BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1010| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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: CONTINUED SB 1010 Page 2 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. SB 1010 Page 3 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. SB 1010 Page 4 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 SB 1010 Page 5 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 **** END ****