Billions of dollars in federal grants aimed at reducing air pollution at seaports are included in the Democrats’ inflation bill with the caveat that the money cannot be used to automate container terminals.
The Inflation Reduction Act of 2022, announced last week by Senators Joe Manchin, D-W.Va., and Majority Leader Chuck Schumer, D-N.Y., is a pared down version of President Joe Biden’s “Build Back Better” package introduced last year but never passed.
The new version, which backers say will raise $739 billion in revenue by closing corporate tax loopholes among other budgetary changes, also invests in domestic energy production and manufacturing with a goal of reducing carbon emissions by roughly 40% by 2030.
One of the provisions in the bill makes available, until September 2027, $3 billion in grants and rebates to port authorities and marine terminals to purchase and install zero-emission cargo-handling equipment.
Build Back Better — which would have set aside $3.5 billion for the grants — included a restriction that funds awarded “shall not be used … to purchase fully automated cargo-handling equipment or terminal infrastructure that is designed for fully automated cargo-handling equipment.”
While the restriction is not included in the grant provision in the climate bill, the provision defines zero-emission port equipment or technology as being “human-operated equipment or human-maintained technology” and therefore continues to exclude automated technology from grant eligibility without the separate language.
Eligible cargo handling equipment or technology is further defined in the bill as producing zero emissions of air pollutants and greenhouse gases or that captures 100% of such emissions produced by ocean vessels at berth.
“This would go a long way to help seaports meet their emission reduction goals,” said Elaine Nessle, executive director of the Coalition for America’s Gateway and Trade Corridors. “Freight projects often have economic benefits for the entire country, but they can also negatively impact local communities, so it’s good to have resources at the federal level to offset those negative impacts.”
Maintaining a port automation exclusion is notable given that automation is considered a major factor in current negotiations between the International Longshore and Warehouse Union (ILWU) and U.S. West Coast marine terminal operators. The ILWU has been wary of automation expansion and downplayed claims by terminal employers on the extent of automation benefits promoted by management.
Truck stops not fans of inflation bill
Freight markets are not all-in on the inflation bill, however. NATSO, which represents truck stops and travel plazas, is urging lawmakers to oppose it because while it extends the biodiesel and renewable diesel tax credit, it provides a higher tax credit of up to $1.75 per gallon for sustainable aviation fuel (SAF) production.
“This legislation purports to create a ‘technology neutral’ clean fuels tax scheme, which fuel retailers have long supported,” said David Fialkov, NATSO’s executive vice president of government affairs. “[However,] favorable treatment for SAF flies in the face of this approach.”
Fialkov also asserted that SAF is not as environmentally friendly as renewable diesel and will cost taxpayers more.
“Providing more favorable tax treatment for a technology that has fewer environmental benefits undermines the intellectual integrity of the climate provisions in this bill,” he said.
Legislative outlook mixed
Because the proposed legislation — which could be voted on sometime this month — affects taxes and spending, it is considered a reconciliation bill. It can therefore avoid a Republican filibuster in the Senate and pass with a simple majority of 51 votes (versus a supermajority of 61 votes).
However, because U.S. Sen. Kyrsten Sinema, D-Ariz., has blocked progress on similar issues in the past, “her vote will be critical,” according to the law firm Gibson Dunn.
Gibson Dunn notes the next steps are for the Senate parliamentarian to review the bill to ensure that everything within it relates directly to the budget and a robust floor debate featuring a “vote-a-rama,” with votes on amendments that could extend beyond the energy, tax, and health care issues that make up much of the legislation. The Senate and House must then vote on the bill.
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