The West Coast Corridor System by chenmeixiu

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									  The West Coast Corridor System

             Phase I Report
Building a Strategy for Secured Mobility




         Prepared by Glenn Pascall
 For the U.S. Department of Transportation
        Borders & Corridors Program

                June 2003
(Frontispiece)




      2
                                 Table of Contents


Frontispiece – corridor growth rates                                2
Table of Contents                                                   3
List of Maps                                                        5
Overview                                                            6
        The Corridor System Concept                                 6
        The Lay of the Land                                         7
        Hot Spots and Choke-Points                                  8
        A West Coast Corridor System Strategy                      10
        Implementing Steps                                         11

Introduction                                                       14
      Background - The Cascade Project                             14
      The West Coast Corridor System Coalition                     14
      Enhanced Relevance since September 11, 2001                  16
      WCCS Phase I                                                 16
      Projects of Corridor System Significance and WCCS Phase II   17
      WCCS Phase I Findings                                        19

The West Coast Corridor System                                     21
     Canada                                                        21
     United States                                                 21
     Mexico                                                        21
     The NAFTA Challenge                                           22
     NAFTA Trade Flows at Border Gateways and Along Corridors      22
     The West Coast Corridor System: Nexus of NAFTA and APEC       23
     Closer Cooperation Between California and the Northwest       25
     The I-10 Corridor                                             29
     Golden State Gateway Coalition                                31

Border-to-Border Management System                                 33
      The West Coast Secured Corridor Initiative                   33
      ITS Coordination                                             34
      Two-Border Cooperation                                       37
      Canada-U.S. Border Issues                                    40
      Mexico-U.S. Border Issues                                    42

Metro Freight Mobility                                             47
      Port Gateways                                                47
             San Pedro Bay                                         48
             Port Hueneme                                          49


                                           3
             San Francisco Bay                                       49
             Lower Columbia                                          51
             Puget Sound                                             52
             Lower Mainland                                          53

      Financing Landside Freight Mobility                            54
            Strategic response: The Alameda Corridor                 55
            Strategic response: Goods movement industry cluster      56
            Strategic response: Regional revenue sources             56
            Strategic response: National and NAFTA revenue sources   58
      The Future of Freight Mobility in Gateway Metro Areas          60
            The outlook for federal financing                        60
            Cooperation among port gateways                          62
            Operational advances                                     63

Green Corridors: Transportation Serving Quality of Life              65
      Jobs-Housing Balance and "Smart Growth"                        65
      The Role of Transit                                            68
      The Logic of Value Pricing                                     69
      Passenger Mobility and Freight                                 70
      By Air and Amtrak                                              71

Conclusion                                                           76




                                           4
                                         Maps



Frontispiece

      Population Growth along Major North-South Corridors, 1950-1999


Facing Page 9

      I-5 Corridor Truck Volumes and Volume-to-Capacity Ratios, 1998

      Freight Analysis Framework, Congestion Levels, 1998

               Los Angeles Metroplex
               Central Valley of California
               San Francisco Bay Area
               Columbia River / I-5 /Portland
               Central Puget Sound / Seattle


Facing Page 23

      National Truck Network Flows

               California
               Oregon
               Washington




.




                                           5
                                           Overview

The Corridor System Concept

Corridors are a defining aspect for every mode of transportation. The term "sea lanes" has
been in use for decades. "Air corridors" define departure, over-flight and approach routes
for commercial traffic and military movements, and often have legal status. Highway
corridors have been given official standing by Congress and are the basis for coalitions
around the country.

Water and air are fluid means of travel that do not require the fixed boundaries of land
transportation routes. Ships and aircraft can change their routing in response to
conditions. Moreover, seaborne commerce often includes multiple ports of call in varied
patterns. One result of the flexibility to alter course at will or from necessity is that sea and
air corridors are webs of alternatives - corridor systems rather than linear routes.

The same is true with land transportation, notably in movement through and between
major metro areas. These nodes of activity experience the highest traffic volumes, have the
greatest concentration of lane-miles, and offer the largest number of route alternatives. In
this setting, freight transport and personal travel through them involve a host of real-time
strategic decisions.

The inescapable fact that highways are fixed routes has led to a mislabeling of reality. The
coalitions that have arisen in response to corridor designations are centered on specific,
numbered portions of the Interstate Highway System. In some cases (e.g., I-95), this
provides a relatively logical and cohesive focus. In others, (e.g., I-35), the focus holds
steady along a portion of the Interstate but not all of it. In still other cases (e.g., Canamex),
geography and disconnected route segments constrain attempts to develop an Interstate
corridor concept.

This dilemma can be resolved by a shift in focus from unilinear corridors (most often,
single Interstate routes) to corridor systems and corridor connectors. Corridor systems are
land transport webs with the same flexibility as air and sea corridors. Corridor connectors
are crucial links between east-west and north-south webs, and among alternative routes in
complex metro areas.

The focus of this report is the West Coast corridor system. The term "East Coast" is
understood to include an entire region of urban centers and hinterlands rather than
simply the Atlantic shore. Similarly, the West Coast is a major region of the U.S.

The term "I-5 Corridor" is not used here. Though it is sometimes called the "Main Street of
the West," I-5 does not pass through the San Francisco Bay Area, the region's second


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largest urban center. Further, the San Joaquin Valley’s “main street” is California 99, a
parallel route east of the Interstate. And I-5 is but one route among many traversing
Greater Los Angeles, which is not only huge but a hinge between north-south and west-
east transport flows. Even in the less-populous Northwest, an I-5 focus overlooks the
Inland Corridor based on Highways 97 and 397, which are important north-south
alternatives.

While the term "I-5 Corridor" is clearly inadequate, "West Coast Corridor" is scarcely
better because the reality is plural and even multiple. A shift in terms to corridors, or more
precisely, to the corridor system, is crucial. A systems focus allows us to understand
transportation challenges and identify solutions. It also recognizes the impact of transport
systems on urban development and land use, and suggests the kind of policy directions
that are required. Finally, a systems focus clarifies the role of corridor connectors; for
example I-580 linking the Bay Area to Interstate 5.


The Lay of the Land

The West Coast Corridor System links the most dynamic growth regions of Canada, the
United States and Mexico. Its main trunk is Interstate 5, with important extensions and
alternatives -Highway 99 in British Columbia; Highways 97 and 395 in Washington,
Oregon and California; Highways 99 and 101 in California; and Highway 1 in Baja
California. These north-south routes relate to important east-west connectors that link the
Pacific Coast to the rest of North America: Highway 1 in Canada, Interstate 90 in
Washington, Interstate 84 in Oregon, and Interstates 80, 40, 15, 10 and 8 in California.

In the fifty-year period after the Interstate System was conceived, West Coast counties
traversed by I-5 grew 182 percent in population. This compares with growth of 120
percent along I-35 and I-75, and 66 percent along I-95. I-5 population grew from 12 million
in 1950 to 34 million in 2000. Urban regions including the San Francisco Bay Area and San
Bernardino-Riverside that are adjacent to but not on I-5 raise the population total to about
50 million.

The West Coast Corridor System is notable with regard to trade as well as population. It is
perhaps the only NAFTA corridor that is not only a concept but a commercial reality
among three nations.

In mid-continent, the "auto belt" corridor system angles across several Interstate routes
from Monterrey, Mexico to Windsor, Ontario. A huge volume of goods crosses into the
U.S. each day at Laredo, Texas and Windsor, Ontario - the busiest trade gateways on each
border. A large share of total volume is components destined for automobile factories
from Tennessee to Michigan.



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The auto belt corridor system is strong in Mexico-U.S. and Canada-U.S. trade but is only
nascent in three-nation trade. The West Coast Corridor System is emerging as the first true
border-to-border NAFTA trade route. It is anchored on the south by Tijuana-San Diego,
the busiest border crossing in the world for personal travel. On the north, the corridor is
anchored by the busiest U.S.-Canada trade crossing outside the Province of Ontario.
Greater Vancouver, Canada's most dynamic growth region, begins almost at the border.
Two hours to the south is Greater Seattle, metro center of Western America's 2nd most
populous state.

These border anchors connect a corridor system that is a North American artery for trade,
travel and tourism. At the Oregon-California line, perhaps the least urban point on I-5,
eighteen-wheeler truck traffic is equal to a remarkable 50 percent of volume on Detroit's
Ambassador Bridge, the busiest commercial border crossing in North America. Along
other segments such as Vancouver-Seattle, Seattle-Portland, Sacramento-Los Angeles, and
Los Angeles-San Diego/Tijuana, large truck volumes are as much five times as great as on
Ambassador Bridge.

Our North American neighbors are the U.S.' largest trading partners. At $1 billion in
goods movement per day, Canada is first and Mexico is next. It is at 60 percent of
Canada's level, and closing the gap. Trade with Japan and China have made West Coast
ports the continent's fastest-growing. The two largest container cargo load centers in the
Western Hemisphere are Los Angeles-Long Beach and Seattle-Tacoma. Vancouver and
Oakland are major players in container trade while Columbia River ports such as
Portland, Vancouver USA and Kalama are the U.S. largest ports for bulk cargo (grain,
minerals) outside the Mississippi River basin.

Highly complex interactions between north-south and east-west movement occur among
truck, rail and (in one case) barge traffic at the U.S.-Canada border, Central Puget Sound,
the Lower Columbia River, the Bay Area, the I-40/I-15/I-10 nexus, and the Mexican
border at Otay Mesa and Calexico. Several points in the corridor system are connectors for
this trade grid, creating a "ladder" of north-south NAFTA movement and east-west Pacific
Rim routes.


Hot Spots and Choke-Points

Sustained and at times explosive growth in Pacific Rim and NAFTA trade has created a
huge challenge in moving imports through the major metro areas adjacent to West Coast
ports to the rest of North America as "just in time" inventory to re-stock retailers and
manufacturers. Gateway and border regions have struggled to meet the infrastructure
costs of serving the combined needs of continental trade and metro traffic.




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Choke-points along the corridor call for - and sometimes compete for - investment
resources required to add crucial capacity. In fact, a general shortage of funding relative to
need sometimes creates the sense of a zero-sum game even when there is no direct
competition for dollars.

Notable hot spots on the goods movement map include:

• The Port of Vancouver's container terminals - Centerm and Vanterm in Burrard Inlet and
Deltaport at Roberts Bank - with the movement of imports through a complex land-and-
water urban geography to long-haul truck and rail routes east.

• The U.S.-Canada border where targeted investments continue to add capacity and
functionality but do not yet provide full, efficient separation of truck and auto traffic nor
allow timely clearance and, where appropriate, expedited pre-clearance of commercial
cargoes and low-risk business travelers.

• Central Puget Sound's container terminals at the Ports of Seattle and Tacoma, with
landside congestion between the docks and access to transcontinental rail and truck
routes, aggravated by complex geography, rapid population growth, and lagging
investment in added capacity.

• The Columbia River - I-5 nexus of truck, rail, ship and barge movement, involving a host
of needs including replacement of the only remaining drawbridge on I-5, deepening the
ship channel, and providing connectors for two major marine ports (Portland and
Vancouver USA) to highway and rail routes, north-south and east west – while keeping
all this activity consistent with metro traffic movement.

• The Bay Area complex of routes - Interstates 5, 80, 580, 680, 880 required to move goods
from Silicon Valley and the Port of Oakland to the rest of North America, including the 20
million-strong Southern California market. The Bay Area is a region where commercial
traffic must deal with complex geography and compete with heavy commute flows from
the Central Valley.

• The Central Valley system of transport for agricultural products north-south, west to the
Bay Area, and east to the rest of America. The Great Valley of California is the nation's
leading agricultural region in total value of output and is the dominant source of over 40
crops. Thanks to affordable housing, it has become a major growth area that ranks with
Washington and Arizona in population. State Route 99, running parallel to I-5, is near
capacity in serving as the Valley's main street and as a crucial artery for agriculture.

• South Valley-North LA Metro is a potentially major crossroads in two regards. First, the
leading east-west truck corridor in the U.S. is Interstate 40. It begins at Barstow in the
Mojave Desert but does not extend west to I-5. Completion of this missing link, either by


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bringing California 58 to full Interstate standard or as I-40, would add a key corridor
connector and enhance the functionality of the West Coast Corridor System. Another
investment would create an "outer ring" based on State Routes 138 and 247, swinging
around the north side of the mountains that rim the LA metroplex, and offering an
alternative connector to I-10 east in the Colorado Desert.

• Southern California's trade and transport complex is the largest in the Western Hemisphere.
Many imported goods stay in the region but more than a third of the total moves east. The
18-mile Alameda Corridor, completed in April 2002, speeds trains 20 miles from the ports
to the main line. As the nation's most notable freight infrastructure project of recent years,
the Alameda Corridor has solved one problem and created another by moving the focus
east to the San Gabriel Valley, where further rail investment of comparable magnitude are
required. Goods movement also requires major upgrades of I-710 and State Route 60,
connectors to I-10 and I-15 which thread through the urban region carrying massive truck
volumes that compete with metro traffic.

• The U.S.-Mexico border at San Ysidro and Otay Mesa faces multiple challenges: adequate
staffing for 24 border inspection lanes serving personal travel between Tijuana and San
Diego, completion of facilities to handle growth in truck traffic, and linking the
commercial crossing directly to interstate-standard highways rather than city streets. In
adjacent Imperial County, parallel issues exist along with the opportunity to connect
Calexico and Andrade by interstate-standard roads directly to I-8 and I-10 east, an
upgrade that would reinforce the value of an "outer ring" allowing long-haul trucks to
bypass the Southern California metro area.

A West Coast Corridor System Strategy

On the West Coast, the need for a system strategy is suggested by a host of factors:
population growth, the steady rise in trade volumes, tightening of financial constraints,
public demands that personal mobility have minimal impact on the environment and
quality of life, and the requirement that mobility be consistent with heightened security.

Reconciling these factors requires cooperation among all those who have a stake in the
functioning of the corridor: federal policymakers and funders, state transportation
agencies, regional planning organizations, private sector users (shippers, carriers,
developers) and specialists in physical and technology infrastructure.

There are models for such a coalition, including a decade of cooperation along the 465-
mile Cascadia Corridor, which comprises the northern segment of the West Coast
Corridor System that reaches 1400 miles “from B.C. to B.C.” – from British Columbia to
Baja California.




                                             10
The ultimate goal of building a strong network supporting the West Coast Corridor
System is to impact TEA-4, the reauthorization of federal support for transportation that
will begin with fiscal year 2009, and to encourage parallel efforts in Canada and Mexico.

The target date for completion of work related to TEA-4 would be summer 2007. This
extended time frame would be required to refine mega-project designs, finalize the
priority list of investments, develop a funding menu including innovative finance
mechanisms, gain consensus on a comprehensive approach, and encourage national
freight initiatives up to and including TEA-4.

In the near term, benefits from participation in the Coalition could begin to flow almost
immediately. These would include cutting-edge studies beginning with regional economic
scenarios, analyzing types of mix within goods movement under each scenario, and
focusing on various facility investments that would support each pattern of activity. (see
page 18, below).

Cooperation within the Corridor Coalition could advance other related objectives
including:

• Treating the West Coast transportation network as a "Corridor System of NAFTA and APEC
Significance," an inter-related web rather than as isolated series of segments and projects,
with multiple linkages to the east-west Pacific Rim trade grid.

• Deployment of Corridor ITS technology that would provide system management to
maximize capacity while meeting security requirements and incident response that
support "secured mobility."

• Coordination between the U.S.-Canada and U.S.-Mexico borders among regional, provincial,
state and federal officials in making requests for federal support to fund staffing,
infrastructure, technology and procedures.

• A shared "Gateway Strategy" treating West Coast ports as units in a unified national and
continental system that equitably balances the regional benefits and burdens of moving
goods in global trade.

• A West Coast "Smart Growth Forum" to share experiences and best practices on the
interactions between transportation, land use and urban development, including the roles
of value pricing, metro transit, and inter-city passenger rail.

A West Coast Corridor System Coalition that addresses these issues would possess the
ability to refine alternatives, take positions, support investments, and move in directions
that enhance regional quality of life while strengthening the voice of the region at
national, NAFTA and Pacific Rim levels.


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Implementing Steps

A coalition can help bridge existing entities, provide an enhanced strategic perspective,
and position the region to benefit from future legislation and new policy directions. A
coalition can develop a high-level framework for a business plan based on issues, not
projects. The plan would include a timeframe and define milestones. Content would be
focused in a four-step process:

• Do we understand the problem?

• What are the challenges for the future?

• What institutional adjustments are needed – in existing law, eligibility standards and
enabling statutes, innovative finance mechanisms, and new programs?

• What operational strategies can advance the effort? (ITS is a prime example because it
ties to mobility, safety and security).


To transform a vision and a logical framework into 21st century outcomes requires a focus
on immediate reality and potential action elements:

• Stay current on revisions that reflect updates on TEA-21 reauthorization.

• Collect input from U.S. Federal Highway Administration division administrators to gain
  broader federal perspective.

• Evaluate new organizational structures to deal with inter-state facilities and procedures.

• Distinguish between points of common agreement and issues to be resolved.

• Present the Phase I Report as an emerging conceptual design that addresses:

   A.   What we have
   B.   How it works
   C.   What its strengths and weaknesses are
   D.   What we want - our vision for the future
   E.   How we will get there - our business plan

A new institutional approach may be required to deal with West Coast transportation
challenges on a long-range, sustainable basis. A single point of contact, with sustained


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capability to address West Coast corridor system issues, would provide a venue for inter-
state and public-private cooperation at the corridor system level to share concerns and
develop responses.

The dialog launched by potential West Coast Corridor Coalition members in Sacramento
on June 5, 2003 might serve as a rallying point for common efforts in the future. No
assumptions can be made about outcomes. Rather, it is time for those in the Pacific States
who are tackling similar challenges to explore the value of maintaining a network of
communication, to share best practices and compare alternative approaches, define
potential areas of cooperation, and heighten mutual awareness on investments of corridor
significance that affect the adequacy of the region’s transportation system.

Each of the three U.S. West Coast states is wrestling with perhaps the most severe budget
crisis it has faced since the Great Depression. How can the Sacramento conference assist in
steps to restore economic vitality in each state and in the region?

• Transportation is a fundamental element in wealth creation. This is true worldwide and
at all levels of economic development. Thus, a multi-year trend toward infrastructure
“disinvestment” in the U.S. would be a telling sign for the future. The single most
important focus of the conference is freight mobility, widely recognized as a requirement
for economic vitality. West Coast freight volumes are projected to grow at rates that are
daunting - at a time when increases in federal and state support have slowed sharply. The
alternatives are ever-more severe conflict in urban areas between personal mobility and
freight, or progress in enhancing the efficiency and capacity of gateway and corridor
systems.

• Harry Caldwell of FHWA calls the coming century "the era of collaborative advantage,"
augmenting the 20th century's search for competitive advantage. The Sacramento
conference has an excellent chance of being the launch point for: (1) a sustained West
Coast dialogue on sharing best practices; (2) gaining synergies by basing investments on a
systems approach rather than at the project level; and (3) making common cause in
seeking future support for "projects of corridor significance.”

• Institutional development is the most difficult thing to do – and the most cost-effective.
West Coast cooperation could be used to maintain a center of excellence, a setting where
policymakers can engage and sustain a dialog on thorny issues as well as best practices. In
freight, the disconnect between logisticians and policymakers – more broadly, between
doers, managers, leaders and thinkers – must be overcome. Also, a gap must be bridged
between the long time frames in transportation planning and short time frames favored
by system users. These are important reasons to build an ongoing capacity for dialog.

• West Coast corridor cooperation offers not only the analytical gain from systems
thinking but a pragmatic advantage in combining the well-placed congressional


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delegations of the Northwest with the economic and population presence of California as
the basis for a West Coast coalition that can speak with a more unified voice in seeking
national support for major investments in the corridor.

• SAFTEA, the just-adopted reauthorization of TEA-21 requires corridors to be multi-
state. This language is indicative of the times, and it makes some form of West Coast
corridor coalition not only desirable but essential. In hindsight, the Sacramento conference
may well appear to be timely positioning for the requirements of TEA-3 and, beyond that,
TEA-4.

The Sacramento conference will be a first step enabling transportation policymakers to
explore the potential - and the limitations - of participating in a Pacific States coalition.
The gathering carries no assumptions regarding the degree of commitment or preferred
form of inter-action. Rather, it is an open-ended exploration. If this approach has merit, it
can be continued during the summer in small group discussions focused on issues related
to specific regions along the corridor, followed by a corridor-wide, corridor-long
reconvening in the fall.

Every system is part of a larger system. The overall system is affected by the health of
each of the smaller systems included in it. Every system needs to find a balance between
two forces. It must keep itself healthy and functioning, and must also be aware of its part
in the larger system.

In this context, West Coast Corridor System policymakers need to understand more
deeply the larger system of which each state is a part, so we can function more effectively.
In meeting our counterparts, we are likely to discover that what we have in common is
greater than our differences. This can move us toward cooperation rather than
competition as a way to capture the benefits of the larger system.

A multi-state corridor coalition will never be the top priority of any state or regional
transportation agency. But such a coalition can be a valuable means to help each entity
move its own priorities forward. This illustrates what Harry Caldwell describes as the "era
of collaborative advantage."




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                                      Introduction


Background - The Cascadia Project

Since 1996, the Cascadia Project at Seattle-based Discovery Institute has worked with the
Whatcom Council of Governments, northernmost Metropolitan Planning Organization on
the U.S. West Coast Corridor. The two entities have cooperated to enhance the
functionality of North American borders and corridors through a series of initiatives:

• The International Mobility and Trade Corridor Project(IMTC), a binational, government
and industry coalition that coordinates planning and improvements for international
crossings serving the I-5 and Highway 99 corridor between the U.S. and Canada.

• "Connecting the Gateways and Trade Corridors," an infrastructure vision and physical
plan linking the major marine ports from Vancouver, British Columbia to Portland,
Oregon with east-west and north-south trade corridors in North America.

•The Inland Corridor Initiative, supporting a dialog among regional leaders in the eastern
portions of British Columbia, Washington and Oregon to strengthen inland north-south
corridors that are alternatives to I-5.

• Serving as consultants to the U.S. Immigration and Naturalization Service in 2001 to
perform field research and prepare a comprehensive report covering traveler pre-
clearance programs on Canada-U.S. and Mexico-U.S. borders.


The West Coast Corridor System Coalition

Based on the coalition model offered by IMTC, a new project was initiated in January
2002: The West Coast Corridor System study. This project is designed to evaluate the
feasibility of a coalition as a cooperative mechanism among regional leaders to support a
vision and infrastructure plan, with the goal of achieving a fully integrated corridor from
border to border. The West Coast initiative builds upon the network that has served the
Cascadia Corridor.

Cascadia covers the 460-mile segment from Vancouver, British Columbia to Eugene,
Oregon. The goal of the initiative is to extend this structure 1000 further miles through
Oregon and California to Baja California. In addition to reaching "from B.C. to B.C.," the
Coalition would also extend northward to Alaska via the Alcan Highway and the Marine
Highway system.




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The West Coast Corridor System Coalition would build a decade of work by the Cascadia
coalition in developing the following elements:

• Strengthen the network of transportation professionals, private sector leaders and
elected officials through common effort on shared goals.

Promote thinking that sees transportation not as a collection of individual projects and
functions but as an integrated system. Sustain a dialogue among professionals and policy-
makers responsible for port gateways, land borders and transportation corridors. Maximize
benefits by placing short-term and medium-size projects in the context of a long-term plan
for "projects of corridor system significance." Encourage development of inter-modal
connectors that support a seamless transportation network.

• Treat port gateways and trade corridors as parts of a system where all parties have a
strategic interest in leveraging each other's investments.

Recognize that as the nexus of APEC and NAFTA, the West Coast faces long-term growth
in traffic volumes that create heavy demands on gateway and corridor infrastructure.
Meet this challenge through cooperative effort within the context of competition among
regional gateways.

• Resolve conflicts between metro traffic and trade gateway functions by implementing
freight mobility strategies that enhance personal mobility while serving goods movement.

Recognize that the volume of freight throughput creates an increased need for freight-
specific investments. Utilize lessons learned from the success of the Alameda Corridor
and the FAST Corridor. Integrate long-haul truck and rail throughput with urban,
agricultural and other land use goals in order to harmonize corridor and gateway
functions with urban mobility.

• Coordinate transportation investments with development strategies that promote best
use of land and enhance quality of life.

Recognize that an important element in making the West Coast a "green corridor" is the
passenger rail system in California and in the Northwest. Seek optimal balance and
integration among various modes - road and rail in freight movement, and high-speed
inter-city passenger rail service as an alternative to highway and commuter air travel.
Make transportation investments consistent with preservation of open space and
agricultural lands.

• Utilize Intelligent Transportation Systems (ITS) as a cost-effective means to enhance
security, expedite mobility and maximize capacity.



                                           16
Work toward a border-to-border management system utilizing best practices. Base the
system on ITS integration and technology that is interoperable (shared and compatible).
Apply ITS to optimize current capacity for traffic flow of vehicles per lane-hour, and to
expedite freight movement while verifying cargo for security and customs purposes. The
beauty of this technology is that by augmenting capacity, redundancy and cargo ID, it ties
equally to security and mobility.

• Achieve two-border cooperation at each end of Interstate 5 in making requests for
federal support.

Treat the Canada and Mexico borders as twin "anchors" of the corridor system.
Coordinate requests for federal support of staffing, technology and infrastructure
investments at both borders. Implement expedited pre-clearance of low-risk frequent
travelers and harmonized procedures for processing people and goods, to assure that the
Canadian and Mexican borders are a bond rather than a barrier between North American
nations.

• Develop a high-priority project list for the West Coast Corridor System.

Facilitate agreement among regional and state officials on a select list of priority projects
for funding under future TEA-21 reauthorization. Assemble a preliminary project list and
interview regional decision-makers as the basis for an integrated analysis and a unified
list of "projects of Corridor System significance" that could be endorsed by transportation
officials on the West Coast.


Enhanced Relevance Since September 11, 2001

Several aspects of the corridor initiative have taken on greater significance in light of U.S.
response to events of September 11, 2001:

• The requirement for a robust and flexible land transportation system serving homeland
and continental security - a reminder of the origins of the National Defense Interstate
Highway System of 1955.

• The challenge of developing operational procedures and achieving international
cooperation to assure that our borders and port gateways facilitate trade and travel while
satisfying heightened security requirements.

• The need to develop a freight infrastructure that meets new standards of redundancy,
robustness, and routing of hazardous cargo around urban centers.




                                             17
• The balancing among modes, notably the optimal roles of truck and rail in freight
movement, and the role of high-speed inter-city passenger rail as an alternative to
commuter air travel.

• Recognition that the West Coast lags behind Midwest and Northeast in the sufficiency
of corridor system infrastructure relative to growth in population, trade and travel in the
years since the design of the Interstate System.


WCCS Phase I

The just-completed Phase I of the West Coast Corridor System study was a field
reconnaissance. Its goals were to identify crucial issues and to determine the positions and
priorities of transportation policy leaders. The primary means used to collect this
information was a series of direct interviews. Field work focused on the Mexican border at
San Diego, the Los Angeles metroplex, and the Bay Area, the Northwest, the Canadian
border at Blaine, and the Lower Mainland of British Columbia.

Phase I was a feasibility study to test key propositions:

• What is the importance to the U.S. and North America of the West Coast as an
interdependent economic unit?

• Can border-to-border ITS integration and inter-operability be expedited through the
Coalition, and can progress in this area strengthen the willingness to cooperate on other
goals?

• Can the West Coast provide a model encouraging officials at international crossings
with Canada and Mexico to coordinate their requests for federal investment in functional
borders?

• Can major port gateways be encouraged to find wider areas of cooperation, even as they
continue to compete for customers?

• Can "best practices" be consistently applied, and federal agency coordination be
achieved, so stringent post-9/11 security standards at land border crossings and marine
cargo ports are enforced in workable ways?

• Can West Coast metro areas achieve greater progress on trade-related freight
throughput by collaboration on financing strategies and infrastructure models?

• Can the West Coast's thriving passenger rail segments be put on a more secure long-
term basis through regional cooperation?


                                              18
• Can freight and passenger solutions for all modes be integrated to support a "green
corridor" that maintains the West Coast's high quality of life?


Projects of Corridor System Significance and WCCS Phase II

The most ambitious goal in launching the WCCS initiative was to explore the potential for
a shared position among West Coast states on funding priorities for TEA-21
reauthorization in 2003.

Specifically, the intent was to develop a list of about a dozen "projects of corridor system
significance" that could gain the active support of leaders and policy makers throughout
the region. Mega-projects would qualify for this short list by significantly enhancing the
capacity of the Corridor System to serve West Coast goals of trade, travel and tourism,
economic vitality and quality of life.

Not surprisingly, the tight timeframes of WCCS Phase I and TEA-3 reauthorization made
it infeasible to achieve West Coast agreement on mega-project priorities and the financing
mechanisms to build them. Well before the study period ended, it became clear that a
more realistic aim for Phase I was to gather an in-depth picture of “what is” as a basis to
strengthen the nascent network of relationships among West Coast transportation policy-
makers.

Thus, the Phase I report should not be thought of as a "point in time" snapshot of
conditions but as a strategic positioning statement that highlights West Coast priorities,
including the time-phasing required for a sustained effort.

The ultimate goal of building a strong network supporting the West Coast Corridor
System is to impact TEA-4, the reauthorization of federal support for transportation that
will begin with fiscal year 2009. The Coalition's target date for completion of its work
would be summer 2007. This extended time frame is required to refine the designs of
mega-projects, finalize the list of priorities, develop a sophisticated budget that includes
innovative finance, gain consensus on a comprehensive approach, and encourage national
freight initiatives, including those that might come on line prior to TEA-4.

In the near term, however, benefits from participation in the Coalition could begin to flow
almost immediately. These could include cutting-edge studies, starting with regional
economic scenarios, then focusing on types of mix within goods movement under each
scenario, and relating various facility investments that would support each pattern of
activity.




                                            19
• Commissioned studies can bracket a range of macroeconomic futures, based on
examination of international economic and political trends, trade relationships, and risk
assessment of potential "shocks" to the global trading system. Research can weight the
implications of domestic developments on West Coast goods movement, including factors
such as major public and private investments, state economic development policy shifts,
and urban growth boundary revisions.

• Future trade flows in the West Coast inter-modal system can be “mapped” by two- digit
SIC code, using macro forecasts and flow-of-funds analysis to define "contestable" cargo
and potential modification or diversion of existing flows.

• Public/private partnerships can examine current and emerging choke-points by
developing nested sets of analytical tools that allow better understanding of current flows
within each choke-point and potential inter-modal solution sets. The outputs from these
tools can be expanded to reflect regional economic and environmental impacts of major
investment strategies.

Building upon this Phase I Corridor System report, strategic data and analytical systems
would provide a springboard to improve multi-state coordination within the region, and
identify a comprehensive range of options for mutual deliberation. Creation of a "tool kit"
would also help USDOT define its role in enabling an effective West Coast Coalition
through national leadership, technical assistance, and seed funding to better understand
problems and options. This approach in its totality would help define the notion of a
West Coast regional "public policy laboratory” that could prove to be a critical element
supporting a national strategy under SAFTEA for freight productivity and security.

The West Coast is the nexus of NAFTA and APEC – Asia-Pacific Economic Cooperation.
Looking farther ahead, it is clear that China will take a growing interest in U.S. freight
logistics trends and emerging cargo security strategies. Other long-term trading partners
including Japan, Korea and Taiwan maintain a similar interest. The Coalition could be the
means for providing timely and comprehensive input to inform state and local decision-
makers on Asian markets, development strategies, and customer service requirements for
international trade.

For example, Japanese interests recently commissioned an American firm to "rate" U.S.
ports as potential Japanese entry points for trade, based on local policies, labor issues,
infrastructure, Customs relationships and inter-modal connections. A parallel Chinese
perspective would enable U.S. ports and states to look at long-term, customer service
based investment strategies from the viewpoint of our Asian trading partners. This could
be an important point of departure for key elements in a West Coast business plan and
strategy for TEA-21 reauthorization as it affects the region.




                                            20
The 2004-2007 timeframe for the Coalition’s work would accommodate the crucial process
that identifies projects of corridor system significance. It could also advance related
objectives including:

• Develop analytical tools that treat I-5, Highway 99 and related routes as a "Corridor
System of NAFTA Significance," a transportation network rather than an isolated series of
segments and projects.

• Reach agreement on deployment of an ITS that would provide system management to
maximize capacity, while supporting security requirements and incident response to
assure "secured mobility."

• Achieve full coordination at the U.S.-Canada and U.S.-Mexico borders among regional,
provincial, state and federal officials in requesting federal support and deploying staffing,
infrastructure, technology and procedures.

• Develop a shared "Gateway Strategy" among regional, provincial and state policy-
makers treating West Coast ports as units in a unified system that equitably balances the
regional benefits and burdens of moving goods in global trade.

• Create a West Coast "Smart Growth Forum" to share experiences and best practices on
interactions between transportation, land use and urban development, including the roles
of value pricing, transit, and passenger rail.

A West Coast Corridor System Coalition that addressed these issues would have the
capacity make decisions, support investments, and move in directions that enhance
regional quality of life – while serving as a stronger, clearer voice for the region at national
and NAFTA levels.


WCCS Phase I findings

As a field survey of current reality and future possibilities, Phase I was rich in revealing
policy perspectives and identifying venues for cooperation among states and provinces.
These are discussed in detail under the following topics:

• The challenge of responding to NAFTA, which was solely a trade agreement but has
generated major transportation impacts.

• The reality of the West Coast as a three-nation trade corridor, and the prospects for
closer cooperation between Mexico, California and the Northwest, including Canada and
Alaska.



                                              21
• Intelligent Transportation Systems (ITS) and post-9/11 security issues as areas of joint
effort that can unify the corridor.

• The logic and synergy represented by cooperation and strategic coordination between
officials and policymakers on the U.S.-Canada and U.S.-Mexico borders.

• The challenge of financing and building landside freight mobility capacity, so imports
can move from West Coast port gateways without disrupting metro area traffic.

• The role of transportation in supporting land use and urban development patterns that
enhance quality of life.

The pages that follow address these issues.




                                              22
                          The West Coast Corridor System


North America's transportation system was constructed on the basis of national economic
goals and political requirements in Canada, the U.S. and Mexico. Highway and rail
network expansion over the decades tended to reinforce the existing structure rather than
to reorient it.

Canada

In 1879, Prime Minister MacDonald implemented a national policy favoring
"Canadianism" over "Continentalism." This policy linked trade protection with a
continental rail line (CPR) that united the country while establishing a primarily east-west
transport network. Completion of a parallel route to the north (CN) enhanced this pattern.

The Trans-Canada Highway (TCH) proceeded along the same lines. Begun in 1949, it was
designed to supplement the rail routes with an all-weather highway linking the industrial
heartland with resource hinterlands and markets east and west. Canada's transport
system thus reinforced trade patterns that were the result of tariff barriers dating from the
1880s.

United States

The doctrine of "Manifest Destiny" provided the political rationale for an east-west rail-
network that would link states from the Atlantic to the Pacific. This pattern was repeated
by subsequent legislation from the 1916 Federal Highway Act to the 1956 Defense
Interstate Highway Act.

The Interstate System was the largest public works project in history, designed to connect
urban areas of 50,000 or greater. Its primary purpose was to facilitate movement of goods
across the country. Like the rail network that preceded it, the system's east-west routes are
more direct than its north-south routes. Except for the coasts and the Mississippi Valley,
these routes wander, connecting cities but not providing adequate border-to-border
connectors.

Mexico

Unlike its northern neighbors, Mexico's transport system developed in a radial pattern.
Routes fanned outward from Mexico City to the central region. Infrastructure in the
northern border states developed much later is less extensive, in part because the region
seemed remote from the capital and due also to a desire to limit contact with the U.S.




                                             23
Construction of a national railway system in the late 19th century was oriented north-
south due to topography, and eventually linked borderlands with the center. Roadways
built in the 20th century tended to reinforce this orientation. However, this was the result
of nation-building and domestic economic development, not a continental strategy.


The NAFTA Challenge

NAFTA was written as a trade policy without provision for dealing with impacts on other
aspects of policy such as transportation, immigration and security. By emphasizing
interdependence and the need for connectivity, the very success of NAFTA has made all
three national transport networks an obsolete reflection of past economic realities. The
agreement has altered not only economic relationships but transport patterns.

Currently, ten times as much truck traffic crosses the U.S.-Canada border as moves
between eastern and western Canada on the Trans-Canada Highway. The value of trade
between our two nations is $1 billion a day, making this the largest trade relationship in
the world. Mexico is now the 2nd-largest U.S. trading partner with a goods flow of $600
million a day. The U.S.-Mexico border is the world's busiest in people movement, with 1
million border-crossings per day.

The major shortcoming in creating a truly continental transport system is lack of
connectivity within the existing structure. Transport in the three countries is linked but
not integrated. A major reason cross-border infrastructure is under-developed is that
transport facilities respond to demand rather than anticipating it.

NAFTA has transformed the purpose of borders as well as their level of activity. Today,
the border as a gateway offers great benefit to local economic vitality as well as to national
economies. By contrast, the border as a barrier to protect sovereignty offers little benefit to
local areas or national economies.

Before September 11, 2001, the shift toward borders as gateways was in full swing. Since
then, that momentum has been dampened by security concerns. Despite an urgent new
emphasis we must not forget that while security is an essential precondition, mobility
remains the purpose of our transport system.


NAFTA Trade Flows at Border Gateways and Along Corridors

Activity at border gateways is highly concentrated. Six of the fifty-three Canada-U.S.
border crossings, and four of the thirty-seven Mexico-U.S. crossings, account for two-
thirds of cross-border trade in North America.



                                              24
While there are ten major U.S. crossings, only two "nascent NAFTA corridors" exist,
according to the Denver-based Center for the New West. In a 1995 study for USDOT, the
Center named an "auto belt" corridor with high volumes from Ontario into Michigan and
from Monterrey and border Maquiladora plants into the Southeast. The portion of exports
to the U.S. that are auto-related is strikingly similar for both Canada and Mexico - slightly
over 34 percent of the total in each case.

The other nascent NAFTA corridor connects the Northwest to the Bay Area, Southern
California and Mexico. The West Coast Corridor System is anchored in the north by the
busiest Canada crossing outside Ontario, and in the south by the third-largest freight
crossing and the largest people crossing on the Mexican border.

Only about 2 percent of total NAFTA trade is between Canada and Mexico, yet twenty-
one "trilateral corridors" were identified as "highest priority" in the Intermodal Surface
Transportation Act of 1991 (ISTEA). These designations were in response to ISTEA's call
for creating an efficient north-south system.

Since ISTEA, twenty-two other corridors have been added - eight by the 1995 National
Highway Designation Act and fourteen by the 1998 Transportation Equity Act for the 21st
Century (TEA-21). In sixteen Western states alone, the Western Transportation Trade
Network (WTTN) had identified twenty "trade corridors" by 1997. Says an I-5 regional
transportation official, "There has been a complete prostitution of the Section 1118
program by designating everything as a corridor and then using total earmarking."

The proliferation of corridors seeking priority status and dilution of corridor funding
through politics are not unique to the U.S. The 1999 Niagara Report notes, "Good
transportation planning must be based on trade volumes and future growth, versus the
common Canadian perspective of equalization" (spreading the money across all regions).


The West Coast Corridor System: Nexus of NAFTA and APEC

Two decades ago, social scientist Jane Jacobs offered an economic model that has proved
persuasive: the reality is the region. Regions do not follow political boundaries nor do
they cover entire nations, yet they do cross national borders. As growth continues along a
"Pacific Trade Corridor," the Northwest and California economic regions, and their
extensions "from "B.C. to B.C. and beyond," are likely to become more strongly linked.

The West Coast region hosts one of the few actual NAFTA corridors and arguably is the
most mature Canada-U.S.-Mexico connector. There are two reasons for this. First, as
noted, the Corridor is unusual in offering direct north-south routes linking the three
nations. Moreover, at 1,360 miles, I-5 is the shortest border-to-border route in the
Interstate System. In addition, population growth during the last 50 years in counties


                                             25
along I-5 has been much greater (182%) than on I-35 (120%), I-75 (120%) or I-95 (66%). This
has created new markets and a mind-set open to new realities such as NAFTA.

The West Coast Corridor System is also the north-south connector of port gateways that
handle Pacific Rim trade. The largest single element in world trade is Asian exports to
North America. Just as NAFTA facilitates trade within North America, ties with Asia are
furthered by Asia-Pacific Economic Cooperation (APEC). The vast majority of imports
from Asia are landed as container cargo at West Coast seaports and as air freight at West
Coast airports.

Once landed, most goods from Asia make their way from the West Coast to markets in
other parts of the U.S. and Canada. Interstate 5 and B.C. Hwy 99 are north-south
connectors for the grid of highway corridors and adjacent rail lines along which Asian
goods move east: The Trans-Canada Highway and CN Rail from Vancouver; Interstate 90
and BNSF Railway from Seattle-Tacoma; Interstate 84, BNSF and UP Rail from Portland;
Interstate 80 and UP from Oakland; Interstate 15/40, Interstate 10, BNSF and UP from Los
Angeles-Long Beach.

Larry Cotrill, Manager of Master Planning for the Port of Long Beach, says "there is an I-5
corridor; it's just not port-related." He believes the best strategy for bringing the ports into
the West Coast Corridor System Coalition is "to designate port-to-I-5 connectors," such as
I-710 north from the Port of Long Beach.

Is there a continuous West Coast Corridor System - or Northwest and California segments
that are separated by the nearly 400-mile, sparsely populated stretch between Eugene,
Oregon and Sacramento, California? One place to test the proposition is I-5 at the
California-Oregon state line. There, the Interstate passes over 4,300-foot Siskiyou Summit
in a remote region with almost no local traffic, making this a logical checkpoint for
measuring long-haul truck volumes between the Northwest and California.

Data released by the California Department of Transportation freight office in January
2002 measure average daily truck traffic on Interstate 5 from Southern California to the
Oregon border. The peak count was located the junction of I-5 and I-405 (San Diego
Freeway) at the northern edge of the City of Los Angeles. Almost 34,000 trucks pass this
point on an average day and half of these have 5 or more axles. At Grenada on the Oregon
border, the daily count is 4,531 trucks, three-fourths of which (3,676) are large rigs.

The sometimes frustrating lack of consistent survey data on port and roadway freight
volumes invites recourse to "anecdata," notes Puget Sound Regional Council freight
mobility expert Peter Beaulieu. Absent firm quantitative data, anecdote-based estimates
can become a surrogate if corroborated by multiple observations. Fortunately, the Cal-
Trans survey relieves this problem. Yet an anecdote may help illustrate the reality of truck
volumes on the I-5 corridor.


                                              26
At the end of November 2001, this writer was driving from Seattle to Los Angeles on I-5
and at the approach to Siskiyou Summit was told the road had been closed by snow for 12
hours. At the summit, northbound snowplows had just arrived. Behind them, two and
sometimes three lanes of northbound 18-wheel trucks were barely moving or stopped on
the pavement - for the next eighteen miles. Nose to tail, they had the appearance of a
freight train of trucks, with a few autos wedged in.

The length of backup, average truck length, length of the closure and number of lanes
filled provided "anecdata" from which derived the calculation that a large, long-haul truck
crossed the boundary between California and the Northwest every 24 seconds. This
computes to 150 large trucks per hour or 3,600 trucks per day. These numbers compare to
daily truck movements of 7,554 vehicles at Windsor-Detroit, the busiest U.S. border
crossing.

Given traffic volumes on I-5, some analysts have identified an "Inland Corridor" to
provide route redundancy, which is more prevalent in the Midwest and East than in the
West. This alternative would connect interior British Columbia, Eastern Washington and
Oregon with California's Mojave Desert, the Imperial Valley and Baja California.

Inland Corridor segments such as U.S. Highway 97 in Oregon receive a significant portion
of total traffic from long-haul trucks seeking an alternative to I-5. With less congestion and
fewer curves and grades than the Interstate, U.S. 97 was Oregon's first designated "route
of statewide significance." Fully developing its capacity as an Inland Corridor would
require added lanes and improved connectors with I-5.

Coincidentally, Oregon's DOT has been advising some heavy truck traffic to use U.S. 97
until cracked bridges that impose lower weight limitations on I-5 are repaired or replaced.
Oregon is taking a strongly system-based approach to this $4.7 billion challenge. To be
strategic in sequencing bridge investments, it has moved to a corridor focus. Rather than
adhering to the traditional doctrine of “fix the worst first,” priority for repair and
replacement will be based on maintaining the capacity of the corridor system. Thus, the
most vulnerable links will be dealt with first. ODOT estimates this strategic approach will
provide 90 percent of the economic benefit that would be gained by replacing all damaged
bridges.


Closer Cooperation Between California and the Northwest

A favorite metaphor for Canadians to describe relations with the U.S. is "sleeping with an
elephant." Says Charles Kelley of the Vancouver-based Cascadia Institute, "Even if the
elephant intends no harm, we pay close attention when he turns over in bed."



                                             27
The Northwest views California in much the same light Canada sees the U.S. "The 800-
pound gorilla" is an often-used phrase. It refers less to specifics than to a sense of relative
size. A population of 36 million and the world's eighth-largest economy make California
six times bigger than Washington and eleven times larger than Oregon.

Yet, conversations with Californians reveal a widespread sense that they have failed to
translate their size into proportional results as they seek federal support for infrastructure
investments. One factor is that huge metro regions within the state do not always send a
unified message.

Speaking to the freight mobility community on April 11, 2002 in Los Angeles, Business &
Transportation Agency Secretary Maria Contreras Sweet said, "We have been hurt - badly
- by our inability to speak with one voice. Lacking this, our congressional delegation
cannot act effectively on our behalf in TEA-21 reauthorization. We must support the same
set of principles statewide."

This frustration has made California more interested in partnering with neighbor states to
achieve impact at the federal level by finding common ground on policies and priorities.
The rationale for cooperation is reinforced by accidents of political placement. California
transportation leaders feel they lack counterparts to Washington's Senator Patty Murray
and Alaska Congressman Don Young who can present their states' case in Washington,
D.C.

On April 22, 2003, Sweet expanded these themes in a multi-state context at the National
Association of Regional Council’s Western Freight Summit: “As we move forward, we
cannot prevail on the larger issues unless we join with our partners – the Western States –
and speak with one voice.” Sweet cited the following shared goals to be pursued with a
unified voice:

Receipt of federal funding in increased amount and flexibility; reduction in constraints
imposed by multi-agency federal planning; expanded multi-modal emphasis; mitigation
of community impacts through grade separations and highway modifications; TEA-21
eligibility for multi-state projects; ability for states to involve regional and local authorities
and the private sector as partners.

“Mobility provides democracy. It’s about chances and choices,” Sweet concluded. “We
should use our mutual gatherings as springboards for action.”


In the recent past, California's ability to coordinate with other West Coast states was
constrained by two factors:

• Organization of the transportation function within state government.


                                               28
 Cal-Trans, unlike the DOT's in Oregon and Washington, is a not self-standing
 department but is part of the Business and Transportation Agency. Cal-Trans does not
 have "cabinet" status and must rely on Agency executives in representing transportation
 interests to the governor.

 This lack of direct line authority, combined with the importance of California's large
 metro areas, has caused more of the "action" in transportation to devolve upon Cal-
 Trans regional directors and on metropolitan planning organizations (MPOs).

• Priorities in transportation policy and funding.

 Modes of personal travel, especially transit, have traditionally had a higher priority than
 freight mobility in state and regional planning. Two of the three largest MPO's - the
 Metropolitan Transportation Commission (MTC) in the Bay Area and the Metropolitan
 Transportation Authority (MTA) in Los Angeles, have a transit emphasis. Only the
 Southern California Association of Governments (SCAG) has given comparable
 emphasis to freight mobility.

If timing is everything, this may be a favorable moment to bring the Pacific states into a
West Coast Corridor System Coalition. Four key political events signal a shift in
California's position:


• MPO focus on freight

The Bay Area’s MTC and the MTA in Los Angeles have long had a huge involvement in
transit. Now they are adding freight mobility as a top priority, recognizing that (1)
standards of service for personal travel cannot be met without coordinated investment in
goods movement and (2) trade is an essential element in economic vitality that supports
the revenue base. MTC recently released a Bay Area Goods Movement Study and MTA
recently hosted a Mobility 21 conference that showcased initiatives by the congressional
Goods movement caucus.

• Cal-Trans leadership

Cal-Trans's recognition of the need for freight infrastructure is becoming an important
positive factor. Supporters of freight mobility investments laud the leadership roles of
Cal-Trans director Jeff Morales, planning chief Joan Sollenberger and freight mobility
chief Richard Nordahl, who authored the Global Gateways report (see below).

• Governor Davis' evolving priorities




                                             29
Governor Gray Davis ran for office in 1998 with a pledge to be the "education governor."
Transportation issues were not prominent in his platform but the reality of a mobility
crisis made him a believer. Today, Agency Secretary Sweet speaks of "unprecedented
levels of commitment to transportation" by Davis, specifically the $8 billion Traffic
Congestion Relief Project.

Sweet says that in inflation-adjusted dollars Davis has now invested more in the system
than Gov. Pat Brown (1959-67) who was famed for public works projects. Sweet notes that
one in five road miles "will have had significant improvements" during Davis'
administration. Cal-DOT's freight mobility chief Nordahl adds that within transportation,
the Governor recognizes a need to give more emphasis to freight mobility.

• Global Gateways Development Program

Senator Betty Karnette of Long Beach is chair of California's Blue Ribbon Commission on
Transportation. At the 2000 legislative session, Karnette sponsored Senate Resolution 158,
which called upon Cal-Trans to produce the Global Gateways Development Program. The
Gateways report was released in Los Angeles in April 2002, one day before the Alameda
Corridor opened. At a five-hour session for the freight mobility community and other
stakeholders, Karnette presented a "call to action" that highlights four recommendations:

A. "The State should take an aggressive role in planning, funding, developing, operating and
maintaining the goods movement transportation system."

   1. A Goods Movement Investment Program should be created as a separate funding
      category in an expanded Interregional Transportation Improvement Program
      (ITIP).

   2. The State's control over transportation spending allocations and its share of
      funding relative to Regional Transportation Planning Organizations (RTPO's)
      should be increased.

   3. The State should establish a stakeholder committee to develop strategies that will
      ensure full consideration of goods-movement projects by federal, state and regional
      agencies.

B. "The State should actively participate, as a leader, negotiator and broker, in improving the
efficiency of the state's major gateways."

   1. The State should facilitate Regional Airport Commissions in large urban regions.

   a) The State should encourage RTPOs to help finance goods movement projects and
      allow them to compete fairly with other projects for funding.



                                              30
   b) The State should promote expanded seaport operating hours to balance truck
      traffic flow on congested routes.

   2. "The state should allow greater flexibility in the use of state funds"

   a) The State Constitution should be amended to make inter-modal yards that produce
      a significant decrease in truck traffic eligible for funding from the gas tax.

   b) A portion of the jet fuel tax should be directed to air cargo access projects.

   c) Funding sources for the Transportation Finance Bank (TFB) should be expanded to
      a more adequate level.

   d) Goods-movement projects, both off and on the state highway system, should be
      eligible to receive loans when they provide a public benefit.

C. The State should take the lead in securing federal cooperation to meet California's goods-
movement needs.

   1. To compete effectively for goods-movement funding, the State should work closely
      with the National Freight Partnership and the FHWA's Office of Freight
      Management and Operations.

   a) During the TEA-21 reauthorization process, the State should pursue a separate,
      distinct funding program for goods movement projects that recognizes California
      as a major Global Gateway and national economic engine (This reflects the fact that
      trade is of national benefit to consumers and business yet the cost of freight
      through-put is borne largely by Gateway regions).

   b) The State should insist on greater federal flexibility in funding goods-movement
      projects from traditional sources.

   c) To participate effectively on TEA-21 reauthorization, the State of California should
      create a stakeholder coalition modeled after the Freight Mobility Strategic
      Investment Board (FMSIB) in Washington State.

The Global Gateways report marks a new level of recognition by the State of California on
transportation’s importance to economic vitality, and a new level of commitment to
achieve progress on freight mobility. This augurs well for cooperation with California’s
neighbors along the Corridor System.

Jeff Brown of the California Senate Office of Research provides staff support for Sen.
Karnette's transportation policy initiatives. Brown says there is "strong potential support
for linking with regions of common interest." A unifying goal is to make a persuasive case


                                                 31
for trade-related and other freight mobility needs. He adds that Sen. Kartnette intends to
make a site visit to major freight facilities in the Northwest. The Whatcom Council of
Governments and the Cascadia Project have offered to organize the itinerary for this visit,
which would offer an opportunity for Sen. Karnette to meet with Northwest
transportation leaders.

Participation by California in coalitions to achieve shared goals has also been endorsed by
Cal-Trans freight mobility chief and Global Gateways author Richard Nordahl. In
presenting the Gateways report at its April 11 roll-out, Nordahl referenced coalition
development as part of an implementation strategy and made specific mention of
"corridor coalitions" based upon I-5 and I-10.


The I-10 Corridor

As noted, the West Coast Corridor System is the shortest and most direct border-to-border
link among NAFTA nations, and is the grid connector for east-west trade corridors linking
Pacific port gateways with the rest of North America. A range of significant issues affect
these corridors, including rail route and capacity issues along I-90 and I-84 in the
Northwest.

In California, the most notable "missing link is the gap between I-40 and I-5. Extending I-
40 west from Barstow from I-15 to I-5 would provide a direct connector between the most
heavily-used east-west truck route in the U.S. and the West Coast's north-south "main
street." Joan Sollenberger, Cal-DOT chief of planning, says the lack of a west extension on
I-40 from Barstow "creates a high impact on California 58 to Bakersfield and I-5." When
the federal government first designated corridors of national significance, the Southern
California Association of Governments (SCAG) proposed I-40 as the "Gateway to
America."

Linking I-5 and I-40 would expand eastbound alternatives for two important generators of
trade and domestic freight. The Bay Area and the Port of Oakland currently rely on
Interstate 80, which crosses 7,000-foot Donner Pass in the Sierra Nevada. Southern
California and the Ports of Los Angeles-Long Beach must funnel eastbound cargoes along
I-10 to the diagonals of I-15 in California or I-20 in Texas. Nationally, the Bay Area ranks
fifth and Los Angeles is first among U.S. Customs districts in value of imports handled.

Currently, only one east-west Interstate is the basis for a coalition effort: I-10. In fact, there
are two separate initiatives to promote cooperation along this corridor. One is fully
established as the I-10 Freight Corridor Feasibility Study composed of DOTs along the
eight-state route from the Ports of Los Angeles-Long Beach, California to Jacksonville,
Florida. The other is the Southwest Passage, an effort launched by the Southern California



                                               32
Association of Governments to link metropolitan planning organizations (MPOs) in a
four-state area from Los Angeles to Houston.

Lead contract agency for the I-10 Coalition is The State of Texas, while the project
manager and lead technical manager is Dilara Rodriguez of Cal-Trans. The effort began as
a proposal for a separated truckway and later adopted an emphasis on broader multi-
modal solutions.

The consultant team project manager is Arno Hart of Wilbur Smith Associates, an
engineering, planning and economics consulting firm. Hart says the project's genesis was
concern about truck traffic growth, which led to interest in a dedicated freight corridor.
The goal of the study is to "define a flexible menu of solutions that can be selected by
states on various timeframes." The analysis of scenarios and options will include ITS,
added lanes, the role of rail and water transport, and operating hours for freight-handling
facilities and gateways.

Designation as a high-priority corridor will likely not be a primary objective. Hart notes
such corridors "tend not to be funded, and this designation is not needed to receive
Borders & Corridors funding." The goal is to garner support and demonstrate the
importance of increased investment in transportation. The I-10 Coalition avoids claims to
be "the most crucial corridor," which Hart notes simply "rouses the ire of others."

Those involved in the study see I-10 as more than a Southern California trade corridor.
Phoenix, Houston, New Orleans, Gulfport, Mobile and Jacksonville are also drivers of
demand, as are city pairs (e.g., Phoenix-Tucson, San Antonio-Houston) at numerous
points along the corridor. Reflecting this, the study will produce what Hart calls "strategic
threads built around specific market linkages through the corridor."

The "Southwest Passage" is an I-10 based proposal from Mark Pisano, executive director
of the Southern California Association of Governments. SCAG covers six Los Angeles-
area counties with a combined population of 17 million.

Pisano notes that the rail line to Chicago developed Los Angeles. He sees the future in a
rail and truck corridor that is "the key North American freightway" serving Asia-Pacific
trade and the Mexican border region. Yet he notes that "Southern California receives no
mitigation from the impact of serving as the entry point for the rest of the country. How
can we convert trade from a cost to a competitive advantage?"

Pisano and SCAG planning director Jim Gosnell envision the Southwest Passage as a land
bridge from Los Angeles to Houston and a fast ship connection to South America and
Africa. It would also serve the U.S.-Mexico "border nation" and Mexican industrial
development. I-5 and I-40 could be tied into the Southwest Passage by using Southern
California as the hinge. A "Southwest Compact" on the model of the Appalachian


                                             33
Regional Commission could bring economic benefits to the adjacent region from the
corridor. Thus far, one investment supporting the Southwest Passage has been funded:
the Alameda Corridor-East grade separation program, designated under TEA-21 in 1998.

Can the Southwest Passage and the I-10 Freight Corridor be mutually supportive? I-10
project manager Dilara Rodriguez of Cal-Trans says, "We need to express our collective
vision of what we seek through reauthorization rather than everyone putting forth their
own vision, which causes California to forfeit its clout in Congress."

FHWA's freight mobility chief Harry Caldwell agrees on the need for continued efforts to
find common ground among groups that have taken varied approaches. "We shouldn't
underestimate the challenge, but it would be good work to get all the I-10 players on the
same page," Caldwell concludes.

Should the I-5 and I-10 coalitions become full-fledged partners? "Coalitions should be
broad in outreach but focused in execution," Hart observes. In other words, recognize
synergies and harmonize objectives but don't overload specific plans and agendas.



Golden State Gateway Coalition

Interstate 5 in north Los Angeles County and south Kern County has been named the
Golden State Gateway. This section of I-5 is a key north-south nexus linking California job
centers, cities, ports, agriculture, tourist attractions and secured mobility systems.

A funnel regulating the flow of commerce, economic growth and international trade
between major ports and 20 million residents with much of the United States, Canada and
Mexico, the Golden State Gateway area is a major transportation entry point to the
enormous economic engine of Southern California.

In this region, a coalition of business and community leaders and public officials has been
formed to promote an improved transportation system with particular emphasis on
Interstate 5. Initially, The Golden State Gateway Coalition will seek funding for
improvements to I-5 from the SR-118 freeway in San Fernando Valley to south Kern
County. HOV and dedicated truck lanes would be added, to ease congestion and promote
safety.

The Coalition supports the efforts of the Los Angeles County Metropolitan Transportation
Authority (MTA) and Cal-Trans in the current North County Combined Corridor Major
Investment Study. The MIS study recommends adding carpool lanes and the extension of
truck lanes in key segments. In addition, the study highlights improvements needed to a
secondary and emergency route through the Newhall Pass--The Old Road, which serves


                                            34
as both a bypass and alternative route to the I-5. Although The Old Road represents
remnants of US-99 and consists of only two lanes in some portions, its worth was proved
when served as a surrogate for I-5 subsequent to the devastating 1994 Northridge
earthquake, which left the freeway out of service.

As a sign of the significance of the corridor and the Golden State Gateway Coalition,
California’s Secretary of Business, Housing and Transportation, Maria Contreras-Sweet ,
served as keynote speaker at the Coalition’s kick off event in November, 2002. She told the
group, “What you have here are the essential ingredients and a model I hope others will
study and follow so that we can continue to take this model throughout the entire State.”
Sweet cited the importance of private sector participation, relevant because the Coalition
provides the unusual example of a public-private partnership performing a policy role
played elsewhere along the West Coast corridor system by government-based RTPO’s –
regional transportation planning organizations.

In summary

NAFTA has caused a three-nation shift toward a continental transport system while the
surge in APEC trade has added port gateways to the freight movement challenge. As the
junction of NAFTA and APEC, the West Coast needs a corridor system that has
redundant road, rail and port capacity, and is served by inter-modal and network
connectors.

In the last decade, NAFTA has made international cooperation essential. Today, freight
flows, funding constraints and quality of life concerns are strong unifying factors
promoting West Coast cooperation within the corridor system.




                                            35
                         Border-to-Border Management System


The West Coast Secured Corridor Initiative

In the aftermath of September 11, 2001, national priorities could be summed up in one
word: Security. This was most dramatically expressed in the two-day shutdown of the
U.S. air travel system. But a single-minded focus is not sustainable. Even in the face of
terrorism, Americans began to search for "the new normal" - a way of living and working
that could continue over an uncertain long-term future.

This necessary shift in perspective is expressed in a new priority: Secured Mobility. It
seeks to satisfy essential security requirements without crippling commerce or blocking
the legitimate movement of 1.3 million citizens from the U.S., Mexico and Canada, who
cross an international border each day in North America.

A higher level of integration between mobility, traditional safety and emergent security
concerns is inevitable and essential. For example, freight productivity and military
“power projection platforms” are related through the highway and rail system. This is
portrayed by STRANET – the Strategic Highway Network. A multi-modal, inter-modal
approach to a mobility-plus-security strategy requires cooperation between Federal
Highways, the Federal Railway Administration, the Maritime Administration, and the
Coast Guard – and the state, regional and metro agencies to which they relate.

Looking ahead, we must place the trauma of September 11 - and any further terrorist
events - in the context of a desire by most residents of our three nations to become "near
neighbors." This means seeing the goal of security not as an end in itself but as a crucial
precondition to the freedom of movement that North Americans consider an inherent
right. A new phrase captures the spirit: "Homeland Mobility."

During 2002, a proposal to launch the West Coast Secured Corridor (WCSC) was
developed by some of the same entities involved in the West Coast Corridor System
Coalition effort. The proposed West Coast Secured Corridor initiative would have
expended $5.5 million over a two-year period in California, Oregon and Washington.
Lead administrator would be a state agency in one of these states. Inter-state cooperation
would be on the model of the salmon restoration program, a $200 million, five-year, four-
state effort that includes Alaska as well as Washington, Oregon and California. Effort
would focused on four objectives:

• A coordinated, inter-operable, border-to-border ITS system. The WCSC initiative would
support demonstration projects to identify optimal ITS applications along the West Coast
Corridor for commercial vehicle identification, accident and incident response, and
capacity management to gain maximum benefit from current infrastructure. Realistically,


                                             36
while the requested WSCS budget is not large enough to deploy technology networks, it
could identify preferred technologies and offer counsel on how to deploy them.

• A public-private risk management partnership based on "best practices." The expertise
of the freight community can contribute substantially to homeland security. Moreover, the
future efficiency of freight movement depends on implementing security procedures that
have minimal impact on productivity. WCSC would collect the experience of air, marine
and landside cargo shippers, carriers and terminal operators through direct, on-site
interviews. Manufacturers with established patterns of port-of-entry operations into the
U.S. would be included. The intent of this approach is to secure involvement by those who
know the most about the current system. The goals is to "incentivize self-policing" by the
private sector, thus assuring that the risk management regime adopted by U.S. homeland
security agencies is not only effective but efficient. End-to-end supply chains would be
used as the test case.

• A forum and unified voice for all non-federal stakeholders. State, regional and local
governments and the private sector have a major stake in achieving federal procedures
and agency relationships that sustain commerce as well as enhance security. The WCSC
would manage a stakeholder forum to address crucial issues such as uniform and
consistent standards, maintenance of experience-based feedback loops to refine federal
requirements and practices, and monitoring of coordination among federal agency
functions. These include roles performed by Customs, INS Enforcement, Border Patrol,
DEA, Coast Guard, National Guard and Agricultural Inspections. It cannot be assumed
that creation of a Department of Homeland Security will achieve this goal simply by
placing multiple entities under one umbrella. Indeed, an independent voice for parties
affected by these functions might be even more crucial during a major organizational
shift.

• Bi-national implementation of action plans at each border. The Smart Border Action
Plan with Canada and the Border Partnership Action Plan with Mexico have been signed
by representatives of the three governments. Through its working relationships with
Canadian and Mexican consulates at both ends of the Corridor, the WCSC would support
regional implementation of these plans not only at the border crossing but in the wider
"border zone" that defines bi-national economic regions. Related to this, the WSCS would
support analyses that have been proposed to measure the regional economic impact of
border crossing delays related to more stringent security procedures.


Operationally, the West Coast Secured Corridor initiative could build upon the structure
and network established by the Cascadia Corridor and by a West Coast Corridor System
Coalition. For the time being, the West Coast Secured Corridor remains only a proposal
and was in a sense eclipsed by Operation Safe Commerce, which received a $58 million



                                           37
appropriation in 2003. However, the certainty of that funding has recently been placed in
doubt, raising the question of how marine gateway security needs will be addressed.


ITS Coordination

"For environmental and economic reasons, we need to take best advantage of the systems
we have," notes FHWA freight mobility chief Harry Caldwell. "Infrastructure
management through ITS maximizes existing assets. Technology systems provide capacity
enhancement, traveler information, and cargo security."

A major goal for the West Coast Corridor is an interoperable technology system that
identifies and verifies commercial cargoes moving by truck and rail, border-to-border and
through port gateways. A related goal is to deploy technologies that optimize system
capacity for both freight and personal mobility. These goals are consistent with national
priorities. Completion of the Interstate System makes deployment of an interoperable
system, serving intermodalism and capacity utilization, a logical next step which applies
technology to enhance physical infrastructure.

The ITS Priority Corridor serving San Diego, Orange and Los Angeles counties is the most
advanced metro traffic ITS application on the West Coast. This "regional" corridor is one
of four established nationwide in 1995 as demonstration projects under ISTEA. The others
are Houston (citywide), Milwaukee-Chicago-Gary (3-state, 3-metro area) and I-95 (multi-
state). The San Diego Association of Governments (SANDAG) serves as administrator of
the ITS "corridor coalition" that extends from Ventura County to the Mexican border.

Coordinator of the ITS Priority Corridor is John Duve, Manager of Advanced
Transportation Systems at SANDAG. Duve says ITS is a tool to expedite movement of
individual vehicles and, more importantly, supports improved efficiency and safety of
transportation as an integrated system. The ultimate benefit of ITS is to lay out a
"migration path" for investments.

"ITS makes the system work better by making it work as a system. The problem is not the
technology - we have all we need. The challenge is applying the technology that exists,"
says Duve. ITS is "an aggressive approach" that links experience and capacity estimates so
public officials can select performance targets and track results.

From an initial $4.6 million federal planning grant, each county received $500,000 to
develop a strategy supporting early deployment of ITS, based on both "local" and
"mutual" (regional) needs. A new rule from the Joint Program Office of USDOT requires
ITS architecture to be part of a regional plan.




                                           38
After IT systems have been integrated so they work together, the next step is to set higher
system standards. For example, the goal for the average freeway lane is 2200 cars per
hour, yet, 2500 could be reached without guide-ways.

There is a lot of "empty space" inside the current system: empty seats, empty routes,
empty times of day. Much of this can be traced to the lack of realistic pricing of system
use. Variable tolls - "value pricing" - is part of the equation. ITS can monitor congestion
and adjust tolls as frequently as ten times an hour. Another part of the equation is
incentives, such as offering the maximum bus subsidy at peak hours. There is need to
reprice inducements as well as costs.

Regional coordination is crucial. For example, a traffic management system for the entire
three-county region can be purchased for the same amount it would cost each individual
jurisdiction. Moreover, in "seamless" systems that provide integration of traffic signals,
freeways with arterials, and buses with trains, the "seams" are found at jurisdictional
boundaries where management systems bump up against each other.

What is the optimal geographic scale for ITS coordination? Duve believes system
management must be regional rather than local or state-level, since either top-down
mandates or local control tend to prevent system integration.

At the same time, metro areas must have compatible systems. Northern California tends
to use DATEX, which can be made compatible with CORBA. This is important because
"super-regions" - anything within a day's travel - are part of the service area. Commenting
on Duve's perspective, Cal-Trans planning director Joan Sollenberger notes that due to
serious compatibility issues among regional ITS, "The real regions for ITS are larger than
metro regions."

These comments suggest the need to coordinate ITS approaches metro-wide, statewide
and, by implication, corridor-wide. Demonstration projects proposed in the WCSC
initiative called for field-tests of technologies that hold the greatest promise in serving
capacity utilization and system integration.

ITS can also play a major role in enhancing security, but this must be done in a
sophisticated way. Regarding a West Coast Coalition as a vehicle for corridor-wide ITS
implementation, Duve is critical of the I-95 Coalition on the East Coast. "They want to
hang their hat on homeland security so they seek money for operations, not for system
integration. Yet, that's where you get leverage from ITS. The results are efficiency and
safety, which serve homeland security."

Duve notes that 70 percent of emergency services are transportation-related. Homeland
security can tap into this through cameras, sensors, and systems that link incidents with



                                            39
emergency response. If a nationwide ITS strategy were required, it could be "tweaked" so
security is included.

Peter Beaulieu of the Puget Sound Regional Council sees the I-95 Coalition as a successful
example of informal cooperation that is both bottom-up and top-down. Lance Grenzebach
of Cambridge Systematics also defends the I-95 Corridor approach. He notes that the
coalition was generated by a federal budget earmark to study ITS application to incident
response. Yet in practice, the expenditure of $5 million in federal funds annually also
includes traveler information, CVO (weigh-in-motion, vehicle classification), traffic
engineering, and inter-modal activities at the Port Authority of New York-New Jersey.
"The I-95 Coalition focus is narrow but effective," concludes Grenzebach.

Among West Coast states, joint effort on ITS has been limited. The Oregon DOT has
hesitated to commit on joint efforts with California due to lingering concerns Crescent, a
privately run, fee-based ITS favored by Cal-Trans. The current status of West Coast ITS
cooperation is that Alaska, British Columbia and Washington are committed participants,
ODOT has declined to participate, and Cal-Trans has taken no position.

One goal of a West Coast Corridor System Coalition would be to extend the Northwest
base of ITS cooperation by securing the participation of Oregon and California. Oregon
has been a leader in intra-state freight applications of ITS. This plus recent California
initiatives such as Global Gateways suggest the potential for building a West Coast ITS
partnership.

There are encouraging signs. WSDOT chief of staff Paula Hammond says, “Common
architecture with transponders and shared ITS architecture is a great idea. We are
interested in joining forces with Oregon and California on corridor investments of this
kind. Washington DOT has developed a strong relationship with our counterparts in
Oregon, and we found we have much more in common than we thought.”


Two-Border Cooperation

The Cascadia Corridor's success in cross-border cooperation can be seen as a pilot project
that provides a model for ITS implementation. At the southern end of the West Coast
corridor, SANDAG is the ITS leader, with the system management focus that can make
ITS a true strategic initiative. SANDAG executive director Gary Gallegos, a former Cal-
Trans regional administrator, speaks of the need to "instrument the border." The goal
would be to provide credible data on the characteristics of freight, passenger and even
pedestrian movement for economic as well as security purposes.

FHWA freight policy chief Harry Caldwell cites a premier ITS application, Border Wizard,
which he calls “the U.S.-Canada-Mexico standard.” Border Wizard is a “nested set” of


                                           40
tools that simulates all types of traffic to reveal how changes in operational procedures
and infrastructure design can expedite cross-border flow without compromising security.
A related tool is the North American Executive Decision Support System, which has
mapped inter-connections in the transportation system. Developed by the Border States
Commission, it could be made available to all state DOTs.

The Whatcom COG and Washington State DOT Advanced Technology Branch in the
Cascadia region, and SANDAG on the southern border are knowledgeable on specific
technologies such as weigh-in-motion, C-VISN, eSEAL, and photo recognition software
for driver identification. ITS can be applied to goods movement not only at land borders
but to air freight and seaport gateways where container cargo has risen to the top of
security concerns. Electronically bonded and sealed containers allow redeployment of
workers from low-productivity cargo processing to assignments that support current
security requirements by enhancing risk management.

ITS serves another trade and security tool: perimeter clearance - inspection of cargoes and
case review of individuals at the point of departure, not at their destination in North
America. This tool would improve the efficient operation of our borders and ports by
transferring to a remote point some of the security pressures that impede their gateway
function. Perimeter clearance can also enhance efficiency as a "one-stop" process in North
America, based on reciprocal Mexican, U.S. and Canadian acceptance of security checks
done by their neighbors.

Jason Ahearn, director of the U.S. Customs management center for Southern California,
speaks of "pushing back the borders" and notes that the Ridge-Manley accord has
motivated new operations in which U.S. agents inspect U.S.-bound cargoes landed at
Vancouver, Montreal and Halifax - Canada's largest ports. Canadian agents are doing
likewise for cargo transshipped from U.S. marine terminals. Steve Gross, chair of the U.S.-
Mexico Border Trade Alliance, describes perimeter clearance as "expanding the borders
and making the port of entry a last line of defense, not the first."

A strong incentive for two-border ITS coordination is that consistent calibration of data on
both ends of the corridor system will generate valid comparisons not only for security
purposes but for economic analysis as well. At the northern border, strong cross-border
cooperation is underway to collect and analyze data on freight movement, and SANDAG,
on the southern border, is a leader in developing an economic model measuring the
regional impact of border functionality. San Diego-Tijuana traffic volumes are projected to
rise 130 percent in the next twenty years yet federal agencies have no long-range plan for
the border. The economic model would provide a basis to assess future demand and the
required level of investment.

The model would also document economic damage resulting from the difficulty of
legitimate cross-border travel. This impact is perhaps the strongest argument for assuring


                                            41
"secured mobility." Moreover, treating the two borders as anchors of a NAFTA corridor
makes clear that reduced cross-border mobility impacts national economies as well as the
border region. NAFTA and Asian imports to and within North America are either inputs
to production or goods for final sale. Delaying their movement carries a significant
economic cost.

San Ysidro is the busiest border crossing in the world. Each day, 35,000 commuters and
15,000 other travelers cross here. Of the commuters, 40% are U.S., citizens and 60% are
legal aliens with a "green card" or work permit. In fiscal year 2000, border movement at
San Ysidro dropped by 1 million crossings due to the difficulty of clearance - this prior to
9/11.

Improved INS data collection can support a new approach to travel documents -
"graduated security” - keyed to the risk levels associated with various groups of travelers.
Implementing this system would involve a range of policy and deployment issues
requiring outreach to the travel industry.

A current focus of personal travel procedures is expedited pre-clearance for low-risk
frequent border-crossers. A common bond between both borders is the desire for early
implementation of a shared system that combines features of SENTRI on I-5 at San Ysidro-
Tijuana and PACE-CANPASS at Peace Arch crossing between I-5 and Canada 99.

NEXUS, the prototype of this system, was rolled out on June 26, 2002 at the Northern
border. SENTRI (Secure Electronic Network for Travelers' Rapid Inspection) continues in
operation on the Southern border because it provides additional vehicle identifications
and vehicle-containment infrastructure deemed necessary for Southern-border ports-of-
entry.

The challenge for both NEXUS and SENTRI is that the demand by low-risk frequent
border-crossers for expedited clearance has soared since September 11. On both borders, a
huge backlog of applications for membership has developed. At current staffing levels,
many months will be required to clear the queue of those who have signed up but have
not yet been processed. In the San Diego region, 6 to 8 months are required to get a "smart
card" for SENTRI's dedicated commuter lane versus 2 to 3 months at El Paso-Juarez.

Customer delay is between four and six weeks in joining NEXUS at the Washington - B.C.
border, where U.S. and Canadian agencies are re-enrolling approximately 130,000
participants of the pre-approved travel programs that operated prior to September 11,
2001.

The rationale for two-border cooperation has many aspects. Among them are comparing
"best practices" and using compatible technology and shared procedures. Cooperation
also calls for speaking with one voice in requesting federal support for staffing,


                                            42
infrastructure and other investments needed to make both borders fully functional in
serving security and commerce.

This unified approach would be a welcome replacement to the long-standing political
rivalry between the borders. Further, by achieving synergy and supporting economies of
scale, two-border coordination would also be likely to reduce the cost and enhance the
impact of total investment required.

Thanks to strong political representation, a superior job has been done in Texas of adding
infrastructure that anticipates increased demand at border crossings. As in the case of
corridor funding, California has made a less effective case for federal investment at the
border. SANDAG's Gallegos notes that the state's congressional delegation is split on
border issues. Some members see the border as a priority while others are indifferent or
even favor using it as a barrier.

Washington State Governor Gary Locke has expressed interest in the functionality of the
Mexican as well as the Canadian border, and has committed that state presentations to the
federal government will reflect this. Locke intended to discuss his interest in southern
border issues on April 17, 2002 with Presidente Fox of Mexico, but Fox's visit to Seattle
was postponed.

As the first Asian-American governor of any mainland U.S. state, Locke is not only
responsive to ethnic issues but aware of political reality. Several Eastern Washington
counties are heavily Hispanic and the Hispanic population of King, the state's largest
county, more than doubled in the 1990s. Within Locke's administration, state trade
representatives to both Mexico and Canada are Hispanic.

For the West Coast Coalition, the goals of a multi-year Phase II include cooperation
between both borders in fully implementing ITS, enrolling a large majority of low-risk
frequent travelers in expedited clearance programs, and making joint requests for federal
resources. This process has begun with regular contact between Jim Miller and Gary
Gallegos, the MPO executives at each end of the I-5 Corridor.

Ultimately, progress along I-5 should make the West Coast Corridor System more
functional by developing tools and a model that can be applied across both borders. In
Gallegos' words, "It's been said that all politics are local. The key to a successful corridor
coalition is to respect local interests while transcending them. To be advocates on behalf of
the corridor, everyone must feel they are getting a fair share."


Canada-U.S. Border Issues




                                             43
Canada is the United States #1 trading partner and "September 11 has been devastating to
its economy," notes Harry Caldwell of FHWA. "The situation has pitted trade facilitation
against security," he says. An example is the new USDOT office of transportation security,
which "has no trade facilitation people." Caldwell concludes, " We are just now making
the connection between trade facilitation and security, realizing these are mutually
reinforcing goals.“

Brenda Plowman chairs the British Columbia Chamber of Commerce. She describes
today's border conditions as "old issues in a new crisis with more urgency." Understaffing,
the lack of resources, and a lag of capacity behind demand have been chronic facts of life.
But prior to September 11, "greater economic integration and similarity of objectives"
defined relations between Canada and the U.S.

Plowman acknowledges "the need to balance between sovereignty, national security and
economic security." Sovereignty focuses on the traditions, practices and legal systems that
distinguish each nation. National security is protection against physical threats, while
economic security depends in part on the mutual benefits that derive from trade. "Our
economies are similar but our procedures are not," observes Plowman. "This results in
freer trade but not free trade."

Charles Kelly, director of the Cascadia Institute in British Columbia, observes, "Our two
nations can no longer separate security needs from transportation planning, trade policy
and tourism promotion." Kelly cites the cross-border record of problem-solving in the
Cascadia region. "Such a unified approach demonstrates a high degree of cooperation,
which we can leverage into federal support in both countries."

A first step away from the slowed pace of progress Caldwell and Plowman describe, and
toward a two-nation effort on the Cascadia model, is the Smart Border Declaration (Ridge-
Manley Accord). In January 2002, the U.S. and Canada reached agreement on action items
in the plan:

• Explore the merits of a common program for commercial processing, including audits,
shared customs data, and partnerships with industry to enhance security through
electronic commercial manifest data and other means.

• Deploy interoperable ITS technologies, such as transponders and electronic container
seals, to facilitate secure movement of goods and people.

• Move cargo clearance away from ports of entry by use of international zones, pre-
processing centers, inland clearance, and maritime cargo in-transit verification.




                                            44
• Coordinate investments in physical and technology infrastructure at key border points
and trade corridors to improve traffic management; use dedicated lanes and ITS modeling
to optimize capacity.

• Explore legal and operational issues related to establishing joint facilities at border
crossings, including the arming of law enforcement officers in these facilities.

• Conduct bi-national threat assessments of trans-border infrastructure and cooperate on
protection measures.

• Develop common biometrics as the basis for personal travel documentation through
permanent resident "secure cards" and other identifiers.

• Resume operation of NEXUS at Sarnia, Ontario-Port Huron, Michigan and expand the
program to other demonstration sites (Washington-British Columbia I-5 crossing for
personal travel, Detroit-Windsor Ambassador Bridge for freight).

• Coordinate and tighten policies on processing of refugee and asylum claims, visa
waivers, in-transit pre-clearance at airports, and advance information on air travelers.

• Develop joint databases on immigration, place more immigration personnel at airports
overseas (for perimeter clearance), and increase joint training of airline personnel.

• Coordinate anti-terrorism intelligence assessments and law enforcement efforts,
including freezing of assets and deportations.


Joint efforts in border gateway planning between Washington State and British Columbia
on the West Coast are led by the Whatcom Council of Governments. WCOG facilitates the
International Mobility and Trade Corridor Project. IMTC is a U.S.-Canada coalition of
government and business entities that jointly identifies and promotes improvements to
cross-border mobility and security for the four border crossings between Whatcom
County, Washington and the Lower Mainland (Greater Vancouver area) of British
Columbia. Together, these ports of entry are called the Cascade Gateway.

The goals of IMTC are to coordinate planning of the Cascade Gateway as a transportation
and inspection system rather than as individual crossings, and to identify and promote
improvements to cross-border infrastructure, operations, and information technology. The
roster of IMTC projects for the Cascade Gateway includes:

• A cross-border demand model of the movement of people and goods by mode and time
period. The model will be used to assess policy initiatives and support economic analysis



                                           45
of infrastructure alternatives and designs. This will be the first cross-border, bi-national
model in North America.

• Feasibility analysis of a 235-mile Cascade Foothills Corridor from Mission, B.C. (on the
Trans-Canada Highway and rail lines) across the Canada-U.S. border, along the Cascade
foothills to Tenino, Washington (south of Olympia) where it would intersect Interstate 5
and the Northwest Rail Corridor. The Foothills Corridor could include a double-tracked
freight rail line, natural gas and petroleum pipelines, telecommunication systems, water
supply lines and recreational trails.

• Construction of a southbound Dedicated Commuter Lane (DCL) on B.C. Highway 15
that offers expedited border clearance to pre-approved passengers through the NEXUS
program.

Extension of the southbound DCL on B.C. Highway 99 as it approaches the U.S. Port of
Entry. Due to the traffic queue resulting from delays at the border, access to the DCL lane
is compromised by congestion. The extension would enable NEXUS members to have
unimpeded access to the express lane.

• Construction of improvements to truck parking areas and approach lanes so that
commercial vehicles do not block other cross-border traffic or access to residential and
retail areas at the Abbotsford B.C. - Sumas WA border crossings.

• Design of a Pacific Highway ITS/CVO dedicated truck lane as an additional
southbound lane on B.C. Highway 15. This would reduce border-crossing delays by
allowing transponder-equipped vehicles to by-pass non-ITS equipped trucks waiting for
border clearance.

• Development of operational concepts to expand existing ITS-CVO capabilities that can
increase the volume of pre-processed, cross-border shipments and link electronic driver
identification data with cargo and truck transponder systems.

• Integration of Insurance Corporation of British Columbia and Washington State
database systems to expedite commercial vehicle travel along the trade corridor.

These fiscal year 2002 projects for the Cascade Gateway program are largely funded by
the USDOT TEA-21 Coordinated Border Infrastructure (CBI) Program. Significant match
funding will come from Washington State, British Columbia and the Canadian federal
government. The CBI Program (Section 1119 of TEA-21) and the National Corridor
Planning and Development Program (Section 1118) share $140 million a year for eligble
improvements in the "border region" (100 kilometers on either side of the U.S.-Canada or
U.S.-Mexico border) and along pre-designated “corridors of national significance.”




                                            46
A notable current project in progress is the ITS Commercial Vehicle Operations Phase II,
an initiative funded 40 percent by Canada and 60 percent by the U.S. This project will bi-
nationally coordinate integration of commercial vehicle enforcement data and
import/export pre-arrival data between agencies (border inspection agencies, truck
weight, hazardous materials enforcement) and across inspection environments (ports-of-
entry, weigh and weigh-in-motion stations, and marine terminals) of both countries.


Mexico-U.S. Border Issues

California Senator Barbara Boxer places priority on cross-border mobility while Senator
Diane Feinstein emphasizes security issues. Congressman Bob Filner (D-San Diego) is
strongly focused on border issues and asked Governor Gray Davis for a declaration of
economic emergency after post-9/11 security procedures led to massive delays for cross-
border travelers.

Mexico has also expressed concerns about the economic effect of wait times at the border
and has indicated a willingness to join in lobbying the U.S. government on strategies to
reconcile security with mobility.

Bi-national cooperation took a major step forward in early 2002 with the signing by
presidents Bush and Fox of a Border Partnership Action Plan that has numerous parallels
to the Ridge-Manley Accord. Key steps include:

• Develop a long range-strategy to coordinate physical and technology infrastructure that
keeps pace with growth in cross-border traffic, including relief of bottlenecks; explore bi-
national financing mechanisms to fund needed investments.

• Assess vulnerability of physical facilities and communication networks, and provide
enhanced protection where required.

• Harmonize procedures, hours of operation and traffic-flow operations on both sides of
the border at ports of entry; conduct joint training and develop compatible databases.

• Expand partnerships with private sector trade groups and cross-border shippers to
enhance security and compliance of commercial cargo while expediting clearance.

• Share technology to implement the Container Security Initiative through joint
deployment of e-seals and license plate readers, rapid exchange of customs data, and in-
transit tracking of shipments.




                                            47
• Expand SENTRI's dedicated commuter lanes (DCLs) at high-volume ports of entry and
explore methods to facilitate movement of NAFTA frequent fliers, including dedicated
security lines at high-volume airports.

• Continue to combat contraband including illegal drugs, firearms, HAZMAT and money
from the sale of contraband.

• Reaffirm shared commitment to the Border Safety Initiative by establishing a bi-national
law enforcement liaison framework to prevent smuggling and trafficking of persons while
continuing to assist, save and advise migrants.

• Enhance joint efforts to detect, screen and deal with third-country nationals who may
represent a security threat.


A SANDAG priority is to integrate border infrastructure with the larger transportation
system. SANDAG and Cal-Trans have cooperatively developed a project list that includes:

• Adding capacity at San Ysidro, the main U.S.-Mexico crossing for people movement on
the I-5 corridor. Improvements involve infrastructure configuration and bolstered staffing
to utilize all lanes.

• Upgrading SR 905 to Interstate status. 905 is the connector between I-5 and Otay Mesa,
the only U.S.-Mexico Port of Entry for trucks in the metro San Diego area. The upgrade
would construct a six-lane freeway from the POE to I-805, replacing a four-lane non-
freeway route.

• Building a new Port of Entry to handle future growth. This POE would be three miles
east of the current Otay crossing, and would be served by a new SR 11 providing direct
access rather than using local streets as Otay does.

• Completing SR 125 as a connector between Otay and I-8 fifteen miles to the north. The
first 11 miles is being built as a privately-operated toll road, and most but not all state
funds are in hand for the other five miles.

• Upgrading several routes in Imperial County that serve agricultural labor, goods
movements and maquiladoras (twin plants) in Mexicali, B.C. They also tie in to the "Inland
Corridor" in this part of the region.

Allejandra Mier y Teran is executive director of the Otay Mesa Chamber of Commerce.
She notes that the Chamber's focus is on infrastructure because this requires long-term
effort while staffing could be solved quickly once a decision is made.




                                            48
The Chamber spearheaded the push to upgrade SR 905 to Interstate status. The final $60
million in funding for the $293 million project "is needed fairly soon." Completion is
scheduled for 2006-07.

Even with the upgrade, a continuing problem is final approach to the border via city
streets that are "an unavoidable but completely inadequate piece of infrastructure." The
Chamber supports a new POE at East Otay to handle future growth, especially since SR 11
will provide a direct, Interstate-quality link to the border.

FHWA’s Harry Caldwell observes that Otay Mesa, El Paso and Laredo, Texas will
continue to be the major U.S.-Mexico freight gateways. "Even if all contestable cargo could
be moved by rail, there will still be massive truck traffic," Caldwell concludes.

Port of Long Beach planning manager Larry Cottrill says one argument for a corridor
approach is investment in Mexico, specifically the Ladera-Carnejas-Manzanillas rail line
improvements that offer direct service to Mexico City. Ensenada "has multiple problems"
as a port but is enjoying some success, including a major Toyota facility. The goal is to
create spin-offs in the local economy through such activities as parts manufacturing,
linked to a Toyota facility in the Bay Area.

Hector Venegas, coordinator of SANDAG's bi-state programs, cites several mechanisms to
address cross-border issues:

The Bi-National Infrastructure Needs Assessment (BINS) covering ten border states, four
in the U.S. and six in Mexico. SANDAG has been designated by Cal-Trans as the BINS
lead agency.

• The Bi-National Borders and Bridges Commission, established a decade ago, has 16
working groups representing state DOTs, the FHWA and the U.S. State Department.
California is represented by CALTRANS.

• The Border Liaison Mechanism (BLM), created in 1993 to focus on law enforcement
incidents that required officers from each nation to cross the border. BLM involves
working closely with Federal authorities.

• The New Border Vision, signed between the U.S. and Mexico in 1998, called for
community input on key issues. In San Diego-Tijuana this meant water quality and
supply and well as Port of Entry issues.

• The Combined Committee on Cross-Border Operations with members from San Diego
and Baja has focused on border wait times since 1997-98. The goal of 20 minutes average
wait was never attained due to security concerns that existed pre-9/11, plus lack of
coordination between INS and Customs. Progress was made, but stalled after 9/11.



                                            49
Venegas believes the best solution would be "for everyone (all legitimate travelers) to
qualify for SENTRI."

Among key players on border issues, Gallegos and Venegas identify Mexican "border
czar" Ernesto Rufo (former Governor of Baja California and the first Mexican state
governor to be elected by PAN, the party of Presidente Fox); Mexican consuls Rodolfo
Figuroa in San Diego and Marta Lara in Los Angeles. Jorge Madrazo, Mexican Consul in
Seattle and former Attorney General of Mexico, has offered to arrange Coalition-related
visits with Rufo, Figuroa and Lara. Former San Diego "border czar" Alan Bersin, now San
Diego schools superintendent, spearheaded the drive to reduce border wait times.

Another cross-border initiative is The Southern Border Project of the Council of State
Governments-West. The Project is a border legislators' initiative co-chaired by Charlene
Zattel of California and Henry Quellar of Texas, funded by the U.S. Agency for
International Development (AID). It arose from the Border Regional Commission (BRC)
that was created as part of the Economic Development Act of 1965, and operated from
1975 to 1981 under the leadership of Gov. Castro of Arizona. The BRC was based on the
Appalachian Regional Commission, which has provided the impetus for all commissions
created under Title V of EDA.

The CSG Southern Border Project is due for merger with the Border Legislators' Initiative,
a long-standing and self-sustaining mechanism for dialogue among border state
lawmakers. There is also a Border State Governors Association, whose staffs meet four
times a year to develop language for declarations by the governors.




In summary

On the West Coast, heightened security concerns plus the need to optimize use of existing
capacity create strong incentives for full application of ITS in border and corridor system
management. Treating the borders as twin "anchors," with shared requirements for ITS
and infrastructure, can help unify the corridor system. A key element is the common
effort to install inter-operable ITS technologies and procedures that serve "secured
mobility."




                                            50
                               Metro Freight Mobility


Freight has become a high priority on the transportation agenda. In every metro region,
freight movement is recognized as essential to economic vitality. Moreover, reconciling
freight and personal mobility is a requirement for quality of life.


Port Gateways

All major West Coast container ports are located in major urban areas. Thus, marine
freight throughput becomes part of metro traffic.

Seaborne cargo forecasts for West Coast ports consistently project that container volumes
will more than double between 2000 and 2020. This increase is the total for international
and domestic traffic and for full and empty containers. It translates to growth rates of 3.4
to 4.4 percent annually.

Bulk cargoes are also a factor at every major port and dominate volumes at Columbia
River ports including Longview, Kalama, Vancouver USA and Portland. However,
growth in shipment of grains, mineral and other agricultural and natural resource based
cargoes is projected at relatively lower rates, with a 40 percent increase expected by 2020.

Analysts believe the growth forecast for container traffic will hold firm despite short-term
fluctuations. They also expect growth rates at major ports to be roughly similar over time.
However, annual rates of change in container cargo traffic can vary sharply, as they did in
2002:


Port                       Change from 2001            Projected 2002 Volume (TEU's)

Vancouver, B.C.                   + 16 %                      1.3 million
Seattle, Washington               - 2                         1.3
Tacoma, Washington                + 2                         1.3
Oakland, California               + 1                         2.0
Los Angeles, California           + 14                        5.9
Long Beach, California            + 6                         4.8


For several reasons, growth rate differentials among ports are likely to even out over time.
All West Coast container ports are "landlord ports" whose income is generated by leasing
land to terminal operators and shipping companies. Annual changes in container volumes
have one-time swings reflecting the gain or loss of major clients. More broadly, growth


                                              51
surges at specific sites tend to be self-limiting due to capacity constraints such as
congestion in land-side truck and rail movement from the ports. This causes shippers to
balance their geographic focus among major ports as they make long-term growth plans.

Southern California's twin-port complex is the leading container cargo center in the
Western Hemisphere. Some analysts cite powerful drivers that could cause it to pull
farther ahead of other West Coast ports. A regional population base of 20 million
consumers and the rise of super-ships seeking a minimal number of stops at hub ports are
obvious factors. Another economic incentive for ocean carriers calling on the Los Angeles
area is "minimal area guarantee" contracts that offer discounted rates in return for high
volumes.

The magnitude of container traffic at Los-Angeles Long Beach enables it to widen its
quantitiative lead over other ports even when growth rates are comparable. "For 10 years,
we grew at 5 to 8 percent annual rates, yet we lost market share to L.A.," notes Richard
Wiederhorn, Director of Strategic Planning for the Port of Oakland. This happens because
a given rate of change generates greater absolute growth when applied to a larger base.

That being said, all major West Coast ports are forecasting container volumes to more
than double in the next two decades. "Long-term, ports don't need a marketing director,
they need a traffic cop," says Jim Miller, executive director of the Whatcom Council of
Governments. As one might expect, every big port has big plans.

San Pedro Bay

April 11, 2002 marked the opening of the biggest public works project in Southern
California history. The Alameda Corridor is a $2.4 billion concrete trench twenty miles
long, 50 feet wide and 33 feet deep. It will move at least 100 trains a day, carrying $100
billion in goods a year, from the ports of Los Angeles and Long Beach to connect with the
main rail line east.

At the harbor, two mega-terminals are being completed that have wharves up to a mile
long and the capacity to handle two million containers at a time. Cranes 240 feet tall will
unload a new generation of cargo ships that can carry 6,600 twenty-foot containers
(TEUs). On the drawing boards are plans for even bigger ships able to carry the equivalent
of 8,000 or more TEUs.

While the ports of Los Angeles and Long Beach compete for customers, they cooperate in
infrastructure planning, including land-side transportation. The Port of Long Beach takes
the lead in planning joint facilities, and the Port of Los Angeles does not have a master
plan.




                                            52
Manager of Transportation Planning for the Port of Long Beach, Kerry Cartwright was
lead staff researcher on the recently-completed plan for land-side freight investments at
the Ports of Long Beach and Los Angeles. With regard to dominance of trade by mega-
ship, Cartwright says the trend is not clear. "Dredging is expensive and sites are limited."
He notes that cargo forecasts are based on the economics of bilateral trade and do not
include environmental or financial factors. Yet, in California, new harbor facilities require
"wetlands credits" that are in increasingly short supply.

Cartwright questions the hub-feeder model in which mega-ports handle mega-ships and
smaller seaborne cargoes are trans-shipped to coastwise destinations. Defined as transfer
of cargo from one ship to another, there is no trans-shipment from the San Pedro Bay
ports.

Gerald Lum, Assistant Chief Harbor Engineer at the Port of Los Angeles, says the twin
ports anticipated completion of the Alameda Corridor with construction of major on-dock
rail investments since 1996. These include the Terminal Island Transfer Facility, the Pier
300 Inter-modal Facility, the West Basin Inter-modal Container Transfer Facility (ICTF)
and a new ICTF being completed at Pier 400.

The West Basin ICTF was designed to serve a 185-acre terminal that may be expanded to
390 acres. This has intensified the focus on rail connections from West Basin to the
Alameda Corridor. Unit trains 7,000 to 8,000 feet long take 20 minutes to pass a given
point. There is urgent need for grade separations at two major intersections to improve
truck flow and prevent conflicts with rail.

Another priority is to make the intersection of Navy Way and Seaside a "freeway-quality
interchange." Huge stress will be put on this intersection with the opening of Pier 400,
largest in the world at 485 acres.

Terminal Island is the center of major container terminals for both Los Angeles and Long
Beach. Three bridges - the Gerald Desmond, Schuler Heim, and Vincent Thomas - are
critical for cargo movement in both ports. The first and last of these are forecast for service
level F by 2020 while the Heim bridge needs to be replaced sooner due to design and
seismic problems.

Port Hueneme

The Port of Hueneme is the sole deep-water facility between San Pedro Bay and San
Francisco Bay. It is the U.S. Port of Entry for California’s Central Coast region, serving
international businesses and ocean carriers from both the Pacific Rim and Europe. The
Port ranks among the top seaports in California for general cargo throughput.




                                              53
The Port of Hueneme has attracted a larger share of foreign trade by carving a niche in
non-container traffic such as automobiles, fresh produce, liquid fertilizer and wood pulp.
The Port is the top seaport in the United States for citrus exports and ranks among the top
ten ports in the country for imports of automobiles and bananas.

A recent study of truck traffic originating at the Port of Hueneme measured the volume
on three nearby roadways and polled truck drivers about their destinations. The results
of this study revealed that a majority of the trucks leaving Port Hueneme use Interstate 5
to travel to their final destinations. One third of all truck traffic is headed to I-5 North via
SR 126. The majority of southbound traffic uses US 101 to connect to I-5.

San Francisco Bay

Rick Wiederhorn is Director of Strategic and Policy Planning for the Port of Oakland,
which he describes as a moderate-sized maritime port and the 4th busiest container port in
the U.S. Today, containers represent about 95 percent of the Port's business and the Port
handles about 98 percent of Northern California's maritime commerce, not including bulk
agricultural cargoes shipped from Central Valley ports.

Unlike Puget Sound and Southern California, ships that call in the Bay Area have only one
choice: the Port of Oakland. "We were the pioneer of container terminals on the West
Coast and we have kept up with growth in container traffic. Yet our market share has
slipped, and will slip further if shippers consolidate calls. We got off to a strong start in
the West Coast container trade and fell to a market share low point in 1995," Wiederhorn
says.

Ten to twelve percent of Port cargoes are discretionary. The remainder is destined for a
zone within 700-800 miles of Oakland. In turn, half of this is consumed within the Bay
Area. Remarkably, Oakland is the only U.S. port of significant size where all of the top 10
carriers call. This is because there is no alternative within a great distance, "which gives us
some leverage to increase our share of discretionary cargo by pressing shippers to make
us their first call," observes Wiederhorn. "To build on this market advantage, we need to
increase the quality of ancillary services."

In 1995, the Pentagon surplused two military bases directly adjacent to Port land. The
Oakland Naval Supply Center was built in 1941 on land taken from the Port. A
reversionary clause provided that if the facility were ever closed, the land would be
returned. The Port already has plans that would consume the 480 acres available, leading
to an increase of more than 100 percent in Port capacity.

Closure of the Oakland Army Base adds further to the Port's land inventory. This site
requires only modest upgrading to meet Port standards for a bulk terminal, warehouses,
support services and rail access. Both BNSF and UP serve the Port directly.


                                              54
The roughly 1000 acres added to the Port by the Navy and Army bases, plus optimal use
of other Port land, fully meets regional freight projections. The Port and the City struck a
deal on how to split the land but this agreement has fallen through. The City now resists
re-use of the bases and wants the land for a "signature gateway" in the form of a casino.

If this happens. the Joint Inter-modal Terminal (JIT), which takes 160 acres of mostly
Army land, would need to be relocated. The JIT allows ship-rail-truck transfers, and
creates an opportunity to put as much cargo as possible on rail. It is not "on-dock," as
trucks would take containers a few blocks to the rail yard.

One major restraint on expansion has been restrictions on filling the Bay. A 22-acre fill
project will allow two new berths. The channel is now dredged to 42 feet - the bare
minimum. The Port has undertaken a 50-foot channel dredging project to handle the next
generation of container ships. "We have learned a lot about being environmentally
sensitive so we can mitigate as we go," notes Wiederhorn. This allows more rapid
progress in deepening the ship channel.




Lower Columbia

A multi-modal nexus of north-south and east-west highway, rail and water routes is
centered at the meeting of I-5 and the Columbia River. This is virtually a "second border"
in its complexity and is also literally the border between two states, making Portland-
Vancouver the only bi-state metro area in the Western U.S.

To address its multi-level challenge the region has formed the Portland-Vancouver I-5
Trade and Transportation Partnership, which works to reach political and community
consensus on freight corridor issues. The Columbia River Bridge is a key bottleneck on I-5.
Its six lanes are seldom in full operation due to bridge repairs and restrictions. Some 70
percent of bridge traffic uses Columbia Corridor exits because of heavy job concentrations
related to the ports and the river.

The Partnership’s strategy is to size improvements not only to current demand but to
future capacity needs. Relieving a major choke-point on a major corridor requires a
staged, multi-modal, bi-state infrastructure and operational plan – the ambitious goal of
the Partnership.

The Ports of Portland and Vancouver USA are located on the Columbia River 106 miles
from the Pacific Ocean. Between them and the sea are the Ports of Longview and Kalama,
which have no ranking in container cargo but together with Portland-Vancouver are



                                            55
among the largest bulk cargo ports in North America. Lower Columbia ports rank second
only to Mississippi River ports in movements of commodities such as grain and minerals,
and serve the largest wheat corridor in the world. Exports from 40 states move through
these ports.

The largest singe port-based activity begins with the arrival of unit trains 100 or more cars
in length. As they sit on 7,500-foot loop tracks next to grain terminals, their cargo is
unloaded in four to five hours into 100,000 metric ton silos for transfer to ocean-going
vessels. Varieties of grain can be mixed on site in any combination required by customers
in Asia.

The current channel between Astoria on salt water and Portland-Vancouver USA is 40 feet
deep, excluding about 70 percent of ocean-going ships. To meet future demand, a
proposed $156 million dredging by the U.S. Army Corps of Engineers would deepen the
channel by three feet. The states of Washington and Oregon have committed $28 million
each to the project. Federal environmental agencies have concluded that the deepening
project would not harm the 13 threatened species in the area.

An unusual aspect of these ports is "container barging" on the Columbia-Snake, the
second-largest river system in the U.S. In 1975, Portland-area barge companies realized
the market opportunity for container cargo and were the first to offer regular service on a
U.S. river system. The volume of containers has grown to more than 50,000 annually. As
shallow-draft vessels, barges can navigate upriver ports as distant as Lewiston, Idaho, 465
miles from the Pacific. Barging is a low-cost form of transport for agricultural and forest
products moved by container. Most barge cargo is shipped to Portland for transfer to
ocean-going vessels and Pacific Rim ports.

Puget Sound

The Port of Seattle has perhaps the most valuable urban land base of any West Coast
marine port. Its attractiveness for a mixed-use development and waterfront tourism is
matched only by San Francisco, which has gone out of the marine cargo business. The
potential variety of land uses is reflected in the Port of Seattle's development plan and its
working relationship with multi-disciplinary advisory committees that include real estate
professionals. By contrast, the emphasis in Tacoma is an "agile port," a highly efficient,
sharply-focused marine cargo operation.

Both ports responding to a forecast doubling in trade volumes over the next two decades.
Seattle Port Commissioner Patricia Davis says, "We intentionally sized our new terminals
to handle double the current volume of containers without affecting new urban land."
This approach combines state of the art technical solutions with an astute sense of urban
development realities.




                                             56
One example is Terminal 46 near Pioneer Square, a popular urban location and tourist
destination. This site "may no longer be suitable for container operations, largely due to
access problems," notes Seattle Port Commission Chair Bob Edwards. The port is
examining relocation of the terminal's shipping customer. One possible use of the terminal
would serve a booming growth sector on the waterfront: the cruise ship business. Since
1999, Seattle has jumped from zero to four homeport cruise lines and ship calls are
expected to rise from 79 in 2002 to 121 in 2003.

A major response to landside freight impacts is the port's heavy involvement in the FAST
Corridor, a cooperative effort with the Port of Tacoma and other major transport entities
in the region including WSDOT, the Puget Sound Regional Council, three counties, a
dozen cities, and the Class I railroads. FAST is the Northwest's counterpart to Alameda
Corridor-East. In Puget Sound, the challenge is not to close a long gap between the docks
and the main rail line as the Alameda Corridor does, but to move long-haul freight
through dense metro traffic in a geographically constricted region.

This task is heightened by the fact that 65 percent of imports landed in Seattle and Tacoma
are shipped east, versus about 35 percent of the total in Southern California. Moreover,
"The Alameda Corridor is an easy problem to define because it's point-to-point," notes
Peter Beaulieu, freight mobility program manager for the Puget Sound Regional Council.
"The FAST challenge is a complex melange of linkages."

The FAST Corridor is based on a series of priority freight mobility investments. Slated for
completion by 2004, FAST Phase I is a $470 million, fifteen-project package funded with
federal, state, local and private sector dollars.

The major goal of Phase I is to separate rail from road crossings in an urban zone between
Everett 30 miles north of Seattle and Tacoma 30 miles to the south. Grade separations "are
critical since most of the Port of Seattle's containers come and go on stack trains directly
from the docks or nearby rail yards," notes Davis. These trains head east via Stevens Pass
north of Seattle (BNSF) or up the Columbia River (UP and BNSF).

The flagship effort and first major completion among FAST's fifteen Phase I projects is the
$33 million Port of Tacoma Road crossing, designed to accommodate a new freight train
assembly yard located underneath the crossing rather than on mainline track where it
would conflict with commuter trains. Tacoma built the first ship-to-rail inter-modal yard
on the West Coast in 1981 and is developing new inter-modal facilities related to FAST.

The second project completion in FAST Phase I is the 3rd Street crossing in Auburn, which
resolves a major conflict between rail and an urban roadway. Seven other Phase I projects
are in various stages of completion. Phase II will focus on regional truck mobility but will
include further grade separations on rail lines.



                                            57
Just as the Ports of Los Angeles and Long Beach cooperate on facilities planning while
they compete for customers, so the Ports of Seattle and Tacoma have representatives on a
"joint inland infrastructure committee" that helps coordinate investments under FAST.

In addition to FAST projects, the Port of Seattle's new on-dock rail facility at Terminal 5
"has taken thousands of truck trips off the streets," says Commissioner Davis. Edwards
refers to the "daring investment in container terminals in the 1960s" and today's state-of-
the-art Terminals 5 and 18 in which the Port has invested $600 million over the last five
years. Says Edwards, "The Port continues to make investments that bring trade flows to
the Northwest that would not otherwise come here." This highlights the service quality
dimension that most port analysts agree is the crucial factor aside from price.

Lower Mainland

The Port of Vancouver has three highly automated container terminals: Centerm and
Vanterm in Burrard Inlet, and Deltaport at Roberts Bank. All three are operated by private
companies under long-term lease agreements with the Port. Centerm and Vanterm handle
bulk and break-bulk cargoes as well as containers. Three of Centerm's four cranes are
Post-Panamax capacity. Four of Vanterm's five cranes are post-Panamax and one is Super
Post-Panamax. All six of Deltaport's cranes are Super Post-Panamax.

Vancouver has grown rapidly in container cargo volume since completion of Deltaport
Terminal in 1997. This facility doubled the Port's terminal capacity and improved the links
to eastbound rail service. Deltaport has eight rail tracks of 3,500 feet each, allowing
assembly of four 7,000-foot double-stack trains. The intermodal yard is served directly by
Canadian National and Canadian Pacific Railways.

Port of Vancouver Director of Trade Development Scott Galloway says these investments
are not part of an aggressive market-share strategy. Most of the growth was achieved "by
recovering Canada-bound cargo" that had been arriving through Northwest U.S. ports.
However, Port of Seattle Deputy CEO Tom Tierney observes that Seattle "views with
concern" the ability of Canadian National Railway to move freight east before it moves
south, "a pattern that creates an advantage for the Port of Vancouver."

The next phase is a landside freight mobility investment to complement the growth in
port capacity. The proposed Fraser Corridor would link the three Vancouver-area ports.
Major projects include "twinning" the Portman Bridge with a new span and a second
crossing of the Fraser River by bridge or tunnel with perimeter roads. "The Fraser
Corridor project will relieve pressure on goods-movement infrastructure and facilitate
cross-border mobility," says Charles Kelly of the B.C.-based Cascadia Institute. "There is a
huge consensus of government and the private sector to move on this."




                                            58
Tolling of exclusive freightways is an accepted principle in Canada. The new bridges will
expedite freight movement between Deltaport and transcontinental rail, interfacing east-
west and north-south rail lines. A freight toll road has also been proposed to provide a
dedicated truck route into Deltaport's state-of-the market facilities.


Financing Landside Freight Mobility

Ports are the gazelles of government. They are "public enterprise entities," a rare breed of
animal that is public in its purpose and entrepreneurial in its approach. Typically,
government agencies are monopoly service providers but ports operate in a climate of
fierce competition. Their mantra is market share and they often race ahead of the rest of
government in planning for expansion. As the Port of Oakland's Wiederhorn says, "There
is a desire and an imperative to grow."

Abetting this urge among West Coast ports is the long-term surge in Pacific Rim trade,
propelled by the American consumer's seemingly insatiable appetite for imports. The
huge U.S. trade deficit is a chronic cause of concern for national economic policy. Yet,
imports provide three large benefits. First, their competitive prices allow Americans to
buy more for less. Second, low prices hold down the inflation rate and enable the Federal
Reserve to hold down interest rates, providing economic stimulus with lessened risk of
triggering inflation.

Third, imports generate millions of jobs. Most numerous are jobs in wholesale and retail
sales of imported goods. Best paying are jobs in the manufacturing of products that
contain imported components. These two types of import-related jobs are far more
numerous than dockside and freight transport jobs linked directly to handling imports
and moving them to markets throughout America. Even in Washington, the nation's most
trade-dependent state, two-thirds of the job impact of imports is in wholesale and retail
trade and in manufacturing, not in the import trade itself.

The bottom line is that all states benefit from maritime trade while gateway states (and
gateway provinces in Canada) bear the brunt of trade costs. The largest expense is
building capacity to move freight from the ports through metro areas to their final
destination. Currently this cost is borne disproportionately by residents of gateway metro
areas. "Port activity imposes huge costs that are not offset by federal help," notes Mark
Pisano, executive director of the Southern California Association of Governments (SCAG),
which represents a region that handles about one-fourth of U.S. imports.



Strategic response: The Alameda Corridor




                                            59
The Alameda Corridor project was dictated not only by shippers' needs but by
community disruption. Major intersections in nearly a dozen cities along the route were
blocked several times a day by rail traffic at grade crossings, effectively severing these
communities. Financing the Corridor was eased because it replaces a route that required
drayage fees of up to $100 for moving a container from the ports to the main rail line.
Thus, shippers agreed to a container fee of $15 per TEU to repay the Corridor's $2.4 billion
cost.

There is widespread agreement that long-haul freight from the ports should travel mainly
by rail. Yet, with the opening of the Alameda Corridor, "the problem has simply been
moved," observes Port of Los Angeles Assistant Harbor Engineer Gerald Lum.

After cargo is speeded from dockside to the transcontinental rail line, it must continue
eastward through another sixty miles of dense urbanized area. The result is severe conflict
between rail and street traffic at urban grade crossings. Moreover, if trends continue,
freight and passenger rail traffic will choke on itself. A report by Leachman & Associates
for SCAG predicts "approaching gridlock" by 2010 and "total gridlock" by 2025 on the
regional rail system, absent investment in double and triple tracks.

The proposed solution is Alameda Corridor-East, a project of grade separations and
added track capacity in the San Gabriel Valley. The project is as expensive as its original
namesake and lacks an obvious cost trade-off such as the Alameda Corridor was able to
employ with container fees.

SCAG is jawboning with BNSF and UP, the two Class I rail carriers, on cost-sharing for
added rail lines. Yet, completion of this project won't solve another problem that lies just
to the east. Pisano says San Bernardino and Riverside counties, the so-called Inland
Empire, will "drown in goods movement," including land-gobbling warehouse and
distribution facilities.

Even those favoring maximum emphasis on rail acknowledge that goods destined for
final sale within the region must be moved by truck. In response to this need, SCAG has
developed a 170-mile program of exclusive truckways costing $15-18 billion.

For the Ports of Long Beach and Los Angeles, the key corridor is I-710 (the Long Beach
Freeway) heading north on a route roughly parallel to the Alameda Corridor. Port
officials describe I-710 as “a state facility of national significance,” reflecting the fact that
about 20 percent of all container cargo shipped into the U.S. heads to market via this route
or the Alameda Corridor. At the Port of Los Angeles, Assistant Chief Harbor Engineer
Gerald Lum calls I-710 "the major land-side issue in freight infrastructure, which the ports
depend on for cargo movement by truck." Planners at the Port of Los Angeles favor
double decking I-710 at least to California route 60, the major eastbound alternative to I-
10.


                                               60
Two years ago SCAG proposed elevated truck lanes for I-710. This has since been altered
to a multi-modal configuration. Ten alternatives have been winnowed to the five that are
best suited to implement a "locally-preferred strategy." Perhaps the key option is a
separated truckway, favored by both freight operators and motorists. At the Port of Long
Beach, planner Cartwright calls separated truck lanes on I-710 "not only the best freight
solution" but an enhancement for passenger mobility and safety. Currently, heavy truck
traffic from the ports is a major factor increasing congestion and risk for autos on I-710. .
Lum adds that while ports are "fairly neutral" on truck-rail market share splits, "we have
become more aware and sensitive to community impacts."

Strategic response: Goods movement industry cluster

At the Port of Oakland, strategic planner Wiederhorn believes, "By the standards of many
ports, we have a pretty decent landside situation. We can expand terminals and even
move streets. We are able to manage our internal circulation."

Thanks to relocation of the Nimitz Freeway when it was rebuilt after a major earthquake,
the Port can put trucks on the freeway quickly with a minimum of disruption in the city.
But cargo gets caught in regional traffic once it leaves the terminal, and not only shippers
but the port's neighbors "are getting upset." A glaring problem is that, due to gate hours,
truckers move multiple shipments through the gate when it is open and then stack them
on city streets. "This is an outrage to the community," Wiederhorn concedes.

The Port began with a search for local solutions but there is also a regional problem. When
the Nimitz Freeway was rebuilt, no lanes were added. The same is true of an upcoming
rebuild on the Bay Bridge. "Congestion increases but capacity does not grow," notes
Wiederhorn. "This creates the danger of slow erosion in competitiveness due to delays."
The Port has no specific plans for truck freightways.

Michael Fischer of Cambridge Systematics notes “there are few good connectors between
the Port of Oakland, goods movement centers and major interstates.” He adds that most
long-haul freight originating in the Bay Area ends up on I-5, with I-80 and I-580 the nexus
of connection between the Port and the Interstate System.

A natural ally of the Port of Oakland is the Economic Development Alliance for East Bay
Business. Headed by Bruce Kern, the Alliance has put forth an initiative based on a
“goods movement industry cluster” of freight handlers, shippers, distributors and
warehouse operators along the I-880 Corridor. Firms in these businesses face growing
pressure from traffic congestion, land costs and regulatory requirements to leave the Bay
Area and move to the Central Valley. Kern notes that declines in the East Bay goods
movement industry hurt other sectors such as manufacturing and trade, which depend on



                                              61
its services. To secure funding sources for its initiative, the EDA has helped develop the
case for targeted freight funding under TEA-21 reauthorization.

Strategic response: Regional revenue sources

One obvious way to finance dedicated truckways in Southern California, the Bay Area
and Central Puget Sound is tolling. Peter Beaulieu, freight specialist at the Puget Sound
Regional Council, observes that, as in the case of tolls on auto routes, charges for freight
corridors work best when there is a parallel free route. This offers road users a direct
tradeoff between time and money.

A particularly persuasive voice on tolling is Robert Poole of the Los Angeles-based Reason
Foundation. Poole sees tolls as part of a repertoire of creative finance mechanisms to
bridge the gap between a stagnant revenue base and the growing costs of maintenance,
design improvements and added capacity.

Poole favors applying toll proceeds to service revenue bonds, as part of a flexible set of
financing tools. These include tax credit bonds, tax-exempt financing for inter-modal
projects, equity participation in toll facility investment and revenue streams by investors
worldwide, and reauthorization of TIFIA, the most widely used federal innovative finance
option. A specific concern for West Coast states including California and Washington is
legislative reauthorization for public-private partnership projects, essential to the legal
framework that supports bonding capacity.

A notably clear example of the struggle by freight gateways to meet investment costs
within traditional revenue structures is provided by the two largest Puget Sound ports.

The Port of Tacoma has been a pace-setter in price competition. Responding to concerns
by the Port of Seattle that rate-cutting can be destructive, Tacoma claims its "more
businesslike" operation is solely focused on being a marine cargo port rather than a full-
service waterfront activity center. Thus, says Tacoma, low rates reflect its business model.

Seattle's price incentive works differently. The Port routinely negotiates "back-end" leases
for its container terminals. Lease payments are relatively inexpensive at first, a financial
device that helps win customers. Then, in the later phases of what are normally 30-year
agreements, port rents increase sharply. For 2002, the rent on recently completed Terminal
5 will be just under $13 million, less than half what the port would have collected on a
straight-line lease with payments that rise over time only to reflect inflation.

Some critics believe the rates at both ports are not sufficient to support the necessary level
of investment in port infrastructure, let alone contribute to landside freight solutions.
SCAG's Mark Pisano says "efforts by Seattle and Tacoma to secure market share by




                                               62
offering shippers cut-rate fees are misguided because port activity imposes large net
costs."

The two major Puget Sound ports levy a property tax, which for years was voluntarily
capped at $35 million per year in Seattle and $8 million in Tacoma. These revenues have
been spent only on marine-related uses. Port of Seattle commissioner Davis notes that the
levy has been used primarily for docks, cranes and related seaport development. A
growing cost is environmental remediation on contaminated port land. A more recent use
is FAST Corridor projects separating double-stack container trains from regional traffic as
cargo moves away from the ports by rail.

In late 2002, the Port of Seattle commission broke away from the cap by proposing an
increase of $19 million (54 percent) in the tax levy, to be spent largely on cruise ship
terminal expansion and improvements. Continued reliance on the property tax raises
equity issues but the ports have yet to commission an independent analysis comparing the
local tax burden with local benefits. The argument of universal economic benefit becomes
unclear as efficiencies reduce the number of dockside and related jobs while infrastructure
costs continue to climb.

Strategic response: National and NAFTA revenue sources

The national policy shift toward user taxes fits equity requirements better than local
property taxes. Purchasers of imports include virtually the entire base of U.S. consumers
and most manufacturers, since 40 percent of the value of imports is producers' goods. The
choice is between continuing to place the costs of a national benefit disproportionately on
gateway area residents, or sharing the burden among all who enjoy the benefit. The latter
approach is not only equitable but could raise comparable revenue from a lower tax rate
on a broadened base.

State Senator Betty Karnette of Long Beach, is Califoria's legislative leader on freight
issues. She has proposed to raise funds for port-related freight improvements by applying
a container tax at the state level. The ports, says Cartwright of POLB, prefer a federal
container fee that would be imposed nationwide to create a level playing field. Lum of
POLA agrees that container fees for infrastructure should be on a national basis to avoid
creating competitive disadvantage. Cartwright adds that U.S. Customs duties now
flowing to the federal General Fund should support freight through-put projects.

Chris Becker of On Trac, the public affairs arm of the Alameda Corridor, addresses the
question of user tolls versus Customs revenue as a funding source for port-related freight
mobility investments. Consistent with many West Coast port representatives, Becker
argues that imposition of either form of charge must be uniform nationwide to assure a
port-neutral impact. He urges creation of a dedicated trust fund for freight mobility. The
fund would collect revenue from "through-put" states as well as "gateway" states, and


                                             63
would give grade separations top priority. The purpose of this dedicated fund would be
to eliminate conflicts between ports, rail and highways in competing for Federal revenues.

BNSF chairman Matthew Rose believes the key task is to "put in place public policy to
accommodate future growth." He criticizes national policy for looking at railways,
highways and waterways in isolation. "This worked in the past but it will not work in the
future," Rose believes. Calling the Alameda Corridor "a model of cooperation," He says
there is need not only to expand funding but flexibility - innovative ways to support
investments in inter-modal facilities and track capacity.

Railroad financing at the national level is difficult. Due to heavy investment in
locomotives and mergers in the 1990s, railroads are reluctant to take on further debt or
commit to large cash outlays. They have sought to become eligible in selective ways for
federal assistance. Rep. Don Young (R-Alaska) has proposed a $70 billion loan program
for laying additional trackage and improving roadbeds. Freight rail companies prefer this
approach to public ownership of rail beds, which would mean open access and
diminished control over train schedules.

Port officials at Seattle and Tacoma, the second-largest container cargo load center in the
Western Hemisphere, have not come as far as their southern counterparts in considering a
dedicated source of federal funding for landside freight mobility. One reason may be that
Puget Sound ports have used pricing to offset the lack of a large regional market in
competing for market share. Another reason is that they fear competition from a nearby,
non-U.S. rival: the Port of Vancouver, B.C. This suggests that a container fee should be
imposed NAFTA-wide, or at least in Canada as well as the U.S.

If enacted, such a uniform,, port-neutral fee could replace an existing, unfair federal levy:
The Harbor Maintenance Tax. This tax covers the cost of dredging in ports that require it,
yet is paid by deepwater ports including Seattle and Tacoma that receive no benefit. By
contrast, a North American container fee would be collected at all ports and spent at all
ports.

The Harbor Maintenance Tax dates from the mid-1980s and collects money from cargo
importers to pay for dredging at ports that require channels to be dug and maintained.
Fees of up to $150 per container are imposed - a yearly total of about $60 million a year at
Seattle and Tacoma. Port of Seattle Deputy CEO Tom Tierney says the Harbor
Maintenance Tax creates a cost differential that is being aggressively exploited by the Port
of Vancouver. Tierney believes shipper avoidance of this tax is a significant reason why
Vancouver's container volume is almost even with its Puget Sound neighbors after
lagging for years.

The failure of previous moves by U.S. deepwater ports to repeal the tax led in 2002 to
introduction of a bill by Sen. Patty Murray (D-WA) and Rep. Jennifer Dunn (R-WA). The


                                             64
legislation says importers don't have to pay the tax at U.S. ports within 200 miles of a
container port in a foreign country. That provision would halt collection only at the Ports
of Seattle and Tacoma. Scott Galloway, Director of Trade Development at the Port of
Vancouver, disputes the relevance of such legislation. "It wouldn't affect what we think
are the key advantages of Vancouver," says Galloway. "I don't think it will have
significant impact at all."

Whether Tierney or Galloway is closer to the mark, it makes sense to impose a container
in Canada as well as the U.S. Richard Ford, a partner at Preston Gates & Ellis is former
Executive Director of the Port of Seattle. Ford notes that if Canada did not join voluntarily
in imposing the fee, it could be applied as container trains cross into the U.S. bearing
cargo from Canadian ports bound for American markets. The intent would be to assure
economic neutrality. Moreover, Ford says rail and truck corridor improvements between
Canada and the U.S. should be among the types of landside freight mobility investment
supported by the container fee.

Harry Caldwell, Chief of Freight Policy for FHWA, emphasizes that rail movement is “co-
equal” with truck traffic in freight strategy, and seventy percent of cargoes in interstate
commerce are modally discretionary. Caldwell observes that railroads invest 18 percent of
net earnings in capital projects – three times the next highest industry sector. Despite this,
Ford notes that in comparison to east-west routes, “north-south rail links on the West
Coast are seriously inadequate. Dual and triple trackage is crucial for the passenger-
freight rail interface and for I-5 traffic relief.”

Caldwell cites the Mid-Atlantic Rail Operations program (MIRAD) as perhaps the best
example of public-private co-funding of rail investments. MIRAD identified 62 rail
bottlenecks and rated each in shares of public and private benefit. This analysis provided
the basis for realistic cost-sharing using six distinct financing approaches. None require
government grants. Instead, loan guarantees are offered to provide risk-sharing, a crucial
condition for cooperation by private operators. The MIRAD effort is necessarily interstate
because its impacts are regional.


The Future of Freight Mobility in Gateway Metro Areas

On April 11, 2002, the day before the Alameda Corridor opened, Caldwell spoke in Los
Angeles at the roll-out of California's Global Gateways report. He traced the history of
logistics costs in the U.S. After peaking at 16.2 percent of gross domestic product (GDP) in
1980, they dropped to 9.9 percent in 2000 with an uptick to 10.3 percent in 2002.

Caldwell labeled this reversal in trend "a cause for concern" because the long-term drop
saved consumers and business billions in costs, averaging $1,000 annually per household.



                                             65
More broadly, he noted that the growth in highway travel demand has been outstripping
additions to highway capacity by a 12:1 ratio for the past two decades.

The outlook for federal financing

As part of TEA-21 reauthorization, Caldwell says USDOT and other major transportation
agencies are recognizing the importance of major gateways with Canada and Mexico. He
notes that several options are being considered, including greater flexibility in use of
federal funds for surface transportation and easier access to innovative finance. He also
cites proposals to bring money to the table in new ways such as federally-imposed user
fees, diversion of existing trade facilitation fees, and voluntary state-local user fees that
could leverage added federal revenues.

"No decisions have yet been made," Caldwell concludes, "but the fact that gateways are
acknowledged as potential bottlenecks to trade is encouraging." Among the concepts with
promise are establishment of a Freight Gateways program and designation of National
Highway System inter-modal connector routes.

Oakland-based Michael Fischer of Cambridge Systematics sees "a new emphasis at
USDOT in treating gateway financing as a more clearly designated part of borders and
corridors." Another emphasis is a multi-jurisdictional planning process that includes
shared funding for freight markets, which typically transcend jurisdictions. "What is the
best way to structure and fund multi-regional and multi-state efforts?" asks Fischer. "This
is a focus of Federal Highways' freight office in TEA-21 reauthorization."

Fischer believes the case for a corridor coalition is likely to be strengthened by events; in
particular, continuing frustration at piecemeal requests and responses. He continues,
“Where is the hook? In what way does the Bay Area fit in? How can Northern California
gain traction from these investments? A National Gateway Program? A redefined Border
and Corridor Program? Expanded how?”

Deputy Director Jim Gosnell, of SCAG decries the low level of awareness on freight
issues, even in regions that are heavily impacted. This suggests a comprehensive question:
Should there be earmarking of federal transportation funding for freight mobility, or is
there simply a need to more persuasively make the case for freight investments as a
national priority?

A long-range issue is whether to replace the current distribution formula by an allocation
formula that would generate "an amount certain" for freight investments. Steve Heminger
of the Bay Area MTC asks, "What is the best way to go in TEA-21 reauthorization -
flexibility via distribution formulas or targeting via allocations? Flexibility sounds good
but it tends to shortchange freight." Gosnell wonders, "How do we create a sense in D.C.
of the need for flexible and expanded funding?"


                                             66
One sign of the times is creation of freight-specific policy entities at the state level. The
Global Gateways report cited Washington State's Freight Mobility Strategic Investment
Board (FMSIB) as a possible model for California. FMSIB has a solid record in building
funding partnerships and strategic alliances on key projects. This is a role distinct from the
state DOT’s function as a “single point of contact” on freight projects, which FHWA
freight policy chief Harry Caldwell calls an essential element in federal-state cooperation.

 A new initiative, the California Freight Advisory Commission (CALFAC), would take a
major step in bringing key players together. Its top tier includes decision-makers, with
direct involvement by freight providers and users, and technical support from policy
experts. CALFAC is intended to provide the "single point of contact" described by
Caldwell. Mark Griffin, freight mobility planner for SCAG, sees the potential for CALFAC
to evolve into “a high-level working group to identify all possible sources of funding for
freight infrastructure.”

Sen. Betty Karnette has taken the lead in launching CALFAC and a related initiative, the
National Freight Security and Infrastructure Bank. The NFSIB would create an
organizational structure and a funding source for capital investments responding to trade
impacts on transportation at U.S. global gateways, border crossings and "inland
interchange points" - places where long-haul freight is transferred for regional
distribution.

Freight mobility advocates have argued that container fees and Customs duties on
imports could be part of a revenue stream to finance a Freight Mobility Trust Fund similar
to the Aviation Trust Fund. This would support the proposal for an International Freight
Gateway Fund to deal with pass-through cargo movement of national benefit.

The NFSID proposal, launched in July, 2002, is "a concept in the making" to achieve
progress in this direction, notes Jeff Brown of the California Senate Office of Research.
Brown says the freight community "needs to tell the story" of the economic impact of
trade. If this is done effectively, it will enable the U.S. "to build a freight infrastructure
with the same vision as the National Highway System," he concludes.

SCAG is hoping USDOT will document freight impacts and identify Strategic Corridors of
National Significance. "It's crucial to get USDOT to step up to the plate and say they are
the national transportation agency. If we can get DOT to think strategically, corridor
designations will have more meaning," Gosnell believes.

"The USDOT is not a national transportation agency," observes Peter Beaulieu of the Puget
Sound Regional Council. "Transportation problems and solutions are regional, yet are
increasingly connected on a national and continental level. Trains leave Seattle to arrive in



                                             67
Chicago at the right time. The challenge for USDOT is to connect inter-regional impacts
and solve problems related to them."

Cooperation among port gateways

Shippers have a choice of ports due to rail mergers including CN-KCS, which crosses the
Canada-U.S. border. The result is a dynamic North American picture. "Ports are no longer
docks and a waterfront but links in a continental supply chain," says Beaulieu. "An idea
excited people - looking at freight mobility as a system that serves a multi-port gateway.
This cuts through a lot of smoke." FAST covers the Tacoma-Seattle-Everett region, 60
miles with three port gateways.

To the south, the Port of Long Beach is the lead on master planning for its own facilities
and for the Port of Los Angeles. In the future, cooperation among ports may need to
extend even beyond such joint planning for facilities. Jim Miller, executive director of the
Whatcom Council of Governments where I-5 meets the Canadian-U.S. border, notes that
ports have limited anti-trust immunity. "This enables them to cooperate not only on
regional planning but on regional pricing," he says. "Even with a uniform West Coast
surcharge for infrastructure, such as a container fee, ports could still compete on the basis
of service.” Rivalry between the Ports of Los Angeles and Long Beach is a vigorous
example of this.

Miller adds that, ultimately, ports could work toward agreement on "what goes where."
The Port of Portland has been a leader in putting forward this concept. Known as
"rationalization," it would explicitly favor deepwater, ocean-facing ports for container
cargo while concentrating bulk movements at locations that can accommodate mile-long
unit trains, dockside grain terminals and other facilities requiring an extensive land base.

FHWA’s Caldwell acknowledges that port rationalization has logic because it helps guard
against stranded assets and replication of expensive facilities. It could also help support
an “inter-modal business plan” that provides a regional, coordinated approach serving
safety, security and economic efficiency needs of West Coast ports. At the same time,
Caldwell urges that port rationalization emerge naturally rather than being put forth as a
label. “Let the corridors and gateways that make sense self-identify. Acknowledge the
market, capitalize on it, and base your case on lessons of experience.” This, he says, is far
superior to seeking formal designation from Congress of various ports as centers for
container traffic or bulk cargoes.

Some analysts believe the long-term solution goes beyond expanding the agenda of
cooperation among ports and includes expanding their jurisdiction so port authorities
cover entire regions. This logic is strengthened in metro regions like the Bay Area,
Portland and Puget Sound where port authorities manage regional airports as well as
marine ports. The ultimate evolution of this model would be bi-national air and sea


                                             68
entities modeled along the lines of the St. Lawrence Seaway Authority between Canada
and the U.S.

Larry Cottrill of the Port of Long Beach notes that San Francisco Mayor Willie Brown
made a strong push for a state port authority when he was Speaker of the California
Assembly (lower house of the legislature). "Perhaps Brown acted on the theory that excess
land at the Port of Oakland should be used before there was expansion at L.A. or Long
Beach," he speculates.

Cottrill adds that not everyone favors minimizing price competition among ports. He
names the Pacific Maritime Association (PMA) and the longshoremen's union (ILWU) as
"the strongest foes" of a state or regional port authority. "They love playing ports off each
other." As an example, Mersk recently moved from Long Beach to Los Angeles on
favorable terms that "they couldn't have gotten without fierce competition from Long
Beach."

Operational advances

A new generation of technologies allows major productivity increases in cargo processing
and related functions, enabling a rising volume of container cargo to be processed on a
given land base. A 2002 study by JWD Group found wide variations in efficiency.
Singapore handled over 18,000 TEUs per gross acre while Rotterdam (Europe's largest
port) was under 6,000 and Los Angeles-Long Beach was at barely 4,000 TEU's handled per
acre.

Technologies for processing and handling cargoes also get the job done with fewer
workers. The threat of technology-related job losses was a major concern of the ILWU in
recent contract negotiations. Yet, jobs are also being created in applying technology to
electronically bond and seal containers, and provide other necessary documentation for
perimeter clearance of cargoes. A key question for the ILWU is whether port workers
could be re-deployed away from functions that will become less labor-intensive thanks to
technology, and assigned to new risk management tasks linked to today's higher security
requirements. Ideally, the result would be no net job loss.

Another issue is harmonizing procedures and hours of operation at port cargo handling
and inspection facilities to expedite truck and rail movements that originate at ports.
"Superships dropping thousands of containers that are picked up by high-speed cranes
would choke today’s system," notes Miller. "Too often, off-loading is compacted
artificially into weekdays due to unions' overtime pay rules," he adds.

Barbara Ivanov directs the Chamber of Commerce in Kent, Washington, a warehousing
and distribution center for cargo from the Ports of Seattle and Tacoma. Ivanov has been
addressing non-capital, operational issues in the freight mobility system since 1998. She


                                             69
leads an "improvement team" that looks at factors affecting the timeliness of goods
delivery in the region. The team has found that only about half of delays arise from
congestion and capacity constraints on roadways and other physical facilities. The rest are
due to limits imposed by staffing levels, hours of operation and procedures at every point
in the goods movement process.

"Regulatory issues such as labor relations and hours of operation need to be dealt with in
a non-threatening way," observes Caldwell. "This is where productivity gains lie, but
labor is sensitive."

Don Breazeale, a consultant on expediting goods movement, urges approaching freight
mobility from a systems logistics perspective. Breazeale argues that before making
commitments to costly capital projects, the first step should be operational improvements.
Next, the design of physical facilities should support process advances, rather than being
made apart from them or working against them. Deliberate design is essential to achieve
synergy between the two forms of investment, Breazeale says.


In summary

The future of West Coast port gateways and the movement of cargoes from them depends
on a range of strategies: regional coordination, operational reforms, more capable facilities
and stronger landside connectors. To support these outcomes, a new national or North
American revenue source may be required to assure that time-sensitive imports reach all
parts of the continent without disrupting metro traffic in gateway regions.




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           Green Corridors: Transportation Serving Quality of Life

Transportation is not an end in itself but a means to mobility and access for people, and
delivery of goods to producers and consumers. Moreover, although transportation is
essential to quality of life, it can disrupt and damage quality of life. Air and noise
pollution, severing of communities by rail and roadways, and "construction disruption"
are obvious examples.

For each of these problem areas, there are smart solutions: tighter pollution standards in
step with emission control technology; thoughtful and artful route design; neighborhood
noise barriers, lids and tunnels to buffer multi-lane highways; grade separations on rail
lines; and careful scheduling and sequencing of construction to minimize local impacts.

In best-case scenarios, transportation investments can enhance quality of life. Chris Becker
sees the Alameda Corridor as a crucial element in "community regeneration" along the
route. Because major arterials are no longer severed repeatedly by freight trains,
neighborhoods are reconnected. Even during the construction process, care was taken to
minimize local impacts. Bridges were built first to restore street service and the rail trench
was constructed in short, rapidly-completed segments so disruption in each community
would be as brief as possible.

Other challenges are more complex. They arise from the expanded range of choices
created by our transportation system - choices that create unintended consequences.


Jobs-Housing Balance and "Smart Growth"

Every West Coast metro area of 3 million or more persons has significant "commute
spillover" problems that cross county and sub-regional lines: San Diego with Riverside;
Los Angeles and Orange with Riverside and San Bernardino; Santa Clara, Alameda and
Contra Costa with San Joaquin and Stanislaus; King with Pierce and Snohomish. In the
latter example, King has two-thirds as many jobs as people while its neighbors have one-
third as many. They also have more affordable housing. The result is "osmotic pressure" to
live in one place and work in another.

The Bay Area is a representative example of the struggle in West Coast metro areas to
achieve jobs-housing balance, a problem that arises from mobility and results in
congestion.

Michael Cunningham is Vice President of the Bay Area Council, an organization of large
employers in the region. He says passenger mobility, not freight or trade, is the Bay Area's
priority. "We are more focused on transportation within the region than transport to other


                                             71
regions." Adds Rick Wiederhorn, director of strategic and policy planning for the Port of
Oakland, "In the Bay Area, transit is not only popular but transit agencies are savvy and
strong. Local and regional issues, not trade, dominate the agenda."

Jobs-housing imbalance "puts huge stress on transportation," Cunningham observes. "Jobs
have moved away from housing - or at least, they are not found in the same place." Most
housing growth is in Livermore-Pleasanton, Concord-Antioch, and even the San Joaquin
Valley. There is some additional housing in south San Jose but it is not adequate to
demand.

The Sunol Grade (I-680), linking housing with jobs, rose quickly from 23rd to first in
regional congestion rankings. Commuting pressures added political momentum to
accelerate construction of heavy rail along I-580 from the Central Valley to I-680 into San
Jose. Notes Cunningham, "As a lifestyle, commuting from Stockton to San Jose can't be at
the top of anyone's preference list. Rail has helped but it is still a stretch for those who
must make this trip each workday."

Large employers recognize that housing and transportation are the two biggest barriers to
business growth in the area. The Bay Area Council supports putting teeth in housing
policy through a requirement "in some form" that job growth be matched by housing
growth. City general plans would need to set aside properly-zoned land to site sufficient
housing for all income strata. "The concept is that cities and counties need to accept
responsibility for housing that supports the jobs they will gain," says Cunningham.

An effort is underway among regional leaders to identify 12 to 20 mega-projects for
moving people within the region. These might not be as large as West Coast projects "of
corridor system significance" but would be large on the regional scale. Examples: a new
mid-bay bridge and/or increased capacity on the existing Bay Bridge, and/or extending
BART rail from Fremont to San Jose, from Pittsburg to Antioch, and from Pleasanton to
Livermore.

The original BART district included only San Francisco, Alameda and Contra Costa
counties. Santa Clara County (San Jose) and San Mateo County (northern Silicon Valley)
have never joined the district due to a requirement that new members make a pro-rata
payment to reflect past investment in the system. To avoid this entry fee, they are paying
for extensions of BART as a separable item. There is high interest among Bay Area leaders
in "market" mechanisms such as congestion pricing, HOT lanes and variable tolls. One use
of revenue would be to support bus and rail transit in the same corridor as autos.

Steve Heminger is Executive Director of the Metropolitan Transportation Commission.
MTC is unusual among metropolitan planning organizations in being a statutory agency
created by state legislation and having the power to allocate state and federal funding -
about $1 billion a year - that elsewhere goes directly to transit operators.


                                            72
Heminger cites two initiatives to promote jobs-housing balance: Transportation for
Livable Communities (TLC) and the Housing Incentive Program (HIP), which recently
doubled to $30 million in annual funding. TLC is based on transit-oriented development
(TOD) while HIP rewards local jurisdictions that agree to build housing near transit
stations, with a bonus for affordability. Sacramento and San Diego are giving
consideration to launching HIP. "If the Bay Area is serious about growth management, we
will expand this initiative," Heminger predicts.

Gerald Raycraft is planning director for the Association of Bay area Governments
(ABAG). Raycraft describes an inter-regional partnership on jobs-housing balance,
launched in 1998 among the counties of Alameda, Contra Costa and Santa Clara (Bay
Area) and San Joaquin and Stanislaus (Central Valley). The partnership arose out of a suit
by Alameda County against the City of Tracy (San Joaquin County) for approving large-
scale housing developments without compensating Alameda for the impacts on that
county's roads. Tracy defended itself with the argument that the failure of Bay Area
Counties to provide housing was forcing workers to look for housing in the Central
Valley.

Part of a pilot project launched by the partnership identified "opportunity zones" - areas of
50 to 500 acres that, when built out, would address the region's needs for balance. This
meant "job zones" in the Central Valley and "housing zones" in the Bay Area. Opportunity
zones are identified through a multi-layer analysis using geographic information systems
that look at urbanization, job centers, housing and transportation nodes.

As population and job growth continues, inter-regional cooperation is becoming more far-
flung. ABAG now has partnerships on jobs-housing balance with Santa Cruz and
Monterey counties to the south, and with Sonoma, Mendocino and Lake counties to the
north.

On another front, ABAG is the lead agency on the Smart Growth Strategy / Regional
Livability Footprint project. Funding comes from MTC and three other regional agencies.
The private sector partner is the Bay Area Alliance. Smart Growth emphasizes in-fill and
redevelopment versus sprawl and edge development. "The alternative is to use
projections that simply reinforce existing patterns," notes Raycraft.

The public participation phase of the project resulted in three alternatives that were
distilled from over one hundred scenarios:

      • Central Cities: urban core and existing transit network focus
      • Network of Neighborhoods: transit-oriented communities and corridors
      • Smarter Suburbs: core-to-edge development



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The MTC and ABAG staff are analyzing impacts of each alternative on mobility and jobs-
housing balance. Two private consulting firms - Design, Community, and Environment
and Bay Area Economics - are assisting.

Raycraft sees two pieces of the Smart Growth Strategy as critically important. The first
piece is to identify the types of jobs that are essential to the region and match them with
the types and affordability of housing available to the people who will fill these jobs. An
urgent problem is long commutes by service workers from affordable housing to the
communities they serve.

The other crucial piece, says Raycraft, is incentives for local actions that implement the
chosen direction of growth strategy. "Homebuilders claim Smart Growth drives up the
cost of housing by restricting the supply of buildable land," he notes. "Local governments
need tools to deal with this." The California Debt Limit Allocation Commission and the
Tax Credit Allocation Commission have been approached for help with incentives. ABAG
also sees tax increment finance as a valuable tool.

The "fiscalization" of land use is a major factor in the lack of jobs-housing balance. Every
local jurisdiction wants retail centers, which pay their own way in taxes, and no one wants
residential development, which does not. The situation was aggravated by Proposition
13's property tax limit, which shifted emphasis to the sales tax. Raycraft believes a first
step away from this problem is a bill before the legislature to distribute a portion of sales
tax collections in the Sacramento area on a regional basis.


The Role of Transit

Transit is crucial to dealing with the commute requirements of jobs-housing imbalance.
Raycraft says that though ABAG and MTC are separate agencies, when the ABAG board
approves projections based on "smart growth" strategy, MTC will be required to reflect
this in making transit investments.

Most of MTC's focus is intra-regional movement and 80 percent of the dollars in its
current plan are for the maintenance and operations of existing service. The BART rail
system is 30 years old and is undergoing seismic retrofit along with the highway system.
The San Francisco Municipal Railway - streetcars and cable cars - carry half the transit
volume in the Bay Area. "The Muni" has operated a light rail system for 75 years with
heavy ridership thanks to high density along the route. A new extension in the City will
replace bus service with underground light rail.

San Jose is launching a new system with local sales tax dollars. "Is rail an extravagance?"
asks Heminger. "This debate rages around the country - and San Jose has decided to do



                                             74
it." The city started its line downtown and is extending outward. "It won't be fair to judge
rail system performance until this network is completed," he believes.

AC Transit (East Bay) focuses on bus rapid transit (BRT), which Heminger calls a
promising strategy. Can express buses compete with auto and rail on commuter freeway
routes? "It's clearly doable, but BRT must offer passenger amenities that put express buses
on a par with light rail by offering the comfort and convenience of an 'office on wheels,'"
concludes Heminger.

There is widespread support for expanding express bus service on HOV lanes but gaps in
the HOV network must be closed before this can happen. A reasonable intermediate step
to rail is construction of exclusive rights-of-way while delaying acquisition of rolling
stock. This provides dedicated routes serving bus rapid transit while sequencing
investment for cash-flow purposes, thus assisting corridors that aren't yet ready for rail
yet badly need relief.

Regarding transit policy, Cunningham observes, "The social equity issue is big in the Bay
Area." Except in the City of San Francisco, "buses are seen as transit for poor people."
Regional express buses would pick up riders at job centers and travel non-stop to
residential areas. "The main justification for rail is to attract people who won't take the
bus," notes Cunningham. "At the same time, advocates of the poor often fight rail as a
large investment that doesn't benefit low-income people. They have pushed for capping
rail costs and protecting budgets for bus service."


The Logic of Value Pricing

Tom Graff, California Regional Director for Environmental Defense (ED), says that there
are numerous linkages between transportation and social equity. Transponders can
identify lower-income people who qualify for credits on highway user taxes and tolls.
HOT lanes make incentives for car-pooling stronger. Value pricing (tolls that vary with
congestion levels) "is a great match" with express bus service that uses dedicated bus
lanes, or HOV plus bus, or HOT lanes plus bus. "We try to stay away from train-versus-
bus issues but we do link with low-income groups in resisting non cost-effective
investment in rail," Graff notes.

ED has focused on making "user pays" approaches - congestion pricing, HOT lanes - part
of the environmental agenda. "User pays" is endorsed by a wide range of players in the
policy debate. Bill Dempsey of California Environmental Dialogue has gained support
from state agencies including Resources and Environmental Protection, and from GM,
Chevron, BP-ARCO and other corporations that believe market pricing assures efficiency
and contributes to sustainable economics.



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ED opposes county-level sales taxes because "they hide the costs of transportation and do
not ensure that the user pays," Graff says. ED successfully fought a sales tax hike in
Alameda County while acquiescing in another on I-680 (Sunol Grade) that requires HOT
lanes )unless found infeasible) and includes congestion pricing.

Since 1996, the Federal Highway Administration has funded two regional workshops per
year on this hot topic. Sites have ranged from New York to Seattle, from Minneapolis to
Atlanta. After San Diego hosted a value-pricing workshop, it launched one of the most
successful variable toll systems in the country on I-15. At the entrance to dedicated lanes,
computers measure traffic congestion every 6 minutes and compute charges accordingly.
The toll system has won a two-thirds approval rating from area residents, with similar
support levels among a wide range of age and income groups, regardless of whether
drivers use the reserved lanes or not.

The logic of value pricing is that when anything that's worth something is priced at zero,
demand will be infinite. In this case, the direct expense for drivers using the most heavily-
traveled roadways at the most congested hours is no greater than if they chose other
routes or hours. There is, of course, a heavy cost in time, and this deters large numbers of
commuters from peak-hour travel. But a majority either can't or don't use such a strategy.

Along with time, there is a large but hidden economic cost. Randall Pozdena of Portland-
based ECONorthwest, is an expert on value pricing. In a 1995 study of roads in California,
he calculated that the 2 cents per mile drivers pay in user taxes is an overcharge of 100
percent on uncongested roads and an undercharge of 900 percent on congested roads. The
reason: pressure to incur the cost of adding new lanes and routes is directly related to
peak usage. Highways are expensive to build, yet gas and motor vehicle taxes are
unrelated to the routes and times people choose to drive. Flat-rate taxes don't reflect the
variable costs of these decisions.

Spreading rush-hour demand even slightly can have a dramatic impact. A decade ago,
traffic managers in the Los Angeles freeway "war room" estimated that a drop of less than
5 percent in peak volumes would restore speed-limit conditions at all hours. As delay
vanishes, so does the call for more capacity.

The cost-avoidance argument makes perhaps the most persuasive case for value pricing.
Costs come in various forms: pouring concrete, disrupting communities, and pollution
from traffic stalled in gridlock. To minimize these burdens, value pricing advocates say
we must change price signals to create incentives for conscious decisions by road users.

Pozdena says that the most sweeping approach is to replace current highway funding
with variable tolls on every piece of roadway. This is almost infeasible, so it is fortunate
that "fairly simple variable price structures result in the vast majority of efficiency gains."
Primary among these are congestion-based variable tolls on segments of roadway with the


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highest rush-hour use. Such tolls not only delay the need for new construction but
broaden the transportation funding base. This may be crucial at a time when gas tax
revenue growth is stalling due to fuel efficiency and could be wiped out entirely if
technology and legal mandates cause petroleum to be replaced by electric and fuel cell
power systems.


Passenger Mobility and Freight

Can jobs-housing balance and transit issues be solved absent the freight dimension?
Raycraft says, "Enhanced commuter mobility through transit benefits freight movement
by maximizing capacity. Ultimately there is no way to address the freight side without
addressing the passenger side." But he believes "the reverse - an exclusive emphasis on
transit - is possible."

Cal-Trans planning chief John Sollenberger questions the realism of those who claim that
transit and other passenger modes can be enhanced without considering freight mobility.
Even bus rapid transit (BRT), the currently favored approach, "can't really operate without
assessing freight impacts. There must be a multi-modal strategy, and MPO partners must
be willing to invest in freight mobility."

Michael Fischer of Cambridge Systematics notes that the I-580 corridor connecting San
Joaquin and Stanislaus counties to the Bay Area "has a huge truck traffic problem." To
relieve stress on I-580 and I-680, a freight shuttle has been proposed between the Port of
Oakland and intermodal facilities operated in the Valley by BNSF at Stockton and UP at
Lathrop.

Fischer notes that "strong population growth creates local issues - development conflicts
between residential areas and distribution centers serving trucks." Local governments are
concerned about the impact of truck volumes on congestion, air quality and pavement
maintenance, and they seek higher-level assistance to mitigate these impacts.

Heminger concedes, “Here in the Bay Area, it's transit that's the easy sell, and there's no
denying that our emphasis on freight has been inadequate. Notwithstanding MTC’s focus
on transit-related issues, we need to put more effort on the freight side of the equation.” A
major first step in that direction is the MTC’s recently released Bay Area Goods
Movement Study.

When ISTEA passed, MTC formed a freight mobility advisory council but has "had a
difficult time keeping people interested," notes Heminger. "Part of the problem was lack
of effort by MTC but part is the freight community's short time horizon and focus on
immediate results, which conflicts with planning and funding public investments." The
freight community gets frustrated with the political process because it takes time to


                                             77
accommodate interests, adds Heminger. "The challenge is how to providing clear
evidence of local benefit while making investments of regional and corridor significance."

FHWA freight policy chief Harry Caldwell confirms Heminger's perspective. Caldwell
cites three ways in which government and private sector perceptions diverge. First, as
supply chains get longer, the perspective of the private sector is increasingly global yet the
public perspective on transportation issues is increasingly local. Next, companies plan on
time frames as short as two years (example: Federal Express) while government planning
horizons range from six to 20 years. Finally, the corporate short-term focus on quarterly
profits fails to capture long term return-on-investment (ROI) essential to measure the
value of major public projects.

Peter Beaulieu of the Puget Sound Regional Council believes it is possible to make wise
investments even in the face of future unknowns. "Strategic choice theory says you can
build pieces that fit together yet are also free-standing." An example is grade separations,
the focus of FAST Phase I and Alameda Corridor-East. "By working at both the design
level and the conceptual level, we can 'jump' the entire rail right-of-way to meet today's
needs and allow for a third track in the future," says Beaulieu. "We need to serve both
options," he concludes, and adds that in an urban area where project "footprints" encroach
on each other, "it's important to look at the total landscape."


By Air and Amtrak

March 2002 saw the conclusion of a hard-fought battle over whether to build an
international airport at El Toro, California, on the site of a former Marine Corps Air Base.
Fierce opposition in South Orange County caused the federal government to decide
against protracted delay, and it closed off the airport option by announcing the pending
sale of the property for other uses.

"The end of (this) battle is likely to spur greater booms in Ontario, the nearby Inland
Empire, San Diego and perhaps neighboring Tijuana as well," observed Los Angeles Times
economics reporter James Flanigan. "It is hard to overstate the economic multiplier effect
of airports because they play such a central role in business travel, tourism (and) speeding
of cargo," Flanigan added.

Southern California regional council head Mark Pisano notes that the value of air freight
at major airports around the country now matches the cost of tickets purchased for
passenger travel. In his region, airport facilities add $120 billion on top of the $250 billion
in trade-related economic activity generated by the Ports of Los Angeles, Long Beach and
San Diego.




                                              78
Within hours of the El Toro decision, a group of public officials and business leaders met
to identify alternative airport capacity for future growth in the region, which is heavily
dependent on international trade and travel. "Their mission is critical," observed Flanigan.
"Failure will allow… other ports such as Seattle and Oakland to take away international
traffic and business."

Ironically, Puget Sound and the Bay Area are struggling with identical concerns. The three
Bay Area airports are operated by different authorities and coordination among them is
minimal. Cargo is as significant as passenger activity. Reconfiguration of San Francisco
International Airport with a third runway is needed to enable use of two runways in all
weather conditions. This expansion has been strongly resisted by local NIMBYs ("not in
my back yard"). Exactly the same situation exists at Seattle-Tacoma International Airport.

In the Bay Area, a large share of express air cargo volume is high-technology Silicon
Valley exports, yet there is local resistance to expanding cargo service at San Jose Airport.
This has led to talk of direct ferry service, not only for passengers but as a way to get air
cargo from Silicon Valley to the Oakland Airport where more air freight jobs would be
welcome. The Bay Area Council supports these initiatives. One concept is cargo shuttle
ferries that could be used by Fed Ex, DHL and UPS in connecting SFO and San Jose to
Oakland.

At Seattle-Tacoma International Airport, the Port of Seattle accumulated a plethora of
permits required from environmental and land use agencies for a third runway and is
now grinding its way through the appeals process. Port officials would undoubtedly
agree with the sentiments of the Alameda Corridor Authority's Chris Becker, who calls for
reforms. Specifically, a "non-challengeable" master use permit would be issued by a single
agency that weighs trade-offs among factors such as air and water quality, and
disturbance of toxic lands. At Sea-Tac, NIMBY opposition is strong, and talk is heard of
finding alternative sites for future expansion in airport capacity.

In Southern California, another probable impact of the no-go decision at El Toro is future
restrictions on commuter flights to Los Angeles International Airport (LAX) from Orange
and San Diego Counties, so larger aircraft and more long-distance routes can be
accommodated. Dampening intra-regional air travel will force dispersion of air cargo;
currently, 45 percent of San Diego's air freight moves through LAX.

Ontario International Airport is expected to receive greatly expanded passenger traffic
from Orange County. Ground transportation will be improved to serve this growth,
beginning with an off-site terminal to handle passengers, luggage check-in and security
inspections before making a bus trip to Ontario. A new master plan for LAX calls for a
similar off-site terminal east of the main airport.




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The absence of a go-ahead at El Toro carries land use and urban development impacts.
Growth will be boosted in the "western areas of the Inland Empire, near Ontario Airport,"
predicts regional economist John Husing. "This will bring companies and executives to the
area," he says, noting that high-end housing is already being built in the area to
accommodate home buyers driven to the Inland Empire by housing costs in Los Angeles
and Orange Counties.

As in the Bay Area and Central Puget Sound, airport planning is constrained by a host of
circumstances. Concentration of traffic at LAX has caused area residents to raise an
"environmental justice" issue that has been heard by elected officials. Ontario has much
growth potential but a cap has been imposed to meet air quality standards. Norton (San
Bernardino) and George (Mojave Desert) have capacity but are remote from most regional
population. John Wayne (Central Orange County) is already close to design capacity
while LAX was 50 percent over capacity for 2001 despite the impact of September 11.

Taking the train

Each trend in regional airport development - restrictions on commuter flights, off-site
terminals requiring ground transportation to airports, and shifts in urban growth patterns
- lend impetus to the emerging connection between airport strategy and passenger rail
service.

Even before September 11, 2001, the role of inter-city rail as an alternative to commuter air
was clear. Travel time between airports and downtowns, and processing time at airports,
had made passenger rail competitive to commuter air for trips of 300 miles or less. Today,
delay and inconvenience due to heightened security requirements plus the safety concerns
of some air travelers have extended the competitive range of inter-city rail service.

High-speed ground transportation (HSGT) may have even more potential. A variety of
technologies allows trains to travel at 150 - 300 miles per hour, twice to four times the
maximum speed currently allowed on most rail routes. A pilot project is 125 mph Acela
service on Amtrak in the Northeast. Still plagued by technical problems, Acela has yet to
show its full potential in winning customers away from the region's congested airport
system.

However, HSGT is proven and operational in Europe and Japan. Magnetic Levitation
(Mag-Lev) offers speeds in the 300 mph range. Mag-Lev has two technologies based on
opposite principles. One pushes the vehicle upward while the other lifts it from above.
The obstacles are weight, complexity, precision and cost, including electricity. The benefits
are speed, adaptability to frequent stops, and ability to handles grades up to 10 percent -
much greater than conventional rail.




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The other high-speed technology is TGV, developed in France and deployed widely in
Europe. TGV is conventional in utilizing steel wheels on steel rail but advanced in tilt
technology that allows curves to be taken much faster, offering overall speeds in the 150
mph range.

On the West Coast Corridor, HSGT has the potential to achieve two impacts that may be
beyond the ability of standard inter-city rail: linking dispersed population centers with
dense centers, and integrating remote, high-quality air transport facilities into regional
systems.

An example of the first impact is the Central Valley of California, which exceeds every
Western state except Washington in population yet is sufficiently dispersed that it lacks
major air hubs. High-speed inter-city rail to Southern California and the Bay Area may be
the key to serving the Valley's air travel needs.

The second potential impact is illustrated by Palmdale Airport in the Mojave Desert north
of Los Angeles, and Moses Lake Airport in central Washington State. Their remoteness is
balanced by first-rate runway capacity and established site location. Palmdale is owned by
the same Regional Airport Authority that operates LAX and Ontario. Supporters see it as
a third component of capacity that will eventually be required. Moses Lake has been
envisioned not only as a passenger facility but as a potential "back port" for Seattle and
Tacoma air freight, enabling planes delivering cargo from Asia to over-fly Puget Sound.

Despite existence of a state commission on high-speed rail, the outlook for HSGT in
California is not clear. A huge bond issue would be required at a time when both state and
federal resources are scarce and HSGT no longer has its leading proponent in Congress,
Senator Daniel Moynihan. USDOT is funding seven demonstration projects but none are
in California. Another inhibiting factor thus far is that Cal-Trans favors TGV while Mag-
Lev is preferred by SCAG. However, some HSGT experts believe both Mag-Lev and TGV
are overly "fined-tuned" and that high-speed rail technology in the American operating
environment needs wider tolerances so it is more robust.

HSGT routes that have gotten most attention in California are LAX to March Air Force
Base (Riverside), Los Angeles to Las Vegas, and Sacramento to San Diego. A future
linking of these lines could be done via I-15 with a connector to the Central Valley through
Mojave. "More should go to March Field," observes Frank Hotchkiss, former director of
strategic planning at SCAG. "This would bring the kind of jobs the Inland Empire wants,
and with HSGT up I-15, March could serve San Diego." Ultimately, Hotchkiss believes the
Las Vegas line could branch to Phoenix. Such possibilities may seem visionary, yet
Hotchkiss recalls the observation of Peter Hall, a global authority on metro area growth:
"All major changes in urban form have arisen from changes in transportation technology."




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A more immediate issue is full utilization of an existing resource, Amtrak. Supporters of a
national rail system point out that federal spending on roads and civil aviation dwarfs the
amount invested in passenger rail. In fiscal year 2000, some $33 billion was spent on
roads, $13 billion on aviation, and $521 million on Amtrak. The implied solution is to raise
support for Amtrak in order to ease or end its budget woes, which have arisen in
significant part from congressional insistence on maintaining a national system built
around long-haul, highly unprofitable routes.

Its chronic budget crisis has dominated news about Amtrak, obscuring the fact that
several successful routes serve West Coast segments including San Diego-Los Angeles,
Los Angeles-San Francisco and Portland-Seattle-Vancouver. Amtrak also runs 11 trains a
day between Sacramento and San Jose, with a stop in Oakland for transfers to San
Francisco.

From a West Coast perspective, elimination of Amtrak West as part of a 2002
reorganization was unfortunate. In the event of congressional de-funding of Amtrak, one
possibility would be to establish Amtrak West as a self-standing entity. Such an approach
has precedents. Jack Basso of the American Association of State Highway and
Transportation Officials (AASHTO) has proposed a National Transportation Finance
Corporation funded by tax credit bonds placed in a sinking fund to pay back project costs.
Bondholders would receive an offset against federal tax liability rather than interest. A
Mid-Atlantic rail group is seeking to set up regional programs from these sources.

A Chicago-based Midwest region, and the Northwest, are seen as other potential users of
this model. It could encourage USDOT to establish regional rail programs based in part on
principles of the Mid-Atlantic initiative. All the states in each region would be signatories
to a compact serving specific projects. This is a natural area of collaboration for members
of a West Coast Corridor System Coalition. A related concept is potential creation of a
West Coast Rail Corridor Corporation based on a dedicated freight fund that would
improve and expand freight trackage, an essential step in relieving conflicts between
passenger and freight rail. Harry Caldwell cites MAROPS, a joint effort of CSX and five
states on the I-95 corridor, as a potential model for the West Coast.


In summary

By serving the goals of mobility and access, transportation expands the available choices
of where people work and live, shop and play. One result is enormously complex travel
patterns. Another is powerful interaction between transportation, urban development and
land use.

Multi-modalism is as crucial to passenger movement as to freight policy. Bus and rail
transit systems may not end congestion but they support concentrations of employment.


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Inter-city passenger rail not only responds to capacity limits and security concerns related
to commuter air, it supports Smart Growth through dispersion - compact communities
separated by open space.

Value pricing - using incentives that reflect the true cost impact of individual decisions on
when and where people use the system - sends effective market signals that can relieve
and redistribute peak demand, creating major benefits in reducing and delaying
expensive and disruptive new construction.

Bottom line: In every mode of transport, it is more effective to address freight mobility
and personal travel as connected rather than separate issues, not as isolated projects but as
parts of a system that is integrated and seamless.




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                                       Conclusion


Along the Cascadia Corridor, a decade of cooperation and dialogue among transportation
policy-makers has demonstrated the benefits of sharing perspectives and best practices,
and the value of making common cause in presenting concerns and priorities. The range
and magnitude of issues along the West Coast Corridor System is even greater, since
spanning "B.C. to B.C. and beyond" triples the length of the 465-mile Cascadia Corridor.

How far can cooperation go? Given a realistic five-year timeframe, a West Coast Corridor
System Coalition can aim to achieve the following goals:

• Develop analytical tools that treat I-5, Highway 99 and related routes as a "Corridor
System of NAFTA Significance," a connected web of transport rather than as an isolated
series of segments and projects.

• Reach agreement on deployment of a Corridor ITS that would provide system
management to maximize capacity while supporting security requirements and incident
response to achieve "secured mobility."

• Develop a roster of "Projects of Corridor System Significance" and a time-phasing of
projects that could be endorsed by policy-makers along the Corridor. A starting point is
the approach taken in California's Global Gateways report. Rather than a priority project
list, the report presents a site-specific matrix of "system deficiencies" linked to
"improvement concepts" - investments that would remedy each deficiency.

• Achieve full coordination at the U.S.-Canada and U.S.-Mexico borders among regional,
provincial, state and federal officials in requesting federal support for staffing,
infrastructure, technology and procedures.

• Develop a shared "Gateway Strategy" among regional, provincial and state policy-
makers that treats West Coast ports as components of a unified system and equitably
balances the regional and national benefits and burdens of moving goods in global trade.

• Create a West Coast "Smart Growth Forum" that shares experiences and best practices
on interactions between transportation, land use and urban development, including the
roles of value pricing, transit, and passenger rail.

A West Coast Corridor System Coalition that addressed these issues would have the
capacity to develop priorities, make decisions, support investments, and move in
directions that enhance regional quality of life - while serving as a stronger, clearer voice
for the region at national, NAFTA and APEC levels.


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