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HomeMy WebLinkAbout07-009 McGintyOPINION OF THE COMMISSION Honorable Barbara Adams General Counsel Commonwealth of Pennsylvania Office of General Counsel 225 Main Capitol Building Harrisburg, PA 17120 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: 4/30/07 DATE MAILED: 5/1/07 07 -009 Re: McGinty Dear General Counsel Adams: This Opinion is issued in response to your advisory request dated April 26, 2007. I. ISSUE: Whether, pursuant to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., the Secretary of Environmental Protection would have a conflict of interest under Section 1103(a) of the Ethics Act with respect to prospective grants from the Department of Environmental Protection to a non - profit organization where it is anticipated that the Secretary's husband might contractually provide consulting services to the grant recipient relative to the grant, and whether the restrictions of Section 1103(f) of the Ethics Act would apply as to such prospective grants. II. FACTUAL BASIS FOR DETERMINATION: As General Counsel of the Commonwealth of Pennsylvania, you request an advisory from this Commission with respect to Secretary of Environmental Protection Kathleen A. McGinty. You note your legal standing to request this advisory both on behalf of the Commonwealth, as the employer of Secretary McGinty, and on behalf of the Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 2 Honorable Edward G. Rendell, Governor, as the appointing authority for the Secretary of Environmental Protection. You have submitted facts that may be fairly summarized as follows. The Secretary of Environmental Protection ( "Secretary ") is a statutory office within the Executive Department of the Commonwealth. The Secretary is the head of the Department of Environmental Protection ( "DEP "). 71 P.S. § 66. You note that as head of DEP, the Secretary is required, "either personally, by deputy, or by the duly authorized agent or employee of the department, ... [to] exercise the powers and perform the duties by law vested in and imposed upon the department." Id. Among its many powers and duties, DEP administers a variety of grant programs to assist businesses and individuals with environmental issues. Almost all grants are administered through a publicly noticed, competitive process that requires the submission of a grant application, evaluation of the application by DEP personnel, and an ultimate decision whether to award a grant. After the award of a grant, the scope of work and amounts awarded may be, and often are, amended based on additional available monies and the need for additional activities. The Secretary is involved in setting overall priorities for DEP's grant programs. You state that the Secretary does not exercise sole decision - making authority when determining which applicants will be awarded grants. Rather, the Secretary reviews and approves a recommended list of proposed grant awards. Her involvement follows an initial approval of a recommended list by the Executive Deputy Secretary and the Deputy Secretary for the particular program area. Grant agreements are executed on behalf of DEP by its Deputy Secretary for Administration and are not signed by the Secretary. DEP does not execute subgrants issued by grantees. The Secretary has no supervisory or overall responsibility for the implementation or administration of any contract /grant or subgrant. These tasks are carried out by the staff of the Grants Center and the particular program that is associated with the particular grant, under the supervision of their respective bureau directors and deputy secretaries. The DEP program at issue in this advisory request, the Growing Greener Watershed Restoration and Protection Program ( "Growing Greener Watershed Program "), was established by the Environmental Stewardship and Watershed Protection Act, 27 Pa.C.S. §§ 6101 -6119, and DEP's authority to make grants from the Environmental Stewardship Fund pursuant to Section 6105(b) of the Environmental Stewardship and Watershed Protection Act, 27 Pa.C.S. § 6105(b). The grant programs administered by DEP under the Environmental Stewardship and Watershed Protection Act are commonly referred to as the Growing Greener I and II Programs. You state that the vast majority of DEP grants and all Growing Greener Watershed Program Grants are awarded through a publicly noticed and competitive process involving public solicitation of applications and competitive review and evaluation of submitted applications based on pre - established criteria. The grant process for the Growing Greener Watershed Program begins with a solicitation for applications. DEP announces a solicitation via its website, a press release, and the Pennsylvania Bulletin. Applications are submitted to the DEP Grants Center where they are logged. A DEP committee consisting of Regional Watershed Managers, Central Office Watershed Management staff, District Mining Office Watershed Managers, and Grants Center staff develops scoring criteria. Prior to scoring, the applications are distributed to other appropriate Regional /Mining /Central Office staff for secondary review and comment. Regional Watershed Managers, Central Office Watershed Management staff, District Mining Office Watershed Managers and other relevant program staff then score the applications based on the established criteria. After the applications are scored, Regional, Mining and Central Office personnel develop a priority listing for projects in their respective areas. Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 3 As the next step in the grant process, Regional Watershed Managers, District Mining Office Watershed Managers, the Central Office Watershed Management staff, and the Deputy Secretary for Water Management meet to consider the scored applications, along with the priority project lists, in order to prepare a recommended list for review by the Executive Deputy Secretary of DEP. The list is then reviewed and finalized at a meeting with the Secretary, Executive Deputy Secretary, the Deputy Secretary for Water Management, the Deputy Secretary for Administration, the Policy Director, the Grants Center Director, and the Watershed Program Manager. You state that if changes are made to the list, they are based on Departmental priorities, funding availability, legislative interest, and concerns for consistent statewide distribution. A contingency list is maintained for future awards if additional money should become available. Many grants are "matched," and if a recipient does not provide its matching funds, the award might be rescinded, thereby freeing up additional funds. Awards to successful applicants are publicly announced and grant agreements are executed. Upon request, DEP 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. The Pennsylvania Environmental Council ( "PEC ") is one of the perennial recipients of grants under DEP programs. PEC is a nonprofit organization that promotes environmental progress in Pennsylvania through advocacy, education, and project development. PEC has received grants for projects, including watershed restoration and mine reclamation, through the Growing Greener Watershed Program. Between 1995 and 2002, DEP awarded to PEC grants totaling over $4,000,000. Under the Rendell Administration, DEP has awarded $2,661,701 to PEC, over half of which supports projects that also received funding from 1995 -2002. During the current administration, PEC has also applied for grants totaling $4,926,400 that were not funded. Enterprising Environmental Solutions, Inc. ( "EESI "), is an organization established and controlled by PEC. EESI has received grants from DEP totaling $509,440 under previous administrations and $120,414 under the current administration. The Growing Greener Watershed Program has historically been the source for all grants made to EESI and most of the grants made to PEC. Like other potential applicants, PEC and EESI are likely to seek funds for projects under the Growing Greener Watershed Program, either as part of an award of a future grant or pursuant to an amendment to an existing grant. One of DEP's priorities has been improving water quality in the Chesapeake Bay Watershed due to the Chesapeake 2000 Bay Agreement, which requires the Commonwealth to reduce its nutrient loading into the Chesapeake Bay by 2010. DEP anticipates that future grant rounds under the Growing Greener Watershed Program would follow the same process as prior grant rounds and that grants might be awarded for the continued development of a nutrient trading program for the Chesapeake Bay Watershed. DEP anticipates that Dr. Karl Hausker, the spouse of Secretary McGinty, might be a "subgrantee" of PEC, EESI, or other applicants in order to assist the grantee with the performance of its responsibilities under the grant. In the past, Dr. Hausker has entered into an Agreement for Services valued at more than $500 with PEC to serve as a consultant on a project funded by a grant awarded to PEC or EESI through the Growing Greener Watershed Program. You state that because of his national reputation in environmental areas, it is reasonable that Dr. Hausker would be invited, as he has been in the past, to enter into an Agreement for Services with PEC, EESI or another applicant to provide consulting services on this or other projects funded by the Growing Greener Watershed Program. Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 4 You state that Secretary McGinty is not an officer, director or principal of any kind in her spouse's business. You have not submitted any facts regarding such a business. The most recent notice with solicitation for applications for watershed protection and restoration grants under the Growing Greener Watershed Program was published in the Pennsylvania Bulletin issued January 27, 2007. The deadline for submitting applications to the Grants Center for these grants was April 13, 2007. You state that since that date, the Grants Center and DEP personnel have been performing the functions described above in connection with the evaluation and eventual award of grants and that performance of these functions will continue. You ask whether it would be a violation of Section 1103(f) of the Ethics Act for PEC, EESI, or another grantee that has routinely sought and received grant funding from DEP, to enter into an Agreement for Services with Dr. Hausker under which Dr. Hausker (as subgrantee) would serve as a consultant to the grantee regarding the grantee's performance of its responsibilities under the grant agreement. With respect to this question, you note the open and competitive process used by DEP in the award of grants under the Growing Greener Watershed Program. You also state that the Secretary has no supervisory or overall responsibility for the implementation or administration of any grant or subgrant. You further ask whether Section 1103(a) of the Ethics Act would permit the Secretary to participate in the process for an award of a grant under the Growing Greener Watershed Program if there would be a possibility that Dr. Hausker might become a subgrantee of a recipient of a grant under the Program. It is your view that an Agreement for Services between Dr. Hausker and a DEP grantee under the Growing Greener Watershed Program would be permissible under Section 1103(f) of the Ethics Act and that under the submitted facts, the Secretary's participation in the process for an award of a grant under the Growing Greener Watershed Program would not constitute a conflict of interest under Section 1103(a) of the Ethics Act. You state that if a grant under the Growing Greener Watershed Program is regarded as a contract for purposes of Section 1103(f) of the Ethics Act, then Dr. Hausker may enter into a consulting agreement with a Program grantee only if: (1) the grant is awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded; and (2) the Secretary has no supervisory or overall responsibility for the implementation or administration of the contract. It is your view that the DEP grant process meets the "open and public process" required by Section 1103(f) of the Ethics Act. You state that DEP solicits applications for grants through a public process in which notices are published in the Pennsylvania Bulletin and DEP's website advertising the availability of grants, advising how applications, instructions and guidelines can be obtained, and setting the deadline for the submission of applications. You state that DEP accepts applications from all qualified applicants and reviews and scores the applications through a competitive process, based upon pre- established criteria. In accordance with DEP's Grants Management Policy, a package containing the recommendations and rankings is provided to the Secretary and members of DEP's senior staff, who make the final decisions on which grants will be approved. DEP publicly announces grant awards and makes grant agreements with successful applicants available to the public upon request. You state that grant applications that do not result in awards are not considered public records under the Right -to -Know Law and are not made available to the public in their entirety. However, DEP will, upon request, make available the names of unsuccessful applicants, the amounts applied for, and descriptions of the proposed projects. Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 5 You further state that the Secretary has no role, supervisory or otherwise, in the implementation or administration of grants. These tasks are carried out by the staff of DEP's Grants Center and the programs associated with the particular grant, under the supervision of the respective Bureau Directors and Deputy Secretaries. As for Section 1103(a) of the Ethics Act, you assert that given the nature of the Secretary's involvement in the award of grants under the Growing Greener Watershed Program, the Secretary would not be using the authority of her office for the private pecuniary benefit of herself, her spouse, or a business with which she or her spouse is associated. You state that the Secretary is involved in DEP's decision to award grants to specific grantees only as part of a lengthy and complex process involving many other DEP officials and managers. You state that the Secretary does not exercise sole decision - making authority in determining which applicants will receive grants, and that she does no more than review and approve a list of applicants recommended to her by others within DEP based upon the process described above. You assert that the Ethics Act requires some affirmative act in furtherance of a conflict. You further assert that absent an intention by the Secretary to use the authority of her office to benefit her spouse, Section 1103(a) of the Ethics Act is not implicated. You contend that given the nature of the Secretary's involvement in the award of grants under the Growing Greener Watershed Program, there is little chance that the Secretary could be in a position to violate Section 1103(a) of the Ethics Act based upon the possibility that her husband might become a subgrantee of a successful grant recipient. Finally, you contend that the amount Dr. Hausker would receive from a subcontract with a grantee would have a de minimis economic impact upon PEC and DEP, such that no conflict of interest would exist. You note that the Ethics Act defines the term "de minimis economic impact" as an "economic consequence which has an insignificant effect." 65 Pa.C.S. § 1102. In support of your position you note that in 2003, Dr. Hausker received approximately $3,700 in Program funds through a contract with PEC, and that these funds were a part of the grant in the amount of $291,102 that DEP had awarded to PEC. You assert that both of the aforesaid amounts were a small portion of DEP's multimillion dollar annual budget. In support of your view that no conflict of interest would exist you cite the following case law: McGuire v. State Ethics Commission, 657 A.2d 1346 (Pa. Cmwlth. 1995); Kraines v. State Ethics Commission, 805 A.2d 677 (Pa. Cmwlth. 2002); and Bixler v. State Ethics Commission, 847 A.2d 785 (Pa. Cmwlth. 2004). By letter dated April 27, 2007, you were notified of the date, time and location of the public meeting at which your request would be considered. At the public meeting on April 30, 2007, Linda Barrett, Esquire, Deputy General Counsel, appeared on your behalf and offered commentary, some of which duplicated information in your prior written submissions. The material portion of the supplemental information offered in Ms. Barrett's commentary at the meeting may be fairly summarized as follows. Ms. Barrett states that the procedures involving the solicitation, evaluation, and awarding of DEP grant funds have been in place for many years. The Growing Greener Watershed Program disseminates monies to organizations pursuant to statutes aimed at targeting various environmental problems or concerns that have been identified by the Legislature. The Growing Greener Watershed Program is one of 30 grant programs administered by DEP. The Growing Greener Watershed Program seeks to restore watersheds and streams, reclaim mined lands, and remediate acid mine drainage. Ms. Barrett states that the priorities for DEP under this grant program are to a large extent set Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 6 by State and Federal priorities, which establish the funding sources. Ms. Barrett states that the Secretary sets overall priorities consistent with the Administration's Directives or Legislative Directives. Ms. Barrett states that DEP has a very elaborate Grant Management Bureau or Division that sets the grant criteria within the context of the particular programs. The priorities of the criteria flow from the priorities set by the Secretary. The individuals involved in the grant process are subordinates of the Secretary. Ms. Barrett states that while the Secretary is the agency head, and the individuals involved in the grant process are her subordinates, the integrity of the process is that she does not involve herself in the process of scoring /evaluating grant applications and that she would not have the authority to do so because that would undercut the entire process. Ms. Barrett states that the Secretary is not involved in scoring or identifying where grant applicants place on the lists compiled as a result of the evaluation process, but serves in a review capacity in connection with the grants that are identified. Ms. Barrett states that she does not believe it would be possible for the Secretary to have input at the earlier stages of the scoring process as opposed to the later review stage. The Secretary would have the authority to deny a grant to any particular grant applicant, even if the proposed grant award had been recommended by the staff to the Secretary. However, it is Ms. Barrett's understanding that the Secretary relies heavily on the managers and her Executive Deputy and other Deputy Secretaries who are in a position to accurately evaluate the grant. Ms. Barrett states that typically, where grants have not been awarded, it has been a collective decision by the group. Ms. Barrett states that sometimes decisions are made to not fund a particular grant. There is also a process for contingency planning and contingency awards. When a grantee requests additional grant monies through a grant amendment, the award is not automatic. New grant applicants might be reviewed under different criteria than "amending grantees," as the latter could be evaluated based upon past success and DEP could be moving in a different direction. Ms. Barrett states that PEC has historically sought both State and Federal monies to promote worthy environmental programs. Ms. Barrett asserts that the information before this Commission establishes that PEC is not dependent exclusively upon the grant monies at issue. Ms. Barrett states that improving the water quality in the Chesapeake Bay Watershed fulfills a very important and paramount obligation for Pennsylvania under the Chesapeake 2000 Bay Agreement, which requires the Commonwealth to reduce its nutrient loading in the Chesapeake Bay. She states that PEC has a track record of delivering high quality results with past grants. She asks this Commission to keep in mind the intended outcome of the grant program, which is to promote continuing environmental stewardship benefiting the people of Pennsylvania as well as future generations. Ms. Barrett contends that spouses and children of many Commonwealth officials work for or are associated with businesses with which the Commonwealth needs to do business. Based upon that contention, Ms. Barrett argues that the Ethics Act does not preclude an award of a grant or subgrant in excess of $500 to a non - profit organization such as PEC that engages in business relationships with a spouse of a public official such as the Secretary. Ms. Barrett asserts that such grant awards are permitted as long as the appropriate safeguards are in place. Ms. Barrett further asserts that such safeguards are in place in this instance. Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 7 Ms. Barrett contends that there is no basis for concluding that the Secretary will abuse or has abused her influence in any way to ensure that the organization(s) in question would be identified for possible funding, or that her spouse would receive a personal benefit to which he would not be entitled. Ms. Barrett further contends that the requirements of Section 1103(f) of the Ethics Act are satisfied by the DEP grant process. 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. In this regard, we note that you have referenced the Secretary's spouse's business, but you have not submitted any facts regarding such a business. References in this advisory Opinion as to restrictions or prohibitions that are based upon actual or anticipated involvement of the Secretary's spouse should be considered to apply equally to the extent such a business of the spouse might be involved. 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) 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. The Secretary is a "public official" and an "executive -level State employee" as those terms are defined by the Ethics Act, and hence the Secretary is subject to the provisions of the Ethics Act. See, Confidential Opinion, 94 -010. 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 Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 8 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. "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. Section 1103(f) of the Ethics Act imposes certain restrictions as to contracting and subcontracting: § 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 Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 9 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. "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. In applying the above provisions of the Ethics Act to the important 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 Ethics Act is remedial legislation, and both the General Assembly and the Pennsylvania Supreme Court have declared that the Ethics Act is to be liberally construed to advance public trust in government. In promulgating the Ethics Act, the General Assembly declared that the people of the Commonwealth of Pennsylvania have the right to be assured that the financial interests of those who hold public office or who seek to hold public office do not conflict with the public trust, and that the Ethics Act is to be liberally construed to promote complete financial disclosure in accordance with the requirements of the Ethics Act: § 1101.1. Purpose Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 10 (a) Declarations. - -The Legislature hereby declares that public office is a public trust and that any effort to realize personal financial gain through public office other than compensation provided by law is a violation of that trust. In order to strengthen the faith and confidence of the people of this Commonwealth in their government, the Legislature further declares that the people have a right to be assured that the financial interests of holders of or nominees or candidates for public office do not conflict with the public trust. Because public confidence in government can best be sustained by assuring the people of the impartiality and honesty of public officials, this chapter shall be liberally construed to promote complete financial disclosure as specified in this chapter. Furthermore, it is recognized that clear guidelines are needed in order to guide public officials and employees in their actions. Thus, the General Assembly by this chapter intends to define as clearly as possible those areas which represent conflict with the public trust. 65 Pa. C. S. § 1101.1. Similarly, 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., 518 Pa. 592, 600, 544 A.2d 1324, 1328 (1988). With the above principles in mind, we shall apply the relevant provisions of the Ethics Act to your request. In applying Section 1103(a) of the Ethics Act to the submitted facts, we determine that the Secretary would have a conflict of interest with regard to prospective DEP grants to a non - profit organization where it is anticipated that the Secretary's husband might contractually provide consulting services to the grant recipient relative to the grant. However, there is a means by which the Secretary would be able to avoid transgressing Section 1103(a) of the Ethics Act as to such grants. Our analysis is as follows. To the extent the Secretary would have official involvement as to the prospective grants, such action would constitute a use of authority of office. As you have noted, as head of DEP, the Secretary is statutorily required, "either personally, by deputy, or by the duly authorized agent or employee of the department, ... [to] exercise the powers and perform the duties by law vested in and imposed upon the department." Id. Additionally, you have factually submitted that the DEP grant process includes review and approval by the Secretary of a recommended list of proposed grant awards. Thus, official action taken by the Secretary as to the prospective grants in question, including participation in the review and approval process, would constitute a use of the authority encompassed within the Secretary's official position. The Secretary would have a conflict of interest as to participating in the review and /or approval of prospective grants to a non - profit organization where it would be known or reasonably anticipated that the Secretary's husband, an immediate family member of the Secretary, would provide consulting services to the grant recipient. In Amato, Opinion 89 -002, this Commission held that a reasonable and legitimate anticipation of the development of a financial /business relationship will support a finding of a conflict of interest. In the instant matter, the basis for the conflict of interest would be that the Secretary would exercise authority over awarding grants to the grant applicants, and the grant applicants would decide whether to contract with the Secretary's spouse for related consulting services. Elisco, Opinion 00 -003; and Confidential Opinion, 05 -004. In Elisco, Opinion 00 -003, this Commission similarly held that where a city council Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 11 member was an assistant principal and another city council member's spouse was a principal in a certain school district, both council members would have a conflict of interest with regard to voting to invest pension funds through an investment company and its sales representative who was a school director in that school district. In Confidential Opinion, 05 -004, this Commission held that a school director would have a conflict of interest pursuant to Section 1103(a) of the Ethics Act in matters pertaining to the appointment /employment of a middle school principal for the school district when one of the candidates for the position exercised some administrative authority and influence over the school director as to the latter's employment as a teacher in a different school district. In the instant matter, the prospective grants would constitute a pecuniary benefit to the grant recipients. This conclusion is based upon the fact that but for the grant monies from DEP, the grant recipients would have less money available to perform the mission(s) undertaken. Cf., Suroviec, Opinion 07 -1003 (regarding the mission of an organization). The Secretary's spouse would also receive a pecuniary benefit through the resulting "subgrant" (also referred to herein as a "subcontract "). The pecuniary benefit to the spouse would consist of compensation for services to the grant recipient under the subgrant /subcontract. The aforesaid pecuniary benefits would be considered private because there is no authorization in law that would permit the Secretary of DEP to participate in awarding grants to organizations contracting with her spouse. The Secretary would also have a conflict of interest in grant matters and other matters involving client(s) of her spouse, even if her spouse would not participate in providing services as to the particular matters before her. Kannebecker, supra; Elisco, supra; Confidential Opinion, 05 -004, supra. Whenever such a conflict of interest would arise, the Secretary would be required to abstain fully from her role as to such matters, and in the event of grant applications, to also abstain fully as to grant applications of competitors for the Growing Greener Watershed Program grant monies. See, Pepper, Opinion 87 -008. facts. We reject your arguments that no conflict of interest would exist under the submitted You assert that the Ethics Act requires some affirmative act in furtherance of a conflict. You are advised that the Secretary's participation in the review and approval of grants would constitute an affirmative act. You assert that absent an intention by the Secretary to use the authority of her office to benefit her spouse, Section 1103(a) of the Ethics Act is not implicated. You are advised that to the contrary, intent is not a requisite element for a violation of Section 1103(a) of the Ethics Act. See, e.q., Yocabet v. State Ethics Commission, 531 A.2d 536 (Pa. CmwIth. mwlth. 1987). You contend that given the nature of the Secretary's involvement in the award of grants under the Growing Greener Watershed Program, there is little chance that the Secretary could be in a position to violate Section 1103(a) of the Ethics Act based upon the possibility that her husband might become a subgrantee of a successful grant recipient. Your assertion conflicts with your factual submissions that DEP anticipates that Dr. Hausker might again be a "subgrantee" of PEC, EESI or other grant applicants under the Growing Greener Watershed Program, given Dr. Hausker's national reputation and the fact that he has provided services as a subgrantee in the past. (Advisory request letter of General Counsel of April 26, 2007, at 4, 10). Finally, you contend that the amount that a grantee would receive from DEP would Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 12 have a de minimis economic impact upon DEP, and the amount that Dr. Hausker would receive from a subcontract with a grantee would have a de minimis economic impact upon both the grantee and DEP, such that no conflict of interest would exist. You note that the Ethics Act defines the term "de minimis economic impact" as an "economic consequence which has an insignificant effect." 65 Pa.C.S. § 1102. In support of your position you note that in 2003, Dr. Hausker received approximately $3,700 in Program funds through a contract with PEC, and that these funds were a small part of the grant in the amount of $291,102 that DEP had awarded to PEC. You assert that both of the aforesaid amounts were a very small portion of DEP's multimillion dollar annual budget. You have not supplied the amounts of the DEP grant requests that are in question. Nevertheless, we conclude that the amounts would be significant enough to motivate the applicants to apply for the grants. Based upon the submitted facts, there is no basis to conclude that the grants would have a de minimis economic impact upon the grant applicants or the Secretary's spouse. As to both, we would note that under the submitted facts, the economic impact could not be viewed in isolation as to one particular grant award or one particular subgrant /subcontract. It is clear from the submitted facts that successful work by a grant recipient under an initial grant award advances the prospects of subsequent additional financial support from DEP, either through one or more grant amendments or additional projects. Likewise, successful work by a nationally known expert in environmental areas through a subgrant /subcontract would be likely to lead to additional consulting opportunities. As for the economic impact upon DEP, such is not controlling. We are aware of the Kraines case, but the instant matter is distinguishable from Kraines. The Kraines case involved a cost savings to the political subdivision involved. There is no indication that the use of grantees contracting with the Secretary's spouse would result in savings to the Commonwealth. Furthermore, Kraines conflicts with another Commonwealth Court decision that applied the same de minimis economic impact exception based upon its impact upon the public officials /employees whose conduct was in question, not the impact upon the governmental body. Salem Township Municipal Authority v. Township of Salem, 820 A.2d 888 (Pa. Cmwlth. 2003). The cases cited in support of your position as to conflict of interest do not alter our view in the instant matter. Recently in Dobrowolski, Opinion 07 -002, this Commission approved a "conflict of interest avoidance mechanism" for avoiding a conflict of interest, which could be applied in the instant matter. In Dobrowolski, the requester was an independent contractor who, through a business involving herself and certain immediate family members, provided limited van transportation services to a school district. The school district was interested in hiring Ms. Dobrowolski as an employee, specifically, a transportation coordinator /clerk. As proposed, the employment position would have included responsibilities as to both bus and van transportation providers. Ms. Dobrowolski was interested in the employment position, but she was also interested in continuing to contractually provide the limited van transportation services. We concluded that Section 1103(a) of the Ethics Act would not prohibit Ms. Dobrowolski from being employed as the school district's transportation coordinator /clerk under certain conditions, which included, inter alia, that her superiors in the school district would reallocate all matters and work involving van transportation services within the school district to persons who would not be subordinates within Ms. Dobrowolski's chain of command, and that there would be no means by which Ms. Dobrowolski could use the authority of the employment position or confidential information accessed as a result of being in that position for a prohibited private pecuniary benefit. You are similarly advised that there is a means by which the Secretary would be able to avoid transgressing Section 1103(a) of the Ethics Act as to the prospective grants that are in question. Specifically, the Governor could designate someone not within the Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 13 Secretary's chain of command to perform the Secretary's role as to the prospective grants in question, as well as the grant applications of competitors for the Growing Greener Watershed Program grant monies. Cf., Dobrowolski, supra; Pepper, supra. We note that the Secretary herself could not make such a designation. See, Confidential Opinion, 02- 004 (holding that where there is no pre- existing conflict mechanism in place specifying how and by whom a public official's authority is to be exercised in the event of a conflict of interest, the public official's delegation of such authority to a subordinate would itself constitute a use of authority of office in contravention of Section 1103(a) of the Ethics Act). Under such a "conflict of interest avoidance mechanism," the Secretary 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 DEP staff members involved in the grant process. Turning to Section 1103(f) of the Ethics Act, we have previously held that the restrictions of Section 1103(f) 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. In the instant matter, prospective grants are anticipated to include funding for the continued development of a nutrient trading program for the Chesapeake Bay Watershed, relative to the Commonwealth's obligations under the Chesapeake 2000 Bay Agreement. Future grant monies could also include watershed /stream restoration and projects involving mine reclamation or remediation of acid mine drainage. We conclude that such services would be agreements or arrangements for services to the Commonwealth and would fall within the definition of contract under the Ethics Act. Additionally, grant recipients would qualify as "persons" under the very broad definition of that term as set forth in the Ethics Act and above. Therefore, for DEP grants involving services to the Commonwealth and as to which the Secretary's spouse would receive a subcontract valued at $500 or more, the restrictions of Section 1103(f) of the Ethics Act would apply. In reviewing the DEP 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 DEP 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) would require that the Secretary not have any supervisory or overall responsibility for the implementation or administration of DEP grants for which the Secretary's spouse would receive a subcontract valued 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 Governor's Code of Conduct. IV. CONCLUSION: Secretary of Environmental Protection Kathleen A. McGinty ( "Secretary") is a "public official" and an "executive -level State employee" subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The Secretary's husband is a member of her immediate family. The Secretary would have a conflict of Adams /Rendell (Re: McGinty), 07 -009 May 1, 2007 Page 14 interest under Section 1103(a) of the Ethics Act with regard to prospective Department of Environmental Protection ( "DEP ") grants to a non - profit organization where it is anticipated that the Secretary's husband might contractually provide consulting services to the grant recipient relative to the grant. The Secretary would also have a conflict of interest in grant matters and other matters involving client(s) of her spouse, even if her spouse does not participate in providing services as to the particular matters before her. Whenever such a conflict of interest would arise, the Secretary would be required to abstain fully from such matters, and in the event of grant applications, to also abstain fully as to grant applications of competitors for the program grant monies. The Secretary would be able to avoid transgressing Section 1103(a) of the Ethics Act as to the aforesaid prospective grants if the Governor would designate someone not within the Secretary's chain of command to perform the Secretary's role as to the prospective grants as well as the grant applications of competitors for the grant program grant monies. The Secretary herself could not make such a designation. Under such a "conflict of interest avoidance mechanism," the Secretary 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. For DEP grants involving services to the Commonwealth and as to which the Secretary's spouse would receive a subcontract valued at $500 or more, the restrictions of Section 1103(f) of the Ethics Act would apply. The DEP 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). Section 1103(f) would require that the Secretary not have any supervisory or overall responsibility for the implementation or administration of grant contracts involving services to the Commonwealth where the Secretary's spouse would receive a related subcontract valued at $500 or more. 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