BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1090|
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THIRD READING
Bill No: AB 1090
Author: Fong (D)
Amended: 4/10/13 in Assembly
Vote: 27
SENATE ELECTIONS & CONST. AMEND. COMMITTEE : 4-1, 7/2/13
AYES: Torres, Hancock, Padilla, Yee
NOES: Anderson
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 58-13, 5/31/13 - See last page for vote
SUBJECT : Conflicts of interest: contracts
SOURCE : Fair Political Practices Commission
DIGEST : This bill authorizes the Fair Political Practices
Commission (FPPC) to bring civil and administrative enforcement
actions for violations of Government Code Section 1090 (Section
1090), dealing with conflicts of interest in contracts, and
requires the FPPC to provide opinions and advice with respect to
Section 1090.
ANALYSIS :
Existing law:
1. Prohibits members of the Legislature and state, county,
district, judicial district, and city officers or employees,
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pursuant to Section 1090, 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. Prohibits
state, county, district, judicial district, and city officers
or employees from being purchasers at any sale made by them
in their official capacity, or from being vendors at any
purchase made by them in their official capacity.
2. Provides that a person who willfully violates Section 1090 is
punishable by a fine of not more than $1,000 or by
imprisonment in the state prison, and is forever disqualified
from holding any office in the state.
3. Provides that a contract made in violation of Section 1090
may be voided by any party to the contract, except for the
officer who had an interest in the contract in violation of
Section 1090.
This bill:
1. Authorizes the FPPC to bring civil and administrative
enforcement actions for violations of Section 1090, dealing
with conflicts of interest in contracts, and requires the
FPPC to provide opinions and advice with respect to Section
1090.
2. Makes violations of Section 1090 subject to civil and
administrative enforcement proceedings, in addition to
criminal prosecutions. Permits the FPPC to bring a civil or
administrative action against any member of the Legislature,
state, county, district, judicial district, or city officer
or employee who is financially interested in any contract
made by that person in his/her official capacity, or by any
body or board of which that person is a member.
3. Prohibits the FPPC from commencing an administrative or
civil action against a person for a violation of Section 1090
except upon written authorization from the District Attorney
(DA) of the county in which the violation occurred.
4. Prohibits the FPPC from bringing a civil action against a
person for a violation of Section 1090 if the Attorney
General (AG) or a DA is pursuing a criminal action against
that person for the same alleged violation.
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5. Provides that if two or more persons are responsible for a
violation of Section 1090, they are jointly and severally
liable.
6. Permits a person who is subject to Section 1090, or his/her
authorized representative, to request an opinion or advice
from the FPPC with respect to his/her duties under Section
1090. Provides that the FPPC's authority to issue opinions
or advice pursuant to these provisions is concurrent with the
authority of the AG to issue opinions and advice.
7. Permits the FPPC to adopt regulations for the purposes of
this bill.
8. Requires the FPPC to investigate possible violations of
Section 1090 upon receipt of a sworn complaint from a person.
Permits the FPPC to investigate possible violations of
Section 1090 on its own initiative. Requires such
investigations to be conducted pursuant to procedures that
govern FPPC investigations for potential violations of the
Political Reform Act (PRA).
9. Provides that the FPPC must obtain written authorization
from the AG and the DA of the county in which an alleged
violation occurred before it can provide immunity from
prosecution for testimony compelled by the FPPC over a
person's objection.
10.Prohibits the FPPC from commencing an administrative action
against a person for a violation of Section 1090 if the FPPC
has commenced a civil action against that person for the same
violation. Prohibits the FPPC from commencing a civil action
against a person for a violation of Section 1090 if the FPPC
has commenced an administrative action against that person
for the same violation.
11.Provides that a civil violation of Section 1090 shall be
punishable by a fine payable to the FPPC for deposit in the
General Fund (GF) in an amount not to exceed three times the
value of the financial benefit received by the person.
12.Provides that if the FPPC determines that a violation of
Section 1090 has occurred through an administrative
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enforcement process, the FPPC shall issue an order requiring
the violator to cease and desist violation of Section 1090,
pay a monetary penalty of up to $5,000 to the FPPC for
deposit in the GF, or both.
13.Requires the FPPC to follow the procedures that apply to
administrative actions brought for violations of the PRA when
bringing an administrative action for a violation of Section
1090 pursuant to the provisions of this bill.
14.Permits the FPPC to obtain a judgment in superior court for
the purpose of collecting any unpaid monetary penalties,
fees, or civil penalties imposed pursuant to this bill.
Provides that the procedures for obtaining such a judgment
for collecting unpaid penalties or fees for a violation of
the PRA shall apply to any action by the FPPC to obtain a
judgment for unpaid penalties or fees for a violation of
Section 1090.
15.Permits the FPPC to apply to the clerk of the superior court
for a judgment to collect penalties imposed by an FPPC
enforcement order for a violation of Section 1090, in lieu of
filing a small claims or civil case with the court to collect
those penalties, pursuant to the following:
A. Provides that if the time for judicial review of a
final FPPC order or decision for a violation of Section
1090 has lapsed, or if all means of judicial review of the
order of decision have been exhausted, the FPPC may apply
to the clerk of the 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.
B. Requires the application to the clerk of the court to
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. Provides that the application constitutes a
sufficient showing to warrant issuance of the judgment to
collect the penalties. Requires the clerk of the court to
issue the judgment immediately.
C. Provides that an application to the clerk of the court
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for a judgment to collect penalties imposed by an FPPC
enforcement order 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 FPPC.
D. Provides that a judgment entered pursuant to these
provisions has the same force and effect as a judgment in
civil action.
E. Provides that the remedy provided in this bill is in
addition to those available under existing law.
Background
Overview of Section 1090 . Section 1090 generally prohibits a
public official or employee from making a contract in his/her
official capacity in which he/she has a financial interest. In
addition, a public body or board is prohibited from making a
contract in which any member of the body or board has a
financial interest, even if that member does not participate in
the making of the contract. Violation of this provision is
punishable by a fine of up to $1,000 or imprisonment in the
state prison, and any violator is forever disqualified from
holding any office in the state. The prohibitions against
public officers being financially interested in contracts that
are contained in Section 1090 date back to the second session of
the California Legislature (Chapter 136, Statutes of 1851).
Various provisions of state law provide exceptions to, or
limitations on, Section 1090. Among other provisions, state law
provides that an officer shall not be deemed to be financially
interested in a contract if the officer has only a "remote
interest" in the contract and if certain other conditions are
met. Similarly, another section of state law provides that an
officer or employee is not deemed to be interested in a contract
if his/her financial interest meets one of a number of different
enumerated conditions.
Given the complexity of Section 1090, and the various exceptions
to and limitations on that section, it can be extremely
difficult for a public board or body to determine whether or not
a member of that board or body has an impermissible financial
interest in a contract made by the board or body. The AG and
county DAs have enforcement authority over Section 1090, but
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neither the AG nor the county DAs typically give legal opinions
on the application of that section. Public officials may be
able to receive an opinion from the legal counsel to the board
or body of which they are a member, but such an opinion does not
provide the same legal protection to the public official.
Conflict of interest rules in the PRA . In addition to the
conflict of interest laws found within Section 1090 that apply
to contracting decisions made by governmental entities, the PRA
also has separate conflict of interest laws that apply more
broadly to all governmental actions. Generally, these
provisions prohibit a public official from making, participating
in making, or in any way attempting to use his/her official
position to influence a governmental decision in which the
official knows or has reason to know that he/she has a financial
interest, as defined. Any public official who knowingly or
willfully violates these conflict of interest rules can be
charged criminally. Civil and administrative enforcement
actions may also be brought against an individual for a
violation of these conflict of interest rules. The FPPC has
sole authority to bring an administrative enforcement action
under the PRA, and the FPPC also has the authority to bring
civil enforcement actions under certain circumstances.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/9/13)
Fair Political Practices Commission (source)
California Common Cause
OPPOSITION : (Verified 8/9/13)
Association of California Water Agencies
Valley Ag Water Coalition
ARGUMENTS IN SUPPORT : According to the author:
In 1974, California voters passed Proposition 9, a measure
that enacted comprehensive conflict of interest laws designed
to ensure that public officials would perform their duties in
an impartial manner, among other provisions. That measure,
commonly known as the Political Reform Act, also created the
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FPPC, and made it primarily responsible for enforcing those
conflict of interest laws. Under the PRA, a public official
generally is prohibited from making or participating in the
making of any governmental decision in which the official
knows or has reason to know that he or she has a financial
interest.
The conflict of interest laws in the PRA apply broadly to all
types of governmental decisions. There is a separate conflict
of interest law, however, that applies only to contracting
decisions. Government Code Section 1090 generally prohibits a
public official or employee from making a contract in his or
her official capacity in which he or she has a financial
interest. In addition, a public body or board is prohibited
from making a contract in which any member of the body or
board has a financial interest, even if that member does not
participate in the making of the contract. Unlike the
conflict of interest rules contained in the PRA, however, the
FPPC does not have a role in enforcing Government Code Section
1090. Instead, enforcement actions may be brought only by the
Attorney General or by the district attorney in the county in
which the violation occurred. Furthermore, unlike the PRA,
which can be enforced through criminal, civil, or
administrative actions, Government Code Section 1090 can be
enforced only through criminal prosecutions.
Because contracting decisions fall within the broader conflict
of interest rules contained in the PRA, however, the FPPC
nonetheless can and does bring enforcement actions under the
PRA for conflicts of interest that arise in the context of
contracting decisions.
The existence of multiple conflict of interest laws that are
enforced by multiple entities create unnecessary confusion for
public officials and hamper efforts to effectively enforce the
state's strict conflict of interest rules.
AB 1090 improves enforcement of the state's conflict of
interest laws by allowing the FPPC to bring civil or
administrative enforcement actions in response to violations
of the Government Code Section 1090 contracting laws, and
gives public officials an additional tool in helping to avoid
conflicts of interest by allowing the FPPC to issue advice
regarding a public official's obligations under Government
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Code 1090.
ARGUMENTS IN OPPOSITION : The Association of California Water
Agencies states:
AB 1090 would make a person who violates Section 1090 of the
Government Code, or who causes another person to violate or
who aids and abets another person in violating the
prohibition, subject to administrative and civil fines. The
bill would authorize the Fair Political Practices Commission
to enforce these violations by bringing an administrative or
civil action against a person who is subject to the
prohibition.
We believe that Government Code section 1090 currently
provides for strong safeguards against financial abuse by
government officials and public employees when entering into
contracts on behalf of a public agency. Adding the threat of
administrative and civil fines to the current threat of jail
time seems unnecessary. If a local government official or
employee is going to willfully violate the law, the prospect
of going to jail is likely much more of a deterrent than an
administrative fine. If the law is violated in error, without
the intent to gain a financial benefit, currently the District
Attorney (DA) can make a determination on whether the case
should be pursued. Often the DA will not pursue a case
because it is clear that the person did not intend to violate
the law. We believe that AB 1090 would merely add
opportunities for government officials and public employees to
be fined which is much easier to accomplish than pursuing a
criminal case.
ASSEMBLY FLOOR : 58-13, 5/31/13
AYES: Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra,
Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Chesbro, Cooley, Daly, Dickinson, Eggman, Fong,
Fox, Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray,
Hall, Roger Hernández, Jones-Sawyer, Levine, Linder,
Lowenthal, Maienschein, Medina, Mitchell, Morrell, Mullin,
Muratsuchi, Nazarian, Nestande, Pan, Perea, V. Manuel Pérez,
Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting,
Waldron, Weber, Wieckowski, Williams, Yamada, John A. Pérez
NOES: Achadjian, Allen, Chávez, Dahle, Donnelly, Beth Gaines,
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Grove, Harkey, Jones, Logue, Mansoor, Patterson, Wagner
NO VOTE RECORDED: Bigelow, Conway, Gorell, Hagman, Holden,
Melendez, Olsen, Wilk, Vacancy
RM:k 8/12/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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