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...