Does a state agency's anti-conflict rule cover every organization it pays, or only ones set up primarily to do that kind of work?

Texas AG Opinion JM-955: How Far Does the Rehab Commission's Conflict Rule Reach?

Plain-English summary

The Texas Rehabilitation Commission buys services from a lot of different organizations to help people with disabilities get and keep jobs. State law includes a conflict-of-interest rule aimed at keeping the people who run those vendor organizations, and their close family, out of the commission's own board and staff. The commissioner wrote to the Attorney General because he thought the rule was sweeping in organizations it was never meant to touch, and he wanted a way to read it more narrowly.

His two examples were concrete. First, the commission pays tuition and fees to state colleges and universities so disabled students can attend. Those schools are not in the business of rehabilitation, and the commission had nothing to do with creating them, so applying a conflict-of-interest rule to them seemed absurd. Second, the commission had a contract with the Guadalupe Economic Services Corporation, which helps disabled migrant and seasonal farmworkers in El Paso County find competitive employment. That corporation earns less than five percent of its revenue from the commission and is not organized primarily to rehabilitate the disabled, yet the deputy director there is married to a commission manager, which under a literal reading of the statute could make that manager's spouse ineligible.

The commissioner's proposed fix was to limit the statute to organizations that fit the federal definition of a "rehabilitation facility," meaning a place run for the primary purpose of providing vocational rehabilitation services. The Attorney General said no, that reading does not match the words the legislature used.

The statute reaches organizations that receive commission money "in payment for the provision of rehabilitation services," and a separate section defines rehabilitation services very broadly, covering essentially any goods or services that help a handicapped person work or live independently: evaluation, counseling, training, transportation, job placement, even basic living expenses. That definition is wide enough to cover the educational services the colleges provide and the employment help the corporation provides. There was no sign the legislature wanted to borrow the narrower federal "facility" definition, so the commission could not use it to shrink the rule.

The Attorney General acknowledged this produces some harsh results, but the answer to a broadly worded statute is not for the agency or the Attorney General to rewrite it. When a statute is unambiguous, you follow the words, even when the outcome is inconvenient.

On enforcement, the commissioner does have power to run the statute. As the agency's chief administrative officer, he can make the factual findings needed to apply the rule and can act when he finds a violation, but only using the standard the statute sets, not one he prefers. For remedies, a board member who violates the rule can be removed, and an ineligible officer, employee, or paid consultant of a vendor simply cannot be hired by the board. A spouse or cohabitant already on the staff does not have to be fired automatically, though; whether that person should face discipline for a genuine conflict is a factual question the agency has to work through first.

Currency note

This opinion was issued in 1988. 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 Texas Rehabilitation Commission was later abolished and its functions folded into other state agencies, and chapter 111 of the Human Resources Code has been amended and in part relocated. Article 6252-9b, V.T.C.S., the general state ethics and conflict-of-interest statute cited here, was repealed and recodified into the Government Code. Anyone weighing a conflict-of-interest question for a Texas agency today should work from the current statutes and the state ethics laws, not the 1988 provisions cited in this opinion.

Who this opinion affected (as of 1988)

The Texas Rehabilitation Commission board and staff: The opinion told them the conflict-of-interest rule applied broadly and could not be narrowed to formal rehabilitation facilities.

Organizations paid by the commission, including colleges and service corporations: People associated with any organization paid for rehabilitation services (broadly defined) fell within the eligibility limits.

Spouses and cohabitants of vendor personnel: They could not serve on the board or hold board jobs at or above salary grade 17, though existing employees did not face automatic dismissal.

Common questions

Did the conflict-of-interest rule apply only to formal rehabilitation facilities?
No. The Attorney General concluded it reached anyone associated with an organization that receives commission funds in payment for rehabilitation services, and that term is defined broadly enough to cover colleges providing education and a corporation helping farmworkers find work.

Could the commissioner read the statute more narrowly to avoid harsh results?
No. The Attorney General held that when a statute is unambiguous, the agency must follow its clear language and may not add to or subtract from it, even when the outcome seems unintended.

Does the commissioner have power to enforce the rule?
Yes. As the agency's chief administrative officer, the commissioner has the implied authority to make the factual determinations needed to enforce the statute and to act on a violation, but only under the standards the statute provides.

What happens to a board employee who is the spouse of a vendor's manager?
That employee does not have to be dismissed automatically. Whether the relationship warrants discipline for a conflict that affects the employee's independence of judgment is a factual question to be decided first at the agency level.

Background and statutory framework

Section 111.025 of the Human Resources Code was enacted in 1985 as part of the sunset review of the Texas Rehabilitation Commission (Acts 1985, 69th Leg., ch. 603) and amended in 1987 to conform to the enactment of the Government Code (Acts 1987, 70th Leg., ch. 167). It bars an officer, employee, or paid consultant of an organization that receives commission funds in payment for rehabilitation services from being a board member or board employee, and bars a person who cohabits with or is the spouse of such an officer, managerial employee, or paid consultant from board membership or board employment at grade 17 or above. The opinion noted that section 111.025 is substantially similar to thirteen other 1985 enactments creating conflict-of-interest provisions for various boards and commissions, but is broader in scope: where several of those provisions reach only organizations whose primary purpose is the board's subject area, section 111.025 reaches all persons associated with organizations paid by the commission for rehabilitation services.

The commission argued that section 111.025 should apply only to organizations fitting the definition of "rehabilitation facility" in section 7 of the federal Rehabilitation Act of 1973 (29 U.S.C. section 706(13)), which emphasizes facilities operated for the primary purpose of providing vocational rehabilitation services. The Attorney General rejected that reading. Section 111.002(5) of the Human Resources Code defines "rehabilitation services" broadly to include equipment, supplies, goods, or services necessary to enable a handicapped individual to engage in a gainful occupation or achieve maximum personal independence, listing activities such as evaluation of rehabilitation potential, counseling and guidance, physical and mental restoration, training, maintenance covering basic living expenses, transportation, job placement, postemployment services, and obtaining occupational licenses. That definition is broad enough to encompass the educational services of state colleges and universities and the employment services of the Guadalupe Economic Services Corporation. Because nothing indicated a legislative intention to incorporate the narrower federal facility definition, the board's narrow reading was contrary to the clear language of sections 111.025 and 111.002(5).

On enforcement, the commissioner serves as the chief administrative officer of the agency (section 111.017), administers chapter 111 under board policies, may make regulations to carry out the chapter subject to board approval (section 111.018(a)), and may take whatever action is necessary or appropriate to accomplish the chapter's objectives (section 111.023). These broad grants carry the implied authority to make the factual determinations necessary to enforce section 111.025 and to take action if a breach is discovered (Bullock v. Calvert, 480 S.W.2d 367 (Tex. 1972)). But the statute's clear standard curtails the commissioner's discretion, and neither the Attorney General nor the commissioner may ignore or alter that standard simply because it yields unwanted results (RepublicBank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605 (Tex. 1985); State v. Millsap, 605 S.W.2d 366 (Tex. Civ. App. - Beaumont 1980, no writ)). The commissioner therefore may make the necessary factual determinations and take action to remedy a violation, but only pursuant to the statute's standards.

On the fourth question, the Attorney General addressed remedies. The Human Resources Code places primary responsibility for operational policies in the board (section 111.017) and authorizes the commissioner to make personnel regulations with board approval (section 111.018(a)), so the board and commissioner may implement policies and rules to enforce section 111.025, guided by its language. Although section 111.025 provides no remedy of its own, section 111.0131 authorizes removal of a board member who violates it. An officer, employee, or paid consultant of a vendor organization is not eligible for board employment at any salary grade. A spouse or cohabitant already employed by the board need not necessarily be dismissed; whether such an employee is subject to discipline under article 6252-9b, V.T.C.S. (which forbids state officers and employees from holding interests in substantial conflict with the discharge of their duties) is a question of fact to be determined first at the agency level.

Citations

Statutory authority:

• Section 111.025, Human Resources Code (conflict-of-interest limits on board membership and employment)
• Section 111.002(5), Human Resources Code (broad definition of "rehabilitation services")
• Section 111.0131, Human Resources Code (removal of a board member who violates section 111.025)
• Section 111.017, Human Resources Code (commissioner as chief administrative officer)
• Section 111.018(a), Human Resources Code (commissioner's rulemaking authority)
• Section 111.023, Human Resources Code (commissioner's authority to accomplish chapter objectives)
• 29 U.S.C. section 706(13) (federal Rehabilitation Act of 1973 definition of "rehabilitation facility")
• Article 6252-9b, V.T.C.S. (conflict-of-interest restrictions on state officers and employees)

Cases:

• Bullock v. Calvert, 480 S.W.2d 367 (Tex. 1972) (Texas Supreme Court; implied administrative authority to carry out statutory duties)
• RepublicBank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605 (Tex. 1985) (Texas Supreme Court; unambiguous statutes are followed as written)
• State v. Millsap, 605 S.W.2d 366 (Tex. Civ. App. - Beaumont 1980, no writ) (Texas appellate court; improper to add to or subtract from an unambiguous statute)

Prior Attorney General opinions referenced: JM-719 (1987).

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-955
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1988/jm0955.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor OCR errors may remain; the linked PDF is authoritative.

September 23, 1988

Mr. Vernon M. Arrell
Commissioner
Texas Rehabilitation Commission
118 E. Riverside Drive
Austin, Texas 78704

Opinion No. JM-955

Re: Application of section 111.025 of the Human Resources Code, regarding certain limitations on the purchase of services by the Texas Rehabilitation Commission (RQ-1299)

Dear Mr. Arrell:

On behalf of the Texas Rehabilitation Commission, you ask four questions concerning the authority of the commissioner to make certain factual determinations and take action pursuant to section 111.025 of the Human Resources Code. Section 111.025 provides the following in pertinent part:

(a) An officer, employee, or paid consultant of an organization that receives funds from the commission in payment for the provision of rehabilitation services may not be a member or employee of the board, nor may a person who cohabits with or is the spouse of an officer, managerial employee, or paid consultant of such an association be a member of the board or an employee of the board grade 17 or over, including exempt employees, according to the position classification schedule under the General Appropriations Act.

You inform us of the commission's view that section 111.025 does not apply to organizations that do not fit the definition of "rehabilitation facility" provided in section 7(10) of the federal Rehabilitation Act of 1973, 29 U.S.C. section 706(13), or to organizations that do not provide rehabilitation services as their primary task. You contend that the legislative intent behind section 111.025 was to place the commission at arm's length with those organizations with which it conducts business. You conclude that the section should apply only to rehabilitation facilities "created or continued" by the commission.[1]

In support of your argument, you describe two situations in which a literal application of section 111.025 will yield, in your opinion, adverse and unintended results. The first involves state colleges and universities:

[T]he Commission purchases educational services from . . . State colleges [and universities]. The application of Section 111.025 to State universities and colleges from whom the Commission purchases educational, rather than rehabilitation, services is an example of an unintended result which would come from such an interpretation . . . . The Commission had no hand in establishing or continuing State universities and colleges, except by the very small payments of fees and tuition for disabled students, and such institutions do not have a primary purpose of rehabilitating the disabled. Therefore, Section 111.025 clearly should not be applied to such institutions.

The second situation involves a contract between the commission and the Guadalupe Economic Services Corporation (hereinafter the corporation). You advise us that the corporation is not organized primarily for the rehabilitation of the disabled. Under the contract, the corporation agrees to provide certain services designed to identify and assist disabled migrant and seasonal farmworkers in El Paso County and other handicapped persons who need assistance in obtaining competitive employment. The corporation also agrees to conduct an assessment of the feasibility of providing similar services in neighboring counties. The corporation derives less than five percent of its total revenues from the commission under this contract. The deputy director of the corporation is the spouse of a managerial employee of the Texas Rehabilitation Commission who serves in a salary grade above grade 17. You argue that because the corporation is not a "rehabilitation facility," section 111.025 should not apply.

On the basis of these facts, you request our opinion on the following issues:

1. Whether the Commissioner of the Texas Rehabilitation Commission may find as a matter of fact that certain organizations, such as State universities and colleges, and the [Guadalupe Economic Services Corporation] are not organizations from which the Commission purchases rehabilitation services and that Section 111.025 [of the Human Resources Code] therefore does not apply.

2. Whether the Commissioner of the Texas Rehabilitation Commission may find as a matter of fact that rehabilitation facilities created or continued by the Commission are organizations governed by Section 111.025 . . . .

3. Whether the Commissioner of the Texas Rehabilitation Commission, upon finding a violation of Section 111.025, may take action since Section 111.025 has neither a self-executing feature nor any penalty attached.

4. Assuming the Commissioner of the Texas Rehabilitation Commission may take action, what is an appropriate remedy for a violation of Section 111.025?

Insofar as these issues are predicated upon the board's interpretation of section 111.025, we should first consider whether that interpretation is correct. We will begin with a review of the history of section 111.025.

Section 111.025 was enacted in 1985 as part of the "sunset" review of the Texas Rehabilitation Commission. Acts 1985, 69th Leg., ch. 603, at 2271. It was amended in 1987 to conform to the enactment of the Government Code. Acts 1987, 70th Leg., ch. 167, section 2.19(19), at 1347. Section 111.025 is substantially the same in language and form as thirteen other enactments of the 69th Legislature. See Agric. Code section 201.0141 (State Soil and Water Conservation Board); Educ. Code section 66.62 (Board for Lease of University Lands); Hum. Res. Code sections 81.002 (Texas Commission for the Deaf), 91.011 (Texas Commission for the Blind), 101.0031 (Texas Board on Aging); Nat. Res. Code sections 32.0123 (School Land Board), 34.0133 (Boards for Lease of State-owned Lands), 161.023 (Veterans' Land Board); Parks & Wild. Code section 11.0122 (Parks & Wildlife Commission); Water Code sections 5.059 (Texas Water Commission), 6.057 (Texas Water Development Board); V.T.C.S. arts. 4477-5, section 2.023 (Texas Air Control Board), 5561c-2, section 108 (Texas Commission on Drug and Alcohol Abuse). These provisions are directed at averting potential conflicts of interest among members and employees of the boards or commissions created by each of the enumerated statutes. There are, however, other provisions that serve similar purposes. See, e.g., Hum. Res. Code section 111.013 (qualifications for appointment to board of Rehabilitation Commission); V.T.C.S. art. 6252-9b, section 1 (forbidding state officers and employees from holding any interest, financial or otherwise, that is in substantial conflict with discharge of their duties).

Though virtually identical to the other 1985 enactments in form and language, section 111.025 is broader in scope than most of the provisions cited above. Compare, e.g., Agric. Code section 201.0141(b), (c) (prohibiting from board membership or employment officers, employees, etc., of "a statewide association whose primary purpose is soil and water conservation"); Hum. Res. Code sections 81.002(d) ("an association representing the interests of deaf or hearing-impaired persons"), 91.011(b) ("an association that has as its primary interest the provision of services to, or other matters relating to, the blind"). In contrast to those provisions, section 111.025 reaches all persons associated with organizations that receive funds from the commission "in payment for the provision of rehabilitation services." To ascertain the proper meaning of section 111.025, then, we must also learn the meaning of the term "rehabilitation services."

Section 111.002 of the Human Resources Code defines "rehabilitation services":

(5) 'Rehabilitation services' means equipment, supplies, goods, or services necessary to enable a handicapped individual to engage in a gainful occupation or achieve maximum personal independence. To enable a handicapped individual to engage in a gainful occupation or achieve maximum personal independence the commission may engage in or contract for activities, including but not limited to:

(A) evaluation of rehabilitation potential, including diagnostic and related services incidental to the determination of eligibility for services and the nature and scope of services to be provided;

(B) counseling and guidance;

(C) physical and mental restoration services necessary to correct or substantially modify a physical or mental condition that is stable or slowly progressive;

(D) training;

(E) maintenance covering a handicapped individual's basic living expenses, including food, shelter, clothing, and other subsistence expenses necessary to support and derive the full benefit of the other rehabilitation services being provided;

(F) transportation;

(G) placement in a suitable employment;

(H) postemployment services necessary to maintain suitable employment;

(I) obtaining occupational licenses, including any license, permit, or other written authority required by a state, city, or other governmental unit to be obtained in order to enter an occupation or small business, and providing tools, equipment, initial stocks, goods, and supplies; and

(J) providing other equipment, supplies, or goods that can reasonably be expected to benefit a handicapped individual in terms of employment in a gainful occupation or achievement of maximum personal independence. (Emphasis added.)

The definition of rehabilitation services is broad enough to encompass virtually all goods and services available to the commission to help a handicapped individual obtain gainful employment and improve his quality of life, including the services of state colleges and universities and the Guadalupe Economic Services Corporation. In contrast, the definition of "rehabilitation facility" contained in the Rehabilitation Act of 1973 places emphasis on facilities "operated for the primary purpose of providing vocational rehabilitation services to individuals with handicaps." 29 U.S.C. section 706(13). You do not suggest that the application of the federal definition is necessary to comply with any agreement with the federal government or is required as a condition for the acceptance of federal funds, and we detect no legislative intention to incorporate the federal definition into section 111.025. We must therefore conclude that the board's narrow reading of section 111.025 is contrary to the clear language of that section and section 111.002(5).

With this understanding of section 111.025, we can now directly address the first three issues concerning the authority of the commissioner to enforce that provision. The commissioner of the Texas Rehabilitation Commission serves as the chief administrative officer of the agency. Hum. Res. Code section 111.017. He administers chapter 111 of the Human Resources Code pursuant to policies adopted by the board of the commission. Id. He is given authority to make regulations necessary to carry out the purposes of chapter 111, subject to board approval. Id. section 111.018(a). He is also authorized to take whatever action is necessary or appropriate to accomplish the objectives of the chapter. Id. section 111.023. These provisions confer broad authority upon the commissioner to administer and enforce chapter 111. We believe they carry with them the implied authority to make the factual determinations necessary to enforce section 111.025 and to take action in the event a breach of section 111.025 is discovered. See Bullock v. Calvert, 480 S.W.2d 367 (Tex. 1972). However, these broad statements of authority do not grant the commissioner unlimited latitude in managing the affairs of the commission.

The language of section 111.025 curtails the discretion of the commissioner by providing a clear standard for establishing whether or to what extent a person is ineligible for employment by or membership on the board. Officers, employees, and paid consultants of organizations that receive funds from the commission "in payment for the provision of rehabilitation services" as defined by section 111.002(5) are ineligible for board membership or employment. Their spouses or cohabitants are ineligible for board membership or employment at or above salary grade 17. While we recognize that there may be harsh consequences, we must presume the legislature had a definite purpose in mind when it chose this broad standard of eligibility for membership on the board or employment by the board. Unless a statute is ambiguous, we are compelled to follow its clear language. RepublicBank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605 (Tex. 1985). Neither this office nor the commissioner may ignore or alter the standard of eligibility simply because it yields unwanted results. See State v. Millsap, 605 S.W.2d 366 (Tex. Civ. App. - Beaumont 1980, no writ) (concluding that it is improper to add or to subtract from an unambiguous statute).

Accordingly, we conclude that the commissioner of the Texas Rehabilitation Commission has the authority to make the factual determinations necessary to enforce section 111.025 of the Human Resources Code, but such determinations must be made pursuant to the standards provided in that section. The commissioner may not enforce a standard at variance with section 111.025. The commissioner may take action necessary to remedy a violation of section 111.025.

Your fourth inquiry concerns the appropriate remedy for a violation of section 111.025. The Human Resources Code places primary responsibility for establishing operational policies in the board of the commission, see Hum. Res. Code section 111.017, and authorizes the commissioner to make regulations governing personnel standards with the approval of the board. Id. section 111.018(a). We think these provisions authorize the board and the commissioner to implement policies and rules necessary to enforce section 111.025. Once again, though, the board and the commissioner must be guided by the language of that section.

You observe that section 111.025 provides no remedy for a violation of the section. Other statutes with similar eligibility limitations provide that board members who violate the prohibitions are subject to removal and that employees who violate them are subject to dismissal. See, e.g., V.T.C.S. art. 8407a, section 29B(c); Attorney General Opinion JM-719 (1987). Section 111.0131 of the Human Resources Code authorizes the removal of a board member who violates section 111.025, but no section requires the dismissal of an employee who violates section 111.025. Clearly, an officer, employee, or paid consultant of an organization supplying rehabilitation services to the commission in exchange for commission funds is not eligible for employment by the board at any salary grade. Their spouses or cohabitants who are employed by the board need not necessarily be dismissed. However, the relationships between board employees and persons associated with organizations that supply rehabilitation services to the commission may, in certain circumstances, affect the independence of judgment of the employee and subject the employee to discipline under article 6252-9b. Whether a board employee who is the spouse or cohabitant of an officer, employee, or paid consultant of such an organization is subject to discipline under article 6252-9b is a question of fact that must first be determined at the agency level.

SUMMARY

The commissioner of the Texas Rehabilitation Commission may make the factual determinations necessary to enforce section 111.025 of the Human Resources Code, but such determinations must be made pursuant to the standards provided in that section. The commissioner may not enforce a standard at variance with section 111.025. The commissioner may take action necessary to remedy a violation of section 111.025.

A board member who violates section 111.025 is subject to removal. Hum. Res. Code section 111.0131(a)(3). Officers, employees, or paid consultants of an organization that receives funds from the commission for the provision of rehabilitation services as defined in section 111.002(5) of the Human Resources Code are ineligible for appointment to or employment by the board of the Rehabilitation Commission. Spouses and cohabitants of such persons may not be members of the board or employees of the board at or above salary grade 17, according to the position classification schedule under the General Appropriations Act.

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Steve Aragon
Assistant Attorney General

[1] You do not explain how a rehabilitation facility is "created" or "continued" by the commission. Your office has informed us that these words simply refer to facilities or programs that receive funds from the commission for rehabilitation services, either by grant or through contract, in other words, facilities established for the primary purpose of providing rehabilitation services.