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HomeMy WebLinkAbout02-560 FotovichMichael B. Kaleugher, Solicitor Collier Township Municipal Authority 2418 Hilltop Road Presto, PA 15142 ADVICE OF COUNSEL May 21, 2002 02 -560 Re: Conflict; Public Official /Employee; Board Member; Municipal Sanitary Sewer Authority; Business With Which Associated; Bidding; Contracts. Dear Mr. Kaleugher: This responds to your letter of April 18, 2002, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., presents any prohibition or restrictions upon a municipal sanitary sewer authority board member as to: (1) performing work for the authority as a low bidder on public bids or on low bid proposals sought by the authority; and (2) performing work for property owners on private property pursuant to private contracts between the authority board member and the property owners for the installation or repair of house lateral lines that will connect into the authority's lines. Facts: As Solicitor to the Collier Township Municipal Authority ( "Authority "), you swan advisory on behalf of Dan Fotovich ( "Fotovich "), an Authority Board member. The Authority is a sanitary sewer authority whose members are appointed by the Township of Collier ( "Township "). Fotovich was recently appointed to the Authority for a five -year term. Fotovich is a resident of the Township, is self - employed, and is in the excavation business. Prior to Fotovich's appointment to the Authority, he would periodically perform both bid and proposal work for the Authority. The jobs were relatively small and would involve line extensions or other general work needed by the Authority. In addition, Fotovich would individually contract with various property owners to install house laterals to connect into the Authority public lines. The property owners would pay Fotovich directly for this service, which did not and would not involve any line or lines being accepted by the Authority. Kaleugher- Fotovich 02 -560 May21, 2002 Page 2 You pose the following specific inquiries. 1. Whether Fotovich may continue to perform work for the Authority either as a low bidder on public bids or on low bid proposals sought by the Authority. You further ask whether the Authority may continue to solicit proposals for small projects and award the projects to the lowest bidder in accordance with state law. 2. Whether Fotovich may continue to perform work for various property owners pursuant to agreements between Fotovich and the property owners for the installation or repair of house lateral lines that will connect into the Authority's lines, where: (1) the agreements would in no way involve the Authority, and the work would be performed for private individuals on private property pursuant to such agreements; and (2) the connection of these private lines would be to public lines of the Authority. You state that any person has the unconditional right to connect into public sewage, provided they meet the necessary Rules and Regulations of the Municipal Authority, which Rules and Regulations are uniform throughout the area. 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 a Board Member of the Collier Township Municipal Authority ( "Authority "), Dan Fotovich ( "Fotovich ") is a public official as that term is defined in the Ethics Act, and hence Fotovich is 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 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 Kaleugher- Fotovich 02 -560 May21, 2002 Page 3 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, 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. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. "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 body with which the public official or public employee is Kaleugher- Fotovich 02 -560 May21, 2002 Page 4 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 body of a political subdivision, where one member has Kaleugher- Fotovich 02 -560 May21, 2002 Page 5 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 pubic 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 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) set forth above. In the instant matter, it is clear the excavating business by which Fotovich is employed is a business with which Fotovich is associated. It is also clear that business relationships would exist between Fotovich and those private property owners with whom Fotovich would contract to install house laterals for connection to Authority owned lines. Pursuant to Section 1103(a) of the Ethics Act, as an Authority Board Member, Fotovich would generally have a conflict of interest as to matters that would financially impact himself, his excavating business, or clients /customers of his excavating business. In each instance of a conflict, Fotovich would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. Your two specific questions shall now be addressed. As to your first question, it is initially noted that the governmental body with which Fotovich would be associated would be the Collier Township Municipal Authority. Accordingly, any contract between Fotovich and the Authority, if over $500, would be subject to the restrictions of Section 1103(f). Further, as an Authority Board Member, Kaleugher- Fotovich 02 -560 May21, 2002 Page 6 Fotovich would have a conflict under Section 1103(a) of the Ethics Act and could not participate as to matters pertaining to any contract he would have with the Authority. Further, in each instance of a conflict, Fotovich would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. Parenthetically, although the contracting in question would not be prohibited under the Ethics Act provided the requirements of Sections 1103(a), 1103(f), and 1103(j) are satisfied, a problem may exist as to such contracting under the Municipality Authorities Act, assuming the Collier Township Municipal Authority was created pursuant to that Act. In the instant situation, the Municipality Authorities Act provides as follows: §5614. Competition in award of contracts (e) Conflict of interest.— No member of the authority or officer or employee of the authority may directly or indirectly be a party to or be interested in any contract or agreement with the authority if the contract or agreement establishes liability against or indebtedness of the authority. Any contract or agreement made in violation of this subsection is void, and no action may be maintained on the agreement against the authority.... 53 Pa.C.S. § 5614. Since such contracting may be prohibited by the above quoted provision of the Municipality Authorities Act, and since the State Ethics Commission does not administer or enforce that Act, it is suggested that you seek legal advice in that regard. As to your question regarding the Authority's bidding process, such is beyond the jurisdiction of the State Ethics Commission and cannot be addressed in this advisory. With regard to the your second question, as noted above, the Ethics Act would not prohibit Fotovich from engaging in private business activities. However, Fotovich would be prohibited from using the authority of his public position as an Authority Board Member or confidential information for the advancement of his own private pecuniary benefit, that of his excavating business or his business client(s). 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 respective municipal code. Conclusion: As a Board Member for the Collier Township Municipal Authority ( "Authority "), Fotovich 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. The excavating business by which Fotovich is employed is a business with which Fotovich is associated. Pursuant to Section 1103(a) of the Ethics Act, as an Authority Board Member, Fotovich would generally have a conflict of interest as to matters that would financially impact himself, his excavating business, or clients /customers of his excavating business. In each instance of a conflict, Fotovich would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. Kaleugher- Fotovich 02 -560 May21, 2002 Page 7 Within the parameters of Sections 1103(a), 1103(j), and 1103(f) and subject to the conditions, restrictions, and qualifications set forth above, the Ethics Act would not prohibit Fotovich, an Authority Board Member, from performing work for the Authority either as a low bidder on public bids or on low bid proposals sought by the Authority. Fotovich would have a conflict in such matters, could not participate, and would be required to observe the disclosure requirements of Section 11030) of the Ethics Act. However, since contracting with the Authority may be prohibited by the Municipality Authorities Act, it is suggested that Fotovich seek legal advice in that regard. As to whether Fotovich may continue to perform work for various property owners pursuant to agreements between Fotovich and the property owners for the installation or repair of house lateral lines that will connect into the Authority's lines, as noted above, the Ethics Act would not prohibit Fotovich from engaging in private business activities. However, as an Authority Board Member, Fotovich would have a conflict as to matters before the Authority involving his business and /or business clients. In each instance of a conflict, Fotovich would be required to abstain and observe 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. 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