April 30, 2004 - From the April, 2004 issue

Port Of Long Beach's John Hancock On Balancing Economy & Environment

As recent census figures show, Los Angeles County remains the most populated county in the nation, and will grow dramatically over the next twenty years. At the same time, the amount of cargo moving through the Ports of Los Angeles and Long Beach is also increasing dramatically. The result is a severe conflict between residents of the South Bay and Port operators and tenants over traffic congestion and air pollution. MIR is pleased to present this interview with John Hancock, President of the Long Beach Board of Harbor Commissioners, in which he discusses regulatory pressures on the Port's operation, the possibility of a Liquid Natural Gas terminal in the harbor, and the advantages of having two of the world's largest ports in the same bay.

John Hancock

Both Long Beach and Los Angeles have entrusted civic leaders with authority to manage, as well as to mitigate, the impacts of their world class harbor operations. As President of Long Beach's Board of Harbor Commisioners, how is your commission attempting to balance economic development with increasing demands by residents for environmental mitigation?

You mention the fact that both Los Angeles and Long Beach do have independent boards of harbor commissioners that are mayoral appointees. And, in the case of Long Beach, these mayoral appointees operate fairly autonomously. It's been that way for many years. The Commission was established that way to make sure that the operation and the administration of the Port was done in a business-related manner, minimizing to the extent reasonable the influence of politics in the process. It's been run that way for years, and most people would agree it's been a successful model.

Obviously, the increasing effect of population, both in Los Angeles and Long Beach, is nothing new. In Long Beach, we're fortunate in a way in that we don't have a port operating next door to residential communities. Our port is located essentially on Terminal Island and adjacent to the west of downtown Long Beach, where there isn't any housing or residential area near it. Notwithstanding that, there are two major issues from operation of the port that do involve the population of Long Beach and the region, and that's the movement of goods (i.e. traffic), and the environment.

Let's begin with traffic. How is the L.B. Board of Harbor Commissioners coping with the exponential growth in goods movement and traffic near the port?

This has been a challenge, as everybody well knows, for a number of years. The 710 freeway was built about 50 years ago and, while it has been expanded and modernized to some degree, it's a woefully inadequate freeway infrastructure to handle the goods movement in and out of Long Beach. We are all in total agreement on that and have, for several years, looked back to how the port has endeavored to deal with the growth that occurred and demands upon the 710 freeway.

You can look at the Alameda Corridor-its concept, its creation, and its implementation-over the past many years, designed to get trucks off of the freeway and onto rail where it doesn't impinge on highway traffic. The Alameda Corridor's below-grade construction doesn't impact cross traffic on the streets intersecting the Alameda Corridor route. We will continue to endeavor to get more and more usage on rail to reduce the impact on local freeways and surface streets. In addition to increasing utilization of the Alameda Corridor, we also will continue to emphasize on-dock rail and the movement of goods in the Southern California area, not merely across the country.

Now, most of the goods that come through the port and are destined to stay in Southern California are going to be handled on truck. We have a substantial requirement for growth that will take place. As a result, we have been working for many years to get the national and the state government to support meaningful improvements in the freeway infrastructure. The ports do not build freeways. Our key objective has been, at least in the case of Long Beach, to make sure that the political entities, be they the federal or state departments of transportation, understand the economic significance of these freeways and the need to invest in that infrastructure.

With a tripling of tonnage coming into our ports over the next two decades projected, is there a realistic possibility that the Long Beach Freeway will be expanded or improved to accommodate the predicted exponential growth in goods movement?

There was a plan put forward recently by the Gateway Cities Partnership recommending specific improvements to the Long Beach Freeway. It did involve some taking of housing and the plan was met with substantial resistance. They went back to the drawing board and developed a plan that has more community buy-in and that will facilitate some expansion of freeway capacity without taking homes. I believe that the responsible agencies will agree on a plan to be forwarded to Washington and Sacramento for funding consideration.

Let's turn now to the issue of the environment and the legislation being advanced in the Assembly by Alan Lowenthal. Address the issues related to air quality and traffic being addressed by his bills, and how the Port of Long Beach in responding to the challenge of more government regulation?

We're all in agreement that we want to achieve an increased efficiency in the movement of trucks coming in and out of the port property. Alan put forward a truck queuing bill about a year ago that has had a significant impact on the terminal operators. Our objective today is endeavoring to get more trucks coming in and out of the port, and thus on our freeways, during non-peak hours. We're all for a plan that will incentivize trucks to move goods in off-peak hours, but that requires cooperation from the terminal operators, from labor and from the shippers. The terminals as well as the warehouses have got to be open at those off-peak hours in order to provide a destination for those trucks at night or on weekends. Without all parties cooperating, we could end up with trucks coming at night and idling in neighborhoods waiting for warehouses to open.

The Harbor Commission firmly believes in using our infrastructure more efficiently and reducing the negative environmental impacts on our freeways. However, Assemblyman Lowenthal has adopted an approach with which we don't totally concur. Nevertheless, we're seeing come significant movement by the industry-terminal operators, truckers and shippers-to implement some type of a plan that will have an economic disincentive to move goods through the peak hours of the day and that will help subsidize goods being moved in off-peak hours. We're not looking for business to be legislated. We're looking for appropriate incentives to get the industry to move on this. And, I think that will be accomplished


Having said all of that, we have not taken a position on Alan's bills. We do have reservations about certain aspects of them. We're not looking for increased legislation on how the ports are run and operated. When we're dealing with a problem, be it air quality or traffic, we try very hard to achieve movement by the interested parties without legislation.

What's the potential, moving to a new issue, for an LNG conversion facility being located in the Long Beach Harbor? FERC claimed exclusive jurisdiction over an application by Mitsubishi Corporation to build such a LNG facility on Terminal Island. We know local civic leaders and the California Public Utilities Commission have challenged FERC's authority. What's the position of Long Beach's Harbor Commission re this dispute? And, is your commission in favor of such a facility in Long Beach?

I don't want to speak for city leaders, but we at the Port believe this could be an extremely additive and beneficial new resource and asset to the state of California and to this region. The construction of an LNG conversion facility in Long Beach will enable the importation of another alternative, cleaner fuel into the region. We have negotiated with Mitsubishi and Sound Energy Solutions regarding the construction of this facility, offering them a first right of negotiation if the project can meet the various environmental hurdles involved.

It's going to have to meet all of the hurdles that might otherwise exist for any new facility of this type. We're not taking sides on who has jurisdiction on it. It isn't going to happen unless the Port agrees to it, but the Port isn't going to be the one to make a judgment on the environmental feasibility. Right now, it is unclear whether that responsibility lies with FERC or the state. My judgment is that it is likely to involve regulators at both the federal and state level-I don't think anybody has exclusive jurisdiction. Without the support of both parties, the project will face significant, and perhaps insurmountable, challenges.

How signficant is the need for a local LNG conversion facility?

I'm not a technical expert on LNG, but my understanding is that it's a cleaner burning and more environmentally friendly fuel. Japan, for example, has had 20 or 25 LNG facilities in Japan, several of which are in Tokyo Bay. We keep talking about alternative fuels and my understanding is that this technology carries less risk than other potential fuel solutions. We're not the resource for LNG coming out of the ground-it's going to be shipped here from abroad. It's just a cleaner more diversified alternative fuel. And at this point, the economics are probably stronger for natural gas than they are for diesel.

Let's turn to electrification of Harbor facilities, an issue that's also being addressed by the City of Los Angeles and their Harbor Commision. What is Long Beach's preferred approach to requiring cold ironing?

We have taken note of the fact that L.A.'s cold ironing project at the China Shipping facility has faced some challenges in implementation. Nevertheless, the obligation exists for us and Los Angeles to take a good look at how to make cold ironing, or shore side power, work and be economically viable. We don't think it's a full solution to dealing with the environment, but it's one we have been committed to studying. We just completed a consultant study by Environ that has put forward recommendations on the viability and economics of the concept. The next step is to determine if we currently have a customer or customers that could take advantage of the program and make the investment viable for both the port and the shipping line. The cost-benefit trade-off of investing $2 million to convert a ship would not work out favorably if that ship docks here twice a year and doesn't go anywhere else where cold ironing is possible. But we do think there are some ships that return to our port enough to make the investment viable. Of course, we can't speak on behalf of the shipping lines in that regard, our objective is to identify partners in this effort.

The other side of this equation is how we obtain the power from the local sources. We have an ongoing discussion with regard to how the power is provided by Southern California Edison. We are discussing this with them on this while we continue to examine other fuel-related alternatives that can complement cold ironing to help improve air quality around the port.

Final Question. What, if any, are the advantages of having two world class, municipally owned ports side by side in metro Los Angeles?

Both these cities have very natural shipping facilities and locations. They've grown up with two ports. The ports both have grown very successfully and will continue to do so as major economic drivers for both the local community and the Southern California market. Could you have one if you started all over? Maybe. But we've had these two separate ports for years. I don't see either one of the cities or the state wanting to change that. Having these two ports in the region does bring significant competition to the marketplace and benefits all parties in the equation. These are well regulated and well managed organizations for the benefit of the cities of L.A. and Long Beach and for the regional economy. And, we are committed to responsibly growing and operating these ports with as much sensitivity to the surrounding communities as possible.


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