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SB 1439- Campaign Contributions to Councilmembers Subject to New Rules on Disclosure, Recusal and Prohibition

SB 1439- Campaign Contributions to Councilmembers Subject to New Rules on Disclosure, Recusal and Prohibition

Since 1982, the Levine Act has imposed campaign contribution prohibitions upon certain city officials - but it has not been applicable to councilmembers. Senate Bill (SB) No. 1439 (signed on September 29, 2022; effective January 1, 2023) extends these prohibitions to councilmembers, makes changes to the affected contribution window, and adds a circumstance in which a violation may be cured. In summary, SB 1439 provides as follows:

1. If an official knows or has reason to know that a party/participant (or agent thereof) has a financial interest in a proceeding involving a “license, permit, or other entitlement,” then the official cannot accept, solicit, or direct a contribution of more than $250 from any party/participant (or agent thereof) while a proceeding is pending before the agency (e.g., before a city council for decision) and for 12 months (originally 3 months) after the decision. This includes any contribution on the official’s own behalf, or on behalf of any other official, or on behalf of any candidate for office/committee.

2. If an official has willfully/knowingly received a contribution in an amount greater than $250 in the 12 months prior to a decision involving a license, permit, or other entitlement in which they know or have reason to know that the party/participant (or agent thereof) has a financial interest in the decision, then the official cannot participate in the decision. This fact would also have to be disclosed on the record of the proceeding. However, participation may be permitted if the contribution is returned within 30 days from the time the official knows, or should have known, about the contribution and the proceeding.

3. A party to a proceeding involving a license, permit, or other entitlement for use must disclose on the record of the proceeding any contribution in an amount of more than $250 made within the preceding 12 months by the party or the party’s agent.

4. A party (or agent thereof) to a proceeding before an agency involving a license, permit, or other entitlement for use may not contribute more than $250 to an official while the proceeding is pending and for 12 months (originally 3 months) after the decision.

The term “license, permit, or other entitlement” includes entitlements for land use, business licenses/permits, franchises, and contracts (except competitively bid, labor, or personal employment contracts). A violation of these prohibitions is a misdemeanor. The California Fair Political Practices Commission (FPPC) has further oversight and may also impose fines.

Additionally, certain violations may be cured. If a local elected official accepts, solicits, or directs a prohibited contribution within 12 months after a decision, then the violation can be cured if the contribution (or portion in excess of $250) is returned within 14 days of accepting, soliciting, or directing the contribution, whichever comes latest, and, further, if the local elected official did not knowingly/willfully accept, solicit, or direct the prohibited contribution. Records of this cure action must also be kept.

Since AB 1439 does not come into effect until January 1, 2023, the prohibition on accepting contributions in an amount greater than $250 during or after a proceeding/decision is arguably not currently applicable at least up until December 31, 2022. For example, if an official participates in a proceeding on October 10, 2022, then they will arguably be able to accept contributions in excess of $250 up until December 31, 2022. However, an official’s ability to participate in proceedings occurring on or after January 1, 2023, may be affected by contributions in excess of $250 made during the prior 12 months. For example, if an official accepts such a contribution on October 10, 2022, then they will arguably not be able to participate in a proceeding on January 1, 2023, and would, further, be required to disclose the contribution on the record.

Nevertheless, given the newness of AB 1439, the impact of these changes during this interim period is unclear. As such, the conservative approach is to treat AB 1439 as currently applicable to ensure continuity until further clarification is provided (e.g., from the FPPC). The FPPC has adopted regulations under pre-AB 1439 law, but they will likely update these regulations in the coming months in order to provide further guidance.

 

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