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HomeMy WebLinkAbout13-569 ADVICE OF COUNSEL October 23, 2013 13-569 This responds to your letter of September 3, 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 prohibitions or restrictions upon a State Legislator with regard to providing private A services to business(es) as a B C between such business(es) and political subdivision(s) located outside or within the boundaries of the State Legislator’s legislative district. Facts: You have been authorized by [name of State Legislator], also referred to herein as “the State Legislator,” 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 State Legislator was first sworn in as a Member of the Pennsylvania [Chamber of the General Assembly] (“the Chamber”) in [year], in which capacity he represents the [certain legislative district] in [name of county], Pennsylvania. Prior to his legislative service, the State Legislator served as the D for [name of political subdivision] for [number] years. The State Legislator is currently an E and the [title] of the [name of entity]. Before the State Legislator was elected to the Chamber, he started an A firm (the “Firm”) to serve as a B C. The State Legislator placed the Firm on hold after his election to the Chamber, and he has not provided any C services since his election. The State Legislator is considering restarting the Firm to act as a C for B issues between businesses and political subdivisions. At present, the State Legislator intends to deal only with officials in political subdivisions located outside the boundaries of his legislative district. The State Legislator’s services would include [certain services]. The State Legislator would be compensated by a business on either an hourly basis or by remaining on a monthly retainer, depending upon the needs of the business. The contract between the business and the State Legislator would specify that he would not represent the client’s interests before any state agencies or seek state funding on its behalf. You state that the State Legislator, who is an F, would not utilize his G in his A work and that all clients would be informed that they must have their own H to provide I. Confidential Advice, 13-569 October 23, 2013 Page 2 You request general advice as to what limits would be applicable to the State Legislator if he would restart the Firm. Additionally, you pose the following specific questions: (1) Whether the State Legislator would be in violation of the Ethics Act if he would meet with officials of political subdivisions located outside the boundaries of his legislative district to provide A services on behalf of his business client(s); (2) Whether the State Legislator would be in violation of the Ethics Act if his business model would change and he would meet with officials of political subdivisions located within the boundaries of his legislative district to provide A services on behalf of his business client(s); and (3) Whether the State Legislator would be in violation of the Ethics Act if, after he would enter into an A agreement with a business, there would be legislative action that would direct money toward such business. 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. The State Legislator is a public official subject to the provisions of the Ethics Act. Section 1103(a) of the Ethics Act provides: § 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 Confidential Advice, 13-569 October 23, 2013 Page 3 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. 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. In applying the above provisions of the Ethics Act to the facts that you have submitted, you are advised as follows. The Firm is a business with which the State Legislator is associated to the extent that the State Legislator is a director, officer, owner, employee or holder of a financial interest in the Firm. Pursuant to Section 1103(a) of the Ethics Act, in his capacity as a public official, the State Legislator could have a conflict of interest under the Ethics Act in matters that would financially impact a business (such as the Firm) with which he is associated. However, to the extent the activities of the State Legislator would relate to “legislative actions” (introducing, considering, debating, voting, enacting, adopting, or approving legislation), they are constitutionally controlled and are exempt from the purview of the Ethics Act and the Pennsylvania State Ethics Commission. See, Mann, Opinion 07-005; Confidential Opinion, 05-002; Corrigan, Opinion 87-001. As for other actions, 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 Confidential Advice, 13-569 October 23, 2013 Page 4 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). Therefore, u nless all of the elements of a conflict of interest would be established, the State Legislator would not transgress Section 1103(a) of the Ethics Act if: (1) the State Legislator would meet with officials of political subdivisions located outside the boundaries of his legislative district to provide A services on behalf of his business client(s); (2) the State Legislator would meet with officials of political subdivisions located within the boundaries of his legislative district to provide A services on behalf of his business client(s); or (3) the State Legislator would enter into an A agreement with a business, and there subsequently would be legislative action that would direct money toward such business. Moreover, 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. 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 provision of A services as a B C. 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. The propriety of the proposed conduct has only been addressed under the Ethics Act. Conclusion: Based upon the submitted facts that: (1) [name of State Legislator] (“the State Legislator”) was first sworn in as a Member of the Pennsylvania [Chamber of the General Assembly] (“the Chamber”) in [year], in which capacity he represents the [certain legislative district] in [name of county], Pennsylvania; (2) prior to his legislative service, the State Legislator served as the D for [name of political subdivision] for [number] years; (3) the State Legislator is currently an E and the [title] of the [name of entity]; (4) before the State Legislator was elected to the Chamber, he started an A firm (the “Firm”) to serve as a B C; (5) the State Legislator placed the Firm on hold after his election to the Chamber, and he has not provided any C services since his election; (6) the State Legislator is considering restarting the Firm to act as a C for B issues between businesses and political subdivisions; (7) at present, the State Legislator intends to deal only with officials in political subdivisions located outside the boundaries of his legislative district; (8) the State Legislator’s services would include [certain services]; (9) the State Legislator would be compensated by a business on either an hourly basis or by remaining on a monthly retainer, depending upon the needs of the business; (10) the contract between the business and the State Legislator would specify that he would not represent the client’s interests before any state agencies or seek state funding on its behalf; and (11) the State Legislator, who is an F, would not utilize his G in his A work, and all clients would be informed that they must have their own H to provide I, you are advised as follows. 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 Firm is a business with which the State Legislator is associated to the extent that the State Legislator is a director, officer, owner, employee or holder of a financial interest in the Firm. Pursuant to Section 1103(a) of the Ethics Act, in his capacity as a public official, the State Legislator could have a conflict of interest under the Ethics Act in matters that would financially impact a business (such as the Firm) with which he is associated. However, to the extent the activities of the State Legislator would relate to “legislative actions” (introducing, considering, debating, voting, enacting, adopting, or approving legislation), they are constitutionally controlled and are exempt from the purview of the Ethics Act and the Pennsylvania State Ethics Commission. Confidential Advice, 13-569 October 23, 2013 Page 5 As for other actions, 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. U nless all of the elements of a conflict of interest would be established, the State Legislator would not transgress Section 1103(a) of the Ethics Act if: (1) the State Legislator would meet with officials of political subdivisions located outside the boundaries of his legislative district to provide A services on behalf of his business client(s); (2) the State Legislator would meet with officials of political subdivisions located within the boundaries of his legislative district to provide A services on behalf of his business client(s); or (3) the State Legislator would enter into an A agreement with a business, and there subsequently would be legislative action that would direct money toward such business. Moreover, 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. 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 provision of A services as a B C. 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