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HomeMy WebLinkAbout05-543 ConfidentialADVICE OF COUNSEL May 10, 2005 05 -543 Re: Conflict; Public Official /Employee; Municipal Authority Board Member; Municipal Authority Employee; A; Compensation; Simultaneous Service; Independent Contractor. This responds to your letter of April 5, 2005, by which you requested a confidential advisory 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 municipal authority board member with regard to receiving compensation as an authority employee or an independent contractor for the authority. Facts: As a member of the Board of the B Authority, you seek a confidential advisory from the State Ethics Commission. You have submitted facts that may be fairly summarized as follows. The B Authority was created pursuant to the Municipal Authorities Act, 53 P.S. §5601 et seq. The B Authority shares its office and telephone number with C Township, the "appointing authority." The B Authority will soon be requesting bids for a project involving upgrading its wastewater treatment plant (the "Project" ). In preparation for the Project and the request and award of bids, the B Authority has executed a contract with an engineering firm to design the Project and, thereafter, to provide services during the bid and construction phases. You state that an A will be needed during the construction phase to D, a service that the engineers are willing to provide for a fee. You state that while you are not in the business of being an A, you have been involved in construction for many years and have familiarity with the Project as a result of your service on the Authority Board. You state that because the other Authority Board Members know you and trust your experience, they have asked whether you would be willing to accept an Confidential Advice, 05 -543 May 10, 2005 Page 2 appointment as the A. You state that compensation for your services would be paid to you as a cost of the Project. Based upon the foregoing facts, you pose the following specific inquiries: 1 Whether under the Ethics Act, you may be appointed to the compensated position of A; 2. If the Ethics Act would not preclude such appointment, whether you may participate in: (1) the matter of appointing an A (assuming you would not be permitted to vote for your own appointment and compensation); (2) actions of the Authority Board relative to the Project; and (3) other actions of the Authority Board; 3. If the Ethics Act would not permit such appointment, why such would not be permissible; 4. If the Ethics Act would permit such appointment, whether any restrictions would exist; 5. If the Ethics Act would not permit such appointment, whether you would be permitted to resign as a B Authority Board IV ember and accept employment as the A; and 6. If you would resign as a B Authority Board Member and take the position of A, whether there would be any restrictions prohibiting your re- appointment by the C Township as a B Authority Board Member after the Project is completed. 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 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 of the material facts. As an Authority Board Member, you are a public official as that term is defined in the Ethics Act, and hence you are 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 Confidential Advice, 05 -543 May 10, 2005 Page 3 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. "Contract." 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. § 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(f) of the Ethics Act 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 Confidential Advice, 05 -543 May 10, 2005 Page 4 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). 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 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 1103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Pursuant to Section 1103(f), an "open and public process" includes: (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered; and (4) public disclosure of the contract awarded and offered and accepted. Section 1103(f) of the Ethics Act also requires that the public official /employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. 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 permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. Confidential Advice, 05 -543 May 10, 2005 Page 5 65 Pa. C. S. § 1103(j). In each instance of a conflict, Section 1103(j) requires the public official/ employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes or supervisor. In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Pavlovic, Opinion 02 -005. In applying the above provisions of the Ethics Act to the instant matter, 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 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. Having set forth the pertinent provisions of the Ethics Act, it is preliminarily noted that the submitted facts indicate the possibility that you may be "employed" or "retained" as an A. Thus, your specific inquiries shall be addressed based upon the assumption that as an A, you would be considered an Authority employee or an independent contractor for the B Authority. In response to questions 1 through 5, assuming you as an A would be considered an Authority employee, the State Ethics Commission in Swick/Aman, Opinion 91 -006, determined that the Municipality Authorities Act would not preclude simultaneous service as a municipal authority board member and employee. However, the Commission's decision that such simultaneous service as an authority board member and employee would be permitted under the Ethics Act was subject to two qualifications. First, the board member could not use the authority of office" by participating in or voting in favor of his own appointment or in matters concerning his employment. Swick/Aman, supra, at 8. As noted above, 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 official /public employee himself, a member of his immediate family, or a business with which he or a member of his immediate family is associated. Participating in appointing oneself to a compensated position, in the absence of express authority to do so, would constitute a use of authority of office for a private pecuniary benefit in contravention of Section 1103(a) of the Ethics Act. Second, the Commission determined that such employment positions would have to be legitimate, rather than a mere machination to enable the authority board members to set their own compensation for duties performed as board members, rather than as bona fide employees. Id. Thus, although authority board members may fix the number of authority employees and may prescribe the powers /duties and compensation of authority employees, authority members may not be compensated as authority employees for duties which they would properly perform as board members. In the instant matter, the Ethics Act would not preclude you from receiving compensation as an employee of the B Authority, assuming such employment position would be legitimate. However, you could not participate in or vote in favor of your own appointment or in matter(s) concerning your employment. Further, you could not Confidential Advice, 05 -543 May 10, 2005 Page 6 participate in any other matter(s), including Project - related matter(s), if your participation would result in a private pecuniary benefit to yourself, a member of your immediate family or a business with which you or a member of your immediate family is associated. In each instance of a conflict of interest, you would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) as set forth above. Your sixth question need not be addressed given that you would not be required to resign as a B Authority Board member before serving as an A. As to whether you would be permitted to receive compensation from the B Authority as an independent contractor, you are advised that as an Authority Board Member, you would have a conflict under Section 1103(a) of the Ethics Act and could not participate in matters pertaining to your contract with the B Authority. In any instance of a conflict, you would be required to observe the disclosure requirements of Section 1103(j) of the Ethics Act. Further, where Section 1103(f) applies, its requirements must be strictly observed. Under the facts that you have submitted, the governmental body with which you would be associated would be the B Authority. Accordingly, the contract between you and the B Authority, if over $500, would be subject to the restrictions of Section 1103(f). Parenthetically, although the contracting in question would not be prohibited under the Ethics Act provided the requirements of Sections 1103(a), 1103(f), and 1103(j) are satisfied, a problem may exist as to such contracting under the Municipality Authorities Act of 1949, as amended. In the instant situation, the Municipality Authorities Act of 1945, as amended, provides as follows: § 5614. Competition in award of contracts (e) Conflict of interest -- No member of the authority or officer or employee of the authority may directly or indirectly be a party to or be interested in any contract or agreement with the authority if the contract or agreement establishes liability against or indebtedness of the authority. Any contract or agreement made in violation of this subsection is void, and no action my be maintained on the agreement against the authority. 53 Pa. C.S. § 5614(e). Since such contracting may be prohibited by the above quoted provision of the Municipality Authorities Act of 1945, as amended, and since the State Ethics Commission does not administer or enforce that Act, it is suggested that you seek legal advice in that regard. 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. Conclusion: As a member of the Board of the B Authority, you are a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Within the parameters of Sections 1103(a), 1103(j), and 1103(f) and subject to the conditions, restrictions, and qualifications set forth above, Confidential Advice, 05 -543 May 10, 2005 Page 7 the Ethics Act would not prohibit you, a B Authority Board Member, from receiving compensation from the Authority as an Authority employee or an independent contractor for the Authority. Since such contracting as an independent contractor may be prohibited by the Municipality Authorities Act of 1945, as amended, it is suggested that you seek legal advice in that regard. 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