ECONOMIC DISCLOSURE PROVISIONS UNDER THE
POLITICAL REFORM ACT OF 1974
Government Code Section 87200 Et Seq.*
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In addition to the requirement that public officials disqualify themselves from conflict of interests situations, public officials whose decision could affect their economic interests, are required under the act to file economic interest statements which are public records. Disclosure serves the two-fold purpose of making assets and income of public officials a matter of public record and reminding those who act, of that economic interest. By making officials and the public aware of what constitutes a conflict of interests, they will be able to identify conflict of interests situations and disqualify themselves from participating in discussions when appropriate. Questions from the media and interested citizens often aid in the public discussion of conflict of interests issues and assist in their resolution. Articles 2 and 3 of Chapter 7 of the Political Reform Act of 1974 (hereinafter "PRA" or "act") deal with disclosure of economic interests by public officials. These provisions were challenged in the case of Hays v. Wood (1979) 25 Cal.3d 772 as being unconstitutionally overbroad and as violative of privacy rights. The court rejected these claims holding that the disclosure scheme established in the act was not overbroad and that any infringements on the official's right to privacy or associational freedom was justified by the limited disclosure needed to prevent conflicts of interests.
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The PRA provides that all state and local officials, who foreseeably may materially affect private economic interests through the exercise of their public duties, must disclose such interests. Some persons are required to file disclosure statements because of their positions and others are required to file because of their duties. The disclosure requirements for constitutional officers, members of the Legislature, county supervisors, city councilmembers, mayors, judges, and other highranking officials are set forth in Government Code sections 87200-87210. footnote No. 4 All other officials who make or participate in the making of decisions are covered by conflict of interest codes adopted pursuant to Government Code sections 87300-87313. The promulgation and administration of conflict of interest codes will be discussed in section F of this chapter. Under Government Code section 87200 et seq., highranking state and local officials must disclose all income, gifts, interests in real property, and investments located in or doing business in their jurisdiction. The disclosure requirements for all other officials are determined according to the powers of the official's position to affect financial interests.
* Selected statutory materials appear in appendix B.
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In general, an official's statement of economic interests discloses the types of interests in real property, investments, business positions, and sources of income and gifts which he or she potentially could affect in his or her public capacity. (For a brief discussion of these economic interests, see chapter I, section E and section K. For specific instructions, see the disclosure forms and manual of the Fair Political Practices Commission (hereinafter "FPPC" or "commission") or contact the FPPC directly.)
If income is received or an interest in real property or investment is held at any time during the period covered by the statement, it must be disclosed. Officials are required to report all interests in real property and investments held by their spouses and dependent children and their community property interest in the income of their spouses. (§ 82030,§ 82033,§ 82034.) Officials who own a 10 percent or greater interest in a business entity must disclose the sources of income to, and the interests in real property and investments held by, the business entity if the applicable prorated dollar thresholds are satisfied. (§§ 82030, 82033, 82034.) Similar disclosure provisions exist with respect to trusts. Assets held by a truly blind trust are not disclosable. (See C.C.R., tit. 2, § 18234.)
Except for gifts, the disclosure of income, interests in real property, business positions and investments need not be reported if there is not a sufficient connection between the official's economic interest and the jurisdiction of the official's office or agency. Thus, an interest in real property must be disclosed only if it is within the official's jurisdiction or within two miles of it. (§§ 82033, 82035.) Similarly, a source of income or business entity in which an official has an investment or holds a business position must be reported only if the source or entity is doing business in the jurisdiction, is planning to do business in the jurisdiction, or has done business within the jurisdiction during the past two years. Once again, the purpose for this limitation is to protect the official's privacy in financial affairs which are beyond the official's power to affect. In reporting income, the appropriate value range is determined by the gross amount received, rather than the net. (In re Carey, No. 76-087, 3 FPPC Ops. 99.) Therefore, an official may have reportable income even when he or she sells a car, land, or an investment at a loss.
For a discussion of gifts, including definitions, valuation and reporting, see Chapter I, section E, subsection 3; and Chapter I, section K, specifically subsections 3 through 8.
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Every official covered by section 87200 or a conflict of interest code must file a statement of economic interests with his or her agency unless another filing officer is specifically designated. Statements of constitutional officers, members of the Legislature, county supervisors, mayors, city councilmembers, and judges are forwarded to the FPPC by their respective agencies.
Disclosure Statements by state lobbyists and their employers also are available for public inspection from the Secretary of State's Office.
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Every agency, which foreseeably may materially affect economic interests must adopt a conflict of interest code for its employees. A conflict of interest code lists those employees or officers who have disclosure obligations (designated employees) and prescribes the types of interests which must be disclosed by such officials (disclosure categories). Employees who perform merely ministerial or manual tasks or members of advisory nondecision making boards, as defined by commission regulations, are not subject to a conflict of interest code. The public is entitled to participate in the code adoption process as provided for in section 87311 and the applicable open meeting law. (For local government bodies, The Brown Act, contained in Gov. Code, § 54950 et seq.; for state bodies, The Bagley-Keene Open Meeting Act, contained in Gov. Code, § 11120 et seq. For more information you may contact the Office of the Attorney General for a pamphlet on the applicable open meeting law.) For more information about the promulgation and contents of conflict of interest codes, contact the FPPC. The commission can provide sample lists of designated employees, model disclosure categories, and other aids.
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Sections 87200-87313 et seq. are a part of the Political Reform Act. For a discussion of penalties and enforcement under the act, see chapter V of this pamphlet.
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Government Code Section 84308*
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As previously noted in chapter I, discussing financial conflicts of interests under the Political Reform Act of 1974 (hereinafter "PRA" or "act"), campaign contributions are not a basis for disqualification by public officials. (See § 82030(b)(1).) footnote No. 5 However, based on the increased concern about the link between campaign contributions and alleged conflicts of interests, the Legislature enacted section 84308 in 1982. Note: state or local laws may impose limits on campaign contributions that are lower than $250.00 (e.g., section 85100 et seq.)
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Briefly stated, Government Code section 84308 provides the following:
* Selected statutory materials appear in appendix E.
A more comprehensive description of the provisions of section 84308 is set forth below. If you have specific questions, you should consult the actual wording of the statute, and the regulations of the Fair Political Practices Commission (hereinafter "FPPC" or "commission").
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The law applies to two types of individuals: covered officials and interested persons.
Covered officials typically include state and local agency heads and members of boards
and commissions. (§ 84308(a)(3)
Interested persons refers to persons who are financially interested in the outcome of specified proceedings (e.g., parties and participants). Parties (e.g., applicants or subjects of the proceeding) are always presumed to be financially interested in the outcome. In addition, persons or entities which satisfy both of the following criteria are financially interested and are called "participants": (1) they foreseeably would be materially financially affected by the outcome of the decision as those terms are defined in Government Code section 87100 et seq.; and (2) they have acted to influence the decision through direct contacts with the officials or their staffs. (§ 84308(a)(1), (a)(2), (b) and (c); C.C.R., tit. 2, § 18438.4.)
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Agents of parties and participants are subject to the same prohibitions and requirements as their principals. (§ 84308(b), (c).) A person is an agent under section 84308 if he or she represents an interested person in connection with the covered proceeding. (C.C.R., tit. 2, § 18438.3(a).) If an individual acting as an agent is also acting as an employee or member of a law, architectural, engineering, or consulting firm, both the individual and the firm are considered agents. (C.C.R., tit. 2, § 18438.3(a).)
To determine whether the threshold of more than $250 for triggering the contribution prohibition or disqualification requirement has been reached, contributions made within the preceding 12 months from parties or participants are aggregated with those of their agents. C.C.R., tit. 2, § 18438.3(b).) Contributions from an individual agent include contributions from that agent's firm but do not include contributions from other individual partners or members of the firm unless such contributions are reimbursed by the firm.
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The law covers proceedings involving a license, permit, or other entitlement for use. These terms include 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. (§ 84308(a)(5).) The law covers conditional use permits, zoning variances, rezoning decisions, tentative subdivision and parcel maps, and consulting contracts, but does not apply to general land use plans or general building and development standards. (C.C.R., tit. 2, § 18438.2.) Ministerial decisions also are not covered. (C.C.R., tit. 2, § 18438.2.)
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Section 84308 imposes various requirements in connection with the making or receipt of campaign contributions on covered officials, parties, and participants involved in specified proceedings. As used in section 84308, the term "contribution" refers to money or services provided in connection with federal, state, or local political campaigns. (§ 84308(a)(6).)
At the time parties initiate proceedings, they must disclose, on the record of the proceeding all covered officials to whom they, or their agents, made contributions of more than $250 during the previous 12 months. (§ 84308(d).) Similarly, officials, must, at the beginning of the hearing, disclose on the record of the proceeding any party or participant who has contributed more than $250 during the previous 12 months. (§ 84308(c); C.C.R., tit. 2, § 18438.8.) If there is no public hearing, the disclosure must be entered on the written record of the proceeding. (C.C.R., tit. 2, § 18438.8.) As will be discussed subsequently, receipt of such contributions may necessitate the disqualification of the official from the decision making process.
If, prior to making a decision in a covered proceeding, more than $250 in contributions has been willfully or knowingly received by an official from a party during the previous 12 months, the official must disqualify himself or herself from participating in the proceeding. (§ 84308(c).) A similar prohibition exists with respect to contributions received from a participant, or his or her agent, if the official knows or has reason to know that the participant is financially interested in the outcome of the proceeding. (§ 84308(c); C.C.R., tit. 2 § 18438.7.) If an official returns the contribution (or that portion which is over $250) within 30 days from the time he or she knows or has reason to know of the contribution and the proceeding, then disqualification is not required. (§ 84308(c).)
Before the contribution prohibition and disqualification requirement are applicable, the covered official must have the requisite knowledge of (1) the contribution and (2) the fact that the source of the contribution is financially interested in the proceeding. By regulation, the FPPC provides that the knowledge requirement is satisfied with respect to the contribution when either the covered official has actual knowledge of it or it has been disclosed on the record of the proceeding. (C.C.R., tit. 2, § 18438.7(c).) With respect to the official's knowledge of the financial interest of the source of the contribution, parties are conclusively presumed to be financially interested. (§ 84308(a)(1), (b), (c); C.C.R., tit. 2, § 18438.7(a)(1).) With respect to participants, the covered official's knowledge requirement is satisfied if the participant reveals facts before the agency that make his or her financial interest apparent. (§ 84308(a)(2), (b), (c); C.C.R., tit. 2, § 18438.7(a)(2).)
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Section 84308 is a part of the Political Reform Act. For a discussion of penalties and enforcement provisions under the act, see chapter V of this pamphlet.
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LIMITATIONS ON FORMER STATE OFFICIALS
APPEARING BEFORE STATE GOVERNMENT AGENCIES
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Historically, there has been a regular flow of personnel between government and the private sector. Sometimes, individuals from the private sector enter government for a short tenure of service and then return to their private enterprise occupations. Other times, individuals with longstanding government service who have developed expertise choose to leave government service and join the private sector. In still other instances, elected officers retire or are defeated and, therefore, return to private industry.
Effective in 1981 the Political Reform Act of 1974 (hereinafter "PRA" or "act") was amended to include Government Code section 87400 et seq. footnote No. 6 In 1990, the Legislature enacted categorical restrictions on post-government employment to coincide with the restrictions previously placed on government officials who participated in specific judicial, quasi-judicial or similar proceedings. Section 87406 places restrictions on former government officials from contacting specified government agencies. These sections constitute the only general state law regulating the activity of former government officials who enter the private sector. (See Pub. Contract Code, § 10411 for specific prohibition.)
If a former local government official wishes to influence his or her former agency, the official should consult local laws and rules to determine if there are limitations on his or her activities. Special provisions for air pollution control districts appear in section 87406.1.
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The basic prohibition contained in section 87400 et seq. provides that: (1) no former state administrative official, (2) shall for compensation act as agent or attorney for any person other than the State of California, (3) before any court or state administrative agency, (4) in a judicial or quasi-judicial proceeding if previously the official personally and substantially participated in the proceeding in his or her official capacity.
*Selected statutory materials appear in appendix F.
If the elements of the prohibition are found to be present, a former state administrative official is forever banned from acting as an agent or attorney in a covered proceeding or from assisting another to so act.
State administrative officials include every member, officer, employee or consultant of a state administrative agency who, as part of his or her official responsibilities, engages in any judicial, quasi-judicial or other proceeding in other than a purely clerical, secretarial or ministerial capacity. (§ 87400(b).) State administrative agencies include every office, department, division, bureau, board and commission of state government, but do not include the Legislature, the courts or any agency in the judicial branch. (§ 87400(a).)
The statutory prohibition only extends to former state administrative officials who, for compensation, represent people as agents or attorneys. (§ 87401, 87402.) Former officials who provide representation without compensation are not covered by the prohibition. However, representing an individual as part of one's employment does constitute receiving compensation for such representation. A firm which has as one of its partners a former administrative official generally may not represent persons in covered proceedings, because the official ultimately will benefit directly or indirectly from the compensation paid to the firm for such representation. However, where a former administrative official merely shares office space and some other overhead expenses with another attorney, that attorney would not be prohibited from handling such cases so long as the former administrative official were in no way involved in fee splitting or the representation. (In re Zatopa, No. 82-95.)
The statute does specify the types of conduct which constitute prohibited representation of another in a covered proceeding (e.g., § 87402). It prohibits any formal or informal appearance or any written or oral communication with an intent to influence the covered proceeding. The prohibition on representation only applies to proceedings in which the State of California is a party or in which it has a direct or substantial interest. (§ 87401(a), § 87401(b).) In addition, the statute prohibits former administrative officials, for compensation, from aiding or assisting another to represent a person in a covered proceeding. (§ 87402.) Thus, if a former administrative official would be prohibited from personally acting as the client's representative, he or she is also prohibited, for compensation, from aiding or assisting another in such representation.
It is important to note that the statute only applies to judicial, quasi-judicial or other proceedings involving specific parties before a court or administrative agency (§ 87400(c); In re Xander, No. A-86-162; In re Berrigan, No. A-86-045). Thus, quasi-legislative proceedings of an agency for the purposes of adopting general regulations do not activate the prohibition. (In re Nutter, No. A-86-042; In re Swoap, No. A-86-199.) Participation in a lawsuit, an administrative enforcement action under section 11500 of the Government Code, or application proceedings are specifically covered. (§ 87400(c).) Any other proceeding which involves a controversy or ruling concerning specific parties also is covered. (§ 87400(c).)
Once it has been determined that a former administrative official is prepared to act as an agent or attorney for another in a court or in an administrative proceeding, it must be determined whether the former official participated in the proceeding during his or her official tenure. (In re Anderson, No. A-86-324; In re Petrillo, No. A-85-255.) If so, the elements of the prohibition are complete and the former administrative official is prevented from acting in a representative capacity. (§ 87401.) A former administrative official is deemed to have participated in a proceeding only if he or she were personally and substantially involved in some aspect. (§ 87400(d).) The statute specifically covers personal and substantial participation in a decision, the approval or disapproval of a decision, the making of a formal recommendation and the rendering of substantial advice. In addition, involvement in an investigation or the use of confidential information qualifies as participation under the statute. (§ 87400(d).) However, the statute specifically exempts from coverage the rendering of legal advice to departmental or agency staff which does not involve specific parties.
Unless covered by a specific exemption, a former administrative official who participated in a covered proceeding in his or her official capacity, is forever banned from acting as an agent or attorney in that proceeding, or from assisting another to do so. Section 87403 provides several limited exceptions to this general prohibition.
The statute does not act to prevent a former administrative official from making a statement which is based on his or her own special knowledge of the area, provided that the official does not receive any compensation, other than witness fees as set forth by law or regulation. (§ 87403(a).) The statute also exempts communications made solely for the purpose of providing information if the court or administrative agency to which the communication is directed makes specified findings. (§ 87403(b).) The court or administrative agency must find that the former administrative official has outstanding and otherwise unavailable qualifications, that the proceeding in question requires such qualifications, and that the public interest would be served by participation of the former official. Lastly, where a court or administrative agency has made a final decision but has retained jurisdiction over the matter, it may permit an appearance or communication from the former administrative official if the agency of former employment gives its consent by determining that the former administrative official left office at least five years previously and the public interest would not be harmed by the appearance or communication.
Upon petition of any interested person, or party, the court or administrative agency may act to enforce the terms of the statutory prohibition. After notice to the former administrative official, the court or administrative agency may exclude him or her from further participation or from assisting or counseling any other participant. (§ 87404.) In addition, the administrative, civil and criminal sanctions available for enforcement of the PRA apply to section 87400 et seq. (See chapter V of this pamphlet.)
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The restrictions prohibit the following former officials from accepting compensation to act as the agent, attorney or representative of another person for purposes of influencing specified government agencies through oral or written communications.
Appearances before a court, a state administrative law judge, or the Workers Compensation Appeals Board are not subject to the prohibitions of section 87406. Also, uncompensated appearances are not subject to the prohibition. The prohibition is not applicable to officials who transfer between agencies (§ 87406(e)), and designated employees of the Legislature (§ 87406(d) and §87400(a)).
"Administrative action" means the proposal, drafting, development, consideration, amendment, enactment or defeat of any rule, regulation or other action in any rate-making proceeding or any quasi-legislative proceeding. (§ 82002.) "Legislative action" means the drafting, introduction, consideration, modification, enactment or defeat of any bill, resolution, amendment, report, nomination, or other matter by the Legislature or by either house or any committee thereof, or by a member or employee of the Legislature acting in his or her official capacity. "Legislative action" also means the action of the Governor in approving or vetoing any bill. (§ 82037.)
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PENALTIES, ENFORCEMENT AND PROSPECTIVE ADVICE
UNDER THE POLITICAL REFORM ACT OF 1974
Government Code Sections 83114-83123 And 91000 Et Seq.
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The Political Reform Act of 1974 (hereinafter "PRA" or "act") provides administrative, civil and criminal penalties for its violation. In past years, the Fair Political Practices Commission (hereinafter "FPPC" or "commission") and local district attorneys have brought numerous enforcement actions which have resulted in hundreds of thousands of dollars of fines. If you have a question about a potential violation of the PRA you should contact the FPPC's enforcement division (428 J Street, 7th Floor, Sacramento, CA 95814, (916) 322-6441) or your local district attorney. The Attorney General and the commission have concurrent jurisdiction with district attorneys over criminal violations. (Gov. Code, § 91000(d), §91001(a).) footnote No. 8
Administrative penalties are levied by the FPPC after a hearing or stipulation. (§ 83116.) Administrative penalties include a $5,000 fine per violation, cease and desist orders, and orders to file reports, etc. (§ 83116.) The FPPC has the authority to bring administrative actions against both state and local officials. (§ 83123; see also McCauley v. BPC Direct Marketing (1993) 16 Cal.App.4th 1262, 1268-69 (certain provisions of the act can only be addressed by an FPPC administrative action).)
Injunctive relief may be sought by the civil prosecutor or any person residing in the official's jurisdiction. (§ 91003.) The court, in its own discretion, may require a plaintiff to file a complaint with the commission prior to seeking injunctive relief. In the event the action would not have been taken but for the conflict of interests, the court is empowered to void the decision. (§ 91003.) (Downey Cares v. Downey Community Development Com., supra, 196 Cal.App.3d 983.) The civil prosecutor also may seek civil damages for violations of the act. (§ 91004,§ 91005 &§ 91005.5.) In addition, any person who purposely or negligently causes any person to commit a violation, or aids and abets in the commission of a violation, is liable to civil, criminal and administrative sanctions. (§ 83116.5,§ 91006.) A plaintiff who prevails in an action brought pursuant to this section may be awarded attorneys fees. (§ 91003.) The standard for awarding fees is determined by application of the standards and case precedent established for attorney fee awards under Code of Civil Procedure section 1021.5, including the use of a multiplier. (Downey Cares v. Downey Community Development Com., supra, 196 Cal.App.3d 997.) A prevailing defendant, however, may be awarded attorney's fees only if the plaintiff's suit is frivolous, unreasonable or without foundation. (People v. Roger Hedgecock for Mayor Com. (1986) 183 Cal.App.3d 810, 816-19; see also Community Cause v. Boatwright (1987) 195 Cal.App.3d 562, 574-77.)
The act also provides misdemeanor criminal sanctions for knowing or willful violations of the act. (§ 91000.) Generally, persons convicted of violating the act may not be a candidate for elective office or act as a lobbyist for four years after the conviction. (§ 91002.)
Generally legislators and other elected state officers are exempt from administrative, civil and criminal penalties for violation of the disqualification requirement contained in Government Code section 87100; however, in 1990, the Legislature adopted limited disqualification requirements for legislators and other elected state officers. These disqualification requirements are only subject to administrative enforcement by the commission. (§§ 87102.5 - 87102.8.)
Persons who violate the gift or honoraria limits set forth in Government Code section 89500 et seq. are subject to a civil action brought by the Fair Political Practices Commission for up to three times the amount of the unlawful gift or honoraria. (§ 89521.) Violators are also subject to administrative sanctions, which include fines of up to $5,000 per violation, but are exempt from the civil or criminal penalties contained in section 91000 et seq. (§ 89520.)
The statute of limitations for civil and criminal enforcement actions is four years from the date of violation. (§§ 91000(c) and 91011(b).) The statute of limitations for administrative actions brought by the commission is five years from the date of violation. (§ 91000.5.)
The chart which follows briefly describes who has authority to initiate enforcement proceedings under the Political Reform Act. With respect to each type of proceeding (administrative, civil and criminal) the chart indicates who has the authority to initiate actions against both state and local officials for violations of the act.
| Type of Enforcement Action |
Actions Against State Officials |
Actions Against Local Officials |
| Administrative (§ 83115 et seq.) |
The FPPC may impose administrative sanctions. |
The FPPC may impose administrative sanctions. |
| Civil (§91001(b),§ 91001.5, 91003 et seq.) |
The FPPC is the civil prosecutor of state officials. The AG is civil prosecutor If the civil prosecutor fails |
The DA is the civil prosecutor. The elected city attorney If the civil prosecutor fails The DA may authorize the |
| Criminal (§§ 91001(a), 91001.5) |
The AG, the commission and the DA have concurrent authority. |
The AG, the commission and the DA have concurrent authority. The elected city attorney |
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Staff members at the FPPC are available by telephone or in writing to provide advice on the Political Reform Act in hopes of avoiding future violations of the law. Written advice can usually be obtained within 21 working days. (§ 83114(b); C.C.R., tit. 2, § 18329.) On occasion, the commission itself adopts formal published opinions. (§ 83114(a); C.C.R., tit. 2, § 18329.) These opinions usually require two commission hearings and two to six months to adopt. Formal opinions provide the requester with complete immunity from the enforcement provisions of the PRA so long as the requester provides the commission with all relevant facts and the official follows the commission's advice in good faith. Written advice, on the other hand, is not a formal opinion of the FPPC nor a declaration of its policies. Therefore, written advice may only provide "guidance" to persons other than the requestor. (C.C.R., tit. 2, § 18329(a)(7).) Written advice pursuant to 83114(b) provides the requester only with immunity from enforcement actions brought by the commission itself if the requestor committed the acts complained of either in reliance on the FPPC's advice or because the FPPC did not provide advice within section 83114's time limits. (§ 83114(b); C.C.R., tit. 2, § 18329.) "Informal assistance," as opposed to a formal opinion or written advice, rendered by the FPPC does not provide the requestor with the immunity set forth in either section 83114(a) or (b). (C.C.R., tit. 2, § 18329(c).)
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