HomeMy WebLinkAbout20-514 ConfidentialPHONE: 717-783-1610 STATE ETHICS COMMISSION FACSIMILE: 717-787-0806
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HARRISBURG, PA 17120-0400
ADVICE OF COUNSEL
March 6, 2020
To the Requester:
20-514
This responds to your letters dated January 6, 2020, and January 29, 2020, by
which you requested a confidential advisory from the Pennsylvania State Ethics
Commission ("Commission").
Issue: Whether the Public Official and Employee Ethics Act ("Ethics Act"), 65
P.S. § 1101 et seq., would impose prohibitions or restrictions upon a member and
:officer] of a [type of political subdivision] A, who in a private capacity is employed with a
type of firm], with regard to the transfer of Bs held in various [type of political
subdivision] Cs to a D C managed by the [type of firm].
Facts: You have been authorized by Mr. E to request a confidential advisory from
Ne—C-ommission on his behalf. You have submitted facts, the material portion of which
may be fairly summarized as follows.
Mr. E is a Member and [officer] of the A of Political Subdivision F, located in
[name of county], Pennsylvania. In a private capacity, Mr. E is employed with a [type of
firm] (the "Firm').
Political Subdivision F is considering transferring Bs held in various Political
Subdivision F Cs, including [types of Bs1, to a D C managed by the Firm. The Firm
would be paid a G of an amount equal to H at the time of transfer. The Firm would
further be paid an I totaling Amount 1. In his capacity as an employee of the Firm, Mr. E
would receive Amount 2 of the I paid to the Firm. The Firm would additionally realize an
economic benefit based upon [certain financial considerations pertaining to the transfer
of Political Subdivision F Bs to the D C managed by the Firm]. You state that the
aforesaid economic benefit that the Firm would additionally realize cannot be quantified
at this time.
Mr. E, who is a salaried employee of the Firm, is compensated based upon the J
of the K, which include the D C. If the J of the K would increase, either because of the I_
or the M of the existing K, Mr. E's salary would increase and would include [various
fringe benefits].
You state the proposed transfer of Political Subdivision F Bs to the D C managed
bsthe Firm would not be advertised and would not involve a bid process. You further
ate that official action regarding the proposed transfer of Political Subdivision F Bs
would take place at a regular meeting of the Political Subdivision F A. Mr. E would be
Confidential Advice, 20-514
March
Page 2
present at the meeting to answer questions regarding [certain matters]. You state that
Mr. E would abstain from voting on whether to transfer Political Subdivision F Bs to the
D C.
Based upon the above submitted facts, the question that is presented by your
advisory request is whether the Ethics Act would impose prohibitions or restrictions
upon IVIr. E with regard to the proposed transfer of Bs from Political Subdivision F Cs to
the D C managed by the Firm.
Discussion: It is initial) noted that pursuant to Sections '1107(10) and 1107(11) of
e Ethics Act, 65 Pa.C.S. y§§ 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 disc osed 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 inquiry relates to conduct that has already occurred, such past
conduct may not 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 a Member and [officer] of the Political Subdivision F A, Mr. E 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
body of a political subdivision, where one member has
1 For this reason, this Advice does not address actions that you indicate were already taken by another
governmental body on which Mr. E serves.
Confidential Advice, 20-514
March
Page 3
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:
§ 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 persons
immediate family is a director, officer, owner, employee or
has a financial interest.
"De minimis economic impact." An economic
consequence which has an insignificant effect.
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 officiallpublic employee is
prohibited from using the authority of public officelemployment 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.
Confidential Advice, 20-514
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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 509. Subject to certain statutory exceptions, in each instance of a voting
conTIRE , 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.
One of the exclusions to the statutory definition of "conflict" or "conflict of
interest," referred to herein as 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;
Schweinsbur , Order 900. The determination of whether tTie deminimis exclusion
applies in a given instance is fact specific and is made on a case -by -case basis. See,
Sero ian v. State Ethics Commission, 20 A.3d 534 (Pa. Cmwlth. 2011). You are
�Eautio_ned that the economic impact OT an individual's conduct may aggregate over time,
rather than be limited to a particular increment of time such as a month or year.
Confidential Opinion, 05-001; Corey, Opinion 13-006; Corey/Mann, Opinion 14-003.
Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows:
§ 1103. Restricted activities
(f) Contract. --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.
65 Pa.C.S. § 1103(f).
The term "contract" is defined in the Ethics Act as follows:
§ 1102. Definitions
"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. The term shall not mean an agreement or
Confidential Advice, 20-514
March
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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.
65 Pa.C.S. § 1102
Section 1103(f) does not operate to make contracting with the governmental
body permissible where it is otherwise prohibited. Rather, where a public official/public
employee, his spouse or child, or a business with which he, his spouse or child is
associated, is otherwise appropriately contracting with the 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, Section 1103(f) requires that an
open and public process" be observed as to the contract with the governmental body.
Section 1103(f) of the Ethics Act also provides that the public official/public employee
may not have any supervisory or overall responsibility as to the implementation or
administration of the contract with the governmental body.
In ap Tying the above provisions of the Ethics Act to the instant matter, you are
advised as follows.
The Firm is a business with which Mr. E is associated in his capacity as an
employee. Unless the de minimis exclusion would be applicable, Mr. E wouldhavea
conflict of interest under Section 1103(a) of the Ethics Act as to discussion(s), vote(s),
or other action(s) of the Political Subdivision F A pertaining to the proposed transfer of
Bs from Political Subdivision F Cs to the D C managed by the Firm. Although it appears
unlikely that the de minimis exclusion would be applicable, the submitted facts do not
enable a conclusive determination in that regard.
In each instance of a conflict of interest, Mr. E 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.
The restrictions and requirements of Section 1103(f) of the Ethics Act would have
to be observed as to any contract between the Firm and Political Subdivision F that
would be valued at $500 or more. (See, Kistler v. State Ethics Commission, 610 Pa.
516, 22 A.3d 223 (2011), regarding the requirements for an open and public process.")
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 N.
Conclusion: Based upon the submitted facts that: (1) Mr. E is a Member and
[officer of thie A of Political Subdivision F, located in [name of county i, Penns Ivania; (2)
in a pr!vate capacity, Mr. E is employed with a [type of firm] (the '`Firm"); 3) Political
Subdivision F is considering transferring Bs held in various Political Subdivision F Cs,
including [types of Bs1, to a D C managed by the Firm; (4) the Firm would be paid a G of
an amount equal to H at the time of transfer; (5) the Firm would further be paid an I
totaling Amount 1; (6) in his capacity as an employee of the Firm, Mr. E would receive
Amount 2 of the I paid to the Firm; (7) the Firm would additionally realize an economic
benefit based upon [certain financial considerations pertaining to the transfer of Political
Confidential Advice, 20-514
March
Page 6
Subdivision F Bs to the D C managed by the Firm]; (8) the aforesaid economic benefit
that the Firm would additionally realize cannot be quantified at this time; 9) Mr. E, who
is a salaried employee of the Firm, is compensated based upon the J of the K, which
include the D C; (10) if the J of the K would increase, either because of the L or the M of
the existing K, Mr. 's salary would increase and would include [various fringe benefits];
(11) the proposed transfer of Political Subdivision F Bs to the D C managed by the Firm
would not be advertised and would not involve a bid process; (12) official action
regarding the proposed transfer of Political Subdivision F Bs would take place at a
regular meeting of the Political Subdivision F A; (13) Mr. E would be present at the
meeting to answer questions regarding [certain matters]; and 14) Mr. E would abstain
from voting on whether to transfer Political Subdivision F Bs to the D C, you are advised
as follows.
As a Member and [officer] of the Political Subdivision F A, Mr. E is a public official
subject to the provisions of the Public Official and Employee Ethics Act ("Ethics Act"), 65
Pa.C.S. § 1101 et sew. The Firm is a business with which Mr. E is associated in his
capacity as an employee.
Unless the de minimis exclusion would be applicable, Mr. E would have a conflict
of interest under Section 1103(a)of the Ethics Act as to discussion(s), vote(s), or other
action(s) of the Political Subdivision F A pertaining to the proposed transfer of Bs from
Political Subdivision F Cs to the D C managed by the Firm. Although it a pears unlikely
that the de minimis exclusion would be applicable, the submitted facts do not enable a
conclusive determination in that regard.
In each instance of a conflict of interest, Mr. E 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.
The restrictions and requirements of Section 1103(f) of the Ethics Act would have
to be observed as to any contract between the Firm and Political Subdivision F that
would be valued at $500 or more.
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 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 writingg and must be actual)
received at the Commission within thirty (30) days of the dates
Advice pursuant to 51 Pa. Code § 73.2(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
Confidential Advice, 20-514
March
Page 7
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