March 7, 1995
Mr. Robert Lucas, Chairman Marine Fisheries Commission
P. O. Box 309 Selma, North Carolina 27576
Re: Advisory Opinion: Fishery Resource Grants Program; N.C.G.S. 14-234(a); 1993 N.C. Session Laws, Chapter 769, §27.17
Dear Chairman Lucas:
You have asked for guidance from this office concerning the potential conflict of interest if members of the Marine Fisheries Commission (or their families), or persons appointed to Commission Advisory Committees (or their families), were to receive fishery resource grants pursuant to 15A NCAC 3I .0017 and Chapter 769 of the 1993 N.C. Session Laws. The grants are to be awarded by the Marine Fisheries Commission for research projects that will assess new coastal fisheries equipment, techniques and trends, examine environmental impacts on marine and estuarine fisheries, or otherwise enhance state coastal fisheries resources.
There are many legal principles at issue involving conflicts of interest when members of the public serve on state boards and commissions. Generally, the questions that arise regarding conflicts of interest involve the application of the judgment of the individual members to Commission matters that involve a member’s private pecuniary interests. In order to guide commissioners in avoiding conflicts, our office generally directs public officers to the following definitions:
Actual Conflict: A very narrow situation in which the subject (e.g. a state agent) has a financial interest whose very existence poses a conflict with the public interest that he or she has an official duty to protect.
Potential Conflict: A situation in which the subject (e.g. a state agent) can make specific decisions to benefit personal interests at the public expense, is in a position to use confidential information for private use, or can use influence to benefit personal interests at the public expense. (Excerpt from April 5, 1985, Interpretative Memo #1, N.C. Board of Ethics.)
Your Commission members should keep these definitions in mind as they face decisions in the fishery resource grant program. What those definitions mean, in practical terms, is that public policy generally requires that self-interest, the appearance of self-interest, or pecuniary gain be avoided. In Kendall v. Stafford, 178 N.C. 461, 464 (1919), a case involving a pay raise for themselves voted on by a city council, the N.C. Supreme Court held, "The public policy of the State, found in the statutes and judicial decisions, has been pronounced against permitting one to sit in judgment on his own cause, or to act on a matter affecting the public when he has a direct pecuniary interest, and this is a principle of the common law which has existed for hundreds of years."
In addition, as the Commission considers grant applications and recommendations, we direct your attention to the specific provisions of N.C.G.S. 14-234(a), which reads, as follows: If any person appointed or elected a commissioner or director to discharge any trust wherein the State or any county, city or town may be in any manner interested shall become an undertaker, or make any contract for his own benefit, under such authority, or be in any manner concerned or interested in making such contract, or in the profits thereof, either privately or openly, singly or jointly with another, he shall be guilty of a misdemeanor. Provided, that this section shall not apply to public officials transacting business with banks or banking institutions or savings and loan associations or public utilities regulated under the provisions of Chapter 62 of the General Statutes in regular course of business: Provided further, that such undertaking or contracting shall be authorized by said governing board by specific resolutions on which such public official shall not vote.
The N.C. Supreme Court has interpreted this provision, stating: "The General Assembly …, in adopting this Act, … made the condemnation of the transactions embraced within the terms thereof a part of the public policy of the State so as to remove from public officials the temptation to take advantage of their official positions to ‘feather their own nests’ …." Lexington Insulation Co. v. Davidson County, 243 NC 252, 254 (1955).
In our opinion, the situation with which you have your principle concern, the potential grant of fishery resource funds to members of the Marine Fisheries Commission, falls within the coverage of N.C.G.S. 14-234(a). Further, the conflict which we perceive in a Commission member so contracting with the Marine Fisheries Commission to his benefit cannot be avoided by removing himself from the Commission consideration or vote on such a grant proposal. State v. Williams, 153 NC 595, 599 (1910). As stated in Williams, "[t]he application of the rule may in some instances appear to bear hard upon individuals who have committed no moral wrong; but it is essential to the keeping of all parties filling a fiduciary character to their duty, to preserve the rule in its integrity …." Of course, no violation exists under this statute unless or until the Commission actually awards contracts to persons who fall within the ambit of that provision.
Having addressed your central concern as to members of the Marine Fisheries Commission receiving fishery resource grants, we turn to the several other categories of potential grantees you have mentioned. While the awarding of fishery resource grants to family members of Commissioners may technically not violate N.C.G.S. 14-234, it would, at best, seem to be at odds with the common law’s treatment of conflicts as set out in relevant North Carolina case law, in having the appearance of self-interest. The award of fishery resource grants to Commission Advisory Committee members or their families would appear to be less of a problem, because those persons have no vote as to the final award decision. However, where relevant, the full Commission should be apprised of the interest of an Advisory Committee member in a specific grant proposal prior to the Commissions’ voting on the proposal. Similarly, Commissioners who are members of organizations that have submitted fishery resource grant proposals, should fully disclose that interest during the discussion preceding the vote on an affected grant proposal. In those cases where Commissioners are officers or directors in an organization applying for a grant, it would be wise for the Commissioner not only to disclose that fact, but to abstain from voting on award of the grant.
We hope this is responsive to your question. Please advise if you feel clarification is necessary.
Daniel C. Oakley Senior Deputy Attorney General
Timothy D. Nifong
Assistant Attorney General