                                                 KEN PAXTON
                                            ATTORNEY GENERAL OF TEXAS




                                                    May 27, 2016



The Honorable Jane Nelson                                        Opinion No. KP-0093
Chair, Committee on Finance
Texas State Senate                                               Re: Whether an institution of higher
Post Office Box 12068                                            education may enter into a contract with a
Austin, Texas 78711                                              business entity in which an institution's board
                                                                 member has an interest (RQ-0081-KP)

Dear Senator Nelson:

        You ask whether "an institution of higher education may enter into a contract with a
business entity in which· an institution's board member has an interest." 1 You explain that during
its 2015 session, the Legislature enacted Senate Bill 20 relating to various aspects of state agency
contracting. 2 Among the legislative changes in Senate Bill 20 is the addition of subchapter F to
chapter 2261 of the Government Code. See TEX. Gov'T CODE§§ 2261.251-.257 (subchapter F,
"Ethics, Reporting, and Approval Requirements for Certain Contracts"). Subsection 226 l .252(b)
provides that a "state agency may not enter into a contract for the purchase of goods or services
with a private vendor with whom [certain] agency employees or officials have a financial interest,"
specifically including "a member of the 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 of higher education acquiring goods or services under" certain grants of authority in
the Education Code. Id.§ 2261.25l(a); TEX. EDUC. CODE§§ 51.9335 ("best value" acquisition
authority generally applicable to institutions of higher education), 73.115 ("best value" authority
of the University of Texas 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").

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

        3
         For 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 of state government created by the state constitution or a state statute;
The Honorable Jane Nelson - Page 2                      (KP-0093)



        An existing provision of the Education Code, however, subsection 51.923( d), states that an
"institution of higher education is not prohibited 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 effect to both if possible. Texas Indus. Energy Consumers v. CenterPoint Energy Haus.
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) of the 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 of legislative intent. TEX. Gov'T CODE § 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 over the more general"). 5

        We begin by examining the scope of the two statutes to determine the extent to which they
may conflict. Section 2261.252 of the 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 of the


(continued from previous page)
                  (2) the supreme court, the court of criminal appeals, a court of appeals, or the
                       Texas Judicial Council; or
                  (3) a university system or an institution of higher education as defined by Section
                       61.003, Education Code, except a public junior college.

TEX. Gov'T CODE § 2151.002.

         4
          The substance of section 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), renumbered by Act of March 25, 1991, 72d Leg., R.S., ch. 16, § 19.01(23), 1991 Tex. Gen.
Laws 244, 369, and amended by Act of April 25, 1995, 74th Leg., R.S., ch. 76, § 5.95(91), 1995 Tex. Gen. Laws
458, 553; Act of May 27, 2011, 82d Leg., R.S., ch. 1049, § 2.01, 2011 Tex. Gen. Laws 2687, 2690.

         5 While subsection 31 l.026(b) states that a "special or local provision" prevails over a general provision,

opinions of Texas 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 - Page 3                        (KP-0093)



                       following agency employees or officials have a financial
                       interest:
                       (1) a member of the 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 member related to an employee or official described
                           by Subdivision (1) or (2) within the second degree by affinity
                           or consanguinity.
                (c) A state agency employee or official has a financial interest in a
                    person if the employee or official:
                       (1) owns or controls, directly or indirectly, an ownership interest
                           of at least one percent in the person, including the right to
                           share in profits, proceeds, or capital gains; or
                       (2) could reasonably foresee that a contract with the person
                           could result in a financial benefit to the employee or official.
TEX. Gov'T CODE§ 2261.252(b)-(c). Subsection 51.923(d) of the Education Code is a grant of
authority, allowing institutions of higher education specifically to contract with an entity in which
a member of the board of trustees has an interest in certain circumstances:

                (d) An institution of higher education is not prohibited 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 if the 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 on the contract or transaction.
TEX. EDUC. CODE§ 51.923(d). 6


        6 Subsection   51. 923(e) defines what constitutes a substantial interest under the statute:
                 [A] member of a governing board has a substantial interest in a business entity
                 if:
                 ( 1) the member owns 10 percent or more of the voting stock or shares of the
                      business entity or owns either 10 percent or more or $15,000 or more of the
                      fair market value of the business entity;
The Honorable Jane Nelson - Page 4                     (KP-0093)



        Because subsection 51.923(d) of the Education Code would authorize some contracts that
subsection 226 l .252(b) of the Government Code would prohibit, the statutes irreconcilably
conflict where they overlap. See NXCESS Motor Cars, Inc. v. JP Morgan Chase Bank, NA., 31 7
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 of the Education Code should
operate as a specific exception to section 2261.252 of the Government Code. 7 Even if we were to
agree that section 51. 923 of the Education Code is the more specific statute, this would not render
it effective as an exception to section 2261.252 of the 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 of higher education," and expressly included members of a 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
of the specified goods and services by an institution of higher education. Id.§ 2261.251(a). For
such contracts, the prohibition in section 2261.252(b) prevails over the authorization in section
51. 923 of the Education Code to the extent the statutes conflict. 8 Accordingly, section 2261.252(b)
of the Government Code prohibits a contract by an institution of higher education to purchase
certain goods or services from a private vendor in which a member of the institution's governing
body or a certain family member has a prohibited financial interest.




(continued from previous page)
                 (2) funds received by the member from the business entity exceed 10 percent of
                     the member's gross income for the previous year ....
                 (3) the member is an officer of the business entity or a member of the governing
                     board of the 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).

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

        8
          Contracts and transactions not subject to the prohibition in section 2261.252(b) of the Government Code
may still be authorized under section 51.923 of the Education Code.
The Honorable Jane Nelson - Page 5           (KP-0093)



                                     SUMMARY

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

                                           Very truly yours,




                                           KEN PAXTON
                                           Attorney General of Texas



JEFFREY C. MATEER
First Assistant Attorney General

BRANTLEY STARR
Deputy First Assistant Attorney General

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

WILLIAM A. HILL
Assistant Attorney General, Opinion Committee
