BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Ben Hueso, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 865            Hearing Date:    7/13/2015
          |Author:    |Alejo                                                |
          |Version:   |7/6/2015    As Amended                               |
          |Urgency:   |No                     |Fiscal:      |Yes             |
          |Consultant:|Nidia Bautista                                       |
          |           |                                                     |
          SUBJECT: State Energy Resources Conservation and Development  
          Commission: contracts, grants, and loans: diversity

            DIGEST:    This bill requires the California Energy Commission  
          (CEC) to develop an outreach program to inform women,  
          minorities, disabled veterans, and gay, lesbian, bisexual, and  
          transgender individuals of CEC funding programs and procurement  
          opportunities.  This bill also requires CEC contractors,  
          grantees and loan awardees to report demographic information and  
          other data as required by the CEC. 

          Existing law:

          1)Establishes the State Energy Resources Conservation and  
            Development Commission, otherwise known as the CEC.  (Public  
            Resources Code 25000 et seq.)

          2)Requires the CEC to administer various grants and loan  
            programs.  (Public Resources Code 25412.5)

          3)Directs the CEC to oversee much of the state's investments in  
            clean energy research, clean transportation, and energy  
            efficiency.  (Public Resources Code 25007, 25008, 25400)

          4)Declares that is the policy of California to aid in the  
            interests of women, minority, disabled veteran, and lesbian,  
            gay, bisexual, and transgender (LGBT) business enterprises,  
            encourages greater economic opportunity for these groups and  
            promotes competition among utilities to procure contracts with  


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            diverse businesses.  (Public Utilities Code 8281)

          This bill:

          1)Requires the CEC to develop an outreach program to inform  
            potential applicants of CEC loans, grants and contracts  
            (including women, minority, disabled veteran, and LGBT  
            business enterprises.) 

          2)Requires that a component of the outreach program include a  
            process for tracking the diversity of contractors, loan and  
            grant recipients. 

          3)Requires the outreach program to include a strategy to inform  
            certified women, minority, disabled veteran, and LGBT business  
            enterprises about CEC workshops, trainings, and funding  
            opportunities, and to consider including these enterprises in  
            capacity building opportunities. 

          4)Requires the CEC to establish guidelines for contractor, grant  
            and loan recipients to use in preparing, implementing and  
            reporting on their respective outreach plans and the format  
            for the reporting.

          5)Requires the CEC to adopt the guidelines at a publicly noticed  
            meeting of the CEC.

          6)Requires the CEC to require each contractor and grant or loan  
            recipient awarded $1,000,000 or more, or a different threshold  
            or criteria determined by the CEC, on or after July 1, 2017,  
            to:  (1) submit a report to the CEC on the demographic makeup  
            of the management of the firm or organization, (2) submit a  
            detailed outreach plan for increasing subcontractor  
            opportunities by women, minority, disabled veteran and LGBT  
            business enterprises, (3) implement the outreach plan to the  
            best of the awardees ability, and (4) report to the CEC  
            regarding activities and outcomes. 

          7)Requires the CEC, after receipt of initial plans and reports,  
            to consider establishing a Diversity Task Force to consider  
            and make recommendations about diversity in the energy  
            industry, including diversity of corporate governing boards  
            and procurement from diverse businesses, and addressing and  


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            promoting local and targeted hiring. 


          Diversity at the CPUC.  Beginning in 1986, the Legislature  
          enacted a series of statutes, resulting in the CPUC adopting  
          General Order (GO) 156, which established the Supplier Diversity  
          Program for the purpose of encouraging greater participation in  
          utility contracts by women and minority-owned businesses.  
          Disable- veteran-owned business enterprises were added in 1990,  
          and in 2014, lesbian, gay, bisexual, and transgender business  
          enterprises were added through statute. 

          GO 156 currently applies to regulated utilities including  
          electrical, gas, water, wireless telecommunications service  
          providers, and telephone corporations with gross annual revenues  
          over $25 million including CPUC-regulated subsidiaries and  
          affiliates.  These regulated entities must participate in the  
          Supplier Diversity Program.  Regulated entities are required to  
          annually submit a detailed and verifiable plan, with goals and  
          timetables, for increasing participation from these  
          aforementioned demographic groups in all categories of  
          procurement, including technology, equipment, supplies,  
          services, materials, and construction.  Although there is no  
          penalty for failure of a utility to meet its goals, each utility  
          is required to report annually on its progress.  The CPUC, in  
          turn, is required to make an annual progress report to the  

          Showing signs of success.  In March 2014, the CPUC reported that  
          companies participating in the Supplier Diversity Program  
          achieved a new record in 2013, procuring approximately $8.5  
          billion in goods and services from qualified diverse suppliers,  
          an increase of about $500 million over 2012 procurement.   
          According to the CPUC, more than 30 companies continue to  
          participate in the program, including Pacific Gas and Electric,  
          Southern California Edison, AT&T and several others. 

          CEC resolution.  On April 8, 2015, the CEC adopted a resolution  
          to implement a policy to reflect the CEC's commitment to  
          diversity outreach for all its programs, including grants, loans  
          and procurement opportunities.  The resolution notes the unique  
          ability of the CEC to promote diversity by providing  
          opportunities for increased participation in CEC programs of  
          small businesses and women, disabled veteran, minority, and  


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          lesbian, gay, bisexual, and transgender owned businesses.  AB  
          865 proposal would further bolster the CEC's efforts by  
          providing more specificity regarding how the CEC will achieve  
          and measure its commitment to support more diversity. 

          Prior/Related Legislation
          AB 2593 (Bradford, 2014) required a business enterprise with  
          gross annual revenues exceeding $25 million participating in a  
          program administered by the California Air Resources Board to  
          increase procurement from women, minority, and disabled veteran  
          business enterprises.  The bill was vetoed by the governor. 

          AB 1678 (Gordon, Chapter 633, Statutes of 2014) extended  
          provisions of the CPUC's Supplier Diversity Program to LGBT  
          business enterprises.                             

          AB 2758 (Bradford, Chapter 475, Statutes of 2010) required cable  
          corporations, with gross annual revenues exceeding $25 million,  
          to annually submit a detailed and verifiable plan for increasing  
          procurement from diverse businesses.  It specified that  
          renewable energy, wireless telecommunications, broadband, smart  
          grid and rail projects should be projects of focus for utility  
          procurement with diverse businesses. 

          AB 873 (Davis, Chapter 316, Statutes of 2008) required each  
          water corporation with 10,000 or more service connections to  
          submit annual plans for increasing procurement from women- and  
          minority-owned businesses and disabled veteran business  
          enterprises to encourage each electrical, gas, water, and  
          telephone corporation that is not required to submit a plan  
          under current law to voluntarily adopt a plan for increasing  
          women, minority, and disabled veteran business enterprises  
          procurement in all categories. 

          AB 3678 (Moore, Chapter 1259, Statutes of 1986) codified the  
          broader parameters of GO 156, and required each electrical, gas,  
          and telephone corporations, with gross annual revenues exceeding  
          $25 million, to annually submit a detailed and verifiable plan  
          for increasing diverse business procurement in all categories  
          that includes short- and long-term goals and timetables, and  
          furnish an annual report.  

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          No


          AB 865 (Alejo)                                      Page 5 of ?

          Assembly Floor                                         (59-16)
          Assembly Appropriations Committee                      (12-4)
          Assembly Jobs, Economic Development & the Economy Committee(6-1)
          Assembly Utilities and Commerce Committee                 (10-3)


          The Greenlining Institute (source)
          American GI Forum
          Asian Business Association
          Asian Business Association - Inland Empire
          Asian Pacific Environmental Network
          California Black Chamber of Commerce
          City of Oakland
          Coalition for Clean Air
          Environment California
          Environmental Defense Fund
          Equality California
          Green Technical Education & Employment
          National Latina Business Women Association
          Natural Resources Defense Council
          Small Business California
          Small Business Majority
          West Angeles Community Development Corporation


          None received

          ARGUMENTS IN SUPPORT:  The Greenlining Institute, the sponsor of  
          the bill, states:  "The CEC provides almost $800 million a year  
          in funding for clean energy projects, and there are currently no  
          policies in place to promote diversity in these procurement  
          pipelines.  Small and ethnic businesses must be part of the  
          clean energy economy if California is to meet its economic and  
          environmental goals.  This is because entrepreneurship is key to  
          the American Dream, and if we are to build a healthy state  
          economy, it is vitally important that California's diverse  


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          communities have access to entrepreneurial opportunities.

          This bill aims to increase the rate of entrepreneurship  
          opportunities among minorities, women, LGBT-identified  
          individuals, and disabled veterans.  In doing so, this bill  
          recognizes the demographic shifts of the California marketplace  
          and helps to nurture the new and next generation of energy  
          technology leaders.

          AB 865 will help to ensure that the growing clean energy economy  
          is transparent, competitive, diverse and inclusive of all  


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