BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1830
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: jones
VERSION: 6/1/10
Analysis by: Art Bauer FISCAL: yes
Hearing date: June 29, 2010
SUBJECT:
High-speed rail
DESCRIPTION:
This bill encourages the California High-Speed Rail Authority to
acquire equipment manufactured in California.
ANALYSIS:
SB 1420 (Kopp), Chapter 796, Statutes of 1996 creates the HSRA
with a nine member governing board, including five members
appointed by the governor, two members appointed by the Senate
Rules Committee, and two members appointed by the Speaker of the
Assembly. In 2008, California voters approved the Safe, Reliable
High-Speed Passenger Train Bond Act, Chapter 276, Statutes of
2008 (Proposition 1A) placed on the ballot by AB 3034
(Galgiani). The bond measure makes available $9 billion for the
development of a high-speed rail system and $950 million for
improvements to existing passenger rail systems that will offer
feeder services to the high-speed rail service. Proposition 1A
identified Phase I of the high-speed rail (HSR) project as
Anaheim-Los Angeles-Bakersfield-Fresno-San Jose-San Francisco
Transbay Terminal. Although planning can proceed on the San
Diego and Sacramento lines, construction may occur only after
Phase I is under construction and funding is available for these
two additional segments.
Proposition 1A defines the capital cost for which bond revenues
may be used to include acquisition of property, acquisition and
construction of tracks, structures, power systems, and stations;
acquisition of train equipment; mitigation of direct and
indirect environmental impacts; relocation assistance; and other
related capital facilities, including financing and refinancing
if authorized by a subsequent statute. It also authorizes the
HSRA to contract for services and equipment for developing and
AB 1830 (JONES) Page 2
operating the high-speed train service.
In January of 2010, the Federal Railroad Administration (FRA)
awarded the HSRA a $2.25 billion American Recovery and
Reinvestment Act (ARRA) grant, the largest HSR grant award in
the country. Included in the grant is $400 million for the San
Francisco Transbay Terminal joint powers agency, which submitted
a separate ARRA application, but FRA consolidated its grant with
the state's. The actual amount of ARRA funds available to the
HSR project is $1.85 billion. The ARRA grant is for assisting in
funding the preliminary engineering and environmental work on
Phase I and to assist with the construction of the following
Phase I segments: Los Angeles-Anaheim, Fresno-Bakersfield,
Fresno-Merced, and San Jose-San Francisco. As a condition of the
grant, the HSRA must obtain environmental clearances for the
corridors by September 30, 2011, and construction must be
completed by September 30, 2017.
In addition to the Proposition 1A authorization and the ARRA
funds, the HSRA also has $336 million of other public funds. The
total amount of funding currently available to the HSRA is $11.2
billion. The HSRA's current estimate for constructing Phase I is
$42.6 billion.
ARRA prohibits the use of grant funds for a project involving
the construction, alteration, maintenance, or repair of a public
building or public facility, unless all of the iron, steel, and
manufactured goods used in the project are produced in the
United States. In addition, it requires that this prohibition
be applied in a manner consistent with U.S. obligations under
international agreements pertaining to procurement. Lastly,
ARRA establishes conditions for waivers of requirements.
This bill authorizes the HSRA to make "every effort" to purchase
high-speed rail equipment manufactured in California, provide it
is consistent with federal law.
COMMENTS:
1) Purpose . This bill seeks to maximize the number of
California-based jobs that the construction of the
high-speed train system will create by encouraging the
acquisition of equipment that is manufactured in the state,
provided that the procurement activity is consistent with
federal law. Last year this committee approved AB 733
(Galgiani) which had the same objective, although it
AB 1830 (JONES) Page 3
required the HSRA to give an explicit preference when
evaluating bids to California-based manufacturing. The
governor vetoed AB 733. In his veto message, Governor
Schwarzenegger said AB 733 "could result in unnecessary
additional costs and delays and may jeopardize the success
of the project in securing the billions of dollars that are
needed to construct this project."
This bill recognizes the supremacy of federal law in the
matters of international trade.
2) High-speed rail project will create jobs . According to
the US Department of Commerce econometric models, the
number of construction only jobs created by a heavy
engineering project, such as high-speed rail, is assumed to
be between 18,000 and 32,000 direct and indirect jobs for
every $1 billion spent. The HSRA is assuming the number of
jobs create by the project could exceed 800,000, which is
within the accepted econometric parameters. This would have
a very beneficial effect on the construction sector of the
California's economy.
Assembly Votes:
Floor: 53-22
Appr: 12-4
Trans: 12-2
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 23, 2010)
SUPPORT: California Labor Federation (sponsor)
OPPOSED: None received.