Port’s Settlement of Environmental Suit Gets Costlier

A landmark legal settlement between the Port of Los Angeles and environmentalists could cost the port as much as $120 million, or twice what port officials estimated in March, City Controller Laura Chick has told port officials.

The earlier $61-million price tag may not fully reflect the costs of meeting the settlement’s requirements, Chick wrote to the port, recommending that it develop a more accurate financial accounting.

The Tuesday letter reflects the second time in three weeks that the controller has taken port officials to task for their financial practices. A lengthy audit last month prompted Chick to conclude that the port seems to operate “more like the back room than the boardroom.”

In the latest letter, Chick addresses a court settlement stemming from the port’s failure to conduct the required environmental review of a 174-acre terminal it built for China Shipping NA Holding Co. Ltd.

“Under the settlement, the city will incur approximately $61 million in costs,” Chick wrote. “However, this estimate may not fully reflect the port’s costs related to the settlement (i.e., lease renegotiation with China Shipping).”

Specifically, Chick cites possible costs of steps to reduce the project’s environmental impact: terminal improvements, which could cost as much as $11 million; new, low-profile cranes, up to $48 million; and unidentified ship retrofitting costs. The money would come from port revenues rather than city tax dollars.

Port Executive Director Larry A. Keller did not respond to requests Wednesday for comment on Chick’s letter.

Deputy Mayor Troy Edwards said that he did not know how Chick arrived at the cost figures. He added, however, that the settlement is an innovative one, calling for cutting-edge approaches, such as using a low-profile crane that has not been built before. That makes costs hard to estimate, he said.

“But I will tell you that increased expenditures on mitigating impacts on communities near the port have traditionally been welcomed by the mayor,” he said. “We will continue to urge the ports and the operators at the port to spend more money and spend more resources on improving the environment.”

Chick said in a Wednesday telephone interview that she learned about the potentially higher costs from Sjoberg Evashenk Consulting, the firm that conducted the June audit criticizing the port’s leasing practices. Those cost figures are estimates, she said.

She expressed concern about what she described as a pattern of the port not being forthright about such matters. “When things are not done in the light of day, when they are slippery, hazy, fuzzy on detail, leaving out important facts and figures, [an agency] is ripe for having serious problems,” Chick said. “The public sector, especially, has to conduct its business operations in public and in a forthright way. In this, the port gets an F.”

The letter addresses a March court settlement in which the port, faced with a lawsuit, committed to a series of environmental improvements.

The lawsuit was brought by environmental and civic groups that claimed the port violated federal and state laws by constructing a terminal for China Shipping without required environmental reviews. After a Court of Appeal panel halted construction last fall so those reviews could be conducted, the port agreed to the settlement so construction could begin again.

Some problems linger. Last month, port and city officials said they agreed to the pact without first consulting with China Shipping, even though the pact calls for retrofitting the company’s own ships to alleviate diesel fumes and replacing its costly cranes with shorter models that do not block views.

Julie Masters, an attorney at the Natural Resources Defense Council, which helped bring the original suit, said that lessening the project’s environmental impact should not be seen as an added cost, but as money the port should have paid to offset environmental impacts.

“It’s costs that the port should be incurring anyway,” she said.