Untitled Texas Attorney General Opinion

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

August 2,2006

The Honorable Beverly Woolley Opinion No. GA-0446

Chair, Committee on Calendars

Texas House of Representatives Re: Conflict of~interest discJosumrequirements

Post Offrce Box 2910~ for local government officers and persons who

Austin, Texas 787682910 contract with local governmental entities

:(RQ-0451-GA)

The Honorable John Smithee

Chair, Committee on Insurance

Texas House of Representatives

Post Oftice Box 2910

Austin, Texas 78768-2910

Shirley J. Neeley, EdD

Commissioner of Education

Texas Education Agency

1701 North Congress Avenue

Austin. Texas 78701-1494

Dear Representatives Woolley and Smithee and Commissioner Neeley:

The three of you write to ask numerous questions about chapter 176, Texas Local

Government Code. Representatives Woolley and Smithee ask:

1. What is the appropriate definition of the term “business relationship;” a term

used in Chapter 176 to trigger disclosure requirements for local government

officers? Does this term include personal or business interest bearing savings

accounts which generate taxable interest for the local government officer or a

family member?

2. What are the appropriate definitions of “affiliation” and “business

relationships,” terms used in Chapter 176 to trigger disclosure requirements for

‘Letter from Honorable Beverly Woolley, Chair, Committee on Calendars, TexasHouse ofRepresentatives and

Honorable John Smithee, Chair, Committee on Insurance, Texas House of Representatives, to Honorable Greg Abbott,

Attorney General of Texas (Feb. 13,2006) (on file with the Opinion Cc%mittee, also available athttp://w.oag

.state.tx.us) [herein&r Woolley Request Letter].

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Shirley J. Neeley, Ed.D.

persons who contract or seek to contract with local governmental entities? Do

these terms include personal or business loans which generate taxable interest

for certain vendors, such as financial institutions?

3. What does the phrase “any other affiliation or business relationship that might

cause a conflict of interest,” a phrase used in Chapter 176 to trigger disclosure

requirements for persons who contract or seek to contract with local

governmental entities, encompass?

4. Whether Chapter 176 applies to professional services providers.

5. How long should a local governmental entity retain the conflicts disclosure

statements and conflicts of interest questionnaires under Chapter 176? How

long should such documents remain available on a local governmental entity’s

website?

6. Whether the disclosure requirements of Chapter 176, as applicable to a

partnership or corporation which seeks to contract or contracts with a local

governmental entity, apply solely to the partnership or corporation as a whole,

or whether the disclosure requirements apply to some or all of the individual

partners and/or employees of the ~entity contracting or seeking to contract with

a local governmental entity who may be working on a contract.

7. Would a person seeking to contract with a local governmental entity comply

with the requirements of Chapter 176 if the person discloses affiliations and

business relationships with all business entities disclosed by the local

governmental entity to the person as having a triggering relationship with a local

government officer and discloses affiliations and business relationships with all

employees and outside contractors disclosed by the local governmental entity to

the person as making recommendations concerning the proposed contract, even

if that disclosure proves to be incomplete or the local governmental entity fails

to make any such disclosure ,despite the person’s request, absent actual

knowledge ofthe person to the contrary?

8. What does the phrase “contracts or seeks to contract for the sale or purchase of

property, goods or services witha’local governmental entity,” aphrasetriggering.

~disclosure requirements under Chapter 176, encompass’? Does Chapter 176

apply to small or routine purchases?

9. Whether local governmental entities have a responsibility to require persons

who contract or seek to contract with local governmental entities to comply with

Chapter 176 prior to entering into a contract with the local governmental

entity[.] Would the failure of a contractor to comply with the requirements of

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Shirley J. Neeley, Ed.D.

Chapter 176 have any impact on the validity of a contract between the local

govermnental entity and the contractor?

10. Whether Chapter 176 requires a person who contracts or seeks to contract with

a local govermnental entity to file a disclosure questionnaire if the person has

no business or financial relationships or affiliations to disclose.

Woolley Request Letter, supra note 1, at 2-3 (footnotes omitted). On behalf of school districts,

Commissioner Neeleyr asks:

1. Are existing vendors (prior to. the January 1, 2006 effective date) required to

complete the new vendor questionnaire and tile it with [a school district] for

existing contracts?

2. If a vendor does not comply with a Chapter 176 disclosure requirement, does [a

school district] have any enforcement responsibility? Must [a school district]

cease doing business with the vendor?

3. If [a school district] receives a questionnaire that indicates there is no~contlict

of interest, must it be posted on [a school district’s] website?

4. What is the responsibility of [a school district] to notify vendors regarding the

requirements of Texas Local Government Code Chapter 176? Must [a school

district] notify the vendor in writing ? Does a notice posted on [a school

district’s] website meet the requirement?

5. Does Texas Local Government Code section 176.002(a)(2) require all sales

personnel or agents of a vendor to als,o complete the questionnaire?

Neeley Request Letter, supra note 2, at 1. Commissioner Neeley finally asks whether chapter 176

applies to “open-enrollment charter schools operating under Subchapter D, Chapter 12 of the Texas

Education Code, or to Regional Education Service Centers organized under Chapter 8 of the Texas

Education Code.“~ Id. at 2. In addition to these questions, Commissioner Neeley also asks us to

consider questions posed bytbe private law firm of Schwartz and EichelbaumP.C., on behalf of its

school district clients.’ Those questions are:~

‘Lettertiom Shirley J. Neeley, Ed.D., CommissionerofEducation, Texas Education Agency, toHonorable Greg

Abbott, Attorney General of Texas (Mar. 2, 2006) (one file with the Opinion Committee, also available at

hnp://www.oag.state.tx.us) [hereinat& Neeley Request Letter].

‘Letter from Jason S. Scott,\ Schwartz & Eichelbaum, P.C., to David Andersen, General Counsel, Texas

Education

Agency (Feb. 15, 2006) (attached to Neeley Request Letter) (on file with the Opinion Committee, also

available

at http://www.oag.state.tx.us) [hereinafier Schwartz Letter].

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Shirley J. Neeley, Ed.D.

1. Chapter 176 requires local government officers to file a disclosure form when

they or certain family members receive gifts worth more than $250 from a

vendor in a twelve-month period. Does this disclosure resuirement apply even

when the vendors themselves are family members? Other laws prohibiting gifts

to public offtcials contain exceptions for such family members. Do the same

exceptions apply to Chapter 176?

2. The reporting requirements of Chapter 176 are triggered if a vendor gives gifts

valued at more than $250 to the local ,govemment official ‘or certain family

members of the local official. Is this amount per family member or per family

unit? In other words, if the local pffrcial and each qualifying family member

receive $250 worth of gifts or less, does a disclosure still have to be tiled?

3. Chapter 176 requires vendors that contract with local governmental entities for

the sale of property, goods, or services to tile a disclosure form. Does this

provision apply to vendors who provide goods or services to the governmental

entity at significantly reduced prices, as a way of giving back to the community?

For instance, what if a local dry cleaner agrees to clean a schools district’s hand

uniforms for a nominal $1 fee per uniform or a local hardware store provides

paint for a district’s drama department at cost? Must these businesses tile

disclosure forms? Similarly, must local governmental officials related to such

business owners file disclosure forms?

4. Many local government officials are also attorneys and may have .clients who

qualify as vendors. In the vast majority of cases, the identities of an attorney’s

clients are not confidential. However, an exception to this general rule protects

the client’s identity from disclosure if that information would reveal the

confidential purpose for which the attorney was consulted. Should the

requirements of Chapter 176 and the duty of confidentiality conflict, attorneys

need to know which takes precedence so that clients may be informed[.]

Schwartz Letter, sypra note 3, at 2-3 (footnotes omitted). Because all ofthese questions relate to

Chapter 176 and were received in close proximity to one another, we have consolidated these

requests. Where possible we will address related questions together.

I. Operation of chapter 176, Local Government Code

Chapter 176 of the Local Government Code was enacted by the Seventy-ninth Legislature

in House Bill 9 14, authored by Representatives Beverly Woolley and Martha Wong, and sponsored

by Senator Tommy Williams, to provide a means by which potentially conflicting relationships

between vendors and members of a local governmental body could be disclosed to the public. See

Act of May 26,2005,79th Leg., R.S., ch. 1014,2005 Tex. Gen. Laws 3429; see also Hearings on

House Bilf 914 Before the Senate Comm. on State Affairs, 79thLeg., R.S. (May 19,2005) (statement

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of Senator Tommy Williams) (“[IIt’s imperative that taxpayers have access to information on details

about who is entering into contracts with local governmental entities. House Bill 914 seeks to

improve the transparency by allowing taxpayers to be informed as to which local government

officials have a connection to vendors. .~who conduct business with local governmental entities.“).

Chapter 176 applies to a person, or agent thereof, who “contracts or seeks to contract for the sale or

purchase of property, goods, or services with a local governmental entity.” TEX. LOC. GOV’T CODE

ANN. 5 176.002(a)(l) (Vernon Supp. 2005). A “local governmental entity” (“entity”) includes all

political subdivisions, as well as a “localgovernment corporation, board, commission, district, or

authority to which a member is appointed by the commissioners court of a county, the mayor of a

municipality, or the governing body of a municipality.” Id. 5 176.001(3).

When a governing member of an entity, or a “local government officer” (“officer”) has a

specified relationship with a person to whom chapter 176 applies, the offtcer must tile a conflicts

disclosure statement (%tatement”). See id. $3 176.001(4), .003. The requirement of the statement

is triggered only when a person to whom chapter 176 applies, i.e., a “vendor,“4 “has contracted with

the local governmental entity or the local governmental entity is considering doing business with the

person” and one of the specified relationships between the vendor and the officer exists. See id. 5

176.003(a). The statement is required when the person has “an employment or other business

relationship with the officer or a family member of the officer that results in the officer or family

member receiving taxable income,” or “has given to the local government officer or a family member

of the officer one or more [specitied gifts].“’ Id. § 176003(a)(2)(A), (B). Among other things, the

statement requires the officer to disclose, under oath and under penalty of perjury, the relationship

with, and any gift received from, the vendor. See id. 5 176.004. Failure to tile the statement is a

Class C~misdemeanor. See id. 5 176.003(c). The officer must tile the statement with the records

administrator of the entity within a certain period of time. See. id. 5 176.003(b). Chapter 176

provides a defense to prosecution, essentially a grace period of seven days. See id. 5 176.003(d).

In addition to the requirement for officers, vendors must file a conflict of interest

questionnaire (“questionnaire”) with the records administrator of the appropriate local entity. See

id. 3 176.006(a). The vendor must file the questionnaire within a~specified period of time after the

date the vendor “begins contract discussions or negotiations with the local governmental entity; or

. submits . . ‘. an application, response to a request for proposals or bids, correspondence, or

another writing related to a potential agreement.” Id. The questionnaire generally requires the

vendor to identify and disclose different affiliations or business relationships with each officer of the

‘We use the term vendor throughout this opinion as shorthand for the stahltory language “a person who. .,

contracts or seeks to contract with a local governmental entity.” TEX. LOc. GOV’T CODEAm. 5 176.002(a)(l)

(Vernon Supp. 2005). It is not our intent to give the term any meaning inconsistent with chapter 176, and we do not use

it as a term of art.

‘Section 176,003(a)(2)(B) provides that a statement is required when a vendor “has given to the local

government officer or a family member of the officer one or more gifts, other than gifts of food, lodging, transportation,

or entertainment accepted as a guest, that have an aggregate value ofmore than $250 [in certain time periods.]” Id.$

176,003(a)(2)(8).

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entity. See id. 5 176.006(c). A vendor commits a misdemeanor offense if the vendor does not file

the questionnaire within the requisite tune period, but again a defense to prosecution in the form of

a seven-day grace period is available. See id. 5 176.006(f)-(g).

The records administrator for the entity is required to maintain a list of “local government

officers of the entity and shall make that list available to the public and any person who may be

required to tile a questionnaire.” Id. 5 176.007. In addition, entities are required to “provide access

to the statements and questionnaires . . on the Internet website maintained by the local

governmental entity.” Id. 3 176.009(a). Larger entities have additional intemet website listing

requirements. See id. 5 176.009@).

II. Legal principles

In construing chapter 176, we must follow the cardinal rule of statutory construction and

determine the legislative intent as discerned primarily from the plain meaning of the words used in

the statute. See In re Doe, 19 S.W.3d 249,255 (Tex. 2000); Fitzgeraldv. AdvuncedSpineFixation

Sys., Inc., 996 S.W.2d 864, 865-66 (Tex. 1999) (court construes a statute by looking to the plain

meaning of the statute’s language). We look beyond the literal text of the statute only where the

language ofthe statute is ambiguous or would lead to absurd results the legislature could not possibly

have intended. See Boykin v. State, 818 S.W;2d 7X2,785-86 (Tex. Grim. App. 1991). At the same

time, we must take the statute as we find it. See RepublicBank Dallas v. Interkal, Inc., 691 S.W.2d

605,607 (Tex. 1985). Texas courts avoid “under the guise of statutory construction, amend[ing] a

statute by adding words to it, no matter how desirable such additions might seem.” In the Interest

of S.H.A., 728 S.W.2d 73, 83 (Tex. App.-Dallas 1987, writ refd n.r.e.); see also Goldman v.

Torres, 341 S.W.2d 154, 158 (Tex. 1960) (stating that reading language into a statute usurps the

legislature’s power). With these principles in mind, we turn to the questions.

III. Analysis

1. Construction of “contracts or seeks to contract”

Because it is a threshold matter in the applicability of chapter 176, we first address the

meaning of “contracts or seeks to contract.“’ Representatives Woolley and Smithee ask us to

construe the phrase “contracts or seeks to contract” and whether it includes small or routine

purchases. See Woolley Request Letter, supru note 1, at 3 (question 3). A two-part analysis is

needed to properly construe the phrase “contracts or seeks to contract for the sale or purchase of

property, goods, or services with a local governmental entity.” TEX. LOC. GOV’T CODE ANN. 5

176,002(a)(1) (Vernon Supp. 2005). First we deal with “contracts or seeks to contract . . with a

local governmental entity.” Absent a definition in the statute, we look to a term’s ordinary meaning.

See Fitzgerald, 996 S.W.2d at 86566 (ordinary meaning). As a noun a “contract” is a promise, or

set of promises, the performance of which the law recognizes to be a duty and for the breach of

which it confers a remedy. See Foster v. Wagner, 343 S.W.2d 914,917 (Tex. Civ. App.-El Paso

1961, writ ref d n.r.e.). As a verb, “contract” means “to agree upon, make a contract” or to “arrange,

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for by contract.” III THE OXFORDENGLISHDICTIONARY835 (2d ed. 1989). The term by itself and

without modification or limitation includes express contracts in which the terms are stated by the

parties and implied contracts which arise from the acts and conduct of the parties. See Harrison v,

FYliamsDenfulGroup, P.C., 140 S.W.3d912,916(Tex. App.-Dallas2004, nopet.); see&o Tex.

Att’y Gen. Op. No. GA-0429 (2006) at 4. “Seek”has been defined by a Texas court to mean to “ask

for, demand, request” or “to inquire for: ask for: entreat, request.” Jones v. State, 175 S.W.3d 927,

932 (Tex. App.-Dallas 2005, no pet.). Thus one who contracts or seeks to contract with an entity

is one who agrees to, makes, or arranges for, or inquires for, asks for, or requests from an entity a

promise creating legal obligations.

The second part ofthe phrase relates to the subject matter of the contract. The plain language

of section 176.002 provides that the subject matter of the contract involves the sale or purchase of

“property, goods, and services.” TEX. Lot. GOV’T CODE ANN. § 176.002(a)(l) (Vernon Supp.

.2005). These are broad terms and no provision in chapter 176 limits or restricts their scope ore

application and so they include the sale or purchase of all property, goods, and services. Thus the

phrase “contracts or seeks to contract for the sale or purchase of property, goods, or services with

a local governmental entity” refers to one who agrees to, makes, or arranges for, or inquiies for, asks

for, or requests from an entity a promise creating legal obligations concerning the sale or purchase

of property; real or personal, and any goods and services.

Unlike chapter 17 1 of the Local Government Code pertaining to conflicts of interest, chapter

176 contains no minimum threshold amount for contractual transactions.6 Chapter 171 provides that

an officer must disclose any substantial interests the officer has in a business interest or real property

when that business interest or real property is the subject of a vote or decision before the entity. See

id. 5 171.004 (Vernon 1999). A substantial interest is generally defined through a minimum

threshold of at least 10 percent of the business interest or gross income of the officer or $2,500 of

the market value of any real property. See id. 5 171.002. Chapter 176 does not contain any

minimum threshold contract amount. See generally id ch. 176 (Vernon Supp. 2005). It requires that

a vendor who merely contracts or seeks to Contract with an entity regarding the listed subject matters

is subject to the chapter. See id; 5 176.002(a)(l). In addition, the chapter ,does not contain any.

exclusions for de minimis transactions. See generally id. ch. 176. Pursuant to fie plain language of

the statute; we conclude that even contracts involving small and routine purchases are subject to

chapter 176.7

6The statote does provide a minimum threshold amount in reference to gifts given to an offic&, which we will

address later in this opinion. See TEX. Lot. GOV’T CODE ANN. $ 176,003($(2)(B) (Vernon Supp. 2005).

‘A brief submitted to this office suggests that this language should be construed to apply to purchas~es above

,a deminimis threshold, see Brief from Hunter Burkhalter and Darcy Alan Frovmfelter, Kemp Smith LLP, to Honorable

Greg Abbott, Attorney General of Texas, at 3 (Apr. 12,2006) (on tile with the Opinion Committee), or only to expre$s

contracts. See Brief from Kathryn Hoang, Legal Counsel, Texas Municipal League, to Nancy S. Fuller, Chair, Opinion

Committee, Office ofthe Attorney General, at 4 (Apr.l3,2006) (on file with the Opinion Committee) [hereinafter TML

Brief]. It has also been argued that the language should be construed to not apply to routine purchases. See Brief from

Jason S. Scott, Schwartz & Eichelbaum, P.C., to Honorable Greg Abbott, Attorney General of Texas, at 7 (Apr. 13,

(continued...)

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2. Business relationships and affiliations

The Woolley request letter asks about the meaning of the term “business relationship” as it

is used in section 176.003 and whether it would include a personal or business savings account that

generated taxable interest for the officer or family member. See Woolley Request Letter, supva note

1, at 2 (question I). It also asks us to define the terins “business relationship” and “affiliations” as

used in section 176.006 and state whether these terms include personal or business loans that

generate taxable interest for vendors such as financial institutions. See id. (question 2). Finally, it

inquires about the phrase “any other affiliation or business relationship that might cause a conflict

of interest” as used in section 176.006(c)(7). Id. (question 3). Because these three questions inquire

about the same terms, we will address them together.

Though critical to the requirements of the statute, the term “business relationship” is not

defined in chapter 176. See TEX. LOC. Gov’? CODE ANN. 5 176.001 (Vernon Supp. 2005).

Similarly, chapter 176 does not define the term “affiliation.” See id. We do~not find a definition of

these exact terms in any Texas statute or judicial opinion. Thus we look to their ordinary meaning.

~See Fitzgerald, 996 S.W.2d at 865-66. A Texas case does provide some information as to a

definition of “business.” See Hallnian Y. Allstate Ins. Co., 114 S.W.3d 656 (Tex. App.-Dallas

2003), reti’d, 159 S.W.3d 640 (Tex. 2005). Inthe context of an insurance policy insuring agaipst

loss incurred in the business of the insured, the court examined the meaning of the terms “trade,”

“profession,” and “occupation,” used iu the policy to define business. See id. at 662. The court said

that the common thread of business was the idea that “a livelihood or means of earning a living”

motivated the activity. Id. This office recently said that the term business “commonly connotes

activity for commercial profit.” Tex. Att’y Gen. Op. No. GA-0375 (2005) at 3; see also Tex. Att’y

Gen. Op. No. DM-3 10 (1994) at 3. Moreover, section 176.003(a)(2)(A) provides that the “business

relationship” must result in “taxable income.” TEX. Lot. GOV’T CODE ANN. 3 176,003(a)(2)(A)

(Vernon Supp. 2005). Thus we construe the term “business” in a limited’manner to mean

commercial activity. The term “relationship” is defined by the dictionary as the “way in which two

or more concepts, objects, or people are connected, or the state of being connected.” THE NEW

OXFORD AMERICAN DICTIONARY 1437 (2001).

.When these definitions are considered together, a “business,relationship” for purposes of

sections 176.003 and 176.006 is a copnection between two or more parties based on a commercial

activity of one of the parties. See, e.g., Tex. Dep’t of Transp. Y. Needham; 82 S.W.3d 314,3 18 (Tex.

2002) (“Statutory terms should be interpreted consistently in every part of an act.“). Thus pursuant

to section 176.003 an officer has a “business~relationship” with a vendor when the officer has a

2006) (on tile with the Opinion Committee) [hereinafter Schwartz Briefl. While these suggestions may be reasonable,

we are constrained by the clear language of the statute. The phrase “contracts or seeksto contract” in chapter 176 is not

modified or limited in any way. We canriot insert additional words into a statute unless it is necessary to give effect to

clear legislative intent. See Hunfer Y.FortWorthC&d Corp., 620 S.W.2d 547,552 (Tex. 198 1). We see no indication

in the language of the statute or the legislative history that the legislature intended a mire narrow application of the

phrase “contracts oi- seeks to contract.”

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connection to a vendor based on the commercial activity of one of them. The officer must file a

statement when the “business relationship” results in taxable income.’ See T&X. LOC. GOV'T CODE

ANN. 5 176.003(a)(2)(A) (Vernon Supp. 2005).

Representatives Woolley and Smithee also ask about the term “affiliation” as used in section

176.006. See Woolley Request Letter, szipra note 1, at 2. The term is undefined by statute or

judicial opinion so we look to its ordinary meaning. ‘See Fitzgerald, 996 S.W.2d at 865-66. A

Texas court has defined fhe root term “affiliate” as “a person, organization, or establishment

associated with another as a subordinate, subsidiary, or member.” Kingston v. Helm, 82 S.W;3d 755,

765 (Tex. App.-Corpus Christi 2002, pet. denied). Section 176.006 requires the vendor to describe

in the questionnaire any “affiliations or business relationships” the vendor niay have with an officer

or the entity. TEx. Lot. GOV’T CODE ANN. 3 176.006(b) (V ernon Supp. 2005) (emphasis added).

Based on a reading of the statutory language and the lack of an answer in the legislative histOry, it

is unclear what the legislature intended by the use of the word “affiliation.” “The word ‘or’ in

ordinary and natural use has a disjunctive meaning” and indicates an alternative between different

or unlikethings. See Burnettv. State, 514 S.W.2d 939,940 (Tex. Crim. App. 1974). Assumingthe

legislature intended the word “or” to have a disjunctive~meaning, we construe “aff%ation” to be

different from a “business relationship.” As we stated previously, the ordinary definition of

“affiliation” is an associationbetween persons or between aperson and an organization. Thus, under

section~l76.006, a vendor that is associated with an officer outside of a business relationship has an

affiliation with that officer and must file a questionnaire. We believe the: question of whether there

is an “affiliation” between an officer and a vendor will most likely be a question of fact. See Tex.

Att’y Gen. Op. ~No. GA-0139 (2004) at 5 (questions of fact are inappropriate for the opinion

process).

With regard to both ofthese terms, Representatives Woolley and Smithee inquire specifically

about savings accounts ,and. loans with financial institutions that generate taxable interest either to

the entity or the vendor. See Woolley Request Letter, supra note 1, at 2. Section 176.002(a)

goveming the applicability of chapter 176 applies to a “person.” See TEx. LOC. GOV'T CODE ANN.

5 176.402(a) (Vernon Supp. 2005). When a statute, does not require a different definition, a person

“includes corporation, organiiatipn, government or governmental subdivision or agency, business

trust, estate, trust, partnership, association, and any other legal entity.” SeeTEx. GOV’T CODE ANN.

tj 3 11.005 (Vernon 2005).(Code Construction Act). Chapter 176 does not indicate that “person” has

a contrary definition. See generally TEx. Lot. GOV’T CODE Aiw. ch. 176 (Vernon Supp. 2005).

Because a“person” subject to the act under section 176.002 can includecorporate entities, the $atut,e

applies to a financial institution. The offering and~holding of the savings account by the financial.

institution for the officer is a business relationship as we have construed the term. The Woolley

Request Letter represents that fhe interest received is taxable income. See Woolley Request Letter,

‘We are not asked about the term “employment relationship” in section 176,003(@(2)(A), so we do not address

it. See Woolley Request Letter, supra.note I; Neeley Request Letter, supranote 2; Schwartz Letter, supra note 3.

Pursuant to the plain language of the statute, an officer must file a statement when the off~icer has an employment

relationshipwith a vendor. See TEX.LOC.GOV'TCODEANN. 9 176.003(a)(2)(A)(Vemon Supp.2005).

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supra note 1, at 2. Thus a personal or business interest-bearing savings account that generates

taxable income to the officer or the officer’s family member would trigger the requirements of

chapter 176. For the same reason, a personal or business loan from an officer that prpduces taxable

income to the vendor is a business relationship that would trigger the requirements off chapter 176.

We next address the question concerning “any other affiliation or business relationship that

might cause a~conflict of interest.” Woolley Request Letter, supru note 1, at 2. We cannot provide

an exhaustive list of all that the phrase encompasses.~ See id. Based on our construction of the terms~

“business relationship” and “affiliation,” the phrase broadly encom$asses a connection between

persons based on a commercial activity or any other association between persons or persons and

organizations.’

3. Professional services providers

Representatives Woolley and Smithee inquire whether chapter 176 applies to professional

services providers. See Woolley Request Letter, supra note 1, at 2 (question 4). The statute applies

to a “person who contracts or seeks to contract for~the sale or purchase of property, goods, or

services with a local governmental entity.” TEX. LOC. GOV’T CODEANN. $176.002(a)(l) (Vernon

Supp. 2005) (emphasis added). By its plain language, ~chapter 176 applies to contracts for the sale

or purchase of services with an entity. See TEX. Lot. GOV’T CODE ANN. 5~176.002(a)(l) (Vernon

Supp. 2005); see also Fitzgerald, 996 S.W.2d at 865-66 (courts construe a statute by looking to the

plain meaning). The term “services” is a broad term that embraces all services, ~including

professional services. No provision in the statute limits the scope or application of the term. We

note that when the legislature wants to exclude professional services from a statutory requiiekent,

it does so expressly. See Corum Mgmt. Co., Inc. v. Aquayo Enters., Inc., 755 S.W.2d 895,897 (Tex.

App.-San Antonio 1988, writ denied); Tex. Att’y Gen. Op. Nos. GA-0409 (2006) at 5, GA-0316

(2005) at 4-5; see also TEX. EDUC. CODE ANN. $$44.031(f) (Vernon Supp. 2005) (expressly

excluding professional servicescontracts); TEX.LOC. GOV’TCODEANN. $8 252.043(i), 254.024(b),

271.056(4) (Vernon Supp. 2005) (same), 325.046(b), 351.144(b) (Vernon 1999) (same). Chapter

176 does not expressly excludes professional services contracts from its provisions. Thus we

conclude that chapter 176 applies to contracts with professional services providers.

4. Retention of information

Representatives Woolley and Smithee ask about retention of information under the statute.

See Woolley Request Letter, supra note 1, at 2 (question 5). Chapter 176 does not provide an

9The Texas Associationof School Boards Legal AssistanceFund (“TASBLAF”) invites us to “provide a clear

framework within which officers can consider their particular situations” especially in light of chapter 176’s criminal

provisions. Brief from Andrea Slater Gulley, Underwood, Wilson, Berry, Stein & Johnson, P.C., to Honorable Greg

Abbott, Attorney General of Texas, at 8 (Apr. 20,2006) (on file with the Opinion Committee) [hereinafter TASB LAF

Brief]. “[C]ourts, may not, under the guise of construction, amend a statute by adding provisions thereto, no matter how

desirable such additions might seem : .” A.M.ServicingCorp.ofDallasv. Safe, 380 S.W.Zd 747,748 (Tex. Civ.

App.-Dallas 1964, no writ). Because to provide the clear framework that TASB LAF invites us to do would require

us to add language that is simply not present in chapter 176, we must declitie the invitation.

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answer. See generally ‘RX. Lot. GOV’T CODE ANN. ch. 176 (Vernon Supp. 2005). However, the

statement and questionnaire are local government records subject to the Local Government Records

Act. See id @ 201.003(S) (defining local government record), 201.001 (Vernon 1999) (entitling

provision). As such, they must be maintained in accordance with the entity’s records retention

schedule. See id. §§ 203.002%,005 (Vernon 1999) (governing county records), 203.021-,026

(governing records of all other local government Dftices); see also id. ,@ 203.041-.050~(records

control schedules); 13 TEX. ADMIN. CODE $5 7.121-,125 (2006) (Tex. State Library &Archives

Comm’n, Records Retention Schedules). Neither chapter 176 nor the records retention schedules

provide for a specified time period during which an entity must make available the statement or the

questionnaire on its website. See generally TEX. LOC. GOV’T CODE ANN. ch. 176 (Vernon Supp.

2005); 13 TEX. ADMIN. CODE $5 7.121-,125 (2006) (Tex. State Library & Archives Comm’n,

Records Retention Schedules).

5. Employees and agents of~korporate and other legal bddies

Two ‘questions presented to us concern the applicability of chapter 176 to personnel of

corporate entities or partnerships. Representatives Woolley and Smithee inquire whether chapter

176’s disclosure requirements apply to some or all individual partners or employees of a partnership

or corporation. See Woolley Request Letter, supra note 1, at 2 (question 6). Commissioner Neeley

asks whether all sales personnel or agents of a vendor are subject to chapter 176. See Neeley

Request Letter, supra note 2, at 1 (question 5).

Chapter 176 applies to any “person who . contracts or seeks to contract with a local

governmental entity.” TEX. LOC. GOV’T CODEANN. 5 176.002(a)(l) (Vernon Supp. 2005). Absent

indication to the contrary, a partnership, corporation, or any other corporate entity is a “person.” See

TEx. GOV’T CODE ANN. 5 311.005 (Vernon 2005). We see no indication that the legislature

intended to exclude corporate bodies from the reach of the disclosure requirements, thus a’

partnership, corporation or other corporate body is a “person” subject to chapter 176 under the plain

language of section 176.002(a)(l). We believe that when a partnership, corporation~br other legal

entity contracts or seeks to contract with the entity, the partnership, corporation or other legal entity

is the party obligated to file the statement.

But chapter 176 also applies to an “agent of a person described by Subdivision (1) in the

person’s,business with a local governmental entity.” Id. 5~176.002(a)(2). The legislature did not

define the term “agent” as used in subsection 176.002(a)(2) and did not differentiate subsection

176.002(a)(2)fromsubsection~l76.002(a)(1). Absent astatutory definition,welookforthecommon

meaning of the term. See TEX. GOV’T CODEANN. 5 3 11 .Ol l(a) (Vernon 2005) And we construe

words with a technical or particular meaning according to that technical or particular meaning. See

id. $3 11 .Ol 1(b). Because the legislature used the term “agent” rather than other general terms such

as “personnel” ore “employee,” we believe it is reasonable to construe “agent” according~to its

meaning under the legal principles of agency. Generally, an “agent” is a third party “who undertakes

to transact some business, or to manage some affair for another, by the authority and on account” of

such other person. Boyd v. Eikenberry, 122 S.W.2d 1045, 1047 (Tex. 1939). Considering that

definition of “agent,” we do not construe the term in subsection 176.002(a)(2) to include the

individuals who compose the legal entity.

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Accordingly, we conclude that as applied to a partnership, corporation or other legal entity,

chapter 176.002’s disclosure requirements apply to only the legal entity that is the “person”

contracting or seeking to contract with the local governmental entity. Third-party individuals who

act as agents under agency law for a legal entity contracting or seeking to contract with the local

governmental entity are independently subject to chapter 176 under section 176,002(a)(2).

6. Wholesale adoption of conflicts disclosure statements

Representatives Woolley and Smithee ask whether a “person seeking to contract with a local

governmental entity [would] comply with the requirements of Chapter 176 if the person discloses

affiliations and business relationships with all business entities disclosed by the local governmental

entity to the person as having a triggering relationship with a local government ofticer and discloses

affiliations and business relationships with all employees and outside contractors disclosed by the

local governmental entity to the person as making recommendations concerning the proposed

contract, even if that disclosure proves to be incomplete or the local governmental entity fails to

make any such disclosure despite the person’s request, absent actual knowledge ofthe person to the

contrary.” Woolley Request Letter, supra note 1, at 2-3 (question 7). As we understand it, the letter

asks whether a vendor can request from the local governmental entity a list of everything disclosed

on the various statements and then, using the information on the list, prepare the vendor’s own

response to the questionnaire using only the list disclosed by the entity and still comply with chapter

176.

The statute requires a vendor to prepare a response to a~questionnaire that identities and

describes specified relationships and affiliations. See TEX. Lot. GOV'T CODE ANN 5

176.006(c)(l)-(7) (Vernon Supp. 2005). To the extent a vendor simply lists the various business

interests and relationships disclosed by the officers, the vendor does not comply with the requirement

that the vendor “describe” the various relationships and affiliations. See id. 5 176.006(c)( 1); (4W7).

Similarly, to the extent the list provided by the entity does not disclose each and every relationship

or affiliation of the vendor such that the vendor’s disclosure fails to “identify” and “describe” each

of the vendor’s specified relationships and affiliations, the vendor does not comply with the statute.

7. Enforcement responsibilities of local governmental entities

Representatives, Woolley and Smithee inquire whether “local governmental entities have a

responsibility to require persons who contract or seek to contract with local governmental entities

to comply with Chapter 176 prior to entering into a contract with the,local governmental entity.”

Woolley Request Letter, supru note 1, at 3 (question 9). They ask whether~ the “failure of a

contractor to comply with the requirements of Chapter 176 [has] any impact on the validity of a

contract between the local governmental entity and the contractor.” Id. Commissioner Neeley asks

on behalf of school districts whether an entity has a responsibility to enforce chapter 176 and

whether an entity must cease to do business with a vendor who does not ,coinply with the chapter.

See Neeley Request Letter, supra note 2, at 1 (question 2). Finally, Commissioner Neeley inquires

about the responsibility of governmental entities to notify vendors regarding the requirements of

Texas Local Government Code chapter 176. See id. (question 4).

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Chapter 176 requires a vendor to prepare and file a questionnaire. See TEX. Lot. GOV’T

CODEANN. $5 176.002, .006(VemonSupp.2005). Thestatuteprescribesthepunishmentforfailure

to comply with its mandate-an officer or vendor commits a Class C misdemeanor for failing to tile

the conflict of interest questionnaire or conflicts disclosure statement. See id. $5 176.003(c) (local

government officer), 176.006(f) (vendor). Bec,ause the statute does not impose it, we do not believe

the entity has an affirmative duty to independently require vendors to comply with chapter 176 prior

to entering into a contract with the local governmental entity. Moreover, Texas law “recognizes that

there is no duty to inform others of the requirements of the law because all persons are presumed to

know the law.” Gabaldon v. Gen. Motors Corp., 876 S.W.2d 367,369 (Tex. App.-El Paso 1993,

no writ) (quoting Greater Houston Transp. Co. Y. Phillips, 801 S.W.2d 523,525 n.3 (Tex. 1990)).

For these reasons, we conclude that a local governmental entity has no statutory responsibility to

“enforce” chapter 176. For the same reasons, we conclude that an entity has no responsibility to

notify vendors of the requirements of chapter 176.

Absent any provision expressly providing that any such contract is void, we believe a

vendor’s failure to tile the questionnaire does not void a contract with the entity, nor does it require

the entity to cease doings business with the noncomplying vendor.

Our conclusion that an entity does not have au affirmative responsibility to require

complianqe with the statute or to enforce its provisions does not preclude an entity from imposing

a requirement that a vendor comply with chapter 176 as a matter of policy. Should an entity choose

to impose such a requirement, it could also impose, as a term of the contract, a requirement that any

contract entered into with a vendor who did not comply with chapter 176 is void or voidable or that

the entity would cease doing business with the vendor.

8. Application of chapter 176 in absence of relationship

Representatives Woolley and Smithee inquire whether chapter 176 “requires a person who

contracts or seeks to contract with a local governmental entity to tile a disclosure questionnaireif

the person has no business or financial relationships or affiliations to disclose.” Woolley Request

Letter, supra note 1, at 3 (question 10). Section 176.006 requires that “a person described by Section

176.002(a) shaZl file a completed conflict of interest questionnaire.” TEX. LOC. GOV’T CODEANN.

5 176.006(a) (Vernon Supp. 2005) (emphasis added). The statute does not establish some trigger

for the filing of a questionnaire as it does for the statement required of an officer. Compare id. $

176.003(a) (“A local government officer shall file a conflicts disclosure statement. . zj! . .“), with

id. §‘176.006(a) (“A person described by Section 176.002(a) shall tile . .“). The word “shall”

usually connotes amandatoryduty. SeeTEx. GOV’TCODEANN. 5 311.016(2) (Vemon2005). Thus

we believe a vendor must file a questionnaire even if the vendor has no business relationships or

affiliations to disclose.

In a related question, Commissioner Neeley inquires whether a questionnaire~that discloses

no relationship must be posted on an entity’s website. See Neeley Request Letter, supra note 2, at

1 (question 3). Section 176.009 requires that the entity “provide access to the statements and

questionnaires tiled under [chapter 1761 on the Internet website maintained by the local

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governmental entity.” TEX. Lot. GOV’T CODEANN. 5 176.009(a) Vernon Supp. 2005). It does not

limit the mandatory requirement to only those statements and questionnaires that reveal relationships

and affiliations. Therefore we conclude that an entity receiving a questionnaire indicating no conflict

of interest must post the questionnaire on the entity’s website.

9. Existing vendors

Commissioner Neeley asks whether existing vendors are required to completethenew vendor

questionnaire. See Neeley Request Letter, supra note 2, at 1 (question 1). Chapter 176 became

effective on June 18, 2005. See Act of May 26,2005,79th Leg., R.S., ch. 1014,2005 Tex. Gen.

Laws 3429,3432. Section 3 of the enacting legislation provides that a vendor subject to chapter 176

under section 176.002(a) “is not required to tile a conflict of mterest questionnaire,. . before

January 1,2006.” Id. 5 3(b), at 3432. Additionally, the statutory language is prospective. A person

is subject to chapter 176 if the person “contracts or seeks to contract” with a local governmental

entity. TEX. Lot. GOV'TCODE&N. 8 176.002(a) (Vernon Supp: 2005). “A statute is presumed to

be prospective in its operation unless expressly made retrospective.” TEX. GOV'T CODE ANN. 5

3 11.022 (Vernon 2005). Texas courts apply statutes retrospectively only if “it appears by fair

implication from the language used that it was the intention of the Legislature to make it applicable

to both past and future transactions.” State v. Humble Oil &Refining Co., 169 S.W.2d 707,708-09

(Tex. 1943). We find nothing in the language of the statute suggesting that vendors who contracted

with a local governmental entity prior to January 1,2006, must file a questionnaire.

We believe the language of the statute requires the conclusion that vendors with pre-existing

contracts are not required to tile a questionnaire. In context, the phrase “seeks to contract” describes

a vendor who is engaged in the attempt to acquire a contract with an entity. See supra p. 7 (defining

“seek”). A vendor in an existing contract with an entity is not one “seek[ing] to contract” with the

entity. The term “contracts” in context describes a vendor who prospectively enters into a contract,

not a vendor that has already done so. See supra pp. 6-7 (definmg “contract”). Additionally, the

text of section ~3of the enabling legislation does not require the questionnaire to be filed before

January 1, 2006. See Act of May 26,2005,79th Leg., R.S., ch. 1014, § 3,2005 Tex. Gen. Laws

3429,3432. And because we have concluded that a contract is not voided by a violation of chapter

176, set?supra p. 13, the information provided by chapter 176 has limited value where the contract

has already been voted on by the entity.

Therefore a vendor who has an existing contract with an entity is not required to complete

and file the questionnaire. However, we believe that amendments to an existing~contract would

subject the vendor to the requirements of chapter 176 because the resulting amended contract is

essentially anew~contract. See Greenbelt Elec. Co-op., Inc. v. Johnson, 608 S.W.2d 320,325 (Tex.

Civ. App.-Amarillo 1980, no writ) (“By law, once the contract was modified by the mutual consent

of the original parties, it became a new agreement, taking the place of the old and consisting of the

new terms and as much of the old as remained unchanged.“).

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10. Charter schools and regional education service centers

Commissioner Neeley also asks about the applicability of chapter 176 to open-enrollment

charter schools and regional education service centers organized under the Texas Education Code.

Neeley Request Letter, supru note 2, at 2. Chapter 176 applies to “local governmental entities”

which means

a county, municipality, school district, junior college district, or other

political subdivision of this state or a local government corporation,

board, commission, district, or authority to which a member is.

appointed by the commissioners court of a county, the mayor of a

municipality, or the governing body of a municipality. The term does

not include an association, corporation, or organization of

govermnental~entities organized to provide to its members education,

assistance, products, or services or to represent its members before

the legislative, administrative, or judicial branches of the state or

federal government.

TEX. LOC. GOV’TCODEANN. § 176.001(3) (Vernon Supp. 2005). To answer this question wemust

determine Whether an open-enrollment charter school or regional education service center falls

witbin the definition of“local governmental entity.”

An open-enrollment charter school is not a county, municipality, junior college district, or

other political subdivision of Texas. See Tex. Att’y Gen. Op. No. JC-0378 (2001) at 4 (“An open-

enrollment charter school is not ‘a district, county, municip,ality, precinct, or other political

subdivision of this state.“‘). Therefore, under the definition of “local governmental entity’? an open-

enrollment charter school is an entity subject to chapter 176 only if it is a “l&al gov&nment

corporation, board, commission, district or authority to which a member is appointed by [listed

entities].” TEX. Lot. GOV’T CODE ANN. 5 176.001(3) (Vernon Supp. 2005). As an independent

school “separate and apart from local independent school districts,” an open-enrollment charter

school isnot a“loca1 government corporation, board, commission, district or authority.” TEx.Loc.

GOV’T CODEANN. 5 176.001(3). (Vernon Supp. 2005); see also Tex. Att’y Gen. Op. Nos., GA-0069

(2003) at 1 (desc;ibing charter schools as “independent public schools formed by individuals or

organizations that operate according to a charter”), JC-0378 (2001) at 1, 3 (recognizing that the

individual or organization operating a school under charter was not a governmental body or school

district). Therefore an open-enrollment charter school is not an entity under chapter 176.

We recognize that open-enrollment charter schools are subject to many of the same la&s

applicable to political subdivisions that are designed to prombte openness and fairness in

government. See TEX. EDUC. CODEANN. $5 12.105 1 (Vernon Supp. .2005) (“Applicability of Open

Meetings and Public Information Laws”); 12.1052 (“Applicability of Laws Relating to Local

Government Records”); 12.1053 (“Applicability of Laws Relating to Public Purchasing and

Contracting”); 12.1054 (“Applicability of Laws Relating to Conflict of Interest”). However, open-

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enrollment charter schools were expressly subjected to these open government provisions. The

absence of an express reference in chapter 176 to open-enrollment schools leads us to conclude that

the statute does not apply to open-enrollment ,chaer schools that fall outside the scope of the

definition of “local governmental entity” under chapter 176.

Chapter 8 of the Education Code provides for regional education service centers, which are

designed primarily to assist school districts in improving student performance and increasing the

effici&cy and effectiveness of’school operations. See TEX. EDUC. CODE~ANN. 5 8.002 (Vernon

Supp. 2005). The commissioner of the Texas EducationAgency provides for the establishment and

operation of regional education service centers. See id. § 8.001(a). The commissioner is also

directed to establish rules for the “local selection, appointment, and continuity of membership of

regional education service center boards of directors.” Id. 5 8.003(b). ,Rules promulgated under that

rule-making authority provide that members ofthe board of directors for a regional education service

center are elected by the boards of trustees of the school districts in the territory of the education

service center. See 19 TEX. ADMIN. CODE 5 53.1001(b)(2) (2006) (Tex. Educ. Agency, Reg’l Educ.

Serv. Ctrs.). A regional education service center is not a “county, municipality, school district,

. . or authority to which a member is appointed by the commissioners court of a county, the mayor

of a municipality, or the governing body of a municipality.” TEX. LOC. GOV’T CODE ANN. 5

176.001(3) (Vernon Supp. 2005). Because regional education kervice centers do not fall within,the

definition of “local governmental entity,” they are not subject to chapter 176.

As with open-enrollment charter schools, many of the laws requiring openness and fairness

of political subdivisions are expressly applicable to regional education service centers. See mx.

EDUC. CODE ANN. $4 8.008 (Vernon Supp. 2005)~(“Applicability of Certain Laws Relating to

Political Activities”), 8.009 (“Applicability of Certain Laws Relating to Conflict of Interest”). And

as we did with respect to open-enrollment charter schools, we conclude that in the absence of an

express provision regarding applicability of chapter 176 to regional educatiqn service centers, they

are not subject to chapter 176 outside of the definition of “local governmental entity.” See supra p.

16 (citing TEX. Lot. GOV’T COMEANN. 5 176.001(3)).

11. Family members are vendors

We next opine on the disclosure requirements that apply when a vendor who contracts or

seeks to contract with an entity is a family member of an officer. See Schwartz Letter, supra note

3, at 2 (q!estion 1). We begin our analysis with the chapter’s applicability provision. Chapter~l76

applies to a person who “contracts or seeks to contract” with an entity. TEX. Lot. GOV'TCODE ANN.

5 176.002(a) (Vernon Supp. 2005). Under the plain la&age of chapter 176, a family member of

an officer who contracts or seeks to contract with the entity would be subject to chapter 176. See id.

Neither section 176,002 nor chapter 176 as a whole provides an exception for family members. See

generally id. ch. 176.

The lack of any express exceptions is especially significant when we consider other law

governing acts of pubiic officials. For instance, chapter 36 of the Texas Penal Code generally

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prohibits a person from giving gifts to public officials. See TEX.PEN.CODE ANN. @ 36.08, .09

(Vernon 2003). Section 36.10 expressly excludes from the prohibition, however, gifts that are given

to the public official because of a personal relationship, such as from a family member. See id. 9

36.10 (Vernon Supp. 2005). No~similar provision exists in chapter 176. See generallyTEX. LOC.

GOV’T CODE ANN. ch. 176 (Vernon Supp. 2005). Therefore we conclude that the disclosure

requnements of chapter 176 apply even when a vendor is a family member”’ of the officer.”

12. Gifts

We next address the question involving the disclosure requirements triggered by the giving

or receiving of gifts. See Schwartz Letter, supra note 3, at 2 (question 2). Chapter 176 requires that

an officer file a statement when a vendor “has given to the officer or.afamily member of then

officer one or more gifts, . , that have an aggregate value of more than $250.“” TEX.LOC.GOV'T

CODEANN. 5 176,003(a)(2)(B) (Vernon Supp. 2005). Section 176.003 applies to “oneor more gifts”

given to “local government offrcer[s] or [their] family member[s].” Id. Chapter 176 plainly refers

only to the individual officer or family members and not to the ~family as a unit. See id. 5

176.003(a)(Z)(B). We believe the limit of the aggregate value of $250 or more is determined by the

individual offrcer or family member that receives the gift. Accordingly, we construe the phrase

“aggregate value of more than $250” to apply to each family member rather than to the family as a

unit.

13. ~Services offered at reduced prices

We next consider the question of whether chapter 176 applies~ to those who contract or seek

to contract with entities but who offer their services at a reduced price. See Schwartz Letter, supra

note 3, at 2 (question 3). The disclosure requnements apply to a person who “contracts or seeks to

contract for the sale or purchase of property, goods, or services with a local governmental entity.”

TEX. Lot. GOV’T CODE ANN. 5 176.002(a) (Vernon Supp. 2005). Section 176.002 contains no

minimum or threshold amount for the contract or any exceptions for particular types of contracts.

See id. A vendor who agrees to provide goods or services to an entity, even at a reduced price, is

loChapter 176 defmes “family member” as a “person related to another person within the fust degree of

consanguinity or aflinity, as described by Subchapter B, Chapter 573, ~ovemment Code.” T~x.Loc. GOV’TCODEANN.

5 176.001(2) (Vernon Supp. 2005). Our conclusion regarding vendors who are family members extends,only to the

extent the, vendor is a “family member” as deftied in chapter 176.

“We have been irged to construe chapter 176 to not require vendors who are also family members of an officer

to tile a questionnaire. See TML Brief, supra note 7, at 6 (“The language of the statute should not include gifts

between family members end the like.“); see also Schwartz Brief, supra note 7, at 11 (“There is , no legitimate reason

for requiring local officials related to a vendor to file a conflict disclosure form listing gifts received by that vendor.“).

As we have previously stated, the wisdom of a particular enacbnent is let? to the legislature. See Smith, 426S.W.2d at

831.

“By its plain terms chapter 176 excludes giffs of”food, lodging, transportation, or entertainment accepted as

a guest.” TEX. Lot. GOV’T LODE ANN. 5 176.003(a)(Z)@) (Vernon Supp. ZOOS).

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nevertheless operating under a “contract . for the sale or purchase of. goods, or services.” Id.

Therefore, pursuant to the plain language of section 176.002, we conclude that a vendor who

provides goods or services to an entity at a significantly reduced price must comply with chapter 176.

Whether an officer who is related to a vendor subject to chapter 176~would be required to file a

statement is determined by section 176.003(a). See id. § 176.003 (listing circumstances when officer

is required to file a conflicts disclosure statement).

14. Confidentiality of attorney’s client

“Many local government officials are als,o attorneys and may have clients who qualify as

vendors.” Schwartz Letter, supra note 3, at 2. In some circumstances, the identity of alawyer’s

client is protected by the attorney-client privilege. See id. at 2-3. With that context, we are asked

whether the requirements of chapter 176 as to the statement supersede the duty of confidentiality that

attorneys owe their clients. See id. (question 4).

Then attorney-client privilege has been recognized as “the oldest of the privileges for

confidential communications known to the common law.” FordMotor Co. v. Leggat, 904 S.W.2d

643,647 (Tex. 1995) (quoting UnitedStates v. Zolin, 491 U.S. 554,562 (1989)); Its purpose is to

protect the free flow of information between attorney and client to ultimately serve the broader

societal interest of the effective administration of justice. See Republic Ins. Co. v. Davis, 856

S.W.2d~ 158, 160 (Tex. .1993). As a general rule, the identity of a client is not protected by the

attorney-client privilege. See In re GrandJury Proceedings v. Jones, 5 17 F.2d 666,670-7 l(5th Cir.

1975). There is a narrow and limited exception that protects a client’s identity if revelation of a

client’s identity would also reveal a privileged communication. See Jones, 5 17 F.2d at 670-71; see

also In re Grand Jury Subpoena for Att ‘y Representing Reyes-Requena, 913 F.2d 1118, 1125 (5th

Cir. 1990); In re GrandJury Proceedings v. Pavlick, 680 F.2d 1026,1027 (5th Cir. 1982). Because

the exception is narrow and depends on the nature of the specific factual circumstances, the question

of when it applies in any given situation must be determined on a case-by-case basis. See Jones, 5 17

F.2d at 671-72. Questions of fact are not appropriate to the opinion prbcess. See Tex. Att’y Gen.

Op. No. GA-0292 (2005) at 4. Therefore we cannot advise on when the identity of a vendor who

is also a client of an attorney Who is an officer may be withheld from disclostie under chapter 176

pursuant to the exce$i& to the attorney-client privilege.

Iv. Conclusion

We~recognize that a plain language construction of chapter 176 will have a significant impact

on Texas local governments arid their communities. While the proffered arguments suggesting that

chapter 176 be construed to include some minimum thresholds or de minimis exceptions might be

reasonable, we are constrained~ by the language of the statute as enacted. We must follow the

directive of the Supreme Court of Texas that

[c]ourts must take statutes as they find them. They should search

out carefully the intendment of a statute, giving full effect td all its

terms. But they must find its intent in its language and not elsewhere

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They are not responsible for omissions in legislation. They are

responsible for a true and fair interpretation of the written law. It

must be an interpretation which expresses only the will of the makers

of the law, not forced nor strained, but simply such as the words of

the law in their plain sense fairly sanction and will clearly ‘sustain.

RepublicBank Dallas, 691 S.W.2d at 607.

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SUMMA.RY

As used in chapter 176 of the Local Government Code, the threshold phrase

“contracts or seeks to contract for the sale or purchase of property, goods, or services

with a local governmental entity” encompasses one who agrees to,~makes, or arranges

for, or inquires for, asks for or requests from a local governmental entity a promise

creating legal obligations concerning the sale or purchase of property, real or personal,

and any goods and services.

A “business relationship” is a connection between two or more parties based

on a commercial activity of one of the parties. An “affiliation” is an association

between persons or between a person and an organization outside of a “business

relationship.” Whether an affiliation exists is a fact question. Pursuant to the term

“business relationship” and “affiliation,” a personal or business interest bearing savings

account or loan which generated taxable income to either the person subject to chapter

176 or the local government officer would fall within the scope of chapter 176.

Chapter 176 includes professional services contracts,

Documents riled with the local governmental entity should be retained in

accordance with the local governmental entity’s records retention schedule. A local

governmental entity should create a retention policy for documents maintained on the

entity’s website.

Partnerships, corporations and other corporate bodies are “persons” subject to

chapter 176. As applied to a corporate or legal entity, chapter 176.002’s disclosure

requirements apply to only the legal entity that is the “person” contracting or seeking

to contract with the local governmental entity. Third-party individuals who act as

agents under agency law for a legal entity contracting or seeking to contract with the

local governmental entity are independently subject to chapter 176 under~ section

176,002(a)(2).

To the extent a vendor merely adopts the list of the various entities and

relationships provided by the local governmental entity, the vendor does not “describe”

the required relationships a&affiliations and therefore does not comply with chapter

176. Similarly, to the extent a vendor adopts an incomplete list of the various entities

and relationships provided by.the local governmental entity, the vendor does not

“identify” and “describe” all relevant relationships and affiliations and therefore does

,not comply with chapter 176.

A local governmental entity does not have an affirmative duty to require

vendors to comply with chapter 176. Nor does a local governmental entity have an

affirmative responsibility to enforce chapter 176, or even to notify vendors of its

requirements. A contract between a local governmental entity and a vendor who fails

The Honorable’Beverly Woolley - Page 21 (GA-0446)

The Honorable John Smithee

Shirley J. Neeley, Ed.D.

to comply with chapter 176 is not void. However, local governmental entities may

choose to impose such a requirement on all its vendors and to provide for the

voidability ,of a contract entered into in violation of chapter 176.

A vendor must file a conflict of interest questionnaire even~if the vendor has

no business relationships or affiliations to disclose. Local governmental entities must

post such a questionnaire on its website.

Vendors with existing contracts with local governmental entities are not

required to file a~contlict of interest questionnaire.

Chapter 176 does not apply to open-enrollment charter schools or regional

education service centers.

Chapter 176’s disclosure requirements apply even when the vendor is a family

member of a local government officer.

The reporting requirements of chapter 176 are triggered~ upon receipt of,more

than $250 in gifts by the local government officer and the offker’s family as

individuals rather than as a family unit.

A vendor who provides goods or services at a reduced price to a local

governmental entity is subject to chapter 176 by its plain terms and must comply with

its disclosure requirements. A related local government officer must also comply with

chapter 176’s disclosure requirements if disclosure is required by section 176.003.

Whether the identity of a vendor who is also a client of an attorney who is a

local government offkermay be withheld from disclosure under chapter 176 pursuant

to an exception to the attorney-client privilege is a fact question and inappropriate for

the opinion process.

KENT C. SULLIVAN

First Assistant Attorney General

The Honorable Beverly Woolley - Page 22 (GA-0446)

The Honorable John Smithee

Shirley J. Neeley, Ed.D.

ELLEN L. WITT

Deputy Attorney General for Legal Counsel

NANCY S .,FULLER

Ch~air,Opinion Committee

Charlotte M. Harper

Assistant Attorney General, Opinion Committee