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HomeMy WebLinkAbout15-526 Kratz ADVICE OF COUNSEL April 3, 2015 Rick Kratz 347 Hanover Street Warrior Run, PA 18706-1103 15-526 Dear Mr. Kratz: This responds to your undated letter postmarked February 24, 2015, received March 5, 2015, by which you requested an advisory from the Pennsylvania State Ethics Commission (“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 with regard to receiving compensation for performing plowing or other work related to the borough’s roads. Facts: You request an advisory from the Commission based upon submitted facts that may be fairly summarized as follows. You are a Member of Council for the Borough of Warrior Run (“Borough”). The Borough has a population of less than 600. Ten months ago, you were put in charge of the Borough road crew. A road crew position is part-time and pays $9.00 per hour for approximately twenty to twenty-five hours per week. Currently, the Borough lacks a sufficient number of road crew employees. You state that you will go out and plow the Borough roads yourself when you are unable to get another person to plow them. You state that last year, you put in over 100 hours repairing trucks, picking up yard waste, patching potholes, and plowing roads with no pay. You further state that you are self-employed and do not need a job paying $9.00 per hour, but you cannot work for nothing any longer. The narrow question that you have posed is whether the Ethics Act would permit you to be paid when you would perform plowing or other work related to the Borough’s roads. You state that you would only perform such work if it would be absolutely necessary. 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 Kratz, 15-526 April 3, 2015 Page 2 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. As a Member of Borough Council, you are 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 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 Kratz, 15-526 April 3, 2015 Page 3 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. 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 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. The use of authority of office is not limited merely to voting, but extends 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. In each instance of a conflict of interest, a public official/public employee 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. One of the exclusions to the statutory definition of "conflict" or "conflict of interest," referred to herein as the "de minimis exclusion,” precludes a finding of conflict of interest as to an action having a de minimis (insignificant) economic impact. Thus, when a matter that would otherwise constitute a conflict of interest under the Ethics Act would have an insignificant economic impact, a conflict would not exist and Section 1103(a) of the Ethics Act would not be implicated. See, Kolb, Order 1322; Schweinsburg, Order 900. The Commission has determined the applicability of the de minimis exclusion on a case-by-case basis, considering all relevant circumstances. In the past, the Commission has found amounts up to approximately $1,200 to be de minimis. An economic impact may aggregate over time, rather than be limited to a particular increment of time such as a month or year. Confidential Opinion, 05-001. For multiple transactions, the aggregate financial benefit received from such transactions should be considered in order to determine whether the de minimis exclusion could have applicability. 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 Kratz, 15-526 April 3, 2015 Page 4 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. 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 may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. It is administratively noted that Section 1404 of the Borough Code provides: “Elected and appointed borough officials and borough employees are restricted from an interest in borough contracts and purchases to the extent provided in 65 Pa.C.S. Ch. 11 (relating to ethics standards and financial disclosure).” 8 Pa.C.S. § 1404. 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 generally would prohibit you from taking it upon yourself to perform plowing or other work related to the Borough’s roads where you would be paid for performing such work. This is because, from a legal perspective, you would be using the authority of your public position as a Borough Council Member to award Borough contract(s) to yourself. However, Section 1103(a) of the Ethics Act would not prohibit you from receiving compensation for performing plowing or other work related to the Borough’s roads if: (1) you would not use the authority of your position as a Member of Borough Council to Kratz, 15-526 April 3, 2015 Page 5 obtain such work/pay; or (2) the amount of compensation you would receive for performing such work would be de minimis. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless a statutory exception 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 observed in the event of a voting conflict. An agreement or arrangement whereby you would perform plowing or other work related to the Borough’s roads would constitute a “contract” as that term is defined in the Ethics Act. Therefore, the restrictions and requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. (See, Kistler v. State Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011), regarding the requirements for an “open and public process.”) The propriety of the proposed conduct has only been addressed under the Ethics Act. Conclusion: As a Member of Council for the Borough of Warrior Run (“Borough”), you are 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 a population of less than 600; (2) ten months ago, you were put in charge of the Borough road crew; (3) a road crew position is part- time and pays $9.00 per hour for approximately twenty to twenty-five hours per week; (4) currently, the Borough lacks a sufficient number of road crew employees; (5) you will go out and plow the Borough roads yourself when you are unable to get another person to plow them; (6) last year, you put in over 100 hours repairing trucks, picking up yard waste, patching potholes, and plowing roads with no pay; and (7) if you would be permitted to receive compensation for performing plowing or other work related to the Borough’s roads, you would only perform such work if it would be absolutely necessary for you to do so, you are advised as follows. Section 1103(a) of the Ethics Act generally would prohibit you from taking it upon yourself to perform plowing or other work related to the Borough’s roads where you would be paid for performing such work. This is because, from a legal perspective, you would be using the authority of your public position as a Borough Council Member to award Borough contract(s) to yourself. However, Section 1103(a) of the Ethics Act would not prohibit you from receiving compensation for performing plowing or other work related to the Borough’s roads if: (1) you would not use the authority of your position as a Member of Borough Council to obtain such work/pay; or (2) the amount of compensation you would receive for performing such work would be de minimis. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless a statutory exception 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 observed in the event of a voting conflict. An agreement or arrangement whereby you would perform plowing or other work related to the Borough’s roads would constitute a “contract” as that term is defined in the Ethics Act. Therefore, the restrictions and requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Kratz, 15-526 April 3, 2015 Page 6 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