BILL ANALYSIS Ó SB 1277 Page 1 Date of Hearing: June 27, 2016 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Das Williams, Chair SB 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 SB 1277 Page 2 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. SB 1277 Page 3 COMMENTS: 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 measures. 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. SB 1277 Page 4 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 SB 1277 Page 5 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. SB 1277 Page 6 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 SB 1277 Page 7 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 Committee. REGISTERED SUPPORT / OPPOSITION: Support SB 1277 Page 8 350 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 SB 1277 Page 9 Ecology Center El Cerrito Democratic Club Environment California Fossil Fuel California inNative 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 Chapter Planning and Conservation League Public Advocates SB 1277 Page 10 San Francisco Baykeeper Service Employees International Union Local 1021 Sierra Club California West Oakland Environmental Indicators Project Opposition 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 SB 1277 Page 11 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) 319-2092