A Money Grab?

By Thomas Jelenić, Vice President, Pacific Merchant Shipping Association

The answer, in California, is “obviously.” But it is reasonable to ask which money grab we are talking about. Since the 2006 Clean Air Action Plan (CAAP), the ports of Long Beach and Los Angeles have significantly reduced emissions and since the 2017 re-boot have been working toward achieving their goals of zero-emission cargo-handling equipment by 2030 and drayage trucks by 2035, while reducing emissions from all other sources by as much as feasible. The rub, of course, is that the technology does not currently exist, but we are getting closer. Hence, the ports, their terminal partners, and State agencies have been funding tens of millions of dollars in port-related demonstration projects. None have been successful in the sense that there is not yet non-automated zero-emissions equipment that can effectively replace existing diesel equipment. All have been successful in the sense that they materially advanced the state of technology to achieve our collective zero emissions goals. Suffice it to say, technology advancement is expensive but actual deployment will be more expensive. Billions more expensive. The challenges are obviously large.

With so much money at stake, it should come as no surprise that some want control. On February 4th, the South Coast Air Quality Management District (SCAQMD) formally pivoted from negotiating a memorandum of understanding (MOU) with the ports on the implementation of the CAAP to rulemaking on an indirect source rule (ISR). In the lead up to February, SCAQMD denigrated the ports’ efforts on the CAAP. In presentations, SCAQMD made demonstrably false contentions that emission reductions from the CAAP are actually attributable to the California Air Resources Board (CARB) regulation. While CARB regulation is important in leveling the playing field statewide, it is important to remember that the San Pedro Bay drayage fleet was turned over before the Drayage Truck Rule went into effect, that many terminals had shore power requirements before there was an At Berth Rule, and that cargo-handling equipment (CHE) was being turned over before there was a CHE rule. Ultimately, SCAQMD staff framed the issue as a choice between real emission reductions under an ISR against insufficient emission reductions from the CAAP. Of course, SCAQMD staff offered nothing to demonstrate that was true and implied emissions reductions that can only be described as fantastical and beyond any known technology.

What can we expect from an ISR? It is not really known but if the warehouse ISR is a guide, there is a lot to be worried about. The warehouse ISR, focused on reducing emissions from trucks, requires that facilities make improvements from a menu of options to earn points. But the real meat of the measure is that a shortfall of points triggers the need to make up the difference in mitigation fee payments. Of course, the ports already have a comprehensive truck program. It will also be backed up by requirements from CARB that will likely accelerate the transition this time. What will terminals, which have no contractual relationship with trucking companies, do? Probably pay a fee, probably a big one. And that will divert resources from the enormous cost to transition their own fleet to zero emissions.

That raises a number of questions, including how does that benefit the community? And where will the money be spent? SCAQMD has supposedly been motivated by the need for early action. SCAQMD’s mantra has been emission reductions are needed now; available technologies should be deployed now rather than waiting on zero-emissions technologies. For my part, I agree. Yet, SCAQMD has now rejected their own argument for accelerated action and is opting for legally dubious rulemaking that will take 12-18 months to put in place by their estimation. More time would be needed before any action attributable to their proposal takes place. Given SCAQMD’s track record of spending the millions in port money that it already has access to, I remain skeptical that they can meaningfully impact the transition. More likely, the transition will happen through the ports and CARB’s direct action, while SCAQMD will drain resources and delay the transition within the ports themselves.

And in another example of a money grab, SCAQMD staff proposed an illegal tax on February 11th to create an additional source of funds. Unfortunately, we have been down this road before, many times. Ignoring for a moment that SCAQMD’s proposed “fee” is an illegal tax on interstate commerce (among other failings), it is also plainly absurd. It is supposed to help the ports transition to zero emissions. That makes as much sense as the State taxing you in order to help you buy a car. SCAQMD levying a tax on the international trade that is responsible for the transition does not make more resources available! After SCAQMD takes their cut, it makes less resources available. The biggest challenge today remains the technology as previously noted.

What is needed are more demonstrations that will ultimately inform the CARB’s rulemaking process for cargo-handling equipment that will get underway this year. It also would not hurt to have a single statewide approach on achieving the transition to zero emissions, rather than one agency with statutory authority (CARB) and another seeking to grab their own slice of money and power.