Informal Advisory Opin 10.16.12

7/31/2019 Informal Advisory Opin 10.16.12

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October 16, 2012

Governor Mitchell E. Daniels, Jr.StatehouseIndianapolis, Indiana

In re: Informal Advisory Opinion

Dear Governor Daniels,

Thank you for contacting our office. As the Governor of the State, you

report that you have accepted the position of President of Purdue University, tocommence in January of 2013 upon the expiration of your term as Governor.

You are requesting guidance on all ethics rules, including post-

employment rules that would be applicable for the remainder of your term asGovernor and may carry over to your new role with Purdue University. You also

offered that I speak with your General Counsel to help obtain additional andnecessary information and records for this review.

As you recognize in your request, keep in mind that this advice is only for

activity that occurs in the future.

In general, you recognize that the Governor of the State obviously has

interaction with the different state agencies and state universities. You allege thatyou have not executed any contracts with Purdue University. You also disclosethat as Governor there are various decisions required by specific statutes

involving state universities, and you request advice on what is permitted withregard to those statutory duties and the Code of Ethics.

Your employment with Purdue University invokes consideration of the

provisions of the Ethics Code pertaining to conflicts of interest, post-employment,and confidentiality. I will include at the end of this opinion the relevant laws

addressed.I

Conflicts of Interest42 IAC 1-5-6 (IC 4-2-6-9)

This rule prohibits a state employee from participating in any decision or

vote if he has knowledge that certain persons have a financial interest in theoutcome of the matter, including the employee himself as well as any person or

organization with whom he is negotiating or has an arrangement concerningprospective employment. Negotiations commence for purposes of this rule as

soon as an employer and employee begin discussing potential employment,



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regardless of who initiates the contact. See: State Ethics Commission (SEC)Advisory Opinion 12-I-9 (published on-line at http://www.in.gov/ig/files/s12-I-

9_SBA-COIdv_PE.pdf ). Because your employment is imminent, you need tofollow procedures outlined in 42 IAC 1-5-6 (IC 4-2-6-9(b)) if any future potential

conflict arises.

You further asked about the rule and your statutory duties as Governorthat may involve Purdue University. One example is appointments to university

boards of trustees. Under IC 21-23-3-2, the Governor shall appoint ten trusteesfor Purdue University. Another example of state responsibility relates to

university bonds. Under IC 21-34-10-1, bonds may not be issued by the board of trustees of a state educational institution without the specific approval of the

budget committee, budget agency and governor. I have been informed thisapproval is facilitated through your signature on budget committee minutes.

The conflict of interest rule is not violated if the action is required by that

specific public official through another specific statutory duty. The SEC hastwice addressed this circumstance. In two Formal Advisory Opinions in 2007, the

SEC provided advice to the CEO and President of the Lincoln Museum in FortWayne and a Trustee for the Indiana Historical Society through published

opinions. See: Advisory Opinion 07-0I-013 (published on-line athttp://www.in.gov/ig/files/s07-I-13_Lincoln_Museum-COIdv_SP.pdf ) and

Advisory Opinion 07-0I-14 (published on-line at http://www.in.gov/ig/files/s07-I-14_IHS-COIdv_SP.pdf ). Both opinions advised these state workers that because

their actions which might otherwise be a violation of the conflict of interest rulewere authorized by another statute for their specific position, the conflict of

interest rule would not be violated. See also: IC 35-41-3-1 (“a person is justifiedin engaging in conduct otherwise prohibited if he has legal authority to do so.”).

These previous SEC Advisory Opinions are consistent with other conflict

of interest laws. See e.g. IC 35-44.1-1-4(c)(1) (a conflict of interest for a publicofficial does not exist if the act is permitted by law). Therefore, your appointment

of trustees and your approval of bonds by signing budget committee meetingminutes would not violate the conflict of interest rule.

II

Post-employment rule (PER)42 IAC 1-5-14 (IC 4-2-6-11)

As a threshold matter, the SEC has determined the PER applies to

employees and officers moving to a state university. SEC Advisory Opinion 12-I-2 (published on-line at: http://www.in.gov/ig/files/s12-I-2_OMB-

PE_Misc.Def.pdf ).

The PER consists of two separate limitations: a “cooling off” period and aparticular matter restriction. The first prohibition, commonly referred to as the

cooling off or revolving door period, prevents you from accepting employment

http://www.in.gov/ig/files/s12-I-9_SBA-COIdv_PE.pdf




http://www.in.gov/ig/files/s07-I-13_Lincoln_Museum-COIdv_SP.pdf


http://www.in.gov/ig/files/s07-I-14_IHS-COIdv_SP.pdf




http://www.in.gov/ig/files/s12-I-2_OMB-PE_Misc.Def.pdf













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for 365 days upon leaving state employment: (A) as a lobbyist, (B) from anemployer with whom you engaged in the negotiation or administration of a

contract and were in a position to make a discretionary decision affecting theoutcome of the negotiation or nature of the administration, or (C) from an

employer for whom you made a regulatory or licensing decision that directly

applied to the employer or its parent or subsidiary. In addition, you are alsoprohibited altogether from accepting employment from an employer if the

circumstances surrounding the hire suggest the employer’s purpose is to influence

you in your official capacity as a state employee.

Each prohibition is discussed below.

ALobbying

In my August 9, 2012 opinion, I advised you were not restricted from

lobbying the Legislature pursuant to 42 IAC 1-5-14 (IC 4-2-6-11(b)(1)). TheExecutive Branch Director of Executive Branch Lobbying advised you on

Executive Branch lobbying rules.

BContracts

Based on the information you provided, you did not engage in the

negotiation or administration of a contract with Purdue University on behalf of theState. We reviewed all professional service contracts from 2005 to present and

found none between your office and Purdue University.

However, bonds are considered within the application of the PER.Pursuant to your statutory authority in IC 21-34-10-1, you further advise that

although you approved certain bond issues as required by statute, you did notnegotiate or administer any of the bonds issued to Purdue University. You also

allege that the State Budget Committee minutes should reflect this in that you didnot attend these State Budget Committee meetings where the bond reviews were

made. You point out your involvement was in subsequently signing the StateBudget Committee minutes which were prepared after the decisions regarding the

bonds in order to comply with IC 21-34-10-1.

The SEC has addressed this issue previously in at least two AdvisoryOpinions, namely 12-I-2 (published on-line at: http://www.in.gov/ig/files/s12-I-

2_OMB-PE_Misc.Def.pdf ) and 10-I-10 (published on-line at:http://www.in.gov/ig/files/s10-I-10_OMB-PE.pdf ). In both opinions, it was

determined that the applicant did not negotiate or administer the bonds. Yourinvolvement appears to be even more removed than in those two circumstances,

in that you are not a member of the State Budget Committee, you did not attendthe State Budget Committee meetings where these were reviewed and voted upon,

and you did not vote on the projects as did the State Budget Committee members.





http://www.in.gov/ig/files/s10-I-10_OMB-PE.pdf







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C

Licensing/Regulatory

A Governor’s actions with regard to a state university are not considered,

and to our knowledge has never been urged to be, a “regulatory or licensingdecision” which might trigger the PER. See e.g.: 12-I-2 (published on-line at:http://www.in.gov/ig/files/s12-I-2_OMB-PE_Misc.Def.pdf ) and 10-I-10

(published on-line at: http://www.in.gov/ig/files/s10-I-10_OMB-PE.pdf ), supra.

DParticular Matters

Keep in mind that in addition to the cooling off period, you are also

subject to the post-employment rule’s “particular matter” restriction. Thisrestriction prevents you from working on any of the following twelve matters if

you personally and substantially participated in the matter as a state employee: 1)an application, 2) a business transaction, 3) a claim, 4) a contract, 5) a

determination, 6) an enforcement proceeding, 7) an investigation, 8) a judicialproceeding, 9) a lawsuit, 10) a license, 11) an economic development project or

12) a public works project. The particular matter restriction is not limited to 365days, but instead extends for the entire life of the matter at issue, which may be

indefinite. No particular matters have been presented to me for review. However,you would be prohibited from representing or assisting your prospective employer

or any other person in a particular matter that you personally and substantiallyparticipated in as a state employee. If, after reviewing this law, you have any

questions regarding whether your intended work would involve any otherparticular matters, I invite you to submit additional facts for a more detailed

analysis.

IIIConfidentiality

IC 4-2-6-6

Finally, please be aware that a state employee is prohibited from acceptingany compensation from any employment, transaction, or investment which was

entered into or made as a result of material information of a confidential nature.So long as working for Purdue University does not result from information of a

confidential nature, any such employment would not violate IC 4-2-6-6.

Thank you for submitting your inquiry. Please let me know if you haveany questions regarding this opinion. Please note that this response does not

constitute an official advisory opinion. Only the Commission may issue anofficial advisory opinion. The Commission will consider that an employee or

former employee acted in good faith if it is determined that the individualcommitted a violation after receiving an informal advisory opinion, and the

alleged violation was directly related to the advice rendered. Also, remember that










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the advice given is based on the facts as I understand them. If this letter misstatesfacts in a material way, or omits important information, please bring those

inaccuracies to my attention.

Sincerely,

/s/ David O. Thomas, Inspector General

CONFIDENTIALITY NOTICE:This e-mail message is for the sole use of the intended recipient(s). It contains

confidential and privileged information. If you are not the intended recipient,please contact the sender by replying to our e-mail administrator and destroying

and deleting all copies of the original message. Any unauthorized review, use,disclosure or distribution is prohibited. You may also reach the sender by phone

at (317) 232-3850, or by fax at (317) 232-0707. To reply to the e-mail directly,send an e-mail to: [email protected].

IC 4-2-6-1Definitions

Sec. 1. (a) As used in this chapter, and unless the context clearly denotes otherwise:

* * *

(10) “Employer” means any person from whom a state officer or employee or the officer’s or

employee’s spouse received compensation. For purposes of this chapter, a customer or client of a self-employed individual in a sole proprietorship or a professional practice is not considered to be anemployer.

* * *

(11) "Financial interest" means an interest:(A) in a purchase, sale, lease, contract, option, or other transaction between an agency and any

person; or(B) involving property or services.

The term includes an interest arising from employment or prospective employment for whichnegotiations have begun.

* * *

(12) “Information of a confidential nature” means information:

(A) obtained by reason of the position or office held; and(B) which:

(i) a public agency is prohibited from disclosing under IC 5-14-3-4(a);(ii) a public agency has the discretion not to disclose under IC 5-14-3-4(b) and that

the agency has not disclosed; or(iii) is not a public record, but if it were would be confidential.

* * *

(13) “Person” means any individual, proprietorship, partnership, unincorporated association, trust,business trust, group, limited liability company, or corporation, whether or not operated for profit, or agovernmental agency or political subdivision.

* * *

mailto:[email protected]





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IC 4-2-7-1

DefinitionsSec. 1. The following definitions apply throughout this chapter:

. . .(5) "Lobbyist" means an individual who seeks to influence decision making of an agency and who

is registered as an executive branch lobbyist under rules adopted by the Indiana department of administration.

42 IAC 1-5-14 Postemployment restrictions

Authority: IC 4-2-7-3; IC 4-2-7-5Affected: IC 4-2-6-11; IC 4-2-7

Sec. 14. Postemployment restrictions are set forth in IC 4-2-6-11.IC 4-2-6-11One year restriction on certain employment or representation; advisory opinion; exceptions

Sec. 11. (a) As used in this section, "particular matter" means:

(1) an application;(2) a business transaction;

(3) a claim;(4) a contract;(5) a determination;(6) an enforcement proceeding;

(7) an investigation;(8) a judicial proceeding;

(9) a lawsuit;(10) a license;

(11) an economic development project; or(12) a public works project.

The term does not include the proposal or consideration of a legislative matter or the proposal,consideration, adoption, or implementation of a rule or an administrative policy or practice of general

application.(b) This subsection applies only to a person who served as a state officer, employee, or special state

appointee after January 10, 2005. A former state officer, employee, or special state appointee may notaccept employment or receive compensation:

(1) as a lobbyist;(2) from an employer if the former state officer, employee, or special state appointee was:

(A) engaged in the negotiation or the administration of one (1) or more contracts with thatemployer on behalf of the state or an agency; and

(B) in a position to make a discretionary decision affecting the:(i) outcome of the negotiation; or(ii) nature of the administration; or

(3) from an employer if the former state officer, employee, or special state appointee made aregulatory or licensing decision that directly applied to the employer or to a parent or subsidiary of theemployer;before the elapse of at least three hundred sixty-five (365) days after the date on which the former stateofficer, employee, or special state appointee ceases to be a state officer, employee, or special stateappointee.

(c) A former state officer, employee, or special state appointee may not represent or assist a person ina particular matter involving the state if the former state officer, employee, or special state appointeepersonally and substantially participated in the matter as a state officer, employee, or special state

appointee, even if the former state officer, employee, or special state appointee receives nocompensation for the representation or assistance.

(d) A former state officer, employee, or special state appointee may not accept employment orcompensation from an employer if the circumstances surrounding the employment or compensationwould lead a reasonable person to believe that:

(1) employment; or(2) compensation;

is given or had been offered for the purpose of influencing the former state officer, employee, or specialstate appointee in the performance of his or her duties or responsibilities while a state officer, anemployee, or a special state appointee.

(e) A written advisory opinion issued by the commission certifying that:



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(1) employment of;

(2) representation by; or(3) assistance from;

the former state officer, employee, or special state appointee does not violate this section is conclusiveproof that a former state officer, employee, or special state appointee is not in violation of this section.

(f) Subsection (b) does not apply to a special state appointee who serves only as a member of anadvisory body.

(g) An employee's or a special state appointee's state officer or appointing authority may waiveapplication of subsection (b) or (c) in individual cases when consistent with the public interest. Waivers

must be in writing and filed with the commission. The inspector general may adopt rules under IC 4-22-2 to establish criteria for post employment waivers.

42 IAC 1-5-6 Conflicts of interest; decisions and votingAuthority: IC 4-2-7-3; IC 4-2-7-5Affected: IC 4-2-6-9; IC 4-2-7

Sec. 6. Decision and voting restrictions are set forth in IC 4-2-6-9.

IC 4-2-6-9Conflict of economic interests

Sec. 9. (a) A state officer, an employee, or a special state appointee may not participate in anydecision or vote if the state officer, employee, or special state appointee has knowledge that any of the

following has a financial interest in the outcome of the matter:(1) The state officer, employee, or special state appointee.

(2) A member of the immediate family of the state officer, employee, or special state appointee.(3) A business organization in which the state officer, employee, or special state appointee is

serving as an officer, a director, a trustee, a partner, or an employee.(4) Any person or organization with whom the state officer, employee, or special state appointee is

negotiating or has an arrangement concerning prospective employment.(b) A state officer, an employee, or a special state appointee who identifies a potential conflict of

interest shall notify the person's appointing authority and seek an advisory opinion from thecommission by filing a written description detailing the nature and circumstances of the particularmatter and making full disclosure of any related financial interest in the matter. The commission shall:

(1) with the approval of the appointing authority, assign the particular matter to another person andimplement all necessary procedures to screen the state officer, employee, or special state appointeeseeking an advisory opinion from involvement in the matter; or

(2) make a written determination that the interest is not so substantial that the commissionconsiders it likely to affect the integrity of the services that the state expects from the state officer,employee, or special state appointee.

(c) A written determination under subsection (b)(2) constitutes conclusive proof that it is not aviolation for the state officer, employee, or special state appointee who sought an advisory opinionunder this section to participate in the particular matter. A written determination under subsection (b)(2)shall be filed with the appointing authority.

IC 4-2-6-6Present or former state officers, employees, and special state appointees; compensation resulting fromconfidential information

Sec. 6. No state officer or employee, former state officer or employee, special state appointee, orformer special state appointee shall accept any compensation from any employment, transaction, or

investment which was entered into or made as a result of material information of a confidential nature.

Documents

Informal Advisory Opin 10.16.12