BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 234
Author: Hancock (D)
Amended: 8/24/12
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE TRANSPORTATION & HOUSING COMMITTEE : 7-0, 8/30/12
(pursuant to Senate Rule 20.10)
AYES: DeSaulnier, Gaines, Harman, Kehoe, Lowenthal, Rubio,
Simitian
NO VOTE RECORDED: Pavley, Wyland
ASSEMBLY FLOOR : Not available
SUBJECT : Goods Movement Emission Reduction Program
SOURCE : California Association of Port Authorities
DIGEST : This bill requires the California Air Resources
Board (ARB) to disperse eligible funds from the Highway
Safety, Traffic Reduction, Air Quality, and Port Security
Bond Act of 2006 (Bond Act) for projects that provide
shorepower for vessels to applicants on a quarterly basis,
and also authorizes ARB to withhold 10% of reimbursable
costs until the project demonstrates its ability to power a
vessel at berth.
Assembly Amendments delete the prior version of the bill,
which dealt with the Board of Equalization, and instead add
CONTINUED
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the current language.
ANALYSIS :
Existing law:
1. Enacts the Bond Act, approved by the voters as
Proposition 1B on November 7, 2006, that includes a $1
billion Goods Movement Emission Reduction Program (Prop
1B Program) administered in partnership between ARB and
local agencies (air districts and ports) to quickly
reduce air pollution emissions and health risk from
freight movement along California's trade corridors.
Authorizes funds for on-shore electrical power for ocean
freight carriers calling at the state's seaports to
reduce the use of auxiliary and main engine ship power.
2. Establishes, through ARB's "Regulation to Reduce
Emissions from Diesel Auxiliary Engines on Ocean-Going
Vessels while at Berth at a California Port," measures
to reduce emissions of diesel particulate matter,
nitrogen oxides, and sulfur oxides from the use of
auxiliary diesel engines and diesel-electric engines
from the operation of auxiliary engines on container
vessels, passenger vessels, and refrigerated cargo
vessels while these vessels are docked at berth at a
California port.
3. Establishes ARB, in partnership with local air
districts, to oversee all air pollution control efforts
to attain and maintain health-based air quality
standards in California.
Comments
Ocean-going vessels are a significant source of harmful air
emissions in California that negatively affect the health
of millions of residents. Technologies are currently
available that provide shoreside electrical power to a ship
at berth while its main and auxiliary engines are turned
off. Such technologies in place are commonly referred to
as cold ironing, alternative maritime power, shorepower or
shore supply. These technologies are eligible for grant
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funding through the Prop 1B Program administered by ARB.
The grant funds are passed through ARB and administered by
the regional air quality management districts with the
grantee. In accordance with the Prop 1B Program, local
agencies can receive grant funding from ARB provided that
they can demonstrate a project's capability to reduce
hoteling (or at-berth) emissions and associated health
impacts from diesel-fueled auxiliary engines on board ships
docked at California ports by either on-shore applications
or ship engine emission capture technologies.
In December 2007, ARB approved a regulation to reduce
emissions from diesel auxiliary engines on container ships,
passenger ships, and refrigerated-cargo ships while
berthing at a California port. The regulation defines a
California port as the Ports of Los Angeles, Long Beach,
Oakland, San Diego, San Francisco, and Hueneme. The
regulation provides vessel fleet operators visiting these
ports two options to reduce at-berth emissions from
auxiliary engines: (1) turn off auxiliary engines for most
of a vessel's stay in port and connect the vessel to some
other source of power, most likely grid-based shore power;
or (2) use alternative control techniques that achieve
equivalent emission reductions.
Further, the Prop 1B Program authorized $100 million for
shorepower projects or emission capture technologies. By
statute, these Prop 1B Program funds can only be used for
emission reductions "not otherwise required by law or
regulation." Further, the Prop 1B Program implementing
statutes requires ARB to adopt guidelines to administer the
$100 million port emission reduction program to include the
following:
1. An application process for the funds and any limits on
administrative costs.
2. Requirements that local agencies identify the useful
life of the project and project delivery milestones as
part of the application process.
3. Criteria for selection of local agency projects and
equipment projects.
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4. Requirements for match funding.
5. The method by which ARB will consider an air basin's
status in achieving state and federal air quality
standards.
6. Requirements that grant agreements between ARB and
local agencies identify project milestones and remedies
for failure to meet project milestones.
7. Accountability and auditing requirements, including
provisions for audits of project expenditures and
outcomes.
ARB adopted the guidelines in March 2010, governing the
expenditure of the Prop 1B Program's $100 million grant
funds for port emission reduction projects. The
guidelines, among other items, require:
1. Projects to be plug-in ready prior to funds to be
reimbursed to applicants.
2. Large shipping lines to meet 50% fleet plug-in
shoreside requirements in 2014-2016.
3. Shorepower electrification contracts to include
provisions for non-performance penalties.
4. A statement that all grant funds will be forfeited for
any grid-based ships at berth or ship emissions capture
and control system project that is not fully operational
by December 31, 2013, unless the grant funds will fund a
berth project that serves only ships not subject to
ARB's shorepower regulations.
In spring 2011, subsequent to the adoption of the
guidelines, California's regional air quality management
districts, the entities managing the Prop 1B Program
funding on behalf of ARB, solicited requests for the use of
the grant monies to the ports. The Ports of Hueneme, Long
Beach, Los Angeles, and Oakland each requested grant
funding for their particular shorepower, electrical plug-in
infrastructure projects. To receive their Prop 1B Program
grant funds, the Ports of Hueneme, Long Beach, and Los
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Angeles separately entered into contracts with the South
Coast Air Quality Management District (South Coast).
Further, the Port of Oakland entered into a Prop 1B Program
grant agreement with the Bay Area Air Quality Management
District.
ARB's current Prop 1B Program guidelines (guidelines) allow
reimbursement to the ports for funds that they have
expended for their shorepower grant projects only upon
demonstration of actual vessel "plug-in" of the project,
thus giving ARB and the California's regional air quality
management district's assurances that the equipment is
functional. According to this bill's sponsor, the
California Association of Port Authorities (CAPA), they
contend that the ports may have difficulty meeting this
requirement due to construction schedules, the nature of
port operations, and the shipping industry's readiness for
shore power. They indicate that the ports have no control
over the availability and deployment of vessels to a
particular berth, particularly as many of the on-shore
power-ready vessels may not be deployed until mid-2014.
Rather than waiting for final reimbursement based upon
actual vessel plug in, this bill would require ARB to
revise their guidelines to provide an alternative
definition of operability that would consider a project
fully operational if the facility providing on-shore
electrical power has completed a building and safety
inspection and load bank testing. Upon the guideline's
revision, this will provide more flexibility to ARB to
approve payments to ports upon project completion.
Furthermore, this will also provide relief in regards to
the guideline's penalty provisions that require on-shore
power systems to be constructed by December 31, 2013.
Under the guidelines, ports unable to meet this deadline
will be penalized grant funds if unable to meet this date.
Timely distribution of state funds to ports . In addition,
it is the author's office contention that the state has
sold the bonds designated for shoreside power projects and
is currently holding these funds and paying interest on
these funds and that it is unreasonable to require ports
that are subdivisions of the state that are making
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improvements to public lands, including state tidelands, to
borrow funds to complete their projects. The author's
office further indicates that "this creates a situation
where the state and ports end up paying double-interest
because one subdivision of the state, ARB, has placed a
rigid reimbursement requirement on other subdivisions of
the state."
Although ARB has traditionally distributed grant funds upon
completion of projects, CAPA contends that nothing in
Proposition 1B, or related enabling legislation, prohibits
the distribution of funds on a reimbursement basis as
project proponents appropriately spend funds. This
"reimbursement" method, often based on monthly reimbursable
invoicing, is the method used by many state and federal
entities (including the California Transportation
Commission) for funding infrastructure improvement
projects; including other Bond Act funded projects.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee, onetime
costs of several hundred thousand dollars, equivalent to
the efforts of two to three fulltime staff, to ARB for
revising the Prop 1B Program guidelines.
SUPPORT : (Verified 8/29/12)
California Association of Port Authorities (source)
Port of Oakland
Port of Hueneme
JJA:d 8/31/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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