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HomeMy WebLinkAbout08-004 DesmondOPINION OF THE COMMISSION Daniel J. Desmond 259 Stonemill Drive Elizabethtown, PA 17022 Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Paul M. Henry Raquel K. Bergen Nicholas A. Colafella DATE DECIDED: 7/21/08 DATE MAILED: 8/5/08 08 -004 Dear Mr. Desmond: This Opinion is issued in response to your advisory request dated June 4, 2008. I. ISSUE: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., would present any restrictions upon the Deputy Secretary of the Office of Energy and Technology Deployment within the Pennsylvania Department of Environmental Protection with regard to engaging in business dealings with a technology company following retirement from Commonwealth employment, where said technology company received a grant from a public financing agency for which staff members of the Office of Energy and Technology Deployment serve as administrators and review and make recommendations on grants. II. FACTUAL BASIS FOR DETERMINATION: As the former Deputy Secretary for the Office of Energy and Technology Deployment ( "OETD ") within the Pennsylvania Department of Environmental Protection ( "DEP'), you request an advisory opinion from this Commission based upon the following submitted facts. You began serving as the Deputy Secretary for OETD in May 2003. In an email to Commission staff on June 25, 2008, you stated that you retired from the aforesaid position effective June 20, 2008. There is no official job description for your former position with OETD. You state that per the OETD website, OETD is responsible for identifying and supporting markets for innovative environmental and advanced energy technologies. OETD works with citizen groups, businesses, local governments, and other entities on Desmond, 08 -004 August 5, 2008 Page 2 policy matters and strategies to encourage pollution prevention and energy conservation practices. OETD manages several grant initiatives, including the Pennsylvania Energy Development Authority ("PEDA "), Energy Harvest, the Alternative Fuel Incentive Grant Program, and the Small Business Advantage Grant Program. You state that OETD awards hundreds of grants each year, ranging from $500 subsidies to the purchasers of hybrid - electric cars to larger scale grants to companies. You state that PEDA is a public financing agency with a separate and independent Board of Directors. Members of OETD staff serve as administrators for PEDA and also review and make recommendations on grants to the PEDA Board of Directors. The PEDA Board of Directors makes decisions on grant awards as one of its functions. During the time that you served as the Deputy Secretary of OETD, a company named "Axion Power International" ( "Axion ") was the recipient of a grant in the amount of $750,000 from PEDA. Axion, an advanced battery technology company located in New Castle, Pennsylvania, used the PEDA grant funds to upgrade and replace old manufacturing and testing equipment that was in the New Castle factory when Axion leased it several years ago. Axion's plant is currently being used as a pre - production prototyping facility to provide samples of new technology batteries for various demonstration projects or for potential customer evaluation. You state that the aforesaid PEDA grant was not used as an incentive to induce Axion to locate in Pennsylvania or to expand its plant, but that DCED did provide a broader package of business and job development assistance. You have submitted a copy of a letter dated October 18, 2006, from Dennis Yablonski, Secretary of the Commonwealth of Pennsylvania Department of Community and Economic Development ("DCED "), to Thomas Granville, Chief Executive Officer of Axion, which document is incorporated herein by reference. In his letter, Secretary Yablonski provides an outline of an economic development assistance package that the Commonwealth of Pennsylvania was prepared to offer Axion "should Axion choose to proceed with its expansion of the company's facility" located in the Commonwealth. October 18, 2006, letter of Yablonski, at 1. In pertinent part, the letter states that a grant program administered by DEP under the Small Business and Household Pollution Prevention Program would provide a $750,000 grant to Axion to be used as reimbursement for costs associated with an Axion project involving the Axion battery. You have also submitted a copy of a document from Axion entitled "Final Report to the Pennsylvania Department of Environmental Protection" ( "Final Report "), which document is incorporated herein by reference. The Final Report indicates that the "Axion PbC Battery Development and Commercialization Project" was completed as of March 3, 2008. The Final Report further indicates that DEP agreed to contribute the amount of $750,000 for the aforesaid project. You state that following your retirement, you intend to continue working in the area of the commercial development and deployment of environmentally beneficial technology. You state that you have been asked by numerous individuals and companies, including Axion, to work on various ventures. In particular, Axion has asked you to consider developing electric vehicle platforms that could demonstrate some of the unique qualities of Axion's product. Based upon the above submitted facts, you pose the following specific questions: 1. In general, whether the Ethics Act would impose any restrictions upon your business activities following your retirement from Commonwealth service; and 2. Whether the Ethics Act would impose any restrictions upon you with Desmond, 08 -004 August 5, 2008 Page 3 regard to engaging in future business dealings with Axion. By letter dated June 5, 2008, you were notified of the date, time and location of the public 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 1107(11) of the Ethics Act, an opinion /advice may be given only as to prospective (future) conduct. To the extent that your inquiry relates to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent that your inquiry relates to future conduct, your inquiry may and shall be addressed. In the former capacity as the Deputy Secretary for OETD, you would be considered a public official /public employee and an "executive -level State 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. 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. Desmond, 08 -004 August 5, 2008 Page 4 "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. 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 is not limited merely to voting, but extends to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer or give to a public official /public employee anything of monetary value and no public official /public employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /public employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. Upon retiring from Commonwealth employment, you became a former public official /public employee and a former executive -level State employee subject to the restrictions of Section 1103(g) and Section 1103(i) of the Ethics Act. Section 1103(i) restricts former executive -level State employees as follows: § 1103. Restricted activities (i) Former executive -level employee. - -No former executive -level State employee may for a period of two years from the time that he terminates employment with this Commonwealth be employed by, receive compensation from, assist or act in a representative capacity for a business or corporation that he actively participated in recruiting to this Commonwealth or that he actively participated in inducing to open a new plant, facility or branch in this Commonwealth or that he actively participated in inducing to expand an existent plant or facility within this Commonwealth, provided that the above prohibition shall be invoked only when the recruitment or inducement is accomplished by a grant or loan of money or a promise of a grant or loan of money from the Commonwealth to the business or corporation recruited or induced to expand. 65 Pa.C.S. § 1103(i). Section 1103(i) restricts the ability of a former executive -level State employee to accept employment or otherwise engage in business relationships following termination of State service, under certain narrow conditions. The restrictions of Section 1103(i) apply even where the business relationship is indirect, such as where the business in question is a client of a new employer, rather than the new employer itself. See, Confidential Opinion, 94 -011. However, Section 1103(i) would not restrict you from being employed by, receiving compensation from, assisting, or acting in a Desmond, 08 -004 August 5, 2008 Page 5 representative capacity for a business or corporation subject to the conditions that you did not actively participate in recruiting such business or corporation to Pennsylvania, and that you did not actively participate in inducing such business or corporation to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania. Unlike Section 1103(i), Section 1103(g) does not prohibit a former public official /public employee from accepting a position of employment. However, it does restrict the former public official /public employee with regard to "representing" a "person" before the governmental body with which he has been associated ": § 1103. Restricted activities (g) Former official or employee. - -No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 Pa.C.S. § 1103(g) (Emphasis added). The terms "represent," "person," and "governmental body with which a public official or public employee is or has been associated" are specifically defined in the Ethics Act as follows: § 1102. Definitions "Represent." To act on behalf of any other person in any activity which includes, but is not limited to, the following: personal appearances, negotiations, lobbying and submitting bid or contract proposals which are signed by or contain the name of a former public official or public employee. "Person." A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. 65 Pa.C.S. § 1102. The term "Person" is very broadly defined. It includes, inter alia, corporations and other businesses. It also includes the former public employee himself, Confidential Opinion, 93 -005, as well as a new governmental employer. Ledebur, Opinion 95 -007. The term "representation" is also broadly defined to prohibit acting on behalf of any person in any activity. Examples of prohibited representation include: (1) personal appearances before the former governmental body or bodies; (2) attempts to influence; (3) submission of bid or contract proposals which are signed by or contain the name of the former public official /public employee; (4) participating in any matters before the Desmond, 08 -004 August 5, 2008 Page 6 former governmental body as to acting on behalf of a person; and (5) lobbying. Popovich, Opinion 89 -005. Listing one's name as the person who will provide technical assistance on a proposal, document, or bid, if submitted to or reviewed by the former governmental body, constitutes an attempt to influence the former governmental body. Section 1103(g) also generally prohibits the inclusion of the name of a former public official /public employee on invoices submitted by his new employer to the former governmental body, even if the invoices pertain to a contract that existed prior to termination of service with such governmental body. Shay, Opinion 91 -012. However, if such a pre- existing contract does not involve the unit where the former public employee worked, the name of the former public employee may appear on routine invoices if required by the regulations of the agency to which the billing is being submitted. Abrams/Webster, Opinion 95 -011. A former public official /public employee may assist in the preparation of any documents presented to his former governmental body. However, the former ublic official /public employee may not be identified on documents submitted to the former governmental body. The former public official /public employee may also counsel any person regarding that person's appearance before his former governmental body. Once again, however, the activity in this respect should not be revealed to the former governmental body. The Ethics Act would not prohibit or preclude making general informational inquiries to the former governmental body to secure information which is available to the general public, but this must not be done in an effort to indirectly influence the former governmental body or to otherwise make known to that body the representation of, or work for the new employer. Section 1103(g) only restricts the former public official /public employee with regard to representation before his former governmental body. The former public official /public employee is not restricted as to representation before other agencies or entities. However, the "governmental body with which a public official /public employee is or has been associated" is not limited to the particular subdivision of the agency or other governmental body where the public official /public employee had influence or control but extends to the entire body. See, Legislative Journal of House, 1989 Session, No. 15 at 290, 291; Sirolli, Opinion 90 -006; Sharp, Opinion 90- 009 -R. The governmental body with which you are deemed to have been associated upon termination of public service is DEP in its entirety, including but not limited to OETD. Therefore, for the first year following termination of your service with DEP, Section 1103(g) of the Ethics Act would apply and restrict "representation" of "persons" before DEP. Having established the above general principles, we shall now consider your specific inquiries. Your first specific inquiry has already been addressed above. In response to your second specific inquiry, you are advised as follows. An advisory opinion cannot provide a ruling as to past conduct. However, you are generally advised that the elements of a violation of Section 1103(a) of the Ethics Act would not be established as a result of your prospectively entering into a business arrangement with Axion subject to the conditions that, while serving as Deputy Secretary of OETD: (1) you did not use the authority of your public position in any matter pertaining to Axion at a time when you had an actual or reasonable expectation that you would enter into a business arrangement with Axion or would otherwise receive a private pecuniary benefit relating to Axion; and (2) you did not use confidential Desmond, 08 -004 August 5, 2008 Page 7 information received as a result of being in your public position in furtherance of securing a business arrangement or other private pecuniary benefit relating to Axion. As noted above, Section 1103(i) of the Ethics Act would not restrict you from being employed by, receiving compensation from, assisting, or acting in a representative capacity for Axion subject to the conditions that you did not actively participate in recruiting Axion to Pennsylvania, and that you did not actively participate in inducing Axion to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of the Governor's Code of Conduct. IV. CONCLUSION: In the former capacity as the Deputy Secretary of the Office of Energy and Technology Deployment ("OETD ") within the Pennsylvania Department of Environmental Protection ("DEP"), you would be considered a "public official /public employee" and an "executive -level State employee" subject to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Upon termination of Commonwealth service, you became a former public official /public employee and a former executive -level State employee subject to the restrictions of Section 1103(g) and Section 1103(i) of the Ethics Act. Based upon the submitted facts that: (1) OETD manages several grant initiatives, including the Pennsylvania Energy Development Authority ("PEDA "); (2) PEDA is a public financing agency with a separate and independent Board of Directors; (3) members of OETD staff serve as administrators for PEDA and also review and make recommendations on grants to the PEDA Board of Directors; (4) the PEDA Board of Directors makes decisions on grant awards; and (5) during the time that you served as the Deputy Secretary of OETD, a company named `Axion Power International" ( "Axion ") was the recipient of a grant in the amount of $750,000 from PEDA, you are advised as follows. An advisory opinion cannot provide a ruling as to past conduct. You are generally advised that the elements of a violation of Section 1103(a) of the Ethics Act would not be established as a result of your rospectively entering into a business arrangement with Axion subject to the conditions that, while serving as Deputy Secretary of OETD: (1) you did not use the authority of your public position in any matter pertaining to Axion at a time when you had an actual or reasonable expectation that you would enter into a business arrangement with Axion or would otherwise receive a private pecuniary benefit relating to Axion; and (2) you did not use confidential information received as a result of being in your public position in furtherance of securing a business arrangement or other private pecuniary benefit relating to Axion. Under Section 1103(i) of the Ethics Act, you would not be prohibited from being employed by, receiving compensation from, assisting, or acting in a representative capacity for Axion subject to the conditions that you did not actively participate in recruiting Axion to Pennsylvania, and that you did not actively participate in inducing Axion to open or expand a plant, facility, or branch in Pennsylvania through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania to Axion. The restrictions of Section 1103(g) and Section 1103(i) of the Ethics Act as outlined above must be followed. The governmental body with which you are deemed to have been associated upon termination of Commonwealth service is DEP in its entirety Desmond, 08 -004 August 5, 2008 Page 8 including, but not limited to, OETD. For the first year following termination of your service with DEP, Section 1103(g) of the Ethics Act would apply and restrict "representation" of "persons" before DEP. Act. The propriety of the proposed conduct has only been addressed under the Ethics Pursuant to Section 1107(10), 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