Honorable Bob Bullock

Secretary of State Austin, Texas 

### 78711 Opinion No. M- 1039

Honorable Clyde Slavln CountyAttorney of Donley County Clarendon,Texas 79226 Nonorable Jack K. Williams President,Texas A & M University College Station, Texas 77843 HonorableRobert S. CalGert Comptroller of PublicAccounts Austin, Texas 

### 78711 Honorable CharlesR. Barden Executive Secretary TexasAir Control Board Austin,Texas 

### 78751

Gentlemen: Re: Saope, constltutlonallty, and effect of House Bill 

### 203,62nd Leg., Reg. Seas., 1971, amendingArticles 6252-9,V.C.S., the Texas Ethics Code.
We have received five opinion requests relating to the scope, constitutionality,and effect of House Bill 2O3,1 . amendingArticle 6252-9,Vernon’s Civil Statutesi?the Texas s Ethics Code. We have concluded that House Bill 203 1s unconstitutional in its entirety for reasons we will hereinafter set forth in detail before passing upon those questions which we hold remain governed by thevalid provisions of Article 6252-9, the originalTexas Ethics Code enacted in 1957$

‘Acts 1971, 62nd Leg., Reg. Sess,, ch. 962, pp,2906-12.
2Acts 1957, 55th Leg., ch. 100, p. 213-15.
-5073-Hon. Bob Bullock, et al, page 2 (M-1039)

Two lnqulrles submittedby the Honorable Bob Bullock, Secretary of State and by the County Attorney of Donley County asked whether Sections 4(0 and 4(e) of House Bill 

### 203are constitutional. 1 Section (0)reads as follows:
"On or before the last Friday of April of each calendaryear, each elected state official and appointed state official and each state employee or legislativeemployee if such leglslative or state employee's annual salary from the State of Texas exceeds $11,000, shall file with the Secretary of State a financial statement which shall be a public record covering sources of income, acquisitions, investments, and divestments obtained or consummatedduring the preceding calendaryear of the lndlvldual filing the statement, and his spouse, and shall be In the following form:

FINANCIAL STATEMENT
For the period Name Address to

Office or position in the government of the State of Texas
For your information: The interests or items required to be disclosed in this statement Include those of yourself and your spouse. The term business entitymeans any person, corporation, firm, partnership, joint stock company, receivership, trusteeship, or any other entity recognizedby law throughwhich business for profitmay be conducted.
1. List of all sources of income to be ldentlfled by employer and/or if a person is selfemployed,by the nature of his business.
2. List of real property acquired or sold during the reporting period.

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### 3 (M-1039)



### 3. List of all stocks, bonds, or other commercial paper acquired or sold during the reporting period.



### 4. List of all other assets acquired during the reportingperiod.



### 5. List of all liabllltles originally incurred durlng the reporting period to any institution regulated or controlledby the State of Texas or the Federal Government.
I swear that the Information given above is true to the best ofmy knowledge and belief.

Date Signature n

Sectlon4(e)reads as follows: "If any person coveredunder this Act or such person's spouse or a dependant 1s an officer, agent,flnancialassociate ormember of, or owns a substantial interest,directly or beneficially in any activity which 1s subject to the jurisdiction of a regulatory agenCy of this State, a record of such relationship or substantial interest shall be made a matter of public record by filingwith the Secretary of State annually by January jlst." The Secretary of State further asked whether, if Sections 4(o) and (e)are unconstitutional,he has any dutiesunder the provisions of Section 4(q) of Senate Bill 

### 15,Acts 1971, 62nd Leg., 1st C.S., p, 3442, ch. 10. Section 4(q) reads as follows:

"Allpolitical candidates for positions and offices covered by this Act shall file with the Secretary of State a financial statementwhich

-5075-Hon. Bob Bullock, et al, page 4 (M-1039)

shall be a public record covering sources of Income, acquisitions, investments,and dlvestments obtained or consummatedduring the preceding calendaryear of the lndlvidual filing the statement, and his spouse, and shall be in the form prescribed in Subsection (0) of this section. The financial statement shall be filed within 

### 15 days after the filing deadline for the election In which the lndlvidual is a candidate." The caption of House Bill 203 gives no notice that any ofthe persons coveredby Itsprovisions are required to file any kind of financial interestdisclosure. It is difficult to see how such detailed financial interest disclosuresas those immediately set forth above in Sections 4(e) and 4(o) could have been anticipatedby a caption which provided merely for "establishingstandards of conduct", "prohibitingcertain acts", 'makingprocedures In the State Ethics Commission",and "providingpenalties". The caption of Senate Bill 

### 15 does declare that it relates 'to the filing of financial statementsby candidates for certain offices...." It falls to give any notice that said financial statements shall embrace the assets belonging to a candidate'sspouse asls required by Section (q). We therefore think that there has been no compliancewith Article III, Section 

### 35 of the Texas Constitution,which requires that the subject of all acts shall be stated in the caption, and that theseprovisionsmust fall for this reason.4 However, if such financial interest disclosuresbe deemed ancillary or consistentwith the prescribing of

-5076-Hon. Bob Bullock, et al, page 

### 5 (M-1039)

standards of conduct for persons covered by the Act, there are other compellingreasons which necessitatedholding the foregoing sections of House Bill 203 unconstitutional. A case squarely in point is City of Carmel-by-the-Sea

v 

### 466 P. 2d 225 (Callfornla1970). The Court held lnva Id a similar financial lnterest public disclosure statute directing every public officialand candidate to file as a public record a statementdescribing the nature of his investmentsin excess of $lO,OOO.OO,as we11 as those ownedby his spouse or a minor child. The court recognized as in the public Interestproper legislative concern about possible conflicts of interestbetweenpublic employment and private financial interests,but held that the disclosuresrequired by the statute were unconstitutionally overbroad. At pages 230-31, the court said:

"The concept of personal liberties and fundamental human rights entitled to protection against overbroad intrusion or regulation by government is not limited to those expressly mentioned in either the Bill of Rights or elsewhere In the Constitution,but Instead extends to basic values llmplIcltin the concept of ordered liberty' (Palkov. State of Connecticut (1937) 302 U.S. 319, 325, 

### 58 S.Ct. 149, 

### 152,82 L.Ed. 288) and to 'thebasic clvllrights of man.' (Skinnerv. State of Oklahoma (1942) 

### 316u.s.,535,541,62 S.Ct, 1110, 1113, 86 L.Ed; $625.)... "Certainof the protectedrights and liberties not specificallymentioned in the Constltulon have been viewed as falling within the penumbra or periphery of the Bill of Rights, and others as being fundamentaland basic personal rights 'retainedby the peo le' within themeaning of the Ninth Amendment. 3 484-485 of 381 U.S., at pp. 1681-1 2 of $4 :'I&., (Griswold, ;;pra, and at pp. 487-499, at pp" 1683-1690 of first concurring 0pinlon.J * +
"Asplaintiff city points out, the right of prlvacy concerns one's feelings and one's own peace ofmind (Fairfieldv. American Photocopyetc. CO. (1955)

### 138 Cal.App.2d 82, 86, 291 P. 2d 194), and certainly one's personal financial affairs are an essential element of such peace ofmind.
-5077-Hon. Bob Bullock, et al, page 

### 6 (M-1039)

Moreover, personal financial affairs are clearly more than the 'adjunctto the domestic economy' referred to in Edwards, supra ( .11&gof 

### 71A.C., 

### 80 Cal. Rptr. 

### 633, 458 P.2d 

### 713 P; Instead they would appear to constitute the primary supporting pillar of that economy. In any event we are satisfied that the protection of one'spersonal financialaffairs and those of his (orher) spouse and childrenagainst compulsorypublic disclosure is an aspect of the zone of privacy which is protected by the Fourth Amendment and which also falls within that penumbra of constltutionalrights into which the governmentmay not intrude absent a showing of compellingneed and that the intrusion is not overly broad. &?/here fundamentalpersonal liberties are involved, they may not be abridgedby the States simply on a showing that a regulatory statute has some rational relationship to the effectuation of a proper state purpose. "Where there is a significantencroachmentupon personal liberty, the State may prevail only upon showing f subordinati% Interestwhich is compelling. **~I~tCitiO~~,.~** The,lawmust be shown "necessary, and not merely rationally related to , the accompllshment of a permissible state ,pollcy." BltationsJ' (Griswoldv. State of Connecticut, 

### 479,497,85 s.ct.1678,1689). lT%%%a%~ %"' legislativeabridgementmust be viewed in the light of less drasticmeans for achieving the same basic purpose.' Shelton v. Tucker, 

### 81 S.Ct. 247, 252, suora, 

### 364U.S. 

### 479, 5 L.Ed.2d 231.)" The courtheld that the disclosuresrequired by the statuteswere unconstitutionallyoverbroad and intruded into irrelevant,private financial affairs of the parties covered by the statute, and were In no way limited to such holdings as might be affectedby the duties or functions of a particular office. The court took cognizance of the fact that a requirement of relevant disclosures of investments or assets whlch.beara relationship to the valid purpose of preventing conflicts of interest on the part of public officersand employees could be, and had been inmany cases, validly drawn. At pages 233-35, the court said:

-5078-Han, Bob Bullock, et al, Page 7 (M-1039)

I, *,. Those various enactments can be roughly divided Into two categories. The first group simply restrictspublic officialsand employees from entering into transactionswhich may cause a conflict of Interests. The second group requires an actual disclosure of any conflict of interestrelevant to the officialduties ofthe officer or employee.Fmphasis supplIedJ ***
"Thusalthough there are lndlvidualdifferences between the disclosure laws discussed above, there is clearly one common element in all of them.. The regulationsprohibiting conflicts of interestand requiring the disclosure of financialholdings are limited to only those transactionsnorholdings which have some relationship,direct or Indirect, to the official duties of the public officer or employee. .., *++

'We are satisfied that in light of the principles applicable to the constitutionalrights here involved,no overridingnecessityhas been establishedwhich would justify sustaininga statutehaving the broad sweep of the one now before us, which, as stated,would Intrude alike into the relevant and the irrelevant private financial affairs of the numerous public officialsand employees coveredby the statute and is not limited to only such holdings as might be affectedby the duties or functions of a particularpublic office.

...Furthermore. the price which the state and the local agencies of government would be expected to pay, should the.constltutionalItyof such a statutebe sustained, in the exodus of competent officials from public office and the displritlngeffect on the willingness of other competent citizens to take on the burdens of public office, far outweighsany legitimatepublic interestto be served." .

-5079-

.Hon. Bob Bullock, et al, page

## a (M-1039)

It Is evident that Sections 4(e), (o), and (q) of House Bill 203 and Senate Bill 15 are neither broad prohibitions of conflicts of Interest nor requirements of actual disclosure of such Interestsas areper se in conflictwith the office or position held or sough= Further, we think that the unconstitutionallybroad requirements of the financial and personal relation disclosureprovisions of Senate Bill 15 and of House Bill 203 are such an integralpart of the regulatory scheme of House Bill 203 as to eliminate any possible

^

. . _ . ^

. severance 0s tnese unconstItuciona1portions srom r;ne balance of the bill. Texas Highway Commissionv. El Paso Bldg. & Const. Trades Council, 149 Tex. 457, 234 d 85 (195 -Simmons v. Arnhlm, 11 26 (lz20);g?ntral Ed 0 Tex.309, 220 S.W. ucation Agency v. I.S.D. of City of El Paso,>2 Tex. 5b, 254 S W 2d 357 (1953)

. . . S.W.

We might be inclined to make a further effort In this regard were we not faced with an additionalunconstltutional section. Section

## a of House Bill 203 provides for the establishment of a State Ethics Commissionwhich **IS t0**  **COnSiSt** of three members of the Senate, elected by the Senate; three members of the House of Representatives; two persons appointedby the Chief Justice of the Supreme Court of the State of Texas; two persons appointed by the PresidingJudge of the Court of CriminalAppeals of the State of Texas; and two persons appointed by the Chairman of the State JudicialQualiflcatlonsCommission. (h) and (I) of Section 8 read as follows: Paragraph~s

"(h) The commission shall have full investigatory powers and subpoenapowers; however, no subpoena may be issuedpertaining to any investlgatlon until the commissionadopts a resolution by a majority vote of themembers of the commission defining the nature and,scope of the investigation. "(I) Actions of the commissionrequire the concurrence ofmajority of the members, including the concurrence of two members from the same House when the action pertains to that House or a member of that House."

-5080-Hon. Bob Bullock, et al, page 9 (M-1039)

It Is evident from reading the foregoing that, In the exercise of the Commission'sfull Investigatory powers, the balance against a legislative investigation or the investigationof a member ormembers of the Legislature 1s weightedagainst such Investigationsas opposed to other Investigationsauthorizedby the Act. This is so because of the fact that the 12 members of the Commission, sixmembers are members of the Legislature, who, by voting Inunison, could prevent obtaining the majority vote necessary to Institutea legislative investigationor the investigationof a member ormembers of the Legislature. Further, there Is the requirement of the concurrenceof twomembers of the same house when the investigationpertains to that house or a member thereof. Although the foregoing Is only a possibility, it amounts to a protection-notaccorded others covered by the provisions of the Ethics Code and Is therefore violative of the equal protection clauses of both the Federal and State Constitution. It clearly operates unequally onmembers of the various classeswithin the scope of the Act, and Is sufficient to render the entire bill unconstitutional. It cannotbe obliterated from theAct since it goes to the enforcement of the Act, Itself,and would leave no plan of operation for the Ethics Commissionwhich it purports to create. As a result, it would be necessary to attempt a wholesale rewriting of this portion of the state, a legislative function which no court would undertake to do. Texas Highway Commlsslonv. El Paso Bldg. & Const. Tramouncll, 

### 49Tex. 

### 457,234S.W.2d 857 (1950). Another reason for holding House Bill 203 unconstltutlonaI Is that Its Section 4, 

### 5 and 

### 6 are wholly Invalidbecause these penal provisionsviolate Articles 

### 6 and 7 of the Texas Penal Code, The new statute is vague, IndefInIteand thereforevoid. Overt v. State, 

### 260S,W, 856 (1924); Ex Parte Meadows, 109 S W 2d 166

. . 1 (1937);S ortatorlum v. State, 115 S.W.2d 483 (Tex.Clv.App.

## 3.93875isnE.).
The Comptroller of PublicAccounts has asked three questlonsrelating to Section 4(k) of House Bill 203, which, in view of the Invalidityof 4(k), are governed by Section 

### 3(i)of Article 6252-g as enacted In 1957. Section 

### 3(i) reads as follows:

-5081-Hon. Bob Bullock, et al, page 10 (M-1039)

"No officer or employee of a state agency nor any firm, association, corporation or otherbusiness entity In which he Is a member, agent, or officer, or In whichhe owns a controlling interest, shall sell goods or services to any person, firm, association or corporationyhlch Is licensedby or regulated in any manner by the state agency In which such officer or employee serves." The Comptroller'squestions are the following:
"1

. A is a large department store which Is Issued a sales tax permit and a store tax license by the Comptroller,and makes regular sales tax reports and payments.
Can an employee of this departmentwork for A as a part-time sales clerk exercisingno degree ofmanagement? 2. B Is a gun shop which Is Issued a sale~s tax permit, a store tax license and a pistol dealers licenseby the Comptroller.
Can an employee of this department sell his private gun to B? 

### 3. C is a used car dealer whlch'is issueda store tax license by the Comptroller.
Can an employee of this department sellhis private automobile to C?"
In deciding these questions, we note at the outset that Texas is among many states that have enacted a wide variety of statutesregulating specificpublic servants In specificareas of potential conflict of public and private Interests. Such statutesare valid where the publlc'lnterest Is sufficient to justify the particular requirement or prohibition, and there Is no unwarranted

-5082-Hon. Bob Bullock, et al, page 11 

### (M-1039)

interferencewith fundamental individualrights or constitutionalguarantees of personal freedom.5
The common every day occurences typifiedby the Comptroller's three submitted questionsmust have arisen and been approvedby the Comptroller In the absence of any Conflict of public and private interests on Innumerable occasions during the fourteenyears.,he has been charged with the duty of complyingwith the provisions of the Ethics Code. Since therehas evidentlybeen no doubt as to the propriety of the types of employee actions covered In the submitted questionsprior to the 1971 amendment, we must assume that the conslstantdepartmental constructionhas been to permit such activities absent forbidden conflicts of Interest. We are In accord with this departmental construction.
The general Declaration of Policy contained In Section 1 of the 1957Act declares that the public servants coveredby the Act shallhave no Interest of any kind, direct or Indirect,or engage In any business transactionor professionalactivity, or Incur any obligation of any nature which is In substantial conflictwith theproper discharge of his duties In the public Interest. It announces that It is for the Implementationof suchpolicy and to strengthen the faith and confidenceof thepeople of Texas In their government that the Code of Ethics Is enacted. It states that the Code shall serve not only as a guide for official conduct of the State's public servants,but also as a basis for dlsclpline for Improper conduct.

5Allmen have certainbasic or natural rights which are inherent and Inalienable,are generally enumerated In a Bill of Rights of life, and are protected against Invasion of government or any branch thereof. 16 C.J.S. 

### 975. ConstitutionalLaw § 199. Rights of life, liberty and property are Inherent rightsmerely reaffirmed In the Constitutionand restricted only as voluntarily surrendered by the people and their government. 

## 12Tex. Jur. 2d 432, ConstitutionalLaw $ 85, Rhlne v. McKlnney, 

### 53Tex. 

### 354 

## (1880).

-5083-Hon. Bob Bullock, et al, page 12 

## (M-1039)

Eased primarily upon the Declaration of Policy as a declaration of legislative intent, and predicatedupon an initial fact finding that In each of the submittedquestion8 there is no conflictbetweenpublic and private interests, we answer all three questions in the affirmative.
In holding that anemployee of the Comptroller's Departmentmay work as a "part-timesales clerk exercising no degree ofmanagement" in the employ of "a large department store which Is issued a sales tax permit and a store tax license by the Comptroller,..,",we realize that the literal language of the prohibition of SecUon 

### 3(l)prevents the employee from sellinghis services to a business entity subject to the Comptroller'sregulations. We are cognizant of the elementary rule of law that there Is no room for construction of plain and unambiguous Xanguage In a staute.7 Nevertheless, there are numerous well-established exceptions to this rule; One of these Is that departure from the literalmeaning of a staute will be made where such departure Is consistent with and essential to the effectuation of legislative intent.8
We do not think that the..Leglslature Intended to absolutelyprohibit State employees from holding any addltlonal jobs with a business entity subject In any way to regulation by the employing State agency. It Is commonknowledge that a State employeemight need to augmenthis Incomeby additional efforts on his part elther to raise his standard of living, or, In some cases, even

6This office does not pass upon questions of fact.
7 

### 53 Tex. Jur.2d 

### 174,Statutes, 8 123, and authorities cited therein.

(185~~ ~%%I%% State v. Delesdenler, 7 Tex. 

### 76 ttT?H b k R 1 I Texas and quoted with akproxal the followl~or~to~ageul&~C6:

1A thing which Is within the Intention of the makers of a statute Is as much within the statute as If It were within the letter;' 'and a thing which Is within the letter of the statute Is not within the statuteunless It be within the Intention of the makers.' (9 Bat. Abr., 

## 247.

)" 

## -5084-.

.

Hon. Bob Bullock, et al, page 

### 13 (M-1039)

to exist. Certainly, it has never been the policy of this State to discourage legitimatediligence and Industry in Its citizens. It would be most unreasonable to conclude that the Legislature Intended any such prohibitionwhere the second employmentdid not affect the employee's compliancewith thehighest standard of ethics In the proper discharge of his duties to the State. The Legislature Is never presumed to Intend an unreasonable, absurd or unjust result If the statutemay be otherwise construed;ard the courtswill depart from the literal Importwhen necessary to preserve legislative Intent,9 Likewise, under the above-statedrule, we hold that the Legislaturedid not Intend for Section 

### 3(i)to prohibit the employee from selling a gun to a gun shop holding a sales tax permit, a store tax license, and a pistol dealer's license;nor from sellinghis car to a used car 'dealer

having a atore tax license. If additional facts exist which lndlcatea conflict of Merest even In such Isolated transactions,a contra result would, of course,be reached. Finally, the answers to all the Comptroller’squestions are necessitatedby the rule that a statutemust be sustained as constitutionalwhereverpossible.10 If Section 

### 3(l) constituteda blanket prohibition against the right of the Individualemployee to work elsewhere or transact business dealings with his own property, It would be blatantly discriminatoryas to him, and a denial of due process and equal protection of the laws In violation of both the State and Federal Constitutions. A statutory classificationwhich

953 Tex. Jur. 2d 

### 134-135,187-189,195-197,Statutes, 88 126, 

### 134,,

135,and authorities cited therein. 

### 1053Tex. Jur.2d 225-227, Statutes, B182, and authorities cited therein. State v. City of Austin, 

### 160Tex. 

### 348,331 S.W.2d 

### 737, 747tl9bO).

-5085-.- .

‘

. .

Hon. Bob Bullock, et al, page 14 

### (M-1039)

singles out certain individuals,or classes of individuals, and deals with them arbitrarilyand unreasonably in a manner unjustifiablydifferent from other Individuals,has many timesbeen held In violation of the 14th Amendment to the Federal Constitution,which specificallypertains to thedeprivation of life, libertyand property without due process of law.11 And, generally, the term 'liberty" as used In the Bill of Rights in 12 arious state constitutions, Including the Texas Constitution, Is as comprehensive as the same term used In the due process clause of the 14thAmendment.I3 Many Texas cases recognize these fundamentalprinciples as preserved by our Bill of Rlghts.14 The Texas AIrControl Board asks whether its Board members or employeesmay have dealings with companiesregulated by the Board. TexasAgriculturaland MechanicalUniversity asks essentially the same questionsabout facultymembers, staff and employees of theUniversity and Its various services. These questionsmust firstbe determinedby the employing State agency in themanner heretofore discussed In answering the questions submittedby the Comptroller. The same rule of reasonable analysis of the facts pertaining to the **QrOQOSed** activity of any State Officer or employee would apply to persons connectedwith Texas Agricultural and MechanicalUniversity, Texas Air Control Board, Donley CountyHospital Board Directors, or Notaries Public. The employing State agency, or those to whom supervisionhas been confided,must determine whether the



### I116C.J.S. 

### 976,Const. Law, § 

### 199.
12Art. I, Sec. 

### 19.
%3 c, J. s. 

### 988,Const. Law, § 202. 

### 14 12 Tex. Jur. 2a 

### 432-434,Const. Law. $ 

### 86-89.

-5086-**. -** 

**. .** **’**

Hon, Bob Bullock, etal, page 

### 15 (M-1039)

facts of any particular case warrant a finding of fact that the activities of an individualreflect a conflict of interestunder Section 

### 3(l)of the 1957 statute.
-SUMMARYHouse Bill 203, 62nd Leg., 1971, Reg. Sess., and Senate Bill 15, 62nd Leg,, 1st C,S., 1971, ch, 10, p. 3442, which sought to amend Article 6252-9,V,C,S. (TexasEthics Code) are both unconstitutional. The 1957 Ethics Code, as It existed before these attempted amendments by the 62nd Legislature, Is In force as the law of Texas, No financial interest disclosure reports are required under existing law. Under the 1957 Ethics Code, whether conflicts of interest exist are fact determinationsfor those who exercisevalidly delegated supervisory powers*

Preparedby Roger Tyler and Marietta McGregor Payne Assistant,AttorneysGeneral
APPROVED: OPINION COMMITTEE
Kerns Taylor. Chairman W. E. Allen, Co-Chairman Houghton Brownlee Gordon Cass Rex White Bob Lattlmore

-5087-. . .

Hon. Bob Bullock, et al, page 16 (M-1039)

SAM MCDANIEL Staff Legal Assistant
ALFRED WALKER ExecutiveAssistant
NOLA WHITE First Assistant

-5088-