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HomeMy WebLinkAbout21-547 Worthington PHONE: 717-783-1610 STATE ETHICS COMMISSION FACSIMILE: 717-787-0806 TOLL FREE: 1-800-932-0936 FINANCE BUILDING WEBSITE: www.ethics.pa.gov 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 ADVICE OF COUNSEL September 1, 2021 To the Requester: Geoffrey S. Worthington, Esquire 21-547 Dear Attorney Worthington: This responds to your letter dated August 6, 2021, by which you requested an advisory opinion from the Pennsylvania State Ethics Commission (Commission), seeking guidance as to the issue presented below: Issue: Does the Public Official and Employee Ethics Act, 65 Pa.C.S. § 1101 et seq., place any restrictions upon a Member of a Municipal Authority (who is an approved vendor of a corporation) from leasing real estate owned by the Municipal Authority and subleasing the real estate to the corporation? Brief Answer: YES. The Ethics Act prohibits a public official from utilizing the authority of his office (or any confidential information received through his holding public office) 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. Facts: You are the solicitor for a Municipal Authority. You have been authorized by the Authority Board of Directors to seek an advisory opinion from the Commission based upon the following submitted facts: • The Municipal Authority owns a parcel of real estate that is not currently necessary for its core function and which it intends to lease to a national corporation for the temporary rotational storage of over-the-road trailers used in logistics. Worthington, 21-547 September 1, 2021 Page 2 • The intended corporate lessee maintains a rigorous vendor qualification process, which will result in excess of six months lost revenue for the municipal authority as it waits for qualification as a vendor. • One of the individual board members of the municipal authority is already an approved vendor for the intended corporate lessee and would not have to undergo the vendor qualification process. You pose the following: “\[t\]he question is whether the individual board member can (without violating the State Ethics Act) lease the real estate in question from the municipal authority and sublease the real estate to the intended corporate lessee as an approved vendor, which would result in immediate lease revenue for the municipal authority.” Discussion: Pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. An advisory opinion only affords a defense to the extent the requester has truthfully disclosed all material facts. In issuing an advisory opinion, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. The burden is upon of the requester to truthfully disclose all material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). As Board Member for the Authority, the individual is a “public official” as that term is defined by the Ethics Act and is hence subject to the Ethics Act and the Regulations of the State Ethics Commission. See, Pa.C.S. § 1102; 51 Pa. Code § 11.1 et seq. 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 related to Section 1103(a) 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 Worthington, 21-547 September 1, 2021 Page 3 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. “Immediate family.” A parent, spouse, child, brother or sister. “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 provides as follows: (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 Worthington, 21-547 September 1, 2021 Page 4 voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 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: (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. Worthington, 21-547 September 1, 2021 Page 5 65 Pa.C.S. §§ 1103 (j). A conflict of interest exists where a public official/public employee, in his official capacity, participates, reviews or acts upon a matter involving himself, his immediate family, and/or a business with which he or his immediate family is associated. Miller, Opinion No. 89 -024; Kannebecker, Opinion No. 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 No. 89 -002; Garner, Opinion No. 93 -004; Snyder, Order No. 979 -2, affirmed Snyder v. SEC, 686 A.2d 843 (Pa. Commw. Ct. 1996). The State Ethics Commission has also held that it is a conflict of interest under Section 1103(a) for a public official to pursue a private business opportunity in the course of public action. Metrick, Order No. 1037. In each instance of a conflict of interest, the public official must abstain from participation in his public capacity. The abstention requirement is not limited merely to voting but extends to any use of authority of office. In Juliante, Order No. 809, the Commission recognized that 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. In each instance of a conflict of interest, the public official must also satisfy the disclosure requirements of Section 1103(j) set forth above. As noted above, Section 1103(f) of the Ethics Act provides for contracting by a public official with his governmental body, but such process must be open and public if the contract is $500 or more. Although the contracting in question would not be per se prohibited under the Ethics Act, provided the requirements of Section 1103(f) are satisfied, a problem may exist as to such contracting under the Municipality Authorities Act. In the instant situation, the Municipality Authorities Act of 1945, as amended, provides as follows: (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 (e). Conclusion: In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows: As a Member of the Board of Directors of a Municipal Authority, the Member/individual is a “public official” as defined by the Ethics Act. The Member/individual is prohibited from Worthington, 21-547 September 1, 2021 Page 6 utilizing the authority of his office (or any confidential information received through his holding public office) 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 Member/individual is required to abstain from participation, which would include voting, unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. 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, this advisory does not address any applicability of the Pennsylvania Municipality Authorities Act (53 Pa. C.S.A. Ch. 56). Pursuant to Section 1107(11) of the Ethics Act, an Advice of Counsel 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 requester 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. Respectfully, Brian D. Jacisin Chief Counsel Estelle, Esther From:Jacisin, Brian Sent:Wednesday, September 1, 2021 6:09 PM To:Estelle, Esther Subject:Fwd: \[External\] RE: Advisory Request Get Outlook for iOS From: Geoffrey Worthington, Esq. <gworthington@dwlawllc.com> Sent: Wednesday, September 1, 2021 6:12:25 PM To: Jacisin, Brian <bjacisin@pa.gov> Subject: \[External\] RE: Advisory Request ATTENTION: This email message is from an external sender. Do not open links or attachments from unknown sources. To report suspicious email, forward the message as an attachment to CWOPA_SPAM@pa.gov. Received. And thank you for your time and for your guidance. Regards, Geoffrey S. Worthington, Esq. DURNEY, WORTHINGTON & MADDEN, LLC 2937 Route 611 Suite 8, Merchants Plaza P.O. Box 536 Tannersville, PA 18372 570-620-0320 570-620-0390 (fax) CONFIDENTIALITY NOTICE: This email transmission, including any attachments, is from a law firm and may contain confidential and/or attorney-client or work product privileged material It is intended for review only by the person to whom it is addressed. If you are not the named addressee, or if this email transmission has been addressed to you in error, you are hereby notified that you have received this email transmission in error and that any review, disclosure, distribution, dissemination, copying, printing, maintaining, saving or other use of this email transmission is strictly prohibited. Unintended transmission of this email shall not constitute waiver of the attorney-client privilege or any other privilege or immunity. Unauthorized retention, disclosure, or use of this information is prohibited and may be unlawful under 18 U.S.C. 2510-2521. If you have received this email in error please notify Durney, Worthington & Madden immediately by reply email or by telephone at 570-620-0320, and permanently delete this email and any attachments. Thank you. Any tax advice contained in this communication, including any attachments, is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the U.S. Internal Revenue Code or (ii) promoting, marketing, or recommending to another person any tax-related matter. From: Jacisin, Brian \[mailto:bjacisin@pa.gov\] Sent: Wednesday, September 01, 2021 5:27 PM To: gworthington@dwlawllc.com 1 Cc: ET, Legal Division <RA-ETLEGALDIVISION@pa.gov> Subject: Advisory Request Attorney Worthington: Please see the attached and confirm receipt. Brian D. Jacisin Chief Counsel State Ethics Commission Finance Building 613 North Street, Room 309 Harrisburg, PA 17120-0400 Phone: 717-783-1610 | Fax: 717-787-0806 1-800-932-0936 (Toll Free in PA) E-mail: bjacisin@pa.gov www.ethics.pa.gov PRIVILEGED INFORMATION/CONFIDENTIALITY NOTICE ATTORNEY-CLIENT COMMUNICATION/ATTORNEY WORK PRODUCT The information in this email is confidential and may be legally privileged. The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any use of this information other than by the intended recipient is prohibited. If you are not the intended recipient, any disclosure, copying, distribution or any action taken or omitted to be taken in reliance on it, is prohibited and may be unlawful. If you have received this communication in error, please immediately notify the sender by replying to this e-mail or by calling 1-800-932-0936. Unintended transmissions shall not constitute waiver of the attorney-client or any other privilege. “Gentlemen do not read each other's mail.” - Henry Lewis Stimson, 1929 2 Estelle, Esther From:Jacisin, Brian Sent:Wednesday, September 1, 2021 5:27 PM To:gworthington@dwlawllc.com Cc:ET, Legal Division Subject:Advisory Request Attachments:Worthington Advice .pdf Attorney Worthington: Please see the attached and confirm receipt. Brian D. Jacisin Chief Counsel State Ethics Commission Finance Building 613 North Street, Room 309 Harrisburg, PA 17120-0400 Phone: 717-783-1610 | Fax: 717-787-0806 1-800-932-0936 (Toll Free in PA) E-mail: bjacisin@pa.gov www.ethics.pa.gov PRIVILEGED INFORMATION/CONFIDENTIALITY NOTICE ATTORNEY-CLIENT COMMUNICATION/ATTORNEY WORK PRODUCT The information in this email is confidential and may be legally privileged. The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any use of this information other than by the intended recipient is prohibited. If you are not the intended recipient, any disclosure, copying, distribution or any action taken or omitted to be taken in reliance on it, is prohibited and may be unlawful. If you have received this communication in error, please immediately notify the sender by replying to this e-mail or by calling 1-800-932-0936. Unintended transmissions shall not constitute waiver of the attorney-client or any other privilege. “Gentlemen do not read each other's mail.” - Henry Lewis Stimson, 1929 1 PHONE: 717-783-1610 STATE ETHICS COMMISSION FACSIMILE: 717-787-0806 TOLL FREE: 1-800-932-0936 FINANCE BUILDING WEBSITE: www.ethics.pa.gov 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 August 9, 2021 Geoffrey S. Worthington 2937 Route 611, Suite 8, Merchants Plaza P.O. Box 536 Tannersville, PA 18372 By email only to: gworthington@dwlawllc.com Dear Attorney Worthington: T requesting an advisory 1101 et seq. Sections 1107(10) and (11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), provide for the requester with standing who requests an advisory Ethics Act. The determination as to whether a request will be docketed for issuance of an Advice or Opinion is made at the Commission by applying the criteria set forth in the Ethics Act and Commission Regulations, 51 Pa. Code § 11.1 et seq. If a matter is docketed for issuance of an Advice, the Ethics Act directs that such Advice be issued within 21 working days (not calendar days), which may be extended for good cause. In this case, following a preliminary review, your request has been docketed for issuance of an Advice. If you do not receive the Advice within 21 working days, you may assume that the time is extended due to other pressing business of the agency and consider this letter NOTICE to that effect. Lastly, due to the COVID-19 pandemic, the Legal Division of the Commission has initiated utilizing email for most time-sensitive communications. Unless you object to receiving communications by email as opposed to First Class mail, please provide the authorize the State Ethics Commission to send all communications pertaining to your any questions or concerns, you may reach me by email at bjacisin@pa.gov and by telephone at (717) 783- 1610 or 1-800-932-0936. Respectfully, Brian D. Jacisin Chief Counsel BDJ/etr Estelle, Esther From:Estelle, Esther Sent:Monday, August 9, 2021 12:18 PM To:gworthington@dwlawllc.com Subject:Regarding your advisory request Attachments:Ack Adv Req.pdf Good afternoon, please see the attached and reply to confirm receipt. Thank you. Esther Estelle LEGAL ASSISTANT LEGAL DIVISION STATE ETHICS COMMISSION FINANCE BUILDING 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 WEBSITE: www.ethics.pa.gov TOLL FREE: 1-800-932-0936 PHONE: 717-783-1610 LEGAL FACSIMILE: 717-705-6271 1 2937 ROUTE 611 SUITE 8, MERCHANTS PLAZA P.O. BOX 536 TANNERSVILLE, PA 18372 TEL: (570) 620-0320 FAX: (570) 620-0390 www.dwlawllc.com JEFFREY A. DURNEY GEOFFREY S. WORTHINGTON HILLARY A. MADDEN August 6, 2021 Via email: ra-etlegaldivision@pa.gov State Ethics Commission Finance Building 613 North Street, Room 309 Harrisburg, PA 17120 RE: Request for Advisory Opinion To whom it may concern: On behalf of my client, a municipal authority board of directors, I am respectfully requesting an advisory opinion under the State Ethics Act based on the following hypothetical fact pattern: Client is the board of directors of a Pennsylvania municipal authority. The municipal authority owns a parcel of real estate that is not currently necessary for its core function and which it intends to lease to a national corporation for the temporary rotational storage of over-the-road trailers used in logistics. The intended corporate lessee maintains a rigorous vendor qualification process, which will result in excess of six months lost revenue for the municipal authority as it waits for qualification as a vendor. One of the individual board members of the municipal authority is already an approved vendor for the intended corporate lessee and would not have to undergo the vendor qualification process. The question is whether the individual board member can (without violating the State Ethics Act) lease the real estate in question from the municipal authority and sublease the real estate to the intended corporate lessee as an approved vendor, which would result in immediate lease revenue for the municipal authority. Please let me know if you need any additional information in order to answer this question. Very truly yours, Geoffrey S. Worthington