Conflicts of Interest

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. 

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 $590 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. 

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 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.

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. 

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.