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HomeMy WebLinkAbout98-545 ErbKenelm L. Shirk, III, Esquire 115 South State Street Ephrata, PA 17522 -2412 STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL April 17, 1998 98 -545 Re: Conflict; Public Official /Employee; Authority Member; Compensation; Appointment; Employment Positions; Performance of Services; Independent Contractor. Dear Mr. Shirk: This responds to your letter of March 13, 1998 by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employe Ethics Law presents any prohibition or restrictions upon members of a municipal sewer authority with regard to setting compensation for meeting attendance; appointing members to employment positions and setting their compensation without the participation /vote of such individuals; and /or setting a uniform rate of compensation for performance of services by members. Facts: As Solicitor for the Georgetown Area Sewer Authority (Authority) you have been authorized by three Members of the Authority, specifically, John Graybill, Bob Keene, and Charlie Erb, to request an advisory on their behalf from the State Ethics Commission as to the following. The Authority is a Pennsylvania Municipal Authority incorporated by the Bart Township Board of Supervisors. Its membership is made up of Bart Township residents who are appointed by the Township Board of Supervisors. The Authority conducts the operations of collection and treatment of sanitary sewage. You pose the following specific inquiries: 1) Whether the Authority, pursuant to the Pennsylvania Municipality Authorities Act, may set compensation for each of its current members for attending meetings by a vote under the "Rule of Necessity "; 2) Whether the Authority, pursuant to the Pennsylvania Municipality Authorities Act, may appoint members to employment positions on behalf of the Authority and set their compensation, without the participation or vote of the person for whom the compensation is being set; and Shirk, 98 -545 April 17, 1998 Page 2 3) Whether the Authority, by a "Rule of Necessity" vote, may set a uniform rate of compensation for performance of services by each current Board member by and on behalf of the Authority. Discussion: It is initially noted that pursuant to Sections 7(10) and 7(11) 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. It is further initially noted that pursuant to the same aforesaid Sections of the Ethics Law, this advisory only addresses the conduct of those individuals who have specifically given you their permission to submit your inquiry on their behalf. As to all others, you are considered a third party without legal standing. According to the minutes of the meeting which you submitted, you have the express permission of the aforesaid three Members of the Authority to submit your inquiry. Consequently, this advisory is limited to addressing the conduct of those three Members. As Members of the Georgetown Area Sewer Authority (Authority), John Graybill, Bob Keene and Charlie Erb are public officials as that term is defined in the Public Official and Employe Ethics Law ( "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. 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. "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. Smirk, 98 -545 April 17, 1998 Page 3 "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. "Contract" 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. 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. Section 3(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 3(f) requires that an "open and public process" be observed as to the contract with the governmental body. Pursuant to Section 3(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 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. Shirk, 98 -545 April 17, 1998 Page 4 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. In each instance of a conflict, 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 voting is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. Having set forth the above provisions and restrictions of the Ethics Law, your specific inquiries shall be addressed seriatim. Your first specific inquiry is whether the Authority may, pursuant to the Pennsylvania Municipality Authorities Act, set compensation for each current member for attending meetings by a vote under the "Rule of Necessity." Although the State Ethics Commission does not have the express statutory jurisdiction to interpret the Municipality Authorities Act, it would appear that the following provision, on its face, provides that only the aovernina body of the municinality (such as a Township Board of Supervisors) may set the salaries for members of a municipal authority: B. Members... shall receive such salaries as may be determined by the aoverning body or bodies of the municipality or municipalities, but none of such salaries shall be increased or diminished by such governing body or bodies during the term for which the member receiving the same shall have been appointed.... Shirk, 98 -545 April 17, 1998 Page 5 53 P.S. §309B (Emphasis added). Therefore, the setting of such compensation by the Authority Members themselves would constitute the use of authority of office for unauthorized compensation in contravention of Section 3(a) of the Ethics Law. Your second specific inquiry is whether the Authority may appoint members to employment positions on behalf of the Authority and set their compensation as long as such individuals do not participate or vote as to their own appointment /compensation. Per the State Ethics Commission's holding in Swick /Aman, Opinion No. 91 -006, such would be allowable under the Ethics Law with regard to legitimate employment positions. Your third specific inquiry is whether the Authority, by a "Rule of Necessity" vote, may set a uniform rate of compensation for performance of services by each current Board member on behalf of the Authority. It is assumed that you are referring to services that would not be undertaken in an employment capacity, but rather as an independent contractor. In this regard, contracting between a public official /public employee and his own governmental body would generally be subject to the restrictions of Sections 3(a), 3(f) and 3(j) of the Ethics Law. Pursuant to Section 3(a), a public official /public employee would be prohibited from using the authority of his public position or confidential information obtained by being in that position, to solicit or promote business activity between the governmental body and himself or a business with which he would be associated. Section 3(j) would require that he abstain from such matters and fully satisfy the disclosure requirements set forth above. With regard to Section 3(0, as noted above, that Section of the Ethics Law would not operate to make contracting with a governmental body permissible where it would otherwise be prohibited, such as by the Municipality Authorities Act. Rather, Section 3(f) would operate to impose the additional restrictions set forth above where a public official /public employee would otherwise be appropriately contracting with his governmental body, or subcontracting with any person who had been awarded a contract with his governmental body, in an amount of $500.00 or more. In such cases, Section 3(f) would require that an "open and public process" be observed as to the contract with the governmental body and that the public official /public employee not have any supervisory or overall responsibility in his public capacity as to the implementation or administration of the contract with the governmental body. Parenthetically, although the contracting in question would not be prohibited under the Ethics Law provided the requirements of Sections 3(a), 3(0 and 3(j) would be satisfied, it is noted that the Municipality Authorities Act of 1945, as amended, provides as follows: §312. Competition in award of contracts 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 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. Shirk, 98 -545 April 17, 1998 Page 6 53 P.S. §312(D). Since such contracting may be prohibited by the above quoted provision, it is suggested that legal advice be obtained in that regard. Lastly, 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. Conclusion: As Members of the Georgetown Area Sewer Authority (Authority), John Graybill, Bob Keene and Charlie Erb are public officials as that term is defined in the Public Official and Employe Ethics Law ( "Ethics Law "), and hence they are subject to the provisions of that law. At 53 P.S. §3096, the Municipality Authorities Act provides on its face that only the governing body of the municipality (such as a Township Board of Supervisors) may set the salaries for members of a municipal authority. Therefore, the setting of such compensation by the Authority Members themselves would constitute the use of authority of office for unauthorized compensation in contravention of Section 3(a) of the Ethics Law. The Authority may appoint members to legitimate employment positions and set their compensation as long as such individuals do not participate or vote as to their own appointment /compensation. Although contracting between these Authority Members and the Authority would not be prohibited under the Ethics Law itself, provided the requirements of Sections 3(a), 3(f) and 3(j) would be satisfied, it is noted that such contracting may be prohibited by the Municipality Authorities Act of 1945, and it is suggested that legal advice be obtained in that regard. 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 ). 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 cerely, u incent . Dop o Chief Counsel