The STB and Piggies

I’m a huge supporter of LA’s bid for the 2024 Summer Olympics. LA pulled off successful games in 1932 and 1984, with the latter doing so well that the profits still help pay for youth sports programs in the city. If any city has the business community savvy and public spirit to put the games back on the right track, it’s LA.

That said, the proposal to locate the Olympic Village at the site of UP’s Piggyback Yard on the east side of the LA River is a little puzzling. As far as I can tell, Piggyback Yard redevelopment plans are a solution in search of a problem – the city’s big thinkers seem to have an obsession with turning the site into something else. Many of the proposals call for large portions to be parks, despite the relative isolation of the site, surrounded by rail lines, the 5 freeway, and the 10 freeway.

The biggest concern about the Piggyback Yard should be that is an active freight rail yard. Since freight rail is more efficient than trucking, it’s a desirable regional goal to encourage the use of rail. Eliminating the facilities required for effective operation of freight rail is counterproductive. The Piggyback Yard would need to be replaced with a new facility or expanded existing facility elsewhere, the right-of-way for which is not available cheaply in a place like LA. The San Gabriel Valley is currently investing well over a billion dollars in improving the freight line east of here.

In addition, UP has not indicated any interest in selling the site, meaning the price offered would probably have to be very high relative to the cost of developing the Olympic Village at other nearby sites. Despite the expansive (and questionably reasoned) eminent domain powers granted to public entities by the Supreme Court in Kelo v New London, eminent domain is not an option for the Piggyback Yard, because the railroad can always appeal to the Surface Transportation Board (STB).

The who? The STB, which is the federal agency that exercises the federal government’s powers to regulate interstate commerce when it comes to railroads. The STB has the power to preempt any state or local eminent domain action to take railroad property at the railroad’s request, and it is often quite deferential to railroads on these issues. For example, the city of Lincoln, NE tried to use eminent domain to take a 20’ wide strip of a 100’ wide right-of-way from a short line railroad that serves only one customer, receiving only 50 car loads per year. The railroad protested, and the STB ruled in its favor, preempting the eminent domain action. When the city foolishly appealed to Court of Appeals, the court held that the STB did not act arbitrarily or capriciously, citing previous rulings that “it can never be stated with certainty at what time any particular part of a right of way may become necessary for railroad uses.”

Lest you think that this is another case of regulatory capture, consider the STB’s bureaucratic pedigree, having inherited its powers from the Interstate Commerce Commission (ICC). Before the Stearns Act, the ICC was notorious for forcing railroads to operate unprofitable branch lines, setting rates too low for lines to stay profitable, and denying railroad petitions to abandon lightly used branch lines. When you’re running a utility-type business, heavy regulation is going to be a fact of life.

The deference shown towards railroad property is a necessity, because railroads are a very peculiar type of interstate commerce. McDonald’s is certainly engaged in interstate commerce, but if a city takes a McDonald’s restaurant by eminent domain, it doesn’t impact the viability of the corporation. On the other hand, if a city takes a portion of railroad right-of-way, it very well may impair the ability of the railroad to continue its operations or expand them in the future, and that not a desirable societal outcome. For this reason, cities and states invariably work cooperatively with railroads to acquire property and relocate railroad facilities.

Now, if UP wants to sell the Piggyback Yard and move its operations elsewhere – for example, by expanding on-dock rail facilities at the ports and increasing utilization of the Alameda Corridor, or expanding operations in the IE and using natural gas or electric trucks to move freight there – I’d be all for that. The Piggyback Yard is a great site for housing development, close to downtown without displacing any affordable housing units. It may be that UP wants to sell but is keeping quiet to better play its cards.

However, if UP doesn’t want to sell, prudence dictates that other options for the Olympic Village be advanced so that the city’s plans are not at the railroad’s mercy.

Fortunately, there are several options around downtown that would also make appealing sites for the Olympic Village. There’s a lot of vacant land and parking lots in the Cornfield area, just east of the Chinatown Gold Line stop. There’s a gigantic mess of parking around Dodger Stadium, which would hugely benefit from having a new neighborhood around it. There are many parking lots between Union Station and Temple St, where downtown’s government employment district starts; developing those parking lots along with a couple overbuilds of the 101 between Hill and Los Angeles would be another major improvement.

LA 2024 is a great opportunity for us to show what kind of city LA can be, and leave a lasting positive legacy like 1932 and 1984. The long-desired urban redevelopment schemes of a few big thinkers shouldn’t be allowed to piggyback onto the games if they’re not the best option. While the Piggyback Yard might work out to be the best, we owe it to ourselves to keep other options on the table, and give ourselves the best chance for a successful games that we can.

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