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HomeMy WebLinkAbout10-500 Confidential ADVICE OF COUNSEL January 4, 2010 10-500 This responds to your letter dated November 12, 2009, by which you requested a confidential advisory from the Pennsylvania State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. §1101 et seq., would present any prohibitions or restrictions upon a member of a [political subdivision] [governmental body] with regard to contracting with the [political subdivision] to provide services as the A for a [political subdivision] project to [perform certain activities]. Facts: You have been authorized by Individual B to request a confidential advisory from the Pennsylvania State Ethics Commission on his behalf. You have submitted facts, the material portion of which may be fairly summarized as follows. Individual B was recently elected as a Member of the C of Political Subdivision D, located in E County, Pennsylvania. Individual B will take office in January 2010. You state that for the last several months, Individual B, in his private capacity, has been negotiating with Political Subdivision D to provide a consulting service to Political Subdivision D. You have submitted a copy of a proposed [title of proposed contract] (hereinafter referred to as “the Proposed Contract”), to which Individual B, Political Subdivision D, and Political Subdivision F would be parties. It is noted that under the Proposed Contract, Individual B would provide services as the A for a Political Subdivision D project to [perform certain activities]. It is further noted that the value of the Proposed Contract would exceed $500. You state that the Proposed Contract has not yet been approved by the C, and it is not yet clear whether the C will act on the Proposed Contract prior to the date on which Individual B will take office as a C Member. You further state that Individual B is already aware that he cannot participate as a Member of the C in any process involving the awarding of the Proposed Contract. Based upon the above submitted facts, you pose the following questions: 1. Whether Individual B, while serving as a Member of the C, may, in his private capacity, enter into a contract under which he would provide consulting services to Political Subdivision D; Confidential Advice, 10-500 January 4, 2010 Page 2 2. Whether Section 1103(f) of the Ethics Act would prohibit Individual B from providing services to Political Subdivision D under the Proposed Contract while serving as a Member of the C; and 3. Whether there are any other issues or concerns involving potential violation of the Ethics Act that Individual B and Political Subdivision D should address. 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. Upon taking office as a C Member, Individual B would become a “public official” subject to the provisions of the Ethics Act. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1. 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 related to Section 1103(a) are defined in the Ethics Act as follows: Confidential Advice, 10-500 January 4, 2010 Page 3 § 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. "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. "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. ursuant to Section 1103(a) of the Ethics Act, a public official/public employee is P 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. In each instance of a conflict of interest, the public official/public employee would be required to abstain fully from participation. The abstention requirement would not be limited merely to voting, but would extend 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. Subject to certain statutory exceptions, 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. Confidential Advice, 10-500 January 4, 2010 Page 4 Sections 1103(b) and 1103(c) of the Ethics Act, pertaining to improper influence, provide in part that no person shall offer or give to a public official/public employee anything of monetary value and no public official/public employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official/public employee would be influenced thereby. 65 Pa.C.S. §§ 1103(b), (c). Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the questions presented. 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. 65 Pa.C.S. § 1103(f). 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 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 Confidential Advice, 10-500 January 4, 2010 Page 5 “open and public process” be observed as to the contract with the governmental body. Section 1103(f) of the Ethics Act also provides 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 provisions of the Ethics Act to the questions you have posed, it is noted that Section 1103(a) of the Ethics Act does not prohibit public officials/public employees from having outside business activities or employment; however, the public official/public employee may not use the authority of his public position--or confidential information obtained by being in that position--for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89-011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official/public employee is associated in his private capacity or private client(s). Miller, Opinion 89-024; Kannebecker, Opinion 92-010. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89-002. In each instance of a conflict of interest, the public official/public employee would be required to abstain from participation, and in the instance of a voting conflict, to abstain and fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Your specific questions are addressed as follows. In response to your first specific question, you are advised that the Ethics Act itself would not prohibit Individual B, in his private capacity, from entering into a contract, including the Proposed Contract, to provide consulting services to Political Subdivision D. However, in his public capacity as a Member of the C, Individual B would have a conflict of interest under Section 1103(a) of the Ethics Act in matters pertaining to actual or anticipated contract(s) between Political Subdivision D and Individual B or any business(es) with which he is associated. In each instance of a conflict of interest, Individual B would be required to abstain fully from participation. The abstention requirement would extend beyond voting to include any use of authority of office. In each instance of a voting conflict, Individual B would be required to abstain and to fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. If, while serving as a C Member, Individual B would enter into a contract with Political Subdivision D, or would subcontract with a person awarded a contract with Political Subdivision D, and the value of the contract/subcontract would be $500 or more, the restrictions of Section 1103(f) would be applicable. In response to your second specific question, you are advised that Section 1103(f) of the Ethics Act would not prohibit Individual B, in his private capacity, from providing services to Political Subdivision D under the Proposed Contract. However, Section(s) 1103(a)/1103(f) of the Ethics Act would prohibit Individual B, in his public capacity as a C Member, from having any supervisory or overall responsibility for the implementation or administration of the Proposed Contract. Your third question is general and has been addressed above to the extent that it can be addressed . Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of Political Subdivision D’s G. Confidential Advice, 10-500 January 4, 2010 Page 6 Conclusion: Upon taking office as a Member of the C of Political Subdivision D, Individual B 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 seq. Based upon the submitted facts that: (1) Individual B will take office in January 2010; (2) for the last several months, Individual B, in his private capacity, has been negotiating with Political Subdivision D to provide a consulting service to Political Subdivision D pursuant to a proposed [title of proposed contract] (hereinafter referred to as “the Proposed Contract”) to which Individual B, Political Subdivision D, and Political Subdivision F would be parties; (3) under the Proposed Contract, Individual B would provide services as the A for a Political Subdivision D project to [perform certain activities]; (4) the value of the Proposed Contract would exceed $500; and (5) the Proposed Contract has not yet been approved by the C, and it is not yet clear whether the C will act on the Proposed Contract prior to the date on which Individual B will take office as a C Member, you are advised as follows. The Ethics Act itself would not prohibit Individual B, in his private capacity, from entering into a contract, including the Proposed Contract, to provide consulting services to Political Subdivision D. However, in his public capacity as a Member of the C, Individual B would have a conflict of interest under Section 1103(a) of the Ethics Act in matters pertaining to actual or anticipated contract(s) between Political Subdivision D and Individual B or any business(es) with which he is associated. In each instance of a conflict of interest, Individual B would be required to abstain fully from participation. The abstention requirement would extend beyond voting to include any use of authority of office. In each instance of a voting conflict, Individual B would be required to abstain and to fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. If, while serving as a C Member, Individual B would enter into a contract with Political Subdivision D, or would subcontract with a person awarded a contract with Political Subdivision D, and the value of the contract/subcontract would be $500 or more, the restrictions of Section 1103(f) would be applicable. Section 1103(f) of the Ethics Act would not prohibit Individual B, in his private capacity, from providing services to Political Subdivision D under the Proposed Contract. However, Section(s) 1103(a)/1103(f) of the Ethics Act would prohibit Individual B, in his public capacity as a C Member, from having any supervisory or overall responsibility for the implementation or administration of the Proposed Contract. 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 Confidential Advice, 10-500 January 4, 2010 Page 7 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