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HomeMy WebLinkAbout24-507 McGheePHONE: 717-783-1610 TOLL FREE: 1-800-932-0936 To the Requester: Robert McGhee Sr. Dear Mr. McGhee: STATE ETHICS COMMISSION FINANCE BUILDING 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 FACSIMILE: 717-787-0806 WEBSITE: www.ethics.pa.gov ADVICE OF COUNSEL January 19, 2024 24-507 This responds to your letter dated January 2, 2024, by which you requested an advisory from the Pennsylvania State Ethics Commission ("Commission"), seeking guidance as to the issue presented below: Issue: Facts: Whether Section 1103(a) of the Public Official and Employee Ethics Act ("Ethics Act"), 65 Pa.C.S. § 1103(a), pertaining to conflict of interest, would prohibit an individual who has been elected as a township supervisor from purchasing scrap metal from the township for his scrap company to process and sell to steel mills. Brief Answer: NO. Because Section 1103(a) of the Ethics Act imposes restrictions upon public officials and public employees in their public capacities and not their private capacities, Section 1103(a) would not prohibit the individual, in his private capacity as the owner of a scrap company, from purchasing scrap metal from the township to process and sell to steel mills. However, Section 1103(a) of the Ethics Act would prohibit the individual from using the authority of his public position as a township supervisor or confidential information accessed or received as a result of being a township supervisor in furtherance of his or his scrap company's business interests. You request an advisory from the Commission based on the following submitted facts. McGhee, 24-507 January 19, 2024 Page 2 You are a newly elected Supervisor for Liberty Township ("Township"), located in Centre County, Pennsylvania. In aprivate capacity, you own and operate McGhee Scrap Company, which is located in the Township. Your company buys scrap metal and then processes it and sells it to steel mills for a profit. In the past, your company has bought scrap metal from the Township. You seek guidance as to whether the Ethics Act would impose any prohibitions or restrictions upon you with regard to purchasing scrap metal from the Township for processing by your company, McGhee Scrap Company. You provide as an example a scenario where the Township would remove old steel drainage pipes and then bring them to your company's facility, at which point the drainage pipes would be weighed and the Township would be paid your company's market price for the steel. Your company would then process the drainage pipes and sell the processed material to a steel mill for a profit. 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 11030) 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. 0) 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 McGhee, 24-507 January 19, 2024 Page 3 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), 11030). 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. "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 Ethics Act's 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 McGhee, 24-507 January 19, 2024 Page 4 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 11030) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 11030) of the Ethics Act would have to be satisfied in the event of a voting conflict. Section 1103(f) of the Ethics Act, pertaining to contracting, 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 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). The term "contract" is defined in the Ethics Act as follows: "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 parry and a public official or public employee as the other parry, concerning his expense, reimbursement, salary, McGhee, 24-507 January 19, 2024 Page 5 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. § 1101. 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. Section 1103(f) of the Ethics Act also provides that the public official/public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Conclusion: In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. As a Township Supervisor, you are a public official subject to the provisions of the Ethics Act. McGhee Scrap Company is a business with which you are associated as the owner. Section 1103(a) of the Ethics Act, pertaining to conflict of interest, imposes restrictions upon public officials and public employees in their public capacities and not their private capacities. Therefore, Section 1103(a) of the Ethics Act would not prohibit you, in your private capacity, from purchasing scrap metal from the Township for processing by your company, McGhee Scrap Company. However, Section 1103(a) of the Ethics Act would prohibit you from using the authority of your public position as a Township Supervisor or confidential information accessed or received as a result of being a Township Supervisor in furtherance of your or your company's business interests. An agreement or arrangement whereby you or your company would purchase scrap metal from the Township would constitute a "contract" as that term is defined in the Ethics Act. The restrictions and requirements of Section 1103(f) of the Ethics Act would have to be observed as to any contract between you or McGhee Scrap Company and the Township that would be valued at $500 or more. (See, Kistler v. State Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011), regarding the requirements for an "open and public process.") Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. 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. McGhee, 24-507 January 19, 2024 Page 6 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. Respectfully, r Bridget K. Guilfoyle Chief Counsel