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PERSPECTIVES FROM USERS OF THE NATION’S 

FREIGHT SYSTEM 

(113–36) 

HEARING 

BEFORE THE

PANEL ON 

21st-CENTURY FREIGHT TRANSPORTATION 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

OCTOBER 1, 2013 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

(II) 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

BILL SHUSTER, Pennsylvania, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee, 

Vice Chair 

JOHN L. MICA, Florida 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

SAM GRAVES, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

LOU BARLETTA, Pennsylvania 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

STEVE SOUTHERLAND, II, Florida 

JEFF DENHAM, California 

REID J. RIBBLE, Wisconsin 

THOMAS MASSIE, Kentucky 

STEVE DAINES, Montana 

TOM RICE, South Carolina 

MARKWAYNE MULLIN, Oklahoma 

ROGER WILLIAMS, Texas 

TREY RADEL, Florida 

MARK MEADOWS, North Carolina 

SCOTT PERRY, Pennsylvania 

RODNEY DAVIS, Illinois 

MARK SANFORD, South Carolina 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

TIMOTHY J. WALZ, Minnesota 

STEVE COHEN, Tennessee 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

JOHN GARAMENDI, California 

ANDRE ́ CARSON, Indiana 

JANICE HAHN, California 

RICHARD M. NOLAN, Minnesota 

ANN KIRKPATRICK, Arizona 

DINA TITUS, Nevada 

SEAN PATRICK MALONEY, New York 

ELIZABETH H. ESTY, Connecticut 

LOIS FRANKEL, Florida 

CHERI BUSTOS, Illinois 

PANEL ON 21ST-CENTURY FREIGHT TRANSPORTATION

JOHN J. DUNCAN, JR., Tennessee, Chairman 

GARY G. MILLER, California 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

MARKWAYNE MULLIN, Oklahoma 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

DANIEL LIPINSKI, Illinois 

ALBIO SIRES, New Jersey 

JANICE HAHN, California 

(III) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... iv 

TESTIMONY 

Tom Kadien, Senior Vice President, Consumer Packaging, IP Asia and IP 

India, International Paper ................................................................................... 4 

F. Edmond Johnston, III, Transportation Policy Leader, DuPont ....................... 4 

Rob Roberson, Materials and Logistics Manager, Nucor Steel Berkeley—a 

Division of Nucor Corporation ............................................................................ 4 

Bill J. Reed, Vice President, Public Affairs, Riceland Foods, Inc. ....................... 4 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Tom Kadien .............................................................................................................. 39 

F. Edmond Johnston, III ......................................................................................... 44 

Rob Roberson ........................................................................................................... 51 

Bill J. Reed ............................................................................................................... 55 

SUBMISSIONS FOR THE RECORD 

Bill J. Reed, Vice President, Public Affairs, Riceland Foods, Inc.: 

Slide component to prepared statement................................. 10, 12, 14, 16, 18, 20 

Response to infrastructure funding and bridge maintenance questions 

from Hon. Corrine Brown, a Representative in Congress from the State 

of Florida ....................................................................................................... 29 

Tom Kadien, Senior Vice President, Consumer Packaging, IP Asia and IP 

India, International Paper, response to request from Hon. John J. Duncan, 

Jr., a Representative in Congress from the State of Tennessee, for specific 

suggestions to modernize and increase the competitiveness of the U.S. 

freight network ..................................................................................................... 36 

ADDITION TO THE RECORD 

Edward R. Hamberger, President and CEO, Association of American Railroads, written statement, including prepared statement from the June 26, 

2013, hearing of the Panel on 21st-Century Freight Transportation .............. 60 

iv 


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SUMMARY OF SUBJECT MATTER 

TO: 

FROM: 

RE: 

Members, Panel on 21 ~ Centnry Freight Transportation 

Staff, Panel on 21" Centnry Freight Transportation 

Panel Hearing on "Perspectives from Users of the Nation's Freight System" 

PURPOSE 

The Panel on 21" Century Freight Transportation will meet on Tuesday, October 1,2013, 

at 1:00 p.m, in 2167 Rayburn House Office Building to receive testimony related to the ways in 

which the agriculture and manufacturing industries rely on the Nation's freight transportation 

system At this hearing, the Panel will receive testimony on the specific freight transportation 

needs of these industries and the impact that the level of performance of the freight system has 

on the ability ofthese industries to remain competitive. The Committee will hear from Tom 

Kadien, Senior Vice President for Consumer Packaging for International Paper; F. Edmond 

Johnston, III, Sustainability Manager for DuPont; William Roberson, Materials and Logistics 

Manager for Nucor Steel Berkeley; and Bill J. Reed, Vice President of Public Affairs for 

Riceland Foods. 

BACKGROUND 

The United States manufacturing sector employs over 12 million people and contributes 

a~nost $2 trillion in goods and services to the Nation's economy annually. I The Nation's 

agriculture industry employs over 16 million people and contributes nearly 750 billion dollars to 

the Nation's annual gross domestic product. Taken together, the manufacturing and agriculture 

industries represent ahnost one-fifth ofthe annual gross domestic product. Both ofthese 

industries rely intrinsically on a highly functioning, efficient, and safe freight transportation 

network. For manufacturing and agriculture businesses to be successful and remain competitive 

with international competitors, we must maintain and improve our infrastructure to keep pace 

with growth in these sectors. 

I Statistics used in this memorandum are taken from the Bureau of Transportation Statistics, the Federal Highway Administration, the 

U.S, Department of Agriculture, the U.S. House of Representatives Committee on Transportation and Infrastructure, the U.S. 

Chamber ofComl11erce, the National Association of Manufacturers, Building America's Future Education Fund, the American 

Association of State Highway and Transportation Officials, and the Soy Transportation Coalition. 
v 


Insert offset folio 2 here 85056.002

Comparing the costs of transporting soybeans to China from the United States and to 

China from Brazil illustrates the critical role that the Nation's freight system plays in the global 

competitiveness of American industry. Currently, it costs $85.19 to transport one metric ton of 

soybeans from Daveoport, Iowa, to Shangbai, China. It costs $141.73 to transport the same 

amount of soybeans approximately the same distance to Shanghai from North Mato Grosso in 

Brazil. The United States currently enjoys a competitive advantage because the Nation's freight 

system is more efficient and cost effective than Brazil's system. However, Brazil is planning to 

invest $26 billion to modernize its freight facilities. These advances will dramatically decrease 

the cost of moving Brazilian soybeans to market. Without an efficient, highly functioning freight 

network, American businesses will be unable to compete in the global marketplace. 

Domestic consumption and production, as well as international trade, of agricultural and 

manufactured products contribute to stretch the Nation's freight system to capacity. A recent 

study conducted by the United States Chamber of Commerce concluded that the Nation's 

intermodal freight transportation system is being operated at the limits of maximum capacity. 

The American Association of State Highway and Transportation Officials went one step further 

in a recent Bottom Line report, stating that the freight system is entering a capacity crisis. 

Additionally, the Federal Highway Administration estimates that in the next 30 years, there will 

be 60 percent more freight tbat must be moved across the Nation. Unless the Nation's fi'eight 

transportation system improves, the competitiveness of the United States' manufacturing and 

agriculture industries will suffer. 

How the Manufacturing Industry Relies on the Freight System 

The manufacturing industry relies on all modes of transportation in a variety of ways. 

Manufucturers rely on the freight system to deliver the raw materials and parts necessary to 

produce goods as well as to deliver the finished goods to market. Manufacturers often have 

unique freight transportation needs depending on the particularities of the goods being produced. 

Some manufacturers produce goods that must remain at a specific, constant temperature, some 

produce goods that are extremely heavy and oversized, some produce goods that are volatile or 

hazardous in nature, and some produce goods that must be consumed within a limited window of 

time. The sophistication and efficiency of the Nation's freight system allow for manufacturers to 

deliver goods in a way that supports the competitiveness of the industry. However, these 

advantages require continued investment in the Nation's infrastructure. 

The United States is currently reaping economic advantages from past investments, but 

manufacturers are concerned that the Nation's current failure to adequately invest in 

infrastructure will cede these gains to global competitors. According to a recent study 

commissioned by the National Association of Manufacturers and Building America's Future, 70 

percent of manufacturers believe that American infrastructure is in fair or poor sbape and needs 

improvement. Only one percent of manufacturers believe that the Nation's highways, bridges, 

and tunnels are improving at a pace to keep up with the needs of business. Furthermore, nearly 

two-thirds of manufacturers believe that the Nation's infrastructure is not positioned to respond 

to the competitive demands ofa growing economy over the next 10to 15 years. A Chief 

Executive Officer of a domestic manufacturing company recently noted, ''Nearly all agree that 

2 
vi 


Insert offset folio 3 here 85056.003

American infrastructure is not as good as it has been and, perhaps more importantly, not as good 

as it could be." 

How the Agriculture Industry Relies on the Freight System 

The Nation's agriculture industry depends on all modes of the freight transportation 

system to deliver goods and food products to urban centers, export facilities, and other consumer 

regions, most of which are a significant distance from the area where the food is grown and 

produced. Farmers require an efficient transportation network to deliver equipment, feed for 

livestock, seeds, and fertilizer so that they can produce the foodstuffs that will then enter the 

stream of commerce along the Nation's roads, rail, and waterways. Raw agricultural products 

must also be transported to processing facilities before beiug repackaged and shipped to another 

destiuation. The agricultural sector is the largest single user ofthe Nation's freight transportation 

system, accountiug for approximately one-third of all ton-miles. 

Aside from the general issues related to a supply and demand market for agricultural 

commodities, transportation costs are the most significant factor impacting the bottom line for 

farmers and other participants in the agriculture iudustry. Due to the time-sensitive nature of the 

harvest period, farmers rely on a high level of efficiency and capacity in the Nation's freight 

system so that they can get their goods to market quickly. 

WITNESS LIST 

Tom Kadien 

Senior Vice President, Consumer Packaging 

International Paper 

F. Edmond Johnston, III 

Sustainability Manager 

DuPont 

William Roberson 

Materials and Logistics Manager 

Nucor Steel Berkeley 

Bill J. Reed 

Vice President, Public Affairs 

Riceland Foods, Inc. 
(1) 

PERSPECTIVES FROM USERS OF THE 

NATION’S FREIGHT SYSTEM 

TUESDAY, OCTOBER 1, 2013 

HOUSE OF REPRESENTATIVES, 

PANEL ON 21ST-CENTURY FREIGHT TRANSPORTATION, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The panel met, pursuant to call, at 2:02 p.m., in Room 2167, Rayburn House Office Building, Hon. John J. Duncan, Jr. (Chairman 

of the panel) presiding. 

Mr. DUNCAN. We will go ahead and call this meeting to order 

here. And I apologize for the delay, but as everyone can understand, everybody’s schedule has been changed. And on the Republican side, we are having a conference at this time that Mr. Hanna 

and I have been a part of. But we won’t have as many Members, 

I don’t believe, as we usually do at these hearings, but we are certainly honored to have our distinguished panel here. And I want 

to welcome everyone to this hearing before the Panel on 21st-Century Freight Transportation of the Committee on Transportation 

and Infrastructure. 

This special panel was created at the request of Chairman Shuster and Ranking Member Rahall of the full committee to examine 

the current state of freight transportation in the United States and 

how improving freight transportation can strengthen the U.S. economy. As everyone knows, we have a lot of competition from around 

the world that many years ago we didn’t have. And we have always 

got to be looking at ways to do more and do it better and more efficiently, if we are going to remain globally competitive as all of us 

want. 

The purpose of this panel, of course, is to modernize the freight 

network and, as I said, make the U.S. more competitive. We have 

been working hard toward this goal, and we plan to issue our report to the full committee by the end of this month. 

The purpose of today’s hearing is to hear from those who are actually producing and growing the goods that are shipped on the 

Nation’s freight transportation system. The manufacturing and agriculture industries represent almost one-fifth of the Nation’s annual gross domestic product. Both of these industries rely on a 

highly functioning, efficient, and safe freight transportation network. For manufacturing and agriculture businesses to be successful and remain competitive with international competitors, we 

must maintain and improve our infrastructure to keep pace with 

growth in these very important sectors. 

2 

I am glad that we have this opportunity to discuss the specific 

freight transportation needs of these two parts of our economy. We 

have an excellent panel of witnesses before us today. I am confident that they will be able to help us understand the unique 

freight transportation challenges facing urban areas and how those 

issues impact the rest of the Nation. We have Tom Kadien, who is 

the senior vice president for consumer packaging at International 

Paper; Eddie Johnston, who is the sustainability manager at DuPont; Rob Roberson, who is materials and logistics manager at 

Nucor Steel Berkeley; and Bill Reed, vice president of public affairs 

for Riceland Foods. Four very important companies. I thank the 

witnesses for being here, and I look forward to your testimony. 

I now recognize Ranking Member Nadler for his opening statement. 

Mr. NADLER. Thank you, Mr. Chairman. And Mr. Chairman, 

thank you for scheduling this hearing to hear testimony from major 

manufacturing and agriculture industries that rely on the Nation’s 

freight transportation system to move their goods to market. 

Whether transporting steel, rice, chemicals, or paper, each of our 

witnesses today will testify about the importance of a safe, efficient, and reliable freight transportation network to their 

business’s ability to remain competitive and successful in the global 

marketplace. We will learn of the logistics analysis that these businesses use to determine which mode of transportation is best for 

their bottom line and long-term growth. 

Our witness testimony on the importance of rail to DuPont’s 

$500 million investment in Charleston, South Carolina, and barge 

transportation to Riceland Foods at New Madrid, Missouri, on the 

Mississippi River illustrate the critical role that infrastructure 

plays in the growth of these businesses. These businesses and the 

United States more generally continue to reap the benefits of past 

infrastructure investments. However, these industries recognize 

that the Nation’s current failure to invest adequately in our Nation’s infrastructure is ceding our advantage for our global competitors. A recent survey of U.S. manufacturers found that the Nation’s 

infrastructure is not keeping pace. 

According to this survey, 70 percent of manufacturers believe 

that our infrastructure is in fair or poor shape and needs improvement, 65 percent do not believe that our infrastructure’s position 

to respond to the competitive demands of a growing economy over 

the next 10 to 15 years, and none of the manufacturers surveyed 

believe that our freight infrastructure is in good shape and needs 

no improvement. With freight transportation measured by tonnage 

expected to increase by 88 percent by 2035, it is clear that the crisis facing our freight transportation network will worsen unless we 

begin to make the necessary investments in our infrastructure to 

ensure safe, efficient, and reliable transportation and to enable 

these major industries to continue to compete and grow. 

Finally, I hope the irony is not lost on my colleagues that these 

witnesses are testifying about the importance of the Federal Government in the middle of a Republican Government shutdown. 

These witnesses discuss the importance of the Army Corps of Engineers and the Service Transportation Board while those agencies 

are now shutting down because of the Republican leadership’s inVerDate Aug 31 2005 14:04 Apr 14, 2014 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\PANELO~1\10-1-1~1\85021.TXT JEAN
3 

sistence on stopping the Affordable Care Act at the expense of everything else. 

This committee has been one of the brightest spots in this Congress, working together in a bipartisan manner again including on 

this panel. But all of the work of this committee will be for nothing 

unless these political shenanigans stop and we get back to doing 

the business of the American people. 

I would like to thank the witnesses for coming here today under 

difficult circumstances. I look forward to your testimony and hope 

that some day, perhaps hopefully soon, the Government will not 

just reopen but will return to creating jobs and investing in infrastructure upon which you and we all rely. I thank you and yield 

back the balance of my time. 

Mr. DUNCAN. Thank you very much. I understand Mr. Crawford 

wants to further introduce one of our witnesses. And, Mr. 

Crawford, you have the floor. 

Mr. CRAWFORD. Thank you, Mr. Chairman. It is my honor to introduce vice president of corporate communications and public affairs of Riceland Foods, Bill Reed. Riceland is probably the most 

important farmer-owned cooperative in my district, providing marketing services for tens of thousands of farmers in Arkansas and 

throughout the rice-producing region. Bill has a distinguished career entirely dedicated to American agriculture. He started at 

Riceland more than 30 years ago, and Riceland’s success can be attributed in large part to Bill’s leadership. Riceland not only markets agricultural products all over the country, but throughout the 

entire globe. 

It goes without saying that freight transportation is a critical aspect of getting agricultural products to market. And I look forward 

to Bill sharing his story about the success of Riceland and the need 

for improvements to freight infrastructure so that American agriculture will continue to lead its competitors in a global economy. 

Mr. DUNCAN. Thank you very much. 

Mr. Lipinski, you have any statement? 

Mr. LIPINSKI. I am looking forward to hearing the testimony of— 

of all our witnesses today. Again, thank the chairman and ranking 

member for putting together this—this hearing. It is certainly important to hear from those who are—who are doing the—the shipping, about what needs to be done. We all know it—what it really 

comes down to in the end is how are we going to pay for this. We 

know that we certainly need the—the investment. 

So if—I know that is not specifically the topic here, but if any 

of our witnesses want to address that in their opening statements, 

I would certainly appreciate that because that is what we are all 

here struggling with. But that is it. Thank you and yield back. 

Mr. DUNCAN. Thank you very much. Mr. Hanna. 

All right. Ms. Hahn. 

Ms. HAHN. Thank you. Thank you, Mr. Chairman. Looking forward to the testimony of our witnesses. Thanks for being here. 

You would think with this Government shutdown we might shut 

down this air conditioning a little bit. 

Mr. DUNCAN. Thank you. 

Mr. Webster. 

4 

Mr. WEBSTER. Thank you, Mr. Chairman. Just glad you are having this hearing and look forward to hearing what everyone has to 

say. Have questions later. 

Mr. DUNCAN. Thank you, Mr. Mullin. 

Mr. MULLIN. Thank you. And thank you, panel, for being here. 

Unfortunately, you are here at a, I would think a pretty historical 

time. But we do have something important facing us, and that is 

our infrastructure needs. We all know to keep this country moving 

forward, of course, it takes Government to put—you know, move 

forward, but at the same time it is our infrastructure. And I think 

it is a great opportunity that we have to get true opinions, bipartisan approach that we are going to move the ball forward. I think 

T&I has shown that they are willing to do that. And Chairman 

Duncan has done a wonderful job putting this panel together. So, 

as I would say, let’s roll and let’s get this thing moving forward. 

Mr. DUNCAN. Thank you very much. 

Previously, in my opening statement, introduced the very distinguished panel that we have, and so we will start with our first witness, Mr. Tom Kadien of International Paper. 

Mr. Kadien. 

TESTIMONY OF TOM KADIEN, SENIOR VICE PRESIDENT, CONSUMER PACKAGING, IP ASIA AND IP INDIA, INTERNATIONAL 

PAPER; F. EDMOND JOHNSTON, III, TRANSPORTATION POLICY LEADER, DUPONT; ROB ROBERSON, MATERIALS AND LOGISTICS MANAGER, NUCOR STEEL BERKELEY—A DIVISION 

OF NUCOR CORPORATION; AND BILL J. REED, VICE PRESIDENT, PUBLIC AFFAIRS, RICELAND FOODS, INC. 

Mr. KADIEN. Thank you, Chairman Duncan and all the other 

committee members. I am Tom Kadien. 

Mr. DUNCAN. Get a little closer to the mic. 

Mr. KADIEN. My name is Tom Kadien. I am a 35-year employee 

of International Paper and a senior vice president. And I am responsible for our consumer packaging businesses here in North 

America as well as our Asia business, our India business, and our 

North American transportation organization. IP is the largest 

paper and packaging company in the world. We have 70,000 employees around the world, and here in the United States, we have 

38,000 employees who work at over 300 facilities in 43 States. And 

many of the members of this committee have district—excuse me, 

have International Paper facilities in your districts. I know a number of you have visited, and you are all certainly welcome. 

IP is a leader in—of major consumer of freight and logistics here in North America. We spend about $2 billion. We are the number 

one shipper of boxcars on the rail system. We export almost 4 million tons of product outside of North America. Two million tons 

goes out in containers and over a million goes out breakbulk. So 

ports are very important to us. And we also ship products over 155 

million miles around the North America system by truck. So we are 

here to ask for your help in addressing the freight transportation 

needs here in North America. I am going to cover two areas of competitiveness for truck and ports. I am not going to talk about rail, 

but we—it is very important to us, and I know some of my colleagues on the panel will. 

5 

Paper is heavy. Our trucks typically weigh out before we cube 

out. And with 300,000 trucks going over the road, it does not make 

a lot of sense to us to ship trucks with 10 feet of empty space when 

there are safe alternatives to increased truck—truck weight here in 

the United States. So we are here to—I am here to talk about 

SETA, the Safe and Efficient Transportation Act, which would 

allow trucks with a sixth axle and braking system to increase the 

truck weight up to 97,000 pounds at the option of the States on 

interstate highways. That would enable us to take about 20 percent 

of our trucks off of the road as well as make us more competitive. 

International Paper, like my colleagues at DuPont, safety is very, 

very important to us. And the research supports that 97,000-pound 

trucks equipped with a sixth axle and brake system stop in the 

same distance as an 80,000-pound truck with five axles. This has 

been proven over years in the U.K., it has been studied here in the 

United States. And shippers like IP are willing to pay higher overthe-road fees. Annual permits can go up from $550 per truck per 

year to $800 per year, per truck. And we would gladly pay that if 

we could use the full capacity, to safely use the full capacity of the 

trucks. 

I will give an example. For our mill in Valliant, Oklahoma, in 

Representative Mullin’s district, if the Oklahoma DOT opted in, we 

could reduce our truck trips by over 5,000 trucks a year, reduce vehicle miles by 1.8 million miles, and CO2 emissions by 6.8 million 

pounds annually. 

So we are very much in favor of this. It is not a rail-versus-truck 

issue. Those are two different fact patterns. Trucks are for, in our 

case, under 400 miles; rail averages over 800 miles. So we simply 

want to make trucking more competitive. 

I would like to move on to the issue of cargo going out of ports. 

We ship 70 percent of our exports out of the ports of Charleston 

and Savannah. And in 2015, the Panama Canal will be reopened 

and be able to handle wider ships. And both of these harbors have 

to be dredged to accommodate the draft of the larger ships, they 

have to pick up an extra 3 to 7 feet. Both are important to us, with 

over 2 million tons. If we cannot use these harbors, we are going 

to have to put product on rail and truck and ship further, either 

to Miami in the south or Norfolk in the north. 

And harbor deepening is important to the health of the U.S. 

economy as well as the movement of goods. And it is important to 

industry who wants to export out of the United States. So we urge 

the panel to support the harbor dredging projects at those ports. 

And that is it for me, Chairman Duncan. 

Mr. DUNCAN. Well, thank you very much. And let me just ask 

you, I was told that you pronounce your last name Kadien, but 

sounded like you said Kadien. 

Mr. KADIEN. My mother said Kadien, yes. 

Mr. DUNCAN. Well, I like to try to get people’s names as close as 

possible. Thank you very much. 

Next, we will hear from Mr. Edmond Johnston from DuPont. 

Mr. JOHNSTON. Good afternoon, Chairman Duncan and Ranking 

Member Nadler. My name is Eddie Johnston. I have worked for 

DuPont for 33 years, the first 8 of which were in the State of Tennessee, where two of my children were born. I am here to testify 

6 

today on behalf of DuPont, a leading science company, and as a 

member of the American Chemistry Council. I appreciate the opportunity to appear before you today. 

DuPont has been bringing market-driven science to the global 

marketplace in the form of innovative products, materials, and 

services since 1802. The company serves markets as diverse as agriculture, electronics, automotive, aerospace, and defense. DuPont 

operates more than 70 manufacturing facilities in the United 

States, and employs thousands of Americans while purchasing 

$550 million in transportation services each year. The chemical industry employs 800,000 Americans and produces 12 percent of U.S. 

exports. The chemical industry and its associated suppliers are 

major users of our Nation’s freight system and some of the largest 

customers for many modes of transportation. The industry ships a 

wide variety of materials that are used to produce more than 96 

percent of all manufactured goods. 

I would like to address three critical freight transportation 

issues. First, funding for infrastructure. Much of our transportation 

infrastructure is old. If America’s manufacturers are to continue to 

move goods safely and reliably over the country’s freight infrastructure, upgrades are sorely needed. I want to thank this committee 

for the work you did to pass the Water Resources Reform and Development Act. I commend you for addressing a major transportation issue. I appreciate that this is an era of tight budgets with 

competing priorities. But a robust and reliable transportation infrastructure is the cornerstone to healthy U.S. economy. 

Second, hazardous materials transportation. A small yet important share of chemical shipments involves hazardous materials. According to the Association of American Railroads, rail HAZMAT accident rates have declined 91 percent since 1980 and more than 

99.99 percent of rail HAZMAT shipments reached their destination 

safely. However, DuPont and ACC members acknowledge that even 

one incident is too many. And our industry is committed to continuous improvement. 

Working with our transportation partners, DuPont and ACC 

member companies have invested billions of dollars to improve 

safety, and we will continue to do so in the future. ACC and its 

member companies also have worked hard to establish a strong 

partnership with the emergency response community. 

The Federal Government continues to play an important role 

through the Hazardous Materials Transportation Act. This legislation has been extremely effective in establishing uniform national 

rules. Reauthorization of the Act will ensure that important 

progress continues. Third, rail policy reform. Congress last undertook comprehensive rail legislation 33 years ago with the Staggers 

Act. In 1980, America’s railroads were struggling to maintain a viable business, and the Staggers Act has been effective in helping the 

industry not only survive but thrive. In fact, the policy embodied 

in the Act has been so successful that the question in 2013 is not 

whether America will have a viable transportation system, but 

whether that system will threaten the competitiveness of the railroad’s customers and become an inhibitor of economic growth. 

An unintended consequence of the Staggers Act has been virtual 

elimination of rail-to-rail competition. Chemical producers report 

7 

that 73 percent of their facilities with inbound and 65 percent with 

outbound transportation are captive shippers, meaning they are 

only served by one railroad. Our industry is not asking for more 

regulation of the rail industry, but for more robust competition in 

the rail industry so that American farmers and manufacturers are 

more competitive on the world stage. It is time to re-examine decades old policy to meet the needs of the 21st century. 

In conclusion, I respectfully request that the panel consider the 

following recommendations: First, Congress should support improvement of our Nation’s transportation infrastructure. Second, 

Congress should reauthorize the Hazardous Materials Transportation Act. And, third, Congress should reform Federal rail policy 

to promote greater access to rail competition and improve the efficiency and effectiveness of the surface transportation board. Thank 

you again for the opportunity to speak today. 

Mr. DUNCAN. Thank you very much. 

Next we have Mr. William Roberson from Nucor Steel. Mr. 

Roberson. 

Mr. ROBERSON. Chairman Duncan and Ranking Member Nadler, 

thank you for the opportunity to testify before you today. I am William Roberson, materials and logistics manager for Nucor Steel 

Berkeley, a division of Nucor Corporation. Nucor Corporation is the 

Nation’s largest steel manufacturer and recycler, operating 23 

scrap-based steel mills. Nucor has the capacity to produce more 

than 27 million tons of steel annually. Last year, our company recycled more than 19 million tons of scrap steel. Nucor also has several wholly owned subsidiaries, including Harris Steel, the David 

J. Joseph Company, and Skyline Steel. Together we are a company 

of over 22,000 teammates, primarily in the U.S. and Canada. 

The freight transportation system is vitally important to Nucor’s 

success. We rely on water, rail, and truck transportation to move 

millions of tons of scrap steel and other raw materials to our steel 

mills and finished products to market. For this reason, disruptions 

in the freight transportation system can have significant negative 

economic impacts on our business. Waterways play a particularly 

important role for a number of our Nucor divisions. We have several steel mills located on rivers, and some of these mills bring in 

more than 90 percent of their raw materials by river. Nucor scraps 

steel business, the David J. Joseph Company, transports approximately 3,500 barges per year of scrap steel. When assessing our 

waterways system, we believe that more frequent maintenance 

dredging is needed to maintain adequate drafts. Unfortunately, inadequate drafts levels are becoming an all too common occurrence. 

For every 1 inch decrease in draft, you lose 17 tons of cargo on a 

barge. This forces companies like ours to use more costly alternatives. 

Barges are a safe, efficient, environmentally friendly, and cost-effective way to move goods. Each barge moves 15 to 1700 tons of 

cargo compared to 80 to 100 tons on railcars or 20 to 22 tons on 

trucks. Considering the importance of our waterways system, we 

are encouraged to see both Houses in Congress advance the Water 

Resources Development Act. Nucor supports this legislation, particularly dedicating more revenue in the Harbor Maintenance Trust 

8 

Fund for the purpose of maintaining our Federal navigation channels. 

We hope that Congress will also strengthen revenues for the Inland Waterways Trust Fund to make necessary investments in this 

critical component of our U.S. supply chain by advancing the industry-supported user fee increase. Like our waterways, our roads and 

bridges are in serious need of investment. The Interstate Highway 

System, built after World War II, is aging, and we need a new, 

long-term commitment to invest in our roads and bridges. The gas 

tax is not providing adequate revenue to further this goal. We need 

to look for new alternatives, including more public-private partnerships. Also enacting legislation giving States the option to increase 

the weight of six-axle trucks operating on select Federal interstates 

would allow more cargo to be moved safely and efficiently over our 

Nation’s railways. 

With regard to our Nation’s rail system, the biggest challenge 

that we face is that we are served by a single major railroad. Several Nucor facilities are captive shippers in that they pay a premium to move their products because of the lack of rail competition. In recent years, the rail industry has seen significant private 

investment. However, these investments are often passed on to the 

rail industry’s customer base, resulting in higher premiums and 

costs for our captive shippers who are still without the ability to 

choose which rail carrier we use. 

We cannot pass these increased costs on to our customers. We 

have to absorb them because we compete in a steel market that is 

being flooded with illegally subsidized foreign products that are 

often already sold below cost. While it is true that we have the 

ability to use less costly modes of transportation, it is not always 

feasible logistically. 

Given these circumstances, we support action to address the 

need for more rail competition for rail service in many parts of the 

country. The creation of this special panel acknowledges that our 

freight infrastructure works collectively as one system. We cannot 

look at each in isolation. Businesses across the country rely on all 

modes of transportation working together to get products to market. 

Keeping American businesses globally competitive requires investment in the entire system. Businesses succeed when there is 

certainty. We can create certainty by providing the proper funding 

for maintenance and much-needed upgrades. We must also streamline the permitting system so projects do not drag on for years in 

endless reviews. For example, we support legislation that would exempt routine highway safety and transportation upgrades that already exist within the current right-of-ways from costly Federal 

permitting requirements. As the National Association of Manufacturers recently noted, manufacturing produces 12 percent of America’s GDP, but the U.S. is only investing about 1.7 percent of our 

GDP back in infrastructure. Many of the countries we compete 

against are investing between 5 to 10 percent of GDP in their infrastructure. In short, others are modernizing while we are struggling to maintain a failing system that is decades old. However, 

with the proper investment and governance, we can give American 

9 

businesses the tools they need to remain globally competitive. 

Thank you. 

Mr. DUNCAN. Thank you very much, Mr. Roberson. 

Next we have Mr. Bill Reed of Riceland Foods. 

Mr. REED. Thank you, Mr. Chairman and members of the panel. 

I appreciate the opportunity to offer our perspective on the freight 

transportation system. I am Bill Reed, vice president of public affairs at Riceland Foods, a cooperative of family farmers 

headquartered at Stuttgart, Arkansas. 

U.S. rice is produced in three primary areas: California; the 

Texas and Louisiana Gulf Coast; and the Midsouth, which includes 

parts of Arkansas, Missouri, Mississippi, and Louisiana. 

[Slide 1 follows:] 

10 


Insert offset folio 4 here 85056.004
11 

And, we do have 600 to 800 acres of rice in west Tennessee, Mr. 

Chairman. 

[Slide 2 follows:] 

12 


Insert offset folio 5 here 85056.005
13 

Half of the Nation’s rice crop is produced in the Midsouth, where 

farmers plant about 11⁄2 million acres each year. 

After struggling to find a viable market, a group of farmers met 

in Stuttgart in 1921 to form a co-op to market their rice. Riceland 

farmer-members today number about 6,000 and account for about 

half of the rice produced in the Midsouth. 

[Slide 3 follows:] 


Insert offset folio 6 here 85056.006

Wheatley. Lanai"'. • Hazen 

Altheimer. 
15 

Each fall, Riceland members harvest their crops and deliver 

them to local grain elevators, where the crops are dried and stored 

until transported to processing facilities for milling and packaging. 

Storage facilities are scattered throughout the region, as are our 

processing facilities, which are indicated by the red stars on the 

map. Riceland is the largest rice miller and marketer. The co-op 

also markets soybeans, corn, and winter wheat that our farmers 

produce. Each year we handle 100 to 125 million bushels of grain. 

Our rice products are sold across the country in retail and club 

stores and to food service establishments and food companies. 

Riceland is a direct exporter, selling rice to 50 foreign destinations. 

In our last fiscal year, we moved more than 9 billion pounds of 

products, commodities, and supplies. We did this with nearly 

140,000 truck and intermodal shipments, 6,300 rail shipments, 

more than 1,000 export containers, and more than 200 river barge 

loads. 

With the Nation’s focus on a fresh, safe, and abundant food supply, we must have a reliable and efficient transportation system. I 

know members of the committee and this panel are well aware of 

the challenges of maintaining our Nation’s highway system. So are 

Arkansans. In 2011, Arkansas voters supported a $575 million 

bond program for interstate improvements. And in 2012, they approved a half cent sales tax to fund $1.8 billion in additional highway improvements. 

Of course, these efforts aren’t enough. It was reported in September that 156 bridges in Arkansas had been found structurally 

deficient. Many are in east Arkansas where our Riceland farmers 

grow food. 

Railroads focus on long hauls now, and they are certainly important to us. We ship railcar loads of rice all over the country and 

unit trains of wheat to Mexico. River transportation is critical to 

our export business. 

[Slide 4 follows:] 

16 


Insert offset folio 7 here 85056.007
17 

Our New Madrid, Missouri, facility, on a good day, can receive 

rice from our farmers, mill the rice, and convey it directly to a 

barge for shipping down the Mississippi River. 

In 2011, however, flood waters on the Mississippi made it impossible to load barges. 

[Slide 5 follows:] 

18 


Insert offset folio 8 here 85056.008
19 

In fact, water was within a foot of entering the processing facility. In 2012, and again this year, it is a whole different story. 

[Slide 6 follows:] 

20 


Insert offset folio 9 here 85056.009
21 

With silt naturally flowing into the harbor and displacing water, 

we can load less rice into each barge. The harbor now looks more 

like a mud puddle than a harbor. 

The New Madrid harbor is not scheduled to be dredged this year. 

We expect low water levels in the harbor next summer to eliminate 

practically all of the economic benefit of using the facility for bulk 

barge shipments. We export from that facility to the Caribbean and 

will be under pressure from suppliers of rice out of Asia to fill those 

orders. 

I have one more example. As corn harvest was underway in early 

August last year, we had thirty 18-wheelers carrying corn scheduled to unload directly into barges at the Port of Yellow Bend, Arkansas. Then we learned that silt had filled the harbor, making it 

unusable. The dredge was heading from upriver at Rosedale, Mississippi, down to Lake Providence, Louisiana, without stopping at 

Yellow Bend, Arkansas. 

Building temporary corn storage and forfeiting sales contracts 

would have cost our Riceland farmers at least $1 million. As many 

as 200 farm families would have been impacted, 15 port employees 

would have lost their jobs, and the port would lose $500,000 in revenue. 

Thanks to Congressman Rick Crawford and Senators John 

Boozman and Mark Pryor of Arkansas, the Army Corps of Engineers redirected the dredge to Yellow Bend. In just a few days, the 

harbor was open and those corn barges were filled. 

I share these examples to illustrate the importance of keeping all 

segments of our transportation system, highway, railroads, and rivers operating in efficient and effective manner. The U.S. transportation system is critical to U.S. competitive advantage in moving 

agricultural and food products across the country and around the 

world. It benefits every American. And I appreciate the panel’s 

focus on this important issue. 

Mr. DUNCAN. Well, thank you. 

I want to thank all of the panel for a very helpful and informative testimony. And let me say, I mentioned earlier that we are 

in sort of an unusual situation here. It is a very busy day for everyone. And so I am amazed that—and very pleased that 9 of the 11 

members of this panel are here at this point. And I know several 

probably have to leave shortly. The first one that has told me that 

he needs to leave is Mr. Mullin. By he wants to ask a question before he goes, so I will go to Mr. Mullin. I yield to Mr. Mullin at 

this time. 

Mr. MULLIN. Thank you, Chairman. And I will try not to take up 

my whole 5 minutes so I can be respectful to everyone else’s time. 

What I want to focus on is the truck weights. Tom, you and I 

have had an opportunity to visit a little bit about this. And this is 

something that is pretty close to my heart, considering I got a CDL 

in my back pocket. I was driving just not too long ago—I mean, 

when I say not too long ago, in the last few weeks—had to go 

through the whole poke and prod, get my medical card. That is an 

embarrassing situation. But I had to go through that process because its required. And now we are talking about something else. 

And increasing truck weights. 

22 

And obviously the more trucks we can take off the road, honestly, 

the safer it is. But how are we going to be able to go past one concern from FMCSA and move forward on the truck capacity 

weights? We have talked about direct routes, we have talked about 

the placement of where the sixth axle should be. And, Tom, I would 

like to get kind of your perspective of where we are going with this 

and then also understand that I truly believe that this is a State’s 

issue, not a Federal issue, this is a State’s issue. I don’t think we 

need the Federal Government stepping in any farther than what 

they already have over States rights. So, Tom, I am going to throw 

that question out to you then we will have a conversation, hopefully. 

Mr. KADIEN. Sure. Thank you. I couldn’t agree more that it is a 

State’s issue. And that is what we are advocating and what SETA’s 

all about is to give States the choice to opt in. And they can opt 

in on some or all or none of the interstate highways in their State. 

So the idea is that they will pick the roads that make the most 

sense, that would make the best utilization of the heavyweight 

trucks and be the safest for that State. You know, the law is written so that it doesn’t dictate whether the axle goes on the front or 

the back. To me, that is where the State DOTs have to weigh in 

on what they want to do in their particular locale. 

Mr. MULLIN. Which this is something that I have interjected in 

before, is that right now the discussion is putting it on the trailer 

if we were to increase the weights. As a driver, I can tell you the 

first place typically you lose brakes is on the trailer. So if we are 

talking about safety here, we would—and my opinion, Chairman, 

we would be—need to be talking about moving that underneath the 

rig itself. Not to mention we had the capacity there to build a— 

raise that axle when we are not needing it, when we are able to 

bring it off the ground. But when we are really talking about stopping, I would say—I don’t know the statistics, but I am just going 

to go by my own self, 90 percent of the time if I were to lose brakes 

it would be on the trailer. 

Mr. KADIEN. And I—I don’t have my license. I am not going to 

take issue with anything you said. I will say on the statistics, the 

State of Maine has done a pilot and the statistics say that there 

are fewer fatalities since they have gone to a sixth axle allowing 

up to 97,000 pounds. The U.K. has got this. This is not a new 

issue. We have 15 States that allow heavyweight trucks on 5-axle 

configurations right now. And this gives the States the right to configure those trucks, to configure which roads are on or not allowed 

to do this in their Interstate Highway System. In the U.K., over a 

5-year period, fatalities were down 35 percent. 

So I think I should let the engineers decide where the load— 

based on where the load is in the truck, where the axle belongs. 

But it has been proven to be a safe way to make trucking more efficient. 

Mr. MULLIN. Right. And just to clarify, with me wanting to see 

the States have an opinion on this, once again I am going to refer 

back to the fact that I drove these trucks and I have hit the exits 

that I shouldn’t have hit. And if we do this as a Federal—we let 

the Federal Government come in, and let’s say they do raise them. 

And you are driving down the interstate and you hit an exit by 

23 

mistake. I mean, all of us have taken wrong turns. I know most 

of us guys, we wouldn’t admit to it, but truth is it is true. But you 

hit the exit and all of a sudden you find yourself on a county road. 

It is not easy to turn these things around. And the States know 

their systems better than the Federal Government does. 

I understand what the opposition is about this too. But the fact 

is that if we are really going to listen to what FMCSA says, and 

they are fine the word of ‘‘safety,’’ then the best way to do that is 

to look at the truck weights, understand that that actually works, 

work with intermodal system, work with the rail, work with the 

ports, and find out what is the best option. If one of those options— 

Tom, and you and talked about—was having a direct route, like 

they to in Louisiana. Where it is a designated route if we want to 

take product from point A to point B. 

So, Chairman, I appreciate the opportunity that you have given 

me. And thank you for jumping over to me because I know I am 

the bottom of the barrel here. 

Mr. DUNCAN. Thank you very much. 

Mr. Nadler. 

Mr. NADLER. Thank you, Mr. Chairman. 

Mr. Roberson, in your testimony, you specifically support a user 

fee increase for the Inland Waterways Trust Fund to make the necessary investments in this critical component of our U.S. supply 

chain. You are a shipper advocating for an increase in fees that you 

will have to pay. Could you explain why it is important to your 

business for the Inland Waterways Trust Fund to have more revenue, why you are willing to pay a larger fee? 

Mr. ROBERSON. Yes, sir, Mr. Nadler. We just feel that at Nucor, 

the return on that additional cost far outweighs whatever liabilities 

will be associated. 

Mr. NADLER. I can’t hear you. Is what? 

Mr. ROBERSON. I apologize. Can you hear me now? Yes, sir. 

We at Nucor are willing to support the increase, even if it means 

an increase in our costs because of the return is reasonable and 

provides value to our company. 

Mr. NADLER. OK. Thank you. 

Mr. Kadien, in your testimony, you advocate for dramatic increase in truck weights to 97,000 pounds. Now, we know that interstate bridges cannot withstand the stress that 97,000 pounds will 

cause, even with the addition of a sixth axle. These trucks will accelerate the depreciation of and further worsen the condition of our 

Nation’s bridges. Your testimony mentions a mill in Valliant, Oklahoma. I would like to recall comments made at a field hearing in 

2011 by Oklahoma DOT Secretary Ridley and former Oklahoma 

Secretary McCaleb. They each made the point that we must proceed with caution in higher truck weights because the potential 

damage to bridges. To quote Secretary McCaleb, ‘‘No matter how 

many axles you put under that essential point, loading will increase the stress repetition and the rate of stress repetition and 

will reduce the life of the bridge. I am an advocate of heavier 

loads,’’ he said, ‘‘but you have to design for those heavier loads. You 

can’t just superimpose those heavier loads on a system that wasn’t 

designed for them.’’ 

24 

According to the Federal Highway Administration, Oklahoma 

has 5,382 bridges that are structurally deficient. 

Do you dispute the fact that heavier trucks will cause accelerated 

damage to bridges? 

Mr. KADIEN. Absolutely don’t dispute that. And that is why this 

is really a States rights issue. It is for the States to decide which 

roads and which bridges will handle the 97,000 pounds. 

Mr. NADLER. So you agree that it will—it will increase the stress 

to bridges, and that you think it is a State’s issue? 

Mr. KADIEN. I think the bridges have to be designed for the 

97,000-pound weights. 

Mr. NADLER. But the existing bridges haven’t been designed. So 

you only allow this on new bridges? 

Mr. KADIEN. Not in all cases. In the cases you have identified, 

that is probably the case. But, you know, in the State of Maine, 

they found no evidence of bridge fatigue or steel fatigue due to the 

heavier weight trucks. That is why I think it depends, really is a 

States rights issue. 

Mr. NADLER. Do you believe—let me just comment. I find it very 

difficult to accept that any of these questions are primarily States 

issues, given the fact the Federal Government spent—paid 90 percent of the cost of the construction of the interstates and pays a 

very large proportion of the ongoing maintenance costs of the interstate. So I think it is certainly a Federal as well as a State’s issue. 

Now, do you believe the citizens of Oklahoma and elsewhere 

across the country are willing to accept the risk that heavier trucks 

pose to these already troubled bridges, most of which in the country were not designed for 97,000 pounds? 

Mr. KADIEN. I don’t believe any State should accept higher risk 

associated with the 97,000—97,000-pound limit, no. If there is a 

risk, we shouldn’t be doing that. 

Mr. NADLER. So you think that the 97,000-pound truck should 

only be allowed on bridges specifically designed for 97,000-pound 

trucks? 

Mr. KADIEN. Yes. 

Mr. NADLER. OK. What percentage of the bridges in the United 

States were specifically designed for 97,000-pound trucks? 

Mr. KADIEN. I don’t know the answer to that question. 

Mr. NADLER. It is rather small, I would assume. 

Mr. KADIEN. Thank you. Fifteen States allow the heavyweight 

trucks right now. 

Mr. NADLER. But the fact that a State follows a foolish policy 

doesn’t mean that we should. Because I asked what percentage of 

the bridges were specifically designed for 97,000 pounds. 

Now, in the—the truck safety study in Vermont, the pilot study 

shows that applying Vermont truck weight added to the national 

average cost, it was determined that a fully loaded 80,000-pound, 

five-axle combination truck incurs 21.5 cents of pavement cost per 

mile on the interstate system and 32.9 cents per mile on other 

highways. A typical 99,000—this is 99, not 97, but I don’t know 

that there is much difference—a typical 99,000-pound, six-axle pilot 

vehicle requires pavement expenditures of 341⁄2 cents per mile of 

travel on the interstate system compared to 211⁄2 cents for 80,000 

pounds, and about 53.6 cents per mile of travel on noninterstate 

25 

roads. In other words, this is about 63 percent more per vehicle 

mile and 32 percent more per ton-mile than a fully loaded five-axle 

vehicle. 

Do you think that we should up the—the 97,000-pound truck 

should pay a 341⁄2 cents—I am sorry—a 63-percent more tax than 

an 80,000-pound vehicle? And if not, why not? 

Mr. KADIEN. Mr. Nadler, I am not familiar with the study. But, 

no, I don’t think so. 

Mr. NADLER. Well, if you are not familiar—why—assuming the 

study is correct, assuming that the cost imposed on the roads is 

63—just is 63 percent more than—than an 80,000-pound vehicle, 

then why shouldn’t they pay a 63-percent higher tax, if that is— 

if the underlying fact were to be correct? 

Mr. KADIEN. I understand your point. But I don’t believe that— 

I don’t understand the basic premise of why it would be so much 

more expensive if the weight is more evenly distributed on the 

97,000-pound truck. 

Mr. NADLER. The study in Vermont, which you say you are unfamiliar with, which I assume you are unfamiliar with, says it is. 

Let’s assume for the sake of argument that the study is correct— 

let’s assume it is not correct. My question is—let’s assume it is only 

50 percent or 40 percent. Should a 97,000-pound truck that imposes a heavier burden on—a heavier cost burden on maintaining 

that highway pay a proportionate extra tax, whatever that proportion might be? And if not, why not? 

Mr. KADIEN. I think you have to balance the proportional increase you are speaking of with making the truck uncompetitive 

versus the 80,000-pound truck. 

Mr. NADLER. Well, if it is uncompetitive, that would argue that 

you shouldn’t allow it. 

Mr. KADIEN. That is correct. 

Mr. NADLER. OK. So maybe we shouldn’t allow it. But my question is, if we do allow it, why shouldn’t it pay its fair share? If it 

imposes an extra cent higher cost on the highway maintenance 

than the 80,000-pound truck, why shouldn’t it pay an X-percent 

higher tax so it is paying its own way in that—to the same extent 

as the existing trucks? 

Mr. KADIEN. I think paying its fair share makes sense. 

Mr. NADLER. Yes. But would that be a fair share? 

Mr. KADIEN. Well, depends on the statistics, I guess. 

Mr. NADLER. Again, whatever the statistic is, if we do the study 

and find the statistic is 20 percent or 40 percent or 60 percent, that 

would be fair, then, to impose an extra tax of 20 percent or 40 percent or 60 percent if those are the facts? 

Mr. KADIEN. If those are the facts and you propose that kind of 

proportional increase, I suspect the math will say that you will 

never have a 97,000-pound truck on the road and you will have 20 

percent more trucks on the road than you do if you allowed it. 

Mr. NADLER. Well, that may be. And maybe that the market is 

telling us something in that in that case. 

I thank you. I yield back. 

Mr. DUNCAN. Thank you very much. 

Mr. Crawford. 

26 

Mr. CRAWFORD. Thank you, Mr. Chairman. I appreciate that. I 

would just again like to thank the panelists for being here. I know 

you came here on your own dime, on your own time, and I appreciate that. 

Mr. Reed, I would direct my first question to you. You mentioned 

in your testimony we—and I remember we had some serious trouble securing the dredging for Yellow Bend, Yellow Bend Port, and 

I am glad we were able to resolve that situation. But there was a 

supplemental disaster funding from the 2000 flood where that 

came from. Can you comment on, speak to the level of uncertainty 

that—that exists over annual dredging of our ports and how that 

impacts Riceland farmers? 

Mr. REED. Yes, Mr. Crawford. I would say that it is critically important to be able to rely on the ports. And, I go back to the New 

Madrid, Missouri, example. We know that we will not be able to 

load barges; certainly not full. We don’t know how much we will 

be able to load in them this coming year, but we know it is certainly going to be complicating our export operations. So we will be 

making arrangements to try to shift production to other facilities 

in order to accommodate that situation in the harbor. 

Mr. CRAWFORD. Transportation costs are obviously one of most 

significant factors that impact a farmer’s bottom line. And I know 

that other countries are making significant investment in infrastructure. Have you noticed, are we losing our edge globally with 

respect to our freight system here in the United States, and are the 

international competitors closing the gap? 

Mr. REED. Well, that is certainly a fear of U.S. agriculture. We 

are seeing, as you know, rice from Asia moving into this hemisphere, into Central America, the Caribbean, even into the United 

States. And that is a concern because of their lower cost of production. We are also watching South America. If those fellows had the 

opportunity to have the type of delivery system that we have in the 

U.S., American agriculture would be in trouble. As you know, the 

production in Brazil is just amazing. But where we have the advantage is in our transportation system. But we are going to have 

to continually improve it and, hopefully, enhance it in order to stay 

competitive and keep our farmers in business. 

Mr. CRAWFORD. Thank you, sir. 

I am going to direct this question to Mr. Roberson. In your testimony, you made the point that many of the Nucor facilities only 

have access to a single major railroad and that results in higher 

costs. Is there currently an effective remedy at the Surface Transportation Board for bringing those rates down to a more affordable 

level? 

Mr. ROBERSON. Mr. Crawford, not currently. Think there is a redress that needs to occur based on the current criteria used to 

make rate cases. So if we could relook at that, I would think that 

we would be better. 

Mr. CRAWFORD. What would you suggest or how might the STB 

be strengthened to help address that issue? 

Mr. ROBERSON. Again, just relooking at the criteria associated 

with rate cases and reciprocal switching and access to multiple 

railroads. 

27 

Mr. CRAWFORD. Thank you. I don’t have any further questions. 

Again, I just want to extend my appreciation to each of you in recognizing you contributing your time to help us make the case for 

improving, enhancing, and investing in our freight transportation 

infrastructure. I appreciate each of you being here. Thank you. 

Mr. DUNCAN. Thank you very much. 

Mr. Crawford. Ms. Brown. 

Ms. BROWN. Thank you, Mr. Chairman. 

Mr. Kadien, I have a question as far as States rights is concerned. I am a bit confused. What do you mean by States rights 

when the Federal Government pays 90 percent of the bridge— 

building the bridge and the maintenance and the State put up 10 

percent. And in 2012, 6,749 bridges rated as structurally deficiency? 

Mr. KADIEN. What I mean by States rights is to allow the State 

to decide based on the traffic and the industry in that State, and 

the studies of their own departments of transportation is to choose 

which State highways that they would allow the 97,000-pound, sixaxle truck to travel on. 

Ms. BROWN. So you don’t think the Federal Government should 

play a part in deciding? 

Mr. KADIEN. No, I think—I think H.R. 612 is a Federal decision 

to allow the States that flexibility. I am not saying it is one versus 

the other. But I think the States are in the best decision, or in the 

best position to decide which roads and bridges should or should 

not be part of the program. 

Ms. BROWN. Do you think they should make that decision without the input of the Federal Government? The Federal Highway 

Administration? 

Mr. KADIEN. No, I don’t. 

Ms. BROWN. So it should be a joint decision? 

Mr. KADIEN. Yes. I would agree with that. 

Ms. BROWN. You mentioned something about, I guess, trucks in 

Europe. And in many of the places that I have gone to Europe 

where trucks is concerned, they make them piggyback, they put 

them on trains and take them different places. 

Mr. KADIEN. Yes, ma’am. I was referring to a 5-year study in the 

U.K. that allowed six-axle, 97,000-pound trucks and saw 35-percent 

reduction in fatalities. I wasn’t referring to piggyback or other 

truck configurations that exist elsewhere in Europe. 

Ms. BROWN. I see. I have other questions for other members on 

the committee. 

Mr. Johnston, you mentioned that DuPont made a $500 million 

investment in the Cooper River facility, and their freight travel has 

doubled. Why did you all decide to Cooper River facility? 

Mr. JOHNSTON. Congresswoman Brown, our investment at Cooper River is a significant investment here in the U.S.—— 

Ms. BROWN. Thank you. 

Mr. JOHNSTON [continuing}. That has created jobs for American 

workers and provides materials that are important to the defense 

industry and to police and other folks who we rely on for our safety 

and security every day. This was the best place to make that investment is the short answer to your question. 

28 

Ms. BROWN. Was it the logistical location? I mean, that is great. 

I mean, we—— 

Mr. JOHNSTON. Logistics did not drive the decision. 

Ms. BROWN. It was just the best place to make the investment, 

the workforce and other factors? 

Mr. JOHNSTON. That is correct. 

Ms. BROWN. Thank you. 

Mr. Roberson, you mentioned that because of the lack of competition, shippers pay a higher premium. And that you thought how 

those boards should be set up to resolve the issues. Can you expand on that a little bit? 

Mr. ROBERSON. I am sorry. I couldn’t hear the last part of your 

question. 

Ms. BROWN. As far as coming up with solutions to solve the competition question, the shippers are sometimes captive, you know, it 

is only one line and they don’t have a choice. 

Mr. ROBERSON. Thank you, ma’am. As my colleagues on the 

panel mentioned, having access to multiple major railroads provides the competition. There is always an alternative for us to ship 

other modes, but there is not an alternative to ship the railroad A 

versus railroad B, and that is what we are advocating. 

Ms. BROWN. Thank you. As we meet today, one of my bridges has 

been taken out because of a ship that hit it. So the question about 

bridges is a major question: How are we going to maintain them? 

How are we going to keep them safe? And how are we going to 

fund the infrastructure? Do you all have any ideas as to how we 

can fund the infrastructure as far as those kinds of investments? 

And, of course, those are the kinds of investments that would actually put American people to work. 

Just briefly. How do you recommend funding the bridges that are 

structurally damaged? 

Mr. KADIEN. I will take a crack at that. There is a fair amount 

of money that is collected for the gas tax that goes into the Highway Trust Fund. And not all of those funds are actually used on 

infrastructure. That would be an opportunity. 

Mr. JOHNSTON. Congresswoman, I don’t have a specific recommendation on this. I understand the dilemma here. DuPont and 

the chemical industry would be happy to work with this committee 

in thinking through ideas that—that might promote the exact thing 

that you are talking about. 

Ms. BROWN. Thank you. 

Mr. ROBERSON. Congresswoman, we would echo those comments. 

We would be glad to work with this committee on solving that 

issue, but we don’t have the answer today. I think that is why we 

are here and having this good discussion. 

Ms. BROWN. We don’t have it either. 

Yes, sir. Mr. Reed. 

Mr. REED. Yes, Congresswoman. You raised an interesting point. 

The rehabilitation of those bridges would be part of the highway 

system funding. But I would have to work on that some to come 

up with a better answer for you. 

[The information follows:] 

29 

Most projects are funded by a combination of Federal 

funds (80 percent) and State funds (20 percent). Under 

MAP–21, our Arkansas Highway and Transportation Department doesn’t have more money to spend on projects, 

including bridges, but the State has more flexibility in 

using Federal funds. 

Ms. BROWN. Thank you. Thank you, Mr. Chairman. 

Mr. DUNCAN. Thank you, Ms. Brown. 

Mr. Hanna. 

Mr. HANNA. Thank you, Mr. Duncan. 

I would suggest that the problem of paying for it belongs to this 

committee and this Congress. Since 1993, we haven’t raised the gas 

tax, haven’t raised the diesel tax. We have had lots of opportunities 

to do that. 

I would also like to thank everyone here because to the person 

you have all indicated that you are willing to pay more for what 

you get. And I would also like to point out that lighter truck 

weights create more repetition of travel, not less. 

So that the small points of how much or what percentage or how 

all of that works out, all of that adds to the greater good of the entire economy. All of us depend on trucks. And it shouldn’t necessarily fall on the individual trucker to pay the full freight of the 

use of the highway. I mean, it trickles through the entire economy 

and we all benefit. 

I wanted to speak to you, Mr. Kadien. You indicated that this 

wasn’t a rail-versus-truck issue. And, you know, I think in many 

ways it is. And I don’t mean it in a pejorative way, necessarily. It 

is more about the simple nature of competition. A railroad would 

allege that if you were to pay the full cost of what it costs to build, 

buy, and maintain roads that your cost per gallon would be substantially more. I have heard upwards of a dollar. 

Is that right, Mr. Nadler? 

Mr. NADLER. Right. 

Mr. HANNA. He is my facts guy over here. 

So that someplace we realize that it is probably entirely impractical. We also know that, everyone here has indicated that monopolies, or oligopolies, if you will, are part of what railroads have going 

for them, just the nature of the business. Everybody says you 

would like to fix that. Maybe someone here could tell me what that 

would look like and how much that adds to your cost. Because 

clearly, if someone has the ability to cost push and they don’t stop 

and you just keep paying the bill, there is no end. So if you would 

like to talk to anyone about that, I would be interested to hear. 

Mr. KADIEN. Well, for International Paper up to about 40 percent 

of our locations in the U.S. are, quote, ‘‘captive’’ to one Class I railroad. And we have very good relationships with all of the Class I’s, 

and I think for the most part we would say we are fairly treated. 

On the other hand, we do see more, I will say, more frequent and 

higher increases on the 40 percent where we are captive. 

Mr. HANNA. So the higher weight limit would necessarily give 

you a little bit of an opportunity, roughly 20 percent lower average 

cost to help you offset that, if you will, advantage. 

30 

Mr. KADIEN. Our fact pattern would be different than that. We 

are not trying to get our rail shipments to compete with our truck 

shipments. We just want competitive rail increases where we have 

captive carriers. Our truck shipments are 400 miles or less. Our 

rail is 800 or more. Our trucks usually have to be there next day 

or second day. It is really two entirely different customer destinations that we are shipping to, and we don’t often mix or compete 

rail versus truck. 

Mr. HANNA. Sure. And I live in a State, New York, where they 

don’t have the sixth axle, but we do have the higher weight without 

that. So in my State’s case, to add that axle would actually make 

our roads safer, not less safe. And by your own study, and I have 

read the studies, there is every indication to believe that it is a 

marginal thing, add the weight and add the axle. 

And I think it is proper to assume that States have the ability— 

they all have engineers and DOTs—to decide what roads, what 

routes, and what is safe and what is not and where to invest 

money to fix those bridges appropriately that will allow for whatever they decide. I know that is what they do in New York. 

So I am not sure it is really a States rights issue in your case. 

Isn’t it just a matter of allowing them to decide? 

Mr. KADIEN. Yes, I would agree with that 100 percent. 

Mr. HANNA. Mr. Reed? 

Mr. KADIEN. But I do think, if I could add, I do think, you know, 

a benefit maybe to the cost issue that was brought up earlier, I 

think the reduction in accidents, truck traffic and the improvement 

in safety is worth something in this argument as well. 

Mr. HANNA. So to Mr. Nadler’s point, and I respect all of his 

opinions, I enjoy listening to him, tell you the truth, that reducing 

trips, reducing repetitiveness over bridges, lowering the average 

cost per trip because of the additional percentage of weight benefits 

more than just the trucker. It has to ultimately make the product 

you sell marginally less expensive and make you more competitive, 

to repeat the obvious. 

Mr. KADIEN. Yes, I would agree with that. 

Mr. HANNA. Thank you. My time is expired. 

Mr. DUNCAN. Thank you very much. 

Mr. Webster. 

Mr. WEBSTER. Thank you, Mr. Chairman. I have enjoyed the 

questions and responses here. I appreciate you doing this. 

I had a similar question. Maybe I will ask it of Mr. Johnston, I 

think your point three was the fact that there were certain areas 

where there was a monopoly of sorts, and you gave a large number 

of your shipments, I don’t recall what they were, inbound and outbound, but it just seemed like the percentage was pretty high. 

Is there a specific recommendation where we would start? I 

wouldn’t want to steal somebody else’s infrastructure, if you put 

two different types of freight trains on the same route. Somebody 

owns those and somebody would not. But is there a specific recommendation you have in that area? 

Mr. JOHNSTON. Thank you for the question, Congressman. As 

you may know, the Surface Transportation Board has held hearings off and on over the last 2 years, or thereabouts, to consider 

ways to increase competition in the rail industry. A variety of proVerDate Aug 31 2005 14:04 Apr 14, 2014 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\PANELO~1\10-1-1~1\85021.TXT JEAN
31 

posals have been presented to the Board by industry. At present, 

the Board is still taking those matters under consideration. 

But I would highlight just a few things, and then I will come to 

one specific. In 1980, when the Staggers Act was passed, there 

were 26 Class I railroads in the United States. Today there are 

seven, and four of those carry 90 percent of the traffic in the 

United States. Two of those are dominant east of the Mississippi 

River and two of them west of the Mississippi. And so those are 

the dimensions of the issue here. 

Furthermore, the premise under which the Surface Transportation Board acts, even today, is the same premise that was actually true in 1980 but is no longer true in 2013. And that is that 

the railroads stand on the brink of bankruptcy. They simply don’t 

any longer. They are healthy. They are making money. And, frankly, we want them to be that way. I don’t want there to be any misunderstanding about that. We need them to be healthy and profitable. 

One of the impediments that the Surface Transportation Board 

is simply that because of the fact that there are only three Commissioners, they can’t confer with one another and discuss matters 

that are before them for consideration. A simple solution to that 

might be to increase the number of Commissioners at the Surface 

Transportation Board. That might be one specific idea that I would 

leave with you today. 

There are a number of other proposals that DuPont and the 

American Chemistry Council have that, I won’t take time now, but 

we would be delighted to sit with you and your staff, other members of this panel, or members of the full committee and review 

those specific policy recommendations with you. 

Thank you. 

Mr. WEBSTER. OK. Well, I would love to get some pre-information if you have. It if you can get it to me, that would be awesome. 

Mr. JOHNSTON. Yes, we will. 

Mr. WEBSTER. Thank you. I yield back. 

Mr. DUNCAN. All right, thank you very much. 

Mr. Kadien, MAP–21 included very significant environmental 

streamlining provisions, shortening the project delivery times for 

highway and transit projects, and Mr. Roberson mentioned approvals for projects within the established or existing right of ways. Do 

you believe that similar provisions should be codified for all other 

modes of transportation as well? 

Mr. KADIEN. I am sorry, I am not familiar with MAP–21. 

Mr. DUNCAN. Well, what we are talking about, you don’t have to 

be familiar with MAP–21, what I am asking, has your company 

seen delays because of environmental rules and regulations and red 

tape, and would it make any difference to your company if we could 

speed up some of these approval projects? 

Mr. KADIEN. Thank you for the explanation. Absolutely, and yes. 

Permitting is, you know, the schedule on a return on any investment severely impacts, schedule delays severely impact the returns, and we see long scheduling delays, getting approvals on construction, engineering, building projects here in North America, 

and that would be very helpful if we could expedite those. 

32 

Mr. DUNCAN. Are you familiar with any particular examples of 

that, of projects that have been delayed or taken longer. Or you 

said in North America—— 

Mr. KADIEN. I meant the United States of America, primarily. 

Mr. DUNCAN. Can you do things faster in some of these other 

countries? 

Mr. KADIEN. Yes. In some of these countries you can. That 

doesn’t mean they are better and there aren’t other issues there as 

well. Environmental permits for a new pulp and paper facility in 

North America is a multiyear process. I am familiar with investments that were not made in this country because of the environmental process, and it often lacks clarity, it is often combative, and 

it is often just easier to go ahead and produce the project in another country. 

All that said, I think we also have the best set of environmental 

regulations from around the world that I am familiar with. So I 

think we end up at a right place in terms of, you know, the laws 

that we pass. But just as an example, we just went through MACT, 

which took several years to get to a conclusion and, you know, I 

think it probably took us 4 years, and if we could have done that 

a lot quicker we would have been able to get the environmental 

benefit and plan our capital spending a whole lot better and more 

efficiently. 

Mr. DUNCAN. Thanks very much. 

Mr. Johnston, you talked about the competition within the railroad industry or the lack of competition, but it seems to me it is 

something that is easy to say, but difficult to achieve because you 

also testified you don’t want to increase the regulations on the railroad industry. So do you have any ideas or suggestions about how 

we go about that since these companies, you know, take care of 

their own tracks and it is difficult, if not almost impossible, to lay 

new tracks in some places? So what do you have to say about all 

that? How do we go about achieving what you want to achieve, 

more competition within the railroad industry? 

Mr. JOHNSTON. Thank you, Mr. Chairman. It is not an easy problem and we don’t want people building new railroads necessarily. 

That is expense that is not going to be beneficial. So that is not 

the solution, as you clearly know and point out there. 

However, giving railroads who don’t have immediate access to 

one of my plants, for example, but might be only a short distance 

away and allowing them to use a portion of another railroadsystem, 

or interchanging traffic at the closest point available from one railroad to another are some simple sort of ideas that would create additional competition if you look at the full route that the traffic carries on the railroads. 

Mr. DUNCAN. You mentioned the four Class I railroads that carry 

90 percent of the rail traffic in this country, but there are a much 

larger number of short line railroads. Are you able to make much 

use of the short line railroads? 

Mr. JOHNSTON. Short line railroads do serve some of our facilities. They are generally hooked into a single Class I railroad, as 

I am sure you are aware. 

Mr. DUNCAN. Yes, sir. 

33 

Mr. JOHNSTON. And so that really doesn’t solve the problem. It 

is simply another railroad that we are dealing with on the front 

end of the transaction. 

Mr. DUNCAN. All right. 

Mr. Roberson, you mentioned that Nucor uses several different 

modes of transportation. I think just about all of you on the panel 

have said that. In which ways do you think current transportation 

funding can be better used, or what area of transportation do you 

feel is the most neglected or the most underfunded at this time? 

Where does Nucor have its biggest problems? 

Mr. ROBERSON. Well, I think it is a, Mr. Chairman, I think it is 

a very comprehensive issue. It is all modes. If you look at our inbound supply chain, clearly that is heavily leveraged on the waterways for a lot of our mills. However, if you were to flip that over 

to our outbound shipments, those go about 60 percent rail, 40 percent truck for many of our facilities. So it is really all modes. It is 

not one particular one that would make a big difference. 

Mr. DUNCAN. Mr. Reed, what do you say about that? You know, 

the government, both at the Federal and State levels, really first 

got into transportation primarily to help farmers to get their products to market. Where do you see the biggest chokepoints or the 

biggest impediments to freight transportation? 

Mr. REED. Well, Mr. Chairman, you are absolutely right, and 

much of the transportation system was built to move products to 

market. In fact, our facilities were located on rail lines, and at one 

time the crops were actually railed to processing facilities from the 

grain storage facilities out in the countryside. None of that is done 

today because of the emphasis on the long hauls. 

As far as our largest concern, we have learned to cope with 

trucking grain from the farm to our facilities. Our farmers are responsible for doing that. It is fast, and that is important for them 

during harvest when they are facing weather issues. We move 

products in all forms. 

But I would say our biggest concern is those harbor situations 

where we just cannot load barges to move rice into the export market. That is done by barge down the Mississippi River to New Orleans and then put on the large oceangoing freighters, but we have 

got to get the product out of the port. In the case of our New Madrid facility, which is the only processing facility we have on a 

river, we have no storage for a processed product. So it is one of 

those situations where you got to keep it flowing, and so that becomes a key bottleneck for us if we can’t move the product out. 

Mr. DUNCAN. All right. Well, thank you very much. 

Just out of curiosity, you know, I meet with people all the time 

from every business, every industry. I met, I guess last week or a 

couple of weeks ago, with some car dealers from Tennessee, and 

they said that while they are doing good business right now, it all 

seems to be pent-up demand, that people are driving cars now 

100,000, 200,000 miles, not trading as often, and that they went for 

several years during the downturn without trading in a car. In 

other words, they are saying they don’t think the economy is as 

strong as current sales might indicate. 

And I read all these business publications and, you know, you 

can find some articles saying that things are going pretty good. You 

34 

can find many that say they are not going pretty good. Our unemployment is too high. Our underemployment is much, much higher. 

Mr. Kadien, what about International Paper? How are you 

doing? What do you see in the near term for your company and the 

overall economy? 

Mr. KADIEN. You know, we are in several lines of businesses that 

are pretty good barometers of economic activity. We are the largest 

producer of corrugated packaging that moves goods, consumables, 

durables around the country, and typically runs about half of the 

GDP rate of the country. And right now we would say that the economic activity is pretty underwhelming, that, you know, we are 

looking at 0.5 to 1 percent kind of growth rates across the industry, 

and that is really not reaching our potential. I have got a consumer 

packaging business, you know, food processors are seeing, you 

know, flat to no growth in their business. We are a big supplier to 

restaurants. They are seeing slow traffic compared to prior years. 

So it is, I would say, it feels like we are moving sideways right 

now instead of gaining any momentum. 

Mr. DUNCAN. Mr. Johnston. 

Mr. JOHNSTON. Yes. DuPont also is in a wide variety of businesses. Our agriculture-related businesses are very strong today, 

both here in the United States and around the world. I would say 

many of our chemical businesses are seeing slow but steady growth 

here in the United States, but we are not seeing those same trends 

in other parts of the world, particularly in Europe and in Asia 

where their economies are simply in the doldrums and have not 

shown signs of recovery yet. 

Mr. DUNCAN. Mr. Reed, how much of Riceland’s, how much of 

your rice goes to other countries? How much is export? 

Mr. REED. Mr. Chairman, we export about a fourth to a third of 

our rice production every year at Riceland. For the U.S. industry 

as a whole, about half of the crop is exported each year to about 

75 countries. Rice is a staple for at least half of the world’s population. They eat it every day if they have it. We have all seen the 

numbers of population growth. By 2050 we may expect about 9 billion people, which are a lot of mouths to feed, and rice does that 

very efficiently. 

So we have seen a period of several years here of good prices for 

agricultural commodities really across the board. We certainly hope 

that continues. But there is always competition from other countries. Asia, for instance, had been deficit of rice. Now, many of the 

Asian countries are exporting rice. In fact, when I started with the 

co-op we were the number one exporter, we as in the U.S. were the 

number one exporter of rice. Today that spot would be filled by 

India, and followed by Vietnam and Thailand and other southeast 

Asian countries which have picked that up. 

Many of those are moving rice around the world at heavily subsidized prices, which makes it very difficult to compete. And, again, 

our transportation infrastructure is one thing that keeps us in the 

hunt for some of that business, especially the higher valued business. 

Mr. DUNCAN. I have gone way over my time and I apologize. You 

probably didn’t notice, but I said in my opening statement that we 

are facing competition that we never had before because for many, 

35 

many years so many other countries were following Socialist and 

Communist governments and were very weak economically. And 

now in many countries around the world, even some former Communist countries, they are allowing almost more free enterprise 

than we are in this country. 

Mr. Nadler, any other questions? 

Mr. NADLER. No, I have no other questions. 

Mr. DUNCAN. Any other questions? 

All right. Well, thank you very much. You have been very helpful. If you think of anything, we are looking for specifics to go in 

this report. We don’t have much time left in the time limit that 

was imposed, the special rule that we are operating under, so if 

you have some specific suggestion that you think might be helpful 

to us, then get in touch with us here in the next week or two. 

[The information follows:] 

36 


Insert offset folio 10 here 85056.010

THOMAS G. KADIEN 

SENIOR VICE PRESIDENT 

CONSUMER PACKAGING, IP ASIA & IP INOlA 

October 16, 2013 

INTERNATIONAL@PAPER 

0400 POPLAR AVENUE 

MEMPHIS, TN 38197 

PHONE: 901-419M7904 

FAX: 901-2140906 

E-MAIL: thomas.kadien@ipaper.com 

Chairman John Duncan and Ranking Member Jerrold Nadler 

Panel on 21 $I Century Freight Transportation 

House of Representatives Transportation and Infrastructure Committee 

2 I 65 Rayburn House Office Building 

Washington, DC 20515 

Dear Chairman Duncan and Ranking Member Nadler: 

Thank you again for providing International Paper Company (IP) the opportunity to present 

testimony to the Transportation and Infrastructure Committee's Panel on 21 st Century Freight 

Transportation. At the end of the hearing on October I, the Chairman invited witnesses to get 

back to the panel with any further specific suggestions. We do have some clarifying, specific 

suggestions and clarifying additional information. 

As outlined in IP's prepared testimony, we (IP) support the Safe and Efficient Transportation Act 

(SETA), H.R. 612. That bill would allow, but not require, a state to permit a vehicle with a 

Gross Vehicle Weight (GVW) of up to 97,000 pounds, if equipped with six axles and meeting 

certain axle weight limits, to operate on the Interstate System in the state. In discussing this 

issue at the hearing, a question arose regarding the roles of state and federal officials in 

determining whether a given route on the Interstate System, including bridges on the system, 

could be utilized by a vehicle of up to 97,000 pounds that met SETA conditions. I briefly noted 

that there was a form of "joint" authority. 

To be more specific, the joint authority that I was referring to is the approach taken under SETA. 

The Federal limits under 23 USC 127 would continue except as amended by H.R. 612. H.R. 612 

would provide a state additional flexibility to allow heavier vehicles that have six axles and meet 

specified axle weight limits to operate on Interstate Highways (including bridges) within the 

state. If a state chooses to increase its GVW for the Interstate System within the narrow 

parameters provided by SETA, USDOT may overrule the state decision. Specifically, section 2 

of SET A allows USDOT to terminate the operation of vehicles under SETA on a specific 

Interstate route segment (including abridge) upon finding that such operation poses an 

unreasonable safety risk based on an engineering analysis or analysis of safety or other 

applicable data. As such, there is both a state and federal role. 
37 


Insert offset folio 11 here 85056.011

I would also like to emphasize that there is plenty of evidence that many bridges on the Interstate 

System can safely handle trucks weighing above 80,000 GVW. First, of course, the Federal law 

already allows higher weights with respect to carriage of certain indivisible loads. The Federal 

law also includes grandfather and other exceptions for many states including New York, which 

issues tens of thousands of divisible load permits for single-trailer trucks weighing up to 117,000 

pounds for operation on Interstate and non-Interstate highways throughout the state, and for 

double-trailer trucks on the Thruway at even heavier weights. 

Vermont was discussed at the hearing and the report that assessed the 20 I 0 Vermont pilot 

program for higher weight limits on the Interstate System in Vermont noted "negligible impact 

on Interstate bridges in Vermont" (page 5) and that the change considered by the pilot program 

"would have a negligible impact to the Vermont Interstate bridges" (page 38). It was also noted 

that "Pilot trucks would not cause measurable damage to bridge structures and that Vermont's 

Interstate bridges are capable of supporting the heavier pilot trucks" (page 44). There are similar 

findings from elsewhere, including Maine and Minnesota. 

As to pavement, the hearing also included a discussion of pavement damage to Vermont 

highways from heavier trucks operating under the Federal pilot program allowing Vermont 

weights higher than generally allowed under 23 USC 127. The study in Vermont noted that the 

higher "axle" weights increased estimated pavement damage (pages 4 and 44). Under the 

Vermont pilot that was studied, Vermont weight laws still applied on the Interstate during the 

pilot program. This included higher per axle weights than set forth in 23 USC 127 or SETA. 

Under SETA, because of the important addition of the sixth axle, a 97,000 pound GVW vehicle 

can operate within current Federal axle weight limits. Also, unlike SETA, and as noted at the 

hearing, the Vermont pilot permitted GVW up to 99,000 pounds. These are important factual 

differences. 

More generally, a study of the literature under National Cooperative Highway Research Program 

(NCHRP) auspices concluded that "truck weight limits that allow higher GVWs distributed over 

more axles (e.g., 6 instead of5 axles) do not necessarily lead to higher pavement costs and can 

even produce cost savings." Carson, Directory of Significant Truck Size and Weight Research, 

NCHRP 20-07 Task 303, October 2011 at page 8. For example, a 2009 study commissioned by 

the Wisconsin Department of Transportation found that authorizing the use of six-axle, 98,000 

pound tractor-semitrailers on the state's Interstate System would produce $10.19 million in 

annual pavement maintenance savings and more than $150 million in overall annual benefits to 

Wisconsin. 

In conclusion, SETA addresses the nation's need for the safe and efficient transportation of 

goods on Interstate highways. It is self-funding and allows the states to opt in, or not, on all or 

parts of their Interstate system. It can reduce the number of trucks on the road and save lives, and 

should receive serious consideration from the Panel. 

Thank you again for the opportunity to testify and for the Panel's consideration. 

Sincerely, 

Thomas G. Kadien 

Senior Vice President 
38 

Thank you very much. That will conclude this hearing. 

[Whereupon, at 3:25 p.m., the panel was adjourned.] 

39 


Insert offset folio 12 here 85056.012

Statement of 

Tom Kadien, Senior Vice President 

Consumer Packaging. IP Asia and IP India 

International Paper Company 

Before the Panel on 21st Century Freight Transportation 

Committee on Transportation and Infrastructure 

United States House of Representatives 

October 1, 2013 

Chairman Duncan, Ranking Member Nadler, and Members of the Panel: 

Good afternoon. I am Tom Kadien and I am the Senior Vice President for International 

Paper's Consumer Packaging, IP Asia and IP India businesses and I am based in 

Memphis, Tenn. Thank you for the invitation to speak with you today about how 

International Paper moves our products around the U.S. and to customers around the 

globe. It's an important opportunity to share how we believe Congress can playa role in 

making the movement of U.S. freight more efficient. And we need that efficiency to help 

preserve and grow the economy in this country. 

International Paper is a global leader in packaging and paper with manufacturing 

operations in North America, Europe, Latin America, Russia, Asia and North Africa. Our 

businesses include industrial and consumer packaging and uncoated papers, 

complemented by xpedx, the company's North American distribution company. The 

company's net sales for 2012 were $28 billion. We are headquartered in Memphis, 

Tenn., and employ approximately 70,000 people around the globe. This includes 38,000 

employees in the U.S. at more than 300 facilities across 43 states. 

Before I begin, I would like to add that we are pleased to have a presence in the 

congressional districts of six members of this panel. International Paper operates a 

containerboard packaging mill in Rep. Mullin's district in Valliant, Okla., and we have 

container plants in the districts of Reps. Hahn, Webster, Lipinski, and Hanna. 

International Paper also has a xpedx distribution facility in Chairman Duncan's district in 

Knoxville, Tenn. Several of you have been to International Paper's facilities and, given 

that we have a presence in so many states, we invite each of you to visit our plants to 

see first-hand how we manufacture and move our products to customers. 

International Paper is one of the nation's major leaders in freight movement, spending 

approximately $2 billion annually on logistics. When it comes to meeting our customers' 

needs and to finding efficiencies in our supply chain to be competitive in a global 

economy, International Paper knows that there are ways to make U.S. freight 

transportation more efficient without any adverse impact on safety. The safety of our 

employees is our top priority and moving products from our facilities to our customers is 

no different. This panel has the important role of putting those ideas on paper and 

making recommendations to the House Transportation & Infrastructure Committee. 

1 
40 


Insert offset folio 13 here 85056.013

Today I will speak about two efficiency and competitiveness issues: the need for 

Congress to act on the Safe and Efficient Transportation Act, to make 53-foot trucks 

more efficient and productive, and to also support the needs of our nation's ports to be 

globally competitive. 

I want to be clear that although I will not touch on rail issues today, International Paper 

is also a significant user of rail and moving our products by rail remains a critical part of 

our supply chain. International Paper is the rail industry's largest U.S. box car 

customer, shipping more than 140,000 carloads by rail in 2012. We are also the third 

largest waterborne exporter of containers from U.S. ports by volume. In 2012, 

International Paper shipped more than 2 million tons in containers equating to 160,000 

TEU's - the standard maritime industry measurement for containers - as well as over 1 

million tons of breakbulk cargo from U.S. ports. Trucking is also critical for International 

Paper. We sent products from our U.S. facilities to customers over more than 

155,000,000 miles by truck in 2012. 

While we are a significant player in all of these transportation modes, International 

Paper has identified an opportunity to increase trucking efficiency by 20% for 300,000 of 

our trucks trips each year while still maintaining safety standards. International Paper 

strongly supports the Safe and Efficient Transportation Act (SETA), HR 612, by Reps. 

Mike Michaud (D-ME) and Reid Ribble (R-WI), which allows each state to permit sixaxle trucks loaded to weights of up to 97,000 pounds to operate on the state's Interstate 

Highway system. SETA doesn't mandate the use of these trucks. It merely gives each 

state the option to allow them on some or all of their Interstate highways, which, in turn, 

enables increased productivity in a safe and environmentally responsible way. The 

results of SETA would be good for the American economy and our global 

competitiveness. It will allow a vast number of manufacturers that must ship heavier 

products to make a portion of their truck shipments more efficient. 

Above: 80,000 lb. 53·foot truck with 5 axles, displacing 4,444 Ibs. per tire. 

Above: a 97,000 lb. 53·foot truck with 6 axles, displacing 4,409Ibs. per tire. Source: Coalition for Transportation Productivity 

2 
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Paper is heavy. For International Paper, allowing trucks to carry the increased weight of 

97,000 Ibs. with the sixth axle would give us the opportunity to be more efficient 

because we could fully load our trucks, which currently weigh out before cubing out at 

the 80,000 Ib 5-axle weight limit. These trucks currently have 8 to 10 feet of empty 

space in the trailer when leaving our mills and therefore we require extra trucks to carry 

our products. With implementation of SETA in a particular state, IP would need four 

trucks instead of five to carry the same amount of product. 

Let me give an example for International Paper's Valliant, Okla. Mill, in Rep. Mullin's 

district. If Oklahoma DOT decided to opt-in to SETA, the Valliant mill could reduce their 

truck trips by 5,398 trucks (20%) annually simply by fully loading its trucks. This equates 

to a reduction in vehicle miles traveled by 1,851,514 miles and a reduction of C02 

emissions by 6,800,000 Ibs. annually. 

Let me be clear. International Paper is not advocating for SETA with any plans to shift 

our rail freight shipments to truck. Selecting the best mode to carry our products 

involves a supply chain analysis which focuses on time lines, price and distance to the 

customer. Our average rail shipment from our mills is over 800 miles, while our average 

truck shipment from the mills is approximately 400 miles. We plan to continue using rail 

at our current level and, again, let me reiterate that we are the rail road industry's 

largest box car customer. We simply want to make the trucking component of our 

supply chain more efficient. This is one tool to help us compete in world markets and 

help grow the U.S. economy. 

Getting back to our Valliant mill example: Although our Valliant Mill could reduce its 

truck shipments by more than 5,300 annually with the implementation of SETA, we 

would still need the same amount of rail cars to service the mill-which is more than 

15,700 rail cars annually. In fact, rail carries double the tonnage from International 

Paper's Valliant mill than trucks, and rail is an important supply chain partner at that mill. 

Importantly, we are willing to pay more to carry the heavier weight. Under SETA, a truck 

operating on the Interstate with the heavier weight pursuant to SETA will also pay a 

higher annual heavy vehicle user fee - $800 compared to the current $550 fee. That 

fee will go into the Highway Trust Fund. 

Safety remains a top priority. At 60 mph, an 80,000 lb. 5-axle truck can stop within one 

foot of a 97,000 lb. 6-axle truck. 

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Source: Paul Johnson, Independent Consultant, Former Senior Director Of Engineering, 

Meritor WABCO 

Allowing more productive truck weights and adding an axle is not a new concept. At 

least 15 U.S. states already allow trucks weighing up to or beyond 97,000 pounds to 

travel on Interstate highways under certain conditions, with some of those weights 

allowed on five-axle trucks. Allowing heavier loads to move on safer and more 

appropriate six-axle trucks will give states the ability to optimize road networks, while 

allowing trucks to incorporate safer Interstate highways into their routes. Six-axle trucks 

with weights equal to or more than those allowed by SETA are in wide use by our global 

competitors in Canada, Europe, Asia and Australia. Heavier trucks are supported by a 

wide body of research from state, federal, international and academic institutions. 

As you know, the U.S. Department of Transportation (DOT) is in the midst of an 18-

month Truck Size & Weight Study. We are confident that the team at DOT is developing 

a balanced report and will come to the conclusion that the 97,000 lb. 6-axle SETA 

proposal will support other previous positive safety research on this topic. This 

configuration has been well studied and documented over time and has demonstrated 

safety benefits in the states and countries where it is already in operation. Safety is in 

our company's DNA and we proudly support SETA here today. 

For all these reasons we ask this panel to include SETA in your recommendations to 

the full committee. We also encourage member support for the ongoing U.S. DOT Truck 

Size & Weight Study and ask that it be completed without delay. We believe that, when 

the time comes to pass the next highway and surface transportation authorization bill, 

the record will continue to be clear that SETA should be included. The time to act on 

sensible and safe truck weight reform is now. 

When it comes to exporting our products made proudly in the U.S., International Paper 

exported 23 percent of what we manufactured in the U.S. in 2012 to customers around 

the globe. While the majority of our exports are primarily containerboard that provide our 

global customers with boxes for their products, our pulp exports are also expanding to 

meet growing global demand for diapers and other related products. 

It is essential to International Paper's logistics operations that our nation's ports and 

infrastructure are highly efficient and prepared to handle the larger vessels coming 

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through the Panama Canal when the expansion is complete in 2015. We urge this panel 

to support harbor dredging projects at U.S. ports to improve their competitiveness and 

keep American exports viable in relation to their global competition. 

For example, International Paper ships 70 percent of our exports out of the Ports of 

Charleston, South Carolina and Savannah, Georgia. Both ports are working tirelessly to 

move forward on projects that will increase their harbor depths to handle the larger 

vessels, which will ensure their global competitiveness and improve the flow of 

American goods to global customers. If the Ports of Charleston and Savannah cannot 

handle the larger ships in 2015, International Paper we will be forced to redirect our 

exports to other U.S. ports that can accommodate the larger ships, or sharply reduce 

our exports. That would be counterproductive to current national efforts to grow U.S. 

exports and wreak havoc on our company's business plans and logistical operations. If 

we are forced to identify new ports because Charleston or Savannah cannot receive the 

larger ships, International Paper would potentially have to export this tonnage out of 

Norfolk, Virginia or Miami, Florida. You can appreciate the additional miles that our 

products would have to travel by truck and rail to get to those ports. Every extra mile 

raises our costs, which hurts our global competitiveness, and adds to the strain on our 

nation's infrastructure. It is more cost effective and efficient to export from the ports that 

are close to our mils in the Southeast. 

Implementation of both of these port projects is important not just for International 

Paper, but also critical for the health of the U.S. economy and the nation's movement of 

goods. We understand that the total economic impact of Georgia's deepwater ports is 

$67 billion, plus $4.5 billion in federal taxes. According to a South Carolina State Ports 

Authority Economic Impact Study report, the Port of Charleston facilitates over $44.8 

billion in total economic output, annually, of which $11.8 billion is paid in wages to 

260,800 employees in South Carolina. 

I urge the Freight Movement Panel to support the funding of these types of critical 

harbor deepening projects so that they can be turned into realities. It was helpful to 

have Vice President Joe Biden visit the Ports of Savannah and Charleston in 

September to underscore the Administration's commitment to these specific projects. 

International Paper also supports the committee's recently-passed Water Resources & 

Reform Development Act's provisions supporting the Savannah Harbor Expansion 

Project (HR 3080, Section 401, Final Feasibility Studies) and the Harbor Maintenance 

Trust Fund provisions to ensure that the Fund's current revenues are directed toward 

their intended purposes. We believe that harbor deepening is a critical investment in the 

nation's ports and will benefit all Americans by expediting the movement of goods 

across the country. The completion of the Panama Canal's expansion in 2015 is 

coming quickly and America's ability to compete is at stake. 

Thank you again for inviting me to participate in today's panel. I look forward to 

answering any questions. 

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The miracles of science~ 

Statement of 

F. Edmond Johnston, III 

Transportation Policy Leader 

DuPont 

Before the 

United States House of Representatives 

Committee on Transportation and Infrastructure 

"Panel on 21st Century Freight Transportation" 

October 1, 2013 
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Good afternoon Chainnan Duncan and Ranking Member Nadler. My name is Eddie 

Johnston. I have worked for DuPont for 33 years, the first eight in the Chairman's home 

state of Tennessee, where two of my children were born. I am pleased to testify on 

behalf of DuPont, a leading science company, and as a member of the American 

Chemistry Council, a trade association representing America's leading chemical 

companies. As transportation policy leader for DuPont, I work with other stakeholders to 

analyze and develop policy recommendations to improve the safety, reliability and costeffectiveness of freight transportation. I serve on ACC's Executive Rail Group. I 

appreciate the opportunity to appear before you today. 

As I will detail in my testimony, the chemical industry is a major user of our Nation's 

freight system and is one of the largest customers for many modes of transportation 

including rail, truck and barge transport. The industry ships a wide range of materials 

from plastic pellets to commodity chemicals that are used to produce more than 96% of 

all manufactured goods. I would like to thank this committee for recognizing the industry 

as an important transportation stakeholder. 

There are three issues that are critical to the economic health and safety of our industry: 

• Infrastructure Funding 

• Reauthorization of the Hazardous Materials Transportation Act 

• Rail Policy Reform 

Meeting the Needs of the Nation 

DuPont is a science company working to find solutions to some of the world's biggest 

challenges, making lives better, safer, and healthier for people everywhere. We have been 

bringing market driven science and engineering to the global marketplace in the form of 

innovative products, materials, and services since 1802. The company serves markets as 

diverse as agriculture, electronics, automotive, aerospace and defense. For example, in 

agriculture, DuPont Pioneer is a leading developer of advanced plant genetics providing 

high quality seeds to farmers around the world. Currently, DuPont is building a 

commercial next generation cellulosic ethanol facility in Iowa that will produce 30 

million gallons per year. This facility and others like it are creating rural jobs, additional 

income for farmers, and improving national security through homegrown energy 

development. 

While we are a global company, we operate more than 70 manufacturing facilities in the 

United States and employ tens of thousands of Americans, while purchasing 

approximately $550 million in transportation services each year. Chemistry is one of the 

many sciences that we utilize. As a company devoted to safety we are proud to have 

recently won a safe shipper award from one of our major rail carriers. 

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More broadly, ACC represents the nation's leading companies in the business of 

chemistry, a $770 billion industry and one of America's most significant manufacturing 

industries. It is one of the largest exporting sectors in the United States, accounting for 

12 percent of U.S. exports. Chemistry companies are also among the largest investors in 

research and development and employ nearly 800,000 Americans paying average annual 

salaries of $84,700. 

Similar to our transportation partners, the chemical industry invests heavily in capital 

improvement and expansion. In 2012, the chemical industry spent over $38 billion of 

private capital on investments in structures and equipment, and we expect that number to 

continue to grow in the coming years, especially if we can put the right policies in place 

that will nurture growth in U.S. manufacturing. 

While it's clear that DuPont and all of ACC's members make an important contribution 

to the economy, we also serve an important role for other producers and in virtually every 

aspect of the daily lives of most Americans. 

The Nation depends on the chemical industry every day for the building blocks that are 

necessary for safe drinking water, life-saving medications and medical devices, and a safe 

and plentiful food supply. 

To meet this constant demand, the business of chemistry shipped about 847 million tons 

of chemical products in 2012 by a variety of modes. And, freight rail is an important part 

of that equation for the industry. Chemical producers are the second largest customer of 

the nation's freight rail system and rely on railroads to deliver chemicals efficiently and 

safely to where they are needed - from water treatment plants to farms and factories. 

Infrastructure Funding 

American families enjoy the necessities and luxuries of life only to the extent that goods 

move safely and reliably over the Nation's transportation infrastructure. Much of our 

transportation infrastructure is old and requires attention. Highways, bridges, ports, locks 

and dams are in need of repair, improvement or replacement. This includes dredging to 

maintain the use of ports and navigable waterways to keep these vital routes open for 

business. 

For example, the Mississippi River is a critical national transportation artery, on which 

hundreds of millions of tons of essential commodities are shipped, such as com, wheat, 

oilseeds, coal, petroleum and chemicals. The historic low-water levels of the Mississippi 

River last year jeopardized the shipment of these essential goods threatening to dismpt 

manufacturing industries and power generation and put thousands of jobs at risk. This 

potential crisis demonstrated the important role of the U.S. Army Corps of Engineers in 

keeping goods flowing through our waterways. 

We want to thank Chairman Shuster, the Ranking Member, Mr. Rahall and all the 

members of this committee and their staff for addressing key transportation issues 

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including the recent passage of the Water Resources Reform and Development Act 

(WRRDA). This legislation is critical to the competitiveness of manufacturers throughout 

the U.S. and will ensure continued investment in our 12,000 miles of inland and coastal 

waterways. This is a step in the right direction and we urge the Committee to consider 

similar initiatives to benefit other modes of freight transportation. We appreciate that we 

operate in an era of tight budgets with competing priorities but believe that a robust and 

reliable transportation infrastructure is the cornerstone to a healthy and competitive U.S. 

economy. 

Hazmat Transportation 

A small but important segment of chemical shipments involve hazardous materials. The 

Department of Transportation recently recognized the irreplaceable nature of these 

shipments stating that these materials "are essential to the economy and national health, 

[and] rail movement of these materials is extremely safe." 

DuPont and ACC member companies are committed to pursuing safety enhancements for 

every aspect of the transportation process through the industry's Responsible Care® 

initiative. Responsible Care is the chemical industry's world-class environmental, health, 

safety and security performance initiative. Working with our transportation partners, we 

have invested billions of dollars in training, technology, and tank car safety, and we will 

continue to do so in the future. 

ACC and its member companies also have worked hard to establish a strong and 

successful partnership with the emergency response community. For example, ACC 

members, together with the railroads and other stakeholders, developed TRANSCAER®, 

a voluntary national training effort that helps communities prepare for and respond to 

possible hazardous material transportation incidents. 

Emergency responders also have access to a wide variety of experts through ACC's 

CHEMTREC@ (Chemical Transportation Emergency Center) service. When an incident 

does take place, responders can contact CHEMTREC's state-of-the-art, 2417 emergency 

center to determine the best way to handle a wide range of chemicals and other hazardous 

materials. 

Beyond industry efforts, we understand that the Federal Government has and must 

continue to playa central role when it comes to ensuring the safe transportation of 

hazardous materials. 

With the Hazardous Materials Transportation Act (HMTA), Congress wisely established 

a comprehensive national regulatory system for essential hazardous materials 

transportation which is administered by the Department of Transportation. The goal of 

this system is not to prevent the movement of chemicals and other hazardous materials 

but to ensure these essential products are delivered safely, securely and reliably. 

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HMT A has worked well in making the transportation of chemicals and other hazardous 

materials throughout the country safe for the public, workers and emergency responders. 

I would like to thank the Committee for recognizing the success of HMTA and 

reauthorizing the program in MAP-21 last year. With its renewal just around the corner, 

I would like to ask for your continued support of this important program. 

The U.S. needs a safe and reliable system of hazardous material transportation governed 

by uniform national rules. That is the system we have today. The challenge going 

forward, for both the private and public sectors, is to ensure all stakeholders work 

together to pursue initiatives with the greatest potential for ensuring this system 

continuously improves. We must be sure to take a comprehensive approach for 

enhancing safety that starts with accident prevention and extends to accident mitigation 

and response. 

Rail Policy Reform 

Today we are experiencing a renaissance in American manufacturing that is bringing 

investment and jobs back to our country. In 2011, DuPont made a $500 million 

investment in our Cooper River facility in Charleston, Sc. The Cooper River site 

produces Kevlar© fiber which is used to manufacture body armor for the military as well 

as for law enforcement. As part of that expansion, our rail traffic has more than doubled. 

In addition, the development of shale gas is supplying abundant supplies of natural gas 

and liquid hydrocarbons used to make chemicals and plastics, changing the attractiveness 

of chemical manufacturing in this country. The chemical industry has already announced 

127 projects that will invest $85 billion and add 318,000 American jobs by 2025. A cost 

effective rail transportation system that enables American manufacturers to compete in a 

global marketplace is essential to realizing the full potential of this opportunity to once 

again grow our Nation's manufacturing capability. 

Since the last major railroad reform legislation passed by Congress, the Staggers Rail Act 

of 1980, a series of mergers reduced the number of Class I railroads from 26 to just seven 

by 2001. With drastically reduced competition, railroad rates have jumped 76 percent 

over the last decade-nearly three times the rate of inflation. In 2012, the chemical 

industry paid over $9 billion in rail transportation costs and has seen rapid increases in 

rail rates. Between 2005 and 2010, the premium paid by chemical and plastics shippers 

for high rail rates increased by 77 percent despite the concurrent recession, according to a 

recent study conducted on behalf of ACC. This premium was calculated by examining 

rail rates that exceed 180 percent of the railroad's variable cost, an important threshold 

allowing potential rate challenges before the Surface Transportation Board (STB). 

A recent survey has shown that rail issues factor heavily into domestic investment 

decisions and have already had an impact on moving forward with investments. In fact, 

more than a quarter of ACC members report that rail transportation issues have hindered 

their own domestic investments. 

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When the Staggers Act was passed and the STB was first created, policymakers were 

looking to address whether a viable rail system could survive. There is no doubt that 

question has been addressed. The full health of the railroads has been restored and the 

vibrancy of the rail network has never been better. 

However, despite dramatic changes and consolidation in the rail industry, the STB has 

not been reauthorized since its inception in 1995 and it has maintained policies that 

restrict rail-to-rail competition. It is time to re-examine decades old policy with the needs 

of the 21st Century in view. Policymakers are now faced with a new question - will 

current freight rail trends be able to foster growth and allow domestic producers to 

compete in a global marketplace? 

ACC and its members believe this question can be resolved through sound and balanced 

reforms to modernize STB policies that will encourage competition and free market 

principles. Such reforms should be designed to make STB processes more efficient and 

effective for resolving rate disputes between shippers and railroads, and should not 

"reregulate" the industry. To the contrary, the reforms DuPont and ACC support would 

result in reduced need for regulatory oversight of the industry by allowing the market to 

work. 

More importantly, Congress and the STB should look for ways to promote competition in 

the freight rail industry. We believe that greater competition between railroads would 

help ensure that commodities, including chemical products, can be shipped efficiently to 

both domestic and international markets. We further believe that market-based 

competition can lead to greater innovation and improvements in rail service, as it does 

throughout other sectors of the U.S. economy. 

We believe these reforms will help fulfill the original mission of the Staggers Act: to 

ensure an economically strong rail industry, to promote economic growth and investment 

in the United States, and to reduce the need for government regulation. 

Forging a Partnership 

Because the safety of all modes of transportation is an imperative, DuPont along with 

other ACe member companies look forward to continuing to work with this Panel as it 

makes recommendations for policies that will enhance the Nation's freight infrastructure. 

In particular, as one of the largest customers of freight rail service, we want to work in a 

constructive manner to update federal regulatory policies that will allow greater access to 

competitive rail service. By working together we can promote safe and sustainable 

domestic growth for our industry well into the 21 sl century. 

In this regard, we respectfully request that the Panel consider the following 

recommendations: 

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• Congress should adequately fund maintenance and improvement of all modes that 

make up our Nation's transportation infrastructure; 

• Congress should reauthorize the Hazardous Materials Transportation Act to sustain 

the safe and reliable transportation of materials essential to our economy; and 

• Congress should reform Federal rail policy to promote greater access to rail 

competition and improve the efficiency and effectiveness of the Surface 

Transportation Board. 

I thank the panel again for this opportunity to testify and look forward to answering any 

questions you may have. 

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House Transportation & Infrastructure Committee 

Panel on 21st Century Freight Transportation 

Testimony of Rob Roberson 

Nucor Corporation 

Oct. 1, 2013 

Chairman Duncan and Ranking Member Nadler, thank you for the opportunity to testify 

before you today. I am Rob Roberson, Materials and Logistics Manager for Nucor Steel 

Berkeley - a division of Nucor Corporation. 

Nucor Corporation is the nation's largest steel manufacturer and recycler, operating 23 

scrap-based steel mills. Nucor has the capacity to produce more than 27 million tons of 

steel annually. Last year, the company recycled more than 19 million tons of scrap 

steel. Nucor also has several wholly-owned subsidiaries including Harris Steel, The 

David J. Joseph Company, and Skyline Steel. Together, we are a company of over 

22,000 teammates, primarily in the U.S. and Canada. 

The freight transportation system is vitally important to Nucor's success. We rely on 

water, rail, and truck transportation to move millions of tons of scrap steel and other raw 

materials to our steel mills and finished products to market. For this reason, disruptions 

in the freight transportation system can have significant negative economic impacts on 

our business. 

Waterways playa particularly important role for a number of Nucor Divisions. We have 

several steel mills located on rivers and some of these mills bring in more than 90 

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percent of their raw materials by river. Nucor's scrap steel business - The David J. 

Joseph Company - transports approximately 3,500 scrap barges per year. 

When assessing our waterways system, we believe that more frequent maintenance 

dredging is needed to maintain adequate drafts. Unfortunately, inadequate draft levels 

are becoming an all too common occurrence. For every one inch decrease in draft, you 

lose 17 tons of cargo On a barge. This forces companies like ours to use more costly 

alternatives. 

Barges are a safe, efficient, environmentally friendly and cost-effective way to move 

goods. Each barge moves 1500 to 1700 net tons of cargo, compared to 80 to 100 tons 

for railcars and 20 to 22 tons for trucks. 

Considering the importance of our waterways system, we are encouraged to see both 

houses in Congress advancing the Water Resources Development Act. Nucor supports 

this legislation, particularly dedicating more revenue in the Harbor Maintenance Trust 

Fund for the purpose of maintaining our federal navigation channels. We hope that 

Congress will also strengthen revenues for the Inland Waterways Trust Fund to make 

necessary investments in this critical component of our U.S. supply chain by advancing 

the industry-supported user fee increase. 

Like our waterways, our roads and bridges are in serious need of investments. The 

interstate highway system built after World War II is aging and we need a new, long2 
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term commitment to invest in our roads and bridges. The gas tax is not providing 

adequate revenue to further this goal. We need to look for new alternatives, including 

more public-private partnerships. Also, enacting legislation giving states the option to 

increase the weight of six-axle trucks operating on select federal interstates, would 

allow more cargo to be moved safely and efficiently over our nation's roadways. 

With regard to our nation's rail system, the biggest challenge that we face is that we are 

served by a single major railroad. Several Nucor facilities are "captive" shippers in that 

they pay a premium to move their products because of the lack of rail competition. In 

recent years, the rail industry has seen significant private investment. However, these 

investments are often passed onto the rail industry'S customer base, resulting in higher 

premiums and costs for captive shippers who are still without the ability to choose which 

rail carrier they use. We cannot pass these increased costs onto our customers. We 

have to absorb them because we compete in a steel market that is being flooded with 

illegally subsidized foreign products that are often already sold below cost. While it is 

true that we have the ability to use less costly modes of transportation, it is not always 

feasible logistically. Given these circumstances, we support action to address the need 

for more competition for rail service in many parts of the country. 

The creation of this special panel acknowledges that our freight infrastructure works 

collectively as one system. We cannot look at each in isolation. Businesses across the 

country rely on all modes of transportation operating together to get products to market. 

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Keeping American businesses globally competitive requires investment in this entire 

system. 

Businesses succeed when there is certainty. We can create certainty by providing the 

proper funding for maintenance and much needed upgrades. We must also streamline 

the permitting system so projects do not drag on for years in endless reviews. For 

example, we support legislation that would exempt routine highway safety and 

transportation upgrades that already exist within the current right-of-ways from costly 

federal permitting requirements. 

As the National Association of Manufacturers recently noted, manufacturing produces 

12 percent of America's GOP, but the U.S. is only investing about 1.7% of our GOP in 

infrastructure. Many of the countries we compete against are investing between 5 to 10 

percent of GOP in their infrastructure. In short, others are modernizing while we 

struggle to maintain a failing system that is decades old. However, with the proper 

investment and governance, we can give American businesses the tools they need to 

remain globally competitive. 

Thank you. 

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Statement Before 

Panel on 21 st Century Freight Transportation 

Committee on Transportation and Infrastructure 

U.S. House of Representatives 

By 

Bill J. Reed 

Vice President, Public Affairs 

Riceland Foods, Inc. 

October 1, 2013 

Thank you, Mr. Chairman. I am Bill Reed, vice president for public affairs of 

Riceland Foods, a cooperative of family farmers, headquartered in Stuttgart, Arkansas. 

I appreciate this opportunity to appear before this Panel on 21 st Century Freight 

Transportation to offer some of our perspectives related to our nation's freight 

transportation system. 

To put my remarks into context, U.S. rice is produced in three primary areasCalifornia, the Texas-Louisiana Gulf Coast and the Mid-South which includes Eastern 

Arkansas, the Missouri Boot Heel, Northeast Louisiana and Northwest Mississippi. 

About half of the nation's rice crop is produced in the Mid-South. On average, 

Mid-South farmers plant about 1.5 million acres to rice each year and produce around 

240 million bushels, or 10.8 billion pounds, of rough rice with the hull intact. 

Rice farming came to the region in the early 1900s. After struggling to find a 

viable market for their crop, a group of farmers met in Stuttgart, Arkansas, in 1921. 

They decided to form a cooperative to market the rice they produced. Today, Riceland 

farmer-members number about 6,000 and account for about half of the rice produced in 

the Mid-South. 

Each fall, Riceland members harvest their crops and deliver them to local grain 

elevators. There the crops are dried and stored until transported to processing facilities. 
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Riceland is the largest miller and marketer of rice. Our farmers also produce 

soybeans, and many grow com and winter wheat which are marketed by the 

cooperative. In total, we market annually 100 to 125 million bushels of grain. 

Our rice products are sold across the country in retail, foodservice, and club 

stores. Rice ingredient products are marketed to many of the nation's blue-chip food 

companies. 

Exports are an important part of the total business. We normally export a 

quarter to a third of our total rice marketings to some 50 foreign destinations. 

As a direct exporter of rice, we sell to buyers in importing countries. Our staff is 

well schooled in the details of everyday management of logistics. They have to be to 

move our products from the Mid-South to customers in the Caribbean, Central America, 

Europe, the Middle East and Africa. 

Besides our rice business, we crush soybeans grown by our farmer-members to 

produce high protein soybean meal for the region's poultry and aquaculture industries. 

We refine crude vegetable oils to produce a line of frying and cooking oils for 

foodservice and ingredient customers. 

Soybeans in excess of our crush capacity generally are sold down the 

Mississippi River and into export markets. We do not process wheat or com, but sell 

them to feed mills or to the export market. 

Transportation is a key part of what we do every day as we move to market the 

products and grains our farmers produce. In our most recent fiscal year, completed July 

31, our transportation team accounted for moving more than nine billion pounds of 

products, supplies and commodities. That does not include transportation of the seed, 

fertilizer, equipment and other inputs required for our farmers to grow their crops. 
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The largest share of our freight is transported on highways. Last year we 

accounted for nearly 140,000 truck and intermodal shipments in the domestic market for 

which we pay the freight or handle the logistics. 

We counted 6,300 rail shipments; well over a thousand export containers and 

break bulk loads; and more than 200 river barge loads of products. 

With the nation's focus on a fresh, safe food supply and just-in-time 

manufacturing and shipping, it is imperative that products move within a narrow time 

frame. To accomplish this economically requires a reliable and efficient transportation 

system. 

I know members of the Committee and this panel are aware of the challenge of 

maintaining our highway system. When the Interstate system was planned and 

constructed, no one imagined it would carry the volume of traffic handled today. 

Maintaining our highways is a never-ending job. 

A couple of weeks ago, Arkansas Highway Director Scott Bennett met with 

members of the Highways and Transit Subcommittee to discuss the state's initiatives to 

improve our Interstates and state highways. 

In 2011, Arkansas voters renewed a $575 million bond program for Interstate 

improvements. Then in 2012, voters approved a temporary half-cent sales tax to fund a 

$1.8 billion bond issue to improve state highways over 10 years. Our citizens supported 

these initiatives because we know we must have highways to keep our economy gOing. 

Of course, these programs are not enough. The day before Director Bennett met 

with Subcommittee members, it was reported that 156 bridges in Arkansas were found 

structurally deficient and in need of rehabilitation or replacement. Many of those 

bridges are in rural areas of East Arkansas where Riceland farmers grow food. As a 

state and nation, we must find a way to maintain and expand our highway system. 
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At one time, much of the grain from our country elevators was transported by rail 

car to processing facilities. In fact, the grain elevators were built in the 1940s and 

1950s along rail lines for that purpose. 

Today, the railroads focus on long hauls. They do a good job for us as we ship 

railcar loads of rice products to markets all across the country. We also use unit trains 

to efficiently ship grain to Mexico. 

River transportation is critical to our export business. Our New Madrid, Missouri, 

rice mill is a shipper's dream. It is located on a rail line, it is one mile from Interstate 55 

between Memphis and St. Louis, and it is in the New Madrid Port on the Mississippi 

River. We can mill rice and convey it directly to a barge to move down the River. 

In 2011, however, floodwaters on the Mississippi made it impossible to load 

barges. In fact, water was within a foot of the entire facility. 

In 2012 and again this year, it's a different story. Silt naturally flows into the 

harbor and displaces water. As the water level falls, we can load less rice in a barge. 

The port looks more like a mud puddle now. Due to a shortage of funds, the New 

Madrid harbor is not scheduled to be dredged this year. 

Instead of having to deal with the problem for a couple of months during this 

current low water period, our manager expects to struggle with it all next summer with 

potentially four to six more feet of silt in the harbor. Given this scenario, there would be 

only five feet of water in the harbor at current river levels which will remove practically 

all of the economic benefits of using the facility for bulk barge shipments. 

I have one more example of the importance of the river transportation system. 

As corn harvest began in early August last year, we had planned to truck corn 

produced in the Southeast corner of Arkansas to the Port of Yellow Bend on the 

Mississippi River. 
59 


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Thirty, 18-wheelers carrying the corn were scheduled to unload at the Port with 

the grain going directly into barges. Then we learned that silt had filled the harbor and 

the dredge was heading from up river at Rosedale, Mississippi, to Lake Providence, 

Louisiana, without stopping at Yellow Bend, Arkansas. 

We calculated that the expense of building temporary storage for the corn and 

forfeiting sales contracts would cost Riceland farmers at least $1 million. As many as 

200 farm families would be negatively impacted and the public port of Yellow Bend 

would lose the jobs of 15 employees and approximately $500,000 in revenue. 

Thanks to the good work of Congressman Rick Crawford and Senators John 

Boozman and David Pryor, the Army Corps of Engineers redirected the dredge to 

YellOW Bend. In just a few days, the harbor was opened, and corn barges were being 

filled. 

I present these examples, Mr. Chairman, to illustrate the importance of keeping 

all segments of our transportation system-highways, railroads and rivers-operating in 

an efficient and effective manner. The U.S. transportation system is critical to the 

competitive advantage we have in moving agricultural and food products across the 

country and around the world. 

We must continue to invest in the transportation infrastructure, not just because 

of the impact it has on rice farmers in the Mid-South, but for the economic impact it 

makes on the entire country. 

I thank the panel for your work on this important issue. 
60 


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fi:\ ASSOCIATION OF \j!If!!t,) AMERICAN RAILROADS 

Office of the President 

Edward R. Hamberger 

President and Chief Executive Officer 

October 16, 2013 

The Honorable Jimmy Duncan 

Chairman 

Panel on 21st Century Freight Transportation 

Committee on Transportation and Infrastructure 

2167 Rayburn House Office Building 

House of Representatives 

Washington, DC 20515 

Dear Chairman Duncan: 

On behalf of the freight rail members of the Association of American Railroads (AAR), I 

am writing to request the inclusion of these written comments in the record of the 

October 1, 2013 hearing ofthe Panel on 21 st Century Freight Transportation entitled, 

"Perspectives from Users of the Nation's Freight System." 

Critical Importance of a World Class Freight Transportation System 

The background memo prepared by Committee staff stated that the U.S. economy 

"rel[ies] intrinsically on a highly functioning, efficient, and safe freight transportation 

network. For manufacturing and agriculture businesses to be successful and remain 

competitive with international competitors, we must maintain and improve our 

infrastructure to keep pace with growth in these sectors." 

AAR wholeheartedly agrees. In addition, we would note that all four witnesses who 

testified at the hearing emphasized the vital importance of a safe and efficient freight 

transportation system to their businesses. 

Tom Kadien of International Paper said, "[M]oving our products by rail remains a critical 

part of our supply chain. International Paper is the rail industry's largest U.S. box car 

customer, shipping more than 140,000 carloads by rail in 2012." 

F. Edmond Johnston, III of DuPont stated, "Chemical producers are the second largest 

customer of the nation's freight rail system and rely on railroads to deliver chemicals 
61 


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The Honorable Jimmy Duncan 

October 16, 2013 

Page 2 

efficiently and safely to where they are needed ... American families enjoy the 

necessities and luxuries of life only to the extent that goods move safely and reliably 

over the nation's transportation infrastructure." 

William Roberson of Nucor Steel said, ''The freight transportation system is vitally 

important to Nucor's success. We rely on water, rail, and truck transportation to move 

millions of tons of scrap steel and other raw materials to our steel mills and finished 

products to market.. .. [DJisruptions in the freight transportation system can have 

significant negative economic impacts on our business." 

Bill J. Reed of Riceland Foods stated, "[I]t is imperative that [our] products move within 

a narrow time frame. To accomplish this economically requires a reliable and efficient 

transportation system." 

These four witnesses are hardly alone. Another pertinent example is found in a recent 

study entitled "Agriculture and Railroads: Maintaining a Track Record of Success." The 

study, which was commissioned by the Soy Transportation Coalition, stated: 

U.S. freight railroads are essential to the viability and profitability of the 

U.S. soybean industry. Most of the leading soybean producing states -

even those with river access - significantly depend on the rail industry 

to satisfy customer demands. As more soybean production occurs in 

western states and as export terminals at Pacific Northwest ports 

increasingly position themselves to address growing demand from Asia, 

the dependence on rail will likely become more pronounced. 

Overview 

Our nation's freight railroads do a remarkable job in meeting the needs of an extremely 

diverse set of shippers. On any given day, hundreds of thousands of rail cars are 

moving to and from thousands of origins and destinations. The vast majority of these 

shipments arrive on time, in good condition, with reasonable levels of service, and at 

rates which shippers elsewhere in the world envy. Today, America has the safest, 

most efficient and cost-effective freight railroad industry in the world. 

Toward this end, policymakers should retain the existing balanced regulatory structure 

at the Surface Transportation Board (STB) that protects rail shippers against 

anticompetitive railroad conduct and unreasonable railroad pricing while allowing 

railroads to determine the most efficient routes to use and what services to offer, and to 

set prices that reflect the marketplace. 

Of related importance in maintaining a world class freight rail system, AAR believes that 

policymakers should fully consider the impacts and costs of operating heavier trucks on 

the nation's highways and bridges before considering any changes to those limits. 

Premature congressional support for trucks weighing as much as 97,000 pounds holds 

the potential to exacerbate damage to our roads and bridges, while diverting freight 

cargo away from railroads and adding to highway congestion and pollution. Most 
62 


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The Honorable Jimmy Duncan 

October 16, 2013 

Page 3 

importantly, increasing truck weights without a commensurate increase in highway user 

fees would place railroads, which are investing record levels of private capital into their 

networks, at a competitive disadvantage. 

AAR Perspective on the Need for Balanced Regulation 

Today's balanced regulations work extremely well- for railroads, their customers, and 

the country at large. After decades of decline, attributable in large measure to overregulation for much of the 20th century, enactment of the Staggers Rail Act of 1980 

ushered in a new era. By passing Staggers, Congress recognized that America's 

freight railroads - the vast majority of which are private companies that operate on 

infrastructure that they own, build, maintain, and pay for themselves - face intense 

competition for most of their traffic, but excessive regulation had prevented them from 

competing effectively. To survive, railroads needed a common-sense regulatory system 

that would allow them to act like most other businesses in terms of managing their 

assets and pricing their services. 

The Staggers Rail Act has been a tremendous success. Since it passed into law, 

average rail rates have fallen 42 percent, railroads are far safer than ever before, rail 

traffic volume has nearly doubled, and railroads have reinvested $525 billion - in 

private funds, not governrnent money - growing and modernizing this country's rail 

network. That's more than 40 cents out of every rail revenue dollar. 

Indeed, railroads have heeded President Obama's call for U.S. companies to "get off 

the sidelines and invest." In 2012 alone, the Class I railroads invested a record $25.5 

billion back into a world class rail network that keeps our economy moving. Railroads 

are projecting similar investment levels in 2013. 

As America's economy grows, the need to move more people and goods will grow too. 

Recent forecasts reported by the Federal Highway Administration found that total U.S. 

freight shipments will rise from an estimated 17.6 billion tons in 2011 to 28.5 billion tons 

in 2040 - a 62 percent increase. Railroads are getting ready today to meet this 

challenge. They will continue to reinvest huge amounts back into their systems, but if 

the United States is to have the optimal amount of rail capacity for the nation's 

economy, keeping reasonable regulations must be part of the mix. 

At a time when the pressure to reduce government spending on just about everything -

including transportation infrastructure - is enormous, it would make no sense to enact 

public policies that discourage private investment in rail infrastructure that boost our 

economy and enhance our competitiveness. Punitive regulatory changes at the STB 

would have the effect of reducing railroad earnings and cutting return on investment, 

leading to disinvestment in the railroads' networks, reduced capacity and less reliable 

service. In the end, these changes would cause the rail sector to either shrink or to 

seek government subsidies. 

The huge public benefits associated with moving more freight by rail are clear. Because 

railroads, on average, are four times more fuel efficient than trucks, less fuel is 
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The Honorable Jimmy Duncan 

October 16, 2013 

Page 4 

consumed. Reduced fuel consumption means less pollution. And because a single 

train can carry the freight of several hundred trucks, carrying freight by rail means less 

congestion on the nation's highways and fewer public dollars needed to build and 

maintain those highways. 

Preemptive Attack on Study of Impacts and Costs of Heavier Trucks 

Notwithstanding the critical importance of a world class freight rail system to its 

business, one witness at the hearing testified in favor of preempting a congressionally 

required study of the impacts and costs of operating heavier trucks on the nation's 

highways and bridges. 

In particular, Mr. Kadien called upon the Panel to include a recommendation raising 

truck weights to 97,000 pounds in its upcoming report to the full House Committee on 

Transportation and Infrastructure. 

AAR Perspective on Truck Weight Issues 

The International Paper proposal would increase maximum truck weights by more than 

20 percent. Doing so would likely cause far more damage to our nation's already overburdened roads and bridges. 

As it is, the fuel and other taxes and fees devoted to highway construction and 

maintenance that heavy trucks pay fail to cover the costs of the highway damage 

caused by trucks. Previous studies have found that trucks only pay for about 80 percent 

of the damage they cause to our highways. The shortfall - estimated at $2 billion or 

more per year - has to be covered by other taxpayers. Allowing heavier trucks on our 

highways would make this disparity even more egregious and force taxpayers to reach 

even deeper into their pockets. 

The massive economic toll of heavier trucks would likely extend to communities and 

commerce as well. Roads and bridges are built to sustain existing vehicle weights, and 

many are crumbling - even under current circumstances. One in every four U.S. 

bridges is already structurally deficient or functionally obsolete, according to the Federal 

Highway Administration. Repairing these structures would cost nearly $200 billion, 

without accounting for the added extensive damage brought on by even heavier trucks. 

The additional cost of repairing bridge damage caused by raising truck weights to 

97,000 pounds could be as much as $65 billion, according to the Department of 

Transportation. 

Raising truck weights to 97,000 pounds could also result in eight million additional 

truckloads on U.S. highways, academic studies show. Our roads - key arteries of our 

national infrastructure - cannot weather this sort of damage. 

Another aspect that should not be overlooked is the potential for increased truck weight 

limits to financially cripple many of the over 500 short line freight railroads across our 

country. These smaller, Class III freight carriers provide a critical "first - mile, last-
64 


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The Honorable Jimmy Duncan 

October 16, 2013 

Page 5 

mile" connectivity between many rural (and often agriculturally focused) areas of our 

country and the national rail freight network. It has been well demonstrated, both in 

actual practice in states that have increased truck weight limits on local highways and in 

rigorous modal diversion studies, that heavier trucks do indeed divert shipments off of 

short line railroads and onto our highway network. Loss of shipments and revenues to 

these smaller rail operators could financially cripple them, and lead to a loss of rail 

services to areas dependent upon these lines. 

For these reasons, we believe that at this time neither the Panel on 21st Century Freight 

Transportation nor individual Members of Congress should endorse longer or heavier 

trucks. The U.S. Department of Transportation is presently conducting a 

comprehensive truck size and weight study mandated by MAP-21, and now is not the 

time to act on raising maximum truck weights. 

Finally, I request that my previous testimony before this Panel dated June 26, 2013 at a 

hearing entitled "How Logistics Facilitate an Efficient Freight Transportation System" be 

appended by reference to this statement and also included as part of the record. That 

statement addresses a number of other issues, including the importance of good 

intermodal connections to the success of freight rail's role in the supply chain. 

Thank you for considering the views of the Association of American Railroads. 

Sincerely, 

Edward R. Hamberger 

President & CEO 

cc: Members of the Panel on 21 st Century Freight Transportation 
65 


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TESTIMONY OF 

EDWARD R. HAMBERGER 

PRESIDENT & CHIEF EXECUTIVE OFFICER 

ASSOCIATION OF AMERICAN RAILROADS 

BEFORE THE 

UNITED STATES HOUSE OF REPRESENTATIVES 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

PANEL ON 21 ST CENTURY FREIGHT TRANSPORTATION 

HEARING ON HOW LOGISTICS FACILITATE 

AN EFFICIENT FREIGHT TRANSPORTATION SYSTEM 

JUNE 26, 2013 

Association of American Railroads 

425 Third Street, S.W. 

Washington, DC 20024 

202-639-2100 
66 


Insert offset folio 39 here 85056.039

Introduction 

On behalf of the members of the Association of American Railroads, thank you for the 

opportunity to discuss logistics, multi-modalism, and freight transportation. AAR freight 

railroad members, which include the seven large U.S. Class I railroads as well as approximately 

170 U.S. short line and regional railroads, account for the vast majority of freight railroad 

mileage, employees, and traffic in Canada, Mexico, and the United States. Amtrak and several 

commuter railroads are also members of the AAR. 

No country can be a first-rate economic power without having first-rate logistics and 

freight transportation capabilities. I commend this panel for recognizing this point and for your 

efforts to find ways to ensure that we have world-best logistical capabilities. 

To be sure, there is a tremendous amount of strength and flexibility in our nation's freight 

transportation systems - more so than in any other country in the world. It's also clear, 

however, that our nation faces significant challenges in maintaining the freight-moving 

capability we have today and continuing to improve it to meet the even greater needs of 

tomorrow. Recent forecasts reported by the 

Federal Highway Administration have found 

that, thanks to population growth and 

economic growth, total U.S. freight 

shipments will rise from an estimated 17.6 

billion tons in 2011 to 28.5 billion tons in 

2040 - a 62 percent increase. 

Demand For Freight Transportation To Rise Sharply 

(bitlions of tons transported in U.S.) 

2011 

2020p 1111111111. 

2030p III1IIIIIIIII 

2040p 285 bll 

America's freight railroads are doing their part now - through record private 

investments in infrastructure and equipment, the development and implementation of innovative 

technologies, and operational enhancements - to ensure that they have adequate railroad 

Association of American Railroads Page 1 of 18 
67 


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capacity tomorrow to meet their customers' needs. Looking ahead, railroads must be able to 

both maintain their extensive existing infrastructure and equipment and build the substantial new 

capacity that will be required to transport the significant additional traffic our economy will 

generate. That's why legislative or regulatory actions that restrict the rail industry's ability to 

invest would have negative capacity, efficiency, safety, and service reliability consequences. 

The Transportation Backbone of America 

America's freight railroads and their 140,OOO-mile 

network serve nearly every industrial, wholesale, retail, 

and resource-based sector of our economy. In fact, our 

railroads carry just about everything. 

Railroads carry more coal than any other single 

commodity. Historically, coal has generated much more 

electricity than any other fuel source, and most coal is 

delivered to power plants by rail. But railroads also carry 

North America's Rail Network 

enormous amounts of corn, wheat, and soybeans; fertilizers, plastic resins, and a vast array of 

other chemicals; cement, sand, and crushed stone to build our highways; lumber and drywall to 

build our homes; animal feed, canned goods, corn syrup, 

frozen chickens, beer, and countless other food 

products; steel and other metal products; crude oil, 

liquefied gases, and many other petroleum products; 

newsprint, recycled paper and other paper products; 

autos and auto parts; iron ore for steelmaking; wind 

turbines, airplane fuselages, machinery and other industrial equipment; and much more. 

Association of American Railroads Page 2 of 18 
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Rail intermodal- the transport of shipping containers and truck trailers on railroad 

flatcars - has grown tremendously over the past 25 years. Today, just about everything you 

find on a retailer's shelves may have traveled on an intermodal train. Increasing amounts of 

industrial goods are transported by intermodal trains as well. 

Given the volume of rail freight (close to two billion tons and 30 million carloads in a 

typical year) and the long distances that freight moves by rail (nearly 1,000 miles, on average), 

it's hard to overstate freight railroads' role in our economy. The rail share of freight ton-miles is 

about 40 percent, more than any other transportation mode. But freight rail's contribution to our 

nation extends far beyond that: 

• Thanks to competitive rail rates - 44 percent lower, on average, in 2012 than in 19801 

and the lowest among major industrialized countries - freight railroads save consumers 

billions of dollars every year, making U.S. goods more competitive here and abroad and 

improving our standard ofliving. 

• Railroads are, on average, four times more fuel efficient than trucks. That means that 

moving freight by rail helps our enviromnent by reducing energy consumption, pollution, 

and greenhouse gases. 

• Because a single train can carry the freight of several hundred trucks enough to 

replace a 12-mile long convoy of trucks on the highways - railroads cut highway 

gridlock and reduce the high costs of highway construction and maintenance. 

• America's freight railroads are privately owned and operate almost exclusively on 

infrastructure that they own, build, maintain, and pay for themselves. When railroads 

reinvest in their networks - which they've been doing in record amounts in recent years 

- it means taxpayers don't have to. 

• Railroads are safe and getting safer: 2012 was the safest year in history for railroads, 

breaking the record set in 2011, which in tum broke the record set in 2010. 

• America's freight railroads sustain 1.2 million jobs, including 180,000 high-paying jobs 

in the freight rail industry itself. Millions of other Americans work in industries that are 

more competitive in the global economy thanks to the affordability and productivity of 

America's freight railroads. 2 

1 As measured by inflation-adjusted revenue per ton-mile. 

2 For much more background on the U.S. freight rail industry, see my March 5, 2013 testimony to the Subcommittee 

on Railroads, Pipelines, and Hazardous Materials of the Committee on Transportation and Infrastructure. 

Association of American Railroads Page 3 of 18 
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For all these reasons, I respectfully suggest that it is in the public interest to enact policies 

that result in more freight moving by rail. 

Freight Rail as a Complement to Trucks 

No one, and certainly not railroads, disputes that motor carriers are absolutely 

indispensable to our economy and quality oflife, and will remain so long into the future. That 

said, because of the enormous cost involved in building new highways, as welJ as environmental 

and land use concerns, it is highly unlikely 

that sufficient highway capacity can be built 

to handle expected future growth in freight 

transportation demand. As it is, over the past 

Highway Expansion Hasn't Come Close to Keeping 

Up With Increased Highway Travel 

2~ ,---------------------------------, 

200 

180 

160 

30 years, highway traffic volume growth has 140 

far eclipsed growth in highway lane-miles 

(see nearby chart), and there is little reason 

to think that will change in the years ahead. 

80 ,---~"-------~----~~~----~--------

'81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 ~5 '07 09 '11 

Source:FHWA 

The United States has the world's most highly developed highway network, built and 

maintained at enormous public cost over the years. According to data from the FHW A, in 2011 

alone, states disbursed $94 billion just on capital outlays and maintenance for highways.3 

Adding in other expenses such as administration and planning, law enforcement, interest, and 

grants to local governments brings total disbursements for highways to $150 billion in 2011. 

Even this huge level of spending, however, is widely considered inadequate to meet present-day, 

much less future, needs. 

3 Federal Highway Administration, Highway Statistics 2011, Table SF-2, 

Association of American Railroads Page 4 of 18 
70 


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Fortunately, freight rail in general, and intermodal rail specifically, represents a viable 

and socially beneficial complement to highway freight movement. Today, rail intermodal takes 

millions of trucks off our highways each year, and its potential to playa much larger role in the 

future is enormous, both in traditional 

U.S. Raillntermodal Traffic: 1990-2012 

(millions of containers and trailers) 

13 transcontinental markets and in short- and 

12 In 11 

10 Total 

9 

8 

7 ----: 

6 

middle-distance lanes. In the context of 

ports, railroads offer tremendous potential 

5 

4 in safely and efficiently moving freight to 

3 

and from port facilities, thereby greatly 2 Trailers 1 

0 ••• 

enhancing overall transportation '90 '92 '94 '96 '98 '00 '02 '04 '06 '06 '10 '12 

Source:AAR 

productivity. In addition, a significant 

portion of the merchandise that railroads transport in their carload business (in addition to 

intermodal containers or trailers) is directly truck competitive. 

Shippers choose to move this freight on railroads because they find that the value 

railroads offer, in terms of cost and service, is superior. Railroads recognize that they will have 

to continue to work hard to earn this business, which is why they are constantly searching for 

ways to further improve productivity, reduce costs for their customers, and enhance their service 

offerings. 

This does not mean that we should stop building highways or that we should no longer 

recognize the importance of trucks and highways in meeting our nation's transportation needs, 

but it does mean that policymakers should be doubly aware of the role railroads play, and can 

play, in our nation's logistical network. 

Association of American Railroads PageS ofl8 
71 


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First-Mile and Last-Mile Connections 

One of the main reasons why the United States has the world's most efficient total freight 

transportation system is the willingness and ability of firms associated with various modes to 

work together in ways that benefit their 

customers and the economy. Policymakers 

can help this process by implementing 

programs that improve "first mile" and "last 

mile" connections where freight is handed 

off from one mode to another - for 

example, at ports from ships to railroads or 

from ships to trucks, or from railroads to 

trucks at intermodal terminals. These connections are highly vulnerable to disruptions, and 

improving them would lead to especially large increases in efficiency and fluidity and forge a 

stronger, more effective total transportation package. 

Railroads are gratified that the current administration and legislators in both parties and 

in both houses of Congress have shown a strong commitment to multi-modalism. That's 

evidenced, for example, in the evaluation and selection process for TIGER grants. To date, 

several dozen projects that have received TIGER grant funding have been associated in one way 

or another with freight railroads, and many of those projects are aimed at improving 

transportation performance by more effectively integrating different transportation modes. 

Some intermodal connection infrastructure projects that are of national and regional 

significance in terms of freight movement could be too costly for a local government or state to 

fund. Consequently, federal funding awarded through a competitive discretionary grant process, 

like the TIGER program, has been an appropriate approach for these needs. 

Association of American Railroads Page 6 of 18 
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Attention to first- and last-mile connections is a critical element of both local and state 

freight planning and policy as well. At the local level, for example, land use planning has been 

largely inadequate in appropriately accommodating the needs of freight. Freight movementwhether in rail yards, intermodal facilities, ports, or regional distribution - must be sufficiently 

taken into acconnt when planning land uses such as residential developments, schools, and 

recreational areas. 

Logistics and Globalization 

One of the distinguishing characteristics of our economy in recent years is sharply 

increasing globalization. In 2000, for example, the value of U.S. exports of goods (as opposed to 

services) was $843 billion. In 2012, it was $1.3 trillion, a 54 percent increase. In 2000, the 

value of U.S. imports of goods was $1.4 trillion. In 2012, it was $1.9 trillion, a 36 percent 

increase. Products and commodities 

across the industrial landscape have 

U.S. Exports 

2000 2012 %chng 

been part of this increased Chemicals ($ bil) $77.6 $188.3 142% 

Automotive veh. & parts ($ bil) $80.4 $146.3 82% 

globalization. The table at right Consumer goods elCCl. autos ($ bil) $89.4 $181.4 103% 

Civilian aircraft & parts ($ bil) $48.1 $94.0 95% 

shows just a few examples of growth Soybeans (mil bushels)* 973 1,362 40% 

*Production year Source: USDA, SEA, ACC 

in U.S. exports in recent years. 

Railroads have played a key role in this globalization. We estimate, for example, that 

railroads account for approximately one-third of U.S. exports, and that approximately half of 

U.S. rail intermodal traffic consists of exports or imports. 

There's no doubt that globalization will continue, and railroads are working hard to 

ensure that they can continue to playa crucial role. The expansion of the Panama Canal is a case 

in point. As you probably know, the Panama Canal currently has two lock chambers, the 

Association of American Railroads Page 7 of 18 
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dimensions of which limit thc size of container ships that can traverse the canal. So-called 

"Panamax" ships, the largest ships that can currently use the canal, can carry a maximum of 

around 4,500 containers. However, a larger third lock chamber is under construction - with 

completion likely in 2015 - that will allow much larger ships to pass through. These larger 

"post-Panamax" ships will be able to carry up to approximately 12,500 containers, or nearly 

three times the maximum number carried by existing ships that use the canal. 

The big unknown is where ships carrying cargo that are bound for, or coming from, the 

eastern part of the United States will go. Today, a significant portion of the cargo from Asia 

destined for the eastern part of the United States is offloaded at West Coast ports (such as Los 

Angeles, Long Beach, Seattle, Tacoma, Vancouver, or Prince Rupert in British Columbia), and 

then transported inland on trucks, railroads, or, in some cases, rivers. Going the other way, cargo 

headed to Asia from the eastern part of the 

United States often travels via rail or truck 

to West Coast ports, where it is loaded onto 

ships heading west. 

It is not uncommon for existing 

Panamax (or smaller) ships coming from 

Asia with cargo bound for the eastern 

United States, as well as ships with cargo 

from the eastern United States heading to Asia, to go through the Panama Canal on an "allwater" route, rather than use the land bridge (via truck or rail) across the country described in the 

previous paragraph. Some observers believe that the huge capital costs of the newer vessels and 

other factors will cause these ships to remain primarily on routes to the West Coast. Many 

Association of American Railroads Page8of18 
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others, though, think that a post-Panamax ship is just as likely to find it cost effective to use the 

"all-water" route to or from the eastern United States. Of course, if an all-water route is to be 

used, the eastern ports must be able to handle the post-Panamax vessels, which is the rationale 

for the efforts by a number of ports on the East Coast, the Southeast, and the Gulf of Mexico to 

dredge deeper channels, install new cranes, and/or build new dock capacity to accommodate 

post-Panamax ships. Meanwhile, ports on the West Coast are pursuing many of these same 

kinds of improvements to better position themselves as the preferred destination for ocean 

carriers even after the canal expansion is complete. 

Frankly, I don't know which ports will be the "winners" and which will be the "losers" of 

this competitive battle. I do know, though, that from the point of view of our nation's rail 

industry as a whole, it doesn't really matter. The fact is, whether the freight is coming into or 

leaving from Long Beach or Savannah or Miami or Houston or Seattle or Norfolk or any other 

major port, our nation's freight railroads are in a good position now, and are working diligently 

to be in an even better position in the future, to offer the safe, efficient, cost-effective service that 

their customers at ports and elsewhere want and need. 

In a June 4, 2012 interview, in response to a question about the Panama Canal expansion, 

the CEO of Norfolk Southern said, "We are preparing and planning so that if the traffic comes in 

from the East and needs to move inland, we'll be there to handle it. If the traffic comes in from 

the West and comes to a western gateway with one of the western carriers, we'll be ready to 

handle it.'>'! He was speaking on behalf of his railroad, but his statement applies equally well to 

the rail industry as a whole. I'm confident that railroads will be "ready to handle it." 

4 "Q&A with Wick Moorman, CEO of Norfolk Southern," The Virginian-Pilot, June 4, 2012. 

Association of American Railroads Page 90f18 
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Sound Public Policy is Needed 

As noted earlier, as America's economy and population grow, the need to move more 

people and goods will grow too. Railroads are getting ready today to meet this challenge. 

In recent years, railroads have been reinvesting more private capital than ever before in 

their infrastructure and equipment, 

U.S. Freight Railroad Spending 

including a record $25.5 billion in 2012. on Infrastructure & Equipment" $25.5 ($ billions) From 1980 through 2012, 

America's $23.3 freight railroads 

reinvested$525 bUlion to 

maintain $21.5 and improve their $20.8 tracks and equipment. $20.2 $20.2 $19.3 

From 2008 to 2012, Class I railroads 

purchased 2,669 new state-of-the-art 

$16.7 $16.7 

locomotives and rebuilt another 845 $15.5 

locomotives to improve their 

- - '-- - - '-

capabilities. Over the same time period, 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

'Capital spending + maintenance expenses. Data are for Class j railroads. Source: AAR 

railroads installed nearly 77 million new 

crossties, installed 2.9 million tons of new rail, and placed nearly 61 million cubic yards of 

ballast. Railroads in recent years have also devoted substantial resources to developing and 

implementing innovative new technologies. These investments have made railroads much safer 

and much more efficient and productive. The entire logistics chain benefits. 

In the years ahead, railroads will continue to reinvest huge amounts back into their 

systems to help ensure that they can continue to help their customers grow, but if the United 

States is to have the socially optimal amount of rail capacity, sound public policy is needed. 

First, policymakers should keep the current system of balanced rail regulation in place. 

The global superiority of U.S. freight railroads is a direct result of a regulatory system, embodied 

in the Staggers Rail Act of 1980, that relies on market-based competition to establish most rail 

rate and service standards. The Staggers Act did not eliminate government oversight. 

Government regulators today still can take action, including setting maximum-allowable rail 

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rates. However, Staggers allowed railroads to act more like other businesses in terms of deciding 

for themselves how to utilize their assets and price their services. 

This balanced regulation has allowed railroads to improve their financial performance 

from anemic levels prior to Staggers to higher levels today, which in turn has allowed them to 

plow back hundreds of billions of dollars into improving the performance of their infrastructure 

and equipment - to the immense benefit of their customers and our nation at large. 

Unfortunately, some special interests are calling for a return to the days of unbalanced 

and unreasonable regulation that would force railroads to artificially cut their rates to belowmarket levels to certain favored shippers. A few shippers might benefit, but at the expense of all 

other shippers, rail employees, and the public at large. 

Trucks, airlines, and barges operate over highways, airways, and waterways that the 

government largely pays for. By contrast, America's freight railroads pay nearly all of the costs 

of their tracks, bridges, and tunnels themselves. To keep their networks in top condition and to 

build the new capacity that America will need in the years ahead, railroads must be able to earn 

enough to pay for it. Artificially cutting rail earnings would severely harm railroads' ability to 

do this. It would mean less new rail capacity and less reliable rail service, negatively affecting 

the entire U.S. logistics chain. At a time when the pressure to reduce government spending on 

just about everything - including transportation infrastructure - is enormous, it makes no 

sense to enact public policies that would discourage private investments in rail infrastructure that 

would boost our economy and enhance our competitiveness. 

Second, where there is voluntary agreement between public and private sector 

stakeholders, policymakers should encourage and facilitate public-private partnerships for freight 

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railroad infrastructure improvement projects where the fundamental purpose of the project is to 

provide public benefits or meet public needs. 

Public-private partnerships - arrangements under which private freight railroads and 

government entities both contribute resources to a project - offer a mutually beneficial way to 

solve critical transportation problems. When more people and freight move by rail, the public 

benefits tremendously through lower shipping costs, reduced highway gridlock, enhanced 

mobility, lower fuel consumption, lower greenhouse gas emissions, and improved safety. Such 

voluntary partnerships allow governments to expand the use of rail, paying only for the public 

benefits of a project. Meanwhile, host freight railroads pay for the benefits they receive. It's a 

win-win for all involved. 

Many members of this panel recently saw firsthand 

one of the nation's pre-eminent railroad public-private 

partnerships: the Alameda Corridor. That project combined 

public and private financing and ultimately facilitated 

enormous port growth and efficient rail operations while 

reducing the effects of freight movments on local 

communities and delivering significant environmental 

benefits. 

Without a partnership, many projects that promise 

substantial public benefits (such as reduced highway congestion by taking trucks off highways, 

or increased rail capacity for use by passenger trains) in addition to private benefits (such as 

enabling faster freight trains) are likely to be delayed or never started at all because neither side 

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can justifY the full investment needed to complete them. The benefits from these projects 

therefore remain essentially trapped until cooperation makes them feasible. 

With public-private partnerships, the public entity devotes public dollars to a project 

equivalent to the public benefits that will accrue. Private railroads contribute resources 

commensurate with the private gains expected to accrue. As a result, the universe of projects that 

can be undertaken to the benefit of all parties is significantly expanded. 

Third, we urge policymakers to make environmental and other reviews more efficient. 

Under existing law, state and local regulations (other than local health and safety regulations) 

that unreasonably interfere with rail operations are preempted by federal regulations. These 

federal regulations protect the public interest while recognizing that railroads form an integrated, 

national network that requires a uniform basic set of rules to operate effectively. 

Nevertheless, rail expansion projects often face vocal opposition from members of 

affected local communities or even larger, more sophisticated special interest groups from 

around the country. In many cases, railroads face a classic "not-in-my-backyard" problem, even 

for projects for which the benefits to a locality or region far outweigh the drawbacks. In the face 

of local opposition, railroads try to work with the local community to find a mutually satisfactory 

arrangement, and these efforts are usually successful. When agreement is not reached, however, 

projects can face lawsuits, seemingly interminable delays and sharply higher costs. A number of 

major rail intermodal terminal projects that yield tremendous gains for the overall logistical 

system, for example, have been and continue to be unduly delayed. Just one of the many 

examples involves an intermodal terminal BNSF Railway has been trying to build for years near 

the ports of Long Beach and Los Angeles. This facility would eliminate millions of truck miles 

annually from local freeways in Southern California, while utilizing state-of-the-art 

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environmentally friendly technology such as all-electric cranes, ultra-low emissions switching 

locomotives, and low-emission yard equipment. It would be one of the "greenest" such facilities 

in the world, but the project continues to face court actions and other protests. 

Policymakers can help improve the movement of freight by taking steps to shorten the 

time it takes for reviews of rail expansion projects in ways that do not adversely affect the 

quality of those reviews. 

Fourth, truck size and weight limits on federal highways were frozen by Congress in 

1991, largely because ofconcems about the safety of longer and heavier trucks and the 

uncompensated highway and bridge damage they cause. Legislation has been proposed many 

times since 1991 that would increase allowable truck sizes and weights on federal highways. To 

date, these attempts have failed because the concerns that led to the federal limits in the first 

place are still valid. Most recently, the 11th Congress rejected proposals to increase maximumallowable truck weights to 97,000 pounds. Instead, MAP-21 directed the U.S. Department of 

Transportation to conduct a comprehensive two-year study to examine the impacts of trucks 

exceeding current federal size and weight limits. We urge policymakers to defer consideration 

of any truck size and weight legislation until the congressionally mandated study is completed. 

Freight Transportation Modes Should Pay Their Own Way 

The truck size and weight issue is related to a broader point: as a general rule, the 

various freight transportation modes should pay their own way. The traditional connection in 

which users of freight infrastructure pay for that infrastructure should not be broken. 

As noted above, America's freight railroads pay virtually all ofthe costs oftheir tracks, 

bridges, and tunnels themselves. Trucks, airlines, and barges, however, operate over highways, 

airways, and waterways that the government largely pays for. Today, for example, 80,000-

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pound trucks pay only about 80 percent ofthe cost of the damage they cause to taxpayer-funded 

roads and bridges, while trucks weighing 80,000 to 100,000 pounds pay for only around half of 

the damage they cause. This huge underpayment, which totals several billion dollars per year, 

means that repairing much of the highway and bridge damage caused by heavy trucks is paid for 

by the general public, not by the trucking companies themselves. As the Government 

Accountability Office (GAO) has pointed out, the existence of underpayments "distorts the 

competitive environment by making it appear that heavier trucks are a less expensive shipping 

method than they actually are and puts other modes, such as rail and maritime, at a 

disadvantage."s 

Moreover, under current projections, revenues to the Highway Trust Fund (HTF) will 

continue to decline relative to projected needs. Funding shortfalls in the HTF in recent years 

have caused the federal government to transfer some $55 billion in general fund revenues to 

meet contract obligations and authorized funding levels. Absent the addition of new revenue 

streams, general fund transfers are expected to be required in the future as well - perhaps as 

high as $15 billion annually.6 These transfers directly benefit the railroad industry's major 

competitor, which is trucking. Combined with the existing huge truck underpayments noted 

earlier, these transfers are an enonnous competitive hurdle that railroads must overcome and they 

artificially distort the freight transportation marketplace. 

5 U.S. Government Accountability Office, "Freight Transportation: National Policy and Strategies Can Help 

Improve Freight Mobility," GAO-08-287, January 2008, p. 16. Proponents of lifting the existing freeze on truck 

sizes and weights sometimes claim that they support higher taxes to pay for the additional damage heavier trucks 

would cause. However, the additional taxes these proponents are willing to pay are vastly lower than what is needed 

to make up for the huge underpayments. 

6 According to a December 2012 report from the Congressional Research Service, general fund contributions 

include $8 billion in FY 2008, $7 billion in FY 2009, and another $14.7 billion (Plus an additional $4.8 billion to the 

transit account) via legislation passed in 2010. MAP-21 calls for general fund transfers of$6.2 billion and $12.6 

billion for FY 2013 and FY 2014, respectively. Congressional Research Service, "Funding and Financing Highways 

and Public Transportation," December 26, 2012. Report R42877. 

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Positive Train Control 

The term "positive train control" (PTC) describes technologies designed to automatically 

stop or slow a train before certain accidents caused by human error occur. The Rail Safety 

Improvement Act of2008 (RSIA) requires passenger railroads and U.S. Class I freight railroads 

to install PTC by the end of2015 on main lines used to 

transport passengers or toxic inhalation materials (TIH). 

Specifically, PTC as mandated by Congress must be 

designed to prevent train-to-train collisions; derailments 

caused by excessive speed; unauthorized incursions by trains 

onto sections of track where maintenance activities are 

taking place; and the movement of a train through a track 

switch left in the wrong position. 

Positive train control is an unprecedented 

technological challenge. A properly functioning, fully interoperable PTC system must be able to 

determine the precise location, direction, and speed of trains; warn train operators of potential 

problems; and take immediate action if the operator does not respond to the waming provided by 

the PTC system. For example, if a train operator fails to begin stopping a train before a stop 

signal or slowing down for a speed-restricted area, the PTC system would apply the brakes 

automatically before the train passed the stop signal or entered the speed-restricted area. 

Such a system requires highly complex technologies able to analyze and incorporate the 

huge number of variables that affect train operations. A simple example: the length of time it 

takes to stop a train depends on train speed, terrain, the weight and length of the train, the 

number and distribution oflocomotives and loaded and empty freight cars on the train, and other 

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factors. A PTC system must be able to take all of these factors into account automatically, 

reliably, and accurately to safely stop the train. 

Freight railroads have enlisted massive resources to meet the PTC mandate. They've 

retained more than 2,200 additional signal system personnel to implement PTC, and to date have 

collectively spent approximately $3 billion of their own funds on PTC development and 

deployment. Class r freight railroads expect to spend an additional $5 billion before 

development and installation is complete. Currently, the estimated total cost to freight railroads 

for PTC development and deployment is around $8 billion, with hundreds of millions of 

additional dollars needed each year after that to maintain the system. 

Despite railroads' best efforts, due to PTC's complexity and the enormity ofthe 

implementation task - and the fact that much of the technology PTC requires simply did not 

exist when the PTC mandate was passed and has been required to be developed from scratch -

much technological work remains to be done. 

Railroads also face non-technological barriers to timely PTC implementation. For 

example, railroads are involved in discussions with the Federal Communications Commission 

regarding ways to streamline the currently unworkable process by which thousands of PTe 

antenna structures must obtain regulatory approval prior to installation. Unless that process 

changes, the timeline for ultimate deployment ofPTC will be delayed significantly. Moreover, 

current FRA regulations pertaining to PTe implementation impose operational restrictions so 

severe that the fluidity of the rail network would be drastically impaired. It is important to 

resolve these issues, and the AAR appreciates that the FRA is considering them in a current 

rulemaking proceeding. 

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In addition to the challenges presented by both the FCC and FRA issues, the key 

unresolved question is, does the system work. Railroads need adequate time to ensure that this is 

the case. In that regard, the current PTC implementation deadline mandated by the RSIA should 

be extended by at least three years from December 31,2015, to December 31,2018. Given the 

unprecedented nature ofPTC and the uncertainties - both known and unknown - flexibility 

beyond December of 20 18 should also be addressed, with the authority for that flexibility 

residing with the Secretary of the Department of Transportation. Additionally, we believe that, 

in order to ensure that railroads can operate safely and efficiently with the PTC system, the 

imposition of PTC-related operational requirements and associated penalties should be deferred 

until all PTC systems are fully integrated and testing has been completed. 

Conclusion 

America today is connected by the most efficient, affordable, and environmentallyresponsible freight rail system in the world. Whenever Americans grow something, eat 

something, export something, import something, make something, turn on a light, or get dressed, 

it's likely that freight railroads were involved somewhere along the line. Looking ahead, 

America cannot prosper in an increasingly competitive global marketplace, and freight logistics 

will suffer accordingly, if we do not maintain our best-in-the-world freight rail system. 

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