HomeMy WebLinkAbout13-582 Garner (2)
ADVICE OF COUNSEL
December 4, 2013
David G. Garner, Esquire
221 East High Street, Suite 1
Pottstown, PA 19464
13-582
Dear Mr. Garner:
This responds to your letter of October 31, 2013, by which you requested an
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 member and
chairman of the board of a municipal authority, who in a private capacity is the
Pennsylvania sales representative for a manufacturer, with regard to the municipal
authority purchasing a paving product from the manufacturer.
Facts:
As Solicitor for the Pottstown Borough Authority (“Authority”), you have
been authorized by Thomas E. Carroll (“Mr. Carroll”), who is a Member and Chairman of
the Authority Board, to request an advisory from the Pennsylvania State Ethics
Commission on his behalf. You have submitted facts, the material portion of which may
be fairly summarized as follows.
The Authority was created pursuant to the Municipality Authorities Act, 53
Pa.C.S. § 5601 et seq. Members of the Authority Board are appointed by Council of the
Borough of Pottstown.
After Mr. Carroll retired from his full-time working career a few years ago, he
began consulting on various types of projects. Mr. Carroll recently began to serve as
the Pennsylvania Sales Representative for KB Industries, which manufactures a porous
flexible paving product called “FLEXI-Pave” (the “Paving Product”). The Paving Product
is made from recycled tires and filters out nitrates and phosphates. You state that the
Paving Product has potential for use in addressing storm water concerns and in more
conventional paving applications and that other vendors appear to offer similar
products.
While there are presently no specific situations in which the Authority is
contemplating purchasing/utilizing the Paving Product, Authority staff believes that there
could be circumstances where the Paving Product would be deemed the best product to
Garner, 13-582
December 4, 2013
Page 2
use for a situation. You state that since Mr. Carroll is the only representative authorized
to sell the Paving Product in Pennsylvania, he would necessarily be involved in any
transaction with the Authority and would derive a commission based upon any purchase
by the Authority.
Based upon the above submitted facts, you ask whether Mr. Carroll would have a
conflict of interest with regard to a decision by the Authority to purchase the Paving
Product.
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.
As a Member and Chairman of the Authority Board, Mr. Carroll is 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 related to Section 1103(a) are defined in the Ethics Act as
follows:
Garner, 13-582
December 4, 2013
Page 3
§ 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.
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.
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 could form the basis for a conflict of interest under
Section 1103(a) of the Ethics Act would include the pursuit of a private business
opportunity in the course of public action (Metrick, Order 1037) and 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).
Garner, 13-582
December 4, 2013
Page 4
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).
In each instance of a conflict of interest, the public official/public employee would
be required to abstain from participation. The abstention requirement would not be
limited merely to voting, but would extend 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. Subject to certain statutory exceptions, in each instance of a voting
conflict, Section 1103(j) of the Ethics Act would require the public official/public
employee to abstain and to publicly disclose the abstention and reasons for same, both
orally and by filing a written memorandum to that effect with the person recording the
minutes.
Section 1103(f) of the Ethics Act, pertaining to contracting, 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).
The term “contract” is defined in the Ethics Act as follows:
§ 1102. Definitions
"Contract."
An agreement or arrangement for the
acquisition, use or disposal by the Commonwealth or a
political subdivision of consulting or other services or of
supplies, materials, equipment, land or other personal or real
property. The term shall not mean an agreement or
arrangement between the State or political subdivision as
one party and a public official or public employee as the
other party, concerning his expense, reimbursement, salary,
wage, retirement or other benefit, tenure or other matters in
consideration of his current public employment with the
Commonwealth or a political subdivision.
Garner, 13-582
December 4, 2013
Page 5
65 Pa.C.S. § 1102.
Section 1103(f) does not operate to make contracting with the governmental
body permissible where it is otherwise prohibited. Rather, where a public official/public
employee, his spouse or child, or a business with which he, his spouse or child is
associated, is otherwise appropriately contracting with the governmental body, or
subcontracting with any person who has been awarded a contract with the
governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an
“open and public process” be observed as to the contract with the governmental body.
Section 1103(f) of the Ethics Act also provides that the public official/public employee, in
his public capacity, may not have any supervisory or overall responsibility as to the
implementation or administration of the contract with the governmental body.
In applying the above provisions of the Ethics Act to the instant matter, you are
advised as follows.
The submitted facts do not identify the precise nature of the relationship between
KB Industries and Mr. Carroll as the Pennsylvania Sales Representative for KB
Industries. You are advised that KB Industries is a business with which Mr. Carroll is
associated to the extent that he is a director, officer, owner, employee, or holder of a
financial interest in KB Industries.
Subject to the statutory exclusions to the definition of “conflict” or “conflict of
interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a)
of the Ethics Act, Mr. Carroll would have a conflict of interest in matters before the
Authority Board that would financially impact him or a business with which he is
associated. Mr. Carroll would specifically have a conflict of interest in matter(s)
pertaining to the Authority’s purchase of the Paving Product from KB Industries if for no
other reason than the fact that Mr. Carroll would derive a commission based upon any
such purchase by the Authority. Mr. Carroll would also be prohibited from using the
authority of his public position, or confidential information accessed or received as a
result of being a Member/Chairman of the Authority Board, to effectuate a private
pecuniary benefit to himself or a business with which he is associated through a
detriment to a business competitor. See, Pepper, Opinion 87-008.
As noted above, in each instance of a conflict of interest, Mr. Carroll would be
required to abstain fully 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 restrictions and requirements of Section 1103(f) of the Ethics Act would have
to be observed whenever applicable.
It is administratively noted that the Municipality Authorities Act provides in part:
§ 5614. Competition in award of contracts.
. . . .
(e) CONFLICT OF INTEREST.--No member of the
authority or officer or employee of the authority may directly
or indirectly be a party to or be interested in any contract or
agreement with the authority if the contract or agreement
establishes liability against or indebtedness of the authority.
Any contract or agreement made in violation of this
subsection is void, and no action may be maintained on the
agreement against the authority.
Garner, 13-582
December 4, 2013
Page 6
53 Pa.C.S. § 5614(e). Because this Advice may not interpret the above quoted
provision of the Municipality Authorities Act, it is suggested that Mr. Carroll seek legal
advice in that regard.
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 Member and Chairman of the Board of the Pottstown Borough
Authority (“Authority”), Thomas E. Carroll (“Mr. Carroll”) 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. Based upon the submitted facts that: (1) the Authority was created
pursuant to the Municipality Authorities Act, 53 Pa.C.S. § 5601 et seq.; (2) Members of
the Authority Board are appointed by Council of the Borough of Pottstown; (3) after Mr.
Carroll retired from his full-time working career a few years ago, he began consulting on
various types of projects; (4) Mr. Carroll recently began to serve as the Pennsylvania
Sales Representative for KB Industries, which manufactures a porous flexible paving
product called “FLEXI-Pave” (the “Paving Product”); (5) the Paving Product is made
from recycled tires and filters out nitrates and phosphates; (6) the Paving Product has
potential for use in addressing storm water concerns and in more conventional paving
applications, and other vendors appear to offer similar products; (7) while there are
presently no specific situations in which the Authority is contemplating
purchasing/utilizing the Paving Product, Authority staff believes that there could be
circumstances where the Paving Product would be deemed the best product to use for
a situation; and (8) since Mr. Carroll is the only representative authorized to sell the
Paving Product in Pennsylvania, he would necessarily be involved in any transaction
with the Authority and would derive a commission based upon any purchase by the
Authority, you are advised as follows.
The submitted facts do not identify the precise nature of the relationship between
KB Industries and Mr. Carroll as the Pennsylvania Sales Representative for KB
Industries. KB Industries is a business with which Mr. Carroll is associated to the extent
that he is a director, officer, owner, employee, or holder of a financial interest in KB
Industries. Subject to the statutory exclusions to the definition of “conflict” or “conflict of
interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a)
of the Ethics Act, Mr. Carroll would have a conflict of interest in matters before the
Authority Board that would financially impact him or a business with which he is
associated. Mr. Carroll would specifically have a conflict of interest in matter(s)
pertaining to the Authority’s purchase of the Paving Product from KB Industries if for no
other reason than the fact that Mr. Carroll would derive a commission based upon any
such purchase by the Authority. Mr. Carroll would also be prohibited from using the
authority of his public position, or confidential information accessed or received as a
result of being a Member/Chairman of the Authority Board, to effectuate a private
pecuniary benefit to himself or a business with which he is associated through a
detriment to a business competitor. In each instance of a conflict of interest, Mr. Carroll
would be required to abstain fully 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 restrictions and requirements of
Section 1103(f) of the Ethics Act would have to be observed whenever applicable. It is
suggested that Mr. Carroll seek legal advice as to the applicability of the Municipality
Authorities Act to the proposed conduct. 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
Garner, 13-582
December 4, 2013
Page 7
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