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HomeMy WebLinkAbout03-010 TesoneI. ISSUE: Robert J. Tesone, Esquire 2500 Highland Road, Suite 104 Kerrwood Place, P.O. Box 1071 Hermitage, PA 16148 Dear Mr. Tesone: OPINION OF THE COMMISSION Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Daneen E. Reese Frank M. Brown Donald M. McCurdy Michael Healey Paul M. Henry DATE DECIDED: 12/2/03 DATE MAILED: 12/15/03 03 -010 Re: Conflict; Public Official /Employee; Exclusion; Class /Subclass; De minimis; Council; Borough; Water Treatment Plant; Sale; Spouse; Brother; Immediate Family; Assistant Foreman; Employee; Private Water Supplier; Appeal of Advice This Opinion is issued in response to the appeal of Advice of Counsel, 03 -582 which was issued on August 14, 2003. Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.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. II. FACTUAL BASIS FOR DETERMINATION: By faxed letter dated September 9, 2003, you appealed Advice of Counsel, 03 -582 issued August 14, 2003. In an initial letter of July 24, 2003, you requested an advisory as to whether Luann Anglin (Anglin), as a member of the Sharpsville Borough Council, had a conflict as to the sale by the borough of its water treatment plant to a private water supplier where Anglin's 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. Tesone /Anglin 03 -010 Page 2 Advice of Counsel, 03 -582, issued on August 14, 2003, in response to your request, found that Anglin's participation in the sale or retention of the water treatment plant would constitute a conflict under Section 1103(a) of the Ethics Act. The advice concluded that Anglin's participation in actions of Borough Council as to the water treatment plant would be uses of authority of office that would result in private pecuniary benefits as to compensation, benefits, or retirement that would inure to Anglin's spouse who is a member of her immediate family. The advice discussed the two exclusions, the "de minimis" exclusion and the class /subclass exclusion, from the statutory definition of conflict. The de minimis exclusion was found not to apply, given that the financial impact is not insignificant. The advice determined that the subclass exclusion also would not apply because Anglin's spouse, being the only assistant foreman with a separate rate of pay, did not comprise a class of more than one person who would be affected to same degree as to the financial impact. Because of the conflict as to Anglin's spouse, the advice did not address the issue of conflict as to Anglin's brother. You timely appealed the above Advice on September 9, 2003. Having noted the above procedural history, we would now typically restate the facts as presented in the original letter of request dated July 24, 2003, given that our review is de novo. However, since you do not take issue with the facts as they are presented in the advice and since we believe that the advice accurately and concisely sets forth the facts, we shall quote the facts as recited in the advice: "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 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 lant or selling the plant to a private water supplier. Although the Borough has not received any definitive estimates for rehabilitating the existing plant, it Tesone /Anglin 03 -010 Page 3 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 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." On October 30, 2003, the Commission received your Brief, wherein you do not dispute the facts as stated in the advice but challenge the analysis and conclusions. You proffer the following arguments in your brief: "use" of authority of office requires action to facilitate the receipt of compensation to which a public official is not entitled, and Anglin's participation would not constitute such "use "; "pecuniary benefit" constitutes an effort to obtain financial gain other than compensation provided by law; Pulice v. SEC, No. 875 C.D. (Pa. Commw. 1997), holds that no pecuniary benefit exists as to salaries for school administrators who are affected to the same degree; because the labor agreement was negotiated within the framework of the Public Employees Act No. 195 of 1970 and any retirement benefits are determined within the structure of the Pennsylvania Municipal Retirement Law, the compensation received by Anglin's spouse /brother is "compensation provided by law "; the class /subclass exclusion to conflict applies to occupations rather than to job titles; Chief Counsel misapplied the class /subclass exclusion by finding that Anglin's spouse was in a unique position as assistant foreman and that a question exists as to the financial impact being Tesone /Anglin 03 -010 Page 4 to the same degree; Kraines v. SEC, No. 3018 C.D. (Commw Ct. 2001) stands for the proposition that a class /subclass may not be an "illusionary" distinction; Chief Counsel's classification of Anglin's spouse as a subclass of "assistant foreman" is illusionary as it attempts to separate him from the ranks of the bargaining unit or occupation of borough employees; Chief Counsel's conclusion that the de minimis exclusion does not apply is in error since the Borough employees have the option of continuing as Borough employees; and wages provided to Anglin's spouse /brother and others in the bargaining unit have an "insignificant adverse economic impact" since the Borough is obligated to provide wages /benefits regardless of whether the water treatment plant is sold or retained by the Borough. By letter dated October 31, 2003, you were notified of the date, time and location of the public meeting at which your request would be considered. III. 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, this 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 Sharpsville Borough Council, Anglin is a public official subject to the provisions of the Ethics Act. 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 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 Tesone /Anglin 03 -010 Page 5 permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa.C.S. §§ 1103(a), 0). The following terms pertaining to conflicts of interest 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. "De minimis economic impact." An economic consequence which has an insignificant effect. 65 Pa.C.S. § 1102. 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. Section 1103 of the Ethics Act was interpreted by Commonwealth Court in Snyder v. SEC, 686 A.2d 843 (Pa. Commw. 1996) to mean that a public official should not participate in personal /business matters. The court upheld the finding of a Section 1103(a) violation of the Ethics Act by a township supervisor as to his participation in the board's consideration of a real estate development plan while he engaged in an undisclosed business relationship with a developer, a business with which the supervisor was not associated. The courts of this Commonwealth, as far back as 1803, in Commonwealth v. Douglas, 1 Binney, 77, (1803) have established the public policy in this Commonwealth regarding a public official's use of public office to obtain financial gains or to participate in matters in which the public official has an interest. See, Coltar v. Warminster Township, 302 A.2d 859 (Pa. Cmwlth. Ct. 1973); Geinkinger v. New Castle, 368 Pa. 547, 84 A.2d 303 (1951); City Councilmembers v. Consumers Education and Protection Association, 495 Pa. 10, 432A.2d 173 (1981); Reckner v. German Township School District, 341 Pa. 375, 19 A.2d 402 (1941); Commonwealth v. Raudenbush, 249 Pa. 86, 94 A.555 (1915). Tesone /Anglin 03 -010 Page 6 Anglin argues that there would be no conflict in her participation because there is no conflict if the financial gain is compensation provided for by law. Although Anglin's recitation of the legal principle is correct, she misperceives and misapplies the principle in her situation. Compensation provided by law is indicative of legislation that specifically authorizes a public official to receive an enumerated financial gain. For example, Section 602 of the Second Class Township Code, 53 P.S. §65602, allows a supervisor on a three - member board to vote for himself to a compensated employment position with the township without conflict. In addition, Section 606 of the Second Class Township Code, 53 P.S. §65606, specifically allows working and non - working township supervisors to receive township paid insurance benefits at their request. See, Akerly, Order 976. However, the assertion that there is an authorization in law for Anglin to vote on the water treatment plant sale because the borough labor agreement was negotiated in conformity with the Public Employees Act and any retirement benefits are within the ambit of the Pennsylvania Municipal Retirement Law, is baseless. To the contrary, since there is no provision in the Borough Code which allows a council member to participate in a matter that would financially impact immediate family members, there is no authorization in law for such participation. Compare, Section 602 of the Second Class Township Code, supra. If we were to adopt Anglin's interpretation of the definition of conflict, the result would be an evisceration of the Ethics Act. Anglin's argument in effect reduces to the proposition that if there is no statutory prohibition against a course of action, then it is authorized in law. Such is not the case. To the contrary, unless there is specific statutory authorization for the actual receipt of the pecuniary benefit, then it is financial gain other than provided for in law. Although Anglin does not concede that there is a conflict, she nevertheless makes alternative arguments relating to the two conflict exclusions which only have application if there would otherwise be a conflict. Initially, we note that both of these exclusions are to be narrowly construed. This is consistent with case law. See, Phillips v. State Ethics Commission, 470 A.2d 659 (Pa. Commw. Ct. 1984). We shall now consider the first exclusion, the de minimis economic impact, which is quoted above. Since the fundamental concept of a conflict centers upon the use of public office to obtain a private pecuniary benefit, the exclusions from conflict relate to two types of instances where the financial gain that is obtained is nevertheless not deemed (excluded from) a conflict. In applying the above definition of de minimis in the context of the overall intendment of the statutory definition of conflict, this exclusion relates to those pecuniary benefits received through the use of office where the financial gain is an economic consequence of insignificant effect. In short, this exclusion relates to financial gains that are so small that they do not rise to the level of a conflict. See, Schweinsburq, Order 900. The exclusion is based upon a practical and legitimate consideration of cases involving insignificant amounts of financial gain that should not be considered as rising to the level of a conflict of interest. Anglin's argument that the de minimis exclusion applies because borough employees may continue with the status quo or receive compensation that is based upon the borough's obligation to provide such wages and benefits, belies both the literal wording and intent of this exclusion. Anglin's participation as to the sale of the borough water treatment plant would have a financial impact upon her spouse or brother that would be more than de minimis. As to Anglin's arguments regarding the borough's obligation to pay wages or the continuation of the status quo, the Ethics Act is not a "wait and see" statute. Rather, the Ethics Act in art allows public officials to seek advice as to prospective conflict so as to avoid a violation of the Ethics Act which has criminal penalties. Anglin's participation would affect matters such as placement and longevity of employees, compensation, benefits, and retirement, all of which are economic considerations that are greater than de minimis as to her spouse and brother. Tesone /Anglin 03 -010 Page 7 Turning to the second exclusion involving a class consisting of the public or subclass consisting of a group, occupation, or profession, Anglin asserts that the placement of her spouse in a subclass of assistant foreman is illusionary because it arbitrarily separates him from the bargaining unit or the occupation comprised of borough employees. To understand the operation of this exclusion, one must understand the purpose for which this provision was inserted into the Ethics Act. That purpose of the exclusion was to remove from conflict those matters that involved a financial gain to the public at large or a subclass consisting of a group, occupation, or profession. The exclusion is premised upon the realization that a conflict should not be attributable to action by a public official which impacts upon him, his immediate family, or associated business where such action impacts to the same degree upon members of a class /subclass. An example of the above would be a public official voting on a tax decrease. The public official will or should be guided by considerations of governmental services, budget, revenues, and like factors as opposed to the singular concern of his own taxes being decreased. The same principle would apply to matters affecting a group, occupation, or profession. For example, in VanRensler, Opinion 90 -017, we held that a school director could vote on the final ratification of a teachers contract when his spouse was a member of the bargaining unit and would receive the same increase as all other teachers. The school director would or should be guided by considerations of the school district, education of students, and expenditures for teachers salaries rather than his own spouse's raise. Given that the class /subclass exclusion requires the financial gain to be to the "same degree" to a class /subclass which contains more than one individual, the narrowness of this exclusion becomes readily apparent. The attempt by Anglin to classify her spouse with all other borough personnel on the basis they are all employees by occupation, constitutes an attempt to glom different classifications of employees into one class so that there is more than one member of a contrived group. Anglin's arguments constitute an attempt to obfuscate what are otherwise two simple and straightforward exclusions in order to make them broad based exclusions without consideration to their literal meaning and true purpose. Even assuming that her spouse or brother is a member of a subclass consisting of more than one individual, Anglin has not established that the subclass members would be affected to the same degree as required by the Ethics Act. The absence by Anglin of either facts or argument as to the requirement that the members of the class /subclass be affected to the same degree is a glaring and telling omission. If the effect is not to the same degree, the exclusion does not apply. See, Kablack, Opinion 02 -003. Given that Anglin's spouse is the sole assistant foreman, with a rate of pay which appears to be the highest (AFSCME Agreement at 16) longevity benefits (Id. at 8) and other financial considerations, it is questionable that he would be affected to the same degree. Anglin certainly has not shown that to be the case. We agree with both the analysis and conclusion of the advice. The issue of the sale of the water treatment plant is a very involved and complicated issue that will financially impact employees of the borough depending upon its disposition and options that the employees exercise as per the agreements. Since Anglin's spouse would be financially implicated, she has a conflict. Because the de minimis and class /subclass exclusions do not apply, Anglin under Section 1103(a) of the Ethics Act may not participate as to the sale of the borough water treatment plant. In addition, she must observe the disclosure requirements of Section 1103(j) of the Ethics Act, supra. Advice of Counsel 03 -582 is affirmed and the appeal is dismissed. IV. CONCLUSION: A member of borough council is a public official subject to the provisions of the Ethics Act. Section 1103(a) of the Ethics Act prohibits a borough council member from participating Tesone /Anglin 03 -010 Page 8 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. Pursuant to Section 1107(10), the person who acts in good faith on this Opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public record and will be made available as such. By the Commission, Louis W. Fryman Chair