BILL ANALYSIS Ó
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Lou Correa, Chair
BILL NO: AB 41 HEARING DATE:
6/21/11
AUTHOR: HILL ANALYSIS BY:
Darren Chesin
AMENDED: 6/9/11
FISCAL: YES
SUBJECT
High Speed Rail Authority: conflicts of interest: ex parte
communications
DESCRIPTION
Existing law establishes the California High-Speed Rail
Authority (HSRA) and charges it with planning, designing,
constructing, operating, and maintaining a high-speed train
system for California. The HSRA is governed by a nine
member board, including five members appointed by the
Governor, two members appointed by the Senate Rules
Committee, and two members appointed by the Speaker of the
Assembly. Members of the HSRA are subject to applicable
provisions of the Political Reform Act (PRA).
Existing law lists certain high-ranking public officials
(known as "87200 filers") who are subject to specified
disclosure requirements under the PRA. These 87200 filers
include elected state officers, judges, members of the
Public Utilities Commission, members of the Fair Political
Practices Commission (FPPC), members of the California
Coastal Commission, members of county boards of
supervisors, district attorneys, mayors, and members of
city councils, among others.
Existing law requires 87200 filers to file periodic
statements of economic interest (SEIs) disclosing
investments, interests in real property, and income
(including gifts).
Existing law requires an 87200 filer who has a financial
interest in a governmental decision, with limited
exceptions, to do all of the following immediately prior to
the consideration of a matter in which the filer has a
conflict of interest:
Publicly identify the financial interest that gives
rise to the conflict of interest in detail sufficient
to be understood by the public;
Recuse himself or herself from discussing and
voting on the matter; and,
Leave the room until after the discussion, vote,
and any other disposition of the matter is concluded,
unless the matter is placed on the portion of the
agenda reserved for uncontested matters.
Existing law requires every state and local governmental
agency to adopt a Conflict of Interest Code. Each Conflict
of Interest Code must include a specific enumeration of the
positions within the agency (not including 87200 filers)
that involve the making or participation in the making of
decisions which may foreseeably have a material effect on
any financial interest. Each person who holds such an
enumerated position must file periodic SEIs disclosing his
or her financial interests in accordance with the
provisions of the agency's Conflict of Interest Code.
These enumerated individuals are known as "87300 filers."
Existing law prohibits a public official at any level of
state or local government from making, participating in the
making, or in any way attempting to use his or her official
position to influence a governmental decision in which the
official knows or has reason to know that he or she has a
financial interest, as defined.
Existing law , pursuant to the Bagley-Keene Open Meeting
Act, requires all state boards and commissions to publicly
notice their meetings, prepare agendas, accept public
testimony and conduct their meetings in public unless
specifically authorized to meet in closed session.
Individual contacts or conversations (ex parte
communications) between a member of a state body and any
other person are permissible unless otherwise prohibited or
regulated.
This bill adds members of the HSRA to the list of 87200
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filers thereby requiring them to publicly identify the
financial interest that gives rise to a potential conflict
of interest, to recuse himself or herself from discussing
or voting on the matter, and to leave the room until after
the discussion, vote, and any other disposition of the
matter is concluded. It also expands the amount of
information that a member of the HSRA must disclose on a
statement of economic interests (SEI). Specifically, this
bill adds members of the HSRA to a statutorily-designated
list of high-ranking public officials who are subject to
the most expansive disclosure requirements under the
Political Reform Act (PRA).
This bill prohibits members of the HSRA board and any
interested person, as defined, from conducting an ex parte
communication, as defined, unless the board member reports
the ex parte communication. This bill would require the
Business, Transportation and Housing Agency to enforce
these provisions if legislation is enacted placing the
authority within the agency.
This bill defines "ex parte communication" as any oral or
written communication between a member of the HSRA and an
interested person about a matter within the HSRA's
jurisdiction that does not occur in a public hearing,
workshop, or other official proceeding, or on the official
record of the proceeding on the matter.
The following communications are not ex parte
communications under this bill:
Any communication between a staff member acting in his
or her official capacity and any HSRA member or
interested person.
Any communication limited entirely to procedural
issues, including, but not limited to, a meeting
schedule, location, or format of a presentation.
Any communication that takes place on the record during
an official proceeding of a state, regional, or local
agency that involves a member of the HSRA who also
serves as an official of that agency.
Any communication between a member of the HSRA, with
regard to any action of another state agency or of a
regional or local agency of which the member is an
official, and any other official or employee of that
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agency.
This bill defines "interested person" as any of the
following:
A potential bidder, vendor, contractor, an agent or an
employee of a bidder, vendor or contractor, or a person
receiving consideration for representing a bidder,
vendor, or contractor interested in obtaining a contract
with the HSRA or currently under contract to the HSRA.
A firm or person with a financial interest in a matter
before the HSRA, or an agent or employee of the firm or
person with a financial interest, or a person receiving
consideration for representing the firm or person with a
financial interest.
A representative acting on behalf of any civic,
environmental, neighborhood, business, labor, trade, or
similar organization who intends to influence the
decision of an authority member on a matter before the
HSRA.
This bill also provides that no HSRA member or alternate
shall make, participate in making, or in any other way
attempt to use his or her official position to influence an
authority decision about which the member or alternate has
knowingly had an ex parte communication that has not been
publicly reported.
BACKGROUND
"87200 Filers" vs. "87300 Filers ." As noted above,
existing law designates certain high ranking public
officials who are subject to the most expansive disclosure
requirements under the PRA. These officials are commonly
referred to as "87200 filers" after the section of state
law (Section 87200 of the Government Code) in which the
officials subject to those requirements are designated.
However, 87200 filers are not the only public officials
that are subject to the PRA's disclosure and conflict of
interest rules. Every public official who holds a position
that is enumerated in his or her agency's Conflict of
Interest Code as a position that involves the making or
participation in the making of decisions which may
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foreseeably have a material effect on the financial
interests of that official is required to file periodic
SEIs disclosing his or her financial interests. These
filers are commonly referred to as "87300 filers" after the
section of state law (Section 87300 of the Government Code)
that requires governmental agencies to adopt Conflict of
Interest Codes. Additionally, existing state law prohibits
any public official, whether that official is an 87200
filer, an 87300 filer, or neither an 87200 nor an 87300
filer, from making or participating in the making of any
governmental decision in which he or she has a financial
interest.
This bill proposes to add members of the HSRA to the
statutorily-established list of 87200 filers. Currently,
members of the HSRA are enumerated in the HSRA's Conflict
of Interest Code, and thus are 87300 filers. This change
would have two primary effects on the members of the HSRA:
First, members of the HSRA board would be subject to
somewhat broader disclosure when they file their SEIs;
currently board members must disclose only those interests
that fall within one of the disclosure categories listed in
the HSRA's Conflict of Interest Code, but as 87200 filers,
board members would be required to disclose all
investments, interests in real property, and income, with
certain limited exceptions.
Second, adding members of the HSRA board to the list of
87200 filers would mean that if a member of the board had a
conflict of interest in a matter before the board, that
member would have to publicly identify the financial
interest and leave the room until after the discussion of
that matter had finished. It should be noted, however,
that members of the HSRA board are already prohibited under
existing law from participating in the making of any
governmental decision in which they have a financial
interest, and that this bill would not change that
prohibition.
COMMENTS
1. According to the author , AB 41 adds the California
High-Speed Rail Authority (CHSRA) to Section 87200 of
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the Political Reform Act, which will close a loophole
that has allowed CHSRA Board members to receive
thousands of dollars from special interests while voting
on issues that impact those very interests. The bill
also outlines commonsense rules for ex parte
communications between Authority Board members and
representatives of entities with business before the
board.
An investigative report in the LA Times on October 31,
2010 revealed that Board members of the California
High-Speed Rail Authority were not required to abide by
the same conflict of interest requirements as other
governmental bodies such as the Public Utilities
Commission, the Coastal Commission, the state Energy
Commission and other state and local government panels
which are required to announce the nature of a
disqualifying conflict before deliberations can begin.
Members of these government entities must leave the room
during debate and voting.
The LA Times report found that certain Board members of
the California High-Speed Rail Authority received more
than $10,000 - under state law, the threshold for
disclosing sources of outside income - from the
special-interest clients in recent years. However,
potential conflicts involving some of those clients have
not always been recognized or publicly disclosed during
meetings by the CHSRA Board members.
AB 41 would reduce potential conflicts by adding them to
the list of Section 87200 filers. This move would
require board members announce when they have a
financial interest in a proceeding and require them to
leave the room during Authority deliberations and recuse
themselves before a vote on items in which they have a
conflict of interest. Even the Authority praised this
provision in its support letter, stating that "avoiding
any conflict of interest is an important step toward
ensuring the full confidence of the voters as this
historic project moves forward."
Additionally, given that the Board will be making
strategic decisions and handing out contracts, this bill
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introduces rules for ex parte communication. In
response to the April 2010 Bureau of State Audits
report, the Authority adopted policies with regard to
how Board members interact with contractors and staff,
but still the Authority has no written policy for how
Board members should interact with the representatives
of entities which may have business before the Board.
Ex parte communications are those which occur between a
decision-maker and an interested party regarding a
decision that will be made in a public proceeding.
Rules governing such proceedings exist in law for the
institutions such as the Public Utilities Commission,
the Coastal Commission, and the Integrated Waste
Management Board, and other entities have adopted their
own rules.
AB 41 proposes commonsense rules for ex parte
communication-not banning it, but ensuring that any ex
parte communication is noted and submitted to public
record. This reform, along with the addition of CHSRA
to Section 87200 of the Political Reform Act, will
reduce conflicts of interest, increase transparency, and
help restore confidence in the process by which the
Authority conducts its challenging task.
2. Related Legislation . AB 952 (Jones), which is pending
in the Senate Committee on Transportation and Housing,
prohibits HSRA members, employees, consultants, and
their immediate families from accepting gifts from
entities with or seeking business before the HSRA and
prohibits HSRA members, employees, and consultants from
representing entities with business before the HSRA for
three years after they leave the HSRA.
SB 517 (Lowenthal), which is pending in the Assembly
Committee on Transportation, would place the HSRA under
the Business, Transportation and Housing Agency,
restructure the governing board, and enact specified
conflict of interest provisions.
PRIOR ACTION
Assembly Elections and Redistricting Committee: 7-0
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Assembly Appropriations Committee: 16-0
Assembly Floor: 60-0
POSITIONS
Sponsor: Author
Support: California High Speed Rail Authority (as
introduced)
Fair Political Practices Commission (as
introduced)
Professional Engineers in California Government
(as introduced)
Oppose: None received
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