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HomeMy WebLinkAbout20-533 Shapiro PHONE: 717-783-1610 STATE ETHICS COMMISSION FACSIMILE: 717-787-0806 TOLL FREE: 1-800-932-0936 FINANCE BUILDING WEBSITE: www.ethics.pa.gov 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 ADVICE OF COUNSEL August 27, 2020 To the Requester: Seth Shapiro 20-533 Dear Seth Shapiro: This responds to your letter dated August 4, 2020, by which you requested an advisory from the Pennsylvania State Eth Issue: Pa.C.S. § 1101 et seq., would impose prohibitions or restrictions upon an individual resigning from the PFMC Board and becoming employed with PFMC in a paid position as an executive. Facts: You request an advisory from the Commission based upon submitted facts that may be fairly summarized as follows. You are a Member and Chair of the PFMC Board. You were appointed to the PFMC Board by the Mayor of the City of Philadelphia. PFMC is an independent, non- profit corporation that holds the management contract for the Philadelphia Gas Works. You state that in early 2021, you will likely be offered a paid position as an executive with PFMC . The execution of an employment contract with regard to the PFMC Executive Position may occur up to six months prior to the start of your potential employment in such position. You state that you have abstained from participating in discussions and votes of the PFMC Board related to your potential employment in the PFMC Executive Position. You state that you have also abstained from participating in discussions and actions of the PFMC Board that would have an impact on future employment in the PFMC Executive Position, such as, for example, the setting of goals and objectives which might be the basis for bonuses, changes to budgets which would have an impact on salaries or benefits, and changes to union benefits which might be mirrored for exempt employees. You further state that you plan to continue abstaining from participating in discussions, votes, and/or actions of the PFMC Board related to your potential employment in the PFMC Executive Position or which would have an impact on future employment in the PFMC Executive Position. Shapiro, 20-533 August 27, 2020 Page 2 Based upon the above submitted facts, you pose the following questions: (1) Whether your plan to continue abstaining from participating in discussions, votes, and/or actions of the PFMC Board related to your potential employment in the PFMC Executive Position or which would have an impact on future employment in the PFMC Executive Position would be sufficient for you to avoid a conflict of interest under Section 1103(a) of the Ethics Act; (2) Whether you would violate the post-termination of service restrictions of Section 1103(g) of the Ethics Act if you would become an employee of PFMC during the first year after you would resign from the PFMC Board; (3) Whether Section 1103(f) of the Ethics Act (pertaining to contracting) would be applicable if you would resign from the PFMC Board prior to the execution of an employment contract related to your employment in the PFMC Executive Position; (4) If you would not resign from the PFMC Board until you would commence employment in the PFMC Executive Position, and assuming there would be that a public bidding process be utilized or other resumes be sought for the hiring of executives, would Section 1103(f) of the Ethics Act require any additional steps with regard to the execution of an employment contract related to your employment in the PFMC Executive Position; and (5) Ethics Act be fulfilled where an employment contract related to your employment in the PFMC Executive Position would be discussed at meeting(s) of the PFMC Board and/or the Philadelphia Gas Commission (and reflected in the meeting minutes) prior to and after the execution of such employment contract. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. As a Member and Chair of the PFMC Board, you are a public official subject to the provisions of the Ethics Act. Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest.--No public official or public employee shall engage in conduct that constitutes a conflict of interest. (j) Voting conflict.--Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be Shapiro, 20-533 August 27, 2020 Page 3 required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three-member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa.C.S. §§ 1103(a), (j). The following terms related to Section 1103(a) are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. 65 Pa.C.S. § 1102. S 65 Pa.C.S. § 1102, a public official/public employee is prohibited from using the authority of public office/employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official/public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. The use of authority of office is not limited merely to voting, but extends to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. Shapiro, 20-533 August 27, 2020 Page 4 In each instance of a conflict of interest, a public official/public employee would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows: § 1103. Restricted activities (f) Contract.--No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa.C.S. § 1103(f). § 1102. Definitions "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. 65 Pa.C.S. § 1102. Section 1103(g) of the Ethics Act imposes post-termination restrictions upon former public officials/public employees: § 1103. Restricted activities (g) Former official or employee.--No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the Shapiro, 20-533 August 27, 2020 Page 5 governmental body with which he has been associated for one year after he leaves that body. 65 Pa.C.S. § 1103(g) (Emphasis added). which a public official or public employee is or has been associated" are specifically defined in the Ethics Act as follows: § 1102. 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. "Person." A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. "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. 65 Pa.C.S. § 1102. Having established the above general principles, your specific questions shall now be addressed. In response to your first question, you are advised as follows. Section 1103(a) of the Ethics Act would prohibit you from using the authority of your current public position as a Member/Chair of the PFMC Board or confidential information received by being a Member/Chair of the PFMC Board to advance the prospects of your obtaining employment in the PFMC Executive Position. In your capacity as a Member/Chair of the PFMC Board, you generally would have a conflict of interest in matter(s) pertaining to your potential employment in the PFMC Executive Position as well as matter(s) that would affect the salary, bonuses, benefits, or other forms of compensation associated with your potential employment in the PFMC Executive Position. You specifically would have a conflict of interest under Section 1103(a) of the Ethics Act with regard to participating in or voting in favor of the hiring of yourself for the PFMC Executive Position. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. You are advised that subject to the condition that there would be no use of authority of your current public position as a Member/Chair of the PFMC Board or confidential information received by being a Member/Chair of the PFMC Board to advance the Shapiro, 20-533 August 27, 2020 Page 6 prospects of your obtaining employment in the PFMC Executive Position, Section 1103(a) of the Ethics Act would not prohibit you from being hired for the PFMC Executive Position. In response to your second question, you are advised as follows. Upon resigning from your position as a Member of the PFMC Board, you would ect to the restrictions of Section 1103(g) of the Ethics Act. The governmental body with which you would be deemed to have been associated upon termination of service as a Member of the PFMC Board would be PFMC in its entirety. While applicable, Section 1103(g) of the Ethics Act would prohibit ,with promised or actual compensation, before PFMC. However, per Commission precedents, Section 1103(g) of the Ethics Act does not prohibit the appointment/rehiring of a former public official/public employee to a public office or position of public employment with the former governmental body. Confidential Opinion, 93-005; Confidential Opinion, 97-008; Long, Opinions 97-010 and 97-010-R; McGlathery, Opinion 00-004. Therefore, Section 1103(g) of the Ethics Act would not prohibit you from accepting employment in the PFMC Executive Position following your resignation from the PFMC Board. With regard to your third, fourth, and fifth questions, you are advised as follows. The restrictions and requirements of Section 1103(f) of the Ethics Act would be applicable to a PFMC Executive Position employment contract between you and PFMC that would be entered into during your service as a Member of the PFMC Board and that would be valued at $500 or more. When applicable, Section 1103(f) of the Ethics Act would require, inter alia, that the PFMC Executive Position employment contract be subsequent publi are advised that: (1) prior public notice of the public meeting of the PFMC Board at which entry into the PFMC Executive Position employment contract would be considered; (2) public disclosure at the aforesaid public meeting of the proposal(s) considered and the details of the PFMC Executive Position employment contract; and (3) public disclosure of Executive Position employment contract, would Cf., Kistler v. State Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011). You are further advised that the restrictions and requirements of Section 1103(f) of the Ethics Act would not be applicable as to a PFMC Executive Position employment contract between you and PFMC that would be entered into after you would resign from the PFMC Board. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Conclusion: Based upon the submitted facts that: (1) you are a Member and Chair the Philadelphia Facilities Management Corporation (ou were appointed to the PFMC Board by the Mayor of the City of Philadelphia; (3) PFMC is an independent, non-profit corporation that holds the management contract for the Philadelphia Gas Works; (4) in early 2021, you will likely be offered a paid position as an executive with PFMC ; (5) the execution of an employment contract with regard to the PFMC Executive Position may occur up to six months prior to the start of your potential employment in such position; (6) you have abstained from participating in discussions and votes of the PFMC Board Shapiro, 20-533 August 27, 2020 Page 7 related to your potential employment in the PFMC Executive Position; (7) you have also abstained from participating in discussions and actions of the PFMC Board that would have an impact on future employment in the PFMC Executive Position, such as, for example, the setting of goals and objectives which might be the basis for bonuses, changes to budgets which would have an impact on salaries or benefits, and changes to union benefits which might be mirrored for exempt employees; and (8) you plan to continue abstaining from participating in discussions, votes, and/or actions of the PFMC Board related to your potential employment in the PFMC Executive Position or which would have an impact on future employment in the PFMC Executive Position, you are advised as follows. As a Member and Chair of the PFMC Board, you are a public official subject to the et seq. Section 1103(a) of the Ethics Act would prohibit you from using the authority of your current public position as a Member/Chair of the PFMC Board or confidential information received by being a Member/Chair of the PFMC Board to advance the prospects of your obtaining employment in the PFMC Executive Position. In your capacity as a Member/Chair of the PFMC Board, you generally would have a conflict of interest in matter(s) pertaining to your potential employment in the PFMC Executive Position as well as matter(s) that would affect the salary, bonuses, benefits, or other forms of compensation associated with your potential employment in the PFMC Executive Position. You specifically would have a conflict of interest under Section 1103(a) of the Ethics Act with regard to participating in or voting in favor of the hiring of yourself for the PFMC Executive Position. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. Subject to the condition that there would be no use of authority of your current public position as a Member/Chair of the PFMC Board or confidential information received by being a Member/Chair of the PFMC Board to advance the prospects of your obtaining employment in the PFMC Executive Position, Section 1103(a) of the Ethics Act would not prohibit you from being hired for the PFMC Executive Position. Upon resigning from your position as a Member of the PFMC Board, you would Act. The governmental body with which you would be deemed to have been associated upon termination of service as a Member of the PFMC Board would be PFMC in its entirety. While applicable, Section 1103(g) of the Ethics Act would prohibit ,with promised or actual compensation, before PFMC. Section 1103(g) of the Ethics Act would not prohibit you from accepting employment in the PFMC Executive Position following your resignation from the PFMC Board. The restrictions and requirements of Section 1103(f) of the Ethics Act would be applicable to a PFMC Executive Position employment contract between you and PFMC that would be entered into during your service as a Member of the PFMC Board and that would be valued at $500 or more. When applicable, Section 1103(f) of the Ethics Act would require, inter alia, that the PFMC Executive Position employment contract be are advised that: (1) prior public notice of the public meeting of the PFMC Board at which entry into the PFMC Executive Position employment contract would be considered; (2) public disclosure at the aforesaid public meeting of the proposal(s) considered and the details of the PFMC Executive Position employment contract; and (3) public disclosure of Shapiro, 20-533 August 27, 2020 Page 8 PFMC Executive Position employment contract, would The restrictions and requirements of Section 1103(f) of the Ethics Act would not be applicable as to a PFMC Executive Position employment contract between you and PFMC that would be entered into after you would resign from the PFMC Board. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717-787-0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Robin M. Hittie Chief Counsel