BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                              Senator Isadore Hall, III
                                        Chair
                                2015 - 2016  Regular 

          Bill No:           SB 1012          Hearing Date:    4/12/2016
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          |Author:    |Nguyen, et al.                                       |
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          |Version:   |2/11/2016    Introduced                              |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Felipe Lopez                                         |
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          SUBJECT: Flags:  purchase


            DIGEST:    This bill requires that any Flag of the United States  
          or the Flag of the State of California purchased by the state or  
          any local government agency be made in the United States from  
          articles, materials, or supplies that were grown, produced, and  
          manufactured in the United States. 

          ANALYSIS:
          
          Existing law:
          
          1)Requires the Flag of the United States and the Flag of  
            California to be prominently installed, displayed, and  
            maintained in the following places:

             a)   In the courtrooms of all courts of the State.
             b)   In all rooms where any court or any state, county, or  
               municipal commission holds any sessions.

          2)Requires the Flag of the United States and the Flag of the  
            State to be prominently displayed during business hours upon  
            or in front of the buildings or grounds of or at each of the  
            following places:

             a)   Each public building belonging to the State, county, or  
               municipality.
             b)   At the entrance and exit of every state park.







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             c)   At the entrance or upon the grounds of each campus of  
               the University of California.
             d)   At the entrance or upon the grounds or upon the  
               administration building of every university, college, high  
               school, and elementary school, both public and private,  
               within the State.
             e)   Upon or at every agricultural inspection station just  
               inside California and located on every highway leading into  
               California.
             f)   At the entrance of or within every state highway  
               maintenance station where personnel reside or are on duty  
               at the time necessary to raise and lower the Flag.

          3)Requires the Flag of the United States and the Flag of the  
            State to be prominently displayed during any and all games and  
            performances of every kind which take place in a coliseum,  
            stadium, bowl, or other open air sites, and at all race tracks  
            where racing is being conducted. 

          This bill:

          1)Requires, on or after January 1, 2017, that every Flag of the  
            United States or the Flag of the State of California purchased  
            by the state or any local government agency shall be made in  
            the United States from articles, materials, or supplies that  
            were grown, produced and manufactured in the United States.

          2)Defines a "local government agency," for purposes of this  
            bill, to mean a county, city, city and county, town, municipal  
            corporation, school district or other district, political  
            subdivision, or any board, commission, or agency thereof, or  
            other local agency. 

          Background

          Purpose of the bill.  According to the author, "current law is  
          silent on the sources from which American flags are purchased by  
          governments in the State of California.  In order to support  
          American manufacturing jobs in the future, California  
          governments should only use taxpayer dollars to purchase flags  
          made from materials grown, produced, and manufactured in the  
          United States."

          Purchasing of Flags.  Though there is no statutory requirement  
          that requires the State of California to purchase flags made in  








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          the United States, the Department of General Services currently  
          purchases all of its United States and California flags from the  
          California Prison Industry Authority (CALPIA), thus satisfying  
          this bill's requirement that the flags be made in the United  
          States.  The CALPIA has indicated that the flags they produce  
          would be consistent with the requirements set forth in this  
          bill. 

          The CALPIA is a state-operated agency that provides productive  
          work assignments for approximately 7,000 offenders annually in  
          California's adult correctional institutions.  It produces over  
          1,400 goods and services including office furniture, clothing,  
          food products, shoes, printing services, signs, binders, eye  
          wear, gloves, license plates, and cell equipment. 

          Legal Concerns.  Governor Brown has previously vetoed  
          legislation that seeks to give preference for California  
          products because of concerns of costly legal challenges.  For  
          example in 2015, Governor Brown vetoed AB 429 (Dahle), a bill  
          that sought to provide a bid preference for California products  
          when contracting for lumber and solid wood products.  In his  
          veto message he stated that, "while I encourage the purchase of  
          California products, especially when price and quality are  
          equal, this bill would invite costly legal challenges for little  
          benefit."

          These concerns seem to stem from challenges to California's Buy  
          American Act and the Buy California Act, both of which were  
          enacted by the California Legislature in 1943.  The Buy American  
          Act generally requires the state and all local government  
          entities to contract only with contractors that use materials of  
          United States origin or manufacture.  The Buy California Act  
          contains price-sensitive preferences for California goods and  
          supplies.  These and similar provisions have been challenged in  
          the courts as interfering with the federal government's foreign  
          relations power and violating the commerce clause and equal  
          protection guarantee of the United States Constitution. 

          For example, in Bethleem Steel Corp. v Board of Commissioners  
          (1969) 276 Cal.App. 2d 221, the California Court of Appeal  
          reviewed the California Buy American Act and held that it was  
          invalid as an impermissible encroachment on the federal  
          government's foreign power to conduct foreign trade policy.  

          Suggested Amendment.   Last year, the Legislature passed and the  








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          Governor signed SB 633 (Hill, Chapter 238, Statutes of 2015)  
          which clarified the definition "Made in U.S.A."  To make this  
          bill consistent with current law, the committee may wish to  
          amend the bill and delete the following language starting on  
          page 2, line 1,"from articles, materials, or supplies that were  
          grown, produced, and manufactured in the United States."

          Prior/Related Legislation
          
          AB 312 (Jones, 2015) would provide that a product may be  
          advertised as being made or manufactured in the United States if  
          the merchandise has been all or virtually all made in the United  
          States.  (Pending on the Assembly Floor)

          AB 429 (Dahle, 2015) would have established a bid preference for  
          state contracts for lumber and other solid wood products  
          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.  (Vetoed by Governor Brown)

          SB 633 (Hill, Chapter 238, Statutes of 2015) prohibited the sale  
          of merchandise labeled Made in U.S.A., Made in America, U.S.A,  
          or similar words if the merchandise or any article, unit, or  
          part thereof, has been entirely or substantially made,  
          manufactured, or produced outside of the United States with  
          minor exceptions.

          AB 199 (Holden 2013) would have required specified government  
          agencies, and encouraged public education entities to purchase  
          agriculture products produced in California if certain criteria  
          are met.  (Vetoed by Governor Brown)

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


            SUPPORT:  

          American G.I. Forum of California
          American Legion - Department of California
          AMVETS - Department of California
          California Association of County Veteran Service Officers
          California State Commanders Service Council
          Made in the USA Foundation








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          Military Officers Association - California Council of Chapters
          VFW - Department of California
          Vietnam Veterans of America, California State Council

          OPPOSITION:

          None received

          ARGUMENTS IN SUPPORT:    Supporters argue that they believe that  
          the flag of the United States should be made in our country and  
          that public agencies should only purchase those that are made in  
          America.