BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 1277 (Hancock) - California Environmental Quality Act: supplemental environmental impact report: City of Oakland: coal shipment ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 4, 2016 |Policy Vote: T. & H. 7 - 3, | | | E.Q. 5 - 2 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 16, 2016 |Consultant: Mark McKenzie | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 1277 would require a public agency with discretionary authority over a proposed project that is necessary for the shipment of coal at a proposed Oakland port facility to prepare a supplemental environmental impact report (EIR) to consider and mitigate the environmental impacts of coal shipments. Fiscal Impact: Unknown significant costs, which could be state or local costs depending on which public agency would have the next discretionary authority over approving a project. These costs would be recovered by fees charged to the project proponent for the cost of preparing the supplemental EIR. See staff comments. SB 1277 (Hancock) Page 1 of ? Background: California Environmental Quality Act (CEQA) Existing CEQA law generally requires lead agencies with the principal responsibility for carrying out or approving a proposed discretionary project to prepare a negative declaration, mitigated negative declaration, or EIR for this action. Generally, an EIR must accurately describe the proposed project, identify and analyze each significant environmental impact expected to result from the proposed project, identify mitigation measures to reduce those impacts to the extent feasible, and evaluate a range of reasonable alternatives to the proposed project. If mitigation measures are required or incorporated into a project, the agency must adopt a reporting or monitoring program to ensure compliance with those measures. Lead agencies and other responsible agencies are required to prepare a subsequent or supplemental EIR only if specified events occur, such as when new information of substantial importance was not known or could not have been known without the exercise of reasonable due diligence at the time the original EIR was certified. When the original EIR has been certified, comprehensive analysis of the project is presumed to have already taken place and the question becomes whether circumstances have changed enough to justify repeating a part of the environmental review process. A supplemental EIR need only address those EIR topics that require major revisions to the original EIR. If the project was approved by the lead agency before the conditions that trigger a supplemental EIR occurred, then the supplemental EIR must be prepared by the public agency that grants the next discretionary approval for the project. Existing law authorizes a lead agency to charge and collect a reasonable fee from a project proponent to recover the estimated costs incurred by the lead agency in preparing a negative declaration or an EIR, as specified. The Oakland Bulk and Oversized Terminal (OBOT) and coal After the Oakland Army Base was closed in 1999, part of the property reverted to the City of Oakland, while another portion was transferred to the Port of Oakland. The following year, the SB 1277 (Hancock) Page 2 of ? Oakland City Council designated the base and surrounding properties as a redevelopment project area, and the City of Oakland prepared an EIR in 2002 related to proposed development in the project area. In 2009, the Port of Oakland secured state transportation bond funding for a project to develop warehouse space, logistics facilities, and a rail terminal on the site. Following the dissolution of the redevelopment agency in 2012, the area owned by the redevelopment agency was transferred to the City of Oakland. The Port and the City began working together on the site and significantly expanded the scope of the redevelopment, including the addition of a bulk terminal (OBOT). The expansion required an update to the original EIR that was completed in 2002, and the City prepared an addendum in 2012. The City entered into an agreement with two private entities, California Capital and Investment Group (CCIG) and Prologis, to develop the site and find additional investors and tenants for the project. Details of what commodities would be transported through the bulk terminal were largely contingent upon the contracts that would be executed, and therefore were not reviewed in the original and addendum environmental documents for the project. CCIG subsequently executed a contract with Terminal Logistics Solutions (TLS) as a long-term lessee that would also manage an existing track network. In spring of 2015, stories surfaced in the media revealing that the state of Utah was in discussions with port developers about shipping coal from Utah to China through the proposed bulk terminal in Oakland. Utah currently exports about 1 million tons of coal each year, mainly through the ports of Richmond, Stockton, and Long Beach. As coal-fired power plants in the U.S. close or switch to natural gas, access to overseas markets is becoming increasingly important for coal-producing states. In early 2016, Utah Governor Gary Herbert signed legislation that would contribute $53 million in Utah transportation funds towards the construction of the new Oakland cargo terminal. To fund the Oakland project, Utah would use state tax revenue and then reimburse the state with federal royalties from mineral leases. TLS is looking to partner with four Utah counties to export commodities including coal, providing four to five million tons of annual shipping capacity and access to overseas markets in exchange for a $53 million investment in the OBOT. SB 1277 (Hancock) Page 3 of ? TLS has yet to exercise its option to develop the terminal. According to the Senate Environmental Quality Committee's analysis of this bill: "Coal dust is a fine powdered form of coal, which is created by the crushing, grinding, or pulverizing of coal. Because of the brittle nature of coal, coal dust can be created during mining, transportation, or by mechanically handling coal. Also, not all coal is created equally - some types break down into dust more easily than others. Particulate matter from the transportation of coal can impact air quality, and severe exposure to coal dust can cause various pulmonary diseases. In addition, questions may arise regarding potential environmental impacts caused by chronic, low-level input of coal dust that may result from steady coal shipment traffic. For example, could the transportation of coal cause pollutant emissions, noise, potential fires, or leaching of chemicals? Could coal dust cover the leaves of nearby vegetation and reduce its photosynthesis capabilities or have toxic effects on public health or wildlife?" Proposed Law: SB 1277 would require a public agency with discretionary authority over a project that is necessary for, and directly related to, the use of the OBOT for the shipment of coal, to prepare or cause to be prepared a supplemental EIR to consider and mitigate the environmental impacts of coal shipment through the terminal, prior to approving the project. The bill also includes extensive findings and declarations. Among these is a statement that coal was not considered as a commodity that would be shipped through the terminal when the City of Oakland prepared the 2012 EIR, but that there is a current proposal to export coal from the OBOT. There is also a finding that this constitutes a change in the proposed project that is new information that was not known and could not have been known at the time the EIR was certified as complete. SB 1277 (Hancock) Page 4 of ? Related Legislation: SB 1279 (Hancock), which is also scheduled for hearing in this Committee, would prohibit the California Transportation Commission (CTC) from programming or allocating state funds for proposed projects at certain port facilities that are involved in the handling, storage, or transportation of coal. The bill would also require the CTC to evaluate every project it considers to determine whether it will increase the state's capacity to facilitate the transportation of coal. Staff Comments: Since there has been no action on the local level to consider the environmental impacts related to the transportation and shipment of coal through the proposed OBOT, this bill requires the next public agency with discretionary authority over a project related to the terminal to prepare a supplemental EIR that would consider and mitigate those impacts. This duty could fall to any one of several public entities that may have permitting authority over a project, including the City of Oakland, the Bay Area Air Quality Management District (BAAQMD), the San Francisco Bay Conservation and Development Commission (BCDC), or other public agency. To the extent the responsibility is placed upon a local agency, any costs related to the preparation of a supplemental EIR would not be reimbursable from the state because existing law provides fee authority to offset those costs. To the extent the responsibility falls to a state entity, there would be significant state costs, and potentially peripheral impacts if the agency has no expertise in considering environmental issues that fall outside of its purview. These costs would eventually be recovered by fees charged to the project proponent for the cost of preparing the supplemental EIR, but the responsible agency could experience significant workload disruptions and incur secondary fiscal impacts. -- END -- SB 1277 (Hancock) Page 5 of ?