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HomeMy WebLinkAbout95-593 DiceBruce E. Dice, Esquire Bruce E. Dice & Associates, P.C. 787 Pine Valley Drive, Suite E P.O. Box 14190 Pittsburgh, PA 15239 Dear Mr. Dice: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL August 15, 1995 95 -593 Re: Conflict, Public Official /Employee, Municipal Authority Member, Business with which Associated, Insurance Broker, Dissolution of Sewer Authority, Reassignment of Duties to Water Authority, Insurance Sales to Sewer Authority, Use of Authority of Office /Confidential Information, Vote. This responds to your letter of July 17, 1995 in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon a municipal water authority member with regard to the proposed dissolution of a sewer authority, the reassignment of its duties to the water authority, and the proposed enlargement of the water authority, where the member is an insurance broker who brokered the insurance for the sewer authority for calendar year 1995, but where all premiums and commissions have been paid and any insurance for future calendar years would be put out for competitive bidding. Facts: You request an advisory on behalf of Mr. Kevin Ewing, who presently serves as a Member of the Plum Borough Municipal Authority ( "Water Authority "). The Water Authority provides water service in and around its territorial limits. There is another authority within the Borough of Plum known as the Plum Borough Municipal Sewer Authority ( "Sewer Authority "). Mr. Ewing is not a member of the Sewer Authority. You acknowledge that in his capacity as a member of the Water Authority, Mr. Ewing is a public official as defined under the Ethics Law. In a private capacity, Mr. Ewing is employed as a broker of insurance, and he has been so employed at all times Dice, Bruce E., Esquire, 95 -593 August 15, 1995 Page 2 relevant to your request. The Sewer Authority puts out for bid an insurance package for the benefit of the Sewer Authority. Several bidders submit proposals on the insurance package. In the past, Mr. Ewing has submitted a bid, and in 1994, he successfully obtained the insurance package from Sewer Authority for the calendar year of 1995. He has brokered the insurance to various agencies and companies and those insurance agencies and companies have received premium payments from the Sewer Authority for their coverage. Mr. Ewing received a commission for such insurance coverage from the various agencies and companies. This coverage remains in effect at this time. No other premium payments will be made by the Sewer Authority this year for insurance in the calendar year of 1995, and all insurance premiums have been paid and commissions taken. It is the practice of the Sewer Authority to put the insurance package out for bids in December. In December, 1995, Mr. Ewing will again submit a bid to the Sewer Authority for insurance coverage. Recently, the Borough of Plum has expressed a desire to combine the Water Authority, which presently provides for water distribution, and the Sewer Authority into one entity. Due to economics and various labilities of both the Authorities, it appears that it is the Borough's desire that the Sewer Authority be dissolved and the duties and the responsibilities of the Sewer Authority be reassigned to the Water Authority. In addition, Council has made a request to the Water Authority to increase its size from the present membership of five to seven or nine members. For such an increase to take place, the Water Authority would be required to initiate a Resolution as to its Articles of Incorporation. If approved, the change would be passed on to Council for approval, and would subsequently be submitted to the Corporation Bureau. Discussions have occurred at the Water Authority as to whether to increase the size of the present Water Authority to a larger number. Mr. Ewing seeks an opinion from the State Ethics Commission as to whether he may vote on such an increase without the appearance of a conflict. Further, Mr. Ewing may be asked to vote in his capacity as a Member of the Water Authority to accept the assignment of all of the Sewer Authority obligations, liabilities, duties and assets of the Sewer Authority. This vote will take place if Council passes a Resolution to dissolve the Sewer Authority; reacquire its obligations, liabilities, duties and assets; and then transfer them by way of assignment to the Water Authority. Contemplated with Dice, Bruce E., Esquire, 95 -593 August 15, 1995 Page 3 such an assignment would be an assignment of all the insurance, obligations, liabilities, and benefits that were previously held by the Sewer Authority. Mr. Ewing has requested an opinion on whether he may vote for such an acquisition, given the above facts. The specific questions posed for consideration are: 1. Can Mr. Ewing, as a Member of the Water Authority, vote on a resolution to amend the Articles of Incorporation to increase its size? 2. Can Mr. Ewing vote to acquire the obligations, liabilities, duties and assets of the Sewer Authority, given his above stated business involvement with the insurance for the Sewer Authority? Discussion: It is initially noted that pursuant to Sections 7(10) and 7(11) of the Ethics Law, 65 P.S. §§407(10), (11) , advisories are issued to the requestor based upon the facts which the requestor has submitted. In issuing the advisory based upon the facts which the requestor has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts which have not been submitted. It is the burden of the requestor to truthfully disclose all of the material facts relevant to the inquiry. 65 P.S. § §407(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. Furthermore, to the extent that your request for an advisory references the "appearance" of conflict, it is initially noted that the Ethics Law no longer extends to "appearances" of conflict but rather, prohibits engaging in conduct that actually constitutes a conflict of interest as defined by the Ethics Law. 65 P.S. §402. As a Member of the Plum Borough Municipal Authority ( "Water Authority "), Mr. Kevin Ewing is a public official as that term is defined under the Ethics Law, and hence he is subject to the provisions of that law. Section 3(a) of the Ethics Law 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 in the Ethics Law as follows: Dice, Bruce E., Esquire, 95 -593 August 15, 1995 Page 4 Section 2. 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. "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 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 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. "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. "Contract" shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, - reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. Dice, Bruce E., Esquire, 95 -593 August 15, 1995 Page 5 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 anything of monetary value based upon the understanding that the vote, official action, or judgement of the public official /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. Section 3(f) of the Ethics Law provides as follows: Section 3. Restricted activities (f) No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. Parenthetically, where contracting is otherwise allowed or where there appears to be no expressed prohibitions to such contracting, the above particular provision of the law would require that an .open and public process must be used in all situations where a public official /employee is otherwise appropriately contracting with his own governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more. This open and public process would require that the following be observed as to the contract with the governmental body: Dice, Bruce E., Esquire, 95 -593 August 15, 1995 Page 6 (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor/ applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered and; (4) public disclosure of the contract awarded and offered and accepted. Section 3(f) of the Ethics Law also requires that the public official /employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Section 3(j) of the Ethics Law provides as follows: Section 3. Restricted activities (j) 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 Dice, Bruce E., Esquire, 95 -593 August 15, 1995 Page 7 member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. If a conflict exists, Section 3(j) requires the public official /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 or supervisor. In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Law, then in that event participation is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. In applying the above provisions of the Ethics Law to the circumstances which you have submitted, Section 3(a) shall be discussed first. Pursuant to Section 3(a) of the Ethics Law, 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. Mr. Ewing's insurance brokerage is a business with which he is associated. The State Ethics Commission has held that a public official /public employee has a conflict of interest as to private business clients. Miller, Opinion 89 -024; Kannebecker, Opinion 92- 010. However, the submitted facts are that all of the premiums for the coverage provided through Mr. Ewing's business to the Sewer Authority for calendar year 1995 have been paid. Likewise, all of Mr. Ewing's commissions have been received. Furthermore, if the Sewer Authority would be dissolved, the existing insurance for calendar year 1995 would be assigned to the Water Authority, such that it appears that the policies would not be cancelled. Therefore, Mr. Ewing's proposed participation as to the enlargement of the Water Authority and its assumption of the obligations, liabilities, duties and assets of the Sewer Authority would not result in any private pecuniary benefit as to the 1995 insurance. As for any future calendar years, it is true that if the Sewer Authority would cease to exist, Mr. Ewing would not be able to sell insurance to it. It is also possible that the Municipality Authorities Act (discussed below) might preclude Mr. Ewing from selling such insurance to the Water Authority as opposed to the Dice, Bruce E., Esquire, 95 -593 August 15, 1995 Page 8 Sewer Authority. However, even if the Sewer Authority would continue to exist, any prospective private pecuniary benefit to Mr. Ewing or his business would be speculative. The insurance contracts for the Sewer Authority are bid each year and Mr. Ewing must compete with all of the other bidders for the business. The facts which you have submitted do not reveal any advantage to Mr. Ewing over other bidders. See, Bankenstein, Opinion 94 -006. Thus, under the facts as you have submitted them to be, there would be no nexus between Mr. Ewing's proposed participation in these specific two matters and any private pecuniary benefit to Mr. Ewing and /or his brokerage business. The necessary conclusion is that under the facts which you have submitted, Mr. Ewing would not have a conflict of interest either in voting as to the increase in size of the Water Authority or as to the acquisition of the obligations, liabilities, duties and assets of the Sewer Authority. With regard to Section 3(f), which by its own terms pertains to "entering into" a contract, the assignment of existing policies to the Water Authority would not invoke the restrictions of Section 3(f) of the Ethics Law. However, as to any future contracting involving the Water Authority and Mr. Ewing's insurance brokerage business, those restrictions would apply. In this regard, it is further noted that the restrictions of Section 3(f) do not operate to permit contracting where it is otherwise prohibited, but rather, provide additional restrictions to be applied where contracting is otherwise permissible and involves the public official, his spouse or child, or a business with which he, his spouse or child is associated. You are cautioned that the Municipality Authorities Act provides as follows: D. No member of the Authority or officer or employee thereof shall either directly or indirectly be a party to or be in any manner interested in any contract or agreement with the Authority for any matter, cause or thing whatsoever by reason whereof any liability or indebtedness shall in any way be created against such Authority. If any contract or agreement shall be made in violation of the provisions of this section the same shall be null and void and no action shall be maintained thereon against such Authority. 53 P.S. §312(D). Although the State Ethics Commission does not have the express statutory jurisdiction to interpret the Municipality Authorities Dice, Bruce E., Esquire, 95 -593 August 15, 1995 Page 9 Act, it would appear that Mr. Ewing should seek legal advice as to the ramifications of that Act should the Authority upon which he serves become the insured under policies brokered by Mr. Ewing, either by assignment of existing policies or through future contracting. 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. Specifically not addressed herein is the applicability of the respective municipal code, although Mr. Ewing has been advised to seek legal advice as to the application of the Municipality Authorities Act in this matter. Conclusion: As a Member of the Plum Borough Municipal Water Authority ( "Water Authority "), Mr. Kevin Ewing is a public official subject to the provisions of the Ethics Law. Mr. Ewing would not have a conflict of interest as to the proposed dissolution of the Plum Borough Municipal Sewer Authority ( "Sewer Authority "), the reassignment of its obligations, liabilities, duties and assets to the Water Authority, and the proposed enlargement of the Water Authority where he is an insurance broker and has brokered the insurance for the Sewer Authority for calendar year 1995, but where all premiums and commissions have been paid for 1995; the existing policies would be reassigned rather than cancelled, if the Sewer Authority were to be dissolved; and any insurance for the Sewer Authority for future calendar years would be put out for competitive bidding. When applicable, the restrictions of Section 3(f) must be observed. 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 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 actually Dice, Bruce E., Esquire, 95 -593 August 15, 1995 Page 10 received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code 513.2(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. jncerely, Vincent J. Dopko Chief Counsel