Court Ruling on Harbor Fees Could Mean a Windfall for Area Exporters
Jim Donovan of Oxnard’s Mission Produce Inc., a leading producer of avocados in California, said he wouldn’t mind if his company received a refund for the harbor maintenance fee it has been paying on exports since 1988.
The tax is only one-eighth of 1% of the value of the crops the company sends abroad by ship, but because Mission Produce exports from 2 million to 10 million pounds of avocados annually, the amount has added up.
Until recently, Donovan, the company’s director of international operations, had never given any thought to a refund.
But on Oct. 25, the Court of International Trade in New York ruled in the case of U.S. Shoe Corp. vs. the United States, that the federal maintenance tax on goods exported by ocean freight was unconstitutional.
Money from the harbor maintenance fee is only used for the dredging of U.S. harbors. The court ruling did not affect the existing levy on imports. From 1988 through 1994, the maintenance levy has generated $2.7 billion, $700 million of that from exports. At the end of fiscal 1994, there was a surplus of $453 million in the fund.
Whether the federal government will appeal the ruling remains to be seen, but for now, Donovan said he is studying the potential impact of the decision. His first step is to determine how much money Mission Produce has paid in maintenance taxes over the years.
“I need to learn a little bit more about what’s going on before I step off the plank and do something,” he said. “But if there’s something to be recovered, it’s prudent business to recover it.”
Donovan would not provide sales figures for the privately held business, but he said Mission Produce regularly accounts for about half of all avocados exported from California. In 1994, the state’s avocado growers exported about 3.8 million pounds of the fruit.
Ray Bowman, the recently appointed executive director of the Oxnard-based California Central Coast World Trade Center, figures there are many businesses in Ventura County such as Mission Produce that could reap benefits from the court ruling, and he’s trying to get the word out.
“There are a lot of big companies in this area that have been exporting for a long time, and the higher the value of their product, the more they have paid in harbor maintenance,” said Bowman. “There’s agribusiness, the higher tech companies, the aerospace companies, military companies. These are high volume companies. . . . This is money due back to them.”
Bowman said that to seek refunds, exporters would need to take civil action in the Court of International Trade. Because of the potential expense involved for individual companies, the trade center is helping to organize a group of businesses from Los Angeles County to San Luis Obispo County to jointly seek refunds through Ventura attorney Byron Lawler, a member of the trade center’s board of directors.
Even if no money is recovered, said Donovan, eliminating future taxes would be a boon to his operation.
“We have a list of costs involved with exporting,” he said. “I think anything that is going to reduce our cost and make us more competitive overseas is definitely worth looking at.” Bowman said exporters will continue to pay the harbor maintenance tax until the question of its constitutionality has been fully resolved.
But should the maintenance fees ultimately be eliminated, the impact on the Port of Hueneme would be minimal, said Kam Quarles, director of marketing and trade zone services for the Oxnard Harbor District.
“At the Port of Hueneme, we have been fortunate that not a great deal of maintenance dredging has been needed here. We have not used maintenance trust funds,” he said. “Of course, harbors relying on this money to do maintenance dredging would certainly feel the impact if the funds are not available to be tapped.”
