BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 974|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 974
Author: Lowenthal (D), et al
Amended: 5/24/07
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 6-4, 4/17/07
AYES: Lowenthal, Cedillo, Corbett, Oropeza, Simitian,
Torlakson
NOES: McClintock, Ashburn, Dutton, Harman
NO VOTE RECORDED: Kehoe
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 6-0, 4/23/07
AYES: Simitian, Aanestad, Florez, Kuehl, Lowenthal,
Steinberg
NO VOTE RECORDED: Runner
SENATE APPROPRIATIONS COMMITTEE : 10-6, 5/31/07
AYES: Torlakson, Cedillo, Corbett, Florez, Kuehl, Oropeza,
Ridley-Thomas, Simitian, Steinberg, Yee
NOES: Cox, Aanestad, Ashburn, Dutton, Runner, Wyland
NO VOTE RECORDED: Battin
SUBJECT : Fees on containerized cargo
SOURCE : Author
DIGEST : This bill imposes a fee on container cargo
imported and exported through the ports of Long Beach, Los
Angeles, and Oakland in an amount not to exceed $30 per
twenty-foot equivalent unit. This bill requires that 50
CONTINUED
SB 974
Page
2
percent of fee revenues be used to develop infrastructure
projects that reduce congestion and 50 percent of revenues
be used to mitigate the air quality impacts associated with
the movement of freight in and out of the three ports.
Finally, this bill specifies the processes for determining
which congestion relief and mitigation projects shall be
funded with fee revenue.
ANALYSIS :
Existing law:
1. Under the Harbors and Ports Mitigation Law, requires a
public agency to approve certain mitigation for port
projects involving filling of subtidal habitats within
ocean or inland ports [Section 1720 et seq. of the
Harbors and Navigation Code].
2. Establishes the California Transportation Commission
(CTC) and sets various duties and procedures for the CTC
[Section 14500 et seq. of the Government Code (GOV)].
3. Authorizes the Air Resources Board (ARB) to coordinate
efforts to attain and maintain ambient air quality
standards [Section 39003 of the Health and Safety Code
(HSC)] and specifies its powers [HSC Section 39500 et
seq.].
4. Creates the State Infrastructure and Economic
Development Bank and specifies its powers [GOV Section
63020 et seq.].
This bill:
1. Establishes the following four funds in the State
Treasury: Southern California Port Congestion Relief
Trust Fund, Southern California Port Mitigation Relief
Trust Fund, Northern California Port Congestion Relief
Trust Fund, and Northern California Port Congestion
Relief Trust Fund.
2. Requires the ports of Long Beach, Los Angeles, and
Oakland, by January 1, 2008, to develop a process to
notify and collect user fees from container cargo
SB 974
Page
3
owners. The ports must notify the cargo owners by June
1, 2008, that a $30 per twenty-foot equivalent unit
(TEU) will be assessed a user fee. Certain information
must be provided, such as the process and frequency of
payment, and that the user fee is being assessed to
improve goods movement infrastructure serving the port,
and to reduce pollution from all forms of equipment that
operate at the port, and bring containers to and from
the port.
3. The three ports must assess the $30 TEU user fee
beginning January 1, 2009, and collect the fee twice a
year, for expenditure by the CTC, with 50 percent of the
fees directed to a congestion relief fund (to fund
projects that improve the flow and efficiency of
container cargo) and 50 percent to a mitigation fund (to
mitigate environmental pollution caused by cargo
movement). Moneys deposited in the funds cannot be
loaned or transferred to the General Fund. The Los
Angeles and Long Beach ports may contract with PierPass
(a nonprofit organization that develops programs to
reduce congestion and improve air quality at the ports)
for collecting the user fee.
4. Establishes a process, beginning January 1, 2008, for
the CTC to select eligible congestion relief
infrastructure projects for funding from the Southern
California and Northern California Congestion Relief
Funds, giving priority to those projects that have been
designed to measurably reduce air pollution and
environmental impacts to local communities, and
assisting in achieving and maintaining state and federal
air quality goals, while addressing the overall
efficiency of container cargo movement. Requirements
are specified for all mobile nonroad equipment used on
projects.
5. Establishes a process, beginning January 1, 2008, for
the ARB to select port mitigation projects for funding
from the Southern and Northern California Port
Mitigation Trust Funds that reduce air pollution caused
by movement of container cargo at the ports, and are
designed to reduce air pollution at the ports in order
to achieve and maintain federal air quality standards.
SB 974
Page
4
6. Requires the ports of Long Beach and Los Angeles to
report to the CTC on implementation of the Final 2006
San Pedro Bay Clean Air Action Plan, and if certain
goals are not met, then the CTC cannot award funding to
any project until the goals are met (other than projects
awarded funding prior to this finding).
7. Establishes procedures for the California Infrastructure
and Economic Development Bank to enter into financing
agreements and issue revenue bonds to finance port
congestion relief and mitigation projects. The
aggregate principal amount of bonds that may be
outstanding at any one time is $5 billion for Southern
California and $5 billion for Northern California.
8. Contains related legislative intent.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2007-08 2008-09 2009-10 Fund
ARB (3-1/2 PY startup) $200 $200
Special*
(ongoing costs funded w/fee revenue)
CTC (2 PY startup) $100 $100
Special**
(ongoing costs funded w/fee revenue)
I-Bank administration costs funded through
financing agreements Special***
Fee revenue ($250,000)
($500,000)
* Air Pollution Control Fund
** State Highway Account
*** CA Infrastructure and Economic Development Bank Fund
SUPPORT : (Verified 5/31/07)
SB 974
Page
5
Alameda Corridor-East Construction Authority
American Academy of Pediatrics, California Division
American Cancer Society
American Heart Association
American Lung Association of California
Asthma Coalition of Los Angeles County
Bay Area Air Quality Management District
Breast Cancer Fund
Breathe California
California Air Pollution Control Officers Association
California League of Conservation Voters
California Natural Gas Vehicle Coalition
California Nurses Association
California Teamsters
California Thoracic Society
Cerritos Chamber of Commerce
City of Downey
City of Lakewood
City of Long Beach
City of South Gate
Coalition for A Safe Environment
Coalition for Clean Air
Coalition on the Environment and Jewish Life of Southern
California
Communities for Clean Ports
Community Action to Fight Asthma
Consumer Attorneys of California
Downey Chamber of Commerce
East Yard Communities for Environmental Justice
Elizabeth Hudson Elementary School - Environmental
Committee
Environment California
Environmental Defense
Friends of the Earth
Gateway Chamber Alliance
Gateway Council of Governments (27 cities)
Interfaith Environmental Council
Lakewood Chamber of Commerce
Long Beach Alliance for Children with Asthma
Long Beach Unified School District
Los Angeles Alliance for a New Economy
Los Angeles County Metropolitan Transportation Authority
Mayor, Curt Pringle, City of Anaheim
Mayor, Todd Campbell, City of Burbank
SB 974
Page
6
Medical Advocates for Healthy Air
Natural Resources Defense Council
Parents for a Safer Environment
Parents for Safer Schools
Physicians for Social Responsibility
Planning and Conservation League
Plug In America
Progressive Christians Uniting
Regional Asthma Management & Prevention Initiative
San Francisco Medical Society
San Gabriel Valley Council of Governments
San Gabriel Valley Economic Partnership
Santa Barbara County Air Pollution Control District
SEIU Local 721 (85,000 members)
Sierra Club California
South Coast Air Quality Management District
South Gate Chamber of Commerce
Strategic Concepts in Organizing & Policy Education
Union of Concerned Scientists
West Long Beach Association
West Oakland Environmental Indicators
OPPOSITION : (Verified 5/31/07)
Abercrombie and Fitch
ACG Cotton Marketing LLC
Ag Processing, Inc.
Agricultural Council of California
Agriculture Transportation Coalition
Allen Group
Allenberg Cotton Co.
Aloha Airlines
American Apparel and Footwear Association
American Chemistry Council
American Cotton Shippers Association
American Council for Food Safety and Quality
American Eagle Outfitters Inc.
American Electronics Association
American Foods Group
American Forest and Paper Association
American Import Shippers Association
Anheuser-Busch Companies, Inc.
Anzco Foods North American, Inc.
APL
SB 974
Page
7
Association of International Automobile Manufacturers
Badger Forest Products
Bank of Hawaii
Beall's, Inc.
Belk, Inc.
Best Buy
Blue Diamond Growers
Bonanza Foods and Provisions, Inc.
Bon-Ton Stores, Inc.
Border Valley Trading LTD
Borders Group, Inc.
Borges of California
Boscov's Department Stores, LLC.
Braun Export
Burger King, Inc.
CA Commodity Export Corporation
Calcot LTC
California Bean Shippers Association
California Business Properties Association
California Cattlemen's Association
California Chamber of Commerce
California Citrus Mutual
California Cotton Ginners and Growers Association
California Farm Bureau Federation
California Fisheries and Seafood Institute
California Grain and Feed Association
California Grape and Tree Fruit League
California Grocers Association
California Independent Grocers Association
California League of Food Processors
California Manufacturers & Technology Association
California Metals Coalition
California Nevada Soft Drink Association
California Railroad Industry
California Restaurant Association
California Retailers Association
California Seed Association
California Taxpayers Association
California Trade Coalition
California Trucking Association
California Warehouse Association
Carriere Family Farms
Castle & Cooke Homes Hawaii, Inc.
Casual Male Retail Group, Inc.
SB 974
Page
8
Central Pacific Bank
Chamber of Commerce of Hawaii
Charming Shoppes, Inc.
Circuit City
Coca-Coal Bottling Co. of Southern CA
Coca-Cola Bottling Company of California
Colorado Food Products
Columbine Vineyards of Delano, CA
Corona Chamber of Commerce
Crain Walnut Shelling, Inc.
Crate & Barrel
CTP Transport, Inc.
Dairy America, Inc.
Del Monte Foods
Derco Associates, Inc.
Diamond Foods, Inc.
Distilled Spirits Council
Dole Food Company, Inc.
Dressbarn, Inc.
Duncan and Sons Lines, Inc.
DVN Louis Dreyfus Corporation
E.I. DuPont de Nemours & Co.
ECOM USA, Inc.
Edwards Luggage
EFI Logistics, Inc.
Ethan Allan Global, Inc.
Food Marketing Institute
Gap Inc.
Grain Millers, Inc.
Grocery Manufacturers/Food Products Association
Harland M. Braun and Company
Hawaii Island Chamber of Commerce
Hawaii Korean Chamber of Commerce
Hawaii Tourism Authority
Hedley Construction and Development
Heineken USA, Inc.
Hewlett-Packard Company
Home Depot
Intel Corporation
JC Penny
Jo-Ann Fabric and Craft Stores
Jockey International
Kailua Chamber of Commerce
Kohl's Corporation
SB 974
Page
9
Lake Elsinore Valley Chamber of Commerce
Leading Lady
Levi Strauss & Co.
Limited Brands, Inc.
Limtiaco Company
Liz Claiborne Inc.
Long Beach Area Chamber of Commerce
Lowes
Macy's/Macy's West
Mallory Alexander International Logistics
Mathiesen Maritime Services, Inc.
Matson Navigation
Maurice's, Inc.
Mazda North American Operations
Meat Importers Council of America
Meridian Nut Growers LLC
Michaels Arts and Crafts
Midwest Shippers Association
Miller Brewing Company
Milpitas Chamber of Commerce
Mohawk Industries
Murphy Imports, LLC
Murrieta Chamber of Commerce
NAIOP Inland Empire
NAIOP SoCal
National Association of Industrial and Office Properties -
CA State Council
National Association of Manufacturers
National Chicken Council
National Federation of Independent Business
National Industrial Transportation League
National Retail Federation
National Turkey Federation
Natural & Organic Imports
Neiman Marcus
New Balance Athletic Shoe, Inc.
Newell Rubbermaid Inc.
Nike, Inc.
Nisei Farmers League
North Dakota Department of Agriculture
Office Depot
OZ Logistics Inc.
Pacific Coast Council of Customs Brokers & Freight
Forwarders
SB 974
Page
10
Pacific Egg and Poultry Association
Pacific Merchant Shipping Association
Panasonic Corporation of North America
Payless Shoe source
Perry Ellis International
Pier 1 Imports
Polo Ralph Lauren Corporation
Preferred Freezer Services
Ralphs Grocery Company
Red Wing Shoe Company
Redondo Beach Chamber of Commerce
Regional Legislative Alliance - Venture/Santa Barbara
Counties
Rekerdres and Sons Insurance
Retail Industry Leaders Association
Retail Merchants of Hawaii
Rite-Aid
Rocky Brands, Inc.
Safeway, Inc.
SAMPCO, Inc.
San Rafael Luggage Center
Seaboard Foods LP
Securakey
Smurfit-Stone Container Company
Sonnet Technologies
Southlands Organic Ltd
Southwest California Legislative Council
Southwest Hide Company
Specialty Crop Trade Council
Spencer Gifts LLC
Spirit Halloween Superstores
Sporting Goods Manufacturers Association
SSA Marine
Starboard Alliance Company
Stop Hidden Taxes Coalition
Sunview Marketing International
Target
Temecula Valley Chamber of Commerce
The Refrigerated Shipping Association
Toy Association of Southern California
Toy Industry Association, Inc.
Transgroup Worldwide Logistics
Travel Goods Association
U.S. Association of Importers of Textiles & Apparel
SB 974
Page
11
U.S. Chamber of Commerce
U.S. Dairy Export Council
United Laundry Services, Inc.
United States Council for International Business
USA Poultry & Egg Export Council
Valley Industry and Commerce Association
Vergel N. Adonis Realty Inc.
VF Outdoor, Inc.
Voit Development Company
Walgreens
Wal-Mart Stores, Inc.
Washington State Potato Commission
Waterfront Coalition
Weil Brothers Cotton, Inc.
Western Cotton Shippers Association
Western Growers
Western United Dairymen
Wilson Homecare
Wine Institute
World Sake Imports
WS Badcock Corp, DBA Badcock Home Furnishings and More
ARGUMENTS IN SUPPORT : According to the author's office,
the ports of Los Angeles, Long Beach, and Oakland are the
nation's first, second, and fourth largest ports,
respectively, and are projected to experience tremendous
growth. The author's office cites certain information as
the basis for this bill, including the following:
1. According to a 2006 report by the ARB, pollution from
our state's ports causes 2,400 premature deaths
annually.
2. The ARB recently estimated that over the next 15 years,
polluting activity from operations at California's ports
will have an aggregate health impact equivalent to
approximately $200 billion in present value dollars.
3. A disproportionate number of communities impacted by
port pollution are low-income communities of color, the
state currently shoulders much of these port-caused
health costs.
4. By 2020, ports and freight transport operations will be
SB 974
Page
12
the largest source of particulate matter (PM) and
nitrogen oxide (NOx) emissions in the state, producing
more diesel PM than all passenger vehicles, off-road
equipment and stationary sources combined.
5. According to the Los Angeles Economic Development Corp.
(LAEDC), Southern California must spend at least $10.5
billion to improve railroads, rail yards and highways to
keep up with surging international trade or risk losing
more than 500,000 new jobs and more than $1 billion of
taxes a year.
6. Inefficiencies in the freight transport system are
costly to the state. Improving our rail system will
reduce the number of diesel trucks on our freeways and
alleviate congestion. For example, "on-dock rail" is a
less polluting and more efficient alternative to
trucking goods on our freeways. Congestion costs
Southern California more than $10 billion in 2003.
7. Southern California risks losing $12.1 billion in
federal highway funds if federal Clean Air Act standards
are not met. So far, the basin has failed to meet
national standards for ozone or for particulate
emissions.
8. The growth of the ports of Los Angeles (LA) and Long
Beach (LB) is staggering. The two ports move approximately
40 percent of the nation's cargo. The LA/LB port complex
is the largest port complex in the United States and under
current operating conditions will see cargo triple (from 15
million TEUs, to 47 million TEUs) by 2020. The ports are
the single largest source of air pollution in the South
Coast Basin.
ARGUMENTS IN OPPOSITION : Opponents of this bill,
generally retailers who own the cargo being imported and
exported through the ports, oppose on two grounds:
imposing the fee as proposed in this bill violates the
commerce clause of the United States Constitution and
increasing the costs of importing and exporting through
these ports will cause retailers to ship their cargo
through other ports.
SB 974
Page
13
JJA:mw 6/1/07 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****