Hailed by construction labor unions, some international trade industry groups and the Long Beach Area Chamber of Commerce, the $500 million near-dock facility is being planned by Burlington Northern Santa Fe Railway (BNSF) on a 153-acre site, just four miles outside of the port complex.

The city council is scheduled to take up an item tonight, at its December 6 meeting, on whether to officially take a stance against the proposed facility, which is being called the Southern California International Gateway (SCIG).

A staff report on the item brought forward by 8th District Councilmember Rae Gabelich and co-signed by 7th District Councilmember James Johnson states that a draft environmental impact report (EIR) recently released by the Port of Los Angeles is based on “faulty assumptions and analysis,” while mitigation measures fail to “address the cumulative impacts of the project.”

However, it is undetermined how some councilmembers may vote on the item since the project would generate thousands of new union construction labor jobs.

John Cross, vice president of the West Long Beach Neighborhood Association, said he has been petitioning city councilmembers to take a stance against the project for years. But he said councilmembers have been on the fence due to a resolution affecting the support from conflicting constituents.

“We served the city council with 1,800 signatures, most of them from the 1st and the 7th Districts, asking the city council to bring forward a resolution to oppose the project . . . It went nowhere,” Cross said. “By not bringing it forward to vote on it at all, they don’t have to act on it and it wouldn’t hurt their campaign runs.”

Randy Gordon, president and CEO of the Long Beach Area Chamber of Commerce, which publicly supports the project, said he’s not sure how the city council will vote. “I don’t know where the council votes are,” he said “Obviously I think this project will bring a lot of jobs and these jobs are union jobs. So, it’s going to be interesting with that being the case. We certainly have councilmembers who are heavily influenced by the unions, to say the least, so the bottom line is these jobs will be union jobs.”

BNSF has been pursuing the project for more than six years, hoping to build about 18 railroad tracks connecting to the Alameda Corridor cargo expressway, allowing rail lines to pick up goods closer to port facilities. The facility would be bounded by Sepulveda Boulevard, Pacific Coast Highway, Dominguez Channel and Terminal Island Freeway.

The Port of Los Angeles owns a majority of the property, while Southern California Edison and various other property owners own other portions.

At Odds Over Jobs

The port’s EIR states the new facility is expected to take two years to complete starting in 2013, and will provide 1,500 construction jobs annually. BNSF recently announced a tentative agreement with the Los Angeles/Orange Counties Building and Construction Trades Council to implement a Project Labor Agreement, which imposes conditions favored by union labor, for more than $255 million worth of construction.

The project would also generate some 250 new permanent jobs by the time the facility opens in 2016 and about 450 jobs by 2023, according to the EIR.

However, if approved by the Los Angeles Harbor Commission in the next year as currently proposed, the new rail yard also stands to evict almost a dozen longtime, local businesses – mostly port-related transloading operations – that currently rent space at the location and employ about 1,200 workers, depending on shipping seasons.

The council members say the new facility would result in a “net loss” of permanent local jobs by replacing existing uses. “Many of the current employees of the existing uses live in Long Beach,” the staff report states. “Therefore, we will see a significant reduction in the numbers of permanent jobs that will be provided to the local economy as a result of the project.”

Meanwhile, the Port of Los Angeles has outlined in its EIR plans to help relocate some businesses to other sites in the port complex. But, full ramifications of the land acquisitions and relocations remain unclear. Some businesses are being offered significantly smaller sites than their current facilities, while other businesses may have to fend for themselves in finding new digs or shutdown entirely.

Although recently unable to be reached by phone, BNSF spokesperson Lena Kent has told the Business Journal in previous interviews that the transloading jobs are mostly contracted out, such as independent truckers, and aren’t “contingent” on existing businesses. She said the jobs would be survived by other port related operations. However, business owners refute BNSF’s claims.

Furthermore, Phillip Sanfield, Port of Los Angeles spokesperson, said the reason for holding two public comment meetings last month was to receive input from the public and business owners. The public comment period lasts until December 22. The port is expected to respond to comments over the next several months and come to the harbor commission for approval of a final EIR sometime next spring, depending on the amount of comments, he said.

“We continue through this period of the EIR to have an open door and are working with some of these companies to see what we can do to accommodate,” Sanfield said. “It may be that’s why this draft EIR is out there and that’s why we’re gathering information during the public comment period. It’s not only for the general public, but also for businesses and we’re looking to work with companies being impacted directly and indirectly.”

Business Impacts

One affected tenant is Los Angeles Harbor Grain Terminal, or L.A. Grain, which has exported bulk agriculture, such as soybean, corn, wheat and other products, through the twin ports for 52 years. The family-owned operation, which has been at it’s current location on Sepulveda Boulevard since 1987, employs about 100 workers who unload grain containers brought in by rail from Midwest farms and deliver the product to ships bound for Pacific Rim countries, such as Japan, Korea, Taiwan and China.

Howard Wallace, president of L.A. Grain, said he was recently approached by BNSF officials at a public comment meeting on the port’s EIR held in Long Beach last month. But neither the railroad company nor the port have fully addressed how the project may impact his business, adding that some businesses may be “on their own” in looking for a new spot.

“BNSF has sort of hit the ground running and put out press releases on how wonderful the project is, but they’re not – and neither is the port – really addressing the loss that’s taking place,” he said. “ ... People just don’t realize that we’re here.”

For L.A. Grain, however, looking for a new facility isn’t all that easy, Wallace said. While other operations may be able to rent somewhere else, the export operation that sits on nearly 2 acres relies solely on the availability of railroad track in an “overweight” freight corridor, adding that the operation is the “only grain handling facility in the ports of Los Angeles and Long Beach.” Having the capacity to handle about 60 railcars per day connected to the Alameda Corridor is critical since products become cheaper for foreign customers, he said.

“In order to handle the volume of grain you have to have a substantial amount of railroad track and that’s the difficult part of our facility,” Wallace said. “We could relocate if we could find a facility and a location within the Alameda Corridor that has sufficient track ... But to find a facility that would match land with the equipment we need would be very difficult to find.”

Additionally, he said the recession has been tough on workers and contractors at the agriculture-exporting terminal, and they now face an uncertain future. “A lot of these guys are quite concerned,” Wallace said. “In some cases, people have been here 10 to 20 years and now they may lose their job. Some people have been out of work for a year or two and they finally got a job again and now they’re going to lose it.”

The largest operation being impacted, however, is local trucking and freight-handling firm California Cartage Company, which operates a more than 70-acre transloading facility in Wilmington, unloading a few hundred cargo containers per day to be trucked out to distribution centers across the country. The local, well-known firm, which currently rents a majority of property from the port on a month-to-month lease, is being asked to reduce its size by 72 percent.

The port has offered up a near 10-acre site south of Pacific Coast Highway. But, Bob Curry, president of Cal Cartage, has told the Business Journal that the new site would only work for a trucking operation. If a new suitable location isn’t found in the next year, he might have to relocate the transloading facility out of state, he said, causing him to lay off some 800 to 1,000 employees.

While Cal Cartage has won numerous awards, including recently from the Long Beach Area Chamber of Commerce, for its pioneering efforts and investment to switch its truck fleet to Liquefied Natural Gas, or LNG, rigs as part of the Clean Trucks Program, Gordon said he is hopeful Cal Cartage will find a new location to remain in operation. He said the project is needed in a time when Long Beach is experiencing a high near 13 percent unemployment rate.

“Cal Cartage is a very good company,” he said. “It’s a solid company and has done a lot of great work in the region. This is not a perfect world here. But, the bottom line is we need this facility and we hope that it does work out so Cal Cartage can have facilities close by.”

Other businesses that may be impacted by the project include: Three Rivers Trucking; Fast Lane Transportation; Total Intermodal Services; Flexi-Van; California Multimodal, Inc.; San Pedro Forklift; Tesoro; and Praxair.

Environmental Dispute

Additionally, the proposed rail yard is surrounded by disputes over the environmental impacts the project would cause.

While the new rail yard is expected to add about 1.5 million truck tips per year (5,500 new truck trips per day) at opening, 95 percent of the trips would be eliminated from the 710 Freeway by bringing rail closer to port docks rather than having trucks take cargo 24 miles up to BNSF’s Hobart rail yard facility in the City of Commerce, according to the port’s EIR.

“These changes in traffic patterns ... are being proposed in order to shorten truck trips for movement of containers between ships and railcars, thereby easing traffic conditions on local freeways and reducing regional air quality impacts,” according to the EIR.

BNSF is also touting the project as a way to: “clean up an industrial site” by investing in new “green” technology, spending $100 million alone on environmentally friendly initiatives, including all-electric wide span gantry cranes, ultra-low emission switching locomotives and low-emission rail yard equipment.

Expected to exceed by 17 times the San Pedro Bay Ports’ minimum requirement for new construction under its Clean Air Action Plan, the project would require trucking companies operate 2007 or later trucks as required under the ports’ Clean Truck Program. Trucks would also be limited to specific “non-residential” routes and be equipped with GPS recording devices for compliance monitoring.

Switching to more “environmentally preferred” rail as means of trade transportation, the facility is promoted as a way to increase the port’s competitiveness in anticipation of the 2014 Panama Canal expansion that threatens to take cargo away from West Coast ports.

However, since port staff used 2005 as the baseline for its analysis, Councilmembers Gabelich and Johnson say the EIR “misrepresents” present conditions at the site, along with the impacts of the proposed project, since all drayage trucks currently in operation are required to meet standards of the Clean Truck Program by January 2012.

The councilmembers also say the EIR “waters down” impacts of truck traffic caused by the new facility and nothing would prevent BNSF or the displaced transloading facilities from adding more traffic to the 710 Freeway. “These assumptions run counter to all of the other regional planning models, which indicate a need to expand and provide dedicated freight lanes for the 710 Freeway,” according to the staff report.

The councilmembers also criticize the EIR for dismissing “zero emissions” technology as not being feasible at this time and not giving any alternatives to be considered, while not providing other locations for the project that wouldn’t have an impact on nearby schools and neighborhoods.

Cross points out that the SCIG project is in addition to Union Pacific planning to double capacity at its current Intermodal Container Transfer Facility, which has been located near BNSF’s proposed rail yard site since 1986, expanding from 700,000 lifts to 1.6 million. He said both projects would add a cumulative impact of new truck trips and health impacts in the area.

“We have higher rates of asthma and higher illness over here than in other parts of the city and it’s bad land use to put in another rail yard facility,” Cross said. “I don’t know how a transloading facility would be dirtier than trains coming out of the facility.”