California, U.S. Department of Transportation Announce Partnership on Supply Chain Infrastructure Program to Create Long-Term Stability

Innovative federal-state partnership to identify potentially billions in financing for infrastructure projects that create sustainable solutions for goods movement chain

SACRAMENTO – On the heels of Governor Gavin Newsom’s executive order to help tackle supply chain issues, and as part of the ongoing efforts of the Biden-Harris Task Force on Supply Chain Disruptions, Governor Newsom and the U.S. Department of Transportation (USDOT) announced a strategic partnership to help facilitate innovative projects and financing opportunities for multi-billion infrastructure improvements in California.

Today’s agreement allows California to expedite work on a network of related projects – rather than using a piecemeal approach – that collectively will help grow the economy, protect the environment, facilitate the movement of imports and exports, and bring supply chain processes into the 21st century to create resilience throughout the critical trade corridors of California and the U.S., including around San Pedro Bay and the Inland Empire.

“California’s ports and infrastructure system is key to the country’s supply chain. Thanks to our collaboration with the Biden-Harris Administration, this innovative federal-state partnership will help us fast-track those projects that will make our ports and infrastructure even more efficient,” said Governor Newsom. “This partnership will help us jumpstart and support multiple infrastructure projects to improve our supply chain, making sure goods get to where they need to go faster, cheaper, and in a more environmentally-friendly manner.”

This partnership can help kick-start construction to deliver benefits to the transportation supply chain and U.S. consumers in the future. Projects that could receive support through this agreement include:

  • Port-specific upgrades;
  • Expanding capacity for freight rail;
  • Developing inland port facilities for increased warehouse storage;
  • Railyard and truck electrification;
  • Highway upgrades to improve truck travel times;
  • Grade-separated crossings to reduce the number of rail-street intersections and improve safety and efficiency;
  • Land ports of entry to expand trade capacity and cross-border commerce;
  • Other eligible projects of critical importance identified by the California State Transportation Agency (CalSTA).

Under the Emerging Projects Agreement, the Build America Bureau at USDOT will support CalSTA in developing California infrastructure projects designed to improve the capacity and resiliency of the goods movement chain and will assist project sponsors in exploring innovative financing opportunities for billions in infrastructure investment, in part through the USDOT credit assistance programs Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation and Improvement Financing (RRIF).

“Our supply chains are being put to the test, with unprecedented consumer demand and pandemic-driven disruptions combining with the results of decades-long underinvestment in our infrastructure. That’s why this administration is working around the clock to address both near-term and long-term challenges to our supply chains, including investments such as those in the bipartisan infrastructure deal,” said U.S. Transportation Secretary Pete Buttigieg. “Today’s announcement marks an innovative partnership with California that will help modernize our infrastructure, confront climate change, speed the movement of goods and grow our economy.”

In tandem with these longer-term solutions, the State of California and the Biden-Harris Administration are actively working on short-term solutions to address bottlenecks. Last week, Governor Newsom issued an executive order that directs state agencies to help identify additional ways to alleviate congestion at California ports, building on earlier efforts this year by CalSTA and the Governor’s Office of Business and Economic Development (GO-Biz) to ease supply chain issues by engaging with supply chain stakeholders on key challenges and identifying short-term and long-term solutions.

The Biden-Harris Task Force is working with private companies from across the supply chain to expand supply chain operations to 24 hours a day, 7 days a week, and helping them to make faster handoffs to each other. So far, both the ports of Los Angeles and Long Beach, the ILWU, Union Pacific Railroad and retailers, including Walmart, Target, FedEx, UPS, and The Home Depot, have committed to expanding hours. Further, USDOT is working with local and state DMVs to cut bureaucratic red tape and make it easier for truck drivers to obtain commercial driver’s licenses (CDL) – this has already proven successful as DMVs are issuing 60 percent more CDLs this year compared to last.

“The COVID-19 pandemic put a spotlight on California’s ports and the importance of our state’s infrastructure in moving goods throughout the U.S. and around the world,” CalSTA Secretary David S. Kim said. “Today’s agreement will go a long way toward quickly upgrading infrastructure to support a more efficient and resilient supply chain that will flex California’s power in global trade. I am proud to work with the Biden-Harris Administration on long-term solutions to enhance California’s infrastructure and strengthen resilience throughout the supply chain.”

“The Emerging Projects Agreement today provides the State of California with a foundation to build a comprehensive program of public and public-private projects that will help build a stronger, more resilient goods movement chain that grows the economy by exporting and importing more goods,” said the Administration’s Port Envoy John D. Porcari. “With today’s agreement, we will create an innovative federal-state partnership that will serve as a model for other states.”

“Having our federal and state transportation agencies working in unison to help fund infrastructure is exactly what we need,” said Port of Los Angeles Executive Director Gene Seroka. “We have projects in need of funding that will reduce cargo delays, improve efficiency, reduce emissions and improve safety for waterfront workers and motorists throughout the region.”

“This federal-state partnership will ensure the creation of local infrastructure projects aimed at improving freight movement between the San Pedro Bay ports complex and distribution centers in the Inland Empire,” said Port of Long Beach Executive Director Mario Cordero. “This plan builds on our ongoing efforts to identify immediate and long-term solutions that will expedite cargo shipments and address an historic cargo surge and forecasted cargo growth.”

Both the State of California and USDOT have made clear that infrastructure projects must be considered based on their potential for strengthening supply chain resilience and in a manner that addresses equity and environmental justice. California’s recently enacted budget includes $250 million for ports, $280 million for infrastructure projects at and around the Port of Oakland, and $1.3 billion over three years for zero-emission trucks, transit buses and school buses, including the deployment of more than 1,000 zero-emission port drayage trucks.