> UNITED STATES OF AMERICA
>
> DEPARTMENT OF TRANSPORTATION
>
> TANK CAR PUBLIC MEETING
>
> Wednesday,
>
> May 28, 2008
>
> Washington Plaza Hotel
>
> 10 Thomas Circle
>
> Washington, D.C.
>
> Franklin Room
>
> The above captioned matter convened pursuant to notice at 9:00 a.m.
>
> [CHAIRPERSON:]{.underline}
>
> Grady C. Cothen, Jr.
>
> Deputy Associate Administrator for
>
> Safety Standards and Program Development
>
> Federal Railroad Administration
>
> 1200 New Jersey Avenue, S.E.
>
> Washington, D.C. 20590
>
> [Department of Transportation Panel:]{.underline}
>
> Charles Hochman
>
> Director
>
> Office of Hazardous Material Technology
>
> Pipeline and Hazardous Materials Safety Administration
>
> 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
>
> Jeffrey Horn
>
> Senior Industry Economist
>
> Office of Safety Analysis
>
> FRA
>
> [PRESENTER-PARTICIPANTS:]{.underline}
>
> Karl Alexy
>
> Corporate Fleet Engineer
>
> E. I. Du Pont de Nemours and Company
>
> Matthew Stershic
>
> Hydrofluoric Acid Marketing and Technical
>
> Services Manager
>
> Honeywell International
>
> Shawn Gleason
>
> Solvay Chemicals, Inc.,
>
> John O\'Leary,
>
> Director of Logistics
>
> Arkema
>
> James Connelly
>
> [PRESENTER-PARTICIPANTS (Continued):]{.underline}
>
> Michael Rush
>
> Associate General Counsel
>
> Association of American Railroads
>
> Washington, D.C.
>
> [PARTICIPANTS - IDENTIFIED ON RECORD:]{.underline}
>
> Jean-Pierre Gagnon,
>
> Superintendent of Tank Cars, Transport Canada
>
> Julie Bart
>
> Manager of Rail and Logistic Services
>
> Chlor-alkali Division
>
> PPG Industries
>
> Bob Toms,
>
> Union Tank Car
>
> Richard Barlow,
>
> Lionel Frissell Industries
>
> Michael Stevens,
>
> DOT,PHMSA
>
> Ken Dorsey,
>
> AIR
>
> Todd Treichel,
>
> Director of the RAI Tank Car Safety
>
> Research Project
>
> [I N D E X]{.underline}
>
> [Agenda Item:]{.underline} [Page]{.underline}
>
> Opening, Mr. Schoonover 5
>
> Introductions & Opening remarks,
>
> Mr. Cothon 6
>
> Procedures, Ms. Henriksen 8
>
> Prepared statements:
>
> E. I. Du Pont de Nemours & Company,
>
> Karl Alexy 12
>
> Honeywell International,
>
> Matthew Stershic 39
>
> Solvay Chemicals, Inc.,
>
> Shawn Gleason 54
>
> Arkema,
>
> John O\'Leary 66
>
> James Connelly 76
>
> American Chemistry Council,
>
> Tom Schick 79
>
> PPG,
>
> Julie Bart 109
>
> Bob Toms,
>
> Union Tank Car 110
>
> Richard Barlow,
>
> Lionel Frassell Industries 112
>
> Michael Rush,
>
> Associate General Counsel
>
> Association of American Railroads 119
>
> Ken Dorsey,
>
> AIR 142
>
> Todd Treichel,
>
> Director of the RAI Tank Car Safety
>
> Research Project 173
>
> [P R O C E E D I N G S]{.underline}

9:05 a.m.

MR. COTHEN: Good morning. This is the Department of Transportation
public meeting on Notice of Proposed Rulemaking for Enhancement of
Pressure Tank Cars Carrying Materials of Poison Inhalation Hazards.

We start off with a safety briefing and Bill Schoonover will do those
duties today.

MR. SCHOONOVER: Thank you, Grady.

Good morning. As a point of reference, we\'re at the Washington Plaza
Hotel, 10 Thomas Circle. In case we have to call 911, that\'s a
reference for the registered responders.

The building, the hotel itself is alarmed. The alarm\'s on the back
wall. If the alarm does go off, the exits are out behind you and to the
right, or you can go behind the podium here into the hallway. You\'ll
take an immediate right, go a short distance, and take a left out the
back.

The meeting point is over at the church around the Circle. I would ask
that you look to your neighbors and make sure that if we do have to
leave here that they are with you.

The rest rooms, you go out the back of the room here, slight job to the
left and then into the hallway. They\'re on the left-hand side.

I would ask you to turn your cell phones to either vibrate or turn them
off. And also, we have CPR-qualified people here. Okay? And I\'m going
to ask you to assist us if we need it and we\'ll handle calling 911.

I also wanted to take a second and recognize our counterparts from
Transport Canada Jean-Pierre Gagnon, who\'s the Superintendent of Tank
Cars with Transport Canada. He\'s here joining us today.

MR. COTHEN: Okay. Thanks, Bill. My name is Grady Cothen. I\'m Deputy
Assistant Administration for Safety Standards at the Federal Railroad
Administration. This meeting is being conducted jointly by the Pipeline
and Hazardous Materials Safety Administration and FRA, and the Docket
Number is 2006-25169, PHMSA Docket HM246.

To my immediate left you\'ve met Bill Schoonover, who\'s Staff Director
for Hazardous Materials Safety at FRA.

Charles Hochman is to his left. He\'s Director of the Office of
Hazardous Materials Technology at PHMSA.

Lucinda Henriksen is a Senior Counsel at the Federal Railroad
Administration and is legal officer for today\'s meeting.

Eloy Martinez is Program Manager in the Office of Research and
Development at the Federal Railroad Administration.

And Jeffrey Horn is Senior Industry Economist in the Office of Safety
Analysis at FRA.

And all of us on the DOT team are available to you throughout the
proceedings today if you have questions, or if there is some way we can
assist.

This is our third day of meetings. The [Federal Register]{.underline}
Notice of April the 15th generally describes our objectives today. We
have a good substantial speakers\' list, but not one that\'s predicted
to carry us necessarily all the way to the noon hour. And accordingly,
to some extent, we may accelerate the proceedings today so that you all
can go on to your next event, whether in town or elsewhere.

I think that\'s the heart of what we really need to say. Those of you
who have been with us for the first two days have heard a good deal
about the purpose of these proceedings. I think the importance of the
proceedings will be punctuated by the appearance tomorrow morning of
Administrator Carl Johnson of PHMSA and Administrator Joe Boardman of
FRA, who will be joining us to hear concluding testimony.

Ms. Henriksen has a short list for appearance in the morning, so if you
feel like, after hearing testimony today, that your organization would
be benefited by appearing before the Administrators and doing a short
summary of your remarks tomorrow, feel free to step forward and talk to
Ms. Henriksen about that and we\'ll put you on the list so that our
senior leadership has the opportunity to hear some of this firsthand.

I\'ll ask Lucinda to describe the procedures for today\'s meeting.

MS. HENRIKSEN: Thank you.

For those of you that have been at our previous meetings, I apologize
because you\'re going to hear the same spiel again, but first I want to
note that there\'s a sign-in sheet at the back of the room at that
table. We\'d appreciate it if you could sign in if you haven\'t done so
already, so we can have an accurate record of today\'s attendance.

Also, on the [Federal Register]{.underline} Notice that Grady mentioned,
which announced this meeting, we ask that if you wish to present oral
statements to let us know beforehand.

As Grady noted, right now we have about six people who have indicated
that they want to speak. These include Karl Alexy from Du Pont, Matthew
Stershic from Honeywell, Shawn Gleason from Solvay Chemicals, Jim
Connelly, and John O\'Leary from Arkema and Tom Schick from American
Chemistry Council.

Have I missed anyone?

(No response.)

If you haven\'t already let us know that you want to speak, but you hear
something that you want to respond to, or if you decide you want to make
comments today, please feel free to just let us know at the break and
indicate so on the sign-in sheet.

As Grady mentioned, the purpose of this meeting is to hear your comments
and issues related to the NPRM published on April 1st, 2008. We will
keep the meeting relatively informal, but to ensure that we proceed in
an orderly and efficient manner, we ask you to abide by a few rules of
procedure.

First, this meeting is not intended as a forum for debate and there will
be no cross-examination of the speakers. Members of the panel up here
may ask questions of the speakers. However, the speakers are not
obligated to answer those questions if they do not wish to.

Our questions will be for the purpose of clarification or to solicit
additional relevant information. And we may ask speakers for just
comments or issues raised by other commentors. If we question a speaker,
it does not mean we agree or disagree with that speaker\'s statement.

After a person is done making a statement, if anyone else in the
audience would like to ask questions, provided that speaker is willing
to accept questions, we will have time to do so.

Also, although we want to try to engage all our meeting participants and
have as open a discussion as possible, note that the panel up here may
not be able to give specific answers today to concerns raised here at
this meeting.

Necessarily as part of the rulemaking process, the Agency may consider
all comments and concerns raised throughout the public comment period
both here and the public meetings and the comments submitted in writing
to the Docket.

In this connection, note that the closing date for written comments on
the NPRM is June 2nd, 2008. It was pointed out this morning that in the
public notice announcing these meetings we have the incorrect date. We
have the date of May 29th.

But just to confirm, as everyone knows, the comment period closes on
June 2nd, 2008. Written comments should be forwarded to the address
indicated in the NPRM.

As a practical matter, this meeting is being transcribed by a Court
Reporter. Accordingly, when you come up front to make your presentation,
or if you speak from the microphone out in the audience, please state
and spell your name for the record so we will have an accurate
transcript of the meeting.

A copy of the transcript will be placed in the Docket, Docket Number
FRA2006-25169, which is available on the Internet at
www.regulations.gov. If you have any questions regarding accessing the
Docket, please let me know.

At this time, I think we can move on to our first speaker, Grady.

MR. COTHEN: Okay. Thank you very much. I just want to mention this
additional item of business. The questions that Mr. Boardman had posed
\-- I believe additional copies have been placed in the back \-- we
already have one written submission on an advance basis from the
Chlorine Institute. Thank you.

And we would appreciate the parties arranging to speak to those
questions as they are able today or tomorrow, or finally, if necessary,
in written filings. I think I would be a little surprised if we didn\'t
have Mr. Boardman aggressively posing one or more of the questions
tomorrow for his understanding, better understanding of the issues, so
you\'re forewarned.

Thank you again for being here today. We appreciate everyone\'s
attendance and we look forward to your testimony. I want to emphasize
that while we\'ve organized the hearings in a topical fashion in an
attempt to get some sort of focus on particular issues, as Ms. Henriksen
said, you\'re certainly free to address any issues relevant to the
pending Notice of Proposed Rulemaking and you\'re invited to do so.

So I\'ll ask Mr. Alexy to come forward and introduce himself and state
and spell his name and so forth.

MR. ALEXY: It\'s Karl Alexy. Can you all hear me? Okay. Karl Alexy,
K-a-r-l, A-l-e-x-y. I\'m with Du Pont.

As introduction, my name, again, is Karl Alexy. I\'m the Corporate Fleet
Engineer for E. I. Du Pont de Nemours and Company.

Safety is a key commitment to Du Pont \-- I\'m sorry \-- safety is the
key commitment Du Pont has made to its employees, the public, and its
shareholders. Thus, we welcome the efforts the FRA and PHMSA are making
to further reduce the risk associated with the rail transportation of
chemicals classified as poison inhalation hazards.

Thank you for giving us the opportunity to provide information to help
your work. These forums, including the Technology Transfer Symposium and
the public meetings focused on chlorine and anhydrous ammonia have
permitted discussions which have brought to light many issues requiring
further considerations prior to issuance of a final rule governing tank
cars.

Du Pont is a science company headquartered in Wilmington, Delaware. Du
Pont has revenues of over \$30 billion a year with 135 manufacturing and
processing sites in 70 countries and over 60,000 employees. In the
United States alone, Du Pont employees about 36,000 workers in 33
States.

Now in its third century of continuous operation, Du Pont brings
together biology and chemistry to meet societal needs for safe and
abundant food, alternative fuels, and other sustainable solutions to
enable a better, safer, and healthier life for people everywhere.

Du Pont uses or produces hundreds of chemicals, ranging from
pharmaceutical and food-grade substances to poison inhalation hazards.
The vast majority of these chemicals are intermediates, which are
shipped to our customers for their use in the production of their final
products.

Again, Du Pont supports the initiatives of FRA and PHMSA to improve the
safety of shipping PHI commodities by rail. And we plan to be active
participants throughout the rulemaking process.

We suggest that the proposed rule published in the [Federal
Register]{.underline} on April 1st, 2008 requires substantial
re-evaluation in order to achieve their stated goal of improving the
safety of rail tank car transportation of hazardous materials without
placing undue burdens on our country\'s economy and ability of companies
like Du Pont to maintain their operations and the jobs they create in
the United States.

To achieve their objective, the proposed rules must be based on sound
technical data, balance the economic interests of both shippers and
carriers, and not create incentives for shippers to transport more
hazardous chemicals by highway, since rail is by far the safest and most
environmentally friendly method of land transport.

Below, I present our company\'s concerns about the published proposed
rules and suggest solutions that will result in achievable and
substantive improvements in the already excellent safety of rail
shipments. Du Pont\'s comments are organized into three sections.

The first section includes a description of the PIH commodities that Du
Pont ships, the current state of our rail fleet in PIH service and the
specific requirements for railcars in Du Pont\'s PIH service.

The second section will address the topics requested in the [Federal
Register]{.underline} and, to the extent possible, the questions
distributed at the May 14th meeting.

The final section addresses additional concerns relative to the proposed
rule.

Du Pont owns and leases a railcar fleet used in part to transport ten
PIH commodities. These commodities include chlorine and anhydrous
ammonia used as raw materials and chlorosulfonic acid, dimethyl sulfate,
anhydrous hydrofluoric acid, anhydrous hydrochloric acid, hydrogen
cyanide, oleum, sulfur trioxide, and titanium tetrachloride we produce.

The manufacturer of tens of thousands of products required for our
Nation\'s security and the American people\'s daily lives would be
impossible without these chemicals.

To date, discussions of the proposed rulemaking have focused on chlorine
and anhydrous ammonia, particularly at the May 14th and 15th public
meetings. Generally, Du Pont supports the comments made at these
meetings by the representative shippers and industry association. This
document is intended to address issues regarding the proposed rulemaking
as they pertain to the other PIH commodities Du Pont ships.

As previously stated, design efforts relative to the proposed changes in
tank standards have been focused on railcars and chlorine service.
However, the design of railcars intended for chlorine service is not
necessarily appropriate for serving the transport of other PIH
commodities. This is due to the unique and disparate chemical and
physical properties of these regulated materials.

To illustrate our point, we provide the following specific examples.

Oleum and sulfur trioxide have relatively high freezing points. Railcars
in this service are insulated to prevent the chemical from freezing in
transit. The design for a railcar in these commodities must include
adequate insulation capable of maintaining the temperature of these
chemicals above their respective freezing points.

Railcars used to transport chlorosulfonic acid are constructed of
stainless steel tanks to prevent coloring of the acid and there is no
viable alternative construction material. The properties of stainless
steel relative to the proposed puncture resistance requirements must be
taken into consideration.

Presumably, additional modeling and verification would be needed to
ensure that rail cars made of stainless steel meet the proposed
performance standards.

Anhydrous hydrochloric acid also requires consideration of design
factors that are different than those involving chlorine. Because the
vapor pressure of this chemical increases at up to 10 pound per square
inch per day, and can ultimately exceed the tank\'s relief device
setting if delayed in transit, anhydrous hydrochloric acid must be
handled as a time-critical shipment.

This product requires a specialized container, insulated with six to ten
inches of polyurethane foam and capable of being pulled to minus 20
degrees prior to loading. The design of any car to be used for the
transport of anhydrous hydrochloric acid must include the six inches of
foam insulation or an equivalent insulation and stay within the plate
clearance limits.

Additionally, they must be constructed from material that can withstand
extreme thermal cycles and the modeling must account for changes in the
mechanical properties of the steel in these extremely low temperatures.

Anhydrous hydrofluoric acid is shipped in non-jacketed cars because
insulation is not needed for thermal protection. The bar commodity tank
can be inspected frequently and enable the detection of potential
problems in the form of external corrosion. Requiring an outer shell on
these railcars transporting anhydrous hydrofluoric acid may create a
higher risk condition.

During modeling and testing the commodity tanks are to be pressurized to
100 pounds per square inch. Intuitively, one would expect the internal
pressure to assist in the overall puncture resistance. However, only a
couple of the PIH commodities shipped by Du Pont will reach a vapor
pressure of 100 phi under normal operating conditions.

We understand the need for standardized testing protocols to compare
design options relative to a baseline car, but the final design of a
retrofit or new car normal operating conditions, specifically the
internal pressures, should be included in the modeling and testing.

These concerns are not insurmountable. They do, however, require careful
consideration and demand significant design efforts and validation of
puncture resistance. The FRA and PHMSA should take this additional
design effort into account when setting the transition period between
the current status and total fleet compliance to the new standard
ultimately adopted.

Du Pont currently uses approximately 500 cars to transport PIH
commodities. Eighty-seven percent of the Du Pont rail fleet in PIH
service is owned, and the other 13 percent is leased. The average age of
Du Pont\'s owned railcars in PIH service is 25 years and the average age
of the leased cars is 14 years.

Eighty-five percent of the Du Pont cars have a useful life of 50 years,
as well as all the leased cars. All the railcars Du Pont owns and leases
used in PIH service are made of normalized steel, except for 26 cars in
chlorosulfonic, which are constructed of stainless steel.

And over the next three years, Du Pont will retire 19 railcars in PIH
service. Whether we need to replace these cars is currently under
consideration.

Section 2. As we read the proposed rules, there appears to be a
potential for additional requirements in the near future, in the form of
top fittings protection, electronically controlled pneumatic brakes, new
coupler technology and railcar visibility.

Du Pont encourages the FRA and PHMSA to work with the other agencies to
develop one rulemaking to address all concerns now, before industry
begins to develop and implement designs to meet the performance
standards ultimately adopted. A comprehensive approach is the only way
to ensure that all issues are addressed at the outset increasing the
efficiency of the considerable effort required to implement the proposed
changes.

Du Pont is not a railcar manufacturer. We will not, therefore, comment
in detail on the technical merits of the proposed rulemaking. However,
based on the panel discussions at the Technology Transfer Symposium it
is clear there are concerns with respect to the technical aspects of the
proposed rulemaking and design of the concept car.

First, attainment of a puncture resistance at the head of the railcar,
30-mile an hour, does not seen achievable based on available technology
and research performed by the tank car builders. Du Pont shares this
concern and requests clarification of the basis used to establish the 30
mile per hour puncture resistance requirement for the tank heads. The
preamble of the Notice of Proposed Rulemaking indicates the closing
speed of the impacting railcar is half the initial speed on the track.

Because the initial speed will be no greater than 50 mile an hour, there
does not seem to be a scientific basis for increasing the puncture
resistance from 25 to 30 mile an hour. The reasoning provided in the
NPRM is that more space is available for appurtenances at the end of the
car and, therefore, more protective structures can be installed.

Given the information shared, this seemingly small five mile per hour
increase results in a potential prohibitive increase in the impact
energy needing to be absorbed by the tank and protective structures. Du
Pont believes equal value should be assigned to both achievable standard
and the timely implementation period.

Second, modeling seems to be narrowly defined and does not reflect the
broad range of possible conditions encountered by a tank car during a
derailment. In addition, full scale and substructure testing do not
adequately reflect actual conditions. Specific issues include:

The size of the impactor; the referenced impactor dimensions are similar
to those of the shank of a coupler, others have suggested consideration
of a broken rail as an impactor.

The impactor orientation relative to tank shell; the protective
structure may respond differently to loads applied at an oblique angle
as opposed to perpendicular to the shell.

Breach conditions; the focus has been on puncture with no attention
given to cracking or tearing of the tank shell.

And finally, FRA\'s conceptual design is a significant departure from
current railcar design. The new concept is focused on puncture
resistance, and little attention has been given to the capability of the
car to withstand the significant in-train loads encountered during
normal operating conditions.

Du Pont respectfully requests that these concerns and other similar ones
be resolved to the collective satisfaction of the regulators, car
builders, and shippers prior to issuance of the final rule.

At the May 7th and 8th Technology Transfer Symposium, the tank car
builders in attendance agreed that the proposed two-year time frame for
designing and getting approval and setting up the manufacture of
railcars, similar to the concept car of the FRA is unreasonable. They
suggested a realistic time frame maybe between eight and ten years.

However, this extended time frame would put shippers and car owners in a
more untenable position than we currently find ourselves. Currently
replacing cars in PIH service with new or leased cars is very difficult
if not impossible.

Most car owners will not lease cars for PIH service because of the
uncertain regulatory environment. There is currently only one builder
who offers a tank for PIH service. However, that builder offers a single
design, which suits few of the PIH commodities Du Pont uses.

Because that car will not meet the proposed new standard, our only
option is to make the significant investment required to purchase a car
without knowing how long we will be able to use it. Du Pont requests the
FRA offer an interim specification or ruling to enable shippers to
acquire railcars. We offer the following suggestions:

Permit the use of railcars exceeding the current DOT requirements until
the end of the transition period with the stipulation that where
possible the cars are equipped with puncture resistant features such as
head shields and jacket and insulation. The expectation would be that
these cars would not be factored into the requirement of phasing out of
50 percent of the fleet at five years after the effective date.

Another option as proposed by others is to allow construction and use of
an enhanced 105J500 specification car for PIH service, with a minimum
life of 25 years. The enhanced design would require that cars be
equipped with a minimum puncture resistant features such as head shields
and jacket and insulation.

The minimum life, allowable life for the railcar in the PIH service
should be 25 years from the date of manufacture, which is the typical
economic life for these assets.

These suggestions will enable builders, owners, and shippers to
completely understand the financial liability as it relates to the life
of an asset. Decisions can be made and business strategies developed
based on a predictable life span of tank cars in PIH service.

In the preamble to the Notice of Proposed Rulemaking, the FRA
appropriately asserts its authority as the entity responsible for
creating packaging requirements and specifications for equipment used to
transport hazardous materials.

This assertion includes the requirement the AAR\'s tank car committee
submit the proposed requirements of CPC 1187 to the DOT for approval
prior to implementation. The FRA also maintains that a railcar meeting
the AAR requirement will not prevent PIH tank car releases in even
moderate speed train accidents.

These excerpts from the NPRM, together with the fact that the AAR made
CPC 1187 effective on May 1st, 2008, have resulted in significant
confusion and difficulty procuring railcars for PIH service. Builders
simply do not want to commit to the AAR\'s specification if it will
become obsolete in eight years.

Du Pont urges the FRA to reassert its authority by: (1) creating an
interim measure to enable shippers to continue to do business while
planning for future commerce, and by eliminating the AAR specification
as an option for PIH transportation.

As indicated above, there is little to be gained in terms of puncture
resistance performance by replacing the existing design car with a car
meeting the AAR requirements.

The impact that the 30 mile per hour and final 50 mile per hour speed
restrictions will have on our company\'s supply chains is difficult to
predict. An accurate assessment can be made only if the current average
train velocity in specific lanes and the overall system and the current
speed restrictions are known.

For a company with a large volume of shipments Du Pont has, such an
undertaking would be practically impossible. Intuitively, however, it is
fair to assume that as the train velocity is decreased, there will be a
commensurate increase in number of railcars needed to satisfy the
delivery schedules required for shipments to customers and for raw
materials needed by Du Pont plants.

It is also fair to believe that the additional demands on rail yard
throughput will result in added congestion. It is not clear, however,
that the speed restrictions will necessarily result in a decrease in the
average train speed.

If the speed restrictions in a decrease in the average train velocity,
especially in dark territory, which accounts for up to 40 percent of the
rail system, the impact will be felt not only on the supply chain of PIH
commodities, but in all supply chains across North America. This impact
will have a huge detrimental effect on manufacturing and the already
struggling U.S. economy.

Section 3: Additional Concerns.

Du Pont offers the unique perspective; that of a shipper and railcar
owner that remains intimately involved with the operation and
maintenance of its fleet. Du Pont operates its railcar fleet in a manner
that always meets, and often exceeds regulatory requirements and
industry standards.

In order to maintain these standards we have a dedicated group within
our logistics organization that manages railcar maintenance. In
addition, all of our leased railcars and hazardous service are covered
by modified lease agreements in which Du Pont is responsible for
maintenance of the leased railcars.

These cars are inspected and repaired at shops within our approved
network and in accordance with our maintenance manual and maintained to
the same standards as our own fleet. Based on this experience and close
involvement, we have serious concerns bout the maintenance implications
of the protective structures required by the FRA conceptual design and
proposed regulations.

As indicated at the Technology Transfer Symposium, the protective
structures and the commodity tank must operate as a system to function
as designed. If one part of the system is damaged, the puncture
resistance capacity of the protective system is compromised.

For example, a side swiped railcar with a dented or creased outer shell
may no longer meet the performance standards. Du Pont asks the FRA to
consider the following issues because in our opinion they will be vital
to the operation and maintenance of railcars in PIH service:

What will be the condemning criteria of damage to the outer shell?

Who will repair the damaged outer shell?

Will a repair facility be expected to certify that the shell, after
repair, has the original, required mechanical properties? Many, if not
all, repair facilities may be hesitant to accept this liability.

If any part of the protected structure is damaged will the car be
treated as a non-complying car and the containing train held to the 30
mile per hour speed restriction?

In conclusion, Du Pont thanks the FRA and PHMSA for the opportunity to
discuss the proposed rulemaking. These forums, including the Technology
Transfer Symposium and the public meeting, have shown that no one group
should work in isolation when attempting to redefine requirements that
concern and affect stakeholders in multiple industries and the general
public.

Dialogue among stakeholders offers the best avenue for ensuring that all
perspectives are considered and that the regulations ultimately adopted
will result in achievable and substantial improvements without crippling
any particular industry and further impairing our Nation\'s economy.

Du Pont supports the effort of the FRA and the PHMSA to enhance rail
transportation safety for hazardous materials, including PIH chemicals,
and offer our support to reach that end.

Thank you and I\'ll be happy to take any questions.

MR. COTHON: Thanks for your testimony. Let me just start out with a few
clarifying questions, if I can.

The head performance standard, I think the premise of the NPRM was that
it\'s possible to have a strike on the head of the car, as when a car
might roll out from an industry, or a cut of car is left standing on the
main might be stricken by a locomotive where the collision energy was,
in fact, higher than the closing speed in a derailment.

In other arenas where we\'ve worked, particularly in the passenger
safety arena, what we\'ve generally found is that the achievable
absorption of collision energy has a lot to do with the amount of space
in which to work, the stroke of the impacting object. And, of course,
this is a little different problem, but nevertheless it has its
similarities.

Do you see a 30 mile an hour performance standard for the tank head as
desirable, or do you feel that it\'s a distraction, or can you get into
that just a little bit more?

MR. ALEXY: Well, I certainly think its desirable. The reason I raised
that point is to balance the timeliness of the implementation of the
rulemaking relative to an achievable standard. It seems that there has
been question as to how achievable that standard is.

MR. COTHEN: Thank you. For the record perhaps, I certainly wouldn\'t \--
you may have this readily at hand, but you may not. Could you help us
out a little bit with turn times on the cars for these specialized
commodities?

You know, in some cases hazardous materials cars are used for local
storage. In other cases, they\'re rapidly unloaded and turned. That
actually has a lot to do with the impact of velocity on requirements for
cars and so could you help us out, if you could, with the number of
shipments per year per car, so we have some sense of the turn time?

And if you find that any of that is proprietary, if you could provide it
to Mr. Horn, he can endeavor to so retain it?

MR. ALEXY: I certainly can. And I don\'t have that information with me
right now, but I can \-- we can submit that along with our written
comments.

MR. COTHEN: Mr. Schoonover.

MR. SCHOONOVER: Thank you, Karl. I have a couple of questions.

When it comes to these commodities like dimethyl sulfate and
chlorosulfonic acid and anhydrous CL, how many other shippers are there?
Are these very

specialized commodities?

MR. ALEXY: As far as I know they are. I know that there\'s \-- I believe
that there\'s just one other anhydrous CL shipper. As far as dimethyl
sulfate, I\'m not sure, but chlorosulfonic acid I believe we\'re the
only shipper of it. I\'m not positive, but oleum and sulfur trioxide as
well, there\'s very few, if any others.

MR. SCHOONOVER: Du Pont does have a special permit for using special
cars that go outside of the DOT regulations, and we did that under HM
175201, because of the issues with chlorsulfonic and diamethyl sulfate.
You\'ve had good experiences with those in accident survivability and
such? I don\'t know of any accidents \--

MR. ALEXY: Off the top of my head, I don\'t know how many incidents \--
any of the cars in that service have been involved in. I can look into
that.

MR. SCHOONOVER: Also, the question on that, the likelihood of diversion
to \-- we often talk about diversion to highway, but what\'s the
likelihood of diversion to portable tanks as well?

It seems like when you look at the possibility of going to intermodal
portable tanks because of the need for stainless, that tends to be the
next type package that considers. Is that a possibility?

MR. ALEXY: It\'s been discussed. I can\'t say that it\'s something
that\'s been taken seriously, but it always comes up in conversations as
an option for shipping these commodities.

MR. SCHOONOVER: How about small entitles? And Du Pont does not meet the
definition of a small company, but I\'m interested in your shippers, if
the consignees that you ship to \--

MR. ALEXY: Okay, I can \--

MR. SCHOONOVER: Do you have places that you ship to that are, you know
\--

MR. ALEXY: Off the top of my head, I don\'t know, but I can find out.

MR. SCHOONOVER: And the last question I had deals with anhydrogen
chloride. And in looking at the AAR circular, that happens to be one of
the two commodities where the circular recommends no improvement.

MR. ALEXY: Right.

MR. SCHOONOVER: And if we\'re to consider an interim car that is a
stepped improvement, where do we go? Do you have any ideas on what we
would do to anhydrogen \-- anhydrous chloride, or do we just continue to
leave it in the current part?

MR. ALEXY: Well, ideally, \-- well, I don\'t want to say ideally, but
we\'ve had success with the current car. I mean it\'s such a specialized
car. I think the design effort and it may be prohibitive and it may not
be, but I think right now the success we\'ve had with this car, and it
is a pretty robust car as it is now, so \--

MR. SCHOONOVER: I did want to note for the record that it is a 600 pound
car, which is the highest rated car by pressure that\'s authorized in
the regulations.

MR. COTHEN: Anyone else have questions?

MR. HOCHMAN: The rule would allow an increased weight to 286,000 pounds.

Are all your customers \-- does it have an impact on your customers\'
ability to accept railcars at 286?

MR. ALEXY: I was here for the May 14th and 15th meeting and I tried my
best to have that answer for you and I didn\'t get it. We\'re canvassing
our customers now and I\'ll supply that in the written comments.

MR. HOCHMAN: Thank you.

MS. HENRIKSEN: Just probably a very basic question for you. At these
meetings, you\'ve talked about chlorine and anhydrous ammonia and we all
know what they\'re used for.

Can you give us kind of a little education on what some of these other
commodities are actually used for?

MR. ALEXY: Well, let\'s see. Our fuming acids are used in surfactants
and detergents. Titanium tetra chloride is used in aerospace application
and a catalyst in manufactured plastics.

Anhydrous hydrochloric acid is used to make chlorosulfonic acid. Our
anhydrous hydrofluoric acid goes into our freons, our refrigerants.

Off the top of my head, that\'s what I can think of now. I can put a
little more verbiage around that. I can provide that type of information
in our written response.

MR. MARTINEZ: I just wanted some clarification on some of the discussion
you said about the size of your fleet. You said 500 cars?

MR. ALEXY: Roughly 500 cars.

MR. MARTINEZ: And 87 percent owned, 13 percent leased?

MR. ALEXY: That\'s correct.

MR. MARTINEZ: And what is the typical lease time frame?

MR. ALEXY: Five years. I believe we\'re in five-year leases.

MR. MARTINEZ: And you said none of your cars were constructed of non-
normalized \--

MR. ALEXY: That\'s correct, except for the chlorosufonic cars, which are
all stainless and there\'s 26 of those.

MR. HORN: Good morning. My question\'s a little bit more of
clarification and, actually, it\'s more of a request for your written
comments.

These specialized products, you described some of the packaging and how
the cars are special rather well. Could you provide as much detail, if
not a little bit more in your written comments? I\'m sure Bill has some
idea on some of this, but you know, the number of cars.

For me it\'s very interesting to find out these cars exist and \--

MR. ALEXY: Sure.

MR. HORN: \-- get an idea of how many shipments or how many cars are
talked about in each one of those categories and the uniqueness of them.

MR. ALEXY: Sure.

MR. HORN: And also, in referencing them, putting the chemical call
numbers is a little bit easier for me to write than these long anhydrous
blah, blah, blah, blah names.

(Laughter.)

MR. ALEXY: No problem.

MR. HORN: Three years of chemistry makes it a little bit easier to
follow.

MR. ALEXY: Okay. No problem.

MR. SCHOONOVER: I did have one question, if I may. Just as a correlating
thing, I\'d forgotten to ask about the anhydrous hydrogen fluoride.

You mentioned in your testimony that there are maintenance implications
for the concept car. Can you discuss that as it relates to anhydrous
hydrogen fluoride?

Because of the hydrogen blistering, you have a pretty extensive
inspection procedure for that. Can you talk about the problems that you
see with maintenance of a concept-type car?

MR. ALEXY: With the outer shell, yeah, it\'s just a concern that the
business feels that if you have that extra layer, that insulation, and
then the engineered metal structure, whatever, you wouldn\'t be able to
see it. It would hide it. And by the time you did discover it, you\'ve
got a much bigger problem than what you would have if you had seen it
early on.

I would have to go back and do a little bit more research to see if we
have any particular \-- if we\'ve ever encountered anything specific to
that with the hydrogen blistering. I\'ll do that; include that.

MR. MARTINEZ: Is it the experience of your company that you do \-- how
often do you actually inspect the cars?

MR. ALEXY: The anhydrous hydro \-- we inspect before every load. We
look, but then again they\'re not jacketed so it\'s an easy inspection.
It\'s one that we can keep up with easily.

MR. COTHEN: Okay. I think in the previous meetingss we provided an
opportunity for clarifying questions from the floor. Are there any for
Mr. Alexy?

MR. HORN: Grady.

MR. COTHEN: I\'m sorry. We\'ve got one more down here. Mr. Horn.

MR. HORN: Yeah, just curious. Is any of this stuff currently shipped on
trucks or has it ever been?

MR. ALEXY: Yes. I do know we do ship clorylsufonic acid in ice
containers. I would have to go through each one and double check that.
I\'m not positive how many. As far as I know, some of them have been.

MR. HORN: Based on the current trends, are you exploring that option
more thoroughly now, or is it still about where it was two to five years
ago?

MR. ALEXY: Yeah, I think it\'s still where it was. The businesses \--
they always look at all these different options and I don\'t know if
they\'re taking them more seriously as time goes by, as this rulemaking
has come to be. I\'m not sure.

MR. MARTINEZ: That\'s just a small shipment number and there\'s such
Union problems that kind of makes it a little less likely.

MR. ALEXY: Right.

MR. MARTINEZ: Thanks.

MR. COTHEN: Hearing no more questions, I thank the witness.

Mr. Stershic. Welcome. Please proceed.

MR. STERSHIC: Good morning. My name is Matthew Stershic, M-a-t-t-h-e-w,
S-t-e-r-s-h-i-c.

Good morning. I would first like to thank PHMSA and the FRA for the
opportunity to provide input concerning he proposed rule to improve the
crashworthiness of poison inhalation railcars. We support and applaud
your efforts in working to improve the safety of PIH railcars.

My name is Matthew Stershic. I am the Hydrofluoric Acid (HF) Marketing
and Technical Services Manager for Honeywell\'s International Fluorine
Products Business, part of the Specialty Materials Group.

Honeywell International is a diversified, multinational manufacturer of
aerospace and avionic products, automation and controls systems,
specialty materials, and transportation systems. In 2007, our revenue
was \$35 million and we employ over 120,000 people in 100 countries.

Honeywell is committed to safety, security, and environmental
performance through the American Chemistry Council\'s Responsible Care
program. This commitment is evidenced through our RC 14001
certification.

Honeywell is the largest producer of anhydrous hydrofluoric acid in the
United States and one of four companies to ship HF by rail in the U.S.
We are both a large consumer of HF as well as supplier to the merchant
market.

As an introduction, I thought I would provide an overview of HF. To
begin, anhydrous HF is the source for virtually every product containing
a fluorine atom. Nearly 50 percent of the HF is consumed for refrigerant
gases and blowing agents used for insulating foam, as well as mobile air
conditioning units for automotive applications.

These fluorocarbon-based gases are the backbone for keeping our
buildings and homes temperature controlled and energy efficient. While
there is a substitute for fluorocarbons for refrigeration, that
substitute is ammonia, also a PIH. There are few, if any, equivalent
replacements for insulation foam uses.

The next largest use of HF is in fluoropolymers. These products are most
widely known for their use as nonstick coatings for cookware and bake
ware, as well as in all-weather apparel. However, the use of
fluoropolymers goes well beyond these applications to areas that are
essential to every day life. Specific applications include use in
aviation, electronics, telecommunications, automobiles and trucks,
pollution control, and national security.

Fluoropolymers are used because of their unique properties including
chemical and heat resistance, and their ability to withstand corrosion,
even in the most challenging environments.

Beyond these large applications, HF finds use in agriculture chemicals
and pharmaceuticals. Nearly 30 percent of all agricultural chemicals and
20 percent of pharmaceuticals contain a fluorine atom. HF is used to
produce gasoline. HF is used as a catalyst to make octane, which is a
critical component in today\'s clean fuels.

HF is used in the refining of uranium. Uranium oxide is reacted with
fluorine, produced from HF, to give uranium hexafluoride. The UF6 is
then further processed to provide fuel rods for nuclear reactors and,
hence, power generation. When mixed with water, aqueous HF is used to
produce stainless steel, semiconductors, and etch glass for light bulbs.

As you can see, HF finds uses in every day applications that are
essential to our existence. It is a basic building block and there are
no substitutes. Without it, we would struggle to maintain our current
living standards and many current products in businesses would cease to
exist.

Honeywell has been producing HF for over 50 years. We understand the
hazards associated with this material and we take many precautions to
ensure it is shipped safely. In addition, we provide many services to
ensure our customers are using the products safely and we are one of the
leaders of the American Chemistry Council\'s HF Chemstar Panel, which is
to improve overall safety and security of the industry.

Today\'s meeting is focused on improving the current PIH railcar design.
Honeywell welcomes this opportunity to provide input into PIH railcar
designs and thanks PHMSA and FRA for making this a collaborative effort.

According to the recent AAR documents, there are approximately 4,100
railcar shipments of anhydrous HF per year. This is the fourth most
widely shipped PIH behind ammonia, chlorine, and ethylene oxide.

With regards to railcar safety, Honeywell has worked hard to upgrade our
fleet of railcars to ensure our product is delivered safely. Our newer
cars are built to 500-pound test pressure standards, but with thicker
steel than required for the standard.

Our newer railcars have shields that are 1.032 inches thick, exceeding
current standards and even the new AAR CPC-1185 standards for thickness
and pressure. Our cars have 1/2-inch thick full head protection and we
have a number of cars equipped with valves, which have similar safety
features as the Midland valves under consideration in the Next
Generation Railcar Project.

With the improvements in steel over the past 20 years, hydrogen
blistering has virtually been eliminated. In fact, it has been over ten
years since we last observed a hydrogen blister. As background, a
hydrogen blister occurs when anhydrous HF reacts with the steel, forms
nascent hydrogen, which permeates the steel shell and forms hydrogen gas
in the walls of the vessel.

Another feature unique to anhydrous HF railcars is the lack of a metal
jacket. Because HF is a liquid at room temperature and is extremely
corrosive, any small spills that would corrode the shell can readily be
observed. This is one of the rationales for granting special permit
number 11759.

With regards to the DOT rule in question, Honeywell supports the
initiative for improved crashworthiness, but we have a number of
concerns with the approach. Specifically, we take issue with the fact
that DOT is proposing a railcar where today there are no proven designs
to support this change. As currently written, a railcar would need to be
designed, built, and tested.

If the car passes the head and side impact tests, great; if it fails, it
is back to the design team and starting the process over again. We
believe this iterative process will take more than the two years
allotted. In addition to more design time, there should be additional
time built into the process for verification and use testing.

Next, due to the limited number of railcar builders, there should be a
longer implementation period. If all PIH cars are to be replaced, six
years is too short of a period. If the rule is implemented as written,
it might force the industry to a less desirable solution - switching
transportation modes from rail to truck.

That would mean nearly 20,000 additional truck shipments, meaning higher
costs and significantly higher potential for accidents and releases.
Lastly, there are no provisions to allow the use of 500 pound cars built
within the past ten years. These cars have a 40-year lifetime. Shippers
will incur a tremendous amount of cost if these cars can only be used
for another eight years.

What we\'d like to see is an interim tank car with improved
crashworthiness, a railcar along the lines of the AAR design in
CPC-1185. While not perfect, it is an improvement over the existing
railcar design.

If this interim railcar could be implemented for a specific period of
time, say 30 years, it would allow tank car shippers and shippers
sufficient time to design, test, validate, and build railcars to meet
the new standard. As with the DOT rule, the implementation period for
CPC-1185 is too short, now having to replace all tank cars by 2018.

One area CPC-1185 does not address is retrofits and special permits. As
mentioned earlier, anhydrous HF railcars have an exemption to the metal
jacket requirement, Special Permit 11759, because of potential issues
with anhydrous HF getting between the shell of the railcar and
insulation, thus causing unseen corrosion. Would this continue?

Also, would DOT and AAR allow retrofits of our 500-pound railcars with
improved top-fitting protection, valves and current flow rates for
pressure relief devices as an interim solution?

If retrofits are allowed, there are more shops available to handle the
railcars and have them converted in a shorter period of time. One key
point would then be to allow these retrofitted cars to continue in
service to the end of their life.

Lastly, I\'d like to answer the specific questions that are part of
today\'s meeting.

Number one, tank car fleet needs over the next three years. We will not
be adding any new railcars, mainly because of the current uncertainty in
specifications.

How many non-normalized pre-1989 tank cars will be replaced? We are
currently in a program to replace 100 percent of our non-normalized tank
cars, and today, we have less than ten in our fleet.

How likely are we to wait for a new DOT performance standard car before
we make major purchases? Our plan is to wait, unless the business
changes significantly, or DOT and AAR allow retrofits of our current
500-pound railcars.

What will the impact of a negative decision about grandfathering the AAR
interchange car have on our buying decisions? It will be one of the
major deciding factors.

How many tank car builders have an AAR interchange standards car
available for purchase? To the best of our knowledge for HF zero.

If the proposed DOT rule were in effect today, how would that impact our
industry? The rule would have a dramatic economic and safety impact on
our industry.

It would cause shortages, plant slowdowns, or shutdowns, and significant
price increases in the refrigerant, insulating foam, fluoropolymer,
energy, and gasoline industries. Because HF is so vital to many
applications, the need to transport HF would switch from rail to road.

The potential for accidents would increase statistically with the burden
of additional truck shipments. The affect of roadway incidents are no
less catastrophic than those on rail.

I would like to thank PHMSA and the FRA for holding this public meeting
and allowing us to provide our input. Honeywell and the entire chemical
industry sincerely hope to reach a mutually agreeable and realistic
solution to improve the safety and security of hazardous rail
transportation.

Thank you.

MR. COTHEN: Mr. Stershic, thank you.

What\'s the product capacity of your newer 500-pound marked cars?

MR. STERSHIC: They\'re 80 tons.

MR. COTHEN: And the gross weight on rail?

MR. STERSHIC: 268. 263, 263,000, sir.

MR. COTHEN: Okay. Thanks. I\'ll defer to my colleagues who can bore
deeper.

MR. SCHOONOVER: I don\'t know if that\'s a good thing or not.

Mr. Stershic, I have a question about chronic substitution. Is it
possible to put the water in the HF and then ship it and then turn it
back into anhydrous for use at local areas?

MR. STERSHIC: No. The problem is HF, at some point, will form an
zoetrope and it require a significant amount of energy to separate the
water from the HF.

MR. SCHOONOVER: Your current fleet of 500W cars, those are 5/16?
They\'re not TC128?

MR. FLOURCH: 5/16.

MR. STERSHIC: That\'s Bob Flourch, who\'s part of our Transportation
Fleet in the audience, so my support.

MR. SCHOONOVER: The reason I ask is that your thicknesses of those cars
over an inch, generally TC128 is not conducive to going above one inch,
so it would just seem like that it would be 5/16.

And if I remember, we had some concerns over putting TC128 inserts in.
Those cars, do they also have full height head shields?

MR. STERSHIC: Full height head shields half inch thick.

MR. SCHOONOVER: Okay. So your current fleet exceeds the CPC-1187?

MR. STERSHIC: Most of our fleet, yes.

MR. SCHOONOVER: Okay.

MR. STERSHIC: Most of it.

MR. SCHOONOVER: Okay. I think that\'s all. That\'s all I have.

MR. HOCHMAN: You said that there was a possibility of 20,000 addition
tank truck shipments. Is that for HF or just across the board?

MR. STERSHIC: That\'s just for anhydrous HF. That\'s if we had to go
from \-- take the tank cars off the railway and on the road, it would
mean an additional 20,000.

MR. HOCHMAN: Is there capacity out there to make 20,000 MC-331\'s?

MR. STERSHIC: Well, you\'re not going to need 20,000 trucks. You\'re
going to need \-- because you\'re delivering just how many you\'re going
to need for your fleet. Is the capacity out there right now? No.

MR. HOCHMAN: Thank you.

MR. MARTINEZ: I have a question about the typical distance that these
commodities are shipping.

MR. STERSHIC: Anywhere from seven miles to several thousand miles, so
it\'s a wide range.

MR. HORN: Are you familiar with how many of the people you ship to or
the receivers are actually small entities and can accommodate a 286 \--

MR. STERSHIC: Most of them are fairly large. I do not believe they would
have any issues handling 286, 286,000-pound cars.

MR. HORN: That\'s refreshing to hear for a change.

MR. STERSHIC: Well, we\'re probably one of a few just because of the
entities that we\'re dealing with.

MR. HORN: That\'s very refreshing to hear.

You\'ve described your specialized cars for the HF very well. I was
wondering if you could provide that detail in your written comments and
any additional detail exactly how they differ, in the quantity that you
have in your written comments so we \--

MR. STERSHIC: Okay.

MR. HORN: I\'d appreciate that.

MR. STERSHIC: No problem.

MS. HENRIKSEN: One quick question. You had mentioned first with regard
to our proposal and also with regard to AAR circular that a longer
implementation period was in order.

Do you have any suggestions?

MR. STERSHIC: I\'d probably look at something on the order of 15 to 20
years. Just the eight years that we have right now, just given the tank
car \-- the number of builders that are out there and the number of rail
\-- the pure number of railcars that would have to be built between \--
you know, when you start with ammonia and chlorine and EO and HF, it
would overwhelm them and there\'s not enough out there right now. Not to
mention the steel capacity\'s not out there.

MR. MARTINEZ: Do you have any experience with these cars being damaged
in incidents?

MR. STERSHIC: We have had several over the years that have been damaged
and to the best of my knowledge and Mr. Flourch can help me, we have
never had a shell compromised. Sorry. I\'m knocking on wood.

MR. COTHEN: It\'s more dignified for you to do it than us to do it.

(Laughter.)

Did you say how many cars in your fleet?

MR. STERSHIC: I did not.

MR. COTHEN: Would you be able to offer that?

MR. STERSHIC: That\'s something that we prefer to keep confidential.

MR. COTHEN: Very well. Based on some gross numbers that we thought we
had for HF and hydrous, it would look like those cars, on average, make
eight round trips per year, would that be somewhere in the ballpark of
what you would experience?

MR. STERSHIC: Probably a few more than that from our experience. We\'re
looking at probably maybe 30 days per trip.

MR. COTHEN: Okay.

MR. STERSHIC: That puts you up in the ten to 12 range.

MR. COTHEN: Thank you. And I don\'t think we care whether it\'s owned or
leased. Jeffrey doesn\'t.

Any further questions from the DOT panel?

MR. HORN: Yes. I wanted a clarification just because I write notes slow.

I believe you said you had about 4,000 shipments of \--

MR. STERSHIC: 4,100 and they come from the AAR.

MR. HORN: 4,100 and you said it\'s like the fourth largest PIH shipment
\--

MR. STERSHIC: Correct.

MR. HORN: \-- after anhydrous chloride and ethelyne oxide?

MR. STERSHIC: Correct.

MR. HORN: 4,00 would put it about three and a half percent of the total
PIH shipments?

MR. STERSHIC: Correct.

MR. HORN: Thank you.

MR. COTHEN: Mr. Hochman.

MR. HOCHMAN: In addition to a visual inspection of cars, since they\'re
not jacketed, are you doing any enhanced inspection methods like
ultrasonics, or emission testing, or enhanced non-destructive testing on
these cars?

MR. STERSHIC: We do internal inspections on a five-year \-- every five
years and we\'ll do regular visual on them, you know, as cars come in
and out.

MR. COTHEN: Any questions from the floor for this witness?

(No response.)

MR. COTHEN: Seeing no one approaching the microphone, Mr. Stershic,
thank you so much for your testimony today.

MR. STERSHIC: Thank you.

MR. COTHEN: Shawn Gleason, please.

Please introduce yourself and spell your name and proceed, sir.

MR. GLEASON: Okay. I\'m Shawn Gleason, S-h-a-w-n, G-l-e-a-s-o-n with
Solvay Chemicals.

On behalf of Sovay Chemicals, I thank you for the opportunity to comment
regarding Docket FRA-2006-25169. SCI shares the Department of
Transportation\'s desire for the design of safer tank cars for
transportation of toxic inhalation hazard materials and appreciates the
holistic approach that DOT has taken by looking at both railroad
operating practices as well as tank car design.

Despite a shared vision for safer tank cars, SCI harbors genuine concern
for the path forward presented in the NPRM. Of greatest concern is the
Volpe concept car. It is SCI\'s opinion the sandwich design causes
potentially larger safety issues by hiding visual corrosion evidence.

Furthermore, the size of the tank will increase risk as more shipments
will be required in the future to move an equivalent amount of material.
The proposed rule also stops short of a realistic transitional plan
since there\'s been no accommodations made for interim cars.

Currently, anhydrous hydrogen fluoride (AHF) ships in 23,000 to 25,00
gallon, non-jacketed, non-insulated 400 and 500 pound cars with
trapezoidal head shields. Non-jacketed cars allow for the visual
detection of any corrosion product on the outside of the commodity tank
long before it can compromise the integrity of the tank.

The Volpe concept car that was presented at the Technology Transfer
Symposium earlier this month is based on the idea of sandwich car where
supporting foam isolates the commodity tank from the structural forces
of the moving train.

AHF is a small molecule that will permeate many structural foam
materials and when mixed with small amounts of water, can be quite
corrosive to steel. In our opinion, by trapping the aqueous hydrogen
fluoride between the structural foam and the steel, the sandwich concept
may create a larger safety concern than what it is aiming to resolve.

Another complication of the Volpe concept car that was presented is it
is based on a 17,500-gallon car, which is significantly smaller than our
current car size. While the smaller tank allows for more head
protection, it will require us to make approximately 35 percent more
railcar shipments annually to meet the same demand that we ship today.

These additional shipments will equate to a larger risk of product
releases resulting from potential train accidents.

About three years ago, SCI began reviewing the need to upgrade our AHF
fleet to replace older non-normalized cars. Shortly thereafter, the
Association of American Railroads published the first circular regarding
the new specification for chlorine and anhydrous ammonia cars.

As dialogue continued between FRA and the AAR Tank Car Committee, or
between the AAR, SCI elected to follow FRA\'s recommendation to the
general sessions of the AAR Tank Car Committee, and delayed replacing
cars until a new specification could be finalized and agreed.

The uncertainty created by AAR\'s unwillingness to suspend CPC-1187
beyond May 1st of 2008, coupled with the new technology required by the
NPRM, has created an environment where none of the lessors are willing
to invest in a car that would ultimately have a life of less than eight
years.

Moreover, we have been recently notified by some lessors they will not
renew existing leases for cars in AHF service. Estimates from car
builders range from four to six years before they will be able to have a
new railcar design tested and compliant with the performance standard
that is being proposed in the NPRM.

During this time frame, over half of our AHF fleet will expire. Until
such time as the prototypes for the new TIH specifications can be built,
tested, and proven, an interim standard must be approved, based on
proven railcar materials and design concepts. It is economically
reasonable to expect any cars built to a safe interim standard should be
allowed a minimum life of 20 years.

SCI is strongly opposed to the Volpe concept car because of the
increased safety risk caused by the sandwich design and the smaller
tank. The DOT is urged to consider all TIH commodities and to be sure
that the proposed performance standard results in a safer car design
than the current specifications.

Further, SCI strongly recommends DOT to publish an interim tank car
standard based on proven railcar technology. These interim cars must
have a lifetime, which is an economically viable alternative to car
owners and shippers alike.

Thank you.

MR. COTHEN: Thank you for your testimony.

Considering U.S. Tax Code and other factors, what\'s a reasonable use
for life for a car?

MR. GLEASON: I mean I think we\'ve been looking at 20 years is what
we\'ve heard from conversations.

MR. COTHEN: You mentioned cars being equipped with trapezoidal head
shield, which was the original head shield concept. I take it that at
this point your fleet would be toward the older end of the range, is
that right?

MR. GLEASON: Yes. We do have some newer cars, but the majority are the
older, older cars.

MR. COTHEN: And are you able to say what percentage are non-normalized
steel?

MR. GLEASON: Not off the top of my head. I can provide that.

MR. COTHEN: Okay.

MR. GLEASON: I mean I think it\'s probably about 50 percent, but I need
to confirm.

MR. COTHEN: Okay. If you could for the record, please?

Mr. Schoonover.

MR. SCHOONOVER: Mr. Gleason, thank you.

I guess some clarifying. Is your fleet 100 percent leased?

MR. GLEASON: Yes.

MR. SCHOONOVER: And when you\'re talking about the older cars, are they
340\'s or 400\'s?

MR. GLEASON: Our fleet is majority 400 and we have some 500\'s.

MR. SCHOONOVER: And I\'ll pose this question and probably ask others
here when we get into it, but I guess one of the questions I\'m trying
to think about here is how you develop a standard.

If you don\'t come out with a straight performance standard and
historically looked at the risks presented by the materials and using
packaging as one of the means of producing that, when we did things like
bottom out protection, we used a structured method based on the hazards
provided by the commodity.

And I guess I\'m trying to balance out how you would do that with these
commodities. And I\'m not trying to put you on the spot. As I think
about all these commodities we\'re hearing about today, it\'s something
to think of how we \-- if that similar type approach is needed and how
you balance the designs of the material, the hazard designs of the
material versus the other risks that they present.

MR. GLEASON: I don\'t know that I have a good answer for you on that
one. I\'m not really on the engineering side. I just know from, you
know, looking at what was presented at the Symposium, you know, I heard
a lot of concern from a lot of car builders and I just \-- our key
concerns are the same as you heard from Honeywell with, you know, our
product.

The concern that if you do put it in a jacketed car, or you do the
sandwich, that you\'ll need to do a lot more frequent inspections and
you may just have \-- you may have failure more from corrosion if
something gets down in the foam, rather than the derailment.

MR. HORN: Yes. My first question is for clarification. Do you primarily
\-- are you \-- and if I missed it, I apologize. Are you primarily
shipping anhydrous hydrochloric, AHF?

MR. GLEASON: Yes. The only change that we ship is HF. We also do ship
\-- we have a small fleet of aqueous HF that we ship as well.

MR. HORN: On the 286 issue, you noted that it required 35 percent more
shipments. In your written comments could you provide detail of how you
got to that, that number?

MR. GLEASON: In written comments, yes.

MR. HORN: And on that note, do any of the people that you ship to, do
they have any issues of receiving a 286 car that you know of?

MR. GLEASON: I don\'t know that for sure. I suspect one of ours will.
I\'ll need to actually confirm with both. There\'s two locations that
take them and I need to confirm. I don\'t know that offhand.

MR. HORN: Any detail or clarification on that in your written comments
would be greatly appreciated.

MR. GLEASON: Okay.

MR. HORN: Thanks.

MR. MARTINEZ: Can you provide for the record an estimate of the number
of shipments a year that you actually make and what the typical distance
that the shipments travel?

MR. GLEASON: The number of shipments, I want to say, is about 300
shipments a year. The distances range between a thousand to 2,000 miles.

MR. SCHOONOVER: I guess while they\'re writing I\'ll ask mine.

We\'ve heard a lot of testimony about the problems will spillage and
getting material down on the outside, or underneath the jackets of cars.
Is this something \-- is this a problem at the loading and unloading
racks where we have the leases of these materials, and are there EPA
reportable quantities for how much you\'re allowed to release before you
have to report it?

Is it more precaution, I guess?

MR. GLEASON: I think it\'s more theoretical. I don\'t believe we really
have. I\'m not aware of any spills as a routine, or common occurrence. I
think we just know of how corrosive that product is and we\'re just
concerned that if a spill happened and it wasn\'t protected, you\'d have
a larger problem.

MR. SCHOONOVER: But I guess the true likelihood of having a release at a
facility is rather minimal.

MR. GLEASON: I would think so. I\'d let other folks in the room comment
on their opinion. MR. SCHOONOVER: Yeah. I mean I\'m trying \-- I guess
what I\'m trying to get at, or drive at is the issue is more one of if
you have a loaded car and you have a spill, you compound the problem
further, rather than actually somebody just having a spill and it not
being detected or reported, because the likelihood of that is, I assume
\--

MR. GLEASON: Is very low, yes.

MR. SCHOONOVER: Okay. You just don\'t want to further compound that
situation in the facility of having a loaded car there that\'s going to
corrode on us at a rate higher than we anticipate.

MR. GLEASON: Right.

MR. COTHON: Any other questions from the DOT panel.

MS. HENRIKSEN: Just one question, but I notice that you mentioned that
100 percent of your fleet is leased and about 50 percent are
non-normalized steel. Did you mention how many cars in total we\'re
talking about that are in your fleet?

MR. GLEASON: No, I didn\'t. I\'d rather do that outside of this.

MS. HENRIKSEN: Okay.

MR. COTHON: And again, we understand that when we get down to this level
of detail, there may be commercial and competitive concerns, proprietary
information and so forth, and Ms. Henriksen can advise on how the
information is best provided. And then we would aggregate any
information that we got suitably before putting any summaries out in the
public record.

Are there any questions from the floor for this witness?

Yes, sir.

MR. GAGNON: Hi. I\'m Jean-Pierre Gagnon with Transport Canada. I
actually have two questions, I guess.

MR. COTHEN: Go ahead.

MR. GAGNON: I\'m aware of two concerns with regards to HF and tank cars.
You\'ve mentioned them and one is hydrogen blistering and the other one
is the extreme corrosiveness of the product.

The blisters, and I\'ve had experience with some of those problems in
the past. And as I understand it, that it\'s more prevalent with older
steels and some features of the older steels and probably less prevalent
now, so I\'d be curious and you mentioned you have older cars, so I\'m
curious to know if you have that problem in your fleet, and I would
expect that it\'s more in the interior of the car.

And number two on the corrosiveness of the product on the outside, how
much different would that concern be from, let\'s say, compared to
hydrochloric acid, which is very corrosive as well?

MR. GLEASON: Well, I think the corrosiveness is as it reacts with water
or, you know, humidity in the air, is when it gets mostly corrosive. I
mean because we ship it in a carbon steel car. Anhydrous isn\'t an
issue. It\'s when it reacts outside that it gets \-- the aqueous form
gets very corrosive in very dilute percentages.

The hydrogen blistering, we\'ve seen some. It\'s not \-- you know, they
are inspected every five years. When they go in for their service
equipment, they also do a tank entry to keep on top of that.

MR. GAGNON: Do you think they still discover blisters?

MR. GLEASON: I think we have done some, but again probably on the older
cars, not on the newer ones.

MR. GAGNON: Okay, thank you.

MR. MARTINEZ: Just a follow on question to that.

Do you do visual inspections prior to every shipment?

MR. GLEASON: Yes, we do. Of the exteriors, yes, we do.

MR. COTHEN: Okay. If there are no further questions from the panel or
the floor, we will take approximately a ten-minute break, returning at
20 to the hour.

Thank you, sir.

(Whereupon, a brief recess was taken.)

MR. COTHEN: We\'ll go back on the record.

And welcome, Mr. O\'Leary; if you could, please.

While you all are getting settled, we did have the Federal Railroad
Administrator come in; I think he was announced by Microsoft or
something. He walked in the door and then he listened for a while and
spoke to a few folks, and he\'s gone on his way and he\'ll be back
tomorrow.

And if your Chair were more alert, he would have been introduced, but,
hey, all these folks up here who were supposed to bail me out didn\'t,
so there you are.

Please proceed, gentleman.

MR. O\'LEARY: My name is John O\'Leary. It\'s J-o-h-n, O\' L-e-a-r-y. I
am Director of Logistics for Arkema.

First of all, Arkema appreciates the opportunity to comment on the
Notice of Proposed Rulemaking issued in the [Federal
Register]{.underline} on April 1st. Arkema, just to give you an idea of
who Arkema is, Arkema is a diversified global chemical producer with
worldwide sales of \$8 billion and 80 manufacturing sites throughout
Europe, North America and Asia. Arkema in the U.S. is headquartered in
Philadelphia, Pennsylvania. It employs 2,400 people in the United States
and operates 17 manufacturing facilities.

Arkema achieved two billion in sales in the U.S. in 2007. As a large
chemical producer, our commitment to safety is of utmost priority and we
continuously monitor our efforts in this area. Arkema is a member of the
American Chemistry Council and we adhere to the responsible care
management code.

Arkema has been recognized for our safety performance over a dozen times
in the last five years by various railroads. We support the efforts of
the FRA in this initiative and we recognize that there is a need for a
viable, safe rail system to transport PIH chemicals, and we are
committed to the safety and security of the PIH products we produce,
transport, and use in our processes.

Arkema will make oral arguments today and will forward our written
comments as instructed in the NPRM. Most of our comments will address
methyl mercaptan. However, I wanted to comment that Arkema also uses as
key raw materials chlorine, anhydrafluric acid, which you\'ve heard
about already.

A little bit about what methyl mercaptan is and goes into. Methyl
mercaptan is a raw material used for the production of methionine, which
is an important component in the poultry and swine industry as a feed
additive. The methionine in the U.S. requires shipment of methyl
mercaptan by rail.

If the supply chain for methionine is disrupted, this will significantly
impact the poultry and swine industry, as well as have a ripple effect
in increased grain use to compensate for the lack of methionine. The
increase on grain demand and other feed products for the poultry
industry will also be exaggerated by the accelerating demand for ethanol
and biodiesel fuels.

Arkema\'s current methyl mercaptan operations are located in Beaumont,
Texas. Since 1975, when that plant opened, we have shipped over five
billion pounds of methyl mercaptan in the current car design of
105J300W. All Arkema cars were built or are built, that we use, are
normalized steel and no car is past its half-life. The oldest car we
have was built in 1993.

Since safety is a key component of our operations, we do valve tests on
these cars every five years, not the ten years that are required by law.
We lease all our cars, of which we have 105, and we make approximately a
thousand rail shipments of methyl mercaptan in a year.

We\'ve also worked to reduce the number of methyl mercaptan shipments.
We entered into a joint venture with a major customer, built an MMP
plant, which is an intermediate that goes into methionine, so you take
mesh MMP methionine at our Beaumont facility.

We were able to reduce the number of shipments by 360 a year, which is
almost a 30 percent reduction by doing that. And we will continue to
look for opportunities to expand that kind of situation with our
customers. However, anyone in the chemical industry knows the capital
investment to build a chemical plant is huge and not all our customers
have the financial wherewithal to do that.

You know, one thing I want to make sure everyone understands is that we
are never going to eliminate the total use of methyl mercaptan in the
total railcar shipments.

We have some concerns about where we are as far as the proposal from the
FRA. One is that not all our TIH\'s are the same. The next generation
car only addressed chlorine. Chlorine is about 11 to 12 pounds per
gallon and the shipping concerns you have with that, the hazards are
it\'s a PIH and it\'s also corrosive.

Methyl mercaptan, on the other hand, is 7.8 pounds per gallon and the
shipping concerns are again, it\'s a PIH, but it\'s also flammable. So
we need to consider subsidiary hazards of these products as we design
new cars. You know, from our perspective, the ideal railcar should be
designed for the chemistry of the products and not just a cookie cutter
approach where one car fits all.

Another concern we have is the AAR circular 1187, which has created
quite a bit of confusion among the shipping community. It does not meet
the crash worthiness of the FRA proposed rule. It freezes fleet sizes as
of the end of April. It hampers our ability to meet customer demand, if
that happens to increase.

And with the AAR issuing their directive, if Arkema uses a car, the
current car we have, which is a 300W car, and there is an accident,
somebody\'s going to ask the question and our liability, or negligence
will be questioned. You know, and then if we build the AAR car, one of
the concerns is what happens when the FRA ruling comes out and it\'s a
different car?

We feel the AAR issued rule 1187, without seeking input or approval from
the FRA, and Arkema stresses that we want the FRA to take a lead in the
undertaking and overrule the FRA initiative.

Another concern we have is renewing railcar leases. You know, most of
our fleet will expire within the next two to three years and we have had
several car owners come to us and refuse to renew those leases, which is
a considerable problem for us, obviously. We have 105 cars and as those
cars dwindle, what car are we going to replace it with?

The other problem we have is what happens \-- you know, we\'ve talked
about the next generation car and some ideas with that. What happens in
five or ten years if a new technology becomes available and it makes the
next generation car obsolete?

We believe that the FRA and its supporting team and sponsors did an
excellent job in creating the next generation rail concept, railcar
concept, but again, the FRA approach doesn\'t address all TIH chemicals,
only chlorine, and methyl mercaptan is lighter than a lot of those
products so that the car design is important.

We also feel that the time frame is aggressive. With the next generation
design process there is a chemical company that\'s been looking at
building a new car and it\'s now in its second year. And we believe they
have a prototype, but there\'s a lot of testing that needs to be done.

The FRA has income for it and told us what testing they\'re going to do
on these cars, and are there alterative test methods that haven\'t been
looked at? We feel that replacement of half the fleet in five years is
not feasible based on capacity within the industry to build the cars,
and also that it is going to take longer to design, build, and field
test the new cars per the discussion at the technical symposium earlier
this month.

There\'s also issues around maintenance. As discussed at the symposium
back in the beginning of May, the proposed new car is going to be
difficult to maintain because of the jacketing, or outside shell. All
repairs would require that they go back to the builder. It will restrict
the production, we believe, of new cars since it will cause a
maintenance backlog.

We cannot choose any shop to repair these; they\'ll have to go back to
the original builder. It will significantly reduce the use of mobile
repair units, which as everyone knows in our industry, helps us quite a
bit as far as getting things fixed. And it\'s also going to cause
additional cleaning and waste treatment. And with all of that, most
likely we\'re going to need more cars because the cars will be held up
in shops longer.

The AAR Interchange rules expect a 50 year life for the car, but all
cars \-- you know, part of the problem is, what happens if, you know, in
the interim that we only get a 50 \-- or I\'m sorry, a 20 or 30 year
life of the interim car?

The AAR Circular methyl mercaptan is asking for .9 of an inch head and
shell, but it doesn\'t address the top of the car. And then again, the
NRPM, you know, it\'s a performance standard versus specific standards
and the standard, at least what\'s been shown so far is a chlorine car.
So there\'s a mix-match between the chemistry and what\'s the next
generation proposal for the FRA.

If for methyl mercaptan we use the 17,000-gallon chlorine car, it will
reduce the payload of the car that we currently use by 35,000 pounds. We
have 23 and 25,000-gallon cars today and this will create more than 30
percent more shipments for us.

And the other problem is, you know, it seems like we\'re getting \-- you
know, how do we move cars from one service to another? Today we\'re able
to do that with the methyl mercaptan fleet and the leasing companies are
going to look at the same thing as far as their return.

And given this confusion between the AAR and the FRA at this point, it
doesn\'t seem like there\'s going to be any short-term increases in cars
because nobody\'s going to want to invest in any type of TIH type car.

Steel pricing will become predatory. We feel that will grown. The high
demand for steel, over a short period of time, is going to increase the
price. It will also cause some economic hardships for unrelated
construction, and also part pricing will most likely increase because of
the number of cars that are going to have to be built in a rather short
period of time.

So in summary, Arkema supports the improvement in current railcars. But
the industry needs to discover some new technologies and new test
methods. The next generation car needs to be built to specific products.
We need to take into account all TIH chemicals, consider alternative
materials, and then look at a life expectancy that complies with the
current field manuals.

We support the higher gross weight of 286,000 pounds. We\'ve looked at
our customers, the traffic lanes they go over, and we do not see that as
a problem.

Arkema has a concern about the maximum speed limits. We\'re concerned
that, you know, is it \-- or the question we have is, isn\'t that a
matter of the roadbed construction and the maintenance of the rail?
We\'re concerned about TIH cars being held in yards for special trains,
which would lead to higher costs, longer transit times and, obviously,
raise security issues.

Our ideal proposal would be to grandfather the current cars on an
interim basis. We would really hope that the railroads would continue
their efforts to keep the cars on the tracks and not have derailments.
We think that the design to build a prototype and the service trials
will take six years to complete.

And I think this was discussed at the symposium in early May. We would
then expect that half the fleet would be done in 11 years and the
completion of the entire fleet in 16 years.

Just to go back, the U.S. poultry industry represents \$16.8 billion in
sales and provides employment for over 500,000 Americans. Every year
this industry, along with a lot of other industries, are impacted by
rising prices and costs of raw materials, including energy. And any
negative influence on the American poultry industry that is not felt
globally will reduce its competitiveness with foreign imports, resulting
in reduced demand for U.S. products and causing the loss of U.S. jobs.

Again, thank you for the opportunity to speak. Questions?

MR. SCHOONOVER: Mr. O\'Leary, thank you.

I guess my first question is how many methyl mecatan manufacturers are
there in the U.S.? Are you the only one, or are there others?

MR. O\'LEARY: There\'s one other.

MR. SCHOONOVER: There\'s one other.

MR. O\'LEARY: Right.

MR. SCHOONOVER: Okay. You mentioned that you would lose your ability to
change in service. What other of these cars can be used in other
services? What do you typically transfer them at work? Until the recent
problems with leasers, I mean what type of services can these cars go
into?

MR. O\'LEARY: These cars can also be moved into floral chemical
services, different refrigerants, foaming agents. Carbon disulfide is
another product that we can transfer these into.

MR. SCHOONOVER: You also mentioned the potential for a maintenance
backlog. Is it your feeling that a car, like the concept car, that the
current repair infrastructure within the U.S. would not be able to
support qualification of maintenance of those cars?

As you mentioned, there would be a maintenance backlog and they\'d have
to go back to manufacturers. I\'m interested in that from an end user\'s
perspective that what do you think, the repair maintenance
infrastructure would not be capable of supporting these new designs?

MR. CONNELLY: Oh, by the way, my name is James Connelly,
C-o-n-n-e-l-l-y. We, as Mr. Gleason pointed out in his testimony the car
is manufactured completely different than the current car. And as we
talk to our car builders, they explain to us that maintenance at a
repair shop would be different because of the paneling and the structure
to the wheels itself.

So they felt, as they explained to us, that car maintenance would
require cars to go back to the shops that they were built in.

MR. SCHOONOVER: So that\'s more than what you\'re getting from the, I
guess, from the manufacturer?

MR. CONNELLY: That\'s correct.

MR. SCHOONOVER: Thank you.

MR. HORN: The first one is to assist me in my ignorance. Methyl
mercaptan, what\'s the chemical call letters for that?

MR. O\'LEARY: MESH, mesh.

MR. HORN: Easy enough. You mentioned you had 105 cars. About how many
shipments do you make?

MR. O\'LEARY: We make about a thousand a year.

MR. HORN: You also didn\'t note whether there was any impact for the 286
on any places you deliver to, whether that would be a negative impact
and whether any of them would not be able to receive the shipments with
the 286. You did? Sorry.

MR. O\'LEARY: I\'ll answer it again. No, we looked at that and we don\'t
see that as a big issue for us.

MR. HORN: Thank you.

MS. HENRIKSEN: Now that I laugh at Jeff, I\'m going to ask you something
and hopefully I didn\'t miss it as well.

Do you have any idea if the entities that you\'re shipping to, are any
of them small entities?

MR. O\'LEARY: No.

MS. HENRIKSEN: No? Okay.

MR. O\'LEARY: I guess define small.

MS. HENRIKSEN: Well, I think the threshold we use is 20 million
operating \-- 20 million operating revenues, at least that\'s what I
believe.

MR. O\'LEARY: There could be one or two that are under that.

MS. HENRIKSEN: One or two?

MR. O\'LEARY: Yeah.

MS. HENRIKSEN: Okay.

MR. HORN: It\'s actually a rather common thing if they\'re subsidiary
and they\'re doing under 20 million and they belong to a larger company.

MR. O\'LEARY: Right, yeah. I\'m just thinking of the customers that we
have, so \--

MR. SCHOONOVER: I guess one question that comes to mind, but not from
mercaptan, that is a \-- it is an odorizer.

MR. O\'LEARY: Right, it\'s downstream. It\'s used as gas odorant. It
goes into a gas odorant.

MR. SCHOONOVER: Is that generally produced right at the refineries?

MR. O\'LEARY: No. We produce the odorant and ship the odorant.

MR. SCHOONOVER: You produce that?

MR. O\'LEARY: Right.

MR. SCHOONOVER: And ship to the refineries as well?

MR. O\'LEARY: Right.

MR. SCHOONOVER: Okay.

MR. COTHEN: Anything else from the DOT panel?

(No response.)

MR. COTHEN: Any clarifying questions from the floor?

(No response.)

MR. COTHEN: Okay. Thank you, gentleman, for your testimony.

And now, batting cleanup for the chemical shippers, introduce yourself,
Tom, if you would.

MR. SCHICK: Good morning. Tom Schick, S-c-h-i-c-k. I\'ve spoken briefly
here at the earlier sessions. I\'m with the American Chemistry Council
and we represent about 130 companies that manufacture and ship chemicals
in the United States.

In fact, each of the four companies that preceded me this morning is an
ACC member and we have some other companies that testified on the 14th
on the chlorine date in this series.

We appreciate the opportunity to be here. I will just briefly echo what
the members have said about the importance of safety to ACC\'s members
and therefore the ACC itself as well, and how that\'s bound in with our
responsible care initiative, which is approximately 20 years old and
does encompass safety, including transportation safety, and also
security, which is, of course, relevant when we\'re talking about
TIH\'s.

Our companies as a whole represent about 85 percent of the manufacturing
capacity of chemicals in the United States. Those range from TIH\'s
through other hazardous materials to non-hazardous chemical products.
I\'m not going to try to break all of this down, nor am I going to try
to get into the specifics this morning of each of the different
products.

We\'ve had people here on the earlier panels today who are far more
knowledgeable than I am about specific applications of these products,
and the ways that they\'re shipped, and some of the issues that are
particular to the equipment that are used to ship those products.

However, I think it\'s pretty obvious to everybody here, as it was when
we talked about anhydrous ammonia on the 15th and chlorine on the 14th,
that these TIH products are being shipped for a wide variety of very
important uses throughout our economy and, indeed, throughout our
society.

I don\'t interpret anything that DOT has done in this Docket as
suggesting this thing should not be moved, and moved safely in the
United States. I want to mention a couple of introductory points and
then I\'m going to talk about questions that Mr. Boardman tee\'s up, and
then I have a few more comments as well.

We do appreciate, in addition to the initiative to improve the safety at
TIH through the packaging here, we also approve of the holistic approach
that DOT has taken to looking at other operational factors in this
Docket, things like the speed limit, but also, of course, other
initiatives that FRA and DOT as a whole have been involved in, such as
the human factors, rulemaking, and other things in the last couple of
years.

We also think it\'s very appropriate to be here today talking about
this. Indeed, to be spending this month talking about this with the DOT.
DOT pointed out in the April 1st [Federal Register]{.underline} notice,
and I\'m going to read a couple of sentences here because we think this
is the absolutely appropriate forum for this.

\"That final policy judgment over these matters lies with DOT and only
DOT is authorized to approve the new tank car specification or through
issuance of a special permit the construction in these tank cars not
meeting the existing DOT specification. DOT does not construe the
procedures established in 49 CFR 179.4 as a limitation on its rulemaking
authority.

In other words, we understand and appreciate the fact that DOT is the
decision maker here, not the specific industries that are involved.

In terms of the questions that the Administrator posed and has put into
the Docket, the series numbered in the three sequences directed to
shippers and other tank car owners, I will not address 3.1, 3.2, or 3.3,
because those are very company-specific questions, what are your needs
in the next three years; how many non-normalized cars do you have, etc.,
and I think the Government panel\'s had the opportunity to ask those
questions and will be getting some additional information.

Question 3.4 asks what will the impact of a negative decision about
grandfathering the AAR interchange car have on your buying decisions.
I\'m not planning to buy any cars myself and I don\'t expect Audit and
Compliance Committee itself will buy any cars, but I think this is
absolutely critical.

A number of parties have already talked about the need for an interim
car standard, or a solution to the interim car problem. And this is a
unique and not quite addressed in the rulemaking itself kind of a
problem.

We have a proposed rule, which creates a process and there\'s some
debate about how long that process will take to get to a final standard,
but there is going to be a standard at the end of the process. We also
have another standard that has been put into place by an industry group,
which, in conjunction with the ongoing rulemaking process is basically
frozen.

I think it\'s not too strong to say that you\'ve heard that that has
frozen the market for tank cars for TIH\'s, so that I don\'t have to
pick and choose an example on any of the ACC member companies that were
here, or the ones that spoke on the 14th. I want to go back to something
that really struck me on the 15th, when we talked about anhydrous
ammonia.

That\'s not a product that\'s generally represented by ACC. The
Fertilizer Institute does and I know that we\'ve got some
representatives here from the Fertilizer institute. One of their
members, I believe the witness from Symplar, in describing the fleet,
said that there were only six normalized steel cars left in their fleet
of leased cars and that they had a corporate commitment to change out
the non-normalized cars and they were down to six and they simply cannot
change those now because they rely on leasing as their source of cars
and no one will lease them a car now.

That just struck me as the illustration, the problem that\'s caused by a
lack of an interim tank car standard for TIH materials. Because here
you\'ve got someone who\'s trying to finish a project that was not even
mandated by regulation, and can\'t get there because of the situation
that we\'re in today.

So I think that\'s very important. I guess I would put that forward as
an answer to the Administrator\'s question 3.4. We\'re in a bad
situation on that.

3.5 has to do with the purchasing of cars, what\'s available. I think I
would defer to others on that. And I think 3.6, which asks if the
proposed DOT rule were in effect today, how would it impact your
industry? I\'m sensing that\'s pretty hypothetical. It\'s tough for me
to answer that question. I don\'t know whether you might want to
rephrase that some way or clarify it.

In terms of other comments beyond the scope of the six questions and the
comments I\'ve made so far \-- of course we will put written comments
into the record as well next week \-- I want to stress the importance,
or maybe the concern that we have about the interplay between this
docket and the security aspects of TIH tank car shipments.

There is essentially a safety docket here to improve the safety,
particularly in terms of derailment of TIH railcar shipments. I think
most folks who are around this docket and around this room know that
there are various things being considered, thought about, examined on
the security side.

And TSA or THS have some ideas and some initiatives and some projects
and some discussions with industry about it and yet, there\'s a
possibility here that we could have, at the end of this rulemaking, a
new essentially safety oriented tank car design rule put into place, and
then another Federal agency would come in and start to do the whole
thing over again from a security point of view

I\'m not minimizing the importance of security, but I\'m very, very
concerned about the fact that I don\'t see THS and TSA up at the table
with you guys. I have seen, to my knowledge, one of their people at one
of these meetings. There may be someone I don\'t know in the audience,
but I think that to proceed on this without \-- and I\'m not asking you
to take on the security objective.

I understand that TSA has lead within the Government on that, but to
have the possibility of another rulemaking hanging over everybody\'s
head creates another problem and another potential economic disaster
here because they would then come in on top of a turned over fleet and
start turning it over again. So I wanted to point that out before I go
on to the technical comments that we have on your proposed rulemaking.

Just to hit some of the highlights of things that others have mentioned
and that we\'ll cover in our written testimony, we do have concerns
about the technical feasibility of this design that was proposed. A
number of our members, shipping various products, were at the symposium
at the beginning of the month.

There certainly is good concern that no cars have been built or tested
to these designs. The difference between the 25 mile an hour and the 30
mile an hour speed limits, and the translation of that extra five miles
an hour into a design standard in terms of the energy that would be
imparted, seems to be concerning a lot of people.

I will just point that out. And it\'s very, very difficult for people to
figure out how to deal with this situation until there is a tank car
that has been designed and tested and built for these kinds of products.

We have a very rapid time schedule being proposed in terms of, I think,
what we\'re seeing from the car builder industry and the other sectors
here. And we think that this should be done in a careful and safe
manner, and that we should not be pushing a new technology out there
until the appropriate design and testing has been undertaken.

We also know there\'s other things going on beyond this docket. The next
generation tank car project, for example, is going on, but that\'s
something I know that DOT is well aware of.

We\'re also concerned, as I said, about the interim car problem during
the intermediate period here. We\'re concerned about the underlying
economics of turning a fleet over in a relatively short time and
treating all cars more or less the same way, all TIH cars.

I think one of the things that\'s come out of this series of hearings,
or public meetings as they were structured, is the fact that there are
such differences among these TIH products in terms of density, car
capacity, design, susceptibility to corrosion, etc. So I think that
that\'s something that\'s been very usefully highlighted here.

We have some concerns about the economic analysis. We think that the
cost has been understated in the economic analysis. That part of this
Docket, we think it should be based as a starting point on the cars that
are out there now as the baseline. We think that there\'s a great deal
to be looked at in terms of the infrastructure related costs.

That would include not only rail lines to get up to 286, but loading and
unloading racks. And I know that questions has been asked and it may be
asked of me again as we go down the panel.

We think that there\'s a misperception. Again, some of the companies
have touched on this today, but there\'s a misperception that the cost
of all of this can simply be pushed down on the customer, the receiver
of these products as part of the delivered costs of the material, the
TIH product that they\'re ordering.

The economics aren\'t going to differ vastly market-by-market, but
certainly for the chemical industry many of the products we sell
domestically face competition from offshore. Many of the products we
export and that support many jobs in the chemical industry face
competition in their home markets, or from other offshore producer
points, so that we\'re facing, potentially, some real difficulty in
passing those kind of things along.

The business of chemistry is essentially nip and tuck each year, but
it\'s either first or second largest exporting sector in the United
States. It\'s either aviation \-- aircraft and aviation parts, or it\'s
chemicals and related products. And I think Crane is probably coming in
around third.

So this is a key exporting industry, approximately. I think, ten percent
of U.S. exports are in the chemical product range. So when you\'re doing
something that may affect the cost of moving it domestically, or even
moving something that\'s a raw material for another chemical product,
you\'ve got some very serious economic issues in that line as well.

To wrap up, I wanted to raise a couple of other comments. There has been
interest and concern and question in the chemical industry about
retrofitability, where the cars bought now, or bought in anticipation of
this rule, or bought in some other manner and under an interim rule,
would or wouldn\'t be retrofitable to meet the ultimate DOT tank car
standard.

I think that\'s a key economic issue and I don\'t know whether that
works the same way for each type of car. I assume, from what I\'ve said
earlier, it does not work the same, but I think that\'s something that
needs to be looked at very closely.

And I think I will wrap it up with that and ask whether you folks have
any questions?

MR. SCHOONOVER: Mr. Schick, thank you, sir.

A couple of questions. The first is I would ask, at some point I would
assume that you represent members that ship some of these other
materials that are not represented at these three meetings. And by that
I mean the acetone, cyanohydrins, you know, some of these other smaller
shipments. They tend to be the ones and twos, but the smaller numbers of
shipments. So I\'d ask if you can get us some information on those.

MR. SCHICK: I will see what we can do in terms of that. I mean one of
the things that ACC has tried to do throughout this process is to get
the word out and get what we call Chemstar panels, which are product
specific panels. I think the HF panels were mentioned this morning.
There are some others.

We\'re trying to get them, as well as individual member companies to
come in and give you information on their products, their uses
downstream, etc. So we will continue to try to do that to the best we
can.

MR. SCHOONOVER: And I was going to ask you, it seems to be \-- I
remember reading in some of the articles that water filtration plants,
water treatment plants are switching over to other things like sulfur
dioxide. Are you seeing the products switching around as well?

MR. SCHICK: I would defer to my friends at the Chlorine Institute on any
switching or substituting that goes on. I think that they have probably
addressed that on the 14th.

But I would say as a general matter, and this was again touched on this
morning in the example that Arkema gave, where they built a facility in
conjunction with a customer and reduced their shipments by 30 something
percent per year.

That goes on all the time. It\'s not easy. There are capital issues,
there are logistical issues, there are corporate issues, but I think as
the Department is aware, through the Section 333 process as well, it\'s
something that can be done in certain circumstances, but it cannot be
done in every circumstance.

Like most industries, the chemical industry is very customer driver. So
if the customer decides that it wants to change a process, or change a
product, if that\'s doable, then we work with the customer to do that.
We\'re not demanding someone buy what we make. We sell what they
require.

I mean I think we\'re all aware here in this room that all these hundred
and some thousand shipments of TIH products \-- I don\'t think any of
them are sent without somebody ordering them first at the other end. I
mean this is not something that people engage in for any purpose other
than meeting customer requirements.

So you have to work your way down the chain to see what\'s doable. It\'s
not something to be done at the producer point alone. It has to be done
in conjunction with the customer point. And where that\'s workable and
possible and feasible, it certainly can be done.

But to assume that because it happened in one situation, it can happen
in all situations is, I suspect, naive. It\'s kind of like saying, well,
if there were, you know, six truckloads in a year of a certain product,
then all of it could be moved by truck. And this has been discussed at
earlier hearings in this series as well.

Just because something once went in a truck, or occasionally goes in a
truck, or goes a short distance in a truck, doesn\'t mean you can put
all of that volume into trucks, nor necessarily would you want to. And
again, we\'ve discussed that issue.

MR. SCHOONOVER: Since you mention trucks, I guess I\'ll bring up the
issue of diversion to intermodal as well. And does that \-- you know,
we\'ve talked a lot about diverting the trucks. Is diverting the
intermodal a real possibility as well, or are there issues there?

MR. SCHICK: When you said diverting intermodal, you\'re saying moving
from railroad tank car to an intermodal rail shipment of the same
products?

MR. SCHOONOVER: Isotones, portable tanks. You know, we often think of
trucks as the next logical step and maybe we\'re missing a part of the
picture and considering we also need to look at the possibility of
diverting to \-- you know, moving this to actually an intermediary step
where we go to an intermodal tank that may not be 7,000 gallons, but may
be three or 4,000 gallons.

MR. SCHICK: A couple of thoughts on that. I guess you\'re trying to cut
the truck guy off on this. I think, again, you have to look first at
whether that\'s feasible, whether that\'s economical, whether that\'s
the delivery format that the customer wants, that\'s the quantity the
customer wants.

A second issue is that tank cars move and continue to move under the
common carrier obligation by rail. Iso-containers, intermodal shipments
operate under what the Surface Transportation Order refers to as an
exemption. Not a commodity exemption, but a service exemption. It\'s
been there for 25 years or something like that.

Intermodal service is exempt and, therefore, that has been construed not
to be within the scope of the common carrier obligation unless the
exemption were revoked by the STD.

And a number of products, TIH\'s, and I believe other hazardous
materials as well, have basically stopped carrying intermodal shipments
of products that they are carrying in tank cars. And I\'m not getting
the question of whether an intermodal container is safer, or less safe,
in the event of a derailment.

I\'m just simply saying that service has been curtailed by the carriers.
So you have to look into that issue as well. And that takes you down
several paths.

MR. SCHOONOVER: So if it\'s intermodal, it\'s going to be highways then?

MR. SCHICK: Well, I think as a practical matter today, if you wanted to
ship these materials in an ISO container, you would be putting it on a
truck. Let\'s say for export. You\'d be putting it on a truck to the
port any way, although that well not be what you would prefer to do.

MR. SCHOONOVER: My last question overall, I think is the \-- really goes
back to the question I asked earlier about achieving a balanced approach
to the varying risks of these commodities.

You know, if you consider what\'s been done, the AAR proposed the tank
improvement factor, which is a stepped approach based on a risk at some
level. Historically, we\'ve done the bottom outlets, where we\'ve looked
at the risks of the products themselves based on their hazard class.

You know, under HM-181, we did something very similar to what we\'re
proposing here by putting in place performance standards for all small
packages with, you know, minor variations. I\'m wondering about your
thoughts on the approach that\'s best here?

MR. SCHICK: Well, I guess inherently, by looking at TIH\'s and TIH\'s
only, you\'ve kind of taken one step in the direction of looking at a
hazard class. But what you see as you look at it is that they\'re not
all the same. The car design is different, the quantity is different,
the density is different, the delivery patterns can be different, the
turn-around time on the car.

So it\'s not going to be one size fits all. And I think the perception,
at least at the symposium, was that the car that folks were seeing as a
concept was a chlorine car. It didn\'t say chlorine car on the slides,
but I think that was perceived, particularly by people who deal with
other types of TIH equipment, as a chlorine car.

So without saying whether that would or wouldn\'t work for chlorine, I
think you\'ve got a whole other set of questions as to whether that
approach, that design approach would work for other products. And I
think you heard some of that on the 15th, when we talked about anhydrous
ammonia.

So I think that\'s one of the aspects of your question. Another aspect
is, when you go back to HM 181 for the smaller hazardous materials
packaging, yes, that was performance arena packaging. It was consistent
with the U.N. approach, the TEG approach to that kind of stuff.

It was performance oriented and certainly ACC and I think you could kind
of today from some of the members as well, I mean there\'s a real
interest in having science based solutions, in having good analysis,
whether you\'re talking about analysis of the hazard that the material
presents, or whether you\'re talking about analysis of the engineering
that goes into a car, or even the analysis of the economics.

I mean we do support that and we see in this proposed rule that it is a
performance standard. There are certain speeds, for example, that are
the standard by which you would have to have a car designed to withstand
being breached if it were hit by a certain kind of \-- certain sized
implement at a certain speed.

So that is something that we obviously support. We\'re very anxious to
have DOT involved in taking the lead on this. We\'re appreciative that
you are taking the lead on it. And I don\'t know, I\'m getting the
feeling I may not be touching on all the subparts of that question
though.

Is there something else you want to point out on that?

MR. SCHOONOVER: I was just wondering if the approach we\'re taking is
\-- your thoughts on the right approach and I think you addressed that.
And I think you gave us some good feedback.

MR. HOCHMAN: Mr. Boardman, he deemed us the truck guys. But I guess what
I\'m hearing is the industry \-- would the industry rather have the
Department go performance standard and leave you the options of how you
meet it, versus detailed prescriptive standards of, you know, what
welding rods you use and how thick the steel\'s got to be?

I mean I think the Departmental preference would be to come up with a
performance standard and let the industry determine the best way to meet
that standard rather than us get down and be prescriptive like we used
to do in small packages. You know, the situation we\'ve found ourselves
in \-- forgive the digression \-- we say you build a box out of white
pine.

Well, in different parts of the world, the tree had a different name.
And if you wanted to build it out of something, which was called white
pine in this country, but Mediterranean pine in a different part of the
world, we got into issuing special permits and back then exemptions.

MR. SCHICK: Right.

MR. HOCHMAN: I think our preference is to develop an agreed upon
performance standard and let the private sector come up with the most
efficient means of meeting the performance standard.

MR. SCHICK: I think in general that\'s absolutely where we are. You
don\'t want to be stuck where you were on the smaller packages and
having, you know, somebody invent a better material or something and it
doesn\'t meet the spec and they have to come in and get a special
permit, or something like that.

It does stifle the progress of engineering and the creativity that\'s
out there in the industries that design the packaging. So yes, we
support a performance standard as a general principle and we do across
the board in transportation, but in other applications as well. That\'s
part of the science-based approach that I was talking about a few
minutes ago.

I think there are two questions here. One is, is the performance
standard in the proposed rule the right performance standard? So, for
example, is 30 miles an hour the right standard for the head, or maybe
it shouldn\'t be the right standard for the head. You know, maybe that
should be 25.

You know, there will be comments all over the place on that, but having
a performance standard is good, but you have to have the right
performance standard. And people have raised all kinds of questions. You
know, how big is the object that could be spearing the tank car? Those
are certainly valid questions that were raised at the symposium and have
been raised at the public meetings.

I guess the other question, or the other side of what you\'re asking is,
you know, can it be done that way, or is there something unique about
tank cars that has to be more of a specified package and less of a
performance-oriented package. I think I will defer the answer to let the
answer to that come from everybody who\'s involved with this Docket.

I\'m not in a position to say it couldn\'t be done as a performance
standard, or it can only be done as a performance standard, or it will
be better to do one way or the other. I mean I understand where you\'re
coming from and I think as a general matter we do strongly support
performance standards, as long as it\'s the right standard.

MR. HOCHMAN: One more question. We\'ve heard presenters talk about this
interim period and whatever length it is, different people have
suggested different lengths for an interim car standard.

People have said that, you know, they\'re diverting traffic to cargo
tanks over the road. I forget, somebody in the ammonia business said
about 300 tons a year was switched from rail due to the confusion of an
interim \-- do you get a sense that there\'s going to be a lot of that
across the board in the interim?

MR. SCHICK: I think what\'s going to happen is that \-- there\'s some of
that right now. I mean we\'ve heard that already through these meetings.
There\'s more of that kind of hanging over the market. Technically,
after the postponements of the AAR standard, we\'ve only been in this
period since May 1st, so we\'re, you know, like 27 days in or something
like that, 28 days in.

Then you have to say how long is this rulemaking really going to take?
Because it\'s going to also depend on how long that is. I mean if the
rulemaking were finished on June 3rd, after you read the comments on the
night of June 2nd, then I suppose, you know, maybe you don\'t need an
interim standard if you have a final rule on June 3rd of this year.

I don\'t think that\'s going to happen. You can then apply your kind of
basic logic to, you know, whether extending that period of time is going
to make that more difficult for more people in more types of product
lines, as they have their leases turn over, or as their business
expands, or if they have to simply replace cars due to attrition.

We heard some discussion about, you know, numbers of cars simply, you
know, due to damage and whatnot, or the end of the life of the car. And
to go back to my opening comments on the interim rule, I think part of
what you\'re just seeing here is a total freezing of this market.

I mean the leasing companies and billers are just \-- they don\'t know
what to do. And I think in all good faith, they want to do what their
customers want, which is the customers want cars, they want supply cars.
That\'s natural. But they don\'t know what to do. So you have to ask
yourself then, Charlie, what\'s going to happen, you know, how many
years out?

Is that problem going to get worse, or is that problem going to get
better? Well, you guys are probably better situated than I am to make a
decision, but I think it\'s already a problem. And part of the problem
is that people don\'t know what to do now.

Even if what they want to do is order a car this fall for delivery next
year, we\'re not talking about years out, people don\'t know what to do
right now. And as long as this problem\'s unresolved, they\'re not going
to know what to do.

MR. HOCHMAN: Thank you.

MR. MARTINEZ: I just want to make a clarifying remark in general.

I feel it\'s a little bit unfortunate, but I believe there is a bit of a
misperception in the industry that what we\'re trying to specify is one
car fits all by proposing a performance standard understandably that
there are differences in the commodities that are being shipped.

What the purpose of that technology exchange meeting was to demonstrate
the approach, which has been applied to a single type of car. That
approach is applicable across the board to any type of car.

Are there going t be differences associated with the potential benefits
that you can get from that type of an approach? There are differences
because the car sizes are different, but the performance of the baseline
car changes as well. And so we\'re not suggesting that one car fits all.

So we have taken into account that there are differences among the
different types of commodities. So I just wanted to put that out there.

MR. SCHICK: Well, I appreciate that. If I overstated it as one \-- I
don\'t mean I meant to say that there would be one kind of car. It\'s
one standard, or one approach for each kind of car.

But I think, again, in terms of looking at what\'s out there already,
one of the things DOT has to do very carefully is to see which cars are
out there. And, for example, some companies have said on the record in
these hearings that they have enhanced their own fleet beyond what the
currently required car is in the DOT rules.

So there\'s already a higher level of safety. There\'s a different
level, perhaps, of costs to them in the past. There may have been an
expectation of how long they could use a car like that and there\'s a
different gap between where that car is and where you\'re heading,
perhaps, than if you use, you know, a starting point that\'s not as
realistic.

MR. HORN: On an earlier question that I believe it was Bill mentioned if
you could share information related to the PIH chemical products that
haven\'t been represented so far, if you could also share information
related to them on how the 286 might impact them, and who they ship to,
and possibly the number of cars and the number of shipments we\'re
talking about for those chemicals?

I realize it\'s a big undertaking, but for the ones that haven\'t been
represented so far, that would be advantageous in written comments.

MR. SCHICK: Well, we\'re trying to get as much as we can for you, Jeff.
I don\'t know that we\'ll be able to get that down to that level. I mean
some companies have been well aware of this and they\'ve chosen not to
participate in these hearings, for whatever reason. You know, I\'m not
going to second guess why they didn\'t do that.

Certainly ACC does not collect information from its members on how many
cars they own, and how much they paid for their cars, and what the names
of their customers are, and where their customers are located, and what
their freight rates were, and what their leasing costs are. I mean
we\'re not allowed to do that.

So I think your best shot on that stuff is to get it directly from the
companies. And some companies have been sitting at this table telling
you the answers and others have said we\'re not telling you unless, you
know, we send it through in an appropriate manner and it doesn\'t get in
the public record.

I mean some of this stuff becomes very commercially sensitive,
particularly in these sectors where \-- in these product lines where
there may only be two or three companies in all of North America making
a product. I mean we will do what we can, but I think, you know, it\'s
hard for us to create the data. Now, some of the Chemstar panels may
also aggregate stuff for you for their product line.

MR. HORN: Well, we\'re not necessarily looking for how much they paid
for their cars, but it\'s items like how many shipments, or how many
cars. Some have been happy to share the number of cars. Some have been
happy to share the number of shipments, but not vice versa.

And then the other issue being whether it does have an impact on who
they\'re delivering it to with the 286. And if they do know that, that
is something helpful and I don\'t think it is proprietary, or something
that\'s going to hurt anybody if they could share that.

MR. SCHICK: Yeah. I think if they know that and we can get it, we can
give it to you. If I get more, I may have to give it to you after the
2nd of June. In terms of the number of shipments, I didn\'t really think
the number, annual number of TIH shipments was really a big secret by
commodity, because I think those data are published annually by the
Government and/or by the AAR.

I don\'t think that\'s a secret as to how many. I mean we all know that
chlorine and anhydrous ammonia is somewhere between 80 and 85 percent,
and we all know the names of the other products, and we all know
approximately that EO is next and HF is next.

So I\'m not sure that having companies come in and say, you know, they
make 400 shipments really gives you something you don\'t already know
from the aggregate data, but we\'ll see what we can find out for you.

MR. HORN: Any additional information would be appreciated.

MR. SCHICK: Okay.

MR. COTHEN: And I may be mistaken on this, but my impression is that
some of the estimates that we get are from the ICC waybill sample, or
STB waybill sample, and you know, it\'s one or two percent of the
waybills and, therefore, the margin of error for some of these smaller
\--

MR. SCHICK: Yeah.

MR. COTHEN: \-- quantities is quite high as evidenced by some of the
differences in what we\'ve heard today, just looking at what we came in
with.

MR. SCHICK: Right.

MR. COTHON: And, you know, in some of that you may be able to help us
and some you can\'t and we appreciate anything you can do for us.

MR. SCHICK: Sure.

MR. COTHEN: Anything else for Mr. Schick here, before we let him off the
hook, from the floor?

Yes? Identify yourself again, if you would, please? Thank you.

MS. BART: I\'m Julie Bart with PPG Industries, B-a-r-t.

We also ship a small quantity of chloroformats and acid chlorides which
fall into \-- some of those products fall into the PIH category. We have
just a few railcars in these applications. And we do have the
alternative to ship by ISO container, and we do that because we\'re in
the middle of this.

We can\'t buy railcars. We have customers who want the products, so we
have gone into ISO containers. Again, we get the challenge that we
cannot ship those ISO containers by rail. We have to ship them by truck.
That gives us big challenges.

It very much limits our ability to compete because many of these
products are used overseas, especially in Asia, and the typical route
that we would like to ship these would be \-- is across \-- by rail to
the ports in California. But we can\'t ship that way because the
railroads refuse to take the product and so we do have to ship by truck,
ISO container quantities. We can\'t get a railcar.

So we\'re really \-- it\'s really limiting our ability for that small
plant and that small product line to compete with the overseas
competitors. It\'s an imports \-- we do struggle. We can\'t compete in
that market. And I\'ll provide the details in my written comments, but I
just wanted to illustrate one of Tom\'s points.

MR. COTHEN: Thank you.

Anything else from the floor?

MR. TOMS: Bob Toms with the Union Tank Car, T-o-m-s. It\'s about as
simple as it gets. I have just a couple of comments on some of the
earlier discussion that was brought up.

One being we understand it\'s performance specification. You know, it\'s
not generally aimed at one car fits all, but from a car
builder/manufacturer standpoint, obviously, it\'s a specialized solution
that we\'re looking for. And we all talk about costs and whatnot.

As a builder, you know, we want to reduce costs and things like that and
specialized solution causes unique situations with how we build and
order materials, manufacturing materials, how we supply, in our case,
extensive repair portion of our business. We inventory these parts to
fix cars and so forth and it becomes very difficult when we have a
number of different solutions, or specialized solutions. It goes against
our economies of scale and so forth.

So, you know, as a builder we\'d prefer to have one solution fits all.
So if, in fact, that does guide to one car fits all, it gets a little
difficult there from a manufacturer\'s standpoint.

Another comment I had was regarding performance specification, or a
design specification. In my past life, I worked with both and they both
work because ultimately they both will drive you towards your home. They
both will create different ways of a \-- but the thing to remember is
that basically they all operate off the same principle though, is where
the design spec.

Somebody had to go through and do what we\'re asking in the performance
spec all the manufacturers to do, is to go out and research, develop,
design and so forth, to understand and then come forth with a solution.

If you\'re doing a design specification in case, say, the DOT or FRA was
to come out with a recipe for design, they would have to go through the
same specs and same measures to understand what it is they\'re trying to
get to. And I think that\'s when some of the concerns are, or concerns
in the industry is that we make sure that this is a performance spec,
that there was the due diligence to go through design, test, improve
concepts or designs that would have a good understanding of what the
specification, the performance specification that was laid out.

So there really \-- the approaches are similar. They\'re just handled a
different way. So either way they\'ll work, but the due diligence must
be done in both cases.

Thank you.

MR. COTHEN: Yes, sir?

MR. BARLOW: Richard Barlow, B-a-r-l-o-w, Lionel Frassell Industries.

We started talking a little bit about performance standards and I\'ve
seen the good and the bad of performance standards in smaller packages.
PHMSA has determined that as the basis weight of the paper going into
corrugated changes, you\'ve changed the design standard.

If you change the supplier of the plastic that\'s used to form the inner
receptacle, the design standards changes and requires additional
testing. I\'d hate to see tank cars fall into that trap so that if you
have a different supplier of a grade of steel, or a construction
material, it changes the design standard and you have to retest the
entire design.

Just a comment since we\'ve been talking about performance standards.

MR. COTHEN: As we move toward final filings in this proceeding, could I
ask that parties, particularly the tank car builders address the
question of the current plausibility from an engineering standpoint of
meeting the 25 mile an hour site impact requirement and the 30 mile an
hour end requirement?

And what that has to do with is not so much the Volpe concept, which has
been presented for discussion as an illustration, but the current
readiness from an engineering standpoint of tank car manufacturing
companies to respond to a performance standard, as this one has been
characterized.

And then if there\'s a belief that it currently can be done, what would
the impacts be on product caring capacity for the major categories, in
terms of product density given the necessary clearance plates for
facilities that ship and receive these cars.

And the reason I do that is that, you know, I think we\'ve had a lot of
good discussion and we\'ll continue to have good discussion, but I think
that the decision makers at DOT are going to need some sense not of how
easy is it to take shots at a particular concept, but how ready is the
market to provide something responsive to the proposed performance
standard.

You know, in our experience at DOT, very often we\'re frustrated because
industry doesn\'t want a performance standard. And here we have a
community that\'s saying this is a desirable way to go. The next step is
always administering what\'s the performance standard, or by the way,
could you give me a standard or specification that\'s known to meet the
performance standard, a/k/a the half inch steel head shield?

And that\'s okay. It\'s understandable, because it creates
predictability up here. At the same time, it makes it very difficult for
us to move forward in hazardous material safety if the entire burden\'s
going to be on the Government to show the way. And I know that\'s not
the spirit in which most everyone is working outside the hearing room,
an example being a next generation product.

Nevertheless, in order to have as complete a record as possible, we
would ask that, particularly from the point of view of those who would
bear the burden of designing and producing these cars, if, based upon
all the discussion that was had at the technical exchange and the
testimony, if we could have some clear statements from the manufacturers
as to their state of readiness that would be helpful.

In a minute we\'ll transition to afternoon, it\'s called, and we\'ll
hear from at least the AAR. Before we do that, I\'ve been asked to put
on the table, and we can discuss it now and then we can discuss it again
when Mr. Rush is through, the issue of extensions of the comment period.

Thus far there\'s been a little buzz about it here and there and one
request, I believe, for a 30-day extension from one association with,
frankly, not a lot of explanation as to why. And we\'ve had some
requests from the panel here today for additional information to be
provided and Tom, among others, has referred to, you know, the
difficulty of the June 2nd date.

PHMSA has been kind to say that we have some latitude to discuss the
issue of extending the comment period from June 2nd to whatever point
would be productive, in terms of receiving additional information and
getting people an opportunity to look at it and react to it.

They will want to publish it. This is done officially. They\'ll want to
publish a notice, which announces the new date. They would have
preferred to do that before today, or before June 2nd, but I\'m sure
that\'s not feasible at this juncture. It\'s not mandatory, Charlie.

So what\'s the appetite in terms of the deliveries you all need to make
to the Docket on behalf of your organizations? What are the needs? Let
me say not appetite, but let me see what are the needs, all right, in
terms of sustenance?

Yes, sir.

MR. STERSHIC: Matthew Stershic from Honeywell.

VOICE: Can you step up to the microphone?

MR. STERSHIC: Matthew Stershic from Honeywell.

You had asked for more information concerning our railcars and we will
supply that. However, it\'s got to go through legal review. And as I
mentioned to Lucinda, not that lawyers intend to hold us up, but lawyers
do tend to hold us up, so we need to go through that route before we can
get it out. So, you know, we would be looking for at least \-- I\'d say
for us at least two weeks to try and get the additional things through
just because that\'s going to go back and forth.

MR. COTHEN: Thank you. Anybody else in terms of order of magnitude of
what you think you will require? And again, we\'ll pose this again when
Mike is through.

Yes, Bob. Talk about legal review. After I ask what I ask, I think the
tank car manufacturers probably will.

MR. THOMAS: Bob Thomas again from Union Tank Car.

You know, we\'ve got our comments pretty well wrapped up and so forth,
but there is an issue of getting it past our legal folks as well, so
that would be appreciated. You know, 30 days would be doable for us, but
we\'ll be prepared June 2nd, if need be.

MR. COTHEN: Yes, Mike?

MR. STEVENS: If I may, Michael Stevens, S-t-e-v-e-n-s, DOT, PHMSA.

We, of course, have the boilerplate language in there that says late
comments will be considered when filed.

MR. SCHOONOVER: To the extent practicable.

MR. STEVENS: Right, to the extent practicable. Are you willing to allow
me to have something in the [Federal Register]{.underline} saying
Monday, Tuesday, announcing this comment extension \-- comment period
extension, and this forum accept that we would accept those late filed
comments?

MR. COTHEN: Let me ask. Is there anybody that needs anything more than,
let\'s say, the end of June? Seriously.

(No response.)

Why don\'t we say provisionally that \-- all right. We\'re being
reminded of the extent to which the Administration is trying to conclude
its business in an orderly way, as opposed to a disorderly way, for
which there\'s much precedent at the end of the Administration, which
creates a real tight box for everybody concerned.

So what we\'ll do is we have those requests. We thank you for them and
we\'ll endeavor to make an announcement at the conclusion of tomorrow\'s
session. And then, if it involves an official extension of the comment
period, a notice will be published. If not, you\'re already aware that
late filed comments are considered by DOT agencies to the extent
practicable.

And certainly there\'s going to be an ample record for us to be going
through over the first few days there after the close of the comment
period, based upon those who are able to file, and the testimony that
we\'ve received thus far.

Okay. We had said we would have an afternoon session and it\'s going to
be literally that. Do we want to take just a quick stretch break, no
more than seven minutes, which would put us at ten minutes after the
hour?

(Whereupon, a brief recess was taken.)

MR. COTHEN: Okay, let\'s resume, if we may.

We said we would take whatever testimony was available this afternoon on
issues that would directly affect the railroads. I don\'t know. I know
we\'ve never put the railroads last before, Mike, but \-- MR. RUSH:
That\'s true.

MR. COTHEN: \-- what we do want to do is, of course, get some testimony
on operational restrictions, anything that folks want to add on the role
of the Tank Car Committee and so forth, and so we\'re pleased to have
Mike Rush with us.

Mike, could you identify yourself for the record, please, and proceed?

MR. RUSH: Yes. Mike Rush \-- the Court Reporter has my card \-- with the
Association of American Railroads. I think everybody in the room knows
who AAR is.

I\'m not sure what the topic of what \-- in terms of what impacts the
railroads, what affects the railroads. I think everything in this
proceeding does, so I will touch on most of the issues that are raised
in the NPRM, both with respect to tank cars and operating restrictions.

I am well aware that I stand between you and lunch. I will try to go as
quickly as possible. I will use my semi-New York speed in talking. I do
want to say I am an attorney. I do not pretend to be a tank car expert.
There are folks in the railroad industry in the room who do have tank
care expertise. For example, Ken Dorsey of AAR, Pat Student of UP.

And with the indulgence of the panel, if there are things I leave out,
or when they address questions if there are things I can\'t answer, I
certainly would like to defer to them. We have organized it so that we
only do have one formal speaker for the industry, so that will make
things go quicker, which I\'m sure you all appreciate.

The AAR\'s members really truly feel that DOT deserves congratulations
for this notice of proposed rulemaking. The transportation of TIH
materials is a concern certainly to the industry, but certainly to the
public as large as well.

DOT, of course, did a good job in the preamble of discussing some of the
actions that have taken place. They certainly have impacted my members
in a very significant way. They\'ve really brought home that the
transportation of TIH materials is about the company scenario insofar as
my members are concerns.

But perhaps more importantly from the public\'s perspective, there are
lives at stake when it comes to the transportation of TIH materials. We
certainly have seen concern from the public at large with respect to TIH
transportation.

Right here in D.C., I think as everyone is aware, for example, there\'s
a lot of community concern over the transportation of TIH materials. So
DOT really deserves congratulations for taking the bull by the horns and
really trying to think out of the box and proposing its truly innovative
with respect to tank car design.

You know, I wear an environmental hat for the industry. I\'ve been
working on air pollution issues and, specifically, locomotive emission
issues for over 15 years. And outside of the ship, we deal a lot with
technology enforcement and regulations.

EPA just earlier this month published in the [Federal
Register]{.underline} a technology enforcing rule for the industry
requiring air pollution reductions that, quite frankly, we don\'t know
how to meet today. We can\'t meet them today. And they\'re publishing a
target that they hope will force the industry to figure out how to use
technology to meet those emissions targets.

And that\'s the approach that clearly DOT is taking here. None of us
know today, none of the experts know today how to meet this proposed
standard. But a technology forcing standard probably is the way to go,
to push us to get where, you know, we transport the stuff in the safest
possible way. And so we really do congratulate DOT for this approach.

And having said that, we certainly \-- today I will go through some
critiques of constructive criticisms. We certainly will be offering
those today and offering some more in our written comments, but that\'s
not to undercut the significance of what DOT has done, or to in any way
criticize the overall approach.

One thing that does strike us with respect to the notice of proposed
rulemaking is DOT did take a very different approach in terms of trying
to ascertain the safety of a tank car than the Tank Car Committee did in
issuing CPC-1187 and its predecessor circulars.

The industry took the approach of looking at probability of risk, or
what we call conditional probability of risk \-- conditional probability
of release \-- excuse me. And that really does tell you what the risk is
from the transportation of any particular TIH material and the specific
type of tank car.

What DOT has done in the NPRM is look at energy absorption and that
really focuses on one type of accident scenario. But as others have
mentioned today and in the earlier sessions, there are other accident
scenarios that are not reflected, or are not directly addressed by the
energy absorption approach.

So we do urge DOT to take \-- to go back and approach tank car design
from the issue of conditional probability of release, and that will give
you the perspective of what a tank car can do from an overall risk
perspective.

Now, having said that, it would probably be no surprise to anybody that
we have tried to take a look at the conditional probability of release
for the DOT tank car. And we really thank Administrator Boardman for
making Volpe available. Volpe has some expertise that was necessary to
kind of take a first look, a first ballpark look at what the conditional
probability of release might be for a tank car meeting the NPRM
standard.

I\'d like to thank Lucinda too, as well, who helped us in that regard.
So we did that, we took a look at the \-- well, I shouldn\'t say we. We
asked the University of Illinois, which is the preeminent expert in this
area, to take a look at this conditional probability of release for a
chlorine car meeting the NPRM standard.

And at least \-- again, this is roughly ballpark, it hasn\'t been peer
reviewed, but we think actually \-- and again, we will have some
constructive criticisms to meet, but the DOT tank car standard gives us
conditional probability of release that is very similar to the standard
that was issued in CPC-1187. It might even be a little bit better.

So it\'s with that perspective that we offer the critique that we do
think EPA needs to \-- or excuse me \-- DOT does need to take a look at
more of a risk based approach, as opposed to looking at the energy
absorption capability of any particular tank car design.

And to be a little more specific about our concern, again, others have
mentioned this today in an earlier session. You know, DOT has looked at
the energy absorption from a large blunt object hitting a shell or
hitting the head, and that ignores other scenarios that others, again,
have pointed out, such as the tearing away of objects such as top
fittings, or impacts from small, or sharp objects where the thickness of
the shell might be more of an issue.

The DOT analysis was based, actually, on a set of historical data going
back between \'69 and \'78, if I recall, from the regulatory impact
analysis, prior to the use of, you know, several innovations from the
industry, widespread use of these, such as double shelf couplers, head
shields, and jackets.

And so its portrayal of the typical action scenario, we think it misses
some stuff. They need to go back and take a look at the broader set of
accidents and that will help you understand, or help them develop the
tank car design that from an overall risk perspective, taking into
account all the action scenarios, reduces the conditional probability of
release as much as is possible.

We did have one of our members actually take a look at six pressure car
accidents where releases took place amongst daily BUS. I think he
mentioned that last week. Was it last week or the week before? My memory
is fading me now. And he noted that, you know, of those eight releases,
five were from other than punctures. So this is a true concern.

And that brings us to the issue of DOT\'s comparison of their standard,
or the proposed \-- the NPRM standard with the standard that the Tank
Car Committee adopted in CPC-1187 where DOT, I guess, estimated the tank
car \-- the Tank Car Committee standard, or the CPC-1187 standard to
only be 15 percent as effective as the NPRM standard.

Now, that justifies \-- to put it bluntly, that kind of defies common
sense. And I\'ll use chlorine as an example. Everybody\'s focusing on
chlorine today; I will as well.

Conditional probability of release for a current specification of
chlorine tank car is about five percent. The CPC-1187 standard, based on
tank cars that are in use today, so it\'s a robust analysis, reduces the
probability of release from five percent to two percent. That leaves two
percent left for DOT to do were it to completely eliminate any
possibility of release at all.

Now, I\'m not a mathematical genius, but it\'s tough to see how you get
to the 15 percent. Really what happened is it was through this analysis
of energy absorption that DOT arrived at the conclusion that CPC-1187 is
only 15 percent as effective as the DOT NPRM standard, but that doesn\'t
take into account the full range of accidents.

It doesn\'t take into account the fact that we actually can estimate
conditional probability for lease for CPC-1187 in a much more robust way
than we can to the NPRM standard, because the estimate of the
conditional probability of release for CPC-1187 is based on that robust
tank car database compiled by the ARRPI Tank Car Safety and Research
Test Project.

That database, as everybody is all familiar with, is composed of data
going back to the mid \'60s, all the way back to the present time. The
actual probability of release analysis is based on an analysis of data
between the mid \'60s, I don\'t remember the starting point, going
through the mid \'90s, of 30 years work of tank car data.

And so we know with statistical significance what the conditional
probability of release when we go between different DOT tank car
specification cars. We don\'t know that, of course, with respect to the
NPRM standard. There\'s a lot of hypothetical modeling that must be
done.

Again, we\'ve worked with Volpe a little bit in trying to ascertain the
CPR for the DOT NPRM standard, but we can say with good statistical
confidence that the CPC-1187 reduces the conditional probability of
release from five percent to two percent. That\'s a pretty significant
improvement. It clearly shows that the estimate of significance to the
NPRM is just flawed.

Turning to the issue of speed limits, we have several concerns with
respect to speed limits. First of all, and some of these concerns apply
to both the 50 and the 30 mile per hour speed limit. DOT doesn\'t
identify what specifically, whether or not it intends to address residue
shipments.

Now, it appears from the write up of the rule and particularly the
regulatory impact analysis that DOT did not intend to address residues.
I say that because if you look at the number of shipments that they
postulate would be affected in the economic impact, it appears residue
shipments were not addressed.

We know from experience \-- well, first of all, obviously, the potential
for significant release from a residue shipment is a lot less than the
potential for release from a fully loaded shipment. We know from
experience, I don\'t have statistical information I can share with you
today, but we know from experience that a residue shipment is less
likely to release.

I think that if DOT is going to go down the path of including residue
shipments, a new notice of proposed rulemaking would be necessary. But
suffice it to say that we don\'t think DOT should address residue
shipments. I would point out OT-55, upon which the 50- mile per hour is
based, does not address residue shipments. It would be a significant
added burden, not only to the railroad industry, but to its shipping
customers.

Secondly, as DOT made it very clear in its discussion of the 50 mile per
hour rule, any speed limit restriction is going to require increased \--
or is probably going to involve increased delay in terms of shipments.
The industry will seek to ship and group TIH cars in fewer trains. That
was made explicit again in DOT\'s analysis of the 50 mile per hour rule.
We need relief from the 48-hour rule.

For those of you not familiar, DOT does have a regulation in place,
which requires the railroads to forward shipments, expedite shipments
within 48 hours. If we\'re going to be able to group shipments,
obviously that rule cannot stand.

A third issue in this add to Tom Schick\'s concern about marrying
security and safety. The industry is under significant I don\'t know if
pressure is the right word, but we are certainly working with the
Transportation Security Administration to reduce dwell time. TIH
shipments move through the railroad industry.

TSA has actually established targets for the reduction of dwell time
going through the year 2013. This rule, obviously, will impact the
ability of the railroads to reduce dwell time. We do not see any sign
that DOT and TSA have put their heads together and addressed this in a
coherent fashion.

We do think they need to sit down and we may need TSA to revisit the
issue of dwell time reduction, but we do need to coordinate the efforts
of DOT and the Transportation Security Administration.

With respect to the 30 mile per hour speed restriction, you know, it\'s
arbitrary. You look at the list of accidents in the regulatory impact
analysis. It\'s based on 19 accidents going back. Again I don\'t have
\-- I think it\'s back to 1967, if memory serves me correctly. You look
at those 19 accidents, there\'s no apparent threshold. I think there was
one accident, for example, between 30 and 35 that was in non-signal
territory.

The speed limit restriction, the 30-mile an hour speed limit restriction
is clearly going to affect railroad\'s ability to serve their customers
and we\'re not just talking about TIH customers here. We\'re talking
about customers, all railroad customers. And not only are we talking
about the ability for the railroad industry to provide economically
efficient transportation for its customers, we\'re talking about the
public losing some very significant benefits with respect to railroad
transportation.

You know, there\'s been a lot lately about how railroads are the
environmentally beneficial form of land transportation. We are three
times more fuel- efficient than trucks when it comes to intermodal
transportation. We have the energy and environmental benefits that go
along with that.

We need to take a look at the overall impact on the industry and the
public when it comes to these kinds of operating restrictions and we\'re
very concerned along those lines.

The fuel savings, when DOT looked at the economic impact of the 30-mile
per hour speed restriction, it postulated that a significant portion of
the benefits were fuel savings. Now, that kind of boggles our mind, that
DOT are going to take credit for slowing down the industry, slowing down
its ability to provide customers with efficient transportation.

We could slow trains down to five miles per hour. We could save lots of
fuel, guys, you know, but we burn fuel for the purpose of getting goods
from point A to point B. Our ability to provide efficient transportation
again has significant public benefits that we just went to.

In essence, what DOT is saying is that we don\'t know our business, that
we should be slowing trains down more in order to save fuel. That kind
of boggles the mind.

DOT, in discussing the 30 mile an hour speed limit, also offered the
industry I don\'t know if carrot\'s the right word, but offered the
industry an alternative that if we look at other ways of improving
safety, we wouldn\'t be subject to a 30 mile an hour speed restriction,
of course, subject to DOT approval.

DOT wasn\'t very specific, however, in exactly what you need to do to
avoid the impact of the 30-mile speed restriction and in our written
comments we\'ll ask DOT to be very specific. For example, switch
indicators, broken rail circuitry. DOT mentioned those items, but
didn\'t specifically say exactly what it would take as an alternative to
the 30-mile per hour speed restriction.

Now, having said all that, with respect to the 30-mile per hour speed
restriction, we are looking at the impact on our operations and what it
would mean. Having said that, we do believe the 30-mile per hour target
is arbitrary. The other side of the coin, of course, is what would the
actual impact be?

And we talked a little bit a few minutes ago about extending the comment
period. We are really struggling to come up in an expedited fashion with
that analysis. I don\'t know that we can pull it off by Monday or not.
So our final word of the 30-mile per hour speed restriction we certainly
will leave for our written comments.

We don\'t want an extension of the comment period that will slow down
the rulemaking process. We are eager to see the rulemaking process being
brought to a conclusion as fast as possible. However, within that
context, if DOT can accommodate an extension to the comment period, it
certainly would give us more time to at least get that kind of
information before DOT within the formal close of the comment period.

Again, I didn\'t want to spend too much time, given the fact that I
stand between you and lunch, that will do it as far as my formal
comments are concerned, and I\'d be happy to answer any questions.

MR. COTHEN: This is going to sound argumentative.

MR. RUSH: Good, nothing like a little argument before lunch.

MR. COTHEN: And I guess that\'s okay, but really I\'m trying to
understand because there are some very bright people who\'ve looked at
this.

What we did in looking at the kind of events that were producing
catastrophic consequences was to look at the database from the lading
loss study for chlorine and anhydrous ammonia. And we selected out
events that had substantial quantities released, a couple of thousand
gallons or more released.

And then we tried to examine whether or not these releases occurred in
dark or single territory. We took only releases that involved cars of
the kind that are typically being operated today under existing DOT
standards. And this is the table that\'s at the back of Jeff\'s
regulatory evaluation.

We then summed the consequences of the releases, in terms of fatalities
as against the number of fatalities in the entire 1965 Ford lading laws
database for these commodities. And we found that 100 percent of the
fatalities were accounted for.

And then we looked at the issue of injuries. And I think for one
commodity it was 100 percent of the injuries, and the other was
90-something percent of the injuries you have in the data in front of
you.

And we said, well, this seems to indicate, from what we\'ve done, that
shell and head punctures account for \-- have accounted since 1965 for
presumably, you know, several million shipments of these products. Have
accounted for virtually all of the stuff that we should first seek to
prevent; that is loss of life and personal injury. And I guess I\'m
still struggling with whether or not the conditional probability of
release analysis takes into consideration the severity of the event the
same way that that kind of, you know, gross sorting that we did seems
to.

Now, having said that before I\'m misunderstood, because I think it\'s
very easy to be misunderstood on either side of the table here, whereas
among railroads and shippers and so forth, I think we all recognize the
top fittings have to be dealt with, right? That the Tank Car Committee
is dealing with that issue and it\'s going to be addressed, I think, to
the satisfaction of everybody concerned over the coming months, so \--
and it needs to be. There\'s no doubt about that.

But having said that, I guess my primary question, Mike, really, and
I\'m trying to understand it, and you know I\'m no statistician, why is
that not then the appropriate focus and in what way does Dr. Barkan\'s
analysis deal with that dimension of the issue, because there always
just seemed to be and I know Dr. Barkan\'s much smarter than I am, but
there\'s always seemed to be a disconnect there that I couldn\'t quite
put together.

MR. RUSH: Well, unfortunately, since Dr. Barkan\'s on his way back from
Korea, I\'m going to have to sit in for Dr. Barkan today, so let me see
if I can take a whack at this.

What DOT did, and I think it was a total of 19 accidents, if I remember
here. It\'s a very small sub-set of accidents. And you\'re almost left
with a scenario, when you look at the DOT accidents it\'s almost
fortuitous in a sense whether a particular accident, when you\'re doing
such a small sub-set, involved the fatality.

I\'ll give you an example. Let\'s look at Lafayette, Louisiana, if I can
pick on Ryan Ringleman\'s railroad back there. A couple of weeks ago, it
had an accident in Livingston, Louisiana. Slow speed, top fitting
sheared off, hydrogen chloride was released. I think a thousand gallons.
I don\'t remember the exact quantity.

One car back was a TIH tank car. A hundred feet could have made a
difference in what was released. You could have had the top fitting
sheared off. You could have had a fairly catastrophic release. The
problem with dealing with such a small sub-set of accidents is that you
don\'t have a sophistically robust database. By looking at a much
broader set of accidents, and again, the HCL is relevant because it\'s
not a question of any particular accident.

You know, again, it could have been a TIH material. You need to look at
at least all the pressure cars and take a look at what happens with
different DOT specification cars. And that\'s what Chris did. And that,
actually, is what Todd Treichel did. The whole lading loss analysis
really goes back to, I think Todd\'s work, when he did the lading loss
report to the ARRIPI or ISI, excuse me, a tank car project.

What we have here is just a very narrow sub-set of those accidents. I
think if we\'re looking for fatalities, I think you\'re only talking
about, I don\'t know, seven or eight fatalities. It\'s not enough to
draw statistical conclusions. You need to look at the whole database of
pressure cars and understand the impact with respect to tank thickness,
and what happens when you move to a 300 to a 500 to a 600-pound car.

The other thing I\'d say when you speak about top fittings, first of all
I would agree with everything Grady said. I think the top fitting\'s
controversy, I think, is really behind us. I think we\'re headed towards
a consensus industry approach to top fittings.

But from our perspective, if you take a look again at the broad
database, and I don\'t have the statistics off the top of my head, but
when you take a look at the broad database of top fitting releases and
you look at releases over 5,000 gallons over a several decade period, I
believe you\'ll find that top fittings are responsible for about 20
percent of those releases, not a small amount.

I do find it a little ironic too, when in a companion rulemaking
proceeding, if that\'s the right word, dealing with routing analyses,
where the industry argued for residue shipments to be excluded, DOT
would not let us exclude, or would not agree to the exclusion of residue
shipments because of the potential for release of a couple of hundred
gallons.

And here, in this proceeding, I find DOT taking almost the opposite
perspective, that so what if we release a few thousand gallons from the
top fittings. But I think that\'s just maybe an inappropriate needle,
but I will say, you know, again, going back to it, the lading loss
report is a robust report based on analysis of 30 years of data with
respect to what happens when you have thicker shells. You know, what
happens when you have all these other variations on a tank car. Here we
just have 19 accidents, not a statistically significant analysis.

MR. COTHEN: Thanks, Mike. I\'ll let my colleagues follow up in a general
trend here because its been such an issue of interest.

Go ahead.

MR. SCHOONOVER: Yeah. Thank you, Grady. I\'m going to follow up on that
if I can. I\'ll try to follow Grady\'s lead and try not to turn this
into an oil company hearing.

MR. RUSH: Nothing wrong with a little debate among friends.

MR. SCHOONOVER: I guess my concern is that in asking people about the
survivability of the CPC-1187 car, the response that I\'ve gotten to
date is that they can\'t guarantee that the car would survive
Granetville or Minot. They feel that it may survive McDonough.

So if, in fact, you\'re saying that there\'s a three percent reduction,
if that three percent misses two of the three major accidents that
involve loss of life in the last decade, after we\'ve made all these
major improvements, how can we really feel that there\'s a confidence
that we\'re addressing the right issues?

MR. RUSH: Bill, I think you \-- I go back to my opening statement. This
is not to say that CPC-1187 is superior to the NPRM proposal. Au
contraire. What I was addressing with respect to \-- in these comments,
or at least that portion of the comments that I was addressing was the
statement that the CPC-1187 only gets 15 percent of the benefit of the
NPRM standard.

Remember what I said about looking at conditional probability release.
We have taken a preliminary look at the NPRM standard. We do think it\'s
a significant improvement in conditional probability released based on
very preliminary analysis. It may even be better than CPC-1187 terms and
conditions of probability release.

And even if it isn\'t, regardless, we do think DOT is right to go look
at a think out of the box approach, let\'s see if we can come up with
something new, let\'s see if we can come up with something better. No
one at AAR certainly, no one at the railroad industry, that I\'m aware
of, has ever said that CPC-1187 should be the final word.

We fervently hope that at the end of the day what we are going to see is
a DOT performance standard that far surpasses the improvement that
CPC-1187. And when I say by far, it closes that two percent gap even
more. So we are not suggesting in any way that DOT has the wrong
approach here. We\'re not suggesting that the NPRM is not a good
proposal.

We are suggesting it may be able to be improved, if you take a look at
conditional probability for releases, and you take a look at the other
acts and scenarios that are not addressed, but through the energy
absorption scenario. So, you know, let\'s not confuse what I was trying
to do in terms of, quote, defend, CPC-1187 and more accurately portray
the safety achievement that we get from CPC-1187.

And let\'s not confuse that with the idea that DOT is trying to really
push the envelope and go further, which I think you deserve a lot of
congratulations for.

MR. SCHOONOVER: Thank you. I guess I did have a question. The RSIAR
database contains information on residue shipments as well?

MR. RUSH: Todd Treichel \-- Ken Dorsey\'s shaking his head yes, it does.

MR. SCHOONOVER: Okay. And so this conditional probability of release
that Dr. Barkin developed includes residues as well?

MR. RUSH: Ken \-- Ken Dorsey from the AIR \-- Ken, why don\'t you come
up to the mike. He\'s better suited to address this than I am.

MR. DORSEY: Ken Dorsey, D-o-r-s-e-y.

Dr. Barkin \-- actually, they did a lot of slicing. They took out cars
that are not \-- I\'m not sure if they took out residue shipments. I do
not believe they did because a breach is a breach.

Again, but for the grace of whatever deity you choose to insert here, it
could have been a full car. So when you\'re talking about statistically
did it cause a breach, I believe he included those, but I would have to
get with him to be specific on that for the record. So to ensure that
that\'s what he did \--

MR. RUSH: I\'m pretty confident that\'s the case as well, Ken, because I
took a look at both Chris\' analysis and Todd\'s analysis a couple of
days ago and they did make some of the exclusions that Ken was talking
about. But I\'m pretty confident residue shipments were not, just for
the reasons Ken stated.

MR. SCHOONOVER: And I have one other question, but I\'ll wait. It deals
with the 48-hour rule, so \--

MR. MARTINEZ: Okay. I have several questions. And I understand that
you\'re not Dr. Barkin, but for the record I would like a response to
the following questions to better understand and educate not only FRA,
but the industry in general about how the CPC-1187 was formulated and
what the basis of that is.

You\'re talking about this 40,000-element matrix of tank cars, which
have been damaged or punctured, and the RSI data. And when you go
through and you read the basis for where CPC-1187 is formulated, they
diced and they sliced and they cut things up, as you suggested that they
did. And from a 40,000-element database, they\'ve decreased it and I
don\'t know the exact number, but basically to 6,500 to 6,900 cars are
now in the set of regression analyses, which were conducted.

Now, some of the concerns that we\'ve had, you pointed out earlier in
your discussion the concern for the information, which was reviewed in
1969 to 1978. We have similar concerns from the perspective that the
6,900 cars or whatever span the full timeframe from 1965 to 2005.

And as you stated, there were significant changes, which were
incorporated into the industry as a result of the Staggers Act, as a
result of Implementation of double shelf couplers, head shields, thermal
protection. And what we\'ve seen in the actual history years,
significant decreases in the number of incidents, which have occurred.

And so the concern or question that I have is I really believe that you
need to go back in terms of your regression analysis and take that into
account so those cars, which were designed prior to that time frame,
probably should be further cut from your regression analysis, which
will, again, cut into the correlation coefficient, which Chris has
developed.

And on some of those correlation coefficients, he\'s in the range of 70
percent. Sometimes he\'s in the range of 60 percent. And that may not be
sufficient, but we\'re going to start chewing away into the confidence
intervals that you\'re talking about associated with that. That\'s one
thing.

MR. RUSH: Well, let me just \-- we\'ll do that for the record, but let
me just respond if I can point by point.

If you look at the lading loss report, I do remember pretty
specifically, for example, looking at the effect of double shelf
couplers. Again, I\'m reluctant to go any further with that, and I
don\'t know if anybody in the audience wants to without Todd or Chris
being here, but I do believe that leaves some of those \-- they did
analyze some of those things and I do remember specifically, for
example, a section at the end of the lading loss report talking about
the effect of double shelf couplers. But we\'ll provide a further answer
for the record.

MR. MARTINEZ: Right. Well, in response to that, if you do look at the
report, they basically put an analog signal in where if you had a double
shelf coupler, in order to include those cars, or exclude those cars,
they put a factor of one in from the probability or likelihood that
you\'re going to multiply, or they put a zero if it didn\'t have it. So
to some extent, that is taken into account. So that\'s fine from that
perspective.

There are other aspects, if you want to break into the analysis a little
bit finer, where Chris used specific numbers to try to account for, in a
similar fashion, the use of head shields full height, or quarter height,
or half height head shields and he just chose the factor that\'s
three-quarters as his analog signal again, or his filter in order to
apply the relative effectiveness that those have.

And some of the concerns, the concerns that I have in general with the
analysis as conducted is that the framework, or the models that are
used, those are typical models. They\'re statistically very valid.
They\'ve been applied in many different areas. However, the sensitivity
of the ultimate results are very significant based on the input
assumptions that you\'re using.

And so you can be driving the results from your model based upon the
input that you put into it. And so that\'s of concern. And so I would
like to ask of Chris \--

MR. RUSH: Sure.

MR. MARTINEZ: \-- who\'s not here, that he define very clearly for us
what the sensitivities are associated with the various inputs that he
has provided.

MR. RUSH: Okay.

MR. MARTINEZ: So that\'s another aspect of it, to talk about top
fittings, which is very important.

You\'ve said some interesting things in your discourse. Top fittings do
occur at a much \-- at a very frequent, or relatively frequent in
comparison to the total number of events. But the consequences
associated with the top fitting failures are relatively low, as Grady
pointed out.

That\'s not to discount the importance of top fittings. FRA has an
ongoing research program where we\'re looking at top fittings and the
industry is doing a very good job of looking at alternative fitting
arrangements to decrease the likelihood that that\'s going to be an
issue.

And so FRA is concentrating instead on those very high consequence
events, even if they\'re less frequent because of the amount of
commodity that\'s going to be ultimately released. So an additional item
that I would request of Chris to provide is, and he can do this based
upon his regression analyses, he can basically take out terms that he
doesn\'t necessarily want to include, and that would be to exclude the
benefits associated with top fittings and report those instead.

And I think what you\'ll find is rather than being in the regime of 65
percent CPR, conditional probability release, or 65 percent reduction,
you\'re really going to be in the regime of something like maybe 30 or
35 percent.

MR. RUSH: We\'ve already done that analysis. It\'s 45 percent for
chlorine. It would depend on the commodity, of course, and the tank car
we\'re talking about, but for example, for chlorine, you go from 63 to
45 when you exclude top fittings.

MR. MARTINEZ: That\'s correct, but for ammonia you go to a significantly
smaller amount.

MR. RUSH: Ammonia was in the low 30\'s range. I don\'t have that figure
off the top of my head.

MR. MARTINEZ: And so if you could do that breakdown, that would be \--
and put it in the Docket for everybody to see that \--

MR. RUSH: sure.

MR. MARTINEZ: \-- that would be helpful as well.

MR. RUSH: Yes.

MR. HOCHMAN: I have two questions for \--

MR. COTHEN: Jeff, just before you go on, let me just mention that
somebody out there is still going to think this is argumentative. It\'s
actually \-- actually it\'s clarifying because we need all the tools we
can get to work our way from here to wherever it is. And so, thank you
again for being here and being willing to work with us on these
questions.

We want to take advantage of all the analytical tools we can and we want
to understand as best we can what the outputs mean.

MR. RUSH: And vice versa. And I would say that\'s why we certainly,
again, want to repeat, you know, we really appreciate \-- I think this
does need to be a collaborative effort on behalf of all of us in the
room. And I think Volpe, for example, has been very sharing and I think
that\'s really says something very positive about DOT\'s approach to
this whole issue.

MR. HOCHMAN: First, as related to the fuel savings at the 30 miles per
hour, there\'s also a small fuel savings for 50 miles per hour, but
basically through the dynamics of physics, anything above ten miles per
hour, you\'re going to be increasing the fuel usage. So anything below
actually, that\'s not the case. It\'s the dynamic of physics with air
resistance.

And the reason it was put into analysis wasn\'t because we were trying
to tell the railroads what to do, or how to run their business, because
we all know that\'s the last thing we should do in the world is tell
somebody how to run a railroad.

And we worked aggressively in numerous rulemakings avoiding trying to
tell the railroads how to do concept management for that exact same
reason. So we tend to work in the direction where we don\'t tell them.
But the way a regulatory impact analysis works is it takes the positive
and negative impacts and it happens to be a positive impact of a 30-mile
per hour reduction, if there is a fuel savings for operating the trains
at slower speeds.

There\'s also the negative impact of how it will slow things down and
delay shipments, and possibly congest lines. Well, those are attempts to
\-- we made attempts to also include those. So it\'s not that we\'re
trying to tell the railroads what to do, but it just does happen to be a
positive impact of slowing the trains down.

MR. RUSH: The fuel savings represents such a large percentage \-- I
don\'t have the figures at the top of my head in terms of the benefit.
It kind of makes you question, I suppose, are the railroads really
running their business properly. And I think it should cause an analyst
to question am I really assessing the benefits correctly, or the costs
correctly because they are \-- it\'s a pretty \-- the fuel benefits
stand out as a pretty large part of the equation.

MR. HOCHMAN: There are a large number, but I don\'t think it flips on a
dime on it. It\'s really related to the fatalities that we\'re trying to
reduce, but it is a number that somebody else has questioned and it has
been analyzed and it can be analyzed again in the final rule, but we
really don\'t intend to tell the railroads how to operate.

But that\'s one of the reasons it\'s included and it will be included,
whether it\'s included at a smaller number, or a slightly larger number,
of as a qualitative number in the final. But \--

MR. RUSH: Let me try to rephrase what I\'m trying to say. Undoubtedly,
the fuel savings is a true savings. The slower you operate generally, to
a point, the more fuel-efficient you will be. I think you have vastly
underestimated the impact on railroads and their customers as a result
of that, quote, fuel savings, and that\'s really what I was trying to
say.

It\'s really disproportionate. And that\'s what we\'re trying
desperately to do in a very short period of time, is trying to come up
with an economic analysis of what the costs would be, if you will, in
those fuel savings.

And I think that\'s really what I was trying to say. The way it\'s
portrayed in the regulatory impact analysis it does cause you to
question whether the railroads really knew what they were doing in
operating their business. We think the costs associated with those fuel
savings are going to be much, much higher and that\'s really the point I
was trying to make, and I just didn\'t state it very artfully, and I
apologize.

MR. HOCHMAN: Well, on those costs, more detail would be helpful in your
comments and \--

MR. RUSH: That\'s what we\'re trying for.

MR. HOCHMAN: And on that detail, how the numbers were calculated, not
just it\'s going to cost us \$30 million, blah, blah, blah, but how that
number is calculated and the transparency of how such a number is
calculated would be extremely advantageous as well.

MR. RUSH: We will do what we can in the time period available.

MR. MARTINEZ: So I have some additional questions. I just wanted to give
Jeff a chance to break in as well.

Some additional questions that I have for Dr. Barkin and AAR, in terms
of clarification, are the key parameter that is sort of output from this
set of regression analyses that Chris has conducted and others, is that
thickness is a very significant reflector of improved crash readiness
performance, and I really feel, based upon the work that has been
conducted by Volpe on this idea, looking at the influence of tank
performance with variation and thickness, that in fact, thickness,
although it does play a role, plays a significantly smaller role than
what Chris has come up with.

And I think this is partially based upon the fact that in reality, when
you\'re looking at these chaotic events, which occur in collisions, that
it\'s a combination of things, it\'s thickness as well as impactor size,
which we found impactor size to be a very significant contributor to the
performance of the car, the ability of a car to be able to resist full
loss of lading.

And so one of the questions that I would pose to Chris is to expound
upon the sensitivity of impactor size upon his results, which he\'s
posed in the report.

MR. RUSH: Yeah. What I think this discussion is reflecting is two very
different approaches to figuring out the safely improvement of a
particular design, or you know, comparing a couple of designs.

What Chris did, the University of Illinois did, building on the work of
the tank car project and the lading loss report, is not tried to model
any particular action scenario, look at things like impactor size. What
it said was, look, we have a database, we have thousands of data points
going over a 30-year period relating to different DOT specification tank
cars.

There is enough data out there to make statistical conclusions about the
effectiveness of different DOT specification tank cars. And that\'s
really what CPC-1187 is based on. It\'s based on existing DOT
specification tank cars. So you don\'t need to figure out what caused a
particular accident in terms of impactor.

You have enough robust data out there to know that a 500-pound car
compared to a 300-pound car is going to give you a different conditional
probability of release. And what Volpe did and what you\'re talking
about is trying to model different action scenarios and calculate what
the effect is of different types of designs based on those scenarios.
It\'s a very different approach.

The former approach, if you have enough data to make statistically sound
conclusions, is a much more robust approach because it\'s based on real
statistics, real accidents, real releases, and, you know, gives you a
very high degree of confidence, obviously, because of the performance of
those cars.

With any kind of modeling exercises, you don\'t know what you\'ve left
in, you know, what you concluded that maybe shouldn\'t have been
concluded. It\'s a much more \-- it\'s a less statistically robust
exercise. And that\'s really the fundamental philosophical difference
we\'re talking about.

I don\'t want to belittle, again, Volpe\'s efforts, or the importance of
looking at energy absorption, or the significance of the proposed
design, or its effectiveness. Really, what we\'re talking about here is
not so much the Volpe design, the NPRM standard.

What we\'re really talking about is the effectiveness of the CPC-1187
and that, I think, we have a much higher degree of confidence in stating
what that safety improvement is than we have with respect to the NPRM
standard. Again, we think the NPRM standard represents significant
improvement.

MR. MARTINEZ: That was a mouthful. I think you bring up a very valid
point from the perspective that the approaches, which have been applied,
are quite different. That is true. They\'re very different.

What FRA has tried to do from a deterministic standpoint is drive the
resultant risk as close to zero as possible because we have a
responsibility to the general public to ensure safety, as well as to the
industry, that we can do this. And so we\'ve developed a process through
which we do that.

The tool, which was used by the industry to develop CPC-1187 is very
different because it does rely upon the past performance to predict
future potential effects. And so one of the additional questions that I
would have is, having gone now from, let\'s just use one commodity car,
a chlorine car, a 500-pound car to a 600-pound car, you have effectively
come to the end of an evolutionary line in the ability to provide any
further benefits, whereas what is being proffered by the DOT is a way to
circumvent that and you can have significant improvements in the future,
depending upon the design that you come up with.

Can you \--

MR. RUSH: Well, let me just say I agree with everything you just said.
You know, the DOT proposal, the think out of the box, tried something
different, see if we can do even better, has the potential at the end to
make very significant, dramatic improvements in safety and go beyond
CPC-1187. We would agree with everything you just said.

MR. MARTINEZ: Okay, thank you.

In your review of the information, when you go back and you start
looking at it, if you could find in your data set, and I\'ve had some
glimpses of the data set in its raw state, and I don\'t know if this
information exists, but if you could classify the number of failures,
according to the type of impactor, that would be very helpful.

You may not have that information because what ultimately is recorded is
just the damage, which ensues after the fact and you don\'t know because
you take the car back and you take it apart.

MR. RUSH: Right.

MR. MARTINEZ: But I\'m confident we \-- I\'ll go back on confident. We
do not have that data, again, just because it\'s a very different way of
going about it. Go ahead, Ken.

MR. DORSEY: Ken Dorsey, AIR.

That work\'s being done. As you\'re aware, the database is built on
files of accidents. Some of those files, particularly the older ones are
not totally complete, so those files have to be discarded. But they are
going back and reviewing where it is possible to determine what the
impactor is.

They are looking for that data. And it\'s going to take a little time to
assemble because it requires going through each of your 6,000 data set,
basically, of similar cars and going through each file piece-by-piece to
determine if that information was included. I don\'t know how successful
they\'ll be either, but it is being done.

MR. RUSH: Yeah and I just want to elaborate on what Ken just said. We
don\'t know what\'s in there. We have no clue.

MR. DORSEY: Correct.

MR. RUSH: We know it\'s not going to be universal. It\'s going to be a
sub-set at best of data, so it\'s not going to be a comprehensive for
all the data points. We\'re not going to have that answer.

MR. MARTINEZ: Okay. Thank you.

MR. HORN: I have one last question. It\'s actually a comment to your
comment and a suggestion and a request for your comments to the Docket.

You\'ve noted that the operating restriction for 30 miles per hour is
arbitrary. My question doesn\'t deal with the fact that you\'re noting
it is arbitrary. It deals with the fact that in the end we\'re probably
going to be dealing with operating restrictions.

It would be beneficial if you could share with us the differences
between say a 30 and a 35-mile per hour operating restricting, and the
impact it would have, from your perspective, on the industry positive
and negative, and on such impact, the transparency on how you calculated
those impacts. That would be beneficial to see something in the Docket
on that note.

MR. RUSH: And we\'ll try to get that, again, in the time frame. We may
be a little time pressured, but we\'ll do what we can. I will say that
from a safety perspective, we\'ve tried and failed to come up with any
logical threshold. You\'re asking a different question, which is the
burden on the industry and that we might be able to be more helpful
with. Okay.

MR. HORN: Yes, and I think it might be more beneficial for everybody to
see such data.

MR. RUSH: Okay.

MR. COTHON: I guess I have to ask the question and maybe it has to do
with the fact that we didn\'t set out the therum too well in a clear way
in the proposal, but the 30-mile an hour restriction in dark territory
was from its first on the belief, which we had developed in the PTC
working group, that the risk of collision is approximately twice in dark
territory, all other things being equal, than in signal territory and
the note that depending upon the condition of the track structure,
particularly the rail, that the absence of a broken rail detection might
create further hazard, and I wasn\'t aware to this date of anybody
quarreling too much with that part of it.

On the issue of whether or not it\'s the 30, or 20, or 10, or 45, you
know, I don\'t think FRA at any point would want to be heard to say that
we would view any negative impact on system velocity as a positive
thing. We certainly would not.

We certainly understand the interests of the railroads and increasing
system velocity, which continues to hover, depending on how you compute
it, in the mid 20\'s, for the nation, but you can only do that, clearly,
if at times you\'re moving the intermodal train at 70 miles an hour.
Otherwise, you really are having significant problems.

Working in dark territory, we\'re talking about, of course, 49 miles an
hour or less as a maximum authorized speed. We\'d also noted, without
taking credit for it that increasing railroads are working to instruct
their crews to engage in train pacing and, in fact, there are those who
are offering tools to the industry that would permit more refined use of
that technique.

And the concept there is not to reduce the speed over the territory, but
to say within the available metes and passes I\'ve got, I\'m going to
limit my speed in order to make that the end of that track line as much
as possible precisely when I should in order to act on the next track
line, while maintaining time and notch, if you will, that is in the
lowest range as possible, taking into consideration track gradient,
curvature, all the factors that an engineer has to consider in order to
move over the territory.

And so, you know, we assume that not only do people not move it at 49
miles per hour in dark territory, they typically, without coaching,
they\'re going to move it significantly less than that because of
interfering traffic and local service on the line and so forth.

And then we further assume that there would be a mitigation without
claiming it, in that more and more we\'re trying to trace pain \-- pace
train \-- I know I can say that \-- to save fuel. It\'s a major
objective. If you talk to railroad operating officers in the industry,
it\'s saving fuel.

We thought that those factors would tend to mitigate the adverse effects
of any 30-mile an hour speed restriction, fully confessing that there
would be some additional restriction on operations. And so in taking
fuel savings, basically we assume that to some extent, for a portion of
that, that the train pacing that\'s going on there, on out there, was
not going on.

I don\'t know if that confuses you, or confuses me, but we certainly
recognize the railroads know their business. We think an important part
of the business is conservation of fuel. And part of the hypothesis here
was that that would tend to mitigate the adverse effects of a 30-mile an
hour speed restriction in dark territory.

I don\'t know if you want to comment on that. I\'ve got one more point,
Mike, on this.

MR. RUSH: Well, you said a mouthful, so let me, if I can, get a few
points out.

And no one\'s quarreling with the suggestion that the accident rate is
higher in non-signal territory than in signal territory. Exactly what
that would be if you control it, for example, for track class and stuff
would be an interesting question. No one\'s questioning that obviously
the faster you go the chances of a significant impact resulting in a
release would be greater.

Having said all that, there\'s a real question as to whether there\'s
any particular threshold that is worth the economic cost.

Now, I think part of the assumption, part of the quarrel I have with
your discussion of the fact we\'re dealing with a maximum of 49 mile an
hour territory and the railroad\'s efforts to save fuel, etc., is sort
of lumping all non-signal territory together.

Non-signal territory encompasses very different types of track, very
different types of operations from seldom used branch lines to fairly
heavily trafficked lines where you have commodities transported that are
really part of transcontinental moves and they\'re critical to the
velocity of the system.

Let me give you an example, again picking on my poor friend Ron
Ringleman at BNSF. I think in the preamble discussion, FRA took note of
the fact that BNSF, or maybe it was at least in the regulatory impact
analysis, that FRA took note that BNSF special approval, which provides
for a waiver of the 48-hour rule and enables BNSF to group cars.

They operate under a 35-mile an hour restriction under that special
approval, but again, waiver of the 48-hour rule, which is why they
needed the special approval. The regulatory impact analysis really
missed the mark with respect to BNSF and when you look at the BNSF
operations and the specific approval, it\'s very illustrative of what
Grady was saying and maybe the fallacy there.

The BNSF special approval was for a certain segment of dark territory,
or non-signal territory on its road. It did not encompass all non-signal
territory operations. For example, its biggest, from a traffic
perspective, segment of non-signal territory gave our subdivisions. That
is not part of the special approval because if BNSF had restricted
operations at 35-miles per hour, it would have had a significant impact
on velocity throughout the system.

It\'s part of the transcon system for transcontinental routes for BNSF,
so really, you can\'t just lump all non-signal territory together. You
need to look at each individual segment. And some segments, yes, you can
do exactly what Grady said. I mean the impacts may be minimal. In
sub-segments they won\'t be. And that\'s really the fallacy underlying
the DOT assumption about operations in non-signal territory.

MR. COTHEN: And, you know, the Federal Railroad Administration actually
looked, tried to look at this on a retail basis as much as possible,
having available a pretty good traffic data, at least on the commodities
of interest, and some knowledge of the train frequencies on the lines
likely to be impacted.

And so I think that\'s why Jeffrey suggested that the more transparency
we can get, and this would be transparency as to the Federal Railroad
Administration because in some cases SSI being what it is, we don\'t
want to, you know, get down in the weeds too much. But the more you can
be clear on that, the more helpful it would be.

You know, this is \-- the year is 2008, I\'m pretty sure. That\'s what
my cell phone says. And, you know, we will continue to have concern over
having worked on positive train control systems by another name since
1985, and I believe that the Federal Railroad Administrator first
testified that advance train control systems were right around the
corner.

We have, you know, some difficulty with the notion that is a segment of
track is part of a transcontinental route, or an international route, a
major gateway in the United States would not be signalized at this
point, or other approaches would not have been taken to mitigate risk.

And we note that there are enormous benefits that accrue to a railroad
that signalizes a line, in terms of the fluidity of the traffic, the
velocity over the route, holding down crew costs, and so forth and so
on.

And so I guess, you know, again our therum in approaching this has been
that one or two capacity constrained lines shouldn\'t be a bar to doing
something that otherwise maybe makes sense in an interim faces, but the
situation may not be precisely as we analyzed it, and so we welcome any
additional information in that regard.

Let me just ask for one further clarification on the temporary speed
restriction. You know our \-- and again, we may not have expressed
ourselves clearly, but we did look at the train speed in those cases
where there was a catastrophic release in this same little table you\'ve
discussed previously.

We did note for the chlorine car generally considered the better
package, at least with respect to the shell, that we were not
experiencing releases above 25 miles an hour. We noted that we didn\'t
want to use 25 miles an hour as a temporary speed restriction. First of
all, it would have further impact on the rail traffic and on the cost of
transportation for the commodities in the train in question.

But also, we didn\'t want to get into a rock and roll situation any more
than it\'s already necessary to do so with situations of Class 2 track
or similar restrictions. And we noted that \-- and we have since noted
from the work of the next generation project and our own analysis that
probably it\'s true that tank cars are going to fail at least on the
shell, or with non-protected head in the range of about half of 25 miles
an hour, which is the closing speed hypothesis.

So 25 miles an hour becomes a threshold at which you would expect a
release to be a good possibility given the typical impactor such as a
coupler draw bar. And that although it would be nice to limit it to 25
miles an hour, 35 miles an hour might be a decent compromise. That was
the overall logic that was employed, which as I say has tended to be
validated in full-scale testing, since we put that hypothesis forward.

So if there are one or more elements of this Gerry rigged structure here
that needs to be knocked out so that collapse of its own weight, I hope
you\'ll let us know, but \--

MR. RUSH: Okay. Can I comment on this point, one aspect of what you just
said, which is the theory that you expect the closing speed to be one
half of the maximum operating speed, which is from 50 to 25.

We don\'t have any data on that, but my understanding is that\'s based
on one data point. I may be wrong, but it\'s really based on one data
point. And I don\'t know that the railroads have a higher degree of
confidence that that\'s right or wrong. I mean it\'s not that we think
it\'s wrong; we just don\'t know.

So to base something significant, like speed restriction, on that
particular data point \--

MR. SCHOONOVER: I guess, Mike, if I can ask a question here, I mean to
say it was based on one data point, if memory \-- my memory is short,
but if memory serves me, the assumptions made in the original proposals
by the \-- to the Tank Car Committee from Dr. Barkin used or assumed the
very same things.

In fact, the engineering assumption was that the loss in speed was
exactly one, or exactly one-half the train speed in driving the
assumptions on the benefits of the proposed CPC, I think it was 1184 at
that time, car. So you know, I would ask that you go back and look at
your records and make sure that you\'re not hitting us over the head
with a mallet for something that you, yourself, actually started.

MR. RUSH: I\'ll be honest, my memory is not as good as yours, Bill, so
I\'d have to defer that till I look back at the record. Okay.

MR. SCHOONOVER: Yeah, we are in trouble if your memory is not as good as
mine.

I do have two questions that are not dealing with this issue. Really,
you brought up an interesting point in needing relief from the 48-hour
rule. The 48- hour rule has a long history of being put in there. I mean
it\'s a rule that has been in place since the original regulations with
the ICC and before that the Bureau of Explosives. And I mean it was
really put in there to keep shipments moving.

TSA, in fact, through their efforts, are taking steps to keep shipments
moving. And I guess my question to you is, you know, what
recommendations would the railroads suggest as alternatives to a 48-hour
rule so that we don\'t have an errant railroad holding shipments hostage
for some reason?

Not that they would, but \--

MR. RUSH: Right. And I think, first of all, well, it\'s not in the
railroad\'s interest to do so. I\'d point that out. I think what we
really need and what we really are asking for in the first instance is
for DOT and TSA to get together and say what should our policy be? Are
we going to impose \-- is the safety trunk security in the sense that
for safety reasons we need to issue a rule, which would, for the
railroads to operate efficiently, will cause them from time-to-time to
hold TIH shipments, group them in fewer trains, in which case TSA
security objective of reducing dwell time, obviously, would be impacted?

Or is dwell time going to be of such paramount importance that we need
to go back and rethink the speed limit issue? We are not telling and we
don\'t mean to in these comments tell the government what the right
approach is. What we\'re asking for is a consistent approach and for DOT
and TSA to get together and kind of build on what Tom was saying.

We just want \-- you know, whatever the government decides, we could
figure out a way to write it up, but first we need government to sit
down and address this in a coherent fashion.

MR. SCHOONOVER: Okay. I guess the reason I asked is because if you look
at that special permit that VNSF has, there are some significant
restrictions in that permit.

MR. RUSH: Right. And we\'re not asking for those.

MR. SCHOONOVER: Well, it prevents them from doing things like
maintenance on the track. You know, it really restricts your ability to
operate in other areas. And so trying to \-- I think trying to balance
that out \--

MR. RUSH: Yeah, and we\'re not asking for those special restrictions.

MR. SCHOONOVER: I\'m not suggesting you were.

MR. RUSH: But be that as it may, but be that as it may, and I don\'t
think you can \-- you know, it\'s really just a plea, if you will, for
the government to get together and then whatever the world should look
like, taking into account both safety and security, we can write it up,
we can figure out how to do it, but they just need to \-- we need the
two agencies to get together.

MR. SCHOONOVER: And one more question and it\'s really dealing with the
RSIAR tanker safety base. You know, we do have all this data that\'s out
there and is outstanding data. And I\'m just wondering how CPC-1187 has
impacted the shippers. I know the railroads report to it readily, but
the shippers and owners, have you had an impact from them reporting into
the database?

And the reason I ask is because I think that raises a concern about the
ability to validate future improvements we have to cars. And I\'m
interested to find out.

MR. RUSH: Well, I think we\'d be better off, Bill, deferring that to the
Executive Director of the project, Todd Treichel, who\'s walked into the
room because he can answer that better than I could.

MR. SCHOONOVER: I mean obviously we\'re going to want to validate
whatever \--

MR. RUSH: Right.

MR. SCHOONOVER: \-- we learn.

MR. TREICHEL: Hi. My name is Todd Treichel, T-o-d-d, T-r-e-i-c-h-e-l and
I\'m Director of the RAI Tank Car Research Safety Project.

Bill, if I understand your question, you\'re asking if we\'ve got a
significant enough percentage of the tank cars that are damaged into the
database to be able to make a substantive statement about performance.
Is that the thrust of your question?

MR. SCHOONOVER: Yes. I was just wondering if everything that\'s gone on
has reduced in any way people\'s willingness to put in data into a
system?

MR. TREICHEL: Oh, no. Actually, it\'s had the opposite effect. I think
as people\'s attention has been heightened on certain issues, they
realize the value of cooperating with our needs in putting together the
database.

We have never had a hundred percent of the cars in there, although we
generally are pretty close on HAZMAT release incidents, but we have for
a long time had very, very good participation by the RSI members, the
sponsors of the project in their major fraction of the tank cars in the
fleet.

And then we get pretty good support from folks like shippers who are not
part of the safety projects, so we generally have a high percentage,
never 100 percent, but generally high. And, as I say, if anything, if
there\'s an issue of interest, it just reminds everybody why we do
collect the data.

MR. SCHOONOVER: Thank you.

MR. MARTINEZ: Todd, before you sit down, it would be really nice if you
could provide information to the Docket in terms of the \-- I remember
in 0502, you did talk a little bit about speed regimes, that incidents
have occurred.

If you could provide something corollary to that for the Docket, looking
at speed bends zero to 30, 30 to 50, 31 to 50, and 50 and above, just in
terms of if you were comparing the CPC-1187 type car versus the
conventional car now, what sort of reductions and risks do you get in
those speed bends, that would be interesting.

MR. TREICHEL: Okay. I\'m sure we can provide something useful beyond
what we\'ve already done for the Docket on that.

MR. MARTINEZ: And then if you could take a minute or two to just discuss
\-- we\'ve heard Mike utter the words many times now, statistical
significance \-- if you could talk a little bit about the number of data
points, which are actually available for some of the thicker tank cars,
the 500 and 600-pound cars, and your degree of confidence that you can
draw sound conclusions based on the regressions at those thickness
levels?

MR. TREICHEL: Sure. I do not recall off the top of my head how many 500
and 600-ound cars were part of the data for that, for RAL 502. I
certainly can check and provide that for you.

We had a high degree of confidence when we issued the report and, in
fact, we asked ourselves the similar question many times before putting
out those formulas, knowing that there was an area of the thickness
domain, if you like, that we weren\'t actually confident in, we would
need to say something.

The regression data, the behavior of that part of the curve of thickness
versus probability of release is informed by cars of lesser thickness as
well, and then there are additional complications, as you\'re aware, of
all the other features that can be on a car.

And regression is specifically designed to try and sort that out, figure
out how much of each aspect of performance should be attributed to each
of these features, including thickness. And you don\'t need thousands of
cars at any given thickness to say something with a strong degree of
confidence.

Is that \-- have I answered your question other than the number itself?
I have to go look that up.

MR. MARTINEZ: Well, I seem to recall and I think it\'s in 0506 \-- is
that an actual report, Bill, 0506? It\'s the follow on report. It\'s the
0602. It\'s the companion report where you reiterated many times that
you need to be really carefully drawing any significant conclusions
based upon the use of the 500 or 600-pound cars because there just
aren\'t enough events to really draw conclusions.

MR. TRIECHEL: Yes, in that report, the request was to draw those cars
out on their own and look at how many releases there were versus how
many damaged cars. And what I meant by those caveats was in drawing
those cars out alone, then you were actually undermining confidence you
can have if you actually go forward with just that behavior in
isolation, without understanding how the rest of the fleet has behaved.

And I would stand by those caveats. And I really think, you know, when
you complete a regression like RAO 0502 has in it, there is still some
uncertainty. I\'m not trying to claim that all of these estimates are
exactly spot on and we never see any deviation in real behavior. But the
regression curve draws the best estimate it can in all parts of the
range for which it has a reasonable amount of data, and we had a
reasonable amount of data.

MR. MARTINEZ: Okay. Thank you.

MS. HENRIKSEN: I have one question and I have to put a disclaimer
because this is an absolutely crazy question and the folks sitting next
to me can just kick me.

But I think there\'s something that Eloy and Todd were just talking
about. If I\'m understanding this correctly, AAR took this much more
robust statistical analysis, using close to 7,000 cars. DOT \-- we on
the other hand, looked at a much smaller subset of high consequence
events.

Now, I know I\'ve read some information out there that if you\'re
looking at the risk of transferring TIH by railcars, the risk of release
is low. The probability, the frequency is low, yet the consequences can
be very high. And I think this what you guys were just talking about.

But I thought there was a body of opinion of analysis out there saying
given these low probability, but high consequence events statistics
isn\'t the best way to analyze those events. I mean I don\'t know if
anyone can comment on that.

MR. RUSH: I mean you know just because it\'s a low probability, but a
high consequence event doesn\'t mean statistics \-- you shouldn\'t look
at things statistically. I think what that tells you, to me what low
consequence \-- low probability/high consequence tells you is that you
need to be concerned about small probabilities. That\'s really what the
issue is.

You know, there\'s been a lot said about how rail being the safest mode
and we do know from an overall transportation perspective the chance of
any car, or railroad\'s transport well over 99 percent of their, you
know, hazard controlled shipments safely without a release. But because
the consequences from a release can be so small, we need to look at
those small probabilities.

I think that\'s really what we\'re getting at. I don\'t know if that
helped or not, Lucinda. Todd can do a better job than I.

MR. TRIECHEL: Todd Triechel again. I guess I would note that if we think
of consequences as what happens after the material is out of the car, I
don\'t think the rulemaking or AAR\'s approach in the circular, or
letter, or any of those things are really driven at changing that. And,
therefore, I think the question really is can statistics/should
statistics be part of understanding what to do about the probability of
a lading loss separated from the consequences of that lading loss.

It is true that there\'s a wide variety of things that could happen,
based on where the accident happens to occur and what the weather is and
all sorts of other things that has a lot of chance in it, but I don\'t
see that in the context of the discussion that\'s taking place in the
rulemaking proceeding that that aspect of it really is at the heart of
this.

I would say that statistics are useful in looking at the probability of
lading loss, specifically because we are lucky enough to have a large
amount of data on what really has happened to cars. And knowing that
there\'s a wide variety of things that can happen even in the accident
environment before the puncture is made, we\'re lucky enough to say,
well, however that varies, we understand that our database, because
it\'s large, contains some sense already built into it of how often
different environments unfold and what the results are in terms of
whether part of the release is lading or not.

I hope that goes towards answering your question.

MS. HENRIKSEN: Thank you.

MR. COTHEN: In case anybody here who\'s missed this, and I can\'t
imagine who that would be, looking out in the room, this has been a very
productive conversation that\'s gone on now for several decades. And,
you know, industry has really worked itself toward a point where we can
all imagine the possibility of not having these releases at all.

And that\'s sort of the question that we\'re asking here, how close can
we come so that the areas of disagreement are vanishingly small. And we
do appreciate everybody\'s testimony today.

I would point out the complicating factor that if you look at train
accidents over the last decade or so, that the degree of severity of
those that have occurred, and they\'ve been in decline, particularly
over the last three or four years, is not really diminished, and that
has to do with just the reality of physics.

And so, that\'s kind of what we\'re \-- part of what we\'re struggling
with at DOT, in terms of dealing with the forces on tank cars, the
question again posed to us by the Board, and by the statute. And it\'s
not the only relevant question, but it\'s a question.

Anything else for Mr. Rush before we let him off the hook here?

(No response.)

Okay. Thank you very much, Mike.

MR. RUSH: Thank you, Grady.

MR. COTHEN: What else do we need to do here before we \--

Are there any other appearances today? Anyone else who would like to say
a word or two before we get away today? You will have another
opportunity, of course, in the morning.

Yes, sir.

MR. STERSHIC: Matthew Stershic with Honeywell.

You guys are going to hate me for this question. Sorry. But in listening
today and listening to, you know, what DOT has said, what FRA has said,
what AAR just said, I\'ve got a question.

A lot of TIH\'s are shipped around in Europe or Japan. Have you guys
talked to any of your counterparts in other countries to see how they do
things, because I know from a fact with HF, for example, in Europe they
have a completely different way of the way the dome is set up and the
types of valves that they\'re using.

And I was wondering, have you talked to people to understand what
they\'re doing and have you taken some of that into consideration in
setting up the standards that you\'re doing today?

MR. COTHEN: Mr. Schoonover can address that.

(Laughter.)

When we were in Austria last summer we did see some gentlemen there in
American cars that were apparently smaller quantity cars in Europe, so
there must be an international dialogue going on.

MR. SCHOONOVER: There is and we \-- you know, we\'ve looked at the ADRD
standards. You know, looked over the top of them. They generally are a
different set of operating conditions and that\'s part of what you have
to balance.

You know, it would be great if we could harmonize and have a, you know,
a U.N. rail code, but unfortunately, the railroad operations in the U.S.
are very different so you have to balance out all the issues.

Although we have looked at them, you know, we consider what they\'re
doing. In some aspects they have designs that are, you know, some could
argue are ahead of ours and in some cases they have aspects that are
behind ours. But we are, as we go forward with standards, we are taking
those into consideration.

MR. COTHEN: Okay. Thank you very much for the testimony today. We said
that the issue of any extension of the comment period is still open for
discussion, but we\'re going to try to keep it down to nothing more than
bare minimum. And we would expect that to be resolved by close of the
meeting tomorrow.

We\'ll return here at 9:00 a.m. and Mr. Johnson and Mr. Boardman are
expected to be here, so wear your best tie.

Thanks. We\'re adjourned.

(Whereupon, the meeting in the above captioned matter was adjourned, to
be reconvened tomorrow morning, Thursday, May 29, 2008, at 9:00 a.m.)