Amended in Senate August 29, 2013

Amended in Assembly April 10, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1090

Introduced by Assembly Member Fong

February 22, 2013

An act to amend Section begin delete 1097 end delete begin insert 1091.5 end insert of, and to add Sections 1097.1, 1097.2, 1097.3, begin delete and end delete 1097.4 begin insert , and 1097.5 end insert to, the Government Code, relating to public officers.

LEGISLATIVE COUNSEL’S DIGEST

AB 1090, as amended, Fong. Public officers: conflicts of interest: contracts.

The Political Reform Act of 1974 establishes the Fair Political Practices Commission as the agency responsible for enforcing the act. The act authorizes the Commission to issue an opinion or advice to a person with respect to that person’s duties under the act, as specified. The act authorizes the Commission to seek and impose administrative and civil penalties against persons who violate the act, as prescribed.

Existing law prohibits Members of the Legislature, state, county, district, judicial district, and city officers or employees from being financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. begin insert Existing law identifies certain remote interests that are not subject to this prohibition and other situations in which an official is not deemed to be financially interested in a contract. end insert Existing law makes a willful violation of this prohibition a crime.

begin insert

This bill would establish an additional situation in which an official is not financially interested in a contract as applied to specified public services contracts entered into by certain special districts.

end insert

This bill would also make a person who violates the prohibition against being financially interested in a contract, or who causes another person to violate begin delete or who aids and abets another person in violating end delete the prohibition, subject to administrative and civil fines, as specified. The bill would authorize the Commission to enforce these violations by bringing an administrative or civil action against a person who is subject to the prohibition, as specified, upon written authorization from the district attorney of the county in which the alleged violation occurred.

This bill would authorize a person who is subject to those prohibitions to request an opinion or advice from the Commission with respect to those prohibitions begin delete . The bill would authorize the Commission to issue opinions and advice to those persons consistent with the manner in which the Commission provides opinions and advice pursuant to the act end delete begin insert , as specified end insert .

The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the act’s purposes upon a 2⁄3 vote of each house and compliance with specified procedural requirements.

This bill would declare that it furthers the purposes of the act.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 1091.5 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

1091.5.  

(a) An officer or employee shall not be deemed to be
interested in a contract if his or her interest is any of the following:

(1) The ownership of less than 3 percent of the shares of a
corporation for profit, provided that the total annual income to him
or her from dividends, including the value of stock dividends, from
the corporation does not exceed 5 percent of his or her total annual
income, and any other payments made to him or her by the
corporation do not exceed 5 percent of his or her total annual
income.

(2) That of an officer in being reimbursed for his or her actual
and necessary expenses incurred in the performance of official
duties.

(3) That of a recipient of public services generally provided by
the public body or board of which he or she is a member, on the
same terms and conditions as if he or she were not a member of
the body or board.

(4) That of a landlord or tenant of the contracting party if the
contracting party is the federal government or any federal
department or agency, this state or an adjoining state, any
department or agency of this state or an adjoining state, any county
or city of this state or an adjoining state, or any public corporation
or special, judicial, or other public district of this state or an
adjoining state unless the subject matter of the contract is the
property in which the officer or employee has the interest as
landlord or tenant in which event his or her interest shall be deemed
a remote interest within the meaning of, and subject to, the
provisions of Section 1091.

(5) That of a tenant in a public housing authority created
pursuant to Part 2 (commencing with Section 34200) of Division
24 of the Health and Safety Code in which he or she serves as a
member of the board of commissioners of the authority or of a
community development commission created pursuant to Part 1.7
(commencing with Section 34100) of Division 24 of the Health
and Safety Code.

(6) That of a spouse of an officer or employee of a public agency
in his or her spouse’s employment or officeholding if his or her
spouse’s employment or officeholding has existed for at least one
year prior to his or her election or appointment.

(7) That of a nonsalaried member of a nonprofit corporation,
provided that this interest is disclosed to the body or board at the
time of the first consideration of the contract, and provided further
that this interest is noted in its official records.

(8) That of a noncompensated officer of a nonprofit, tax-exempt
corporation, which, as one of its primary purposes, supports the
functions of the body or board or to which the body or board has
a legal obligation to give particular consideration, and provided
further that this interest is noted in its official records.

For purposes of this paragraph, an officer is “noncompensated”
even though he or she receives reimbursement from the nonprofit,
tax-exempt corporation for necessary travel and other actual
expenses incurred in performing the duties of his or her office.

(9) That of a person receiving salary, per diem, or reimbursement
for expenses from a government entity, unless the contract directly
involves the department of the government entity that employs the
officer or employee, provided that the interest is disclosed to the
body or board at the time of consideration of the contract, and
provided further that the interest is noted in its official record.

(10) That of an attorney of the contracting party or that of an
owner, officer, employee, or agent of a firm which renders, or has
rendered, service to the contracting party in the capacity of
stockbroker, insurance agent, insurance broker, real estate agent,
or real estate broker, if these individuals have not received and
will not receive remuneration, consideration, or a commission as
a result of the contract and if these individuals have an ownership
interest of less than 10 percent in the law practice or firm, stock
brokerage firm, insurance firm, or real estate firm.

(11) Except as provided in subdivision (b), that of an officer or
employee of, or a person having less than a 10-percent ownership
interest in, a bank, bank holding company, or savings and loan
association with which a party to the contract has a relationship
of borrower, depositor, debtor, or creditor.

(12) That of (A) a bona fide nonprofit, tax-exempt corporation
having among its primary purposes the conservation, preservation,
or restoration of park and natural lands or historical resources for
public benefit, which corporation enters into an agreement with a
public agency to provide services related to park and natural lands
or historical resources and which services are found by the public
agency, prior to entering into the agreement or as part of the
agreement, to be necessary to the public interest to plan for,
acquire, protect, conserve, improve, or restore park and natural
lands or historical resources for public purposes and (B) any officer,
director, or employee acting pursuant to the agreement on behalf
of the nonprofit corporation. For purposes of this paragraph,
“agreement” includes contracts and grants, and “park,” “natural
lands,” and “historical resources” shall have the meanings set forth
in subdivisions (d), (g), and (i) of Section 5902 of the Public
Resources Code. Services to be provided to the public agency may
include those studies and related services, acquisitions of property
and property interests, and any activities related to those studies
and acquisitions necessary for the conservation, preservation,
improvement, or restoration of park and natural lands or historical
resources.

(13) That of an officer, employee, or member of the Board of
Directors of the California Housing Finance Agency with respect
to a loan product or programs if the officer, employee, or member
participated in the planning, discussions, development, or approval
of the loan product or program and both of the following two
conditions exist:

(A) The loan product or program is or may be originated by any
lender approved by the agency.

(B) The loan product or program is generally available to
qualifying borrowers on terms and conditions that are substantially
the same for all qualifying borrowers at the time the loan is made.

begin insert

(14) That of a party to a contract for public services entered
into by a special district that requires a person to be a landowner
or a representative of a landowner to serve on the board of which
the officer or employee is a member, on the same terms and
conditions as if he or she were not a member of the body or board.
For purposes of this paragraph, “public services” includes the
powers and purposes generally provided pursuant to provisions
of the Water Code relating to irrigation districts, California water
districts, water storage districts, or reclamation districts.

end insert

(b) An officer or employee shall not be deemed to be interested
in a contract made pursuant to competitive bidding under a
procedure established by law if his or her sole interest is that of
an officer, director, or employee of a bank or savings and loan
association with which a party to the contract has the relationship
of borrower or depositor, debtor or creditor.

begin delete

SECTION 1.  

Section 1097 of the Government Code is amended
to read:

1097.  

(a) An officer or person prohibited by Section 1090
from making or being interested in contracts, or from becoming a
vendor or purchaser at sales, or from purchasing scrip, or other
evidences of indebtedness, including any member of the governing
board of a school district, who willfully violates any provision of
Section 1090 is punishable by a fine of not more than one thousand
dollars ($1,000), or by imprisonment in the state prison, and is
forever disqualified from holding any office in this state.

(b) An officer or person prohibited by Section 1090 from making
or being interested in contracts, or from becoming a vendor or
purchaser at sales, or from purchasing scrip, or other evidences of
indebtedness, including any member of the governing board of a
school district, who violates any provision of Section 1090, who
causes any other person to violate any provision of Section 1090,
or who aids and abets any other person in the violation of any
provision of Section 1090 shall be liable in an administrative action
commenced by the Commission as provided in Section 1097.1 or
a civil action commenced by the Commission as provided in
Section 1097.2.

(c) The Commission shall not commence an administrative or
civil action pursuant to subdivision (b) against a person except
upon written authorization from the district attorney of the county
in which the alleged violation occurred. A civil action alleging a
violation of Section 1090 shall not be filed against a person
pursuant to this section if the Attorney General or a district attorney
is pursuing a criminal prosecution of that person pursuant to
subdivision (a).

(d) If two or more persons are responsible for a violation of this
section, they shall be jointly and severally liable.

(e) A person who is subject to the prohibitions of Section 1090,
or that person’s authorized representative, may request an opinion
or advice from the Commission with respect to his or her duties
under Section 1090. The Commission may provide an opinion or
formal or informal advice to that person in a manner consistent
with the Commission’s duties and authority to provide opinions
and advice pursuant to the Political Reform Act of 1974 (Title 9
(commencing with Section 81000)) and implementing regulations
adopted by the Commission. The Commission’s authority to issue
opinions and advice pursuant to this subdivision is concurrent with
the authority of the Attorney General to issue opinions and advice
to a person with respect to Section 1090.

(f) The Commission may adopt, amend, and rescind regulations
to implement this section and Sections 1097.1, 1097.2, 1097.3,
and 1097.4 in the same manner as provided in Section 83112.

(g) For purposes of this section and Sections 1097.1, 1097.2,
1097.3, and 1097.4, “Commission” means the Fair Political
Practices Commission.

end delete

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 1097.1 is added to the end insert begin insert Government Code end insert begin insert , to
read: end insert

begin insert

begin insert 1097.1. end insert   

(a) The Commission shall have the jurisdiction to
commence an administrative action, or a civil action, as set forth
within the limitations of this section and Sections 1097.2, 1097.3,
1097.4, and 1097.5, against an officer or person prohibited by
Section 1090 from making or being interested in contracts, or from
becoming a vendor or purchaser at sales, or from purchasing
scrip, or other evidences of indebtedness, including any member
of the governing board of a school district, who violates any
provision of those laws or who causes any other person to violate
any provision of those laws.

(b) The Commission shall not have jurisdiction to commence
an administrative or civil action or an investigation that might
lead to an administrative or civil action pursuant to subdivision
(a) against a person except upon written authorization from the
district attorney of the county in which the alleged violation
occurred. A civil action alleging a violation of Section 1090 shall
not be filed against a person pursuant to this section if the Attorney
General or a district attorney is pursuing a criminal prosecution
of that person pursuant to Section 1097.

(c) (1) The Commission’s duties and authority under the
Political Reform Act of 1974 (Title 9 (commencing with Section
81000)) to issue opinions or advice shall not be applicable to
Sections 1090, 1091, 1091.1, 1091.2, 1091.3, 1091.4, 1091.5,
1091.6, or 1097, except as provided in this subdivision.

(2) A person subject to Section 1090 may request the
Commission to issue an opinion or advice with respect to his or
her duties under Section 1090, 1091, 1091.1, 1091.2, 1091.3,
1091.4, 1091.5, and 1091.6. The Commission shall decline to issue
an opinion or advice relating to past conduct.

(3) The Commission shall forward a copy of the request for an
opinion or advice to the Attorney General’s office and the local
district attorney prior to proceeding with the advice or opinion.

(4) When issuing the advice or opinion, the Commission shall
either provide to the person who made the request a copy of any
written communications submitted by the Attorney General or a
local district attorney regarding the opinion or advice, or shall
advise the person that no written communications were submitted.
The failure of the Attorney General or a local district attorney to
submit a written communication pursuant to this paragraph shall
not give rise to an inference that the Attorney General or local
district attorney agrees with the opinion or advice.

(5) The opinion or advice, when issued, may be offered as
evidence of good faith conduct by the requester in an enforcement
proceeding, if the requester truthfully disclosed all material facts
and committed the acts complained of in reliance on the opinion
or advice. Any opinion or advice of the Commission issued
pursuant to this subdivision shall not be admissible by any person
other than the requester in any proceeding other than a proceeding
brought by the Commission pursuant to this section. The
Commission shall include in any opinion or advice that it issues
pursuant to this subdivision a statement that the opinion or advice
is not admissible in a criminal proceeding against any individual
other than the requester.

(d) Any decision issued by the Commission pursuant to an
administrative action commenced pursuant to the jurisdiction
established in subdivision (a) shall not be admissible in any
proceeding other than a proceeding brought by the Commission
pursuant to this section. The Commission shall include in any
decision it issues pursuant to an administrative action commenced
pursuant to the jurisdiction established in subdivision (a) a
statement that the decision applies only to proceedings brought
by the Commission.

(e) The Commission may adopt, amend, and rescind regulations
to govern the procedures of the Commission consistent with the
requirements of this section and Sections 1097.2, 1097.3, 1097.4
and 1097.5. These regulations shall be adopted in accordance
with the Administrative Procedures Act (Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2).

(f) For purposes of this section and Sections 1097.2, 1097.3,
1097.4, and 1097.5, “Commission” means the Fair Political
Practices Commission.

end insert

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

Section begin delete 1097.1 end delete begin insert 1097.2 end insert is added to the Government
Code, to read:

begin delete 1097.1. end delete
begin insert 1097.2. end insert   

(a) Upon the sworn complaint of a person or on its
own initiative, the Commission shall investigate possible violations
of Section 1090 begin delete relating to any officer or person subject to that
section end delete begin insert , as provided in Section 1097.1 end insert . begin delete The end delete begin insert After complying with
subdivision (b) of Section 1097.1, the end insert Commission shall provide
a written notification to the person filing a complaint in the manner
described in Section 83115.

(b) The Commission shall not make a finding of probable cause
to believe Section 1090 has been violated unless the Commission
has notified the person who is alleged to have violated Section
1090 in the manner described in Section 83115.5.

(c) If the Commission determines there is probable cause to
believe Section 1090 has been violated, it may hold a hearing to
determine if a violation has occurred, subject to the requirements
of subdivision begin delete (c) of Section 1097 end delete begin insert (b) of Section 1097.1 end insert and in the
manner described in Section 83116.

(d) If the Commission rejects the decision of an administrative
law judge made pursuant to Section 11517, the Commission shall
state the reasons in writing for rejecting the decision, as required
by Section 83116.3.

(e) The Commission shall have all of the subpoena powers
provided in Section 83118 to assist in the performance of the
Commission’s duties under this section.

begin delete

(f) The Commission may provide immunity from prosecution
for testimony compelled by the Commission over a person’s
objection that the testimony or evidence required of him or her
may tend to incriminate that person, as provided in Section 83119,
with respect to possible violations of Section 1090. In addition to
the requirements of Section 83119, the Commission shall not grant
immunity to a witness pursuant to this section unless the
Commission has obtained written authorization from the Attorney
General and the district attorney of the county in which the alleged
violation occurred.

end delete begin insert

(f) The Commission may refuse to excuse any person from
testifying, or from producing books, records, correspondence,
documents, or other evidence in obedience to the subpoena of the
Commission notwithstanding an objection that the testimony or
evidence required of the person may tend to incriminate the person.
A person who is compelled, after having claimed the privilege
against self-incrimination, to testify or produce testimonial
evidence, shall not have that testimony or the testimonial evidence
the person produced used against that person in a separate and
subsequent prosecution. However, the individual so testifying shall
not be exempt from prosecution and punishment for perjury
committed in so testifying. The Commission shall not compel any
person to testify or produce testimonial evidence after the person
has claimed the privilege against self-incrimination unless the
Commission has obtained written authorization from the Attorney
General and the district attorney of the county in which the alleged
violation occurred.

end insert

(g) The Commission shall not commence an administrative
action pursuant to this section against a person who is subject to
Section 1090 alleging a violation of that section if the Commission
has commenced a civil action pursuant to Section begin delete 1097.2 end delete begin insert 1097.3 end insert
against that person for the same violation. begin insert For purposes of this
subdivision end insert begin insert , the commencement of the administrative action shall
be the date of the service of the probable cause hearing notice, as
required by subdivision (b), upon the person alleged to have
violated Section 1090. end insert

(h) An administrative action brought pursuant to this section
shall be subject to the requirements of Section 91000.5. begin delete For
purposes of that section, the commencement of the administrative
action shall be the date of the service of the probable cause hearing
notice, as required by subdivision (b), upon the person alleged to
have violated Section 1090. end delete

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

Section begin delete 1097.2 end delete begin insert 1097.3 end insert is added to the Government
Code, to read:

begin delete 1097.2. end delete
begin insert 1097.3. end insert   

(a) Subject to the requirements begin delete of subdivision (c) end delete of
Section begin delete 1097 end delete begin insert 1097.1 end insert , the Commission may file a civil action
begin delete against a person subject to the prohibitions identified in end delete begin insert for an
alleged violation of end insert Section 1090. A person held liable for begin insert such end insert a
violation begin delete of Section 1090 end delete shall be subject to a civil fine payable
to the Commission for deposit in the General Fund of the state in
an amount not to exceed begin insert the greater of ten thousand dollars
($10,000) or end insert three times the value of the financial benefit received
by the begin delete person, as determined by the trier of fact end delete begin insert defendant for each
violation end insert .

(b) The Commission shall not commence a civil action pursuant
to this section alleging a violation of Section 1090 if the
Commission has commenced an administrative action pursuant to
Section 1097.1 against the person for the same violation.

(c) A civil action brought by the Commission pursuant to this
section shall begin insert not end insert be filed begin delete not end delete more than four years after the date
the violation occurred.

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

Section begin delete 1097.3 end delete begin insert 1097.4 end insert is added to the Government
Code, to read:

begin delete 1097.3. end delete
begin insert 1097.4. end insert   

In addition to any other remedies available, the
Commission may obtain a judgment in superior court for the
purpose of collecting any unpaid monetary penalties, fees, or civil
penalties imposed pursuant to Section 1097.1 begin delete or end delete begin insert , end insert 1097.2 begin insert , or 1097.3 end insert .
Penalties shall be collected in accordance with Section 91013.5.

begin delete SEC. 5. end delete
begin insert SEC. 6. end insert   

Section begin delete 1097.4 end delete begin insert 1097.5 end insert is added to the Government
Code, to read:

begin delete 1097.4. end delete
begin insert 1097.5. end insert   

(a) If the time for judicial review of a final
Commission order or decision issued pursuant to Section begin delete 1097.1 end delete
begin insert 1097.2 end insert has lapsed, or if all means of judicial review of the order
or decision have been exhausted, the Commission may apply to
the clerk of the superior court for a judgment to collect the penalties
imposed by the order or decision, or the order as modified in
accordance with a decision on judicial review.

(1) The application, which shall include a certified copy of the
order or decision, or the order as modified in accordance with a
decision on judicial review, and proof of service of the order or
decision, constitutes a sufficient showing to warrant issuance of
the judgment to collect the penalties. The clerk of the court shall
enter the judgment immediately in conformity with the application.

(2) An application made pursuant to this section shall be made
to the clerk of the superior court in the county where the monetary
penalties, fees, or civil penalties were imposed by the Commission.

(3) A judgment entered in accordance with this section has the
same force and effect as, and is subject to all the provisions of law
relating to, a judgment in a civil action and may be enforced in the
same manner as any other judgment of the court in which it is
entered.

(4) The Commission may bring an application pursuant to this
section only within four years after the date on which the monetary
penalty, fee, or civil penalty was imposed.

(b) The remedy available under this section is in addition to
those available under Section begin delete 1097.3 end delete begin insert 1097.4 end insert or any other law.

begin delete SEC. 6. end delete
begin insert SEC. 7. end insert   

The Legislature finds and declares that this bill furthers
the purposes of the Political Reform Act of 1974 within the
meaning of subdivision (a) of Section 81012 of the Government
Code.