BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 429| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 AB 429 Page 2 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. AB 429 Page 3 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 AB 429 Page 4 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 AB 429 Page 5 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 **** END ****