HomeMy WebLinkAbout14-545 Loperfito
ADVICE OF COUNSEL
October 2, 2014
Larry D. Loperfito, Esquire
Geary & Loperfito, LLC
158 Grant Avenue
Vandergrift, PA 15690
14-545
Dear Mr. Loperfito:
This responds to your letter dated August 5, 2014, 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 borough
council member, who in a private capacity owns a residential rental property located
within the borough, with regard to renting such property to a contractor to house
employees who would be working on a borough sewer project.
Facts:
As Solicitor for the Borough of Vandergrift (“Borough”), located in
Westmoreland County, Pennsylvania, you have been authorized by Borough Council
Member James P. Rametta (“Mr. Rametta”) to request an advisory from the
Pennsylvania State Ethics Commission on his behalf. You have submitted facts that
may be fairly summarized as follows.
The Borough has entered into a contract with a contractor (the “Contractor”) for
the construction of a new sewer system (the “Sewer Project”) within the Borough.
Construction on the Sewer Project commenced in early 2014 and is anticipated to
exceed a period greater than eighteen months. The construction involves the
Contractor’s use of employees who do not live in the Borough and must travel there to
complete work on the Sewer Project.
Mr. Rametta owns a residential rental property (the “Property”) located within the
Borough. A representative of the Contractor approached Mr. Rametta for the purpose
of seeking to rent the Property to house employees of the Contractor who would be
working on the Sewer Project. Under the proposed transaction, the Contractor would
rent the Property from Mr. Rametta at a rate between $700 and $1,000 per month
depending upon the number of employees to occupy the Property, and the Contractor
would rent the Property for a term of months commensurate with the construction
schedule for the Sewer Project. You state that it is Mr. Rametta’s view that the
proposed rent is fair market value for the Property based upon the number of persons to
occupy the Property. You further state that the proposed transaction between the
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October 2, 2014
Page 2
Contractor and Mr. Rametta would not require a vote by Borough Council as the rental
of the Property would not alter the contractual arrangement between the Borough and
the Contractor and that the rental by the Contractor of any property in the Borough was
not a contractual issue under the bid requirements for the Sewer Project as submitted
by the Borough engineer.
Based upon the above submitted facts, you seek guidance as to whether the
Ethics Act would permit Mr. Rametta to rent the Property to the Contractor to house
employees who would be working on the Sewer Project.
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, pursuant to Sections 1107(10) and (11) of the
Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), an opinion/advice may be given only as to
prospective (future) conduct. If the activity in question has already occurred, the
Commission may not issue an opinion/advice, but any person may then submit a signed
and sworn complaint, which will be investigated by the Commission if there are
allegations of Ethics Act violations by a person who is subject to the Ethics Act. To the
extent you have inquired as to conduct that has already occurred, such past conduct
may not be addressed in the context of an advisory opinion. However, to the extent you
have inquired as to future conduct, your inquiry may and shall be addressed.
As a Borough Council Member, Mr. Rametta 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
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October 2, 2014
Page 3
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:
§ 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.
65 Pa.C.S. § 1102.
It is noted that Section 1103(a) of the Ethics Act does not prohibit public
officials/public employees from having outside business activities or employment.
However, subject to the statutory exclusions to the Ethics Act’s definition of the term
“conflict” or “conflict of interest,” 65 Pa.C.S. § 1102, a 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). A reasonable and legitimate expectation that a business
relationship will form may support a finding of a conflict of interest (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 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.
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October 2, 2014
Page 4
Per the Pennsylvania Supreme Court’s decision in Kistler v. State Ethics
Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the
Ethics Act, a public official/public employee:
… must act in such a way as to put his \[office/public position\]
to the purpose of obtaining for himself a private pecuniary
benefit. Such directed action implies awareness on the part
of the \[public official/public employee\] of the potential
pecuniary benefit as well as the motivation to obtain that
benefit for himself.
Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. 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.” Id., 610 Pa. at 528, 22 A.3d at 231.
Based upon Kistler, the existence of a violation of Section 1103(a) would depend
upon the circumstances in a given case. Raphael, Opinion 13-003.
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.
In applying the above provisions of the Ethics Act to the instant matter, you are
advised as follows.
Section 1103(a) of the Ethics Act applies to restrict public officials and public
employees in their public capacities. Therefore, Section 1103(a) would apply to restrict
Mr. Rametta in his capacity as a public official, rather than in his private capacity.
Although the Ethics Act would not restrict Mr. Rametta, in his private capacity, with
regard to renting the Property to the Contractor to house employees who would be
working on the Sewer Project, you are advised that at such times as Mr. Rametta would
have a business relationship with or would have a reasonable expectation of developing
a business relationship with the Contractor, Mr. Rametta would have a conflict of
interest and would violate Section 1103(a) of the Ethics Act by participating in his official
capacity as a Borough Council Member in matter(s) involving the Contractor if: (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; (2) his action(s) would constitute one or more specific steps to attain that
benefit; and (3) neither of the statutory exclusions to the definition of "conflict" or
"conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, would be
applicable.
As noted above, in each instance of a conflict of interest, Mr. Rametta 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
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October 2, 2014
Page 5
interpretation of the Ethics Act. Specifically not addressed herein is the applicability of
the Borough Code.
Conclusion:
As a Member of Council for the Borough of Vandergrift (“Borough”),
located in Westmoreland County, Pennsylvania, James P. Rametta (“Mr. Rametta”) 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
Borough has entered into a contract with a contractor (the “Contractor”) for the
construction of a new sewer system (the “Sewer Project”) within the Borough; (2)
construction on the Sewer Project commenced in early 2014 and is anticipated to
exceed a period greater than eighteen months; (3) the construction involves the
Contractor’s use of employees who do not live in the Borough and must travel there to
complete work on the Sewer Project; (4) Mr. Rametta owns a residential rental property
(the “Property”) located within the Borough; (5) a representative of the Contractor
approached Mr. Rametta for the purpose of seeking to rent the Property to house
employees of the Contractor who would be working on the Sewer Project; (6) under the
proposed transaction, the Contractor would rent the Property from Mr. Rametta at a rate
between $700 and $1,000 per month depending upon the number of employees to
occupy the Property, and the Contractor would rent the Property for a term of months
commensurate with the construction schedule for the Sewer Project; (7) it is Mr.
Rametta’s view that the proposed rent is fair market value for the Property based upon
the number of persons to occupy the Property; (8) the proposed transaction between
the Contractor and Mr. Rametta would not require a vote by Borough Council as the
rental of the Property would not alter the contractual arrangement between the Borough
and the Contractor, and the rental by the Contractor of any property in the Borough was
not a contractual issue under the bid requirements for the Sewer Project as submitted
by the Borough engineer, you are advised as follows.
Section 1103(a) of the Ethics Act, pertaining to conflict of interest, applies to
restrict public officials and public employees in their public capacities. Therefore,
Section 1103(a) would apply to restrict Mr. Rametta in his capacity as a public official,
rather than in his private capacity. Although the Ethics Act would not restrict Mr.
Rametta, in his private capacity, with regard to renting the Property to the Contractor to
house employees who would be working on the Sewer Project, you are advised that at
such times as Mr. Rametta would have a business relationship with or would have a
reasonable expectation of developing a business relationship with the Contractor, Mr.
Rametta would have a conflict of interest and would violate Section 1103(a) of the
Ethics Act by participating in his official capacity as a Borough Council Member in
matter(s) involving the Contractor if: (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; (2) his action(s) would
constitute one or more specific steps to attain that benefit; and (3) neither of the
statutory exclusions to the definition of "conflict" or "conflict of interest" as set forth in the
Ethics Act, 65 Pa.C.S. § 1102, would be applicable. In each instance of a conflict of
interest, Mr. Rametta 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
.
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October 2, 2014
Page 6
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