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HomeMy WebLinkAbout05-592 CONFIDENTIALADVICE OF COUNSEL November 10, 2005 (CONFIDENTIAL - NOT TO BE DISSEMINATED TO THE PUBLIC) 05 -592 Re: Conflict; Public Official /Employee; County; Commissioner; Business With Which Associated; Lease Agreement; Vote; Three - Member Board. This responds to your letter of October 6, 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 county commissioner with regard to participating in matters pertaining to a proposed lease agreement involving multiple parties including the county and the county commissioner's private business. Facts: As Solicitor for A County, you have been directed by the A County Board of ommissioners to request an advisory regarding a situation involving B and C Business, which B owns and operates on his D situate in E Township, A County. B has joined in this request. You have submitted facts that may be fairly summarized as follows. Prior to his election as Commissioner, B as owner of C Business entered into an Agreement with A County in [year] to process A County's F at the engineered G site located on his D utilizing F processing equipment, including an H, 1, and a J, which equipment was purchased by A County with money it received from a K Department L grant. Pursuant to the Agreement, F, consisting mostly of M, from N Borough, was delivered to the site for processing approximately twice a year. The Agreement also provided that the general public was allowed to deliver F, free of charge, to the site for processing. Upon delivery, the F was placed in Hs and turned into G. B would then sell the G for [dollar amount] per cubic yard or use it on his D. During the period of the Agreement, B submitted two private grant applications to K Department under its 0 Program for grants to purchase additional equipment, both of which were denied. Following his election as Commissioner in [year], B disclosed to the Board of Commissioners the existence of his prior agreement with A County and the F processing equipment purchased by A County, that the equipment remained on his D at the G site, and that he continued to G F utilizing the equipment. On [date], unbeknownst to the other Commissioners, B met with the P and the representatives of K Department and Q to discuss, plan and develop a G project for the Confidential Advice, 05 -592 November 10, 2005 Page 2 R within A County and the submission of an application to K Department for a grant. Subsequent discussion regarding the G of S also involved the T at N Borough. As a result of the aforesaid discussions, the P recommended to the Board of Commissioners that a feasibility study be undertaken to identify means of G S generated by Q and T and also F generated by the Q and in A County. Consequently, at a regular public meeting of the Board of Commissioners held on [date], a motion was adopted to approve the undertaking of a feasibility study and to approach K Department to do so pursuant to its U Program. Prior to voting on the motion, B abstained on the basis that he had a conflict of interest. The feasibility study, which was classified by K Department as a V Project and was conducted by W, examined the possibility of implementing an S program involving the three known G operations in A County operated by the T, Q and C Business. The findings of W's evaluation and its recommendations were summarized in a letter report to the P dated [date]. This report recommended that the T, Q and A County seek to implement an S G program in conjunction with C Business at the G site located on B's D. Based upon the recommendation of the feasibility study letter report, a proposed X Agreement between A County, Q, the T and C Business, was drafted but to date has not been submitted to the Board of Commissioners for its consideration and approval or executed. Additionally, on [date], B submitted a third Grant Application to K Department under its 0 Program, for a grant to purchase additional G equipment, which application was subsequently approved, as a result of which B used the grant money to purchase the equipment. Also, on [date], the P submitted a Grant Application to K Department under its U Program for a grant to implement the S, Y and G projects involving A County, Q, T, and C Business and to purchase equipment, including the same equipment since purchased by B with his private grant money and also a truck to be used for the collection and transportation of S from Q and T to C Business. You state that except for the adoption by the Board of Commissioners of the motion regarding the feasibility study, the Commissioners, other than B, as well as the County's Chief Clerk and yourself as Solicitor, were unaware of any of the facts and circumstances regarding the above until last month. Therefore, you seek advice from the State Ethics Commission as to the prohibitions and restrictions that apply to B and his business, C Business under the Ethics Act. It is noted that ou have submitted copies of the following documents: [description of documents]. 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. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion /advice may be given only as to prospective (future) conduct. If the activity in question has already occurred, the Commission may not issue an opinion /advice but any person may then submit a signed and sworn complaint, which will be investigated by the Commission if there are allegations of Ethics Act violations by a person who is subject to the Ethics Act. To the extent you have inquired as to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct, your inquiry may, and shall be addressed. (CONFIDENTIAL - NOT TO BE DISSEMINATED TO THE PUBLIC) Confidential Advice, 05 -592 November 10, 2005 Page 3 As a Commissioner for A County, B is a public official as that term is defined in the Ethics Act, and hence B 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 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. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. "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 (CONFIDENTIAL - NOT TO BE DISSEMINATED TO THE PUBLIC) Confidential Advice, 05 -592 November 10, 2005 Page 4 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. 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 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. (CONFIDENTIAL - NOT TO BE DISSEMINATED TO THE PUBLIC) Confidential Advice, 05 -592 November 10, 2005 Page 5 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. 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, it is noted that Section 1103(a) of the Ethics Act 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 (CONFIDENTIAL - NOT TO BE DISSEMINATED TO THE PUBLIC) Confidential Advice, 05 -592 November 10, 2005 Page 6 capacity Gorman, Order 1041; Rembold, Order 1303; Wilcox, Order 1306), or private customer(s)/client(s) (Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010). The Commission has also held that a reasonable and legitimate expectation that a business relationship will form may support a finding of a conflict of interest. Amato, Opinion 89 -002. In the instant matter, all past action taken by B will not be addressed in this advice for the reasons noted above. However, in considering future action taken by B, are advised that C Business would be considered a business with which B is associated. Pursuant to Section 1103(a) of the Ethics Act, B would generally have a conflict of interest in his public capacity in matters that would financially benefit himself, C Business, or private customer(s) /client(s). B would specifically have a conflict of interest in matters involving the proposed implementation of an S G program involving A County, T, Q, and C Business as well as the proposed X Agreement between A County, Q, T, and C Business. Should A County approve the X Agreement, B would have a conflict of interest in matters that would financially benefit himself or C Business, including, but not limited to, decisions as to whether the parties should renew the X Agreement or enter into a new X Agreement. In each instance of a conflict of interest, B would be required to abstain from participating and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Further, to the extent Section 1103(f) of the Ethics Act would be applicable, an open and public process would have to be observed and B would be prohibited from having any supervisory or overall responsibility for the implementation or administration of the contract. 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 might exist as to such contracting under the County Code. In this regard, you are advised that the State Ethics Commission does not have the statutory jurisdiction to interpret the County Code. Despite the conflict, B would still be permitted to participate under certain limited circumstances. In Garner, Opinion 93 -004, the Commission considered the issue of whether, under Section 3(j) of the Ethics Law, a supervisor on a three member board would be permitted to second a motion even if he had a conflict where the two remaining supervisors would have opposing views or where one of the remaining two members would be absent from the meeting. Citing Juliante, Order 809, the Commission first noted that seconding a motion is a use of authority of office. Hence an individual with a conflict would not be permitted to participate, make a motion, second a motion, or vote. See, Garner, supra. However, the Commission also stated: [T]he General Assembly in enacting Section 3(j) would not have allowed a public official /employee on a three member board who has a conflict to be able to vote unless a second to the motion could be made so that the matter would be in the posture for a vote. Thus, we believe that since there is a need for a second to a motion in order to make Section 3(j) of the Ethics Law operative, the General Assembly intended as to three members [sic] boards for the public official with a conflict to be allowed to second so that if the other supervisors became deadlocked, the public official could then vote provided the disclosure requirements are satisfied. Garner, at 6. In light of the foregoing, the Commission concluded that Section 3(j), now Section 1103(j), of the Ethics Act does allow an individual to second a motion where the two remaining supervisors have opposing views or where one of the other two (CONFIDENTIAL - NOT TO BE DISSEMINATED TO THE PUBLIC) Confidential Advice, 05 -592 November 10, 2005 Page 7 supervisors is absent. The Commission emphasized that its ruling was expressly limited in its application to three member boards and to the question of seconding a motion. In applying Garner to the instant matter, you are advised that under Section 1103(j) of the Ethics Act, B would be permitted to second a motion only if: (1) the two remaining Commissioners would have opposing views; or (2) one of the other two Commissioners would be absent from the meeting. Allowing B to second the motion in either of the above scenarios would put the matter in a posture for a vote. Thereafter, if the other two Commissioners would cast opposing votes, B would be permitted to vote to break the tie provided he satisfied the disclosure requirements of Sections 1103(j). However, B could not speak to the motion or advocate his view in the matter; Section 1103(j) would only allow him to vote under the above circumstances. 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 County Code. Conclusion: As a Commissioner for A County, B 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. C Business would be considered a business with which B is associate Pursuant to Section 1103(a) of the Ethics Act, B would generally have a conflict of interest in his public capacity in matters that would financially benefit himself, C Business, or private customer(s) /client(s). B would specifically have a conflict of interest in matters involving the proposed implementation of an S G program involving A County, T, Q, and C Business as well as the proposed X Agreement between A County, Q, T, and C Business. Should A County approve the X Agreement, B would have a conflict of interest in matters that would financially benefit himself or C Business, including, but not limited to, decisions as to whether the parties should renew the X Agreement or enter into a new X Agreement. In each instance of a conflict of interest, B would be required to abstain from participating and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. To the extent Section 1103(f) of the Ethics Act would be applicable, an open and public process would have to be observed and B would be prohibited from having any supervisory or overall responsibility for the implementation or administration of the contract. 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) would be satisfied, a problem might exist as to such contracting under the County Code. The State Ethics Commission does not have the statutory jurisdiction to interpret the County Code. Under Section 1103(j) of the Ethics Act, B would be permitted to second a motion only in a situation where: (1) the two remaining Commissioners would have opposing views; or (2) one of the other two Commissioners would be absent from the meeting. Allowing B to second the motion in either of the above scenarios would put the matter in a posture for a vote. Thereafter, if the other two Commissioners would cast opposing votes, B would be permitted to vote to break the tie provided he satisfied the disclosure requirements of Sections 1103(j). However, B could not speak to the motion or advocate his view in the matter; Section 1103(j) would only allow him to vote under the above circumstances. 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 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. (CONFIDENTIAL - NOT TO BE DISSEMINATED TO THE PUBLIC) Confidential Advice, 05 -592 November 10, 2005 Page 8 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 (CONFIDENTIAL - NOT TO BE DISSEMINATED TO THE PUBLIC)