The Issue:

As part of the “first hundred hours” push of the new Democratic majority, the House of Representatives approved 9/11 Commission Implementation Act (HR 1), which, among other things, contains a new mandate for 100 percent scanning for radiological materials of all inbound cargo before leaving foreign ports. This provision would override a 100 percent scanning pilot program created in The Security and Accountability for Every (SAFE) Port Act, which the President signed into law in October 2006.   Senators, however, seem less inclined to revisit this issue, particularly since the pilot program in the SAFE Port Act has not yet been given time to be implemented and because it is unclear there exists the technology to satisfy a full 100 percent scanning mandate. Meanwhile, efforts continue regarding implementation of the SAFE Port Act.  Among other things, that legislation will increase requirements for participants in Customs' Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT) program and require background checks of all workers at US ports.  The act also requires Customs to ensure it has sufficient data on shipments entering the United States, which has led to new 10+2 data requirements.  Meanwhile, on February 23, California Senator Alan Lowenthal re-introduced SB 974, AAFA-opposed legislation which calls for a $60 per 40-foot container fee at the ports of Los Angeles, Long Beach and Oakland to pay for goods movement infrastructure investments and goods movement-related pollution reduction programs. The same bill passed the California General Assembly last year, but Governor Arnold Schwarzenegger (R) vetoed the measure. Many experts feel that the political environment has changed, which could force Schwarzenegger to sign the measure if it reaches his desk again. On a related point, due to intense opposition by AAFA and others,  similar legislation in the Washington State Senate that would have imposed a new $100 per container fee on containers moving through the Ports of Seattle and Tacoma has now become a proposed study to evaluate whether a new container fee would lead to cargo diversion away from Washington State ports.

AAFA on the Issue:

AAFA will lobby to defeat or change proposed legislation and other initiatives that could adversely affect U.S. apparel and footwear firms while doing little to improve homeland security.  At the same time, AAFA continues to work with Congress and the U.S. government to find constructive solutions to improving homeland security and to improve the transportation infrastructure in the United States without impeding trade. AAFA will also continue to monitor the situation on the West Coast and will explore alternative solutions (including possible legislative fixes) for AAFA members.

The Latest News:

12.23.08
In yet another blow to the Ports of Los Angeles and Long Beach's efforts to impose new container fees to pay for their Clean Truck Plans, the Federal Maritime Commission (FMC) December 17 that the ports must provide the FMC more information regarding their Clean Truck Plans before moving forward on implementing any new fees. This request essentially delays any implementation for at least 45 days, or until late January 2009 at the earliest. The FMC cited continued concerns that the ports’ proposed fees may violate the Shipping Act.

12.06.09
US District Judge Richard Leon has delayed making a decision on the Federal Maritime Commission's (FMC) case against the Clean Truck Programs at the Ports of Los Angeles and Long Beach. In October, FMC filed a claim against the ports on grounds that the program may violate provisions of the Shipping Act. On December 8, Judge Leon was scheduled to disclose his decision regarding FMC's request for a preliminary injunction. However, he has now delayed his decision until sometime shortly after January 1, 2009 stating that he needs more time to consider the details of the case.

10.20.08
Officials at the US Customs and Border Protection (CBP) office in Long Beach, CA on October 9 announced a dramatic increase in seizures of counterfeit goods at the Ports of Los Angeles and Long Beach. In fiscal year 2008 (which ended September 30), CBP seized 357 shipments of pirated goods at the Ports of Los Angeles and Long Beach with a domestic value of $71.4 million, representing a 50 percent increase in total seizures and a 148 percent increase in total value over fiscal year 2007. CBP cites the hard work of the agencies’ staff and the close partnerships formed between the many different government agencies involved in IP protection as the reasons for the increased seizures.

11.17.08
The scheduled November 17 implementation of Port Check to collect the $70 per FEU (forty-foot container) fee at the Ports of Los Angeles and Long Beach been postponed indefinitely due to unresolved issues with the Federal Maritime Commission's approval of Ports' Clean Truck Programs, which the fees would help fund, as well as operational problems with the Port Check system.

10.06.08
On September 30, the Governor of California, Arnold Schwarzenegger, vetoed the container fee bill that would have required a payment of $60/FEU tax on containers that went through Los Angeles, Oakland and Long Beach. A large part for the reason of the veto is that Schwarzenegger and his Administration say that the bill is not focused enough and the profit from the fees would be used for too broad of a purpose. In the bill, the revenues were to be used to facilitate projects to help congestion of the ports and to improve the air pollution in the state, but the bill does not provide enough oversight or assurance that the projects will be effective. The Governor also commented on the bill's lack of long-term planning for infrastructure projects and the importance of not burdening businesses more with added container fees under current economic conditions.

09.22.08
On October 1, the ports of Los Angeles and Long Beach plan to start collecting the $70/FEU clean truck fee. Marine Terminal Operators (MTOs) are working around the clock to develop an electronic payment and management system as well as features that can deny entry of any banned truck. As of two weeks ago, MTOs requested both ports to delay implementation of the Clean Truck Plan until January 1, 2009, due to their inability to have the system effectively completed by October 1. Nevertheless, all reports still point to the plan rolling out as scheduled.

Meanwhile in Sacramento, CA State Senator Alan Lowenthal’s (D-Long Beach) container tax legislation may be doomed for the year after California Governor Arnold Schwarzenegger (R) vowed not to sign any bills until the legislature passes a budget. While the governor still expresses some concerns with the bill, his Alaskan counterpart and now-Republican Vice Presidential candidate Governor Sarah Palin has publicly asked Schwarzenegger to veto the legislation, a move that he has made previously.

09.15.08
US District Judge Christina Snyder on September 10 formally denied an injunctive relief request by the American Trucking Association (ATA) pending the outcome of its case against the ports of Los Angeles and Long Beach Clean Truck Plans. In its request for an injunction, ATA said that the programs would result in large economic damages, potentially forcing many companies out of business. Judge Snyder disagreed and added that the concessions would actually ensure compliance with homeland security regulations regarding the Transportation Worker Identification Credential (TWIC™), along with state and federal motor carrier safety regulations. Meanwhile, west coast marine terminal operators on September 10 asked both ports to delay the implementation of the Clean Truck Plan, including the payment of the $70/FEU container fee, until January 1, 2009. They explained that, while they are working diligently to develop the systems to manage the program, those systems cannot effectively be completed by October 1, 2008. Specifically, a database containing the compliance information of all trucks and motor carriers is incomplete. At this time, however, the fee is still scheduled to be collected beginning in three weeks on October 1.

09.08.08
AAFA sent a letter August 12 to California Governor Arnold Schwarzenegger asking him to veto legislation (SB 974) that would impose an unconstitutional container tax on international cargo coming through the ports of Los Angeles, Long Beach and Oakland. The legislation, approved by the California General Assembly in August, would impose a $30 per TEU tax on all containers moving through California ports as of July 1, 2009. The proposed tax would be in addition to the new container fees already announced by the Ports of Los Angeles and Long Beach that will go into effect on October 1.

08.11.08
Last week, the California State Senate passed legislation sponsored by Senator Alan Lowenthal (D-Long Beach) that would impose a $30 TEU fee on containers coming through the Ports of Los Angeles, Long Beach and Oakland. While California Governor Arnold Schwarzenegger (R) vetoed similar legislation two years ago, rumors around the state capital over the last several months have said that he may sign it into law. However, since Senate passage of the bill, Sacramento insiders are now saying that the governor may still have some reservations. Either way, Schwarzenegger still has a couple weeks before he has to make a final decision.

AAFA will soon send a letter of opposition to the governor asking him to veto the bill again. If Schwarzenegger signs the legislation into law, the new fees would be imposed July 1, 2009 and would be in addition to the new fees already announced by the Ports of Los Angeles and Long Beach.

07.28.08
Reports indicate that the American Trucking Association (ATA) will ask a federal judge to block implementation of the Southern California ports’ $2.4 billion clean truck program that seeks to replace some 17,000 drayage trucks from entering the port. The anticipated suit will attack the ports of Long Beach and Los Angeles on the grounds of violation of the Commerce Clause of the US Constitution, which precludes the imposition of local taxes on international freight. The two ports have been anticipating the lawsuit for nearly a year and have already spent several million dollars retaining several prominent law firms to help defend against the possible ATA action.

07.21.08
Last week, the California State Assembly passed Senator Alan Lowenthal’s container tax legislation (SB 974) by a vote of 45-23. The bill imposes a $60 per FEU fee to be paid by shippers moving cargo through terminals in Los Angeles, Long Beach and Oakland. This fee would be in addition to separate port-imposed container fees to pay for a new fleet of clean trucks and infrastructure improvements in and around the ports all of which are set to be paid by beneficial cargo owners.

SB 974 now goes to the Senate for consideration and it is still unclear when the Senate vote will be scheduled. If and when the bill moves out of the Senate, it will be sent to Governor Arnold Schwarzenegger’s desk for his final approval. While the Governor has vetoed the bill previously, Sacramento insiders have indicated that he will sign the bill.

07.14.08
Last week, the Long Beach City Council voted to take another look into the financing model for a $2.4 billion truck plan approved earlier this year by the city’s port officials. The 6-0 vote could lead to a Council decision that could change the current draft, including a provision that protects the independent owner-operator status among the more than 14,700 drivers in the port drayage fleet. While Long Beach city council members do not have direct authority to rule on the truck plan, the council and Mayor Bob Foster have been able to bring pressure on port commissioners on other issues and due to voter-approved changes to the City Charter last year, Foster now wields the authority - with City Council approval - to fire a sitting port commissioner.

The ports’ truck plan, long opposed by the American Trucking Association (ATA) and other industry groups, is likely to end up in court by the end of this month. The ATA, representing about 37,000 trucking firms nationwide, is in the final stages of preparing its suit which will focus on, among other points, the truck plan’s alleged violation of the Commerce Clause of the U.S. Constitution and the Shipping Act of 1984.

07.07.08
While it was widely speculated that CA State Senator Alan Lowenthal’s container tax bill would be approved last week, the week came and went without a vote on the controversial proposal that seeks to impose a $30 tax per TEU on containers. The delay apparently was a result of a series of amendments being considered by Assembly members, whose scheduled summer recess begins July 4. The Legislature reconvenes on August 4, when it is again speculated that the bill will be considered. Although he vetoed it the last time it came to his desk, CA Governor Arnold Schwarzenegger has indicated he will sign it.

06.30.08
On June 24, the Senate Finance Committee held an oversight hearing including the US Bureau of Customs and Border Protection’s (CBP). Commissioner W. Ralph Basham spoke briefly about CBP’s efforts to finalize controversial regulations on its proposed Importer Security Filing, commonly referred to as “10 + 2.” In his prepared statement, Chairman Basham reiterated his support for rule and said “obtaining data earlier in the logistics process will assist CBP in making more informed decisions when inspecting individual shipments” and “will facilitate entry and expedite clearance for low-risk cargo.” Commissioner Basham misspoke when he said that the rule was going to the Office of Management and Budget (OMB) this week, in fact the rule is still being reviewed. The rule, known as “10 + 2,” would impose requirements on both importers and carriers to submit the additional cargo information before the cargo is loaded onto an ocean vessel bound for the U.S. The nickname “10 + 2” comes from the fact that the rule would require 10 additional data sets from importers and 2 from shippers.

06.30.08
On June 20, Senators Frank Lautenberg (D-NJ), Robert Menendez (D-NJ)), Chuck Schumer (D-NY) and Hillary Clinton (D-NY) introduced the Port Authority Implementation Act of 2008 (S.3174). The bill would require cargo to be monitored from the moment it is packed into containers abroad until it reaches its final destination in the United States. Containers that do not meet the security standards would be refused entry into the country. The bill would also create designated security officials on foreign ships, regional response and recovery plans and standardized risk assessment tools, among other regulations.

06.23.08
The seven-member board of the Port of Oakland voted last Thursday on a plan to impose a container tax similar to the two enacted at the Ports of Los Angeles and Long Beach earlier this year. Citing a worsening financial situation at the port, the $25 per FEU tax would be added on all loaded containers moving through the port. It is unclear when the fees would take effect. At the same time, the LA City Council approved the port’s clean-trucks program, further paving the way for implementation of that onerous plan. The American Trucking Association may still file a federal lawsuit on the port plans, which could come by the end of June.

In other developments, the Federal Maritime Commission provided the plans with another important push forward when it approved the truck plans last week.

06.16.08
Following the ports of Los Angeles and Long Beach, the Port of Oakland staff has recommended that its Harbor Commission implement a $25 container (FEU) fee to fund infrastructure and clean air projects. According to the staff report, the revenue will be used to fund undefined port infrastructure projects and the replacement of 1,000 older harbor trucks. The report recommends that the fee be imposed by July 1, 2009 and would apply only to loaded containerized cargoes. All other cargoes, such as project and bulk cargo as well as empty containers, moving by truck on local roads would not be subject to the fee.

At the same time, SB 974, CA State Senator Lowenthal Container tax bill, is expected to move out of the California Legislature this July as part of a budget package sent to the governor. SB 974 calls for a $70 container (FEU) fee levied on cargo moving through, L.A., Long Beach and Oakland to pay for undefined transportation and environmental mitigation projects. While California Governor Arnold Schwarzenegger has previously vetoed the bill, Sacramento insiders have said that they now expect him to sign it.

03.17.08
The Port of Oakland Harbor Commission is set to consider a similar container fee program as has been proposed by the Ports of Los Angeles and Long Beach over the last couple months. Like that plan, Oakland will be looking at fees to pay for a fleet of clean trucks and infrastructure projects in northern California. However, the price of fees and the collection mechanism have not yet been released.

01.07.08
Despite strong opposition from AAFA and the rest of the business community, the Port of Long Beach on December 17 and the Port of Los Angeles on December 20 approved a tax - which they call a Clean Trucks Fee - of $35 per TEU ($70 per FEU) on each loaded container entering or leaving the port by truck. Trains are not covered. The fee starts on June 1, 2008 and is expected to end in 2012, when the "cleaner" drayage fleet envisioned under the Ports' Clean Air Action Plan (CAAP) is in place. The CAAP imposes a ban on old, dirty trucks that call at the ports. The ban will be phased in, beginning October 1, 2008, with a ban on all trucks built before 1989. By January 1, 2010, only trucks built after 1993 will be allowed and, by January 1, 2012, all trucks must meet 2007 federal EPA standards. On December 19, California Governor Arnold Schwarzenegger (R), reversing a previous policy position, expressed support for the fees.

As a result of this latest action by the ports, California State Senator Alan Lowenthal (D-Long Beach) has now pledged to push forward with his own statewide container tax bill that would impose similar container fees in addition to those imposed by the ports. Earlier this year, the senator announced that he would postpone any further movement of his legislation, as he has twice before failed to implement his bill last year after a veto from the governor. However, early last week, Schwarzenegger stated that he now supports Lowenthal’s bill.

The effects of these fees will undoubtedly be detrimental to the flow of goods moving through Southern California and will place even more egregious burdens on those companies that rely upon this crucial point along the international supply chain. AAFA is continuing to track and speak on behalf of the industry on this important and fast developing issue.

Port Security News Archive