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HomeMy WebLinkAbout13-533 Confidential ADVICE OF COUNSEL May 10, 2013 13-533 This responds to your letter dated March 21, 2013 (postmarked March 26, 2013, and received March 28, 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 A for a [type of political subdivision], who along with his wife has been discussing with a local developer the possibility of investing in a development project within the [type of political subdivision], with respect to: (1) entering into a business relationship with the developer on a project not related to any [type of political subdivision] project; or (2) participating in discussions related to negotiations regarding the sale to the developer of commercial property owned by the [type of political subdivision]. Facts: As A of [name of political subdivision] (the “Political Subdivision”), 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, via the B, is in negotiations to sell to a local developer (the “Developer”) some commercial property (the “Property”) owned by the Political Subdivision. The Developer owns other property within the Political Subdivision. You and your wife, as private citizens, are discussing with the Developer the possibility of investing in a development project (the “Project”) within the Political Subdivision that has no relationship to the matter which the Political Subdivision is negotiating with the Developer. Based upon the above submitted facts, you ask whether the Ethics Act would permit you to participate in discussions related to the negotiations with the Developer concerning the Property. You express your view that it would be prudent for you to recuse yourself from the actual vote regarding the sale of the Property to the Developer. You further ask whether the Ethics Act would permit you, as a private citizen, to enter into a business relationship with the Developer on a project not related to any Political Subdivision project. 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 Confidential Advice, 13-533 May 10, 2013 Page 2 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 of 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 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 Confidential Advice, 13-533 May 10, 2013 Page 3 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. 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. 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. Per State Ethics Commission precedent, 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, supra; Miller, supra), 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). 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). 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 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 Confidential Advice, 13-533 May 10, 2013 Page 4 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. In applying the above general principles to your specific questions, you are advised as follows. The Ethics Act would not prohibit you, in your private capacity, from entering into a business relationship with the Developer on a project not related to any Political Subdivision project. However, at such times as you would have a business relationship with or would have a reasonable expectation of having a business relationship with the Developer, you would have a conflict of interest and would transgress Section 1103(a) of the Ethics Act by participating in your official capacity in discussion(s) or vote(s) related to the negotiations with the Developer concerning the Property 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). 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; 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 [name of political subdivision] (the “Political Subdivision”), 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, via the B, is in negotiations to sell to a local developer (the “Developer”) some commercial property (the “Property”) owned by the Political Subdivision; (2) the Developer owns other property within the Political Subdivision; and (3) you and your wife, as private citizens, are discussing with the Developer the possibility of investing in a development project (the “Project”) within the Political Subdivision that has no relationship to the matter which the Political Subdivision is negotiating with the Developer, you are advised as follows. The Ethics Act would not prohibit you, in your private capacity, from entering into a business relationship with the Developer on a project not related to any Political Subdivision project. However, at such times as you would have a business relationship with or would have a reasonable expectation of having a business relationship with the Developer, you would have a conflict of interest and would transgress Section 1103(a) of the Ethics Act by participating in your official capacity in discussion(s) or vote(s) related to the negotiations with the Developer concerning the Property 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. 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 Confidential Advice, 13-533 May 10, 2013 Page 5 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