88.11

OPINION NO. 88-11

An Ethics Commission opinion has been requested as to whether the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law) applies to limit the activities of a State Highway Administration reviewing appraiser (the Employee) who has personal and economic relationships with a private contract appraiser (the Contractor) who provides services to the agency. We advise the Employee and his agency that the facts do not come within the disqualification provisions of §3-101 of the Ethics Law.

This request is presented by the Director of the Office of Real Estate in the State Highway Administration (SHA), on behalf of a Reviewing Appraiser in one of SHA's Right of Way Districts. The State Highway Administration is charged with the responsibility of constructing and maintaining the State highway system. In connection with this activity it buys and sells property on which a highway or road will be constructed or which will serve as a buffer zone, easement or in another use connected with the highway. The Administration is authorized by the Transportation Article, §8-302, Annotated Code of Maryland, to acquire real property for any highway purpose. It has Right of Way Offices throughout the State whose function is to purchase property in connection with specific highway projects. These offices are part of the SHA's headquarters Office of Real Estate.

When a property is identified as required for a highway project, the first step in acquiring it is to have it appraised, by an SHA staff appraiser or by an outside independent fee appraiser hired by contractual agreement between the SHA and a private appraiser. The Right of Way District Chief determines whether an appraisal will be done by staff or by a private fee appraiser, and solicits bids (in accordance with State procurement regulations) from three of the ten or so private appraisers in a particular area that are used by the Right of Way Office. It is the District Chief who decides which private appraiser will be used, and what the terms and conditions of the agreement will be. The completed appraisal is provided to an agency reviewing appraiser, whose job is to review it for legal sufficiency, relevancy and fair market value. The review appraiser may confer with the private appraiser to resolve differences, and may accept, reject, or require corrections in an appraisal. The appraisal received, reviewed and corrected becomes the basis on which the Administration makes an offer of compensation to the property owner.

The Employee has been employed in this Right of Way Office for 23 years. He has been a right of way agent, and is currently a reviewing appraiser. The issue presented here arises from his friendship and private relationship with the Contractor, who is a former employee of the District and currently a private fee appraiser. The Employee indicates that the two worked together in the Office and have known each other for about 20 years. While they were both employees, they became good friends and their families are friends and engage in activities together. Particularly, the Employee indicates that he and the Contractor own together a recreational vehicle/trailer that their families use for vacation purposes.

According to the Employee, the trailer is an old one that is worth about $4000. It is owned by the two outright with no loans or other encumbrances. They also share in the lease of campground property on which the trailer is stored. The Employee advises that the trailer is used solely for family recreational purposes; it is not now nor has it ever been leased or otherwise used in a commercial activity. Also, he indicates that the two do not have any other commercial or business relationship. He says that once several years ago when they were both agency employees, they bought, refurbished and sold a boat. This is not a continuing business activity, however, and we are informed that they currently have no business dealings, and would not anticipate any in the future.

The issue here is whether any of the provisions of the Ethics Law would apply to compel any action on the part of the SHA regarding the relationship between the Employee and an agency contractor. We do not believe that there is a business relationship here that requires application of the outside employment and interest provisions of §3-103(a)(1) of the Law. This prohibition bars employment with entities that do business with an employee's agency, as well as any other employment that would impair his impartiality or independence of judgment. Though the Employee and the Contractor have in the past bought and sold a boat, this does not appear to be a continuing or currently functioning business enterprise between the two men.

Moreover, the Employee advises, as to the trailer, that it has never been leased or used commercially; it is used solely as a vacation home for the two families. We have in prior opinions held that property held for use as a private residence did not result in the existence of a business entity for purposes of the Ethics Law. (See Opinion No. 83-27.) As there is also no indication that the Employee is involved in the Contractor's appraisal business, we conclude that the private dealings between the Employee and the Contractor do not result in a business relationship that would come within the provisions of §3-103(a) of the Law.

In addition to the outside employment and interest prohibitions, the other sections of the Law that could be at issue are the disqualification provisions of §3-101 of the Law and the prestige provision of §3-104. The disqualification provision bars participation by employees in matters in which they have an interest, and also bars participation in any matter which involves as a party a business entity with which the individual has certain economic relationships. Based on the information presented by the Employee, we do not believe that his review of the Contractor's appraisals would, by virtue of his friendship and joint property ownership with the Contractor, be barred by the general language of §3-101. Nor do we believe that the friendship and joint property interests between the Employee and the Contractor result in a business entity that would bring the Employee's participation within the specific prohibitions of §3-101(a). We also note that agency managers do not believe that this relationship would impair the employee in any interaction with the Contractor.

The Employee should also be aware of the prestige of office provision of §3-104 of the Ethics Law, which prohibits the use of prestige of office for one's own economic gain or that of another. Though there is no requirement for the existence of a business or other relationship in application of this provision, we note that the Employee is not directly involved in the determination of whether to select the Contractor for a particular project. Also, he does not appear to have any role regarding the Contractor's fee or other conditions of his contract with the Administration. We do not believe that the Employee's review of the work product submitted under the contract would necessarily in itself, and in the absence of any wrongful conduct, constitute the intentional use of prestige as contemplated by this provision.

Care, of course, should be taken to monitor this situation, and the agency may prefer to assign the Contractor's appraisals to another reviewing appraiser. However, based on our analysis of the facts as presented to the Commission and our interpretation of these provisions of the Ethics Law, we advise the Employee and his agency that the Law does not apply, as a technical matter, either to prohibit the Employee's private relationships, or to require his disqualification from reviewing the Contractor's submissions or otherwise compel the agency to take action reorganizing this District's workload.

M. Peter Moser, Chairman
   William J. Evans
   Rev. C. Anthony Muse
   Betty B. Nelson
   Barbara M. Steckel

Date: May 4, 1988