95.06

Opinion No. 95-6

Advice has been requested regarding application of the Time of Appointment exemption to a member of the Governor's Council on Adolescent Pregnancy. Based on previously submitted disclosures and information regarding current transactions, and the specific facts presented regarding current activity, we advise that the previous Time of Appointment Exemption Disclosure Statements apply to allow the continued private involvement of the Member in the pending transaction.

The Governor's Council on Adolescent Pregnancy (GCAP or the Council) is established in Article 49D, §§21-27, Annotated Code of Maryland. It is designated as an independent agency located within the Governor's Subcabinet for Children, Youth and Families (OCYF) for budgetary and administrative purposes. The Council includes 20 members appointed by the Governor, including 5 persons from the community with interests or expertise in the field, 2 local government representatives and 2 student members. The Council's general purpose is to reduce unplanned adolescent pregnancies in the State. It has no direct grant or regulatory authority, but is to play an advocacy and planning role, collect information, and promote cooperative efforts among all of the levels of public and government involved in this problem.

Prior to establishment of GCAP to implement the State's teen pregnancy program, the Member had been involved in setting up a private nonprofit organization (the Charity) to address the issues of teen pregnancy. Funding for advertising activities in the field was, prior to establishment of GCAP, awarded to the Charity on a sole source basis, originally through the Department of Health & Mental Hygiene. This program approach apparently reflected the practice and policy that funds from private contributions, available through the Charity, would be added to the State funds to enhance the scope and capability of the program. The Member serves as Executive Director of the Charity. Apparently because of this pre-existing involvement in establishing the Charity, the Member was recruited by the former Governor to serve on GCAP, to fill a seat designated as a person with community interest or expertise.

Since establishment of GCAP, the Charity has continued to be awarded the program contract, which is executed and monitored through the Office of Children Youth and Families (of which GCAP is a unit). The funding originally was just under $100,000 and has since increased to about $320,000 planned for FY 96. The Charity, which continues to be involved as a nonprofit fundraising contributor to the project, in turn contracts with the Member's advertising firm to produce and air ads aimed at reducing adolescent pregnancy. A procurement action is currently pending under which the services would be purchased through the bidding process. A new contract is anticipated beginning in Fiscal Year 1996. Because some issues have been raised regarding the Member's dual affiliation an advisory opinion has been requested in the context of that procurement.

At the time his original appointment was being made in July 1989, the Member consulted with Ethics Commission staff about his already existing preappointment affiliation with the Charity and the fact that the advertising firm was already involved in producing TV spots for the teen pregnancy program. He was advised that this relationship was a conflict and that he would need to submit it on a Time of Appointment Exemption Disclosure Statement and, if appointed, not participate in matters pertaining to the Charity or the advertising contract. Pursuant to this advice the Member submitted a time of appointment disclosure form in 1989 that reflects his affiliation with the Charity and also with his advertising firm. This is required in such situations so that the appointing authority can determine if the individual should be appointed in spite of a conflict. In this case the appointment was made, thus exempting the conflict to the extent allowed by the Law. The Member was subsequently reappointed in October 1994 and at that time reiterated his private affiliations in a letter to the Governor attached to a Time of Appointment Disclosure Statement. Though apparently received by the Appointments Office at the time of the reappointment, this correspondence and Statement were inadvertently not transmitted to the Ethics Commission until about two months later. (These forms are to be maintained and available for public review at the Ethics Commission office and are also maintained in the Governor's Appointments Office.)

This request presents issues under §3-103(a) of the Maryland Public Ethics Law (Article 40A, §3-103(a), Annotated Code of Maryland, the Ethics Law), which prohibits officials and employees from being employed by or having a financial interest in an entity that contracts with or is subject to the authority of their agency or an agency with which they are affiliated (subsection (a)(1)(i)). It also bars any other employment that would impair their impartiality or independence of judgment (subsection (a)(1)(ii)). This prohibition applies as an initial matter to individuals such as the Member, who are appointed to serve on boards and commissions established under State law. Though GCAP is defined as an independent agency, it is affiliated with OCYF, which is now the contracting entity in the adolescent pregnancy advertising program. Moreover, the actual monitoring of the contract is handled by GCAP staff. The Member as Executive Director of the Charity would be viewed by the Commission as having an employment relationship with it, and he also has an employment and financial interest relationship with his advertising firm, the subcontractor on the project.

Under these circumstances, we believe that the Member's dual relationship comes within the prohibition of §3-103(a). Subsection (a)(2)(iii), however, includes a special exemption applying to persons appointed to boards and commissions, providing that the prohibition does not apply to

a member of a board or commission in regard to a financial interest or employment held at the time of appointment, provided it is publicly disclosed to the appointing authority, the Commission, and in instances where confirmation is required, to the Senate prior to confirmation.

We have generally viewed this provision as designed to allow the appointing authority to make its own value decision to bring experience and expertise to a board despite the known existence of a conflicting interest. There are a large number of these exemptions granted by the appointing authorities each year. This exemption applies by operation of law as to existing conflicts disclosed in connection with the appointment process and not rejected by the appointing authority or the Senate. (Note that Senate confirmation of GCAP members is not required.) The Commission does not have a substantive role in granting or denying exemptions under this provision. We are rarely consulted in the substantive decision, although the staff is often contacted for technical analysis and forms review. Disclosures filed with the Commission are acknowledged with a brief indication that the exemption application is limited to existing conflicts and that the other ethics conduct provisions such as nonparticipation continue to apply.

In the situation here, the Member submitted a Time of Appointment Exemption Disclosure Statement in connection with his original appointment that discloses his affiliation with the Charity and his firm, and their involvement with activities relating to teen pregnancy and DHMH, the agency with which GCAP was affiliated at the time. We are advised in the interim that he has served on GCAP, but has not participated in any matters pertaining to the advertising contracts, as this part of the program is entirely a staff function and GCAP itself has no contract authority. Also, in connection with his recent reappointment, the Member communicated by letter, with a signed Time of Appointment Exemption Disclosure Statement attached, to the appointing authority reviewing again the specific contractual relationship that is at issue. The letter specifically expresses an interest in bringing these circumstances to the Governor's attention again, so that he can reconfirm or change his decision.

We believe under all of these circumstances that the Member's private relationships with entities involved in the GCAP program were sufficiently disclosed to meet the requirements of §3-103(a)(2)(iii). The appointing authority decided to reappoint the Member with knowledge of the conflict. Therefore the exemption applies to allow these continued relationships notwithstanding the limitations of §3-103(a). The Member, of course, must continue to disqualify himself from participation in any GCAP activity relating to transactions involving private entities with which he is affiliated, as required by §3-101 of the Law, and to otherwise comply with the prestige, gift and information provisions of the Law (§§3-104, 3-106, and 3-107).

Mark C. Medairy, Jr., Chairman
    Michael M. May
    Charles O. Monk, II
   April E. Sepulveda

Date: May 17, 1995