BILL NUMBER: AB 289 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 22, 2010
AMENDED IN SENATE MAY 28, 2010
AMENDED IN SENATE APRIL 21, 2010
AMENDED IN SENATE JANUARY 25, 2010
AMENDED IN SENATE AUGUST 17, 2009
AMENDED IN ASSEMBLY APRIL 14, 2009
INTRODUCED BY Assembly Member Galgiani
FEBRUARY 13, 2009
An act to amend Sections 185024 and 185037 of, and to
repeal Sections 185033 and 185035 of, Section 185024
of the Public Utilities Code, and to add Chapter 20.1
(commencing with Section 2704.25) to Division 3 of the Streets and
Highways Code, relating to high-speed rail, and declaring the urgency
thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 289, as amended, Galgiani. High-speed rail.
Existing law, the California High-Speed Rail Act, creates the
High-Speed Rail Authority to develop and implement a high-speed rail
system in the state, with specified powers and duties. Existing law,
pursuant to the Safe, Reliable High-Speed Passenger Train Bond Act
for the 21st Century, approved by the voters as Proposition 1A at the
November 4, 2008, general election, provides for the issuance of
$9.95 billion in general obligation bonds for high-speed rail and
related purposes. The federal Passenger Rail Investment and
Improvement Act of 2008 (PRIIA) and the federal American
Recovery and Reinvestment Act of 2009 (ARRA) provides funding for
allocation nationally to high-speed rail projects.
This bill would state the intent of the Legislature to
appropriate $230,500,000 to the authority from the bond act in the
Budget Act of 2010-11, to be used to provide a dollar-for-dollar
match for federal ARRA funds received by the state for high-speed
rail purposes. The bill would identify the corridors
eligible for ARRA and PRIIA funds, upon appropriation by
the Legislature, and require the authority to work with the Federal
Railroad Administration to create a plan for expenditure of the
federal ARRA funds. The bill would set
forth the dates for obligation and expenditure of the
federal ARRA funds and dates for completion of
various tasks in that regard. These provisions would not apply to the
portion of ARRA funds awarded to the Transbay Terminal project in
San Francisco.
This bill would revise and recast provisions governing the
authority's business plan for high-speed rail development and for the
peer review process applicable to the funding plan for each
high-speed rail corridor or usable segment under the preappropriation
review process. The bill would provide that the preappropriation
review process and the preexpenditure review process required for
expenditure of bond funds also apply to expenditure of federal funds.
The bill would enact other related provisions.
Existing law provides for appointment of an executive director by
the authority, who is exempt from civil service and serves at the
pleasure of the authority.
This bill, for purposes of overseeing the ongoing work of the
authority in implementing the high-speed rail project, would
authorize the Governor to appoint up to 5 6
additional executive staff exempt from civil service who would
serve at the pleasure of the executive director.
The bill would create the Office for Project Controls and Risk
Management in the authority and would provide for appointment of an
inspector general by the Governor to oversee the fiscal functions of
the authority. The inspector general would be required to report
annually to the authority and Legislature. The bill would also
require the State Auditor to perform periodic audits of the authority'
s use of ARRA funds.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) With the enactment of the federal American Recovery and
Reinvestment Act (ARRA) (Public Law 111-5) on February 17, 2009, the
federal government made available a grant program in which states
could apply for up to $8 billion in federal funds for the development
of high-speed rail throughout the nation.
(b) On October 2, 2009, the High-Speed Rail Authority (HSRA)
submitted to the Federal Railroad Administration (FRA) of the United
States Department of Transportation an application for $4.73 billion
in federal funds to further the development of high-speed rail in
California.
(c) On January 28, 2010, the federal government awarded the HSRA
$2.25 billion to advance the development of a high-speed rail system
in this state.
(d) The HSRA estimates that 90,000 jobs will be created or
maintained by the investment of these ARRA funds, along with matching
state bond funds, in the dozens of construction projects along the
eligible corridors throughout California.
(e) It is necessary to provide the HSRA with unambiguous statutory
authority to receive and expend federal funds awarded to the HSRA
for the purposes described in its application of October 2, 2009, and
consistent with the award of those federal funds.
(f) Moreover, it is in the state's interest to obligate and expend
awarded funds as expeditiously as possible and in a manner
consistent with the voters' expectations when they approved the Safe,
Reliable High-Speed Passenger Train Bond Act for the 21st Century
(Chapter 20 (commencing with Section 2704) of Division 3 of the
Streets and Highways Code) in November 2008, in order to expand job
creation and to complete vital infrastructure improvements as soon as
possible.
SEC. 2. Section 185024 of the Public Utilities Code is amended to
read:
185024. (a) The authority shall appoint an executive director,
exempt from civil service, who shall serve at the pleasure of the
authority, to administer the affairs of the authority as directed by
the authority.
(b) For purposes of overseeing managing
and administering the ongoing work of the authority in
implementing the high-speed train project, upon recommendation
of the executive director, the Governor may appoint up to
five six additional employees, exempt
from civil service, who, together with the executive
director, shall constitute the executive staff of the authority, and
who shall serve at the pleasure of the executive director.
Pursuant to this subdivision, the Governor may appoint employees
only for the following positions:
(1) Chief program manager.
(2) Regional director.
(3) Chief financial officer.
(4) Director of risk management and project controls.
(c) The compensation of the executive director and the additional
employees authorized by subdivision (b) shall be established by the
authority , and approved by the Department of Personnel
Administration, in an amount that is reasonably necessary, in
the discretion of the authority, to attract and hold a person of
superior qualifications. To determine the compensation for
the positions under this subdivision, the authority shall cause to be
conducted, through the use of independent outside advisers, salary
surveys The authority shall cause to be conducted,
through the use of independent outside advisers, a salary survey to
determine the compensation for the positions under this
subdivision. The Department of Personnel Administration may, in its
discretion, accept a previously completed salary survey that meets
the requirements of this subdivision, and shall review the
methodology used in the survey. The salary survey shall consider
of both of the following:
(1) Other state, regional, and local transportation agencies that
are most comparable to the authority and its responsibilities.
(2) Other relevant labor pools.
The compensation set by the authority shall not exceed the highest
comparable compensation for a position of that type, as determined
by the salary survey. The Department of Personnel
Administration shall review the methodology used in the salary
survey. Based on the salary survey, these positions
shall be paid a salary established by the authority and approved by
the Department of Personnel Administration.
(d) The executive director may, as authorized by the authority,
appoint necessary staff to carry out the provisions of this part.
(e) Any action to be taken under this section by the authority
shall require a vote of the board of the authority.
SEC. 3. Section 185033 of the Public Utilities
Code is repealed.
SEC. 4. Section 185035 of the Public Utilities
Code is repealed.
SEC. 5. Section 185037 of the Public Utilities
Code is amended to read:
185037. (a) Notwithstanding any other provision of law, for any
project along the high-speed rail network, the authority may contract
with the department to perform project design and engineering
services, including construction inspection services.
(b) The Department of Finance, the department, and the authority
may enter into agreements, execute documents, manage accounts and
deposits, and take any other action that may be appropriate, in
accordance with federal law and rules and regulations, to further
this section.
(c) For purposes of this section, "project design and engineering
services, including construction inspection services" means
preliminary engineering, planning, prebid services, right-of-way
acquisition, preparation of environmental documents, preparation of
plans, specifications, and estimates, construction inspection
including surveying and materials testing, quality control inspection
including highway and utility relocation, and grade separations.
SEC. 6. SEC. 3. Chapter 20.1
(commencing with Section 2704.25) is added to Division 3 of the
Streets and Highways Code, to read:
CHAPTER 20.1. HIGH-SPEED RAIL IMPLEMENTATION AND OVERSIGHT
Article 1. General Provisions
2704.25. As used in this chapter, the following terms have the
following meanings:
(a) "ARRA" means the federal American Recovery and Reinvestment
Act of 2009 (Public Law 111-5).
(b) "Authority" means the High-Speed Rail Authority created
pursuant to Section 185020 of the Public Utilities Code, or its
successor.
(c) "Bond act" means the Safe, Reliable High-Speed Passenger Train
Bond Act for the 21st Century (Chapter 20 (commencing with Section
2704).
(d) "Preappropriation review process" means the process, set forth
in subdivision (c) of Section 2704.08, to submit a funding plan for
bond proceeds for eligible capital costs prior to appropriation.
(e) "Preexpenditure review process" means the process, set forth
in subdivision (d) of Section 2704.08, to commit appropriated bond
proceeds to expenditure on eligible capital costs.
Article 2. Implementation of the Safe, Reliable High-Speed
Passenger Train Bond Act for the 21st Century
2704.30. It is the intent of the Legislature to appropriate, in
the 2010-11 Budget Act, the sum of two hundred thirty million five
hundred thousand dollars ($230,500,000) in state bond funds from the
High-Speed Passenger Train Bond Fund to the authority. The state bond
funds shall be used to provide a dollar-for-dollar match for federal
funds received by the state as provided in Section 2704.50. As these
state bond funds are expended by the authority, an equivalent amount
of federal high-speed rail funds received on a reimbursement basis
from the federal government shall be deposited in the High-Speed
Passenger Train Bond Fund to replace the expended state bond funds.
The deposited federal funds shall be used, upon appropriation, for
high-speed rail purposes consistent with federal law and regulations.
Not more than 30 days after replacing the expended state bond funds
with federal funds, the Director of Finance shall notify, in writing,
the chair of the committees in each house of the Legislature that
consider appropriations and the chair of the Joint Legislative Budget
Committee of this action.
2704.31. (a) In identifying the estimated full cost of
constructing a corridor or usable segment thereof for purposes of
subparagraph (C) of paragraph (2) of subdivision (c) of, and
subdivision (d) of, Section 2704.08, the amounts identified shall be
adjusted in year-of-expenditure dollars for the year in which
construction will actually occur.
(b) The preappropriation review process for a corridor or usable
segment thereof for eligible capital costs shall apply to the initial
request for each corridor or usable segment to be funded. The
process shall also apply to appropriations of federal ARRA funds for
capital costs. This subdivision does not, however, require submission
of subsequent funding plans for future year appropriations to fund
projects of a corridor or usable segment that previously was the
subject of a funding plan under the preappropriation review process.
(c) The funding plan required under the preappropriation review
process, in addition to including the items required by subparagraphs
(A) to (K), inclusive, of paragraph (2) of subdivision (c) of
Section 2704.08, shall additionally include a summary of milestones
achieved and any issues identified in that regard, and any actions
taken to address those issues.
Article 3. Federal High-Speed Rail Funds
2704.50. The sum of two billion two hundred fifty million dollars
($2,250,000,000) in federal funds made available to the state for
high-speed rail purposes pursuant to Title XII of Division A of the
American Recovery and Reinvestment Act of 2009 (ARRA) shall, upon
appropriation by the Legislature, be used for (a) planning and
engineering for the high-speed train system and (b) capital costs,
consistent with federal guidelines, rules, and regulations, and
consistent with the bond act and this chapter.
2704.51. The authority shall take those actions necessary to
ensure that federal ARRA funds awarded to the state for high-speed
rail purposes are expended and used in a manner that meets all
applicable federal guidelines, rules, and regulations.
2704.52. (a) The ARRA funds to be appropriated pursuant to
Section 2704.50 shall be available for preliminary engineering,
project-level environmental work, mitigation, final design, and
construction for the following corridors that were approved by the
Federal Railroad Administration, without reference to any individual
corridor or corridors:
(1) San Francisco to San Jose.
(2) Merced to Fresno.
(3) Fresno to Bakersfield.
(4) Los Angeles to Anaheim.
(b) The ARRA funds to be appropriated pursuant to Section 2704.50
(b) Funds received from the Passenger
Rail Investment and Improvement Act of 2008 (PRIIA; Public Law
110-432) for 2010-11 shall also , upon
appropriation, be available for planning and engineering for
any of the following corridors, without reference to any individual
corridor or corridors:
(1) Sacramento to Stockton to Fresno.
(2) San Francisco Transbay Terminal to San Jose to Fresno.
(3) Oakland to San Jose.
(4) Fresno to Bakersfield to Palmdale to Los Angeles Union
Station.
(5) Los Angeles Union Station to Riverside to San Diego.
(6) Los Angeles Union Station to Anaheim to Irvine.
(7) Merced to Stockton to Oakland and San Francisco via the
Altamont Corridor.
(1) Merced to Sacramento.
(2) Los Angeles to San Diego.
(3) The Altamont Corridor.
2704.53. (a) The authority shall work with the Federal Railroad
Administration to establish priorities among the four corridors
specified in subdivision (a) of Section 2704.52 and to create a plan
for expenditure of ARRA funds to be appropriated pursuant to Section
2704.50. Upon finalizing the expenditure plan, the authority shall
submit a copy of the plan to the Director of Finance and to the
policy committees with jurisdiction over transportation matters and
to the fiscal committees in both houses of the Legislature.
(b) The federal funds to be appropriated pursuant to Section
2704.50 shall be available for obligation and expenditure by the
following dates specified in ARRA and its implementing guidelines,
rules, and regulations:
(1) Completion of environmental review by September 2011.
(2) Obligation of funds by September 2012.
(3) Completion of construction by September 2017.
2704.54. This article shall not apply to ARRA high-speed rail
funds awarded to the Transbay Joint Powers Authority for purposes of
constructing the Transbay Terminal in San Francisco.
Article 4. High-Speed Rail Accountability and Oversight
2704.70. (a) The authority shall prepare, publish, adopt, and
submit to the Legislature, not later than January 1, 2012, and every
two years thereafter, a business plan. At least 60 days prior to the
publication of the plan, the authority shall publish a draft business
plan for public review and comment. The draft plan shall also be
submitted to the Senate Committee on Transportation and Housing, the
Assembly Committee on Transportation, the Senate Committee on Budget
and Fiscal Review, and the Assembly Committee on Budget.
(b) The business plan shall identify or include, but need not be
limited to, all of the following:
(1) The type of service the authority anticipates it will develop,
such as local, express, commuter, regional, or interregional, and a
description of the primary benefits the system will provide.
(2) A forecast of the infrastructure capital costs, in
year-of-expenditure dollars, by segment, for the system and an
estimate of capital costs by year of expenditure by major cost
category.
(3) A forecast of the anticipated operating and maintenance costs
by the following categories:
(A) Train drivers and crew members.
(B) Station services and security.
(C) Control center operations.
(D) Administration.
(E) Power and energy.
(F) Track and system maintenance.
(G) Trainset maintenance.
(H) Infrastructure replacement funding, including trainsets.
(4) An estimate and description of the total anticipated federal,
state, local, and other funds the authority intends to access to fund
the construction and operation of the system. The estimate shall
include alternative funding scenarios that reflect the possibility of
reduced or delayed funding from planned sources. These scenarios
should detail the implications for construction timelines and for
bringing revenue-based passenger service on line.
(5) The proposed chronology for the construction of the eligible
corridors of the statewide high-speed train system.
(6) A discussion of all reasonably foreseeable risks the project
may encounter, including, but not limited to, risks associated with
the project's finances, patronage, right-of-way acquisition,
environmental clearances, construction, equipment, and technology,
and other risks associated with the project's development along with
a description of the authority's strategies, processes, or other
actions it intends to utilize to manage those risks.
(7) Using the most recent patronage forecast for the system, a
forecast of the expected patronage and service levels for the Phase 1
corridor as identified in paragraph (2) of subdivision (b) of
Section 2704.04 and by each segment or combination of segments for
which a project level environmental analysis is being prepared for
Phase 1. The forecast shall assume a high, medium, and low level of
patronage and a realistic operating planning scenario for each level
of service. Alternative fare structures shall be considered when
determining the level of patronage.
(8) Based on the patronage forecast in paragraph (7), alternative
financial pro formas for the different levels of service, and the
operating break-even points for each alternative. Each pro forma
shall assume the terms of subparagraph (J) of paragraph (2) of
subdivision (c) of Section 2704.08.
(9) The expected schedule for completing environmental review and
initiating and completing construction for each segment of Phase 1.
(10) The source of federal, state, and local funds available for
the project that will augment funds from the bond act and the level
of confidence for obtaining each type of funding.
(11) A description of written agreements with public or private
entities to fund components of the high-speed rail system, including
stations and terminals, and any impediments to the completion of the
system, such as the inability to gain access to existing railroad
rights-of-way.
(12) A description of alternative public-private development
strategies for the implementation of Phase 1.
(13) An estimate of costs for trainsets and an anticipated
replacement schedule.
(14) An estimate of potential costs of a minimum revenue guarantee
and potential payment sources.
(15) A long-term spending plan for preconstruction activities.
(16) All ARRA requirements and actions taken to ensure compliance
with federal law, guidelines, rules, and regulations.
(17) The number of jobs each corridor is estimated to create in
this state.
(c) To the extent feasible, the business plan should draw upon
information and material developed according to other requirements,
including, but not limited to, the preappropriation review process
and the preexpenditure review process in the bond act, set forth in
Sections 2704.08 and 2704.31. The authority shall hold at least one
public hearing on the business plan and shall adopt the plan at a
regularly scheduled meeting. When adopting the plan, the authority
shall take into consideration comments from the public hearing and
written comments that it receives in that regard, and any hearings
that the Legislature may hold prior to adoption of the plan.
2704.71. (a) The authority shall establish an independent peer
review group for the purpose of reviewing the planning, engineering,
financing, and other elements of the authority's plans and issuing an
analysis of appropriateness and accuracy of the authority's
assumptions and an analysis of the viability of the authority's
financing plan, including the funding plan for each corridor required
under the preappropriation review process pursuant to Sections
2704.08 and 2704.31.
(b) The peer review group shall include all of the following:
(1) Two individuals with experience in the construction or
operation of high-speed trains in Europe, Asia, or both, designated
by the Treasurer.
(2) Two individuals, one with experience in engineering and
construction of high-speed trains and one with experience in project
finance, designated by the Controller.
(3) One representative from a financial services or financial
consulting firm who shall not have been a contractor or subcontractor
of the authority for the previous three years, designated by the
Director of Finance.
(4) One representative with experience in environmental planning,
designated by the Secretary of Business, Transportation and Housing.
(5) Two expert representatives from agencies providing intercity
or commuter passenger train services in California, designated by the
Secretary of Business, Transportation and Housing.
(c) The peer review group shall evaluate the authority's funding
plans and prepare its independent judgment as to the feasibility and
reasonableness of the plans, appropriateness of assumptions,
analyses, and estimates, and any other observations or evaluations it
deems necessary.
(d) The authority shall provide the peer review group any and all
information that the peer review group may request to carry out its
responsibilities.
(e) The peer review group shall report its findings and
conclusions to the Legislature no later than 60 days after receiving
the plans.
(f) The reference in subdivision (c) of Section 2704.08 to Section
185035 of the Public Utilities Code shall be deemed to refer to this
section.
(g) The peer review group is not a state body as that term is
defined in Article 9 (commencing with Section 11120) of Chapter 1 of
Part 1 of Division 3 of Title 2 of the Government Code or a local
agency as that term is defined in the Ralph M. Brown Act (Chapter 9
(commencing with Section 54950) of Part 1 of Division 2 of Title 5 of
the Government Code).
2704.72. The Legislature shall exercise oversight over the
expenditure of funds available for high-speed rail implementation and
construction through the preappropriation review process and the
preexpenditure review process, as set forth in Sections 2704.08 and
2704.31.
2704.73. The Office for Project Controls and Risk Management is
hereby created in the authority and shall report directly to the
chief executive director of the authority.
2704.74. (a) An inspector general shall be appointed by the
Governor to oversee the fiscal functions of the authority to ensure
public confidence and private investor confidence in the fiscal
management and construction of the high-speed train project.
(b) The inspector general shall report annually to the authority
and the Legislature. The report shall be submitted in compliance with
Section 9795 of the Government Code. This subdivision shall be
inoperative on January 1, 2016, pursuant to Section 10231.5 of the
Government Code.
2704.75. The requirement pursuant to subdivision (e) of Section
2704.04 for the State Auditor to perform periodic audits of the
authority's use of bond proceeds shall also apply to the authority's
use of proceeds of federal ARRA funds received by the state for
high-speed rail purposes. Nothing in this section shall limit the
authority of the State Auditor to perform audits of expenditures
associated with any corridor or usable segment of the high-speed
train system. Audits conducted by the State Auditor shall be
independent of any audit conducted internally by the authority.
SEC. 7. SEC. 4. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to ensure that California may secure the maximum amount
of funds available for high-speed rail development and to provide for
necessary staff in that regard as quickly as possible, it is
necessary that this act take effect immediately.