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HomeMy WebLinkAbout08-544 NanovicThomas S. Nanovic, Esquire Nanovic Law Offices 57 Broadway P.O. Box 359 Jim Thorpe, PA 18229 -0359 Dear Mr. Nanovic: ADVICE OF COUNSEL April 30, 2008 08 -544 This responds to your letter of March 24, 2008, and your faxed transmission of March 27, 2008, by which you requested advice from the Pennsylvania 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 township supervisor, whose son -in -law owns five percent (5 %) of the shares of a corporation, with regard to: (1) voting to award to the aforesaid corporation a contract for the supply of materials or a contract for the supply of equipment and labor to repair and maintain the township's roads; or (2) serving as the township roadmaster or assistant roadmaster if the township would award such contract(s) to the aforesaid corporation. Facts: As Solicitor for Penn Forest Township ( "Township "), located in Carbon ounty, Pennsylvania, you have been authorized by Township Supervisor Warren R. Reiner ( "Reiner") to request an advisory from the Pennsylvania State Ethics Commission on his behalf. You have submitted facts that may be fairly summarized as follows. The Township is a second class township governed by a five - member Board of Supervisors ( "Board'). You state that the Township does not have employees or equipment to repair and maintain the Township's roads and related facilities such as culverts, swales and the like. Instead, each year the Township awards a contract for the supply of materials to be used on the Township's roads and another contract for the supply of equipment and labor to repair and maintain the Township's roads. You state that since each contract is publicly bid and is awarded to the lowest responsible bidder, it is possible for both contracts to be awarded to the same contractor. Nanovic /Reiner, 08 -544 April 30, 2008 Page 2 For minor repairs or maintenance on Township roads costing $4,000 or less, the Township roadmaster is authorized by the Board to select and schedule the work to be done. The roadmaster reports such work to the Supervisors either before or after the work is completed. The roadmaster is not authorized to use more materials or equipment and labor than was contracted for by the Township. You state that in the absence of the roadmaster, the assistant roadmaster performs the roadmaster's duties. For repairs or maintenance at a single location that would cost more than $4,000, the Township either obtains quotes (for amounts from $4,001 to $10,000) or awards contracts through the public bid process (for amounts exceeding $10,000). You state that Reiner's son -in -law owns five percent (5%) of the shares of a corporation ( "the Corporation ") that bids to supply the materials and /or equipment and labor for the maintenance and repair of the Township roads. You note that Reiner's daughter and son -in -law do not reside in Reiner's household. You state that Reiner would like to serve as the Township roadmaster or assistant roadmaster. Based upon the above submitted facts, you pose the following specific questions: 1. Whether Reiner would be permitted to serve as the Township roadmaster or assistant roadmaster if the Township would award to the Corporation the contract to supply materials or the contract to supply equipment and labor to maintain and repair the Township roads; and 2. Whether Reiner would be permitted to vote to award to the Corporation the contract to supply materials or the contract to supply equipment and labor to maintain and repair the Township roads if the Corporation would be the lowest responsible bidder through the public bid process. 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 a Township Supervisor, Reiner is 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 Nanovic /Reiner, 08 -544 April 30, 2008 Page 3 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 related to Section 1103(a) 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. "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. Nanovic /Reiner, 08 -544 April 30, 2008 Page 4 65 Pa.C.S. § 1103(f). "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5 % of the assets of the economic interest in indebtedness. 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, a 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. See, 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. Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows: § 1103. Restricted activities (f) Contract. - -No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. The term "contract" is defined in the Ethics Act as follows: § 1102. Definitions "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a Nanovic /Reiner, 08 -544 April 30, 2008 Page 5 political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. 65 Pa. C. S. § 1102. Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Pursuant to Section 1103(f), an "open and public process" includes: (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered; and (4) public disclosure of the contract awarded and offered and accepted. When Section 1103(f) of the Ethics Act is applicable, it also requires that the public official /public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. In applying the above provisions of the Ethics Act to your specific inquiries, you are advised as follows. Subject to the statutory exceptions to the definition of "conflict" or "conflict of interest," pursuant to Section 1103(a) of the Ethics Act, Reiner would have a conflict of interest in matters before him in his capacity as a Township Supervisor that would financially impact him, a member of his immediate family, or a business with which Reiner or a member of his immediate family is associated. Reiner's son -in -law is not a member of his "immediate family" as that term is defined in the Ethics Act. Therefore, the submitted fact that Reiner's son -in -law owns stock in the Corporation in and of itself would not form the basis of a conflict of interest for Reiner under the Ethics Act in Township matters pertaining to Reiner's son -in -law or the Corporation. Accordingly, you are advised that absent some basis for a conflict of interest such as a private pecuniary benefit to Reiner, a member of his immediate family, or a business with which Reiner or a member of his immediate family is associated, Section 1103(a) of the Ethics Act would not restrict Reiner from voting to award to the Corporation a contract to supply materials or a contract to supply equipment and labor for maintenance and repair of the Township roads. Subject to the condition that the Corporation is not a business with which Reiner, his spouse, or his child is associated, Section 1103(f) of the Ethics Act would not restrict Reiner from having supervisory or overall responsibility as to the implementation or administration of any such contract(s) between the Township and the Corporation. Nanovic /Reiner, 08 -544 April 30, 2008 Page 6 You are further advised that Section 1103(a) of the Ethics Act would not prohibit Reiner from serving as the Township roadmaster or assistant roadmaster if the Township would award to the Corporation the contract to supply materials or the contract to supply equipment and labor for maintenance and repair of the Township roads. The ropriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of the Second Class Township Code. Conclusion: As a Supervisor for Penn Forest Township ( "Township "), located in Carbon County, Pennsylvania, Warren R. Reiner ("Reiner") 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. Subject to the statutory exceptions to the definition of "conflict" or "conflict of interest," pursuant to Section 1103(a) of the Ethics Act, Reiner would have a conflict of interest in matters before him in his capacity as a Township Supervisor that would financially impact him, a member of his immediate family, or a business with which Reiner or a member of his immediate family is associated. Reiner's son -in -law is not a member of his "immediate family" as that term is defined in the Ethics Act. Therefore, the submitted fact that Reiner's son -in -law owns stock in a corporation ( "the Corporation ") in and of itself would not form the basis of a conflict of interest for Reiner under the Ethics Act in Township matters pertaining to Reiner's son -in -law or the Corporation. Absent some basis for a conflict of interest such as a private pecuniary benefit to Reiner, a member of his immediate family, or a business with which Reiner or a member of his immediate family is associated, Section 1103(a) of the Ethics Act would not restrict Reiner from voting to award to the Corporation a contract to supply materials or a contract to supply equipment and labor for maintenance and repair of the Township roads. Subject to the condition that the Corporation is not a business with which Reiner, his spouse, or his child is associated, Section 1103(f) of the Ethics Act would not restrict Reiner from having supervisory or overall responsibility as to the implementation or administration of any such contract(s) between the Township and the Corporation. Section 1103(a) of the Ethics Act would not prohibit Reiner from serving as the Township roadmaster or assistant roadmaster if the Township would award to the Corporation the contract to supply materials or the contract to supply equipment and labor for maintenance and repair of the Township roads. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, 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 Nanovic /Reiner, 08 -544 April 30, 2008 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