A Judicial Decision Involving the Language of "Interest" and Non-Financial Benefits

As I keep saying, conflicts are about "benefits" and "relationships" rather than about "interests," and this should be reflected in the language of ethics codes. The clash of these two kinds of language is the subject of a recent Virginia Supreme Court decision, Newberry Station Homeowners Assoc. et al v. Board of Supervisors of Fairfax County (April 18, 2013).

The matter also involves non-financial benefits and the distinction between an official sitting on a body as a government representative or as a private individual.

A sloppily written state conflict provision that applies solely to boards of supervisors dealing with land use matters, Code §15.2-852(A), requires disclosure "of any business or financial relationship," which is defined in great detail (see early in the decision) to include direct and indirect relationships, including relationships with members of a supervisor's household, relationships through a partnership or corporation, and even relationships based on a gift or donation of over $100. It is a thorough description of relationships, at least to the extent they are financial rather than personal (if a supervisor's brother were to seek a permit, no disclosure would have to be made under this provision).

But when it comes to withdrawal from participation, the language suddenly changes in the second paragraph of the provision. "If at the time of the hearing in any such case such [supervisor] has a business or financial interest with" an applicant or other person involved in a land use matter, only then must the supervisor withdraw from participation.

The plaintiff insists that there is no difference between "relationship" and "interest" in this provision. The board of supervisors insists that these are two distinct terms, and that "interest" is defined in the second paragraph by the following language: "involving the relationship of employee-employer, agent-principal, or attorney-client."

The first thing one may think is, why would "interest" be defined in terms of "relationships," in order to distinguish "interests" from "relationships"? But it so happens that "interest" is often defined in ethics codes in terms of "benefits" and "relationships." That's one reason why "interest" is such a confusing term. It is not used because it is the best or clearest term. It is used because of the term "conflict of interest," and because lawyers feel comfortable with it. Unfortunately, other people are not comfortable with it, and it confuses them (see the discussion of this problem in my book Local Government Ethics Programs; click here and search for "terminology").

I won't bother going through the court's reasoning, but it did conclude that "relationship" and "interest" as used in this provision are synonymous.

The Relationship in This Case
The next part of the decision seeks to determine whether two of the supervisors had a relationship that required them to withdraw from participation in the matter.

It's worth noting that the relationship here involved the supervisors being board members of the Washington Metropolitan Area Transit Authority (WMATA), a position that also became the center of a controversy within the District of Columbia's new ethics program (see my blog post). In this case, the court determined that the board position, since it is a government entity and brings no financial "benefit" to its board members, is not one of the positions that gives rise to a "business or financial relationship."

Non-Financial Benefits and Government Representation
I realize that the Virginia provision is limited to financial conflicts, but I consider this limitation to be wrong. When it comes to wearing multiple hats, it doesn't matter whether or not the hat-wearer benefits financially. As it turns out, if the state provision had included non-financial benefits, the result would have been the same, because there is another distinction that would except these two supervisors from withdrawal. The distinction is that they sit on WMATA solely as representatives of their county, not in their personal capacity.

I would argue that an official who as an individual, rather than as a government representative, sits on the board of a government body involved in a matter before the official should withdraw from the matter. For example, a member of the board of a state university should withdraw from a matter where, say, the university seeks a permit from the official's agency or body. This is true even if the official would receive no financial benefit. The official would be wearing two hats, and would therefore be reasonably seen by the public as not clearly acting in the public interest. That is enough to create a conflict requiring withdrawal.

Thanks to Patty Salkin's Law of the Land Blog for bringing this court decision to my attention.

Robert Wechsler
Director of Research-Retired, City Ethics

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