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AB-572 California Deforestation-Free Procurement Act.(2019-2020)

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Date Published: 02/14/2019 09:00 PM
AB572:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 572


Introduced by Assembly Member Kalra
(Principal coauthors: Assembly Members Bloom, Eduardo Garcia, and Reyes)

February 14, 2019


An act to add Section 6105 to the Public Contract Code, relating to public contracts.


LEGISLATIVE COUNSEL'S DIGEST


AB 572, as introduced, Kalra. California Deforestation-Free Procurement Act.
Existing law governs the bidding and awarding of public contracts by various state agencies. Existing law imposes requirements on contractors awarded various public contracts, including, among others, certifying that no equipment, materials, supplies, apparel, garments, or accessories provided under specified contracts are produced by sweatshop labor, forced labor, convict labor, indentured labor under penal sanction, abusive forms of child labor, or exploitation of children in sweatshop labor.
This bill would establish the California Deforestation-Free Procurement Act. The bill would require a contractor, and specified subcontractors, for any contract entered into, extended, or renewed on or after January 1, 2021, contracting with a state agency for the procurement of products comprised wholly or in part of forest-risk commodities to certify that the products have not contributed in whole or in part to tropical deforestation or illegal land conversion. The bill would require specified contractors to develop and maintain a No Deforestation, No Peat, No Exploitation policy containing, among other things, the complete supply chain, to the greatest extent possible, for each product comprised wholly or in part of a forest-risk commodity. The bill would require, on or before January 1, 2021, the Department of General Services to adopt regulations to establish a Deforestation-Free Code of Conduct to be used by contractors that includes, among other things, a list of forest-risk commodities subject to these provisions.
This bill would impose sanctions on contractors who knew or should have known that a product furnished to the state was comprised wholly or in part of a forest-risk commodity in violation of these provisions. The bill would specify that any person who certifies under penalty of perjury as true any material matter that the person knows to be false is guilty of a misdemeanor. By creating a new crime and expanding the crime of perjury, this bill would impose a state-mandated local program.
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   Local Program: YES  

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


SECTION 1.

 The Legislature finds and declares all the following:
(a) Tropical forests cover roughly 7 percent of the Earth’s surface, but harbor close to 50 percent of all species on Earth.
(b) Humans are behind the current rate of species extinction, which is at least 100 to 1,000 times higher than nature intended. World Wildlife Fund’s 2016 Living Planet Report found global populations of fish, birds, mammals, amphibians, and reptiles declined by 58 percent between 1970 and 2012.
(c) An estimated 18,000,000 acres of forest, an area the size of Panama or nearly one-fifth the size of California, are lost every year to deforestation according to the Food and Agriculture Organization of the United Nations, with over one-half of the Earth’s tropical forests already gone. At the current pace, the Earth’s tropical rainforests will be gone within the next 100 years.
(d) An estimated 15 percent of the world’s greenhouse gas emissions come from deforestation activities. Plantation development of tropical peatlands in southeast Asia is a particularly strong driver of greenhouse gas emissions.
(e) California is an outspoken leader in addressing the climate crisis, with a plan to reduce the state’s greenhouse gas emissions to 40 percent below 1990 levels by 2030.
(f) Tropical deforestation in many countries is closely associated with violations of the land rights of indigenous peoples and local communities and with the exploitation of workers, including forced labor and child labor, and in many cases is enabled by corruption, criminality, and violence against land defenders.
(g) Tropical deforestation in many countries is also closely associated with illegal wildlife trafficking, including, but not limited to, various bird and reptile species, pangolins, and orangutans, and in many cases is enabled by corruption, criminality, and violence against conservationists.
(h) Tropical countries with significant deforestation include Brazil, Thailand, Guatemala, and the Democratic Republic of the Congo. Indonesia has lost the most acreage of tropical forest, at least 39 million acres, since 2000.
(i) The main driver of tropical deforestation is industrial-scale production of agricultural commodities, increasingly known as “Forest-risk commodities”. The primary forest-risk commodities are palm oil, soy, cattle, rubber, paper, pulp, and wood. Products containing these commodities are widely consumed in California.
(j) California is inadvertently promoting and sanctioning deforestation through the purchase of goods and products that have been produced in supply chains that contribute to deforestation.
(k) California is the fifth largest economy in the world and its purchasing power has significant market force.
(l) Hundreds of major consumer brands, commodity traders, and national and subnational governments have shown support for ending tropical deforestation. The New York Declaration on Forests set a goal to halve deforestation by 2020 and to end it by 2030, and is currently endorsed by more than 50 governments, more than 50 of the world’s biggest companies, and more than 50 influential civil society and indigenous peoples’ organizations. As a signatory to the New York Declaration on Forests, California has committed to ending deforestation by 2030.
(m) Legislative efforts to address the market for goods and products contributing to tropical deforestation have been lacking, yet the market is a key impetus for deforestation.
(n) It is the intent of the Legislature that it be the policy of this state to ensure companies contracting with the state are not contributing to tropical deforestation directly or through their supply chains.

SEC. 2.

 Section 6105 is added to the Public Contract Code, to read:

6105.
 (a) This section shall be known as the California Deforestation-Free Procurement Act.
(b) For purposes of this section, the following definitions shall apply:
(1) “Forest” or “tropical forest” means native forest ecosystems within the tropics containing a tree canopy cover of more than 10 percent over an area of at least 0.5 hectares and a species composition, structure, and ecological function that is, or would be found, in a given area in the absence of major human modification. This includes human-managed or regenerating forest ecosystems that possess significant similarities in species composition, structure, and ecological function, or that are likely to possess those similarities under conducive management practices, and primary forests, areas of High Conservation Value, High Carbon Stock forest areas, and peatlands, regardless of depth. “Forest” shall not include tree plantations.
(2) “Forest-risk commodity” means any product, whether in raw or processed form, that is commonly grown, harvested, reared, or produced on converted or deforested land, including, but not limited to, wood, paper, pulp, palm oil, soy, beef, leather, coffee, cocoa, and rubber.
(3) “Illegal land conversion” means a change of natural forest or other natural ecosystem to another land use or a profound change in the natural ecosystem’s species composition, structure, or function in violation of a nation’s laws concerning the acquisition or use of land and natural resources, or in violation of a nation’s provisions for the recognition and protection of the rights of indigenous peoples’ local communities, including laws to prevent related corrupt practices.
(4) “Point-of-origin” is the geographical location and identity of the smallest administrative unit of land where a commodity was grown, harvested, reared, produced, or otherwise derived.
(5) “Tropical deforestation” or “deforestation” means any of the following:
(A) Direct human-induced conversion of forested lands to agriculture, other nonforest land use, or a plantation forest, or severe and sustained degradation.
(B) Change of a natural forest ecosystem to another land use or a profound change in the natural ecosystem’s species composition, structure, or function not allowed by a nation’s laws or indigenous peoples’ rights, including conversion of lands acquired through illegal means.
(C) Loss of natural forest not allowed by a nation’s laws or its provisions for the recognition and protection of the rights of indigenous peoples, including deforestation of lands acquired through illegal means.
(c) (1) Every contract entered into by a state agency that includes the procurement of any product comprised wholly or in part of a forest-risk commodity shall require that the contractor certify under penalty of perjury that the product furnished to the state pursuant to the contract has not contributed in whole or in part to tropical deforestation or illegal land conversion. The contractor shall agree to comply with this provision of the contract.
(2) The contract shall specify that the contractor is required to cooperate fully in providing reasonable access to the contractor’s records, documents, agents, employees, or premises if reasonably required by authorized officials of the contracting agency, the Department of General Services, or the Department of Justice to determine the contractor’s compliance with the requirements under paragraph (1).
(3) Contractors shall exercise due diligence in ensuring that their subcontractors comply with the requirements under paragraph (1). Contractors shall require each subcontractor to certify under penalty of perjury that the subcontractor has not furnished a forest-risk commodity that has contributed in whole or in part to tropical deforestation or illegal land conversion.
(d) (1) Any contractor contracting with the state for products comprised wholly or in part of a forest-risk commodity shall develop and maintain a No Deforestation, No Peat, No Exploitation (NDPE) policy.
(2) The NDPE policy shall contain all of the following:
(A) The complete supply chain, to the greatest extent possible, for each product comprised wholly or in part of a forest-risk commodity.
(B) Measures taken to ensure the product does not contribute to the deforestation of primary forests, areas of High Conservation Value, High Carbon Stock forest areas, or peatlands, regardless of depth.
(C) Measures taken to ensure the free, prior, and informed consent of directly affected indigenous peoples.
(D) Measures taken to protect biodiversity and prevent the poaching of endangered species in all operations and adjacent areas.
(E) A contractor shall show evidence on an annual basis that the contractor is monitoring and ensuring progress in implementing the policy and shall make the NDPE policy available to the state agency the contractor is contracting with or to the Department of General Services or the Department of Justice upon request.
(e) (1) Any contractor contracting with the state who knew or should have known that a product comprised wholly or in part of a forest-risk commodity was furnished to the state in violation of subdivision (c), may, subject to paragraph (2), have any or all of the following sanctions imposed:
(A) The contract under which the prohibited forest-risk commodity was furnished may be voided at the option of the state agency to which the commodity was furnished.
(B) The contractor may be assessed a penalty that shall be the greater of one thousand dollars ($1,000) or an amount equaling 20 percent of the value of the product that the state agency demonstrates was comprised wholly or in part of a forest-risk commodity and furnished to the state in violation of subdivision (c).
(C) The contractor may be removed from the bidder’s list for a period not to exceed 720 days.
(2) Notwithstanding paragraph (1), a contractor that has complied with the provisions of paragraph (3) of subdivision (c) shall not be subject to sanctions for violations, of which the contractor had no knowledge, of the requirements of subdivision (c) that were committed solely by a subcontractor. Sanctions described under paragraph (1) shall instead be imposed against the subcontractor that committed the violation.
(f) (1) When imposing the sanctions described in subdivision (e), the contracting agency shall notify the contractor or subcontractor of the right to a hearing, if requested, within 15 days of the date of the notice. The hearing shall be before an administrative law judge of the Office of Administrative Hearings in accordance with the procedures specified in Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. The administrative law judge shall take into consideration any measures the contractor has taken to ensure compliance with this section.
(2) The agency shall be assessed the cost of the administrative hearing, unless the agency has prevailed in the hearing, in which case the contractor or subcontractor shall be assessed the cost of the hearing.
(g) (1) Any state agency that investigates a complaint against a contractor or subcontractor for violation of this section may limit its investigation to evaluating the information provided by the person or entity submitting the complaint and the information provided by the contractor or subcontractor.
(2) Whenever a contracting officer of the contracting agency has reason to believe that the contractor failed to comply with subdivision (c) or (d), the agency shall refer the matter for investigation to the head of the agency and, as the head of the agency determines appropriate, to either the Director of General Services or the Department of Justice.
(h) Any person who certifies under penalty of perjury as true any material matter pursuant to this section that the person knows to be false shall be guilty of a misdemeanor.
(i) On or before January 1, 2021, the Department of General Services shall adopt regulations to establish a Deforestation-Free Code of Conduct to be used by contractors for purposes of complying with subdivisions (c) and (d). The Deforestation-Free Code of Conduct shall include the following:
(1) A list of forest-risk commodities subject to requirements in this section.
(2) A list of products derived wholly or in part from forest-risk commodities.
(3) A list of products furnished to the state or used by state contractors in high-volume purchases that contain or are comprised wholly or in part of forest-risk commodities.
(4) A set of responsible sourcing guidelines and policies derived from best practices in supply chain transparency, with guidance provided by a multistakeholder group of independent experts.
(5) Guidance for contractors to assist the contractors in identifying forest-risk commodities in the supply chain and certifying that the commodity did not contribute to tropical deforestation or illegal land conversion.
(j) This section shall apply to all contracts entered into, extended, or renewed on or after January 1, 2021.

SEC. 3.

 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.