BILL ANALYSIS Ó AB 16 Page 1 ASSEMBLY THIRD READING AB 16 (Perea) As Introduced December 6, 2010 Majority vote TRANSPORTATION 12-1 APPROPRIATIONS 12-5 ----------------------------------------------------------------- |Ayes:|Bonnie Lowenthal, |Ayes:|Fuentes, Blumenfield, | | |Jeffries, Achadjian, | |Bradford, Charles | | |Blumenfield, Bonilla, | |Calderon, Campos, Davis, | | |Buchanan, Eng, Mitchell, | |Gatto, Hall, Hill, Lara, | | |Galgiani, Miller, | |Mitchell, Solorio | | |Portantino, Solorio | | | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Norby |Nays:|Harkey, Donnelly, | | | | |Nielsen, Norby, Wagner | | | | | | ----------------------------------------------------------------- SUMMARY : Requires the High-Speed Rail Authority (Authority) to make every effort to purchase high-speed train rolling stock and related equipment that is 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 responsibility to plan, design, construct, operate, and maintain 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 (Act). The 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 the use of funds appropriated for planning and capital costs. 4)Requires the Authority, prior to seeking an initial appropriation for capital expenditures and prior to expending bond funding for the construction and acquisition of equipment and property, to AB 16 Page 2 submit detailed funding plans to the Legislature. 5)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. 6)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. 7)Prohibits, generally, the use of American Recovery and Reinvestment Act of 2009 (ARRA) funds for a project unless all of the iron, steel, and manufactured goods used in the project are produced in the United States. FISCAL EFFECT : According to Assembly Appropriations Committee, potential minor administrative costs to the extent the Authority conducts enhanced outreach to California suppliers prior to contracting for equipment purchases. COMMENTS : Following the statewide voter approval of Proposition 1A authorizing $9 billion for the development of a high-speed rail system in California, the Authority is transitioning from a small study and planning organization to a multi-billion dollar engineering and construction entity. The Authority may soon be tasked to approve major purchases of train rolling stock and equipment. This bill imposes a requirement upon the Authority to try to buy California manufactured rolling stock and equipment. California workers have reason to be concerned that high-speed rail manufacturing may otherwise be outsourced. Foreign firms are lobbying hard to secure work from 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. The sponsor of this bill, the California Labor Federation, asserts AB 16 Page 3 that, "As construction progresses, California will need to contract with a company to purchase new high-speed trains. Currently all high-speed rail manufacturers are located overseas. But California has an opportunity to use public dollars to attract new manufacturers to California to build high-speed rail trains here, creating new jobs and a new industry." Related legislation: AB 492 (Galgiani) authorizes 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. AB 492 (Galgiani) is currently in the Assembly Appropriations Committee. Previous legislation: AB 1830 (Galgiani) of 2010 was identical to this bill. It passed the Legislature but was vetoed by Governor Schwarzenegger who 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." Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093 FN: 0000498