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HomeMy WebLinkAbout05-563 YeagerADVICE OF COUNSEL July 15, 2005 David Yeager, Director Governor's Action Team Department of Community & Economic Development 400 North Street, 4th Floor Commonwealth Keystone Building Harrisburg, PA 17120 -0225 05 -563 Re: Former Public Official /Public Employee; Section 1103(); Executive -Level State Employee; Section 1103(i); Director of the Governor's Action Team; Department of Community & Economic Development. Dear Mr. Yeager: This responds to your submission of June 8, 2005, 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 restrictions upon employment of a Director of the Governor's Action Team following termination of service with the Commonwealth of Pennsylvania Department of Community & Economic Development. Facts: You are currently employed as the Director of the Governor's Action Team 70/1") in the Pennsylvania Department of Community and Economic Development ("DCED"). You report directly to the Secretary of DCED. As Director of the GAT, you manage a staff of approximately 30 individuals. You state that the purpose of your group is to work directly with private sector company executives or their consultants to relocate or expand current facilities in the state for economic development purposes. Your group evaluates each project individually to determine the project validity and its impact upon the region and the state's economy. Key components to each evaluation include the company's capital investment, the creation of jobs, and the retention of jobs. Following analysis, your group recommends appropriate incentive packages of predetermined DCED programs for approval by the DCED Secretary as an inducement for the company to commit to the project in Pennsylvania. You state that GAT's role is as a facilitator between the company and the individual DCED programs the company may be able to utilize. Yeager, 05 -563 July 15, 2005 Page 2 You state that the decisions you make are relative to the recommendations you receive from your staff. You describe your staff as the front line "development specialists" working with the individual companies. You review and approve your staff's recommendations, which recommendations are then routed to the DCED Secretary. The Secretary makes his decisions on funding based upon direct feedback from the Governor. Once the funding is approved by the Governor and the Secretary, your team drafts "offer letters" that are signed by the Secretary and mailed to the companies. You state that you have no decision - making authority in awarding DCED subsidies. Your team works primarily with the following DCED programs in your offer letters to companies: Opportunity Grant Program; Customized Job Training; Job Creation Tax Credits; Machinery and Equipment Fund; Infrastructure Development Program; and PIDA and PEDFA loan programs. You state that you work directly with executives of specific businesses and their consultants. You maintain that you have no authority over any of the DCED program offices that are responsible to negotiate contracts with the individual companies and the programs they administer. You have submitted a copy of your job description, which is incorporated herein by reference. The duties and responsibilities set forth in your job description include, but are not limited to, the following: (1) Determining goals, objectives and priorities for economic development initiatives; coordinating the establishment, maintenance and expansion of business enterprises throughout the state; and assisting with averting economic dislocations of businesses; (2) Meeting with federal, state and local officials, economic development groups, regulatory agencies and corporate officials to discuss and resolve controversial issues and concerns and develop incentive packages to encourage the establishment or expansion of business enterprises in the state; Coordinating activities among other DCED programs and between agencies to ensure the attainment of statewide economic development partnership strategies, goals and objectives; (4) Identifying, qualifying and performing due diligence on projects in order to recommend appropriate incentive packages for approval by the DCED Secretary and the Governor; Working directly with company executives looking to relocate or expand current facilities in the state to evaluate and determine the project validity and its impact to the region and the overall Pennsylvania economy; (3) (5) Yeager, 05 -563 July 15, 2005 Page 3 (6) Leading the negotiation of state financial incentive packages with company executives in preparation for the recommended approval; Working directly with real estate representatives, developers and local economic development agencies to identify available sites and buildings meeting the company's requirements and coordinating and /or supervising site and building tours; (8) Providing and /or supervising assistance to the client to valuate workforce availability, utility service and infrastructure including transportation, water and sewer, and the like, building the project portfolio supporting the location for attraction and /or expansion; Coordinating the involvement of all additional Commonwealth agencies in the economic development projects including but not limited to environmental permitting, transportation improvements, workforce training and business tax issues to provide accurate and prompt service to the company; and (10) Coordinating the preparation of responses to Requests for Proposals from site selection consultants and /or company executives as appropriate. You plan to terminate your service with DCED in the near future. You have not made any decision with regard to future employment. Based upon the foregoing facts, you seek an advisory as to the post - employment restrictions that would apply to you. 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 Director of the Governor's Action Team ( "GAT ") for DCED, you would be considered a public official /public employee and an "executive -level State employee" subject to the Ethics Act and the Regulations of the State Ethics Commission. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1. Consequently, upon termination of public service, you would become a former public official /public employee and a former executive -level State employee subject to the restrictions of Section 1103(g) and Section 1103(i) of the Ethics Act. (7) ( Section 1103(i) restricts former executive -level State employees as follows: § 1103. Restricted activities (i) Former executive -level employee. - -No former executive -level State employee may for a period of two Yeager, 05 -563 July 15, 2005 Page 4 years from the time that he terminates employment with this Commonwealth be employed by, receive compensation from, assist or act in a representative capacity for a business or corporation that he actively participated in recruiting to this Commonwealth or that he actively participated in inducing to open a new plant, facility or branch in this Commonwealth or that he actively participated in inducing to expand an existent plant or facility within this Commonwealth, provided that the above prohibition shall be invoked only when the recruitment or inducement is accomplished by a grant or loan of money or a promise of a grant or loan of money from the Commonwealth to the business or corporation recruited or induced to expand. 65 Pa.C.S. § 1103(i). (See, Confidential Opinion, 94 -011 (determining that active participation would mean taking part through an actual exercise of power or discretion, and would not include mere presence or passive involvement through the non - discretionary performance of a perfunctory function)). Section 1103(i) restricts the ability of a former executive -level State employee to accept employment or otherwise engage in business relationships following termination of State service, under certain narrow conditions. The restrictions of Section 1103(i) apply even where the business relationship is indirect, such as where the business in question is a client of the new employer, rather than the new employer itself. See, Confidential Opinion No. 94 -011. You are advised that based upon your job duties with the GAT, Section 1103(i) of the Ethics Act would apply to you and would restrict you from being employed by, receiving compensation from, assisting, or acting in a representative capacity for a business or a corporation that you actively participated in recruiting to Pennsylvania or that you actively participated in inducing to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania to the business or corporation. Unlike Section 1103(i), Section 1103(g) does not prohibit a former public official /public employee from accepting a position of employment. However, it does restrict the former public official /public employee with regard to "representing" a "person" before the governmental body with which he has been associated ": § 1103. Restricted activities (g) Former official or employee. - -No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 Pa.C.S. § 1103(g) (Emphasis added). The terms "represent," "person," and "governmental body with which a public official or public employee is or has been associated" are specifically defined in the Ethics Act as follows: § 1102. Definitions "Represent." To act on behalf of any other person in any activity which includes, but is not limited to, the following: personal appearances, negotiations, lobbying and Yeager, 05 -563 July 15, 2005 Page 5 submitting bid or contract proposals which are signed by or contain the name of a former public official or public employee. "Person." A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. 65 Pa. C. S. § 1102. The term "Person" is very broadly defined. It includes, inter alia, corporations and other businesses. It also includes the former public employee himself, Confidential Opinion, 93 -005, as well as a new governmental employer. Ledebur, Opinion 95 -007. The term "representation" is also broadly defined to prohibit acting on behalf of any person in any activity. Examples of prohibited representation include: (1) personal appearances before the former governmental body or bodies; (2) attempts to influence; (3) submission of bid or contract proposals which are signed by or contain the name of the former public official /employee; (4) participating in any matters before the former governmental body as to acting on behalf of a person; and (5) lobbying. Popovich, Opinion 89 -005. Listing one's name as the person who will provide technical assistance on a proposal, document, or bid, if submitted to or reviewed by the former governmental body, constitutes an attempt to influence the former governmental body. Section 1103(g) also generally prohibits the inclusion of the name of a former public official /public employee on invoices submitted by his new employer to the former governmental body, even though the invoices pertain to a contract that existed prior to termination of public service, Shay, Opinion 91 -012. However, if such a pre - existing contract does not involve the unit where the former public employee worked, the name of the former public employee may appear on routine invoices if required by the regulations of the agency to which the billing is being submitted. Abrams/Webster, Opinion 95 -011. A former public official /public employee may assist in the preparation of any documents presented to his former governmental body. However, the former ublic official /public employee may not be identified on documents submitted to the former governmental body. The former public official /public employee may also counsel any person regarding that person's appearance before his former governmental body. Once again, however, the activity in this respect should not be revealed to the former governmental body. The Ethics Act would not prohibit or preclude making general informational inquiries to the former governmental body to secure information which is available to the general public, but this must not be done in an effort to indirectly influence the former governmental body or to otherwise make known to that body the representation of, or work for the new employer. Section 1103(g) only restricts the former public official /public employee with regard to representation before his former governmental body. The former public official /public employee is not restricted as to representation before other agencies or entities. However, the "governmental body with which a public official /public employee Yeager, 05 -563 July 15, 2005 Page 6 is or has been associated" is not limited to the particular subdivision of the agency or other governmental body where the public official /employee had influence or control but extends to the entire body. See, Legislative Journal of House, 1989 Session, No. 15 at 290, 291; Sirolli, Opinion No. 90 -006; Sharp, Opinion 90- 009 -R. The governmental body with which you would be associated upon termination of public service would be DCED in its entirety including, but not limited to, the GAT. Therefore, for the first year after termination of your service with DCED, Section 1103(g) of the Ethics Act would apply and restrict "representation" of "persons" before DCED. Based upon the facts that have been submitted, this Advice has addressed the applicability of Sections 1103(g) and 1103(i) only. It is expressly assumed that there has been no use of authority of office for a private pecuniary benefit as prohibited by Section 1103(a) of the Ethics Act. Further, you are advised that Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /employee 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. Lastly, 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. Specifically not addressed herein is the applicability of the Governor's Code of Conduct. Conclusion: Upon termination of service as Director of the Governor's Action Team ( "GAT ") with the Pennsylvania Department of Community & Economic Development (`DCED "), you would become a former public official /public employee and a former executive -level State employee subject to the restrictions of Section 1103(g) and Section 1103(i) of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Based upon your job duties with the GAT, Section 1103(i) of the Ethics Act would apply to you and would restrict you from being employed by, receiving compensation from, assisting, or acting in a representative capacity for a business or a corporation that you actively participated in recruiting to Pennsylvania or that you actively participated in inducing to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania to the business or corporation. With regard to Section 1103(g), the restrictions as outlined above must be followed. The former governmental body would be DCED in its entirety, including but not limited to, the GAT. The propriety of the proposed conduct has only been addressed under the Ethics Act. Further, should service be terminated, as outlined above, the Ethics Act would require that a Statement of Financial Interests be filed by no later than May 1 of the year after termination of service. 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 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 Yeager, 05 -563 July 15, 2005 Page 7 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