6a Memo Revised

PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA 
Item No.             6a 
Date of Meeting      April 14, 2009 
DATE:       April 8, 2009 
TO:          Tay Yoshitani, Chief Executive Officer 
FROM:      Charles Sheldon, Seaport Managing Director 
Stephanie Jones Stebbins, Senior Mgr., Seaport Environmental Programs 
SUBJECT:    Agreement with the Puget Sound Clean Air Agency to support the Northwest
Clean Air Strategy 
ACTION REQUESTED: 
Request for authorization for the Chief Executive Officer to enter into an agreement with Puget
Sound Clean Air Agency to transfer $2.3 million ($1.15 million in 2009 and $1.15 million in 
2010) from the Port of Seattle's operating budget to support the implementation of the Northwest
Ports Clean Air Strategy 
SYNOPSIS 
The purpose of this memo is to request authorization for the Chief Executive Officer to enter in
to an agreement with Puget Sound Clean Air Agency to transfer $2.3 million ($1.15 million in
2009 and $1.15 million in 2010) from the Port of Seattle's operating budget to support the
implementation of the Northwest Ports Clean Air Strategy. 
The Port of Seattle and PSCAA have a long history of collaborative partnerships to quantify,
understand, and reduce emissions from port-related operations. Examples of these partnerships
include the 2005 Puget Sound Maritime Air Emissions Inventory, the Northwest Ports Clean Air
Strategy, the Holland America Line and Princess Cruises shore power projects at the Terminal
30 Cruise Facility, and numerous projects to retrofit and replace cargo-handling equipment at the
container terminals. This request builds on this successful collaboration to reduce emissions
from port operations and protect public health in the Puget Sound region. 
The Port intends to enter into an agreement with the PSCAA to advance the Agency's efforts to
improve air quality in Elliott Bay and the Puget Sound Airshed. PSCAA may spend the funds
when and where it deems necessary. The Port would receive reports on how the funds are spent.
Additionally, PSCAA will present their staff recommendations on a truck buy back and scrap
program.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
April 8, 2009 
Page 2 of 7 

BACKGROUND 
Shockwaves from the current global economic crisis are rippling through the port industry.
Shippers, carriers, terminal operators, longshore workers, and truck drivers alike have been
impacted by the sudden drop in consumer spending. The jobs created by cargo are more crucial
than ever, and port authorities across the US are taking steps to remain competitive. Southern
California ports are creating incentive packages to attract intermodal rail cargo from the Pacific
Northwest. 
Port container tenants need temporary cost reductions while the Port needs their cooperation to
implement the Port's clean truck and other environmental programs. Port staff is therefore
proposing a program that combines these customer recovery efforts with the implementation of
Port environmental initiatives. Port staff is requesting two separate but integrated Commission
actions today: Adoption of a customer recovery program that will be added to the container
leases in consideration for the Port's new environmental language and authorization to transfer
$2.3 million to the Puget Sound Clean Air Agency (PSCAA). 
As terminal leases are modified to include the measures that will maintain our competitiveness,
the Port is including language that: 
Requires terminal operators to implement and enforce the proposed clean truck program; 
Formalizes the emissions reductions in cargo handling equipment that terminal operators have
already begun implementing voluntarily; 
Establishes protocols for Port and marine terminal operators to meet regarding continued progress
on environmental practices. 
The following questions and answers further describe these integrated programs: 
When cargo returns to previous levels, will the Port attempt to "make up" the lost revenue? 
No. The Southern California ports have enacted incentive programs aimed directly at attracting
intermodal cargo from other ports, such as Seattle. Our Customer Recovery Program will help
our container terminal tenants retain business in these tough economic times. Attempting to
recover lost revenue from this program at a later date will create additional costs for cargo in the
future, potentially leading to diversion of cargo to other ports. To our knowledge, no other port 
has sought or received any considerations in exchange for the financial support they've given
their customers during these difficult economic times. 
What environmental requirements beyond those already required under state law and permits
may be added to the leases? 
The major elements of the draft lease amendments that go beyond regulatory requirements
include: 
Implementation by the terminal operators of the Port's truck program standards for 2011 and
beyond. 
Acknowledgment by the terminal operators to meet the goals of the Northwest Ports Clean Air
Strategy (NWPCAS) for cargo handling equipment by 2011, something the terminals are on track
to do.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
April 8, 2009 
Page 3 of 7 

Annual meeting to discuss operations and to look for ways to reduce environmental impacts and
implement the goals of the Port's air program. 

What monitoring and enforcement mechanisms would be attached to these new lease
requirements? 
The Port will have several mechanisms for ensuring that these new lease requirements are met. 
Port staff, PSCAA, and the terminal operators will work together to develop a system of periodic
audits of the entrance records and ensure that the program is implemented and enforced
thoroughly and consistently.
Equipment lists for cargo handling equipment are submitted to the Port annually for review. This
will allow us to determine compliance with the NWPCAS standard. 

How much money is needed to implement the proposed truck buy-back and scrapping program? 
Enrollees in the buy-back program will receive the fair market value of their truck or $5,000,
whichever is greater, for participation in the program. Using the PSCAA's estimate of 300 pre-
1994 trucks remaining in the fleet, approximately $1.5 million will fund the initial buy-back and
scrapping program. 
How will the program ensure that Port of Seattle dollars are spent on the trucks that service our
terminals? 
PSCAA will require a document summarizing the truck's port drayage activity during the
previous year, verifying that the truck is part of the Seattle drayage fleet. Requiring this
information should eliminate trucks that are not part of the drayage fleet or that are no longer
used for drayage due to the economic downturn. 
What criteria or certification or registry will be used to distinguish compliant from noncompliant
trucks? 
The Port will work with terminal operators and the PSCAA to develop a registry verification
system once the Commission has approved a clean truck program.  Only trucks that have been
confirmed as compliant will be registered initially. Ideally, verification will use RFID or some
other automated technology. If automated technologies are not in place by Dec. 31, 2010, we
will begin with a simpler verification method, such as a registration and sticker system. 
How will POS ensure that terminal operators are only permitting the entry of trucks that are
certified or on the registry? 
Port staff, PSCAA and the terminal operators will work together to develop a system of periodic audits of
the entrance records. The audits may include visual checks of VIN numbers to ensure that they match
registered trucks.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
April 8, 2009 
Page 4 of 7 

How much money would the Port give to the Puget Sound Clean Air Agency (PSCAA)? 
Port staff is requesting authorization to transfer $2.3 million total to PSCAA to support the agency's air
emissions reduction programs between 2009 and 2010. Of that $2.3 million, $800,000 has already been
approved by the Commission and is in the Port's 2009 budget. PSCAA anticipates using an additional
$1.5 million would be used by PSCAA to support a buy-back and scrapping program for pre-1994
drayage trucks. PSCAA is a longstanding, reliable partner with a solid track record of results in projects
with the Port and other partners. 
We do not yet know what funding will be required or available via grants, WSDOE or PSCAA beyond
our current request. The current focus is on meeting the 2010 NWPCAS goals; once that is accomplished,
Port staff will determine what resources are required to meet goals established for 2015 and 2017. 
How will PSCAA be accountable to the Port for the use of the funds? 
The Port will provide funding to PSCAA in quarterly installments. Any unused funding will be
returned to the Port at the end of the agreement, unless otherwise agreed to by the Port in writing,
once all reimbursements and administrative costs are covered.
PSCAA will provide Port with a written report every three months showing how the agency
spent the Port funds transmitted under the agreement. The Port can terminate the agreement on
30-days notice. 
How would the proposed program incorporate the Northwest Ports Clean Air Strategy
(NWPCAS) 2015 goals? 
On average, drayage trucks are replaced every ten years. The truck standards and timelines in
the NW Ports Clean Air Strategy were designed to work with the natural turnover of trucks in the
drayage industry. 
In addition, the CSS program would put $100 per month from truckers' lease payments into a
savings account to go toward the purchase of a 2007 truck. If the trucker chooses to withdraw
from the program, the money will be his or hers (along with the interest). If the driver chooses to
stay with the program, by 2015, he or she will have accumulated a significant down payment
toward the cost of a 2007 or newer truck. 
On January 22, 2008, the Port of Seattle Commission adopted the Northwest Ports Clean Air
Strategy, a voluntary and collaborative effort of the Ports of Seattle, Tacoma and Vancouver
(B.C.) to reduce maritime and port-related emissions that affect air quality and climate change in
the Pacific Northwest. Developed in close collaboration with the Puget Sound Clean Air
Agency, Washington Department of Ecology, US Environmental Protection Agency, and
Environment Canada with input from stakeholders, customers, and citizens, the Strategy will
result in emission reductions to further improve air quality throughout the region.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
April 8, 2009 
Page 5 of 7 

The strategy has three primary emissions reduction objectives: 
Reduce maritime and port-related air quality impacts on human health, the environment and
the economy; 
Reduce contribution to climate change through co-benefits associated with reducing air
quality impacts; and 
Help the Georgia Basin-Puget Sound region continue to meet air quality standards and
objectives. 
The Strategy builds on the significant efforts the Ports of Seattle, Tacoma and Vancouver, BC
have invested in emission reductions and establishes common short-term (2010) and long-term
(2015) performance measures for further reducing emissions from cargo-handling equipment,
rail, harbor vessels, ocean-going vessels, and trucks. 
ENVIRONMENTAL BENEFITS 
Puget Sound Clean Air Agency has identified reduction of diesel particulate matter (DPM) 
emissions as one of their top priorities because of the associated public health and environmental
impacts. In 2005, the Port of Seattle conducted the Puget Sound Maritime Air Emissions
Inventory (EI), which located and quantified DPM from maritime sources in the greater Puget
Sound region. Based on the results of the EI, in 2005 the Port of Seattle operations accounted for
9% of all of the DPM emitted in the four county Puget Sound Clean Air Agency region (the
relative contributions to that 9% included ocean-going vessel hotelling: 44%, cargo-handling
equipment: 32%, rail: 12%, ocean-going vessel maneuvering: 9%, trucks: 3%, fleet vehicles
<1%, and harbor vessels <1%). 
The expected environmental benefits of implementation of the Northwest Ports Clean Air
Strategy performance measures for trucks, cargo-handling equipment, rail, harbor vessels, and
ocean-going vessels is a reduction in air pollutants of DPM, oxides of nitrogen (NOx), volatile
organic compounds (VOCs), and sulfur oxides (SOx), as well as a reduction in fuel consumption
and emissions of greenhouse gases (GHGs). 
Trucks: A truck that meets 1994 U.S. EPA particulate matter (PM) emission standards is 6 to 2.5
times cleaner than a truck built before 1994. Similarly, a truck that meets 2007 U.S. EPA PM
standards is 10 times cleaner than a truck built between 1994 and 2006, and 5 to 60 times cleaner
than a truck built before 1994. 
Cargo-Handling Equipment: Exhaust retrofits installed on cargo-handling equipment reduce
emissions of particulate matter (PM) and oxides of nitrogen (NOx). Switching from off -road
diesel fuel (500 parts per million sulfur [ppm]) to ultra-low sulfur diesel fuel (15 ppm) reduces
emissions of sulfur oxides (SOx).

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
April 8, 2009 
Page 6 of 7 

Ocean-Going Vessels: The At-Berth Clean Fuels Vessel Incentive Program (ABC Program)
incentivizes the use of lower-sulfur marine fuels, not to exceed 0.5% sulfur content, in auxiliary
engine operations while at a Port of Seattle berth. Switching from high-sulfur marine fuels
(~2.7% sulfur) to lower-sulfur marine fuels (not to exceed 0.5% sulfur) is expected to reduce
emissions of sulfur dioxide (SO2) by 95% and particulate matter (PM) by 60%. 

FINANCIAL IMPLICATIONS 
Source of Funds 
The 2009 Seaport Operating Budget included $600,000 in Operating Expense(1) for the
implementation of the Northwest Ports Clean Air Strategy. Assuming $1,150,000 (50%) of the
requested funds are transferred to PSCAA in 2009, the transfer will create an unfavorable
Operating Expense variance of $550,000.  To the extent the amount transferred in 2009 is
greater or less than 50% of the total, then the unfavorable Operating Expense variance will
increase or decrease accordingly. Any amounts not transferred in 2009 will be included in the
2010 Operating Expense Budget.
Note (1): An additional $200,000 was included in the 2009 Budget as a Non-Operating Public Expense
but, pending determination from Accounting, it is currently assumed that the full amount of the transfer
will be treated as an Operating Expense. 
Financial Analysis Summary 
CIP Category                Not applicable 
Project Type                  Environmental 
Risk adjusted Discount rate    N/A 
Key risk factors                 Since the grants are unrestricted and the reporting of
expenditures is subsequent to disbursement, there is a risk that
the funds are not spent in way that the Port might consider
most effective and efficient. 
There is a risk that the proposed uses do not reduce emissions
to the extent expected. This risk is mitigated by the expertise
and past successes of the Port and PSCAA in understanding
and reducing emissions. 
Project cost for analysis        $2,300,000 
Business Unit (BU)            Containers 
Effect on business             The estimated total project costs will have the following impact on
performance                 Net Operating Income (NOI) assuming 50% of the funds are
transferred in 2009 and the remaining 50% in 2010.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
April 8, 2009 
Page 7 of 7 

NOI (in $000's)          2009     2010    Total
NOI*                  ($1,150)  ($1,150)  ($2,300)
Depreciation                  $0        $0        $0
NOI After Depreciation    ($1,150)   ($1,150)   ($2,300)
*To the extent that some or any of the uses qualify, certain of the expenses may
be recorded as a Non-Operating Public Expense. 
IRR/NPV                 N/A 

PREVIOUS COMMISSION ACTION 
On February 16, 2007, the Commission passed a series of environmental motions that required,
in part, that staff present an air quality action plan for Commission approval. 
On January 22, 2008, the Commission adopted the Northwest Ports Clean Air Strategy.

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