BILL ANALYSIS Ó
SB 12
Page 1
SENATE THIRD READING
SB 12 (Corbett)
As Amended September 3, 2013
Majority vote
SENATE VOTE :30-9
BUSINESS & PROFESSIONS 8-4 APPROPRIATIONS 12-5
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|Ayes:|Bonilla, Campos, |Ayes:|Gatto, Bocanegra, |
| |Dickinson, Eggman, | |Bradford, |
| |Holden, Mullin, Skinner, | |Ian Calderon, Campos, |
| |Ting | |Eggman, Gomez, Hall, |
| | | |Holden, Pan, Quirk, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Jones, Hagman, |Nays:|Harkey, Bigelow, |
| |Maienschein, Wilk | |Donnelly, Linder, Wagner |
| | | | |
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SUMMARY : Creates the Made in California Program (Program)
within the Governor's Office of Business and Economic
Development (GO-Biz) to promote products manufactured in
California, and authorizes GO-Biz to develop and adopt standards
that would permit a company to represent that a product is made
in California. Specifically, this bill :
1)Declares the sale or lease of goods or services which
represent that a product is made in California by using a Made
in California label created pursuant to this bill is an unfair
method of competition and an unfair or deceptive practice or
act unless the product complies with this bill.
2)Establishes the Program, a public and private collaboration
within GO-Biz, and declares that the purposes of the Program
are to encourage consumer product awareness and to foster the
purchase of high-quality products made in this state.
3)Requires GO-Biz to develop a program that permits a company to
represent that a product is made in California. To be eligible
under the program, a company shall establish all of the
following:
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a) The product is substantially made by an individual
located in California; and,
b) The finished product could lawfully use a "Made in
U.S.A." label, as specified.
4)Defines "substantially made" to mean completing an act that
adds at least 51% of a final product's wholesale value by
manufacture, assembly, fabrication, or production to create a
final, recognizable product. "Substantially made" does not
include the act of packaging a product.
5)States that the Program shall not apply to those agricultural
products subject to the Buy California Program, as specified.
6)Authorizes GO-Biz to issue and make effective a marketing
agreement, including but not limited to, issuance of a Made in
California label, and be advised by those California
businesses willing to participate in the Program on a
voluntary basis via funding or in-kind contributions in a
manner defined under the marketing agreement.
7)Requires each company to register with GO-Biz for use of the
Made in California label.
8)Requires the company filing the registration to submit a
qualified third-party certification at least once every three
years that the product is made in accordance with this
section.
9)Defines "qualified third-party" as an individual, group, or
association that possesses a professional license,
certification, or other equivalent documentation indicating
sufficient training, education, or expertise to perform a
regulatory compliance audit.
10)Authorizes GO-Biz to require a fee to accompany the Program
registration.
11)Requires GO-Biz to determine the application fee, and
restricts that amount to the reasonable costs in providing the
services for which it is charged, including, but not limited
to, the costs to implement the Program. Proceeds from the fee
shall be deposited in the Made in California Fund (Fund).
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12)Permits GO-Biz to begin accepting applications prior to fully
developing and implementing the Program.
13)Authorizes GO-Biz to accept monetary donations or other
donations from businesses, nonprofit organizations, or
individuals for the purpose of implementing the Program.
These donations shall be deposited in the Fund.
14)Requires GO-Biz to report to the Legislature on January 1,
2015, and each successive January 1, regarding its
expenditures, progress, and ongoing priorities with the
Program, as specified.
15)Establishes the Fund as a fund within the State Treasury.
Funds deposited and maintained in the Fund that were donated
are continuously appropriated, without regard to fiscal years,
to the director of GO-Biz, for the purposes of implementing
the Program, as specified. Any other funds deposited and
maintained in the Fund are available, subject to appropriation
by the Legislature, for purposes of implementing the program.
16)States that this bill shall be enforced by the Consumer Legal
Remedies Act, as specified, and do not impose any requirement
upon GO-Biz to enforce, audit, or investigate a company that
participates in the Program.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, on-going costs would depend on the number of
participants in the program and the size of the program. GO-Biz
estimates those costs to be approximately $500,000 General Fund
(GF) per year. Once the program is fully established,
contributions from participating businesses may help offset the
GF costs of the program. However, it is unlikely that the fee
would be sufficient to fully offset the GF costs.
COMMENTS :
1)Purpose of this bill . This bill aims to create a registration
and marketing program for products made in California. The
standards for product registration would be verified by third
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parties and enforced through the Consumer Legal Remedies Act.
This bill is author-sponsored.
2)The Buy California Program . In 2001, the "Buy California
Program" was created within the Department of Food and
Agriculture to boost consumption of California's agricultural
commodities and provide resources to growers of specialty
crops. The Buy California Program addresses research,
agricultural education, nutrition, food safety and pest and
disease eradication to provide safe and nutritious food in a
fair marketplace with responsible stewardship of the
environment.
Within the Buy California Program is the Buy California
Marketing Agreement (BCMA), which was created in 2001 to be a
joint effort of agricultural industry groups representing the
products of California's farms, ranches, forests and
fisheries. Working as an advisory board to the California
Department of Food and Agriculture (CDFA), BCMA brings
together industry and government resources to increase the
awareness, consumption and value of California agricultural
products. BCMA also oversees the popular "California Grown"
campaign. The "California Grown" campaign is funded through
public and private contributions by the U.S. Department of
Agriculture, CDFA, and California agricultural organizations.
The author of this bill asserts that other products made and
produced in California, many by small businesses, would
benefit from another California labeling program. However,
unlike the Buy California Program, which also provides
research, agricultural education, nutrition, food safety and
pest and disease eradication, the program envisioned by this
bill would be exclusively a marketing effort.
3)Existing "Made in California" Programs . There are several
existing for-profit and nonprofit marketing programs that
promote California-made products:
California Manufacturing Technology Consulting (CMTC) is a
non-profit corporation affiliated with the National Institute
of Standards and Technology (NIST) that operates a "Made in
California" program to recognize manufacturers who produce
products in southern California. CMTC's "Made in California
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Program" is marketing program that offers manufacturers who
make products in California visibility through the CMTC Web
site (http://www.cmtc.com/made-in-california-program).
Manex Inc. operates a similar manufacturing promotion program
for products manufactured in northern California.
(http://manexconsulting.com/made-in-ca/)
There are also other outlets that promote "Made in California"
goods, such as www.madeincalifornia.net,
www.americansworking.com, and www.shopcal.com.
However, there is currently no official definition for what
constitutes "Made in California." Consumers may seek
compensation to recover damages for buying a product that is
not made in California through the Consumer Legal Remedies Act
(CLRA). CLRA prohibits unfair methods of competition, acts,
or practices by any person.
4)Additional comments . The Legislature may wish to take the
following issues into consideration:
a) Unrestricted fee authority; restricted use of standards .
This bill takes the unusual step of granting unrestricted
fee authority to GO-Biz, when the more common practice is
to approve a fee range to ensure affordability and some
measure of Legislative oversight. While the bill does
state that the fees required by this bill may only be used
to pay the "reasonable costs" of implementing the program,
the fee amount remains unknown.
Although this bill allows for in-kind contributions and
donations, these funding sources have not been identified,
so it is reasonable to expect that Program participants
would bear the bulk of the cost or choose not to
participate.
As a result, some small businesses may succeed in meeting the
future standard and yet be barred from promoting their
products as California-made because of the presumptively
high cost of the Program.
b) Standards guidance remains unclear . The recommended
standards contained in this bill parallel those for a
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product to be advertised as "Made in U.S.A." under existing
law. Courts have previously interpreted this standard very
strictly, meaning that any merchandise containing even one
part that is foreign made or assembled may not be marketed
as "Made in U.S.A." (Colgan v. Leatherman Tool Group, Inc.
(2006) 135 Cal.App.4th 663). It is functionally a 100%
domestic content standard.
However, while this bill contains a "substantially made"
standard requiring 51% in-state production by value, the
much more stringent "Made in U.S.A." requirement would
presumably control.
Analysis Prepared by : Sarah Huchel / B.,P. & C.P. / (916)
319-3301
FN: 0002272