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Home My WebLink About24-501 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 ADVICE OF COUNSEL January 8, 2024 To the Requester: 24-501 This responds to your letter dated December 19, 2023, by which you requested a confidential advisory from the Pennsylvania State Ethics Commission (“Commission”), seeking guidance as to the issue presented below: Issue: Whetherthe Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., would impose prohibitions or restrictions upon a person serving as a Member of the \[Governing Body\] of the \[Political Subdivision\], who in a private capacity is a Member of the Board of Directors of a non-profit corporation named the \[Entity\], with regard to voting on: (1)a \[Political Subdivision\]budget which includes a line item for a \[Type of Payment\] in \[a Certain Amount\] to the \[Entity\]; or (2) a bill list which includes the \[Type of Payment\] in \[the Certain Amount\] to the \[Entity\]. Brief Answer: YES. Because the \[Entity\] is a business with which the person is associated in her capacity as a Director, pursuant to Section 1103(a) of the Ethics Act, the person would have a conflict of interest as a Member of the \[Political Subdivision Governing Body\] with regard to voting on: (1) a \[Political Subdivision\]budget which includes a line item for a \[Type of Payment\]in \[a Certain Amount\]to the \[Entity\]; or (2) a bill list which includes the \[Type of Payment\] in \[the Certain Amount\] to the \[Entity\]. Facts: Youhave been authorized by \[Name of Person\] (“the Person”) to request a confidential advisory from the Commission on her behalf. You have submitted facts that may be fairly summarized as follows. Confidential Advice, 24-501 January 8, 2024 Page 2 The Person is a Member of the \[Political Subdivision Governing Body\]. The \[Political Subdivision\] is located in \[County\], Pennsylvania. The Entity is a Pennsylvania non-profit corporation which seeks to \[Achieve a Certain Goal\]. The Entity maintains a \[Type of Facility\] and programs \[Certain Activities\] for \[Types of Individuals\]. For several years the \[Political Subdivision\] has made a \[Type of Payment\] to the \[Entity\]. The \[Political Subdivision’s\] budgeted expenditures for 2024, which total approximately \[Amount\], include a budgeted \[Type of Payment\] of \[a Certain Amount\] to the \[Entity\]. In a private capacity, the Person is a Member and \[Officer\] of the Board of Directors of the \[Entity\]. Other Members of the \[Political Subdivision Governing Body\] who do not serve on the \[Entity\] Board of Directors are members of the \[Entity\] or participate in \[Entity-Sponsored\] activities. The question that is posed by your advisory request is whether the Ethics Act would impose prohibitions or restrictions upon the Person with regard to voting on: (1) a \[Political Subdivision\] budget which includes a line item for a \[Type of Payment\] in \[a Certain Amount\] to the \[Entity\]; or (2) a bill list which includes the \[Type of Payment\] in \[the Certain Amount\] to the \[Entity\]. 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. 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 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 material facts. 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 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 Confidential Advice,24-501 January 8, 2024 Page 3 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. “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. Confidential Advice, 24-501 January 8, 2024 Page 4 “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. Subject to the statutory exclusions to the definition of the term “conflict” or “conflict of interest”(i.e., the “de minimis exclusion” and the “class/subclass exclusion), 65 Pa.C.S. § 1102, 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 advancement of his own private pecuniary (financial)benefit or that of a business with which he is associated. The definition of the term “business” as set forth in the Ethics Act includes a non-profit corporation. Rendell v. State Ethics Commission, 603 Pa. 292, 983 A.2d 708 (2009). 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. Conclusion: In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. As a Member of the \[Political Subdivision Governing Body\], the Person is a public official subject to the provisions of the Ethics Act. The \[Entity\] is a business with which the Person is associated in her capacity as a Director. (It is noted that an individual’s membership in the \[Entity\] or participation in \[Entity-Sponsored\] activities alone would not be sufficient to make it a business with which the individual is associated.) The Person generally would have a conflict of interest under Section 1103(a) of the Ethics Act in matters before the \[Political Subdivision Governing Body\] that would financially impact her or the \[Entity\]. The Person specifically would have a conflict of interest with regard to voting on: (1) a \[Political Subdivision\] budget which includes a line item for a \[Type of Payment\] in \[a Certain Amount\] to the \[Entity\]; or (2) a bill list which includes the \[Type of Payment\] in \[the Certain Amount\] to the \[Entity\]. In each instance of a conflict of interest, the Personwould be required to abstain from participation, which would includevoting 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. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Confidential Advice, 24-501 January 8, 2024 Page 5 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 availableas 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 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, Bridget K. Guilfoyle Chief Counsel