> UNITED STATES OF AMERICA
>
> DEPARTMENT OF TRANSPORTATION
>
> PIPELINE & HAZARDOUS MATERIALS SAFETY ADMINISTRATION
>
> HAZARDOUS MATERIALS: IMPROVING THE SAFETY OF RAILROAD
>
> TANK CAR TRANSPORTATION OF HAZARDOUS MATERIALS
>
> PUBLIC MEETING
>
> Thursday,
>
> May 15, 2008
>
> The above captioned matter convened pursuant to notice at 9:00 a.m.
>
> [CHAIRPERSON:]{.underline}
>
> Charles Hochman
>
> Director
>
> Office of Hazardous Material Technology
>
> Pipeline and Hazardous Materials Safety Administration
>
> [Department of Transportation Panel:]{.underline}
>
> Lucinda Henriksen, Esquire
>
> Office of Chief Counsel
>
> FRA
>
> William Schoonover
>
> Staff Director, Hazardous Materials
>
> Office of Safety Assurance and Compliance
>
> Federal Railroad Administration
>
> Eloy Martinez
>
> Program Manager
>
> Office of Research and Development
>
> FRA
>
> Grady Cothen
>
> Deputy Associate Administrator
>
> Safety Standards and Program Development
>
> Federal Railroad Administration
>
> Jeffrey Horn
>
> Senior Industry Economist
>
> Office of Safety Analysis
>
> FRA
>
> [PRESENTER-PARTICIPANTS:]{.underline}
>
> Pam Guffain
>
> Vice President of Member Services
>
> TFI
>
> Pete Rucks
>
> CF Industries
>
> Greg Yont
>
> Senior Director of Logistics
>
> Agrium Wholesale
>
> Nick DeRoos
>
> Terra Nitrogen
>
> Ray Foster
>
> Director of Distribution
>
> PotashCorp
>
> Matt Holtz
>
> Director, Rail Fleet
>
> PotashCorp
>
> Nick DeRoos
>
> Senior Director of Distribution
>
> Terra Nitrogen
>
> Judy Gillies
>
> Senior Director of Transportation
>
> J.R. Simplot Company
>
> Michael Orr
>
> Specialty Process Consulting
>
> [PARTICIPANTS - IDENTIFIED ON RECORD:]{.underline}
>
> Madame Marie-France Desjonais
>
> Director-General
>
> Transport of Dangerous Goods
>
> Transport Canada
>
> Xenin Luicki (ph)
>
> Chief of Engineering
>
> Transport of Dangerous Goods
>
> Transport Canada
>
> Manuel Kuchurnian (ph)
>
> Means of Containment Specialist
>
> Transport Canada
>
> Francisco Gonzalez
>
> DOT, FRA
>
> Cheryl West-Freeman
>
> Office of Hazardous Materials Safety
>
> PHMSA
>
> Pat Student
>
> Union Pacific
>
> [I N D E X]{.underline}
>
> [Agenda Item:]{.underline} [Page]{.underline}
>
> Opening, Mr. Schoonover 5
>
> Introductions & Opening remarks, Mr. Hochman 6
>
> Prepared statements:
>
> Pam Guffain, TFI 15
>
> Pete Rucks, CF Industries 32
>
> Greg Yont, Agrium Wholesale 53
>
> Ray Foster, PotashCorp 63
>
> Matt Holtz, PotashCorp 66
>
> Nick DeRoos, Terra Nitrogen 87
>
> Judy Gillies, J.R. Simplot Company 98
>
> Michael Orr, Specialty Process Consulting 107

[P R O C E E D I N G S]{.underline}

9:10 a.m.

MR. SCHOONOVER: Are we ready? Good morning. We\'ll begin this
proceeding. I\'m going to \-- I am Bill Schoonover with the Federal
Railroad Administration. I want to begin with a safety briefing, as we
always do.

Start out by saying we are at the Washington Plaza Hotel, at 10 Thomas
Circle, Northwest, in case we have to dial 911. The hotel itself is an
alarmed hotel, the alarm is on the back wall of the building. If the
alarm does go off, the exits are either out the back and to your right,
or immediately behind me, through the doors, take a right, and there\'s
an exit on the left. Either one of those will take you out of the
building and I would ask that you look to your left and right and make
sure that those people leave with you.

The restrooms are out the back \-- out the door behind you, slight jog
to your left, and then in the hallway on your left are the restrooms.

I would also ask that you turn your cell phones onto either vibrate or
turn them off. And CPR \-- do we have CPR-qualified and first aid
qualified people? Bob and Bob, I\'m going to ask you again, if you would
assist us. I\'ll call 911.

With that \-- before I turn it over to the people running the show, I
just wanted to extend a warm welcome to Transport Canada and our
colleagues from there. We\'re gifted today to have Madame Marie-France
Desjonais, who is the new Director-General from Transport Canada, for
the Transport of Dangerous Goods. We have Xenin Luicki (ph), who is the
Chief of Engineering for the Transport of Dangerous Goods, and then we
have Manuel Kuchurnian (ph) who is a Means of Containment Specialist. I
wanted to specifically say that because I like that title. But I just
wanted to extend them a welcome to these proceedings.

And with that, I\'ll turn it over to Charles.

MR. HOCHMAN: Good morning. And I have a brief opening statement for the
record, and apologize in advance for those people who heard it
yesterday, because it\'s the same statement, and I hope I changed the
dates.

Good morning. For the record, today is Thursday, May 15, 2008. My name
is Charles Hochman. I am the Director of the Office of Hazardous
Materials Technology within the Pipeline and Hazardous Materials Safety
Administration. And I will be serving as chair of today\'s public
meeting.

This is a public meeting on PHMSA\'s Notice of Proposed Rulemaking
published on April 1, 2008, which is directed at improving the safety of
pressure tank cars used to transport poison inhalation hazard materials.

PHMSA is conducting this rulemaking in concert with the Federal Railroad
Administration, and in order to unify all records concerning this topic
in one docket, we have designated FRA Docket 2006-25169 as the
electronic docket for the rulemaking. Once again, that\'s FRA Docket
2006-25169. The docket is accessible at www.regulations.gov. PHMSA\'s
designation for this rulemaking is Docket HM-246.

1.  Before proceeding, I want to identify others on the Department of
    Transportation panel for this hearing. Starting on your right, my
    left is Eloy Martinez, who is a Program Manager in the Office of
    Research and Development, FRA. Seated next to Eloy is Grady Cothen,
    who is the Deputy Associate Administrator for Safety Standards and
    Program Development in the Federal Railroad Administration. Seated
    next to Grady is Jeffrey Horn, who is a Senior Industry Economist in
    the Office of Safety Analysis, FRA. Seated next to Jeffrey is
    Lucinda Henriksen, an attorney within the Office of Chief Counsel,
    FRA. And on my immediate left is Bill Schoonover, who is the Staff
    Director, Hazardous Materials, Office of Safety Assurance and
    Compliance, Federal Railroad Administration.

This is the second day of four public meetings that the agencies will
conduct on this proposed rule. The purpose of these meetings is to
receive oral comments responsive to the Notice of Proposed Rulemaking.
The [Federal Register]{.underline} notice published on April 14, 2008,
sets forth in some detail the subject matters that the agencies would
like to explore at each of these meetings. The NPRM, the notice
announcing these meetings, and the accompanying Regulatory Impact
Analysis, which the agencies have placed in the docket, all pose
questions addressing issues about which the agencies seek information
and views. There certainly may be additional items suggested by the NPRM
that parties may wish to address, and these meetings are intended to
provide an opportunity to explore those issues, as well.

In order to foster an orderly and focused process, we do ask the
parties, insofar as reasonably possible, to observe the topical
organization found in the notice. If that means that your organization
means to speak on two or more days, that\'s fine. If you find that this
presents a hardship, please see me or Ms. Henriksen at the first break,
and we can discuss the best way of ensuring that you are fully able to
fully participate.

In addition, FRA\'s Administrator, Joseph Boardman, has asked that we
utilize these public meetings to pose and discuss a series of specific
questions related to the proposed rule, and AAR\'s new interchange
standards for tank cars transporting poison inhalation hazard materials.
The questions are in the back of the room near the sign-in sheet if you
have not yet gotten a copy.

As noted in the April 14th notice, today we intend to focus on issues
related to anhydrous ammonia. Our purpose is to ensure that we leave no
stone unturned and understand the implications of the proposed rule for
the transportation of this commodity, as well as any related issues and
options.

On the morning of April 28th (sic), we intend to concentrate on other PH
commodities transported by railroad tank car.

Clearly, there are cross-cutting issues that may affect transportation
of all commodities, and presenters should feel free to address those
issues in that light.

We will try to reserve the operational restriction issues, which
principally impact the railroads, but may have implications for shippers
as well, for the afternoon of May 28th.

Finally, on May 29th, we will hear from anyone who has previously not
spoken; and we will welcome back any parties who would like to offer
summary testimony after having listened to other presenters. We
anticipate that Administrator Boardman, and possibly Administrator
Johnson, will us on the concluding day.

As we go through these meetings, I know you\'ll be conscious of the fact
that the Department of Transportation is acting in response to a
statutory mandate, as well as National Transportation Safety Board
recommendations. The principal question before us is whether, through an
approach such as the one contained in the Notice of Proposed Rulemaking,
we can specify performance requirements for new tank cars that are
first, effective in preventing releases of PH materials in derailments
and collisions; and second, practical for implementation, given the
current state of engineering knowledge and practice.

There are, of course, many issues that we need to explore related to the
potential life cycle costs of implementing the proposed rule, potential
impacts on small entities, and whether there are alternatives that might
achieve the same results. Further, we seek your comments on whether, if
adopted as proposed, the rule could lead to intermodal diversions and
whether or under what circumstances that might be viewed as an
acceptable alternative.

Again, presenters should feel free to discuss issues not specifically
raised by the Department in the underlying rulemaking documents, but
relevant to consideration of the impact and feasibility of the proposed
rule, or any potential alternatives.

For example, we are aware that there is a concern among some shippers
and leasing companies, that new tank cars could be built and delivered
under the proposed rule only after some period of time. Meanwhile, cars
may need \-- cars may be needed to be replace existing cars that are
nearing the end of their useful life and due for retirement or to
augment capacity. A number of questions have been raised regarding the
ability of car owners to realize the full value represented by
investment in tank cars purchased during this interim period if no
grandfathering provision is accorded.

Now is the time for presenters and others to put those issues on the
table. We ask that you provide us as much information as possible
regarding potential options and impacts related our proposal.

In a moment, counsel will explain the procedures for this meeting. I
want to emphasize that it will be important for every person who speaks
to identify himself or herself by name and organization and to use the
microphone on a stand or at the head table.

Ms. Henriksen will now briefly describe how we intend to conduct this
meeting.

MS. HENRIKSEN: Good morning. And I\'ll echo Charlie\'s apologies for
those of you that were here yesterday and heard this spiel, but we
intend to run this meeting pretty much the same way we ran the meeting
yesterday. So, first, I\'d like to note that if you haven\'t signed in
already, there are some sign-in sheets at the very back, by the door,
and we would appreciate it if you could sign in so we\'ll have an
accurate record of today\'s attendance.

Also, in the [Federal Register]{.underline} notice that Charlie
mentioned, which announced these public meetings, we asked persons
wishing to present oral statements at any of these meetings to let us
know beforehand. We have seven persons who prior to this meeting
indicated that they desired to speak. These include Pam Guffain, of TFI,
Pete Rucks of CF Industries, Greg Yont of Agrium, Nick DeRoos of Terra
Nitrogen, Matt Holtz and Ray Foster of Potash Corp, Judy Gillies of J.R.
Simplot, and Michael Orr of Specialty Process Consulting. If I\'ve
missed anyone, please, at a break, just let me know.

We plan to let each of our seven speakers make their presentations, and
then if there are any others in attendance who would like to speak but
have not told us beforehand, we will open the floor to hear from you as
well. In that connection, if you\'re not one of the previously mentioned
speakers, and you would like to make a statement, please either let us
know up here at one of the breaks, or simply mark the little box in the
sign-in sheet back there.

As Charlie mentioned, the purpose of this meeting is to hear your
comments, concerns, and issues, anything related to the NPRM. We will
keep this meeting relatively informal, but in order to ensure that we
proceed in an orderly and efficient manner, we ask you that to abide by
a few rules of procedure.

First, the meeting is not intended to be a forum for debate, and there
will be no cross examination of speakers. Members of the panel up here
may ask questions of the speakers. Our questions will be for the
purposed of clarification or to solicit additional relevant information,
and we may ask speakers to address comments or issues raised by other
commentors.

Our failure to question a speaker, however, if does not mean that we
agree or disagree with that speaker\'s statement. If anyone else in the
meeting room wishes to ask questions, provided the speaker is willing to
take questions, you are free to do so once that person is done making
their statement.

Although we want to try to engage meeting participants and have as open
a discussion as possible, please note that the panel may not be able to
give specific answers today to concerns raised at this meeting.
Necessarily, as part of the rulemaking process, the agencies need to
consider all comments and concerns raised throughout the public comment
period, both here at the public meetings and in writing to the docket.
In this connection, please note that the closing date for written
comments on the NPRM is June 2, 2008. Written comments should be
forwarded to the address indicated in the NPRM.

As Charlie also mentioned, this meeting is being transcribed by court
reporter. Accordingly, for practical purposes, when you come up to speak
at the microphones, if you could please just state your name and spell
your name for the record so that our court reporter can get an accurate
transcription, we would appreciate it.

A copy of the transcript ultimately will be placed in the docket. Docket
Number FRA 2006-25169, which is available, as Charlie mentioned, on the
internet, at www.regulations.gov.

And at this time, I think we can move to our first speaker unless there
are any questions or issues, anyone has to start with?

MR. HOCHMAN: Our first presenter is Pam Guffain of the Fertilizer
Institute.

MS. GUFFAIN: Good morning. Can you hear? This okay? My name is Pam
Guffain. I am Vice President of Member Services, of the Fertilizer
Institute. Sometimes lately I think my title should be Vice President of
Railroad Issues, because that\'s all that we seem to get done anymore.
Just thought a little light to start off this morning.

The Fertilizer Institute is the national trade association which
represents fertilizer producers, retailers, wholesalers, and importers.
We appreciate very much that PHMSA and FRA has decided to hold these
public hearings and hear from the shippers of anhydrous ammonia.

As a bit of background, anhydrous ammonia is an essential \-- is
essential to growing food for millions of Americans. It is the least
costly and most effective source of nitrogen fertilizer for American
farmers. In addition to its direct application as a fertilizer,
anhydrous ammonia is the primary ingredient in all other nitrogen
fertilizers, such as urea and urea ammonium nitrate solution, such as
urea, and urea ammonium nitrate. It is also used to produce phosphate
fertilizers, such as diammonium phosphate and monammonium phosphate. DAP
and MAP, as they are referred to, are the primary forms of phosphate
fertilizer and we would he unable to replace them with a suitable source
of phosphate if we could not get the ammonia to the phosphate production
facilities. Fertilizers high in nitrogen arc essential to crops such as
corn, which is the largest consumer of direct applied anhydrous ammonia.
A single rail car of ammonia produces approximately 128,000 bushels of
corn, which can feed approximately 1600 cattle and produce 345,000
gallons, of ethanol. Corn is also used in thousands of basic food
products found on your grocers\' shelves. There simply is no substitute
for anhydrous ammonia in maintaining our nation\'s food supply.

Anhydrous ammonia is also essential to a variety of industrial
applications and is the only raw material available for the production
of some consumer goods. For example, anhydrous ammonia is necessary to
certain pharmaceuticals, adhesives, feed supplements, personal care
products and nylon fibers. Coal burning power plants use anhydrous
ammonia to comply with Clean Air Act emission standards. And for most
industrial applications, there is no substitute for anhydrous ammonia.

TFI supports the general purpose of the Department of Transportation\'s
rulemaking to enhance tank car safety. In that connection, TFI and its
ammonia shipping members strongly believe that DOT has the authority and
the responsibility to mandate standards, and that DOT should lake strong
action to clarify and enforce its authority in this area.

Our comments today will focus on the following issues that were outlined
in the proposed rulemaking: the implementation timeline, the Volpe
Center research, pre-1989 cars, 286 pound cars, interim cars, top
fittings and security.

TFI represents 14 companies who ship ammonia. While there are other
companies who ship

ammonia that are not members of our association. Our comments and the
data that we presents relates to the members of our association only.
The 14 member companies who ship ammonia, utilize 4461 tank cars and
deliver many tons of ammonia to consumers in agricultural production and
in industrial applications. Of this total, 340 cars, are pre-1989
non-normalized cars. The majority of our ammonia cars are leased and are
of the 112J340 type. The average age of ammonia cars in our fleet is
only ten to 12 years.

We are very concerned about the two year timeline for design
implementation and manufacture ramp-up outlined in the proposed rule.
TFI has discussed this matter with car builders, in particular during
the technology transfer system symposium on May 7th and 8th, and we know
that they also are extremely concerned about this timeline. The precise
time needed for design development, testing, prototype building, service
trial and then manufacture is currently unknown, but every indication
suggests that the design development and manufacturing ramp up period of
two years is very inadequate. This is a matter of public safety and it
would he imprudent to rush a new design into service without an adequate
service trial period.

We appreciate the technology transfer symposium held last week to review
the work completed by Volpe. Volpe\'s design is reported to meet the DOT
design for head and shell protection but it must be tested. This is
critical to the rulemaking. Despite the tremendous strides by Volpe, it
is apparent that there are still many unanswered questions that need to
he addressed.

With respect to the transportation of anhydrous, the most basic of those
questions is the lack of focus on ammonia cars. It is clear from the
discussions at the symposium that all the research and data so far, has
focused on chlorine cars. While we realize that there are similarities
between cars used for the transportation of chlorine and cars to he used
for the transportation of ammonia, the two types of cars are not and
will not he the same. Very little has been done to develop the ammonia
concept car.

And with that in mind, the timeline currently outlined in the proposed
rulemaking is even more

unrealistic. We are asking DOT to consider this issue seriously and
adjust the implementation for cars in ammonia service accordingly.

DOT has proposed that all pre-1989 that are non-normalized cars he taken
out of service and

replaced within five years from the date of the final rulemaking.
Pre-\'89 ammonia cars are being retired at an accelerated rate and are
scheduled \-- and we are scheduled to eliminate these cars from our
fleet within the next several years.

The concern is, however, with the current uncertainties as to the
delivery of replacement cars, the shippers will either have to run these
cars longer or reduce the size of their fleet.

DOT also proposes the use of 286,000 pound cars without the need for a
special permit, and we do support this part of the rulemaking. However,
there are issues surrounding the move to 286,000 cars that must he
considered. In particular some of our origins and destinations are not
286 capable. As an example, one of my ammonia shippers reports that the
railroad track out of his facility is not 286 capable. This facility in
question, is responsible for more than 50 percent of their ammonia
shipments. From the very beginning of discussions at the Tank Car
Committee and during the Section 333 conferences, we asked, and were
assured, that the Association of American Railroads and FRA would look
into the ammonia industry origins and destinations and determine where
our deliveries would he impacted.

To date, we have not received this information. Where track is not
capable of handling heavier cars our only alternative will he to switch
to trucks if possible or light-load rail cars.

Light-loading 286 to 263 will require shippers to increase their fleet
size and the number of shipments by ten percent to service those weight
restricted areas. In either case, putting more trucks on already
congested highways or more cars on the rail lines is clearly counter to
the intent of the rule and will degrade, rather than enhance, public
safely.

Since the publication of the Notice of Proposed Rulemaking on April 1,
the AAR did put into effect CPC 1187 on April 30. This has caused mass
confusion for not only shippers of toxic by inhalation chemicals but the
car builders as well. TFl would like to stress that it continues to be
our position that DOT has authority to mandate standards. We believe
that DOT should take steps to assert its authority in this area. It is
likely that there will be a significant period of time necessary for DOT
to prescribe a final rule. It is likely that cars will need to be
ordered in the interim, and DOT needs to provide for clear rules during
this interim period.

We understand that a request is pending at DOT to grandfather the AAR\'s
500 or 600 pound cars for the economical life of the car which we\'ve
been told is stated as being 20 years. If there is to be an interim
ammonia car, DOT needs to decide what that interim car is, and establish
regulatory structures that will make it economically possible for such
an interim car to be built. Car builders will not build the AAR cars
unless there is a market for them, which means the purchaser must have
the opportunity to use these cars for their economic life. Car leasing
companies will not order the cars from the builders unless they get the
economic value out of them. The car proposed in 1187 is essentially a
single product car. Moreover, there are problems if the proposed cars
are grandfathered for 20 years, since lessees, my members, will be
required to sign a contract for the 20 year term. Our companies may not
he willing to carry a 20 year commitment given the inherent
uncertainties of the market.

While demand for nitrogen is strong today, it is impossible to see five
years into the future, let alone twenty. The average age of ammonia
cars, as I stated earlier, is between between ten and 12 years. Given
the uncertainty and length of time that will he necessary to produce a
car that conforms to the DOT proposed standards, we feel the need for a
clear interim decision by DOT. Under the current circumstances, ammonia
shippers who may have to order new cars built in the next several years
will have no option because of the AAR\'s interchange rules. As we have
stated previously, it is the authority of DOT to make a determination on
what the interim car should be and if there should he one.

With that in mind, TFI recommends that the DOT determine \-- that if the
DOT determines the need for an interim car that, one, the interim car be
allowed for its useful life, that the current ammonia car continue to he
allowed until a phase-out period is established in DOT\'s final
rulemaking; and, three, very importantly, that the railroads be
prohibited from charging a shipper a premium for cars used not meeting
the interim standard.

In closing, I just want to briefly comment on top fittings and security.
It is the feeling of the TFI members that if DOT has any intention of
addressing top fitting requirements in the near future, that this issue
be looked at while we\'re still in the design phase so that we don\'t
\-- so we can minimize interruptions in car design and in the cost. And
with security, communication with the Department of Homeland Security
would certainly be in order should they decide that additional
improvements need to be made to tank cars for security purposes.

That concludes my remarks, and I\'ll be happy to take any questions.

MR. SCHOONOVER: Okay. Thank you. My first question is a general question
about the ammonia fleet. Is the ammonia fleet optimized at this time? By
that I mean is \-- do you have enough cars? Is there an impending
compelling need to get cars right now?

MS. GUFFAIN: At this particular time, we are probably okay for, I would
say, the next two, perhaps three years. The problem that we will have is
that is when the majority of the leases will be up on our current car.
It will depend, and we have heard from several car leasing companies,
since all of ours are leased, that they will not renew those leases, and
that puts us in a very peculiar situation because we don\'t know what we
would do to replace those unless we can find some companies that have
some excess cars that we\'d be able to utilize.

MR. SCHOONOVER: Okay. You also asked that we consider adjusting the
implementation for timelines \-- implementation timelines for cars in
ammonia service. Do you have any idea of how long you would propose that
we adjust that timeline to?

MS. GUFFAIN: Because our fleet is so young, I think if, realistically
and economically, if we could \-- if we could use those cars for at
least 15 more years, I believe \-- and my members who will testify after
me today may be able to add better light on that from their perspective
\-- but I think if we could get 15 more years out of these cars that
have proven to run well and be safe that that would be a considerable
help to us.

MR. SCHOONOVER: And the last question deals with switching to trucks.
There have been some articles in newspapers about some diversion to
highway transport. I was wondering if you could give us an idea of the
\-- any current diversion activities or future plans that you\'re aware
of?

MS. GUFFAIN: I might better leave that to some of the individual
shippers, but at some point during every move of ammonia, it does go by
truck. Normally, when it goes into an agricultural retail facility, it
goes from a terminal via truck for a very short distance, maybe 25
miles. Economically, if you go further than about 500 miles, it\'s just
not economically good judgement, but with the rates that we are
currently being charged for the transportation of ammonia and the
premiums being put on that transportation by rail, I would not be
truthful in saying that we are diverting sometimes to truck now.

MR. SCHOONOVER: All right. I have one last question I wanted to ask
about if you have any idea, roughly, U.S. production versus production
in Canada that\'s brought in the U.S. by rail?

MS. GUFFAIN: Canadian \-- I know that we have the capacity to produce
ammonia in the United States at around roughly 11 million short tons,
that\'s the capacity. We direct applied, in 2006, direct applied
ammonia, about 3.1 million tons in direct application as fertilizer.
Maybe Greg can address the import from Canada. Most of the ammonia \--
we\'re a net importer of ammonia in this country, and most of that comes
out of Canada. I don\'t have that figure off the top of my head, Bill,
but I can certainly get that for you.

MR. SCHOONOVER: Okay. Thanks.

MR. HOCHMAN: Jeff? Grady?

MR. COTHEN: While Jeff is doing his calculations, let me ask a question
which I don\'t certainly expect to be answered this morning, but which I
think needs to be answered as we try to finish this proceeding.
Yesterday, there was testimony, I believe, to the effect that the
additional cost associated with \-- and this was in chlorine service \--
use of the \-- something like the DOT concept car, might add \$80,000
per car to the price of the tank car. We had estimated something
substantially less than that, but in any event, certainly the additional
cost in terms of capacity, fleet capacity, in the anhydrous ammonia
market would be higher than whatever number we might use in the chlorine
context because of the potential loss of product capacity.

My question is, have you thought through at what point we sort of come
to some equipoise here. Cars are going to cost more, you\'ll need a few
more cars. At the same time the basis of which, a premium is being
charged for transportation of the product would seem to abate
significantly, therefore the rates should, presumably, fall
significantly at some point when new cars are being utilized, whether of
an interim, improved interim, or long term performance standard
compliant cars.

Given that the cost of \-- the upfront cost is obviously current
dollars, at the point the car is purchased, and given that the benefit
to be realized by the shipper in terms of reduced transportation cost
would be realized over the life cycle of the car, I gather up to 35
years, have you had a chance to think through what the net cost of the
replacement is, again, given the fact that there\'s substantial upfront
cost of whatever magnitude, but there would be significant, presumably
significant reductions in transportation costs long term? And again, I
certainly wouldn\'t expect an answer to that this morning unless
someone\'s done some pro forma calculations. But we would be interested
in your impression of that, what it would take \-- maybe the question
is, what it would take by way of rate reductions, percentage-wise, in
order to come close to a break even, if that could be achieved?

MS. GUFFAIN: I know that several of the shippers here today have thought
long and hard about this issue and the economic impact to their
individual companies. I think the cost of the new cars, either under the
DOT proposal or under 1187, is what we\'ve been told, a lot higher than
\$80,000 for an ammonia car. But we will take your request back, Grady,
and see what we can put together in our final comment.

MR. SCHOONOVER: Thank you.

MR. HORN: Yes, you noted the concern about the 286 and the light loading
and provided some data. Any additional data you can provide about your
shippers and how much track and how many percentage would be helpful if
you could provide that to the docket. I realize you don\'t know it all
because it\'s the railroads you\'re dealing with, but any information
you can share with us would be appreciated.

Yesterday, one of the issues that popped up was the transferring of the
car \-- the chlorine cars into other service. And you didn\'t mention
the transfer costs or the applicability of transferring NH3 cars into
other service, and I was just curious what your response might be on \--
because we got a lot of push-back from the chlorine on that particular
issue, and I was wondering what the feeling and the response would be
from TFI on the NH3 issue.

MS. GUFFAIN: We do swap cars periodically into LP service. But with the
number of \-- I mean it\'s a seasonal business for them, just like it is
for us, and so a lot of times we\'ll even \-- they\'ll sublease cars to
us and we\'ll sublease cars to them, and then take them back, you know,
so they don\'t have a full year\'s lease on them. But if there\'s a glut
of 112J340s all of a sudden in the market, I doubt that the LPG industry
is going to gobble them all up.

MR. HORN: They\'ll be jumping for joy at the cost that they\'ll be
paying for them anyway.

MS. GUFFAIN: And they \-- you know, they \-- I just don\'t know that
they\'re going to need that many cars, though, but it is a \-- we\'re
hoping that if we run out of cars that we can get some from them for the
time being, so it works both ways.

MR. HORN: Thank you.

MS. HENRIKSEN: Bill just suggested that we take a moment to talk about
submitting information to the docket. Just an FYI, I\'m sure most people
know this already, but if we\'re requesting information, or you have
relevant information that you would like to provide, but you don\'t \--
you want to keep that information confidential, we certainly can do
that. Basically, the way you can do that is by marking whatever
documents you want to submit confidential and the best thing to do is
give me a ring and I will usher the information to the appropriate
people, and ensure that it\'s kept confidential.

That\'s just a note out there that we\'re \-- if we\'re requesting and
asking and would appreciate any kind of data that you can provide that
would be relevant to several of these issues, and if it is information
that you want to keep confidential, we will work with you to try to do
that.

MS. GUFFAIN: Great. Thank you.

MR. HOCHMAN: We heard yesterday as well as today, the need for an
interim car. If we were to \-- if the Department were to consider an
interim car, would you be willing to provide us later on your
suggestions for what that interim car should be?

MS. GUFFAIN: Sure. We think our current car is just fine, actually.

MR. SCHOONOVER: I\'m surprised.

MS. GUFFAIN: You\'re surprised? Yes, we will. You know, we\'re \-- I
guess we\'re not convinced that we shouldn\'t be able to use this young
fleet for quite some time yet, but if that is not possible, then we
would happy to work with DOT to discuss and give you our suggestions on
what we could do for something in between. Most certainly.

MR. SCHOONOVER: I did have one more that I just wanted to clarify a
point. Your \-- the current chlorine \-- rather, the current ammonia
fleet you said was 112-340s, those cars are already equipped with head
shields?

MS. GUFFAIN: Yes, they are.

MR. SCHOONOVER: Unlike chlorine, which \--

MS. GUFFAIN: Exactly. They have a half inch head shield and a
eighth-inch jacket.

MR. SCHOONOVER: Okay. Thank you.

MR. HOCHMAN: Are we done? Any questions from the floor?

MR. GONZALEZ: Francisco Gonzalez, DOT, FRA. Pam, you mentioned about
that we should focus on top fitting protections. Currently in my
programs, I have a research program on top fitting protections for
non-pressure cars. Do you or any of your members have any suggestions on
what will that top fitting protection should be and would not interfere
with your loading and unloading tracks?

MS. GUFFAIN: We\'ve talked a bit about it, Francisco, I don\'t have any
suggestions for you at the moment, but we\'ll be happy to discuss that
and get back to you.

MR. GONZALEZ: Okay. Thank you.

MS. GUFFAIN: Okay? Thank you.

MR. SCHOONOVER: Our next presenter will be Pete Rucks from CF
Industries.

MR. RUCKS: Can everyone hear me? Is that good? Okay. Good morning. My
name is Pete Rucks and I am here today to speak on behalf of Cf
Industries. CF is a member of The Fertilizer Institute and supports
their comments as well.

We would like to thank the Pipeline and Hazardous Materials Safety
Administration and the Federal Railroad Administration for hosting this
public meeting to address tile safe transportation of hazardous
materials in tank cars. We continue to support PHMSA and FRA\'s
comprehensive review of design and operational factors that affect rail
tank car safety, and we look forward to continuing to work with you on
this important issue.

CF Industries, Inc., a subsidiary of CF Industries Holdings, Inc., is a
major producer and distributor of nitrogen and phosphate fertilizer
products. CF Industries operates world­scale nitrogen fertilizer plants
in Donaldsonville, Louisiana and Medicine Hat, Alberta, Canada; conducts
phosphate mining and manufacturing operations in central Florida, and
distributes fertilizer products through a system of over 40 terminals,
warehouses, and associated transportation equipment located in critical
agricultural communities throughout the midwestern United States. CF
Industries accounts for 26 percent of the nitrogen fertilizers applied
in the Corn Belt states.

With growing concern over increased food prices and the short timeframes
associated with application of fertilizer, oftentimes no more than a
two-to-three week window in the fall and spring seasons, the network and
infrastructure we\'ve developed is critical to ensuring that farmers
have the essential fertilizer products when and where they need it.
Without this essential product, U.S. farmers would be unable to produce
the amount, or the quality, of food that the world has come to rely on.

Our extensive anhydrous ammonia manufacturing and terminal operation is
supported by a leased fleet of over 550 ammonia tank cars. On an annual
basis, CF ships approximately 850,000 tons of ammonia by rail to ten
CF-owned terminals in the critical food producing states of Minnesota,
North Dakota. Illinois, Iowa, Nebraska, and Washington, as well as from
our Tampa Terminal to phosphate production facilities in Plant City,
Florida.

My comments today will focus on several items:

One, anhydrous ammonia is an essential product for crop production. Two,
tank car safety is important to our industry. And three, items to
consider as we continue to move forward towards the more secure and safe
transportation of anhydrous ammonia.

Anhydrous ammonia is used directly as a commercial fertilizer or as the
basic building block for producing virtually all other forms of nitrogen
fertilizers such as urea, ammonium nitrate and nitrogen solutions, as
well as in the production of phosphate fertilizers such as diammonium
phosphate and monoammonium phosphate.

Since the 1940s, farm demand for nitrogen fertilizers has always been
supported by a large, efficient fertilizer industry. Because most of the
nitrogen fertilizer in the U.S. is consumed within very short timeframes
in the fall and spring application seasons, an extensive distribution
infrastructure has developed to move product from the manufacturing
plants to the major fertilizer consuming regions. Obviously, rail is a
critical component of the distribution infrastructure that allows CF to
supply American farmers with the anhydrous ammonia and other fertilizers
needed to grow a safe and reliable food supply.

Approximately 85 percent of the ammonia consumed in the United States is
for agricultural purposes. An estimated 40 percent of U.S. crop
production is directly attributed to the use of commercial fertilizers.
Many crops use anhydrous ammonia since it is the least costly and most
effective source of nitrogen fertilizer for American farmers. Corn
production is a major use of direct applied anhydrous ammonia primarily
because it is the cheapest source of nitrogen on a per pound basis.
According to the University of Illinois, 30 to 50 percent of corn yields
can be directly attributed to nitrogen fertilizer.

CF Industries and the fertilizer industry have a proven history of
commitment to safety and working closely with the railroads on safety.
In response to National Transportation Safety Board concerns, CF
Industries voluntarily modernized its fleet of ammonia tank cars
beginning in 2005, swapping out non-normalized steel cars, cars built
before 1989, for normalized steel cars, cars built after 1989. CF
Industries will remove the remaining 24 non-normalized steel cars from
our fleet by the end of this year. This strictly voluntary swapping out
of ammonia cars came at a cost of approximately \$2.5 million to CF.

As part of its ammonia safety program, CF routinely exceeds federal and
state material transportation standards and regulations. For example, we
inspect and test pressure and safety valves, and we replace all o-rings
every live years rather than the ten year interval required by U.S.
regulation.

As an industry, we have worked with the railroads and FRA to ensure all
ammonia tank cars have head shields and double shelf couplers. We
supported the development of the pool torch test, which led to the
obsolescence of the 105s and 112s car. The industry has also supported
other safety advancements, including improvements to wheels, roller
bearings, valves, and domes.

CF Industries remains committed to working through TFI with AAR, FRA,
and industry trade associations to achieve more secure and safer
transportation of ammonia. However, as we move forward, we ask that the
following items related to the notice of proposed rulemaking be taken
into consideration:

One, a reasonable timeframe for design and implementation must he
established. The FRA\'s NPRM is seeking to have a new tank car developed
and approved within two years with a subsequent six year implementation
schedule. Based on the information presented by tank car builders at
last week\'s Tank Car Technology Transfer Symposium we do not believe
new tank cars can be designed, tested and approved in two years or that
there will be the production capacity to meet the overly ambitious
timetable for replacing the TIH fleet of approximately 15,000 cars.

The proposed timeframe also does not take other market forces into
consideration. For example, if the ethanol mandates from the 2007 Energy
Legislation are retained, there will need to be a significant increase
in the production of ethanol cars which will impede car builders\'
ability to build an adequate supply of TIH tank cars to meet the
proposed timetable. A proposed alternative would be to begin
implementation of the fleet replacement once a new design is approved
and is shown that there is adequate tank car building capacity.

Based on what the tank car builders said at the Symposium, FRA should
refrain from initiating a phase-in schedule until builders have had a
chance to review the new proposed design, and FRA and the builders have
worked together to assess how long it will take to build, test and
replace the existing ammonia car after factoring in other market forces.

Two, clear market signals that allow for long-term capital investment
decisions must he established. FRA\'s NPRM adds a layer of uncertainty
for companies that build and lease tank cars and makes it more difficult
to negotiate new leases for cars in the near term. CF Industries has
several leases coming up for renewal in the next two years, all of which
are new cars built in 2005 or 2006, and the expedited timeframe
introduced in this NPRM adds an unknown variable into these discussions.

Extending the timeframe for replacing these cars would help alleviate
the uncertainty and give shippers, builders, and leasing companies more
time to align their business decisions with the NPRM. Because there is
no design or tank cars being built during the two-year design period,
the industry or CF Industries could face business interruptions or be
forced to switch from rail shipments to truck shipments should leases
not get renewed. It takes four trucks to carry the same volume of one
tank car. This could lead to disruptions of shipments to farmers who
would not have access to the fertilizers they need to produce our food.

Three. Substitution and countervailing risks to railroad infrastructure
must be considered. The

FRA must consider the adverse effects of heavier tank cars on rail
operations and whether those consequences reduce the safety of rail
transportation of ammonia. CF Industries has at least one terminal,
thru­puting more than 50,000 tons of ammonia annually, which cannot
support the heavier tank car. This terminal is serviced by rail
infrastructure, including a bridge owned by the railroad, which cannot
support the extra weight. In this instance, CF Industries will either
need to light-load the tank cars in order to meet the weight
restrictions, which would result in more tank cars on the already
strained rail system, or re-route around the bridge which would lead to
increased rail congestion and mileage, as well as added cost and transit
time to ammonia shipments.

A move to heavier cars may also shift ammonia transport from rail to
truck, where the safety risks are substantially higher, or limit our
ability to get the fertilizer to the farmers serviced by this terminal.
A longer phase-in schedule would allow more time for infrastructure
upgrades necessary to support the heavier car. Also, requirements that
the railroads prioritize upgrades in those areas that transport TIH
materials would help ensure that the proper infrastructure is in place.

Four. Risk reduction strategies must also be considered in a
cost-benefit analysis. By having several strategies and performance
standards to select from, shippers and carriers can select those
measures that best meet specific scenarios.

CF thanks PHMSA and the FRA for hosting this public meeting and I cannot
emphasize enough the importance of anhydrous ammonia to the U.S. economy
and how important tank car safety is to our industry. As the FRA moves
forward in finalizing the rule we ask that you take into consideration a
reasonable timeframe, clear market signals that allow for long-term
capital decisions, risks to railroad infrastructure and the cost-benefit
of risk reduction strategies.

Thank you.

MR. SCHOONOVER: Pete, I\'ve got a couple questions. First question is,
you mentioned the need for anhydrous ammonia for corn. According to the
USDA perspective planning report that came out in March, we\'re planting
12 percent less corn this year, the majority of that reduction will be
absorbed by soybean. Just a question, does soybean use ammonia at the
same level as corn?

MR. RUCKS: No.

MR. SCHOONOVER: It does not. Okay. Let\'s see, the second question I had
is, can you discuss or provide us some information on the impact of this
rule to small businesses, including potential distribution facilities,
farmers?

MR. RUCKS: Well, I mean, if \-- I think to the farmer, I think things
will get more costly. I think car is going to cost more, and that cost
is going to get passed on to the farmer, which obviously gets passed
down, you know, the food, you know we buy at the store. I mean, we\'ve
all seen how much corn has gone up in the last couple years, and we can
see how much we\'re paying for a steak right now, and I would think that
would just continue \-- be another thing that would make the price go
up.

MR. SCHOONOVER: Another question I had was, pipeline capacity. There is
a \-- an anhydrous ammonia at least, there\'s a major pipeline that runs
from Louisiana up into the midwest. Does that pipeline have capacity and
has that been a consideration that the many producers are looking at?

MR. RUCKS: Obviously, CF\'s in that pipeline, we take product in that
pipeline, but I can\'t \-- I don\'t deal with the pipeline, so I don\'t
\-- I can\'t answer you know, how much more capacity we have or don\'t
have. But that\'s something I can find out and share with you.

MR. SCHOONOVER: Okay. Yeah, I\'d appreciate that.

MR. HORN: Good morning, and thank you for your testimony. I have \-- the
first question is a rather inquisitive one. You noted that you moved
from \-- you move anhydrous ammonia from Tampa to Plant City. It\'s
about 15 or 20 miles \--

MR. RUCKS: It\'s 26 miles one trip.

MR. HORN: How does it get to Tampa? Is it produced in Tampa?

MR. RUCKS: No, we have a terminal there, and we vessel it in.

MR. HORN: By ship?

MR. RUCKS: By ship.

MR. HORN: And then you \--

MR. RUCKS: We store it in that tank, and then we ship out cars from
there to our plant \--

MR. HORN: About 15, 20 miles.

MR. RUCKS: Twenty-six rail miles.

MR. HORN: Okay. Thank you. Second question deals with the six year
implementation time period. You noted that it was too brief. I believe
the AAR interchange provides until 2018, which is like basically nine
and a half years. How is that feasible, compared to the six years?

MR. RUCKS: Well, I think more is better, but I think \-- our bigger
problem is during this design period of two years, we have a number of
leases coming up for renewal, and the tank car builders aren\'t quite
\-- we\'re not quite sure what they\'re doing. I\'ve been asking for
renewals and they\'re waiting to see how all this shakes out before they
renew cars, and our big concern is that they\'re going to pull some
away. And like, I think Pam said that, you know, one car builder of \--
leasing car company has already said, we\'re not renewing. And you\'re
not going to get a builder to build a car until they know what is going
to happen here, and that two year window of uncertainty, I mean, I think
we might lose some cars there.

MR. HORN: So it seems like the two year design phase and the unknown
situation with leasing is actually of greater concern than the six year
production time?

MR. RUCKS: In the near term, but then you\'re pushing \-- you know,
obviously, I\'d rather have the longer phase in period beyond that.

MR. HORN: Thank you.

MR. MARTINEZ: I had a couple of general questions. I\'m just trying to
get a sense. Pam, when she gave testimony discussed that the group has
roughly 4000 cars. Do you \-- can you talk specifically about your own
company in terms of the split between owned cars and leased cars? And a
follow on question would be, what\'s the typical timeframe for a lease?

MR. RUCKS: As I mentioned, we have about 550 ammonia cars. We lease all
our cars. Typical timeframe for us is five years.

MR. MARTINEZ: I\'m sorry?

MR. RUCKS: Five years leasing.

MR. HOCHMAN: I\'ve got one question. In other days, Mr. Boardman refers
to me as the truck guy. I wear many hats. I\'d be curious \-- we heard
\-- and I don\'t want to get into a day-long discussion of risk, my
hair\'s white enough. We hear that, as you\'ve said, that one tank car
has about four truck loads. Could you provide us information for the
record on what you perceive any increase in risk would be in
transportation if you switch from tank cars to tank trucks? I would like
to see if quantified, if possible, what you \-- what you perceive to be
the increase in risk, going from \--

MR. RUCKS: Well, I mean, I think I was \-- I\'m not sure if it was the
FRA or AAR website \-- I think we\'ve all heard it quoted many times,
railroad\'s the safest mode of transportation. And there\'s a bigger
concern is, if there is a lot of switch to truck, is there enough truck
capacity out there to handle it?

MR. HOCHMAN: Which is part of the same issue.

MR. RUCKS: Right. I can\'t quantify that, but you know, for every \-- we
have our fleet size. We don\'t \-- what we think is perfect for our
situation, and for every car we lose, that\'s going to \-- if it\'s
going to be impossible, every month, four trucks to go via the highways.
I don\'t know if that answers your question \-- I don\'t think it does.

MR. HOCHMAN: Well, it\'s \-- you know, I will tell you that if you go to
trucking websites they will tell you that they\'re as safe as the
railroads too, so I don\'t want to get into comparative risk between
modes. I was just looking \-- you know, if you have to go from a
corporate perspective, you\'ve done some risk assessment, and if
there\'s any information available on it \--

MR. RUCKS: I\'ll have to \--

MR. HOCHMAN: I don\'t expect an answer today.

MR. SCHOONOVER: May I add to that?

MR. HOCHMAN: Sure.

MR. SCHOONOVER: I think what Charlie\'s trying to look at is the \-- if,
in fact, one of the major considerations in the whole equation is
service reliability. It\'s been argued that trucks can provide a greater
level of service reliability and assurance that your shipments are going
to get there on time, even if there are four of them. And so we\'re
interested to get some information on how that fits into the model.

MR. RUCKS: Well, I think you\'ve got the distance factor to consider. We
have a plant in Madison, Alberta, as I mentioned earlier, all those
products come down the Dakotas and Minnesota. I don\'t know where we\'re
going to get a truck to come all the way down to Iowa from Madison,
Alberta, Canada. So I think a lot of it is the service issue, and I \--
there\'s one finding someone who would do that, but I don\'t think there
would be. I mean it\'s 1200 miles or something like that. It\'s just not
local, as opposed to when you pull it out of the tank to go to your
farm.

MR. SCHOONOVER: Would you consider this, and provide us information if
you would, I think break it in parts between what you import into the
U.S. and something like your localized delivery such as the Tampa to
Plant City type moves.

MR. RUCKS: Okay.

MR. MARTINEZ: Yes, I have an additional question. Can you expound a
little bit on the time sensitivity associated with the delivery of the
shipments of ammonia for fertilizer use?

MR. RUCKS: Yeah. The corn planting season, you know, depending \-- this
year it\'s obviously a lot more condensed because of the weather \-- so
let\'s just say the month of April or first three weeks of April maybe,
might be the typical planting season. So you have to have all your \--
we have our tank \-- we work on the unique a little bit at CF, we just
ship to ourselves. We don\'t go directly to farm, we go to our own
tanks, then the farmers come and pull out. So we have to make sure, you
know, we\'re drawing down those tanks when the seasons hits, in ten
days. We\'ve got to make sure rail cars are there to fill it back up,
and if rail cars don\'t show up for five days, then that\'s not a good
thing. So, you know, they put the corn in the ground and they give their
shot of nitrogen. There\'s a timing when they do that. So you can\'t put
\-- you can\'t wait a month to go back and put your first shot.

MR. MARTINEZ: In terms of utilization rate, then, predominantly you do
it twice a year? Or how do you break out your transportation timeframe,
when the cars are actually being used to transport?

MR. RUCKS: We use \-- our fleet averages about a turn a month. And so,
obviously, some are shorter, some are longer, but we figured out,
depending on demand, because some terminals have more demand and they
want to be closer to plant during April, so the transit time is shorter.

MR. MARTINEZ: So an additional question to that is, what is the typical
length \-- I know they vary quite a bit, but what\'s the typical length
for transport of your ammonia products?

MR. RUCKS: The length?

MR. MARTINEZ: Yes.

MR. RUCKS: You mean \-- our cars are constantly moving.

MR. MARTINEZ: I\'m sorry?

MR. RUCKS: Our cars are constantly moving. You mean how long our cars
are going for or what \-- I guess I don\'t follow your question.

MR. MARTINEZ: Well, if predominantly you have material in Canada, and
you\'re shipping it to the midwest, I mean that would be your typical
travel time, I guess.

MR. RUCKS: You trying \-- I mean you want how long does it take to get
there? The average is like 30 days \-- round trip, so that would be like
15 days of our whole fleet up in the \-- out of Canada. You know, some
might be six days, some might be 20 days, just depends on where it\'s
going.

MR. COTHEN: Just to follow up on that. To what extent is the tank car
used for storage and gradual delivery of product during the planting
season?

MR. RUCKS: For us, it isn\'t.

MR. COTHEN: Not at all?

MR. RUCKS: No.

MR. COTHEN: So your consignees have storage on site?

MR. RUCKS: Yeah, we have \-- we ship to ourselves, to tanks. We ship
from our plant to our terminal which we store in tanks.

MR. COTHEN: Gotcha. Thank you. .

MR. HORN: A follow up on Bill\'s thing, you primarily \-- your NH3 is
primarily used for phosphate production out of Tampa, Plant City, and
then for crop production. Corn has been discussed. Bill asked about
soybean. Is it not used at all with soybean, or much less so? And what
other crops are \-- is it significant to besides corn?

MR. RUCKS: I guess I don\'t know enough about that side to say. I mean,
I assume \-- it\'s used in other crops, but corn\'s the main \-- the
main deal for anhydrous ammonia.

MR. HORN: I asked because my background\'s more orange groves and
strawberries, so \-- and I know it\'s not used in those.

MR. RUCKS: I don\'t think it\'s used in those. I\'m pretty sure not.

MR. HORN: That\'s why I knew exactly almost the distance from Tampa to
Plant City. Thank you.

MR. HOCHMAN: Anybody out in the audience have a question? Statement?
Comment?

MS. GUFFAIN: It may just be a statement, to answer the last question. A
large majority of ammonia is used for \-- as an intermediary, you know,
to our other phosphate fertilizers, so that takes up a lot of it, but
the next probably highest past corn, is probably wheat for ammonia.
Orange groves do not use ammonia that I\'m aware of. There\'s some
specialty crops in California that are large users of ammonia as well.
You probably use ammonium nitrate on orange groves.

MR. HORN: Would any of those specialty crops also be ones in \... Valley
up in Oregon as well?

MS. GUFFAIN: Probably in Oregon. California is a large ammonia consuming
state. Let me think \-- well, obviously, your midwest states are the
largest \-- Illinois, Indiana, Iowa, Montana, Nebraska \-- those are
your largest consuming states because of the wheat and corn crops.

MR. HORN: Thank you.

MS. FREEMAN: Hi. Cheryl West Freeman with PHMSA. I\'m wondering if your
company has looked at the proposed rulemaking in terms of the speed
restrictions, and if that has any impact in your shipments \-- may have
any impact in your shipments, in terms of \-- since you were talking
about time is an issue?

MR. RUCKS: Yeah, I mean, if you\'re going to slow the trains down, it\'s
going to obviously take a little longer to get there, and if those are
implemented, then we\'ll just have to adjust our shipping pattern,
probably a little differently than we do now. But that\'s something
we\'ll have to \-- we\'ll have to look at a little harder. But we
haven\'t looked at it, you know, up to today.

MR. HOCHMAN: Any other questions or statements?

MR. RUCKS: Thank you.

MR. HOCHMAN: We would like to take a ten minute break.

(Whereupon, a ten minute recess off the record was taken.)

MR. HOCHMAN: Our next presenter is Greg Yont from Agrium, Inc.

MR. YONT: Good morning. My name\'s Greg Yont. I\'m the Senior Director
of Logistics for Agrium Wholesale. Thank you very much for having this
session and for inviting us to make comments this morning.

I\'ll start with maybe a bit of company advertisement. Agrium is a major
retail supplier of agricultural products and services in North and South
America, and a leading global wholesale producer and marketer of all
three major agricultural nutrients. So that makes us probably a little
bit unique among the companies represented here in that we\'re a through
the value chain, retail and wholesale.

Just to give you an idea of size, we have 2007 sales of about \$5
billion dollars, and those are fairly evenly split between the retail
and wholesale companies. I thought about talking about some of the
importance of ammonia and fertilizer, but I think Pam and Pete have done
a great job of that, so maybe I\'ll just talk a bit around the
importance of ammonia to our business.

It is an important part of our business. We have an annual production
capacity of almost three million tons. About half of that is internally
consumed to produce the downstream fertilizers like urea or UAN, but
there is a substantial amount that goes into direct sales. Some of that
is industrial, and some of that is into direct applied ammonia for
agricultural.

Distribution and marketing of ammonia is a very specialized business and
requires a significant investment in infrastructure and strong
partnerships with transportation providers. We\'re well positioned in
ammonia distribution in North America, due to our extensive ammonia
distribution, storage, and transportation network.

Our plants, the bulk of them, are based in Alberta. We also have a
production facility in Border, Texas. And our markets are both in Canada
and the United States. Rail is a very significant part of that
transportation capacity, and we shipped just over 10,000 carloads in
2007.

Agrium is committed to the safe production and distribution of our
products, and we strive to continuously improve our performance. In
2007, our non-accidental release performance with ammonia rail shipments
was at 0.59 incidents per thousand shipments, which is about the same as
the year before. For the last five years we\'ve won over nine safe
handling awards from railways.

We lease a total ammonia fleet and all of our cars are \-- or all of our
fleet, rather, is leased. Of 950 cars. We\'ve made ongoing investments
to upgrade our fleet throughout the years, and today we have no pre-\'89
non-normalized steel cars. Our fleet is safe, and has considerable
upgrades in addition to improved metallurgy over a pre-\'89 car, such as
double-shelf couplings and constant contact side bearings.

Agrium supports the efforts of DOT to make further improvements in the
safe shipping of our products. There are several undertakings in
industry today, some directed at improving safety, that require the
consolidating authority of the DOT. And I hope it\'s okay if I use DOT
as the umbrella term instead of going through the list.

We want to ensure that the significant investments required by industry,
most, if not all of which appear to fall to the shipper, result in
material improvements and safety performance.

We do have some concerns with the proposed rulemaking or other
undertakings, and offer the following comments:

The proposed retirement deadlines would limit the life of recently built
cars to only ten years, clearly not economic. Older 112J340 cars could
see more reasonable life of 25 years, but the net effect would be to
penalize those who have made recent investments to bring their fleets up
to the most currently safe standard.

So one of the suggestions that I\'d like to make is, when we look at
retirement deadlines for the current fleet, perhaps instead of having a
deadline that is all cars must be replaced by a certain time, to look at
economic life by year of car built.

Between the AAR\'s CPC 1187 and the FRA\'s proposed rulemaking, access
to new cars has all but disappeared. With significant uncertainty, even
the interim potential of the 600 pound car is not really available to
lessees. Some of our lessors have stated they will not renew leases on
even newer cars. We do not know if these cars will be lost to the
ammonia business, or somehow be made available through purchase.

Many of our shipping destinations are not on 286-capable lines. While
many of our production facilities might be, it makes little difference
if the end destination isn\'t. We believe there may be significant
restrictions with the heavier interim car, or the car of the future.
This translates into more shipments, and additional cost.

As many have already stated, performance of the shipping package is not,
to us, the root cause of rail incidents, and we support the DOT\'s
consideration of measures to prevent rail accidents in the first place.

Agrium is a fertilizer producer and distributor. We\'re not involved
with the design and manufacture of tank cars, so I\'ll defer to the
opinion of the tank car manufacturers on issues with development and
implementation of the next generation car or interim car. I would
however, note the following:

The proposed design and implementation schedule for a new car appears to
be overly aggressive. We ask the DOT to ensure there\'s adequate time
for design, prototype testing, performance validation, and then
construction of a new fleet. This fleet should be phased in over a time
period which allows orderly replacement and competitive access to new
cars.

That\'s really all I had for prepared comments. I think a lot of the
comments already made by Pam and Pete, we certainly support and agree
with, so I won\'t try and repeat them. Be happy to take any questions.
Unless it\'s about how much ammonia goes from Canada over the border,
because Pam, I\'m sorry, I don\'t know that one. I can certainly provide
information on our shipments in confidence.

MR. SCHOONOVER: Yeah. I guess I\'ll begin with a question related to
that. You said you shipped 10,000 car loads last year, and a lot of that
comes down to the U.S. through the portal \-- the north portal on CP.
I\'m wondering if you have considered, inasmuch as that is a high
traffic route, and it is unsignaled territory \-- unsignaled, otherwise
known as dark territory \-- the impact on your business with the 30 mile
an hour speed restriction?

MR. YONT: We have discussed that with the railroads, and they are still
looking at it to say how much of an impact it is for their lines. So at
this point, I have to say we don\'t know. We\'re certainly concerned
about it because, for us, transit times, some of the things you asked
about before, probably won\'t be the issue. Dwell time in terminals
affect our transit times more than the train speed, and I think on a lot
of that territory, that may not be a huge reduction in speed. So again,
turn time\'s probably not the issue. How much it affects railroad
operation? How it impacts their costs? I\'m sure we\'re going to see
passed to us through rates.

MR. SCHOONOVER: Also, if you could, provide any information, because you
are a retail provider as well, wonder if you could provide some \-- any
information or insight you have on the impact on small businesses with
your company?

MR. YONT: Okay. Again, our retail enterprise has annual revenues of
about \$2.7 billion, so I don\'t think we\'re qualified as the small
business. But as Pete said, you know, we see through to the farmer, and
that\'s certainly the issue. Cost of fertilizer is up, cost of fuel is
up, cost of seed is up. So even though crop prices are relatively good,
the farmer is still in a bit of a margin squeeze, so the use of ammonia
as the most cost-effective, in many ways, most efficient in some soil
types and some crops, that\'s going to be important to them and any cost
increases are going to impact the farmer.

MR. COTHEN: There was an article in some publication recently, I don\'t
know whether I saw it in the [Post]{.underline} or the
[Washington]{.underline} \-- you know, the [Washington Post]{.underline}
or the [New York Times]{.underline} or where it was, but the cost of
bagels was going up, and some of you probably saw that. And I guess \--
I\'m asking the question, in my own mind, why we shouldn\'t assume that
all these costs get passed to the ultimate consumer? Granted that
they\'re going to be temporary cases in which the market is making an
adjustment, and somebody is in a squeeze temporarily, right now, end
consumers seem to be seeing a lot of the costs of crude, a lot of the
cost of corn, and wheat, and so I just kind of \-- and I wouldn\'t want
to put this on you, Mr. Yont, but I would hope that commentors,
generally, would address that from a macro economic point of view, and
from a micro economic point of view, to the extent that they have good
views into their individual markets.

You had referred to some of your consignees, I assume, for direct
application not being on 286 lines. You indicated that you shipped about
10,000 car loads in 2007. Would you have any estimate for us as to the
number of car loads that might be impacted by 286 restrictions, assuming
them to remain, and what that would mean in terms of the number of
additional car loads?

MR. YONT: Unfortunately, I do not, and a lot of the issue is not just
the receiver, but the lines they\'re going to run on in between. As Pam
said, we\'ve asked for that information from the railroads, but to date
have not received any information about how much will be impacted.

MR. COTHEN: Well, I\'m not the witness, but I\'ll \-- what I think we
should do, as much as possible, is being transparent in our decision
making and put on the record those items that seem obvious to us. You
know, the short line industry\'s been going through an extensive process
of bringing lines up to 286, and the reason they\'ve done this, and not
tank cars, is because the interchange standard is 286, and substantial
portion of the fleets in all categories, for all products, is 286, and
will be increasingly so over the coming years.

And except to the extent that a short line is really serving a niche
market and really can\'t get 263 cars, you know, they\'re going to have
to upgrade. And the short line industry has gone through one round of
tax credits and continues to seek extension of those tax credits to get
it done.

Federal Railroad Administration is sitting on \$35 billion dollars of
RIF loan authority, only a very small portion of which is currently
occupied. And so, you know, I think that the assumption that the Federal
Railroad Administration would tend to make in looking at this over the
course of the rule is to assume that this problem is related to
origin/destination, as opposed to line haul in between.

And if parties have information that would suggest that\'s an erroneous
assumption, you know, I very much would appreciate them bringing this to
the table and I appreciate that that may be more the railroads that will
have the ability to do that, and answer the questions that you have. But
we really would encourage that that information be brought forward so
that we know what we\'re really dealing with as opposed to the natural
anxiety associated with asking the questions.

Other questions for this witness?

MR. HORN: Actually, just to lead on with that, the 286, the destination
ones, if you could provide any data to the docket that you do have on
your destinations, not necessarily the lines you\'re going across, but
that aren\'t compliant, that\'d be helpful.

MR. YONT: Certainly, I can provide information on our internal
destinations.

MR. HORN: That would be very helpful, thanks.

MR. HOCHMAN: Are there any questions from the audience?

MR. SCHOONOVER: I did have one more clarifying. You mentioned in your
statement about lease terms, and you have a relatively new fleet. Do you
\-- are your lease terms roughly the same five year leases, or are you
\--

MR. YONT: That\'s a good average term for the lease. There\'s some
shorter, some longer. And I\'d be happy to provide some details on our
fleet and the retirements in confidence, so I\'ll send that down.

MR. SCHOONOVER: Thank you.

MR. HOCHMAN: Our next presenters will be Matt Holtz and Ray Foster from
Potash Corporation.

MR. FOSTER: Good morning also. To safe a little bit of redundancy,
we\'ll try not to belabor some of the points already made, but I think
that\'s possibly going to occur anyway. But we certainly want to thank
you for your time and for the invitation, and with the TFI, we are a
member of the TFI, and with Pam\'s help, does a tremendous job, and all
of our colleagues in the audience.

We are Potash Corp. PCS is what we\'re commonly known as throughout the
industry. We started as a small potash company back in the mid-eighties,
and through acquisitions and expanding, we are now the world\'s largest
fertilizer producer by capacity. We make potash, we make phosphate, and
also we produce nitrogen.

Our rail freight expenditures in excess of \$300 million per year, and
our rail car lease expenditures is in excess of \$65 million per year.

Potash Corp markets industrial products, fertilizer products, and animal
feed products. Ammonia is a primary feed stock of several agricultural
and industrial applications. Now, it seems like that this morning, from
what I\'m hearing, a lot of the focus was on ag ammonia. Ag ammonia is
very, very important, but ammonia is also the base of many products that
we touch and feel every day. The foam you\'re sitting on, the tiles in
this ceiling, this carpet, all derive from ammonia. And what I have for
the record, and I will leave \-- I\'m not going to go through all of it
right now \-- but we do have a chart, basically, of all the downstream
products that come from ammonia, and all the consumer products that is
derived from ammonia, which I think you would be amazed, once you start
looking at all the applications. So ammonia, to this country, is a very
important product.

Anhydrous ammonia for tank car safety \-- and that\'s what we\'re here
for this morning. We have a few points here we want to try to make.
Again, there\'ll be some redundancy.

Except for Minot, most safety issues are related to human error and tank
car fittings. Normalized steel and HM-144, 175A, and 201 improvements
provided a dramatic increase in crash worthiness of ammonia cars. Since
1989, even though one is too many, only one fatality has resulted from
an ammonia car rail shipment. And I think you have to give credit to the
railroads, and the shippers, and the car builders, for that record.

The fatality occurred at Minot from cars constructed from non-normalized
steel. From NTSB report on Minot, \"The low fracture toughness of the
non-normalized steel used for tank shields of the five tank cars that
failed in this accident contributed to the cars\' complete fracture and
separation.\" That\'s a quote. Potash Corp supports the removal of cars
constructed with non-normalized steel from the fleet.

Now, regarding the Potash Corp fleet. PCS supports safety improvements
sought by potential advancements in fleet development. We want to make
that very clear. We do support it. PCS currently leases 599 ammonia
cars, currently today at this meeting, 312 are full lease \-- from full
lease leasing companies, 287 of those cars are net leased. PCS still has
32 non-normalized cars that will be scrapped by mid-2009.

PCS ships in excess of 600,000 tons of ammonia by rail annually, in over
8000 individual shipments. Ammonia is the basic raw material for several
PCS and customer product lines, and we have a deep invested interest in
the application of new laws regulating it.

These are some considerations from PCS. PCS is frustrated with the
position of the AAR to set precedents and dictate requirements without
the support of the FRA. We think it causes confusion. The railroads have
stated position against transporting TIH materials is evident in their
proposals. Ammonia shippers need clear understanding of the leadership
and authority of tank car standards. There\'s over 4600 ammonia cars
that ship ammonia, as Pam alluded to. The lack of clear direction can
result in costly mistakes.

By the way, I didn\'t state my name, and I apologize for that. I am Ray
Foster, Director of Distribution within Potash Corp. Now, I\'m going to
pass the second half of the presentation to my colleague, Matt Holtz,
who\'s the Director, specifically of our Rail Fleet.

MR. HOLTZ: That\'s correct, my name is Matt Holtz. I am the Director of
the Rail Fleet for Potash Corp. I do report to Ray. And I\'d like to
point out we\'re talking today about future negative impacts to the
shippers. But I\'d like to take a moment to talk about the negative
impacts that have already happened due to the lack of clarity in passing
regulations and the excitement, so to speak, about what\'s to come and
what\'s not to come.

So far at least, one of our major leasing companies has put out word
that they are intending to leave the anhydrous ammonia rail car
industry. Now that\'s going to have a major impact on the competition
for rail cars and the building of rail cars.

Our renewal rates that we\'ve already renewed on cars over the past two
years, have been increased almost to the point of a gouging, in our
opinion, to the tune of 35 percent in the last year, year to two years.

The lease wording in some of the proposed new renewals is now leaning
towards passing on liability to the lessee, which is something that
we\'ve expressed major concern over, and frustration, but that has not
been put to bed yet. But that is almost unprecedented from a full
service leasing company.

Also, as Ray said, we are trying to release our non-normalized cars in
an accelerated way, and that is already causing a shortage of rail cars.

Now, I\'d like to go on to talk about the future negative impacts that
we perceive coming. The railroads are already implementing car design
based pricing that will penalize PCS and possibly other shippers,
without the opportunity to meet the car criteria. Railroad\'s efforts
are designed to push an important commodity off the rails, as so it\'s
been described to us.

We\'ve already seen increases in anywhere from 100 percent to 680
percent since 2004, in rail rates alone. Now, that\'s not car leasing
rates, but that is rail freight rates. It\'s a serious cost impact. We
are looking at the costly car standards of the future, but we have no
idea of what that number might be.

And there will be, as we understand it, additional cars required to move
the same amount of volume that Ray alluded to.

Based on the rate and projected car shortages, PCS has already converted
130,000 tons annually to trucks, which increases congestion to the
general public by an additional 6500 trucks per year. And that should be
understood that that\'s additional fuel, additional equipment for trucks
to be built, the capacity there. There\'s a number of things to be
considered with regard to that.

MR. FOSTER: I think that\'s a very good point, is the consumption of
fuel. I don\'t have the \-- maybe if there\'s any railroad people could
tell me, but the cost of a gallon to move a unit train of 75, 90 rail
cars at one time, compared to a truck expending maybe nine to ten miles
per gallon is the best they\'re going to get, to move only 20 tons, so
you can see the fuel consumption and the impact, if we go to more
trucks.

MR. HOLTZ: Further projected impacts would be the speed restrictions
that we are looking at, are expected to cause additional congestion and
dramatic increase in turn time, requiring also, additional cars.
Specific railroads have indicated to us that the speed restrictions will
cause operational problems that will essentially be equating to economic
costs that will be passed along to the shippers.

Handling ammonia cars will become increasingly difficult from
regulations regarding re-routing around high threat urban areas, and
interchange security requirements as outlined and discussed in the
Section 333. The 286,000 gross weight will eliminate service to certain
customers. And although I don\'t \-- I also don\'t have much information
regarding that, I can only believe that there will be an impact, if
nothing else, due to the origin/destination locations.

Based on the length of time until the final rule is effective, plus the
time to research, build, and test new cars, years could pass before we
could take on additional cars, thus constraining our business.

Another thing is the world \-- world food supply will be victimized
based on our reduced ability to provide fertilizer for crop production
nation-wide, and world-wide, ultimately.

Further impacts would be \-- a newly-designed car, while not yet
defined, is projected to reach in excess of \$150,000 to build. I
believe that\'s a safe statement. This will cause full service lease
rates to increase by well over 100 percent.

Now, the PCS fleet, 95 percent of the PCS ammonia car fleet is less than
15 years old. The depreciated value of that fleet is quite high, and
this regulation will cause an impact to us. The final rule provides
essentially no ability to modify these existing cars. 287 of these cars,
for PCS, are on 20 year leases, specific to ammonia. Ultimately, these
cars will have no commercial value as ammonia cars at the end of that
lease. The asset and economic losses on those specific cars, could
exceed \$15 million dollars on cars rendered obsolete, and we could
potentially be looking at as high as \$40 to \$50 million dollars as
replacements of those particular cars.

The implementation timeframes of five years for 50 percent and eight
years for 100 percent are excessively burdensome to PCS, and this would
require PCS to order 283 cares in the first 4.5 years when new
construction costs will be at their highest. With no real performance
testing history, risk for design error and hazard exposure could be
great.

Now these are the things that PCS is -- Potash Corp \-- is looking for.
First of all, we request the FRA to make clear its authority over the
AAR and express intolerance for the confusion in publications that
create two sets of rules for the shipper.

We believe that interim car designs should only be approved by the FRA,
including the interim car, if such action is subsequent to the testing
and does not disturb the economics of new car supply nationwide, or
become obsolete after an FRA final ruling later on.

Since the final rule will determine PCS\'s course of action, the new
cars ordered should not be established until the final rule is out.
Then, and only then, an appropriate timeframe should be considered,
allowing for the multiple designs to be tested.

We consider that a car less than 15 years old, designed to the then DOT
approval when built, represents a significant investment to our
corporation, and should be grandfathered for the life of that particular
car.

Since controlling the effects of a derailment is critical to the
survivability of a car, we also feel that all rail cars on the rail
should be equipped with double shelf couplers as they can easily be
coupled to a tank car, just the same as two tank cars coupled together.

MR. FOSTER: To be clear, that\'s not only ammonia cars, but that\'s all
rail cars, double coupling.

MR. HOLTZ: And that concludes our presentation. I thank you for your
time, and we\'re welcome to take any questions.

MR. SCHOONOVER: Thank you. Thank you, gentlemen. It\'s great as long as
the price of pastries don\'t go up, I\'m okay. The bagels can rise, I
just want to make that clear.

The \-- I guess I\'ll start by \-- apparently from your presentation,
you\'ve already acquired trucks for ammonia. I\'m wondering what the \--
if you can give us an idea of what the cost of trucks are. We made some
assumptions in the rule based on what we knew, but I\'m wondering if you
could \--

MR. FOSTER: Well, Bill, those are \-- that is a contract that we have
with a specific carrier. In confidence I\'ll be glad to get you that,
okay, off the record, yeah.

MR. SCHOONOVER: Thanks. I was also wondering about your average haul,
your distance. Do you have any sense of \-- you know, the national
average for hazardous materials is somewhere around \-- I believe the
number is 460 miles, somewhere in that neighborhood.

MR. HOLTZ: I can\'t say right down to the mile, we could probably get
that information, but we estimate it to be between four and 500 miles.

MR. SCHOONOVER: Okay. Also, the question on your \-- you have, on your
leases, they asked a similar question yesterday about whether any of the
leases had regulatory clauses in. I know prior leases would have clauses
in them that if the government put in requirements that would supersede
what the car was at the time that you ordered it, is there a clause that
would allow you to get out of it, or are you stuck with the full 20 year
\-- for the remaining?

MR. HOLTZ: Generally, the way the typical \-- we have a number of leases
\-- but the typical lease in the terms of such net lease cars, would
require us to remain in compliance through the term of the lease, which
would cause us, the lessee, to bear the brunt of any modifications prior
to the return of the car, which would also require us to return that car
in a condition that it could be used for what it was originally intended
for, anhydrous ammonia. So a car that can\'t be modified is suddenly \--
has no commercial value.

MR. SCHOONOVER: The other \-- I guess my next question is, the \-- I\'m
wondering if you could talk about the impact of \-- you made a decision
to scrap the remaining 32 pre-\'89 cars in your fleet by mid-\'09, I
believe you said.

MR. HOLTZ: Yes.

MR. SCHOONOVER: I\'m wondering about the impact of that \-- the shortage
of rail cars on that decision, and how that\'s \--

MR. HOLTZ: We \-- we originally had, I think the number was, when we
first started keeping track of it, the number was up around 70 cars, I
think, 70 cars. And you know, they were older cars. Some came off of
leases that we purposely chose not to renew. Others were scrapped
through attrition and aging out. We do have 32 cars left. We have had to
go out and lease some cars to replace some of those cars that we lost
through attrition or scrapping. However, not on a car-for-car basis.
It\'s just been \-- we saw a fleet reduction, therefore we did some
replacements.

MR. SCHOONOVER: Okay.

MR. FOSTER: And also, Bill, this contract for these truck times is not
due to commence until January \'09. So, we\'re trying to compensate a
little bit for losing a few of these cars.

MR. SCHOONOVER: The \-- my next question is, the \-- you mentioned the
security issues, and I\'m wondering, what issues are you currently
seeing with the issues with cars, the availability, these proposed rules
and what TSA is doing on reducing dwell time in yards and so forth? How
is that impacting you?

MR. HOLTZ: We \-- currently, we\'re probably seeing at or near the same
turn times that we have for some time. We have not really studied that
in particular. We are constantly on a goal to try to improve our
utilization of the equipment, and we\'ve actually seen some
improvements. I think that\'s internal to our own monitoring of the
fleet and so forth. But to date, I \-- we haven\'t seen major impacts in
dwell time problems, that sort of thing.

MR. SCHOONOVER: And I guess my last question is if you can \-- if you
have any other information on the impact on small businesses as it
relates to people you supply.

MR. HOLTZ: I think \-- I think small businesses will naturally be
affected because the cost of much of this will ultimately be borne on
the \-- on the small business. All of the small businesses or smaller
businesses as outlined in the information that Ray alluded to, in terms
of the various chemicals and those products, they\'re naturally going to
feel car increases to not only the rail rates that have increased, as I
said, 100 to 600 percent already, but also in car costs, lease rates
that are going up could be as high as 100 to 200 percent, depending on
what the interim car and/or final rule car are. Those will be \-- they
will be forced along.

MR. FOSTER: I think another point too is that, for instance, if we have
an industrial account, a readable account, which means they take tons
every month steady throughout the year, maybe a rail car a week or every
two weeks. If that should go to truck, they do have storage on site, so
they\'ll \-- they typically have at least about a rail car and a half
worth of storage. Most small industrial accounts, sometimes two rail
cars worth. But if we should go to trucks, then just the delivery and
the service of those will be so critical, that smaller business would
have to add manpower, because you\'ll have more units coming in, to
unload that truck. You know, those are costs that really, I don\'t know
what the magnitude will be. But it will be higher cost for them, no
doubt about it.

MR. SCHOONOVER: Okay. I would just ask, and I\'ll \-- for all the
presenters \-- I think if you have information on small businesses that
you provide to, if you could provide us some information in what the \--
what your projected impacts on those would be.

MR. HOLTZ: I believe we can come up with something.

MR. SCHOONOVER: Thank you.

MR. HOCHMAN: Grady, if I can \-- can I just follow up? The customers who
are now getting rail shipments, if they go to \-- you have to supply
them by truck, is that going to require major infrastructure changes at
the customer\'s facility?

MR. FOSTER: In some cases, yes. The unloading of a rail car compared to
the unloading of a truck is not the same. So, yes, there would have to
be pumps provided, again, manpower, extra manpower provided to handle
those more units.

MR. HOCHMAN: And you\'ve said you\'ve already converted 130,000 tons a
year from rail to highway, and that\'s 6500 truckloads?

MR. FOSTER: Right.

MR. HOCHMAN: And do you lease those trucks, or what \--

MR. FOSTER: We have a contract.

MR. HOCHMAN: You have a contract?

MR. FOSTER: We have a contract, yeah.

MR. HOCHMAN: There\'s a potential that those trucks could be \-- when
you\'re not using them, they can be converted to LP gas service?

MR. FOSTER: Well, this is a dedicated fleet for our service is what it
will be, yes, specifically, this particular move, I don\'t mind telling
you, is moving ammonia from Tampa, which is coming in by vessel, okay,
by water, that will be going to our phosphate plant in Florida, and that
phosphate plant makes six other products in the phosphate line, that we
sell to all avenues of customers.

MR. COTHEN: Tampa to your plant\'s about how long?

MR. FOSTER: Well, it\'s not quite to Jacksonville, but it\'s a couple
hour drive anyway, about 75.

MR. COTHEN: Okay. For movements, you know, 500 to 1000 miles, would you
see the economics of that changing any from your perspective? I
understand that there are downstream costs, but would you see that \--
any significant difference in terms of the election of modal diversion?

MR. FOSTER: Going from rail car to trucks?

MR. COTHEN: Right.

MR. FOSTER: Is that the question?

MR. COTHEN: Right.

MR. FOSTER: Yeah, we would not like to see that. And again, I think Pam
alluded to it in her presentation, the threshold is somewhere around
three, or four, or 500 miles, max. That\'s about as far as you want to
go with a truck. After that, then you\'re really start losing economics
quick.

MR. COTHEN: Okay. This liability thing intrigues me. I have to confess,
I\'m trained as a lawyer, so just have to forgive me. The \-- in any
given decade there are about, I think it\'s about 100 \-- on the order
of ten to one \-- fatalities on the highway versus fatalities on the
railroads from transportation of hazardous materials. There are,
obviously, additional liability costs associated with truck transport
having to do with the ordinary traffic accidents that occur. And other
FRA analysis has indicated that, as you suggest, that\'s not a favorable
tradeoff, in fact, if it is going to occur.

However, one assumes that \-- and again, assumes, and that\'s why I\'m
asking the question \-- that at least the reinsurance markets for
transportation must be comprised of entities that have some knowledge of
what these risks are, and I\'m intrigued by the notion that we\'re going
to talk about transferring product to truck and at no point does the
insurance market catch up with the realization that the risks have
increased. It seems that at some point that they would, particularly
given the heightened security \-- sensitivity associated with having a
vehicle you can take off the rails \-- off the street, if you will.

Any sense in talking with the insurance community what\'s going on
there? Or where we might be headed? And again, this may not be something
you want to respond to here and now, but I would think that it\'s
something that we need to hear from all the parties on.

MR. FOSTER: Well, we agree, it\'s probably a little premature now, but
it will be something that will be coming, no doubt about it, as the
units increase on the highways. What Matt specifically alluded to in his
point, was that we had a rail car leasing company that basically said,
yes, we will lease you cars, but you assume 100 percent of the
liability.

So, will truckers eventually, in their new contracts, will they make the
same requirements? I don\'t know. Or I don\'t know what that cost would
be right now. It\'s a little \-- I think it\'s premature.

MR. COTHEN: Sure. Thanks. Thanks for speaking to that.

There\'s this one other issue that\'s come up a couple of times in the
last two days that you mentioned, and that was the desire to have double
shelf couplers on all rail cars. And I\'m intrigued by that. My
understanding in the \-- we have rail representatives in the room and
they can correct me \-- but I believe that the current interchange
standard for new couplers is bottom shelf for all rail cars other than
hazardous materials rail cars.

The Federal Railroad Administration looked at this with regard to an
NTSB recommendation on double shelf couplers on locomotives, and after
some extended consideration, came to the conclusion that there would be
little or no benefit achieved by doing that. And of course, the reason
for that was that what\'s going to get struck on a locomotive is not
normally an occupied portion of the locomotive. And also secondly, and
Eloy Martinez is here, and worked that from a technical standpoint, also
the kind of impacts that we were seeing that the Board seemed to think
that might be favorably influenced, were actually of sufficiently high
energy that we were ripping out the draft gear anyway.

And so, having worked on double shelf couplers for tank cars, and having
seen the industry roll out the bottom shelf, which would seem to work in
concert with the double shelf coupler on the tank car to avoid head
punctures, which have been happily infrequent, although not non-existent
in typical switchyard impacts since the retrofit, I\'m wondering if not
here, but for the record, you could give us any technical case that
you\'ve seen that would support applying double shelf couplers to the
remainder of the fleet, which would be on the order of 1.6 million units
of rolling stock, minus 250,000 tank cars in the North American fleet.

We\'re not, in any way, closed in our minds to that option, but we\'re
not able to describe what benefit would be achieved.

MR. HOLTZ: I would have to prepare something along those lines, and my
\-- PCS\'s thought process merely reflects how we\'ve seen tank cars,
and how we\'ve learned of tank cars behaving in derailments with double
shelf couplers. We \-- we are \-- we believe the effects of the
application of the double shelf couplers on the tank cars has been a
godsend to the survivability of cars, very good improvement. It\'s just
that we feel that this is probably something that if it\'s as good for
tank cars, perhaps it should be the same for other freight cars, to help
protect in the cars that are coupled to the tank cars themselves.

I think the bottom shelf couplers, perhaps that is something that is
helping, but if it\'s worked for tank cars, I don\'t understand the
shortcoming of just making it the double \-- the bottom shelf coupler.

MR. COTHEN: And so the benefit that you see would be in a derailment
environment, keeping the cars coupled, is that basically the scenario
you\'re looking at?

MR. HOLTZ: Coupling and going through the full accordion effect
prevention and head impact, by \-- by another freight car.

MR. COTHEN: Okay. Thank you. I think that\'s what I had.

MR. HORN: To focus on the risk thing a little bit more, when you were
pointing out the highway situation, where you shipping from Tampa all
the way up to somewhere near Jacksonville, so you\'re shipping via truck
across I-4, and then up north via 75 or 95?

MR. FOSTER: Right, that would be the route, correct.

MR. HORN: Just my gut tells me it would be safer to ship on a rail, but
\-- from what I know from I-4 and I-95 and I-75 in Florida, especially
during the winter months.

On a different note, we know what the likelihood and the probability of
substitutes and the effectiveness of ammonia for agriculture purposes,
for NH3. We\'re pretty sure there aren\'t any for explosives. For your
other products, since you are diverse beyond agriculture, are there any
substitutes for NH3 as far as use in these products?

MR. FOSTER: No. No.

MR. HORN: Thanks.

MR. SCHOONOVER: Yes, I actually have two clarifying questions. One is,
I\'m not \-- I would have to go back and pull out the UWASI legislation,
but is Tampa a high threat urban area? I don\'t know if you know if it
is considered one. It is considered one, Pam? Thank you. That\'s \--
it\'s interesting that we\'re moving to truck in a high threat urban
area. I\'d be interested to \-- if you could provide some information on
the issues that you\'re seeing with TSA in that area.

MR. FOSTER: Certainly.

MR. SCHOONOVER: The other may not be directed to you gentlemen, but you
\-- I\'ve heard twice that there are 4500 cars in the fleet for ammonia.
The number we used was somewhere around 6000. I\'m wondering if the
disparity is non-TFI members? Does that \-- is the 6000 still an
accurate number, roughly, or \-- if you could step up \-- there seems to
\-- I just want to make sure we \-- we have \--

MS. GUFFAIN: I\'m sorry, Bill, it still may be a little high, because
you know, I don\'t really know the universe of ammonia shippers, other
than, obviously, the ones that are within the TFI membership. But I know
there are at least two additional shippers that our companies probably
do business with that ship ammonia that are not TFI members, but I do
not think that their rail car fleet adds up to a lot of cars. So, where
the discrepancy comes from, I really have never been able to establish a
6000 number. And I update our numbers with our members \-- well, I\'ve
done it twice now in the past year, so I feel fairly accurate that our
numbers are correct.

MR. SCHOONOVER: Are your numbers, Pam, are they \-- are those ones that
are on what we would consider long term lease? I mean, is there a
possibility that the \-- some of that balance are cars that are
temporarily used from \-- perhaps shifted from LP gas into ammonia?

MS. GUFFAIN: No, let\'s see, I did this probably, Bill, about a month
ago, so this includes not only our non-normalized, but our newer cars,
and that\'s where I came up with the 4660 and the 340 non-normalized.
And these are ones that stay, I think, pretty much in our service all
the time. I don\'t think these are the swap-outs right now. This was our
fleet as of like about a month ago.

I can go over these numbers with you in confidence, if you\'d like, and
we\'ve had some contact with the other two companies that we do know
that ship ammonia, but it wouldn\'t probably amount to about 300 more
cars, total.

MR. SCHOONOVER: I you would \--

MS. GUFFAIN: If anybody has any idea who else is shipping ammonia, we\'d
like to know. I don\'t know \-- but they may have to join for us to help
them. That\'s my member services.

MR. SCHOONOVER: I\'m \-- yeah, if you would, Pam, when you\'re looking
at those, if you would also, I guess, get a sense of what we\'re looking
at as far as cars that may come in from the LP gas service. I know
there\'s less and less of that these days than there was, probably, ten
years ago \--

MS. GUFFAIN: Right.

MR. SCHOONOVER: \-- but I\'m just trying to get a sense of how that
plays into this equation.

MS. GUFFAIN: I know that at least one of these companies does sublet
back and forth, but I don\'t know that that \-- I do not believe that\'s
included in their numbers.

MR. SCHOONOVER: Okay. Thank you.

MR. HOCHMAN: Any questions from the audience for either Matt or Ray?
Thank you.

Our next presenter will be Nick DeRoos of Tetra Nitrogen.

PARTICIPANT: It\'s Terra.

MR. HOCHMAN: Terra. I can\'t read.

MR. DeROOS: First of all, I want to say thank you for having this very
important meeting to both administrations, and appreciate the
opportunity to come here and comment.

My name is Nick DeRoos and I\'m with \-- I am the Senior Director of
Distribution for Terra Industries, located in Sioux City, Iowa. Terra is
the largest anhydrous ammonia producer in the United States and
distributes ammonia from its key facilities in Donaldsonville,
Louisiana; Port Neal, Iowa; Woodward, Oklahoma; Verdigris, Oklahoma; and
Yazoo City, Mississippi. Terra also owns a facility in Courtright,
Ontario and we ship a lot of ammonia from that facility the eastern part
of the United States.

Terra Industries is very concerned about the safety \--safety in
general, and has company wide initiatives that are directly tied to
performance compensation based on our safety performance. We are
concerned about tank car security and design safety, and we are in full
support of developing the best standards, and adhering to those
standards.

With that said, we also desire to base multi-million dollar decisions on
well established facts and testing and not rely on modeling alone. Terra
is supportive of taking the time and effort to \-- necessary to develop
the right car. We are not convinced we should be proceeding with a car
standard, such as the J500, that

has not been thoroughly tested and will likely be superseded by another
car standard within the next two or three years.

I want to make specific comments as we go along to the requests that
were part of the CFR. So the next category of comments is on the
enhanced car design and implementation period.

Terra Industries is among the largest lessees of anhydrous ammonia cars
in the United States. We have a fleet that runs about 800, 100 percent
leased. Assuming the lease cost difference between a new J340 car, if
you could get one, and the future enhanced car is approximately \$500
per month, the incremental cost to Terra would be approximately \$5
million dollars per year, present value.

Up until April 30, 2008 the 112J340 car was the car standard for ammonia
industry. The next day, the car standard was changed to the 112J5OO, and
since the AAR has put that into effect, they\'ve also asked that car car
standard be grandfathered, which we\'re all aware of for its economic
life. No car manufacturers, to our knowledge, are building that car, and
it\'s not likely that any of them will unless that car is grandfathered.

My concern is if the J500 car is grandfathered, it is likely some
railroads will implement their respective transition programs designed
to expedite transition of the fleet to the J500 car, similar to the
transition program proposed by the BNSF originally scheduled to go into
effect January 1st of this year, but then was suspended. Assuming the
J500 car is grandfathered and built, Terra desires that this ruling both
address the possible existence of the J500 cars and exclude the J500
cars from the eight year implementation period.

In addition, and I guess kind of reciprocally, Terra requests some type
of protection be put in place that would prohibit any railroad,
organization or governing body from assessing a fee of any kind \-- I
called that a transition program earlier \-- against a shipper for using
that J500 car in ammonia service during the grandfathered period of the
car. Likewise I ask the same for the existing 340 car, at least through
the implementation period that we have in the proposed ruling.

And I want to be specific when I say \"of any kind,\" some type of a
transition program of any kind. The BNSF called theirs a rebate program,
but I don\'t think a rebate on the heels of a rate increase is really a
rebate, just for clarification.

The ammonia industry\'s willingness to replace J340 cars with a safer
car should be met with the railroad industry\'s acknowledgment that
their level of risk has been reduced and therefore, the risk premium
that has been priced into anhydrous ammonia rates should be reduced as
well. If not, one could assume the railroads do not see a significant
reduction of risk achieved by the J500 car and therefore everyone should
just wait until we have demonstrated the proper car design, and all
parties can accept that and move on from there.

The enhanced car design is intended to improve the crashworthiness of
the car in the event of derailments and ramming regardless of the cause.
We\'ve talked about potential causes already. One of the most likely
objects present in a rail incident that possesses both the momentum and
shape capable of puncturing a car is the coupler of another car. One
measure that could be taken to reduce this source of a puncture is to
universally require double shelf couplers on all rail cars in the entire
fleet, which has been mentioned already.

As far as the proposed speed restrictions, Terra does not have the
information required to comment on the impact of the speed restrictions.
Terra does have concerns, however, that these restrictions could go
counter to railroad capacity and velocity initiatives and therefore put
additional commercial burden on anhydrous ammonia shipments.

As far as the gross weight increase to 286,000 pounds, in order to ship
the same amount of product in the enhanced car, it will require Terra to
upgrade track infrastructure at all of its manufacturing and key
distribution facilities. We are estimating \-- we\'ve already spent a
million and a half to upgrade some infrastructure. And we are estimating
an additional \$4 million dollars to make our facilities 286 capable.

Though we have not conducted studies, it is likely that some customer
locations do not receive enough ammonia shipments to justify upgrading
their track infrastructure to accommodate heavier cars. They just don\'t
have the volume. So in these cases, it\'s already been mentioned that
it\'s possible that there could be a shift in modes, but they may
conceivably just take light-loaded cars, which \-- and pay the freight
\-- associated freight penalty for taking a light-loaded car, as opposed
to putting the money into the \-- upgrading their tracks. One other
thought that, as I was developing this came to mind is, heavier cars
will require more fuel and horsepower to transport the same net weight.
It\'s just physics. In addition, the empty return weight will be higher,
which also causes it to use more fuel. The added inefficiencies will
probably cause upward pressure on rates and generate a larger carbon
footprint per ton of product hauled.

My concluding comment is that my overriding concern is that we will
invest the money required to transition our fleet to the new enhanced
car standard. We will spend the money to upgrade our rail
infrastructure, and likewise our customers. And we will continue to pay
the escalating freight rates as long as it\'s commercially doable and
we\'re in a part of an ag boom that\'s allowed some of this to happen,
that when that returns to normal, I think it will be devastating to the
industry. We could do all that, but at the end of the day, I\'m afraid
we might end up at the same place we are today with the railroads not
wanting to haul anhydrous ammonia due to liability.

So eventually, through pricing strategies, the commodity will be
transferred onto a less safe mode of transportation whose rates have
also escalated in sympathy with rail through this whole process. In the
meantime, we will have spent millions of dollars to end up where we
didn\'t want to end up in the first place.

That\'s the end of my comments. Thank you. Any questions, I\'ll be glad
to take them.

MR. SCHOONOVER: I guess I\'ll start. Terra Nitrogen, your primary sales
are to retail or to wholesale?

MR. DeROOS: Predominantly, we\'re a wholesale.

MR. SCHOONOVER: Wholesale?

MR. DeROOS: A wholesaler, yeah. We were a retailer back in the late
90\'s and then we divested of that business and went strictly wholesale.

MR. SCHOONOVER: Is \-- I guess just for \-- is the retail side of it
primarily run by small \-- is that the coop side, and the \-- or \--

MR. DeROOS: Well, some of the companies that have presented already are
also retailers, but you have \-- we\'re a blend of industrial customers,
where we sell direct to the industrial user, and then we sell a lot to
cooperatives. We\'re probably much more of a rural corn belt ammonia
distributor to the farm service and the retailers that actually have
limited storage and such. The question earlier about whether rail cars
are used for storage, and I think the gentleman from PCS, Ray, addressed
that pretty well. Some of these have limited storage, and you actually,
to gear up for the season, you may have a couple rail cars sitting at
their facility waiting to be off-loaded, and the timing of that is all
so questionable because of weather, it\'s really, you\'ve got a window
that finally hits and then you move the ammonia.

One quick comment before I forget, there was a question about pipeline
capacity earlier. Terra does distribute or move product on both
pipelines throughout the United States. The Magellan pipeline has, in
recent year, year and a half, been somewhat constrained, some from
mechanical testing and such that they\'re doing, but it\'s full at
capacity.

The New Star pipeline, which has been called several pipelines over the
last five years, is currently what goes from like Taft, Louisiana, up
into the Illinois and Missouri and such, and it does have a lateral, I
think, that is being \-- the size has been increased basically, so it
might be running a parallel artery to get the total surface area, or
volume throughput up through that region, but I think it\'s nominal how
much it\'ll increase it.

MR. SCHOONOVER: Well, since you mentioned pipeline, I guess I\'d ask you
that \-- to understand the pipeline portion of it, my understanding is
the pipeline does not necessarily provide delivery to all the areas that
it\'s needed. It mainly goes into some parts of Iowa, Nebraska,
Wisconsin, but it doesn\'t necessarily go up into the wheat belt in that
area? Is that \--

MR. DeROOS: Well, that\'s probably fair. It does go \-- a section goes
like from Border, Texas up through western Oklahoma, and up that route,
and a lateral comes over from like the Tulsa area on up and then it goes
into Nebraska \-- through Kansas, Nebraska, and into Iowa, and meets up
with \-- it does intersect with the New Star pipe as well.

But the number of taps, if you will, connections to it, are limited.
Obviously, it\'s generally large cryogenic storage facilities. You can
kind of imagine the challenge with ammonia, it\'s \-- you\'re filling up
storage when you\'re out of season so that you can move all that product
in a short period of time when you\'re in season. So most of the utility
of the pipelines would be to reenergize, or restock, seasonal storage
capacity. And you\'re doing that most of the year and then you move all
your product under a couple of two peak seasons.

There are some advantaged industrial customers that are tied directly to
the pipeline, and they have limited storage generally, and they get it
directly off the pipe.

MR. SCHOONOVER: So is it fair to assume that the \-- a lot of the
pipeline still has, even though it\'s transported by pipeline, there\'s
still a pretty fair percentage of move that\'s done by rail after the
pipe? Or is most of that local?

MR. DeROOS: Yeah, I believe that most of what is done \-- there isn\'t
like you pipe it and then you rail it. Like pipe it to a midwestern
facility and they rail it. Most of that would be a local truck
distribution from there. There may be some, but I \-- Terra doesn\'t do
\-- doesn\'t do that.

MR. SCHOONOVER: Okay.

MR. HOCHMAN: Grady? Are there any questions for Nick from the audience?

MR. DeROOS: Okay. Very good. Thank you for your time.

MR. HOCHMAN: I have a question for people. This part of the meeting I
can speak with 100 percent confidence on my cheap, knock-off, \$10
watch, which I got in a flea market in Florida, it says it\'s about ten
minutes to 12. We have two more presenters before we open it up to
audience for general comments, and I\'d like a sense, do we just want to
plod through and finish, or \-- I can take a hint. We will continue.

MR. SCHOONOVER: Want to take a few minutes?

MR. HOCHMAN: Okay, but before we continue, it\'s a request we take a
short ten minute break.

MR. SCHOONOVER: A bio-break would be good.

(Whereupon, at 11:50 a.m., a ten minute recess off the record was
taken.)

MR. HOCHMAN: If we could take our seats, I promised to start the meeting
and we could all get out of here in a reasonable time.

Before we move on to our next presenter, Nick has asked for the
microphone to \-- he left out an important sentence in his presentation.

MR. DeROOS: Yeah, with all the excitement, regarding non-normalized
pre-\'89 cars, Terra would support a mandate to remove those cars from
service sooner than the proposed five years, provided that suitable
replacement cars are available and lessees would be released from their
leases without penalty. Thank you.

MR. HOCHMAN: Okay. Thank you. Our next presenter is Judy Gillies from
J.R. Simplot.

MS. GILLIES: Thank you. And thanks to both agencies for having this
hearing and to let the shippers have a voice in this matter, and thanks
for the audience for coming back after the ten minute break.

Much of what I\'ll say will be a reiteration of what my colleagues spoke
about earlier, but I think it\'s important that each one of us represent
our companies here, because anhydrous ammonia is so important to us.

My name is Judy Gillies. I\'m the Senior Director of Transportation for
the J.R. Simplot Company. I am responsible for both inbound material and
outbound finished product for both truck and rail.

The J.R. Simplot Company is a privately owned agribusiness company based
in Boise, Idaho. The Simplot Company is made up of three main business
groups. They are Land and Livestock, which is a cattle feeding
operation; Food Group, which produces food products like French fries
\-- if you\'ve ever eaten a French fry from McDonald\'s, you normally
would eat one of our products, or if you eat guacamole at Mexican food
restaurants, we also produce that; and AgriBusiness is the portion I
represent, and AgriBusiness is a phosphate fertilizer company.

We \-- I have production facilities in Pocatello, Idaho; Rock Springs,
Wyoming; Lathrop, California; and Helm, California. Simplot fertilizers
are distributed domestically to growers for use on crops such as grains,
rice, potatoes, vegetables and fruits \-- and so the specialty products
that you were referring to earlier, as the strawberries. Our company
also owns an import facility at Rivergate, Oregon.

Anhydrous ammonia and molten sulfur are the two key ingredients into our
production. I am here today, of course, to discuss the shipping of
anhydrous ammonia.

Anhydrous ammonia is a key raw material for phosphate fertilizer
production. There is no alternative. Annually, Simplot consumes close to
150,000 tons of anhydrous ammonia at the Idaho and Wyoming facilities.
All of this is shipped by rail, and it\'s not feasible for us to ship
this by truck. The retail side of our business consumes approximately
20,000 tons annually. Most of this is used for non-hazardous solution
reaction.

Simplot practices, as do all the companies represented by my colleagues
here today, 100% compliance with all federal, state and local regulatory
rules for handling, shipping and storing hazardous materials, and this
includes toxic inhalation hazards. Our companies \-- our employees
receive regular formal training in all procedures for safety and
security. Our company also has a security task force which is charged
with staying current on all Homeland Security initiatives, and we ensure
compliance at all our locations.

Simplot training is provided not only to our employees but to our
customers. Simplot is a participating partner in TRANSCAER, which is
Transportation Community Awareness and Emergency Response. It\'s an
outreach effort. The rail carriers, rail car builders, shippers,
receivers, first responders, all provide and receive training through
TRANSCAER in the very communities where we do business.

Simplot is committed to support the regulations for a safer tank car and
wants to work with DOT throughout the process. While Simplot is
committed to being an industry leader in setting high safety and
security standards, we do question the increased safety results of the
proposed tank car improvements in Docket Number FRA 2006-25169. The
specifications proposed are out of scope of the current Next Generation
tank designs. The Next Generation tanks were designed to improve the
crashworthiness based on historic data and industry input.

The question becomes \"Will there ever be a tank car designed that can
survive all derailments and accidents?\" The proposed items also suggest
slower train speeds for tank cars not meeting the outlined
specifications. This will he an operational issue for rail carriers and
will likely result in financial

penalties for the shippers. Additionally, the slower train speeds will
result in longer turn times for product which leads shippers to increase
their fleet size. For example. if the current turn time is five days and
the slower train speed equates to a time of ten days, the requirement
will be to double the fleet. This adds \-- subsequently puts more rail
car tanks on an already at capacity rail system.

Simplot already has experienced an increase in rail fleet costs for
anhydrous ammonia. Compared to my colleagues who spoke today, we\'re a
very small ammonia shipper, but it\'s extremely critical to our company
to receive ammonia as well. All but six of the pre-1989 tanks have been
released from our fleet and replaced with new anhydrous ammonia tank
cars which are the 112J340W models. This was the only model at the time
that was available and approved for us to use as a car replacement.
These cars hold less product due to the increased jacket on the car, so
the capacity has been decreased. This necessitated the increase of the
fleet from 85 tanks to 93 tanks. The combination of early releasing
pre-1989 tanks and increasing the fleet size meant an increase in costs
of nearly a million dollars to our company.

A 286 rail tank car will hold the larger payload; however, many
infrastructure changes will be required at both our origins and
destinations. The cost for these charges to our company would be in the
millions of dollars. Of course, these additional costs would \-- we
would try to pass those along to the consumers, ultimately the growers,
ultimately, the people who buy food. So it would increase our basic food
supply chain cost in North America.

Simplot respectfully requests that DOT grant approval for an interim
anhydrous ammonia tank that would have a life of longer than twenty
years. Currently, the rail equipment builders cannot justify building
anhydrous ammonia tank cars for shippers who don\'t know if the tank
cars will be obsolete in a few years. The negative economic impact to
change a rail tank car fleet in less than twenty years can be an
unbearable financial burden to the small shipper.

Simplot supports the general purpose of the Department of
Transportation\'s rulemaking to enhance rail car safety as the
importance of public safety and security is well recognized within our
company. Simplot requests that DOT consider these comments along with
the comments of other shippers, rail carriers, and rail equipment
builders when making the rule on this critical matter. Simplot
recognizes DOT as the sole government agency with the authority and
responsibility to make such a ruling.

The opportunity to be heard on this is very much appreciated. Thank you.

MR. SCHOONOVER: I guess I\'ll \-- Judy, a question on your \-- you\'re
recommending that we come up with an interim car with a life longer than
20 years, and I don\'t expect an answer right now, but if you would
consider and provide us some comments on how much longer, you know, is
it 21, is it 25? And some justification as to what the \-- how you
arrived at that basis, we\'d appreciate it.

MS. GILLIES: Certainly.

MR. COTHEN: I\'m sure others here probably understood implicitly, but
could you walk back, for me, please, Ms. Gillies, you went from 85 to 93
cars based upon what \-- what transition was that?

MS. GILLIES: That was when we changed from the pre-1989 cars \-- those
cars could hold up to 70 tons of ammonia, and the newer cars that we
have, we\'re probably getting about \-- excuse me, the older cars we got
about 78 tons in, these we\'re only getting about 70 in. So we had to
increase our fleet size.

MR. COTHEN: And those are 263 cars?

MS. GILLIES: 263 cars \-- both of them are, it\'s just the difference in
design, that the payload is less in the newer 112J cars. And that\'s due
to the thickness of the jacket.

MR. COTHEN: Thank you.

MS. GILLIES: You\'re welcome.

MR. COTHEN: That helps \-- helps me understand. Go ahead, Bill.

MR. SCHOONOVER: I was just going to say, so the pre-\'89 cars that you
had were, I take it, thermally protected cars, T-cars?

MS. GILLIES: They were.

MR. SCHOONOVER: Okay.

MS. GILLIES: And we \-- Simplot, as some of the other companies have
stated, we aggressively changed out the pre-1989 cars after it was
suggested, after the Minot incident, and we only have six of those left
in our fleet, and the reason we still have those six is just simply
there\'s not availability of a car to replace them. As soon as those
cars become available, then this six will be rotated out as well.

MR. COTHEN: So did you say whether you lease or owned?

MS. GILLIES: We lease all of our ammonia cars.

MR. COTHEN: And have you gotten the same reaction from lessors in terms
of renewing leases and conditions for leases?

MS. GILLIES: That\'s correct. It\'s \-- on the leasing of these, the
newest cars that we have in, Simplot was in a position as the other
companies, that we\'re very reluctant to enter into a re-lease of longer
than three to five years, because in case the standards change, then we
don\'t want to have leases that we can\'t get out of for our fleet cars.

MR. COTHEN: Thank you.

MR. HORN: You noted the 286 issue would create some problems for some of
the delivery of the shippers. If you could provide later, or any data
\--

MS. GILLIES: Certainly.

MR. HORN: \-- or additional information on that, that would be helpful.

MS. GILLIES: Okay. Certainly.

MR. HORN: On this, actually on a similar note, you remarked about small
shippers and this would be economically hard on them, if you provide
some further detail as to entities we\'re talking about, or how many,
that would be somewhat helpful too.

MS. GILLIES: Okay.

MR. HORN: Thanks.

MS. GILLIES: You\'re welcome.

MR. MARTINEZ: Specific to your comment on the crashworthiness \--

MS. GILLIES: Yes.

MR. MARTINEZ: I was wondering if you could clarify what you said. I
wasn\'t quite sure I understood the \-- where you were going with that.

MS. GILLIES: I believe that there were some tests done on the Next
Generation car for train speeds for penetration kinds of damage, and
that in the proposed rule it\'s train speeds, I think of 30 miles per
hour. One of the car builders said that they had conducted tests that
even up to, you know, as low as 17 miles per hour, that there\'s still
damage done.

So I guess the question is, will there always be another \-- you know,
once we \-- once everybody decides that maybe 30 miles an hour is what
you need to protect for before there\'s any kind of damage, will there
be something else that will say 15 miles an hour, ten miles an hour? So
really, will there ever be a car design that will prevent any kind of
damage during any derailment or accident? So, you know, kind of a
hypothetical question, I guess, is there always going to be a next car
design that\'s going to be safer?

MR. HOCHMAN: Does anybody have a question for Judy? Thank you very much.

MS. GILLIES: You\'re welcome.

MR. HOCHMAN: Our next presenter will be Michael Orr of Specialty Process
Consulting.

MR. ORR: Thank you. As stated, my name is Michael Orr, Specialty Process
Consulting out of Pocatello, Idaho, and as you can see, us people from
Idaho get a little nervous when we get to the big city, so we sit
together.

I want to lend my verbal support to the statements that have been made
here today, totally and completely, and make some other comments related
to this.

NH3 is essential to our very existence, from the very cellular level all
the way up to the lifestyle that we enjoy today. With the statements
that have been previously made, as I said, it is my desire not to
regurgitate those things that have been already stated, but to address
some of the questions that have been raised at this point in time.

One area that I find that has not been addressed on the fertilizer side
of this is another product that is manufactured by three of the major
suppliers here today, and that is superphosphoric acid. It is 68 percent
P2O5. It is shipped via insulated rail car around the country, and then
mixed with anhydrous ammonia on site in many areas, and then shipped out
as a benign material, as ammonium polyphosphate, is either 10-34-0, or
11-37-0.

With that said, then the statement is is that there is a significant
amount of ammonia that is consumed directly from the rail car. There\'s
a considerable amount of ammonium polyphosphate that is produced by
portable reactors that transverse the country, set up at a facility,
manufacture, and move on to another site. This is due to the increased
cost of having stationary facilities at each and every dealer or
retailer.

What\'s been seen and observed over the last year is that that there is
an increasing amount of anxiety among users of anhydrous ammonia at the
dealer and retail level, due to the problems of scheduling in anhydrous
ammonia in a timely fashion with need, demand, and meeting up with a
reactor, and SPA shipments. This has created an increased cost in
addition with the increase of fuel associated with running the pieces of
equipment.

In fact, I took the opportunity yesterday to visit with a dealer just
north of here, and that was one of the first questions he asked me, is,
are you seeing an increased amount of truck traffic to supply anhydrous
ammonia? The answer to that question is \"yes.\"

As time moves forward, and this meeting \-- this committee meets, and
the resistance of rail car manufacturers to produce cars, there\'s
becoming more increasing difficulty in getting ammonia to the dealers.
Some of this may be associated with weather patterns. We\'ve been seeing
increased cold weather across the northern tier, and again, that backs
up the system.

There have been mandates that have been passed that restrict the amount
of time that anhydrous ammonia can be on a specific site, which is also
added to the problem of matching ammonia shipments to timing with the
planting season.

With the potential here, then, we see that there\'s an increased amount
of truck traffic, which may trickle down to increasing the size of NH3
storage at each and every facility, or doing completely away with those
type of commodities, which is impossible to do. But imagine this, paying
the same price for 32 units of something on a train, or 46, versus 82,
which is the nitrogen content of anhydrous ammonia, 82 percent nitrogen.
The alternate products that would be shipped, possibly in the
agriculture market then, become 46-00 urea, or 32-00 UAN, urea ammonium
nitrate. As has been stated previously, these other products and
alternative materials, are unable to replace anhydrous ammonia in the
marketplace.

As you take the rail system and those who lease rail cars, typically
they are dedicated in service, reason being, is the southern tier of the
United States will start earlier, as early as November, and growing
seasons then will migrate north. From the Imperial Valley of California,
to the \... Valley in the Polousse (ph), where grain crops are grown,
across the corn belt of the midwest, and which include crops, fresh
produce, potatoes, onions, carrots, all the crops that we consume on a
daily basis, assuming that they\'re grown at a local grocery shopping
center.

The majority of America, I doubt, fully realizes the nature \-- very
nature of where their foodstuffs come from and originate. With that,
green leaf products are typically higher in nutrient nitrogen demand
than other products. Tubers, then, require phosphate and potassium in
higher volumes.

It has also been stated that due to the limited rate \-- speed
restrictions during dark territory, there will be a bottleneck increase
in supply chain capability, which will create additional demand on rail
car traffic.

One of the other questions that was associated with this or asked, was
then, can this cost be passed on to the consumer? The consumer is
already being stressed. As I relate back to my feeble understanding of
my classes in college of Western Civilization and its development, a
majority of wars were fought over hungry mothers with children who were
starving. We\'re now hearing in the news of riots, and there is pressure
for Congress to have hearings on the impact of corn and ethanol
production on increasing food stocks. Real or imagined, it is perceived.

It is interesting to note that in reviewing the Minot rail derailment,
that one of the visual video components of that shows a police officer
entering the ammonia cloud. Also in documentation from the FRA, it
mentions that there\'s been an increased \-- observed increase in
accidents since 2006. My contention is is have we studied the
possibility that the increase accident rate is somewhat related to
buy-outs by the railroad?

Lack of clarification on FRA guidelines for training, handling,
shipping, and receiving of anhydrous ammonia at the retailer and dealer
level \-- that may contribute to these problems.

One of the other things that I have encouraged is that we implement seal
controls upon all CFR 49 regulated products to allow \-- to determine of
tampering, either by the shipper upon under load or returning back
empty.

We live in a great country. We are the highest net acreage producer of
food crops in the world. There are developing countries out there that
are putting demand upon pricing and supply of fertilizer products across
the world. As we continue to become a global society, we also need to
look at the possibility of imports of anhydrous ammonia possibly coming
from Mexico, in addition to increased capacities from Canada.

I hope, and my overall concern is where the priority of the few impact
so many, we will not become dependent on foreign fertilizer nutrients as
we are presently on oil.

I do not envy the task of this committee to make a decision that will
impact so many. Thank you. I will answer any questions you may have.

MR. SCHOONOVER: Mr. Orr, thank you. I have to say I\'m very interested
in the \-- the ancillary effect of any increase in cost on ammonia as it
relates to phosphoric acid or superphos acid. And in general, about the
portable reactors that \-- if you know how many of those are operating
and what their consumption is?

MR. ORR: At present time there are approximately, if you had asked me by
state I could have told you \-- probably somewhere in the neighborhood
of 12 to 14, maybe a few more. Typically, my past experience does not
take me much beyond the Mississippi River, but the majority of those
will probably run 40 percent of the SPA that is produced domestically.

One of the interesting things about SPA, is that it is a product that
has to be shipped at high temperatures, thereby we are not subject, at
the present time, for import of superphosphoric acid, which limits that
capability. In addition, as another part of that, is that these
products, SPA and anhydrous ammonia, make a liquid material that blends
well with UAN and other products that go out in a liquid form in time,
in season, when the crop generally needs it, which I believe there\'s
data from the fluid fertilizer foundation that supports the reduction in
runoff and leaching due to that benefit.

MR. SCHOONOVER: Thank you.

MR. ORR: You want me to answer the other part of that question too? You
gave me that look about the cost of ammonia and SPA.

MR. SCHOONOVER: Oh, yeah.

MR. ORR: It\'s a direct \-- I mean, it\'s a direct cost. The other issue
with it is you increase the rail car size, you decrease the amount that
can be put in a rail car under load, thereby, with the portable
reactors, or even some stationaries, where they manufacture this, it
does not match up well with SPA shipments, thereby, the potential is
that you\'ll increase onsite storage which was significantly reduced in
about 2000 due to regulatory restrictions and requirements that were
mandated at that time. So now, what we\'re seeing is the opposite of
what occurred in 2000, is people are out seeking for onsite NH3 ammonia
storage bullets.

MR. SCHOONOVER: You had mentioned an increase in truck traffic. Did you
\-- in your, if you\'re going to submit written comments, could you be a
little bit more specific?

MR. ORR: Well, we\'re seeing it in Texas, Texas can\'t get \... it in
some areas. We\'re seeing it in Idaho. I talked to some people there
that are having difficulty getting rail car shipments of ammonia, and
their concern is that they may not be able to get anhydrous ammonia
whatsoever because some of the plants and facilities that they have
received it from previously are not set up to transload any longer to
rail car. We\'re seeing it in California \-- California is kind of an
interesting situation. Again, the gentleman just north of here, they\'re
trucking their ammonia in in some cases. North Dakota, Minnesota,
depending on availability.

MR. HOCHMAN: Are there any questions for \--

MR. MARTINEZ: Can you comment on the size of the fleet and whether it\'s
leased or not leased, and the timeframe of your typical leases are, if
you do lease them?

MR. ORR: I do not deal with any dealers who lease their own cars. Most
all the cars that are shipping NH3 are leased by shippers. I would
suppose, from my knowledge, that a majority of them are in the lease
process. But one thing has been said, and I\'ll say it again, is that
manufacturers are very resistant to leasing going forward until
determination of what the outcome will be, and with the increased cost,
they are demanding almost a lifetime lease on the car.

MR. HOCHMAN: Does anybody have any questions for Michael? Thank you very
much.

MR. ORR: Thank you.

MR. HOCHMAN: Mike was the last of the people who had notified us in
advance that they\'d like to make a statement or presentation. Is there
anybody in the audience who would like to make a statement or
presentation?

MR. FOSTER: Just a agronomy comment \--

MS. HENRIKSEN: Just a second, if you could please state your name just
so we can get it on the transcript?

MR. FOSTER: Just a agronomy comment, I guess, regarding nitrogen,
phosphate and potash. There\'s no nitrogen carry-over from year to year
ins stubble stock or in the fields themselves, where potash and
phosphate, you tend to have a little bit of carry over. So in other
words, that nitrogen, every year, 100 percent of it needs to be replaced
for the crop to survive.

And just one other comment. I don\'t know if this is a fact or not, but
it goes back to the double shelf coupler comment and that issue. Could
have Graniteville been avoided if the penetrating car, if that had been
a double coupler, or a double shelf coupler? I don\'t know that for a
fact or not, but if memory serves me, that that would have been the
case. So, just as comment.

MS. HENRIKSEN: Give your name?

MR. FOSTER: Ray Foster, Potash Corp.

MR. HOCHMAN: Before we conclude, Bill has some questions on the
questions on the back of the room from Administrator Boardman.

MR. SCHOONOVER: I think we just wanted to provide an opportunity, if
anybody has some comments or answers to the questions, we understand
that many will be providing those in writing or in another form, but I
just wanted to provide that opportunity.

MR. MARTINEZ: Bill, I would just like to make two minor comments. In
terms of the question that was posed by Ray, the energy involved in
those incidents was sufficiently high that whether that was a double
shelf coupler or not, it\'s very likely the coupler would have failed.
So, just to answer that.

And then I was hoping that somebody from the Next Gen Rail Tankcar Group
could get up and discuss a little bit about the comment that was made
for the testing which was done on an intermediate design. It was not a
final design, not meant to be fully compliant with what was being either
proposed in the NPRM or meeting the goals of that Next Gen had laid out.
So I just wanted to make sure that the audience understands that that
was just \-- it\'s a point in the process, and it wasn\'t intended to be
the end-all, be-all of designs.

MR. STUDENT: Pat Student, S-T-U-D-E-N-T, Union Pacific Railroad, also
working with the Next Gen Project. And I think just to amplify for Eloy,
that that was the second \-- what was just conducted at Pueblo, was the
second head test of looking at a component. The principal reasons for
the test is to validate the modeling versus the test set up, and also to
determine actually how different materials are interacting that we
haven\'t in the industry heretofore done \-- performed, and this is one
of a series of tests that there are at least one, and possibly two or
three more scheduled this year, to do, to gather that knowledge.

MR. MARTINEZ: Thank you, Pat.

MR. HOCHMAN: Anybody other comments? Would anybody else like to make a
comment before we wrap up? Okay. Seeing no takers, I would like to thank
everybody from taking time out from your schedules and people traveling
large distances to get here. I\'d like to emphasize once again that this
is a \-- one of the highest priority rulemaking projects within the
Department of Transportation. Both Administrator Boardman and
Administrator Johnson brief Secretary Peters on a regular basis on where
we are and where we\'re going.

We look forward to your comments, and I\'d like to thank everybody for
coming. I\'d like to thank the presenters for taking the time out to try
to enlighten us, particularly me as the truck guy. Once again, we\'d
like to thank everybody for coming, and we will keep moving on this and
try to come up with a solution which \-- a win-win for everybody. Thank
you. (Whereupon, the meeting in the above captioned matter was
adjourned.)