A major port terminal operator, Stevedoring Services of America, is pushing forward with a lawsuit against the Port of Oakland that could ultimately cost the public agency $123 million or force it to hand over control of public property to a corporation in which Goldman Sachs owns a major stake. Late last year, an administrative law judge with the Federal Maritime Commission denied the port's request to dismiss the suit. And the case has garnered little attention from the media and public, even though the judge has already made important rulings that have recast the relationship between the port and the City of Oakland.
The origins of the suit stem back to 2009 when the port approved a major privatization contract with another marine terminal operator, Ports America. Unlike previous contracts with companies that operate the various berths at the port where ships are loaded and unloaded, the Ports America agreement was precedent-setting; it allowed Ports America to effectively own Berths 20 through 25, which are on public property in West Oakland. Under the concession's terms, Ports America may make its own infrastructure investments, is exempt from some state environmental laws, and may keep a larger share of profits generated at the port than other companies. The Ports America contract lasts fifty years, much longer than most port leases, which top out at ten to fifteen years.
SSA contends that the Port of Oakland, because of the lease it awarded to Ports America, is violating the Shipping Act of 1984, a federal law designed to ensure maritime companies are treated fairly in an industry otherwise dominated by global monopolies and powerful cartels.
The Ports America concession at the Port of Oakland, worth about $700 million, is among the first of what has become a growing trend in privatizing US port infrastructure. Ports America, owned by New York-based private equity group Highstar Capital, is only one player in this industry. Other investors seeking concessions include investment banks like Goldman Sachs Infrastructure Partners, a subsidiary of the Wall Street giant. Goldman Sachs also owns 49 percent of SSA and therefore has much to gain if SSA's suit succeeds. Further complicating matters is the fact that Goldman Sachs employees acted as advisers to Highstar Capital and Ports America in the Port of Oakland deal that is at the center of SSA's case.
Continue reading here. This article was originally published on EastBayExpress.com on September 12, 2012.
