[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
         CONFRONTING FREIGHT CHALLENGES IN SOUTHERN CALIFORNIA

=======================================================================

                                (111-9)

                          JOINT FIELD HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                          HIGHWAYS AND TRANSIT

                                AND THE

                            SUBCOMMITTEE ON
             RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                  FEBRUARY 20, 2009 (Los Angeles, CA)

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             VERNON J. EHLERS, Michigan
JERROLD NADLER, New York             FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida               JERRY MORAN, Kansas
BOB FILNER, California               GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas         HENRY E. BROWN, Jr., South 
GENE TAYLOR, Mississippi             Carolina
ELIJAH E. CUMMINGS, Maryland         TIMOTHY V. JOHNSON, Illinois
ELLEN O. TAUSCHER, California        TODD RUSSELL PLATTS, Pennsylvania
LEONARD L. BOSWELL, Iowa             SAM GRAVES, Missouri
TIM HOLDEN, Pennsylvania             BILL SHUSTER, Pennsylvania
BRIAN BAIRD, Washington              JOHN BOOZMAN, Arkansas
RICK LARSEN, Washington              SHELLEY MOORE CAPITO, West 
MICHAEL E. CAPUANO, Massachusetts    Virginia
TIMOTHY H. BISHOP, New York          JIM GERLACH, Pennsylvania
MICHAEL H. MICHAUD, Maine            MARIO DIAZ-BALART, Florida
RUSS CARNAHAN, Missouri              CHARLES W. DENT, Pennsylvania
GRACE F. NAPOLITANO, California      CONNIE MACK, Florida
DANIEL LIPINSKI, Illinois            LYNN A WESTMORELAND, Georgia
MAZIE K. HIRONO, Hawaii              JEAN SCHMIDT, Ohio
JASON ALTMIRE, Pennsylvania          CANDICE S. MILLER, Michigan
TIMOTHY J. WALZ, Minnesota           MARY FALLIN, Oklahoma
HEATH SHULER, North Carolina         VERN BUCHANAN, Florida
MICHAEL A. ARCURI, New York          ROBERT E. LATTA, Ohio
HARRY E. MITCHELL, Arizona           BRETT GUTHRIE, Kentucky
CHRISTOPHER P. CARNEY, Pennsylvania  ANH ``JOSEPH'' CAO, Louisiana
JOHN J. HALL, New York               AARON SCHOCK, Illinois
STEVE KAGEN, Wisconsin               PETE OLSON, Texas
STEVE COHEN, Tennessee
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
BETSY MARKEY, Colorado
PARKER GRIFFITH, Alabama
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico

                                  (ii)

?

                  SUBCOMMITTEE ON HIGHWAYS AND TRANSIT

                   PETER A. DeFAZIO, Oregon, Chairman

NICK J. RAHALL II, West Virginia     JOHN J. DUNCAN, Jr., Tennessee
JERROLD NADLER, New York             DON YOUNG, Alaska
BOB FILNER, California               THOMAS E. PETRI, Wisconsin
ELLEN O. TAUSCHER, California        HOWARD COBLE, North Carolina
TIM HOLDEN, Pennsylvania             JERRY MORAN, Kansas
BRIAN BAIRD, Washington              GARY G. MILLER, California
MICHAEL E. CAPUANO, Massachusetts    HENRY E. BROWN, Jr., South 
TIMOTHY H. BISHOP, New York          Carolina
MICHAEL H. MICHAUD, Maine            TIMOTHY V. JOHNSON, Illinois
BRIAN HIGGINS, New York              TODD RUSSELL PLATTS, Pennsylvania
GRACE F. NAPOLITANO, California      BILL SHUSTER, Pennsylvania
DANIEL LIPINSKI, Illinois            JOHN BOOZMAN, Arkansas
MAZIE K. HIRONO, Hawaii              SHELLEY MOORE CAPITO, West 
JASON ALTMIRE, Pennsylvania          Virginia
TIMOTHY J. WALZ, Minnesota           JIM GERLACH, Pennsylvania
HEATH SHULER, North Carolina         MARIO DIAZ-BALART, Florida
MICHAEL A ARCURI, New York           CHARLES W. DENT, Pennsylvania
HARRY E. MITCHELL, Arizona           CONNIE MACK, Florida
CHRISTOPHER P. CARNEY, Pennsylvania  JEAN SCHMIDT, Ohio
STEVE COHEN, Tennessee               CANDICE S. MILLER, Michigan
LAURA A. RICHARDSON, California      MARY FALLIN, Oklahoma
ALBIO SIRES, New Jersey              VERN BUCHANAN, Florida
DONNA F. EDWARDS, Maryland           ROBERT E. LATTA, Ohio
GENE TAYLOR, Mississippi             AARON SCHOCK, Illinois
LEONARD L. BOSWELL, Iowa
RICK LARSEN, Washington
JOHN J. HALL, New York
STEVE KAGEN, Wisconsin
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
JAMES L. OBERSTAR, Minnesota
  (Ex Officio)

                                 (iii)

?

     SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

                   CORRINE BROWN, Florida Chairwoman

DINA TITUS, Nevada                   BILL SHUSTER, Pennylvania
HARRY TEAGUE, New Mexico             THOMAS E. PETRI, Wisconsin
NICK J. RAHALL II, West Virginia     JERRY MORAN, Kansas
JERROLD NADLER, New York             GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland         HENRY E. BROWN, Jr., South 
GRACE F. NAPOLITANO, California      Carolina
JASON ALTMIRE, Pennsylvania          TIMOTHY V. JOHNSON, Illinois
TIMOTHY J. WALZ, Minnesota           SAM GRAVES, Missouri
MICHAEL A. ARCURI, New York          JIM GERLACH, Pennsylvania
CHRISTOPHER P. CARNEY, Pennsylvania  CHARLES W. DENT, Pennsylvania
ALBIO SIRES, New Jersey              LYNN A. WESTMORELND, Georgia
MARK H. SCHAUER, Michigan            JEAN SCHMIDT, Ohio
BETSY MARKEY, Colorado               CANDICE S. MILLER, Michigan
MICHAEL E. McMAHON, New York         VERN BUCHANAN, Florida
THOMAS S. P. PERRIELLO, Virginia     ROBERT E. LATTA, Ohio
PETER A. DeFAZIO, Oregon             BRETT GUTHRIE, Kentucky
JERRY F. COSTELLO, Illinois          AARON SCHOCK, Illinois
BOB FILNER, California               ANH ``JOSEPH'' CAO, Louisiana
EDDIE BERNICE JOHNSON, Texas         PETE OLSON, Texas
LEONARD L. BOSWELL, Iowa
RICK LARSEN, Washington
MICHAEL H. MICHAUD, Maine
DANIEL LIPINSKI, Illinois
STEVE COHEN, Tennessee
LAURA A. RICHARDSON, California
JAMES L. OBERSTAR, Minnesota
  (ex officio)

                                  (iv)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Asplund, Nate, Director of Public-Private Partnerships, 
  Burlington Northern Santa Fe Corporation.......................    23
Bayer, Hon. Anne, President, Board of Directors, Gateway Cities 
  Council of Governments.........................................     3
Clifford, Randall J., Chairman, Ventura Transfer Company.........    23
Ikhrata, Hasan, Executive Director, Southern California 
  Association of Governments.....................................     3
Knatz, Geraldine, Executive Director, Port of Los Angeles........     3
Mack, Chuck, Vice President, Western Region, International 
  Brotherhood of Teamsters.......................................    23
Mayer, Anne, Executive Director, Riverside County Transportation 
  Commission.....................................................     3
Rajkovacz, Joe, Regulatory Specialist, Owner-Operator Independent 
  Drivers Association............................................    23
Spence, Hon. David, President, Board of Directors, San Gabriel 
  Valley Council of Governments..................................     3
Steinke, Richard D., Executive Director, Port of Long Beach......     3
Turner, Robert W., Senior Vice President, Corporate Relations, 
  Union Pacific Corporation......................................    23

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Asplund, Nate....................................................    43
Bayer, Hon. Anne.................................................    53
Clifford, Randall J..............................................    56
Ikhrata, Hasan...................................................    67
Knatz, Geraldine.................................................   108
Mack, Chuck......................................................   127
Mayer, Anne......................................................   136
Rajkovacz, Joe...................................................   141
Spence, Hon. David...............................................   147
Steinke, Richard D...............................................   152
Turner, Robert W.................................................   161

                       SUBMISSIONS FOR THE RECORD

Ikhrata, Hasan, Executive Director, Southern California 
  Association of Governments, supplemental statement.............    89

                        ADDITIONS TO THE RECORD

Mendez, Michael, Chairman, I-5 Consortium Joint Powers Authority 
  (I-5 JPA), written testimony...................................   172
Transportation for America Coalition, written statement..........   185
The Waterfront Coalition, written statement......................   189

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 FIELD HEARING ON CONFRONTING FREIGHT CHALLENGES IN SOUTHERN CALIFORNIA

                              ----------                              


                       Friday, February 20, 2009

                   House of Representatives
     Committee on Transportation and Infrastructure
  Subcommittee on Highways and Transit and Subcommittee on 
              Railroads, Pipelines, and Hazardous Materials
                                                    Los Angeles, CA
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
the Third Floor Board Room at the Los Angeles Country 
Metropolitan Transportation Authority at One Gateway Plaza, 
Hon. Peter A. DeFazio [Chairman of the Subcommittee] presiding.
    Mr. DeFazio. Let us get settled down. We have a time limit 
on the room and we have quite a few witnesses to get through. 
We want to give them all an opportunity and we want to give the 
panel members time to ask good questions.
    This is a joint hearing between the Highways and Transit 
Subcommittee and Chairwoman Brown's Subcommittee on Railroads, 
Pipelines, and Hazardous Materials. I will keep my opening 
remarks very brief.
    We had an opportunity yesterday by both boat and air and 
surface to tour and get a look at a number of the challenges 
confronting freight movement in this area. It is an awesome 
challenge but I am impressed at what has been done and what is 
planned.
    I guess where I find substantial agreement with everyone 
here is that the federal government needs to play a more 
significant role and have more of a national plan for freight 
movement since it is so important to our nation in terms of our 
international competitiveness, just-in-time delivery, the 
result from more efficient movement of freight in addition to 
the potential fuel savings and environmental benefits. I look 
forward to hearing your ideas today. With that I would turn to 
Chairwoman Brown for her opening remarks.
    Ms. Brown. First of all, let me thank the Chairman for 
inviting the Subcommittee on Railroads, Pipelines, and 
Hazardous Materials to join you today for this important 
hearing. The American way of life relies on the U.S. 
transportation system to move goods and services effectively 
and efficiently, and with the new transportation 
reauthorization bill, we are going to be giving America's 
transportation system the facelift it desperately needs.
    Unfortunately, congestion has become a major problem across 
all modes of surface transportation, including our railways. 
The U.S. Department of Transportation predicts that the demand 
for freight rail transportation will increase 88 percent by 
2035.
    As the Chair of the Rail Subcommittee I clearly see freight 
and passenger rail as a solution to increasing gridlock on our 
nation's roads, as well as the environmental and economic 
problems that our nation is facing.
    If you watched last year's Super Bowl, you would have heard 
that freight railroads have made major gains in fuel efficiency 
through training and improved locomotive technology. A single 
intermodal train can take up to 240 trucks off our highway.
    Today, one gallon of diesel fuel can move a ton of freight 
an average of 414 miles, a 76 percent improvement since 1980.
    And last year, General Electric unveiled the world's first 
hybrid locomotive. So it is easy to see why rail will continue 
to play a major role in confronting the freight challenges 
being faced in Southern California and across the U.S.
    I am glad we have panelists that we have representing here 
today. I also want to thank Mrs. Napolitano and Ms. Richardson, 
both on my Committee. I am looking forward to hearing their 
testimony today and looking forward to move forward with our 
reauthorization bill coming up.
    Thank you, Mr. Chairman.
    Mr. DeFazio. Thank you, Chairwoman.
    Do either of the local Members have brief opening 
statements?
    Ms. Napolitano. I would like to start.
    Mr. DeFazio. Okay.
    Ms. Napolitano. I would like to thank both Subcommittee 
Chairs for coming and putting more of an emphasis on the issues 
of Southern California. I certainly want to thank the fire 
chief for providing us a copter tour yesterday which Corrine 
had already experienced a year ago.
    There are many issues and this complicated issue and 
hopefully with your being able to be understanding by being 
here talking to the people involved you can understand how the 
local governments are having a problem because the money is 
infused in the state or the county or other areas and they do 
not get their share sometimes to take on the responsibility of 
the impact they have because of the increase in traffic whether 
it is the rail or the highway. Thank you both and look forward 
to a great hearing.
    Ms. Richardson. Thank you, Mr. Chairman and Ms. Chairwoman.
    Let me first of all just say that government is at work and 
this is a good day. When we turn on the news we hear all the 
things of what is not working about government but what I hope 
people will feel who are here today is that this is what we 
should be doing and unfortunately we don't hear enough about.
    We are in the process of hearing testimony about one of the 
largest revenue generating opportunities we are going to have 
strictly for transportation which we have all been talking 
about for months now. I think you are going to be able to see 
what the stimulus package did not fully complete. You are going 
to see this authorization to be that second leg on that chair 
that is desperately crumbling underneath us when you consider 
really the aging infrastructure that we have across this 
nation.
    I want to almost say we could almost go home, Mr. Chairman, 
because in your opening comments when you said that you 
acknowledge the national significance that we have. We haven't 
always had that said so clearly and up front without us having 
to beg and plead and almost use two by fours. I think today is 
a good day.
    I look forward to the testimony and I look forward even 
further to working with our two Members of Congress here, our 
Chairman and Chairwoman and, of course, my colleague Ms. 
Napolitano as we ensure that what we talk about today will be 
evident in the results which will be the dollars that we need 
desperately. I think that rang true of what I saw yesterday and 
I think we are in store for better days. Thank you very much.
    Mr. DeFazio. I always like to encourage the use of two by 
fours since I have a number of manufacturers in my district so 
whatever we can to get the attention of the Department of 
Transportation and some of our colleagues on this issue.
    We are going to do this a little different than many 
hearings are done. You have all provided substantial testimony. 
I thank you for that. It will be part of the record. I have 
read it all. I would assume that other members of the panel 
have also and have questions. What I would like to encourage is 
that each of you summarize briefly.
    They did have a very ominous one-minute counter up here. We 
won't be quite that stringent but summarize in much less than 
five minutes your best points. And/or if someone who is either 
preceding you on the panel or someone who you anticipate being 
on the panel has an item with which you take issue or you 
disagree or you want to comment, feel free and we will also 
give you opportunities as we move along to do that.
    We will go in the order which was published and we would 
begin with Dr. Knatz, Executive Director, The Port of Los 
Angeles.
    Dr. Knatz.

 TESTIMONY OF GERALDINE KNATZ, EXECUTIVE DIRECTOR, PORT OF LOS 
 ANGELES; RICHARD D. STEINKE, EXECUTIVE DIRECTOR, PORT OF LONG 
 BEACH; HASAN IKHRATA, EXECUTIVE DIRECTOR, SOUTHERN CALIFORNIA 
     ASSOCIATION OF GOVERNMENTS; THE HONORABLE ANNE BAYER, 
   PRESIDENT, BOARD OF DIRECTORS, GATEWAY CITIES COUNCIL OF 
 GOVERNMENTS; THE HONORABLE DAVID SPENCE, PRESIDENT, BOARD OF 
  DIRECTORS, SAN GABRIEL VALLEY COUNCIL OF GOVERNMENTS; ANNE 
  MAYER, EXECUTIVE DIRECTOR, RIVERSIDE COUNTY TRANSPORTATION 
                          COMMISSION.

    Dr. Knatz. Thank you, Chairman DeFazio, Chairwoman Brown, 
and Members of the Subcommittee. We here at the local and 
regional level are all about solving the freight challenges in 
Southern California and we are starting to make some real 
progress on the infrastructure and environmental challenges 
that come with being America's No. 1 trade corridor.
    As problem solvers we established our own container fee to 
fund infrastructure and to help clean up trucks but we can't do 
it all alone. We need the federal government to be our partner 
with funding and policy changes. Congress needs to make goods 
movement the centerpiece of federal transportation policy and 
commit sufficient funds to implement while at the same time 
moving quicker to address environmental issues associated with 
goods movement.
    Our five year Clean Air Action Plan delivered a 20 percent 
reduction in particulate emissions in its first year. With our 
clean truck program we will achieve over 80 percent reduction 
in emissions from trucks in just a few short years. We even 
went and built an all-electric heavy-duty truck that is just 
about to start rolling off the assembly line but we need 
national leadership to accelerate emission reductions from 
federal sources.
    On behalf of the Port of Los Angeles and the American 
Association of Port Authorities, which I currently chair, we 
share the view that the economic stimulus legislation is the 
first step but the real solution is reauthorization. Surface 
transportation reauthorization must happen this year and it 
must create the national strategic vision.
    Someone has to keep their eye on the big picture. We can't 
continue to expect that a funding process where all the money 
goes to the state or the local MPOs will be enough to deliver 
multi-jurisdictional projects of national significance.
    We have a lot of catching up to do on infrastructure. I 
call the stimulus our father's infrastructure. We need to plan 
for our grandchildren as well. Why? Because we need to keep 
America competitive. Canada is aggressively marketing itself as 
the gateway to America's heartland.
    Canada's federal government is spending $7 million on a 
marketing campaign in Asia as we sit here. They want to be 
America's port but we, and a lot of people in this room, we are 
really America's gateway and if we want to help the economy 
recover and create jobs and stay competitive we need to invest 
in infrastructure.
    My written testimony has got a lot more detail. I look 
forward to answering your questions. More importantly, I look 
forward to working with you.
    Mr. DeFazio. Thank you.
    Mr. Steinke. Thank you, Mr. Chairman, Chairwoman Brown, 
Members of the Subcommittee. As referenced in the written 
testimony, there are a number of impacts to freight mobility in 
Southern California that include congestion, failing 
infrastructure, lack of sufficient rail facilities, in addition 
to the forecasted increase in cargo volumes expected to move 
through the port complex over the coming years.
    In order to improve the freight infrastructure system the 
goods movement system and to meet future mobility needs we 
recommend that Congress adopt the National Freight Policy to 
identify system-wide projects that will reduce congestion, 
improve safety, remove bottlenecks, mitigate emissions, as well 
as establish an investment fund to pay for these much-needed 
freight-related projects.
    As America's gateway for U.S. Asian trade significant 
investments must be made in the port's infrastructure. 
According to a trade impact study released in 2007 the San 
Pedro Ports complex remains a vital asset to Southern 
California and the rest of the nation providing millions of 
jobs and sales tax revenues to states throughout the country.
    But our freight system is in need of repair. We cannot 
continue to operate business as usual with a transportation and 
rail system that is outdated. If we do we risk loosing that 
business at other ports, as Ms. Knatz just mentioned, countries 
outside of the United States are working on and are making 
investments in their goods movement system allowing them the 
ability to move freight much faster.
    Along with 19 other port and transportation agencies in 
Southern California National Freight Collaboration a group 
assembled to advance projects that will improve mobility we are 
committed to finding solutions to meet our freight mobility 
needs but we need help.
    Specifically the upcoming transportation bill needs to 
focus a great deal of attention on developing a comprehensive 
list of national priority projects and make a greater 
commitment to provide a more significant amount of funding for 
freight mobility projects.
    The port's commitment to system-wide improvement projects 
like the Alameda Corridor and the Gerald Desmond Bridge, a 
project that will improve traffic safety, move goods 
efficiently and create jobs speaks to our dedication to finding 
solutions to our freight challenges.
    The port looks forward to working with Members of the 
Committee and other stakeholders to develop and implement a 
national freight policy that will meet emerging needs of 
seaports throughout the Nation. Thank you again for this 
opportunity and I look forward to discussing these issues and 
answering any questions you might have.
    Mr. DeFazio. Thank you, Mr. Steinke. I mispronounced it the 
first time. Please feel free to correct my pronunciation.
    Now we have an even more challenging name perhaps. I would 
next recognize Mr. Hasan Ikhrata. Is that close? Okay. 
Executive Director, Southern California Association of 
Governments.
    Mr. Ikhrata. Thank you, Chairman, Chairwoman, Members of 
the Subcommittee, good morning. Thanks for having me here to 
testify in front of you. Your leadership and interest in 
hearing key transportation agency staff is very much 
appreciated as you embark on the SAFETEA-LU re-authorization.
    SCAG is a federally designated Metropolitan Planning 
Organization for six counties, 188 cities and 19 million 
people. We very much hope for a continued federal 
transportation partnership because it is essential to the 
health, mobility and economic vitality of our region.There 
needs to be a defined federal role for goods movement 
infrastructure and establishment of a freight trust fund that I 
detailed in my presentation.
    I just want to repeat that we are the gateway for the 
country. Forty-three percent of our goods that come to the 
United States move through these ports. You see behind you on 
the chart the growth is tremendous both in containers. This is 
the DOT, Department of Transportation, estimates that the 
volumes at the ports will quadruple to 60 million from about 15 
million today.
    In addition, truck volume is going to be more than double 
on our freeways. One freeway that many of you have probably 
driven is the 710. It handles about 40,000 today and is going 
to go to 80,000 in the future. We know that trade creates jobs 
and we appreciate that and we like that. The jobs are in the 
hundreds of thousands and there is going to be more of it but 
with that comes challenges. 1,200 premature deaths are 
attributed to emissions from goods movement. 80 percent of 
Californians who are exposed to emissions from the ports live 
here in Southern California.
    Fifty percent of the total U.S. population exposed to 
particulate matter live here in Southern California. We would 
like to ask you as you embark on the reauthorization to look at 
the dedicated trust fund for goods movement. It is not there 
right there and that fund should have principles that are 
clear. We outlined the principles. There are nine of them in my 
presentations. I will ask you to make sure that the firewall is 
sustained and it comes with funding for infrastructure and 
mitigation for the infrastructure. We also outline that the 
sources for these funds could be great.
    I want to also remind you that in Southern California the 
issues and the challenges and goods movement does not stop at 
the port's gates. It is throughout Southern California. This is 
a region that has 1.5 billion square foot of warehousing all 
across the region. Trucks have to move to these warehouses.
    We look forward to working with you and be a resource to 
you as you embark on this important reauthorizations 
principles. Thank you very much again for having us and I will 
be happy to answer any questions.
    Mr. DeFazio. Excellent. Thank you very much.
    Next I would recognize the Honorable Anne Bayer, President 
of the Board of Directors, Gateway Cities Council of 
Governments.
    Ms. Bayer. Thank you and thank you for holding this hearing 
on this important topic. My name is Anne Bayer, President of 
the Gateway Cities Council of Governments representing 27 
cities of Southeast Los Angeles County in California.
    Gateway Cities has a population of 2.2 million people who 
live and work in the epicenter of the goods movement in this 
nation. The nation's largest port complex is located at the 
southern end of out subregion and all freight leaving these 
facilities travels through our communities by two things, by 
rail or highway.
    The freight challenges for our communities are probably the 
most significant of any other place in the country. 
Approximately 43 percent of the goods entered into this country 
go through these two ports. About 75 to 85 percent of those 
good leave Southern California bound for the remainder of the 
nation.
    Community issues and challenges from moving freight through 
our subregion can best be summarized as follows:Air Quality and 
Health Risks. The residents along the I-710 freeway have some 
of the highest asthma and cancer rates in the states. Highway 
safety, the I-710 has the highest truck related accident rates 
in the country. We have achieved progress with the I-5 Freeway 
Project which is the Gateway Cities colleagues' top priority.
    The Orange County segment is nearly complete and the 
Southern LA County portion from the I-605 to the county line is 
fully funded and will commence construction within the next two 
years. We are actively seeking funds to complete the 
environmental work for the I-5 from the I-605 to the I-710.
    Our communities and our regional partners have taken a 
leadership role in examining new ways to address goods movement 
challenges including looking at advance technologies with zero 
emissions, intelligent transportation systems, and alternative 
regional freight corridors. We cannot meet these national 
challenges alone. We need your help, we need your support and, 
most of all, we need your funding. Thank you so much.
    Mr. DeFazio. Thank you. Right to the point.
    We turn now to the Honorable David Spence, President, Board 
of Directors, the San Gabriel Valley Council of Governments.
    Mr. Spence. Thank you, Chairman DeFazio and Chairwoman 
Brown for having us here and the rest of the Members of the 
Committee.
    I am a local government guy. I am the Mayor of La Canada 
Flintridge four times, on the City Council, President of the 
San Gabriel Valley Council of Governments as you said, which is 
the parent agency of the Alameda Corridor-East Construction 
Authority.
    The interstate highway 710 and the Alameda Corridor Rail 
Expressway together carry almost all container traffic from the 
San Pedro Bay ports which remain the busiest container ports in 
the nation despite the global trade slowdown. Both the 710 
freeway and the Alameda Corridor end immediately west of the 
San Gabriel Valley which is at ground zero for freight traffic 
as it continues eastward on the transcontinental rail and 
highway system to the rest of the nation.
    Created more than a decade ago to strengthen safety and 
alleviate congestion at the 54 at-grade rail crossings in the 
valley the ACE project is well on the way toward completing the 
first half of its program of 20 great separations securing 
commitments of nearly $1.5 billion in federal, state, local and 
railroad funds. Far from your conventional highway project 
share of 80 percent federal funding, the federal funding share 
of the Alameda Corridor-East projects stands at just under 15 
percent.
    ACE's progress has been remarkable. Safety improvements are 
complete at 39 grade crossing. Five grade separation projects 
are open to traffic. Three grade separation projects are under 
construction and two separation projects will start 
construction this year and a trench grade separation project 
will start in 2011 in San Gabriel.
    Another six ACE grade separation projects remain unfunded. 
ACE is pursuing federal economic stimulus funding for three 
grade separation projects which together would create 11,220 
jobs one of which the $498 million San Gabriel trench project 
is already approximately 70 percent funded from nonfederal 
sources.
    The other two projects are the $68.1 million Baldwin Avenue 
grade separation project in El Monte which will create 783 
jobs. The $81.8 million Nogales Street grade separation project 
in the city of industry which is estimated to create 1,473 
jobs.
    In addition to supporting the efforts to establish state or 
port cargo container user fees ACE will seek funding from $1.5 
billion federal grant programs for nationally and regionally 
significant surface transportation projects that was 
established in the economic recovery bill approved by Congress 
and signed by the President this week.
    As Congress drafts transportation program authorization 
legislation this year, we urge the establishment of a freight 
trust fund similar to the highway trust fund but specifically 
for freight projects which have difficulty competing with 
traditional highway projects for funding.
    Again, I say thank you very much for hearing us. It is nice 
to see Congresswoman Napolitano who taught me how to be a 
council member about 16 years ago.
    Mr. DeFazio. We will have to hear that story.
    We will next go to Ms. Anne Mayer, Executive Director, 
Riverside County Transportation Commission.
    Ms. Mayer. Thank you and good morning Chairpersons and 
Members of the Committee. We do so much appreciate you not only 
visiting Southern California for also allowing Riverside County 
and the Inland Empire to be represented today on your agenda.
    Riverside County is the fourth largest in population in 
California. Although we are currently the epicenter of national 
foreclosure and a real estate crisis census projections have 
Riverside County as second only to Los Angeles County in 
population by 2050.
    Concurrently the ports of LA and Long Beach will grow 
exponentially and this is significant because both the UP and 
BNSF railroads cross through our county in our most populated 
areas impacting our cities by cutting traffic circulation and 
emitting tons of pollutants while cars idle behind trains. This 
mixture of rapid urbanization and equally rapid international 
trade growth presents a mixed blessing to Southern California.
    While we benefit from and absolutely need the employment 
created by goods movement, our communities and local commerce 
suffers. Solutions to the problems must be regional and 
national. In the next authorization bill Congress must address 
goods movement as a national infrastructure network that 
includes communities beyond the ports.
    We can't talk about rail issues in Southern California 
without also talking about the co-existence of commuter rail 
traffic and freight traffic. Those two systems share the same 
infrastructure and it is absolutely essential that we address 
them collectively.
    RCTC is one of the five Member agencies of the Southern 
California Regional Rail Authority also known as Metrolink. We 
are committed as an agency to ensuring safety along our 
commuter rail lines as well as working with our rail partners 
to make sure that we both have the capacity that we need to be 
successful.
    Thank you again. I look forward to our dialogue.
    Mr. DeFazio. Thank you. Thanks for that good summary of 
your testimony.
    We will now turn to questions from members of the panel, or 
direct to members of the panel from us. There seems to be 
substantial consensus we need more money and a number of ways 
of perhaps raising that money. We have got to deal in some 
fairly concrete terms here so to speak, not to make a bad pun 
about infrastructure. Specific suggestions and how would such 
suggestions potentially interact with the fees that the two 
ports have already levied?
    Dr. Knatz.
    Dr. Knatz. Mr. Chairman, there has been a number of 
suggestions that the port committee has put forward, including 
dedicating some of the Customs receipts, gas tax, and container 
fees have been discussed. I think from the port's perspective 
having experience with the ad valorem tax on the value of cargo 
that goes to fund the Army Corps of Engineers and the fact that 
we pay a lot and don't get a lot back.
    What really is important to us is that the money comes back 
to the region and so we have established a local container fee 
and we are working with the regional transportation agencies to 
look at what needs to be done in the region. If a national 
container fee is added to that, that again could affect our 
competitive situation. I understand container fees will be 
looked at. I think we just have to recognize that some areas 
may have already done that and put things in place.
    Mr. DeFazio. Just to expand that, you have the local fee. 
For instance, in the BNSF testimony they talked about their 
saying that there could be user fees today or in the near 
future of up to $120 per TEU. If there was a national fee 
added, I mean, you have already got theoretically a competitive 
disadvantage because of some of these fees.
    Dr. Knatz. Right. Right. That is what Canada is using 
against us right now.
    Mr. DeFazio. Right. So you would think we might just reach 
some tipping point with the addition of a national fee on top 
of your fees.
    Dr. Knatz. I think with what we have done here, yes, we 
would reach that tipping point. I think the thing that gives us 
the ability to fund things that are outside our jurisdiction. 
We have to create the nexus. If we look at a grade separation 
on the Alameda Corridor-East, a certain volume may be 
associated with port traffic but there is other volume that 
also uses that Corridor as well.
    While we may be able to make a contribution under a 
regional fee structure for Alameda Corridor-East we can't pay 
the whole bill because it is not all port related traffic that 
would use those grade separations or what have you. They are 
still going to be needing other sources of funds for those 
projects.
    Mr. DeFazio. Just one last one and then I will let others. 
Any fee we are going to add, I mean, we can't impose fees in 
Canada.
    Dr. Knatz. Right.
    Mr. DeFazio. If we are looking at Canada as a competition, 
you still have your local fees per container. If we went to a 
higher Customs fee, I mean, while I suppose that ultimately the 
goods coming into Canada would have to come into the U.S. so 
perhaps the Customs fee could ameliorate some of that problem. 
They wouldn't pay it at the port but they would pay it when 
they entered on the rail.
    Dr. Knatz. Right. I think what the port community has 
suggested is Customs receipts, a portion of that being 
dedicated for the freight infrastructure.
    Mr. DeFazio. Any other members have ideas?
    Mr. Steinke. Mr. Chairman, Members of the Committee, I 
would only add to Ms. Knatz' comments that there are other fees 
that the federal government are charging. She made reference to 
the harbor maintenance trust fund. Right now there is a $4 
billion surplus in that fund and it is a good example of donor 
ports contributing to the fund and not getting those resources 
back.
    I would further suggest that there might be a way to look 
at freight fees like airport improvement fees that we all pay 
passenger taxes on when we are going through an airport and 
those are basically invisible to the consumer that is buying 
the airfare.
    Those airport improvement funds go right back into 
improving runways and airport garages and those types of things 
so that methodology has been in place for several years 
allowing airports to make much needed improvements to capacity. 
That might be a theory that is looked at in terms of either ad 
valorem tax or some kind of fee that would be added to either 
Customs revenues or harbor maintenance tax to supplement the 
ability for local ports to make the needed infrastructure 
improvements that we need to do.
    Mr. DeFazio. The harbor maintenance tax is probably a sore 
point with each of the four members here. Unfortunately, there 
is no $4 billion surplus. There are $4 billion worth of IOUs in 
the harbor maintenance trust fund. I would like to see that 
converted into something more akin to the highway trust fund so 
that Congress isn't constantly dipping into it and borrowing 
the money and spending it on something else and then 
underspending to make the deposit reduction with a dedicated 
tax that isn't dedicated so I agree with you there. I won't get 
into the airport fees. I actually served on the Committee and 
helped originate that program. It doesn't work exactly that way 
and it goes to slightly different things but there is some 
point there.
    Yes.
    Mr. Ikhrata. Chairman, I just want to say that the County 
Transportation Commission in Southern California with SCAG, 
Caltrans, and SANDAG commissioned to study a couple of years 
ago the Multi-County Goods Movement Study that identified $50 
billion worth of needs. This is needs to both put the right 
infrastructure to accommodate the growth and mitigate the 
community impacts and their quality impacts.
    Now, the ports are doing a great job in getting some of 
that money. The state passed a 1B bond, $2 billion and $1 
billion for the quality. The stimulus package gets some money. 
That is important but that is a small step to addressing the 
real need.
    Any other question about what sources there could be many 
sources, small reactor fees, container fees. It could be a 
combination of those but the need is so great. When we talk 
about the tipping point the SCAG Commission studied with UC 
Berkeley a couple of years ago and talked about what is the 
tipping point in fees. I don't think we are there yet.
    I will take an issue about we are getting there because if 
you want to continue the growth and if you want to gain the 
benefit you need to mitigate the impacts. The tipping point is 
-- frankly, the tipping point should be when we completely 
mitigate the impact and build the right infrastructure to bear 
the benefits of this job growth that we are talking about.
    Mr. DeFazio. So is there a conflict between basically the 
idea that we want to fully mitigate the impacts, or much more 
substantially mitigate the impacts? Would you be raising -- you 
would raise fees to a point at which there may be some 
increment of traffic that would intentionally be shifted. You 
wouldn't be looking at infinite growth.
    Mr. Ikhrata. Let me just point out that when we talk about 
traffic shifting these are the two ports, one of four in the 
world that has deporters. We have $1.5 billion square foot of 
warehousing. We have $19 million people that needs goods to be 
shipped regardless of what port. The theory of shifting, yes, 
if you charge a lot more than we are charging now maybe there 
will be some shift but the growth is so tremendous that I don't 
believe the shift is a discussion at this point because we are 
not at the tipping point.
    Mr. DeFazio. Okay. Anybody else want to comment on that.
    Dr. Knatz. I would like to.
    Mr. DeFazio. We will come back to you very briefly. I am 
running out of time.
    Ms. Bayer. I would just like to say that six of us came 
here today with just different problems that will impact us 
nationally. We are willing to work on our levels, the rail, the 
ports, the cities. We need your help to do our projects because 
our projects will make it easier to get goods and services to 
the nation.
    If we have a bottleneck here, that is where we need to use 
most of the money to make that flow so that we can get it out 
of the port, we can get it out of LA, we can get it to the rest 
of the nation. We are only getting 20 percent of the needs 
filled here. If there were no growth tomorrow and we still had 
to maintain what we have, we would still have a problem here. 
It is a problem that all of us here at this table are going to 
have to face together with your help.
    Mr. DeFazio. Okay. Dr. Knatz.
    Dr. Knatz. I just wanted to make it clear that I think 
moving forward the competition among ports is going to be much 
greater. We can't assume in the future that everything is going 
to come here. I kind of remember the SCAG study and it 
identified a $200 swing here per TEU.
    When you add the $100 for the Pier Pass Fee, which pays for 
the extra labor at night, the $70 FEUs for the clean truck 
program that we have got, and then right now we have the local 
infrastructure fee that could go up to $30. We are at the $200 
breaking point already that was identified that would cause 
diversion.
    Mr. DeFazio. Right. All the assumptions, the chart we had 
up earlier seems to assume that the canal is going to have 
little or no impact.
    Dr. Knatz. The numbers in the chart are not exactly 
correct. I think the 2020 value is 36 million TEUs on that 
chart up to a high of 42. They had a number for us of 59 
million TEUs. I think it may be the West Coast number or 
something that was put there for Los Angeles and Long Beach.
    The Panama Canal, you know, it will open in 2014. Right now 
all the ports on the East Coast don't have the channels to 
handle the big ships so there are a lot of infrastructure needs 
on the East Coast as well. Overall moving forward the port 
environment is going to be more competitive. We have to be more 
strategic about the things we do. We can't assume if we build 
it they will come.
    Mr. DeFazio. Okay.
    Mr. Steinke. I would just add one more point and then I 
will get off the subject. We are starting to see diversion 
right now and it is very price sensitive. I think a lot of it 
is based on what the economy is. Shippers are requiring 
carriers to move cargo based on cents on a dollars. That is how 
sensitive that is right now. There is some elasticity or, at 
least, there was but I think we are getting closer to that 
tipping point now than we have ever been before.
    Mr. DeFazio. Okay.
    Dr. Knatz. We are lowering our fees.
    Mr. DeFazio. Last quick one.
    Mr. Ikhrata. I just want to say that let us say today we 
have 15 million annual containers or 14, whatever the number 
is. When we talk about the growth in the future, when we are 
talking about 40 million or 60 million, that is a huge growth. 
We are having problem with the 14 and 15 million we are 
handling today so whatever growth is going to come is going to 
have to be dealt with so if the growth is 42 million like the 
capacity for Casa Del Port or the deal here it is going to be 
tremendous growth either way.
    Mr. DeFazio. Thank you.
    Ms. Brown.
    Ms. Brown. Mr. Ikhrata, your map, can you put it back up? I 
was just wondering why my area wasn't included. We have the big 
port there in Jacksonville.
    Mr. DeFazio. I have a port that didn't show up in Portland.
    Ms. Brown. In the future just keep that in mind.
    Mr. DeFazio. Know your audience.
    Ms. Brown. It is not there and I was just confused about 
that. The question we were talking about was funding, 
particularly The Honorable Mr. Spence. You mentioned the lack 
of funding that you received from the Federal Government for 
your particular project. Short of a freight trust fund what are 
some of the recommendations that you have because when this 
issue is raised, I found that the railroads are not interested 
in a trust fund but, you know, we really need a dedicated 
source of revenue for the freight port type of projects.
    Mr. Spence. I did not come with any specific 
recommendations for establishing funds. We were hoping that you 
were looking at breaking up some of the federal money to be 
included in a freight trust fund along with the highway trust 
fund. I wasn't coming with a recommendation for how these 
specific funds are created.
    Ms. Brown. The trust fund primarily come from gasoline tax.
    Mr. Spence. Correct.
    Ms. Brown. Which, you know, when you go to Europe or other 
places they laugh at us because they don't fund their 
transportation that way. We have got to come out of the box and 
come up with additional ways that we can partner and help 
enhance our revenue. This is the challenge.
    Mr. Spence. It is a challenge. We certainly don't want to 
increase taxes to reduce employment or harm the quality of life 
of the hardworking residents in the South Bay area and the ones 
that are working at the port. We are concerned about, as 
mentioned, particulate matter, especially with all the trucks 
going to the San Gabriel Valley which is a little more than 2 
million people. That is not a great answer to your question. We 
are just looking to have you guys come up with a way to give us 
funds that come from a specific focus for freight movement 
rather than just all transportation.
    Ms. Brown. Yes, but the bottom line is when we talk about 
the funds it is all of the same funds.
    Mr. Spence. Correct.
    Ms. Brown. The federal government funds, the local and 
state. It is still pretty much the same pot.
    Mr. Spence. Correct.
    Ms. Brown. Ms. Mayer.
    Ms. Mayer. Thank you. I think we have the same challenge 
whether it is at the local, state, or national level in that 
everyone needs more money. We all need more. We can't print it. 
We have to find a way to achieve our goals and at the same time 
recognizing we can't keep growing the pot.
    That is why one of the things that we have been focusing on 
we were really quite excited by some of the findings from the 
1909 commission that talked about doing things different than 
the way we have done in the past but there is an opportunity 
now with authorization to look at the existing programs and if 
there are some that don't make sense, then maybe they should be 
revised, abolished, new ones put in place.
    I think there is some real opportunity in the existing 
processes to make sure that we are streamlining processes, 
spending money on projects, not process. Possibly that is 
another way to look at it because we can't just keep adding 
container fees. We can't go back to the voters and say just 
increase sales taxes again. We can't go to the developers and 
say we are going to increase your fees on every rooftop. We are 
running out of ways to create money. We would recommend that 
there is a focus in authorization on looking at ways of doing 
things differently.
    Ms. Brown. I agree. I was talking to one of the Transit 
Authority persons last night and they indicated that part of it 
how long it takes to do the permitting and maybe we could have 
some kind of a one stop everybody in the room so that it 
doesn't take years to get a project authorized and funded. That 
is part of the problem.
    Ms. Mayer. Absolutely.
    Mr. Spence. My colleague makes a great point and I would 
like to offer that our COG has an extremely talented group of 
young students from the University of Southern California who 
have focused on freight movement. We would be very happy to put 
these young minds to work with your help to study the issue of 
how we can become more efficient rather than say this program 
is here so we have to keep it.
    Maybe it is not working well. I would offer that as a 
possible grant that you could fund and I believe we would come 
up with some very positive answers that would be very effective 
for the whole region, not only her COG and my COG and all the 
others in the Southern California area. It might help national 
information.
    Ms. Brown. Last comment.
    Mr. Ikhrata. Congresswoman, if I may, what we would like 
you to consider is that we don't create a dedicated freight 
trust fund. That means the freight investment is going to 
compete with the highway investments and the highway investment 
doesn't have enough money to cover the highway needs. Right now 
we have no indicated freight investment at the freight level.
    When we talk about a separate freight trust fund, there are 
many sources to look at and we would love to work with you. In 
my testimony there are detailed ideas of how to go about it. It 
is very critical that we don't say let's fund the freight 
infrastructure need from the highway trust fund because that 
takes away from other things that the region very badly needs.
    Ms. Brown. Thank you. Mr. Chairman.
    Mr. DeFazio. Ms. Napolitano.
    Ms. Napolitano. Thank you, Mr. Chairman. I am glad that 
some of these issues are coming forth. There are many 
challenges but any solution has to include the impact on cities 
not directly affected but indirectly affected. I specifically 
am talking about the Alameda Corridor-East.
    Dr. Knatz, you mentioned the Army Corps of Engineers 
funding. What amount is that in and what is it for?
    Dr. Knatz. Well, what I was referring to was the ad valorem 
tax on the value of cargo.
    Ms. Napolitano. And the amount?
    Dr. Knatz. Yes. That then goes into a pot of money to fund 
----
    Ms. Napolitano. Amount.
    Dr. Knatz. Of the amount? I don't remember the exact 
amount. It is some piece of a penny on the value of cargo. 
Because it is on value Los Angeles and Long Beach pay the 
greatest into that fund and then it is doled out to do ----
    Ms. Napolitano. Pardon me because I run out of time real 
quickly. That brought something else to mind. Many of your 
containers are not checked for the content so they pay a 
certain tariff that may not be commensurate to what it is 
worth. What are you doing about being able to then understand 
that you can do spot checking of some of those containers and 
go back to those chippers and check them until they do what 
they are supposed to be doing and pay the correct amount of 
tariff?
    Dr. Knatz. That is really a better question to the Customs 
Service but, as far as I know, what it is in the container is 
known by Customs so that they can charge the appropriate duty 
on it.
    Ms. Napolitano. They do not know what is in it. Congressman 
Dwyer one time told me that if every container were checked 
every U.S. individual would have seven lawnchairs. Really. That 
is his statement to me. I think maybe we need to have the ports 
a little more involved in what you are shipping so that then 
you can have possibly more funding to be able to put into the 
programs that we are talking about.
    Mr. Ikhrata, your health report I am very interested in. I 
would love to have a copy and maybe the panel would like to 
have a copy of the Berkeley report because I think that may 
begin to shed a little light on the questions that we are 
talking with you about. Certainly maybe we can propose some 
funding to do the USC report so that we then have a better look 
at it.
    Ms. Bayer, you talk about the bottleneck and the great 
separation, Ms. Bayer. The bottleneck is in my area because no 
matter what you do at the port, you may facilitate, you may 
expedite, you run over there and you have 54 great crossings of 
which only two are finished and those trains are going to slow 
down so that while you made one on-time delivery and promise 
on-time maybe Prince Rupert, and maybe that is another idea 
that Transportation can look at, is being able to see what 
makes those shippers come to this area versus going to another 
area and then work on being able to provide them with whatever 
it is that they need.
    Mr. Spence, I don't know where I got involved in your 
career but thank you for your comment. The gas tax. Now, we are 
all talking about relying on funding that is coming from the 
gas tax on all vehicles. With hybrids going to be more and more 
utilized you are going to have less tax to rely on so what are 
we looking at to be able to supplement that because that is 
going to be another impact within the next 10 years. That is a 
certainty. Anybody.
    Mr. Ikhrata. I would say it will be a great discussion to 
have to actually look at different forms of taxes like the VMT, 
vehicle mile travel tax, which doesn't matter what fuel you are 
using, you are paying a tax.
    Ms. Napolitano. Corrine. Yeah.
    Mr. Ikhrata. Here is the issue with the tax. Whatever form 
of tax you are going to have to make sure that you build into 
the system a way to maintain those funds into the future.
    Ms. Napolitano. But you hit the most vulnerable when you do 
a per vehicle fee, per mile fee simply because a lot of people 
who may not be able to get a job are going to have to travel 
50, 60 miles and you are penalizing the ones that can worst 
afford it.
    Mr. Ikhrata. I am not saying necessarily it has to be a 
vehicle mile travel tax. It has to be somehow indexed so it 
maintains the growth.
    Ms. Napolitano. So maybe something in consideration in 
looking at the whole picture rather than just certain segments 
of it.
    I could go on, Mr. Chair, because, as you well know, I am 
always having a lot of questions. To Mr. Spence and Ms. Bayer, 
do you feel you have your fair share of federal economic 
recovery funds once they trickle from the state and MTA?
    Ms. Bayer. We can hold onto them and they are not delegated 
out away from us.
    Ms. Napolitano. Delegated how?
    Mr. Spence. Go ahead.
    Ms. Bayer. People that above us take what they want for 
their section and we are left with the rest where we should be 
getting most of the proceeds we are paying most of the 
proceeds. It should be coming back to our specific area and it 
is not.
    Mr. Spence. That is a great question. I believe that in 
this region the local governments are going to be penalized 
because everything goes through the MTA board, the MTA 
operation. We have to convince them that our shovel-ready 
projects are the ones that they should fund. It is very 
difficult. We submitted a list. All of the cities in my COG 
submitted lists and all of them have to go through the MTA to 
get approved. We are not sure that is the right way to go.
    Ms. Mayer. There has been a lot of discussion in California 
about how to distribute the funds and the California 
Transportation Commission met yesterday to talk about that. We 
are trying to get to a point where there is consensus as best 
we can get it to funnel most of the money that is coming to 
California to have 30 percent of it go to the state to decide 
what to do with it and then have the rest flow to the regions. 
As was mentioned, it will be coming to the regional 
transportation planning agencies such as RCTC and LA Metro.
    I think the biggest challenge for all of us in a 
distribution is that it is not going to be near enough money. 
We talk about the list. The Riverside County list is a half a 
billion dollars worth of projects that can be delivered in the 
next year and a half. We are going to see maybe 35 to 70 
million depending on how the formulas come down and it is 
simply not enough.
    We are going to be challenged to just focus the money on a 
couple of key projects by the deadline to make sure that we 
spend our money. I think the challenge is going to be 
expectations are very high that everyone is going to get their 
piece of the pie and it won't be there.
    Ms. Napolitano. Thank you.
    Thank you, Mr. Chair.
    Ms. Brown. I just want to say to the gentlelady that if you 
yield for a second, the Homeland Security passed the bill 
saying that all of the containers had to be checked as they 
come into port. I guess I want to ask the port director what is 
the status of the program?
    Dr. Knatz. Yes. That legislation requires that by 2012 all 
of the containers coming into the U.S. are scanned. That is a 
big deal to finish by 2012. I know from the perspective of the 
Port of Los Angeles we have been working with the four major 
terminal operating companies in the world which control about 
80 percent of the containers to look at something that we can 
develop, you know, working with them to actually get a good 
chunk of it done.
    Mr. DeFazio. I just want to follow up for a second on the 
point about Riverside. You said how much you could do in an 18-
month timeline, or get started?
    Ms. Mayer. Almost half a billion dollars worth of projects. 
That was the wish list.
    Mr. DeFazio. But it was not just a wish list. I mean, these 
are things that have been through environmental review?
    Ms. Mayer. Yes. Absolutely.
    Mr. DeFazio. And that was half a billion dollars.
    Ms. Mayer. Yes.
    Mr. DeFazio. And you expect your allocation to be $30 to 
$40 million.
    Ms. Mayer. Yes.
    Mr. DeFazio. All right. Just one of my major criticisms of 
the so-called stimulus. Thank you for reinforcing my 
prejudices.
    Ms. Richardson.
    Ms. Richardson. Thank you, Mr. Chairman. It is so hard 
being a sophomore and being last. My first comment is going to 
be to my colleagues and then I'm going to end with the question 
to two folks that I have worked with now for over 10 years.
    I have worked on the issue of container fees for now 10 
years. Since I was on the city council we looked at the 
possibility of doing it. When we asked the question our city 
attorney opined that it was unconstitutional because it was a 
discussion of interstate commerce versus intrastate commerce. 
That was the council doing it, not the ports.
    Then, you know, I went onto the state assembly and Senator 
Lowenthal brought up his legislation which is in our packets 
here. Then when I went to Congress it was the first thing that 
I said I was going to work on and it was going to be my number 
one piece of legislation.
    Well, I was a good team member last night and didn't get a 
chance to give my Chairman the briefing that I had intended but 
myself and my staff have worked over a year and a half on this 
very issue. Some of the things I would like to share with you 
is regarding the whole issue of where the fee should come from.
    I am encouraged that what I have heard everyone here say is 
that we need, number one, a national freight program and, 
number two, we need a dedicated source of funds to be able to 
pay for these projects. I completely agree that taking the 
money from the highway trust fund is not the answer because we 
don't have enough money there to provide the needs for our 
streets and the other implications that we have.
    The tremendous amount of work that we have done with 
Committee staff, with transportation staff in Washington, we 
have found to be the following. Number one, it is, in fact, 
potentially unconstitutional to provide to assess a container 
fee for two reasons. One, we can't do it on exports. It is 
unconstitutional.
    Number two, when you are assessing a fee or a tax for 
something that currently does not exist, i.e., a road or a 
highway, you run into some very questionable issues which is 
why we in California have had the issues that we have had as we 
have attempted to apply these fees. The work that we have done 
with the T&I staff has been to consider looking at it through 
Customs.
    You already have a system in place in terms of how the fees 
are collected, how the fees are assessed. I won't use this 
hearing to be able to go through the entire bill. But what I 
will say is that what we have found that the business community 
has said there is no objection that there needs to be a greater 
role within the importers business community of solving our 
infrastructure problem.
    There is no disagreement with that. The issue is, as my two 
colleagues here from the port said, number one, any solution we 
bring forward the money has to stay in the region where the 
money was generated. It can't be stolen, borrowed, transferred, 
held, whatever, which we have seen with the HMT. We also have 
to apply it nationally.
    Otherwise, we run the risk of insuring that some ports are 
not competitive and if we don't look at a solution of inland 
and also ports, then we are going to have cargo diffusion. I 
actually have a great piece of legislation that I am looking 
forward to bringing forward to the Chairman and to my 
colleagues that will address this.
    One thing I would like to point out about the HMT. In 1986 
the Water Resources Development Act it was only .04 percent. In 
1990 it was raised to .125 percent. There was a 350 increase. 
We really haven't done anything significantly since then. I 
think that is a key area that absolutely this Committee and our 
joint Committees are going to have to consider because, as has 
already been said, the gas tax is going down and other things. 
We have to look at other potential revenue sources to solve 
this problem.
    In light of that my question that I am going to end now 
with my former colleagues here is would you be supportive of 
federal legislation, a national freight program, a freight 
trust fund program if you were unsure that the money was 
dedicated to your region?
    What I proposed is 90 percent within a 40-mile radius and 
only 10 percent extending to 150-mile radius. If it was 
committed it would not be stolen, transferred, or loaned if it 
was applied and if it was applied to inland ports as well. 
Would that be something you would be supportive of?
    Ms. Mayer. I think we would look very seriously at 
something like that. I think that what we don't want to do is 
sort of charge our customers twice for the same thing so even 
when Senator Lowenthal was proposing his legislation, if it had 
gotten through we would have had to back down on some of our 
fees so that they don't pay twice for the same thing. The key 
point, and you made it, it has got to deliver the 
infrastructure.
    When we work with industry from a bottoms-up approach they 
agreed they want that bridge and that bridge and this street 
and it cost this much and we need this much money so they are 
going to pay three dollars for this and two dollars for that. 
We built up to actually generate the amount of the fee and they 
bought into it and they supported it. We didn't get any 
lawsuits or anything over it.
    Ms. Richardson. Mr. Steinke.
    Mr. Steinke. Congresswoman Richardson, I would agree with 
everything Geraldine said and add the fact that it needs to be 
equitable. I think you hit the nail on the head. To the extent 
that it is applied nationwide to all ports that doesn't place 
San Pedro Bay ports at a competitive disadvantage, that it 
affords the ability for other ports to make infrastructure 
improvements and deal with intermodal connectors and the things 
that we have all been talking about I think is a very, very 
good idea. I think it has been something, as Geraldine said, we 
have worked with the shippers. If they can see the direct nexus 
to what they are paying for, I think they understand that is 
money well spent.
    When they see things like the harbor maintenance trust fund 
and they recognize that it is supposed to be for harbor 
maintenance dredging and harbor maintenance dredging isn't 
taking place in America and these sea ports that are collecting 
the revenues that go into the trust fund are going to pay for 
what we would call donee boards, to a certain extent that is 
great but they don't have much trust in trust funds at this 
point. I think it is a key that needs to be looked at in the 
establishment of any bill.
    Ms. Richardson. The other point that I would say, Mr. 
Chairman, is that I think part of why you have seen locations 
like California, like Washington, like New York having these 
discussions and applying these fees is because we from a 
national perspective have not provided that direction.
    When you consider the incredible load that we are supplying 
out of the San Pedro complex, 36 percent is either in our own 
report here for this Committee, 36 percent is either consumed 
in the Southern California region, or leaves by truck to nearby 
locations. Clearly there is the role of interstate commerce 
versus intrastate. I just want to applaud you. My point is I am 
excited that we are finally getting to the point that people 
are saying, ``Yes, we have to take this leadership role.''
    With that I just have one more question that I would like 
to ask. I think I am well within my ----
    Mr. DeFazio. That is fine.
    Ms. Richardson. Thank you, Mr. Chairman. Just one thing I 
wanted to ask of my two port colleagues here. I think it is 
good news that everyone in this Committee needs to hear. We are 
hearing a lot about the truck emissions but a large part of the 
health issues is not just truck emissions, it is the ship 
emissions. I know you have done a lot of work with cold 
ironing. We saw of that yesterday.
    I know I have seen some demonstrations of hoods coming over 
the ships themselves. Could you just give us a very brief 
background of where technology is with that and what we could 
do. You asked us not only for funding but you asked us for 
policy so what can we do as policy makers to enact these sorts 
of technologies across the board to improve our environment?
    Mr. Steinke. I will mention a couple of them and Geraldine 
will pick up where I left off. You mentioned some of the new 
technologies that we are looking at, ship to shore power which 
both ports are doing. A couple of very exciting programs that 
both ports are doing is vessel speed reduction program where 
vessels slow down their speeds. We provide an incentive for 
these vessels and reduced charges if they sustain that for a 
period of years. It has been very successful. About 90 percent 
of the vessels are slowing down to 12 knots when they get to 20 
nautical miles to the two ports.
    The other things that the two ports did was a low-sulfur 
fuel incentive program where we would pay the difference 
between the regular bunker price and the low-sulfur price. 
Those have tremendous air quality benefits for the region. They 
have been very well received by the ocean-going carriers. Cold 
ironing, sock on a stack technology that Congresswoman 
Richardson was talking about, they all have a dramatic impact 
on air quality. That is on the ocean-going vessel side.
    I will turn it over to Geraldine.
    Dr. Knatz. We have completely turned over the locomotives 
for our shortline railroad that serves both ports. We have the 
cleanest shortline railroad in the world. One of the big things 
about our Clean Air Action Plan is the technology advancement 
program. We are funding new technologies and that is how we 
actually built this all electric truck with enough torque to 
hold a fully loaded container.
    It has a niche moving back and forth to the nearby 
warehouses. We are really looking at moving toward some of 
these emission free strategies because we are focusing on 
health risks now but then we'll have greenhouse gases and other 
things we need to deal with in the future.
    We need help on some of the mainline locomotives in terms 
of what the federal plan is and how we need to be a little bit 
more aggressive in our region. Also, ship emissions require 
support for control action at the international level, by the 
IMO.
    Ms. Richardson. Thank you, Mr. Chairman.
    Ms. Brown. Just one quick comment. As we think through 
this, keep in mind that the ports compete against each other. I 
noted earlier that my port didn't even make your map but 
Savannah and Brunswick, Georgia only have two ports. Florida 
have 14 so the question is are we competing and that is healthy 
but then how do we fund the infrastructure that is needed that 
we can still keep the competition in place.
    As we think through this we have to think through it. Even 
the West Coast is competing with the East Coast and we are 
trying to get our ports down to the depth so that they won't 
come here. Of course, you know, the competition is very healthy 
but as we try to come up with a system to fund the 
infrastructure how do we do that?
    Dr. Knatz. I think it is really looking at the map and 
seeing where freight flows are going. You need to make the best 
investment in Los Angeles and Long Beach area. Yeah, you have 
got to look to the future and say, hey, you know, the South 
Atlantic area is going to be what Los Angeles and Long Beach is 
today and they have got to be prepared.
    Mr. DeFazio. I thank the gentlelady. The staff has just 
pointed out that perhaps the reason you were omitted, and I was 
omitted and some others, was that was a Bush DOT map.
    Mr. Spence. Mr. Chairman, I just had one brief comment. One 
of the major advantages of the underground crossings in the 
Alameda Corridor-East construction authority is reducing the 
amount of automobiles and trucks that are sitting at the grade 
crossings idling for 15, 18 minutes while a train goes by. 
Congresswoman Napolitano knows that amount of particulate 
matter is harming the schools and the local communities and 
that is why it is so important to have these underpasses put 
in.
    Congresswoman Richardson, you stated about your bill. I 
think it is a very positive bill. I would hope that the funding 
would be allocated based on the percentage of the freight that 
comes through the ports so that is something you might want to 
consider.
    I promise you, Congresswoman Brown, that we will take Hasan 
back and spank him at SCAG's headquarters for not putting your 
port in.
    Mr. DeFazio. Ms. Napolitano had a quick follow-on question.
    Ms. Napolitano. Very quick. This is to Mr. Ikhrata. 
California stands to get a good chunk of the stimulus package 
and gives it to LAMATA working with SCAG but how will SCAG and 
MTA prioritize the projects and decide what projects to 
construct and are you consulting with the COGs and will you 
ensure that the money is distributed equally to each area of 
the country and will you ensure each city has an input how the 
money is spent and where it is spent?
    Mr. Ikhrata. We are going to do our best to do all of that 
to ensure the COGs and the cities, mainly MTA, and they will 
make sure that the COGs and the cities are participating in 
their location.
    Ms. Napolitano. I would hope so, sir, because I belonged to 
SCAG many, many years ago and at that time the big cities had 
the bigger portion of the pie and the little cities got the 
crumbs. I think that has to be addressed simply because they 
are the ones who make up the most or the bulk of the county 
itself or in the affected area.
    Ms. Knatz, you pay for low-sulfur fuel difference. Can't 
they be incentives instead of you paying them for coming into 
delivery cargo that we have to accept?
    Dr. Knatz. Well, you know, the amount of emissions from the 
ships coming into the port is so huge that we felt it was worth 
it to pay the difference back to the companies, the carriers, 
for the differential in fuel. We implemented that program for 
one year to get them used to using the clean fuel, to make sure 
that they were sourcing clean fuel to make it available. 
Ultimately CARB has a rule that will go into effect at the time 
our incentive ends. Which will be when?
    Mr. Steinke. July 2010.
    Ms. Napolitano. Thank you. Thank you, Mr. Chair.
    Mr. DeFazio. What is CARB?
    Ms. Napolitano. Oh, sorry.
    Mr. Steinke. California Air Resources Board.
    Mr. DeFazio. We don't have a national rule on this?
    Mr. Steinke. No. Well, the IMO has a rule which is much 
higher. The limits of sulfur are much higher than what we are 
asking for with our vessel speed reduction program and CARB's 
rule that will be coming into effect. The sulfur content is 
much less than the IMO rule currently is.
    Ms. Napolitano. Mr. Chair, you might consider looking at it 
so that you might look at the ports implementing something to 
be able to clean up those areas that are impacted.
    Mr. DeFazio. Well, I have long been a critic of how we deal 
with or through the IMO and we still do have nation and state 
rights and we could just prohibit any ship coming to America to 
use it. We don't have to give in to any international covenant 
to have that. I think we ought to look at that because that way 
we don't put any of our ports at a competitive disadvantage.
    Dr. Knatz. One of the things you may not be aware of, Mr. 
Chairman, is that in April I believe the federal EPA is 
applying to the IMO for a North America ECA (Emission Control 
Area). If that is approved and it goes through a long process, 
that would help bring down the vessel emissions for all of_the 
West Coast Region. I guess Canada and the U.S. are working 
together on this and that would really help us.
    Mr. DeFazio. Right. I guess my problem is you used the word 
apply to the IMO.
    Dr. Knatz. Right.
    Mr. DeFazio. Which is an organization where imaginary 
countries get as much clout as we do.
    Dr. Knatz. Right.
    Mr. DeFazio. I mean, like the great port cities of the 
registry states. I have spent a lot of time on these issues and 
on that Committee and the way the whole thing runs is not in 
the best interest of the United States or other developed 
nations who want to have higher standards across the board on 
maritime commerce to tie ourselves to Liberia. How do they even 
choose their representative, you know, and things like that. It 
is just absurd.
    Dr. Knatz. I agree with that. EPA could do the same thing.
    Mr. DeFazio. Right, and we should think about that. Just to 
follow up and raise this question because I did hear a little 
decent when we were talking about the money flowing through 
MTA. Then I believe, in particular, Mr. Spence and perhaps Ms. 
Mayer raised some concerns about how those funds ultimately -- 
how the priorities are set.
    Mr. Spence. Well, one of the problems is that the city of 
Los Angeles controls the MTA. They have the most votes. They 
have the clout so when the projects come through that are in 
the regional areas, the smaller cities, if they don't like 
them, they don't approve it and that hurts.
    You know, the local cities, 20,000, 30,000, 50,000, 60,000 
population cities work extremely efficiently. A lot of us in 
Southern California are members of the Contract Cities 
Association. When the federal government or the state 
government asks for shovel-ready projects we have them. Our 
staff knows where they are. We can put that money out in 60 to 
90 days.
    We don't lie to anybody. We function very efficiently and I 
think the federal government is missing the boat by allowing 
these big regional agencies to control everything. In the LA 
basin specifically we lose a lot of control because the MTA 
board has all the votes and LA City has all the votes and it is 
a problem.
    Ms. Brown. Mr. Chair, in our discussion in Transportation 
when we were discussing this we were trying to figure out what 
was the quickest and best ways to get the money to the -- you 
know, in some areas when you get it to the governor it never 
gets down so we tried to come up with as many ways as we could 
to get the money to the local areas.
    For example, the money will go directly to the Transit 
Authorities of different areas. If you have some better ideas 
of how we can best as we move forward with the authorization to 
get money to the area, you know, to the lowest common 
denominator then that will be helpful because many of the 
members just want the money to go to the governess which is 
ludicrous because it goes to Tallahassee or Sacramento and that 
is the end.
    Mr. Spence. I promise you that our COG will send you some 
opinions of the local government and some ideas on how to 
resolve that issue.
    Mr. DeFazio. Excellent. Excellent.
    Ms. Brown. My last question. You mentioned that we only the 
80/20 ratio on the funding and we were only giving you 15 
percent for the Alameda Corridor. Was it 15 percent? Yes, that 
is correct. The local and state came up to the plate and 
increased it more. My question to you is why did they do it and 
how could we expand this kind of participation in other areas?
    Mr. Spence. That is a good question. I don't rally have the 
answer off the tip of my tongue right now. I know that our 
staff has worked very hard through our congressional delegation 
in Southern California and we have received federal funds but 
we have also received funds from the local government, the 
local cities, the local communities, and the county government. 
It is all tied in. I don't have all the answers exactly as you 
ask right at the moment but we can get them for you.
    Ms. Brown. Thank you.
    Mr. DeFazio. Do you have a succinct question or comment?
    Ms. Richardson. Sure.
    Mr. DeFazio. Okay. Go ahead.
    Ms. Richardson. Mr. Chairman, yesterday, if you recall, 
when we were on the bus I asked for LAMTA to provide us with a 
list of what they were proposing with the stimulus package. I 
think it is my intention to work with both of our Chairmen here 
to ensure that the stimulus occurs as it should.
    As Mr. Spence has said, here in Los Angeles the majority of 
the votes do swing to the City of LA so all the surrounding 
cities, although they work together do not have enough votes to 
overthrow that majority and so it is upon us to work with you 
but there are some issues here and I commit to work with the 
Chairmen to help on that.
    Mr. Spence. That is great to hear. Thank you very much.
    Mr. DeFazio. We would be interested in that.
    Okay. Anybody on the panel have something you really wished 
you had said and didn't say? Okay.
    Ms. Bayer. Thank you for listening to us.
    Mr. DeFazio. Okay. Well, thanks very much for being here. 
Appreciate your time. We will get ready for the next panel now.
    We are going to take a five-minute break before the second 
panel. Five minutes so at 11:25 by that clock over there.
    [Whereupon, at 11:20 a.m. the Subcommittee recessed to 
reconvene at 11:31 a.m.]
    Mr. DeFazio. Okay. Thanks. We will now move on with our 
second panel. We would start with Mr. Nate Asplund, Director of 
Public-Private Partnerships, Burlington Northern Santa Fe 
Corporation.

     TESTIMONY OF NATE ASPLUND, DIRECTOR OF PUBLIC-PRIVATE 
PARTNERSHIPS, BURLINGTON NORTHERN SANTA FE CORPORATION; ROBERT 
 W. TURNER, SENIOR VICE PRESIDENT, CORPORATE RELATIONS, UNION 
  PACIFIC CORPORATION; RANDALL J. CLIFFORD, CHAIRMAN, VENTURA 
 TRANSFER COMPANY; JOE RAJKOVACZ, REGULATORY SPECIALIST, OWNER-
  OPERATOR INDEPENDENT DRIVERS ASSOCIATION; CHUCK MACK, VICE 
    PRESIDENT, WESTERN REGION, INTERNATIONAL BROTHERHOOD OF 
                           TEAMSTERS.

    Mr. Asplund. Thank you for the opportunity to speak this 
morning. I'm with BNSF Railway, based out of our Fort Worth, 
Texas Headquarters. I head up our Public Private Partnership 
team on our network basis. LaDonna DiCamillo and our Southern 
California team are here with me as well. They are going to 
come up with some kind of hand codes if I say something wrong. 
If you see the hand code behind me, if you could please let me 
know, I would appreciate it.
    Freight rail PPP's are a collaborative partnership with the 
public sector. They are growing. They are in their infancy. 
They are getting developed in many locations throughout our 
network. Today typically we work mainly with state and local 
governments, not much with the federal government yet. What 
these projects do is allow us to produce substantial public 
benefits for projects where the freight railroads are unable to 
fund completely on their own.
    BNSF is committed to doing our part to confront the freight 
mobility challenges here in Southern California. In the last 
four years we have invested about $700 million in California 
for capacity expansion and maintenance. Between 2003 and 2007 
we have added almost 180 miles of new second track to our 
Transcon line that runs from Los Angeles to Chicago.
    In 2008 we opened up the Cajon Pass project. That was an 
$80 million project for triple track up on the Cajon Pass that 
increased the capacity in that former choke point by 50 
percent. We advocate both economic growth and a healthy 
environment and these goals we feel require the government and 
industry to work together to find the most effective and 
efficient solutions to environmental challenges.
    Both BNSF and UP entered into a memorandum of understanding 
starting in 1998 with the California Air Resources Board to 
reduce locomotive emissions in the south coast basin. The goal 
was to expedite the emission reductions that would be produced 
faster than what is facilitated by EPA with the new locomotive 
tier fleet requirements coming on board. We are on target to 
have that reduced by 67 percent by 2010.
    In 2005 we went to another step of a second MOU with the 
Air Resources Board to take additional measures to reduce 
emissions from yard operations through the adoption of health 
risk assessments, low-sulfur fuel, and installation of train 
idling control technology throughout our fleet here in 
California.
    Future improvements include SCIG, Southern California 
International Gateway, which is a multi-hundred million dollar 
near-dock facility that would utilize the latest technologies 
to deliver proven state of the art technology and eliminate 
millions of truck miles from the 710 and other local freeways.
    In the bigger picture, as I am sure your previous panel 
said, and said quite well, this is the perfect place in 
Southern California to observe the local and international 
importance of freight and the unintended consequences of a lack 
of a national freight policy. In its absence Californians have 
had to resort to Self-Help from taxing freight to floating 
bonds.
    Without a national policy that partners financially with 
the region and with the private sector to improve trade flows, 
ultimate commerce will be dislocated and diverted.
    My testimony talked about our concerns with the 
proliferation of local fees. One reason we continue to hear 
from customers about why they are and will continue to divert 
freight away from the San Pedro Bay ports is a climate of 
uncertainty as to how many new fees will be established, costs 
and new regulations, etc., and the uncertainty that potentially 
could impact more than 500,000 direct jobs in this region that 
depend on international trade.
    Finally, there is a lot of discussions on the national 
freight program. We believe freight rail improvements should 
receive a variety of sources of funding given the benefits they 
convey including reduced highway wear and tear, greenhouse gas 
emissions and reduced fuel usage.
    If Congress were to establish a national freight fee, we 
feel it is important that Commerce is not burdened, 
particularly in this economic environment. We feel strongly 
about creating performance-based accountable and transparent 
links between a freight fee and the selection and funding of 
projects that facilitate growing trade-driven freight volumes 
which would include improved velocity, improved capacity and 
reliability, all of which benefit both the public and private 
stakeholders.
    In the absence of a strong link between funding the freight 
projects and the fee we would have a hard time supporting it. 
Thank you for your time and I look forward to your questions.
    Mr. DeFazio. Thank you.
    Mr. Turner, Senior Vice President, Corporate Relations, 
Union Pacific Corporation.
    Mr. Turner. Chairman DeFazio, Chairwoman Brown, thank you 
for the opportunity to be here today. I would like to highlight 
four items from my submitted testimony for emphasis here. The 
first is while this hearing is about the freight mobility in 
and out of the San Pedro Bay ports, our company has an enormous 
footprint in other businesses here in Southern California.
    In fact, about 10 percent of our entire business either 
starts or finishes in Southern California having nothing to do 
with the port. As we talk about issues of congestion and 
putting more freight on the rails and less on the highway, it 
is a broader story than simply the movement of international 
goods through this part of the world.
    The testimony also shows that our company, too, has 
invested heavily not only in Southern California for freight 
mobility but further downstream and across the country. It does 
no good to move things quickly through Southern California and 
have them not be able to go to the markets across this country.
    Third, there really is no greener way to move freight than 
by rail. Our company and others have not only met the 
obligations that my colleague from BNSF just mentioned, but in 
our case our company has added over 100 ultra-low emissions 
switch locomotives in yards here in Southern California which 
are just part of our larger story of investing in green 
technology.
    To the point of what government can do to assist the 
movement of freight, I have two suggestions. One, streamline 
the permitting process. Many of you had a chance to tour our 
facility over on Long Beach near the ports. For three years we 
have been in the permitting process on a project that would 
reduce the emissions from that facility by 80 percent while 
doubling its through-put.
    Finally, when public money is being applied towards 
freight-related projects the best use is to put that money 
towards things that the public benefits from and let our 
companies continue to invest in those that benefit our 
customers. Thank you very much.
    Mr. DeFazio. Thank you. Thank you for being quite succinct.
    We will now turn to Mr. Randall J. Clifford, Chairman, 
Ventura Transfer Company.
    Mr. Clifford. Thank you very much, Mr. Chairman, Ms. 
Chairman. My name is Randy Clifford, as indicated by the 
Chairman. I am Chairman of the Ventura Transfer Company which 
is a local trucking company founded in Southern California 140 
years ago. It's been in our family for the last 52 years and 
it's really a family business. I feel a little bit overwhelmed 
by the nature of the other people here. I am just a trucker and 
it is an honor to be here to share a few things.
    Our particular company focuses on the movement of bulk 
commodities such as plastic pellets and powders, chemicals, 
those kinds of things, throughout the basin and the rest of the 
state as well as local states. In and out of the ports we haul 
containers, liquid containers. Most of our business is 
transloaded from the rail from these gentlemen's companies onto 
our trucks for local delivery throughout the area. We are very 
much involved with covering Southern California and the state 
as a whole both in and out of the ports as well as just 
throughout the railheads and everywhere else.
    There are three areas in which the American Trucking 
Association, which I am representing today, would like to 
highlight. One is certainly congestion is no longer a local 
program. It is a nationwide problem. Certainly when a 
bottleneck is broken it tends to move downstream and so unless 
there is a multi-jurisdictional approach to solving the 
problem, it just perpetuates the problem.
    We are looking for the federal government, as some of the 
speakers said in the first panel, to really take a leadership 
role in oversight of a national plan and develop a highway 
freight corridor initiative with the ATA and other stakeholders 
to identify where the corridors are and really focus scarce 
funds on the areas that need it most.
    The second area that we would like to discuss is full 
funding of the pilot parking program. There is a real shortage 
of truck parking along the highways, particularly here in 
California. For the safety of our drivers, the cargo, and the 
motoring public at large there is really a need to have 
adequate parking for our drivers.
    The last area has to do with the STAA, the access to the 
federal highway system, the 48-foot rule versus the 53-foot 
trailers that are on the roads. Apparently there is a problem 
with harmonization between the states and the federal 
regulations regarding providing protection for 53-foot 
trailers.
    Those protections have not been put into place throughout 
the states and so there are several areas in which we can't use 
the larger trailers to access the STAA routes.
    The last item in my testimony had to do with the ports of 
LA and Long Beach. I am in and out of there with my trucks 
everyday so I am very familiar with the situation.
    The position of the association and the industry at large 
is that we are all for the environmental benefits of the plans. 
Our people live and work in these areas, I live and work in 
these areas, and I breathe the air and I recognize the need for 
these changes and we anxiously look forward to some solutions.
    However, the focus of the litigation that the American 
Trucking Associations has with the ports has nothing to do with 
the environmental benefits of the plan. It affects what we 
believe is unnecessary and overly intrusive re-regulation of 
the industry.
    To consider that the industry would be re-regulated 
community by community, state by state, school district by 
school district, whatever jurisdiction the precedent might 
establish is frightening at best. We hope that we are able to 
work through those issues. I look forward to the opportunity to 
answer any questions you might have.
    Mr. DeFazio. Thank you.
    Joe, you are going to have to help me with your last name.
    Mr. Rajkovacz. Rajkovacz.
    Mr. DeFazio. Okay, Rajkovacz. All right. Mr. Joe Rajkovacz, 
Regulatory Specialist, Owner-Operator Independent Drivers 
Association.
    Mr. Rajkovacz. Good morning, Chairman, Chairwoman, and 
Members of the Subcommittee. As was just stated, my name is Joe 
Rajkovacz, Regulatory Affairs Specialist with the Owner-
Operator Independent Drivers Association out in Kansas City. I 
am pleased to be here to answer your questions regarding the 
challenges confronting the freight movement in Southern 
California.
    I spent over two decades trucking produce out of the state 
back into the upper midwest with my own equipment. I was an 
owner-operator. I also hauled out of Oakland, the ports of 
Oakland, Long Beach, San Diego, as well as many other ports in 
this country.
    Building a modern and efficient and environmentally 
sustainable freight system is going to require a lot of 
creative thinking outside the box. I certainly heard today 
everybody is going to talk about funding. We certainly think 
there is other low-hanging fruit that can be gotten that can 
help out the situation without throwing gobs of federal dollars 
at it.
    Some of the issues that I certainly like to talk about is 
highway congestion, mitigation. As my colleague Mr. Clifford 
just talked about truck parking, big issue. I have been working 
on it out here in California with Caltrans. Just last month I 
met with Supervisor Antonovich's staff about truck parking here 
in LA and related to members of ours that are having problems 
parking their trucks here in LA County.
    FMCSA just issued a report on efficiency in trucking. The 
number one area of efficiency that everybody seems to turn a 
blind eye to is the waste of a driver's time at docks with 
loading and unloading. There is literally billions of dollars 
laying on the ground right there. It is going to take a federal 
solution for the supply chain to get knocked up side the head 
and do the right thing. I look forward to answering your 
questions.
    Mr. DeFazio. Thank you.
    Last will be Mr. Chuck Mack, Vice President, Western 
Region, International Brotherhood of Teamsters.
    Mr. Mack. Chairman, Chairwoman, Members of the Committee, I 
thank you for the invitation to be here today to present our 
views on what we think are some of the goods movement 
challenges in Southern California. I want to point out that the 
freight challenges we see must be defined by more than just 
building the physical infrastructure. While the right 
infrastructure is needed, and we don't question that, that is 
only half the equation.
    In defining our freight challenges we must also address the 
abusive working conditions and lack of any voice on the job for 
most freight transportation workers. Outside of longshore and 
rail workers most freight transportation, trucking warehouse in 
particular, these jobs are poverty level. They are nonunion. 
They have no health or retirement benefits.
    Because most trucking and warehouse workers are contingent 
workers or hired as independent contractors, they are provided 
with no basic protections of employment law and certainly don't 
have the ability to bargain collectively to change the 
circumstances that they find themselves in.
    These challenges must also address the public health and 
environmental cost that an unregulated freight system produces. 
Port communities in Southern California and across the country 
suffer from diesel particulate pollution in terms of greatly 
increased asthma and cancer rates. Goods movement is also a 
significant source of greenhouse gas emissions that are 
contributing to adverse climate change.
    There is a great example here in Los Angeles of how to 
tackle the labor, the public health, and environment problems 
that is making green growth possible at the Port of Los 
Angeles. That is the LA Clean Trucks Program. The program is 
creating good green jobs by requiring trucking companies to 
clean up their trucks and take responsibility for the drivers 
by employing them and making them employees as opposed to 
independent contractors. The Teamsters are proud to have been 
part of the solution through our participation in the Clean and 
Safe Ports Coalition which actively supports LA's program.
    Now, some of the panelists here, I think, would have a 
problem with what I might have to say but deregulation of 
freight transportation is really at the root of this broken 
system that pollutes the air, exploits communities, and abuses 
workers. We prefer that the federal government provide 
leadership on this issue by enacting some national needed 
reforms and I even dare say national standards. Until there is 
national leadership we are going to continue to work with ports 
here and across the country to advocate for reform and to bring 
about change.
    Let me close just with an example, a rather tragic example 
of the difference in programs like the LA Clean Trucks Program, 
what a difference a program like that can make. Two to three 
weeks ago here in Southern California a truck driver named 
Pablo Garcia was killed, crushed on the ground while he was 
walking around looking for a chassis, to pick up a chassis.
    Another worker employed in the port was moving the chassis 
with a forklift, did not see Pablo and drove him up against the 
set of chassis and crushed him, killed him. Pablo was the 
father of three children, 36 years old. About two months prior 
to that Pablo was an independent contractor and worked really 
on his own on the waterfront. He went to work for a company 
called Meritek that has a collective bargaining agreement with 
the Teamsters Union.
    If he had been killed, crushed as an independent 
contractor, there wouldn't have been a Cal OSHA investigation 
of his death. There wouldn't have been worker compensation 
benefits paid to his family. There wouldn't be benefits from 
the Union contractor paid to his family. He would be another 
lost statistic in the drivers that have been killed on 
waterfronts around the country.
    I hope the Committee looks for ways to support efforts like 
the LA Clean Truck Program. That is really the answer to the 
problems that we have got out there, the lack of regulation, 
the lack of oversight, and it starts with the drivers 
themselves. Those drivers are undercapitalized. Is it any 
surprise they are driving trucks that are 15, 20 years old? 
They have no bargaining power. They can't join the union. They 
can't bargain collectively.
    The program we advocate does not mean automatic union 
membership as some in Southern California have suggested, 
notably Bob Foster out of Long Beach. What it means is that 
workers have a choice. If they want to belong to the union, 
they have the right to join the union and they have a right to 
bargain collectively. If they don't want to belong, they don't 
have to belong.
    If we correct that model, we put the capital in for that 
trucking system. It then takes on the appearance of other 
businesses across this country that have employees that accept 
responsibility for those employees. We deal with the worker 
abuses. We deal with the environmental issues. We deal with the 
port security issues knowing who is driving the truck on that 
waterfront and fixing that responsibility and holding somebody 
accountable. I dare say we make a system that is going to be 
much more efficient and effective going forward. Thank you.
    Mr. DeFazio. Thank you.
    I will now turn to questions. I think it was Mr. Turner, it 
may have been Mr. Asplund, talked about differentiating between 
investments the railroads have to make in their interest and 
where the public money flows. I was a little confused by that 
because it seems that in looking at these corridor issues there 
are substantial benefits both to the public in terms of health 
issues, surface transportation issues that conflict with the 
rail corridors and to the railroad in terms of being able to 
move your freight out more expeditiously.
    In particular we looked at Colton Crossing. My 
understanding is that you are looking for public funds to solve 
that which seems contradictory to the idea because that just 
affects two railroads but, of course, railroads ultimately I 
suppose back up and block streets. I was just kind of puzzled 
how we would make the determination what is public and what is 
private. In that case, I mean, you are actually apparently 
looking for substantial public funding to deal with a rail 
bridge which will directly benefit rail but also will have some 
other benefits for the public.
    Mr. Asplund. That is a very good question. Typically when 
we talk about one of these choke point facilities like Colton 
Crossing, we have another one that we are working on in 
California called the Tehachapis which is between the San 
Joaquin Valley, Northern California and Southern California. 
Typically these are old legacy chokepoints. The Tehachapis 
dates back to 1889.
    I don't know when Colton was originally constructed. What 
the problem is for the railroads to self-fund the remedies to 
those chokepoints 100 percent we will do that at some point in 
the future but because we are so capital intensive about almost 
20 cents or 17 percent of our revenue has to go right back into 
the plant.
    Because of that capital intensivity those projects that are 
very high dollar are put off until we absolutely have to do 
them. Your question was how do you determine the benefit. The 
response to that is you do a cost benefit evaluation and those 
are getting much better. The state of Virginia has been a 
leader on those. Caltrans worked on them with the TCIF program, 
etc.
    That is the way on a transparent basis with the state DOT 
or the public partner as well as ourselves as a private 
participant you look at the project in its entirety and you 
sort out what are the public benefits, what are the private 
benefits. The private benefits will pay for and we ask for the 
public to consider whether it is a good spend of their money 
for the level of public benefit that would come from them 
matching up to provide that investment.
    Mr. DeFazio. Okay. Mr. Turner, do you have anything?
    Mr. Turner. I largely agree with what he said. There is a 
way to calculate it when the public pays. In the Colton 
Crossing project our companies had both agreed to put money 
into that project to speed up the timing of when it gets done. 
We agree at some point that will get done when it gets sorted 
out against other priorities if it is left just to us.
    Mr. DeFazio. Okay. I think maybe we have some grounds for 
some discussion here that could be interesting. Mr. Clifford, I 
was a bit puzzled in discussing, and we are not going to get 
deep into the Clean Trucks Program here because that is not the 
purpose of the hearing but, I mean, fees and there are a whole 
lot of things that are flowing from congestion so ultimately 
all these things are relevant.
    You said that somehow the ports are engaged in re-
regulation. I was kind of puzzled by that because I'm not sure 
that I understand that and I will give you a chance to answer 
that in a second. Then it seems to me that Mr. Mack and Mr. 
Rajkovacz are saying, in fact, that we could solve some of 
these problems with some degree of regulation.
    In particular, there is something that I am not familiar 
with which apparently is something that predates my study of 
these issues is in Mr. Rajkovacz' testimony about federally 
mandated detention regulation when you talk about the amount of 
time that drivers are having to waste at loading docks and 
places like that. I guess I would like to have a little 
discussion here why do you think this is regulation and isn't 
there perhaps some role for regulation.
    If you have a broker who is engaging a trucker, the broker 
is just trying to get the delivery to a certain point and they 
could care less like what that imposes ultimately on the time 
of that trucker. That is not their problem.
    I mean, someone took their bid and they are delivering the 
product so I see very little incentive unless it is a major 
company which has a major incentive to move its trucks more 
efficiently and make sure they aren't sitting around a lot. 
There are other people who don't control their own brokerage 
and are much more subject to these many hundreds or, I don't 
know, thousands of independent drivers. We had a little hearing 
about brokers.
    Mr. Clifford.
    Mr. Clifford. Well, there is a fundamental difference 
between a freight broker and a motor carrier absolutely in 
their incentives. I can't speak for the brokerage industry. I 
am not in that industry. I can say that I have Teamster drivers 
that work for me and I have owner/operators that work for me 
and I know how I deal with them and how they deal with me and 
it works fine. I have four Teamster agreements and a mechinist 
agreement so I am very familiar with dealing in a labor 
intensive bargaining unit environment and I am very comfortable 
with that.
    The issue with regulation for the association and certainly 
for me is if it is the decision of the Congress to re-regulate 
the trucking industry, then that is their decision to do that 
but we don't think it is appropriate for the ports or the 
municipality and I think the termination act for the ICC 
specifically prohibits subdivisions of states to do any kind of 
regulations.
    Mr. DeFazio. What is the regulatory action here?
    Mr. Clifford. It is restricting the rates, routes, and 
services of motor carriers. If I am a licensed motor carrier to 
operate in interstate commerce, I have to meet a number of 
criteria now to be able to go into the ports of LA and Long 
Beach, particularly the port of Los Angeles. That is interstate 
traffic and as long as I meet all the requirements the Federal 
Motor Carrier Safety Administration has on me and the 
Department of Transportation, that is supposed to give me 
access to the ports or to any interstate traffic.
    Mr. DeFazio. Elsewhere in your testimony you said the port 
had the Clean Truck Program and it wasn't about that but it 
seems to be. What you are saying is the Clean Truck Program is 
a violation of the Interstate Commerce Act.
    Mr. Clifford. No. We support ----
    Mr. DeFazio. You support the idea of clean trucks but not 
the way they are getting there?
    Mr. Clifford. Not the way it is. Let us take, for example 
----
    Mr. DeFazio. I said we were not going to get too deep into 
it.
    Mr. Clifford. Well, the Los Angeles mandate, for example, 
about an employee versus an owner/operator. We don't see the 
connection, the nexus between those. As I said, there doesn't 
seem to be a problem. The issues with safety, for example, or 
equipment maintenance, all of those issues that are being 
addressed in the concessionaire agreements are addressed 
through the Federal Motor Carrier Safety Administration, the 
TWIC cards which are already in implementation and will be 
fully implemented next month.
    All of those issues are sort of regulation of work that is 
already being accomplished by other agencies at the state and 
federal level and it just adds cost, it adds bureaucracy, it 
adds complications, and is a barrier to entry to an industry 
where there is already capacity constraints. When the economy 
does turn around, and it certainly will, a lot of truckers have 
already left the industry. There are going to be much worse 
capacity problems when the industry finally begins to recover 
so we are very concerned about that.
    Mr. DeFazio. Mr. Rajkovacz, in particular, could you 
address this federally mandated detention regulation issue.
    Mr. Rajkovacz. The detention regulation was something that 
was unique. I started driving in 1977 hauling beer out of the 
breweries in Milwaukee and the shipper gives you the 
appointment time, tells you what time to show up. I would show 
up and after two hours if they were still lollygagging the law 
kicked in. They would have to pay for the truck and trailer.
    There is something really unique about a system like that 
is that it is a real disincentive to abuse human capital and 
equipment. That law was sunsetted under the Reagan 
Administration in 1982 as part of the laissez faire attitudes 
that were pretty prevalent at the time. I trucked for all these 
years, especially out of here, Dole up in Marina, a lot of 
facilities in California.
    The issue appointments or hold systems by appointments. I 
would show up at 6:00 p.m., the sun would go down and the sun 
would come up the next morning and I would still be parked at 
their dock standing there watching each pallet come into the 
trailer because they didn't care. My time does not represent 
the cost within the supply chain. If we are going to deal 
effectively as a society with a lot of these issues, there has 
to be a question that is attached to the time of a driver.
    Billions of dollars are wasted and that impacts highway 
safety. FMCSA does some of these studies and sometimes as I 
read them you are not making the correlations that a lot of us 
intrinsically know are there. When you are sitting there on a 
dock all night long what happens under the existing hours of 
service because you are not paid? Drivers don't account for it 
on their log books. Guess what? We did back then. We accounted 
for our time on our log books because we got paid for it. It is 
a real disincentive for everyone out there to abuse a driver's 
time if they have got to pay for it.
    Mr. DeFazio. Well, Mr. Clifford mentioned the potential and 
we held a hearing on the future availability of drivers and 
capacity and there are some real concerns out there last year. 
Are you saying that if there was some incentive to the shippers 
to use drivers more, do you think that makes the whole system 
for efficient and would actually enhance capacity because you 
wouldn't have a lot of people idle waiting for load?
    Mr. Rajkovacz. Not precisely. I can just give a real 
specific example. I would usually come into the LA basin out of 
Minneapolis and I would reload. Especially nine months out of 
the year the produce center shifts up to Salinas Valley. Well, 
there is an opportunity in that 350 miles to generate revenues. 
Nobody does it. It is because by the time you get done at 
whatever warehouse you are at, you don't even know what time 
you are going to get out there.
    What I would always try to do is make my appointment up 
there as late at night as possible because I might get held up 
for six, seven, eight hours unloading down here in the LA 
basin. That is a huge opportunity. That gets to the second part 
of the FMCSA's study. The second part is all the empty miles. I 
could have converted those into revenue miles if my time wasn't 
getting abused but because I had to empty out and get 350 miles 
up the road, I deadheaded up there. I ran up there empty.
    There is so much inefficiency in the system because 
everybody will say it is the free enterprise system. Kind of 
funny. It is free enterprise for everybody else but not the 
trucker. We are obligated to give away our time and nobody 
compensates for it. If you make it more efficient, you might 
need less trucks to handle the existing capacity. There is no 
maybe about it, you would. We have an aging population.
    The ATA has talked constantly about a driver shortage 
which, of course, our economic times have really softened that. 
When our economy comes back if we don't get more efficient than 
how we use a driver's time, yeah, that stuff is really going to 
be on the charts in this country, not enough drivers, a 
capacity shortage. Shippers and receivers have got to be 
brought into account.
    Mr. DeFazio. Okay. Mr. Mack, you want to add anything to 
that?
    Mr. Mack. Well, my experience leads me to believe there is 
no driver shortage. If you pay the wages and you provide the 
benefits, there are going to be enough truck drivers and rough 
individuals that come forward to drive trucks. The same thing 
with the industry, with trucks operating in the industry.
    If there is a market out there, if there is an opportunity, 
you are going to find entrepreneurs that are willing to jump in 
and take advantage of that opportunity. I think that has been 
grossly overstated. What you have got is companies that don't 
want to pay adequate levels of compensation so they are not 
able to attract people to the jobs. If you pay and you provide 
the benefits you will get people to the jobs.
    I am not the biggest market enthusiast in the world. I have 
gone through all of these de-regulation battles in trucking. We 
are not talking about the economic re-regulation of this 
industry as we had it before where you had rates that were in 
place that guaranteed adequate returns so you could pay decent 
wages. What you are talking about in Los Angeles is after a 
study and an analysis of what the problems are in their port 
trucking industry a decision to move forward and to require, to 
put certain requirements, standards in place in the port.
    One of those standards is employee status because the port 
in that economic analysis recognized that these drivers as 
independent contractors were completely undercapitalized, 
didn't have the ability because they are not like real owner/
operators. They don't have that ability to negotiate with the 
companies they haul for or the beneficial cargo owners.
    It is on a take it or leave it basis. Some owner/operators 
pull with one company, constantly work for the same company day 
in and day out, day in and day out. Some companies have no 
employees. How could you be a company with no employees. All 
they have are independent contractors and owner/operators 
pulling for them. That is the thing that needs to be changed 
and LA is on the right track doing that.
    Mr. DeFazio. Okay. Thank you.
    Ms. Brown.
    Ms. Brown. Thank you, Mr. Chairman.
    Mr. Asplund, as you know, Panama Canal is expected to be 
completed by 2015 to increase its capacity that would allow 
accommodation for larger cargo ships that it cannot accommodate 
today. How did this development at the Panama Canal impact the 
competition in the ports of Los Angeles and Long Beach as a 
gateway for rail to develop goods across the country?
    Mr. Asplund. That is a very good question. I don't know if 
anybody definitively knows the answer yet. We are going to have 
to wait until 2014 when the Canal opens but we do have some 
indications. First, we believe that if we can take care of a 
lot of the intermodal connectivity problems that exist here in 
the Inland Empire and the LA basin, that combined with the 
double track that we have already established 90 percent of the 
way to Chicago.
    Union Pacific, as Mr. Turner will speak of, has also got a 
very solid system. The timeliness, the cost effectiveness, and 
the reliability of that network once we fix some of the 
problems here we think is quite superior.
    The U.S. East Coast ports, as mentioned in the last panel, 
will have to complete the dredging and they also have inland 
connections, a lot of the same problems that this region is 
working out, but they are going to have many years to solve. We 
think that will be a constraint for the growth and the 
expansion of those flows coming in all via the East Coast.
    Ms. Brown. Mr. Turner.
    Mr. Turner. I essentially agree. There is another factor in 
this and that is the ship rotation that brings the product from 
Asia to the West Coast or, in this case, through the Canal. If 
you model current shipping times the goods that could move to 
the West Coast on five vessels require nine vessels given the 
longer steaming time to East Coast ports from Asia.
    Also, it takes longer from a timing perspective than to 
bring them in here and move them across by rail. There are a 
number of factors. I don't think we will know until the Canal 
is open. I think in the end it will be an economic decision by 
the beneficial owners of the cargo who, as they said in the 
earlier panel, are very, very focused on the cost of moving 
goods ultimately from where they are produced to where they are 
sold.
    Ms. Brown. What are the intermodal connection problems?
    Mr. Asplund. In our view we have continuously increased our 
use of on-dock here in San Pedro. We have probably gone up 
almost 200 percent in the last several years. We are up to 
about 67 percent of our loadouts in 2008 that were on-dock. The 
problem we have is that in the future with the projected 
growth. Even conservative estimates of the growth at the San 
Pedro Ports, there is not the ability for the on-docks, the 
space, or the advancement of those projects to accommodate the 
growth.
    One problem we have is for customers to come to alternative 
facilities if they can not load at an on-dock location. One of 
them is our Hobart Facility. That is a 20-mile dray up the 710 
so that is the basic premise of why we are supporting the 
construction of the SCIG operation, which would be a near dock 
about four miles away with dedicated truck lanes, etc., to give 
that additional capacity.
    Ms. Brown. In your written testimony BNSF believes in 
larger federal partnership and role in facilitating the flow of 
national and international commerce is what is needed here in 
California and elsewhere around the country. Please say more 
about that.
    I want Mr. Turner to respond to this. Do you believe the 
federal role should be limited to financial support? Anyone 
else can respond to that.
    Mr. Asplund. The panel before us spoke a lot about these 
funding challenges. Where do you come up with the funding from 
the federal side? How do we take care of this problem? I would 
like to add that one of the questions really is what is the 
criteria for funding. How can you look at the benefits that 
would drive, have performance-based criteria based on the 
national freight strategy of what the local communities need to 
have remedied to mitigate the impact, what we need for the flow 
of goods to be efficient to benefit the economy and the 
shippers.
    I think the need of that federal partnership here in 
Southern California is probably greater than any other single 
international location in the country. Forty percent of the 
freight that comes into the states comes through these ports. 
Without the federal partnership the state, the ports have had 
to resort to self help.
    The previous panel talked about these problems with 
diversion and the impacts of these user fees, etc. The State of 
California has put in billions of dollars in a bond program 
called Prop1B which the voters voted for. They committed to 
mitigating freight. They committed to improve fluidity. Then 
with the existing financial situation it is a very big 
challenge to float those bonds, so, on the federal side, this 
is a national and international supply chain that is very vital 
to our economy.
    Ms. Brown. Mr. Turner, would you like to?
    Mr. Turner. It is a national challenge. There really are a 
number of local tensions versus national needs. That is really 
a role that the federal government can assist with. Our concern 
on a trust fund, which got a lot of conversation on the prior 
panel, is if we are taxed or expected to pay into such a fund, 
you are taking dollars that we have to earn from our customers 
that we are presently investing in infrastructure and put it 
into the fund.
    If that is not spent properly, spent on real efficient 
movement or freight, then you are going to have less efficiency 
and, in fact, you may end up with less freight investment. 
Secondly, if there were such a fund diverting into passenger 
and commuter rail operations would be a huge temptation. Again, 
you are talking about taking revenue from freight and moving it 
towards another use.
    Ms. Brown. Let us just think about that for a second 
because we are not just talking about taking it and giving it 
to a commuter rail highspeed rail. The point is in order to 
make it most efficient we need in the future think about how we 
can separate those tracks like they do in Europe. Our 
competitors are already there. We are the caboose and they 
don't use cabooses anymore.
    Mr. Turner. There is a need to separate. If there is going 
to be a robust commuter system or robust passenger system we 
have a lot of experience in working together with passenger 
agencies and with the private freight rails. I think there are 
some basic conclusions that when they are separated they really 
do work better.
    Ms. Brown. What do you think about the tax credit, the 
incentive to invest in the infrastructure?
    Mr. Turner. I think it is a way to speed up the investment 
of private capital into the nation's freight system because the 
rate of return would be more attractive and that will attract 
more investment.
    Ms. Brown. Thank you. Thank you, Mr. Chairman.
    Mr. DeFazio. Ms. Napolitano.
    Ms. Napolitano. Thank you, Mr. Chair. I am very interested 
in how some of these questions are being answered.
    Mr. Asplund, in your written testimony one of the key 
reasons that customers divert from San Pedro is they claim an 
uncertainty because of questionable fees regulations future. 
You say you have surveyed. Is it a written survey? Did all 
participate? Was it something that you could share? If that is 
the question, then what are they willing to do to help 
ameliorate the issue?
    Mr. Asplund. Thank you. I believe that we indicated in 
conversations we have had with customers. There was no formal 
survey done but common theme that customers expressed to us is 
the uncertainty that has resulted from these user fees and some 
of the other provisions. I think all of us agree the objective 
is spot on. It is the fact that without a federal role the 
local ports, the State of California, and the agencies here 
have had to take Self-Help and it is causing diversion and 
other negative impacts to this region.
    Ms. Napolitano. Then the question to you, Mr. Turner, would 
be have you done or are you aware of the differences in time 
delivery between Prince Rupert and Long Beach, Los Angeles. I 
am sure you have done some kind of serving to find out if they 
are leaving, are they planning to leave the Long Beach LA port 
and what is it that I would say is enticing them?
    Mr. Turner. There is a lot of uncertainty in the market 
today. Even before we got in the economic mess we are in as a 
country there was a lot of concern about movement of goods that 
started for us a year ago.
    Ms. Napolitano. I am talking about the time frame of 
delivery between Prince Rupert and LA Long Beach to customers 
and what impact does that have on your customers' decisions of 
whether to remain in Long Beach LA or go to the northern part.
    Mr. Turner. Our customers first value reliable delivery 
time more so than speed of delivery so as long as the delivery 
is on time, if it moves on schedule they are far less concerned 
about whether that is a 17-day transit or a 16-day transit.
    Ms. Napolitano. You still haven't answered my question. 
What is the time frame?
    Mr. Turner. I am sorry. I didn't mean to not answer your 
question.
    Ms. Napolitano. Prince Rupert delivery to customer, LA Long 
Beach delivery to customer, the time.
    Mr. Turner. I don't know. I do not know the actual number 
of days. Is that what you are asking?
    Ms. Napolitano. Well, simply because if it is on-time 
delivery then you would think they would go up there but it is 
a matter of other issues, concerns with a price, etc. That was 
my question. But that leads to my other statement in regard to 
on-time delivery because railroads have impacted my area 
tremendously and have a greater increase.
    As the Chairman was stating, you are looking for help in 
addressing choke points. Yet, you have had banner years a few 
years. I know in my area specifically, and I have been over 
this with UP ad nauseam, the fact that the infrastructure has 
not been upgraded for a long time and has caused issues and 
derailments in my area. That has been my greatest concern.
    If you are not going to help us put in additional funding 
to do the grade separation, and you have heard some of the 
elected officials concerns in regard to the impact, economic, 
environmental, safety, all of those, then how are we to then 
consider your request for additional assistance?
    Mr. Turner. With all due respect, Congresswoman, we have 
put a lot of money into infrastructure in Southern California 
in the condition of the rail, condition of the railbed and in 
safety to reduce and hopefully eliminate derailments, delays, 
and problems ----
    Ms. Napolitano. Haven't seen one for years now so thank 
you.
    Mr. Turner. I would be happy to work with you and your 
staff to show you some of those. We should have done a better 
job of doing that. We believe we are investing. We are working 
with communities on grade separation projects and will continue 
to do so.
    Ms. Napolitano. Again, I refer back to on-time delivery. 
You can expedite at a port whether it is working with the 
Teamster and the personnel or whether working with the 
carriers, but if you can't get it past the Alameda Corridor-
East, then you are still defeating yourselves in being able to 
have that on-time delivery and that is the kind of tie-in I 
want to make is we need to address all of it.
    Mr. Turner. Yes.
    Ms. Napolitano. So what can we expect from the railroads to 
be able to be heavier partners in assisting in doing more of 
those separations to increase that rail speed?
    Mr. Turner. As I know our Chairman commented to you in a 
hearing in Washington two weeks ago, we have said we will 
continue to work with you. We will continue to provide the 
engineering resources appropriately and we will continue to do 
our share of the benefit that comes out of these projects.
    Ms. Napolitano. Thank you. That is good. I am glad to hear 
that there is an affirmation, if you will. I have had great 
results recently, or the last few years, in my area in working 
with UP and with Lupe Valdez and your attorney here in town. He 
and I have talked about some of the issues that my district 
has.
    What happens here affects the rest of the country so that 
whatever it is we can do to work together, I am certain that we 
will do everything we can. I know I will and I know my 
colleague will. We have the ear of some of our colleagues but 
they expect us to be able to be forthright with information so 
they know what the affect is on some of their rail issues and, 
again, some of their on-time delivery to their customers.
    Thank you, Mr. Chairman.
    Mr. DeFazio. Thank you. Just to follow-up with Mr. Asplund, 
you very definitively said that the current fee structure is 
causing diversion. Are you able to quantify that because the 
ports themselves did not seem to feel there has been diversion 
at this point?
    Mr. Asplund. We do watch the volumes through Prince Rupert, 
for example, and those volumes have gone up pretty 
significantly over this period. As the overall economy has 
gotten more difficult their rate of lift through Prince Rupert 
has gone up, whereas the rate of lift or the volumes for this 
region have gone down. We can provide you some evaluations of 
those transient times.
    We have done some studies of that and some of the other 
provisions. There is some talk that the Prince Rupert facility 
will be expanded. It is about 500,000 TEU capacity now. It is 
going to be increased to 2 million somewhere around 2010, 2011. 
They have an eventual goal by 2020 to go up to 9 million TEU's 
in the British Columbia ports.
    Mr. DeFazio. Ms. Richardson.
    Ms. Richardson. Thank you, Mr. Chairman. First of all, 
before I ask my questions I would like to introduce in our 
audience Kathleen Hollingsworth, who is the District Director 
for Congressman Roybaucher, is here in the audience. A lot of 
the discussion has been what has covered his particular 
district and what we saw yesterday. I wanted to make sure to 
acknowledge that she is present. Mr. Roybaucher is on a 
congressional delegation in Baghdad and helping us in that 
effort so I wanted to make sure everyone knew his activity and 
his involvement.
    Two questions that I have. First of all, for Mr. Clifford 
and Mr. Mack. The trucking industry is a vital part obviously 
of our freight movement industry itself transporting 69 percent 
of our freight tonage. Much has been said about the debate of 
allowing triples and extra heavy trucks on the highways 
nationwide. Some have said this will destroy our goods movement 
infrastructure. Is this true or would it in fact reduce the 
overall trucks on the road? Either one of you, Mr. Clifford or 
Mr. Mack.
    Mr. Clifford. Well, I am not an engineer. What I have been 
told is that when properly loaded the heavier vehicles spread 
out over the axles, etc., etc., it will have no worse affect on 
the roads than currently is the case but I am not an engineer. 
Logic would tell you by putting more product in larger vehicles 
you are going to reduce the number of engines.
    Granted, if it is a million tons, it is a million tons 
divided X number of ways but you are going to reduce the number 
of pieces of power pulling those trailers and that is going to 
reduce fuel consumption and reduce the environmental affects of 
smog, etc.
    Ms. Richardson. Would you expect any safety ramifications?
    Mr. Clifford. Well, again, anectodally it would appear that 
larger vehicles might be more scary but from what I understand 
in the states where there are longer combination vehicles in 
place and they compare the safety results with the conventional 
equipment there is no difference. In fact, it might even be a 
little bit better. I don't have all that information. I know I 
can get it from the American Trucking Associations but that is 
my understanding that there is no safety ----
    Ms. Richardson. I wanted your opinion as one of the 
individuals working here in our region. I have read that 
material.
    Mr. Mack, did you have a position on that question?
    Mr. Mack. We are not in favor of increasing the number and 
size of vehicles, longer combination vehicles. It is not so 
much an employment issue here because there are certain areas 
and certain states where we do have longer vehicles that 
operate. The idea of a set of triples running down I-5 or 
coming through 101 in Los Angeles or down to 10 is bizarre and 
is not going to do anything to ease traffic burdens and not 
going to do anything to improve highway safety.
    There was a cartoon a few years ago. One thing consistent 
about the industry, and I am not picking on Mr. Clifford here 
because he has I am sure a very good operation in his company 
but one thing about the industry consistently, and you see it 
in Congress, every session they are going to have three 
trailers, four trailers, Rocky Mountain doubles, double 53s, 
whatever.
    They have all of these ideas. There was a cartoon a few 
years ago I think that said it best. It had a truck followed by 
about 25 trailers crossing a rail crossing and the train 
stopped waiting for the truck and all those trailers to go 
across the track. I think you are going to hear that. I think 
there is enough flexibility and enough size in this industry 
right now that we don't need to increase and go beyond it.
    Mr. Clifford. That is why it was a cartoon.
    Mr. Mack. Yeah, right.
    Ms. Richardson. Thank you very much for both of your 
opinions.
    Mr. Asplund, should Congress set up a railroad trust fund? 
You heard the first panel and the whole discussion and clearly 
I know, I have been with Ms. Napolitano and Ms. Brown and there 
has been much discussion that we can't lose sight of the rail 
improvements that must be done. In your opinion do you think we 
should set up a railroad trust fund? Let me add the caveat that 
would in fact address the rail issues and not funds used in 
another way.
    Mr. Asplund. Right. We are opposed to that. Let me give you 
a quick example. The challenge that we see with the railroad 
trust fund is currently the railroads are responsible to 
maintain and expand their own networks. We have to pay the note 
for everything. As I mentioned in my previous comments, 17 
percent of our revenue goes right back into the railroad every 
year.
    In January 2009 BNSF announced we have got about a $2.7 
billion investment program. That is only down 5 percent versus 
2008 and in this economy largely because we have to keep 
putting so much money back into our infrastructure, and we want 
to keep our railroad strong, keep our service up. Why we like 
to be able to take the money we generate from our customers and 
invest it in our facilities ourselves is we have tools where we 
can do analysis to determine where we know right where the 
biggest bang for the buck occurs. We bring that to the table 
and we do public private partnerships as well.
    The public private where we signed an MOU with Caltrans 
this past year in September, as I mentioned the Tehachapis 
Corridor, which is about 64 miles long, we found through 
modeling and looking at the operation that we could improve the 
capacity by 70 percent by daylighting a small tunnel here, 
connecting a siding there, and doing small enhancements.
    The total capital expenditure to improve a through-put, a 
major freight corridor that Union Pacific actually owns and we 
are attended on, is going to cost $104 million at its full 
scope of work. We would pay half the money, Caltrans through 
Prop1B would pay half the money. That delivers about 1.1 
million trucks per year that don't have to use SR 58, don't 
have to use Highway 99, don't have to go up and down I-5. 
Because of the uniqueness of our network we need to be able to 
have the ability to direct where that capital goes and that is 
the concern we have with the railroad freight fund.
    Ms. Richardson. And my last question. Are freight railroads 
still supporting legislation providing a 25 percent rail 
infrastructure tax credit?
    Mr. Asplund. Yes, we are. We see one major use of those 
dollars is the positive train control initiatives. Here in LA 
and in the Inland Empire if you take a look at a lot of our 
tracks, our traffic right now only accounts for 50 percent to 
64 percent of the daily traffic with many lines shared with 
Metro and with Amtrak. The estimates of what it is going to 
cost the industry to install positive train control are very, 
very large so it is an item that the ITC could apply for. It is 
something we can bring in right away and help us with that 
major burden.
    Ms. Richardson. Mr. Turner, did you have anything else you 
want to add on that point or do you agree?
    Mr. Turner. On the investment tax credit?
    Ms. Richardson. Yes.
    Mr. Turner. Yes. Absolutely. We believe it is a very 
efficient way to increase investment and infrastructure and 
rail in this country.
    Ms. Richardson. And the railroad trust fund?
    Mr. Turner. The devil is always in the details. Our model 
is very similar to BNSF. Money from our customers is reinvested 
at industry high levels and it has been that way for a number 
of years. There is all kinds of data that correlates.
    Our ability to invest is tied to our ability to earn it. We 
can put it where we need it. An ethanol facility in Colton, not 
very far east of here, tied to meeting California's ethanol 
standard was a business decision that was driven off a business 
opportunity. Our ability to charge with that and invest in it I 
think is well known.
    Ms. Richardson. I would just ask if you would supply to the 
Committee if we were, in fact, to have something like that what 
would be some of the conditions you would like to see? I 
appreciated your comments and I am going to incorporate them in 
what we are doing on the truck side in terms of accountability 
and so on but I would recommend you provide to this Committee 
if that discussion were to continue what would be some of the 
groundbreakers you would like to see? Oh, my time has expired 
so I can't do anymore. I want to stay in good graces with my 
Chairman.
    Mr. DeFazio. Go ahead.
    Mr. Asplund. Mr. Chairman, I think what we need to be clear 
is to differentiate railroad trust fund versus freight fee. 
Those are two different things.
    Mr. DeFazio. Versus what?
    Mr. Asplund. Versus a freight fee which would be a 
contributor to a national freight program.
    Ms. Richardson. I understood. I was asking specific to the 
railroad trust fund.
    Mr. Asplund. Thank you.
    Ms. Richardson. Thank you.
    Mr. DeFazio. I just have one other question on the trucking 
side. We had a discussion earlier about the inadequacy of the 
highway trust fund that I believe ATA has taken a position if 
quantified in supporting an increase in taxation. I just wonder 
from the three of you if you have any idea of ways we might 
fund a freight specific mobility program.
    Mr. Clifford. The ATA has gone on record to support an 
increase in the diesel fuel tax for that purpose as long as it 
could be directed specifically for those purposes.
    Mr. DeFazio. Yes.
    Mr. Rajkovacz. I would like to add to that. Truckers aren't 
Pollyannish about this. They realize there are issues and they 
are willing to step up to the plate. The most efficient way, 
though, to collect a tax is through the fuel tax, not a vehicle 
miles tax. It is very easy. It is done and we don't have to let 
inside-the-beltway contractors get billions of dollars for 
tracking equipment on our trucks. Yes, an increase in fuel tax 
but tied to accountability and how that is used.
    Railroad grade crossings. You are in the south land. Yeah, 
I have sat in Ontario for 20 minutes. That is a worthwhile 
improvement from the standpoint of a trucker if I don't have to 
sit there but for me to pay for an upgrade out across the 
middle of Wyoming I think that is an unfair diversion.
    Mr. Mack. I don't know that we have taken a position on 
that yet, Mr. Chairman.
    Mr. DeFazio. All right. Anybody else have something they 
really want to say? Yes, Grace.
    Ms. Napolitano. Thank you, Mr. Chair. This question is for 
Mr. Mack. I ran out of time the last time. The states do play 
an important role in assisting the Federal Rail Authority with 
the insuring of the safety along the rail lines.
    I agree that the current federal law should continue to 
prohibit states from creating regulations that burden 
interstate commerce but should states be allowed to regulate 
railroads in order to protect against local safety hazards? And 
do you feel the states should be allowed to regulate them in 
areas where the federal government does not have authority or 
has not acted upon?
    Mr. Mack. I would think so, yes.
    Ms. Napolitano. Anybody else? No comment.
    Mr. Clifford. I would say it depends on the specific 
circumstances.
    Ms. Napolitano. The CPUC, California Public Utilities 
Commission, has been the only means that any community can go 
and file any claim against a railroad for sitting on a crossing 
for half an hour or impeding traffic. Some areas there is no 
way of any redress for the communities and that is my concern.
    Mr. Clifford. Wednesday morning, for example, on my way to 
work, literally because I timed it, I was stuck behind a switch 
engine going back and forth for 30 minutes. I just couldn't get 
to my office. I missed a meeting as a result of it.
    Ms. Napolitano. Did you file a complaint?
    Mr. Clifford. No. The railroads are our friends. We work 
together so, no, I didn't file a complaint.
    Ms. Napolitano. I am teasing. Thank you very much. It is an 
issue that I think needs to be considered.
    Ms. Brown. I do because as Chair of the railroad I want to 
be clear that it is a balance between the community but it is 
commerce and we have got to find a way to, like we said, double 
track or figure out a way that we can move our country forward. 
You can't just sit up here and say I almost missed church 
because the train was going by but it is economic.
    We need the overpass so we can go to church another way. We 
have got to figure out how to fund our system. We cannot have 
each community developing their own plan. We need your input 
but we have got to work together as partners. It is a local, 
state, and federal government working together. Our freight 
rail is the envy of the world. Every time we go somewhere, and 
you have been there, they ask us about freight and we are 
asking them about commuter rail so we have got to figure it 
out. Thank you.
    Ms. Napolitano. I am reclaiming my time, Mr. Chair. I 
agree. Certainly there are certain things that we are very 
cognizant of. While you are talking about fast trains, that is 
one question that we didn't ask and I would like to submit some 
questions for the record because we do not have any ability to 
increase our passenger rail because it is competing with the 
other type of loads that you carry because they make more money 
for the railroads.
    Yet, we in Southern California don't have a mass transit 
system so we need to consider how do we move them on your rails 
and be able with the increase expected for the rail traffic 
from the port how do we work that out. That is something else I 
would love to be able to have a discussion and we have 
consideration of. Thank you, Mr. Chair.
    Mr. DeFazio. Well, I want to thank all the Members of the 
panel. Thank you for your testimony. I thank the audience. I 
thank MTA for the use of the facility, their hospitality, and 
all those who participated in educating the community these two 
days. I appreciate what you did and hopefully we will come up 
with some great ideas on how to better address these issues 
nationally. The Committee is adjourned.
    [Whereupon, at 12:36 p.m. the Subcommittee was adjourned.]

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