INDUSTRY REACTS TO HOLLINGS? PROPOSAL FOR PORT SECURITY FEES

INDUSTRY REACTS TO HOLLINGSÆ PROPOSAL FOR PORT SECURITY FEES    Sen. Ernest Hollings stepped up his efforts last week toward starting the collection of port security fees, as he tacked his proposal onto pending port and maritime security legislation.
   Hollings, D-S.C. issued a document to the Conference Committee last week citing the need for such fees. Hollings proposed that the fees, which would be charged to shippers, could finance a Port Security Trust Fund, as part of the Port and Maritime Security Act.
   His plan calls for fees on containers entering or leaving the United States. The fees, to be collected by the U.S. Customs Service, would be $15 per TEU, and $20 per containers with hazardous materials. Additionally, fees of $4 per vehicle, and up to 75 cents per metric ton (depending on the type of cargo) would be imposed.
   Dennis Bryant, senior Maritime Counsel at Holland & Knight LLP, called Hollings’ 23-page document a “fleshed-out” and amended version of his earlier proposal, which Hollings raised to the committee in mid-July. Bryant said Hollings’ plan would meet opposition from shippers, Congress, and the lawmaking process itself.
   “While Sen. Hollings contends his proposal is a user fee, the feeling among many in the House of Representatives, including the House Ways and Means Committee, is that the proposal is actually a tax,” Bryant said. “All tax measures have to originate in the House of Representatives. The Senate cannot do that.”
   Hollings has proposed that the monies be divided among the U.S. Coast Guard, the Maritime Administration, the Transportation Security Administration, and Customs, as well as port authorities, and waterfront facility operators.
   Peter Gatti, vice president of international policy at the National Industrial Transportation League, said Hollings’ proposal puts an unfair burden on shippers by singling them out to shoulder a cost toward security measures benefiting all participants in the supply chain.
   “It is a fee that erroneously assumes that the cargo owner is the only direct beneficiary of what is being financed from this fee,” Gatti said.
   Both the House and Senate are expected to take up seaport security legislation immediately upon return from recess.
   In an Aug. 16 letter to House and Senate members of the security legislation conference committee, the National Customs Brokers and Forwarders Association of America opposed the fee proposal.
   In the letter, sent to Hollings and over 20 other members of the Senate and House, NCBFAA said the trade community is already contributing significantly to the cost of border security, adding that one U.S. manufacturer alone has estimated the proposed container fee would amount to $10 million per annum for its imports and exports.
   NCBFAA added that its previous experience with the Merchandise Processing Fee makes them hold a skeptical view about the final use of monies generated by similar fees. “The MPF has raised considerably more than was appropriated for the Customs Service, providing an ample and ready source of cash for diversion to other government programs,” NCBFAA wrote. “U.S. companies are already paying over $1 billion annually in user fees under the MPF. Congress should question the economic wisdom of burdening the flow of trade with even more fees.”