HomeMy WebLinkAbout11-503 Ball
ADVICE OF COUNSEL
January 31, 2011
David M. Ball
122 Alexander Drive
McMurray, PA 15317
11-503
Dear Mr. Ball:
This responds to your letter dated December 13, 2010 (postmarked December
15, 2010, and received December 20, 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 township
council member, who in a private capacity is president of a corporation which plans to
offer water treatment services to gas drilling firms and other waste water generators, but
does not yet have any clients or revenue, with regard to participating in discussions or
votes by the township council regarding proposed zoning ordinance amendments that
would impact gas drilling within the township.
Facts:
As a Member of Council for Peters Township (“Township”), you request an
advisory from the Pennsylvania State Ethics Commission. You have submitted
extensive facts, the material portion of which may be fairly summarized as follows.
In a private capacity, you are President of a corporation named “Zoom
Resources Ltd.” (“Zoom”). Zoom is attempting to develop business in the treatment of
waste water from Marcellus Shale drilling and fracturing. You state that Zoom’s
business objective is to conceive, adapt, engineer, and apply solutions that will offer
competitive, in-place, and functional water treatment solutions to gas drilling firms and
other waste water generators. You state that Zoom has not yet entered into any
contracts or received any revenue from any source. You state that you do not have an
equity position in Zoom and that you have not received any compensation from Zoom.
You note that in Pennsylvania, gas drilling is subject to the provisions of the Oil
and Gas Act, 58 P.S. § 601.101 et seq., and that recent decisions of the Supreme Court
of Pennsylvania have affirmed that state law preempts local ordinances with regard to
the regulation of gas drilling processes and operations. You further state that under
existing state law and court decisions, a municipality may not ban drilling within its
jurisdiction, but a municipality may regulate, through zoning ordinances, where drilling
may occur and other considerations such as noise, light, hours of operation, and
damage to local roads.
Ball, 11-503
January 31, 2011
Page 2
You state that in 2010, when it became apparent that the Township had no
specific provisions in its zoning ordinance dealing with gas drilling, Township staff was
directed to develop modifications to the Township’s zoning ordinance. Township
Council held two public hearings and a public workshop session to discuss the draft
ordinance. You state that Township Council may hold another public hearing prior to
considering the proposed changes to the Township zoning ordinance at a regular
Township Council meeting.
You state that you have disclosed your association with Zoom during several
public Township meetings when the subject of gas leasing and drilling arose. You state
that you will not receive any personal gain regardless of what the Township does with
respect to modifying its zoning ordinance as to gas drilling within the Township. You
further state that if and when Zoom does “enter the market,” Zoom’s impact will be very
small and totally unrelated to any Township zoning ordinance.
Based upon the above submitted facts, you seek guidance as to whether the
Ethics Act would impose any prohibitions or restrictions upon you with regard to
participating in discussions or votes by the Township Council regarding proposed
zoning ordinance amendments that would impact gas drilling within the Township.
Administrative notice is taken of the following provision of the Oil and Gas Act:
§ 601.602. Local ordinances
Except with respect to ordinances adopted pursuant
to the act of July 31, 1968 (P.L. 805, No. 247), known as the
Pennsylvania Municipalities Planning Code, and the act of
October 4, 1978 (P.L. 851, No. 166), known as the Flood
Plain Management Act, all local ordinances and enactments
purporting to regulate oil and gas well operations regulated
by this act are hereby superseded. No ordinances or
enactments adopted pursuant to the aforementioned acts
shall contain provisions which impose conditions,
requirements or limitations on the same features of oil and
gas well operations regulated by this act or that accomplish
the same purposes as set forth in this act. The
Commonwealth, by this enactment, hereby preempts and
supersedes the regulation of oil and gas wells as herein
defined.
58 P.S. § 601.602.
Administrative notice is also taken of the following Pennsylvania Supreme Court
decisions. In Huntley & Huntley, Inc. v. Borough Council of the Borough of Oakmont,
600 Pa. 207, 964 A.2d 855 (2009), the Supreme Court stated that the Oil and Gas Act
totally preempts local regulation of oil and gas development except with regard to
municipal ordinances adopted pursuant to the Municipalities Planning Code and the
Flood Plain Management Act. The Court concluded that the Oil and Gas Act did not
automatically preempt a zoning ordinance restriction regarding the placement of oil and
gas wells in residential districts. In Range Resources-Appalachia, LLC v. Salem
Township, 600 Pa. 231, 964 A.2d 869 (2009), the Supreme Court held that the Oil and
Gas Act preempted a township ordinance, adopted pursuant to the Municipalities
Planning Code, which regulated oil and gas drilling operations as well as ancillary
features of oil and gas operations, such as water treatment facilities.
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
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January 31, 2011
Page 3
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 of Township Council, 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 as follows:
§ 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), 1103(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
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January 31, 2011
Page 4
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.
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.
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, 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.
Sections 1103(b) and 1103(c) of the Ethics Act provide:
§ 1103. Restricted activities
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January 31, 2011
Page 5
(b) Seeking improper influence.--
No person
shall offer or give to a public official, public employee or
nominee or candidate for public office or a member of his
immediate family or a business with which he is associated,
anything of monetary value, including a gift, loan, political
contribution, reward or promise of future employment based
on the offeror's or donor's understanding that the vote,
official action or judgment of the public official or public
employee or nominee or candidate for public office would be
influenced thereby.
(c) Accepting improper influence.--
No public
official, public employee or nominee or candidate for public
office shall solicit or accept anything of monetary value,
including a gift, loan, political contribution, reward or promise
of future employment, based on any understanding of that
public official, public employee or nominee that the vote,
official action or judgment of the public official or public
employee or nominee or candidate for public office would be
influenced thereby.
65 Pa.C.S. §§ 1103(b), (c).
In applying the above provisions of the Ethics Act to the instant matter, you are
advised that Zoom is a business with which you are associated in your capacity as
President. Subject to the statutory exclusions 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, you would have a conflict of interest in matters before Township
Council that would financially impact you, Zoom, Zoom’s customer(s)/client(s), or
Zoom’s prospective customer(s)/client(s) when there would be a reasonable expectation
that a business relationship would form. See, Kannebecker, supra; Miller, supra;
Amato, supra.
In response to your specific question, you are advised as follows. Subject to the
conditions that: (1) there would be no improper influence as prohibited by Sections
1103(b)-(c) of the Ethics Act; and (2) there would be no basis for a conflict of interest
such as a private pecuniary benefit to you, a member of your immediate family, a
business with which you or a member of your immediate family is associated (including
but not limited to Zoom), customer(s)/client(s) of a business with which you or a
member of your immediate family is associated or prospective customer(s)/client(s)
when there would be a reasonable expectation that a business relationship would form,
the Ethics Act would not prohibit you from participating in discussions or votes by
Township Council regarding a proposed Township ordinance that would impact gas
drilling within the Township.
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.
Conclusion:
As a Member of Council for Peters Township (“Township”), 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) in a
private capacity, you are President of a corporation named “Zoom Resources Ltd.”
(“Zoom”); (2) Zoom’s business objective is to conceive, adapt, engineer, and apply
solutions that will offer competitive, in-place, and functional water treatment solutions to
gas drilling firms and other waste water generators; (3) Zoom has not yet entered into
any contracts or received any revenue from any source; (4) in 2010, when it became
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January 31, 2011
Page 6
apparent that the Township had no specific provisions in its zoning ordinance dealing
with gas drilling, Township staff was directed to develop modifications to the Township’s
zoning ordinance; (5) Township Council held two public hearings and a public workshop
session to discuss the draft ordinance; (6) Township Council may hold another public
hearing prior to considering the proposed changes to the Township zoning ordinance at
a regular Township Council meeting; (7) you have disclosed your association with Zoom
during several public Township meetings when the subject of gas leasing and drilling
arose; (8) you will not receive any personal gain regardless of what the Township does
with respect to modifying its zoning ordinance as to gas drilling within the Township; and
(9) if and when Zoom does “enter the market,” Zoom’s impact will be very small and
totally unrelated to any Township zoning ordinance, you are advised as follows.
Zoom is a business with which you are associated in your capacity as President.
Subject to the statutory exclusions 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, you would have a conflict of interest in matters before Township Council that would
financially impact you, Zoom, Zoom’s customer(s)/client(s), or Zoom’s prospective
customer(s)/client(s) when there would be a reasonable expectation that a business
relationship would form. Subject to the conditions that: (1) there would be no improper
influence as prohibited by Sections 1103(b)-(c) of the Ethics Act; and (2) there would be
no basis for a conflict of interest such as a private pecuniary benefit to you, a member of
your immediate family, a business with which you or a member of your immediate family
is associated (including but not limited to Zoom), customer(s)/client(s) of a business with
which you or a member of your immediate family is associated or prospective
customer(s)/client(s) when there would be a reasonable expectation that a business
relationship would form, the Ethics Act would not prohibit you from participating in
discussions or votes by Township Council regarding a proposed Township ordinance
that would impact gas drilling within the Township. 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