AB 366, as amended, Holden. Women, minority, and disabled veteran business enterprises.
(1) Under
end deletebegin insertUnder end insertexisting 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.begin delete For the purposes of these provisions, existing law defines a minority business enterprise, women business enterprise,
and disabled veteran business enterprise.end delete
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.
end delete(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.
end deleteBecause a violation of the requirements of the bill would be a crime under those provisions, this bill would impose a state-mandated local program.
end deleteThe 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.
end deleteThis bill would provide that no reimbursement is required by this act for a specified reason.
end deleteThis bill would make findings and declarations regarding women, minority, and disabled veteran business enterprises. This bill would state the intent of the Legislature to promote diverse lending institutions to increase the availability of access to capital for women, minority, and disabled veteran-owned businesses consistent with the original intent of the supplier diversity program and to continue these efforts in the procurement of legal services and financial services.
end insertbegin insertend insertVote: majority.
Appropriation: no.
Fiscal committee: begin deleteyes end deletebegin insertnoend insert.
State-mandated local program: begin deleteyes end deletebegin insertnoend insert.
The people of the State of California do enact as follows:
begin insert(a)end insertbegin insert end insert The Legislature finds and declares all of the
2following:
3(a)
end delete
4begin insert(end insertbegin insert1)end insert In 1986, the
Public Utilities Commission adopted General
5Order 156 to promote competition among utility suppliers and to
6encourage greater economic opportunity for women, minority, and
7disabled veteran-owned businesses.
8(b)
end delete
9begin insert(end insertbegin insert2)end insert General Order 156 states that “each utility shall make special
10efforts to increase utilization and encourage entry into the
11marketplace of women, minority, and disabled veteran-owned
12businesses in product or service categories where there has been
13low utilization such as legal and financial
services, fuel
14procurementbegin insert,end insert and areas that are considered technical in nature.”
15(c)
end delete
16begin insert(end insertbegin insert3)end insert From 2010 to 2011, inclusive, utility procurement from
17women, minority, and disabled veteran business enterprises
18increased from $5.17begin delete billionend delete to $7.20 billion. However, the
19percentage of total procurement from women, minority, and
20disabled
veteran business enterprises that provide financial or legal
21services continues to lag behind procurement from other types of
22women, minority, and disabled veteran business enterprises.
23(4) Women, minority, and disabled veteran-owned businesses
24continue to be the engine of employment in emerging communities.
25Their business growth depends on a variety of capital, from funding
P4 1to establish new firms, to working capital and business loans to
2expand their businesses, to private equity for acquiring and
3merging with other firms.
4(5) Historically, discriminatory practices existed in the banking
5and lending industries, instituting a redlining policy that used
6racial criteria
to categorize lending risks. Inadequate access to
7financial capital continues to be a significant constraint limiting
8the growth of women, minority, and disabled veteran-owned
9businesses. National and regional studies over several decades
10indicate that racial discrimination as well as limited financial and
11human capital are primarily responsible for the disparities in
12women, minority, and disabled veteran-owned business
13performances.
14(6) Capital access remains the most important factor limiting
15the establishment, expansion and growth of women, minority, and
16disabled veteran-owned businesses. Given this well established
17constraint, the current financial environment has placed a greater
18burden on women, minority, and disabled veteran-owned
19enterprises that are trying to keep their businesses thriving in
20today’s economy.
21(7) Women, minority, and disabled veteran-owned firms are
22found to have less than half the average amount of recent equity
23investments and loans than nonminority firms. Across the nation,
24women, minority, and disabled veteran-owned businesses face the
25obstacles of access to capital and access to markets, both of which
26are essential for any business to increase in size and scale.
27(d) Women represent more than 50 percent of our population,
28and minorities together make up more than 35 percent of our
29population combined. Out of a total United States population of
30308 million, African Americans number more than 37 million,
31Asian Pacific Americans number more than 13
million, and
32Hispanic Americans number more than 45 million. Yet, those
33numbers are hardly reflected in the leadership of our nation’s top
34corporations.
35(e) Only one out of every five board members is a woman; only
36one out of every seven board members is a minority; only one out
37of every 28 board members is a minority woman; only one out of
38every 11 board members is African American; only one out of
39every 48 board members is Asian Pacific American; and only one
40out of every 28 board members is Hispanic American.
P5 1(f) Minorities have less representation in executive management
2than they do on corporate boards, representing 10.44 percent of
3executive managers, compared to the 35 percent of their actual
4proportion in the United States population. Only one out of every
5five executive managers is a woman; only one out of every nine
6executive managers is minority; only one out of every
24 executive
7managers is African American; only one out of every 30 executive
8managers is Hispanic American; and only one out of every 35
9executive managers is Asian Pacific American.
10(g) It is the intent of the Legislature to promote corporate
11diversity consistent with the original intent of the supplier diversity
12program and to continue these efforts in the procurement of legal
13services and financial services from women, minority, and disabled
14veteran business enterprises.
15(b) It is the intent of the Legislature to promote diverse lending
16institutions to increase the availability of access to capital for
17
women, minority, and disabled veteran-owned businesses consistent
18with the original intent of the supplier diversity program and to
19continue these efforts in the procurement of legal services and
20financial services.
Section 8282.1 is added to the Public Utilities Code,
22to read:
(a) The Legislature finds and declares all of the
24following:
25(1) Shareowners elect the directors of a corporation pursuant to
26Section 301 of the Corporations Code.
27(2) Under Section 309 of the Corporations Code, a director of
28a corporation is required to perform the duties of a director in good
29faith and in a manner that the director believes to be in the best
30interests of the corporation and its shareowners, and with the care
31of an ordinarily prudent person.
32(b) For the purposes of this section, “executive management
33team” means controlling officers, as defined in the articles of
34incorporation or bylaws of the
publicly owned business.
35(c) In addition to Section 8282, a publicly owned business
36enterprise that provides financial or legal services may also qualify
37as a women, minority, or disabled veteran business enterprise if it
38meets any of the following definitions:
39(1) “Women business enterprise” means a business enterprise
40that has a board of directors that consists of at least 51 percent
P6 1women and has an executive management team that consists of at
2least 51 percent women. The membership of the board of directors
3must consist of at least 51 percent women for at least five years
4prior to the certification of a publicly owned business as a women
5business enterprise.
6(2) “Minority business enterprise” means a business enterprise
7that has a board of directors that consists of at least 51 percent
8minority individuals and
has an executive management team that
9consists of at least 51 percent minority individuals. The
10membership of the board of directors shall consist of at least 51
11percent minority individuals for at least five years prior to the
12certification of a publicly owned business as a minority business
13enterprise. The contracting utility shall presume that minority
14includes Asian Pacific Americans, African Americans, Hispanic
15Americans, and Native Americans.
16(3) “Disabled veteran business enterprise” means a business
17enterprise that has a board of directors that consists of at least 51
18percent disabled veterans and has an executive management team
19that consists of at least 51 percent disabled veterans. The
20membership of the board of directors must consist of at least 51
21percent disabled veterans for at least five years prior to the
22certification of a publicly owned business as a disabled veteran
23business enterprise.
24(d) The commission shall establish guidelines for calculating
25how the requirement that the board of directors and executive
26management team consist of at least 51 percent women, minority
27individuals, or disabled veterans can be met, including how to
28calculate the percentage when an individual fits within two or more
29of the categories described in the definitions in subdivision (c) or
30when the board of directors or executive management team consists
31of a combination of women, minority individuals, or disabled
32veterans.
33(e) This section shall become inoperative on January 1, 2019,
34and, as of January 1, 2020, is repealed, unless a later enacted
35statute, that becomes operative on or before January 1, 2020,
36deletes or extends the dates on which it becomes inoperative and
37is repealed.
Section 8282.2 is added to the Public Utilities Code,
39to read:
(a) The commission shall require every electrical, gas,
2water, wireless telecommunications service provider, and telephone
3corporation with gross annual revenues exceeding twenty-five
4million dollars ($25,000,000) and their commission-regulated
5subsidiaries and affiliates to separately identify procurement
6contracts entered into with women, minority, and disabled veteran
7business enterprises, as defined in Section 8282.1, in their annual
8plans required by subdivision (a) of Section 8283.
9(b) The commission shall separately identify procurement
10contracts entered into pursuant to Section 8282.1 in its annual
11report required by subdivision (e) of Section 8283.
12(c) This
section shall remain in effect only until January 1, 2020,
13and as of that date is repealed, unless a later enacted statute, that
14is enacted before January 1, 2020, deletes or extends that date.
Subdivision (c) of Section 8282.1 of the Public Utilities
16Code does not provide authority for the creation of any corporate
17structure not authorized under existing law.
No reimbursement is required by this act pursuant to
19Section 6 of Article XIII B of the California Constitution because
20the only costs that may be incurred by a local agency or school
21district will be incurred because this act creates a new crime or
22infraction, eliminates a crime or infraction, or changes the penalty
23for a crime or infraction, within the meaning of Section 17556 of
24the Government Code, or changes the definition of a crime within
25the meaning of Section 6 of Article XIII B of the California
26Constitution.
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