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HomeMy WebLinkAbout807 DoughertyIn re: David Dougherty STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 : File Docket: 89 -029 -C Date Decided: July 12, 1991 : Date Mailed: July 16, 1991 Before: Robert W. Brown, Chair Dennis C. Harrington, Vice Chair James M. Howley Daneen E. Reese Roy W. Wilt Austin M. Lee The State Ethics Commission received a complaint regarding a possible violation of the State Ethics Act, No. 170 of 1978, 65 P.S. 401 et. seq. Written notice, of the specific allegation(s) was served at the commencement of the investigation. A Findings Report was issued and served, upon completion of the investigation, which constituted the Complaint by the Investigation Division. An Answer was filed and a hearing deemed waived. The record is complete. This adjudication of the Commission is hereby issued which sets forth the individual Allegations, Findings of Fact, Discussion, Conclusions of Law and Order. This adjudication is final and will be made available as a public document fifteen days after issuance. However, reconsideration may be requested which will defer public release of this adjudication pending actin on the request by the Commission. A request for reconsideration, however, does not affect the finality of this adjudication. A reconsideration request must be received at this Commission within fifteen days of issuance and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code §2.38. The files in this case will remain confidential in accordance with Section 8(a) of Act 170 of 1978 and Section 8(h) of Act 9 of 1989 during the fifteen day period and no one unless the right to challenge this Order is waived, may violate confidentiality does not preclude discussing this case with an attorney at law. Any person who violates confidentiality of the Ethics Act is guilty of a misdemeanor subject to a fine of not more than $1,000 or imprisonment for not more than one year, 65 P.S. 409(e). ADJUDICATION I. ALLEGATION: That you, Chairman of the Shenango Township Municipal Authority, violated Section 3(a) and Section 3(c) of the State Ethics Act (Act 170 of 1978), when you were hired by the Authority as a Construction Inspector for the Township's Municipal Sewage Construction Project: Section 3. Restricted Activities (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 5403(a). II. FINDINGS: Section 3(c) of the Ethics Act provides: (c) No public official or public employee or a member of his immediate family or any business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body 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. Any contract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract. 65 P.S. 5403(c). 1. David Dougherty has served as a member of the Shenango Township Municipal Authority, Lawrence County, for approximately twenty years. a. Dougherty has been Chairman of the Shenango Township Municipal Authority Board for at least ten of those years. Dougherty, 89 -029 -C Page 3 b. Dougherty was appointed to the Authority by the Shenango Township Supervisors. 2. The Shenango Township Municipal Authority (STMA) was created to plan and construct additions and improvements to the existing sewer systems in Shenango Township, City of New Castle and South New Castle Borough. 3. The Shenango Township Municipal Authority applied for funding through the Environmental Protection Agency for the improvements to the sanitary sewer system. a. The Federal Identification: C- 421292 -02 b. Type of Application: Basic Grant c. Proposed Funding: $6,155,250 d. Certified By: David Dougherty, Chairman e. Date: 2/28/84 4. Part V, of the grant application contained the Assurances Clause that the STMA would comply with regulations, guidelines, policies and requirements established by federal guidelines as they relate to the application, acceptance and use of federal funds for the project. Item 12 of the assurances provided as follows: a. It will establish safeguards to prohibit employees from using their positions for a purpose that is or gives the appearance of being motivated by a desire for private gain for themselves or others, particularly those with whom they have family, business or other ties. 5. The Shenango Township Municipal Authority received a $6,323,840 grant through the Environmental Protection Agency for the construction and improvement in sewer systems. a. The Department of Environmental Resources certified the grant on May 24, 1984. b. The EPA approved the grant in July 1984. 6. The Shenango Township Municipal Authority discussed the proposed sewer line at various board meetings and took action at meetings regarding appointment of officers and payment of bills relating to the construction of the sewer project. a. July 11, 1984: Authority Engineer, Wilbur VanRyper, reported that Dougherty, 89 -029 -C Page 4 the Authority just received the notification from the EPA in regards to that grant. The Authority now has twenty -one days to sign and return the papers if we wish to continue into the design stage and receive funding. VanRyper also reviewed the Preliminary Requirements of the DER. The total construction costs are $7,933,400.00 of which $6,155,000.00 are funded. VanRyper also reviewed the payments and their dates. Fred Pflugh made the motion to sign and return the grant and also sign the engineering agreements. Michael Buly seconded the motion and the motion passed. Present: Dougherty, Pflugh, Buly and Weingartner b. January 29, 1985: The Authority held a yearly reorganizational meeting. Fred Pflugh made the motion that the present officers remain in their present offices for the 1985 year: which would be Dave Dougherty as Chairman, Fred Pflugh as Treasurer and Tom Weingartner as Secretary. The motion passed. Engineer VanRyper brought with him many maps of the areas that are designated to get sewers covered by the EPA Grant. Present: Dougherty, Pflugh and Weingartner c. January 28, 1986: VanRyper reported that the DER is in the process of it's final review which should take two more weeks. He also reported that the engineers are in the process of setting the easement descriptions. Tom Weingartner made the motion to keep the same officers for 1986 as they were last year, which is Dave Dougherty as Chairman, Tom Weingartner as Secretary, John Pflugh as Treasurer and to also retain Dick Audino as the Authority Solicitor, Consoer- Townsend as Authority Engineer, and Corbis Walker as Authority Accountants. Mike Buly seconded the motion and the motion passed. The Authority talked about hiring a manager. Motion made by Tom Weingartner, and seconded by Mike Buly, that the Authority hire Don Nagle as their Authority Manager. The motion passed. Dougherty, 89 -029 -C Page 5 Motion passed authorizing any two of three officers to conduct business involving MMIA accounts and one checking account. Present: Dougherty, Weingartner, Pflugh and Buly d. July 15, 1986: Engineer Palkovic reported that he received a letter from the DER on July 10 which authorized the Authority to advertise the sewer project for bid. The Authority must advertise and wait for a minimum of thirty days before opening bids. Paul Morrone, made a motion to advertise the sewer project for bid in the New Castle News on July 21. The bids will be accepted up to 8:00 p.m. on September 9, 1986 at which time the bids will be opened. The Authority will hold a special meeting on September 9, 1986 to begin at 7:300 p.m. Mike Buly seconded the motion and the motion passed. Present: Dougherty, Buly, Morrone and Weingartner e. January 27, 1987: Engineer Palkovic suggested that the Authority advertise for construction inspectors. Mike Buly made a motion to advertise in the New Castle News and Ellwood City Ledger for five straight days, with a deadline on accepting resumes of thirty days after the last ad. Tom Weingartner seconded the motion and the motion passed. Motion by Buly, seconded by Pflugh, to maintain the same officers as last year: Chairman - David Dougherty; Treasurer - J. Pflugh; Secretary - T. Weingartner; Engineer - Consoer- Townsend. Motion carried. Present: Dougherty, Pflugh, Buly and Weingartner f. February 24, 1987: Frank Palkovic of Consoer - Townsend reported that he had talked to Dale Foster of DER, and they are issuing a letter to Shenango Township Municipal Authority that they are authorized to issue notices to proceed with the project. Bill Sennett, of Knox, McLaughlin, Gornall and Sennet has sent information to major insurance companies concerning the issue of insurance. We were Dougherty, 89 -029 -C Page 6 informed that by the next meeting, the proposal to buy the bonds will be prepared with a closing of April 15. At this time, contractors will be notified to proceed. S. Rosin of South New Castle Borough claimed that they have not been properly involved in the planning and installation procedure for the sewers. He feels that Shenango Township is dictating the rates to South New Castle Borough and making changes in the design. Engineer Wilson, South New Castle Borough, wants to know what inspector will be assigned to their area, so they can review their qualifications. Secretary will notify Wilson when resumes are reviewed - about twenty applications. Present: Pflugh, Buly and Dougherty g. March 24, 1987: Wilbur Hughes will be the Resident Engineer for Consoer - Townsend Associates. Dave Dougherty will start to notify candidates for inspector positions. They will each be interviewed. Motion carried to approve manager's salary at $12.00 /hour. Present: Dougherty, Pflugh and Buly h. May 26, 1987: Engineer Hughes reported that 25% of Division C is completed which is being done by B &B Construction Company, and Eastern Construction Company started on May 26 to work on Big Run Interceptor. Engineer Palkovic reported that he is preparing the second partial payment request for EPA. He also reported that the trustee (First Seneca Bank) wants the Authority to set up two funds: 1. 2. Engineer requests Administrative Fund - For administrative expenses which includes office wages. Payroll Fund - For inspector wages. Palkovic submitted ten construction bill for approval by the Authority, and they Dougherty, 89 -029 -C Page 7 included #10 Shenango Township Municipal Authority, June Inspectors payroll, $35,000.00. Paul Morrone made a motion to approve the request. John Pflugh seconded it and the motion passed. Present: Dougherty, Morrone, Pflugh and Weingartner i. July 28, 1987: Engineer Palkovic submitted to the Authority the following list of payment requests totalling $682,082.45. Item #30 on the list was $20,000.00 for Shenango Township Municipal Authority (Inspector Payroll). Palkovic reported that he had the EPA partial payment request #4 for $542,700 ready to be submitted. John Pflugh made a motion to approve the payment requests and forwarded them onto the trustee for payment. Tom Weingartner seconded the motion and the motion passed. Present: Pflugh, Weingartner and Dougherty j. August 25, 1987: John Pflugh made a motion to approve and submit to the trustee for payment the following request: Item #36, $25,000.00, Shenango Township Municipal Authority (Inspector Payroll). Mike Buly seconded the motion and the motion passed. Present: Dougherty, Pflugh, Buly and Morrone k. September 22, 1987: It was moved by P. Morrone, and seconded by J. Pflugh, to pay request #46 -53. #46 is Shenango Township MA, Inspector Payroll, $25,000.00. Motion passed. Motion by T. Weingartner, and seconded by T. Morrone, to make partial payment request to EPA as soon as Chairman Dougherty signs the papers. Motion passed. Present: Weingartner, Pflugh and Morrone 1. February 23, 1988: John Pflugh made a motion to pay the following request: Item #3 is Inspector Payroll Account, $10,000.00. Tom Weingartner seconded the motion Dougherty, 89 -029 -C Page 8 and the motion passed. Present: Dougherty, Weingartner, Fiacco and Pflugh m. March 22, 1988: John Pflugh made a motion to approve and submit to the trustees for payment the following payment request number 90 through 96, totalling $207,433.34: Item #95 was $10,000.00, Shenango Township Municipal Authority (Inspector Payroll). Present: Dougherty, Pflugh, Fiacco and Weingartner n. April 27, 1988: Motion made by John Fiacco, and seconded by John Pflugh, to make the following request: Item #104, Inspector's Payroll Account, $12,000.00. Motion passed. Present: Dougherty, Pflugh and Fiacco o. May 24, 1988: John Fiacco made a motion to accept and authorize the trustee to make payment for Requests #105 to #114 to reimburse the petty cash account. Request #112 was for $15,000.00, Shenango Township Municipal Authority Inspector Payroll. John Pflugh seconded the motion. All board members voted in favor except Paul Morrone who voted against the motion. The motion passed. Present: Dougherty, Weingartner, Pflugh, Morrone and Fiacco p. June 28, 1988: John Pflugh made a motion that the following bill request be submitted to the trustee for payment: Item #119, $12,000.00. Shenango Township Municipal Authority (Inspector Payroll). Tom Weingartner seconded the motion. Members: Dougherty, Pflugh and Weingartner voted in favor, and member Fiacco voted against the motion. Therefore, the motion passed. Dougherty, 89 -029 -C Page 9 q. Present: Dougherty, Pflugh, Fiacco and Weingartner July 26, 1988: John Pflugh made a motion for the Authority to approve and to submit to the trustee for payment, Bureau Request Nos. 134 -143, totalling $385,523.44. John Fiacco seconded the motion and the motion passed. Item #137, $12,000.00, Shenango Township Municipal Authority (Inspector Payroll). Present: Dougherty, Morrone, Fiacco, Pflugh and Weingartner r. August 30, 1988: Tom Weingartner made a motion to approve and submit to the trustee bill payment request #145 through 153, totalling $263,071.53. Item #149, $5,000.00, Inspector Payroll. John Fiacco seconded the motion and the motion passed unanimously. Present: Morrone, Fiacco and Weingartner Absent: Dougherty and Pflugh s. September 27, 1988: A letter was read from Consoer - Townsend & Associates dated August 31, 1988 asking for an extension of the contract for engineers at the same rate as has been maintained throughout the contract. It was moved by P. Morrone, and seconded by J. Fiacco, to grant this request of Consoer - Townsend. Motion passed. Wilbur Hughes reported that 94% of the time has expired for the contract. He gave a report for Division A that it is progressing; for Division B, no progress; and Division C &D, he recommended the acceptance of certain sewer lines and underground work only. Contractor D has asked for reduction of retainage to one percent. He would like the Authority to give the engineer authority to approve lines piece meal so that lines can be turned over to the township. Motion by P. Morrone, and seconded by Dougherty, 89 -029 -C Page 10 J. Fiacco, to accept underground work as recommended. These roads to be turned over to the supervisors. Motion passed. Motion by P. Morrone, and seconded by J. Fiacco, to accept underground work on lines that are done, but are not ready for turnover. David Dougherty read the bills on a motion by P. Morrone, and seconded by J. Fiacco, and passed to pay the following bills: Item #158, Shenango Township, Inspector Payroll, $3,000.00, Authority Inspectors. Present: Dougherty, Pflugh, Morrone and Fiacco t. October 11, 1988: Chairman Dougherty explained the purpose of the meeting was to discuss and act upon an amendment from the engineering contract. Dougherty read three letters from Consoer - Townsend. The first letter dated August 22, requested an additional $35,000.00 because of additional work in regard to the extra rock encountered during construction in Division C, B, D and A. The second letter summarized the cost incurred for the extra rock removal, and the third letter quoted Mr. Foster from DER in which he stated that the change orders would be grant eligible, therefore, making the extra engineering costs grant eligible. Engineer Palkovic summarized the extra work that Consoer- Townsend performed enabling the Authority to have an increase in the EPA Grant of $931,000.00. Present: Dougherty, Pflugh, Fiacco and Weingartner u. October 29, 1988: Paul Morrone made a motion to extend only the electrical portion of the sewer contract for thirty days for Section D. John Fiacco seconded the motion. Directors Morrone and Fiacco voted in favor of the motion, and Dougherty, Pflugh and Weingartner voted against the motion. The motion failed to pass. Paul Morrone, then made a motion to extend the complete contract with Figley Construction Company Dougherty, 89 -029 -C Page 11 for Section D for thirty days. The motion was seconded by J. Pflugh. The motion passed to extend the contract as Directors Morrone, Pflugh and Weingartner voted in favor. John Fiacco voted against, and D. Dougherty abstained. John Fiacco asked how many people the Authority was presently using for inspectors. Present: Dougherty, Pflugh, Weingartner, Morrone and Fiacco v. November 22, 1988: After discussion, and a recommendation by Solicitor Audino and Engineer Hughes about extending B &B's contract for 45 days from 11/28/88, John Pflugh made a motion to approve this recommendation, and Tom Weingartner seconded the motion. Directors Dougherty, Weingartner and Pflugh voted in favor of the motion. Fiacco voted against the motion. Motion passed. Present: Dougherty, Weingartner, Pflugh and Fiacco w. September 8, 1989: The meeting was opened by Attorney Audino explaining the situation with money being released by DER ($387,000.00). He also explained that there was not enough money to pay the bills in full. Chairman Dougherty reviewed the bills and suggested the following bills be paid. Motion by J. Fiacco, and seconded by J. Pflugh, to make payments as delineated above. Motion passed. Present: Dougherty, Fiacco and Pflugh 7. The Shenango Township Municipal Authority bid the project (EPA -C- 421292 -02) and arranged for financing by the sale of general obligation and assessment bonds: a. Bids for proposals were advertised in the New Castle News on July 21, 1986. b. Bids were advertised for sewer improvements: 1) Division A - Big Run Interceptor 2) Division B - Sanitary Sewers, South New Dougherty, 89 -029 -C Page 12 Castle Borough 3) Division C -I - General Construction Sanitary Sewers 4) Division C -II - Electrical, North 5) Division D -I - Sanitary Sewers, General Construction, South 6) Division D -II - Electrical, South c. Bids were awarded on September 9, 1986: 1) Division A — Eastern Ohio Construction Company, Inc. ($984,369.50) 2) Division B - Graziani Construction Company, Inc. ($628,858.00) 3) Division C -I - B &B Construction Company of Ohio, Inc. ($2,270,035.23) 4) Division C -II - Blackhawk Neff, Inc. ($33,486.00) 5) Division D -I - B &B Construction Company of Ohio, Inc. ($2,678,665.83) 6) Division D -II - Bruce & Merrilees Electric ($5,895.00) d. Notices to proceed were issued to each contractor on May 7, 1987. e. All work was anticipated to be completed by October 29, 1988. 8. Consoer- Townsend & Associates, Inc. was selected by the STMA as the consulting engineers for the sewer line project. a. Consoer- Townsend had the responsibility for the design of the project. b. The design of the sewers in South New Castle Borough was subcontracted to John Wilson & Associates. c. Consoer - Townsend would provide a resident engineer for the project who would report to the Authority. Dougherty, 89 -029 -C Page 13 9. On November 25, 1986, the Shenango Township Municipal Authority entered into an agreement with PRC Consoer- Townsend to provide engineering services for the proposed additions and improvements to the sewer system. a. Division E - Detailed observation of construction provided that: Construction work shall be done under the . full -time observation of a representative of the engineers and by such additional filed representatives as may be required for observing the construction of the project. It is understood and agreed that all such full -time field representatives may be furnished by the owner and, whether furnished by the owner or by the engineers, shall be mutually satisfactory to the owner and the engineers. b. The agreement was signed by David Dougherty, Chairman of STMA and R. Ceppi for Consoer- Townsend. 10. On August 11, 1986, Frank Palkovic, Resident Engineer for Consoer - Townsend Engineering, advised the STMA of DER requirements for the hiring of inspectors for the construction phase of the sewer improvement project. The following procedures must be followed: a. The position must be publicly advertised in the local newspapers and proof of advertisement provided. b. Candidates should be interviewed and the best qualified selected. c. A standard agreement must be prepared and executed between the Authority and each inspector. d. This agreement should indicate the duties of the inspector, wages and benefits to be paid, and an estimated length of employment. e. Included and made part of the agreement must be an executed EPA Form 5700 -41 and EPA Regulations 40 CFR, Part 33, Subpart F. f. EPA Regulations 40 CFR, Part 33, Subpart, Section 30.613, dealing with conflicts of interest, Dougherty, 89 -029 -C Page 14 provides that EPA's policy is to prevent conflicts of interest or the appearance of such conflicts of interest in the award and administration of EPA assistance, including subagreements. 1) Section 30.613(a) provides, in part: a) An official or employee of a recipient may not participate in any activity relating to EPA assistance if any of the following persons or organizations, to the official's or employee's knowledge, has a financial interest in the activity. (1) The official or employee himself: 2) Section 30.613(a) provides, in part: b) Officials and employees of recipients must avoid any action which might result in, or create the appearance of: (1) Using official position for private gain; (2) Giving preferential treatment to any person; (3) Losing independence or impartiality; (4) Making an official decision outside official channels; or (5) Undermining public confidence in the integrity of EPA programs. 11. The Shenango Township Municipal Authority published an advertisement in the New Castle News and the Ellwood City Ledaer newspapers from February 2 through the 6th, 1987, for Dougherty, 89 -029 -C Page 15 construction inspectors. The advertisement contained the following: a. Applications are invited for the position of construction inspector. b. Responsibilities Include: 1) Inspection of the installation of various diameter sewer lines including excavation, back fill and restoration to insure procedures and materials comply with plans and specifications. 2 3 4 Verification of dimensions and various structural installations and layouts. Interpretation of plans and specifications to insure compliance with regulations governing construction. Recording of quantities of materials received or used during specified periods. 5) Preparation of sketches of construction deviations from contract drawings. 6) Preparation of written daily reports. c. Candidates should have knowledge of construction methods and materials. Related inspection experienced preferred. 12. The Shenango Township Municipal Authority received approximately (75) resumes for the position of construction inspector. a. The members of the Authority reviewed the resumes and interviewed approximately (30) applicants. b. The interviews were conducted by Authority members including David Dougherty; Engineer Wilbur Hughes and Authority Manager, Donald Nagle. c. Five inspectors were initially hired. Other inspectors were subsequently hired as the project progressed. 13. The STMA entered into agreements for inspection services with the following individuals: Dougherty, 89 -029 -C Page 16 a. James Caster - August 17, 1987 b. Robert Dean - April 11, 1987 c. Randy Dunn - April 11, 1987 d. Larry Kwolek - April 11, 1987 e. John Miller - May 28, 1987 f. Donald Mount - April 11, 1987 g. Gregory Nastal - August 19, 1987 h. Tom Otell - April 11, 1987 All of the above agreements were signed by David Dougherty, Chairman of the STMA. 14. The official records of the Shenango Township Municipal Authority do not reflect that the hirings of the inspectors were formally approved by the Authority board. 15. The STMA entered into agreements for inspection services with the individuals hired as construction inspectors. a. Duties were prescribed as follows: 1) Perform assignments as directed by the resident engineer and /or assistant resident engineer. 2) Inspect installation of various diameter sewer lines including excavation, back - fill, and restoration to insure procedures and materials comply with plans and specifications. 3) Measure distances to verify accuracy of dimensions of structural installations and layouts. 4) Observe work in progress to insure that procedures followed and materials used conform to specifications. 5) Examine workmanship of finished installations for conformity to standards. Dougherty, 89 -029 -C Page 17 6 7 Record quantities of materials received or used during specified periods. Prepare sketches of construction installations that deviate from contract requirements and report such change for incorporation on record drawings. 8) Prepare written daily reports. b. It is understood, and agreed by the Authority and the inspector, that 40 CFR, Subpart F, Subagreement Provisions is attached hereto and made a part of this Agreement. c. It is understood and agreed that the maximum cost ceiling paid by the Authority for services rendered under this agreement, which includes all wages, social security, and workmen's compensation insurance contributions, shall be set at $41, 250.00. 16. The agreements for inspection services were amended on July 17, 1987 to include the following: a. The Pennsylvania Department of Environmental Resources and United States Environmental Protection Agency are requiring certain additional conditions be incorporated into the Agreement. b. In the event any discrepancies or ambiguities are found between the Agreement and E.P.A. 40 CFR, Subpart F, Subagreement provisions, which are attached to and made a part of the Agreement, the Subpart F, Subagreement provisions shall apply. c. The Authority agrees to compensate the Inspector for services rendered at the rates set forth in the Agreement by making bimonthly payments to the inspector. 17. In a letter dated July 31, 1987, Dale Foster, Project Manager, Bureau of Water Quality Management, PA Department of Environmental Resources, advised David Dougherty as Chairman of STMA that contracts for the construction inspectors in accordance with 40 CFR Part 33 and Section 205 (g) has been approved. a. The construction inspectors were identified as Robert Dean, Randy Dunn, Larry Kwolek, Edward McKinney, John Miller, Donald Mount and Thomas Dougherty, 89 -029 -C Page 18 Otell. 18. In a memo dated September 11, 1987, Gertrude Bryson, Contract Analyst for the Division of Municipal Facilities and Grants, advised Dale Foster, DER Project Manager, that approval was recommended for the Agreements for Inspection Services between STMA and James Carter and Greg Nastal. 19. David Dougherty was hired as a construction inspector by. the STMA. a. Records are devoid of any information as to whether the hiring was or was not approved at a meeting of the Authority. b. Dougherty did not submit a resume for the position of construction inspector. c. David Dougherty was not interviewed for the position of construction inspector. d. At the time of his hiring as an inspector, Dougherty was furloughed from his employment as a union plumber at the Shippingport Nuclear Power Plant. e. Dougherty worked for the Authority as an inspector during periods when he was furloughed from his union position. 20. David Dougherty entered into an agreement for inspection services with the STMA. a. The agreement is dated October 12, 1987. b. The agreement contains identical provisions as those entered into between the Authority and the other inspectors. c. The agreement is signed by Thomas Weingartner for the STMA. d. A subsequent agreement, dated May 2, 1988, was also signed by Weingartner and Dougherty. 21. Dougherty also entered into an amendment to the agreement for inspection services with the STMA. a. The amendment is dated October 12, 1987. b. Dougherty signed the agreement as both inspector Dougherty, 89 -029 -C Page 19 and authority member. c. A second amendment was signed on May 2, 1988 by Thomas Weingartner for the STMA and Dougherty as the inspector. 22. A subagreement review checklist for Project No. C- 421292, Step 4, for the hiring of construction inspectors was prepared by Dale Foster. a. Inspectors and hiring dates were identified: 1) George Doyle - 10/23/87 2) Harry Armagost - 10/23/87 3) David Dougherty - 10/12/87 4) Charles March - 10/14/87 b. Foster noted in his review: David Dougherty is the Authority Chairman. Denis Rigney at EPA III had indicated that, while there is a potential conflict of interest, we have no real reason to not approve the agreement. Dave Dougherty has since terminated his agreement. I recommend approval of these interim inspector agreements. c. The checklist is signed by Foster and dated December 10, 1987. D.E. Milhous, Chief Permits and Grants Section, also signed the checklist on January 8, 1988. d. Gertrude Bryson approved Foster's recommendation on December 21, 1987. 23. By letter dated January 12, 1988, Dale Foster notified David Dougherty in his capacity as Chairman of the Shenango Township Municipal Authority that in accordance with 40 CFR Part 33 and Section 205(g) of the Federal Clean Water Act, the contracts with James Carter, Greg Nastal, George Doyle, Harry Armagost, David Dougherty and Charles March to provide construction inspection services was approved. 24. Shenango Township Municipal Authority payroll records confirm the following hours for which David Dougherty was compensated: Dougherty, 89 -029 -C Page 20 a. For the October 16, 1987 through November 1987 period: Regular Hours - 212 Hours Overtime - 10 Hours Rate - $12.00 /Hour; $18.00 /Hour Overtime Gross Wages - $2,724.00 Net Pay - $2,128.07 b. For the period of May through November 30, 1988: Regular Hours - 1,121 Hours Overtime - 52.5 Hours Gross Wages - $14,397.00 Net Pay - $11,294.00 25. Records of the Shenango Township Municipal Authority confirm that payroll account checks were made payable to David L. Dougherty. Dougherty approved (15) of the (18) checks issued to him: a. 1987 Check No. 286, October 30, David L. Dougherty, Thomas Check No. 276, October 16, David L. Dougherty, Thomas Check No. 308, November 16 David L. Dougherty, Thomas E. Pflugh, David L. Check No. 462, June E. Pflugh, Thomas P Check No. 476, June E. Pflugh, David L. 1987, $812.70, Signed P. Weingartner 1987, $322.26, Signed P. Weingartner , 1987, $864.01, Signed P. Weingartner Check No. 336, December 1, 1987, $129.10, Signed David L. Dougherty, Thomas P. Weingartner Check No. 444, May 16, 1988, $755.18, Dougherty 1, 1988, $923.48, . Weingartner 16, 1988, $828.89, Dougherty Signed John Signed John Signed John Signed Signed John Check No. 514, August 1, 1988, $808.54, John E. Pflugh, David L. Dougherty Check No. 502, July 15, 1988, $919.97, E. Pflugh, David L. Dougherty Check No. 489, July 1, 1988, $959.95, Signed John Dougherty, 89 -029 -C Page 21 26. W -2 wage Township David D. 16101: a. E. Pflugh, Thomas P. Weingartner Check No. 548, September 16, 1988, $755.18, Signed John E. Pflugh, David L. Dougherty Check No. 537, September 1, 1988, $894.26 Signed David L. Dougherty, Thomas P. Weingartner Check No. 526, August 16, 1988, $949.55, Signed. David L. Dougherty, Thomas P. Weingartner Check No. 575, November 1, 1988, $828.89, Signed David L. Dougherty, Thomas P. Weingartner Check No. 570, October 16, 1988, $755.18, Signed John E. Pflugh, Thomas P. Weingartner Check No. 556, September 30, 1988, $828.89, Signed John E. Pflugh, David L. Dougherty Check David Check David No. 589, November 16, 1988, $828.89, Signed L. Dougherty, Thomas P. Weingartner No. 592, November 25, 1988, $257.15, Signed L. Dougherty, John E. Pflugh and tax statements on file with the Shenango Municipal Authority confirm the wages received by Dougherty, 1120 Dougherty Road, New Castle, PA 1987 - $2,724.00 b. 1988 - $14,397.00 27. On March 24, 1987, the Environmental Protection Agency (EPA) issued a project management conference report for the STMA sewer project. This report outlined information regarding the hiring of construction inspectors. a. The report contained minutes of a pre - construction meeting of the STMA. b. The resident engineer would be provided by the consulting engineer, and all inspectors would be selected and employed by the Authority but would be under the direct supervision of the engineer. 28. All inspectors hired by the STMA were to report directly to Wilbur Hughes, Resident Engineer for Consoer - Townsend. Dougherty, 89 -029 -C Page 22 a. David Dougherty was one of the inspectors who reported to Hughes. b. Hughes would report directly to David Dougherty, Chairman of the STMA. 29. David Dougherty maintained a field notebook during his employment as a construction inspector. a. The log contained entries of Dougherty's daily activities. b. Dougherty reported to Hughes on a daily basis. 30. The STMA issued a termination notice to David Dougherty dated November 2, 1988. The notice provided: a. In accordance with the agreement entered into between Shenango Township Municipal Authority and Inspector, David L. Dougherty, for Inspection Service, written notice is hereby given to cancel said agreement as of November 11, 1988. Any work after this date will be on a day -by -day basis. b. Handwritten on the notice was: Dave finished working on Friday, November 18, 1988. c. The notice is signed by Donald Nagle, STMA Manager. 31. The EPA submitted Interim Inspection Reports for the STMA project. The reports were related to construction management and included listings of construction inspectors employed at various stages of the project. a. June 1, 1987: Report identified that (5) inspectors had been hired. The inspectors will be under the direct supervision of Wilbur Hughes, Project Representative for PRC Consoer- Townsend. Inspectors hired were Robert Dean, Randy Donn, Larry Kwolek, Ed McKinney, John Miller, Dick Mount and Tom Otell. b. August 13, 1987: Project approximately 17% completed. c. December 17, 1987: Dougherty, 89 -029 -C Page 23 Project approximately 59% completed. David Dougherty included on list of inspectors. d. January 26, 1988: Project approximately 78% completed. (3) inspectors listed: Dick Mount, James Carter and Harry Armagost. e. April 25, 1988: Project approximately 80% completed. (4) inspectors listed: Dick Mount, James Carter, Harry Armagost and Tom Otell. f. May 27, 1988: Project approximately 80% completed. Same inspectors as 4/25/88. g. August 1, 1988: Project approximately 90% completed. (5) inspectors listed: Dick Mount, Randy Dunn, Harry Armagost, Dave Dougherty and John Miller. h. November 22, 1988: Project approximately 95% completed. (3) inspectors listed: Dick Mount, Harry Armagost and Dave Dougherty. i. December 16, 1988: Construction approximately 97% completed. Dave Dougherty listed as Chairman /STMA. j. January 10. 1989: Construction 98% completed. Dougherty listed as Chairman /STMA. Dougherty, 89 -029 -C Page 24 32. All partial payment requests submitted to the EPA for approval were signed by David Dougherty as Chairman of the Authority. a. All of the payment requests were approved by STMA board. b. Dougherty participated in those decisions. c. Payment requests included the salary for all construction inspectors. 33. By letter dated May 5, 1989, Anthony Maisano, Chief of Administrative Services, Division of Municipal Facilities and Grant, requested a review by the U.S. Environmental Protection Agency of the hiring by the STMA of David Dougherty as an inspector. a. The letter advised that Dougherty was one of the individuals hired as an inspector. b. DER approved the construction inspectors contracts during the procurement review but did not recognize that the authority chairman was one of the inspectors. c. EPA's review and opinion was requested as to whether a conflict of interest existed, and if so, the procedures to follow to remedy the situation. 34. By letter dated June 2, 1989, William Bulman, Chief of Construction Grants Branch of United States Environmental Protection Agency, responded to Maisano's May 5, 1989 letter and advised that David Dougherty's employment could constitute an apparent conflict of interest. That letter provided, in part, as follows: a. As indicated in correspondence from Mr. Dale Foster of your office, we advised him that we believed there did not appear to be a conflict of interest concerning the Authority's action in this regard. After further research into this matter, however, we believe the Authority's employment of their chairman for project inspection services could constitute an apparent conflict of interest. EPA regulation 40 CFR 33.270, subtitled Code of Conduct Regulations, outlines the guidance to be utilized by grant recipients regarding conflict of interest issues. Based on the discussion contained therein, we would advise grantees in the future to avoid the use of personnel in such a Dougherty, 89 -029 -C Page 25 III. DISCUSSION: manner, which would place themselves of an apparent conflict of interest. b. The question of any violation of the Ethics should be considered. in a position State Code of 35. As a member of the Shenango Township Municipal Authority, David Dougherty did not file annual Statements of Financial Interests for the 1985, 1986, 1987, 1988 and 1989 calendar years. As a Member and Chairman of the Shenango Township Municipal Authority (STMA), David Dougherty, hereafter Doughherty is a public official as the term is defined in the Ethics Act. 65 P.S. 402;51 Pa. Code 1.1. As such, his conduct is subject to the Ethics Act and the restrictions therein are applicable to him. Initially, it is noted that Section 9 of Act 9 of 1989 provides: "This amendatory act shall not apply to violations committed prior to the effective date of this act, and causes of action initiated for such violations shall be governed by the prior law, which is continued in effect for that purpose as if this act were not in force. For the purposes of this section, a violation was committed prior to the effective date of this act if any elements of the violation occurred prior thereto." Since the occurrences in this case transpired prior to the effective date of Act 9 (June 26, 1989), we must apply the provisions of Act 170 of October 4, 1978, P.L. 883 to determine whether the Ethics Act was violated. Under Section 3(a), quoted above, this Commission has determined that use of office by a public official to obtain a financial gain for himself or a member of his immediate family or a business with which he is associated which is not provided for in law transgresses the above provision of law. Thus, use of office by a public official to obtain a financial gain which is not authorized as part of his compensation is prohibited by Section 3(a): Hoak /McCutcheon v. State Ethics Commission, 77 Pa. Commw. Ct. 529, 466 A.2d 283 (1983); Yacobet v. State Ethics Commission, 109 Pa. Commw. Ct. 432 531 A.2d 536 (1987). Similarly, Section 3(a) of the Ethics Act would prohibit a public official /employee from using public office to advance his own interests; Koslow v. State Ethics Commission, 116 Pa. Commw. Ct. 19, 540 A.2d 1374 (1988). Likewise, a public official /employee may not use the status or position of public office for his own Dougherty, 89 -029 -C Page 26 personal advantage; Huff, Opinion 84 -015. Additionally, under Section 3(c) of the Ethics Act quoted above, this provision of law provides, in part, that no public official shall enter into a contract valued at $500 or more with his governmental body unless the contract was awarded through an open and public process. The issue before us is whether Dougherty violated either Section 3(a) or 3(c) of Act 170 of 1978 regarding his appointment as an authority construction inspector relative to a municipal sewage construction project. Factually, Dougherty has served as a member of STMA for approximately 20 years, the last 10 of which he has served in the capacity of STMA Chairman. STMA was created to construct additions and improvements to the existing sewer systems in Shenango Township, the City of Newcastle and South Newcastle Borough. An application for funding with the Environmental Protection Agency (EPA) was filed by STMA on February 28, 1984. Part five of the grant application contained an assurances clause to the effect that STMA would comply with federal regulations, guidelines and policies as to the utilization of federal funds for the project. In particular, the assurance clause directed that safeguards be established to protect employees from using their positions to obtain a private gain for themselves, their families, business or other ties. As a result of the application, STMA received a grant of $6,323,840.00 from EPA which grant was approved in July, 1984. There were extensive discussions regarding the proposed sewer line at various STMA meetings commencing in July 1984. The minutes of those meetings outline the processes by STMA as to administering the project. In particular, at a January 27, 1987 meeting, Engineer Palkovic suggested that the Authority advertise for construction inspectors. Dougherty voted in favor of the motion to advertise for construction inspectors which passed unanimously. The minutes of the March 24, 1987 meeting reflect inter alia that Dougherty would notify candidates for inspector positions that they would be interviewed. The following list of STMA meetings reflects actions upon motions to approve payments relative to the STMA inspectors payroll at which Dougherty was present: July 28, 1987; August 25, 1987; February 23, 1988; March 22, 1988; April 27, 1988; May 24, 1988; June 28, 1988 (Dougherty specifically recorded as voting for the motion which carried by a 3 to 1 vote); July 26, 1988 and September 27, 1988. STMA did put the sewer project out for bid based upon a divisional breakdown which is outlined in Fact Finding 7(b). The bids which were awarded on September 9, 1986 are outlined in Fact Finding 7(c). Consoer- Townsend and Associates was selected by Dougherty, 89 -029 -C Page 27 STMA as the consulting engineer for the sewer line project with the subcontract for the sewer design being awarded to John Wilson and Associates. Part of the agreement which was signed by Dougherty provided that construction was to be observed by a representative of the engineers or furnished by the owner (STMA), assuming such to be mutually satisfactory. On August 11, 1986, Frank Palkovic, the resident engineer for Consoer - Townsend Engineering, advised STMA of the DER requirements regarding the hiring of inspectors for the construction phase of the sewer improvement project which are outlined in Fact Finding 10. The procedures required that candidates be interviewed, that the best qualified be selected and that the EPA regulations regarding conflict of interest be followed regarding the award and administration of the EPA assistance. In particular Section 30.613(a) provides that no official or employee of the recipient may participate in any activity relating to the EPA assistance and further that any officials or employees of the recipients must avoid any action which would result in or create the appearance or use of official position for private gain or preferential treatments. After advertisements for construction inspectors appeared in two local newspapers in February of 1987, STMA received approximately 75 resumes for the positions of construction inspectors. Thirty applicants were accepted for interviews which were conducted by STMA members including Dougherty, Engineer Wilbert Hughes and Authority Manager Don Nagle. Of the initial group of thirty applicants, five inspectors were hired. It is noted that Dougherty signed all the agreements entered into by STMA for inspection services in 1987. STMA official records do not reflect that hirings of the inspectors were formally approved by the Board. STMA did enter into agreements for inspection services which outline the duties for those positions (Fact Finding 15). Said agreements did include an understanding that the provisions of 40 C.F.R, Subpart(f) (Federal Conflict of Interest Provisions) were incorporated and made part of the agreement. The agreements were amended in July of 1987 which amendments included in part that if any discrepancies or ambiguities existed, in such cases, 40 C.F.R. Subpart(f) would apply. By letter of July 31, 1987 of Dale Foster, project manager for DER, advised Dougherty as Chairman of STMA that the contracts for the construction inspectors were approved in accordance with 40 C.F.R. Part 33 of Section 205(g). Dougherty was hired as a construction inspector by STMA (Fact Finding 19). Although STMA records do not reflect whether Dougherty was or was not hired at a meeting of the Authority, it is established that Dougherty did not submit a resume for the position of construction inspector, nor was he interviewed for that position. In this regard, Dougherty was furloughed in his employment at the Shippingport Nuclear Power Plant at the time he Dougherty, 89 -029 -C Page 28 was hired as an inspector and worked for the Authority during periods that he was furloughed from his position with the power plant. The inspection services agreement between Dougherty and STMA was entered into on October 12, 1987 which contained identical provisions as to other agreements for inspectors. Although the agreement was signed by Thomas Weingartner for. STMA, a subsequent agreement dated May 2, 1988 was signed by both Weingartner and Dougherty. As to an amendment to the inspection services agreement dated October 12, 1987, Dougherty signed the . agreement both as the inspector and as STMA Authority member whereas a second amendment on May 2, 1988 was signed by Thomas Weingartner on behalf of STMA and Dougherty as the inspector. In a subsequent review of the hiring of construction inspectors prepared by Dale Foster, he noted that Dougherty as STMA chairman was considered by Dennis Rigney of EPA to have a potential conflict of interest but Dougherty at that time had terminated his agreement. Fact Findings 24 and 25 reflect the hours for which Dougherty was compensated for inspection services as well as the payroll account checks which were made payable to Dougherty for providing such services. In particular, in 1987, Dougherty received $2,724.00 and in 1988, $14,397.00 for performing his inspection services relative to the project. All inspectors that were hired by STMA reported directly to Wilbur Hughes who was the resident engineer for Consoer - Townsend. Dougherty as an inspector reported to Hughes but Hughes had to report to Dougherty as Chairman of the STMA (Fact Finding 28). The STMA issued a termination notice to Dougherty on November 2, 1988 which reflected that written notice was given to cancel the agreement relative to his inspection services. The notice was signed by Don Nagle as STMA manager. The EPA submitted various interim inspection reports for the STMA project including listings of construction inspectors. The following dated lists included Dougherty as a construction inspector: December 17, 1987; August 1, 1988; November 22, 1988; December 16, 1988 (with Dougherty listed as chairman /STMA); January 10, 1989 (with Dougherty listed as chairman /STMA). It is noted that all partial payment requests submitted to the EPA for approval were signed by Dougherty as Chairman of STMA. Although the requested payments were approved by the Board, Dougherty participated in the decisions including the salary for all construction inspectors (Fact Finding 32). By letter dated May 5, 1989 Anthony Maisano who was Chief of the Administrative Services, Division of Municipal Facilities and Grant, requested a review by EPA as to the hiring of Dougherty by STMA regarding the inspection services. William Bulman, Chief of Construction Branch of United States Environmental Protection Agency responded by letter of June 2, 1989 and advised that there Dougherty, 89 -029 -C Page 29 did not appear to be a conflict of interest regarding the Authority's action but, after further research, that such action could constitute an apparent conflict of interest and that the question of a violation of the State Code of Ethics should be considered. Lastly, although Dougherty was Chairman of the STMA, he has not filed Statements of Financial Interests (FIS's) for the 1985 through the 1989 calendar years. In applying the above facts to the quoted provisions of Section 3(a) and 3(c) of Act 170 of 1978, we find violations of both provisions of law. As to Section 3(a) of Act 170 of 1978, we find a use of office on the part of Dougherty as an STMA Member in participating and voting to approve payments for construction inspection services which he provided along with other individuals. In addition, Dougherty signed agreements for inspection services with STMA and, in fact, he signed in one instance both in the capacity of Chairman of STMA and also as the other party to the contract who would provide the construction inspection services for STMA. Clearly, the use of such office resulted in a financial gain as is reflected by the compensation that Dougherty received in 1987 and 1988 for providing such construction inspection services. The financial gain inured to Dougherty himself and was compensation other than provided for by law. In this regard, there is no legal authorization for an authority board member to receive such compensation for providing construction inspection services. To the contrary, Federal law appears in fact to prohibit such an activity. In particular, 40 C.F.R. Part 33 Subpart Section 30.613, specifically prohibits a recipient (STMA official) from participating in any activity where he would have a financial interest in the activity and further provides that said official must avoid any action which would result in or create and appearance of use of official position for private gain or preferential treatment. Having established all the requisite elements of Section 3(a) of Act 170 of 1978, we find a violation regarding the payment to Dougherty as to construction inspection services. See Braszo, Order 630 -R. Turning to Section 3(c) of the Ethics Act we do note that there was an initial advertisement for the hiring of construction inspectors. These contracts exceeded the $500 threshold amount of Section 3(c). However, there was no subsequent public disclosure of the proposals considered and contracts awarded in this case. Accordingly, we find that Dougherty violated Section 3(c) of Act 170 of 1978 in that the open and public process as set forth in that provision of law was not followed. See Smythe, Order 733 -R. Having found violation by Dougherty of Sections 3(a) and 3(c) of Act 170 of 1978, we feel that restitution is appropriate Dougherty, 89-029-C Page 30 in this case. The right of this Commission to impose restitution upon a public official as to a financial gain received from his governmental body in violation of Section 3(a) of the Ethics Act has been upheld by Commonwealth Court in Yocabet v. SEC, supra. In this case, given the totality of the facts and circumstances, restitution in the amount of $2,724.00 is warranted. Accordingly, Dougherty is directed within thirty days of the issuance of this order to forward a check to this Commission payable to the order of the STMA in the amount of $2,724.00. Failure to comply with the foregoing will result in the referral of this matter to the appropriate law enforcement authorities. Turning to the matter of the FIS's, although there is no allegation as to the failure of Dougherty to file, we direct Dougherty within thirty days of the issuance of this order to file FIS's for the 1985 through 1989 calendar years. In addition, if Dougherty has not filed as of this time for the 1990 calendar year, he is also directed to file a calendar year 1990 FIS form within thirty days of issuance of this order. Failure to comply will result in the referral of this matter for an order enforcement action. IV. CONCLUSIONS OF LAW: 1. David Dougherty, as Member and Chairman of the Shenango Township Municipal Authority is a public official subject to the provisions of Act 170 of 1978. 2. Dougherty violated Section 3(a) of Act 170 of 1978 when he used public office to obtain a financial gain for himself other than compensation provided for by law consisting of receiving compensation from the Authority for providing construction inspection services. 3. Dougherty violated Section 3(c) of Act 170 of 1978 by contracting with the Authority as to construction inspection services in excess of $500.00 which contracts were advertised but were not subsequently publicly disclosed as to the proposals considered and contracts awarded. In re: David Dougherty : File Docket: 89 -029 -C : Date Decided: July 12, 1991 : Date Mailed: July 16, 1991 ORDER No. 807 1. David Dougherty, as Member and Chairman of the Shenango Township Municipal Authority violated Section 3(a) of Act 170 of 197 when he used public office to obtain a financial gain for himself other than compensation provided for by law consisting of receiving compensation from the Authority for providing construction inspection services. 2. Dougherty violated Section 3(c) of Act 170 of 1978 by contracting with the Authority as to construction inspection services in excess of $500.00 which contracts were advertised but were not subsequently publicly disclosed as to the proposals considered and contracts awarded. 3. Dougherty is hereby directed to make restitution to the Shenango Township Municipal Authority in the amount of $2,724.00 by forwarding a check to this Commission payable to the order of the Authority within thirty days of issuance of this order. Failure to comply with this paragraph will result in the referral of this matter for an order enforcement action. 4. Within thirty days of issuance of this order, Dougherty is directed to file Financial Interest Statements for the 1985 through 1989 calendar years, as well as the 1990 calendar year if not already filed. BY THE COMMISSION, ROBERT W. BROWN, CHAIR Mr. David Dougherty 1120 Dougherty Road New Castle, PA 16101 Re: Order No. 807, File No. 89 -029 -C Dear Mr. Dougherty: On August 12, 1991, the State Ethics Commission your payment for reimbursing the Shenango Township Authority as required by Order No. 807. We have forwarded your check in the amount of $2, the Shenango Township Municipal Authority. such. JJC /slj cc: Public Binder STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 7$3 -1610 August 13, 1991 This letter will be part of the Order and a public J. J xecuti Director received Municipal 724.00 to record as