HomeMy WebLinkAbout87-007 KoppI. Issue:
II. Factual Basis for Determination:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
OPINION OF THE COMMISSION
DATE DECIDED: 12/14/87
DATE MAILED: 12/22/87
87 -007
Charles G. Kopp, Esquire
12th Floor, Packard Building
S.E. Corner 15th and Chestnut Streets
Philadelphia, Pennsylvania 19102
Re: Public Official, Bi -State Port Authority, Financial Interests Statement
Dear Mr. Kopp:
This responds to your letter of September 29, 1987, wherein you question
whether you are required to file the Statement of Financial Interests under
the State Ethics Act.
Whether a Commissioner of a bi -state port authority is a public official
under the Ethics Act so as to be required to file a Statement of Financial
Interests.
The Delaware River Port Authority, hereinafter DRPA, is the successor to
the Delaware River Joint Commission, which was established by the Act of July
9, 1919, P.L. 814, as amended, 36 P.S. 3421 et. seq. The original Commission
was supplanted by the DRPA as a result of a bi -state compact, hereinafter
Agreement, entered into between Pennsylvania and New Jersey. See the Act of
June 12, 1931, P.L. 575, as amended, 36 P.S. 3503 et. seq.
The purpose of the DRPA, as set forth in the Preamble of the Agreement,
is to provide additional transportation facilities between the Commonwealth of
Pennsylvania and the State of New Jersey and also to develop the Delaware
River from Philadelphia and Camden to the sea by promotiny more extensive use
of the ports for maritime purposes. The Preamble also describes the DRPA as
"...a single agency of both states empowered to further the aforesaid
interests of both States..." 36 P.S. §3503.
Charles G. Kopp, Esquire
Page 2
The DRPA is characterized in the Agreement as follows:
The body corporate and politic, heretofore created and
known as the Delaware River Joint Commission, hereby is
continued under the name of the Delaware River Port
Authority (hereinafter in this agreement called the
'commission'), which shall constitute the public corporate
instrumentality of the Commonwealth of Pennsylvania and
the State of New Jersey for the following public purposes,
and which shall be deemed to be exercising an essential
governmental function in effectuating such purposes, to
wit: 36 P.S. §3503, Art. I.
The Agreement, which has the force of a Pennsylvania statute (36 P.S.
§3504), also provides:
The effectuation of its authorized purposes by the
commission is and will be in all respects for the benefit
of the people of the Commonwealth of Pennsylvania and the
State of New Jersey, for the increase of their commerce and
prosperity and for the improvement of their health and
living conditions, and since the commission will be
performing essential governmental functions in
effectuating said purposes, the commission shall not be
required to pay any taxes or assessments upon any
property acquired or used by it for such purposes; and the
bonds or other securities or obligations issued by the
commission, their transfer and the income therefrom
(including any profits made on the sale thereof), shall,
at all times, be free from taxation within the
Commonwealth of Pennsylvania and the State of New Jersey.
36 P.S. §3503, Art. XI
Generally, the DRPA has the power to acquire, hold, use and sell real and
personal property (Art. IV(g)(h); to exercise the right of eminent domain
(Art. IV(k); to enter contracts (Art. IV(f); to employ counsel, officers,
agents and employees and to fix and determine the qualifications, duties and
compensation of these individuals (Art IV(e); to issue bonds (Art. X); to
appoint DRPA Police who have specified powers relating to matters that occur
upon the DRPA property (36 P.S. 3504.1); and to exercise in general those
other powers and duties that are specified throughout the Agreement. 36 P.S.
§3503 et. seq.
You state that you resigned your position with the DRPA effective August
18, 1987.
As a former Commissioner of the DRPA, you ask whether you are a public
` al under the Ethics Act so as to be required to file the Financial
`'atement.
Charles G. Kopp, Esquire
Page 3
III. Discussion:
Section 404(a) of the Ethics Act provides:
Section 4. Statement of financial interests required to be filed.
(a) Each public employee employed by the Commonwealth
shall file a statement of financial interests for the
preceding calendar year with the department, agency or
bureau in which he is employed no later than May 1 of each
year that he holds such a position and of the year after
he leaves such a position. Any other public employee
shall file a statement of financial interests with the
governing authority of the political subdivision by which
he is employed no later than May 1 of each year that he
holds such a position and of the year after he leaves such
a position. 65 P.S. 404(a).
Parenthetically, it has been decided that the financial disclosure
requirements in Section 404(a) apply to public officials as well as public
employees. Kremer v. State Ethics Commission, 56 Pa. Cmwlth. 160, 424 A.2d
968 (1981), affirmed, 503 Pa. 358, 469 A.2d 593 (1983).
In the definitional section of the Ethics Act, Section 402, "public
official" is defined as follows:
Section 2. Definitions.
"Public official." Any elected or appointed official in
the Executive, Legislative or Judicial Branch of the State
or any political subdivision thereof, provided that it
shall not include members of advisory boards that have no
authority to expend public funds other than reimbursement
for personal expense, or to otherwise exercise the power
of the State or any political subdivision thereof.
[ "Public official" shall not include any appointed
official who receives no compensation other than
reimbursement for actual expenses.]
65 P.S. 402.
However, in Snider v. Thornburgh, 469 Pa. 159, 436 A.2d 593 (1981), the
Pennsylvania Supreme Court held the definitional phrase "public official"
unconstitutional insofar as it operated to exempt appointed /non- compensated
officials from Ethics Act coverage. Thus, the Court's decision had the effect
of removing the appointed /non- compensated exclusion from the Ethics Act.
Charles G. Kopp, Esquire
Page 4
The Regulations of this Commission define "public official", in part, as
follows:
Section 1.1. Definitions.
Public officials - --
An elected or appointed official in the
executive, legislative or judicial branch of the
government of the Commonwealth or its political
subdivisions. The terms does not include a member of
an advisory board who has no authority to spend public
funds other than reimbursement for personal expenses
or to otherwise exercise the power of the State or a
political subdivision thereof.
(i) The following criteria will he used to
determine if the exception in this paragraph is
applicable:
(A) The body will be deemed to have the power
to expend public funds if the body may commit funds
or may otherwise make payment of monies, enter into
contracts, invest funds held in reserves, make loans
or grants, borrow money, issue bonds, employ staff,
purchase, lease, acquire or sell real or personal
property without the consent or approval of the
governing body and the effect of the power to
expend public funds has a greater than de minimus
effect on the interest of a person.
(B) The body will be deemed to have the
authority to otherwise 'exercise the power of the
State or of a political subdivision if one of the
following exists:
(I) The body makes binding decisions or
orders adjudicating substantive issues which are
appealable to a body or person other than the
governing authority.
(II) The body exercises a basic power of
government and performs essential governmental
functions.
(III) The governing authority is bound by
statute or ordinance to accept and enforce the
rulings of the body.
Charles G. Kopp, Esquire
Page 5
(IV) The body may compel the governing
authority to act in accordance with the body's
decisions or restrain the governing authority
from acting contrary to the body's decisions.
(V) The body makes independent decisions
which are effective without approval of the
governing authority.
(VI) The body may adopt, amend and repeal
resolutions, rules, regulations, or ordinances.
(VII) The body has the power of eminent
domain, or'condemnation.
(VIII) The enabling legislation of the body
indicates that the body is established for
exercising public powers of the Commonwealth or
a political subdivision.
(ii) The term does not include judges and
inspectors of elections, notary publics and political
party officers.
(iii) The term generaly includes persons in the
following offices:
(A) Incumbents of offices filled by nomination
of the Governor and confirmation of the Senate.
(B) Heads of executive, legislative and
independent agencies, boards and commissions.
(C) Persons who report directly to heads of
executive, legislative and independent agencies,
boards and commissions except clerical personnel.
(D) Members of agencies, boards and
commissions appointed by the General Assembly or
its officers.
(E) School superintendents and assistant
superintendents.
<harles G. Kopp, Esquire
Page 6
(F) Persons appointed to positions designated
as offices by code, charter or the like of the
Commonwealth or its political subdivisions.
(G) Members of municipal, industrial
development, housing, parking and similar
authorities.
(H) Members of zoning hearing hoards and
similar quasijudicial bodies.
(I) Members of other public bodies meeting the
criteria set forth in subparagraph (i)(A). 51 Pa.
Code §1.1 as amended 1986, 16 Pa. Bulletin 4653
It is noted that eight of the sixteen Commissioners of the DRPA consist
of eight resident voters of the Commonwealth of Pennsylvania. Six of the
eight Commissioners for the Commonwealth are appointed by the Governor with
the Auditor General and State Treasurer being the other two ex officio
members. 36 P.S. §3503, Art. II
Since the DRPA is not within any branch of the Commonwealth's tripartite
form of government, the question must be addressed as to whether the DRPA is a
"political subdivision" of the Commonwealth as that term is used in the Ethics
Act and Regulations. Although the Ethics Act does not contain a definition of
"political subdivision ", the Regulations of the Ethics Commission define the
term as follows:
Section 1.1. Definitions.
Political subdivision - -- Any county, city, borough,
incorporated town, township, school district, vocational
school, county institution district, a.nd any entity or
body organized by the aforementioned. 51 Pa. Code 1.1.
In order to determine whether the DRPA is a political subdivision within
the meaning of the above quoted definition, it is necessary to review
decisional law which has construed the term "political subdivision."
The Courts have construed the term "political subdivision" broadly in
certain cases. Most significantly, the Second Circuit Court.,of Appeals in
Commissioner of Internal Revenue v. Shamberg's Estate, 144 F.2d 998 (1944),
cert. denied, 323 U.S. 792 (1945), specifically found that the New York Port
Authority, created through a bi -state compact between New York and New Jersey,
was a political subdivision of those states so that the income from._the
Authority's bonds was exempt from tax. After noting that the Authority was a
body politic and corporate created by the bi -state compact, the Court adopted
+E f'llowing definition of "political subdivision" from an Opinion of the
°s Attorney General:
Charles G. Kopp, Esquire
Page 7
The term 'political subdivision' is broad and
comprehensive and denotes any division of the State made
by the proper authorities thereof, acting within their
constitutional powers, for the purpose of carrying out a
portion of those functions of the State which by long
usage and the inherent necessities of government have
always been regarded as public. The words 'political' and
'public' are synonymous in this connection. (Dillon
Municipal Corporations, 5th ed., sec. 34.) It is not
necessary that such legally constituted 'division' should
exercise all the functions of the State of his character.
It is sufficient if it be authorized to exercise a
portion of them. * * * Id. at 1004.
The Court concluded by rejecting an argument based upon the bi -state nature of
the Authority:
The argument that the exemption does not apply to the
Authority because two states, rather than one, created the
agency is far from persuasive, and we reject it..."
Id. at 1006.
A broad application of the term "political subdivision" has been used by
Pennsylvania Courts in many cases. In Commonwealth v. Metropolitan Transit
Authority, 444 Pa. 339, 282 A.2d 291, (1971), the Pennsylvania Supreme Court
found that a municipal authority was an independent agency of the Commonwealth
and part of its sovereignty. The Court in reaching its decision noted that
the authority was created to perform "essential governmental functions" for
the benefit of the people so as to increase the commerce, prosperity and
improvement in health and living conditions. In this regard, the Federal
District Court in New Jersey in Delaware River Port Authority v. Tiemann, 403
F.Supp. 1117 (1975) in noting that the DRPA was a "public agency ",
referenced in a footnote that Article 1 of the Agreement provided that the
DRPA was deemed to exercise an essential governmental function in
effectuating its purposes and further referenced a comment that the public at
large was the stockholder to which the DRPA was ultimately accountable. See
also the Agreement, 36 P.S. §3503, Art. I.
Likewise, the Commonwealth Court of Pennsylvania in Camiel v. State
Ethics Commission, 56 Pa. Cmwlth. 518, 425 A.2d 60 (1981), specifically found
that turnpike commissioners were "public officials" of the Commonwealth even
though that Commission was "an entity independent of the Commonwealth."
1. Vacated and remanded, for reasons not herein related, DRPA v. Tiemann, 531
F.2d 699(1976).
Charles G. Kopp, Esquire
Page 8
Similarly, SEPTA was found to be an agency and instrumentality of the
Commonwealth in light of the exercise of its public powers which included
eminent domain. Crill,y v. South Eastern Pennsylvania Transportation
Authority, 529 F.2d 1355 (1976). See also Commonwealth v. Philadelphia Gas
Works, 484 Pa. 60, 398 A.2d. 942 (1979), wherein the Pennsylvania Supreme
Court held that the Philidelphia Gas Works which was leased by the city to a
utility constituted a political subdivision on the theory that it was an
integral part of a political subdivision (Philadelphia).
In this respect, it is interesting to note that the aforecited
regulations of the State Ethics Commission specifically provide that the body
will be deemed to exercise the power of the state or political subdivision if
the enabling legislation of the body indicates that the body is established
for exercising public powers or the body performs essential governmental
functions. 51 Pa. Code §1.1(B)(II); (VII).
In light of the powers, duties and "governmental function" (36 P.S.
§3503, Art. I) of the DRPA and the case law which has construed the term
"political subdivision," the DRPA is a "political subdivision" within the
meaning of the Ethics Act and its Regulations.
The question now rises as to whether the provision of the Ethics Act,
which requires the filing of a Statement of Financial Interests, constitutes
an unlawful legislative intrusion into the DRPA Agreement entered into between
the Commonwealth of Pennsylvania and the State of New Jersey.
Although the general rule is that a state may not unilaterally legislate
as to a bi -state agency, that limitation only applies to matters relative to
the internal operation of the authority. See Agesen v. Catherwood, 311 NYS
2d. 886, 260 N.E. 2d 525 (1970), wherein the court laid down the following
distinction between permissible external and impermissible internal
regulation:
The distinction between the internal operations and
conduct affecting external relations of the Authority is
crucial in charting the areas permitting unilateral and
requiring bilateral State action. Each has undoubted
power to regulate the external conduct of the Authority,
and it may hardly be gainsaid that the Authority, albeit
bistate, is subject to laws involving health and safety,
insofar as its activites may externally affect the
public.... `
Indeed, given sufficient social or economic
justification, the lines of external and internal
operation may shift, justifying increased regulations as
Charles G. Kopp, Esquire
Page 9
the impact outside the Authority becomes more pronounced.
Finally, even as to internal matters, the two States, by
bilateral action, may always regulate Authority action,
when unilateral actin is ineffective or impractical.
Id. at 88.
Since the filing of a Statement of Financial Interests by the eight
Pennsylvania Commissioners cannot be deemed to relate to the internal
operations of the DRPA, it is clear that this external regulation of the
conduct of the Commissioners by the filing of a Statement of Financial
Interests is not an impermissible unilateral internal regulation. In
Henderson v. Delaware River Joint Toll Bridge Commission, 362 Pa. 475, 66 A.2d
843 (1949), the Pennsylvania Supreme Court specifically upheld the validity of
unilateral legislation by the Commonwealth of Pennsylvania which eliminated
the need for municipal consent relative to construction by the bi -state
commission that involved the occupation or overpassing of municipal streets:
It is within the competency of a State, which is a
party to a compact with another State, to legislate i n
respect of matters covered by the compact so long as such
legislative action is in approbation and not in
reprobation of the compact. Id. at 488.
Lastly, this Commission has reached its conclusion by following the
direction of Commonwealth Court in Phillips v. State Ethics Commission, 79 Pa.
Cmwlth. 491, 470, A.2d 659 (1984), that the Ethics Act should have broad
construction in application but narrow construction as to exclusions.
IV. Conclusion: As a former Commissioner from the eight Pennsylvania members
of the DRPA, you are a public official as that term is defined in the State
Ethics Act. The DRPA is a political subdivision of the Commonwealth as that
term is defined in the Ethics Act and its Regulations. As a "public
official ", you, as one of the eight Pennsylvania Commissioners, are required
to file a Statements of Financial Interests under Section 404(a) of the Ethics
Act. 65 P.S. 404(a). Lastly, you are reminded that the Ethics Act requires
you to file a Statement of Financial Interests for the year following your
termi nation of service.
Pursuant to Section 7(9)(i), this opinion is a complete defense in any
enforcement proceeding initiated by the Commission, and evidence of good faith
conduct in any civil or criminal proceeding, providing t! rgquestor has
disclosed truthfully all the material facts and committed the acts complained
of in reliance of the advice given.
This letter is a public record and will be made available as such.
Charles G. Kopp, Esquire
Page 10
Finally, any person may request within 15 days of service of the opinion
that the Commission reconsider its opinion. The person requesting reconside-
ration should present a detailed explanation setting forth the reasons why the
opinion requires reconsideration.
By the Commission,
G. Sieber Pancoast
Chairman