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HomeMy WebLinkAbout09-1001 BochettoGeorge Bochetto, Esquire Bochetto & Lentz 1524 Locust Street Philadelphia, PA 19102 Dear Mr. Bochetto: I. ISSUE: OPINION OF THE COMMISSION Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Paul M. Henry Raquel K. Bergen Nicholas A. Colafella DATE DECIDED: 3/12/09 DATE MAILED: 3/27/09 09 -1001 This Opinion is issued in response to your advisory request letters dated February 6, 2009, and February 17, 2009. Whether, pursuant to Pennsylvania's lobbying disclosure law ( "Lobbying Disclosure Law "), 65 Pa.C.S. § 13A01 et seq., the prospective involvement of the firm "Municipal Brokerage Assistance, Inc." and its sole shareholder, Dennis E. (Harvey) Thiemann, in the pursuit of "derivatives opportunities," including "swaps" and other non - securities related derivative instruments, as to Commonwealth agencies or authorities would require registration /reporting under the Lobbying Disclosure Law. II. FACTUAL BASIS FOR DETERMINATION: As Counsel for the firm "Municipal Brokerage Assistance, Inc." ( "MBA ") and its sole shareholder, Dennis E. (Harvey) Thiemann ( "Mr. Thiemann "), you seek an advisory Opinion from this Commission regarding the registration and reporting requirements of the Lobbying Disclosure Law. You have submitted facts that may be fairly summarized as follows. In addition to being the sole shareholder of MBA, Mr. Thiemann is also MBA's sole employee. MBA currently has a contract with DEPFA First Albany Securities LLC (DFAS) to pursue derivatives opportunities. You have submitted a copy of MBA's contract with DFAS, which document is incorporated herein by reference. You have also submitted a list of definitions of various terms related to the types of transactions forming the basis for your inquiry. For purposes of illustration, we note that an "interest rate swap" is defined as "[a] contractual agreement between two parties who agree to exchange certain cash flows Bochetto, 09 -1001 March 27, 2009 Page 2 at specified intervals based during the life agreement," and a "basis swap" is "[a] floating - to- floating rate swap in which one variable rate index is swapped for another; commonly used to modify basis risk." In reviewing the submitted documents, the transactions at issue are clearly financial transactions based upon contractual agreements. Mr. Thiemann's role in relation to the contract between MBA and DFAS is to either forward to DFAS client identification information for DFAS to make contacts, or to contact potential clients identified by DFAS. All financial information is compiled by DFAS. All presentations are made by DFAS personnel. Mr. Thiemann may be present at such presentations. All costs including, but not limited to, costs associated with travel, room rental, food or other refreshments served at such meetings, and preparation of literature used in proposals are paid fully by DFAS. You state that although MBA's contract with DFAS permits Mr. Thiemann to request reimbursement for his personal expenses, to date Mr. Thiemann has neither requested nor received any expense reimbursement from DFAS. You state that to date, all payments to MBA from DFAS have been for services relating to clients such as school districts, municipalities, and municipal authorities. You state that no payments from DFAS to MBA to date have been for services relating to the Commonwealth of Pennsylvania or any of its authorities. Prospectively, the potential clients that MBA intends to suggest to DFAS may include state -level agencies /governmental bodies. The question that you have posed is whether the prospective involvement of MBA and Mr. Thiemann in the pursuit of derivatives opportunities, including swaps and other non - securities related derivative instruments, as to Commonwealth agencies or authorities would require registration /reporting under the Lobbying Disclosure Law. By letter dated February 20, 2009, you were notified of the date, time and location of the public meeting at which your request would be considered. At the public meeting on March 12, 2009, Mr. Thiemann appeared and offered to answer any questions from the Commission. III. DISCUSSION: It is initially noted that pursuant to Section 13A08(a) of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A08(a), in conjunction with Sections 1107(10) and 1107(11) of the Public Official and Employee Ethics Act ( "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, this 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. In the instant matter, the answer to the question of whether MBA or Mr. Thiemann would be required to register or report under the Lobbying Disclosure Law hinges upon a determination of whether their activities in the pursuit of derivatives opportunities would include "lobbying" as that term is defined by the Lobbying Disclosure Law. The Lobbying Disclosure Law defines the term "lobbying" as follows: § 13A03. Definitions. Bochetto, 09 -1001 March 27, 2009 Page 3 "Lobbying." An effort to influence legislative action or administrative action in this Commonwealth. The term includes: (1) direct or indirect communication; (2) office expenses; and (3) providing any gift, hospitality, transportation or lodging to a State official or employee for the purpose of advancing the interest of the lobbyist or principal. 65 Pa.C.S. § 13A03. The following related terms are defined in the Lobbying Disclosure Law as follows: § 13A03. Definitions. "Administrative action." Any of the following: (1) An agency's: (5) (i) proposal, consideration, promulgation or rescission of a regulation; (ii) development or modification of a statement of policy; (iii) approval or rejection of a regulation; or (iv) procurement of supplies, services and construction under 62 Pa.C.S. (relating to procurement). (2) The review, revision, approval or disapproval of a regulation under the act of June 25, 1982 (P.L.633, No.181), known as the Regulatory Review Act. (3) The Governor's approval or veto of legislation. (4) The nomination or appointment of an individual as an officer or employee of the Commonwealth. The proposal, consideration, promulgation or rescission of an executive order. "Legislative action." An action taken by a State official or employee involving the preparation, research, drafting, introduction, consideration, modification, amendment, approval, passage, enactment, tabling, postponement, defeat or rejection of: (1) legislation; (2) legislative motions; Bochetto, 09 -1001 March 27, 2009 Page 4 (3) a veto by the Governor; or (4) confirmation of appointments by the Governor or appointments to public boards or commissions by a member of the General Assembly. "Lobbying Firm." An entity that engages in lobbying for economic consideration on behalf of a principal other than the entity itself. "Lobbyist." Any individual, association, corporation, partnership, business trust or other entity that engages in lobbying on behalf of a principal for economic consideration. The term includes an attorney at law while engaged in lobbying. "Principal." An individual, association, corporation, partnership, business trust or other entity: (1) on whose behalf a lobbying firm or lobbyist engages in lobbying; or (2) that engages in lobbying on the principal's own behalf. 65 Pa.C.S. § 13A03. The proposed activities of MBA or Mr. Thiemann would only constitute lobbying if they would involve effort(s) to influence "legislative action" or "administrative action" as those terms are defined by the Lobbying Disclosure Law. Based upon the submitted facts, it would appear unlikely that the proposed activities would involve effort(s) to influence legislative action. As for "administrative action," the definition of that term includes an agency's procurement of "construction," "services," and "supplies" under the Commonwealth Procurement Code, 62 Pa.C.S. § 101 et seq. (65 Pa.C.S. § 13A03, definition of "administrative action" (1)(iv)). The Commonwealth Procurement Code defines the terms "construction," "services," and "supplies" as follows: § 103. Definitions "Construction." The process of building, altering, repairing, improving or demolishing any public structure or building or other public improvements of any kind to any public real property. The term does not include the routine operation or maintenance of existing structures, buildings or real property. "Services." The furnishing of labor, time or effort by a contractor not involving the delivery of a specific end product other than drawings, specifications or reports which are merely incidental to the required performance. The term shall include the routine operation or maintenance of existing structures, buildings or real property. The term does not include employment agreements or collective bargaining agreements. The term includes utility services and those services formerly provided by public utilities such as electrical, telephone, water and sewage service. Bochetto, 09 -1001 March 27, 2009 Page 5 "Supplies." Any property, including, but not limited to, equipment, materials, printing, insurance and leases of and installment purchases of tangible or intangible personal property. The term does not include real property, leases of real property or alcoholic beverages or liquor purchased for resale by the Pennsylvania Liquor Control Board. 62 Pa.C.S. § 103. It is clear that the financial transactions contemplated by your advisory request would not constitute "construction" as that term is defined by the Commonwealth Procurement Code. However, it is not clear from the face of the above definitions whether the financial transactions in question would be considered "services" or "supplies" under the Commonwealth Procurement Code. There does not appear to be any case law addressing that issue. This Commission does not have the statutory jurisdiction to interpret the Commonwealth Procurement Code. Therefore, this advisory Opinion must necessarily be limited to providing the following general guidance. The involvement of MBA and Mr. Thiemann in the pursuit of "derivatives opportunities," including "swaps" and other non - securities related derivative instruments, as to Commonwealth agencies or authorities would necessitate registration and reporting under the Lobbying Disclosure Law only if: (1) such activities would include effort(s) to influence "legislative action" or "administrative action" as those terms are defined by the Lobbying Disclosure Law; and (2) no exemptions under Section 13A06 of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A06, would be applicable. The request for an advisory has only been addressed under the Lobbying Disclosure Law and, derivatively, the Ethics Act to the extent applicable. IV. CONCLUSION: The involvement of the firm "Municipal Brokerage Assistance, Inc." and its sole shareholder, Dennis E. (Harvey) Thiemann, in the pursuit of "derivatives opportunities," including "swaps" and other non - securities related derivative instruments, as to Commonwealth agencies or authorities would necessitate registration and reporting under the Lobbying Disclosure Law only if: (1) such activities would include effort(s) to influence "legislative action" or "administrative action" as those terms are defined by the Lobbying Disclosure Law; and (2) no exemptions under Section 13A06 of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A06, would be applicable. Pursuant to Section 13A08(a) of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A08(a), a requester who truthfully discloses all material facts in a request for an advisory and who acts in good faith based upon a written Opinion of this Commission issued to the requester shall not be held liable for a violation of the Lobbying Disclosure Law. The protection afforded for reliance upon this Opinion will remain in effect until such time as any regulation, statutory enactment, or ruling precludes further reliance upon this Opinion. This Opinion is a public record and will be made available as such. Finally, a party may request this Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The party requesting reconsideration must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with Bochetto, 09 -1001 March 27, 2009 Page 6 51 Pa. Code § 21.29(b). By the Commission, Louis W. Fryman Chair