Harbor Panel OKs Terminal for Chinese Line

Charting a determined course into politically unsettled waters, the Long Beach Harbor Commission approved a plan Monday to build a $200-million cargo terminal for China’s state-run shipping line, saying that the lucrative promise of hundreds of jobs and a flood of cargo outweighs fears of potential environmental damage or international intrigue.

The port’s effort to help expand the Chinese company’s operation has generated a huge outcry in Long Beach and beyond, from the airwaves of radio talk shows and local cable stations to the floor of the House of Representatives, prompting dozens of opponents to pack the commission chamber Monday.

The panel voted unanimously to proceed with construction over the objections of environmentalists, who fear the project will destroy wildlife and unleash contaminated sediment in the ocean, and some federal legislators, who worry that Beijing could use the terminal for arms smuggling or intelligence operations.

The port has already signed a lease for the property with the China Ocean Shipping Co., or Cosco.

“Cosco has been operating in the Port of Long Beach with the full knowledge and approval of the U.S. government since 1981,” said Harbor Commission President George Murchison. “It is wrong to ask the Port of Long Beach to discontinue a long relationship with a good customer because some people do not support trade policies established by our federal government. And it is absurd to suggest that Cosco’s operation as a commercial shipping line poses a threat to U.S. security.”

Port officials view Cosco, which handles 25% of U.S. trade with China, as a crucial customer, with cargo volume that could warrant lease payments at the new terminal of up to $22 million. City officials have repeatedly changed their estimates of new jobs that the terminal would generate, but Murchison said Monday the terminal would create 300 to 600 permanent port jobs.

The five-member panel initially approved the project in September, but a Los Angeles judge ordered it to reconsider the matter “free and clear” of any prior commitments, such as the letter of intent the port had signed with Cosco before it completed its environmental impact review.

Plans for the 145-acre terminal, which would be built on the site of the closed Long Beach Naval Station, still must overcome several roadblocks. Los Angeles Superior Court Judge Robert H. O’Brien must rule on whether the port has complied with his order. The plan is also the subject of a lawsuit filed by television host and history buff Huell Howser, who opposes the destruction of taxpayer-funded buildings at the naval station.

And, perhaps most worrisome to city officials, the plan is vulnerable to criticism from some federal legislators who have sponsored a bill to block the project, warning that the company cannot be trusted. To stave off the legislation, city officials have mobilized a defense in Washington. Rep. Steve Horn (R-Long Beach) and Rep. David Dreier (R-San Dimas) are writing a letter supporting the commission and plan to fight the bill.

Cosco, supervised by China’s Ministry of Communications, is now the focus of increasing scrutiny in Washington. Allegations of Beijing’s campaign contributions to American politicians have raised questions about the depth of China’s business presence in the United States, and about the extent to which Chinese government leaders control operations at state-owned companies like Cosco.

“The Long Beach Harbor Commission has their specific interests--they are looking out for Long Beach,” said Patrick McSwain, chief of staff for Rep. Randy (Duke) Cunningham (R-San Diego), a sponsor of the legislation to block the project. “We just don’t believe they’re necessarily looking out for the security interests of the nation.”

Critics have suggested that Cosco was the beneficiary of White House largess as a result of campaign contributions allegedly made by Beijing. A Cosco advisor was escorted by a Democratic National Committee donor to one of President Clinton’s weekly radio addresses last year. Clinton was host at a White House coffee to a Chinese businessman whose company manufactured assault rifles that were carried in March 1996 on a Cosco vessel to the Port of Oakland. The company also has received a $138-million federal loan to buy cargo ships from a Mobile, Ala., shipyard.

City and port officials, who have met Clinton twice, deny that the White House played a role in making the deal with Cosco.

Cosco officials in Los Angeles did not return phone calls seeking comment. But the port’s deputy executive director, Richard Steinke, said the company has expressed “concern” about the growing controversy involving the project. Representatives from the adjacent Port of Los Angeles, the chief rival of the Long Beach port, have visited Beijing to lure the company in the event the terminal project at the naval station unravels.

“I don’t believe Los Angeles will be successful in taking Cosco away from us,” Murchison said. “We have a superior property to offer them.”

Once the closed naval station, which includes a variety of recreational and housing facilities and a colony of black herons, a protected species, is razed, the port would build a 2,500-foot wharf.

But even if the project is built, port officials are becoming increasingly concerned that it will come at a price. The Harbor Commission had been anticipating the approval of Navy Secretary John H. Dalton for the transfer of the property to the city because it must complete construction of the terminal by July 1, 1998, or compensate Cosco for any delay.

“The threat is there,” said Commissioner John W. Hancock.

The Pentagon has signaled that transfer of the land could be months away. The port has also committed to pay up to $200,000 in moving expenses for Cosco and, if the deal falls apart, may have to cover the cost of up to six dockside cranes Cosco has bought for the terminal, at a price of $32 million.

Construction of the terminal, the first in the United States dedicated exclusively to Cosco, would be paid for with local bonds secured by port revenue, which comes from user fees paid by shipping lines and terminal operators. Cosco has signed a 10-year lease that requires it to pay the port a minimum of $14.5 million per year or more depending on the amount of cargo it handles. The city would receive an additional $1 million in annual tax revenue.

Some opponents of the project, led by a local preservationist organization, pleaded Monday for the commission to request an independent analysis of the other potential uses of the naval station land.

“There continues to be a serious lack of of credibility and objectivity in the assessment of alternatives by your staff,” wrote Jan Chatten-Brown, the attorney for the preservationist group--Long Beach Heritage--in a letter to the commission.