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HomeMy WebLinkAbout01-512 ConfidentialADVICE OF COUNSEL January 31, 2001 First, the Staff Member is a Q licensed in Pennsylvania. 01 -512 Re: Conflict; Public Official /Employee; Member; General Assembly; Legislative Staff Member; Conduct of Employee; Use of Authority of Public Office /Position; Use of Confidential Information; Business With Which Associated; B Firm; B Transaction. This responds to your letters of December 20, 2000 and December 28, 2000, by which you requested a confidential advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. §1101 et seq., presents any prohibition or restrictions upon a Legislator or a member of the Legislator's staff ( "Staff Member ") where: (1) the Staff Member is an A in Pennsylvania and owns a B firm ( "Firm "); (2) the Legislator previously assigned to the Staff Member a constituent request regarding assistance in locating a suitable C for a D Institution; (3) the constituent has located and is interested in purchasing a C; (4) the owner of the C has retained one of the Es employed by the Staff Member for representation in the transaction; and (5) a contract has not yet been signed, and no consideration has been exchanged in the sale of the C. Facts: As F to the G, you request a confidential advisory on behalf of a Member of the Pennsylvania General Assembly ( "Legislator "). You have submitted facts which may be fairly summarized as follows. The Legislator employs a staff person ( "Staff Member ") whose primary responsibilities are to assist and advise the Legislator on H issues. The Staff Member makes recommendations to the Legislator. The Legislator gives the Staff Member broad direction and parameters to work for I. The Staff Member acts much of the time on his /her own initiative and at his /her own discretion, while keeping the Legislator apprised of the Staff Member's activities. The Staff Member's duties include working with community and business leaders and local and state government officials on all aspects of H and J projects. In the past, the Staff Member has participated in projects including K, establishing L, promoting M, and N for an O. You state that all projects involving the Staff Member occurred in one P. The submitted facts indicate that the Staff Member is involved in several other activities in addition to his /her work for the Legislator. Confidential Advice, 01 -512 January 31, 2001 Page 2 Second, the Staff Member is President of an R, which is a non - profit Pennsylvania corporation that receives funding from both private and public sources, including the Commonwealth of Pennsylvania. The R participates in H activities. Third, the Staff Member is President of an S, the purpose of which is to foster T and U. Fourth, the Staff Member is an A in Pennsylvania. The Staff Member owns a B firm ( "Firm "), which fact was unknown to the Legislator until recently. The Staff Member employs two Es who are licensed in Pennsylvania. The compensation arrangements for these Es differ. One E retains 100% of the commissions from V. The other E retains 50% of the commissions from V, with the remaining 50% going to the Firm. As to the latter, the Staff Member represents that the 50% going to the Firm is used to defray business expenses. You state that the R has purchased two Cs through the Firm. You state that these Cs were purchased for W purposes. You further state that the source of funding for the two Cs included state money. You state that the E retained 100% of the commissions and the Firm did not profit from these two sales. Finally, you state that a constituent approached the Legislator for assistance in locating a suitable C for a D Institution. Not knowing that the Staff Member owned a B firm, the Legislator assigned the constituent's request to the Staff Member. The constituent has located and is interested in purchasing a C. The owner of the C has retained one of the Es employed by the Staff Member for representation in the transaction. A contract has not yet been signed, and no consideration has been exchanged in the sale of the C. Based upon the above facts, you pose the following five questions: 1. Whether the Staff Member is a "public employee" for purposes of the Ethics Act; 2. If the answer to the first question is in the affirmative, whether the above - described transaction presents a conflict of interest for the Staff Member under §1103(a) of the Ethics Act, 65 Pa.C.S. §1103(a); 3. Whether the above - described transaction would violate any other provision of the Ethics Act as it applies to the Legislator, who is a public official and employer; 4. What, if any, are the duties of the Legislator in this matter, as a public official and employer; and 5. Whether the answers to the above questions would change if the Es of the Firm or the Firm itself would not make any commission on transactions. 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 which the requester has submitted. In issuing the advisory based upon the facts which the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts which 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. It is further noted that, pursuant to Sections 1107(10) and (11) of the Ethics Act, 65 Pa.C.S. §1107(10), (11), an opinion /advice may given only as to prospective ( "future ") conduct. If the activity in question has already occurred, the Commission may not issue Confidential Advice, 01 -512 January 31, 2001 Page 3 an opinion /advice, but any person may then submit a signed and sworn complaint which will be investigated by the Commission if there are allegations of Ethics Act violations by a person who is subject to the Ethics Act. To the extent you have inquired as to conduct involving the R, such is past conduct which may not be addressed in the context of this Advice. However, to the extent you have inquired as to the Staff Member's activities involving the constituent's search for, and prospective purchase of, a C for a D Institution, future conduct may and shall be addressed. You have posed five questions, which shall be answered seriatim. The first and threshold issue is whether the Legislator's Staff Member would be considered a "public employee" subject to the restrictions of the Ethics Act. This issue hinges upon whether the Staff Member's duties and responsibilities would bring the Staff Member within the definition of "public employee" as set forth in the Ethics Act and Regulations of the State Ethics Commission. In the absence of a formal job description, this Advice is necessarily based solely upon your description of such duties and responsibilities. The Ethics Act defines the term "public employee" as follows: §1102. Definitions "Public employee." Any individual employed by the Commonwealth or a political subdivision who is responsible for taking or recommending official action of a nonministerial nature with regard to: 1 contracting or procurement; 2 administering or monitoring grants or subsidies; 3 planning or zoning; 4 inspecting, licensing, regulating or auditing any person; or (5) any other activity where the official action has an economic impact of greater than a de minimis nature on the interests of any person. The term shall not include individuals who are employed by this Commonwealth or any political subdivision thereof in teaching as distinguished from administrative duties. 65 Pa.C.S. §1102. The regulations of the State Ethics Commission similarly define the term "public employee" and set forth the following additional criteria: (ii) The following criteria will be used, in part, to determine whether an individual is within the definition of "public employe ": (A) The individual normally performs his responsibility in the field without onsite supervision. (B) The individual is the immediate supervisor of a person who normally performs his responsibility in the field without onsite supervision. (C) The individual is the supervisor of a highest level field office. Confidential Advice, 01 -512 January 31, 2001 Page 4 (D) The individual has the authority to make final decisions. (E) The individual has the authority to forward or stop recommendations from being sent to the person or body with the authority to make final decisions. (F) The individual prepares or supervises the preparation of final recommendations. (G) The individual makes final technical recommen- dations. (H) The individual's recommendations or actions are an inherent and recurring part of his position. (1) The individual's recommendations or actions affect organizations other than his own organization. (iii) The term does not include individuals who are employed by the Commonwealth or a political subdivision of the Commonwealth in teaching as distinguished from administrative duties. (iv) Persons in the following positions are generally considered public employes: (A) Executive and special directors or assistants reporting directly to the agency head or governing body. (B) Commonwealth bureau directors, division chiefs or heads of equivalent organization elements and other governmental body department heads. (C) Staff attorneys engaged in representing the department, agency or other governmental bodies. (D) Engineers, managers and secretary- treasurers acting as managers, police chiefs, chief clerks, chief purchasing agents, grant and contract managers, administrative officers, housing and building inspectors, investigators, auditors, sewer enforcement officers and zoning officers in all governmental bodies. (E) Court administrators, assistants for fiscal affairs and deputies for the minor judiciary. (F) School superintendents, assistant superinten- dents, school business managers and principals. (G) Persons who report directly to heads of executive, legislative and independent agencies, boards and commissions except clerical personnel. (v) Persons in the following positions are generally not considered public employes: Confidential Advice, 01 -512 January 31, 2001 Page 5 (A) City clerks, other clerical staff, road masters, secretaries, police officers, maintenance workers, construction workers, equipment operators and recreation directors. (B) Law clerks, court criers, court reporters, probation officers, security guards and writ servers. (C) School teachers and clerks of the schools. 51 Pa. Code §11.1. Status as a "public employee" subject to the Ethics Act is determined by applying the above definition and criteria to the position held. The focus is necessarily upon the position itself, and not upon the individual incumbent in the position, the variable functions of the position, or the manner in which a particular individual occupying the position may carry out those functions. See, Phillips v. State Ethics Commission, 470 A.2d 659 (Pa. Commw. Ct. 1984); and Mummau v. Ranck, 531 Fed. Supp. 402 (E.D. Pa. 1982). Furthermore, the Commonwealth Court of Pennsylvania has directed that coverage under the Ethics Act be construed broadly and that exclusions under the Ethics Act be construed narrowly. See, Phillips, supra. Based upon the above judicial directives, the provisions of the Ethics Act, the State Ethics Commission Regulations, and the opinions of the State Ethics Commission, in light of the Staff Member's duties and responsibilities as you have described them, the necessary conclusion is that the Staff Member is a "public employee" subject to the Ethics Act. Per the submitted facts, the Staff Member's primary responsibilities are to assist and advise the Legislator on H issues. The Staff Member makes recommendations to the Legislator. Additionally, the Legislator gives the Staff Member broad direction and parameters to work for I. The Staff Member acts much of the time on his /her own initiative and at his /her own discretion, while keeping the Legislator informed. The Staff Member's duties include working with community and business leaders and local and state government officials on all aspects of H and J projects. These activities have an economic impact of greater than a de minimis nature on the interests of many persons. The Staff Member is clearly a "public employee" subject to the Ethics Act. 65 Pa.C.S. §1102 ( "public employee, subparagraph (5)); 51 Pa. Code §11.1 ( "public employee," subparagraph (ii)). The remaining questions which you have posed shall now be addressed. Your second question is whether the proposed transaction involving the sale of C for a D Institution would present a conflict of interest for the Staff Member under §1103(a) of the Ethics Act. You are advised that it would, if all of the elements for a conflict of interest would be established. Section 1103(a) of the Ethics Act provides: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. §1103(a). The following terms pertaining to Section 1103(a) are defined in the Ethics Act as follows: Confidential Advice, 01 -512 January 31, 2001 Page 6 § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. 65 Pa.C.S. §1102. Section 1103(j) of the Ethics Act provides as follows: § 1103. Restricted activities (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 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. Confidential Advice, 01 -512 January 31, 2001 Page 7 65 Pa.C.S. §1103(j). In applying the above provisions of the Ethics Act to your second question, you are advised that Section 1103(a) of the Ethics Act does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may employee use the authority of his ublic position or confidential information obtained by being in that position for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89- 011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order No. 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order No. 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity, such as the review /selection of its bids or proposals, Gorman, Order No. 1041. If the private employer or business with which the public official /public employee is associated would have a matter pending before the governmental body, the public official /public employee would have a conflict of interest as to such matter. Miller, Opinion No. 89 -024. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j). The Firm is clearly a business with which the Staff Member is associated. Pursuant to Section 1103(a) of the Ethics Act, it would be a conflict of interest for the Staff Member to use the authority of his /her public position or confidential information received by being in that position for the private pecuniary benefit of the Staff Member or the Firm. Metrick, Order No. 1037. The Staff Member (an A) has already used the authority of his /her public position with regard to the search for C for the D Institution, and may also have received related confidential information by being in the public position. It remains to be seen whether the Staff Member will have used the authority of his public position or any such confidential information for a prohibited private pecuniary benefit. You state that one of the Es employed by the Staff Member has been retained to represent the owner of the chosen C in the transaction. Depending upon which E is involved, there may be a share of the commission flowing to the Firm. You are advised that the element of a private pecuniary benefit to the Staff Member or his Firm may be established by a share of the commission(s) from the sale of the property, even if such share is used to "defray business expenses." See, Freind, Order 800. Your third question is whether the proposed transaction would violate any other provision of the Ethics Act as it applies to the Legislator, who is both a "public official" subject to the Ethics Act and the employer of the Staff Member. You are advised that the Legislator would not be accountable under the Ethics Act for the submitted conduct of his employee. Furthermore, the submitted facts do not suggest a potential violation of the Ethics Act as to the Legislator. Similarly, in response to your fourth question, you are advised that the Ethics Act would not impose any duties upon the Legislator with regard to the submitted conduct of his employee. Your fifth and final question is whether the answers to the above questions would change if the Es of the Firm or the Firm itself would not make any commission on transactions. You are advised that the only answer which might be impacted by the lack of commissions would be the answer to your second question. However, the Commission may find a conflict of interest based upon an attempt to obtain a prohibited private pecuniary benefit. Taylor, Order 983. Confidential Advice, 01 -512 January 31, 2001 Page 8 It is parenthetically noted that Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the Legislative Code of Conduct. Conclusion: The Legislator and the legislative staff member ( "Staff Member ") about whom you have inquired would be a "public official" and a "public employee" respectively, and both would be subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 et seq. The B firm ( "Firm ") which the Staff Member owns is a business with which the Staff Member is associated. Pursuant to Section 1103(a) of the Ethics Act, it would be a conflict of interest for the Staff Member to use the authority of his /her public position or confidential information received by being in that position for the private pecuniary benefit of the Staff Member or the Firm. The Legislator would not be accountable under the Ethics Act for the submitted conduct of his employee. The Ethics Act would not impose any duties upon the Legislator with regard to the submitted conduct of his employee. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), 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 requestor 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 §13.20. 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, Vincent J. Dopko Chief Counsel