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HomeMy WebLinkAbout04-596 CarpenterJohn A. Carpenter, Esquire Carpenter & Edmunds 101 North Eleventh Street Sunbury, PA 17801 -2432 Dear Mr. Carpenter: ADVICE OF COUNSEL September 23, 2004 04 -596 Re: Conflict; Public Official; Board Member; Joint Rail Authority; Business With Which Associated. This responds to your letter of August 5, 2004, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., presents any prohibition or restrictions upon a member of the board of directors of a joint rail authority who is a director of a business that utilizes one of the railroad lines owned by the joint rail authority. Facts: You are legal counsel for William A. Clark ( "Clark "), a member of the Board of Directors of the SEDA -COG Joint Rail Authority ( "Authority ") since 1986. Clark is Chairman of the Property Management Committee, which reviews sales and purchases of land and material upgrades, and makes recommendations to the Board. Clark also serves on several other committees. The Authority, which was created in 1983 pursuant to the Municipality Authorities Act of 1945, currently consists of eight (8) county members whose mission is to preserve rail service in Central Pennsylvania and to further economic development through the retention, improvement and expansion of the rail infrastructure and rail service. The Authority's Bylaws provide that the Authority may own land, rights of way, engine houses, railroad tracks, and various structures, which it may lease to short line operators that provide contract carrier services to various shippers within the constituent counties. You have submitted a copy of the Authority's Bylaws, which document is incorporated herein by reference. In a private capacity, Clark serves as a Director of Clark's Feed Mill, Inc. and holds a 1`)/0 financial interest holder in that corporation. Clark receives no income from Clark's Feed Mill, Inc. Carpenter /Clark, 04 -596 September 23, 2004 Page 2 In a telephone conversation with legal staff on September 22, 2004, you made the following clarifying remarks. Clarks Feed Mill, Inc. uses NS, CP and Shamokin Valley Railroad to receive products in the course of its business. While all three rail lines are utilized by Clarks Feed Mill, Inc., the products are ultimately delivered to its place of business via the Shamokin Valley Railroad, which is the only railroad of the three that is owned by the Authority. Clarks Feed Mill, Inc. makes its purchases through brokerage firms that handle the pricing, routing and collection of fees for that service. The brokerage firms designate the routing through the most economical route; Clark's Feed Mill, Inc. does not make any determinations as to routing, other than to stipulate that the product is to be delivered to its place of business via the Shamokin Valley Railroad. Clark does not have any input as to the selection of rail lines and does not use or reveal any limited financial information that he may become aware of to either Clark's Feed Mill, Inc. or to the shipping broker. Given the foregoing facts, you ask for an advisory as to any conflict or concern under the Ethics Act with respect to Clark's long- standing position on the Authority Board. 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, the 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 Board of Directors of the Authority, Clark is a public official as that term is defined in the Ethics Act, and hence Clark is subject to the provisions of that Act. Section 1103(a) of the Ethics Act provides: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. § 1103(a). 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 Carpenter /Clark, 04 -596 September 23, 2004 Page 3 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. In addition, Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. Section 1103(j) of the Ethics Act provides as follows: § 1103. Restricted activities (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 Carpenter /Clark, 04 -596 September 23, 2004 Page 4 permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa. C. S. § 1103(j). In applying the above provisions of the Ethics Act to your inquiry, it is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interest does not prohibit public officials /public employees from having outside business activities 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) would 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, Freind, 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, Gorman, Order 1041, or private client(s). Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010. If the private employer or business with which the public official /public employee is associated or a private client 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 to satisfy the disclosure requirements of Section 1103(j) set forth above. The abstention requirement would not be limited merely to voting, but would extend 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. Based upon the submitted facts, Clark's Feed Mill, Inc. would be considered a business with which Clark as a Director is associated. Pursuant to Section 1103(a) and 1103(j) of the Ethics Act, as an Authority Board Member, Clark would have a conflict and could not participate in any matter(s) that would financially impact himself, Clark's Feed Mill, Inc., or business client(s). In the unlikely event that matters involving Clark's Feed Mill, Inc. or business client(s) would come before the Authority Board, Clark would have a conflict, could not participate, and would have to disclose his interest both orally and in a written memorandum filed with the person responsible for taking the minutes at the meeting in accordance with Section 1103(j) of the Ethics Act. While Clark would have a conflict as to matters financially impacting himself, his business, or business clients, Clark would not have a conflict of interest in using the authority of his office as an Authority Board Member for the pecuniary benefit of the Authority, since the Authority is a governmental body. A pecuniary benefit flowing solely to a governmental body does not form the basis for a conflict of interest under Section 1103(a of the Ethics Act. See, Confidential Opinion, 01 -005; McCarrier, Opinion 98- 008; Warso, Order 974. With respect to Clark's business dealings with Clark's Feed Mill, Inc., the Ethics Act would not impose any restrictions or prohibitions upon Clark provided he undertakes such activities in a private capacity and not as a public official during governmental working hours. 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 Carpenter /Clark, 04 -596 September 23, 2004 Page 5 conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the Municipality Authorities Act of 1945. Conclusion: As a member of the Board of Directors of the SEDA -COG Joint Rail Authority ( "Authority "), William A. Clark ( "Clark ") is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Clark's Feed Mill, Inc. would be considered a business with which Clark as a Director is associated. Pursuant to Section 1103(a) and 1103(j) of the Ethics Act, as an Authority Board Member, Clark would have a conflict and could not participate in any matter(s) that would financially impact himself, Clark's Feed Mill, Inc., or business client(s). In the unlikely event that matters involving Clark's Feed Mill, Inc. or business client(s) would come before the Authority Board, Clark would have a conflict, could not participate, and would have to disclose his interest both orally and in a written memorandum filed with the person responsible for taking the minutes at the meeting in accordance with Section 1103(j) of the Ethics Act. Clark would not have a conflict of interest in using the authority of his office as an Authority Board Member for the pecuniary benefit of the Authority, since the Authority is a governmental body. With respect to Clark's business dealings with Clark's Feed Mill, Inc., the Ethics Act would not impose any restrictions or prohibitions upon Clark provided he undertakes such activities in a private capacity and not as a public official during governmental working hours. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), 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 requestor 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. Sincerely, Vincent J. Dopko Chief Counsel