ADOPTED - 1988/06/24

SUBJECT - Conflicts of Interest; Member of Commission as potential beneficiary of grant.

REQUESTED BY: Roger Christianson, Director, Nebraska Department of Economic Development.

QUESTION: Does a member of a Commisison have an impermissible interest in a contract by virtue of the Commissioner's being a contractor to a beneficiary of the grant?


See Analysis.


The Department of Economic Development is charged with administering the Community Development Block Grant Program. The United States Department of Housing and Urban Development requires that the DED distribute funds in the form of grants to counties and municipalities. One type of grant is awarded to a local government in order to assist for-profit businesses through a loan, a loan guarantee, or other financing mechanisms. A local government may submit an application to DED only after following a detailed citizen participation process, including a public hearing. The application is then reviewed by the DED staff to ascertain compliance with state and federal regulations and procedures. The staff recommendation is then reviewed by the CDBG Economic Development Selection Committee. This committee approves or disapproves the staff recommendations and forwards the matter to the agency director. The director submits a recommendation to the Governor who makes the final decision. At this time there is pending an application for a grant from a municipality in Nebraska. If the grant is made, the municipality intends to use it to assist a for-profit business. A member of the Economic Development Commission is one of three contract suppliers to the for-profit business. In addition, there is some possibility that the Commissioner may be asked to join the Board of Directors of the for-profit business. The Economic Development Commission plays no role in this grant process and the Economic Development Commissioner is not a member of the CDBG Economic Selection Committee.


Section 49-14,102 states in part:

. . . no public official or public employee, member of that individual's immediate family, or business with which the individual is associated shall enter into a contract valued at $2,000 or more, in any one year, with a governmental body unless the contract is awarded through an open and public process which includes prior public notice and subsequent availability for public inspection during the regular office hours of the contracting governmental body of the proposals considered and the contract awarded.

In the instant case, neither the commissioner nor a business with which he is associated has an interest in any contract with the Department of Economic Development or the municipality. The Commissioner's only association with the for-profit business is his status as an independent contractor who supplies goods or services to the for-profit business. The fact that the Commissioner may some day be asked to join the board of directors of the for-profit business is speculation. Speculation that an individual may some day have a business association does not give rise to a present interest in a contract. And, under the fact situation presented, grants are awarded through an open and public process. Therefore, the commissioner has no obligations under this section.

Section 49-1499 describes a potential conflict of interest as a situation in which an official or employee of the Executive Branch of State Government is required to an take action or make a decision that may cause financial benefit or detriment to him or her, a member of his or her immediate family, or a business with which he or she is associated. Members of the Economic Development Commission are officials of the executive branch of state government as defined in Section 49-1436 subject to the provisions of this section. However, in this situation the commissioner is not faced with making a decision or taking an action. Any decisions or actions are taken by the governor and the director of the Department of Economic Development.

Section 49-14,101(3) states that:

No public official or public employee shall use that person's public office or any confidential information received through the holding of a public office to obtain financial gain . . . for himself or herself, a member of his or her immediate family, or a business with which the individual is associated.

There is nothing in the facts presented which leads us to believe that the commissioner in this case has any opportunity to use his public office for personal gain. In addition, there appears to be no confidential information involved. All matters are matters of public record. Therefore, it does not appear that the commissioner incurs any obligations under the provisions of Section 49-14,101(3).

Given the forgoing description of this situation, we do not see that the contemplated grant imposes any obligations upon the commissioner under the provisions of the Nebraska Political Accountability and Disclosure Act.

We note that the United States Government is the source of funding for these block grants. Often by law or regulation there are special conflict of interest requirements which are applicable to both the grantors and the grantees. This Commission has no jurisdiction to interpret any federal laws or regulations which may be applicable.

We also note Attorney General's Opinion #87012 issued on January 29, 1987 to the director of the Department of Economic Development. That opinion stated that members of the Economic Development Commission and advisory committees are not eligible for grants administered by the Department of Economic Development. This opinion relies upon Section 49-14,101(3) as basis for prohibiting certain interests in grants. We do not believe the opinion applies to this situation because the commissioner does not have the authority to use his public office in support of the grant, not is there any confidential information to be used.