BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       SB 1012|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 


          Bill No:  SB 1012
          Author:   Nguyen (R), et al.
          Amended:  4/18/16  
          Vote:     21 

           SENATE GOVERNMENTAL ORG. COMMITTEE:  12-0, 4/12/16
           AYES:  Hall, Berryhill, Block, Gaines, Galgiani, Glazer,  
            Hernandez, Hill, Hueso, Lara, McGuire, Vidak
           NO VOTE RECORDED:  Runner

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 5/2/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

           SUBJECT:   Flags:  purchase


          SOURCE:    Author
          
          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.

          ANALYSIS:
          
          Existing law:
          
          1)Requires the Flag of the United States and the Flag of the  
            State 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.








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          2)Requires the Flag of the United States and the Flag of the  
            State of California 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.
             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 of California 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.

          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  







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          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  
          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. 

          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  







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          government's foreign power to conduct foreign trade policy.  

          Prior/Related Legislation
          
          AB 312 (Jones, 2015) provides 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 in Senate Judiciary Committee)

          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.:YesLocal:   No


          According to the Senate Appropriations Committee, no new costs,  
          as all flags currently purchased by DGS are made in the United  
          States.  However, potential reimbursable mandate costs, but only  
          to the extent local agencies are not currently purchasing United  
          States made flags, those flags are more expensive than those  
          currently purchased by local agencies, and the net  
          cost-differential exceeds $1,000 for each affected agency in a  
          given fiscal year. (General Fund)










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          Any state- reimbursable costs would be contingent upon the  
          filing of a successful reimbursement claim with the Commission  
          on State Mandates, and a determination by the Commission that  
          specific mandated local costs are deemed reimbursable.




          SUPPORT:   (Verified5/3/16)


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


          OPPOSITION:   (Verified5/3/16)


          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.

          Prepared by:Felipe Lopez / G.O. / (916) 651-1530
          5/4/16 15:04:15


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