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HomeMy WebLinkAbout92-527Dear Mr. McCune: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL February 7, 1992 Mr. James H. McCune McCune & Vreeland 92-527 119 South College Street Washington, PA 15301 -4923 Re: Public Employee /Official, FIS, Corporation, President /Principal Stockholder, Contracting with Municipal Authority, Management and Operation of Sewer Plants This responds to your letter of December 16, 1991, in which you requested advice from the State Ethics Issue: Whether the president /principal stockholder of a privately owned business corporation which contracts with a municipal authority to manage and operate its sewer plant is to be considered a "public employee" under the Public Official and Employee Ethics Law, and therefore, required to comply with the financial reporting and disclosure provisions of the Ethics Law. Facts: As legal counsel to H &H Water Controls, Inc. (H &H), a small privately owned business corporation in Greene County, Pennsylvania, and its President and principal stockholder, Mr. Edgar Harris, you seek an advisory from the State Ethics Commission regarding whether H & H and /or Mr. Harris would be required to file Statements of Financial Interests under the following circumstances. H&H manages and operates sewer plants, also known as waste water treatment facilities. H &H is presently a party to two contracts with the Crucible Sewer Authority (Authority), situate in Greene County, Pennsylvania. Pursuant to a three -year contract, H &H operates the Crucible Waste Water Treatment Facility, such that H &H is responsible for all operations, maintenance and testing required by the Department of Environmental Resources. You note that this arrangement is purely contractual, with no representative of H &H being an Mr. James H. McCune February 7, 1992 Page 2 employee of, or on the payroll of, the Authority in any way. The other contract is also renewed every three years, and provides that H &H will take care of all monthly billing for the Authority's customers. As with the other contract, there are no employees of the Authority involved in providing these services. You specifically inquire as to whether H &H and /or Mr. Harris -would be required, pursuant to the "appropriate legislation," to file a Statement of Financial Interests or any other pertinent documents. Noting that this issue is being debated in your community, you request an expedited response. Discussion: To the extent your inquiry regards H &H itself, as a corporation, you are initially advised that the financial reporting and disclosure provisions of the Ethics Law apply to individuals, not corporations. Considering your request from the perspective of Mr. Edgar Harris, the president and principal stockholder of H &H, the issue is whether Mr. Harris would be considered a "public employee" as defined in the Ethics Law. The term "public employee" is defined in the Ethics Law as follows: Section 2. Definitions "Public employee." Any individual employed by the Commonwealth or a political subdivision who Ls for - taking - or recommending official action of a nonministerial nature with regard to: (1) contracting or procurement; A (2) administering or monitoring grants or subsidies; (3) planning or zoning; (4) inspecting, licensing, regulating or auditing any person; or (5) any other activity where the official action has an economic impact of greater than a de minimis nature on the interests of any person. Mr. James H. McCune February 7, 1992 Page 3 "Public employee" shall not include individuals who are employed by the State or any political subdivision thereof in teaching as distinguished from administrative duties. 65 P.S. 8402. Although it is Mr. Harris' status individually which is in question, the focus of the inquiry is necessarily directed to H &H, and its role as an independent contractor in providing management and operational services for the Authority. It is noted that this Advice relies primarily on your description of H &H and its role as set forth in your letter of December 16, 1991. The Commission has considered similar situations in the past. In Fraas, Opinion 80 -016, the Commission considered a private, independent contracting tax collection agency with no discretionary duties or authority, which was employed by many school districts and municipalities for tax collection. Under the facts of Fraas, the Commission concluded that the filing requirements of the Ethics Law did not apply. In contrast, in Flower, Opinion 80 -033, the Commission considered the Carlisle Area Earned Income Tax Bureau which was actually formed by various governmental bodies to employ an Earned Income Tax Officer, to make rules and regulations, and to see that the local Earned Income Tax was collected and distributed to the member districts. The Bureau was composed of one representative from each of the taxing bodies. Furthermore, the Bureau functioned in more than an administrative capacity by exercising discretion in compromising claims and authorizing legal action. In Flower, the Commission determined that the Carlisle Area Earned Income Tax Bureau itself was a governmental body and therefore was within the parameters of the Ethics Law. Although Fraas and Flower were both decided under former Act 170 of 1978 and would therefore not be controlling, the reasoning of the Commission as set forth in those Opinions would appear to continue to apply under present Act 9 of 1989. The Commission's reasoning in Fraas supra, would apply to H &H. In light of H &H's nature as set forth above, Mr. Harris is not to be considered a public employee as defined in the Ethics Law. This conclusion is based upon an objective review of the information you have provided from, which it appears that H &H would not be a governmental body but rather would be a private entity acting as an independent contractor. This conclusion is also consist with Rogers v Com., State Ethics Commission, 80 Pa. Commw. 43, 470 A.2d 1120 (1984). Mr. James H. McCune February 7, 1992 Page 4 Thus, because Mr. Harris is not a public employee as defined in the Ethics Law, he would not be subject to the financial reporting and disclosure requirements of the Ethics Law. Accordingly, he would not be required to file the Statement of Financial Interests for the years in which he is President and principal stockholder of H &H while H &H is contractually providing management and operational services to the Crucible Sewer Authority. Although H &H and Mr. Edgar Harris are not subject to the financial reporting and disclosure requirements of the Ethics Law, both H &H and Mr. Edgar Harris are subject to Sections 3(b) and 3(c) of the Ethics Law which apply to everyone. For your information, 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 anything of monetary value based upon the understanding that the vote, official action, or judgement of the public official /employee would be influenced thereby. 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 Law has not been considered in that they do not involve an interpretation of the Ethics Law. Conclusions -- As the - President and - principal stockholder of H &H Water Controls, Inc., a corporation which acts as an independent contractor in providing management and operational services for the Crucible Sewer Authority, Mr. Edgar Harris is not to be considered a public employee as defined in the Ethics Law. Accordingly, Mr. Edgar Harris would not be subject to the reporting and disclosure requirements of the Ethics Law and need not file a Statement of Financial Interests. Sections 3(b) and 3(c) of the Ethics Law are applicable to everyone, including H &H Water Controls, Inc. and Mr. Edgar Harris. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Pursuant to Section 7(11), 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 Mr. James H. McCune February 7, 1992 Page 5 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 52.12. Sincerely, AM o,kw incent . Dopko Chief Counsel ''i