81.35

OPINION NO. 81-35

The attorney for the Prince George's County Board of License Commissioners (the Board) has requested an opinion as to whether the Board is an executive agency subject to the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law), and, if so, whether a member of the Board may hold an interest in a District of Columbia business entity that sells alcoholic beverages at retail. 032; 032;

This request is presented on behalf of a Board member who inquires as to his 50% ownership of a private business that operates a nightclub/restaurant in the District of Columbia. The Member indicates that he will not be involved in any way in the management of the business; his involvement will be as a stockholder only. The operation of the business involves the retail sale of alcoholic beverages in accordance with the liquor control laws of the District of Columbia; the Member indicates that neither the sale nor the purchase of alcoholic beverages for resale will take place in Maryland or in any way involve the regulatory authority of the State or the Board. He further indicates that the sole activity of the business is operation of this single restaurant. The entity has no interests or property in Maryland.

The first question raised by this request is whether the Board is an executive agency subject to the conflict of interest provisions of the Ethics Law. Section 1-201(1) of the Ethics Law defines "executive agency" as "a department, agency, commission, board, council, or other body in State government, which is established by law but which is not a part of either the legislative branch or the judicial branch." Since the Board is not in the legislative or judicial branch and is also clearly established by general public law, the issue is whether it should be viewed as "in State government." The question of whether boards of license commissioners or liquor boards are State agencies is a general matter that is also being considered within the broader context of the Ethics Commission's board and commission review. While some factors regarding the Board could be interpreted to place it in State government, we believe that analysis regarding its status should be conducted within the broader context, rather than separately in connection with a particular advisory opinion request.

Further, we do not believe that the jurisdictional question must be resolved here, as we conclude that the facts do not, in any case, give rise to a violation of§3-103(a) of the Ethics Law. This section prohibits an official from being employed by or holding a financial interest in an entity which is subject to his or his agency's authority or has contractual dealings with it. The section also includes a more general "inconsistent employment" provision. The Member's 50% stock interest exceeds 3% of the entity and is in excess of $1,000 in value, and he thus plainly holds a financial interest in the entity as contemplated by the definition of "financial interest" in §1-201(m) of the Ethics Law.1

However, based on the facts as presented to us, we view section 3-103(a) as inapplicable to this situation, as the business does not operate in or have any connection with the State of Maryland. Since the restaurant is located in downtown District of Columbia, not any where near the Maryland State line or Prince George's County, this would tend to reduce any impact on its business by local license decisions. Additionally, the Member indicates that he has no management involvement in the entity. Thus, given the nature of his stock ownership and the resulting absence of an employment relationship that would impair his impartiality or independence of judgment, we believe that the prohibition against inconsistent employment would also not apply. We therefore conclude that, even if there were Ethics Law jurisdiction over the Board, the Member's stock ownership as presented here would not constitute a violation of §3-103(a).

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

Date: August 19, 1981

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1 Section 1-201(m) defines "financial interest" to mean:(1) Ownership of any interest as the result of which the owner has received, within the past 3 years, or is presently receiving, or in the future is entitled to receive, more than $1,000 per year, or (2) Ownership, or the ownership of securities of any kind representing or convertible into ownership, of more than 3 percent of a business entity.