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HomeMy WebLinkAbout15-558 Brunozzi ADVICE OF COUNSEL August 25, 2015 James Brunozzi 710 Grassy Island Avenue Jessup, PA 18434 15-558 Dear Mr. Brunozzi: This responds to your letter dated August 4, 2015, by which you requested an advisory from the Pennsylvania State Ethics Commission (“Commission”). Issue: Whether, pursuant to Section 1103(a) of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., a borough council member would have a conflict of interest with regard to voting on matter(s) pertaining to a proposed natural gas electric power generating plant (“the Plant”) seeking to be located in the borough, including but not limited to an application for a curative amendment to the borough’s zoning ordinance, where: (1) The Plant would purchase natural gas from UGI, a public utility; (2) The borough council member’s children are members of a limited liability company (“Children’s LLC”) that currently th holds a 1/13 interest in a rod and gun club; (3) The rod and gun club is the lessor on a gas/oil/mineral rights lease (“the Lease”) for land it owns in a different county than the county in which the borough is located; (4) Presently, no gas extraction is occurring and no royalties or income are being received under the Lease; (5) The borough council member is not aware of any connection between the energy companies that have been parties to the Lease and the energy company(ies) that would own the Plant; and (6) It is unknown where UGI gets its gas to provide to consumers. Brunozzi, 15-558 August 25, 2015 Page 2 Facts: You request an advisory from the Commission based upon the following submitted facts. You are a Borough Council Member for the Borough of Jessup (“the Borough”), which is located in Lackawanna County, Pennsylvania. You have served on Borough Council continuously since 1983. In July 2014, you transferred all of your right, title and interest in the Buckhorn Rod & Gun Club, LLC (“the Rod and Gun Club”) to “Brunozzi Family Enterprises, LLC,” a separate limited liability company also referred to herein as “the Children’s LLC,” which consists solely of your four children as members. The Children’s LLC currently th holds a 1/13 interest in the Rod and Gun Club. The Rod and Gun Club is the lessor on a gas/oil/mineral rights lease (“the Lease”) for land it owns in Susquehanna County. The lessee was originally a company named “Chesapeake Appalachia, LLC.” In 2012, Chesapeake Appalachia, LLC assigned its interest in the Lease to a company named “Southwestern Energy.” Upon the signing of the Lease, the Rod and Gun Club received an initial upfront payment of a sum of money. Presently, no gas extraction is occurring and no royalties or income are being received under the Lease. You state that the Rod and Gun Club is just one of thousands of land owners which have entered into leases with various companies to extract gas from the Marcellus Shale. On August 26, 2015, the Borough Council is expected to vote on an application for a Curative Amendment to the Borough’s Zoning Ordinance, which has been requested by the owner of a proposed natural gas electric power generating plant (“the Plant”) seeking to be located within the Borough. If the Curative Amendment would be granted, there would likely be further matters for Borough Council to consider and vote upon regarding the Plant. You state that the owner of the Plant would be a company named “Lackawanna Energy Center, LLC,” which itself is owned by a company named “Invenergy.” You state that you are not aware of any connection between the energy companies that have been parties to the Lease and Lackawanna Energy Center, LLC or Invenergy. The Plant would purchase natural gas from UGI, a public utility. The natural gas that the Plant would purchase is the same type of natural gas provided to residents of the Borough. You state that it is unknown where UGI gets its gas to provide to consumers. Finally, you state that opponents of the Plant argue that the natural gas provided by UGI to the Plant might somehow be the same gas that comes from the Marcellus Shale, possibly from/through the land belonging to the Rod and Gun Club, and that th such would result in a pecuniary advantage to your family by virtue of the 1/13 interest of the Children’s LLC in the Rod and Gun Club. Based upon the above submitted facts, you seek guidance as to whether you would have a conflict of interest with regard to voting on matter(s) pertaining to the Plant. 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 Brunozzi, 15-558 August 25, 2015 Page 3 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 Borough Council Member, you are a public official as that term is defined in the Ethics Act, and therefore you are 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: § 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 Brunozzi, 15-558 August 25, 2015 Page 4 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. "Immediate family." A parent, spouse, child, brother or sister. "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. 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. The Pennsylvania Supreme Court has held that 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 v. State Ethics Commission, 610 Pa. 516, 523, 22 A.3d 223, 227 (2011). To violate Section 1103(a) of the Ethics Act, a public official/public employee “must be Brunozzi, 15-558 August 25, 2015 Page 5 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. In applying the above provisions of the Ethics Act to the submitted facts, you are advised as follows. The Children’s LLC is a business with which members of your immediate family are associated. However, the mere possibility that someday, gas might be extracted from the Rod and Gun Club’s property located in Susquehanna County, and that such gas might become the property of UGI, and subsequently might be sold to the Plant located in Jessup Borough in Lackawanna County, is too remote and speculative to establish a conflict of interest under the Ethics Act. See, Kistler, supra; see also, Armstrong, Opinion 97-001. Therefore, under the submitted facts, you are advised that you would not have a conflict of interest with regard to voting on matter(s) pertaining to the Plant, including but not limited to an application for a Curative Amendment to the Borough’s Zoning Ordinance. 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 applicability of the Borough Code. Conclusion: As a Borough Council Member for Jessup Borough (“the Borough”), located in Lackawanna County, Pennsylvania, 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) in July 2014, you transferred all of your right, title and interest in the Buckhorn Rod & Gun Club, LLC (“the Rod and Gun Club”) to “Brunozzi Family Enterprises, LLC,” a separate limited liability company also referred to herein as “the Children’s LLC,” which consists solely of your four children as th members; (2) the Children’s LLC currently holds a 1/13 interest in the Rod and Gun Club; (3) the Rod and Gun Club is the lessor on a gas/oil/mineral rights lease (“the Lease”) for land it owns in Susquehanna County; (4) the lessee was originally a company named “Chesapeake Appalachia, LLC”; (5) in 2012, Chesapeake Appalachia, LLC assigned its interest in the Lease to a company named “Southwestern Energy”; (6) upon the signing of the Lease, the Rod and Gun Club received an initial upfront payment of a sum of money; (7) presently, no gas extraction is occurring and no royalties or income are being received under the Lease; (8) on August 26, 2015, the Borough Council is expected to vote on an application for a Curative Amendment to the Borough’s Zoning Ordinance, which has been requested by the owner of a proposed natural gas electric power generating plant (“the Plant”) seeking to be located within the Borough; (9) if the Curative Amendment would be granted, there would likely be further matters for Borough Council to consider and vote upon regarding the Plant; (10) the owner of the Plant would be a company named “Lackawanna Energy Center, LLC,” which itself is owned by a company named “Invenergy”; (11) you state that you are not aware of any connection between the energy companies that have been parties to the Lease and Lackawanna Energy Center, LLC or Invenergy; (12) the Plant would purchase natural gas from UGI, a public utility; (13) the natural gas that the Plant would purchase is the same type of natural gas provided to residents of the Borough; and (14) you state that it is unknown where UGI gets its gas to provide to consumers, you are advised as follows. The Children’s LLC is a business with which members of your immediate family are associated. However, the mere possibility that someday, gas might be extracted from the Rod and Gun Club’s property located in Susquehanna County, and that such gas might become the property of UGI, and subsequently might be sold to the Plant located in Jessup Borough in Lackawanna County, is too remote and speculative to Brunozzi, 15-558 August 25, 2015 Page 6 establish a conflict of interest under the Ethics Act. Therefore, under the submitted facts, you are advised that you would not have a conflict of interest with regard to voting on matter(s) pertaining to the Plant, including but not limited to an application for a Curative Amendment to the Borough’s Zoning Ordinance. 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