90.07

OPINION NO. 90-7

An Opinion has been requested as to whether and how the Public Ethics Law applies to limit the solicitation or acceptance of memberships or other contributions from utilities and others subject to the jurisdiction of the Public Service Commission by a private art museum with which a member of the Commission (the Commissioner) is affiliated and for which his spouse serves as Executive Director. We advise the Commissioner that solicitation and acceptance of donations or memberships by the Museum would be prohibited as long as he continues his employment services as a board member or officer of the museum. If he were to discontinue these relationships, however, donations and memberships could be accepted from such entities as long as certain other constraints are met.

This request is presented by a Commissioner of the Public Service Commission (PSC), who with his spouse is a founder and continuing officer in the Maryland Museum of African Art (the Museum). The Commissioner is one of five full-time Commissioners, all appointed by the Governor. The PSC is established in Article 78, Annotated Code of Maryland. It has regulatory authority over all public utilities and similar entities in the State. It has jurisdiction, for example, over gas and electric companies, telephone companies, radio common carriers, taxicab companies (in four jurisdictions), private water and sewer companies, telegraph companies, intrastate bus services and courier services. The Commission issues certificates of convenience and necessity, establishes rates and routes and hears customer complaints as to matters such as billing disputes and service termination. All final decisions are made by the Commission. The jurisdiction of the Commission extends primarily to intrastate service. It therefore exercises authority over major local utility entities such as BG&E, PEPCO, Potomac Edison, C&P and AT&T.

The Commissioner has regularly filed financial disclosure and has in each year disclosed his involvement with the Museum. This is non-profit arts and cultural enterprise incorporated in 1980 by him and his spouse, who were and continue to be the only officers of the Corporation. There is a Board of Trustees and an Advisory Council consisting of persons in the business, art and educational fields. According to the Commissioner, none of these individuals are affiliated as employees or officers of a utility or other entity regulated by the PSC. The enterprise originally consisted primarily of his spouse's taking African art exhibits to various schools and other locations and making presentations about the items displayed. The undertaking was funded largely with personal funds provided by the couple and with nominal contributions or fees provided in connection with the presentations.

The Museum recently moved to a new location in Howard County, and is thus taking on a more permanent and established existence. This includes the establishment of a salaried Executive Director/Curator position filled by the Commissioner's spouse, as well as a part-time secretarial position. Budgeting for the Museum is therefore a more significant undertaking, and it has broadened its funding appeals, to include requests for State, corporate and individual funding. A $50,000 capital bond bill was enacted in the 1989 Session of the General Assembly. Funds to match this amount are being sought through corporate and institutional donations, through a significantly expanded fundraising effort.

The Museum has sponsored a night with Diana Ross, for example, and anticipates a number of similar fundraising events over the next year or so. The organization has a membership program which seeks corporate contributions as well as individual, family and community organization memberships. The Commissioner indicates that in connection with its membership and fundraising activities the organization uses a mailing list that is internally generated. This is done through newsletters, hand-outs at arts activities, word-of-mouth and use of sign-in books at the Museum. The list includes about 1000 names, none of which to the Commissioner's knowledge include any utility. In fact, the Commissioner advises that the Museum has consciously avoided in its fundraising or other activities any targeting of utilities or other entities that are within the jurisdiction of the PSC.

The Commissioner identifies, however, two past contacts which such entities, one involving the purchase by two regulated utility companies of 10 tickets each to the Diana Ross fundraising event. The Commissioner advises that both of these purchases were unsolicited, one purchase, for example, resulting from the fact that the Chairman of the Howard County Arts Council is an employee of the company involved. The other situation involved his spouse's presentation on African art at a meeting of the MD-DC Utilities Association. The Commissioner indicates that he and his wife have along with other members of the Commission attended this affair on a regular basis. She has participated in spouse activities and her interest in African art is known. She was invited to make a subject matter presentation as part of the spouses' activities program. She did so and was paid a small appearance fee. This advisory opinion request arose out of the submission in November 1989 of a $200 corporate membership from a utility that serves metropolitan Washington areas in Maryland, and which is under the Commission's rate setting and regulatory jurisdiction. The company is apparently not on any Museum mailing list and the membership was wholly unsolicited.

The issues presented here involve application of the inconsistent employment, prestige of office, and gift provisions of §§3-103(a)(1)(ii), 3-104, and 3-106 of the Public Ethics Law (Article 40A, §§3-103(a)(1)(ii), 3-104, and 3-106, Annotated Code of Maryland, the Ethics Law).1 Section 3-103(a)(1)(ii) bars any employment relationships that would impair the individual's impartiality or independence of judgment, while §3-104 prohibits a person from using the prestige of his office for his own economic gain or that of another. §3-106 of the Law prohibits employees from soliciting gifts and from accepting gifts from parties that are impacted by their agency.

In evaluating application of these provisions to the Commissioner's situation, we believe that he has two possible options. One approach would be for the Museum to adopt the policy of not having any dealings with utilities or others subject to PSC jurisdiction. This would involve not including such entities or persons clearly known to be utility managers or lobbyists on the mailing lists, not accepting donations or memberships from such persons or entities, and not having any other involvement with them (such as making presentations to utilities or their associations). If this approach were taken and followed in good faith, we believe that neither the employment or other provisions of the Ethics Law would apply to prohibit or otherwise limit the Commissioner's continued involvement with the Museum as in the past. This approach, of course, would entail some record keeping and could cause unavoidable problems where regulated persons or entities affiliate with the Museum without his knowledge.

An alternative approach would be to consider application of the inconsistent employment, gift, and prestige of office provisions of the Law to the Commissioner's affiliation with the Museum if it continues its approach of not soliciting contributions or memberships but receives corporate or related contributions, memberships or consulting revenue from utilities or other entities that are subject to the authority of the PSC. As to the employment provisions, the Commissioner serves as an officer and trustee of the Museum, and also provides services to it. He would therefore have an employment relationship with the Museum. In our view, the type of very substantial past and current involvement he has had with an entity that receives financial support from utilities and other entities subject to Commission authority raises issues that would bring the activity within the impairment prohibition of §3-103(a)(1)(ii). These issues are reflected in indications by the PSC Chairman of concern about appearance problems that could arise if a pattern of these kinds of contributory relationships were to develop.

Also, as to §3-104, we believe that it would be very difficult for the Commissioner to disassociate himself from his official position and avoid potential prestige of office issues if he were so significantly involved with an entity involved in financial relationships with regulated entities or persons. In addition, §3-106 of the Law prohibits officials and employees from soliciting any gift. This is a very broad language, which we have informally recognized does not necessarily limit private charitable fundraising. Also informally, however, we have advised that persons holding high level and visible State positions should generally avoid private fundraising activities that involve solicitation to individuals or entities subject to their contractual or regulatory authority or that of their agency. Here the issue is even more significant, where a substantial part of the Museum's revenue would support the salary of the Commissioner's spouse.

While we do not in any way wish to impugn the Commissioner's integrity or suggest that he would improperly involve regulated entities or persons with his private activity, we believe that the significance, visibility and breadth of impact of his public position with the PSC require that the utmost caution be taken to avoid even the appearance of conflict (see §1-102(b) of the Law). We therefore advise the Commissioner that if the Museum anticipates accepting donations or memberships from utilities or other entities regulated by the PSC, he should discontinue his service as an officer and board member of the Museum. While we recognize that he could continue with informal volunteer involvement, we believe that he should also avoid any duties involving management or control of the Museum or where he would be viewed as a responsible party as to its financial relationships.

Which of these approaches the Commissioner adopts would be, of course, a matter for his own evaluation and consideration with his spouse in view of the nature of the Museum's organization and structure. Whichever approach he adopts, he would need to take care to avoid any situation where it could be suggested that he is soliciting gifts or using his position to advance the interest of the private entity. This would include, for example, not interjecting the Museum or his spouse's activities in conferences or other matters relating to the PSC. If the Commissioner were to follow one or the other of these approaches, taking into account these constraints, we believe that the activities of the Museum and his affiliation with it would not be inconsistent with the provisions of the Ethics Law.

William J. Evans, Chairman
   Robert C. Rice, Ph.D.
   Barbara M. Steckel

Date: May 9, 1990

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1 The Museum is not an entity that is regulated by or a contractor of the Public Service Commission, and it does not appear that it would otherwise be impacted by the agency or present situations in which members of the Commission would be expected to participate on behalf of the State. The strict employment provision of §3-103(a)(1)(ii), which prohibits an official or employee from being employed by any entity that contracts with or is subject to his authority or that of his agency, would therefore not be at issue here.