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Friday, August 17, 2012

Long Beach TEU Volumes Continue to Slide


Overall container traffic at the Port of Long Beach dropped 8.8 percent in July compared to the same month in 2011, with the port seeing downward slides in all major traffic categories, including the number of loaded inbound, loaded outbound and empty containers shipped.

Imports were down 10 percent and exports down nearly 1.9 percent, according to the port’s newly released data.

Long Beach terminals handled 522,486 TEUs last month, compared to 572,926 TEUs in July 2011. Import containers accounted for 261,233 TEUs, compared to 290,314 TEUs in July 2011. Exports accounted for 124,574 TEUs, compared to 126,968 TEUs a year ago.

Empty container moves were down almost 12.2 percent to 136,679 TEUs last month compared to 155,644 TEUs in July 2011.

For the calendar year to date, overall container traffic at Long Beach is down 5.5 percent through July. And for the fiscal year so far, which began in October 2011, traffic is also down. About 5.23 million containers had moved through the port by this point during the prior fiscal year, but during the same time period during FY 2012, Long Beach has seen 4.8 million TEUs, a drop of about 8.3 percent.

The port attributes the volume decreases in part to the slow national economic recovery, which over the past couple of years has led to the elimination of ship calls at Long Beach by several niche service strings.

Port of Los Angeles Container Traffic Rises in July


Overall cargo volumes at the Port of Los Angeles were up 5.53 percent last month compared with the same month 2011, according to new data, signaling a good start to the port’s new fiscal year.

Imports increased by 3.97 percent month-over-month at Los Angeles, going from 357,667 TEUs in July 2011 to 371,859 TEUs this July, according to the port’s newly-released data. It was the highest number of inbound loaded TEUs moved during any individual month so far in 2012 at the port.

Exports on the other hand, increased by just .27 percent, rising from 165,135 TEUs in July 2011 to 165,581 TEUs last month.

Combined, the number of total loaded imports and exports for July was up 2.8 percent, from 522,802 TEUs last July to 537,440 TEUs in July 2012. Factoring in empties, which increased 14.1 percent year over year, the overall July 2012 volume of 726,375 TEUs represented a 5.53 percent jump compared to July 2011’s 688,325 TEUs.

For the first seven months of calendar 2012, overall container volumes have increased 6.3 percent, to 4,736,579 TEUs, compared to the same period in 2011, when the port moved 4,455,552 TEUs.
July marked the first month in the Los Angeles port’s new fiscal year, which runs through the end of June 2013.

Port of Oakland Container Traffic Up Slightly


Container traffic saw a slight bump at the Port of Oakland last month, as overall volume rose 2.2 percent compared with the same month last year.

A grand total of 201,993 TEUs moved through Oakland in July 2012, the second-highest number of the calendar year so far, behind the 203,446 TEUs that were shipped through the port in May.

Although the number of full containers imported and exported was relatively flat, the port saw a sizable month-over-month increase in the number of empty containers exported. The 34,211 empty TEUs that were shipped out represented a nearly 12 percent increase from the number shipped in July 2011.

The number of empties imported however, 18,357, was a 1.7 percent decrease from the same month last year.

Oakland’s monthly full import and export volumes were on the plus side, but just barely. The 70,586 full TEUs imported was just a 1.5 percent bump from July 2011, and the 78,359 filled containers exported represented a month-over-month rise of just 0.1 percent.

With July’s numbers added in, the Port of Oakland has moved a grand total of 1.35 million TEUs so far in the calendar year, an increase of 0.9 percent compared with the same seven months last year.

BNSF Plans Washington Rail Improvements, Expansion


BNSF Railway says it plans to invest about $106 million on maintenance and rail capacity improvement and expansion projects within Washington State this year, including one near the Port of Longview.

“BNSF’s investments will improve our ability to provide rail freight services to Washington businesses and communities and will expand opportunities to create more jobs and growth for the Washington economy,” railway chair and CEO Matthew K. Rose said.

Capacity enhancement projects in the state include the construction of a new lead to access the Port of Longview, as well as signal upgrades for federally mandated positive train control.

The railway says it is also continuing its track maintenance program in Washington, which includes 1,020 miles of track surfacing and undercutting work as well as the replacement of 56 miles of rail and about 178,000 ties.

The planned capital investments in Washington are part of BNSF’s total 2012 capital commitment of $3.9 billion. The largest component of the capital plan is spending $2.1 billion on BNSF's core network and related assets. BNSF also plans to spend approximately $1.1 billion on locomotive, freight car and other equipment acquisitions, many of which will serve Washington. The program also includes about $300 million for federally mandated positive train control and $400 million for terminal, line and intermodal expansion and efficiency projects.

In May the railway announced it plans to spend $120 million on rail capacity improvement and maintenance projects within California, including installation of an automated gate system at its Hobart Intermodal Facility in the Los Angeles area to increase the velocity of container/trailer processing.
The California plan also includes 786 miles of track surfacing and undercutting work, the replacement of 40 miles of rail and about 377,000 ties and train control signal upgrades.

Thursday, August 16, 2012

California Grants Boost Public Health and Vessel Owner Capital


By Suzanne Seivright

Air along the coast of California will be a little cleaner, and vessel owners and operators will spend less on fuel, thanks to government grant dollars that target older, polluting marine engines.

Catalina Express offers year round service from the Ports of Long Beach, San Pedro, and Dana Point to Catalina Island for more than one million passengers each year. Over the last ten years, Catalina Express has partnered with the Port of Los Angeles, using government grants, to replace most of the propulsion and auxiliary engines in six of their fast ferry vessels.

“The Port of Los Angeles is working on many fronts to reduce the harmful emissions here at the Port. We’ve had great success in the last several years; we’ve reduced emissions approximately by 50 percent or more throughout the Port over the last 6 years. So, it’s partners like Catalina Express and doing everything on land and sea to clean up the air that is making this a success” says Phillip Sanfield, Spokesman for the Port of
Los Angeles.

Partnerships between vessel owners and operators and government agencies, through grant programs, not only benefit public health significantly, but also reduce a vessel’s capital expenditures related to fuel costs, regulatory compliance and other factors. In some cases, switching to newer diesel engines can substantially reduce fuel consumption.

Marine Engine Government Grants
Grants inclusive of the Carl Moyer program, administered by agencies such as the South Coast Air Quality Management District, have offered varied opportunities to vessel owner and operators intended to inspire strategies for reducing air pollution. Grant funds replace or retrofit older, high-emission diesel marine engines and result in substantial reductions in nitrogen oxide (NOx) emissions, an ozone precursor pollutant, and toxic diesel particulate matter (PM).

Sam Atwood, Spokesman for the South Coast Air Quality Management District, says “Reducing the air pollution emissions from commercial marine vessels is a very important piece to the entire puzzle of reaching our federally mandated air quality standards. Commercial vessels, of course, have very large diesel marine engines, and they can be a large source of nitrogen oxide emissions which is typical for a diesel engine.”

Marine vessel grant applications are evaluated on the cost effectiveness for reducing NOx and diesel PM based on annual fuel use, rated horsepower, engine emission factors, and the cost of the new engine.

Under these government grant programs, funding is restricted to the use of engines that have been verified by the US Environmental Protection Agency (EPA). “Technology has evolved to make diesel engines more efficient and cleaner than ever,” says Gina McCarthy, Assistant Administrator for EPA’s Office of Air and Radiation. Government grants enable owners of older diesel engines to make investments that modernize their equipment while making the air in their communities cleaner and healthier.

Grants typically cover up to 80 percent of the total cost of the approved marine engine, related labor, sales tax, shipping costs, and other costs related to vessel modifications needed to install the new engine.

Vessel owner and operators invoice the government agency, and are required to destroy and render useless the old engine that will be taken to a metal recycling/salvage yard. After the grant project is complete, vessel owners and operators are required to maintain their new engines as recommended by the equipment manufacturer and must submit operation reports to the correlating government agency. Vessels are typically required to demonstrate historic usage in ports, estuaries, and bays within 24 nautical miles of California’s coastline.

“As tug boat operators, such as the Sause Brothers have shown, it’s practical and very feasible to change out older diesel engines for newer and much cleaner models,” says Sam Atwood. “Through the Carl Moyer funding, I believe that most of the tug fleet has already been retrofitted to cleaner power. So this is something that is feasible and [a] very important piece of the puzzle, especially when we can get significant cost effective reductions of nitrogen oxides from these commercial vessels.”

‘Commercial Harbor Craft’ Regulation
Grant programs typically only reduce emissions from marine diesel engines that are surplus to government regulations. Pursuant to Carl Moyer grants, eligible vessels include fishing, ferry excursion (whale watching, harbor cruises, diving), tugboat, towboat, and other applications that must have their grant project completed at least three years prior to regulatory compliance deadlines.

On November 15, 2007, the California Air Resources Board (CARB) approved the ‘Commercial Harbor Craft’ regulation to reduce emissions from diesel engines on commercial vessels that operate in regulated California waters. The regulation supports the “Risk Reduction Plan to Reduce Particulate Matter Emission from Diesel-Fueled Engines and Vehicles” adopted by CARB’s Governing Board on September 30, 2000, and the “Goods Movement Emission Reduction Plan” adopted in April 2006, as well as the current State Implementation Plan.

The regulation establishes in-use emission limits for both propulsion and auxiliary diesel engines of ferries, excursion vessels, tugboats, towboats, and other specified vessel applications consistent with the US EPA marine engine emission standards.

The regulation’s goal is to reduce the public’s exposure to diesel PM and NOx by requiring vessel owners to replace in-use engines with cleaner Tier 2 and Tier 3 engines. Additional information regarding the ‘Commercial Harbor Craft’ regulation can be obtained at http://www.arb.ca.gov/ports/marinevess/harborcraft.htm.

Reduced Capital Expenditures
Some vessel owners and operators have claimed cuts of nearly 50 percent in fuel consumption once new diesel engines are installed, which results in savings from day one of operation. Do the math – calculate the capital expenditure (the price of the new equipment and boatyard labor) in relation to potential grant funding, fuel savings, and other factors such as regulatory compliance in order to realize what a grant truly means to a marine vessel and overall business operation.

In addition to grant funding, some government agencies have partnered with financing authorities to encourage banks and other institutions to make loans to small businesses that have difficulty in obtaining financing. For example, CARB in coordination with the California Capital Access Program, established a loan guarantee program to provide $5 million in loan assistance to business owners of marine vessels for diesel engines. This is a one-time loan assistance opportunity with the objective of assisting vessel owners to upgrade their marine vessels for early compliance with CARB’s ‘Commercial Harbor Craft’ regulation. Participants are limit to companies with fewer than 500 employees in addition to other requirements which can be viewed at http://www.treasurer.ca.gov/cpcfa/calcap.asp.

Vessel owners and operators should consider any or all government grant programs to enhance short-term and long-term goals. The Carl Moyer program has allocated funding annually since its inception, and hundreds of vessels have had engines replaced or retrofit taking advantage of this “free money”. Grant programs are typically administered through a government organization such as a local air district, state agency, or port authority. The applications are fairly straightforward to complete, however, vessel owners and operators should discuss potential projects with a grant coordinator early in the process to make sure its proposed project is eligible and to determine the best approach to ensure funding.

Suzanne Seivright is the Manager of Regulatory Affairs and Compliance at Valley Power Systems, Inc. She has experience in the environmental field working in both the public and private sectors. Seivright has focused on legislation and rules related to engines, existing fuels and their respective opportunities and challenges, engine emission control devices, and alternative fuel/advanced vehicle technologies. She has been instrumental in identifying opportunities that includes market and channel development, collaborating with early adopters, and sourcing of government funding.

US Supreme Court Rejects PMSA’s Challenge to California’s Vessel Fuel Rule


By Craig H. Allen

On June 25, 2012, the US Supreme Court denied the petition for certiorari in the ongoing litigation between the Pacific Maritime Shipping Association (PMSA) and the California Air Resources Board (CARB) over the CARB vessel fuel rule for ocean-going vessels. The Supreme Court’s decision in PMSA v. Goldstene (Executive Officer, California Air Resources Board) came just 32 days after the US Solicitor General filed the Department of Justice’s legal brief on May 25th. The DOJ brief rejected the position of the US Maritime Law Association, which has long championed the principle of uniformity in maritime law, and instead urged the Supreme Court to deny PMSA’s petition for review of the Ninth Circuit decision in favor of CARB. Veteran court watchers know that in predicting how the Supreme Court will respond to maritime federalism challenges against state and local regulations the position taken by the federal government is often crucial. In this case it was likely dispositive.

As it turned out, the same week DOJ filed its brief with the Supreme Court Hillary Clinton, the Secretary of State, was across the street testifying before the Senate Foreign Relations Committee in support of a comprehensive treaty-based global maritime legal system (the 1982 Law of the Sea Convention) and defending it against allegations that it would erode US sovereignty. It seems ironic that the Administration’s senior diplomat was touting the benefits of a global maritime treaty regime before the US Senate while the Administration’s senior lawyer was urging the Supreme Court to deny review of a state agency’s fuel standards for international shipping that undermine the global treaty regime approach to reducing vessel source air emissions.

The Case: PMSA v. Goldstene
In trying to understand the importance of the PMSA challenge to CARB’s vessel fuel rule it is easy to get lost in the various technical details in the CARB fuel standards, the default MARPOL Annex VI fuel standards, the more stringent standards applicable in the North American Emission Control Area (ECA), the Marine Pollution Prevention Act of 2008, which implements MARPOL Annex VI, and the effective dates for each vessel fuel standard. Adding to the confusion is the fact that this is the second challenge to CARB’s vessel air emission control rules by the PMSA. The first one resulted in the Ninth Circuit striking down CARB’s “marine vessel rule” in 2008 on the ground the rule was preempted by the federal Clean Air Act. The second challenge is directed at CARB’s vessel fuel rule. The CARB vessel fuel rule, like the two MARPOL schemes, seeks to reduce, among other pollutants, sulfur oxide (SOx) emissions from specified sea-going vessels, mostly by requiring those vessels to use fuels with lower sulfur content.

The following table briefly summarizes the default global standard for vessel fuel sulfur content limitations under MARPOL Annex VI, the stricter standard for the MARPOL Emission Control Area (ECA) for waters 200 miles seaward of most of North America and the CARB fuel requirements for ocean-going vessels (per CARB Marine Notice 2012-1, July 2, 2012).










The key takeaway, and the crux of the present case, is that as part of a comprehensive effort to restore air quality in one of the most polluted airsheds in the country California has rejected the existing standards set by the agreement entered into by the US government at the IMO regarding the sulfur content of marine vessel fuels and has instead set a more stringent standard for vessels calling on California ports. California applies that standard to vessels calling at its ports while operating within 24 miles of the state’s coast – 21 miles beyond the outer limit of the state’s waters.
As some who have been watching the case have already noted, if the individual states are free, as a result of this decision, to regulate shipping to the outer limit of the 24 mile US contiguous zone, as California now does, why not to the 200 mile outer limit of the exclusive economic zone, or even beyond that, so long as the regulations are drafted as “conditions of entry” or justified by “effects” within the state – both of which have been offered in support of California’s power to regulate vessels while outside its waters?

The DOJ Brief to the Supreme Court
In its 2011 decision against PMSA, the Ninth Circuit announced its belief that the regulatory scheme at issue in this second case against CARB “pushes a state’s legal authority to its very limits.” The court did not, however, articulate the rule that defined those limits. The DOJ brief doesn’t do much better. In fact, despite the theoretical concept of a “unitary executive,” the brief appears to argue against itself in some places, signaling to some observers that not all federal agencies agreed with the ultimate decision to recommend against Supreme Court review and that the federal government might take a more assertive position in the case if and when the PMSA challenge is more fully developed in the lower courts.

The DOJ brief drafters acknowledged that the California rule raises “important and difficult questions about the scope of a State’s power to regulate seagoing vessels” and criticized the lower court for giving “insufficient weight to the federal government’s primary responsibility for matters bearing on maritime commerce” and for improperly applying a presumption against preemption, pointing out that the Supreme Court has already ruled that “in matters bearing on maritime commerce there is no beginning assumption that concurrent regulation by the State is a valid exercise of its police powers.”

Although the brief went on to highlight that questions remain as to whether a state is constitutionally barred from implementing regulations that apply extraterritorially, it ultimately concluded that the PMSA challenge was not, at this time, an appropriate case for deciding such questions, in light of its procedural posture. In fact, the brief argued that granting review “at this juncture” would actually prevent the Court from later considering “important dimensions of the underlying controversy.”

Strangely absent from the DOJ brief is any discussion of whether the US government agrees with the assertion that individual state and local governments can exercise the power normally accorded to nation-states under international law to impose conditions for entry into the nation’s ports and internal waters. Congress expressly addressed “conditions for entry into ports in the United States” in the Ports and Waterways Safety Act (33 USC. §§ 1228, 1232(e)). It should be noted here that, while it’s true that when the US Senate gave its advice and consent to ratification of Annex VI it attached an “understanding” that nothing in the treaty precludes a party to Annex VI from imposing more stringent standards as a “condition of entry” into US ports and internal waters, the Senate did not suggest that the treaty – which is the Law of the Land under Article VI of the Constitution – also permits state or local governments in the US to do so. Nor does it suggest that Congress intended to relax its historical solicitude for international law limits on the nation’s jurisdiction. Congress’ solicitude is evident in a section of the Act to Prevent Pollution from Ships, which implements the MARPOL Convention in the US, where Congress directed that any action taken under APPS “shall be taken in accordance with international law (33 USC. § 1912).

Additionally, DOJ failed to directly question the possible source of a state’s power to declare a zone of “Regulated California Waters” extending 24 miles seaward, in which the state will regulate ocean shipping activities, particularly in light of the fact that the presidential proclamations extending the US territorial sea from 3 to 12 miles in 1988 and extending the US contiguous from 12 to 24 miles in 1999 were both careful to disclaim any intent to extend or otherwise alter existing state law or jurisdiction.

The DOJ brief also did not question the argument that states have the power to regulate shipping activities outside their territory to the extent that those extraterritorial activities produce “effects” in the state’s territory. That assertion is highly problematic as a matter of international law. While customary international law does recognize what is generally referred to as “objective territoriality” as a valid basis for a nation-state to prescribe laws governing conduct outside its territory if that conduct produces effects in its territory, under the 1982 LOS Convention, jurisdiction is strictly limited by “zone.” The coastal nation’s jurisdiction over foreign vessels varies according to which zone (territorial sea, contiguous zone, EEZ or high seas) the vessel is in. The coastal nation cannot “supplement” its zonal jurisdiction by claiming that activities outside the zone have an “effect” in its territory. Were the rule otherwise, effects-based jurisdiction would quickly swallow the LOS Convention’s zonal approach to jurisdiction. In addition, even if effects-based jurisdiction was proper as a matter of international law, it is not at all clear whether, as a matter of US law, state and local governments may invoke the “effects” theory to regulate international and interstate shipping activities beyond their waters.

Although the DOJ brief reveals a possible internal schism among the involved federal agencies, the final recommendation is a predictable consequence of the tone set by the President’s May 20, 2009 memorandum to all federal executive branch agencies, which plainly discourages agencies from taking a position advocating preemption of the states. It also appears to be consistent with the Administration’s National Ocean Policy and its adoption of a bottom-up coastal and marine spatial planning process involving federal, state and tribal governments in planning on an ecosystem-based approach, where the relevant large marine ecosystems often extend up to 200 miles seaward.

DOJ’s Shot Across California’s Bow
While recommending against review at this time, the DOJ brief did fire a shot across California’s bow, expressing the federal government’s belief that after January 2015, when the MARPOL phased-in fuel standard overtakes the existing California standard, California “will not second-guess the efficacy of the federal standard expressly adopted through MARPOL and implemented through APPS.” There are, in fact, numerous representations, or perhaps assumptions, that the dispute will be mooted in 2015, when the MARPOL fuel standard for the North American Emission Control Area comes up to the present CARB vessel fuel standard. CARB’s reply brief, for example, flatly avers that the CARB vessel fuel rules will “sunset” in 2015.

Several factors suggest a cautious approach to relying on those representations, however. First, the CARB Executive Officer apparently will have discretion regarding any decision on whether the MARPOL fuel standards are equivalent to CARB’s vessel fuel rule. The Ninth Circuit noted this, observing that the sunset provision provides for termination of the vessel fuel rule when “CARB’s Executive Officer makes a finding that the federal government has adopted and is enforcing requirements that will achieve equivalent emission reductions.” Second, California law requires a comprehensive review of the CARB plan every 3 years, so even within existing laws CARB might decide to adopt a stricter standard. Finally, the California legislature remains free to enact new and more stringent air pollution laws for vessels and might feel compelled to do so if the existing measures fail to bring the region’s air quality within acceptable limits.

Conclusion
No one doubts that diesel engine emissions pose a serious threat to human health and marine and coastal ecosystems, particularly in Southern California. Opinions differ, however, on whether solutions for the shipping industry should be global, regional, national or local. By ratifying Annex VI and then seeking IMO approval for the more stringent protections afforded by the Emission Control Area regime, the federal government has adopted a combination of global and regional standards for controlling air emissions from oceangoing vessels. As a consequence, when vessels enter the 200 mile wide North America ECA, they may be required to switch to fuel having a lower sulfur content than the fuel that meets the default Annex VI standard.

In its 2000 decision in United States v. Locke, the US Supreme Court cited a note verbally filed with the US State Department by Denmark (and echoed by several other US trading partners) before unanimously ruling against the state of Washington and its oil pollution regulations. The Danish protest asserted that “differing regimes in different parts of the US would create uncertainty and confusion. This would set an unwelcome precedent for other Federally-administered countries.” 529 US at 98. In Locke, the Court declined to permit such an unwelcome precedent to stand.

The fate of the PMSA challenge after it is sent back to the federal courts in California is not clear. What is clear is that if California is permitted to prescribe and enforce its own standards, a container ship on a voyage from the Western Pacific to Los Angeles or Long Beach might find that it may have to manage the storage of three different fuels: one that meets the global MARPOL Annex VI standard (which can be used on the high seas), a second that meets the stricter ECA standard when it comes within 200 miles of North America and a third that meets the even stricter CARB standard when it comes within 24 miles of the California coast. Admittedly, the vessel operator could choose to only buy and burn fuel that meets the strictest standards applicable throughout its voyage (and thereby also avoid those risky fuel-switchovers), but the cost of doing so would be considerable.

The author is the Judson Falknor Professor of Law at the University of Washington. For the 2011-2012 academic year he served as the Distinguished Visiting Professor of Maritime Studies at the US Coast Guard Academy and a Visiting Professor at the Yale Law School. The views expressed are the author’s alone.

Tuesday, August 14, 2012

Fidley Watch: Gamesmanship


The US Coast Guard responded to 20,510 search and rescue cases and saved more than 3,800 lives last year, according to the written testimony of US Coast Guard Commandant Admiral Robert Papp Jr. addressing the 2013 budget. The Coast Guard also seized more than 75 metric tons of cocaine and 18 metric tons of marijuana destined for the United States; seized 40 vessels, detained 191 suspected smugglers; conducted over 10,400 annual inspections of US-flagged vessels; conducted 6,200 marine casualty investigations; conducted more than 9,000 Port State Control and Security examinations on foreign flagged vessels; and responded to 3,000 pollution incidents.
Admiral Papp also mentioned the Coast Guard icebreaker Healy and her crew that broke their way through 800 miles of Bering Sea ice to enable the motor vessel Renda to deliver 1.3 million gallons of fuel to the 3,600 people of Nome, Alaska.

The men and women of the US Coast Guard work hard to keep the country’s navigable waters safe for merchant sailors, fishermen and pleasure boaters, and this magazine applauds them and the work they do. We’re worried that the Coast Guard’s already tight 2013 budget is threatened by partisan bickering in Washington DC.

Last August Congress passed the Budget Control Act as a last-resort measure to avert a fiscal crisis due in part to the Senate’s failure to pass a budget. The act requires that Congress begin $1.2 trillion in automatic spending cuts, known as a sequester, to be divided between defense and domestic spending, in January 2013. Although defense spending makes up less than 20 percent of the Federal budget, national defense will suffer 50 percent of the cuts. If the sequester goes into effect, it will mean a 7.8 percent reduction in the budget of the Department of Homeland Security, which includes the US Coast Guard. Congress has five months to come up with an alternative deficit-reduction package.

While Congress is legally required to consider a budget resolution every year, there’s no penalty for not doing it. As a result, the senate hasn’t proposed a budget in more than three years.

Meanwhile, the Bush-era tax cuts are set to expire on December 31st. The President’s budget for 2013 proposed extending tax breaks only for people with incomes of less than $250,000, while most Republicans want the cuts to remain in place across the board. Senate Majority Leader Harry Reid says the issue could be averted if Republicans will agree to a deficit reduction package that includes additional taxes. “It can be avoided. It’s all up to Republicans,” he says. “All they have to do is give some revenues.”

In support of Harry Reid, Washington Senator Patty Murray is willing to let the sequestration cuts occur (and the Bush-era tax rates to expire) if Republicans refuse to raise taxes on upper-income earners. “Unless Republicans end their commitment to protecting the rich above all else, our country is going to have to face the consequences of Republican intransigence,” Murray said in a speech late last month.

Gamesmanship is part of politics – a necessary evil, if you will – but it should stop short of threatening the security of the country.

Patty Murray has been a good friend to Washington’s maritime industry, as well as an outspoken advocate for maritime and port security and national defense. She is also a firmly entrenched Democrat Senator from a liberal state, and her position in Congress is certainly secure for the foreseeable future – she’ll most likely have plenty of time to pursue her own goals. While she may feel she owes her allegiance to the Democrats in the Senate and their leader Harry Reid, her constituents are Washington State residents: commercial mariners served by the Coast Guard, the shipyards and equipment suppliers who build, repair and maintain Coast Guard vessels, and the taxpayers who will ultimately be on the hook for any monies spent by Congress. Doesn’t she owe her allegiance to them, as well as her Democrat colleagues in Congress? Senator Murray needs to hear from her constituents in the maritime industry, telling her that the country’s safety isn’t something to be used as a poker chip.

Senator Patty Murray can be reached at (202) 224-2621 or senator@murray.senate.gov.
Chris PhilipsManaging Editor

Gulf Coast Yards See Upswing


By Jim Shaw

Shipyards along the Gulf Coast are seeing an upswing in commercial activity this year, particularly in the deepwater offshore sector, but government work is facing a downturn. Of most concern is the pending closure of the big Huntington Ingalls Industries’ (HII) Avondale yard near New Orleans. According to HII Chief Executive Officer Michael Petters, shipbuilding will end at Avondale towards the third quarter of next year after the facility delivers its final amphibious ship to the US Navy. However, Petters said the company is continuing to seek another user for the property that could develop a new business line such as manufacturing on the site.

The pending closure of Avondale comes as the Pentagon prepares for as much as $1 trillion in potential budget cuts over the next decade and a reduction in shipbuilding contracts. While the prospect for government work is dimming, regional yards are watching with interest the construction of several dual fuel Offshore Supply Vessels (OSVs) by Trinity Offshore at Gulfport, Mississippi for New Orleans-based Harvey Gulf International. The LNG-burning vessels, which will also achieve ENVIRO+, Green Passport certification by the American Bureau of Shipping, are expected to be the leaders in a new series of “clean” ships wanted by the offshore oil industry as it polishes its image following the Deepwater Horizon oil spill of 2010.

Is LNG the Future?
The allure of LNG is taking place as more environmental regulations hit the maritime industry and as the fuel becomes more abundant, the result of new hydraulic fracturing or “fracking” technologies. Its marine application has also been well proven in northern Europe where an increasing number of vessels, including OSVs, ferries and tankers have been built and retrofitted to utilize it as a fuel. Finland’s Wärtsilä, a leader in LNG propulsion and storage systems, will provide its 6-cylinder 34DF dual-fuel engines for the Harvey newbuildings, which will be constructed to STX Marine’s SV310DF design. To be given an LNG storage capacity of 290 cubic meters (m3), the 5,500-dwt ships will be able to operate for more than a week before refueling while having a transit speed of 13 knots. When running in gas mode, NOx emissions will be reduced by about 85 percent compared to diesel operation while sulfur oxide emissions will be completely eliminated and emissions of CO2 lowered. Harvey Gulf CEO Shane J. Guidry noted that the company’s ordering of the lead two dual-fuel vessels last year was “enthusiastically accepted” by oil company executives, leading to the ordering of two 302-foot by 64-foot sister ships earlier this year. Still to be seen will be the infrastructure requirements needed to support the safe LNG fueling of these vessels, the lead two of which have already found charters.

Eastern Expanding
While the Trinity yard is building four LNG-powered OSVs for Harvey, Florida’s Eastern Shipbuilding Group has a number of other vessels under construction for the New Orleans-based company. These will follow delivery of the 292-foot Tiger Shark class Sisuaq to Harvey in April. The 292-foot by 64-foot Sisuaq has since been deployed to Alaska following the fitting of heating enhancements and hardened electronics that can take temperatures down to -20 degrees Fahrenheit.

In May of next year Harvey will take delivery of a similar sized boat from Eastern, the 302-foot Harvey Deep Sea, that will be equipped with an active heave-compensated 165-ton knuckle boom crane capable of lifting/setting 100 tons at depths of up to 10,000 feet. Designed for deepwater construction work, and to be the first US-flagged deepwater construction vessel built, the new boat will also be capable of delivering 18,000 barrels of liquid mud, 10,500 cubic feet of cement, 1,700 barrels of methanol and 4,000 tons of deck cargo.

To keep ahead of its growing order book, which also includes several other vessels for Harvey, five OSVs for Boldini SA of Brazil and eight OSVs for Hornbeck Offshore Services, Eastern is expanding its facilities on the Gulf through the lease of 20 acres of land at Port St. Joe, Florida while continuing operations at its two Panama City locations.

In June the company’s Nelson St. yard in Panama City redelivered the 265-foot anchor handler Keith Cowan to SEACOR Marine after a major rebuilding following fire damage. The job represented one of Eastern’s major reconstruction efforts to date.

Mobile Bay
On Alabama’s Mobile Bay BAE Systems Southeast Shipyards (BAE) started construction of Weeks Marine’s new 8,500 cubic yard capacity trailing suction hopper dredge Magdalen in June, with the 340-foot by 79-foot vessel to be delivered in 2014. The state-of-the-art dredge has been designed by Holland’s IHC Merwede and is the first of that company’s well-known dredge designs to be built in the United States. Gibbs & Cox of Arlington, Virginia will provide functional engineering and detailed production support during construction.

The newbuilding demonstrates BAE’s continued growth in the commercial shipbuilding sector and follows completion of the 616-foot by 105-foot product tanker American Phoenix from an unfinished hull for Mid Ocean Tanker Company and Alterna Capital as the largest vessel built to date in Alabama. Although much smaller in size, the yard has also won contracts to build two 295-foot by 62-foot dump scows, with options for two more, for Illinois-based Great Lakes Dredge & Dock Company.

Another Great Lakes-based company, Moran Iron Works, has entered into a teaming agreement with BAE to collaborate on the pursuit of plate steel fabrication projects for industrial plant customers. Together the two firms will be able to serve customers throughout the northern and southern regions of central and eastern North America using BAE’s yards at Mobile and Jacksonville along with Moran’s facilities at Onaway and Cheboygan, Michigan.

Austal USA
Located just to the north of BAE’s Mobile yard, the recently expanded Austal USA facility has laid the keel for the third Joint High Speed Vessel (JHSV) it is building for the US Navy as part of a firm nine-vessel program. Under Austal’s modular approach to ship manufacturing, keel laying means that 32 of the 43 modules used to form the 103-meter aluminum catamaran have been assembled, thus the ceremony marks the beginning of final assembly rather than initial construction. The first ship of the program, USNS Spearhead (JHSV 1) was christened last September and successfully completed builders’ trials in April while the second vessel, Choctaw County (JHSV 2), is approximately 80 percent complete and will be launched later this year. Following a decision reached in 2011 to place all JHSVs under the Navy, the third vessel, to have been named Fortitude, will enter service as USNS Millinocket.

Austal is also preparing its second 127-meter Littoral Combat Ship (LCS), Coronado (LCS 4), for sea trials with the ship expected be commissioned at San Diego next year. According to the Navy up to 16 littoral ships will be stationed in San Diego while at least four will be deployed to Singapore on a rotational basis starting next spring. Earlier this year Austal worked with neighboring yard BAE to make several modifications to the aluminum catamaran Sea Fighter (FSF-1), operated by the Office of Naval Research (ONR) and used to test technologies for both the LCS and JHSV programs.

VT Halter
In Mississippi, the VT Halter yard at Pascagoula delivered the first of three 750 class tank barges it is building for Crowley Maritime last November and expects to hand over the second barge next month and the final unit in March of next year. All of the 45,000-dwt ATB barges, the lead unit of which has already been connected to its Dakota Creek Industries-built pushtug, measure 600 feet by 105.5 feet and have a capacity of 330,000 bbls. The Pascagoula yard is also moving forward with construction of the 692-foot combination ro/ro/container carrier Marjorie C for Honolulu-based Pasha Hawaii after cutting first steel for the ship last August. To be capable of carrying 2,750 vehicle units and 1,500 TEU of containers, the vessel is expected to enter the Mainland/Hawaii trade in the third quarter of 2013. She will sail opposite Pasha Hawaii’s PCTC Jean Anne, also built by VT Halter, to allow a weekly service.

Besides these commercial contracts the Pascagoula yard is also building four 62-meter Fast Missile Craft (FMC) for the Egyptian Navy with the lead craft, S. Ezzat (682), to be delivered shortly.

At VT Halter’s Moss Point facilities construction has begun on eight large Super 320 Class OSVs ordered by Hornbeck Offshore Services, with the first of the STX Marine-designed vessels to be delivered by October 2013. These 6,200-dwt DP2 units, to be slightly larger than the Hornbeck OSVs being built in Florida by Eastern, will have 20,900 bbls of liquid mud carrying capability and 11,863 square feet of work deck area along with a firefighting class notation.

Bollinger Building
In Louisiana, Bollinger Shipyards’ Lockport facility delivered the second Fast Response Cutter (FRC) it is building for the Coast Guard under an ongoing program that may eventually see 58 vessels built. The 28-knot CGC Richard Etheridge (WPC-1102) was delivered to the Coast Guard in May and will be followed shortly by the William Flores (WPC-1103), both of which, like lead unit Bernard C. Webber (WPC 1101) will be based at Miami, Florida. Bollinger has been contracted to build twelve of the boats to date, all based on the Damen Stan Patrol Boat 4708 design drawn up by Holland’s Damen Group.

In the commercial sector Bollinger’s Amelia, Louisiana yard is preparing to deliver the 146-foot by 46-foot DP-1 rated tugs Ocean Wave and Ocean Wind to Crowley Maritime within the third quarter. These 10,880-horsepower vessels will be followed by two slightly longer DP-2 tugs, Ocean Sky and Ocean Sun, next year. The Amelia yard is also building three municipal waste ships for the New York City Department of Environmental Protection using federal recovery funds provided through the American Recovery and Reinvestment Act of 2009 (ARRA). The 290-foot by 70-foot vessels, the first of which will be delivered later this year, will have a design capacity of 1.04 million gallons in six cargo tanks.

Gulf Craft Fast Cats
Also in Louisiana, Patterson-based Gulf Craft LLC has been contracted to build two Incat Crowther designed 55-meter catamaran-hull crew boats for SEACOR Marine. These vessels, to be named SEACOR Lynx and SEACOR Leopard, will each be powered by four MTU 16V4000 M73L main engines driving four Hamilton HT-810 water jets for a top speed in excess of 46 knots. The combination of four reversing jets and two retractable azimuth thrusters, coupled with a Kongsberg control system, will provide the vessels with DP3 capability while increasing operational efficiency and reducing hull motions.

As with the earlier SEACOR Cheetah and SEACOR Cougar, placed in service in 2008 and 2009, the cargo deck of the newbuildings will be lined with hardwood inserts while heavy duty cargo rails will be furnished at the sides. The main deck passenger cabins will have seats for 150, along with increased luggage space and more toilets compared to the earlier vessels, while cargo capacity will be 150 tons. The wheelhouses will feature forward and aft control stations and both boats will carry fire monitors as well as rescue craft. The twin hulls will accommodate 14 crewmembers in a mix of officer and non-rated cabins while the port hull will also feature galley and mess facilities. The vessels are to be delivered in January and April of next year.

LEEVAC Consolidates
At Jennings, Louisiana LEEVAC Shipyards Jennings has delivered the third of a series of 187-foot by 46-foot Lightering Support Vessels (LSVs) it is building for Houston, Texas-based AET Lightering Services. The first boat of this series, AET Innovator, was delivered last October with the second, AET Excellence, following in January. The latest vessel, AET Partnership, may be followed by up to five additional vessels, all of which will primarily support the lightering activity of AET in the Gulf of Mexico out of Galveston, Texas.

The LEEVAC Jennings yard is also building two 80-foot by 38-foot Robert Allan designed Z-Tech 2400 class terminal/escort tugs for Bay Houston Towing Company and Suderman & Young Towing Company, both of Houston. To be operated by G&H Towing Company, the twin newbuildings will primarily be used for towing and escort work around the Houston and Galveston areas following their delivery in June and September 2013.

At the start of this year LEEVAC consolidated its sister companies, LEEVAC Industries and LEEVAC Shipbuilding and Repair Calcasieu, under the new holding company LEEVAC Shipyards, LLC, with the company’s yards in Jennings and Lake Charles, Louisiana now operating under the names of LEEVAC Shipyards Jennings, LLC and LEEVAC Shipyards Lake Charles, LLC.

NLRB Awards Portland Jobs to Electricians Union


The National Labor Relations Board has ruled that disputed jobs hooking and unhooking refrigerated containers at the Port of Portland’s Terminal 6 should go to union electricians, rather than a longshore workers union that had tried to commandeer the work.

In a five page decision issued Aug. 13, the three-member NLRB panel said that after reviewing all the information presented before it, it believed that the work in question should be performed by members of the International Brotherhood of Electrical Workers, not the International Longshore and Warehouse Union.

The dispute dates back to 2011, when ICTSI Oregon entered into a 25-year agreement with the port to operate the dock at Terminal 6, and chose to honor a collective-bargaining agreement between the port and the District Council of Trade Unions, of which the IBEW is a member.

The IBEW has performed the work since operations began at the terminal in 1974.

The ILWU, however, began to claim that under the collective bargaining agreement between the ILWU and the Pacific Maritime Association – of which ICTSI is a member – longshoremen should be doing the work.

“After considering all the relevant factors, we conclude that employees represented by IBEW are entitled to perform the work in dispute,” the NLRB’s decision reads in part. “We reach this conclusion relying on the factors of collective-bargaining agreements and employer preference and past practice. We note that the factor of employer preference, although not itself determinative, is entitled to substantial weight.”

To that point, the board specifically cited the testimony of the Port of Portland’s chief commercial officer, Sam Ruda, who said officials insisted during negotiations with ICTSI that “work jurisdictions be maintained” when the new terminal operator took over the facility.

In June, a noticeable drop in productivity began, coinciding with the escalation of labor dispute. ICTSI Oregon and other stakeholders labeled a work slowdown by ILWU Local 8. Although the union denied it was engaging in a slowdown, a federal judge in July issued an indefinite injunction banning slowdowns pending the results of the NLRB investigation.

The labor issues had resulted in fewer vessel calls at the terminal the past two months, although two shippers, Hanjin and Hapag-Lloyd, resumed service at the port after having bypassed Terminal 6 multiple times earlier in the summer.

The ILWU has yet to confirm whether or not it plans to appeal the NLRB decision.

Port of San Diego, Dole to Sign Unprecedented Lease


The Port of San Diego and Dole Fresh Fruit Co. are expected to sign an unprecedented 24.5-year lease agreement that covers nearly 955,000 square feet of space at the port’s Tenth Avenue Marine Terminal and demonstrates Dole’s long-term commitment to the area.

The lease term is unique because in the past, Dole had typically chosen five- or ten-year renewals at the port.

Under the terms of the new lease agreement, the port and Dole are to work together on infrastructure improvements to improve cargo operations at the port, as well as improve the environment for the neighboring community.

The port says it plans to invest about $7 million in shore power equipment at the Tenth Avenue Marine Terminal that will service Dole’s vessels, as required by new California Air Resources Board regulations. The vessels will use the shore power while berthed at Tenth Avenue Marine Terminal in order to reduce their diesel emissions.

Another term of the new lease extends Dole’s operating area to a warehouse offsite of the Tenth Avenue Marine Terminal, thereby eliminating truck staging and off-terminal operations from nearby residential areas.

Dole Fresh Fruit is a division of Dole Food Co., the largest importer of bananas and the second largest importer of pineapples to North America. The Port of San Diego is Dole’s first stop for fresh fruit moving into the US from South America. The port receives about 95,000 twenty-foot containers of Dole fruit each year.

A signing ceremony to commemorate this historical event will take place after 1 pm Tues., Aug. 14, 2012 at the Port of San Diego’s administration building.

Dole Fresh Fruit’s Vice President of Operations, Stuart Jablon, is expected to attend the signing along with Board of Port Commissioners Chairman Lou Smith.

The signing ceremony is scheduled to take place immediately after the start of the regular Board of Port Commissioners meeting. The Board’s expected to vote on the new lease and then recess to the lobby area to sign the document.

SoCal Marine Exchange Goes Green


A solar and wind power system that generates all the electricity needed to support the tracking of vessels entering and leaving waters from San Diego to Port Hueneme has been put in place at the Marine Exchange of Southern California.

The $450,000 project, which was supported by the Port of Los Angeles and the Los Angeles Department of Water and Power, was designed and built over more than two years. With its unveiling in early August, it means the Marine Exchange, which operates 24 hours a day, seven days a week, now runs on electricity generated by a sustainable network of 286 solar panels and four wind turbines.

“We are the modern equivalent of a lighthouse that helps ships find their way safely,” Capt. Richard McKenna, Executive Director of the Marine Exchange, said. “With this project, we are also a figurative lighthouse helping to guide the way to cleaner, greener operations in the San Pedro Bay.”

The system generates more than 87 kW, which is enough to support the Marine Exchange’s up to 60 kW power needs and also feed surplus energy into the city’s power grid.

With the help of city grants and rebates, the direct cost to the Marine Exchange is less than $200,000, according to the City of Los Angeles. The Exchange expects to pay off the expense over the next six to seven years, partially through the savings it will receive by not having to pay an electricity bill.

It previously spent up about $20,000 annually in energy costs, according to the City of Los Angeles.

Third Annual PortTechExpo Set


PortTechLA, a non-profit technology center and business incubator founded in part by the port and city of Los Angeles, is conducting its third annual PortTechExpo on Sept. 5 and 6.

This year’s conference, according to the event’s organizer, focuses on exploring and helping to fund the most innovative environmental, energy, transportation and security technologies for the maritime industry.

The Expo, which attracts business and community leaders, venture capitalists, maritime industry experts and technology entrepreneurs from around the region, has been expanded this year to include a pre-event evening session for a technology entrepreneur competition.

The clean technology entrepreneur competition on Sept. 5 will feature 10 finalists, chosen from competitions to be held Aug. 16 and 22. Selected finalists will have the opportunity to pitch their innovative technology ideas to a panel of judges, investors and invited guests on the evening of Sept. 5.

Entrepreneurs interested in entering the competition can contact John Dmohowski, director of client services at PortTechLA, via email at showcase@porttechla.org. More information on the event, including registration costs and forms, can also be found on the PortTechLA website at http://www.porttechla.org/events/calendar-details.asp?id=21.