California recently passed a series of new regulations affecting its “pay-to-play” laws that limit political contributions by state and local government contractors and others involved in proceedings on contracts, licenses, permits, and other “entitlements for use” in the state.  These regulations implement changes to the law that took effect this year, which include applying the law to contributions to local elected officials and extending the prohibited period through 12 months after the end of a proceeding covered by the law.  The regulations also clarify some previously vague issues in the law. 

A summary of the changed regulations is below.

• Application of changes in the law to past activities: A new regulation clarifies that the expansion of the law to local elected officials does not have retroactive effect—proceedings and contributions involving directly-elected local agency officers prior to January 1, 2023 are not covered.    
• Affected officers and agencies: An amended regulation implements the major change that took effect this year, making decisions of and contributions to local elected officials subject to the pay-to-play laws.  This regulation also revises who is an “officer” under the law, so that members of the governor’s cabinet are sometimes covered by the law; clarifies that any person serving in an elected position is covered, even if appointed to or otherwise not elected to that position (e.g., appointed to fill a vacancy), or not the head of the agency; and adds that any person with decision-making authority in a covered proceeding who is also a candidate is covered.
• “Pending” and Proceedings: Under California’s pay-to-pay law, any party or party’s agent may not contribute more than $250 in the aggregate to a state or local government agency officer while a proceeding is pending and for twelve months after the decision is made.  The new regulation clarifies that this provision prohibits contributions to an officer during a proceeding only if the proceeding is pending before that specific officer.
• Agents: The law applies to contributions by agents, as well as parties to a proceeding and “participants” who attempt to influence the proceeding.  The revised regulations clarify that an agent is someone who represents a party or participant in a pending proceeding for compensation through appearances or communications, rather than applying a broader definition of “agent.”
• Aggregation of contributions: An amended regulation specifies that covered contributions include not only those by agents, participants, and parties, but also contributions of an individual who directs or controls an entity’s contributions, as well as contributions by any other entity that individual directs or controls, or by any entity directed and controlled by a majority of the persons that direct or control the party, participant, or agent.  This aligns the law with aggregation rules found elsewhere in California campaign finance law.
• Solicitation, direction, and receipt of contributions: The law applies to contributions not only received by, but also solicited or directed by, an official or candidate.  The amended definition explains that covered contributions include those requested by the officer or their agent for any other recipient. 
• Prohibitions and disqualification: A revised regulation provides guidelines for determining whether an officer knows or has reason to know of a participant’s financial interest.  It also creates a process that allows an officer to participate in a proceeding before returning a contribution.

The new regulations will be important for anyone who makes contributions in California and has matters before state and local officials.  Covington regularly advises on the state’s pay-to-play law and will continue to monitor developments around its regulations.