Opinion

Opinion  EC-COI-87-39

Date: 10/26/1987
Organization: State Ethics Commission

Members of the Massachusetts Corporation for Educational Telecommunications (MCET) must observe the abstention requirements of both section 6 and St. 1982, c. 560 in connection with matters which affect the financial interest of members or their business organizations. In most instances, members may seek exemptions from section 6 from their appointing officials.

Table of Contents

Facts

You are the Secretary of the Executive Office of Economic Affairs. In that capacity, you are also a member of several quasi-public corporations which have been established by the General Court since 1975 to further certain economic and development programs. [1]

These corporations are typically administered by boards of directors composed in significant part by individuals with particular private sector backgrounds and institutional affiliations, as required by their respective enabling statutes. These statutorily prescribed qualifications create the potential for conflict, as they require that corporate directors have certain affiliations which will be affected by the actions they take as directors. The General Court has inserted exemptive provisions in each of the enabling statutes. The exemptive provision from the enabling statute of the Massachusetts Corporation for Educational Telecommunications (MCET), for example, reads as follows:

The provisions of chapter two hundred and sixty-eight A of the General Laws shall apply to all directors, officers and employees of the corporation except that the corporation may purchase from, sell to, borrow from, contract with or otherwise deal with any organization in which any director of the corporation is in any way interested or involved; provided, however, that such interest or involvement is disclosed in advance to the directors and recorded in the minutes of the proceedings of the corporation; and provided
further, that no director having such an interest or involvement may participate in any decision relating to such organization. St. 1982, c. 560, s.3.

The exemptive provisions for the other enabling statutes are substantially similar.

Question

In the normal course of official duties of MCET directors, particular matters on the MCET agenda may affect the financial interests of business organizations for which MCET directors serve as officers or employees. Some of these matters may be contracts between MCET and their organizations. How do the provisions of G.L. c. 268A, s.s.6 and 7 and the exemptive provisions in the MCET enabling statute apply to MCET directors who are affiliated with organizations which have matters pending before MCET?

Answer

MCET directors are subject to the conditions discussed below.

Discussion

Members of the MCET board of directors are state employees for the purposes of G.L. c. 268A. See, G.L. c. 268A, s.1(p),(q); St. 1982, c. 560. In view of their part-time status, directors are also "special state employees" within the meaning of G.L. c. 268A, s.1(o). Two provisions of G.L. c. 268A are relevant to your question.

1. Section 7

Section 7 generally prohibits a state employee from having a financial interest, direct or indirect, in a contract made by a state agency. For example, absent qualification for an exemption, a state employee who has an ownership interest in a company would violate s.7 if his company contracts with his state agency. Further, a special state employee may have a financial interest in a contract between his company and his agency only if the governor, with the consent of the executive counsel, approves. G.L. c. 268A, s.7(e).

As applied to MCET directors, s.7 places few, if any, restrictions on directors' financial interests in contracts

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made by state agencies. MCET directors, as special state employees, may have a financial interest in contracts made by state agencies other than MCET following their filing of a disclosure of their contractual interest pursuant to G.L. c. 268A, s.7(d).

With respect to their having a financial interest in contracts made by MCET, directors need not comply with the gubernatorial exemption procedure of s.7(e). Pursuant to MCET's enabling statute, St 1982, c. 560, s.3, MCET may purchase from, sell to, borrow from, contract with, or otherwise deal with any organization in which any MCET director is in any way interested or involved, as long as the disclosure and abstention requirements of St. 1982, c. 560, s.3 are satisfied. In effect, the General Court has exempted MCET directors from the restrictions which s.7 would customarily place on their financial interest in an MCET contract [3]

2. Section 6

Section 6 generally prohibits a state employee from participating [4] in any contract, decision, determination or other particular matter [5] in which, in relevant part, either the state employee or any organization for which the state employee serves as an officer, director, trustee, partner or employee has a financial interest. The abstention requirement is not absolute and is tempered by a disclosure and exemption procedure under which the employee may participate in the matter if his appointing official has made and filed with the Ethics Commission a written determination that the financial "interest is not so substantial as to be deemed likely to affect the integrity of the services which the Commonwealth may expect from the employee." G.L. c. 268A, s.6(3).

As state employees, MCET directors would customarily be subject to these abstention, disclosure and exemption provisions with respect to all matters affecting financial interests covered by G.L. c. 268A, s.6. In light of the exemptive language of St. 1982, c. 560, s.3, there appears to be an ambiguity as to whether the s.6 exemption avenue is available at all to MCET members. Based on our comparison of c. 560, s.3 with G.L. c. 268A, s.6, our application of principles of statutory construction and our examination of the legislative history of c. 560 and similar statutes, we conclude that the s.6 exemption procedure is available to MCET directors except for contracts or other particular matters in which the director has been exempt from s.7 by virtue of c. 560, s.3.

Viewed in its entirety, c. 560, s.3 appears to establish for MCET directors conflict of interest exemptions and restrictions which supplement, rather than replace, the existing provisions of G.L. c. 268A. The plain language of c. 560, s.3 accomplishes three purposes:

1. a confirmation of the application of G.L. c. 268A to MCET directors subject to an exemption from s.7 for MCET directors;

2. a disclosure requirement with respect to those interests made exempt by c. 560; and

3. an absolute abstention requirement with respect to matters relating to the organization and in which the director has an interest made exempt by c. 560.

We do not believe that the Legislature intended the abstention requirement of c. 560, s.3 to supersede the exemption avenue of s.6. Reasonably read, c. 560, s.3 establishes an exemption to the s.6 procedure only for contracts made exempt from s.7.

The c. 560 abstention requirement does not appear in isolation but rather follows a proviso to a limitation or an exception to a general rule. The use of words such as provided, further" and "having such an interest" seem to refer to conditions under which a director may take advantage of an exemption from s.7. We therefore presume that the abstention requirement is confined to its previous antecedent. Opinion of the Justices, 286 Mass. 611, 620 (1934).[6]

Our examination of the progression of legislative drafts which culminated in the enactment of c. 560 as well as in the enactment of other quasi-public corporations with similar exemption language reveals no further guidance as to the Legislature's intent The relevant language in c. 560, s.3 was enacted in unchanged form from its original version, which was modeled after earlier precedents established by the Legislature. See, FN 1, infra. The original legislation creating this language was contained in St. 1975, c. 866 (MCDC) and thereafter "boiler-plated" in the enabling statutes of other similarly-structured corporations. There is no indication that the Legislature was aware of the apparent ambiguity it was creating with s.6 or that it intended any particular result.

In light of the apparent purpose of c. 560, s.3, the absence of any legislative history to the contrary and our obligation to construe statutes so as to constitute a harmonious whole, we conclude that the s.6 exemption avenue is available to MCET directors, except for contracts made exempt from s. 7 by virtue of c. 560, s.3. [7] Accordingly, directors appointed by the governor may receive a s.6 exemption from the governor. Those direction who are members by virtue of their governmental office, such as the Chancellor of the Board of Regents, may seek an exemption from the government officials who appointed them to their positions. Those directors who are members by virtue of their private position, such as the president of the WGBH Educational Foundation, would not appear to have an official responsible for these appointments to their positions. Consequently, they have no appointing official who exercises the exemption authority under s.6. [8]

* Pursuant to G.L. c. 268B, s.3(g), the requesting person has consented to the publication of this opinion with identifying information.

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[1] These corporations include the Massachusetts Community Development Corporation, St. 1975 , c. 866; the Massachusetts Technology Development Corporation, St. 1978, c. 497; the Community Economic Development Assistance Corporation, St. 1978 c. 498; the Bay State Skills Corporation, St. 1981, c. 351; the Massachusetts Technology Park Corporation, St. 1982 , c. 312; the Massachusetts Corporation for Educational Telecommunications, St. 1982, c. 560; and the Massachusetts Products Development Corporation, St. 1984, c. 208.

[2] For ease of discussion, this opinion will address the application of G.L. c. 268A to MCET directors. The principles in this opinion will apply with equal force to directors of other quasi-public corporations with exemptive language similar to MCET.

[3] The exemption may also apply to other violations of G.L.c. 268A which otherwise accrue due to the dealings of a director's organization with MCET. See, G.L.c. 268A, s.4(a), which prohibits a state employee from receiving "compensation" for the services which others perform in their dealings with state agencies. We note, however, that the exemption does not exempt MCET directors from the agency restrictions of s.4(c). Under s.4(c), an MCET director may not have any dealings with MCET on behalf of his organization.

[4] "Participate", is defined as participate in agency action or in a particular matter personally and substantially as a state, county and municipal employee, through approval, disapproval, decision, recommendation, the rendering of advice, investigation or otherwise. G.L.c. 268A, s.1(j).

[5] "'Particular matter", is defined as any judicial or other proceeding, application, submission, request for a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, decision, determination, finding, but excluding enactment of general legislation by the general court and petitions of cities, towns, counties and districts for special laws related to their governmental organizations, powers, duties, finances and property. G.L.c. 268A,s.1(k).

[6] This parsing of the enabling statute is supported by the rule of statutory construction called "the rule of the last antecedent" United States v. Ven-Fuel, Inc., 758 F.2d 741,751(1st Cir. 1985). That rule holds generally that qualifying phrases are to be applied to the words or phrase immediately preceding and not to be construed as extending to more remote phrases unless there is a plain indication to the contrary in the statute. Id, See, also 2A. C. Sands, Sutherland Statutory Construction, s.s.47.09, 47.33(4th ed. 1972). The rule which is grounded in grammar as well as logic, has long been followed by Massachusetts courts, Moulton v. Brooklyn Rent Control Board, 385 Mass. 228-231 (1982); Druzik v. Board of Health of Haverhill 324 Mass. 129, 133(1949); West's Case, 313 Mass. 146, 149 (1943).

[7] Because of the hypothetical nature of your question, we cannot address whether a "blanket" s. 6 exemption granted by an appointing official would suffice or whether a separate s.6 exemption need be sought each time a matter arises affecting the member's or his organization's financial interest. We would note that s. 6 seems to envision the latter course because the perceived impact of the financial interest may differ with each particular matter.

[8] This is not to say that the Commission would not consider other potential surrogate appointing officials to effectuate the purposes of G.L.c. 268A, s.6. See, {Commission Advisory No. 11}. Whether the creation of such an appointing official is feasible can only be examined in the context of a future opinion request. We note that the selection of the trustees of the WCBH Educational Foundation as the "appointing official" would not be appropriate in light of the obvious financial interest which the appointing official would have in the result.

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