83.01

OPINION NO. 83-1

An opinion has been requested concerning whether the Chancellor of the University of Maryland, College Park Campus (UMCP), may serve on the Board of Directors of two Baltimore businesses, Commercial Credit Corporation (Commercial Credit) and Baltimore Gas and Electric (BG&E).

The recently appointed Chancellor for the College Park campus of the University of Maryland has been invited to serve on the Boards of Directors of Commercial Credit and BG&E. The Chancellor of the College Park campus serves as the chief academic and administrative official on the campus, and, as indicated by both the President of the University and the Executive Vice President, the Chancellors of the respective University of Maryland campuses have significant independence in managing their campuses. Each Chancellor serves on the President's Advisory Council, but this is not a decision-making body. It carries out a purely advisory function as to the University-wide matters; it is not a governing body and no votes are taken. The decision entity for the University at large is in the Central Administration, which makes policy and program decisions involving allocation of State funds among the various campuses. The Executive Vice President states that each Chancellor would be involved in providing Central Administration with facts and arguments regarding the programs on his own campus, but would not be a decision party in these matters. Each campus functions independently in the solicitation of non-State funds.

The Chancellor has been offered Board memberships with Commercial Credit and BG&E, both to be compensated positions. His acceptance of these positions is supported by University of Maryland President and also by the Chairman of the University's Board of Regents. The Chancellor's service with these entities is viewed by them as beneficial to the University. Both of these officials believe that the College Park campus and the Chancellor's duties to it can be viewed separately from the general University structure and other particular campuses that may have affiliations with these entities.

Both Commercial Credit and BG&E have contractual relationships with the University. Commercial Credit is a subsidiary company of Control Data Corporation, which is involved in a multi-million dollar transaction transferring aspects of the Plato computer learning programs to the University of Maryland at Baltimore (UMAB). One result of this transaction is that UMAB acquired computer capability reducing its reliance on central university computer services at the College Park campus. BG&E has contracts with various campuses, other than College Park, as follows:

UMAB—a non-interruptible customer of BG&E for electric, gas and steam;

University of Maryland, Baltimore County—a non-interruptible customer of BG&E for gas and electric;

Center for Environmental and Estuarine Studies—$11,000 contract with BG&E for the supply of artificial oyster reefs; and

University College—two contracts with BG&E, one (involving College Park engineering faculty) to provide training programs for BG&E employees in nuclear engineering, and another (IREP) involving a program services development program. 032;

Baltimore Gas and Electric apparently does not supply power to the College Park campus. It does, however, make grants and provide financial aid to students in the College Park College of Engineering. It is also party to a $160,000, 2 year contract from BG&E to the College of Engineering, the Department of Chemical and Nuclear Engineering. Also, a contract between the U.S. Department of Energy (through its Sandia Lab) and the University of Maryland Research Foundation is nearing completion. This contract involves College Park faculty in the Department of Chemical and Nuclear Engineering in a study relating to the Calvert Cliffs Nuclear Power Plant, and is funded for the first year at a level of $1 million. BG&E is not a direct party to this contract, though it is the owner of Calvert Cliffs, and is involved in logistics of access, etc. and has representatives on two oversight committees for the project.

As noted, the College Park campus has a Department of Chemical and Nuclear Engineering that maintains a close working relationship with BG&E. The Department offers a substantial program in nuclear engineering, offering both graduate and undergraduate degrees. Facilities available in the program include a 250 KW swimming pool type nuclear reactor using enriched uranium. College Park faculty in this area have served as experts in legislative and other matters involving State decision-making in the energy and nuclear power field. One faculty member currently serves on the State's Power Plant Siting Board in the Department of Natural Resources. The Executive Vice President indicates that these activities are, within the basic framework of academic freedom, undertaken by faculty without policy or other restraints imposed by the University Administration.

This request raises outside employment issues under the prohibitions of §3-103(a) of the Public Ethics Law (Article 40A, §3-103(a), Annotated Code of Maryland, the Ethics Law). Subsection (a)(1)(i) bars employment by an official with an entity that contracts with his agency; and subsection (a)(1)(ii) bars any other employment that would impair an individual's impartiality or independence of judgment. Since both of these provisions involve employment, an initial issue is whether the Chancellor's service on these Boards would be viewed as employment. He would receive significant compensation for both, and would be undertaking duties carrying a significant fiduciary relationship and commitment. We therefore conclude that his service with these entities would result in an employment relationship with them. (See our Opinions No. 82-43, No. 82-22, No. 82-2, and No. 80-4.

Section 3-103(a)(1)(i) deals with outside employment with an entity having contracts with one's agency. Thus, another preliminary question in applying this provision is whether the Chancellor's "agency" is the University of Maryland or the College Park campus of the University. We have generally concluded that agencies should be viewed as single indivisible entities, rather than be broken up into their component parts. (See Opinion No. 80-18). In Opinions involving the University, we have: 1) applied §3-103(a)(1)(i) where the faculty member's department and the research bureau with which his private firm contracted were in the same Division on the College Park campus (Opinion No. 82-20), and 2) found that the University Board of Regents and the rest of the University were part of the same agency for purposes §3-103(a)(1)(i).

The question of treatment of the various campuses as separate agencies or a single indivisible entity has not been addressed. In evaluating the issue in this situation, however, we do not believe that the Chancellor's high-level management position, even though it is on one campus, can be seen as separate from the University as a whole. We think that the advisory role of the President's Administrative Council, as well as the common input of each campus in the Central Administration also support a determination to view the University as a single entity. We note that individual Chancellors can probably not directly impact contract or other decisions on the other campuses; and also that each campus has a separate private funding capability. However, substantial State funds are available which are allocated among the programs of the various campuses based on a University-wide decision process. In view of these facts, and since both of these entities contract with some part of the University, we believe that the Chancellor's service with either of these corporations would constitute employment with an entity that contracts with his agency, and would be a violation of §3-103(a) of the Ethics Law unless excepted pursuant to our outside employment exception regulations.

Authority for this exception is set forth in the introduction to §3-103(a), which provides that the prohibition applies "except as permitted by regulation of the Commission where such employment does not create a conflict of interest or appearance of conflict." This exception provision was added to the Ethics Law in 1981 partly based on the recommendation of the Commission that flexibility be added to the absolute prohibitions in §3-103(a), to avoid situations where a violation would result from purely technical application of the elements of §3-103(a) even where there is no conflict or appearance of conflict between the private interest or employment and official duties. In developing exception criteria implementing the employment portion of this provision (COMAR 19A.02.01), we sought to define circumstances where the relationship between an employee's official duties and private employment are so remote that the possibility of a conflict of interest or the appearance of conflict is unlikely.

If all of these regulatory standards of remoteness are met then employment would be allowable, despite the existence of authority or contractual links between an individual's State and private employers. The criteria include findings that:

A. The State duties do not significantly impact on the outside employer or a contract between the outside employer and the agency.

B. The employee is not directly supervised by a person whose duties significantly impact on the outside employer or a contract between the outside employer and the agency.

C. The employee does not supervise a person whose duties significantly impact on the outside employer or a contract between the outside employer and the agency.

D. The employee is not affiliated with the specific unit in the agency that exercises authority over or contracts with the outside employer.

E. The employee has complied with other relevant sections of the Ethics Law.

F. The outside employment involves no non-ministerial duties significantly relating to the agency's authority over the employer.

G. The employee's private duties do not involve negotiating or carrying out a contract between the agency and the outside employer (except for broad fixed reimbursement contracts).

H. The private compensation is not directly funded by the State contract.

I. The specific employment circumstances do not otherwise create a conflict of interest or the appearance of a conflict.

We have evaluated the Chancellor's proposed employment with the two private entities in view of these criteria as well as various understandings provided by the University concerning the criteria and the Chancellor's employment responsibilities. These understandings include, for example:

(1) that the Chancellor would undertake no duties at UMCP that would significantly impact on either entity, having the University's Executive Vice President review and execute contracts relative to UMCP's relationships with either of the entities;

(2) that the President of the University (who supervises the Chancellor) would not have any duties significantly impacting either of these entities, and to the extent that he does, would assign any such duties to an appropriate vice president (recognizing that the President would retain ultimate responsibility for administration of the University);

(3) that, though the Chancellor supervises all faculty at UMCP, the dimension and scope of his supervision of the research contracts between UMCP and BG&E would be minimal, and all authority related to these firms would be transferred to the Executive Vice President; and

(4) that the Chancellor would undertake to ensure that he does not involve himself as a private board member for either of these firms in discussing or voting on any contractual transactions involving the entity and the University.

In considering our regulatory criteria and this input provided by the University, we have concluded that an exception may be granted as to the Chancellor's service on the board of Commercial Credit. We do this based primarily on the fact that the entity has no current presence on the College Park campus, and that, based on the various representations of the University, he and those who supervise him will be shielded from involvement with the firm. We wish to make clear, of course, that this view strongly relies on the absence of the entity's activities at UMCP. Our view on the applicability of the Law and the exception could change if Commercial Credit (or possibly its parent company, Control Data) were to establish a presence at College Park. Based on the facts as we understand them at this time, however, we advise the Chancellor that his service on the board of Commercial Credit Corporation is excepted from the prohibition of §3-103(a)(1).

A different result is required, however, as to his service with BG&E. We understand that the Chancellor and the University have undertaken to disqualify him and shield him and those who supervise him from matters involving this company. In implementing §3-103(a), however, in conjunction with the nonparticipation provisions of §3-101 of the Law, we have viewed them as separate provisions expressing different concerns as to the conduct and activities of officials of the State. We have thus not accepted disqualification as a "cure" of a violation of the prohibitions in §3-103(a), and we do not interpret our exception regulations as adopting that approach.

The exception provision in the Law was intended to allow flexibility to avoid technical application of a prohibition where there is no conflict of interest or appearance of conflict. The regulations were not drafted to be a series of purely technical criteria that could be avoided, but as indicators by which to measure actual or potential conflicts of interest. This is especially so in view of the purposes of the Law, set forth in §1-102, to assure the public of the impartiality of public officials, recognizing that the public may not be in a position to know or understand how reorganization of duties or nonparticipation actually serves to avoid a conflict or appearance thereof. In any case, in evaluating the University's response to the criteria, we do not believe that all of the criteria would be satisfied by the planned course of action.

Moreover, the fact is in this situation, that BG&E is a major industrial entity in the State of Maryland. As a major energy supplier, it is involved in significant and controversial economic, technical and social issues that have substantial impact on many Maryland consumers and on the State's general economic welfare. The University of Maryland at College Park is a large and advanced State Institution of higher education, and as such is a major resource in the State's ability to deal with many of the important issues that also involve BG&E (such as nuclear power and hazardous waste disposal). The Chancellor is described as the chief administrative and academic officer of the campus. However successful he may be in avoiding particular actions relating to particular transactions, he is ultimately responsible for the policy and direction of the campus and its many parts.

Under these circumstances we do not believe it is appropriate to conclude that the relationship between the Chancellor's official responsibilities and BG&E is so remote that a conflict of interest or appearance of conflict is unlikely. We therefore conclude that an exception may not be granted to allow his service with BG&E.

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

Date: January 12, 1983