SoCal ports container tax effort delayed by FMC
An effort by the Southern California ports to fund a trucking re-regulation program with a $35-per-TEU container tax has been delayed by the U.S. Federal Maritime Commission.
The FMC on Wednesday voted to request additional information from the ports' about the container tax mechanisms before the commission will allow the ports to move forward with imposing the tax on cargo owners.
In a 2-1 vote, the three sitting members of the normally five-member panel, cited 'rapidly changing economic circumstances and the recent pronouncement that the Port of Los Angeles will reevaluate certain aspects of the Clean Truck Program' as reasons why the commission needed additional information from the ports.
At the heart of the FMC decision to request additional information is a Dec. 4 statement by Port of Los Angeles Executive Director Geraldine Knatz that said due to a downturn in port revenue the port was 'looking at ways to modify [the truck program] to lessen the impact on the cargo owners.'
This is the fifth time the FMC has taken some form of action against the ports over the truck program. Most recently, the FMC sued the ports in federal court to block portions of the truck plan from moving forward with a decision on the injunction expected early next year.
The portions of the truck plan the FMC is trying to block in court do not include the collection of the container tax. However, the FMC, according to its statement, still wishes to have certain information presented by the ports to allow the commission 'to accurately assess the likely competitive impact of the agreement on transportation costs and services.'
Assenting commissioners Harold Creel, Jr. and Rebecca Dye said the information was critical to make sure the container tax does not lead to a reduction in competition at the ports.
'Such reduction would raise prices at a time when the American consumer can least afford any added costs, and at a time when independent owner operators can least afford to be driven out of the port drayage market. Through a comprehensive and up-to-date analysis of the ports’ programs, the FMC is working to ensure that our foreign trades operate free from substantially anticompetitive activities,' said a statement from the commission majority.
Dissenting commissioner Joseph Brennan said he was 'very troubled that the commission majority has again decided to delay or block this important environmental program without justification.'
The agreement in dispute is a marine terminal operators agreement filed with the commission by the ports of Long Beach and Los Angeles in November. Titled the Port Fee Services Agreement, the filing sets down the mechanisms under which the ports will collude with their marine terminal tenants to collect a $35-per-TEU container tax to pay for the ports' trucking re-regulation program. Portions of the truck program went into effect nearly three months ago, however, the collection of the container tax was delayed, initially by technical problems, then by the FMC raising questions about the agreement.
If the agreement is not allowed to take affect by the FMC, the ports would not be able to discuss, plan, or implement the details of the container tax scheme as detailed in the filed agreement.
The FMC's request for information now 'delays the effectiveness of the Port Fee Services Agreement until 45 days after the parties have submitted the requested information and documents,' according to the FMC.
Depending on how quickly the ports respond to the FMC request, the process could leave the ports with no way to start collection of the container tax until February of next year. By then, the ports will have been paying for the truck program out of their own pockets for nearly five months.
However, so far, the ports have not needed a huge influx of cash for the program.
The program originally planned to offer drivers and trucking firms loans, grants, and other financial mechanisms to replace aging trucks with 2007 or newer models. Funding comes from about $400 million in state funds and the anticipated $1.6 billion to be collected from the container tax over the next five years.
To date, though, the owners of less than 10 trucks have actually moved through the complicated process to receive funds for new trucks, with another 100 trucks in the process of being funded. The truck program is ultimately envisioned to help replace the more than 19,000 drayage vehicles that were servicing the ports before the truck program started.
According to the Port of Long Beach, the program hopes to fund several thousand trucks during 2009. ' Keith Higginbotham