HomeMy WebLinkAbout13-506 Confidential
ADVICE OF COUNSEL
February 6, 2013
13-506
This responds to your letter of December 11, 2012, 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 impose any prohibitions or restrictions upon an individual
in his capacity as the A of the B of a [political subdivision] if: (1) a [type of entity] in
which the individual and his [immediate family member] would have an ownership
interest would purchase an existing facility from a C and create a D with two Es; (2) the
[political subdivision] would purchase one E of the D for its own use and would pay
[amount] of Fs; and (3) the [type of entity] or its successor would continue to own the
other E of the D and would operate such E as a separate business.
Facts:
You have been authorized by Individual G, who is the A of the B of [name
of political subdivision] (the “Political Subdivision”), to request a confidential advisory
from the Pennsylvania State Ethics Commission on his behalf. You have submitted
facts that may be fairly summarized as follows.
The Political Subdivision plans to submit an H regarding a proposed facility
(“Facility”) for the Political Subdivision with a particular ownership structure. You state
that a separate [type of entity] (the “Entity”) would purchase an existing facility from a C.
Individual G and his [immediate family member] would have an ownership interest in the
Entity.
At the time of [type of event], the Entity would create a two E D. One E of the D
would be purchased and owned outright by the Political Subdivision and used for the
Political Subdivision. The other E of the D would continue to be owned by the Entity or
its successor and would be operated as a separate business. You state that the
Political Subdivision would abide by the I and would pay [amount] of Fs like any other D
owner.
Based upon the above submitted facts, you pose the following questions:
(1) Whether the ownership structure proposed for the Facility would constitute
a conflict of interest for Individual G under Section 1103(a) of the Ethics Act or would in
any way implicate Section 1103(f) of the Ethics Act (pertaining to contracting); and
(2) Whether any other section of the Ethics Act would create a problem with
regard to Individual G continuing to serve on the B of the Political Subdivision.
Confidential Advice, 13-506
February 6, 2013
Page 2
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. If
the activity in question has already occurred, the Commission may not issue an
opinion/advice but any person may then submit a signed and sworn complaint, which
will be investigated by the Commission if there are allegations of Ethics Act violations by
a person who is subject to the Ethics Act. To the extent you have inquired as to
conduct that has already occurred, such past conduct may not be addressed in the
context of an advisory opinion. However, to the extent you have inquired as to future
conduct, your inquiry may, and shall, be addressed.
As A of the B of the Political Subdivision, Individual G is a public official as that
term is defined in the Ethics Act, and therefore he is subject to the provisions of the
Ethics Act. See, [cite].
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).
Confidential Advice, 13-506
February 6, 2013
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.
"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.
Confidential Advice, 13-506
February 6, 2013
Page 4
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.
In addition, Sections 1103(b) and 1103(c) of the Ethics Act, 65 Pa.C.S. §§
1103(b), (c), provide in part that no person shall offer or give to a public official/public
employee anything of monetary value and no public official/public employee shall solicit
or accept anything of monetary value based upon the understanding that the vote,
official action, or judgment of the public official/public employee would be influenced
thereby. Reference is made to these provisions of the law not to imply that there has
been or will be any transgression thereof but merely to provide a complete response to
the question presented.
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
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
Confidential Advice, 13-506
February 6, 2013
Page 5
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 submitted facts, you are
advised as follows.
The Entity would be a business with which Individual G and his [immediate family
member] would each be associated in his capacity as an owner. The Ethics Act would
not prohibit Individual G from continuing to serve on the B of the Political Subdivision if
the Political Subdivision would enter into the proposed ownership structure for the
Facility. However, pursuant to Section 1103(a) of the Ethics Act, in his capacity as A of
the B of the Political Subdivision, Individual G generally would have a conflict of interest
in matters that would financially impact him, his [immediate family member], or the
Entity. Individual G would specifically have a conflict of interest in matter(s) pertaining
to the proposed ownership structure for the Facility, including but not limited to the
Political Subdivision’s purchase of a D E from the Entity.
In each instance of a conflict of interest, Individual G 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 satisfied
whenever applicable. To the extent the Entity would contract with the Political
Subdivision, or would subcontract with a person awarded a contract with the Political
Subdivision, and the value of the Entity’s contract/subcontract would be $500 or more,
the restrictions of Section 1103(f) would be applicable.
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 of the B of [name of political subdivision] (the “Political
Subdivision”), Individual G is 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 Political Subdivision plans to submit an H regarding a
proposed facility (“Facility”) for the Political Subdivision with a particular ownership
structure; (2) a separate [type of entity] (the “Entity”) would purchase an existing facility
Confidential Advice, 13-506
February 6, 2013
Page 6
from a C; (3) Individual G and his [immediate family member] would have an ownership
interest in the Entity; (4) at the time of [type of event], the Entity would create a two E D;
(5) one E of the D would be purchased and owned outright by the Political Subdivision
and used for the Political Subdivision; (6) the other E of the D would continue to be
owned by the Entity or its successor and would be operated as a separate business;
and (7) the Political Subdivision would abide by the I and would pay [amount] of Fs like
any other D owner, you are advised as follows.
The Entity would be a business with which Individual G and his [immediate family
member] would each be associated in his capacity as an owner. The Ethics Act would
not prohibit Individual G from continuing to serve on the B of the Political Subdivision if
the Political Subdivision would enter into the proposed ownership structure for the
Facility. However, pursuant to Section 1103(a) of the Ethics Act, in his capacity as A of
the B of the Political Subdivision, Individual G generally would have a conflict of interest
in matters that would financially impact him, his [immediate family member], or the
Entity. Individual G would specifically have a conflict of interest in matter(s) pertaining
to the proposed ownership structure for the Facility, including but not limited to the
Political Subdivision’s purchase of a D E from the Entity. In each instance of a conflict
of interest, Individual G 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 satisfied whenever applicable. To
the extent the Entity would contract with the Political Subdivision, or would subcontract
with a person awarded a contract with the Political Subdivision, and the value of the
Entity’s contract/subcontract would be $500 or more, the restrictions of Section 1103(f)
would be applicable. 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