Existing law requires the Department of General Services, beginning no later than the 202425 fiscal year, to ensure that at least 50% of the light-duty vehicles purchased for the state vehicle fleet each fiscal year are zero-emission vehicles, except as provided.

This bill would require the department to require a supplier of zero-emission vehicles purchased for the state vehicle fleet to certify that any raw materials used in the manufacturing of the zero-emission vehicles, including, but not limited to, cobalt and lithium, come from mining operations that are free of child labor. The bill would require a supplier of zero-emission vehicles purchased for the state vehicle fleet to provide to the department the locations where the raw materials used in the production of the zero-emission vehicles were mined and the average hourly wage of the workers that mined the raw materials, and would require the department to post on its internet website that information provided by the supplier and a list of the zero-emission vehicles purchased for the state vehicle fleet that are certified to be made with raw materials that come from mining operations that are free of child labor.

Existing law requires the Department of General Services, beginning no later than the 202425 fiscal year, to ensure that at least 50% of the light-duty vehicles purchased for the state vehicle fleet each fiscal year are zero-emission vehicles, except as provided.

This bill would require the department to require a supplier of zero-emission vehicles purchased for the state vehicle fleet to certify that the any raw materials used in the manufacturing of the zero-emission vehicles, including, but not limited to, cobalt and lithium, come from mining operations that are free of child labor. The bill would require a supplier of zero-emission vehicles purchased for the state vehicle fleet to provide to the department the locations where the raw materials used in the production of the zero-emission vehicles were mined and the average hourly wage of the workers that mined the raw materials, and would require the department to post on its internet website that information provided by the supplier and a list of the zero-emission vehicles purchased for the state vehicle fleet that are certified to be made with raw materials that come from mining operations that are free of child labor.

The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report (EIR) on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment.

Existing law, until January 1, 2025, exempts from CEQA the closure of a railroad grade crossing by order of the Public Utilities Commission if the commission finds the crossing to present a threat to public safety. Existing law makes this exemption inapplicable to any crossing for high-speed rail or any crossing for a project carried out by the High-Speed Rail Authority. Existing law requires the lead agency to file the notice of exemption with specified public entities.

This bill would delete the January 1, 2025, sunset date, thereby applying these provisions permanently. Because the bill would impose additional duties on lead agencies with regards to the filing of the notice of exemption, 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.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1239 (Grove) - State vehicle fleet: zero-emission vehicles: raw materials: child labor

Bill Summary:

SB 1239 requires the Department of General Services (DGS) to require a zero-emission vehicle (ZEV) supplier to certify that any raw materials used in the manufacturing of a ZEV purchased for the state vehicle fleet comes from mining operations that are free of child labor.

Fiscal Impact:

• DGS reports:
  • One-time cost of $170,000 for a limited-term staff to make updates to and implement statewide policies and procedures in the State Contracting Manual, and publish forms related to the mandated certification.
  • Ongoing total annual costs of $340,000 for two permanent staff in DGS’s Procurement Division to review information from ZEV suppliers.
  • Unknown potentially significant procurement cost pressures, to the extent that certain ZEV suppliers are unable or unwilling to meet the specified certification requirements and therefore become ineligible to contract with the state. (General Fund and various special funds)
• The California Air Resources Board (ARB) report costs of $873,332 in Fiscal Year (FY) 2024-25, $873,332 in FY 2025-26, and $436,666 in FY 2026-27 and ongoing to update and amend the State and Local Government fleet ZEV purchase schedule, process ZEV purchase exemption requests, and conduct other activities related to assessing and ensuring ZEV suppliers’ compliance (Air Pollution Control Fund).

Background:

Executive Order B-16-12. In 2012, Governor Brown issued EO B-16-2012, which called for 1.5 million ZEVs to be on the road in California by 2025, as a means of helping the state reach its greenhouse gas (GHG) emissions reduction goals.

The EO further included a requirement that, California's state vehicle fleet increase the number of its ZEVs so that at least 10 percent of fleet purchases of light-duty vehicles be zero-emission by 2015 and at least 25 percent of fleet purchases of light-duty vehicles be zero-emission by 2020. The EO did not contain any requirements for larger, heavy-duty trucks and buses.

To continue the momentum initiated by the EO, the Governor's Office convened an interagency working group that culminated in the release of the 2013 ZEV Action Plan. The ZEV Action Plan, which was updated in 2016 and 2018, established goals for the advancement of ZEVs and outlined strategies to achieve those goals. The 2016 ZEV Action Plan highlighted a couple priorities for ZEVs, including, “making ZEV technologies commercially viable in targeted applications the medium-duty, heavy-duty and freight sectors.”

According to state data, new ZEV purchases for the state routinely outpaced the targets set forth in the EO. However, during the start of the COVID-19 pandemic, purchases of all types of vehicles for the state fleet declined as the state faced an uncertain financial future.

Executive Order N-79-20. In September of 2020, Governor Newsom signed EO N-79-20 that, among other things, established a goal of the state that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035, and that 100 percent of medium- and heavy-duty vehicles in the state be zero-emission by 2045 for all operations where feasible.

Additionally, EO N-79-20 requires the Governor’s Office of Business and Economic Development (GO-Biz), in coordination with ARB and other state agencies, to develop a ZEV Market Development Strategy by January 31, 2021, and update the strategy every three years thereafter. EO N-79-20 also directs GO-Biz and ARB to ensure coordinated and expeditious implementation of the system of policies, programs, and regulations necessary to achieve the goals and orders of the EO, and outlines state agencies’ actions to support new and used ZEV markets for broad accessibility for all Californians. That strategy is available online through GO-Biz’s internet website.

Advanced Clean Fleets Regulation Emissions Inventory Workgroup. In November of 2021, the ARB’s Advanced Clean Fleets Regulation Emissions Inventory Workgroup made publicly available possible forthcoming regulations regarding ZEVs, including public fleets of California’s cities, special districts, and state agencies. According to the information made available, the Public Fleet proposal requires that ZEVs be 50 percent of purchases for 2024-2026 model years of vehicles, and 100 percent of purchases for 2027 and every succeeding model year.

Proposed Law:

• Requires DGS to require a ZEV supplier to certify that any raw materials, including cobalt and lithium, used in the manufacturing of the ZEV purchased for the state vehicle fleet come from mining operations that are free of child labor.

-- END --

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: 1239 Hearing Date: 4/23/2024

SUBJECT: State vehicle fleet: zero-emission vehicles: raw materials: child labor

DIGEST: This bill requires suppliers of zero-emission vehicles (ZEVs) purchased for the state vehicle fleet to certify to the Department of General Services (DGS) that the raw materials used in the manufacturing of the ZEV come from mining operations that are free of child labor, and requires DGS to collect and publish on its internet website the locations where the raw materials were mined and the average hourly wage of the workers that mined the materials, as specified.

ANALYSIS:

Existing law:

1. Requires DGS, beginning no later than the 2024-25 fiscal year (FY), to ensure that at least 50 percent of the light-duty vehicles purchased for the state vehicle fleet each FY are ZEVs, except as provided.
2. Requires DGS, if it determines that it cannot meet the needs of the state while fulfilling the requirements for light-duty ZEVS, to hold a public hearing to make that finding, notify the Secretary of State of the finding, and cease to implement the requirement, as specified.
3. Requires a contract entered into by any state agency for the procurement of laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to require that a contractor certify that nothing furnished to the state pursuant to the contract has been laundered or produced by certain types of labor, as specified.
4. Executive Order (EO) B-16-2012 requires that California's state vehicle fleet increase the number of its ZEVs through the normal course of fleet replacement so that at least 25 percent of fleet purchases of light-duty vehicles be zero-emission by 2020.
5. EO N-79-20, among other things, establishes a goal of the state that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035, and that 100 percent of medium- and heavy-duty vehicles in the state be zero-emission by 2045 for all operations where feasible.

This bill:

1. Requires DGS to require a supplier of ZEVs purchased for the state vehicle fleet to certify that the raw materials used in the manufacturing of the ZEVS, including, but not limited to, cobalt and lithium, come from mining operations that are free of child labor.
2. Requires a supplier of ZEVs purchased for the state vehicle fleet to provide DGS the locations where the raw materials used in the production of the ZEVs were mined and the average hourly wage of the workers that mined the raw materials.
3. Requires DGS to post on its internet website the information required pursuant to this bill and a list of the ZEVs purchased for the state vehicle fleet that are certified to be made with raw materials that come from mining operations that are free of child labor.

Background

Author Statement. According to the author’s office, “the State’s push for electric vehicles is causing profound environmental damage and human misery in places like the Congo which feed the raw material needed for these car batteries. SB 1239 shines a light on this issue by requiring the suppliers of electric vehicles to the state of California to certify that the raw material, including cobalt and lithium, in zero-emission vehicles purchased by the state come from child-labor free mining enterprises.”

Executive Order B-16-12. In 2012, Governor Brown issued EO B-16-2012, which called for 1.5 million ZEVs to be on the road in California by 2025, as a means of helping the state reach its GHG emissions reduction goals.

The EO further included a requirement that, California's state vehicle fleet increase the number of its ZEVs so that at least 10 percent of fleet purchases of light-duty vehicles be zero-emission by 2015 and at least 25 percent of fleet purchases of light-duty vehicles be zero-emission by 2020. The EO did not contain any requirements for larger, heavy-duty trucks and buses.

To continue the momentum initiated by the EO, the Governor's Office convened an interagency working group that culminated in the release of the 2013 ZEV Action Plan. The ZEV Action Plan, which was updated in 2016 and 2018, established goals for the advancement of ZEVs and outlined strategies to achieve those goals. The 2016 ZEV Action Plan highlighted a couple priorities for ZEVs, including, “making ZEV technologies commercially viable in targeted applications the medium-duty, heavy-duty and freight sectors.”

According to state data, new ZEV purchases for the state routinely outpaced the targets set forth in the EO. However, during the start of the COVID-19 pandemic, purchases of all types of vehicles for the state fleet declined as the state faced an uncertain financial future.

Executive Order N-79-20. In September of 2020, Governor Newsom signed EO N-79-20 which, among other things, established a goal of the state that 100 percent of in-state sales of new passenger cars and trucks will be zero-emission by 2035, and that 100 percent of medium- and heavy-duty vehicles in the state be zero-emission by 2045 for all operations where feasible.

Additionally, EO N-79-20 requires the Governor’s Office of Business and Economic Development (GO-Biz), in coordination with ARB and other state agencies, to develop a Zero-Emissions Vehicle Market Development Strategy by January 31, 2021, and update every three years thereafter, that: ensures coordinated and expeditious implementation of the system of policies, programs, and regulations necessary to achieve the goals and orders of the EO; and, outlines state agencies’ actions to support new and used ZEV markets for broad accessibility for all Californians. That strategy is available online through GO-Biz’s internet website.

Advanced Clean Fleets Regulation Emissions Inventory Workgroup. In November of 2021, the ARB’s Advanced Clean Fleets Regulation Emissions Inventory Workgroup made publicly available possible forthcoming regulations regarding ZEVs, including public fleets of California’s cities, special districts, and state agencies. According to the information made available, the Public Fleet proposal requires that ZEVs be 50 percent of purchases for 2024-2026 model years of vehicles, and 100 percent of purchases for 2027 and every succeeding model year.

Electric Vehicle Battery Manufacturers. The global ZEV battery market is expected to grow from $17 billion to more than $95 billion between 2019 and 2028. Despite efforts from the United States to increase domestic production of batteries, the market is still dominated by overseas suppliers. Currently, Chinese companies make up 56 percent of the electric vehicle battery market, followed by Korean companies (26 percent) and Japanese manufacturers (10 percent). One third of the world’s ZEV batteries come from the Chinese company CATL, which provides lithium-ion based batteries to Tesla, Peugeot, Hyundai, BMW, Toyota, Volkswagen, and Volvo. The North American market for lithium-ion batteries is driven by major players like Tesla and Panasonic, contributing significant demand for cobalt and lithium. Besides for ZEVs, lithium battery technology is essential for the energy transition, providing storage capacity for intermittent solar and wind generation.

State Procurement and Sweat Free Code of Conduct. Existing law imposes a series of requirements on state vendors awarded state contracts for the procurement of equipment, material, supplies, and garments. It requires that all state contractors comply with a Department of Industrial Relations (DIR) contractor responsibility program, including a “Sweat Free Code of Conduct.”

Generally speaking, existing law requires contractors to certify that products supplied to the state are not produced with sweatshop labor or other abusive labor practices. The law is intended to ensure that vendors engaging in public contracts with the state adhere to labor standards that respect human rights and dignity. Under the existing law, vendors contracting with the state for the procurement of ZEVs are required to certify that no accessories, equipment, materials, or supplies furnished to the state pursuant to the contract have been produced in whole or in part or with the benefit of sweatshop labor, forced labor, convict labor, indentured labor under penal sanction, abusive forms of child labor, or exploitation of children in sweatshop labor.

The certification must affirm that none of the products supplied were made in conditions that violate those principles. Any person who certifies as true any material matter pursuant to the above requirement that they know to be false is guilty of a misdemeanor. The contracting certification requirements do not apply to credit card purchases of $2,500 or less (this exemption shall not exceed $7,500 per year for each company from which a state agency is purchasing goods).

Further, existing law requires contractors cooperate with state agencies by granting access to their records and premises for compliance checks by state agencies or the DIR, and outlines penalties for contractors found to be in violation, including voiding contracts, imposing fines, and banning from future contracts.

In cases where a contractor is found to have violated these conditions, the Sweat Free Code of Conduct outlines various sanctions including financial penalties of up to $1,000 or twenty percent of the value of the products and/or the contractor or subcontractor being barred from participating in future state contracts. Existing law grants contractors the ability to appeal sanctions, including hearings before an administrative law judge (ALJ). These sanctions are intended to serve as a deterrent against the exploitation of workers and ensure that contractors maintain high labor standards.

Contractors are required to ensure that their subcontractors are in compliance with the Sweat Free Code of Conduct, under penalty of perjury. Any person who certifies as true any material matter pursuant to the above requirements that they know to be false is guilty of a misdemeanor.

This bill requires each supplier of ZEVs purchased for the state vehicle fleet to certify that the raw materials used in the manufacturing of the ZEVs come from mining operations that are free of child labor. Further, this bill requires those suppliers to provide to DGS the locations where the raw materials were mined and the average hourly wage of the workers that mined the raw materials. This bill requires DGS to post on its internet website the information regarding the location of the raw materials and the average hourly wage of the workers that mined the raw materials.

California Deforestation-Free Procurement Act. AB 416 (Kalra, 2021) would have established the California Deforestation-Free Procurement Act, requiring vendors to certify that commodities were not grown, derived, harvested, reared, or produced on land where tropical deforestation occurred, as specified. That bill was vetoed by Governor Newsom who wrote, in part:

Deforestation is a major contributor to the climate crisis that California and the world is facing right now. I share the author's commitment to preventing tropical deforestation. Unfortunately, this bill's extensive requirements would create a significant burden on California businesses - particularly small businesses - that are looking to participate in state contracts.

For example, under this bill, every time the state purchases a product that contains soy, the vendor providing that product would need to disclose the exact location where the soybeans were grown, who the farmer was, and where the soybeans were processed. Most small business suppliers do not have access to that information, and with nearly all the U.S. soybean supply coming from domestic producers, this requirement would place a significant burden on businesses without impacting the stated goal of preventing tropical deforestation.

Additionally, AB 782 (Cooper, 2021) would have enacted the Congo Child Labor Act of 2021, prohibiting a retail seller or manufacturer doing business in the state with gross receipts of $10 million or more per year from selling or making a product containing more than 300 grams of cobalt unless it certified, under penalty of perjury, that the cobalt was not mined or refined using child labor by filing a Congo Child Labor Disclosure, among other things. That bill never received a hearing in the Assembly.

Policy Consideration. As stated above, existing law requires vendors to certify under the penalty of perjury to the Sweat Free Code of Conduct requirements when furnishing equipment, materials, or supplies to the state through the procurement process, and as such this part of the bill may be redundant with existing statute. Further, this bill requires a supplier of a ZEV to provide DGS with the locations where the raw materials used in the production of the ZEVs were mined and the average hourly wage of the workers that mined the raw materials.

The new sourcing and data requirements regarding the average hourly wage of the miners may prove difficult to implement. Ensuring the accuracy of wage data reported by suppliers could involve extensive verification processes as suppliers may source materials from multiple mines in various countries, each with its distinct labor laws and economic conditions. Further, collecting sensitive wage data and making it publicly available might raise privacy concerns among workers and mining companies and brings a risk of misuse of data. Additionally, the administrative load placed on DGS and suppliers under this bill could be substantial. This includes costs associated with data collection, management, and publication, as well as the ongoing responsibility to update this information to reflect any changes in the mining operations or their economic conditions.

The global supply chains involved in sourcing raw materials like lithium and cobalt are highly complex and involve multiple stakeholders, including local and national governments, multinational corporations, and various intermediaries. Simply disclosing wages and locations does not address the myriad factors that contribute to labor abuses. It may be overlooking broader systemic issues such as local governance, corruption, and the enforcement of labor laws in producing countries.

It is unclear to what extent, if any, the publication of average hourly wages, would have in reducing reliance on unscrupulous mining operations around the globe. Many factors influence labor practices in mining, including local economic conditions which may vary widely from the economic conditions here in California. Gathering and verifying the accuracy of the global data on mining locations and wages could prove costly and complex. Different countries have varying standards of record-keeping and transparency, which could make consistent and reliable reporting difficult. The administrative and financial burden on both the state and the suppliers could be substantial, potentially outweighing any potential benefit of publishing the wages of works on the other side of the globe.

Additionally, the requirements of this bill could slow the state’s transition to a fully ZEV fleet by adding layers of bureaucracy to the procurement process, contrary to California’s broader environmental goals. Finally, enforcing the sourcing and wage requirements of the bill could potentially conflict with international trade agreements or laws in other countries where these materials are mined. This could lead to diplomatic or trade disputes, complicating relations and potentially impacting broader economic interests.

As such, the committee may wish to amend the bill by removing the requirements that suppliers of ZEVs to the state fleet provide DGS with the locations where the raw materials were mined and the hourly wage of the workers that mined the raw materials and by deleting the requirement that DGS post that information on its internet website.

Suggested Amendments.

Amendment #1.

25724.(3) A supplier of zero-emission vehicles purchased for the state vehicle fleet shall provide to the Department of General Services the locations where the raw materials used in the production of the zero-emission vehicles were mined and the average hourly wage of the workers that mined the raw materials.

Amendment #2.

25724.(d) The Department of General Services shall post on its internet website the information required pursuant to paragraph (3) of subdivision (a) and a list of the zero-emission vehicles purchased for the state vehicle fleet that are certified to be made with raw materials that come from mining operations that are free of child labor.

Prior/Related Legislation

SB 1157 (Hurtado, 2024) revises existing contracting requirements to require compliance with specified human trafficking prohibitions; requires contractors and subcontractors to certify that contracts comply with specified provisions of law under the penalty of perjury, as specified; requires posted compliance plans, as specified; includes due diligence and annual reporting requirements; and specifies required actions for noncompliance violations, as specified. (Pending in the Senate Labor, Public Employment & Retirement Committee)

SB 1010 (Skinner, Chapter 360, Statutes of 2022) requires DGS, on and after January 1, 2024, to develop criteria to evaluate bidders, at least in part, based on the number of ZEVs or plug-in hybrid electric vehicles in their rental fleet when seeking to award a contract for commercial rental car services, as specified, and provides that the installation of specified ZEV and other electrical and hydrogen fueling infrastructure by state entities do not constitute gifts of public funds.

AB 416 (Kalra, 2021) would have required a contractor to certify that commodities were not grown, derived, harvested, reared, or produced on land where tropical deforestation occurred, as specified. (Vetoed by Governor Newsom)

AB 782 (Cooper, 2021) the Congo Child Labor Act of 2021, among other things, would have prohibited a retail seller or manufacturer doing business in this state with gross receipts of $10 million or more per year, from selling or making a product containing 300 or more grams of cobalt unless it has certified, under penalty of perjury, that the cobalt was not mined or refined using child labor, as specified. (Never heard in the Assembly Accountability and Administrative Review Committee)

SB 498 (Skinner, Chapter 628, Statutes of 2017) requires the ARB to review all state programs related to the adoption of ZEVs and make recommendations to the Legislature and requires DGS to meet a 50% ZEV target for the state vehicle fleet by 2024-25.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

Global Hope 365

State Building and Construction Trades Council of California, AFL-CIO

Hathaway LLC

Kern County Supervisor Jeff Flores

Mission Oil Co.

Rival Well Services, Inc.

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: In support of the bill, Mission Oil Co. writes that, “[t]o keep up with the increasing need for cobalt, artisanal and small-scale mines have an estimated 200,000 people mining in the Congo in horrendous working conditions; including children as young as seven. With no professional, large-scale equipment and safety gear, these makeshift mines are dangerous, often caving in and burying children alive. In October 2022, the US Department of Labor added lithium-ion batteries to a list of goods produced by child labor, specifically because of children involved in the mining of cobalt in the country.”