Did Texas conflict-disclosure law require every local vendor, including professionals and small sellers, to file a questionnaire?

TX AG Opinion GA-0446: Which local vendors had to file conflict questionnaires?

Plain-English summary

In 2006, the Texas Attorney General read Local Government Code chapter 176 broadly. The opinion said the phrase "contracts or seeks to contract" reached agreements and requests involving all property, goods, and services. Because the statute then contained no minimum contract amount or exception for minor transactions, the opinion concluded that even "small and routine purchases" fell within the chapter.

The opinion defined a "business relationship" as a connection based on one party's commercial activity. It treated an "affiliation" as an association outside a business relationship and said whether one existed would usually be a fact question. On the financial examples presented, an interest-bearing savings account or loan that generated taxable income could trigger the statute.

Professional-services contracts were included. For a corporation, partnership, or other legal entity, the entity itself was the person required to file. Separate third parties acting as agents under agency law were independently covered, but the opinion did not treat every employee or salesperson as an agent merely because the person worked for the vendor.

The opinion also concluded that a vendor had to file a questionnaire even when it had no relationship or affiliation to report, and the local entity had to place that questionnaire on its website. A local government had no statutory duty to notify vendors, force compliance before contracting, or stop doing business with a noncomplying vendor. Noncompliance did not automatically void the contract, although the entity could adopt its own compliance policy and contract terms.

Other conclusions included that preexisting contracts did not require a new questionnaire, though an amendment could amount to a new contract; family-member vendors and reduced-price suppliers were not exempt; and open-enrollment charter schools and regional education service centers did not fit the chapter's definition of a local governmental entity. The opinion declined to decide when attorney-client privilege might protect a vendor-client's identity because that depended on particular facts.

Currency note

This opinion was issued in 2006. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Who this opinion affected in 2006

Local governments and school districts: The opinion said chapter 176 did not impose an affirmative duty to notify vendors or enforce vendor filing obligations. It did require entities to make filed statements and questionnaires available on their websites and to retain the records under the applicable retention schedule.

Vendors and professional-service providers: The opinion treated property, goods, and services broadly, with no small-purchase or professional-services exception. A questionnaire was required even when the vendor had no affiliation or business relationship to disclose.

Corporations, partnerships, and vendor agents: The contracting legal entity had the filing obligation. A third party who acted as the vendor's agent under agency law was independently subject to chapter 176, but the opinion did not extend that label automatically to every employee.

Charter schools and regional education service centers: The opinion concluded that neither type of organization fell within chapter 176's definition of a "local governmental entity" at that time.

Common questions

Did chapter 176 apply to a small or routine local-government purchase?
Yes, under the 2006 text examined in the opinion. The Attorney General found no minimum contract amount or de minimis exception and therefore included small and routine purchases.

Did a vendor have to file if it had no conflict or relationship to report?
Yes. The opinion read section 176.006 as requiring every covered vendor to file a completed questionnaire, and it read section 176.009 as requiring the local entity to post that filing even when it disclosed no conflict.

Did every employee of a corporate vendor have to file separately?
No. The legal entity was the covered "person." A separate individual was independently covered only if that person acted as an agent in the vendor's business with the local governmental entity under agency law.

Did a vendor's failure to file invalidate its contract?
Not automatically. The opinion found no statutory language making the contract void or requiring the local entity to stop doing business with the vendor. It also said an entity could impose compliance and voidability terms through its own policy or contract.

Were old contracts already in place subject to the new questionnaire rule?
The opinion said no for existing contracts, but it treated a later amendment as potentially creating a new agreement subject to chapter 176.

Did chapter 176 settle whether an attorney-official had to reveal a vendor-client's identity?
No. The opinion said client identity was usually not privileged, but a narrow exception could apply when disclosure would reveal a privileged communication. Whether that exception applied was a fact question outside the opinion process.

Background and statutory framework

The requests came from two Texas House committee chairs and the Commissioner of Education after the Seventy-ninth Legislature enacted chapter 176 through House Bill 914. The opinion described the law's purpose as public disclosure of potentially conflicting relationships between local-government officers and vendors.

At the time, local-government officers filed a conflicts disclosure statement when specified employment, business, or gift relationships existed. Vendors filed a conflict-of-interest questionnaire after beginning contract discussions or submitting a bid, proposal, application, correspondence, or other writing related to a potential agreement. The records administrator maintained the officer list and the filed disclosures, and local entities provided website access.

The Attorney General applied the statute's plain language throughout. It repeatedly declined invitations to add thresholds, family exceptions, professional-services exclusions, or other limits that the Legislature had not written into chapter 176.

Citations

Statutes:

• Tex. Loc. Gov't Code ch. 176, including §§ 176.001, 176.002, 176.003, 176.004, 176.006, 176.007, and 176.009
• Tex. Loc. Gov't Code §§ 201.001, 201.003, 203.002-.050
• Tex. Gov't Code §§ 311.005, 311.011, 311.016, 311.022
• Tex. Educ. Code chs. 8 and 12
• Tex. Penal Code §§ 36.08, .09, and 36.10

Cases:

• In re Doe, 19 S.W.3d 249 (Tex. 2000)
• Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864 (Tex. 1999)
• RepublicBank Dallas v. Interkal, Inc., 691 S.W.2d 605 (Tex. 1985)
• Boyd v. Eikenberry, 122 S.W.2d 1045 (Tex. 1939)
• Gabaldon v. Gen. Motors Corp., 876 S.W.2d 367, 369 (Tex. App.-El Paso 1993, no writ)
• Greenbelt Elec. Co-op., Inc. v. Johnson, 608 S.W.2d 320 (Tex. Civ. App.-Amarillo 1980, no writ)
• Ford Motor Co. v. Leggat, 904 S.W.2d 643 (Tex. 1995)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0446
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2006/ga0446.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain. The linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS

The Honorable Beverly Woolley
Chair, Committee on Calendars
Texas House of Representatives
Post Office Box 2910.

Austin, Texas 78768-2910

The Honorable John Smithee

Chair, Committee on Insurance
. Texas House of Representatives

Post Office Box 2910

Austin, Texas 78768-2910

Shirley J. Neeley, Ed.D
Commissioner of Education
Texas Education Agency
1701 North Congress Avenue
Austin, Texas 78701-1494

GREG ABBOTT

August 2, 2006

Opinion No. GA-0446

Re: Conflict of interest disclosure requirements
for local government officers and persons who
contract with local governmental entities
(RQ-0451-GA)

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, Texas House of Representatives 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 Committee, also available at http://www.oag
.state.tx.us) [hereinafter Woolley Request Letter].

The Honorable Beverly Woolley - Page 2 (GA-0446)
The Honorable John §mithee
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 of the person to the contrary?

8. What does the phrase “contracts or seeks to contract for the sale or purchase of
   property, goods or services with a local governmental entity,” a phrase triggering
   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

The Honorable Beverly Woolley - Page 3 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

Chapter 176 have any impact on the validity of a contract between the local
governmental entity and the contractor?

10. Whether Chapter 176 requires a person who contracts or seeks to contract with
    a local governmental 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 Neeley’ asks:

1. Are existing vendors (prior to. the January 1, 2006 effective date) required to
   complete the new vendor questionnaire and file it with [a school district] for
   existing contracts?

2. Ifavendor 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 {aschool district] receives a questionnaire that indicates there is no conflict
   ' 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 also 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.” Jd. at 2. In addition to these questions, Commissioner Neeley also asks us to

consider questions posed by the private law firm of Schwartz and Eichelbaum, P.C., on behalf of i its
schoo} district clients.> Those questions are:.

2L etter from Shirley J. Neeley, Ed.D., Commissioner of Education, Texas Education Agency, to Honorable Greg
Abbott, Attorney General of Texas (Mar. 2, 2006) (on: file with the Opinion Committee, also available at
http://www.oag. state.tx.us) [hereinafter 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) [hereinafter Schwartz Letter].

The Honorable Beverly Woolley - Page 4 (GA-0446)
The Honorable John Smithee
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 requirement apply even
   when the vendors themselves are family members? Other laws prohibiting gifts
   to public officials 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.government official ‘or certain family
   members of the local official. Is this amount per family member or per family
   unit? Jn other words, if the local official and each qualifying family member
   receive $250 worth of gifts or less, does a disclosure still have to be filed?

3. Chapter 176 requires vendors that contract with local governmental entities for
   the sale of property, goods, or services to file 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 school district’s band
   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 file
   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, supra note 3, at 2~3 (footnotes omitted). Because all of these 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. »

1 ‘Operation of chapter 176, Local Government Code

Chapter 176 of the Local Government Code was enacted by the Seventy-ninth Legislature
in House Bill 914, 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 Bill 914 Before the Senate Comm. on State Affairs, 79th Leg., R.S. (May 19, 2005) (statement

The Honorable Beverly Woolley - Page 5 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

of Senator Tommy Williams) (“[I]t’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. § 176.002(a)(1) (Vernon Supp. 2005). A “local governmental entity” (“entity”) includes all
political subdivisions, as well as 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.” Jd. § 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 officer must file a conflicts
disclosure statement (“statement”). See id. §§ 176.001(4), .003. The requirement of the statement
is triggered only when a person to whom chapter 176 applies, i.e., a “vendor,”* “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. §
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 (specified gifts].”° Jd. § 176.003(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. § 176.004. Failure to file the statement is a
Class C misdemeanor. See id. § 176.003(c). The officer must file the statement with the records
administrator of the entity within a certain period of time. See id. § 176.003(b). Chapter 176
provides a defense to prosecution, essentially a grace period of seven days. See id. § 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. § 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.” Jd. 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 statutory tanguage “a person who. ...
contracts or seeks to contract .. . with a local governmental entity.” TEx. Loc. Gov’T CoDE ANN. § 176.002(a)(1)

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

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 of more than $250 [in certain time periods.]” Id. §
176.003(a)(2)(B).

The Honorable Beverly Woolley - Page 6 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

entity. See id. § 176.006(c). A vendor commits a misdemeanor offense if the vendor does not file
the questionnaire within the requisite time period, but again a defense to prosecution in the form of
a seven-day grace period is available. See id. § 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 file a questionnaire.” Jd. § 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.” Jd. § 176.009(a). Larger entities have additional internet website listing
requirements. See id. § 176.009(b).

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); Fitzgerald v. Advanced Spine Fixation

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 of the statute is ambiguous or would lead to absurd results the legislature could not possibly
have intended. See Boykin v. State, 818 S.W:2d 782, 785-86 (Tex. Crim. 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 ref'd 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.

UL. 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, supra 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. §
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 865-66 (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 8.W.2d 914, 917 (Tex. Civ. App.—E] Paso
1961, writ ref’d n.r.e.). Asa verb, “contract” means “to agree upon, make a contract” or to “arrange.

The Honorable Beverly Woolley - Page 7 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

for by contract.” If THE OXFORD ENGLISH DICTIONARY 835 (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.
Williams Dental Group, P.C., 1408.W.3d 912, 916 (Tex. App.—Dallas 2004, no pet.); see also 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 8.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 of the 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. Loc. Gov’T CODE ANN. § 176.002(a)(1) (Vernon Supp.

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

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 inquires 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 171 of the Local Government Code pertaining to conflicts of interest, chapter

. 176 contains no minimum threshold amount for contractual transactions.® 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. § 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. § 171.002. Chapter 176 does not contain any
minimum threshold contract amount. See generally id. ch. 176 (Vernon Supp. 2005). It requires that

• avendor who merely contracts or seeks to contract with an entity regarding the listed subject matters
  is subject to the chapter. See id: § 176.002(a)(1). In addition, the chapter does not contain any.
  exclusions for de minimis transactions. See generally id. ch. 176. Pursuant to the plain language of
  the statute, we conclude that even contracts involving small and routine purchases are subject to
  chapter 176.’ .

®The statute does provide a minimum threshold amount in reference to gifts given to an officer, which we will
address later in this opinion. See TEx. Loc. Gov’ CODE ANN. § 176.003(a)(2)(B) (Vernon Supp. 2005).

7A brief submitted to this office suggests that this language should be construed to apply to purchases above

a de minimis threshold, see Brief from Hunter Burkhalter and Darcy Alan F rownfelter, Kemp Smith LLP, to Honorable
Greg Abbott, Attorney General of Texas, at 3 (Apr. 12, 2006) (on file with the Opinion Committee), or only to express
contracts. See Brief from Kathryn Hoang, Legal Counsel, Texas Municipal League, to Nancy 8. Fuller, Chair, Opinion

Committee, Office of the Attorney General, at 4 (Apr.13, 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...)

The Honorable Beverly Woolley - Page 8 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

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, supra note
1, at 2 (question 1). It also asks us to define the terms “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). Jd. (question 3). Because these three questions i 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’t CODE ANN. § 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 Hallman v. Allstate Ins. Co., 114 $.W.3d 656 (Tex. App.—Dallas
2003), rev ’d, 159 S.W.3d 640 (Tex. 2005). In the context of an insurance policy insuring against
loss incurred in the business of the insured, the court examined the meaning of the terms “trade,”
“profession,” and “occupation,” used in 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. Jd. 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-310 (1994) at 3. Moreover, section 176.003(a)(2)(A) provides that the “business
relationship” must result in “taxable income.” TEX. Loc. GOv’T CODE ANN. § 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 connection between two or more parties based on a commercial .
activity of one of the parties. See, e.g., Tex. Dep’tof Transp. v. Needham, 82 S.W.3d 314, 318 (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

7(...continued)
2006) (on file with the Opinion Committee) [hereinafter Schwartz Brief]. While these suggestions may be reasonable,
we are constrained by the clear language of the statute. The phrase “contracts or seeks to contract” in chapter 176 is not
modified or limited in any way. We cannot insert additional words into a statute unless it is necessary to give effect to
clear legislative intent. See Hunter v. Fort Worth Capital Corp., 620 S.W.2d 547, 552 (Tex. 1981). We see no indication
in the language of the statute or the legislative history that the legislature intended a more narrow application of the '
phrase “contracts or seeks to contract.”

The Honorable Beverly Woolley - Page 9 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

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 TEx. Loc. GOV’T CODE
ANN. § 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, supra 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 the root term “affiliate” as “a person, organization, or establishment
associated with another as a subordinate, subsidiary, or member.” Kingston v. Helm, 828.W.3d755,
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 may have with an officer
or the entity. TEx. Loc. Gov’T CODE ANN. § 176.006(b) (Vernon 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 unlike things. See Burnett y, State, 514 S8.W.2d 939, 940 (Tex. Crim. App. 1974). Assuming the
legislature intended the word “or” to have a disjunctive-meaning, we construe “affiliation” to be
different from a “business relationship.” As we stated previously, the ordinary definition of
“affiliation” is an association between persons or between a person and an organization. Thus, under
section 176.006, 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.
Atty Gen. Op. No. GA-0139 (2004) at 5 (questions of fact are inappropriate for the opinion
process).

With regard to both of these 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)
governing the applicability of chapter 176 applies to a “person.” See TEX. Loc, GOV’T CODE ANN,
§ 176.002(a) (Vernon Supp. 2005). When a statute does not require a different definition, a person

• “includes corporation, organization, government or governmental subdivision or agency, business
  trust, estate, trust, partnership, association, and any other legal entity.” See TEX. Gov’T CODE ANN.
  § 311.005 (Vernon 2005).(Code Construction Act). Chapter 176 does not indicate that “person” has
  a contrary definition. See generally TEx. Loc. Gov’T CODE ANN. ch. 176 (Vernon Supp. 2005). .
  Because a “person” subject to the act under section 176.002 can include corporate entities, the statute
  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 the interest received is taxable income. See Woolley Request Letter,

®We are not asked about the term “employment relationship” in section 176.003(a)(2)(A), so we do not address
it. See Woolley Request Letter, supra note 1; Neeley Request Letter, supra note 2; Schwartz Letter, supra note 3.
Pursuant to the plain language of the statute, an officer must file a statement when the officer has an employment
relationship with a vendor. See TEX. Loc. Gov’T CODE ANN. § 176.003(a)(2)(A) (Vernon Supp. 2005).

The Honorable Beverly Woolley - Page 10 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

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 produces taxable
income to the vendor is a business relationship that would trigger the requirements of chapter 176.

We next address the question concerning “any other affiliation or business relationship that
might cause a conflict of interest.” Woolley Request Letter, supra note 1, at2. 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 encompasses 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. GOvV’T CODE ANN. § 176.002(a)(1) (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. Loc. GOv’T CODE ANN. §-176.002(a)(1) (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 requirement,
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 services contracts); TEX. Loc. GOV’T CODE ANN. §§ 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 exclude 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

°The Texas Association of School Boards Legal Assistance Fund (“TASB LAF”) 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 Guiley, 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. Servicing Corp. of Dallas v. State, 380 S.W.2d 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 decline the invitation.

The Honorable Beverly Woolley - Page 11 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

answer. See generally TEX. Loc. 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(8) (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 offices); see also id. §§ 203.041-.050 (records
control schedules); 13 TEX. ADMIN. CODE §§ 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 §§ 7.121~.125 (2006) (Tex. State Library & Archives Comm’n,
' Records Retention Schedules). .

5. Employees and agents of corporate and other Jegal bodies

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 CODE ANN. § 176.002(a)(1) (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. § 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)(1). We believe that when a partnership, corporation or 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.” Jd. §-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) from subsection 176.002(a)(1). Absent statutory definition, we look for the common
meaning of the term. See TEX. GOV’T CODE ANN. § 311.011(a) (Vernon 2005). And we construe
words with a technical or particular meaning according to that technical or particular meaning. See
id. §:311.011(b). Because the legislature used the term “agent” rather than other general terms such
as “personnel” or “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.

The Honorable Beverly Woolley - Page 12 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

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 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 of the 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 identifies and
describes specified relationships and affiliations. See TEx. Loc. Gov’T CODE ANN. §
176.006(c)(1)(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. § 176.006(c)(1); (4)(7).
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, supra 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.” Jd. 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 comply 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).

The Honorable Beverly Woolley - Page 13 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

Chapter 176 requires a vendor to prepare and file a questionnaire. See TEX. Loc. GOv’T
CODE ANN. §§ 176.002, .006 (Vernon Supp. 2005). The statute prescribes the punishment for failure
to comply with its mandate—an officer or vendor commits a Class C misdemeanor for failing to file
the conflict of interest questionnaire or conflicts disclosure statement. See id. §§ 176.003(c) (local
government officer), 176.006(f) (vendor). Because 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. v. 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 file the questionnaire does not void a contract with the entity, nor does it require
the entity to cease doing business with the noncomplying vendor.

Our-conclusion that an entity does not have an affirmative responsibility to require
compliance 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 file a disclosure questionnaire if
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) shall file a completed conflict of interest questionnaire.” TEX. Loc. GOV’T CODE ANN.
§ 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 ... if: ...”), with
id. § 176.006(a) (“A person described by Section 176.002(a) shall file ....”). The word “shall”
usually connotes a mandatory duty. See TEX. GOv’T CODE ANN. § 311.016(2) (Vernon 2005). 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 filed under [chapter 176] on the Internet website maintained by the local

The Honorable Beverly Woolley -~ Page 14 (GA-0446)
The Honorable John Smithee °
Shirley J. Neeley, Ed.D.

governmental entity.” TEX. Loc. GOv’T CODE ANN. § 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 complete the new 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 file a conflict of interest questionnaire . . . before

January 1, 2006.” Jd. § 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. LOC. Gov’T CODE ANN. § 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, §
311.022 (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 8.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 file 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 (defining “contract”). Additionally, the
text of section 3 of 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, see 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.”).

The Honorable Beverly Woolley - Page 15 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

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, supra 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 ofa municipality. The term does
not include an association, corporation, or organization of
governmental 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’ T CODE ANN. § 176.001(3) (Vernon Supp. 2005). To answer this question we must
determine whether an open-enrollment charter school or regional education service center falls
within 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, municipality, 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 “local government
corporation, board, commission, district or authority to which a member is appointed by [listed
entities].” TEx. Loc. GOv’T CODE ANN. § 176.001(3) (Vernon Supp. 2005). As an independent
school “separate and apart from local independent school districts,” an open-enrollment charter
school is not a “local government corporation, board, commission, district or authority.” TEX. Loc.
GOv’T CODE ANN. § 176.001(3). (Vernon Supp. 2005); see also Tex. Att’y Gen. Op. Nos. GA-0069
(2003) at 1 (describing 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 laws
applicable to political subdivisions that are designed to promote openness and fairness in
government. See TEX. EDUC. CODE ANN. §§ 12.1051 (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-

The Honorable Beverly Woolley - Page 16 (GA-0446)
The Honorable John Smithee .
Shirley J. Neeley, Ed.D.

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 charter 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 aré-
designed primarily to assist school districts in improving student performance and increasing the
efficiency and effectiveness of school operations. See TEX. EDUC. CODE-ANN. § 8.002 (Vernon
Supp. 2005). The commissioner of the Texas Education Agency 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.” Jd. § 8.003(b). Rules promulgated under that
rule-making authority provide that members of the 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. Cope § 53.1001(b)(2) (2006) (Tex. Educ. Agency, Reg’! Educ.
Serv. Ctrs.). A regional education service center is not a “county, municipality, school district,

...0r 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. §
176.001(3) (Vernon Supp. 2005). Because regional education service 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 TEX.
Epuc. CODE ANN. §§ 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 education service centers, they
are not subject to chapter 176 outside of the definition of “local governmental entity.” See supra p.
16 (citing TEx. Loc. Gov’T CODE ANN. § 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 (question 1). We begin our analysis with the chapter’s applicability provision. Chapter.176 -
  applies to a person who “contracts or seeks to contract” with an entity. TEX. Loc. GOV’T CODE ANN.

§ 176.002(a) (Vernon Supp. 2005). Under the plain language 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 public officials. For instance, chapter 36 of the Texas Penal Code generally

The Honorable Beverly Woolley - Page 17 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

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. §
36.10 (Vernon Supp. 2005). No similar provision exists in chapter 176. See generally TEX. Loc.
GOv’T CODE ANN. ch. 176 (Vernon Supp. 2005). Therefore we conclude that the disclosure
requirements 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.a family member of the.
officer one or more gifts, .. . , that have an aggregate value of more than $250.” TEx. Loc. Gov’T
CODE ANN. § 176.003(a)(2)(B) (Vernon Supp. 2005). Section 176.003 applies to “one or more gifts” ..
given to “local government officer[s] or [their] family member[s].” Jd. Chapter 176 plainly refers
only to the individual officer or family members and not to the family as a unit. See id. §
176.003(a)(2)(B). We believe the limit of the aggregate value of $250 or more is determined by the
individual officer or family member that receives the gift. Accordingly, we construe the phrase

“asoregate 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 requirements 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. Loc. Gov’T CODE ANN. § 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

Chapter 176 defines “family member” as a “person related to another person within the first degree of
consanguinity or affinity, as described by Subchapter B, Chapter 573, Government Code.” TEx. Loc. GOv’T CODEANN,
§ 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 defined in chapter 176.

"We have been urged to construe chapter 176 to not require vendors who are also family members of an officer
to file a questionnaire. See TML Brief, supra note 7, at 6 (“The language of the statute . . . should not include gifts
between family members and 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 ofa particular enactment is left to the legislature. See Smith, 426 S.W.2d at
831.

"By its plain terms, chapter 176 excludes gifts of “food, lodging, transportation, or entertainment accepted as
a guest.” TEX. Loc. Gov’T CODE ANN. § 176.003(a)(2(B) (Vernon Supp. 2005).

The Honorable Beverly Woolley - Page 18 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

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 also attorneys and may have clients who qualify as
vendors.” Schwartz Letter, supra note 3, at 2. In some circumstances, the identity of a lawyer’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).

The attorney-client privilege has been recognized as “the oldest of the privileges for
confidential communications known to the common law.” Ford Motor Co. v. Leggat, 904 S.W.2d
643, 647 (Tex. 1995) (quoting United States 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 Inre Grand Jury Proceedings v. Jones, 517 F.2d 666, 670—71 (Sth 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, 517 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 Grand Jury Proceedings v. Pavlick, 680 F.2d 1026, 1027 (Sth 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, 517
F.2d at 671-72. Questions of fact are not appropriate to the opinion process. 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 disclosure under chapter 176
pursuant to the exception to the attorney-client privilege. |

IV. Conclusion

We recognize that a plain language construction of chapter 176 will havea significant impact
on Texas local governments and 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 to all its
terms. But they must find its intent in its language and not elsewhere

The Honorable Beverly Woolley - Page 19 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

.... 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.

The Honorable Beverly Woolley - Page 20 (GA-0446)
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

SUMMARY

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 filed 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 and 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, of 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 conflict 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 officer’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 officer may 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
The Honorable John Smithee
Shirley J. Neeley, Ed.D.

ELLEN L. WITT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

_ Charlotte M. Harper
Assistant Attorney General, Opinion Committee

(GA-0446)