HomeMy WebLinkAbout17-519 ConfidentialSTATE ETHICS COMMISSION
309 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
(717) 783 -1610
1 -800- 932 -0936
ADVICE OF COUNSEL
March 27, 2017
To the Requester:
17 -519
This responds to your letter dated January 31, 2017, 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
P�-S. § 1101 et sew , would impose prohibitions or restrictions upon an individual( with
regard to performing the duties of his public position' as a [type of political subdivision] A
where five particular businesses with which the individual is associated -- including one
business with which members of the individual's immediate family are also associated- -
may have matter(s) before the [type of political subdivision] [governing body].
Facts: You request a confidential advisory from the Commission on behalf of
n -ividual B. You have submitted facts that may be fairly summarized as follows.
Individual B was recently appointed as are A for Political Subdivision C, located in
[name of county], Pennsylvania. The [governing. body of Political Subdivision C]
consists of five Members.
As detailed below, Individual B, in a private pacit yy, is involved with and/or has
an ownership interest in each of the fllowing e hies, hereinafter collectively
referred to as "the Five Entities," that engage in various activities within Political
Subdivision C:
• [Name of entity] ( "Entity 1 "): Individual B is the owner of Entity 1, which is
a [type of company]. Entity 1 routinely applies for Ds from Political
Subdivision C as part of Entity 1's normal day -to -day business.
[Name of entity] ( "Entity 2 "): Individual B is employed with Entity 2 and
serves as its E and F. Entity 2 is a [type of company] owned by Individual
B's G. Entity 2 is the H of an I located within Political Subdivision C.
Individual B's J is also employed with Entity 2, as is Individual B's K on a
[type of basis].
[Name of entity] Ras ntity 3 "): Individual B serves as the L for Entity 3, which
fVl the N. Entity in the past been .required by Political Subdivision C,.
with Political Subdivision C approval, to assist Entity 2 with [various
FAX: (717) 787 -0806 • Web Site: www.ethics.state.pa.us 0 e -mail: ethics(@state.pa.us
Confidential Advice, 17 -519
March 7, 7
Page 2
matters], Individual B, in his capacity as the L, extends [certain N- related
benefits] to Members of the [governing body of Political Subdivision C],
other boards and committees, [type of personnel], and some Political
Subdivision C employees.
[Name of entity] ( "Entity 4"): Individual B serves as the 4 and P of Entity
4, which is a [type of entity] with the primary interest of [particular interestl:
[Name of entity] ( "Entity 5 "): Individual B is an owner of Entity 5, and he
serves as its O and Q. Entity 5 is a [type of business], and the ma'ority of
Entity 5's work is comprised of services completed within i'ofit�cal
Subdivision C. Entity 5 does not currently engage in any work for Political
Subdivision C. A few Members of the [governing body of Political
Subdivision C] are customers of Entity 5.
Based upon the above submitted facts, you pose the following questions:
(1) Whether the Ethics Act would permit Individual B, in his capacities as the
owner of Entity 1 and an owner of Entity 5, to file applications for Ds from
Political Subdivision C, or whether he would need to send an employee to
file such applications;
(2) Whether the Ethics Act would permit Individual B, in his capacities as the
owner of Entity 1 and an owner of Entity 5, to directly communicate with
various parties in relation to the aforesaid D applications, including the Rs
and S, the T contracted with Political Subdivision C;
(3) Whether the Ethics Act would permit Individual B, in his capacity as the L
for Entity 3, to enter into various agreements related to the N with Political
Subdivision C;
(4) Whether the Ethics Act would permit Individual B, in his capacity as a
Political Subdivision C A, to vote to break a 2 -2 tie vote of the other four
Political Subdivision C As on any issue(s) related to Individual B's
aforesaid business interests;
(5) Whether the Ethics Act would require Individual B, in his capacity as a
Political Subdivision C A, to recuse himself from discussions of the
[governing body of Political Subdivision C] involving any matter(s) related
to Individual B's aforesaid business interests; and
(6) Whether the Ethics Act would permit Individual B, in his various private
capacities with the Five Entities, to contract with or hire professional
services from people either employed or subcontracted by Political
Subdivision C, and if so, what limitations must he be aware of or what
actions must he take in order to comply with the Ethics Act.
Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of
e 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.
Confidential Advice, 17 -519
March 27, 20 7
Page 3
It is further initially noted that, pursuant to the same aforesaid Sections of the
Ethics Act, an opinion /advice ma be given only s to prospective (future) conduct. To
the extent that your ingiry 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 Political Subdivision C A, Individual B is a public official subject to the
provisions of the Ethics Act.
Sections 1103(a) and 11030) 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.
Q) 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), 0).
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 genera!
Confidential Advice, 17 -519
March 27, 7
Page 4
public or a subclass consisting of an industryry, 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.
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 officiallpublic 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 officiallpublic 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 Section 11030) 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.
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 far 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, 17 -519
March 27, 20
Page 5
Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(x) of the Ethics
Act, a public officiallpublic 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 addition, Sections 1103(b) and 1103 (c) of the Ethics Act, 65 Pa.C.S. §§
1103(b), (c), provide in part that no person shall offer or give to a public official/public
employee anything of monetary value and no public official/public employee shall solicit
or accept anything of monetary value based upon the understanding that the vote,
official action, or judgment of the public official/public employee would be influenced
thereby. Reference is made to these provisions of the law not to imply that there has
been or will be any transgression thereof but merely to provide a complete response to
the question presented.
Having established the above general principles, you are advised as follows.
Individual B's G, J, and K are members of his "immediate family" as that term is
defined in the Ethics Act, Entity 1 is a business with which Individual B is associated in
his capacity as the owner. Entity 2 is a business: (1) with which Individual B is
associated In his capacities as an employee, the E, and the F; 2) with which Individual
B's G is associated in his capacity as the owner; (3) with which individual B's J is
associated in her capacity as an employee; and (4) with which Individual B's K is
associated at such times as she is in an employment relationship with Entity 2. Entity 3
is a business with which Individual B is associated in his capacity as the L. Entity 4 is a
business with which Individual B is associated in his capacity as the O and P. Entity 5
is a business with which Individual B is associated in his capacities as an owner, the O,
and the Q.
Section 1103(a) of the Ethics Act, pertaining to conflict of interest, imposes
restrictions upon public officials and public employees_ Therefore, Section 1103(a)
would impose restrictions upon Individual B in his capacity as a public official, rather
than upon him in his private capacities.
The Ethics Act would not prohibit Individual B, in his pertinent private capacities
with the Five Entities, from: (1) filing applications for Ds from Political Subdivision C or
directly communicating with various parties in relation to such D applications, including
the Rs and S; (2 ) entering into various agreements related to the N with Political
Subdivision C; or (3) contracting with or hiring professional services from people either
employed or subcontracted by Political Subdivision C.
In his public capacity as a Political Subdivision C A, Individual B would have a
conflict of interest under Section 1103(a) of the Ethics Act as to discussion(s), vote(s),
and /or other action(s) of the [governing body of Political Subdivision C] pertaining to
matter(s) involving any of the Five Entities if: (1) he would be consciously aware of a
Vpecuniary benefit for himself, member(s) of his immediate family, or any of the
Five Entities; (2) his action(s) would constitute one or more specific steps to attain that
benefit; and (3) neither the de minimis exclusion nor 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. Cf. Kistler, supra.
SubJJ'ect to the voting conflict exceptions of Section 11030) of the Ethics Act,
Individual B would be required to abstain fully from participation m each instance of a
conflict of interest. Because the (governing body of Political Subdivision Cl is comprised
of five Members, the exception In Section 1103 0) of the Ethics Act for breaking a tie
vote despite a conflict of interest would not permit Individual B to vote to break a 2-2 tie
vote of the other four Political Subdivision C As where Individual B would have a conflict
of interest because such exception is available exclusively to members of three member
Confidential Advice, 17 -519
March 27, 0 7
Page 6
governingg bodies who first abstain and disclose their conflicts as required by Section
1 103(]) of the Ethics Act. See, Pavlovic, Opinion 02 -005.
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 U.
Conclusion: As an A for Political Subdivision C, located in [name of county],
ennsy vania, Individual B is a public official subject to the provisions of the Public
Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et sec.. Based upon
the submitted facts, you are advised as follows.
Individual B's G, J, and K are members of his "immediate family" as that term is
defined in the Ethics Act. [Name of entity] ( "Entity 1 ") is a business with which Individual
B is associated in his capacity as the owner. JName of entity] ( "Entity 2 ") is a business:
(1) with which Individual B is associated in his capacities as an employee, the E, and
the F; (2) with which Individual B's G is associated in his capacity as the owner; (3) with
which Individual B's J is associated in her capacity as an employee; and (4) with which
Individual B's K is associated at such times as she is in an employment relationship with
Entity 2. [Name of entity] ( "Entity 3") is a business with which Individual B is associated
in his capacity as the L. [Name of entity] ( "Entity 4 ") is a business with which Individual
B is associated in his capacity as the O and P. [Name of entity] ( "Entity 5" is a
business with which Individual B is associated in his capacities as an owner, the , and
the Q.
Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), pertaining to conflict of
interest, imposes restrictions upon public officials and public employees. Therefore,
Section 1103(a) would impose restrictions upon Individual B in his capacity as a public
official, rather than upon him in his private capacities.
The Ethics Act would not prohibit Individual B, in his pertinent private capacities
with the aforesaid Five Entities, from: (1) applying for Ds from Political Subdivision C or
directly communicating with various parties in relation to such D appplications, including
the Rs and S; (2 entering into various agreements related to the N with Political
Subdivision C; or �3) contracting with or hiring professional services from people either
employed or subcontracted by Political Subdivision C.
In his public capacity as a Political Subdivision C A, Individual B would have a
conflict of interest under Section 1103(a) of the Ethics Act as to discussion(s), vote(s),
and/or other action(s) of the [governing body of Political Subdivision C] pertaining to
matter(s) involving any of the Five Entities if: (1) he would be consciously aware of a
private pecuniary benefit for himself, member(s) of his immediate family, or any of the
Five Entities; (2) his action(s) would constitute one or more specific steps to attain that
benefit; and () neither the de minimis exclusion nor 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.
Subject to the voting conflict exceptions of Section 11030) of the Ethics Act,
Individual F3 would be required to abstain fully from participation in each instance of a
conflict of interest. Because the Lgoverning body of Political Subdivision C] is comprised
of five Members, the exception in Section 11030) of the Ethics Act for breaking a tie
vote despite a conflict of interest would not permit Individual B to vote to break a 2 -2 tie
vote of the other four Political Subdivision C As where Individual B would have a conflict
of interest because such exception is available exclusively to members of three member
governing bodies who first abstain and disclose their conflicts as required by Section
Confidential Advice, 17 -519
March 7, 7
Page 7
11030) of the Ethics Act. 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 actual)
received at the Commission within thirty (30) days of the date of this
Advice pursuant to 51 Pa. Code § 1'3.2(h). The appeal may be
received at the Commission by hand deliverryy, 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, l
Robin M. Hittie
Chief Counsel