Loading...
HomeMy WebLinkAbout22-001 Confidential 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 OPINION OF THE COMMISSION Before: Nicholas A. Colafella, Chair Mark R. Corrigan, Vice Chair Roger Nick Melanie DePalma Michael A. Schwartz Shelley Y. Simms Rhonda Hill Wilson DATE DECIDED: 1/21/22 DATE MAILED: 1/25/22 22-001 To the Requester: This responds to your correspondence dated \[REDACTED\], (received \[REDACTED\]) by which you requested an advisory opinion from the Pennsylvania State Ethics Commission I. ISSUE: Would et seq., impose any restrictions upon a former executive-level State employee from accepting employment with an entity who was the recipient of grant funding specific to the opening or expansion of a plant or facility within the Commonwealth, where the former executive- entity, acknowledging the awarding of the grant? II. FACTUAL BASIS FOR DETERMINATION: In submitting your request for an advisory opinion from the Commission you have provided a factual basis which is fairly summarized as follows: You currently serve as the \[EXECUTIVE LEVEL POSITION\] of the \[GOVERNMENTAL ENTITY\]. You have been offered a position of employment with \[GRANT RECIPIENT\]. You are currently considering accepting that offer. In \[DATE REDACTED\], the \[GOVERNMENTAL ENTITY #2\] located within \[GOVERNMENTAL ENTITY\], negotiated an incentive package for \[GRANT RECIPIENT\], in order for \[GRANT RECIPIENT\] to commit to \[OPENING A NEW PLANT, FACILITY OR BRANCH IN THIS COMMONWEALTH OR EXPANDING AN EXISTENT PLANT OR FACILITY WITHIN THIS COMMONWEALTH\]. Confidential Opinion, 22-001 January 25, 2022 Page 2 The incentive package included the following: \[GRANT\] $ \[REDACTED\] \[TAX CREDITS\] $ \[REDACTED\] A summary of this funding was sent to you along with your \[SUBORDINATE EMPLOYEE(S)\]. Your \[SUBORDINATE EMPLOYEE(S)\] then forwarded this summary to the \[GOVERNMENTAL ENTITY #3\] for approval. Once the \[GOVERNMENTAL ENTITY #3\] approved the package, a letter was signed by you as the \[EXECUTIVE LEVEL POSITION\] and sent to \[GRANT RECIPIENT\]. You are of the belief that your actions in this matter did not give rise to ection 1103(i), Restricted Activities, Former executive-level State employee, for the following reasons: You did not actively participate in discussions between the \[GOVERNMENTAL ENTITY #2\] and \[GRANT RECIPIENT\] You did not actively participate in discussions or determinations of the incentive amount for this project The \[GOVERNMENTAL ENTITY #3\] had final approval of these incentive packages at that time You were Acting \[EXECUTIVE LEVEL POSITION\] at the time, since you did not receive confirmation from the Senate until a month or so after The awarding of the grants in this matter occurred \[OVER FIVE\] years ago III. DISCUSSION: Pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisory opinions are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory opinion based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory opinion only affords a defense to the extent the requester has truthfully disclosed all material facts. As the \[EXECUTIVE LEVEL POSITION\] of the \[GOVERNMENTAL ENTITY\], you are s well as -as those terms are defined by the Ethics Act. executive-are subject to the Ethics Act and the Regulations of the Pennsylvania State Ethics Commission. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1. Upon termination of Commonwealth employment/service, you will become a former public employee and a former executive-level State employee subject to the restrictions of Section 1103(i) and Section 1103(g) of the Ethics Act. Confidential Opinion, 22-001 January 25, 2022 Page 3 Section 1103(i) restricts former executive-level State employees as follows: § 1103. Restricted activities (i) Former executive-level employee. No former executive-level State employee may for a period of two years from the time that he terminates employment with this Commonwealth be employed by, receive compensation from, assist or act in a representative capacity for a business or corporation that he actively participated in recruiting to this Commonwealth or that he actively participated in inducing to open a new plant, facility or branch in this Commonwealth or that he actively participated in inducing to expand an existent plant or facility within this Commonwealth, provided that the above prohibition shall be invoked only when the recruitment or inducement is accomplished by a grant or loan of money or a promise of a grant or loan of money from the Commonwealth to the business or corporation recruited or induced to expand. 65 Pa.C.S. § 1103(i). Section 1103(i) restricts the ability of a former executive-level State employee to accept employment or otherwise engage in business relationships following termination of State service, under certain narrow conditions. The restrictions of Section 1103(i) apply even where the business relationship is indirect, such as where the business in question is a client of a new employer, rather than the new employer itself. See, Confidential Opinion, 94-011. However, Section 1103(i) would not restrict a former executive-level State employee from being employed by, receiving compensation from, assisting, or acting in a representative capacity for a business subject to the conditions that the former executive-level State employee did not actively participate in recruiting such business to Pennsylvania, and that the former executive-level State employee did not actively participate in inducing such business to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth. In considering the applicability of Section 1103(i), the Commission noted: . . . that according to the legislative debate, Section 3(i) \[1103(i)\] was designed to: eliminate any strong potential for a conflict of interest by anyone in the high levels of government where they may negotiate deals which profit themselves -level executive employees prohibiting the post - employment for two years with those large businesses or corporations with which they have had involvement and discretionary power in soliciting the (Comments of the Honorable Representative Pitts, who offered the amendment to House bill No. 198 to include this particular Section in Act 170 of 1978, Legislative Journal - House , April 26, 1977 at 640.) Confidential Opinion: 94 -011, Page 10. Confidential Opinion, 22-001 January 25, 2022 Page 4 Essential to the applicability of the Section 1103(i) restriction is that the executive-level State employee must have d participates,and has concluded that signifying that mere participation in a passive sense would not transgress Section 1103(i). See Confidential Opinion: 94-011, Page 12. Thus, the term actively participated requires one to take part through an actual exercise of power or discretion and would not include mere presence or passive involvement through the non-discretionary performance of a perfunctory duty. The factual scenario for which you seek advice, i.e. whether your participation in the process of awarding a grant to \[GRANT RECIPIENT\], does not equate to active participation, such that you are prohibited from accepting employment from \[GRANT RECIPIENT\] pursuant to the extent you directed your \[SUBORDINATE EMPLOYEE(S)\] to forward the previously negotiated agreement from the \[GOVERNMENTAL ENTITY #2\] to the \[GOVERNMENTAL ENTITY #3\] for approval, was not a use of any discretionary power. Additionally, the presence of your signature, as the Acting \[EXECUTIVE LEVEL POSITION\], on a letter sent to \[GRANT RECIPIENT\] following the \[GOVERNMENTAL ENTITY #3\] approval of the grant was a perfunctory duty. The proffered facts indicate that you did not actively participate in discussions between the \[GOVERNMENTAL ENTITY #2\] and \[GRANT RECIPIENT\], nor actively participated in discussions or determinations of the incentive amount for this project. The fact that you did not participate in the negotiations nor decisions to award the funds eliminated the likelihood that you negotiated a deal whereby you would realize a private pecuniary gain. The determining factor in determination and/or approval of the awarding of grant monies. That is not to say that an individual must be engaged in the negotiation, determination, and approval process, but rather that in any one of those facets of awarding a grant or loan of monies would be sufficient to implement the restrictions contained within Section 1103(i). It is not of consequence that you were Acting \[EXECUTIVE LEVEL POSITION\] nor that the awarding of the grants in this matter occurred \[BEYOND FIVE\] years ago. Although not subject of your request, the Commission must note that in addition to Section 1103(i), as a former public employee, you are also subject to the restrictions of Section 1103(g), 65 Pa.C.S.§1103(g). Unlike Section 1103(i), Section 1103(g) does not prohibit a former public official/public employee from accepting a position of employment. However, it does restrict the governmental body with which he has been associated. § 1103. Restricted activities (g) Former official or employee.--No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 Pa.C.S. § 1103(g) (Emphasis added). Confidential Opinion, 22-001 January 25, 2022 Page 5 Section 1103(g) only restricts the former public official/public employee with regard to representation before his former governmental body. Applying the foregoing to the specific facts presented, the governmental body with which you are deemed to have been associated upon separation is \[GOVERNMENTAL ENTITY\]. Therefore, for the first year following separation, Section 1103(g) \[GOVERNMENTAL ENTITY\] and any reporting subordinate offices. Lastly, 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. IV. CONCLUSION: Based upon the above, it is the Opinion of this Commission that Section 1103(i) would not prohibit your employment with an entity who received grant funding, premised upon the submitted fact that your involvement as the \[EXECUTIVE LEVEL POSITION\]/Acting \[EXECUTIVE LEVEL POSITION\] of the \[GOVERNMENTAL ENTITY\] was limited to passive involvement through the non-discretionary performance of a perfunctory duty. The propriety of the proposed course of conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(10) of the Ethics Act, 65 Pa.C.S. § 1107(10), the person who acts in good faith on this Opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. A redacted version of this letter will be made available as a public record. By the Commission, Nicholas A. Colafella Chair Dissenting Opinion: For the reasons stated by Robert W. Brown, Vice Chairman, in State Ethics Commission Confidential Opinion: 91-002, and that there appears to be insufficient Pennsylvania Jurisprudence, Commissioner Hill Wilson respectfully dissents.