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HomeMy WebLinkAbout07-594 ConfidentialADVICE OF COUNSEL November 9, 2007 Sections 1103(a) and 1103(j) of the Ethics Act provide: 07 -591 This responds to your letter dated September 24, 2007, by which you requested confidential advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., would present any prohibitions or restrictions upon an A, whose [immediate family member] owns a B in the [political subdivision], with regard to voting on a proposed B tax for the [political subdivision]. Facts: You have been authorized by Individual C to request confidential advice from the State Ethics Commission on his behalf as to the following. Individual C is a sitting A for Political Subdivision D. Individual C's adult [immediate family member], Individual E, is the owner of G, a B located in Political Subdivision D. You ask whether Individual C would have a conflict of interest with regard to voting on a proposed B tax as authorized by the following provisions of Code H, where G would be subject to such tax: [quote and cite]. You state that the proposed B tax would affect all of Political Subdivision D. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. As an A for Political Subdivision D, Individual C is a public official as that term is defined in the Ethics Act, and hence he is subject to the provisions of the Ethics Act. Confidential Advice, 07 -591 November 8, 2007 Page 2 § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. (j) Voting conflict. - -Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa. C. S. §§ 1103(a), (j). The following terms are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. Confidential Advice, 07 -591 November 8, 2007 Page 3 "Immediate family." A parent, spouse, child, brother or sister. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. 65 Pa. C. S. § 1102. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. The use of authority of office is not limited merely to voting, but extends to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In each instance of a voting conflict, Section 1103(j) of the Ethics Act requires the public official /public employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes. In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Pavlovic, Opinion 02 -005. In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. Individual C's [immediate family member], Individual E, is Individual C's "immediate family member" as that term is defined in the Ethics Act. G is a business with which Individual C's [immediate family member] is associated in her capacity as G's owner. Pursuant to Section 1103(a) of the Ethics Act, Individual C would generally have a conflict of interest in matters that would financially impact him, his [immediate family member], or G. In each instance of a conflict of interest, Individual C would be required to abstain fully from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The submitted facts are insufficient to establish whether the proposed B tax would financially impact Individual C's [immediate family member] or G. Therefore, this advisory must be limited to providing the following general guidance. To the extent the proposed B tax would financially impact Individual C's [immediate family member] or G, Individual C would have a conflict of interest in matters pertaining to said proposed tax unless one of the exclusions to the statutory definition of "conflict" or "conflict of interest" would be applicable. The statutory definition of "conflict" or "conflict of interest" includes two exclusions, referred to herein as the "de minimis" exclusion and the "class /subclass exclusion." Confidential Advice, 07 -591 November 8, 2007 Page 4 The de minimis exclusion precludes a finding of a conflict of interest as to an action having a de minimis (insignificant) economic impact. Thus, when a matter that would otherwise constitute a conflict of interest under the Ethics Act would have an insignificant economic impact, a conflict would not exist and Section 1103(a) of the Ethics Act would not be implicated. See, Kolb, Order 1322; Schweinsburq, Order 900. The Commission has determined the applicability of the de minimis exclusion on a case -by -case basis, considering all relevant circumstances. In the past, the Commission has found amounts ranging from $2 to approximately $500 to be de minimis. See, Bixler v. State Ethics Commission, 847 A.2d 785 (Pa. Cmwlth. 2004). However, you are cautioned that an economic impact may aggregate over time, rather than be limited to a particular increment of time such as a month or year. Confidential Opinion, 05 -001. In the instant matter, based upon the submitted facts, a conclusive determination cannot be made as to whether the de minimis exclusion would apply. In order for the class /subclass exclusion to apply, two criteria must be met: (1) the affected public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be a member of a class consisting of the general public or a true subclass consisting of more than one member; and (2) the public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be affected "to the same degree" as the other members of the class /subclass. 65 Pa.C.S. § 1102; see, Kablack, Opinion 02- 003; Graham, Opinion 95 -002 (citing Van Rensler, Opinion 90 -017); Rubenstein, Opinion 01 -007. The first criterion of the exclusion is satisfied where the members of the proposed subclass are similarly situated as the result of relevant shared characteristics. The second criterion of the exclusion is satisfied where the individual /business in question and the other members of the class /subclass are reasonably affected to the same degree by the proposed action. Kablack, supra. In the instant matter, based upon the submitted facts, a conclusive determination cannot be made as to whether G would be a member of an appropriate subclass or whether G would be affected by the imposition of the proposed B tax to the same degree" as other members of such a subclass. Accordingly, you are generally advised that in order for the class /subclass exclusion to apply, there would have to be at least one other B in Political Subdivision D: (1) that would be similarly situated to G as the result of relevant shared characteristics, so as to qualify with G as a member of a subclass; and (2) that would be reasonably affected to the same degree as G would be affected by the As' action as to such matter. As noted above, if Individual C would have a conflict of interest in matters pertaining to the aforesaid proposed tax, Individual C would be required to abstain fully from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Conclusion: As an A for Political Subdivision D, Individual C is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Individual C's [immediate family member], Individual E, is a member of Individual C's "immediate family" as that term is defined in the Ethics Act. G is a business with which Individual C's [immediate family member] is associated in her capacity as G's owner. Pursuant to Section 1103(a) of the Ethics Act, Individual C would generally have a conflict of interest in matters that would financially impact him, his [immediate family member], or G. To the extent that a proposed B tax for Political Subdivision D would financially impact Individual C's [immediate family member] or G, Confidential Advice, 07 -591 November 8, 2007 Page 5 Individual C would have a conflict of interest in matters pertaining to such proposed tax unless one of the exclusions to the statutory definition of "conflict' or "conflict of interest" (the "de minimis" exclusion or the "class /subclass exclusion ") would be applicable. Under the submitted facts, it cannot be conclusively determined whether the de minimis exclusion or the class /subclass exclusion would be applicable. In each instance of a conflict of interest, Individual C would be required to abstain fully from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Robin M. Hittie Chief Counsel