Here’s Why I Oppose a New Inland Port Trans-loading Facility
There are major legal, regulatory, and geographical obstacles to the commercial success of this project that port officials have yet to address.
A “transloading facility” is a freight yard that moves shipping containers between trucks and trains. The Utah Inland Port Authority (UIPA) believes that it must build a new one for its inland port project to succeed.
The UIPA plans to expropriate Salt Lake City’s future tax revenue, which it will hand over to buyers of UIPA’s capital improvement bonds. It plans to issue bonds worth $150 million, repaid over 35 years from future city tax revenue, at interest rates as high as 8.5%. Total cost to taxpayers could reach $256 million.
It’s little wonder that UIPA may have to pay junk bond rates to finance its transloading facility. The UIPA has not made a concrete business case for it and apparently believes it doesn’t need to. Former UIPA board chairman Derek Miller explained that “we’re building the airplane as we fly it.”
In place of planning and modeling of key economic variables, UIPA offers the bond buyer only arm-waving generalities that blue financial skies for its project lie ahead. Even if the UIPA had done its homework, seeking to finance its project now is astonishingly premature for these reasons:
1. The Utah Supreme Court is still pondering whether UIPA can usurp Salt Lake City’s taxing authority without violating Utah’s constitution.
2. Union Pacific already has a transloading facility in the port area ready to double its throughput if demand warrants.
3. The transloading project can’t proceed without public hearings and permits issued by the Surface Transportation Board, the Federal Highway Administration, and, likely, the Army Corps of Engineers. A thorough environmental impact statement must be prepared before these hearings are held. The analyses and approvals needed require years of advance planning. The UIPA has not shown that it is even aware of these requirements, let alone planning to meet them.
4. Salt Lake County is an EPA “nonattainment area” for ozone and PM2.5 pollution. These air quality standards are obsolete, and likely to be tightened by the Biden administration. With full buildout, the new transloading facility could generate 70,000 new diesel truck trips per day, further fouling our airshed. The UIPA may be told to devise major pollution mitigation measures to obtain a “nonattainment new source review” permit from the EPA before building its transloading facility.
5. Currently, diesel trucks haul freight for 12 cents per ton-mile on average, compared to 4 cents for rail. Some industry analysts predict that within five years, autonomously driven electric semis will carry long-haul freight at 3 cents per ton-mile. If this happens, with a 25% cost advantage, autonomous trucks will quickly capture the market for long haul freight, which would end the need to transload containers to rail.
6. Transpacific shipping is dominated by three large consortiums. They keep contractual control over both the sea and land segments of their container movements. They avoid using West Coast seaports that divert freight through dry ports that are more than 200 miles from their parent seaport. This keeps to a minimum both their costs and their container turnaround times. Following current industry practice, these consortiums would not send containers through Utah’s port which is over 600 miles from the California seaports on which it depends.
7. Successful dry ports need a large import market, with at least 10 million consumers within a 300-mile radius. Utah’s import market is barely one third that size. Successful dry ports also need substantial export volumes, such as agricultural, mineral, or industrial products. Utah has only two bulk products of potential interest to Asia — coal and alfalfa.
No West Coast seaport will accept coal. Alfalfa cultivation uses half of the West’s water supply — most going to feed cattle in China. Our climate scientists predict that the mega drought gripping the American West is here for the long term. Expanding the alfalfa trade now would be as foolish as hitting ourselves in the head with a hammer.
There are major legal, regulatory, and geographical obstacles to the commercial success of UIPA’s transloading facility that the UIPA has yet to address — including the chance that it will not be needed soon after it is built. If the UIPA prematurely bets hundreds of millions of future tax dollars on a soon-to-be-obsolete transloading facility, taxpayers will be left holding a very expensive bag.
Malin Moench is a volunteer with the Stop the Polluting Port Coalition.
UPHE in the News:
Deseret News, October 5, 2021