BILL ANALYSIS Ó
SB 1279
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Date of Hearing: June 27, 2016
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jim Frazier, Chair
SB
1279 (Hancock) - As Amended June 20, 2016
SENATE VOTE: 26-12
SUBJECT: California Transportation Commission: funding
prohibition: coal shipment
SUMMARY: Prohibits the California Transportation Commission
(CTC) from programming or allocating state funds for bulk coal
terminal projects, and requires terminal project grantees under
specific conditions, to annually report to CTC that the project
is not being used to handle, store, or transport bulk coal.
Specifically, this bill:
1)Makes findings and declarations with regard to impacts
associated with the transportation and use of coal.
2)Declares the intent of the Legislature to cease all
investments in transportation infrastructure projects that
store, transfer, or transport significant quantities of bulk
coal.
3)Prohibits CTC, to the extent consistent with federal law, from
programming or allocating state funds, including bond
proceeds, for new bulk coal terminal projects proposed on or
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after January 1, 2017.
4)Requires CTC to evaluate each new terminal project to
determine whether or not the purpose or intent of the project
is to increase the state's overall capacity to facilitate the
transport of bulk coal based on a review of the completed
California Environmental Quality Act (CEQA) documents and
written confirmation from the lead agency of the project.
5)Requires a terminal project grantee identified by CTC as
subject to this section to annually notify the CTC that the
project is not being used to handle, store, or transport bulk
coal.
6)Provides that the prohibition for funding bulk coal terminals
does not apply to infrastructure already permitted as of
January 1, 2016.
7)Defines a "new bulk coal terminal" as a terminal that stores,
handles, or transports coal in bulk to a degree or
significance that is categorized as having the potential for
significant impacts in an environmental document prepared
pursuant to CEQA as a result of the storage, handling, or
transport of coal in bulk.
8)Provides that a "new bulk coal terminal" does not include a
project that is designed for safety, rehabilitation,
congestion reduction, modernization, maintenance, or repair of
an existing operation or facility, including rail terminals,
railyards, rail facilities, rail infrastructure, and rail
right-of-way.
9)Provides that a terminal project does not include a project
that is designed for safety, rehabilitation, congestion
reduction, modernization, maintenance, or repair of an
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existing operation or facility, including rail terminals,
railyards, rail facilities, rail infrastructure, and rail
right-of-way.
EXISTING LAW:
1)Establishes CTC consisting of 11 voting members and two
non-voting ex-officio members.
2)Vests the CTC with the responsibility for programming and
allocating funds for the construction of highway, passenger
rail, and transit improvements throughout California.
3)Vests CTC with responsibility to advise and assist the
Secretary of the California State Transportation Agency and
the Legislature in formulating and evaluating state policies
and plans for California's transportation programs.
4)Requires CTC to submit to the Legislature an annual report
that, among other things, identifies timely and relevant
transportation issues facing California and that may include a
discussion of any significant upcoming transportation issues
anticipated to be of concern to the public and the
Legislature.
5)Assigns to the CTCs the responsibility of advising and
assisting the Administration and the Legislature in
formulating and evaluating state policies and plans for
California's transportation programs. A large part of this
responsibility currently includes approving various
transportation programs funded by state and federal funds and
proposed by both the state and regional transportation
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planning entities.
6)Enacts, pursuant to the passage of Proposition 1B (Prop. 1B),
the Highway Safety, Traffic Reduction, Air Quality, and Port
Security Bond Act of 2006 that authorized $19.9 billion in
general obligation bonds to fund a variety of transportation
projects.
7)Established the Trade Corridor Improvement Fund (TCIF)
following the passage of Prop. 1B to distribute $2 billion of
Prop. 1B bond funds by the CTC in accordance with established
criteria for infrastructure improvements along federally
designated "Trade Corridors of National Significance" or along
other corridors with high volumes of freight movement.
FISCAL EFFECT: Unknown
COMMENTS: Coal is a material composed primarily of carbon that
has been burned throughout history to produce heat and, in more
modern times, to generate electricity. Burning coal also
produces a significant amount of pollution which adversely
affects human health and the environment. Health effects
include lung cancer, stroke, and heart disease while the
environmental effects include the release of carbon into the
atmosphere which contributes to climate change. Breathing coal
dust is also known to cause "black-lung," and it is estimated
that in the United States approximately 1,500 former employees
of the coal industry die every year from the effects of
breathing coal mine dust.
Background: After the Oakland Army Base closed in 1999, part of
the property reverted to the City of Oakland, while another
portion was transferred to the Port of Oakland (Port). The
following year, the Oakland City Council designated the base and
surrounding properties as a redevelopment project area and in
2009, the Port of Oakland secured TCIF funding for a project to
develop warehouse space, logistics facilities, and a rail
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terminal on the site. By diverting freight from trucks to
trains, the new rail terminal complex was expected to reduce
diesel 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 to significantly expand 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 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.
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's Governor signed legislation that would
contribute $53 million in transportation funds towards the
construction of the new Oakland cargo terminal. To fund the
Oakland project, Utah proposed to use state tax revenue and then
reimburse the state with federal royalties from federal mineral
leases. Under the agreement, Utah would have access to overseas
markets for shipped products and commodities, such as coal, in
exchange for a $53 million investment in OBOT.
In total, the CTC has allocated $242 million in TCIF funds for
the bulk terminal portion of the project, specifically, for the
construction of a proposed intermodal rail terminal complex that
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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, nor
did the applicant disclose or commit to, exactly what commodity
or commodities would be transported through the OBOT. To date,
all of the TCIF funding has been allocated and the projects
utilizing TCIF funds are nearly completed.
Author's statement: According to the author, the project
proposal submitted to CTC along with the application for TCIF
funds did not disclose that the OBOT would involve the transport
and export of coal. In fact, the author points out that the
TCIF application, when referencing 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 author contends that while the TCIF application did not
specifically require that the applicant to disclose, or commit
to, exactly what commodity or commodities would be transported
through the terminal, it is her belief that had the information
been provided to CTC with regard to plans for coal transport,
the project would likely not have qualified for TCIF funds given
that Prop 1B, as its name implies "The Highway Safety, Traffic
Reduction, Air Quality, and Port Security Bond Act of 2006", was
explicitly intended to result in air quality improvements.
To address this issue and to memorialize that state
transportation infrastructure funding should not be expended for
projects that move significant quantities of bulk coal, the
author introduced SB 1279 which would prohibit the CTC from
programming or allocating state funds, to the extent that it is
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consistent with federal law, for new bulk coal terminals
proposed after January 1, 2017. This bill would also require
that CTC evaluate each new bulk terminal project that comes
before it for transportation funding to determine whether or not
the project would increase the state's ability to transport bulk
coal and if not, that any bulk terminal grantees be required to
continually submit information to the CTC to ensure that future
movement of coal is not undertaken. This bill also declares the
Legislature's intent to cease all investments in transportation
infrastructure projects that store, transfer, or transport
significant quantities of bulk coal.
Provisions that prohibit the programming or allocation of funds
for new bulk terminal projects that transfer coal does not apply
to infrastructure that is permitted as of January 1, 2016,
appear to exempt the OBO; however, if for some reason the
project were to be subject to this legislation, it is unlikely
that it would have a substantial impact on the construction of
projects currently funded using TCIF monies given that these
projects are largely completed. (The portions of the OBOT that
received TCIF funding include construction of a proposed
intermodal rail terminal complex, marine terminal improvements,
and a grade separation connection between the intermodal and
marine terminal.)
Writing in support of SB 1279, the California Nurses Association
notes that coal presents a clear health risk to workers and
communities at every state of its lifecycle, and they note that
coal pollutants affects all major body organ systems and
contributes to four of the five leading causes of mortality in
the United States. They also point out that burning coal is
responsible for one third of the carbon emissions in the United
States and is the primary contributor to climate change. For
these reasons, CNA believes it is vital that local and state
governments do everything possible to reduce and prevent the
transport and use of heavily polluting fossil fuels such as
coal.
While organizations such as the Pacific Merchant Shipping
Association and the California Railroads have removed their
opposition, the League of California Cities (League) remains
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opposed to SB 1279 noting that California's ports are some of
the busiest in the world and make a critical contribution to the
global economy. The League appropriately contends that a
blanket prohibition on allocating state funds because it
facilitates the transport of a specific commodity would set a
concerning precedent and potentially result in the unintended
consequence of making critical infrastructure projects of
statewide significance ineligible for public funds.
While this bill's effect is largely symbolic (in that it is
unlikely to impact an existing project), the bill does serve to
emphasize California's commitment to policies on climate change
and health by ensuring that the state's funding practices are in
alignment with its important state policy objectives. In fact,
the Legislature has a history of taking this stand on
investments relative to climate change policies with the recent
passage of SB 185 [(de León), Chapter 605, Statutes of 2015)
which prohibited the California Public Employees' Retirement
System (CalPERS) and California State Teachers' Retirement
System (CalSTRS) from investing in thermal coal companies along
with the call of California's Insurance Commissioner earlier
this year asking that the insurance industry divest its
interests in coal.
Related legislation: SB 1277 (Hancock), requires a public
agency with discretionary authority over the OBOT project to
prepare or cause to be prepared a supplemental Environmental
Impact Report to consider and mitigate the shipment of coal
through the terminal. SB 1277 is scheduled to be heard by the
Assembly Natural Resources Committee on June 27, 2016.
Previous legislation: SB 185 (de León), Chapter 605, Statutes
of 2015, prohibits CalPERS and CalSTRS from investing in thermal
coal companies, as specified.
REGISTERED SUPPORT / OPPOSITION:
SB 1279
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Support
Alameda County Board of Supervisors
Alameda County Democratic Central Committee
Asian Pacific Environmental Network
Berkley 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 in California
InNative
No Coal in Oakland
Northern California District Council of the International
Longshore and Warehouse Union
Oakland Unified School District
Physicians for Social Responsibility, San Francisco Bay Chapter
Public Advocates
Redlands Area Democratic Club
San Francisco Baykeeper
Save the Bay
Service Employees International Union, Local 1021
Sierra Club California
The Peace, Earthcare and Social Witness Committee
West Oakland Environmental Indicators Project
350 Bay Area
1 Individual
Opposition
League of California Cities
California Teamsters Public Affairs Council
California Trade Coalition
SB 1279
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Analysis Prepared by:Victoria Alvarez / TRANS. / (916)
319-2093