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HomeMy WebLinkAbout02-516 PerrottaLouis M. Perrotta, Esquire Cilli & Perrotta, P.C. 229 S. Jefferson St., Suite 203 New Castle, PA 16101 Dear Mr. Perrotta: ADVICE OF COUNSEL February 13, 2002 02 -516 Re: Conflict; Public Official /Employee; City; Mayor; Council Member; Business With Which Associated; Business Relationship; Contract; Vote. This responds to your letter of January 9, 2002, by which you requested 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 city mayor or council member from conducting business with public or private entities through a sole proprietorship owned by the mayor or council member. Facts: You represent Nick Maiorano ( "Maiorano "), who may seek the position of Mayor or Council Member of the City of New Castle ( "City "), a third class city. For the past eight years, Maiorano has been the owner and operator of AAA Fire Protection Company ("AAA "), a sole proprietorship located in the City. Maiorano sells and services fire protection services equipment through AAA. AAA provides fire protection installation and fire extinguisher services primarily on an annual basis, although it does provide immediate services when necessary. AAA does not maintain written sales contracts or service agreements. Since 1992, Maiorano and AAA have serviced accounts for the City's Fire Department, Department of Parks and Recreation, and Public Works Department, and the New Castle Transit Authority, New Castle Area School District ( "School District "), CSX Railroad, and Columbia Gas. The Fire Department, Department of Parks and Recreation, and Public Works Department are all directly supervised by City employees. With regard to the New Castle Transit Authority ( "Authority "), you proffer the following facts. The Authority is a municipal corporation sponsored by the City and supervised by an autonomous Board of Directors. The Authority's daily activities are supervised by a general manager. The City's Mayor appoints the members of the Perrotta /Maiorano, 02 -516 February 13, 2002 Page 2 Board with the approval of City Council. The City provides financial support to the Authority. You state that the School District is a separate entity from the City. In addition, you state that CSX Railroad and Columbia Gas are independent organizations that are neither controlled nor sponsored by the City. You pose the following questions based upon the assumption that Maiorano would win the election for Mayor or Council Member of the City. 1. Whether Maiorano would have a conflict of interest if he would continue to service the accounts of CSX Railroad, Columbia Gas, the Authority, and the School District through AAA; 2. Whether Maiorano would be permitted to conduct business in the City through AAA with CSX Railroad, Columbia Gas, and the School District given that AAA does not have written contracts with the foregoing entities, which are free to solicit business from other fire protection companies, and CSX Railroad and Columbia Gas do conduct business within the City; and 3. If Maiorano would have a conflict of interest in conducting business with CSX Railroad, Columbia Gas, and the Authority, whether it would be enough of a precaution for Maiorano to abstain from voting on issues regarding those entities. 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. Assuming Maiorano would win the election for Mayor or City Council Member for the City of New Castle, he would be a "public official" as that term is defined in the Ethics Act, and hence would be subject to the provisions of that Act. 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 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 Perrotta /Maiorano, 02 -516 February 13, 2002 Page 3 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." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "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. "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. In addition, 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. Section 1103(f) of the Ethics Act 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 Perrotta /Maiorano, 02 -516 February 13, 2002 Page 4 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). Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Pursuant to Section 1103(f), an "open and public process" includes: (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered; and (4) public disclosure of the contract awarded and offered and accepted. Section 1103(f) of the Ethics Act also requires that the public official /employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. 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 Perrotta /Maiorano, 02 -516 February 13, 2002 Page 5 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(j). In each instance of a conflict, Section 1103(j) requires the public official /employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes or supervisor. In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. In applying the above provisions of the Ethics Act to your inquiry, 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 not use the authority of his public 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. It is clear that AAA Fire Protection Company ( "AAA ") is a business with which Maiorano, as its owner, is associated. Therefore, pursuant to Section 1103(a) of the Ethics Act, Maiorano would have a conflict of interest as to matters that would come before him in his capacity as Mayor or Council Member that would financially impact himself or AAA. Further, given that since 1992, Maiorano /AAA has serviced the accounts of certain entities including the Authority, the School District, CSX Railroad, and Columbia Gas, a business relationship would exist between Maiorano /AAA and the Authority, the School District, CSX Railroad, and Columbia Gas. Thus, Maiorano would also have a conflict of interest as to matters involving those entities. See, Snyder v. State Ethics Commission, 686 A.2d 843 (Pa. Commw. 1996). In each instance of a conflict, Maiorano would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. Having established the above general principles, your specific inquiries shall now be addressed. As to your first question, the Ethics Act would not prohibit Maiorano /AAA from servicing the accounts of CSX Railroad, Columbia Gas, the Authority, or the School District while serving as Mayor or Council Member, provided that there would be no use by Maiorano of the authority of his office as Mayor or Council Member or confidential information for a private pecuniary benefit of himself, AAA, or CSX Railroad, Columbia Gas, the Authority, or the School District. Perrotta /Maiorano, 02 -516 February 13, 2002 Page 6 With regard to your second question, the Ethics Act would not prohibit Maiorano /AAA from conducting business in the City, particularly with CSX Railroad, Columbia Gas, and the School District, while serving as Mayor or Council Member of the City. However, as noted above, Section 1103(a) of the Ethics Act would prohibit Maiorano from using the authority of his public position or confidential information obtained by being in that position for the advancement of his own private pecuniary benefit, AAA, or CSX Railroad, Columbia Gas, or the School District. In response to your third question, pursuant to Section 1103(a) of the Ethics Act, Maiorano would have a conflict of interest as to matters before him as Mayor or Council Member that would financially impact himself, AAA, or any entity with which he /AAA would have a business relationship, including CSX Railroad, Columbia Gas, or the Authority. In each instance of a conflict, Maiorano would be required to abstain and to observe the disclosure requirements of Section 1103(j) of the Ethics Act. The abstention requirement not only would prohibit Maiorano from voting, but would also prohibit him from engaging in other uses of authority of office, including, but not limited to, discussing, conferring with others, or lobbying for a particular result. See, Juliante, Order 809. Finally, it is noted that Maiorano /AAA has also serviced accounts for the City of New Castle Fire Department, City of New Castle Department of Parks and Recreation, and City of New Castle Department of Public Works. As to any contract Maiorano /AAA would have with the City valued at $500 or more, such would not be prohibited under the Ethics Act provided the requirements of Sections 1103(a), 1103(f) and 1103(1) are satisfied. However, a problem may exist as to such contracting under the Third Class City Code. In this regard, it is suggested that Maiorano seek legal advice as to the applicability of that code. 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: Assuming Nick Maiorano ( "Maiorano ") would win the election for Mayor or City Council Member for the City of New Castle, he would be a "public official" subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. AAA Fire Protection Company ("AAA") is a business with which Maiorano, as its owner, is associated. Pursuant to Section 1103(a) of the Ethics Act, Maiorano would have a conflict of interest as to matters that would come before him in his capacity as Mayor or Council Member that would financially impact himself or AAA. Maiorano would also have a conflict of interest as to matters involving any entity with which he /AAA would have a business relationship, including the New Castle Transit Authority ( "Authority "), the New Castle Area School District ( "School District "), CSX Railroad, and Columbia Gas. Although the Ethics Act would not prohibit Maiorano from servicing the accounts of or conducting business with the Authority, the School District, CSX Railroad, or Columbia Gas, Section 1103(a) of the Ethics Act would prohibit Maiorano from using the authority of his public position or confidential information obtained by being in that position for the advancement of his own private pecuniary benefit, AAA, or the Authority, the School District, CSX Railroad, or Columbia Gas. In each instance of a conflict, Maiorano would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. As to any contract Maiorano /AAA would have with the City valued at $500 or more, such would not be prohibited under the Ethics Act provided the requirements of Sections 1103(a), 1103(f) and 1103(] ) are satisfied. However, a problem may exist as to such contracting under the Third Class City Code. In this regard, it is suggested that Maiorano seek legal advice as to the applicability of that code. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Perrotta /Maiorano, 02 -516 February 13, 2002 Page 7 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