BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1279  


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          Date of Hearing:  August 3, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 1279  
          (Hancock) - As Amended June 20, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill prohibits state funding for future bulk coal terminal  
          projects. Specifically, this bill: 


          1)Prohibits the California Transportation Commission (CTC), to  
            the extent consistent with federal law, from programming or  
            allocating state funds for new bulk coal terminal projects, as  
            defined and proposed on or after January 1, 2017.


          2)Requires CTC to evaluate each new terminal project to  
            determine whether the purpose of the project is to increase  








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            the state's 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  
            project's lead agency.


          3)Requires a terminal project grantee to annually notify the CTC  
            that the project is not being used to handle, store, or  
            transport bulk coal.


          4)Provides that the prohibition for funding bulk coal terminals  
            does not apply to infrastructure permitted as of January 1,  
            2016.


          FISCAL EFFECT:


          Any costs to the CTC will be minor and absorbable.


          COMMENTS:


          1)Background. The burning of coal produces a significant amount  
            of pollution which adversely affects human health and the  
            environment. The Legislature's policies addressing climate  
            change include SB 1368 (Perata), Chapter 598, Statutes of  
            2006, which had the effect of preventing the state's electric  
            utilities from entering into or renewing contracts for  
            coal-fire electricity generation, and SB 185 (de León),  
            Chapter 605, Statutes of 2015, which prohibits the California  
            Public Employees' Retirement System (CalPERS) and California  
            State Teachers' Retirement System (CalSTRS) from investing in  
            thermal coal companies.











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            The CTC has allocated $242 million in general obligation bonds  
            from the Trade Corridor Improvement Fund (TCIF) for the  
            Oakland Bulk and Oversized Terminal Project (OBOT), which has  
            also received federal transportation grant funding. This  
            project at the Port of Oakland involves construction of an  
            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.  






            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. 





          2)Purpose. 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. The author contends that, while such a  
            disclosure was not required as part of the TCIF application,  
            it is her belief that, had the information been provided to  
            CTC with regard to plans for coal transport, the project  
            likely would not have qualified for TCIF bond funds given that  
            the authorizing  bond measure, "The Highway Safety, Traffic  
            Reduction, Air Quality, and Port Security Bond Act of 2006",  








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            was explicitly intended to result in air quality improvements.

            To address this issue going forward, and to memorialize that  
            state transportation infrastructure funding should not be  
            expended for projects that move significant quantities of bulk  
            coal, SB 1279 prohibits the CTC from programming or allocating  
            state funds, to the extent consistent with federal law, for  
            new bulk coal terminals proposed after January 1, 2017.  

          3)Opposition. The League of California Cities argues 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.

          Analysis Prepared by:Chuck Nicol / APPR. / (916)  
          319-2081