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Home My WebLink About13-576 Confidential ADVICE OF COUNSEL November 6, 2013 13-576 This responds to your advisory request dated September 10, 2013 (received September 17, 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 serving in the [Chamber of the General Assembly] (the “Chamber”) with regard to being a co-owner of an A that would be principally utilized by [certain parties] to [engage in transactions involving certain items]. Facts: You 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 that may be fairly summarized as follows. The State Legislator has a potential business venture (“Business Venture”) in which the State Legislator would be a co-owner of an A that would be principally utilized by [certain parties] to [engage in transactions involving certain items]. Interested parties would be required to pay a B to access the A and/or its C. There would be no D associated with the [transaction] engaged in by the parties. You state that none of the State Legislator’s work regarding the Business Venture would be done in Chamber offices or with Chamber equipment. The narrow question that you have posed is whether the Ethics Act would permit the State Legislator to be a co-owner of the Business Venture A. 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 this Advice is limited to addressing the narrow question posed. Confidential Advice, 13-576 November 6, 2013 Page 2 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 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 Confidential Advice, 13-576 November 6, 2013 Page 3 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. To the extent the activities of a 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. 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. Based upon the submitted facts, you are advised that Section 1103(a) of the Ethics Act would not prohibit the State Legislator, in his private capacity, from being a co-owner of the Business Venture A. Any business in which the State Legislator would be a director, officer, owner, employee or holder of a financial interest would be considered a business with which the State Legislator is associated. 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: Based upon the submitted facts that: (1) [name of State Legislator], also referred to herein as “the State Legislator,” has a potential business venture (“Business Venture”) in which the State Legislator would be a co-owner of an A that would be principally utilized by [certain parties] to [engage in transactions involving certain items]; (2) interested parties would be required to pay a B to access the A and/or its C; (3) there would be no D associated with the [transaction] engaged in by the parties; and (4) none of the State Legislator’s work regarding the Business Venture would be done in Chamber offices or with Chamber equipment, 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. Section 1103(a) of the Ethics Act would not prohibit the State Legislator, in his private capacity, from being a co-owner of the Business Venture A. Any business in which the State Legislator would be a director, officer, owner, employee or holder of a financial interest would be considered a business with which the State Legislator is associated. 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 Confidential Advice, 13-576 November 6, 2013 Page 4 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