BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 16
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: perea
VERSION: 12/6/10
Analysis by: Art Bauer FISCAL: yes
Hearing date: June 28, 2011
SUBJECT:
High-speed rail
DESCRIPTION:
This bill encourages the California High-Speed Rail Authority to
acquire equipment manufactured in California
ANALYSIS:
In November 2008, California voters approved Proposition 1A, the
Safe, Reliable High-Speed Passenger Train Bond Act for the 21st
Century of 2008 (Proposition 1A). The $9.95 billion bond
measure provides $950 million for improving conventional rail
services connecting to the high-speed rail line and $9 billion
for high-speed rail development. Of the remaining $9 billion,
$900 million is for the project's planning, environmental
analysis, and preliminary engineering. Proposition 1A limits the
expenditure of the $8 billion available for construction to not
more than 50 percent of the cost of building the systems.
Proposition 1A identifies the Phase I corridor for high-speed
rail as an alignment from the San Francisco Transbay Terminal to
the Los Angeles Union State and Anaheim via the San Joaquin
Valley. The HSRA estimates the total cost of Phase I to be
between $43 and $65 billion.
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
operating the high-speed train service.
In January 2010, the High-Speed Rail Authority (HSRA) received
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an American Recovery and Reinvestment Act (ARRA) grant of $2.25
billion to aid in the development of the Phase I project. Of
that amount, $400 million is for constructing the basement of
the new Transbay Terminal in San Francisco to accommodate
high-speed trains. According to the Federal Railroad
Administration's (FRA) announcement of its ARRA award, the
remaining $1.85 billion is for purchasing right-of-way,
constructing track, signaling systems, and stations, and
completing environmental reviews and engineering documents for
the Los Angeles/Anaheim segment, the San Francisco/San Jose
segment, the Fresno/Bakersfield segment, and the Merced/Fresno
segment. In a second round of federal funding the HSRA received
approximately $1.3 billion, and in a third round of funding, the
HSRA received $300 million from funds declined by Florida. The
HSRA and FRA jointly selected a segment from near Fresno to near
Bakersfield as the first construction segment. Between federal
funds and state bond funds, the HSRA has committed about $5.7
billion for the Central Valley project. As a condition of the
ARRA grants, the HSRA must complete construction by September
30, 2017.
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 these requirements.
This bill authorizes the HSRA to make "every effort" to purchase
high-speed rail equipment manufactured in California, provided
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 manufactured in the state,
provided that the procurement activity is consistent with
federal law. This bill recognizes the supremacy of federal
law in the matters of international trade.
2) High-speed rail project will create jobs . According to
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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 the project could create will exceed 800,000, which is
within the accepted econometric parameters. This would
have a very beneficial effect on the construction sector of
California's economy.
3) Location, location, location . Siemens Mobility, the
United States transportation division of the international
manufacturing conglomerate Siemens, is headquartered in
Sacramento. It opened for business twenty-six years ago to
do final assembly of light rail transit vehicles, primarily
for the California market. Today, the plant is situated on
55 acres in south Sacramento and manufactures vehicles.
Every third light rail vehicle in the United States is a
Siemens vehicles, and most were manufactured in Sacramento.
Last November Amtrak awarded Siemens a $466 million
contract to manufacture seventy electric locomotives for
service between Washington and Boston. This order will add
approximately 200 new employees to an existing workforce of
about 750 persons. Currently, the Sacramento plant is
recruiting about forty welders.
4) Related legislation . Recently, this committee passed AB
1097 (Skinner), which requires the Secretary of Business,
Transportation and Housing to authorize a state or local
agency receiving federal funds for transit purposes to
provide a bidding preference to a bidder if the bidder
exceeds Buy American requirements applicable to
federally-funded transit projects.
In 2009, this committee approved AB 733 (Galgiani), which
would have required the HSRA to give an explicit preference
to bids that included California-based manufacturers. The
Governor vetoed that bill.
Last year, this committee passed AB 1830 (Jones), which was
identical to this bill, the Governor also vetoed AB 1830.
Assembly Votes:
Floor: 57-19
Appr: 12-5
AB 16 (PEREA) Page 4
Trans: 12-1
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 22, 2011)
SUPPORT: California Labor Federation (sponsor)
OPPOSED: None received.