Office of Administrative Law 555 Capitol Mall, Suite 1260 Sacramento, CA 95814 Subject: Request for Determination Dear Mr. Heidig: This is a request for determination under California Code of Regulations, Title 1, Section 122 concerning policies adopted on February 9, 1998 by the California Public Employees' Retirement System (CalPERS). The policies address three issues: prohibiting political contributions to CalPERS fiduciaries, prohibiting solicitations by CalPERS fiduciaries of contributions, and requiring monthly disclosure of gifts received by CalPERS fiduciaries. Enclosed please find a copies of the following: The three policies for which a determination is requested and the implementing procedures for BD-98-03 (I understand implementing procedures for the other two policies are not yet final); A copy of my e-mail petition to adopt these policies as regulations; A copy of a letter from Kayla J. Gillan, CalPERS General Counsel, which contends the policies do not fall under the definition of regulations because they relate "only to the internal management of the state agency;" and A memo from Joe Parilo, CalPERS Regulations Coordinator, voluntarily requesting publication of the denial letter. As I stated in my original petition, while I applaud the adoption of policies designed to reduce conflicts of interest at CalPERS, I am concerned the System's ability to enforce such policies may be jeopardized by the failure to adopt them as regulations. In addition, I believe the formal adoption process for regulations would afford significantly more input from members of the System and other interested parties, resulting in clearer more effective provisions. CalPERS contends the policies are exempt from the definition of regulations because they deal solely with the internal management of a state agency. Let?s examine each policy in light of that contention. Prohibition on Political Contributions to CalPERS Fiduciaries: BD-98-01. Under the resolved language, point A clearly applies to situations outside the "internal" management of CalPERS. "No person who is engaged in business for gain, or seeking to engage in business for gain, with CalPERS may make any political contributions to a CalPERS fiduciary during the tenure of the CalPERS business relationship, or during the period they are seeking to establish such a relationship." Prohibition on Solicitation by CalPERS Fiduciaries of Contributions: BD-98-02. Point B of the resolved language requires disclosure by contractors of contributions solicited by CalPERS fiduciaries. ?CalPERS contracts shall include a requirement that these persons disclose if, in fact, contributions are solicited by a CalPERS fiduciary.? Monthly Disclosure of Gifts Received by CalPERS Fiduciaries: BD-98-03. The implementing procedures for this item, dated 4/1/98, require disclosure by third parties. Point 3ai requires such parties "must disclose prior to any contract execution whether they have provided, or have ben requested to provide, during the preceding 12 months, any gifts or campaign or charitable contributions to CalPERS Board or senior staff members, or candidates..." In addition, point 3b requires such parties to make annual disclosures. Clearly these items do not relate only to the internal management of CalPERS, as their general counsel contends. I look forward to a determination by the Office of Administrative Law concerning whether the three enclosed policies are regulations as defined in Government Code Section 11342(g) and are invalid and unenforceable because they have not been adopted as regulations pursuant to the Administrative Procedure Act. If you need further information or clarification concerning this request for determination, please call me at 916-327-8642 (day) or 916-691-9722 (evening). I hereby declare under penalty of perjury my belief that the information contained in this request, as well as in the enclosures, is true and correct. I also declare under penalty of perjury that a copy of this request for determination was hand delivered to CalPERS at 400 P Street, Sacramento, on April 30, 1998. Sincerely, James McRitchie cc: Kalya J. Gillan General Counsel CalPERS Contact: jm@perswatch.net If you agree that CalPERS should adopt regulations regarding political contributions and gifts received by CalPERS fiduciaries, contact Herbert F. Bolz of the Office of Administrative Law at hbolz@oal.ca.gov Let Mr. Bolz know you are a CalPERS member and you think gifts to the Board from those doing business with CalPERS should be banned. Please cc me at jm@perswatch.net so that I know what support is building.