Bill Text: CA AB906 | 2009-2010 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Conflict of interest: remote interest in a contract.

Spectrum: Bipartisan Bill

Status: (Passed) 2009-10-11 - Chaptered by Secretary of State - Chapter 488, Statutes of 2009. [AB906 Detail]

Download: California-2009-AB906-Amended.html

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BILL NUMBER: AB 906	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 8, 2009
	AMENDED IN ASSEMBLY  MAY 11, 2009
	AMENDED IN ASSEMBLY  APRIL 27, 2009
	AMENDED IN ASSEMBLY  APRIL 1, 2009

INTRODUCED BY   Assembly Members Hill and Smyth

                        FEBRUARY 26, 2009

   An act to amend Section 1091 of the Government Code, relating to
conflict of interest, and declaring the urgency thereof, to take
effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 906, as amended, Hill. Conflict of interest: remote interest in
a contract.
   Existing law prohibits Members of the Legislature, and state,
county, district, judicial district, and city officers or employees
from being financially interested in any contract made by them in
their official capacity, or by any body or board of which they are
members. Existing law defines what is a remote interest in a contract
that does not present a prohibited conflict of interest under these
provisions.
   This bill would revise the definition of "remote interest" to
include the interest of a person who is both a member of a state,
county, district, judicial district, or city body or board, and an
officer or employee of an investor-owned utility in a contract
related to energy efficiency encouragement programs, under specified
conditions.
   This bill would declare that it is to take effect immediately as
an urgency statute.
   Vote: 2/3. Appropriation: no. Fiscal committee: no. State-mandated
local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1091 of the Government Code is amended to read:

   1091.  (a) An officer shall not be deemed to be interested in a
contract entered into by a body or board of which the officer is a
member within the meaning of this article if the officer has only a
remote interest in the contract and if the fact of that interest is
disclosed to the body or board of which the officer is a member and
noted in its official records, and thereafter the body or board
authorizes, approves, or ratifies the contract in good faith by a
vote of its membership sufficient for the purpose without counting
the vote or votes of the officer or member with the remote interest.
   (b) As used in this article, "remote interest" means any of the
following:
   (1) That of an officer or employee of a nonprofit entity exempt
from taxation pursuant to Section 501(c)(3) of the Internal Revenue
Code (26 U.S.C. Sec. 501(c)(3)) or a nonprofit corporation, except as
provided in paragraph (8) of subdivision (a) of Section 1091.5.
   (2) That of an employee or agent of the contracting party, if the
contracting party has 10 or more other employees and if the officer
was an employee or agent of that contracting party for at least three
years prior to the officer initially accepting his or her office and
the officer owns less than 3 percent of the shares of stock of the
contracting party; and the employee or agent is not an officer or
director of the contracting party and did not directly participate in
formulating the bid of the contracting party.
   For purposes of this paragraph, time of employment with the
contracting party by the officer shall be counted in computing the
three-year period specified in this paragraph even though the
contracting party has been converted from one form of business
organization to a different form of business organization within
three years of the initial taking of office by the officer. Time of
employment in that case shall be counted only if, after the transfer
or change in organization, the real or ultimate ownership of the
contracting party is the same or substantially similar to that which
existed before the transfer or change in organization. For purposes
of this paragraph, stockholders, bondholders, partners, or other
persons holding an interest in the contracting party are regarded as
having the "real or ultimate ownership" of the contracting party.
   (3) That of an employee or agent of the contracting party, if all
of the following conditions are met:
   (A) The agency of which the person is an officer is a local public
agency located in a county with a population of less than 4,000,000.

   (B) The contract is competitively bid and is not for personal
services.
   (C) The employee or agent is not in a primary management capacity
with the contracting party, is not an officer or director of the
contracting party, and holds no ownership interest in the contracting
party.
   (D) The contracting party has 10 or more other employees.
   (E) The employee or agent did not directly participate in
formulating the bid of the contracting party.
   (F) The contracting party is the lowest responsible bidder.
   (4) That of a parent in the earnings of his or her minor child for
personal services.
   (5) That of a landlord or tenant of the contracting party.
   (6) That of an attorney of the contracting party or that of an
owner, officer, employee, or agent of a firm that renders, or has
rendered, service to the contracting party in the capacity of
stockbroker, insurance agent, insurance broker, real estate agent, or
real estate broker, if these individuals have not received and will
not receive remuneration, consideration, or a commission as a result
of the contract and if these individuals have an ownership interest
of 10 percent or more in the law practice or firm, stock brokerage
firm, insurance firm, or real estate firm.
   (7) That of a member of a nonprofit corporation formed under the
Food and Agricultural Code or a nonprofit corporation formed under
the Corporations Code for the sole purpose of engaging in the
merchandising of agricultural products or the supplying of water.
   (8) That of a supplier of goods or services when those goods or
services have been supplied to the contracting party by the officer
for at least five years prior to his or her election or appointment
to office.
   (9) That of a person subject to the provisions of Section 1090 in
any contract or agreement entered into pursuant to the provisions of
the California Land Conservation Act of 1965.
   (10) Except as provided in subdivision (b) of Section 1091.5, that
of a director of, or a person having an ownership interest of, 10
percent or more in a bank, bank holding company, or savings and loan
association with which a party to the contract has a relationship of
borrower or depositor, debtor or creditor.
   (11) That of an engineer, geologist, or architect employed by a
consulting engineering or architectural firm. This paragraph applies
only to an employee of a consulting firm who does not serve in a
primary management capacity, and does not apply to an officer or
director of a consulting firm.
   (12) That of an elected officer otherwise subject to Section 1090,
in any housing assistance payment contract entered into pursuant to
Section 8 of the United States Housing Act of 1937 (42 U.S.C. Sec.
1437f) as amended, provided that the housing assistance payment
contract was in existence before Section 1090 became applicable to
the officer and will be renewed or extended only as to the existing
tenant, or, in a jurisdiction in which the rental vacancy rate is
less than 5 percent, as to new tenants in a unit previously under a
Section 8 contract. This section applies to any person who became a
public official on or after November 1, 1986.
   (13) That of a person receiving salary, per diem, or reimbursement
for expenses from a government entity.
   (14) That of a person owning less than 3 percent of the shares of
a contracting party that is a for-profit corporation, provided that
the ownership of the shares derived from the person's employment with
that corporation.
   (15) That of a party to litigation involving the body or board of
which the officer is a member in connection with an agreement in
which all of the following apply:
   (A) The agreement is entered into as part of a settlement of
litigation in which the body or board is represented by legal
counsel.
   (B) After a review of the merits of the agreement and other
relevant facts and circumstances, a court of competent jurisdiction
finds that the agreement serves the public interest.
   (C) The interested member has recused himself or herself from all
participation, direct or indirect, in the making of the agreement on
behalf of the body or board.
   (16) That of a person who is an officer or employee of an
investor-owned utility that is regulated by the Public Utilities
Commission with respect to a contract between the investor-owned
utility and a state, county, district, judicial district, or city
body or board of which the person is a member, if the contract
requires the investor-owned utility to provide energy efficiency
rebates or other type of program to encourage energy efficiency that
benefits the public when all of the following apply:
   (A) The contract is funded by utility consumers pursuant to
regulations of the Public Utilities Commission.
   (B) The contract is not performed for the profit of the
investor-owned utility and provides no individual benefit to the
person that is not also provided to the public.
   (C) The person has recused himself or herself from all
participation in making the contract on behalf of the state, county,
district, judicial district, or city body or board of which he or she
is a member. 
   (D) The contract is approved by the Public Utilities Commission.
 
   (D) The contract implements a program authorized by the Public
Utilities Commission. 
   (c) This section is not applicable to any officer interested in a
contract who influences or attempts to influence another member of
the body or board of which he or she is a member to enter into the
contract.
   (d) The willful failure of an officer to disclose the fact of his
or her interest in a contract pursuant to this section is punishable
as provided in Section 1097. That violation does not void the
contract unless the contracting party had knowledge of the fact of
the remote interest of the officer at the time the contract was
executed.
  SEC. 2.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
   To allow the state, a county, district, judicial district, or city
to gain the economic benefits of participating in sponsored energy
conservation programs as soon as possible, it  is  necessary
for this act to go into immediate effect.