Chinese Rolling Stock Ban Included in Bipartisan Pentagon Authorization Bill

June 20, 2019

In recent years, Congress has gotten worse and worse at passing authorization legislation, particularly those that recur on an annual basis. But there is one annual authorization bill that is considered so important that Congress has never let a year go by without getting one signed into law (going as far back as 1961 according to this CRS report), and that is the annual defense authorization bill.

That makes it particularly notable that the Senate this week took legislation preventing local transit agencies from using federal funds to purchase rolling stock from Chinese-owned manufacturers and incorporated that legislation into the annual defense authorization bill (S. 1790). And the House of Representatives very well may follow suit in two weeks.

The rolling stock provision was not included in the defense bill as it was reported from the Senate Armed Services Committee. But on June 19, Armed Services chairman James Inhofe (R-OK) introduced a bipartisan “amendment in the nature of a substitute” for the entire bill (Senate Amendment 764, the text of which starts here on page S3855). The Senate is scheduled to vote at 5:30 p.m. Monday on a motion to formally take up S. 1790, and immediately after that vote, Majority Leader McConnell (on chairman Inhofe’s behalf) will offer amendment 764 to the bill, and the amendment will become the pending business of the Senate.

Section 6015 of amendment 764 is the text of the Transit Infrastructure Vehicle Security Act (S. 846) that was introduced three months ago by Senators John Cornyn (R-TX) and Tammy Baldwin (D-WI) as well as Mike Crapo (R-ID) and Sherrod Brown (D-OH), the latter two being the chairman and ranking Democrat on the committee that oversees federal mass transit policy. Since the introduction of the bill, 43 additional Senators have been added as cosponsors.

The legislation prevents transit agencies from using any federal funds made available under chapter 53 of title 49 U.S.C. to award a contract or subcontract (after the date of enactment) for the procurement of rolling stock for use in public transportation if the manufacturer has facilities in the U.S. but “is owned or controlled by, is a subsidiary of, or is otherwise related legally or financially to a corporation based in” the People’s Republic of China. (The legislation clarifies that “the term ‘otherwise related legally or financially’ does not include a minority relationship or investment.”)

Existing contracts (like those that transit agencies in Boston, Chicago and Los Angeles have signed with Chinese-based CRRC to buy rolling stock) are grandfathered: “This subsection…shall not apply to the award of a contract or subcontract made by a public transportation agency with a rail rolling stock manufacturer described in paragraph (1) if the manufacturer and the public transportation agency have a contract for rail rolling stock that was executed before the date of enactment of this subsection.”

Some transit agencies (Boston) are buying Chinese-made without using federal dollars, but the legislation also tries to stop this. As a condition of further federal assistance under the state of good repair program (49 U.S.C. §5337), the legislation requires the head of each transit agency to certify once a year “that the recipient will not award any contract or subcontract for the procurement of rail rolling stock for use in public transportation with a rail rolling stock manufacturer” owned by China. Failure to sign such a certification would result in the transit agency forfeiting its federal SOGR funding for that year.

The legislation also requires transit agencies to establish “a process to develop, maintain, and execute a written plan for identifying and reducing cybersecurity risks.”

The four original Senate sponsors of the legislation issued a press release celebrating the inclusion of their legislation in the defense bill:

  • Cornyn: “China’s ‘Made in 2025’ initiative and their weaponization of foreign investment are clearly targeting our critical infrastructure, posing a grave threat to our national security. This bipartisan effort to help safeguard our transportation and infrastructure sectors from exploitation is vital, and I’m grateful to my colleagues for joining me in this effort to include this important provision in the defense bill.”
  • Baldwin: “China has made clear its intent to dismantle U.S. railcar and bus manufacturing in its ‘Made in China 2025’ plan—our economic and national security demands that we address Chinese attempts to dominate industries that build our nation’s critical infrastructure. That’s why I’m working with my colleagues on both sides of the aisle to hold China accountable because we need to do all we can to support American workers and American-made products.”
  • Crapo: “This legislation will curb Chinese efforts to undermine economic competitiveness and displace bus and rail public transportation manufacturers in the United States. The bill will require rail transit agencies to evaluate their cybersecurity risks and develop a plan to mitigate those risks, which is critical given the increasing complexity and technological advances in rail transportation.”
  • Brown: “This strong bipartisan bill protects federal dollars from being spent on Chinese buses and railcars, and improves cybersecurity in public transportation. Federal dollars should not support Chinese state-controlled enterprises that want to undermine U.S. manufacturers and overtake our supply chain that supports rail and bus manufacturing.”

The House version of the defense authorization bill (H.R. 2500) was reported from the House Armed Services Committee this week and will be on the House floor next week. As reported from the Armed Services Committee, section 896 of H.R. 2500 contains language that appears identical to the Senate language is identical to the Senate language, but for one word –the House language adds the word “rail” in front of rolling stock in several places, so the House language only applies to transit rail cars, not transit buses (the Senate language applies to both rail cars and buses). (Edit added 6-24-19.)

Mass transit is not within the jurisdiction of the Armed Services Committee, which is a violation of House rules. The House Rules Committee intends to meet the week after the July 4 recess to consider terms for House debate on H.R. 2500, and will have to decide whether or not to waive the point of order that would otherwise lie against section 836.

This would normally put the spotlight on Transportation and Infrastructure chairman Peter DeFazio (D-OR), because it is standard Rules Committee practice to defer to the chairman of the authorizing committee of jurisdiction when settling these issues, and DeFazio has expressed support for Buy America strengthening in general and opposition to U.S. purchases from Chinese state-owned manufacturers in particular. However, the fact that Ways and Means chairman Richard Neal (D-MA), in whose district CRRC has an assembly facility, opposes these provisions, and that Neal is very tight with Rules chairman Jim McGovern (D-MA)), may muddy things a bit.

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