Ports, Infrastructure, & User Fee Proposals 

National Freight Policy Discussions
Congress is scheduled to reauthorize legislation for surface transportation (highways, transit) projects. The two issues that affect RILA members most directly are the source of funding for the legislation and the inclusion of a national freight policy.  Surface transportation reauthorization legislation is expected shortly in both the House and the Senate; currently one bill has been introduced that suggests there will be additional fees on the freight community. 

ON TIME Act:  Representative Ken Calvert (R-CA) reintroduced his legislation that directs the Secretary of Transportation to designate key trade transportation corridors, or National Trade Gateway Corridors, extending out from every official air, land, and sea port of entry in the United States.  The bill plans to derive its trade-based dedicated funding stream through the establishment of a capped and nominal ad valorem fee (at .075 percent) on all goods entering and exiting through official ports of entry.  The fee is capped at $500 per shipment and would be deposited into the newly created “National Trade Gateway Corridor Fund.”  Discussion has taken place on possibly including this fee to help finance the next surface transportation reauthorization bill, but the authors of the bill have not hinted that they intend to use this mechanism.  This legislation was introduced in 2008 and 2009 and did not gain traction.

The Freight is the Future of Commerce in the United States Act of 2011 (Freight FOCUS Act):  In March 2011, Congresswoman Richardson reintroduced legislation aimed at developing a more comprehensive approach to funding freight.  The legislation (H.R. 1122) creates an Office of Freight Planning at the Department of Transportation to prioritize key freight corridors and arranges for both public and private sector involvement in the process.  It creates a dedicated source of funding for goods movement, while providing funding to mitigate the effects of goods movement on the environment and public health by increasing the diesel tax by 12 cents.  This legislation was endorsed by RILA.

Clean Trucks Efforts
Despite recent reductions in volumes at ports across the country as a result of the recession, basic infrastructure improvements remain a necessity in order to improve the shipments of goods. Environmental mitigation will continue to be combined with infrastructure improvement needs especially in localities surrounding major port operations as local leaders struggle with health concerns for their constituencies and maintaining the competiveness of their ports.   This once local fight has moved to the national arena.  As Congress continues to deliberate on congestion issues, major U.S. ports have added an additional item for possible consideration: a new policy shift focused on sustainability at the ports.  

Local Level:
Port of Los Angeles and Long Beach:  In 2006, both ports approved a Clean Air Action Plan (CAAP) to reduce emissions from trucks, vessels and operating equipment by 45 percent over five years. The Los Angeles/Long Beach plans are as follows:

• Clean Truck Fee:  The Port of Long Beach eliminated the Clean Truck Fee for privately financed clean trucks, port-funded liquefied natural gas and alternative-fueled trucks. It was ultimately decided that only container cargo moved by 2006 and older trucks and clean diesel trucks funded by the Port of Long Beach will be subject to the fee.
  
• Concession Requirements: Los Angeles’ concession plan prohibited the use of independent owner-operators over a five-year period.  In April 2009, a federal judge ruled portions of the clean-truck programs at the ports of Los Angeles and Long Beach illegal, but left others in place. In August 2010, U.S. Federal District Court Judge Snyder issued a ruling in favor of the Port of Los Angeles (POLA), which allows the POLA’s concession plan, including the employee mandate, to move forward at the port.  The American Trucking Associations (ATA) filed a notice of appeal to the Federal Circuit Court (Judge Snyder) and a civil appeals statement filed with the 9th Circuit Court of Appeals.  In October 2010, Judge Snyder reinstated the injunction until the case is heard under appeal by the 9th circuit – while the ATA appealed her August decision. In June, the 9th Circuit began hearing arguments for a second time in this case; it is expected that the three-judge panel will rule later this year. If the courts decide in favor of POLA, other ports will likely follow with inclusion of employee mandates in their plans. 
  
• Local Cargo Infrastructure Fees: The ports of Los Angeles and Long Beach also approved a cargo infrastructure fee to fund priority port infrastructure projects.  However, in light of the economic downturn, the ports delayed collection of the fee until at least January 1, 2012.

Port of Seattle/Tacoma:  In Spring 2009, the Port of Seattle Commission and the Port of Tacoma Commission separately approved plans to reduce emissions from trucks that serve the port without involving additional cargo fees. The Port of Seattle’s plan prohibits the most polluting trucks (1994 model-year and older) from entering port terminals which began on January 1, 2011, in keeping with the 2010 standard of the Northwest Ports Clean Air Strategy.  The program includes measures to scrap the old trucks, compensate truck owners for their older trucks and help them buy or lease newer ones.  The Port of Tacoma’s plan does not have a truck replacement program.  Port officials are instead encouraging the use of low sulfur fuels and are using an on-dock rail system to minimize the concentration of trucks in the port.

Port of Oakland:  In March 2008, the Port of Oakland approved a container fee but the fee collection has been postponed. Port of Oakland commissioners also approved an air quality improvement plan in April 2009 designed to reduce diesel emissions from port activities 85 percent by 2020.  In June, the Port of Oakland approved its Maritime Comprehensive Truck Management Plan, which sets hard targets for truck retirement goals without the imposition of new container fees or an employee driver mandate.  Oakland became the second major west coast port (after Seattle/Tacoma) to adopt a retailers supported clean truck plan. 

Port of New York/New Jersey: In March 2010, the Port Authority of New York and New Jersey announced their clean truck program; a truck phase-out plan. As of January 1, 2011 all pre-1994 model trucks were be banned from the Port Authority marine terminals, trucks not equipped with engines that meet or exceed 2007 federal emissions standards will no longer be able to serve the marine terminals starting on January 1, 2017.

State Level:
California:  On a state level, the west coast has been focused on establishing standards to continue their focus on “greening” the economy.  The California Air Resources Board (CARB) passed a series of vehicle and fuel rules to cut port diesel emissions. One rule bars old diesel trucks from visiting California ports after January 1, 2010, unless they install diesel filters.  CARB also announced that it is releasing $90 million in state bond money for the state's Goods Movement Emission Reduction Program. The funding will go toward cleaning up port trucks, upgrading trucks in the Central Valley and Mexican Border regions and installing shore-based electrical power for two ship berths at the Port of Oakland.

Two new pieces of legislation will also aid in California’s effort to force an employee mandate on all drayage truckers and to levy a container fee on Beneficial Cargo Owners (BCOs):

AB 950:  This legislation, introduced in February by Speaker of the Assembly John Perez (D-Los Angeles) and coauthored by Assemblyman Sandre Swanson (D-Oakland), Chairman of the Assembly Labor & Employment Committee, seeks to force an employee mandate on all drayage truckers in the state. The language in the bill states that it will “deem drayage truck operators as employees of those persons who arrange for or engage their services.” The result of this bill will be a ban all independent contractors, also known as owner-operators, from California ports including Los Angeles, Long Beach and Oakland.  

The Committee passed the legislation on a 4-1 party-line vote, but the bill stalled, and was not brought up for a vote on the Assembly floor prior to the end of the 2011 session. Since the California State Legislature has large pro-labor majorities in both the Senate and the Assembly, along with a pro-labor Governor, this is a real threat in the 2012 session, one that RILA is actively working to oppose.

SB 862:  Senator Alan Lowenthal (D-Long Beach) introduced legislation to levy a container fee on Beneficial Cargo Owners (BCO) through PierPASS. This bill would establish the Southern California Goods Movement Authority comprised of local port, city and county officials. Although the bill did not pass this session, RILA will actively oppose this legislation in the 2012 session.

While legislative activity has seen activity in California, other states have begun to focus their attention on legislative vehicles focused on employee misclassification and container fees.  They are as follows:

New Jersey (AB 4146):  This bill, introduced in the New Jersey Assembly, addresses misclassification of drayage truck operators and is currently in the Assembly Labor Committee awaiting further action. It is important to note that since New Jersey’s legislative session is rolling (no session end date), there is no deadline to when this bill must be passed to become law.

Washington (SB 5945):  This legislation would raise business & occupation (B&O) tax rates for several areas related to logistics and international trade, including drayage trucking, customs brokers, stevedoring services and freight forwarders. The bill was not reported out of the Senate Committee on Ways & Means in the 2011 Special Session, but all indications suggest this legislation will remain alive for the 2012 session.
 
Illinois (Transportation District Authority Act):  This legislative language, intended as an amendment to a Senate bill, would create the Illinois Transportation District Authority to have sole power and responsibility to impose regulations and commercial vehicle user fees related to roadway infrastructure within the territorial jurisdiction. The proposed fee schedule for container/truck movements in and out of the Authority range from $3.50 to $12 a movement. This legislation was introduced in the state’s General Assembly only three days prior to the end of the session and although this bill did not pass, it will likely be brought up in the next session.

Federal Level:
National Update:  Following the U.S. District Court’s initial decision on the Port of Los Angeles’ clean air action plan, the Los Angeles Harbor Commission hired a Washington lobbying firm to develop language that would override current federal law.  Advocacy efforts focused on amending the Federal Aviation Administration Authorization Act (F4A) to grant ports regulatory authority.  The Port of Oakland, the Port Authority of New York New Jersey, and a number of big city mayors also added their support for a change in legislation.  In July 2010, Congressman Jerrold Nadler (D-NY) introduced the Clean Ports Act of 2010 (H.R. 5967), which had widespread Democratic support in the House with over 90 co-sponsors in the 111th Congress.  In February 2011, Nadler reintroduced this bill in and currently has 56 co-sponsors.

Amending the F4A could, and most certainly would, lead to the unionization of harbor truck drivers across the nation.  Last May, the House Transportation and Infrastructure (T&I) Subcommittee held a hearing to shed light on the Port of Los Angeles /Long Beach’s Clean Air Action Plan.  The Coalition for Responsible Transportation (CRT) testified at the hearing to convey the proactive measures that shippers are taking at the ports.  Instead of the hearing focusing on the original intent of sustainability efforts at the ports, the outcome of the hearing turned the discussion towards viable leasing agreements between licensed motor carriers (LMCs) and independent owner operators (IOOs). 

With a Republican majority now in the House of Representatives, it is highly unlikely that legislation to open up the definition of interstate commerce and allow a patchwork of regulations on the trucking industry will gain any traction.  If the House and Senate do not take up the issue, as expected, it can be anticipated that attention to this issue could very well divert to the Administration through regulatory actions on employee misclassification.  

RILA continues to work with stakeholders to ensure that onerous legislation is not enacted.  RILA is continuing to protect retailer interests by working to ensure that policies address real infrastructure shortcomings and that policies do not unfairly punish infrastructure users with duplicative costly fees and mandates. 

In 2009, RILA partnered with the Coalition for Responsible Transportation (CRT) to further advocate the retailers’ sustainability efforts at the ports. Through RILA’s efforts with CRT, the Environmental Protection Agency (EPA) launched a new SmartWay Drayage partnership to bring SmartWay long-haul benefits to our nation’s ports. RILA will also work with local port authorities considering environmental mitigation and/or infrastructure plans to ensure the development of sound programs that achieve shared goals and without disrupting the movement of goods.

American ports require new investment in infrastructure to handle the annual increase in cargo volume and mitigate the environmental impact caused by port congestion.  Dramatic environmental action plans that include new port fees, and sometimes employee mandates, are becoming increasingly popular to fund port investments, reduce congestion, and alleviate pollution caused by port operations.

Nowhere is this dynamic more true than in California, particularly at the ports of Los Angeles and Long Beach.  Los Angeles and Long Beach are the nation’s two largest ports, handling approximately 44 percent of the nation’s containerized cargo.  Congestion at the ports is significant, and operations from both locations have been recognized as a substantial source of pollution in the Los Angeles metropolitan area.  Taken in total, the port fee proposals at the state and local levels have the potential to cost RILA companies an additional $182 per 40-foot container to import goods into Southern California.  Other west coast ports have followed suit, including Seattle/Tacoma and Oakland, and now New York/New Jersey has implemented their own plan.  It is only a matter of time before these proposed fees expand to all ports located throughout the nation.

Discussions on addressing port matters are not only taking place at the local level but are also happening at the federal level.  As Congress continues to deliberate on transportation focused legislation, there is potential for national policies to be crafted to address these issues directly.  Some policies currently under consideration will result in a positive outcome for industry; other policies will potentially hamper the economy and the productivity of the retailer’s supply chains.

State Level:

California:  On a state level, the west coast has been focused on establishing standards to continue their focus on “greening” the economy.  The California Air Resources Board (CARB) passed a series of vehicle and fuel rules to cut port diesel emissions. One rule bars old diesel trucks from visiting California ports after Jan. 1, 2010, unless they install diesel filters.  CARB also announced that it is releasing $90 million in state bond money for the state's Goods Movement Emission Reduction Program. The funding will go toward cleaning up port trucks, upgrading trucks in the Central Valley and Mexican Border regions and installing shore-based electrical power for two ship berths at the Port of Oakland.

Local Level:

Port of Los Angeles and Long Beach:  Last year, both ports approved a Clean Air Action Plan (CAAP) to reduce emissions from trucks, vessels and operating equipment by 45 percent over five years. The Los Angeles/Long Beach plans are as follows:

• Clean Truck Fee:  The Port of Long Beach has now eliminated the Clean Truck Fee for privately financed clean trucks, port-funded liquefied natural gas and alternative-fueled trucks. Recently, it was decided that only container cargo moved by 2006 and older trucks and clean diesel trucks funded by the Port of Long Beach after April 20, 2009, will pay the fee.
  
• Concession Requirements: Los Angeles’s concession plan prohibited the use of independent owner-operators over a five-year period.  In April, a federal judge ruled portions of the clean-truck programs at the ports of Los Angeles and Long Beach illegal, but left others in place. The requirement that would have banned owner-operators from working at the port is gone.  The American Trucking Association, however, believes the April 28 decision by the U.S. District Court in Los Angeles did not go far enough. ATA argues the concessions are entirely illegal and filed an appeal challenging the district court decision.
  
• Local Cargo Infrastructure Fees: The ports of Los Angeles and Long Beach also approved a cargo infrastructure fee to fund priority port infrastructure projects.  However, in light of the economic downturn, the ports have delayed collection of the fee until at least July 1, 2010.

Port of Seattle/Tacoma:  In Spring 2009, the Port of Seattle Commission and the Port of Tacoma Commission separately approved plans to reduce emissions from trucks that serve the port without involving additional cargo fees. The Port of Seattle’s plan calls for prohibiting the most polluting trucks (1994 model-year and older) from entering port terminals beginning January 1, 2011, in keeping with the 2010 standard of the Northwest Ports Clean Air Strategy.  The program will include measures to scrap the old trucks, compensate truck owners for their older trucks and help them buy or lease newer ones.  The Port of Tacoma’s plan does not have a truck replacement program.  Port officials are encouraging the use of low sulfur fuels and are using an on-dock rail system to minimize the concentration of trucks in the port.

Port of Oakland:  Last year, the Port of Oakland approved a container fee but the fee collection has been postponed.  Port of Oakland commissioners also approved an air quality improvement plan in April 2009 designed to reduce diesel emissions from port activities  85 percent by 2020.  In June, the Port of Oakland approved its Maritime Comprehensive Truck Management Plan, which sets hard targets for truck retirement goals without the imposition of new container fees or an employee driver mandate.  Oakland now becomes the second major west coast port (after Seattle/Tacoma) to adopt a retailers supported clean truck plan.

For more information, please contact Kelly Kolb, vice president of government affairs, at kelly.kolb@rila.org.