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HomeMy WebLinkAbout06-593 GallagherMichael D. Gallagher, Esquire Murrin, Taylor, Flach, Gallagher & May Diamond Park Place, Lower Level 110 East Diamond Street Butler, PA 16001 -5999 Dear Mr. Gallagher: ADVICE OF COUNSEL October 23, 2006 06 -593 This responds to your letter of September 21, 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 three township supervisors with regard to voting upon a public sewage system proposed for a village in the township when the three supervisors own properties that would be included in the public sewage system, and if all three supervisors would have a conflict of interest with regard to voting on the public sewage system, whether Section 1103(j) of the Ethics Act would still permit the supervisors to vote on the public sewage system. Facts: As Solicitor for Summit Township ( "Township ") in Butler County, you request an advisory on behalf of the Township's three Supervisors, Rod Scott ( "Scott "), Regis Karch ( "Karch "), and Larry Osche ( "Osche "). In 2005, the Department of Environmental Protection ( "DEP ") notified the Township that the area in and around the unincorporated village of Herman, which is located within the Township, has a problem with numerous private on -site sewage systems that are defective. DEP suggested that the Township would need to find a remedy for the defective on -site sewage systems, or else DEP would file a sewage facilities action against the Township and possibly mandate a remedy. The Supervisors thereafter obtained a study, and the options presented to the Supervisors fall into one of two general categories: (1) construct lines and facilities to tap into an existing sewage system run by other communities; or (2) establish a Township sewage system that will probably ultimately be converted to a municipal authority pursuant to the Municipality Authorities Act. The Supervisors own properties in the Township that will be affected by the introduction of public sewage regardless of which option to provide public sewage is Gallaqher /Scott /Karch /Osche, 06 -593 October 23, 2006 Page 2 chosen. Scott owns adjacent houses, each on one acre, and a vacant half -acre lot. Karch owns a lot with a house and a thirty -five acre vacant parcel. Osche owns a five acre lot with a house. Although public sewage will be available to the Supervisors' properties, the Supervisors will be required to pay tap -in fees that will cost thousands of dollars. It is possible that the larger parcels could be subdivided into smaller parcels for sale after the introduction of public sewage. Depending upon the size of the project, the sewage system will serve 139 or more residents, including the Supervisors. You pose the following specific inquiries: (1) Whether the Supervisors' ownership of properties that would be included in the public sewage project constitutes a conflict of interest that would prohibit them from voting on the project, or whether their voting on the project would have a de minimis economic impact such that there would not be a conflict of interest. (2) If all three Supervisors would have a conflict of interest with respect to voting on the public sewage project, would the Supervisors still be permitted to vote on the project pursuant to Section 1103(j) of 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 Supervisors for the Township, Scott, Karch, and Osche are public officials as that term is defined in the Ethics Act, and hence they are 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 Gallaqher /Scott /Karch /Osche, 06 -593 October 23, 2006 Page 3 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. Gallaqher /Scott /Karch /Osche, 06 -593 October 23, 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. Having established the above general principles, your specific inquiries shall now be addressed. As to your first inquiry, you are advised as follows. Each of the three Supervisors would have a conflict of interest under Section 1103(a) of the Ethics Act with respect to voting on the proposed public sewage system. As for each Supervisor, he would use the authority of office by voting on the public sewage system. Further, such action would result in private pecuniary benefits to him, consisting of the availability of public sewage to property that he owns in the Township. Lastly, those pecuniary benefits would inure to him. Hence, all of the elements of a conflict would exist for each Supervisor. However, the statutory definition of "conflict" or "conflict of interest" includes two exclusions, hereinafter referred to as the "de minimis" exclusion and the "class /subclass 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, Schweinsburq, Order 900. In that the inquiry involves the Supervisors' participation in voting on a public sewage system that would serve 139 or more residents, including the Supervisors, such action would not have a de minimis economic impact, and therefore, this exclusion would not apply. In order for the class /subclass exclusion to apply, two criteria must be met: (1) the affected public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be a member of a class consisting of the general public or a true subclass consisting of more than one member; and (2) the public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be affected "to the same degree" as the other members of the class /subclass. 65 Pa.C.S. § 1102; see, Graham, Opinion 95 -002 (citing Van Rensler, Opinion 90 -017); Rubenstein, Opinion 01 -007. The first criterion of the exclusion is satisfied where the members of the proposed subclass are similarly situated as the result of relevant shared characteristics. The second criterion of the exclusion is satisfied where the individual /business in question and the other members of the class /subclass are reasonably affected to the same degree by the proposed action. Kablack, Opinion 02 -003. In considering the first criterion, it would appear that the correct identification of the subclass to which the Supervisors belong is the subclass consisting of all property Gallaqher /Scott /Karch /Osche, 06 -593 October 23, 2006 Page 5 owners in the Township whose property would be served by the proposed public sewage system. Regarding the second criteria concerning being affected to the same degree as the other members of the class /subclass, although the submitted facts describe the properties owned by the Supervisors, the submitted facts do not disclose any facts with respect to the other properties that would be served by the public sewage system. Thus, no factual information has been presented to determine the effect that the introduction of public sewage would have on each individual Supervisor's property values as compared to the effect that it would have on the property values of the other members of the subclass. Therefore, a determination cannot be made as to whether any or all of the Supervisors would be reasonably affected to the same degree as one or more other members of the subclass. When a factual insufficiency exists as to the impact of proposed action on members of the class /subclass, the advisory must necessarily be limited to providing general guidance. If, as a result of the proposed action, a Supervisor would be affected to the same degree (i.e., experience the approximate same financial impact on the value of his properties) as one or more other members of the class /subclass, the class /subclass exclusion would apply and that Supervisor would not have a conflict of interest under Section 1103(a) of the Ethics Act as to participating in voting on the public sewage system. If, as a result of the proposed action, a Supervisor would not be affected to the same degree as one or more other members of the class /subclass, the class /subclass exclusion would not apply and that Supervisor would have a conflict of interest under Section 1103(a) of the Ethics Act as to participating in voting on the public sewage system. In any instance of a conflict, a Supervisor would be required to abstain from participating and observe the disclosure requirements of Section 1103(j) of the Ethics Act. As to your second inquiry, you are advised as follows. If the Board of Supervisors would be unable to take action on the proposed public sewage system because all three Supervisors would be required to abstain from voting due to a conflict of interest, thus making the majority or other legally required vote of approval unattainable, the Supervisors would be permitted to vote if they would make the proper disclosures as provided in Section 1103(j) of the Ethics Act. See, Pavlovic, Opinion 02- 005. It is noted, however, that Section 1103(j) does not give conflicted officials the authority to otherwise participate, as for example, by discussing or advocating as to the 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 respective municipal code. Conclusion: As Supervisors for Summit Township ( "Township ") in Butler County, Rod Scott, Regis Karch, and Larry Osche are public officials subject to the provisions of the Public Official and Employee Ethics Act "Ethics Act"), 65 Pa.C.S. § 1101 et seq. Each Supervisor would have a conflict of interest under Section 1103(a) of the Ethics Act with regard to voting on a proposed public sewage system for the village of Herman, which is located in the Township, as such action would result in private pecuniary benefits to him consisting of the availability of public sewage to property that he owns in the Township. However, the statutory definition of "conflict" or "conflict of interest" includes two exclusions, hereinafter referred to as the "de minimis" exclusion and the "class /subclass exclusion." The de minimis exclusion would not apply. Gallaqher /Scott /Karch /Osche, 06 -593 October 23, 2006 Page 6 In order for the class /subclass exclusion to apply, two criteria must be met: (1) the affected public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be a member of a class consisting of the general public or a true subclass consisting of more than one member; and (2) the public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be affected "to the same degree" as the other members of the class /subclass. In considering the first criterion, it would appear that the correct identification of the class /subclass to which the Supervisors belong is the subclass consisting of all owners of properties that would be served by the proposed public sewage system. Regarding the second criterion, concerning being affected to the same degree as the other members of the class /subclass, although the submitted facts describe the properties owned by the Supervisors, the submitted facts do not disclose any facts with respect to the other properties that would be served by the public sewage system. Thus, no factual information has been presented to determine the effect that the introduction of public sewage would have on each individual Supervisor's property values as compared to the effect that it would have on the property values of the other members of the subclass. Therefore, a determination cannot be made as to whether any or all of the Supervisors would be reasonably affected to the same degree as one or more other members of the subclass. Due to a factual insufficiency, it has not been established that the class /subclass exclusion would apply. If, as a result of the proposed action, a Supervisor would be affected to the same degree (i.e., experience the approximate same amount of financial impact on his properties) as one or more other members of the class /subclass, the class /subclass exclusion would apply and that Supervisor would not have a conflict of interest under Section 1103(a) of the Ethics Act as to participating in voting on the proposed public sewage system. If, as a result of the proposed action, a Supervisor would not be affected to the same degree as one or more other members of the class /subclass, the class /subclass exclusion would not apply and that Supervisor would have a conflict of interest under Section 1103(a) of the Ethics Act as to participating in voting on the proposed public sewage system. In any instance of a conflict, a Supervisor would be required to abstain from participating and observe the disclosure requirements of Section 1103(j) of the Ethics Act. If the Board of Supervisors would be unable to take action on the proposed public sewage system because all three Supervisors would be required to abstain from voting due to a conflict of interest, thus making the majority or other legally required vote of approval unattainable, the Supervisors would be permitted to vote if they would make the proper disclosures as provided in Section 11030) of the Ethics Act. 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. Gallaqher /Scott /Karch /Osche, 06 -593 October 23, 2006 Page 7 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