BILL ANALYSIS �
AB 1692
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Date of Hearing: April 1, 2014
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Paul Fong, Chair
AB 1692 (Garcia) - As Introduced: February 13, 2014
SUBJECT : Political Reform Act of 1974.
SUMMARY : Limits the use of campaign funds and legal defense
funds to pay fines and penalties that are imposed for an
improper personal use of campaign funds. Specifically, this
bill :
1)Prohibits an expenditure of campaign funds of more than $200
to pay a fine, penalty, judgment, or settlement relating to an
expenditure of campaign funds that was found to be improper
because the expenditure resulted in either of the following:
a) A personal benefit to the candidate or officer, and the
expenditure was not reasonably related to a political,
legislative, or governmental purpose; or,
b) A substantial personal benefit to the candidate or
officer, and the expenditure was not directly related to a
political, legislative, or governmental purpose.
2)Codifies a regulatory definition of the term "attorney's fees
and other related legal costs" for the purposes of provisions
of existing law that specify the permissible uses of funds
raised into a legal defense fund, and makes that definition
applicable to provisions of state law that restrict the use of
surplus campaign funds and that limit the circumstances under
which campaign funds may be used to pay fines, penalties,
judgments, or settlements.
a) Defines the terms "attorney's fees and other related
legal costs" and "attorney's fees and other costs," for the
purposes of various provisions of the Political Reform Act
(PRA), to include only the following:
i) Attorney's fees and other legal costs related to the
defense of a candidate or officer; and,
ii) Administrative costs directly related to compliance
with the requirements of the PRA.
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b) Provides that the terms "attorney's fees and other
related legal costs" and "attorney's fees and other costs,"
for the purposes of various provisions of the PRA, do not
include expenses for fundraising, media or political
consulting fees, mass mailing or other advertising, or
except as expressly authorized, a payment or reimbursement
for a fine, penalty, judgment or settlement, or a payment
to return or disgorge contributions made to any other
committee controlled by a candidate or officer.
3)Makes corresponding changes.
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EXISTING LAW :
1)Creates the Fair Political Practices Commission (FPPC), and
makes it responsible for the impartial, effective
administration and implementation of the PRA.
2)Prohibits campaign funds from being used to pay or reimburse
fines, penalties, judgments, or settlements, except those
resulting from either of the following:
a) Parking citations issued in the performance of an
activity that was directly related to a political,
legislative, or governmental purpose; or,
b) Any other action for which payment of attorney's fees
from contributions is permitted pursuant to the PRA.
3)Requires campaign expenditures to be reasonably related to a
political, legislative, or governmental purpose. Requires
campaign expenditures that confer a substantial personal
benefit on an individual with the authority to approve the
expenditure of campaign funds to be directly related to a
political, legislative, or governmental purpose. Provides
that the term "substantial personal benefit" for these
purposes means an expenditure that results in a direct
personal benefit of more than $200.
4)Permits candidates and elected officials to establish a legal
defense fund to defray attorney's fees and other related legal
costs incurred in the defense of the candidate or elective
officer who is subject to one or more civil, criminal, or
administrative proceedings arising directly out of the conduct
of an election campaign, the electoral process, or the
performance of the officer's governmental activities and
duties. Provides that funds deposited into a legal defense
fund may be used only to defray those attorney's fees and
other related legal costs.
5)Provides that campaign funds that are raised on or after
January 1, 1989 by a candidate and that remain in the campaign
account at the time the candidate leaves elective office, or
at the end of the postelection reporting period following the
defeat of the candidate, are considered surplus campaign
funds. Restricts the purposes for which surplus campaign
funds can be used, but permits such funds to be used for
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payment of attorney's fees for litigation which arises
directly out of a candidate's or elected official's
activities, duties, or status as a candidate or elected
officer.
6)Provides that expenditures of campaign funds for attorney's
fees and other costs in connection with administrative, civil,
or criminal litigation are not directly related to a
political, legislative, or governmental purpose except where
the litigation is directly related to activities of a
committee that are consistent with its primary objectives or
arises directly out of a committee's activities or out of a
candidate's or elected officer's activities, duties, or status
as a candidate or elected officer.
FISCAL EFFECT : Unknown. State-mandated local program; contains
a crimes and infractions disclaimer.
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COMMENTS :
1)Purpose of the Bill : According to the author, "To prevent
campaign funds from being used to pay for fines that result
from the violation of campaign fund laws (i.e. making
expenditures intended for private purposes), AB 1692
prohibits the use of campaign funds to pay for the associated
fines, penalties, judgments and settlements."
2)Personal Use of Campaign Funds : Existing law generally
prohibits campaign funds from being used for personal
expenses, and instead requires campaign expenditures to be
reasonably related to a political, legislative, or
governmental purpose. When a campaign expenditure results in
a personal benefit of more than $200 to an individual who had
the authority to approve the expenditure, the expenditure must
be directly related to a political, legislative, or
governmental purpose. These provisions are intended to ensure
that campaign funds are not used as a method of personally
enriching candidates and officers of political committees.
3)Use of Campaign Funds to Pay Fines & Penalties and Possible
Amendment : As noted above, the PRA generally allows campaign
funds to be used to pay or reimburse fines and penalties only
if the action is one for which the use of campaign funds to
pay attorney's fees would be permissible. The use of campaign
funds to pay attorney's fees is permissible only when those
attorney's fees arise directly out of an election campaign,
the electoral process, or the performance of an official's
governmental activities. These provisions are a natural
extension of the "personal use" provisions of the PRA-if
litigation against a candidate or elected official is
unrelated to that person's duties or activities as a candidate
or official, then the expenditure of campaign funds for
attorney's fees (or to pay any fines or penalties that result
from the litigation) would not be reasonably or directly
related to a political, governmental, or legislative purpose,
but instead would serve to defray the personal legal expenses
of the candidate or official.
Arguably, the concept behind this bill is similar. When a
determination is made in an enforcement action that a
candidate or other person has received an impermissible
personal benefit from a campaign expenditure, a necessary part
of that determination is an assessment that the expenditure in
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question was not related to a political, legislative, or
governmental purpose as required by law. To permit campaign
funds to be used to pay a fine or penalty in such a situation
would seem to be inconsistent with the policy that campaign
expenditures must be related to a political, legislative, or
governmental purpose, since the underlying expenditure that
led to the fine or penalty being imposed was deemed not to be
related to a political, legislative, or governmental purpose.
However, this bill does allow up to $200 of a fine that is
levied as a result of the improper personal use of campaign
funds to be paid for with campaign funds. If there is a
concern that individuals receive an improper personal benefit
when they use campaign funds to pay fines that are imposed for
the personal use of campaign funds, it is unclear why
individuals should be allowed to pay the first $200 of such a
fine with campaign funds. The author and the committee may
wish to consider an amendment that prohibits the use of
campaign funds of any amount to pay a fine that is levied due
to the improper personal use of campaign funds.
4)Regulatory Definition of "Attorney's Fees" : As noted above,
existing law permits candidates and elected officials to
establish a legal defense fund to defray attorney's fees and
other related legal costs under certain situations. The FPPC
has adopted a regulation to define the term "attorney's fees
and other related legal costs" for the purpose of expenditures
from legal defense funds. This bill codifies the definition
in the FPPC regulation.
Additionally, this bill adopts the FPPC's regulatory definition
of "attorney's fees" for the purposes of other provisions of
the PRA that allow surplus campaign funds and non-legal
defense campaign funds to be used for attorney's fees.
5)Related Legislation : AB 2692 (Fong), which is pending in this
committee, requires a person who is found in an administrative
proceeding to have improperly used campaign funds for personal
purposes, to pay the value of the personal benefit received to
the general fund, in addition to any other fine or penalty
imposed as a result of the proceeding.
AB 1666 (Garcia), which is also being heard in this committee
today, prohibits the use of campaign funds to pay restitution
fines that are imposed when a public official is convicted of
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bribery, as specified.
6)Political Reform Act of 1974 : California voters passed an
initiative, Proposition 9, in 1974 that created the FPPC and
codified significant restrictions and prohibitions on
candidates, officeholders and lobbyists. That initiative is
commonly known as the PRA. Amendments to the PRA that are not
submitted to the voters, such as those contained in this bill,
must further the purposes of the initiative and require a
two-thirds vote of both houses of the Legislature.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Ethan Jones / E. & R. / (916) 319-2094