BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 861
Author: Corbett (D), et al.
Amended: 8/31/11
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 9-1, 4/12/11
AYES: Wright, Anderson, Corbett, De Le�n, Evans,
Hernandez, Strickland, Wyland, Yee
NOES: Berryhill
NO VOTE RECORDED: Calderon, Cannella, Padilla
SENATE APPROPRIATIONS COMMITTEE : 6-3, 5/26/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Emmerson, Runner
SENATE FLOOR : 33-2, 6/1/11
AYES: Alquist, Anderson, Blakeslee, Calderon, Cannella,
Corbett, Correa, De Le�n, DeSaulnier, Emmerson, Evans,
Gaines, Hancock, Harman, Hernandez, Huff, Kehoe, La
Malfa, Leno, Lieu, Liu, Lowenthal, Negrete McLeod,
Pavley, Price, Simitian, Steinberg, Strickland, Vargas,
Wolk, Wright, Wyland, Yee
NOES: Berryhill, Walters
NO VOTE RECORDED: Dutton, Fuller, Padilla, Rubio, Runner
ASSEMBLY FLOOR : 67-11, 0/0/11 - See last page for vote
SUBJECT : Public contracts
SOURCE : Enough!
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DIGEST : This bill prohibits a scrutinized company, as
defined, using conflict minerals from the Democratic
Republic of Congo from bidding on a state goods or services
contract.
Assembly Amendments adds language that this bill does not
become operative until the later of January 1, 2012, or the
date the United States Securities and Exchange Commission
issues the final rules and regulations on the
implementation of Section 1502 of Public Law 11-203, and
become inoperative upon a specified date; and (2) add
co-authors.
ANALYSIS :
Existing Federal Law :
1. Establishes the 2006 Democratic Republic of Congo
Relief, Security, and Democracy Promotion Act (DRCRSDP
Act). The DRCRSDP Act stated that it is the policy of
the United States (U.S.) to work for peace and security
throughout the Democratic Republic of Congo (DRC) by
supporting efforts to protect civilians, disarm illegal
armed groups, and hold accountable individuals and
entities working to destabilize the country.
2. Establishes the 2010 Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act), pertaining to
the trade of minerals associated with the DRC conflict.
The Dodd-Frank Act was signed into law adding, amongst
other things, Section 13(p) to the Act, and directing
the Securities Exchange Commission (SEC) to publish new
disclosure rules by April 17, 2011, for publically
traded companies reporting to the SEC for whom "conflict
minerals" are necessary to the functionality or
production of a product manufactured by such persons.
Existing Law :
1. Authorizes contracting between state agencies and
private contractors and sets forth the requirements for
the procurement of goods and services and for the
solicitation and evaluation of bids and the awarding of
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contracts by public entities.
2. Prohibits persons engaging in investment activities in
Iran's energy sector, as specified, from bidding or
entering into contracts with a public entity for goods
or services.
3. Prohibits companies involved in specified business
activities in Sudan from entering into a state goods and
services contract.
This bill:
1. Prohibits a scrutinized company from bidding on a state
goods or services contract if it must comply with the
disclosures relating to conflict minerals originating in
the DRC, as specified in the Securities Exchange Act of
1934.
2. Defines "scrutinized company" to mean a person found to
be in violation of Section 13(p) of the Act by final
judgment or settlement entered in a civil or
administrative action brought by SEC and the person has
not remedied or cured the violation in a manner accepted
by the SEC on or before final judgment or settlement.
3. Deems that a person is no longer regarded as a
scrutinized company when the person no longer in
violation of the Act, an amended or correct filing is
made with the SEC, or three years from the date of final
judgment or settlement, whichever is earlier.
4. Requires the Department of General Services (DGS) to
establish policies and procedures for state entities to
implement the provisions of this bill in the State
Administrative Manual or the State Contracting Manual.
5. Defines "goods or services" to include types of
tangible personal property, including materials,
supplies, and equipment, and information technology and
telecommunication goods and services, as specified.
6. Prohibits this bill from becoming operative until the
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later date of January 1, 2012, or the date the SEC
promulgates final regulations on the reporting of
conflict minerals and whether they originated in the
DRC.
7. Makings legislative findings and declarations.
Comments
The Legislature has recently heard legislation prohibiting
specified "scrutinized companies" from bidding on public
contracts on humanitarian grounds and in conjunction with
federal efforts.
The DRC is Africa's third largest nation, and it is the
eastern portion, Kivu, that has been the site of conflict.
Illegally armed militia groups have been responsible for
human rights abuses, sexual exploitation, acts of violence,
and other atrocities in order to mine the mineral-rich
Kivu. The Act defines "conflict materials" as
columbite-tantalite (coltan), cassiterite, gold,
wolframite, or their derivatives. These materials, in
turn, are used to produce tungsten, tin, steel, or some
other component that results in the manufacture of light
bulb filaments, electrical components, computer chips and
processors, cell phones, and other technology products. In
addition, other conflict materials mentioned in the
Dodd-Frank Act, such as gold, are manufactured into jewelry
and sold in the U.S.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee, (1) to
the extent this bill reduces the number of prospective
bidders on some state contracts, due to a company or
companies being found in violation of the DRC-related
provisions of the Dodd-Frank Act, there will be less
competition for those contracts, which tends to increase
state costs. The overall impact of this bill is unknown,
and would depend on the number of companies unable to
submit bids, but given the multi-billion volume of state
contracting, costs could exceed $150,000 in any fiscal
year. Because the bill is narrowly drawn, however,
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particularly when compared to recent similar legislation,
the annual cost would likely not be significant; (2) DGS
will incur minor one-time costs to establish the relevant
policies and procedures and minor ongoing costs to monitor
SEC rulings regarding violations of Dodd-Frank and to
inform state agencies about companies ineligible to submit
bids and when these companies regain eligibility to submit
bids.
SUPPORT : (Verified 9/9/11)
Enough! (source)
Amnesty International
Boston Common Asset Management
California Province of the Society of Jesus
Calvert Asset Management
Catholic Health East
Christian Brothers Investment Services
Congregation of Sisters of St. Agnes, Fond du Lac, WI
Dominican Sisters of San Rafael
EarthRights International
Global Witness
Human Rights First
Individual, Starr King School for Ministry
Interfaith Center on Corporate Social Responsibility
Investor Environmental Health Network
Marianist Province of U.S.
Midwest Coalition for Responsible Investment
PaxWorld Management LLC
Responsible Sourcing Network
Sister of the Holy Family
Sisters of St. Francis of Philadelphia
Sisters of St. Joseph of Springfield, MA
Social Responsibility Coordinator JOLT
Spring Water Asset Management
The International Corporate Accountability Roundtable
The Social Equity Group
The Sustainable Group at Loring, Wolcott & Coolidge
Trillium Asset Management
Tri-State Coalition for Responsible Investment
US Social Investment Forum
Zevin Asset Management, LLC
ARGUMENTS IN SUPPORT : The author's office notes that
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embedded in the financial reform measure that President
Obama signed was a truly historic regulatory provision
pertaining to the DRC. In an effort to choke off funding
for the armed thugs and rebel militias who have killed more
than five million people and turned the Congo into the rape
capital of the world, federal law now requires publicly
traded companies to disclose whether their products contain
minerals from rebel-controlled mines in the Congo. Greed
for the Congo's mineral wealth has been a prime cause of
the atrocities and conflict, and multiple armed groups use
mass rape as a strategy to intimidate and control
communities as they profit from the illicit trade of
conflict minerals. Many of these same conflict minerals
end up in our electronic devices such as cell phones,
laptops, and digital cameras.
ASSEMBLY FLOOR : 67-11, 9/8/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Gatto, Gordon, Halderman, Hall,
Hayashi, Roger Hern�ndez, Hill, Huber, Hueso, Huffman,
Jeffries, Knight, Lara, Logue, Bonnie Lowenthal, Ma,
Mendoza, Miller, Mitchell, Monning, Nestande, Pan, Perea,
V. Manuel P�rez, Portantino, Skinner, Smyth, Solorio,
Swanson, Torres, Valadao, Wagner, Wieckowski, Williams,
Yamada, John A. P�rez
NOES: Donnelly, Garrick, Grove, Harkey, Jones, Mansoor,
Morrell, Nielsen, Norby, Olsen, Silva
NO VOTE RECORDED: Gorell, Hagman
PQ:do 9/9/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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