BILL ANALYSIS
AB 906
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 906 (Hill and Smyth)
As Amended July 9, 2009
2/3 vote. Urgency
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|ASSEMBLY: |73-0 |(May 14, 2009) |SENATE: |35-0 |(August 17, |
| | | | | |2009) |
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Original Committee Reference: JUD.
SUMMARY : Revises the definition of "remote interest" in the
existing conflict of interest statute pertaining to government
officials in order to allow a government entity to enter into a
contract with an investor-owned utility (IOU), if the purpose of
the contract is to provide energy efficiency, as specified.
Specifically, this bill :
1)Provides that an officer of a public entity shall be deemed to
have only a "remote interest" in a contract entered into by a
body or board of which the officer is a member, if that
officer is also an officer or employee of an IOU that is
regulated by the California Public Utilities Commission (PUC)
and the contract requires the IOU to provide energy efficiency
rebates or otherwise encourages energy efficiency that
benefits the public, if all of the following apply:
a) The contract is funded by utility consumers pursuant to
regulations of the PUC;
b) The contract provides no individual benefit to the
officer that is not also provided to the public and the
investor-owned utility receives no direct financial profit
from the contract;
c) The officer has recused himself or herself from all
participation in the making of the contract on behalf of
the state, county, district, judicial district, or city
body or board of which he or she is a member; and,
d) The contract implements a program authorized by the PUC.
2)Contains an urgency clause, allowing this bill to take effect
immediately upon enactment.
AB 906
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The Senate amendments :
1)Clarify that a contract must implement a program authorized by
the PUC.
2)Clarify that the contract shall not provide the investor-owned
utility with any "direct financial profit."
EXISTING LAW :
1)Provides that Members of the Legislature, as well as state,
county, district, judicial district, and city officers or
employees, shall not be financially interested in any contract
made by them in their official capacity, or by any body or
board of which they are a member.
2)Provides that a government officer shall not be deemed to be
interested in a contract entered into by a body or board of
which the officer is a member if the officer has only a
"remote interest," as defined, in the contract. Requires,
however, that the remote interest be disclosed to the body or
board which the officer is a member and noted in its official
records, and thereafter that the body or board authorizes,
approves, or ratifies the contract in good faith by a vote of
its membership, without counting the vote or votes of the
officer or member with the remote interest.
3)Enumerates the circumstances that would lead to characterizing
an interest as remote.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version approved by the Senate.
FISCAL EFFECT : None
COMMENTS : In order to guard against potential conflicts of
interest, existing law generally prohibits a government
official, in his or her official capacity, from participating in
the making of any contract in which the official has a financial
interest. At the same time, however, existing law provides a
number of exemptions to this general rule where the member's
interest is deemed sufficiently "remote" and is properly
disclosed and cabined. These exemptions generally reflect the
fact that officials who serve on various public entities may
AB 906
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occasionally have associations with private entities with whom
the public entity may wish to contract.
The bill provides legislative clarification that participation
in an energy efficiency program, which serves a statewide policy
interest in energy conservation, should not be barred solely
because a government official may have been an employee of the
utility company, so long as the conditions outlined in this bill
are met. Specifically, this bill would expand the "remote
interest" exemption so as to permit a contract between a public
entity and an IOU regulated by the PUC, even where one the
members of the contracting pubic entity is also an officer or
employee of the IOU. The bill would provide, however, that such
contract can only be entered into if: 1) its purpose is to
provide the public entity with energy efficiency rebates or
otherwise encourage energy efficiency; 2) the contract does not
provide an individual benefit to the official; and, 3) the
official recuses himself or herself from all participation in
the making of the contract.
According to the author, this bill will allow a government body
to enter into a contract with an IOU in order to participate in
critically needed energy conservation programs, while at the
same time ensuring that there is no direct or indirect financial
benefit to any individual member or members of the government
body, and the contract is not made for the profit of the IOU.
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334
FN: 0001888