• Local Charter and Statutory Limitations
• State Ethics Law
• Covered Officials
• State Ethics Code Prohibitions
• Use of Office to Obtain Financial Benefit
• The Ethics Code Applies to Public Officials and Their Relatives
• Businesses Associated with Public Officials or Their Relatives
• What Constitutes "Using" Official Position or Office
• Large Gifts
• Jobs
• Confidential Information
• Representation (of clients)
• Potential and Actual Conflicts of Interest
• Actual Conflict of Interest
• Potential Conflict of Interest
• Exceptions
• Methods of Handling Actual or Potential Conflicts of Interest
• Statement of Economic Interest

Many cities address conflicts of interest in their charters and ordinances. Often, cities have specific prohibitions tailored to particular public offices or to specific duties of those offices. For example, the Eugene City Charter provides that "No member of the council may be pecuniarily interested in any contract the expenses of which are to be paid by the city or vote upon any subject in which pecuniarily interested." As another example, the Eugene City Code has a provision which prohibits any member of the planning commission from participating in a proceeding in which that member, the member's relatives, or certain businesses to which the member is connected, has a "direct or substantial financial interest."

Public officials should be aware that the type of activity at issue may trigger federal statutory guidelines regarding the use of funds which are derived from the federal government. For example, 24 C.F.R. sec. 570.611(b) limits the ability of governing body members to be advantaged by the expenditure of community development block grant funds and other federal monies.

State Ethics Law

In 1974, Oregon voters adopted a code of ethics and guidelines for situations involving conflicts of interests. The ballot measure also provided that a state commission (presently known as the Oregon Government Standards and Practices Commission) would investigate and enforce violations of the state ethics law.

Covered Officials

The state ethics law applies to "public official." The definition of public official is very broad. It includes all persons "serving" a government entity (such as city, county, or special district) as an "officer, employee, agent or otherwise." It does not matter whether such persons receive compensation for their service. For example, a person serving on a city council or a commission like a planning commission is a public official within the meaning of the ethics law.

State Ethics Code Prohibitions

The state ethics code prohibits several actions: (a) using public office to obtain a financial benefit; (b) acceptance of "large" gifts; (c) soliciting or receiving a promise of future employment based on an understanding that the promise would influence the official; (d) using confidential information for personal gain; and (e) representing a client before the governing body of which the person is a member.

Use of Office to Obtain Financial Benefit

The primary rule in the ethics code prohibits the use of public office for financial benefit. That rule prohibits the use or attempted use of a public official's office or position to obtain financial gain for the public official or closely associated persons. If a public official takes an action in order to avail himself of an opportunity to save money or gain a benefit that would not be available but for the official's position, the official violates the ethics code. The rule is set forth in ORS (Oregon Revised Statute) 244.040(1)(a), which provides, in part:

"No public official shall use or attempt to use official position or office to obtain financial gain or avoidance of financial detriment that would not otherwise be available but for the public official's holding of the official position or office ... for the public official or the public official's relative, or for any business with which the public official or a relative of the public official is associated.'

The rule does, however, allow the following financial gain: honoraria; reimbursement of expenses; unsolicited awards for professional achievement; and official salary.

The ethics code prohibits public officials from using, or attempting to use, their positions to obtain a monetary benefit for their relatives. The term relative means only the following persons: (a) spouse of the public official; (b) children of the public official or public official's spouse; and (c) brothers, sisters or parents of the public official or public official's spouse.

Business Associated with Public Officials or Their Relatives

Public officials are prohibited from using their position to obtain financial benefit for businesses with which they or their relatives are associated. This applies to businesses which are operated for economic gain; however, certain income-producing non-profit corporations are excluded. A person is associated with a business if the person or the person's relative is a director, officer, owner or employee, or agent of the business. Also, anyone who has owned (at) least $1,000 worth of stock in a corporation during the preceding year is associated with that corporation.

What Constitutes "Using" Official Position or Office

To "use" one's public office generally requires some affirmative act or omission which is related to the public office. For a member of a public body, use of office includes discussing, debating or voting as a member of the body. For a public official who is not a member of a body, use of office includes any act such as approval of a contract, hiring an employee and failing to enforce the law. The prohibition also extends to any attempt to use public office. This prohibition is fairly broad, as the following examples illustrate.

Example: A SAIF official violated the ethics law when he purchased a personal car as an "add on" to SAIF''s fleet purchase at a savings of almost $1,300. This purchase did not involve any additional cost to SAIF. Because this discount would not have been available to him but for the fact that he worked for SAIF, he had used his office for gain.

Example: A city official may not use the city telephone account for long-distance calling, even if he were to reimburse the city at city rates, because the rates government entities pay for telephone service are significantly less than what individuals pay. In such a case, the public official would not enjoy the discounted rate he received but for the fact that he held a position with the city.

Example: Use of the office can be direct or indirect. A state senator was chairman of the senate committee which considered all bills affecting workers' compensation. The senator received a financial benefit because he was paid by a friend to sue the influence of his office to obtain business for the friend. The senator used his office directly by requesting business for that friend; he also used his office indirectly by letting it be know that he supported that friend's business enterprise.

Example: An Oregon State Police (OSP) major's duties included negotiating with private parties for development of OSP facilities. In a private trade with one such party, he traded three handguns with a total value of $1,257 for a motor home and a car with a total value of $11,425. The ethics commission found he violated the ethics code.

During any one calendar year, a public official or relative may not receive a gift or gifts with an aggregate value in excess of $100 from any single source who could reasonably be known to have a "legislative or administrative interest" in any agency over which the official can exercise any authority. The following items are not prohibited: (a) gifts from family members; (b) campaign contributions; (c) food, lodging and travel for events attended in official capacity; (d) giving or receiving food or beverage if consumed by the official or relative in the presence of the purchaser or provider; and (e) giving or receiving entertainment if the entertainment is experienced in the presence of the purchaser or provider, and the value does not exceed $100 per person on a single occasion and is not greater than $250 in any one calendar year.

Jobs

Officials may not solicit or receive any promise of future employment based on an understanding that the official's vote, official action or judgment would be influenced thereby. The ethics code also prohibits persons from offering such promises to officials.

Confidential Information

No official may use confidential information gained in the course of their official duties or position for the purpose of furthering personal gain.

Representation (of clients)

No person shall attempt to represent or represent a client for a fee before the governing body of a public body of which the person is a member. This does not apply to the person's employer, business partner or other associate.

Potential and Actual Conflicts of Interest

Public officials may face situations in which their actions may, or will, result in pecuniary benefit for themselves, their relatives, or businesses with which they or their relatives are associated. In such cases, the state ethics law describes the proper response. The response depends upon whether the conflict is a potential or an actual conflict. Keep in mind, however, that under no circumstances may an official use their office for the purpose of benefitting the official, a relative or an associated business.

Actual Conflict of Interest

An actual conflict of interest exists when a public official, or a person acting as a public official, is faced with acting, deciding or recommending an action and the effect of that action certainly would be to the private pecuniary benefit or detriment of the official, the official's relative, or any business with which the person or a relative of the person is associated.

Example: A city councilor owns one of two well-digging companies in the city. The council is voting upon whether to adopt a proposed ordinance that would impose licensing fees on well-digging companies. His vote will certainly have the effect of a financial detriment or benefit upon his company.

Example: A systems operation official approves an employment agreement with a technical support company for who her son works. The approval would be to the pecuniary benefit of a business with which her relative is associated.

Potential Conflict of Interest

A potential conflict of interest exists when a public official, or a person acting as a public official, is faced with acting, deciding or recommending an action, and the effect of that action could be to the private pecuniary benefit or detriment of the official, the official's relative, or any business with which the person or a relative of the person is associated.

Example: If the public official as an independent contractor performs services for a business that comes before the public body upon which the official sits, a potential conflict exists. The decisions of the public body could result in private pecuniary benefit to the official.

Exceptions

Actions affecting an entire class do not create a conflict of interest. In other words, no conflict exists if the public official's action would affect other members of a large class of people in the same way it would affect the public official. For example, if a city council was voting to adopt a city-wide tax cut for retail businesses, council members who owned retail businesses would not have a conflict because of the exception. However, if the city council was voting to adopt a tax cut for software companies, and a city councilor owned one of only three software companies in the city, the councilor would have an actual conflict of interest for which the "class" exemption would not apply. In that case, three software companies would not be considered a large enough class to gain the exception.

Other exceptions include the following: (a) Membership in a particular class required by law as a prerequisite to holding office does not give rise to conflict. For example, a commission which recommends fees for the use of certain chemicals requires that one of its positions be filled by a representative of a company which uses such substances. That person is not faced with conflict when deliberating upon the amount of a fee. (B) No conflict exists when the pecuniary benefit or detriment arises out of membership in or membership on the board of directors of a nonprofit corporation which is tax-exempt under section 501(c) of the Internal Revenue Code.

Methods of Handling Actual or Potential Conflicts of Interest

In every case in which a public official is met with an actual or potential conflict of interest, the official must disclose the conflict. Elected or appointed officials serving on a board or commission must publicly announce the nature of the conflict. The conflict must be recorded in the official rec9ords of the public body. A public official need only announce a conflict of interest once during the course of the particular meeting, even though discussion or action may be interrupted.

When faced with an actual conflict of interest, a public official must, after disclosing the conflict, refrain from participating a s a public official in any discussion or debate no the issue out of which the actual conflict arises or from voting on the issue. The public official should make certain that the minutes reflect that the public official did not participate in the discussion or vote.

Rule of necessity: If the official's vote is necessary to meet a requirement of minimum number of votes to take official action, then the official is eligible to vote, but not to participate as a public official in any discussion or debate on the issue out of which the actual conflict arises. Caveat: If voting under the "rule of necessity," would violate the code of ethics (for example, where a vote would constitute "using" the office to obtain financial gain or avoid financial detriment), then the public official may not vote.

When faced with a potential conflict of interest, a public official must announce publicly the nature of the potential conflict prior to taking any action thereon in the capacity of a public official. Following the declaration of the conflict, the official may discuss or vote on the matter. Caveat: A public official may not take official action after declaring a potential conflict of interest if such action would violate any provision of the code of ethics.

Statement of Economic Interest

On or before April 15 of each year, the following officials must file a statement of economic interest with the Government Standards and Practices Commission: (a) elected officials; (b) city managers; (c) planning, zoning and boundary commissioners; (d) municipal judges; and (e) members of governing bodies of metropolitan services districts and executive officers of such districts.

The economic interest statement must be on a form provided by the Government Standards and Practices Commission. In that form, the public official must provide the following from the preceding calendar year: (a) Positions held as officer or director of business by the official or a member of the official's household; (b) Sources of income received by the official or member of the official's household that produced 10% or more of the total amount of household income; (c) Information regarding the source of income from which 50% or more of the total household income of the official was received, in particular, whether the source is derived from an entity which might, or currently does, conduct business with the body or agency over which the official has authority; (d) Real property interests of the official or members of the official's household (excluding the official's principal residence); (e) Food, lodging and payment of travel expenses received by the official when participating in an event related to the official's office; and (f) Any honoraria exceeding $50 received by the official or the official's household.