83.06

OPINION NO. 83-6

An opinion has been requested concerning whether the Assistant Secretary for Economic Development (Department of Economic and Community Development, DECD) may accept a certain gift from the Allegany County Economic Development Company Board of Directors and Allegany County Board of Commissioners.

The Requestor was appointed Assistant Secretary for Economic Development in September 1982, after serving with DECD in other capacities since February 1979. Prior to his employment with the State, he served as Director of the Allegany County Economic Development Company (the Company). As Assistant Secretary, the Requestor carries out the duties of the Director of the Division of Economic Development (the Division) as set forth in Article 41, §259-266, Annotated Code of Maryland. Section 258 provides that the Division has the

general purpose of advancing the economic welfare of the people through programs and activities to develop in a proper manner the State's natural resources and economic opportunities and to promote and encourage the location of new industries and businesses in the State of Maryland as well as encouraging the expansion of existing industries...

The Division Director is to be selected based on "his known experience and interest in the development of natural resources and industrial opportunities."

The Assistant Secretary's responsibilities are described by DECD Deputy Secretary as primarily coordination of the various economic development programs, which include industrial training, tourism, seafood marketing, small business assistance, industrial development grants and infrastructure loans, and the marketing of Maryland as a business location. The Deputy Secretary indicates that the Requestor does not generally exercise unilateral executive authority in these programs, since they are generally managed by independent authorities, such as the Maryland Industrial Development Financing Authority and the Maryland Small Business Development Financing Authority. He does, however, serve as a department designee on these boards, and some programs are handled strictly by the Division, without an appointed board or authority. In evaluating the ability of the Assistant Secretary to favorably impact the Department's relationship with grantees, the Deputy Secretary points out that the Department is not able to direct businesses as to where to locate in Maryland, and also that there is little competition for DECD loan and grant funds, since these programs have never run out of money. He also indicates that the tourism funds provided to the various counties are based on historic apportionment formulas over which the Assistant Secretary/Director exercises little discretion.

The Allegany County Economic Development Company is the entity designated by the Allegany County Commissioners to do economic development projects with DECD funds. It is a private non-profit entity funded solely by DECD funds directed to it by the County.1 These funds are made available to the County for specific projects in response to applications, and can be awarded to the County through loans or matching grants. The projects are directed not so much to specific activities of private businesses, but to development of industrial parks, sewer and other utility capability, and other infrastructure activities designed to attract businesses to the county. These projects are managed by the Company, with private subcontractors or on its own. These grants or loans are developed by staff in the Division and are signed by the Secretary of the Department after approval action by the Assistant Secretary/Director. The grant or loan agreement is directly between the Company and DECD.

The gift that is the subject of this request is a Cross pen and pencil set. The Requestor estimates its value at about $115 based on finding it in a catalogue. It is a desk set engraved with his name and title and was presented to him in recognition of his promotion to Assistant Secretary. He sees it as a token gesture recognizing a "local boy who made good."

This request raises issues under §3-106 of the Public Ethics Law (Article 40A, §3-106(a), Annotated Code of Maryland, the Ethics Law). Section 3-106(a) bars any official or employee from accepting any gift2 from a person who (among other things) is doing or seeking to do business with the official's or employee's agency or has financial interests that can be particularly affected by his performance of his official duties. It would appear that the Company fits within this category,3 since it is a direct party to these transactions and must be accountable to the DECD for its implementation of the projects. Also, its activities would seem quite plainly to be impacted by the Requestor in his performance of his official duties. His acceptance of this gift would therefore be barred by §3-106 unless it falls within the exceptions set forth in subsection (b) thereof.

This subsection allows acceptance of otherwise prohibited gifts in certain situations, where the gift would not affect the official's or employee's impartiality or independence of judgment, or, if of significant value, give the appearance of doing so or being intended to do so. In connection with evaluating application of the proviso language of §3-106(b), we note that the Department's Deputy Secretary does not see any likely appearance problem arising from the Requestor's acceptance of this gift. We agree that the circumstances of this particular gift do not present a situation where the proviso language would limit the application of any specific exception set forth in the subsection, either because the gift would be likely to actually affect the Requestor's impartiality, or would give the appearance of doing so or being intended to do so. Thus, an exception could be allowed to the extent that the facts fit within the provisions set forth in the subsection.

A key factor in the subsection (b)(6) exception is that the gift be purely personal in nature. We note in this regard that the Requestor's affiliation with the Company predated his State service and that he held a position of some responsibility with it. Also, the gift was presented in connection with a particular infrequent occasion (his promotion), and could be viewed as a personal congratulatory gesture. Moreover, the Deputy Secretary of the Requestor's agency has stated that he does not believe the Assistant Secretary's acceptance of the gift would be detrimental to the agency's operations. We therefore conclude that subsection (b)(6) may be applied here to allow acceptance of the gift by the Requestor.4 He should keep in mind, since the gift is from an entity doing business with the State and exceeds $25 in value, that its receipt must be disclosed by him on Schedule D of his annual financial disclosure statement, as required by §4-103(d) of the Ethics Law.

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

Date: March 17, 1983

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1 There is a separate entity, having the same Board of Directors (the Cumberland-Allegany County Industrial Foundation) that is funded solely through private sources.

2 Defined in §1-201(p) of the Ethics Law as the transfer of anything of economic value without adequate and lawful consideration.

3 Note that §3-106(a) uses the term "person," which includes individuals and business entities (§1-201(x)). Since Allegany County is a governmental entity not fitting either of these classifications, a gift from it would not appear to be covered unless the county commissioners are viewed as individuals.

4 We wish to clarify that this conclusion relates solely to our interpretation of the principles in subsection (b)(6), and our view that there would be no impairment of impartiality or appearance thereof. This Opinion should not be read to a conclusion that a gift valued at $115 would be viewed as "insignificant" or "nominal" in value, either for purposes of the proviso language or the exceptions in subsections (b)(2) and (b)(3).