Schram, 051517 NEAGO, AGO 17-3

Docket Nº:AGO 17-3
Case Date:May 15, 2017
Tim Schram, Chairman
AGO 17-3
No. 17-003
Nebraska Attorney General Opinions
State of Nebraska office of the Attorney General
May 15 2017
         SUBJECT: (1) Executive Director's Part-Time Work With Telecommunications Consulting Firm As Violation Of The Oath Required By Neb. Rev. Stat. § 75-106 (2009); And (2) Validity Of Executive Director's Employment Contract Permitting Termination For "Just Cause".          REQUESTED BY: Tim Schram, Chairman Nebraska Public Service Commission          WRITTEN BY: David Bydalek, Deputy Attorney General, Douglas J. Peterson, Attorney General          INTRODUCTION          The Nebraska Public Service Commission ["NPSC" or "Commission"] has requested our opinion on two questions related to the Commission's Executive Director. The first question is whether the Executive Director's outside employment with a national consulting firm that provides economic, financial, and policy analysis for regulated industries, including telecommunications companies, violates the Executive Director's oath of office required by Neb. Rev. Stat. §§ 75-102 and 75-106 (2009). The second question is whether the Executive Director's employment contract, which permits termination for "just cause", is valid and effective, and precludes termination without cause.          For the reasons stated below, we conclude that: (1) The Executive Director's outside employment does not violate the oath required by §§ 75-102 and 75-106, as it does not result in the Executive Director being "indirectly interested in any common carrier" subject to the Commission's jurisdiction; and (2) The Executive Director's employment contract, which creates a five year term and provides for termination only for "just cause", is invalid and unenforceable, as the Commission lacks authority to create a term or tenure for the office of Executive Director created by § 75-106, or to alter the at-will nature of the office of Executive Director.          FACTS          Jeff Pursley commenced service as the Commission's Executive Director on July 1, 2015. On July 2, 2015, Mr. Pursley and the Chairman, on behalf of the Commission, executed a contract regarding Mr. Pursley's employment as Executive Director [the "Contract"]. The Contract establishes an initial five year term of employment (from July 1, 2015 to June 30, 2020), and includes provisions for renewal. The Contract also provides it "may be canceled or terminated for just cause by the NPSC at any time prior to its expiration." "Just cause" is determined based on a finding by a majority of the Commission that one of several enumerated factors exist regarding Mr. Pursley or his performance as Executive Director. In addition to provisions governing the term of the agreement, renewal, and termination, the Contract includes provisions governing compensation and benefits, reimbursement of certain expenses, organization of staff, disability, and the conduct of an annual performance review. The Contract also specifically states: "Mr. Pursley may undertake other professional duties and obligations which do not represent a conflict or interfere with the performance of his duties as Executive Director."          Prior to assuming his duties as Executive Director, Mr. Pursley was a Director with Parrish, Blessing & Associates ["PB&A"]. PB&A is a national consulting firm that provides economic, financial and policy analysis for regulated entities providing telecommunications, natural gas, electricity, and water services. Since commencing service as Executive Director, Mr. Pursley has maintained a part-time role with PB&A focused on federal telephone compliance work for companies outside the Commission's jurisdiction. Mr. Pursley has developed a model to automate the population of federal forms and supporting documentation for filings required by the FCC. The filings relate to "price cap" regulation, which is the manner in which larger incumbent local telephone companies interstate rates are regulated by the FCC. The interstate rates of these carriers are not subject to Commission jurisdiction. Mr. Pursley collects and imports the data for price cap filings by three carriers, none of which are subject to the jurisdiction of the Commission.1 Windstream Communications, a carrier that does engage in activity regulated by the Commission, has recently contracted with PB&A to perform price cap filings with the FCC. While the model developed by Mr. Pursley is used for these filings, Mr. Pursley has no role in performing any filings for Windstream, nor would he do so for any entity subject to the Commission's jurisdiction. PB&A has also asked Mr. Pursley to participate in development of a similar model for companies subject to federal rate of return regulation. As with the price cap model, this model would automate the population of various federal forms required by the FCC and would not apply to any services subject to the Commission's jurisdiction. While this model has not been completed, Mr. Pursley will have no involvement in use of the model or the development or review of any forms or rates for any company subject to the jurisdiction of the Commission.          Mr. Pursley's compensation from PB&A is based on his generic model work for both the current price cap model and the proposed rate of return model. His work is performed to ensure that the models are in compliance with federal requirements, and include continuing efforts to improve the efficiency of the models and compliance with new versions of software and related federal rules. Mr. Pursley's compensation is also based on direct work for Alaska Communications Systems, Puerto Rico Telephone, and U.S. Virgin Island Telephone. As noted previously, none of these companies are subject to the Commission's regulatory jurisdiction.          ANALYSIS          I. Does The Executive Director's Part-Time Employment With PB&A Constitute An Indirect Interest In A Common Carrier Which Violates The Oath Of Office Required By Neb. Rev. Stat. §§ 75-102 and 75-106?          The Executive Director is required to "take the same oath as the commissioners." Neb. Rev. Stat. § 75-106 (2009). In addition to the oath of office prescribed in the Nebraska Constitution, each Commissioner and the Executive Director "shall... swear that he or she is not directly or indirectly interested in any common carrier or jurisdictional utility, subject to the provision of...

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