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HomeMy WebLinkAbout96-622 McQuaideRex W. McQuaide, Esquire McQuaide Law Offices 1405 Eisenhower Blvd. Richland Square I Suite 200 Johnstown, PA 15904 Dear Mr. McQuaide: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL December 23, 1996 96 -622 Re: Conflict, Public Official /Employee, Contracting with Governmental Body, Transit Authority, Board Member, Transmission Repair Shop, Purchase by Authority of Transmission Services and Parts, Business with which he is Associated. This responds to your letter of November 20, 1996 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 County Transit Authority Board Member, or a "business with which he is associated," with regard to contracting with the Authority for transmission services and parts. Facts: As the Solicitor for the Cambria County Transit Authority (CCTA), you are requesting an advisory on behalf of and with the authorization of John Cafeo (Cafeo). Cafeo has recently been appointed to the Board of Directors of CCTA. In his private capacity, Cafeo is the owner and operator of JAT's Transmission Company (JAT's). For many years prior to Cafeo's appointment to the CCTA, JAT's has provided transmission repair services to CCTA. CCTA's buses are equipped with Allison transmissions, and JAT's is the only authorized Allison transmission repair shop in Cambria County. You state that while it is possible to obtain transmission parts and repairs from other companies, CCTA would prefer to use JAT's because of its close proximity to CCTA. Your specific inquiry is whether the CCTA may continue to transact business with JAT's now that Cafeo has been appointed to the CCTA Board of Directors. You state that you are cognizant of the provisions at 53 P.S. §312D, and that you are seeking clarification as to that other statutory provision from the Attorney General's Office. McQuaide /Cafeo, 96 -622 December 23, 1996 Page 2 Discussion:. It is initially noted that pursuant to Sections 7(10) and 7(1 1) 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. As a Member of the Board of Directors for the CCTA, Mr. John Cafeo 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: 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. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more McQuaide /Cafeo, 96 -622 December 23, 1996 Page 3 than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. 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. In relation to the above provision of law, the State Ethics Commission has generally determined that this provision is a procedure to be used when a public official or employee contracts with his own governmental body in an amount of $500 or more. The process must be open and public with prior public notice and subsequent public disclosure. In addition, the public official/ employee may not have any supervisory or overall responsibility for the implementation or administration of the contract. Thus, the open and public process, must be used in all situations where a public official is otherwise appropriately contracting with his own governmental body in an amount of $500 or more. This open and public process would require: (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; McQuaide /Cafeo, 96 -622 December 23, 1996 Page 4 (3) public disclosure of all applications or proposals considered and; (4) public disclosure of the contract awarded and offered and accepted. Further, Section 3(f) requires that the public official could not have supervisory or overall responsibility as to the implementation or administration of the contract. 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 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, 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 McQuaide /Cafeo, 96 -622 December 23, 1996 Page 5 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. JAT's is a business with which Cafeo is associated, as that term has been defined in the Ethics Law and as set forth above. Thus, contracting situations between JAT's and the CCTA would present conflict of interest situations for Cafeo. In each instance of a conflict of interest, Cafeo would be required to abstain from participation and to satisfy the disclosure requirements of Section 3(j) as set forth above. As for Section 3(f), the requirements of that Section as set forth above would have to be observed for any contracts between JAT's and the CCTA in the amount of $ 500 or more. Parenthetically, although the contracting in question would not be prohibited under the Ethics Law provided the requirements of Sections 3(a), (f) and (j) are satisfied, a problem may exist as to such contracting under the respective code. In the instant situation, the Municipality Authorities Act provides as follows: D. No. member of the Authority or officer or employe 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). Since such contracting may be prohibited by the above quoted provision of the Code, but not under the Ethics Law, it is suggested that legal advice in that regard be sought. It is noted that your letter of inquiry specifically references the aforesaid Section and indicates that you will seek an advisory from the Attorney General in that regard. 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. Conclusion: As a Member of the Board of Directors for the Cambria County Transit Authority (CCTA), Mr. John Cafeo (Cafeo) is a public official subject to the provisions of the Ethics Law. JAT's Transmission Company is a business with which Cafeo is associated. Under Section 3(a) of the Ethics Law, a public official /employee or a business with which he is associated may contract with the governmental body, but the public official /public employee may not vote or participate in the matter of the contract. The disclosure requirements of Section 3(j) outlined above must be observed in each instance of a conflict of interest. Finally, if the contract is $500 or more, the open and public process as outlined above must be accomplished, and the public official /employee may not have any supervisory or overall responsibilities as to the contract. Lastly, the propriety of the proposed conduct has only been addressed under McQuaide /Cafeo, 96 -622 December 23, 1996 Page 6 the Ethics Law. Due to the possible application of the Municipality Authorities Act in this matter, it is suggested that legal advice be obtained in that regard. 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. 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. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 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. ncerely, Vincent '' op o Chief Counsel