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HomeMy WebLinkAbout13-1501 Confidential ADVICE OF COUNSEL July 29, 2013 13-554/13-1501 This responds to your letter dated June 11, 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., and/or Pennsylvania’s lobbying disclosure law (“Lobbying Disclosure Law”), 65 Pa.C.S. § 13A01 et seq., would impose prohibitions, restrictions, or requirements upon a State Legislator who is a Member of the Pennsylvania [Chamber of the General Assembly] (“the Chamber”) and the A, and who, in a private capacity, is a B, with regard to joining [a type of firm] (“the Firm”) either as a C or D, where: (1) the Firm currently [provides certain services to] the A as to an E that commenced before the State Legislator considered F; (2) the State Legislator does not hold a G in the A; (3) if the State Legislator would join the Firm, the State Legislator would not exercise any influence concerning whether the Firm should be utilized as H by the A or any I Member of the Chamber; (4) the Firm is registered as a lobbying firm with the Pennsylvania Department of State; and (5) the State Legislator would not be engaged in lobbying. Facts: You have been authorized to request a confidential advisory from the Pennsylvania State Ethics Commission on behalf of [name of State Legislator], also referred to herein as “the State Legislator.” You have submitted facts, the material portion of which may be fairly summarized as follows. In a public capacity, the State Legislator is a Member of the Chamber and the A. In a private capacity, the State Legislator is a B. The State Legislator is considering joining the Firm either as a C or D. The State Legislator could receive compensation from the Firm for work performed on behalf of clients and/or for business generated by bringing in new clients. The Firm currently [provides certain services to] the A as to an E that commenced before the State Legislator considered F. You state that the State Legislator does not hold a G in the A and that if the State Legislator would join the Firm, he would not exercise any influence concerning whether the Firm should be utilized as H by the A or any I Member of the Chamber. You further state that the Firm is registered as a lobbying firm with the Pennsylvania Department of State and that the State Legislator would not be engaged in lobbying. Confidential Advice, 13-554/13-1501 July 29, 2013 Page 2 You request general advice as to whether the Ethics Act and/or Lobbying Disclosure Law would impose prohibitions, restrictions, or requirements upon the State Legislator if he would join the Firm while serving as a State Legislator. You ask whether such prohibitions, restrictions, or requirements would vary depending upon whether the State Legislator would be a C or D with the Firm, with the latter relationship being in the capacity of an independent contractor. Additionally, you pose the following three specific questions: (1) Whether the State Legislator would be in violation of the Ethics Act if the A would engage the Firm to [provide certain services to] the A; (2) Whether the State Legislator would be in violation of the Ethics Act if any other I Member of the Chamber would engage the Firm using legislative funds; and (3) Whether the State Legislator would be in violation of the Ethics Act if, after he joined the Firm, there would be ongoing [provision of certain services] by the Firm for the A or an I Member of the Chamber that commenced prior to the State Legislator joining the Firm. You have also posed certain questions under Section 1512(a.5) of the Pennsylvania Race Horse Development and Gaming Act (“Gaming Act”), 4 Pa.C.S. § 1512(a.5); however, by letter dated June 13, 2013, you were informed that the State Ethics Commission lacks jurisdiction to answer such questions under Section 1512(a.5) of the Gaming Act. See, Confidential Opinion, 10-2003/10-004. 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), in conjunction with Section 13A08(a) of the Lobbying Disclosure Law, 65 Pa.C.S. § 13A08(a), 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. This advisory will first address your inquiry relative to the Lobbying Disclosure Law. The Lobbying Disclosure Law regulates individuals, associations, and entities which are involved with lobbying activities, and in particular, lobbying firms, lobbyists, and principals. See, 65 Pa.C.S. §§ 13A04 (pertaining to registration), 13A05 (pertaining to reporting), and 13A07 (pertaining to prohibited activities). Under the submitted facts, the State Legislator would not be engaged in lobbying, and there is no basis in the submitted facts to conclude that the State Legislator would otherwise have any involvement, responsibility, or authority with regard to the Firm’s lobbying activities. Therefore, based upon the submitted facts, you are advised that the Lobbying Disclosure Law would not impose any prohibitions, restrictions, or requirements upon the State Legislator as a result of joining the Firm. Turning to your inquiry under the Ethics Act, the State Legislator is a public official subject to the provisions of the Ethics Act. Section 1103(a) of the Ethics Act provides: Confidential Advice, 13-554/13-1501 July 29, 2013 Page 3 § 1103. Restricted activities (a)Conflict of interest.-- No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. § 1103(a). 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. 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. 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. Confidential Advice, 13-554/13-1501 July 29, 2013 Page 4 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. Section 1103(f) of the Ethics Act 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). Sections 1104 and 1105 of the Ethics Act, 65 Pa.C.S. §§ 1104-1105, provide for the filing of annual Statements of Financial Interests by public officials/public employees. Section 1104(a) of the Ethics Act, 65 Pa.C.S. § 1104(a), provides that each public official/public employee must file a Statement of Financial Interests for the preceding calendar year, each year that he holds the position and the year after he leaves it. Section 1105(b) of the Ethics Act, 65 Pa.C.S. § 1105(b), and its subsections detail the financial disclosure that a person required to file the Statement of Financial Interests form must provide. Section 1105(b)(2) of the Ethics Act requires the filer to disclose on the Statement of Financial Interests his occupation or profession. Section 1105(b)(5) of the Ethics Act requires the filer to disclose on the Statement of Financial Interests the name and address of any direct or indirect source of income totaling in the aggregate $1,300 or more but does not require the divulgence of confidential information protected by statute or existing professional codes of ethics or common law privileges. Section 1105(b)(8) of the Ethics Act requires the filer to disclose on the Statement of Financial Interests any office, directorship or employment in any business entity. In applying the above provisions of the Ethics Act to the facts that you have submitted, you are advised as follows. The elements of a conflict of interest pursuant to Section 1103(a) of the Ethics Act are use of the authority of the public office/employment position, or use of confidential information received by being in such position, for the private pecuniary Confidential Advice, 13-554/13-1501 July 29, 2013 Page 5 benefit of the public official/public employee, a member of his immediate family, or a business with which he or a member of his immediate family is associated. 65 Pa.C.S. § 1102 (definition of “conflict” or “conflict of interest”). To the extent the activities of the State Legislator would relate to “legislative actions” (introducing, considering, debating, voting, enacting, adopting, or approving legislation), they would be constitutionally controlled and exempt from the purview of the Ethics Act and the State Ethics Commission. See, Corrigan, Opinion 87-001. As for other actions of the State Legislator, the State Legislator would not transgress Section 1103(a) of the Ethics Act unless: (1) he would be consciously aware of a private pecuniary benefit for himself, a member of his immediate family, or a business with which he or a member of his immediate family is associated; and (2) his action(s) would constitute one or more specific steps to attain that benefit. See, Kistler v. State Ethics Commission, 610 Pa. 516, 528, 22 A.3d 223, 231 (2011). A violation of Section 1103(a) would not be established as to the State Legislator unless the State Legislator would take action directed toward the purpose of obtaining such a private pecuniary benefit. Kistler, supra; cf., McGuire v. State Ethics Commission, 657 A.2d 1346 (Pa. Cmwlth. 1995).Actions taken by others without any involvement/action by the State Legislator would not establish the elements of a conflict of interest under Section 1103(a) of the Ethics Act. See, Kistler, supra; McGuire, supra. Moreover, the nature of the particular relationship between the State Legislator and the Firm (either C or D, providing services as an employee or independent contractor) would be significant with respect to determining whether the Firm would be considered a business with which the State Legislator is associated. For the Firm to be considered a business with which the State Legislator is associated, the State Legislator would have to be a director, officer, owner, employee or holder of a financial interest in the Firm. Status as an independent contractor would not satisfy the Ethics Act’s definition of the term “business with which he is associated.” See, 65 Pa.C.S. § 1102. Therefore, you are advised that u nless all of the elements of a conflict of interest would be established, the State Legislator would not transgress Section 1103(a) if: (1) the A would engage the Firm to [provide certain services to] the A; (2) another I Member of the Chamber would engage the Firm using legislative funds; or (3) after the State Legislator joined the Firm, there would be ongoing [provision of certain services] by the Firm for the A or an I Member of the Chamber that commenced prior to the State Legislator joining the Firm. Sections 1103(b) and 1103(c) of the Ethics Act would prohibit improper influence/understanding(s) such as with respect to the State Legislator’s joining the Firm or work for the Firm. 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 questions presented. Section 1103(f) of the Ethics Act would have to be observed when applicable. Under the submitted facts, Section 1103(f) of the Ethics Act would not apply as to contract(s) entered into with the Firm at a time when the State Legislator is not/was not a director, officer, owner, employee or holder of a financial interest in the Firm. Finally, the State Legislator is required to file annual Statements of Financial Interests in compliance with Sections 1104 and 1105 of the Ethics Act. If the State Legislator would join the Firm either as a C or D, then Section 1105(b)(2) of the Ethics Act would require the State Legislator to disclose on his Statements of Financial Interests his occupation/profession as a B. Section 1105(b)(5) of the Ethics Act would require the State Legislator to disclose on his Statements of Financial Interests the name and address of the Firm as a direct/indirect source of income totaling in the aggregate $1,300 or more, assuming that such disclosure threshold would be met. Confidential Advice, 13-554/13-1501 July 29, 2013 Page 6 Section 1105(b)(8) of the Ethics Act would require the State Legislator to disclose on his Statements of Financial Interests any office, directorship or employment he would have with the Firm. Your questions have only been addressed under the Ethics Act and the Lobbying Disclosure Law. Conclusion: Based upon the submitted facts that: (1) [name of State Legislator] (“the State Legislator”) is a Member of the Pennsylvania [Chamber of the General Assembly] (“the Chamber”) and the A; (2) in a private capacity, the State Legislator is a B; (3) the State Legislator is considering joining [a type of firm] (“the Firm”) either as a C or D; (4) the State Legislator could receive compensation from the Firm for work performed on behalf of clients and/or for business generated by bringing in new clients; (5) the Firm currently [provides certain services to] the A as to an E that commenced before the State Legislator considered F; (6) the State Legislator does not hold a G in the A; (7) if the State Legislator would join the Firm, he would not exercise any influence concerning whether the Firm should be utilized as H by the A or any I Member of the Chamber; (8) the Firm is registered as a lobbying firm with the Pennsylvania Department of State; and (9) the State Legislator would not be engaged in lobbying, you are advised as follows. Under the submitted facts, Pennsylvania’s lobbying disclosure law, 65 Pa.C.S. § 13A01 et seq., would not impose any prohibitions, restrictions, or requirements upon the State Legislator as a result of joining the Firm. The State Legislator 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. The elements of a conflict of interest pursuant to Section 1103(a) of the Ethics Act are use of the authority of the public office/employment position, or use of confidential information received by being in such position, for the private pecuniary benefit of the public official/public employee, a member of his immediate family, or a business with which he or a member of his immediate family is associated. To the extent the activities of the State Legislator would relate to “legislative actions” (introducing, considering, debating, voting, enacting, adopting, or approving legislation), they would be constitutionally controlled and exempt from the purview of the Ethics Act and the State Ethics Commission. As for other actions of the State Legislator, the State Legislator would not transgress Section 1103(a) of the Ethics Act unless: (1) he would be consciously aware of a private pecuniary benefit for himself, a member of his immediate family, or a business with which he or a member of his immediate family is associated; and (2) his action(s) would constitute one or more specific steps to attain that benefit. A violation of Section 1103(a) would not be established as to the State Legislator unless the State Legislator would take action directed toward the purpose of obtaining such a private pecuniary benefit. A ctions taken by others without any involvement/action by the State Legislator would not establish the elements of a conflict of interest under Section 1103(a) of the Ethics Act. For the Firm to be considered a business with which the State Legislator is associated, the State Legislator would have to be a director, officer, owner, employee or holder of a financial interest in the Firm. Status as an independent contractor would not satisfy the Ethics Act’s definition of the term “business with which he is associated.” 65 Pa.C.S. § 1102. U nless all of the elements of a conflict of interest would be established, the State Legislator would not transgress Section 1103(a) if: (1) the A would engage the Firm to [provide certain services to] the A; (2) another I Member of the Chamber would engage Confidential Advice, 13-554/13-1501 July 29, 2013 Page 7 the Firm using legislative funds; or (3) after the State Legislator joined the Firm, there would be ongoing [provision of certain services] by the Firm for the A or an I Member of the Chamber that commenced prior to the State Legislator joining the Firm. Sections 1103(b) and 1103(c) of the Ethics Act would prohibit improper influence/understanding(s) such as with respect to the State Legislator’s joining the Firm or work for the Firm. Section 1103(f) of the Ethics Act would have to be observed when applicable. Under the submitted facts, Section 1103(f) of the Ethics Act would not apply as to contract(s) entered into with the Firm at a time when the State Legislator is not/was not a director, officer, owner, employee or holder of a financial interest in the Firm. Finally, the State Legislator is required to file annual Statements of Financial Interests in compliance with Sections 1104 and 1105 of the Ethics Act. If the State Legislator would join the Firm either as a C or D, then Section 1105(b)(2) of the Ethics Act would require the State Legislator to disclose on his Statements of Financial Interests his occupation/profession as a B. Section 1105(b)(5) of the Ethics Act would require the State Legislator to disclose on his Statements of Financial Interests the name and address of the Firm as a direct/indirect source of income totaling in the aggregate $1,300 or more, assuming that such disclosure threshold would be met. Section 1105(b)(8) of the Ethics Act would require the State Legislator to disclose on his Statements of Financial Interests any office, directorship or employment he would have with the Firm. Your questions have only been addressed under the Ethics Act and the Lobbying Disclosure Law. 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