Letter to Joseph Brennan, Harold Creel, Jr., and Rebecca Dye Commisioners of the Federal Maritime Commission, Re: Review of the Ports of Los Angeles and Long Beach "Clean Trucks Program" Oversteps its Mandate and Capabilities

Letter

Letter to Joseph Brennan, Harold Creel, Jr., and Rebecca Dye Commisioners of the Federal Maritime Commission, Re: Review of the Ports of Los Angeles and Long Beach "Clean Trucks Program" Oversteps its Mandate and Capabilities

Senator Feinstein Expresses Concern that the Federal Maritime Commission's Review of the Ports of Los Angeles and Long Beach "Clean Trucks Program" Oversteps its Mandate and Capabilities

Washington, DC - U.S. Senator Dianne Feinstein (D-Calif.) today expressed serious concerns that the Federal Maritime Commission (FMC) may be overstepping its mandate and capabilities through its ongoing review of the "Clean Truck Program," which was implemented by the Ports of Los Angeles and Long Beach on October 1, 2008.

In a letter to FMC Commissioners Joseph Brennan, Harold Creel, and Rebecca Dye, Senator Feinstein urged the Commissioners to work productively with the Ports to reconcile any cost concerns they might have - instead of pursuing litigation. The Commissioners are expected to meet on Wednesday, October 15, to consider this matter.

Following is the text of the letter sent by Senator Feinstein today to Commissioners Joseph Brennan, Harold Creel, and Rebecca Dye:

October 10, 2008

Commissioner Joseph E. Brennan
Commissioner Harold J. Creel, Jr.
Commissioner Rebecca F. Dye
The Federal Maritime Commission
800 North Capitol Street NW
Washington, DC 20573

Dear Commissioners Brennan, Creel, and Dye:

I am writing to express my deep concern that the Federal Maritime Commission's (FMC) ongoing review of the San Pedro Bay Ports' Clean Truck Program Agreement oversteps the Commission's mandate, expertise, and capabilities. I believe it is unwise for the FMC to consider challenging the cost effectiveness of the ports' program.

The San Pedro Bay Ports account for more than 20 percent of the toxic air emissions in the Los Angeles basin and more smog and particulate-forming nitrogen oxide emissions than all six million cars in the region. In local communities around the port, childhood asthma rates are double the national average, and the cancer risk exposure from inhalation of diesel particulates is 500 times higher than what the federal government considers acceptable.

On October 1, 2008, the Ports of Los Angeles and Long Beach began implementing their Clean Trucks Program Agreement. The two ports have agreed to prohibit trucks with the highest pollution levels from port service and collect a fee to fund the replacement of dirty trucks with clean, new vehicles. While the ports have also implemented differing labor and safety requirements, their agreement is specifically focused on the goal of reducing the environmental and public health threat posed by diesel air pollution.

I understand that next week the FMC will hold a closed door session at which it will determine whether to challenge the Clean Trucks Program Agreement in Federal District Court under the Shipping Act. To protect the public interest from "substantially anticompetitive agreements" in an industry allowed to collude, the Shipping Act instructs the FMC to review agreements to protect against shipping tariffs and rates that would likely produce a reduction in competition that causes an "unreasonable increase in transportation cost."

I do not believe Congress intended to give the FMC the power to determine whether environmental programs in ports are cost effective. The Shipping Act is intended to give FMC the power to prevent anticompetitive behavior, not to evaluate the cost effectiveness of an environmental fee.

I am also concerned that the FMC lacks the expertise to conduct a thorough and accurate assessment of the human health and environmental benefits of the Clean Trucks Program, which is the primary public benefit of the agreement under evaluation. The FMC cannot determine whether the program's costs are reasonable without considering these benefits, but quantifying the social benefit of environmental protection is an extraordinarily difficult task in which unsound assumptions or omissions can jeopardize results.

In such a circumstance, the FMC should ensure that both its methodology and conclusions for cost evaluation under the Shipping Act are conducted in compliance with standard accepted practice for environmental program review. Instead, the FMC is conducting an in-house analysis that differs from accepted standards.

* The FMC has not hired environmental economists or submitted its economic analysis and conclusions for peer review by a cost benefit expert.
* The FMC has not followed the U.S. Environmental Protection Agency's "Guidelines for Preparing Economic Analyses," or the Office of Management and Budget's "Circular A-4," which is designed to assist analysts in regulatory agencies by standardizing the way benefits and costs of Federal regulatory actions are measured.
* The FMC has not consulted with the U.S. Environmental Protection Agency or the California Air Resources Board on its analysis.

The FMC does not intend to conduct a comprehensive evaluation of the environmental and human health benefits of the Clean Trucks program. Instead, the FMC economists will "accept" the ports' own assessment of these benefits. However, the FMC has never asked the ports to prepare and submit a comprehensive benefits analysis that would meet Federal standards.

Furthermore, the ports themselves have never independently conducted a benefits analysis that would meet Federal standards. The most comprehensive assessment, in which consultant John E. Husing concluded that the expected monetized human health benefits from reduced fine particulate pollution would range from $1.7 billion to $10.1 billion, was based on South Coast Air Quality Management District staff estimates that were never finalized. More importantly, the Husing study clearly states:

Additional health benefits not quantified in these analyses would be anticipated from reductions in regional ozone levels. In addition, these analyses did not estimate benefits from reductions in localized cancer risks associated with reductions in diesel particulate matter near facilities where trucks operate.

An environmental and human health impact analysis of air pollution from these ports that fails to quantify ozone level impacts or cancer risk reduction is incomplete. Husing's study is a useful tool to demonstrate significant public benefit, but it is woefully inadequate as a quantification of all benefits to be compared against the program's costs.

Los Angeles is one of only two "severe ozone nonattainment areas" in the United States under the Clean Air Act. Unhealthy levels of ozone, a primary precursor of smog, can cause bouts of coughing, reduce lung function, aggravate asthma, increase susceptibility to respiratory illnesses like pneumonia and bronchitis, and cause permanent lung damage. The FMC also should not ignore the impact that cleaner air would have on cancer rates. As Dr. Elaine Chang, the Deputy Executive Director of the South Coast Air Quality Management District, recently testified, "The area around the ports suffers an average cancer risk from air pollution that is more than 60 percent higher than the average in the South Coast Air Basin."

I understand that the FMC believes it must review the agreement established between the Ports of Los Angeles and Long Beach under the Shipping Act, even though this is not the type of agreement that Congress intended to be reviewed under this Act. However, the FMC does not have and has not obtained the capacity and expertise necessary to assess whether the agreement to establish the Clean Trucks Program would create unreasonable cost, when compared to the human health and environmental benefits that would be accrued.

Under such circumstances, I believe it would be a mistake for the FMC to assert in Federal Court that this is the first agreement in the Commission's history to reduce competition to the point that it unreasonably increases the cost of transportation. It is imperative that the FMC consider whether a cost analysis of a public health and environmental agreement that has failed to measure public benefits would stand up in Federal Court.

I encourage the FMC to provide the ports with recommended steps that could reduce the cost of implementing the Clean Trucks Program, instead of pursuing litigation. If you have any questions or concerns, please do not hesitate to contact me or my staff in my Washington office.

Sincerely,

Dianne Feinstein
United States Senator

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