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HomeMy WebLinkAbout01-557 BlackDavid E. Black 300 Allenview Drive Mechanicsburg, PA 17055 Re: Former Public Official /Public Employee; Section 1103(g); Executive -Level State Employee; Section 1103(i); Chief Operating Officer of Team Pennsylvania; Department of Community and Economic Development; Team Pennsylvania Board; Business Calling Program; Team Pennsylvania Foundation; Economic Development Organization; Local Economic Development Assistance Program. Dear Mr. Black: ADVICE OF COUNSEL May 22, 2001 01 -557 This responds to your letter of April 23, 2001, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act ") presents any restrictions upon employment of a Chief Operating Officer of Team Pennsylvania following termination of service with the Department of Community and Economic Development. Facts: Since June 13, 2000, you have been employed by the Commonwealth as Chief Operating Officer ( "COO ") of Team Pennsylvania, a position that is funded through a line item in the Department of Community and Economic Development ( "DCED ") budget. As COO of Team Pennsylvania, you report directly to the Secretary of DCED. Your primary responsibilities include coordinating activities and meetings of the Team Pennsylvania Board; overseeing the Business Calling Program, which is also funded through the Team Pennsylvania line item in the DCED budget; and serving as the liaison to the Team Pennsylvania Foundation, a private 501(c)(3) corporation. The Team Pennsylvania Board, which is largely a vehicle for policy discussion, consists primarily of private sector members appointed by the Governor as well as seven cabinet secretaries. Occasionally, the Board Members are asked to bring their resources to bear in the recruitment of companies and jobs to Pennsylvania. You state that Team Pennsylvania was established because Pennsylvania has traditionally lagged behind other states in private sector involvement in state economic deals. You further state that when Team Pennsylvania asks for help from one of the private sector companies, the Team Pennsylvania staff or the Governor's Action Team will make the contact. The Business Calling Program is Pennsylvania's job retention program through which state funding from the Team Pennsylvania line item in the DCED budget is Black, 01 -557 May 22, 2001 Page 2 provided to regional organizations that work on a contractual basis to ensure that nearly 6,000 calls on current Pennsylvania companies are completed each year. A business call includes an extensive survey, through which the business caller gathers information from the company on issues such as workforce and business climate. The data is then entered into an internet database that is maintained by Team Pennsylvania. Questions or requests for assistance generated by such calls are forwarded to appropriate state agencies for review and action, if appropriate. As Liaison to the Team Pennsylvania Foundation, you serve as a link to state government for the Foundation. You state that although the Foundation has received grant funds from DCED, it relies largely upon private sector contributions. You further state that as Liaison, you regularly make policy suggestions to the Foundation, some, but not all, of which are accepted. Recently, you have been approached by a regional economic development organization to apply for the position of CEO and President. You state that the organization has a very comprehensive structure with several divisions, including economic development, regional team building, regional promotion, group medical insurance for small businesses, and other services for members. The economic development component has its own deputy director who reports to the President and CEO of the regional economic development organization. The economic development component currently works and will continue to work with companies to create jobs in the area by seeking assistance from DCED in the form of grants, loans and /or tax credits on behalf of specific companies. You state that some of these programs provide grants or loans to the regional organizations, which in turn, provide grants or loans to the companies without financially gaining themselves. You further state that the economic development component receives funding by a previously established formula from the Local Economic Development Assistance program contained in the DCED budget. You note that the economic development component of the regional economic development organization performs some of the business calls under the Business Calling Program through a subcontract with another multi- county regional organization that is under contract with Team Pennsylvania. You state that the funds received by the economic development corporation originate from the Team Pennsylvania line item in the DCED budget. You further state that the position you seek is neither supported by Commonwealth or DCED funding nor supported by DCED funds intended to help companies in the region. Given the foregoing facts, you ask what restrictions will apply to you should you pursue the position of CEO /President of the regional economic development organization. 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 requestor based upon the facts which the requestor has submitted. In issuing the advisory based upon the facts which the requestor 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 requestor 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 requestor has truthfully disclosed all of the material facts. As Chief Operating Officer of Team Pennsylvania for the Department of Community and Economic Development ( "DCED "), you would be considered a public official /public employee and an "executive -level State employee" subject to the Ethics Act and the Regulations of the State Ethics Commission. See, 65 Pa.C.S. §1102; 51 Pa.Code §11.1. Black, 01 -557 May 22, 2001 Page 3 Consequently, upon termination of public service, you would become a former public employee and a former executive -level State employee subject to the restrictions of Section 1103(g) and Section 1103(i) of the Ethics Act. Section 1103(i) restricts former executive -level State employees as follows: $1103. Restricted activities. (i) Former executive -level employee. - -No former executive -level State employee may for a period of two years from the time that he terminates employment with this Commonwealth be employed by, receive compensation from, assist or act in a representative capacity for a business or corporation that he actively participated in recruiting to this Commonwealth or that he actively participated in inducing to open a new plant, facility or branch in this Commonwealth or that he actively participated in inducing to expand an existent plant or facility within this Commonwealth, provided that the above prohibition shall be invoked only when the recruitment or inducement is accomplished by a grant or loan of money or a promise of a grant or loan of money from the Commonwealth to the business or corporation recruited or induced to expand. 65 Pa.C.S. §1103(i). Section 1103(i) restricts the ability of a former executive -level State employee to accept employment or otherwise engage in business relationships following termination of State service, under certain narrow conditions. The restrictions of Section 1103(i) apply even where the business relationship is indirect, such as where the business in question is a client of the new employer, rather than the new employer itself. See, Confidential Opinion No. 94 -011. However, Section 1103(i) would not restrict you from being employed by, receiving compensation from, assisting, or acting in a representative capacity for a regional economic development organization provided and conditioned upon the assumptions that you did not actively participate in recruiting such organization to Pennsylvania, and that you did not actively participate in recruiting or inducing such organization to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania to such organization. Unlike Section 1103(i), Section 1103(g) does not prohibit a former public official /public employee from accepting a position of employment. However, it does restrict the former public official /public employee with regard to "representing" a "person" before the governmental body with which he has been associated ": $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 governmental body with which he has been associated for one year after he leaves that body. 65 Pa.C.S. §1103(g) (Emphasis added). The terms "represent," "person," and "governmental body with which a public official or public employee is or has been associated" are specifically defined in the Ethics Act as follows: Black, 01 -557 May 22, 2001 Page 4 $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. The term "Person" is very broadly defined. It includes, inter alia, corporations and other businesses. It also includes the former public employee himself, Confidential Opinion 93 -005, as well as a new governmental employer. Ledebur, Opinion 95 -007. The term "representation" is also broadly defined to prohibit acting on behalf of any person in any activity. Examples of prohibited representation include: (1) personal appearances before the former governmental body or bodies; (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; and (5) lobbying. Popovich, Opinion 89 -005. Listing one's name as the person who will provide technical assistance on a proposal, document, or bid, if submitted to or reviewed by the former governmental body, constitutes an attempt to influence the former governmental body. Section 1103(g) also generally prohibits 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 that existed prior to termination of public service, Shay, Opinion 91 -012. However, if such a pre - existing contract does not involve the unit where the former public employee worked, the name of the former public employee may appear on routine invoices if required by the regulations of the agency to which the billing is being submitted. Abrams/Webster, Opinion 95 -011. A former public official /public employee may assist in the preparation of any documents presented to his former governmental body. However, the ublic official /public employee may not be identified on documents submitted to the former governmental body. The public official /public employee may also counsel any person regarding that person's appearance before his former governmental body. Once again, however, the activity in this respect should not be revealed to the former governmental body. The Ethics Act would not prohibit or preclude making general informational inquiries to the former governmental body to secure information which is available to the general public, but this must not be done in an effort to indirectly influence the former governmental body or to otherwise make known to that body the representation of, or work for the new employer. Black, 01 -557 May 22, 2001 Page 5 Section 1103(g) only restricts the former public official /public employee with regard to representation before his former governmental body. The former public official /public employee is not restricted as to representation before other agencies or entities. However, the "governmental body with which a public official /public employee is or has been associated" is not limited to the particular subdivision of the agency or other governmental body where the public official /employee had influence or control but extends to the entire body. See, Legislative Journal of House, 1989 Session, No. 15 at 290, 291; Sirolli, Opinion No. 90 -006; Sharp, Opinion 90- 009 -R. The governmental body with which you would be associated upon termination of public service would be DCED in its entirety. Therefore, for the first year after termination of your service with Team Pennsylvania, Section 1103) of the Ethics Act would apply and restrict "representation" of "persons" before the DCED. Having set forth all of the above restrictions, it is clear that although the Ethics Act would not preclude you from accepting employment with the regional economic development organization, you could not represent the organization before DCED. You state that the economic development component of the organization seeks financial assistance from DCED on behalf of specific companies. In performing such work for the regional economic development organization, you could not have any prohibited contacts as to DCED and no written materials containing your name could be submitted to DCED except within the narrow and limited circumstances permitted by Webster, supra, as set forth above. Based upon the facts which have been submitted, this Advice has addressed the applicability of Sections 1103(g) and 1103(i) only. It is expressly assumed that there has been no use of authority of office for a private pecuniary benefit as rohibited by Section 1103(a) of the Ethics Act. Further, you are advised that Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /employee 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. Lastly, 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: As Chief Operating Officer of Team Pennsylvania for the Department of Community and Economic Development ( "DCED "), you would become a former public official /public employee and a former executive -level State employee subject to the restrictions of Section 1103(g) and Section 1103(i) of the Public Official and Employee Ethics Act ( "Ethics Act "), Act 93 of 1998, Chapter 11. Under Section 1103(i) of the Ethics Act, you would not be prohibited from being employed by, receiving compensation from, assisting, or acting in a representative capacity for a regional economic development organization based upon the assumptions that you did not actively participate in recruiting such organization to Pennsylvania, and that you did not actively participate in recruiting or inducing such organization to open or expand a plant, facility, or branch in Pennsylvania through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania. With regard to Section 1103(g), the restrictions as outlined above must be followed. The former governmental body would be the DCED in its entirety. The propriety of the proposed conduct has only been addressed under the Ethics Act. Further, should service be terminated, as outlined above, the Ethics Act would require that a Statement of Financial Interests be filed by no later than May 1 of the year after termination of service. Black, 01 -557 May 22, 2001 Page 6 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 §13.2(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, Vincent J. Dopko Chief Counsel