BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 619
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Blumenfield
VERSION: 6/17/10
Analysis by: Art Bauer FISCAL: yes
Hearing date: June 29, 2010
SUBJECT:
High-speed rail procurement
DESCRIPTION:
This bill establishes procedures for firms desiring to contract
with the High-Speed Rail Authority to disclose any participation
in the deportation of persons to concentration camps, prisoner
of war camps, work camps, or extermination camps between January
1, 1942 and December 31, 1944.
ANALYSIS:
Existing law:
1) Requires state departments, unless specifically
exempted, to award contracts to the "lowest responsible
bidder."
2) Authorizes state agencies to award contracts to the
lowest responsible bidder or on the basis of "best value"
to the state, provided the factors that will be used to
determine best value are included in the bid solicitation
documents.
3) Authorizes the California High-Speed Rail Authority
(HSRA) to enter into design-bid-build, design-build, or
design-build-operate contracts with private or public
entities for the design, construction and operation of
high-speed trains.
This bill:
1) Makes findings and declarations that:
AB 619 (BLUMENFIELD) Page 2
a. It is in the interest of the state to assess
the character of entities implementing the high-speed
rail program, especially to ascertain if they
participated in deporting persons, American citizens
and others during World War II (WWII) to concentration
camps, in order to determine that public funds used to
construct the high-speed rail project are used in "a
manner, consistent with our shared values of respect
for human rights".
b. Any findings that an entity has had direct
involvement in transporting persons by trains persons
to exterminations camps, work camps, concentration
camps, prisoner of war camps, or any similar other
camps are "relevant to the to the state's legitimate
concern with the present character of applicants, as
well as to the quality of their corporate governance,
corporate accountability, corporate responsibility,
and trustworthiness."
c. Historical wrongs are not intended to be
remedied by this bill.
d. This bill is not intended to be a punitive
measure.
2) Defines "entity" to mean any corporation, affiliate, or
other entity that controls, is controlled by, or is under
common control with, or that is a member of a partnership
or a consortium with an entity affected by this bill.
3) Requires all entities submitting bids with the HSRA for
services, or an engineering, construction, manufacturing,
or high-speed train operating contract are required to
affirmatively certify prior to submitting a formal bid
whether it had any direct involvement in the deportation of
any individuals to extermination camps, work camps,
concentration camps, prisoner of war camps, or any similar
camps between January 1, 1942 and December 31, 1944.
4) Requires entities responding in the affirmative shall
certify the following:
a. Whether it has any records (whenever created)
in its possession, custody, or control related to
AB 619 (BLUMENFIELD) Page 3
those deportations.
b. Whether the entity has taken remedial action
concerning those deportations, including restitution
to all identifiable victims subject to deportation.
5) Permits an entity certifying direct involvement in
deportations to provide the HSRA with any mitigating
circumstances in narrative and documentary form, including:
a. All records in its possession related to the
origination and destination of the deportation trains,
the fees collected for the deportations and any
internal or external communications regarding the
deportations in a detailed narrative form.
b. Detailed description of any remedial actions
taken or restitution that the firm has provided
identifiable victims.
6) Requires bidders to make their disclosures in advance
of, or at the time of, submitting bid documents and
prohibits submission of disclosures after the deadline for
the submission of bid documents. All disclosures are a
matter of public record.
7) Allows the HSRA to disqualify the entity from bidding if
it determines that the disclosures raise "significant
concerns" regarding an entity's corporate character and
responsibility.
8) Allows a second or third lowest bidder or any
subcontractor on the bidder's team, prior to awarding a bid
to a qualified entity by the HSRA, to bring an action in
superior court if that entity suffers damages as a result
of the successful bidder's false certification.
9) If a determination is made that an entity has submitted
a false certification, the entity may be subject to the
following consequences:
a. Authorizes the court to impose a penalty of
$250,000 or greater or twice the value of the bid that
was submitted to the HSRA.
b. Authorizes the HSRA, at its discretion, to
AB 619 (BLUMENFIELD) Page 4
terminate the contract with the entity.
c. Debars the entity from bidding on state
contracts for a period of not less than three years
from the date the entity submitted false information.
10) Authorizes the court, at its discretion, to award
costs and reasonable attorney's fees to the prevailing
party.
COMMENTS:
1) Purpose . According to the author, the purpose of this
bill is to require companies seeking to be awarded a
high-speed rail contract to publicly disclose their direct
involvement, if any, in transporting persons by trains to
exterminations camps, work camps, concentration camps,
prisoner of war camps, or any similar other camps. The
firms are also required to disclose if they have had made
restitution to all identifiable victims of deportation. The
disclosures are seen by the author as a means to ensure
that companies that profit from the state's high-speed rail
system take responsibility for their involvement in the
"horrific actions that forever changed the lives of
individuals and families, many of whom are residents of
California." This bill is not asking firms for financial
restitution, but only an acknowledgement on the part of
companies that were involved in WW II of their
participation in transporting people to concentration or
other types of camps. Moreover, the bill leaves to the
discretion of the HSRA whether it should take action to
disqualify a firm from bidding, if its disclosure of events
raises significant concerns.
2) Background . To be sure, the focus of this bill is the
deportation of persons to the various categories of camps
in Europe. The period covered by the bill begins with
January 1, 1942, the month in which the Nazi Regime decided
at the Wannsee Conference that Jews would be deported from
their countries of residence in Europe to concentration
camps for extermination. December 31, 1944 is when the
deportation of Jews was stopped. During this time of the
Holocaust, millions of Jews were transported by railroad to
extermination camps. All the national railroads in Europe
were involved in wartime activities, including transporting
people to concentration and other camps. The author has
AB 619 (BLUMENFIELD) Page 5
focused attention on Soci?t? Nationale des Chemins de Fer
Fran?ais (SNCF), which was created as a state enterprise in
1938, when the French government nationalized five private
railroad companies. It has been documented that SNCF
transported 75,000 Jews from France east to concentration
camps. Today, SNCF remains a state owned company.
Other railroads were also involved in the transportation of
Jews in Europe, most notably the Deutsche Reichsbahn, the
German national railroad. It was created in 1924 and was
placed under the control of the Nazi government in 1937.
During the period covered by this bill it is well
documented that it carried Jews to concentration and other
kinds of camps. Both SNCF and Deutsche Reichsbahn were paid
to carry persons to the camps.
In 1949, the Deutsche Bundesbahn, was created as the
successor to the Deutsche Reichsbahn and was owned by
German government until 1994. The successor to Deutsche
Bundesbahn is Deutsche Bahn AG, a private railroad
operating company.
Although the discussion around AB 619 has focused on
Europe, the bill applies to all firms, including
participants in partnerships, consortium or other business
relationships, who may submit bids for contracts with the
HSRA. It, therefore, applies to the Asian-Pacific Theatre
of WW II. In Asia, the Japanese Government Railways
operated trains on the main islands of Japan between 1907
and 1949. This operation transported prisoners of war to
various kinds of camps in Japan. In addition, about 670,000
Koreans were brought to Japan against their will by the
government to work in factories and mines often under
appalling conditions. These individuals were moved about
Japan by rail. In 1949, the Japanese Government Railroad
was reorganized into a state owned public corporation
referred to as the Japanese National Railroad. In 1987, the
Japanese National Railroad was privatized and the Japanese
Rail Group was formed as its successor. Seven for-profit
firms were created during the privatization. One of the
companies, the JR Central operates Japan's Shinkansen
high-speed train service, the most heavily patronized
high-speed service in the world.
In regard to the United States, privately owned railroads
transported American citizens of Japanese ancestry as well
AB 619 (BLUMENFIELD) Page 6
as Japanese who were legal residents in the country to
internment camps throughtout the West. The railroads also
transportated prisoners of war to incarceration facilities
in the country. In 1970, congress enacted legislation
creating a government corporation, the National Railroad
Passenger Corporation, which operates Amtrak services. The
enabling act permitted railroad corporations operating
passenger service to transfer their service to Amtrak and
to allow the company to operate over their lines. This
freed the companies from any legal obligations to provide
passenger services. Amtrak was allowed to terminate
services and decide how to organize the services it wanted
to provide. Amtrak is not a corporate successor in interest
of the corporations that previously provided passenger rail
services.
3) Foreign firms and the high-speed rail project . The
California high-speed rail project cannot be developed and
operated without the involvement of foreign firms, since no
U.S. firm can match the experience of foreign companies in
developing and operating high-speed service. For example,
SNCF, which has indicated an interest in participating in
the project, operartes 1,100 miles of high-speed lines in
France. Representatives of Japanese business firms also
have shown an interest in participating in the the project.
The JR Central operates the most heavily traveled
high-speed service in the world, the Tokaido Shinkansen,
operating between Tokyo and Osaka, would likely be covered
by this bill. If Deutsche Bahn AG were interested in the
participating in the high-speed rail program it would
likely be affected by the provisions of AB 619.
4) California's previous experience addressing Holocaust
issues . AB 600 (Knox), Chapter 827, Statutes of 1999,
enacted the Holocaust Victim Insurance Relief Act of 1999
which required the State Insurance Commissioner to
establish and maintain a registry of Holocaust victims to
whom insurance policies were issued in Europe between 1920
and 1945. In addition, AB 600 authorized Holocaust victims
who are residents of the state and to whom policies were
sold during that period, beneficiaries of the policies, or
heirs of beneficiaries to bring legal action against such
firms, if they believe they are entitled to unpaid
benefits. The United Statutes Supreme Court held AB 600 to
be unconstitutional, since it infringed upon the power of
the President to resolve foreign policy issues, such as
AB 619 (BLUMENFIELD) Page 7
Holocaust-era claims. To be sure, AB 619 is not seeking
economic restitution, only acknowledgement of wrong doing,
but it is addressing a matter that may be viewed as within
the scope of presidential foreign policy making. Moreover,
there is a possibility the HSRA may require information
that firms are not obliged to disclose under terms of
agreements to which the United States is a signatory,. This
could engender legal action.
5) Implications for the high-speed rail program . Although
the HSRA is not ready to issue procurement documents to
design, build, or operate a high-speed rail system, this
bill raises issues that could result in litigation that
would delay the procurement. For example, if the HSRA chose
to disqualify an entity because its disclosures "raised
significant concerns about that entity's corporate
character and responsibility," it is possible the entity
would sue the HSRA. On the other hand, parties believing
the HSRA's failed to perform sufficient due diligence and
disqualify an entity may choose to challenge the HSRA in
court. In short, this litigation could have an impact on
the proposed implementation schedule of the HSRA.
6) Clarification needed . This bill endeavors to incorporate
into the high-speed rail procurement process an additional
condition, an acknowledgement by bidders of participating
in a wrong doing. The basis for making this determination
rests with the HSRA. Should the HSRA exercise its
discretion and disqualify a firm, it must be based on the
meaning of the terms "significant concerns," "corporate
character," and "responsibility." (See page 5, lines 29-32)
These terms are not defined in the bill and beg for
definition. The committee may wish to consider authorizing
the HSRA to adopt a regulation defining the terms
significant concerns, corporate character, and
responsibility for purposes of implementing this bill. The
committee staff has been informed that the author may
submit amendments clarifying one or more of these terms.
Another term requiring definition is "deportation," which
implies the transportation of individuals to concentration
camps or other camps beyond a person's country of
residence. In fact, individuals were transported by
railroad to camps within their county of residence as well
as beyond the country. The committee may wish to amend the
bill to define deportation to mean the transporting of
AB 619 (BLUMENFIELD) Page 8
people to camps within as well as outside a country.
Assembly Votes are not relevant.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 23, 2010)
SUPPORT: 30 Years After
Bet Tzedek The House of Justice
Jewish Family Services of Los Angeles
Los Angeles Museum of the Holocaust
OPPOSED: None received.