81.05

OPINION NO. 81-5

An advisory opinion has been requested as to whether a conflict of interest under the Maryland Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law) results from the employment of the spouse of the Administrator of the Energy Administration (the Administrator) as the Office Manager of the Maryland Petroleum Association (MPA).

The Energy Administration (the Administration) is a sub-unit of the Department of Natural Resources. The Administration has substantial and broad ranging responsibilities for managing the State's energy program, including the responsibility:

1) to "develop and update a State policy for management and conservation of Maryland's energy resources";
2) to prepare "contingency plans for the allocation and distribution of middle distillate oil, motor gasoline residual fuel oil, and propane gas to various classes of consumers in the time of energy shortage"; and,
3) to carry out "responsibilities delegated to the State energy offices pursuant to the orders, rules, and regulations promulgated pursuant to any Federal laws relating to the allocation, conservation, development, or consumption of energy resources...."

The MPA is a trade association that is the Maryland division of the American Petroleum Institute, Inc. The group's brochure identifies the Institute's membership as including "some 275 energy-related companies and more than 7,000 individuals that represent a cross section of U.S. industry operations in exploration, transportation, research, finance and marketing." The entity is primarily a lobbyist organization. In 1980 it had two lobbyists registered pursuant to Title 5 of the Ethics Law. Though the 1980 forms did not require distinction between executive and legislative branch lobbying, both of MPA's lobbyists indicated on their earlier submissions they did executive branch lobbying and both disclosed executive branch lobbying expenditures on their lobbying activity reports submitted under the prior law.

The Administrator indicates that the Administration does not regulate or do business with MPA. However, in addition to administering programs specifically relating to the oil industry, the Administrator indicates that he occasionally testifies before the General Assembly on matters affecting the industry, on which MPA also testifies. The Administrator's spouse is identified as the Office Manager on the MPA brochure. Her husband indicates that her duties include "coordination of the Association's general office routine and equipment use, supervision of office clerical personnel, fiscal recordkeeping and financial reporting to API, check writing and accounting," and other secretarial responsibilities. He indicates that she does not participate in any lobbying activities.

The provisions of the Ethics Law that could impact upon the situation presented by the Administrator are §§3-103(a), 3-101, 3-104 and 3-107. Section 3-103(a) is a fundamental provision of the Ethics Law that sets forth an absolute prohibition against being employed by or holding an interest in an entity subject to the authority of or contracting with one's agency. Since the Administrator is clearly not himself employed by MPA he would violate § 3-103(a) only if he holds an interest in it and if it is under the authority of or contracts with his agency. The MPA apparently has no contracts with the Energy Administration, though it is not clear whether it has any contractual relationships with the Department of Natural Resources, the cabinet department of which the Administration is a part. Nor is it clear whether the fact that MPA's members are plainly under the Energy Administration's authority would necessarily mean that the organization is itself also under the Administration's authority. However, we specifically do not address these issues in this Opinion, as we do not believe that under the facts presented here the Administrator holds an interest in MPA as is contemplated in § 3-103(a) of the Ethics Law.

In our Opinion No. 80-17, we dealt with the question of whether an official, solely by virtue of his spouse's employment relationship, had an indirect legal or equitable economic interest in the spouse's employing brokerage firm. Recognizing that the Ethics Law in certain sections specifically deals with the spousal interests, we stated that "we do not believe that the Law was intended to reach every interest or employment of an employee's spouse." We concluded there that

The mere fact that the Official's spouse works for a brokerage firm which negotiates and enters contracts with the [Official's agency] without any control or other evidence of an interest in the employee, *did not* in itself give rise to even an indirect legal or equitable interest of the Official in the spouse's employer.

In that case the official's spouse expected to be paid on a commission basis rather than receive a salary from the firm. We do not believe that the Administrator's spouse's receipt of salary in the circumstances presented here requires a different conclusion than we reached in Opinion 80-17. The Administrator's spouse was employed by MPA prior to his appointment to his position and there do not appear to be any circumstances peculiar to this situation justifying a conclusion that his spouse's employment is an interest of the Administrator.

Though we therefore conclude that his spouse's employment does not come within the reach of the absolute prohibition of § 3-103(a) of the Ethics Law, we believe that the Administrator should be aware of and take care to comply with other conflict of interest provisions that could impact on this situation. Even if his spouse's employment is not an interest prohibited by § 3-103(a), the Administrator's request also raises questions under § 3-101 of the Law. This section prohibits an official from participating in matters in which he has an interest or in matters involving as parties certain entities. The general prohibition of § 3-101 would not appear to apply here since it requires identification of a matter in which the Administrator specifically has an interest; we do not believe that he has an interest in his wife's salary that would constitute an interest in all matters which may involve her employer.

Section 3-101(a)(2), however, is more specific, prohibiting participation in a matter which involves as a party a business entity of which one's spouse is an employee. The Administrator must therefore disqualify himself from matters in which MPA is a party. In Opinion No. 80-17 we addressed the question of identifying "matters" and "parties" to them for purposes of § 3-101, concluding that

Disqualification would not be required as to all matters with which such entities are generally interested, but those matters in which they have some specified and clearly defined role; the entities would have to be identified as parties to a transaction and likely to be impacted by the transaction in the usual legal sense of that term.

The prohibition of § 3-101(a)(2) thus would apply in any formal proceeding in which MPA is a formal "party." However, the MPA is primarily a lobbying organization and most likely to be engaged in informal participation in regulatory, legislative or general policy issues; we do not believe such situations (especially general policy determinations or legislative proposals) constitute "matters" as contemplated in § 3-101. Nor do we believe that MPA's participation by submitting comments or giving testimony makes it a "party" to a legislative or Administration matter as would be required under § 3-101(a)(2). Further, in our view, the Administrator's participation, by testifying before the General Assembly in a legislative matter does not constitute the type of non-ministerial participation that is prohibited by § 3-101(a)(2).

Though apparently the potential matters to which the disqualification provisions would apply are as a technical matter very narrow, the Administrator should take care to be sensitive to situations where the MPA is significantly involved. In addition to disqualifying himself from participation in matters which would technically come within the reach of § 3-101(a)(2), he should be sensitive to other situations which could raise an appearance of conflict of interest. He should also be aware of the provisions of § 3-104 and 3-107 of the Ethics Law. Section 3-104 prohibits a public official from intentionally using the prestige of his office for his own benefit or that of another. The Administrator should be careful to avoid situations or relationships with his wife's employer which could be interpreted as lending the prestige or influence of his official position to the MPA. Further, consistent with § 3-107 of the Ethics Law, he should take care in his communication to the MPA by or through his spouse, not to disclose any otherwise nonpublic information acquired through his official position that would or could accrue to the economic benefit of MPA or its member entities.

Herbert J. Belgrad, Chairman
    Jervis S. Finney
    Reverend John Wesley Holland
    Barbara M. Steckel

Date: March 10, 1981