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HomeMy WebLinkAbout87-513A ReedMr. Donald G. Reed 36 West Fourth Street Emporium, PA 15834 Dear Mr. Reed: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PA 17120 TELEPHONE: (717) 783 -1610 June 15, 1987 SUPPLEMENTAL ADVICE OF COUNSEL 87 -513A Re: Conflict of Interest, Executive Director of the Economic Development Office, Governmental Business Complex, Administration of a Community Development Block Grant, Interest in Corporation Seeking to Rent Space in Complex Receipt is acknowledged of your letter of June 4, 1987, wherein you request clarification and additional advice as to a previous Advice of Counsel No. 87 -513 dated February 11, 1987. Issue: Whether there is any prohibition under the State Ethics Act when the executive director of a county economic development office seeks to administer a community development block grant in a complex when none of the community development block grant funds will be used for the improvement of certain buildings located in the complex which buildings are leased by a company in which the executive director is a stockholder. Facts: As previously noted in Advices of Counsel Nos. 86 -623 and 87 -513, the Mid - Cameron Municipal Authority, hereinafter Authority, being a joint project of the borough of Emporium and Shippen Township, purchased a multi - tenant manufacturing complex which is now known as the Emporium Trade Center, hereinafter ETC. You as executive director of the Cameron County Economic Development Office, hereinafter CCEDO, being a county entity, assist in the application for Community Development Block Grant Funds, hereinafter CDBG, which are received from the federal government through the Pennsylvania Department of Community Affairs. You, as executive director, receive your salary from the county but are not a member of the Authority. You also have a private interest, as a stockholder, in a company known as PA Door & Millwork, Ltd., hereinafter PA Door, in which your two brothers are the other stockholders. You were previously advised that there would be no prohibitions as to your involvement with PA Door which rents space in ETC provided you would be performing no tasks relative to the management of the complex and relative to the leasing of the office space in the complex. The advice was based upon the premise that you as executive director would have no involvement with the specific buildings from which PA Door would rent space. You were further Mr. Donald G. Reed June 15, 1987 Page 2 cautioned, however, that if you were called upon in your capacity as executive director to perform certain functions wherein a conflict of interest would develop, you should abstain from participating in those matters and so note it of public record. You now seek clarification and additional advice regarding the administration of the CDBG 86 grant for ETC. Specifically, you ask whether there would be any conflict i'f you would administer the whole CDBG 86 grant when no CDBG funds would be used for the buildings in which PA Door leases space. Secondly, you inquire as to whether there would be a conflict if funds from the Economic Development Administration,. hereinafter EDA, would be used to renovate the buildings in which PA Door leases space when the Authority has the absolute prerogative in administering the EDA grant. Lastly, you inquire as to whether there would be any conflict if you terminate your position as executive director followed by employment with PA Door. Discussion: As previously noted in the prior Advices of Counsel, you are a public employee as that term is defined in section 402 of the State Ethics Act and hence, your conduct must conform to the requirements of that law. Section 3(a) of the State Ethics Act provides as follows: Section 3. Restricted activities. (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). Section 3(a) of the Ethics Act does provide that no public official or public employee shall use his public office or any confidential information obtained through holding of a public office or position to acquire financial gain for himself, his immediate family, or a business with which he is associated. See 65 P.S. 403(a). A "business with which he is associated" is defined in the Ethics Act as follows: "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 holder of stock. 65 P.S. 402. Since PA Door is a business with which you are associated, as defined in the Ethics Act, you should not participate in any decisions, discussions or recommendations that would benefit PA Door wherein you are a stockholder. Specifically, as to the administration of the CDBG 86 Grant by your office, it is noted that none of those funds would be used to renovate buildings 10 Mr. Donald G. Reed June 15, 1987 Page 3 through 16 which are occupied by PA Door, Since it would appear that the administration of the CDBG 86 funds would not insure to PA Door, the Ethics Act would not prohibit CCEDO from administering that grant, provided the facts are as outlined above. As to the second inquiry as to whether there would be a conflict in your administering the CDBG Grant if the Authority decided to use EDA funds in buildings 10 through 16 which' are leased by PA Door, section 3(a) of the Ethics Act quoted above must be considered. As outline above, this section of the Act prohibits a public employee from utilizing his position to obtain financial gain. You state that the Authority administers the EDA Grant and that none of the tenants including PA Door has any input as to how the funds would be expended. As previsously noted, you as executive director are not a member of the Authority. The administration of the EDA Grant by the Authority would not conflict with the administration of the CDBG program by your office provided there is absolutely no input, discussions, recommendations or any influence by you to the Authority dealing with the application of the EDA funds. Lastly, you inquire as to whether there would be any conflict if you would terminate your position as executive director followed by your employment with PA Door. Although you raise the question in the context of whether the CCEDO would be absolved of any conflict of interest, the question can only be reviewed in the context of your activity as a public employee. Section 7 (9)(i) and (ii) of the Ethics Act provides as follows: Section 7. Duties of the commission. (9) (i) Issue to any person, upon such person's request, an opinion with respect to such person's duties under this act. The commission shall, within 14 days, either issue the opinion or advise the person who made the request whether an opinion will be issued. No person who acts in good faith on an opinion issued to him by the commission shall be subject to criminal or civil penalties for so acting, provided that the material facts are as stated in the opinion request. The commission's opinions shall be public records and may from time to time be published. 65 P.S. 407(9)(1). (ii) Provide written advice to any person upon their request with respect to such person's duties under this act. Such advice shall be provided within 21 working days of the request, provided that the time may be extended for good cause. It shall be a complete defense in any enforcement proceeding initiated by the commission, and Mr. Donald G. Reed June 15, 1987 Page 4 evidence of good faith conduct in any civil or criminal proceding, if the requester, at least 21 working days prior to the alleged violation, requested written advice from the commission in good faith, disclosed truthfully all the material facts and committed the acts complained of either in reliance on the advice or beacuse of the failure of the commission to provide advice with 21 days of the request of such later extended time. 65 P.S. 407(ii). Under the above quoted provisions, only advice or an opinion can be given to you but, not CCEDO as to possible conflicts of interests under the Ethics Act. Consequently, upon termination of your employment, you would become a "former public employee" subject to Section 3(e) of the Ethics Act. Section 3(e) of the Ethics Act provides that: Section 3. Restricted activities. (e) No former official or public employee shall represent a person, with or without compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 P.S. 403. Initially, to answer your request the "governmental body" with which you were associated while working with CCEDO must be identified. Then, the scope of the prohibitions associated with the concept and term of "representation" must be reviewed. In this context, the Ethics Commission has previously ruled that the "governmental body" with which an individual may be deemed to have been associated during his tenure of public office or employment extends to those entities where he had influence, responsibility, supervision, or control. See Ewing, 79 -010. See also Kury vs. Commonwealth of Pennsylvania, State Ethics Commission, 435 A.2d 940 (1981). From the description and analysis of your duties and responsibilities and based upon the facts outlined above, your jurisdiction, responsibility, influence and control appears to have been CCEDO. Thus, the "governmental body" with which you have been "associated" upon the termination of your employment would be CCEDO. Therefore, within the first year after you would leave CCEDO, Section 3(e) of the Ethics Act would apply and restrict your "representation" of persons or new employers vis-a-vis CCEDO. The Ethics Act would not affect your ability to appear before agencies or entities other than with respect to the CCEDO. Likewise, there is no general limitation on the type of employment in which you may engage, following your departure from CCEDO. We do note, however, that the conflicts of interest law Mr. Donald G. Reed June 15, 1987 Page 5 is primarily concerned with financial conflicts and violations of the public trust. The intent of the law generally is that during the term of a person's public employment he must act consistently with the public trust and upon departure from the public sector, that individual should not be allowed to utilize his association with the public sector, officials or employees to secure for himself or a new employer, treatment or benefits that may be obtainable only because of hts association with his former public employer. See Anderson, 83 -014; Zwikl, 85 -004. In respect to the one year representation restriction the Ethics Commission has promulgated regulations to define "representation" as follows: Section 1.1. Definitions. Representation - -- Any act on behalf of any person including but not limited to the following activities: personal appearances, negotiating contracts, lobbying, and submitting bid or contract proposals which are signed by or contain the name of the former public official or public employe. 51 Pa. Code 1.1. The Commission, in its opinions, has also interpreted the term "representation" as used in Section 3(e) of the Ethics Act to prohibit: 1. Personal appearances before the governmental body or bodies with which you have been associated, (that is CCEDO), including, but not limited to, negotiations or renegotiations on contracts with the CCEDO; 2. Attempts to influence CCEDO; 3. Participating in any matters before CCEDO over which you had supervision, direct involvement, or responsibility while employed by CCEDO; 4. Lobbying, that is representing the interests of any person or employer before CCEDO in relation to legislation, regulations, etc. See Russell, 80 -048 and Seltzer, 80 -044. The Commission has also held that preparing and signing a proposal, document or bid, or listing your name as the person who will provide technical assistance on such proposal, document, or bid, if submitted to or reviewed by you, constitutes an attempt to influence your former governmental body. See Kilareski, 80 -054. Therefore, within the first year after you leave CCEDO, you should not engage in the type of activity outlined above. (The Commission, however, has stated that the inclusion of your name as an employee or consultant on a "pricing proposal," even if submitted to or reviewed by you, is not prohibited as "representation." See Kotalik, 84 -007). Mr. Donald G. Reed June 15, 1987 Page 6 You may, assist in the preparation of any documents presented to CCEDO so long as you are not identified as the pr @parer. You may also counsel any person regarding that person's appearance before CCEDO. Once again, however, your activity in this respect should not be revealed to the CCEDO. Of course, any ban under the Ethics Act would not prohibit or preclude you from making general informational inquiries of CCEDO to secure information which is available to the general public. See Cutt, 79 -023. This, of course, must not be done in an effort to indirectly influence these entities or to otherwise make known to the CCEDO your representation of, or work . for your new empl oyer. Finally, the Commission has concluded that if you are administering an existing contract as opposed to negotiating or renegotiating a contract, your activities would not be, prohibited by the Ethics Act. See Dalton, 80 -056 and Beaser, 81 -538. Additionally, we note that Section 403(b) of the State Ethics Act would prohibit any public employee or public official from accepting a position of employment if said position has been offered based upon the understanding that the official conduct of the employee or official, while working for his former governmental body, was influenced by such offer. See 65 P.S. §403(b). Conclusion: As a executive director of CCEDO, you are to be considered a "public employee" as defined in the Ethics Act. Under the circumstances as outline above, there would appear to be no prohibition for CCEDO to administer CDBG 86 provided none of the funds would be utilized for the buildings in which PA Door leases space. Further there would be no prohibition if the Authority decided to use EDA funds in the buildings wherein PA Door leases space provided you have no input, discussions, recommendations or influence relative to the application of those monies by the Authority. Upon termination of your service with CCEDO, you would become a "former public employee" subject to the restrictions imposed by Section 3(e) of the Ethics Act. As such, your conduct should conform to the requirements of the Ethics Act as outlined above. Your governmental body for the purpose of the one year representation restriction is CCEDO. Further, should you terminate your employment or service, as outlined above, you are reminded that the Ethics Act also requires you to file a Statement of Financial Interests for the year following your termination of servi ce. Mr. Donald G. Reed June 15, 1987 Page 7 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. 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 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 made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. Sincerely, Vincent J. Dopko General Counsel