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HomeMy WebLinkAbout92-548Mr. Forrest L. Shadle P.O. Box 395 Lavelle, PA 17943 -0395 STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 ADVICE OF. COUNSEL February. 27, 1992 91 -548 Re: Conflict, Public Official /Employee, Township Supervisor, Private Employment, Contracting with Governmental Body, Insurance Agent, Broker, Use of Authority of Office or Confidential Information, Voting, Insurance for Township., Dear Mr. Shadle: This responds to your letter of January 22, 1992, 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 a township supervisor who is also a licensed Pennsylvania insurance broker and agent, with regard to remaining the broker of record for the township's existing law enforcement liability insurance and with regard to prospective contracts between the Township and An insurance company for which the supervisor is an agent. Facts: You were elected as a Butler Township Supervisor in the November general election and were installed on January 5, 1992. You are also a licensed Pennsylvania insurance broker and a representative agent for the Erie Insurance Group. Your stationery indicates that you are an independent agent representing Erie Insurance Group. Several years ago during the public liability crisis, the Butler Township Board of Supervisors contacted you to secure Public Official's and Law Enforcement Liability insurance for them. Being a licensed Pennsylvania broker, you did find coverage for them and have been the broker of record since that time for two policies which will be up for renewal on May 23, 1992. You state that historically, Erie Insurance Group has always been very competitive with their commercial rates. You further state that Butler Township is currently paying an astronomically high premium for Township Liability insurance. Mr. Forrest L. Shadle February 27, 1992 Page 2 In 1992, the Township Supervisors will be soliciting rates and coverages from local insurance agencies. Should Erie Insurance Group be interested and competitive in insuring Butler Township, you inquire as to what - ramifications could develop out of this situation. You specifically pose the following inquiries: 1. Whether you may continue to be "broker of record" for Butler Township's Law Enforcement and Public Official's policies until and after the renewal. date . of May 23, 1992; and 2. Whether you could be in violation of the Ethics Law should the Board of Supervisors at any time vote to contract with Erie Insurance for insurance coverages. Based upon all of the above, -you request an advisory from this Commission. Discussion: As a Township Supervisor for Butler Township, you are a public official as that term is defined under the Ethics Law, and hence you are subject to the provisions of that law. follows: 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 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 bu 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 Mr. Forrest L. Shadle February 27, 1992 Page 3 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. "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 f 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. Mr. Forrest L. Shadle February 27, 1992 Page 4 In addition, Sections 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer t� 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: 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. Parenthetically, where contracting is otherwise allowed or where there appears to be no expressed prohibitions to such contracting, the above particular provision of law would require that an open and public process must be used in all situations where, a public official /employee is otherwise appropriately Mr. Forrest L. Shadle February 27, 1992 Page 5 contracting with his own governmental body in an amount of $500.00 or more. This open and public process would require: (1 prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor /applicant t� 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. Section 3(j) of the Ethics Law provides as follows: Section 3. Restricted activities. 0) 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 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 Mr. Forrest L. Shadle February 27, 1992 Page 6 governing where one a result remaining have cast abstained the tie otherwise body of a political subdivision, member has abstained from voting as of a conflict of interest, and the two members of the governing body opposing votes, the member who has shall be permitted to vote to break vote if disclosure is made as provided herein. 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. Generally, the Ethics Law places no per se prohibition upon a public official or a business with which he is associated from contracting with his governmental body. Pancoe, Opinion 89 -011. However, there are restrictions which would be applicable. Under Section 3(a) of the Ethics Law, a public official /public employee may not use the authority of public off ice /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, a member of his immediate family, or a business with which he or a member of his immediate family is associated. As an independent agent, if you-have a sole proprietorship, it is a business with which you are associated. Guloien, Opinion 90 -011. Additionally, any business for which you or a member of your immediate family is a director, officer, owner, employee, or has a financial interest, is a business with which you are associated. Based upon the principles espoused in Miller, Opinion 89 -024, it is clear that Section 3(a) would also have application as to the insurance companies for which you serve as a broker and /or agent. Under Section 3(a), you would have a conflict of interest as to insurance matters before the Township involving you (as a broker or agent), a business with which you are are associated, and /or an insurance company for which you serve as a broker and /or agent. Miller, Opinion 89 -024. In such instances, it will be necessary that you remove yourself from any participation of any nature whatsoever. As noted in Miller., matters which come before a public official /public employee involving his private business /employer or private clients place a public official /public employee in a situation where he is faced with Mr Forrest L. Shadle February 27, 1992 Page 7 conflicting interests. In his private capacity, his duty is, owed to a private employer as 'well as to the private - clients, - while in his capacity-as a public official /public .employee, his primary duty is: to act in the best interest of the governmental body with the duty being owed to the public rather than to private clients. Id.; See .also, Brooks, Opinion-89-023. In each instance of a conflict • of interest, you would be required to abstain from any participation of any nature whatsoever, including but not limited to participating in discussions, voting, lobbying for a particular result, or otherwise - using the authority of your office. Similarly, you could not use any confidential information received by holding your public office to advance an opportunity for a contract between the Township and yourself, any business with which you are associated, or an insurance company for which you serve as a broker and /or agent. In each instance of a conflict of interest, the requirements • of Section 3(j) of the Ethics Law must be satisfied, whereby the abstention and the reasons for same must be publicly disclosed both orally and by filing a written memorandum -to that effect with the secretary recording the minutes. Contracting between the Township and you or any business with :which you. are .associated would be subject to the restrictions of Section 3(f) of the Ethics Law set forth above, for contracts in-the amount of $500 or more. Parenthetically, although the contracting in question would not be prohibited under the Ethics Law provided the requirements of .Sections 3(f), and .( are - satisfied, a problem may exist as to such contracting under the Second Class Township Code, which provides, in pertinent part, as follows: • (f), Except as herein provided, no township 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 contract for the sale or furnishing of any supplies or materials for the use of the township, or for any work to be done for such township involving the expenditure by the township of more than three hundred dollars ($300) in any year, but this limitation shall ; not apply to cases where such officer, or appointee of the township, is an employe of the . - person, firm or corporatoh to ; which the . money • ,s tp be lu. Forrest L. Shadle February 27, 1992 Page 8 paid in a capacity with no possible influence on the transaction, and in which he cannot be possible benefited thereby; either financially or otherwise: Provided, however, That in the case -of a supervisor, if he knows that he is within the exception just mentioned, he shall so inform the supervisors and shall refrain from voting on the expenditures, or any ordinance relating thereto, and shall in no manner participate therein: Provided, further, That any such official or appointee who shall knowingly violate this provision shall be subject to surcharge to the extent of the damage shown to be thereby sustained by the township, ouster from office, and shall be guilty of a misdemeanor, and upon conviction thereof, shall be sentenced to pay - a fine not exceeding five hundred dollars ($500): Provided, That in the case of the purchase of material for the construction, reconstruction, maintenance and improvement of roads and bridges, the contract, which shall be in writing, and shall be let only on standard specifications of the Department of Transportation, and materials so purchased shall only be used in accordance with specifications of said department. 65 P.S. S65802(f) . Since such contracting may be prohibited by the above quoted provision of the Second Class Township Code, but not under the Ethics. Law, it is suggested that you obtain the advice- of legal counsel in that regard. Turning to your first specific inquiry, as to whether you may continue to be the broker of record on the Law- Enforcement and Public Official's policies with the Township until and after the renewal date of May 23, 1992, you are advised that Section 3(a) of the Ethics Law does not apply to restrict you ins your private capacity as a broker and insurance agent. Rather, Section 3(a) of the Ethics Law restricts your conduct as a public official. Subject to the restrictions and qualifications noted above, the Ethics Law would not preclude your continuing to be the booker of record on the Law Enforcement and Public Official's policies with the Township. Mr. Forrest L. Shadle February 27, 1992 Page 9 Turning to your second specific inquiry, you ask whether you could be in violation of the Ethics Law should the Board of Supervisors at any time vote to contract with Erie Insurance Group for insurance coverage. Although you would be required to observe the restrictions and qualifications of the Ethics Law noted above, the that the Township Board of Supervisors would vote-to contract with Erie Insurance Group would not in and of itself constitute a violation of the Ethics Law. 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. Specifically not addressed in this Advice is the applicability of the Second Class Township,Code,- although it has been recommended that you obtain the advice of legal counsel as to its applicability. Conclusion: As a Township Supervisor for Butler Township, you are a public official subject to the provisions of the Ethics Law. Any business in which you or a member of your immediate family is a director, officer, owner, employee or has a financial interest is a business with which you are associated. Under Section 3(a) of the Ethics Law, you may not use the authority of your office or confidential information received by holding your public position for the private pecuniary benefit of yourself, a member of your immediate family, or a business with which you or a member of your immediate family is associated. You would have a conflict of interest as to insurance matters before the Township involving you (as a broker or agent), a business with which you are associated, and /or an insurance company for which you serve as a broker and /or agent. In each instance of a conflict of interest, you would be required to abstain from any participation of any nature whatsoever and the disclosure requirements of Section 3(j) outlined above would have to be observed. Finally, if the contract is $500 or more, the open and public process as outlined in Section 3(f) above must be accomplished. You as a public official /employee could not have any supervisory or overall responsibilities as to the contract. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Due to the possible application of the Second Class Township Code in this matter, it is suggested that you obtain the advice of legal counsel as to whether such contracting may be prohibited-by the Second Class Township Code. 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 Mr. Forrest L. Shadle February 27, 1992 Page 10 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 request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be in writing and must be received at the Commission within 15 days of the date of this Advice pursuant to 51 Pa. Code 52.12 Sincerely, Vincent . Dopko Chief Counsel