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HomeMy WebLinkAbout10-546 Confidential ADVICE OF COUNSEL February 12, 2010 10-546 This responds to your letter dated December 15, 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 impose any prohibitions or restrictions upon a member and [type of officer] of a municipal authority board with regard to receiving compensation for past services performed or future services to be performed in managing the day-to-day operations of the municipal authority in the absence of an acting authority manager. Facts: As Solicitor for the [name of municipal authority] (“the Authority”), you request a confidential advisory on behalf of Authority Board Member and [type of officer] Individual A. You have submitted facts, the material portion of which may be fairly summarized as follows. You state that in or about [month, year], the Authority Board appointed Individual A and another Authority Board Member, Individual B, as the [type of committee] of the Authority Board to handle the day-to-day operations of the Authority while office staff members including the Authority manager were on leave. You state that such office staff members have not returned to work and that the [type of committee] continues to manage the day-to-day operations of the Authority. You state that Individual A has acted as the de facto Authority manager since [month, year] without receiving compensation. You state that Individual A has worked over [number] hours managing the day-to-day operations of the Authority, including but not limited to [performing certain functions]. You state that the duties performed by Individual A in her role as de facto manager of the Authority exceed the oversight capacity typically performed by a [type of officer] of the Authority Board. You state that Individual B has inquired as to whether the Authority may compensate Individual A for the time she has spent managing the day-to-day operations of the Authority. The Authority Board discussed such matter in an executive session on [date], at which Individual A was not present. You state that the Authority Board has approved the concept of compensating Individual A for acting in the role of de facto Confidential Advice, 10-546 February 12, 2010 Page 2 manager of the Authority and that Individual A has not participated in the deliberations as to whether such compensation should be provided to her. Based upon the above submitted facts, you ask whether the Ethics Act would permit Individual A to receive compensation for past services rendered with respect to the day-to-day operations of the Authority as well as prospective services to be rendered until such time that the position of Authority manager would be filled. 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 Member and [type of officer] of the Authority Board, Individual A 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 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, 10-546 February 12, 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. 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. 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. Section 1103(f) of the Ethics Act 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 Confidential Advice, 10-546 February 12, 2010 Page 4 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). 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. It is noted that the Municipality Authorities Act provides, in part, as follows: § 5614. Competition in award of contracts . . . . (e) CONFLICT OF INTEREST. -- No member of the authority or officer or employee of the authority may directly or indirectly be a party to or be interested in any contract or agreement with the authority if the contract or agreement establishes liability against or indebtedness of the authority. Any contract or agreement made in violation of this subsection is void, and no action may be maintained on the agreement against the authority. 53 Pa.C.S. § 5614(e). In addressing the specific question that you have posed, you are advised as follows. In Swick/Aman, Opinion 91-006, the State Ethics Commission determined that the Ethics Act would not preclude simultaneous service as a municipal authority board member and authority employee, subject to two qualifications. First, the Commission held that the board member could not “use the authority of office” by participating in or voting in favor of his own appointment or in other matters concerning his employment. Swick/Aman, supra, at 8. Second, the Commission determined that such employment positions would have to be legitimate, and not a mere machination to enable the authority board members to set their own compensation for duties performed as board members, rather than as bona fide employees. Id. (Citing Confidential Advice, 90-527, affirmed, Confidential Opinion, 90-012). Based upon the Commission’s decision in Swick/Aman, supra, Section 1103(a) of the Ethics Act would not prohibit Individual A from receiving compensation for prospective management services to be rendered to the Authority until the Authority manager position would be filled, where Individual A would perform such services in a legitimate employment position with the Authority. As a Member and [type of officer] of the Authority Board, Individual A could not participate in or vote in favor of her own appointment/hiring or in other matter(s) that would financially impact her. In each instance of a conflict of interest, Individual A would be required to abstain fully from participation and in the instance of a voting conflict, to abstain fully and satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Confidential Advice, 10-546 February 12, 2010 Page 5 As for whether Individual A would be permitted to receive compensation for past or future services rendered to the Authority outside the scope of a position of employment with the Authority, you are advised that the answer to that question hinges upon an interpretation of the Municipality Authorities Act. The State Ethics Commission does not have the statutory jurisdiction to interpret the Municipality Authorities Act. Therefore, you are advised that if the Municipality Authorities Act would prohibit Individual A from receiving compensation for past or future services rendered to the Authority outside the scope of a position of employment with the Authority, any use by Individual A of the authority of her public position as a Member and [type of officer] of the Authority Board to facilitate her receipt of such unauthorized compensation could establish the elements for a violation of Section 1103(a) of the Ethics Act. The requirements of Section 1103(f) of the Ethics Act would have to be observed when applicable. The propriety of the proposed conduct has only been addressed under the Ethics Act. Conclusion: As a Member and [type of officer] of the Board of the [name of municipal authority] (“the Authority”), Individual A 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. Section 1103(a) of the Ethics Act would not prohibit Individual A from receiving compensation for prospective management services to be rendered to the Authority until the Authority manager position would be filled, where Individual A would perform such services in a legitimate employment position with the Authority. As a Member and [type of officer] of the Authority Board, Individual A could not participate in or vote in favor of her own appointment/hiring or in other matter(s) that would financially impact her. In each instance of a conflict of interest, Individual A would be required to abstain fully from participation and in the instance of a voting conflict, to abstain fully and satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. If the Municipality Authorities Act would prohibit Individual A from receiving compensation for past or future services rendered to the Authority outside the scope of a position of employment with the Authority, any use by Individual A of the authority of her public position as a Member and [type of officer] of the Authority Board to facilitate her receipt of such unauthorized compensation could establish the elements for a violation of Section 1103(a) of the Ethics Act. The requirements of Section 1103(f) of the Ethics Act would have to be observed when applicable. 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 Confidential Advice, 10-546 February 12, 2010 Page 6 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