An opinion has been requested concerning whether the Chief Boiler Inspector with the Board of Boiler Rules may own and operate a private boiler inspection business serving only Federal facilities not subject to his agency's jurisdiction.
This request is presented by the Chief Boiler Inspector in the Division of Labor and Industry (the Division) in the Department of Licensing and Regulation (DLR). The Division is responsible for implementing the provisions of the Boiler Pressure and Safety Act (Article 48, §167-180, Annotated Code of Maryland, the Boiler Act). This law involves a substantial regulatory program for inspection of new and existing boilers of all types, though certain categories of boilers are exempt, including "boilers and pressure vessels under federal control or regulation." (Article 48, §172(a)(1). The program involves "routine inspections, special inspections, investigations and the monitoring of repairs to boilers and pressure vessels." The Requestor (the Inspector) is the supervisory inspector and directs the activities of several Deputy Inspectors.
The Inspector owns and operates (with his daughter's assistance) a private boiler inspection business. He indicates that the company's sole business is to inspect boilers and pressure vessels on federal projects. The firm gets these jobs through a competitive bidding process conducted by the Federal General Services Administration. It was indicated that the Business is conducted on the Inspector's own time and that any day-time phone calls or other duties are handled by his daughter. As noted above, federal facilities are specifically exempted from coverage of the Boiler Act. However, in the Federal competitive bidding process, the Inspector's private firm may be bidding against insurance or inspection companies who employ Special Inspectors whose activities are subject to his official review.
Officials in DLR have expressed some concerns regarding the Inspector's private business. They are particularly concerned about the potential for using his State position to contact potential private employees in other states and also to qualify himself as an inspector for the federal jobs. It was also pointed out that the Division does some gratis inspections of federal facilities at Federal request, though the Inspector is not involved in any way in the decision as to whether or not this service will be provided to a federal facility. Personnel from DLR also raised the issue of whether an appearance problem would arise as to whether a person could be in competition with entities that the Boiler Law charges him with regulating and supervising. The agency did not, however, present any evidence that the private business actually had impaired the Inspector's impartiality or was likely to do so in the future.
The Inspector indicates that he and his private employees work solely on off duty or on annual leave time, and also that the federal contracts do not require that he be commissioned as an inspector, but only that he be eligible for an inspection commission. Thus he states that he does not need to rely on his State position as an inspector to qualify to bid for the federal work. He states that most of his workers in other States are retired inspectors who, though they are not active inspectors, would qualify for commission as an inspector.
The Inspector also characterizes his monitoring responsibilities as primarily mechanical and not requiring significant exercise of discretion and judgment. Division officials also apparently agree that the substantial volume of units to be monitored (over 42,000 pressure vessels and 38,000 boilers) results in agency review of private inspections as more ministerial than substantive. Occasional spot checks are done and forms are reviewed for completeness, but most substantive inspection work of the agency involves uninsured units that are the direct inspection responsibility of the Division. The Inspector's primary inspection duties relate to review of repair work on this category of pressure vessels or boilers.
This request raises issues primarily under the interest and outside employment provisions of §3-103(a) of the Public Ethics Law (Article 40A, §3-103(a), Annotated Code of Maryland, the Ethics Law). We have considered a situation similar to this in our Opinion No. 81-18 which involved a member of the Bank regulations Board who served as Vice-President of a Federal Savings and Loan Association. The federal entity was not regulated by the Bank Regulations Board though it did compete in some ways with regulated State entities. We ruled that the circumstances there did not involve an employment or interest relationship prohibited by §3-103(a) (as then in effect). We conclude that the principles of Opinion No. 81-18 apply here and that the Inspector's private business is not barred by the §3-103(a)(1)(i) prohibition against having an interest or employment in an entity regulated by one's agency.
However, Opinion 81-18 was issued prior to amendment of the Law to include the inconsistent employment provision of §3-103(a)(1)(ii). (Ch. 796, Laws of 1981.) This section bars any employment that would impair an employee's impartiality or independence of judgment. A preliminary question here is whether the Inspector's outside activity involves an employment relationship that would be covered by this provision. We have in the past generally looked to the substance rather than the form of a relationship in determining whether it constitutes employment as contemplated by §3-103(a). See, e.g., Opinion No. 80-4. For example, in a recent opinion regarding a dentist wishing to practice as a sole practitioner, we viewed his status as that of an owner/employer. Opinion No. 81-45. Applying these principles in this request, we conclude that the Inspector's affiliation with his firm constitutes an employment relationship as contemplated in §3-103(a)(1)(ii).
We have interpreted this provision in several prior opinions. Nos. 81-45, 81-41, 81-28, and 82-15). We have generally read the provision narrowly, concluding in our Opinion No. 81-28, for example,
that the more narrowly drafted final version of the Ethics Law inconsistent employment provision must be viewed as requiring a narrower reading of the prohibition than followed by the Board of Ethics...
...[W]e believe that it should be read primarily as a complement to the provisions of §3-103(a)(1)(i). We view it as primarily covering those situations where the authority or contractual relationships of §3-103(a)(1)(i) may not be met, but where the relationship between official duties and outside activities gives rise to clear and serious concerns as to the ability of the official or employee to engage in the outside activity and still maintain his impartiality and independence of judgment in carrying out his State responsibilities.
We have evaluated the facts and issues raised in this request by both the Inspector and his DLR supervisors, including the various administrative concerns expressed by the agency. We have in prior cases considered situations where such issues are raised by agency personnel, and have generally noted that these concerns may often be more effectively addressed by agency regulations permitted by §1-103 of the Ethics Law. In our Opinion No. 81-28, we indicated that
We view the Ethics Law as setting forth certain minimum standards of conduct to be followed by all State employees. Section 1-103 of the Law reflects a recognition of the need for agency managers who have particular concerns related to their specific agency mission and personnel situation to take appropriate administrative action to deal with these circumstances. These unique agency problems are thus properly addressed by agency regulations and standards supplementary to, but not inconsistent with, the Public Ethics Law.
Thus, while the Division or DLR may wish to take administrative action to ensure that agency working procedures and administrative practices are not compromised, we do not believe that the Inspector's outside activities are absolutely barred by the inconsistent employment provisions of §3-103(a)(1)(ii). The Inspector himself appears in his substantive responsibilities to be primarily involved in inspecting and supervising inspections of units directly regulated by the Division, which do not in any way involve competitors of the Inspector's private business. There is also no suggestion that this monitoring activity is being handled in a way that could be viewed as biased for or against any of the insurance inspector operations.
It is therefore our view that this situation does not present the kind of clear and serious concerns intended to be addressed in §3-103(a)(1)(ii). The Inspector's private business is thus not absolutely forbidden by this provision of the Ethics Law. We advise the Inspector, however, that he should keep in mind other relevant provisions of the Law in conducting his private business. These include, for example, the disqualification provisions of §3-101 and the prohibitions against use of prestige of office and confidential information in §§3-104 and 3-107.
Herbert J. Belgrad, Chairman
Jervis S. Finney
Reverend John Wesley Holland
Betty B. Nelson
Barbara M. Steckel
Date: May 26, 1982