BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 16
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        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 








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          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 








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        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 


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