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HomeMy WebLinkAbout12-534 Lady ADVICE OF COUNSEL May 7, 2012 James D. Lady, Tyrone Township Supervisor 445 Chestnut Hill Road Aspers, PA 17304 12-534 Dear Mr. Lady: This responds to your letter dated March 14, 2012 (postmarked March 19, 2012, and received March 20, 2012), 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 supervisor who, in a private capacity, is a local farmer and a licensed state broker for poultry litter, with regard to participating in or voting on matter(s) before the township board of supervisors involving: (1) a corporation to which the township supervisor sells most of his harvested crops, and which is owned by two brothers (the “Brothers”) and their families; (2) another corporation that does not have a business relationship with the township supervisor, but that is owned by one of the Brothers and his family; or (3) a business with which the township supervisor has a contract to haul poultry litter. Facts: As a Supervisor for Tyrone Township (“Township”), you request an advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. You are a local farmer, and you have a 25% interest in a farm known as “Lady’s Chestnut Hill Farms, LLC.” As part of your farming operation, you are a licensed state broker (“Broker”) for poultry litter. You primarily sell your harvested crops to a corporation named “Agricultural Commodities, Inc.” (“ACI”), which owns mills located in the Township. You state that the sales price for crops is set daily using the commodity prices from the Chicago Board of Trade and that there is no negotiation over the sales price. You are not obligated to sell crops to ACI, and ACI is not obligated to buy crops from you. ACI typically does not have matters that come before the Township Board of Supervisors. ACI is owned by two brothers (the “Brothers”) and their families. One of the Brothers and his family own another corporation named “Soy Energy, Inc.” (“Soy Energy”). You state that you do not have a business relationship with Soy Energy. Soy Energy has a land development plan (the “Plan”) pending before the Township. Lady, 12-534 May 7, 2012 Page 2 As a Broker, you have a hauling contract (“Contract”) with “Hillandale Gettysburg, LP” (“Hillandale”). Under the Contract, you haul the poultry litter produced by Hillandale, sell the poultry litter to various third parties, and then remit a portion of your gross sales back to Hillandale. You seek guidance as to whether the Ethics Act would impose any prohibitions or restrictions upon you with regard to participating in or voting on any matters before the Township Board of Supervisors that would involve: (1) ACI; (2) Soy Energy-- including but not limited to the Plan; or (3) Hillandale--including but not limited to land development, subdivision, and zoning issues. 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 Township Supervisor, 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). Lady, 12-534 May 7, 2012 Page 3 The following terms 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 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. The Pennsylvania Supreme Court has held that 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, Pa. , , 22 A.3d 223, 231 (2011). Lady, 12-534 May 7, 2012 Page 4 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 the facts that you have submitted, you are advised as follows. A conflict of interest under Section 1103(a) of the Ethics Act may be based upon an ongoing business relationship (Kitner, Order 1542; Burchfield, Order 1492; Johnson, Order 1338; Confidential Opinion, 06-001; Kannebecker, Opinion 92-010; Miller, Opinion 89-024), or a reasonable and legitimate expectation that a business relationship will form (Gerhard, Order 1460; Mann, Opinion 07-005; Moore, Opinion 04-004; Confidential Opinion, 00-006; Amato, Opinion 89-002). As a general rule, a conflict would not exist as to former customer(s)/client(s), but under certain circumstances, a conflict could exist as to former customer(s)/client(s) depending upon factors such as the number of prior business transactions and the period of time over which such occurred. See, Kannebecker, supra. You have significant, ongoing business relationships with both ACI and Hillendale. Therefore, you are advised that you would have a conflict of interest and would transgress Section 1103(a) of the Ethics Act by participating in your official capacity or voting on matter(s) before the Township Board of Supervisors involving ACI or Hillendale to the extent that: (1) you would be consciously aware of a private pecuniary benefit for yourself, a member of your immediate family, or a business with which you or a member of your immediate family is associated; and (2) your action would constitute one or more specific steps to attain that benefit (Kistler, supra). Per the submitted facts, you do not have a business relationship with Soy Energy. The submitted fact that Soy Energy is owned by one of the Brothers and his family would not be sufficient, in and of itself, to establish a conflict of interest for you in matter(s) before the Township Board of Supervisors involving Soy Energy. Cf., Smith, Advice 12-516; Pertile, Advice 10-610; Ocker, Advice 94-600; see also, Confidential Opinion, 92-003. Therefore, you are advised that you would not have a conflict of interest with regard to matter(s) before the Township Board of Supervisors involving Soy Energy subject to the condition that you would not be consciously aware of any private pecuniary benefit for yourself, a member of your immediate family, or a business with which you or a member of your immediate family is associated, and your action would not constitute one or more specific steps to attain such a benefit (Kistler, supra). 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 Second Class Township Code. Conclusion: As a Supervisor for Tyrone 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 a local farmer, and you have a 25% interest in a farm known as “Lady’s Chestnut Hill Farms, LLC”; (2) as part of your farming operation, you are a licensed state broker (“Broker”) for poultry litter; (3) you primarily sell your harvested crops to a corporation named “Agricultural Commodities, Inc.” (“ACI”), which owns mills located in the Township; (4) the sales price for crops is set daily using the commodity prices from the Chicago Board of Trade, and there is no negotiation over the sales price; (5) you are not obligated to sell crops to ACI, and ACI is not obligated to buy crops from you; (6) ACI is owned by two brothers (the “Brothers”) and their families; (7) Lady, 12-534 May 7, 2012 Page 5 one of the Brothers and his family own another corporation named “Soy Energy, Inc.” (“Soy Energy”); (8) you do not have a business relationship with Soy Energy; (9) as a Broker, you have a hauling contract (“Contract”) with “Hillandale Gettysburg, LP” (“Hillandale”); and (10) under the Contract, you haul the poultry litter produced by Hillandale, sell the poultry litter to various third parties, and then remit a portion of your gross sales back to Hillandale, 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 your official capacity or voting on matter(s) before the Township Board of Supervisors involving ACI or Hillendale to the extent that: (1) you would be consciously aware of a private pecuniary benefit for yourself, a member of your immediate family, or a business with which you or a member of your immediate family is associated; and (2) your action would constitute one or more specific steps to attain that benefit. The submitted fact that Soy Energy is owned by one of the Brothers and his family would not be sufficient, in and of itself, to establish a conflict of interest for you in matter(s) before the Township Board of Supervisors involving Soy Energy. You would not have a conflict of interest with regard to matter(s) before the Township Board of Supervisors involving Soy Energy subject to the condition that you would not be consciously aware of any private pecuniary benefit for yourself, a member of your immediate family, or a business with which you or a member of your immediate family is associated, and your action would not constitute one or more specific steps to attain such a benefit. 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