BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 2249 (Cooley) - State parks
          
           ----------------------------------------------------------------- 
          |                                                                 |
          |                                                                 |
          |                                                                 |
           ----------------------------------------------------------------- 
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Version: August 2, 2016         |Policy Vote: N.R. & W. 9 - 0,   |
          |                                |          JUD. 7 - 0            |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Urgency: No                     |Mandate: No                     |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Hearing Date: August 8, 2016    |Consultant: Narisha Bonakdar    |
          |                                |                                |
           ----------------------------------------------------------------- 
          
          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  AB 2249 prohibits a concession contract from providing a  
          contracting party with a trademark or service mark of the names  
          associated with a state park.      


          Fiscal  
          Impact:  
           One-time costs of $50,000 to $150,000 (General Fund) to the  
            California Department of Parks and Recreation (CDPR) to  
            develop regulations.
           Unknown, potentially significant costs, to ensure compliance  
            with anti-trademarking provisions and to provide required  
            appeals process, if requested.
           Unknown cost for potential litigation for contested contract  
            awards. (See staff comments)


          Background:  
          California Department of Parks and Recreation. CDPR manages  







          AB 2249 (Cooley)                                       Page 1 of  
          ?
          
          
          California's state park system, comprised of 280 State Parks,  
          State Natural Reserves, State Historic Parks, State Historic  
          Monuments, State beaches, State Recreation Areas, State  
          Vehicular Recreation Areas, State Seashores and State Marine  
          Parks that are visited by over 67 million visitors each year.  
          Together, State Park System lands protect and preserve  
          culturally and environmentally sensitive structures and  
          habitats, threatened plant and animal species, ancient Native  
          American sites, historic structures and artifacts. 


          Under existing law, the CDPR may enter into contracts for the  
          construction, maintenance, and operation of concessions within  
          units of the state park system, and describes the process  
          through which concession bids are solicited and selected.  
          Currently, CDPR has approximately 200 contracts with vendors. 

          Concession contracts are required, with specified exceptions, to  
          be awarded to the best responsible bidder.  The best responsible  
          bidder is a bidder who will (1) operate the concession  
          consistent with the contract; (2) operate in a manner fully  
          compatible with and complimentary to the characteristics,  
          features, and theme of the park; and (3) operate in the best  
          interests of the state and the public (Public Resources Code §  
          5080.05).

          Alternatively, the director of CDPR is authorized to negotiate  
          or renegotiate a contract under specific conditions, including  
          the bid process failed to produce a best responsible bidder. 

          Existing law also requires all concession contracts to contain  
          several provisions, including:


               a.     Maximum term shall be 10 years, unless under certain  
                 conditions, as described.


               b.     If the concession contract is for construction,  
                 development and operation of a multiple-unit lodging  
                 facility with an initial cost of more than $1.5 million,  
                 the maximum term may be 50 years.










          AB 2249 (Cooley)                                       Page 2 of  
          ?
          
          
               c.     Every concessionaire shall submit to CDPR all sales  
                 and use tax returns and provide an annual financial  
                 statement.  Every concessionaire is subject to audit by  
                 CDPR.


               d.     The state is not obligated to purchase any  
                 improvement made by the concessionaire if a contract is  
                 terminated for substantial breach.


          The Case for the Trademark Clause. This bill was sparked by a  
          recent, well publicized, contract dispute involving Yosemite  
          National Park. For the last 23 years, the Delaware North Company  
          was the concessionaire operating visitor services and facilities  
          within Yosemite National Park under a contract with the National  
          Park Service.  In 2015, the National Park Service rebid the  
          contract and awarded a new 15 year concession contract to  
          Aramark who was the successful bidder.  


          After Delaware North lost the contract they sued the federal  
          government for "breach of an implied contract" and other alleged  
          bidding issues.  They also asserted they were entitled to  
          compensation for various trademarks and other intellectual  
          property rights they had registered while they were the  
          concessionaire in Yosemite.  According to Delaware North, some  
          of the trademark registrations were acquired by Delaware North  
          from the Curry Company, the previous concessionaire, along with  
          other Curry Company assets, and some were newly registered by  
          Delaware North after they became the concessionaire. Among the  
          names they claim to have a registered trademark property right  
          for are "The Ahwahnee," "Yosemite Lodge," "Wawona," "Curry  
          Village," and "Badger Pass," all of which are well-known venues  
          within Yosemite National Park.  Also, the Delaware North Company  
          claims to have a registered trademark for the name "Yosemite  
          National Park" and the iconic Half Dome used on logos and other  
          merchandise sold through the gift shop. 


          Delaware North has asserted that it is entitled to compensation  
          for the value of its trademarks and other intellectual property  
          rights in Yosemite National Park which it claims is valued at  
          $51 million.  The National Park Service has countered that the  








          AB 2249 (Cooley)                                       Page 3 of  
          ?
          
          
          value is closer to $1.63 million, and alleges that many of the  
          trademarks were registered without its knowledge or consent. The  
          National Park Service has also filed a petition with the United  
          States Patent and Trademark Office seeking to cancel the  
          disputed trademarks.  


          Delaware North offered to let the park keep the names while the  
          legal process plays out.  But, rather than risk an injunction  
          that might interrupt service at Yosemite, the National Park  
          Service removed the contested names from various signs, bridges,  
          and other places within the park, and renamed the venues, at a  
          total cost of $1.7 million.  For example, the historic Ahwahnee  
          Hotel, which is listed on the National Register of Historic  
          Places as a National Historic Landmark, is being renamed "the  
          Majestic Yosemite Hotel." The dispute has outraged many park  
          visitors who see the trademark claims as violating the public  
          trust and the deeply held understanding that the national parks  
          are national treasures that belong collectively to the people of  
          the country.




          Proposed Law:  
            This bill establishes the California Heritage Protection Act.   
          Specifically, the bill:


          1)Prohibits a concession contract from providing a contracting  
            party with a trademark or service mark of the names associated  
            with a state park.                 


          2)Makes several legislative findings and declarations regarding  
            the public interest and historical significance served by  
            national, state, and regional parks, including Yosemite  
            National Park. 


          3)Modifies the definition of best responsible bidder, for  
            purposes of existing law governing the awarding of concession  
            contracts for state parks, to include that the bidder shall  
            operate the concession in a manner that protects the state's  








          AB 2249 (Cooley)                                       Page 4 of  
          ?
          
          
            trademark and service mark rights in the names associated with  
            a state park and state park resources. 


          4)Provides that a concessionaire, who makes a legal claim to  
            have a trademark or service mark interest in a state park in  
            violation of the law, shall forfeit the right to bid on future  
            state park concession contracts, to the extent authorized by  
            federal law.


          5)Provides that a concessionaire who files an application for a  
            trademark or service mark associated with a state park or  
            state park resources that is successfully opposed or cancelled  
            by the state, shall be responsible for the state's attorney's  
            fees and costs.


          6)Prohibits a concession contract awarded for a state park from  
            providing the contracting party with a trademark or service  
            mark interest in the name or names associated with a state  
            park or state park resources, or from serving as the basis for  
            any legal claim that the contracting party has such an  
            interest.  


          7)Prohibits a bidder from being awarded a state park concession  
            contract if the bidder has made a legal claim or assertion to  
            have a trademark associated with a state park in violation of  
            this statutory prohibition, or if a court has determined that  
            the bidder has made a claim to have a trademark or service  
            mark interest in the name or names associated with a state or  
            federal park venue without reasonable cause and in bad faith.


          8)Requires CDPR to adopt regulations to provide a bidder who is  
            denied a contract award on the basis of trademark claims with  
            written notice and an opportunity to rebut the denial at a  
            formal hearing.


          9)Provides that a provision of a concession contract or other  
            agreement that violates these provisions shall be void and  
            unenforceable.








          AB 2249 (Cooley)                                       Page 5 of  
          ?
          
          


          10)                                Provides that this bill's  
            prohibition on state park concession contracts providing the  
            basis for a trademark claim in the name or names associated  
            with a state park shall not be construed to impact a  
            contracting party's valid trademark or service mark rights  
            that were held before the concession contract was awarded.


          11)                                States that the bill is  
            declaratory of existing law.


          Staff  
          Comments:  
          Purpose. According to the author, the current concessionaire of  
          Yosemite National Park has operated there since 1993 but  
          recently lost the bid to renew their contract. In response, they  
          claimed the names of several Yosemite landmarks as their  
          intellectual property. Unable to resolve the dispute, the  
          National Park Service has re-named the Ahwahnee Hotel, Curry  
          Village and the Wawona Hotel.  This bill will prevent similar  
          claims in state parks.

          Current contracts. The contract typically used by CDPR for state  
          park concessions in California expressly prohibits a  
          concessionaire from obtaining a trademark claim in any name or  
          logo associated with a state park, and provides that any such  
          trademark that might be created during the period of the  
          contract shall continue in CDPR's exclusive ownership upon  
          termination of the Contract.  While this is the current practice  
          at CDPR, this bill would ensure that such protections continue  
          to apply in the future. 

          CDPR's fiscal. According to the CDPR,

          "The Department cannot comply with the requirements of this bill  
          within existing resources, therefore, this bill would have  
          General Fund implications. Additional costs would be associated  
          with developing regulations and the additional workload to  
          research the background of potential concessionaires."

          CDPR estimates one-time costs of $150,000 (General Fund) to  








          AB 2249 (Cooley)                                       Page 6 of  
          ?
          
          
          develop regulations, and approximately $335,000 annually  
          (General Fund) for staff to research potential concessionaires,  
          amend current concession contracts; hold appeals hearings, if  
          requested; and conduct outreach on this new law.

          It is not clear that the level of resource-intensive, research  
          accounted for in CDPR's fiscal is intended; however, this  
          interpretation highlights a potentially costly ambiguity in the  
          bill given that CDPR's interpretation will guide implementation.  
          The author may wish to clarify that CDPR may allow contract  
          bidders to self-certify compliance with the law, and to only  
          require CDPR to deny or end a contract if it becomes aware of a  
          violation.

          Potential litigation? The CDPR notes the "likelihood of  
          additional Departmental costs for Attorney General  
          Representation due to contested contract awards. For context,  
          billing for representation by the Attorney General in a recent  
          contested concession contract award was $80,000. That case was  
          considered straightforward and uncomplicated." 









                                      -- END --