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HomeMy WebLinkAbout04-014 SmithOPINION OF THE COMMISSION Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Michael J. Healey Paul M. Henry Raquel K. Bergen DATE DECIDED: 9/21/04 DATE MAILED: 10/1/04 04 -014 The Honorable Samuel H. Smith Majority Leader, House of Representatives P.O. Box 202020 Room 110, Main Capitol Building Harrisburg, PA 17120 -2020 Re: Conflict; Public Official; Authority Board Member; Intergovernmental Cooperation Authority for Cities of the Second Class; Financial Interest in Licensed Gaming Entity; Pennsylvania Race Horse Development and Gaming Act. Dear Mr. Smith: This Opinion is issued in response to your advisory request dated August 11, 2004, addressed to Louis W. Fryman, Chair. I. 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 appointed member of the governing board of the Intergovernmental Cooperation Authority for Cities of the Second Class with regard to owning or holding a financial interest in a "licensed gaming entity" as defined by the Pennsylvania Race Horse Development and Gaming Act ( "Gaming Act "), H.B. 2330 of 2004. II. FACTUAL BASIS FOR DETERMINATION: As Majority Leader of the Pennsylvania House of Representatives, you request an advisory opinion from this Commission on behalf of William K. Lieberman, Chairman of the Intergovernmental Cooperation Authority for Cities of the Second Class (hereinafter referred to as "Intergovernmental Cooperation Authority "). Smith /Lieberman, 04 -014 October 1, 2004 Page 2 The question that you have posed is whether the Ethics Act would impose prohibitions or restrictions upon Mr. Lieberman as an appointed member of the governing board ( "Board ") of the Intergovernmental Cooperation Authority with regard to owning or holding a financial interest in a "licensed gaming entity" as defined by the Gaming Act. We take administrative notice of Section 1512 of the Gaming Act, which provides, in pertinent part: § 1512. Public Official Financial Interest. (a) General Rule.— Except as may be provided by rule or order of the Pennsylvania Supreme Court, no executive -level state employee, public official, party officer or immediate family member thereof shall have, at or following the effective date of this part, a financial interest in or be employed, directly or indirectly, by any licensed racing entity or licensed gaming entity or any holding, affiliate, intermediary or subsidiary company, thereof, or any such applicant, nor solicit or accept, directly or indirectly, any complimentary service or discount from any licensed racing entity or licensed gaming entity which he knows or has reason to know is other than a service or discount that is offered to members of the general public in like circumstances during his or her status as an executive -level state employee, public official or party officer and for one year following termination of the person's status as an executive -level state employee, public official or party officer. (b) Definitions. —As used in this section, the following words and phrases shall have the meanings given to them in this subsection: "Financial interest." Owning or holding securities exceeding 1`)/0 of the equity or fair market value of the licensed racing entity or licensed gaming entity, its holding company, affiliate, intermediary or subsidiary business. A financial interest shall not include any such stock that is held in a blind trust over which the executive -level state employee, public official, party officer or immediate family member thereof may not exercise any managerial control or receive income during the tenure of office and the period under subsection (A). "Public official." Any person elected by the public or elected or appointed by a governmental body or an appointed official in the executive, legislative or judicial branch of this Commonwealth or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense or to otherwise exercise the power of the Commonwealth or any political subdivision or commissioner of any authority or joint state commission. Section 1512, Gaming Act (Emphasis added). Smith /Lieberman, 04 -014 October 1, 2004 Page 3 Although we do not have the statutory jurisdiction to interpret the Gaming Act, we note that on its face, Section 1512(a) of the Gaming Act prohibits a "public official" from having a "financial interest" in a licensed gaming entity as those terms are defined in Section 1512(b) of the Gaming Act. You state that you are aware of Moore, Opinion 04 -004, issued by this Commission earlier this year, in which this Commission concluded that an appointed member of the Board of the Intergovernmental Cooperation Authority would be considered a "public official" as that term is defined in the Ethics Act. However, you note that the definition of the term "public official" set forth in Section 1512(b) of the Gaming Act is different than the definitions set forth in the Ethics Act and the Intergovernmental Cooperation Authority Act for Cities of the Second Class, 53 P.S. § 28101 et seq. Specifically, the Ethics Act defines the term "public official" as follows: § 1102. Definitions "Public official." Any person elected by the public or elected or appointed by a governmental body or an appointed official in the executive, legislative or judicial branch of this Commonwealth or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense or to otherwise exercise the power of the State or any political subdivision thereof. 65 Pa.C.S. § 1102. The Intergovernmental Cooperation Authority Act for Cities of the Second Class defines the term "public official" as follows: § 28104. Definitions "Public official." Any elected or appointed official or employee in the executive, legislative or judicial branch of the Commonwealth or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense or to otherwise exercise the power of the Commonwealth or any political subdivision thereof. The term shall not include any appointed official who receives no compensation other than reimbursement for actual expenses. 53 P.S. § 28104. In comparing the three definitions, you state your view that it would appear that members of the Intergovernmental Cooperation Authority would not be deemed public officials under the Gaming Act (which excludes from its definition a "commissioner of any authority ") or under the Intergovernmental Cooperation Authority Act for Cities of the Second Class (which excludes from its definition any appointed official who receives no compensation other than reimbursement for actual expenses "). You state that it is important to note that the Ethics Act does not contain these exclusions in its definition. Given the distinctions between the definitions of the term "public official" set forth in the Gaming Act, the Intergovernmental Cooperation Authority Act for Cities of the Second Class, and the Ethics Act, you seek clarification as to whether the Ethics Act would impose prohibitions or restrictions upon Mr. Lieberman with regard to owning or holding a financial Smith /Lieberman, 04 -014 October 1, 2004 Page 4 interest in a licensed gaming entity. By letter dated August 18, 2004, 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 that the requestor has submitted. In issuing the advisory based upon the facts that the requestor has submitted, this 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 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. An appointed member of the Board of the Intergovernmental Cooperation Authority is considered a "public official" as that term is defined in the Ethics Act because: (1) The General Assembly has specifically mandated that the Ethics Act is applicable to the Intergovernmental Cooperation Authority (53 P.S. § 28202(h)(1)(iv)); (2) Appointment by the Governor or by a Pennsylvania legislator satisfies the first portion of the Ethics Act's definition of "public official" (see, 65 Pa.C.S. § 1102 (definitions of "public official" and "governmental body "); 53 P.S. § 28202(a); PA CONST. art. IV, Section 1; art. II, Section 9; art. VI, Section 3; Cohen, Opinion 03 -006; Moore, Opinion 04 -004, at 4); and Based upon the delineated powers of the Intergovernmental Cooperation Authority Board, the exclusion within the second portion of the Ethics Act's definition of "public official" for "members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense or to otherwise exercise the power of the State or any political subdivision thereof" (65 Pa.C.S. § 1102) does not apply. Moore, Opinion 04 -004. Mr. Lieberman is an appointed member of the Intergovernmental Cooperation Authority Board. 53 P.S. § 28202(b). Therefore, you are advised that in such capacity, Mr. Lieberman would be considered a "public official" as the Ethics Act defines that term, and he would be 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. (3) (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 Smith /Lieberman, 04 -014 October 1, 2004 Page 5 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), (j). The following terms 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. Pursuant to Section 1103(a) of the Ethics Act, 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 private pecuniary benefit of the public Smith /Lieberman, 04 -014 October 1, 2004 Page 6 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. See, e.q., Freind, Order 800; Metrick, Order 1037; Gorman, Order 1041; Rembold, Order 1303; Wilcox, Order 1306. In each instance of a conflict of interest, the public official or public employee is required to abstain from participation and to fully satisfy the disclosure requirements of Section 1103(j) as set forth above. We shall now consider the specific question to be addressed, that is, whether the Ethics Act would impose prohibitions or restrictions upon Mr. Lieberman as an appointed member of the Intergovernmental Cooperation Authority Board with regard to owning or holding a financial interest in a "licensed gaming entity" as defined by the Gaming Act. You are advised that the fundamental question of whether Mr. Lieberman may own or hold a financial interest in a licensed gaming entity must be answered under the Gaming Act itself. The Ethics Act, the Gaming Act, and the Intergovernmental Cooperation Authority Act for Cities of the Second Class contain different definitions for the term "public official." The fact that Mr. Lieberman is a public official as defined by the Ethics Act does not necessarily mean that he is a public official as defined by the Gaming Act or the Intergovernmental Cooperation Authority Act for Cities of the Second Class. Moreover, it is Section 1512(a) of the Gaming Act, not the Ethics Act, that expressly prohibits a "public official" from having a "financial interest" in a licensed gaming entity, and it is the definition of "public official" in Section 1512(b) of the Gaming Act, not the definition in Section 1102 of the Ethics Act, that specifically applies to that prohibition. This Commission does not have the statutory jurisdiction to interpret the Gaming Act or the Intergovernmental Cooperation Authority Act for Cities of the Second Class. This Commission does not have the jurisdiction to determine whether Mr. Lieberman would be a "public official" as defined by Section 1512(b) of the Gaming Act and would therefore be prohibited by Section 1512(a) of the Gaming Act from having a "financial interest" in a licensed gaming entity as defined by Section 1512(b) of the Gaming Act. It would be for a court to make such determinations. However, in order to provide a complete response to your inquiry under the Ethics Act, we shall address the foreseeable impact a judicial determination might have under the Ethics Act. If a court would determine that the Gaming Act would not prohibit Mr. Lieberman from having a financial interest in a licensed gaming entity, no issues relating to such ownership in and of itself would arise under the Ethics Act. If conditions would exist under which Mr. Lieberman could not lawfully serve as a member of the Intergovernmental Cooperation Authority Board, the resulting impact under the Ethics Act would be that any pecuniary benefit that Mr. Lieberman would receive as a result of unlawful service on the Board would be unauthorized in law and therefore a prohibited private pecuniary benefit contrary to Section 1103(a) of the Ethics Act. See, Hoak/McCutcheon v. State Ethics Commission, 466 A.2d 283 (Pa. Commw. Ct. 1983); Confidential Opinion, 03 -003. However, since members of the Intergovernmental Cooperation Authority Board are not compensated and receive only reimbursement for reasonable and necessary actual expenses (53 P.S. § 28202(e)), and since this Commission has already determined that it would not be a pecuniary benefit for a Board member to receive such reimbursements (Moore, supra), the necessary conclusion is that in the absence of any use of authority of office or confidential information received by holding public office for a prohibited private pecuniary benefit, Section 1103(a) of the Ethics Act would not impose prohibitions or restrictions upon Mr. Lieberman as a member of the Intergovernmental Cooperation Authority Board with regard to owning or holding a financial interest in a "licensed gaming entity" as defined by the Gaming Act. We commend you and Mr. Lieberman for seeking guidance as to this important issue. However, the question that we have answered is not the fundamental question that Smith /Lieberman, 04 -014 October 1, 2004 Page 7 needs to be answered. The fundamental question that needs to be answered is whether Mr. Lieberman would be considered a "public official" as defined by Section 1512(b) of the Gaming Act and would therefore be prohibited by Section 1512(a) of the Gaming Act from having a "financial interest" in a "licensed gaming entity" as defined by Section 1512(b) of the Gaming Act. That question must be answered under the Gaming Act itself, which Act we do not have jurisdiction to interpret. Act. Act. The propriety of the proposed conduct has only been addressed under the Ethics IV. CONCLUSION: An appointed member ( "Member ") of the governing board ( "Board ") of the Inter - governmental Cooperation Authority for Cities of the Second Class ( "Intergovernmental Cooperation Authority ") would be a "public official" as defined by the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The Member would be subject to the provisions of the Ethics Act. This Commission does not have the statutory jurisdiction to address the fundamental question of whether the Member would be considered a "public official" as defined by Section 1512(b) of the Pennsylvania Race Horse Development and Gaming Act ( "Gaming Act "), H.B. 2330 of 2004, and would therefore be prohibited by Section 1512(a) of the Gaming Act from having a "financial interest" in a "licensed gaming entity" as defined by Section 1512(b) of the Gaming Act. In the absence of any use of authority of office or confidential information received by holding public office for a prohibited private pecuniary benefit, Section 1103(a) of the Ethics Act would not impose prohibitions or restrictions upon the Member with regard to owning or holding a financial interest in a "licensed gaming entity" as defined by the Gaming Act. The propriety of the proposed conduct has only been addressed under the Ethics 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. Finally, a party may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The party requesting reconsideration must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). By the Commission, Louis W. Fryman Chair