L.A., Long Beach OK grants for Mexican carriers

Land Lne Magazine | August 15, 2008
By Charlie Morasch

Friday, Aug. 15, 2008 – The Ports of Los Angeles and Long Beach boast of bringing in 40 percent of the nation’s imported goods, and plans to cut emissions at each port have been highlighted in mainstream news programs and the cable TV show “America’s Port.”

A Land Line investigation into the ports’ multibillion-dollar clean truck program, however, shows that the $2.2 billion program could pay for the replacement of trucks owned by Mexican trucking companies while it excludes U.S. trucks that run any miles outside of California.

The Ports of Long Beach and Los Angeles each have adopted clean trucks programs that phase out all pre-2007 emissions level trucks by December 2012, and phase in requirements that all trucks be operated by licensed concessionaires approved by the port. The Port of Los Angeles adopted further restrictions that eventually require all drivers to be company employees.

On page five of the Clean Trucks Program application – which features logos of each port – the form asks applicants to check one of three types of operating authority numbers.

MC for motor carrier 
FF for freight forwarder 
MX for Mexican companies with federal authority to operate beyond commercial zones 

The MX stands for “carriers that are based in Mexico,” said Art Wong, a spokesman for the Port of Long Beach.

Theresa Adams-Lopez, a spokeswoman for the Port of Los Angeles, also confirmed the Mexican truck classification in a statement but said it was “merely an inquiry during the application process.”

“An MX-registered truck probably won’t be automatically excluded from getting grant funding,” Adams-Lopez said. “However, it will need to meet all the standard criteria. Be assured that no truck will be funded under either port’s funds unless it can be shown to meet all program requirements, as a legitimate frequent tripper and contributor to the ports’ air quality programs.”

The potential for hundreds of millions of dollars to be given to companies domiciled in Mexico concerns the Missouri-based Owner-Operator Independent Drivers Association, said Rick Craig, OOIDA’s director of regulatory affairs.

“It appears that certain Mexican trucking companies could meet the requirements of this program,” Craig said.

The truck replacement funding form requires applicants to be plated in California with no International Registration Plan license, and applicants must promise not to run any miles outside of the Golden State for at least seven years.

The ports plan to use container fees to finance a portion of the $2.2 billion truck replacement program, which can fund up to 80 percent of the cost of replacing the oldest trucks among the estimated 16,000 drayage trucks that operate daily in the ports.

The program, however, isn’t fully funded by container fees. The state of California is kicking in a large share of money needed for truck replacement.

Proposition 1B – which includes a total of $20 billion for transportation infrastructure and $1 billion specifically for air quality programs – also will fund $98 million worth of truck replacement funds at the Ports of Long Beach and Los Angeles during the 2007-2008 fiscal year.

Applicants can try to obtain grants for a portion of the cost of a new truck, or to a “subsidized lease or grant using a combination of port and Proposition 1B funds,” according to a joint announcement issued by the ports on Aug. 1.

Many Mexican carriers run trucks in California with license plates from Mexico and California, or with an International Registration Plan license plate, each examples that would prevent their application from being considered for the truck replacement program. Foreign owned and operated carriers also must deal with a variety of customs and immigration regulations.

Theoretically, a Mexican carrier could purchase a truck in the U.S., run only California miles and employ an American driver to meet immigration standards, Craig said.

Craig pointed out the drayage economy in Los Angeles and Long Beach has been profitable for port trucking companies but not for owner-operators, who can’t afford to buy their own new trucks or to maintain existing ones.

“If not for the perverted economic model that has developed in the ports, there would be no need to subsidize port replacement trucks in the first place,” Craig said. “Our people are complying without public funding.”

Joe Rajkovacz, OOIDA’s regulatory affairs specialist, has addressed the Port of Los Angeles Harbor Commission and spoken to several port officials about the Association’s concerns.

Rajkovacz said the American Trucking Association’s recent lawsuit seeking an injunction against the port’s clean truck program doesn’t argue against carriers receiving billions in truck replacement funds.

“The most onerous aspect of the clean truck program has always been the money giveaway,” Rajkovacz said. “Within the ATA lawsuit against the ports they profess to want less polluting trucks serving the ports, but welcome the financial windfall to meet clean truck program goals. That’s not the market capitalism they supposedly champion. That travesty is only compounded by giving money away to foreign-domiciled motor carriers when long haul truckers must comply on their own dime.”