Conflicts of Interest: Court Decisions and AG Opinions

Prohibited Beneficial Interests in Contracts Under RCW 42.23.030

RCW 42.23.030 prohibits municipal officers from receiving beneficial interests in contracts made by, through or under their supervision. Several court cases and AG opinions help to define “beneficial interests” and when municipal officers “make” contracts.

A “Beneficial Interest” in a Contract Means a Financial Interest

• In re Recall of Olsen (2005) held that a port district’s decision to indemnify and defend one of its commissioners in litigation over their official acts did not violate RCW 42.23.030. Indemnity decisions are not “contracts” under the statute, and the commissioner had no prohibited beneficial interest in a contract between the port and the attorney hired by the port to defend the commissioner.
• Barry v. Johns (1996) held that a councilmember received no beneficial interest from a contract that limited their liability for official acts because “beneficial interests” in RCW 42.23.030 means financial interests, and it does not include other non-pecuniary contract interests.
• Similarly, in AGLO 1973 No. 6 the AG opined that a school district can contract with a company that employs a district board member as long as the member receives no compensation (i.e. salary or commission) as a result of the contract award.

Beneficial Interests Must Come from Contracts to Violate RCW 42.23.030

• Citizens for Des Moines, Inc. v. Peterson (2005) held that a city’s use of its councilmember’s towing company to tow vehicles from city property did not violate RCW 42.23.030 because any economic benefit the councilmember received from the towing transactions came from chapter 46.55 RCW (towing authority) rather than any express or implied contract between the city and the company.
• AGO 1996 No. 15 involved a county commissioner whose spouse simultaneously served as the county’s health department administrator. The AG opined that any beneficial interest the commissioner had in the spouse’s earnings did not violate RCW 42.23.030 because the spouse’s earnings for their position were set by law and not by contract between county and spouse.

When Are Contracts “Made by, Through or Under the Supervision” of a Municipal Officer?

• In City of Raymond v. Runyon (1998), a city public works commissioner owned a quarry that sold rock for city contracts overseen by the commissioner’s department. The commissioner tried to avoid violating RCW 42.23.030 by having his subordinates supervise the contracts. But the court held that despite the delegation the commissioner violated RCW 42.23.030 because he remained ultimately responsible to supervise the contracts as the city’s public works commissioner, and he could not delegate that ultimate responsibility to others.
• Seattle v. State (1983) examined a Seattle ordinance allowing public office incumbents to contract with the city for financial assistance with their re-election campaigns. The court found that these contracts did not violate RCW 42.23.030 because the city executed and administered them through an independent election commission that was not supervised or controlled by the mayor or any elected city official.
• In AGO 1978 No. 17, the AG opined that a county commissioner’s personal sale of real property to the county housing authority did not violate RCW 42.23.030 because housing authorities function independently and separately from the county commissioners, so the commissioner had no ability to control or supervise the authority’s acceptance or performance of the contract.
• AGLO 1972 No. 47 concluded that RCW 42.23.030 does not prohibit a chief deputy sheriff’s spouse from contracting for employment as a deputy sheriff in the same county. Only the sheriff can appoint deputy sheriffs, so the chief deputy had no power to “make” their spouse’s employment contract.
• In AGLO 1970 No. 89, the AG opined that a county commissioner’s marriage to a county employee did not violate RCW 42.23.030. While the marriage gave the commissioner an interest in the spouse’s earnings, the commissioner did not “make” the spouse’s employment contract since the county hired her before the commissioner took office. And although the spouse’s employment contract continued after the commissioner assumed office, she did not serve at the commissioners’ pleasure and continuing her contract required no official board action.

Prohibited Special Privileges or Exemptions under RCW 42.23.070(1)

• RCW 42.23.070(1) prohibits municipal officers from using their positions to secure special privileges or exemptions for themselves or others. The authorities below discuss what “special privileges” are and penalties for violating the provision.
• AGO 2019 No. 6 considered whether a municipal officer gets a special privilege from their appointment to the state legislature. The AG opined that qualified county legislators can be appointed to fill state legislature vacancies without violating RCW 42.23.070, even though they also appoint nominees to fill such vacancies under the State Constitution. RCW 42.23.070 only prohibits such appointments as special privileges when county legislators participate in deciding their own appointment.
• AGO 2010 No. 3 defines “special privilege” under RCW 42.23.070(1) as permission to do something otherwise prohibited, and “special exemption” as relief from doing something otherwise required.
• In re Recall of Feetham (2003) addressed penalties that municipal officers can face for violating RCW 42.23.070(1). The court held that a petition alleging prima facie violations RCW 42.23.070(1) can support an elected official’s recall from office. The court found prima facie violations of RCW 42.23.070(1) where a town mayor directed the building inspector to overlook building code violations, and took the permit file regarding for their own property from town hall (and then directed town employees to not report it missing).
• Hubbard v. Spokane County (2002) established that “special privileges” can include a municipal officer’s unlawful official decisions that benefit others. The case involved a county building department director’s decision to administratively issue a building permit. The director fired a county planner for pointing out the decision could violate state law and the county zoning code. The planner sued for wrongful termination, arguing that in making an unlawful permit decision, the director used his position to give special privileges to the permit applicants. The county argued that permit issuance is merely a planning decision that gives no "special privileges" even though it might benefit a permit applicant. The Washington Supreme Court disagreed, holding that although planning decisions often “favor one party over another,” decisions favoring parties though zoning code violations are special privileges because the favored party “could not have received the benefit without a violation of the law.”

Using or Disclosing Confidential Information in Violation of RCW 42.23.070(4)

• AGO 2017 No. 5 notes that municipal officers violate RCW 42.23.070(4) either by disclosing “confidential information” or by otherwise using “confidential information” for personal gain without disclosing it. For purposes of RCW 42.23.070(4), “confidential information” means: “(a) specific information, rather than generalized knowledge, that is not available to the general public on request or (b) Information made confidential by law.”