BILL ANALYSIS
SB 1010
Page 1
Date of Hearing: June 19, 2006
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Lloyd E. Levine, Chair
SB 1010 (Florez) - As Amended: January 23, 2006
SENATE VOTE : 33-3
SUBJECT : Rail service: City of Shafter.
SUMMARY : Requires freight railroads that operate in California
to prepare an annual report on track utilization and capacity,
and authorizes the City of Shafter (Shafter) to establish a
separate governing body to operate an intermodal rail facility.
Specifically, this bill :
1)Declares that railroads may have sufficient capacity to permit
additional trains to operate over their lines, it is state
policy for railroads to use their lines to move traffic rather
than via highway, and it is in the public interest to allow
other rail carriers to use surplus capacity.
2)Requires a freight railroad that owns or operates a line in
the state to annually prepare and submit a report on track
utilization and capacity to the California Public Utilities
Commission (PUC), Department of Transportation (CalTrans), and
Air Resources Board (ARB).
3)Requires the PUC and CalTrans to develop procedures to define
and report track utilization and capacity.
4)Authorizes Shafter to establish a separate governing body
(special district) to operate an intermodal rail facility, but
delegates to Shafter all governance issues such as obtaining
financing, or entering into leases or contracts related to the
construction of an intermodal facility.
5)Requires Shafter to use all revenues received from the
operations of the intermodal facility solely for public or
municipal purposes.
6)Requires Shafter to provide all funding for the intermodal
facility.
7)Prohibits the governing body from levying any tax, assessment,
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fee, or other charge or exaction.
8)Requires the governing body to prepare and submit a budget to
the City for its approval.
EXISTING LAW authorizes municipal corporations to acquire,
construct, own, operate, or lease any public utility and defines
public utility as including the transportation of persons or
property.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to expand rail service from the Port of Oakland to Shafter
through the San Joaquin Valley to decrease air pollution caused
by diesel trucks.
1) Background : The Port of Oakland, 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. formed a partnership to increase rail activity.
They created the concept of a California Integrated Logistics
Center (CILC). The CILC would be an intermodal facility
intended to encourage greater use of the Port of Oakland by
creating an alternative way to get containers into the greater
Los Angeles area. Rather than using the heavily congested Ports
of Long Beach and Los Angeles, container ships, if deemed
feasible, could dock in 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 originating from the Central valley could also be
trucked into Shafter where the process would be reversed for
shipping out of the Port of Oakland. (According to the railroad
industry, Northwest Container Services, Inc. advised Shafter
that it is "no longer interested in pursuing the project"
because they were unable to develop a mutually acceptable
Memorandum of Understanding and do not agree with Shafter's
"legislative approach to working with the railroads.")
In 2002, AB 1768 (Oropeza), (Chapter 1127, Statutes of 2002)
appropriated $5 million to CalTrans for a local assistance grant
to Shafter to construct the Southern San Joaquin Valley
Intermodal Facility, a part of the CILC. This past December,
ground was broken on the switching and rail spur for that
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project. Shafter estimates project completion by November 2006.
2) The declarations : The uncodified section of the bill
declares that rail carriers may have sufficient available unused
capacity. It also declares that it is the policy of the state to
encourage owners or operators of rail lines with available
unused capacity to permit the use of these lines for
international traffic, or to permit other rail carriers to use
the lines to move traffic. It declares that the public interest
is served by arrangements that permit carriers to move traffic
via rail that would otherwise move over highways.
Whether carriers have unused capacity may be subjective because
neither "capacity" nor "unused capacity" is defined. Also, it
is debatable whether the best policy to transport imports is by
encouraging trains, ships, trucks, planes, or any other
transport vehicle. Concerns that some are safer, less air
polluting, less water polluting, or more energy efficient, all
have merit. Due to undetermined resolution on which is the
optimal import transport vehicle under many different
circumstances, the committee may wish to delete the uncodified
declarations.
3) The separate governing body : SB 1010 would authorize
Shafter to establish a separate governing body in order to
operate the intermodal facility. According to the author,
Shafter can currently establish a separate governing body
without legislation; however, Shafter would like to have
permissive statute. The bill also requires Shafter to use all
revenues received for the operations of an intermodal facility
solely for public or municipal purposes. It defines "public or
municipal purposes" broadly: as any purpose that the
legislative body of Shafter determines to be for the operation
or development of the intermodal facility, the citizenry of
Shafter as a whole, or to Shafter in its capacity as a municipal
corporation.
The bill includes common safeguards typical for governmental
bodies, such as the Bagley-Keene Open Meeting Act and the Public
Records Act; however, these Acts may or may not be appropriate
for this type of entity. In addition, a governing body such as
a city may not possess the authority to oversee another
governing body. SB 1010 will be heard in the Assembly Committee
on Local Government. These issues, in addition to other local
jurisdictional issues, would be more appropriately addressed in
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that committee.
4) The report : SB 1010 requires all freight railroads that own
or operate a line in the state to prepare and submit an annual
report on track utilization and capacity to the PUC, CalTrans,
and ARB. The goal of the report, according to the author, is to
allow the State to determine how much space is out there and
help the state to find out to what extent that information can
be used in helping the state move goods. In addition, the
author also would like the report to provide information for
state entities to determine the fair market value to move goods
because Shafter believes the railroads are not quoting fair
prices.
The railroads are concerned that "capacity" is a highly
specialized and complex determination. Capacity depends on a
number of variables, including the number of trips, speed,
weight of load, number of cars, etc. In addition, studying
every rail route in the state may not advance the purpose of
reducing Southern California port-related truck congestion and
encouraging the use of a short singular line between the Port of
Oakland and the not-yet-complete Shafter intermodal facility.
The PUC is concerned that it does not possess the expertise
needed to develop procedures to define and report track
utilization and capacity. The PUC only has authority over
railroad crossings and local safety issues. (The Federal
Railroad Administration has virtual plenary authority over
railroad operations and often preempts the states with regard to
most operational issues.) The PUC stated that it would have to
significantly expand the scope of the Railroad Safety Division
and hire additional personnel who possess expertise in this
highly specialized field of balancing safety and risk with more
frequent, heavier, and/or speedier trains.
The bill requires railroads to report track capacity to the ARB.
Last year, ARB and Union Pacific Railroad Company (UPRR) and
Burlington Northern Santa Fe (BNSF) entered into an agreement,
which obligates UPRR and BNSF to reduce emissions in and around
California's railyards. Some claim that the agreement is
inadequate. Regardless, it is unclear how the ARB would use the
annual capacity reports. Due to the subjective nature of the
report and undefined benefits derived by the report, the
committee may wish to delete Section 2 that defines the annual
report and directs the PUC and CalTrans to develop procedures to
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design the report.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Shafter (sponsor)
Tejon Ranch Company
Valley CAN (Clean Air Now)
Opposition
The Allen Group
California Railroad Industry
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083