accordingly, article III, section 18 would not prohibit any original
contract between the Legislator and TSU that was agreed to prior to the Legislator's election and
qualification. Upon becoming a member of the Legislature, however, the Legislator would be
constrained by article III, section 18 where the other elements were present.
The' second article III, section 18 element requires that a legislator have a direct or indirect
interest in, the contract. See TEX. CaNST. art. III, § 18. The request letter provides no information
on the nature of the Legislator's interest in the sale of the insurance contracts. This office has
analogized the interest proscribed by article III, section 18 to an interest under article V, section 11
that disqualifies a judge in certain cases. See Tex. Att'y Gen. Ope No. M-625 (1970) at 5-6. An
interest under article V, section 11 is not the type ofinterest shared with the public generally; it must
be one in which the judge "by the judgment in the case, gain[s] or lose[s] something." Id. at 6.
(quoting Moody v. City ofUniv. Park, 278 S.W.2d 912,919 (Tex. Civ. App.-Dallas 1955, writ
refd n.r.e.)). Similarly, the interest under article III, section 18 must be more than the general
interest shared by the public; it must be one that involves gain or loss specific to the member ofthe
Mr. Glenn Lewis - Page 3 (GA-0567)
Legislature. The business of providing insurance or receiving premiums likely constitutes a direct
or indirect interest. Nonetheless, the question of "[w]hether a legislator's interest in a business is
significant enough to prevent that business from contracting with the State is a question of fact."
Tex. Att'y Gen. LO-89-72, at 1; see also Washington, 708 S.W.2d at 496 (examining factors
involved in legislator's interest in fees paid while serving as appointed attorney for indigent
defendant and distinguishing from interest in contract contemplated by article III, section 18); Tex.
Att'y Gen. Ope No. GA-0003 (2002) at 1 (stating that the opinion process does not determine facts).
The third element ofthe article III, section 18 prohibition is that the contract be with the state
or a county thereof. See TEX. CaNST. art. III, § 18. As a state university is not a county, the concern
relevant to TSU's query is whether a state university is the "state" within article III, section 18's
prohibition. While article III, section 18 does not define the term "state" and thus provides no
guidance on its meaning or scope, a state university generally, and TSU specifically, is included
~ithin the scope of article III, section 18. See TEX. EDUC. CODE ANN. § 106.02 (Vernon 2002)
(designating TSU as a "statewide general purpose institution ofhigher education"); see also Addison
v. Addison, 530 S.W.2d 920, 921 (Tex. Civ. App.-Houston [1st Dist.] 1975, no writ) (recognizing
TSU as branch of the University of Texas System of Higher Education).
The fourth element requires that the prohibited contract be "authorized by any law passed
during the term for which [the member of the Legislature] was elected." TEX. CaNST. art. III, § 18.
In addition to a statute expressly authorizing the contract, the phrase "any law passed during the
term" includes any "appropriation providing funds for the contract." Tex. Att'y Gen. Ope No. JM-
782 (1987) at 1; see also Tex. Att'y Gen. Ope Nos. JM-162 (1984), H-696 (1975), M-625 (1970),
0-6582 (1945), 0-1519 (1939). Thus, any new insurance contracts entered into with the Legislator
after his election and qualification would be subject to article III, section 18 to the extent the
contracts were authorized by any law, including appropriations enactment, enacted during the
Legislator's term. See, e.g., TEX. EDUC. CODE ANN. § 51.966 (Vernon 2006) (authorizing
institutions of higher education to purchase insurance); ide § 62.021 (providing for allocation of
constitutionally appropriated funds among certain institutions of higher education); see also Tex.
H.B.l, 80th Leg., R.S. (2007) (including appropriation to TSU) [currently available at
http://www.lbb.state.tx.us].
After consideration ofthe elements ofthe prohibition in article III, section 18, we believe the
answer to TSU's question likely turns on this last element; specifically, whether new contracts, or
new appropriations, were authorized by any law enacted during the Legislator's term. Absent factual
information on the nature and duration of the particular insurance contracts, however, we cannot
provide a definitive answer. Insurance contracts are generally construed under the rules of contract
construction. See Safeway Managing Gen. Agencyfor State & County Mut. Fire Ins. Co. v. Cooper,
952 S.W.2d 861, 865 (Tex. App.-Amarillo 1997, no writ). Specifically, insurance contract
renewals, without written indication to the contrary, are treated as new contracts. See Berry v. Tex.
Farm Bureau Mut. Ins. Co., 782 S.W.2d246, 249 (Tex. App.-Waco 1989, writ denied). Similarly,
modifications to insurance contracts ordinarily result in a new contract. See Greenbelt Elec. Coop.,
Inc. v. Johnson, 608 S.W.2d 320,325 (Tex. Civ. App.-Amarillo 1980, no writ) (recognizing Texas
Mr. Glenn Lewis - Page 4 (GA-0567)
law considers a contract modified by mutual consent as a new contract). Thus, to the extent the
original insurance contracts were renewed or modified after the Legislator was elected, and were
authorized by any law enacted, including appropriation enactments, during the term for which the
member ofthe Legislature was elected, the contracts would likely be barred by article III, section 18.
II. Texas Government Code, chapter 572
Chapter 572, Government Code, contains provisions relating to personal financial disclosure,
standards of conduct, and conflicts of interest. See TEX. GOV'T CODE ANN. ch. 572 (Vernon 2004
& Supp. 2006). The chapter's purpose is to prohibit a state officer or employee from having
a direct or indirect interest, including financial and other interests, or
engage in a business transaction or professional activity, or incur any
obligation of any nature that is in substantial conflict with the proper
discharge of the officer's or employee's duties in the public interest.
Id. § 572.001(a) (Vernon 2004). Section 572.051 3 prohibits a state officer from accepting
"employment or compensation that could reasonably be expected to impair the officer's . . .
independence ofjudgment in the performance ofthe officer's ... official duties." Id. § 572.051(3).
Questions about the propriety ofa legislator's employment depends on the particular facts. See Tex.
Att'y Gen. Ope No. GA-0087 (2003) at 1; Tex. Att'y Gen. LO-96-043, at 4 (recognizing that
violation of provisions of section 572.051 is a fact question). Moreover, "[c]ompliance with the
provisions in section 572.051 is a matter of personal ethics." Ope Tex. Ethics Comm'n No. 228
(1994) at 2 n.2 (and authority cited therein); see also Ope Tex. Ethics Comm'n Nos. 408 (1998) at
1, 192 (1994) at 1 (considering actions under Penal Code and section 572.051 and stating that "a
state officer or employee must decide for himself whether his actions violate state policy and
standards of conduct"), 156 (1993) at 1 (compliance with standards of conduct set out in section
572.051 is a matter of personal ethics), 41 (1992) at 1. Accordingly, questions involving the
propriety under chapter 572 of a legislator's business or employment activities are generally not
appropriate for the attorney general opinion process.
3S ection 572.056 limits a state officer's contracting authority. See TEX. GOV'T CODE ANN. § 572.056(a)
(Vernon 2004). We do not address here questions concerning the applicability ofthis section to the insurance contracts
because you tell us that the contracts were competitively bid. See Request Letter, supra note 1, at 1. Under section
572.056, contracts that are competitively bid are expressly excluded from the provision. See TEX. GOV'T CODE ANN.
§ 572.056(b)(I) (Vernon 2004).
Mr. Glenn Lewis - Page 5 (GA-0567)
SUMMARY
The constitutional prohibition in article III, section 18, does
not bar contracts with individuals not yet elected to the Texas
Legislature. Once elected to the Legislature, a legislator may not
provide insurance services to a state university unless authorized
under the Texas Constitution and statutes.
Questions involving the propriety of a legislator's particular
activities under chapter 572, Government Code, involve fact
determinations and are determined in the first instance by the
individual legislator and, thus, are generally inappropriate for the
opinion process.
KENT C. SULLIVAN
First Assistant Attorney General
NANCY S. FULLER
Chair, Opinion Committee
Charlotte M. Harper
Assistant Attorney General, Opinion Committee