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HomeMy WebLinkAbout90-527 ConfidentialSTATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL March 27, 1990 90 -527 Re: Simultaneous Service, Municipal Authority and Municipal Authority Officer. This responds to your letter of January 17, 1990, in which you requested a confidential advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law imposes any prohibition or restrictions upon a municipal authority board member from also serving or being employed as a municipal authority officer. Facts: You are a member of the Board of Directors of a joint municipal sewage authority known as the A Authority. Article II, Section I of the by -laws of the Authority provides for the following officers: a) Chairman of the Board; b) Vice - chairman of the Board; c) Secretary; d) Treasurer: e) Assistant Secretary Treasurer; f) Chairman of the Personnel Committee; g) Chairman of the Finance and Budget Committee; h) Chairman of the Sludge Committee; i) Chairman of the Insurance Committee; j) Chairman of the Grounds and Maintenance Committee; and k) Chairman of the Legal and Engineering Services Committee. The by -laws also provide that all of the officers with the exception of the assistant secretary treasurer shall be members of the Board of Authority and further that no person shall hold more than one such office. A copy of Article II of the by -laws has been provided wherein Section 9 directs that the officers shall be elected at an annual meeting of the Board of the Authority for a period of one year or until Confidential Advice Page 2 a successor is elected and qualified. The duties of officers are defined in Article II of the by -laws; Section 12 of that Article provides that Authority officers may be compensated by the Board of Authority which shall be determined by resolution adopted at the annual meeting subsequent to the election of the officers. The next scheduled meeting of the Board is on February 21, 1990 at which it is presumed that the Board will act in accordance with the provisions of the by- laws. After quoting Section 4(b) of the Municipalities Authorities Act of 1945, 53 P.S. 5306B and Section 7C of that Act, 53 P.S. 5309C, you pose four questions regarding your duties and obligations under the Public Official and. Employee Ethics Law. First you inquire as to whether you may receive compensation as an officer of the A Authority. Secondly, you inquire as to whether you are permitted to vote in favor of your election to an office and if not, what reason must be expressed for your abstention. Third, you ask whether you may vote for a resolution establishing the compensation for the authority officers and if not, what reason must be given for abstention. Finally, you inquire as to whether you may receive compensation as an officer of the A Authority and whether such compensation may be established by individual resolution for each office. Since it is anticipated that the Board of Directors of the A Authority will take action at a reorganizational meeting on February 21, 1990, you request an advisory opinion. Discussion: Initially, it is noted that this advisory is prospective in nature and does not address the propriety of any past conduct or actions. Secondly, this advisory is issued based upon an interpretation of Act 9 of 1989 and likewise would not have application to any matters as to which Act 170 of 1978 would control. As a Board Member for A Authority, you are a "public official" as that term is defined in the Public Official and Employees Ethics Law and hence you are subject to the provisions of that Law. 65 P.S. 5402; 51 Pa. Code 51.1. Section 3(a) of the Ethics Act provides: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms are defined under the Ethics Law: Section 2. Definitions. Confidential Advice 1 • i 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. "Conflict" or "conflict of interest" 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 or 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. In addition, Sections 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept any thing of monetary value based upon the understanding that official /employee would be influenced thereby. Under Section 3(a) of the Ethics Law quoted above, the Commission has determined that if a particular statutory enactment prohibits an official's receipt of a particular benefit, then that official's receipt of such a prohibited benefit, in and through the authority of office, would also be in contravention of the Ethics Law. The Commission has been called upon, on various occasions, to determine whether a private pecuniary benefit is prohibited by law. Fletcher, Opinion 89 -018. In order to determine whether a particular private pecuniary benefit is strictly prohibited by law, the provisions of the enabling legislation of the governmental body in question must be reviewed. In the instant situation the Municipalities Authorities Act provides as follows: Every Authority is hereby granted, and shall have and may exercise all powers necessary or convenient for the carrying out of the aforesaid purposes, including but without limiting the generality of the foregoing, the following rights R 4 3 1 t 1 A majority of the members shall constitute a quorum of the board for the purpose of organizing the Authority and conducting the business thereof and for all other purposes, and all action may be taken by vote of a majority of the members present, unless in any case the by -laws shall require a larger number. The board shall have full authority to manage the properties and business of the Authority and to prescribe, amend and repeal by- laws, rules and regulations governing the manner in which the business of the Authority may be conducted, and the powers granted to it may be exercised and embodied. The board shall fix and determine the number of officers, agents and employees of the Authority and their respective powers, duties and compensation and may appoint to such office or offices any member of the board with such powers, duties and compensation as the board may deem proper. 53 P.S. §309C. In applying the above provisions of the Ethics Law to the question of simultaneous service as an authority board member and i officer, there is no per se prohibition to such service. Basically, the Ethics Law does not state that it is inherently incompatible for a public official /employee to serve in a position of employment. The main prohibition under the State Ethics Law and Opinions of the Ethics Commission is that one may not serve the interests of two persons, t groups, or entities whose interests may be adverse. Therefore, the positions of authority board member and officer are not prohibited under Section 3(a) of the Ethics Act, provided that the available offices with the Authority would be those which are bona. fide in nature. However, the creation of non - legitimate offices for the purpose of providing members of the Authority with compensated positions would be precluded by Section 3(a) of the Ethics Law because in that instance the authority members would be using the authority of their office, through creating these positions and voting for appointments to these positions, to create a private pecuniary benefit for themselves. It is important to note that the Municipal Authorities I 1 mj Confidential Advice Page 4 and powers: (f) To make by -laws for the management and regulation of its affairs. (g) To appoint officers, agents, employees and servants, to prescribe their duties and to fix their compensation. 53 P.S. §306B. Confidential Advice Page 5 Act requires that the compensation of authority members be fixed by the governing body that created the authority. Thus, if the board members who can fix the compensation for board officers and employees use their office to "create" positions in order to evade the above requirements, then such would be in contravention of the State Ethics Law. The criteria necessary to determine whether the offices are legitimate would be to consider the time at which the "offices" were created, the number of "offices" relative to the number of authority board members, the duties that are performed in these offices, the underlying purpose for creating the "offices ", the salaries for these "offices" relative to the compensation set by the governing body and any other considerations which bear upon the legitimacy of such "offices." Sections 3(b) and 3(c) of the Ethics Law referenced above would expressly prohibit a situation where an understanding would exist between Authority Board Members to create "offices" which may be filled by Board Members followed by a vote whereby the Board Members would reciprocate by appointing each other to one of the various "offices Although additional information has been requested regarding the circumstances of these numerous Authority "offices ", you have not supplied that information in your response. Accordingly, it cannot be determined whether such "offices" are in fact appropriate and not just an attempt to circumvent the requirements that the governing body, that created the authority, fix the member's compensation. As such, your service in that "office" would be prohibited under the Ethics Law. In any event you may not vote for your own appointment based upon the restriction of Section 3(a) of the Ethics Law. In addition, Section 3(j) of the Ethics Law would require you to publicly announce your abstention as well as file a written memorandum to that effect with the secretary recording the minutes. The two other inquiries concerning a resolution for compensation or individual resolution for offices cannot be addressed due to the insufficiency of information. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law; 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 Law. Conclusion: As a board member of the A Authority you are a public official subject to the provisions of the Ethics Law. Based upon the limited information, it is concluded that Section 3(a) of the Ethics Law would preclude you from simultaneously serving as Board Member of the Authority and as a compensated "officer" of the Authority. Further, Sections 3(b) and 3(c) of the Ethics Law expressly prohibit an understanding whereby the Board Members would reciprocate by voting in favor of each others' appointments as to "offices" within the Authority. Lastly, the propriety of the proposed conduct has only been Confidential Advice Page 6 addressed under the Ethics Law. Pursuant to Section 7(9)(ii), this 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, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. such. This letter is a public record and will be made available as Finally, if you disagree with this Advice or if you have any reason to challenge same, you may request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be in writing and must be received at the Commission within 15 days of the date of this Advice pursuant to 51 Pa. Code §2.12. cerely, 10 Vincent ) Dopko, Chief Counsel