BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON NATURAL RESOURCES AND WATER
                             Senator Fran Pavley, Chair
                                2015 - 2016  Regular 

          Bill No:            AB 2249         Hearing Date:     June 14,  
          2016
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          |Author:    |Cooley                 |           |                 |
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          |Version:   |May 27, 2016                                         |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Matthew Dumlao                                       |
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                                Subject:  State parks


          BACKGROUND AND EXISTING LAW
          Under existing law, the Department of Parks and Recreation (DPR)  
          may enter into contracts for the construction, maintenance, and  
          operation of concessions within units of the state park system.   
          Existing law also describes the steps required to solicit and  
          select concession contract bids, including the criteria for  
          selecting a concession bid.

          Concession contracts are required, with specified exceptions, to  
          be awarded to the best responsible bidder.  The best responsible  
          bidder is a bidder who will (1) operate the concession  
          consistent with the contract; (2) operate in a manner fully  
          compatible with and complimentary to the characteristics,  
          features, and theme of the park; and (3) operate in the best  
          interests of the state and the public (Public Resources Code §  
          5080.05).

          Alternatively, the director of DPR is authorized to negotiate or  
          renegotiate a contract under specific conditions, including the  
          bid process failed to produce a best responsible bidder. 

          Existing law also requires all concession contracts to contain  
          several provisions, including:


               a.     Maximum term shall be 10 years, unless under certain  







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                 conditions, as described.


               b.     If the concession contract is for construction,  
                 development and operation of a multiple-unit lodging  
                 facility with an initial cost of more than $1.5 million,  
                 the maximum term may be 50 years.


               c.     Every concessionaire shall submit to DPR all sales  
                 and use tax returns and provide an annual financial  
                 statement.  Every concessionaire is subject to audit by  
                 DPR.


               d.     The state is not obligated to purchase any  
                 improvement made by the concessionaire if a contract is  
                 terminated for substantial breach.


          This bill was sparked by a recent, well publicized, contract  
          dispute involving Yosemite National Park.  For the last 23  
          years, the Delaware North Company was the concessionaire  
          operating visitor services and facilities within Yosemite  
          National Park under a contract with the National Park Service.   
          In 2015, the National Park Service rebid the contract and  
          awarded a new 15 year concession contract to Aramark who was the  
          successful bidder.  


          After Delaware North lost the contract they sued the federal  
          government for "breach of an implied contract" and other alleged  
          bidding issues.  They also asserted they were entitled to  
          compensation for various trademarks and other intellectual  
          property rights they had registered while they were the  
          concessionaire in Yosemite.  According to Delaware North, some  
          of the trademark registrations were acquired by Delaware North  
          from the Curry Company, the previous concessionaire, along with  
          other Curry Company assets, and some were newly registered by  
          Delaware North after they became the concessionaire. Among the  
          names they claim to have a registered trademark property right  
          for are "The Ahwahnee," "Yosemite Lodge," "Wawona," "Curry  
          Village," and "Badger Pass," all of which are well-known venues  
          within Yosemite National Park.  Also, the Delaware North Company  








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          claims to have a registered trademark for the name "Yosemite  
          National Park" and the iconic Half Dome used on logos and other  
          merchandise sold through the gift shop. 


          Delaware North has asserted that it is entitled to compensation  
          for the value of its trademarks and other intellectual property  
          rights in Yosemite National Park which it claims is valued at  
          $51 million.  The National Park Service has countered that the  
          value is closer to $1.63 million, and alleges that many of the  
          trademarks were registered without its knowledge or consent. The  
          National Park Service has also filed a petition with the United  
          States Patent and Trademark Office seeking to cancel the  
          disputed trademarks.  


          Delaware North offered to let the park keep the names while the  
          legal process plays out.  But, rather than risk an injunction  
          that might interrupt service at Yosemite, the National Park  
          Service removed the contested names from various signs, bridges,  
          and other places within the park, and renamed the venues, at a  
          total cost of $1.7 million.  For example, the historic Ahwahnee  
          Hotel, which is listed on the National Register of Historic  
          Places as a National Historic Landmark, is being renamed "the  
          Majestic Yosemite Hotel." The dispute has outraged many park  
          visitors who see the trademark claims as violating the public  
          trust and the deeply held understanding that the national parks  
          are national treasures that belong collectively to the people of  
          the country.



          PROPOSED LAW


          This bill would establish the California Heritage Protection  
          Act.  This act would prohibit a concession contract from  
          providing a contracting party with a trademark or service mark  
          of the names associated with a state park.


          Specifically, this bill would: 










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             1.   Make several legislative findings and declarations  
               regarding the public interest and historical significance  
               served by national, state, and regional parks, including  
               Yosemite National Park. Find and declare that California  
               state parks are held in trust for the people of California,  
               that a legal claim to a trademark right in a name or a  
               names associated with a state park derogates the interests  
               of California, and that making such a claim is indicative  
               of the claimants lack of fitness to serve as a steward of  
               state parks. Find and declare that an agreement entered  
               into by a California state agency that compromises the  
               interests of Californians is "ultra vires" and, therefore,  
               beyond that agencies legal authority to enter.  


             2.   Modify the definition of best responsible bidder, for  
               purposes of existing law governing the awarding of  
               concession contracts for state parks, to include that the  
               bidder shall operate the concession in a manner that  
               protects the state's trademark and service mark rights in  
               the names associated with a state park and state park  
               resources. 


             3.   Provide that a concessionaire who makes a legal claim to  
               have a trademark or service mark interest in a state park  
               in violation of the law, shall forfeit the right to bid on  
               future state park concession contracts, to the extent  
               authorized by federal law.


             4.   Provide that a concessionaire who files an application  
               for a trademark or service mark associated with a state  
               park or state park resources that is successfully opposed  
               or cancelled by the state, shall be responsible for the  
               state's attorney's fees and costs.


             5.   Commencing January 1, 2017, prohibit a concession  
               contract awarded for a state park from providing the  
               contracting party with a trademark or service mark interest  
               in the name or names associated with a state park or state  
               park resources, or from serving as the basis for any legal  
               claim that the contracting party has such an interest.   








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               State that this prohibition is declaratory of existing law.  
                


             6.   Prohibit a bidder from being awarded a state park  
               concession contract if the bidder has made a legal claim or  
               assertion to have a trademark associated with a state park  
               in violation of this statutory prohibition, or if a court  
               has determined that the bidder has made a claim to have a  
               trademark or service mark interest in the name or names  
               associated with a state or federal park venue without  
               reasonable cause and in bad faith.


             7.   Require DPR to adopt regulations to provide a bidder who  
               is denied a contract award on the basis of trademark claims  
               with written notice and an opportunity to rebut the denial  
               at a formal hearing.


             8.   Provide that a provision of a concession contract or  
               other agreement that violates these provisions shall be  
               void and unenforceable.


             9.   Provide that this bill's prohibition on state park  
               concession contracts providing the basis for a trademark  
               claim in the name or names associated with a state park  
               shall not be construed to impact a contracting party's  
               valid trademark or service mark rights that were held  
               before the concession contract was awarded.



          ARGUMENTS IN SUPPORT
          At the core of the arguments in support is the notion that state  
          parks are part of the state's public trust and that this bill is  
          essential to protecting the integrity of California's treasured  
          state parks.

          The author argues that "to prevent concessionaires from  
          co-opting state landmarks, this bill puts forth three key ideas.  
           First, this bill clarifies that an awarded food or lodging  
          contract does not entitle a company to any legal claim of a  








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          trademark.  No State Park official has the authority to agree to  
          contractual terms that fail to safeguard the interests of  
          California by offering a public trademark to a private  
          corporation.  Second, this bill specifically prohibits  
          concessionaires from claiming ownership of a name associated  
          with a California State Park.  Finally, a concessionaire who  
          asserts a claim of this type will no longer be viewed as a fit  
          partner to contract with California State Parks.  This bill  
          permanently disqualifies a concessionaire from consideration for  
          future contracts if they attempt a trademark claim.  This bill's  
          impact rests on the premise that a state park concessionaire's  
          business is incompatible with a trademark or claim of ownership  
          of park facilities which they have been entrusted with as a  
          steward, but which still remain the property of the state.  The  
          author asserts that California's treasured heritage sites are a  
          part of our state's public trust and it is self-evident that the  
          state would never approve giving away the inherent value  
          associated with those historic names and places.


          ARGUMENTS IN OPPOSITION
          None received.

          COMMENTS
           Impact on National Park concession contracts:   While this bill  
          targets concession contracts in state parks, it includes  
          provisions to encourage concessionaires to follow the same rules  
          when entering into contracts with national parks.  This bill  
          would make a concessionaire ineligible for a state park  
          concession contract if a court determined that the  
          concessionaire made a legal claim to have a trademark interest  
          in the name or names associated with a state or federal park  
          venue.  Thus, while the state cannot dictate the terms of  
          contracts in federal parks, this bill is attempting to use the  
          possibility of losing future concession contracts in state parks  
          as motivation to avoid making trademark claims in national  
          parks.

           Double referred:  The Rules Committee referred this bill to both  
          the Committee on Natural Resources and Water and the Committee  
          on Judiciary.  Therefore, if this bill passes this committee, it  
          will be referred to the Committee on Judiciary, which will  
          consider the issues within their jurisdiction.
          








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          SUPPORT
          California Association of Professional Scientists
          California Association of Recreation and Park Districts
          California State Parks Foundation 
          Dave Jones, Insurance Commissioner, Department of Insurance
          Sierra Club California 

          OPPOSITION
          None Received

          
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