HomeMy WebLinkAbout13-522
ADVICE OF COUNSEL
April 19, 2013
13-522
This responds to your letter dated February 25, 2013 (received March 5, 2013),
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
serving as a member and [officer] of a [type of political subdivision] A, whose Relative B
is employed as a C with a [type of facility] owned and operated by the [type of political
subdivision], with regard to voting--either in favor of or against--the [type of political
subdivision]: (1) exploring the terms of a contract with an entity for the management of
said facility and approving such a contract; or (2) approving a total sale of said facility.
Facts:
As a Member and [officer] of the A of [name of political subdivision] (the
“Political Subdivision”), Pennsylvania, you request a confidential advisory from the
Pennsylvania State Ethics Commission based upon submitted facts which may be fairly
summarized as follows.
The Political Subdivision owns and operates the [name of facility] (the “Facility”),
which is a [type of facility] located in [certain geographical area]. The Facility provides
[certain services] to [type of individuals] of the Political Subdivision. The Political
Subdivision owns the building out of which the Facility operates.
The Political Subdivision A votes on all personnel matters regarding the Facility.
A union (the “Union”) represents the rank and file employees of the Facility, and labor
attorneys hired by the Political Subdivision A negotiate with the Union to reach a multi-
year contract regarding Union employees. The Political Subdivision A must vote to
approve any final contract with the Union. You have a Relative B who obtained
employment with the Facility as a C in [year], and she is a member of the Union.
You state that multiple [types of management entities] have recently approached
the Political Subdivision and expressed an interest in managing the Facility. Under
such a proposed arrangement, the Political Subdivision and a management entity would
enter into a contract by which the Political Subdivision would retain ownership of the
Facility and the management entity would be responsible for managing the day-to-day,
short and mid-term affairs of the Facility. You expect that in the near future, the
Political Subdivision A will have to vote on whether to explore the terms of any such
Confidential Advice, 13-522
April 19, 2013
Page 2
management contract for the Facility and possibly approve such a contract if the
Political Subdivision and a management entity would come to terms.
You state that the Political Subdivision A is not currently discussing a total sale of
the Facility but might in the future explore and vote on a total and complete sale of the
Facility, including a sale of the building occupied by the Facility.
You state that if the Political Subdivision would enter into a management contract
for the Facility, the management entity could take actions--including without limitation
negotiating a new, less employee-favorable contract with the Union--which would result
in a reduction in Union employee work hours and related pay or in Union employees
being laid off. You further state that a total sale of the Facility by the Political
Subdivision could have similar results for Union employees as would entering into a
management contract for the Facility and that your Relative B could be detrimentally
affected by either such event.
Based upon the above submitted facts, you ask whether you would have a
conflict of interest with regard to voting--either in favor of or against--matters pertaining
to the exploration of the terms of a management contract for the Facility and approval of
such a contract or the approval of a total sale of the Facility.
You state that your current inclination is to vote to enter into discussions with one
or more management entities regarding the management of the Facility and then vote to
approve such an arrangement if satisfactory terms could be reached.
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 Member and [officer] of the Political Subdivision A, 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
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April 19, 2013
Page 3
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 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.
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
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April 19, 2013
Page 4
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 the submitted facts, you are
advised as follows.
Your Relative B is a member of your “immediate family” as that term is defined in
the Ethics Act. Pursuant to Section 1103(a) of the Ethics Act, you generally would have
a conflict of interest in matters before the Political Subdivision A that would financially
impact you, a member of your immediate family such as your Relative B, or a business
with which you or a member of your immediate family is associated.
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, 610 Pa. 516, 528, 22 A.3d 223, 231 (2011).
Therefore, under the submitted facts, you would not have a conflict of interest or
transgress Section 1103(a) of the Ethics Act by voting on matter(s) pertaining to the
exploration of the terms of a management contract for the Facility and approval of such
a contract or the approval of a total sale of the Facility--whether in favor of or against
such matter(s)--unless you would be consciously aware of a private pecuniary benefit
for your Relative B and your official action would constitute one or more specific steps to
attain that benefit.
Even if, by voting on matter(s) pertaining to the exploration of the terms of a
management contract for the Facility and approval of such a contract or the approval of
a total sale of the Facility, you would be taking official action to attain such a pecuniary
benefit, you nevertheless would not transgress Section 1103(a) of the Ethics Act if one
of the two exclusions to the statutory definition of the term "conflict" or "conflict of
interest" (referred to herein as the "de minimis exclusion" and the "class/subclass
exclusion") would be applicable. Based upon the submitted facts, it cannot be
determined whether either of the exclusions would be applicable. Therefore, this
advisory must be limited to providing the following general advice as to the exclusions.
The de minimis exclusion precludes a finding of conflict of interest as to an action
having a de minimis (insignificant) economic impact. See, Kolb, Order 1322;
Schweinsburg, Order 900. 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).
In order for the class/subclass exclusion to apply, two criteria must be met: (1)
the affected public official/public employee, immediate family member, or business with
which the public official/public employee or immediate family member is associated
must be a member of a class consisting of the general public or a true subclass
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April 19, 2013
Page 5
consisting of more than one member; and (2) the public official/public employee,
immediate family member, or business with which the public official/public employee or
immediate family member is associated must be affected "to the same degree" (in no
way differently) than the other members of the class/subclass. 65 Pa.C.S. § 1102; see,
Kablack, Opinion 02-003; Rubenstein, Opinion 01-007. The first criterion of the
exclusion is satisfied where the members of the proposed subclass are similarly
situated as the result of relevant shared characteristics. The second criterion of the
exclusion is satisfied where the individual/business in question and the other members
of the class/subclass are reasonably affected to the same degree by the proposed
action. Kablack, 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 D.
Conclusion:
As a Member and [officer] of the A of [name of political subdivision]
(the “Political Subdivision”), Pennsylvania, 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) the Political Subdivision owns
and operates the [name of facility] (the “Facility”), which is a [type of facility] located in
[certain geographical area]; (2) the Facility provides [certain services] to [type of
individuals] of the Political Subdivision; (3) the Political Subdivision owns the building
out of which the Facility operates; (4) the Political Subdivision A votes on all personnel
matters regarding the Facility; (5) a union (the “Union”) represents the rank and file
employees of the Facility, and labor attorneys hired by the Political Subdivision A
negotiate with the Union to reach a multi-year contract regarding Union employees; (6)
the Political Subdivision A must vote to approve any final contract with the Union; (7)
you have a Relative B who obtained employment with the Facility as a C in [year], and
she is a member of the Union; (8) multiple [types of management entities] have recently
approached the Political Subdivision and expressed an interest in managing the Facility;
(9) under such a proposed arrangement, the Political Subdivision and a management
entity would enter into a contract by which the Political Subdivision would retain
ownership of the Facility and the management entity would be responsible for managing
the day-to-day, short and mid-term affairs of the Facility; (10) in the near future, the
Political Subdivision A will have to vote on whether to explore the terms of any such
management contract for the Facility and possibly approve such a contract if the
Political Subdivision and a management entity would come to terms; (11) the Political
Subdivision A is not currently discussing a total sale of the Facility but might in the
future explore and vote on a total and complete sale of the Facility, including a sale of
the building occupied by the Facility; (12) if the Political Subdivision would enter into a
management contract for the Facility, the management entity could take actions--
including without limitation negotiating a new, less employee-favorable contract with the
Union--which would result in a reduction in Union employee work hours and related pay
or in Union employees being laid off; and (13) a total sale of the Facility by the Political
Subdivision could have similar results for Union employees as would entering into a
management contract for the Facility, and your Relative B could be detrimentally
affected by either such event, you are advised as follows.
Your Relative B is a member of your “immediate family” as that term is defined in
the Ethics Act. Pursuant to Section 1103(a) of the Ethics Act, you generally would have
a conflict of interest in matters before the Political Subdivision A that would financially
impact you, a member of your immediate family such as your Relative B, or a business
with which you or a member of your immediate family is associated. Under the
submitted facts, you would not have a conflict of interest or transgress Section 1103(a)
of the Ethics Act by voting on matter(s) pertaining to the exploration of the terms of a
management contract for the Facility and approval of such a contract or the approval of
Confidential Advice, 13-522
April 19, 2013
Page 6
a total sale of the Facility--whether in favor of or against such matter(s)--unless you
would be consciously aware of a private pecuniary benefit for your Relative B and your
official action would constitute one or more specific steps to attain that benefit. Even if,
by voting on matter(s) pertaining to the exploration of the terms of a management
contract for the Facility and approval of such a contract or the approval of a total sale of
the Facility, you would be taking official action to attain such a pecuniary benefit, you
nevertheless would not transgress Section 1103(a) of the Ethics Act if one of the two
exclusions to the statutory definition of the term "conflict" or "conflict of interest"
(referred to herein as the "de minimis exclusion" and the "class/subclass exclusion")
would be applicable. Based upon the submitted facts, it cannot be determined whether
either of the exclusions 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