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111 <br />BEST BEST & KRIEGEII)€ <br />ATTORNEYS AT LAW <br />CITY F'1 <br />p pp <br />Memorandum <br />To: PUBLIC AGENCY CLIENTS <br />From: BEST BEST & KRIEGER LLP <br />Date: May 11, 2015 <br />Re: SUMMARY OF CHANGES TO FPPC REGULATIONS RE: CONFLICT OF <br />INTEREST ANALYSIS AND MATERIALITY STANDARDS <br />In March, 2015 the Fair Political Practices Commission (FPPC) completed a <br />months' long project to revise and simplify its regulations pertaining to Government Code <br />section 87100 (the Political Reform Act (PRA)) and, specifically the "reasonably foreseeable" <br />financial effect standard and the "materiality" standards related to the various "financial <br />interests" which can give rise to a prohibited conflict of interest. The FPPC also simplified the <br />Eight Step Process for determining when a conflict of interest exists under the PRA, condensing <br />it to a Four Step Process. <br />The Public Policy and Ethics Compliance Group has provided memos over the <br />past number of months as these revised acid amended regulations became effective. The purpose <br />of this memo is to summarize all of these revisions in this one memo to ease in the application of <br />the newly amended regulations to your operations and decisions. (Additionally, many of the <br />amended regulations have been renumbered since being revised, and this memo will refer to the <br />new regulation numbers.) <br />"Reasonably Foreseeable" Financial Effect (Regulation 18701) <br />The first step in the process to determine whether a financial interest could give <br />rise to a prohibited conflict of interest is assessing whether the financial effect of the <br />governmental decision is "reasonably foreseeable." (As part of its revision process, the FPPC <br />revised the "basic rule" for determining whether a public official has a prohibited conflict of <br />interest from the former "Eight Step Process" to a simplified "Four Step Process,"' which <br />' Reg. 18700 provides: "(d) To determine whether a public official has a prohibited conflict of interest under the <br />Act, apply the following: <br />(1) Step One: Is it reasonably foreseeable that the governmental decision will have a financial effect on any of the <br />public official's financial interests? To determine if the financial effect is reasonably foreseeable, apply Regulation <br />18701. If the answer is no, there is no conflict of interest under the Act. If the answer is yes, proceed to Step Two. <br />(2) Step Two: Will the reasonably foreseeable' Financial effect be material? To determine if the reasonably <br />foreseeable financial effect is material, apply Regulation 18702. If the answer is no, there is no conflict of interest <br />under the Act, If the answer is yes, proceed to Step Three. <br />This product provided under the Public Policy & Ethics Group Program <br />