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HomeMy WebLinkAbout06-545 HermanKent H. Herman, Esquire King, Spry, Herman, Freund & Faul, LLC One West Broad Street Suite 700 Bethlehem, PA 18018 Dear Mr. Herman: ADVICE OF COUNSEL April 13, 2006 06 -545 This responds to your letters of March 8, 2006 and March 14, 2006, 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 prohibition or restrictions upon a transportation authority board member from operating a transit passenger waiting and service center on those Sundays that the authority operates buses pick up and drop off passengers at the center. Facts: As Solicitor for Lehigh and Northampton Transportation Authority (LANTA), you seek an advisory from the State Ethics Commission on behalf of Steve Schmitt (Schmitt), a volunteer member on the 12 member LANTA Board of Directors. You have submitted the following facts which may be fairly summarized as follows. Schmitt, in addition to being a LANTA Board Member, also directs the charity CAT - Coalition for Appropriate Transportation, which works to improve safe access to LANTA. LANTA, an authority created by Lehigh and Northampton Counties pursuant to the Municipal Authorities Act, operates a public transportation system for public use in the metropolitan area of the two counties. On January 11, 2002, LANTA and the City of Bethlehem entered into a 99 year sublease for space at the North Street Parking Facility in Bethlehem to provide a transit passenger waiting and service center, together with retail space and food and beverage service for the general public, LANTA passengers and LANTA operators. The cost for the leased premises by LANTA was paid by a combination of Federal and local monies. After LANTA operated the leased space known as "MetroMart" for a period of time, the Administration and Board determined that the facility could be operated in more cost effective manner by a private vendor. In October 2005, LANTA Herman /Schmitt, 06 -545 April 13, 2006 Page 2 advertised a Request for Proposals (RFP) for vendor services for MetroMart. Vijay Nar (Nar) made a proposal to LANTA in response to the RFP and LANTA accepted his proposal. The agreement between LANTA and Nar does not obligate him to operate the MetroMart on Sundays. Since Schmitt believes that the public and LANTA operations would be better served if the MetroMart would be open on those Sundays when the buses are operating at the facility, he is interested in operating MetroMart on those Sundays. Schmitt's compensation for his work is projected to be a percentage of the net profit of MetroMart received on Sundays; however, he has agreed to limit his compensation to less than $500. If Schmitt is successful in operating MetroMart on Sundays without losing money, he would then turn the Sunday operation back over to Nar's management as soon as possible and stop receiving any compensation. Schmitt has no financial interest in the lease between LANTA and Nar and has no other relationship with Nar. Schmitt would perform such work as an independent contractor retained by Nar. It will be for Nar to make the determination as to whether he will turn over the Sunday operation and, if so, when Schmitt's involvement will be terminated. You ask whether Schmitt's prospective conduct, in operating MetroMart on certain Sundays and receiving compensation, would create a conflict under the Ethics Act. 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 Board of Directors Member for LANTA, Schmitt is a public official as that term is defined in the Ethics Act, and hence he 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 Herman /Schmitt, 06 -545 April 13, 2006 Page 3 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. 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(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. Herman /Schmitt, 06 -545 April 13, 2006 Page 4 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. Although Schmitt, as a LANTA Board Member, would otherwise have a conflict as to matters involving the Sunday operations of the MetroMart, there are two exclusions from conflict under the Ethics Act, one of which is the "de minimis" exclusion. The de minimis exclusion precludes a finding of a 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 upon a public official, a member of his immediate family, or a business with which he or a member of his immediate family is associated, a conflict would not exist and Sections 1103(a) and 1103(j) of the Ethics Act would not restrict participation in such matter. See, Schweinsburg, Order 900. In that Schmitt's financial gain would involve less than $500, the de minimis exclusion would apply and Schmitt would not have a conflict. See, Bixler v. S.E.C., 874 A.2d 785 (Pa. Cmwlth. 2004). Although Schmitt would not have a conflict under the Ethics Act based upon the submitted facts that his receipt of total compensation will be less than $500, there may be a problem with Schmitt's conduct under the Municipality Authorities Act, which provides as follows: §5614. Competition in award of contracts (e) 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 may be maintained on the agreement against the authority. 53 Pa. C.S. §5614 In that the Commission does not have the jurisdiction to administer, enforce or interpret the Municipality Authorities Act, it is suggested that Schmitt consider obtaining advice from his attorney on that issue. 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 Municipality Authorities Act. Herman /Schmitt, 06 -545 April 13, 2006 Page 5 Conclusion: As a Board of Directors Member for Lehigh and Northampton Transportation Authority, Schmitt 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. Section 1103(a) of the Ethics Act would not prohibit Schmitt as a transportation authority board member from operating a transit passenger waiting and service center on those Sundays that the authority buses pick up and drop off passengers at the center, in that the financial gain to Schmitt, being less than $500, would be diminimis. 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. 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