BILL ANALYSIS                                                                                                                                                                                                    

          |SENATE RULES COMMITTEE            |                       SB 1277|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 

          Bill No:  SB 1277
          Author:   Hancock (D) 
          Amended:  4/4/16  
          Vote:     21 

           SENATE TRANS. & HOUSING COMMITTEE:  7-3, 4/12/16
           AYES:  Beall, Allen, Galgiani, Leyva, McGuire, Roth, Wieckowski
           NOES:  Cannella, Bates, Gaines
           NO VOTE RECORDED:  Mendoza

           AYES:  Wieckowski, Hill, Jackson, Leno, Pavley
           NOES:  Gaines, Bates

           AYES: Lara, Beall, Hill, McGuire, Mendoza
           NOES: Bates, Nielsen
           SUBJECT:   California Environmental Quality Act:  supplemental  
                     environmental impact report:  City of Oakland:  coal  

          SOURCE:    Author

          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 (EIR) to  
          consider and mitigate the shipment of coal through the terminal.


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          Existing law:

          1) Requires, under the California Environmental Quality Act  
             (CEQA), the 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) Enacts, 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:

          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  
            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.


          Proposition 1B and the Trade Corridor Improvement Fund (TCIF).   
          Proposition 1B, the Highway Safety, Traffic Reduction, Air  


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          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 EIR completed in 2002; an addendum was prepared  
          in 2012.  

          Meanwhile, the City of Oakland forged an agreement with two  
          private entities, California Capital and Investment Group (CCIG)  


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          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 was signed by Governor Gary Herbert on March 22,  

          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, unless an exemption  
          applies. Specifically:

          1)If the initial study shows there would not be a significant  


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            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  

          1)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  
            rail ? the terminal would also accommodate project cargo such  


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            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.

          2)How would this bill impact the Oakland project?  This bill  
            requires that when the next step of this project is reached,  
            the agency with discretionary approval of that step (e.g., the  
            local air district or the water board) will have to prepare or  
            commission a supplemental EIR.  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.  Because there has been no  
            movement by a local agency, for nearly a year, seeking to put  
            on record that potential coal shipment is new information that  
            should be analyzed, this bill seeks to clarify and ensure that  
            this issue gets addressed.

          3)Concerns.  The Pacific Merchant Shipping Association (PMSA)  
            has taken a position of "concern" on this bill, citing legal  
            concerns and noting that "all of these facilities in question  
            have already received their environmental clearances, mostly  
            through exceptionally thorough and highly-scrutinized EIR  
            processes ?"

          Related/Prior Legislation
          SB 1279 (Hancock, 2016) prohibits the CTC from programming or  
          allocating state funds for any port facility project in or  
          adjacent to one or more DACs which export or propose to export  
          coal from California.  

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

          According to the Senate Appropriations Committee: 

          Unknown significant costs, which could be state or local costs  
          depending on which public agency would have the next  
          discretionary authority over approving a project.  These costs  
          would be recovered by fees charged to the project proponent for  
          the cost of preparing the supplemental EIR.    


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          SUPPORT:   (Verified5/27/16)

          Alameda County Democratic Central Committee
          Berkeley Climate Action Coalition
          California Nurses Association
          Center for Environmental Health
          City of Berkeley
          City of Emeryville
          City of Richmond
          East Bay Regional Park District
          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 
          Physicians for Social Responsibility 
          Public Advocates
          San Francisco Baykeeper
          Save the Bay
          SEIU Local 1021
          Sierra Club California
          West Oakland Environmental Indicators Project
          350 Bay Area
          One individual

          OPPOSITION:   (Verified5/27/16)

          American Planning Association, California Chapter
          California Building Industry Association
          California Business Properties Association


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          California Capital and Investment Group
          California Chamber of Commerce
          California Manufacturers and Technology Association
          California Railroad Industry
          California Teamsters Public Affairs Council

          ARGUMENTS IN SUPPORT:  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 County.  

          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 disadvantaged  
          community (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.
          ARGUMENTS IN OPPOSITION:  The American Planning Association,  
          California Chapter, writing in opposition to 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 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."

          Prepared by:Erin Riches / T. & H. / (916) 651-4121


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          5/28/16 17:15:15

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