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HomeMy WebLinkAbout06-584 SpencerVaughn D. Spencer, President City of Reading City Council Room 2 -24 815 Washington Street Reading, PA 19601 -3690 ADVICE OF COUNSEL September 21, 2006 06 -584 Dear Mr. Spencer: This responds to your letter of August 18, 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 restrictions upon a person who is retired and receives a pension from a city from being appointed to serve as a member or director of a city board, commission or authority, and whether a person who retired from employment with an authority may serve on the board of the authority from which he or she retired. Facts: You are President of City Council for the City of Reading ( "City "). On August 14, 2006, City Council adopted a resolution directing the City Solicitor or his designee to draft a request for an advisory from the State Ethics Commission on behalf of City Council. You have submitted correspondence addressed to the State Ethics Commission from the Legal Specialist for the City. Said correspondence sets forth the following inquiries. The first inquiry is general in nature and is based upon the following facts. Members of City boards, commissions, and authorities do not receive compensation for their service on said bodies, but they are entitled to reimbursement of any reasonable expenses. With the possible exception of the Police and Fire Pension Board, the City boards, commissions, and authorities have no involvement with the management of City finances. The first inquiry is whether a person who is retired and receives a pension from the City may be appointed to serve as a member or director of a City board, commission or authority, presuming that such an appointment is not precluded by the City Charter, City Ordinances, or the Articles of Incorporation of the board, commission, or authority at issue. Spencer /City of Reading City Council, 06 -584 September 21, 2006 Page 2 Additional inquiries are based upon the following facts. Pursuant to the Municipality Authorities Act, 53 P.S. § 5601, the City and Berks County ( "County ") created a regional transportation authority, BARTA. The City and the County each appoint members to the BARTA Board of Directors. The City recently appointed a retired BARTA employee, who receives a pension from BARTA, to fill one of the positions on the BARTA Board of Directors. This recent appointee also served as local president of one of the unions that represents BARTA employees. BARTA's Board of Directors approves collective bargaining agreements with unions that represent BARTA employees. Based upon these facts, a general inquiry is posed as to whether the Ethics Act would prohibit the appointment of a retired employee to serve on the board of the authority from which the employee retired. In addition, the following specific inquiries are posed: 1. Is there any general conflict of interest with this retired employee's appointment to the Board of Directors? 2. Does the fact that the retired employee receives a pension from the municipal authority from which s /he retired create a conflict of interest? 3. If yes to number 2, is the conflict removed if the retired employee does not vote on matters regarding pensions? 4. Is there any conflict created as a result of the appointee's prior service as local union president? 5. If yes to number 4, is the conflict overcome if the retired prior local union president abstains from voting on labor matters ?" 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 that the inquiries pertain to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent that the inquiries pertain to future conduct, the inquiries may and shall be addressed. The submitted facts do not disclose the capacities in which the retired individuals at issue were employed by the City. Therefore, it shall be factually assumed for purposes of this advisory that said individuals, in their capacities as employees of the City, would be considered "public employees" 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, these individuals became "former public employees" subject to Section 1103(g) of the Ethics Act. The submitted facts also do not disclose whether the City boards, commissions, and authorities at issue are purely advisory in nature. Therefore, it shall be factually assumed that said Spencer /City of Reading City Council, 06 -584 September 21, 2006 Page 3 governmental bodies are not purely advisory bodies and that accordingly, members of said bodies would be considered to be "public officials" subject to the Ethics Act. While Section 1103(g) does not prohibit a former public official /public employee from accepting a position of employment, 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 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 /public 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 Spencer /City of Reading City Council, 06 -584 September 21, 2006 Page 4 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 is or has been associated" is not limited to the particular subdivision of the agency or other governmental body where the public official /public 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 90 -006; Sharp, Opinion 90- 009 -R. Per State Ethics Commission precedents, Section 1103(g) of the Ethics Act does not prohibit the appointment /rehiring of a former public official /public employee to a public office or position of public employment with the former governmental body. Confidential Opinion, 93 -005; Confidential Opinion, 97 -008; Long, Opinions 97 -010 and 97- 010 -R; McGlathery, Opinion 00 -004. Sections 1103(a) and 1103(j) of the Ethics Act pertaining to conflicts of interest 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 Spencer /City of Reading City Council, 06 -584 September 21, 2006 Page 5 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 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. "Immediate family." A parent, spouse, child, brother or sister. "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. 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 questions presented. Spencer /City of Reading City Council, 06 -584 September 21, 2006 Page 6 Having established the above general principles, your inquiries shall be addressed. The first inquiry is whether a person who is retired and receives a pension from the City may be appointed to serve as a member or director of a City board, commission or authority, presuming that such an appointment is not precluded by the City Charter, City Ordinances, or the Articles of Incorporation of the body at issue. Based upon the submitted fact that an individual appointed to serve on one of the aforementioned bodies would not receive compensation for serving on the body and would only be entitled to receive reimbursement of expenses, you are advised that Section 1103(g) of the Ethics Act would not preclude a retired City employee from serving on any of the aforementioned bodies because Section 1103(g) only applies to restrict a former public official /public employee when the representation before the former governmental body is with `promised or actual compensation." 65 Pa.C.S. § 1103(g). Parenthetically, if the one year restriction period of Section 1103(g) has expired, then Section 1103(g) would in any event not apply to restrict a retired City employee with regard to representation before that individual's former governmental body. With regard to the specific inquiries posed as to whether a conflict of interest was created by the appointment of the retired BARTA employee to the BARTA Board of Directors in light of the individual's receipt of a pension from BARTA and his prior service as a local union president, said inquiries cannot be addressed in that past conduct cannot be reviewed in an advisory. See, Hofrichter, Opinions 98 -003, 98-003 - R. Consequently, this advice is necessarily limited to providing the following general guidance. Section 1103(g) of the Ethics Act would not prohibit an individual who retired from employment with an authority from being appointed to serve on the board of that authority. Upon appointment to the authority board, the individual would in that capacity once again become subject to the Ethics Act. As a general rule, pursuant to Section 1103(a) of the Ethics Act, said individual would have a conflict of interest as to matters before the authority that would financially benefit the individual, a member of the individual's immediate family, or a business with which the individual or a member of the individual's immediate family is associated. The above quoted statutory definitions of "business" and "business with which he is associated' delineate the entities and circumstances under which those terms have application. This assumes that the applicable municipal code would not prohibit an authority board member from receiving a pension from the authority while serving on the authority board. If the applicable municipal code would provide such a prohibition, the receipt of a pension while serving on the authority board would constitute a private pecuniary benefit contrary to Section 1103(a) of the Ethics Act. In each instance of a conflict, the individual would be required to abstain and to observe the disclosure requirements of Section 1103(j) of the Ethics Act. 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 retired employee with the City of Reading ( "City "), an individual would be considered a "public employee" as defined in the Public Official and Employee Ethics Act ( "Ethics Act'), 65 Pa.C.S. § 1101 et seq. Upon termination of service with the City, the individual became a `former public employee" subject to Section 1103(g) of the Ethics Act. Based upon the submitted fact that an individual appointed to serve on a City board, commission, or authority would not receive compensation for serving on the body and would only be entitled to receive reimbursement of expenses, a retired City employee would not be precluded from serving on any of the aforementioned bodies because Section 1103(g) only applies to Spencer /City of Reading City Council, 06 -584 September 21, 2006 Page 7 restrict a former public official /public employee when the representation before the former governmental body is with "promised or actual compensation." If the one year restriction period of Section 1103(g) has expired, then Section 1103(g) would in any event not apply to restrict a retired City employee with regard to representation before that individual's former governmental body. Section 1103(g) would not prohibit an individual who retired from employment with an authority from being appointed to serve on the board of that authority. Upon appointment to the authority board, the individual would in that capacity once again become subject to the Ethics Act. Pursuant to Section 1103(a) of the Ethics Act, said individual would have a conflict of interest as to matters before the authority that would financially benefit the individual, a member of the individual's immediate family, or a business with which the individual or a member of the individual's immediate family is associated. This assumes that the applicable municipal code would not prohibit an authority board member from receiving a pension from the authority while serving on the authority board. If the applicable municipal code would provide such a prohibition, the receipt of a pension while serving on the authority board would constitute a private pecuniary benefit contrary to Section 1103(a) of the Ethics Act. In each instance of a conflict, the individual would be required to abstain and to observe the disclosure requirements of Section 1103(j) of the Ethics Act. Act. The propriety of the proposed conduct has only been addressed under the Ethics 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 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