Ethics: AO 2011-4
2011

 

Advisory Opinion No. 2011-4

 

 

November 17, 2011

 

 

Question Presented:        Petitioner asks how the Ethics Code applies to four issues: (1) his past (i.e., pre-State) business relationships; (2) his wife’s congressional run; (3) his recent paid speaking engagement in Cleveland, Ohio; and (4) his ongoing attempt to end his relationship with a consulting firm. 

 

Brief Answer:      (1) Petitioner may take official action as to entities with which he had, but no longer has, a financial relationship; (2) besides the bribery prohibition, there are no constraints on contributions his wife’s campaign may receive, nor is he constrained by those contributions; (3) he was entitled to accept an honorarium for his Cleveland speech given that he used personal time and was invited by virtue of his expertise; and (4) he may continue to play a role in the consulting firm with an eye toward ending his connection with it, provided that he abides by the conflict provisions.

 

At its October 2011 regular meeting, the Citizen’s Ethics Advisory Board (“Board”) granted the petition for an advisory opinion submitted by Daniel C. Esty, Commissioner of the Connecticut Department of Energy & Environmental Protection.  The Board issues this advisory opinion on the date shown below in accordance with General Statutes § 1-81 (a) (3).  The opinion interprets only the Code of Ethics for Public Officials (“Ethics Code”)[1] and its regulations, is binding on the Board concerning the person who requested it and who acted in good-faith reliance thereon, and is based solely on the facts provided by the petitioner.    

 

Facts

         

          Generally, a petitioner’s facts are set forth in this section, but given the length of the petition at issue and its multiple exhibits, it will be appended to the opinion’s end, with pertinent facts laid out, in condensed form, with each individual issue discussed below. 

 

Analysis

 

As head of the Connecticut Department of Energy and Environmental Protection (“DEEP”), Commissioner Esty is a “public official”[2] and is therefore subject to the Ethics Code, including its conflict-of-interests provisions, General Statutes §§ 1-84 through 1-86.  The question here is how those conflict provisions apply to four issues raised by Commissioner Esty in his advisory-opinion request: (1) his past (i.e., pre-State) business relationships; (2) his wife’s congressional run; (3) his recent paid speaking engagement in Cleveland, Ohio; and (4) his ongoing attempt to end his business relationship with his consulting firm. 

 

1.       Past (i.e., pre-State) business relationships.

 

Before assuming his state position, Commissioner Esty provided the Governor’s office with a “list of businesses and organizations that [he] had been associated with in the past five years, and explanations of those relationships.”[3]  He also spoke with members of the Governor’s staff, DEEP legal counsel, his personal attorney, and the legal division of the Office of State Ethics (“OSE”) about his past professional experience, including, for example, his work as a speaker, nongovernmental organization trustee, corporate advisory board member, policy commentator, author, and consultant.  Based on those conversations, he and DEEP’s in-house legal counsel developed and distributed a recusal list, which was intended to address both actual and perceived conflicts.  He now seeks to confirm that his conduct concerning his past (i.e., pre-State) business relationships complies with the Ethics Code.

 

Commissioner Esty’s conduct concerning entities with which he had, but no longer has, a financial relationship not only complies with the Ethics Code, but goes beyond its requirements.  Indeed, to paraphrase Advisory Opinion No. 91-4: The Ethics Code’s conflict provisions, §§ 1-84 through 1-86, are all grounded on a single rationale, namely, that public service is a public trust and must not be used for personal financial gain or the financial gain of certain family members or a “business with which he is associated.”[4]  Absent this requisite financial gain, the tenets of the Ethics Code do not apply and the jurisdiction of this office is lacking.  

 

In Advisory Opinion No. 94-9, the former State Ethics Commission (“SEC”) applied that principle in a context similar to that here.  The question was whether the project manager for the “single statewide computer system” (“SSCS”) could “interact with, or make decisions concerning her former employer or any competing vendor regarding bids for the SSCS.”[5]  After noting that the conflict provisions prohibit a use of one’s state position for personal financial gain, the SEC concluded that, “[a]bsent any quid pro quo, such as a promise to return to [the former employer] in return for selecting them as the successful bidder, there is no restriction on her involvement in either the bidding process or implementation of the project.”[6]  The reason: “although the Code restricts contact with one’s former state agency for one year after termination of state service, there is no parallel restriction regarding contact with your former employer when coming from the private sector to state service.”[7]

 

          The SEC followed suit in several informal staff letters, including these:

 

·        Request for Advisory Opinion No. 1476 (1995): A former employee of New City Development, Inc., who no longer has any financial affiliation with that entity, is neither prohibited from accepting state employment as the Governor’s legislative director, nor limited in his “ability to interact with, or make decisions concerning,” his former employer.

 

·        Request for Advisory Opinion No. 1402 (1995): With respect to the former employer of a member of the Commission on Hospitals and Health Care, if the former employer “is a business with which the state servant is ‘associated’ . . . or if the state servant has a financial interest, such as a pension, which would be affected by his official action, the Code . . . may require recusal.  In the absence of such a relationship or financial interest, the status of ‘former employer’ is not significant for purposes of the Code.”

 

·        Request for Advisory Opinion No. 1395 (1995): Because the candidate for Insurance Commissioner has agreed to “accept a lump-sum payment from AETNA [his former employer], thereby officially assuming retired status, and would place any AETNA stock he holds in a blind trust, he has addressed any potential conflicts under the Ethics Code,” and “AETNA would in no way be placed at a disadvantage regarding insurance regulatory matters, and would have full and equal access to [the] Commissioner . . . .”

 

·        Request for Advisory Opinion No. 3482 (2004): Because the nominee for Commissioner of the Office of Health Care Access has no financial ties to her former employers, she is not required to recuse herself from making decisions that would affect them, as the Ethics Code does “not include a so-called ‘reverse’ revolving door,” meaning that it does not “contain a blanket prohibition against a current public official making decisions that would affect his or her former employer.”

 

The same was said in Advisory Opinion No. 2001-20, which addressed whether a member of the Connecticut Siting Council had a conflict by virtue of “his past association with the Northeast Utilities Service Company [NU] or the Yankee Energy System.”  From his previous employment with those entities, the council member had certain pension rights and 1,509 shares of NU stock.[8]  But because he had divested the NU stock, and because the pension rights could not “be forseeably affected by his actions as a member of the Siting Council,” the SEC concluded that he could, “consistent with the requirements of the Ethics Code, perform the full range of duties of a public member of the Siting Council.”[9]  It finished by noting that the council member’s “conduct in addressing the ethical aspects of his public service [was] exemplary.”[10]   

 

If the council member’s conduct was deemed “exemplary,” then the same must be said of Commissioner Esty’s.  As should be readily apparent by now, Commissioner Esty’s past financial relationships with various entities have (as one informal staff letter put it) “no legal significance under the [Ethics] Code”[11]; and like the council member above, he is—at least as concerns the Ethics Code—“free to perform the full range of duties” of the DEEP Commissioner with respect to those entities, given that he has absolutely no financial ties to them.  Nevertheless, he has apparently placed many of them on his recusal list to address even perceived conflicts—over which this office has no jurisdiction[12]—and, in doing so, has gone beyond the requirements of the Ethics Code.

 

2.       Congressional run of Commissioner Esty’s wife.

 

          Commissioner Esty explains that his wife, Elizabeth Esty, formerly a member of the Connecticut General Assembly, is currently running for the U.S. Congress from Connecticut’s Fifth Congressional District.  Given that fact, he recently asked DEEP in-house counsel, his personal attorney, his wife’s campaign-finance attorney, and the Governor’s legal office whether “there are any state law constraints on the contributions that [his] wife’s campaign can receive due to [his] position as Commissioner, or whether [he is] constrained by the contributions she receives.”[13]  The response was a unanimous “no,” and Commissioner Esty now seeks to confirm the validity of this legal conclusion, noting that he has “committed not to solicit any campaign contributions from anyone in Connecticut who has business interests before DEEP.”[14] 

 

Because of our limited jurisdiction, we can speak only as to the legal conclusion’s validity in terms of the Ethics Code, which the SEC applied in a related context in Advisory Opinion No. 2004-5, titled “Application of Code of Ethics for Public Officials to State Employee Running for Governor.”  Addressing whether Joel Schweidel, a state employee/gubernatorial candidate, could solicit campaign contributions from those subject to his state authority, the SEC found the relevant Ethics Code provisions to be these: the anti-bribery provision of § 1-84 (g), the gift provisions of § 1-84 (j) and (m), and the use-of-office provision of § 1-84 (c).[15]

 

Taking those provisions in turn, the first, § 1-84 (g), is one of two anti-bribery provisions (the other being § 1-84 (f)), and under it a public official may not “solicit or accept anything of value, including but not limited to, a . . . political contribution . . . based on any understanding that the . . . official action or judgment of the public official . . . would be or had been influenced thereby.”  According to the SEC, “it would, of course, violate the Code of Ethics for Mr. Schweidel to accept a contribution that is given with the understanding that his official actions would be affected thereby.”[16]

 

The next two provisions, subsections (j) and (m) of § 1-84, prohibit a public official and (in the case of subsection (j)) a member of his immediate family from knowingly accepting any “gift” from certain persons, including (among others) registered lobbyists and persons regulated by the official’s department or agency.  The term “gift” means “anything of value, which is directly and personally received, unless consideration of equal or greater value is given in return.”[17]   But exempt from the definition of “gift,” the SEC explained, are two things of particular importance in the political context: “(1) a properly-reported political contribution and (2) services provided by persons volunteering their time.”[18]  In light of those gift exceptions, the SEC found the gift prohibitions to be “inapposite” to Mr. Schweidel’s question.[19]

 

The final provision, § 1-84 (c), prohibits a public official from using his public office to obtain financial gain for (among others) himself, his spouse, or a “business with which he is associated,” whose definition exempts any unpaid director or officer of a non-profit entity.[20]  The SEC explained that, in soliciting contributions from those subject to his state authority, Mr. Schweidel would be in violation of § 1-84 (c) only if one of two things held true.  First, “if [his] candidate committee could be used for his own personal financial gain.”[21]  But according to the SEC, state election law forbids “a candidate . . . from using candidate committee goods, services, funds or contributions for his or his immediate family’s personal use.”[22]  Second, if “the candidate committee . . . constituted a business with which he is associated . . . .”[23]  But according to the SEC, it does not; “candidate committees are not-for-profit entities,” the candidates are not “officers,” and even if they were, they are unpaid (thus fitting within the exemption italicized above).[24]  Hence, it concluded that § 1-84 (c) “is not applicable to this situation,” after which it noted:

 

A review of other candidates’ situations reveals that, except for certain very specific limitations (e.g., the restrictions on contributions to candidates for Treasurer contained in Conn. Gen. Stat. §9-333n), candidates are permitted to, and oftentimes do, solicit campaign funds from people from over whom they have some potential level of authority.[25]

 

So, according to the SEC, when it comes to legitimate campaign contributions, the use-of-office provision is “not applicable” and the gift prohibitions are “inapposite,” which leaves the anti-bribery provision, § 1-84 (g).  What that means for Commissioner Esty is this: He may not solicit, and his wife’s campaign may not accept, any campaign contribution given with the understanding that his official actions would be or had been influenced thereby.  Aside from that, the Ethics Code places “no constraints on the contributions that [his] wife’s campaign can receive due to [his] position as Commissioner,” and he is not “constrained by the contributions she receives.”[26] 

 

3.       Commissioner Esty’s recent paid speaking engagement in Cleveland, Ohio.

 

On October 3, 2011, Commissioner Esty gave a speech as part of the Town Hall of Cleveland Speaker Series sponsored by Case Western Reserve University.  The speech, titled “Green to Gold,” was premised on his book of the same name and “had no relationship to [his] official role or state business.”[27]  Commissioner Esty used vacation time to attend the event, and his travel and honorarium were provided by the Town Hall of Cleveland, a nonprofit entity whose mission, as noted on its website, “is to educate and to inform, through an annual series of public lectures . . . .”[28]  Before attending the event, Commissioner Esty sought informal advice on the issue from the OSE legal division and was given the green light, and he now seeks to confirm that his actions comply with the Ethics Code.

 

          Under General Statutes § 1-84 (k), “[n]o public official . . . shall accept a fee or honorarium for an article, appearance or speech, or for participation at an event, in the public official’s . . . official capacity

. . . .”  The regulations clarify that “a public official . . . is prohibited from accepting a fee or honorarium only if the activity is undertaken in one’s ‘official capacity.’”[29]  “When a public official . . . is asked to give a speech . . . the activity shall be deemed to be in his or her ‘official capacity’ if the public official’s . . . official position or authority was a significant factor in the decision to extend the invitation.”[30]  If not, then the public official may accept the fee or honorarium, provided that he or she “does not attend the event on state time.”[31]

 

          Here, because Commissioner Esty used vacation time to attend this event, the only question is whether he was asked to speak by virtue of his state office or his expertise.  The fact that the invitation preceded his state appointment suggests that his official position played no part in the decision to extend it.  But even had the invitation post-dated his appointment, there is nothing to suggest otherwise: the speech was titled and premised on his book “Green to Gold,” which was written long before he came to state service; the invitation was extended by an out-of-state entity, which could not benefit in any way from his state office, DEEP having no authority over it; and he had no need of his state office to add weight or credibility to the views expressed in his speech—as evidenced by the worldwide demand for his pre-State speaking services, from which he earned over $1 million in the five years preceding his appointment.  Because Commissioner Esty was clearly invited to speak by virtue of his expertise, it was entirely permissible for him to accept the honorarium.

 

4.       His ongoing attempt to end his business relationship with consulting firm.

 

The final issue deals with Commissioner Esty’s attempt to end his business relationship with his consulting firm, Esty Environmental Partners (“EEP”).[32]  Since taking office, he has spent no more than two hours per week of personal time on wrap-up issues pertaining to EEP—which does no business with the state of Connecticut—and has “avoid[ed] any activity which involved companies regulated by DEEP or the receipt of any compensation for this work.”[33]  In fact, “the only compensation that [he has] received from EEP was for activities undertaken prior to . . . taking office.”[34]  Based on those facts, we confirm advice given to Commissioner Esty by the OSE legal division, namely, that he may “continue to play the chairman’s role at EEP on [his] own time with an eye toward closing out [his] connection with the firm,”[35] so long as he abides by the Ethics Code’s conflict provisions, §§ 1-84 through 1-86.[36]  Most pertinently, under §§ 1-84 (c), 1-85 and 1-86, he must not “tak[e] official action or otherwise us[e] his . . . state position to influence . . . any . . . agency action, for his . . . own financial benefit or for the financial benefit of an ‘associated’ business,”[37] which EEP happens to be by virtue of his ownership interest.[38] 

 

By order of the Board,

 

 

 

 

 

Dated_____11/17/11__                       ____/s/ David W. Gay, Chairperson_



[1]Chapter 10, part I, of the General Statutes.

[2]General Statutes § 1-79 (k) defines “public official” in part as “any person appointed to any office of the . . . executive branch of state government by the Governor . . . .”

[3]Letter from Daniel C. Esty, DEEP Commissioner, to the Citizen’s Ethics Advisory Board (October 12, 2011) (hereinafter referred to as “Esty Letter”).

[4]General Statutes § 1-79 (b) defines “business with which he is associated” as “any sole proprietorship, partnership, firm, corporation, trust or other entity through which business for profit or not for profit is conducted in which the public official or state employee or member of his immediate family is a director, officer, owner, limited or general partner, beneficiary of a trust or holder of stock constituting five per cent or more of the total outstanding stock of any class, provided, a public official or state employee, or member of his immediate family, shall not be deemed to be associated with a not for profit entity solely by virtue of the fact that the public official or state employee or member of his immediate family is an unpaid director or officer of the not for profit entity. ‘Officer’ refers only to the president, executive or senior vice president or treasurer of such business.”

[5]Advisory Opinion No. 94-9.

[6]Id.

[7](Emphasis added.)  Id.

[8]Advisory Opinion No. 2001-20.

[9]Id.

[10]Id.

[11]Request for Advisory Opinion No. 3120 (2002).

[12]See Advisory Opinion No. 2009-7 (“[t]he Code . . . does not speak of appearances of conflict, only actualities,” so in “interpreting and enforcing the Code . . . [we are] limited, by statute, from addressing appearances or perceptions of conflict of interest” [internal quotation marks omitted]).

[13]Esty Letter.

[14]Id.

[15]Advisory Opinion No. 2004-5.

[16]Id.

[17]General Statutes § 1-79 (e).

[18]Advisory Opinion No. 2004-5, citing General Statutes § 1-79 (e) (1) and (2).  Subdivision (2) of § 1-79 (e) was subsequently amended and now exempts the following from the term “gift”: “Services provided by persons volunteering their time, if provided to aid or promote the success or defeat of any political party, any candidate or candidates for public office or the position of convention delegate or town committee member or any referendum question . . . .”

[19]Advisory Opinion No, 2004-5.

[20]See General Statutes § 1-79 (b) (“a public official . . . or member of his immediate family, shall not be deemed to be associated with a not for profit entity solely by virtue of the fact that the public official . . . or member of his immediate family is an unpaid director or officer of the not for profit entity”). 

[21]Advisory Opinion No. 2004-5.

[22]Id.

[23]Id.

[24]Id.

[25]Id.

[26]Esty Letter.

[27]Id.

[28]http://www.townhallseries.org/.

[29](Emphasis added.)  Regs., Conn. State Agencies § 1-81-22 (a).

[30]Regs., Conn. State Agencies § 1-81-22 (b).

[31]Advisory Opinion No. 2001-22.

[32]In his advisory-opinion request, Commissioner Esty explains that he has recently reached an agreement to sell his EEP ownership share to the remaining partners, and that the transaction is scheduled to close in the next few weeks, resulting in a name change for the firm.

[33]Esty Letter.

[34]Id.

[35]Id.

[36]Cf. Advisory Opinion No. 2003-12 (candidate for Secretary of the State who owns an architectural/engineering firm, which has contracts with Connecticut state agencies and represents clients before them, may not only serve as Secretary of the State but also continue with his business activities provided that this work is carried out in a manner consistent with the conflict provisions).

[37]Advisory Opinion No. 95-5.

[38]General Statutes § 1-79 (b).



Content Last Modified on 11/22/2011 2:26:08 PM