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    State Senator Lowenthal Halts Advance Of His Container Fee Bill For Clean Air, Security & Infrastructure -- Legislation Opposed By "Goods Movement" Interests -- Hoping To "Work Something Out" With Schwarzenegger Administration

    (August 17, 2005) -- State Senate Alan Lowenthal (D., LB-SB-PV) has announced that for the moment he is halting the advance of his own Port-related clean-air bill to levy a fee on containers running through the Ports of LB and L.A. for clean air, security and infrastructure purposes.

    State Senator Lowenthal's office said in a written release it is "[e]ncouraged by recent talks with the goods movement industry and the Governor's office." It quoted State Senator Lowenthal as saying, "I am holding SB 760 in the Assembly now in the hope we can work something out with the Administration. I believe that I could move this bill to the Governor this year, however with the Governor's recent work on Goods Movement issues, I think a more collaborative proposal can be worked out, it will just take a few more months."

    SB 760 had already passed the State Senate and was pending in the Assembly with continuing opposition by "goods movement" interests. Last year, Governor Schwarzenegger vetoed legislation by then-Assemblyman Lowenthal to establish baselines for "no net increase" in Port-related air pollution (AB 2042). Earlier this year, Senator Lowenthal reintroduced the "no net increase" bill as part of a package of Port-related clean air measures...which included the container fee measure SB 760.

    An Assembly legislative analysis of SB 760 indicates opponents of Lowenthal's container fee bill variously claimed it violates the U.S. Constitution's commerce clause and international trade agreements, invites litigation and a possible dispute at the World Trade Organization...and also said CA Ports would be competitively disadvantaged and cargo would be diverted away from CA Ports.

    As first reported, on August 8 the Port of LB's senior Washington, D.C. lobbyist -- whose firm LB City Hall has for years separately retained to represent City Halls' DC interests -- publicly told LB's Board of Harbor Commissioners that his firm helped defeat federal container fee legislation authored by Congressman Dana Rohrabacher (R, HB-LB-PV). Rohrabacher's bill would have allowed Ports nationwide to levy container fees under the U.S. Constitution. Questioned about the federal container fee bill at the August 9 LB City Council meeting, the Port's lobbyists reiterated grounds for opposing the federal container fee bill; the Council has since taken no action on the matter.

    SB 760 would impose a $30 fee on each shipping container processed at the Ports of Los Angeles and Long Beach and specifies the allocation and expenditure of the container fee revenues for rail system improvements, port security and environmental pollution mitigation.

    In a June 27 legislative analysis (the most recent available), those registering support for SB 760 included:

    • Alameda Corridor-East Construction Authority
    • American Lung Association of California
    • CA Teamsters Public Affairs Council
    • Camara Latina de Industria y Comercio de Lynwood
    • City of Rancho Palos Verdes
    • Environmental Entrepreneurs
    • Long Beach Alliance for Children with Asthma
    • Lynwood Chamber of Commerce
    • Metropolitan Transportation Authority
    • Natural Resources Defense Council
    • Planning and Conservation League
    • San Gabriel Valley Council of Governments
    • San Gabriel Valley Economic Partnership
    • San Gabriel Valley Economic Partnership
    • South Coast Air Quality Management District
    • South Gate Chamber of Commerce
    • The First Congregational Church of Long Beach

    Opposition included:

    • Agricultural Council of California
    • APM Terminals
    • California Association of Port Authorities
    • California Chamber of Commerce
    • California Chapters of the Institute of Scrap Recycling Industries
    • California Trade Coalition
    • Cal-Tax
    • China Ocean Shipping Company Agencies (Los Angeles) Inc.
    • Greater Fresno Area Chamber of Commerce

    The June 27 legislative analysis for SB 760 notes in pertinent part:

    The author's office states that the Twin Ports process containers and freight constituting approximately 40 percent of the nation's port cargo. The Los Angeles/Long Beach port complex already is the largest in the nation and will continue to grow from 15 million TEUs today to 47 million TEUs by 2020. The ports are the single largest source of pollution in the South Coast Air Basin, and the existing port-related infrastructure is already strained and ill-equipped to handle the growth in cargo shipments that is occurring and will continue to occur...

    ...Environmental Impact

    According to the author's office, the ports are the single largest source of air pollution in the South Coast Basin. According to a 2004 NRDC report, Harboring Pollution: Strategies to Clean Up U.S. Ports, "The ships, rail, trucks and cargo handling equipment that move containers through the ports are all significant sources of air pollution impacting the neighboring communities and all residents of the broader South Coast Air Basin." According to the South Coast AQMD, more than 70% of the cancer risk faced by Southern California residents comes solely from diesel exhaust. In a June 12, 2005 Riverside Press-Enterprise editorial, former governor George Deukmejian noted, "We need to invest money, lots of it, in our highway and rail systems so that we can move goods efficiently and cleanly." In order to fund this goal, Deukmejian argues for "a freight user fee on all containerized goods moving by truck and rail through Southern California ports and transportation corridors."

    ...Security Concerns

    The author's office also cites security concerns, noting that only two percent of the containers moving through the ports will be inspected. According to an August 2004 statement by Stephen Flyyn, Ph.D., U.S. Coast Guard Commander (ret.), since 9/11, "Washington has provided only $516 million dollars towards the $5.6 billion the Coast Guard estimates U.S. Ports need to make them minimally secure." Any security disaster at the ports could stop freight shipments to all parts of the country for undetermined periods at a cost of over $1 billion/day to the nation's economy.

    ...Free Trade

    Opponents of this bill make two major arguments against the measure. First, trade-related businesses and organizations contend that the bill violates the United States Constitution's Commerce Clause and breach obligations under international trade agreements, including Article VII of the General Agreement on Trade and Tariffs. They believe that costly litigation could result and an international trade dispute at the World Trade Organization could ensue. Opponents believe that California ports would become competitively disadvantaged by the new fees and that cargo would be diverted elsewhere, away from California ports. They describe the container fee as an illegal tax being imposed at a time when existing transportation and infrastructure funds are being diverted to the General Fund and that the new charges will have to be passed on to consumers.

    The trade organizations state they already are implementing the Pier Pass Program, a private sector effort to add a tariff on goods moved at ports at peak hours to fund the alternative costs of keeping ports and terminals opening during off-peak hours so as to reduce peak-period truck traffic. The bill's additional fee cannot be absorbed, in their opinion.

    "I have always contended that the best solutions to a problem should involve all parties that would be affected," said Lowenthal in his office's release. "The problem is clear and solutions are within our reach. I am confident that given more time we will find the correct answers to this crisis. The public has spoken and they expect us to act."

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