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HomeMy WebLinkAbout97-007 ConfidentialSTATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION Before: Daneen E. Reese, Chair Austin M. Lee, Vice Chair Roy W. Wilt Allan M. Kluger Rev. Joseph G. Quinn Julius Uehlein DATE DECIDED: 5/29/97 DATE MAILED: 6/11/97 97 -007 Re: Commission A; Former Public Employee; Executive Director; Contract; Association B; Representation; Section 3(g); Person; Compensation; Consultant; Independent Contractor. 1997. This Confidential Opinion is issued in response to your letter dated April 3, I. ISSUE: Whether the Public Official and Employee Ethics Law imposes any prohibition or restrictions upon a former Executive Director in contracting with his former governmental body to complete one of the functions he performed in his public employment. 1I. FACTUAL BASIS FOR DETERMINATION: Both Commission A and its former Executive Director request an opinion from this Commission as to whether he is permitted under the Ethics Law to enter into a contract with his former governmental body. Commission A appointed Mr. C as Executive Director in May, 1986, in which position he served until his retirement on January 31, 1997. In late 1991, Mr. C became involved in the formation of a national organization whose objective is to encourage more responsible and effective D. Membership focuses upon officials in state executive and legislative branches, commissions similar to Commission A, and private entities which regularly interact with government regulators. In December, 1993, Association B was officially formed. Mr. C served on Association B's first Confidential Opinion, 97 -007 June 11, 1997 Page 2 executive committee. He was appointed First Vice Chair in December, 1994 and was elected Chair in December, 1995 and again in December, 1996. While employed with Commission A, Mr. C made a commitment to Association B to serve as its Chair until his term expires in December, 1997. Commission A approves of this commitment and continues to support Mr. C in his leadership of Association B. In discharging his duties, Mr. C is satisfying a pledge he made as Commission A's Executive Director which he could not have done if he were not actively employed as a government official involved in E. For several reasons, Commission A wants to take action, if legal, to enable Mr. C to satisfy his commitment to Association B. First, Commission A is a charter member of Association B and its system of E has been recognized as a model for other member states. Second, because of his background and leadership role, Mr. C continues to be an able representative in Association B. Finally, Commission A seeks to enable Mr. C to fulfill his commitment which he made as Executive Director with the full support and approval of Commission A. For personal reasons, Mr. C retired before he could complete his current term as Chair. Commission A and Mr. C want to enter into a contract whereby he would be paid a stipend to enable him to complete his term with Association B. Funding for the stipend is based upon previously submitted and approved budget estimates. The contract would enable Mr. C to attend two meetings: the planning meeting in July and the annual meeting in December. Mr. C would not be reimbursed for any travel expenses. Mr. C's sole responsibility under the contract would be limited to Association B activities. Mr. C would not resume any of his other former duties as Executive Director and would be required to file periodic reports on his activities with the new Executive Director. A draft copy of the contract has been submitted which is incorporated herein by reference. Commission A has reviewed Advice of Counsel No. 97 -537 and Confidential Opinions 93 -005 and 89 -019 which are asserted to be not controlling in this matter. Such rulings are argued to be distinguishable on the theory that they involve former public employees who sought to contract with their former governmental bodies to perform functions similar to those listed in their job descriptions for compensation which was commensurate with their expertise. The Advice of Counsel is referenced as involving an individual performing a specialized function for compensation based upon her technical qualifications. The Opinions are interpreted as limited to fact patterns involving employees who would terminate employment and seek to perform the same functions as independent contractors. It is stated that the proposed contract between Mr. C and Commission A is premised upon a different set of circumstances in that he would not be performing any of the listed functions he performed as Executive Director where he was responsible for overseeing all of Commission A's internal operations. Rather, Mr. C would only be engaged for the limited purpose of concluding his previous commitment made during his tenure with Commission A. Serving as Commission A's Association B representative will entail substantial travel and registration expenses; however, Mr. C will not be separately reimbursed for such expenses. It is asserted that the monthly stipend paid to Mr. C will probably not cover his out -of- pocket expenses, such that there will be virtually no consideration accruing to him under the contract. Finally, unlike the requestors in the cited rulings, Confidential Opinion, 97 -007 June 11, 1997 Page 3 Mr. C is fully retired, is not the owner of a consulting firm or any other business and is not self - employed in any capacity. The proposed contract for consulting services provides that Mr. C as a consultant will continue to perform the functions and duties associated with Commission A's membership in Association B which he performed while Executive Director. The consultant will perform and file written reports to the current Executive Director of Commission A. Compensation is set not to exceed $400 per month. Although the consultant is responsible for his own expenses, he may receive an office, supplies, telephone service, postage and photocopy services from Commission A. The consulting agreement has a term from February 15, 1997 to December 15, 1997 with the consultant in the status of an independent contractor. The consulting agreement contains a dispute clause whereby Commission A will make the final decision subject to the right of the consultant to file a claim with the Board of Claims of the Commonwealth of Pennsylvania. At the hearing on this case, Commission A's Chairman, Mr. F; the current Executive Director, Mr. G; and the Chief Counsel, Ms. H provided the following additional information and arguments. Mr. C's participation and commitment to Association B was as an employee of Commission A with its encouragement. Since Mr. C's term of office with Association B is longer than his employment at Commission A, Association B has been given an implied commitment from Commission A that Mr. C will serve out his term at Association B. It is asserted that there would be no financial advantage because the contract stipend covers only expenses for Mr. C as to Association B which would not include any duties of the Executive Director. When Mr. G was hired as the Executive Director of Commission A in December, Mr. C had already made the commitment to Association B. Mr. C continued his employment until January to assist in the transition. There is no intention for Mr. C to perform any activities related to the operation of Commission A, only to fulfill a commitment made as a Commission A employee to complete his term with Association B. Although Commission A could have retained Mr. C as an employee with a changed job description limited to the Association B activity, Commission A proceeded as set forth above. Because Mr. C as a non - employee cannot be reimbursed by Commission A for his expenses, a stipend is proposed via the Agreement. However, if a dispute would occur between Mr. C and Commission A under the Agreement, Mr. C would be representing his own interests in such a dispute. III. DISCUSSION: In his former capacity as Executive Director of Commission A, Mr. C would be considered a "public employee" within the definition of that term as set forth in the Public Official and Employee Ethics Law and the Regulations of this Commission. 65 P.S. §402; 51 Pa.Code § 1 1.1. This conclusion is based upon the job description, which when reviewed on an objective basis, indicates clearly that the power exists to take or recommend official action of a non - ministerial nature with respect to contracting, procurement, planning, inspecting, administering or monitoring grants, Confidential Opinion, 97 -007 June 11, 1997 Page 4 leasing, regulating, auditing or other activities where the economic impact is greater than de minimis on the interests of another person. Consequently, upon termination of public service, Mr. C became a "former public employee" subject to Section 3(g) of the Public Official and Employee Ethics Law. Section 3(g) of the Ethics Act provides that: Section 3. Restricted activities. (g) No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. The governmental body with which Mr. C was employed was Commission A. The term "governmental body with which a public official or public employee is or has been associated" is defined under the Ethics Law as follows: Section 2. Definitions. "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. The governmental body with which Mr. C was associated prior to termination of public service would be Commission A. The above is based upon the language of the Ethics Law, the legislative intent (Legislative Journal of House, 1989 Session, No. 15 at 290, 29 and the prior precedent of this Commission. Therefore, within the first year after retirement by Mr. C from Commission A, Section 3(g) of the Ethics Law would apply and restrict his representation of persons or new employers vis -a -vis Commission A. As to the restrictions under Section 3(g), we have enunciated such restrictions in Popovich, Opinion 89 -005 and in other Opinions. However, we shall attempt to summarize such restrictions. The Ethics Law does not affect one's ability to appear before agencies or entities other than with respect to the former governmental body. There is no general limitation on the type of employment in which a person may engage, following departure from their governmental body. The intent of the Ethics Law is that during the term of a person's public employment he must act consistently with the public trust and upon departure from the public sector, that individual should not be allowed to utilize his association with the public sector, officials or employees to secure for himself or a new employer, treatment or benefits that may be obtainable only because of his association with his former governmental body. Confidential Opinion, 97 -007 June 11, 1997 Page 5 The one year restriction prohibits "representation." The Ethics Law defines "Represent" as follows: Section 2. Definitions. "Represent." To act on behalf of any other person in any activity which includes, but is not limited to, the following: personal appearances, negotiations, lobbying and submitting bid or contract proposals which are signed by or contain the name of a former public official or public employee. We have interpreted the term "representation" to prohibit: 1. Personal appearances before the former governmental body or bodies, including, but not limited to, negotiations or renegotiations in general or as to contracts; 2. Attempts to influence; 3. Submission of bid or contract proposals which are signed by or contain the name of the former public official /employee; 4. Participating in any matters before the former governmental body as to acting on behalf of a person; 5. Lobbying, that is representing the interests of any person or employer before the former governmental body in relation to legislation, regulations, etc. We have held that listing one's name as the person who will provide technical assistance on such proposal, document, or bid, if submitted to or reviewed by the former governmental body constitutes an attempt to influence the former governmental body. Section 3(g) would also prohibit in general the inclusion of the name of a former public official /public employee on invoices submitted by his new employer to the former governmental body, even though the invoices pertain to a contract which existed prior to termination of public service. An example of an application of the representation restriction of Section 3(g) would be that Mr. C may not be identified on documents submitted to Commission A. As to the prohibition against representing a "person" before the former governmental body, we have held that the term includes a former public employee representing himself in providing consulting services to his former governmental body. Confidential Opinion 93 -005. In applying Section 3(g) and our prior precedent to the instant matter, we conclude that Mr. C is prohibited from representing himself for compensation before his former governmental body, Commission A, within one year of termination of service. The service Mr. C would perform is one of the functions he performed as Executive Director. Mr. C would also be submitting "periodic reports" under his signature to Commission A, his former governmental body. The compensation of $400 per month is hardly a "nominal stipend," not to mention the office and services he may receive from Commission A. Mr. C would be representing himself as is Confidential Opinion, 97 -007 June 11, 1997 Page 6 evidenced by the description in the contract which designates him as a consultant acting in the capacity of an independent contractor. In such capacity, Mr. C would no longer be representing Commission A as an employee subject to all the strictures and controls of Commonwealth employment. Mr. C would be representing himself and his own interests which may not align with those of Commission A as is evidenced by the "Dispute" clause in the proposed contract. Although it is argued that Mr. C's situation is distinguishable from our prior precedent, no such distinctions are made in Section 3(g) or in our prior decisions. Mr. C's case is similar in all material respects to those prior decisions. Accordingly, Section 3(g) of the Ethics Law precludes such representation by Mr. C before his former governmental body, Commission A for a period of one year after termination of service. Our decision in this matter is consistent not only with the letter but also the spirit of the Ethics Law. Section 3(g) of the Ethics Law aptly has been named as the "revolving door" prohibition. The provision seeks to curtail the scenario of public officials /employees leaving governmental service and then coming back before their former governmental bodies to capitalize on their prior service by using their connections with those bodies to their advantage in their new private endeavors for financial gain. Two major areas of concern are: first, former public officials /employees using their contacts or knowledge of operations within their former governmental bodies for the benefit of their new employers or clients; and second, former public officials /employees using their former employment to their advantage in obtaining consulting contracts with their former governmental bodies. The Ethics Law in our view is not harsh in its application to this case for two reasons. First, if Mr. C had completed his public employment at the end of the year, he could have accomplished this particular service. However, he chose an early retirement which subjects him to the prohibition of Section 3(g) for the one -year period. Commission A has acknowledged that there was an awareness of this option but for whatever reasons, that course of action, which could have alleviated this problem under the Ethics Law, was not pursued. Second, Mr. C could perform such service as long as he would not take any "promised or actual compensation" which would consist of the monthly "stipend" plus any other benefits such as an office, staff support, equipment or supplies. Thus, Section 3(g) would not bar Mr. C from engaging in the consulting services for Commission A provided he did not receive any promised or actual consideration. Lastly, the propriety of the proposed conduct has only been addressed under Section 3(g) of the Ethics Law; 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 Law. IV. CONCLUSION: An Executive Director of an administrative agency of the Commonwealth of Pennsylvania is a public employee subject to the Ethics Law. Section 3(g) of the Ethics Law precludes a former public employee from entering into a contract with his former governmental body within one year of termination of service to provide services for compensation. Confidential Opinion, 97 -007 June 11, 1997 Page 7 Pursuant to Section 7(10), the person who acts in good faith on this opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public record and will be made available as such. Finally, any person may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The person requesting reconsideration should present a detailed explanation setting forth the reasons why the Opinion requires reconsideration. By the Commission, iroamu6 aL41._J Daneen E. Reese Chair Vice Chair Austin M. Lee and Commissioner Julius Uehlein dissent.