HomeMy WebLinkAbout16-535 Loperfito
ADVICE OF COUNSEL
May 12, 2016
Larry D. Loperfito, Esquire
Geary•Loperfito•Urti, P.L.L.C.
158 Grant Avenue
Vandergrift, PA 15690
16-535
Dear Mr. Loperfito:
This responds to your letter dated March 2, 2016 (postmarked April 14, 2016,
and received April 18, 2016), 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 member and
secretary of a municipal authority board, who in a private capacity is part owner of a
company that sells paper and janitorial supplies, safety apparel, and other products,
with regard to participating in votes or other actions of the municipal authority board
pertaining to matters involving customers of the company.
Facts:
You have been authorized by Gary R. Astor (“Mr. Astor”) to request an
advisory from the Commission on his behalf. You have submitted facts, the material
portion of which may be fairly summarized as follows.
Mr. Astor is a Member and Secretary of the Board of the Municipal Sanitary
Authority of the City of New Kensington (“Authority”).
In a private capacity, Mr. Astor holds a forty-nine percent ownership interest in a
company named “Quality Assured Merchandise, LLC” (the “Company”). The Company
sells paper and janitorial supplies, safety apparel, and other products to local
households and businesses throughout western Pennsylvania.
The Company’s customers include individuals and businesses that receive sewer
services through the Authority. Some of the Company’s corporate customers, including
an entity named “Keystone Rustproofing, LLC” (“Keystone”), produce sewage waste
from commercial establishments that are under and subject to pre-treatment review and
quality control evaluation by the Authority. The Authority may levy fines and penalties
against entities such as Keystone for discharging improperly treated waste products into
the sanitary system.
Loperfito, 16-535
May 12, 2016
Page 2
Based upon the above submitted facts, you seek guidance as to whether the
Ethics Act would impose prohibitions or restrictions upon Mr. Astor with regard to
participating in votes or other actions of the Authority Board pertaining to matters
involving customers of the Company.
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 a Member and Secretary of the Authority Board, Mr. Astor 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
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
Loperfito, 16-535
May 12, 2016
Page 3
"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.
"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.
"De minimis economic impact."
An economic
consequence which has an insignificant effect.
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
orally and by filing a written memorandum to that effect with the person recording the
minutes.
Loperfito, 16-535
May 12, 2016
Page 4
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.
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.
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.
In applying the above provisions of the Ethics Act to the instant matter, you are
advised as follows.
The Company is a business with which Mr. Astor is associated in his capacity as
an owner. Mr. Astor would have a conflict of interest under Section 1103(a) of the
Ethics Act as to vote(s) and/or other action(s) of the Authority Board pertaining to
matter(s) involving customer(s) of the Company if: (1) he would be consciously aware of
a private pecuniary benefit for himself or the Company; (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.
As noted above, in each instance of a conflict of interest, Mr. Astor would be
required to abstain from participation, which would include voting unless one of the
Loperfito, 16-535
May 12, 2016
Page 5
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 Municipality Authorities Act.
Conclusion:
Based upon the submitted facts that: (1) Gary R. Astor (“Mr. Astor”)
is a Member and Secretary of the Board of the Municipal Sanitary Authority of the City
of New Kensington (“Authority”); (2) in a private capacity, Mr. Astor holds a forty-nine
percent ownership interest in a company named “Quality Assured Merchandise, LLC”
(the “Company”); (3) the Company sells paper and janitorial supplies, safety apparel,
and other products to local households and businesses throughout western
Pennsylvania; (4) the Company’s customers include individuals and businesses that
receive sewer services through the Authority; (5) some of the Company’s corporate
customers, including an entity named “Keystone Rustproofing, LLC” (“Keystone”),
produce sewage waste from commercial establishments that are under and subject to
pre-treatment review and quality control evaluation by the Authority; and (6) the
Authority may levy fines and penalties against entities such as Keystone for discharging
improperly treated waste products into the sanitary system, you are advised as follows.
As a Member and Secretary of the Authority Board, Mr. Astor 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 Company is a business with which Mr. Astor is associated
in his capacity as an owner. Mr. Astor would have a conflict of interest under Section
1103(a) of the Ethics Act as to vote(s) and/or other action(s) of the Authority Board
pertaining to matter(s) involving customer(s) of the Company if: (1) he would be
consciously aware of a private pecuniary benefit for himself or the Company; (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, Mr. Astor 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
Loperfito, 16-535
May 12, 2016
Page 6
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