BILL ANALYSIS                                                                                                                                                                                                    

                                                                    SB 1277

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          Date of Hearing:  June 27, 2016


                                 Das Williams, Chair

          1277 (Hancock) - As Amended April 4, 2016

          SENATE VOTE:  26-13

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

          SUMMARY:  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.  

          EXISTING LAW:   

          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). 

          2) Requires a lead agency or responsible agency to prepare a  


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             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.  

          3) 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 Trade  
             Corridor Improvement Fund (TCIF) for infrastructure  
             improvements along high-volume freight corridors.

          THIS BILL:
          1)Requires a public agency, before approving a project that is  
            necessary for, and directly related to, the use of the Bulk  
            and Oversized Terminal in the City of Oakland for the shipment  
            of coal, to prepare or cause to be prepared a supplemental EIR  
            to consider and mitigate the environmental impacts of coal  
            shipment through the terminal.

          2)Includes related findings and declarations.
          FISCAL EFFECT:  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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          1)CEQA background.  CEQA provides a process for evaluating the  
            environmental effects of applicable projects undertaken or  
            approved by public agencies.  If a project is not exempt from  
            CEQA, an initial study is prepared to determine whether the  
            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, 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.  If mitigation measures are required or  
            incorporated into a project, the agency must adopt a reporting  
            or monitoring program to ensure compliance with those  

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

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

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


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

          1)Oakland Bulk and Oversize Terminal 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.

            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  


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            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 Utah  
            Governor Gary Herbert.  


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            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. 

          2)Author's statement:

          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 --  
          cancer, heart disease, asthma and other ailments.  Coal puts  
          residents and workers at risk, and defeats efforts to ensure a  
          clean and healthy environment.   Coal dust is a source of  
          particulate matter that is dangerous to breathe and is also  
          responsible for most occupational lung disease due to airborne  
          particulate.  West Oakland is already heavily impacted by  
          pollution.  Residents are 2.5 times 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.  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 City of Oakland was awarded $176 million from the CTC via  
          the Trade Corridor Improvement Fund (TCIF) for site preparation  
          and infrastructure redevelopment of the former Oakland Army  
          Base.  The initial redevelopment project proposal provided to  
          the CTC, did not include the potential for the transportation  
          and export of coal, nor was the initial EIR done with the use of  
          a coal export facility examined.  However, the current proposal  


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          plans to transport 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 other  
          countries.  West Oakland, the location of the development  
          project, is designated by the CalEnviroScreen as being a  
          disadvantaged community due to its high asthma rates, cancer  
          risks, and pollution levels.  This proposal to transport  
          approximately 10 million tons of coal is not in accordance with  
          Proposition 1B and contradicts California's efforts in reducing  
          climate change.   Further, this development would be the largest  
          export facility on the west coast of the United States.

          When the EIR was prepared by the City of Oakland for the bulk  
          and oversized terminal, coal was not considered as a commodity  
          that would be shipped through the terminal.  This constitutes a  
          change to the project and could not have been know at the time  
          the EIR was certified as complete.  There needs to be further  
          review done to review the impacts of a coal terminal.

          3)Related legislation.  SB 1279 (Hancock) prohibits the  
            California Transportation Commission (CTC) from programming or  
            allocating any state funds, including proceeds from the sale  
            of general obligation bonds, under its jurisdiction for any  
            new bulk coal terminal project proposed on or after January 1,  
            2017.  SB 1279 is pending in the Assembly Transportation  




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          350 Bay Area

          Alameda County Board of Supervisors

          Alameda County Democratic Party

          Asian Pacific Environmental Network

          Berkeley Climate Action Coalition

          California League of Conservation Voters

          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


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          Ecology Center

          El Cerrito Democratic Club

          Environment California

          Fossil Fuel California


          International Longshore and Warehouse Union, Northern California  
          District Council

          No Coal in Oakland

          Oakland Unified School District Board

          Peace, Earthcare and Social Witness Committee

          Physicians for Social Responsibility, San Francisco Bay Area  

          Planning and Conservation League

          Public Advocates


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          San Francisco Baykeeper

          Service Employees International Union Local 1021

          Sierra Club California

          West Oakland Environmental Indicators Project


          American Planning Association, California Chapter

          BNSF Railway Company

          California Building Industry Association

          California Business Properties Association

          California Capital and Investment Group

          California Chamber of Commerce

          California Manufacturers and Technology Association


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          California Short Line Railroad Association

          California Teamsters Public Affairs Council

          California Trade Coalition

          Union Pacific Railroad Company

          Ventura County Railroad

          Analysis Prepared by:Lawrence Lingbloom / NAT. RES. / (916)