Applicability of Executive Conflict of Interest Act to elected officials who are members of the State Investment Board

STATE INVESTMENT BOARD--EMPLOYERS AND EMPLOYEES--OFFICES AND OFFICERS--TREASURER--LEGISLATORS--CONFLICT OF INTEREST--Applicability of Executive Conflict of Interest Act to elected officials who are members of the State Investment Board

Membership in the State Investment Board includes the State Treasurer and one member each of the House of Representatives and the Senate.  Members of the Board are subject to the Executive Conflict of Interest Act, chapter 42.18 RCW.  Although the Act does not apply to elected state officers and legislators when they are acting in their capacity as elected officials, these elected officials are subject to the Act when they are acting in their capacity as a member of the Board.

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                                                                   June 21, 1993

HonorableBrian Sonntag
State Auditor
Legislative Building, MS 40021
Olympia, WA  98504-0021

                                                                                                Cite as:AGO 1993 No. 13

Dear Mr. Sonntag:

            By letter previously acknowledged you requested an opinion on a question we have paraphrased as follows:

            Does the Executive Conflict of Interest Act, chapter 42.18 RCW, apply to members of the State Investment Board who are elected officials?

            For the reasons outlined below, we conclude that the provisions of the Executive Conflict of Interest Act (Act) apply to members of the State Investment Board, including those members who are elected officials.

                                                                BACKGROUND

            The State Investment Board consists of 14 members who are appointed in accordance with RCW 43.33A.020.  Among the nine voting members of the State Investment Board are three members who, by definition, also hold elective office. These three members are listed in RCW 43.33A.020 as:

                        (4) The state treasurer or the assistant state treasurer if designated by the state treasurer.

                        (5) A member of the state house of representatives.  This member shall be appointed by the speaker of the house of representatives.

                        (6)  A member of the state senate.  This member shall be appointed by the president of the senate.

Your question arises because of the dual capacities of these three members of the State Investment Board.  The Act does not apply to these individuals in their capacities as state treasurer, state representative, and state senator.  However, the Act does, by its terms, apply to any member of a board such as the State Investment Board (Board).  Your question is directed at how to reconcile the application of this statute to individuals who act in each of these capacities.

                                                                    ANALYSIS

            We will first determine the Act's application to the elected officials in their capacities as state treasurer, state representa-tive, and state senator.  Second, we will examine how the Act applies to members of the Board.  Finally, we will consider how the provisions of the Act apply to the members of the Board who are also elected officials.

            The first step in analyzing these issues is to examine the definitions in the Act.  Three definitional sections of the Act are important to the analysis.  Foremost is the definition of "state employee".  RCW 42.18.130 provides:

                        "State employee" means any individual who is appointed by an agency head, as defined in RCW 42.18.040, or his designee, and serves under the supervision and authority of an agency as defined in RCW 42.18.030.

                        Notwithstanding the foregoing, the term "state employee" shall not include any of the following:

                        (1)  Officers and employees in the legislative and judicial branches of the state of Washington; and

                       . . . .

                        The term "state employee" also includes any member of a commission, board, committee or any other multi-member governing body of an agency.

The terms "agency" and "agency head" as used in this section are defined elsewhere.  RCW 42.18.030 defines "agency" as follows:

                        "Agency" means:

                        (1)  The office of the governor.

                        (2)  Any office, department, board, commission, or other separate unit or division, however designated, of the state government, together with all personnel thereof:

                        (a)  Upon which the statutes confer powers and impose duties in connection with operations of either a governmental or proprietary nature; and

                        (b)  That has as its chief executive officer a person or combination of persons such as a commission, board, or council, by law empowered to operate it, responsible either to (i) no other public officer or (ii) the governor.

RCW 42.18.040 defines "agency head" as follows:

                        "Agency head" and "head of agency" mean the chief executive officer of an agency, who shall be the chairman in the case of an independent establishment which is a commission, board, or committee.

            Applying these definitions, it is clear the Act does not apply to the elected officials in their capacities as state treasurer, state representative, and state senator.  The first definition of "state employee" in RCW 42.18.130 includes only individuals who are appointed by an agency head and serve under the supervision and authority of an agency.   The state treasurer is elected by the people, not appointed by an agency head.  See Const. art. 3, §§ 1, 3.  Nor does the state treasurer serve under the supervision and authority of an agency.  The treasurer is elected to a four-year term, and may be removed only through impeachment.  See Const. art. 3, § 3, art. 5, § 2.

            Legislators are explicitly excluded from this first definition of state employee.[1]  The definition is modified by a proviso that the term "state employee" shall not include officers in the legislative branch.  This exclusion is in keeping with the policy of the Act to prescribe "essential restrictions against conflicts of interest in the executive branch of the state government".  RCW 42.18.010 (emphasis added).

            Members of the Board are "state employees" by virtue of the second definition of "state employee" in RCW 42.18.130.  The concluding paragraph of this statute expands the definition to include "any member of a commission, board, committee or any other multi-member governing body of an agency."  The Board is a multi-member governing body of an agency.  The definition of "agency", set forth in full above, includes any board of state government (1) upon which the statutes confer powers and impose duties in connection with operations of either a governmental or proprietary nature; and (2) that has as its chief executive officer a person or combination of persons, such as a board, by law empowered to operate it, responsible either to no other public officer or the governor.  See RCW 42.18.030(2).  The Board falls within this definition of an agency.  Chapter 43.33A RCW,inter alia, confers powers and duties in connection with investment of public trust and retirement funds.[2]  The Board is responsible to no other public officer; the board members are appointed for terms and may be removed only for cause.  RCW 43.33A.020.  The Board is a "multi-member governing body of an agency" and its members are "state employees" subject to the Act.

            Specific reference to chapter 42.18 RCW in the legislation which created the Board is another clear indication that members of the Board are subject to the Act.  The Board was created by enactment of Substitute House Bill 1610, Laws of 1981, ch. 3.[3]  Section 11 of this 1981 law provided:

                        The state investment board may make appropriate rules and regulations for the performance of its duties.  The board shall adopt rules to ensure that its members perform their functions in compliance with chapter 42.18 RCW.  Rules adopted by the board shall be adopted pursuant to chapter 34.04 RCW.

Laws of 1981, ch. 3, § 11, p. 7.  Subsequent amendments to this section, codified at RCW 43.33A.110, have not made any changes to the provision that the Board shall adopt rules to ensure that its members perform their functions in compliance with chapter 42.18 RCW.[4]

            This leads us to the central and final question:  whether members of the Board who are also elected officials fall within this second definition of "state employee".  We believe they do.  The definition broadly encompasses "any member of a commission, board, committee or any other multi-member governing body of any agency."  RCW 42.18.130 (emphasis added).  There are no provisos or other modifying phrases which would exclude the elected officials who serve as members of the Board from this definition of state employee.  Furthermore, it was within the context of a single bill that the Legislature both included elected officials among the members of the Board and required the Board to adopt rules to ensure compliance with chapter 42.18 RCW.  See Laws of 1981, ch. 3, §§ 2, 11, pp. 5, 7.  Both the statutory language and the history of this legislation indicate all members of the Board were intended to be included in the second definition of "state employee" and subject to the provisions of the Act.

            When an individual serves both as an elected official and as a member of the Board, the individual is a "state employee" only for purposes of membership on the State Investment Board.[5]  Whether conduct is related to the individual's capacity as a member of the State Investment Board and thus subject to chapter 42.18 RCW, will turn on the facts of the particular situation and the nature of the applicable provision of the Act.

            We trust this opinion will be of assistance to you.

                                                                        Very truly yours,

                                                                        CHRISTINE O. GREGOIRE
                                                                        Attorney General

                                                                        NARDA PIERCE
                                                                        Solicitor General

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