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HomeMy WebLinkAbout06-556 CohenZachary J. Cohen, Esquire Blank Rome, LLP 1620 Pond Road Suite 200 Allentown, PA 18104 Dear Mr. Cohen: ADVICE OF COUNSEL May 18, 2006 06 -556 This responds to your letter of April 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., would impose any prohibition or restrictions upon a township supervisor in matters pertaining to the township's emergency medical service provider ("EMSP ") when the township supervisor's business provides contractual services to the EMSP. Facts: On behalf of Middle Smithfield Township ( "Township ") Supervisor Deborah A. Kulick ( "Kulick "), you request an advisory from the State Ethics Commission as to certain questions that were previously submitted to the State Ethics Commission by the Township Solicitor, Richard E. Deetz, Esquire ( "Deetz "), in a March 14, 2006, letter. It is parenthetically noted that an advisory was not issued to Attorney Deetz, who lacked standing to obtain an advisory as to Kulick. Kulick has authorized you to obtain an advisory as to the questions posed by Deetz. The submitted facts forming the basis for your inquiry may be fairly summarized as follows. The Township's EMSP is "Bushkill Emergency Corps, Inc." ( "BEC "). For many years, the Township Supervisors have approved annual contributions to BEC as authorized by the Second Class Township Code. For the 2006 budget, the Board has approved a contribution to BEC in the amount of $8,300. BEC's annual budget exceeds $650, 000. Kulick has been affiliated with BEC for approximately 33 years as an active volunteer crewmember, EMT service provider, and officer. Kulick also has a business relationship with BEC. BEC has been a business client of Kulick since 1993. Presently, Kulick is the sole owner of an employee - leasing company that provides staff to BEC. Cohen - Kulick, 06 -556 May 18, 2006 Page 2 During the years ended June 30, 2004 and 2003, BEC paid $261,948 and $237,094 respectively for the contracted services through Kulick's company. Recently, a Supervisor questioned the ability of the Township Board of Supervisors to make a charitable donation to BEC, due to Kulick's affiliation with that entity. You have submitted a letter dated April 4, 2006, from Kulick in which Kulick has noted recent issues before the Township Board of Supervisors regarding BEC. Kulick has stated that she has abstained from voting as to these issues. You state that Kulick also discloses all of her affiliations as required by the Ethics Act. You cite various case law holding that in order for a public official to use the authority of office to obtain an improper financial gain, the public official must act in some way that facilitates his or her receipt of compensation to which he or she is not entitled. You contend that Kulick does not use her office for any improper purpose, given her abstentions from votes affecting BEC and her full disclosure of her affiliations. The following questions have been submitted for review: (1) Whether it is ethically proper for the Township Board of Supervisors to appropriate and pay monies to BEC and to make contracts relating thereto; and (2) Whether it is ethically proper for Kulick, through her company, to contract with BEC for the provision of services when BEC receives an appropriation of Township money. It is noted that the following documents were submitted by Attorney Deetz with his March 14, 2006, letter: (1) a copy of a May 2002 Lease Agreement between the Township Supervisors as Lessors and BEC as Lessee; (2) a copy of a letter from John J. Contino, Esquire, Executive Director of the State Ethics Commission to Kulick, dated September 10, 2002; (3) a copy of the December 30, 2003, Agreement between BEC and the Township pertaining to the provision of emergency medical services; and (4) Financial Statements for BEC as at June 30, 2004 and 2003. 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. 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. As a Township Supervisor, Kulick is a "public official" subject to the provisions of the Ethics Act. Cohen - Kulick, 06 -556 May 18, 2006 Page 3 Sections 1103(a) and 1103(j) 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. (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(a), (j). The following terms pertaining to conflicts of interest under the Ethics Act are defined 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 Cohen - Kulick, 06 -556 May 18, 2006 Page 4 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. "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. 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. The use of authority of office is more than the mere mechanics of voting and encompasses all of the tasks needed to perform the functions of a given position. See, Juliante, Order 809. Use of authority of office includes, for example, discussing, conferring with others, and lobbying for a particular result. Subject to certain voting conflict exceptions, Section 1103(j) of the Ethics Act requires a public official /public employee with a conflict of interest 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 addition, Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /public employee anything of monetary value and no public official /public employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /public 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 your inquiry. 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 Cohen - Kulick, 06 -556 May 18, 2006 Page 5 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. 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. 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 capacity Gorman, Order 1041; Rembold, Order 1303; Wilcox, Order 1306), or private customer(s)/client(s) (Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010). In Kannebecker, supra, the State Ethics Commission determined that a township supervisor, who in his private capacity was an attorney, would have a conflict of interest Cohen - Kulick, 06 -556 May 18, 2006 Page 6 as to matters before the township involving ongoing clients or client(s) for whom he was on retainer, even if he would not represent such clients as to the matter pending before the township. The Commission determined that as a general rule, a conflict would not exist as to former client(s), but that under certain circumstances, a conflict could exist as to former client(s) depending upon factors such as the number of prior representations of the given client and the period of time over which such occurred. 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, the specific questions submitted for review are as follows: (1) Whether it is ethically proper for the Township Board of Supervisors to appropriate and pay monies to BEC and to make contracts relating thereto; and (2) Whether it is ethically proper for Kulick, through her company, to contract with BEC for the provision of services when BEC receives an appropriation of Township money. In response to the first question, it would appear that you lack standing to inquire as to the conduct of the Township Board of Supervisors or the individual Supervisors other than Kulick. However, it is generally noted that Section 1103(a) of the Ethics Act prohibits individual public officials and public employees from engaging in conduct constituting a conflict of interest. Section 1103(a) does not apply to restrict the conduct of a governmental body. In response to the second question, you are advised that Kulick's company would be considered a business with which she is associated. The Ethics Act would not prohibit Kulick in her private capacity from continuing to do business with customers /clients such as BEC who would have matters before the Township. However, pursuant to Section 1103(a) of the Ethics Act, Kulick would generally have a conflict of interest in her public capacity as a Township Supervisor in matters that would financially impact herself, her business, or a private customer /client such as BEC. In each instance of a conflict of interest, Kulick would be required to abstain fully from participating and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. You are further advised that the requirements of Section 1103(f) of the Ethics Act would have to be strictly observed whenever applicable. Parenthetically, in addition to the requirements of the Ethics Act, the Second Class Township Code provides as follows: § 68102. Letting contracts (i) No township official, either elected or appointed, or township employe who knows, or who by the exercise of reasonable diligence could know, shall be interested to any appreciable degree, either directly or indirectly, in any contract for the sale or furnishing of any supplies or materials for the use of the township or for any work to be done for the township involving the payment by the township of more than five hundred dollars ($500) in any year unless the contract is awarded through the public bid process. This limitation does not apply if the officer or appointee of the Cohen - Kulick, 06 -556 May 18, 2006 Page 7 township is an employe of the person, firm or corporation to which the money is to be paid in a capacity with no possible influence on the transaction and the officer cannot possibly be benefited thereby, either financially or otherwise. If a supervisor is within this exception, the supervisor shall so inform the board of supervisors and refrain from voting on the payments and shall in no manner participate in the contract. Any official or appointee who knowingly violates this provision is subject to surcharge to the extent of the damage shown to be sustained by the township, is ousted from office or employment and commits a misdemeanor of the third degree. 53 P.S. § 68102(i). The State Ethics Commission does not have the statutory jurisdiction to interpret the Second Class Township Code. Therefore, it is suggested that Kulick seek legal advice as to its potential applicability. 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 Supervisor for Middle Smithfield Township ( "Township "), Deborah A. Kulick ( "Kulick ") 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. Kulick's company is a business with which Kulick is associated. In response to the question of whether it is ethically proper for Kulick, through her company, to contract with Bushkill Emergency Corps, Inc. ( "BEC "), the Township's emergency medical service provider, for the provision of services when BEC receives an appropriation of Township money, you are advised as follows. The Ethics Act would not prohibit Kulick in her private capacity from continuing to do business with a client such as BEC who would have matters before the Township. However, pursuant to Section 1103(a) of the Ethics Act, Kulick would generally have a conflict of interest in her public capacity as a Township Supervisor in matters that would financially impact herself, her business, or a private customer /client such as BEC. In each instance of a conflict of interest, Kulick would be required to abstain fully from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The requirements of Section 1103(f) of the Ethics Act must be strictly observed whenever applicable. 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, Cohen - Kulick, 06 -556 May 18, 2006 Page 8 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