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Retailers Ask Governor to Veto Bill on Port Fee

September 08, 2006|Ronald D. White | Times Staff Writer

The nation's largest retailer group on Thursday told Gov. Arnold Schwarzenegger to veto a bill that would impose fees on cargo containers moving through the nation's largest seaport complex or face an exodus of business to ports in other states.

SB 927 by Sen. Alan Lowenthal (D-Long Beach) would impose a $30 fee on every 20-foot cargo container arriving and departing from the ports of Los Angeles and Long Beach. Because most containers are 40 feet long, the typical fee would be $60. The money would be spent on infrastructure improvements, programs to protect the ports from terrorist attacks and to reduce pollution.

But the National Retail Federation said the legislation passed last week would force its members, which would be stuck with the tab, to seek alternatives, such as ports in the Pacific Northwest, Canada and Mexico. A spokesman for the federation said retailers also would pursue all-water cargo routes to the East Coast through the Suez and Panama Canals.

"It will hurt retailers. It will hurt California agricultural exporters who are already operating under very tight margins. An increase like this could place them outside of the global marketplace in terms of competition, and those costs will have to be passed on to consumers," said Erik Autor, vice president and international trade counsel for the retailer group, whose board of directors include executives from J.C. Penney Co., Inc., Gap Inc. and IBM Corp.

The federation argued that the governor had strong legal reasons to veto the measure.

"Container fees of the sort contemplated in the Lowenthal bill would violate the commerce clause of the U.S. Constitution, international law and U.S. treaty obligations, and would expose the state of California to court challenge were it to become law," Chief Executive Tracy Mullin said in a letter to Schwarzenegger.

Lowenthal disagreed, saying that the legislation had been reviewed by academic experts and others well-grounded in the rules of international trade and also had passed muster with the state's legislative analyst. Studies have shown that there would be very little diversion of business to other ports, he said.

Lowenthal commended shipping lines and the ports for their environmental programs and efforts to handle the rising tide of international trade, such as extended terminal gate hours. But, he added, these amounted to "the low hanging fruit. We have to do this to handle the expected growth. We can't be at the end of the tailpipe any longer."

The ports of Los Angeles and Long Beach handled more than 14 million containers in 2005 and are on pace to sharply exceed that number this year. Lowenthal said that all of the money raised by SB 927 would be used in Southern California.

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