BILL ANALYSIS
SB 409
Page 1
Date of Hearing: June 28, 2010
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
SB 409 (Ducheny) - As Amended: January 26, 2010
SENATE VOTE : 32-0
SUBJECT : California High-Speed Rail Authority realignment
SUMMARY : Makes various changes regarding the governance and new
report requirements of the California High-Speed Rail Authority
(Authority). Specifically, this bill :
1)Places the Authority within the Business, Transportation and
Housing Agency (BT&H).
2)Requires the five members appointed to the Authority by the
Governor be confirmed by the Senate.
3)Requires BT&H to prepare a five-year Strategic Rail
Connectivity Plan (strategic plan). Requires BT&H to submit
the strategic plan for approval to the California
Transportation Commission (CTC) on September 1, 2011, and
every five years thereafter. Requires, for each
transportation project subject to CTC approval and implicated
by the strategic plan, CTC to make a determination that the
project is consistent with the strategic plan. Allows CTC to
approve a project that is not consistent with the strategic
plan for good cause, subject to a waiver granted by BT&H. The
elements of the strategic plan are to include the following:
a) Desirable linkages and feeder opportunities between
various passenger rail services, including high-speed and
conventional intercity rail, commuter rail, and rail
transit, where the various services are the responsibility
of different implementing and operating agencies.
b) Identification of the coordination in planning and
capital investments necessary to maximize the opportunities
for each of those services in providing a cohesive,
connected, and easy-to-use system for Californians
consisting of all of those services, rather than a
cumbersome set of unlinked individual rail services.
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c) Identification of future right-of-way needs of passenger
rail lines in connection with state and local highway
system improvements in order to accommodate future rail
system improvements as those highway improvements proceed
to implementation, with the objective of avoiding lost
opportunities by failure to reserve right-of-way capacity
for future rail improvements.
d) As an option, may also include other matters that offer
similar opportunities for statewide coordination, including
the efficient movement of goods.
1)Requires the Authority to submit an annual funding plan to CTC
for approval on September 1, 2011, and every five years
thereafter. Specifies, among other things, that the funding
plan identify the need for investments during the fiscal year
to which it applies, and the amount of bond sales necessary to
accommodate those investments.
EXISTING LAW :
1)Enacts the Safe, Reliable High-Speed Passenger Train Bond Act
for the 21st Century (High-Speed Rail Bond Act). The
High-Speed Rail Bond 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.
$950 million is authorized for capital projects on other
passenger rail lines to provide connectivity to the high-speed
train system and for capacity enhancements and safety
improvements to those lines.
2)Establishes Authority and charges it with the planning,
designing, constructing, operating, and maintaining a
state-of-the-art high-speed train system for California.
Authority consists of a nine-member board (five appointed by
the Governor, two appointed by the Senate Rules Committee, and
two by the Speaker of the Assembly). The appointments are not
subject to Senate confirmation.
3)Authorizes the Legislature to establish conditions and
criteria on funds appropriated for planning and capital costs.
Requires Authority, prior to expending capital bond funding
for the construction and acquisition of equipment and
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property, to submit a detailed funding plan for each corridor
or usable segment to an independent peer review group as well
as the Legislature and the Department of Finance.
4)Establishes BT&H that includes, under its aegis, 13
departments and several economic development programs and
commissions consisting of more than 44,000 employees and a
budget of $20 billion. Its responsibilities and operations
address issues that directly impact the state's economic
vitality and quality of life including; transportation, public
safety, affordable housing, international trade, financial
services, tourism, and managed health care.
5)Establishes the CTC for the development and implementation of
a single, unified California transportation policy. CTC is
responsible for the programming and allocating of funds for
the construction of highway, passenger rail and transit
improvements throughout California. The CTC also advises and
assists BT&H and the Legislature in formulating and evaluating
state policies and plans for California's transportation
programs. Requires capital expenditures for intercity rail
projects funded from the state's Public Transit Account to be
included in the State Transportation Improvement Program,
which is a five-year state transportation capital outlay
program, adopted every two-years by the CTC.
6)Establishes the multi-modal California Department of
Transportation (Caltrans), and within it a division of rail,
which is responsible for the development of a comprehensive
rail passenger system and the preparation of the rail
passenger development plan, including a discussion of rail
freight services.
7)Under federal law, approves $2.25 billion for high-speed rail
passenger services for California, through the American
Recovery and Reinvestment Act of 2009 (ARRA, the recently
enacted federal economic stimulus package).
8)Under the federal Passenger Rail Investment and Improvement
Act of 2008 (PRIIA), focuses on improving intercity rail
passenger service, operations, and facilities, including the
development of high-speed rail corridors.
FISCAL EFFECT : Unknown.
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COMMENTS : The proposed California high-speed rail passenger
train network consists of an 800+ mile high-speed system capable
of a speed up to 220 miles per hour (mph), initially serving the
major metropolitan market of San Francisco through the Central
Valley into Los Angeles and Orange County (Phase 1). The system
is required by statute to transport people from San Francisco to
Los Angeles in two hours and forty minutes. Eventually the
service would be extended to Sacramento, the Inland Empire, and
San Diego. Further, improved rail service over the Altamont
corridor would be implemented.
In August 2008, AB 3034 (Galgiani) Chapter 267, was enacted that
laid the framework for improving the oversight of the Authority's
high-speed rail project. That bill also clarified and modified
bond provisions that eventually were approved by the California
voters in November 2008 with the passage of the Proposition 1A
(High-Speed Rail Bond Act). With that endorsement, $9.95 billion
state general obligation bond funds were authorized for eventual
sale, providing the initial capital seed funds for the completion
of the entire statewide system.
Additionally, AB 3034 established significant oversight
processes and control mechanisms for the independent review and
approval of financing and engineering plans for the construction
of California's high-speed train system. Reporting and other
oversight mechanisms were also required by subsequent California
legislative Budget Act requirements.
The author's office contends that California has a network of
5,488 miles of Class I rail and 1,409 miles of short line and
terminal rail that traverse the state and over which 7,578,465
carloads of freight carrying 177,907,810 tons of freight travel.
In addition, over 28 million intercity and commuter passengers
traveled in 2006 on facilities owned by Class I railroads or
over tracks owned by public agencies, but over which Class I
railroads may operate. The office further states that the
High-Speed Rail Bond Act provided $995 million for intercity and
commuter systems and concludes that "given the magnitude of
California's rail system, the difficulty in coordinating safety
concerns and multi-modal investments, the myriad of players at
the state, local and private sector level and the imminent
implementation of a high-speed rail, there is a need to
coordinate functions between private firms and public agencies."
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Together with the passage of Proposition 1A and California's
approval and pending receipt of $2.25 billion in federal ARRA
high-speed rail funds, Authority will soon be approving
multi-billion dollar engineering and construction contracts, in
accordance with a schedule approved by the federal ARRA funding
agency (Federal Railroad Administration). Accordingly,
environmental reviews of the initial Phase 1 segments are slated
to be completed by September 30, 2011, with construction
beginning by September 30, 2012. Filling an immediate need, the
Authority, after a nationwide search, selected a chief executive
officer to manage its operations.
This bill proposes substantive changes in the Authority's
governance and reporting alignment. It proposes to place the
Authority under the BT&H; requires the Authority members to be
approved by the Senate; requires BT&H to prepare a 5-year
Strategic Rail Connectivity Plan; requires the plan to be
approved by the CTC and, subsequently, for each transportation
project subject to CTC approval and implicated by the plan, that
the CTC make a determination that the project is consistent with
the plan (also provides waiver provisions); and requires the
Authority to submit an annual funding plan to the CTC for
approval.
Oversight hearings of the legislative transportation committees
and reviews by others : This committee and the Senate
Transportation and Housing Committee conducted oversight
hearings of the Authority. Separately, the Legislative
Analyst's Office and the California State Auditor conducted
independent reviews of the Authority's business plans,
organizational staffing plans, budget requests, ridership
models, and operations and management. Overall, from the
hearings and reviews, these entities expressed concerns over the
operations and management of the Authority. General criticisms
included inadequate planning for ultimate system build-out, weak
oversight due to inactivity of peer review group, inadequate
administrative accounting over expenditures, poor contract
management, etc.
PRIIA : The new federal rail passenger law (PRIIA) tasks states
to develop statewide rail plans to set policy involving freight
and passenger rail transportation within their boundaries;
establish priorities and implementation strategies to enhance
rail service in the public interest; and serve as the basis for
federal and state rail investments within the state. Under that
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law, state rail plans are to address a broad spectrum of issues,
including an inventory of the existing rail transportation
system, rail services and facilities within the state. They
must also include an explanation of the state's passenger rail
service objectives, an analysis of rail's transportation,
economic, and environmental impacts in the state, and a
long-range investment program for current and future freight and
passenger infrastructure in the state. The plans are to be
coordinated with other state transportation planning programs
and clarify long-term service and investment needs and
requirements. The Federal Railroad Administration is to
establish minimum standards for the preparation and periodic
revision of state rail plans.
Support : Writing in support of the bill, the Planning and
Conservation League (PCL) indicates that "Since the passage of
Proposition 1A, PCL has worked closely with legislative members,
local residents, and community groups throughout the state to
ensure that this complicated and expensive public works project
"be done right" in the first instance. However, we have
consistently been troubled by the Authority's questionable
business activities and general lack of transportation planning
expertise, as detailed in recent reports from the Legislative
Analyst's Office and the State Auditor. In an effort to right
the project's course, PCL has urged the Legislature to exercise
its statutory authority to appoint a successor-agency staffed
with professionals experienced with implementing large-scale
transportation projects. Only with qualified and experienced
professionals to lead the Authority will a high-speed rail
project be completed successfully? PCL strongly supports the
increased oversight and accountability measures imposed on the
Authority by SB 409. The policies in this measure represent a
good first step toward righting some of the fundament problems
plaguing this project. First, this bill would require that
members recommended to the Authority by the Governor be
appointed with the advice and consent of the Senate. This
provision will not only allow the Legislature ensure the
Authority is staffed with transportation and financial
professionals, but will also provide the Legislature an
opportunity to proactively exercise greater oversight over the
Authority's policy decisions going forward and provide the
public a chance to comment on appointments. This substantive
reform will lead to more thoughtful and responsible
decision-making by the Authority and help to ensure that a
high-speed rail system is successfully designed and implemented
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in the best interest of all Californians."
Committee concerns :
1)The committee has concerns over this bill's provisions related
to the realignment of the Authority under the aegis of BT&H.
This move could have positive benefits by elevating the
visibility of the Authority by enabling BT&H to champion its
causes and further its positions, especially as the BT&H
secretary is a member of the governor's cabinet. At the same
time, aligning the Authority under the BT&H would provide
another layer of oversight and control, regardless of the fact
that the Authority is composed of governor and legislative
appointees. In fact, the precedence of other appointed bodies
to be under the auspices of an agency is already in place in
regards to the California Air Resources Board (under the
Secretary of the Environmental Protection Agency) and the
State Energy Resources Conservation and Development Commission
(under the Secretary of Resources Agency). However, although
this bill's proposal to realign the Authority under BT&H may
have merit, it is, nevertheless premature and a more thorough
discussion and vetting of all options need to take place.
Accordingly, some possible options could include the creation
of a department of high-speed rail or a department of
railroads. Making any statutory changes to the reporting and
authority of the Authority could undermine, in the short term,
their ability to manage and implement the project. Lastly,
because of the recent appointment of the Authority's chief
executive officer (CEO), delaying such moves at this time
would allow additional and more sufficient time for the CEO to
gain better insight and understanding of the operations and
demands of his organization that will result in more
beneficial and effective participation by the Authority in
future policy discussions involving its reorganization or
reporting alignments.
2)This bill would require the preparation of a five-year
strategic plan by BT&H. The bill establishes requirements for
the strategic plan. On a parallel track, the federal PRIIA
requires states to develop a state plan that includes many of
the same study parameters. That report is to be undertaken by
Caltrans. Some of the bill's strategic plan requirements
differ from the requirements of the PRIIA report. The
committee has a concern that state resources would be
unnecessarily expended by having two separate entities prepare
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a similar, essentially duplicative report. As Caltrans
currently prepares the biennial 10-year State Rail Plan, it is
well prepared to respond and address the PRIIA requirements.
Accordingly, the committee suggests that the strategic plan be
prepared by Caltrans instead of BT&H. Furthermore, the bill
should be amended to reflect a review and adoption schedule
that is conducive to optimizing public comment.
3)This bill would require the Authority to submit an annual
funding plan to the CTC for approval. Currently, as a
condition to the pre-expenditure of state bond funds, the
Authority is required to submit funding plans to several
entities such as the AB 3034 peer review group, Department of
Finance, the transportation and fiscal committees of the
Legislature, and the Joint Legislative Budget Committee.
Adding yet another entity to the list of reviewers, especially
with express approval authority over the funding plans, could
create delays and impede project delivery.
However, considered in a different context, the requirement
for a "funding plan," other than as described in AB 3034,
could have merit. A funding or programming document prepared
annually that covers the funding needs and expenditure
projections over a multi-year period enables decision makers
and project managers to allocate resources and work activities
beyond a single year. The CTC currently adopts a five-year
State Transportation Improvement Program (STIP) that Caltrans
uses to implement transportation projects. Accordingly, a
similar document should be developed for use by the Authority;
however, unlike this bill, the CTC should have no role and the
document should be multi-year. For these reasons, the
committee suggests that the bill's provisions be modified
accordingly.
Suggested amendments : The committee suggests the following
amendments:
1)Delete Section 1 to not effectuate any change in reporting by
the Authority.
2)Require Caltrans, rather than the BT&H, to prepare the
five-year strategic rail connectivity plan.
3)Revise Section 4 to require the Authority to develop a
multi-year programming document, without approval from the
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CTC, but with the advice and consent from the AB 3034 peer
review group. (Use AB 2121 (Harkey) 2010, as a template)
Related bills : SB 455 (Lowenthal) of 2009, requires the
Governor's appointees to the Authority to be subject to Senate
confirmation, establishes criteria for selecting high-speed rail
projects, and provides the Authority with eminent domain
authority similar to the authority assigned to Caltrans and the
Department of Water Resources. That bill is on the Assembly's
third reading inactive file.
AB 1375 (Galgiani) of 2010, creates a Department of Railroads to
manage and implement the high-speed rail program described in
the High-Speed Rail Bond Act and other statutes. The management
of that department would be overseen by the governing board of
the Authority. The department would be required to submit an
annual progress report as well as a six-year funding program.
According to the author of that bill, the bill is being amended
to remove provisions that would reorganized the existing
Authority. The bill is in Senate Transportation and Housing
Committee awaiting hearing.
AB 289 (Galgiani) of 2009, pertains to ARRA funding and staffing
of the Authority. The bill is in Senate Transportation and
Housing Committee awaiting hearing.
AB 2121 (Harkey) of 2010, among other items, requires a six-year
programming document. The bill is in the Senate Rules Committee
awaiting assignment.
REGISTERED SUPPORT / OPPOSITION :
Support
Planning and Conservation League
Opposition
None on file
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093