The Oregon Supreme Court is being asked to look at the legality of subsidies the Port of Portland gave to ocean carriers in 2012 and 2013.
The Oregon Supreme Court is being asked to look at the legality of subsidies the Port of Portland gave to ocean carriers in 2012 and 2013.
The 9th Circuit U.S. Court of Appeals last week referred questions raised in a lawsuit filed by the International Longshore and Warehouse Union (ILWU) against the port that challenged the subsidies, saying it was not clear if the way the subsidies were accounted for was legal under current Oregon case law.
“We are hesitant to expand Oregon law in a manner that may be contrary to Oregon’s wishes and in an important subject matter in Oregon’s history,” the 9th Circuit said. “If the Oregon Supreme Court declines certification, we will resolve the question according to our best understanding of Oregon law.”
The lawsuit grows out of a dispute between the ILWU, the port, and terminal operator ICTSI Oregon, which won a lease for Terminal 6 in Portland in 2010.
The dispute was over whether work having to do with refrigerated containers at Terminal 6 should be done by ILWU members or members of the International Brotherhood of Electrical Workers.
John Kitzhaber, then governor of Oregon, brokered a deal that gave the jobs to the ILWU in 2013.
As a result of the labor disputes and slowdowns by the ILWU at Terminal 6, the court noted the Port of Portland “implemented four incentive and subsidy programs to keep Terminal 6 operating at financially sustainable levels.”
The ILWU challenged those subsidies, questioning whether they violated Article XI, Section 9 of the Oregon Constitution, which bars a state public entity, such as a municipal corporation, from raising money for, or loaning its credit to, or in aid of, any company.
However, the 9th Circuit explained the port “employed various accounting and budgetary measures to segregate tax revenue from non-tax revenue.”
The subsidies failed in keeping container business at the port. All three of the container carriers that had called Terminal 6 – Hanjin Shipping, Hapag-Lloyd and Westwood – eventually abandoned the port in 2015 and 2016.
The court said it is well-settled law in Oregon that a municipal corporation’s sale of revenue bonds does not violate Section 9. However, the court said there was a question about whether an Oregon municipal corporation can protect tax revenue as Section 9 requires by employing accounting and financial management methods or whether the structural protections of revenue bonds necessary to avoid running afoul of Section 9.
It certified the question of law to the Oregon Supreme Court saying its answer “may be determinative” of the ILWU’s complaint.
Questions raised by ILWU lawsuit referred to Oregon Supreme Court
