Dan Richard Does It Again

Sep 1st, 2014 | Posted by

Dan Richard has been doing a great job as Chair of the California High Speed Rail Authority board, bringing the project through some of its roughest seas. He’s gotten the Legislature to release the bond funding, gotten them to approve using cap-and-trade money for the project, and helped navigate through an important appeals process that led to a big victory. He didn’t do it alone, and his partnership with Governor Jerry Brown has been crucial.

But one other place Richard has excelled is in public advocacy for the project. He’s a consistent, persistent defender of HSR and routinely does the work necessary to slap down criticisms, most of which are unfounded. Late last week James Fallows devoted his column at The Atlantic to letting Richard respond to the latest barrage of nonsensical criticisms thrown at the project.

Richard’s responses are thorough and detailed. But some of them are also just straight and to the point, like this one:

[HSR in California is a boondoggle and a gigantic waste of money. You're likely subsidizing each potential rider with trends of thousands of dollars construction costs alone, plus more subsidies in operating costs.... HSR represents political corruption, crony capitalism, and vote buying at its purest.]

I know we live in a time of cynicism with strong distrust of government, but these statements are polemical and not based on fact. No subsidies will be given. None. It would violate the bond act and we believe the system will generate significant positive cash flows. Sorry to dispel the notion that this is all to support expensive union contracts; all federally-funded projects are based upon prevailing wage-labor rates and have been for decades. Please read our business plan – the trains will be operated by the private sector, not public sector.

We see this train service as operating at many levels to serve working class Californians and not just affluent ones. Oh, and by the way, our policy is that 30% of all contract dollars must be spent on small businesses. That’s $1.8 billion for small businesses in the Central Valley over the next five years, just on the first construction segment.

Now I’m not exactly wild about the trains being operated by the private sector, but Richard is right to cite that in his pushback against this particular absurdity.

Richard isn’t just having these conversations in public. He’s also having them in Sacramento, with legislators who are easily spooked by bad press. There’s a reason why the Legislature has been consistently willing to fund HSR these last few years, and it’s not just Governor Brown’s insistence. Richard’s patient yet thorough explanation of the issues has paid off when it comes to winning over wavering legislators.

Glad that we’ve got him on board.

Two Contractors Drop Out of Fresno-Bakersfield Bidding

Aug 27th, 2014 | Posted by

And then there were three:

Two would-be contenders for a contract to design and build the second stretch of a high-speed train line through the San Joaquin Valley have dropped out of the competition, leaving the California High-Speed Rail Authority with three contractors chasing the job.

The withdrawal of the two contracting teams potentially reduces the competitive pressure on the remaining firms bidding for the 65-mile job from Fresno to the Tulare-Kern county line. The state estimates the project’s value at between $1.5 billion and $2 billion.

Rail authority CEO Jeff Morales confirmed last week that two teams sent withdrawal letters to the agency in May. They are:

• California Rail Builders, a joint venture composed of Ferrovial Agroman U.S. Corp. and Granite Construction. Ferrovial is an American subsidiary of Ferrovial S.A., a Spanish company, while Granite Construction is a California company headquartered in Watsonville.

• Skanska-Ames Joint Venture, a team that includes Skanska USA Civil West California District Inc., a subsidiary of Sweden’s Skanska, and Minnesota-based Ames Construction Inc.

The two teams said in their letters that this wasn’t intended as a lack of confidence in the project or the process:

Jose Baraja, a Los Angeles-based representative of Ferrovial Agroman, said in his notice to the rail authority only that “the number of bidders shortlisted resulted in problems moving forward on the project.” Skanska USA Civil’s vice president of operations in Riverside, Jeff Langevin, wrote that his team’s decision was “based on internal business decisions and strategy and not a reflection on the authority or the project.” Both letters indicated that the companies hope to compete for future contracts on the high-speed train system.

So who’s left? There’s three teams still bidding:

• Tutor Perini/Zachry/Parsons, which won the $1 billion contract for the first segment in and to the north of Fresno

• Dragados/Flatiron/Shimmick, with Spain’s Dragados being the centerpiece of that bidding team

• Golden State Rail Partnership, which includes OHL USA and a US-based subsidiary of Samsung.

Tim Sheehan’s article also notes that in a conference call with investors, Tutor Perini CEO Ron Tutor indicated that the fewer bids meant a possibility of greater profit on this second segment. CHSRA CEO Jeff Morales disputed that, of course.

Bids are due in October and the board will make its choice in December. We will see who wins. There was no small amount of controversy last year when Tutor Perini won the first contract, something I’m sure the CHSRA board is keen to avoid this time around.

Cap-and-Trade Survives Attack From Oil Companies

Aug 25th, 2014 | Posted by

Earlier this year oil companies began spinning up a new attack on AB 32 and the state’s wildly successful cap-and-trade system. They convinced a few moderate Democrats that applying cap-and-trade to fuels this coming January would ruin their political chances this November, as it would supposedly cause gas prices to soar. Those Democrats wrote a letter asking for the state to delay subjecting fuels to the cap-and-trade system.

Today the Legislature rejected those claims and killed a bill that would have delayed including the fuels in cap-and-trade auctions:

Assemblyman Henry Perea, D-Fresno, warned that the change would hurt residents of inland districts where unemployment hovers above the state average and long commutes are commonplace. His Assembly Bill 69 would have delayed bringing transportation fuels under the cap-and-trade program. Numerous moderate Democrats signed a letter supporting the concept.

Democratic leaders and environmentalist allies pushed back, saying California must stay the course if the law is to achieve its purpose of curtailing the emissions blamed for global warming. Now Senate President Pro Tem Darrell Steinberg, D-Sacramento, has all but ensured the change will proceed as planned, saying in a letter to Perea that AB 69 will not receive a hearing before the Aug. 31 end of the legislative session.

“I share your concern about the costs of combating carbon emissions. But the cost of doing nothing is much greater,” the letter reads.

Steinberg is absolutely right to point out that the cost of doing nothing is indeed much greater for the Central Valley and the state as a whole, especially as the drought continues to worsen. Kudos to him for killing this terrible bill.

The high speed rail project is one beneficiary of Steinberg’s move, as it and other sustainable transportation projects are counting on billions in cap-and-trade revenues. Had fuels been exempted, that would have meant even less money would be available for HSR and other important transit projects.

It’s possible that Perea will try again in 2015, but he will have far less leverage. Democrats won’t be quite as scared of their electoral prospects, as the November 2016 election would be nearly two years away and in a presidential cycle as well. Never say never, but I would be surprised if this threat ever materialized again.

Is the CHSRA Really Considering the San Gabriel Tunnel?

Aug 24th, 2014 | Posted by

According to Dan Weikel at the Los Angeles Times, the California High Speed Rail Authority is giving serious consideration to LA County Supervisor Mike Antonovich’s proposal to put the bullet train tracks in a tunnel under the San Gabriel Mountains. The thing is, I can’t tell if the CHSRA is just humoring Antonovich or whether they might actually do it:

“We ought to take a serious look at this,” said Jeff Morales, the authority’s chief executive. “I continually push our team to look at ideas and to solicit and listen to what we get from the outside. We are sensitive to community input, and we’ve heard the concerns of Acton, Agua Dulce and Santa Clarita. That matters.”

Antonovich first approached the authority with his idea several years ago, but board members and the chief executive at the time were reluctant to work with the range of federal environmental agencies that would have to be involved in planning and approving a route through a national forest. With the arrival of Morales and board Chairman Dan Richard, the agency has been more receptive.

“We’ve had some discussions and talked to the supervisor,” Morales said. “I’m impressed by his focus to bring improvements to that part of the county and state. He’s pushed hard and we’ve listened.”

Morales and Richard are careful to not say they plan to endorse the proposal, but neither are they simply dismissing it:

Although none of the proposals have been fully vetted, Morales said there could be advantages to Antonovich’s plan, including lower construction costs and shorter travel times. The trip would take an estimated 15 minutes, 7 to 10 minutes less than the highway routes.

In addition, both Morales and the supervisor said there would be substantial benefits from reducing the project’s effects on communities along the 14 Freeway, where the population has grown at least 24% in the last decade.

Nowhere in the article are the costs or risks of a tunnel discussed, which I find surprising given that the LA Times usually does not miss a chance to criticize the project. I don’t mind it, but I have to believe that, rightly or wrongly, cost is going to be the primary factor in deciding whether this tunnel moves ahead.

Personally I’m all for giving this tunnel proposal serious, genuine consideration. I dislike the possibility of bypassing Santa Clarita and its population. The tunnels are risky, especially building one that long. But there are potential benefits to consider as well, and a thorough vetting is certainly warranted.

What isn’t helpful are clearly absurd complaints like those from Kathryn Phillips, who did indeed take this opportunity to slam HSR:

“The environmental impacts would be enormous,” said Kathryn Phillips, director of Sierra Club California, which generally supports the high-speed rail project. “Going through a national forest isn’t going to sit well with my members.”

First off, this is inaccurate, Phillips generally opposes the high speed rail project. But what environmental impacts exactly would result from a tunnel deep below the forest? It would preserve more trees than the alternative. It wouldn’t cross migration corridors or displace habitat. And most importantly, it helps reduce CO2 emissions (as would a Highway 14 route), which should be the Sierra Club California’s top priority unless they’ve suddenly become pro-global warming and pro-drought.

Heck, I might even be willing to back a tunnel just to spite the clueless Phillips. Maybe. We’ll see…