A bill sitting on the desk of Gov. Arnold Schwarzenegger could dramatically increase the price of goods that move through California’s three ports – Long Beach, Los Angeles and Oakland. But environmentalists say a new fee on those imports and exports is needed to help clean up air pollution near those three ports.

The bill, AB 974 by Sen. Alan Lowenthal, D-Long Beach, is being closely watched by the international business and environmental communities. It was among the most controversial bills in the 2008 legislative year. At its core is the larger struggle of how much Californians should pay to clean up their air and reduce greenhouse gas emissions, and who should pay the bill.

The fee could impact billions of dollars worth of goods from the Pacific Rim that move through the ports every year. According to the U.S. Department of Commerce, Japan, China and South Korea and California’s third, fourth and fifth largest trading partners, respectively. In 2006, California exported $31 billion worth of goods to those three countries, and many of those products moved through the ports.

The bill is also something of a dilemma for Gov. Schwarzenegger. The governor has made his reputation fighting greenhouse gas emissions, and has used the issue as a way to build his national political brand.

But he is also sensitive to the impacts and importance of California’s trade in the Pacific Rim. In 2005, Schwarzenegger led a delegation of California business leaders on a trade mission to China to underscore the importance of the state’s economic partnership with that country.

Opponents of the measure, which reads like a list of just about everyone who does business in the state of California, say the bill is not only harmful to their business, but that it is unconstitutional.

Assemblywoman Jean Fuller, R-Bakersfield, said in a statement that the bill “will devastate our economy and encourage companies to ship goods through other states and countries.”

The list of opponents to the bill underscore the scope of business California does through its ports. Those opponents include everyone from the California Cattlemen’s Association to Burger King to Levi Strauss & Co.

The three ports that would levy this new container fee constitute three of the four largest ports in the United States. Nearly 40 percent of all the nation’s cargo passes between the ports of Long Beach or Los Angeles. The bill would allow ports to impose a fee of up to $30 on each container that moves through the ports. The money would then be directed to projects that help reduce port congestion and others that help reduce the impacts the ports have on local air quality.

Local port authorities and members of local air quality districts would be responsible for devising the list of projects that would be funded by the new revenues generated by the fee.

According to a Senate analysis of the bill, the new fee would generate hundreds of millions of dollars every year. In Long Beach and Los Angeles, the fee would raise an estimated $340 million per year. In Oakland, the fees collected could be as high as $54 million.
That $400 million in total revenues would be used to guarantee $5 billion in revenue bonds that the ports would use to fund these congestion and air quality projects.

But supporters of the bill say the need for the environmental fixes outway the possible impact on the price of goods that move through the ports.

“SB 974 is the best chance we have to raise the necessary funding to bring these numbers down and protect public health,” said Tina Andolina, Legislative Director for the Planning and Conservation League. “Supporters of this important bill have waited a long time, and with the passage of SB 974, the ball is in the Governor’s court.”

Gov. Schwarzenegger threatened to veto a similar measure last year. But Lowenthal is optimistic that he has addressed the governor’s concerns, and is hopeful he will get Schwarzenegger’s signature.

Environmentalists site the overwhelming need to drastically reduce port congestion as a justification for the fees. The California Air Resources Board estimates that port pollution is responsible for up to 2,400 premature deaths every year. By 2020, the ARB claims port and freight transport will be the largest source of particulate matter pollution in the state, creating more diesel emissions than all cars, trucks and off-road vehicles combined.