Joint House Transportation and House International Relations & Economic Development – February 21, 2020

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The House Committee on International Relations & Economic Development and the Committee on Transportation met in a joint hearing on February 21, 2020 to discuss Texas’ seaport and land port infrastructure, as well as auxiliary rail and roadway needs, feasibility and economic impact of dredging and widening Texas ports, and potential impediments to international trade.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing, but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

Opening Statements

Chair Canales – Recognizes that Texas ports, terrestrial and aquatic, are underfunded and overlooked but paramount to Texas’ economic growth
- Highlights Mexico as Texas’ greatest economic partner
Chair Anchia – Has only doubled down on NAFTA for the benefit of Texas
- Laredo has seen substantial growth as a response to its international trade
Chair Anchia – Highlights again that Mexico is Texas’ greatest economic partner
Rep. Raymond – Thanks and provides several anecdotes about the attendees

Panel 1

Dr Pablo Arenaz, President of Texas A&M International University

Refers to the university being in the largest inland port in the Western Hemisphere (Laredo)
Shows promotional video for TAMIU
Believes TAMIU is responsible for much of the development in Laredo
- High student reattendance rates
- Very low student debt rates among Texas universities
- Ranks in top 10 of upward mobility
- Median income in Laredo has increased

Alberto Torres Jr., City of Laredo City Council

Port Laredo is the largest inland port in the US and second largest by productivity
In 2019 the port brought in $232 billion and imported more than $3.8 billion in produce from Mexico; Mission Produce to build new storage facility in Laredo
The World Trade Bridge and the Port are moving forward with their “fast lanes” initiatives
- Initiatives aim to increase fluidity of traffic
Laredo’s airport is one of the only in the US that shares customs responsibilities with Mexico
In 2019 air cargo weight totaled over 685 million pounds
- Exports to 67 countries and imports from 35
Laredo one of the most congested cities in the US; resulting in infrastructure issues, high unemployment and poverty
The Senate’s passage of the USMCA Trade Agreement is good news for Laredo
- Implementation of this trade deal with Mexico and Canada projected to create new jobs and opportunities in Laredo and the southern Texas region
- Should encourage the connection of more markets to grow trade

Kirby Snideman, Laredo Metropolitan Planning Organization

Statewide funding formulas should be redeveloped to account for transportation demands
Would like the committee to consider the creation of a subcommittee to calculate new formulas
The port’s northbound entry saw 5 million cars with 11 million passengers, over 3.7 million pedestrians and over 2 million commercial trucks
US trade with China is roughly on par with US trade with Mexico
Laredo receives most of the trading traffic between the US and Mexico
Transportation and infrastructure investments are required to sustain Laredo
Current investment calculations focus on population sizes, so Laredo does not receive enough transportation funding
Laredo has the wear and tear on infrastructure like San Antonio, but funding does not match
Chair Canales – Laredo ports are disproportionality used, Laredo disproportionality contributes positively to the Texas economy and receives funding disproportionate to its benefit to the state, is this correct?
- Yes

Gerald Schwebel, Self; NASCO, I –69 Alliance of Texas, & IBC Bank

Texas ports, including Laredo’s, are of national and international significance
In 2018 total trade through Texas ports valued at $791 billion; 54% via Texas/Mexico ports
Infrastructure in Laredo is lagging trade and commercial traffic
Four major bridges in Laredo used for trade; a fifth bridge being planned
2040 projections see 21,900 commercial trucks travelling northbound and 17,700 travelling southbound via these bridges; and an increase in Laredo’s population
Laredo received $220 million in funding to connect the city to several major highways and FMs
60% of the vehicles moving through Laredo’s major roadways are commercial trucks
Prior to NAFTA, unemployment rates in the border region were 17%
- Now they are 5% in Texas and 3% in Mexico
Need to discuss outliers such as adequate staffing, threats of border shutdowns and non-tariff barriers disguised as trade suspension agreements
To ensure success of USMCA, Texas must work with the Texas Association of Business and the Texas Mexico Trade Coalition to continuously monitor and follow-up
Rep. Frullo – Could you repeat the numbers for northbound and southbound traffic?
- 21,800 northbound and 17,700 southbound via the bridges
Rep. Frullo – Where is the difference in those numbers coming from?
- Projections based upon expected new trade from Mexico and Canada
- Raw materials are southbound and finished/assembled products are northbound
- Snideman – This port is concentrated for northbound trade that is disbursed throughout the country; traffic finds its way back to other ports
With the new I –27 corridor, we are expecting to see oil and gas transportation through Laredo
Chair Anchia – Mr. Snideman, what could make the current system more efficient? If we were able to increase funding, is the scope of magnitude?
- Snideman – Difficult questions to answer; currently a master plan is being designed for the bridge system that would answer those
- Increasing infrastructure funding would increase the capacity of the transportation system and would decrease wait times for shipping
- There is a shift in manufacturing preference to Mexico over China due to shipping speed
Chair Canales – Waiting costs money for businesses; due to finite funding issues, would a toll road be preferable? Need to convince the legislature they would be getting a return on investment
- Schwebel – Many different studies done to look at border wait times and different models; although Laredo does not get fair share, not a fan of user fees
Chair Canales – Reiterates, how do we show the legislature they will get an ROI?
- Schwebel – The border region is historically underfunded in Texas
  - Need to allocate federal funds coming through the state
  - Land ports are where the bulk of revenue is coming from
Chair Anchia – Do not have a number for a possible ROI, but have date for the lost output
- 2008 study shows wait times costing the US $116 million and 26,000 jobs
- Would be a huge tax cut and economy boost if to invest in infrastructure in this region
Snideman – Reiterates time sensitivity is extremely important in shipping and commerce
- Need to update the studies that have been done

Panel 2

Caroline Mays, Texas Department of Transportation

Testimony will focus more on border wide trade rather than just Laredo
Texas hosts 64% of the US Mexico border with nearly 30 trade ports to Mexico
Population along the border has grown by 67% in and 72% in Mexico side since 1990
Unemployment has decreased, but income is growing at a slower rate than the national level
Rate of people living below poverty line is high compared to national average
Truck and rail dominate north and southbound trade percentages
- Energy trade through pipeline, while smaller, is the fastest growing with 97% of pipeline trade moving southbound
Number of northbound trains and trucks have increased 53since 1996
Staggering decline in movement of people across the border due to wait times, economic improvements in Mexico and a shift towards flight travel to the US
Currently working on the Texas-Mexico Border Transportation Master Plan
- Will address border transportation issues, needs and opportunities to move people and goods across the border, border regions and beyond
- Will specifically look at border wait time and what it costs
- CVP has identified a $5 billion shortfall modernize port of entry and expansion
- Final approval by BTAC and submission to the TTC anticipated late 2020
TxDOT is focusing on road safety and prevention of traffic fatalities
Rep. Canales – TxDOT has held a meeting with several Mexican officials, were you at that meeting?
- Yes, as part of the Border Transportation Masterplan we have held three meetings to discuss these issues
Chair Canales – Are Mexican officials just trying the get their trucks across as fast as possible?
- Yes, many trucks come to Laredo to avoid the wait times associated with double and triple inspections in other border cities
Chair Canales – Trucks will go with whoever can get them across the fastest?
- Yes, in the trucking industry, time is money
Chair Canales – Wherever infrastructure is invested in, is going to relive truck traffic?
- Yes; northbound traffic-heavy roads are a part of that system as well (I-35, 69, etc.)
Chair Anchia – Cites Mays as a resource for institutional knowledge;
- In past hearings we have met with manufacturers and time is an important variable
- Laredo competes not only with other entry ports in the US, but internationally
- The US benefits from Laredo’s strategic trading value
Rep. Goldman – Echoes Mays is a valuable resource; how many south to north truck crossings?
- A large proportion of trucks are entering through the entry port cities like Laredo
Rep. Goldman – We can say that we have about 20,000 trucks each day moving north?
- Yes
Rep. Goldman – Do we know where these trucks are going?
- All over the US and Canada
Rep. Goldman – What is the benefit to Texas if these trucks are using and damaging our highways to get through to somewhere else?
- Over 380,000 jobs exist across the state directly due to trade with Mexico
Rep. Goldman – How does the shipment of goods outside the state create jobs in Texas?
- 70% of the trucks moving through Texas stay in Texas (destination is Dallas)
- Much of what is being brought to Texas is also consumed here in Texas
- Most of the cargo being shipped through Texas to other states is via rail

Federico Schaffler, Self; Texas A&M International University

NAFTA was good for Texas overall; particularly Laredo and the border region
- Seen development of the economic markets in this region
High strain on the infrastructure of ports of entry and throughout the state
USMCA has been an improvement and brings relief for the people of Texas and investors
- Will stabilize some jobs lost, but will not account for jobs lost to robotics and technology
Public/private sectors of Texas and Mexico need to work together to increase competitiveness
As a result of USMCA, the North American Development Bank will have more funds to protect the environment for infrastructure and to improve quality of life along the border
The following are recommendations from TAMIU, NASCO and other stakeholders
Work with Mexican transportation services to increase fast authorized drivers to expedite trade
Establish a pilot program to help pinpoint transit times round-trip
Provide a map for companies to see transit times from origin to destination
Establish a website to host information that might be needed for transporting goods
Establish a long-term plan to ensure funding and community engagement to completion
Work with logistics and transportation organizations to increase the users of automated toll payment; this is already being done at many points
Establish a point-based system for traffic violations to reduce cargo delays
Reduce the use non-intrusive technologies; consider changing lanes at border crossings
Install RFID readers at crossing points and in surrounding areas
Increase communication on both sides of the border so there is a common base of knowledge
References slides that compare Texas’ imports and exports with all the countries in the world
Rep. Larson – What is the investment being made by Mexico on their side of the border?
- Mays – In some instances, Mexico’s side is far superior as far as infrastructure; Mexico’s northern border is important to them and is controlled on a federal level
Rep. Larson – Need to make sure there is not an inequity from one side to another
- Mays – We can get this information when we document the investments from their side
- Schaffler – Mexico is investing $45 billion in their northern border
Chair Canales – Does Mexico acknowledge the importance of infrastructure on the US Mexico border?
- Mays – Yes, Mexico understands and is taking action to back that up; the issue is with the northbound lanes; congestion on the US side is affecting the Mexico side
Rep. Larson – Need to make strategic investments on our side to help facilitate flow through
Rep. Leman – What are our federal partners willing to do to relive this issue as a result of USMCA?
- Mays – Have worked with GSA to build physical infrastructure and CBP to manage operations (for freight and trucking FMCSA inspecting)
  - Challenges come from some of the border crossings being outdated or overcapacity; CBP has a $5 billion need to modernize
  - TxDOT has no say what happens inside the CBP compounds
Rep. Larson – If state funding issues were addressed, but the federal issues remained, would the problems get solved?
- Mays – Solving the state issues will relieve pressure overall but there would still be work to be done
Chair Canales – Couldn’t state of Texas appropriate funding for Laredo to invest in bridges?
- Mays – speaking from a TxDOT perspective, I am not qualified to answer that
Chair Canales – I know because in the past I have seen appropriation for certain things so I wouldn’t say that Texas legislators’ hands are tied
Rep. Romero – The lack of traffic southbound, is that because of a lack of security when entering Mexico? Is there an analysis of what amount of trucks per minute CBP facilities would have to be able to handle?
- Mays – First question, Mexico does inspect their vehicles, but they are often empty and have different requirements for empty trucks
  - Second question, CBP has comprehensive information for what amount they are expecting and what they can handle; the issue is with different trucks requiring different levels of inspection
  - The fast lanes may be able to calculate a rate of capacity
- Schaffler – Regarding the trucks moving quickly south through Mexico, trucks pass through x-rays and only stop if they must

Rafael Aldrete, Texas A&M Transportation Institute

Increasing trade means increasing congestion
Movement across the border is difficult due to lack of real time information
Has developed a prototype that would allow real time estimates of border crossing wait times
Already a system in place that estimates travel times across the border, but you must be in the queue to use the system
Wi-Fi and cellular tracking could be used for personal vehicles while RFID information could be used by commercial vehicles for tracking
AI may be required to create a comprehensive forecast of border crossing times
Research shows that using Bluetooth, RFID, and AI produce a highly comprehensive estimate
- Google Maps and Wayze are not accurate in estimating cross border travel times
A formal study has not yet been conducted to verify the influence of border crossing wait times on routing decisions, but these technologies would allow for greater use of infrastructure
Chair Anchia – How would a rollout of the pilot occur, is there an optimal port of entry to pilot, what is the cost of the pilot, and what are the aggregate potential benefit of the deployment?
- El Paso border crossing facility has the largest deployment of these technologies
- The only crossing in which these technologies are available for passenger vehicles; all the freight crossings are covered with the RFID system
- Freight sensor in use at the Bridge of the Americas
Chair Anchia – How long would you need to generate reliable data in order to report back to us?
- Two years for testing and finishing development along with some time to access the hardware needs of the areas we would implement these technologies in
- 2019 figures estimate $3 million for the pilot and $700,000 a year for operation
Chair Anchia – So about $5 million dollars five years in?
- $6 million
Chair Anchia – We would have a report back for the legislature by 2025?
- Yes
Chair Anchia – If deployed, is there a projection for the improvement of wait times?
- Not yet
Chair Canales – Technological infrastructure could decrease wait times?
- Yes, if that information is communicated to the public in real time
Chair Canales – Could the state invest in technological infrastructure rather than solely physical?
- Yes; would increase border security

Jeff Moseley, Self; Texas Association of Business

Congestion is the center of this conversation as Texas is growing rapidly
700,000 Texans have jobs thanks to the trade relationship with Mexico
TxDOT budget has increased to about $32 billion
Congestion is an issue for the growth of Texas; most congestion is seen in Dallas and Houston
Issues arise from the non-toll environment
Private sector should be allowed to engage; would relieve burden of funding from the state
- Need state-directed private investment
The average commuter spends an extra $1K due to traffic; funding gap to fix I-35 is $27 billion
Should modernize roads and embrace technology
Rep. Larson – References Maquiladoras in Mexico, has an assessment been done concerning American investment made within 60 miles of the border?
- Could get you updated information, not the best resource to answer that
Chair Canales – A lot of American investment in Mexican labor through the Maquiladoras; inefficiencies hurt the US
- Schaffler – Many customs brokers from Mexico work and invest in the US
Rep. Krause – Any ideas on how to handle the congestion along the border and the rest of the state?
Private investment would help fund these “megaprojects” on a locally approved basis
- Private investment would allow the state to reserve and better allocate funds
Rep. Ortega – Could you be more specific about private investment in these projects?
- Have used private investment before; with that model, it would be faster to complete projects; local communities should have that option
  - Could be done be through the creation of toll roads and additions of free lanes

Panel 3

Pete Saenz, Mayor of Laredo

Laredo is the 10^th largest city in Texas by population but second most active port in the nation
$232 billion in value in Laredo; billions more than Houston
About 16,000 trucks, 200 tour buses, 25 soon-to-be-40 trains, thousands of cars a day
Mentions Mission Produce’s plan to build a storage facility in Laredo
Laredo’s port-status has been a factor in increasing median household income by 20%
Congestion is an issue; too many trucks, but is a part of the economy
Improved on poverty, but it prevails
TxDOT’s $220 million is a down payment on the work that needs to be done
Need to expand Loop 20, I-69, I-35 and I-27
Products need to move through ports to consumers; may lead to better prices

Sam Vale, Starr Camargo Bridge Co. and Border Trade Alliance

Are a privately owned bridge; make all investments and lease facilities to the government
Cities and counties primary owners because they do not have to pay taxes
Mentions Mays, Schwebel, Mosely and Lagos and appreciates their work
All districts are affected by international trade
Worried about more than just north/south traffic; many ports of entry on the border
Need a more efficient border infrastructure to move goods nationally and internationally
In discussion with the federal government; should do unified cargo processing
Ports in the future should be one border, one port
CBP command centers should be shared on both sides of the border
Need efficient, lawful trade; mentions US laws help Mexico prevent migrant crisis?
Believes the USMCA will provide billions in revenue
Need healthy competition; mentions Florida attempting to put in place a seasonality rule
Cannot maintain workforce without investments in transportation infrastructure
TxDPS could use more resources; concerning safety
Ask that you give more funding to Texas

Ernesto Gaytan, Self

Owner of a heavy haul transportation company with 5 locations in US and presence in Mexico
President of the Laredo Motor carriage Association
Treasurer of the Texas Trucking Association
Member American Trucking Association
Trucking is Industry is essential to local, state and national economy
- Is the bridge between US and Mexico
Equal local and out-of-state trucking companies with terminals in Laredo
- Companies like J.B. Hunt, Swift, Warner, FedEx, UPS and more
- References Goldman’s question from earlier, local presence creates jobs in Texas
Many communities depend on trucking to move their goods
Trade between US, Mexico and Canada employs 90,000 in the trucking industry – 60,000 are US truckers
Many other jobs in the border region are created by trucking
CBP estimates border crossings will increase 40% in the next five years
International Trade Commission estimates USMCA will increase economic growth by 68.1 billion
- Will result in 175,700 additional US jobs
Current infrastructure does not support this growth; current gridlock causes problems and longer wait times; can increase cost of transportation which is passed to the consumer
Department of Commerce estimated wait times at ports costs the US up to $5.8 annually
USMCA will help with customs wait times, but physical infrastructure remains the main issue
88 US customs lanes for cross-border trucking are not enough
Mexico has surpassed China as US’s largest trading partner- most by freight
Roads leading to bridges need work
FM 1472 has heaviest truck traffic
Laredo needs funding for infrastructure issues
1,600 in higher maintenance and traffic
Last year, truck drivers sat in traffic for 1.2 billion hours (nationwide)
Trucking industry 6.8 billion gallons of fuel and causes excess carbon dioxide emissions
Aim to expand safety mechanisms and software; safety is linked to proper infrastructure
Rep. Larson – With the Colombia Bridge, investment has not been made on the Mexican side, worried about not equal investment; how would you leverage that?
- We have dialogues with Mexico; thinks Colombia Bridge is underutilized
- Vale – Need better planning between TxDOT and Mexico; they are funded differently
  - Need more ports going east to west
- Saenz – It will be a political decision on the Mexican side; mentions Colombia Bridge and recognized it is underutilized
Rep. Larson – The point is, we need to leverage money on other projects; to attempt the people in Mexico to work on their fair share
- Gaytan – Should be a user-fee system, on the registration side something should be done
Chair Canales – trucks “eat up” the road at an incredible rate; who uses it should pay for it
Chair Canales – References Vale’s east to west comment; would not solve the issue; not looking for which route is the closest, but the fastest
Landgraf – Which bridge is the farthest north in the greater Laredo area?
- Saenz– the Colombia Bridge
- Vale – Even if you built the Colombia road, double the world trade bridge and build the world trade bridge… there will be 1,500 that will not make it… needs to be a Dallas or Houston-like solution
Rep. Landgraf – I-27, have there been discussions about that being fed into the Colombia Bridge
- Saenz – Yes; proposing extension of FM 1472 to alleviate traffic

Claudia Lagos, Self

Career in public and private international trade
Work has been with relations with a state of Mexico to ensure alignment of funds on the Mexico and US sides
A majority bridges are administrated on a federal level; some are private
Before NAFTA, Mexico had a closed economy
Since NAFTA, 2 ports of entry built and maquilas established in Mexico
Laredo is the main port of entry for all Latin America
Since USMCA, globalization has eliminated barriers, trade traffic needs highways that connect main corridors
Need new high-tech and more efficient ports of entry and multi-modal infrastructure
Need unified cargo processing; inspecting goods once in one facility to maximize efficiency
Public private partnerships; model of investments that can help us
International trade and free trade agreement have brought us great benefits
Rep. Larson – How can we get Mexico to make reciprocating investments
Mexico built Colombia Bridge 25 years ago, created whole infrastructure for trade and it is growing; industries are the ones that choose where they want to cross
Some industries are moving into Colombia have asked brokers or transport company to move to Colombia; if federal gov’t continues with highway construction that will come into Colombia, that will alleviate traffic

Captain Steve McQuagge, Texas Department of Public Safety

Commercial vehicle enforcement service, a sub-portion of highway patrol
CV Enforcement strategies: roadside inspections (ways stations, license plate readers, hazardous materials readers, weight sensors, oversized dimension sensors)
Must update facilities; specifically updating and building new scale houses
DPS has 89 facilities statewide
5 levels of inspection border inspection with trucks, 3 main
Level 1: complete walk around inspection, go underneath to check brake equipment
Level 2: complete walk around inspection
Level 3: Driver credentials and paperwork
A level 1 inspection in an area where there isn’t a pit, it could take 45 min-1 hour, time varies based on the technology the facility has
Chair Canales – Infrastructure DPS uses while inspecting trucks at sites affects time?
If there is technology, it takes less time
- Otherwise they have to get on a creeper to do a level 1 inspection
Laredo is inspecting significantly less vehicles than other facilities because of the high volume of CV’s that come through
- World Trade Bridge facilities are in Laredo under U.S. Customs, so we had to take turns inspecting with them; they often only do weight operations there
- Border has seen an increase in commercial traffic
- While DPS inspection of passenger vehicles has decreased statewide; Laredo increased
DPS works with transportation industry; mentions working with Mexico on reducing axel weight
- Discusses safety with companies three times a year
Rep. Larson – Could we pre-emptively certify companies and their loads on the Mexico side to reduce inspection wait times?
- After level 1 certification, the vehicle is not inspected for 90 days
- Issue; many trailers are not owned by the company who owns the truck
  - Trailers have higher out of service rates than trucks
  - Inspectors often let familiar faces go on through
Rep. Ortega – The scales, are those available at all ports?
- Yes, but types vary, and some are broken
- Weigh-in-Motion scales are not available everywhere; attempting to get them to new facilities on major corridor highways
- Other places are manually weighed one by one
Rep. Ortega – So there is some way of checking weight of trucks coming through?
- Yes, and some troopers have portable scales that allow for weighing on the roadside
Rep. Frullo – How many citations do you issue and how many result in arrests?
- Do not have that number, would guess 10% result in arrests
- 90% of inspections reveal violations; we issue warnings until over the 1000 lb. threshold
- Most violations are equipment-based; mostly brakes and tires; results in out-of-service
- Use the Commercial Vehicle Safety Alliance’s book on out-of-service criteria
Rep. Thompson – Industry is using drones/robotics (technology) to do inspections; is DPS planning on following suit?
- Thermal imaging inspects while vehicles pass through; detects tire or brake issues
  - Trying to implement at scale facilities; aim to keep products moving through
- Inspections contribute to the company’s safety ratings; insurance companies now basing interest rates upon safety rating; causes companies to support pre-screening technology
Chair Anchia – The following questions are related to progress on recommendations from joint IR&EC report from last session
Chair Anchia – Has DPS co-located with federal inspection facilities so co-inspection can occur? If DPS wants more money for the legislature to make their portable facilities more permanent, need to look at co-locating
- Those discussions have been had, but does not know what current status is
Chair Anchia – Related; in the report, we wanted to require DPS to provide legislature with justification for creation of permanent facilities separate from federal facilities
- To be done before appropriations
Chair Anchia – Is DPS increasing awareness on the Trusted Traveler Program for companies in Mexico?
- Yes, drivers are vetted; those vehicles are allowed to leave commercial zone area
Chair Anchia – Need better wait time data; heard today about a possible pilot program the legislature could fund
Chair Anchia – Mentions Sen. Cornyn’s appropriations rider for the private sector to aid in building necessary infrastructure in the border region; not seen much work done, but public/private partnerships may be the answer
Chair Anchia – Is DPS a working together with TxDOT on border infrastructure issues?
- Yes
Chair Anchia – Is DPS communicating with industry members?
- Yes; it is carrying forward beyond that
Chair Anchia – Invited CBP to testify, they did not come; what is DPS’s relationship with CBP?
- Took turns at worked together with them at the World Trade Bridge
- Discusses collaborations with CBP during gridlock-emergency situations