An opinion has been requested from the Department of General Services (DGS) concerning whether State employees may be purchasers of State surplus property under regulations currently being developed by the Department.
This request is submitted by the Director of the Office of Central Services in DGS (the Director). His office is preparing revised regulations for disposal of State surplus personal property. The regulations establish several different procedures for surplus property disposal, and as proposed specifically allow participation by State employees in at least two of the procedures (auction and retail sale). The Director indicates exclusion of State employees from the sections on other procedures was inadvertent and that they would be treated the same for all types of disposal. He expresses concern, however, about possible ethical considerations if an award is made to a high bidder who is a State official, especially if the person's employment is with the agency that declared the property surplus.
The Director indicates that the initial decision to declare personal property as surplus is made by the immediate using office. The property is then offered, through the appropriate agency administrative office, to the other offices of the parent department or agency. If the property is not claimed within that department or agency, it is offered, through DGS, to all other departments and agencies in State government. Property still unclaimed is then sold as surplus. Decisions as to the method of sale are made by DGS, with most sales being handled by the original agency. Proceeds of all sales are credited to the General Treasury.
Several provisions of the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law) are of concern here. Section 3-101 is a disqualification provision which prohibits non-ministerial participation by officials and employees in matters in which they or certain relatives have an interest or in which they or business entities with which they are associated are involved as parties. We thus view this section as prohibiting persons from participating in the various stages of the disposal process if they, their relatives or businesses with which they are associated are purchasers. Though the provision does not apply to purely ministerial participation, we believe that§3-101 would still apply, as a general matter, since some, if not all, of the various aspects of the process involve the exercise of some discretion or judgment by the official or employee.
It is thus our advice to DGS that it consider adopting regulations excluding from participation in surplus property sales State officials or employees from DGS or other agencies whose primary job responsibilities involve property management or disposal or who are agency employees otherwise directly involved in the disposal of particular property. Such a general rule may exclude persons who could technically avoid application of 3-101 by simply not participating officially in a specific transaction where they intended to be involved as purchasers. However, we believe that this approach is allowable as a more restrictive agency provision specifically allowed in§1-103 of the Ethics Law. It would also be consistent with the general purposes of the Ethics Law set forth in §1-102, and with the position taken in a similar situation by the Board of Ethics. In this opinion (Title 19 COMAR, Opinion No. 20) the Board approved a State Roads Commission administrative policy forbidding its employees from participating in auction sales of surplus real property. 1
Other provisions of the Ethics Law that could be relevant in special circumstances to the participation of employees in surplus property sales are §§3-103(a) and (c), 3-104 and 3-107. Section 3-103(a) (as amended, Laws of 1981, Ch. 796) prohibits being employed by or having a financial interest in an entity that is under the authority of or contracts with one's agency, or engaging in outside employment that would impair an official's or employee's impartiality or independence of judgment. Section 3-103(c) prohibits officials and employees from assisting or representing another party for contingent compensation in matters before or involving an agency of the State. Section 3-104 prohibits the intentional use of the prestige of one's office for the private economic benefit of oneself or another. And section 3-107 of the Ethics Law prohibits the use or disclosure of nonpublic information acquired in an individual's official position for his own economic benefit or that of another.
Employees participating as purchasers in property sales should be aware that these Ethics Law provisions could, in particular situations, work to limit their private activities in connection with surplus property sales. However, none of these provisions would appear to justify an absolute prohibition against participation in such sales as a general matter. Also, application of these provisions generally calls for a series of factual determinations that appear to be more suited to consideration of the specific circumstances of a particular situation rather than in the regulatory context. Thus, though these provisions could be addressed in the DGS regulations, we believe that the better approach would be to adopt a non-participation provision for those whose official duties involve property disposal, while noting that other State employees, though not generally excluded, continue to be subject to the other Ethics Law prohibitions depending upon the specific circumstances. Ethics Commission staff will be available to provide DGS personnel any additional assistance required in addressing these issues in the property disposal regulations.
Herbert J. Belgrad, Chairman
Jervis S. Finney
Reverend John Wesley Holland
Betty B. Nelson Barbara M. Steckel
Date: June 23, 1981
1 This approach is also consistent with the provisions of§3-105 of the Ethics Law (as amended, Laws of 1981, Ch. 796), which prohibit outside employment with an entity that has a State contract of a certain amount, where the individual's official duties substantially relate to the contract. Assuring that persons who have official responsibilities for property disposal not participate in sales could help to avoid outside employment conflicts under this provision.