Amended in Senate June 4, 2014

Amended in Assembly May 1, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1678

Introduced by Assembly Member Gordon

(Principal coauthor: Assembly Member Dickinson)

(Coauthors: Assembly Members Fong and Ting)

February 12, 2014

An act to amend Sections 8281, 8282, 8283, 8284, 8285, and 8286 of, and to amend the heading of Article 5 (commencing with Section 8281) of Chapter 7 of Division 4 of, the Public Utilities Code, relating to public utilities.

LEGISLATIVE COUNSEL’S DIGEST

AB 1678, as amended, Gordon. Women, minority, disabled veteran, and LGBT business enterprise procurement.

(1) Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical, gas, water, and telephone corporations. Existing law authorizes the commission to establish rules for all public utilities, subject to control by the Legislature.

Existing law directs the commission to require every electrical, gas, water, wireless telecommunications service provider, and telephone corporation with annual gross revenues exceeding $25,000,000, and their regulated subsidiaries and affiliates, to implement a program developed by the commission to encourage, recruit, and utilize minority-, women-, and disabled veteran-owned business enterprises, as defined, in the procurement of contracts from those corporations or from their regulated subsidiaries and affiliates, and to require the reporting of certain information. The commission, by its rulemaking authority, has adopted General Order 156, applicable to certain electrical, gas, and telephone corporations, to effectuate these requirements. Existing law includes the declaration by the Legislature that each electrical, gas, water, mobile telephony service provider, and telephone corporation that is not required to submit a plan, and each cable television corporation and direct broadcast satellite provider, is encouraged to voluntarily adopt a plan for increasing women, minority, and disabled veteran business enterprise procurement in all categories. Existing law requires the commission, by rule or order, to adopt criteria for verifying and determining eligibility of women and minority business enterprises for procurement contracts. Existing law requires the commission to provide to the Legislature a specified report on the progress of activities undertaken by certain entities in the implementation of women, minority, and disabled business enterprise development programs. Existing law requires the commission to recommend a program and legislation for carrying out the policy of aiding the interests of women, minority, and disabled veteran business enterprises.

This bill would extend these provisions to LGBT business enterprises, as defined. In adopting criteria for verifying and determining the eligibility of LGBT business enterprises for procurement contracts, the bill would require the commission to consult with LGBT begin delete Chambers of Commerce end delete begin insert chambers of commerce end insert and other entities with expertise and relevant experience in the certification of LGBT businesses.

(2) Under existing law, a violation of any provision of any rules or orders of the commission is a crime. In addition, any person or corporation who falsely represents a business as a women, minority, or disabled veteran business enterprise for the purposes of the program discussed above is subject to criminal penalties.

This bill would also subject any person or corporation who falsely represents a business as an LGBT business enterprise for the purposes of the program discussed above to criminal penalties. Because a violation of the requirements of the bill would be a crime under those provisions, this bill would impose a state-mandated local program.

(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

The heading of Article 5 (commencing with
Section 8281) of Chapter 7 of Division 4 of the Public Utilities
Code is amended to read:

 

Article 5.  Women, Minority, Disabled Veteran, and LGBT
Business Enterprises

 

SEC. 2.  

Section 8281 of the Public Utilities Code is amended
to read:

8281.  

(a) The Legislature hereby finds and declares that the
essence of the American economic system of private enterprise is
free, open, and transparent competition. Only through free, open,
and transparent competition can free markets, reasonable and just
prices, free entry into business, and opportunities for the expression
and growth of personal initiative and individual judgment be
ensured. The preservation and expansion of that competition are
basic to the economic well-being of this state and that well-being
cannot be realized unless the actual and potential capacity of
women, minority, disabled veteran, and LGBT business enterprises
is encouraged and developed. Therefore, it is the declared policy
of the state to aid the interests of women, minority, disabled
veteran, and LGBT business enterprises in order to preserve
reasonable and just prices and a free competitive enterprise, to
ensure that a fair proportion of the total purchases and contracts
or subcontracts for commodities, supplies, technology, property,
and services for regulated public utilities, including, but not limited
to, renewable energy, wireless telecommunications, broadband,
smart grid, and rail projects, are awarded to women, minority,
disabled veteran, and LGBT business enterprises, and to maintain
and strengthen the overall economy of the state.

(b) (1) The Legislature finds all of the following:

(A) The opportunity for full participation in our free enterprise
system by women, minority, disabled veteran, and LGBT business
enterprises is essential if this state is to attain social and economic
equality for those businesses and improve the functioning of the
state economy.

(B) Public agencies and some regulated utilities that have
established short- and long-range women, minority, disabled
veteran, and LGBT business enterprise goals are awarding 30
percent or more of their contracts to these business enterprises.

(C) Women, minority, disabled veteran, and LGBT business
enterprises have traditionally received less than a proportionate
share of regulated public utility procurement contracts, especially
in renewable energy, wireless telecommunications, broadband,
smart grid, and rail projects.

(D) It is in the state’s interest to expeditiously improve the
economically disadvantaged position of women, minority, disabled
veteran, and LGBT business enterprises.

(E) The position of these businesses can be substantially
improved by providing long-range substantial goals for
procurement by regulated public utilities of technology, equipment,
supplies, services, materials, and construction work, especially in
renewable energy, wireless telecommunications, broadband, smart
grid, and rail projects, from women, minority, disabled veteran,
and LGBT businesses.

(F) That procurement also benefits the regulated public utilities
and consumers of the state by encouraging the expansion of the
number of suppliers for procurements, thereby encouraging
competition among the suppliers and promoting economic
efficiency in the process.

(G) That the long-term economic viability of this state depends
substantially upon the ability of renewable energy, wireless
telecommunications, broadband, smart grid, and rail projects to
incorporate women, minority, disabled veteran, and LGBT
businesses into those projects.

(2) It is the purpose of this article to do all of the following:

(A) Encourage greater economic opportunity for women,
minority, disabled veteran, and LGBT business enterprises.

(B) Promote competition among regulated public utility
suppliers in order to enhance economic efficiency in the
procurement of electrical, gas, water, wireless telecommunications
service provider, and telephone corporation contracts and contracts
of their commission-regulated subsidiaries and affiliates.

(C) Clarify and expand the program for the procurement by
regulated public utilities of technology, equipment, supplies,
services, materials, and construction work from women, minority,
disabled veteran, and LGBT business enterprises.

SEC. 3.  

Section 8282 of the Public Utilities Code is amended
to read:

8282.  

For the purposes of this article, the following definitions
apply:

(a) “Women business enterprise” means a business enterprise
that is at least 51 percent owned by a woman or women; or, in the
case of any publicly owned business, at least 51 percent of the
stock of which is owned by one or more women; and whose
management and daily business operations are controlled by one
or more of those individuals.

(b) “Minority business enterprise” means a business enterprise
that is at least 51 percent owned by a minority group or groups;
or, in the case of any publicly owned business, at least 51 percent
of the stock of which is owned by one or more minority groups,
and whose management and daily business operations are
controlled by one or more of those individuals. The contracting
utility shall presume that minority includes African Americans,
Hispanic Americans, Native Americans, and Asian Pacific
Americans.

(c) “Disabled veteran business enterprise” has the same meaning
as defined in Section 999 of the Military and Veterans Code.

(d) “LGBT business enterprise” means a business enterprise
that is at least 51 percent owned by a lesbian, gay, bisexual, or
transgender person or persons; or, in the case of any publicly owned
business, at least 51 percent of the stock of which is owned by one
or more lesbian, gay, bisexual, or transgender persons; and whose
management and daily business operations are controlled by one
or more of those individuals.

(e) “Control” means exercising the power to make policy
decisions.

(f) To “operate” means to be actively involved in the day-to-day
management. It is not enough to merely be an officer or director.

SEC. 4.  

Section 8283 of the Public Utilities Code is amended
to read:

8283.  

(a) The commission shall require each electrical, gas,
water, wireless telecommunications service provider, and telephone
corporation with gross annual revenues exceeding twenty-five
million dollars ($25,000,000) and their commission-regulated
subsidiaries and affiliates, to submit annually, a detailed and
verifiable plan for increasing procurement from women, minority,
disabled veteran, and LGBT business enterprises in all categories,
including, but not limited to, renewable energy, wireless
telecommunications, broadband, smart grid, and rail projects.

(b) These annual plans shall include short- and long-term goals
and timetables, but not quotas, and shall include methods for
encouraging both prime contractors and grantees to engage women,
minority, disabled veteran, and LGBT business enterprises in
subcontracts in all categories that provide subcontracting
opportunities, including, but not limited to, renewable energy,
wireless telecommunications, broadband, smart grid, and rail
projects.

(c) The commission shall establish guidelines for all electrical,
gas, water, wireless telecommunications service providers, and
telephone corporations with gross annual revenues exceeding
twenty-five million dollars ($25,000,000) and their
commission-regulated subsidiaries and affiliates, to be utilized in
establishing programs pursuant to this article.

(d) Every electrical, gas, water, wireless telecommunications
service provider, and telephone corporation with gross annual
revenues exceeding twenty-five million dollars ($25,000,000) shall
furnish an annual report to the commission regarding the
implementation of programs established pursuant to this article in
a form that the commission shall require, and at the time that the
commission shall annually designate. begin insert The report shall include the
information about LGBT business enterprises beginning with the
2016 report. end insert

(e) (1) The commission shall provide a report to the Legislature
on September 1 of each year, on the progress of activities
undertaken by each electrical, gas, water, wireless
telecommunications service provider, and telephone corporation
with gross annual revenues exceeding twenty-five million dollars
($25,000,000) pursuant to this article in the implementation of
women, minority, disabled veteran, and LGBT business enterprise
development programs. The report shall include information about
which procurements are made with women, minority, disabled
veteran, and LGBT business enterprises with at least a majority
of the enterprise’s workforce in California, to the extent that
information is readily accessible. The commission shall recommend
a program for carrying out the policy declared in this article,
together with recommendations for legislation that it deems
necessary or desirable to further that policy. The commission shall
make the report available on its Internet Web site.

(2) In regard to disabled veteran business enterprises, the
commission shall ensure that the programs and legislation
recommended pursuant to paragraph (1) are consistent with the
disabled veteran business enterprise certification eligibility
requirements imposed by the Department of General Services and
that the recommendations include only those disabled veteran
business enterprises certified by the Department of General
Services.

(3) The commission shall include the information about LGBT
business enterprises required by paragraph (1) begin delete not later than end delete
begin insert beginning with end insert the report due on September 1, 2016.

(f) (1) The Legislature declares that each electrical, gas, water,
mobile telephony service provider, and telephone corporation that
is not required to submit a plan pursuant to subdivision (a) is
encouraged to voluntarily adopt a plan for increasing women,
minority, disabled veteran, and LGBT business enterprise
procurement in all categories.

(2) The Legislature declares that each cable television
corporation and direct broadcast satellite provider is encouraged
to voluntarily adopt a plan for increasing women, minority,
disabled veteran, and LGBT business enterprise procurement and
to voluntarily report activity in this area to the Legislature on an
annual basis.

SEC. 5.  

Section 8284 of the Public Utilities Code is amended
to read:

8284.  

(a) (1) The commission shall, by rule or order, adopt
criteria for verifying and determining the eligibility of women,
minority, and LGBT business enterprises for procurement
contracts.

(2) The commission shall adopt the Department of General
Services’ disabled veteran business enterprise certification
eligibility requirements for verifying and determining the eligibility
of disabled veteran business enterprises for procurement contracts,
and shall not deem eligible those disabled veteran business
enterprises that are not certified by the Department of General
Services.

(3) In adopting criteria for verifying and determining the
eligibility of LGBT business enterprises for procurement contracts
pursuant to paragraph (1), the commission shall consult with LGBT
begin delete Chambers of Commerce end delete begin insert chambers of commerce end insert and other entities
with expertise and relevant experience in the certification of LGBT
businesses.

(b) The commission shall develop, and require every electrical,
gas, water, wireless telecommunications service provider, and
telephone corporation with gross annual revenues exceeding
twenty-five million dollars ($25,000,000) and their
commission-regulated subsidiaries and affiliates to implement, an
outreach program to inform and recruit women, minority, disabled
veteran, and LGBT business enterprises to apply for procurement
contracts under this article.

SEC. 6.  

Section 8285 of the Public Utilities Code is amended
to read:

8285.  

(a) Any person or corporation, through its directors,
officers, or agents, which falsely represents a business as a women,
minority, or LGBT business enterprise in the procurement of, or
the attempt to procure, contracts from an electrical, gas, water,
wireless telecommunications service provider, or telephone
corporation with gross annual revenues exceeding twenty-five
million dollars ($25,000,000), or a commission-regulated
subsidiary or affiliate subject to this article, shall be punished by
a fine of not more than five thousand dollars ($5,000), by
imprisonment in a county jail for not more than one year or in the
state prison, or by both that fine and imprisonment. In the case of
a corporation, the fine or imprisonment, or both, shall be imposed
on every director, officer, or agent responsible for the false
statements.

(b) Any person or corporation, through its directors, officers,
or agents, which falsely represents a business as a disabled veteran
business enterprise in the procurement of, or the attempt to procure,
contracts from an electrical, gas, water, wireless
telecommunications service provider, or telephone corporation
with gross annual revenues exceeding twenty-five million dollars
($25,000,000), or a commission-regulated subsidiary or affiliate
subject to this article, shall be punished according to the penalties
established pursuant to subdivision (b) of Section 999.9 of the
Military and Veterans Code. In the case of a corporation, the fine
or imprisonment, or both, shall be imposed on every director,
officer, or agent responsible for the false statements.

SEC. 7.  

Section 8286 of the Public Utilities Code is amended
to read:

8286.  

(a) In order to facilitate the participation of
women-owned businesses, minority-owned businesses, disabled
veteran-owned businesses, and LGBT-owned businesses and small
businesses in contract procurement, any corporation subject to this
article may consider the following measures to include those
businesses in all phases of their contracting:

(1) Timely or progressive payments to those businesses.

(2) An amendment of the performance bond requirements so
that bond requirements of electrical, gas, and telephone
corporations do not prohibitively burden those businesses from
procuring the corporation’s business.

(3) The provision of assistance to those businesses by securing
contract payments to those businesses with letters of credit,
negotiable securities, or other financing arrangements or measures.

(b) This section does not restrict a corporation’s ability to require
a bond.

SEC. 8.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.