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HomeMy WebLinkAbout00-1005 BeatyOPINION OF THE COMMISSION Patrick T. Beaty, Esquire Saul, Ewing, Remick & Saul, LLP Penn National Insurance Tower 2 North Second Street, 7th Floor Harrisburg, PA 17101 1999. I. ISSUE: Before: Daneen E. Reese, Chair Austin M. Lee, Vice Chair Julius Uehlein Louis W. Fryman John J. Bolger Frank M. Brown Susan Mosites Bicket DATE DECIDED: 2/1/2000 DATE MAILED: 2/11/2000 II. FACTUAL BASIS FOR DETERMINATION: 00 -1005 Re: Lobbying, Principal, Lobbyist, Pennsylvania Local Government Investment Trust, Common Law Trust, Political Subdivision, Exempt. Dear Mr. Beaty: This Opinion is issued in response to your advisory request received on December 6, Whether a Pennsylvania common law trust established by Pennsylvania local government entities to provide investment and cash management services to such entities, is a "political subdivision' of the Commonwealth of Pennsylvania so as to be exempt from the registration and reporting requirements of the Lobbying Disclosure Act. On behalf of the Pennsylvania Local Government Investment Trust (PLGIT) and its approximately 2400 local governmental members, you request an advisory from this Commission under the Lobbying Disclosure Act (Act). You seek a determination that PLGIT is exempt from the registration and reporting requirements of the Act. In our request letter and in a supplemental letter dated January 5, 2000, you submitted the following facts and arguments in support of your request. Beaty, 00 -1005 Page 2 PLGIT is a Pennsylvania common law trust established by municipalities, school districts, authorities and other local government entities across the Commonwealth of Pennsylvania. PLGIT was created in 1980 under the authority of the Intergovernmental Cooperation Act of 1971, as amended (53 Pa.C.S. §2301 et seq.) for the purpose of providing investment and cash management services to its members, all of which are Pennsylvania local governmental entities. As of September 30, 1999, PLGIT had 2,407 members, including 442 school districts, 25 intermediate units, 42 vocational schools, 43 counties, 40 cities, 501 boroughs, 63 first class townships, 691 second class townships, 385 authorities and 175 other governmental entities such as councils of government and regional commissions. Pursuant to the Intergovernmental Cooperation Act and other applicable Pennsylvania statutes, governmental entities join PLGIT by adopting an ordinance or resolution specifically authorizing membership in PLGIT. PLGIT is governed by a Board of Trustees consisting of eleven local government officials elected annually by the entire membership. You quote the following provision from the Intergovernmental Cooperation Act: §2304. Intergovernmental cooperation A municipality by act of its governing body may ... cooperate or agree in the exercise of any function, power or responsibility with, or delegate or transfer any function, power or responsibility to, one or more other local governments, the Federal Government or any other state or its government. 53 Pa.C.S. §2304. Further, you quote the definition of "local government" under the Intergovernmental Cooperation Act, which includes the following entities: §2302. Definitions "Local government." A county, city of the second class, second class A and third class, borough, incorporated town, township, school district or any other similar general purpose unit of government created by the General Assembly after July 12, 1972. 53 Pa.C.S. §2302. You state that it is clear that the investment of public moneys is a "function, power or responsibility" of governmental entities, and that each of the Codes and Acts applicable to counties, cities, boroughs, townships, school districts and authorities contains specific provisions requiring that public funds be invested in certain ways and authorizing joint investing with other local government entities. To illustrate your point, you quote the following provisions from the Second Class Township Code: §68204. Investment of township funds (c) The board of supervisors shall provide for an investment program subject to restrictions contained in this act and in any Beaty, 00 -1005 Page 3 other applicable statute and any rules and regulations adopted by the board of supervisors. (e) In making investments of township funds, the board of supervisors may: (3) Join with one or more other municipal corporations, municipality authorities or school districts under the act of July 12, 1972 (P.L. 762, No. 180), referred to as the Intergovernmental Cooperation Law, in the purchase of a single investment if the requirements of paragraph (2) on separate accounting of individual funds and separate computation, recording and crediting of the earnings therefrom are adhered to. 53 P.S. §68204 (c), (e)(3). You state that the following provisions of law detail the permissible investments for various local government entities: Townships of the First Class - 53 P.S. §56705.1; Townships of the Second Class - 53 P.S. §68204; Boroughs - 53 P.S. §46316; School Districts - 24 P.S. §4- 440.1; Municipal Authorities - 53 P.S. §309.1; Cities of the Second Class - 53 P.S. §5410; Cities of the Third Class - 53 P.S. §36804.1; Counties of the Second Class and Second Class A - 16 P.S. §4964; Counties of the Third through Eighth Classes - 16 P.S. §1706; and Municipal Authorities - 53 P.S. §309.1. Finally, you quote the definition of "political subdivision" as set forth in the Pennsylvania Public Official and Employee Ethics Act (Ethics Act): "Political subdivision." Any county, city, borough, incorporated town, township, school district, vocational school, county institution district, and any authority, entity or body organized by the aforementioned. 65 Pa.C.S. §1102 (Emphasis added). Because PLGIT is an entity formed by Pennsylvania local governmental entities to act as their combined instrumentality in performing a statutorily mandated government function, you believe it falls within the definition of a "political subdivision" for purposes of the Act. As further evidence that PLGIT operates as a political subdivision, you state that PLGIT's Board of Trustees advertises and conducts its meetings in accordance with the Pennsylvania Sunshine Act, and the Trustees file annual statements of financial interests with PLGIT pursuant to the Ethics Act. You state that in at least four prior Opinions, 99 -1012, 99 -1013, 99 -1015, and 99- 1016, this Commission has concluded that the General Assembly did not intend to include political subdivisions within the definition of a "principal" under the Act . Therefore, on behalf of PLGIT and its approximately 2400 local governmental members, you seek a determination that PLGIT is exempt from the registration and reporting requirements of the Act. You have submitted copies of the following documents, which documents are incorporated herein by reference: (1) Declaration of Trust of PLGIT dated as of February 1, 1981, as amended as of May 19, 1989; (2) Information Statement dated July 1, 1998; and (3) By -laws of PLGIT dated as of November 6, 1998. Per the Declaration of Trust, the initial settlors of PLGIT were the Borough of Chambersburg and the Borough of Emmaus. Article X, Beaty, 00 -1005 Page 4 Section 10.3 of the Declaration of Trust provides the mechanism by which other municipal entities may also become settlors of PLGIT: Section 10.3. Adoption by Pennsylvania Municipal Entities. A municipal entity of the Commonwealth of Pennsylvania may become a Settlor of this Trust by taking appropriate corporation action to adopt this Declaration of Trust and furnishing the Trust with satisfactory evidence that such corporate action has been taken. A copy of this Declaration of Trust may be adopted through incorporation by reference into the ordinance or resolution of such municipal entity, and a certified copy of such ordinance or resolution shall constitute satisfactory evidence of adoption contemplated by this Section. Id. Per the Declaration of Trust and the By -laws, all Shareholders of PLGIT must be Pennsylvania municipal entities. By letter dated January 11, 2000, you were notified of the date, time, and location of the public meeting at which your request for an Opinion was to be considered. At the public meeting on February 1, 2000, the Managing Director with Public Financial Management and Assistant Treasurer for PLGIT and you, as Counsel, appeared and restated the facts and arguments in your submission which may be fairly summarized as follows. After restating the particulars concerning the establishment, structure and purpose of PLGIT, you note that PLGIT is currently registered as a principal and you are registered as its lobbyist. Because PLGIT was created by municipalities, you believe it qualifies as a political subdivision so as to be exempt from the registration and reporting requirements of the Act, citing Franklin - Suber, Opinion 99 -1012; Veraldi, Opinion 99 -1013; Bowers, Opinion 99 -1015; and Ever, Opinion 99 -1016. III. DISCUSSION: It is initially noted that pursuant to Section 1308(c) of the Act in conjunction with Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. § §1107(10), (11), advisories are issued tote requestor 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, in issuing advisories. It is the burden of the requestor to truthfully disclose all of the material facts relevant to the inquiry. An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. In order to decide the issues which you have raised, this Commission must review the pertinent definitions and substantive provisions of the Act and related Regulations. Section 1303 of the Act defines "lobbying" as follows: "Lobbying." An effort to influence legislative action or administrative action. The term includes: (1) providing any gift, entertainment, meal, transportation or lodging to a State official or employee for the purpose of advancing the interest of the lobbyist or principal; and (2) direct or indirect communication. Beaty, 00 -1005 Page 5 65 Pa.C.S. §1303. The key terms "legislative action," "administrative action," "direct communication," and "indirect communication' that are within the definition of "lobbying" are themselves defined as follows: 65 Pa.C.S. §1303. "Legislative action." An action taken by a State official or employee involving the preparation, research, drafting, introduction, consideration, modification, amendment, approval, passage, enactment, tabling, postponement, defeat or rejection of legislation; legislative motions; overriding or sustaining a veto by the Governor; or confirmation of appointments by the Governor or of appointments to public boards or commissions by a member of the General Assembly. "Administrative action." Any of the following: (1) An agency's: (i) proposal, consideration, promulgation or rescission of a regulation; (ii) development or modification of a guideline or a statement of policy; or (iii) approval or rejection of a regulation. (2) The review, revision, approval or disapproval of a regulation under the act of June 25, 1982 (P. L.633, No.181), known as the Regulatory Review Act. (3) The Governor's approval or veto of legislation. (4) The nomination or appointment of an individual as an officer or employee of the Commonwealth. (5) The proposal, consideration, promulgation or rescission of an executive order. "Direct communication." An effort, whether written, oral or by any other medium, made by a lobbyist or principal, directed to a State official or employee, the purpose or foreseeable effect of which is to influence legislative action or administrative action. "Indirect communication." An effort, whether written, oral or by any other medium, to encourage others, including the general public, to take action, the purpose or foreseeable effect of which is to directly influence legislative action or administrative action. The term includes letter- writing campaigns, mailings, telephone banks, print and electronic media advertising, billboards, publications and educational campaigns on public issues. The term does not include regularly published periodic newsletters primarily designed for and distributed to members of a bona fide association or charitable or fraternal nonprofit corporation. Beaty, 00 -1005 Page 6 Id. The terms "principal" and "lobbyist" are defined in the statute as follows: "Principal." Any individual, firm, association, corporation, partnership, business trust or business entity: (1) on whose behalf a lobbyist influences or attempts to influence an administrative action or a legislative action; or In applying the above provisions of law to the facts which you have submitted, we must determine whether PLGIT is exempt from the registration and reporting requirements of the Act as a political subdivision of the Commonwealth of Pennsylvania. The Lobbying Disclosure Regulations define "political subdivision" as it is defined in section 1102 of the Ethics Act, quoted above (see, 51 Pa. Code §31.1). Factually, PLGIT was organized initially by two settlors, the Borough of Chambersburg and the Borough of Emmaus. Per the Declaration of Trust quoted above, other municipal entities may also become settlors of PLGIT, but all Shareholders of PLGIT must be Pennsylvania municipal entities. Therefore, through a straightforward application of the definition of "political subdivision," PLGIT is a political subdivision, because it is an entity organized by other of the political subdivisions enumerated within that definition. Political subdivisions of the Commonwealth are not "principals" under the Act. See, Bowers, Opinion 99 -1015 (SEPTA); Veraldi, Opinion 99 -1013 (The Port Authority of Allegheny County); Franklin - Suber, Opinion 99 -1012 (City of Philadelphia). Additionally, we now hold, for the same reasons cited in the above opinions, that political subdivisions are not "lobbyists" under the Act. Therefore, PLGIT is neither a principal nor a lobbyist, and it is exempt from the registration and reporting requirements of the Act. You have correctly concluded that as a political subdivision, the PLGIT trustees are "public officials" subject to, inter alia, the restrictions and requirements of the Ethics Act. Further, as to PLGIT, any others besides the trustees who would fall within the definitions of "public official" and "public employee" as set forth in the Ethics Act would be subject to the provisions of that Act. The propriety of the proposed conduct has only been addressed under the Act and derivatively the Ethics Act to the extent applicable; the applicability of any other statute, code, ordinance, regulation or other code of conduct has not been considered in that they do not involve an interpretation of the Act. IV. CONCLUSION: (2) that engages in lobbying on the principal's own behalf. "Lobbyist." Any individual, firm, association, corporation, partnership, business trust or business entity that engages in lobbying on behalf of a principal for economic consideration. The term includes an attorney who engages in lobbying. Beaty, 00 -1005 Page 7 A Pennsylvania common law trust established by Pennsylvania local government entities to provide investment and cash management services to such entities is a "political subdivision" of the Commonwealth of Pennsylvania and is therefore exempt from the registration and reporting requirements of the Lobbying Disclosure Act. A political subdivision is neither a "principal" nor a 'lobbyist" under the Act. Pursuant to Section 1308 of the Act, a requestor who truthfully discloses all material facts in a request for an advisory and who acts in good faith based upon a written opinion of the Commission issued to the requestor shall not be held liable for a violation of the Act. This Opinion is a public record and will be made available as such. Finally, a party may request this Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The party requesting reconsideration must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code §39.1. By the Commission, Daneen E. Reese Chair