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HomeMy WebLinkAbout07-608 BEICHNERMichael R. Hadley, Esquire One Drake Drive Oil City, PA 16301 Dear Mr. Hadley: ADVICE OF COUNSEL December 31, 2007 07 -608 This responds to your letter of November 19, 2007, by which you requested 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 a newly - elected county commissioner as to participating in matters related to a park owned and operated by a municipal authority, when the county commissioner and her husband are involved in a lawsuit against the municipal authority regarding the building of overnight accommodations in the county park. Facts: You have been authorized by Jan Beichner ( "Mrs. Beichner"), a newly - elected Commissioner for Venango County ( "County "), to seek advice from the State Ethics Commission on her behalf. You have submitted extensive facts, which may be fairly summarized as follows. You state that the Venango County Park and Natural Resources Authority ("VPNRA ") was formed by the County in 2003, mainly to own and operate the Two Mile Run County Park ( "Two Mile Run Park "). In December 2003, on one of the last days the exiting County Commissioners were in office, the County formally recorded a deed granting Two Mile Run Park to VPNRA. You state that this decision was opposed by many County residents, and that your law office was retained to represent a group of citizens who had originally granted land to Two Mile Run Park. You further state that this litigation is ongoing, but is on hold" as a cost saving measure to both sides. Mrs. Beichner and her husband, Ray Beichner "Mr. Beichner "), are owners and operators of overnight accommodations located in the County. On December 30, 2004, Mr. Beichner initiated litigation (the "litigation ") against VPNRA in the Venango County Court of Common Pleas ( "the Court "). You have submitted a copy of the Complaint by which Mr. Beichner initiated the litigation against VPNRA. The litigation was based upon allegations that VPNRA was planning to build a "Treehouse Village Project" that would offer overnight accommodations to the public at Two Mile Run Park. The Hadley, 07 -608 December 31, 2007 Page 2 Complaint alleged that VPNRA was violating the non - competition clause of the Municipality Authorities Act, 53 Pa.C.S. § 5607(b). You state that Mrs. Beichner had to be added to the litigation as a Plaintiff since she is the co -owner of the business that is the subject of the litigation. Following a trial before an advisory jury in December 2006, the Court issued an Adjudication and Order on May 25, 2007. You state that thereafter, both VPNRA and the Beichners appealed the Court's Adjudication and Order. You have submitted copies of the Court's Adjudication and Order of May 25, 2007, and of the "Concise Statement of Matters Complained of on Appeal" filed by the Beichners. You state that three new County Commissioners, including Mrs. Beichner, were elected in November 2007. At some point in 2007, all Members of the VPNRA Board of Directors resigned and were replaced. You further state that at a meeting of VPNRA in November 2007, one of the newly - elected Commissioners other than Mrs. Beichner announced that it was the intention of the Commissioners -elect that Two Mile Run Park be returned to the County by either February or March of 2008. You state that when Two Mile Run Park would be returned to the County, Mrs. Beichner, as a Commissioner, would be in a position to have input and vote upon the operation of said Park. You further state that upon the return of Two Mile Run Park to the County, the caption of the ongoing litigation might change to name the County as the defendant, since the County would be the successor -in- interest to VPNRA. You ask generally what duties and responsibilities under the Ethics Act, if any, Mrs. Beichner would violate by providing input and voting upon decisions made by the Commissioners regarding Two Mile Run Park. In particular, you pose the following specific questions: 1. Whether Mrs. Beichner would be required to abstain from any and all decisions involving Two Mile Run Park; 2. If Mrs. Beichner would be permitted to participate in decisions involving Two Mile Run Park, whether she would be permitted to participate in the specific decision of whether to rent the existing cottages at said Park; 3. If Mrs. Beichner would be required to abstain from decisions involving Two Mile Run Park, whether such abstentation requirement would continue only while the litigation is pending, and whether she would no longer be required to abstain if she and her husband would discontinue their appeal of the Court's Adjudication and Order; and 4. When Two Mile Run Park would be returned to the County, whether Mrs. Beichner would be permitted to vote to discontinue the cross - appeal that was originally filed by VPNRA, and whether she would be permitted to do so regardless of whether her appeal would be discontinued first. 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. Hadley, 07 -608 December 31, 2007 Page 3 Upon taking office as a County Commissioner, Mrs. Beichner would become a public official subject to the provisions of the Ethics Act. Sections 1103(a) and 1103(j) of the Ethics Act provide: § 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. Hadley, 07 -608 December 31, 2007 Page 4 "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. "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 above statutory definition of "conflict" or "conflict of interest" contains two exclusions, referred to herein as the "de minimis" exclusion and the "class /subclass exclusion." The de minimis exclusion precludes a finding of 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. 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" (in no way differently) than 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 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 Hadley, 07 -608 December 31, 2007 Page 5 provided the disclosure requirements noted above are followed. See, Pavlovic, Opinion 02 -005. In applying the above provisions of the Ethics Act to your inquiry, you are advised that generally, where a public official is involved in litigation, matters pertaining to or affecting the litigation or a third party litigant present a conflict of interest for the public official. See, DeLano, Opinion 88 -008; Golla, Opinion 88 -004; cf., McCullough, Advice 07 -534; Owalt, Advice 07 -524; Hiscott, Advices 06 -517 and 06- 517 -S. Even where litigation would not be a factor, a public official would have a conflict of interest under Section 1103(a) of the Ethics Act in matters that would financially impact the public official, a member of his immediate family, or a business with which he or a member of his immediate family is associated, unless the de minimis exclusion or the class /subclass exclusion would be applicable. In response to your first and second specific questions, you are advised as follows. For as long as either Mrs. Beichner or Mr. Beichner would be an adverse party in the litigation against VPNRA, or the County as a successor in interest to VPNRA, Mrs. Beichner would generally have a conflict of interest in all matters before the County involving VPNRA, Two Mile Run Park, or the litigation. See, DeLano, supra; Golla, supra. Mrs. Beichner's conflict of interest would exist, for example, with respect to decision(s) of whether to rent the existing cottages at Two Mile Run Park. In each instance of a conflict, Mrs. Beichner would be required to abstain fully from participation and to fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. In response to your third specific question, you are advised as follows. If the litigation would become final such that there would no longer be litigation between either of the Beichners and VPNRA or the County, that particular basis for a conflict of interest would no longer exist for Mrs. Beichner. However, Mrs. Beichner would still have a conflict of interest under Section 1103(a) of the Ethics Act in matters involving Two Mile Run Park that would financially impact Mrs. Beichner, a member of her immediate family such as her husband, or a business with which she or a member of her immediate family is associated, unless the de minimis exclusion or the class /subclass exclusion would be applicable. The submitted facts are insufficient to enable a conclusive determination as to whether the de minimis exclusion or the class /subclass exclusion would apply in the instant matter. The submitted facts do not reveal the amount of the financial impact that particular matter(s) would have upon the Beichners. The submitted facts do not indicate whether there are other County residents with overnight lodging accommodations who would be similarly situated to the Beichners so as to form an appropriate subclass, and if so, whether all members of the subclass would be affected `to the same degree" by particular matter(s) before the County Commissioners. Therefore, you are advised that Mrs. Beichner would have a conflict of interest in matters that would financially impact her, her husband, or a business with which she or her husband is associated, unless the de minimis exclusion or the class /subclass exclusion to the statutory definition of "conflict" or "conflict of interest" would be applicable. In each instance of a conflict of interest, Mrs. Beichner would be required to abstain from participation and fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. In response to your fourth specific inquiry, you are advised that regardless of whether Mrs. Beichner would first discontinue her appeal as to the litigation, Mrs. Beichner would have a conflict of interest as to participating or voting to discontinue the cross - appeal originally filed by VPNRA when Two Mile Run Park would be returned to the County. 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 Hadley, 07 -608 December 31, 2007 Page 6 interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the County Code. It is recommended that Mrs. Beichner obtain legal advice regarding case law as to bias, which is not addressed herein. Conclusion: Upon assuming office as a Commissioner for Venango County ( "County "), Jan Beichner "Mrs. Beichner ") would become a public official subject to the provisions of the Public Official and Employee Ethics Act (`Ethics Act "), 65 Pa.C.S. § 1101 et sec. Under the submitted facts that: (1) Mrs. Beichner and her husband, Ray Beichner ("Mr. Beichner "), are owners and operators of overnight accommodations located in the County; (2) Mrs. Beichner and Mr. Beichner are Plaintiffs in litigation (the "litigation ") filed against Venango County Park and Natural Resources Authority ( "VPNRA "); (3) the litigation is based upon allegations that VPNRA was planning on building overnight accomodations in "Two Mile Run County Park" (hereinafter, "Two Mile Run Park ") in violation of the non - competition clause of the Municipality Authorities Act, 53 Pa.C.S. § 5607(b); and (4) the County is expected to become a successor in interest to VPNRA, you are advised as follows. For as long as either Mrs. Beichner or Mr. Beichner would be an adverse party in the litigation against VPNRA, or the County as a successor in interest to VPNRA, Mrs. Beichner would generally have a conflict of interest in all matters before the County involving VPNRA, Two Mile Run Park, or the litigation. Mrs. Beichner's conflict of interest would exist, for example, with respect to decision(s) of whether to rent the existing cottages at Two Mile Run Park. If the litigation would become final such that there would no longer be litigation between either of the Beichners and VPNRA or the County, that particular basis for a conflict of interest would no longer exist for Mrs. Beichner. However, Mrs. Beichner would still have a conflict of interest under Section 1103(a) of the Ethics Act in matters involving Two Mile Run Park that would financially impact Mrs. Beichner, a member of her immediate family such as her husband, or a business with which she or a member of her immediate family is associated, unless the "de minimis exclusion" or the "class /subclass exclusion" to the definition of "conflict" or "conflict of interest," 65 Pa.C.S. § 1102, would be applicable. Regardless of whether Mrs. Beichner would first discontinue her appeal as to the litigation, Mrs. Beichner would have a conflict of interest as to participating or voting to discontinue the cross - appeal originally filed by VPNRA when Two Mile Run Park would be returned to the County. 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 Hadley, 07 -608 December 31, 2007 Page 7 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