New regulations clarify campaign finance law for local elected officials

Regulations clarifying a new financial interest law take effect on Aug. 12. The Fair Political Practices Commission (FPPC) passed the regulations in response to concerns from the League of California Cities and others about the law’s lack of clarity. 

The new law, SB 1439 (Glazer, Chaptered, 2022), expands the Levine Act to local elected officials. The Levine Act previously restricted campaign contributions to appointed officials, such as planning commissioners and members of joint powers authorities. SB 1439 extended that limitation to local elected officials in their role as elected officials.

The new law’s ambiguous language raised many questions. The regulations clarify who the Levine Act impacts and when a local elected official must comply with its disclosure and recusal requirements.

What does the Levine Act now require?

Local elected officials must now recuse themselves from most license, permit, contract, or other entitlement decisions involving a person who contributed more than $250 to their political campaigns within the 12 months before the decision, unless they comply with specific disclosure and refund requirements.

The law also prohibits local elected officials from accepting, soliciting, or directing campaign contributions over $250 from a party or participant involved in a pending proceeding to any political campaign committee — their own or others. This prohibition lasts 12 months after a final decision.

What clarifications did Cal Cities help secure?

The FPPC Committee of Cal Cities City Attorneys Department submitted comment letters throughout the rulemaking process. It successfully secured amendments that will help local officials more easily comply with Levine Act’s new requirements.

Some helpful clarifications include:

• Pending proceedings. A decision is “pending” when it is before the official, such as an item placed on a meeting agenda. A proceeding is also “pending” when it is reasonably foreseeable the decision will come before the official and the official knows or has reason to know the decision is within the jurisdiction of the agency. This could be when a formal application is filed or when staff inform the city council of an anticipated agenda item.
• Willful contributions. An official willfully or knowingly receives a contribution when the official has actual knowledge that the contribution came from someone with a connection to a pending proceeding or if specified facts exist. The mere fact that a contribution is in a campaign report, as required by law, does not by itself establish that the official knows or has reason to know of the contribution and the donor’s connection to a pending proceeding.
• Disclosure timelines. An official who learns of a financial interest or contribution during a proceeding must disclose the contribution before participating further in the proceeding. This could occur during a hearing. The official may participate if the official discloses the disqualifying contribution on the record, confirms that the contribution will be returned within 30 days of when the official knew or should have known about the contribution, and the contribution is returned within that time.
• Donation amounts. Contributions are aggregated. A $200 campaign donation made to a local elected official by a company or its agents in February 2023 must be added to a $50 contribution by that party or its agents in March 2023. This would trigger the disclosure and recusal requirements in a proceeding pending before the official involving that company until at least March 2024.
• Legally required participation. Officials who would otherwise be disqualified from engaging in a proceeding can participate if their participation is legally required. Some possible examples include if all council members would be disqualified from engaging in a proceeding under the Levine Act, but the council needs three votes to adopt a resolution or four votes to exercise eminent domain. This could also occur if two or one council seats are vacant. However, an absence is generally not sufficient to trigger the rule of legally required participation.

Even with the FPPC’s clarifying regulations, the Levine Act is complex and nuanced. For more information about SB 1439, please watch a recent Institute for Local Government webinar. For specific questions about how the Levine Act will apply to you, please consult your city attorney.

The League of California Cities will also hold a presentation on SB 1439 during the Annual Conference and Expo on Sept. 22. For general questions about SB 1439, please contact Legislative Affairs Lobbyist Johnnie Pina.