HomeMy WebLinkAbout13-548 Confidential
ADVICE OF COUNSEL
July 2, 2013
13-548
This responds to your letter of May 6, 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 a township
supervisor who, in a private capacity, is part owner of a corporation that provides [type
of services], with regard to participating/voting as to contracts, bills, or other matters
involving business(es) to which the corporation provides services that are unrelated to
township projects.
Facts:
You request a confidential advisory from the Pennsylvania State Ethics
Commission based upon submitted facts that may be fairly summarized as follows.
You are a Supervisor for [name of township] (the “Township”), located in [name
of county] (the “County”), Pennsylvania. Over the course of the last several years, the
Township has contracted with a company named [name of company] (“Company 1”) for
the use and rental of A and B for public projects. During the same time period, the
Township has also contracted with a company named [name of company] (“Company
2”) for C used in D.
In a private capacity, you hold a [percentage] ownership interest in a corporation
named [name of corporation] (the “Corporation”). The Corporation provides [type of
services] throughout the County. You state that Company 1, Company 2, and other
businesses have contracted with the Corporation for the Corporation to E and that none
of the work performed by the Corporation has been for or related to the Township
contracts awarded to Company 1 and Company 2.
You state that the Township may be presented with possible contracts with
and/or bills from Company 1, Company 2, and other businesses in the future.
Based upon the above submitted facts, the question that is presented is whether
the Ethics Act would impose any prohibitions or restrictions upon you with regard to
participating/voting as to contracts, bills, or other matters involving business(es) to
which the Corporation provides services that are unrelated to Township projects.
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, 13-548
July 2, 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 Township Supervisor, you are a public official 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
public or a subclass consisting of an industry, occupation or
Confidential Advice, 13-548
July 2, 2013
Page 3
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.
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).
Confidential Advice, 13-548
July 2, 2013
Page 4
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
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.
Having set forth the above principles, you are advised as follows.
The Corporation is a business with which you are associated in your capacity as
an owner.
You would have a conflict of interest and would transgress Section 1103(a) of the
Ethics Act by participating in your official capacity as to contracts, bills, or other matters
involving Company 1, Company 2, or other business(es) to which the Corporation
provides services or has a reasonable expectation of providing services, 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. Specifically not addressed herein is the applicability of
the Second Class Township Code.
Conclusion:
As a Supervisor for [name of Township] (the “Township”), located in
[name of county] (the “County”), 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) over the course of the last
several years, the Township has contracted with a company named [name of company]
(“Company 1”) for the use and rental of A and B for public projects; (2) during the same
time period, the Township has also contracted with a company named [name of
company] (“Company 2”) for C used in D; (3) in a private capacity, you hold a
[percentage] ownership interest in a corporation named [name of corporation] (the
“Corporation”); (4) the Corporation provides [type of services] throughout the County; (5)
Company 1, Company 2, and other businesses have contracted with the Corporation
for the Corporation to E; (6) none of the work performed by the Corporation has been
Confidential Advice, 13-548
July 2, 2013
Page 5
for or related to the Township contracts awarded to Company 1 and Company 2; and
(7) the Township may be presented with possible contracts with and/or bills from
Company 1, Company 2, and other businesses in the future, you are advised as follows.
The Corporation is a business with which you are associated in your capacity as
an owner. You would have a conflict of interest and would transgress Section 1103(a)
of the Ethics Act by participating in your official capacity as to contracts, bills, or other
matters involving Company 1, Company 2, or other business(es) to which the
Corporation provides services or has a reasonable expectation of providing services, 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
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