HomeMy WebLinkAbout15-560 Confidential
ADVICE OF COUNSEL
October 29, 2015
15-560
This responds to your letter dated September 3, 2015, by which you requested a
confidential 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 an A for \[name of
political subdivision\] (“the Political Subdivision”) with regard to participating in
discussions or votes by the Political Subdivision B pertaining to a land development
application/plan and project relating to property owned by \[name of entity\] (“Entity 1”),
where: (1) Entity 1 and \[name of entity\] (“Entity 2”) are both legal entities under C; and
(2) the A’s spouse is an owner and partner in a privately held company that makes
sales to Entity 2 but does not make any sales to Entity 1.
Facts:
You request a confidential advisory from the Commission based upon
submitted facts that may be fairly summarized as follows.
You are an A for the Political Subdivision, which is located in \[name of county\],
Pennsylvania.
Entity 1 and Entity 2 are both legal entities under C, a D established initially for E
purposes. You state that Entity 1 and Entity 2 have separate Fs and employees, make
separate purchases, and enter into separate contracts.
Entity 1 has recently acquired a \[type of property\] (“the Property”) in the Political
Subdivision. You state that it is expected that a land development application/plan (“the
Land Development Plan”) for the Property will be filed with the Political Subdivision, in
which event the Political Subdivision B will have discussions and take formal action on
such matter.
Your spouse is an owner and partner in a privately held company named \[name
of company\] (“the Company”), located near \[name of municipality\], Pennsylvania. The
Company sells \[type of equipment\], primarily for \[certain uses\], to \[various types of
customers\] all over the United States. The Company sells the aforesaid equipment via
the internet or telephone and at a retail store located at the Company’s headquarters.
The Company has total annual sales of approximately \[amount\].
The Company annually makes approximately \[amount\] in sales to Entity 2. You
state that the Company makes no sales to Entity 1 given Entity 1’s G as a \[type of
entity\] and that there is no possibility the Company will ever make any sales to Entity 1.
Confidential Advice, 15-560
October 29, 2015
Page 2
Based upon the above submitted facts, you ask whether the Ethics Act would
permit you to participate in discussions or votes by the Political Subdivision B pertaining
to the Land Development Plan and 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.
As an A for the Political Subdivision, 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
Confidential Advice, 15-560
October 29, 2015
Page 3
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.
"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.
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.
Confidential Advice, 15-560
October 29, 2015
Page 4
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
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 your inquiry, you are advised
as follows.
The Company is a business with which your spouse is associated in his capacity
as an owner and partner. 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, you would have a conflict of interest in
matters before the Political Subdivision B that would financially impact you, your
spouse, or the Company.
You would have a conflict of interest under Section 1103(a) of the Ethics Act in
discussion(s) and/or vote(s) involving the Land Development Plan or project if: (1) you
would be consciously aware of a private pecuniary benefit for you, a member of your
immediate family such as your spouse, or the Company; (2) your 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. Cf. Kistler, supra.
As noted above, in each instance of a conflict of interest, you 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
interpretation of the Ethics Act. Specifically not addressed herein is the applicability of
the H.
Conclusion:
Based upon the submitted facts that: (1) you are an A for \[name of
political subdivision\] (“the Political Subdivision”), which is located in \[name of county\],
Pennsylvania; (2) \[name of entity\] (“Entity 1”) and \[name of entity\] (“Entity 2”) are both
legal entities under C, a D established initially for E purposes; (3) Entity 1 and Entity 2
have separate Fs and employees, make separate purchases, and enter into separate
contracts; (4) Entity 1 has recently acquired a \[type of property\] (“the Property”) in the
Political Subdivision; (5) it is expected that a land development application/plan (“the
Land Development Plan”) for the Property will be filed with the Political Subdivision, in
which event the Political Subdivision B will have discussions and take formal action on
such matter; (6) your spouse is an owner and partner in a privately held company
named \[name of company\] (“the Company”), located near \[name of municipality\],
Pennsylvania; (7) the Company sells \[type of equipment\], primarily for \[certain uses\], to
\[various types of customers\] all over the United States; (8) the Company sells the
aforesaid equipment via the internet or telephone and at a retail store located at the
Company’s headquarters; (9) the Company has total annual sales of approximately
\[amount\]; (10) the Company annually makes approximately \[amount\] in sales to Entity
2; and (11) the Company makes no sales to Entity 1 given Entity 1’s G as a \[type of
entity\], and there is no possibility the Company will ever make any sales to Entity 1, you
are advised as follows.
As an A for the Political Subdivision, 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. The Company is a business with which your spouse is associated in his
Confidential Advice, 15-560
October 29, 2015
Page 5
capacity as an owner and partner. 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, you would have a conflict of interest in
matters before the Political Subdivision B that would financially impact you, your
spouse, or the Company. You would have a conflict of interest under Section 1103(a)
of the Ethics Act in discussion(s) and/or vote(s) involving the Land Development Plan or
project if: (1) you would be consciously aware of a private pecuniary benefit for you, a
member of your immediate family such as your spouse, or the Company; (2) your
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, you 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.
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