BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: SB 1279 Hearing Date: 4/19/2016
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|Author: |Hancock |
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|Version: |4/4/2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Erin Riches |
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SUBJECT: California Transportation Commission: funding
prohibition: coal shipment
DIGEST: This bill prohibits the California Transportation
Commission (CTC) from programming or allocating funds for any
port facility project located in or adjacent to a disadvantaged
community which exports or proposes to export coal from
California.
ANALYSIS:
AB 32 and disadvantaged communities
AB 32 (Núñez and Pavley, Chapter 488, Statutes of 2006) requires
the state Air Resources Board (ARB) develop a plan to reduce
emissions to 1990 levels by 2020. It also requires ARB to
ensure that programs reduce greenhouse gas (GHG) emissions are
targeted, to the extent feasible, to the most disadvantaged
communities (DACs) in the state. AB 32 authorizes ARB to
deposit any fees paid by GHG emission sources into the
Greenhouse Gas Reduction Fund (GGRF).
SB 535 (De León, Chapter 830, Statutes of 2012) requires 25% of
GGRF funds to be allocated to projects that provide benefits to
DACs, and at least 10% to projects located within DACs. DACs
have been identified by the California Environmental Protection
Agency using census tract data based on geographic,
socioeconomic, public health, and environmental hazard criteria.
SB 1279 (Hancock) Page 2 of ?
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 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 particulate matter (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 forged an agreement with two private
entities, California Capital and Investment Group (CCIG) 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
SB 1279 (Hancock) Page 3 of ?
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 exchange
for investing in the bulk terminal, Utah hoped to secure the
right to ship a fixed amount of cargo through it each year. 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, this deal. The legislation passed
by a wide margin and was signed by Utah Governor Gary Herbert.
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.
This bill prohibits the CTC from programming or allocating any
state funds under its jurisdiction for any project at a port
facility located in or adjacent to one or more DACs, that
exports or proposes to export coal from the state.
COMMENTS:
1)Purpose. 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,
SB 1279 (Hancock) Page 4 of ?
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.
2)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
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.
3)How would this bill impact the Oakland project? TCIF requires
at least a 50% match from local, federal, or private sources.
By prohibiting transport of coal through the Port, this bill
would effectively eliminate $53 million worth of matching
funds. Forcing the project developers to find an alternative
funding source potentially poses the risk of delaying the
project. On the other hand, allowing the shipment of coal
through the bulk terminal could conflict with AB 32 goals to
reduce GHG emissions.
4)How might this bill impact other ports? This bill applies to
ports in or adjacent to one or more DACs. The state of Utah
currently exports about 1 million tons of coal each year,
mainly through the ports of Richmond, Stockton, and Long
Beach. The committee understands that the Port of Stockton is
located in a DAC, while the ports of Long Beach and Richmond
are located in or near DACs; thus, this bill could potentially
prohibit any more public funding from being allocated to these
ports. The ports of Los Angeles and West Sacramento are
located in DACs, but the committee is not aware that coal is
currently being shipped through these ports.
5)Opposition concerns. The California Teamsters Public Affairs
SB 1279 (Hancock) Page 5 of ?
Council, writing in opposition to the February 19 version of
this bill, stated that "It should be up to the countries that
import fuels to determine whether they wish to ban a product."
The California Railroad Industry, writing in opposition to
the current version of this bill, states that because it
applies to every port in California and therefore appears to
restrict coal exports statewide, it appears to violate both
U.S. treaty obligations and the Commerce Clause.
In response, the author states that Legislative Counsel
indicates that this bill would only place restrictions on
funding, not commodities; furthermore, these restrictions
would only be on public funding, with no impact on private
funding. In addition, this bill would only affect other ports
in California if they have received public funding. To help
address opposition concerns, the author amended this bill on
March 30 to clarify that it will be implemented only to the
extent it is consistent with federal law. In addition, the
author amended this bill on April 4 to change "public funds"
to "state funds" to avoid any potential conflict with federal
or local funds.
6)Other stakeholder concerns. The Pacific Merchant Shipping
Association (PMSA) has taken a position of "concern" on this
bill. PMSA states that the bill package (SB 1277-1280) raises
a variety of operational questions and legal hurdles. In
particular, "to the extent these bills propose to eliminate
all public funding for existing facilities because one
commodity was transferred across the dock, they will result in
unnecessarily painful, and extremely disruptive, results if
imposed on existing ports and marine terminals."
7)Second hearing. Testimony, but no vote, was taken on this
bill in this committee on April 12. At that hearing, the
author pledged to work with concerned stakeholders, including
PMSA and the California Association of Port Authorities, on
amendments to address their concerns. The committee had not
yet received any draft amendments as of the morning of April
14.
Related Legislation:
SB 1277 (Hancock) - 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
SB 1279 (Hancock) Page 6 of ?
cause to be prepared a supplemental EIR to consider and mitigate
the shipment of coal through the terminal. This bill was passed
by this committee on April 12 and will be heard in the Senate
Environmental Quality Committee on April 20.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
April 13, 2016.)
SUPPORT:
Alameda County Democratic Central Committee
Berkley Climate Action Coalition
California Nurses Association
City of Berkeley
City of Emeryville
City of Richmond
East Bay Young Democrats
Ecology Center
El Cerrito Democratic Club
Environment California
Fossil Free California
Friends Committee on Legislation
inNative
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
Meeting
Physicians for Social Responsibility
Public Advocates
San Francisco Baykeeper
SEIU Local 1021
Sierra Club California
West Oakland Environmental Indicators Project
One individual
OPPOSITION:
SB 1279 (Hancock) Page 7 of ?
California Capital and Investment Group
California Railroad Industry
California Teamsters Public Affairs Council
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