How Government Stands in the Way of Infrastructure Improvements

T o handle the deluge in goods Americans have purchased, the country needs more logistics capacity. That’s especially true at the Ports of Los Angeles and Long Beach, where powerful unions and outdated trade policies have combined to produce two of the least efficient major ports in the world.

BNSF, the largest freight railroad in North America, proposed the Southern California International Gateway (SCIG) project in 2005. The SCIG was to be a modern intermodal rail yard within four miles of Los Angeles/Long Beach. BNSF’s existing rail yards are near downtown Los Angeles, about 25 miles away from the ports. BNSF was willing to pony up $500 million of its own money to build the facility. It committed to making the SCIG “the greenest intermodal facility in the U.S., by investing more than $130 million in green technology.”

Sixteen years later, with containers piling up at our ports, the SCIG remains unbuilt, stuck in California’s environmental-regulation purgatory.

This is not a problem more government infrastructure spending would solve. In all the discussions on trillion-dollar infrastructure bills in the past year, freight railroads went mostly unmentioned. That’s because, unlike airports and highways, freight railroads are privately owned and operated. The rail companies that run the trains also own the tracks that they run on and the facilities that service them. That means they have every incentive to keep their infrastructure in good shape. If they don’t, they’re the ones who suffer.

There are 140,000 miles of rail in the United States, and private railroads have spent over $700 billion in the past 40 years to develop that network, according to the American Society of Civil Engineers (ASCE). Freight railroads reinvest about 20 percent of their revenue back into their own infrastructure and receive virtually no federal aid. Aligning the incentives properly has delivered good results. The ASCE, famously pessimistic about American infrastructure, gives rail the highest grade of any category on its infrastructure scorecard.

The SCIG would have been a major contribution from BNSF in modernizing southern California’s intermodal infrastructure. When a container bound for a BNSF train is taken off a ship at Los Angeles/Long Beach, it is loaded onto a truck and driven 24 miles north to BNSF’s Hobart/Commerce Yard. That relatively short movement by truck between modes is called “drayage.” Drayage costs — in money, time, and pollution — add up quickly.

The largest container ships today can drop off 8,000 TEU (20-foot equivalent units, the industry measurement of containerized freight) in one port call. Let’s say, for sake of argument, that there’s one train’s worth of freight for BNSF from this ship. That’s 400 TEU. A truck, however, can only carry 2 TEU. That means drayage trucks will have to make a total of 200 trips back and forth from the port to the rail yard. Driving 24 miles to the rail yard 200 times and 24 miles back another 200 times adds up to 9,600 miles driven.

Cutting 20 miles off the drayage distance, as the SCIG would have done, pays huge dividends. It takes our hypothetical 9,600 total miles and shrinks it to only 1,600 total miles. Measured in time, it takes what can be an hour-or-more drive on I-710 through L.A. traffic and shrinks it to a more consistent ten-to-15-minute drive. All that time is freed up for drayage trucks to haul other containers. Remember, this hypothetical is only for 400 out of 8,000 TEU from one out of multiple port calls per day at a busy port such as Los Angeles/Long Beach.

Fewer miles driven and less time with engines running means less pollution. Drayage has the highest carbon emissions per mile of any part of a container’s journey. Ocean freighters and trains carry so many containers at once that the emissions per container are very small. The more time a container spends on those modes, the less carbon will be emitted. According to the Association of American Railroads, freight trains are three to four times more fuel efficient than trucks, and they continue to become more efficient. In 2019 freight trains were 82 percent more fuel efficient than they were in 1980 and 17 percent more fuel efficient than they were in 2000. Freight-rail CO₂ emissions from diesel fuel peaked in 2006 and by 2019 had been reduced by 18 percent.

California’s never-ending environmental review process has nevertheless prevented the SCIG project from being built. The project is supposed to take three years to build; it’s spent over five times that in a quagmire of litigation and environmental reviews.

The project was proposed in 2005, and the environmental impact report was initially completed and approved in 2013. At that point the project was expected to be completed in 2016. Instead, it ended up in court for three years. In a 200-page ruling, the trial court said the environmental impact report did not meet California’s standards. In January 2018 the California Court of Appeal overturned the trial court’s ruling. BNSF decided to persist despite the City of Los Angeles saying it had set aside its commitments related to the project. The Port of Los Angeles released its updated draft of the environmental impact report in May of this year. The public comment period for the draft ended August 25, which is where the project currently stands according to BNSF’s website.

Some progressive activist groups have opposed the SCIG by calling it racist. The Coalition for Clean Air has said that, “Port air emissions are a major cause of health risk in the low income communities of color who are made to shoulder the burden but rarely see benefits.” The Natural Resources Defense Council called the project “a textbook case of environmental racism.” An organizer with East Yard Communities for Environmental Justice said that, “If you support this project, you are supporting the death of our neighbors.”

The SCIG would be built on land in an already heavily industrial area, along the Alameda Corridor. In fact it would be on a plot of land adjacent to an existing intermodal rail yard for Union Pacific. The area is already more polluted than other areas of the city, but BNSF has committed to “allow only clean trucks on designated industrial routes with GPS tracking, support for zero or near-zero emissions technologies, a soundwall, intensive landscaping, a local jobs training program and priority hiring for new jobs to qualified local job applicants.” The project would not require eminent domain to be used to take people’s homes, although some businesses said they would be affected. BNSF says the project would “reduce diesel particulate matter and improve health risk compared to the heavy industrial operations currently at the site.” They also promise to use green technology, such as electric cranes, throughout the yard.

No project is costless, and pollution in that area of Long Beach has been a concern for years. But BNSF has made many concessions based on feedback from the community and even California’s notoriously strict environmental standards have been unable to kill the project entirely. They’ve just been able to delay it long enough that we don’t have a more efficient rail yard at a time when we really need one. And now that there are dozens of ships idling for days waiting to be unloaded, the Long Beach Post reports that there’s “a layer of brown smog lining the ocean horizon” and “West Long Beach is choking on air pollution from cargo congestion.”

The SCIG wouldn’t be a cure-all for the supply-chain crisis, but it would be helpful to have right now. The Biden administration thinks it needs to spend more federal money to unclog our infrastructure bottlenecks. Since 2005, BNSF has been willing to spend $500 million of its own money to make port operations at Los Angeles/Long Beach more efficient. Government bureaucracy has been standing in the way.