STATE OF ALABAMA

ETHICS COMMISSIONMAILING ADDRESS

P.O. BOX 4840

MONTGOMERY, AL

36103-4840

STREET ADDRESS

RSAUNION

100 NORTH UNION STREET

SUITE 104

MONTGOMERY, AL 36104COMMISSIONERSJerry L. Fielding, Ret, Sf. Circuit Judge, ChairFrank C. "Butch" Ellis, Jr., Esq., Vice ChairJames Jerry Wood, Esq.Stewart Hill Tankersley, M.D.Charles Price, Ret, Circuit Judge

Thomas B. AlbrittonExecutive Director

September 1, 2016 TELEPHONE (334) 242-2997FAX (334) 242-0248

WEB SITE: www.ethics.alabama.gov

ADVISORY OPINION NO. 2016-22

James H. Anderson, Esq.Copeland, Franco, Screws & Gill, P.A.444 South Perry St.Montgomery, Alabama 36104

Conflict Of Interest/Member Of AlabamaPublic Service Commission (PSC) EnteringLease Agreement With Entity DoingBusiness In The State Of Alabama

A member of the Alabama Public ServiceCommission (PSC) may not enter into alease agreement whereby he would leaseland to a private corporation for the purposeof locating a solar generation facility whichwill, in turn, be offered in response to aRequest for Proposal by a utility which thePublic Service Commission (PSC) regulates.

It should be noted that this opinion appliesto this set of facts only, and should not beinterpreted or applied to any other set offacts.

Dear Mr. Anderson:

The Alabama Ethics Commission is in receipt of your request for a formal AdvisoryOpinion of this Commission, and this opinion is rendered pursuant to that request.

James H. Anderson, Esq.Advisory Opinion No. 2016-22Page Two

QUESTION PRESENTED

Maya member of the Alabama Public Service Commission (PSC) enter into a leaseagreement whereby he would lease land to a private corporation for the purpose of locating asolar generation facility which will, in turn, be offered in response to a Request for Proposal by autility which the Public Service Commission (PSC) regulates?

FACTS AND ANALYSIS

The facts as have been presented to this Commission are as follows:

Chip Beeker is a member of the Alabama Public Service Commission (PSC). CoronalDevelopment Group is a company from Charlottesville, Virginia. Coronal constructs utilitygrade solar projects and sells the power generated from those projects on the wholesaleelectricity market. Coronal wants to lease land from Mr. Beeker and is generally interested indeveloping projects in Alabama.

Coronal Development Group is not registered as a principal in the State of Alabama, noris Ryan Gilchrist, their employee, registered as a lobbyist. Coronal has extended an offer tolease Mr. Beeker's land (451 acres located in Greene County, Alabama) on the following terms:$500.00/acre over the term of 25 years (plus two five-year extension options). The estimatedannual lease payment based on his acreage is, therefore, $225,500.00. If the terms of the leasedo not change, the total lease payments would be $5.6 million dollars over the initial 25-yearterm. Coronal is interested in Mr. Beeker's property because it lies near an existing electrictransmission facility to which Coronal can eventually connect.

Other than entering the lease agreement, Mr. Beeker will not have any involvement inany aspect of Coronal's business. Mr. Beeker did not solicit the lease. Coronal approached himabout it. Mr. Beeker had no prior knowledge or familiarity with the company or any of itsprincipals or employees. Mr. Beeker states that as a PSC member, he has no authority overCoronal Development Group's activity. No one has entered into any contractual agreements atthis point.

If Coronal enters a sales agreement to sell the electricity that is ultimately generated fromthe solar facility that would be located on Mr. Beeker's property to an entity which the PSCregulates, then Mr. Beeker understands that he would have to abstain from considering and/orapproving any sales agreement or any other transactions between Coronal and any entity whichthe PSC regulates. Coronal has entered such collaborative agreements with other Operating

James H. Anderson, Esq.Advisory Opinion No. 2016-22Page Three

Companies of Southern Company in an arrangement which allows the Operating Company todiversify its energy portfolio. This is what Coronal does.

Mr. Anderson argues that current Alabama statutes that govern the provision of retailelectric service preclude the PSC from regulating a solar company as a utility or otherwise. Hestates that Coronal will only be able to offer wholesale electric service which is not regulated bythe Public Service Commission. He further states that the only time wholesale offerings mightcome before the Public Service Commission is if an entity which the PSC regulates wants toenter into an agreement to buy such wholesale electricity from Coronal. This is the issue thatMr. Beeker understands he would have to recuse himself from if we were to approve the lease,and it is what Coronal intends to do with Mr. Beeker's lease, as it has done in other places.

Mr. Anderson attached to his request for an Advisory Opinion an e-mail dated June 21,2016, from Ryan Gilchrist, an employee of Coronal Development Group. In that e-mail.Mr.Gilchrist states, "In preparation for the Request for Proposal that Alabama Power is expected torelease in August, we are building a portfolio of land that meets the ideal criteria for solardevelopment. As of today, we have signed nine lease option agreements with landownersthroughout the State of Alabama." The PSC regulates Alabama Power.

Mr. Anderson argues that the Legislature, in declaring their findings in § 36-25-2(b), didnot intend for public officials, like Commissioner Beeker, to be denied a business opportunityavailable to all other citizens if there are no apparent conflicts of interest, and that the speculationthat something may change as to the law or regulations, does not create a fact situation thatmakes entering into a lease agreement which such an entity illegal.

As an elected member of the PSC, Mr. Beeker is a public official subject to the AlabamaEthics Law. Ala. Code § 36-25-1 (27). While the law allows public officials and publicemployees to have outside business and financial interests, just as members of the general publiccan have, they cannot do so when a conflict of interest exists, nor can they use or allow others touse their official position for personal gain. Ala. Code §§ 36-25-1 (8); 36-25-2(b); 36-25-5(a).Finally, as a member of a regulatory body, "no person" can offer a member of a regulatorycommission, and no member of a regulatory commission can accept, a thing of value fromsomeone associated with a business the Commission regulates, "other than in the ordinary courseof business." Ala. Code § 36-25-12.

To the Commission's knowledge, no one has violated any of the above sections at thispoint, and the PSC may never regulate Coronal. In this particular fact scenario, however, theidentity of the Lessor as a member of the Public Service Commission, when combined with thestated purpose of the lease to be presented as a part of a package offered to a utility the PSCregulates, and Coronal's stated business purpose and previous leases, matters. Coronal intends tooffer a package of leases to a utility the PSC regulates which will include a proposal to buy the

James H. Anderson, Esq.Advisory Opinion No. 2016-22Page Four

electricity generated on land which a member of the PSC owns. This is the lease's value toCoronal. The lease itself contemplates that action. The RFP has not occurred at this point, butthe Commission is not satisfied that Mr. Beeker's public position is irrelevant to Coronal, norcan we conclude that the lease would not present a conflict between Mr. Beeker's privateinterests and official responsibilities if executed.

Although there is no previous Advisory Opinion directly on point with the presentquestion, the Commission has held that business relationships with entities that intend to dobusiness with entities the public official regulates create conflicts of interest. See, e.g., A099-25("Deputy Director of the Birmingham Airport Authority may not enter into business ventureswith firms that conduct business with the Birmingham Airport"); A096-31 ("There is aninherent conflict of interest when an employee of a regulatory agency [ADEM] has outsideemployment with a business whose clients may be regulated by ADEM.").

The lease is being contemplated in anticipation of presentation to a utility the proposedLessor regulates as a public official. The relative position of these parties creates a question as towhether executing the lease would violate § 36-25-5(a)'s prohibition of allowing someone else touse your position for personal gain and whether it would present a conflict of interest betweenMr. Beeker's private interests and his official responsibilities. At the very least that perception iscreated.

Therefore, the Commission declines to approve this particular lease under these particularcircumstances.

CONCLUSION

A member of the Alabama Public Service Commission (PSC) may not enter into a leaseagreement whereby he would lease land to a private corporation for the purpose of locating asolar generation facility which will, in turn, be offered in response to a Request for Proposal by autility which the Public Service Commission (PSC) regulates.

It should be noted that this opinion applies to this set of facts only, and should not beinterpreted or applied to any other set of facts.

James H. Anderson, Esq.Advisory Opinion No. 2016-22Page Five

AUTHORITY

By 1=2vote of the Alabama Ethics Commission on September 1,2016.

rry LChairAlabama Ethics Commission