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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 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.