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HomeMy WebLinkAbout25-524 ConfidentialPHONE: 717-783-1610 TOLL FREE: 1-800-932-0936 To the Requester: STATE ETHICS COMMISSION FINANCE BUILDING 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 FACSIMILE: 717-787-0806 WEBSITE: www.ethics.pa.gov ADVICE OF COUNSEL May 6, 2025 24-524 This responds to your letter received April 28, 2025, by which you requested a confidential advisory from the Pennsylvania State Ethics Commission ("Commission"), seeking guidance as to the general issue presented below: Issue: Whether, pursuant to Section 1103(a) of the Public Official and Employee Ethics Act ("Ethics Act"), 65 Pa.C.S. § 1103(a), a [Political Subdivision] [Official] would have a conflict of interest with regard to participating in matters pertaining to the [Political Subdivision's] response to a corporation's [Type of Pipeline] [Event] in the [Political Subdivision] or the [Political Subdivision's] potential participation in a lawsuit filed against the corporation by [Political Subdivision] residents, where: (1) the lawsuit seeks certification as a class action; (2) the [Political Subdivision] [Official] and members of his immediate family reside in the [Political Subdivision] neighborhood where the [Event] occurred; and (3) if the lawsuit would be certified as a class action, the [Political Subdivision] [Official] and his immediate family members would be included as members in the class action. Brief Answer: The [Political Subdivision] [Official] would not have a conflict of interest under Section 1103(a) of the Ethics Act with regard to participating in matters pertaining to the [Political Subdivision's] response to the corporation's [Type of Pipeline] [Event] or the [Political Subdivision's] potential participation in the lawsuit filed against the corporation in relation to the [Event] unless: (1) the [Political Subdivision] [Official] would be consciously aware of a private pecuniary (financial) benefit for himself or his immediate family members; (2) the [Political Subdivision] [Official's] action(s) would constitute one or more specific steps to attain that benefit; and (3) neither the "de minimis exclusion" nor the "class/subclass exclusion" to the definition of "conflict" or "conflict of interest" as set forth in Section 1102 of the Ethics Act would be applicable. Confidential Advice, 25-524 May 6, 2025 Page 2 Facts: You have been authorized by [Name of Individual] ("the Individual"), who is an [Official] for the [Political Subdivision], to request a confidential advisory from the Commission on his behalf. You have submitted facts that may be fairly summarized as follows. The Individual resides with his wife and their sons in the [Name of Neighborhood] ("the Neighborhood") of the [Political Subdivision]. The Neighborhood is a residential subdivision consisting of approximately [Number and Type of Dwellings]. Potable water for the Neighborhood is made available through residential wells. On [Date], a corporation engaged in the sale and transmission of [Type of Products] confirmed that one of its underground pipelines had [an Occurrence of an Event] beneath the Neighborhood. As a result of the [Event], at least [a Number] of residential wells in the Neighborhood have been [Adversely Affected]. On [Date], [a Number] of individuals who reside at a property located in the Neighborhood filed a lawsuit ("the Lawsuit") against the Corporation and another business in the [Court]. The Lawsuit alleges violations of state and federal laws and regulations regarding [Certain Matters]. The Lawsuit seeks certification as a class action and identifies its class ("the Class") as all Pennsylvania citizens who owned, rented, or resided at real properties located within a one mile radius of a specific property during the time period from [Date] to the present. The Class, which incorporates the vast majority of the Neighborhood and extends beyond the [Political Subdivision], includes over [Number] of residents in all likelihood. The [Political Subdivision] owns property within the area used to identify the Class, but no determination has been made as to whether a political subdivision would be included in the Class. The Individual and his immediate family members are part of the Class as it is currently defined. The Individual and a member of his immediate family executed a fee agreement with counsel representing the Lawsuit plaintiffs. The Individual and his immediate family members do not have any authority to direct the Lawsuit. The [Political Subdivision] [Governing Body] has and will receive information from [Political Subdivision] consultants who have been tasked with monitoring the response to and cleanup of the [Event]. The [Political Subdivision] [Governing Body] may be confronted with decisions or contracts that could result in the plaintiffs' costs of prosecuting the Lawsuit being defrayed. There may also be circumstances where the interests of the [Political Subdivision] and the steps it must take to secure those interests will overlap with steps the Lawsuit plaintiffs must take to prosecute their case, including steps to determine the feasibility of several sources of clean water for the Neighborhood and possibly other areas of the [Political Subdivision] impacted by the [Event]. Additionally, the expenditure of [Political Subdivision] funds on tasks could conceivably reduce the costs associated with the Lawsuit. Parallel with the Lawsuit, the [Government Agency] has imposed [Type of Procedures] on the Corporation. As a result, the [Political Subdivision] is permitted to advocate on behalf of its residents for various outcomes, including [Certain Outcomes]. Confidential Advice, 25-524 May 6, 2025 Page 3 Based upon the above submitted facts, you pose the following questions: (1) Whether the Individual would be considered a member of a group of people similarly situated with respect to potential groundwater and drinking water contamination; (2) Whether the Individual's membership in the Class causes him to have a conflict of interest such that he must recuse himself from his elected role on the [Political Subdivision] [Governing Body]; (3) Whether the provision and security of clean water for the [Political Subdivision] residents, including the Individual, would constitute a private pecuniary benefit to the Individual; (4) Whether the Individual would be prohibiting from voting on [Political Subdivision] actions that may provide a cost -saving for the Lawsuit if the actions would also provide a bona fide benefit to [Political Subdivision] residents, notwithstanding membership in the Class; (5) Whether the Individual would be prohibited from voting for the [Political Subdivision] to join or for the [Political Subdivision] to withdraw from the Lawsuit if it would be certified as a class action; and (6) Whether the Individual would be prohibited from voting on matters relating to advocacy for the [Political Subdivision] residents for particular results or determinations from the [Government Agency]. 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 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 of the material facts relevantto the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. Sections 1103(a) and 11030) 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. 0) Voting conflict. --Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any Confidential Advice, 25-524 May 6, 2025 Page 4 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), 0). 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. "Immediate family." A parent, spouse, child, brother or sister. Confidential Advice, 25-524 May 6, 2025 Page 5 "De minimis economic impact." An economic consequence which has an insignificant effect. 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" and 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 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. 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 11030) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 11030) of the Ethics Act would have to be satisfied in the event of a voting conflict. Per the Pennsylvania Supreme Court's decision in Kistler v. State Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the Ethics Act, a public official/public employee: ... must act in such a way as to put his [office/public position] to the purpose of obtaining for himself a private pecuniary benefit. Such directed action implies awareness on the part of the [public official/public employee] of the potential pecuniary benefit as well as the motivation to obtain that benefit for himself. Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics Act, a public official/public employee "must be consciously aware of a private pecuniary benefit for himself, his family, or his business, and then must take action in the form of one or more specific steps to attain that benefit." Id., 610 Pa. at 528, 22 A.3d at 231. A conflict of interest would not exist to the extent the "de minimis exclusion" or the "class/subclass" exclusion set forth within the Ethics Act's definition of the term "conflict" or "conflict of interest" would be applicable. The de minimis exclusion precludes a finding of conflict of interest as to an action having a de minimis (insignificant) economic impact. Thus, when a matter that would otherwise constitute a conflict of interest under the Ethics Act would have an insignificant economic impact, a conflict would not exist and Section 1103(a) of the Ethics Act would not be implicated. See, Kolb, Order 1322; Schweinsburg, Order 900. The Commission has determined the applicability of the de minimis exclusion on a case -by -case basis, considering all relevant circumstances. Confidential Advice, 25-524 May 6, 2025 Page 6 In order for the class/subclass exclusion to apply, two criteria must be met: (1) the affected public official/public employee, immediate family member, or business with which the public official/public employee or immediate family member is associated must be a member of a class consisting of the general public or a true subclass consisting of more than one member; and (2) the public official/public employee, immediate family member, or business with which the public official/public employee or immediate family member is associated must be affected "to the same degree" (in no way differently) than the other members of the class/subclass. 65 Pa.C.S. § 1102; see, Kablack, Opinion 02-003; Rubenstein, Opinion 01-007. The first criterion of the exclusion is satisfied where the members of the proposed subclass are similarly situated as the result of relevant shared characteristics. The second criterion of the exclusion is satisfied where the individual/business in question and the other members of the class/subclass are reasonably affected to the same degree by the proposed action. Kablack, supra. Conclusion: In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. As a [Political Subdivision] [Official], the Individual is a public official subject to the provisions of the Ethics Act. The Individual's wife and sons are members of his "immediate family" as that term is defined in the Ethics Act. Pursuant to Section 1103(a) of the Ethics Act, the Individual generally would have a conflict of interest in matters before the [Political Subdivision] [Governing Body] that would financially impact him or his immediate family members. In response to your specific questions, you are advised as follows. As a threshold issue, in order for there to be a basis for the Individual to have a conflict of interest under Section 1103(a) of the Ethics Act in a matter before the [Political Subdivision] [Governing Body], the [Political Subdivision's] action as to such matter would have to result in a private pecuniary benefit to the Individual or his immediate family members. A private pecuniary benefit is a private financial gain. Accordingly, absent a financial gain to the Individual or his immediate family members, the provision and security of clean water for the [Political Subdivision] residents would not constitute a private pecuniary benefit to the Individual or his immediate family members. The Individual's membership in the Class in and of itself would not be a basis for the Individual to have a conflict of interest under Section 1103(a) of the Ethics Act with regard to [Political Subdivision] action taken in matters pertaining to the [Political Subdivision's] response to the [Event] or the Lawsuit. The submitted facts do not indicate whether, or to what extent, the Individual or his immediate family members would be financially affected by any particular [Political Subdivision] action taken with regard to the [Event] or the Lawsuit. Therefore, this advisory must be limited to providing the following general guidance. The Individual would not have a conflict of interest with regard to participating in matters where the [Political Subdivision] action may provide a cost -saving for the Lawsuit while also Confidential Advice, 25-524 May 6, 2025 Page 7 providing a bona fide benefit to [Political Subdivision] residents, participating in [Political Subdivision] decisions as to whether to join or withdraw from the Lawsuit if it would be certified as a class action, or participating in [Political Subdivision] decisions on advocating for particular results or determinations from the [Government Agency] unless: (1) the Individual would be consciously aware of a private pecuniary (financial) benefit for himself or his immediate family members; (2) his action(s) would constitute one or more specific steps to attain that benefit; and (3) neither the "de minimis exclusion" nor the "class/subclass exclusion" to the definition of "conflict" or "conflict of interest" as set forth in Section 1102 of the Ethics Act would be applicable. Based upon the submitted facts, for purposes of the application of the "class/subclass" exclusion, the Individual and his immediate family members would be members of a subclass of owners or residents of [Type of Dwellings] located in the [Political Subdivision] that may have groundwater and drinking water contamination as a result of the [Event]. In each instance of a conflict of interest the Individual would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 11030) of the Ethics Actwould be applicable. Additionally, the disclosure requirements of Section 11030) 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 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