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Jeff Morales defends California High-Speed Rail to a Santa Clarita delegation at the California State Capitol, March 15, 2015.

Is the California High-Speed Rail Authority Paying for Legendary Leadership?

Raising Gas Taxes While Unions Support Billions for Bullet Train

Editor’s Note:  It is difficult to find a better example of how California’s labor movement fails ordinary workers than their support for high speed rail. Because that project, using foreign sourced materials and yielding virtually no benefits – economic, environmental, or societal – that justify the cost, is at the expense of projects that are sorely needed. Money is fungible and finite. As Jon Coupal writes, California’s union controlled legislature is now considering raising gasoline taxes. But instead of raising gasoline taxes, the money we’re spending on high speed rail could instead be used to repair and upgrade California’s roads, all of them, everywhere, with tens of billions left over for other compelling projects, such as sewage treatment and reuse facilities, or desalination plants. These projects would create far more jobs and yield far greater benefits to ordinary Californians. Isn’t that what unions want? Union support for high-speed rail is an epic betrayal of the ideals they are uniquely positioned to advocate. It is shameful.

Sacramento is about to launch a new attack in its ongoing war on drivers.

California’s 48.6 cent gas tax already ranks second out of 50 states –- the feds take another 18.4 cents — and when the hidden carbon tax, part of the cap-and-trade program, is factored in, our state leads the pack by a wide margin. But this is not nearly enough, according to the political class.

Sen. Jim Beall is building a coalition of both Democrats and Republicans in the Legislature to hike gas taxes along with vehicle license fees and registration.

The San Jose lawmaker’s Senate Bill 16 slams taxpayers in three ways.  First, it would raise at least $3 billion annually by increasing the gas tax by another 10 cents a gallon.  Second, it would hike the vehicle license fee, which is based on value, by more than 50 percent over 5 years.  Third, it would increase the cost to register a vehicle by over 80 percent.

Although the backers of the SB 16 tax increase say it is vital to make up the claimed $59 billion backlog in roadway maintenance, some of the funds are slated to go to repaying transportation bonds that, when passed, were to be paid from the general fund.  This means that not all of the new revenue will go to the stated intent of fixing roads and highways.

Whatever the actual dollar amount of the backlog in roadway maintenance, this shortfall is the result of previous diversions of gas tax and truck weight revenue to budget items that have no direct impact on road improvement, and Beall’s bill would allow this practice to continue.

It should not go unnoticed that the $59 billion estimated backlog approaches the $68 billion that the governor and Legislature want to spend on the bullet train.  Quentin Kopp, former chairman of the California High-Speed Rail Authority, has become a strong critic, characterizing it as “low-speed rail” due to the changes that have been made to the original plan that voters were promised to convince them to provide seed money for the project in 2008.   He adds that to be financially viable, high-speed trains need to run from 10 to 20 trains per hour, but due to the current plan, called a “blended system,” slower trains and bullet trains must share the same track, reducing the number of fast trains to about four per hour.    And even supporters of the project as currently envisioned concede that the Los Angeles to San Francisco trip that voters were told would take about two-hours and forty minutes for a $50 fare, will likely take closer to 5 hours at nearly double the cost to the rider.

So, while Sacramento politicians and special interest insiders, including unions and construction companies, continue to push for billions of dollars of new spending on a high-speed rail system that is not expected to be completed before 2029, they expect drivers, fed up with bumping along on crumbling roads and highways, to pay more.

Gas prices in California are already tops in the nation.  If taxes are increased again, every motorist should be given a railroad engineer’s cap compliments of Sacramento lawmakers and the governor because the extra they pay will free up money, which could have been used for roads, to be spent on their pet train.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

California High Speed Rail's Dubious Claims of Environmental Benefits

Editor’s Note: There are dozens of major infrastructure investments that would yield positive economic returns to Californians. Spending over $100 billion on high-speed rail is definitely not one of them. But as Kevin Dayton explains in this article, even the environmental benefits of high speed rail are questionable, if not a complete fabrication. This isn’t Dayton’s first expose of the high speed rail disaster; for more withering details, read “Unions Virtually Alone in Love with California High-Speed Rail,” and “California High-Speed Rail Business Plan Misrepresents Project Labor Agreement.” California’s so-called “bullet train” is a textbook case of crony capitalists and corrupt politicians hiding behind environmentalist rhetoric to justify an epic waste of taxpayers money. And with all the construction projects California really could benefit from, the unions pushing high-speed rail should be ashamed of themselves (ref. “Construction Unions Should Fight for Infrastructure that Helps the Economy.”)

Earth Day 2014 deserves a detailed report on the environmental achievements of California High-Speed Rail, the spine of the mass transit connectivity system that will one day transport you between your own home transit village and another transit village.

And yes, you WILL ride, because artificial government cost barriers will discourage you from driving and flying. A governor and legislators who today are merely students protesting at a University of California campus somewhere will enact such policies between 2028 and 2041.

Trees-for-Shade and Other Schemes for “Net Zero Emissions”

The California High-Speed Rail Authority claims it will achieve “net zero emissions” when it builds its “First Construction Segment” from Madera to Bakersfield by 2017. This program will allegedly allow the Authority to avoid adding to the state’s carbon footprint already imprinted by the lifestyles of Hollywood celebrities and other top Democratic Party campaign contributors.

Net zero emissions means lots of free and discounted stuff to the San Joaquin Valley. The Authority plans to plant 5,000 trees, buy new school buses for school districts, and buy new irrigation pumps and tractors for farmers. (If you’re a farmer in the San Joaquin Valley now forced to buy a pump to extract water from a new deeper well, save your receipts.)

The Authority will also require certain emissions standards for construction equipment, require contractors to recycle 100 percent of concrete and steel from construction and demolition activities, and divert 75 percent of non-hazardous waste from landfills as a way to reduce greenhouse gases. The guy in Pixley with one excavator from the old family business will NOT be working on this project.

Global sea levels are already falling in anticipation of the tree planting program. As required as a condition of 2012 state legislative appropriations, the California High-Speed Rail Authority produced a report in June 2013 entitled “Contribution of the High-Speed Rail Program to Reducing California’s Greenhouse Gas Emission Levels.” Here’s an excerpt:

The Authority is committed to achieving zero net greenhouse gas emissions related to construction activities. While construction activities will generate greenhouse gas emissions, when coupled with the Authority’s strategy, the result is zero net direct construction greenhouse gas emissions. For example, the estimated greenhouse gas emissions associated with construction activities, materials deliveries, and worker travel for Construction Package 1, the first 29-mile construction segment of the high speed-rail system from Madera to Fresno, of 30,107 metric tons of CO2e, from 2013 to 2018, would be offset at the start of construction through a tree planting program that the Authority is developing. This multi-faceted forestry program will introduce enough trees into the region where construction is taking place to honor the Authority’s commitment to offset the direct greenhouse gas emissions associated with construction. The program is planned to include urban forestry and tree planting, through regional tree foundations, which compounds greenhouse gas emissions reductions by providing shade and other amenities with tangible local economic benefits. The program could also include providing shade trees to interested home owners

These will be big leafy trees – not tall skinny palm trees like the ones now shunned in the City of Los Angeles Million Trees LA program because palm trees don’t provide enough shade. Already state and local legislators are angling for trees in their districts. (They don’t seem to be thinking about the public costs of irrigating and maintaining those trees, though.)

Some people think this tree-planting program is farcical. Why not just plant 100,000 trees as an emissions offset and skip building the $68 billion high-speed rail line between San Francisco and Los Angeles? And why borrow money via bond sales, use it to buy trees for interested home owners, and then pay the money back with interest over 35 years? Using borrowed money from bond sales to buy iPads might be a better investment.

As another example of offsetting greenhouse gas emissions, the California High-Speed Rail Authority report also touts “an agreement with the California Department of Conservation (DOC) and the Madera and Merced County Farm Bureaus to assist in obtaining farmland conservation easements from willing sellers located near the high-speed rail alignment between Merced and Bakersfield.” This agreement is the result of a 2013 settlement of an environmental lawsuit against the California High-Speed Rail Authority. Less than a month after the California High-Speed Rail Authority released its report citing this agreement, an article in the Fresno Bee reported that the California High-Speed Rail Authority had failed to make the $5 million payment required in the settlement to establish the program.

Everyone Wants Some Cap-and-Trade Money

Everyone loves a windfall, whether it’s the Peace Dividend, the Tobacco Settlement, Facebook IPO tax revenue, or First 5 California. There’s now a new, exciting one in California: Cap-and-Trade auction proceeds, sometimes called “allowances” but more accurately called “taxes.”

Governor Brown has proposed spending $250 million of planet-saving Cap-and-Trade auction proceeds on California High-Speed Rail in his fiscal year 2014-15 state budget and 33% of proceeds in future years. State Senate pro Tem Darrell Steinberg will reportedly counter with a proposed budget that designates about 20% of proceeds for the high-speed train program. Some environmental groups – in particular the Sierra Club – oppose spending Cap and Trade auction proceeds on California High-Speed Rail at this time. Some Democrats agree and think other programs are more worthy.

Everyone wants this money taken from the polluters. At budget subcommittee hearings about spending Cap-and-Trade funds, lobbyists line up to advocate for their organizations and causes to get money or more money from it. Politics will play a role in how much goes to the train.

For the California High-Speed Rail Authority, Cap-and-Trade revenue may be essential to preserve the program. A court has blocked the state from selling Proposition 1A bonds, thereby also jeopardizing the expenditure of federal matching grants for the program. Governor Brown and the California High-Speed Rail Authority have been forced to seek this funding now to keep the high-speed train program moving into its first construction contract.

Is California High-Speed Rail Authority Justified in Getting Cap-and-Trade Money?

In its February 2014 report “The 2014-15 Budget: Cap-and-Trade Auction Revenue Expenditure Plan,” the California Legislative Analyst’s Office (LAO) described Governor Brown’s $250 million Cap-and-Trade proposal for California High-Speed Rail. The report was lukewarm about using Cap-and-Trade auction proceeds for High-Speed Rail:

“Some Outcomes Would Depend on Changes in Behavior. In addition, the amount of greenhouse gas reductions for some proposed programs would depend on changes in behavior that are difficult to predict. For example, the administration assumes that the high-speed rail…proposals would result in some individuals shifting their mode of transportation, resulting in a net reduction in vehicle miles traveled in cars. While such changes might very well occur and could result in net greenhouse gas emission reductions, it would be difficult to predict with precision the likely marginal net greenhouse gas reduction due to these efforts. This uncertainty increases the risk that the administration’s plan would not achieve its maximum potential emission reductions.

Some Reductions Would Likely Occur Beyond 2020. We also find that some proposed activities would not contribute significant greenhouse gas reductions before 2020, which as mentioned above, is the statutory target for reaching 1990 emissions levels. For example, plans for the high-speed rail system indicate that the first phase of the project will not be operational until 2022. Moreover, the construction of the project would actually generate greenhouse gas emissions of 30,000 metric tons over the next several years. The High-Speed Rail Authority plans to offset these emissions with an urban forestry program that proposes to plant thousands of trees in the Central Valley. We also note that High-Speed Rail Authority’s greenhouse gas emission estimates for construction do not include emissions associated with the production of construction materials, which suggests that the amount of emissions requiring mitigation could be much higher than currently planned. Therefore, it is possible that the construction of the Initial Operating Segment may result in a net increase in greenhouse gas emissions, even when accounting for proposed offsets.”

The report also listed several implementation problems of the Governor’s proposed plan to spend Cap-and-Trade auction proceeds.

Will California High-Speed Rail Actually Reduce Greenhouse Gas Emissions?

Don’t abandon construction of that giant sea wall yet, City of Santa Cruz. The hype about California High-Speed Rail saving the planet is compromised when one considers boring things, such as cement production for civil construction and the accuracy of ridership prediction models.

In the fall of 2010, two experts in Civil and Environmental Engineering at the University of California, Berkeley published a report entitled “Life-Cycle Environmental Assessment of California High Speed Rail.” This report suggested that claims of major reductions in greenhouse gas emissions because of California High-Speed Rail might be unfounded.

“Taking life-cycle and ridership uncertainty into account can yield drastically different estimates about the energy efficiency of different transportation modes…The life-cycle inventory for high-speed rail shows that accounting for infrastructure construction and electricity production adds 40 percent to the energy consumed by the trains’ operations alone…Greenhouse gas emissions increase by about 15 percent, primarily because of the concrete used in construction – half a kilogram of CO2 is emitted for every kilogram of cement produced. Infrastructure construction will emit roughly 490 million metric tons of greenhouse gases, which are approximately 2 percent of California’s current annual emissions. As was the case with the life-cycle inventory of conventional modes, the majority of emissions are released not from the electricity needed to propel the high-speed trains, but from the indirect and supply-chain components.

We can estimate the energy payback period for high-speed rail by comparing the energy used in its construction with the resulting energy savings in its operation, but only by making assumptions about ridership. The payback period evaluates the upfront energy or emission investment in deploying high-speed rail infrastructure against the potential reductions over time. The California High-Speed Rail Authority provides a ridership estimate, but as we noted above, ridership is uncertain, and for an entirely new mode it is very uncertain. Thus California high-speed rail warrants ridership evaluation for both high- and low-ridership scenarios. We consider high ridership as strong adoption of high-speed rail at the expense of auto and air travel, mid-level ridership as moderate adoption of high-speed rail, and low ridership as poor adoption of high-speed rail where travelers favor auto and air. For high ridership scenarios, the energy payback period on the initial investment is eight years, for mid-level ridership 30 years, and never for low ridership (when under-used high-speed rail is coupled with increased utilization of auto and air travel). For greenhouse gas emissions the payback period for rail is six years for high ridership, 70 years for mid-level ridership, and never for low ridership…Thus the California high-speed rail system can reduce greenhouse gas emissions, but may do so only over a very long period, and will do so in exchange for other air emissions.”

Such thinking was never presented in your 4th grade ecology class. Why do things have to be so complicated?

It Could All Be Moot: Cap-and-Trade May Not Survive Lawsuits Anyway

In April 2013, businesses and organizations filed lawsuits (Morning Star Packing Co., et al. v. California Air Resources Board, et al., Case No. 34-2013-80001464 and California Chamber of Commerce, et al. v. California Air Resources Board, et al., Case No. 34-2012-80001313in Sacramento County Superior Court contending that the revenue-generating auction provisions of the California Air Resources Board Cap and Trade regulations are unconstitutional, not authorized under state law, and illegal taxes under Proposition 13 and Proposition 26.

On August 28, 2013, Sacramento County Superior Court judge Timothy M. Frawley sided with the California Air Resources Board. However, he noted that “On balance, the court agrees that the charges are more like traditional regulatory fees than taxes, but it is a close question. Contrary to what [the California Air Resources Board] argues, the charges have some traditional attributes of a tax.”

He also ruled that “Although AB 32 does not explicitly authorize the sale of allowances, it specifically delegates to [the California Air Resources Board]the discretion to adopt a cap-and-trade program and to “design” a system of distribution of emissions could be freely distributed to covered entities or to non-regulated entities, who could then convert the value of the allowances into cash by selling them in the allowance market.”

The plaintiffs have appealed the decision, and the cases are likely to end up at the California Supreme Court. Don’t pay the bills with Cap-and-Trade just yet.

About the Author:  Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

California High-Speed Rail Business Plan Misrepresents Project Labor Agreement

Before submitting its business plan to the state legislature every two years, the California High-Speed Rail Authority is required to produce a draft and encourage public comments. Its new 2014 draft plan includes a deceptive paragraph touting the union Project Labor Agreement added to bid specifications without any public deliberation or vote. This deserves public comment.

Background on the Project Labor Agreement for California High-Speed Rail

At its December 6, 2012 meeting, the California High-Speed Rail Authority board voted for a fairly innocuous Community Benefits Policy that stated the Authority’s desire for “optimizing benefits to California communities, small businesses, and residents through participation of community-based small businesses and individuals in economically distressed areas in the construction of the system.” It was a scheme to provide legal backing for a union monopoly on construction of the California High-Speed Rail system, the most expensive construction project in human history.

In late December 2012, the California High-Speed Rail Authority staff added an addendum to the bid documents for the 29-mile initial construction segment of rail line between Madera and Fresno. Disguised under the name “Community Benefit Agreement,” the Project Labor Agreement mandated by the High-Speed Rail Authority is a traditional boilerplate agreement with the State Building and Construction Trades Council of California for construction companies and professional construction service companies.

For the agreements, see the December 26, 2012 Draft Project Labor Agreement as Addendum 8 and see the August 13, 2013 final executed version of the Project Labor Agreement for California High-Speed Rail.

To portray this union mandate as something that would help “disadvantaged” workers in California’s Central Valley to get jobs, the Project Labor Agreement included a section that set a goal for contractors to hire certain classifications of people (such as homeless, ex-offenders, etc.) from zip codes anywhere in the United States that would fall under a definition of “economically disadvantaged” or “extremely economically disadvantaged.”

Not surprisingly, the public responded with disbelief and derision to the California High-Speed Rail Authority’s absurd claim to be a solution to social problems by serving as an employment agency. For example, the March 4, 2013 Sacramento Bee article High-Speed Rail Project Targets ‘Disadvantaged’ Workers in the Central Valley reported the following:

In addition to veterans, former foster children and single parents, the classification includes high school dropouts, the homeless and people who have been convicted of a crime. “There’s another chapter in the high-speed fail saga, and I almost can’t do this one with a straight face,” Assemblyman Brian Jones, R-Santee, said in a recent installment of “Are You Kidding Me?” a video series in which Jones vents political frustrations. “What a social engineering disaster this is going to be, and add to California’s laughingstock reputation.”

The Sacramento Bee March 5, 2013 editorial Should Ex-Cons Get Dibs on Rail Project? was also skeptical:

People who are qualified, have been in prison and served their debt to society should not be denied a chance to work on high-speed rail or any other government project. But that they should be given preference above other equally qualified long-term unemployed is absurd…The real beneficiaries of the agreement are the state’s building trades unions. Embedded in the agreement are provisions that make it more likely that union workers will be employed on the project almost exclusively…

And that claim is true, of course. A line-by-line analysis of the so-called Community Benefit Agreement reveals its subtle, tricky language. Loopholes will allow unions to control the project workforce while avoiding the challenging task of overcoming the problems of individuals who have difficulty finding and holding decent jobs. For a comprehensive analysis of the Project Labor Agreement, see my January 11, 2013 blog post Analysis of the Phony Community Benefits and Other Provisions in the Union Project Labor Agreement for the First Segment of California’s High-Speed Rail.

What the Project Labor Agreement does achieve is a guarantee of construction trade union support for an extremely costly, unpopular, and troubled project. See my January 21, 2014 www.UnionWatch.org article Unions Virtually Alone in Love with California High-Speed Rail.

For a narrative on how the Project Labor Agreement was apparently planned and implemented behind the scenes, see my April 29, 2013 blog post Newly Obtained Documents Reveal Which Elected Official Was the Catalyst for the Project Labor Agreement on California High-Speed Rail: Fresno Mayor Ashley Swearengin.

What Does the Draft 2014 Business Plan Claim About the Project Labor Agreement?

Connecting California, the Draft 2014 Business Plan for the California High-Speed Rail Authority issued on February 7, 2014, states the following on page 23 about the Project Labor Agreement:

Additionally, the Authority Board of Directors has approved a Community Benefits Policy that will ensure that 30 percent of the hours will be performed by National Targeted Workers and that 10 percent of the hours will be performed by disadvantaged workers. According to the National Targeted Hiring Initiative, disadvantaged workers either live in an Economically Disadvantaged Area or face specific barriers to employment. The impact of the Authority’s policy will be most strongly felt in the Central Valley where the design-build contractors will be required to fulfill these requirements and where the majority of workers will qualify as disadvantaged workers. At the same time, the Fresno Regional Workforce Investment Board received a $1.5 million grant to train hundreds of people for jobs in constructing the project.

This paragraph is riddled with inaccuracies and distortions. If you choose as a resident taxpayer of California or the United States to comment on this paragraph, below is a list of some ideas worthy of your elaboration.

Problems with Draft Business Plan Description of the Community Benefits Policy

1. The vague and innocuous “Community Benefits Policy” adopted by the Board of Directors was in practice implemented through a Project Labor Agreement subsequently negotiated and executed between the State Building and Construction Trades Council of California and the California High-Speed Rail Authority. The Draft Business Plan distorts by not recognizing this.

2. The California High-Speed Rail Authority board has never commented on the Project Labor Agreement (aka “Community Benefit Agreement”), discussed it as a formal agenda item, or voted on it. In a January 16, 2013 email about the Project Labor Agreement to the former chairman of Fresno County Economic Opportunities Commission, the Small Business Advocate of the California High Speed Rail Authority stated that “The Community Benefits Agreement (CBA) is an internal administrative document that was not necessarily intended to be circulated for public comment.”

3. As the implementation document for the “Community Benefits Policy,” the Project Labor Agreement (aka “Community Benefit Agreement”) does not and cannot “ensure” that any percentage of hours will be performed by any specific type of worker. It sets goals and requires signatory parties to “exert their best efforts,” have “efforts made,” make their best effort,” “make every effort,” “recognize a desire,” “acknowledge” goals, and “exercise full support of this policy.” The Draft Business Plan distorts by not recognizing this.

4. As the implementation document for the “Community Benefits Policy,” the Project Labor Agreement (aka “Community Benefit Agreement”) does not and cannot “ensure” that Central Valley workers from “Economically Disadvantaged Areas” will perform any percentage of hours. Workers from any “Economically Disadvantaged Area” in the country are eligible to fulfill the goals. The Draft Business Plan distorts by not recognizing this.

5. As the implementation document for the “Community Benefits Policy,” the Project Labor Agreement (aka “Community Benefit Agreement”) does not and cannot “ensure” that truly “disadvantaged” workers will fulfill the goals. First, a specific zip code may include households in dire poverty but also include households that are well-off. In addition, the nine categories of “disadvantaged worker” include a category for a military veteran of any background or an entry-level apprentice, who may come from any background. The Draft Business Plan distorts by not recognizing this.

6. The Draft 2014 Business Plan states that “the majority of workers [from the Central Valley] will qualify as disadvantaged workers.” This is conjecture – no one has been hired yet for any trade work. In addition, there is no indication of how many workers will actually be long-term residents of the Central Valley, how residency will be determined, or how unions will dispatch workers through the “registration facilities and referral systems established or authorized by this Agreement and the signatory Unions” as indicated in the Project Labor Agreement (aka “Community Benefit Agreement”). The Draft Business Plan distorts by not recognizing this.

7. The Draft 2014 Business Plan does not mention key provisions of the Project Labor Agreement (aka “Community Benefit Agreement”) related to union hiring hall dispatching procedures and mandatory employer and employee payments to union trust funds:

  • Contractors must “recognize that the Unions shall be the primary source of all craft labor employed on the Construction Contract for the Project” (Section 7.1) through a system in which “one Core Worker shall be selected and one worker from the hiring hall of the affected trade or craft and this process shall repeat until such C/S/E’s requirements are met or until such C/S/E has hired five (5) such Core Workers for that craft., whichever occurs first. Thereafter, all additional employees in the affected trade or craft shall be hired exclusively from the applicable hiring hall list.” (Section 7.1.2)
  • Employees must “comply with the applicable Union’s security provisions for the period during which they are performing on-site Project work to the extent, as permitted by law, of rendering payment of the applicable monthly dues and any working dues” (Section 6.2)
  • “All employees covered by this Agreement (including foremen and general foremen if they are covered by the Schedule A Agreement) shall be classified and paid wages, benefits, and other compensation including but not limited to travel, subsistence, and shift premium pay, and contributions made on their behalf to multi-employer trust funds, all in accordance with the then current multi-employer Schedule A Agreement of the applicable Union.” (Section 8.1) 

8. Although the Fresno Regional Workforce Investment Board did receive a $1.5 million grant to train construction workers, the Draft Business Plan does not indicate that training is being done through construction trade unions with additional requirements related to union representation. It does not indicate how much grant money is being transferred to union-affiliated trust funds or how trainees will pay union dues and initiation fees.

9. There are reports that the Fresno Regional Workforce Investment Board web site was not functional for months because of an alleged “backlog of registrants.” How many people registered, what was the extent of complaints that led to the shutdown and continued during the shutdown, and has this program adequately served the public? The Draft Business Plan neglects this issue.

10. Has the Project Labor Agreement (aka “Community Benefit Agreement”) been approved by the Federal Railroad Administration, as required in Section 3 of Executive Order 13502? The Draft Business Plan neglects this issue.

How Do Californians and Americans Comment on This Matter?

To ensure that the public has an opportunity to respond, the Authority is providing five methods for submitting comments on this draft plan:

1. Online comment form through the Draft 2014 Business Plan website at http://www.hsr.ca.gov/About/Business_Plans/Draft_2014_Business_Plan.html

2. By email at 2014businessplancomments@hsr.ca.gov

3. By U.S. mail to the Authority:

California High-Speed Rail Authority
Attn: 2014 Business Plan
770 L Street, Suite 800
Sacramento, CA 95814

 
4. Voice mail comment at 916-384-9516.

5. Provide public comment at the Authority’s Board of Directors Meeting on February 11, March 11 and April 10.

The Draft 2014 Business Plan can be found online at http://www.hsr.ca.gov/About/Business_Plans/Draft_2014_Business_Plan.html

 


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

 

 

 

Unions Virtually Alone in Love with California High-Speed Rail

Even close observers of the California High-Speed Rail Authority have struggled to track developments for the state’s planned bullet train. The debacle began in November 2008, when 52.7% of California voters approved Proposition 1A and triggered serious planning for what could be the most expensive construction project in human history. With that kind of money at stake, unions were obviously inspired to be part of this boondoggle.

Kings County Says No to CaHSRThe California High-Speed Rail Authority has become justly notorious for backroom deals, secretive administrative actions, and lack of transparency. But most Californians are at least vaguely aware that the project has been mismanaged and misrepresented.

Proposition 1A – placed on the ballot by the California State Legislature – authorized the State of California to borrow $9.95 billion to begin design and construction of a $45 billion complete high-speed rail system linking San Francisco, Los Angeles, San Diego, and Sacramento. Including interest payments, the Proposition 1A commitment was estimated to be $19.4 billion to $23.2 billion for bonds to be paid back over 30 years. According to Proposition 1A, that money borrowed by the state was supposed to be supplemented with significant funding from the federal government, private investors, and municipal governments.

Proposition 1A also promised that the bullet train would be able to travel non-stop from San Francisco to Los Angeles in 2 hours, 40 minutes. Presumably many Californians who voted for it – including the 78.4% of San Francisco voters who approved it – imagined a fast train speeding between two world-class cities along the median of Interstate 5. They were wrong.

Here’s the current appalling status of California High-Speed Rail:

1. The California High-Speed Rail Authority has spent $587 million on consultants as of September 30, 2013. The California State Treasurer has sold at least $703 million worth of bonds (Buy America Bonds and perhaps others) for California High-Speed Rail as of May 13, 2013.

2. The estimated cost has been dramatically revised. Instead of being $45 billion for the entire system, it is now $68 billion just for the line between San Francisco and Los Angeles, and the high-speed rail will be “blended” with other commuter rail lines at the beginning and end of the route. One group has estimated that the entire system may exceed $200 billion if bond interest is included and the federal government does not provide additional grants.

3. The California State Treasurer cannot sell the Proposition 1A state bonds because a judge determined in November 2013 that the California High-Speed Rail Authority failed to comply with the law. While the California High-Speed Rail Authority has already obtained $2,942,000,000 from the federal government, possibly under false pretenses of a commitment to matching funds, the Republican majority in the U.S. House of Representatives is intent on stopping further grants until the Authority gets its act together. No private investors have emerged – corporations want to GET money from the Authority through contracts, not give it money to be squandered. Cities in the San Joaquin Valley where the line will be built first have no money to invest in it – Fresno is nearly bankrupt.

4. Governor Jerry Brown desperately included $250 million in his 2014-15 budget for California High-Speed Rail to be obtained from “Cap and Trade” allowances paid by emitters of greenhouse gases as part of the California Global Warming Solutions Act of 2006 (Assembly Bill 32 or AB 32). But the project is expected to increase greenhouse gas emissions during four years of initial construction. The Authority claims it will earn the Cap and Trade funds because offsets from its tree planting program (as well as other activities such as “cleaner school buses and water pumps in Central Valley communities”) will allow it to produce “zero net emissions.”

5. With the “blended” plan, there are serious challenges to achieving the 2 hour 40 minute travel time required in law. An analysis claiming that the time can be met includes the train going over the Tehachapi mountain range (north of Los Angeles) at 150+ miles per hour. There is idle talk about digging a long tunnel for the bullet train through the seismically-active San Gabriel Mountains from Palmdale to Los Angeles, but this is probably to lull citizens of Santa Clarita into believing the rail won’t go through their town.

6. To the surprise and confusion of hipster high-speed rail supporters in San Francisco and Los Angeles, this bullet train will be a local, with stops at least in Merced, Fresno, Hanford or Visalia, Bakersfield, and Palmdale. In June 2013, the Authority awarded a $970 million contract (with provisions for an additional $55 million) to Tutor Perini/Zachry/Parsons (a joint venture) to design and build the first 29-miles of the high-speed rail between Madera and Fresno by February 2018. People are supposed to be able to ride the high-speed rail between Merced and Palmdale by 2022.

7. The California High-Speed Rail Authority erred by awarding the first design-build contract for a 29-mile stretch that includes 25 miles in one segment assigned for environmental review (Merced to Fresno) and four miles in another segment assigned for a different environmental review (Fresno to Bakersfield). While it received full environmental clearance for the 25-mile stretch, it has not received clearance for the 4-mile stretch. In December 2013, the federal Surface Transportation Board rejected a secretive request from the Authority for an exemption to environmental review. If it can’t get the federal exemption, the Authority’s design-build contract is in jeopardy.

8. Owners of 370 parcels that the California High-Speed Rail Authority needs for the first 29-mile stretch are apparently resisting or holding out on selling their property. At last report in mid-December, the Authority had allegedly closed escrow on five parcels. The Authority has now received authorization from the California Public Works Board to possess two parcels through eminent domain.

Based on these eight points alone, who would still be eager to proceed with this project besides Governor Jerry Brown, the corporations seeking contracts, and a scattering of citizens committed to various leftist causes related to urban planning and environmentalism? Unions.

Union supporters at California High-Speed Rail Congressional field hearing in Madera on May 31, 2013.

Union supporters at California High-Speed Rail Congressional field hearing in Madera on May 31, 2013.

In a backroom deal, without any public deliberation or vote, the board of the California High-Speed Rail Authority negotiated and executed a Project Labor Agreement (called a “Community Benefit Agreement”) with the State Building and Construction Trades Council of California. This agreement gives unions a monopoly on construction trade work and certain construction-related professional services.

In a January 16, 2013 email about the Project Labor Agreement to the former chairman of Fresno County Economic Opportunities Commission, the Small Business Advocate of the California High Speed Rail Authority stated the following:

The Community Benefits Agreemeent (CBA) is an internal administrative document that was not necessarily intended to be circulated for public comment, however, that doesn’t mean you cannot provide me your input. The document was added to Construction Package #1 and Addendum 8 and I’ve attached it herein for your convenience. It includes regulatory compliance and is being reviewed by the Federal Rail (sic) Administration.

There is no evidence available to show that the Federal Railroad Administration approved the Project Labor Agreement, as required by law. But the final version of the agreement was signed in August 2013. No board member or administrator of the California High-Speed Rail Authority has commented in a public meeting about the agreement that will give unions control of most of the claimed 100,000 job-years of employment over a five-year period.

When State Senator Andy Vidak, with Congressman David Valadao, held a press conference critical of California High-Speed Rail on January 17, 2014 at the site of the eventually-to-be-demolished Fresno Rescue Mission, there were protesters: construction union leaders, lobbyists, public relations officials, and activists. The Fresno Bee reported this about the press conference:

In a news release prior to the announcement, Vidak indicated that his goal is to kill the bullet train. He tempered his in-person remarks, however, as he faced a crowd that included both high-speed rail critics from his home area in Kings County and a couple dozen representatives of labor unions who support the project…Rail supporters, some clad in hard hats and safety vests, booed Vidak as they wielded their own signs proclaiming high-speed rail as “good for the local economy, good for air quality and good for jobs.”

The Fresno Business Journal reported this about the press conference:

Dillon Savory, an advocate representing several local unions, commented after the event that high-speed rail would not only provide needed jobs, but it would help improve the Valley’s air, which has been heavily polluted this winter. Also, the cost of roadwork in the area is about double the cost of high-speed rail, making road construction less cost effective, Savory said. Savory criticized the anti-high-speed rail forced for trying to pit rail against water. He said the greater issue is putting people back to work with decent paying jobs. He said many union workers are only finding temporary work for about two weeks at a time. That is not putting food on the table, he said.

In 2013, Savory was the manager for the successful union-backed campaign to defeat a ballot measure (Measure G) supported by the Mayor of Fresno that would have allowed the city to outsource garbage collection. The political professionals are getting involved.

When the groundbreaking ceremony occurs for California High-Speed Rail, perhaps in an abandoned Madera County cornfield seized through eminent domain by the Authority, expect thousands of construction union workers to be bused in to block and neutralize any protesters. Governor Brown cannot suffer any more embarrassment over this boondoggle and debacle.

Bullet train path through Kings County farmland.

Bullet train path through Kings County farmland.

Sources

California Streets and Highway Code Section 2704.09 (implemented by California voters in November 2008 as Proposition 1A, as authorized by Assembly Bill 3034 (Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century)

Top-40 Donors to Campaign to Convince California Voters to Borrow $10 Billion to Start Building High-Speed Rail

Election Results by County: Proposition 1A (2008)

May 7, 2008 Senate Appropriations Committee legislative analysis for Assembly Bill 3034 (source of estimated costs of bonds, including interest payments)

American Recovery and Reinvestment Act of 2009 (ARRA) High Speed Rail Awards

July 2012 – California’s High-Speed Rail Realities: Briefly Assessing the Project’s Construction Cost, Debt Prospects, and Funding (“The Realistic – No Additional Federal Funding scenario results in a total debt burden of $203 billion between 201 3 and 2058.”)

February 11, 2013 California High-Speed Rail Authority memo “Phase 1 Blended Travel Time”

A Preliminary Timeline of Activity Concerning What Will Be $9.95 Billion Borrowed through Proposition 1A Bond Sales for California High-Speed Rail

June 2013 – Contribution of the High-Speed Rail Program to Reducing California’s Greenhouse Gas Emission Levels (includes “plans to plant thousands of new trees across the Central Valley” and “cleaner school buses and water pumps in Central Valley communities”)

November 15, 2013 – Project Update Report to the California State Legislature (source of report that $587 million was spent on consultants)

November 25, 2013 California High Speed Rail Authority Bond Validation Lawsuit Ruling

November 25, 2013 – Tos Fukuda Kings County v California High-Speed Rail Prop 1A Part 1 Ruling

November 25, 2013 Tos Fukuda Kings County v California High-Speed Rail Prop 1A Part 2 Ruling

California High-Speed Rail – Fresno to Bakersfield Surface Transportation Board Exemption Letters

Project Labor Agreement (Community Benefits Agreement) for California High-Speed Rail – Addendum 8 in Bid Specifications – December 26, 2012

Project Labor Agreement (Community Benefits Agreement) for California High-Speed Rail – Final – August 13, 2013

February 27, 2013 Fresno County Economic Opportunities Commission Chairman Wonders Why No Input Into California High-Speed Rail Authority Project Labor Agreement

Vidak Rails Against Bullet-Train Plan, Met by Bipartisan Crowd at Fresno EventFresno Bee – January 17, 2014

Vidak Calls for High-Speed Rail RevoteFresno Business Journal – January 17, 2014

California High-Speed Rail Scam

Past Articles in www.UnionWatch.org on Unions and California High-Speed Rail

Unions Creep Closer to Monopolizing California High-Speed Rail Construction – December 6, 2012

Watch Union Official’s Rude Antics at California High-Speed Rail Conference – January 15, 2013

Unions Await Fantastic Return on High-Speed Rail Political Investments – January 22, 2013

Exposing the Plot Behind Project Labor Agreement for California Bullet Train – April 30, 2013

Unions Defend California High-Speed Rail Project at Congressional Hearing – June 4, 2013

California Construction Unions Circumvent Public Scrutiny of Project Labor Agreements – September 17, 2013

 


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

 

California Construction Unions Circumvent Public Scrutiny of Project Labor Agreements

A common and enduring complaint of the political Left is that constitutional structures established in the country’s republican form of government hinder progress and subvert the democratic will of the people.

According to such thinking, those constitutional structures need to be reformed and modernized so that government can be more “democratic.” A few astute political observers in California have noticed that unions and their political allies are advancing strategies at the state and local government levels that effectively chip away at checks and balances inherent in the structure of American constitutional government.

One example is the end of public deliberation and votes for Project Labor Agreements in the legislative branch of state and local governments. Instead, backroom deals are made in the executive branch to give unions control of the work.

In the past year, Project Labor Agreements have been imposed on four large publicly-funded construction projects without any public deliberation or votes. In some cases, the public has been denied access to the Project Labor Agreement.

1. San Diego County New Central Courthouse
Judicial Council of California – Administrative Office of the Courts
May 2013
$560 million in public funds

San Diego County New Central Courthouse Project Labor Agreement

No formal public discussion or vote on it. Repeated requests at Judicial Council meetings and to Administrative Office of the Courts staff for a public vote have been futile.

How Project Labor Agreement was implemented:

Background:

  • Judicial Council of California Imposes Project Labor Agreement on San Diego Courthouse – www.UnionWatch.org – June 8, 2013
  • Courthouse to be Built Under Labor Pact – San Diego Union-Tribune – June 7, 2013
  • I’ve Failed So Far in Seeking the Project Labor Agreement from the California Administrative Office of the Courts for the New San Diego Central Courthouse – www.LaborIssuesSolutions.com – July 10, 2013
  • Not Accountable for Project Labor Agreement – Until Now: Mailers Inform Judges About Union Deal of Administrative Office of the Courts – www.LaborIssuesSolutions.com – June 24, 2013
  • Coalition for Fair Employment in Construction to Hold Press Conference – June 20, 2013 at 11:00 a.m. – Condemning San Diego Courthouse Project Labor Agreement – www.LaborIssuesSolutions.com – June 20, 2013
  • Union Quest for Project Labor Agreements from Judicial Council of California and Administrative Office of the Courts Succeeds with San Diego County Central Courthouse  – www.LaborIssuesSolutions.com – June 8, 2013
2. San Diego Convention Center Phase 3 Expansion
City of San Diego
November 2012
$520 million in public funds

San Diego Convention Center Phase 3 Expansion Project Labor Agreement

No formal public discussion or vote on it. Appears to be a violation of a voter-approved city ordinance prohibiting the city from entering into contracts that require companies to sign Project Labor Agreements.

How Project Labor Agreement was implemented: Secret Deal between Mayor and Union Official to End Union Lawsuit and CEQA Objections to San Diego Convention Center Phase 3 Expansion

Lawsuit filed by Coalition for Fair Employment in Construction to get Project Labor Agreement after repeated rejections of public records requests: Coalition for Fair Employment in Construction v. City of San Diego

Background:

3. California High-Speed Passenger Train – First Construction Segment (Madera to Fresno)
California High-Speed Rail Authority
December 2012
$985 million in public funds

California High-Speed Rail Project Labor Agreement (Community Benefits Agreement) 2012

No formal public discussion or vote on it. Repeated requests at California High-Speed Rail Authority meetings for a public vote have been futile.

Bid specifications require prime contractor to sign Project Labor Agreement, so there is a government mandate to sign it.

California High-Speed Train Project – Request for Proposal for Design-Build Services

Background:

4. New Sacramento Kings Arena (Entertainment and Sports Center)
City of Sacramento (Public-Private Partnership)
September 2013
$448 million (includes $258 million in public funds

No formal public discussion or vote on it. Public does not have access to Project Labor Agreement. A proposal circulates to release the Project Labor Agreement to the public and have the Sacramento City Council vote on it.

Eight Steps to Possibly Alleviate Taxpayer and Contractor Outrage about the Backroom Deal for a Project Labor Agreement on Construction of the Sacramento Kings Arena

Background:


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

Unions Defend California High-Speed Rail Project at Congressional Hearing

On May 28, 2013, the Subcommittee on Railroads, Pipelines, and Hazardous Materials of the Committee on Transportation and Infrastructure for the U.S. House of Representatives held a field hearing in Madera, California on oversight of the California High-Speed Rail project.

Unlike San Francisco, where 78.4% of voters approved Proposition 1A in November 2008 to authorize borrowing $9.95 billion through bond sales to fund the project, Madera County is farm country in the San Joaquin Valley, where the reception to the bullet train is generally hostile. Signs at the entrance to the Madera Community College Center, where the hearing was held, criticized the project and its Congressional supporters.

I had predicted in a couple of tweets that unions would have a strong, supportive presence at the committee hearing. That was indeed the case.

And when Congressman Jim Costa began his introductory remarks, he entered into the record a thick collection of letters in support of the project.

You can read the 120 pages of letters here: Support Letters – California High-Speed Rail – May 28, 2013 Congressional Field Hearing in Madera. The package isn’t as impressive when you discover that most of the letters are from union officials, and most of the letters are the same boilerplate language.

Nevertheless, the letters indicate why construction trade unions were among the biggest financial supporters of Proposition 1A in 2008 and remain among the strongest supporters today: “let’s create those jobs and get to work now.” And we are told “we simply can’t afford not to start building High-Speed Rail now.”

The main argument against California High-Speed Rail is that we simply can’t afford to build it. And the Project Labor Agreement that construction companies large and small will have to sign with unions as a condition of working on this project will increase the cost, if studies and anecdotes about Project Labor Agreements in California are an accurate indication of what happens when unions get a government-mandated monopoly on construction.

A union official told KSEE Channel 24 news in Fresno that the project was an opportunity to create jobs. But Nicole Goehring of the Northern California Chapter of Associated Builders and Contractors also told KSEE Channel 24 news that those jobs were going to be union-only because of the Project Labor Agreement, which was imposed without public discussion or a vote of the board of the California High-Speed Rail Authority. See Proposed High Speed Rail Plans Face Challenges.

For the boring but accurate details about the California High-Speed Rail Project Labor Agreement (aka Community Benefits Agreement), see my Analysis of the Phony Community Benefits and Other Provisions in the Union Project Labor Agreement for the First Segment of California’s High-Speed Rail.


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

Election Gains for California Unions in 2012 Drive Push for Project Labor Agreements

The explosion of Project Labor Agreements on government projects in California since the November 6 elections is not surprising to long-time observers of labor union initiatives at local governments.

In the six months after the November 2008 Presidential Election, emboldened and confident construction trade unions won Project Labor Agreements at eleven local governments in California. It was a dramatic upsurge from the usual handful of Project Labor Agreements that California local governments had considered each year.

Four years later, the November 2012 Presidential Election once again expanded and solidified gains for union-backed candidates at local governments in California. And again, the result is a flurry of new government requirements that construction companies sign Project Labor Agreements with unions as a condition of contract work. Here’s a timeline of Project Labor Agreement activity in California since November 6.

November 6: voter approval of Proposition Z means that the San Diego Unified School District extends an existing Project Labor Agreement with the San Diego County Building and Construction Trades Council to construction funded by an additional $2.8 billion in bond sales, as directed by a resolution passed by the board of directors on July 24, 2012.

November 8: union officials and representatives of the outgoing Mayor of San Diego triumphantly announce a “deal” that ends union environmental objections to the planned San Diego Convention Center Phase 3 Expansion. A November 15 press release from the San Diego County Building and Construction Trades Council confirms that contractors will now be required to sign a Project Labor Agreement as a condition of working on the expansion. The City of San Diego refuses to provide the Project Labor Agreement to the public.

December 11: the board of trustees for Milpitas Unified School District approves a Project Labor Agreement with the Santa Clara and San Benito Building and Construction Trades Council.

December 26: a Project Labor Agreement is finalized and then added as Addendum 8 to the bid specifications for the first construction segment of California High-Speed Rail, without discussion or a vote by the High-Speed Rail Authority Board of Directors.

January 24: the board of trustees of Coast Community College District in Orange County discusses a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council.

February 6: the board of trustees of the Solano Community College District hears a scheduled staff presentation about a Project Labor Agreement with the Napa-Solano Building and Construction Trades Council.

February 6: the board of trustees of Coast Community College District hears a scheduled staff presentation about a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council. The board appoints a task force to study the issue and return with a report.

February 12: the board of trustees for Lynwood Unified School District approves a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council.

February 13: the board of trustees for Ohlone Community College District in Fremont approves a Project Labor Agreement with the Alameda County Building and Construction Trades Council.

March 6: the board of trustees of Solano Community College District hears formal scheduled presentations from groups supporting and opposing a Project Labor Agreement.

March 6: the board of trustees for El Monte Union High School District votes 3-2 to table consideration of a Project Labor Agreement negotiated with the Los Angeles and Orange Counties Building and Construction Trade Council.

March 6: multiple speakers tell the board of trustees of Coast Community College District during general public comment that they oppose a proposed Project Labor Agreement with the Los Angeles and Orange Counties Building and Construction Trade Council.

March 12: the board of trustees for San Francisco Unified School District directs staff to develop a local contracting and hiring policy to include in a planned Project Labor Agreement with the San Francisco Building and Construction Trades Council.

March 19: the board of trustees for Hartnell Community College District in Salinas discusses a Project Labor Agreement with the Monterey/Santa Cruz Building and Construction Trades Council.

March 19: the El Monte City Council approves a Project Labor Agreement with the Los Angeles and Orange County Building Trades Council.

April 1: the board of trustees for Rancho Santiago Community College District votes 5-2 to begin negotiations for a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council.

April 3: the board of trustees of Coast Community College District again discusses a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council. On a 3-2 vote, the board rejects a proposal to begin negotiating a Project Labor Agreement with union representatives and again instructs the task force to study the issue and return with a report.

April 8: the Pasadena City Council approves negotiations for a Project Labor Agreement on the Glenarm Power Plant Repowering Project with the State Building and Construction Trades Council and the Los Angeles-Orange County Building and Construction Trades Council.

April 9: the Sonoma County Board of Supervisors establishes a Project Labor Agreement Ad-hoc Committee based on a priority set by the board at its February 8 strategic planning session to consider a Project Labor Agreement policy with the Sonoma, Lake & Mendocino Counties Building and Construction Trades Council.

April 10: the board of trustees for El Monte Union High School District pulls from their meeting agenda a scheduled vote on a Project Labor Agreement negotiated with the Los Angeles and Orange Counties Building and Construction Trade Council.

April 16: the American Canyon City Council holds a “study session” on a Project Labor Agreement with the Napa-Solano Building and Construction Trades Council.

April 16: the board of trustees for the College of Marin approves the expansion of its existing Project Labor Agreement with the Marin Building and Construction Trades Council to include the New Academic Center. The board also holds a “study session” on Project Labor Agreements.

April 23: in response to a lawsuit, the City of San Diego provides the public with a copy of the Project Labor Agreement announced in November 2012 for the San Diego Convention Center Phase 3 Expansion.

April 23: the board of trustees for the San Francisco Unified School District approves a local contracting and hiring policy to include in a planned Project Labor Agreement with the San Francisco Building and Construction Trades Council.

April 29: the public obtains records indicating that the Mayor of the City of Fresno asked the U.S. Secretary of Transportation to approve a targeted hiring policy for California High-Speed Rail included in the context of a Project Labor Agreement.

April 30: a task force at Coast Community College District votes to recommend to the full board of trustees that it not require contractors to sign a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council.

May 7: the board of trustees for Hartnell Community College District in Salinas votes 4-3 to negotiate a Project Labor Agreement with the Monterey/Santa Cruz Building and Construction Trades Council.

Union officials supporting a Project Labor Agreement get ready for the May 7, 2013 meeting of the Hartnell Community College District board of trustees. "P.L.A. Yes!"

Union officials supporting a Project Labor Agreement get ready for the May 7, 2013 meeting of the Hartnell Community College District board of trustees. “P.L.A. Yes!”


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

Exposing the Plot Behind Project Labor Agreement for California Bullet Train

Documents obtained on April 29, 2013 through a request under the authority of the California Public Records Act reveal behind-the-scenes maneuvering for a government mandate that construction companies sign a Project Labor Agreement with the State Building and Construction Trades Council of California as a condition of building California’s High-Speed Rail.

Getting these records was not a simple task. The appointed board of directors of the California High-Speed Rail Authority never discussed or voted on this union monopoly. The Project Labor Agreement materialized out of nowhere in late December 2012 as Addendum 8 in the bid specifications for the first construction segment from Madera to Fresno.

For reasons still to be publicly revealed, obscure Fresno-based appointed boards and quasi-public groups interacted with federal and state officials to develop the Project Labor Agreement for what will be the most expensive public works project in human history. It was the Fresno Regional Workforce Investment Board that possessed many of the key documents. So far only one elected official has been identified as a direct player in the scheme: Fresno Mayor Ashley Swearengin.

Here’s what is available and known to the public as of April 30, 2013.

In November 2009, the California High-Speed Rail Authority requested “expressions of interest” from local governments for a $40 million heavy maintenance facility somewhere from Merced to Bakersfield that would employ up to 1500 workers during peak shifts. The County of Fresno, the City of Fresno, the Economic Development Corporation in Fresno County, and the Fresno Regional Workforce Investment Board organized a consortium called “Fresno Works” to compete for the facility against cities such as Merced, Chowchilla, and Bakersfield.

At some point this Fresno Works consortium appeared to expand its interests to include getting a requirement for high-speed rail contractors to hire people from areas of the Central Valley where unemployment is high. In September 2011, the Fresno Regional Workforce Investment Board recommended to the Fresno Works consortium that the California High Speed Rail Authority (CHSRA) implement a “Targeted Unemployed Worker” Program and “First Source” transparency requirement for contractors working on the California High-Speed Rail project.

The board of the California High-Speed Rail Authority discussed the proposal at its January 12, 2012 meeting. (Board member Tom Richards was also serving as chairman of the Fresno Regional Workforce Investment Board and removed himself from the board discussion.) It was already moot because a letter dated January 6, 2012 from the U.S. Department of Labor’s Federal Railroad Administration to the California High Speed Rail Authority indicated that the proposed workforce requirements violated rules concerning the use of federal grants for construction projects.

Nothing was mentioned about labor unions or Project Labor Agreements in this proposal. California High-Speed Rail Authority board member Bob Balgenorth, who was also head of the State Building and Construction Trades Council of California, inquired during discussion on whether or not construction trade union officials had been consulted and noted that the proposal did not seem to recognize that union hiring halls typically dispatch workers directly to the job site and not to an employer’s office.

Work apparently resumed in Fresno to develop a targeted hiring program that would meet federal contracting standards. In a memorandum to the California High Speed Rail Authority dated March 21, 2012,  the co-chairman of the Education Committee of the Fresno Works Consortium (who was also the executive director of the Fresno Regional Workforce Investment Board) proposed a set of revised “Targeted Unemployed Worker” Hire Criteria and “First Source” Transparency Requirements.

Here for the first time were references to unions. It stated that hiring criteria “be reflective of union apprenticeship requirements” and that “if a project labor agreement is negotiated to cover this project, such an agreement shall include a provision requiring the parties to adhere to this Targeted Unemployed Worker Program.” Obviously, someone had proposed (or demanded) a union Project Labor Agreement.

An opportunity soon came to propose combining a targeted hiring policy (albeit without local hiring requirements) with a union Project Labor Agreement. Sometime during the following three months, word reached Fresno that the U.S. Department of Labor’s Federal Transit Administration had given approval in February 2012 to the Los Angeles County Metropolitan Transportation Authority to require contractors to sign the new Project Labor Agreement for its massive construction program. Using this approval as the basis for her argument, Fresno Mayor Ashley Swearengin sent a letter dated June 19, 2012 to Ray LaHood, Secretary of the U.S. Department of Transportation, seeking approval for a revised hiring program for the California High-Speed Rail Authority:

…it has come to my attention that Mr. Dorvel R. Carter, Chief Counsel of the Federal Transit Administration, approved language put forward by the Los Angeles County Metropolitan Transit Administration (sic) (LACMTA) and the Los Angeles/Orange Counties Building and Construction Trades Council which is very similar to the Fresno Works targeted hiring program. This language focuses on establishing targeted hiring criteria in project labor agreements…we have modified our initial proposal to more closely comport with the LACMTA language that has been approved by USDOT-FTA and respectfully request that USDOT work with us to institute this revised proposed, the “National Targeted Hiring Program,” for the Initial Construction Section of the California High Speed Rail program…I look forward to discussing it with you and your team at your earliest convenience.

While mentioning some conditions and caveats, a letter from the head of the Federal Railroad Administration at “Secretary LaHood’s request” dated June 29, 2012 assured Mayor Swearengin that “we would respect the choices of CHSRA in adopting a variation of a targeted hiring program so long as the program is consistent with the California state procurement policies and procedures that CHSRA uses in the expenditure of its non-Federal funds.”

The general counsel for the Fresno Regional Workforce Investment Board then produced a legal analysis of a revised Fresno Works consortium proposal for a ”National Targeted Hiring Program” that would win federal approval. He noted that a similar hiring program was approved by the Federal Transit Administration as included in a Project Labor Agreement that contractors must sign to work on projects of the Los Angeles County Metropolitan Transportation Authority.

Representatives of the Fresno Works consortium and the Fresno Regional Workforce Investment Board – including Chuck Riojas, the head of the International Brotherhood of Electrical Workers (IBEW) Local No. 100 in Fresno – then made a presentation about the new proposal at the November 14 board meeting of the California High Speed Rail Authority. No references were made to a Project Labor Agreement, and Mr. Riojas of the IBEW official even asserted that “This isn’t I’d like to stress a union or non-union document” and that apprentices from non-union programs could get on-the-job training opportunities under the proposal. (These claims turned out to be false when the final version of the proposal was adopted in the context of a Project Labor Agreement.)

At their following meeting on December 8, the California High Speed Rail Authority board approved a “Community Benefits Policy” meant to adopt guidelines for a targeted hiring program. Again, there were no references in the policy to unions or a Project Labor Agreement.

Then, in late December, the California High Speed Rail Authority issued Addendum 8 for the bid specifications for the first construction segment from Madera to Fresno. Contractors would now be required to sign a “Community Benefits Agreement.” The so-called Community Benefits Agreement turned out to be a typical Project Labor Agreement negotiated with the State Building and Construction Trades Council of California, with the goals of the targeted hiring program inserted in it.

Unless you were part of the inner circle working behind-the-scenes on this scheme, you would have no way of knowing that union officials were using a benevolent-sounding, locally-motivated targeted hiring program as their vehicle to gain monopoly control of construction for California High Speed Rail. References to a Project Labor Agreement only appeared in passing in internal letters and documents for obscure local appointed boards and quasi-public organizations in Fresno. The board of the California High Speed Rail Authority never discussed a Project Labor Agreement or voted on it. The public was kept uninformed, for obvious reasons.

So far the only elected official implicated in the scheme is Fresno Mayor Ashley Swearengin, who was prodded by someone to send the pivotal letter to a top Obama Administration official asking for federal approval to require contractors to sign a Project Labor Agreement for California High Speed Rail. That’s where the plot can be exposed in greater detail. Here are questions for Mayor Swearengin that need to come from Fresno citizens and all parties interested in California High Speed Rail:

1. How did you find out about the Project Labor Agreement with the Los Angeles/Orange Counties Building and Construction Trades Council that the Los Angeles County Metropolitan Transportation Authority requires contractors to sign as a condition of work?

2. Who asked you to send the letter to U.S. Transportation Secretary Ray LaHood asking for approval for the California High-Speed Rail Authority to use a targeted hiring program in the context of a Project Labor Agreement? Who wrote the letter?

3. Which union officials contacted your office related to the targeted hiring program and the Project Labor Agreement?

4. Why did you send the letter from your office instead of more appropriately referring the subject to the California High-Speed Rail Authority?

5. Was your letter part of some sort of deal related to union lobbying for selecting Fresno as the location for the California High-Speed Rail Heavy Maintenance Facility?

6. The City of Fresno municipal code prohibits the city from requiring contractors to sign a Project Labor Agreement with unions as a condition of work. Did you keep this letter from exposure to the public because you knew it asked for something contrary to the principles established in your city’s own laws?

The California High-Speed Rail Authority and its appointed board members have earned a reputation for a lack of transparency and accountability, and as long as it gets taxpayer money, it can continue this practice with impunity. But with relentless public pressure on elected officials who are supposed to be accountable to the people, the complete story of the Project Labor Agreement on the California High-Speed Rail will eventually come out, to the shame and detriment of everyone involved in the sneaky scheme.

Background and Sources:

Project Labor Agreement for California High-Speed Rail

Analysis of the Phony Community Benefits and Other Provisions in the Union Project Labor Agreement for the First Segment of California’s High-Speed Rail -www.LaborIssuesSolutions.com – January 11, 2013

Community Benefits Policy for California High-Speed Rail

Project Labor Agreement for Los Angeles County Metropolitan Transportation Authority

Construction Careers Policy for Los Angeles County Metropolitan Transportation Authority

Fresno Regional Workforce Investment Board (FRWIB) Board of Directors

Fresno Works Consortium

Fresno Mayor Ashley Swearengin

Origin of Fresno Works Consortium, established to win selection of Fresno to be site of California High-Speed Rail Heavy Maintenance Facility

California High-Speed Rail Authority January 12, 2012 Board Meeting Agenda Item #3 – Presentation of Fresno Regional Workforce Investment Board

Transcript of January 12, 2012 Board Meeting for California High-Speed Rail Authority

January 6, 2012 Federal Railroad Administration Letter – California High-Speed Rail – Targeted Hiring

March 21, 2012 Fresno Works Consortium Revised Targeted Hiring Program for California High-Speed Rail

June 19, 2012 Letter from Fresno Mayor Ashley Swearengin to Federal Railroad Administration – Inquiry on Applying Project Labor Agreement to California High-Speed Rail

June 29, 2012 Letter from Federal Railroad Administration to Fresno Mayor Ashley Swearengin on Targeted Hiring Program for California High-Speed Rail

August 8, 2012 Legal Analysis for Fresno Regional Workforce Investment Board of California High-Speed Rail Targeted Hiring Program

Transcript of November 14, 2012 Board Meeting for California High-Speed Rail Authority – Hints of Project Labor Agreement

January 17, 2013 Letter from Associated Builders and Contractors (ABC) National Office to Federal Railroad Administration on California High-Speed Rail Project Labor Agreement

March 26, 2012 Letter from Federal Railroad Administration to Associated Builders and Contractors on California High-Speed Rail Project Labor Agreement

April 11, 2013 Letter from Fresno Regional Workforce Investment Board – Public Documents – Process Leading to Project Labor Agreement on California High-Speed Rail

California High-Speed Rail Authority Keeps Union Deal Out of Public Forums – my article in www.FlashReport.org – February 10, 2013

www.CaliforniaHighSpeedRailScam.com – your centralized source for key information about the debacle that is the California High-Speed Passenger Train for the 21st Century.


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

Unions Await Fantastic Return on High-Speed Rail Political Investments

It’s a heady time to be a top construction union official in California, as the California High-Speed Rail Authority presumably now holds proposals from as many as five design-build consortiums to build the first segment of the $68 billion project.

If this project moves forward, it will become part of the pantheon of huge American infrastructure projects that unions cite when they brag about the lasting accomplishments of union labor. And unions can also claim an essential role in the politics behind its advancement.

Even before Californians had a chance to vote directly on funding for High-Speed Rail, union-affiliated labor-management cooperation committees made massive campaign contributions to stop statewide ballot initiatives in the mid-2000s that would have given property owners stronger rights against the government’s power of eminent domain, as a result complicating the High-Speed Rail Authority’s land acquisition plans.

For example, the State Building & Construction Trades Council Labor Management Cooperation Trust contributed $1 million in 2006 to the campaign to defeat Proposition 90, a statewide ballot measure to strengthen property rights. And in the spring of 2008, the California Construction Industry Labor-Management Cooperative Trust contributed $250,000 to this No on 98/Yes on 99 campaign committee to oppose another statewide ballot measure to protect property rights.

These two union-affiliated committees are authorized under the obscure Labor-Management Cooperation Act of 1978, a federal law signed by President Jimmy Carter and implemented by the Federal Mediation and Conciliation Service. There are no federal or state regulations specifically addressed toward these trusts, and these trusts do not have any reporting requirements to the U.S. Department of Labor’s Office of Labor-Management Standards. Unions use these trust funds routinely now to fund campaigns for and against state and local ballot measures in California. 

When Proposition 1A was on the November 2008 ballot asking California voters to authorize borrowing $10 billion for the high-speed rail project by selling bonds, unions provided a substantial portion of the campaign funding. Leading the charge was the California Alliance for Jobs, another labor-management cooperation committee authorized under the Labor-Management Cooperation Act of 1978.

As shown in the Operating Engineers Local 3 Northern California Master Agreement (page 42) and the Northern California District Council of Laborers Master Agreement (pages 14, 26), construction companies belonging to various business trade associations must pay an amount to the California Alliance for Jobs trust based on the number of hours worked by each employee represented by the union. These amounts are incorporated into the state-mandated construction wage rates (so-called “prevailing wages”) as part of the “Other” category of payments. This ambiguous category of employer payments was implemented as California Labor Code Section 1773.1(a)(7-9) when Governor Gray Davis signed Senate Bill 868 in 2003.

Through contributions, a $100,000 loan, and in-kind/non-monetary gifts, the California Alliance for Jobs was able to assist the campaign to pass Proposition 1A with $616,500, comprising 23% of the total amount raised by Californians for High Speed Trains – Yes on Proposition 1A – A Coalition of Taxpayer, Business, Environmental and Labor Groups and People from Across California Tired of Being Stuck In Traffic.

The national headquarters and the Northern California and Southern California locals of the Operating Engineers union combined for another $575,000, the Laborers union chipped in $100,000, and the State Building and Construction Trades Council of California gave $75,000. 

Top Ten Contributors to the Main Campaign Committee to Pass Proposition 1A (Includes Loans and Non-Monetary/In-Kind Contributions)

1

California Alliance For Jobs Rebuild California Committee

Union-Affiliated Labor-Management Cooperation Committee

$616,500

2

International Union of Operating Engineers Construction Union

$250,000

3

Operating Engineers Local Union No. 3 (Union & PAC) Construction Union

$250,000

4

Professional Engineers in California Government (PECG) Public Employee Union

$183,493

5

California State Council of Laborers Construction Union

$100,000

6

Parsons Brinckerhoff Americas Inc. Construction Design & Engineering

$76,500

7

AECOM Tech Corporation Construction Design & Engineering

$75,000

8

International Union of Operating Engineers Local No. 12 Construction Union

$75,000

9

Members Voice of the State Building Trades Construction Union

$75,000

10

HNTB Corporation Construction Design & Engineering

$63,000

Union involvement in pushing the high-speed rail wasn’t over with the 2008 election. In 2010 and 2011, when the California High-Speed Rail Authority was stumbling under a confused business plan and skyrocketing cost estimates, the head of the State Building and Construction Trades Council of California and regional building trade unions submitted commentaries to newspapers defending the planned rail program. And as appointees to the Board of Directors of the California High-Speed Rail Authority, the head of the State Building and Construction Trades Council of California and a representative of the Operating Engineers union kept the votes coming to move the project forward.

Now the unions get the rewards. Section 7.11.3 of the Request for Proposal for Design-Build Services for the first segment of the California High-Speed Rail project stated that “Proposers are advised that, subject to FRA [Federal Railroad Administration] approval, the Authority intends to develop a Community Benefits Agreement consistent with the Community Benefits Policy adopted by the CHSRA [California High-Speed Rail Authority] Board at its December 6, 2012 meeting with which the Contractor will be required to comply.”

And Section 10.1 of the Request for Proposal states that “The Authority [that is, the California High-Speed Rail Authority CEO Jeff Morales] will not make a recommendation for award of the Contract [to the California High-Speed Rail Authority Board of Directors] unless the successful selected Proposer has submitted the following…A letter of assent executed by the Proposer agreeing to be bound by the Community Benefits Agreement.”

This “Community Benefit Agreement” is commonly known as a “Project Labor Agreement.” In fact, a “draft” Project Labor Agreement is included as Addendum 8 in the High Speed Rail Authority’s bid documents for the Request for Proposal. (See my comprehensive analysis of the union “Community Benefits Agreement” for the California High-Speed Rail and the subsequent rebuttal from the Building and Construction Trades Department, AFL-CIO national headquarters.)

For construction unions, California’s High-Speed Rail project will yield a fantastic long-term return for their political investment. It remains to be seen if taxpayers see any worthwhile returns on their “investment” in paying for it.

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

Watch Union Official’s Rude Antics at California High-Speed Rail Conference

On January 11, 2013, a video camera recorded a stunning public tirade by Fresno’s top construction union official at a conference about supposed local contracting opportunities for the first segment of California’s High Speed Rail. Below is video footage of the beginning of a panel discussion about Project Labor Agreements, and below that is the ignominious ending of the panel discussion a few minutes later.

The incident exposes the coercive power of special interest groups behind the California High-Speed Rail Authority’s quest to slice the first segments of this rail corridor through the San Joaquin Valley, located in the middle of the planned route between San Francisco and Los Angeles. It also compromises the California High-Speed Rail Authority’s relentless public relations program to portray the high-speed rail to coastal urbanites as a progressive, visionary plan to save the planet.

An effective public relations campaign depends on major news media focusing on idealistic concepts, rather than the coarse ground game related to which people from which places get the jobs to perform the actual construction. But while idealistic concepts for environmental sustainability are promoted by professional activists who work for non-profit environmental and public transit advocacy organizations, building the high-speed rail requires construction trade workers. This injects union officials from the San Joaquin Valley into the coalition to build the rail line. And one of those union officials tarnished the progressive image on January 11.

Background: Why Will Unions Get a Monopoly on Building California’s High-Speed Rail?

Construction trade unions have long planned to use the government as its agent to monopolize the building of high-speed rail, now estimated by the California High-Speed Rail Authority to cost $68.4 billion. It seemed probable (but not guaranteed) that union workers that specialize in heavy industrial infrastructure construction would end up building the rail line itself. However, the stations and other building infrastructure would be prime bidding targets for Northern California’s productive and efficient non-union contractors. And unions do not want another failure similar to their failed plot ten years earlier to win a Project Labor Agreement to build the new University of California campus in Merced.

That plan – backed by Governor Gray Davis – was undermined in 2001 and 2002 by San Joaquin Valley business, political, and community leaders, who worked with some aggressive construction business associations to expose and criticize the scheme. In the end, bidding was done under fair and open competition, and non-union contractors and their non-union employees were prominent in building the new campus.

This time, things are different. Unions provided campaign support to pass Proposition 1A (the “Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century”) in November 2008. The head of the State Building and Construction Trades Council of California was appointed to the High-Speed Rail Authority Board of Directors, along with an official for the Operating Engineers Local Union No. 3, which represents operators of cranes, excavators, and other construction equipment.

So it shouldn’t be a surprise that Section 7.11.3 of the Request for Proposal for Design-Build Services for the first segment of the California High-Speed Rail project states that “Proposers are advised that, subject to FRA [Federal Railroad Administration] approval, the Authority intends to develop a Community Benefits Agreement consistent with the Community Benefits Policy adopted by the CHSRA [California High-Speed Rail Authority] Board at its December 6, 2012 meeting with which the Contractor will be required to comply.” (Note: “Community Benefits Agreement” is a euphemism for “Project Labor Agreement” meant to give the public a nice warm feeling about a union sweetheart deal.)

And Section 10.1 of the Request for Proposal states that  “The Authority [that is, the California High-Speed Rail Authority CEO Jeff Morales] will not make a recommendation for award of the Contract [to the California High-Speed Rail Authority Board of Directors] unless the successful selected Proposer has submitted the following: Escrowed Proposal Documents and corrected any deficiencies identified by the examination of the EPDs, and A letter of assent executed by the Proposer agreeing to be bound by the Community Benefits Agreement.” This indicates a government-mandated Project Labor Agreement.

California High Speed Rail Project Labor Agreement Mandate - Section 10.1

California High Speed Rail Project Labor Agreement Mandate – Section 10.1

In addition, the California High-Speed Rail Authority arranged the bidding process on the first segment of the High-Speed Rail (from Madera through Fresno) so that the five prequalified design-build construction consortiums are obligated to sign a Project Labor Agreement with the State Building and Construction Trades Council of California in order to be competitive. This subtlety is possible because the High-Speed Rail Authority is authorized to select the winning bidder using a somewhat subjective scoring system based on “best value” procurement criteria.

On December 6, 2012, the California High-Speed Rail Authority voted for a policy resolution that established generalized “community benefits” that contractors would have to demonstrate as a result of building the high-speed rail through the Central Valley. Not surprisingly, these same benefits are cited in the union Project Labor Agreement that is now included as a “Community Benefits Agreement” in Addendum 8 of the bid documents for the first segment of the high-speed rail. In order to maximize the score for community benefits, the contractor simply agrees to the Project Labor Agreement, and then everyone will feel good that ‘Needy’ Workers Will Get Jobs on High-Speed Rail.

For technical details about the provisions of this Project Labor Agreement, see my comprehensive, 4000-word Analysis of the Phony Community Benefits and Other Provisions in the Union Project Labor Agreement for the First Segment of California’s High-Speed Rail.

Unexpectedly Defiant Resistance to the Project Labor Agreement Provokes Union Anger

A panel discussion about the draft Project Labor Agreement for the construction of the first segment of the California High-Speed Rail was scheduled for 1:30 p.m. on Friday, January 11, 2012 during the 6th Annual San Joaquin Valley Region Public Contracting / Central Valley High Speed Rail Conference / Expo (Jobs & Contracts) at the Downtown Fresno Radisson Hotel & Convention Center. The panel moderator was Kathleen Ellis Faulkner, a Bakersfield attorney.

Three invited panelists showed up: John Hutson, Secretary-Treasurer of the Fresno, Madera, Kings and Tulare Counties Building and Construction Trades Council (this organization lacks a web site), Eric Christen of the Coalition for Fair Employment in Construction (a Project Labor Agreement opponent), and Nicole Goehring of the Northern California Chapter of Associated Builders and Contractors (another Project Labor Agreement opponent). As you hear in Video #1, organizers of the panel discussion had asked other union officials to participate (some apparently chose instead to sit in the audience).

As shown in Video #1, Hutson was flummoxed to find out he would be defending the unions’ Project Labor Agreement instead of explaining to the construction companies of the Central Valley how they would soon enjoy the benefits of unionization under the Project Labor Agreement if they hoped to work on the High-Speed Rail. He expresses his astonishment that “some little kid” was handing out information from Associated Builders and Contractors about Project Labor Agreements. He then proceeds to tell a colorful story from “when he was a small boy” about farm life.

None of this has anything to do with the terms and conditions of Project Labor Agreements in bid specifications for construction contracts, and Video #2 shows what happened when an effort was made by the moderator to get the panel discussion on track.

Hutson complains that Eric Christen is “edging it on” and “smiling it up.” (Did he mean “egging it on?”) He then says to Christen, in defiance of social norms of respect for other people as promoted by the White House and the U.S. Department of Labor, “I think I recognize you from before your sex change operation.”

The moderator tries to take the microphone away and restore order, but Hutson resists: “get your hands off.” Then he walks away from the table, only to return to spit out some profanity (specific words heard by witnesses but not quite audible on Video #2). He then storms out of the room (and the hotel) with his fellow union officials, leaving the contractors sitting in the room stunned at the personal attacks and derogatory statements launched during the five-minute panel discussion.

A press release jointly issued on January 11, 2013 by the Coalition for Fair Employment in Construction and Associated Builders and Contractors quoted a Fresno-based construction company owner who attended the panel discussion:

I took time away from my workday to be here to discuss this important issue on behalf of my employees that prefer to work in a merit shop environment. The antics displayed today represent the reason why I left the Union many years ago. The taxpayers and voters of California should be deeply concerned about the union favoritism displayed in this agreement.

In November 2008, 52.7% of California voters supported Proposition 1A, called the “Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century.” How many of them assumed that the 21st Century would involve these kinds of union antics?

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

Unions Creep Closer to Monopolizing California High-Speed Rail Construction

UPDATE (December 7, 2012): A article today in the Fresno Bee (‘Needy’ Workers Will Get Jobs on High-Speed Rail) about the “Community Benefits” policy approved on December 6, 2012 by the California High-Speed Rail Authority contains a stunning revelation:

Five teams of contractors have been invited to bid on the first major contract for a stretch of the rail route between Madera and Fresno. How the new policy will translate into the contract has yet to be determined, said Jeffrey Morales, the authority’s CEO. Potentially complicating the issue is that each of the five would-be prime contracting teams has already signed project labor agreements with labor unions. Morales said the existence of project labor agreements between the contractors and labor unions is independent of any action the agency takes.

So all five prequalified bidders have negotiated and signed Project Labor Agreements with construction unions. How did that happen? Why? Was there some kind of deal involving the High-Speed Rail Authority? Are the five agreements all the same? What do these union agreements contain? Will the public ever get the chance to see these agreements, which give unions a monopoly on the work?

California High Speed Rail Project Labor Agreement Mandate - Section 10.1

California High Speed Rail Project Labor Agreement Mandate – Section 10.1


At its December 6, 2012 meeting, the board of directors of the California High-Speed Rail Authority unanimously approved a resolution to establish a “Community Benefits” policy for construction of California’s high-speed rail system. The High-Speed Rail Authority promptly issued a press release with quotes from local elected officials in the San Joaquin Valley who like the concept of community benefits but apparently aren’t aware of the big-city union scheme behind the plan.

While a typical reader of www.UnionWatch.org is instantly alerted by the phrase “community benefits” to the likelihood that government is executing a special deal at the expense of taxpayers, the policy sounds innocuous and benevolent to the ordinary person. Staff of the High-Speed Rail Authority claimed before the board vote that this policy will enhance employment opportunities for economically disadvantaged and low-income workers, veterans, youth, unemployed, homeless, single parents, and people with criminal records. It will “ensure that California benefits as much as possible.”

There are numerous signs that the High-Speed Rail Authority established this policy to provide a strong incentive for construction contractors to sign a Project Labor Agreement with unions for construction of the $68 billion-$100 billion rail system, including related structures such as stations. Staff for the High-Speed Rail Authority reported that “different stakeholders” will participate in the implementation of the policy, and no stakeholder has been more involved in perpetuating this massive, costly project than the State Building and Construction Trades Council of California.

As I reported in a January 11, 2011 article in www.TheTruthaboutPLAs.com entitled California’s Top Construction Union Officials Love the State’s $100 Billion High-Speed Rail Project, construction unions have long sought a Project Labor Agreement in order to monopolize the construction workforce on this project. With the Community Benefits policy now in place, here’s what some of the most politically-astute California construction industry officials expect to happen:

  1. The High-Speed Rail Authority will award construction contracts using a “design-build” bidding procedure. Instead of awarding contracts to design a project and then awarding contracts to the lowest responsible bidder to build it, the High-Speed Rail Authority is authorized under state law to award contracts to qualified corporate entities that combine project design and construction work. It will select the design-build entities using a somewhat subjective list of “best value” criteria that could result in design-build entities winning contracts even if they do not submit bids with the lowest price. The California Department of Finance will approve the criteria to award the design-build contracts, and the State Public Works Board will oversee the contract awards.
  2. The High-Speed Rail Authority will indicate in its construction contract specifications that bidders will be evaluated in part based on their plan to conform with the Community Benefits policy. Potential bidders will either be explicitly informed or figure out that the chances of winning a design-build contract will be greatly improved if they commit in their bids to negotiate and sign a Project Labor Agreement with construction trade unions in order to comply with the Community Benefits policy.
  3. By using this strategy to implement a Project Labor Agreement, the board of directors of the High-Speed Rail Authority and their union cronies will avoid controversial and high-profile public votes to negotiate it and approve it. California taxpayers and the U.S. Congress will remain generally unaware that unions cleverly obtained a monopoly on the construction of the rail project, because reporters will have difficulty researching and explaining this complicated procedure and because the Project Labor Agreement will not be a matter of public record. And the High-Speed Rail Authority will avoid accountability for the Project Labor Agreement; it can portray the agreement as the contractor’s own internal private and voluntary business decision.

There are recent precedents for imposing Project Labor Agreements on large government projects in California while evading public deliberations and votes. Clark Construction negotiated and signed a Project Labor Agreement for the San Diego Convention Center Expansion Phase III and negotiated and signed a Project Labor Agreement for the new Governor George Deukmejian Courthouse in Long Beach. Both the City of San Diego and the California Administrative Office of the Courts claim that these Project Labor Agreements are not a matter of public record, and Clark Construction declines to provide the union agreements to the public.

There is one weakness in the High-Speed Rail Authority’s plot to give construction unions a monopoly on the rail project with Project Labor Agreements: representatives of the beleaguered California construction organizations opposed to government-mandated Project Labor Agreements and other costly union schemes are tough, experienced, and smart. They are exposing the scheme.

Representatives of the Coalition for Fair Employment in Construction, Associated Builders and Contractors (ABC) of California, the Western Electrical Contractors Association (WECA), the Plumbing-Heating-Cooling Contractors Association of California (PHCC), and the Air Conditioning Trade Association (ACTA) spoke at the meeting against Project Labor Agreements for the High-Speed Rail construction. In addition, a representative of the Bakersfield-based Kern Minority Contractors Association spoke during public comment and asked that both union and non-union contractors have the opportunity to work on the high-speed rail project. (The High-Speed Rail Authority is moving forward with building the first segment of the high-speed rail line in the San Joaquin Valley, basically from Fresno to Bakersfield.)

High-Speed Rail Authority chairman Dan Richard, a former member of the board of directors of the Bay Area Rapid Transit District (BART), concluded board discussion of the proposed Community Benefits policy by responding to public criticism of Project Labor Agreements. Chairman Richard declared that while no decision has been made about how the new “Community Benefits” policy will be implemented, he thinks Project Labor Agreements are effective in improving the efficiency of project delivery, reducing the number of conflicts, and providing a way for minority contractors to get work.

Chairman Richard also reported that he attended a December 5, 2012 meeting at which the minority community expressed very strongly that a Project Labor Agreement was the way to achieve the policy objectives. It appears that Chairman Richard was the keynote speaker at a “California High-Speed Rail Small Business Opportunity Conference” sponsored by the American Asian Architects and Engineers in San Francisco on December 5, 2012 and featuring Congresswoman Barbara Lee (D-Oakland/Berkeley). Of course, it’s contractors that will employ trade workers in the San Joaquin Valley, not San Francisco architects and engineers.

Chairman Richard also took a moment during the meeting to recognize two important people watching in the audience: Bob Balgenorth, outgoing head of the State Building and Construction Trades Council of California and former High-Speed Rail Authority board member, and Robbie Hunter – the head of the Los Angeles-Orange County Building and Construction Trades Council – who is the incoming head of the State Building and Construction Trades Council of California. Were these union leaders attending the meeting to express support for employment opportunities for the homeless, or were they in the audience to see another piece fall into place for a union Project Labor Agreement on what will be far-and-away the most expensive public works “mega-project” in American history?

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.