AO 01-003

March 22, 2001

Mr. Andrew L. Ritter, Executive Director, N.C. Board of Mortuary Science, 2321 Crabtree Boulevard, Post Office Box 27368, Raleigh, North Carolina 27611-7368

Re: Board of Mortuary Science

Dear Mr. Ritter:

I am happy to respond to your March 16, 2001, request regarding any potential conflict of interest or the appearance of a conflict of interest in the context of the North Carolina Board of Mortuary Science ("MSB" or "the Board") co-sponsoring legally-required continuing education courses with trade associations whose members are licensed and regulated by the Board. Before I do, however, you need to be aware of several limitations on the scope of this response. First, the Board is covered by other laws or rules which may apply to this situation. For example, North Carolina General Statutes ("NCGS") §90-210.25 (a) (5) requires the Board to "cause to be established and offered to the licensees, each calendar year, at least five hours of continuing education courses…." The Board is authorized to cover the cost of producing such courses through reasonable attendance fees and the use of "other funds received under the provisions of [Article 13A]." Other statutes may apply to the sharing of expenses and "profits" between public and private interests. See, e.g., the Executive Budget Act (Article 1 of Chapter 143).

Definitive interpretation of these and other applicable statutes and policies, as well as their specific application to your situation, is a matter for the Board’s legal counsel. The Board of Ethics ("BOE") is charged with interpreting and enforcing Executive Order Number One ("EO One" or "the Order"). Any conflict between a provision of the Order and other North Carolina law is resolved in favor of the law. EO One, §5 (a) (3).

With the foregoing limitations in mind, the following preliminary advisory opinion is issued by Board staff according to the Board's "Rules and Regulations" and may be relied upon until and unless it is formally modified or rescinded by the full Board. Once the Board formally approves, modifies, or otherwise disposes of the preliminary opinion, all pertinent parties will be so notified.

All advisory opinions, both preliminary and final, are based upon the particular facts presented and issues raised in the specific request for an advisory opinion. As such, the scope of each opinion is limited to the request made and should only serve as a recommendation to the particular parties involved. It may, however, serve as a general guide to other individuals similarly situated.

I understand the basic facts to be as follows. As mentioned above, the Board is required by statute to offer continuing education courses to its licensees during the calendar year. See NCGS §90-210.25 (a) (5). The Board has done so with great success for many years. While the primary goal is not to make a "profit," the Board has made a relatively small amount of money on these courses in the past. Last year, one of the two relevant North Carolina trade associations approached the Board about co-sponsoring the continuing education program. The Board agreed after inviting the other trade association to also take part in the program. As a result, the Board and the two trade associations have co-sponsored two such programs, splitting expenses and any resulting profits. The Board licenses and regulates members of the two trade associations, but otherwise has no direct regulatory contact with the associations themselves. No Board members are currently serving as officers, directors, or leaders of the relevant trade associations, although most are members of such associations. If I am mistaken about any of the foregoing facts, or if there is additional relevant information needed for a complete understanding of the issues involved, please let me know at once.

The basic rule of conduct for covered Public Officials is that they must perform their official duties in a manner to promote the best interests of the public. EO One, § 7. This encompasses avoiding both conflicts of interest and the appearance of conflicts of interest. Conflict of interest rules are aimed primarily at avoiding undue financial gain as a result of one's official position. The basic conflict provision is found in section 7 (a) (1). A Public Official shall not knowingly use his or her position in any manner which will result in financial benefit, direct or indirect, to not only the Official but also a business, organization, or group with which the Official is associated. EO One, § 7 (a) (1).

Your question primarily raises appearance of conflict issues covered by section 7 (b) of the Order. Public Officials must make every effort to avoid even the appearance of a conflict of interest. This is a flexible, open-ended standard applicable on a case-by-case basis. An appearance of conflict exists when a reasonable person would conclude from the circumstances that the Official's ability to protect the public interest, or perform public duties, is compromised by personal interests. The "personal interests" that can give rise to an impermissible appearance of conflict are broader than strictly financial or familial interests. An appearance of conflict may exist even in the absence of a true conflict of interest. EO One, § 7 (b) (1).

In the present situation, the danger lies in the possible perception that because the Board and the trade associations are "partners" in the continuing education programs, association members will enjoy some advantages or benefits that non-members do not. Others may perceive a closer connection between the public regulator and the private organization than there really is. Yet another potential appearance is that the Board is somehow encouraging individuals to join an association. Any one of these perceptions, if reasonable, would undermine public confidence that the Board is acting in the best interest of the public as a whole as required by Executive Order Number One. In addition, voting to share "profits" with a private organization with which a Board member is closely associated could run afoul of section 7 (a) (1) of the Order.

For the foregoing reasons, the Board should give very careful consideration to co-sponsoring any future continuing education programs with trade associations whose members are licensed and regulated by the Board.

This is not to say that Board members are barred from any and all involvement with trade associations. Membership in or involvement with related trade associations does not per se create an impermissible conflict of interest or the appearance of conflict, but it does create a potential conflict of interest, and Public Officials must be very careful when matters pertaining to or proposed by such associations come before the public body on which they sit. See AO-00-004 (March 20, 2000). While the Board of Ethics has stated that the ethics order does not intend to keep appointees from participating in professional activities, "the more involved board members are with persons they are regulating, the greater the risk of conflict of interest while performing public duties." Individual board members must weigh this risk carefully and exercise caution so as not to give rise to a conflict of interest, or the appearance thereof, by virtue of serving in both roles.

Finally, this request shows a high degree of sensitivity to the ethical ramifications, both real and perceived, of public service, and I commend the Board for seeking clarification and advice when there is any doubt whatsoever about the proper course of action. I hope this opinion adequately addresses the specific questions raised in your request, but if it does not, please do not hesitate to call on me for further discussion and analysis.

Sincerely,

Perry Y. Newson, Executive Director

cc: Mr. George F. Bason, Chairman, NC Board of Ethics