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HomeMy WebLinkAbout24-509 Shellhammer 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 February 20, 2024 To the Requester: Walter Shellhammer 24-509 Dear Mr. Shellhammer: This responds to your letter received January 22, 2024, by which you requested an advisory from the Pennsylvania State Ethics Commission (Commission), seeking guidance as to the issue presented below: Issue: Whether the Public Official and Employee Ethics Act (Ethics Act), 65 Pa.C.S. § 1101 et seq., would impose prohibitions or restrictions upon an individual serving as a Board in his private capacity, owns and operates Shellhammer Brothers Excavating & Trucking, Inc. , which provides services and products to the Authority for compensation. Brief Answer: YES. a Board Member of the Authority, he would have a conflict of interest and would violate Section 1103(a) of the Ethics Act by participating in discussions, votes, or other actions of the Authority pertaining to the Company. Facts: You request an advisory from the Commission based upon submitted facts, the material portion of which may be fairly summarized as follows. The Authority treatment system to serve the North Shenango Township and South Shenango Township geographical areas. You previously held a position of Board Member for the Authority and have Shellhammer, 24-509 February 20, 2024 Page 2 been asked to serve on the Authority Board once again. In your private capacity, you own and operate the Company, which has provided goods and services to the Authority in the past. Based upon the above submitted facts, you ask whether the Ethics Act would impose any restrictions upon you if you accept the invitation to join the Authority as it pertains to the Company providing products and services to the Authority in the future. 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 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. Shellhammer, 24-509 February 20, 2024 Page 3 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. 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. Section 1103(a) of the Ethics Act, pertaining to conflict of interest, restricts public officials and public employees in their public capacities, not their private capacities. Subject to the statutory , § 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. Shellhammer, 24-509 February 20, 2024 Page 4 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. 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). 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 party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, 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 Shellhammer, 24-509 February 20, 2024 Page 5 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 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. Please note that Section 1103(a) of the Ethics Act pertaining to conflicts of interest does not prohibit public officials/public employees from having outside business interests or employment; however, the public official/public employee may not use the authority of his public position or confidential information obtained by being in that position for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89-011. Examples of conduct that would be prohibited under Section 1103(a) include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Friend, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official/public employee is associated in his private capacity or private clients(s). Miller, Opinion 89-024; Kannebecker, Opinion 92-010. If a private employer or business with which the public official/public employee is associated or a client of the private employer or business would have a matter pending before the governmental body, the public official/public employee would have a conflict of interest as to such matter. Miller, supra; Kannebecker, supra. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89-002. In each instance of a conflict of interest, the public official/public employee would be required to abstain from participation and in the instance of a voting conflict, to abstain and fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Conclusion: In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. In the event you accept the invitation to become a member of the Authority again, you would be a public official/public employee as that term is defined in the Ethics Act, and therefore you would be subject to the provisions of the Ethics Act. Shellhammer Brothers Excavating & Trucking, Inc. (Company) is a business with which you are associated for purposes of the Ethics Act. Pursuant to Section 1103(a) of the Ethics Act, in your public capacity as an Authority Board member, you generally would have a conflict of interest as to discussion(s), vote(s), and/or other actions of the Authority Board in matters pertaining to the Company and any potential contracts or other business activities between the Authority Board and the Company. As noted above, in each instance of a conflict of interest, you would be required to fully abstain from participation, which would include voting unless one of the statutory exceptions of Shellhammer, 24-509 February 20, 2024 Page 6 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. In addition, you generally would have a conflict of interest with respect to voting to approve the payment of any bills or invoices that would be submitted by the Company to the Authority Board. As noted above, in each instance of a conflict of interest, you would be required to abstain fully from participation and in the instance of a voting conflict, to abstain fully and satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. To the extent the Company would contract with the Authority and the value of the contract would be $500.00 or more, the restrictions of Section 1103(f) would be applicable. In such instance, the contract would have to be awarded through an open and public process, and if awarded to the Company, you would be precluded from having any supervisory or overall responsibility for the implementation of any contract between the Company and the Authority. 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 in that they do not involve an interpretation of 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. 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, Bridget K. Guilfoyle Chief Counsel