BILL ANALYSIS Ó
AB 16
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Date of Hearing: December 25, 2011
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 16 (Perea) - As Introduced: December 6, 2010
SUBJECT : High-Speed Rail Authority: California-made train and
equipment purchases
SUMMARY : Requires the High-speed Rail Authority (Authority) to
make every effort to purchase high-speed train rolling stock and
related equipment that are manufactured in California,
consistent with federal law and any other applicable provision
of state law.
EXISTING LAW :
1)Establishes the Authority and charges it with the planning,
designing, constructing, operating, and maintaining a
state-of-the-art high-speed train system for California.
2)Enacts the Safe, Reliable High-Speed Passenger Train Bond Act
for the 21st Century (Bond Act). The Bond Act, approved as
Proposition 1A in November 2008, provides $9.95 billion in
general obligation bond authority to fund the planning and
construction of a high-speed passenger train system and
complementary improvements to other specified rail systems in
the state.
3)Authorizes the Legislature to establish conditions and
criteria on funds appropriated for planning and capital costs;
requires the Authority, prior to expending bond funding for
the construction and acquisition of equipment and property, to
submit concurrently to Department of Finance and the Joint
Legislative Budget Committee a detailed funding plan for each
corridor or usable segment.
4)Requires contracts for the purchase of supplies for state or
local government use to include provisions granting
preferences for supplies grown, manufactured, or produced in
California. Authorizes the use of the preference when
in-state products and supplies do not exceed more than 5% of
the price of the lowest bid for goods and supplies
manufactured out-of-state.
AB 16
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5)Establishes procedures for competitive bidding of certain
contracts by public entities and requires them to give
California companies preference on construction contracts
against nonresident contractors. The preference is equal to
any preference that the nonresident contractor receives on
public works contracts in its state of residency.
6)Authorizes, through enactment of the federal American Recovery
and Reinvestment Act of 2009 (the recently enacted federal
economic stimulus package referred to as "ARRA"), $3.2 billion
for high-speed rail passenger service development in
California.
7)Prohibits, pursuant to ARRA, the use of economic recovery
funds for a project for the construction, alteration,
maintenance, or repair of a public building or public work
unless all of the iron, steel, and manufactured goods used in
the project are produced in the United States. The federal
law requires that this prohibition be applied in a manner
consistent with U.S. obligations under international
agreements (e.g., the government procurement provisions of the
nation's trade agreements). The federal law also establishes
conditions for waivers of the rule.
FISCAL EFFECT : Unknown.
COMMENTS : Following the statewide voter approval of the Bond
Act, the Authority is transitioning from a small study and
planning organization to a multi-billion dollar engineering and
construction entity. With the passage of the Bond Act and
California's approval and pending receipt of $3.2 billion in
federal ARRA high-speed rail funds, the Authority will be
developing, in 2012, the initial construction segment, which
stretches about 120 miles from Borden (north of Fresno) to
Bakersfield. Although this bill would require the Authority to
make every effort to purchase train equipment and rolling stock
manufactured in California, the initial $5.5 billion to be
expended on the construction of the initial segment will not
include expenditures for rolling stock or equipment.
According to the sponsor of this bill, the California Labor
Federation, AFL-CIO, "In 2008, a majority of California voters
approved Proposition 1A, authorizing $9 billion in bond funding
for the construction of a statewide high-speed rail system. The
construction of the system will create more than 600,000 jobs
AB 16
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alone? This bill would require the Authority to make every
effort to purchase high-speed trains manufactured in California
when they contract for trains. Since no trains are currently
manufactured in California, this consideration would incentivize
train manufacturers from abroad to consider locating new
manufacturing in California."
AB 16 imposes a requirement upon the Authority to try to buy
California-manufactured rolling stock and equipment. Similar
programs at the federal level that require public transit
agencies to buy American-made products have met with mixed
results. In one instance, for example, a foreign firm brought
in foreign employees to assemble light rail cars built under a
"Buy America" contract because hiring and training United States
workers was too expensive.
Despite suggestions that a "Buy California" requirement may not
be effective, California workers have reason to be concerned
that high-speed rail manufacturing may otherwise be outsourced.
Foreign firms have already begun ramping up their efforts to
secure work for the Authority. China, for example, has
announced plans to build United States high-speed train lines
and is stepping up exports of its rail technology. French,
Spanish, and Japanese firms have also indicated their interests
in securing contracts with the Authority.
Related legislation : AB 492 (Galgiani, 2011) would authorize
the Authority to consider, to the extent permitted by federal
and state law, the creation of jobs in California when awarding
major contracts or purchasing high-speed trains.
Previous legislation: AB 1830 (Galgiani/Jones) of 2010, was
identical to this bill. That bill passed this committee on a
12-2 vote, was approved by the Legislature, and eventually
vetoed by the Governor. In his veto message, the Governor
wrote, "While I support job creation in the state, this bill
could result in unnecessary additional costs and delays in the
constructing of high-speed rail in California and for this
reason I am unable to sign it."
REGISTERED SUPPORT / OPPOSITION :
Support
California Labor Federation, AFL-CIO (Sponsor)
AB 16
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American Federation of State, County and Municipal Employees,
AFL-CIO
California Conference of Machinists
California Nurses Association
California Teamsters
Communication Workers of America (CWA)
State Building and Construction Trades Council of California
United Steelworkers of America (USWA)
Opposition
None on file
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093