Lawsuit: Business vs. FPPC
SB 1439

SB 1439 by Senator Steven Glazer D-Orinda was signed into law last year by Governor Gavin Newsom. It took effect in January and made a number of changes to the “Levine Act,” which is a part of the Political Reform Act.

What to know about SB 1439:

  • It amends the Levine Act of Political Reform Act of 1974, which prohibits an officer of an agency from accepting more than $250 from a party that has a permit or license up for a decision in front of that agency for three months before and after a final decision is made.
  • SB 1439 removes the exception for local government agencies, and extends the prohibition timeline to a year before and after a decision is made. This means elected public officials would be unable to vote on a project, permit, or license if they received over $250 from the requesting party. This includes all affiliates of the requesting party, including employees.
  • Before SB 1439 was enacted, public officials were only required to recuse themselves from voting if they had a personal financial interest in the matter.
  • The bill does not apply to state officials, such as the legislature.
  • The bill only targets those with financial interest thereby excludes unions, NIMBY’s and other organizations without direct financial interest.

How SB 1439 will impact you:

The Levine Act will now impose two key duties on city council and district board members:

  • It will prohibit accepting, soliciting or directing a campaign contribution of $250 if the donor is involved in a proceeding involving a license, permit or other entitlement for use, including a contract award, that is pending before the agency. Under SB 1439, this prohibition continues for 12 months following the proceeding, while it was previously three months.
  • The Levine Act will now require city council and district board members to recuse from any proceeding involving a license, permit or other entitlement for use, including a contract award, if the member has received a campaign contribution from a person involved in the proceeding within the previous 12 months.

The Levine Act applies to both the parties directly involved in the proceeding, such as an applicant for an entitlement, as well as to other participants who actively support or oppose a particular decision in the proceeding. As with other provisions of the Political Reform Act, officials with a Levine Act conflict of interest cannot make, participate in making, or attempt to influence any such proceeding. The rule does not apply to labor contracts, personal employment contracts or contracts that are competitively bid.

The Business Coalition Response:

In the lawsuit, the plaintiffs argue that SB 1439 is unconstitutional because it amends a ballot measure by directly conflicting with the original provisions of the initiative.

  • The plaintiffs argue that state law specifically excludes campaign contributions from being included as gifts or income for the purposes of being a conflict of interest, meaning that the bill directly conflicts with the Political Reform Act’s original regulation and effectively repeals state law.
  • They also argue that the bill violates the First Amendment by restricting campaign contributions to local public officials, citing a ruling from the California Supreme Court that said such restrictions violate free speech.

“It is also unconstitutional on its effect on local elected officials who are permitted to campaign for their elective offices and to communicate with voters, using campaign contributions solicited and received for that purpose, pursuant to state and local laws,” the lawsuit reads.

The plaintiffs behind the lawsuit include the Family Business Association of California, California Restaurant Association, California Retailers Association, California Building Industry Association, California Business Properties Association, California Business Roundtable, Sacramento Regional Builders Exchange, California Manufacturers & Technology Association, Rancho Cordova City Councilmember Garrett Gatewood and Sacramento County Supervisor Pat Hume.

How are individual projects where the applicant and its affiliates have donated to the local campaigns affected?

Even with the lawsuit, it is advised for our members to contact the city attorney where they will have a project hearing to get a legal finding and impacts of SB 1439.

Per our Sacramento advocates, if you or any affiliates of your organizations have donated an aggregate of $250 to an individual elected official, SB 1439 is triggered.  Therefore, it is important to discuss it with the city attorney in order to rectify it if possible or understand its impacts to your project.

NAIOP SV will continue to monitor this and provide a monthly update when necessary to our membership. Want to learn more about NAIOP Silicon Valley’s Public Policy Platform? Please contact Edesa Bitbadal.