The Levine Act prohibits “officers” of any state or local government agency who have received a contribution of $250 or more from an applicant or affiliated party from voting on the applicant’s matter—whether it be a contract, a permit or other entitlement—if the officer knows or has reason to know that the participant has a financial interest in the matter. State and local elected officials and bodies—such as mayors and legislators, city councils, and boards of supervisors—have always been excluded from the Levine Act’s prohibitions, but that is about to change for local electeds.
On September 29, 2022, Governor Newsom signed SB 1439 (Glazer), a bill that extends the Levine Act’s “pay-to-play” and recusal requirements to local elected officials who received campaign contributions from parties appearing before them. SB 1439 could create significant and unanticipated issues for any entity with business before local elected bodies where the entity or other closely associated persons, such as their agents, employees, or any person with a financial interest in a project, have made campaign contributions to the elected officials in excess of $250.
Levine Act
The Levine Act, California Government Code Section 84308, prohibits pay-to-play contributions to members of nonelected bodies such as planning commissions and the California Coastal Commission. The Levine Act was adopted in 1982, in response to reports that several members of the Coastal Commission had solicited and received large campaign contributions from individuals with applications pending before the commission. The Levine Act requires members of nonelected bodies to recuse themselves from voting on a matter involving a license, a permit or other entitlement if the member has received from the party or another participant a campaign contribution of $250 or more within the preceding 12 months. The Levine Act also prohibits a party with a pending matter from contributing to a member while a proceeding is pending and for three months after, and it prohibits members from soliciting contributions of $250 or more during the same time period.
SB 1439
SB 1439 amends Section 84308 to apply to members of local elected bodies, such as city council members and county supervisors. Under this expansion, if a party or participant has made a campaign contribution of $250 or more within the preceding 12 months to a member of a city council, the member of the city council will be required to recuse herself or himself from voting on a matter involving a license, a contract, a permit or other entitlement because the party (or an affiliated party, such as an agent or employee) has given a campaign contribution if the member knows or has reason to know that the participant has a financial interest in the matter.
SB 1439 also extends from three months to 12 months the time frame after an approval during which a member (elected or unelected) is prohibited from receiving a campaign contribution from a party.
Note of Caution to Entities Doing Business With Elected Bodies
SB 1439 potentially has serious implications for individuals, companies and other entities doing business with local elected bodies in the state, especially in 2023, its first year of implementation. If a company made a campaign contribution in 2022 to a member of a city council, that city council member will be required to recuse herself or himself from matters directly affecting the finances of the company for the following 12 months.
In the future, companies, individuals and other entities that intend to seek contracts, permits or licenses from local elected bodies will need to refrain from making any prohibited contributions, be on the lookout for any prohibited contributions from principals or employees who might be unaware of the rule, and ask agents and consultants about their campaign contribution history, and they should put in place a compliance process to avoid inadvertent violations. Without appropriate compliance measures, contributions innocently made in an effort to support a friend or a policymaker who shares your political views could backfire, forcing a potentially supportive council member or supervisor to recuse herself or himself from an important vote.
Notably, a number of California cities already have prohibitions on campaign contributions from developers and city contractors to elected city officials. These cities include Alhambra, Baldwin Park, Claremont, Costa Mesa, Culver City, Gardena, Glendale, Los Angeles, Malibu, Modesto, National City, Oakland, Oxnard, Pacific Grove, Pasadena, San Francisco, Temple City and West Covina. For example, the City of Los Angeles Charter prohibits contributions to elected city officials and candidates by any person “who bids on or submits a proposal or other response to a contract solicitation that has an anticipated value of at least $100,000 and requires approval by the City Council,” as well as major subcontractors on such bids and principals of covered entities. L.A. Charter § 470(c)(12). The prohibition also applies to citywide offices (mayor, city attorney and city controller) where the contract at issue would be approved by that office. Id.
Future Compliance
SB 1439 will go into effect on January 1, 2023. Going forward, it will be important for individuals, companies and other entities doing business with elected bodies in the state to ensure that they are complying with the law’s requirements and are monitoring their activities and the activities of their principals, employees and agents for compliance. Manatt can provide assistance with developing such compliance programs.
