BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 853|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 853
Author: Roger Hernández (D)
Amended: 9/1/15 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 7-3, 7/13/15
AYES: Hueso, Hertzberg, Hill, Lara, Leyva, McGuire, Wolk
NOES: Fuller, Cannella, Morrell
NO VOTE RECORDED: Pavley
SENATE APPROPRIATIONS COMMITTEE: 4-3, 8/27/15
AYES: Lara, Beall, Leyva, Mendoza
NOES: Bates, Hill, Nielsen
ASSEMBLY FLOOR: 50-25, 6/2/15 - See last page for vote
SUBJECT: Electrical and gas corporations: security of plant
and facilities
SOURCE: Coalition of California Utility Workers
DIGEST: This bill requires an electrical and gas
investor-owned utility to utilize employees of the utility for
any work associated with the design, engineering, and operation
of its nuclear, electrical and gas infrastructure, unless the
utility has prior approval from the California Public Utilities
Commission to contract out that work.
ANALYSIS:
Existing law:
AB 853
Page 2
1)Establishes the California Public Utilities Commission (CPUC)
and empowers it to regulate privately-owned public utilities
in California. Specifies that the Legislature may prescribe
that additional classes of private corporations or other
persons are public utilities. (Article XII of the California
Constitution; Public Utilities Code §301 et seq.)
2)Provides the CPUC regulatory authority over public utilities,
including electrical corporations and gas corporations, as
defined. (Public Utilities Code §§218 and 222)
3)Requires the CPUC, after a hearing, if it finds that the
rules, practices, equipment, appliances, facilities, or
service of any public utility, or the methods of manufacture,
distribution, transmission, storage, or supply employed by it,
are unjust, unreasonable, unsafe, improper, inadequate, or
insufficient, to determine and, by order or rule, fix the
rules, practices, equipment, appliances, facilities, service,
or methods to be observed, furnished, constructed, enforced,
or employed. (Public Utilities Code §761)
4)Requires the CPUC to prescribe rules for the performance of
any service or the furnishing of any commodity of the
character furnished or supplied by any public utility, and, on
proper demand and tender of rates, require such public utility
to furnish such commodity or render such service within the
time and upon the conditions provided in such rules. (Public
Utilities Code §761)
This bill:
1)Requires electrical and gas corporations that file general
rate cases on or after January 1, 2016 with the CPUC to obtain
approval from the CPUC prior to contracting out work to
non-utility employees for any work associated with design,
engineering, and operation of its nuclear, electrical, and gas
infrastructure, including all computer and information
technology systems
2)Requires the electrical and gas corporation to file a request
with the CPUC to employ persons that are not employees of the
utility as part of the general rate case application.
3)Requires the utility to demonstrate and the CPUC to evaluate
AB 853
Page 3
that the work can be performed safely and securely, and
without jeopardizing the security of its nuclear, electrical,
and gas infrastructure.
4)Requires the CPUC to issue a written decision as part of the
general rate case proceeding to determine whether the utility
can utilize non-utility employees for the described work.
5)Exempts contracting for work related to construction,
alteration, demolition, installation, maintenance, or repair
work on its nuclear, electrical or gas infrastructure from
requiring approval by the CPUC.
6)Exempts standard equipment purchased from an outside vendor
from the requirements of this section.
Background
Southern California Edison (SCE) layoffs. In April 2014, SCE
announced it would be laying off 400-500 information technology
(IT) workers at its Irwindale, California location. SCE has
also stated that an additional 100 employees would be leaving
voluntarily. The 500 lost jobs reportedly represent just over a
quarter to a third of the SCE Irwindale facility IT workforce of
1,500 to 1,800 employees.
Earlier this year, news reports in the Los Angeles Times, and
other outlets, surfaced that SCE was replacing laid off workers
with outsourced contracted workers from two Indian companies,
Infosys and Tata. Some of these news reports included claims by
SCE laid off workers that they were being asked to train their
replacements who were in the country on H-1B visas. SCE has
confirmed it is outsourcing IT work to two Indian companies,
Tata and Infosys, and that about 70 percent of that work would
be completed offshore, but did not know whether or not foreign
workers would be brought to the U.S. to complete the remaining
30 percent of the work.
H-1B Visas. H-1B visas were introduced by the federal
government in 1990, and over the years the annual cap on them
has ranged up to 195,000, and currently stands at 65,000 (plus
20,000 for individuals with master's degrees). Under federal
law, visa users must have specialized training or a bachelor's
degree in the subject for which they are being hired. The visa
holder must be offered the prevailing wage for the work, and
AB 853
Page 4
they can only take jobs for which employers could not find a
qualified American worker.
Tata and Infosys are reportedly the largest holders of H-1B
visas, based on the 2013 figures, with each having 6,000+ H-1B
visas. According to the same list, about 50 percent of the H-1B
visas holders are offshore companies. Employers must file wage
data and location information with federal authorities, known as
a Labor Condition Application (LCA). A February 2015 news story
in Computer World Magazine noted that "in Irwindale, California,
where SCE runs a major part of its IT operations, Tata and
Infosys, had as many as 180 LCAs, and in a random check of these
applications, every address matched a SCE location."
Lawmakers and the public have raised concerns about potential
abuses with the H-1B visa program after several news reports
have noted the potential widespread abuse of the program by
companies who are looking to reduce their costs at the expense
of American workers. Many of these news stories have included
claims by laid off employees that they are required to train
their replacements who are H-1B visa holders in exchange for
their severance or other benefits package, and/or on condition
of confidentiality. In March 2015, the U.S. Senate Judiciary
Committee held a hearing on "Immigration Reforms Needed to
Protect Skilled American Workers." The hearing focused on the
H-1B visa program, the ability to bring high-skilled workers in
the country to help companies compete, but also noted concerns
with stories of abuse by employers who are displacing American
workers in a manner inconsistent with the requirements or intent
of the visa program.
Outsourcing as a security risk. AB 853 finds and declares that
protecting the security of nuclear, electrical, and natural gas
utility systems, as well as the privacy of ratepayers' personal
information is a paramount state interest. This bill declares
that electrical and gas corporations should make every
reasonable effort to protect their computer systems from
unauthorized intrusions and, to do so, the information
technology personnel who operate those systems should be direct
employees of the utility.
General Rate Case (GRC). All utilities that are regulated by
the CPUC are required to undergo a GRC to request funding for
distribution and generation costs associated with their service.
AB 853
Page 5
GRCs are major regulatory proceedings and provide the CPUC an
opportunity to perform an exhaustive examination of a utility's
operations and costs. Usually performed every three years, the
GRC allows the CPUC to conduct a broad and detailed review of a
utility's revenues, expenses, and investments in plant and
equipment to establish an approved revenue requirement. Through
the GRC, a utility forecasts how they will structure their
operations and make investments for the next three years.
Prior/Related Legislation
AJR 12 (E. Garcia, 2015) urges the United States Department of
Labor and the Congress of the United States to investigate
alleged misuse of the H1-B Visa program. The bill is currently
under consideration on the Assembly Floor.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee, at least
$40,000 in one-time costs and at least $144,000 ongoing annually
to the Public Utilities Reimbursement Account (special) to
consider advice letters or GRC petitions to allow the use of
contract works.
SUPPORT: (Verified8/31/15)
Coalition of California Utility Workers (source)
California Labor Federation
California State Association of Electrical Workers
California State Pipe Trades Council
International Union of Elevator Constructors
Western States Council of Sheet Metal Workers
OPPOSITION: (Verified8/31/15)
@Business, Inc.
Accu-Bore Directional Drilling
Advanced Concepts, Inc.
Agile Sourcing Partners, Inc.
American Council of Engineering Companies - California
AB 853
Page 6
American Truck & Trailer body Co., Inc.
AREVA
Barnard Pipeline, Inc.
Bjork Construction Company, Inc.
Burns & McDonnell Engineering Company
Cadence Resource Group
California Business Properties Association
California Chamber of Commerce
California Hispanic Chambers of Commerce
California Manufacturer & Technology Association
CANUS Corporations
CB&I
CompTIA
Cupertino Electric Inc.
EN Engineering, LLC
Energy Experts International
ETIC Engineering, Inc.
Fluor Corporation
Gas Transmission Systems, Inc.
Golder Associates
Granite Construction Company
Gravity Pro Consulting
Holtec International
Hot Line Construction, Inc.
Information Technology Alliance for Public Sector
IW Group, Inc.
J. Givoo Consultants, Inc.
Large-Scale Solar Association
Latin Business Association
Latino Journal
Los Angeles Area Chamber of Commerce
Los Angeles County Business Federation
MGE Underground, Inc.
National Gay & Lesbian Chamber of Commerce
OneSource Supply Solutions
Orange County Hispanic Chamber of Commerce
Pacific Gas and Electric Company
ProActive Business Solutions, Inc.
PS Energy Group, Inc.
S2S Environmental Resource Management
Sargent & Lundy Engineers, Ltd.
Semper Electric, Inc.
Siemens
Sierra Utility Sales, Inc.
AB 853
Page 7
Snelson Companies, Inc.
Southern California Edison
Sumitomo Electric USA, Inc.
TechNet
Terra Verde Environmental Consulting, LLC
The Okonite Company
Underground Construction Co., Inc.
Utility Tree Service Inc.
Western Electrical Contractors Association, Inc.
Wilson Utility Construction Company
World Wide Technology, Inc.
Zines, Inc.
ARGUMENTS IN SUPPORT: According to the author, AB 853 prohibits
an electrical or gas corporation from outsourcing critical
nuclear, electrical and gas infrastructure work, including
computer and informational technology systems, without first
obtaining approval from the CPUC. The author cites concerns
with news reports regarding layoffs of hundreds of SCE employees
and the outsourcing of these jobs to contractors from overseas,
potentially including H-1B visa holders who would be brought in
to replace California workers. "The part of any computer system
most vulnerable to being compromised is the personnel who
operate the system. Unfortunately, recent events have raised
concerns about the safety and security of such systems."
ARGUMENTS IN OPPOSITION:SCE argues that AB 853 has the potential
to jeopardize the safe, reliable operation of the electric
service and thousands of California jobs. SCE further states
they currently have a database of 8,000 contract workers in a
wide variety of jobs related to operations of the utility.
"Work is performed by contract workers in any manner of job
duties? to bring expertise that is not a core function of the
utility, for urgent projects? This bill could bring utility
projects to a stand-still, including interconnections, major
projects, and critical emergency response and recovery effort,
by requiring each hiring to go through a lengthy public process.
AB 853 suggests this [contract] workforce creates questions
about the security and safety of the utility, which is unfair
and unwarranted."
ASSEMBLY FLOOR: 50-25, 6/2/15
AYES: Alejo, Bonilla, Bonta, Brown, Burke, Calderon, Campos,
Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman,
AB 853
Page 8
Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin,
Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina, Mullin,
Nazarian, O'Donnell, Perea, Quirk, Rendon, Ridley-Thomas,
Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber,
Williams, Atkins
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Beth Gaines, Gallagher, Hadley, Harper, Jones, Kim, Lackey,
Linder, Maienschein, Mathis, Mayes, Melendez, Obernolte,
Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Bloom, Chávez, Dahle, Grove, Wood
Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
9/1/15 21:34:07
**** END ****