The Honorable Jane Nelson Chair, Committee on Finance Texas State Senate Post Office Box 12068 Austin, Texas 78711

Dear SenatorNelson: 

### KEN PAXTON ATTORNEY GENERAL OF TEXAS

May 27, 2016

OpinionNo. KP-0093
Re: Whether an institution of higher education may enter into a contract with a business entity in which aninstitution'sboard memberhas an interest (RQ-0081-KP)

You ask whether "an institution of higher education may enter into a contract with a business entity in which·an institution's board memberhas an interest." 1 You explainthat during its 2015 session, the Legislature enacted Senate Bill 20 relating to various aspects ofstate agency contracting.2 Among the legislative changes in Senate Bill 20 is the addition ofsubchapter F to chapter 2261 ofthe Government Code. See TEX. Gov'TCODE§§ 2261.251-.257 (subchapter F, "Ethics, Reporting, and Approval Requirements for Certain Contracts"). Subsection 226l .252(b) provides that a "state agency may not enter into a contract for the purchase ofgoods or services with aprivate vendorwithwhom [certain] agency employees orofficialshave a financial interest," specifically including "amember ofthe agency's governing body." 

### Id. § 2261.252(b)(l). While subchapter F does not define "state agency," the Legislature expressly applied the subchapter "to an institution ofhigher education acquiring goods or services under" certain grants ofauthority in the Education Code. 

### Id.§ 2261.25l(a); TEX. EDUC. CODE§§ 51.9335 ("best value" acquisition authority generally applicable to institutions ofhigher education), 73.115 ("best value" authority ofthe University ofTexas M. D. Anderson Cancer Center). 3

1 See Letter from Honorable Jane Nelson, Chair, Senate Comm. on Finance, to Honorable Ken Paxton, Tex. Att'y Gen. at I (Nov. 23, 2015), https://www.texasattorneygeneral.gov/opinion/request-for-opinion-rqs ("Request Letter").

2Act ofMay 31, 2015, 84th Leg., R.S., ch. 326, 2015 Tex. Gen. Laws 1477, 1477-89 (Senate Bill 20).

3For purpose of subtitle D of the Government Code ("State Purchasing and General Services"), "state agency" means: (I) a department, commission, board, office, or other agency in the executive branch ofstate governmentcreatedbythe state constitution ora state statute;The Honorable Jane Nelson

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Anexistingprovision ofthe Education Code, however, subsection 51.923(d), states that an "institution ofhigher education is notprohibited from entering into a contract or other transaction with a business entity in which a member of the governing board of the institution of higher education has an interest" provided the interest is not substantial or the member discloses the interest and refrains from voting on the contract or transaction. TEX. EDUC. CODE§ 51.923(d).4 As you note, "[t]hese provisions appear to contradict one another." Request Letter at 1. When two statutes appear contradictory, courts try to harmonize them to avoid conflicts, giving full effectto both ifpossible. Texas Indus. Energy Consumers v. CenterPointEnergyHaus. Elec., LLC., 324 S.W.3d 95, 107 (Tex. 2010); Acker v. Texas Water Comm 'n, 790 S.W.2d 299, 301 (Tex. 1990) (stating that "statutory repeals by implication are not favored"). When statutes irreconcilably conflict, the Code Construction Act provides rules to determine which should prevail. Subsection 31 l.025(a) ofthe Code Construction Act provides that if effect cannot be given to two irreconcilable statutes, the statute latest in date of enactment prevails as the last expression oflegislative intent. TEX. Gov'TCODE § 311.025(a) (Code Construction Act). But a different rule applies when one provision is general and the other is specific on the same subject, in which case the specific provision "prevails as an exception to the general provision, unless the general provision is the later enactment and the manifest intent is that the general provision prevail." Id.§ 31 l.026(b); Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 901 (Tex. 2000) (recognizing the "traditional statutory construction principle that the more specific statute controls overthe more general"). 5
We beginby examiningthe scope ofthe two statutes to determine the extentto whichthey may conflict. Section 2261.252 ofthe Government Code is a prohibition on certain contracts of state agencies: (b) A state agency may not enter into a contract for the purchase of goods or services with a private vendor with whom any ofthe

(continued frompreviouspage) (2) the supreme court, the court ofcriminal appeals, a court ofappeals, or the Texas Judicial Council; or (3) a university system oran institution ofhigher education as defined by Section 61.003, Education Code, except a publicjuniorcollege.
TEX. Gov'TCODE § 2151.002.

4The substance ofsection 51.923(d) was enacted in 1989, and the section was last amended in 2011. Act of May 22, 1989, 71st Leg., R.S., ch. 647, § I, 1989 Tex. Gen. Laws 2140, 2140--41 (formerly codified as section 51.921, Education Code), renumberedbyAct ofMarch 25, 1991, 72d Leg., R.S., ch. 16, § 19.01(23), 1991 Tex. Gen. Laws 244, 369, andamended by Act ofApril 25, 1995, 74th Leg., R.S., ch. 76, § 5.95(91), 1995 Tex. Gen. Laws 458, 553; Act ofMay 27, 2011, 82d Leg., R.S., ch. 1049, § 2.01, 2011 Tex. Gen. Laws 2687, 2690.

5While subsection 31 l.026(b) states that a "special or local provision" prevails over a general provision, opinions ofTexas courts and attorney general opinions construe "special or local" to mean "specific." Tex. Att'y Gen. Op. No. GA-0650 (2008) at4, citing City of Dallas v. Mitchell, 870 S.W.2d 21, 23 (Tex. 1994).The Honorable Jane Nelson

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following agency employees or officials have a financial interest: (1) a member ofthe agency's governing body; (2) the governing official, executive director, general counsel, chief procurement officer, or procurement director of the agency; or (3) a family memberrelatedto an employee orofficial described by Subdivision(1) or (2) withinthe seconddegreebyaffinity or consanguinity. (c) A state agency employee or official has a financial interest in a person ifthe employee or official: (1) owns orcontrols, directly orindirectly, anownership interest ofat least one percent in the person, including the right to share inprofits, proceeds, or capital gains; or (2) could reasonably foresee that a contract with the person couldresult in a financial benefitto the employee orofficial. TEX. Gov'T CODE§ 2261.252(b)-(c). Subsection 51.923(d) ofthe Education Code is a grant of authority, allowing institutions ofhigher education specifically to contract with an entity in which a member ofthe board oftrustees has an interest in certain circumstances: (d) Aninstitution ofhighereducationis notprohibitedfrom entering into a contract or other transaction with a business entity in which a member of the governing board of the institution of higher educationhas aninterest ifthe interest is not a substantial interest or, if the interest is a substantial interest, the board member discloses that interest in a meeting held in compliance with Chapter 551, Government Code, and refrains from voting on the contract or transaction requiring board approval. Any such contract or transaction requiring board approval must be approved by an affirmative majority of the board members voting onthe contract or transaction. TEX. EDUC. CODE§ 51.923(d). 6

6Subsection 51.923(e) defines what constitutes a substantial interest under the statute: [A] member ofa governing board has a substantial interest in a business entity if: (1) the member owns 10 percent or more ofthe voting stock or shares ofthe business entity or owns either 10 percent ormore or $15,000 or more ofthe fair market value ofthe business entity;The Honorable Jane Nelson

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Because subsection 51.923(d) ofthe Education Code would authorize some contracts that subsection 226l .252(b) of the Government Code would prohibit, the statutes irreconcilably conflict where they overlap. See NXCESSMotor Cars, Inc. v. JP Morgan Chase Bank, NA., 317 S.W.3d 462, 469 (Tex. App.-Houston [1st Dist.] 2010, pet. denied) (stating that statutes conflict "[i]f the same factual situation can harvest different results under different statutes" (internal quotation marks omitted)). Thus, we must analyze how to resolve the conflict using the rules in the Code Construction Act. Briefs submitted to this office contend that section 51.923 ofthe Education Code should operate as a specific exceptionto section 2261.252 ofthe Government Code.7 Even ifwe were to agree that section 51.923 ofthe Education Code is the more specific statute, this would not render it effective as anexceptionto section2261.252 ofthe Government Code. This is because a general statute will prevail over a specific statute when "the general provision is the later enactment and the manifest intent is that the general provision prevail." TEX. Gov'T CODE § 311.026(b). In section 2261.252, the later-enacted statute, the Legislature specifically made the prohibition applicable to an "institution ofhigher education," and expressly included members ofa governing body within the prohibition. Id. §§ 2261.25l(a), .252(b)(l), (3). Thus, the words of specific inclusion manifest intent that the statute prevail with respect to certain contracts for the purchase ofthe specified goods and services by an institution ofhigher education. Id.§ 2261.251(a). For such contracts, the prohibition in section 2261.252(b) prevails over the authorization in section 51.923 ofthe EducationCodeto the extentthe statutes conflict.8 Accordingly, section 2261.252(b) ofthe Government Code prohibits a contract by an institution ofhigher education to purchase certain goods or services from a private vendor in which a member ofthe institution's governing body or a certain family member has a prohibited financial interest.

(continued from previouspage) (2) funds received bythe memberfrom the business entity exceed 10 percent of the member's gross income for the previous year .... (3) the member is an officer ofthe business entity ora member ofthe governing board ofthe business entity; or (4) an individual related to the member in the first degree by consanguinity or affinity, as determined under Chapter 573, Government Code, has an interest in the business entity as described by Subdivision (1), (2), or (3).
TEX. EDUC. CODE§ 51.923(e)(l)-(4).

7See generally Brieffrom John Huffaker, Vice Chancellor & Gen. Counsel, Tex. Tech. Univ. Sys. (Jan. 12, 2016); Brieffrom Daniel H. Sharphorn, Vice Chancellor & Gen. Counsel, the Univ. ofTex. Sys. (Dec. 22, 2015) (briefs on file with the Op. Comm.).

8Contracts and transactions not subject to the prohibition in section 2261.252(b) ofthe Government Code may still be authorized under section 51.923 ofthe Education Code.

### The Honorable Jane Nelson

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### SUMMARY Section 2261.252 of the Government Code prohibits a contract by an institution ofhigher education to purchase certain goods or services from a private vendor in which a member ofthe institution's governing body or a certain family member has a prohibited financial interest.

JEFFREY C. MATEER First Assistant Attorney General BRANTLEY STARR Deputy First Assistant Attorney General VIRGINIA K. HOELSCHER Chair, Opinion Committee WILLIAM A. HILL Very truly yours,

KEN PAXTON Attorney General ofTexas

Assistant Attorney General, Opinion Committee