February 19, 1992

FACTS:


You are a state employee interested in exploring the
possibility of employment with the federal government. You have
provided the following background. You are currently responsible
for certain litigation on behalf of the Commonwealth. This
litigation has been undertaken jointly with two agencies of the
federal government, Agency X and the Department of Justice (the
Department). A settlement agreement has been entered into with a
portion of the defendants. An allocation agreement has also been
signed between the Commonwealth and Agency X which establishes the
formula for dividing the monies recovered in settlement. You inform
us that this allocation agreement does not require Court approval.
As we understand it, the allocation agreement involves the use of
a formula to divide the proceeds from the litigation. You state
that, to your knowledge, this allocation agreement would not be
re-negotiated, except as an extraordinary event, although the
absolute dollar figure may change if additional proceeds are added
to the settlement.

Until recently, it appeared likely that the litigation would
soon be completed. However, a third-party recently challenged the
settlement agreement and an appeal was filed in the First Circuit.
No date for oral argument has been set and the case could continue
for months without a final decision on the validity of the
settlements. You maintain that the financial issues and "interests"
of the public will have been settled by written agreement on file
with the Court. It is your opinion that only in the event that the
governmental entities lose the appeal, and the settlements are
thereby overturned, is there any expectation that the "financial
interests" of the public and the settlement agreements would have
to be reopened for negotiation.

You have also informed us that the litigation has not involved
any United States Attorney's Office, nor will any such office
receive any part of the settlement proceeds

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under any scenario. To your knowledge, all United States Attorney's
Offices conduct hiring practices independent of the Department
although apparently routine background checks are handled in
Washington. To your knowledge, the Department does not exercise
oversight or control over the hiring or daily operations of United
States Attorney's Offices. You suggest that there is not the same
unity of interest or control that characterizes, for example, the
role of a parent corporation that would reasonably associate these
two offices as a single "person or organization.

With your consent, this Commission contacted the United States
Attorney's Office in Boston in an effort to understand the role of
the Department in the hiring process. We were informed that the
Department and the Federal Bureau of Investigation conduct a
background check on all applicants to United States Attorney's
positions. The Department's input into the hiring decision is
limited, however, to a veto of those persons who do not pass the
background check. The Department otherwise plays no role in
recommending whether a candidate is hired. The candidate must,
however, receive a commission from the United States Attorney
General, and, as we understand it, can be terminated only by the
Department, not by the local United States Attorney.


QUESTION:


Given the above facts, what restrictions does the conflict of
interest law place on you if you should seek employment with the
federal government at this time?

ANSWER:


The conflict of interest law would require you to make written
disclosures to your appointing authority prior to contacting
federal agencies under certain conditions, as described below.


DISCUSSION:


You are a state employee for purposes of the conflict of
interest law. As such, two provisions of the conflict of interest
law, s. 6 and s. 23, apply to you in your current situation.


Section 6


Section 6 of c. 268A prohibits a state employee from
participating[1] in any particular matter[2] in which he, an
immediate family member, or any business organization in which he
is serving as an officer, director, trustee, partner or employee,
or any person or organization with whom he is negotiating or has
any arrangement concerning prospective employment, has a direct or
a reasonably foreseeable financial interest. You should note that
the financial interest may be of any size, and may be either
positive or negative. See, e.g., EC-COI-91-14.

Section 6 further provides, however, that:

Any state employee whose duties would otherwise require him to
participate in such a particular matter shall advise the
official responsible for appointment to his position and the
state ethics commission of the nature and circumstances of the
particular matter and make full disclosure of such financial
interest, and the appointing official shall thereupon either

1. assign the particular matter to another employee, or

2. assume responsibility for the particular matter, or

3. make a written determination that the interest is not so
substantial as to be deemed likely to affect the integrity of
the services which the commonwealth may expect from the
employee, in which case it shall not be a violation for the
employee to participate in the particular matter. Copies of
such written determination shall be forwarded to the state
employee and filed with the state ethics commission by the
person who made the determination. Such copy shall be retained
by the Commission for a period of six years.

The reasons for the s. 6 disclosure/determination process were
articulated in Commission Advisory No. 14 (Negotiation for
Prospective Employment). Advisory No. 14, quoting from the Report
of the Special Committee on the Federal Conflict of Interest laws
of the Association of the Bar of the City of New York, Conflict of
Interest and Public Service 280 (1960), stated that:

[t]he risk is not bribery through the device of job offers;
the risk is that of sapping governmental policy, especially
regulatory policy, through the nagging and persistent
conflicting interests of the government official who has his
eye cocked toward subsequent private employment. To tum the
matter

Page 373

around, the greatest public risks arising from post-employment
conduct may well occur during the period of government
employment.

The Commission has treated prior violations of this section as
a serious offense. Even where no evidence is found that the state
employee has acted to provide any special treatment to the
prospective employer, a fine will be imposed if the state employee
has entered into negotiations with that prospective employer while
participating in a matter affecting its financial interests. See
Disposition Agreement, Docket No. 421, 1991 ($500 fine); see also
1986 SEC 260, 262 ("Section 6, like many of the other sections of
G.L. c. 268A, is intended to prevent any questions arising as to
whether the public interest has been served with the single-minded
devotion required of public employees"); 1986 SEC 253, 255 (these
disclosure provisions are more than mere technicalities because
they protect the public interest from potentially serious harm. The
procedures are designed to prevent an appointing authority from
making an uninformed, ill-advised or badly motivated decision).

In the present case, you participate as a state employee in
litigation in which at least two federal agencies have an interest.
Consequently, issues under this section would need to be addressed
if you were to negotiate for employment with the federal government
while the litigation is ongoing or the settlement agreement remains
open to challenges. See EC-COI-82-8; Commission Advisory No. 14.

Several points should be addressed here. First, s. 6 draws a
clear distinction between the financial interests of a "business
organization" in which the state employee is serving as an officer,
director, trustee, partner, or employee, and those financial
interests of a "person or organization" with whom the state
employee is negotiating for prospective employment. See Buss, The
Massachusetts Conflict of Interest Statute: An Analysis
, 45 B. U.
L. Rev. 299, 357-358 (1963) ("there is no evident justification .
. . for reading [the terms person or organization] to mean a person
engaged in business or a business organization." Emphasis in
original).[3] This distinction, of course, makes it possible to
cover a broader class of entities in the negotiation for employment
context -- including governmental agencies and charitable entities,
for example. Consequently, our focus in the present case is whether
the federal government is a person or an organization (or
organizations) within the meaning of this section.

Second, a "person" is defined, by statute, as a corporation,
society, association or a partnership. G.L. c. 4, s. 7, cl.
twenty-third (definitions of statutory terms; statutory
construction). The term does not, however, include either
governmental subdivisions or governmental agency. On the other
hand, an "organization" does include governments, governmental
subdivisions, and governmental agencies, in addition to
corporations, business trusts, estates, partnerships or
associations, two or more persons having a joint or common
interest, or any other legal or commercial entity. Black's Law
Dictionary, Fifth Edition, 1979. Consequently, in the present case,
s. 6 is implicated because the federal government is considered an
organization within the meaning of this section even though it is
neither a business organization nor a person.

Third, the Commission concludes that the entire federal
government is not a single organization for purposes of this
section. A contrary position would mean that any state employee who
has any dealings with a branch or division of the federal
government, no matter how minimal the dealings, no matter how
distinct the agency, and no matter how far removed from the
particular matter in question, would find that s. 6 is implicated
by each and every contact concerning prospective employment made
with every other branch of the federal government. For the reasons
stated below, such a result is both unreasonable and unnecessary.

The conflict of interest law must be given a workable meaning.
Graham v. McGrail, 370 Mass. 133, 140 (1976). In light of the fact
that the definition of an organization can be applied to each
separate governmental entity without difficulty, and in light of
the distinctions already made by this Commission between various
agencies of state governments, we find that the federal government
is not a single organization within the meaning of s. 6. See, e.g.,
EC-COI-91-5; 90-5
(for purposes of s. 4 of the conflict of interest
law, the state agency served by a special state employee was the
Board with which he had contracted, not the supervisory agency
within which the Board was located); 85-35 (DSS special state
employee could not receive compensation in connection with matters
which were referred by DSS; however, that same restriction would
not apply to clients referred from DMH, even though both DSS and
DMH are part of the same Secretariat); 84-146 (for purposes of
determining the "governmental body" under s. 5(e), the governor's
office is a distinct agency from the various Secretariats . . . the
critical focus is on the name and

Page 374

organizational location of the agency, not on the functional
accountability of one agency to another . . . in view of the
intervening state agency layers between the budget bureau, an
agency within Administration and Finance, and the governor's
office, the governmental body is the governor's office, rather than
the entire executive administration).[4]

The above cases illustrate that the Commission has, from time
to time, considered how closely allied one agency is to another for
purposes of determining agency separateness when applying various
sections of c. 268A. In light of the above, the Commission
concludes that, for purposes of the employment negotiation context
under s. 6, it will look to whether one agency of government has
substantial control over the hiring process of another agency. If
substantial control exists, the two agencies will be treated as if
they are a single organization for purposes of s. 6.

In the present case, the Department includes, among other
divisions, the Federal Bureau of Investigation, the Office of
Immigration and Naturalization, and the United States Attorneys'
Offices. Each of those agencies has a distinct function and
separate mission from the Department although each agency
ultimately reports to the Department. Accordingly, the Commission
finds that each such agency should be treated as a separate
organization for hiring purposes unless the Department can be shown
to have substantial control over the hiring process within each of
these agencies, whether by statute or by actual practice.[5]

As we understand the facts in the present case, the Department
has little input into the hiring practices of a given United States
Attorney's Office. Accordingly, the Commission finds that United
States Attorney's Offices are separate and distinct organizations
from the Department for purposes of the s. 6 employment negotiation
context. This conclusion results from the fact that the Department
does not have substantial control over the hiring of United States
Attorneys. We find that the separation of hiring functions protects
the public's interest from the harm contemplated by the
restrictions established in s. 6.

Consequently, employment negotiations with Agency X or the
Department would raise issues under this section because both of
those agencies have an interest in the litigation in question. On
the other hand, negotiations for employment with other federal
agencies (i) which do not have a interest in the litigation, or
(ii) whose hiring procedures are not substantially controlled by
Agency X or the Department, will not raise issues under this
section.

However, in order for s. 6 to be applicable it is not enough
that the agency in question has an interest in the litigation. The
interest must be a financial one. For the reasons stated below, we
conclude that individual governmental agencies involved in
litigation have a financial interest in that litigation even
if the agency itself will not be receiving the benefit of the proceeds
derived from the litigation.

In the present case, you maintain that none of the agencies in
question will share in the proceeds of the litigation because all
monies will ultimately be deposited into the federal treasury. You
have also suggested that the allocation agreement signed by the
agencies in question, in effect, insulates the agencies from any
financial interest. That agreement splits the litigation proceeds
among the various agencies by way of a set formula. In other words,
you maintain that the allocation formula eliminates any "financial
interest." However, we conclude that any federal agency actively
involved in pursuing the litigation has a direct or a reasonably
foreseeable financial interest in the outcome of that litigation
because the federal government has such an interest. The federal
government's financial interest will be attributed to the agency or
agencies actively involved in pursuing that litigation on the
federal government's behalf. The federal government would receive
nothing unless the agency or agencies involved pursued the
litigation. Accordingly, s. 6 is implicated in the present case and
would require a public disclosure once you reach the point of
negotiations with an interested federal agency. (A different rule
applies concerning the application of s. 23(b)(3) as described
below.) Based upon your facts, the two agencies which trigger the
s. 6 disclosure requirements are Agency X and the Department.


Section 23


In addition to the above, s. 23(b)(3) prohibits a state
employee from acting in a manner which would cause a reasonable
person to conclude that any person can improperly influence or
unduly enjoy his favor in the performance of his official duties,
or that he is likely to act or fail to act as a result of kinship,
rank, position or undue influence of any party or person. This is
the so-called "appearances" section of c. 268A. The appearance of
a conflict of interest can be dispelled by making a full written
disclosure to the state employee's appointing authority.

Page 375

This section has been cited in at least two recent Commission
cases which have involved a public employee who has had official
dealings with third parties while simultaneously having private
dealings with these same parties. See In re Keverian, 1990 SEC 460;
In re Garvey 1990 SEC 478. Specifically, In re Keverian 1990 SEC
460, 462 stated the reasons why s. 23(b)(3) is implicated whenever
a public employee has a private relationship with a third party:

In the Commission's view, the reason for this [s. 23(b)(3)]
prohibition is two fold: first, such conduct raises questions
about the public official's objectivity and impartiality. For
example, if lay-offs or cut-backs are necessary, an issue can
arise regarding who will be terminated, the subordinate or
vendor who has a significant private relationship with the
public employee, or another person who does not enjoy any such
relationship. At least the appearance of favoritism becomes
unavoidable. Second, such conduct has the potential for
serious abuse.

A s. 23(b)(3) disclosure is necessary whenever there exists a
potential for serious abuse of a public position by a public
employee. This potential for serious abuse need not involve any
financial interest on the part of the other party.

You maintain that you can no longer influence the settlement
of the litigation and would therefore argue that no "appearance" of
a conflict of interest will arise requiring your disclosure.
However, we find that, because the settlement has now been
challenged, and because you are required to continue having overall
responsibility for the matter, an appearance of a conflict of
interest arises if you were to contact an interested federal agency
for employment.

This conclusion is based upon the fact that it may appear that
you would somehow act in a manner designed to place your own
interests ahead of those of the Commonwealth, even if, in fact, no
such bias exists. For example, a situation might arise where the
federal government agency wishes to settle the litigation as to a
challenger, but the Commonwealth's interests require further
actions. It could appear that you might agree with the federal
agency's assessment in an effort to curry favor with the very
people with whom you are seeking employment. Again, this results
even if no financial interest is present. Consequently, a s.
23(b)(3) disclosure is necessary in order to dispel any appearance
of a conflict of interest.

You should also be aware that, while the s. 6 disclosure
requirements are triggered at the point of negotiations for a
specific job, see Commission Advisory No. 14, the point at which an
appearance of a conflict of interest arises for s. 23(b)(3)
purposes is at the moment that you contact, for employment, an
interested federal agency while you are responsible for any aspect
of the conduct of the litigation.

Please also be aware that s. 23 has application to you
whenever you must officially participate in matters involving
persons or organizations with whom you have recently terminated
negotiations. See Commission Advisory No. 14. In addition, s. 23(c)
prohibits the use or disclosure of confidential information to
benefit a private interest. Confidential information is any
information which cannot be obtained through a public records
request.

Finally, certain restrictions will apply to your activities
after you leave state service. Those restrictions are found in G.L.
c. 268A, s. 5. You should make an additional opinion request if you
seek guidance on s. 5.



CONCLUSION:



In summary, based upon the facts you have provided to this
Commission, a s. 6 disclosure is not necessary if you negotiate for
employment with a federal agency unless (i) that agency has a
financial interest in, or is actively pursuing, the litigation in
question, or (ii) the agency's hiring procedures are substantially
controlled by an agency described in (i) above. We find, for
example, that no s. 6 disclosure is necessary if you were to
negotiate for employment with a United States Attorney's Office
even though the Department has a financial interest in the
litigation unless the United States Attorney's Office in question
is actively involved in pursuing the litigation. However, a s. 6
disclosure is necessary if you begin negotiations with either
Agency X or the Department.

Further, a disclosure under s. 23(b)(3) would be required
whenever you contact, for employment, a federal agency which is a
party to, or has some other interest in, the litigation, regardless
of whether the agency has a financial interest. We find, for
example, that Agency X and the Department have such an interest.[6]

Page 376

On the other hand, neither s. 6 nor s. 23(b)(3) is implicated
where (i) the settlement agreement is finally approved by the
Courts and/or no legal challenges or appeals remain; or (ii) you
contact a federal agency which has no interest (financial or
otherwise) in the outcome of the lawsuit, including a United States
Attorney's Office which has had no involvement with the litigation.

-----------------------------------

[1] "Participate," participate in agency action or in a
particular matter personally and substantially as a state, county
or municipal employee, through approval, disapproval, decision,
recommendation, the rendering of advice, investigation or
otherwise. G.L. c. 268A, s. 1(j).

[2] "Particular matter," any judicial or other proceeding,
application, submission, request for a ruling or other
determination, contract, claim, controversy, charge, accusation,
arrest, decision, determination, finding, but excluding enactment
of general legislation by the general court and petitions of
cities, towns, counties and districts for special laws related to
their governmental organizations, powers, duties, finances and
property. G.L. c. 268A, s. 1(k).

[3] Although this Commission has held in previous opinions
that municipalities and municipal agencies are "business
organizations" within the meaning of s. 6, see, e. g.,
EC-COI-81-56; 81-62; 82-25; 85-67; 89-2; 90-4; 90-8
, other
governmental agencies apparently are not considered "business
organizations." For example, while municipalities are
established for the purpose of conducting business, other public entities (the
Commonwealth or its agencies, for example) appear not to be 90
established. See G.L. c. 40, s. 1, which establishes that cities
and towns are "bodies corporate." See also, Attorney General
Conflict of Interest Opinion No. 613
, February 5, 1974. Cf. The
Preamble to the Constitution of the Commonwealth of Massachusetts,
which establishes the Commonwealth as a "body politic [ ] formed by
a voluntary association of individuals: it is a social compact";
Attorney General Conflict of Interest Opinion No. 30, April 25,
1963 (state agencies are not business organizations within the
meaning of s. 6). However, because the present opinion does not
concern the meaning of a business organization, we need not reach
any conclusion on the meaning of any such distinctions.

[4] Nothing in this opinion should be construed as holding
that the various subsidiaries, divisions, or the like, of a
corporation should be treated as distinct and separate entities for
purposes of negotiating for prospective employment. For example,
the Commission would conclude that a state employee who is
participating in a matter involving one of General Motors' wholly
owned manufacturing subsidiaries must observe the s. 6 disclosure
and determination procedures if he is simultaneously negotiating
for employment with another division of the same company. This is
because the parent company is a person within the meaning of this
section. On the other hand, various governmental agencies can be
treated as separate and distinct entities within the definition of
an "organization." The Commission finds that the public interest is
not injured by establishing a distinction between private
corporations and agencies of the federal government for purpose of
the s. 6 employment negotiation context.

[5] Nothing in this opinion should be construed to find that
a governmental agency which has branches in different jurisdictions
can be further distinguished by locale or internal division. For
example, if Agency X is one agency which triggers the application
of s. 6 in your case, we would find that it makes no difference
whether your work distinctly involved only one branch or division
of Agency X, or its main office in Washington. The entire agency
would be considered a single organization for the purposes of s. 6.
Similarly, unless it is clear that the [name deleted] Division of
the Department is a distinct and separate agency from the
Department itself (that is, unless the Department does not have
substantial control over the hiring within the Division), the
entire Department will be treated as a single organization for
purposes of s. 6.

[6] To the extent that a s. 23 disclosure is necessary once
you contact the agency anyway, you may choose to file a s. 6 public
disclosure. The s. 6 disclosure would require your appointing
authority to provide you with written guidance as to your continued
participation in the litigation. A s. 23(b)(3) disclosure would not
require your appointing authority to provide that guidance.

Page 377

End Of Decision