HomeMy WebLinkAbout11-519 Smeltz
ADVICE OF COUNSEL
April 14, 2011
Larry E. Smeltz
c/o Larry E. Smeltz Co., Inc.
321 Union Street
Millersburg, PA 17061
11-519
Dear Mr. Smeltz:
This responds to your letter dated March 2, 2011 (postmarked March 7, 2011,
and received March 8, 2011), 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 borough
council member, who in a private capacity is the owner of a vehicle repair business
located in the borough, with regard to performing repair work on borough vehicles.
Facts:
You are a Member of Council for Millersburg Borough (“Borough”). In a
private capacity, you are the owner of a vehicle repair business named “Smeltz’s Repair
Service” (“the Repair Service”), which is located in the Borough.
Based upon the above submitted facts, you ask whether the Ethics Act would
impose any restrictions upon you with regard to performing repair work on Borough
vehicles.
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 Borough Council Member, 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.
Smeltz, 11-519
April 14, 2011
Page 2
(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:
§ 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.
Smeltz, 11-519
April 14, 2011
Page 3
"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.
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
Smeltz, 11-519
April 14, 2011
Page 4
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
“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 the Repair Service is a business with which you are associated in your
capacity as the owner. Pursuant to Section 1103(a) of the Ethics Act, in your capacity
as a Borough Council Member, you generally would have a conflict of interest in matters
that would financially impact you, the Repair Service, or the Repair Service’s
customer(s)/client(s). See, Kannebecker, supra; Miller, supra. See, Coll, Advice 05-
501 (Self-employed public official would not have a conflict of interest as to a
customer/client from which he/his business would receive only a de minimis
(insignificant) financial benefit).
You are further advised that the Ethics Act itself would not prohibit you, in your
private capacity as the owner of the Repair Service, from performing repair work on
Borough vehicles. However, an agreement or arrangement for the provision of vehicle
repair services to the Borough would constitute a contract as that term is defined in the
Ethics Act. In your public capacity as a Borough Council Member, you would have a
conflict of interest under Section 1103(a) of the Ethics Act in matters pertaining to actual
or anticipated contract(s) between the Borough and you/the Repair Service.
At such times as there would be a reasonable and legitimate anticipation that the
Borough would award a contract to you/the Repair Service, you would have a conflict of
interest in related matters, such as preparing or approving the specifications for such
contract. Where you/the Repair Service would bid for a Borough contract, you would
Smeltz, 11-519
April 14, 2011
Page 5
have a conflict of interest as to such contract and could not participate in reviewing or
selecting bids or proposals or awarding the contract. You would also be prohibited from
using the authority of your public position, or confidential information accessed or
received as a result of being a Borough Council Member, to effectuate a private
pecuniary benefit to yourself/the Repair Service through a detriment to a business
competitor. See, Pepper, Opinion 87-008.
In addition, you generally would have a conflict of interest with respect to voting
to approve the payment of any bills or invoices that would be submitted by you/the
Repair Service to the Borough.
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. If, while serving as a Borough Council Member, you/the Repair
Service would enter into a contract with the Borough, or would subcontract with a
person awarded a contract with the Borough, and the value of the contract/subcontract
would be $500 or more, the restrictions of Section 1103(f) of the Ethics Act would be
applicable.
Parenthetically, although the contracting in question would not be prohibited
under the Ethics Act itself where the requirements of Sections 1103(a), 1103(f), and
1103(j) of the Ethics Act would be satisfied, a problem could exist as to such contracting
under the Borough Code.
It is administratively noted that the Borough Code provides in pertinent part:
§ 46404. Penalty for personal interest in contracts or
purchases
Except as otherwise provided in this act, no borough
official either elected or appointed, who knows or who by the
exercise of reasonable diligence could know, shall be
interested to any appreciable degree either directly or
indirectly in any purchase made or contract entered into or
expenditure of money made by the borough or relating to the
business of the borough, involving the expenditure by the
borough of more than one thousand dollars ($1000) in any
calendar year, but this limitation shall not apply to cases
where such officer or appointee of the borough is an
employe of the person, firm or corporation to which the
money is to be paid in a capacity with no possible influence
on the transaction, and in which he cannot be possibly
benefited thereby either financially or otherwise. But in the
case of a member of council or mayor, if he knows that he is
within the exception just mentioned he shall so inform
council and shall refrain from voting on the expenditure or
any ordinance relating thereto, and shall in no manner
participate therein. Any official or appointee who shall
knowingly violate the provisions of this section shall be
subject to surcharge to the extent of the damage shown to
be thereby sustained by the borough and to ouster from
office, and shall be guilty of a misdemeanor, and upon
conviction thereof shall be sentenced to pay a fine not
Smeltz, 11-519
April 14, 2011
Page 6
exceeding one thousand dollars ($1000), or not exceeding
one hundred eighty days' imprisonment, or both.
53 P.S. § 46404.
Because this Advice may not interpret the above quoted provision of the Borough
Code, 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.
Conclusion:
As a Member of Council for Millersburg Borough (“Borough”), 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 in a
private capacity, you are the owner of a vehicle repair business named “Smeltz’s Repair
Service” (“the Repair Service”), which is located in the Borough, you are advised as
follows. The Repair Service is a business with which you are associated in your
capacity as the owner. Pursuant to Section 1103(a) of the Ethics Act, in your capacity
as a Borough Council Member, you generally would have a conflict of interest in matters
that would financially impact you, the Repair Service, or the Repair Service’s
customer(s)/client(s). The Ethics Act itself would not prohibit you, in your private
capacity as the owner of the Repair Service, from performing repair work on Borough
vehicles. However, an agreement or arrangement for the provision of vehicle repair
services to the Borough would constitute a contract as that term is defined in the Ethics
Act. In your public capacity as a Borough Council Member, you would have a conflict of
interest under Section 1103(a) of the Ethics Act in matters pertaining to actual or
anticipated contract(s) between the Borough and you/the Repair Service. At such times
as there would be a reasonable and legitimate anticipation that the Borough would
award a contract to you/the Repair Service, you would have a conflict of interest in
related matters, such as preparing or approving the specifications for such contract.
Where you/the Repair Service would bid for a Borough contract, you would have a
conflict of interest as to such contract and could not participate in reviewing or selecting
bids or proposals or awarding the contract. You would also be prohibited from using the
authority of your public position, or confidential information accessed or received as a
result of being a Borough Council Member, to effectuate a private pecuniary benefit to
yourself/the Repair Service through a detriment to a business competitor. You
generally would have a conflict of interest with respect to voting to approve the payment
of any bills or invoices that would be submitted by you/the Repair Service to the
Borough. 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. Although the contracting in question would not be
prohibited under the Ethics Act itself where the requirements of Sections 1103(a),
1103(f), and 1103(j) of the Ethics Act would be satisfied, a problem could exist as to
such contracting under the Borough Code, and therefore, it is suggested that you seek
legal advice in that regard. 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.
Smeltz, 11-519
April 14, 2011
Page 7
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