BNSF intermodal facility on hold as Port of Los Angeles and City ponder next move

UPDATE: BNSF says it plans to address concerns over site plans with new environmental impact report.

A $500 million intermodal project in Southern California remains on hold as its municipal backers, the Port of Los Angeles and the City of Los Angeles, wrangle with legal challenges over the new facility.

But BNSF, the anchor tenant for project, says it is still convinced of project's merits and plans to push ahead with government approvals. The five members of the Port of Los Angeles’ harbor commission met Thursday with attorneys on the future of the Southern California International Gateway, a 153-acre, near-dock railyard aimed at handling the growing container volumes coming out of the top two ports in the U.S.

Under the plan, BNSF will build the near-dock railyard on land to be leased from the Los Angeles Harbor Department for fifty years. The project, which would take three years to complete, would first handle 570,800 twenty foot equivalent units (teus), before eventually hitting full capacity of 2.8 million teus. But the Gateway project, which was first proposed in 2005, must go back to the drawing board due to extensive legal challenges from the nearby City of Long Beach, residents and businesses adjacent to the project.

The opponents scored a legal victory in January when a California appellate court partially upheld a decision from a lower court that said the Gateway’s sponsors did not address certain issues in the final environmental impact report.

The appellate court said that the City of Los Angeles will have to “suspend project activities” until a revised environmental impact report is submitted.

The Port of Los Angeles said in a statement that it has already set aside its prior approval of the environmental impact report as well as the 50-year operating permit to BNSF. It said the onus is now on the City of Los Angeles and BNSF to find a way to move it through the regulatory process.

"The City has suspended all (Gateway) project activities, which shall not resume unless the City and BNSF take future actions to certify a revised (environmental impact report) . . . and adopt related environmental and project approvals," the Port of Los Angeles said.

For its part, BNSF said in a statement that it will work with the Port of Los Angeles to certify a new environmental impact report to secure related environmental and project approvals.

BNSF "still believes that this $500 million investment in Southern California will bring good jobs, take millions of truck miles off local freeways and improve air quality as long as it remains economically feasible," the company said in a statement.

The City of Long Beach, parts of which the Gateway site will straddle, has opposed the project due to its impact on local residents. Attorneys for Long Beach have highlighted that the all-hours intermodal facility would be located near schools and homes.

Long Beach has asked the project mitigate its impact by installing bigger sound walls, relocate certain facilities and move dray truck traffic away from residential streets. At full capacity, the report says Gateway would generate up 2 million truck trips from the port, which is four miles from the proposed site.

Despite the concerns from nearby residents, the Gateway actually pitched itself as a way to mitigate trucking pollution as it reduces the distance travelled for dray and intermodal truck movements to BNSF’s Hobart Yard in East Los Angeles.

In its environmental impact report, the Gateway would “help convert existing and future truck transport into rail transport, thereby providing air quality and transportation benefits” as it “would replace truck trips that would otherwise go to the [Hobart] yard in East Los Angeles, a journey of 24 miles each way.”

But even some in the intermodal and drayage are not keen on the project as it’s currently configured.

Fast Lane Transportation, which owns four intermodal depot sites in California, also filed as a petitioner on the original case seeking to block the Gateway. Fast Lane faces a potential eminent domain fight as the Gateway’s current plan contemplates taking over land now occupied by Fast Lane’s Wilmington depot.

California Cartage has also petitioned against the Gateway. It occupies land now owned by the Harbor Department that would be converted to the Gateway project.

The Gateway’s new environmental impact report would also have to weigh the impact from Union Pacific’s near-dock intermodal yard, the Intermodal Container Transfer Facility, which is five miles north of the port and adjacent to the proposed Gateway site. The ICTF itself is undergoing an upgrade that will eventually double its container volumes to 1.5 million forty-foot equivalent units per year.

The need for bigger intermodal facilities comes as the sector shows growth thanks to tightness in over-the-road trucking. As of the end of August, the Association of American Railroads said in its capacity report that North American intermodal traffic has grown 5.3% this year to 12.3 million railcars.

Year-to-date through August, Union Pacific’s intermodal business was up 5% from a year ago to 2.55 million rail cars. BNSF’s intermodal business was up 4.6% from a year ago to 3.54 million railcars.

As for the nearby ports, the Gateway’s environmental impact report expects Los Angeles and Long Beach will process up to 34.6 million teus annually by 2030, up from a combined 16 million teus in throughput at the end of 2017.

In pushing for the project, the Port of Los Angeles says that the future projections of container growth will require greater intermodal capacity.

“Even after maximizing the potential on-dock rail yards, the demand for intermodal rail service creates a shortfall in railyard capacity,” the Port of Los Angeles said in its environmental impact report.