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HomeMy WebLinkAbout03-582 JosephJoseph M. Joseph, Esquire Douglas & Joseph 409 North Hermitage Road Hermitage, PA 16148 ADVICE OF COUNSEL August 14, 2003 03 -582 Re: Conflict; Public Official /Employee; Exclusion; Class /Subclass; Council; Borough; Water Treatment Plant; Private Water Supplier. Dear Mr. Joseph: This responds to your letter of July 24, 2003, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Ha.G.S. § 1101 et seq., presents any prohibition or restrictions upon a borough council member as to the sale by the borough of its water treatment plant to a private water supplier where her spouse is an employee of the borough and water treatment plant and her brother is an employee of the borough with overlapping duties with the water treatment plant. Facts: You seek an advisory as to whether a council member for Sharpsville Borough (Borough) has a conflict of interest under the following submitted facts. The Borough, located in Mercer County, is governed by seven council members. Mrs. Luann Anglin (Anglin) presently serves on Borough Council. The Borough currently owns /operates a water treatment plant and distribution system, both of which are physically located within the borough boundaries. For water treatment plant operations, the Borough employs six full -time, hourly employees comprised of four licensed operators, one assistant foreman who is not a licensed operator, and one secretary. Anglin's spouse, Casey, is an employee of the Borough and assistant foreman of the water treatment plant. The employees of the water treatment plant are represented through AFSCME for collective bargaining. Anglin's brother, Gino Guerino ( Guerino), is employed as an hourly street department worker, being the least senior member of the AFSCME collective bargaining group. A copy of the current collective bargaining contract between the borough and its employees has been supplied and is incorporated by reference. Pursuant to the collective bargaining contract, Casey Anglin receives an hourly wage of $16.68 per hour, including longevity pay in the amount of $1,425.00, and thirty sick days and thirty vacation days per year. Casey Anglin's rate of pay is the assistant foreman's rate of Joseph /Anglin, 03 -582 August 14, 2003 Page 2 pay which is a different rate of pay received for water utility pay. The Borough also employs seven additional hourly employees who are part of the AFSCME collective bargaining unit. Their duties may overlap with water plant employee duties. The hourly street employees and water department employees are members of the same AFSCME bargaining unit. All AFSCME hourly employees receive certain benefits through their Borough employment: health, vacation, sick /personal, longevity, and retirement. The hourly employees' retirement benefits allow any employee who is at least 55 years of age with at least 20 years of service to retire and receive up to 80% of his pay. An early retirement benefit allows for an individual to voluntarily leave employment, provided there is at least 20 years of credited service, and receive a monthly benefit that will be actuarially reduced for each year of early retirement. The reduction will amount to approximately one half percent of the benefit for each month under normal retirement age. The Borough through an evaluation of its water treatment plant contemplates either rehabilitating the existing plant, building a new plant or selling the plant to a private water supplier. Although the Borough has not received any definitive estimates for rehabilitating the existing plant, it has obtained financial figures ranging from six hundred thousand to 1.8 million dollars. Similarly, the Borough does not have definitive estimates as to the cost of building a new plant but has varying financial figures ranging from 2.0 million to 3.2 million dollars. The Borough has received an offer, a photocopy of which has been submitted and is incorporated by reference, from a private water supplier, Consumers Water Company (Consumers) for the purchase of the water plant. Consumers' offer contains the following provisions: the water treatment plant will continue service for at least five years after the purchase; the Borough will operate the water treatment plant and the water system during that time period; the Borough will receive a monthly fee from Consumers for operating costs of the water system; water department employees will continue as public employees with benefits and a pension program during the five year transition; and the existing labor contract will continue in effect. In the transition period, water department employees may elect to become Consumer employees. An employee with the required age and years of service will be able to retire with a full pension from the Borough and become an employee of Consumers. Any new employees would be hired as Consumers' employees. In the transition, the water system will be interconnected so that by the end of the five -year period, all water department employees will be either Consumer employees, Borough retired employees or retained Borough employees in some other capacity. Consumer does not delineate the treatment of Borough employees, their rate of pay or benefits that may be offered after the transition period if they elect to become Consumer employees. Although several water plant employees may be eligible to retire with full pension benefits, Casey Anglin would not be so eligible. During the five -year transition period, Casey Anglin will not attain 55 years of age and 20 years of service in that time frame; he would be eligible for an early retirement benefit of an unknown amount. Casey Anglin may continue as a Borough employee for the transition period, and then elect an early retirement with a partial pension. He could also become a Consumer employee, with a rate of pay and benefits that are unknown. If the water treatment plant is sold, all existing water plant employees, including Casey Anglin, would have the opportunity to continue as Borough employees during the transition period. Such employees could choose not to become Consumer employees and not to retire. In such instances, they would remain Borough employees. Casey Anglin would have to be retained per the provisions of the current collective bargaining agreement. This could possibly result in a lay -off of the least senior member of the collective bargaining group, Guerino, who would have a right of recall within three years of his being laid off per the AFSCME Collective Bargaining Agreement. If the water Joseph /Anglin, 03 -582 August 14, 2003 Page 3 plant is not sold, the Borough employees will not have to make an election and no employee's current job status, pay, or benefits would change unless the employee elected to retire or elected to terminate his employment status. As per Anglin's authorization to you, as borough solicitor, you seek an advisory as to whether Anglin may vote on whether the borough should sell the water plant to Consumers or retain it. 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 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. §§ 1107(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As a Council member for Sharpsville Borough, Anglin is a public official as that term is defined in the Ethics Act, and hence she is subject to the provisions of that 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 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. "Immediate family." A parent, spouse, child, brother or sister. 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 Joseph /Anglin, 03 -582 August 14, 2003 Page 4 imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. 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 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. Section 1103(a) of the Ethics Act prohibits a public official /public employee 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. As to the question you have posed, participation by Anglin in Borough Council action as to the water treatment plant forms the basis for a conflict. Under Section 1103(a) of the Ethics Act, Anglin would use the authority of office by participating in actions of Borough Council as to the water treatment plant. Further, such action would result in private pecuniary benefits as to compensation, benefits, or retirement. Lastly, the pecuniary benefits would inure to Anglin's spouse who is a member of her immediate family as that term is defined under the Ethics Act. Regardless of the outcome of Council action, there will be a financial impact upon Anglin's spouse. Thus, if the borough does not sell the water treatment plant, Anglin's spouse will be able to keep his current position of Borough employment. Such continuation of Borough Joseph /Anglin, 03 -582 August 14, 2003 Page 5 employment is a pecuniary benefit. Likewise, if the water treatment plant is sold, then Casey Anglin could take an early retirement and begin employment with Consumers. That would also be a primary benefit. (July 24, 2003 letter of Joseph, Exhibit B at 1.) Hence, all of the elements of a conflict exist. The statutory definition of "conflict" or "conflict of interest" includes two exclusions, hereinafter referred to as the "de minimis" exclusion and the "class /subclass exclusion." The de minimis exclusion precludes a finding of a conflict of interest as to an action having a de minimis (insignificant) economic impact. Thus, when a matter that would otherwise constitute a conflict of interest under the Ethics Act would have an insignificant economic impact upon a public official, a member of his immediate family, or a business with which he or a member of his immediate family is associated, a conflict would not exist and Sections 1103(a) and 1103(j) of the Ethics Act would not restrict participation in such matter. See, Schweinsburq, Order 900. In that the inquiry involves the financial impact upon Anglin's spouse as to the sale or retention of the water treatment plant, such action would not have a de minimis economic impact, and therefore, this exclusion would not apply. In order for the class /subclass exclusion to apply, two criteria must be met: (1) the affected public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be a member of a class consisting of the general public or a true subclass consisting of more than one member; and (2) the public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be affected "to the same degree" as the other members of the class /subclass. 65 Pa.C.S. § 1102; see, Graham, Opinion 95 -002 (citing Van Rensler, Opinion 90 -017); Rubenstein, Opinion -007. The first criterion of the exclusion is satisfied where the members of the proposed subclass are similarly situated as the result of relevant shared characteristics. The second criterion of the exclusion is satisfied where the individual /business in question and the other members of the class /subclass are reasonably affected to the same degree by the proposed action. Kablack, Opinion 02 -003. In considering the first criterion, it might appear that the correct identification of the class /subclass is the borough /water treatment plant employees who have relevant shared characteristics with Casey Anglin. However, it appears that Casey is the only assistant foreman with a separate rate of pay. Accordingly, Casey would be unique and hence would not comprise a subclass of more than one person. Regarding the second criteria concerning being affected to the same degree as the other members of the class /subclass, even if there were a subclass comprised of Casey Anglin and one or more other similarly situate employees, a serious question exists whether the financial impact to Casey Anglin would be to the same degree as to the other member(s) of the subclass. Hence, Anglin has a conflict as to the water treatment plant issue, may not participate and must observe the disclosure requirements of Section 1103(j) of the Ethics Act. Since the elements of a conflict exist as to Anglin's spouse and since there is no basis in the submitted facts to establish a subclass (exception), a conflict exists. As such, there is no need to address the financial impact on Anglin's brother Guerino of the action as to the water treatment plant which could provide an additional basis for a 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 not addressed herein is the applicability of the Borough Code. Joseph /Anglin, 03 -582 August 14, 2003 Page 6 Conclusion: As a Councilwoman for the Borough of Sharpsville, Luann Anglin 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. Participation by Anglin in the sale or retention of the water treatment plant forms the basis for a conflict. Under Section 1103(a) of the Ethics Act, Anglin would use the authority of office by participating in actions of Borough Council as to the water treatment plant. Further, such action would result in private pecuniary benefits as to compensation, benefits, or retirement. Lastly, the pecuniary benefits would inure to Anglin's spouse who is a member of her immediate family as that term is defined under the Ethics Act. The statutory definition of "conflict" or "conflict of interest" includes two exclusions, the "de minimis" exclusion and the "class /subclass exclusion." The de minimis exclusion would not apply, given that the financial impact is not insignificant. The subclass exclusion would not apply because Anglin's spouse Casey is the only assistant foreman with a separate rate of pay. Accordingly, Casey would be unique and hence would not comprise a class of more than one person or be affected to same degree as to financial impact. Given the above conflict, the issue of conflict as to Anglin's brother Guerino need not be addressed. 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