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HomeMy WebLinkAbout03-554 RudderowJoseph E. Rudderow, III, President Bell Hardware and Supply, Inc. 1051 S. Route 100 P.O. Box 216 Trexlertown, PA 18087 Re: Conflict; Public Official /Employee; Member; Planning Commission; Chairman; Vacancy Board; Second Class Township; Business; Business With Which Associated; Hardware Store; Sales; Bid; Contract; Dear Mr. Rudderow: ADVICE OF COUNSEL June 6, 2003 03 -554 This responds to your letter of April 30, 2003, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. presents any prohibition or restrictions upon a planning commission member and seq., vacancy board chairman /member regarding sales or contracts between a business with which he is associated and the township. Facts: Maidencreek Township, Berks County, has been a customer of Bell Hardware and Supply, Inc. (Bell), since May 18, 2001. Bell is a Pennsylvania S- Corporation which sells to the general public as well as the commercial and industrial markets in Berks, Lehigh, and Northampton Counties in Pennsylvania. You are the President and a 50.1% shareholder in Bell. Your partner, Bernard R. Buhosky, is Vice President of Commercial and Industrial Sales and a 49.9% shareholder of Bell. You are a resident of Maidencreek Township but Buhosky is a resident of Upper Saucon Township. In December 2001, you had expressed an interest in serving your local government by asking the Board of Supervisors to consider you for an opening on the Maidencreek Planning Commission. During the January 2002 reorganization meeting, you were appointed to the Maidencreek Township Planning Commission to serve out the term of a deceased member. In addition to that appointment, since the deceased Planning Commission member also served as the Vacancy Board Chairman, you were asked to also serve as the Vacancy Board Chairman for that term. You agreed to serve Rudderow, 03 -554 June 6, 2003 Page 2 in both positions. When you asked the now former township solicitor if there was a conflict of interest, he responded that since you do not have any direct access to township funds or their dispersal, he did not believe that a conflict of interest existed. In April of 2003, Bell was a bidder on recycling containers for the Maidencreek Township Recycling Program. This was an advertised open bid process in which sealed bids were submitted to the township to provide the recycling containers and lids for this program. Prior to Bell's bid submission, you asked the current township solicitor if there would be any conflict of interest if Bell submitted a formal bid. The solicitor opined that since it was an open bid process, Bell could submit a bid without having a conflict of interest. You asked the solicitor about non -bid, day -to -day business purchases by the township from Bell. The solicitor opined that the law left some room for interpretation on the non -bid day -to -day business purchases of the township. He recommended that you ask the State Ethics Commission to review the matter and provide you with an advisory. You question whether a conflict of interest exists in the business relationship between Bell and Maidencreek Township on the day -to -day non -bid business purchases of the township just because of our appointments to both the Planning Commission and Vacancy Board. You ask it" township calls Bell and asks for the price and availability of merchandise and materials, and Bell quotes a price and availability of the merchandise and material to be purchased, and then based on the quote, the township decides to make that purchase from Bell, is there a conflict of interest? If so, you request an explanation as to how the conflict arises and seek a clear and concise remedy to the situation. 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 upon the facts which the requestor has submitted. In issuing the advisory based upon such submitted facts, 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. § 1107(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As a member of the Maidencreek Township Planning Commission, you may be a public official as that term is defined in the Ethics Act. As Chairman and a member of the Vacancy Board, you are a public official as that term is defined in the Ethics Act. Hence, you are subject to the provisions of the Ethics Act. 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 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 Rudderow, 03 -554 June 6, 2003 Page 3 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 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. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, 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. "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 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 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: § 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 Rudderow, 03 -554 June 6, 2003 Page 4 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. 65 Pa.C.S. § 1103(f). 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 as follows: § 1103. Restricted activities (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 Rudderow, 03 -554 June 6, 2003 Page 5 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. 65 Pa.C.S. § 1103(j). In each instance of a conflict, Section 1103(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 Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. In applying the above provisions of the Ethics Act to the instant matter, pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official/ public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. You specific inquires will now be addressed, first as a planning commission member and then as a chairman of the vacancy board. Initially, since Bell is a S- Corporation of which you are the president and a 50.1% shareholder, Bell is a business with which you are associated as that term is defined under the Ethics Act. As to your membership on the planning commission, there are basically two types of planning commissions in Pennsylvania: one type is a purely advisory body, the board members of which are not public officials under the Ethics Act; the other type is permitted to make decisions, the members of which are public officials under the Ethics Act. If your planning commission is the type that is a purely advisory body that only makes recommendations but cannot approve subdivision plans, then you would not be considered a public official as to your membership on the planning commission and the Ethics Act would not restrict your activities except as to Sections 1103(b)/(c) which apply to everyone. If your planning commission is the type that could actually make decisions, you would be a public official subject to the Ethics Act. However, you would not have a conflict as to matters between Maidencreek Township and Bell because Maidencreek Township is a separate governmental body from the planning commission. Since the planning commission would not be doing any business with Bell, the possibility of any conflict would not arise. Turning to the matter of your membership on the vacancy board, that board is not a separate governmental body but is part of Maidencreek Township. Consequently, as a vacancy board member and chairman, you would have a conflict as to any matters specifically involving Bell. However, as a practical matter, any transactions between Bell and Maidencreek Township would be done through the board of supervisors without any involvement by the vacancy board or yourself. Hence, it is difficult to foresee any situation where a conflict would arise under Section 1103(a) of the Ethics Act on your part as a vacancy board member vis -a -vis sales or contracts between Bell Rudderow, 03 -554 June 6, 2003 Page 6 and the township. In any situation of a conflict under Section 1103(a) of the Ethics Act, you would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act as noted above. Having reviewed the conflict question, the contracting provision of Section 1103(f) of the Ethics Act will now be discussed. In that the vacancy board is not a separate governmental body from Maidencreek Township and you are a member and chairman of that board, any sales or contracts between Bell and the township that would be $500 or more would be subject to the requirements of Section 1103(f) of the Ethics Act. Thus, in any instance where Bell would seek to make a sale to or contract with the township in the amount of $500 or more, Section 1103(f) would require that such sale /contract be entered through an open and public process as delineated above. Further, you could not have any administrative or supervisory responsibility as to that contract. As a practical matter, you as a member /chairman of the vacancy board would not have any involvement as to contracts that would be handled by the board of supervisors. 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 respective municipal codes. Conclusion: As a member of the Maidencreek Township Planning Commission, you may be and as Chairman of the Vacancy Board, you are a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Bell, a S- Corporation of which you are the president and a 50.1% shareholder, is a business with which you are associated under the Ethics Act. If your planning commission is the type that is a purely advisory body that only makes recommendations but cannot approve subdivision plans, then you would not be considered a public official as to your membership on the planning commission and the Ethics Act would not restrict your activities except as to Sections 1103(b)/(c) which apply to everyone. If your planning commission is the type that could actually make decisions, you would be a public official subject to the Ethics Act. However, you would not have a conflict as to matters between Maidencreek Township and Bell because Maidencreek Township is a separate governmental body from the planning commission. Since the planning commission would not be doing any business with Bell, the possibility of any conflict would not arise. Turning to the matter of your membership on the vacancy board, that board is not a separate governmental body but is part of Maidencreek Township. Consequently, as a vacancy board member and chairman you would have a conflict as to any matters specifically involving Bell. However, as a practical matter, any transactions between Bell and Maidencreek Township would be done through the board of supervisors without any involvement by the vacancy board or yourself. Hence, it is difficult to foresee any situation where a conflict would arise under Section 1103(a) of the Ethics Act on your part as a vacancy board member vis -a -vis sales or contracts between Bell and the township. In any situation of a conflict under Section 1103(a) of the Ethics Act, you would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act as noted above. In that the vacancy board is not a separate governmental body from Maidencreek Township and you are a member and chairman of that board, any sales or contracts between Bell and the township that would be $500 or more would be subject to the requirements of Section 1103(f) of the Ethics Act. Thus, in any instance where Bell would seek to make a sale to or contract with the township in the amount of $500 or Rudderow, 03 -554 June 6, 2003 Page 7 more, Section 1103(f) would require that such sale /contract be entered through an open and public process as delineated above. Further, you could not have any administrative or supervisory responsibility as to that contract. As a practical matter, you as a member /chairman of the vacancy board would not have any involvement as to contracts that would be handled by the board of supervisors. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. 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. 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