BILL NUMBER: SB 861	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JULY 13, 2011
	AMENDED IN SENATE  MAY 31, 2011
	AMENDED IN SENATE  APRIL 25, 2011
	AMENDED IN SENATE  APRIL 7, 2011

INTRODUCED BY   Senator Corbett
    (   Coauthor:   Senator   Anderson
  ) 
    (   Coauthor:  Assembly Member  
V. Manuel Pérez   ) 

                        FEBRUARY 18, 2011

   An act to add Section 10490 to the Public Contract Code, relating
to public contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 861, as amended, Corbett. Public contracts: contract
eligibility: conflict minerals in the Democratic Republic of the
Congo.
   Existing law authorizes contracting between state agencies and
private contractors and sets forth requirements for the procurement
of goods and services by state agencies and the various
responsibilities of state agencies and the Department of General
Services in implementing state contracting procedures and policies.
   This bill would prohibit a scrutinized company, as defined, from
entering into a contract with a state agency for goods or services,
as provided.
   This bill would become inoperative upon a specified date.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) The Democratic Republic of Congo was devastated by a civil war
carried out in 1996 and 1997 and a war that began in 1998 and ended
in 2003, which resulted in widespread human rights violations and the
intervention of multiple armed forces or armed nonstate actors from
other countries in the region.
   (b) Despite the signing of a peace agreement and subsequent
withdrawal of foreign forces in 2003, the eastern region of the
Democratic Republic of Congo has continued to suffer from high levels
of poverty, insecurity, and a culture of impunity, in which illegal
armed groups and military forces continue to commit widespread human
rights abuses.
   (c) According to a study by the International Rescue Committee
released in January 2008, conflict and the related humanitarian
crisis in the Democratic Republic of Congo have resulted in the
deaths of an estimated 5,400,000 people since 1998 and continue to
cause as many as 45,000 deaths each month.
   (d) Sexual violence and rape remain pervasive tools of warfare
used by all parties in eastern region of the Democratic Republic of
Congo to terrorize and humiliate communities, resulting in community
breakdown which causes a decrease in the ability of affected
communities to resist control by illegal armed forces and a loss of
community access to minerals. Sexual violence and rape affect
hundreds of thousands of women and girls, frequently resulting in
traumatic fistula, other severe genital injuries, and long-term
psychological trauma.
   (e) A report released by the Government Accountability Office in
December 2007 describes how the mismanagement and illicit trade of
extractive resources from the Democratic Republic of Congo supports
conflict between militias and armed domestic factions in neighboring
countries.
   (f) In October 2002, the United Nations Group of Experts on the
Democratic Republic of Congo called on member states of the United
Nations to adopt measures, consistent with the guidelines established
for multinational enterprises by the Organization for Economic
Co-operation and Development, to ensure that enterprises in their
jurisdiction do not abuse principles of conduct that they have
adopted as a matter of law.
   (g) In February 2008, the United Nations Group of Experts on the
Democratic Republic of Congo stated, "individuals and entities buying
mineral output from areas of the eastern part of the Democratic
Republic of Congo with a strong rebel presence are violating the
sanctions regime when they do not exercise due diligence to ensure
their mineral purchases do not provide assistance to illegal armed
groups" and defined due diligence as including the following:
determining the precise identity of the deposits from which the
minerals they intend to purchase have been mined; establishing
whether or not these deposits are controlled or taxed by illegal
armed groups; and refusing to buy minerals known to originate, or
suspected to originate, from deposits controlled or taxed by illegal
armed groups.
   (h) In its final report, released on December 12, 2008, the United
Nations Group of Experts on the Democratic Republic of the Congo
found that official exports of columbite-tantalite, cassiterite,
wolframite, and gold are grossly undervalued and that various illegal
armed groups in the eastern region of the Democratic Republic of
Congo continue to profit greatly from these natural resources by
coercively exercising control over mining sites from where they are
extracted and locations along which they are transported for export.
   (i) United Nations Security Council Resolution 1857, unanimously
adopted on December 22, 2008, broadens existing sanctions relating to
the Democratic Republic of Congo to include "individuals or entities
supporting the illegal armed groups ... through illicit trade of
natural resources"; and encourages member countries to ensure that
companies handling minerals from the Democratic Republic of Congo
exercise due diligence on their suppliers.
   (j) Continued weak governance in the Democratic Republic of Congo
has allowed the illicit trade in the minerals columbite-tantalite,
cassiterite, wolframite, and gold to flourish, which empowers illegal
armed groups, undermines local development, and results in a loss or
misuse of tax revenue for the Government of the Democratic Republic
of Congo. The development of stronger governance and economic
institutions that support legitimate cross-border trade in such
minerals would help prevent the exploitation of such minerals by
illegal armed groups and enable the hundreds of thousands of people
who depend on such minerals for their livelihoods to benefit from
such minerals.
   (k) Metals derived from columbite-tantalite, cassiterite,
wolframite, and gold from the Democratic Republic of Congo are used
in diverse technological products sold worldwide, including mobile
telephones, laptop computers, and digital video recorders.
   (l) In February 2009, the Electronic Industry Citizenship
Coalition and the Global e-Sustainability Initiative released a
statement asserting that use by the information communications
technology industry of mined commodities that support conflict in
such countries as the Democratic Republic of Congo is unacceptable
and electronics companies can and should uphold responsible practices
in their operations and work with suppliers to meet social and
environmental standards with respect to the raw materials used in the
manufacture of their products.
   (m) Notwithstanding the extensiveness of the supply chains of
technological products and the extensiveness of the processing stages
for the metals derived from columbite-tantalite, cassiterite,
wolframite, and gold used in such products, companies that create and
sell products that include such metals have the ability to influence
the situation in the Democratic Republic of Congo by doing all of
the following: exercising due diligence in ensuring that their
suppliers provide raw materials in a manner that does not directly
finance armed conflict, result in labor or human rights violations,
or damage the environment; verifying the country from which the
minerals used to derive such metals originate, the identity of the
exporter of the minerals, and that all appropriate tax payments are
made; and committing to support mineral exporters from the Democratic
Republic of Congo that fully disclose their export payments and
certify that their minerals do not directly finance armed conflict,
result in labor or human rights violations, or damage the
environment.
   (n) It is the sense of the Legislature that the exploitation and
trade of conflict minerals originating in the Democratic Republic of
Congo is helping to finance conflict characterized by extreme levels
of violence in the eastern Democratic Republic of Congo, particularly
sexual- and gender-based violence, and contributing to an emergency
humanitarian situation.
   (o) The Dodd-Frank Wall Street Reform and Consumer Protection Act
was signed into law by President Barack Obama on July 21, 2010. This
law requires those who file with the Securities Exchange Commission
and use minerals originating in the Democratic Republic of Congo in
manufacturing to disclose measures taken to exercise due diligence on
the source and chain of custody of the materials and the products
manufactured.
  SEC. 2.  Section 10490 is added to the Public Contract Code, to
read:
   10490.  (a) A scrutinized company is ineligible to, and shall not,
bid on or submit a proposal for a contract with a state agency for
goods or services related to products or services that are the reason
the company must comply with Section 13(p) of the Securities
Exchange Act of 1934.
   (b) For purposes of this section, a "scrutinized company" is a
person that has been found to be in violation of Section 13(p) of the
Securities Exchange Act of 1934 by final judgment or settlement
entered in a civil or administrative action brought by the Securities
and Exchange Commission and the person has not remedied or cured the
violation in a manner accepted by the commission on or before final
judgment or settlement.
   (c) A person shall cease to be regarded as a scrutinized company
when the person is no longer deemed to be in violation of Section 13
(p) of the Securities Exchange Act of 1934,  or upon filing by
such person of an amended or corrective filing under Section 13(p) of
the Securities Exchange Act of 1934, which filing corrects the
violations described in subdivision (b),  or after three years
from the date of final judgment or settlement, whichever is earlier.

   (d) The Department of General Services shall establish in the
State Administrative Manual or the State Contracting Manual policies
and procedures for all state agencies, departments, boards, and
commissions to implement the contract prohibition of this section.
 
   (e) For purposes of this section, "goods or services" includes
goods and services subject to this chapter (commencing with Section
10290), information technology goods and services subject to Chapter
3 (commencing with Section 12100), and telecommunication goods and
services subject to Chapter 3.5 (commencing with Section 12120).

  SEC. 3.  Section 2 of this bill shall become inoperative upon the
disclosure requirements termination date specified pursuant to
Section 1502(b)(4) of Public Law 111-203.