HomeMy WebLinkAbout11-533 Confidential
ADVICE OF COUNSEL
June 24, 2011
11-533
This responds to your letter dated May 2, 2011, 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 an A with
regard to participating in discussions or votes by the B as to matters involving
individuals or educational institutions that are customers of a business in which the A’s
spouse is a partner.
Facts:
As an A for [name of political subdivision] (“the Political Subdivision”),
located in [name of county], Pennsylvania, you request a confidential advisory from the
Pennsylvania State Ethics Commission based upon submitted facts that may be fairly
summarized as follows.
There are several post-secondary educational facilities located within the Political
Subdivision, including [name of educational institution] (“Institution 1”), [name of
educational institution] (“Institution 2”), and [name of educational institution] (“Institution
3”). Various private schools, including [name of private school] (“the Private School”),
and the public school facilities of [name of school district] (“the School District”) are also
located within the Political Subdivision.
Land development plans, park use agreements, and other similar requests and
proposals from the aforementioned educational institutions periodically come before the
Political Subdivision B for authorization or approval. [Types of organizations] also come
before the Political Subdivision B for approval to utilize the parks, athletic fields, and
other facilities of the Political Subdivision.
The Political Subdivision and the School District share various fields and other
athletic facilities pursuant to a [type of agreement] (“the Agreement”). The Agreement
establishes the usage of facilities, payment of fees, and exchange of funds between the
Political Subdivision and the School District. The Political Subdivision is in the process
of renegotiating the Agreement with the School District.
Your spouse is a partner in a privately held company named [name of company]
(“the Company”), located near [name of municipality], Pennsylvania. The Company
Confidential Advice, 11-533
June 24, 2011
Page 2
sells [type of equipment] (hereinafter referred to as “Equipment”), primarily for [certain
uses], to [various types of customers] all over the United States. The Company sells
Equipment via the internet or telephone, at a retail store located at the Company’s
headquarters, and in person to individuals at various [type of events]. The total of all
Company sales in the Political Subdivision is less than [fraction of one percent] of the
Company’s total annual sales of approximately [amount].
The Company sells Equipment to the Private School, Institution 1, Institution 2,
Institution 3, and the School District.
From 2008-2010, the Company’s sales to the Private School averaged under
[amount] annually. In 2010, the Company sold approximately [amount] in Equipment to
the Private School. The total of sales to the Private School for 2011 is currently
[amount].
The Company sells approximately [amount] in Equipment annually to Institution
1.
The Company sells approximately [amount] to [amount] in Equipment annually to
Institution 2.
The Company sells approximately [amount] in Equipment annually to Institution
3. In 2010, the Company sold Cs to Institution 3 for [amount].
The Company’s sales to the School District totaled [amount] in 2008, [amount] in
2009, and less than [amount] in 2010. The Company made additional sales totaling
approximately [amount] to D from 2008 to the present.
In addition to the above-referenced institutional sales, the Company makes
sales, most of which are between [amount] and [amount], to hundreds of residents of
the Political Subdivision.
Based upon the above submitted facts, you ask whether the Ethics Act would
permit you to participate in discussion(s) or vote(s) by the B as to the following matters:
(1) A pending proposal for the Political Subdivision to lease athletic fields to
the Private School for after-school activities, summer camps, and the like;
(2) A land development plan, permit request, or other proposal from Institution
1;
(3) A land development plan, permit request, or other proposal from Institution
2;
(4) A land development plan, permit request, or other proposal from Institution
3;
(5) A renegotiated Agreement between the Political Subdivision and the
School District (regarding sharing fields and other athletic facilities);
(6) A request for plan or permit approval from an individual who is a customer
of the Company; and
(7) A request for a permit from a local property owner represented by an
attorney who is a customer of the Company.
You further seek guidance as to whether, for the purposes of Section 1103(a) of
the Ethics Act (pertaining to conflict of interest), individuals who would make purchases
Confidential Advice, 11-533
June 24, 2011
Page 3
from the Company would be treated differently than institutions that would make
purchases from the Company.
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 an A for the Political Subdivision, 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
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
Confidential Advice, 11-533
June 24, 2011
Page 4
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.
"Immediate family."
A parent, spouse, child, brother
or sister.
"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.
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.
In applying the above provisions of the Ethics Act to your inquiry, you are advised
that the Company is a business with which your spouse is associated in his capacity as
an owner. 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 the B that would
financially impact you, your spouse, or the Company.
Confidential Advice, 11-533
June 24, 2011
Page 5
A matter before the B involving a customer/client of the Company could present a
conflict of interest for you under the Ethics Act. See, Kannebecker, supra; Miller, supra.
For example, such matter(s) could result in a pecuniary benefit to the Company through
continued or increased sales to the customer/client. In order to violate Section 1103(a)
of the Ethics Act, a public official/public employee “must be consciously aware of a
private pecuniary benefit for himself, his family, or his business, and then must take
action in the form of one or more specific steps to attain that benefit.” Kistler v. State
Ethics Commission, No. 59 MAP 2009, slip op. at 12 (Pa. June 22, 2011).
You would not have a conflict of interest as to a customer/client from which the
Company would receive only a de minimis (insignificant) financial benefit. 65 Pa.C.S. §
1102; cf., Coll, Advice 05-501. The Commission determines the applicability of the de
minimis exclusion on a case-by-case basis, considering all relevant circumstances. In
the past, the Commission has found amounts ranging from $2 to approximately $500 to
be de minimis. See, Bixler v. State Ethics Commission, 847 A.2d 785 (Pa. Cmwlth.
2004). For a customer/client involved in multiple transactions, the aggregate financial
benefit received from such transactions should be considered in order to determine
whether the de minimis exclusion could have applicability. Cf., Yorczyk, Advice 07-506.
Your specific questions shall now be addressed.
In response to your first specific question, you are advised that you would have a
conflict of interest under Section 1103(a) of the Ethics Act with regard to participating in
discussion(s) or vote(s) by the B as to a pending proposal for the Political Subdivision to
lease athletic fields to the Private School for after-school activities, summer camps, and
the like, because such action would likely result in a pecuniary benefit to the Company
through continuing or increased sales by the Company to the Private School.
In response to your remaining specific questions, based upon the limited
submitted facts, you are advised as follows. You would have a conflict of interest and
would transgress Section 1103(a) of the Ethics Act by participating in discussion(s) or
vote(s) by the B as to: (1) a land development plan, permit request, or other proposal
from Institution 1, Institution 2, or Institution 3; (2) a renegotiated Agreement between
the Political Subdivision and the School District (regarding sharing fields and other
athletic facilities); and/or (3) Company customers appearing before the B regarding a
plan or permit approval, either for themselves or their clients, if you would be
consciously aware of a private pecuniary benefit for yourself, your family, or the
Company, and your official action would constitute one or more specific steps to attain
that benefit. Kistler, supra. For purposes of Section 1103(a) of the Ethics Act,
individuals who would make purchases from the Company would not be treated
differently than institutions that would make purchases from the Company.
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
disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied
in the event of a voting conflict.
The propriety of the proposed conduct has only been addressed under the Ethics
Act. Specifically not addressed herein is the applicability of E.
Conclusion:
As an A for [name of political subdivision] (“the Political
Subdivision”), located in [name of county], 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) there are several post-secondary
educational facilities located within the Political Subdivision, including [name of
educational institution] (“Institution 1”), [name of educational institution] (“Institution 2”),
and [name of educational institution] (“Institution 3”); (2) various private schools,
Confidential Advice, 11-533
June 24, 2011
Page 6
including [name of private school] (“the Private School”), and the public school facilities
of [name of school district] (“the School District”) are also located within the Political
Subdivision; (3) land development plans, park use agreements, and other similar
requests and proposals from the aforementioned educational institutions periodically
come before the Political Subdivision B for authorization or approval; (4) [types of
organizations] also come before the Political Subdivision B for approval to utilize the
parks, athletic fields, and other facilities of the Political Subdivision; (5) the Political
Subdivision and the School District share various fields and other athletic facilities
pursuant to a [type of agreement] (“the Agreement”); (6) the Agreement establishes the
usage of facilities, payment of fees, and exchange of funds between the Political
Subdivision and the School District; (7) the Political Subdivision is in the process of
renegotiating the Agreement with the School District; (7) your spouse is a partner in a
privately held company named [name of company] (“the Company”), located near
[name of municipality], Pennsylvania; (8) the Company sells [type of equipment]
(hereinafter referred to as “Equipment”), primarily for [certain uses], to [various types of
customers] all over the United States; (9) the total of all Company sales in the Political
Subdivision is less than [fraction of one percent] of the Company’s total annual sales of
approximately [amount]; (10) the Company sells Equipment to the Private School,
Institution 1, Institution 2, Institution 3, and the School District as detailed above; and
(11) the Company makes sales, most of which are between [amount] and [amount], to
hundreds of residents of the Political Subdivision, you are advised as follows.
The Company is a business with which your spouse is associated in his capacity
as an owner. 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 the B
that would financially impact you, your spouse, or the Company. A matter before the B
involving a customer/client of the Company could present a conflict of interest for you
under the Ethics Act. In order to violate Section 1103(a) of the Ethics Act, a public
official/public employee “must be consciously aware of a private pecuniary benefit for
himself, his family, or his business, and then must take action in the form of one or more
specific steps to attain that benefit.” Kistler v. State Ethics Commission, No. 59 MAP
2009, slip op. at 12 (Pa. June 22, 2011).
You would not have a conflict of interest as to a customer/client from which the
Company would receive only a de minimis (insignificant) financial benefit. For a
customer/client involved in multiple transactions, the aggregate financial benefit
received from such transactions should be considered in order to determine whether the
de minimis exclusion could have applicability.
You would have a conflict of interest under Section 1103(a) of the Ethics Act with
regard to participating in discussion(s) or vote(s) by the B as to a pending proposal for
the Political Subdivision to lease athletic fields to the Private School for after-school
activities, summer camps, and the like, because such action would likely result in a
pecuniary benefit to the Company through continuing or increased sales by the
Company to the Private School. Based upon the limited submitted facts, you are
advised that you would have a conflict of interest and would transgress Section 1103(a)
of the Ethics Act by participating in discussion(s) or vote(s) by the B as to: (1) a land
development plan, permit request, or other proposal from Institution 1, Institution 2, or
Institution 3; (2) a renegotiated Agreement between the Political Subdivision and the
School District (regarding sharing fields and other athletic facilities); and/or (3) Company
customers appearing before the B regarding a plan or permit approval, either for
themselves or their clients, if you would be consciously aware of a private pecuniary
benefit for yourself, your family, or the Company, and your official action would
constitute one or more specific steps to attain that benefit. For purposes of Section
1103(a) of the Ethics Act, individuals who would make purchases from the Company
would not be treated differently than institutions that would make purchases from the
Company.
Confidential Advice, 11-533
June 24, 2011
Page 7
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.
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