Published on May 12th, 2016 | by Paul Rosenberg0
Dealings with Former Harbor Commissioner Scrutinized
By Paul Rosenberg, Senior Editor
The Port of Los Angeles is anxiously trying to turn over a new leaf in light of the mitigation measures it failed to implement at China Shipping and TraPac.
But, the port’s problems are deeper. Its problems are rooted in POLA’s corporate culture—a culture profoundly resistant to outside accountability. An old face has re-emerged as the new poster boy for this core institutional dysfunction: former Harbor Commission President Nick Tonsich.
His business dealings with port tenants and the port itself since leaving office have again raised serious questions, not just about him, but about the wider business culture. A pollution-control company he founded received a $1.5 million grant in 2015 and he is in line to get millions more via his involvement in Pasha’s Green Omni Terminal. But community members are increasingly calling “foul.”
On Dec. 17, 2015, homeowner activists Kathleen Woodfield and Janet Gunter raised initial concerns to the Harbor Commission. They were joined by environmental justice activist Jesse Marquez on Feb. 17, and again on April 5, focusing on how port staff appears to have given Tonsich favored treatment.
As more concerns have been brought to light, the port’s response has begun to lag. While Woodfield’s initial request for information was mostly answered in less than a month, the port still has not replied to issues Marquez raised in February, despite Ambassador Vilma Martinez, president of the Harbor Commission, directing staff to “look into the serious allegations and report back.”
When Marquez noted this lack of response on April 5, Deputy Executive Director Doane Liu mistakenly confused the issues raised by Marquez with the earlier request, saying that staff had already replied in a memo, and he would “be happy to give you another copy.”
Woodfield kicked things off in December by referencing her own recent Los Angeles ethics training, saying that a former commissioner has to ask written permission from the city attorney to become involved in business related to their former post, and asking, under the public request act, for Tonsich’s letter and the city attorney’s response.
On Jan. 6, Liu responded to the commissioners’ request with a summary of information about Tonsich and a link to the city attorney’s letter to Tonsich in September 2009.
“You are subject to a permanent ban on receiving compensation to attempt to influence any City agency regarding matters in which you were personally and substantially involved,” the letter stated. “You are also subject to a permanent ban on receiving compensation to assist or advise a person who is attempting to influence action on those matters.”
It went on to specifically address his involvement with China Shipping, noting that the ban applied to him with respect to the lease agreement. It did not address a more fundamental concern shared by many: whether his involvement in developing the “No Net Increase” plan precludes his work on air quality mitigation, which he has since tried to capitalize on.
On Feb. 17, Jesse Marquez raised additional concerns, primarily focused on port staff adhering to its own internal guidelines with respect to matters involving Tonsich, specifically, his ownership role in Clean Air Engineering-Maritime, which appears to have received favored treatment in receiving a $1.5 million grant in 2012. Tonsich had previously represented Advanced Cleanup Technologies Inc., which developed the first prototype for capturing ship emissions while docked—a process which has been under way at the Port of Long Beach since 2006—but then formed Clean Air Engineering-Maritime to compete with Advanced Cleanup Technologies Inc.
Tonsich had claimed to be a part owner of ACTI, but the company claimed it rejected his ownership bid, and that afterward Tonsich formed Clean Air Engineering-Maritime to compete with them. As of 2012, ACTI had a working prototype, Tonsich’s company did not, yet his company got the $1.5 million grant without a competitive bid process.
In a comment letter, Marquez alleged that POLA failed to provide a “fair, objective selection process for all agreements and procurement opportunities,” failed to, “purchase without prejudice, seeking to obtain the maximum value for each dollar expended,” and failed to “avoid unfair practices, giving all qualified vendors equal opportunity.”
Random Lengths asked POLA to respond to specific aspects of his letter.
For example, Marquez wrote, “The Port of Los Angeles issued a $ 1.5 million Technology Advancement Program (TAP) contract to Clean Air Engineering-Maritime (CAEM) to build the Clean Air Engineering-Maritime/Tri-Mer ship emission treatment unit. Clean Air Engineering-Maritime had no previous experience in this technology or any clean air technology.”
When asked if POLA had any evidence to the contrary regarding CAEM’s experience, port spokesman Arley Baker replied, “Sure do. The CAE system is made by Tri-Mer. You can read about their experience in this technology at tri-mer.com.” However, Tri-Mer had previously worked (and is still working) with ACTI, who unlike CAEM had built and tested a series of units before CAEM contract was signed. It appears that Clean Air Engineering-Maritime’s “experience” was actually that of its competitor’s.
“The standard protocol for POLA Technology Advancement Program grants has been that a company must have a prototype to demonstrate,” Marquez also wrote. “Clean Air Engineering-Maritime did not. POLA illegally waived this requirement.”
Baker said that POLA normally asks that the grant program go toward testing and verification of performance for the Technology Advancement Program.
“So, yes, a prototype is typically what we seek, though the two ports and the TAP advisory Board try to be flexible,” he said. “In this case, this was not a TAP grant. It was a TraPac EIR [environmental impact report] mitigation measure requirement that POLA, not the TAP, provide money to TraPac for development of such a system. TraPac selected CAE to develop the system.”
However, the port’s own documentation contradicts this explanation, referring to the $1.5 million as a “TAP grant,” even though it does not appear on a list of TAP grants. It was identified as a TAP grant in two separate staff documents included with the agenda item on May 17, 2012, when $1.5 million funding agreement was approved. In the compensation section of the “Agreement Between The City Of Los Angeles And TraPac Inc.,” it stated that “The TAP grant award is calculated based upon the estimated expenses of the PROJECT as reported by GRANTEE in its application submitted to the TAP Committee.”
“ACTI is the original inventor of the AMECS-Advanced Maritime Emissions Control Systems technology and the only company that had a ship emission capture technology prototype immediately available for demonstration but was not invited to receive a TAP Grant or invited to bid,” Marquez further stated.
Baker disregarded the context of Marquez’s account, the $1.5 million contract in 2012.
“We did give them [ACTI] a TAP grant,” Baker said, directing to the 2015 TAP Annual Report, which lists a 2008 grant, which AQMD also participated in, for a demonstration project at the Port of Long Beach, which was obviously the lead agency involved. POLA’s share—$150,000—was only a fraction on of the 2012 contract.
POLB had begun working with ACTI in 2006, according to Heather Tomley, POLB’s director of environmental planning.
“It began with Metropolitan [Stevedore],” she said.
POLB got involved and drew in the rest of the funding team. There were a series of refinements. In 2013, POLB approved a little more than $2 million for a demonstration project, using a competitive two-fold selection process: a request for information followed by a request for proposal. POLA participated more actively in the early stages, Tomley noted. Only ACTI and Tonsich’s company were in the final running, and POLB selected ACTI.
In October, the California Air Resources Board gave final approval to ACTI’s system for container ships.
“Our next phase of testing is for other classes of ships,” Tomley said. “We’re waiting for CARB to establish specifications.”
“This is the only TAP application ever received from either company, by the way,” added Baker. That contradicts the 2012 contract language identifying it as a TAP grant. Scrambling the protocols relied on is part of POLA’s persistent dysfunctional culture.This calls into question how the program is being run and underscores the need for outside oversight.
“The service is ordered up by the shipping line or terminal operator, not POLA,” Baker said.
But diffusing a corrupt practice does not make it less corrupt. It simply involves more people in the corruption of good government. Obviously, Tonsich has used his past position to create self-serving business relations—representing TraPac as an attorney, while creating his own pollution control company to do business with TraPac, funded by the port. His underlying friendliness to terminal operators and hostility to the general public made him an ideal candidate for terminal operators to hire and do business with — as TraPac and Pasha have done. While POLB’s Tomley said it was good to have more than one company competing to provide the technology, Clean Air Engineering-Maritime’s success so far seems limited to POLA, where all of Tonsich’s long-time connections lie.
“The public and environmental justice organizations have recommended the ACTI AMECS Technology for multiple POLA Project EIR Mitigation for the past 8 years,” Marquez also pointed out. “Why was such a long record of community input repeatedly ignored?”
“We’re the first port in the world to support and test this type of technology; so to say we have ignored community input in terms of deploying the technology is a little disingenuous,” Baker responded.
But, as noted above, it’s actually Long Beach that has taken the lead.
In her April 5 testimony, Woodfield noted that the city attorney’s letter “indicates Mr. Tonsich cannot do business in China Shipping for life, due to his involvement in the settlement agreement, however the letter does not indicate a lack of conflict at other sites.”
In particular, TraPac’s EIR was certified in September 2007, long after Tonsich left the Commission.
“But it does not follow that there were no prerequisite discussions between Tonsich and TraPac that may be influencing the TraPac EIR,” Woodfield said. “In 2002, he was involved the West Basin Development Program, which involved extensive extensions and improvements to the TraPac terminal itself, and emission reduction strategies.”
Add to that Tonsich’s role in creating the clean air framework and the conflicts of interest that should bar him seem overwhelming.
Tonsich didn’t act alone, however. His actions reflect much broader problems of governance. In her December testimony, Gunter recalled that, in her audit reports, City Controller Laura Chick had said that the port was operating “more like the backroom than the boardroom,” and that it had “an open disdain for good government” and that Tonsich had responded to later by calling Chick “unqualified and politically motivated.”
But every few years brings new revelations of how past port decision making has been deeply flawed, and Chick’s observations still seem as apt as ever.
“This is a former port commissioner who had nothing but contempt for this community until he figured out a way to profit from it,” Gunter added. “This behavior needs to stop, now.”