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 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:

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.