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Labor Department Blocks $12 Billion for California’s Transit

The federal agency determined the state was ineligible for nearly $12 billion in federal grants for public transit. Officials fear that this loss of funding could be detrimental to transit agencies.

(TNS) — The U.S. Labor Department recently determined California is ineligible for federal money for public transit, putting in jeopardy about $12 billion in grants including a portion of the infrastructure spending Congress approved last week.

The Labor Department's determination targeted a 2013 state pension law that the department said eroded public transit employees' rights to negotiate over their pay and benefits.

A 1964 federal law says that before state and local agencies may receive federal grants for mass transit, the department must certify the agencies are protecting the interests of any affected employees. California, by restricting pension benefits for any new employees hired after Jan. 1, 2013 with its Public Employees' Pension Reform Act, ran afoul of those federal protections, according to the Labor Department's Oct. 28 determination.

The determination would affect about $9.5 billion Congress earmarked for California public transit agencies in the infrastructure bill the U.S. House of Representatives approved Friday, said Michael Pimentel, executive director of the California Transit Association, a nonprofit representing public transit agencies in the state. In total, the $1.2 trillion bill included about $45 billion for California.

Also affected would be about $2.5 billion in American Rescue Plan Act grants for public transit in California, which several agencies have already applied for, Pimentel said.

"This relief funding has served as a lifeline for them, and in the absence of these federal dollars flowing to California transit agencies, we will absolutely see a reduction in service and losses in our workforce, making it more difficult for agencies to rebound," Pimentel said.

Pimentel said the dollar figures are estimates, and that the amount could ultimately be smaller depending on how the Labor Department implements its determination.

Gavin Newsom Asks to Free Up Funding

Gov. Gavin Newsom urged Labor Secretary Marty Walsh in a letter Wednesday to reverse the decision, which he said is legally flawed and would harm transit agencies and their riders.

"Public transit agencies rely more than ever on these federal grants just to keep trains and buses running and their workforces employed," Newsom said in the letter. "The grants being withheld also help provide vital mobility to low-income seniors, individuals with disabilities, and other transit-dependent riders."

As an example, Newsom said a project expanding Bay Area Rapid Transit service — the Transbay Corridor Core Capacity Program — could not be completed as planned without more federal money.

California Sens. Dianne Feinstein and Alex Padilla also urged Walsh on Wednesday to restore California's access to the federal grants, saying the department's determination was "at odds with multiple state and federal court decisions and past Labor Department precedent."

The Labor Department's determination reverses its own position from 2019 on California's pension law.

The determination, written by Deputy Director Andrew Auerbach, said the department initiated a new review after President Joe Biden's election.

Transit Union Contested California Pension Law

The dispute over the state pension law goes back further.

In 2012, the Sacramento Regional Transit District and Caltrans — on behalf of Monterey-Salinas Transit — submitted applications for federal transit grants, according to background information in the determination.

The Amalgamated Transit Union, representing employees at the agencies, objected, saying PEPRA harmed their members in a way that violated the 1964 federal law. The Labor Department agreed, and blocked the money.

California and the transit agencies sued. The U.S. District Court for the Eastern District of California ruled in their favor in 2014, saying the agencies should get the money and that their employees' collective bargaining rights remained intact.

The court's 2014 ruling was restricted to the Sacramento Regional Transit District and Monterey-Salinas Transit, according to the department's determination letter. Its new determination affects prospective grant disbursements.

Pimentel said it's not clear if the court's ruling means the Sacramento and Monterey-Salinas agencies can still receive new federal money or if the ruling applies only to the funds they applied for in 2012.

The 2013 pension law, among other things, increased employees' required contributions to their pensions and made pension accrual formulas less generous. In the Labor Department's view, since those changes were imposed by law rather than through collective bargaining, they were improper, according to the determination letter.

Newsom's letter argued the court's ruling set a precedent that the department shouldn't overturn.

He also said the fact that public employee unions in California have successfully negotiated new contracts since 2013 show collective bargaining remains intact.

The department's letter, however, says PEPRA "continues to interfere with the collective bargaining process regardless of the specific terms of workers' collective bargaining agreements now in existence."

(c)2021 The Sacramento Bee (Sacramento, Calif.) Distributed by Tribune Content Agency, LLC.

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