Western Washington University Western CEDAR Border Policy Research Institute Publications Border Policy Research Institute 2006 Governance of Canadian and American Ports Border Policy Research Institute Follow this and additional works at: https://cedar.wwu.edu/bpri_publications Part of the Economics Commons, Geography Commons, International and Area Studies Commons, and the International Relations Commons Recommended Citation Border Policy Research Institute, "Governance of Canadian and American Ports" (2006). Border Policy Research Institute Publications. 51. https://cedar.wwu.edu/bpri_publications/51 This Border Policy Brief is brought to you for free and open access by the Border Policy Research Institute at Western CEDAR. It has been accepted for inclusion in Border Policy Research Institute Publications by an authorized administrator of Western CEDAR. For more information, please contact [email protected]. BORDER POLICY BRIEF Focus: Governance of Canadian and American Ports Volume 1, No. 5, September 2006 by Jean O. Melious, J.D. * Web Address: www.ac.wwu.edu/~bpri Introduction. This article discusses differences in the proximately $763 million, including payments by the Vancou- governance of seaports within the U.S. and Canada, with par- ver Port Authority itself, by employers and employees in all ticular emphasis upon ports located on the Georgia Basin – five of the port’s employment sectors, and by cruise ship pas- Puget Sound waterway shared by the State of Washington and sengers. 1 The port of Tacoma reported creation of 10,978 full- the Province of British Columbia. The article reveals how time jobs in 2005, 2 while a 2003 port of Seattle report esti- regulatory contexts affect the ability of ports to compete mated that Seattle’s seaport generates 17,927 direct jobs. 3 Sea- within and outside the region and concludes with an assess- port activity at Tacoma and Seattle is estimated to generate ment of the advantages of regional port cooperation. $107.5 million and $210.9 million, respectively, in state and Three globally significant ports are located on the Georgia local tax revenue. Basin – Puget Sound: the ports of Tacoma and Seattle, sepa- These economic benefits, plus the indirect benefits ac- rately operated by two Washington State port authorities, and crued through more broadly defined port-related activities, the port of Vancouver, in British Columbia. Table 1 shows motivate the ports to compete with each other for shippers’ the utilization of the three for container traffic, relative to business. Port users, especially shipping companies, are the other ports in North America. The three ports compete for targets of such competition, and ports compete by offering Asian trade with each other and with North America’s largest faster turnaround times, more and larger facilities for carriers, container ports, Los Angeles and Long Beach. The competi- and lower costs. tion takes place not only at the broadest global levels, as ship- Ports are not solely business enterprises, however. They ping firms calculate their most advantageous routes, but also at are hybrids which allow private enterprise to occur within a the local level. As the ports race to expand and upgrade their public framework. A third definition of ports, therefore, is facilities, located in each case in thriving urban areas, competi- that they are government agencies defined by law. As such, tion is affected by funding sources and public reactions to such U.S. and Canadian laws establish different ground rules on spillover effects as noise, pollution, and land conversion for each side of the border, thereby affecting the competition be- infrastructure and warehouses. As public-private enterprises, tween the port of Vancouver and the ports of Seattle and Ta- ports receive public funding and therefore are required to be coma. While the transportation and economic requirements of accountable to the public, not just to their private clients. Port ports do not vary considerably across the international border, authorities must, of necessity, think globally and act locally. the legal and political contexts in which the ports function are Roles of a Port. The importance of governance to port very different. competitiveness becomes clear upon considering a deceptively U.S. Port Governance: Local Control. In the post- simple question: “What is a port?” The prime definition of a 9/11 world, Americans have started to think of ports as a part port is to serve as a link in the transportation chain. In addi- of our national infrastructure that should be regulated by the tion to moving cargo onshore and offshore, ports must pro- federal government. Because the Constitution gives the fed- vide for the efficient movement of cargo between transporta- eral government authority over harbors and over foreign com- tion modes. This “intermodal” connection generally involves merce, it would be logical to assume that the federal govern- the movement of cargo from ships to railroads or trucks, which may take the cargo to its ultimate destination or to a Table 1. Ranking of North American Ports by warehouse for storage until the ultimate user requires the Container Traffic, 2005 goods. Based on this definition alone, it would make sense for TEUs the ports of Seattle, Tacoma, and Vancouver to coordinate Los Angeles, CA 7,484,624 their activities in order to ensure adequate infrastructure, create Long Beach, CA 6,709,818 a rational cargo-handling system, and compete most effectively New York, NY 4,792,922 with other West Coast ports. Oakland, CA 2,272,525 A second definition of ports focuses on their economic role. Ports are engines of regional economic development, as Seattle, WA 2,087,929 is often emphasized by the ports themselves. All three Puget Tacoma, WA 2,066,447 Sound ports periodically release economic impact studies com- Charleston, SC 1,986,586 piling their local, regional, and even national value. In 2005 Hampton Roads, VA 1,981,955 the port of Vancouver created 30,100 direct jobs, generated by Savannah, GA 1,901,520 five port-related sectors: maritime cargo, cruise industry, capi- Vancouver, BC 1,767,379 tal investment in port facilities, shipbuilding and repair, and non-maritime enterprises. Federal, provincial, and local taxes Source: American Association of Port Authorities. TEU stands for “twenty-foot equivalent unit,” a standard container and revenues generated in the year 2004 were estimated at ap- measurement. A 40-foot container is 2 TEUs. 2 ment controls ports. In fact, state and local governments are thorities are municipal corporations classified as “special dis- the primary operators and regulators of ports, with the result tricts,” a category which also includes school districts, fire dis- that port planning and investment decisions are largely decen- tricts, emergency medical districts, and approximately seventy tralized. The federal government does play a role, but its func- other categories in Washington. State law grants ports a wide tions are diffuse and largely uncoordinated. range of powers, including the “acquisition, construction, The U.S. has no national port authority or port policy, and maintenance, operation, development and regulation within many commentators and government agencies have expressed the district” of improvements and facilities. Ports are specifi- concern over the absence of a strategy for the marine trans- cally authorized to engage in economic and industrial develop- portation system that would take into account the needs of ment projects. Ports may exercise eminent domain to acquire ports, waterways, and intermodal connections. A new cabinet property, construct and operate sewer and water utilities, issue level Committee on the Marine Transportation System tax-exempt bonds, and even levy taxes – a power envied by (CMTS) is intended to provide a more holistic approach to Canadian ports. A port may levy up to 45 cents per $1,000 of marine transportation, although its makeup demonstrates the assessed valuation on all property within its district bounds for fragmentation of federal agency control in this area. The four general port purposes. In 2006, the port of Tacoma levied “core agencies” of the CMTS are each lo- 18.59 cents per $1,000 of assessed value, cated within a different department of the estimated to result in a total collection of federal government: the Maritime Admini- $11.9 million. 9 The port of Seattle’s 2006 stration, within the Department of Trans- rate was 23.4 cents per $1,000 of assessed portation, tasked with promoting “the de- value, yielding a projected collection of velopment and maintenance of an ade- $62.7 million. 10 The ports control some of quate, well-balanced United States mer- the most valuable property in the two cit- chant marine”; the National Oceanic and ies, including 1,400 waterfront acres in Atmospheric Administration, within the Seattle. Department of Commerce, which provides A port district is formed by referen- oceanographic and meteorological data to dum, and the voters also elect commis- ports and is also charged with protection sioners to administer the districts and of marine species subject to the Endan- oversee their development and operation. gered Species Act; the U.S. Coast Guard, Port commissions have many of the pow- the federal lead agency for maritime secu- ers of a city council. In Seattle, for exam- rity, now within the Department of Home- ple, the port commission is a part-time, land Security; and the U.S. Army Corps of five-member panel, with a two-person Engineers, primarily associated with port staff. The day-to-day work is done by the dredging and channel improvement, but port’s professional staff of 1,600 and its also the lead agency for regulating wetland CEO, referred to by one journalist as “one development. of the most powerful men in Seattle.” 11 Federal agencies thus are involved in Port of Seattle, courtesy NOAA Port authorities were among the earliest the navigational, commercial, environ- special districts to be established in Wash- mental, and security interests of ports.