Rendell v. Pennsylvania State Ethics Commission

OPINION BY

Kathleen A. McGinty (McGinty), Secretary of the Department of Environmental Protection (DEP), Michael DiBerardinis (DiBerardinis), Secretary of the Department of Conservation and Natural Resources (DCNR) (collectively Secretaries), and Governor Edward G. Rendell (Governor) (collectively Petitioners) seek both review in this Court’s appellate jurisdiction and declaratory relief in its original jurisdiction regarding advisory opinions issued by the State Ethics Commission (Commission) pursuant to Section 1107 of the Public Official and Employee Ethics Act (Ethics Act), 65 Pa.C.S. § 1107.

By letter dated April 26, 2007, pursuant to Section 1107 of the Ethics Act, General Counsel Barbara Adams (Adams) requested an opinion or advice of counsel from the Commission regarding McGinty. The letter stated that DEP administered grant programs commonly known as Growing Greener I and II, and that the non-profit organization, the Pennsylvania Environmental Council (PEC), had received over $6.5 million in grants from DEP since 1995. The letter stated that DEP anticipated continuing to fund grants to PEC or to Enterprising Environmental Solutions, *556 Inc., an organization controlled and established by PEC. The letter also stated that McGinty’s husband, Dr. Karl Hausker, had previously been asked to do consulting work on projects pursuant to DEP grants and that DEP anticipated that he would be invited to do so again. The letter further stated that the grants in question were awarded following an open, competitive process and that McGinty’s role was limited to reviewing and approving a list of proposed grant awards, which had already been initially approved by other officials within DEP. The letter inquired whether these circumstances would give rise to a conflict of interest under the Ethics Act. In the letter Adams provided her own legal analysis explaining why McGinty’s participation would not violate the Ethics Act.

By a separate letter, dated April 26, 2007, Adams requested an opinion or advice of counsel from the Commission regarding DiBerardinis. This letter stated that DCNR, through its Bureau of Recreation and Conservation, awarded numerous grants to non-profit organizations and municipalities. The letter stated that DiBerardinis’s role in the grantmaking process is limited to reviewing the list of grants after the grantees have been selected and approved according to established criteria by DCNR officials. The letter further stated that one such grantee was the Pennsylvania Horticultural Society (PHS), a non-profit organization which had, so far, received $1.5 million for a tree cover program called “TreeVitalize.” The letter also stated that DiBerardinis’s wife, Joan Reilly, was one of 14 managers employed by PHS. Additionally, the letter stated that PHS had requested another $500,000 for its TreeVitalize program and inquired whether, under the circumstances outlined, it would present a violation of the Ethics Act for DiBerardinis to participate in the grantmaking process. In the letter Adams provided her own legal analysis explaining why DiBerardinis’s participation would not violate the Ethics Act.

On April 30, 2007, the Commission issued advisory opinions in response to Adams’s letters. In the McGinty Opinion, Opinion 07-009, the Commission concluded that McGinty would have a conflict of interest if she participated in the grantmak-ing process. In reaching this conclusion, the Commission applied the Ethics Act to the scenario outlined in Adams’s letter regarding McGinty. The Commission stated that the “conflict of interests” provision in the Ethics Act is to be liberally construed to promote public trust in government. The Commission stated that participation by McGinty in the grantmaking process would constitute use of her authority and that, because it was anticipated that her husband would be employed to work on projects as a result of the grant, this use would result in a private pecuniary benefit under the Ethics Act. The Commission also opined that, even if it was not anticipated that McGinty’s husband would actually work on projects funded by the grants, a private pecuniary benefit would still accrue if clients of McGinty’s husband received the grants. In response to an assertion in Adams’s letter that intent was a requisite element of conflict of interest under the Ethics Act, the Commission stated that a conflict of interest could exist, even absent intent, according to this Court’s decision in Yocabet v. State Ethics Commission, 109 Pa.Cmwlth. 432, 531 A.2d 536 (1987). The Commission also addressed the assertion in Adams’s letter that the grant by DEP would have a de minimis economic impact on both the grantee and DEP and, therefore, would not give rise to a conflict of interest. The Commission noted that, although the letter had not specified the amounts of the prospective grants in question, it could con- *557 elude that since the amount of the grant would be sufficient to induce an applicant to apply for the grant, the grant would not be de minimis. The Commission also stated that the economic impact of the single prospective grant at issue should not be viewed in isolation, but in the context that one grant could likely lead to other future grants.

The Commission recommended that, in order to avoid the conflict of interest, the Governor could appoint a person outside McGinty’s chain of command to perform her functions in the grantmaking process. The Commission stated that McGinty “would need to be removed/insulated from any involvement in the grant process in question, as well as any access to confíden-tial/non-public information involving the grant process.... ” (McGinty Opinion 12.) The Commission also stated that McGinty “could not” select the person who would take her place in the grantmaking process.

In the DiBerardinis Opinion, Opinion 07-010, the Commission set forth an analysis which was substantially similar to that contained in the McGinty Opinion. In addition to the issues addressed in the McGinty Opinion, the Commission also concluded that a non-profit organization could be considered a “business” under the Ethics Act. The Commission concluded that it would be a conflict of interest for DiBerardinis to participate in DCNR’s grantmaking process and recommended a mechanism similar to the one in the McGinty Opinion for avoiding the conflict.

The Governor and each Secretary subsequently filed a “Petition for Review in the Nature of an Appeal of an Opinion of the Pennsylvania State Ethics Commission and in the Nature of an Action for Declaratory Judgment” (DiBerardinis Petition and McGinty Petition, respectively) with regard to each advisory opinion. In these petitions, the Governor and the Secretaries appealed from the advisory opinions and the Governor, alone, sought declaratory judgment regarding a number of issues raised in the opinions. The petitions sought appellate review of the advisory opinions in the name of the Governor and each respective Secretary, alleging that the Commission had committed errors of law and that the opinions would disrupt the effective administration of state government. The petitions sought, in the name of the Governor only, a declaratory judgment regarding these same alleged errors of law. In response, the Commission filed a Motion to Quash and Preliminary Objections, which are now before this Court.

In its Motion to Quash the appeal, the Commission argues that the advisory opinions in these cases are not appealable orders. We agree. In general, only adjudications of a Commonwealth Agency are appealable. See Section 702 of the Administrative Agency Law, 2 Pa.C.S. § 702 (stating that “[a]ny person aggrieved by an adjudication of a Commonwealth agency who has a direct interest in such adjudication shall have the right to appeal therefrom to the court vested with jurisdiction of such appeals ...” (emphasis added)). “Adjudication” is defined as “[a]ny final order, decision, determination or ruling by an agency affecting personal or property rights, privileges, immunities, duties, liabilities or obligations of any or all of the parties to a proceeding in which the adjudication is made.” Section 101 of the Administrative Agency Law, 2 Pa.C.S. § 101 (emphasis added). 1 We have held that *558 advisory opinions of the Commission are not considered final, appealable orders. Suehr v. State Ethics Commission, 651 A.2d 648 (Pa.Cmwlth.1994). Here, the advisory opinions of the Commission are just that: advisory. They deal with events which have not yet occurred and which may never occur. This can be seen in the very language of the advisory opinions. For example, in the DiBerardinis Opinion, the Commission states:

[t]he prospective grant to PHS would constitute a pecuniary benefit to PHS....

Having concluded that the Secretary would have a conflict of interest with regard to the proposed DCNR grant to PHS, you are advised that the Secretary would be required to abstain fully from matters pertaining to the grant or to grant applications of competitors for the Program grant monies.

(DiBerardinis Opinion at 10 (emphases added).) The hypothetical nature of the facts underlying these cases is even more evident in the McGinty Opinion:

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.

(McGinty Opinion at 10 (emphases added).) To make a decision on appeals of advisory opinions based on these sorts of hypothetical facts “would be to issue our own advisory opinion on the subject which is not within the purview of our appellate jurisdiction.” Suehr, 651 A.2d at 649.

Under the Ethics Act, an official can request an advisory opinion which, if the official relies upon it, will provide immunity to that official even if the opinion turns out to be incorrect. See Section 1107(10) of the Ethics Act, 65 Pa.C.S. § 1107(10). In this case, the advisory opinions do not give the Secretaries the immunity they wanted under Section 1107(10), because the opinions do not opine that the Secretaries can participate in the grantmaking processes. However, these opinions do not impose new duties or obligations on the Secretaries, 2 or affect any personal or property right of the Secretaries. Petitioners argue that, pursuant to the Supreme Court’s decision in Shaulis v. State Ethics Commission, 574 Pa. 680, 833 A.2d 123 (2003), the Commission’s advisory opinions are final, appealable adjudications. We do not agree. In Shaulis, the advisory opinion appealed from effectively infringed on Shaulis’s constitutionally protected and vested property interest in pursuing her profession, the practice of law. 3 *559 In this case, no such property interest is involved. It is also notable that, in Shau-lis, the Supreme Court specifically declined to overturn Suehr, which held that advisory opinions of the Commission are not final, appealable orders. After discussing the Commission’s reliance on Suehr, the Court stated that “Shaulis counters that Suehr was wrongly decided and should be overruled by this Court, but we need not address that argument.” Shaulis, 574 Pa. at 690, 833 A2d at 129.

We will follow the example of our Supreme Court and similarly decline to overrule Suehr. In Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 37, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976), the United States Supreme Court stated that, “[n]o principle is more fundamental to the judiciary’s proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies.” Id. This principle is equally fundamental to Pennsylvania’s system of government. If this Court were to begin issuing decisions not based on specific sets of established facts, we would usurp the legislative function that is vested by our state constitution solely in the legislature. Pa. Const, art. 2, § 1. Similarly, if this Court were to give broad, general instructions on the application and execution of the Ethics Act, we would become not a “super legislature” but a “super Ethics Commission”; we would usurp the executive function. See Pa. Const, art. 4, § 2. This Court must be diligent in confining itself to its constitutional limitations. For these reasons we follow Suehr and find that these advisory opinions are not final. We must, therefore, grant the Commission’s Motion to Quash.

In addition to the appeal of the Commission’s Opinions, the Governor, alone, has also filed an action for declaratory judgment in our original jurisdiction. Courts generally should refuse to grant requests for declaratory judgment where it would not resolve the controversy or uncertainty which spurred the request. Section 7537 of the Declaratory Judgments Act, 42 Pa.C.S. § 7537. 4 “In order to sustain an action under the Declaratory Judgments Act, a plaintiff must demonstrate an ‘actual controversy’ indicating imminent and inevitable litigation, and a direct, substantial and present interest.” Stilp v. Commonwealth, 910 A.2d 775, 782 (Pa.Cmwlth.2006) (quoting Wagner v. Apollo Gas Co., 399 Pa.Super. 323, 582 A.2d 364 (1990)). To require otherwise would result in this Court issuing advisory opinions, which is beyond our jurisdiction to do. Sheppard v. Old Heritage Mutual Insurance Co., 51 Pa.Cmwlth. 490, 414 A.2d 1109, 1114 (1980) (concluding in this original jurisdiction case involving an insurance liquidation, that “this Court is not in the business of making advisory decisions” and would not address a hypothetical issue as “to set-off for wage obligations to corporate officers”, noting that “[o]ne need only refer to this Commonwealth’s insurance *560 laws to determine the appropriate powers and responsibilities of the Court-appointed liquidator”); see also In re Condemnation by Department of Transportation, 100 Pa.Cmwlth. 546, 515 A.2d 102, 106 (1986) (relying on Sheppard to conclude that “Advisory opinions are not within the purview of an appellate court’s jurisdiction.”); see generally, Blackwell v. State Ethics Commission, 527 Pa. 172, 185, 589 A.2d 1094, 1100 (1991) (“Judicial decisionmaking inherently requires courts to resolve conflicts after they arise”) (quoting Gibson v. Commonwealth, 490 Pa. 156, 163, 415 A.2d 80, 84). While the Governor requests declaratory judgment on ten issues in his Petitions for Relief, 5 most of these issues depend upon the unfolding of hypothetical facts that may never occur. 6 As such, they do not present this Court with a concrete case or controversy and, so, making declaratory judgments as to these issues *561 would not resolve the underlying uncertainty. Therefore, pursuant to Section 7537 of the Declaratory Judgments Act, we must decline to render a judgment regarding these issues. 7

Two of the issues that the Governor raises, however, do present us with clear questions of statutory construction about which there is an actual controversy. The first of these issues is whether a non-profit organization may be included in the definition of “business” found in Section 1102 of the Ethics Act, 65 Pa.C.S. § 1102. The other is whether, when a department head is affected by a conflict of interest, the Ethics Act requires the Governor to appoint a person outside that department head’s chain of command in order for the conflict to be avoided. As we may answer these questions without resort to hypothetical facts that may never occur, we find that these issues present us with concrete controversies, especially given the expressed difference of interpretation between the Commission, which is charged with enforcing the Ethics Act, and the Governor, who is, along with his subordinates, subject to the Ethics Act.

The Commission raises preliminary objections on two bases to the Governor’s action for declaratory judgment. First, the Commission argues that the Governor may not both appeal the advisory opinions and seek declaratory judgment regarding them; however, since we have found that the advisory opinions are not appealable adjudications, he will not receive more than one form of relief.

Second, the Commission argues that the Governor’s action for declaratory judgment seeks relief for non-parties for whom no true case or controversy exists. The Governor has alleged that his action for declaratory judgment is for “the thousands of public officials and public employees subject to the Ethics Act.” 8 We find no true case or controversy as to these thousands of unnamed individuals, and thus sustain this part of the Commission’s preliminary objections. Any advisory *562 opinion by the Commission will affect persons situated similarly to those about whom the opinion was written. This does not give those similarly-situated persons standing to seek declaratory judgment regarding those opinions any more than a person situated similarly to a party to a precedent-setting lawsuit may seek declaratory judgment regarding the suit’s outcome.

The Governor is the appointing authority for the two Secretaries, and we find that he does present us with a case or controversy as to the Secretaries. We therefore overrule the Commission’s preliminary objections to the extent they argue the Governor lacks standing. Section 1107(10) of the Ethics Act states that the Commission shall “(Tissue to any person upon such person’s request or to the appointing authority ... of that person upon the request of such appointing authority ... an opinion.... ” 65 Pa.C.S. § 1107(10) (emphasis added). As the appointing authority for the Secretaries, the Governor has standing to seek declaratory judgments regarding their conduct under the Ethics Act.

Accordingly, for the reasons discussed above, the Commission’s Motion to Quash is hereby granted, the Commission’s Preliminary Objections are overruled in part and sustained in part, and we will allow the Governor’s action for declaratory judgment to move forward as to the following issues: (1) whether non-profit organizations may be included by the definition of “business” in Section 1102, and (2) whether, when a department head is affected by a conflict of interest, the Ethics Act requires the Governor to appoint a person outside that head’s chain of command in order for the conflict to be avoided. 9

ORDER

NOW, December 19, 2007, Respondent’s Motion to Quash is hereby granted, Respondent’s Preliminary Objections are overruled in part and sustained in part, and the Governor’s action for declaratory judgment is allowed to proceed consistent with this Opinion. Respondent is directed to file answers to the petitions filed by Petitioners within thirty (30) days of the date this order.