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HomeMy WebLinkAbout07-017 ConfidentialOPINION OF THE COMMISSION Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Paul M. Henry Raquel K. Bergen Nicholas A. Colafella Reverend Scott Pilarz DATE DECIDED: 10/23/07 DATE MAILED: 11/7/07 07 -017 This Opinion is issued in response to your advisory request letters dated July 20, 2007, and August 15, 2007. I. ISSUE: Whether, pursuant to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., an A with Commonwealth Department B ( "the Department ") would have a conflict of interest under Section 1103(a) of the Ethics Act with respect to prospective grants from the Department to two non - profit organizations that are clients of a non - profit organization for which the spouse of the A serves as an officer and compensated staff member, and whether the restrictions of Section 1103(f) of the Ethics Act would apply as to prospective grants to any of the three aforementioned non - profit organizations. II. FACTUAL BASIS FOR DETERMINATION: As Chief Counsel of the Department, you request an advisory from this Commission with respect to Commonwealth Employee C (hereinafter referred to as "Employee C "), who is employed with the Department as an A. You note that you have been authorized by both Employee C and by Public Official D to request this advisory. You have submitted facts that may be fairly summarized as follows. Pursuant to its mandate under the [Act and cite], to [quote], the Department awards grants authorized by various state and federal statutes. The Department's Unit E awards and administers most of the grants issued by the Department, including grants issued through the Department's F Program. Unit E awards F Program grants to [types of entities] for projects involving the [types of projects]. The F Program is administered by Unit E's G Office in [city] and its [number] H Confidential Opinion, 07 -017 November 7, 2007 Page 2 Offices across the Commonwealth. The F Program grant process begins with the announcement of grant rounds via the [publication], the Department's website, news releases, and mailings to potential applicants. Grant applicants are supplied with information about the types of grants available, eligibility requirements for grantees and grant projects, selection criteria for grant applications, and the grant process through the aforesaid announcements, Unit E's grants manual, and public workshops conducted by Unit E. Grant applications are submitted to Unit E's G Office, where staff distributes the applications to Unit E's H Offices based on the locations of the grant projects. Proposed grant projects that have statewide impact rather than just regional effects are retained and reviewed by G Office staff. The H Offices then rate and rank the grant applications distributed to them. You state that the application of a H Office staff's specialized knowledge in assessing the needs and capabilities of the [types of entities] that comprise the grant community in that particular region is critical to that H Office's rating and ranking process. The H Offices then submit their recommendations for funding to Unit E's G Office, where staff reviews the ratings submitted for the regional projects for accuracy and overall consistency. The G Office staff works with the H Office staff to rank the grant applications and determine funding levels. You note that the grant applications compete for funding not only with other grant applications from the same region but also with applications from the other regions. As the next step in the grant process, Unit E staff compiles a list of recommended regional and statewide grant projects and funding levels. The list is first reviewed by the Unit E 1 and then by the J. The list is ultimately cleared with Public Official D or a designee. Awards to successful applicants are publicly announced and grant agreements are executed. Upon request, the Department makes available to the public the names of unsuccessful applicants, grant agreements with successful applicants, the grant amounts requested by the applicants, and descriptions of the proposed projects. Employee C is the A in Unit E's K H Office of Unit E's L Division. You have submitted copies of Employee C's official Department position description and the job classification specifications for the position of A (job code [number]), both of which documents are incorporated herein by reference. You state that Employee C is responsible for supervising the delivery of grants to the [number] counties encompassed within the K region. Employee C's responsibilities include supervising one employee who is a M (hereinafter referred to as the "Subordinate Employee ") and providing guidance and information about Unit E's grant program to potential applicants through meeting with potential applicants and participating in workshops conducted by Unit E. With respect to the processing of grant applications, Employee C is responsible for using the criteria published in Unit E's grants manual to rate and rank the applications for regional projects from applicants in the K region, a task which is shared with the Subordinate Employee. Employee C and the Subordinate Employee divide between themselves the applications in each grant round by project categories, so that one individual reviews all the applications within a given category. Employee C and the Subordinate Employee then meet to discuss their evaluations and arrive at the K H Office's recommended rating for each application. Employee C is also responsible for submitting recommendations for funding to Unit E's G Office and meeting with G Office staff to review project information and rankings Confidential Opinion, 07 -017 November 7, 2007 Page 3 after G Office staff has checked the ratings for accuracy and reviewed how the projects rank in relation to budget allocations for each region. You state that at this point, the role of H Office staff, including Employee C, ends with respect to evaluating and rating grant applications. With respect to the administration of grants, Employee C is responsible for performing site inspections on acquisition and development projects at the request of the G Office as part of the closing out process for a grant after the project has been completed. At the invitation of organizations that have been awarded grants, Employee C also serves on project steering committees to provide technical assistance on grant projects in the K region. You state that as a member of H Office staff, Employee C has no other role in the administration of grants. You state that on [date], Unit E published in the [publication] an announcement of the availability of grants for the next two rounds of F Program grants. One round was for the period from [date] through [date]. The second round (hereinafter referred to as the Second Round ") was for the period from [date] through [date]. The amount of grant funding to be awarded by Unit E in the Second Round will range from $[amount] to $[amount]. In the Second Round, Unit E will be considering [number] grant applications, [number] of which are for projects in the K region. For the Second Round, the initial rating and ranking of K region applications would be done by Employee C for six specific project categories and by the Subordinate Employee for four other specific project categories. Employee C's spouse, Individual N, is [officer], [officer], and the only paid staff member of Organization 0, a non - profit 501(c)(3) corporation. You state that Organization O's mission is to [statement of mission]. Organization 0 has one grant application pending with Unit E in the Second Round. However, because the project would have a statewide impact, the application will be rated and ranked in Unit E's G Office rather than by regional staff. You state that Employee C therefore would have no involvement with the Organization 0 grant application or with the administration of any grant that would be awarded to Organization O. Organization P and Organization Q are non - profit organizations that have contracted with Organization 0 to develop strategic management and organizational plans. You state that neither you nor Employee C has any other information regarding the business dealings or any future business dealings between Organization 0 and Organization P or Organization Q. Both Organization P and Organization Q have grant applications currently pending with Unit E. Organization P has applied for three grants in the amounts of $[amount], $[amount], and $[amount], for projects in the K region. All of the projects are in the project category of [type of project] and would therefore be rated and ranked by Employee C. You state that Organization 0 is not involved in any of these projects. You further state that according to the Bureau of Charitable Organizations website, for the fiscal year ending December 31, 2005, Organization P had income totaling approximately $[amount] and net assets of approximately $[amount]. Organization Q has applied for two grants, in the amounts of $[amount] and $[amount], for projects in the K region. As a result of the categories that the projects are in, these two applications would initially be rated and ranked by the Subordinate Employee. A third grant application submitted by Organization Q would not be reviewed by either Employee C or the Subordinate Employee since the proposed project is in the R Confidential Opinion, 07 -017 November 7, 2007 Page 4 region. You state that Organization 0 is not involved in any of these projects. You further state that according to Organization Q's 2006 annual report, Organization Q had revenue of approximately $[amount] and net assets of approximately $[amount]. You pose several specific inquiries based upon the above submitted facts. You first ask whether it would be a conflict of interest under Section 1103(a) of the Ethics Act for Employee C to perform her normal job duties as an A in Unit E with respect to the F Program. If Employee C would have a conflict of interest under the submitted facts, you seek answers to the following three additional inquiries: 1. Whether Employee C's removal of herself from all involvement in Unit E's consideration of grant applications from Organization P and Organization Q would be sufficient to avoid the conflict of interest; 2. Whether the Subordinate Employee could perform Employee C's role in the consideration of the grant applications of Organization P and Organization Q; and 3. If the answer to either of the two questions immediately above would be "no," whether there would be a way in which Employee C could perform her job duties as an A in Unit E's K H Office in a manner that would not violate the Ethics Act. With respect to this question, you state that reviewing grant applications for the Second Round would constitute 70 to 75 percent of Employee C's work, and discussing future grant projects with prospective applicants would constitute another 20 percent of Employee C's work. Your final inquiry is whether it would be a violation of Section 1103(f) of the Ethics Act if the Department would award a grant to Organization 0, Organization P, or Organization Q, under the above submitted facts. By letter of Chief Counsel dated July 25, 2007, you were asked to submit additional material facts needed to answer the questions that you posed. In your response dated August 15, 2007, you stated that the Department does not have a formal mechanism in place to delegate Employee C's authority to another Department employee in a situation such as the one at issue in this matter because the Department has not viewed such a situation to require any delegation of authority under the Ethics Act. You declined to submit additional facts that were requested as to your questions numbered 2 and 3 above. (Letter of August 15, 2007, at 2). By letter dated August 28, 2007, you were notified of the date, time and location of the executive meeting at which your request would be considered. III. DISCUSSION: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, this Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. It is further noted that, pursuant to Sections 1107(10) and (11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), an opinion /advice may be given only as to prospective (future) Confidential Opinion, 07 -017 November 7, 2007 Page 5 conduct. To the extent you have inquired as to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct, your inquiry may and shall be addressed. In the capacity as an A for the Department, Employee C would be considered a "public employee" subject to the Ethics Act and the Regulations of the State Ethics Commission. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1. This conclusion is based upon the position description and the job classification specifications, which when reviewed on an objective basis, indicate clearly that the power exists to take or recommend official action of a non - ministerial nature with respect to one or more of the following: contracting; procurement; planning; inspecting; administering or monitoring grants; leasing; regulating; auditing; or other activities where the economic impact is greater than de minimis on the interests of another person. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from engaging in conduct that constitutes a conflict of interest: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. § 1103(a). The following terms pertaining to conflicts of interest are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Immediate family." A parent, spouse, child, brother or sister. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. Confidential Opinion, 07 -017 November 7, 2007 Page 6 "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. 65 Pa.C.S. § 1102. Section 1103(a) of the Ethics Act prohibits a public official /public employee from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. The use of authority of office includes more than mere voting; for example, it includes discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. Section 1103(f) of the Ethics Act imposes certain restrictions as to contracting: § 1103. Restricted activities (f) Contract. - -No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa.C.S. § 1103(f). The Ethics Act defines the terms "contract" and "person" as follows: § 1102. Definitions "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. Confidential Opinion, 07 -017 November 7, 2007 Page 7 "Person." A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. 65 Pa.C.S. § 1102. Section 1103(f) of the Ethics Act provides in part that no public official /public employee or his spouse or child or business with which the public official /public employee or his spouse or child is associated may enter into a contract with his governmental body valued at five hundred dollars or more or any subcontract valued at five hundred dollars or more with any person who has been awarded a contract with the governmental body with which the public official /public employee is associated unless the contract is awarded through an open and public process including prior public notice and subsequent public disclosure. Section 1103(f) of the Ethics Act also requires that the public official /public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. In applying the above provisions of the Ethics Act to the questions that you have presented, we are guided by the following fundamental principles. Public office is a public trust. 65 Pa.C.S. § 1101.1(a). Insofar as public officials and public employees are concerned, the public trust is paramount over private interests. Hutchins, Order 1320; Mohr, Order 1293; Urtz, Order 1274; Billetdeaux, Order 1222; Summers, Order 1174; Kannebecker, Opinion 92 -010; Crisci, Opinion 89 -013; see also, 1 Pa.C.S. § 1922. The Pennsylvania Supreme Court has declared that the Ethics Act, as remedial legislation, must be liberally construed, Maunus v. State Ethics Commission, 518 Pa. 592, 598, 544 A.2d 1324, 1327 (1988), and that "[t]he duty of government to establish and promote standards of the highest order is perhaps its most compelling obligation, in view of the public trust reposed within its auspices." Id. at 600, 544 A.2d at 1328. In applying Section 1103(a) of the Ethics Act to the submitted facts, we determine that Employee C would have a conflict of interest with regard to prospective Department grants to Organization P and Organization Q where such organizations stand in a client relationship with Organization 0, a non - profit organization for which Employee C's spouse serves as [officer], [officer], and the only paid staff member. Our analysis is as follows. First, to the extent Employee C would have official involvement as to the prospective Department grants, such action would constitute a use of authority of office. You have factually submitted that Employee C would rate and rank the three grants applied for by Organization P. In addition, although you have factually submitted that the Subordinate Employee would rate and rank the two grants applied for by Organization Q for projects in the K region, Employee C would participate in determining the K H Office's recommended ratings for those two grant applications. Thus, official action taken by Employee C as to the prospective Department grants to Organization P and Organization Q, including participation in the rating and ranking process, would constitute a use of the authority encompassed within Employee C's official position. It is our view that Organization 0, a non - profit corporation, is a "business" as that term is defined in the Ethics Act, and that it is a business with which Employee C's spouse, as an officer and compensated staff member, is associated. It is further our view that Employee C would have a conflict of interest in prospective grant matters before her that would financially impact Organization 0 or its clients, even if Organization 0 would not participate in providing services as to particular client matters before Employee C. We note that we are aware of the recent ruling of the Pennsylvania Supreme Court in In re Nomination Petition of Carroll, 586 Pa. 624, 896 A.2d 566 (2006). In Carroll, in the narrow context of a challenge to a candidate's nomination petition, the Court reviewed the Confidential Opinion, 07 -017 November 7, 2007 Page 8 definition of the term "business" as set forth in the Ethics Act and questioned whether the definition would include or exclude non - profit organizations: § 1102. Definitions "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. 65 Pa.C.S. § 1102. The Court noted that the "organized for profit" reference in the definition was subject to two possible interpretations —an interpretation that would construe the reference as modifying all preceding forms of business listed in the definition (such that only for - profit entities would qualify as "businesses ") and another interpretation that would construe it as applying only to the last antecedent example (such that non - profit entities would qualify as "businesses "). Having apparently been erroneously informed that the State Ethics Commission had no rulings as to whether non - profit entities would be considered "businesses" under the Ethics Act (see, Carroll, 586 Pa. at 633 -634, 896 A.2d at 571), the Court construed the definition in the way most favorable to the candidate, and held that a candidate's omission from his Statement of Financial Interests of his presidency of a non - profit corporation from which he received no compensation was not a fatal defect to his nomination petition. The Court's decision in Carroll was based upon inaccurate information as to the status of this Commission's rulings and was also inconsistent with the Court's own prior mandate that the Ethics Act, as remedial legislation, must be liberally construed. Maunus v. State Ethics Commission, 518 Pa. 592, 598, 544 A.2d 1324, 1327 (1988). Contrary to the inaccurate information that was apparently supplied to the Supreme Court in the Carroll case, this Commission has long held that a non - profit corporation is a "business" as that term is defined in the Ethics Act. In Soltis - Sparano, Order 1045 (decided in 1997), we specifically interpreted the language at the end of the definition of the term "business" and concluded that: The word "or" is disjunctive, and furthermore, the repeated use of the word "any" precludes any interpretation that the final phrase "legal entity organized for profit" modifies the initial word "corporation:" Any corporation, ... or any legal entity organized for profit." The clear and unambiguous statutory language is that any corporation, including a non- profit corporation, is a "business. "... Based upon the clear and unambiguous language of the definition, we need not analyze all of the additional factors involving statutory construction, yet, as is pointed out by the Investigative Division in its Closing Statement, those factors which include the legislative intent in promulgating the Ethics Law, the mischief to be remedied, the object to be attained, the consequences of a given interpretation, and the legislative and administrative interpretations of such statute, also support our holding. Soltis - Sparano, Order 1045, at 31. The following are additional decisions in which this Commission has held that a non - profit corporation is a "business" within the meaning of that term as defined by the Ethics Act: Confidential Opinion, 89 -007 (decided in 1989); McConahy, Opinion 96 -006 Confidential Opinion, 07 -017 November 7, 2007 Page 9 (decided in 1996); Maduka, Order 1277 (decided in 2003). All of these rulings are public documents that are available on the Commission's web site in a searchable electronic library and are also available in libraries throughout the Commonwealth. In Carroll, the Supreme Court was effectively precluded from discovering or considering this Commission's long- standing interpretation of the definition because of incorrect information submitted to the Court. We believe that if the Supreme Court had been aware of this Commission's interpretation of the definition of "business," the Carroll decision would have adopted this Commission's interpretation. The Supreme Court has expressly stated: It is well settled that when the courts of this Commonwealth are faced with interpreting statutory language, they afford great deference to the interpretation rendered by the administrative agency overseeing the implementation of such Iegislation....Thus, our courts will not disturb administrative discretion in interpreting legislation within an agency's own sphere of expertise absent fraud, bad faith, abuse of discretion or clearly arbitrary action. Winslow - Quattlebaum v. Maryland Insurance Group, 561 Pa. 629, 635 -636, 752 A.2d 878, 881 (2000); see also, Kuznik v. Westmoreland County Bd. of Comm'rs, 588 Pa. 95, 902 A.2d 476 (2006); #1 Cochran, Inc. v. Unemployment Compensation Board of Review, 579 A.2d 1386 (Pa. Cmwlth. 1990), alloc. den., 527 Pa. 653, 593 A.2d 424 (1991). This Commission's interpretation of the definition of "business" as including non- profit corporations and organizations is both correct and consistent with the Statutory Construction Act, which directs that in ascertaining the intention of the General Assembly, it may be presumed that the General Assembly intends to favor the public interest as against any private interest." 1 Pa.C.S. § 1922. An interpretation that would exclude non- profit organizations from the definition of "business" would favor private interests over public interests, contrary to the legislative intent. On its face, we do not read the Carroll case as having definitively decided the status of non - profits under the Ethics Act. Additionally, we note that challenges to candidate nomination petitions involve unique considerations, and at this time, there is no indication that the Supreme Court will extend its ruling in the Carroll case beyond the scope of election - related challenges. See, Kravetsky, Order 1420. Indeed, election - related challenges are subject to an entirely different standard than conflict of interest questions under the Ethics Act. Specifically, election matters are subject to the requirement that the Election Code must `be liberally construed in order to protect a candidate's right to run for office and the voters' right to elect the candidate of their choice." In re Nomination Papers of Nader, 580 Pa. 22, 39, 858 A.2d 1167, 1177 (2004). See also, In re Petition of Cioppa, 533 Pa. 564, 626 A.2d 146 (1993); In re Nomination Papers of Creighton, 899 A.2d 1166 (Pa. Cmwlth. 2006), aff'd., 586 Pa. 652, 896 A.2d 583 (2006); In re Nomination Petition of DiGirolamo, 873 A.2d 52 (Pa. Cmwlth. 2005); Bedow v. Cortes (In re Nomination Petition of Bedow), 848 A.2d 1034 (Pa. Cmwlth. 2004). In contrast, the Ethics Act protects the public trust. As noted above, the Ethics Act is to be liberally construed to promote public confidence in government. The status of a non - profit corporation as a "business" as that term is defined in the Ethics Act has significant and far - reaching implications beyond election - related challenges. Furthermore, Carroll clearly did not hold that non - profits are not businesses under the Ethics Act when an employer - employee relationship exists. Confidential Opinion, 07 -017 November 7, 2007 Page 10 In the instant matter, which is not an election matter, and which involves a financial relationship between Employee C's spouse and Organization 0, we hold that Organization 0 is a "business" with which Employee C's spouse, a member of Employee C's immediate family, is associated. The status of Employee C's spouse as an officer and compensated staff member of Organization 0 is sufficient to qualify Organization 0 as a "business with which he is associated." The submitted fact that Organization P and Organization Q have contracted with [Organization 0] to develop strategic management and organizational plans" (Advisory request letter of July 20, 2007, at 5) indicates the existence of current client relationships between Organization 0 and Organization P and between Organization 0 and Organization Q, forming the basis for conflicts of interest under Kannebecker, supra. Given the aforesaid existing client relationships, Employee C would have a conflict of interest as to grant applications of Organization P and Organization Q regardless of whether Organization 0 would anticipate performing work under the particular grants in question. This is because, as a practical matter, "personal business dealings" encompass the persons or entities with which one does business or actively seeks to do business. To hold otherwise would be to ignore the realities of client relationships. The basis for Employee C's conflicts of interest as to grant applications of Organization P and Organization Q would be the actual (as well as any anticipated) business dealings of Organization 0 with these prospective Department grant recipients. Employee C would exercise authority over recommending grants to the grant applicants. The grant applicants would determine whether to engage in ongoing business relationships with Organization O. The private pecuniary benefits that would accrue to Organization 0--a business with which Employee C's husband is associated - -would consist of financial benefits flowing from business dealings with clients receiving grant support from the Department. We conclude that Employee C would have a conflict of interest in grant matters before her that would financially impact Organization 0 or its clients, Organization P and Organization Q, even if Organization 0 would not participate in providing services as to the particular grant matters before Employee C. Kannebecker, supra; Elisco, Opinion 00- 003; Confidential Opinion, 05 -004. Further, the prospective grants to Organization P and Organization Q would constitute pecuniary benefits to the grant recipients. This conclusion is based upon the fact that but for the proposed grant monies from the Department, Organization P and Organization Q would have less funds available to perform the respective missions that they have undertaken. Cf., Suroviec, Opinion 07 -1003 (regarding the mission of an organization). The pecuniary benefits would be considered private because there is no authorization in law that would permit Employee C to participate in a process that would award grants to clients of a non - profit organization for which her spouse serves as [officer], [officer], and compensated staff member. Based upon the stated amounts of the prospective grants, the "de minimis economic impact" exclusion to the definition of "conflict" or "conflict of interest" would not be applicable. Having concluded that Employee C would have a conflict of interest with regard to the proposed grants from the Department to Organization P and Organization Q, you are advised that Employee C would be required to abstain fully from all matters pertaining to those grants as well as grant applications of competitors for the same pool(s) of grant monies. See, Pepper, Opinion 87 -008. Your remaining two questions regarding Section 1103(a) of the Ethics Act are: (1) whether the Subordinate Employee could perform Employee C's role in the consideration of the grant applications of Organization P and Organization Q; and (2) if not, whether Confidential Opinion, 07 -017 November 7, 2007 Page 11 there would be a way by which Employee C could perform her job duties in Unit E's K H Office in a manner that would not violate the Ethics Act. As noted above, you were asked to submit additional material facts needed in order for this Commission to properly answer these questions. You refused to do so. You are advised that based upon your refusal to submit all of the material facts pertaining to these questions, only the following limited guidance may be provided to you. Generally, a public official /public employee could avoid a conflict of interest as to a grant award process by a means that would remove the public official /public employee from the opportunity to influence the process. You are advised that in the absence of a pre- existing mechanism providing for delegation of Employee C's authority in the event of a conflict of interest, Employee C's delegation to her Subordinate Employee of Employee C's authority to consider the grant applications of Organization P and Organization Q would itself be a use of authority of office contrary to Section 1103(a) of the Ethics Act. Confidential Opinion, 02 -004. You are advised that the following is one potential mechanism by which Employee C would be able to avoid transgressing Section 1103(a) of the Ethics Act as to the prospective grants that are in question. Specifically, Employee C's superior(s) in the Department could designate someone not within Employee C's chain of command to perform Employee C's role as to the prospective grants in question, as well as the grant applications of competitors for the same pool(s) of grant monies. Cf., Dobrowolski, supra; Pepper, supra. Under such a "conflict of interest avoidance mechanism," Employee C would need to be removed /insulated from any involvement in the grant process in question, as well as any access to confidential /non - public information involving the grant process, such as, for example, ratings, evaluations, and recommendations by Department staff members involved in the grant process. See, Dobrowolski, Opinion 07 -002. The above conflict avoidance mechanism is only one possible means by which Employee C could avoid a conflict of interest. So that our decision in this matter is not misconstrued, we do not hold that the suggested mechanism is the only one available. As noted above, generally, a public official /public employee could avoid a conflict of interest as to a grant award process by a means that would remove the public official /public employee from the opportunity to influence the process. Turning to your specific inquiry regarding Section 1103(f) of the Ethics Act, you are advised as follows. The requirements of Section 1103(f) of the Ethics Act apply where a public official /public employee or his spouse or child or business with which the public official /public employee or his spouse or child is associated seeks to enter into a contract with his governmental body valued at five hundred dollars or more or any subcontract valued at five hundred dollars or more with any person who has been awarded a contract with the governmental body with which the public official /public employee is associated. We have previously held that the restrictions of Section 1103(f) of the Ethics Act are applicable to a grant process involving a "contract" as that term is defined in the Ethics Act. See, Confidential Opinion, 03 -007; Confidential Opinion, 01 -005. Under the submitted facts, neither Organization P nor Organization Q would be considered a business with which Employee C or her spouse is associated. However, the restrictions of Section 1103(f) of the Ethics Act would apply as to prospective grant(s) to Organization P or Organization Q if Organization 0 would enter into a subcontract valued at $500 or more with Organization P or Organization Q as to such grant(s). With regard to the prospective grant to Organization 0, the submitted facts do not Confidential Opinion, 07 -017 November 7, 2007 Page 12 disclose the proposed use of the grant funds. As such, we are unable to determine whether the services to be provided under the prospective grant would be services to the Commonwealth and would thus fall within the definition of the term "contract" set forth in the Ethics Act. In addition, the submitted facts do not disclose the amount of the prospective grant. Due to a factual insufficiency, we are unable to render a conclusive determination as to whether the restrictions of Section 1103(f) of the Ethics Act would apply as to the prospective grant to Organization O. You are generally advised that if: (1) the services to be provided under the prospective grant to Organization 0 would fall within the definition of contract under the Ethics Act; and (2) the amount of said prospective grant would be valued at $500 or more, the restrictions of Section 1103(f) of the Ethics Act would apply as to the prospective grant to Organization O. In reviewing the Department grant process as detailed in the submitted facts, we conclude that it would constitute an "open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded" as required by Section 1103(f) of the Ethics Act. The "prior public notice" component of the Department grant process is exemplary. The "subsequent public disclosure" component is adequate to satisfy the requirements of Section 1103(f) in light of the public announcement as to grant awards, the public availability upon request of grant agreements, and the public availability upon request of the relevant information as to unsuccessful grant applicants /applications. Section 1103(f) of the Ethics Act would require that Employee C not have any supervisory or overall responsibility for the implementation or administration of any contract for a Department grant to Organization i mplementation at $500 or more. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the S. IV. CONCLUSION: As an A with Commonwealth Department B ( "the Department "), Unit E, Commonwealth Employee C (hereinafter referred to as "Employee C ") would be considered a "public employee" subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. 1101 et seq. Employee C's spouse is a O member of her immediate family. Organization 0, a non - profit organization, is a business with which Employee C's spouse is associated as the organization's [officer], [officer], and paid staff member. Employee C would have a conflict of interest under Section 1103(a) of the Ethics Act as to prospective grant matters before her that would financially impact Organization 0 or its clients, even if Organization 0 would not participate in providing services as to the particular client matters before Employee C. Employee C would have a conflict of interest with regard to prospective Department grants to Organization P and Organization Q, two non - profit organizations that stand in a client relationship with Organization 0, and would be required to abstain fully from matters pertaining to those grants or to grant applications of competitors for the same pool(s) of grant monies. In the absence of a pre- existing mechanism providing for the delegation of Employee C's authority in the event of a conflict of interest, Employee C's delegation to her subordinate employee of Employee C's authority to consider the grant applications of Organization P and Organization Q would itself be a use of authority of office contrary to Section 1103(a) of the Ethics Act. Generally, a public official /public employee could avoid a conflict of interest as to a Confidential Opinion, 07 -017 November 7, 2007 Page 13 grant award process by a means that would remove the public official /public employee from the opportunity to influence the process. One means by which Employee C would be able to avoid transgressing Section 1103(a) of the Ethics Act as to the aforesaid prospective grants would be for Employee C's superior(s) in the Department to designate someone not within Employee C's chain of command to perform Employee C's role as to the prospective grants in question, as well as the grant applications of competitors for the same pool(s) of grant monies. Under such a "conflict of interest avoidance mechanism," Employee C would need to be removed /insulated from any involvement in the grant process in question, as well as any access to confidential /non - public information involving the grant process such as, for example, ratings, evaluations, and recommendations by Department staff members involved in the grant process. Neither Organization P nor Organization Q would be considered a business with which Employee C or her spouse is associated. However, the restrictions of Section 1103(f) of the Ethics Act would apply as to prospective grant(s) to Organization P or Organization Q if Organization 0 would enter into a subcontract valued at $500 or more with Organization P or Organization Q as to such grant(s). Additionally, if the services to be provided under the prospective grant to Organization 0 would fall within the definition of the term "contract" under the Ethics Act, and the amount of said prospective grant would be valued at $500 or more, the restrictions of Section 1103(f) of the Ethics Act would apply as to the prospective grant to Organization O. The Department grant process as outlined in the submitted facts would constitute an "open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded" as is required by Section 1103(f) of the Ethics Act. When applicable, Section 1103(f) would require that Employee C not have any supervisory or overall responsibility for the implementation or administration of a contract for a grant. Act. The propriety of the proposed conduct has only been addressed under the Ethics Pursuant to Section 1107(10) of the Ethics Act, the person who acts in good faith on this Opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public record and will be made available as such. Finally, a party may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The party requesting reconsideration must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). By the Commission, Louis W. Fryman Chair