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HomeMy WebLinkAbout96-593 BergerJeffrey J. Crossland, Esquire PO Box 352 129 Market Street Lewisburg, PA 17837 Dear Mr. Crossland: STATE ETHICS COMMISSION 309 FINANCE BUILDING PO. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL September 25, 1996 96 -593 Re: Conflict, Public Official /Employee, Township, PENNVEST, Municipal Authority, Sewage Treatment Plant, On -Site Project Representative, Hiring, Board Members, Employee, Independent Contractor. This responds to your letter of August 14, 1996 in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon the Chairman and Secretary of a township municipal sewer authority regarding their prospective employment by the authority to act as on- site project representatives /inspectors and to receive compensation for that service. Facts: As the Solicitor for the Buffalo Township Municipal Sewer Authority (Authority) in Union County, Pennsylvania, you request an advisory from the State Ethics Commission. By letter dated August 21 ,1996, George E. Aikey, Chairman of the Authority, and Lawrence Berger, Secretary of the Authority, expressly authorized you to request this advisory on their behalf. The Authority operates a sewage treatment plant that serves approximately 100 residential homes in the Village of Mazeppa, which is located entirely in Buffalo Township. The treatment plant was completed in the fall of 1994 with users being connected to the plant during the winter of 1994 and 1995. Monthly sewer rentals were first charged and collected in March, 1995. Financing for the project, which cost approximately $1.5 million, was in the form of grant monies and a low interest loan from PENNVEST. During the course of the construction of the plant, which lasted approximately 8 months, one member of the Authority Board volunteered to act as the On -Site Project Representative for the owner. You state that in the original engineer's estimate of costs for the project, this representative was listed as a separate line item in the Crossland, 96 -593 September 25, 1996 Page 2 budget and it was anticipated that the Authority would have to pay to employ someone full time as an on -site representative during the course of the construction. You state that it is your recollection that the engineer estimated a fairly substantial cost for this position, in excess of $50,000. One of the Authority Board Members volunteered to act in that capacity without compensation because he had experience with construction projects, and in particular, with sewer construction. Recently, the Authority received additional grant monies and was approved by PENNVEST for additional low interest loans. The Authority is planning an addition to the sewage treatment system which would extend collection lines to the Villages of Vicksburg and Buffalo Crossroads. That construction is expected to begin in the near future. In connection with that construction, the Authority Board would like to hire two Board Members who would receive salaries to act as On -Site Project Representatives, handling various paperwork and overseeing construction of a general nature on behalf of the Authority. The two members who would be acting in this capacity are the Chairman and Secretary of the Authority. Your specific inquiry is whether there would be any prohibitions or restrictions under the Ethics Law as to the Chairman and Secretary of the Authority Board being hired and paid wages to act as On -Site Project Representatives during the course of construction of this additional project. You do not know whether the two individuals would be hired as employees or independent contractors and what salary or compensation would be paid to them. You ask that if there are any conditions or qualifications as to such an arrangement, you wish to be advised of such circumstances. You cite an example that if advertising is required through legal notices, you would like to know such particulars. piscussion: It is initially noted that pursuant to Sections 7(10) and 7(1 1) of the Ethics Law, 65 P.S. §§407(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 P.S. § §407(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As the Chairman and Secretary of the Buffalo Township Municipal Sewer Authority, George Aikey and Lawrence Berger would be public officials as that term is defined under the Ethics Law, and hence they are subject to the provisions of that law. Section 3(a) of the Ethics Law provides: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. Crossland 96 -593 September 25, 1996 Page 3 The following terms are defined in the Ethics Law as follows: Section 2. 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. "Conflict" or "conflict of interest" 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. In addition, Sections 3(b) and 3(c) of the Ethics Law 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 judgement 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 3(f) of the Ethics Law provides as follows: Section 3. Restricted activities (f) 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 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. Crossland, 96 -593 September 25, 1996 Page 4 Parenthetically, where contracting is otherwise allowed or where there appears to be no express prohibitions to such contracting, the above particular provision of the law would require that an open and public process must be used in all situations where a public official /employee is otherwise appropriately contracting with his own 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. This open and public process would require that the following be observed as to the contract with the governmental body: (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 3(f) of the Ethics Law 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 3(j) of the Ethics Law provides as follows: Section 3. Restricted activities (j) 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 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. Crossland, 96 -593 September 25, 1996 Page 5 If a conflict exists, Section 3(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 Law, then in that event participation is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. On the specific issue posed, the Commission has held that an authority may hire its board members as employees of the authority, subject to certain limitations. Swick /Arran. Opinion 91 -006. First, the board member could not use the authority of office as to his own employment. Such use of authority of office is not merely limited to making motions or voting. Juliante, Order 809. There can be no participation by the board member in the entire hiring process. For example, the board member could not participate in writing the job description for the employment position or determine the criteria for hiring. The board member could not take any action which could eliminate competitors for the position he is seeking. pepper, Opinion 87 -008. Further, if employed, the board member would have a conflict as to matters of his own performance as an employee, salary, continuation of employment, termination, etc. As to such conflicts, the board member must abstain and comply with the disclosure requirements of Section 3(j) noted above. In addition to the above, it is assumed that the position of employment is a bona fide working position. See, Rebottini, et al. v. SEC, 634 A.2d 743 (1993). Finally, the requirements of Section 3(f) of contracting, outlined above, must be satisfied. Subject to the above restrictions, the two board members may be employed by the Authority as representatives /inspectors. Parenthetically, if the authority contemplates hiring the board member as an independent contractor rather than an employee, Aikey and Berger should consult with their Solicitor as to the prohibitions in the Municipality Authorities Act regarding contracting. Although the contracting in question would not be prohibited under the Ethics Law provided the requirements of Sections 3(a), (f) and (j) are satisfied, a problem may exist as to such contracting under the Municipality Authorities Act. In the instant situation, the Municipality Authorities Act provides as follows: D. No member of the Authority or officer or employee thereof shall either directly or indirectly be a party to or be in any manner interested in any contract or agreement with the Authority for any matter, cause or thing whatsoever by reason whereof any liability or indebtedness shall in any way be created against such Authority. If any contract or Crossland, 96 -593 September 25, 1996 Page 6 agreement shall be made in violation of the provisions of this section the same shall be null and void and no action shall be maintained thereon against such Authority. 53 P.S. §312(D). The propriety of the proposed conduct has only been addressed under the Ethics Law; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Law has not been considered in that they do not involve an interpretation of the Ethics Law. Specifically not addressed herein is the applicability of the Municipality Authorities Act. Conclusion: As the Chairman and Secretary of the Buffalo Township Municipal Sewer Authority, George Aikey and Lawrence Berger would be public officials subject to the provisions of the Ethics Law. Subject to the express restrictions noted above, Aikey and Berger may be employed by the Authority Board to perform representative /inspector functions. Section 3(f) of the Ethics Law must be satisfied. To the extent applicable, the disclosure requirements of Section 3(j) must be met. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Pursuant to Section 7(11), this 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, providing 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 1. 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. Vincent . Dopko Chief Counsel