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HomeMy WebLinkAbout07-006 ConfidentialOPINION OF THE COMMISSION Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Paul M. Henry Raquel K. Bergen Nicholas Colafella DATE DECIDED: 3/27/07 DATE MAILED: 4/11/07 07 -006 This Opinion is issued in response to your confidential advisory request dated January 31, 2007. I. ISSUE: Whether an individual appointed by an A to serve as a non - voting member of a B board would be considered a "public official" subject to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., and the Regulations of the State Ethics Commission, and particularly the requirements to file Statements of Financial Interests; and if so, whether the non - voting board member would have a conflict of interest under the Ethics Act where: (1) the non - voting board member would serve as the sole member of a B committee that oversees a C company that provides services to the B; (2) the non - voting board member could make recommendations to the voting board members that would result in billable hours for the C company; and (3) the C company is partially owned by the M of the non - voting board member. II. FACTUAL BASIS FOR DETERMINATION: As a non - voting Member of the Board of Political Subdivision D, you request an advisory opinion from this Commission based upon the following submitted facts. The E of Political Subdivision F enacted a G that authorized Political Subdivision F to enter into a H with Political Subdivision D. The H between Political Subdivision F and Political Subdivision D granted Political Subdivision D the right and privilege of constructing, maintaining, and operating an I within Political Subdivision F. The H and the G both provided for the appointment by Political Subdivision F of a non - voting representative to serve as a Member of the Political Subdivision D Board. You have submitted an unsigned copy of the H. It is noted that the H provides in Confidential Opinion, 07 -006 April 11, 2007 Page 2 pertinent part: [quote and cite]. You have also submitted a copy of the G. It is noted that the G provides in pertinent part: [quote and cite]. We take administrative notice that the J Act provides the following powers and duties to an A: [quote and cite]. You were appointed by the Political Subdivision F E to serve as a non - voting Member of the Political Subdivision D Board. On [date], you attended a reorganization meeting of Political Subdivision D. The Political Subdivision D Chairman selected you to serve as the only member of the K Committee. Your M is one of the owners of a company, L ( "the Company "), which has provided management consulting on K to Political Subdivision D for many years. At the Political Subdivision D Board meeting in [date], the Company was directed to perform all of the K management functions that were previously performed by a Political Subdivision D employee. You state that the K Committee oversees the work performed by the Company. You state that you could not vote to hire the Company, but you could potentially make recommendations to the voting Members of the Political Subdivision D Board, which could result in billable hours for the Company. You pose the following narrow inquiries: 1. Whether as a non - voting Member of the Political Subdivision D Board, you would be considered a public official subject to the Ethics Act and the Regulations of the State Ethics Commission, and particularly, the requirements for filing Statements of Financial Interests. 2. Whether you would have a conflict of interest under the Ethics Act with regard to serving on the K Committee given that it oversees the work performed by the Company. 3. Whether the Ethics Act would prohibit or restrict you from making recommendations to the voting Members of the Political Subdivision D Board that could result in billable hours for the Company. By letter dated February 9, 2007, you were notified of the date, time and location of the executive meeting at which your request would be considered. III. 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 which the requester has submitted. In issuing the advisory based upon the facts which the requester has submitted, this Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts which 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 Confidential Opinion, 07 -006 April 11, 2007 Page 3 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 your inquiries relate 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 your inquiries relate to future conduct, your inquiries may and shall be addressed. This Opinion shall be limited to addressing the narrow inquiries you have posed. We shall first address the question of whether, in your capacity as a non - voting Member of the Political Subdivision D Board, you would be considered a "public official" subject to the Ethics Act. The term "public official" is defined in the Ethics Act as follows: § 1102. Definitions "Public official." Any person elected by the public or elected or appointed by a governmental body or an appointed official in the executive, legislative or judicial branch of this Commonwealth or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense or to otherwise exercise the power of the State or any political subdivision thereof. 65 Pa.C.S. § 1102. The related terms "governmental body" and "political subdivision" are defined as follows: "Governmental body." Any department, authority, commission, committee, council, board, bureau, division, service, office, officer, administration, legislative body or other establishment in the executive, legislative or judicial branch of a state, a nation or a political subdivision thereof or any agency performing a governmental function. "Political subdivision." Any county, city, borough, incorporated town, township, school district, vocational school, county institution district, and any authority, entity or body organized by the aforementioned. 65 Pa.C.S. § 1102. The regulations of the State Ethics Commission similarly define the term "public official" and set forth the following additional criteria that are used to determine whether the advisory board exception applies: (i) The following criteria will be used to determine if the exception in this paragraph is applicable: (A) The body will be deemed to have the power to expend public funds if the body may commit funds or may otherwise make payment of monies, enter into contracts, invest funds held in reserves, make loans or grants, borrow money, Confidential Opinion, 07 -006 April 11, 2007 Page 4 issue bonds, employ staff, purchase, lease, acquire or sell real or personal property without the consent or approval of the governing body and the effect of the power to expend public funds has a greater than de minimis economic impact on the interest of a person. (B) The body will be deemed to have the authority to otherwise exercise the power of the Commonwealth or a political subdivision if one of the following exists: (I) The body makes binding decisions or orders adjudicating substantive issues which are appealable to a body or person other than the governing authority. (II) The body exercises a basic power of government and performs essential governmental functions. (III) The governing authority is bound by statute or ordinance to accept and enforce the rulings of the body. (IV) The body may compel the governing authority to act in accordance with the body's decisions or restrain the governing authority from acting contrary to the body's decisions. (V) The body makes independent decisions which are effective without approval of the governing authority. (VI) The body may adopt, amend and repeal resolutions, rules, regulations or ordinances. (VII) The body has the power of eminent domain or condemnation. (VIII)The enabling legislation of the body indicates that the body is established for exercising public powers of the Commonwealth or a political subdivision. (ii) The term does not include judges and inspectors of elections, notary publics and political party officers. (iii) The term generally includes persons in the following offices: (A) Incumbents of offices filled by nomination of the Governor and confirmation of the Senate. (B) Heads of executive, legislative and independent agencies, boards and commissions. (C) Members of agencies, boards and commissions appointed by the General Assembly or its officers. (D) Persons appointed to positions designated as officers by the Commonwealth or its political subdivisions. Confidential Opinion, 07 -006 April 11, 2007 Page 5 (E) Members of municipal, industrial development, housing, parking and similar authorities. (F) Members of zoning hearing boards and similar quasi - judicial bodies. (G) Members of the public bodies meeting the criteria in paragraph (i)(A). 51 Pa. Code § 11.1. Status as a "public official" subject to the Ethics Act is determined by applying the above definition and criteria to the position held. The Commonwealth Court of Pennsylvania has directed that coverage under the Ethics Act be construed broadly and that exclusions under the Ethics Act be construed narrowly. See, Philips v. State Ethics Commission, 470 A.2d 659 (Pa. Cmwlth. 1984). In applying the Ethics Act's definition of "public official," the first portion of the definition provides that a public official is a person who: (1) is elected by the public; (2) is elected or appointed by a governmental body; or (3) is an appointed official in the executive, legislative, or judicial branch of the Commonwealth or a political subdivision of the Commonwealth. Muscalus, Opinion 02 -007. The fact that you were appointed to the Political Subdivision D Board by the Political Subdivision F E satisfies the first portion of the definition. As for the remainder of the definition, it is the determination of this Commission that you would not fall within the statutory exception for members of purely advisory boards lacking authority to expend public funds other than reimbursement for personal expense or to otherwise exercise the power of the State or a political subdivision. We note from the provision of the J Act set forth above that the Political Subdivision D Board has the power to, inter alia, [perform enumerated activities]. Given the foregoing powers, it is clear that the Political Subdivision D Board goes beyond advisory functions in that it exercises a basic power of government and has the power to expend public funds. Although you are a non - voting Member of the Political Subdivision D Board, we note that the Ethics Act does not exclude from the definition of "public official" a non - voting member of a body that itself is not purely advisory. This Commission does not have the authority to create an exception which does not exist by statute. Richardson, Opinion 93- 006; Marsh, Opinion 93 -007; Zeigler, Opinion 98 -001; Whitlock, Opinion 04 -015. Therefore, based upon the above judicial directives, the provisions of the Ethics Act, this Commission's Regulations, and the opinions of this Commission, the necessary conclusion is that you are a "public official" subject to the Ethics Act and the regulations of this Commission, and that you are required to file Statements of Financial Interests pursuant to the Ethics Act. Having established your status as a public official subject to the Ethics Act, we shall now set forth the remaining provisions of the Ethics Act that are pertinent to your second and third inquiries. 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. Confidential Opinion, 07 -006 April 11, 2007 Page 6 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 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. "Immediate family." A parent, spouse, child, brother or sister. 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 includes more than mere voting; for example, it includes discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In each instance of a conflict of interest, a public official /public employee is required to abstain fully from participation. Your M is a member of your immediate family, and the Company is a business with which your M is associated. As a Member of the Political Subdivision D Board, you would generally have a conflict of interest in matters that would financially benefit your M or the Company. In each instance of a conflict of interest, you would be required to abstain fully from participation. With respect to your second specific inquiry, it is noted that the K Committee is responsible for overseeing the work performed by the Company for the B. As a practical matter, it would appear to be impossible for you to serve on the one - member K Committee, given that you would have a conflict of interest in such matters involving the Company. With respect to your third specific inquiry, you are advised that Section 1103(a) of Confidential Opinion, 07 -006 April 11, 2007 Page 7 the Ethics Act would restrict you as a Member of the Political Subdivision D Board from making recommendations to the voting Members of the Political Subdivision D Board that could result in billable hours for the Company. Such recommendations would constitute a use of authority of office. Juliante, supra. Billable hours would constitute a private pecuniary benefit to the Company, a business with which a member of your immediate family is associated. 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. IV. CONCLUSION: An individual appointed by an A to serve as a non - voting member of a B board ( "the Board Member ") is a "public official" subject to the Public Official and Employee Ethics Act, 65 Pa.C.S. § 1101 et seq. ( "Ethics Act "). The Ethics Act does not exclude from the definition of "public official" a non - voting member of a body that itself is not purely advisory. The Board Member would be required to file Statements of Financial Interests pursuant to the Ethics Act. The Board Member's M is a member of the Board Member's immediate family as that term is defined in the Ethics Act. The C company ( "the Company ") of which the Board Member's M is part -owner is a business with which the Board Member's M is associated. Pursuant to Section 1103(a) of the Ethics Act, the Board Member would generally have a conflict of interest in matters that would financially benefit her M or the Company. In each instance of a conflict of interest, the Board Member would be required to abstain fully from participation. As a practical matter, it would appear to be impossible for the Board Member to serve on a one - member committee that would oversee the work performed by the Company for the B, given that the Board Member would have a conflict of interest in such matters involving the Company. Section 1103(a) of the Ethics Act would restrict the Board Member from making recommendations to the voting Members of the B Board that could result in a private pecuniary benefit to the Company. Pursuant to Section 1107(10), the person who acts in good faith on this Opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public record and will be made available as such. Finally, a party may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The party requesting reconsideration must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). By the Commission, Louis W. Fryman Chair