Amended in Assembly May 1, 2013

Amended in Assembly April 16, 2013

Amended in Assembly April 1, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 366

Introduced by Assembly Member Holden

February 14, 2013

An act to begin delete amend Section 8282 of end delete begin insert add and repeal Sections 8282.1 and 8282.2 of end insert the Public Utilities Code, relating to women, minority, and disabled veteran business enterprises.

LEGISLATIVE COUNSEL’S DIGEST

AB 366, as amended, Holden. Women, minority, and disabled veteran business enterprises.

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Under

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begin insert (1) end insert begin insert   end insert begin insert Under end insert existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical, gas, water, and telephone corporations. Existing law authorizes the commission to establish rules for all public utilities, subject to control by the Legislature.

Existing law directs the commission to require every electrical, gas, water, wireless telecommunications service provider, and telephone corporation with annual gross revenues exceeding $25,000,000, and their regulated subsidiaries and affiliates, to implement a program developed by the commission to encourage, recruit, and utilize minority-, women-, and disabled veteran-owned business enterprises, as defined, in the procurement of contracts from those corporations or from their regulated subsidiaries and affiliates, and to require the reporting of certain information. Existing law requires the commission, by rule or order, to adopt criteria for verifying and determining eligibility of women, minority, and disabled veteran business enterprises for procurement contracts. The commission, by its rulemaking authority, has adopted General Order 156, applicable to certain electrical, gas, and telephone corporations, to effectuate these requirements. For the purposes of these provisions, existing law defines a minority business enterprise, women business enterprise, and disabled veteran business enterprise.

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This bill would revise and recast these definitions.

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This bill would, until January 1, 2019, additionally authorize a publicly owned business enterprise that provides financial or legal services to qualify as a women, minority, or disabled veteran business enterprise if it meets separate specified definitions for a women, minority, or disabled veteran business enterprise, respectively. This bill would, until January 1, 2020, require the commission to require every electrical, gas, water, wireless telecommunications service provider, and telephone corporation with gross annual revenues exceeding $25,000,000 and their commission-regulated subsidiaries and affiliates to separately identify procurement contracts entered into with women, minority, and disabled veteran business enterprises, as defined in these provisions, in their annual plans. This bill would, until January 1, 2020, require the commission to separately identify procurement contracts entered into pursuant to these provisions in a specified annual report to the Legislature. This bill would provide that these provisions do not provide authority for the creation of any corporate structure not authorized under existing law.

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(2) Under existing law, a violation of any provision of the Public Utilities Act or any rules or orders of the commission is a crime. In addition, any person or corporation that falsely represents a business as a woman, minority, or disabled veteran business enterprise for the purposes of the programs discussed above is subject to criminal penalties.

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Because a violation of the requirements of the bill would be a crime under those provisions, this bill would impose a state-mandated local program.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that no reimbursement is required by this act for a specified reason.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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The Legislature finds and declares all of the
following:

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(a) In 1986, the Public Utilities Commission adopted General
Order 156 to promote competition among utility suppliers and to
encourage greater economic opportunity for women, minority,
and disabled veteran-owned businesses.

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(b) General Order 156 states that “each utility shall make
special efforts to increase utilization and encourage entry into the
marketplace of women, minority, and disabled veteran-owned
businesses in product or service categories where there has been
low utilization such as legal and financial services, fuel
procurement and areas that are considered technical in nature.”

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(c) From 2010 to 2011, inclusive, utility procurement from
women, minority, and disabled veteran business enterprises
increased from $5.17 billion to $7.20 billion. However, the
percentage of total procurement from women, minority, and
disabled veteran business enterprises that provide financial or
legal services continues to lag behind procurement from other
types of women, minority, and disabled veteran business
enterprises.

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(d) Women represent more than 50 percent of our population,
and minorities together make up more than 35 percent of our
population combined. Out of a total United States population of
308 million, African Americans number more than 37 million,
Asian Pacific Americans number more than 13 million, and
Hispanic Americans number more than 45 million. Yet, those
numbers are hardly reflected in the leadership of our nation’s top
corporations.

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(e) Only one out of every five board members is a woman; only
one out of every seven board members is a minority; only one out
of every 28 board members is a minority woman; only one out of
every 11 board members is African American; only one out of
every 48 board members is Asian Pacific American; and only one
out of every 28 board members is Hispanic American.

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(f) Minorities have less representation in executive management
than they do on corporate boards, representing 10.44 percent of
executive managers, compared to the 35 percent of their actual
proportion in the United States population. Only one out of every
five executive managers is a woman; only one out of every nine
executive managers is minority; only one out of every 24 executive
managers is African American; only one out of every 30 executive
managers is Hispanic American; and only one out of every 35
executive managers is Asian Pacific American.

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(g) It is the intent of the Legislature to promote corporate
diversity consistent with the original intent of the supplier diversity
program and to continue these efforts in the procurement of legal
services and financial services from women, minority, and disabled
veteran business enterprises.

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begin insert SEC. 2. end insert   

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begin insert Section 8282.1 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

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begin insert 8282.1. end insert   

(a) The Legislature finds and declares all of the
following:

(1) Shareowners elect the directors of a corporation pursuant
to Section 301 of the Corporations Code.

(2) Under Section 309 of the Corporations Code, a director of
a corporation is required to perform the duties of a director in
good faith and in a manner that the director believes to be in the
best interests of the corporation and its shareowners, and with the
care of an ordinarily prudent person.

(b) For the purposes of this section, “executive management
team” means controlling officers, as defined in the articles of
incorporation or bylaws of the publicly owned business.

(c) In addition to Section 8282, a publicly owned business
enterprise that provides financial or legal services may also qualify
as a women, minority, or disabled veteran business enterprise if
it meets any of the following definitions:

(1) “Women business enterprise” means a business enterprise
that has a board of directors that consists of at least 51 percent
women and has an executive management team that consists of at
least 51 percent women. The membership of the board of directors
must consist of at least 51 percent women for at least five years
prior to the certification of a publicly owned business as a women
business enterprise.

(2) “Minority business enterprise” means a business enterprise
that has a board of directors that consists of at least 51 percent
minority individuals and has an executive management team that
consists of at least 51 percent minority individuals. The
membership of the board of directors shall consist of at least 51
percent minority individuals for at least five years prior to the
certification of a publicly owned business as a minority business
enterprise. The contracting utility shall presume that minority
includes Asian Pacific Americans, African Americans, Hispanic
Americans, and Native Americans.

(3) “Disabled veteran business enterprise” means a business
enterprise that has a board of directors that consists of at least 51
percent disabled veterans and has an executive management team
that consists of at least 51 percent disabled veterans. The
membership of the board of directors must consist of at least 51
percent disabled veterans for at least five years prior to the
certification of a publicly owned business as a disabled veteran
business enterprise.

(d) The commission shall establish guidelines for calculating
how the requirement that the board of directors and executive
management team consist of at least 51 percent women, minority
individuals, or disabled veterans can be met, including how to
calculate the percentage when an individual fits within two or
more of the categories described in the definitions in subdivision
(c) or when the board of directors or executive management team
consists of a combination of women, minority individuals, or
disabled veterans.

(e) This section shall become inoperative on January 1, 2019,
and, as of January 1, 2020, is repealed, unless a later enacted
statute, that becomes operative on or before January 1, 2020,
deletes or extends the dates on which it becomes inoperative and
is repealed.

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begin insert SEC. 3. end insert   

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begin insert Section 8282.2 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

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begin insert 8282.2. end insert   

(a) The commission shall require every electrical, gas,
water, wireless telecommunications service provider, and telephone
corporation with gross annual revenues exceeding twenty-five
million dollars ($25,000,000) and their commission-regulated
subsidiaries and affiliates to separately identify procurement
contracts entered into with women, minority, and disabled veteran
business enterprises, as defined in Section 8282.1, in their annual
plans required by subdivision (a) of Section 8283.

(b) The commission shall separately identify procurement
contracts entered into pursuant to Section 8282.1 in its annual
report required by subdivision (e) of Section 8283.

(c) This section shall remain in effect only until January 1, 2020,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2020, deletes or extends that date.

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begin insert SEC. 4. end insert   

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begin insert Subdivision (c) of Section 8282.1 of the Public Utilities
Code does not provide authority for the creation of any corporate
structure not authorized under existing law. end insert

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begin insert SEC. 5. end insert   

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No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

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SECTION 1.  

Section 8282 of the Public Utilities Code is
amended to read:

8282.  

For purposes of this article, the following definitions
apply:

(a) “Women business enterprise” means a business enterprise
whose management and daily business operations are controlled
by one or more women and is either at least 51 percent owned by
a woman or women; or, in the case of any publicly owned business,
has an executive management team that consists of at least 51
percent women, and has a board of directors whose membership
includes at least 51 percent women, and did so for at least five
years prior to the certification of the publicly owned business as
a women business enterprise.

(b) “Minority business enterprise” means a business enterprise
whose management and daily business operations are controlled
by one or more members of a minority group and is either at least
51 percent owned by a minority group or groups; or, in the case
of any publicly owned business, has an executive management
team that consists of at least 51 percent minority, and has a board
of directors whose membership includes at least 51 percent of one
or more minority groups and did so for at least five years prior to
the certification of the publicly owned business as a minority
business enterprise. The contracting utility shall presume that
minority includes Asian Pacific Americans, African Americans,
Hispanic Americans, and Native Americans.

(c) “Disabled veteran business enterprise” has the same meaning
as defined in paragraph (7) of subdivision (b) of Section 999 of
the Military and Veterans Code, except that in the case of any
publicly owned business the board of directors membership shall
include at least 51 percent disabled veterans, and the executive
management and daily business operations shall be controlled by
one or more disabled veterans. The membership of the board of
directors must consist of at least 51 percent disabled veterans for
at least five years prior to the certification of a publicly owned
business as a disabled veteran business enterprise.

(d) “Control” means exercising the power to make policy
decisions.

(e)  “Operate” means being actively involved in the day-to-day
management and not merely officers or directors.

(f) “Executive management team” means controlling officers,
as defined in the articles of incorporation or bylaws of the publicly
owned businesses.

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