By ERIC WARD
Is the idea of privatization gaining traction?
A key issue has been overlooked in a political firestorm engulfing a state board’s recent decision to approve a project that could help Georgia better compete against South Carolina in the ports industry.
The issue holds major economic implications for the entire Palmetto State, but heretofore has been absent from media reports and public discussion of the Georgia-South Carolina ports controversy.
The missing matter?
This state and Georgia operate the only publicly run ports in the nation – if not the entire world, according to sources knowledgeable in the ports business.
“The only two states on the East Coast operating state ports authorities are Georgia and South Carolina,” says James Capo, chairman and CEO of the United States Maritime Alliance, a nonprofit industry group based in New Jersey.
Everywhere else in the country, Capo and other sources say, states own their ports and leave it to private companies to manage and run the facilities.
But in Georgia and South Carolina, state agencies oversee the functioning of their ports. That entity here is named the S.C. State Ports Authority, or SPA. It was created through legislation in 1942 and runs the Port of Charleston and the Port of Georgetown.
To more than one well-informed observer, the operating model for South Carolina ports is less advantageous – or for that matter, downright problematic – in several ways. Those include questions of competitiveness and serving the interests of the state as a whole.
Moreover, this perspective is shared among some leaders who occupy distinctly different points along the philosophical spectrum, from free market conservatives to labor and environmental advocates.
Indeed, despite their disparate world views, these voices all cite problems with South Carolina’s state-run ports.
“I think politics gets involved a lot more when there are public entities doing the projects,” says state Sen. Tom Davis, R-Beaufort. “I think the two go hand in hand.”
Politics, as it happens, is precisely the source of the Georgia-South Carolina ports brouhaha.
This morning, in some political theater certain to get the State House beltway all in a tizzy, four of Gov. Nikki Haley’s senior staff members were scheduled to testify under oath to the Senate Medical Affairs Committee.
The four are Tim Pearson, chief of staff; Swati Patel, chief legal counsel; Ted Pitts, deputy chief of staff for legislative and cabinet affairs; and Katherine Veldran, legislative liaison.
In a rare move for the legislative branch of state government, the Medical Affairs Committee subpoenaed the four executive branch staffers to testify after Haley declined requests for them to do so voluntarily.
Members of the committee want to question the Haley staffers about the S.C. Department of Health and Environmental Control board approving a water quality permit for Savannah River dredging and deepening the Port of Savannah.
Georgia needs South Carolina’s permission for the project because the river borders both states.
In what has been widely reported, the DHEC board OK’d the permit in November on the same day the agency’s staff, after rejecting the permit in September, reversed its longstanding opposition to the project.
Haley asked the board chairman, Allen Amsler, to consider an appeal of the staff’s decision against the permit, according to the reports.
The board’s subsequent approval of the permit provoked a tidal wave of criticism. In addition to environmental concerns, critics charge that the DHEC board is helping a competing port up-fit to accommodate larger cargo ships expected to call on the East Coast in a few years after an expansion of the Panama Canal is completed.
South Carolina aims to woo those super carriers, too.
Haley appointed all of the DHEC board members and has been accused of using her office to influence the panel’s decision for political reasons. She has denied the accusations.
Davis says he does see politics factoring into the Georgia and South Carolina state-run ports operations, but more so in another project – a proposed port on the Savannah River in Jasper County that has been long delayed.
A staunch champion of free market economics, Davis knows his ports issues. He logged about a year on the State Ports Authority board. He also worked closely on plans to develop a Jasper port while serving as a chief of staff to former Gov. Mark Sanford.
“It talks specifically about the use of private capital to develop the facility,” Davis says of an agreement on the project between South Carolina and Georgia.
In fact, the senator says he authored an amendment to a State Ports Authority restructuring bill, which passed in 2009, that prescribes private funding for Jasper port construction. “That’s in the statute.”
Davis says a site designated for a Jasper port offers an expansive footprint, dual rail access and other significant logistical advantages. “We have, by all accounts, the best undeveloped maritime asset on the East Coast,” he says, “and yet, nothing’s been done (with it).”
The reason, according to Davis?
The South Carolina and Georgia ports agencies are protecting their turfs, he says. “And I think that’s a result of the two major players in the S.C. State Ports Authority and the Georgia Ports Authority letting politics factor into their decision-making process.”
In an email, SPA spokesman Byron Miller said the Jasper project is unsound.
“Serious environmental and river capacity issues make a future Savannah River deepening extremely unlikely,” Miller said.
Continuing, he said, “So building a $4B (billion) Jasper Ocean Terminal with significant new public infrastructure on a constrained river that’s not capable of handling ships that are already here – and which will not be deepened again – makes no fiduciary sense, given what we know today about the big ships that are here and that are coming.”
For his part, Sanford backs up Davis’s take on the matter.
In a phone interview with The Nerve, Sanford told of having conversations with two different SPA officials while he was governor who argued for protecting the agency’s monopolistic control over the state’s ports.
“But it’s typical of all these government agencies – they want to grow their own kingdom,” he says.
(Executive-level salaries at the State Ports Authority certainly have grown, as The Nerve reported yesterday in this story.)
It’s not just free market types like Davis and Sanford, however, who see problems with the state’s government-run ports.
Dana Beach, founder and director of the Coastal Conservation League, says the public sector exists to fill needs that the private sector doesn’t. “But that’s not the case with a port, because the private sector does a very good job of running a port,” Beach says.
Presumably, a publicly run ports agency would be more attuned to community and environmental concerns that a private company isn’t obligated to consider, he says. “What we have seen is that the exact opposite it true,” Beach says.
Time and again, he says, the Coastal Conservation League has found private companies to be better stewards of resources than the State Ports Authority. He named SCANA, Nucor, Google and Alcoa as examples.
“I think we ought to have that conversation,” Beach says of privatizing the state’s ports operations.
Ken Riley, president of the International Longshoremen’s Association Local 1422 in Charleston, agrees.
“Because this is what the major steamship lines want,” Riley says. “This is the preferred model going forward.”
So why isn’t South Carolina having a conversation about this, especially amid the Palmetto State-Peach State ports imbroglio?
“He who owns the gold wants to keep the gold,” Sanford says.
Reach Ward at (803) 254-4411 or eric@thenerve.org.