BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2249 (Cooley) - State parks
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|Version: August 2, 2016 |Policy Vote: N.R. & W. 9 - 0, |
| | JUD. 7 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 8, 2016 |Consultant: Narisha Bonakdar |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 2249 prohibits a concession contract from providing a
contracting party with a trademark or service mark of the names
associated with a state park.
Fiscal
Impact:
One-time costs of $50,000 to $150,000 (General Fund) to the
California Department of Parks and Recreation (CDPR) to
develop regulations.
Unknown, potentially significant costs, to ensure compliance
with anti-trademarking provisions and to provide required
appeals process, if requested.
Unknown cost for potential litigation for contested contract
awards. (See staff comments)
Background:
California Department of Parks and Recreation. CDPR manages
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California's state park system, comprised of 280 State Parks,
State Natural Reserves, State Historic Parks, State Historic
Monuments, State beaches, State Recreation Areas, State
Vehicular Recreation Areas, State Seashores and State Marine
Parks that are visited by over 67 million visitors each year.
Together, State Park System lands protect and preserve
culturally and environmentally sensitive structures and
habitats, threatened plant and animal species, ancient Native
American sites, historic structures and artifacts.
Under existing law, the CDPR may enter into contracts for the
construction, maintenance, and operation of concessions within
units of the state park system, and describes the process
through which concession bids are solicited and selected.
Currently, CDPR has approximately 200 contracts with vendors.
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 CDPR 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
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.
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c. Every concessionaire shall submit to CDPR all sales
and use tax returns and provide an annual financial
statement. Every concessionaire is subject to audit by
CDPR.
d. The state is not obligated to purchase any
improvement made by the concessionaire if a contract is
terminated for substantial breach.
The Case for the Trademark Clause. 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
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
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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 establishes the California Heritage Protection Act.
Specifically, the bill:
1)Prohibits a concession contract from providing a contracting
party with a trademark or service mark of the names associated
with a state park.
2)Makes several legislative findings and declarations regarding
the public interest and historical significance served by
national, state, and regional parks, including Yosemite
National Park.
3)Modifies 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
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trademark and service mark rights in the names associated with
a state park and state park resources.
4)Provides 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.
5)Provides 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.
6)Prohibits 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.
7)Prohibits 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.
8)Requires CDPR 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.
9)Provides that a provision of a concession contract or other
agreement that violates these provisions shall be void and
unenforceable.
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10) Provides 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.
11) States that the bill is
declaratory of existing law.
Staff
Comments:
Purpose. According to the author, the current concessionaire of
Yosemite National Park has operated there since 1993 but
recently lost the bid to renew their contract. In response, they
claimed the names of several Yosemite landmarks as their
intellectual property. Unable to resolve the dispute, the
National Park Service has re-named the Ahwahnee Hotel, Curry
Village and the Wawona Hotel. This bill will prevent similar
claims in state parks.
Current contracts. The contract typically used by CDPR for state
park concessions in California expressly prohibits a
concessionaire from obtaining a trademark claim in any name or
logo associated with a state park, and provides that any such
trademark that might be created during the period of the
contract shall continue in CDPR's exclusive ownership upon
termination of the Contract. While this is the current practice
at CDPR, this bill would ensure that such protections continue
to apply in the future.
CDPR's fiscal. According to the CDPR,
"The Department cannot comply with the requirements of this bill
within existing resources, therefore, this bill would have
General Fund implications. Additional costs would be associated
with developing regulations and the additional workload to
research the background of potential concessionaires."
CDPR estimates one-time costs of $150,000 (General Fund) to
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develop regulations, and approximately $335,000 annually
(General Fund) for staff to research potential concessionaires,
amend current concession contracts; hold appeals hearings, if
requested; and conduct outreach on this new law.
It is not clear that the level of resource-intensive, research
accounted for in CDPR's fiscal is intended; however, this
interpretation highlights a potentially costly ambiguity in the
bill given that CDPR's interpretation will guide implementation.
The author may wish to clarify that CDPR may allow contract
bidders to self-certify compliance with the law, and to only
require CDPR to deny or end a contract if it becomes aware of a
violation.
Potential litigation? The CDPR notes the "likelihood of
additional Departmental costs for Attorney General
Representation due to contested contract awards. For context,
billing for representation by the Attorney General in a recent
contested concession contract award was $80,000. That case was
considered straightforward and uncomplicated."
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