An opinion has been requested as to whether the Commission's financial interest exception regulations (COMAR 19A.02.02) may be applied to permit the Manager of Baltimore-Washington International Airport (BWI) to own stock in Piedmont Aviation (Piedmont).
This request was presented in a submission by the Manager of BWI Airport (the Manager) of an Interest Exception Disclosure Form in response to the Commission's general distribution of these forms. The Manager disclosed on the form his ownership of stock in Piedmont, which he subsequently indicated he purchased in January of 1983. He has also indicated that he sold the stock shortly after he became aware of the application of the provisions of the Ethics Law. He requested, however, that the Commission continue with consideration of this opinion request since he expects that in the future he may again want to buy airline stock.
Piedmont Aviation is an airline that has been a tenant at BWI since 1950. It has recently negotiated an arrangement with the State Aviation Administration (SAA) to significantly expand its presence at BWI, and the SAA has undertaken construction of add-on facilities at the airport for this carrier. Its facilities would increase from two to twelve gates and from six to thirty-eight flights per day. The Manager and his supervisor, the SAA Director of Airports, indicate that he generally does not participate in the decision process to bring an airline to BWI or to expand its service or facilities at the airport. According to his supervisor, the Manager was not involved in development of the contracts regarding Piedmont's new facilities, though his official position description indicates that he "participates in the review and approval of plans and specifications submitted by architects *and* engineers...." Nor, except to ensure that construction does not interfere with airport operations, does the airport's Manager appear to be significantly involved with the construction itself. The construction project is monitored by SAA's Office of Planning and Engineering, which reports directly to the agency Administrator.
The Manager's responsibilities do, however, involve substantial contact with all of the tenants and concessionaires at the airport. He is involved in day-to-day operational management of the airport, and supervises the station manager and other BWI staff who also directly interface with airline tenants. The Manager's duties for oversight of airport operations involve the responsibility for making decisions that could be expected to impact directly, sometimes substantially, on airlines operating out of BWI. It is the view of both the Manager and his supervisor that these duties are primarily operational and do not involve substantial policymaking or contract negotiation. Both also recognize, however, that there could be an appearance problem presented by the Manager's ownership of airline stock, since members of the public may not be aware of the distinction between these operational and policy roles.
Section 3-103(a) of the Public Ethics Law (Article 40A, § 3-103(a), Annotated Code of Maryland, the Ethics Law) prohibits officials from holding financial interests in entities that are under their authority or that of their agency, or that have or are negotiating contracts with their agency. The Manager's stock in Piedmont is worth in excess of $3,000. Based on our opinions that ability to sell an interest for over $1,000 brings it within the definition of financial interest (§1-102(m), see Opinions No. 79-1 and No. 81-21),1 this stock would constitute a financial interest for purposes of §3-103(a) of the Ethics Law. It would also appear that Piedmont meets the other criteria of §3-103(a), since it is an entity that contracts with and is under the authority of the SAA, and is also subject directly to the Manager's authority. His ownership of the stock disclosed on his form would thus be prohibited by §3-103(a) unless it is excepted under the interest exception regulations (COMAR 19A.02.02).
These regulations became effective on January 31, 1983, and implement introductory language in §3-103(a), which provides that the prohibitions of subsection (a)(1) apply "except as permitted by regulation of the Commission where such interest is disclosed or where such employment does not create a conflict of interest or appearance of conflict." The purpose of the exception is to avoid situations where a violation would result from technical application of the elements of §3-103(a) even where there is no conflicting relationship between the private interest or employment and official duties. The exception criteria define the circumstances where the relationship between an employee's official duties and private interest is remote, and the possibility of a conflict of interest or the appearance of conflict is unlikely. In addition to requiring disclosure of the interest, the criteria include findings that:
A. The State duties do not significantly impact on the entity or a contract between the entity and the agency.
B. The employee is not directly supervised by a person whose duties significantly impact on the entity or a contract between the entity and the agency.
C. The employee does not supervise a person whose duties significantly impact on the entity or a contract between the entity and the agency.
D. The employee is not affiliated with the specific unit in the agency that exercises authority over or contracts with the entity.
E. The employee has complied with other relevant sections of the Ethics Law.
F. The financial interest involves no non-ministerial duties significantly relating to the agency's authority over the employer.
G. The financial interest does not involve negotiating or carrying out a contract between the agency and the entity (except for broad fixed reimbursement contracts).
H. State contracts with the entity do not exceed: 20% of the entity's calendar year gross income, 1/3 of the entity's capitalized value, or a calendar year value of $5,000.
I. The specific circumstances of the situation do not otherwise create a conflict of interest or the appearance of a conflict.
Issues are raised by this situation under several of these items. As to item A, for example, it would appear that, though the Manager's duties may be primarily operational, rather than policy-making or contract formation, they do significantly impact on the airline, as he is the agency's representative and agent for ensuring implementation and execution of its contractual and official relationship with the airline. Also, under item E, there is a question of application of §3-101, which prohibits officials from non-ministerial participation in any matter which involves as a party an entity in which they have a financial interest.
Given the nature of his responsibilities, it would be reasonable to conclude that the Manager's daily participation in decisions involving the airline would constitute non-ministerial participation in matters as contemplated in §3-101. Even though his work is "operational" rather than policy-making, it does involve discretion. Under these circumstances, we conclude that an exception would not be appropriate as to the Piedmont stock originally disclosed by the Manager. Given the nature of his responsibilities and his relationship to airline tenants at BWI, we are unable to conclude that the relationship between the Manager and the entity in which he holds a financial interest is so remote as warrant application of the exception to this prohibition.
The Manager has also requested guidance regarding possible future purchases of airline stock. While we as a general matter provide advice only about actual fact situations, we believe that the Manager's duties are sufficiently defined so that we can advise him generally about future airline purchases. Though to some extent this is a speculative situation, it would appear that as long as his duties remain the same, ownership of stock in any airline operating out of BWI would be subject to the same considerations discussed here, and would therefore be barred by §3-103(a). As to other airlines not currently affiliated with BWI (or SAA), we believe that ownership of such stock would not be barred as long as the technical criteria of §3-103(a) are not met.
The Manager should be aware of the provisions of §3-103(a) and 3-101, however, and realize that any purchase of airline stock would entail the risk of having to subsequently sell it should the particular entity undertake a relationship with BWI (or SAA or DOT). The airport is a dynamic operation constantly seeking new carriers, and the Manager should be aware that §3-103(a) deals with entities negotiating as well as contracting with his agency. Also, he should keep in mind that §3-101 addresses any non-ministerial participation in matters involving an entity, including recommendation and advice.
Herbert J. Belgrad, Chairman
Reverend John Wesley Holland
Betty B. Nelson
Barbara M. Steckel
Date: June 27, 1983
1 Unless otherwise specifically cited to the Maryland Register, all Opinion citations are to Ethics Commission Opinions published in COMAR, Title 19A.