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HomeMy WebLinkAbout14-553-S Varano ADVICE OF COUNSEL January 29, 2015 Samuel Varano Lori Sniezek Greg Carna Pulaski Township Board of Supervisors Lawrence County 1172 State Route 208 Pulaski, PA 16143 14-553-S Dear Mr. Varano, Ms. Sniezek, and Mr. Carna: This responds to your letter dated December 4, 2014, by which you requested supplemental advice 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 either of two members of a three-member township board of supervisors with regard to making a motion on an energy company’s request for conditional use approval for installation of a well pad on land owned by one of the township supervisors, where: (1) each of the two township supervisors would have a direct financial interest in the conditional use application; and (2) the third township supervisor is an employee of the energy company and would recuse herself from any proceeding involving the conditional use application. Facts: By letter dated September 29, 2014, you submitted an initial request for an advisory from the Pennsylvania State Ethics Commission. In response to your initial advisory request, Varano, Sniezek, and Carna, Advice 14-553, was issued to you on November 10, 2014. Advice of Counsel 14-553 was based upon submitted facts that were summarized as follows: Each of you is a Supervisor for Pulaski Township (“Township”), located in Lawrence County, Pennsylvania. The Township Board of Supervisors (“Board”) consists of three Members. There is extensive shale gas and oil exploration and production in the Township. Numerous active well sites have been permitted by the Pennsylvania Department of Varano, Sniezek, and Carna, 14-553-S January 29, 2015 Page 2 Environmental Protection and approved by the Board as conditional uses under the Township zoning ordinance. Many Township residents have leased the gas and oil rights to their property, and the principal energy company holding these leases is Hilcorp Energy Company (“Hilcorp”) of Houston, Texas. Ms. Sniezek is a full-time employee of Hilcorp. You state that in the past, Ms. Sniezek has recused herself from any participation in any Township zoning hearing involving Hilcorp and has filed a written disclosure of the nature of her interest for inclusion in the transcripts of each Township zoning hearing involving Hilcorp. Mr. Varano and Mr. Carna have each signed an oil and gas lease with Hilcorp. Hilcorp proposes to seek conditional use approval for the installation of a well pad on properties owned by Mr. Varano and Mr. Carna. Hilcorp’s proposal, if approved and permitted, would result in direct financial gain to Mr. Varano and Mr. Carna. You state that Ms. Sniezek will again recuse herself from participating in any proceeding involving Hilcorp, including proceeding(s) involving Hilcorp’s proposal for the properties of Mr. Varano and Mr. Carna. You further state that if Mr. Varano and Mr. Carna recuse themselves from such proceeding(s), the Township will be unable to discharge its statutory duty to hear and rule upon Hilcorp’s request for conditional use approval relative to the properties of Mr. Varano and Mr. Carna. The narrow question that you have posed is whether Mr. Varano and Mr. Carna, after making disclosures under Section 1103(j) of the Ethics Act, would be permitted to participate in the proceedings and vote on Hilcorp’s request for conditional use approval for installation of a well pad on properties owned by Mr. Varano and Mr. Carna. Varano, Sniezek, and Carna, Advice 14-553, at 1-2. Varano, Sniezek and Carna, Advice of Counsel 14-553, initially noted, inter alia, that it is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. See, Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11). The Advice of Counsel noted that the submitted facts did not indicate: (1) whether Board action as to a single conditional use application could financially impact both Mr. Varano and Mr. Carna; or (2) whether there would be any potential basis for Mr. Varano or Mr. Carna to have a conflict of interest other than their respective ownership of property included in a conditional use application. The Advice of Counsel assumed that: (1) factually, a single conditional use application would not financially impact both Mr. Varano and Mr. Carna; and (2) factually, there would be no potential basis for Mr. Varano or Mr. Carna to have a conflict of interest other than their respective ownership of property included in a conditional use application. Advice of Counsel 14-553 determined that as a Township Supervisor, each of you is a public official subject to the provisions of the Ethics Act. The Advice concluded as follows: Varano, Sniezek, and Carna, 14-553-S January 29, 2015 Page 3 As to each of the two Township Supervisors who have signed oil and gas leases with Hilcorp (that is, Mr. Varano and Mr. Carna), the Township Supervisor would have a conflict of interest under Section 1103(a) of the Ethics Act with regard to a request by Hilcorp for conditional use approval for installation of a well pad on property owned by that Township Supervisor. Subject to the voting conflict exceptions of Section 1103(j) of the Ethics Act, Township Supervisor(s) with a conflict of interest would be required to abstain fully from participation. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. Per the submitted facts, Ms. Sniezek always recuses herself from Township zoning hearings involving Hilcorp and files disclosure statements as a result of her employment with Hilcorp. When two Board Members would have conflicts of interest with regard to a particular request by Hilcorp for conditional use approval, only the remaining non- conflicted Member could make a motion. If such a motion would not be made, there would be no opportunity for a motion to be seconded. If such a motion would be made, since the non-conflicted Member could not second his own motion and it would be otherwise impossible to obtain a second to the motion, either of the two conflicted Members, having previously abstained and disclosed the conflict, could then second the motion if he/she would so choose. The two conflicted Members could not discuss or advocate as to the motion. The two conflicted Members could only vote on the motion. Finally, you are advised that pursuant to Sections 1103(a) and 1103(b)-(c) of the Ethics Act, any vote as to the conditional use applications in question must occur without improper influence/understanding(s) between/among the Township Supervisors. Varano, Sniezek and Carna, Advice of Counsel 14-553, at 5-6. In your December 4, 2014, advisory request letter, you state that the factual basis relied upon in rendering Advice of Counsel 14-553 is slightly different from the factual scenario that you now face. You state that Hilcorp will shortly file an application for conditional use approval (“Application”) to install an oil and gas well drilling pad (“Well Pad”) on property owned by Mr. Varano (the “Varano Property”) and that Mr. Varano would receive direct financial compensation from Hilcorp if the Application would be approved and the Well Pad would be installed. You further state that once production from the well would be initiated, Mr. Varano would also receive royalty payments from Hilcorp for the gas and oil extracted from the well. You state that Mr. Carna owns property (the “Carna Property”) near the Varano Property and that the Carna Property is in the same production unit as the Varano Property. You further state that if the Application to install the Well Pad on the Varano Property would be approved, Mr. Carna would be owed royalty payments under his oil and gas lease with Hilcorp when production at the well on the Varano Property would commence. You additionally state that if Mr. Carna and Mr. Varano would both participate with regard to the Application to install the Well Pad on the Varano Property, Varano, Sniezek, and Carna, 14-553-S January 29, 2015 Page 4 they would be approving or denying a conditional use application in which each of them has a direct financial interest. In light of the above additional facts, you request a supplemental advisory as to how to proceed with respect to the Application to install the Well Pad on the Varano Property. You specifically ask whether: (1) either Mr. Varona or Mr. Carna would be permitted to make a motion as to the Application to install the Well Pad on the Varano Property; (2) the Supervisor who did not make the motion would be permitted to second the motion; and (3) both Mr. Varona and Mr. Carna would be permitted to vote on the motion, provided that the proper disclosures would be made under Section 1103(j) of the Ethics Act and neither Mr. Varona nor Mr. Carna would advocate a position as to the Application. Discussion: 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. This Supplemental Advice incorporates herein by reference the quotations, citations and commentary as to the Ethics Act set forth within Varano, Sniezek and Carna, Advice of Counsel 14-553. In considering the additional submitted facts, you are advised as follows. As a Township Supervisor for Pulaski Township (“Township”), located in Lawrence County, Pennsylvania, each of you is a public official subject to the provisions of the Ethics Act. The two voting conflict exceptions contained in Section 1103(j) of the Ethics Act do not authorize an individual with a conflict to make a motion to put the matter in the posture for a vote. Therefore, where all three Members of the Township Board of Supervisors would have a conflict of interest with regard to the Application to install the Well Pad on the Varano Property, Section 1103(j) of the Ethics Act itself would not authorize any Member(s) of the Township Board of Supervisors to make a motion as to the Application to install the Well Pad on the Varano Property. However, Section 1103(j) of the Ethics Act recognizes that certain other sources of law may apply to voting conflicts. See, 65 Pa.C.S. § 1103(j). It is suggested that you seek legal advice as to the potential applicability of such other sources of law to your inquiry. 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. Specifically not addressed herein is the Second Class Township Code or the Rule of Necessity. Conclusion: As a Supervisor for Pulaski Township (“Township”), located in Lawrence County, Pennsylvania, each of you 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 additional submitted facts that: (1) Hilcorp Energy Company (“Hilcorp”) of Houston, Texas will shortly file an application for conditional use approval (“Application”) to install an oil and gas well drilling pad (“Well Pad”) on property owned by Mr. Varano (the “Varano Property”), and Mr. Varano would receive direct financial compensation from Hilcorp if the Application would be approved and the Well Pad would be installed; (2) once production from the well would be initiated, Mr. Varano Varano, Sniezek, and Carna, 14-553-S January 29, 2015 Page 5 would also receive royalty payments from Hilcorp for the gas and oil extracted from the well; (3) Mr. Carna owns property (the “Carna Property”) near the Varano Property, and the Carna Property is in the same production unit as the Varano Property; (4) if the Application to install the Well Pad on the Varano Property would be approved, Mr. Carna would be owed royalty payments under his oil and gas lease with Hilcorp when production at the well on the Varano Property would commence; and (5) if Mr. Carna and Mr. Varano would both participate with regard to the Application to install the Well Pad on the Varano Property, they would be approving or denying a conditional use application in which each of them has a direct financial interest, you are advised as follows. The two voting conflict exceptions contained in Section 1103(j) of the Ethics Act do not authorize an individual with a conflict to make a motion to put the matter in the posture for a vote. Therefore, where all three Members of the Township Board of Supervisors would have a conflict of interest with regard to the Application to install the Well Pad on the Varano Property, Section 1103(j) of the Ethics Act itself would not authorize any Member(s) of the Township Board of Supervisors to make a motion as to the Application to install the Well Pad on the Varano Property. However, Section 1103(j) of the Ethics Act recognizes that certain other sources of law may apply to voting conflicts. See, 65 Pa.C.S. § 1103(j). It is suggested that you seek legal advice as to the potential applicability of such other sources of law to your inquiry. 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 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