BILL ANALYSIS                                                                                                                                                                                                    Ó




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                                 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,  








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          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  








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            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.  









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          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









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          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  








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            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








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          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


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