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HomeMy WebLinkAbout23-557 Confidential PHONE: 717-783-1610 STATE ETHICS COMMISSION FACSIMILE: 717-787-0806 FINANCE BUILDING WEBSITE: www.ethics.pa.gov TOLL FREE: 1-800-932-0936 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 ADVICE OF COUNSEL December 13, 2023 To the Requester: 23-557 This responds to your letter dated November 14, 2023, by which you requested a confidential advisory from the Pennsylvania State Ethics Commission (“Commission”), seeking guidance as to the issues presented below: Issues: (1) Whether, following termination of your employment as the \[Position\] for the \[Political Subdivision\], the post-employment restrictions of Section 1103(g) of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1103(g), would impose prohibitions or restrictions upon you with regard to being appointed as a Member of the \[Governing Body\] of the \[Governmental Entity\]. Brief Answer: The post-employment restrictions of Section 1103(g) of the Ethics Act would not prohibit you from being appointed as a Member of the \[Governing Body\] of the \[Governmental Entity\] following termination of your employment as the \[Position\] for the \[Political Subdivision\]. However, during the first year following termination of your employment with the \[Political Subdivision\], Section 1103(g) of the Ethics Act would apply and restrict “representation” of a “person” — including but not limited to the \[Governmental Entity\] — before your former governmental body, the \[Political Subdivision’s Office\], to the extent such representation would not constitute the practice of law. (2) Whether, as a Member of the \[Governing Body\]of the \[Governmental Entity\], you would have a conflict of interest with regard to voting on matters involving the \[Political Subdivision\], such as, for example, a settlement agreement with respect to litigation between the \[Governmental Entity\] and the \[Political Subdivision\]. Confidential Advice, 23-557 December 13, 2023 Page 2 Brief Answer: You would not have a conflict of interest with regard to voting on a settlement agreement or other matters involving the \[Political Subdivision\]unless: (1) you would be consciously aware of a private pecuniary (financial) benefit for yourself, a member of your immediate family, or a business with which you or a member of your immediate family is associated; and (2) your action(s) would constitute one or more specific steps to attain that benefit. Facts: You request a confidential advisory from the Commission based upon submitted facts that may be fairly summarized as follows. On \[Date\], you will be retiring from your employment as the \[Position\] for the \[Political Subdivision\]. Upon your retirement, you will receive a pension from the \[Political Subdivision\] which is based solely on your years of service and earnings. During your employment with the \[Political Subdivision\], issues arose involving the \[Governmental Entity\], which was \[Established\] by the \[Political Subdivision\]. In \[Month, Year\], the \[Governmental Entity\] entered into an \[Arrangement\] with a \[Corporation\]. The \[Political Subdivision’s\] governing body \[Engaged in Certain Action\] to permit the \[Governmental Entity\] to \[Perform a Certain Activity Related to the Arrangement\]. The \[Political Subdivision\] was not a signatory to the \[Arrangement\] and did not approve the \[Arrangement\] by \[Law\]. After several new members of the \[Political Subdivision\]’s governing body took office in \[Month, Year\], the \[Political Subdivision’s\] governing body instructed you to review the \[Arrangement\] and determine whether the \[Political Subdivision\] had any viable legal options to \[Take a Position on the Arrangement\]. Working with the \[Political Subdivision’s\]governing body and outside counsel retained by the \[Political Subdivision\], the \[Political Subdivision’s\]\[Position on the Arrangement\] was developed and implemented. By \[Law\] enacted \[Date\], the \[Political Subdivision\] authorized \[Certain Action Involving\] the \[Governmental Entity\]. The \[Political Subdivision\] additionally initiated litigation against the \[Governmental Entity\] in the \[Court\]. The \[Political Subdivision\] is also opposing the \[Action to be Taken Pursuant to the Arrangement\] in proceedings before the \[Governmental Agency\]. As a result of your role as the \[Political Subdivision\] \[Position\], you possess confidential information related to ongoing civil actions in \[Various Courts\] pertaining to one or more aspects of the \[Action to be Taken Pursuant to the Arrangement\]. The terms of two Members of the \[Governing Body\] of the \[Governmental Entity\] will expire on \[Date\]. Members of the \[Governmental Entity\] \[Governing Body\] whose terms have expired can continue to serve until their successors have been appointed by the \[Political Subdivision\]. Members of the \[Governmental Entity\] \[Governing Body\] receive compensation in relation to their service. As a resident of the \[Political Subdivision\], you are eligible for appointment to the \[Governmental Entity\] \[Governing Body\]. Confidential Advice, 23-557 December 13, 2023 Page 3 You seek guidance as to whether the Ethics Act would impose prohibitions or restrictions upon you following termination of your employment as the \[Political Subdivision\] \[Position\]. In particular, you pose the following questions: (1) Whether the Ethics Act would prohibit or restrict you from being appointed as a Member of the \[Governmental Entity\] \[Governing Body\]; (2) If the Ethics Act would not prohibit you from being appointed as a Member of the \[Governmental Entity\] \[Governing Body\], whether, in such capacity, you would have a conflict of interest with regard to voting on matters involving the \[Political Subdivision\], such as, for example, a settlement agreement with respect to litigation between the \[Governmental Entity\] and the \[Political Subdivision\]or other litigated actions currently underway; and (3) Whether the responses to the questions above would change if the \[Political Subdivision\] would retain you, as a private legal practitioner, to provide legal advice or representation to close out certain matters not involving the \[Governmental Entity\] which you worked on as the \[Political Subdivision\] \[Position\]. 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 requester based upon the facts that the requester has submitted. In issuing the advisory 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 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 requester has truthfully disclosed all of the material facts. Pursuant to Section 1103(a) of the Ethics Act, a public official/public employee is prohibited from engaging in conduct that constitutes a conflict of interest: Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. -- No public official or public employee shall engage in conduct that constitutes a conflict of interest. (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 Confidential Advice, 23-557 December 13, 2023 Page 4 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(a), 1103(j). 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 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. 65 Pa.C.S. § 1102. Confidential Advice, 23-557 December 13, 2023 Page 5 Subject to the statutory exclusions to the Ethics Act’s definition of the term “conflict” or “conflict of interest,” 65 Pa.C.S. § 1102, a public official/public employee is prohibited from using the authority of public office or confidential information received by holding such a public position for the private pecuniary (financial) 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. The use of authority of office is not limited merely to voting but extends to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In each instance of a conflict of interest, a public official/public employee would be 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. Per the Pennsylvania Supreme Court’s decision in Kistler v. State Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the Ethics Act, a public official/public employee: … must act in such a way as to put his \[office/public position\] to the purpose of obtaining for himself a private pecuniary benefit. Such directed action implies awareness on the part of the \[public official/public employee\] of the potential pecuniary benefit as well as the motivation to obtain that benefit for himself. Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics Act, a public official/public employee “must be consciously aware of a private pecuniary benefit for himself, his family, or his business, and then must take action in the form of one or more specific steps to attain that benefit.” Id., 610 Pa. at 528, 22 A.3d at 231. Section 1103(g) of the Ethics Act imposes post-termination of service/employment restrictions upon a former public official/public employee with regard to “representing” a “person” before “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). The terms “represent,” “person,” and “governmental body with which a public official or public employee is or has been associated” are specifically defined in the Ethics Act as follows: Confidential Advice, 23-557 December 13, 2023 Page 6 § 1102. Definitions “Represent.” To act on behalf of any other person in any activity which includes, but is not limited to, the following: personal appearances, negotiations, lobbying and submitting bid or contract proposals which are signed by or contain the name of a former public official or public employee. “Person.” A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. “Governmental body with which a public official or public employee is or has been associated.” The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. 65 Pa.C.S. § 1102. The term “person” is very broadly defined. It includes, inter alia, corporations and other businesses. It also includes the former public official/public employee himself, Confidential Opinion, 93-005, as well as a new governmental employer. Ledebur, Opinion 95-007. The term “represent” is also broadly defined to prohibit acting on behalf of any person in anyactivity. However, Section 1103(g) of the Ethics Act may not be applied to restrict an attorney’s conduct insofar as it constitutes the practice of law because the Pennsylvania Supreme Court has the exclusive authority to regulate an attorney’s conduct in that regard. Shaulis v. Pennsylvania State Ethics Commission, 574 Pa. 680, 833 A.2d 123 (2003); cf., Yocum v. Pennsylvania Gaming Control Board, 639 Pa. 521, 161 A.3d 228 (2017). Additionally, the Commonwealth Court of Pennsylvania has held that lobbying by an attorney is the practice of law. Gmerek v. State Ethics Commission, 751 A.2d 1241 (Pa. Cmwlth. 2000), affirmed by evenly divided Court, 569 Pa. 579, 807 A.2d 812 (2002). It is important to note that although Section 1103(g) of the Ethics Act may not be applied to restrict a former public official/public employee — who is an attorney — from lobbying the former governmental body during the first year following termination of public service/public employment because lobbying by an attorney is the practice of law (see, Gmerek, supra), by Order of the Pennsylvania Supreme Court dated April 11, 2023, Rule 1.19 of the Rules of Professional Conduct was amended to include the following subsection regarding lawyers acting as lobbyists: Rule 1.19 Lawyers Acting as Lobbyists Confidential Advice, 23-557 December 13, 2023 Page 7 (c) A lawyer whose service as a public officer or public employee of a governmental body concludes on or after June 1, 2023, shall not act as alobbyist, as defined in any statute, resolution passed or adopted by either house of the Legislature, regulation promulgated by the Executive Branch or any agency of the Commonwealth of Pennsylvania or ordinance enacted by a local government unit, on any matter before the governmental body with which the lawyer had been associated for one year after termination of the lawyer's service as a public officer or public employee. Rule of Professional Conduct 1.19(c). Because the issue of whether a former public official/public employee — who is an attorney — may act as a lobbyist before the former governmental body is not governed by Section 1103(g) of the Ethics Act but rather is governed by the Rules of Professional Conduct, which the Commission does not have the statutory jurisdiction to interpret or administer, the Commission may not address questions regarding such lobbying activity. Conclusion: In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. As the \[Political Subdivision\] \[Position\], you are a public employee subject to the Ethics Act. See, \[Cites\]. Consequently, upon termination of your employment as the \[Political Subdivision\] \[Position\], you would become a “former public employee” subject to Section 1103(g) of the Ethics Act. The governmental body with which you would be deemed to have been associated upon termination of your employment as the \[Political Subdivision\] \[Position\] would be the \[Political Subdivision’s Office\]. Therefore, for the first year following termination of your employment as the \[Political Subdivision\] \[Position\], Section 1103(g) of the Ethics Act would apply and restrict “representation” of a “person” before the \[Political Subdivision’s Office\] to the extent such representation would not constitute the practice of law. Cf., Moore, Opinion 05-008; Confidential Opinion, 19-001. Section 1103(g) of the Ethics Act would not prohibit you from being appointed as a Member of the \[Governmental Entity\]\[Governing Body\] following termination of your employment as the \[Political Subdivision\] \[Position\]. However, during the first year following termination of your employment as the \[Political Subdivision\] \[Position\], Section 1103(g) of the Ethics Act would apply to restrict you from representing the \[Governmental Entity\] before your former governmental body,the \[Political Subdivision’s Office\], to the extent such representation would not constitute the practice of law. If you would be appointed as a Member of the \[Governmental Entity\] \[Governing Body\], you would in that capacity be a public official subject to the provisions of the Ethics Act. Accordingly, you would simultaneously be a former public employee with respect to your former Confidential Advice, 23-557 December 13, 2023 Page 8 governmental body, the \[Political Subdivision’s Office\], and a public official with respect to your current governmental body, the \[Governmental Entity\]. Cf., Moore, Opinion 05-008. As such, you would simultaneously be subject to the restrictions of Section 1103(g) of the Ethics Act (i.e., as a former public employee with respect to the \[Political Subdivision’s Office\], you would be prohibited from engaging in any activity that would involve “representation” of a “person” before the \[Political Subdivision’s Office\] to the extent such representation would not constitute the practice of law) and the restrictions of Section 1103(a) of the Ethics Act (i.e., as a public official with respect to the \[Governmental Entity\], you would be prohibited from engaging in conduct that would constitute a conflict of interest). You would not have a conflict of interest as a Member of the \[Governmental Entity\] \[Governing Body\] with regard to voting on matters involving the \[Political Subdivision\], such as, for example, a settlement agreement with respect to litigation between the \[Governmental Entity\] and the \[Political Subdivision\] or other litigated actions currently underway, unless: (1) you would be consciously aware of a private pecuniary (financial) benefit for yourself, a member of your immediate family, or a business with which you or a member of your immediate family is associated; and (2) your action(s) would constitute one or more specific steps to attain that benefit. See, Kistler, supra. Section 1103(g) of the Ethics Act would not prohibit you from being retained by the \[Political Subdivision\]to provide legal advice or representation to close out certain matters not involving the \[Governmental Entity\]which you worked on as the \[Political Subdivision\] \[Position\], as such activity would constitute the practice of law. Your retention by the \[Political Subdivision\] in such capacity would not serve as a basis for the Ethics Act to prohibit youfrom being appointed as a Member of the \[Governmental Entity\] \[Governing Body\] nor would it serve as a basis for you to have a conflict of interest as a \[Governmental Entity\] \[Governing Body\] Member in matters pertaining to the \[Political Subdivision\]. 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. Pursuant to Section 1107(11) of the Ethics Act, 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 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 receivedat the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be Confidential Advice, 23-557 December 13, 2023 Page 9 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, Martin W. Harter Acting Chief Counsel