Senate Bill 1439 (“SB 1439”) significantly impacts campaign contributions to local elected officials and gives rise to new potential conflicts of interest. Effective January 1, 2023, SB 1439 extends existing prohibitions on campaign contributions under the Levine Act to local agency bodies whose members are elected, such as city councils, school district board members, and county boards of supervisors. In addition, this regulation expands the timeframe prohibiting specific contributions following an elected or nonelected official’s action from three months to 12 months.
This bipartisan legislation was authored by State Senator Steve Glazer (D-Orinda) and co-authored by Senate Republican Leader Scott Wilk (R-Santa Clarita). The goal of SB 1439 is to ensure the same pay-to-play prohibitions that apply to appointees when approving a license, permit, or entitlement for use also apply to local elected officials when acting in an identical capacity.
The Existing Law: The Levine Act
Previously, the Levine Act prohibited members of nonelected bodies, such as planning commissions, from accepting, soliciting, or directing a contribution of more than $250 from any party while a proceeding is pending before the agency and for three months following the date a final decision is rendered in the proceeding. Elected legislative bodies, such as city councils, county boards of supervisors, and the Legislature were excluded from these provisions unless the officer served on a specific board or commission.
The New Law: Revision to the Levine Act
SB 1439 significantly broadens the reach of the Levine Act by making it applicable to local agencies whose members are directly elected by the voters. The new regulation includes the following:
1. Elected Officials: Expands the existing prohibition on appointed officers from accepting, soliciting, or directing a contribution of more than $250 from any party while a proceeding involving a license, permit, or other entitlement for use is pending before the agency to cover elected officials.
2. Regulated Activity: A proceeding involving a “license, permit, or other entitlement for use” means all business, professional, trade, and land use licenses and permits and all other entitlements for use, including all entitlements for land use, all contracts (other than competitively bid, labor, or personal employment contracts), and all franchises.
3. Prohibition Period Expanded from Three to 12 months: Prohibits members of both elected and nonelected bodies from accepting, soliciting, or directing a contribution of more than $250 from any party while a proceeding involving a license, permit, or other entitlement for use is pending, and for 12 months following the date a final decision is rendered in the proceeding if the officer knows or has reasons to know that the participant has a financial interest.
4. Disclose and Recuse or Return and Participate:
Disclose and Recuse: Prior to rendering any decision in a proceeding pending before an agency that involves a license, permit, or other entitlement for use, including certain contracts, each officer who received a contribution over $250 within the preceding 12 months from a party or participant in the proceeding shall disclose that fact on the record of the proceeding. After disclosing the fact on the record, the officer should recuse themselves and shall not make, participate in making, or in any way attempt to use the officer’s official position to influence the decision in a proceeding pending before the agency if the officer knows or has reason to know that the participant has a financial interest in the decision.
Return and Participate: If an officer receives a contribution that would otherwise require disqualification and returns the contribution within 30 days from the time the officer knows, or should have known, about the contribution and the proceeding involving a license, permit, or other entitlement for use, the officer shall be permitted to participate in the proceeding.
5. How to Cure Contributions Made During the 12 Months After the Decision: Permits both elected and nonelected bodies who accept, solicit, or direct a contribution of more than $250 during the 12 months after the date a final decision is rendered in a proceeding involving a license, permit, or other entitlement for use, to cure the violation by returning the contribution or the portion exceeding $250 within 14 days of accepting, soliciting, or directing the contribution, whichever comes latest. However, an elected or nonelected officer is permitted to cure such a violation only if the officer did not knowingly and willfully accept, solicit, or direct the prohibited contribution, and requires the officer or the officer’s controlled committee to maintain records of curing the violation.
6. Entities Doing Business with Elected Bodies Disclosure and Prohibition Requirements: A party to a proceeding before an agency involving a license, permit, or other entitlement for use shall 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. In addition, the party or participant shall not make a contribution of more than $250 to any officer of that agency during the proceeding and for 12 months following the date a final decision is rendered by the agency in the proceeding. When a closed corporation is a party to or a participant in a proceeding involving a license, permit, or other entitlement for use pending before an agency, the majority shareholder is subject to the disclosure and prohibition requirements specified in this section.
7. Potential Retroactive Effect: While SB 1439 does not go into effect until January 1, 2023, the bill does not specifically address campaign contributions made within 12 months prior to the effective date. In effect, this could mean newly elected 2022 councilmembers or school board members are disqualified for 12 months from participating in certain items with no opportunity to cure since the 30-day cure period to return the contribution has passed. As of today, the FPPC Committee advised that recusal would be the most prudent course of action.
Complying with SB 1439
Moving forward, it is key for both elected officials and entities doing business with elected bodies to monitor the contributions of their principals, employees, and agents along with the timeline of contributions and presentations before elected officials.
If you have any questions regarding SB 1439, or how to adopt policies in compliance with this new law, please contact your OMLO attorney.
OMLO will continue to monitor these developments carefully. This article is for informational purposes only and only provides an overview of specific developments. It is not intended to be, and should not be construed as, legal advice for any particular fact situation. For actual legal advice and specifics pertaining to your governmental entity, please contact your OMLO attorney for assistance.