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Conflict of Interest Issues Related to Mayor' s Employment with the Minnesota Industrial Sand Council

Conflict of Interest Issues Related to Mayor' s Employment with the Minnesota Industrial Sand Council

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Published by Sally Jo Sorensen
The purpose of this memorandum is to provide legal advice on the question of
whether Red Wing Mayor Dennis Egan' s employment as the Executive Director of the

Minnesota Industrial Sand Council ( "Sand Council ") creates a conflict of interest in

violation of Minnesota law, the Red Wing City Charter, or any other applicable City

Mayor Egan' s work with the Sand Council appears to involve primarily lobbying

activities. It appears his lobbying activities will primarily address matters presented to

the Minnesota legislature. The Sand Council is a consortium of aggregate and trucking
companies with interest in the silica sand industry. At this time, we do not have facts

related to how Mayor Egan will be compensated for his work with the Sand Council.

Ultimately, it may be necessary to obtain a copy of his employment agreement.

Minimally, we need to sit down with him and discuss his duties and activities with the

Sand Council in detail.

While the City Council is actively discussing ongoing issues involving truck and
barge traffic related to silica sand mining operations, there are no frac sand facility

applications currently pending before the City. Late last fall, the City Council took action
to address zoning issues related to silica sand mining and adopted a comprehensive Frac

Ordinance.

As discussed in detail below, there does not appear to be a conflict of interest at

the present time. Instead, the issue is primarily a public relations matter at this point.
The purpose of this memorandum is to provide legal advice on the question of
whether Red Wing Mayor Dennis Egan' s employment as the Executive Director of the

Minnesota Industrial Sand Council ( "Sand Council ") creates a conflict of interest in

violation of Minnesota law, the Red Wing City Charter, or any other applicable City

Mayor Egan' s work with the Sand Council appears to involve primarily lobbying

activities. It appears his lobbying activities will primarily address matters presented to

the Minnesota legislature. The Sand Council is a consortium of aggregate and trucking
companies with interest in the silica sand industry. At this time, we do not have facts

related to how Mayor Egan will be compensated for his work with the Sand Council.

Ultimately, it may be necessary to obtain a copy of his employment agreement.

Minimally, we need to sit down with him and discuss his duties and activities with the

Sand Council in detail.

While the City Council is actively discussing ongoing issues involving truck and
barge traffic related to silica sand mining operations, there are no frac sand facility

applications currently pending before the City. Late last fall, the City Council took action
to address zoning issues related to silica sand mining and adopted a comprehensive Frac

Ordinance.

As discussed in detail below, there does not appear to be a conflict of interest at

the present time. Instead, the issue is primarily a public relations matter at this point.

More info:

Published by: Sally Jo Sorensen on Feb 13, 2013
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02/14/2013

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CONFIDENTIAL
ATTORNEY -
CLIENT
COMMUNICATION
MEMORANDUM
To:
Members
of
the
Red
Wing
City
Council
Kay
Kuhlmann,
Council
Administrator
From:
Jay
T.
Squires
John
P.
Edison
Re:
Conflict
of
Interest
Issues
Related
to
Mayor'
s
Employment
with
the
Minnesota
Industrial
Sand
Council
Our
File
No.
4001(
1) -
0712
Date:
February
8,
2013
INTRODUCTION
The
purpose
of
thismemorandum
is
to
provide
legal
adviceonthequestion
of
whether
Red
WingMayor
Dennis
Egan'
s
employment
as
the
ExecutiveDirector
of
the
MinnesotaIndustrial
Sand
Council ( "
Sand
Council ")
creates
a
conflict
of
interest
in
violation
of
Minnesota
law,
the
Red
Wing
City
Charter,
or
any
otherapplicable
City
policy.
Mayor
Egan'
s
work
with
the
Sand
Council
appears
to
involve
primarily
lobbying
activities.
It
appears
his
lobbying
activities
will
primarily
address
matterspresented
to
the
Minnesotalegislature.
The
Sand
Council
is
a
consortium
of
aggregate
and
trucking
companies
with
interest
in
the
silica
sand
industry.
At
thistime,
we
do
not
have
facts
related
to
how
Mayor
Egan
will
be
compensated
for
his
work
with
the
Sand
Council.
Ultimately,
it
may
be
necessary
to
obtain
a
copy
of
his
employment
agreement.
Minimally,
we
needto
sit
down
with
him
and
discuss
his
duties
and
activities
with
the
Sand
Councilin
detail.
While
the
City
Council
is
actively
discussing
ongoing
issues
involving
truck
and
barge
traffic
related
tosilica
sand
mining
operations, there
are
no
frac
sand
facility
applications
currently
pending
beforethe
City.
Latelast
fall,
the
City
Council
took
action
to
address
zoning
issues
related
to
silica
sand
mining
and
adopted
a
comprehensiveFrac
Ordinance.
As
discussed
in
detailbelow,
there
does
not
appear
to
be
a
conflict
of
interest
at
thepresent
time.
Instead,
the
issue
is
primarily
a
public
relationsmatter
at
this
point.
 
CONFIDENTIAL
ATTORNEY-
CLIENTCOMMUNICATION
ANALYSIS
I.
Statutory
Conflictof
Interest
Analysis.
Under
the
circumstances,
it
does
not
appear
the
Mayor'
s
employment
with
the
Sand
Council
would
create
a
statutory
conflict
of
interest.
The
applicablestatutory
conflict
of
interest
provisions
are
outlined
in
Section
471.
87
of
the
Minnesota
Statutes,
whchprovdes:
Except
as
authorized
in
section
471.88, a
public
officer
who
is
authorizedto
take
part
in
anymanner
in
making
any
sale,
lease,
or
contract
in
official
capacityshall
not
voluntarily
have
a
personal
financial
interest
in
that
sale,
lease,
or
contract
orpersonallybenefit
financially
therefrom. Every
public
officer
who
violates
this
provision
is
guilty
of
a
gross
misdemeanor.
Minn.
Stat. §
471.
87 (
emphasis
added).
As
noted
in
the
underlined
language,
a
key
inquiry
is
whether
a
public
officer
would
derive
a
personal
financial
interest
or
financial
benefit
from
a
proposed
sale,
lease,
or
contract.
Basedonthe
information
we
have
at
thistime,
it
does
not
appear
Mayor
Egan
would
derive
the
type
of
personal
financial
benefit
prohibitedby
statute
through
acting
as
Mayor
while
working
for
theSand
Council.
There
are
a
number
of
Attorney
General
opinions
on
this
point.
For
example,
the
Attorney
General
determinedthat
there
was
not
a
statutory
conflict
of
interest
in
a
situation
where
a
city
entered
into
a
contract
with
an
architectural
firm
thatemployed
a
member
of
the
city
council
because
the
council
member
was
paid
on
a
salaried
basisand
did
not
stand
to
benefit
financially
from
his
firm'
s
contract
with
the
city.
Op.
Atty.
Gen.
90 -
E -
5 (
Nov.
13,
1969).
In
another
opinion,
the
Attorney
General
opinedthat
there
wasno
statutory
conflict
of
interest
in
a
situation
where
a
city
purchased
gasoline,
oil,
grease
and
anti -
freeze
from
a
tilling
stationthat
purchased
products
from
the
mayor
of
the
citywho
acted
as
an
agent
for
an
oil
company. Op.
Atty.
Gen.
90e -
5
March
6,
1959).
The
basis
for
this
opinion
was
that
the
mayor'
s
dealings
with
the
filling
stationwere
separate
and
distinct
from
the
city'
s
dealings
with
the
filling
station.
Id.;
see
also
Op.
Atty.
Gen.
90B (
Jan.
23,
1956) (
indicating
that
the
government
entity
must
be
a
party
to
a
transaction
in
order
for
a
statutory
conflict
of
interestto
exist).
In
addition,
by
its
terms,
this
statute
only
applies
in
situations
when
there
is
a
sale, lease,
orcontract"
at
issue.
According
to
the
Attorney
General,
Section
471.
87
does
not
operate
to
bar
a
city
council
member
from
voting
on
the
enactment
or
amendment
of
a
zoning
ordinance
thataffects
the
council
member'
s
property.
Op.
Atty.
Gen.
59a -32 (Sept.
11,
1978).
In
issuingthat
opinion,
the
Attorney
General
also
noted "
to
hold
a
city
council
is
powerless
to
act
whenever
an
ordinance
will
affect
the
individual
interests
of
any
member
would
render
the
policepower
wholly
ineffectual
in
2
 
CONFIDENTIAL
ATTORNEY-
CLIENT
COMMUNICATION
many
situations."
Id.
At
this
point,
it
appears
unlikely
that
the
Minnesota
Industrial
Sand
Council
would
be
involved
in
any "
sale,
lease
or
contract"
with
the
City.
There
arealso
conflict
of
interest
provisions
contained
in
Minnesota'
s
campaign
financeand
public
disclosure
statutes.
For
example, certain
publicofficials
must
comply
with
specificreporting
requirements
if
their
official
duties
would
requirethem
to
take
an
action
or
make
a
decision
that
would
substantially
affect
the
official'
s
financial
interests -
or
those
of
an
associated
business, unless "the
effect
onthe
official
is
no
greaterthan
on
othermembers
of
the
official'
s
business
classification;
profession, oroccupation."
Minn.
Stat. §
10A.
07,subd.
1.
Under
this
statute,
a "
financial
interest" means "
any
ownership
or
controlin
an
asset
which
has
the
potential
toproduce
a
monetary
return."
Minn.
R.
4515.
0100,
subp.
5.
Inaddition,
lobbyists
are
generally
prohibitedfromgiving
gifts
to
officials
and
officials
are
likewise
generally
prohibited
from
accepting
gifts
from
lobbyists.
Minn.
Stat. §10A.
071,
subd.
2.
Upon
review
of
the
definitions
used
in
Chapter10A,
however,
the
provisions
of
Sections
IOA.
07
and
10A.
071
do
not
appear
toapplyin
this
case.
The
conflict
of
interest
provisions
of
Sectionl
0A.
07
apply
to
a "
public
official"
and
a "
local
official
elected
to
or
appointed
by
a
metropolitan
governmental
unit."
Minn.
Stat. §
10A.
07, subd.
1.
The
term "
public
official"
is
defined
in
a
waythat
would
not
include
the
Mayor
of
Red
Wing.
Minn.
Stat. §
10A.
01,
subd.
35.
In
addition,
the
City
of
Red
Wing
would
not
fall
within
the
definition
of
a "
metropolitan
governmental
unit."
Minn.
Stat. §
10A.
01,
subd.
24.
Similarly,
the
Mayor
of
Red
Wing
is
not
an "
official"
for
the
purposes
of
interpreting
Section
10A.
07because
the
statute
defines "
official"
as
a "
public
official [
as
defined
in
Section
10A.
01,
subd.
35],
an
employee
of
the
legislature,
a
judge,
or
a
local
official
of
a
metropolitangovernmental
unit."
Minn.
Stat. §
10A.
071, subd.
l (
c).
Basedonthe
foregoing,
it
does
not
appear
that
Mayor
Egan
has
a
conflict
of
interest
under
Section
471.
87
or
Chapter
l0A
simply
due
to
his
role
as
Mayor
and
his
position
with
the
Sand
Council.
II.
Common
Law
Conflict
of
Interest
Analysis.
In
additionto
therequirements
of
Section
471.
87;
Minnesota
courts
havedeveloped
a
separate
common
law
conflict
of
interestanalysis
that
is
broaderthanthe
statutory
analysis.
The
critical
distinction
betweenthe
two
is
that
a
statutory
conflict
of
interest
is
not
cured
when
theinterested
public
official
abstains
fromvoting,
while
a
common
law
conflict
of
interest
is.
See,
e.
g.,
Op.
Atty.
Gen. (
Dec.
5,
2002);
Op.
Atty.
Gen.
90 -
E -
5 (
Nov.
13,
1969).
A
common
law
conflict
of
interest
exists
when
a
public
official
has
any "
direct
interest"
in
theoutcome
of
a
matterbefore
the
governing
body.
See, e.
g.,
Lenz
v.
CoonCreek
Watershed
Dist.,
153
N.W.
2d
209,
219 (
Minn.
1967);
E.T.
O.
v.
Town
of
Marion,

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