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HomeMy WebLinkAbout18-538 FalatovichPHONE: 717- 783 -1610 TOLL FREE: 1 -800- 932 -0936 STATE ETHICS COMMISSION FINANCE BUILDING 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120 -0400 ADVICE OF COUNSEL June 19, 2018 To the Requester: Mr. Gary A. 1=alatovich, Esquire Dear Mr. Falatovich: FACSIMILE: 717- 787 -0806 WEBSITE: www,ethics.pa.00v 18-538 This responds to your letter dated May 29, 2018, 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 T75-T:S. § 1101 et seq., would impose prohibitions or restrictions upon any of four members of a borough council with regard to participating in negotiations, votes, or other actions of borough council pertaining to a county municipal authority's proposal to purchase the assets and assimilate some or all of the union and non -union employees of a joint sewage authority that was formed by the borough and two other municipalities, where: (1) one of the borough council members, who is borough council president, is a union employee of the sewage authority as well as a union steward; (2) one of the borough council members, who is borough council vice president, is a non -union employee of the sewage authority; (3) one of the borough council members is a union employee of the county municipal authority and a union trustee; and (4) one of the borough council members receives a stipend of $200 per month for serving as a member of the board of the sewage authority. Facts: You have been authorized by Jeffrey Tabita ( "Mr. Tabita "), Earl igg Berger ( "Mr. Highberger'.), Jeanne Davis ( "Ms. Davis "), and Ronald Holtzer ( "Mr. Holtzer ") to request an advisory from the Commission on their behalf. You have submitted facts that may be fairly summarized as follows. Mr. Tabita, Mr. Highberger, Ms. Davis, and Mr. Holtzer are Members of Council for the Borough of Southwest Greensburg ( "Borough "), located in Westmoreland County, Pennsylvania. Mr. Tabita is President and Mr. Highberger is Vice President of Borough Council. The Greater Greensburg Sewage Authority (the "Sewage Authority ") is a joint sanitary sewage authority that was formed by the Borough, the City of Greensburg, and the Borough of South Greensburg (collectively, the "Member Municipalities ") to provide sanitary sewage disposal facilities to the Member Municipalities. The Municipal Authority of Westmoreland County (the "Municipal Authority ") provides regional water and sewage services to municipalities throughout Westmoreland pCounty. The Municipal Authority is seeking to purchase the assets of the Sewage Authority. If the Sewage Authority Board will not approve a sale of the Sewage Authority's assets, the Municipal Authority will seek the approval of the Member Municipalities for a sale of those assets. Negotiations on a sale of the Sewage Falatovich, 18 -538 un2018 Page 2 Authority assets would be conducted between the Municipal Authority Board and representative Members of the Councils of the Member Municipalities. A Municipal Authority proposal to purchase the Sewage Authority's assets would also involve the assimilation of some or all of the Sewage Authority's union and non- union employees as Municipal Authority employees. The issues of which Sewage Authority employees would be retained as Municipal Authority employees and what their pay rates and other benefits would be as Municipal Authority employees would be subject to negotiation. You state that traditionally, rank and file employees of an entity acquired by the Municipal Authority are retained, while the extent to which supervisory or administrative employees of an acquired entity are retained is dependent upon the circumstances of each acquisition. The Member Municipalities' approval of a sale of the Sewage Authority's assets would eventually result in the dissolution of the Sewage Authority and the elimination of the Sewage Authority Board. Each of the Member Municipalities would receive a significant lump sum payment if the Municipal Authority would acquire the assets of the Sewage Authority. In order to consummate the transaction, Members of Borough Council would be required to vote upon and approve same. Mr. Tabita is a rank and file employee of the Sewage Authority. Twelve Sewage Authority employees, including Mr. Tabita, are members of Utility Workers Local #487 ( "Union 1 "). Mr. Tabita holds the title of "Class 1 Licensed Operator," and he is a licensed lab supervisor. Mr. Tabita will be the Union 1 steward until .July 1, 2018. Mr. Highberger is employed by the Sewage Authority as the Superintendent of the Sewage Authority plant, and he is a supervisor at the Sewage Authority plant. The non -union employees of the Sewage Authority include Mr. Highberger, another supervisor at the Sewage Authority plant, a supervisor for the Sewage Authority's collection system, a manager, and four clerical personnel. Ms. Davis is a rank and file employee of the Municipal Authority. Approximately 244 Municipal Authority employees, including Ms. Davis, are members of AFL -CIO Local 164 ('Union 2 "). Ms. Davis serves as a Trustee on the Board of Union 2. Mr. Holtzer serves as Borough Council's representative on the Sewage Authority Board. Mr. Holtzer is paid a stipend of $200.00 per month for his service as a Member of the Sewage Authority Board, and he would lose that stipend if the Sewage Authority would be dissolved. Any sewage rate increases that could result from the Municipal Authority's acquisition of the assets of the Sewage Authority would impact Mr. Tabita, Mr. Highberger, Ms. Davis, Mr. Holtzer, and all Borough residents. Based upon the above submitted facts, you ask whether the Ethics Act would impose prohibitions or restrictions upon Mr. Tabita, 'Mr. Highberger, Ms. Davis, or Mr. Holtzer with regard to participating in negotiations, votes, or other actions of Borough Council pertaining to a Municipal Authority, proposal to purchase the assets and assimilate some or all of the union and non -union employees of the Sewage Authority. It is administratively noted that Borough Council consists of 7 Members. 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 Fafatovich, 18 -538 une �5,�018 Page 3 facts relevant to the inquiry. 65 Pa.C.S. 1107(10 }, (11). An advisory only affords a defense to the extent the requester has trut fully discllosed 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 in uiry relates to conducf that has already occurred, such past conduct may no 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 Members of Borough Council, Mr. Tabita, Mr. Highberger, and Ms. Davis are public officials subJJ'ect to the provisions of the Ethics Act. As a Member of Borough Council and as a Mmber of the Sewage Authority Board, Mr. Holtzer 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. 0) 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 bod of a political subdivision, where one member has abstaained 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 Falatovich, 18 -538 un� eTg-, 2018 Page 4 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 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 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. Falatovich1 18 -538 June 19, 018 Page 5 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 "classlsubclass 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 a ply, two criteria must be met: (1) the affected public official/public employee, immediNe 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 whic the public official /public employee or immediate family ember 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 your inquiry, it is noted that this Advice cannot foresee every factual variable that might occur as the matters of the Municipal Authority's proposed purchase of the assets of the Sewage Authority and assimilation of Sewage Authority employees are considered. However, in any given instance, for each of the four Borough Council Members on whose behalf you have inquired, the standard to be applied in determining whether a conflict of interest exists is the Kistler standard set forth above. Under the submitted facts, pursuant to Kistler, su�r_a, Mr. Tabita, Mr. Highberger, Ms. Davis, and Mr. Holtzer would each have a conflict of interest under Section 1103(x) of the Ethics Act as to participating in negotiations, votes, or other actions of Borough Council pertaining o a potential sale of the Sewage Authority's assets to the Municipal Authority, andfor the assimilation of Sewage Authority employees as Municipal Authority employees, if: 1) he/she would be consciously aware of a private pecuniary benefit for himself /hersel or a business with which he/she is associated; {2} his/her action(s) would constitute one or more specific steps to attain that benefit; and (3) neither the de minimis exclusion nor the classlsubclass 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. For Mr. Tabita or Mr. Highberger, examples of actions that could result in a conflict of interest, depending upon the facts and circumstances, would include actions to: reserve his employment with the Sewage Authority (Cf., Miscavi e, Advice 99- 544y,)(2) advance his employment with the Municipal Authority; (3 enhance - -or reduce a loss as to- -his compensation or employment benefits; or ( ) financially benefit a business with which he is associated. Based upon the submitted facts, it cannot be determined whether Mr. Tabita's status as the Union 1 steward would result in Union 1 being considered a business with which Mr. Tabita is associated. If a Union 1 steward is a director, officer, or employee of Union 1, then Union 1 would be considered a business with which Mr. Tabita is currently associated. Falatovich, 18 -538 un _ zS, _2018 Page 6 Given Ms. Davis's status as a Trustee serving on the Board of Union 2, Union 2 would be considered a business with which Ms. Davis is associated. Depending upon the facts and circumstances, Ms. Davis could have a conflict of interest in her capacity as a Borough Council Member with regard to action(s) that would financially benefit her or Union 2. Because Mr. Holtzer would lose his $200.00 per month stipend for serving as a Member of the Sewage Authority Board if the Sewage Authority would be dissolved, Mr. Holtzer would have a conflict of interest with regard to participating in negotiations, votes, or other actions of Borough Council by which he would oppose a potential sale of the Sewage Authority's assets to the Municipal Authority. In each instance of a conflict of interest, the Borough Council Member(s) with the conflict of interest would be required to abstain from participation, which would include voting unless a voting conflict exception of Section 11030) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 11030) of the Ethics Act would have to be satisfied in the event of a voting conflict. Section 11030) of the Ethics Act contains two voting conflict exceptions. The voting conflict exception for breaking a tie vote despite a conflict of interest is available exclusively to members of three - member governing bodies who first abstain and disclose their conflicts as required by Section 1103{1) of the Ethics Act. See, Pavlovic, Opinion 02 -005. The only voting conflict exception that enables a member of a seven - member board such as Borough Council to vote despite a conflict of interest requires that the following conditions be met: (1) the board must be unable to take an action on red t m the matter before it because the number of members re aio abstain fro voting under the provisions of the Ethics Act makes the majority or other legall required vote of approval unattainable; and (2) prior to voting, such members with con licts under the Ethics Act must disclose their conflicts as required by Section 11030). When both of these conditions are met, such that the exception is applicable, the exception allows for voting only --it does not permit other forms of participation, such as discussing the matter that is the subject of the vote. Pavlovic, supra. Therefore, pursuant to Sections 1103(a) and 11030) of the Ethics Act, the Borough Council Member(s) with a conflict of interest with regard to certain matter(s) would not be permitted to vote on such matter(s) unless so many Members of Borough Counal would have conflicts of interest under the Ethics Act as to such matters that there would not be enough non-conflicted Members left to take action. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability f 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 Borough Code or the Municipality Authorities Act. Conclusion: As Members of Council for the Borough of Southwest Greensburg Ub%ou g , located in Westmoreland County, Pennsylvania, Jeffrey Tabita ( "Mr. a "), Eari Highberger ( "Mr. Highberger "), and Jeanne Davis ( "Ms. Davis ") are public officials subject o the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 a. S. § 1101 et se q. As a Member of Borough Council and as a Member of the Board of the Greater Greensburg Sewage Authority (the "Sewage Authority "), Ronald Holtzer ( "Mr. Holtzer ") is a public official subject to the provisions of the Ethics Act. Based upon the submitted and administratively noted facts that: (1) the Sewage Authority is a joint sanitary sewage authority that was formed by the Borough, the City of Greensbur , and the Borough of South Greensburg (collectively, the "Member Municipalities"3 to provide sanitary sewage disposal facilities to the Member Municipalities; (2) the Municipal Authority of Westmoreland County (the Municipal Falatovich, 18 -538 U_u_ne_T9_,2 018 Page 7 Authority ") provides regional water and sewage services to municippalities throughout Westmoreland County; (3) the Municipal Authority is seekingg to purchase the assets of the Sewage Authority; (4) if the Sewage Authority Board wi[I not approve a sale of the Sewage Authority's assets, the Municipal Authority will seek the approval of the Member Municipalities for a sale of those assets, (5) negotiations on a sale of the Sewage Authority assets would be conducted between the Municipal Authority Board and representative Members of the Councils of the Member Municipalities; (6) a Municipal Authority proposal to purchase the Sewage Authority's assets would also involve the assimilation of some or all of the Sewage Authority's union and non -union employees as Municippal Authority employees; (7) the issues of which Sewage Authority employees would be retained as Municipal Authority employees and what their pay rates and other benefits would be as Municipal Authority employees would be subject to negotiation; (8) traditionally, rank and file employees of an entity acquired by the Municipal Authority are retained, while the extent to which supervisory or administrative employees of an acquired entity are retained is dependent upon the circumstances of each acquisition; (9) the Member Municipalities' approval of a sale of the Sewage Authority's assets would eventually result in the dissolution of the Sewage Authority and the elimination of the Sewage Authority Board; (10) each of the Member Municipalities would receive a significant lump sum payment if the Municipal Authority would acquire the assets of the Sewage Authority; (11) in order to consummate the transaction, Members of Borough Council would be required to vote upon and approve same; (12) Mr. Tabita is President and Mr. Highberger is Vice President of Borough Council; (13) Mr. Tabita is a rank and file employee of the Sewage Authority; (14) twelve Sewage Authority employees, including Mr. Tabita, are members of Utility Workers Local #487 ( "Union 1 "); (15) Mr. Tabita holds the title of "Class 1 Licensed Operator," and he is a licensed lab supervisor; (16) Mr. Tabita will be the Union 1 steward until July 1, 2018; {'17) Mr. Highberger is employed by the Sewage Authority as the Superintendent of the Sewage Authority plant, and he is a supervisor at the Sewage Authority plant; (18) the non -union employees of the Sewage Authority include Mr. Highberger, another supervisor at the Sewage Authority plant, a supervisor for the Sewage Authority's collection system, a manager, and four clerical personnel; (19) Ms. Davis is a rank and file employee of the Municipal Authority; (20) approximately 244 Municipal Authority employees, including Ms. Davis, are members of AFL -CIO Local 164 ( "Union 2 "); (21) Ms. Davis serves as a Trustee on the Board of Union 2; (22) Mr. Holtzer serves as Borough Council's representative on the Sewage Authority Board; (23) Mr. Holtzer is paid a stipend of $200.00 per month for his service as a ember of the Sewage Authority Board, and he would lose that stipend if the Sewage Authority would be dissolved; (24) any sewage rate increases that could result from the Municipal Authority's acquisition of the assets of the Sewage Authority would impact Mr. Tabita, Mr. Highberger, Ms. Davis, Mr. Holtzer, and all other Borough residents; and (25) Borough Council consists of 7 Members, you are advised as follows. Mr. Tabita, Mr. Highberger, Ms. Davis, and Mr. Holtzer would each have a conflict of interest under Section 1103(a) of the Ethics Act as to participating in negotiations, votes, or other actions of Borough Council pertaining to a potential sale of the Sewage Authority's assets to the Municipal Authority, and /or the assimilation of Sewage Authority employees as Municipal Authority employees, if: (1) he /she would be consciously aware of a private pecuniary benefit for himself /hersel or a business with which he /she is associated; (2) his /her 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. For Mr. Tabita or Mr. Highberger, examples of actions that could result in a conflict of interest, depending upon the facts and circumstances, would include actions to: (1) preserve his employment with the Sewage Authority; (2) advance his employment with the Municipal Authority; 3) enhance - -or reduce a loss as to - -his compensation or employment benefits; or (4I financially benefit a business with which Falatovich, 18 -538 une_T9,2018 Page 8 he is associated. Based upon the submitted facts, it cannot be determined whether Mr. Tabita's status as the Union 1 steward would result in Union 1 being considered a business with which Mr. Tabita is associated. If a Union 1 steward is a director, officer, or employee of Union 1, then Union 1 would be considered a business with which Mr. Tabita is currently associated. Given Ms. Davis's status as a Trustee serving on the Board of Union 2, Union 2 would be considered a business with which Ms. Davis is associated. Depending upon the facts and circumstances, Ms. Davis could have a conflict of interest in her capacity as a Borough Council Member with regard to action(s) that would financially benefit her or Union 2. Because Mr. Holtzer would lose his $200.00 per month stipend for serving as a Member of the Sewage Authority Board if the Sewage Authority would be dissolved, Mr. Holtzer would have a conflict of interest with regard to participating in negotiations, votes, or other actions of Borough Council by which he would oppose a potential sale of the Sewage Authority's assets to the Municipal Authority. In each instance of a conflict of interest, the Borough Council Member(s) with the conflict of interest would be required to abstain from participation, which would include voting unless a voting conflict exception of Section 11030) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 11030) of the Ethics Act would have to be satisfied in the event of a voting conflict. The only Section 11030) voting conflict exception that enables a member of a seven - member board such as Borough Council to vote despite a conflict of interest requires that the following conditions be met: (1) the board must be unable to take any action on the matter before it because the number of members required to abstain from votinq under the provisions of the Ethics Act makes the majority or other e all re uired vote of approval unattainable; and (2) prior to voting, such members with con licts under the Ethics Act must disclose their conflicts as required by Section 11030). When both of these conditions are met, such that the exception is applicable, the exception allows for voting only —it does not permit other forms of participation, such as discussing the matter that is the subject of the vote. Therefore, pursuant to Sections 1103(a) and 11030) of the Ethics Act, the Borough Council Member(s) with a conflict of interest with regard to certain matter(s) would not be permitted to vote on such matter(s) unless so many Members of Borough Council would have conflicts of interest under the Ethics Act as to such matters that there would not be enough non-conflicted Members left- to tae action. 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 to 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. Falatovich, 18 -538 June S, 018 Page 9 Any such appeal must be in writing and must be act��ually received at the Commission within thirty (30) days of the date this vice pursuant to 57 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