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HomeMy WebLinkAbout25-522 Confidential 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 April 23, 2025 To the Requester: 25-522 This responds to your letter dated April 9, 2025, by which you requested a confidential advisory from the Pennsylvania State Ethics Commission (“Commission”), seeking guidance as to the issue presented below: Issue: Whetherthe Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., would prohibit an individualwho is employed with a \[Type of Corporation\] that receives funding from a \[Political Subdivision\] from serving as a member of the \[Governing Body\] for that \[Political Subdivision\]. Brief Answer: NO. The Ethics Act would not prohibit the individual from serving as a member of the \[Governing Body\] for the \[Political Subdivision\] while employed with the \[Type of Corporation\]. However, if elected as a member of the \[Political Subdivision Governing Body\], the individual generally would have a conflict of interest in matters before the \[Political Subdivision Governing Body\] that would financially impact him or the \[Type of Corporation\]. Facts: Yourequest a confidential advisory from the Commission based upon the following submitted facts. You are seeking election as a Member of the \[Governing Body\] for the \[Political Subdivision\], located in \[County\], Pennsylvania. Positions on the \[Political Subdivision Governing Body\] are considered part-time, and \[Political Subdivision Governing Body\] Members receive a salary of \[Dollar Amount\] per year. Confidential Advice, 25-522 April 23, 2025 Page 2 In a private capacity, you are employed as the \[Position\] for a \[Type of Corporation\] that does business as \[Corporate Name\] (“the Corporation”). You have submitted a copy of the Bylaws of the Corporation, which document is incorporated herein by reference. Per the Bylaws, the purpose of the Corporation is to \[Achieve Certain Goals\]. The Corporation receives \[Types of Funding\] to support its work. \[A Certain Percentage\] of your salary as a Corporation employee comes from funding provided by the \[Political Subdivision\], and the remainder of your salary comes from funding provided by \[Other Sources\]. Based upon the above submitted facts, the following questions are posed by your advisory request: (1) Whether the fact that the Corporation receives funding from the \[Political Subdivision\] or any other reason would prohibit you from holding office as a Member of the \[Political Subdivision Governing Body\] while you are employed with the Corporation; (2) Whether anything would prevent you from fulfilling your duties as the \[Position\] for the Corporation while you would be serving as a Member of the \[Political Subdivision Governing Body\], includingin particular the following duties: (a) overseeing programs and services provided by the Corporation in partnership with the \[Political Subdivision\]; (b) seeking grant and other funding directly from or through the \[Political Subdivision\] to support Corporation programs and services; (c) working with local government officials to strengthen the Corporation’s \[Efforts to Achieve Certain Goals\]; and (d) promoting the Corporation’s work through \[Types of Activities\]; (3) Whether conflicts of interest that may arise while serving as a Member of the \[Political Subdivision Governing Body\]could be addressed by recusing yourself from discussions about matters relating to the Corporation and abstaining from voting on matters involving the Corporation, such as awarding grant funding from the \[Political Subdivision\] to the Corporation, authorizing grant applications submitted by the \[Political Subdivision\]on behalf of the Corporation, and approving \[Types of Documents\] with the Corporation for the services that it provides; and (4) Whether you would be precluded from voting on a \[Political Subdivision\] annual budget that includes a line item for funding for the Corporation. 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. Confidential Advice, 25-522 April 23, 2025 Page 3 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. 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 Confidential Advice, 25-522 April 23, 2025 Page 4 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” or the “class/subclass exclusion”), 65 Pa.C.S. § 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 employeehimself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. The definition of the term “business” as set forth in the Ethics Act includes a non-profit corporation. Rendell v. State Ethics Commission, 603 Pa. 292, 983 A.2d 708 (2009). 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 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. Conclusion: In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. The Ethics Act would not prohibit you from being elected and serving as a Member of the \[Political Subdivision Governing Body\]while you are employed as the \[Position\] for the Corporation. If you would be elected as a Member of the \[Political Subdivision Governing Body\], upon assuming said position, you would in that capacity be a public official subject to the provisions of the Ethics Act. Confidential Advice, 25-522 April 23, 2025 Page 5 Section 1103(a) of the Ethics Act, pertaining to conflict of interest, would impose restrictions upon you in your public capacity as a Member of the \[Political Subdivision Governing Body\] rather than upon you in your private capacity as a Corporation employee. Therefore, Section 1103(a) would not prohibit you from performing any of your duties and responsibilities as the \[Position\] for the Corporationif you would be elected as a Member of the \[Political Subdivision Governing Body\]. However, as a Member of the \[Political Subdivision Governing Body\], you generally would have a conflict of interest under Section 1103(a) of the Ethics Act in matters that would financially impact you or the Corporation, which is a business with which you are associated in your capacity as an employee. You specifically would have a conflict of interest with regard to awarding grant funding from the \[Political Subdivision\]to the Corporation, authorizing grant applications submitted by the \[Political Subdivision\] on behalf of the Corporation, and approving \[Types of Documents\]with the Corporation for the services that it provides. You additionally would have a conflict of interest with regard to voting on a \[Political Subdivision\] annual budget that includes a line item for funding for the Corporation. In each instance of a conflict of interest, you 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. 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. 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 receivedat 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