Federal authorities arrested a second high-ranking member of Mayor Martin J. Walsh’s administration on Wednesday for allegedly forcing a popular music festival to hire unneeded union stagehands to work on a concert on City Hall Plaza.

A grand jury indicted Timothy Sullivan, the city’s acting director of intergovernmental relations, on charges of conspiracy and extortion, according to US Attorney Carmen Ortiz’s office.

A seven-page indictment alleges that Sullivan colluded with the city’s tourism director, Kenneth Brissette, to withhold city permits from the Boston Calling music festival until it hired stagehands from the International Alliance of Theatrical Stage Employees, Local 11. Brissette was charged on a similar extortion count in May, and authorities added a new count against him in Wednesday’s indictment.

The indictment of a second department head at City Hall brings more unwanted scrutiny to Walsh, who took office on the strength of his deep ties to organized labor and is personally close to the 36-year-old Sullivan, who, like Walsh, grew up with the labor movement.

Walsh said the indictment of his aides is “deeply concerning’’ to him. He faced questions about the indictment from a throng of reporters at his first public appearance Wednesday morning, and he was also greeted by about two dozen protesters seeking his attention about the pending closure of a nursing home and a separate group that opposes the construction of a hotel in Boston.

“If these allegations are true, [it’s] simply really disheartening,’’ Walsh said, adding, “We don’t encourage people to use union labor. There’s a process in place that we have 800 events a year in the City of Boston and the topic of union labor should never come up, and to my knowledge, it hasn’t.’’

Asked whether he has testified before the federal grand jury investigating the alleged extortion by his aides on behalf of labor unions, Walsh declined to comment, as he has done throughout the probe.

“Again, I have no comment on that because there is an ongoing investigation as you can clearly see. I am going to continue to see what happens with this investigation,’’ the mayor said. “I have offered to work very cooperatively with the US attorney’s office . . . to get to the bottom of this.’’

Sullivan appeared in US District Court Wednesday afternoon, dressed in jeans and a blue golf-style shirt. He was released on a $25,000 unsecured bond and directed not to discuss the case with witnesses or victims. His arraignment was set for July 12.

William Cintolo, an attorney for Sullivan, lashed out at the indictment after the hearing, saying prosecutors ignored Monday’s US Supreme Court decision that sought to draw a line between corruption and a public employee’s legitimate work on behalf of constituents.

All Sullivan did was set up a meeting between constituents, Cintolo said. “There is no allegation that he received any money, that he received any gifts, that he received any dinner or anything of that nature,’’ he said. “The allegation in this case is that a meeting was set up, some people discussed what should be done, whether some union members should be hired.’’ Cintolo said “one [of] the victims in this case will testify that they do not believe they were threatened or coerced or [had] pressure put on them.

“I think the US attorney’s office believes they could run the city of Boston, meaning they’ll decide what’s good government, what’s not good government,’’ he said. “That’s exactly what federalism prevents; that’s what our constitutional fathers . . . wanted to prevent.’’

Sullivan and Brissette are on paid administrative leave for the duration of the criminal case. The city is not paying their legal bills, according to the mayor’s office. In Sullivan’s absence, Katie King will become interim director of intergovernmental affairs, Walsh’s office said. She had served as the mayor’s director of state relations, according to her Linked­In profile.

In a prepared statement, Walsh said he has called for an independent ethics training program for city department heads and has enlisted an outside panel of experts to look into how special events have been managed in the city.

“I will not prejudge anyone’s guilt or innocence,’’ Walsh said. “Nor will I tolerate anything less than the highest ethical standards.’’

The new ethics training, which Walsh announced in May, is scheduled for July 11, the mayor’s office said. Two months have passed since Walsh announced the review of the special events office, and the panel of experts has met once. Next month, the panel plans to meet with Walsh, according to his office.

Brissette, 52, was indicted on a single count last month but now faces a total of two charges due to the superseding indictment made public Wednesday, prosecutors said. Brissette pleaded not guilty last month to extortion. Prosecutors added a conspiracy charge.

Federal prosecutors have not publicly identified the music festival at the center of the City Hall scandal, but the Globe has reported it is Boston Calling, a biannual event that has been held on City Hall Plaza since 2013. The festival has announced it is moving to Allston next year.

Sullivan was arrested without incident at his Dorchester home by FBI agents early Wednesday, said Kristen M. Setera, spokeswoman for the FBI’s Boston office.

The indictment, signed on Tuesday and unsealed Wednesday morning, alleges that Brissette and Sullivan together and individually repeatedly demanded during the summer of 2014 that the festival hire Local 11 workers for a September show.

The festival initially responded that it already had a contract with a nonunion company and had hired all its labor, the indictment states.

On Aug. 20, 2014, an IATSE Local 11 official e-mailed Sullivan a copy of a proposed contract for Boston Calling to hire union members.

“Attached you will find a draft agreement for Boston Calling for your review. Please pass it along to the production team,’’ wrote Colleen A. Glynn, business manager for Local 11. “I’m confident we can get a deal for a dozen or so stagehands especially with Mayor Walsh’s backing.’’

The indictment cites Glynn’s e-mail, and says that on Sept. 2, 2014, three days before the festival was due to start, Brissette and Sullivan requested a meeting. The two city officials allegedly again told organizers that the festival would need to hire Local 11 and insisted half of the labor force be union.

“Later that afternoon, [Boston Calling] entered into a contract with Local 11 for eight additional laborers and one foreman as a result of the demands made by Brissette and Sullivan,’’ the indictment states. “Shortly thereafter, the City of Boston issued the necessary permits.’’

Sullivan is charged with conspiracy to extort a company and extortion of that company, according to federal prosecutors. Each charge carries a maximum penalty of 20 years in prison.

Sullivan joined the Walsh administration in February 2014, a month after Walsh took office.

Before joining City Hall, Sullivan worked a decade for the AFL-CIO, becoming legislative and communications director. He was for seven years a registered lobbyist for the umbrella organization that represents about 400,000 union workers across the state. When he was just 31, Sullivan launched a campaign to become president of Mass AFL-CIO, though he eventually left the race to back another candidate, then-state Senator Steven A. Tolman, who was elected to the labor post.

Sullivan’s father, Gary, served as president of the Utility Workers Union of America, Local 369.

The original Brissette indictment in May cited another unnamed city official who also allegedly pressured Boston Calling, and attention immediately focused on Sullivan.

E-mails released by the city under a public records request linked Sullivan to private discussions with Boston Calling in the summer of 2014.

Brissette on June 27, 2014, wrote to Sullivan to say he would be hosting a meeting with IATSE on July 8.

“Thank you,’’ Sullivan replied.

The original indictment did not identify all the participants of the Sept. 2 meeting, but the Globe has reported that Brian Appel, a Boston Calling cofounder, e-mailed Brissette and Sullivan the afternoon of Sept. 2 saying, “Thanks for the time today.’’

“I received a message from Colleen at IATSE already,’’ Appel continued, apparently referring to Glynn, of Local 11. “Will wait to hear back from you regarding our discussion before calling her back.’’

Milton J. Valencia of the Globe staff contributed to this report. Mark Arsenault can be reached at mark.arsenault@globe.com. Follow him on Twitter @bostonglobemark. John R. Ellement can be reached at ellement@globe.com. Follow him on Twitter @JREbosglobe. Andrew Ryan can be reached at acryan@globe.com Follow him on Twitter @globeandrewryan.