Sacramento RT Refuses to Award Rail Contract to Oregon Steel Subsidiary
26 January 2000
Board to Investigate Whether Company is 'Responsible'
SACRAMENTO, Calif. -- The Sacramento Regional Transit (RT) Board of
Directors voted unanimously Monday night to deny awarding a contract for steel
rails to the Rocky Mountain Steel Mills subsidiary of Oregon Steel Mills, Inc.
Following lengthy testimony about Oregon Steel's legal, financial and
other problems, the Board voted to investigate whether the company is a
responsible partner for RT's southern light rail extension. The
"responsibility" investigation will include sending a delegation to the
company's Pueblo, Colorado, mill and a hearing before the board on March 13th
in Sacramento.
In rejecting a bid utilizing Rocky Mountain Steel Mills (RMSM) rail, the
board pointed to the company's repeated violations of federal and state labor
and environmental laws, "serious" concerns about safety and quality, and
Oregon Steel's shaky financial future.
In response to testimony about the company's flaunting of air pollution
laws, health and safety regulations, and labor law, RT board members said that
a case had been made on several issues that warranted a denial of the contract
award.
"Only one direction makes any sense for the agency to take," board member
Roger Dickinson said. "At least a prima-facie case has been made on a number
of issues."
Dickinson noted four areas where a case had been made that the company may
not be responsible: rail quality; timely delivery; financial instability,
specifically the company's plummeting stock price and reshuffled management;
and environmental and safety violations.
Bill Camp, Executive Secretary of the Sacramento Central Labor Council,
representing 120,000 workers, told the board that the company is "just the
kind of corporation we don't want doing business in our community.
"It's our member who would have to install this rail and our members'
families who would have to ride on those rails," he said. "This company has
more problems than employees. It would be an outrage to award a contract with
taxpayers' money to a company with such a terrible history."
Board members expressed deep concern that the company is being sued by the
Colorado health department for continually polluting the air in violation of
state law. Concern over air pollution in Sacramento is one of the driving
forces behind expanding the light rail system and directors noted they have no
intention of trading air pollution in Pueblo for reductions in Sacramento.
Early Withycombe, President of the Environmental Council of Sacramento
(ECOS), told the board that a company which continually flouts environmental
regulations and is being sued by the Colorado Health Department does not
deserve to participate in Sacramento's light rail expansion.
Directors also noted that Rocky Mountain Steel Mills received the second-
highest OSHA fine in Colorado history for health and safety violations, and is
awaiting a court decision on more than 100 charges of violating federal labor
law - including the unlawful replacement with inexperienced substitutes of the
veteran workers that used to make rail for the company.
The cheapest qualifying bid for steel rail for the southern light rail
extension was from a contractor utilizing RMSM rail, but cost is only one of
many factors RT must consider under state law. Section 1103 of the California
Public Contract Code defines a responsible bidder as one "who has demonstrated
the attribute of trustworthiness, as well as quality, fitness, capacity and
experience to satisfactorily perform the public works contract." State courts
have further held that a "contractor's ability to comply with all relevant
laws ... is certainly relevant to whether it is responsible."
Several light rail and transit agencies in California and other states
have already adopted resolutions not to purchase RMSM rail, including the San
Francisco Bay Area Rapid Transit District (BART), but Monday night's vote was
the first to actually deny a pending purchase.
Members of United Steelworkers Locals 2102 and 3267 went on strike against
Oregon Steel's CF&I Steel subsidiary (now doing business as Rocky Mountain
Steel Mills) on October 3, 1997, to protest the company's unfair labor
practices and substandard contract offer. When they ended their strike three
months later, management unlawfully refused to reinstate the vast majority of
Steelworkers to their jobs, exposing the company to a potential back-pay
liability that could reach $300 million if litigated to the end of the appeals
process.
Three Wall Street analysts recently downgraded their opinions of Oregon
Steel's stock based on the company's performance and "adverse legal or
political rulings associated with the company's ongoing dispute with the
United Steel Workers of America."