Lowenthal ?container tax? bill passes key State Senate committee

Lowenthal ôcontainer taxö bill passes key State Senate committee Aggressive and vocal criticism by business leaders, the shipping industry and shippers alike has not seemed to slow down the so-called 'Lowenthal container fee bill,' which successfully passed the California State Senate Transportation Committee last week.
   Sen. Alan Lowenthal's bill, SB974, seeks to impose a $30-per-TEU fee on all containers moving through the ports of Long Beach, Los Angeles and Oakland. Under the bill, collected revenue would be evenly split between infrastructure improvements and environmental programs, all with the goal of improving goods movement and mitigating port impacts. Infrastructure funds would be limited to rail and non-highway container moving systems, such as the short-haul magnetic levitation transport, or maglev, system being shopped around by a San Diego group.
   Two weeks ago, the powerful pro-business California Chamber of Commerce identified SB974 as one of the year's top “job killer” bills in its annual list of legislation deemed to potentially have the most negative impact on California’s global competitiveness.
   The CalChamber believes SB974's proposed fee is not constitutional and would increase the cost of shipping goods, making California less competitive.
   Trade advocates have long called the bill illegal and poorly designed, and have said it would cause cargo to be diverted from the nation's primary ocean freight gateway.
   'We believe that a one-size-fits-all approach, such as that established in SB 974, is inappropriate for financing the infrastructure improvements and environmental mitigation projects created by California's growing population and economy,' the Agriculture Transportation Coalition letter said in a letter to Gov. Arnold Schwarzenegger earlier this month.
   'Proponents of SB 974 insist that diversion of cargo to other ports will not occur if a $30-per-TEU tax is imposed at our three largest ports. International trade follows the path of least resistance, and when California piles on additional costs, discretionary cargo is likely to flow in to competing ports. For example, an 8,000-TEU cargo ship that drops off a full load, and then picks up a full load, will be saddled with an additional shipping cost of $480,000. California's ports are already more expensive than competitors, and an additional cost of $480,000 per 8,000-TEU vessel is likely to add to other cost pressures and lead to diversion of cargo.'
   AgTC claims the bill particularly hurts agriculture shippers.
   'California's vital agricultural industry is already at a disadvantage with out-of-state and foreign competitors because of the high costs associated with doing business in California,' the letter said. 'Unlike some other industries impacted by SB 974, California's farmers can not simply increase the cost of their product when shipping costs increase. Instead, prices are often set on an international market that does not fluctuate based on California's business climate. While the intent of SB 974 is clearly not to hurt California's farmers, the results are unmistakable — California farmers will be less competitive on an international level.'
   Last month, the governing board of the Port of Long Beach voted 3-2 to put the port's support behind the measure, with the caveat that the language of the bill be changed to meet three board concerns.
   The five-member board wants assurances that any SB974 funds collected in Southern California would stay to support Southern California infrastructure and environmental projects.
   The board also wants language to be included allowing the funds to pay for roadways projects, such as a long-delayed $800 million bridge replacement in the Long Beach port.
   In addition, the port wants SB974 to include language freeing the ports from commitments to meet long-term air quality standards if outside regulatory actions or legal rulings prevent the ports from doing so.
   This is the third go around for Lowenthal on the issue. His first effort never made it out of the Assembly and Schwarzenegger vetoed the senator's second effort last year.
   The current bill now heads for the State Senate Appropriations Committee.