BILL ANALYSIS �
SB 234
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Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 234 (Hancock) - As Amended: July 5, 2012
Policy Committee:
TransportationVote:13-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill alters the manner by which the Air Resources Board
(ARB) reimburses seaports for on-shore electrical power projects
that qualify for grant funding under the Highway Safety, Traffic
Reduction, Air Quality, and Port Security Bond Act of 2006
(Proposition 1B). Specifically, this bill:
1)Requires ARB to reimburse, on a quarterly basis, port
operators for the costs of projects to provide on-shore
electrical power to ocean freight carriers calling at the
state's seaports, to reduce emissions of air pollutants.
(Currently, ARB reimburse such costs upon demonstration a
project is fully operational through connecting the on-shore
electrical power to a seagoing vessel.)
2)Requires ARB to revise its Proposition 1B guidelines so that a
project is considered fully operational if the project has
completed structural, safety and related inspections.
FISCAL EFFECT
Onetime costs of several hundred thousand dollars-equivalent to
the efforts of two to three fulltime staff- to ARB revise
Proposition 1B guidelines (special fund).
COMMENTS
1)Rationale . The author contends the state's seaports differ
from other recipients of ARB grant funding in that (a) the
ports are entities of the state acting in the interest of the
state and (b), unlike mobile sources of air pollution, the
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ports are unable to operate outside the state. The author
therefore asserts it inappropriate to withhold funding for
port infrastructure projects until project completion because
there is little or no risk the project will fail to provide
clean air infrastructure in the state. The author also
describes an undesirable, and avoidable, outcome of ARB's
grant funding policy, in which public entities pay interest
twice on money borrowed for a single clean-air project-ARB
paying interest on Proposition 1B bonds it has issued and the
port paying interest on money it borrowed to complete the
project. For these reasons, the author concludes it better to
allow ARB to periodically reimburse ports for eligible
on-shore power projects.
2)Background . Proposition 1B of 2006 authorizes the state to
sell about $20 billion of general obligation bonds to fund
transportation projects to relieve congestion, improve the
movement of goods, improve air quality, and enhance the safety
and security of the transportation system. This $20 billion
includes $3.2 billion for projects to improve the movement of
goods through the ports, on the state highway and rail
systems, and between California and Mexico and for projects to
improve air quality by reducing emissions related to goods
movement and replacing or retrofitting school buses. Projects
eligible for $100 million in Proposition 1B funding including
those at the state's sea ports that reduce air pollution
emissions by allowing ships to turn off auxiliary engines
while at port and connect to some other source of power, such
as on-shore electrical power.
According to ARB Proposition 1B guidelines, ARB (or the local
air districts, acting on ARB's behalf) reimburses the ports
for funds that they have expended for on-shore power projects
only upon demonstration of project completion via vessel
plug-in. This delayed reimbursement assures ARB the project
is capable of achieving air pollution emission reductions.
Port operators, however, protest that such a funding scheme is
unfair, in that they have no control over whether and when
ships that may connect to on-shore power call to port; unwise,
in that interest paid by the ports, which are public entities,
while awaiting reimbursement adds to the public costs of port
infrastructure projects; and unnecessary, in that ports,
unlike mobile air pollution sources such as trucks, cannot
operate outside the state. Port operators prefer a funding
scheme similar to that used by the California Transportation
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Commission and other public entities, by which costs are
reimbursed periodically during project implementation.
3)Support . This bill is supported by the California Association
of Port Authorities (sponsor) and the ports of Hueneme and
Oakland.
4)There is no opposition formally registered against this bill.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081