Conflict of Interest: Richard Katz, L.A. County’s Local Voice on the Rail Authority Board, Holds Incompatible Offices (*updated)

Update below.

Our local voice on the California High Speed Rail Authority board, Richard Katz, has a special form of conflict of interest called “incompatible offices.” This form of conflict of interest occurs when a public official holds two or more offices that will potentially conflict. As a general rule, holding incompatible offices is prohibited by California Government Code Section 1099.[1]

Mr. Katz is a board member for three public agencies: (a) Los Angeles County Metropolitan Transportation Authority (“Metro”),[2] (b) Southern California Regional Rail Authority (“Metrolink”),[3] and (c) California High Speed Rail Authority (“Rail Authority”). As discussed below, Mr. Katz’s seat on the Rail Authority board conflicts with his seats on Metro and Metrolink.

In April 2010, the California Legislative Counsel’s Office sent a letter to the State Senate concluding that Mr. Katz and another member of the Rail Authority board, Kurt Pringle, hold incompatible offices. (PDF)(Google Docs)The Legislative Counsel is a public agency that drafts legislative proposals, prepares legal opinions, and provides other legal services to the Legislature. The letter was solicited by members of the California Legislature.

As a result, in June 2010, California State Senator Alan Lowenthal, a Democrat from Long Beach, asked the California Attorney General to produce an opinion determining whether Mr. Katz holds incompatible offices. The issue made it back into the press several months later when Californians Advocating Responsible Rail Design (“CARRD”), a watchdog group in Palo Alto issued a press release in October 2010 and sent a letter to Attorney General (now governor-elect) Jerry Brown highlighting conflicts of interest by Mr. Katz and Mr. Pringle.[4] CARRD’s letter demanded that the Attorney General file a special lawsuit, called quo warranto, against both men for the conflicts of interest.[5]

The Attorney General’s office recently confirmed it will draft an opinion, although it has not indicated when the opinion will be released or if it will ask a court to remove Mr. Katz from office.

In 2005, Mr. Katz was appointed to a seat on the Metro board by the mayor of Los Angeles. Metro is responsible for regional transportation planning for Los Angeles County, sets transportation priorities, funds many of the transportation projects in the county, and operates a large bus fleet and light rail system. As a result, Metro is highly involved in the freeway corridors through the county. It helps the California Department of Transportation (Caltrans) set priorities and pay for modifications and improvements to the freeways.

In addition, Metro is a partner in Metrolink with four other county transportation planning agencies in Southern California. Metrolink is a joint powers authority specifically chartered to operate a regional commuter rail system. Metro either owns or has contracted for all rights of way and trackage rights used by Metrolink through the county. Metrolink itself does not hold any rights to lay or use railway tracks through the county.

Due to his position on the Metro board, Mr. Katz is a board member for Metrolink.

In 2009, Mr. Katz was appointed to a seat on the Rail Authority board by Governor Schwarzenegger. The Rail Authority is a state agency in the process of planning and building a high speed rail network to link major population and job centers in California including San Francisco, Los Angeles, and San Diego. More than 125 miles of high speed tracks are planned for Los Angeles County.

The Rail Authority is still deciding on routes for its high speed rail network through Los Angeles County. A majority of the routes under consideration utilize rights of way currently used by Metrolink or the median of freeways through the county. For example, the Rail Authority has proposed using the Metrolink rights of way between Los Angeles Union Station to Palmdale in the north, El Monte in the east, and Anaheim in the south. In addition, Los Angeles Union Station serves as the hub of the Metrolink rail network in Los Angeles County and will serve a similar role in the high speed rail network. The Rail Authority has also proposed using significant portions of the I-10 and SR-60 freeways to extend the high speed rail network from Los Angeles Union Station to San Diego.

The Rail Authority, Metro, and Metrolink have been engaged in negotiations for more than two years with regard to the Rail Authority’s use of the Metrolink rights of way.

Mr Katz has refused to resign. [6]

Conflict of Interest – Incompatible Offices

“A public office is a public trust created in the interest and for the benefit of the people. Public officers are obligated … to discharge their responsibilities with integrity and fidelity….” [7] In other words, a public official is a trustee of the public trust and must put his or her obligations to the trust above all others, including their own personal interests. A conflict of interest occurs when the personal, financial, or other interest belonging to the public official competes with the interests of the public.

In this case, the conflict of interest alleged is called “incompatible offices.” The doctrine restricts the ability of public officials to hold two different public offices simultaneously if the offices have overlapping and conflicting public duties. When a government official serves competing interests one or the other will be compromised. Thus, promoting competing goals and interests always results in a conflict of interest, undermining that official’s integrity and the public trust.[8]

The doctrine of incompatible offices is an old common law legal doctrine created by judges based on public policy grounds.[9] It was codified by the state legislature in 2005 as California Government Code Section 1099.[10] As such, courts likely will look to court cases interpreting incompatible offices if there is any ambiguity in Section 1099. It will also look favorably upon Attorney General Opinion letters relating to incompatible offices.[11]

Government Code Section 1099

More specifically, Section 1099(a) prohibits “[a] public officer, including, but not limited to, an appointed or elected member of a governmental board, commission, committee, or other body…” from simultaneously holding “two public offices that are incompatible.” [12]

Mr. Katz clearly holds multiple public offices. He is an appointed member of three governmental boards: (1) California High Speed Rail Authority; (2) Los Angeles County Metropolitan Transportation Authority (Metro); and (3) Southern California Regional Rail Authority (Metrolink).[13]

Section 1099 further states that “[o]ffices are incompatible when … [b]ased on the powers and jurisdiction of the offices, there is a possibility of a significant clash of duties or loyalties between the offices.”

There are significant and direct conflicts between the duties and loyalties Mr. Katz owes to the Rail Authority and our local county transportation agencies (Metro and Metrolink) and the communities they serve.

Here are several examples of conflicts that already exist between the Rail Authority and both Metro and Metrolink.

  1. Metrolink right of way [14]
    • Metro partners with four other counties in Metrolink. Many of the alternative routes proposed through L.A. county shares or utilizes the Metrolink rights of way. [15]
    • The Rail Authority has proposed using the Metrolink right of way down the center of the I-10 freeway as one alternative for its L.A. to San Diego segment of the high speed rail project.
      • Metro owns that particular railway right of way down the center of the I-10 freeway between L.A. and El Monte. That right of way is currently used by Metrolink for its San Bernardino line.
    • The Rail Authority also has proposed sharing a right of way with Metrolink between Palmdale and L.A. and from L.A. to Anaheim.
    • Conflict:
      • The Rail Authority needs to negotiate many different items with Metro regarding the right of way, including the value of the right of way, how Metro will be compensated, how the Rail Authority may use the right of way, how the Rail Authority will accommodate Metrolink, acceptable impacts to the community, and what mitigation is required. [16]
      • Metrolink also is involved in the negotiations. Mr. Katz also sits on the Metrolink board.
  2. 60 Freeway [17]
    • The Rail Authority has proposed using the 60 freeway median as a second alternative for its L.A. to San Diego segment of the high speed rail project.
    • Metro has proposed using the same route for its Gold Line extension from East L.A. Metro is currently in the Environmental Impact Report (EIR) phase of that Gold Line extension and is considering only one other route. It expects to complete the draft EIR in August 2011 and issue a final EIR by the end of 2011.
    • Conflict:
      • The Rail Authority and Metro have both proposed using the same route along the 60 freeway.
      • Metro is expected to complete the Gold Line Extension by 2017, several years before the Rail Authority would begin construction of its project.[18 ]
        • If Metro uses the 60 freeway route, it is less likely to be a feasible route for the Rail Authority. The Rail Authority may need to build above the Gold Line or would be squeezed out of the route altogether.
      • The agencies will need to negotiate how the Rail Authority will use the right of way and acceptable impacts on the Gold Line.
  3. Impacts to local communities
    • The high speed rail project will impact communities it traverses.
    • Metro is responsible for regional transportation planning for L.A. County. It sets transportation priorities, funding many of the transportation projects in the county, and operates a large bus fleets and the light rail system.
      • As a result, Metro is highly involved in the freeway corridors through the county. It helps Caltrans set priorities and pay for modifications and improvements to the freeways. For example, Metro is is partially funding the current I-10 construction through Alhambra and the rest of the San Gabriel Valley. Also, Metro runs its buses on the carpool lanes, called the busway, and will operate what it calls the high occupancy toll (HOT) lanes Caltrans is building.
    • Conflict:
      • Any impacts to the freeways, highways, or major city streets will create conflicts between the Rail Authority and the Metro.
      • No matter the route chosen through the county, Metro has a duty to look out for the interests of the local communities. Meanwhile, the Rail Authority must look out for the interest of the State of California as a whole. The two interests are currently in conflict because building the system will bring positive economic and environmental quality impacts to the state as a whole while negatively burdening local communities like Alhambra with [fill in the blank].
      • In addition, Alhambra and other cities would not be so hopping mad or fighting the Rail Authority if a conflict did not exist between local and statewide interests.

The Legislative Counsel’s Office also adds that there are conflicts with regard to funding and questions about who bears the burden. Its letter states:

“Transactions and dealings between the [the Rail Authority] and Metro will likely be required to bring the high-speed rail project into Los Angeles County, and those activities will be subject to approval by both members of the [Rail Authority] and the board of Metro. As an example, the [Rail Authority] might prefer Metro to fund certain costs associated with the high-speed rail project along Metro-owned rights-of-way, while Metro might view the high-speed rail project as a potential source of funding for costs Metro would otherwise incur for its own rail or transit operations. This creates the possibility of a significant clash of duties or loyalties for a board member of Metro simultaneously serving as a member of the [Rail Authority].”

Thus, for the reasons given above, Mr. Katz is guilty of holding incompatible offices under California Government Code Section 1099.

Common Law Doctrine of Incompatible Offices

Mr. Katz may argue that Section 1099 does not apply to him because Government Code 1001 defines civil executive officer and fails to list the Rail Authority board despite providing a laundry list of positions from “governor” to “five directors for the insane asylum at Stockton.”[20] For that reason, it is worth considering whether Mr. Katz holds incompatible offices under the common law, which would still apply.[21]

Under the common law, two elements must be present for a conflict to qualify as incompatible offices: (1) the person must hold two public offices simultaneously; and (2) a potential conflict or overlap must exist in the functions, responsibilities, or duties of the two offices.

1. Public Offices

Mr. Katz holds multiple public offices at the same time. There should be little argument that board positions for the Rail Authority and Metro qualifies as public office under the common law. Courts in California have found a number of political and non-political positions to qualify as public offices, including deputy district attorney,[22] city attorney,[23] judge, [24] parole board member,[25] and board of medical examiners member [26]. In the same way, the board seats for the Rail Authority and Metro will be found to be public offices.

The California Supreme Court has said that a public office requires (1) a permanent office that is “not transient, occasional or incidental” with an orderly succession of office holders, and (2) delegated legislative, executive or judicial powers to carry on the sovereign functions of government.” [27] It has also said that a public office exists when“ the legislature creates the position, prescribes the duties, and fixes the compensation” and when the duties of that position “pertain to the public” and are permanent.[28]

The California Legislature clearly intended that the Rail Authority board positions be public offices when it passed the High-Speed Rail Act in 1996. That Act and successive laws that modified the Act are together called enabling statutes. An enabling statute gives an agency the power and authority to act – in other words, it enables the agency to operate.

The enabling statutes provide permanence to the Rail Authority board positions. It (a) established a nine member board;[29] (b) set term limits for the board positions as well as rules for succession;[30] (c) set compensation amounts for board members;[31] and (d) provides no set dates on which the agency will terminate so the board positions are thus permanent. In addition, the enabling statutes (a) assign duties and obligations to the Rail Authority; and (e) delegate powers to the Rail Authority, including power to enter into contracts on behalf of the state, accept money, select routes, issue debt, and use eminent domain to acquire property.[32]

Metro was likewise created by the California Legislature and its board positions qualify as public offices. The enabling statute identifies: (a) the number of board seats; (b) term limits for board positions; (c) rules for termination of board seats and succession; and (d) has no set dates on which the agency terminates so the board positions are thus permanent.[33] In addition, the enabling statute provides Metro with the power and authority to act. It has: (a) the power to enter contracts, accept money, use eminent domain to acquire property, and levy special assessments on real property; and (b) assigns duties and obligations to the agency and its board. For those reasons, board positions with Metro will be considered a public office.

Mr. Katz holds multiple public offices at the same time because he currently holds board positions with the Rail Authority and Metro.[34]

2. Conflict or Overlap in the Functions, Responsibilities, or Duties

Mr. Katz cannot execute his duties to the Rail Authority or Metro without conflict. As the California Supreme Court has said, “[t]wo offices are … incompatible when the holder cannot in every instance discharge the duties of each.”[35] As discussed above, actual conflicts exists between the Rail Authority and Metro. There is a distinct possibility that the duties and loyalties Mr. Katz owes to the Rail Authority and Metro will clash and he will not be able to properly serve one without violating his duty to the other.

Thus, because both required elements are present, Mr. Katz is guilty of the common law doctrine of incompatible offices.

Penalties

Mr. Katz is in violation of both, Government Code Section 1099 and the common law doctrine of incompatible offices. This was true even when the conflicts had not yet materialized.

Unfortunately, Section 1099 does not have any real teeth. Nor did the common law. There is no clear or mandatory punishment and no real ability to challenge past decisions or votes made by the person with the conflict.[36] If found guilty under Section 1099, Mr. Katz may be required to pay the costs to bring the suit and the court has discretion to levy a fine up to $5,000. [37]

Generally, the person holding incompatible offices will be treated as if they had resigned one of the offices. According to the California Supreme Court “acceptance by a public officer of another office which is incompatible with the first … vacates the first office; that is, the mere acceptance of the second incompatible office per se terminates the first office as effectively as a resignation.” [38]

With that in mind, Mr. Katz will be found to have automatically resigned his board seat on Metro. According to CARRD, Mr. Katz took his Metro board seat in 2005 and board seat with the Rail Authority in 2009. [39]

Bottom line:

  • Mr. Katz is guilty of holding incompatible offices under both California Government Code Section 1099 and the common law doctrine. In other words, Mr. Katz is not looking out for our local interests.
  • Mr. Katz is fully aware that he holds incompatible offices and should do the right thing and officially resign one of the incompatible offices. At the very least, Mr. Katz needs to recuse himself from all discussions and decisions with Metro that would impact the high speed rail project, and vice versa recuse himself from all discussions and decisions with the Rail Authority that impact Los Angeles County or Metrolink.
  • The Attorney General should promptly finish its opinion and initiate quo warranto proceedings against Mr. Katz.
  • By law, Mr. Katz resigned his seat on the Metro board when he accepted a board seat with the California High Speed Rail Authority.
  • We need to ask the legislature to add teeth to Government Code, Section 1099.
    • Public officials who knowingly hold incompatible offices should receive a mandatory fine if they refuse to resign or fail to recuse themselves from relevant discussions and votes while waiting for an opinion from the Attorney General.
    • The person who held incompatible offices should be restricted from holding public office or executive positions in government agencies for 2-5 years if that person fails to promptly resign or follow other procedures set by the Attorney General or Political Fair Practices Commission.
    • Agencies should be punished for allowing public officials to take part in discussions or votes when that agency reasonably knows its public official holds incompatible offices. For example, the Rail Authority could be required to treat Mr. Katz as an outsider and apply lobbyist rules once the Rail Authority became aware of his conflict of interest. Decisions could then be challenged in court because the agency violated rules regarding lobbyist conversations.

Update: Mr. Katz did the right thing and submitted his resignation, effective Dec. 1, 2010. See: Rich Connell, Richard Katz resigns from California’s high-speed train board, Los Angeles Times (November 16, 2010)

Footnotes:


[1]  California Government Code, Sections 1090-1099; See also Ethics Orientation for State Officials, California Attorney General’s Office,


[2] Bio for Richard Katz, California High Speed Rail Authority web site; See also Board members and Executive staff, Metro web site


[3] Metrolink web site See also About Metrolink; Government Code Section 14072


[4] Mr. Pringle currently holds the incompatible offices of: (1) Chairperson, California High Speed Rail Authority and (2) Mayor, City of Anaheim. Due to his position as mayor of Anaheim, Mr. Pringle is a board member of the Orange County Transportation Authority (OCTA), which is a second incompatible office. See Bio for Kurt Pringle, California High Speed Rail Authority web site; Bio for Mayor Kurt Pringle, City of Anaheim web site; Bio for Kurt Pringle, OCTA web site.


[5] http://www.calhsr.com/resources/incompatible-offices-conflict-of-interest/; See also Dan Weikel, Complaints allege two on high speed rail board have conflicts, L.A. Times (October 1, 2010)


[6] Dan Weikel, Complaints allege two on high speed rail board have conflicts, L.A. Times (October 1, 2010)


[7] Terry v. Bender, 143 Cal.App.2d 198, 206 (Cal. Ct. App. 1956) (emphasis added).


[8] See People Ex Rel. Chapman v. Rapsey, 16 Cal. 2d 636, 640 (Cal 1940) (“The individual who occupies such an office is a public officer. He is a public agent and as such acts only on behalf of his principal, the public, whose sanction is generally considered as necessary to give to acts performed by the officer the authority and power of a public act or law. An “incumbent” is one who is in the present possession of an office. The terms “officer” and “office” are paronymous, and in their original and proper sense are to be regarded as strictly correlative. They may be used in a sense other than the proper one, but the presumption is, unless the contrary appears, that the proper sense was intended.”)


[9] Common law simply means it is judge-created law that is not found in statutes. See http://en.wikipedia.org/wiki/Common_law


[10] Section 1099 (f) “This section codifies the common law rule prohibiting an individual from holding incompatible public offices.” California Government Code, Sections 1090-1099.


[11] Attorney General opinions are persuasive. Courts have referred to the Attorney General’s opinions in several ways, including: (1) “Although an official interpretation of a statute by the Attorney General is not controlling, it is entitled to great respect.” Thorning v. Hollister School Dist. 11 Cal.App.4th 1598, 1604 (Cal. Ct. App. 1992) (emphasis added) (2) “Opinions of the Attorney General, while not binding, are entitled to great weight.… In the absence of controlling authority, these opinions are persuasive since the legislature is presumed to be cognizant of that construction of the statute.” Napa Valley Educators’ Assn. v. Napa Valley Unified School Dist 194 Cal.App.3rd 243, 251 (Cal. Ct. App. 1987) (emphasis added).


[12] California Government Code, Sections 1090-1099.


[13] This post is about Mr. Katz’s conflict of interest; however I would like to note that Mr. Pringle also holds multiple public offices as he is an appointed member of two governmental boards: (1) California High Speed Rail Authority; and (2) Orange County Transportation Authority (OCTA). He is also the elected mayor of Anaheim, a governmental body. The analysis comes out the same with regard to Mr. Pringle. Just switch out Metro and Metrolink with Anaheim and OCTA.


[14] See Why the I-10 Corridor is a Possible Route.


[15] Metrolink web site, About Metrolink.


[16] My understanding is that preliminary negotiations between staff members of the agencies are currently under way, but that negotiations do not involve board members, yet. The negotiations involve Metro, Metrolink, and Caltrans (although not necessarily all together at the same time).


[17] See Why the I-10 Corridor is a Possible Route.


[18] MTA Position on “30/10 Initiative” Executive Managment and Audit Committee, April 15, 2010 , page 8 (approving recommendation)  (PDF) (Google Docs)


[19] Rail Authority web site: LA to Anaheim segment


[20] California Government Code 1000-1001 That said, the list is intended to differentiate between civil and military positions.


[21] After all, Section 1099 (f) states that the statute “codifies the common law rule prohibiting an individual from holding incompatible public offices.” See California Government Code, Sections 1090-1099. Even if a board position with the Rail Authority would not qualify as a public office under Section 1001, a court will have the ability to revert to the common law.


[22] People Ex Rel. Chapman v. Rapsey, 16 Cal. 2d 636 (Cal 1940)


[23] People Ex Rel. Chapman v. Rapsey, 16 Cal. 2d 636 (Cal 1940)


[24] The People ex rel. Deputy Sheriffs’ Association of Santa Clara County v. County of Santa Clara, 49 Cal. App. 4th 1471 (Cal. Ct. App. 1996).


[25] Howard Jarvis Taxpayers’ Association v. Fresno Metropolitan Projects Authority, 40 Cal. App. 4th 1359 (Cal. Ct. App. 1995) (citing Ex parte Gerino, 143 Cal. 412 (Cal. 1904)).


[27] Moore v Panish, 32 Cal.3d 535 (Cal. 1982).


[28] People Ex Rel. Chapman v. Rapsey, 16 Cal. 2d 636, 639 (Cal. 1940)


[29] California Public Utilities Code, Section 185020(b).


[30] California Public Utilities Code, Section 185020(c)-(d)


[31] California Public Utilities Code, Section 185022 (“(a) Each member of the authority shall receive compensation of one hundred dollars ($100) for each day that the member is attending to the business of the authority, but shall not receive more than five hundred dollars ($500) in any calendar month.”).


[32] California Public Utilities Code, Sections 185034 – 185036.


[33] Metro’s enabling statute is Public Utilities Code Section 130051. See also Public Utilities Code Section 33000 allowing the agency that became Metro to levy special assessments to property surrounding light rail and other transit stations.


[34] Similarly, Mr. Pringle simultaneously holds multiple public offices because he currently holds board positions with the Rail Authority and OCTA, and is Mayor of Anaheim.


[35] People Ex Rel. Chapman v. Rapsey, 16 Cal. 2d 636, 642 (Cal 1940)


[36] Section 1099 is enforceable by California Code of Civil Procedure, Section 803.


[37] California Code of Civil Procedure, Section 809


[38] People Ex Rel. Chapman v. Rapsey, 16 Cal. 2d 636, 639 (Cal. 1940)


[39] See: http://www.calhsr.com/resources/incompatible-offices-conflict-of-interest/ I have not done any independent research. I am not sure how long Mr. Katz’s term lasts or whether Mayor Villaraigosa reappointed him to Metro.

Text of California Government Code, Section 1099

(a) A public officer, including, but not limited to, an
appointed or elected member of a governmental board, commission,
committee, or other body, shall not simultaneously hold two public
offices that are incompatible. Offices are incompatible when any of
the following circumstances are present, unless simultaneous holding
of the particular offices is compelled or expressly authorized by
law:
(1) Either of the offices may audit, overrule, remove members of,
dismiss employees of, or exercise supervisory powers over the other
office or body.
(2) Based on the powers and jurisdiction of the offices, there is
a possibility of a significant clash of duties or loyalties between
the offices.
(3) Public policy considerations make it improper for one person
to hold both offices.
(b) When two public offices are incompatible, a public officer
shall be deemed to have forfeited the first office upon acceding to
the second. This provision is enforceable pursuant to Section 803 of
the Code of Civil Procedure.
(c) This section does not apply to a position of employment,
including a civil service position.
(d) This section shall not apply to a governmental body that has
only advisory powers.
(e)
For purposes of paragraph (1) of subdivision (a), a member of
a multimember body holds an office that may audit, overrule, remove
members of, dismiss employees of, or exercise supervisory powers over
another office when the body has any of these powers over the other
office or over a multimember body that includes that other office.
(f) This section codifies the common law rule prohibiting an
individual from holding incompatible public offices.

Mr. Katz is a board member for three public agencies: (a) Los Angeles County Metropolitan Transportation Authority (Metro), (b) Southern California Regional Rail Authority (Metrolink), and (c) California High Speed Rail Authority (CHSRA).

Be Sociable, Share!

Leave a Reply

Your email address will not be published. Required fields are marked *