BILL ANALYSIS                                                                                                                                                                                                    



                                                                    SB 1277  


                                                                    Page  1





          Date of Hearing:  August 3, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 1277  
          (Hancock) - As Amended April 4, 2016


           ----------------------------------------------------------------- 
          |Policy       |Natural Resources              |Vote:|6 - 3        |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
           ----------------------------------------------------------------- 


          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


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


          This bill also states legislative findings and declarations  
          including that during the consideration of the EIR, coal was not  
          considered as a commodity that would be shipped through the  








                                                                    SB 1277  


                                                                    Page  2





          terminal.


          FISCAL EFFECT:


          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.   





          The duty to prepare a supplemental EIR could fall to any one of  
          several public entities that may have permitting authority over  
          a project, including the City of Oakland, the Bay Area Air  
          Quality Management District (BAAQMD), the San Francisco Bay  
          Conservation and Development Commission (BCDC), or other public  
          agency.  


          To the extent the responsibility falls to a state entity, there  
          would be significant state costs, and potential impacts  
          particularly if the agency has no expertise in considering  
          environmental issues that fall outside of its purview.  These  
          costs would eventually be recovered by fees charged to the  
          project proponent, but the responsible agency could experience  
          significant workload disruptions and incur secondary fiscal  
          impacts.


          COMMENTS:


          1)Purpose.  According to the author:









                                                                    SB 1277  


                                                                    Page  3






            "Most recently, the City of Oakland has adopted a zoning  
            ordinance to amend the Oakland Municipal Code and to prohibit  
            the storage and handling of coal and coke at bulk material  
            facilities or terminals throughout the City of Oakland. The  
            City's zoning ordinance comes as a result of a proposed  
            project at the former Oakland Army Base that 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 other overseas countries.  If  
            built, it will be nearly four times larger than any coal  
            export terminal in the West Coast.


            Although the zoning ordinance was adopted, it does not stop  
            the coal export terminal from being built. The project  
            developer has publicly advised that he will enter litigation  
            and sue the City of Oakland for breach of contract and  
            violation of his vested rights. If litigation takes place, and  
            the developer is victorious in court, he can move on with the  
            coal export facility and not have to do an Environmental  
            Impact Report (EIR). The City's zoning ordinance adopts CEQA  
            exemption findings and relies on the previously certified 2002  
            and 2012 EIRs; both EIRs did not analyze the impact of the  
            coal export facility." 


          2)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 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.
            CEQA also requires a lead agency or responsible agency to  
            prepare a subsequent or supplemental EIR if one or more of the  








                                                                    SB 1277  


                                                                    Page  4





            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.


             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)The Oakland Bulk and Oversized Terminal (OBOT) and coal.   
            After the Oakland Army Base was closed was closed in 1999,  
            part of the property reverted to the City of Oakland, while  
            another portion was transferred to the Port of Oakland.  The  
            following year, the Oakland City Council designated the base  
            and surrounding properties as a redevelopment project area,  
            and the City of Oakland prepared an EIR in 2002 related to  
            proposed development in the project area.  In 2009, the Port  
            of Oakland secured state transportation bond funding for a  
            project to develop warehouse space, logistics facilities, and  
            a rail terminal on the site.  


            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  
            (OBOT).  The expansion required an update to the original EIR  
            that was completed in 2002, and the City prepared an addendum  
            in 2012.  









                                                                    SB 1277  


                                                                    Page  5







            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 proposed  
            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. 



            On July 19, 2016,  the Oakland City Council adopted an  
            Ordinance to prohibit the storage and handling of coal and  
            coke at bulk material facilities or terminals throughout the  
            City of Oakland and declaring the ordinance exempt from CEQA.

          2)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 also on today's calendar.





          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081















                                                                    SB 1277  


                                                                    Page  6