Friday, October 26, 2012

Outside Review Finds No Port of Seattle Conflict of Interest

Legal counsel and an ethics expert hired by two Port of Seattle commissioners to investigate whether the port’s CEO committed a conflict of interest when he accepted a position on the board of a for-profit logistics company have found no wrongdoing.

In a report dated Oct. 22, investigator Gerry Alexander, a retired state Supreme Court justice, wrote that Yoshitani serving on Expeditors Internationals’ board doesn’t violate Washington state law or the port’s ethics rules because the logistics company doesn’t compete with the port or conduct business directly with the port.

“It is my conclusion that Mr. Yoshitani’s service on the Board of Expeditors does not create a real, perceived or appearance of a conflict of interest. Neither does his service on that corporation’s Board run afoul of the statutory Code of Ethics for Municipal Officers or any Employee Codes of the Port of Seattle,” he wrote.

The port had announced on Sept. 25 that commissioners Tom Albro and Rob Holland, acting as a temporary subcommittee, would be hiring outside legal counsel and an ethics expert to review the port’s position that CEO Tay Yoshitani serving on the board of directors of Expeditors International did not represent a conflict of interest.

Although the month-long investigation found no wrongdoing, Alexander did present the port board with one recommendation in his report.

“Going forward, the Commission might consider providing in future employment contracts with its CEO that before the CEO may accept a position on the Board of Directors of a private entity, the Port Commission must give its approval to this outside employment,” Alexander wrote. “There may be instances in the future where the CEO’s service on a corporate board is not, technically speaking, a conflict of interest but does, at the same time, generate a response from members of the public that is damaging to the port’s reputation and reduces public confidence in it. Requiring an evaluation of the potential impact of such employee-employer relationships before the fact is, in my judgment, far superior to making those determinations after the fact.”

The suggestion was a partial reference to the situation that led to the review. In August 13 King County, Washington legislators urged the port to look more closely into various issues raised by Yoshitani’s acceptance of the second job. In an Aug. 24 letter, the lawmakers said Yoshitani serving on the Expeditors board could result in the company’s clientele gaining a competitive advantage over non-Expeditors port customers.

Yoshitani, who has been the port’s executive director since March 2007, was announced as the newest member of Expeditors’ board Aug. 7. In the role, he stands to earn more than $230,000 in annual compensation – consisting of $30,000 in cash and up to $200,000 in restricted stock options – on top of the nearly $367,000 a year he earns at the port.

Crane Crushes Port of Oakland Worker

A mechanic performing maintenance on an Evergreen Marine Corp. crane at a Port of Oakland terminal died Oct. 24 after being caught in and crushed by a piece of equipment.

The 51-year-old victim, whose name was not immediately released, suffered major head and chest injuries about 9:30 am at the Ben E. Nutter terminal, according to Peter Melton, a spokesman for the California Division of Occupational Safety and Health, the state governmental body commonly known as Cal/OSHA.

The unidentified man had been working at Berth 37, which is operated by Evergreen Marine Corp. of Taiwan. He was transported to Summit Medical Center, where he later died.

A longshoreman who didn’t want to be identified told a local NBC news affiliate that the worker was up on the crane about 250 feet when the trolley moved and he was crushed between the cable and the body of the crane.

The unidentified worker was a crane mechanic and a member of the International Association of Machinists and Aerospace Workers, according to the port.

The Nutter terminal was shut down for the day and workers sent home while local agencies and Cal/OSHA conducted an investigation.

According to Cal/OSHA records, this was the first fatal accident at the Port of Oakland in at least five years.

Crowley Maritime Makes Management Shifts

Crowley Maritime has announced that Steve Demeroutis is assuming the role of vice president of marine operations for the company’s petroleum and chemical transportation group, and that Rudy Leming will assume Demeroutis’ former position of vice president of labor relations.

Demeroutis will now report to Rob Grune, Crowley’s senior vice president and petroleum services general manager. Leming now reports to Vice Chairman and Executive Vice President Bill Pennella.
In his new position, Demeroutis will be responsible for the safe and reliable operation of Crowley's marine petroleum assets including Jones Act product tankers, ranging from 240,000 to 300,000 barrels, and the company’s 17 articulated tug-barges, which range from 155,000 to 327,000 barrels and are capable of carrying refined petroleum products and easy chemicals.

And in his new job, Leming is responsible for the development and implementation of Crowley’s overall labor strategy. He will oversee contract negotiations, union relationships and the day-to-day administration of collective bargaining agreements throughout the entire Crowley organization, in addition to having functional responsibility for labor relations for all Crowley subsidiaries.
East and West Coast labor functions will also now report to Leming.

POLA Wins Environmental Award

For the second consecutive month, the Port of Los Angeles has received an environmental award from an England-based trade publication, this time from Containerisation International.

A judging panel including experts with extensive experience in international supply chain operations and management, voted to bestow upon the Los Angeles port the magazine’s annual Environmental Award. The award was presented earlier this month in London during the publication’s annual awards ceremony, which honors companies and individuals around the world for best practices, innovation and creative thinking in the container industry.

“We commend the Port of Los Angeles for its commitment to innovative business and environmental practices that have helped make the container industry safer, more secure and more sustainable,” Containerisation editor John Fossey said in a statement announcing the award. “The port’s approach to sustainability and green growth is far ahead of the curve and a lesson to the entire maritime industry.”

The award also highlighted the port’s hosting of the 2012 Pacific Ports Clean Air Collaborative Conference, which drew participants from around the world to discuss green supply chain strategies and environmental innovations, and for being the first seaport to adopt the Environmental Ship Index program, which rewards ocean carriers for bringing their newest and cleanest vessels to the Port.

The port was also recognized for its ongoing implementation of various initiatives under the Clean Air Action Plan, the initiative that has led to dramatic reductions in port emissions since 2005.
“This award illustrates that industry growth and environmental progress are not mutually exclusive, but rather an integrated strategy for success,” Port of Los Angeles Executive Director Geraldine Knatz said.

In September, the port received the Lloyd’s List Global Award in the Environment category, which recognized the port’s environmental leadership in adopting and promoting programs that reduce emissions from maritime sources. London-based Lloyd’s List is a daily newspaper for the maritime industry.

Tuesday, October 23, 2012

Piracy & Maritime Terrorism: A 35-Year Retrospective

Captain Keith F. Graham

Part 1 of 5-part Series

I began giving weekend seminars for the Academy’s Continuing Education Department to those interested in the maritime matters in 1975, while still on excess leave from the Navy to attend law school, and the most popular topic over each sixteen-hour session on everything encompassed by international maritime law was “piracy”.

As I had already mastered criminal law and was occasionally assigned as an assistant prosecutor in military justice matters when on temporary duty as a JAG student, I did not then (nor now) find much romance in sea rogues whose stock in trade are the common law felonies of murder, arson, rape, mayhem, kidnap, and robbery. None of those crimes are made glamorous simply because the platform for their commission happens to be on the water. No doubt I also diluted audience enthusiasm by addressing the topic of “maritime terrorism”, which I characterized as a phenomenon waiting to happen. In 1975, no one wanted to hear about terrorism from the sea and the laws that might apply; they just wanted more on pirates.

Over the intervening 35-plus years, the pertinent law has evolved in some respects and changed not at all in others. What follows is my own legal “take”, my own opinions, my own view of this precinct of the maritime world. Hopefully it is sufficiently supported by legal theory, practice, logic, and facts. In any event, it is supported by my convictions and constant reinforcement to audiences nationwide as well as audiences from several nations that border the Pacific Rim.

Historical Definitions
It has been said that, “Piracy as a ‘profession’ is one day younger than seafaring,” and piracy's persistence in human history has led to its acknowledgement as a crime against the law of all nations. Consequently, early on in the development of international law, there was near universal consensus that any nation could take action against pirates, i.e., assume jurisdiction as a matter of customary international law against “hostis humani generis” or the enemies of all mankind. This ancient legal premise was further buoyed by the 17th Century theory that in asserting jurisdiction to act against pirates, nations were also exercising “collective self-defense”, a newly evolved legal concept among the nation-states of Europe.
Apart from universal jurisdiction in efforts to combat piracy, nations could also refer to their own domestic or internal laws as a basis to proceed, and actions could be taken on the basis of criminal or civil jurisdiction, but the better accepted view and historical practice have been to emphasize the role and responsibility of the world community in taking legal measures against piracy.

In the English common law tradition brought to Colonial America, piracy consisted of committing acts of robbery and depredation on the high seas (a “depredation” being an act executed by force, violence or the demonstration of the intent to use force or violence against persons or property), which, if committed ashore, would amount to a felony. Thus our common law contemplated acts done with a felonious intent. When the site of such criminal actions was the open ocean or the world’s highway, they were deemed to be committed by felons acting with a sense of universal hostility against all humanity and commerce indiscriminately.
Since a “felonious intent” was necessary to constitute the crime of piracy, an individual acting in good faith under a grant of authority could not be guilty of piracy. Thus the first and often misunderstood exception to piracy emerges… privateering. Whereas nations were willing to act to suppress piracy, many nations practiced and encouraged privateering, which was a formal speculative business venture. Commonly referred to as the “right to make private war” on select nations, privateering was based on a governmental grant of authority such as a letter of marque and reprisal, a commission or warrant, and essentially allowed maritime commerce raiding against targeted countries. Sponsors, investors, and benefactors of privateering involved the “first citizens” and ruling classes of most nations. In the United States, two signers of the Declaration of Independence were well known privateers. Early in our national history, Congress granted letters of marque freely under the authority of the Constitution. However, private war at sea is also disruptive to world commerce and so by 1856, the community of nations was ready to renounce the right of privateering in the Declaration of Paris with notable exceptions being Spain, Mexico, Venezuela, and the United States.

Lack of Precedent
In the young United States, one of the first acts of Congress in April 1790 declared that any person who committed on the high seas or any basin out of the jurisdiction of any particular nation, murder or robbery or any other offense, which if committed in the United States would be punishable by death, was a pirate and should suffer death when brought within any US territorial jurisdiction.

Other 18th and 19th Century federal statutory authorities state that seizing a vessel and running away with it with a felonious intent is piracy (note no element of force or violence required); attempting to corrupt the master of a vessel to go over to piracy was unlawful; it was illegal to combine or confederate with pirates; and finally Congress pronounced it illegal to correspond with pirates. All were well-intentioned legislative efforts to militate against the scourge of piracy in America, but are meager artifacts to take decisive legal action in the 21st Century.

Historical case law in the United States concerning piracy is also spartan. A jury in 1819 had the privilege of deciding whether someone was a pirate; the Supreme Court provided a definition of piracy in 1820; while the last case in almost 150 years was actually a privateering case at the start of the Civil War held in New York City in which the jury deadlocked. Now, recent circumstances have forced a new judicial look at our arcane authorities. Late in 2010, two different judges made conflicting rulings in two different cases in federal district court against Somali nationals charged with piracy for attacking US naval vessels. Whether the rulings will be reconciled at the federal appeals court level or whether the cases ultimately percolate up to the Supreme Court for resolution, the symptoms causing the disparate district court rulings are the real issue. In one instance, the federal judge determined that the existing piracy statute must be interpreted as it was meant when enacted in 1819 and the actions of the Somalis did not rise to the level of piracy, while on similar facts, the other judge concluded acts of piracy had been perpetrated.

Reasonable people and judges disagree all the time…they should not, however, have to base the legal fate of public sea service members and commercial mariners on stale, vague, and historically obscure authority. It is clearly time for the United States to update existing law and seek new authorities to counter the upswing in piracy worldwide. Sadly, I am on record for the last 37 years as making this exhortation to the collective deaf ears of our Nation’s lawmakers.

Watering Down the Definition
As noted above, legal authority against piracy also includes more than proceedings against the participants. There has been the potential under select US criminal statutes (and mirrored in admiralty law) to capture and seize a vessel involved in a piratical or other legally offensive venture and seek its condemnation, forfeiture, and judicially ordered sale in a prize court. This process, in parallel with the condemnation of cargo found aboard the vessel, is equally arcane, unlikely, and irrelevant to the type of piracies practiced in the world’s hotspots. (A similar process to be conducted under the law of war received very limited use by the US, even in World War II.)

Customary international law, including criminal jurisdiction over pirates, gave way to multi-national treaty law beginning with a series of United Nations Law of the Sea conferences and conventions. The latest treaty addressing piracy was the third United Nations Convention on Law of the Sea (known as UNCLOS III), which was signed in 1982 and became effective in 1994. Articles 100-107 deal with controlling piracy and the obligations of signatories in combating it. Article 101 of that Convention contains a consensus definition of piracy that should have facilitated the universal war that all nations have declared against piracy. Regrettably, it does not.

The majority of the world community chose a narrow view of piracy in Article 101, requiring three elements that serve as impediments to resolute action by participating nations. First, the illegal acts of violence and detention must be committed for private gain. Therefore, kidnap, murder, intimidation, etc., committed at sea where the motive is public attention or political statement (such as the celebrated 1961 case of a Portuguese luxury liner hijacked near the Dutch Antilles) cannot by definition be piracy. Secondly, there must be two vessels or craft involved. Consequently, otherwise piratical acts, including mutinies, which are staged aboard one vessel only, are excluded. Finally, the site of the piracy must be on the high seas or some other location outside a nation’s jurisdiction.

This constituent part of the definition simply fails to account for the site of most piracy today, i.e., conducted within the territorial waters of many nations. These three inherent defects in the majority’s definition were made for the sake of political expediency and compromise. However, the loopholes created by the language of Article 101 have permitted acts (when committed on the platform of an underway vessel) such as nations protecting active insurgents and terrorists, destruction of life and property in the name of “national liberation”, and the commission of random acts of violence having colorable political overtones, all to be untouchable as “piracy” per se.

Next month I'll discuss the ramifications of UNCLOS III and its effect on piracy.

Scandal Results in Oakland Port Management Shakeup

The Oakland Board of Port Commissioners has placed Executive Director Omar Benjamin on administrative leave in the wake of allegations that one of his top aides spent thousands of dollars in public money at a Texas strip club.

Benjamin, who has headed the port since 2007, was suspended with pay, and port Director of Aviation Deborah Ale Flint named acting executive director, effective Oct. 18. Flint in turn ordered Director of Maritime James Kwon to return from overseas business travel and placed him on administrative leave with pay on Oct. 19.

Kwon is alleged to have spent $4,500 entertaining shipping executives at strip club in Houston, Texas called Treasures in 2008 during a business conference.

In addition to suspending Kwon, Ale Flint made multiple other shifts in management assignments, including giving Deputy Executive Director Jean Banker the additional role of acting director of maritime; making Aviation Planning & Development Manager Kristi McKenney the acting director of aviation; and giving Associate Aviation Project Manager Hugh Johnson the additional role of acting aviation planning and development manager.

“I am taking these actions to ensure that our 24/7 operations continue to meet our customers’ needs,” Ale Flint explained. “These actions are also critical so that the port can continue being the economic engine of the region that it is.”

According to an Oct. 19 article in the San Francisco Chronicle, the port is also looking at the possibility that there may have been “hundreds of thousands of dollars in questionable expenditures by higher-ups going back several years.”

The port says it has retained the law firm of Arnold & Porter to assist the board in an ongoing investigation of allegations of improper expenditures.

“We continue to take this situation very seriously,” Board President Gilda Gonzales said. “Holding those responsible accountable is our highest priority.”

Union, Grain Handlers Association Near Possible Lockout

Contract negotiations between the Pacific Northwest Grain Handlers Association and International Longshore and Warehouse Union are at an impasse and a lockout could be imminent, according to sources.

The Grain Handlers Association is expected to lock out longshore workers on Oct. 24 at six Northwest grain terminals in Portland, Oregon, Seattle, Tacoma, and Vancouver, Washington, according to the ILWU.

The contract between the groups was set to expire Sept. 30, but the grain handlers group announced Sept. 28 that it had agreed with the union to push the expiration date back two weeks while negotiations continued. However, an agreement was still not reached.

The Pacific Northwest Grain Handlers Association represents four companies: Columbia Grain, which operates a Port of Portland terminal; United Grain Corp., which has an export terminal at the Port of Vancouver in Washington; LD Commodities, operator of facilities in Portland and Seattle; and TEMCO, which has facilities in Kalama, Portland and Tacoma.

The association began negotiations with the union involving Puget Sound terminals and operations on the Columbia River in early September. The owners group has said it wants a contract similar to what was worked out between management and longshore workers at the Port of Longview earlier this year for the port’s EGT grain terminal. The contract includes several cost-saving workplace rules.

The union says it won’t budge on some concessions the owners want, such as 12-hour work shifts, an ability to bypass the union hiring hall, and being given greater control over the ability to fire dockworkers.

Despite the increasingly contentious negotiations, there have been no reported labor disruptions at any of the affected terminals so far. But plans are underway to organize boat pickets on the Columbia and Willamette rivers if the lockout occurs, according to the union.

Union Pacific Reports Best-Ever Quarter

In spite of quarterly business volumes being down slightly compared to 2011, Union Pacific Corp. on Oct. 18 reported 2012 third quarter net income of $1 billion.

The company reported a double-digit drop in coal volumes, a reflection of the lengthy slump in shipments dating back to the winter of 2011-2012, which was relatively mild. But the decline didn’t hurt the railroad’s overall financial performance.

“Despite a 12 percent decline in coal volumes and significantly weaker steel and scrap metal markets, we generated best-ever financial results across the board,” Union Pacific CEO Jack Koraleski said. “We achieved solid core pricing gains, managed our network efficiently and delivered on the benefits of our diverse franchise with growth in other markets.”

Volume growth in chemicals, automotive and intermodal offset declines in shipments of coal, agricultural products and industrial products, according to the company. Quarterly operating revenue increased five percent in the third quarter of 2012 to $5.3 billion versus $5.1 billion in the same quarter of 2011.

Additionally, UP reports that quarterly freight revenue increased four percent compared to the third quarter of 2011, mainly driven by core pricing gains of five percent; and that the company’s operating ratio of 66.6 percent was an all-time quarterly best, 2.5 points better than the third quarter 2011 and a 0.4 point improvement from the previous record set in the second quarter 2012.

Average quarterly diesel fuel prices were flat at $3.19 per gallon in the third quarter 2012 compared to $3.18 per gallon in the third quarter 2011, while the Customer Satisfaction Index of 94 was an all-time quarterly record and was three points better than the same quarter last year.

Quarterly train speed, as reported to the Association of American Railroads, was 26.1 mph, increasing six percent compared to the third quarter 2011.

Port Metro Vancouver Container Volumes Rise Again

Canadian Port of Metro Vancouver’s monthly container volumes were strong again in September 2012, with the facility’s terminals moving a total of 224,407 20-foot equivalent units last month, raising the Canadian port’s calendar year-to-date total to over two million TEUs.

The port continues to have good a year so far when it comes to both full and empty container movement. The port saw almost 195,000 full TEUs in August, about 119,000 of which were inbound and over 81,000 outbound.

For the year to date, container terminals at the port have moved a total of 1.79 million full TEUs, with 1.02 million of those coming into the country.

Regarding empty TEUs, Metro Vancouver saw 29,400 last month, more than 23,400 of which were outbound and 5,900 inbound. Through the first nine months of the calendar year, port terminals saw over 222,000 empty TEU, with about 150,000 of those being shipped out of the country.

Port Metro Vancouver is the largest port by container traffic in Canada and fourth largest in North America, after the ports of Los Angeles, Long Beach and New York/New Jersey.