Commission On Cal. State Gov. Org. & Econ. v. Fair Political Practices Com.

• Decision Date: 08 December 1977
• Citation: 75 Cal.App.3d 716,142 Cal.Rptr. 468
• Court: California Court of Appeals Court of Appeals
• Parties: COMMISSION ON CALIFORNIA STATE GOVERNMENT ORGANIZATION AND ECONOMY, Petitioner, v. FAIR POLITICAL PRACTICES COMMISSION of the State of California, Respondent. Civ. 16843.

Page 468

142 Cal.Rptr. 468

75 Cal.App.3d 716

COMMISSION ON CALIFORNIA STATE GOVERNMENT ORGANIZATION AND ECONOMY, Petitioner, v. FAIR POLITICAL PRACTICES COMMISSION of the State of California, Respondent.

Civ. 16843.

Court of Appeal, Third District, California.

Dec. 8, 1977.

Hearing Denied Feb. 1, 1978.

Evelle J. Younger, Atty. Gen., Iver E. Skjeie, Asst. Atty. Gen., and Floyd D. Shimomura, Deputy Atty. Gen., for petitioner.

Daniel H. Lowenstein, Robert M. Stern, Michael J. Baker, Sacramento, and Lee C. Rosenthal, for respondent.

FRIEDMAN, Associate Justice.

In this mandate proceeding the Commission on California State Government Organization and Economy ("commission") contends that the Political Reform Act of 1974 exempts it from promulgating a "Conflict of Interest Code" covering its appointive members. It seeks a writ directing the Fair Political Practices Commission ("FPPC") to grant its claim of exemption. We hold that the commission is not exempt and deny its petition.

The objective of the Political Reform Act is the promotion of impartial and ethical conduct of public affairs by state and local government officials. (See Gov.Code, § 81000.) ¹ The FPPC has primary responsibility for administration of the Act. (§ 83111.) One of the Act's regulatory segments deals with conflicts of interest. It prohibits a public official, state or local, from participating in or using his official position to influence a governmental decision in which he has a financial interest. (§ 87100.) ² It requires state and local agencies to adopt conflict of interest codes covering their "designated employees." (§ 87300.) Such a code designates the decision-making positions within the agency involving foreseeable conflicts of interest and requires the designated employees to file periodic financial disclosure statements. (§§ 82014, 87302.) The FPPC is the "code reviewing body" for agencies of the state government. (§ 82011.)

Pivotal to the present controversy is section 82019 which excludes from the category of designated employees "any unsalaried member of any board or commission which serves a solely advisory function." ³ Acting under a regulation of the FPPC, the commission submitted a request for exemption grounded upon the claim that its appointive members were all unsalaried and had solely advisory functions; that its three staff members and one consultant had no duties engendering potential conflicts of interest; thus, that it had no "designated employees." The FPPC denied the request, approving in substance a staff memorandum whose summary we quote in the margin. ⁴ To analyze the commission's claim that its members serve a solely advisory function, we briefly survey its character and powers. It consists of nine uncompensated, appointive members plus four legislators serving ex-officio. ⁵ In general, its mission is to assist the Governor and the Legislature by making studies and recommendations designed to achieve economy, efficiency and improved services within the executive branch of state government. (§§ 8521-8523.) To accomplish this mission, section 8541 equips it with power to hold hearings, to pursue investigations directly or through law enforcement agencies and to conduct studies directly or by contract. ⁶

The issue before us whether the unsalaried commission members have a solely advisory function does not entail interpretation of an ambiguous statute. Even when words are fairly certain, their application to concrete cases is aided by placing them in context. Even "clear" statutory words gain color and precision from the legislation's objective. Advisory is authoritatively defined as having the attribute of advising; giving or tending to give advice; in the context of section 82019 the signification of advice is opinion given or offered as to action. (The Oxford English Dictionary.) When these definitions are fleshed out by cognitive notions, the word advisory denotes indirect, relatively passive, hortatory and non-binding counsel or guidance, as contrasted with active management, decision-making and imposition of obligatory orders or decrees. (See Roget's Thesaurus (St. Martin's Press, 1936) Headings 689, 691.) ⁷

In section 82019, the exemption statute, the phrase solely advisory appears as a description of function. The exemption provision is part of a statutory structure aimed at preventing conflicts of interest. The objective is to enhance the purity of decision-making by excluding participants who have a personal financial stake in the decision. The statutory exemption exists because solely advisory officials are not decision-makers; they only recommend. The presence or absence of decision-making power is thus an important factor in identifying the wielder of a solely advisory function.

The functions of the commission include its prime mission plus a group of investigatory powers which supply the means for accomplishing that mission. Considered in isolation, the prime mission (formulation of structural and operational recommendations submitted for acceptance or rejection by the Governor and legislature) is undebatably advisory.

Directly and by indirection, the exercise of its aggregate power transforms the commission into an active manager and originator of decisions. The commission's decision-making, nonadvisory function emerges when its discrete activities are viewed collectively. The governing statutes do not limit its choice of investigative areas. Within the broad gamut of executive agencies, the commission chooses its own investigative priorities. Its selection of a particular segment of government is coupled with the power to hold hearings, to force the production of evidence by subpoena and oath and to enlist the aid of law enforcement agencies. The investigation then culminates in a public report, which may be mildly or sharply critical of the agency and its staff. These collective commission functions are directly influential upon the decision-making activities of the operating agencies.

According to the statutory letter, the commission operates indirectly, submitting its studies and recommendations to the Governor and legislature, which may accept or reject them. The indirection is only nominal and theoretical. Executive agencies which are vulnerable to charges of abuse, inefficiency or waste, will tend to anticipate public criticism by voluntary self-improvement. The more vulnerable the agency, the greater its sensitivity to the commission's investigatory power. Like a biological organism, the complex and interdependent array of executive agencies responds to external stimuli and to internally secreted adrenalin. In real life the commission's investigations are not all indirect and advisory. They are capable of directly altering the activities, that is, the decisions of executive agencies, resulting in tangible effects which far outdistance the soft inducements of good counsel. ⁸ These observations gain added force when juxtaposed to the conflict of interest provisions of the Political Reform Act. Foremost of these is section 87100 (fn. 2, ante). An official has a financial interest in a decision when it is "reasonably foreseeable" that the decision will have a material financial effect on his investments, property or income. (§ 87103.) The conflict of interest laws operate without regard to actual corruption or actual governmental loss; they establish an objective standard "directed not only at dishonor, but also at conduct that tempts dishonor;" they are preventive, acting upon tendencies as well as prohibited results. (United States v. Mississippi Valley Generating Co. (1961) 364 U.S. 520, 549-551, 81 S.Ct. 294, 309, 5 L.Ed.2d 268; Stigall v. City of Taft (1962) 58 Cal.2d 565, 569, 25 Cal.Rptr. 441, 375 P.2d 289; People v. Watson (1971) 15 Cal.App.3d 28, 37-39, 92 Cal.Rptr. 860.) A violation occurs not only when the official participates in the decision, but when he influences it, directly or indirectly. (§ 87100, fn. 2, ante; Stigall v. City of Taft,supra, 58 Cal.2d at p. 569, 25 Cal.Rptr. 441, 375 P.2d 289.) Thus, a public official outside the immediate hierarchy of the decision-making agency may violate the conflict of interest law if he uses his official authority to influence the agency's decision.

The appointive members of the Commission on California State Government Organization and Economy are uncompensated, parttime public officials. Their tasks implicitly but firmly call for people of talent, rich in the insights supplied by business and professional success. One or several members may pursue state-licensed occupations; others may be drawn from state-supervised insurance or banking firms; one may be a property developer interested in surplus lands to be sold by the state, another an official of a corporation engaged in controversy with a state taxing agency. Through participation in or influence upon the commission's investigatory actions, the commission member is vested with power to influence the decisions of state agencies which regulate or affect his private business, property or income. There is a "rational connection" and a "potential conflict" between the private business affairs of the commission members and the sweeping range of the commission's investigative activities. (See City of Carmel-By-The-Sea v. Young (1970) 2 Cal.3d 259, 269-270, 85 Cal.Rptr. 1, 466 P.2d 225.) The preventive purpose of the conflict of interest laws is blunted by the members' exemption from the disclosure requirements governing "designated employees."

The commission's power to contract with other agencies involves it in "contracting out," a function not at all advisory. Private consulting firms, nonprofit organizations and educational institutions offer themselves as contracting suppliers of governmental expertise. (See California State Employees' Assn. v. Williams (1970) 7 Cal.App.3d 390, 398-399, 86 Cal.Rptr. 305.) Award of a study or consulting contract is preceded by...