'Buy American' bill targets contracting by government.

A bill that quietly passed by the Legislature requires state and local governments to "Buy American" - even if it costs more money.

Assemblywoman Patricia Wiggins, D-Santa Rosa, sponsored AB 214 in response to concerns that countries like Japan and China are dumping cheap steel into this country.

Gov. Gray Davis hasn't indicated whether he will sign the legislation into law. But if he does, it would require state and local governments to hire contractors who vow to use only domestic materials for public works projects - if their bid is no more than 25 percent above the lowest bidder using non-U.S. materials.

It also would require contractors to use California-made products if doing so wouldn't raise the cost more than 5 percent. That condition would not apply if U.S. or California materials weren't available.

Among the major public work projects in L.A. County that could be affected are the replacement of County-USC Medical Center, possible expansion of Los Angeles International Airport, and any improvements at the Port of Long Beach. All of those projects could carry final price tags in the hundreds of millions of dollars.

"You're opening a real Pandora's box in terms of whether it will drive up construction costs," said Jack Kyser, economist at the L.A. Economic Development Corp. "They're digging a lot of trenches and building bridges that need a lot of steel" in public works projects around L.A.

Officials with the Alameda Corridor project said construction of the massive L.A. freight rail line probably wouldn't be impacted by the bill because 95 percent of the contracts already have been awarded.

The current state budget for new construction is $2.4 billion - with half of that to be spent on materials. Adding an extra 5 percent in costs under the bill could pencil out to an additional $60 million, according to a study by the state Department of Finance, which opposes the legislation.

"If the bill is enacted, it would probably have an impact on state construction costs," said spokesman Sandy Harrison.

Supporters of the bill include a number of trade unions, including the California Labor Federation, California District Council of Ironworkers and the Teamsters. They say an imbalance in trade of materials has hurt vital industries like aerospace, apparel and electronics.

Meanwhile, the California Chamber of Commerce and the California Council for International Trade, which represents more than 150 businesses and 100,000 employees, want Davis to veto the bill. They claim it violates U.S. free trade agreements with the World Trade Organization and may encroach upon the U.S. Foreign Powers Act, which holds that only the federal government can make laws affecting trade.

"Technically, the California government is inferior to the federal government," said CCIT President Joseph Harrison. "The federal government makes trade policy, and the federal government doesn't do these kinds of things."

Except that it does. Under the Surface Transportation Assistance Act of 1982, the federal government requires that most transportation projects funded with federal dollars use American-made materials.

But no such limits are placed on state-funded projects. As a result, virtually all of the steel the California Department of Transportation has purchased so far in its $2.6 billion project to seismically retrofit seven state toll bridges has been bought from foreign suppliers.

"A California contractor lost a $63 million contract to retrofit the east span of the Carquinez Bridge (east of San Francisco) by less than $30,000," said Matt Reilly, chief of staff for Wiggins. "Foreign governments are underwriting the costs of materials for their companies. Isn't it worth spending a little bit more to say no to this anti-competitive behavior?"

Opponents counter that given California's place as the largest exporting state in the nation could be left vulnerable if any countries affected by the bill decide to retaliate.