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California has taken yet another step towards its goal of reducing its carbon emissions, while reshaping the way contractors bid for certain state infrastructure projects. On October 15, 2017, Governor Jerry Brown signed AB 262, the Buy Clean California Act, into law. Rather than awarding contracts to the lowest bidder, AB 262 requires state agencies, the University of California and the California State University systems to award projects to contractors certifying that the embedded carbon emissions for “eligible materials” (specifically, carbon steel rebar, flat glass, mineral wool board insulation and structural steel) meet specific standards. This new law will only apply to contracts entered into on or after July 1, 2019.
A lot of money is at stake here, as California spends approximately $10 billion dollars on infrastructure each year. That means many large state projects will be off the table for contractors and suppliers that do not meet the Buy Clean California Act’s required emission standards (for example, those based out-of-state or overseas that would not otherwise be subject to California’s climate change laws). On the other hand, AB 262 may help level the playing field for manufacturers that have already invested the money necessary to improve their processes and lower their carbon emissions.
As the sixth largest economy in the world, AB 262 hopes to leverage California’s extensive purchasing power to not only influence the production and manufacturing practices of local companies, but those based around the world that seek to do business here in the Golden State and that might not otherwise be subject to such strict laws.
Jennifer Tung is an associate with Hunt Ortmann who’s practice includes general business litigation and contract disputes. If you would like additional information about the subject matter of this bulletin, please contact Jennifer Tung at firstname.lastname@example.org