Can a former Texas utility regulator go to work for a company the PUC regulates?

Plain-English summary

Texas had a set of "revolving door" rules for the Public Utility Commission, the agency that regulates electric, telephone, and other utilities. The rules were in section 6 of the Public Utility Regulatory Act (PURA). The Commission's executive director asked the Attorney General how those rules applied to a staffer who had run a management audit of a regulated telephone company, then quit and went to work for an affiliate of that company. To make it more pointed, the staffer and the company's president (who also ran the affiliate) had apparently started talking about the job while the audit was still going on.

The Attorney General worked through several questions. The first was the one-year cooling-off rule. PURA's section 6(i) said a former PUC employee could not be hired within a year by a public utility that had been within the scope of his official duties. But the AG, relying on an earlier opinion, read that ban to cover only the regulated utility itself, not an affiliate of it. So the staffer's move straight to the affiliate did not break section 6(i).

The harder questions were about how the job came together. Section 6(d) barred a PUC employee from soliciting a utility for a job, including a job for himself, and section 6(e) barred a utility's officer from offering a PUC employee a job. The AG said that if the staffer had asked the officer for work, or the officer had offered it while the staffer was still at the PUC, each would have crossed those lines. But whether that actually happened was a question of fact, and the Attorney General does not decide fact disputes in an opinion. The AG also pointed the director toward two other laws to consider: the general conflict-of-interest statute (section 8 of article 6252-9b) and a Penal Code abuse-of-office provision.

Finally, the director asked whether a then-new ethics law, Senate Bill 1, changed anything. The AG said no. Senate Bill 1 added a post-employment rule (section 7A of article 6252-9b), but that rule expressly stepped aside whenever another law already restricted a former employee's dealings with a state agency. PURA's own section 6(j) did exactly that for former PUC personnel, so the PUC stayed under its own rules.

Currency note

This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Public Utility Regulatory Act (then V.T.C.S. article 1446c) was later recodified into the Utilities Code, and the standards-of-conduct statute (then V.T.C.S. article 6252-9b) was recodified into chapter 572 of the Government Code, so confirm current law before relying on anything described here.

Background and statutory framework

The Executive Director of the Public Utility Commission (PUC) asked about the post-employment restrictions that applied to a PUC employee who resigned to work for an affiliate of a PUC-regulated telephone company. One of the employee's last PUC assignments was as project manager for a management audit of the regulated company. The audit was completed in February 1991, the employee resigned in May 1991, and he began working for the affiliate soon after. According to the request, the employee and the president of the regulated company, who was also president of the affiliate, apparently began employment negotiations while the audit was still in progress.

What counts as an "affiliate." Article 1446c, V.T.C.S., the Public Utility Regulatory Act (PURA), restricts certain dealings between PUC personnel and the utilities they regulate and those utilities' affiliates. Section 3(i) defined "affiliated interest" or "affiliate" broadly, reaching, among others, any person or corporation owning five percent or more of a utility's voting securities, any corporation five percent or more of whose voting securities a utility owns or controls, and any person or corporation the commission finds, after notice and hearing, exercises substantial influence or control over a utility.

The one-year ban, section 6(i). Section 6(i) said that no former employee could, within one year after leaving the commission, be employed by a public utility that was within the scope of the commissioner's or employee's official responsibility while at the commission. The AG had already read this ban narrowly. Attorney General Opinion JM-280 (1984) concluded that section 6(i) applied to employment by a public utility, but not to employment by an affiliated interest of a public utility. So, assuming the affiliate met the section 3(i) definition, the former employee did not violate section 6(i) by accepting the affiliate's job. (Although the AG cannot resolve fact questions in an opinion, it can answer a legal question on stated facts. Attorney General Opinion JM-495 (1986).)

Soliciting and offering a job, sections 6(d) and 6(e). Section 6(d) barred any commissioner or employee from soliciting, requesting, suggesting, or recommending to a public utility (or its agents and officers) the appointment or employment of any person. The AG read that prohibition on soliciting employment "for any person" to include soliciting a job for oneself, so if the PURA employee asked the officer for employment with the affiliate, or made any of the other prohibited communications, he violated section 6(d). Section 6(e) barred a public utility or affiliated interest, or its officers, from giving or offering employment to a member or employee of the commission, so if the officer made or offered employment to the PUC employee while the employee still worked for the PUC, the officer violated section 6(e). Whether either person actually engaged in the proscribed conduct was a question of fact the AG could not address.

Other laws to consider. The request did not name a specific additional statute, but the AG suggested the director consider section 8 of article 6252-9b, V.T.C.S. (designed to keep a state officer or employee from using an official position for personal gain, by barring private economic interests that might influence the exercise of public authority), noting per Attorney General Opinion JM-587 (1986) that section 8 carries no sanctions for violations, as well as section 39.01 of the Penal Code.

The new ethics law, Senate Bill 1. Senate Bill 1 of the 72d Legislature adopted provisions on the ethics of public servants, some overlapping section 6 of PURA. Article 6252-9b, adopted in 1973 to set standards of conduct for state officers and employees, applied to PUC personnel, and Senate Bill 1 amended it, but most amendments did not overlap section 6 of PURA. The amendment most relevant was section 7A, a post-employment restriction on a former officer's or employee's representation of a person before the agency. Section 7A(d) provided that if other law restricts a former officer's or employee's representation of a person before a particular state agency, the other law prevails over section 7A. PURA's section 6(j) places exactly such a restriction on former PUC commissioners and employees, barring them, while associated with the commission "or at any time after," from representing a person before the commission or a court in a matter they were personally involved in or that was within their official responsibility. Because section 6(j) already governs, section 7A(b) gave way to it, and section 7A did not apply to the PUC. The AG concluded the result would be no different had the transactions occurred entirely after Senate Bill 1's effective date, and that, absent any other conflicting Senate Bill 1 provision the director identified, PUC commissioners and employees are subject to Senate Bill 1 to the same degree as state agency officers and employees in general.

Common questions

Could a former PUC employee go to work for a company the agency regulates?
Not for one year, if the utility had been within the scope of his official duties. But the AG read the one-year ban in section 6(i) to cover only the regulated utility itself, not an affiliate of it, so a former employee could take a job with the affiliate within that year.

Was it a problem that the staffer ran the audit of the company he later joined?
The opinion did not say it automatically broke the law. The concern was how the job offer came about: section 6(d) barred the employee from asking the utility for the job while still at the PUC, and section 6(e) barred the utility's officer from offering it. Whether either actually happened was treated as a fact question for someone other than the AG to resolve.

Who decides whether the law was actually broken?
Not the Attorney General in an opinion. The AG can lay out what the statute prohibits, but a dispute over what the people involved actually said or did is a question of fact for the appropriate fact-finder.

Did the 1991 ethics overhaul (Senate Bill 1) tighten the rules for the PUC?
No, not on this point. Senate Bill 1's post-employment rule (section 7A of article 6252-9b) stepped aside wherever another law already restricted a former employee's dealings with an agency, and PURA's section 6(j) already did that for the PUC, so the PUC stayed under its own statute.

Citations

• V.T.C.S. art. 1446c (Public Utility Regulatory Act): § 3(i) (defining "affiliated interest"/"affiliate"); § 6(d) (employee may not solicit employment from a utility); § 6(e) (utility/officer may not offer employment to commission personnel); § 6(i) (one-year bar on employment by a regulated utility); § 6(j) (post-employment bar on representing persons before the commission)
• V.T.C.S. art. 6252-9b (standards of conduct for state officers and employees): § 7A (post-employment representation restriction); § 7B (soliciting things of value from regulated entities); § 8 (private economic interests / personal gain)
• Penal Code § 39.01
• Senate Bill 1, 72d Legislature, Regular Session, 1991
• Attorney General Opinions JM-280 (1984), JM-495 (1986), JM-587 (1986)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0209
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1993/dm0209.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, and a few badly garbled passages were reconstructed from context; the linked PDF is authoritative. Some footnote text could not be recovered from the scan.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

March 17, 1993

Mr. James L. Crouch
Executive Director
Public Utility Commission
7800 Shoal Creek Boulevard
Austin, Texas 78757

Opinion No. DM-209

Re: Whether the former employee of the Public Utility Commission who goes to work for an affiliate of a regulated utility violates section 6 of article 1446c, V.T.C.S. (RQ-118)

Dear Mr. Crouch:

You ask several questions about the post-employment restrictions applicable to a Public Utility Commission (PUC) employee who resigned to work for an affiliate of a PUC-regulated telephone company. You state that one of his last PUC assignments was as project manager for a management audit on the regulated company. The audit was completed in February 1991, and the employee resigned from the PUC in May 1991, beginning employment for the affiliate soon after. You state that the employee and the president of the regulated company, who was also president of the affiliate, apparently began employment negotiations while the audit of the telephone company was in progress.

Article 1446c, V.T.C.S., the Public Utility Regulatory Act (PURA), restricts certain transactions between PUC employees and affiliates of public utilities. In general, an "affiliate" or "affiliated interest" of a public utility is a person or entity that can substantially control the policies and actions of the public utility, that is subject to being controlled in this way by the public utility, or that is under common control of the same entity as the public utility. Section 3(i) of article 1446c defines these terms as follows:

"Affiliated interest" or "affiliate" means:

(1) any person or corporation owning or holding directly or indirectly, five percent or more of the voting securities of a public utility;

(2) any person or corporation in any chain of successive ownership of five percent or more of the voting securities of a public utility;

(3) any corporation five percent or more of the voting securities of which is owned or controlled, directly or indirectly, by a public utility;

(4) any corporation five percent or more of the voting securities of which is owned or controlled, directly or indirectly, by any person or corporation that owns or controls directly or indirectly, five percent or more of the voting securities of any public utility . . .;

(5) any person who is an officer or director of a public utility or of any corporation in any chain of successive ownership of five percent or more of voting securities of a public utility;

(6) any person or corporation that the commission, after notice and hearing, determines actually exercises any substantial influence or control over the policies and actions of a public utility, or over which a public utility exercises such control . . .;

(7) any person or corporation the commission after notice and hearing determines [is] exercising such substantial influence over the policies and action of the public utility . . . .

Section 6 of PURA prohibits various transactions between employees and former employees of the PUC on the one hand and public utilities and their affiliates on the other. This section provides in part:

(d) No commissioner or employee of the commission may directly or indirectly solicit or request from or suggest or recommend to, any public utility, or to any agent, representative, attorney, employee, officer, owner, director, or partner thereof, the appointment to any position or the employment in any capacity of any person by such public utility or affiliated interest.

(e) No public utility or affiliated interest . . . nor any agent, representative, attorney, employee, officer, owner, director, or partner of any public utility or affiliated interest . . . may give, or offer to give, any . . . employment . . . whatsoever to any member or employee of the commission . . . .

. . . .

(i) No . . . employee shall, within one year after his employment with the commission has ceased, be employed by a public utility which was in the scope of the commissioner's or employee's official responsibility while the commissioner or employee was associated with the commission.

(j) During the time a commissioner or employee of the commission is associated with the commission or at any time after, the commissioner or employee may not represent a person, corporation, or other business entity before the commission or a court in a matter in which the commissioner or employee was personally involved while associated with the commission or a matter that was within the commissioner's or employee's official responsibility while associated with the commission.

V.T.C.S. art. 1446c, § 6.

You first ask whether section 6(i) was violated under the facts you have provided. Although we cannot resolve fact questions in an attorney general opinion, we can answer a legal question based on facts provided to us. Attorney General Opinion JM-495 (1986). Attorney General Opinion JM-280 (1984) concluded that section 6(i) of article 1446c applied to the employment of a former member or employee of the Public Utility Commission by a public utility, but not to that person's employment by an affiliated interest of a public utility. Accordingly, assuming the affiliate in this case meets the definition set out in section 3(i) of PURA, the former employee did not violate section 6(i) by accepting employment with that entity.

You next ask whether "it [was] illegal under section 6(d) and (e) for the employee and the company officer to negotiate such an arrangement while the officer was president of both the company under audit and the affiliate and the employee was the PUC staff member in charge of the audit?"

Section 6(d) provides that no PURA employee may "solicit or request from or suggest or recommend to" any officer of a public utility, "the employment in any capacity of any person by such public utility or affiliated interest." (Emphasis added.) In our opinion, the prohibition in section 6(d) against soliciting employment for any person would bar a PURA employee from making such solicitations, requests, suggestions, or recommendations on behalf of his own employment. If the PURA employee asked the officer for employment with the affiliate or made any other of the prohibited communications, he violated section 6(d).

Section 6(e) provides that no "officer . . . of any public utility or [any] affiliated interest . . . may give, or offer to give . . . [any] employment . . . to any . . . employee of the commission." If the officer of the regulated utility made or offered employment to the PUC employee while the employee worked for the PUC, the officer violated section 6(e). Whether the PURA employee or the officer engaged in conduct proscribed by subsection (6)(d) or 6(e) of article 1446c is a question of fact that cannot be addressed in an attorney general opinion.

You also ask whether any other applicable law was violated under the facts stated. You do not specify the statute you wish us to address, but we suggest that you consider whether section 8 of article 6252-9b, V.T.C.S., as well as section 39.01 of the Penal Code might apply to the case you have described. Section 8 of article 6252-9b, V.T.C.S., is designed to prevent a state officer or employee from using his official position to seek personal gain. It prohibits officers and employees from having various private economic interests that might influence them in their exercise of public authority. See Attorney General Opinion JM-587 (1986) (section 8 of article 6252-9b, V.T.C.S. provides no sanctions for violations of its provisions).

Your remaining three questions are as follows:

(4) If the [transactions] had occurred after January 1, 1992, the effective date of Senate Bill 1, 72d Legislature, Regular Session, 1991, would your [answer differ]?

(5) To what extent, if any, will the ethics law established in PURA continue to apply to PUC commissioners and staff after the effective date of Senate Bill 1?

(6) Conversely, to what extent, if any, will the new ethics law established in Senate Bill 1 apply to PUC commissioners and staff after its effective date?

Senate Bill 1 of the 72d Legislature adopted several provisions regulating the ethics of public servants. Some of its provisions address conduct also covered by section 6 of article 1446c, V.T.C.S. Article 6252-9b, V.T.C.S., adopted in 1973 to establish standards of conduct for state officers and employees, applies to officers and employees of the PUC. See V.T.C.S. art. 6252-9b, §§ 2(1), (5)(A)(i), (6)(A), (5)(A) (defining "state officer" and "state employee"). Senate Bill 1 adopted several amendments to article 6252-9b, V.T.C.S., but most of these do not overlap with section 6 of article 1446c, V.T.C.S. See V.T.C.S. art. 6252-9b, § 7B (prohibiting employees of a regulatory agency from soliciting anything of value from regulated entities). Section 7A, the amendment most relevant to your inquiry, provides as follows:

(a) A member of the governing body or executive head of a regulatory agency may not make, with the intent to influence, any communication to or appearance before an officer or employee of the agency in which the person served before the second anniversary of the date the person ceases to be a member of the governing body or executive head of the agency, on behalf of any person in connection with any matter on which the person seeks official action.

(b) A former state officer or employee of a regulatory agency who ceases service or employment with the agency on or after January 1, 1992, may not represent any person or receive compensation for services rendered on behalf of any person regarding a particular matter in which the former officer or employee participated during the period of state service or employment, either through personal involvement or because the case or proceeding was a matter within the officer's or employee's official responsibility. This subsection does not apply to a rule-making proceeding that was concluded before the officer's or employee's service or employment ceased.

(c) Subsection (b) of this section applies only to:

(1) a state officer of a regulatory agency, or

(2) a state employee of a regulatory agency who is compensated . . . [details of compensation set out].

(d) If other law restricts the representation of a person before a particular state agency by a former state officer or employee, the other law prevails over this section.

V.T.C.S. art. 6252-9b, § 7A (emphasis added).

Section 6(j) of the PURA, quoted above, prohibits a former state officer or employee from representing persons before the PUC under restrictions similar to those set out in section 7A. Section 6(j) applies during the time the officer or employee is associated with the commission "or at any time after." V.T.C.S. art. 1446c, § 6(j). It prohibits the commissioner or employee from representing any "person, corporation, or other business entity before the commission or a court in a matter in which the commissioner or employee was personally involved while associated with the commission or a matter that was within the commissioner's or employee's official responsibility" while associated with the commission. Id. As expressly provided in section 7A(d) of article 6252-9b, section 6(j) of the PURA prevails over section 7A(b).

Accordingly, we do not believe our result would be different if the transactions you describe had occurred entirely after the effective date of Senate Bill 1. Section 7A of article 6252-9b, V.T.C.S., does not apply to the PUC. You have not identified any other provisions of Senate Bill 1 that appear to conflict with provisions of section 6 of the PURA. Assuming the absence of conflicting provisions, the commissioners and employees of the PUC are subject to the provisions of Senate Bill 1 to the same degree as state agency officers and employees in general.

SUMMARY

Section 6(i) of article 1446c, V.T.C.S., provides that a former employee of the Public Utility Commission (PUC) may not be employed within one year after leaving the commission by a public utility that was in the scope of his official responsibility while he worked for the commission. This prohibition does not bar a former employee from working for the affiliate of such public utility within a year after his departure from the commission.

Section 6(d) of article 1446c, V.T.C.S., prohibits an employee of the Public Utility Commission (PUC) from asking an officer of a regulated utility for employment with that utility or an affiliated interest of the utility. Section 6(e) prohibits an officer of a public utility or affiliated interest from offering employment to any employee of the commission. Whether any person has violated either of these provisions is a fact question.

Senate Bill 1 of the 72d Legislature adopted post-employment restrictions on the appearance before a regulatory agency by former state officers and employees of that agency. These provisions, codified as section 7A of article 6252-9b, V.T.C.S., do not apply to former state officers or employees if their representation of a person before a state agency is restricted by other law. Since section 6(j) of article 1446c, V.T.C.S., places post-employment restrictions on appearances before the PUC by its former commissioners and employees, section 7A of article 6252-9b, V.T.C.S., does not apply to these individuals.

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Attorney General for Litigation

RENEA HICKS
State Solicitor

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Susan L. Garrison
Assistant Attorney General

Footnotes (recovered from the scan):

Senate Bill 1: Acts 1991, 72d Leg., ch. 304, at 1290.

Article 6252-9b: Acts 1973, 63d Leg., ch. 421, at 1086.