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
SB 1279
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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