BILL ANALYSIS Ó
SB 1279
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SENATE THIRD READING
SB
1279 (Hancock)
As Amended August 4, 2016
Majority vote
SENATE VOTE: 26-12
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Transportation |10-5 |Frazier, Baker, |Linder, Kim, |
| | |Bloom, Brown, Chu, |Mathis, Melendez, |
| | |Daly, Dodd, |O'Donnell |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gomez, Nazarian | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |14-6 |Gonzalez, Bloom, |Bigelow, Chang, |
| | |Bonilla, Bonta, |Gallagher, Jones, |
| | |Calderon, Daly, |Obernolte, Wagner |
| | |Eggman, Eduardo | |
| | |Garcia, Holden, | |
| | |Quirk, Santiago, | |
| | |Weber, Wood, Chau | |
| | | | |
SB 1279
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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
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
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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
existing operation or facility, including rail terminals,
railyards, rail facilities, rail infrastructure, and rail
right-of-way.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, any costs to the CTC will be minor and absorbable.
COMMENTS: 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
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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 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 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 (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
United States (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
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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
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."
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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 this bill, which would prohibit the CTC from
programming or allocating state funds, to the extent that it is
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
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intermodal rail terminal complex, marine terminal improvements,
and a grade separation connection between the intermodal and
marine terminal.)
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.
Please see the policy committee analysis for full discussion of
this bill.
Analysis Prepared by:
Victoria Alvarez / TRANS. / (916) 319-2093 FN:
0003864
SB 1279
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