On January 1, 2023, a new statewide law aimed at further combatting “pay-to-play” politics will become operative.
The legislation, approved by the state Legislature this year as Senate Bill 1439 and signed into law by the Governor (“SB 1439”), amended Government Code Section 84308 to establish two new restrictions for local elected officials related to campaign contributions that previously applied only to appointed officials such as commissioners and department heads:
- Limitation on Soliciting or Accepting Campaign Contributions from Certain Parties. First, SB 1439 prohibits local elected officials from soliciting, accepting, or directing campaign contributions of more than $250 to any local, state, or federal candidate or campaign, including ballot measure campaigns, from a party or participant or their agents involved in certain contracting, permitting, or other entitlement for use and land use proceedings pending before the official’s agency and for 12 months after the agency renders a decision on the matter.
- Disqualification Based on Past Campaign Contributions. Second, SB 1439 prohibits local elected officials from voting on certain contracts, permits, or other entitlements for use including land use entitlements if the official received a contribution to the official’s campaign of more than $250 in the prior 12 months from a party or participant or their agents with a financial interest in the proceeding. Officials must recuse from participating in the matter, unless they cure the violation within a designated timeframe as described below in the legislative overview.
SB 1439 expands the Levine Act, first adopted in 1982, to local elected officials. The Levine Act applied only to appointed officials such as commissioners and department heads. The Levine Act precluded an appointed official from soliciting or accepting a campaign contribution from a party with an interest in a matter before them for 3 months following the decision. SB 1439 extends that period to 12 months for both appointed officials and elected officials.
“We welcome the renewed statewide attention to curbing pay-to-play politics,” stated LeeAnn Pelham, Executive Director of the San Francisco Ethics Commission. “Our team will be working with local officials to understand and abide by the new restrictions.”
“SB 1439 is an important step in strengthening the transparency of municipal decision making and reducing outside influence. My office is prepared to assist City officials in complying with these new requirements,” said City Attorney David Chiu. Ethics Staff prepared this guidance in consultation with the City Attorney’s Office.
SB 1439 covers campaign contributions over $250 from any party or participant or their agents in proceedings involving a “license, permit, or other entitlement for use.” Such proceedings include land use permits and entitlements, contracts (other than competitively bid, labor, or personal employment contracts), and franchises. A party is a person, including a business entity, that files an application for, or is the subject of a proceeding, involving a license, permit, or other entitlement for use. A participant is any person, including a business entity, that is not a party to the proceeding but that actively supports or opposes a particular decision by lobbying the agency, testifying before the agency, or otherwise seeking to influence the agency and that has a financial interest in the outcome of the decision. Where a party or participant is a business entity, contributions from affiliated entities may also count towards the $250 limit. And if the party or participant is a closed corporation, the majority shareholder is also subject to the restrictions. An agent of a party or participant is an individual or business entity that represents the party or participant in the proceeding.
The legislation contains two cure provisions:
- With regard to the limitation on soliciting or accepting campaign contributions, if an official accepts, solicits, or directs a contribution of $250 or more from a party, participant, or agent in a covered proceeding within the 12 months following the agency’s decision in the matter, the official can cure the violation by returning the contribution or the portion of the contribution that exceeds $250 within 14 days of accepting, soliciting, or directing the contribution, whichever comes latest. The official may rely on this cure provision where the official did not knowingly and willfully accept, solicit, or direct the contribution.
- With regard to the disqualification provision, where an official has received a contribution within the 12-month lookback period that would require recusal, the official may return the contribution within 30 days of learning of the covered proceeding and the contribution and may then participate in the matter. For example, if the official received the contribution 8 months ago and then learns a proceeding is now pending before the agency and will be before the official for consideration within the next two months, the official may return the contribution within 30 days of learning of the proceeding and participate in the matter.
Application of SB 1439 to 2022 Election Cycle and Proceedings Occurring in 2022
On December 22, 2022, the Fair Political Practices Commission adopted an opinion finding that the changes made by SB 1439 do not apply retroactively to conduct that occurred prior to January 1, 2023. Therefore, campaign contributions that elected officials received in 2022 will not disqualify them from participating in proceedings, and officials are not precluded from receiving a campaign contribution based on their participation in a covered proceeding prior to January 1, 2023. However, contributions made in 2023 to a campaign committee formed for or ahead of the 2022 election cycle are regulated by SB 1439.
If you have any questions regarding this policy change, please contact the Ethics Commission at email@example.com or (415) 252-3100 or the City Attorney’s Office at firstname.lastname@example.org.