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HomeMy WebLinkAbout20-507 ConfidentialPHONE: 717-783-1610 TOLL FREE: 1-800-932-0936 To the Requester: STATE ETHICS COMMISSION FACSIMILE: 717-787-0806 FINANCE BUILDING WEBSITE: wwA .ethics.pajov 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 ADVICE OF COUNSEL February 27, 2020 20-507 This responds to your letters received January 6, 2020, and January 14, 2020, by which you requested an advisory from the Pennsylvania State Ethics Commission ("Commission's. Issue: Whether the Public Official and Employee Ethics Act ("Ethics Act"), 65 75—T'S. § 1101 et sect., would impose prohibitions or restrictions upon a newly -elected [type of political subdivision] A, who serves on the board of directors of a B that provides services to the [type of political subdivision], with regard to participating in discussions, votes, or other actions of the [ty e of political subdivision] [governing body] involving Cs from the B or Ds or Es for F for type of purposes]. Facts: You request a confidential advisory from the Commission based upon sTtted facts that may be fairly summarized as follows. You ,were recently elected as an A for [name of political subdivision] ("the Political Subdivision__}, (name of county], Pennsylvania, for a term of office beginning in [month, year]. The Political Subdivision operates under the G. The Political Subdivision is served by multiple Bs, including the name of company] (the "Compan "). You serve on the Board of Directors of the Company, which Is located in the Political Subdivision. The Political Subdivision [governing body] receives Cs from Hs, including the Company, that service the Political Subdivision on an annual basis. The most recent Political Subdivision I provided J to the Company for [certain itemsj. The Political Subdivision has discussed initiating Ds or Es for F for [type of purposes]. Based upon the above submitted facts, you pose the following questions: (1) Whether the Ethics Act would impose prohibitions or restrictions upon you with regard to participating in discussions, votes or other actions of the Political Subdivision [governing body] involving Cs from the Company, (2) Whether the Ethics Act would impose prohibitions or restrictions upon you with regard to participating in discussions, votes, or other actions of the Political Subdivision [governing body] involving Ds or Es for F; and Confidential Advice, 20-507 February Page 2 (3) Whether the answers to the above questions would be different if you would cease serving on the Board of Directors of the Company and would become a K of the Company or an advisor to the Company Board of Directors. It is administratively noted that per the website of the Pennsylvania Department of State, the Company is a non-profit corporation. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethcs 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 facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. As a Political Subdivision A, you are 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 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. 65 Pa.C.S. §§ 1103(a), 0). The following terms related to Section 1103(a) are defined in the Ethics Act as follows: Confidential Advice, 20-507 February Page 3 § 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 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. The use of authority of office is not limited merely to voting, but extends 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. In each instance of a conflict of interest, a public official/public employee would be required to abstain from participation, which would include voting unless one of the statutory exceptions 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. Per the Pennsyylvania Supreme Court's decision in Kistler v. State Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate ection 03 a of t e t ics 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 Confidential Advice, 20-507 February Page 4 of the [public official/public employee] of the potential pecuniary benefit as well as the motivation to obtain that benefit for himself. Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics c� 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. Having established the above general principles, your specific questions shall now be addressed. In response to your first and second questions, you are advised as follows. The Company is a business with which you are associated in your capacity as a Director. See, Rendell v. State Ethics Commission, 603 Pa. 292, 983 A.2d 708 (2009) (Holding tTiat the Ethics Acts a inition o the term "business" includes non-profit entities). You generally would have a conflict of interest under Section 1103(a) of the Ethics Act as a Political Subdivision A in matter(s) that would financially impact the Company. You specifically would have a conflict of interest with regard to participatin in discussion(s), votes) or other action(s) of the Political Subdivision [governing body] involving Cs from the CCompany. You further would have a conflict of interest with regard to participating in discussion(s), vote(s), or other action(s) of the Political Subdivision [governing body] involving Ds or Es for F if: (1) you would be consciously aware of a private pecuniary benefit for you, a member of your immediate family, or a business with which you or a member of your immediate family is associated, such as the Company, (2) your action(s) would constitute one or more specific steps to attain that benefit; and (3) neither of the statutory exclusions to the definition of conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, would be applicable. Cf., Kistler, supra. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions 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. In response to your third question, you are advised as follows. If you would cease serving on the Board of Directors of the Company and would become a K of the Company or an advisor to the Company Board of Directors, the Company would no longer be considered a business with which you are associated. Under such circumstances, unless there would be a basis for a conflict of interest such as a private pecuniary benefit to you, a member of your immediate family, or a business with which you or a member of your immediate family is associated, you would not have a conflict of interest under Section 1103(a) of the Ethics Act with regard to participatin in discussion(s), vote(s�) or other action(s) of the Political Subdivision [governing body] involving Cs from the Company or Ds or Ens for F. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of 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 G. Conclusion: Based upon the submitted and administratively noted facts that: (1) you were recently elected as an A for [name of political subdivision] ("the Political Subdivision"), [name of county], Pennsylvania, for a term of office beginning in [month, Confidential Advice, 20-507 February Page 5 year]; (2) the Political Subdivision operates under the G; 3) the Political Subdivision is served by multiple Bs, including the [name of company] (the "Company"); (Udivision; ou serve on the Board of Directors of the Company, which is locatted in the Political (5} the Political Subdivision [governing body] receives Cs from Hs, including the CCompany, that service the PolAc'al Subdivision on an annual basis; (6) the most recent Political Subdivision I provided J to the Company for [certain items]; and (7) the Political Subdivision has discussed initiating Ds or Es for F for [type of purposes], you are advised as follows. As a Political Subdivision A, you are a public official subject to the provisions of the Public Official and Employee Ethics Act ( Ethics Act"), 65 Pa.C.S. § 1101 et seq. The Company is a business with which you are associated in your capacity as a Director. You generally would have a conflict of interest under Section 1103(a) of the Ethics Act as a Political Subdivision A in matter(s) that would financially impact the Company. You specifically would have a conflict of interest with regard to participatin in discussion(s), vote(s) or other action(s) of the Political Subdivision [governing bodyl involving Cs from the Company. You further would have a conflict of interest with regard to participating in discussion(s), vote(s), or other action(s) of the Political Subdivision [governing body] involving Ds or Es for F if: (1) you would be consciously aware of a private pecuniary benefit for you, a member of your immediate family, or a business with which you or a member of your immediate family is associated, such as the Company; (2) your action(s) would constitute one or more specific steps to attain that benefit; and (3) neither of the statutory exclusions to the definition of conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, would be applicable. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions 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. If you would cease serving on the Board of Directors of the Company and would become a K of the Company or an advisor to the Company Board of Directors, the Company would no longer be considered a business with which you are associated. Under such circumstances, unless there would be a basis for a conflict of interest such as a private pecuniary benefit to you, a member of your immediate family, or a business with which you or a member of your immediate family is associated, you would not have a conflict of interest under Section 1103(a) of the Ethics Act with regard to participating in discussion(s), vote(s) or other action(s) of the Political Subdivision [governing body] involving Cs from the Company or Ds or Es for F. 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 in 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 it 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. Confidential Advice, 20-507 February Page 6 Any such appeal must be in writingg and must be act- - i received at the Commission within thirty (30) days of the date o this Advicepursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand deliverryy, 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, . .G-- 0 1 1. Robin M. Hiitie Chief Counsel