Newsom Removes California Pay-to-Play Law Exemption

If an agent receives a disqualifying contribution and returns it within 30 days of the agent knowing (or should have known) of the contribution and instance, the agent can participate in the instance.

The law covers all elected and appointed leaders of an ‘agency’, as well as candidates for elective public office. However, coverage is significantly restricted by the definition of “agency”, which exempts the judiciary, legislature, equalization board, constitutional agents and local agencies whose members are elected by voters. Because of this narrow exemption, the law generally affected only appointed members of local boards and commissions, such as planning commissions.

Important changes in the law

On September 29, 2022, Governor Newsom signed into law Senate Bill 1439, effective January 1, 2023. This amends Section 84308 to no longer exclude local government agencies whose members are directly elected by voters , such as city council members and county supervisors, and marks a sea change after 40 years of such local elected officials escaping cover.

This means that now a party requesting a license, permit or other usage right cannot contribute more … than $250 to an agent of the agency (including city ​​council members and county supervisors) while proceedings are pending before that body and for 12 months after the final decisionwhich is another change to the existing law, extending the contribution limit from three months after the final decision to 12 months.

In addition, an officer (including members of the city council and county supervisors) must recuse themselves from a decision involving a license, permit or other right of use if the agent has received a contribution from more … than $250 from a party, participant or their agent in the previous 12 months. All contributions from Covered Donors are aggregated for the purposes of the $250 restriction and recusal requirements.

The definitions of “party”, “participant” and “agent” were not changed by Senate Bill 1439.

  • “Party” means any person who files an application or is the subject of a proceeding involving a license, permit or other right of use.
  • “Participant” means any person who is not a party but who actively supports or opposes a particular decision in a proceeding involving a license, permit or other right of use and who has a financial interest in the decision . A person actively supports or opposes a particular decision in a proceeding if that person personally pressures agency officers or employees, testifies in person before the agency, or otherwise acts to influence agency officers. agency.
  • An “agent” is a person or company that represents a party or participant in a proceeding. If an agent is an employee or member of a law, architectural, engineering, consulting, or similar firm, both the entity and the individual are considered agents.

In addition, licenses, permits or other rights of use always include procedures relating to all business, profession, trade and land use licenses and permits, and other rights of use, including all land use rights, all contracts (other than tenders, employment contracts or personal employment contracts) and all franchises.

Compliance with amended law

When the amended law comes into force on January 1, 2023, all relevant procedures will be covered. Although it is not yet clear, it is likely that from January 1, 2023, the 12-month retrospective before a 2023 proceeding will take into account contributions made in 2022 before the law came into force. Accordingly, now is a good time to review contributions that were made in 2022 and consider whether the disqualification of a local elected official may possibly be required in 2023. The elected official may repay the contribution within 30 days of when the agent is aware of the contribution and the proceeding to allow its participation in the proceeding.

Entities that do business with elected bodies in California should ensure compliance procedures are in place, including tracking and monitoring contributions that may implicate these restrictions, and make changes to existing procedures to include Locally elected. Employees and agents may inadvertently violate laws if they are unaware of the possible implications of innocent personal contributions.

Pillsbury’s political law team uses its deep knowledge and exceptional experience to help clients navigate the complex web of laws governing pay-to-play, campaign contributions, lobbying, gifts and ethical issues. Pillsbury frequently develops political law compliance programs for organizations large and small, including procedures for monitoring and tracking contributions regulated by this amended Pay-to-Play Act.

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