June 28, The Honorable Mark DeSaulnier Senate Transportation & Housing Committee State Capitol, Room 2209 Sacramento, CA 95814

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1 June 28, 2013 The Honorable Mark DeSaulnier Senate Transportation & Housing Committee State Capitol, Room 2209 Sacramento, CA Dear Chairperson DeSaulnier: The Santa Clara Valley Transportation Authority (VTA) is the sponsor of AB 1046 (Gordon) and respectfully requests your support for this bill when it comes before the Senate Transportation & Housing Committee for a vote. AB 1046 authorizes Caltrans to perform reimbursed work for projects on and off the state highway system within Santa Clara County for purposes of implementing the Innovative Delivery Team (iteam) Demonstration Program that VTA and Caltrans District 4 are voluntarily pursuing. In this era of increasing demand for public services and limited resources, it is important for government at all levels to consider innovative ways to become more effective and efficient in other words, to do more with less. In Silicon Valley, VTA and Caltrans District 4 are in the process of developing a master agreement and three work plans to guide our iteam Demonstration Program, which is intended to put in place a new business model for the cooperative delivery of transportation projects and for the cooperative operation of state highways in Santa Clara County. Building on the collaborative efforts already underway between VTA and Caltrans District 4, the iteam Demonstration Program will entail, among other things, more streamlined decisionmaking, improved processes, better communication, the use of new technologies, and enhanced training. The focus of this effort will be on the areas of project delivery, local assistance and traffic operations analysis. We believe the iteam Demonstration Program presents an excellent opportunity for VTA and Caltrans District 4 to engage in innovative thinking; to test out new ideas; and to reinvent how we do project delivery, local assistance and traffic operations analysis for the benefit of our communities and the public. For those ideas that work, Caltrans could consider rolling them out to other parts of the state, if applicable, thereby potentially stretching the benefits of the iteam Demonstration Program beyond Silicon Valley. AB 1046 was introduced to serve as a legislative vehicle for making any statutory changes necessary to facilitate the implementation of the iteam Demonstration Program. One such issue that has been raised repeatedly during the development of the master agreement and accompanying work plans is the need to make sure that Caltrans District 4 has the appropriate ability to do reimbursed work to support this effort. AB 1046 addresses this issue. We respectfully seek your support for AB Thank you for your consideration of our request. Sincerely, Joe Pirzynski, Chairperson Board of Directors Santa Clara Valley Transportation Authority

2 MEMORANDUM TO: FROM: Santa Clara Valley Transportation Authority Board of Directors Kurt Evans, Government Affairs Manager Santa Clara Valley Transportation Authority DATE: June 28, 2013 SUBJECT: Weekly Legislative Summary: Week of June 24, 2013 FEDERAL Transportation Secretary: The Senate voted unanimously to confirm Charlotte Mayor Anthony Foxx as transportation secretary. He was nominated by President Barack Obama in April to replace Ray LaHood, who is retiring after serving more than four years as the head of the U.S. Department of Transportation. Foxx gained national recognition when Charlotte hosted the Democratic National Convention last year, and he was a key surrogate in North Carolina for the President during his reelection bid. During his tenure as mayor, Foxx oversaw the beginning of construction of a downtown streetcar project, the opening of a third runway at Charlotte-Douglass International Airport, the completion of a major highway widening project in the Charlotte metropolitan area, and the extension of the LYNX light rail system to the University of North Carolina at Charlotte. Climate Change: In a major speech at Georgetown University, President Obama directed the U.S. Environmental Protection Agency (EPA) to work with states, industry and other stakeholders to establish new standards restricting carbon pollution at new and existing power plants as part of a comprehensive effort to combat climate change that he plans to implement through executive action. The President also directed the U.S. Department of the Interior to permit new wind, solar and other renewable energy projects on public lands with the goal of providing electricity to more than 6 million homes by 2020; ordered federal agencies to work with state and local governments to help them with their climate change issues, including the development of smarter, more resilient infrastructure; proposed more aggressive efforts to promote renewable energy sources; and urged the establishment of new energy-efficiency standards. In addition, he called for an end to U.S. government support for public financing of new coal-fired plants overseas, and pledged to seek new global agreements on climate change. Warning that climate change threatens future generations, President Obama told his college audience that the question is not whether we need to act the overwhelming judgment of science, of chemistry and physics, and of millions of measurements has put all that to rest. He added, The question now is whether we will have the courage to act before it s too late.

3 In unveiling his national climate change plan, President Obama also indicated that the U.S. State Department should not sign off on the controversial Keystone XL oil pipeline if it increases greenhouse gas emissions. In January 2012, the President rejected the initial 1,700-mile pipeline from Alberta, Canada, to Port Arthur, Texas, saying more time was needed to conduct a thorough environmental review of the project. Calgary-based TransCanada, the pipeline s operator, then split the project into two parts and offered a revised route for the northern leg that avoided some environmentally sensitive areas in Nebraska. The company received approval last year from the U.S. Army Corps of Engineers to begin construction of the 485-mile, $2.3 billion southern leg from Cushing, Oklahoma, to the Gulf Coast. The State Department s pending decision, expected as early as this summer, involves the 875 miles of the northern leg that would stretch from Alberta through Montana and South Dakota to Steele City, Nebraska. If approved by the State Department, which is required because the northern leg of the pipeline originates in Canada and crosses the border, construction could begin in Oil Drilling: In testimony before the Senate Energy & Natural Resources Committee, Interior Secretary Sally Jewell said President Obama s five-year oil drilling plan does not offer any lease sales in Atlantic or Pacific coastal waters, a change from an earlier draft that included lease sales for zones off the Atlantic coast. Jewell told committee members that the President pulled back on offshore drilling following the explosion of a Deepwater Horizon rig in the Gulf of Mexico in April 2010, the largest offshore spill in U.S. history. Meanwhile, House Republicans, who want oil and gas companies to have more access to offshore waters, are forging ahead with legislation that would open up the Atlantic and Pacific coasts to drilling. Jewell s Senate testimony, however, strongly hinted that President Obama would veto such legislation should it ever get to his desk. U.S. Supreme Court: The U.S. Supreme Court took center stage this past week, issuing an unprecedented flurry of major decisions regarding gay marriage, voting rights, affirmative action, and workplace discrimination. In dramatic fashion, a sharply divided court gave a double-barreled boost to gay and lesbian rights, upholding earlier judicial rulings that legalized same-sex marriage in California and striking down a section of the 17-year-old Defense of Marriage Act that denied federal benefits to those already married in 12 states and the District of Columbia. Taken together, the dual 5-4 decisions, rendered by separate coalitions of liberal and conservative justices, represent a major step forward for marriage equality, and a significant setback for defenders of traditional marriage between only men and women. In an opinion written by Chief Justice John Roberts Jr., the Supreme Court all but lifted a five-year-old ban on same-sex marriage in California by declaring that the backers of Proposition 8 lacked legal standing to challenge lower court rulings against it. Roberts was joined by an unusual coalition consisting of conservative Justice Antonin Scalia, and three of the court s more liberal justices Ruth Bader Ginsburg, Stephen Beyer and Elena Kagen. The high court s decision did not address the merits of same-sex marriage. Instead, by contending that the supporters of Proposition 8, which was approved by California voters in 2008, did not have the standing to sue, the justices effectively reinstated earlier state and federal court rulings that struck down the same-sex marriage ban. While the 2

4 timing ahead is not immediately clear, California is now poised to rejoin the 12 other states and the District of Columbia in permitting gay men and lesbians to wed. The decision involving the Defense of Marriage Act was written by Justice Anthony Kennedy, who is typically the Supreme Court s swing vote. He was joined by the court s four more liberal justices. The ruling concluded that the law s benefit limitations unconstitutionally discriminated against gay and lesbian couples. No legitimate purpose overcomes the purpose and effect to disparage and to injure those whom the State, by its marriage laws, sought to protect in personhood and dignity, Kennedy wrote. By seeking to displace this protection and treating those persons as living in marriages less respected than others, the federal statue is in violation of the Fifth Amendment. Still, Kennedy was careful to say the decision applied only to lawful marriages performed in states that already recognize same-sex unions. It has no immediate effect on the 36 states whose laws forbid same-sex marriages. In another highly anticipated decision, conservative justices united behind an opinion written by Roberts that invalidates a key section of the 1965 Voting Rights Act. In the 5-4 decision, the court concluded that times have changed since Congress first enacted the groundbreaking law and, thus, certain states and localities should be freed from the necessity of having to get U.S. Department of Justice approval for electoral revisions. Under Section 5 of the Voting Rights Act, designated states and local jurisdictions must secure Justice Department approval before they can change any voting practice or procedure. Called pre-clearance, this can cover everything from buying new voting machines and closing polling places to requiring photo identification and shifting district boundaries. A related portion of the law, Section 4, provides the formula for determining which political jurisdictions must meet the pre-clearance requirements. Nine states are currently covered in their entirety by the pre-clearance requirements: Alabama, Alaska, Arizona, Georgia, Louisiana, Mississippi, South Carolina, Texas, and Virginia. Selected jurisdictions in an additional seven states also are covered, including parts of California, Florida, North Carolina, Michigan, New Hampshire, New York, and South Dakota. In California, the pre-clearance rules currently apply to only three counties: Kings, Monterey and Yuba. The Supreme Court did not invalidate the Voting Rights Act s pre-clearance requirements outright. Instead, Roberts wrote that Congress has failed to account for broad changes in the nation s civil rights landscape since lawmakers first laid out its method for determining which states and counties would be covered. That failure, Roberts concluded, left the court with no choice but to invalidate Section 4 of the law as unconstitutional. Coverage today is based on decades-old data and eradicated practices, he wrote. Our country has changed, and while any racial discrimination in voting is too much, Congress must ensure that the legislation it passes to remedy that problem speaks to current conditions. Roberts noted that Congress is free to come up with a new formula based on current conditions to salvage the pre-clearance requirement. The Supreme Court s ruling opens the door for Congress and states to move in different directions. State and local governments that had been blocked from restricting the right to vote can now do so. They still would face legal challenges under a separate section of the Voting Rights Act, but such challenges would come after the fact, and could prove costly and time-consuming. Congress could try 3

5 to come up with a new formula for determining which states and localities must first clear voting changes with the Justice Department, but that would necessitate bipartisan cooperation. In a 7-1 decision, the Supreme Court drew new limits on the use of affirmative action plans by public colleges and universities for admissions purposes. Written by Kennedy, the decision suggests that such plans can be used to create a diverse student body only as a last resort, and raises the prospects that public colleges and universities will face a tougher burden of justifying them in the future. But the high court stopped short of issuing a broader ruling cementing or eliminating a higher educational institution s ability to take into account an applicant s race. Specifically, Kennedy wrote that public colleges and universities can adopt affirmative action plans if they can demonstrate that no workable race-neutral alternatives would produce the benefits of educational diversity. The decision came in a closely watched challenge to the admissions policy of the University of Texas- Austin, which is based, in part, on an applicant s race. However, the justices declined to decide whether the university s program met the tough new standard. Instead, the ruling said a lower federal court had acted too deferentially by, in essence, taking the university s word for the fact that such preferences were necessary. The Supreme Court instructed the lower court to hear the case again and, this time, to require the university to prove that it had no other way to assemble a diverse student body. How the decision will play out remains to be seen, and could depend on how well public colleges and universities are able to justify their policies to lower courts. Advocates on both sides of the debate said they saw reasons for optimism, even if none of them got precisely what they wanted from the high court. Finally, the Supreme Court s conservative majority sided with corporations against individuals in two 5-4 decisions involving workplace discrimination. In a case involving an African-American kitchen worker at Ball State University who said she was harassed by a co-worker, the court ruled that workplace discrimination claims under Title VII of the Civil Rights Act of 1964 only can be pinned on a supervisor. In an opinion written by Justice Samuel Alito, the court concluded that the principal harasser in this case did not meet the definition of supervisor because she lacked such powers as hiring, firing, promoting, and demoting. In the second case, the Supreme Court ruled against a physician of Middle Eastern descent employed at the University of Texas Southwestern Medical Center who said he was denied a promotion because a supervisor retaliated against his earlier complaints about alleged ethnic and religious bias. Kennedy wrote the decision for this case, concluding that retaliation claims against an employer must prove a direct cause and effect. IRS: The Internal Revenue Service (IRS) released a 53-page interim review regarding its handling of applications for tax-exempt status. According to IRS Acting Commissioner Danny Werfel, the review sheds further light on leadership failures that resulted in the agency s controversial practice of targeting applications submitted by conservative organizations, particularly those with Tea Party or Patriot in their names. The review notes that several key leaders, including some in the commissioner s office, failed in multiple capacities to identify, prevent, address, and disclose the unfair targeting of conservative groups. The IRS controversy erupted last month, after an inspector general s audit found that employees in the agency s Cincinnati office developed and implemented inappropriate criteria as triggers for sending 4

6 applications from conservative organizations through a more lengthy process. After two top agency officials resigned, President Obama appointed Werfel, a former controller at the Office of Management & Budget (OMB), to head the IRS through the end of September and to conduct a 30-day, top-tobottom review of its operations. Werfel pointed out that the review, which is ongoing, has not turned up any evidence of intentional wrongdoing inside the IRS, nor any involvement by anyone outside the agency. In addition, Werfel said the IRS was moving quickly to correct flaws that led to the inappropriate targeting. He specifically noted that the agency has created a board to recommend additional personnel actions to ensure there is appropriate accountability for the targeting, and is working to establish a procedure for periodically assessing the criteria and methods used to screen applications for tax-exempt status to ensure that they do not run afoul of IRS policies. STATE State Budget: Gov. Jerry Brown signed into law an FY 2014 state budget that largely mirrors his proposal for a fiscally constrained spending plan. In a major victory, the Governor was able to convince lawmakers to base the budget on the Department of Finance s more conservative revenue forecasts. Democrats had been urging about $2 billion more in spending than recommended in the Governor s May Revision after the Legislative Analyst s Office (LAO) came out with higher revenue estimates than those prepared by the Department of Finance. The Governor also succeeded in securing a new K-12 school finance formula that would eliminate most of California s categorical funds, as well as channel more money to school districts with high levels of students from low-income families and with low English proficiency. The budget includes commitments to: (a) spend more money for mental health services, CalWORKs grants, and courts; (b) partially restore dental care for an estimated 3 million Medi-Cal recipients; and (c) establish a college scholarship program for students from middle-class families. This additional spending, which is less than what many Democrats had hoped, comes at the expense of paying down the state s so-called Wall of Debt. The Wall of Debt, which is estimated at $35 billion by the Department of Finance, consists of loans, deferrals and other budgetary obligations that accumulated over the prior decade in order to avoid deeper cuts to General Fund programs. The Governor originally wanted to set aside $4.2 billion for this purpose, but agreed to use some of this money to fund a few priorities of the Democratic legislative leadership. Of interest to transportation, Democratic lawmakers accepted Gov. Brown s recommendation to loan $500 million in cap-and-trade auction proceeds, the total amount anticipated to be generated in the current fiscal year and FY 2014, to the General Fund for short-term, cash-flow purposes. The budget also includes the Governor s request to transfer approximately $67 million in non-gas tax revenues that are deposited into the State Highway Account to the General Fund on a permanent basis to offset debt service costs for transportation-related, general obligation bonds. These miscellaneous transportation revenues, which are not protected by Article XIX of the California Constitution or by Proposition 22, primarily consist of Caltrans rental income and the sale of surplus property by the department. Although originally dedicated to the Public Transportation Account (PTA) for mass transit purposes, the Legislature, in recent years, has been using these revenues to offset General Fund deficits. 5

7 In January, Gov. Brown proposed consolidating the Safe Routes to School, Environmental Enhancement and Mitigation, and Bicycle Transportation Programs into a single Active Transportation Program. He also requested the appropriation of $134 million in state and federal funds for this new consolidated program. The Legislature initially rejected this proposal, but then opted to meet the Governor halfway. Thus, the budget contains separate, line-item appropriations for the Safe Routes to School, Environmental Enhancement and Mitigation, and Bicycle Transportation Programs, along with budget control language stating that these funds are not available for expenditure until the Secretary of the Business, Transportation and Housing Agency convenes a working group by August 31, 2013, regarding active transportation and until legislation is enacted that creates a new program to promote active transportation. High-Speed Rail: In a 67-page decision, the federal Surface Transportation Board (STB) ruled 2-1 that California could begin work on the first 65 miles of its proposed high-speed train system from Merced to Fresno as long as it maintains the current route and follows through on promises to mitigate environment impacts caused by construction. The decision removes a key hurdle for the California High-Speed Rail Authority. Congressman Jeff Denham (R-CA), who chairs the House Railroads, Pipelines & Hazardous Materials Subcommittee and opposes the state s plans for high-speed rail, had appealed to the STB to step in and stop the project. However, the board s majority said California officials and the Federal Railroad Administration (FRA) have already extensively reviewed the potential environmental and archaeological impacts of the project, and the current construction plans include steps to mitigate those impacts. We need not revisit the determinations on the viability and desirability of the project already made by various federal, state and local government interests, all of which have a stake in the matter, the STB ruling states. The information before us confirms that the project would be a valuable addition to the passenger rail transportation system. NOTE: Also contributing to this report were Steve Palmer with Van Scoyoc Associates; Delaney Hunter with Gonzalez, Quintana & Hunter LLC; Scott Haywood, VTA Policy and Community Relations Manager; and Colleen Valles, VTA Senior Policy Analyst. 6