HomeMy WebLinkAboutB-06 - Conflicts of Interest Rules'® Conflicts of Interest Rules
Under the Act, a public official has a disqualifying conflict of interest in a governmental
decision if it is foreseeable that the decision will have a financial impact on his or her
personal finances or other financial interests. In such cases, there is a risk of biased
decision - making that could sacrifice the public's interest in favor of the official's private
financial interests. To avoid actual bias or the appearance of possible improprieties, the
public official is prohibited from participating in the decision.
Disqualifying Financial Interests
There are five types of interests that may result in disqualification:
• Business Entity. A business entity in which the official has an investment of
$2,000 or more in which he or she is a director, officer, partner, trustee,
employee, or manager.
• Real Property. Real property in which the official has an interest of $2,000 or
more including leaseholds. (However, month -to -month leases are not
considered real property interests.)
• Income. An individual or an entity from whom the official has received income or
promised income aggregating to $500 or more in the previous 12 months,
including the official's community property interest in the income of his or her
spouse or registered domestic partner.
• Gifts. An individual or an entity from whom the official has received gifts
aggregating to $460 or more in the previous 12 months.
• Personal Finances.The official's personal finances including his or her
expenses, income, assets, or liabilities, as well as those of his or her immediate
family.
Disqualifying Financial Impact or Effect
If a decision may have a financial impact or effect on any of the foregoing interests, an
official is disqualified from governmental decision if the following two conditions are met:
• The financial impact or effect is foreseeable, and
• The financial impact or effect is significant enough to be considered material.
•
Generally, a financial impact or effect is presumed to be both foreseeable and material
if the financial interest is "explicitly" or directly involved in the decision. A financial
interest is explicitly involved in the decision whenever the interest is a named party in, or
the subject of, a governmental decision before the official or the official's agency.
If the interest is "not explicitly involved" in the decision, a financial impact or effect is
reasonably foreseeable if the effect can be recognized as a realistic possibility and
more than hypothetical or theoretical. A financial effect need not be likely to occur to be
considered reasonably foreseeable.
However, for interests "not explicitly involved" in the decision, different standards apply
to determine whether a foreseeable effect on an interest will be material depending on
the nature of the interest. The FPPC has adopted rules for deciding what kinds of
financial effects are important enough to trigger a conflict of interest. These rules
are called "materiality standards," that is, they are the standards that should be used for
judging what kind of financial impacts resulting from governmental decisions are
considered material or important.
There are too many materiality standards to adequately review all of them here.
To determine the applicable materiality standard, or to obtain more detailed information
on conflicts, an official may consult the FPPC's guide to Recognizing Conflicts of
Interest. Alternatively, the official should seek assistance from agency counsel or the
FPPC anytime the official has reason to believe a decision may have a financial impact
or effect on his or her personal finances or other financial interests.
Exceptions
Not all conflicts of interest prevent a public official from lawfully taking part
in the government decision. There are two limited exceptions to the conflict of
interest rules:
The Public Generally Exception. A public official is not disqualified from a
decision if the effect on the official's interests is indistinguishable from the effect
on the public.
Legally Required to Participate. In certain rare circumstances, a public official
may be randomly selected to take part in a decision if a quorum cannot be
reached because too many officials are disqualified under the Act.
Exceptions must be considered with care. A public official should contact agency
counsel or the FPPC to determine if an exception applies.
Recusal Requirements
An official with a disqualifying conflict of interest may not make, participate in making, or
use his or her position to influence a governmental decision. When appearing before his
or her own agency or an agency subject to the authority or budgetary control of his or
her agency, an official is making, participating in making, or using his or her position to
influence a decision any time the official takes any action to influence the decision
including directing a decision, voting, providing information or a recommendation, or
contacting or appearing before any other agency official. When appearing before any
other agency, the official must not act or purport to act in his or her official capacity or
on behalf of his or her agency.
Certain officials (including city council members, planning commissioners, and
members of the boards of supervisors) have a mandated manner in which they
must disqualify from decisions made at a public meeting (including closed
session decisions) and must publicly identify a conflict of interest and leave the
room before the item is discussed.
While there are limited exceptions that allow a public official to participate as a member
of the public and speak to the press, the exceptions are interpreted narrowly and may
require advice from your agency's counsel or the FPPC.
0