BILL ANALYSIS                                                                                                                                                                                                    Ó

                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          SB 1277           Hearing Date:    4/12/2016
          |Author:   |Hancock                                               |
          |Version:  |4/4/2016    Amended                                   |
          |Urgency:  |No                     |Fiscal:      |Yes             |
          |Consultant|Erin Riches                                           |
          |:         |                                                      |

          SUBJECT:  California Environmental Quality Act: supplemental  
          environmental impact report: City of Oakland: coal shipment

            DIGEST:  This bill requires a public agency with discretionary  
          authority over the Bulk and Oversized Terminal project, located  
          in the former Oakland Army Base, to prepare or cause to be  
          prepared a supplemental environmental impact report to consider  
          and mitigate the shipment of coal through the terminal.

          AB 32 and Disadvantaged Communities

          AB 32 (Núñez and Pavley, Chapter 488, Statutes of 2006) requires  
          the state Air Resources Board (ARB) to develop a plan to reduce  
          emissions to 1990 levels by 2020.  It also requires ARB to  
          ensure that programs to reduce greenhouse gas (GHG) emissions  
          are targeted, to the extent feasible, to the most disadvantaged  
          communities (DACs) in the state.  AB 32 authorizes ARB to  
          deposit any fees paid by GHG emission sources into the  
          Greenhouse Gas Reduction Fund (GGRF).

          SB 535 (De León, Chapter 830, Statutes of 2012) requires 25% of  
          GGRF funds to be allocated to projects that provide benefits to  
          DACs, and at least 10% to projects located within DACs.  DACs  
          have been identified by the California Environmental Protection  
          Agency using census tract data based on geographic,  
          socioeconomic, public health, and environmental hazard criteria.  


          SB 1277 (Hancock)                                  Page 2 of ?

          Proposition 1B and the Trade Corridor Improvement Fund (TCIF) 

          Proposition 1B, the Highway Safety, Traffic Reduction, Air  
          Quality, and Port Security Bond Act of 2006, was approved by  
          California voters in November 2006.  Proposition 1B authorized  
          the issuance of $19.9 billion in general obligation bonds to  
          fund a variety of transportation projects.  Of this, $2 billion  
          was allocated to the TCIF for infrastructure improvements along  
          high-volume freight corridors.
          The TCIF program requires at least a 50% match from local,  
          federal, or private sources.  The project application must  
          include a specific description of non-TCIF funding (source,  
          amount, and availability) to be applied to the project.  The  
          California Transportation Commission (CTC) evaluates TCIF  
          applications based on factors including increased speed of  
          freight traffic; relief for freight system bottlenecks; and  
          reduction of local and regional emissions of diesel particulate  
          matter (PM), carbon dioxide (CO2), oxides of nitrogen (NOx), and  
          other pollutants.

          The Oakland Army Base Redevelopment Project 

          After the Oakland Army Base was closed in 1999, part of the  
          property reverted to the City of Oakland, while another portion  
          went to the Port of Oakland.  The following year, the Oakland  
          City Council designated the base and surrounding properties, an  
          area totaling 1,800 acres, as a redevelopment project area.  In  
          2009, the Port of Oakland secured TCIF funding for a project to  
          develop warehouse space, logistics facilities, and a rail  
          terminal on the site.  By diverting freight from trucks to  
          trains, the new rail terminal complex was expected to reduce  
          diesel PM emissions while simultaneously increasing the  
          efficiency of goods movement through the Port.    

          Following the dissolution of the redevelopment agency in 2012,  
          the area owned by the redevelopment agency was transferred to  
          the City of Oakland. The Port and the City began working  
          together on the site and significantly expanded the scope of the  
          redevelopment, including the addition of a bulk terminal.  The  
          Port obtained a grant under the federal Transportation  
          Investment Generating Economic Recovery (TIGER) program, as well  
          as additional TCIF funds.  The expansion of the project required  
          an update to the environmental impact report (EIR) completed in  
          2002; an addendum was prepared in 2012.  


          SB 1277 (Hancock)                                  Page 3 of ?

          Meanwhile, the City of Oakland forged an agreement with two  
          private entities, California Capital and Investment Group (CCIG)  
          and Prologis, to develop the site.  These two companies were  
          tasked with finding additional investors and tenants for the  
          project.  Details of what commodities would be transported  
          through the bulk terminal were largely contingent upon the  
          contracts that would be executed, and therefore were not  
          reviewed in the new environmental documents.

          To date, the Port and the City have secured about two-thirds of  
          needed project funding.  Of this, the majority comes from public  
          funding sources; specifically, the state TCIF ($242 million);  
          the federal TIGER program ($15 million); the Port of Oakland  
          ($16 million); and the City of Oakland ($55 million).  In  
          addition, CCIG and Prologis have identified funding totaling  
          approximately $172 million.  
          In spring of 2015, stories surfaced in the media revealing that  
          the state of Utah was in discussions with Port developers about  
          shipping coal from Utah to China through the bulk terminal in  
          Oakland.  Utah currently exports about 1 million tons of coal  
          each year, mainly through the ports of Richmond, Stockton, and  
          Long Beach.  As coal-fired power plants in the U.S. close or  
          switch to natural gas, access to overseas markets is becoming  
          increasingly important for coal-producing states.  In February  
          2016, eight working days before the end of the Utah legislative  
          session, a bill surfaced to authorize, and provide $53 million  
          in funding for, the deal.  The legislation passed by a wide  
          margin and is currently on the desk of the state's Republican  
          Governor, Gary Herbert, who is expected to sign it.  

          As noted above, the City had tasked two companies, CCIG and  
          Prologis, to come up with additional project funding.  CCIG, in  
          turn, executed a contract with Terminal Logistics Solutions, a  
          company headed by Jerry Bridges, a former executive director of  
          the Port of Oakland.  It was this company that negotiated the  
          deal with Utah. 

          California Environmental Quality Act (CEQA)

          CEQA requires state and local agencies to identify the  
          significant environmental impacts of their actions and to avoid  
          or mitigate those impacts, if feasible.  Every development  
          project that requires a discretionary government approval  
          requires at least some environmental review pursuant to CEQA,  


          SB 1277 (Hancock)                                  Page 4 of ?
          unless an exemption applies. Specifically:

          1)If the initial study shows there would not be a significant  
            impact on the environment, the lead agency must prepare a  
            negative declaration.  

          2)If the study shows potentially significant impacts but the  
            applicant revises the project plan in a manner to avoid or  
            mitigate those impacts, before the proposed negative  
            declaration and initial study are released for public review,  
            the lead agency must prepare a mitigated negative declaration.  

          3)If the initial study shows the project might have a  
            significant effect on the environment, the lead agency must  
            prepare an EIR.  

          Generally, an EIR must accurately describe the proposed project,  
          identify and analyze each significant environmental impact  
          expected to result from the proposed project, identify  
          mitigation measures to reduce those impacts to the extent  
          feasible, and evaluate a range of reasonable alternatives to the  
          proposed project.  

          CEQA also requires a lead agency or responsible agency to  
          prepare a subsequent or supplemental EIR if one or more of the  
          following occurs:

          1)Substantial changes are proposed in the project that will  
            require major revisions of the EIR.

          2)Substantial changes occur in the circumstances under which the  
            project is being undertaken that will require major revisions  
            to the EIR.

          3)New information, which was not known and could not have been  
            known at the time the EIR was certified as complete, becomes  

          This bill:

          1)Requires a public agency with discretionary authority over the  
            Bulk and Oversized Terminal project, located in the former  
            Oakland Army Base, to prepare or cause to be prepared a  
            supplemental EIR to consider and mitigate the shipment of coal  


          SB 1277 (Hancock)                                  Page 5 of ?
            through the terminal.

          2)States that coal shipment was not considered under the  
            original EIR for this project as a commodity that would be  
            shipped through the terminal.

          3)States that the proposal to export coal from the terminal  
            constitutes a change in the proposed project and is new  
            information that was not known, and could not have been known,  
            at the time the EIR was certified as complete.


          1)Purpose.  The author states that coal transport spreads the  
            damages caused by coal dust and contributes to the likelihood  
            that residents in adjacent communities will suffer from  
            illnesses linked to pollution, such as cancer, heart disease,  
            and asthma.  Coal dust is a source of PM that is dangerous to  
            breathe and is responsible for most occupational lung disease.  
             West Oakland is already heavily impacted by pollution: its  
            residents are 2.5 times more likely to get cancer due to  
            breathing air which contains three times the amount of diesel  
            PM than air in other parts of the Bay Area.  In addition, West  
            Oakland residents are two times as likely to go to the  
            emergency room with asthma as people in other parts of Alameda  

            The author states that the initial redevelopment project  
            proposal provided to the CTC in the TCIF application did not  
            include the potential for the transport and export of coal,  
            nor did the initial EIR examine the use of a coal export  
            facility.  Now, however, the project proposes to transport up  
            to 9 million tons of coal each year from Utah, through the  
            Port, to China and other countries.  West Oakland, the  
            location of the project, has already been designated by the  
            state as a DAC due to its high asthma rates, cancer risks, and  
            pollution levels.  The author states that this proposal is not  
            in accordance with Proposition 1B and contradicts California's  
            efforts in reducing climate change.

          2)Why didn't the TCIF application mention coal?  The TCIF  
            application, in reference to the bulk terminal portion of the  
            project, stated that it would be "converted to a modern bulk  
            cargo marine terminal for movement of commodities such as iron  
            ore, corn, and other products brought in to the terminal by  


          SB 1277 (Hancock)                                  Page 6 of ?
            rail ? the terminal would also accommodate project cargo such  
            as windmills, steel coils, and oversized goods."  The TCIF  
            application did not require the applicant to disclose, or  
            commit to, exactly what commodity or commodities would be  
            transported through the terminal.

          3)Recent amendments.  The prior version of this bill prohibited  
            the transport of coal to or through the Bulk or Oversized  
            Terminal located in the former Oakland Army Base. The author  
            amended this bill on April 4 to instead require a public  
            agency with discretionary authority over this project to  
            prepare or cause to be prepared a supplemental EIR to consider  
            and mitigate coal shipment through the terminal.  Under the  
            new version of this bill, when the next step of this project  
            is reached, the agency with discretionary approval of that  
            step (e.g., the local air district, the water board) will have  
            to prepare or commission a supplemental EIR.  

          4)How would this bill impact the Oakland project?  By requiring  
            a supplemental EIR, this bill could potentially delay the  
            project timeline.  At the same time, however, a supplemental  
            EIR will help ensure that any potential impacts from shipping  
            coal through the port and community are addressed.  

          5)Opposition concerns.  The American Planning Association,  
            California Chapter, writing in opposition to the current  
            version of this bill, states that "While APA supports the  
            State's renewable energy portfolio; we do not support the idea  
            of special CEQA treatment of an individual project by the  
            Legislature."  The California Railroad Industry, also writing  
            in opposition to the current version of this bill, states that  
            it "singles out coal-related projects at a specified bulk  
            cargo terminal, treating coal shipments differently than every  
            other commodity that moves through that facility."  The  
            Industry also states that the bill's provisions extend beyond  
            the state's authority in areas such as interfering with  
            federal rail operations, discriminating against common  
            carriers, restricting the export of coal in conflict with  
            multiple treaties to which the U.S. is a party, discriminating  
            against interstate and foreign commerce, and imposing  
            retroactive restrictions on a project that has already been  

            To help allay concerns about conflicts with federal  
            regulations or treaties, the author amended this bill on March  


          SB 1277 (Hancock)                                  Page 7 of ?
            31 to clarify that it will be implemented only to the extent  
            it is consistent with federal law.  
          6)Double-referral.  This bill has also been referred to the  
            Environmental Quality Committee.

          Related Legislation:
          SB 1279 (Hancock) - prohibits the CTC from programming or  
          allocating state funds for any port facility project in or  
          adjacent to one or more DACs which exports or proposes to export  
          coal from California.  This bill is also being heard by this  
          committee today.

          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  No

            POSITIONS:  (Communicated to the committee before noon on  
                          April 6, 2016.)

          Alameda County Democratic Central Committee
          Berkeley Climate Action Coalition
          California Nurses Association
          City of Berkeley
          City of Emeryville
          City of Richmond
          East Bay Young Democrats
          Ecology Center
          El Cerrito Democratic Club
          Environment California
          Fossil Free California
          Friends Committee on Legislation
          International Longshore and Warehouse Union, Northern California  
               District Council 
          No Coal in Oakland
          Oakland Unified School District

          Peace, Earthcare, and Social Witness Committee of Strawberry  
          Creek Quaker 


          SB 1277 (Hancock)                                  Page 8 of ?
          Physicians for Social Responsibility 
          Public Advocates
          San Francisco Baykeeper
          SEIU Local 1021
          Sierra Club California
          West Oakland Environmental Indicators Project
          One individual


          American Planning Association, California Chapter
          California Building Industry Association
          California Railroad Industry
          California Teamsters Public Affairs Council


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