                                ATTORNEY GENERAL OF TEXAS
                                              GREG        ABBOTT


                                                    June 3,2004



The Honorable Joe F. Grubbs                                      Opinion No. GA-0195
Ellis County and District Attorney
1201 North Highway 77, Suite B                                   Re: Whether an employee of the City of
Waxahachie, Texas 75 165-5 140                                   Midlothian may simultaneously   serve as a
                                                                 director of the Mountain Peak Water Supply
                                                                 Corporation    (RQ-0 142-GA)


Dear Mr. Grubbs:

        You ask whether an employee of the City of Midlothian may simultaneously serve as a
director and/or officer of the Mountain Peak Water Supply Corporation.’ A letter from the attorney
for the Mountain Peak Water Supply Corporation has informed us that the corporation has recently
converted to the Mountain Peak Special Utility District (“Mountain Peak”).’

        You indicate that the municipal employee in question is “a front line supervisory employee
whose duties include mowing City parks and roadsides. Except for the purchase of approved
supplies used in the course and scope of his daily duties, he has no authority to enter into any type
of contract on behalf of the City.” Request Letter, supra note 1, at 1. The same individual serves
simultaneously   as president and director of Mountain Peak.3 You ask that we address this
simultaneous service in terms of both dual office holding and conflict of interest under chapter 171
of the Local Government Code.

        Article XVI, section 40 of the Texas Constitution provides, in relevant part, that “[n]o person
shall hold or exercise at the same time, more than one civil office of emolument.” TEX. CONST.art.
XVI, § 40. As the Supreme Court of Texas observed in Aldine Independent School District v.
Stand@, 280 S.W.2d 578 (Tex. 1955), “the determining factor which distinguishes a public officer
from an employee is whether any sovereign function of the government is conferred upon the
individual to be exercised by him for the benefit of the public largely independent of the control of
others.” Id. at 583. On the basis of the facts you have presented, the individual in question is an
employee, rather than an officer, of the City of Midlothian.


           ‘See Letter from Honorable Joe F. Gmbbs, Ellis County and District Attorney, to Honorable Greg Abbott, Texas
Attorney General (Dec. 8, 2003) (on file with the Opinion Committee, also available at http://www.oag.state.tx.us)
[hereinafter Request Letter].

         ‘See Letter from David A. Miller, Miller Mentzer MacDonald, P.C., to Nancy Fuller,             Chair, Opinion
Committee, Offke of the Attorney General (Jan. 21,2004) (on file with the Opinion Committee).

         31d. at 2
The Honorable Joe F. Grubbs      - Page 2        (GA-0195)




         Dual office holding also encompasses the common-law doctrine of incompatibility, which
has three aspects: self-appointment, self-employment, and conflicting loyalties. See Tex. Att’y Gen.
Op. No. GA-0127 (2003) at 2. Self-appointment does not apply in this case because the individual,
as a municipal employee, does not appoint the directors of Mountain Peak nor, as a director of
Mountain Peak, does he appoint employees of the City of Midlothian. Neither is self-employment
incompatibility applicable because, as a municipal employee, he is not employed by Mountain Peak.
Conflicting loyalties incompatibility requires that both positions constitute “offices.” See Tex. Att’y
Gen. Op. No. JM-1266 (1990) at 4; see also Tex. Att’y Gen. LO-96-148, at 2. Because we have
determined that, as amunicipal employee, the individual does not hold an office, conflicting loyalties
do not arise.

         We must also consider chapter 17 1 of the Local Government Code, which relates to conflicts
of interest. Section 17 1.004 thereof requires, inter alia, that, “[i]f a local public official has a
substantial interest in a business entity . . . the official shall file, before a vote or decision on any
matter involving the business entity . . . an affidavit stating the nature and extent of the interest and
shall abstain from further participation in the matter,” if “the action on the matter will have a special
economic effect on the business entity that is distinguishable from the effect on the public.” TEX.
Lot. GOV’T CODEANN. 0 171.004(a)( 1) (Vernon 1999). “Local public official” includes “amember
of the governing body or another officer. . . of any district . . . county, municipality, precinct, central
appraisal district, transit authority or district, or other local governmental entity who exercises
responsibilities beyond those that are advisory in nature. ” Id. § 171.001(l). A director of a special
utility district, such as Mountain Peak, is clearly a local public official for purposes of section
171 .OOl of the Local Government Code. As an employee of the City of Midlothian, however, the
individual in question is of course not a local public official.

         It is undisputed that the City of Midlothian has, in the past, contracted to sell water to
Mountain Peak, and that it is likely to do so in the future. See Request Letter, supra note 1, at 2. As
a director of Mountain Peak, the person in question must, under chapter 171 of the Local
Government Code, disclose any interest he might have in any business entity. The term “business
entity’ is defined as “a sole proprietorship, partnership, firm, corporation, holding company, joint-
stock company, receivership, trust, or any other entity recognized by law.” TEX. Lot. GOV’T CODE
ANN. 5 17 1.001(2) (Vernon 1999). In Attorney General Opinion DM-267, this office concluded that
a city is not a business entity for purposes of chapter 171 of the Local Government Code. See Tex.
Att’y Gen. Op. No. DM-267 (1993) at 2. Rather, it is “[a] political entity or subdivision for local
governmental purposes.”        Id. (quoting BLACK’S LAW DICTIONARY 244 (6th ed. 1990)). More
recently, relying on Opinion DM-267, we said that a school district is not a business entity under the
terms of chapter 171. See Tex. Att’y Gen. Op. No. GA-003 1 (2003) at 2; see also Tex. Att’y Gen.
Op. No. JM-852 (1988) (state university is not a business entity as defined in section 171.001(2) of
the Local Government Code).

         Accordingly, we conclude that a director and/or officer of the entity formerly known as the
Mountain Peak Water Supply Corporation, and now designated as the Mountain Peak Special Utility
District, is not required by section 171.004 to disclose his interest in and abstain from voting on
matters involving the City of Midlothian, which he serves as an employee.
The Honorable   Joe F. Grubbs   - Page 3       (GA-01 95)




                                        SUMMARY

                        An employee of the City of Midlothian is not barred by article
                XVI, section 40 of the Texas Constitution, nor by common-law
                incompatibility from simultaneously serving as a director/officer of
                the entity formerly known as the Mountain Peak Water Supply
                Corporation, and now designated as the Mountain Peak Special
                Utility District. As a director/officer of Mountain Peak, he need not
                disclose his interest in or abstain from voting on matters involving the
                City of Midlothian.            _

                                                Yours very truly,




BARRY R. MCBEE
First Assistant Attorney General

DON R. WILLETT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General, Opinion Committee
