BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        AB 429|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 


          Bill No:  AB 429
          Author:   Dahle (R), et al.
          Amended:  8/31/15 in Senate
          Vote:     21  

           SENATE NATURAL RES. & WATER COMMITTEE:  5-0, 7/14/15
           AYES:  Stone, Hertzberg, Hueso, Jackson, Vidak
           NO VOTE RECORDED:  Pavley, Allen, Monning, Wolk

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 8/27/15
           AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

           ASSEMBLY FLOOR:  78-0, 5/11/15 - See last page for vote

           SUBJECT:   Public contracts: preferences: forest products


          SOURCE:    Author

          DIGEST:  This bill establishes a bid preference for state  
          contracts for lumber and other solid wood products that are  
          harvested in compliance with the Z'berg-Nejedly Forest Practice  
          Act, federal timber sales, or a federal certification program  
          identified by the director of the Department of Forestry and  
          Fire Protection.

          ANALYSIS: 
          
          Existing law: 

          1)Provides California has various programs that provide bid  
            preferences to specific types of contractors or for projects  
            in certain areas.  Generally, various Government Code sections  








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            establish the programs and the Department of General Services'  
            (DGS) State Contracting Manual specifies program parameters  
            and compliance requirements. 

            The two main bid preference programs are the Disabled Veteran  
            Business Enterprise Program and the Certified Small and  
            Microbusiness Program.  DGS oversees these programs and  
            certifies these businesses so they are eligible for the  
            preferences when bidding for state contracts.  Additional  
            smaller bid preferences are also overseen by DGS.

            Another provision in Section 12400 of the Public Contract Code  
            that is similar to a purchasing preference requires the state  
            to engage in "environmentally preferable purchasing." 

          2)Prohibits, pursuant to the Z'berg-Nejedly Forest Practice Act  
            of 1973, a person from conducting timber operations on  
            timberland unless a timber harvesting plan has been prepared  
            by a registered professional forester and has been submitted  
            to the Department of Forestry and Fire Protection and approved  
            by the Director of Forestry and Fire Protection or the State  
            Board of Forestry and Fire Protection.

          This bill: 

          1)Contains numerous findings and declarations regarding the  
            economic and environmental importance of forested lands  
            including the importance of forested lands to sequester carbon  
            dioxide. 

          2)Establishes conditions for a purchasing preference for lumber  
            or other solid wood products that when those materials are  
            purchased by state agencies. These conditions include  
            harvesting that meets any of the following: 

             a)   The lumber or wood products must be harvested in  
               compliance with the California Forest Practices Act, rules  
               governing federal timber sales, or a forest certification  
               program that is identified by the director of the  
               Department of Forestry and Fire Protection after conducting  
               a public hearing. The director shall notify the DGS of any  
               such identification in writing. 

             b)   The preference must be consistent with federal law.







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             c)   The preference would apply only to direct purchases of  
               lumber and wood products by state agencies. 

          3)States that the direct purchase of lumber or other solid wood  
            products pursuant to this preference are subject to this  
            purchasing preference "if price, fitness and quality are  
            equal, based upon verifiable, self-certification from  
            suppliers that are selling directly to state agencies." 

          4)States the lumber or other solid wood products that are  
            subject to this purchasing preference are only those purchased  
            directly by state agencies. 

          5)Provides the preference attaches only if consistent with  
            federal law as determined by the courts.  

          6)Provides the preference attaches only when consistent with the  
            state's obligations under any applicable international  
            agreement. 

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Senate Appropriations Committee, onetime costs  
          of up to $100,000 to the General Fund for the DGS to promulgate  
          regulations that would establish how the bid preference in this  
          bill would interact with other existing bid preferences




          SUPPORT:   (Verified8/28/15)


          Associated California Loggers
          California Chamber of Commerce
          California Farm Bureau
          California Forestry Association
          California Licensed Foresters Association
          Forest Products Industry National Labor Management Committee
          Forest Landowners of California
          Green Diamond Resource Company







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          Mendocino/Humboldt Redwood Companies
          Shasta Forests Timberlands, LLC and Red River Forests, LLC
          Sierra Pacific Industries
          Western Wood Preservers Institute


          OPPOSITION:   (Verified8/28/15)


          British Columbia 
          Coast Forest Products Association (20 companies from British  
          Columbia)
          Forest Products Association of Canada
          Interfor

          ARGUMENTS IN SUPPORT: The author and supporters state this bill  
          would encourage state agencies to give preference to California  
          lumber products as long as the price, quality and fitness of  
          products are equal and those products are purchased directly by  
          a state agency as opposed to a purchase through bidding on a  
          major public works project.  The author is concerned that lumber  
          production in the state has declined as demand for lumber has  
          increased. Further, the author argues that California's forests  
          are harvested sustainably and are subject to more rigorous  
          regulation than competitors from other states and nations. 

          The author believes that the provision that limits the bill to  
          situations when it is consistent with federal law should remove  
          the concern that the bill would be implemented if it conflicted  
          with federal trade agreements. 

          The author believes that allowing other suppliers whose forest  
          products are harvested pursuant to federal timber sales rules or  
          a third party certification program identified by the director  
          of the California Department of Forestry and Fire Protection  
          will allow many other suppliers from other states and nations to  
          meet the requirements of this bill so that no international  
          treaty obligations would be violated. 

          ARGUMENTS IN OPPOSITION:The opposition consists primarily of  
          Canadian government and Canadian forestry interests who make  
          several points based on earlier versions of the bill: 

          1)The bill discriminates against lumber and forest products  







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            imported into California from what the opposition contends are  
            sustainably managed forests in Canada and elsewhere.
          2)The bill violates U.S. obligations within the context of World  
            Trade Organization (WTO) agreements. The WTO agreement  
            requires California to provide "treatment no less favorable  
            than the treatment" of California wood products purchased in  
            Canada. 
          3)While the bill claims to be open to California purchases from  
            all wood products harvested pursuant to the California Forest  
            Practices Act, as a practical matter such lumber only comes  
            from California because of the impossibility of verifying the  
            lumber from outside of California was harvested pursuant to  
            California law and regulations. 

          ASSEMBLY FLOOR:  78-0, 5/11/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,  
            Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Grove, Harper, Roger Hernández, Holden, Irwin,  
            Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood
          NO VOTE RECORDED:  Hadley, Atkins

          Prepared by:William Craven / N.R. & W. / (916) 651-4116
          8/31/15 15:43:15


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