Agenda Item 8
September 16, 2014
Public Hearing
MEMORANDUM
TO:
County Council
FROM:
t~Cbael
Faden, Senior Legislative Attorney
Public Hearing:
Bill 39-14, Ethics - Amendments
SUBJECT:
Bill 39-14, Ethics - Amendments, sponsored by the Council President at the request of
the Ethics Commission, was introduced on July 29,2014. A Government Operations and Fiscal
Policy Committee worksession is tentatively scheduled for September 22 at 2 p.m.
Bill 39-14 would revise certain provisions of the County ethics law governing financial
disclosure and solicitation and acceptance of gifts to meet certain requirements of state law. See
the transmittal letter from the Ethics Commission for details (©37-40). For further analysis of
the Bill and how it relates to the state requirements, see the Bill review letter from the County
Attorney on ©41-54.
This packet contains:
Bill 39-14
Legislative Request Report
Transmittal memo from Ethics Commission
Bill review letter from County Attorney
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CORRECTED COPY
Bill No.
39-14
Conceming: Ethics - Amendments
Revised: 7-28-14
Draft No.
..1!!..
Introduced:
July 29,2014
Expires:
January 29, 2016
Enacted: _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ __
Sunset Date: _ _ _ _ _ _ __
Ch, _ _, Laws of Mont Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the request ofthe Ethics Commission
AN
ACT to:
(1)
(2)
revise certain provisions of the County ethics law governing financial disclosure and
solicitation and acceptance ofgifts to meet certain requirements ofstate law; and
generally update and amend the County ethics law.
By amending
Montgomery County Code
Chapter 19A, Ethics'
Sections 19A-4, 19A-16, 19A-17, 19A-18, 19A-19, and 19A-20
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment,
Deletedfrom existing law or the bill by amendment.
Existing law unqffected by bill.
The County Council for Montgomery County, Maryland approves thefollowing Act:
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BILL
No. 39-14
(CORRECTED COpy)
1
See. 1. Sections 19A-4, 19A-16, 19A-17, 19A-18, 19A-19, and 19A-20 are
amended as follows:
19A-4.
Definitions.
2
3
4
5
Unless the context clearly indicates otherwise, the following words have the
following meanings:
6
7
8
*
G)
*
*
Interest
or
economic interest
means any source of income or any other
legal or equitable economic interest, whether or not the interest is
subject to an encumbrance or a condition, which is owned or held in
whole or in part, jointly or severally, and directly or indirectly_ Interest
does not include:
(1) an interest in a time deposit or demand deposit in a financial
institution or in a money market fimd with assets of at least
$10,000,000;
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16
(2) an interest in an insurance policy, endowment policy, or annuity
contract under which an insurance company promises to pay a
fixed number of dollars either in a lump sum or periodically for
life or some other specified period; [or]
(3) an interest in a deferred compensation plan that:
(A) has more than 25 participants; and
(B) <the Internal Revenue Service has detennined qualifies
under section 457 ofthe Internal Revenue Code; [or]
(4) an interest in a common trust fimd or a trust that fonns part of a
pension plan or profit-sharing plan that:
(A) has more than 25 participants; and
(B) the Internal Revenue Service has determined to be a
qualified trust or college savings plan under the Internal
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(!)
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BILL No. 39-14 (CORRECTED Copy)
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19A-16.
(a)
Revenue Code; [and] or
(5) an interest in a mutual fund [(including a closed-end fund and a
unit investment trust) regulated by the Securities and Exchange
Commission, in which the investor does not control the purchase
or sale of the individual securities the fund holds] that is publicly
traded on
~
national scale unless the mutual fund is composed
primarily ofholdings of stocks and interests in
~
specific sector or
area that is regulated
Qy
the individual's governmental unit.
*
*
Soliciting or accepting gifts.
*
A public employee must not solicit [a] any gift [to the employee or
another person or organization:
(l)
from any business or person who:
(A) is registered or must register as a lobbyist;
(B) does business with the County agency with which the public
employee is affiliated; or
(C) is, or owns or operates a business that is, regulated by the
County agency with which the public employee is
affiliated;
(2) during official work hours, or at a County agency, or from any other
public employee who is supervised directly or indirectly by the
public employee;
(3) while wearing all or part of an official uniform of a County agency,
or while otherwise identifiable as a public employee;
(4) for the employee's own benefit, unless the Ethics Commission
approves the solicitation; or
®
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(5) with the intent of affecting or offering to affect any action by a
County agency].
[(b)
However, a public employee may solicit a gift:
(l)
from public employees during official work hours, or at a County
agency, for a charitable drive that is approved by the County
Executive or (for public employees of the legislative branch) the
President of the Council, when the solicitation is part of the
public employee's official duties;
(2)
from any person to a charitable organization, as defined in the
state law regulating public charities, or a municipality, if the
public employee does not solicit gifts primarily from those
persons who do business with or are regulated by the county
agency with which the public employee is affiliated, or from
other employees who are supervised directly or indirectly by the
public employee;
(3)
from any person, during official work hours, while identifiable as
a public employee, or at a County agency, for the benefit of a
County agency or a nonprofit organization formally cooperating
on a program with a County agency if the solicitation is
authorized by the County Executive or (for public employees of
the legislative branch) the President of the Council in an order
printed in the County Register that designates:
(A)
(B)
(C)
(D)
the public employee authorized to solicit the gift;
the purpose for which the gift is sought;
the manner in which the gift may be solicited;
the persons or class of persons from whom gifts may be
solicited; and
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(E)
(4)
the type of
gifts
that may
be
solicited;
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while wearing all or part of a uniform of the corporation, to a
nonprofit fire or rescue corporation of which the public employee
is a member; or
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(5)
from any person to a charitable organization, as defmed in the
state law regulating public charities, while identifiable as an
elected official, if the employee lists in a supplement to each
annual fmancial disclosure statement each organization to which
the employee solicited a contribution during that year.]
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Oil
A public employee must not directly solicit or facilitate the solicitation
of
f!
gift, on behalf of another person, from an individual regulated
lobbyist.
(c)
A public employee must not knowingly accept a direct or indirect gift
from any individual or organization that the public employee knows or
reasonably should know:
(l)
is registered, or must register, as a lobbyist on a matter that is or
could be considered by the County agency with which the public
employee is affiliated;
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(2)
does or seeks to do business.1 regardless of amount, with the
County agency with which the public employee is affiliated;
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(3)
owns or operates a business that is regulated by the County
agency with which the public employee is affiliated; or
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(4)
has an identifiable economic interest that is different from that of
the general public, which the public employee may substantially
affect in performing the public employee's official duties.
(d)
Subsection (c) does not apply to:
(j)
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(1)
meals and beverages consumed in the presence of the donor or
sponsoring entity at
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function attended
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at least 20 persons
.Qh
if fewer than 20 persons attend, meals and beverages consumed
in the presence of the donor or sponsoring entity which do not
exceed $50 in value from the same source in any calendar year;
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(2)
ceremonial gifts or awards [with a resale] that have insignificant
monetary value [of $100 or less, if the gift or award
commemorates an event or achievement associated with the
public employee];
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(3)
[items of personal property, other than cash, worth less than $10;]
unsolicited gifts of nominal value that do not exceed $20 in cost,
or trivial items of informational value;
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(4)
reasonable expenses for food, travel, lodging, and scheduled
entertainment of the public employee, given in return for the
public employee's participation in a panel or speaking at a
meeting;
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(5)
gifts to an elected official, [or that official's designee who is
assigned to represent the official at an event included in this
paragraph,] if the gift:
(A)
(B)
is a courtesy extended to the office; and
consists of tickets or free admission for the [employee and
one guest] elected official to attend a charitable, cultural,
[civic, labor, trade, sports,] or political event, including
meals and beverages served at the event;
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(6)
any item that is solely informational or of an advertising nature,
including a book, report, periodical, or pamphlet, if the resale
value of the item is [$25] $20 or less;
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(7)
(8)
gifts from a relative;
honoraria [or awards for achievement] for speaking to or
participating in
I!
meeting if the offering of the honorarium is not
related to the employee's official position; or
(9)
a specific gift or class of gifts which the Commission exempts
from this Section after finding in writing that accepting the gift or
class of gifts is not detrimental to the impartial conduct of the
business of a County agency.
(e)
(f)
Subsection (c) does not apply to unsolicited gifts to a County agency.
A public employee who receives a gift that the public employee must
not accept under this Section must report the gift to the Commission, if
otherwise required to report it, and return the gift to the donor or transfer
the gift to the County. [If the unacceptable gift is a perishable item, the
employee, instead of transferring the gift to the County, may transfer it
to a charitable or educational organization that can make timely and
effective use of the gift, so long as the employee is not an officer,
director, trustee, partner, or employee ofthe receiving organization.]
19A-17.
Who must file a financial disclosure statement.
under oath:
[(1)]
Weach incumbent and candidate for:
[(a)] The following persons must file a public financial disclosure statement
[(A)]
[(B)]
ill
County Executive; and
ru
County Council;
ill
Chief Administrative Officer and any Deputy or
Assistant Chief Administrative Officer;
[(2)]
{hl
the following public employees:
[(A)]
[(B)]
ill
special assistants to the County Executive;
(J)
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[(C»)
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director and deputy director of each department,
principal office, and office in the County government;
[(D) any officer holding a position designated by law as a non­
merit position;]
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each Hearing Examiner in the Office of Zoning and
Administrative Hearings;
[(E)]
ill
members of the County Board of Appeals;
[(F)
(Q)
members ofthe Commission; and)
each member of the Fire and Emergency Services
Commission, Board of License Commissioners, Revenue
Authority, and Housing Opportunities Commission;
[(G)]
ill
members ofthe Merit System Protection Board;
00
(2)
the Council Administrator and the Deputy Council
Administrator, ifany;
each Senior Legislative Analyst, Legislative Analyst,
Senior Legislative Attorney, and Legislative Attorney for
the County Council;
om
the Legislative Information Officer for the County
Council;
.Ql)
each Senior Legislative Analyst and Legislative Analyst
in
the Office of Legislative Oversight;
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each Legislative Senior Aide III for the County Council;
(U)
the Inspector General;
[(3)]
(H)
any person who is appointed to serve
in
an acting
capacity in any position listed in the preceding paragraphs
while the position is vacant; and
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(CORRECTED COpy)
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(£)
the fO'llO'wing public emplO'yees, if nO't already required to' file under this
SectiO'n:
ill
ill
any employee in the Management Leadership Service;
any paid member of any board, commission, or committee of
County government, and any other member O'f
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bO'ard,
cO'mmission, O'r committee of County government whO' the Chief
Administrative Officer designates; and
ill
any other public employee in the Executive branch O'f CO'unty
government designated
Qy
the Chief Administrative Officer, and
any public employee in the legislative branch of County
gO'vernment designated
Qy
the Council Administrator.
[(4)
any O'ther public employee in the Executive branch, O'r in the
Revenue Authority, Board of License CO'mmissioners, or
Housing Opportunities CommissiO'n, including any persO'n listed
in subsection (b), whO' the County Executive designates by
regulation issued under methO'd (2) after finding that filing a
public financial disclosure statement will promote trust and
confidence in County government;]
[(5)
any other public employee in the legislative branch including the
CO'unty Board of Appeals, and in the Merit System Protection
BO'ard, including any person listed in subsectiO'n (b), whO' the
CO'uncil designates by resolution after finding that filing a public
fmancial disclosure statement will promote trust and confidence
in County government; and]
[(6)
the members of a board, commission, cO'mmittee, or similar body
in the Executive branch, or of the Revenue Authority, Board O'f
License Commissioners, or Housing OpPO'rtunities Commission,
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which the County Executive designates by regulation issued
under Method (2) or any public employee in the legislative
branch, including the County Board of Appeals, and in the Merit
System Protection Board, who the Council designates by
resolution, after fmding that filing a limited public fmancial
disclosure statement will promote trust and confidence in County
government.
The fmancial disclosure required under this
paragraph must be limited to information concerning any
economic interest or gift that may create a conflict between the
employee or member's personal interests and official duties. The
Commission must adopt a regulation specifying the information
that must be disclosed. A public employee who files a limited
public financial disclosure statement under this paragraph must
also file a confidential financial disclosure statement if required
to do so under subsection
(b).
A public employee need not file a
limited public financial disclosure statement under this paragraph
if the employee already is required to file a public financial
disclosure statement.]
[(b)
The following persons must file a confidential financial disclosure
statement under oath:
(1)
(2)
(3)
(4)
(5)
Assistant Chief Administrative Officers;
attorneys in the Office of the County Attorney;
Hearing Examiners;
Members ofthe Fire and Emergency Services Commission;
paid members of any board, commission, committee, or authority
of County government, including members of the Board of
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License Commissioners, the Revenue Authority, and the Housing
Opportunities Commission;
(6)
any public employee in the Executive branch, or in the Revenue
Authority, Board of License Commissioners, or Housing
Opportunities Commission, who the County Executive designates
by regulation issued under method (2) after finding that filing a
confidential fmancial disclosure statement will promote trust and
confidence in County government; and
(7)
any public employee in the legislative branch including the
County Board of Appeals, and in the Merit System Protection
Board, who the Council designates by resolution after finding
that filing a confidential financial disclosure statement will
promote trust and confidence in County government.]
[(c)]
@
In
designating other public employees to file [public or confidential]
fmancial disclosure statements [under subsection (a)(4) or (b)(6)], the
[Executive should]
Chief Administrative Officer and Council
Administrator respectively must include those employees [who have
substantial responsibility for one or more of the following functions]
whose duties and responsibilities are likely to substantially affect private
interests and require significant participation through decision or the
exercise of significant iudgment, and without substantial supervision
and review, in taking
~
government action regarding:
(1)
(2)
(3)
(4)
(5)
contracting or procurement;
administering grants or subsidies;
land use, planning and zoning;
regulating, licensing.,. or inspecting any business;
other decisions with significant economic impact; and
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[(b)
19A-18.
[(a)
(6)
(7)
[(d)
law enforcement[; and
controlling access to confidential infonnation].
The Executive and Council, respectively, must annually review the list
of employees designated under subsections (a)(4), (a)(5), (a)(6), (b)(7),
and (b)(8) for compliance with the purposes ofthis Article.]
Financial disclosure statement; procedures.
(1)
Each public employee required to file a public financial
disclosure statement under subsection 19A-17(a) must file the
statement under oath by April 15 of each year for the previous
year.
(2)
Any person nominated by the County Executive to hold any
office listed in paragraph 19A-17(a)(2) must file the statement
before the Council confinns the appointment.
(3)
.If the Council makes an appointment to any office listed in
paragraph 19A-17(a)(2), the applicant must file the statement as
part of the application for the position.]
Unless a statement has been filed under subsection (a), each candidate
for an office listed in paragraph 19A-17(a)(l) must file with the Board
of Supervisors of Elections a financial disclosure statement under oath
for the year before the year in which the certificate of candidacy is filed.
The statement must be filed with the certificate of candidacy.]
[(c)
If a certificate of candidacy is filed before January 1 of the year in
which the election is held, the candidate must file a supplemental
fmancial disclosure statement under oath for the year before the year in
which the election is held. The supplemental statement must be filed
with the Board of Supervisors of Elections on or before the last day to
withdraw a candidacy. The Board of Supervisors of Elections must
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notify each candidate of this obligation to file a supplemental financial
disclosure statement at least 20 days before the last day to withdraw a
candidacy. If the candidate fails to file a timely supplemental statement,
the candidacy is withdrawn.]
[(d)
The Board of Supervisors of Elections must not accept a certificate of
candidacy or certificate of nomination unless a financial disclosure
statement in proper form has been filed. Within 30 days after receiving
a statement, the Board must forward the statement to the Commission to
be retained under this Chapter.]
[(e)
(1)
(A)
Any person required to file under subsection 19A-17(b)
must file a financial disclosure statement under oath with
each director of a County agency with which the person
was affiliated during the reporting period. Any person
required to file under subsection 19A-17(b) who is not
supervised by a director must file a financial disclosure
statement under oath with the Chief Administrative
Officer.
(B)
The statement must be filed by April 15 for the previous
year.
(C)
The director or the Chief Administrative Officer must
review the statement to see if:
(i)
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the answers are complete;
there is any conflict of interest with the person's
official duties; and
(ii)
(iii)
there is any potential conflict of interest.
(D)
The Chief Administrative Officer may designate the head
of a County agency to review a statement. A director of a
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County agency or the Chief Administrative Officer may
designate the deputy director ofthe agency or the chief of a
division of the agency to review a statement. The
designator must inform the Commission of the delegation.
The designee is subject to the same rules of confidentiality
as the designator.
(2)
After certifying that each part of the statement has been
completed and that, on the basis of the information reported,
there is no conflict of interest or potential conflict of interest with
the filer's official duties, the agency director or Chief
Administrative Officer must forward the statement to the
Commission within 30 days after receiving it. The agency
director or the Chief Administrative Officer may retain a copy of
the statement for one year after forwarding it to the Commission.
If asked by an agency director, the Chief Administrative Officer,
the County Executive, a Council member, or the filer of the
statement, the Commission must review any statement within 120
days after receiving it.
(3)
The Commission, the Chief Administrative Officer, the County
Executive, a member of the County Council, the County
Attorney, the Director of the Office of Legislative Oversight, the
filer of the statement, or their designees, may review a statement
at any time. A designee must be appointed in writing and is
subject to the same rules of confidentiality as the designating
party.
( 4)
Any confidential fmancial disclosure statement filed under this
Chapter must not be made available to the public for
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examination. The Commission must retain each statement for 6
years. After the 6-year period expires, the Commission must
destroy each statement unless the Commission determines that
the statement is needed to resolve an investigation or complaint.]
[(t)
Each public employee required to file an annual financial disclosure
statement under Section 19
A-17
must also file a financial disclosure
statement:
(1)
within 15 days after the employee begins employment in a
position covered by Section
19A-17,
covering the current
calendar year up to the date of filing and, unless the employee has
already filed a statement for the previous year, the previous
calendar year; and
(2)
before the employee leaves a position covered by Section
19A­
17, unless the employee has taken another position covered by
Section
19A-17.
The Director of Finance must not issue an
employee's fmal paycheck until the employee has filed a
statement required by this paragraph. Any statement filed under
this paragraph must
be
treated and reviewed as if it were an
annual statement, except that it need only report on the period
after the employee's last previous annual statement, if any.]
[(g)
The Commission must make available each statement filed under
subsection 19A-17(a) for examination and copying during normal office
hours. The Commission may charge reasonable fees and adopt
procedures for examining and copying statements.]
[(h)
The Commission must provide forms for filing financial disclosure
statements. Forms should be made available no later than January 1
each year.]
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[(i)
A person must not use any financial disclosure statement required under
this Chapter for commercial purposes.]
(0)
A fmancial disclosure statement is filed under oath if the person signs a
declaration that the fmancial disclosure statement is made under the
penalties ofperjury.]
!ill
Each public employee required to file
~
public fmancial disclosure
~
statement under Section 19A-17 must file
financial disclosure
statement in the system established
Qy
the Chief Administrative Officer
under subsection (h):
ill
ill
Qy
Aprilli of each year if that person was
~
filer at the end of the
previous calendar year, covering the year just ended;
within li days after
~
public employee begins employment in
~
position covered
Qy
Section 19A-17, covering the prior year and
the current year
!ill
to the date of filing;
ill
before an employee leaves
~
position covered
Qy
Section 19A -17,
unless the employee has taken another position covered
Qy
Section 19A-17. The Director of Finance must not issue an
employee's [mal paycheck until the employee has filed
~
statement required
Qy
this paragraph. Any statement filed under
this paragraph must cover the period since the employee's last
filed statement;
ill
before the Council confirms the appointment of any person
nominated
Qy
the County Executive to hold any office listed in
subsection 19A-17(b), covering the prior year and the current
year
!ill
to the date of filing. Any person required to file
under this paragraph need not file
~
~
report
report under paragraph
ill
@
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BILL
No.
39-14
(CORRECTED COpy)
401
402
403
404
405
406
407
408
409
410
411
unless 90 days has passed since the filing of the report under this
paragraph; and
ill
as part of the application for
f!
Council-appointed office listed in
subsection 19A-17(b), covering the prior year and the current
year
!!l2
to the date of filing. Any person required to file
f!
report
under this paragrnph need not file
f!
report under paragraph
ill
unless 90 days has passed since the filing of the report under this
paragraph.
W
Each candidate for an office listed in subsection 19A-17Ca) must file
with the County Board of Elections
f!
financial disclosure statement
covering the prior year and the current year
!!l2
to the date of filing the
candidate's certificate of candidacy. The statement must be filed with
the certificate of candidacy or certificate of nomination. The County
Board of Elections must not accept
f!
certificate of candidacy or
certificate of nomination unless
f!
fmancial disclosure statement in
proper form has been filed.
If
f!
statement has been filed under
412
413
414
415
416
417
418
419
420
421
422
423
424
425
426
subsection
{§1
then the statement required
Qy
this subsection need only
cover the current year
!!l2
to the date of filing the certificate of candidacy
or nomination.
(£)
If at the end of
f!
calendar year in which
f!
candidacy is pending and no
election has occurred, the candidate must file
f!
financial disclosure
statement with the County Board of Elections covering the year just
ended.
The statement must be filed on or before the last day to
withdraw
f!
candidacy. The County Board of Elections must notify each
candidate of this obligation to file the fmancial disclosure statement at
least 20 days before the last day to withdraw
f!
candidacy.
If the
®
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BILL
No.
39-14 (CORRECTED COpy)
427
428
429
430
431
432
433
434
435
436
437
438
439
440
441
442
443
444
candidate does not file
.i!
timely statement under this subparagraph, the
candidacy is withdrawn
J2.y
operation oflaw.
@
The County Board of Elections must not accept
i!
certificate of
candidacy or certificate of nomination unless the candidate has filed
.i!
financial disclosure statement in proper form.
W
ill
®
Any person, other than
i!
candidate for elective office, who
is required to file under Section 19A-17, must file
i!
fmancial disclosure statement in an electronic system set
yp
to receive and administer fmancial disclosure reports.
The filer must certify that each statement was made to the
best ofthe filer's knowledge and belief.
(ID
The Chief Administrative Officer must reVIew each
statement for filers
in
the Executive Branch, and the
Council Administrator must review each statement for
each filer
in
the Legislative Branch, to see if:
ill
(ii)
the answers are complete; and
there are conflicts or potential conflict of interests
with the filer's official duties.
445
446
447
448
449
450
451
452
453
©
For each filer who is an incumbent under Section 19A­
17(a), the Chief Administrative Officer must review each
statement for the position of County Executive and the
Council Administrator must review each statement for
each member of the County Council.
ill)
For departments and offices in the Executive Branch, the
Chief Administrative Officer may designate the head of
i!
department or office to review
i!
statement. For offices of
the Legislative Branch, the Council Administrator may
@
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BILL No. 39-14 (CORRECTED COpy)
454
455
456
457
458
459
460
461
462
463
464
465
466
467
468
469
470
471
472
473
474
475
476
477
478
designate the head of an office to review
director of
~
~
statement. A
County department or office or the Chief
Administrative Officer or the Council Administrator, as
appropriate, may designate the deputy director of the
department or the chief of
~
division to review
~
statement.
Each designation must be reported to the Chief
Administrative Officer or the Council Administrator, as
appropriate, and to the Commission. The reviewer may
seek the advice of public employees familiar with the
filer's official responsibilities, including the filer's
supervisor, in evaluating the report under subparagraph
®
ill
Each reviewer must certify
within
30 days that the statement has
been completed and, on the basis of the information reported,
there is no conflict of interest or potential conflict of interest with
the filer's official duties. If
~
reviewer cannot so certify or has
identified
~
conflict of interest or potential conflict of interest, the
reviewer must immediately notify the Commission and the Chief
Administrative Officer for an employee of the Executive Branch
and the Council Administrator for an employee of the legislative
branch that the reviewer is unable to certify the statement.
ill
The Commission must make available each statement filed under this
Article for examination and copying during normal office hours. The
Commission may charge reasonable fees and adopt procedures to
examine and
£QPY
statements.
®
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BILL NO. 39-14 (CORRECTED COpy)
479
480
481
482
483
484
485
486
487
488
489
490
491
492
493
494
495
496
497
498
499
500
501
502
503
504
505
(g)
The Commission must make available the electronic form for filing
annual financial disclosure statements
Qy
the first business day of each
calendar year.
®
The Chief Administrative Officer must establish and maintain an
electronic system to facilitate filing of and public access to financial
disclosure statements required under this Article. Any electronic system
must report, current to within one business day, an accurate list of each
public employee required to file
~
statement under Section 19A-17,
whether the employee is required to file under subsections 19A-17(a),
(Q1
or
f£1
and include the employee's position, necessary contact
information, the reviewer, and whether the report is an initial, annual, or
final report. This list must be current and correspond to personnel
records and records of memberships in boards, committees and
commissions. Any electronic system must be able to generate reports
!mQ!!
request of the Chief Administrative Officer, the Council
Administrator, or the Commission detailing who is required to file and
the current state of compliance
Qy
public employees with financial
disclosure filing and review requirements under this Article.
The
County Executive must annually, or more frequently as requested,
provide the list of employees designated to file financial disclosure
reports to the Council.
The Commission must make all necessary
accommodations for any person who does not have access to the
electronic system.
ill
A person must not use any fmancial disclosure statement required under
this Chapter for commercial purposes.
ill
The Commission must retain each fmancial disclosure statement filed
under this Article for
1:
years. For each filer filing under subsection
§
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law
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BILL
No.
39-14
(CORRECTED COpy)
506
507
508
509
510
511
512
513
514
515
516
517
518
519
19A-17(a), the retention period must be at least Q years, after which
each record must be archived.
19A-19.
Content
of financial
disclosure statement.
[The fmancial disclosure statement required under Section 19A-17 must
disclose the following infonnation about the filer for the previous year:]
[(a)
all economic interests in any real property, including leasehold interests
and interests in oil, gas, or mineral royalties or leases, if the property is
located in Montgomery County, Prince George's County, Howard
County, or Frederick County, Maryland; the District of Columbia; or
Fairfax County or Loudoun County, Virginia. The filer must specify:
(1)
the nature of each property, and its location by street address,
mailing address, or legal description;
(2)
the nature and extent of the interest held, and any applicable
conditions and encumbrances;
(3)
(4)
how, when, and from whom the interest was acquired;
the nature and amount of the consideration given in exchange for
the interest. If the interest was not acquired by purchase, the filer
must provide the fair market value of the interest when it was
acquired;
(5)
ifan interest was transferred during the previous year:
( A)
the interest transferred;
the nature and amount of the consideration received; and
to whom the interest was transferred; and
520
521
522
523
524
525
526
527
528
529
(B)
(C)
(6)
[(b)
the name of any other person with an interest in the property;]
530
531
532
all economic interests in any business.
In
this subsection, business does
not include an agency or instrumentality of federal, state, County, or
local government. The filer must specify:
®
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BILL No. 39-14 (CORRECTEOCOPV)
533
534
535
536
537
538
539
540
541
542
543
544
545
546
547
548
549
550
551
(1)
the name ofthe business. If the business is a corporation, the filer
must list the stock exchange (if any) on which the corporation's
securities are traded and the corporation's trading symbol. If
securities of the business are not publicly traded, the filer must
list the address ofthe business' principal office;
(2)
the nature and value of the interest held, and any applicable
conditions and encumbrances. The filer must specify what
percentage of the business the filer owns, if the filer knows the
percentage; and
(3)
if an interest was acquired or transferred during the previous year,
the filer must describe the interest acquired or transferred, the
nature and amount of the consideration and, if known, the name
ofthe other person or business in the transaction;]
[(c)
each source of income from an economic interest that is not disclosed
elsewhere, from which the filer received or was entitled to receive
$500
or more during the previous year. The filer must specify:
(1)
the name, and the address of the principal office or residence, of
the source;
(2)
(3)
the type of income; and
the amount of income by category:
(A)
$500
to
$5,000;
or
552
553
554
555
556
557
(B)
over
$5,000.
(4) (A) Ifthe source and the filer have a confidential relationship,
the filer need not report the information required under
paragraph
(1)
unless the source:
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BILL
No. 39-14
(CORRECTED COpy)
558
559
560
561
562
563
564
565
566
567
568
569
570
571
572
573
574
575
576
577
578
579
580
581
582
583
(i)
is registered or must register as a lobbyist on a
matter that is or could be considered by the County
agency with which the filer is affiliated;
(ii)
does business with the County agency with which
the filer is affiliated;
(iii)
owns or operates a business that is regulated by the
County agency with which the filer is affiliated; or
(iv)
has an economic interest that is different from the
public interest, which the filer may substantially
affect in performing the filer's official duties.
(B)
The Commission must designate only one person to review
this information. Ifthe reviewer finds a reasonable basis to
believe that a violation of this Chapter, or Sections 2-109,
lIB-51 or IIB-52(a), has occurred, the entire Commission
may review the information.
(C)
Confidential relationship means a relationship between
two persons that creates a privilege against testifying under
state law;]
[(d)
(1)
each gift given to the filer, to a member of the filer's immediate
family, or to any other person at the filer's direction, during the
previous year ifthe donor ofthe gift:
(A)
is registered, or must register, as a lobbyist on a matter that
is or could be considered by the County agency with which
the filer is affiliated;
(B)
does business with the County agency with which the filer
is affiliated; or
@
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BILL
No. 39-14
(CORRECTED
COpy)
584
585
586
587
588
589
590
591
592
593
594
595
596
597
598
599
600
601
602
603
604
605
606
607
608
609
(C)
owns or operates a business that is regulated by the County
agency with which the filer is affiliated.
(2)
The filer must specify:
(A)
(B)
the nature of each gift;
the value of each gift by category:
(i)
(ii)
(iii)
$50 or under,
$51 to $100;
$101 to $500; or
over $500; and
(iv)
(C)
the person who gave the gift or directed, either directly or
indirectly, that the gift be given.
(3)
The filer need not report the following gifts on any part of the
financial disclosure statement:
(A)
a gift to the filer with a value of less than $50, unless the
same person gave the filer, members of the filer's
immediate family, another person at the filer's direction, or
any combination of them, gifts totaling more than $100
during the previous year;
(B)
a gift to a member of the filer's immediate family with a
value of less than $100, unless the same person gave the
filer, members of the filer's immediate family, another
person at the filer's direction, or any combination of them,
gifts totaling more than $100 during the previous year;
(C)
a gift received under Section 19A-16(dX5), unless the gift
is admission to a cultural or sports event valued at $50 or
more;
®
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BILL
No. 39-14
(CORREClED COpy)
610
611
612
613
(D)
a gift from a relative of the filer, or a gift to a relative by
the filer, unless:
(i)
the value of all gifts from the same relative exceeds
$100,and
(ii)
the relative:
(a)
is registered, or must register, as a lobbyist on
a matter that is or could be considered by the
County agency with which the filer is
affiliated;
(b)
does business with the County agency with
which the filer is affiliated; or
(c)
owns or operates a business that is regulated
by the County agency with which the filer is
affiliated; or
614
615
616
617
618
619
620
621
622
623
624
625
626
627
628
(E)
[(e)
(1)
a political contribution governed by state law;]
all offices, including any directorship, trusteeship, or partnership,
held at any time during the previous year in any business that:
(A)
(B)
(C)
is doing business with or is regulated by a County agency;
has an office in the County; or
to the filer's knowledge, has an interest in real property
located in the County.
629
630
631
632
633
634
635
(2)
The filer must specify:
(A)
the name, and the address of the principal office, of each
business; and
(B)
[(t)
the title and nature ofeach office;]
all liabilities over $500 owed at any time during the previous year by the
filer, except a debt owed to a relative. The filer need not report any debt
636
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BILL
No.
39-14
(CORRECTED COpy)
637
638
639
640
641
642
643
644
645
646
647
648
649
650
651
652
653
654
655
less than $5000 owed on a consumer credit card account. The filer need
not report a debt over $5000 owed on a consumer credit card account
unless the debt is owed for more than 90 days. A consumer credit card
account is an open-ended credit card account used to obtain money,
property, or services for personal, family, or household purposes. The
filer must specify:
(1)
(2)
(3)
(4)
to whom the liability is owed;
the amount owed at the end of the year;
the tenns ofpayment ofthe liability;
how much the principal amount of the liability increased or
decreased during the year; and
(5)
[(g)
any security given for the liability;]
all debts over $500 owed to the filer at any time during the previous
year, except a debt owed by a relative. The filer must specify:
(l)
the debtor;
the amount of the debt at the end of the year;
the tenns ofpayment ofthe debt;
how much the principal amount of the debt increased or
decreased during the year; and
(2)
(3)
(4)
656
657
658
659
660
661
(5)· any security given for the debt;]
[(h)
a list of all members of the filer's immediate family who are employed
in
any capacity by a County agency; and]
[(i)
any other interest or infonnation that the filer wants to disclose to carry
out the purposes ofthis Chapter.]
[0)
If the filer is required to file under paragraph 19A-17(a)(1), the filer
must list the amount and issuer of each bond or other security owned
during the previous year that was issued by the County, any bi-county
662
663
@
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ethics
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BILL No. 39-14 (CORRECTED COpy)
664
665
666
667
668
669
670
671
672
673
674
675
676
677
678
679
680
681
682
agency with jurisdiction in the County, and any city or town in the
County.]
[(k)
If the filer is required to identify any person or business, the filer must
designate, if known, whether that person or business has done business
or expects to do business with, or is regulated by, a County agency.]
[(1)
In
this Section and Section 19A-20, interest means any interest held at
any time during the previous year.]
[em) If a filer is required to report any amount or value, including the value
of any property, under this Section, except subsections (c) and (d), the
filer may specify the amount or value by category:
(1)
(2)
$1000 or less;
over $1000.]
ill
Each financial disclosure statement filed under Section 19A-17Ca) must
disclose the following:
ill
Interests in real property.
CA)
The statement must identify each interest in real property,
regardless ofthe property's location.
ill)
For each interest in real property, the statement must
include:
683
684
685
686
687
688
689
ill
the nature of the property, and the location
Qy
street
address, mailing address, or legal description of the
property;
(ii)
the nature and extent of the interest held, including
any condition or encumbrance on the interest;
Ciii)
the date when, the manner in which, and the identity
ofthe person from whom the interest was acquired;
@
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BILL
No.
39-14
(CORRECTED COpy)
690
691
692
693
694
695
696
697
698
699
700
701
702
703
704
705
706
707
708
709
710
711
712
713
714
715
716
(iv) the nature and amount of the consideration given in
exchange for the interest
ill:,.
if the interest was
acquired other than
Qy
purchase, the fair market
value ofthe interest when it was acquired;
ill
if any interest was transferred, in whole or in part, at
any time during the reporting period,
~
description
of the interest transferred, the nature and amount of
the consideration received for the interest, and the
identity of each person to whom the interest was
transferred; and
(vi) the identity of any other person with an interest in
the property.
ill
Interests in corporations, partnerships or other businesses.
(A) The statement must list each interest in any corporation,
partnership, limited liability partnership, limited liability
corporation, sole proprietorship, or other business.
tID
For each interest reported, the statement must specify:
ill
the name and, unless the interest is traded publicly
on
~
national exchange, the address of the principal
office of the corporation, partnership, limited
liability partnership, limited liability corporation,
sole proprietorship, or other business;
(ii) the nature and amount of the interest held, including
any condition or encumbrance on the interest;
(iii)
for any interest transferred, in whole or in part, at
any time during the reporting period,
.§.
description
of the interest transferred, the nature and amount of
@
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BILL
No. 39-14
(CORRECTED COpy)
717
718
719
720
721
722
723
724
725
the consideration received for the interest, and, if
known, the identity of the person to whom the
interest was transferred; and
(iv)
for any interest acquired during the reporting period:
ill
the date when, the manner in which, and the
identity of the person from whom the interest
was acquired; and
ill
the nature and amount of the consideration
given in exchange for the interest
Qr,.
if the
726
727
728
729
730
731
732
733
734
735
736
737
738
739
740
741
742
743
interest was acquired other than
.!2y
purchase,
the fair market value of the interest when
was acquired.
i!
©
A filer may satisfy the requirement to report the amount of
the interest held under subparagraph (B)(ii)
.!2y
reporting,
instead of
~
dollar amount:
ill
for an equity interest in
~
corporation, the number of
shares held and, unless the corporation's stock is
publicly traded, the percentage of equity interest
held; or
Cii)
CD)
for an equity interest in
~
partnership, the percentage
of equity interest held.
For purposes of subparagraph (B)(i), the filer need not
report the address of any publicly held company.
ill
Gifts.
CA)
The statement must list each gift valued at more than $20
or any series of gifts totaling $100 or more received during
the reporting period from or on behalf
Qb
directly or
(jf)
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BILL
No. 39-14
(CORRECTED COpy)
744
745
746
747
748
749
750
751
752
753
754
755
756
757
758
759
760
761
762
indirectly, anyone person who does business with the
County.
.aD
For each gift listed, the statement must specify:
ill
Oi)
the nature and value of the gift; and
the identity of the person from whom, or on behalf
of whom, directly or indirectly, the gift was
received.
ill
Employment with, or interests
ilL.
entities doing business with the
County.
CA)
The statement must identify each office, directorship, and
salaried employment
Qy
the filer or member of the filer's
immediate family held at any time during the reporting
period with any entity doing business with the County.
.aD
For each position listed under this Section, the statement
must include:
ill
Cii)
the name and address of the principal office of the
business entity;
the title and nature of the office, directorship, or
salaried employment held, and the date
i1
started;
763
764
765
766
767
768
(iii)
and
the name of each County agency with which the
entity is involved, indicated
Qy
identifying one or
more of the three categories of "doing business", as
defined in Section 19A-4(e).
ill
Indebtedness to entities doing business with the County.
®
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BILL NO.
39-14
(CORRECTED COpy)
769
770
771
772
773
774
775
776
777
778
779
780
781
782
783
784
785
786
787
788
789
790
791
792
793
794
795
(§)
(A)
The statement must identify each liability. other than
§:
retail credit account, to any person doing business with the
County owed at any time during the reporting period by:
ill
(ii)
the filer; or
§:
member of the filer's immediate family if the filer
was involved in the transaction giving rise to the
liability.
.au
For each liability reported under this paragraph, the
statement must specify:
ill
(ii)
the identity of the person to whom the liability was
owed, and the date the liability was incurred;
the amount of the liability owed at the end of the
reporting period;
(iii) .
the terms of payment of the liability, and the extent
to which the principal amount of the liability was
increased or reduced during the year; and
(iv)
the security, if any, given for the liability.
Employment with the County.
The statement must identify each
immediate family member of the filer employed
Qy
the County
in
any capacity at any time during the reporting period.
ill
Sources gfearned income.
(A)
The statement must list the name and address of each
employer of the filer, other than the County Government,
and each business entity of which the filer or
§:
member of
the filer's immediate family was
§:
sole or partial owner
and from which the filer or member of the filer's
immediate family received earned income at any time
®
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BILL No.
39-14
(CORRECTED COpy)
796
797
798
799
800
801
802
803
804
805
806
807
808
809
810
during the reporting period. The statement must include
the source of each fee for services provided
by
the filer
during the reporting period.
However,
~
filer need not
include any information with respect to any person for
whom services were provided
by
any firm or association of
which the filer was
~
member, partner, or employee unless
the filer was directly involved in providing those services.
aD
The filer need not disclose
~
minor child's employment or
business ownership if the agency that employs the filer
does not regulate, exercise authority over, or contract with
the place of employment or business entity of the minor
child.
(Q
If
~
source of earned income and the filer have
~
~
confidential relationship which creates
privilege against
testifying under state law, the filer need not report the
identity ofthe source unless the source:
(i)
is registered or must register as
~
811
812
813
lobbyist on
~
matter that is or could be considered
by
the County
agency with which the filer is affiliated;
814
815
816
817
818
(ii)
does business with the County agency with which
the filer is affiliated;
(iii)
owns or operates
~
business that is regulated
by
the
County
~ency
with which the filer is affiliated; or
(iv)
has an economic interest that is different from the
public interest, which the filer may substantially
affect in performing the filer's official duties,
819
820
821
@
f:\law\bills\1439 ethics
law
updatelbill2a comn corrected.doc
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BILL
No. 39-14
(CORRECTED COpy)
822
823
824
825
826
827
828
829
830
831
832
833
834
835
836
in which case the identity of the source must be disclosed
confidentially to the Commission in
~
~
manner prescribed
the Commission.
00
(hl
The statement may also include any additional interest or
infonnation that the filer wishes to disclose.
For the purposes of subsections (a)(1) and (a)(2), the following interests
must
be
treated as the interests of the filer of the statement:
ill
an interest held
~ ~
member of the filer's immediate family if
the filer, at any time during the reporting period, directly or
indirectly controlled the interest;
ill
ill
an interest held
~ ~
business entity in which the filer held
~
30%
or greater interest at any time during the reporting period; or
an interest held
~~
trust or estate in which, at any time during
the reporting period:
(A)
the filer held
or
~
reversionary interest or was
~
beneficiary;
837
838
839
840
@
if
~
revocable trust, the filer was
~
settlor.
W
Each statement filed under Section 19A-17{b) must disclose all
infonnation required to be disclosed under subsection
ll!1
However, the
841
842
843
844
845
846
847
filer need not specify the nature or amount of consideration given in
exchange for an interest or the fair market value of an interest. F or
~
debt, the filer need only disclose the infonnation required under
subsection (a){5)(A).
@
Each statement filed under Section 19A-17Cc) must disclose the
infonnation required in subsection (a)(3) with respect to gifts and must
disclose the infonnation otherwise required in subsection
ill
only with
@
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BILL No. 39-14 (CORRECTED COpy)
848
849
850
851
852
853
854
855
856
857
858
859
860
861
862
863
864
865
866
respect to any interest, compensated position, or liability that may create
~
conflict under Section 19A-11 or is prohibited under Section 19A-12.
[19A-20.
Interests attributable to filers.]
[Under section 19A-19, the following must be reported as an economic interest
ofthe filer:
(a)
(b)
any economic interest held by a member ofthe filer's immediate family;
any economic interest held by a relative of the filer, if:
(1)
the interest was controlled by the filer, directly or indirectly, at
any time during the previous year; and
(2)
the interest could be affected by an action or a failure to act by
the filer in the performance of official duties;
(c)
any economic interest in real property held by a business in which the
filer owns an interest, if the property is located in Montgomery County,
Prince George's County, Howard County, or Frederick County,
Maryland; the District of Columbia; or Fairfax County or Loudoun
County, Virginia; and if the filer's prorated interest in the real property
has a market value of more than $1,000. If the securities of the business
are publicly traded, the filer need not report the interest in the real
property; and
867
868
869
870
871
872
873
874
(d)
any economic interest held by a
trust,
except a common trust fund, if the
filer:
(1)
(2)
(3)
holds an income interest of more than $1,000;
holds a reversionary interest of more than $1,000; or
is a trustor or beneficiary of a revocable trust.]
19A-20.
Certifications regarding conflicts of interest.
In
addition to any other requirement of this Article, each person who
W
files
~
financial disclosure statement under Section 19A-17 must certify
B
f:\law\bills\1439 ethics
law
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BILL
No. 39-14
(CORRECTED COpy)
875
876
877
878
879
880
881
882
883
884
885
886
887
888
889
890
that, to the best of the filer's knowledge, neither the filer nor the filer's
immediate family or relatives have any interest, including any liability,
that may create!! conflict of interest under Section 19A-ll or 19A-12.
If !! filer is unable to so certify, the filer must separately identify, in the
manner required
Qy
the Commission, any interest that may create !!
conflict of interest under Section 19A-ll or 19A-12.
@
The annual certification filed under subsection
ill}
must be filed
Qy
April
12.
of each year with the filer's fmancial disclosure statement.
W
If the economic interests of
!!
filer, including those of an immediate
family member or relative, have changed since the filer's last filed
certification such that !! conflict of interest may be created under Section
19A-ll or 19A-12, or if the filer or an immediate family member
received
!!
reportable gift from any person doing business with the
filer's County agency or department, the filer must, within.2. days after
the event, amend the certification filed under subsection
ill
and identify
each possible conflict or gift.
891
892
Approved:
Craig
L.
Rice, President, County Council
Date
893
894
Approved:
Isiah Leggett, County Executive
Date
895
This is a correct copy ofCouncil action.
896
Linda M. Lauer, Clerk of the Council
Date
.@
f:llaw\biJIs\1439 ethics law update\bill2a comn corrected.doc
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LEGISLATIVE REQUEST REPORT
BHl39·14
Ethics
-
Amendments
DESCRIPTION:
Bill 39-14 would revise certain provisions of the County ethics law
governing financial disclosure and solicitation and acceptance of gifts
to meet certain requirements of state law.
County law should be updated to conform to state law.
To conform County law to State law.
Ethics Commission
To be requested.
To be requested.
To be requested.
To be researched.
Mike Faden, Senior Legislative Attorney, 240-777-7905
To be researched.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
A violation of Chapter 19A is a Class A violation.
f:\law\bills\1439 ethics law update\legislative request report.doc
@
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MONTGOMERY COUNTY
E"fHICS
COMMISSION
Kenita V. Barrow
Chair
Mark L. Greenblatt
Vice Chair
April II, 2014
Craig Rice
Council President
Montgomery County Council
100 Maryland Avenue
Rockville, MD 20850
Isiah Leggett
County Executive
Montgomery County
Executive Office Building
101 Monroe Street, 2
nd
Floor
Rockville, MD 20850
RE: Ethics Commission Legislative Proposal
Dear Mr. Council President and Mr. County Executive:
The Montgomery County Ethics Commission (MCEC) proposes changes to the
Montgomery County Public Ethics Law to align the County's law with Maryland State
law requirements on gifts and financial disclosure. The proposal also includes provisions
that the MCEC believes appropriate for providing assurance that County employees do
not have conflicts ofinterest
in
the performance oftheir duties. The proposals are
attached.
The State's Public Ethics Law requires local governments to enact laws similar to the
State's for their respective jurisdictions. Prior to 2010, Montgomery County's Ethics
Law had been considered to be compliant with the State requirement ofsimilarity. In
2010, the State Ethics Law was amended to further mandate that
as
to elected local
officials, local governments'laws must be equivalent to or exceed the requirements of
State law with respect to conflict of interest and financial disclosure provisions.
Moreover. the 2010 amendments required each local ethics commission to annually
Montgomery County Ethirs Commission
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100 Maryland
Avenue,
Room
204.
Rockville,
MD 20850
OFFICE 240-777-6670, FAX 240-777-6672
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Ethics Commission Legislative Proposal
April 11, 2014
Page 2
certify that their respective local laws are in compliance with the State's requirements
with regard to elected officials. The State Ethics Commission staffhas communicated
that in light of the 2010 law and other factors, including a Court case finding a local
jurisdiction's laws not sufficiently similar to the State's law, the State Ethics
Commission's view on what constitutes "similar"
has
narrowed since the time the State
Commission viewed Montgomery County's law as meeting the similarity requirement.
The State law requirements for local ethics laws include:
15-804. Conflic:t of interest laws.
(a)
In general.
-
Except as provided in subsection
(b)
of this section, the
conflict of interest provisions enacted by a county or municipal corporation
under
§
15-803 of this subtitle shall be similar to the provisions of Subtitle 5
of this title, but may be modified to the extent necessary to make the
provisions relevant to the prevention of conflicts of interest in that
jurisdiction.
(b)
For elected local officials.
The conflict of interest provisions for
elected local officials enacted by a county or municipal corporation under
§
15-803 of this subtitle shall be equivalent to or exceed the requirements of
Subtitle 5 of this title, but may be modified to the extent necessary to make the
provisions relevant to the prevention ofconflicts of interest in that
jurisdiction.
IS-80s. Financial disclosure laws.
(b)
Similarity to
Ethics Law.
(1)
Except as provided in paragraph (2) of
this subsection and subsection (c) ofthis section, the financial disclosure
provisions enacted by a county or municipal corporation under
§
15-803 of
this subtitle shall be similar to the provisions of Subtitle 6 of this title, but
shall be modified to the extent necessary to make the provisions relevant to
the prevention of conflicts of interest in that jurisdiction. (2) The financial
disclosure provisions for elected local officials enacted by a county or
municipal corporation under
§
15-803 of this subtitle shall be equiValent to or
exceed the requirements of Subtitle 6 of this title, but shall be modified to the
extent necessary to make the provisions relevant to the prevention of conflicts
of interest in that jurisdiction.
Representatives of the State Ethics Commission have stated that the State Ethics
Commission interprets the clauses at the end ofthese provisions pennitting and
mandating modifications as meaning that additional requirements can be imposed that
exceed the State requirements, but that local requirements under these paragraphs cannot
Montgomery County Ethics Commission
--------------~~~~~
100 Maryland Avenue, Room 204, Rockville, MD 20850
OFFICE 240-777-6670, FAX 240-777-6672
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Ethics Commission Legislative Proposal
April 11, 2014
Page 3
be different from the State requirements in such a way as to lessen that which is required
by State law.
I
In the fall of 20
II,
MCEC staff began an examination of the differences between the
State ethics laws and the County's ethics laws. In April 2012, the MCEC submitted for
State Ethics Commission staff review a draft of proposed amendments to the
Montgomery County Public Ethics Law. These proposed changes suggested alternatives
to
the County's current ethics law as it applies to County elected officials.
On
April 12,
2013, another proposal was forwarded to State Ethics Commission staff. In the fall of
2013, correspondence between the State Ethics Commission staff and MCEC staff
resulted in refinement of the MCEC proposal. This proposal has been further refined as a
result of further input by the State Ethics Commission and from the Montgomery County
Attorney and from the County's Senior Legislative Counsel. A meeting was held on
February 24, 2014, in which MCEC staff, State Ethics Commission staff, the County
Attorney and Senior Legislative Counsel discussed the then current draft.
At this meeting, State Ethics Commission
staff
provided general guidance as to what
language would be acceptable to the State Ethics Commission.
In
several instances, the
Montgomery County proposal was more specific than State law as to what conduct would
be prohibited. The direction from the State Ethics Commission staff was for
Montgomery County to follow the State's lead by imposing broad restrictions that could
be modified or narrowed
in
application through interpretation (rather than through
exceptions in the law). For example, State law prohibits the solicitation of any gift by an
employee. The State recommendation is for Montgomery County to include this broad
prohibition in the law, without any exceptions, and through MCEC interpretation of the
prohibition, create what caveats make practical sense. County participants in the meeting
were concerned that generic provisions would not provide suitable notice of what conduct
is being prohibited. Notice of what constitutes a violation is particularly important where
violations are sanctioned by civil and criminal penalties.
Given the State Ethics Commission's insistence on provisions being submitted that meet
its requirements, the MCEC has decided to accede to the bulk of the State Ethics
Commission staffrecommendations on what should be contained in the MCEC's
proposal for the County's gift and fmancial disclosure laws. The MCEC fully recognizes
that the County's policy makers, in particular, the County Council, may have views that
deviate from those of the State Ethics Commission about what is required by State Ethics
Law. The MCEC forwards this proposal with a genuine and vested interest in how the
County's law is ultimately enacted. But the MCEC, meeting once monthly, cannot be an
efficient or appropriate arbiter between the State Ethics Commission and the County
The State Ethics Commission has prepared model local laws, avai1able on its website, which it
recommends for counties and municipalities subject to the equivalency and similarity
requirements.
I
Montgomery County Ethics Commission
100 Maryland
Avenue, Room
204,
RockviJle,
MD 20850
OFFICE 240-777-6670, FAX 240-777-6672
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Ethics Commission Legislative Proposal
April 11,2014
Page 4
Councilor County Executive on what should or must be contained in the County's Ethics
Law.
Particular Features of Proposed Law Going Beyond State Requirements
The MCEC proposes several significant changes from the current Public Ethics Law and
adds provisions that exceed State requirements. The new features mandated by State law
include that all financial disclosures be made publicly available and that there be
increased disclosure for elected officials, particularly as regards valuation of assets.
• The proposal recommends three levels of disclosure, with elected officials
providing, consistent with State law requirements, greater disclosure
than
non­
elected senior County officials who are designated by law as filers. The current
designation process for identifying filers is eliminated in favor of a static statutory
list of filers being identified. A third tier of filers would be designated as filers
without the formal method 2 regulatory process existing under current law who
would only identify conflicting holdings and reportable gifts.
• The proposal explicitly imposes on the Chief Administrative Officer a
requirement to establish an electronic system for submission and management of
financial disclosure reports.
• The proposal includes a requirement to disclose sources of fees for services
provided by the filer.
• The proposal requires public employees to certify that to the best of their
knowledge, there are no conflicts of interests, or alternatively, to identify the
interests that may create a conflict of interest.
• The proposal requires public employees to report to the MCEC within 5 days any
new interests that may create a conflict of interest and any reportable gifts.
The MCEC contemplates making future legislative recommendations on other portions of
the County's Public Ethics Law and is available for further comment on this proposal.
Sincerely,
~~
Robert W. Cobb
Staff Director/Chief Counsel
Montgomery County Ethics Commission
Attachments
cc: Michael Lord, Executive Director, State Ethics Commission
Montgomery County Ethics Commission
100 Maryland A
venue,
Room 204, Rockville, MD 20850
OFFICE 240-777-6670, FAX 240-777-6672
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OFFICE OF THE COUNTY A TIORNEY
lsiah Leggett
County Executive
Marc P. Hansen
County Attorney
MEMORANDUM
TO:
Bonnie Kirkland
Assistant Chief Administrative Officer
Marc P. Hansen
1'Y1O/J.:--
County Attorney
FROM:
II~
Edward
B.
Lattner, Chief
~1.3t. e~~:;;
Division of Human Resources
&
Appeals
DATE:
September 7, 2014
Bill 39-14, Ethics - Amendments
RE:
Bill 39-14 amends the County's Ethics Law in order to: 1) comply with recent
amendments to the State's Ethics Law; 2) comply with certain requirements insisted upon by the
State Ethics Commission; and 3) impose new obligations on public employees proposed by the
County Ethics Commission.
Bi1139-14 makes significant changes to the rules regarding the solicitation and
acceptance of gifts by public employees. The Bill also makes significant changes to the
County's financial disclosure system. Although the Bill proposes some changes that constitute
important improvements to the current implementation of the Ethics law, other proposed changes
set such nebulous standards as to set traps for the unwary and other changes set standards that
may not be obtainable. Our concerns are noted in the body of this memorandum, and we have
compiled a summary list of those concerns at the end of the memorandum.
I.
BACKGROUND: SIMILARITY TO STATE ETHICS LAW
A.
General Rule
The State Ethics Law
l
requires that each county and municipal corporation in the State
I
Md. Code Ann., State Gov't (SG) § 15-803. The State Ethics Law is set out in SG §§ 15-JOI
to
15-JOO1.
101 Monroe Street, Rockville, Maryland 20850-2580
(240) 777-6735
-TrY
(240) 777-2545 - FAX (240) 777-6705 _ EdwardLattner@montgomerycountymd.gov
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Bonnie Kirkland
Re: Bill
39-14,
Ethics - Amendments
August
26, 2014
Page 2
enact provisions governing the public ethics oflocal officials
2
relating to (1) conflicts of interest,
(2) financial disclosure, and (3) lobbying.) For several years, the State Ethics Law required each
county to enact ethics regulations
(1)
"similar" to the State's conflict of interest laws, (2)
"similar" to the State's fmancial disclosure laws, and (3) "substantially similar" to the State's
lobbying laws, with the proviso that each local jurisdiction could make modifications to the
extent necessary to make the provisions relevant to prevent conflicts of interest in that particular
local jurisdiction. Similar, or even substantially similar laws, can be less strict,
just
as strict, or
more strict-with less variation permitted for laws that must be "substantially" similar. The State
Ethics Commission may petition a circuit court to compel a COWlty or municipal corporation to
comply with these requirements.
4
In
conformance with the direction of SO
§
15-205(b),
the State
Ethics Commission has adopted model local laws by regulation. COMAR
19A.04.01
Appendix
A (large cOWlties and municipalities)
&
Appendix B (small cOWlties and municipalities). The
State Ethics Commission previously approved the County's ethics law, including regulation of
gift solicitation/acceptance and the designation of some financial disclosure filers as confidential.
B.
Elected Officials
Effective October
1,20
I 0, the State amended its ethics law, changing the required
"similarity" of County ethics laws governing
County elected officials.
s Under the new State
law, the County must enact ethics regulations for local elected officials that are "equivalent
to
or
exceed" state law regulations governing
conflict of interest
and
rmancial disclosure.
Again, the
state law includes the proviso that local laws "shall be modified to the extent necessary to make
the provisions relevant
to
the prevention of conflicts of interest in that jurisdiction." The new law
requires the County ethics commission to certify annual compliance with this provision every
October 1. The Ethics Commission most recently wrote to the State Ethics Commission on
September
24,2013,
that "the County's laws may meet all State requirements."
"Local official" means an official, officer, or employee of a county or municipal corporatiOn, and each
member and employee of a board of Jicense commissioners, that the governing body ofthe county or municipal
corporation determines is subject
to
the local ethics law.
sa
§
15-102(y). In Montgomery County, the term "local
official" includes each member and employee of the County Revenue Authority, each commissioner and employee
of the County Housing Opportunities Commission, and each County employee of the County Department of Health
and Human Services.
sa
§
15-807(c).
2
The State Ethics Law also addresses ethics standards applicable to local
boards
ofeducation,
sa
§§
15­
811
to
15-15-817, as well as the Maryland-National Capital Park and Planning Commission, the Washington
Suburban Sanitary Commission, and the Washington Suburban Transit Commission,
sa
§§
15-818
to
15-828.
Finally, the State Ethics Law includes special disclosure requirements applicable to applicants for a local map
amendment in Montgomery County,
sa
§§
15-838 to 15-843, and certain restrictions on the activities of lobbyists
vis-a-vis County elected officials and candidates for elective office.
3
4
sa
§
15-808.
sa
§§
15-804 to 15-806.
S
®
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Bonnie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26, 2014
Page 3
C.
Case
Law
Effective April 18, 2011, the State revised its local government ethics regulations to
reflect the changes to the State Ethics Law and certain changes made
to
the "similarity" standard
as a result of the Court of Appeals decision in
Seipp
v.
Baltimore City Bd. ofElections,
377 Md.
362,833 A.2d 551 (2003).
In
that case, the Court concluded that Seipp should not have been
disqualified as a candidate for the Baltimore City Council because Baltimore City'S law on
financial disclosure from candidates was not similar to the State's law on financial disclosure
from candidates for State office. When Seipp filed his certificate of candidacy, a City Board of
Elections employee handed Seipp a financial disclosure fonn with an erroneous filing deadline.
When Seipp missed the actual filing deadline imposed under the City's Ethics law (the date for
withdrawal of a certificate of candidacy), the City Board of Elections disqualified him as a
candidate. But the State ethics law required a candidate
to
file his disclosure statement with the
certificate ofcandidacy. "Had the [city] law required Seipp
to
file his disclosure statement with
the certificate of candidacy, he presumably would have done so (or never become a candidate).
and the problem would not have arisen."
ld.
at 375,833 A.2d at 559. The Court ordered the City
Board of Elections to place Seipp'S name on the ballot.
II.
ANALYSIS oCBiIl39-14
A.
Sections 19A-16(a) and
(b):
Restrictions On Soliciting Gifts
The Montgomery County Ethics Commission's (MCEC) April1!, 2014, transmittal
memo indicates that the State Ethics Commission advised it "to follow the State's lead by
imposing broad restriction that could be modified or narrowed in application [by MCEC] though
interpretation (rather than through exception
in
the law)." The MCEC transmittal notes that
County staff disagreed with that recommendation. A closer examination of the proposed changes
to
§
19A-16(a) and (b) regarding solicitation of gifts will serve to illustrate the pitfalls ofthe
State's recommendation.
Presently,
§
19A-16(a) prohibits a public employee from soliciting a gift from certain
persons, most notably. anyone who does business with the employee's agency, anyone who
lobbies the employee's agency. or anyone who is regulated by the employee's agency. A public
employee is also prohibited from soliciting a gift during official work hours or from anyone the
employee supervises. Section 19A-16(b) sets out a number of exceptions
to
this prohibition,
including an exception that permits the County to conduct its annual Giving Campaign through
its employees; pennits a public employee to solicit a gift for a charity on the employee's
0\VIl
time so long as the employee is not identifiable as a County employee; pennits solicitations
to
benefit County programs authorized by executive order;6 and pennits elected officials
to
solicit
Two of the most apparent examples of solicitations on County time permitted by executive order are the
firefighters'
"Fill
The Boot" campaign to fight muscular dystrophy and the police officers' campaign for Special
Olympics.
6
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Bonnie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26, 2014
Page 4
gifts for charitable organizations.
At the State's behest, Bill 39-14 scraps the detailed legislative scheme of§ 19A-16(a)
(and presumably decades of MCEC decisions interpreting that scheme) for a single sentence: "A
public employee must not solicit any gift." Likewise, Bill 39-14 deletes the carefully crafted
exceptions in § 19A-16(b) and replaces them with another sentence: "A public employee must
not directly solicit or facilitate the solicitation of a gift, on behalf of another person, from an
individual regulated lobbyist."
Bill 39-14 does match the exact language ofSG IS-SOS(a)(1)
&
(2). But we believe that
such mimicry of the State ethics laws is neither required nor wise. These gift provisions are not
limited to elected officials, so they need not meet the higher threshold applicable to such
provisions ("equivalent to or exceed" state law regulations). State law simply requires that these
gift provisions be "similar" to the State's ethics law, while expressly allowing for modification
"to the extent necessary to make the provisions relevant to the prevention of conflicts of interest
in that jurisdiction." SG
§
IS-804(a). We are unaware of any argument that the present state of
the County's ethics law, previously approved by the State and in place for over 20 years, is no
longer sufficient to prevent conflicts of interest in the County.
Brevity is commendable, but not at the expense of clarity, particularly where civil and
criminal penalties await unwary public employees (including volunteer members of boards,
committees and commissions). Under the proposed law a public employee could not on her or
his own time solicit for the American Heart Association; participate in the Fill the Boot
Campaign; ask for food donations in support of an HHS program; or participate in the annual
County charity drive. Under current law each of these activities are explicitly permitted-a law
previously approved by the State Ethics Commission.
If a specific provision in the County's gift solicitation rules is not in compliance with
State law, it should be addressed directly. Wholesale elimination of the County's current gift law
will place the County Ethics Commission in the position of not just applying and interpreting the
ethics law, but creating the ethics law on a case-by-case basis outside of the more transparent
legislative process.
If the Council retains the proposed general prohibition concerning solicitation of gifts, the
Council should consider requiring the Ethics Commission to issue regulations implementing this
provision.
B.
Sections 19A-16(c) and (d): Restrictions On Accepting Gifts
Bill 39-14 would amend
§
19A-16(c)(2) to prohibit a public employee from accepting a
gift "regardless of amount" from a business the employee knows or should know "seeks" to do
business with the County agency with which the employee is affiliated. Again, while the
proposed language does match SG § IS-SOS(b)(1), it is unclear what the purpose of adding the
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Bonnie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26, 2014
Page 5
phrase "seeks to do business with" the County is intended to accomplish. The current Ethics law
already defines "doing business with" the County to include a business "submitting a bid or
proposal to a County agency for a transaction that involves at least
$
1,000 during a year."
So does "seeks to do" business include a business that simply calls the County to inquire
about contracting opportunities? The breadth of this new language is mollified by the
requirement that the employee knows or should know of the business' contracting activities.
Nevertheless, this new language introduces a degree of uncertainty into the Ethics law that could
ensnare a public employee who
has
no practical means for learning if a business is "seeking" to
do business with the County.
The proposed amendments to
§
19A·16(d) approximate similar language in SG
§
15·
505(c) and make important improvements to the existing Ethics law. Section 19A-16(d)(l), if
adopted, would reverse the November 2012
Holiday Guidance
issued by the Ethics Commission
thereby allowing public employees to attend community events, like the public safety awards
luncheon sponsored by the Chamber of Commerce, without the necessity of navigating through
the cumbersome process for accepting gifts to the County established by AP 1-16.
The proposed amendment to
§
19A -16(d)(8) brings the section regulating honoraria into
conformance with prior advice given by this Office. We would recommend, however, that
"unsolicited" be added to modify honoraria to forestall a public employee from approaching a
person and suggesting that an honoraria be paid.
C.
19A-17:
Who Files A Financial Disclosure Statement
The Bill eliminates the "confidential" category of financial disclosure filers, making all
employees who file a financial disclosure statement public filers. But extant code provisions
requiring certain employees to file either a limited confidential or limited public filing remain.
7
These provisions should
be
amended accordingly ifthe intent is to create one single class of
public
filers.
Section
§
19A-17 creates three "classes" of public filers:
1.
2.
§
19A-17(a) - elected officials. They file the most detailed statements.
§
19A-17(b) - high level employees, such as the CAO, department heads,
legislative analysts and legislative attorneys, hearing examiners, and those who
serve in these positions on an acting basis. Statements filed by these employees
Members of the following boards file limited confidential financial disclosure statements: Cable and
Communications Advisory Committee per
§
8A-30(e), Montgomery Community Television per
§
8A-32(c)(3), and
the Arts and Humanities Council
per
§
5A-4(d). Members of the Cable Compliance Commission file a full
confidential and limited public financial disclosure statement per § 8A-31(e). Finally, members of the Montgomery
Cares Advisory Board file a limited public financial disclosure statement per
§
24-50(1).
7
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Bonnie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26, 2014
Page 6
are less detailed than those filed by elected officials. Question A appointees are
not included in this category. Council should consider adding these employees to
subsection
(b).
In addition, it is unclear why the Deputy Inspector General would
not be include in this list as well.
3.
§
19A-17(c) - employees in the Management Leadership Services, paid members
of boards, commission, and committees, and any employee in the executive
branch designated by the CAO, and any employee in the legislative branch
designated by the Council Administrator. Employees in this third group file the
least detailed statements
The bill deletes the process of designating filers by executive regulation or council
resolution. No substitute process for designation is provided. Presumably, the CAO and Council
Administrator would add employees
by
way of a decision memorandum.
By way of clarification, it would be helpful if Council indicated that such designation by
the CAO is not subject
to
collective bargaining.
D.
19A-18: Time For Filing Financial Disclosure Statements And Procedures
Section 19A-18(a), an amalgamation of present
§§
19A-18(a) and
(f),
continues the
practice of requiring a financial disclosure statement shortly after beginning employment in a
covered position, before leaving a covered position, before Council confirmation of certain
Executive appointees, and as part of the application for a Council-appointed position.
Lines 413-16 duplicate the language in
§
19A-18 (d) and should be deleted.
Section 19A-18(e)(l)(C) is both new and problematic (Lines 445-49). This provision
requires the CAO, who serves at the pleasure of the County Executive, to review the County
Executive'S financial disclosure statement to see if"there are conflicts or potential conflicts of
interests." This provision puts the Council Administrator in the same position with respect to
Councilmembers. Taken together, these proposed amendments would place the CAO and
Council Administrator in a position of having
to
exercise oversight of the officials to whom they
report. If someone other than the public (including the press) should review the statements of
elected officials, it should be the Ethics Commission. We are unaware of any provision in the
state ethics law, regulations, or model law that would require this proposed amendment. Indeed,
those state sources provide that financial disclosure statements are filed directly with the state
ethics commission and available for public review. There is no state statutory reviewer.
Subparagraph
(C)
also suffers from another defect that is replicated elsewhere in Bill 39­
14.
It
requires the CAO, the Council Administrator, and all reviewers (see lines 466-69)
to
8
8
See,
for example, lines 848-49 with regard to what certain filers must report on their financial disclosure statement.
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Bonnie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26,2014
Page 7
certify that there are no "potential conflict of interests." Without the ability to foretell the future
how is a reviewer to determine if there is a potential conflict of interest? Moreover, what
sanction might befall a reviewer who fails to identify a potential conflict of interest? Section
]9A-28
makes "any violation of this Chapter" subject to both criminal and civil sanctions.
Section 19A-IO authorizes any individual to file a complaint with the Commission for "a
violation of this Chapter", and empowers the Commission to impose sanctions upon a finding
that the subject of the complaint has violated Chapter
19A.
By way of example, suppose a lawyer reports that the lawyer owns shares in Target
Corporation. Target operates stores in Montgomery County.
It
is plausible (although perhaps not
likely) that the County might issue to Target a citation for violation of the County Code. Should
the reviewer identify this economic interest in Target as a potential conflict of interest? If there is
a sanction for a reviewer missing a call, wouldn't a reviewer be well advised to treat every
economic interest of the filer as a potential conflict of interest and notify the CAO and the
Commission that the reviewer is unable to certify the statement (see lines 469-74)? The Council
should consider deleting the requirement that a reviewer certify that there are no "potential
conflicts of interest".
Finally, subparagraph
(C)
requires the reviewer to certify that there are "no conflict of
interests." Certainly, a reviewer may certify that there are no conflicts of interest known
to
the
reviewer. In many instances, however, filers may handle hundreds ifnot thousands of matters in
a year. It is simply not feasible for a reviewer to cross check every matter the filer may have
participated in to see if a conflict occurred.
The example cited above with the lawyer reporting an economic interest in Target is also
apropos in this instance as well. Is the reviewer required to comb through thousands of citations
to see if Target had been cited and ifthat lawyer had prosecuted the citation-in FY-14 OCA
prosecuted 4,422 citations. This example could
be
expanded to all the debt collection cases
handled by OCA as well as the hundreds of contracts and other matters handled by OCA.
Again, the prudent reviewer may simply notify the CAO and the Ethics Commission that the
reviewer cannot certify the statement.
This requirement that a reviewer certify a financial disclosure statement imposes a
policing function on the reviewer that is wholly new; the intent appears
to
be to make the
reviewer accountable for ferreting out violations of the ethics law committed by a public
employee supervised by the reviewer. The employee who violates the ethics law should be held
accountable not another employee who failed to identify the violation.
In our view, the real key to obtaining compliance with the Ethics law from public
employees is educating employees about the requirements of the Ethics law on a continuing
basis.
E.
19A-19: Content OfTbe Financial Disclosure Statement
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Bonnie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26, 2014
Page 8
The current Ethics law requires a filer to indicate only if an economic interest is above or
below $ 1,000 in value-the threshold for whether a conflict ofinterest occurs.
§
19A-19(m).
The current law, therefore, limits the purpose of the financial disclosure statement to an
instrument designed to assist the public and supervisors to prevent and identify conflicts of
interest. Bi1l39-14 removes
§
19A-19(m) and makes the financial disclosure statement into a
"wealth" indicator as well by requiring certain filers to indicate the value of certain economic
interests.
The goal to be accomplished by this change is unclear. Is the assumption that a more
wealthy official is more likely (or less likely) to have a conflict of interest or engage in an Ethics
law violation? The same question can be asked of a less wealthy official. Although this level of
specificity may be required for elected officials, who are subject to a higher level of disclosure
under the state ethics law, there is no valid reason to extend this level of scrutiny to other filers.
Employees described in
§
19A-17(a) (elected officials) must file a statement that
discloses the following:
(1)
Interests in real property. This is similar to present
§
19A-19(a), except that
disclosure is no longer limited to real property in neigbboringjurisdictions.
(2) Interests in corporations, partnerships, or other businesses. This is similar to
present
§
19A-19(b), which speaks to disclosing an interest in "any corporation, partnership,
limited liability partnership, partnership, limited liability corporation, sole proprietorship, or
other business.". This provision should simply use the term "business". The word "business" is a
defined tenn and already includes the other types of business entities described in this section. If
the word "business" is no longer satisfactory, it should be redefined. Otherwise, the word
"business" should be used without the duplicative reference to the other types of businesses
already included in the definition of
the
word "business."
9
(3)
Gifts.
This new provision
19A-19 (d» is broadened. Under the Bill a filer's
obligation to disclose a
gift
is no longer limited to a donor who does business with, lobbies, or is
regulated by the employee's County agency-i.e. the employee's department or office.
Instead, the employee must report any gift over $20 if the donor simply does business with the
County. The state ethics law similarly requires a filer to disclose gifts received from a person
who is regulated by or does business with "the state."
SG
§ lS-607(e)(2)(ii). But given that the
substantive prohibition against accepting a gift from a person who lobbies, does business with, or
is regulated by an employee's specific agency will remain in place under the bill, we see no valid
reason to broaden the companion financial disclosure provision. The purpose of this significant
This is not the only instance where Bill 39-14 uses synonyms for the
tenn
"business." This practice is not
good legislative drafting as it introduces a note of uncertainty into the legislation. See, for example, line
800-:finn
or association". Bill 39-14 needs
to
be thoroughly reviewed to eliminate this type ofpotential inconsistency. See
also the
teon,
for example. "governmental unit" on line 35. A better tenn might be "agency," a defined
tenn
already
used in the ethics law.
9
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Bonnie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26, 2014
Page 9
expansion is unclear and presents a significant hurdle for the flIer. For example, a filer who
works in DEP would need to know who contracts with DOT. In this regard, it is important to
note that the State Ethics Law requires the State Ethics Commission to publish a list of entities
doing business with the State. SG
§
lS-20S(c). If this change is adopted, the County Ethics
Commission should likewise be required
to
publish a list of all businesses who are "doing
business with" the County.
This new section also deletes the obligation to report gifts to immediate family members.
The purpose of this deletion is unclear.
(4)
Employment with, or interests in, entities doing business with the County.
This
section is new. Present
§
19A-19(e) requires disclosure of all offices held in a business that does
business with, or is regulated by, the County. This new provision requires disclosure of salaried
employment in addition to offices held by the filer (or a member of the filer's immediate family)
with any entity that does business with the County.
It
is unclear why "salaried employment" is
added in this subsection because all salaried employment must be disclosed under paragraph (7),
Sources of Earned Income. Again, while this proposed provision does have a state analogue in
SG
§
lS-607(f), we are unaware of any evidence that the County's present provision is deficient.
(5)
Indebtedness to entities doing business with the County.
This is similar
to
present
§
19A-19(f) with two distinctions. First, the filer need only report debts to entities doing business
with the County. Second, reportable debts include debts owed by the filer's immediate family
member "if the filer was involved in the transaction giving rise to the liability."
(6)
Employment with the County.
This is similar to present
§
19A-19(h).
(7)
Sources of earned income.
This is similar to present
§
19A -19(c). The filer must
disclose the name and address of each outside employer and each "business entity,,10 where the
filer or a member of the filer's immediate family was a sole or partial owner and received earned
income. "However, a filer need not include
any
infonnation
with
respect to
any
person for whom
services were provided by any finn or association of which the filer was a member, partner, or
employee unless the filer was directly involved in providing those services." Presumably, the
term "filer" does not include the filer's immediate family.
This is a new and broad requirement whose purpose is unclear. This provision is also
broader than the state companion provision. SG
§
IS-607(i). For example, a filer who works as a
realtor would be required to list every client whose property the filer sold without regard to
whether the client has any connection to the County. It is important
to
note that this requirement
to list clients is not a requirement imposed by State law. The Council should carefully consider
whether this disclosure serves a sufficiently important public purpose to justify the disclosure of
information that is usually considered as confidential commercial information.
10
Again, the Bill uses a tenn similar to but not identical with the defined tenn "business".
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Borurie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26, 2014
Page 10
Employees described in
§
19A-17(b) (high level employees) must also disclose the above
infonnation, but with less detail in certain circumstances. The filer need not specify the nature or
amount of consideration given in exchange for an interest or the fair market value of an interest.
For a debt, the filer can disclose less information.
Employees described in
§
19A-17(c) (MLS, paid board members, and others) must
disclose information regarding gifts received and must disclose the infonnation otherwise
required "only with respect to any interest, compensated position, or liability that may create a
conflict under
§
19A-ll or is prohibited under
§
19A-12." (Emphasis added) For reasons
discussed in the context of the certification requirement of a reviewer of a financial disclosure
statement, the "may create" standard puts the filer into a nearly impossible position. Not
knowing what the future may bring, the prudent filer would be well advised to simply list all
economic interests, which defeats the purpose of having three levels of filers.
F.
19A-20: Certifications Regarding Conflicts
Of
Interest.
This problematic section is new and has no analogue in
the
present ethics law.
Subsection (a) requires each filer to annually certify that, to the best of the filer's
knowledge, neither the filer nor the filer's immediate family or relatives have any interest,
including any liability, that may create a conflict of interest under Section 19A-ll or 19A-12. If
a filer is unable to so certify, the filer must separately identify, in the manner required by the
Commission, any interest that may create a conflict ofinterest under Section 19A-l1 or 19A-12.
Finally, subsection (c) states as follows: "If the economic interests of a filer, including
those ofan immediate family member or relative, have changed since the filer's last filed
certification such that a conflict ofinterest may be created under Section 19A-l1 or 19A-12, or
if the filer or an immediate family member received a reportable gift from any person doing
business with the filer's County agency or department, the filer must, within 5 days after the
event, amend the certification filed under subsection (a) and identify each possible conflict or
gift." (Emphasis added)
This new section raises the following concerns:
1.
As earlier noted, there is immense uncertainty with respect to determining if an
economic interest may create a conflict of interest.
Requiring the filer to amend the filer's financial disclosure statement "within 5
days" after a new economic interest is acquired (or sold) or a gift received from
certain donors will change an annual filing process into a continuing process.
The 5 day reporting requirement will almost certainly trap many unwary filers. In
2.
3.
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Bonnie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26, 2014
Page 11
this regard it is important to remember that a public employee who violates any
provision ofthe Ethics law is subject, under
§
19A-28,
to
both criminal and civil
penalties. Under this new section, a lawyer in OCA who sells stock in IBM and
buys stock in Microsoft will need to remember to report this transaction with 5
days. Failing to remember to report the transaction violates the Ethics law.
4.
The requirement to report gifts would seem to require reporting gifts that are not
even required to be reported on the annual statement-e.g. gifts with a value of
less than
$
20.
The Council should consider deleting this new provision from the Bill.
III.
CONCLUSION AND SUMMARY
It can be argued that most, but not all, of the changes proposed by Bill 39-14 are required
as to elected officials because the County's ethics law must be equivalent to or exceed the state
law. But, given the lower level of equivalency required for other employees, it is debatable
whether those changes are required for other employees.
In
some cases, the proposed changes
seem unwise.
Section 19A-16 (a)
&
(b) -
Soliciting Gifts And Exceptions. Arguably, the changes
proposed in Bill 39-14 as
to
these sections are required as to elected officials. It is debatable (and
we think ill-advised) whether those changes are required for other employees.
Section 19A-16(c) & (d) - Accepting Gifts And Exceptions. Arguably, the changes
proposed in Bill 39-14 as
to
these sections are required as to elected officials. WhiJe it is
debatable whether those changes are required for other employees, we agree that these changes
are helpful and make important improvements to the ethics law, with one exception. We believe
the proposal
to
prohibit an employee from accepting a gift from a business the employee knows
or should know is doing business or "seeks" to do business with the employee's agency is
unnecessary give the broad definition of "doing business" under the ethics law.
Section 19A-18 - Financial Disclosure Procedures. The proposal
to
require the
CAD
and
the Council Administrator
to
review the financial disclosure statements filed by the County
Executive and Councilmembers, respectively, is not required at all because there is no similar
requirement in the state ethics law. Likewise, the requirement that all reviewers certify that there
are no "conflicts of interest" or "potential conflicts of interest" is not required because there is no
state analogue.
Section 19A-19 - Financial Disclosure Content.
Detailed Reporting
Of
Economic Interests. Detailed reporting of economic interests is
arguably required for elected officials.
It
is debatable whether such detailed reporting is required
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Bonnie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26, 2014
Page 12
of other filers.
Gifts. Arguably, reporting of gifts received from anyone who lobbies, does business, or is
regulated by the County is required for elected officials. Again, it is debatable whether this
requirement must
be
extended to all other filers.
EmploymentlInterest In Entities Doing Business With The County. Arguably, these
changes are required for elected officials.
It
is debatable whether these changes are necessary for
other filers.
Sources Of Earned Income. This provision is broader that its state companion and,
therefore, is not required.
Following is a list of the recommendations made in this memorandum. After each
recommendation, we have noted whether, in our view, State law allows
the
Council discretion to
decide whether to adopt the proposed change.
1.
The Council should consider retaining the current provisions concerning the
solicitation of gifts by a public employee or require the Commission to issue
regulations to identify what gifts a public employee may solicit. State law would
permit the Council to require the Commission to issue regulations; the current
statutory rules regarding solicitation of gifts could arguably
be
retained for non­
elected public employees.
The term "seeks
to
do business with" should
be
removed from the provision in
§
19A-16, because it introduces an unfair degree ofuncertainty into the Ethics
law. State law arguably would permit the Council to delete this phrase.
The term "unsolicited" should be added to modify "honoraria" in
§
19A-16(d)(8)
to
forestall a public employee from approaching a person and suggesting that an
honoraria be paid. State law would permit this modification.
The Council should consider adding Question A employees and the Deputy
Inspector General to the list of employees who must file a fmancial disclosure
statement under
§
19A-17 (b). State law would permit this addition.
Extant code provisions requiring certain emRloyees to file either a limited
confidential or limited public filing remain.
1
These provisions should be
2.
3.
4.
5.
Members of the following boards file limited confidential financial disclosure statements: Cable and
Communications Advisory Committee per
§
SA-30(e), Montgomery Community Television per
§
SA-32(c)(3), and
the
Arts
and Humanities Council per
§
SA-4(d). Members of the Cable Compliance Commission file a full
confidential and limited public financial disclosure statement per
§
SA-31(e). Finally, members ofthe Montgomery
Cares Advisory Board file a limited public financial disclosure statement per
§
24-SO(f).
II
@
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Bonnie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26, 2014
Page 13
amended accordingly if the intent is to create one single class of public filers.
State law wouldpermit the implementation of this recommendation.
6.
For purposes of clarification, the Council should indicate that the CAO's decision
to require a public employee to file a financial disclosure statement is not subject
to collective bargaining. State law would permit the implementation of this
recommendation.
Lines 413-16 duplicate the language in
§
19A-18 (d) and should be deleted. State
law is not implicated.
Section 19A-18 (e)
(1) (C)
is both new and problematic (Lines 445-49). This
provision places the CAO and Council Administrator in a position of having to
exercise oversight of the officials to whom they report. If someone other than the
public (including the press) should review the statements of elected officials,
it
should
be
the Ethics Commission. State law does not require the use ofreviewing
officials.
The Council should consider deleting the requirement that a reviewer certify that
there are no "conflicts of interest" and no "potential conflicts of interest." State
law does not require the use of reviewing officials.
The Council should consider removing the "wealth" indicators from the proposed
fmancial disclosure statement. State law would permit the Council to require the
Commission to publish a list of entities that do business with the County; the
current statutory rules regarding the use ofthe abovelbelow $1,000 category could
arguably be retained for non-elected public employees.
Bill 39-14 uses synonyms for the term "business". This practice is not good
legislative drafting as it introduces a note of uncertainty into the legislation. State
law would permit the implementation of this recommendation.
A public employee must report any gift over $20 if the donor does business
with
the County.
The purpose of this significant expansion is unclear and presents a
significant hurdle for the filer. Ifthis change is adopted, the County Ethics
Commission should be required to publish a list of all businesses who are "doing
business with" the County. Slate law would permit the Council to require the
Commission to publish a list of entities that do business with the County; the
current statutory rules regarding the reporting of gifts could arguably be retained
for non-elected public employees.
The provision regarding the disclosure of gifts deletes the obligation to report
gifts to immediate family members. The purpose of this deletion is unclear, and
7.
8.
9.
10.
11.
12.
13.
@
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Bonnie Kirkland
Re: Bill 39-14, Ethics - Amendments
August 26, 2014
Page 14
the Council should consider the reasons for this proposed change. State law
would permit the Council to require a filer to report gifts made to immediate
members of the filer's family by "interested" donors.
14.
The Council should carefully consider whether requiring a filer to disclose client
lists serves a sufficiently important public purpose to justify the disclosure of
information that is usually considered to be confidential commercial information.
State law would permit the Council to delete this proposal from the bill.
For reasons discussed in the context of the certification requirement of a reviewer
of a financial disclosure statement, the "may create" standard puts a filer into a
nearly impossible position. Not knowing what the future may bring, the prudent
filer would be well advised to simply list all economic interests, which defeats the
purpose ofhaving three levels of filers. State law would arguably permit the
Council to abandon the "may create" standard.
Proposed
§
19A-20 should be deleted. It imposes unfairly vague standards on a
filer and creates a continuing reporting requirement that will trap many unwary
filers. State law would permit the implementation of this recommendation.
15.
16.
ebl
Enclosure
(bill)
cc:
Michael Faden, Sr. Legislative Attorney
Bob Drummer, Sr. Legislative Attorney
Robert Cobb, Executive Director,