AgTC: Lowenthal bill “one-size-fits-all” approach unfair on ag shippers

AgTC: Lowenthal bill “one-size-fits-all” approach unfair on ag shippers

AgTC: Lowenthal bill “one-size-fits-all” approach unfair on ag shippers

The Agriculture Transportation Coalition on Thursday submitted a letter to the California legislature and Gov. Arnold Schwarzenegger, denouncing the latest installment of a container fee bill (SB 974) proposed by state Sen. Alan Lowenthal.
   The bill, which Lowenthal has introduced in each of the last three legislative sessions, would assess a $30-per-TEU fee on each container handled at the ports of Los Angeles, Long Beach and Oakland. Revenue from the bill is designed to fund goods movement-related infrastructure, environmental and security projects.
   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 letter said. '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 into 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 then said that 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 cannot 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.'
   The letter also reiterates familiar refrains from opponents of the bill — that it would hurt California's manufacturing sector, that it enacts an illegal tax on trade, and that it violates the Commerce Clause of the Constitution, as well as trade agreements like the WTO's General Agreement on Trade and Tariffs.
   'Despite suggestions to the contrary, acceptable alternatives do exist,' the letter said. 'Ports are currently financed with billions of dollars in private sector investments paid for mostly through revenue bonds financed by port terminal operators and others through true user fees. California ports are carrying close to $3.5 billion in revenue bonds for goods movement related infrastructure improvements. These funds continue to be spent on updating and building new roads, rail capacity, and a variety of other projects.
   'In principle, a public private partnership must provide real and tangible benefits to all who contribute funds. This concept is most applicable to individual projects because funding sources may derive varying levels of benefit from each specific project and, therefore should have varying levels of financial involvement in those projects. The one-size-fits-all approach that is offered in SB 974 does not constitute a true public private partnership.'