The specter of California’s strict but confounding conflict-of-interest law prohibiting public officials from profiting from their own agencies came up recently in regards to the Kern County Water Agency hiring its former board president as its general manager.

Was it OK, under California Government Code Section 1090 for KCWA to hire Eric Averett as its general manager though he had served as board president while the position was being discussed for nearly four months?

A reader sent SJV Water several “advice letters” from the Fair Political Practices Commission that seem to suggest it may not have been OK.

Averett resigned his board seat Oct. 8 – which was not publicly announced –  and was named as the agency’s new general manager on Oct. 23. The position comes with a $525,000 annual salary, $60,000 signing bonus, and other perks. He is set to begin his new duties Nov. 24.

The advice letters sent to SJV Water are FPPC responses to questions by attorneys on behalf of a the City of Kerman, the Antelope Valley Transit Authority and the Spalding Community Services District.

In each instance, a board member sought to resign their seat and be hired as the city manager, executive director or district manager, respectively.

And each time, the FPPC said doing so would violate 1090.

That’s because as board members, the individuals in question had the opportunity to influence or “make” the contract that they would then be seeking. Public officials are forbidden from benefitting financially from their agencies’ own contracts under 1090.

Related Story: Powerful Kern Water Agency Hires Its New Manager at Eye-Popping Salary

This Is a Different Situation: KCWA Attorney

KCWA attorney James Ciampa, however, said the circumstances laid out in those advice letters are different from Averett’s.

“The distinction here is that former Director Averett did not at all participate in any aspect of the General Manager contract, including any preliminary discussions, until after he had resigned from the Board,” on Oct. 8, Ciampa wrote in an email.

It’s unclear if that distinction matters as the definition of what it means for a public official to “make a contract” under 1090 has been broadly interpreted by the courts, according to the FPPC advice letters.

“Notably, when members of a public board, commission or similar body have the power to execute contracts, each member is conclusively presumed to be involved in the making of all contracts by his or her agency, regardless of whether the member actually participates in the making of the contract,” the FPPC wrote in a 2019 advice letter regarding the Spalding Community Service District.

Because of that, 1090 should be treated with extreme caution, according to legal observers.

“(Section) 1090 is very broad and very vigorously enforced,” wrote Attorney Ken White in an email. White is with Brown White & Osborn LLP and focuses on criminal defense and civil litigation with an emphasis on white collar crime and First Amendment issues.

“The FPPC has made it clear that a board of a public entity cannot give a member a job, even if the member resigns before taking the job. I would expect anyone looking at this — whether it’s the FPPC or a District Attorney — to look very carefully at whether there was any discussion of Mr. Averett as a candidate before he resigned,” White added. “If there was, they have a real problem.

“This (KCWA) decision presents an appearance problem I would not recommend that any entity undertake.”

The KCWA board voted unanimously on May 22 not to renew former general manager Tom McCarthy’s contract.

Averett Attended Closed-Session Meetings

From then until Oct. 23, the board held more than half a dozen meetings at which the general manager position was listed on the closed session agendas.

Averett was present at all but one of those closed session meetings.

“Eric was not involved in any specific discussions regarding candidates to fill the General Manager position or in the process, which was delegated to and handled by the General Manager Ad Hoc Committee consisting of Directors (Gene) Lundquist, (Royce) Fast and (Laura) Cattani,” Ciampa wrote in an email.

Averett did recuse himself from the Sept. 25 closed session, after which the board announced it had identified a candidate, presumably Averett, and would begin contract negotiations with that person.

“However, no discussions concerning the General Manager position at all occurred at any time prior to former Director Averett submitting his resignation on October 8. Only after the resignation was submitted were negotiations of the contract commenced,” Ciampa wrote.

Ciampa couldn’t get into specifics of what occurred in previous closed sessions, but said Averett didn’t recuse himself from earlier meetings because “Recusal was not necessary in the context of the subject being discussed.”

He wrote that after researching the issue, it was determined there would be no 1090 violation and an advice letter was not sought from the FPPC.

Potential Impacts of 1090 Violations

The ramifications of a 1090 violation can be significant.

To start, any contract deemed in violation of 1090 would be void. Fines of $5,000 per violation can be issued. And the FPPC or District Attorney’s office can also pursue criminal prosecutions in 1090 violation cases, depending on the level of suspected public harm.

The FPPC website doesn’t show that anyone has made a complaint regarding Averett’s hiring. But that’s not the only way an FPPC investigation could begin.

“Complaints and referrals are received from citizens, other government agencies, and the media,” the website states. “The Enforcement Division also investigates on its own initiative.”

About the Author

SJV Water CEO and editor Lois Henry has spent 30 years covering the San Joaquin Valley.

About SJV Water

SJV Water is an independent, nonprofit news site covering water in the San Joaquin Valley, www.sjvwater.org. Email us at sjvwater@sjvwater.org