SUMMARY IF CHANGES TO FPPC REGULATIONS RE: CONFLICT OF INTEREST ANALYSIS AND MAERIALITY STANDARDS

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IM!bk BEST BE5T & KRIEGER ATTORNEYS AT LAW jettisoned the "direct" P'indirect" interest dichotomy.) For a number of years, there was some confusion about what the term "reasonably foreseeable" meant. Over time, this phrase was interpreted as "substantially likely," which in practice required a very high degree of probability before disqualification of an official was triggered. Amended Regulation 18701 lowers this threshold for explicitly involved economic interests and states: "A financial effect on an economic interest is presumed to be reasonably foreseeable if the economic interest is a named party in, or the subject of, a governmental decision before the official or the official's agency. An economic interest is the subject of a proceeding if the decision involves the issuance, renewal, approval, denial, or revocation of any license, permit, or other entitlement to, or contract with, an economic interest. (See Regulation 18705.2(a)(1)-(6).)" However, when an economic interest is not explicitly involved in the decision (as described above), the financial effect can still be considered reasonably foreseeable if it is a "realistic possibility." In other words, if the financial result cannot be expected, absent extraordinary circumstances not subject to the public official's control, then it is not considered "reasonably foreseeable." The following six factors, as summarized, should be used to guide one's analysis in specific circumstances: 1. Consider the extent the financial effect is contingent upon intervening events, not including future public agency actions. 2. Consider whether the public official should anticipate the financial effect on his or her economic interest as a potential outcome of the decision under normal circumstances. (3) Step Three: Can the public official demonstrate that the material financial effect on the public official's financial interest is indistinguishable from its effect on the public generally? To determine if the material financial effect on any of the public official's financial interest is indistinguishable from its effect on the public generally, apply Regulation 18707 et seq. If the answer is yes, there is no conflict of interest under the Act. If the answer is no, proceed to Step Four. (4) Step Four: If after applying the three step analysis and determining the public official has a conflict of interest, absent an exception, he or she may not make, participate in making, or in any way attempt to use his or her official position to influence the governmental decision. To determine if the public official is "making, participating in making, or in any way attempting to use his or her official position to influence a governmental decision," apply Regulation 18704. If the public official will be called upon to make, participate in the making, or use his or her official position to influence a governmental decision in which he or she has a financial interest as determined under Step One through Step Three, he or she will have a prohibited conflict of interest." -2- 93939.00001\9704968 2