Thursday, November 19, 2009

Oakland Port: No Truck Ban Extension or Upgrade Funds

Bay Area air quality officials told port-servicing truck drivers attending the Port of Oakland public meeting Monday that there would be no extension of an impending ban on older trucks and no further funds to help the drivers retrofit their vehicles or buy new ones.

The port ban, which takes effect Jan. 1, is expected to bar about a 1,000 of the approximately 3,000 port-servicing trucks from entering the port terminals. Drivers have protested that the ban will essentially put them out of business. Adopted in October, the ban denies port access to all pre-1994 model year trucks and requires that 1994 to 2003 model year trucks install after-market particulate matter capture devices.

The Bay Area Air Quality Management District had established a $22 million fund last year that was being used to help drivers of 1994 to 2003 model year trucks to pay for the smokestack filters--each costing from $10,000 to $21,000. Drivers receiving the grants were only responsible for the sales tax on the retrofit filters.

The fund was also used by the air district to provide $50,000 grants toward the purchase of a new truck, with the remaining $50,000-plus price tag for a new trucks being borne by the drivers.

To date, the $22 million fund has paid for just over 190 new trucks and more than 800 particle filters, of which more than 600 remain to be installed.

Two weeks ago, the BAAQMD sent nearly 1,000 port-servicing drivers letters rejecting applications for grants because the BAAQMD fund was already depleted.

Air quality officials said the new rules were required to reduce diesel pollution that studies show have contributed to elevated cancer and asthma rates near the port.

Stockton Port Channel Gets Fed Funds for Dredging

Congress has allocated more than $11 million for water projects in San Joaquin County, including nearly $3.4 million for maintenance dredging of the Port of Stockton's Deep Water Channel.

Located about 75 miles east of San Francisco Bay, the Port of Stockton is only accessible through the channel, which as part of a delta requires periodic dredging.

"These funds are also an injection of much-needed capital in the local economy," Rep. Jerry McNerney, D-Pleasanton, said in a news release. "Our area needs the jobs that projects like these can help create and save."

Built in the early 1930s to a depth of 30 feet, the Deep Water Channel went through a major dredging project in the late 1980s, providing up to 70 feet of depth in some areas. The channel still ranges from 35 feet to 70 feet throughout its entire length. An Army Corps of Engineers study is under way of a $140 million plan to increase the minimum depth of the channel to 40 feet, thereby allowing much larger vessels to transit.

NOL's Widdows: Trans-Pac Rates Must Increase Soon

Despite trans-Pacific carriers unlikely to experience an excess of capacity for the next three to four years, cargo rates will go up in 2010 according to Ron Widdows, CEO and group president of Singapore-based NOL.

Widdows' comments came in a speech to a transportation conference in Irvine, Calif. sponsored by the Intermodal Association of North America, the National Industrial Transportation League and the Transportation Intermediaries Association.

Although carriers are attempting to draw down capacity as quickly as possible by cutting and combing services, said Widdows, the vast number of vessels on order could prevent a capacity balance until 2012 or 2013.

In the short term, however, rates will have to go up, Widdows told the attendees. He said that estimates suggest that carriers will lose up to $20 billion in 2009 and if rates do not increase soon and dramatically, some carriers could go out of business.

Seaman’s Service Awards Widdows, Kurz Highest Honor

The United Seamen’s Service’s 40th Annual Admiral of the Ocean Sea Award was presented Friday to Keystone Shipping Co. President and CEO Donald Kurz, and to Ronald Widdows, Group President and CEO of Neptune Orient Lines of Singapore, parent of American President Lines.

The annual AOTOS award is the most prestigious honor bestowed by the United Seaman's Service.

In presenting the award to Kurz, the group highlighted Keystone's role as one of the largest U.S.-flagged fleets and the nearly 100-year commitment of the Kurz family to the maritime industry.

The group cited Widdows' role as an innovator and out-spoken luminary of the shipping industry in presenting him with the award.

The event also honored the United States Coast Guard with a special Admiral of the Ocean Sea Award for its ongoing service to and role in the maritime community.

The United Seaman's Service, a non-profit agency established in 1942 that operates centers in eight foreign ports in Europe, Asia, and Africa and in the Indian Ocean, provides community services for the U.S. Merchant Marine, the American Armed Forces, and seafarers of the world. The agency also provides seagoing libraries to American vessels through its affiliate, the American Merchant Marine Library Association.

Tuesday, November 17, 2009

Truckers Protest SoCal Ports’ Impending Ban

As many as 400 truckers in big rigs clogged Southern California freeways Friday, before arriving in Downtown Los Angeles to blast their horns as they circled City Hall, all in protest of an impending ban by the ports of Long Beach and Los Angeles of all trucks made before 1994.
The truckers, many of whom later rallied in front of City Hall on foot to express their ire at Los Angeles Mayor Antonio Villaraigosa, called for an extension of the ban's Jan. 1, 2010 deadline, better funding for the replacement of trucks, and an investigation into the ports' Clean Trucks Program.

The ports' program, which seeks to dramatically cut diesel emissions from thousands of ports-servicing trucks by 2012, relies heavily on several scheduled bans of certain model year trucks to achieve the air quality goals. Trucks, trains, ships and yard handling equipment at the adjacent ports, known as the San Pedro port complex, have been identified as the largest single-point generator of certain air pollutants in the Los Angeles area, accounting for about 20 percent of the total diesel emissions for the Southern California basin.

Older trucks, according to the ports, produce much greater pollution than newer 2007-or-later model year trucks. The truck program started last October with a ban of more than 2,200 pre-1989 model year trucks. The impending ban on pre-1994 truck models also covers all 1994 to 2003 model year trucks that have not been retrofitted with pollution control devices.

Many of the protesting truck drivers, who operate as independent contractors servicing the ports, said that tens of millions in grant monies handled under the auspices of the truck program have found their way to large trucking companies and not to the individual drivers or small trucking firms which make up the largest percentage of ports-serving trucking companies.
The drivers said that the new ban could put many of them out of business when you consider than a retrofit costs upwards of $20,000 and a new truck costs more than $100,000.

While the truck program was jointly developed at its outset by the two ports, each have adopted differing language during the ramp up to implementation last year. Port of Los Angeles officials have stuck to version that calls for all drivers wishing to enter the port to drop their independent contractor status and work for trucking firms as hourly employees. The neighboring Port of Long Beach has not included any restrictions on employment status of drivers in its version of the program.

The American Trucking Associations, which filed suit against both ports’ programs late last year, recently settled with Long Beach officials, removing the Port of Long Beach from the ongoing litigation. The settlement removed several aspects of the Long Beach program to which the ATA took exception, while allowing the port to maintain environmental, safety and security control over which trucks enter the port's facilities.

The Port of Los Angeles is scheduled to face off against the ATA in a Los Angeles federal court in March 2010.

CKYH Alliance to Cut Boxship Speeds

Chinese shipping giant COSCO, in conjunction with its CKYH alliance partners “K” Line, Yang Ming and Hanjin, said the alliance plans to shift 50 percent of its collective fleet to 'super slow steaming.

In making the announcement Friday at the World Shipping Summit in Quingdao COSCO CEO and President Captain Wei Jiafu cited control costs, fuel savings, and control of greenhouse emissions as the primary reasons for the allliance taking the step. Members of the alliance have all been hit with substantial losses in the fiscal quarter ending Sept. 30. COSCO reported revenues fell 52 percent to $2.3 billion in the third quarter, "K" Line reported a net loss of $514 million on revenues of $2.35 billion, Yang Ming reported traffic volumes down 30 percent, and Hanjin on Thursday reported a net loss for the quarter of $338 million on revenues of $1.44 billion.

Captain Jiafu said that the alliance is welcoming other shipping lines to join in the move.

Maersk Parent Sees $1 Billion In Losses By Year's End

Danish shipping giant A.P. Moller-Maersk, parent of shipping line Maersk, pointed to a 31.7 percent drop in container shipping revenues and falling cargo rates for a $706 million loss in the first nine months of the year and said it projects losing more than $1 billion by year's end.

CEO Nils Smedegaard told analysts that the main problem in the industry remains rates, which while edging up slightly in recent months, are still well below rates at the start of the year. He also said that rates are not recovering as quickly as bunker fuel prices are increasing and when fuel prices are factored out, rates still remain below levels at the start of the year.

Despite seeing volumes and rates increase in the third quarter, A.P. Moller-Maersk reported a $163 million loss in its container shipping operations during the first nine months of the year, with container volumes off 5.6 percent compared to the first nine months of last year.

Revenue from container shipping operations fell to $15 billion for the first nine months of the year and total A.P. Moller-Maersk revenues were off 25 percent from the year-ago period to $35.5 billion.

TTI Wins Maersk Loops for Oakland

Beating out a group of seven other competitors, terminal operator Total Terminals International has won two Maersk Line loops for the TTI terminal at the Port of Oakland.

TTI, which also has West Coast facilities in Long Beach and Seattle, will welcome the Maersk trans-Pacific TP5 and TP7 loops to Oakland beginning in January 2010.

The eastbound TP5 service begins in Korea, heads to China and Japan, then crosses to Long Beach and Oakland before ending at Dutch Harbor, Alaska. The westbound TP5 service runs from Long Beach to Oakland to Dutch Harbor, then crosses to Japan and Korea before ending in China.

The eastbound TP7 loop, which begins in Taiwan and ends in Newark, New Jersey, does not stop on the US West Coast. The westbound TP7, which begins in Halifax, Nova Scotia, moves down the East Coast, through the Panama Canal to Long Beach and then to Oakland before crossing to Taiwan, mainland China and Korea.

The new services are expected to add 60,000 lifts to TTI's 120-acre terminal at Berth 55-66 in Oakland.

In related service news, starting Nov. 22, the Maersk westbound trans-Pacific TP9 service will change several of its call times. The service begins in Seattle before heading to Vancouver, Canada, then crosses to Yokohama, Japan, and then calls at four ports in Mainland China before ending in Malaysia. The service change will see a one day reduction in call time at Seattle, reduce the Vancouver call by half a day, add an extra day to the trans-Pacific transit and increase the call time in Tanjung Pelepas, Malaysia by two hours.

Special Feature: Insurance and the Law -- Permitting a New Project in California

By: Sharon Rubalcava (As seen in the November issue of Pacific Maritime Magazine)

California has long had the reputation of being a difficult and costly place to do business, and nowhere is this more apparent than in the permitting of new industrial or commercial projects. The potential environmental impacts of such new projects are often the lightning rod that attracts public opposition. Local politicians may give speeches about the need for more jobs– especially green jobs– and the importance of a vibrant economy. However, all of that can go by the wayside when a public official must decide whether to vote “yes” on a proposed project if the perception is that it will impact the environment and if the public opposes the project on environmental grounds. Why is that, and what has brought us to this place?

Environmental Concerns
Anyone who watches late night television has heard the jokes about how horrible air quality is in Southern California, and it is true that certain areas of California have the worst air quality in the nation. However, air quality has been getting better for years and many areas attain all of the federal air quality standards with the exception of the standards for ozone and fine particulates. In the past, the poor air quality was often attributed to major industries such as power generation and refining, but now the greatest contributors of the pollutants that cause the federal standards to be exceeded come from the transportation sector. This includes cars, truck, railroads, airplanes and ships.

Clean, But Not Popular
Projects in California must comply with the most stringent environmental regulations in the country. A factory in California may require expensive control equipment for both emissions of air pollutants and water discharges that would not be required elsewhere. For example, a proposed new plant locating in an area that meets the federal ambient air quality standards– called an attainment area– might not be required to install pollution controls or even get an air quality permit unless its emissions would be greater than 100 to 250 tons per year depending on the type of facility. In contrast, new plants in the South Coast Air Quality Management District located in Southern California must permit any piece of equipment that emits or controls air pollutants unless specifically exempt from permitting requirements.

If equipment must obtain a written permit, then the permitting rules require installation of Best Available Control Technology or BACT if emissions will be over one pound per day. But it’s not enough just to install BACT. Any remaining emissions must be offset by the purchase of Emission Reduction Credits or ERCs. ERCs are in short supply and have become very costly. Some companies report that offset costs exceed the cost of the basic equipment. Also, in addition to the initial capital costs, such a facility will face increased operational costs, including monitoring, record keeping, and reporting costs to demonstrate compliance.

One would think that an area having the cleanest factories and industrial facilities in the country would support its local businesses. However, exactly the opposite is true. Most people, and in turn, most politicians have no idea of the requirements imposed on local businesses. In fact, due to community and environmental activists they are constantly hearing about plants spewing pollutants, trucks emitting a “witch’s brew” of toxic emissions, and rampant non-compliance with environmental rules. The local air districts and other environmental agencies accomplishments in regulating industrial facilities and enforcing their own regulations are often ignored.

California Environmental Quality Act Compliance
The California Environmental Quality Act or CEQA requires any public agency that approves or permits a project to determine whether the project will have an adverse impact on the environment. If impacts are determined to be potentially “significant”, as defined by CEQA, an Environmental Impact Report or EIR must be prepared describing those impacts, discussing alternatives to the project, and mitigating any adverse impacts found to be significant, if feasible. If such impacts cannot be avoided or mitigated, the agency must justify its decision to approve the project by balancing the benefits against the negative aspects. If the impacts are not found to be significant, a less detailed analysis called a Negative Declaration or Mitigated Negative Declaration can be prepared.

CEQA was adopted in 1970. Its requirements have changed over time as new interpreting regulations, called Guidelines, have been developed, and as court decisions have found EIRs or Negative Declarations to be inadequate. Where the Guidelines once suggested that EIRs be no longer than 100 pages, it is not unusual now for EIRs for major projects to be several thousand pages long.

The CEQA process was originally designed to produce informational documents that would inform the public about proposed projects and identity the adverse impacts so that they could be reduced or eliminated, but that process has morphed into something akin to a trial by ordeal. In preparing a draft EIR, the main permitting agency– called the lead agency– must meet with other governmental agencies that will have to permit the project to identify the potential impacts that must be analyzed. This is called scoping. The lead agency must try to anticipate all possible environmental impacts, thoroughly discuss those impacts, consider a reasonable range of alternatives to the project, and identify mitigation measures. Using this information, the lead agency then produces a draft EIR, which is circulated for public comment.

The CEQA public comment period is often where projects encounter the most challenges. This is the age of the internet, and project opponents know how to effectively stir up opposition to a project, and they know that delays can sometimes kill a project. Once a proposed project is announced, public opposition can be organized. Project opponents show up at public meetings to voice their opposition and they submit detailed written comments on draft EIRs.

Public opposition can cause the lead agency to slow down the review process, proceed more cautiously and delay projects in several different ways:
• Significant negative comments at scoping meetings can lead to hiring of additional consultants, more detailed analyzes, and reluctance to issue the draft document.
• Public comments on draft EIRs must be responded to in writing and extensive public comments can take months to answer.
• An overlooked or improperly analyzed issue can lead to recirculation of a draft EIR, usually resulting in a delay of months to years.
• Public agencies fear CEQA litigation and the expense of defending CEQA documents. Elected officials who must certify documents are concerned about losing votes if they sense significant opposition.
• Additional mitigations are often imposed in an attempt to appease the opposition, but frequently the opponents want nothing less than a denial of the project.
• Additional mitigations may impose significant costs with minimal or no benefit to the environment.
• Factors unrelated to a specific project can delay preparation of EIRs and project approval. A recent example of this is uncertainty in how to account for a project’s greenhouse gas emissions.

Project Success
Projects in California must be as “green” as possible to be approved. Trying to avoid environmental protections can destroy credibility and lead to project denial. What do forward thinking companies do? Here are some suggestions to consider:
• The CEQA process is a part of doing business in California and cannot be avoided or minimized.
• Assemble an experienced team familiar with CEQA and other permitting requirements, and work closely with the team to make sure all aspects of the project are thoroughly analyzed.
• Some agencies prepare their own CEQA documents. Make sure the agency knows and fully understands the proposed project, including key decisions made along the way especially with regard to economic viability. Consider preparing key analyzes for the agency to consider while it is preparing the draft EIR to make sure impacts are properly analyzed.
• Schedule frequent meetings with the agency and be sure to communicate project scheduling concerns and when approvals are needed.
• Public support is crucial. The opponents will make themselves heard but project supporters often assume they don’t need to be vocal. Identify community supporters and make sure they voice their support at key meetings and in comments on the draft EIR.
• Jobs are important. Make sure to quantify jobs associated with your project and make sure elected officials know if these are high paying jobs with benefits. Don’t forget to include other regional benefits including future taxes that will be paid.
• Environmental justice issues are very important in California. Consider the community in which a new plant is proposed. If such a community is already heavily impacted, consider other locations or meet with community members to gauge likely opposition.
• Unions are very active in opposing or supporting projects. Consider the role that unions will play when elected officials are asked to consider your proposed project.
• Don’t assume a project will be approved as proposed. Be prepared for additional, unexpected expenses and factor in likely delays. It is not unusual for significant projects to take many years to permit.

Projects continue to be permitted in California, but permitting will often be significantly more difficult than in other jurisdictions. In planning future projects, businesses must consider these challenges upfront and factor them into feasibility and future profitability analyzes.

Ms. Rubalcava is a partner in the Los Angeles office of Alston & Bird LLP. She advises clients planning major industrial development projects on compliance with the California Environmental Quality Act (CEQA) and National Environmental Policy Act (NEPA), with a particular emphasis on facilities with significant air and toxic emissions and water quality issues. Ms. Rubalcava’s projects include major infrastructure projects, power plants, solid waste disposal facilities, petroleum pipelines, gasoline refineries, marine terminals and manufacturing facilities.