BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 1097
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: skinner
VERSION: 6/13/11
Analysis by: Michelle Leinfelder
FISCAL:Yes
Hearing date: June 21, 2011
SUBJECT:
Transit projects: domestic content
DESCRIPTION:
This bill 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.
ANALYSIS:
The federal American Recovery and Reinvestment Act (ARRA) was an
economic stimulus package enacted by the 111th United States
Congress in February 2009. ARRA had the following purposes: 1)
Preserve and create jobs and promote economic recovery; 2)
Assist those most impacted by the recession; 3) Provide
investments needed to increase economic efficiency by spurring
technological advances in science and health; 4) Invest in
transportation, environmental protection, and other
infrastructure that will provide long-term economic benefits;
and 5) Stabilize state and local government budgets, in order to
minimize and avoid reductions in essential services and
counterproductive state and local tax increases. The Buy
American program was an ARRA initiative intended to serve these
purposes.
The Buy American program provides that, unless one of three
listed exceptions applies - nonavailability, unreasonable cost,
or inconsistency with the public interest - and a waiver is
granted, none of the funds appropriated or otherwise made
available by the Act may be used for the construction,
alteration, maintenance, or repair of a public building or
public work unless all the iron, steel, and manufactured goods
used are produced in the United States. These three exceptions
AB 1097 (SKINNER) Page 2
were incorporated into the Code of Federal Regulations (CFR) for
transportation. Additionally, the CFR provides an exception for
rolling stock, such as buses, vans, cars, railcars, locomotives,
trolley cars and buses, and ferry boats, as well as vehicles
used for support services. That exception is that the cost of
rolling stock components and subcomponents produced in the
United States be at least 60% of the total cost of components
but that final assembly of the rolling stock must occur in the
United States. The cost of a component or a subcomponent is the
price that a bidder must pay to a subcontractor or supplier for
that component or subcomponent. Transportation costs to the
final assembly location must be included in calculating the cost
of foreign components and subcomponents.
The CFR also has a provision for state Buy American programs.
The provision allows states to impose more stringent Buy
American requirements than those set forth in the federal law,
but the Federal Transit Administration (FTA) will not
participate in state and local Buy National or Buy American
preference provisions that are not explicitly set out under
state law. California currently has no such preference law.
This bill 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.
COMMENTS:
1) Purpose . According to the author, this bill allows a transit
agency receiving federal funds for transit purposes to
provide a preference to bidders that exceed the federal Buy
American requirements. The federal Buy American regulation
defers to stricter state Buy American laws if there is an
explicit state law. This bill provides that state law. The
author calls this a permissive bill that will
promote domestic manufacturing and encourage California-based
transit agencies to seek a higher level of American products,
which will ultimately support transit needs and create
jobs in America and California.
2) Closing a funding restriction . This bill closes a funding
restriction imposed by the FTA by explicitly putting
language into state law that authorizes transit agencies to
provide bidding preferences to bidders
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who exceed national Buy American requirements. It encourages
state transit agencies to seek American-made products by
rewarding those contractors who can provide products with
high domestic content. It is in the best interest of the state,
as well as manufacturers across the nation, to authorize state
and local agencies to give preferences to bidders on rolling
stock contracts that provide domestic content above the minimum
requirements set forth in federal "Buy American" law.
Assembly Votes:
Floor: 78-0
Appr: 16-0
Trans: 14-0
POSITIONS: (Communicated to the Committee before noon on
Wednesday, June 15,
2011)
SUPPORT: Alameda-Contra Costa Transit District
California Conference Board of Amalgamated
Transit Union
California Conference of Machinists
California Teamsters Public Affairs Council
California Transit Association
San Francisco Bay Area Rapid Transit District
OPPOSED: None received.