BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 1279 (Hancock) - California Transportation Commission:
funding prohibition: coal shipment
-----------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
| | |
|Version: April 26, 2016 |Policy Vote: T. & H. 8 - 3 |
| | |
|--------------------------------+--------------------------------|
| | |
|Urgency: No |Mandate: No |
| | |
|--------------------------------+--------------------------------|
| | |
|Hearing Date: May 16, 2016 |Consultant: Mark McKenzie |
| | |
-----------------------------------------------------------------
This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 1279 would prohibit the California Transportation
Commission (CTC) from programming or allocating state funds for
proposed projects at certain port facilities that are involved
in the handling, storage, or transportation of coal. The bill
would also require the CTC to evaluate every project it
considers to determine whether it will increase the state's
capacity to facilitate the transportation of coal.
Fiscal
Impact:
CTC costs of $413,000 annually for two new positions to
conduct additional project evaluations to determine the impact
on the state's capacity to transport coal. (State Highway
Account)
Minor CTC costs to adopt guidelines prohibiting programming
and allocation of state funds for port facility projects.
SB 1279 (Hancock) Page 1 of
?
(State Highway Account)
Background: Existing law establishes the CTC, which consists of 11 voting
members and two non-voting ex officio members. The CTC is
responsible for programming and allocating funds for the
construction of highway, passenger rail, and transit
improvements throughout California.
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, including $2 billion
for Transportation Corridor Improvement Fund (TCIF) projects.
The TCIF is a program designed to improve freight movement along
trade high-volume trade corridors while reducing diesel
particulate and other pollution emissions. The CTC evaluates
TCIF applications based on certain factors and projected
outcomes, including increased speed of freight traffic; relief
for freight system bottlenecks; and reduction of local and
regional emissions of diesel particulate matter, carbon dioxide,
oxides of nitrogen, and other pollutants.
After the Oakland Army Base 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. 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
Oakland Bulk and Oversized Terminal, or OBOT). The Port
obtained federal transportation grant funding, as well as
additional TCIF funds. Meanwhile, the City of Oakland forged an
SB 1279 (Hancock) Page 2 of
?
agreement with two private entities, California Capital and
Investment Group (CCIG) and Prologis, to develop the site and
find 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
environmental documents for the project. CCIG executed a
contract with Terminal Logistics Solutions (TLS) as a long-term
lessee that would also manage an existing track network.
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.
In early 2016, Utah Governor Gary Herbert signed legislation
that would contribute $53 million in Utah transportation funds
towards the construction of the new Oakland cargo terminal. To
fund the Oakland project, Utah would use state tax revenue and
then reimburse the state with federal royalties from federal
mineral leases. TLS is looking to partner with four Utah
counties to export commodities including coal, which would
provide four million to five million tons of annual shipping
capacity and access to overseas markets in exchange for a $53
million investment in OBOT. TLS has yet to exercise its option
to develop the terminal.
In total, the CTC has allocated $242 million in TCIF funds for
the bulk terminal portion of the project. The TCIF funding is
for construction of a proposed intermodal rail terminal complex
that will provide a high-density, green intermodal terminal,
trade and logistics facilities, marine terminal improvements,
and a grade separation connection between intermodal and marine
terminals. The Port of Oakland's 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
SB 1279 (Hancock) Page 3 of
?
applicant to disclose, or commit to, exactly what commodity or
commodities would be transported through the terminal.
Proposed Law:
To the extent consistent with federal law, SB 1279 would
prohibit the CTC from programming or allocating any state funds,
including the proceeds of bonds, for any project proposed on or
after January 1, 2017 at a port facility that is located in or
adjacent to a disadvantaged community and that proposes to allow
or facilitate the handling, storage, or transportation of coal
in bulk.
The bill would also require the CTC to evaluate each project it
considers for consistency with these requirements and determine
whether the project would increase the state's overall capacity
to facilitate the transportation of coal.
The bill's requirements would not apply to projects or
infrastructure permitted in operation as of January 1, 2016, or
to projects designed for safety, rehabilitation, modernization,
maintenance, or repair of an existing operation or facility.
Related
Legislation: SB 1277 (Hancock), which is also scheduled for
today's hearing of the Senate Appropriations Committee, would
require a public agency with discretionary authority over a
proposed project that is necessary for the shipment of coal at
the OBOT to prepare a supplemental environmental impact report
to consider and mitigate the environmental impacts of coal
shipments.
Staff
Comments: According to the Senate Environmental Quality
Committee's analysis of SB 1277:
"Coal dust is a fine powdered form of coal, which is
created by the crushing, grinding, or pulverizing of coal.
Because of the brittle nature of coal, coal dust can be
created during mining, transportation, or by mechanically
handling coal. Also, not all coal is created equally -
SB 1279 (Hancock) Page 4 of
?
some types break down into dust more easily than others.
Particulate matter from the transportation of coal can
impact air quality, and severe exposure to coal dust can
cause various pulmonary diseases. In addition, questions
may arise regarding potential environmental impacts caused
by chronic, low-level input of coal dust that may result
from steady coal shipment traffic."
This bill seeks to limit the dedication of state funding for
projects that facilitate the handling, storage, or
transportation of coal because of the potential environmental
and air quality impacts. Specifically, the bill prospectively
prohibits the CTC from programming or allocating state funds for
projects at ports located in the vicinity of disadvantaged
communities for those proposed purposes. The CTC indicates that
it would adopt guidelines to prohibit the allocation of state
funds for any project at port facilities since there is no way
to feasibly determine that a port project may at some point
allow or facilitate the handling, storage, or transportation of
coal. The costs to adopt those guidelines would be minor and
absorbable.
SB 1279 would also require the CTC to evaluate every project it
considers (not just port projects) to determine whether or not
the proposed project would increase the state's overall capacity
to facilitate the transportation of coal. Staff notes that the
CTC annually considers approximately 250 projects under the
State Highway Operation and Protection Program (SHOPP), 175
projects under the State Transportation Improvement Program
(STIP), 200 projects under the Active Transportation Program
(ATP), as well as hundreds of projects that are included in
lump-sum allocations to regional transportation partners. The
CTC estimates that evaluating hundreds of projects each year to
determine whether they would facilitate coal transportation
would require two additional staff positions at a cost of
approximately $413,000 annually.
-- END --
SB 1279 (Hancock) Page 5 of
?