Two private firms are willing to invest their own money in building new freight-rail infrastructure, but the Golden State’s regulations could stand in the way.
Two private firms are willing to invest their own money in building new freight-rail infrastructure, but the Golden State’s regulations could stand in the way.
P rivate companies are ready to invest in improving California’s freight-rail infrastructure in response to the traffic congestion that has hit the state over the past two years. The question is whether California’s regulations will allow these projects to be completed.
In August, private development firm Pioneer Partners proposed the $75 million Mojave Inland Port project. The 410-acre planned facility would be served by Union Pacific, and it would be located about 90 miles inland from the ports of Los Angeles and Long Beach. It’s expected that the facility would be able to handle 3 million containers annually and 3,600 trucks per day.
In the past few days, railroad BNSF has proposed a separate, $1.5 billion project to build a new facility in Barstow, about 130 miles inland. The 4,500-acre project, which would be the first project of its kind for a major U.S. railroad, would include an intermodal facility, a rail yard, and warehouses.
One thing that these projects have in common is that they are entirely privately financed. Pioneer Partners and BNSF are proposing to put up their own money to build facilities that they each believe will be good for business. They aren’t scrounging for money from the federal government, and the actual construction portions of the projects will only take a few years at most to complete.
Freight-rail infrastructure, unlike airports, seaports, or highways, is privately owned and maintained. That’s likely one of the reasons that it consistently scores higher than other types of infrastructure on the American Society of Civil Engineers’ report card. Railroads have good incentives to invest in maintaining and expanding their own networks because they reap the economic rewards from doing so, unlike the publicly owned facilities that other transportation companies often have to share.
Rail congestion on the West Coast has been a huge problem recently. Shippers have been routing freight from Asia to the East and Gulf Coasts instead, opting to take a roundabout path to avoid West Coast congestion. These companies are responding to a real market need.
The logic of the two projects is similar. Currently, many containers that arrive in Los Angeles and Long Beach go from ships to drayage trucks. Those trucks carry the containers to warehouses and intermodal facilities throughout the Los Angeles area and the Inland Empire. This system leads to significant highway congestion, lots of pollution from the thousands of trucks, and more hand offs of cargo between different modes of transportation.
These projects, if completed, will allow more containers to be transferred directly from ships to trains. Trains, which are much more efficient than trucks both in terms of fuel use and how much freight they can carry, will shuttle containers back and forth between the inland facilities and the ports. All the sorting and staging for cross-country transport will be done at the inland facilities, alleviating some of the crowding near the ports where that work is currently done.
Neither project involves any modifications to existing port facilities. The ports could certainly use modifications, considering that they lag behind every other major port in the world according to the Container Port Performance Index. But these companies are making improvements where they can with private money, avoiding the tangled politics around the docks.
The problem is that we’ve seen such proposals before, and they didn’t result in any new construction. In 2005, BNSF proposed a $500 million project called the Southern California International Gateway (SCIG) near the Port of Long Beach — a new intermodal yard to expand near-port capacity. Seventeen years later, the SCIG still hasn’t been built, because California’s environmental regulations make construction nearly impossible.
An environmental-impact report on the SCIG was completed in 2013, but the project still ended up in litigation for years after that. It continues to languish today.
Both of these new proposals — the Mojave Inland Port project and the Barstow facility — can boast support from government officials. BNSF notes positive comments from the governor’s office and local officeholders, and Pioneer Partners has already received approval from the county board of supervisors. But the SCIG had initial support from local-government officials as well. BNSF has not even started to navigate the review process required under California’s notoriously strict environmental laws.
Neither Pioneer Partners nor BNSF have any firm timelines for their projects. That means companies won’t be able to count on the extra capacity that the projects would create for purposes of their long-term planning, which will in turn lead them to continue to search out roundabout solutions such as the East and Gulf Coast ports they have been using recently.
Private companies are looking to help solve a pressing economic issue with their own money by building facilities in a desert. They have support from the government officials whose support they need. In a sane world, that would be the end of the story. But these companies don’t operate in a sane world; they operate in California, where reams of red tape can delay or outright scuttle even no-brainer proposals such as theirs. So they will plod through the sure-to-be-years-long regulatory process, uncertain of success.