BILL ANALYSIS
SB 974
Page 1
Date of Hearing: June 25, 2007
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Loni Hancock, Chair
SB 974 (Lowenthal) - As Amended: May 24, 2007
SENATE VOTE : 22-12
SUBJECT : Ports: congestion relief: environmental mitigation:
regulatory fee.
SUMMARY : Imposes a $30 fee on each shipping container processed
at the Ports of Los Angeles, Long Beach, and Oakland to fund
congestion management and air quality improvement projects
related to the ports.
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 (Harbors and Navigation Code 1720 et seq.).
2) Establishes the California Transportation Commission (CTC)
and sets various duties and procedures for the CTC
(Government Code 14500 et seq.).
3) Authorizes the State Air Resources Board (ARB) to coordinate
efforts to attain and maintain ambient air quality standards
(Health and Safety Code 39003) and specifies its powers
(Health and Safety Code 39500 et seq.).
4) Creates the Infrastructure and Economic Development Bank
(I-Bank) and specifies its powers (Government Code 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 Mitigation Relief Trust Fund.
2) Requires the ports of Long Beach, Los Angeles, and Oakland,
SB 974
Page 2
by January 1, 2008, to develop a process to notify and
collect user fees from container cargo owners. The ports
must notify the cargo owners by June 1, 2008, that a $30 per
twenty-foot equivalent unit (TEU) user fee will be assessed.
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 port-related
equipment.
3) The three ports must assess the $30 TEU user fee beginning
January 1, 2009, and collect the fee twice a year, with 50%
of the fees directed to a CTC-administered congestion relief
fund (to fund projects that improve the flow and efficiency
of container cargo) and 50% to an ARB-administered mitigation
fund (to mitigate environmental pollution caused by cargo
movement). Moneys deposited in the funds cannot be loaned or
transferred to the General Fund.
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 attaining state and federal air quality goals,
while addressing the overall efficiency of container cargo
movement. Emission requirements are specified for all mobile
non-road 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 reach federal air quality attainment
standards.
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).
SB 974
Page 3
7) Establishes procedures for the I-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.
FISCAL EFFECT : According to the Senate Appropriations
Committee, start-up costs of $200,000/year to ARB from the Air
Pollution Control Fund and $100,000/year to CTC from the State
Highway Account. Ongoing costs funded by fee revenues. I-Bank
administrative costs funded through financing agreements. Fees
revenues estimated to reach $500 million in 2008/09.
COMMENTS :
1) Purpose of Bill . According to the author, 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 cites
certain information as the basis for this bill, including the
following:
According to a 2006 report by the ARB, pollution from
our state's ports causes 2,400 premature deaths annually.
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.
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.
By 2020, ports and freight transport operations will be
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.
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
SB 974
Page 4
keep up with surging international trade or risk losing
more than 500,000 new jobs and more than $1 billion of
taxes a year.
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.
Southern California risks losing $12.1 billion in
federal highway funds if federal Clean Air Act standards
aren't met. So far, the basin has failed to meet national
standards for ozone or for particulate emissions.
The growth of the Ports of Los Angeles and Long Beach is
staggering. The 2 ports move approximately 40% 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.
1) Opposition and support concerns . Opponents generally assert
that the fee in SB 974 violates the commerce clause of the
U.S. Constitution and increases costs of importing and
exporting through the ports. Supporters generally cite
concerns about negative impacts of port goods movement
activities and related affects on air quality and certain
infrastructure.
2) Fee and commerce clause issue . In a 2005 opinion based on a
prior version of this bill, Legislative Counsel concluded
that "it is our opinion that a court faced with the question
would find that the charge proposed?is a valid regulatory fee
imposed under the police power of the state, as long as the
amount of the charge assessed does not exceed the reasonable
cost of providing the services described, and that amount
bears a reasonable relationship to the burdens created by the
marine terminal operators."
Regarding the commerce clause issue, Legislative Counsel
concluded that "there is not federal legislation relating to
SB 974
Page 5
the subjects addressed under [Section 1745]. Thus, it is our
view that, generally, the state may legislate in this area"
and that "we conclude that the charge proposed under Section
1745 would survive scrutiny under the commerce clause of the
United States Constitution as a legitimate regulatory fee
imposed under the police power of the state."
3) Related legislation . SB 760 (Lowenthal) of 2006 established
a similar container fee program for the Ports of Long Beach
and Los Angeles, but not Oakland. The provisions of that
bill were subsequently amended into SB 927 (Lowenthal) of
2006. In vetoing SB 927, Governor Schwarzenegger indicated
that "if done in a more coordinated fashion with the public
and private sector, funding for additional congestion relief
and mitigation could be increased geometrically." The
Governor also cited his support of the transportation bond
(Proposition 1B) and noted that "my goods movement task force
is developing a comprehensive report that will provide more
thorough and strategic direction and insight on what the best
options are to address goods movement and port related
challenges."
4) Doubled Referral . This bill has been double referred to the
Assembly Committee on Transportation.
REGISTERED SUPPORT / OPPOSITION :
Support
-----------------------------------------------------------------
|Alameda Corridor-East |Gateway Chamber Alliance |
|Construction Authority |Gateway Council of Governments |
|American Academy of Pediatrics, |(27 cities) |
|California Division |Interfaith Environmental |
|American Cancer Society |Council |
|American Heart Association |Lakewood Chamber of Commerce |
|American Lung Association of |Long Beach Alliance for |
|California |Children with Asthma |
|Asthma Coalition of Los Angeles |Long Beach Unified School |
|County |District |
|Bay Area Air Quality Management |Los Angeles Alliance for a New |
|District |Economy |
|Breast Cancer Fund |Los Angeles County Metropolitan |
|Breathe California |Transportation Authority |
SB 974
Page 6
|California Air Pollution |Mayor, Todd Campbell, City of |
|Control Officers Association |Burbank |
|California League of |Mayor, Curt Pringle, City of |
|Conservation Voters |Anaheim |
|California Natural Gas Vehicle |Medical Advocates for Healthy |
|Coalition |Air |
|California Nurses Association |Natural Resources Defense |
|California Teamsters |Council |
|California Thoracic Society |Parents for a Safer Environment |
|Cerritos Chamber of Commerce |Parents for Safer Schools |
|City of Cudahy |Physicians for Social |
|City of Downey |Responsibility |
|City of Lakewood |Planning and Conservation |
|City of Long Beach |League |
|City of Signal Hill |Plug In America |
|City of South Gate |Progressive Christians Uniting |
|Coalition for Clean Air |Regional Asthma Management & |
|Coalition for A Safe |Prevention Initiative |
|Environment |San Gabriel Valley Council of |
|Coalition on the Environment |Governments |
|and Jewish Life |San Gabriel Valley Economic |
| of Southern California |Partnership |
|Communities for Clean Ports |Santa Barbara County Air |
|Community Action to Fight |Pollution Control District |
|Asthma |San Francisco Medical Society |
|Consumer Attorneys of |SEIU Local 721 (85,000 members) |
|California |Sierra Club California |
|Downey Chamber of Commerce |South Coast Air Quality |
|East Yard Communities for |Management District |
|Environmental Justice |Strategic Concepts in |
|Elizabeth Hudson Elementary |Organizing & Policy Education |
|School - |South Gate Chamber of Commerce |
| Environmental |Union of Concerned Scientists |
|Committee |West Long Beach Association |
|Environment California |West Oakland Environmental |
|Environmental Defense |Indicators |
|Friends of the Earth | |
-----------------------------------------------------------------
Opposition
-----------------------------------------------------------------
|Abercrombie and Fitch |California Retailers |
SB 974
Page 7
|ACG Cotton Marketing LLC |Association |
|Ag Processing, Inc. |California Seed Association |
|Agricultural Council of |California Taxpayers |
|California |Association |
|Agriculture Transportation |California Trade Coalition |
|Coalition |California Trucking Association |
|Allenberg Cotton Co. |California Warehouse |
|Allen Group |Association |
|Aloha Airlines |Carriere Family Farms |
|American Apparel and Footwear |Castle & Cooke Homes Hawaii, |
|Association |Inc. |
|American Chemistry Council |Casual Male Retail Group, Inc. |
|American Cotton Shippers |Central Pacific Bank |
|Association |Chamber of Commerce of Hawaii |
|American Council for Food |Charming Shoppes, Inc. |
|Safety and Quality |Circuit City |
|American Eagle Outfitters Inc. |Coca-Cola Bottling Company of |
|American Electronics |California |
|Association |Coca-Coal Bottling Co. of |
|American Foods Group |Southern CA |
|American Forest and Paper |Colorado Food Products |
|Association |Columbine Vineyards of Delano, |
|American Import Shippers |CA |
|Association |Corona Chamber of Commerce |
|Anheuser-Busch Companies, Inc. |Crain Walnut Shelling, Inc. |
|Anzco Foods North American, |Crate & Barrel |
|Inc. |CTP Transport, Inc. |
|APL |Dairy America, Inc. |
|Association of International |Del Monte Foods |
|Automobile Manufacturers |Derco Associates, Inc. |
|Badger Forest Products |Diamond Foods, Inc. |
|Bank of Hawaii |Distilled Spirits Council |
|Beall's, Inc. |Dole Food Company, Inc. |
|Belk, Inc. |Dressbarn, Inc. |
|Best Buy |Duncan and Sons Lines, Inc. |
|Blue Diamond Growers |DVN Louis Dreyfus Corporation |
|Bonanza Foods and Provisions, |E.I. DuPont de Nemours & Co. |
|Inc. |ECOM USA, Inc. |
|Bon-Ton Stores, Inc. |Edwards Luggage |
|Border Valley Trading LTD |EFI Logistics, Inc. |
|Borders Group, Inc. |Ethan Allan Global, Inc. |
|Borges of California |Food Marketing Institute |
|Boscov's Department Stores, |Gap Inc. |
|LLC. |Grain Millers, Inc. |
|Braun Export |Grocery Manufacturers/Food |
SB 974
Page 8
|Burger King, Inc. |Products Association |
|CA Commodity Export Corporation |Harland M. Braun and Company |
|Calcot LTC |Hawaii Island Chamber of |
|California Bean Shippers |Commerce |
|Association |Hawaii Korean Chamber of |
|California Business Properties |Commerce |
|Association |Hawaii Tourism Authority |
|California Cattlemen's |Hedley Construction and |
|Association |Development |
|California Chamber of Commerce |Heineken USA, Inc. |
|California Citrusl Mutual |Hewlett-Packard Company |
|California Cotton Ginners and |Home Depot |
|Growers Association |Intel Corporation |
|California Farm Bureau |JC Penny |
|Federation |Jo-Ann Fabric and Craft Stores |
|California Fisheries and |Jockey International |
|Seafood Institute |Kailua Chamber of Commerce |
|California Grain and Feed |Kohl's Corporation |
|Association |Lake Elsinore Valley Chamber of |
|California Grape and Tree Fruit |Commerce |
|League |Leading Lady |
|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 | |
| | |
-----------------------------------------------------------------
-----------------------------------------------------------------
|Levi Strauss & Co. |Rekerdres and Sons Insurance |
|Limited Brands, Inc. |Retail Industry Leaders |
|Limtiaco Company |Association |
|Liz Claiborne Inc. |Retail Merchants of Hawaii |
|Long Beach Area Chamber of |Rite-Aid |
|Commerce |Rocky Brands, Inc. |
|Lowes |Safeway, Inc. |
SB 974
Page 9
|Macy's/Macy's West |SAMPCO, Inc. |
|Mallory Alexander International |San Rafael Luggage Center |
|Logistics |Seaboard Foods LP |
|Mathiesen Maritime Services, |Securakey |
|Inc. |Smurfit-Stone Container Company |
|Matson Navigation |Sonnet Technologies |
|Maurice's, Inc. |Southlands Organic Ltd |
|Mazda North American Operations |Southwest California |
|Meat Importers Council of |Legislative Council |
|America |Southwest Hide Company |
|Meridian Nut Growers LLC |Specialty Crop Trade Council |
|Michaels Arts and Crafts |Spencer Gifts LLC |
|Midwest Shippers Association |Spirit Halloween Superstores |
|Miller Brewing Company |Sporting Goods Manufacturers |
|Milpitas Chamber of Commerce |Association |
|Mohawk Industries |SSA Marine |
|Murphy Imports, LLC |Starboard Alliance Company |
|Murrieta Chamber of Commerce |Stop Hidden Taxes Coalition |
|NAIOP Inland Empire |Sunview Marketing International |
|NAIOP SoCal |Target |
|National Association of |Temecula Valley Chamber of |
|Industrial and Office |Commerce |
|Properties - CA State Council |The Refrigerated Shipping |
|National Association of |Association |
|Manufacturers |Toy Association of Southern |
|National Chicken Council |California |
|National Federation of |Toy Industry Association, Inc. |
|Independent Business |Transgroup Worldwide Logistics |
|National Industrial |Travel Goods Association |
|Transportation League |U.S. Association of Importers |
|National Retail Federation |of Textiles & Apparel |
|National Turkey Federation |U.S. Chamber of Commerce |
|Natural & Organic Imports |United Laundry Services, Inc. |
|Neiman Marcus |United States Council for |
|New Balance Athletic Shoe, Inc. |International Business |
|Newell Rubbermaid Inc. |U.S. Dairy Export Council |
|Nike, Inc. |USA Poultry & Egg Export |
|Nisei Farmers League |Council |
|North Dakota Department of |Valley Industry and Commerce |
|Agriculture |Association |
|Office Depot |Vergel N. Adonis Realty Inc. |
|OZ Logistics Inc. |VF Outdoor, Inc. |
|Pacific Coast Council of |Voit Development Company |
|Customs Brokers & Freight |Walgreens |
|Forwarders |Wal-Mart Stores, Inc. |
SB 974
Page 10
|Pacific Egg and Poultry |Washington State Potato |
|Association |Commission |
|Pacific Merchant Shipping |Waterfront Coalition |
|Association |Weil Brothers Cotton, Inc. |
|Panasonic Corporation of North |Western Cotton Shippers |
|America |Association |
|Payless Shoe source |Western Growers |
|Perry Ellis International |Western United Dairymen |
|Pier 1 Imports |Wilson Homecare |
|Polo Ralph Lauren Corporation |Wine Institute |
|Preferred Freezer Services |World Sake Imports |
|Ralphs Grocery Company |WS Badcock Corp, DBA Badcock |
|Red Wing Shoe Company |Home Furnishings |
|Redondo Beach Chamber of | and More |
|Commerce | |
|Regional Legislative Alliance - | |
|Venture/Santa Bara | |
| Counties | |
-----------------------------------------------------------------
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092