HomeMy WebLinkAbout16-523 Confidential
ADVICE OF COUNSEL
April 12, 2016
16-523
This responds to your letter dated February 18, 2016, 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 a borough
council member, who in a private capacity is employed with a local A in the position of
B, with regard to participating in \[type of decisions\] including matters pertaining to C(s)
for borough Ds, where the local A would be among the businesses under consideration
for appointment as a borough C.
Facts:
As Solicitor for \[name of borough\] (“Borough”), you have been authorized
by Individual E to request a confidential advisory from the Commission on his behalf.
You have submitted facts that may be fairly summarized as follows.
Individual E is a Member of Borough Council. In a private capacity, Individual E
is employed with a local A (the “Entity”) in the position of B.
The Borough may appoint one or more Cs for Borough Ds. \[Number\]
businesses, including the Entity, recently submitted to the Borough proposals for
consideration for appointment as a Borough C. Individual E did not participate in
deliberations and votes which resulted in the appointment of a business other than the
Entity as the sole Borough C. The Entity might in the future submit another proposal for
consideration for appointment as a Borough C.
Based upon the above submitted facts, you seek guidance as to whether the
Ethics Act would impose prohibitions or restrictions upon Individual E with regard to
participating in matters pertaining to the Borough C(s) where the Entity would be among
the businesses under consideration for appointment as a Borough C. In particular, you
pose the following questions:
(1) Whether Individual E would have a conflict of interest with regard to voting
on the appointment of a business other than the Entity as a Borough C;
(2) Whether Individual E would have a conflict of interest with regard to voting
on a motion to appoint the Entity and one or more other businesses as
Borough Cs, or whether the “class/subclass exclusion” set forth within the
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April 12, 2016
Page 2
Ethics Act’s definition of the term "conflict" or "conflict of interest" would be
applicable as to such a vote;
(3) Whether Individual E, as a Member of the F, would have a conflict of
interest with regard to attending F meetings regarding Borough C(s); and
(4) Whether Individual E would be permitted to participate in discussions,
deliberations, or actions pertaining to procedural issues and the gathering
of information related to the Borough’s designated C(s).
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 the same aforesaid Sections of the
Ethics Act, an opinion/advice may be given only as to prospective (future) conduct. To
the extent that your inquiry relates to conduct that has already occurred, such past
conduct may not be addressed in the context of an advisory opinion. However, to the
extent your inquiry relates to future conduct, your inquiry may and shall be addressed.
As a Member of Borough Council, Individual E 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
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
Confidential Advice, 16-523
April 12, 2016
Page 3
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.
"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.
In each instance of a conflict of interest, the public official/public employee would
be required to abstain from participation. The abstention requirement would not be
limited merely to voting, but 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. Subject to certain statutory exceptions, in each instance of a voting
conflict, Section 1103(j) of the Ethics Act would require the public official/public
employee to abstain and to publicly disclose the abstention and reasons for same, both
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April 12, 2016
Page 4
orally and by filing a written memorandum to that effect with the person recording the
minutes.
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.
A conflict of interest would not exist to the extent the “de minimis exclusion”
and/or the “class/subclass exclusion” set forth within the Ethics Act’s definition of the
term "conflict" or "conflict of interest," 65 Pa.C.S. § 1102, would be applicable.
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.
In order for the class/subclass exclusion to apply, two criteria must be met: (1)
the affected public official/public employee, immediate family member, or business with
which the public official/public employee or immediate family member is associated
must be a member of a class consisting of the general public or a true subclass
consisting of more than one member; and (2) the public official/public employee,
immediate family member, or business with which the public official/public employee or
immediate family member is associated must be affected "to the same degree" (in no
way differently) than the other members of the class/subclass. 65 Pa.C.S. § 1102; see,
Kablack, Opinion 02-003; Rubenstein, Opinion 01-007. The first criterion of the
exclusion is satisfied where the members of the proposed subclass are similarly
situated as the result of relevant shared characteristics. The second criterion of the
exclusion is satisfied where the individual/business in question and the other members
of the class/subclass are reasonably affected to the same degree by the proposed
action. Kablack, supra.
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
an open and public process, including prior public notice and
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April 12, 2016
Page 5
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.
The Entity is a business with which Individual E is associated in his capacity as
an employee. Subject to the statutory exclusions to the definition of “conflict” or “conflict
of interest” as set forth in Section 1102 of the Ethics Act, 65 Pa.C.S. § 1102, pursuant to
Section 1103(a) of the Ethics Act, Individual E would have a conflict of interest as a
Borough Council Member in \[type of decisions\] or other matters that would financially
impact him or the Entity.
In response to your specific questions, you are advised as follows.
Confidential Advice, 16-523
April 12, 2016
Page 6
At such times as the Entity would be under consideration for appointment as a
Borough C, Individual E generally would have a conflict of interest under Section
1103(a) of the Ethics Act in matter(s) pertaining to the appointment of one or more
businesses as Borough C(s).
Individual E would be prohibited from using the authority of his public position as
a Borough Council Member, or confidential information obtained by being a Borough
Council Member, to effectuate a private pecuniary benefit to the Entity through a
detriment to a competitor for appointment as a Borough C. See, Pepper, Opinion 87-
008. Individual E would specifically have a conflict of interest with regard to voting to
eliminate competitor(s) for appointment as a Borough C.
Unless the class/subclass exclusion set forth within the Ethics Act’s definition of
the term "conflict" or "conflict of interest," 65 Pa.C.S. § 1102, would be applicable,
Individual E would have a conflict of interest under Section 1103(a) of the Ethics Act
with regard to voting on a motion to appoint the Entity and one or more other
businesses as Borough Cs. The submitted facts are insufficient to enable a conclusive
determination as to whether the Entity would belong to a class/subclass of similarly
situated businesses that would be reasonably affected to the same degree by being
appointed as Borough Cs.
Individual E would have a conflict of interest under Section 1103(a) of the Ethics
Act in attending F meetings regarding Borough C(s) or participating in discussions,
deliberations, or actions pertaining to procedural issues and the gathering of information
related to the Borough’s designated C(s) if: (1) Individual E would be consciously aware
of a private pecuniary benefit for himself or the Entity; (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. Cf. Kistler, supra.
In each instance of a conflict of interest, Individual E 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 restrictions and requirements of Section 1103(f) of the Ethics Act would have
to be observed whenever applicable.
The propriety of the proposed conduct has only been addressed under the Ethics
Act.
Conclusion:
Based upon the submitted facts that: (1) Individual E is a Member
of Council for \[name of borough\] (“Borough”); (2) in a private capacity, Individual E is
employed with a local A (the “Entity”) in the position of B; (3) the Borough may appoint
one or more Cs for Borough Ds; (4) \[number\] businesses, including the Entity, recently
submitted to the Borough proposals for consideration for appointment as a Borough C;
(5) Individual E did not participate in deliberations and votes which resulted in the
appointment of a business other than the Entity as the sole Borough C; and (6) the
Entity might in the future submit another proposal for consideration for appointment as a
Borough C, you are advised as follows.
As a Member of Borough Council, Individual E 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. The Entity is a business with which Individual E is associated in his
capacity as an employee. Subject to the statutory exclusions to the definition of
“conflict” or “conflict of interest” as set forth in Section 1102 of the Ethics Act, 65 Pa.C.S.
§ 1102, pursuant to Section 1103(a) of the Ethics Act, Individual E would have a conflict
Confidential Advice, 16-523
April 12, 2016
Page 7
of interest as a Borough Council Member in \[type of decisions\] or other matters that
would financially impact him or the Entity.
At such times as the Entity would be under consideration for appointment as a
Borough C, Individual E generally would have a conflict of interest under Section
1103(a) of the Ethics Act in matter(s) pertaining to the appointment of one or more
businesses as Borough C(s). Individual E would be prohibited from using the authority
of his public position as a Borough Council Member, or confidential information obtained
by being a Borough Council Member, to effectuate a private pecuniary benefit to the
Entity through a detriment to a competitor for appointment as a Borough C. Individual E
would specifically have a conflict of interest with regard to voting to eliminate
competitor(s) for appointment as a Borough C.
Unless the class/subclass exclusion set forth within the Ethics Act’s definition of
the term "conflict" or "conflict of interest," 65 Pa.C.S. § 1102, would be applicable,
Individual E would have a conflict of interest under Section 1103(a) of the Ethics Act
with regard to voting on a motion to appoint the Entity and one or more other
businesses as Borough Cs. The submitted facts are insufficient to enable a conclusive
determination as to whether the Entity would belong to a class/subclass of similarly
situated businesses that would be reasonably affected to the same degree by being
appointed as Borough Cs.
Individual E would have a conflict of interest under Section 1103(a) of the Ethics
Act in attending F meetings regarding Borough C(s) or participating in discussions,
deliberations, or actions pertaining to procedural issues and the gathering of information
related to the Borough’s designated C(s) if: (1) Individual E would be consciously aware
of a private pecuniary benefit for himself or the Entity; (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, Individual E 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 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.
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,
Confidential Advice, 16-523
April 12, 2016
Page 8
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