OPINION NO. 99-06
Ethics Commission advice has been requested from an individual (the Requestor) involved with the Department of Business and Economic Development's Business License Information System as to whether she may have a private business collecting and marketing permit and licensing inventory information relating to other states. We advise that this secondary employment and business activity is allowable within certain constraints designed to ensure that the activity and the Requestor's dealings with other states do not relate to or in any way impact on her duties for the Department.
The Business License Information System (BLIS) in the Department of Business and Economic Development (DBED) is an Internet-based system that is designed to assist people who have or plan to start businesses in Maryland in identifying and following the process for starting a business in the State. A person can log on to the BLIS Homepage and to the Search section, identifying the type of business involved, and where it will be located. Then there is a series of questions relating to how the business will be organized, what property it will use, the nature of its employee base, and other information. Based on these answers a search is done and a list is generated of the permits and licenses that will be required for the business. From the list fact sheets can be accessed and in some cases a form can be downloaded. Also, as to some required licenses a link is created to the issuing agency allowing the application to be filed on-line.
The Requestor as Administrator of BLIS was responsible for structuring the system from a conceptual point of view and for its original development and implementation, as well as for ongoing management and operation of the system. This involves meeting regularly with representatives of Maryland agencies included in the system to ensure continuing accuracy and timeliness of the information, and interacting with businesses that use the system, responding to questions and providing information. According to the Requestor's official position description her duties include supervision of data entry of State permit information, content management and plans, market development, hardware/software requirements, system testing and training, evaluation system development, and web site navigation. She indicates that while the fact sheets provided on BLIS are developed and owned by DBED, the forms option actually takes the user directly to the licensing agency with the ability to download the forms or actually file an application on-line.
This request relates to the Requestor's plans to organize a private business as an LLC, through which she would collect licensing and permit information from other states. She says that she would do this on her own time from her home phone and would work one state at a time calling licensing agencies for information about required business licenses. She would then create an inventory identifying the name of the other state's agency, the name of the required license, the purposes of the license, and identification of who to call for information or forms in the other state, possibly including a web site address. This inventory information would then be sold to another company for use in developing a nationwide web site for providing business licensing information. The Requestor indicates that one possible market for the information she will collect is a new company being set up by an individual who works for another company that has in the past contracted with DBED. She advises, however, that the individual's work with DBED has been completed for some time and that neither the individual nor the company currently have any dealings with DBED.
According to the Requestor, the plans for this undertaking are still in the quite formative stage. She says that the possibility of creating a nationwide inventory was suggested by her in casual conversation and this individual followed up with her later. He would continue to work for his current employer and set up a separate business as an individual secondary undertaking. Apparently this individual is considering eventually setting up a nationwide clearinghouse and possibly creating an electronic licensing program that would allow on-line filing for a user fee paid either by the filer or the licensing agency. This company would market through a web site on the Internet and may sell advertising space on the site. The Requestor says, however, that she would not be a part of these later possible transactions, but would be involved only in developing and selling the inventory information. She says that she would not anticipate being a part of the other company's web site except for possible recognition by name, but without any reference to her Maryland position.
We are advised by both the Requestor and her agency that she does not as a general matter interact with parallel agencies in other states. She says that her activities are solely involved with Maryland agencies. Her private work would also not entail dealing with the economic development agencies in other states, but with the licensing agencies in these states. Also, the agency ethics liaison confirms the agency managers do not believe that there would be a conflict presented here with the Requestor's carrying our her DBED functions. Her immediate supervisor concurs that the Requestor has little interaction or involvement with other states in the context of her official duties, indicating that her only concern is that any work not be done on State time or using State information or facilities.
The Requestor here will have a private business that will not itself be subject to the authority of DBED or apparently have any contractual or business relationships with it. We therefore believe that this is a situation primarily raising issues under the employment impairment provisions of §15- 502(b)(2) of the Public Ethics Law (State Government Article, §15-502(b)(2), Annotated Code of Maryland), and the various opinions issued by the Commission dealing with this type of private consulting or sole proprietorship businesses.1 This section of the Law bars an employee from having any secondary employment that would impair their impartiality or independence of judgment, and has generally been viewed by the Commission as a complement to the strict employment and interest prohibition (§15-502(b)(1)). It has been viewed as applying where there is no contractual or regulatory relationship between a private activity and a person's agency, but where there are other relationships that suggest concerns about whether a person can engage in the activity and still maintain their impartiality and independence of judgment. The impairment provision of the Law has especially been viewed as applying in situations involving private consulting businesses, activities involving other states or federal work, and private practices.
As a general matter we have provided advice as to limitations and restrictions that would apply in these kinds of secondary activities, but have tended not to view the Law as totally barring activities based solely on the potential for abuse to occur. Also, in prior advice situations we have considered this type of consulting business in view of the prohibition in §15-506 of the Law against the use of prestige of office for one's own economic gain or that of another, applying an abuse standard in this situation as well, rather than concluding that an activity was absolutely barred by §15-506. We have advised, for example, that use of State time, materials and equipment would be within the prestige prohibition, and this section has been the basis for prohibiting employees from engaging in private businesses that involve interaction with populations also served by their agencies. We have said, however, that more than common subject matter or expertise between State and private employment is required to support a finding of intentional use of prestige of office as contemplated by §15-506.
The general approach developed under these two provisions of the Law as applied to outside consulting and related private endeavors has resulted in a series of criteria, including for example, that the activity is out-of-state or in a different geographic jurisdiction than the employee's agency duties, that it is not the type of undertaking that the person might be expected to do as part of their State duties and would not involve individuals or matters with which the person would be interacting or impacting in their State job, and that the activity would not be done on State time or as part of official duties or have some direct relationship to the individual's State job and duties. In the situation here the Requestor plans a private business that will entail dealing with licensing agencies of other states with which she apparently has no dealings in her work with DBED's BLIS. She states that she can do this research on her own time using her own computer and telephone connections. Also, her agency seems to suggest that this is not a situation where it has dealings with its counterparts in other states and where she would be participating officially in conferences with other states where she could develop private business opportunities.
We believe that the circumstances of this situation as they are described to us by the Requestor and her agency are sufficiently similar to others where an activity has been allowed that the Requestor can be advised that this activity would not be barred by application of the employment or prestige provisions of the Public Ethics Law. She needs to take considerable care to ensure that the activity proceeds as described, however, particularly as the company that she will be selling the information to is being created by an individual that she came to know through his dealings with DBED, and that the information and basic system is similar to what she has developed and is responsible for in Maryland. The Requestor should clearly understand that she is obliged to take great care to monitor her activities and understand that if the situation changes then some or all of her activities may need to be discontinued, and also that certain constraints need to be followed.
First, Requestor's private activities may not entail any business or commercial transactions with individuals or entities with which she may deal in her official duties, or that as a general matter have contractual interactions with DBED. Her anticipated sale of information to the individual who has in the past dealt with DBED, for example, can continue only assuming that he does not in the future have any involvement with the agency, either as an individual or through his primary employer. Also, the Requestor may not engage in this activity during her regular State workday or make use of any State equipment, materials or information such as telephones, facsimile machines or other equipment. To the extent that any information or programming has been developed in connection with her DBED work on BLIS, and is owned by DBED or any other Maryland agency, it may not be used by her in the context of this private activity. Also, she cannot, as long as she works for the State, rely on her Maryland position in communicating with agencies in other states to collect and compile information or assist the individual to whom she will be marketing her information in working with other states to develop a nationwide clearinghouse in this field. Moreover, our advice assumes that the Requestor, her agency, and the State generally do not become involved in interacting with other states to advance this type of information program. If the Maryland agency were to begin to coordinate with other states' programs and the Requestor were to become involved in interactions with her counterparts in other states, then the situation would have to be reevaluated to determine if and under what circumstances this activity could continue.
Charles O. Monk, II, Chair,
Dorothy R. Fait,
April E. Sepulveda
Date: August 27, 1999
1 See, for example, Opinions No. 85-18 and No. 86-14. Opinions published in COMAR Title 19A.