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.
The 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.
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.
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)
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.”)
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)
Vidak Rails Against Bullet-Train Plan, Met by Bipartisan Crowd at Fresno Event – Fresno Bee – January 17, 2014
Vidak Calls for High-Speed Rail Revote – Fresno 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
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.
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?
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:
- 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.
- 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.
- 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.
Residents of Kings County (in the San Joaquin Valley of California) see local opportunities for economic growth and job creation through the construction and operation of proposed solar-powered electrical generation facilities. At the same time, local residents worry about the possibility that out-of-town developers could build or partially build these solar power facilities on former farmland but then abandon them to rust if solar energy turns out not to be profitable.
This is why the Alliance for a Cleaner Tomorrow (ACT), a project of the Coalition for Fair Employment in Construction (CFEC), mailed 10,000 educational pieces this week to Kings County households informing them that construction trade unions are abusing the the California Environmental Quality Act (CEQA) to grab control of solar power construction jobs, in the process increasing costs of construction and risking the economic viability of solar energy generation in the San Joaquin Valley.
In a press release issued today (September 25, 2012), the Alliance for a Cleaner Tomorrow reported that it intended to make 10,000 Kings County households aware of the epidemic of union “greenmail” against renewable energy projects in the San Joaquin Valley – and specifically against Recurrent Energy‘s Mustang Solar Generation Project in Kings County.
Groups such as California Unions for Reliable Energy (CURE) and the International Brotherhood of Electrical Workers Union Local No. 100 in Fresno exploit the California Environmental Quality Act (CEQA) and other environmental laws to delay proposed projects. Their objective is to coerce developers to hand over monopoly control of the construction to unions through a Project Labor Agreement. The CEQA abuse racket is called “greenmail,” and it is rampant throughout California.
A San Francisco-based company, Recurrent Energy, succumbed to the union CEQA threats and signed a Project Labor Agreement for construction of the Mustang Solar Generation Project in Kings County.
Eric Christen, executive director of the Alliance for a Cleaner Tomorrow, says the following in the September 25, 2012 press release:
For too long, construction unions have claimed, with a straight face, that solar power is bad for the environment. It’s as shameless as it is absurd. The unions block or threaten to block solar power projects using the California Environmental Quality Act – commonly known as CEQA – until the developer surrenders to the unions and agrees to sign a Project Labor Agreement (PLA). This is exactly what happened on the 160 megawatt solar power plant in Lemoore called the Mustang Solar Generation Project.
The press release also outlines the details of how greenmail works.
The Kings County Planning Commission had received this letter from CURE when Recurrent (Energy) first made its plans known for a Kings County project. Like rain in springtime, these implicitly threatening letters appear like clockwork as soon as a project is announced anywhere in California…The International Brotherhood of Electrical Workers Local No. 100 has a long history of hiring the law firm of Adams, Broadwell, Joseph & Cardozo out of South San Francisco to dig up alleged environmental problems with solar projects. One of the most prominent was the Fresno Airport Parking solar project in 2007.
Adams Broadwell Joseph & Cardozo is cited in the Project Labor Agreement for the Mustang Solar Generation Project.
The press release concludes with the motivation for sending the mailers:
We’re going to make sure that Kings County residents and the people of California and the San Joaquin Valley know why solar power plants are so expensive, why they are taking so long to build, and why local workers don’t get to build them,” Christen added.
When will the California State Legislature reform CEQA to stop this? The Fresno Bee published an editorial on Sunday, August 5, 2012 calling for Governor Jerry Brown to take a leadership role in reforming CEQA so that unions can’t exploit it to coerce Project Labor Agreements from developers. See “EDITORIAL: Governor Again Moves Toward Needed CEQA Reform Steps – Changes to the State Law Should Be Vetted and Discussed by All Parties” – Fresno Bee – August 5, 2012.
The editorial states the following:
Brown recently has been dropping hints he is open to a significant reform of the law. It’s clearly needed, and we hope this isn’t another instance of him shooting off his mouth. California needs significant CEQA reform.
CEQA is being abused, and defenders of the law get defensive whenever anyone suggests it. The most pernicious abuse is known as “greenmail,” with groups threatening CEQA lawsuits to get labor concessions or other side deals.
Real Reform of CEQA to Stop Union Greenmail Will Be an Uphill Battle
Setting aside the last-minute proposed Sustainable Environmental Protection Act of 2012 (which was never formally introduced and probably would have little effect in stopping greenmail), the California State Legislature considered one bill in 2012 to significantly reform CEQA. On January 9, 2012, the Assembly Natural Resources Committee considered a bill introduced by Assemblywoman Shannon Grove (R-Bakersfield) – Assembly Bill 598 – which would have given the California Attorney General the exclusive authority to file or maintain a lawsuit alleging that an Environmental Impact Report (EIR), negative declaration, or mitigated negative declaration does not comply with CEQA.
The committee rejected the bill on a 6-3 party-line vote, with Republicans in support and Democrats opposed. The hearing was an opportunity for the committee to discuss how certain parties, particularly labor unions, exploit public participation in the CEQA process to achieve objectives unrelated to environmental protection.
Assemblywoman Grove cited four specific examples of different unions (the Teamsters, the California Nurses Association, the United Food and Commercial Workers, and the Service Employees International Union) filing CEQA lawsuits to delay projects as leverage to extract labor concessions from businesses:
- In 2011, the Teamsters union filed a CEQA lawsuit against VWR International, a distributor of laboratory supplies. The union, in an attempt to intimidate VWR International into signing a union labor agreement at a proposed new facility in Visalia, is using CEQA to allege that trucks entering and exiting the facility will harm the environment. This large facility is likely to employ more than 100 people in a county that has an unemployment rate over 15% and desperately needs jobs, yet there are truckers trying to stop the use of trucks! And this is after an EIR has already been approved for the process.
- In 2009, the California Nurses Association sued Alameda County under the pretense that the county did not comply with CEQA in approving a project to demolish the deficient Eden Medical Center Hospital and other buildings and replace them with a new state of the art hospital and medical office complex. The nurses’ union did not want Sutter Health to close the San Leandro Hospital and reduce the number of beds at the Eden Medical Center. Here we see nurses protesting against a state-of-the-art new hospital.
- The Service Employees International Union filed a CEQA lawsuit in 2007 to stop construction of Providence Holy Cross Medical Center in Mission Hills and a CEQA lawsuit in 2006 to stop construction of Sutter Medical Center in Sacramento. Both of these lawsuits occurred in the context of SEIU organizing campaigns.
- The United Food and Commercial Workers Union has been behind numerous CEQA lawsuits filed by a Davis lawyer against proposed Wal-Mart projects in Northern California. These lawsuits are related to unions concerns over non-signatory competition for grocery sales.
Testifying on behalf of my former employer (Associated Builders and Contractors of California), I discussed how certain construction trade unions abuse CEQA as a weapon to delay projects until the owner agrees to require contractors to sign a Project Labor Agreement with unions. The Western Electrical Contractors Association (WECA) and the Chambers of Commerce Alliance of Ventura & Santa Barbara were the other public supporters of the bill.
Assemblywoman Linda Halderman (R-Fresno) cited the specific example of a union using CEQA to try to force a contractor to sign a Project Labor Agreement to install solar panels at Fresno-Yosemite International Airport. Assemblyman Steve Knight (R-Palmdale) adeptly exposed the Attorney General’s double standard of opposing the additional responsibilities assigned in AB 598 while remaining silent about adopting additional responsibilities through other legislation.
Legitimate environmental organizations such as the Sierra Club and the Planning and Conservation League opposed the bill. The Teamsters and United Food and Commercial Workers (UFCW) union opposed the bill in writing but did not speak at the hearing. Democrats on the committee opposed the bill, but some of them (along with the Attorney General’s office) acknowledged that some parties abuse CEQA. Assemblyman Bill Monning (D-Santa Cruz) said nothing about how the Carpenters union used CEQA in a recent high-profile campaign to delay and ultimately derail the proposed La Bahia Hotel in Santa Cruz.
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.