BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1279|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 1279
Author: Hancock (D)
Amended: 8/4/16
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
SENATE FLOOR: 26-12, 6/2/16
AYES: Allen, Beall, Block, De León, Galgiani, Glazer, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara,
Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan,
Pavley, Roth, Wieckowski, Wolk
NOES: Anderson, Bates, Berryhill, Cannella, Fuller, Gaines,
Huff, Moorlach, Morrell, Nguyen, Nielsen, Stone
NO VOTE RECORDED: Runner, Vidak
ASSEMBLY FLOOR: 50-26, 8/22/16 - See last page for vote
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
new bulk-coal terminal project proposed on or after January 1,
SB 1279
Page 2
2017.
Assembly Amendments expand the scope of this bill to any
terminal project before the CTC (rather than only projects
located in or adjacent to disadvantaged communities) and clarify
the definitions of "new bulk-coal terminal" and "terminal
project."
ANALYSIS:
Existing law:
1)Establishes the CTC, which consists of 11 voting members and
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), 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.
This bill:
1)Prohibits the CTC from programming or allocating any state
funds under its jurisdiction, including general obligation
bond revenues, for any new bulk-coal terminal project proposed
on or after January 1, 2017.
2)Requires the CTC to evaluate each new terminal project before
it to determine whether its purpose or intent is to increase
the state's overall capacity to facilitate the transportation
of coal in bulk, based on a review of completed environmental
documents and written confirmation from the lead agency on the
project, as designated pursuant to the California
SB 1279
Page 3
Environmental Quality Act (CEQA).
3)Requires a terminal project grantee of funds identified by the
CTC to annually notify the CTC that the project is not being
used to handle, store, or transport coal in bulk.
4)Defines "new bulk-coal terminal," "terminal project," and
"terminal." Excludes from these definitions projects or
infrastructure already permitted 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, rail
yards, rail facilities, rail infrastructure, and rail
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
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.
SB 1279
Page 4
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 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
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
SB 1279
Page 5
1)Purpose. 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. The author states
that while the TCIF application did not specifically require
the applicant to disclose or commit to exactly what commodity
or commodities would be transported through the terminal, the
project would likely not have qualified for TCIF funds had the
information regarding coal transport been provided to the CTC.
This bill aims to ensure that in the future, state funds are
not allocated to projects that facilitate the transport of
coal.
2)Oakland project is now a moot point. The TCIF requires at
least a 50% match from local, federal, or private sources.
Because this bill excludes projects that were already
permitted as of January 1, 2016, it would not threaten the $53
million worth of matching funds for Oakland project.
Moreover, the City of Oakland voted on June 27, 2016, to ban
the transport and storage of large coal shipments, effectively
shutting down the bulk-coal terminal plan.
3)Establishing a state policy. The state of Utah currently
exports about 1 million tons of coal each year, mainly through
the ports of Richmond, Stockton, and Long Beach. Under this
bill, state funding could not be provided for any future
bulk-coal terminal projects at these or other California
ports. This bill also declares the intent of the Legislature
to cease all investments in transportation infrastructure
projects that store, transfer, or transport significant
quantities of bulk coal. By doing so, it emphasizes the
state's commitment to policies on climate change and health
objectives.
4)Opposition concerns. Opponents raise a variety of concerns
about this bill, including the possibility that it might
SB 1279
Page 6
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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Assembly Appropriations Committee, any costs to
the CTC will be minor and absorbable.
SUPPORT: (Verified8/22/16)
Alameda County
Alameda County Democratic Central Committee
Asian Pacific Environmental Network
Berkeley Climate Action Coalition
California Democratic Party Executive Board
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
SB 1279
Page 7
Redlands Area Democratic Club
San Francisco Baykeeper
Save the Bay
SEIU Local 1021
Sierra Club California
West Oakland Environmental Indicators Project
350 Bay Area
One individual
OPPOSITION: (Verified8/22/16)
California Capital and Investment Group
California Teamsters Public Affairs Council
California Trade Coalition
League of California Cities
ASSEMBLY FLOOR: 50-26, 8/22/16
AYES: Alejo, Arambula, Atkins, Baker, Bloom, Bonilla, Bonta,
Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley,
Cooper, Dababneh, Dodd, Eggman, Frazier, Cristina Garcia,
Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon,
Hadley, Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine,
Lopez, Low, McCarty, Mullin, Nazarian, Quirk, Ridley-Thomas,
Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber,
Williams, Wood, Rendon
NOES: Achadjian, Travis Allen, Bigelow, Brough, Chang, Chávez,
Dahle, Beth Gaines, Gallagher, Gray, Grove, Harper, Jones,
Kim, Lackey, Linder, Maienschein, Mathis, Mayes, Obernolte,
Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Daly, Medina, Melendez, O'Donnell
Prepared by: Erin Riches / T. & H. / (916) 651-4121
8/22/16 21:33:55
**** END ****
SB 1279
Page 8