REGULATORY BOARDS & COMMISSIONS ETHICS ACT

Senate Bill 576 (Substitute H-2)

Sponsor:  Sen. Tonya Schuitmaker

House Committee:  Regulatory Reform

Senate Committee:  Reforms, Restructuring and Reinventing

Complete to 3-13-14                                                              (Enacted as Public Act 96 of 2014)

A SUMMARY OF SENATE BILL 576 AS REPORTED FROM HOUSE COMMITTEE

The bill would create a new act, known as the Regulatory Boards and Commissions Ethics Act, to establish new conflict of interest standards for regulatory boards and commissions within the Department of Licensing and Regulatory Affairs.  The standards would apply to members of any board, commission, committee, or subcommittee in LARA that has regulatory authority over private individuals and entities. 

Under the bill, members of regulatory bodies within LARA would be subject to disclosure for certain conflict of interest situations and would face removal from a board and the voiding of board action under certain conditions. 

Section 2 – Compliance with the act

The bill would require members of regulatory boards and commissions to comply with all of the standards established under the bill, in addition to any other standard of conduct or disclosure requirements that already apply.

Section 3 - Required actions by members

Under the bill, board members would have to do all of the following:

o   Disclose to the board and LARA director any pecuniary, contractual, business, employment, or personal interest the member may have in a matter before the board.  Disclosure would also be required if a spouse, child, or stepchild of a board member is affiliated with an entity that is under consideration for a contract, grant, or loan, or is the subject of regulatory, enforcement, or disciplinary action before the board. 

o   Refrain from participating in discussions with other board members regarding matters before the board if the member has an interest as described above.

o   Abstain from voting on any motion or resolution relating to a matter in which the member has an interest as described above.

o   Use state resources, property, or funds that are under the member's official care and control judiciously and in accordance with all legal procedures, and not for personal gain or benefit.

Section 4 – Prohibited actions

Board members would be required to refrain from all of the following:

o   Divulging any confidential information to unauthorized persons that is acquired in the course of service on the board before the time the information is legally allowed to be released to the public.

o   Representing personal opinion as that of the board or LARA.

o   Soliciting or accepting gifts or loans of money, goods, services, or other things of value for the benefit of someone other than the state that could reasonably be expected to influence the manner in which the member performs official duties.

o   Engaging in business transactions in which the member may profit from the official position or authority as a board member, or benefit financially from confidential information that the member obtained incident to being on the board.

o   Rendering services for a private or public interest if it is incompatible or in conflict with the discharge of the member's official duties at the time the services are rendered.

o   Participate in an official capacity as a board member in negotiating or executing contracts, making loans, granting subsidies, fixing rates, issuing permits or certificates, or other regulation or supervision relating to a business entity that the member of an immediate family member has a pecuniary or personal interest (except for a two-percent or smaller ownership stake in a publicly traded company).

Section 4 – Voiding of agreements

Under the bill, contracts, grants, or loans that a board enters into with or awards to a member or an immediately family member of a board member with an interest in the matter would be considered in violation of conflict of interest standards and would be voidable at the option of LARA, unless the affected member complies with both of the following:

o   Except as expressly permitted by applicable law, the affected member has abstained from participating in the discussion or vote.

o   The affected member promptly disclosed the pecuniary, contractual, business, employment, or personal interest in the matter as required by the act and all other applicable laws.

Section 5 – Removal and request for conflict ruling

Any board member that failed to disclose an interest described above would be subject to immediate removal from the board by the governor.

Additionally, anyone who has reason to believe a board member has failed to disclose a conflict of interest or has an interest that is not required to be disclosed but could have a tendency to affect the ability to render an impartial decision could request the director of the department (or a designee) to consider the issue of a conflict of interest up to one year after the board has taken action on a matter.

A matter referred to the board as a potential conflict of interest would have to be investigated by the director or designee, who would have to decide if the member in question has an undisclosed interest or has another conflict of interest sufficient to raise a reasonable doubt as to whether the member could render an impartial decision.  The director or designee could refer the matter to the State Board of Ethics.

If it is determined that a member has an undisclosed conflict in violation of the act or a conflict of interest that is sufficient to raise reasonable doubt about the member's ability to render an impartial decision, the department would review the action to determine if the member in question cast a deciding vote on the matter.  If the action did not depend on the vote of that board member, the action of the board stands.  If the board member was the deciding vote, the board would have to reconsider the matter without the participation of that member.

Section 6 - Applicable laws

This new act is intended to supplement existing ethics laws, and the following laws would prevail if this new act created any conflicts with existing law:

o   Section 10 of Article IV of the State Constitution of 1963.

o   MCL 15.181 to 15.185.

o   MCL 15.301 to 15.310.

o   MCL 15.321 to 15.330.

o   MCL 15.341 to 15.348.

FISCAL IMPACT:

Senate Bill 576 would not have a significant fiscal impact on the state or local units of government.

                                                                                        Legislative Analyst:   Jeff Stoutenburg

                                                                                                                           Chris Couch

                                                                                                Fiscal Analyst:   Paul Holland

■ This analysis was prepared by nonpartisan House staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.