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HomeMy WebLinkAbout10-616 PARKER ADVICE OF COUNSEL October 15, 2010 John H. Parker, Jr. Parker Oil Company th 320 North 9 Street P.O. Box 229 Stroudsburg, PA 18360-0229 10-616 Dear Mr. Parker: This responds to your letter dated August 24, 2010, by which you requested an 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 vice chairman of a municipal authority board with respect to engaging in private business activities that would involve negotiations with the authority and the purchase, transportation, and resale of large quantities of water from the municipal authority. Facts: As a Member and Vice Chairman of the Board (“Board”) of the Brodhead Creek Regional Authority (“Authority”), you request an advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. The Authority currently has customers that purchase water in bulk from the Authority and load the bulk water out of the existing Authority plant (“Plant”). Such bulk water customers pay a specific rate per gallon of water and are not subject to the tapping fee that a new commercial or residential customer would be required to pay to hook up a building to the water distribution system. In a private capacity, you own and operate a business named “Parker Oil Company.” You state that you have recently been presented with a business opportunity (“the Project”) that would involve the purchase, transportation, and resale of large quantities of water from the Authority. You state that at the regularly scheduled Authority Board meeting on August 18, 2010, at your request, you were placed on the agenda to preliminarily discuss purchasing bulk water from the Authority. You state that because of the large volumes of water expected to be purchased by the Project and the inconvenience to the Authority of loading a large number of trucks at the Plant, you proposed that a loading station connected to the Authority system be constructed on property owned by your Parker, 10-616 October 15, 2010 Page 2 company. The loading station would be constructed at no cost to the Authority, and trucks would be loaded at that location. Several businesses that you own are existing customers of the Authority. You state that these businesses paid the appropriate tapping fees when their buildings were originally connected to the Authority system. You state that considering the similarity of the proposed purchases of water by the Project to the purchases made by the existing bulk water customers of the Authority, you requested that the tapping fee be waived or negotiated if the Project would go forward. You further state that it is very likely that other negotiations with the Authority will be necessary due to the volume of water purchases and uniqueness of the Project. You state that all of the information you have obtained to develop the Project is public information and that you have not used, nor will you use, your position as a Board Member to influence any Authority decisions. You further state that you will not participate in your capacity as an Authority Board Member in negotiations with or decisions rendered by the Authority. Based upon the above submitted facts, you ask whether, pursuant to the Ethics Act, you would be permitted to continue to serve as a Member of the Authority Board while engaging in private business activities as to the Project, including negotiating with the Authority with regard to the Project and operating the Project. 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. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion/advice may be given only as to prospective (future) conduct. To the extent that your inquiry relates to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent your inquiry relates to future conduct, your inquiry may and shall be addressed. As a Member and Vice Chairman of the Authority Board, you are a public official as that term is defined in the Ethics Act, and therefore you are 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 Parker, 10-616 October 15, 2010 Page 3 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. "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 Parker, 10-616 October 15, 2010 Page 4 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, any 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. Juliante, Order 809. In each instance of a conflict of interest, a public official/public employee would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. 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. 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 Parker, 10-616 October 15, 2010 Page 5 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 “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 above provisions of the Ethics Act to the instant matter, you are advised that any business as to which you are a director, officer, owner, or employee or in which you have a financial interest would be considered a business with which you are associated. A sole proprietorship or self-employed individual is included within the definition of the term “business” as set forth in the Ethics Act. 65 Pa.C.S. § 1102; In Re: Nomination Petition of Paulmier, 594 Pa. 433, 937 A.2d 364 (2007). Subject to the statutory exceptions to the definition of “conflict” or “conflict of interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, in your capacity as a Member and Vice Chairman of the Authority Board, you would have a conflict of interest in matters that would financially impact you, any business(es) with which you are associated, or the customer(s)/client(s) of any business(es) with which you are associated. See, Kannebecker, supra; Miller, supra. You are further advised that the Ethics Act itself would not prohibit you, in your private capacity, from negotiating with the Authority with regard to the Project or operating the Project while continuing to serve as a Member and Vice Chairman of the Authority Board. However, in your public capacity as a Member and Vice Chairman of the Authority Board, you would have a conflict of interest in matters pertaining to the Project. As noted above, in each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the Parker, 10-616 October 15, 2010 Page 6 disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. It is administratively noted that the Municipality Authorities Act provides in part: § 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). Because this Advice may not interpret the above quoted provision of the Municipality Authorities Act, it is suggested that you seek legal advice in that regard. 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 interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the Municipality Authorities Act. Conclusion: As a Member and Vice Chairman of the Board (“Board”) of the Brodhead Creek Regional Authority (“Authority”), you are 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) the Authority currently has customers that purchase water in bulk from the Authority and load the bulk water out of the existing Authority plant (“Plant”); (2) such bulk water customers pay a specific rate per gallon of water and are not subject to the tapping fee that a new commercial or residential customer would be required to pay to hook up its building to the water distribution system; (3) you have recently been presented with a business opportunity (“the Project”) that would involve the purchase, transportation, and resale of large quantities of water from the Authority; (4) at the regularly scheduled Authority Board meeting on August 18, 2010, at your request, you were placed on the agenda to preliminarily discuss purchasing bulk water from the Authority; (5) because of the large volumes of water expected to be purchased by the Project and the inconvenience to the Authority of loading a large number of trucks at the Plant, you proposed that a loading station connected to the Authority system be constructed on property owned by your company; (6) the loading station would be constructed at no cost to the Authority, and trucks would be loaded at that location; (7) considering the similarity of the proposed purchases of water by the Project to the purchases made by the existing bulk water customers of the Authority, you requested that the tapping fee be waived or negotiated if the Project would go forward; and (8) it is very likely that other negotiations with the Authority will be necessary due to the volume of water purchases and uniqueness of the Project, you are advised as follows. Subject to the statutory exceptions to the definition of “conflict” or “conflict of interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, in your capacity as a Member and Vice Chairman of the Authority Parker, 10-616 October 15, 2010 Page 7 Board, you would have a conflict of interest in matters that would financially impact you, any business(es) with which you are associated, or the customer(s)/client(s) of any business(es) with which you are associated. The Ethics Act itself would not prohibit you, in your private capacity, from negotiating with the Authority with regard to the Project or operating the Project while continuing to serve as a Member and Vice Chairman of the Authority Board. However, in your public capacity as a Member and Vice Chairman of the Authority Board, you would have a conflict of interest in matters pertaining to the Project. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. It is suggested that you seek legal advice as to the applicability of the Municipality Authorities Act to the proposed conduct. 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 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