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Interpretative Opinion 99-17: Conflict of Interest

December 1, 1999

The Honorable Harold Brazil
Councilmember – At – Large
Council of the District of Columbia
441-4th Street, NW
Washington, DC  20001

Re: Conflict of Interest

Dear Councilmember Brazil:

This responds to your request for an opinion concerning the propriety of your vote on matters before the Council related to the Potomac Electric Power Company (PEPCO).  Specifically, you state that Bill 13-284, the “Retail Electric Competition and Consumer Protection Act of 1999” is pending before the Council, and that you own common stock in PEPCO.

  DC Code § 1-1461(b) provides that “[n]o public official shall use his or her official position or office to obtain financial gain for himself or herself, any member of his or her household, or any business with which he or she or a member of his or her household is associated, other than that compensation provided by law for said public official.  This subsection shall not affect a vote by a public official:  (1) on any matter that affects a class of persons (such a class shall  include no less than 50 persons), of which such public official is a member if the financial gain to be realized is de minimis . . .”.

  DC Code § 1-1461(f) states, “[n]o member or employee of the Council of the District of Columbia shall accept assignment to serve on a committee the jurisdiction of which consists of matters (other than of a de minimis nature) in which he or she or a member of his or her family or a business with which he or she is associated, has financial interest.”

18 U.S.C. § 208 further restricts District employees from participating personally and substantially in government matters requiring decision-making and/or advice when, to   their   knowledge,   they   have  a  direct  or  indirect  financial  interest  in  the  matter
(emphasis added).  This federal statute has had longstanding applicability to officers and employees, including members of the Council, of the District of Columbia.  Pursuant to 5 C.F.R. § 2640.103, which implements 18 U.S.C. § 208, an employee’s participation is deemed personal and substantial when he or she directly takes part in the matter, and his or her involvement is of “significance to the matter.”  Moreover, an employee is prohibited from participating in an official capacity in a matter in which he or she has a financial interest “if the particular matter will have a direct and predictable effect on the interest.”  The test for direct financial interest is whether there is a “close causal link between any decision or action to be taken in the matter and any expected effect of the matter on [the] financial interest.”  A predictable effect is found where there is a real, rather than speculative, possibility that the matter will affect the financial interest.

Based on our review of the referenced legislation, it appears that among its many purposes are to require the Commission [Public Service Commission] to order an electric company to adopt policies and practices designed to prevent discrimination and self-dealing; to allow the Commission to regulate the market for any deregulated service upon a finding that the market for that service does not have effective competition; and to require the Commission to issue regulations to protect consumers, electric companies, and electricity suppliers from anti-competitive and abusive practices.

As a resident of the District of Columbia who necessarily utilizes electricity, and as a stockholder of PEPCO, it is conceivable that you would be among a class of persons who may be indirectly affected by the referenced legislation.  There is no apparent financial gain, however, that would inure to your direct benefit.  In light of the purpose of the legislation, any financial gain which could be realized would be speculative at best.  Therefore, it is the opinion of this Office that your vote on this Bill is not prohibited.