BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
409 (Ducheny)
Hearing Date: 08/27/2009 Amended: 05/21/2009
Consultant: Mark McKenzie Policy Vote: T&H 10-0
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BILL SUMMARY: SB 409 would create a Department of Railroads
within the Business, Transportation and Housing Agency (BTH),
consolidating the rail programs currently administered by the
Department of Transportation (Caltrans), the High-Speed Rail
Authority (HSRA), and the Public Utilities Commission (PUC).
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
New executive positions$175-$200 $350-$400 $350-$400 Special*
Establish DOR at BTH unknown, significant costs to establish
and Special*
maintain office space and general
services
PUC relocation costs & $400 $165
Special**
hiring/training of new staff --------(see staff
comments)-------
Freight rail analysis $25 $75 $50
Special***
Consolidation of functions Unknown net fiscal impact.
Probably some Special*
initial increased costs, potentially
offset in the
future due to efficiencies related to
consolidation
____________
* Public Transportation Account (PTA), State Highway Account
(SHA), PUC Transportation Reimbursement Account, or High-Speed
Passenger Train Bond Fund
** PTA, SHA, and PUC Transportation Reimbursement Account
*** PTA, SHA
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STAFF COMMENTS: SUSPENSE FILE.
Existing law establishes Caltrans within BTH, and creates a
division of rail within Caltrans which is responsible for the
development of a comprehensive rail passenger system and the
preparation of the rail passenger development plan. Caltrans
contracts with Amtrak for passenger rail service, purchases and
leases equipment and property related to passenger rail, and
prepares a biennial State Rail Plan report to the Legislature
that consists of a passenger and freight rail element. Existing
law provides the PUC with sole authority to allow, close, and
regulate railroad at-grade crossings and grade separations
between railroads, local streets and roads, and light rail
transit systems, to regulate the crossing of one railroad with
another, to authorize the installation and maintenance of
grade-crossing devices, and to apportion cost for the
construction and maintenance of such devices and grade
separations. Existing law also establishes the HSRA and
authorizes the Authority to develop and implement an intercity
high-speed passenger train service, as specified.
Page 2
SB 409 (Ducheny)
This bill is intended to elevate California's rail programs to
departmental status, consolidate the disparate state rail
programs under a single entity, and provide more oversight to
rail programs. Specifically this bill would:
Establish the Department of Railroads (DOR) within BTH and
assign an undersecretary of the agency to handle rail matters.
Create the positions of Director and Deputy Director of
Railroads. These positions would be appointed by the Governor
and the salary of the Director would be equal to the salary of
the Director of Caltrans.
Consolidate the following programs under the Department of
Railroads:
o The intercity rail program, currently administered
by Caltrans.
o The High-Speed Rail Program, currently administered
by the HSRA.
o The rail goods movement program, currently
administered by BTH and Caltrans under its Office of
Goods Movement.
o The rail-highway grade separation and grade crossing
programs, currently administered by the PUC.
o Coordination of regional transportation planning
relative to rail transportation.
Require DOR, in connection to goods movement and in
cooperation with specified interested parties, to conduct a
biennial analysis of freight rail systems with respect to
other modes of transportation and recommend improvements.
Transfer the powers and duties for administering the programs
identified above to DOR, and require DOR to develop a proposed
budget that supports these programs.
Require the Secretary of BTH to convene a task force with the
Director of Caltrans, Director of DOR, and a representative of
the PUC to resolve issues relative to overlapping
jurisdiction.
Establishes within DOR a division of railroad-highway grade
separation and grade crossing protection, and a division of
the High-Speed Rail Authority.
Eliminate the position of executive director at the HSRA and
establish a chief of the division, who would be exempt from
civil service.
Replace one of the Governor-appointed HSRA board members with
the Director of DOR, who would be the chairperson of the HSRA.
SB 53 (Ducheny), Chapter 612 of 2008 required the California
Research Bureau (CRB), in consultation with various state
agencies and offices, to analyze and report to the Legislature
its recommendations and the estimated costs for improving the
state's rail functions. The report identified several areas
related to the potential for restructuring railroad functions in
which experts agreed, most of which are included in SB 409. The
report also noted the following common themes:
Reorganization of executive functions is costly and benefits
generally are uncertain. Quantifiable costs and benefits of
analogous past examples are largely unavailable. As a
consequence, dramatic reorganization proposals typically
entail relatively certain risks against relatively uncertain
gains. Significant restructuring proposals should focus on
agencies exhibiting clear, persistent and significant policy
failures.
In the absence of obvious program failures, the greatest net
benefits from reorganization generally can be found from
streamlining the administration of programs and gathering like
functions under a single administrative roof.
Page 3
SB 409 (Ducheny)
In light of themes noted in the CRB report, staff notes that
consolidation of state railroad functions into a new Department
of Railroads would result in significant administrative costs
associated with the development of a new department, potentially
offset in future years by efficiencies gained due to
consolidation. SB 409 creates the positions of Director and
Deputy Director of DOR, and requires an Undersecretary of BTH to
dedicate attention to rail matters. Based upon the existing
salaries of the Director of Caltrans and Deputy Director
positions elsewhere in state government, and assuming PY of
Undersecretary staff time, costs related to the establishment of
executive positions would be in the range of $350-$400 annually.
The PUC oversees the safety of all railroads, numerous transit
system, and more than 16,000 public and private rail crossings,
and possesses the exclusive authority to approve or disapprove
all highway crossings. PUC inspectors are responsible for
annual inspections of tracks, semi-annual inspections of train
equipment and facilities, and investigations of rail accidents.
The PUC notes a concern that removing a key part of the rail
system, rail crossings, from PUC regulation will lead to a
disintegration of the system components and compromise rail
safety. The PUC also raises a concern over the
constitutionality of legislatively removing its responsibility
over rail crossings since their regulatory authority over
railroads is granted under Article XII of the California
Constitution. Apart from these policy concerns, PUC indicates
that this bill would result in a fiscal impact that includes the
transfer of $1.3 million in personnel costs and $2.2 million in
operations costs, and $715,605 in replication and relocation
costs. Replication costs include duplication of adjudicatory
processes, legal expenses, attrition, and additional replacement
staff. Staff notes that shifting of personnel costs,
operations, and resources should not result in net increased
costs, but new costs can be attributed to the following: staff
relocation costs of $250,000; incidental setup costs of
$150,000; and $165,000 in costs associated with hiring and
training of new staff as a result of some existing staff not
wishing to move. PUC identifies a cost of approximately
$700,000 related to segregating out the portion of a
comprehensive database that would be transferred to the new
department (RSSIMS database). Costs associated with duplication
of duties and establishing a new office are included under other
general provisions of the fiscal impact noted above.
SB 409 also includes a provision that requires DOR, in
connection with its goods movement responsibilities, to conduct
an analysis of the state's freight rail transportation systems
at least every two years. Prior to conducting an analysis DOR
would be required to develop and publish performance indicators
that can measure freight system connectivity, safety, and
capacity within California. Staff estimates initial costs in
the range of $50,000 to develop and establish performance
indicators to measure the effectiveness of the freight rail
system, and up to PY of staff time annually to coordinate with
the various interested parties and prepare the biennial
analysis.
SB 409 also eliminates the position of executive director at the
HSRA, but replaces it with a chief of the division of the HSRA.
This provision would likely have no net fiscal impact. However,
HSRA notes that the bill could result in substantial delays to
current activities and contracts, potentially resulting in
significant cost increases.