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HomeMy WebLinkAbout02-521 ConfidentialADVICE OF COUNSEL February 25, 2002 02 -521 Re: Conflict; Public Official /Employee; Board Member, Governmental Facility A Authority; Business With Which Associated; Governmental Relations /Lobbying Firm; Business Clients; Industrial Development Corporation B; Political Subdivision C; Commonwealth Funding; Expansion of Governmental Facility A. This responds to your letter of January 22, 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 Member of the Board of the G6vernmental Facility A Authority who, in his private capacity, is associated with a governmental relations and lobbying firm, with regard to contracting with Industrial Development Corporation B to provide lobbying and governmental relations services on behalf of Political Subdivision C in an effort to secure funding from the Commonwealth of Pennsylvania for the proposed expansion of Governmental Facility A. Facts: You seek an advisory from the State Ethics Commission on behalf of your client, Individual D. You have submitted facts which may be fairly summarized as follows. Individual D serves as a Member of the Board of the Governmental Facility A Authority ( "Authority "), which Authority was created pursuant to Act E, [cite]. The Authority exercises jurisdiction over Governmental Facility A located in Political Subdivision C. You acknowledge that as a Member of the Board of the Authority, Individual D is a public official subject to the Ethics Act. [Cite]. In Individual D's private capacity, he is President, CEO and sole shareholder of Firm F ( "Firm "), a private governmental relations and lobbying firm. The Firm has existing contractual business relationships with both Political Subdivision C and Industrial Development Corporation B, the latter of which is the official Agency G for Political Subdivision C. The Firm represents the interests of Political Subdivision C and Industrial Development Corporation B before the executive and legislative branches of the Commonwealth. Political Subdivision C and Industrial Development Corporation B have expressed a desire to expand Governmental Facility A so that it can accommodate Confidential Advice, 02 -521 February 25, 2002 Page 2 larger Hs. You state that such an expansion would serve the purposes of both Political Subdivision C and Industrial Development Corporation B by increasing the positive economic impact of Governmental Facility A's activities on various private commercial enterprises in Political Subdivision C. Industrial Development Corporation B is interested in contracting with the Firm to secure lobbying and governmental relations services directed to obtaining additional Commonwealth funding for Political Subdivision C's proposed expansion of Governmental Facility A. You state that such services would be on behalf of Political Subdivision C, but that the Firm would receive remuneration from Industrial Development Corporation B only. There would be no remuneration to the Firm by the Authority. You note that pursuant to Act E, Members of the Authority Board receive an established per diem plus expenses. Except for the Board Chairman, Members do not (and may not) receive additional compensation for extra service to the Authority. [Cite]. You further note that Act E includes a conflict of interest provision at [cite]. Finally, you note that Members of the Authority Board are subject to Act 1, [cite], as per [cite]. You contend that the above proposed arrangement would not be prohibited by the Ethics Act, Act E, or Act I. You submit the following arguments /points in support of your position: Regarding the contractual arrangement (1) For contractual purposes, the Authority is an independent body. It does not have the power to pledge the credit or taxing powers of any other public body, and its obligations are not subject to recourse as against Political Subdivision C or Industrial Development Corporation B. (2) The Authority will not be a party to the contract. Industrial Development Corporation B rather than the Authority will contract with the Firm for the aforesaid lobbying services. (3) As the contracting party, Industrial Development Corporation B will define the scope of the Firm's responsibilities and will be the source of its compensation. (4) The Firm will deal directly with Political Subdivision C and /or Industrial Development Corporation B in coordinating its efforts. (5) The services to be rendered by the Firm will not be services to the Authority. (6) The Authority has retained its own governmental relations representative to work on the Authority's behalf with respect to the proposed expansion of Governmental Facility A. Individual D has no affiliation with the aforesaid governmental relations representative retained by the Authority. Regarding any impact upon the Authority (7) The services to be rendered by the Firm will not involve representation before the Authority. Confidential Advice, 02 -521 February 25, 2002 Page 3 (8) There is no adverse interest between the Firm's proposed lobbying activities and Individual D's position with the Authority. To the extent the Firm's work would affect the Authority, it would confer a benefit upon the Authority, which benefit would be incidental to the goals of Political Subdivision C of: J. ( Regarding Individual D as a public official (10) The Firm's efforts in securing additional Commonwealth funding for the expansion of Governmental Facility A would not involve extra service by Individual D as an Authority Board Member. (11) You submit that Individual D would not have a conflict of interest because he has not engaged in any activity as an Authority Board Member that would have the effect of either (A) internally promoting the idea of engaging the Firm, or (B) using his position as an Authority Board Member to gain influence with Political Subdivision C or Industrial Development Corporation B to secure the proposed contract. (12) You state that Individual D's position as an Authority Board Member was not a factor in Political Subdivision C's or Industrial Development Corporation B's decision to use the Firm as its governmental relations representative in connection with the proposed expansion of Governmental Facility A. Rather, Industrial Development Corporation B has approached Individual D to perform these lobbying services based upon his /the Firm's reputation and standing in the field of lobbying and governmental relations work in Pennsylvania and based upon the Firm's prior lobbying efforts on behalf of Political Subdivision C and Industrial Development Corporation B in connection with the original construction of Governmental Facility A in [timeframe], prior to Individual D's affiliation with the Authority. Based upon the foregoing, you request an advisory addressing the proposed lobbying engagement described above. 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. It is further initially noted that the Commission, in the exercise of its jurisdiction under the Ethics Act, is limited to making determinations under the Ethics Act. In making such determinations, it is necessary at times to review other laws in order to properly apply the Ethics Act. However, it is beyond the scope of the Ethics Act and the function of the Commission to make determinations as to other state laws, regulations or Constitutions. Accordingly, this Advice is limited to addressing the proposed conduct under the Ethics Act. Confidential Advice, 02 -521 February 25, 2002 Page 4 As a Member of the Authority Board, Individual D is a public official subject to the provisions of the Ethics 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 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. 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 Confidential Advice, 02 -521 February 25, 2002 Page 5 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. 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. If a business with which the public official /public employee is associated or its client(s) would have matter(s) pending before the governmental body, the public official public employee would have a conflict of interest as to such matter(s). Miller, Opinion No. 89 -024; see also, Kannebecker, Opinion 92 -010. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation and satisfy the disclosure requirements of Section 1103(j) set forth above. Having established the above general principles, your inquiry shall now be addressed. Confidential Advice, 02 -521 February 25, 2002 Page 6 It is clear that the Firm is a business with which Individual D, as its President, CEO and sole shareholder, is associated. However, under the submitted facts: (1) the Firm will be contracting with Industrial Development Corporation B, not the Authority, as to the proposed lobbying services; (2) the Authority will have no involvement as to the contract; and (3) Individual D has neither had nor will have any involvement in his capacity as a public official as to the contract. Therefore, under the submitted facts, Section 1103(a) of the Ethics Act would not prohibit contracting between the Firm and Industrial Development Corporation B for the provision of lobbying and governmental relations services directed to securing additional Commonwealth funding for the proposed expansion by Political Subdivision C of Governmental Facility A. Pursuant to Section 1103(a) of the Ethics Act, Individual D would generally have a conflict of interest as to matters that would come before him in his capacity as an Authority Board Member that would financially impact himself, the Firm, or the Firm's client(s) including, but not limited to, Political Subdivision C and /or Industrial Development Corporation B. See, Miller, supra, Kannebecker, supra. In each instance of a conflict, Individual D would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. 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 Act Eor Act I. Conclusion: As a Member of the Board of the Governmental Facility A Authority ( "Authority "), Individual D is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Firm F ( "Firm ") is a business with which Individual D, as its President, CEO and sole shareholder, is associated. Under the submitted facts, Section 1103(a) of the Ethics Act would not prohibit contracting between the Firm and Industrial Development Corporation B for the provision of lobbying and governmental relations services directed to securing additional Commonwealth funding for the proposed expansion by Political Subdivision C of Governmental Facility A. Pursuant to Section 1103(a) of the Ethics Act, Individual D would generally have a conflict of interest as to matters that would come before him in his capacity as an Authority Board Member that would financially impact himself, the Firm, or the Firm's client(s) including, but not limited to, Political Subdivision C and /or Industrial Development Corporation B. In each instance of a conflict, Individual D would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. 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. Confidential Advice, 02 -521 February 25, 2002 Page 7 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