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Over the past two plus years, the Fair Political Practices Commission – or FPPC – has been working to entirely revamp the regulations that interpret and apply the Conflict of Interest provisions of the Political Reform Act, which was passed bay California’s voters in the wake of Watergate.
For those of us who follow the FPPC, or who care about government ethics, these recent changes are huge!
In practice, the changes should be important to public officials, public employees and public agencies – as well as the public, private and non-profit entities that may have matters pending before local or state governments.
The big picture rule of the Political Reform Act's conflict of interest provisions is that public servants may not use their official position to benefit themselves, their investments, their affiliated organizations, their employers or other sources of income, financially.
The FPPC’s recent work has changed how we analyze and guard against potential conflicts – and the appearance of divided loyalties.
What used to be a complicated 8-step analysis, requiring us to flip from regulation to regulation, to check stock listings, to take out our calculators, and more, has been simplified significantly. Now, once we determine if a public official, employee or consultant is covered by the regulations, and whether the individual has a “financial interest” under the law – which could be a source of income to the official or his or her spouse, real property, or more – we walk through a simplified 4-step analysis and re-ordered, revised regulations.
The first step is all about likelihoods – most basically put, is it a realistic possibility – as opposed to just hypothetical or theoretical – that a government's decision is going to have the effect we’re envisioning? If not, we stop there. If so, on to Number 2.
Will this financial effect we're envisioning be material?
“Materiality” is about importance: is the effect we’re expecting a big deal? For example, is a company going to get a new permit, pay penalties or gain or lose a contract? Is the value or use of property going to change? Is a stock price or company's value going to go up or down? If, based on the relevant regulation, the answer is Yes, it’s on to Number 3.
The third step asks whether you can point to one or a distinguishable group of people, organizations or properties that will be effected in ways others won’t.
If we are still saying yes, we go to 4, which is the prohibition: Is the public official making, participating in making, or in any way attempting to use his or her official position to influence the government decision that we've been analyzing?
And that’s the final step – because the answer can’t be yes, or we have a violation of the law.
Last but not least, it’s important to remember that the Political Reform Act is NOT the only law governing conflicts of interest, so if what you’ve heard on this video raises a question in your mind about whether or how the conflict rules apply to a certain situation, there is no time like the present to figure it out.