HomeMy WebLinkAbout01-508 HoyDonald L. Faulkner, Esquire
Snowiss, Steinberg, Faulkner & Hall, LLP
333 N. Vesper Street
Lock Haven, PA 17745
Dear Mr. Faulkner:
ADVICE OF COUNSEL
January 18, 2001
01 -508
Re: Conflict; Public Official /Employee; Council Member; Borough; Insurance Agency;
Employee; Contract; Vote.
This responds to your letters of December 13, 2000 and December 18, 2000, 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 borough council
member who is employed by an insurance agency with regard to contracting between the
insurance agency and the borough.
Facts: You seek an advisory on behalf of Stephen W. Hoy ( "Hoy "), who has
recently been appointed to fill a vacancy on the Council of the Borough of Flemington
( "Borough "), Clinton County, Pennsylvania.
In his private capacity, Hoy is an employee of an insurance agency which has an
insurance contract with the Borough. You state that Hoy is not an owner or officer of the
insurance agency and does not have a financial interest in it. You further state that the
insurance agency's contract with the Borough has been, and will continue to be, awarded
in an open and public process with prior public notice and subsequent public disclosure
of all proposals considered and contracts awarded.
You state that Hoy intends to abstain from voting on any insurance contracts
involving his employer and will publicly disclose his interest as a public record in a written
memorandum filed with the Borough Secretary.
You ask whether, in following the above procedure, Hoy would be in compliance
with the Ethics Act.
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
Faulkner, 01 -508
January 18, 2001
Page 2
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. 107(10), (11). An advisory only affords a
defense to the extent the requestor has truth fully disclosed all of the material facts.
As a Member of Borough Council, Hoy is a public official subject to the provisions
of the Ethics Act.
65 Pa.C.S.
The
defined as
Sections 1103(a) and 11030) of the Ethics Act provide as follows:
§1103. Restricted activities.
(a) Conflict of interest. - -No public official or public
employee shall engage in conduct that constitutes a conflict of
interest.
(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 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.
§ §1103(a), (j).
following terms that pertain to conflicts of interest under the Ethics Act are
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
Faulkner, 01 -508
January 18, 2001
Page 3
65 Pa.C.S. §1103(f).
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.
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, which pertains to contracting /subcontracting,
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 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.
Faulkner, 01 -508
January 18, 2001
Page 4
The term "contract" is defined in the Ethics Act as follows:
§1102. Definitions.
"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 applying the above provisions of the Ethics Act to your inquiry, Section 1103(a)
shall be addressed first.
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 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 800; Pancoe supra and (3) the participation in an official capacity as to
matters involving the�neiss with which the public official /public employee is associated
or private clients, Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010. A reasonable
and legitimate expectation that a business relationship will form may also support a
finding of a conflict of interest. Amato Opinion 89 -002; Garner, Opinion 93 -004; Snyder
Order 979 -2, affirmed, Snyder v. ate Ethics Commission, 686 A.2d 843 (Pa. Commw.
Ct. 1996), alloc. den., No. 0029 M.D. Allocatur Docket 1997 (Pa. December 22, 1997).
In each instance of a conflict of interest, the public official /public employee must
abstain from participation in his public capacity and observe the disclosure requirements
of Section 11030) as set forth above. The abstention requirement is not limited merely to
voting, but extends to any use of authority of office. The use of authority of office as
defined in the Ethics Act includes, for example, discussing, conferring with others, and
lobbying for a particular result. See, Juliante, Order 809.
Under the facts which you have submitted, the insurance agency which employs
Hoy would be a business with which Hoy is associated. Hoy's status as an employee
would be sufficient to establish that relationship.
Therefore, Hoy could not use the authority of his public position as a Borough
Council Member, or any confidential information received by being in that position, to
solicit or promote business activity between the insurance agency which employs him
and the Borough. To the extent Hoy would, in his public capacity, have involvement as to
the insurance agency, a conflict would exist. See, e.g., Kurtz, Order 1116, in which
numerous conflict of interest violations were found as to a township supervisor who: (1)
participated in discussions on general township insurance matters, including increasing
insurance coverage and obtaining insurance coverage for equipment through her
Faulkner, 01 -508
January 18, 2001
Page 5
insurance agency; (2) made or seconded motions and voted to approve Treasurers
reports which included payments to her insurance agency, some of which actions had the
additional effect of approving insurance coverage for the township through her insurance
agency; and (3) signed checks in her capacity as a township supervisor, which checks
were payable to her insurance agency.
In each instance of a conflict of interest, Hoy would be required to abstain fully
from participation and to fully satisfy the disclosure requirements of Section 11030) set
forth above.
As for Section 1103(f) of the Ethics Act, you are advised that 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.
While Hoy remains both a Borough Council Member and an employee of the
insurance agency with which the Borough contracts, the above requirements imposed by
Section 1103(f) of the Ethics Act must be observed as to such contract(s). See Kurtz
supra.
Parenthetically, although the contracting in question would not be prohibited under
the Ethics Act provided the requirements of Sections 1103(a), 1103(f), and 11030) are
satisfied, a problem may exist as to such contracting under the Borough Code, which
provides as follows:
§46404. Penalty for personal interest in contracts or
purchases
Except as otherwise provided in this act, no borough
official either elected or appointed, who knows or who by the
exercise of reasonable diligence could know, shall be
interested to any appreciable degree either directly or
indirectly in any purchase made or contract entered into or
expenditure of money made by the borough or relating to the
business of the borough, involving the expenditure by the
borough of more than one thousand dollars ($1000) in any
calendar year, but this limitation shall not apply to cases
where such officer or appointee of the borough is an employe
of the person, firm or corporation to which the money is to be
paid in a capacity with no possible influence on the
Faulkner, 01 -508
January 18, 2001
Page 6
transaction, and in which he cannot be possibly benefited
thereby either financially or otherwise. But in the case of a
councilman or mayor, if he knows that he is within the
exception just mentioned he shall so inform council and shall
refrain from voting on the expenditure or any ordinance
relating thereto, and shall in no manner participate therein.
Any official or appointee who shall knowingly violate the
provisions of this section shall be subject to surcharge to the
extent of the damage shown to be thereby sustained by the
borough and to ouster from office, and shall be guilty of a
misdemeanor, and upon conviction thereof shall be sentenced
to pay a fine not exceeding one thousand dollars ($1000), or
not exceeding one hundred eighty days' imprisonment, or
both.
53 P.S. §46404.
Since such contracting may be prohibited by the above quoted provision, it is
recommended that Hoy obtain legal advice in that regard.
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 Borough Code.
Conclusion: As a Council Member for the Borough of Flemington ( "Borough "),
Stephen W. Hoy ( "Hoy ") 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 insurance agency
which employs Hoy is a business with which he is associated. Pursuant to Section
1103(a) of the Ethics Act, Hoy would be prohibited from using the authority of his office
as a Borough Council Member or confidential information received by being in that
position to solicit or promote business activity between the insurance agency which
employs him and the Borough. To the extent Hoy would, in his public capacity, have
involvement as to his employer, a conflict would exist. In each instance of a conflict of
interest, Hoy would be required to abstain fully from participation and to fully satisfy the
disclosure requirements of Section 11030) set forth above.
While Hoy remains both a Borough Council Member and an employee of the
insurance agency with which the Borough contracts, the requirements imposed by
Section 1103(f) of the Ethics Act must be observed as to such contract(s . Those
requirements as to an open and public process and Hoy's inability to -lave any
supervisory or overall responsibility for the implementation or administration of such
contract(s) are set forth above.
Lastly, the propriety of the proposed conduct has only been addressed under the
Ethics Act. It is recommended that Hoy obtain legal advice regarding the application of
the Borough Code.
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.
Faulkner, 01 -508
January 18, 2001
Page 7
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