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[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

       THE ALAMEDA CORRIDOR PROJECT: ITS SUCCESSES AND CHALLENGES

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT EFFICIENCY,
                        FINANCIAL MANAGEMENT AND
                      INTERGOVERNMENTAL RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 16, 2001

                               __________

                           Serial No. 107-50

                               __________

       Printed for the use of the Committee on Government Reform

  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

77-859              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2002
____________________________________________________________________________
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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida         EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California             PATSY T. MINK, Hawaii
JOHN L. MICA, Florida                CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia                    ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida                  DANNY K. DAVIS, Illinois
DOUG OSE, California                 JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky                  JIM TURNER, Texas
JO ANN DAVIS, Virginia               THOMAS H. ALLEN, Maine
TODD RUSSELL PLATTS, Pennsylvania    JANICE D. SCHAKOWSKY, Illinois
DAVE WELDON, Florida                 WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   ------ ------
ADAM H. PUTNAM, Florida              ------ ------
C.L. ``BUTCH'' OTTER, Idaho                      ------
EDWARD L. SCHROCK, Virginia          BERNARD SANDERS, Vermont 
------ ------                            (Independent)

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                     Robert A. Briggs, Chief Clerk
                 Phil Schiliro, Minority Staff Director

    Subcommittee on Government Efficiency, Financial Management and 
                      Intergovernmental Relations

                   STEPHEN HORN, California, Chairman
RON LEWIS, Kentucky                  JANICE D. SCHAKOWSKY, Illinois
DAN MILLER, Florida                  MAJOR R. OWENS, New York
DOUG OSE, California                 PAUL E. KANJORSKI, Pennsylvania
ADAM H. PUTNAM, Florida              CAROLYN B. MALONEY, New York

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
          J. Russell George, Staff Director and Chief Counsel
                 Earl Pierce, Professional Staff Member
                          Grant Newman, Clerk

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 16, 2001...................................     1
Statement of:
    Hankla, James, chief ecexutive officer, Alameda Corridor 
      Transportation Authority; Tim Buresh, director of 
      engineering and construction, Alameda Corridor 
      Transportation Authority; Jeffrey Brown, California State 
      Office of Research, representing State Senator Betty 
      Karnette; and Larry Wiggs, job training officer, Tutor-
      Saliba.....................................................    46
    Kellogg, Jeffrey, former Long Beach City councilman and 
      former vice chairman, Alameda Corridor Transportation 
      Authority Board; Gill Hicks, former general manager, 
      Alameda Corridor Transportation Authority; James Preusch, 
      vice president, managing director, A.G. Edwards & Sons, 
      former treasurer, Alameda Corridor Transportation 
      Authority; and Jeffrey D. Holt, vice president, Goldman 
      Sachs & Co., senior managing underwriter, Alameda Corridor 
      Project....................................................     3
    Steinke, Richard, executive director, Port of Long Beach 
      representing the Alameda Corridor Transportation Authority 
      Board; Larry Keller, executive director, Port of Los 
      Angeles; and Rollin Bredenberg, vice president, service 
      design and performance, Burnington Northern Santa Fe 
      Railroad...................................................    30
Letters, statements, etc., submitted for the record by:
    Buresh, Tim, director of engineering and construction, 
      Alameda Corridor Transportation Authority, prepared 
      statement of...............................................    55
    Hankla, James, chief ecexutive officer, Alameda Corridor 
      Transportation Authority, prepared statement of............    49
    Hicks, Gill, former general manager, Alameda Corridor 
      Transportation Authority, prepared statement of............     7
    Holt, Jeffrey D., vice president, Goldman Sachs & Co., senior 
      managing underwriter, Alameda Corridor Project, prepared 
      statement of...............................................    43
    Keller, Larry, executive director, Port of Los Angeles, 
      prepared statement of......................................    37
    Preusch, James, vice president, managing director, A.G. 
      Edwards & Sons, former treasurer, Alameda Corridor 
      Transportation Authority, prepared statement of............    13
    Steinke, Richard, executive director, Port of Long Beach 
      representing the Alameda Corridor Transportation Authority 
      Board, prepared statement of...............................    32
    Wiggs, Larry, job training officer, Tutor-Saliba, prepared 
      statement of...............................................    63

 
       THE ALAMEDA CORRIDOR PROJECT: ITS SUCCESSES AND CHALLENGES

                              ----------                              

                         MONDAY, APRIL 16, 2001

                  House of Representatives,
  Subcommittee on Government Efficiency, Financial 
        Management and Intergovernmental Relations,
                            Committee on Government Reform,
                                                    Long Beach, CA.
    The subcommittee met, pursuant to notice, at 8:58 a.m., in 
the Harbor Department Administration Building Board Room, Port 
of Long Beach, 925 Harbor Plaza, Long Beach, CA, Hon. Stephen 
Horn (chairman of the subcommittee) presiding.
    Present: Representatives Horn and Millender-McDonald.
    Staff present: J. Russell George, staff director and chief 
counsel; Bonnie Heald, director of communications; and Grant 
Newman, assistant to the committee.
    Mr. Horn. This meeting of the Subcommittee on Government 
Efficiency, Financial Management and Intergovernmental 
Relations will come to order.
    More often than not congressional hearings are called to 
examine a problem. Sometimes it involves an outrageous waste of 
Federal taxpayer money, other times it may involve an abusive 
use of power. Today's hearing is different and refreshing. We 
are here today to examine the multi-billion dollar 
transportation project that, unlike most publicly funded 
programs of this magnitude, is nearing completion on schedule 
and within budget. By this time next year trains will be 
speeding their Pacific Rim cargo along the Alameda Corridor 
between the Ports of Long Beach and Los Angeles and 
transcontinental rail networks 20 miles away.
    The intermodal project, which includes a 10-mile, 33-foot 
deep trench and 29 new bridges will ease traffic congestion and 
cut noise and air pollution in each of the seven cities along 
its path. The project will also allow cargo from the combined 
port complex, the busiest in the Nation and the third busiest 
in the world, to move two to three times faster toward 
destinations throughout the United States. Nearly one quarter 
of all waterborne imports currently enter this country through 
these ports and that volume is expected to double within the 
next 20 years. The need for such a project was clear, the 
challenges however were enormous.
    When the Alameda Corridor Transportation Authority was 
created in 1989, board members had the daunting task of 
building a consensus among seven distinct city governments, 
huge railroad companies that were in the process of merging, 
and Federal, State, and regional government agencies. The 
support of all of these entities was vital to the completion of 
the $2.4 billion project. Today we would like to learn how that 
consensus was achieved. We would like to hear about the 
specific challenges, how they were met and finally how the 
project is progressing.
    There are a number of proposals for similar projects in 
other cities, such as Seattle and New Orleans, perhaps Houston 
and others. In addition, projects are being discussed for other 
congested California areas north and east of Los Angeles. We 
hope that today's testimony will provide guidance for those who 
are considering these proposals. I congratulate all of our 
witnesses who are here with us today for their contributions to 
this highly successful public/private enterprise.
    I would like to welcome our first panel of witnesses who 
helped put this project together. Jeffrey Kellogg of the Newark 
Co., former Long Beach City councilman and former vice chairman 
of the Alameda Corridor Transportation Authority Board of 
Directors; Gill Hicks, president of Gill Hicks and Associates, 
Inc., and former general manager of the Alameda Corridor 
Transportation Authorty; James Preusch, vice president and 
managing director of A.G. Edwards and Son and former treasurer 
of the Alameda Corridor Transportation Authority; and Jeffrey 
D. Holt, vice president of Goldman Sachs & Co., and senior 
managing underwriter of the Alameda Corridor Project.
    On panel two we will hear the stakeholders of this project, 
the ports and the railroads. Richard Steinke, the executive 
director of the Port of Long Beach, who will also represent the 
Alameda Corridor Transportation Authority Board of Directors; 
followed by Larry Keller, his counterpart, executive director 
of the Port of Los Angeles and Rollin Bredenberg, vice 
president of service, design and performance for Burlington 
Northern Santa Fe Railroad.
    Our third and final panel will provide an update on the 
progress and successes of the project and the challenges that 
remain. James Hankla, chief executive officer of the Alameda 
Corridor Transportation Authority, former city manager of the 
city of Long Beach, former chief administrative officer for the 
county of Los Angeles; Tim Buresh, director of engineering and 
construction for the Alameda Corridor Transportation Authority; 
Jeffrey Brown of the California State Office of Research, who 
is also representing State Senator Betty Karnette.
    I welcome all of you and look forward to your testimony. 
Let me explain how we conduct this hearing. Technically we are 
an investigating committee, and as I said earlier, this is the 
good luck day with this committee. We have had about 100 
different hearings in the last 2 years and we will do the same 
process here. The minute--if you have a written statement--that 
we introduce you, that automatically goes in the hearing record 
with the gentleman from my left, and your right, and that will 
all be put in there with exhibits and everything else. What we 
would like you to do is summarize your testimony within 5 
minutes. We would like to have a lot of time for questions and 
answers, because that is the way we learn a lot. Your 
statements are very fine. They have been gone over by staff and 
I have had a chance to look at some. So if we can get panel one 
up here. You cannot see it apparently, but I can see it. Mr. 
Kellogg is on the right side. Mr. Hicks next to him. That is 
Mr. Hicks. Then we have Mr. Preusch and we have Mr. Holt.
    I might add for the second panel and the third one, you 
might want to just get around here and then it will be more 
intimate than having you just sitting and seeing their backs. 
So why doesn't the second panel just come up? We will put you 
in the right place when that time comes. Those chairs might 
even be more comfortable. The commissioners are very good at 
being comfortable. This is a beautiful building and we thank 
all of the people in the Port for helping us with this Corridor 
hearing, and you have been so good in the past when we have had 
hearings on the Customs Service and trying to help them, a very 
fine service.
    So we have Mr. Kellogg, Mr. Hicks, Mr. Preusch and Mr. 
Holt.
    Ms. Heald. Mr. Holt is here and we are trying to find him.
    Mr. Horn. Oh, OK. Well he will be the fourth one anyhow, so 
it does not matter.
    Let me just say that we also swear in all witnesses. So if 
you will stand and raise your right hands.
    [Witnesses sworn.]
    Mr. Horn. The clerk will note the three witnesses have 
assumed the oath.
    We will now begin with Mr. Jeffrey Kellogg, former Long 
Beach city councilman and I think mayor pro tem and former vice 
chairman of the Alameda Corridor Transportation Authority 
Board. So, Jeff, we are delighted to have you here.

     STATEMENTS OF JEFFREY KELLOGG, FORMER LONG BEACH CITY 
     COUNCILMAN AND FORMER VICE CHAIRMAN, ALAMEDA CORRIDOR 
  TRANSPORTATION AUTHORITY BOARD; GILL HICKS, FORMER GENERAL 
   MANAGER, ALAMEDA CORRIDOR TRANSPORTATION AUTHORITY; JAMES 
  PREUSCH, VICE PRESIDENT, MANAGING DIRECTOR, A.G. EDWARDS & 
    SONS, FORMER TREASURER, ALAMEDA CORRIDOR TRANSPORTATION 
AUTHORITY; AND JEFFREY D. HOLT, VICE PRESIDENT, GOLDMAN SACHS & 
   CO., SENIOR MANAGING UNDERWRITER, ALAMEDA CORRIDOR PROJECT

    Mr. Kellogg. Actually by starting with me you are jumping a 
little bit ahead because Mr. Hicks was involved with the 
Southern California Association----
    Mr. Horn. Have we got those microphones OK? The clerk will 
check. Can you hear it out in the audience?
    Mr. Kellogg. The problem with these tables is you do not 
know where the microphones are unless you look over at them. 
That is fine.
    Mr. Horn. Fine, but you have got to speak up.
    Mr. Kellogg. It is on.
    Mr. Chairman, my involvement is from the beginning of the 
Alameda Corridor in 1988 as a newly elected member of the Long 
Beach City Council. I am one of the original members of that 
governing board. The beginning process though really began with 
Mr. Hicks and the Southern California Association of 
Governments as they went through a process of determining the 
planning for the growth of the Ports of Long Beach and Los 
Angeles. I wish I could sit here today and tell you that I had 
this great vision, and if I was still in elected office I 
probably would make that claim, but the fact remains that I was 
simply trying to find a way of removing train traffic and 
eliminating a lot of the problems that trains were causing in 
my neighborhoods as a Council member.
    Someone showed me a document about this proposed Alameda 
Corridor. I got involved more out of luck than anything else. I 
became one of the original members and I was a chairman, I 
believe, four different times of that governing board during my 
12 years. It is probably one of the projects I am most proud of 
during my tenure as a member of the city council, and also 
representing the city of Long Beach on that governing board.
    There are too many stories that I have talked to your staff 
about on the project that are beneficial to it, some of the 
challenges along the way. I could probably--as you mentioned, 
you many times have to talk to different public works projects 
that have not had a success rate, as this one has been. Every 
time I did go back to Washington, DC, or Sacramento to lobby, 
it usually began with the following: Good morning, my name is 
Jeff Kellogg and I am not with the Metropolitan Transportation 
Agency. We are not part of the MTA, because the MTA, or the big 
dig project in Boston were at that time at the forefront of how 
to spend a lot of money and not necessarily get a lot of 
results.
    If I had to tell you what I felt was the strongest point on 
the Alameda Corridor that made it successful, it is because of 
one strong factor. You had people that were vested in it 
financially. The Ports of Long Beach and Los Angeles stepped 
up. When we went back to Washington, DC, or Sacramento to ask 
for additional funding, we did not say we have no funding, we 
said we have funding, we need more funding to make this project 
work. The strongest point is to have a partner in this who is 
willing to step up financially, whether it be corridor or 
cities. In other parts of this country who are trying to do 
similar projects, if they are not willing to put financial 
dollars up to make the project initially begin, I believe they 
will have a difficult time getting any more support back in 
Washington, DC, for example.
    The other issue that we felt very strongly about, we had a 
sole purpose. We are building one corridor to connect the Ports 
of Long Beach and Los Angeles to downtown Los Angeles and move 
the cargo. We are not trying to do 10 or 15 different items. We 
did not have 10 or 15 different political agendas taking place. 
We had one agenda, to build this corridor, to help improve 
moving cargo out of the Ports of Long Beach and Los Angeles. 
That impact is positive for the Federal Government, as well as 
the local area. For a local official, it meant less trains 
running through my neighborhood. So we had from the very 
smallest part, as an elected official, all the way to the top 
end of government realizing the benefits of it all.
    Those two points were critical as I looked at this. Having 
the people who were willing to financially invest in the 
project from the very beginning and then the community 
continuing to focus on the mission statement of what this was 
to do, and that was to build this project, not to become social 
engineers, but to just advance an engineering project of this 
magnitude.
    Mr. Chairman, that is the best advice I can give to anyone. 
It was a wonderful experience for me. I had a tremendous time 
working with different people and the Ports of both Long Beach 
and Los Angeles. I truly believe it is a model for everyone 
else to follow. Thank you, Mr. Chairman.
    Mr. Horn. Well, I thank you very much because that was a 
good summary, and here we are even before the end of the 5-
minute situation.
    Mr. Hicks, who was one of the early pioneers in guiding the 
Alameda Corridor project.
    Mr. Hicks. Good morning, Mr. Chairman, ladies, and 
gentlemen. Thank you very much for the invitation to speak to 
you today.
    You have asked me to discuss some of the challenges faced 
by this project. I am going to speak primarily to the issues 
prior to construction. There are other speakers here today who 
will touch base on that.
    As you know, the Alameda Corridor began modestly as a low-
budget planning study in the early 1980's and has now developed 
into a $2.4 billion program, one of the largest public works 
projects in the United States. I believe that the success of 
the Alameda Corridor is due in part to the successful execution 
of what I call the seven C's of project development, and they 
are communication, coordination, credibility, compromise, 
consensus, coalition and champions. These C words reflect the 
necessary components of implementing a complex project 
involving many stakeholders with competing agendas. 
Successfully navigating these seven C's is normally a 
prerequisite to obtaining another C word, namely capital. 
Conversly, missteps in any of these areas, if serious enough, 
could easily sink or derail a major project.
    In the early days of the program, one of the key challenges 
was what is the project. What is the project definition? And in 
the early 1980's, the Southern California Association of 
Governments created a Ports Advisory Committee which looked at 
the options. And after only 5 months, in March 1982, the Ports 
Advisory Committee did reach consensus on a comprehensive list 
of highway improvements that included the widening of Alameda 
Street from the ports to Route 91.
    From 1982 to 1984, the Ports Advisory Committee focused on 
railroad access for the ports, and in December 1984 the SCAG 
Executive Committee adopted a plan for the consolidation of all 
port-related railroad traffic onto the former Southern Pacific 
San Pedro Branch. This corridor is largely industrial and thus 
more compatible with the heavy freight trains than three other 
harbor-access lines that cut through residential neighborhoods.
    When the plan for the consolidated corridor was originally 
proposed in 1984 the railroads looked at it and were generally 
opposed because, of course, they had their own privately owned 
rights-of-way. It was like asking three neighbors on a 
residential street to share the same driveway. Ultimately 
however, through simulations of the railroad traffic and other 
studies, we were able to convince the railroad that, yes 
indeed, the project would speed up the trains and reduce the 
significant amount of delay to their own trains; thus, 
improving the efficiency of the rail line and facilitating the 
movement of international cargo were important objectives, 
along with the goals of reducing vehicular delays at grade 
crossings, improving emergency access, and reducing noise and 
air pollution. The SCAG study demonstrated that the 
consolidated corridor would be a win-win solution for all 
concerned.
    Another major challenge, of course, was obtaining 
additional funding beyond the seed funding that the ports 
provided in the early days of ACTA. We first approached the 
L.A. County Transportation Commission, which was the earlier 
agency before the MTA. Initially there was not even a category 
in which to compete. We were not a freeway, we were not buses, 
we were not commuter rail. For 2 years we lobbied the agency 
for a category for goods movement so that the Alameda Corridor 
could compete in this arena. Eventually over time we were 
successful in getting commitments from the MTA for $347 million 
in State, Federal and county grants. These efforts were also 
supported by the California Transportation Commission, another 
major champion of that project.
    One of the highlights of the program, of course, was 
obtaining the Federal loan in 1996 and 1997. Through a variety 
of legislation, the ISTEA, the National Highway System 
Desigination Act which desiginated the Alameda Corridor as a 
high-priority corridor, we became eligible for the innovative 
financing. In 1996, the Omnibus Budget legislation allowed for 
a $58.68 million appropriation to support a $400 million loan. 
In 1997, in January, President Clinton held a signing ceremony 
for the loan at the White House.
    This process, culminating in the landmark loan, was the 
result of extensive communications, coordination, credible 
analyses of national economic impact of port activity, 
consensus and coalition building, compromise and the support of 
key champions within the legislative and executive branches of 
the State and Federal Governments. Members of ACTA's coalition 
and advocacy team successfully communicated the key message 
that the project was vital to the health of the Nation's 
economy because it would dramatically improve a critical 
international trade corridor linking every other State in the 
Nation to the largest port complex in the United States. 
Congressman Horn and several of his colleagues were true 
champions in this endeavor and deserve enormous credit for the 
successful effort.
    Mr. Chairman, there are other challenges that I have listed 
in my written testimony that you can read at your leisure, but 
in the interest of time, I would like to stop here.
    Mr. Horn. Well thank you very much, Gill. You have been a 
real pioneer and I am sure you will have plenty of people 
saying how did you do it and how can we do it. So that will be 
helpful.
    Our next presenter is James Preusch, the vice president and 
managing director of A.G. Edwards & Sons, former treasurer of 
the Alameda Corridor Transportation Authority. He also was the 
chief financial officer to the Port of Los Angeles. So he 
really knew the territory.
    Mr. Preusch.
    [The prepared statement of Mr. Hicks follows:]

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    Mr. Preusch. Thank you, Mr. Chairman, and good morning. It 
is a pleasure to be here. I want to thank you for your support 
and encouragement of the ACTA project. It was one of the things 
that helped us move the financing along.
    Let me talk about several factors that led to the success 
in financing the ACTA project.
    First, I think was the recognition that ACTA represented a 
solution to a bona fide need. As Mr. Hicks pointed out, in the 
early 1970's and the 1980's, the three rails were using 
different routes; asking them to consolidate, was vital to 
eliminating 200 separate points of conflict where surface 
streets crossed--met rail lines, creating traffic conflicts, 
safety, noise and environmental impacts at each one of those 
points. The fact that there was a very clear and substantive 
need, I think brought people together to resolve that need. The 
ACTA project was the outgrowth and the solution.
    Second, the project developed a great deal of regional 
support and involvement. As people began to understand what the 
project represented and really grasp the nature of the 
challenge, they recognized this as a vital solution to 
resolving that conflict. I think an important aspect was the 
recognition that cargo would come to our country through the 
San Pedro Bay ports regardless of whether or not there was a 
plan to deal with that eventuality or not. The fact that the 
cargo was coming motivated people to do something about it. 
There was little that could be done to stop the cargo movement 
and the recognition that it would be here motivated people 
throughout the community to get on board to find a workable 
solution.
    In the early 1990's, as the concept was beginning to take 
shape, there were some preliminary estimates of costs that led 
to several funding strategies. The initial thinking included 
right-of-way funding by the ports, funding from State and local 
sources, bond financing supported by a truck or rail user-fee 
and a Federal grant of $700 million. It soon became clear that 
in spite of the need and support for ACTA, a Federal grant of 
that magnitude was simply out of the question. Many Members of 
Congress and the administration encouraged flexibility and some 
cooperation in resolving that problem, and we saw creative, 
experienced staff members within the U.S. DOT and with the new 
latitude in the ISTEA legislation find ways to craft a loan for 
ACTA's benefit. The cargo use fee which grew out of the 
negotiations with the railroads was essential to supporting the 
debt structure that was necessary to provide the financing.
    In 1994, the ports made a major financial commitment by 
purchasing miles of railroad right-of-way potentially needed 
for the project for some $394 million. That was a very bold 
move, but that extraordinary commitment of cash when ACTA's 
costs were unknown and its financial viability unproven was 
vital. The use-fee, which was negotiated as part of the funding 
package, was essential in assemblying and leveraging those 
funding sources.
    I want to talk for just a minute more about the outgrowth 
of the Federal loan in the TIFIA legislation that came about in 
TEA-21. TIFIA, as you know, provides $10.6 billion in loanable 
money between 1999 and 2003. When ACTA received its loan, the 
loan was negotiated, and the first $140 million draw was 
received before the ACTA costs were clearly known or the 
details of the bond structure were in hand. Today the TIFIA 
process has become more conservative to the frustration of many 
of the applicants. The result has been some stagnation. I would 
like to encourage that in going forward these projects find 
ways to become more flexible with TIFIA funding that can go to 
the ports or to ACTA, and to more flexibility in using TIFIA 
that might be possible with charges during reauthorization.
    Thank you.
    [The prepared statement of Mr. Preusch follows:]

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    Mr. Horn. Well, that is very helpful and I am sure in the 
question period, maybe you will reveal some of the other 
options that you must mentioned would be needed if someone is 
going to try to replicate this.
    Is Mr. Holt--somebody said he is in the building----
    Ms. Heald. No, he is not in the building.
    Mr. Horn. Well, we will go to the next panel then, Let me 
go through two panels I think and then we will have questions.
    Panel two: Richard Steinke, executive director, Port of 
Long Beach. Just stay where you are, folks, we will have a 
grand convention here before the end. Welcome, Richard. And 
then Larry Keller, executive director of the Port of Los 
Angeles; and Rollin Bredenberg, vice president, service design 
and performance, Burlington Northern Santa Fe Railroad.
    So we will start with Mr. Steinke.

STATEMENTS OF RICHARD STEINKE, EXECUTIVE DIRECTOR, PORT OF LONG 
    BEACH REPRESENTING THE ALAMEDA CORRIDOR TRANSPORTATION 
AUTHORITY BOARD; LARRY KELLER, EXECUTIVE DIRECTOR, PORT OF LOS 
ANGELES; AND ROLLIN BREDENBERG, VICE PRESIDENT, SERVICE DESIGN 
     AND PERFORMANCE, BURNINGTON NORTHERN SANTA FE RAILROAD

    Mr. Steinke. Good morning, Mr. Chairman.
    I would like to tell you a little bit about what I consider 
the challenges and successes of the Alameda Corridor 
transportation project. As executive director of one of the 
Nation's busiest ports and as a member of the governing board 
of ACTA, I can tell you that the word that best describes ACTA 
to me is perseverance. Most people think that ACTA is only a 
few years old, but as Mr. Kellogg, Mr. Preusch, and Mr. Hicks 
indicated, it really has its origins going back to the early 
1980's. This intermodal project was first conceptualized during 
this time and it has taken over 15 years to transition from 
concept to design and now to construction. With any large-scale 
project, there will always be challenges, and during this 
period of time, this project has certainly seen its share of 
these obstacles that it has had to overcome.
    I stand before you today happily being able to tell you 
that we have overcome these obstacles and are scheduled for an 
on-time and under-budget completion of ACTA in April 2002. 
There has been a tremendous amount of inter-governmental 
cooperation by a whole host of entities. First of all, there 
had to be cooperation between the Port of Long Beach and the 
Port of Los Angeles. Also we share one bay, we are two separate 
and distinct harbor departments within two different cities. 
And while we compete vigorously for customers and market share, 
we also have recognized that we must cooperate on regional 
infrastructure projects. The Alameda Corridor is a good case in 
point. The project traverses important corridor cities and 
cooperation and consensus had to be attained from the cities of 
Long Beach, Los Angeles, Carson, Compton, South Gate, 
Huntington Park and Vernon. A number of major regional 
governmental organizations have also had to be involved in this 
project including the Metropolitan Transportation Authority, 
Southern California Association of Governments, Metrolink, 
Southern California Regional Rail Authority and others. A 
significant role has been played by the State of California and 
our Federal Government has served an essential role through the 
various agencies involved in reviewing and approving the 
project and funding for the same. You can mix or you can 
combine any or all of these entities because all of us have had 
to work cooperatively through a myriad of issues to make this 
project work successfully. Years have been spent in 
negotiations on issues ranging from permits and environmental 
documentation to funding issues and construction, to name a 
few. I will not go into detail about the funding of the 
project, but suffice to say that besides the Ports of Long 
Beach and Los Angeles, various other sources of governmental 
funding have been used to finance the $2.4 billion project, 
including the $400 million loan from the Department of 
Transportation.
    This is truly a public-private partnership, and while I 
previously mentioned the governmental stakeholders that have 
been involved in this project, it also required cooperation 
with the railroads. When this project started, we were dealing 
with three major railroad companies--Southern Pacific, Union 
Pacific, and Santa Fe, all who had separate lines that ran to 
the ports. By the time all of the operating agreements and 
final documents were completed, there were mergers and 
acquisitions that resulted in our railroad partners being Union 
Pacific and Burlington Northern Santa Fe.
    Probably the key aspect of this project has been the 
recognition by all of the parties that this is a critical and 
beneficial infrastructure project that will positively impact 
not only southern California, but also the State's and the 
Nation's surface transportation system. Without that 
recognition and without the various parties working toward the 
greater good, the project would still be in a planning mode. We 
all look forward to this time next year when all the various 
entities will rightfully be able to say they contributed to the 
success of a critical linchpin in our Nation's transport system 
of goods movement. This has been a great example of 
intergovernmental interdependence that will assure the 
continuing movement of goods from our Pacific gateway ports to 
consumers across the country.
    Thank you.
    Mr. Horn. Thank you.
    [The prepared statement of Mr. Steinke follows:]

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    Mr. Horn. Let me introduce Ms. Millender--Juanita 
Millender-McDonald. She has been very helpful on the Alameda 
Corridor and we are glad to have her here this morning.
    Mr. Holt has arrived now and what I would like to do is 
swear in Mr. Holt and the three witnesses.
    [Witnesses sworn.]
    Mr. Horn. The clerk will note that the fourth witness of 
panel one and all of panel two have taken the oath.
    So we now go to the executive director of the Port of Los 
Angeles, Larry Keller. Glad to have you here.
    Mr. Keller. Good morning, Mr. Chairman and Congress Member 
Millender-McDonald.
    We are proud to be one of the founding partners of the 
Alameda Corridor and thank you for this opportunity to appear 
before your subcommittee to discuss this vital infrastructure 
project. I would also personally like to thank both of you for 
your support of this project over the years that it has been in 
existence. It is much appreciated and it has made it possible.
    At the core of our success to date has been the significant 
intergovernmental cooperation and bipartisan support received 
from all levels of government. It has been unprecedented and 
certainly signifies the value placed on the need for seamless 
transcontinental cargo delivery. In reality, the beneficiary of 
the Alameda Corridor's successful completion and operation is 
the American public, to whom our domestic and global 
transportation efficiency is critical.
    In the early 1980's, it was apparent an improved 
infrastructure would be required if the cargo transportation 
system serving the Ports of Los Angeles and Long Beach was to 
handle the predicted growth in cargo through the west coast 
ports. In the ensuing two decades, cargo through southern 
California has increased more than 700 percent. Globally, 
containerization has become the undeniable mode for efficient, 
cost-effective cargo handling and intermodalism has become the 
delivery mode of choice.
    Our growth projections proved to be conservative. Container 
growth at Los Angeles in the last 5 years has been an explosive 
76 percent. Business has been brisk despite economic 
uncertainties with some of our trading partners around the 
world starting in 1997. In fact, the Port of Los Angeles saw a 
27 percent overall increase in container cargo last year alone. 
With our neighbor, the Port of Long Beach, our total cargo 
places us third in the world behind the Ports of Singapore and 
Hong Kong.
    Needless to say, we must be prepared for continuing growth 
surges in the near and long term. Our planning has been likened 
to a chess game where you must contemplate at least 12 moves 
ahead and there is no single all-encompassing solution for our 
future. The puzzle of our highway and rail efficiency has 
numerous pieces which must fit precisely together in order to 
achieve a functioning whole. No longer can we afford to have 
cross traffic at intersections which slows cargo transit and 
delays our people.
    And as environmentally responsible public agencies, we are 
also charged with addressing air emissions and other quality of 
life issues caused by idling vehicle traffic and costly delays 
to people and commerce. One answer was to design a better 
corridor for the short but critical 20-mile stretch between the 
ports and downtown railheads. That piece of the puzzle was the 
construction of the Alameda Corridor.
    At the extreme south end of the Corridor are port grade 
separations, street improvements and similar infrastructure 
projects serving major terminal developments designed to meet 
current and future transportation needs. Efficient 
infrastructure is the centerpiece of our future potential in 
planning for road and rail improvements and is a normal but 
important part of our terminal design work.
    At the Port of Los Angeles alone, we have spent more than 
$200 million in recent years for infrastructure improvements to 
link the Corridor with our Pier 300 and 400 projects. These 
Pier 300 and Pier 400 landfill and terminal projects are 
dependent upon the Corridor and highway access to carry almost 
5 million containers of cargo today alone. For our two ports, 
that number can be expected to swell to about 24 million 
containers in just 20 years.
    No longer are container terminals built on 100 acres, which 
was common just 10 years ago. When completed in less than 4 
years, our newest terminal on Pier 400 will cover almost 500 
acres, built on a manmade landfill of some 600 acres. This is 
responsible planning and careful readiness.
    Our projections are matched by those of our customers to 
develop the best technology, design and logistics to set the 
standard for our industry. We are committed to continued 
improvements in coordination with the Alameda Corridor project 
completion early next year.
    Further, the Ports of Los Angeles and Long Beach are 
jointly pursuing an MTA grant for $7.2 million for an 
intelligent transportation system to put the whole thing 
together. We have each committed over $1 million in matching 
funds because we feel so strongly about efficient 
transportation. The goal is to provide real time traffic 
information to truckers using the ports, using tools like 
interactive transit signage and programmable signs driven by TV 
cameras mounted on freeway bridges. These measures in sync with 
express rail access provided by the Corridor will ensure that 
all cargo, both local and intermodal loads, will move swiftly 
from our docks to their ultimate destinations.
    Growth will continue here. That is a given. The reason for 
our continued growth is quite simple. Today, half our cargo 
stays in our five-county area to serve this consumer pool of 16 
million people. We are a distribution and manufacturing hub for 
import and export cargo. In about 10 years, it is estimated 
that the Los Angeles regional population could swell to 20 
million people. The addition of a population the current size 
of the city of Los Angeles. The other 50 percent of our cargo 
goes to points east of the Rockies because of our excellent 
access to America's rail system.
    America depends on us, we depend on you, we thank you for 
your efforts. Projects like the Alameda Corridor ensure that we 
can in fact deliver as promised.
    Thank you very much.
    Mr. Horn. Thank you for that very succinct presentation.
    And now Rollin Bredenberg is vice president, service design 
and performance for the Burlington Northern Santa Fe Railroad. 
Welcome.
    [The prepared statement of Mr. Keller follows:]

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    Mr. Bredenberg. Good morning, Mr. Chairman, ladies and 
gentlemen, thank you for the opportunity to speak to you today. 
I am Rollin Bredenberg, vice president, service design and 
performance with Burlington Northern Santa Fe.
    When the Corridor first started being negotiated, I was at 
that time general manager on the Southern Pacific Railroad and 
so have seen this from a couple of angles. I can tell you from 
either angle it was not the railroad's great vision that got 
the project started.
    As a matter of fact, the different railroads had different 
slants on whether the project should even go or not. Southern 
Pacific had arguably the best existing infrastructure with the 
San Pedro and Wilmington branches serving as a paired track 
feeder to the ports. Southern Pacific also had the ICTF 
facility, the near dock facility, that facility started 
producing so many trains that even their paired track operation 
started to get slow, and because of other problems that the 
Southern Pacific had, even Southern Pacific went along with 
this. Union Pacific had their harbor subdivision, a single 
track, unsignaled mainline. The Santa Fe was in probably the 
worst position with its harbor subdivision, a 23-mile branch 
line that goes down through the L.A. Airport and Inglewood 
area.
    The infrastructure that existed in the mid-1980's, and 
remains today substantially, could not and has not sustained 
growth. When the Corridor opens up in April 2002, we will be 
past the time when we needed to have that corridor open.
    The use-fee that the railroads will be paying for the use 
of the Corridor can be absorbed by traffic on the Corridor 
because much of that traffic would have to be drayed at a 
higher cost to facilities in Vernon or Los Angeles. Not only 
that, but today there is no place to expand intermodal 
production lift facilities anywhere in the Los Angeles basin 
short of San Bernadino, on our railroad.
    The project model for the Alameda Corridor is not a model 
that can be replicated other places that do not have the 
fundamental franchise need or infrastructure need by the 
railroads to sustain growth. That is the reason why the 
railroads over time will retire a $1.1 billion bond and I 
believe $400 million loan. At the rate of $30 per 40-foot 
container, we will be paying and passing the costs on to our 
customers or absorbing in margin ourselves what we would not 
have been able to do without this project.
    As we move toward substantial completion of the project, 
Union Pacific and BNSF and ACTA have been able to reach 
consensus on all of the important decisions necessary for a 
successful implementation and operation.
    Thank you.
    Mr. Horn. Thank you very much. That will be helpful in the 
question period there.
    Let us go back now to Mr. Jeffrey D. Holt, vice president, 
Goldman Sachs & Co., senior managing underwriter for the 
Alameda Corridor Project. Thank you, Mr. Holt, for coming.
    Mr. Holt. Thank you, Mr. Chairman and distinguished 
members.
    My name is Jeff Holt. I am a vice president of Goldman, 
Sachs & Co., and I am the manager of the municipal finance 
division of the Fixed Income Currency and Commodities Group, 
and my offices are in San Francisco. I served as the senior 
managing underwriter for the Alameda Corridor project. It is my 
pleasure to address the committee concerning the financing 
aspects of the Alameda Corridor project. The views I present 
today are my own and do not necessarily represent those of 
Goldman, Sachs & Co.
    In my business, I see many great proposals for new 
infrastructure ideas. Engineers bring in beautiful conceptual 
drawings, planners project tremendous statistical benefits and 
policymakers stress the need for such projects. In the end, 
each and every one of these projects comes down to financial 
feasibility. The big question is always, how do we pay for the 
large public works projects that everyone needs but that no one 
agency, on its own, can afford. The Alameda Corridor is 
possibly the best example of how multiple parties in a public/
private partnership can come together to fund such large 
projects.
    The effort started with the ports of Los Angeles and Long 
Beach. Of all the stakeholders, one group, the ports, finally 
stepped up to take the leadership position, and they brought 
their checkbook. The all-important $400 million in development 
money used to secure the right-of-way was only surpassed in 
importance by the many dedicated and skilled personnel they 
lent to the effort on a full-time basis. The ports provided the 
organization, the vision, and the enthusiasm to make the 
project happen.
    Next the railroads agreed to combine three separate lines 
into one. They proved ultimately reasonable through the 
negotiations and the entire debt burden of $1.6 billion will be 
paid from the $30-per-box corridor user-fee.
    The Federal Government added several critical financing 
components. Through the local MPO, the LACMTA, the Federal 
Government is passing through $347 million in grant funding for 
the project. The LACMTA is graciously accelerating that funding 
through its own financing efforts in order to turn those future 
grants into construction dollars now. In addition, the U.S. DOT 
closed the last portion of the funding gap with a very 
innovative loan. The U.S. DOT staff came to the finance team 
early in the process and asked us how they could be helpful. We 
said give us more grants. They said the grant well is dry, so 
how about a loan. We said we can borrow in the tax exempt 
market, why do we need taxable Federal loans. They said, we can 
give a loan with very favorable terms. So we got busy and 
designed a loan whose terms one could only describe as being 
very close to straight equity, and they agreed. That $400 
million loan finished the funding package and completely closed 
the gap. That loan stands as a prototype for the U.S. DOT's now 
popular TIFIA program. The key piece to that loan was a $59 
million congressional appropriation in a key budget vote in a 
key budget year. That $59 million appropriation for a loan-loss 
reserve made a $400 million loan available which, in turn, made 
it possible to borrow an additional $1.2 billion from the 
capital markets to complete the $2.4 billion total project 
cost.
    I also want to compliment the ACTA Board. During the final 
stages of the process, the negotiations with the railroads made 
the project costs increase by several hundred million dollars. 
Rather than succumb to whispers of potential cost overruns, the 
ACTA board held fast in their courage that the project was 
feasible in its proposed form and size, and they moved ahead 
with the final approvals.
    Last, bondholders stepped forward and provided $1.2 billion 
in bond proceeds to complete the funding package. Interest 
rates were very favorable at the time. Swarms of lawyers wrote 
stacks of documents, including a 650-page official statement, 
the primary disclosure document for the municipal market. In 
the end, the projected revenue stream was converted to 
construction dollars with the maximum leverage that the capital 
markets would allow and with the least risk to the principals 
possible. The bond financing was non-recourse to the ports and 
non-recourse to the railroads. Bondholders accepted a basketful 
of risks, including construction risks, interruption risks and 
long-term business, revenue and economic risks. The ports 
provided a limited backup pledge, which under current 
projections will never be drawn. This was groundbreaking 
financing in many ways, but most importantly, it was the first 
time that any financing for intermodal cargo facilities had 
been secured almost solely from the container cargo stream 
coming through a single gateway port. The strong market forces 
that make containers come through the Los Angeles/Long Beach 
area provided the credit and security to bondholders. So in the 
end, the problem became the solution.
    The blended cost of capital for the combined financings was 
near 6.5 percent. On the date of financial closing, it was 
expected that the debt service for the $1.6 billion in debt 
would have been paid off on the last possible day that 
container use charges could be collected. As you all are well 
aware, the San Pedro Ports have been growing at double digit 
numbers for several years running. Given the tremendous growth 
through the last 3 years and the fact that the management team 
has brought the project in on time and on budget, it is now 
expected that the Federal loan will be paid off many, many 
years early. By all financial standards, this project is a 
raging success.
    In closing, I must say that it was the governmental 
partners that brought the critical elements together for a 
successful project. They saw the original need for the Corridor 
using regional long-term planning. They brought all of the 
parties together across many jurisdictions to solve the 
organizational, logistical and financial problems. They staffed 
the Carson office with dedicated and brilliant men and women, 
and most importantly, they have, and still have, the will to 
succeed.
    Thank you.
    [The prepared statement of Mr. Holt follows:]

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    Mr. Horn. Thank you. I think we will now--if panel three is 
here, we will merge you in and then we can put questions to all 
of you and not have to replicate it. I see Mr. Hankla, Mr. 
Buresh, Mr. Brown and Mr. Wiggs are here.
    Gentlemen, we do have an oath to be administered, so Mr. 
Holt and the new panelists please rise.
    [Witnesses sworn.]
    Mr. Horn. The clerk will note that all five of the 
witnesses have affirmed the oath. That duty done, we will start 
with Mr. Hankla, chief executive officer, Alameda Corridor 
Transportation Authority, and as I noted, former city manager 
of Long Beach, former chief administrative officer of the 
largest county in the Nation, which is Los Angeles County. So 
thank you for coming.

 STATEMENTS OF JAMES HANKLA, CHIEF ECEXUTIVE OFFICER, ALAMEDA 
  CORRIDOR TRANSPORTATION AUTHORITY; TIM BURESH, DIRECTOR OF 
 ENGINEERING AND CONSTRUCTION, ALAMEDA CORRIDOR TRANSPORTATION 
AUTHORITY; JEFFREY BROWN, CALIFORNIA STATE OFFICE OF RESEARCH, 
REPRESENTING STATE SENATOR BETTY KARNETTE; AND LARRY WIGGS, JOB 
                 TRAINING OFFICER, TUTOR-SALIBA

    Mr. Hankla. Thank you, Mr. Chairman and Congresswoman 
Millender-McDonald. It is always nice to see both of you. My 
name is Jim Hankla. I am the chief executive officer of the 
Alameda Corridor Transportation Authority, known by the acronym 
ACTA. We are the public agency building the Alameda Corridor 
rail cargo expressway, otherwise known as a toll road for 
trains.
    Thank you for inviting us here today to discuss how our 
project came together and how we have benefited from 
intergovernmental cooperation. At ACTA, we believe very 
strongly in government efficiency and think there are good 
lessons to be learned from our experience in this area, so we 
are very grateful for the opportunity to appear before you 
today.
    I especially want to thank you, Mr. Chairman, and also 
Congresswoman Millender-McDonald for your longstanding and 
active support of the Alameda Corridor project. I doubt that 
this project would be in existence today were it not for your 
efforts. As you know, intergovernmental cooperation has been at 
the heart of the success of the Alameda Corridor project.
    In 1981, a Ports Advisory Committee was created in response 
to growing concerns about the ability of ground transportation 
systems to accommodate increasing levels of traffic in the port 
area. The committee was formed by the Southern California 
Association of Governments. Its members included 
representatives of the ports, the U.S. Navy, the Army Corps of 
Engineers, the railroads, the trucking industry, and the Los 
Angles County Transportation Commission, the predecessor agency 
to the Los Angeles County MTA.
    Perhaps the most basic example of intergovernmental 
cooperation can be found in the very structure of the Alameda 
Corridor Transportation Authority itself. ACTA is a Joint 
Powers Authority created by the cities of Los Angeles and Long 
Beach in 1989. The seven-member governing board includes 
representatives from each city council, two representatives 
from each port and a representative from the Los Angeles County 
Metropolitan Transportation Authority.
    By putting aside their friendly but unmistakable rivalry to 
cooperate on the Alameda Corridor project, the two ports are 
benefiting not just the region but the entire Nation, and they 
should be praised for their leadership.
    In the early 1990's, ACTA began reaching out to Members of 
Congress to line up bipartisan support for the project. Members 
of Congress and elected officials at all levels were invited to 
the port area to see for themselves the critical need for the 
Alameda Corridor. In 1995, Congress approved legislation that 
identified the Alameda Corridor as a project of national 
significance. I should note, Mr. Chairman, that as a Member of 
Congress, you and the Congresswoman were both instrumental in 
the success of this effort.
    The congressional identification of the Alameda Corridor as 
a project of national significance was the trigger needed to 
secure Federal funding for the project. In 1997, Congress 
appropriated $57 million needed to back a Federal loan for the 
project, and in 1998, the U.S. Department of Transportation 
authorized a $400 million loan for the Alameda Corridor 
project. Neither of these actions would have been possible 
without a broad coalition of support from elected officials and 
our strategic partners in the Federal Government.
    The process that resulted in the Department of 
Transportation loan became the model for the Transportation 
Infrastructure Finance and Innovation Act of 1998 [TIFIA]. 
Through TIFIA, the Department of Transportation and the Federal 
Highway Administration now provide financial assistance to 
projects across the country identified as being nationally 
significant. I understand that the Federal Government is 
considering an expansion of this program. I can tell you 
unequivocally that this innovative program worked well for 
ACTA. In effect, it allowed us to leverage Federal financial 
support to complete our funding package with money from the 
public and private sectors, which I will get into in a moment.
    At the State level, ACTA worked closely with members of the 
legislature, Caltrans' staff and the California Transportation 
Commission to include the Alameda Corridor in short and long-
range plans, and to expedite its funding. Through Caltrans, 
ACTA also received a grant as partial funding for a major rail/
rail grade separation, known as the Redondo Junction, to grade 
separate freight train movements from commuter and intercity 
passenger rail services, thus providing benefit to both freight 
and passenger rail services.
    At the local level, we worked closely with the Los Angeles 
County MTA to set aside State and Federal grant funds, as well 
as local transportation sales tax revenue that MTA allocates at 
its discretion for use on the Alameda Corridor project.
    The ports, of course, provided the most essential risk 
capital, $394 million for rights-of-way purchases and startup 
financing.
    Innovative financing was provided. The collective 
assistance offered by the Federal, State and local agencies and 
elected officials provided the base funding--the leverage if 
you will--for the biggest piece of our innovative financing 
package, more than $1.1 billion in proceeds from revenue bonds 
sold by ACTA. Approximately 55 percent are taxable bonds and 
the remaining 45 percent are tax exempt.
    The bonds and the Federal loan are to be retired with 
revenues from the fees paid by the railroads for use of the 
corridor. These fees are based on the number of full and empty 
cargo containers hauled by the railroads on the corridor. The 
fee program is the product of the successful partnership 
developed between ACTA and the railroads that transport freight 
from the ports. I sometimes refer to this, as I said earlier, 
as a toll road for trains.
    In total, ACTA's innovative $2.4 billion financing package 
breaks down as follows: 51 percent from revenue bonds; 18 
percent from Federal loans; 18 percent from the ports; 8 
percent from California State grants and 5 percent from other 
sources, much of it administered through the Los Angeles 
Metropolitan Transportation Authority.
    The Alameda Corridor project truly is a public/private 
partnership that has benefited from the cooperation of our 
strategic partners, the multiple Federal, State and local 
agencies, elected officials and, of course, the railroads.
    Because of our success in multi-agency cooperation, ACTA 
has been approached numerous times by organizations planning 
large transportation related infrastructure projects. We are 
happy to share our experiences with them because we believe the 
public benefits from efficiencies achieved when government 
agencies put aside competition to cooperate for the greater 
good.
    We would also be pleased to provide any guidance that will 
assist the subcommittee in applying our experiences to other 
programs and projects.
    Thank you again for having us here today, Mr. Chairman. We 
would be happy to address any questions you may have.
    Mr. Horn. Thank you.
    Mr. Tim Buresh is director of engineering and construction, 
Alameda Corridor Transportation Authority. Mr. Buresh.
    [The prepared statement of Mr. Hankla follows:]

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    Mr. Buresh. Good morning, Mr. Chairman and Congresswoman. 
If you will please refer to the slide show I will use to 
accompany my remarks, I will provide a brief description of the 
project and a status report of construction.
    As has already been mentioned, the Corridor is a 20-mile 
rail-link between the ports and the transcontinental railroads 
which are located just east of downtown Los Angeles. The 
Corridor is being built primarily to smoothly accommodate an 
exponential increase in cargo shipped through the ports. Port 
cargo volume doubled in the 1990's. By 2020 those volumes are 
expected to triple to approximately 24 million containers per 
year. Unfortunately the existing rail system now serving the 
ports, two railroads with four low-speed branch lines, are 
insufficient to handle such volumes.
    Trains on the existing lines, which are often more than a 
mile long, typically travel at less than 15 miles an hour and 
the system can only accommodate about 20 unit trains per day. 
This threatens the region's competitiveness in international 
trade and causes major delays of vehicle traffic at street-
level railroad crossings throughout the Los Angeles Basin. On 
the Alameda Corridor, these trains will now travel at over 
twice their current speed and the Corridor will be able to 
accommodate over 100 unit trains per day, a five fold increase.
    How do we accomplish that kind of increase? By 
consolidating the rail lines into a single two-track expressway 
that is completely grade-separated and eliminates the conflicts 
at more than 200 street-level rail crossings.
    Besides safeguarding the region's competitiveness in the 
global marketplace and easing traffic congestion, the Alameda 
Corridor has the added benefits of reducing air pollution from 
idling cars and trucks and slower-moving trains and cutting 
noise pollution from trains. The Alameda Corridor is one of the 
largest air abatement projects in California. We are also 
providing job training and placement services to 1,000 
residents of Corridor communities, a societal benefit that will 
last well beyond the construction of the Alameda Corridor. Mr. 
Wiggs will expand upon this point later.
    The Corridor is a large, complex project. It is one of the 
largest transportation projects in the Nation and currently the 
largest single public works project in California. The 
centerpiece of the project is the Mid-Corridor Trench, a 10-
mile long, 30-foot deep trench that will carry trains below 
ground level between State Route 91 to the border separating 
the cities of Vernon and Los Angeles. At this date over 6 miles 
of the trench has been excavated, track work is under way with 
over 3 miles of permanent track already in place, as you can 
see on this slide.
    There are over 30 bridges as part of the Mid-Corridor 
project. At this time only four bridges remain to be completed. 
Twenty-six are already opened up to traffic, as is this one at 
Zoie Street in Huntington Park. By this fall the trench 
structure will be complete and all bridges will be in place. 
Track work and street reconstruction will continue through the 
spring of 2002.
    There are many construction elements that make up the 
Alameda Corridor. Besides the Mid-Corridor Trench, the two 
biggest pieces are the Henry Ford Avenue grade separation on 
the south end and the Redondo Junction grade separation at the 
north end.
    This photograph is a picture of the Henry Ford Avenue grade 
separation, which replaces a single track rail with a mile long 
two-track rail bridge over the Dominguez Channel and State 
Route 47 with transition ramps at Henry Ford Avenue.
    The Redondo Junction grade structure is a bridge structure 
stretching the length of eight football fields in the vicinity 
of Washington Boulevard and Santa Fe Avenue in Los Angeles. 
This project separates passenger rail lines from cargo rail 
lines by elevating Amtrak and Metrolink commuter tracks above 
the Alameda Corridor mainline. This project will be completed 
and opened up in July of this year with an immediate benefit to 
all of the passenger rail which uses it daily.
    Right now, we are in the middle of full-scale construction 
up and down the 20-mile route, with up to 1,500 people working 
on various construction projects on any given day. These 
projects are rapidly working toward completion. Major project 
segments will be completed and opened to traffic this year.
    I am pleased to report that the Alameda Corridor project is 
on schedule to open on April 15, 2002. This was the original 
project completion date and there has been no schedule delay to 
this project. I would also like to report that ACTA remains 
well within our original budget of $2.4 billion.
    Any project of this scope inevitably encounters significant 
hurdles in the construction process that can lead to delays. 
There are many reasons why our project remains on schedule, but 
at the top of the list are our agreements with the corridor 
communities and our decision to use a design-build contract for 
the Mid-Corridor Trench.
    ACTA has Memoranda of Understanding [MOUs], with each of 
the cities along the route detailing expedited permitting 
processes, haul routes for construction traffic and the 
processes for lane closures and temporary detours. By agreeing 
in advance on these and other issues, we have streamlined a 
complex construction process. For instance, the Santa Fe Avenue 
bridge that you see here required the cooperation of the city 
of Los Angeles, the city of Vernon and Los Angeles County, in 
addition to ACTA, to become a reality.
    On the Mid-Corridor design/build project, we have saved an 
estimated 18 months in project delivery by using the design/
build approach. The design/build approach allows for the 
overlapping of some design and construction work. ACTA has 
obtained design/build authority through a city of Los Angeles 
ordnance. This enabled ACTA to award the Mid-Corridor contract 
based on the lowest ultimate cost as opposed to the traditional 
bid process. This contract ensures that the contractor's work 
will be completed by a fixed date and a fixed cost or be 
subject to significant financial penalties.
    These are just two of the many examples of how ACTA has 
cleared some hurdles and saved time by making the construction 
process more efficient.
    ACTA continues to face strategic challenges in completion 
of the project. For example, ACTA will be obtaining final 
environmental permits for stormwater discharge. ACTA has 
installed state-of-the-art stormwater treatment and collection 
systems. However, some of the proposed discharge standards are 
extremely stringent. For example, falling rain may be too 
contaminated to be discharged into the Los Angeles River and 
San Pedro Bay estuaries. We continue to strive for a common-
sense solution to this situation.
    The ports in the Los Angeles region have continued their 
rapid growth. Mr. Keller outlined many of those statistics in 
his remarks. ACTA is taking all reasonable steps to ensure that 
there is adequate capacity to meet this demand. The trench and 
north end of the project definitely have adequate capacity for 
the foreseeable future. At the south end, ACTA is strengthening 
connections between the ports and to the Corridor. For example, 
this photograph shows that the existing connections to Terminal 
Island must be expanded within a few short years. This will 
require a new bridge. ACTA is working cooperatively with the 
ports and the Coast Guard to deliver a less expensive bridge 
which will save time as well as cost. ACTA will continue to 
explore other opportunities to enhance its capacity and 
efficiency.
    That concludes my remarks, Mr. Chairman.
    Mr. Horn. Thank you very much for that presentation. It 
gives us a better view. OK, we will now go to Mr. Jeffrey 
Brown, the California State Office of Research representing 
State Senator Berry Karnette.
    [The prepared statement of Mr. Buresh follows:]

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    Mr. Brown. Good morning, Chairman Horn, Congresswoman 
Millender-McDonald, I am Jeff Brown with the California Senate 
Office of Research. I am here today to speak on behalf of State 
Senator Betty Karnette. Unfortunately the Senate floor session 
has prevented Senator Karnette from attending today's hearing. 
But she would like to thank you for the opportunity to comment 
today on the Alameda Corridor, which the Senator truly believes 
to be America's Corridor of National Significance.
    In addition, Senator Karnette would like to thank all of 
the men and women of the Alameda Corridor Transportation 
Authority [ACTA]. It is their world-class professionalism and 
dedication that have delivered one of America's largest 
transportation projects on time and on budget. Moreover, ACTA 
not only implemented the Nation's major transportation corridor 
with efficiency and innovation, but incorporated a jobs 
development and training program to assist in developing a 
sustainable economic development effort for the Alameda 
Corridor region.
    Given the significant growth in international trade, and 
the increasing share of rail and freight cargo moving east and 
west, there is a critical need to effectively implement a 
comprehensive regional transportation plan. The Alameda 
Corridor is now the efficiency and innovation standard on how 
to do transportation planning and implementation.
    Years of supporting and working on the Alameda Corridor 
have helped Senator Karnette, as former chair of the 
Transportation Committee and as current chair of the 
Subcommittee on the Alameda Corridor to recognize that 
California's trade-based economy requires California to expand 
the State's policy in facilitating goods movement and to 
increase State support for projects that promote international 
trade.
    Last year, Senator Karnette authored Senate Concurrent 
Resolution 96, the Global Gateways Development Program which 
will help contribute to the regional transportation 
infrastructure and be the State's goods movement blueprint. In 
addition, SCR-96 will help lay the groundwork for the State to 
develop an effective and strategic plan to influence the next 
Federal transportation reauthorization bill. The goal of SCR-
96, as inspired by the Alameda Corridor, is to improve major 
freight gateways in California, to enhance overall mobility, 
including increased access at and to international ports of 
entry, international airports, seaports and other major 
intermodal transfer facilities, goods movement distribution 
centers and trade corridors in California.
    The measure requires the Department of Transportation in 
cooperation with business transportation and housing, the trade 
and commerce agency, the California Transportation Commission 
and other appropriate parties to submit a final report to the 
legislature by July 1, 2001.
    This $2.4 billion public-private partnership is not simply 
a transportation project, but a project dedicated to helping 
the Alameda Corridor region to produce a sustainable economic 
development strategy that will effectively meet the challenges 
of a 21st century global economy.
    International trade is a key element to local, regional, 
State and national economies. The Corridor is enabling southern 
California businesses to prosper as well as to create a 
substantial number of new jobs. ACTA chose not only to be a 
major transportation project but to partner in the economic 
development of the Corridor region. In order to realize the 
potential for the quality of life and the attraction of new 
industries and jobs, a strong collaborative effort among all 
interested parties involved in the Alameda Corridor project 
needed to be developed. to achieve this goal, a comprehensive 
regional strategic plan has been created and is being 
effectively implemented. The job development and training 
program required by the Alameda Corridor Transportation 
Authority for the Corridor community residents is an important 
component in helping to develop a sustainable economic 
development effort for the Alameda Corridor region. This 
opportunity for sustained community development is enormous.
    ACTA, local organizations, communities along the corridor 
have demonstrated a collaborative spirit and visionary 
leadership to develop the opportunities which are helping to 
realize the full potential of the Alameda Corridor region.
    In the past, we have often viewed transportation, economic, 
environmental and social goals as competing. Over the past 
decade, however, a new vision of the future has emerged. One 
arguing that progress in all areas is not only possible, but 
required for communities and regions to be sustained over the 
long-term. Consensus is emerging among business, government, 
environmental, regional and community leaders about 
sustainability and the importance of creating sustainable 
regions and community. This project is addressing that goal. 
The core essence of sustainability is the focus on the future 
and a collaborative commitment to ensure prosperity and 
opportunity for the next generation. Economic regions 
increasingly compete with one another to attract private 
investment and talented workers to assure a rising standard of 
living. However, few regions are able to implement policies 
region-wide and support and effectively implement a sustainable 
economic development strategy. The Alameda Corridor has been an 
important agent in helping the region meet these challenges of 
a new economy. The effort motivated Senator Karnette to author 
SB-653, the Alameda Corridor Industrial Reclamation Act of 
1999, which the legislature passed and the Governor signed. The 
bill is doing the following: It is directing several local 
entities to provide assistance, both short and long-term, to 
coordinate, plan and implement strategies to assist cities and 
unincorporated communities impacted by the Alameda Corridor, to 
expand their commercial and industrial base. In addition, it is 
improving workforce preparedness to meet the needs of a 
changing manufacturing and technological environment.
    Chairman Horn, Congresswoman Millender-McDonald, I would 
like to thank you again for the opportunity to praise this 
remarkable transportation project and to salute the men and 
women who are making it a reality.
    Mr. Horn. Thank you very much for coming down here to 
testify.
    Mr. Wiggs. Mr. Wiggs is the job training officer for Tutor-
Saliba.
    Mr. Wiggs. Thank you very much. Chairman Horn and 
Congresswoman Millender-McDonald, it is a pleasure to be here 
representing the Tutor-Saliba Corp., the Tutor-Saliba Team and 
its president, Ron Tutor, who is the president and the prime 
contractor for the mid-corridor component of the Alameda 
Corridor project.
    I am here today to speak briefly on the job training 
program that has been alluded to and the development component 
and the performance statistics and accomplishments of the 
program at the end of the second year of operation. I want to 
point out that while the first quarter 2001 performance 
statistics are not yet compiled, rest assured that the goals 
established by the Alameda Corridor Transportation Authority 
are growing closer to achievement.
    As a condition of contract approval, the recommended 
contractor for the mid-corridor segment of the Alameda Corridor 
project, the Tutor-Saliba Team, was required to develop and 
fund a program designed to provide pre-apprenticeship training, 
construction training for 650 residents and non-trade 
construction training to 350 residents.
    The Century Housing Corp., the Carpenter's Educational 
Training Institute [CETI], the Alameda Corridor Jobs Coalition 
Training and Employment Corp. were contracted by Tutor-Saliba 
to administer and implement the job training program.
    At the end of the first program year, organization changes 
took place within the job training program resulting in the 
Carpenter's Training and Education Employment Institute 
relinquishing all of its training programs in the State of 
California, thus backing out of our program, as well as a non-
trade training entity backing out, thus being substituted by 
Century Housing Community Training Program and the project-by-
project consulting program.
    The main criteria for eligibility in a training project is 
residency within a specific geographic area adjacent to the 
Alameda Corridor project and the graduation of the 1,000 
Corridor community residents represents the satisfaction of the 
training goals established by ACTA.
    Following the pre-apprenticeship training, the placement 
goal is triggered. Here, the goal is to place the 650 graduates 
in State-approved union apprenticeship programs. I want to 
point out that while the additional 350 non-trade construction 
trainees are not--there is no requirement for placement, we are 
happy to note that 10 percent of the current trainees have been 
placed in support positions within the construction industry.
    The employment goals set forth two performance criteria. 
The first is that 30 percent of all the work hours on the mid-
corridor segment of the Alameda Corridor project be performed 
by Corridor community residents or local workers. Again, those 
individuals who are within an established geographic boundary 
of the Alameda Corridor location.
    The second requirement is that 30 percent of all the local 
work be performed by graduates of the training program.
    I would like to take the next few moments to give you a 
comparison as to where we were at the end of year one, December 
1999 and at the end of year two, December 2000, with respect to 
our various goals. At the end of December 1999, we had 
established program graduate rate of 167. At the end of 2000, 
we had 674 Corridor residents graduating from our combined 
programs.
    The graduates in the construction pre-apprenticeship 
training; i.e., the goal is 650. At the end of the first 
program year, 97; the second year was 486. The graduates in the 
non-trade training, the goal was 350; the first year resulted 
in 70 graduates; second year, 188.
    The placement accomplishments, again, the goal is to place 
those 650 in union apprenticeships. Graduates at the end of the 
first year was 70; second year, 295 in union apprenticeship 
programs.
    In the non-construction jobs, these are jobs that 
individuals opted out rather than going into union 
apprenticeships, they were still related to the construction 
industry, there were 13 in the first year, 49 in the second 
year.
    Total placements, 83 the first year; 344 end of year two.
    Now the breakdown I wanted to share with you on the three 
segments of our contract, mid-corridor project, that is a 10-
mile trench; the first year, we had 14 graduates; second year, 
116.
    The north and south Alameda projects, the first year, 4; 
second year 14. And then other construction projects within the 
L.A. County region, 65 first year and 214 second year for a 
total of 344.
    Our local worker goal, the number of local workers in the 
first year we had 223 representing the various surrounding 
community corridor cities. At the end of the second year, we 
had 559 who had been placed and were gainfully employed.
    Local worker hours, 21 percent, the goal was 30 percent. At 
the end of the second year, 29 percent.
    Percentage of graduate hours, 6 percent and 12 percent. We 
are struggling in that area, I should note, but we are making 
substantial improvement with our subcontractors hiring more of 
our trainees and maximizing their hours. And I want to point 
out that several subcontracts on the Alameda mid-corridor 
project have yet to come on-line, so we feel very certain that 
those numbers will be increasing in the next three quarters.
    One area that ACTA has asked us to really focus on is to 
ensure the equitable distribution of our resources; i.e., jobs 
and training. I'll provide this pie chart to just indicate to 
you where we are with our training graduates, and this 
replicates itself around the work force as well.
    Black population of our training graduates, 57 percent; 
Hispanic, 23; and other, 20 percent. The gender is split 66 
percent male, 25 percent female.
    This is important to note, because as our graduates enter 
in the program, with a few exceptions, they are without wage or 
at minimum wage. But upon completion of the program and 
entering into the union apprenticeship, the average of our 
apprenticeship is $11.95, so at the end of their 8 week 
training, they are virtually--they are making $12 a hour with 
benefits, with vacation time and health benefits. At the end of 
their 4 to 5 year apprenticeship program, they can command a 
$25.62 hourly wage, as of this date. And this is nationwide 
within the construction industry.
    The next chart is one that we prepared because this is the 
guide that we are using as a tool for our training officers as 
well as to share with all parties involved how your particular 
community or city fares with respect to our placement of local 
workers and job trainees.
    The labor force goal is essentially the labor-force, 
percentage of the labor-force per Corridor city and the goal 
that we are to achieve. For example, the city of Carson has a 
labor-force goal of 6.97 percent. The actual to date is 4.41. 
There is some effort that we need to do in that regard to 
increase the numbers of trainees and graduates working on that 
project within the city of Carson.
    So where are we? To date, within the 2-years of our 
program, 3,100 Corridor residents have responded to our 
outreach effort. That is, 3,100 individuals have received 
written communications inviting them to participate in the 
Alameda Corridor jobs program; 67 percent of our goal has been 
achieved; i.e., 674 program graduates; 45 percent of our 
placement goal at the end of 2000, December, has been achieved 
with 295 graduates being placed in union apprenticeships; 130 
graduates have been placed on the Alameda Corridor project 
specifically; 653 non-trainee local workers have been hired on 
the mid-corridor segment of the project. There are many others 
who were hired by contractors on both the north and south end 
projects. Twenty-nine percent of all of our work hours have 
been performed, the goal is 30; 12 percent of the local work 
hours were performed by graduates, again the goal is 30. And we 
completed 70 percent of the mid-corridor segment of the Alameda 
Corridor project, 30 percent of our work remains to be 
completed by 2002, April.
    That concludes my comments, Members.
    [The prepared statement of Mr. Wiggs follows:]

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    Mr. Horn. Thank you very much. We appreciate your 
presentation and the statistics there.
    Let me now move to some questions. I am going to spend 5 
minutes on them and then I am going to yield to my colleague 
and she will spend another 5 minutes and we will go back and 
forth, so we can cover some of this ground and get it from 
various perspectives. Let me just start with a few simple ones.
    Either Mr. Hicks or Mr. Kellogg might be on this. There 
were some problems involving some of the smaller cities along 
the Corridor. How were those problems resolved?
    Mr. Kellogg. Mr. Chairman, I always like to tell people in 
the private sector, in government you have a term called 
mitigation when you get something resolved. A lot of times it 
is called blackmail, but that said, there were issues that were 
going on in the cities that needed to be addressed. They were 
addressed.
    The problems that communities had up and down the corridors 
were real. My concern was--
    Mr. Horn. Cannot hear up here.
    Mr. Kellogg. My problem at the time, Mr. Chairman, was that 
as we were negotiating with the cities, unfortunately we 
followed another project and that project was an MTA project. 
As was mentioned earlier, some of the successes of this project 
is because we stayed very focused on what we were trying to 
accomplish. This was a project, as Mr. Hankla mentioned, a road 
for trains, it was not a program that we were going to build 
fire stations, things that were not related to the 
transportation issues, because we had to stay very focused on 
it.
    What finally happened is the cities realized the benefits 
of this project, eliminating something that has been 
historically having a negative effect, and that is the impact 
of train traffic through their communities, cutting their 
cities in two, three, four different sections. This project, 
just by going below grade, had a tremendous impact on that. 
Many of the cities along the Corridor finally realized that. 
They accepted the fact that we were putting--we, this project, 
was putting a lot of money toward making those improvements and 
everyone stayed focused on what this project was. I think that 
was critical to working with those cities, working through the 
problems and getting beyond them at the very beginning. In the 
beginning a lot of people looked at this project as if this was 
a wish list of the many things outside the parameters of what 
the Alameda Corridor was. The Alameda Corridor, on its own, 
would have a tremendous impact positively in each community and 
I believe all the community leaders up and down the Corridor 
finally realized that and accepted the fact that this was the 
answer to a lot of their problems. What we were not going to do 
was answer a lot of problems that had nothing to do with the 
Corridor.
    And so finally, reasonable minds came together and the 
project moved forward. I think Mr. Buresh made a comment about, 
again, keeping focused on this project, having all the permits 
in place. One of, as was mentioned, the criteria for this if 
you are moving forward with a construction project and you do 
not have agreements with the cities that you are passing 
through and you expect when you enter that city to get all your 
permitting done in a timely fashion, you are horribly mistaken. 
By the time we began the actual construction of the trench, for 
example, all the permits were in place, the agreements with the 
cities, and we passed through those cities with relative ease. 
And that was a critical point.
    But this project took a lot of time and I know there was a 
lot of comments about that, especially dealing with a lot of 
the communities, but reasonable minds did take place finally.
    Mr. Horn. Any other members of the panel want to make a 
comment on this? Mr. Hankla.
    Mr. Hankla. The only point that I would add to what Mr. 
Kellogg has said, Mr. Chairman, is that essentially there was 
litigation. The litigation was ultimately resolved in the favor 
of the Alameda Corridor Transportation Authority, which allowed 
the Authority to restructure itself.
    Notwithstanding the success on the litigation front, it was 
obvious that we were going to need the cooperation, just as Mr. 
Kellogg said, to secure the necessary permits in a timely 
fashion and the cooperation we would need in carrying out the 
construction project through these cities. The scope of the 
negotiations then narrowed to a payment to those cities, those 
six cities, to secure their cooperation. Alameda Corridor 
Transportation Authority did make that payment. My recollection 
is it was about $12 million, and as a consequence of that, 
those MOUs went in place and we have been administering the 
project pursuant to those MOUs.
    Mr. Horn. Thank you. On that, we will switch to Ms. 
McDonald for 5 minutes and then I will go back.
    Ms. Millender-McDonald. Thank you, Mr. Chairman. I do have 
other meetings to attend, but I am going to try to see if I can 
get all of my questions answered at this point.
    Let me first say, in seeing Mr. Hicks in front of me, it 
reminds me of the time when in the State legislature, the bill 
that I passed on gridlock, those three rail tracks that you 
were talking about--Mr. Steinke, I think is your name--reminds 
me of the fact that Mr. Hicks was in front of us at that time 
on the transportation committee in Sacramento and it was indeed 
the bill that I authored to ungridlock those three railroads to 
get them to the table to start the Alameda Corridor running and 
also the bonding bill that I authored as well as the bill to 
make this Corridor a Corridor of National Significance. I never 
thought that I would get to Congress in time to ungridlock the 
$400 million that Mr. Holt spoke about in terms of ensuring 
that we did get this funding. And so it seems like a baby that 
is about to be born, way over time, as one of you said, but 
then right on time, so that is a dichotomy in and of itself.
    But as I sit here and really am sitting here 1 year out 
from the opening of this Corridor and really taking the traffic 
as it should be, not only downtown Los Angeles but across this 
great Nation, in listening to Mr. Keller, he kind of brought 
back the whole notion that I speak so often to the Members of 
Congress that 50 percent of this Corridor does come across the 
Nation and indeed we are a significant partner not only in this 
State but in this Nation in terms of economics.
    Mr. Kellogg, getting back to you though on the cities, I am 
going to have to disagree with my friend, those cities still 
have not been really given the due diligence that they should 
have in terms of this Corridor. We are talking about jobs that 
Mr. Wiggs has outlined, and yet I have a bone to pick with him 
as well, as well as the economic significance of this whole 
Corridor. This is why I introduced that bill, not only for the 
national significance of it, but also the economic viability of 
those cities along the Corridor, the 37th Congressional 
District's cities really are impacted by this Corridor and yet, 
they have not seen the jobs that should have come, they have 
not seen the economic vitality that we had wanted to have here. 
So I need to have someone on this panel speak to me about the 
jobs.
    When Mr. Wiggs talks about the jobs, they are extremely low 
in numbers and unemployment is still tremendously high in 
Wilmington, Carson, Compton, Watts, Lynwood, all of those 
cities that are severely impacted by this.
    I recall that I had to go to DOT and get at $1.5 million 
for mitigation of those cities because of the tremendous impact 
of this Corridor. So please tell me now why is it that the jobs 
have not come in as they should have and the economic vitality 
has not been reached by those cities--someone please talk to 
me.
    Mr. Hankla. Congresswoman, I think it would be certainly on 
point to tell you that of this entire program, we have probably 
spent almost as much time and energy in trying to get the jobs 
program up and running as we have on problems of the Corridor.
    I think we had a false start in the efforts to accomplish 
the training of the skilled workers program through the 
auspices of the Carpenter's Educational and Training Institute. 
It was only after we shifted to Century Housing Corp. that we 
began to record substantial success in those numbers. To the 
extent that we have also implemented the Alameda Corridor 
Conservation Corps, which is another 200-plus members that is 
separate and apart from the Job Training Program, which is 
training young adults between the ages of 18 and 23, and is 
also assisting them with their high school diplomas and also 
placing them in the union apprentice programs. When you add 
that 200-plus members--and I think they are at over 200 now--I 
think then our numbers come up to exactly what was promised.
    Now the project is not over. And let me say that the 
economic benefits--
    Ms. Millender-McDonald. What is that number that was 
promised, Mr. Hankla?
    Mr. Hankla. The number that was promised was basically 650 
trainees in the trades and 350 in non-trade training. Now with 
roughly one-third of the project yet remaining, we think we 
will meet those numbers. When you overlay that with the numbers 
on the Alameda Corridor Conservation Corps, which were never 
promised, but were essentially undertaken by our Board of 
Directors as more or less an insurance policy to make sure we 
hit those number--
    Ms. Millender-McDonald. I just wanted someone to get back 
to the numbers that the Inspector General was told we would get 
for the jobs on the Alameda Corridor at my next round of 
questions.
    Mr. Hankla. And basically that was 650 in trades, 350 in 
non-trades.
    Now in terms of the economic benefits that these 
communities are going to derive, I think it is fair to say that 
most of these communities are tremendously negatively impacted 
today by a monumental construction project.
    If I were to sit here today and tell you we have been able 
to mitigate all of the inconveniences caused those cities by 
this project, that would be totally, utterly false. It cannot 
be done. But as we open those new bridges, and we have opened 
over 20 bridges today, and there is transportation taking place 
where it never took place before, connecting cities from east 
to west where they have been disjointed for over 100 years.
    We see the L.A. Economic Development Corp. beginning to 
market large parcels of real estate along the Corridor for 
major employers. That is where the economic benefit is going to 
come for these communities. It will come after our project, 
aside from the labor training project, which I think is 
beginning to show the numbers.
    Mr. Horn. Let me move a little bit to the railroad 
situation. The Alameda Corridor is a win-win situation for 
cities and railroads, as you have just mentioned. Other 
California proposals for similar projects appear to lack that 
balance. What do these projects need to do in order to get the 
railroad support?
    Mr. Hankla. Is that question directed to me, Mr. Chairman.
    Mr. Horn. Yeah, beyond the State. There are about 30 ports 
in California.
    Mr. Hankla. Well, I believe it perhaps goes without saying 
that these projects need to find the hot button that will 
interest the railroads in participating in these projects. That 
may be something akin to what was done in the Alameda Corridor, 
such as purchasing right-of-way, I frankly do not think the 
Alameda Corridor would have happened had that particular step 
not taken place. That may well be the linchpin in terms of 
these other rail projects that are important to cargo movement 
in southern California. If I had to pick one single linchpin, 
that would be it.
    Mr. Horn. Any other comments on that anybody wants to make? 
Yes, Mr. Bredenberg.
    Mr. Bredenberg. Congressman, I would like to clarify that, 
however. In the case of the Alameda Corridor, a very inadequate 
infrastructure was purchased from the railroads, an 
infrastructure that did not have the capacity to absorb growth. 
It would be very difficult to interest the railroads in 
purchasing right-of-way if they have the infrastructure at the 
time and have already provisioned for the funding of the 
amplification of that infrastructure to handle the growth it is 
going to be seeing in the next 30 to 40 years.
    Mr. Horn. Thank you. Yes, Mr. Buresh.
    Mr. Buresh. Mr. Congressman, I think one of the big keys to 
the Corridor's success is the fact that it is a systemic 
solution. That is, that it provides a comprehensive solution to 
moving containers from the ports to the transcontinental 
railroads. The classic trap facing many transportation agencies 
is that they focus on congestion issues. Basically they develop 
a grade separation here, improve an intersection there and so 
forth. The problem is that is basically a reactive rather than 
a proactive solution and it does nothing to change your 
fundamental flow and movement patterns of goods, either their 
efficiency or their cost.
    When the Corridor comes into play, it changes a lot of 
those economics. You have got a consolidation of that flow of 
traffic, there is a big increase in speed for the rail trains 
happening through there, there is a big increase in the safety 
and efficiency, an increase in capacity for the future. And 
fundamentally, the transportation economics for the railroads 
have changed and therefore justifies their investment in those 
toll charges.
    So I think it is inherent that other mega projects of that 
scale must combine that systemic overview on there. And while a 
particular community may need a grade separation as its major 
mitigation, it has to look elsewhere to find an enhancement to 
the railroads to offset that and combine that in there in a 
systemic improvement. That is the real challenge.
    Mr. Horn. Let me move to another field on this last 
question on this 5 minutes. Regarding the stormwater discharge 
standards, Mr. Buresh, you say that falling rain may be too 
contaminated to flow into the Los Angeles River. Can you 
explain this or elaborate on it?
    Mr. Buresh. We ran into a great problem in the process of 
dewatering on this project where we had basically a temporary 
situation of having to discharge water and we could not meet 
the discharge standards for trace metals. These are very, very 
low. We were able to discharge under the agreement that we 
proceed with a series of studies to validate that we did no 
harm to the environment. Based on those studies, which 
demonstrated no harm, I would have a serious series of 
challenges to raise those limits. I think they are extremely 
low. Essentially, the trace metal limits are so low that 
rainfall coming through the atmosphere in L.A. picks up enough 
trace metals out of the atmosphere, that we may not be able to 
be in compliance. That essentially puts us in the business of 
polishing rain.
    I think it has come to the point that it is almost absurd 
and it requires an overall solution and I think it is going to 
have to come out of the Congress. We are just one of many 
projects being impacted. Some of the environmental cleanup work 
that is reflected in these standards is very necessary and 
should be going forward; however, the standards do need to be 
real world standards that communities and agencies can meet. 
Fundamentally, we are part of the solution, not a problem here. 
We have cleaned up a 20-mile corridor, we have better 
stormwater control and cleanup standards than has probably been 
seen in most sections of railroad anywhere in the country and 
yet, we found ourselves extremely vulnerable to those 
standards.
    Mr. Horn. Were those State or Federal standards or both?
    Mr. Buresh. Both are in here, but it comes out of the 
Federal Clean Water Control Program.
    Mr. Horn. But you think it will be solved?
    Mr. Buresh. I believe that we will be able to solve it. But 
I think it poses a grave risk for any other large-scale 
transportation project.
    Mr. Hankla. Mr. Chairman, by way of scale, the potential 
fines that could have been levied against the Alameda Corridor, 
for the privilege of cleaning up 20 miles of the most polluted 
environment in the United States, was $794 million.
    Mr. Horn. $794 million. And how did we come to that?
    Mr. Hankla. That was basically based upon the requirement 
by the Regional Water Quality Control Board that we meet the 
standards of the national toxic rule which establishes limits 
of trace metals which can be discharged into I guess threatened 
bodies of water?
    Mr. Buresh. That is correct.
    Mr. Chairman, the way the fines are set up, if I put out of 
a gallon of water and it has say 10 different trace metals in 
there, I can collect a fine for each one of those metals per 
gallon as a violation. It has a huge compounding effect.
    These rules basically exist to punish agencies that are 
attempting to do the right thing. We are very easy targets to 
get. Meanwhile, we have spent $40 million cleaning up messes 
left from other people out there that are true lawbreakers. 
They are hard to catch, the regulatory agencies do not go after 
them. We are very easy to find.
    Mr. Horn. We are hoping with a new administrator there, she 
will have common sense and that is basically--the former 
administrator just simply had lawsuits all over the place and 
hardly ever cleaned-up any major dumps, and you are absolutely 
right about that. So hopefully we will get some action this 
time.
    Now I will yield to my colleague from--
    Ms. Millender-McDonald. Following up on the questions that 
you have raised, Mr. Hankla, the 790, did you say $3 million?
    Mr. Hankla. $94.
    Ms. Millender-McDonald. $94 million. Were these additional 
fines that you had to try to get for this cleanup or was it all 
encompassed in the $2.4 billion that this project cost?
    Mr. Hankla. Basically it is the potential fine that could 
have been levied by the Regional Water Quality Control Board. 
We were successful in Sacramento, with the tremendous 
assistance of Senator Karnette and Assemblyman Lowenthal, in 
securing some relief. There was a bill previously that had been 
passed by the legislature and signed by the Governor called the 
Migdon Bill that would have removed the discretion on the part 
of the Regional Board and would have made the levying of those 
fines mandatory. We were able to secure the relief that 
returned that discretion to the Regional Water Quality Control 
Board. Our subsequent interaction with staff, we believe, will 
lead to relatively reasonable fines. Frankly, I do not think we 
should be fined at all, but we have already been fined about 
$180,000 for our work on the Corridor.
    Ms. Millender-McDonald. Well, certainly you should not be 
fined when it is something that is out of the realm of your--
you have no cause for this type of--the rainfall, the falling 
rain, and the contamination of it. So that is something that 
perhaps, Mr. Chairman, we can pursue or follow-up on to make 
sure that some relief can be done there.
    Mr. Keller, in terms of the dredging of the 300 and 400 
pier, I have been following that for years because it certainly 
does speak to the quadrupled freight cargo that we are 
anticipating and projecting. Will this falling rain affect 
anything that we are doing down in the pier--would it not 
affect that as well?
    Mr. Keller. Congressmember, it really never has. That is a 
natural function of the ports and certainly the downstream 
portion during major rain events and that type of thing, it is 
our duty to clean-up as best we can, particularly floating 
materials.
    The dredging, however, has had a beneficial effect overall 
because materials that have historically been washed into the 
harbor from former industrial activities have been cleaned up 
and removed. As you know, under our dredging permits, we are 
allowed only to take clean material out to sea. Hazardous 
material is hauled to upland waste disposal sites and 
encapsulated. So the actual dredging is a beneficial effect 
that does largely cleanup the effects of former industrial 
activity. And these are the same type of activities that Mr. 
Hankla and Mr. Buresh are dealing with on shore, where the 
materials have percolated down into groundwater.
    Ms. Millender-McDonald. Uh-huh.
    Mr. Keller. We have inherited the activities from water and 
materials that were dumped directly into our waters.
    Ms. Millender-McDonald. I have sent a letter to Ms. 
Christine Todd-Whitman to come and look at some of the 
brownfields in this area, Mr. Chairman, and perhaps you and I 
can come together with her to look at some of the things that 
you are talking about, because after all, this is the region 
that is going to be the engine that drives the economy of this 
State, especially given the power problem that we now face. But 
this has always been, in my estimation, and will always be the 
engine that drives it.
    As you said, Mr. Keller, we are a third behind Hong Kong 
and Singapore, we have gone to Hong Kong to look at their port 
system. I have not gone to Singapore and perhaps we need to go 
there and we can talk with our new chairman and see if we can 
get that trip out, Mr. Chairman.
    But are you saying that right now we are going to have a 
700 percent increase in cargo with the dredging of both 400 and 
300 pier completed, we will go into 24 million tons of cargo? 
Explain that to me. I wrote it down as you were speaking and I 
may not have gotten it all correctly.
    Mr. Keller. Congresswoman, our cargo has increased 700 
percent since the early 1980's and in the next 20 years--the 
two ports right now are putting through about 10 million 
containers, imports and exports. By the year 2020, we expect 
that number to rise to 24 million--from 10 million to 24 
million.
    We are not, by any means, done with our development between 
the two ports. We have additional landfills, consolidations and 
dredging projects in order to allow the larger ships to come 
in.
    Ms. Millender-McDonald. Uh-huh, absolutely.
    That is why it is so critically important that we make sure 
that the air, the quality of the environment is conducive to 
your continuing that, because we are looking forward to that, 
as we talk about international trade and other entities that 
will help us in our economic vitality.
    Mr. Horn. Let me ask you, what is the extent you have 
engaged in eminent domain in order to get the project done?
    Mr. Buresh. Mr. Chairman, the bulk of the real estate which 
was required for the Corridor was obtained either from the 
initial rail purchase executed by the ports or has come from 
the ports or additional purchases from the railroads or from 
the Corridor cities. There are approximately 200 parcels that 
we have been required to obtain from third parties other than 
the ones I previously mentioned.
    Mr. Horn. So what percent of the land was picked by eminent 
domain?
    Mr. Buresh. Approximately 10 percent.
    Mr. Horn. Ten percent. That is rather unusual in a major 
program like this, is it not?
    Mr. Buresh. That is very unusual, and again, that 
underscores the importance of that initial purchase of the 
railroad right-of-way by the ports.
    Mr. Horn. I think you would agree, Mr. Hankla, on that, if 
you look at a nationwide perspective.
    Mr. Hankla. Yes, sir.
    Mr. Horn. Well, that is very good news because you did not 
drive a lot of people out of their houses. But did we have that 
problem anywhere along the line?
    Mr. Hankla. Actually no, there has been very little 
residential relocation, other than we have some people who live 
in junkyards and they will get relocated. But basically no 
housing was taken out, it is mostly commercial space.
    Mr. Horn. What about the Pacific Coast highway, what is the 
situation with that in terms of--I can see you saying oh, no, 
not this one--but who wants to take that on?
    Mr. Buresh. Nobody wants to take that.
    Mr. Horn. Looks like you have got the gavel.
    Mr. Buresh. OK. There were a series of related 
transportation projects funded called the Port Access 
Demonstration Projects. These were done by various cities, the 
city of Carson and Los Angeles County in particular. One of 
those projects was the PCH or Pacific Coast Highway grade 
separation. This takes place through the Equilon Oil Refinery.
    Mr. Horn. I am sorry, which oil refinery?
    Mr. Buresh. The Equilon Oil Refinery, used to be Texaco, 
now it is owned by both Texaco and Shell.
    Mr. Horn. Oh, OK.
    Mr. Buresh. At that particular grade separation--and I 
would emphasize, all the other grade separations along the 
Corridor are either done or very close to being done. By the 
end of the year, they will all be in place, whether they were 
done directly by the Corridor or by some of our sister agencies 
as part of the PADP projects.
    The one exception is the PCH grade separation, which is a 
CALTRANS project. That project is not yet underway. The design 
is not complete, they have not obtained a final deal with 
Equilon to expand access across their refinery. Building a 
grade separation at that particular location will require an 
extensive relocation of refinery utilities. That work has not 
yet begun, there is not even a business or engineering solution 
to that work.
    Our concern from the Corridor's point of view is very 
simple. We already have our main tracks in place at this 
location, we do not need additional work there. That allows us 
to run 100 trains per day or more with impunity, but the 
reality is that when we put that many trains in there, we will 
effectively have stopped or completely blocked Pacific Coast 
Highway. Highway No. 1 of the State is going to come to a 
standstill.
    The solution CALTRANS is putting forward will be a detour 
of Pacific Coast Highway, beginning at the Terminal Island 
Freeway going north to Sepulveda, going west on Sepulveda, 
coming down Alameda Street and then resuming its former route. 
Essentially, we will deactivate this portion of the Pacific 
Coast Highway. It is a cause of great alarm for us. Right now 
we see, when train traffic appears down there, a large number 
of illegal movements on the part of vehicles, people turning U-
turns in the middle of streets. I think it is just a question 
of time before somebody with a tanker does something like that 
and we have a tragedy on our hands.
    The other thing is that this particular intersection is 
close to the port, we get a large number of trucks moving 
through here. This is an important part of our grid system, and 
having that capacity in place is critical, especially as the 
710 becomes more congested, either because of port growth or 
because of CALTRANS construction on the 710. If you happened to 
drive it this morning, you noticed all the K-rail or temporary 
concrete barriers along the median. That is just the first step 
in some repaving and correction of drainage problems along the 
710. The minute those K-rails went up, we saw a significant 
increase in truck traffic in other portions of the grid, in 
particular along Alameda Street, on PCH and on Anaheim, as well 
as on the 110 freeway. So it is important that we fix this 
portion of our grid before other portions experience increased, 
more increased capacity problems.
    Mr. Horn. Mr. Brown, you have come from Sacramento and you 
have spent a lot of time on transportation for Senator 
Karnette. Where are we on the PCH side and where are we 
particularly on 710? How are we going to handle the truck 
traffic that is there now and that we hoped, when the Alameda 
Corridor was complete, it might not be doubling, just as the 
Corridor is with rail containers. How do you feel about this 
and what do they say in Sacramento and at CALTRANS on all that?
    Mr. Brown. Well, Mr. Chairman, with regard to the 710, a 
study is underway, we should have that hopefully within the 
very near future. CALTRANS is prone to be delinquent in 
delivering its reports, but given the critical nature of the 
710, we hope that we can hold their feet to the fire, get the 
study done and produced to the legislature on time so that we 
can begin to address and begin to implement a solution to the 
710.
    With regard to the Pacific Coast Highway, which as Tim has 
just outlined, is most critical, Senator Karnette, 
Assemblywoman Orapeza and Assemblyman Lowenthal will be--
Senator Karnette is convening a meeting on April 27 with ACTA 
and with CALTRANS to discuss at length and hopefully come up 
with a solution that provides a win-win strategy. The solution 
that currently is on the table by CALTRANS, as I understand it 
from members I have just outlined, is unacceptable. It brings 
with it a great deal of liability, it does not allow the 
freight and goods movement as well as movement by vehicles and 
the general public, to move in a safe and conducive capacity. 
In the future it will potential bring tremendous liability with 
those tanker trucks.
    So I hope that we can begin to address solving the Pacific 
Coast Highway situation with a plan that ACTA brought up and 
was discussed at length 1 year ago. We hope that through 
productive and constructive discussions with CALTRANS, with the 
members that will meet with them on the 27th, that we will be 
moving in the direction, hopefully, that CALTRANS has outlined. 
In addition to CALTRANS' gracious and generous offer to 
contribute in making this happen with some of their engineering 
ability and maybe some of their construction management 
contribution, which would be sorely needed in order to divert 
us away from this potential problem that we face.
    Mr. Horn. Is one option to either get the trucks isolated 
that will still be using 710 or the cars that are isolated to 
still get some sort of special lanes for cars, because people 
that go to work up in that area, it is a terrible situation 
where you have got a truck on the side, truck behind you and 
truck in front of you. Is there any way CALTRANS has got some 
creative methods to get them moving?
    Mr. Brown. The short answer to that, Mr. Chairman, is no. I 
think that the design that ACTA has provided addresses the 
elements that you have just outlined with a long overpass 
instead of a short overpass or a roundabout or whatever the 
configuration that CALTRANS currently has on the table. That 
does not in any way address what you have just suggested and 
questioned. In looking at the plans that ACTA has put forth and 
discussed at great length with CALTRANS and with the 
legislature, the long bridge is what is necessary in order to 
meet these needs for the present time as well as to address the 
future impact of freight and vehicular movement on the PCH.
    Mr. Horn. What does the Alameda Corridor think of doing 
something to either help the individual vehicle traffic--and 
most of those are just one person in a car--or getting the 
isolations of the trucks left over to go to various places 
where, but not to where the railroad yard is that the Alameda 
Corridor feeds into?
    Mr. Hankla. Mr. Chairman, an organization called Gateway 
Cities currently has a cooperative study underway relative to 
the 710 Freeway. There is no question it is a serious concern 
to the cities of the region and the residents of the region and 
it has every prospect of getting worse. Now what the ultimate 
recommendations will be coming out of that study, we are not 
involved with. We have representatives that observe those 
deliberations. How ACTA might be involved in any future effort 
would be strictly a policy matter for our Board of Directors.
    Mr. Steinke. Mr. Chairman, if I might add a little bit more 
detail about the 710 as it pertains to truck trips into and out 
of the Port of Long Beach and Los Angeles, the two ports have 
embarked upon a $600,000 study looking at some interim 
solutions, some things that we might be able to do. It is 
called the Transportation Master Plan. We are looking at ways 
to either look at moving traffic to some of the other arterials 
like the underused Terminal Island Freeway or the 110, looking 
at empty containers that might be able to be isolated away from 
the ports some things like that.
    The results of this study are going to be fed into a major 
investment study, a $4.2 million study that Mr. Brown was 
referring to, that is looking at the overall long-term 
solutions to capacity restraints on the 710. And that is what 
Mr. Hankla was referring to that the Gateway Cities Council of 
Governments is keeping very close tabs on. That study will take 
some time to complete but it should come up with some capacity 
recommendations which will hopefully be implemented over the 
course of the next several years.
    The two ports, with the growth that we are experiencing, 
cannot afford to wait for 5, 6, 8, or 10 years to have capacity 
improvements take place on the 710 and that is why we are 
looking at some short-term mitigation measures to try to move 
trucks to different locations, reduce truck trips, extend 
hours, do some other things that give the ports more elasticity 
than they currently have.
    Mr. Horn. We have met, and I think you and all your 
colleagues, with the Gateway Cities people and their problems 
with 5 and the Orange and the interconnection with what goes on 
in Los Angeles County.
    As you know, one of their basic thrusts is to go east with 
the Alameda Corridor, to solve some of the pollution problems 
that are going on. I think the group feels there are some of 
the things come into the ports, especially coal from Utah that 
they either tie down the loads or not, I do not know, but it is 
a real problem still. I thought we had done all that and now I 
do not think we have.
    So who would want to grapple with the extension of the 
Alameda Corridor? I am not saying you should do it, but I am 
saying that a lot of Members of Congress, starting with Mr. 
Dreier, or really starting with the rail yard and then going 
east. You have got Mr. Dreier's District, Mr. Jerry Lewis' 
District, Ken Calvert's District, all of that, to go to the 
Nevada line essentially. But certainly to get into Riverside 
and San Bernardino.
    Any comments? I do not think I see too many hands on this. 
Mr. Hicks.
    Mr. Hicks. Mr. Chairman, there are a number of efforts to 
look at grade separations and other improvements east of 
downtown Los Angeles. The so-called Alameda Corridor East in 
the San Gabriel Valley is approximately a $900 million effort. 
It has raised about $400 million thus far for their program.
    Another program is called OnTrac in Orange County, which is 
also called the Orange County Gateway. It's approximately a 
$450 million railroad lowering project similar to the ACTA 
trench along Alameda Street. They have raised about $32 million 
thus far and are looking of course for additional funding.
    The county of Riverside and the county of San Bernardino 
are also putting together a plan for grade separations and have 
teamed up with the San Gabriel Valley and Orange County to 
prepare a report per AB 2928 in the State, which requires them 
to collaborate and develop a long-range plan for grade 
separation improvements in all four areas. Once that report is 
done, then some funding will become available through the State 
to help supplement those projects. But it will not be enough. 
Clearly, significantly more funding will be required, hopefully 
through the TEA-21 reauthorization and other sources.
    There are needs east of downtown Los Angeles. Clearly all 
those trains continue east and go through various communities 
on their way to the San Bernardino area.
    Mr. Horn. Mr. Kellogg, did you want to comment on that?
    Mr. Kellogg. Mr. Chairman, I know in the past I have had 
discussions with Supervisor Antonovich on this, some rather 
heated ones. I have talked to Congressman Lewis and Dreier on 
it. Obviously they do have concerns, but my only caution--and I 
have been removed from the Alameda Corridor for 9 months, but 
as I mentioned to them, in particular Supervisor Antonovich, we 
have many issues in the corridor cities that we need to address 
first and foremost. My caution was always not to look at the 
Ports of Long Beach and Los Angeles as a funding source. My 
comment to him was what you are attempting to do is build the 
second coming of the transcontinental railroad by piecemeal and 
using the funding from the Ports of Long Beach and Los Angeles. 
We have issues we have to address in this general area and, 
again, as my opening comments, the communities up there, the 
impacts they have, they do have to step up financially because 
to look at the ports as the financial vehicle I find 
inappropriate, but I think there would be some legal questions 
as well. But I know they have looked many times when I was 
serving on the Alameda Corridor as--their solution to a lot of 
their funding was to come back to the Ports of Long Beach and 
Los Angeles, and I think that would be a travesty and it would 
be irresponsible to the corridor cities who do have direct 
needs that we have to address on this project.
    Ms. Millender-McDonald. Mr. Chairman, if I might just 
comment on that. The reason they are looking at the ports is 
because after all, you are going to quadruple in your cargo 
container movement, which means that they perceive 710 as being 
the conduit for the trucks. Of course it is. The Alameda 
Corridor is not a corridor for the trucks to go through, and so 
they are looking at the 710. Indeed, Congressman Horn and I did 
meet with the Gateway Cities folks just last month and they 
raised this issue and raised the whole capacity issue, 
especially given NAFTA. NAFTA is now opening up new truck 
traffic and we are just going to be inundated with trying to 
take this cargo from the ports out east. So they have suggested 
that the port, as well as the Federal--in other words, they 
want to mimic what we have done for the Alameda Corridor, for 
the Alameda Corridor East. They want pretty much the same type 
of model in order to move the truck traffic out east and 
beyond.
    And so it is a problem, Mr. Chairman. I have talked with 
SCAG about this and again, we need to look at and convene, Mr. 
Chairman, a regional--we had tried to put that in place last 
year when I suggested to them last year that we need to look at 
that, because indeed Congresswoman Napolitano and all of those 
who are witnessing the heavy truck traffic on the 710, the 
gridlock that the chairman talks about in terms of cars 
interwoven with the trucks, we have got to do something about 
that. No one wants to travel the 710 now because of the 
gridlock. And so indeed we have got to study that, whether it 
is ACTA, whether it is whatever, whether it is SCAG, whether it 
is CALTRANS, we have got to do that.
    Mr. Brown, my question is why is it that we are still in a 
dilemma of the PCH in terms of making sure the grade separation 
takes place? I mean that is also a critical component to what 
we are talking about in terms of moving cargo in and onto the 
710 and beyond. So what is going on here that we cannot get 
that grade separation going?
    Mr. Brown. I think it is CALTRANS' way of doing business, 
which you have experienced for many years.
    Ms. Millender-McDonald. God knows, yes.
    Mr. Horn. That is Mr. Brown--I am going to start--the 
reporter cannot quite hear everybody.
    Mr. Brown. I am sorry, Jeff Brown.
    I think CALTRANS--and Tim knows the history of this a lot 
better--because of the long history and lack of action on the 
part of I guess the city of L.A. and CALTRANS to address the 
Pacific Coast Highway grid sep is the answer to your question, 
Congresswoman. I just think that it has been on the back-
burner, it has remained on the back-burner. Because of a decade 
of keeping it on the back burner, the project costs have gone 
up. I think the parties involved have, to some degree, 
alienated Equilon in the negotiating process of right-of-ways, 
and as a result of that it escalated their costs--it has almost 
doubled from what it was last year.
    I think what we need to address the problem in a timely, 
cost-efficient, and efficient way with innovative approaches is 
to address this in a public/private partnership way, CALTRANS 
partnering to a great degree with ACTA, because we are about to 
get a black eye if we do not address Pacific Coast Highway 
grade sep.
    Ms. Millender-McDonald. I do not think anyone wants to come 
into a project that is already over-budget--or you are saying 
lack of funding, because you have an override, right?
    Mr. Brown. It is tremendous, I mean I think the figure now 
is $115 million. Last year, it was about $30 million less. I 
think that with some type of public/private partnership 
collaborative effort, we might be able to bring that cost down 
and get the project underway. But I think we, the State, will 
have to prevail upon ACTA and their gracious offer to help us 
get ourselves out of this knot. Because based on historical 
inaction on the part of the city and CALTRANS, we are where we 
are today and that is absolutely at step one. We need a partner 
to pull us along quickly, efficiently and hopefully in a cost-
effective way.
    Ms. Millender-McDonald. Mr. Hankla, where are you on 
assisting them in making sure that we open up PCH so that we 
can begin to look at this regional intermodal transportation 
mode?
    Mr. Hankla. Congresswoman Millender-McDonald, let me say 
that we have met on a number of occasions with CALTRANS, we 
have made suggestions to CALTRANS and offered some technical 
assistance to CALTRANS. What seems to be the rub, if I may be 
so bold, is that CALTRANS would like ACTA to make up the 
financial shortfall. I think that is highly problematic from 
the standpoint of management of our funds, as well as the 
policies established by our Board of Directors.
    Mr. Horn. CALTRANS is funded by the Federal Trust Fund for 
most of the interstate highway. This is partly interstate 
highway----
    Ms. Millender-McDonald. It is.
    Mr. Horn [continuing]. And presumably only 10 percent is 
put in by the States across the country. So we give them a good 
hefty bit when all of us drive in to our friendly gasoline 
station and see the Federal tax go in the pocket back east and 
we have fought very vigorously to make sure that people do not 
use that for other things than primarily interstate highways.
    Ms. Millender-McDonald. Mr. Chairman, I suggest, given the 
fact that this is Government Reform and Efficiency, that 
perhaps a letter goes out asking them to delineate the cost 
that has been incurred to date, to see whether or not it has 
been efficiently done, so that we can get a handle on this. You 
know, we are looking at not only this quadrupled container 
traffic coming in, but also the truck traffic that is going to 
be increased. And if we do not get some of these corridors 
opened up, you are talking about gridlock, it is just going to 
be a tremendous detriment to us down here economically. So 
perhaps I would like to suggest that you and I together----
    Mr. Horn. They are going to have a meeting on this and----
    Ms. Millender-McDonald. The 24th, April 24.
    Mr. Horn. Yeah.
    Mr. Brown. April 27.
    Mr. Horn. The State legislative personnel, both Assembly 
and State Senate, are the ones that tell CALTRANS what to do.
    Ms. Millender-McDonald. Of course, they should dictate to 
them.
    Mr. Horn. It is not the Federal legislators.
    Ms. Millender-McDonald. But our funding, we can ask just 
how to date that has been implemented in terms of getting the 
corridors taken care of; in my opinion, it certainly would not 
be a problem.
    Mr. Horn. We talked with them, as I recall, in 1993 and we 
had very mixed feelings when we left discussions with our 
friends in CALTRANS, but I think they have helped in a number 
of ways ever since; is that not so?
    Mr. Hankla. Mr. Chairman, by frame of reference, I believe 
this project was essentially initially funded in 1987.
    Mr. Horn. 1987?
    Ms. Millender-McDonald. And we are still pretty much in the 
same position where we are, have we crawled, have we snailed, 
have we done anything in terms of moving on?
    Mr. Hankla. To term the movement glacial would probably be 
an overstatement.
    Mr. Horn. Is that ahead of a snail or behind a snail? 
[Laughter.]
    Ms. Millender-McDonald. Or even a snail.
    Mr. Horn. Even a snail. It is a melting one, anyhow, it is 
a glacial one.
    Ms. Millender-McDonald. I really do think that we will wait 
to hear what the meeting on the 27th brings about, but 
certainly with the funding from the Federal, I think we will be 
in a position to ask if we can get some kind of efficiency 
report or something to see just where we are and where the 
money has come down, because it is important that we get that 
corridor up and going, given this truck traffic increase as 
well as the cargo container increase.
    Mr. Chairman, you spoke about eminent domain, my bill did 
not move any residents any place, we did not have that type--I 
wanted to make sure, given that they were poor people along 
that corridor anyway. So that particular eminent domain bill 
that Mr. Hicks and all of us fought for in Sacramento with Mr. 
Kellogg did not bring about any undue hardship on anyone.
    Mr. Horn. I want you to know that there are low income 
people on both sides of the tracks and the L.A. River.
    Ms. Millender-McDonald. That is very true, I am not 
suggesting----
    Mr. Horn. And based on that, that is how I got the money to 
solve the L.A. River problem. You know, this is not people 
sitting in Carmel on bluffs.
    Ms. Millender-McDonald. That is very true, we connect in 
Long Beach, so how well I know.
    Mr. Horn. And we have gotten everybody on both sides of the 
river to help us; on all of these things, we try to have a 
bipartisan approach in Los Angeles County, and I must say my 
colleagues have signed on the dotted line every time.
    Ms. Millender-McDonald. Uh-huh.
    Mr. Horn. Whether it be Ms. Waters, whether it be the ones 
related like Jerry Lewis and Ken Calvert. We work together, in 
brief.
    Let me ask you, Mr. Wiggs, I am particularly interested in 
what we learned from the experiences you had with the project 
and I was very interested to see the data you had on 
apprenticeships. There are a number of firms in the area where 
women are the CEOs and the workers. To what extent have we had 
those firms that are right in the area get jobs along the way 
in terms of the Alameda Corridor?
    Mr. Wiggs. Let me go back and describe for you just the 
process of how our trainees gain entry into the program. We 
have established what we call intake sites or points of entry 
for any Corridor resident that is located within your 
Congressional District; Congresswoman Millender-McDonald's 
Congressional District; your colleague, Maxine Waters', Lucille 
Roybal-Allard and to an extent Congressman Becerra's District, 
so that we can get individuals from the entire breadth and 
length of the Alameda Corridor participating in the job 
training program, thus representing all of the geographic and 
demographic constituencies in the areas.
    In my opinion, we have had great success in the last year, 
year two has been a turning point in the program. The labor 
unions, the trade unions, have stepped up to permit our 
graduates' entry into their unions, thus ensuring them a 
position in the new apprenticeship program. The private sector 
is a sector that we have not reached out to in any great way 
because the structure of our program is union apprenticeships. 
That is the goal that we are striving, attempting to achieve 
within the project.
    Any private sector support has come by way of the small 
number of placements from our non-trade component. There again, 
they are essentially support staff to the construction 
industry.
    If I were to name the central lesson that has been learned 
from this project, it is two-fold; one you and Congresswoman 
Millender are probably familiar with. The first is the trade 
unions opening up their union roles to be as receptive as 
possible for new blood, as it were. Our project has some 350 
labor personnel coming out of the trade unions or labor locals. 
Our goal in that regard was to have the highest number of 
apprentices per journey level. At that particular trade, there 
are about 25 percent of apprentices to journey level. That is 
the rule of thumb. We have not met that basic goal yet. We are 
approximately 50 percent below that threshold mark and in the 
last month we in fact may have even--may meet substantial 
difficulty in getting that additional 50 percent labor union 
support. It is not a formal support, it is an informal 
relationship. They have agreed--they being the three labor 
unions operative in the Alameda Corridor parameters--to work 
with us. Nothing formal. We attempted early on to get a 
memorandum of understanding between the labor unions and the 
Alameda Corridor Project, at least our mid-corridor segment, 
whereby any individual that we would sponsor into the labor 
union would be accepted. That was not received by the three 
labor unions, they agreed that they would take a percentage of 
our graduates proportionate equally amongst the three unions. 
It was a very small number at that point. Subsequent to meeting 
that number with that labor union, then informally, they have 
expanded and permitted us to go beyond that.
    I say that because I recall reading several weeks ago, 
emanating from the White House, there is a position that there 
may be an elimination of PLAs, project labor agreements, with 
any new projects of this magnitude. That would, in my opinion, 
serve a substantial disincentive for any future project of this 
nature to incorporate local workers and apprentices in their 
program because the project labor agreement is that binding 
document that at the front-end, if established properly, will 
then hold the hands of both the contractor and the labor unions 
to buy into a concept. Absent a project labor agreement, then 
the workforce of course then becomes probably non-union and 
absolutely antithetical to what this project and other projects 
do, enhance the lives of individuals and transition them into a 
union workforce.
    Mr. Horn. Any more thoughts on that?
    Ms. Millender-McDonald. Mr. Wiggs, you know, you and I have 
gone back and forth on these jobs and the inability of the 
training; first of all, the unions to accept those who were 
trained by Tutor-Saliba and the training program, to go on 
board without having to pay a union fee before coming aboard. 
Has that been dismissed or where are we on trying to get those 
who have been pretrained or into the apprenticeship training 
program to at least get on board and start working and then pay 
the union fee, because after all, these folks are folks who did 
not have jobs and do not have funds for that?
    Mr. Wiggs. We have worked that out. I am happy to report to 
you that the issue of union sponsorship and payment of dues has 
been worked out. That was worked out several months after we 
met in your office and you encouraged us to work out that 
relationship.
    That is not the issue at this point. The issue now, of 
course, is for more and more subcontractors and others in the 
area to accept our trainees as apprentices, bring them on to 
their workforces, their labo-force, and give them the requisite 
number of hours to continue their apprenticeship training.
    Ms. Millender-McDonald. So there was not an MOU done to 
enable that to go forth, if I am understanding you correctly?
    Mr. Wiggs. That is correct.
    Ms. Millender-McDonald. Then is it ACTA who comes back and 
talks about that or what happens here that there is a slight--
--
    Mr. Horn. Mr. Hankla.
    Ms. Millender-McDonald. Yeah, Mr. Hankla.
    Mr. Hankla. ACTA has certainly jawboned this issue, both 
with Tutor-Saliba and with the unions. The relationship, the 
critical relationship, is between the general contractor and 
those unions.
    Ms. Millender-McDonald. Right.
    Mr. Hankla. We cannot insert ourself in that relationship. 
If we do, we create certain imbalances and legal 
responsibilities. However, we have been pleased with the 
progress that Mr. Tutor has been making with the unions 
recently. We have certainly helped him out to the extent that 
we have talked, and I personally have talked, to the unions 
about securing their support.
    It is a problem that is not solved yet, but our ability to 
impact the problem at this point is limited to jawboning.
    Ms. Millender-McDonald. To what?
    Mr. Hankla. Jawboning. We talk a lot and we do and we have.
    Mr. Horn. A good labor term.
    Mr. Hankla. Yes.
    Mr. Horn. J-a-w-i-n-g.
    Ms. Millender-McDonald. We do understand that jawboning, 
yeah.
    All right, well, Mr. Wiggs, I did see that there is a 
slight under-percentage of jobs in the work force in the Carson 
area; also in the Compton area I saw in your grid, and Lynwood.
    Mr. Wiggs. Compton has exceeded its goals substantially by 
three-fold.
    Ms. Millender-McDonald. Maybe I did not have my glasses on 
when I saw that.
    Mr. Wiggs. Lynwood is approximately about a percentage 
point ahead of its goals.
    Ms. Millender-McDonald. And what about the Watts area?
    Mr. Wiggs. Watts area is part of the Los Angeles community.
    Ms. Millender-McDonald. Which is part of my district.
    Mr. Wiggs. It has approximately 45 percent of the entire 
labor force of the Alameda Corridor communities. They have the 
highest numerical number of workers and trainees on the 
project, yet we are still under goal about 9 percent, given the 
substantial numbers that the city of L.A. has.
    Ms. Millender-McDonald. Yeah, but I am talking about the 
city of L.A., Watts, Wilmington, the two W's that I have talked 
about for years. They are still under-represented in this job 
market.
    Mr. Wiggs. If I may take a moment to somewhat take a 
different perspective. The Wilmington community, about 12 
percent of our trainees and graduates are from the Wilmington 
community specifically. Unfortunately, I do not have the 
following numbers, I did a report several months ago----
    Ms. Millender-McDonald. Can you send that to my office, I 
will be in the rest of this week and I would like to get that.
    The last question that I have, Mr. Chairman, so that I can 
move on and leave for my next meeting, I had wanted to talk 
with Mr. Brown, but I suppose he has either left or he is out 
for this moment. But I would really like to talk with him. And 
again I appreciate Senator Betty Karnette having someone to 
come in and speak today--may I put that on the record? But I 
would like to talk with them about their SB-653, especially 
when you are talking about improving the work force 
preparedness to meet the changing manufacturing environment. 
With my being the ranking member on Small Business, Work Force 
and Empowerment, I am interested in working--is this Mr. Brown? 
Yes, Mr. Brown, thank you.
    I just wanted to ask you to elaborate on your SB-653, 
especially directing certain local entities to provide 
assistance and so forth and so on for communities impacted by 
the Alameda Corridor. And again, will you extend my 
graciousness to the Senator for having someone here to 
represent her, and I know why she is not here. She is doing the 
people's business in Sacramento. Also improving the work force 
preparedness, can you expound on that for me somewhat?
    Mr. Brown. The SB-653 was actually a partnership with ACTA 
and L.A. County Economic Commission to invest in firstly 
identifying brownfield locations of the Corridor----
    Ms. Millender-McDonald. I am sorry?
    Mr. Brown. Brownfield locations.
    Ms. Millender-McDonald. Uh-huh.
    Mr. Brown. Which could be graded according to their 
toxicity so that you could begin to address the mitigation 
necessary to attract businesses. The L.A. EDC, as Mr. Hankla 
pointed out in his presentation, has reached out nationally to 
attract manufacturing concerns and advance transportation 
technologies to begin, hopefully in the near future, to create 
new plants there that would in turn help generate quality of 
life jobs.
    I think if you have that in place, and one of the long-term 
goals of 653, although not part of the legislation, but 
certainly the intent and good will of that legislation; if you 
are able to attract the manufacturing concerns and the advanced 
transportation technology concerns to those sites, you will 
generate quality of life jobs for people in the corridor which 
will hopefully enhance small and mid-sized business in that 
community and hopefully will begin to initiate affordable 
housing strategies. You know, they are building blocks to the 
process. I think this is one of the key foundational building 
blocks, SB-653, in identifying the sites, grading them and then 
beginning an extensive marketing strategy that will attract the 
businesses to provide precision manufacturing jobs and advanced 
transportation jobs for people in this corridor and in the 
surrounding vicinities.
    Ms. Millender-McDonald. Have you gotten cities to come 
together in a joint policy authority or whatever it might be to 
engage in the solicitation of companies and manufacturing 
companies to come out and look at the area?
    Mr. Brown. Well, actually, that has been the responsibility 
of the L.A. EDC, Lee Harrington, and Richard Hollingsworth of 
Gateway Cities. They have been sort of at the front of that 
effort and I believe there have been two or three tours of 
industry, CEOs and decisionmakers to the corridor to look at 
these sites and to begin that process.
    One thing that Senator Karnette would like to do and we 
have been trying to schedule that is to get an inter-agency 
effort with Health and Human Services, Winston Hickok, and the 
treasurer whose report on smart investment and the double-
double bottom line addresses exactly what the potential of the 
Alameda Corridor community region has to offer in revitalizing 
this manufacturing hub with quality jobs, helping to raise 
small and mid-sized businesses to a higher level of earnings 
and to generate, as I said, affordable housing.
    Ms. Millender-McDonald. Well, I am interested in following 
you and following the Senator on her movements, given the 
signage of this bill, and making sure that those cities that 
are affected really do become cities that have quality of life 
jobs and economic vitality.
    Mr. Chairman, let me thank you again for your insight in 
bringing this committee to Long Beach; and to all of you who 
have been here today, I must leave because I have other 
commitments and when I got the word, I had to stop and come in, 
but thank you so very much.
    Mr. Horn. Good to see you.
    Ms. Millender-McDonald. Uh-huh.
    Mr. Horn. Mr. Wiggs, I was very impressed with the data you 
gave to us and you told us some lessons about your experience 
on this. I guess let me ask you, if you could change one thing, 
what would it be in terms of what you have to go toward goals 
and so forth?
    Mr. Wiggs. I think the fundamental change would be at the 
beginning--the front-end of the program design was the 
appointed authority determining that a job training, 
development program would be part of its criteria for selection 
of contractors--would be to establish a punitive system as 
well; and that is to say that if there is no performance, a 
monetary punitive statement in any contractual document setting 
forth that failing to perform established goals will result 
in--my terminology would be impacting contractors' retention. 
Because at this point, as I have shared with staff, the impetus 
for contract compliance is great, but it is one where there is 
the reference of goal, goal versus requirement. Wherever there 
is that reference point, there is a feeling that if you do not 
achieve the established goal, and you have demonstrated your 
best faith, given best faith efforts, the obvious response is 
OK, I did it, so what.
    That means that there is a harder effort for the 
implementers and those who are encouraging goal attainment to 
really apply the pressure upon subcontractors and others to 
perform. At this point, we are grappling in the final stages of 
our contract as to what we should do as a contractor for our 
subs who less than achieve their goals. Therefore, the only 
thing that is left for us to do is to attack the retention or 
at least threaten that retention will be attacked should that 
become a necessity. I have gotten some response from our 
subcontractors in the last quarter, numbers have begun to 
increase, meaning specifically that trainees have been brought 
on their work forces and have been maximized--the hours have 
been maximized. So I would think at the beginning would be some 
reference that attachment of retention or some percentage of 
retention should be withheld for job training assurance for 
performance purposes.
    Mr. Horn. That is helpful. And a lot of them have been 
integrated into the various unions?
    Mr. Wiggs. Yes.
    Mr. Horn. So there has been good cooperation there.
    Mr. Wiggs. Oh, we have not had union, trade union problems. 
I spoke to you early on about the Laborers Union, but again, 
the informal agreements have been working well. We are not 
getting those formal agreements unless you have at the front-
end of a project as well that labor agreement specifically 
setting forth the terms of the training program; i.e., numbers 
of local workers or whatever designation of worker category you 
are using, shall be employed on this project from beginning-to-
end and the trade unions are signing off on that agreement at 
the front end.
    Mr. Hankla. Mr. Chairman, I think it is important to note 
that in the mix of workers on the Corridor, approximately 60 
percent--correct me if I am wrong--would be laborers. So if we 
have a problem with the Laborers Union, that is much larger as 
a problem than, for example, if we had a problem with the 
Electricians' Union. I think that has been one of our problems 
and I think that Mr. Wiggs would agree that best efforts at 
this point with the Laborers have as yet to produce the kind of 
results we would like. And since they are so over-represented 
in terms of the workforce, it has an interesting and negative 
impact on the numbers.
    Mr. Horn. That is very important.
    Anybody have something they want to get on the record 
before we close it out? Although if you have a good idea, we 
keep it open to put something, a memorandum or letter, in the 
mail or whatever. But this has been very enlightening for me of 
all the progress that has been made. You will have lots of 
visitors.
    Mr. Buresh.
    Mr. Buresh. There are a couple of comments I would like to 
get into, to go back to some of our discussions, if you will, 
about the overall transportation system. I think it is the 
lessons to be learned from the Corridor and some of the 
opportunities in here. This has been a very effective 
partnership between the ports and the railroads that impacts 
the transportation system dramatically.
    When the Corridor comes on-line, one of the benefits will 
be the dramatic reduction in travel time for a container 
traveling by rail from the ports to say San Bernardino. 
Presently that trip I believe takes 10 to 12 hours depending on 
rail traffic congestion. Now that trip will go down to an 
average of say 3 hours for the Burlington-Northern Railroad. 
That suddenly changes possibilities and those things which 
would not make economic sense in the past suddenly become more 
viable.
    We talked about AB-2928, that is a required study by 
several counties to address goods movement, but it has turned 
into a grade separation study. It is not really addressing 
goods movement. More important, it is not addressing how you 
change that flow of goods. I think for those of us who have 
worked with CALTRANS and been driving through their large long-
term projects, that is a project delivery time line that is 
broken and we cannot count on. I think we need to find ways to 
shift more containers from trucks to rail and expand that as a 
viable alternative, to start either reducing truck trip length 
or the number of truck trips. I believe that the current 
studies are not addressing that opportunity or taking advantage 
of the increased opportunities that the opening of the Corridor 
will present in a very short time.
    We need to also come up with a different project delivery 
method for CALTRANS. Frankly, there has not been a penalty for 
their failure to perform. At peak construction volume on the 
Corridor, we put in place over $2 million worth of work per 
day. CALTRANS on average puts in $3 million per day in the 
entire State. Clearly things could be speeded up, expansions 
could be made more rapidly, and more responsive, to our 
changing needs.
    The ports are unusual in that we can see where our growth 
is coming, we can see what the demand is going to be. Mr. 
Keller referred to the fact that half of those containers go to 
Los Angeles, well they come from the ports, but they go 
somewhere. We have over 20 million square feet of new warehouse 
or big box space opening up in San Bernardino. By definition, 
trucks come from somewhere to feed them, they leave them to 
feed somewhere else. And the whole time that all those 
facilities have been getting installed out there, we have not 
addressed whether we should serve them in any way other than 
traditional truck road, which consists of once they leave my 
loading dock, I do not think about them, I do not care how they 
get where they are going. I think as a region, we have got to 
get our arms around that and come up with a wiser approach to 
having a good mix between rail and truck service and having the 
right kinds of truck service into those facilities.
    Mr. Horn. That is a very helpful perspective.
    Mr. Hankla.
    Mr. Hankla. There is one other item, and that is, I think 
as these other projects search for the nexus that will allow 
them to become reality, the one thing that they should be 
looking toward is how they can add value in terms of cargo and 
goods movement, and in particular how they would add value for 
the railroads, because they are the principal partners. We 
added value, or the Alameda Corridor would not exist. How do 
they add value, that is the question.
    Mr. Horn. Well, give me some examples of the value added.
    Mr. Hankla. Well, does this improve in some fashion the 
railroad's ability to move cargo; does it move it faster, does 
it move it cheaper, does it move it better. Those, I think, 
will become the sine qua non that the railroads are going to be 
looking for to get involved in a partnership and these other 
projects. Without the railroads, you do not have a partnership.
    Mr. Horn. So you would see a much faster movement of goods 
from port to wholesale and retail, once it is out of Los 
Angeles County, and it is apparently quite a bit in Los Angeles 
County. But I take it the trucks will handle most of that. Is 
there sort of any rule of thumb, Mr. Keller, Mr. Steinke, as to 
whether you see the truck traffic changing and doing maybe 
within 150 miles or something like that, or San Diego, as 
opposed to putting it on a railcar?
    Mr. Steinke. Congressman, I think those are some of the 
studies that groups like the Transportation Research Board are 
looking at and as Mr. Buresh said, the idea of maybe taking a 
train, a unit train, to a place like Ontario or San Bernardino, 
to eliminate trips on the 710; whether or not those make 
economic sense. And I think that those studies are taking place 
by the groups that I just mentioned. Traditionally, we think of 
intermodal cargo as anything about 300 miles and further, and 
so that is where we come up with our basic ratios of about 50 
percent serving the local market and then 50 percent moving 
what we call intermodally. But I think we need to continue to 
look at what makes sense, if there is a train movement that 
goes into San Bernardino County, and then serves the areas 
closer in. Those are things that other groups are looking at, 
whether that makes sense. I think we need to continue to 
investigate those kinds of things.
    Mr. Horn. Mr. Keller.
    Mr. Keller. That is certainly one part of the model. 
Another one, Congressman, that we have discussed actively is 
strengthening the whole distribution system. We have truckers 
who will drive at night, we have terminals in the ports that 
will stay open at night. But the containers have nowhere to go. 
The same distribution centers we are talking about want to open 
at 8 a.m., and close at 6 p.m., leaving the trucker with no 
secure spot to drop the container.
    We have to strengthen that system, and in so doing, we 
would effectively free up the freeways for roughly sometime 
between 9 p.m., and 7 a.m., a time when most commuters and most 
other citizens are not using those freeways and highways. We 
think that has enormous potential as well and we are actively 
engaged with several of the groups who can make this happen, 
particularly with some of the smaller importers and exporters.
    So we think that there are solutions here and they are all 
being studied.
    Mr. Horn. That is an exciting idea as to certain times 
where the bulk of the traffic could go and other times not.
    Any other comments? Yeah, Mr. Brown.
    Mr. Brown. Congressman, I would just like to go back to the 
Alameda Corridor East and I think Mr. Kellogg identified it as 
sort of a piecemeal process. AB-2928 invested $273 million for 
those four counties to invest in building the Corridor which is 
now, as Mr. Buresh indicated, a grade separation project, not 
necessarily a goods movement project. What is key, in order for 
this project to build it from the Redondo junction to the 
desert is that there needs to be a regional approach. We cannot 
do it in a piecemeal fashion, we cannot do it through a 
parochial lens. All of the districts--congressional districts, 
legislative districts east of the Redondo junction need to look 
at this as a team effort or else we will build this in a 
piecemeal fashion and it will take twice as long and probably 
three times the money. And we will have a great deal of 
congestion.
    So I just want to suggest that in talking with your 
colleagues in Congress, that the approach to building the 
Alameda Corridor East be one of a regional approach.
    Mr. Horn. That makes a lot of sense and that is how we got 
this far. Now as I remember, it was $800 million, the Secretary 
of Transportation signed on and said you did not have to start 
paying it back until what----
    Mr. Buresh. $400.
    Mr. Horn. $400. What did you do with the other $400?
    Mr. Hankla. We got $400 from the Federal Government in a 
loan.
    Mr. Horn. Good heavens, I thought it was $800.
    Mr. Hankla. The ports advanced $400 risk capital up front.
    Mr. Horn. That was Secretary Pena.
    Mr. Hankla. We got approximately $400 million, give or 
take, through California Transportation Commission MTA, the 
rest was bond funded.
    Mr. Horn. So have you fixed a figure on the container and 
how long it will take to pay the Federal Government back?
    Mr. Hankla. It will be based--at current projections it 
looks like there will be an early retirement of the debt all 
around. How early, I could not say. But based upon cargo 
growth, it appears that the debt will be retired earlier than 
anticipated.
    Mr. Horn. Do you have any thoughts on the financing here 
that somebody wants to comment on? Yes, Mr. Preusch.
    Mr. Preusch. The $800 million was the amount that the $400 
million loan grew to before the amortization actually occurred. 
With the increasing volumes that we are seeing, it probably 
will not get to that point. As Mr. Hankla pointed out, all of 
the debt should be retired quite a bit sooner than the loan 
agreement anticipated.
    One of the things, if I could make one other point, with 
regard to regional issues and concerns related to the Alameda 
Corridor East or the Placentia project, I think it is important 
to recognize not just how, as Mr. Hankla pointed out, the 
railroads would benefit, but who the ultimate beneficiaries 
are. About half, 55 percent, of the cargo coming through the 
San Pedro Bay ports is moving to points well east for consumers 
that are back there. There needs to be some mechanism to 
connect the benefit that those ultimate consumers receive to 
the costs of moving those goods faster and with less 
congestion, less impact here.
    One of the things that the airline industry has done is to 
use a passenger facility fee. Each one of us pays a very, very 
small amount to fly through LAX whether we live here or not. 
There may be a parallel structure that could be imposed on 
goods movements in a way that would cause the ultimate consumer 
to help support some of these projects in a more regional or 
national sense.
    I think it is important that the money not be 
redistributed, that it be applied where the needs are, in this 
area as an example. But as has been said many, many times, we 
cannot expect the ports, we cannot expect ACTA to fund every 
grade separation between here and Chicago or New York.
    Mr. Horn. Well said. I am interested in what you think--
these would be the sort of duplicate for what was the harbor 
maintenance tax that the Supreme Court threw out.
    Mr. Preusch. I think the issue with the harbor maintenance 
tax was the redistribution of money, it was not necessarily 
used where it was collected. I think perhaps an approach that 
would bring a fee back to a port or a region where the 
congestion is occurring, where the relief is needed might work 
a little more effectively.
    Mr. Horn. Do you see any other option in terms of replacing 
the harbor maintenance tax that would withstand Constitutional 
muster?
    Mr. Preusch. I do not know that I have explored it that 
thoroughly. I think that is likely the case. One of the issues 
there, of course, was the redistribution. To the extent that 
money is collected for cargo coming through an area, it needs 
to be used to support that same area. That is the principle 
that has worked with the passenger facility charge in the 
airline fee and I think that is a pretty good model to at least 
explore.
    Mr. Horn. Yeah, and of course the airlines were very upset 
about that when Los Angeles International put that on, but I 
first remember that in Yugoslavia back in the 1960's and 
1970's. They get you going out of town, that is for sure.
    Well, thank you for that dialog and thank you all, 
gentlemen, for your help in this. A lot of people are going to 
want a copy at other ports in America as to what you all said 
this morning. So thanks for coming and we appreciate it.
    Let me thank the staff that put this together. Right to my 
left, your right, staff director and chief counsel, Russell 
George; Dianne Guensberg, professional staff has returned to 
Washington. On my right is the professional staff member and 
director of communications, Bonnie Heald, who came from Long 
Beach here. Earl Pierce, professional staff is back in 
Washington, as is Matthew Ebert, policy advisor. Grant Newman 
is here doing all the work and he is over there. Put your hand 
up, Grant. And then Brian Hom, our intern is staying in 
Washington.
    Now we want to thank the people here that helped us a lot 
and they are Steve Sykora and Arturo Garcia. We are delighted 
to have this facility. They are both related to public 
relations for the Port of Long Beach. And then Bill Warren, 
this will be his last hearing in the last 10 days and I am sure 
he is glad to get back to Georgia--the court reporter.
    We thank you all and with that, we are adjourned.
    [Whereupon, at 11:46 a.m., the subcommittee was adjourned.]

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