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