California ports container tax bill shelved

Japan eases fumigation mandate on Washington cherries A contentious cargo container tax bill aimed at raising more than $500 million for port infrastructure and air quality projects — and facing a veto by Gov. Arnold Schwarzenegger — is being shelved until next year.
   Sen. Alan Lowenthal, D-Long Beach, author of Senate Bill 974, made the announcement Thursday afternoon.
   The bill, which was nearing a final vote in the state assembly, sought to impose a $30 tax on each 20-foot container moving through the ports of Long Beach, Los Angeles and Oakland. The bill faced a Sept. 15 deadline to be voted on by both houses, but it was expected to pass in time.
   Lowenthal will place the bill on the agenda for the next session of the legislature, which begins in January. Since the bill has already worked its way through both houses of the state legislature, it could be moved forward again anytime before the next session's legislative deadline in late August or early September 2008.
   Sacramento insiders, asking that their names be withheld, said Schwarzenegger prompted the move by informing Lowenthal last week that he would veto SB974 if it reached his desk. Calls to the governor's office were not returned, but Lowenthal's office agreed with the description of the events.
   In vetoing a previous and nearly identical Lowenthal bill last year, Schwarzenegger raised numerous issues with the entire concept of the container tax, stating 'Although the policy objectives of (the bill) — to develop more secure ports, congestion relief and environmental mitigation — are laudable, this measure is flawed in its construction, application, lack of accountability and failure to coordinate with other public and private financing sources ignoring opportunities to leverage additional funding.'
   After last year's veto, Lowenthal made minor changes to the bill before introducing it again during the current legislative session.
   Lowenthal shelving the bill brings to center stage a proposal by Southern California ports to implement their own container tax.
   Despite being labeled by Lowenthal as a 'user fee,' industry and business groups had been formulating legal action against the bill, viewing it as an illegal tax. Industry insiders said Thursday that some cargo owners — the end users of all the containers — were already looking to shift their legal arguments to the ports' proposed tax.
   'The issues regarding whether this is a user fee or a true tax remain the same,' said John McLaurin, president of the Pacific Merchant Shipping Association, which represents the majority of ocean shipping lines on the West Coast.
   While not involved with potential litigation over the Lowenthal bill or ports' tax, McLaurin's group last week did win a court case against the California Air Resources Board and others, including the Port of Long Beach, that called into question the authority of local agencies like the ports to supersede federal authority. Containers moving though the ports are considered interstate commerce and taxing such commerce is normally a power reserved to the federal government.
   The Los Angeles Chamber of Commerce, while expressing concerns over both Lowenthal's bill and the ports' plan, struck a cooperative position on Thursday's news.
   'We want to work with the ports to make sure that if there is a funding mechanism put in place, that it is the most equitable and efficient possible for all the stakeholders,' said Sam Garrison, the chamber's director of public policy.
   In July, officials for the ports of Long Beach and Los Angeles proposed an eight-year 'Infrastructure and Environmental Cargo Fee' (IECF) that would impose a $26 fee for each container moving in and out of the neighboring ports. The plan states that it intends to make cargo owners pay 'their fair share' of development at the ports. The plan, which would require the ports to approve changes to their tariffs, is set for a rare joint session meeting of both port's policy-setting boards on Sept. 28.
   'There is no cause for celebration here,' said Ezra Finkin, legislative director of the Washington, D.C.-based Waterfront Coalition, an advocacy group representing the shipping industry. 'What the ports have put together here, in terms of infrastructure and clean trucks, is in some respects much more costly than Sen. Lowenthal's plan.'
   Port documents reveal that as part of the IECF plan the ports have identified $8.1 billion in road and rail projects considered by port officials as “critical” to keeping the two ports growing. According to the documents, the ports are willing to pay $267 million, or 3.3 percent, of the total cost of the projects. Under the port IECF funding scheme detailed in the documents, taxpayer funds from federal, state and local sources would pay for $3.7 billion of the total. The remaining $4.1 billion would be passed along to importers, exporters and the railroads through port-imposed fees. Economic experts have said that these companies will not absorb these costs, but pass them along to consumers in the form of higher prices.
   The two neighboring ports, which together comprise the busiest container port complex in the Western Hemisphere, moved nearly 16 million TEUs last year. Estimates suggest that this number will more than double within a decade. Given that the port-area infrastructure continues to deteriorate as costs for repairs and development have skyrocketed, the problem has grown out of reach of even the financially-lucrative ports.
   For example, one project detailed as a target of collected IECF funds — replacing the aging Gerald Desmond Bridge in the Long Beach port — has risen in cost over the past five years from around $350 million to a current estimate of more than $800 million. A taller, higher-capacity version of the bridge is considered a key project by Long Beach port officials, despite criticisms from local groups that it will lead to higher truck volumes and more pollution. The current bridge was built in the late-1960s and is considered a bottleneck at the ports due to its low traffic capacity. It is also too low to allow future mega-container vessels safe passage underneath it. Despite Long Beach identifying the bridge as a project of critical importance, the port documents reveal that the two ports are willing to provide only $56 million, about 7 percent of the total, to its replacement.
   Other projects identified by the ports as 'critical' and targets of the IECF funds include:
   ' A $1.8 billion port trucking re-regulation plan.
   ' Numerous on-dock rail projects.
   ' The Gerald Desmond Bridge replacement, to allow more trucks over it and larger vessels under it.
   ' Expanding a short port-area freeway that is used almost exclusively to deliver containers to a near-dock port rail yard.
   ' Rebuilding freeway connectors serving the Los Angeles port.
   ' Highway-rail grade separations in Los Angeles, Orange, Riverside and San Bernardino Counties.
   Much of the federal, state and local funding listed in the port documents has yet to be secured by port officials.
   The Port of Los Angeles declined to make an immediate comment on Lowenthal's action and the ports of Long Beach and Oakland did not immediately return calls Thursday afternoon.