Lowenthal container tax bill again moving through Legislature
A state senate bill seeking to impose a $30-per-TEU tax on California's three largest ports has been moved off the Senate's inactive list and is again moving through the Legislature.
The bill is the third time Sen. Alan Lowenthal, D-Long Beach, has proposed a statewide container tax to raise nearly $500 million a year for goods movement infrastructure and environmental projects. The current version of the bill would apply the tax to all containers moving through the ports of Long Beach, Los Angeles and Oakland.
Two previous attempts to pass versions of the bill either did not make it through the Legislature or were vetoed by Gov. Arnold Schwarzenegger.
After making minor amendments, Lowenthal reintroduced the current version of the bill last year, where it easily passed the Senate. The bill then went to the Assembly, where it moved steadily toward a vote in the final days of the legislative session last September. At the time Lowenthal said he was confident he had enough Assembly votes to secure passage of the bill.
However, under threat of another veto from Schwarzenegger, Lowenthal agreed to shelve the bill by placing it in the legislative inactive file. While this removed the bill from active consideration, it meant Lowenthal could bring the bill back at any time without going through time-consuming preliminary procedures.
Monday, the bill was removed from the inactive list by Assembly member Karen Bass, D-Los Angeles.
This time around, Lowenthal's bill — which Sacramento insiders say could be moved to a final vote within days — faces a much smoother road than previous attempts, most notably in the governor's office.
Just days after the two Southern California ports passed their own $35-per-TEU tax in December, Schwarzenegger shifted his position on a statewide container tax.
“I think fees are good, we just have to work it out with the various stakeholders,” Schwarzenegger said. “It’s extremely important that we find a way to create economic development and increase trade, but at the same time take care of our environment.”
Despite being labeled by Lowenthal as a 'user fee,' opponents generally assert the bill would create an illegal tax by violating the commerce clause of the U.S. Constitution. The shipping and logistics industry is also concerned that the tax will increase costs of importing and exporting through the ports.
Supporters have typically cited concerns about negative impacts of port-generated impacts on air quality and certain infrastructure.
'The issues regarding whether this is a user fee or a true tax remain the same,' John McLaurin, president of the Pacific Merchant Shipping Association, said last September. McLaurin's group, which represents the majority of ocean shipping lines on the West Coast, was not involved in potential litigation over the Lowenthal bill, but his group did win a September court case against the California Air Resources Board that called into question the authority of local or state agencies 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.
Another lawsuit, decided last week by the U.S. Supreme Court, found that a Maine law trying to impose regulations on that state's trucking industry was not legal.
Curtis Whalen, executive director of the Intermodal Motor Carrier Conference, said the Supreme Court’s decision could provide ammunition against other local governmental efforts to impose local control of transportation industries.
“The decision’s broad application of the scope of preemption under the statute and its clear protection of motor carrier’s ability to structure their rates, routes, and services free of government interference provide strong precedent for potential challenges to other state provisions that intrude into those protected areas,” Whalen said.
The Los Angeles and Long Beach ports' container tax is set to take effect Oct. 1 and be collected through 2012. The estimated $1.6 billion to be collected will be used to replace or retrofit nearly 17,000 diesel trucks in the ports' drayage fleet. The replacement plan is part of a larger $2.2 billion drayage overhaul scheme the ports are attempting to impose on the local port trucking industry.
In addition to the Lowenthal and ports' tax involving their truck plan, the two ports in January passed an additional $15-per-TEU tax to help defer the cost of infrastructure development in the two ports. The ports project that the seven-year tax, set to take effect Jan. 1, will generate nearly $1.4 billion to pay for expanded road, rail and bridge projects at the two ports. Port officials plan to use the funds to match state transportation bond funds, possibly providing an additional $1.4 billion in taxpayer money for port projects.
An academic study conducted in 2006 showed that container fees above a certain level could spark mass cargo diversions from Long Beach and Los Angeles to other ports. If the fees climb to $100 per TEU or more, the U.C. Berkley study found, the Southern California ports face the potential loss of at least 1 million TEUs each per year.
Adding to the already existing $50 per TEU PierPass gate fee, the two recent taxes approved by the port authorities raise the total additional costs for a TEU moving through the two ports to $100 — the threshold detailed in the study.
Lowenthal's tax, if approved would bring the total taxes to $130 per TEU, well above the study threshold to spark major diversions. ' Keith Higginbotham
