BILL ANALYSIS Ó
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|RULES COMMITTEE | SB 1279|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 1279
Author: Hancock (D)
Amended: 5/31/16
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE: 8-3, 4/19/16
AYES: Beall, Allen, Galgiani, Leyva, McGuire, Mendoza, Roth,
Wieckowski
NOES: Cannella, Bates, Gaines
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NOES: Bates, Nielsen
SUBJECT: California Transportation Commission: funding
prohibition: coal shipment
SOURCE: Author
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 proposes to allow or facilitate the handling,
storage, or transportation of coal in bulk.
ANALYSIS:
Existing law:
1)Establishes the CTC, which consists of 11 voting members and
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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.
2)Enacts, pursuant to Proposition 1B (Prop. 1B), enacts the
Highway Safety, Traffic Reduction, Air Quality, and Port
Security Bond Act of 2006 and authorizes $19.9 billion in
general obligation bonds to fund a variety of transportation
projects. (Government Code §8879.22 et seq.)
This bill:
1)Prohibits the CTC from programming or allocating any state
funds under its jurisdiction for any project proposed on or
after January 1, 2017, that proposes to allow or facilitate
the handling, storage, or transportation of coal in bulk for
any project at a port facility located in or adjacent to one
or more disadvantaged communities (DACs).
2)Requires the CTC to determine whether or not a project's
purpose or intent is increase the state's overall capacity to
facilitate the transportation of coal, based on a review of
completed environmental documents and written confirmation
from the lead agency on the project.
3)Requires a recipient of funds allocated by the CTC to annually
notify the CTC that the project is not being used to handle,
store, or transport coal in bulk.
4)Excludes projects or infrastructure at port facilities that
were already permitted in operation as of January 1, 2016, as
well as those designed for safety, rehabilitation, congestion
reduction, modernization, maintenance, or repair of an
existing operation or facility, including rail terminals,
yards, facilities, infrastructure, and right-of-way.
Background
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
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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
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
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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 Governor Gary Herbert on
March 22, 2016.
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.
Comments
1)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.
2)How might this bill impact the Oakland project? TCIF requires
at least a 50% match from local, federal, or private sources.
As currently written, this bill excludes projects that were
already permitted in operation as of January 1, 2016 and thus
would likely not threaten the $53 million worth of matching
funds for Oakland project.
3)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
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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.
4)Recent amendments. To help address opposition concerns, the
author amended this bill in the Appropriations Committee to
require the CTC, instead of evaluating the project in relation
to transportation of coal, to review completed environmental
documents and written confirmation from the project's lead
agency; require fund recipients to annually report to the CTC
that the funds are not being used in relation to coal in bulk;
and to clarify exemptions from this bill. The California
Railroad Industry indicated on May 9 that it would remove its
opposition if the amendment was taken to exempt rail
terminals, yards, and facilities; this amendment was taken in
Appropriations Committee.
Related/Prior Legislation
SB 1277 (Hancock, 2016) 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 EIR to consider and mitigate
the shipment of coal through the terminal.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
1)Minor CTC costs to adopt guidelines prohibiting programming
and allocation of state funds for port facility projects.
(State Highway Account)
2)Likely minor CTC costs to determine consistency with specified
requirements and also whether or not an applicable project at
a port facility near a disadvantaged community is intended to
increase overall capacity to facilitate coal transportation.
SUPPORT: (Verified5/27/16)
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Alameda County Democratic Central Committee
Berkeley Climate Action Coalition
California Interfaith Power and Light
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
Save the Bay
SEIU Local 1021
Sierra Club California
West Oakland Environmental Indicators Project
350 Bay Area
One individual
OPPOSITION: (Verified5/27/16)
California Capital and Investment Group
California Railroad Industry
California Teamsters Public Affairs Council
California Trade Coalition
League of California Cities
Pacific Merchant Shipping Association
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ARGUMENTS IN SUPPORT: 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, 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.
ARGUMENTS IN OPPOSITION: Opponents raise a variety of concerns
about this bill, including the possibility that it might violate
U.S. treaty obligations and the Commerce Clause; concerns about
the legal implications of singling out port infrastructure; the
potential impact on existing business relationships and
operations; and singling out a single commodity.
Prepared by:Erin Riches / T. & H. / (916) 651-4121
5/31/16 20:45:39
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