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Friday, October 29, 2010

What's Wrong With Measure D

A Commentary on the Nov. 2 Long Beach Ballot
By Keith Higginbotham

Come November 2, the voters of Long Beach in Southern California are going to be asked to vote on Measure D, which seeks to make two changes to the City Charter regarding the Port of Long Beach.

One change would strip the Port of Long Beach Harbor Commissioners of any authority over oil properties in the port area and give this authority to City Hall, including any revenue generated by said properties.

The other is a change in the way an annual transfer of port profits to city coffers is formulated – from 10 percent of the port's audited annual net profits to 5 percent of the port's gross revenue. Take it off the top, as some have described it.

In their ballot argument supporting Measure D, Mayor Bob Foster, City Auditor Laura Doud and Councilmember Gary DeLong describe the measure as an effort to provide "a more transparent, fair, and reliable funding method" for the city's Tidelands Fund.

Despite the benign claims by City Hall, what Measure D is really about is quite simple: money and control.

More port money for City Hall officials to spend as they see fit and more control by City Hall over the Harbor Department.

This has some people worried.

Nearly all the major stakeholders involved in the local international trade business community have expressed opposition to Measure D, including: the Long Beach Chamber of Commerce; the Los Angeles Customs Brokers and Freight Forwarders Association; the LA/LB Propeller Club; the Pacific Merchant Shipping Association; the Harbor Association of Industry and Commerce; FuturePorts; and the California Marine and Intermodal Transportation System Advisory Council, or CALMITSAC.

Why would nearly the entire international trade community band together in unanimous opposition to something purported to be a minor issue regarding the relationship between City Hall and the port?

Several reasons.

First, City Hall rushed the measure onto the ballot with almost zero vetting and with no analysis of the long-term impacts on the port.

Second, Measure D would shift significant portion of the port's revenue to City Hall, threatening the financial security and competitiveness of the port.

Third, Measure D would inject the political whims of City Hall into the operation of the port as a business by the Harbor Department.

Let's look at each of these individually.

A Rushed Measure

Late last year, City Auditor Laura Doud began an analysis of the port's finances at the behest of the City Council. The goal was to examine how the port determined the annual transfer of port profits to the city's Tidelands Fund. In presenting her findings to the City Council in June, Doud effused over the port's cooperation during the analysis. However, she said several issues related to the transfer process "merit further discussion and consideration."

One was for the port to stop deducting the previous year's transfer to the city as an expense – despite the fact that standard accounting practices allow the port to do this. A second recommendation was to speed up the time frame in which the port made the annual transfer. Under the current Charter language, City Hall can request the 10 percent transfer after the port's independently audited financial statements are complete – roughly six months after the end of the fiscal year on Sept. 30. Doud suggested a plan that would see the port make two transfers this year – to sync the timeframes – and in following years make 80 percent of the transfer on Oct. 1 and the remaining 20 percent when the port's audited financial statement is complete.

The Harbor Commission considered the recommendations and on June 28 rejected the City Auditor's recommendation regarding deducting the previous year's transfer as an expense.

On July 6, the City Council's Charter Amendment Committee met for the first time since September 2009. One of the items put forward by Councilmember Gary DeLong for further consideration for the November ballot was a Charter amendment requiring the port to not include the previous year's transfer as an expense. No mention was made of changing the transfer formula or the oil property issue.

On July 19, the Harbor Commission approved the first transfer payment but balked at making the second 80 percent payment on Oct. 1. Instead, the commission said it would attempt to complete it's audit for 2010 by January, 2011. This would allow the full second payment to be made to the city about three months ahead of time instead of the accelerated six month schedule the City Auditor requested.

Just a week after the Commission's rebuke of the Auditor's recommendation, the City Council's Charter Amendment Committee met again on July 27 and discussed the Measure D Charter amendment.

On August 3, the final day for ballot measures to be considered for the November ballot, the City Council voted to place Measure D on the ballot. The only public discussion of the Measure D item was during the July 27 Charter Amendment Committee meeting and at the Aug. 3 Council meeting. From the Charter Committee discussions on July 27, it is clear that the language for Measure D had only just been drafted. In fact, at the Aug. 3 Council meeting, the City Attorney was still tweaking the language, only moments before the vote to place it on the ballot.

One thing missing from the City Council debate on Measure D was a study, report, or analysis of how Measure D would impact the port. This is because one was never done.

A recent study of Measure D by the California State Lands Commission – the state watchdog over local port authorities – stated that State Lands staff, despite numerous requests to City Hall for such a study, report or analysis, was "unaware of any evidence that the City Council analyzed and considered any potential impacts to Port operations when it voted to place [Measure D] on the November ballot."

Shifting Revenues

Mayor Foster repeated several times during the Aug. 3 City Council meeting that Measure D was not about getting more money from the port. He even offered the suggestion that Measure D would only amount to and increase of $1 million to $2 million a year from the port to the Tidelands Fund.

In fact, the number is drastically higher.

A recent presentation by the port financial staff detailed that Measure D would shift more than $130 million from the port to the Tidelands Fund over the next five years – $100 million in oil revenues and $33 million in added port-to-city annual transfers. This represents roughly 20 percent of the port's net income per year.

This presents several real concerns for the port.

One area is in the port's bond rating. The port currently enjoys very positive bond ratings from each of the major bond rating agencies.

This rating assess the credit worthiness of a business entity's debt issues and serves almost the same function as a credit rating or FICO score does for individuals.

On a basic level, a high bond credit rating allows an entity like the Port of Long Beach, to obtain easier access to credit and at better terms. The opposite effect results from a lower bond rating.

Just like Equifax or TransUnion generate credit ratings for individuals, so to do a group of ratings agencies issue bond ratings for businesses and municipal entities like the port. In the case of bond ratings, the "big three" ratings firms are Fitch, Moody's and Standard & Poors.

In their evaluations of the port, each of these agencies cite similar specific port strengths that could be impacted by the continued diversion of port revenues.

One of these strengths is the port's infrastructure, including, as detailed in a March 2010 Moody's report, "state-of-the-art facilities, including mega terminals and good road and rail connections."

In order to maintain this infrastructure the port has to invest sizable amounts of money. For example, the port's cost for the recently started Middle Harbor Project, which will rehabilitate and reconfigure several smaller terminals into one larger and more efficient mega terminal, is expected to be $751 million over ten years.

An increase in the amount of port revenues headed to City Hall could not only delay such port projects but could cause the port to re-evaluate which projects are deemed a priority. This in turn could cause a re-evaluation of the port's bond rating by the ratings agencies.

At least $1.2 billion of the port's 10-year $4.7 billion capital development project is expected to come from issuing debt. Any change in the port's bond rating would add significant cost to obtaining this debt. Port financial staff estimate that the port could face between $40 million and $158 million in additional debt interest payments depending on the severity of any rating agency downgrade.

The rating agencies have also cited any increase in cargo diversions from the port as a potential risk to the port's rating.

The shifting of port revenue to City Hall could result in such diversion, if the port were forced to increase service fees or even implement a container fee to cover the loss of revenues to City Hall.

And it would not take much of an increase to force shippers to look elsewhere, according to a recent a recent analysis done by the Southern California Association of Governments, or SCAG. This group, the largest regional planning group in the nation, is mandated by the federal government to research and draw up plans for transportation, growth management, hazardous waste management, and air quality for the Southern California region.

The SCAG analysis, which looked at the impact of container fees on Southern California port traffic, found that a $100 fee per container would drive away 10 percent of the port's total imports in the short term and 23 percent over the long term. A $200 per-container fee would drive 19 percent of the port's total imports away over the short term and nearly 43 percent over the long term.

In other words, a $200 per-container fee would, over the long term, eliminate all the traffic gains made by the port in the past 15 years of growth. Even the $100 per-container fee's short term impacts would return the port to the same levels experienced during the height of the economic downturn in late 2008 and early 2009.

Loss of Autonomy

The City of Long Beach Harbor Department, which operates the port, was set up under the City Charter to be nearly autonomous from the day-to-day politics of City Hall. In fact, City Hall only has several ways to directly impact the operation of the port: the mayor and City Council appoint the five members of the port commission; the City Council must approve the port's annual budget; the Mayor has line-item veto power over the port budget; and, the City Council can remove a sitting port commissioner under specific circumstances. Beyond these actions, City Hall has very little control over port staff beyond the application of political pressure on port officials.

In the past, all three rating agencies have cited the port's autonomy from City Hall politics as a distinct strength enjoyed by the port that figures into the port's strong ratings.

However, Foster has made it clear in recent days that while the port should be kept at "arm's-length," the port has a fiduciary responsibility to the city in addition to its trust responsibility to the state.

While this opinion runs counter to numerous legal decisions by the state Supreme Court stretching back to the early days of the port, the mayor and city staff have become more aggressive in the past year on imposing the will of City Hall on the port.

Examples of this include the development of an oil deal with Occidental Petroleum, which was ultimately approved by the Council in November 2009. During the negotiations, City Hall officials sided with Occidental over the valuation of the port oil property and attempted to pressure port officials who disagreed to go along with the valuation. City Hall also led port officials to believe that the port would still be receiving the revenues from any future oil development. Port officials were notified shortly before the deal was signed that City Hall had unilaterally decided that the city, and not the port, would be receiving any revenue generated under the deal.

Another example was the recent dressing down of port officials by the Mayor and members of the Council at the Aug. 3 Council meeting. After two port commissioners rose to question the timing of Measure D and the fact that no financial impact study was done, Foster and nearly all of the council members slammed the two commissioners for not cooperating with City Hall on the transfer timing issue, despite initial assertions by the City Auditor that the port had been very cooperative.

Perhaps most disingenuous was the Mayor's and Councilmembers' repeated expressions of shock during the Aug. 3 meeting over the Harbor Commissioners' questioning of the Measure D process. This despite the fact that the Harbor Commission had sent a memo to the Mayor and City Council prior to the meeting explaining that they would be opposing the measure and why.

The most recent example was the recent veto of a $60 million item in the port budget by the Mayor. Foster intimated that the line item, for the removal of a port maintenance yard sitting in the path of an impending bridge replacement project, was a way for the port to move forward with a decade-old plan to build a new port administration building. This despite several assurances by port officials prior to the veto that the administration building was no longer moving forward. Foster told port officials that the port could seek approval for the funds from the council as a budget amendment, thus placing the council in the position of approving the funds for the port project instead of the port commission.

No on Measure D

The bottom line is that Measure D is a solution that addresses the wrong problem.

The Mayor and Council believe the problem is that the port is not stepping up to the plate when the community needs its revenues most.

This is an odd sense of reality when you consider that the port has contributed close to $800 million to the city since 1990, or just over $41 million a year for the past two decades. With or without Measure D, this support from the port will continue. And despite the fact that the port could refuse the Council's request for the annual port-to-city transfer, the Harbor Commission has approved the transfer every year since the Council first asked for it in 1995. If anything, the port has stepped up to the plate more times than most people remember: the Queen Mary, the Convention Center, the Aquarium, Colorado Lagoon, the Spruce Goose, the Municipal Band, the Fourth of July fireworks, the SeaFest, the Grand Prix. All of these owe some degree of gratitude to contributions made by the port.

No, the real problem is City Hall's inability to live within its means.

Let's deal with that problem before we consider taking hundreds of millions of dollars away from the port – which has proven year after year that it can not only handle money but can actually make its lucrative financial situation work for the city – and turn it over to the keepers of the black hole we know as the city budget.

I encourage you to draw a line in the sand on Nov. 2 and vote "NO" on Measure D. Perhaps a rousing defeat at the ballot box will convince City Hall that it must clean its own house before plundering one of the few golden geese left in Long Beach.

Thursday, October 28, 2010

Northern California Ports Break Ground On Marine Highway Barge Project

Officials from the Northern California ports of Oakland, Stockton, and West Sacramento broke ground Tuesday on a $30 million project that seeks to ease local highway congestion and reduce goods-movement pollution.

The California Green Trade Corridor, when completed in early 2012, will see containers arrive at the inland Stockton and West Sacramento ports and then be transported more than 75 miles to the Port of Oakland via river barge instead of by trucks over area highways. Each barge will take the place of more than 300 truck trips.

The project is one of 18 so-called marine highway projects being supported by the federal Transportation Investment Generating Economy Recovery, or TIGER, grant program.

Tuesday's ceremonies, also attended by state and federal officials, marked the official release of the $30 million in funds for the project.
The funds will be used for:

– $13 million for the construction of a container staging area, rail extensions and crane purchases at the Stockton port.

– $8.5 million for the construction of a distribution center and purchase of cranes at the West Sacramento port.

– $8.5 million to provide ship-to-shore power at Port of Oakland berths
Although Tuesday's ground breaking was ceremonial, port officials expect to begin the bidding process for the various components of the project within the next four to eight weeks.

TOTE and Tacoma Port Kick Off Ship-to-Shore Power System

The race to be the first ocean carrier in the Pacific Northwest to plug a cargo ship into shore power was won Wednesday when a docked Totem Ocean Trailer Express, Inc. vessel switched over to landside power at the Port of Tacoma.

The ceremony kicking off the ship-to-shore power service at the TOTE facility was attended by federal, state and local officials, including representatives from Gov. Chris Gregoire's office and officials from the US EPA. The $2.7 million ship-to-shore power system was funded by a $1.5 million federal EPA grant and a nearly $1.2 million investment from TOTE. Port of Tacoma staff provided environmental permitting, grant administration and project management.

Ship-to-shore systems allow vessels to plug into the landside power grid while docked and turn off on-board emission-generating auxiliary diesel engines that typically provide at-berth maintenance power. These auxiliary engines produce the majority of emissions generated by a vessel during a normal port call.

“By plugging in, TOTE and the Port of Tacoma are using clean Northwest energy instead of fossil fuels,” said Dennis McLerran, EPA Region 10 Administrator. “This project has three major benefits: It reduces greenhouse gas emissions, creates healthier air and spurs job growth.”

TOTE's two state-of-art Orca-class vessels, which call weekly at Tacoma, are both outfitted to utilize the system. The ship-to-shore system is expected to reduce diesel and greenhouse emissions from TOTE's roughly 100 ship calls per year at Tacoma by 90 percent.

“Not only does this shore power plug installation help us clean the air, this project has created dozens of living-wage jobs at a time when we need them the most,” Gov. Chris Gregoire said in a statement. “This is the kind of investment we need to emerge from this recession ready for the 21st century economy – one with a healthy environment and a good supply of clean energy jobs.”

The Tacoma ship-to-shore project supports the Northwest Ports Clean Air Strategy, adopted in early 2008 by the Tacoma, Seattle and Vancouver, BC ports to meet jointly established short- and long-term clean air goals for ships, cargo-handling equipment, rail, trucks and harbor craft. Approximately half of the ships that call frequently at Tacoma already meet the 2010 clean-air goal for ships by using cleaner-burning distillate fuel at berth. TOTE ships, which call twice a week in Tacoma, will boost that number to 64 percent by plugging into the shore power system.

“Almost 35 years to the day since TOTE first introduced service from Puget Sound to Alaska, we are delighted today to again provide leadership in helping to establish this new benchmark for environmentally responsible cargo movement.” said TOTE President John Parrott. “Shore power is simply the next step in TOTE’s ongoing commitment to innovations which benefit our customers … and the communities in which we live.”

Ship-to-shore systems for cargo vessels have been in place in Southern California for several years and several West Coast ports already offer such facilities for cruise vessels.

Vancouver USA Port Inches Closer to Fully Funding Massive Rail Project

US Sen. Patty Murray, D-Wash., visited the Washington-state Port of Vancouver on Tuesday to celebrate a $10 million federal infrastructure grant she helped push through Congress.

Formally announced on Oct. 15, the grant inches the port one step closer to fully funding its massive $148 million West Vancouver Freight Access Project.

The $10 million grant will go toward the completion of two key components of the WVFA project: a vehicle bridge over rail tracks at Gateway Avenue that will improve access to the port's Terminal 5 facility; and, a rail enhancement project at the port's United Grain facilities. Both projects are set to begin construction next year.

In July, the port completed a rail loop project as the final phase of its $66 million Terminal 5 rail upgrade project – itself the first key component of the larger WVFA project.

Work began on the Terminal 5 rail loop began in November 2009 and was declared officially open by BNSF on June 29. Completed ahead of schedule and on budget, the rail loop marked the first major milestone under the West Vancouver Freight Access and Industrial Track Agreement, a deal reached between the port and BNSF in 2008 that provides the overall blueprint and timeline for the WVFA project. The entire WVFA project is expected to be completed some time in 2017.

Last month, the Vancouver port board voted to apply for a United States Federal Rail Administration loan to cover the remaining $76 million needed to complete the WVFA project. When completed, the WVFA project will boost the port's rail network from just under 17 miles to more than 44 miles and triple the rail car capacity of the port-area BNSF tracks.

Chamber Opposes Long Beach Port Ballot Measure

The Long Beach Chamber of Commerce has become the latest voice to oppose a Long Beach City Council-drafted ballot measure that seeks to assert more City Hall control over the Port of Long Beach.

The Chamber voted Thursday morning to accept the recommendation of its Government Affairs Committee to oppose Measure D.

The measure seeks to change the way an annual transfer of port revenue to City Hall is calculated and also seeks to transfer control of port-owned oil properties to City Hall. Though City Hall did no analysis of the impacts Measure D might have on the port, an analysis by port financial staff released last week found that Measure D could shift more than $130 million in port revenue over the next five years to the control of City Hall.

Mayor Bob Foster has said that Measure D is nothing more than an effort to clarify City Charter language regarding the city's relationship with the port.

In voting to oppose Measure D, the Chamber cited the potential impact such a shift of funds might have on the port's ability to develop and remain competitive, as well as the possible impact such a shifting of port revenue may have on the port's exceptionally high bond ratings.

The Chamber joins a large number of business groups that have opposed the measure. Last week, a coalition including the Los Angeles Customs Brokers and Freight Forwarders Association, the LA/LB Propeller Club, the Pacific Merchant Shipping Association, the Harbor Association of Industry and Commerce, FuturePorts, and the California Marine and Intermodal Transportation System Advisory Council, or CALMITSAC announced their opposition to Measure D. Members of the various groups represent nearly all the major stakeholders in the Southern California shipping industry.

Local news outlets including the Long Beach Business Journal, the Grunion Gazette and the Beachcomber have also expressed opposition to Measure D.

A recent study of Measure D by the California State Lands Commission – the state watchdog over local port authorities – found that Measure D did not, on its face, violate state law. However, the agency was highly critical of the way the measure was put forward without an economic analysis.

Tuesday, October 26, 2010

Fuel Cells for Marine Propulsion

By Louis Lemos

Various scientific theories and subsequent discoveries have been identified as stepping stones in the evolution of what has become known as the fuel cell, which generates electricity through heat. The concept of “thermoelectric generation” discovered by Seebeck around 1821, is based on the principle that current is produced in a closed circuit of two dissimilar metals, if the two junctions are maintained at different temperatures, such as in thermocouples for measuring temperature. Potentials are produced by thermocouples, and power at efficiencies of approximately 1 percent. The Peltier effect, discovered in 1834, consists of the heating or cooling of the junction of two thermoelectric materials by passing a current through the junction. The effectiveness of thermojunction as a cooling device has been greatly increased by the application of semiconductor thermoelectric materials.

In 1915 the concept of “Thermionic Generation” was proposed by Schlicter, using a thermionic converter, which is basically a vacuum or gas-filled device with a hot electron emitter as the cathode, and a cold electron collector as the anode within a gas-tight enclosure. By heating the cathode, it imparts enough energy to some of the electrons to enable them to escape from the work-function barrier at the surface of the cathode, into the interelectrode space. Gas-filled converters can attain efficiencies as high as 17 percent but with an output voltage averaging 1 to 2 volts, several units are required to be connected in series to attain a reasonably useful voltage.


Fuel Cell Fuels
Of the various fuels available for use in fuel cell systems, hydrogen appears to be the most logical, given that (a), it is non-toxic, (b), yields a higher ratio of chemical energy per unit mass than that available from natural gas, and (c), it is abundant as an unlimited resource in atomic form. In addition to which, hydrogen is non-polluting. Liquefied Natural Gas (LNG), which is now widely used in many dual-fuel marine diesel engines, is also a strong contender for fuel cell use.

Currently, there is an ongoing initiative in Holland known as the Green Tug project, piloted by the Offshore Ship Designer Group, including participation by Bureau Veritas, featuring a hydrogen-powered fuel cell tugboat designed for near-zero exhaust emissions level, and estimated to increase propulsion efficiency by almost seventy percent compared to that of a conventional Diesel-direct-drive.

There is also a methanol-based auxiliary power system fuel cell known as METHAPU, sponsored by the European Union with the cooperation of Lloyd’s Register, Wartsila and the University of Genoa, among others. This project involves a methanol-fuelled auxiliary power system of the solid oxide fuel cell (SOFC) type, rated at 20kW, that has recently been installed aboard a Swedish car carrier. In addition thereto is the MTU Onsite Energy fuel cell developed by the Fellow-SHIP Project, consisting of Det Norske Veritas, the ship-owner Eidesvik, the system integrator Wartsila and MTU Onsite Energy, who supplied the 320 kW fuel cell powered by LNG that was installed aboard the Norwegian Offshore-Support ship Viking Lady in the latter part of 2009. Funding for the Fellow-SHIP project is provided by the Norwegian Research Council and Innovation Norway.

The essential factors governing the selection of the most appropriate fuel for use in fuel cells are those of availability and cost. Hydrogen, for instance, can be obtained from natural gas and coal, involving a process of carbon sequestration. Given that the submerged endurance of ninety days by nuclear submarines is attributable to the ability of replenishing their internal atmosphere with fresh oxygen extracted from seawater, it is conceivable that this capability may eventually be extended to surface ships powered by Marine Propulsion fuel cells. In this case, the procedure would be changed to the extraction of hydrogen from seawater, (using a form of hydrolysis), to feed the Marine Propulsion fuel cell engines. Given the inevitable trend toward Hydrogen as a preferred fuel for fuel cells, those interested in the development of fuel cell systems for Marine Prime Movers, are advised to learn all they can about the safe handling, transportation and storage of hydrogen, since this will no doubt become a primary choice of fuel for Marine fuel cell systems. A logical starting point for such information is to be found within the growing application of dual-fuel engines, and associated support systems for main propulsion of recently built European-flagged LNG carriers. Much of the current dual-fuel program consists of high-grade conventional marine diesel fuel (MDO) and Liquefied Natural Gas (LNG), of which the latter already involves practice and procedures that are applicable to hydrogen. In due course, we may expect to see publication and indeed enforcement, of a safety code of hydrogen storage and handling. Hence, it would be wise to monitor the pertinent publications from the American Bureau of Shipping (ABS) and their foreign counterparts; the US Coast Guard; International Maritime Organization (IMO), and major Marine Fuel Refiners, for the benefit of those ultimately responsible for distribution and ultimately, consumption of such fuel.

Basic Technology
When provided with fuel and air, a fuel cell converts chemical energy directly into electricity and heat, but unlike batteries, will not run down. It is an electrochemical device that converts the chemical energy of the fuel directly into electricity and heat, and does so more efficiently than conventional combustion-based technologies. The common types of fuel cells are phosphoric acid (PAFC); molten carbonate (MCFC); proton exchange membrane (PEM); and solid oxide (SOFC); all named after their respective electrolytes. Given that they rely on electrochemical reactions instead of combustion, fuel cells need an easily oxidized substance, such as hydrogen. Some fuel cells, such as solid oxide fuel cells (SOFC), can also utilize carbon monoxide (CO), making them more fuel-flexible and generally more efficient with available fuels. Hydrogen and CO can be produced from natural gas and other fuels by steam reforming. fuel cells like SOFC’s that can reform natural gas internally have significant advantages in efficiency and simplicity when using natural gas because they do not need an external reformer.

Safety Codes and Standards
As fuel cells become successfully adopted by the US maritime Industry, for purposes of main propulsion and auxiliary power generation, we should expect to see the promulgation and enforcement of US Coast Guard Rules and Regulations applicable thereto, as well as comparable Rules and Standards issued by the American Bureau of Shipping, for fuel cell-powered American flag vessels. In addition to the aforementioned Guidelines for fuel cell systems on board commercial ships, proposed by Bureau Veritas, there are various codes and standards (non-marine) that may be applicable to basic fuel cells with particular emphasis on the safe handling, transportation, storage and usage of hydrogen and related fuels. The US Department of Energy is currently developing and testing complete system solutions that address all elements of infrastructure and vehicle technology, validating integrated hydrogen and fuel cell technologies transportation, infrastructure and electric generation in a systems context under real-world operating conditions. Data will be collected under realistic operating conditions to provide feedback on progress and to efficiently manage the research elements of the program while providing re-direction as needed.

Comparative Properties of Gasoline, Natural Gas and Hydrogen

Gasoline Natural Gas Hydrogen
Heating Value (low)
(Btu/lb) 18,500 21,250 51,500
Density (lbs./gal.) 6.25 0.005 0.0007
Toxicity to humans Poisonous Non-toxic Non-toxic

The above factors are based on data provided by the Alternative Fuels Data Center, of the U.S. Department of Energy.

Fuel Cell Guidelines
Bureau Veritas (BV), one of the world’s largest Classification Societies, has proposed guidelines for the safe operation of fuel cells for marine propulsion, according to BV Product Manger Gijsbert de Jong. The intent being to establish a regulatory framework within which, building and testing of prototype fuel cell systems can be safely conducted while ensuring that the technology is developed and applied in accordance with safe performance-criteria. In his comments Mr. de Jong stated that “BV’s guidelines for the safe application of fuel cells on ships take into account all relevant existing IMO conventions and guidelines together with a wide range of international non-marine standards. They reflect BV’s in-house knowledge and expertise, and could have important commercial – as well as environmental – implications for ship-owners and operators.” He further explained “The object of the BV guidelines is to provide criteria for the arrangement and installation of machinery for propulsion and auxiliary purposes, using fuel cell installations, which have an equivalent level of integrity in terms of safety, reliability and dependability as that which can be achieved with new and comparable conventional oil-fuelled main and auxiliary machinery. The guidelines currently have preliminary status and are subject to internal and external review. After taking into account all relevant feed-back, they will be published as a Bureau Veritas Guidance Note entitled “Guidelines for fuel cell systems on board commercial ships.”


Fuel Cell Operation
Basic requirements for a hydrogen fuel cell are fuel, oxidant and an electrolyte, plus a negative anode and a positive anode. In a typical Polymer Electrolyte Membrane fuel cell (PEMFC), such as that developed for Space Missions of the 1960’s, the system works as follows:

• Hydrogen is fed into the anode, which is the electrically negative post of the Fuel Cell.
• In the center of the fuel cell the electrolyte absorbs an electron from the hydrogen atom using it to make electricity.
• The cathode, as the electrically positive post of the fuel cell, is where the electrons recombine with the hydrogen and oxygen to make water, which is the exhaust effluent. This transition of protons and electrons is referred to as ionic conduction wherein there is a transmission of electrons (electrically-charged atoms) or protons, produced by dissolution of electrolytes, a characteristic of fuel cells.


Fuel Cell Transplant
Given the eventual phase-out of fossil fuels and the conventional marine propulsion plants (of existing vessels) the latter could be replaced by fuel cell power plants with electric drive motors. Feasibility of such transplant would of course be contingent upon successful reduction of current fuel cell systems to a size compatible with that of existing internal combustion engines, but of comparable power range. The original diesel fuel tanks would have to be replaced with specifically designed high-pressure vessels for storage of hydrogen, with matching high-pressure piping, valves, gauges, etc. This would be somewhat similar to the new high-pressure LNG tanks and piping systems now in use. Meanwhile, the entire existing diesel fuel refinery, distribution, transportation, storage and retail infra-structure as we know it, will have to be re-designed to cope with hydrogen and/or LNG instead. Studies along these lines are currently in progress, coordinated by the California fuel cell Partnership consisting of British Petroleum; Chevron-Texaco; Exxon-Mobil; Shell; California Air Resources Board and the US Department of Energy (D.O.E.). Fuel cell propulsion is being viewed within D.O.E. as the transportation technology of the future, based on the findings of studies being conducted by the Argonne National Laboratory.

Fuel Cell Information
Within the US Department of Energy, under the heading of “Energy Efficiency & Renewable Energy,” there is a fuel cell technologies program to which one may apply for specific data regarding information resources, technologies, financial opportunities and market transformation, etc. Further information may be found within the “California Fuel Cell Partnership” that combines the resources of the California Air Resources Board, the US Department of Energy and that of prominent oil companies.

In addition to several years’ service as engineering officer, British Merchant Navy and as Chief Engineer, US Merchant Marine, Louis Lemos is a US Navy certified Ship Superintendent (MINS); former Marine Engineering Advisor to the South Vietnamese Navy; a licensed Stationary Engineer; Commissioned Inspector of Boilers and Pressure Vessels; former Port Engineer with Military Sealift Command. Mr. Lemos can be reached at 415-897-9056 or l.lemos@att.net.

Fed Judge to Reinstate Injunction Against Portions of Los Angeles Port Truck Plan

The federal judge who ruled in favor of the Port of Los Angeles port trucking program last month has agreed to reinstate an injunction against the most contentious portion of the truck program until a federal appeals court can hear the case.

District Court Judge Christina Snyder issued the tentative ruling on Monday and is expected to issue a formal ruling on the matter sometime this week.

The ruling will reinstate an injunction against a portion of the port plan that requires trucking firms servicing the port to only hire per-hour employee drivers while the appeals case is under way.

The American Trucking Associations, who had sued the port over non-environmental portions of the truck plan in 2008, asked Judge Snyder on Sept. 24 to reinstate the injunction that had been in place during the trial while the group appealed to the US Ninth Circuit Court of Appeals. The injunction, originally issued by Judge Snyder in 2009, blocked certain portions of the truck plan, including the employee-only mandate, from being implemented by the port.

The employee-only mandate and several other components of an access license scheme contained in the Los Angeles port's truck program were cleared for full implementation when Judge Snyder ruled in favor of the port on Sept. 16 and as part of the ruling dissolved the original injunction.

Judge Snyder based her ruling in favor of the port on several legal issues called "federal preemption" and "market participation."

While she found that portions of the port truck plan violated federal law, she also ruled that the port was exempt from the applicable federal law because the port was acting as a participant in the trucking industry, much like a private company.

In her tentative ruling reinstating the injunction, Judge Snyder said that while she was confident of her ruling in favor of the truck program, she recognized that "the interpretation and the application of the market participant doctrine in this case present substantial and novel legal questions."

She also determined that the trucking industry was likely to suffer "irreparable harm" if the employee-only mandate was allowed to be implemented and was later overturned.

However, Judge Snyder also concluded that such harm would not arise from another portion of the truck plan that calls for all trucking firms servicing the port to have an off-street parking plan for their vehicles. This portion of the trucking program will not be covered by the reinstated injunction.

The ATA plans to file with the Ninth Circuit as soon as Judge Snyder makes the tentative ruling on the injunction formal. As part of the tentative ruling both the ATA and the port have agreed to seek an expedited hearing before the appeals panel.

State Officials Criticize Long Beach City Hall Handling of Measure D, Warn of Impacts to Port

The California State Lands Commission on Thursday issued an analysis critical of the way in which City of Long Beach officials pushed Measure D onto the November ballot.

The analysis found that while Measure D does not, on its face, violate the state trust that allows the city to operate the Port of Long Beach, CSLC officials concluded that the city failed to analyze "any potential fiscal implications and impacts to Port operations that may result," from the measure.

The state report also criticized Long Beach City Hall officials for offering no rationale under state law for authorizing "significant diversions" of port funds for non-port related city expenditures. The report singled out recent expenditures of port funds such as contribution to the City Municipal Band and the Fourth of July Fireworks show as examples of expenditures not consistent with state law.

The CSLC functions as the state's watchdog over the various port authorities throughout the state, assuring that the port authorities and their city hall bosses adhere to state laws requiring the ports to be operated for the benefit of all the citizens of California and not just local interests. Under the Public Trust Doctrine, the state-owned ports are granted to the various cities to be operated in trust for the citizens of the state.

State law also requires that all funds generated by the various ports be used for very specific maritime-, navigation-, and water recreation-related uses within the city tidelands – that area below the high tide mark in 1911 when the first part of the trust doctrine was approved. In Long Beach, this area is basically anything south of Ocean Boulevard.

Under state law, port funds cannot be used for general fund purposes. However, the city maintains a Tidelands Operating Fund that is separate from the General Fund. Port funds, such as the annual transfer of port profits requested by City Hall, are allowed to be placed into this fund and spent on the state-defined uses within the tidelands. City Hall can in turn offset General Fund expenses that would have been spent in the tidelands, such as police and fire service, with money from the Tidelands Fund.

Measure D, which was rushed onto the ballot at the eleventh-hour, seeks to make two changes to the City Charter regarding the port. One change would alter the formula for how the annual transfer of port profits are calculated – from the current 10 percent of port net income to 5 percent of port gross revenue. The second part of the measure would remove the port's authority over port-area oil property, and the resulting profits, and give it solely to City Hall.

A fiscal analysis presented by port officials last week found that an approval of Measure D would shift $133 million over the next five years – $100 million in oil revenue and $33 million in additional transfers – from the port to the City Hall-controlled Tidelands Fund. This would in turn lower port net income by $148 million over the same five-year period and necessitate the port borrowing an additional $151 million for various capital projects.

"Over the five years, this accounts for approximately 15 percent of the Port’s annual net income," said the CLSC report. "When combined with the increase in transfer formula, the impact of Proposition D could account for approximately 20 percent of the Port’s annual net income.

The report goes on to state that the long-term financial draining on the port due to the passage of Measure D could have a significant impact on port operations.

"The impacts to Port operations may include a reduction in the Port’s credit rating due to anticipated reductions in its annual cash flow," said the report. "...If the Port’s credit rating is downgraded, the Port will pay more in interest."

The port analysis estimated that downgrades to the port's currently high bond rating could result in an additional $39 million to $158 million in interest expense over the next 30 years, depending on the severity of any downgrade.

Despite these estimates of potential loss for the port, the CSLC was unable to find that Measure D, on its face, violated either the Public Trust Doctrine or land use laws.

"However," said the CSLC report, "the City has a fiduciary duty, as the State’s trustee, to balance competing public trust needs and to carefully consider any potential impacts to Port operations that any change to the City Charter may have. The issue in diverting revenues from the Port is whether the City would be impairing Port operations of statewide and even national importance to fund less critical operations.

In addition, the state commission found that some expenses being borne by the port may be inconsistent with state law.

"Commission staff has not initiated either an investigation or audit, but has recently become aware, through news sources, of some questionable expenditures and budgeted expenditures of public trust revenues both by the City and the Port," said the report.

"Commission staff has received an explanation of some of these expenditures sufficient to determine that such expenditures are not inconsistent with the common law Public Trust Doctrine and the City’s trust grant. However, staff believes that further information is needed to determine trust consistency, given the Supreme Court [rulings], for other questionable expenditures and budgeted expenditures such as: the Port providing over $200,000 in scholarships since 2007; $50,000 by the Port to fund the Long Beach Municipal Band and $75,000 by the Port to fund the City’s Fourth of July fireworks (Port FY 2011 Budget); and $65,000 by the City’s Tidelands Operating Fund to fund the Long Beach Municipal Band (City FY 2011 Budget).

The State Lands Commission will hold a regular public meeting in Culver City on October 29th. The agenda for the meeting includes a staff report on the “City of Long Beach Public Trust Revenues, Including Proposition [Measure] D.”

Longview Port Increases Acreage By 70 Percent With Land Purchase

The near capacity Port of Longview announced Friday that is has purchased 306 acres of undeveloped waterfront property at Barlow Point.

The $2.45 million foreclosure auction purchase will increase the port's current 437 acres by 70 percent.

Port officials told the Daily News Online that port staff is still evaluating the parcel, which was the previous home to Longview Motocross. Possible port uses for parts of the waterfront property could be the development of marine terminals. Port Director Ken O'Hollaren, who left Monday for a trip to Asia to market the new property, said the property is within the city limits, zoned for manufacturing and could support several tenants.

Located four miles downriver, the parcel was valued by the Cowlitz County Assessor's Office at $6.7 million.

The port, the only bidder in the foreclosure auction for the property, plans to issue a general revenue bond next month to cover the purchase.

Everett Port Passes 2011 Budget, Plans Layoffs and No Changes to Tax Levy

The three-member governing board for the Port of Everett, Washington last week approved a $24 million budget that calls for staff layoffs next year and keeps in place a property tax levy on port district residents.

Port officials cited a decline in the port's property tax revenue stream, decreases in business lease revenues and declines in marina space rent as justification for the 2011 cutbacks. Under the budget the port will not replace three employees scheduled to be lost through attrition next year, will layoff three additional employees and will require that the port's 25 exempt employees take six unpaid days off in 2011.

The tax levy, as approved by the port board, will remain at 28.3 cents for each $1,000 in assessed property value for port district property owners. The owner of a $300,000 home would pay slightly less than $85 in port taxes in 2011.

The port board agreed to keep the levy in place, as opposed to increasing it, citing the current rate as adequate to continue paying down $38.5 million in outstanding port debt.

Due to the overall drop in property values, estimated at a total of $2 billion over the past two years in the Everett area, the port expects its property tax levy to generate about $3.7 million in 2011--roughly 11 percent less than in 2010.