An opinion has been requested concerning application of the Public Ethics Law, particularly §3-103(a) (Article 40A, §3-103(a) Annotated Code of Maryland, the Ethics Law), to an appointee to the University of Maryland Board of Regents whose private commodity supply business may have sales to the University.

This request is presented by an individual (the Appointee) who has been appointed by the Governor to serve on the University of Maryland Board of Regents. He is the President of a Maryland business that deals in contract hardware and industrial mill supplies. The Appointee indicates that his firm has two types of transactions with the State. First, based on specifications developed by architectural-engineering firms, the firm develops and submits bids to supply hardware (primarily for doors) to general contractors who in turn bid on general construction contracts with various State agencies, including the University. He states that his firm does not deal directly with the contracting agency, but negotiates separately with the prime contractor, sometimes after the general contract has been awarded.

In its contract hardware business, the firm is a commodity supplier only; it is not a service contractor. This is also true with regard to the second type of potential transaction between the firm and the University or other State agencies, that of sales of industrial mill supplies or tools. The Appointee indicates that these types of supplies are sold to State agencies through submission of prices in response to Request for Quotations (RFQ). Most of these transactions are thus through public competitive bidding and involve objective price quotations, though occasionally small sales may be made to various agencies that are authorized to procure items under a certain amount without competitive process.

The University of Maryland has substantial autonomy in the purchase of commodity items such as tools and mill supplies. The University does not have a single annual contract, and such items are purchased through purchasing units on individual campuses. Some tools are purchased by campus departments under a "blanket order" system, while larger purchases are made through the RFQ process. The Appointee indicates that his firm has in the past sold these types of supplies to the University as well as other State agencies.

The Appointee was nominated by the Governor in the winter of 1982 to serve on the University's Board of Regents. His appointment papers were forwarded to the Senate's Executive Nominations Committee on February 19, 1982, and his appointment was considered and confirmed by the Senate on March 25, 1982; he was expected to take office on the first Monday in June. Although the Appointee indicates that he notified the Governor's Office and University and Board of Regents officials of his business dealings with the State and with the University, he was not provided by the appointing authority with a copy of the Ethics Commission form for disclosure by appointees pursuant to §3-103(a)(2)(iii) of the Ethics Law. Thus, though the appointing authority appears to have been notified, however informally, of this potentially conflicting affiliation, it does not appear that disclosure was made to the Legislature in connection with its confirmation proceedings. Additionally, the disclosure was not public and was not made to the Ethics Commission.

The issue in this request is application of the provisions of §3-103(a) of the Ethics Law to the Appointee's service on the University of Maryland Board of Regents, in view of the contractual dealings of his private business with the University. Subsection (a)(1)(i) of this section prohibits an official or employee from having an interest in or being employed by an entity that has or is negotiating a contract with his agency. We believe that this prohibition applies in this situation, since the Board of Regents and the University must be viewed as the same agency for purposes of §3-103(a)(1)(i). We have generally viewed entities as single "indivisible" agencies except where there is a clear independence and separation of substantive responsibilities and lines of authority. See Opinions No. 80-11, 80-13, and 80-25. Though we have never expressly addressed the issue of whether the operational governing board of a college or university should be viewed as the same agency as the university, consistent with our prior considerations of this issue, we believe that common sense warrants a conclusion that the governing board is an "indivisible" part of the institution.

The Appointee has indicated that his private firm does in fact have some industrial mill supplies sales transactions directly with the University, though they appear to represent a relatively small percentage of his total business. Under these circumstances, his private affiliation constitutes an interest and employment relationship with an entity having or negotiating a contract with his agency as contemplated in §3-103(a)(1)(i). As the Appointee's private activities fit within the contract prohibitions of §3-103(a), 103(a), this section works to bar his service on the Board of Regents unless he fits within an exemption established under the Ethics Law.

There are several sources of exemptions in the Law.1 However, the exemption provision in §3-103(a) that we believe was intended to apply in this situation is the provision in subsection (a)(2)(iii) that the prohibition does not apply to a board or commission member "in regard to a financial interest or employment held at the time of appointment, provided it is publicly disclosed to the appointing authority, the Commission, and, in instances where confirmation is required, to the Senate prior to confirmation." Procedures for complying with this provision were established by coordination between the Ethics Commission and the Governor's Office. The procedure, however, appears not to have been followed in this case, though some disclosure was made to the appointing authority.

We have considered this exemption provision in two earlier opinions (Nos. 81-38 and 81-39) concluding that the purpose of the exemption "is to allow appointment of qualified persons, after disclosure of disqualifying interests or employment, thus allowing the appointing authority to balance the State's needs in acquiring a person's services against the concerns raised by an identified conflict of interest." Opinion No. 81-39. Though there seems to have been an oversight in handling the new procedures in the Appointee's nomination, we believe that these are the types of circumstances where the exception procedures in §3-103(a)(2)(iii) were intended to apply.

In connection with our consideration and preparation of this Opinion, the Appointee submitted a completed Appointee Exemption form (Ethics Commission Form No. 5). Although we believe that appointee exemption disclosure should be made prior to and for use in the nomination and confirmation process, the absence of this procedure appears to have been a technical oversight associated with a new process. More importantly, in view of the fact that plans are underway to assure that the appointing authority and the Senate have an appropriate opportunity to review the Appointee's disclosure form, we conclude that the Appointee may serve with the exemption pending completion of Gubernatorial and legislative procedures. Assuming the disclosure meets the requirements of the appointing authority and the Senate at the time of the completion of the process, then, in accordance with our Opinion No. 81-38, we believe that the §3-103(a)(2)(iii) exemption would apply to conflicting employment or interests that are similar to or related to a situation at the time of the appointment, as disclosed in the Form.2

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

Date: August 25, 1982


1 Section 2-103(h), for example, permits the Commission to exempt a member of a board or commission (or to modify the requirements of the Law) where, because of the nature of the board or commission, the application of the Law would constitute an unreasonable invasion of privacy, significantly reduce the availability of qualified persons for public service, and not be necessary to preserve the purposes of the Law. Exemptions may be granted under this section only in response to the written request of the agency involved. Section 3-103(a) also sets forth several possible bases for exemption.

2 We understand that there are others in circumstances similar to the Appointee, including some for which Senate confirmation is not required. This Opinion, in our view, would apply to these others, provided that public disclosure is made to appointing authority, the Commission and Senate where required.