BILL ANALYSIS Ó SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator Wieckowski, Chair 2015 - 2016 Regular Bill No: SB 1277 ----------------------------------------------------------------- |Author: |Hancock | ----------------------------------------------------------------- |-----------+-----------------------+-------------+----------------| |Version: |4/4/2016 |Hearing | 4/20/2016 | | | |Date: | | |-----------+-----------------------+-------------+----------------| |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Joanne Roy | | | | ----------------------------------------------------------------- SUBJECT: California Environmental Quality Act: supplemental environmental impact report: City of Oakland: coal shipment ANALYSIS: Existing law, under the California Environmental Quality Act (CEQA), 1) Requires lead agencies with the principal responsibility for carrying out or approving a proposed discretionary project to prepare a negative declaration, mitigated negative declaration, or environmental impact report (EIR) for this action, unless the project is exempt from CEQA (CEQA includes various statutory exemptions, as well as categorical exemptions in the CEQA Guidelines). (Public Resources Code (PRC) §21000 et seq.) 2) Requires a lead agency or responsible agency to prepare a subsequent or supplemental EIR only if specified events occur, such as when new information, which was not known and could not have been known at the time the EIR was certified as complete, becomes available. (PRC §21166(c)) 3) Pursuant to Proposition 1B (Prop. 1B), enacts the Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006 and authorizes $19.9 billion in general obligation bonds to fund a variety of transportation projects. (Government Code §8879.22 et seq.) This bill: SB 1277 (Hancock) Page 2 of ? 1) Makes several findings and declarations related to a project to develop the Bulk and Oversized Terminal at the former Oakland Army Base and a proposal to export coal from there. 2) Requires a public agency with discretionary authority over the project to prepare or cause to prepare a supplemental EIR to consider and mitigate the environmental impacts of the proposed coal terminal before approving a project that is necessary for, and directly relates to, the use of the terminal for the shipment of coal. Background 1) CEQA: Environmental review process. CEQA provides a process for evaluating the environmental effects of a project, and includes statutory exemptions as well as categorical exemptions in the CEQA guidelines. If a project is not exempt from CEQA, an initial study is prepared to determine whether a project may have a significant effect on the environment. If the initial study shows that there would not be a significant effect on the environment, the lead agency must prepare a negative declaration. If the initial study shows that the project may have a significant effect on the environment, then 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. Prior to approving any project that has received an environmental review, an agency must make certain findings. If mitigation measures are required or incorporated into a project, the agency must adopt a reporting or monitoring program to ensure compliance with those measures. If a mitigation measure would cause one or more significant effects in addition to those that would be caused by the proposed project, the effects of the mitigation measure must be discussed but in less detail than the significant effects of the proposed project. SB 1277 (Hancock) Page 3 of ? 2) What is analyzed in an environmental review? Pursuant to CEQA, an environmental review analyzing the significant direct and indirect environmental impacts of a proposed project, may include water quality, surface and subsurface hydrology, land use and agricultural resources, transportation and circulation, air quality and greenhouse gas emissions, terrestrial and aquatic biological resources, aesthetics, geology and soils, recreation, public services and utilities such as water supply and wastewater disposal, cultural resources, and tribal cultural resources. The analysis must also evaluate the cumulative impacts of any past, present, and reasonably foreseeable projects/activities within study areas that are applicable to the resources being evaluated. A study area for a proposed project must not be limited to the footprint of the project because many environmental impacts of a development extend beyond the identified project boundary. Also, CEQA stipulates that the environmental impacts must be measured against existing physical conditions within the project area, not future, allowable conditions. 3) CEQA: Supplemental EIR. A supplemental EIR may be necessary, such as when new information of substantial importance was not known or could not have been known without the exercise of reasonable due diligence at the time the original EIR was certified. When the original EIR has been certified, comprehensive analysis of the project is presumed to have already taken place and the question becomes whether circumstances have changed enough to justify repeating a part of the environmental review process. A supplemental EIR need only address those EIR topics that require major revisions to the original EIR. A supplemental EIR is subject to the same notice and public review requirements as the original EIR, except a new notice of preparation is not required. If the project was approved by the lead agency before the conditions that trigger a supplemental EIR happened, then the supplemental EIR must be prepared by the public agency that grants the next discretionary approval for the project. SB 1277 (Hancock) Page 4 of ? 4) Coal. Coal consumption in the United States has been declining in recent years due to the abundance of cheap natural gas, the growth of renewable energy, and environmental regulation. The coal industry has sought to make up for the loss of U.S. demand by increasing exports. Demand for coal globally continues to grow, fueled largely by China. While some U.S. coal is exported to Japan and South Korea, it is not a major player in Asia despite the relative cheapness of western U.S. coal; and the lack of export terminal capacity may be viewed as one of the reasons why. Proposals over the past several years to construct or expand port terminals in Oregon and Washington in order to grow exports to Asia have been defeated or stalled at almost every step, primarily due to concerns about both local environmental impacts and global climate change. a) Coal and climate change. Coal is a fossil fuel. When coal is burned, carbon dioxide, sulfur dioxide, nitrogen oxides, and mercury compounds are released. The fifth assessment report from the Intergovernmental Panel on Climate Change notes that atmospheric concentrations of global warming pollutants have risen to levels unseen in the past 800,000 years. Carbon dioxide concentrations have increased by approximately 40% since pre-industrial times. There is broad scientific consensus that these GHG emission increases are leading to higher air and water temperatures as well as rising sea levels, with serious consequences for California. In July 2015, Governor Brown spoke at the Vatican symposium on climate change and modern slavery, which aimed to drive awareness, dialogue, and action at the local level - among his remarks, he stated that 90% of the world's coal must remain unused to help avoid the dangers of global warming. b) Coal dust: environmental and public health risks. Coal dust is a fine powdered form of coal, which is created by the crushing, grinding, or pulverizing of coal. Because of the brittle nature of coal, coal dust can be SB 1277 (Hancock) Page 5 of ? created during mining, transportation, or by mechanically handling coal. Also, not all coal is created equally - some types break down into dust more easily than others. Particulate matter from the transportation of coal can impact air quality, and severe exposure to coal dust can cause various pulmonary diseases. In addition, questions may arise regarding potential environmental impacts caused by chronic, low-level input of coal dust that may result from steady coal shipment traffic. For example, could the transportation of coal cause pollutant emissions, noise, potential fires, or leaching of chemicals? Could coal dust cover the leaves of nearby vegetation and reduce its photosynthesis capabilities or have toxic effects on public health or wildlife? 5) Coal shipments through California. According to the author, three ports in California export coal: a) Levin-Richmond Terminal: A private terminal, which exported approximately 1 million tons of coal per year for the last four years; but currently unknown as to whether exports are continuing in 2016. b) Port of Stockton: Coal exports have varied from 25,000 tons to up to 1.8 million tons. c) Port of Long Beach: Less than one million tons. If the coal export terminal is built in West Oakland to handle 10 million tons of coal, it would be the largest coal export facility along the west coast. 6) West Oakland public health. According to the author, West Oakland has been designated as a disadvantaged community by the California Environmental Protection Agency via CalEnviroScreen. The community of West Oakland is impacted heavily by goods movement. West Oakland residents breathe air containing three times the amount of diesel particulate matter than air in other parts of the Bay Area, which translates into 2.5 times greater risk of cancer. SB 1277 (Hancock) Page 6 of ? Children in West Oakland suffer from ailments like asthma at higher rates than children in other neighborhoods. West Oakland residents are two times as likely to go to the emergency room with asthma as people in other parts of Alameda County. 7) History of the Oakland Bulk and Oversize Terminal (OBOT). a) Redevelopment of Oakland Army Base. According to the Senate Transportation and Housing Committee, after the Oakland Army Base 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 area. In 2009, the Port of Oakland secured Trade Corridor Improvement Fund (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 EIR completed in 2002; an addendum was prepared in 2012. b) Funding. According to the Senate Transportation and Housing Committee, the Port and the City forged an agreement with two private entities, California Capital and Investment Group (CCIG) and Prologis, to develop the site. These two companies SB 1277 (Hancock) Page 7 of ? 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 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. CCIG executed a contract with Terminal Logistics Solutions (TLS), 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. c) Enter Utah. As coal-fired power plants in the United States close or switch to natural gas, access to overseas markets is becoming increasingly important for coal-producing states. 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 a proposed bulk terminal in Oakland. In February 2016, the Utah Legislature passed SB 246 to authorize and provide $53 million in Utah transportation funding to aid construction for the new Oakland cargo terminal. On March 22, 2016, the Utah Governor Gary Herbert signed the bill. To fund the Oakland project, Utah would use state tax revenue and then reimburse the state with federal royalties from federal mineral leases. However, federal mining royalties are required to go to local projects such as building roads, parks, public buildings, water and sewer systems-infrastructure to mitigate the impact of mineral development in Utah. Instead, Utah is putting tax revenue moneys into a newly created, Throughput Infrastructure Fund, and then reimbursing the state with mineral royalties. SB 1277 (Hancock) Page 8 of ? d) What's the plan? The OBOT is part of the larger redevelopment project at the former Oakland Army Base, financed with a combination of public and private funds. The improvements for the OBOT part of the project will cost an estimated $250 million. The developer is CCIG and the long-term lessee of the terminal would be TLS, which would also manage an existing track network. TLS is looking to partner with the four Utah counties to export commodities including coal, giving the Utah counties four million to five million tons of annual shipping capacity and access to overseas markets in exchange for a $53 million investment. According to the Los Angeles Times article, "Coal represents the polluted past - except in the interior West," (William Yardley, March 16, 2016), public records from March 2015 show that at least under a plan being developed at that point, the company that would operate the terminal, TLS, would be controlled in part by Bowie Natural Resources, the company whose Utah coal mines would serve the terminal. TLS has yet to exercise its option to develop the terminal. Comments 1) Purpose of Bill. According to the author: A proposed project at the former Oakland Army Base would bring up to 10 million tons of coal to West Oakland each year. Coal would come on railroad lines from Utah and be transferred to cargo ships for export to China and overseas countries. If built, it will be nearly four times larger than any coal export terminal in the West Coast. West Oakland would be impacted by this coal export facility and coal dust would add to the high pollution levels in West Oakland. West Oakland residents are already 2.5 more likely to get cancer due to breathing air which contains three times the amount of diesel particulate matter than air in other parts of the Bay Area. West Oakland has also been designated by the CalEnviroScreen as being a disadvantaged community due to its high asthma rates, cancer risks, and pollution levels. SB 1277 (Hancock) Page 9 of ? I am certainly concerned about the impact of a large coal export terminal and the impact it would have for the surrounding environment, including the San Francisco Bay. It is not acceptable to have the City of Oakland build a large new facility to export coal to places like China where people often must cover their faces or stay inside to avoid breathing dirty air. The need for a legislative response has gotten even more pronounced as a result of legislation that was just signed into law in Utah that would direct $53 million from the state's Community Impact Bonds to purchase ownership shares in the Oakland project in order to guarantee port access for Utah's coal industry. The City of Oakland has already received over $176 million in public funds from the California Transportation Commission via the Trade Corridor Improvement Fund from Proposition 1B. All of which means these efforts to prop up a dirty and antiquated energy source are being supported through public dollars. SB 1277 declares that the transportation of coal through West Oakland is a clear and present danger to the health and safety of Oakland residents as well as to the workers that would handle the coal. It also requires, before approving a project that is necessary for and directly related to the use of the terminal for the shipment of coal, a public agency with discretionary authority over the project to prepare or cause to prepare a supplemental EIR to consider and mitigate the environmental impacts through the coal terminal pursuant to CEQA. 2) Why should the state be concerned? Some contend that this bill is a district issue and should be dealt with at the local level. However, the impacts of coal on public health and global warming are statewide concerns. For example, the state has policies that prohibit utilities from renewing contracts with coal-fired power plants. Also, coal transported from Utah would have to go through multiple counties in the state before it reaches OBOT - would citizens in those counties be affected by this project? It seems appropriate for the state to have some concern about a SB 1277 (Hancock) Page 10 of ? project, which the state has provided $176 million in general obligation funds. As noted above, the Port of Oakland secured TCIF funding in 2009. Prop. 1B mandates, among other things, that when allocating TCIF, emphasis must be placed on projects that improve corridor mobility while reducing emissions of diesel particulate and other pollutant emissions. Coal, which can have significant air quality impacts, was not considered in 2009 as a potential commodity to use in the facility; and, now the export terminal may be built to handle up to 10 million tons of coal annually. It seems reasonable that when no action has occurred at the local level for almost a year to address this issue that the state may wish to ensure that the law is adhered to and state funds are used as intended. 3) How much was known when? The developer, CCIG, explicitly stated in a December 2013 newsletter that CCIG "has no interest or involvement in the pursuit of coal-related operations at the former Oakland Army Base." According to the Los Angeles Times article, "How Utah quietly made plans to ship coal through California," [W]hen state and county officials in southern Utah came up with an unusual plan to invest $53 million in public money to help build an export terminal in San Francisco Bay, they decided to tell as few people as possible what commodity they planned to export. 'The script,' according to Jeffrey Holt, the [former] chairman of the Utah Transportation Commission and a central figure in arranging the $53-million loan, writing in an email last spring, 'was to downplay coal.'" (William Yardley, December 11, 2015). Over the past several years, with the environmental reviews, contract negotiations, and public funding processes, Oakland City officials claim that they were never advised that coal would be part of the product mix. CCIG did not formally confirm that coal would be one of the exports from the OBOT until a July 2015 letter to the Oakland Mayor. SB 1277 (Hancock) Page 11 of ? 4) Need for a supplemental EIR. CEQA provides that a public agency must prepare a subsequent or supplemental EIR for a project if the lead agency determines that new information of substantial importance has come to light since the EIR was certified. CCIG states that it has already complied with CEQA. However, neither the original EIR, which was certified 13 years ago, nor the CEQA addendum in 2012, included any mention of coal as a commodity that would pass through OBOT - there was no reason to analyze the impacts of coal if coal was not even considered a potential commodity to go through the facility. As noted above, even as late as December 2013, people were under the belief that coal was not a commodity being deliberated. The developer's July 2015 letter confirming coal to the Oakland mayor and Utah's recent approval to help fund the facility with $53 million show a commitment that coal is intended to be shipped through the facility. Both of these show a change in the project requiring supplementation to the environmental review. However, there has been no action at the local level to consider this new development that coal is a commodity that will be shipped through OBOT. A question that arises is - in what stage of the development process is this facility and what is the next discretionary permitting/action required? Because of the new information regarding coal, the next public agency with discretionary action cannot fully rely on the certified EIR. Thus, the next public agency will become the lead agency that must prepare, or cause to be prepared, a supplemental EIR to analyze and mitigate the environmental impacts related to the shipment of coal. The original discretionary action by the City of Oakland and for which the EIR was certified is done. Unless Oakland has another discretionary action regarding the facility, the city is no longer the lead agency. For example, if the city reopens the development agreement, then the city could be the lead agency to prepare the supplemental EIR. Because there has been no movement by a local agency, for almost a year now, that seeks to put on record that this is new information that should be analyzed and to ensure that SB 1277 (Hancock) Page 12 of ? this does not slip through the cracks, this bill is intended to clarify and make certain that this issue gets addressed. DOUBLE REFERRAL: This measure was heard in Senate Committee on Transportation & Housing on April 12, 2016, and passed out of committee with a vote of 7-3. SOURCE: Author SUPPORT: 350 Bay Area Berkeley Climate Action Coalition City of Richmond East Bay Young Democrats Ecology Center Environment California Fossil Free California Northern California District Council of the International Longshore and Warehouse Union (ILWU) Physicians for Social Responsibility San Francisco Bay Area Chapter Public Advocates San Francisco Baykeeper Save the Bay Sierra Club California The Peace, Earthcare and Social Witness Committee West Oakland Environmental Indicators Project 1 Individual OPPOSITION: American Planning Association, California Chapter California Building Industry Association California Business Properties Association California Chamber of Commerce California Manufacturers & Technology Association California Railroad Industry California Teamsters Public Affairs Council SB 1277 (Hancock) Page 13 of ? -- END --