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Pa., N.J. claim Delaware will steal their cargo business if Congress approves shipping bill

Philadelphia Inquirer logo Philadelphia Inquirer 7/16/2020 By Andrew Maykuth, The Philadelphia Inquirer

Pennsylvania and New Jersey officials are stepping up a campaign to block legislation that they say would give the Port of Wilmington and its foreign-owned private operator a lucrative advantage over rival Delaware River ports, and potentially siphon cargo business away from Philadelphia.

Opponents complain that the legislation, co-sponsored by U.S. Sen. Thomas Carper (D., Del.), would simplify environmental permitting for a new container port in Edgemoor on the site of a former chemical factory, and allow the operator to use federal disposal facilities for dredged material “at minimal to no cost” compared with the expenses that competing port facilities must pay.

“The unprecedented language is designed to provide the Port of Wilmington and the proposed Port of Edgemoor in Delaware an unfair competitive advantage over other ports along the Delaware River,” U.S. Reps. Brendan F. Boyle, a Democrat, and Brian Fitzpatrick, a Republican, said in a letter to congressional leaders that was co-signed by nine other representatives from Pennsylvania and New Jersey.

“I admire creativity, but this is beyond the pale, given the sizable impact it could have on the environment, and the very problematic precedent it sets,” said Jerry Sweeney, the chairman of PhilaPort, regional port authority. “It’s a serious issue.”

The Delaware proposal particularly irritates officials from Pennsylvania, whose taxpayers paid $140 million of the $400 million cost to deepen the Delaware River channel from 40 feet to 45 feet to accommodate larger vessels. Delaware and New Jersey opposed the project, and declined to pay for it, but Boyle and Fitzpatrick said Wilmington’s current expansion plan “is only possible” because of the deeper channel.

The legislation would benefit Gulftainer, a United Arab Emirates port operator that in 2018 won a 50-year lease to run Wilmington’s port. Gulftainer promised to invest $584 million over 10 years to improve the existing Wilmington port, including $410 million to build a new deepwater port in Edgemoor, a former DuPont chemical plant.

The governors of Pennsylvania and New Jersey cited Gulftainer’s foreign ownership in a letter last month to leaders of the House Committee on Transportation and Infrastructure Committee, which is negotiating provisions in the bill. The benefits to the Wilmington port are included in the Senate bill, America’s Water Infrastructure Act of 2020, which Carper co-sponsored.

“We strongly request your support in this matter because U.S. workers and entities should not be jeopardized by foreign competitors at taxpayer expense, and because federal legislation should require that all similarly situated organizations compete under the same rules,” Gov. Tom Wolf of Pennsylvania and Gov. Phil Murphy of New Jersey wrote to the House committee.

The bill was approved last month by the Senate Environment and Public Works Committee, on which Carper is the ranking Democrat. Supporters of the legislation say the provisions will benefit ports across the nation. Carper said Wilmington’s expansion will benefit Pennsylvania and New Jersey as well as Delaware.

”The Port of Wilmington expansion will not only create more jobs in the short-term, in the long-term, it will enable more commerce to be facilitated through the port, creating more jobs and economic activity for the entire region,” Carper said in a statement Wednesday. “It’s a win for our entire regional economy.”

The dispute is the latest clash between neighboring jurisdictions over the Delaware River that dates to 1682, when England’s Duke of York set the boundaries for the Delaware colony. He included most of the submerged lands beneath the Delaware River, allowing Delaware to exert control over fishing and some development to the river’s eastern bank, much to New Jersey’s enduring frustration.

In 2016, the state-owned Diamond State Port Corp. bought the 114-acre former DuPont site in Edgemoor and conducted an extensive search to privatize and modernize its port. It chose Gulftainer, which operates 13 ports worldwide, including Port Canaveral in Florida

Gulftainer made no secret about its expansion aims when it signed the Wilmington lease in 2018, saying the Edgemoor site would be a state-of-the-art container port with direct access to rail and highways that would shave valuable transit times for container ships bound for Philadelphia or New York.

“This is going to be a hard thing for people north of us to swallow, because this is going to be the place where people want to come,” Peter Richards, chief executive of Gulftainer’s U.S. arm, GT USA, said at the time.

Sweeney, the PhilaPort chairman who is also chief executive of the Brandywine Realty Trust, said Gulftainer has not identified new shippers of container traffic. “Rather, they plan on cannibalizing the existing book of business,” he said.

“It’s one thing if there was a coordinated public policy and business approach where the three states would work collaboratively to grow overall volumes within the ports that are served by the Delaware River,” Sweeney said. “This is clearly just an attempt to to take away from the traffic.”

Wilmington now handles about 350,000 container units a year, and Gulftainer aims to expand it to 1.2 million units per year in a decade with the Edgemoor project. The Port of Philadelphia, which underwent a $300 million state-funded upgrade, last year loaded and unloaded 548,000 container units, and is aiming to expand its capacity to 1 million units a year.

The legislation introduced by Carper contains provisions that Pennsylvania opponents say would put pressure on the U.S. Army Corps of Engineers to approve and issue development permits for the Wilmington Ports without the required studies and analysis required of similar port projects.

The 305-page Senate bill would also allow the non-federal Wilmington ports to use U.S. Army Corps of Engineers confined disposal facilities for dredged material. (“CDFs”) at minimal to no cost as compared to the significant expenses incurred by other ports for their maintenance dredge material.

“If the Senate bill amendments become law, the new facilities would effectively be federally funded without undergoing the normal review processes,” Govs. Wolf and Murphy wrote in their letter. “They would not be required to undergo the cost of future maintenance of their project. They would be relieved of the need to plan for and safely dispose of their maintenance materials. And they would enter the regional maritime market with significant cost and time savings over every other port.”

The provisions in the law allowing a port operator to skirt some reviews undermines environmental protections, said Peter Winslow, president of A SMART Collaboration LLC, a coalition of environmental groups.

“It’s a terrible precedent from an environmental standpoint, short-cutting the way in which permitting is done and dredging is conducted, and where the tailings are deposited,” said Winslow.

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