BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  SB 1010|
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                                 THIRD READING


          Bill No:  SB 1010
          Author:   Florez (D)
          Amended:  1/23/06
          Vote:     21

           
           SENATE ENERGY, U.&C. COMMITTEE  :  6-2, 1/12/06
          AYES:  Escutia, Alarcon, Dunn, Kehoe, Murray, Simitian
          NOES:  Morrow, Cox
          NO VOTE RECORDED:  Battin, Bowen, Vacancy

           SENATE APPROPRIATIONS COMMITTEE  :  12-0, 1/19/06
          AYES:  Murray, Aanestad, Alquist, Ashburn, Battin, Dutton,  
            Escutia, Florez, Ortiz, Poochigian, Romero, Torlakson
          NO VOTE RECORDED:  Alarcon


           SUBJECT :    Rail service:  City of Shafter

           SOURCE  :     City of Shafter


           DIGEST  :    This bill authorizes the City of Shafter to  
          establish a special district to develop and operate an  
          intermodal rail facility.  This bill also requires freight  
          railroads operating in the state to report annually on  
          track use and capacity.

           ANALYSIS  :    Existing law authorizes municipal corporations  
          to acquire, construct, own, operate, or lease any public  
          utility.

          This bill declares:
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          1.Railroads may have sufficient California capacity to  
            permit additional trains to operate over their lines  
            without unreasonably interfering with existing rail  
            traffic.

          2.It is state policy for railroads to use their lines to  
            move traffic via rail rather than via highway so that  
            congestion and pollution are reduced.

          3.It is in the public interest for railroads to allow  
            others rail carriers to use surplus capacity so that port  
            and highway congestion is reduced.

          This bill authorizes the City of Shafter to establish a  
          separate governing body (special district) for purposes of  
          operating an intermodal rail facility with the City of  
          Shafter, but delegates to the city all governance issues.   
          The City shall obtain financing, or enter into leases or  
          contracts, relating to the construction of such an  
          intermodal rail facility.

          This bill requires all revenues received from the operation  
          of such facility to be used solely for public or municipal  
          purposes.

          The bill provides that the special district shall not levy  
          any tax, assessment, fee or other charge, and shall prepare  
          and submit a budget to the City of Shafter, as specified.

          This bill requires all freight railroads to report annually  
          track utilization and capacity to the Public Utilities  
          Commission (PUC), the Department of Transportation (DOT)  
          and the California Air Resources Board in a manner  
          determined by those agencies.

           Background

           According to the author's office, the author has observed  
          that the major Southern California ports are congested with  
          greater congestion forecast.  Conversely Oakland, the major  
          Northern California port, has capacity to expand.  The  
          author believes that expansion is constrained by the rail  
          capacity for moving containers to and from the port.







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          The Port of Oakland, the City of Shafter (in the author's  
          district, 15 miles northwest of Bakersfield, between I-5  
          and Highway 65), and a privately-owned company, Northwest  
          Container Services, Inc., have formed a partnership to  
          increase that rail capacity through the creation of the  
          California Integrated Logistics Center (CILC).  The CILC is  
          an inter-modal facility intended to encourage greater use  
          of the Port of Oakland by creating an alternative way of  
          getting containers into the greater Los Angeles area.   
          Rather than using the heavily congested Ports of Long Beach  
          and Los Angeles, container ships could go instead to the  
          Port of Oakland, where a railroad shuttle would ferry  
          containers to Shafter.  Once in Shafter, those containers  
          would be trucked to their destinations in Southern  
          California.  Exports could also be trucked into Shafter  
          whereupon the process would be reversed for shipping out of  
          the Port of Oakland.

          Note:  According to the California Railroad Industry, the  
          Northwest Container Service, Inc. advised the City of  
          Shafter that they were "no longer interested in pursuing  
          the project."  They state they were unable to develop a  
          mutually acceptable Memorandum of Understanding and do not  
          agree with the City's "legislative approach to working with  
          the railroads."

          AB 1768 (Oropeza), Chapter 1127, Statutes of 2002, provided  
          $5 million from the State Transportation Fund to DOT for  
          local assistance to the City of Shafter for the Southern  
          San Joaquin Valley Inter-modal Facility, a part of the  
          CILC.  Last month ground was broken on the switching and  
          rail spur for that project.

           Comments

           This bill requires   railroads to report to the PUC on their  
          track utilization and capacity.  The PUC and DOT are to  
          develop appropriate definitions and reporting procedures.    


          The declarations in the bill regarding state policy to  
          encourage rail line owners to permit other users on those  
          lines are uncodified. 







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           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          Although the PUC does not have a specific estimate of the  
          costs of this bill, it expects costs to be "significant" -  
          in excess of $150,000 - to develop standards for the  
          report.

           SUPPORT  :   (Verified  1/23/06)

          City of Shafter (source)
          Tejon Ranch Company

           OPPOSITION  :    (Verified  1/23/06)

          The California Railroad Industry

           ARGUMENTS IN SUPPORT  :    Proponents argue that the CILC  
          will (1) improve air quality and reduce road congestion as  
          rail transport is substituted for trucks, (2) improve air  
          quality and reduce road congestion as rail transport is  
          substituted for trucks, and (3) relieve congestion in the  
          Southern California ports, improving efficiency.

          Proponents argue that the reports will be beneficial.   
          Understanding if and where slack rail capacity exists will  
          help in the formulation of policy for utilizing that  
          capacity.  Relieving choke points in the transportation  
          infrastructure will facilitate growth of California ports  
          and support the more efficient conduct of commerce.

           ARGUMENTS IN OPPOSITION  :    The California Railroad  
          Industry opposes the statewide rail capacity reports, which  
          they argue have no specific relevance to the City of  
          Shafter proposal.  They argue it is difficult to understand  
          how studying every rail route in the state will advance the  
          purpose of reducing port-related truck congestion.  They  
          argue they would prefer a limited DOT study that would be  
          relevant to the Shafter project.  While they do not have a  
          position on the City of Shafter pursuing an intermodal rail  
          facility, they argue that "ultimately, the issue of whether  
          a short-haul rail service is viable between Shafter and  
          Oakland is a market decision that cannot be solved through  







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          legislation."  They note the bill focuses exclusively on  
          "line capacity" without considering other factors such as  
          the comparative costs of short haul rail, and the cargo  
          owners' economic and logistical considerations.  They state  
          "the bill implies incorrectly that the State can determine  
          if a railroad has 'available capacity' on some vague  
          standard in a corridor or between any two points, and then  
          appropriate that capacity for State or private purposes."  
           

          NC:cm  1/25/06   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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