California Container Tax Law Put on Hold for Another Year

A CALIFORNIA state law that would have levied a $30 per teu fee on each container passing through the ports of Los Angeles and Long Beach and earmarked the cash to improve rail infrastructure, air quality and port security has gone into cold storage for one year.

Its author, Democratic state senator Alan Lowenthal, said he would hold the Bill, SB 760, in the state Assembly for another year 'in the hope we can work something out with the administration'. It was estimated to raise $800m annually.

Mr Lowenthal said the decision to hold SB 760 in abeyance was based on Republican governor Arnold Schwarzenegger's recent record on 'goods movement issues', which has raised hope that a 'more collaborative proposal can be agreed within a few more months'.

Joshua Tooker, a spokesman at the senator's Sacramento office, told Lloyd's List the impending recess of the state legislature played a role in the decision.

He said Mr Lowenthal still believed in the legislation and wanted to reach out to the affected parties to see if an acceptable version could be drafted.

Mr Lowenthal said in a written statement: 'I have always contended that the best solutions to a problem should involve all parties that would be affected.

'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.'

The Bill now has until next summer to resurface, sources said.

In effect, however, Mr Lowenthal has acknowledged the strong protests from industry groups such as the Waterfront Coalition, leading shippers such as Payless Shoesource, carriers including Cosco, Hanjin, Matson and MOL and terminal operators APM Terminals and SSA Marine.

The measure had wide-ranging support, from California Teamsters, the American Lung Association, environmental organisations and local chambers of commerce.

The state senate had already passed SB 760. The Bill awaited ratification by the assembly the state-level equivalent of the House of Representatives before reaching Mr Schwarzenegger's desk for his signature. This would have come about swiftly if the assembly had ratified it unchanged.

After clearing the assembly committees on transport and natural resources, the Bill was scheduled to be heard this month by the assembly's appropriations committee.

SB 760 proposed a three-way split of the per-container fee. One-third apiece was to go towards improving rail infrastructure to combat congestion improving air quality and for the two ports to upgrade port security and container screening.

Citing figures from Los Angeles Economic Development Corp, the Bill suggested that southern California must spend at least $10.5bn to improve railways, rail yards and highways to keep up with surging international trade or risk losing more than 500,000 new jobs and more than $1bn of taxes a year.

Southern California also risks losing $12.1bn in federal highway funds if federal Clean Air Act standards are not met by 2010, it warned.

Opponents of the Bill, however, had come out with an equally cogent case. In addition to questioning the state's authority to tax international trade, one guest editorialist wrote: '[Legislators view the Bill] as a free pot of gold.

'SB 760 requires just 13 private sector terminal operators to do what state and local governments have failed to do pay for strategic investments in our infrastructure.

'Instead, these few companies are being required to tax their customers, and ultimately California consumers, to pay for projects that are the proper and necessary responsibility of state and local governments.'

(c)2005 Informa Martime Trade and Transport