```

[Senate Hearing 114-206]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-206

FREIGHT RAIL TRANSPORTATION: ENHANCING SAFETY, EFFICIENCY, AND COMMERCE

=======================================================================

                                 HEARING

                               	BEFORE THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 28, 2015

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation
                             
                             
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      SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                   JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
DEAN HELLER, Nevada                  JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               GARY PETERS, Michigan
STEVE DAINES, Montana
                    David Schwietert, Staff Director
                   Nick Rossi, Deputy Staff Director
                    Rebecca Seidel, General Counsel
                 Jason Van Beek, Deputy General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
       Clint Odom, Democratic General Counsel and Policy Director
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on January 28, 2015.................................     1
Statement of Senator Thune.......................................     1
Statement of Senator Nelson......................................     3
    Prepared statement...........................................     4
Statement of Senator Blunt.......................................    37
Statement of Senator Cantwell....................................    39
Statement of Senator Gardner.....................................    40
Statement of Senator McCaskill...................................    41
Statement of Senator Fischer.....................................    42
Statement of Senator Daines......................................    44
Statement of Senator Markey......................................    47
Statement of Senator Moran.......................................    49
Statement of Senator Manchin.....................................    49
Statement of Senator Klobuchar...................................    51
Statement of Senator Peters......................................    56
Statement of Senator Johnson.....................................    58
Statement of Senator Blumenthal..................................    61

                               Witnesses

Frank Lonegro, Vice President, Service Design, CSX 
  Transportation, Inc............................................     5
    Prepared statement...........................................     7
David A. Brown, Chief Operating Officer, Genesee & Wyoming Inc...    16
    Prepared statement...........................................    18
Bill Johnson, former Director, PortMiami; and former Chair, 
  Florida Ports Council..........................................    21
    Prepared statement...........................................    23
Michelle Teel, P.E., Multimodal Operations Director, Missouri 
  Department of Transportation...................................    25
    Prepared statement...........................................    27
    Letter dated November 14, 2014 from the National Radio 
      Passenger Corporation......................................    28
    Letter dated December 23, 2014 from the Missouri Department 
      of Transportation..........................................    29
Chris Jahn, President, The Fertilizer Institute..................    30
    Prepared statement...........................................    31

                                Appendix

National Association of Railroad Passengers, prepared statement..    63
Response to written questions submitted by Hon. John Thune to:
    Frank Lonegro................................................    64
    Chris Jahn...................................................    70

 
                      FREIGHT RAIL TRANSPORTATION:
                     ENHANCING SAFETY, EFFICIENCY
                              AND COMMERCE

                              ----------                              

                      WEDNESDAY, JANUARY 28, 2015

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:03 a.m. in 
room SR-253, Russell Senate Office Building, Hon. John Thune, 
Chairman of the Committee, presiding.
    Present: Senators Thune [presiding], Nelson, Blunt, 
Fischer, Moran, Johnson, Gardner, Daines, Cantwell, McCaskill, 
Klobuchar, Blumenthal, Markey, Manchin, and Peters.

             OPENING STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    The Chairman. This hearing in the Commerce, Science, and 
Transportation Committee will come to order and we're delighted 
to have a great panel here to talk about railroad issues.
    As 2013 and 2014's freight rail delays and service 
challenges highlighted, rail service is absolutely critical to 
our Nation's economy. South Dakota farmers scrambled to find 
rail cars and watched as rail turn times worsened, delaying 
shipments and creating grain shortage challenges for the 
record-breaking wheat, corn and soybean crops that we've had in 
our state.
    However, those delays were not just limited to the north 
central United States; they also extended across the country 
and impacted every shipping sector and industry. Thankfully, 
this winter's relatively mild weather and better service have 
provided some improvements, but there's still work that needs 
to be done.
    I was pleased that Genesee & Wyoming, the parent company of 
South Dakota's Rapid City, Pierre and Eastern Railroad has 
joined us for today's hearing. I look forward to hearing from 
Dave Brown, the Chief Operating Officer of Genesee & Wyoming, 
which is the largest Class II railroad in the country with over 
100 short line and regional railroads, about the opportunities 
and challenges the RCP&E and other short line railroads face.
    From automobiles, to coal, to ethanol, to agriculture, rail 
service moves goods from farm and factory to consumer 
marketplaces across the country and across the globe. The U.S. 
Department of Transportation notes that freight rail moves 
roughly 40 tons per person each year. As a Nation, we rely on 
cost-efficient, timely service to move food, consumer products, 
and energy resources on a daily basis.
    The private infrastructure that makes up our Nation's 
freight rail system is costly, as old tracks and equipment 
require ongoing maintenance and investment. Our nation's 
railroads continue to invest in new track, sidings, locomotives 
and car resources with the goal of serving their customers. 
Class I railroads and short lines alike face increasing demands 
for prompt, reliable and safe service.
    In 2014, freight traffic increased nearly 5 percent over 
2013 levels, and we should seek solutions that foster an even 
stronger freight rail network to meet this increasing demand.
    The Federal Railroad Administration has proposed or 
finalized over 15 new freight rail safety rules since the 
passage of the Rail Safety Improvement Act of 2008, and many of 
these regulations will take effect in 2015.
    Not only is the Positive Train Control, or PTC, mandate 
looming with its December 31 deadline, but the DOT has 
announced that it expects a crude-by-rail regulation to be 
published around May of this year.
    Although the PTC deadline is quickly approaching, it 
remains unattainable. Through the end of 2014, railroads have 
invested over $5 billion in PTC, and they expect to spend 
billions more in the coming years.
    They have begun installation of the radio towers, 
locomotive technology, and other PTC infrastructure, but full 
compliance with the statutory requirements cannot be achieved 
by the end of this year. The FRA and the Government 
Accountability Office have documented the immense technical and 
programmatic challenges with implementing PTC.
    As a result of these challenges, the DOT has reported that 
the deadline will not be met and has offered a proposal to 
ensure the benefits of PTC are realized. I look forward to 
working with my colleagues on a legislative fix to ensure that 
we can set a more realistic implementation timeline for this 
important safety improvement.
    I'm also closely monitoring the proposed crude-by-rail 
requirements and I have expressed concerns to the Office of 
Management and Budget as well as to the DOT about the 
unintended harms that could result from the proposed rule. The 
DOT estimates its proposed crude-by-rail rule could cost nearly 
$6 billion, and it acknowledges the rule would increase network 
delays and out-of-service time for rail equipment.
    Without question, we must improve the safety of our 
Nation's rail system, but I am concerned about the unattainable 
deadlines that the rule proposes. Like the PTC mandate, there 
are very real impacts when Federal agencies set unreasonable 
and, in many times, unachievable deadlines.
    Among other things, the DOT issued this proposed rule 
without analyzing the potential tank car shop capacity needed 
to retrofit or replace over 100,000 DOT-111 tank cars. Shippers 
have raised concerns about a tank car shortage with a 
disruption in energy supply transportation if DOT finalizes 
this rule with an unattainable deadline. I look forward to 
working with my colleagues, stakeholders and the Secretary of 
Transportation on a realistic timeline for such a phase-out.
    While safety can and should be improved, we certainly do 
not need to build in system-wide delays and congestion like we 
witnessed during the past year and a half. Our transportation 
network connects port to rail to truck. Delays and burdensome 
regulations, and failing infrastructure disrupt our Nation's 
economy and cost jobs, so we must work together to find 
workable solutions.
    In addition, we must ensure that the Surface Transportation 
Board, which is tasked with resolving railroad rate and service 
disputes and reviewing proposed railroad mergers, can provide 
effective and efficient oversight to the rail industry.
    This Committee has a great deal of work to do in addressing 
freight rail service and safety in addition to passenger rail 
reauthorizations. I hope members will bring forward thoughtful 
solutions as we address these challenges.
    I'd like to turn now to my distinguished Ranking Member 
from Florida, Senator Nelson.

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. Thank you, Mr. Chairman, and did you know 
that most of the witnesses are from Florida?
    The Chairman. I did not.
    Senator McCaskill. There's one from Missouri.
    [Laughter.]
    Senator Nelson. Three of the five. And just like your state 
is so dependent upon railroads, so are so many of our states. 
And my state of Florida actually developed a railroad. It was 
Henry Flagler that brought his railroad south. And as he 
brought it down the east coast of Florida, so developed 
Florida.
    Said back in the old days, when they would, Henry Flagler 
would bring it as far south as a place like Saint Augustine, he 
built a hotel, which is now the Flagler Hotel. It is part of 
Flagler College in Saint Augustine; the oldest continuous 
settlement in the United States, by the way. We are celebrating 
450 continuous years.
    And then, he would move it further south and he would build 
another hotel. Palm Beach, The Breakers, a place that the two 
gentlemen to my right have been many times.
    [Laughter.]
    The Chairman. Now, I would say to the Senator from Florida, 
how does he know that?
    Senator Nelson. Because I know the pattern of other 
Senators who like to come to Florida.
    And so, it used to be said in the old days--the old-timers 
in Florida, back in the early part of the last century, would 
say that all the natives, which are called ``Florida 
Crackers,'' of which I am one, they'd live off of fish and 
alligators during the summer and they'd live off the tourists 
during the winter as Flagler would bring them further south.
    And so, I'm going to submit my statement for the record. 
You have covered it; most of it.
    Mr. Chairman, I would say that U.S. Department of 
Transportation estimates that the tonnage of freight moving by 
rail is going to increase by 88 percent through 2035, and if 
we're going to handle this future growth we have to prepare and 
improve starting today.
    And some recent events highlight the challenges that we're 
going to have to overcome. In the past year, high demand and a 
harsh winter has resulted in several delays in several parts of 
the country. Railroads have responded by investing record 
amounts to expand capacity, to expand equipment and to hire 
more crew.
    And so, I want to hear from our witnesses. Do you think the 
situation is improving? And I want to hear about what you think 
about the industry's progress on safety.
    Rail is already one of the safest ways of moving people and 
goods, but there are challenges. Positive Train Control, to 
prevent collisions and enforce speed restrictions; first 
recommended by the NTSB way back in 1969. Well, Positive Train 
Control will even make this industry even safer. And so, we've 
got a lot to do.
    Mr. Chairman, I'll just short-circuit my comments so we can 
get right into the witnesses.
    [The prepared statement of Senator Nelson follows:]

   Prepared Statement of Hon. Bill Nelson, U.S. Senator from Florida
    I want to thank everyone for being here today.
    I especially want to welcome several of the witnesses from Florida:

   Frank Lonegro, the Vice President for Service Design at CSX 
        in Jacksonville, who has a significant amount of experience 
        working on positive train control technology;

   David Brown, the Chief Operating Officer for Genesee & 
        Wyoming, Inc., also in Jacksonville; and

   Bill Johnson, the former Director of the Port of Miami.

    Your presence here today underscores the importance of freight rail 
not only to Florida, but also to our country.
    Historically, railroads played a critical role in developing and 
uniting our growing nation.
    Florida developed around railroads built by the likes of Henry 
Flagler, a pattern that was repeated around the country.
    Today, freight railroads remain the backbone of the Nation's 
economy.
    About 40 percent of all freight in the U.S. moves by rail, more 
than any other way. That amounts to an average 5 million tons of goods 
delivered by rail every day.
    Freight railroads haul all types of goods that we depend on, from 
grain for our food to the clothes that we wear.
    Railroads also connect thousands of communities to the global 
economy by bringing American goods to ports, like Port Miami, where 
they are exported abroad.
    For our country to remain competitive, freight railroads must 
deliver goods safely, reliably, and efficiently.
    But there's more to the story than just moving freight.
    The freight rail industry employs more than 180,000 highly-skilled 
and well-paid professionals--nearly 25 percent of which are veterans.
    Moving freight by rail also has other benefits like reduced highway 
congestion and cleaner air.
    And, in many parts of the country, passenger rail service is 
provided over tracks owned and maintained by freight railroads.
    While this hearing isn't focused on passenger rail, it will also be 
an important issue for me this Congress--especially when it comes to 
the development of high-speed rail.
    Simply put, freight railroads are fundamental to the American 
experience and our daily lives.
    Florida is a key example.
    CSX alone operates more than 2,800 miles of track and employs over 
5,000 people in Florida, while moving 1.1 million carloads of freight.
    They are an integral part of Florida's entire economy--serving 12 
ports and thousands of businesses.
    Despite freight rail's great success story, we need to keep 
improving our system, and that's why I'm pleased the Chairman called 
this hearing today.
    The U.S. Department of Transportation estimates that the tonnage of 
freight moving by rail will increase by 88 percent through 2035.
    To handle this future growth, we've got to start preparing and 
improving today. Some recent events highlight challenges we will have 
to overcome.
    Over the past year, high demand and a harsh winter resulted in 
severe delays in several parts of the country.
    Railroads responded by investing record amounts to expand capacity, 
buy new equipment, and hire more crew.
    I look forward to hearing if our witnesses think the situation is 
improving and the prospects for 2015.
    I also look forward to hearing about the industry's progress on 
critical safety issues.
    Rail is already one of the safest ways to move people and goods. 
The past two years for which data are available were the safest years 
on record.
    But challenges remain.
    Implementing Positive Train Control to prevent collisions and 
enforce speed restrictions--first recommended by the National 
Transportation Safety Board in 1969--will make an already safe industry 
even safer.
    Despite the industry's efforts, however, this year's deadline for 
implementation will not be met, so we must create a workable path 
forward.
    Another key safety issue we need to address is the shipment of 
crude oil by rail.
    Finally, Florida and the Nation cannot continue to grow unless 
we're moving freight efficiently.
    Achieving this goal will also require connecting rail to other ways 
of moving goods, especially our ports.
    I hope the Commerce Committee will continue examining these 
challenges and the solutions our country needs.
    I thank Chairman Thune for calling this hearing and all of the 
witnesses for being here today. I look forward to your testimony.

    The Chairman. Thank you, Senator Nelson.
    And appreciate the important role that railroading played 
in the state of Florida, likewise in South Dakota. I've got 
deep family ties, as I've mentioned before in this committee, 
to railroading as they kind of made their way across the 
country and in our state of South Dakota.
    We've got a great panel to talk about some of these issues 
today and I want to welcome all of you. Thank you for being 
here.
    We've got Mr. Frank Lonegro. He's the Vice President of 
Service Design at CSX Transportation.
    Mr. Dave Brown, as I mentioned earlier, is the Chief 
Operating Officer of Genesee & Wyoming Railroad Services, which 
serves our state of South Dakota.
    Mr. Bill Johnson is the former Director of PortMiami and 
former Chair of the Florida Ports Council.
    And, Ms. Michelle Teel. Ms. Teel is the Multimodal Director 
of the Missouri Department of Transportation.
    And we have Mr. Chris Jahn who is here on behalf of The 
Fertilizer Institute where he serves as President.
    So thank you so much for being here. I look forward to 
hearing from you. And we'll start on my left and your right 
with Mr. Lonegro.

STATEMENT OF FRANK LONEGRO, VICE PRESIDENT--SERVICE DESIGN, CSX 
                      TRANSPORTATION, INC.

    Mr. Lonegro. Good morning, Mr. Chairman, Mr. Ranking 
Member, and members of the Committee. I'm Frank Lonegro, Vice 
President of Service Design at CSX and Chairman of the AAR's 
PTC Interoperability Committee.
    Thank you for the opportunity to appear here today. I'm 
here to represent CSX as well as the freight rail industry and 
our views on the current state of Positive Train Control.
    Safety is the highest priority of every American railroad. 
In preserving the safety of our workers, the safety of our 
communities, where we operate and the safety of rail passengers 
is the overriding factor in the thousands of decisions that we 
make every day.
    Our steadfast safety focus has resulted in dramatic safety 
improvements. Since the year 2000, the freight train accident 
rate has fallen 42 percent. One way we achieve improvements in 
safety is through the consistent investment and infrastructure 
and in new technologies. America's railroads invest more than 
$25 billion annually to ensure the safety, reliability and 
efficiency of the rail network.
    For the last 6 years, we have also been investing in a key 
safety technology known as Positive Train Control, or PTC. PTC 
is not a single system but rather is a large number of 
subsystems that are linked together. Those components are 
designed to stop a train before certain types of accidents 
occur. The Rail Safety Improvement Act of 2008 requires Class I 
railroads to install PTC by the end of 2015, on main lines used 
to transport passengers or certain toxic materials.
    PTC is being designed to prevent accidents in four specific 
situations: trains traveling beyond the allowable speed; trains 
traveling beyond their authority; trains traversing a 
misaligned switch; and trains entering a work zone. To do so, 
PTC most be able to determine the precise location, direction 
and speed of trains, warn train operators of potential 
problems, and stop the train if the operator does not respond. 
This is not an easy task.
    Such a system requires the creation, and I do emphasize 
creation, of highly complex technologies that are able to 
analyze the many variables that affect train operations. As you 
can imagine, the length of time that it takes to stop a train 
depends on the train speed, the terrain, the weight and length 
of the train, the number and distribution of locomotives and 
the number of loaded and empty freight cars on that train.
    PTC must take all of these factors into account reliably 
and accurately in order to safely stop the train.
    The task of deploying PTC in the United States includes: 
equipping 23,000 locomotives with onboard computers designed to 
know exactly when to take control of a train and bring it 
safely to a stop; completely rebuilding tens of thousands of 
miles of railroad signaling systems to be capable of 
interacting with the ultra-modern PTC system; deploying 35,000 
sensors to communicate the status of signals and switches to 
the PTC system; completing a geospatial survey of 60,000 miles 
of rail infrastructure; building a new nation-wide 
communication system designed for the massive data transmission 
requirements of PTC; and developing back office systems to feed 
the precise data requirements of PTC. And each railroad's PTC 
system must be interoperable with each of the 40 railroads that 
are developing PTC on their main lines since locomotives and 
trains of one railroad frequently operate on the main lines of 
another.
    In all of these areas, railroads have made significant 
progress. Railroads have also overcome significant regulatory 
challenges. For example, in 2013 the FCC required that all new 
PTC communications towers undergo statutory review. This 
required significant engagement with the State Historical 
Preservation Societies, the Native American Tribes, and others. 
Resolving this issue delayed the installation of these towers 
by more than a year. Thanks to the efforts of all involved, and 
specifically the efforts of this committee, we believe that 
this issue is now behind us.
    As of the end of 2014, CSX has invested some $1.2 billion 
on PTC and we expect to spend another $300 million on PTC this 
year. The freight railroads, together, have spent over $5 
billion to date and expect to spend at least $9 billion before 
PTC is fully operational.
    It is important that PTC deliver the mandated functionality 
while also ensuring the safety and the efficiency of rail 
transportation.
    Two principal risks illustrate why it is so important that 
we take the time necessary to do this job right. The first 
great risk is safety. An immature PTC system could actually 
create safety hazards. Candidly, we are still finding critical 
defects in the key pieces of PTC software we are receiving from 
our suppliers. Second, an immature PTC system could interrupt 
the free flow of rail cargo and rail passengers across the 
United States, which would impact our recovering economy.
    The railroads remain committed to implementing PTC as 
quickly as possible and in a manner that ensures both the 
safety and the efficiency of the railroad network. Despite the 
railroad's best efforts and our substantial progress to-date, 
PTC will not be completed this year.
    Thank you, Mr. Chairman, for calling this hearing and for 
your support for a PTC extension.
    Thank you.
    [The prepared statement of Mr. Lonegro follows:]

 Prepared Statement of Frank Lonegro, Vice President--Service Design, 
                        CSX Transportation, Inc.
    On behalf of CSX Transportation, Inc. (CSX) and the Association of 
American Railroads (AAR), thank you for the opportunity to appear 
before you today to discuss positive train control (PTC).
    CSX operates a freight rail network spanning approximately 21,000 
miles, with service to 23 eastern states, the District of Columbia and 
two Canadian provinces. We are part of a 140,000-mile U.S. freight rail 
network that serves nearly every industrial, wholesale, retail, 
agricultural, and mining-based sector of our economy. Whenever 
Americans grow something, eat something, mine something, make 
something, turn on a light, or get dressed, CSX or another freight 
railroad is probably involved somewhere along the line.
    In this testimony, I will describe what positive train control is, 
the steps CSX and other freight railroads have taken to develop and 
implement this new technology, and explain why--despite railroads' best 
efforts--the existing statutory deadline for nationwide PTC 
implementation is unrealistic and should be extended.
What is Positive Train Control?
    ``Positive train control'' (PTC) describes technologies designed to 
automatically stop a train before certain accidents caused by human 
error occur. The Rail Safety Improvement Act of 2008 (RSIA) requires 
passenger railroads and Class I freight railroads to install PTC by the 
end of 2015 on main lines used to transport passengers or toxic-by-
inhalation (TIH) materials.\1\ Specifically, PTC as mandated by the 
RSIA 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.\2\ The PTC systems that will be installed to meet the 
statutory mandate are overlay systems, meaning they supplement--rather 
than replace--existing train control systems.
---------------------------------------------------------------------------
    \1\ TIH materials are gases or liquids, such as chlorine and 
anhydrous ammonia, which are especially hazardous if released into the 
atmosphere.
    \2\ A switch is equipment that controls the path of trains where 
two sets of track diverge.
---------------------------------------------------------------------------
Positive Train Control is an Unprecedented Technological Challenge
    A properly functioning 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 warning provided by the PTC system. For example, if 
a train operator fails to begin stopping a train when approaching a 
stop signal, or slowing down for a speed-restricted area, the PTC 
system would apply the brakes and stop the train 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 of locomotives and loaded and empty 
freight cars on the train, and other factors. A PTC system must be able 
to take all of these factors into account automatically, reliably, and 
accurately in order to safely stop the train.
    The development and implementation of PTC systems constitute an 
unprecedented technological challenge for railroads (See Attachment A). 
Tasks involved include:

   A complete physical survey and highly precise geo-mapping of 
        the approximately 60,000 miles of railroad right-of-way on 
        which PTC technology will be installed, including geo-mapping 
        of nearly 440,000 field assets (mileposts, curves, grade 
        crossings, switches, signals, and much more) along that right 
        of way.

   Installing PTC technology on more than 22,900 locomotives.

   Installing over 35,000 ``wayside interface units'' (WIU) 
        that provide the mechanism for transmitting information to 
        locomotives and the train dispatching office from signal and 
        switch locations along the right of way.

   Installing PTC technology on over 3,300 switches in non-
        signaled territory and completing signal replacement projects 
        at more than 14,500 locations.

   Developing, producing, and deploying a novel radio system 
        and new radios specifically designed for the massive data 
        transmission requirements of PTC at 4,000 base stations, 31,000 
        trackside locations, and on 22,900 locomotives.

   Developing back office systems and upgrading dispatching 
        software to incorporate the data and precision required for PTC 
        systems.
        
        
    In all of these areas, railroads have made substantial progress. As 
of the end of 2014, 13,000 locomotives were at least partially equipped 
with PTC, out of the 22,900 that will require PTC installations; some 
19,000 WIUs are deployed, out of 35,000 that will ultimately be 
required; and close to 1,500 of the 4,000 base station radios were 
installed. These statistics represent the incredible effort railroads 
have made toward installing the nationwide, interoperable PTC network. 
However, there is no question that much more work remains to be done.
More Time is Needed to Ensure Safe and Effective Implementation
    CSX and other freight railroads have been working tirelessly, and 
spending tremendous amounts of money, to meet the PTC mandate. As of 
the end of 2014, CSX has invested some $1.2 billion on PTC. We expect 
to spend another $300 million this year. Our current estimate for the 
total cost of PTC on our railroad is at least $1.9 billion. Freight 
railroads together have so far spent well over $5 billion--of their own 
funds, not taxpayer funds--on PTC development and deployment, and 
expect to spend at least $9 billion by the time PTC is fully 
operational nationwide. This does not include the hundreds of millions 
of additional dollars needed each year to maintain the railroads' PTC 
systems when they are complete.
    Despite these huge expenditures, PTC's complexity and the enormity 
of the implementation task--and the fact that much of the technology 
PTC requires simply did not exist when the PTC mandate was passed and 
has had to be developed from scratch--more time is needed for full 
implementation.
    Much of the railroads' efforts to date has been directed toward 
development and initial testing of technology that can meet the 
requirements of the legislation and which can be scaled to the huge 
requirements of a national system. For example, production and 
installation of the new radios was possible only after a long period of 
development and testing. Essential software and hardware for many PTC 
components are being deployed, and rigorous testing of these components 
are being performed. Only after this work is completed and the 
technology has been installed can the task of testing each of the 
individual parts, and the system as a whole, be completed.
    This task is made particularly complex by the need to ensure that 
PTC systems are fully and seamlessly interoperable across all of the 
Nation's major railroads. It is not unusual for one railroad's 
locomotives to operate on another railroad's tracks. When that happens, 
the ``guest'' locomotives must be able to communicate with, and respond 
to commands from, the ``host'' PTC system. Put another way, a CSX 
locomotive has to behave like a Norfolk Southern locomotive when it's 
traveling on NS's tracks; a BNSF locomotive must be compatible with 
Union Pacific's PTC system when it's on UP tracks, and so on. That's 
much easier said than done, and ensuring this interoperability has been 
a significant challenge.\3\
---------------------------------------------------------------------------
    \3\ Some have questioned why railroads don't all simply implement 
identical PTC systems, thereby ensuring interoperability. That's not 
possible because a railroad's PTC system must function within the 
parameters of that railroad's existing communication and dispatching 
system. These existing systems vary from railroad to railroad.
---------------------------------------------------------------------------
    It is also critical that the many potential failure points and 
failure modes in PTC systems are identified, isolated, and corrected--
all without negatively impacting the efficient movement of goods by 
rail throughout the country. This is incredibly important. The PTC 
systems the railroads ultimately develop must work flawlessly, day in 
and day out, or risk seriously impairing operations on key parts of the 
U.S. freight rail network. The damage that would cause to our Nation's 
economy would be enormous.
    In addition, the Federal Railroad Administration must review each 
railroad's PTC safety plan and certify each railroad's PTC systems 
after the development and testing of the components are complete. Only 
then can a railroad's PTC installation be completed and placed into 
operation.
    Railroads knew when the PTC mandate was passed in 2008 that the 
technological challenges related to PTC would be immense. But railroads 
have also faced significant non-technological barriers to timely PTC 
implementation.
    Most notably, one such challenge involves regulatory barriers to 
the construction of antenna structures. As part of PTC implementation, 
railroads must install over 35,000 wayside antenna structures 
nationwide to transmit PTC signals. Approximately 97 percent of these 
structures are relatively small poles, between 6 and 60 feet high, 
installed on railroad rights-of-way alongside railroad tracks. The 
remainder, approximately 3 percent, are larger base stations similar to 
traditional telecommunication towers. Depending on the location, these 
larger structures may or may not be located on a railroad's right-of-
way.
    The railroad industry had been working with the Federal 
Communications Commission (FCC) for years to license the wireless 
spectrum necessary for PTC. Despite this work, an issue arose in early 
2013 that neither the rail industry nor the FCC foresaw: the FCC's 
requirement that the railroads submit the poles that support PTC 
antennas for historic preservation and tribal review. The FCC's 
historic preservation review process requires railroads to provide 
information (height, location, etc.) on each antenna structure to 
historic preservation officers within state governments and Native 
American tribes so that the states and tribes can determine if the 
installations will negatively impact areas of historic, cultural, or 
religious significance.
    It quickly became clear that the FCC's existing process was 
inadequate for a deployment on the scale of PTC and in the time frame 
mandated by the RSIA. In fact, in May 2013, the FCC asked the railroads 
to stop filing applications for review while the agency developed a new 
process for PTC antenna structures. In the meantime, railroads were 
asked to cease the installation of these structures, creating a huge 
impediment to timely PTC implementation.
    To its credit, the FCC was willing to work with the railroads to 
find a workable solution. (The rail industry is also grateful to 
members of this committee for the attention they gave this issue.) As 
far as the railroads are concerned, the current approval process, put 
in place in May 2014, is functional, and installation of antenna 
structures is now going forward. That said, the 2013 construction 
season and part of the 2014 construction season was essentially lost 
for PTC wayside antennas, setting the railroads back significantly in 
their implementation plans.
    Despite these setbacks, railroads' aggressive implementation of PTC 
will continue. However, it is simply not possible to complete a 
nationwide, interoperable PTC system by the end of 2015. Adjusting the 
implementation deadline would more accurately reflect railroads' 
considerable efforts to design, test, approve, produce, distribute, 
install and train 100,000 employees on the use of this incredibly 
complex technology. Rushing PTC development and installation and 
foregoing a logical plan for sequencing its implementation would 
sharply increase the likelihood that the system would not work as it 
should, which is an outcome that serves no one's purpose.

    Some have suggested that the railroads have somehow not tried hard 
enough to meet the existing statutory deadline. That is simply not 
true. I have been intimately involved in the PTC development and 
implementation process at CSX since it began, and I know how much we 
have devoted to PTC. I'm proud of CSX's and other railroads' efforts, 
and I'm sure that those involved in PTC at other freight railroads 
would say the same thing. We in the railroad industry are fully 
committed to PTC, but it must be done correctly. That's simply not 
possible by the end of this year.
The ``Business Benefits'' of Positive Train Control
    Some have claimed that railroads will achieve billions of dollars 
in ``business benefits'' from PTC because PTC will allow trains to be 
more tightly spaced, thereby reducing train delays and increasing a 
rail line's capacity without the need to install new track. Any 
industry that invests billions of dollars in a new technology will try 
to leverage those investments into operational improvements, even if 
the main purpose of that technology is to enhance safety. That said, 
the rail industry has yet to identify any substantial ``business 
benefits'' for the foreseeable future attributable to PTC deployment as 
mandated under RSIA.
    That's mainly because of the urgency to comply with an extremely 
challenging statutory deadline, railroads have not had the luxury of 
developing and implementing supplemental PTC technologies that, in 
addition to safety benefits, have the most promising potential 
operational benefits. It is far less likely that the first-generation 
PTC systems being deployed now will yield meaningful business benefits 
compared with second-or third-generation PTC systems that might come a 
decade or two later.
    Moreover, many of the business benefits some have claimed will be 
achieved by PTC actually have little or nothing to do with PTC. For 
example, many of the claims that PTC will reduce train delays and allow 
more trains to move over a rail line presuppose the use of ``precision 
dispatching.'' This term refers to the use of complex computer 
algorithms to analyze a variety of factors (such as the priority levels 
of different trains, train crew availability, and the location and 
schedules of other trains) to decide in what order and when trains on a 
railroad's network should travel. But there is no direct relationship 
between the use of precision dispatching and PTC implementation: the 
development of precision dispatching has begun and would continue if 
PTC did not exist.
    In fact, it's possible that PTC could actually make existing rail 
operations less efficient, especially if it is put into place without 
adequate testing. As I noted above, the PTC systems railroads are 
developing have essentially had to be created from scratch--they don't 
exist anywhere in the world. By necessity, a fully functioning PTC 
system is enormously complex, and the failure of a single part within 
that complex system means the entire PTC system will not work as it 
should. If that happened, the affected rail line would be substantially 
operationally degraded until the failure was corrected. It goes without 
saying that the inefficiencies this would create, and the damage it 
would cause to our economy, are best avoided. That's another key reason 
why the PTC development and implementation process should not be 
rushed.
Conclusion
    Since enactment of the RSIA, CSX and other railroads have devoted 
enormous human and financial resources to develop a fully functioning 
PTC system, and progress to date has been substantial. However, despite 
railroads' best efforts, the immense technological hurdles are such 
that a safe, reliable, nationwide, and interoperable PTC network will 
not be completed by the current deadline. Railroads remain committed to 
implementing PTC as early as possible and are doing all they can to 
address the challenges that have surfaced, but more time is needed to 
ensure safe and effective implementation on the Nation's vast freight 
and passenger rail networks.
Attachment A
                              PTC Data \4\
---------------------------------------------------------------------------
    \4\ The data in this Attachment is based on estimates as of 
December 31, 2014, current PTC implementation plans on file with FRA 
(including amendments to plans that have been approved by FRA), and the 
regulations in existence on December 31, 2014.

                                    Table 1.--Equipping Locomotives with PTC
----------------------------------------------------------------------------------------------------------------
            Railroad               ARR      BNSF      CN       CP      CSX      KCS       NS       UP     Total
----------------------------------------------------------------------------------------------------------------
# to be equipped                      54    6,000    1,000    1,000    3,900      614    3,811    6,532   22,911
----------------------------------------------------------------------------------------------------------------
# partially equipped to date          27      671      238      225    1,825      301    1,993    4,394    9,674
----------------------------------------------------------------------------------------------------------------
# fully equipped                      17    2,389       72      146      812        0        0        0    3,436
----------------------------------------------------------------------------------------------------------------

                        Table 2.--Railroad Signal Personnel Hired or Retained Due to PTC
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
ARR                                                                                                            4
----------------------------------------------------------------------------------------------------------------
BNSF                                                                                                         447
----------------------------------------------------------------------------------------------------------------
CN                                                                                                           117
----------------------------------------------------------------------------------------------------------------
CP                                                                                                            35
----------------------------------------------------------------------------------------------------------------
CSX                                                                                                          554
----------------------------------------------------------------------------------------------------------------
KCS                                                                                                           36
----------------------------------------------------------------------------------------------------------------
NS                                                                                                           659
----------------------------------------------------------------------------------------------------------------
UP                                                                                                           569
----------------------------------------------------------------------------------------------------------------
Total                                                                                                      2,421
----------------------------------------------------------------------------------------------------------------

                                      Table 3.--Integrated WIU Installation
----------------------------------------------------------------------------------------------------------------
            Railroad               ARR      BNSF      CN       CP      CSX      KCS       NS       UP     Total
----------------------------------------------------------------------------------------------------------------
# integrated WIUs required to         55    6,648    1,036      591    5,250      658    5,486   11,399   31,123
 be deployed
----------------------------------------------------------------------------------------------------------------
# integrated WIUs deployed to         14    4,171       85      423    1,915      363    1,805    8,700   17,476
 date
----------------------------------------------------------------------------------------------------------------
# integrated WIUs remaining to        41    2,477      951      168    3,335      295    3,681    2,699   13,647
 be deployed
----------------------------------------------------------------------------------------------------------------

                                     Table 4.--Stand-alone WIU Installation
----------------------------------------------------------------------------------------------------------------
            Railroad               ARR      BNSF      CN       CP      CSX      KCS       NS       UP     Total
----------------------------------------------------------------------------------------------------------------
# stand-alone WIUs required to         2      417      488      114      894      148      487    1,615    4,165
 be deployed
----------------------------------------------------------------------------------------------------------------
# stand-alone WIUs deployed to         0      262        0        6      122       56       51    1,167    1,664
 date
----------------------------------------------------------------------------------------------------------------
# stand-alone WIUs remaining to        2      155      488      108      772       92      436      448    2,501
 be deployed
----------------------------------------------------------------------------------------------------------------

                                      Table 5.--Signal Replacement Projects
----------------------------------------------------------------------------------------------------------------
            Railroad               ARR      BNSF      CN       CP      CSX      KCS       NS       UP     Total
----------------------------------------------------------------------------------------------------------------
# locations of signal                  0     4707      177       63    2,100      391    2,851    4,252   14,541
 replacement required
----------------------------------------------------------------------------------------------------------------
# locations replaced to date           0    2,579      125       52    1,134      304      975    3,262    84,31
----------------------------------------------------------------------------------------------------------------
# locations remaining to be            0    2,128       52       11      966       87    1,876      990    6,110
 replaced
----------------------------------------------------------------------------------------------------------------

                                 Table 6.--Switches in Non-Signal PTC Territory
----------------------------------------------------------------------------------------------------------------
       Railroad                            ARR   BNSF     CN      CP      CSX     KCS     NS       UP     Total
----------------------------------------------------------------------------------------------------------------
                       # needed             45     417     227     225     700     133     617      974    3,338
                      ------------------------------------------------------------------------------------------
                       # equipped with       7     262       0      41     130      54      38       58     ,590
                        power to date
                      ------------------------------------------------------------------------------------------
# non-signaled         # remaining to be    38     155     227     184     570      79     579      916    2,748
switch locations        equipped with
needing power & WIUs    power
                      ------------------------------------------------------------------------------------------
                       # equipped with       6     262       0      41     130      54      38       58     ,589
                        WIUs to date
                      ------------------------------------------------------------------------------------------
                       *#remaining to be    39     155     227     184     570      79     579      916    2,749
                        equipped with
                        WIUs
----------------------------------------------------------------------------------------------------------------
# non-signaled         # needed              0       0     227     248     700     133     617      974    2,899
switch locations
needing switch
position monitors
                      ------------------------------------------------------------------------------------------
                       # equipped to date    0       0       0     117     130      54      38       58      397
                      ------------------------------------------------------------------------------------------
                       # remaining to be     0       0     227     131     570      79     579      916    2,502
                        equipped
----------------------------------------------------------------------------------------------------------------

                                       Table 7.--Communications Deployment
----------------------------------------------------------------------------------------------------------------
       Railroad                            ARR   BNSF     CN      CP      CSX     KCS     NS       UP     Total
----------------------------------------------------------------------------------------------------------------
                       # needed             35     731     181     112   1,285      85     736      847    4,012
                      ------------------------------------------------------------------------------------------
# Base station         # installed           8     521      26      18     395       0     242      282    1,492
220 MHz radios
                      ------------------------------------------------------------------------------------------
                       # of future          27     210     155      94     890      85     494      565    2,520
                       installations
                       needed
----------------------------------------------------------------------------------------------------------------
                       # needed             84   6,015   1,751     663   5,299     806   4,763   11,877   31,258
                      ------------------------------------------------------------------------------------------
# Wayside              # installed          19   4,098     184      28   2,160       0   1,147    4,136   11,772
location 220
MHz radios
                      ------------------------------------------------------------------------------------------
                       # of future          65   1,917   1,567     635   3,139     806   3,616    7,741   19,486
                       installations
                       needed
----------------------------------------------------------------------------------------------------------------
                       # needed             54   6,000   1,000   1,000   3,900     614   3,811    6,532   22,911
                      ------------------------------------------------------------------------------------------
Locomotive             # installed          16   2,389      72      75     812       0      10    1,855    5,229
220 MHz radios
                      ------------------------------------------------------------------------------------------
                       # of                 38   3,611     928     925   3,088     614   3,801    4,677   17,682
                       locomotives
                       remaining to
                       be equipped
----------------------------------------------------------------------------------------------------------------

                                      Table 8.--Status of PTC GIS Projects
----------------------------------------------------------------------------------------------------------------
   Railroad                       ARR     BNSF      CN       CP       CSX      KCS      NS       UP       Total
----------------------------------------------------------------------------------------------------------------
# PTC assets to be* mapped and   2,800   88,447   25,630   16,468   114,731   9,641   52,000   130,000   439,717
 extracted for GIS consumption
----------------------------------------------------------------------------------------------------------------
# track miles   # miles mapped     600   19,886      257    1,515    21,565       0   10,904    21,150    75,877
 required to     to date
 be GIS mapped
               -------------------------------------------------------------------------------------------------
                # miles to be        0    2,164    4,043      696         0   2,227        0         0     9,130
                 mapped
----------------------------------------------------------------------------------------------------------------
# track miles   # miles            600   16,318      257    1,183    21,565     293   10,904    21,150    72,270
 required to     processed to
 be data         date
 processed
               -------------------------------------------------------------------------------------------------
                # miles              0    5,732    4,043    1,028         0   1,934        0         0    12,737
                 remaining to
                 be processed
----------------------------------------------------------------------------------------------------------------
# track miles   # converted to     130   14,888      257    1,162     5,809     154      608       300    23,308
 GIS data to     date
 be converted
 to PTC subdiv
 files
               -------------------------------------------------------------------------------------------------
                # remaining to     470    7,162    4,043    1,049    15,756   2,073   10,296    20,850    61,699
                 be converted
----------------------------------------------------------------------------------------------------------------
* The calculation of assets to be mapped includes the following: integer mileposts; signals; crossings;
  switches; interlockings/control point locations; permanent speed restrictions; the beginning and ending limits
  of track detection circuits in non-signaled territory; clearance point locations for every switch location
  installed on the main and siding tracks; and inside switches equipped with switch circuit controllers.

            Table 9.--Status of PTC Dispatch System Projects
------------------------------------------------------------------------
             Railroad                 Date System will be PTC-capable
------------------------------------------------------------------------
ARR                                Completed
------------------------------------------------------------------------
BNSF                               Completed
------------------------------------------------------------------------
CN                                 1st quarter 2015
------------------------------------------------------------------------
CP                                 March 2015
------------------------------------------------------------------------
CSX                                Completed
------------------------------------------------------------------------
KCS                                1st quarter 2015
------------------------------------------------------------------------
NS                                 Completed
------------------------------------------------------------------------
UP                                 Completed
------------------------------------------------------------------------

                        Table 10.--PTC Investment
------------------------------------------------------------------------
                                       PTC investment through  December
              Railroad                           31, 2014 ($)
------------------------------------------------------------------------
ARR                                                          103,000,000
------------------------------------------------------------------------
BNSF                                                       1,230,000,000
------------------------------------------------------------------------
CN                                                           105,400,000
------------------------------------------------------------------------
CP                                                           196,945,493
------------------------------------------------------------------------
CSX                                                        1,178,000,000
------------------------------------------------------------------------
KCS                                                           82,400,000
------------------------------------------------------------------------
NS                                                           814,349,713
------------------------------------------------------------------------
UP                                                         1,496,700,000
------------------------------------------------------------------------
Total                                                      5,206,795,206
------------------------------------------------------------------------

                                               Table 11.--Training
----------------------------------------------------------------------------------------------------------------
    Railroad        Category 1      Category 2      Category 3      Category 4      Category 5         Total
----------------------------------------------------------------------------------------------------------------
ARR                          110               9             199             250              30             598
----------------------------------------------------------------------------------------------------------------
BNSF                       1,234             728          12,018           7,054             859          21,893
----------------------------------------------------------------------------------------------------------------
CN                           857             240           2,550           1,120             200           4,967
----------------------------------------------------------------------------------------------------------------
CP                           550             100           1,600             900             250           3,400
----------------------------------------------------------------------------------------------------------------
CSX                        1,315             445          14,085             900           1,275          18,020
----------------------------------------------------------------------------------------------------------------
KCS                          202              44           1,526             493             130           2,395
----------------------------------------------------------------------------------------------------------------
NS                         2,150             445          12,000           6,275           1,780          22,650
----------------------------------------------------------------------------------------------------------------
UP                         2,324             710          13,546           8,450             914          25,944
----------------------------------------------------------------------------------------------------------------
Total                      8,742           2,721          57,524          25,442           5,438          99,867
----------------------------------------------------------------------------------------------------------------

    Categories of employees requiring training (49 C.F.R. 236.1041):

  (1)  Persons whose duties include installing, maintaining, repairing, 
        modifying, inspecting, and testing safety-critical elements of 
        the railroad's PTC systems, including central office, wayside, 
        or onboard subsystems;

  (2)  Persons who dispatch train operations (issue or communicate any 
        mandatory directive that is executed or enforced, or is 
        intended to be executed or enforced, by a train control system 
        subject to this subpart);

  (3)  Persons who operate trains or serve as a train or engine crew 
        member subject to instruction and testing under part 217 of 
        this chapter, on a train operating in territory where a train 
        control system subject to this subpart is in use;

  (4)  Roadway workers whose duties require them to know and understand 
        how a train control system affects their safety and how to 
        avoid interfering with its proper functioning; and

  (5)  The direct supervisors of persons listed in paragraphs (a)(1) 
        through (a)(4) of this section.

    The Chairman. Thank you, Mr. Lonegro.
    Mr. Brown.

STATEMENT OF DAVID A. BROWN, CHIEF OPERATING OFFICER, GENESEE & 
                          WYOMING INC.

    Mr. Brown. Good morning, Mr. Chairman, Ranking Member 
Nelson and members of this committee. My name is David A. 
Brown. I was appointed Chief Operating Officer of Genesee & 
Wyoming in October, 2012, and in this capacity I oversee the 
management and operations of the 116 railroads owned by G&W.
    G&W is a global railroad holding company that owns freight 
railroads in the U.S., Canada, Australia, the Netherlands and 
Belgium. In the U.S., we own two Class II regional railroads 
and 105 Class III short line railroads located in 39 states. 
Based on the diversity of G&W short line holdings, we believe 
we are able to offer a relevant perspective on safety and 
efficiency of the short line industry.
    I would like to address four areas for consideration by 
this committee within the focus of this hearing. First, short 
line and regional railroad safety. Second, the infrastructure 
challenges facing short line railroads. Third, the uncertainty 
created for short line and regional railroads associated with 
the PTC mandate. And fourth, the importance of short line and 
regional freight railroads as part of the national rail freight 
network.
    Like the railroad industry as a whole, G&W-owned railroads 
have dramatically improved their safety performance over the 
past decade. We have become an industry leader in safety 
through an intense, multi-faceted approach that focuses on 
building a culture of safety.
    As a result of this intense safety culture, 101 of 113 G&W-
owned railroads completed 2014 with zero FRA reportable 
injuries, which yields a consolidated injury frequency rate 
that is safer than any Class I railroad and nearly six times 
safer than the short line industry average. We believe the same 
attention to detail that is required to eliminate injuries 
translates to every area of operations resulting in efficient, 
well run freight service for our customers. Our objective is 
simply for every G&W-owned railroad to stay injury-free every 
day.
    Eighty-six percent of all short line shipments are 
interchanged with the Class I railroad demonstrating the 
interdependence between the short line railroads and the Class 
I carriers. This demonstrates the true network nature of Class 
I, II and III railroads.
    However, if a short line cannot handle the same weight of a 
freight car as its Class I connection, the utility of the short 
line service to its customers suffers. The speed and weight 
limitations on short line routes are most often due to aged 
rail and bridge structures. Limiting car weights and train 
speeds can ensure safe operations over these lines, but that 
does not address the lost economics caused by lighter freight 
shipments and slower service speeds faced by the customers 
dependent on our short lines.
    Since 2004, Congress has provided a Short Line Tax Credit 
to help short line and regional railroads improve their lines, 
replace their rail and upgrade their bridges; all to serve 
their customers with more competitive freight services.
    Since 2005, the credit has spurred over $1.5 billion of 
private investment in railroad infrastructure. The credit was 
extended on December 19 of last year with support from 15 
members of this committee. Unfortunately, it expired on 
December 31, 2014. I strongly encourage the Senate to renew it 
so as to continue encouraging the private sector during 2015 to 
invest in short line and regional railroad infrastructure 
improvements.
    PTC implementation is led by the Class I industry, and has 
not yet addressed areas of serious concern to the smaller 
freight railroads. The vast majority of focus on PTC 
implementation has been done by the Class I carriers and their 
suppliers without consideration to the financial and physical 
constraints of short line railroads. Little attention has been 
given to these new PTC systems, but will interface with 
connecting short line operations referred to as, Frank 
mentioned, interoperability.
    The majority of short lines that will be required to 
implement PTC are doing so because of a physical interaction 
with a Class I railroad. While the FRA created PTC exemptions 
for certain short line operating situations, short line 
railroads have no clear guidance on how to meaningfully apply 
these exemptions to actual situations.
    In addition to the significant costs associated with 
purchasing and installing PTC on short line, locomotives, the 
technology being used for PTC requires on-going technical 
support and maintenance that is largely unavailable on short 
line railroads. The expense and difficulty in acquiring this 
support could be significant.
    Clearly there is not enough time between now and December 
31 of this year for this to happen. For these reasons, I 
encourage members of this committee to develop a fixed period 
of extension of the existing PTC deadline and to clarify the 
exceptions of short line railroads as they relate to Class I 
operations and Class I PTC-implementation requirements.
    From a short line perspective, it is amazing how focused 
one becomes on superior customer service when your railroad 
only has a few customers to serve, and those few customers must 
provide the cash to meet your payroll. Our part of the overall 
rail freight industry is highly capable of providing that First 
Mile/Last Mile of service safely and efficiently.
    To that end, I ask the members of this committee to 
consider the following: appreciate and understand the 
significant role short line and regional railroads play as part 
of the U.S. rail freight network; support extension of the 
Short Line Tax Credit and allow the continuation of expanded 
reinvestment of private capital back into the short line and 
regional railroads across the country; understand that the 
economics and financial resources of short line and regional 
railroads are limited, and recognize that the burdens of 
regulations and mandates like PTC fall heavily on the small 
railroads.
    Thank you.
    [The prepared statement of Mr. Brown follows:]

    Prepared Statement of David A. Brown, Chief Operating Officer, 
                         Genesee & Wyoming Inc.
Introduction
    My name is David A. Brown. I was appointed Chief Operating Officer 
of Genesee & Wyoming Inc. in October, 2012, and I have management 
oversight responsibility of the 116 railroads owned by G&W. Thank you 
for the opportunity to take part in this hearing today, and to briefly 
review the important role of regional and short line freight railroads 
in enhancing safety, efficiency and commerce across the United States.
    As background, G&W is a global railroad holding company that owns 
short line and regional freight railroads in the United States, Canada, 
Australia, the Netherlands and Belgium. In the United States, we own 
two Class II regional railroads and 105 Class III short line railroads 
located in 39 states. These railroads, which range from as few as two 
to as many as 670 track miles, are each locally managed companies 
intensely focused on providing their on-line customers with safe, 
flexible, and efficient freight service. Based on the diversity of G&W 
short line holdings, we believe we are able to offer a relevant 
perspective on safety and efficiency of the short line industry.
    The typical U.S. short line railroad has light traffic density, 
interchanging freight from the one or two major customers on its line 
with a connecting Class I railroad. U.S. short line railroads thus 
serve a fundamental and essential purpose: To provide the critical 
``First Mile/Last Mile'' of service connecting their communities and 
customers to the national rail freight network.
    In my comments today, I would like to address four areas for 
consideration by this Committee within the focus of this hearing: Short 
line and regional railroad safety, the infrastructure challenges facing 
short line railroads, the uncertainty created for short line and 
regional railroads associated with the Positive Train Control mandate 
enacted through the 2008 Rail Safety Improvement Act, and finally, the 
importance of short line and regional freight railroads as part of the 
national rail freight network.
Short Line and Regional Railroad Safety
    As with any heavy industry, and indeed any mode of transportation, 
safety must be in the forefront of all efforts in railroad operations. 
At the same time, short line operations must provide a high level of 
local service that is critical to their customers' viability. Providing 
this local service is physically intense, creating risks of human harm 
and physical damage if not done properly and with care.
    Like the rail industry as a whole, G&W-owned railroads have 
dramatically improved their safety performance over the past decade. We 
have become an industry leader in safety through an intense, multi-
faceted approach starting with the orientation of every new employee, 
continuing with both classroom and on-the-job training, coaching and 
support from both line managers and fellow employees, and continuous 
analysis of how to improve the safety of operations. Two examples of 
investments at G&W to support this approach are:

  1.  The implementation of a DuPont safety training program for 
        railroad employees, which focuses on the relentless 
        identification and elimination of unsafe behaviors and unsafe 
        conditions in the work environment. This program was developed 
        by DuPont, a recognized safety leader, and adopted to the 
        railroad industry. The program is critical to instilling a 
        culture of safety with all employees, and participation has 
        been expanded to include customers and members of the G&W Board 
        of Directors.

  2.  G&W constructed, equipped and staffed a state-of-the-art training 
        center in Jacksonville, Florida, which includes a locomotive 
        simulator and fully functioning air brake ``rack'' to aid in 
        train handling and safety training. Numerous classes, both for 
        hourly employees and field managers, are conducted by senior 
        managers with a passion for safety and professionalism. We plan 
        to link these classes with remote field locations via Internet 
        tele-video conferencing, allowing for more frequent and 
        responsive training to meet specific needs.

    These examples highlight the culture of safety that is pervasive at 
G&W-owned railroads, emphasizing that everyone should go home to their 
families after a day of work in the same condition as when they 
arrived. As a result of this intense safety culture, 101 of 113 G&W-
owned railroads completed 2014 with zero reportable injuries, which 
yields a consolidated injury frequency rate that is safer than any 
Class I railroad and nearly six times safer than the short line 
industry average. Our real target, however, is for every G&W-owned 
railroad to stay injury free, every day. We believe the same attention 
to detail that is required to eliminate injuries translates to every 
area of operations, resulting in efficient, well run freight service 
for customers. In fact, in biennial satisfaction surveys of every G&W 
railroad customer worldwide, in which we have consistently outperformed 
the trucking and overall railroad industries, the attributes of our 
employees rated highest by customers in every survey are ``commitment 
to safety'' and ``professionalism''.
    Finally, for the good of the short line industry and our Nation, 
G&W also supports the Short Line Safety Institute being established 
cooperatively by the American Short Line and Regional Railroad 
Association (ASLRRA) and the Federal Railroad Administration. This 
effort will take the lessons learned in our industry on the importance 
of establishing and reinforcing a culture of safety on short line and 
regional railroads and help bring this understanding to all Class II 
and III operations in a cooperative, open-learning way.
Infrastructure Challenges facing Short Line Railroads
    The vast majority of the almost 550 short line railroads in the 
United States were created though Class I railroads disposition of 
light-density branch and secondary lines. By their nature, these lines 
were generally not as well maintained as the core main lines of the 
Class I operations, and typically went through a period of declining 
revenues and investments prior to being sold or leased to a short line 
railroad. When sold the condition of these lines often necessitates 
slower-speed operations and weight limitations on the freight cars 
handled over the lines.
    A recent, high-profile example of a Class I disposition is the new 
Class II Rapid City, Pierre & Eastern Railroad (RCPE). The RCPE has 670 
miles of former Class I track. At the time of the sale, RCPE faced a 
record grain harvest on top of an existing railroad backlog. RCPE 
management quickly expanded its startup plan to add the employees, 
locomotives and grain cars to move the harvest offline to its three 
Class I connections.
    Only a very small portion of South Dakota grain is needed in-state; 
our role on the RCPE is to be an efficient, safe, and reliable means 
for the farmers in the state to reach their distant markets by working 
with our Class I connections. This is typical of many short line and 
regional railroads. According to ASLRRA, 86 percent of all short line 
shipments are interchanged with a Class I railroad, demonstrating the 
interdependence between short line railroads and the Class I carriers. 
This demonstrates the true network nature of Class I, II and III 
railroads.
    However, if a short line cannot handle the same weight of freight 
car as its Class I connection, the utility of the short line service to 
its customers suffers. The speed and weight limitations on short line 
routes are most often due to aged rail and bridge structures. Limiting 
car weights and train speeds can ensure safe operations over these 
lines, but that does not address the lost economics caused by lighter 
freight shipments and slower service speeds faced by the customers 
dependent on these short lines.
    Since 2004, the Federal government has provided a tremendous boost 
via the Short Line Tax Credit to help short line and regional railroads 
improve their lines, replace their rail, and upgrade their bridges, all 
to serve their customers with more competitive freight services. The 
credit allows Class II or III railroads to invest more of what they 
earn into improving their own railroad infrastructure. A railroad must 
spend a dollar for every 50 cents in credit, so the credit maximizes 
private investment in capital improvements. The total available credit 
is capped at the equivalent of $3,500 per mile per railroad.
    According to ASLRRA, since 2005 the credit has spurred over $1.5 
billion of private investment in railroad infrastructure. The national 
Railroad Tie Association estimates that the credit has allowed short 
lines to purchase and install more than 750,000 railroad ties per year 
over and above their normalized purchases. All of the new rail, ties, 
ballast and bridges afforded by the credit directly benefit customers 
such as the South Dakota farmer shipping wheat to market, the Florida 
paper manufacturer and the Ohio steel manufacturer serving customers in 
the Midwest, and the California carrot distributor shipping to eastern 
markets. All of these customers, now served by G&W-owned railroads, and 
thousands more across our country directly benefit from the increased 
private infrastructure investments made through the Short Line Tax 
Credit.
    The credit was extended on December 19 of last year after action in 
Congress, including the direct support of 251 House and 51 Senate co-
sponsors of bills calling for the extension of the credit. The Senate 
count included 15 members of this Committee. Unfortunately, what was 
extended on December 19, 2014 expired on December 31, 2014. I strongly 
encourage you to help thousands of short line served companies across 
the Nation and reinstate this credit as soon as possible so as to 
continue to encourage investment during 2015 in short line and regional 
railroad infrastructure improvements. These investments will directly 
improve the ability short line and regional rail to serve their 
customers, providing a vital link to the national rail freight network.
Uncertainty Created for Short Line Railroads with the Positive Train 
        Control Mandate
    Perhaps the only certainty with Positive Train Control (PTC) is the 
inability of the industry to meet the December 31, 2015 full 
implementation deadline mandated by the 2008 Rail Safety Improvement 
Act. While a vast amount of attention and resources has been expended 
to development and implementation of PTC on the Class I railroads, 
there is tremendous uncertainty on how this mandate will affect short 
line and regional railroads, and we are less than a mere 12 months from 
the current deadline for implementation. This level of uncertainty is 
due to several factors:

   The vast majority of focus on PTC implementation has been 
        done by the Class I carriers and their suppliers, without 
        consideration to the financial and physical constraints of 
        short line railroads. Little attention has been given to how 
        these new PTC systems will interface with connecting short line 
        operations (referred to as ``interoperability''). For example, 
        many short line locomotives are older and cannot be rationally 
        equipped with a functional PTC system, as the cost to equip is 
        more than the entire locomotive is worth.

   The majority of short lines that will be required to 
        implement PTC are doing so because of a physical interaction 
        with a Class I carrier. This could be, for example, operating 
        over a short distance of the Class I PTC-equipped line to enter 
        its yard to interchange traffic, or an at-grade ``diamond'' 
        crossing of the short line and Class I PTC-equipped tracks. 
        While the Federal Railroad Administration created PTC 
        exemptions for certain short line operating situations, short 
        line railroads have no clear guidance on how to meaningfully 
        apply these exemptions to actual situations.

   In addition to the significant costs associated with 
        purchasing and installing PTC on short line locomotives, the 
        technology being used for PTC requires on-going technical 
        support and maintenance that is largely unavailable on short 
        line railroads. The expense and difficulty in acquiring this 
        support could be significant.

    To resolve these issues will require a fair and reasoned approach 
by all parties, and clearly there is not enough time between now and 
December 31 of this year for this to happen. For these reasons, I 
encourage members of this Committee to develop a fixed period of 
extension of the existing PTC deadline, and to clarify the expectations 
of short line railroads as they relate to Class I operations and Class 
I PTC-implementation requirements.
Importance of Short Line Railroads as part of the National Rail Freight 
        Network
    The freight railroad network is both unique and an important 
element of the competitive future of the Nation. It is difficult to 
imagine another industry of so many diverse ownerships working closely 
together to provide generally seamless and competitive services to a 
such a wide variety of different customers. Nor an industry that holds 
itself open as ``common carriers'' that maintains at its own expense 
and liability so much infrastructure. The network works through the 
learned experiences of many, many years of successes and failures: from 
the bankruptcy and collapse of almost the entire Northeastern rail 
system in the 1970s to the birth and growth of hundreds of short line 
railroads over the last 30 years.
    From a short line perspective, it is amazing how focused one 
becomes on superior customer service when your railroad only has a few 
customers to serve, and those few customers must provide the cash to 
meet your payroll. Our part of the overall rail freight industry is 
highly capable of providing that ``First Mile/Last Mile'' of service 
safely and efficiently. To that end, I ask the Members of this 
Committee to consider the following:

   Appreciate and understand the significant role short line 
        and regional railroads play as part of the U.S. rail freight 
        network.

   Support extension of the Short Line Tax Credit, and allow 
        the continuation of expanded reinvestment of private capital 
        back into the short line and regional railroads across the 
        country.

   Understand that the economics and financial resources of 
        short line and regional railroads are limited and recognize 
        that the burdens of regulations and mandates like PTC fall 
        heavily on the smaller railroads.

    Going forward, G&W and, I am sure, the other regional and short 
line railroads of our country are ready to tackle the future issues and 
land future opportunities, and along the way help grow our economy and 
improve our environment. Thank you for giving me this opportunity to 
present this information today.

    The Chairman. Thank you, Mr. Brown.
    Mr. Johnson.

  STATEMENT OF BILL JOHNSON, FORMER DIRECTOR, PORTMIAMI, AND 
              FORMER CHAIR, FLORIDA PORTS COUNCIL

    Mr. Johnson. Mr. Chairman, Senator Nelson, and members of 
the Senate Committee on Science and Transportation--Commerce, 
Science, and Transportation, my name is Bill Johnson and it is 
my pleasure to speak with you today.
    I'm speaking to you this morning as a former Director of 
PortMiami, as a former Chair of the Florida Ports Council. I'm 
also today, currently serving as my community's Director of 
Water and Sewer, one of the nation's largest public utilities. 
Beginning on March 1, I step into the role at the state level, 
as Florida's new Secretary of Commerce and CEO of Enterprise 
Florida.
    Throughout my 35-year public service career, which is 
largely focused on infrastructure development, I've seen 
firsthand the impact of infrastructure on a community's ability 
to thrive economically and, of course, the need to properly 
connect to existing and new infrastructure at the local, state 
and national levels. I strongly believe that, in order for 
these types of infrastructure projects to move forward, there 
needs to be partnerships with private sector and, of course, 
participation of all three levels of government.
    When I became Director of PortMiami in 2006, we were faced 
with the reality of an aging infrastructure. And infrastructure 
that did not meet the needs of a growing seaport and a changing 
economy that depended on regional trade as a key job generator. 
While South Florida is known worldwide as the ``Cargo Gateway 
of the Americas,'' to remain competitive our region needed to 
address the challenges posed by the expansion of the Panama 
Canal. PortMiami is the second largest economic engine in South 
Florida, second only to Miami International Airport, and our 
port contributes approximately $30 billion annually direct and 
indirect to the local, state and national economies.
    PortMiami supports 225,000 jobs annually, both directly and 
indirectly. It is projected that the new infrastructure being 
completed at our port, including the deepening of our channel 
to a depth of 50 feet, will add more than 30,000 new high 
paying jobs over the next several years. And I would say that 
these are really high paying jobs. The average job through 
PortMiami with a High School Diploma is over $56,000 a year.
    However, in addition to deepening the channel to 
accommodate a new generation of super post-Panamax container 
ships, PortMiami had to address the inland logistics challenges 
including how to move goods on and off its port linking South 
Florida to markets on the East Coast and throughout America.
    Our approach was to implement a three-part, which Senator 
Nelson is very much aware of, a three-part development strategy 
that focused on capital improvement projects and infrastructure 
investments that would support cargo growth and not only by 
virtue of a deeper channel, but also projects such as the new 
port tunnel, the re-introduction of on-dock rail, stronger 
bulkheads and the acquisition of new super Post-Panamax cranes.
    I'm briefly going to touch on all three and how they 
interconnect to make our port a stronger, if you will, more 
valuable port.
    Currently, the U.S. Army Corps of Engineers is hard at 
work, would create Lakes Dredge and Dock Company to deepen our 
channel to 50 feet. This project will be completed on time this 
summer, summer 2015; making our port, PortMiami, the only port 
south of Norfolk, Virginia on the East Coast at that water 
depth; the same depth as the Panama Canal. In fact, Miami will 
be at a 50 foot depth one year in advance of Panama's 
improvements.
    The dredge project is supported by the strengthening of 
bulkheads, completed, in order to accommodate the larger 
container vessels and also the acquisition of some of the 
world's largest gantry cranes. This allows us to load and 
unload, if you will, containers timely and efficiently.
    As Senator Nelson is very much aware, there has been an 
important introduction of a new project last summer, and that's 
the construction of PortMiami Tunnel. This tunnel links our 
port to the Nation's highway system, and it provides four lanes 
under the Biscayne Bay with a seamless connection with no 
traffic signals to allow us to move our container and our 
cruise passengers in and out efficiently.
    This is a successful project because it was a public-
private partnership. It involved all three levels of 
government; the Federal, the state and the local. The project 
opened on time and under budget. It shows what can be done when 
you partner in an open fashion.
    Vehicles now, of course, travel, if you will, from our port 
and is somewhere in the range now of about 26,000 vehicles a 
day using the PortMiami tunnel.
    Importantly, for this committee and for our port is on-
dock, the restoration of on-dock rail. Again, this another 
great example of America working smart. This was a public-
private partnership involving all three levels of government; 
our national government, our state and our local. Today, from 
PortMiami, with our partners at Florida East Coast Rail, that's 
FEC--and Senator Nelson referred to Henry Flagler. We utilize 
the same rail system that Mr. Flagler brought to Florida back, 
you know, over 100 years ago.
    This rail improvement allows us from our port to connect to 
over 70 percent of the American population; from our port, from 
one to 4 days. Within 4 days we can get you to Chicago to 
Heartland of America to Cleveland faster and at less cost via 
rail. Huge, important. And again, it was a partnership with 
Washington, our state government and local and our private 
sector partners.
    On-dock rail is a critical component of PortMiami's growth 
strategy. And no, no port, I believe, can be successful without 
on-dock rail. Rail is essential to the movement of goods and 
people in America. Our new FEC port partnership allows 
shippers, again, to reach over 70 percent of our Nation's 
population in one to 4 days. It's a win-win.
    In summary, PortMiami is in the midst of the most ambitious 
capital program in its 100-year history. It's all about 
connectivity. It's all about the ability to reach markets 
faster and safer. We believe that the new connections, OK, to 
Asia with the expanded canal will help America protect or help 
all of us in America be able to grow or trade. These are new 
opportunities for all of us that do business globally.
    Global trade and freight movement should be at the 
forefront of economic developments at the local, state and 
national levels. Our Nation's transportation systems, which 
depend on rail, OK, are vital to moving the Nation's commerce 
and supporting our economy. The system demands proper planning 
and investment, key investment, to keep freight movement 
expeditious and cost effective. Infrastructure projects that 
improve the network of how our region and our Nation moves 
goods contributes to the entire economic growth in many, many 
ways. We all know those, construction jobs, obviously a wide 
range of logistics jobs, on and on and on.
    The bottom line for me, we need to continue to support a 
smart investment in our rail system.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Johnson follows:]

 Prepared Statement of Bill Johnson, former Director of PortMiami and 
former Chair, Florida Ports Council; speaking on behalf of Juan Kuryla, 
                        Port Director, PortMiami
    Mr. Chairman, Sen. Nelson and members of the Senate Committee on 
Commerce, Science, and Transportation, my name is Bill Johnson and it 
is my pleasure to speak to you today on behalf of Port Director Juan 
Kuryla who is in Asia promoting Port Miami and as the former Director 
of PortMiami and former Chair of the Florida Ports Council. I am 
currently serving Miami-Dade County as the Director of Water and Sewer 
and, commencing March 2, I will be taking the reins at the state level 
as the Secretary of Commerce and CEO of Enterprise Florida. Throughout 
my public service career, which has largely focused on infrastructure 
development, I have seen firsthand the impact of infrastructure on a 
community's ability to thrive economically, the need to properly 
connect existing and new infrastructure at the local, state and 
national levels. I also strongly believe that, in order for these type 
of projects to move forward, there needs to be partnerships with the 
private sector and at all levels of government.
    When I became Director of PortMiami in 2006, we were faced with the 
reality of aging infrastructure that did not meet the needs of a 
growing seaport and changing economy that depended on regional trade as 
a key job creator. While South Florida is known worldwide as the 
Gateway to the Americas, to remain competitive our region needs to 
address the challenges posed by the expansion of the Panama Canal. 
PortMiami is the second largest economic engine in South Florida, 
second only to Miami International Airport, and it contributes $30 
billion annually to the local and state economies. PortMiami supports 
225,000 jobs, both directly and indirectly, in the State of Florida. It 
is projected that new infrastructure investments at the port, including 
deepening the port's channel to minus 50-feet, will add more than 
30,000 jobs over the next several years.
    However, in addition to a deeper channel to accommodate a new 
generation of super-sized container vessels, PortMiami must also 
address inland logistical challenges including how to move goods on and 
off the port linking South Florida to markets along the Eastern 
Seaboard and Midwest.
    Our approach was to develop a three-part development strategy that 
focused on capital improvement projects and infrastructure investments 
that would support cargo growth not only by virtue of a deeper channel, 
but also such projects as a new port tunnel, the re-introduction of on-
dock rail, stronger bulkheads, and the acquisition of new Post-Panamax 
gantry cranes. I'd like to touch on each of those projects.
Deep Dredge, Bulkhead Strengthen and New Gantry Cranes
    The U.S. Army Corps of Engineers awarded a contract to Great Lakes 
Dredge and Dock Company to deepen the Port's channel to a minus-50 
feet. When the project is completed this summer, PortMiami will be the 
ONLY port south of Norfolk, Virginia at -50 feet when the expanded 
Panama Canal opens in 2016. The dredge project is supported by the 
strengthening of the bulkheads in order to accommodate larger cargo 
vessels and the acquisition of new gantry cranes capable of loading and 
off-loading the super-sized ships.
Port Tunnel
    Construction of the Port Tunnel, linking the Nation's interstate 
system with port facilities, was completed in May 2014, and has been 
operational since last August. The project was delivered both on-time 
and on-budget. The tunnel, like a number of port projects, was a 
private-public partnership managed by the Florida Department of 
Transportation in conjunction with Miami-Dade County, the City of Miami 
and our private sector partners, the Miami Access Tunnel and Bouygues 
Civil Works. The tunnel not only benefits PortMiami, but has also 
greatly improved traffic flow in downtown Miami. Pedestrians and 
automobiles no longer compete with the 18-wheeler cargo trucks for 
space on our downtown residential and commercial streets. Vehicles now 
travel from the Interstate to PortMiami without crossing a SINGLE 
traffic signal.
On-Dock Rail Connection
    Another public-private project of great importance to PortMiami was 
the re-introduction of on-port rail. In partnership with Florida East 
Coast Railway (FEC), we have restored freight rail linking our port to 
an intermodal center with links to the national railway system. We are 
currently moving hundreds of containers on a daily basis as part of 
FEC's regular service. While the tunnel connects our port facilities 
directly to the Interstate and the State of Florida, the rail connects 
PortMiami to the Southeastern U.S. and beyond.
    On-dock rail is a critical component of PortMiami's growth 
strategy. No modern port can be successful without on-dock rail. The 
new FEC-Port partnership allows shippers to reach more than 70 percent 
of the U.S. population from Miami within one to four days. In global 
trade, it's all about time to market and this connection has afforded 
South Florida an important competitive advantage.
    In summary, PortMiami is in the midst of the most ambitious capital 
program in the Port's 100-year history. It is all about connectivity--
fast and efficient connections to transportation systems and markets. 
We believe with new connections to Asian markets via the expanded 
Canal, there are great new opportunities for those of us who do 
business in this part of the world.
    Global trade and freight movement should be at the forefront of 
economic development efforts at the local, state and Federal levels. 
Our nation's transportation network, which depends on rail, is vital to 
moving the Nation's commerce and supporting our economy. The system 
demands proper planning and investment to keep freight movement 
expeditious and cost-effective. Infrastructure projects that improve 
the network of how our region and nation moves goods contribute to 
economic growth in multiple ways. These include not only construction 
jobs created to build the new infrastructure, but also a wide-range of 
logistics jobs in the goods distribution and retail industries. By 
allowing goods to reach domestic and international markets efficiently, 
we can provide consumers a broader variety of goods with minimal, added 
cost for transport, if any. Delay in bringing goods to market causes 
price inflation and deters American business, not to mention the 
harmful environmental impacts of idle machinery stalled at various 
system chokepoints.
    In closing, without the ability to move our goods and people 
efficiently, a community cannot grow.
    Thank you for the opportunity to address you this morning.
About PortMiami
    PortMiami is Miami-Dade County's second most important economic 
engine contributing $30 billion annually to the local economy and 
supporting more than 225,000 jobs in South Florida. It is recognized as 
the Cargo Gateway of the Americas.
    Miami's unique geographic position makes the Port easily accessible 
to Caribbean and Latin American markets, as well as those of Asia and 
Europe by way of the Panama Canal.
    PortMiami is also known worldwide as the Cruise Capital of the 
World, welcoming more cruise passengers to its terminals than any other 
port in the world.
Our Mission
    PortMiami's mission is to operate and further develop the world's 
leading cruise port and the largest container port in the State of 
Florida; to maximize its assets and strengthen its advantage for future 
growth; promote international trade and commerce as a vital link 
between North and South America and a growing center for global trade; 
support sustainability and operate in an environmentally responsible 
manner.
    Our business plan and quarterly performance reports outline 
PortMiami's strategic alignment, performance measures as well as our 
ongoing progress toward meeting those objectives. The documents include 
a table of organization that defines the reporting relationships within 
the department.
Foreign Trade Zone 281
    FTZ 281 is a General Purpose Foreign Trade Zone established under 
the Alternative Site Framework (ASF). The ASF provides an expedited 
process to becoming an FTZ site. Since its authorization in August 2012 
by the Foreign Trade Zone Board, we have 27 sites that have been 
designated with approximately 3.0M square feet available for foreign 
trade zone logistics operations.
Mission & Vision
    To make Miami-Dade County's international trading community more 
profitable and competitive by providing quick and easy access to 
foreign trade zone benefits.
Geographic Impact
    FTZ 281 stretches from Southwest Eighth Street to the Broward 
County line, from Miami Beach in the east to the Urban Development line 
in the west. This area encompasses many industrial areas and critical 
logistics components including:

   Miami International Airport

   Opa-locka Airport

   PortMiami

   Railyards and other transportation infrastructure

    The Chairman. Thank you, Mr. Johnson.
    Ms. Teel.

               STATEMENT OF MICHELLE TEEL, P.E.,

                MULTIMODAL OPERATIONS DIRECTOR,

             MISSOURI DEPARTMENT OF TRANSPORTATION

    Ms. Teel. Thank you, Chairman Thune and Ranking Member 
Nelson for inviting me to participate in this hearing. Thank 
you, also, to our Missouri senators, Senator Blunt and Senator 
McCaskill, for your support of transportation. I am so pleased 
to be here to share the state experience on freight rail 
safety, efficiency and commerce.
    Situated in the center of the United States, Missouri is 
the crossroads for our Nation's railroads. Missouri is the 
fourth most rail intensive state, annually carrying more than 
420 million tons of goods. Nearly 20 million additional trucks 
a year would be needed to move this same amount of freight on 
our highways in Missouri.
    We have more than 4,800 miles of track, 3,800 public rail 
crossings and six Class I railroads operating within the state. 
We're also proud to have two of the top three rail terminals in 
the country. Kansas City Terminal Railway is the second largest 
terminal in the country. Approximately 250 freight train 
movements occur at KCT every day. Missouri is also a home to 
Terminal Railroad Association of St. Louis the third largest 
terminal in the country.
    At the Missouri Department of Transportation, safety is our 
highest priority and we do everything within our ability to 
make our transportation system as safe as possible. When we 
recently saw Bakken crude oil shipments increase, Missouri's 
railroad safety inspectors worked with the railroads and with 
the Federal Railroad Administration to make certain those 
routes received our highest attention.
    The rise of railroad movements also spurred MoDOT to 
increase their railroad safety inspection staff. So, in a time 
when resources are scarce, this decision demonstrates MoDOT's 
commitment to rail safety and the safety of our citizens.
    In Missouri, we value our strong relationships with the 
nation's second and third largest terminal railroads. We know 
Missouri's terminal railroads are an important national asset, 
moving a significant amount of freight, including hazardous 
materials. They allow multiple railroads to use common 
infrastructure thus maximizing efficiencies and minimizing 
environmental impacts.
    Amtrak and the state-sponsored Missouri River Runner, 
passenger rail service contracted through Amtrak, also use 
these nationally significant terminal railroads. Six passenger 
trains traverse KCT each day. As I mentioned earlier, 
approximately 250 freight movements occur every day at KCT, 
which is obviously driving our nation's economy.
    With Positive Train Control regulations, the terminal 
railroads were only required to install PTC if they had 
passenger movements with no regard to operation volume, 
population density, tonnage or commodities moved, including 
hazardous materials. So recently, MoDOT received a letter from 
Amtrak regarding PTC improvements in Kansas City and St. Louis 
terminals, which is attached to my testimony. This letter 
indicates Amtrak is receiving invoices from Kansas City 
Terminal for the implementation of Positive Train Control.
    The estimated total cost for installation in KCT is about 
$32 million, and Missouri's share for that state-sponsored 
passenger rail service is approximately $20 million and $2 
million a year for maintenance in Kansas City alone. So to give 
some scale to this, Missouri's cost to fund the entire 
passenger rail service between Kansas City and St. Louis is 
about $9 million a year. And the service operates on Kansas 
City Terminal for only about 6 of the entire 250 miles of the 
passenger rail route.
    So while we agree, PTC helps improve rail safety, we do not 
believe MoDOT and Amtrak should be required to bear the cost of 
the entire PTC system in the terminals considering the volume 
of hazardous materials and other commodities in these dense 
population areas. MoDOT sent a response letter to Amtrak and 
another to the FRA regarding this issue, and I've attached both 
of those letters to my testimony as well.
    You'll see in our letters, MoDOT stands ready to work with 
the FRA, with the railroads, Amtrak, and lawmakers to address 
this important issue. We know there will be an on-going and 
dynamic discussion that we hope, ultimately, leads to a more 
informed and more importantly a more equitable method of 
implementing PTC in our nation's largest rail terminals.
    Again, I'd like to thank you for the opportunity to share 
our views on this very important topic, and reinforce that the 
Missouri Department of Transportation stands committed to 
improving the safety of our entire transportation system.
    Thank you.
    [The prepared statement of Ms. Teel follows:]

   Prepared Statement of Michelle Teel, P.E., Multimodal Operations 
            Director, Missouri Department of Transportation
    Thank you, Chairman Thune and Ranking Member Nelson for inviting me 
to participate in this hearing. I am Michelle Teel, the Missouri 
Department of Transportation (MoDOT) Multimodal Operations Director. 
I'm so pleased to be here to share the state experience on freight rail 
safety, efficiency, and commerce.
    Situated in the center of the United States, Missouri is the 
crossroads for our Nation's railroads. Missouri is the fourth most rail 
intensive state by tonnage, annually carrying more than 420 million 
tons of goods. Nearly 20 million additional trucks a year would be 
needed to move this same amount of freight on Missouri's roads. 
Missouri also has more than 4,800 miles of railroads, 3,800 rail 
crossings on public roads, and six Class One railroads operating within 
the state. Kansas City Terminal Railway (KCT) is the second largest 
terminal in the country. Approximately 250 freight train movements 
occur at KCT every day. Missouri is also home to Terminal Railroad 
Association (TRRA) of St. Louis. TRRA is the third largest terminal in 
the country. All sorts of commodities move through these terminals 
every day from places like Long Beach California and Powder River 
Valley. You don't have to wait long in Missouri to see a unit train of 
coal or a load of hazardous materials.
    Safety is MoDOT's highest priority, and we do everything within our 
ability to make our transportation system as safe as possible. When we 
recently saw Bakken crude oil shipments increase, Missouri's railroad 
safety inspectors worked with the Class One railroads and the Federal 
Railroad Administration (FRA) to make certain those routes received our 
highest attention to help ensure the safe movement of goods. We checked 
curves of tracks, intersections with roads, and the operations of these 
movements to give Missouri the safest rail system possible. The rise of 
railroad movements also spurred MoDOT to increase railroad safety 
inspection staff. In a time when resources are scarce, the decision to 
increase railroad safety inspection staff demonstrates MoDOT's 
commitment to rail safety. With rail movements on the rise, we believe 
these actions are prudent to make certain our citizens and railroads 
are safe.
    In Missouri, we work closely with the Nation's second and third 
largest terminal railroads to promote safe and efficient rail 
transportation. We know Missouri's terminal railroads are an important 
national asset, moving a significant amount of freight, including 
hazardous materials. They allow multiple Class One railroads to use 
common infrastructure, thus maximizing efficiencies and minimizing 
environmental impacts. The state sponsored Missouri River Runner 
passenger rail service and Amtrak also use these nationally significant 
terminal railroads to move passengers. Six passenger trains traverse 
KCT each day, moving people to and from our Nation's largest population 
centers. Moreover, as I mentioned earlier, approximately 250 freight 
movements occur every day at KCT, driving our Nation's economy.
    When positive train control (PTC) regulations were created, the FRA 
made the ruling through their interpretation of The Rail Safety 
Improvement Act of 2008, that terminal railroads would only have to 
install PTC if they had passenger movements. However, MoDOT believes 
PTC installation requirements should not be triggered by a small amount 
of passenger rail traffic, but rather should be based on operation 
volume, population density, tonnage, and commodities moved--especially 
hazardous materials. This would be consistent with the rest of the PTC 
rules and applications nationwide.
    Recently, MoDOT received a letter from Amtrak regarding PTC 
improvements in KCT and TRRA. This letter laid out that Amtrak had 
begun receiving invoices from KCT for the implementation of PTC. As KCT 
views the law through FRA interpretation and subsequent regulation, the 
only requirement for implementing PTC in the terminal is the six 
passenger train movements per day, not the 250 freight movements 
through this dense population center. Amtrak explained in the letter 
the estimated total cost for installation in KCT will be about $32 
million. The letter states Missouri's share for the state sponsored 
Missouri River Runner passenger rail service (contracted through 
Amtrak) is approximately $20 million and about $2 million a year for 
maintenance in KCT alone. To give some scale to this--Missouri's cost 
to fund the Missouri River Runner passenger rail between Kansas City 
and St. Louis is approximately $9 million per year. The service 
operates on the KCT for only about 6 miles of the entire 250 mile 
route.
    MoDOT believes PTC helps improve rail safety. However, requiring 
MoDOT and Amtrak to bear the cost of the entire PTC system in the 
terminals--considering the volume of hazardous materials and other 
commodities in these dense population areas--does not seem to comply 
with the intent of the law. While this issue impacts Missouri the most 
severely, Illinois and California are also impacted by this FRA 
interpretation.
    MoDOT sent a response letter to Amtrak and another to the FRA, 
regarding the Amtrak letter. I have attached both of these letters to 
my testimony, along with the letter received from Amtrak. You will see 
in our letters, MoDOT stands ready to work with the FRA, railroads, 
Amtrak, and lawmakers to address this important safety issue. We know 
there will be an on-going and dynamic discussion ultimately leading to 
a more informed and equitable method of implementing PTC in our 
Nation's largest rail terminals.
    I would like to thank you for the opportunity to share our views on 
this very important topic. Missouri stands committed to improving the 
safety of our entire transportation system.
                              Attachments
                    National Railroad Passenger Corporation
                                  Washington, DC, November 14, 2014

Mr. Eric Curtit,
Administrator of Railroads,
Missouri Department of Transportation,
Jefferson City, MO.

Re: Positive Train Control on Kansas City Terminal Railway 
   and the Terminal Railroad Association of St. Louis Rail 
                                                      Lines

Dear Mr. Curtit:

    As you may be aware, Amtrak has received initial bills totaling 
approximately $8.8 million from Kansas City Terminal Railway (KCT) and 
from the Terminal Railroad Association of St. Louis (TRRA) concerning 
the installation of Positive Train Control (PTC) on: (1) KCT's main 
line in Kansas City between Rock Creek Junction and Santa Fe Junction 
and (2) TRRA's main line in St. Louis between Grand Avenue and the 
Amtrak Station. The State-supported Missouri River Runner service uses 
these lines. The long-distance Southwest Chief uses a portion of the 
KCT route in Kansas City and the Texas Eagle uses the TRRA route in St. 
Louis.
    KCT and TRRA are asserting that the existence of passenger trains 
on these lines is the only reason why PTC must be installed under the 
final PTC Rule recently issued by the Federal Railroad Administration. 
Amtrak currently is in an arbitration litigation with KCT and in 
discussions with TRRA as to whether and to what extent these bills, and 
any subsequent bills for installation and maintenance, are indeed 
incremental costs which KCT and TRRA have incurred or will incur solely 
due to the presence of passenger trains, and if so what amount would be 
clue to KCT and TRRA for reimbursement. If reimbursement is 
appropriate, Missouri would, pursuant to the PRIIA Sec. 209 Cost 
Methodology Policy, be responsible for a substantial portion of the 
cost of this installation and subsequent maintenance.
    To date, Amtrak has made no payment to KCT or TRRA and has posed 
various questions and asserted potential defenses. In response, KCT has 
informed us that the estimated total cost of installation will be about 
$32 million. If passenger trains were required to pay that amount, 
prorating by train counts and routes, approximately $20 million will be 
Missouri's share and the balance will be Amtrak's share. Although KCT 
has not provided any estimate to Amtrak of its annual maintenance 
costs, such annual maintenance costs could be about 10 percent of the 
installation cost, i .e., about $2 million per year for Missouri's 
share.
    Also in response, TRRA has informed us that it is still in the 
preliminary engineering phase of its development and does not have a 
total cost estimate for its PTC installation. TRRA's installation 
involves Missouri's River Runners, Illinois' Lincoln Service, and the 
long-distance Texas Eagle. Amtrak's rough order of magnitude estimate 
of the portion of the TRRA PTC installation cost west of the Amtrak 
station in St. Louis is about $0.7 million. If passenger trains were to 
be required to pay that amount, prorating by train counts, 
approximately $0.45 million is the state of Missouri's share and the 
balance is Amtrak's share. Although TRRA has not provided any estimate 
to Amtrak of its annual maintenance costs of PTC, such annual 
maintenance costs could be about 10 percent of the installation cost, 
i.e., about $45,000 per year for Missouri's share.
    Amtrak is not in a position to fund PTC expenses on state-supported 
routes, and indeed pursuant to the PRIIA Sec. 209 Cost Methodology 
Policy, these costs on the River Runner's route fall to Missouri. Since 
KCT and TRRA have begun to issue bills, please advise Amtrak's Mr. 
Michael Franke by December 1, 2014, of Missouri's commitment to pay 
Amtrak for the PTC expenditures as described above. Amtrak requires 
this commitment to continue to operate this state-supported service 
beyond the PTC effective elate of December 31, 2015. If Missouri is 
unable to commit to this by December 1, 2014, then Amtrak must take 
steps to notify KCT that the River Runner service will end and KCT need 
not install PTC on any trackage that is not used by Amtrak's Southwest 
Chief
    Amtrak is sending a similar letter to other states in this 
situation. Currently these states are Illinois (Lincoln Service) and 
California (Pacific Surfliners).
    I look forward to hearing from you.
            Sincerely,
                                               DJ Stadtler,
                                          Executive Vice President 
                                      and Chief Operations Officer.
CC: Joseph Szabo, FRA
        Jay Commer
        Mike Franke
        Paul Vilter
        Keith Holt
        Robin McCarthy
        Jad Roberts
                                 ______
                                 
                      Missouri Department of Transportation
                              Jefferson City, Mo, December 23, 2014

Mr. Paul Nissenbaum,
Associate Administrator,
Federal Railroad Administration,
Washington, DC.

Dear Mr. Nissenbaum:

    My purpose in writing is to formally request that the Federal 
Railroad Administration (FRA) review its interpretation of the August 
2014 final rule on positive train control (PTC). Specifically, the 
Missouri Department of Transportation (MoDOT) seeks FRA's reversal of 
its interpretation exempting the Terminal Railroad Association of St. 
Louis (TRRA) and the Kansas City Terminal Railway (KCT) from paying for 
the cost of installing positive train control on the Missouri portion 
of its network. It is our understanding that the Illinois Department of 
Transportation is submitting a similar request to you in regard to 
TRRA's Illinois network.
    TRRA and KCT cite FRA's interpretation of the short-line railroad 
exemption, which currently includes both Terminal railroads. The St. 
Louis and Kansas City Terminals, however, are unlike other short-lines 
in that they are owned 100 percent by Class 1 railroads that are 
subject to the PTC mandate at their own expense. The St. Louis and 
Kansas City Terminals thus do not in any way fit into the ``small 
business'' category of other short-lines.
    KCT has already sent Amtrak an initial invoice for PTC work in 
Kansas City. Amtrak, in turn, is citing Section 209, stating that PTC 
installation is an operational cost that should be borne by the states 
supporting passenger rail service. Accordingly, Amtrak is estimating 
that Missouri will need to identify $20 million in funding to cover PTC 
installation on KCT's infrastructure and $450K in TRRA for Missouri's 
share of the PTC installation. Missouri, however, believes that PTC is 
a fixed capital asset whose cost allocation should at least be governed 
by an as-yet undetermined division of fixed capital asset costs between 
the states and Amtrak. But the entire need for such an allocation 
discussion would be eliminated if FRA reverses its interpretation as we 
request, and requires TRRA and KCT to fund the installation of PTC on 
its own--just like FRA is mandating the class 1s to install PTC at 
their own expense on other qualifying infrastructure owned by them.
    I have instructed Eric Curtit, MoDOT's Administrator of Railroads, 
to work with you on this issue. Please follow up with Eric directly. 
Thank you for your consideration.
            Sincerely,
                                    David B. Nichols, P.E.,
                                                          Director.
cc: Joe Shacter, IDOT

    The Chairman. Thank you, Ms. Teel.
    Mr. Jahn.

              STATEMENT OF CHRIS JAHN, PRESIDENT, 
                    THE FERTILIZER INSTITUTE

    Mr. Jahn. Thank you, Mr. Chairman and Ranking Member 
Nelson, and members of the Committee. We appreciate the 
opportunity to talk to you today about rail service issues.
    The fertilizer industry and agriculture depend on safe, 
reliable and cost-effective rail service. And in fact, nearly, 
all fertilizer shipped in North America touches the rail 
transportation system at some point. The delivery of fertilizer 
in a timely manner is critical to the 2 million American 
farmers who produce enough food to feed our citizens and 
generate over $400 billion annually in economic output. And, in 
fact, 40 to 60 percent of a crop's yield is due directly to 
fertilizer.
    So it's vital that this committee understands that the 
availability of an efficient rail service is not a season issue 
for agriculture. Our industry works to support farmers 24 hours 
a day, 7 days a week. And the sheer production of volume of 
production in the industry couldn't possibly be transportation 
just two times a year during the spring and fall planting 
seasons. And, in fact, this takes place year round.
    In addition, our members have relatively little storage. 
And so, if they don't have reliable rail service, those plants 
have to shut down. So just as the railroad industry has changed 
in the last 35 years since the Staggers Act has passed, farming 
has as well due to advanced agriculture. So, for example, last 
spring in May of 2014, the country as a whole went from 29 
percent of acres planted to 73 percent acres planted. That's 40 
million acres that were planted in a 2-week period.
    So farmers rely on the robustness of the transportation 
system, especially the railroads now more than every. And so, 
given our reliance on rail service, The Fertilizer Institute 
supports policies that will promote greater competition between 
railroads and improve the efficiency and effectiveness of the 
Surface Transportation Board. For example, last spring the STB 
required the BNSF and CP to track fertilizer shipments. The 
transparency helped to improve service that desperately needed 
it.
    However, we're concerned that the recent STB order, 
establishing temporary reporting requirements and the Board's 
purposed rulemaking a permanent reporting requirement do not 
include separate tracking of fertilizer shipments. Given our 
importance to agriculture and the time length of delivery and 
application of fertilizer, we feel that it's appropriate to be 
included in that permanent reporting order. Farmers at the 
April 2014 STB hearing testified to that fact.
    We're also concerned about other issues that effect rail 
service. For example, the new crude oil tank car standards 
proposed by DOT could have the unintended impact of crowding 
out shop capacity for maintenance required for other cars. 
Further, the proposed speed restrictions for High-Hazard 
Flammable Trains, which do not include fertilizer, could add 
significant congestion to an already overburdened network.
    Moreover, it's likely that the trains under the rulemaking 
may have significant number of cars that do not contain 
flammable liquids.
    We're also concerned about the deadline for deploying 
Positive Train Control, which we've heard a lot about this 
morning. As you all know, this covers tens of thousands of 
miles of track. And while we have very strongly supporting the 
effort to deploy PTC and enhance rail safety, we want to make 
sure that it does not erode the railroad's commitment to their 
common carrier obligation to transport toxic inhalation cargo.
    And the reason for that is rail service is vital to the 
transportation of anhydrous ammonia, which is used a direct 
application fertilizer particularly in the Midwest. It's also 
used in the production of many other types of fertilizers. And 
as others have said before today, rail is in fact the safest 
transportation option for anhydrous over land. So we want to 
make sure that those 30,000 tank cars that are transported 
annually, we want to make sure that we continue to have the 
right to ship over-the-rails. Because, it takes four trucks to 
replace one rail car. And that's just--that would not be 
possible to do in a timely manner.
    So in conclusion, I want to thank again the Committee for 
allowing us to be here. Our partnership with the railroads is 
crucial in helping feed a growing world and we dependent on 
that safe, reliable and cost-effective service. And we want to 
work with the Committee, the Surface Transportation Board and 
our partners within the railroads to make sure that that 
happens.
    Thank you.
    [The prepared statement of Mr. Jahn follows:]

 Prepared Statement of Chris Jahn, President, The Fertilizer Institute
    My name is Chris Jahn. I am the President of The Fertilizer 
Institute (TFI) which is the national trade association representing 
the fertilizer industry. TFI represents virtually every primary plant 
food producer, as well as secondary and micronutrient manufacturers, 
fertilizer distributors and retail dealerships, equipment suppliers and 
engineering construction firms, brokers and traders, and a wide variety 
of other companies and individuals involved in agriculture. The 
Institute's members play a key role in producing and distributing vital 
crop nutrients, such as nitrogen, phosphorus and potassium, which are 
used to replenish soils throughout the United States and globally to 
produce healthy and abundant supplies of food, fiber and fuel. 
Fertilizers make it possible for farmers to grow enough food to feed 
the world's 7.2 billion people. Research has confirmed that 40-60 
percent of crop yields are attributable to commercial fertilizers 
nutrient inputs.
    The fertilizer industry depends on safe, reliable, and cost-
effective rail transportation to deliver fertilizer, which is essential 
to U.S. food production. While fertilizer shippers also utilize other 
modes of transportation to move their products, nearly all fertilizer 
shipped across North America touches the rail transportation system at 
some point, between its production and ultimate application by the 
farmer. In 2011-2012, 61 million material tons of fertilizer products 
were sold in the U.S. The delivery of fertilizer products in a timely 
manner is critical to farmers. There is only a narrow window of 
opportunity to apply the right fertilizer source, at the right rate, at 
the right time and in the right place. If farmers do not receive their 
fertilizer in a timely manner, there are potential consequences for 
food security and the environment. Limited nutrient access during key 
utilization periods reduces crop yields which means lower production 
and potentially higher food prices for consumers. Additionally, the 
inability of farmers to access nutrients during these periods could 
encourage use during inopportune times such as frozen or wet 
conditions. This could potentially increase nutrient losses to surface 
and ground waters.
    The 2013/2014 winter was particularly challenging for our members 
due to extreme cold temperature and higher than normal snowfall totals 
limiting rail capacity and threatening the timely delivery of 
sufficient fertilizer to farmers. TFI greatly appreciated the Surface 
Transportation Board's (STB) intervention last spring to track 
fertilizer shipments on the BNSF Railway and the Canadian Pacific 
Railroad. Given our members' reliance on rail transportation and 
significant service issues, TFI fully supports policies that will 
promote greater competition between railroads and improve the 
efficiency and effectiveness of the STB.
    TFI commends the STB for last year's efforts to increase 
transparency when it comes to rail service by requiring Class I rail 
carriers to provide key service metrics. TFI is, however, concerned 
that the Board's October 8, 2014, order establishing temporary 
reporting requirements similar to last winter do not separately track 
fertilizer rail shipments. Furthermore, we are concerned that the 
Board's recently-proposed rulemaking to adopt permanent reporting 
requirements does not require separate reporting for fertilizer 
shipments which are critical to the placement of fertilizer in time for 
the spring and fall planting seasons. Notably, the Board's proposed 
reporting requirements include grain and ethanol, two products whose 
production would be greatly impacted without timely application of 
fertilizer. Moreover, the Board's emphasis on these other commodities 
provides incentives for rail carriers to prioritize them over 
fertilizer shipments when allocating rail cars. As farmers at the April 
10, 2014, STB hearing on rail service testified, timely fertilizer 
shipments are a very serious concern.
    On a separate issue, TFI members have expressed concerns regarding 
the new crude oil tank car rules proposed by the Pipeline and Hazardous 
Materials Safety Administration. Under the proposed rules, rail car 
maintenance facilities will be inundated by orders to retrofit older 
tank cars for crude and ethanol over an unreasonably short span of 
time. This will crowd out capacity for the routine inspections and 
maintenance required by other cars. This will be to the detriment of 
other commodities, including fertilizer. Furthermore, the proposed 
speed restrictions for High-Hazard Flammable Trains (HHFT) could apply 
so broadly that they could add significant congestion to the already 
congested national rail network.
    The Rail Safety Improvement Act of 2008, which mandated that 
railroads implement Positive Train Control (PTC) by the end of 2015 on 
main lines that handle toxic-by-inhalation (TIH) materials, also is of 
concern to TFI members which ship and receive TIH materials in the form 
of anhydrous ammonia used in most all nitrogen based fertilizers, some 
finished phosphate fertilizers and several intermediary applications 
that produce finished goods for use in the home. Rail transportation is 
essential to the safe and reliable movement of anhydrous ammonia. In 
most cases, the safest and often only feasible mode of bulk long 
distance transportation of anhydrous ammonia is by rail. Shipment of 
ammonia by truck alone would place four trucks on the Nation's highways 
for every railcar. Shipment by barge is only feasible between a very 
limited number of ammonia production and storage facilities located on 
a navigable waterway. Rail has proven to be the safest and most 
economical mode for TIH shipments over land.
    The existing PTC mandate would apply to over 70,000 miles of track 
and the rail industry unequivocally has declared that it cannot meet 
the current statutory deadline for most of this track. TFI strongly 
supports efforts to enhance rail safety, including the deployment of 
PTC. However, our members have concerns the railroads would cease or 
substantially curtail TIH transportation if they are unable to meet the 
statutory deadline. We are also concerned that railroads may curtail 
TIH transportation in order to reduce the number of rail lines that 
must install PTC. Therefore, PTC implementation must not erode the 
common carrier obligation. TFI members must have access to rail 
transportation for anhydrous ammonia in order to meet the demands of 
U.S. farmers for optimal crop production. For these reasons, TFI 
supports Chairman Thune's legislation from last Congress that would 
extend the PTC implementation deadline.
    We continue to monitor a host of important issues before the STB 
and other regulatory agencies. Topics such as unilateral railroad 
mandates, railroad pricing power, and reassignment of third party 
liability to the shippers are major concerns for our industry. These 
and the other aforementioned items will have a major impact on our 
member's abilities to serve and supply farmers and meet our goal of 
feeding the U.S. and the world.
    While there is not a single solution to the ongoing rail service 
challenges, TFI, on behalf of our members appreciates this opportunity 
to share some of our freight rail service concerns. We look forward to 
working with this Committee and Congress on these issues moving 
forward.

    The Chairman. Thank you, Mr. Jahn, and thank you to all of 
you for your great testimony.
    And Senators, we'll start with 5-minute rounds and then see 
where it goes and how much participation we have. We'll 
probably have time to do another round of questions depending 
on how many people show up.
    I want to start with you, Mr. Brown. As you know, South 
Dakota's Genesee & Wyoming property, the Rapid City, Pierre and 
Eastern Railroad, which I alluded to earlier, hands off a 
significant portion of rail traffic to the Canadian Pacific, 
which is a Class I railroad. During the early months of the 
transition following G&W acquisition of the line, there were 
challenges in managing power and car resources and in 
effectively handing off trains. My question is: How do short 
lines manage service with Class I railroads and how does that 
vary among Class I railroads?
    Mr. Brown. It's certainly we have a great--first of all, 
we're a customer of every Class I railroad. As a short line 
holding company, our various railroads are a customer of every 
Class I. We're also partners. So in the case of RCP&E and, our 
partnership with CP as we started that operation, we manage it 
on a very much multiple, you know, interactions per day basis. 
We look at ourselves in our various railroads as an extension 
of the Class I's, into the First Mile/Last Mile environment.
    For example, in South Dakota, which is a fantastic 
operation that we successfully began in last year and it has 
progressed well. And we've seen there were some challenges as 
we started that operation. There often are as we integrate a 
new property into the portfolio of railroads that G&W owns. So 
we establish strong communication channels operationally so 
that every day, various times through the day, we're planning 
for locomotives and how many cars are going to be available for 
our customers. We've purchased and brought into that railroad 
over 2,000 cars of our own in addition to what CP had previous 
supplied to that railroad when it was part of their network.
    So we bought our own locomotives. We brought those into 
that operation and we hired over 180 South Dakotans to operate 
that railroad, and they've done a fantastic job of--yes, sir.
    The Chairman. And I'm sure you have to be careful about 
what you say in terms of your interchanges with the Class Is, 
but are there differences between Class Is?
    Mr. Brown. Certainly.
    The Chairman. I mean, you obviously interact with a lot of 
Class Is.
    Mr. Brown. Right. Every one of them. So, yes, every single 
Class I, and there are differences.
    I understand the networks having formerly worked for two 
Class Is and having been well-acquainted with the rest of them. 
So there are differences that I see that there's a lot of 
attention in the Class Is, all of them in terms of enhancing 
their capacity, improving their fluidity, and I'm seeing 
results that say they're being successful in improving where 
everywhere that we connect with them.
    It's progressing well. We all know last winter was----
    The Chairman. Right.
    Mr. Brown.--off the scale as far as its impact and that has 
largely been recovered.
    The Chairman. Yes. And we're glad to see the improvements 
as well.
    Mr. Lonegro, there are disruptions in the rail network that 
have cascading impacts. And the question is: how can we better 
manage major bottlenecks like the one in Chicago that impact 
the fluidity that Mr. Brown eluded to of the entire rail 
system? And then, as a sort of a more perhaps specific 
question, how have railroads changed their planning for severe 
winter weather events like the one that we're experiencing in 
the Northeast right now?
    Mr. Lonegro. Thank you, Mr. Chairman.
    In terms of Chicago, clearly Chicago is the crossroads of 
all of North American's railroads. It's the most efficient way 
to interchange traffic from west-to-east and east-to-west. So 
it's a natural place where all railroads come together; as it 
has been historically. You know, Chicago is a situation where 
congestion on any one railroad can impact other railroads. 
There are also a series of switching carriers within Chicago 
that make connections between railroads that don't naturally or 
physically exist.
    Chicago last winter suffered from the same challenges that 
Mr. Brown just spoke of in terms of the winter as well as the 
additional volume that we all experienced starting in the 
second quarter of last year. There are two ways, I think, to 
help look at Chicago. One of those is investment.
    And when you look at the create projects or the great 
public-private partnership, multibillion-dollar, multi-decade 
series of projects that help both freight railroads as well as 
passenger railroads and in the individual investment of many 
railroads as we all look to make our interchanges and our 
individual rail networks as sufficient as possible, there are a 
series of committees that are operational committees on the 
ground every day in Chicago. We call it the CTCO, the Chicago 
Traffic Coordination Office. We each have members that sit on 
that coordination office and their job is literally to try to 
get freight from one side of Chicago to the other side of 
Chicago every day. They have gone into a very revised series of 
what they call ``OPCON,'' or Operating Condition changes so 
that, if any one railroad gets in trouble, that railroad has to 
bring forward a plan to alleviate that congestion. If they are 
unable to do so, then the other railroads pitch in and begin to 
divert traffic to alternative interchanges.
    So there is a lot happening right there. Amtrak has put 
together a blue ribbon panel to look at that. Class Is have put 
together a retired executive panel to look at ways to improve 
Chicago fluidity. Many of us have looked at alternative 
interchanges. We just opened one with the BNSF in Smithboro, 
which is just Northeast of St. Louis, so that if we do get into 
a situation where traffic needs to be diverted from Chicago, or 
maybe doesn't have to go to Chicago at all, we do have those 
alternative gateways that can help reduce the congestion in 
Chicago.
    To your winter question: Obviously, last winter took many 
of us by surprise; probably the worst winter in 30 to 40 years. 
We have winter every year, it's just a question of how extreme 
it is, how much snow, how much precipitation, how much cold 
there may be. And so, you know, we did dust off our plans and 
make sure that they were each as up-to-date as possible. It's 
making sure we have the supplies of the right components for 
freight cars and locomotives and rail that are temperature 
sensitive. You know, everything that we deal with by and large 
is steel and steel reacts to temperature both extremes on the 
low end and extremes on the high end.
    We also have invested in new equipment, what are called 
switch heaters and jet blowers. It is, in essence, how we clear 
the railroad of snow and ice to make sure that the equivalent 
of the exit ramp off of the main line remains fluid. And then, 
it gets down to communication and making sure we understand 
where certain trains may be in trouble in getting crews and 
additional power out there to rescue a train that might have 
had a locomotive failure or track failure or car failure.
    The Chairman. Thank you.
    And anything you can do in Chicago, I know there's a lot 
being done, but that was a huge, as you know, bottleneck in 
last season.
    My time's over. I've got some PTC questions but I'm sure my 
other colleagues will get to those.
    So, Senator Nelson.
    Senator Nelson. So, Mr. Lonegro, you all have been trying 
to implement Positive Train Control. There have been some 
complications. What can we do to help you and how does the 
extension figure into that?
    Mr. Lonegro. Well, certainly this committee plays a major 
role in introducing legislation to extend the deadline for PTC. 
We're appreciative to the Committee and, certainly, your 
sponsorship or co-sponsorship and Senator Thune and Senator 
Blunt's sponsorship of the extension that you introduced in the 
last session. And we look forward to continuing that discussion 
with you in this session of Congress.
    The extension will be used for the following. The next 
handful of years, say 3 years or so, will be the continued 
deployment in the infrastructure side. The 30,000 locomotives 
that I mentioned in my opening testimony, 23,000 locomotives in 
my opening testimony, in the tens of thousands of miles of 
signal replacement that we have to do in order to bring it up 
to the type of technology that can interface with Positive 
Train Control.
    So the hardware deployment will continue significantly in 
the next 3 years. Certainly, the software is not yet in its 
final form and we will look forward to working with our 
suppliers to try to get it into final form. And, in some 
respects, that merely starts the process of testing in a 
laboratory and then testing in the field in order to make sure 
that it works in an operating environment. And so, the safety 
and the efficiency of that.
    And I think it's important to remember the amount of money 
and the dedication. Literally, at CSX we have 1,000 people 
working on PTC, the industry literally has thousands of people 
working on Positive Train Control and they've, in essence, made 
it their career and life's work in order to deliver this 
technology for the safety of our workers and our communities 
and the passengers who run on our railroad.
    Senator Nelson. Mr. Johnson, you started the interactivity 
and connectivity of rail to the Port of Miami before you 
actually did the tunnel, the tunnel for trucks, and the rail 
obviously for rail. Share quickly, distill your answer, with 
the Committee why the rail connectivity was so important.
    Mr. Johnson. Without rail, Port of Miami literally could 
not grow. And this is true for a number of ports. Miami is at 
the end of a long peninsula; Miami, PortMiami, Port Everglades 
as well. Both ports have had substantive rail improvement. 
You've got the major road quarter, I-95, it's already heavily 
congested. And for PortMiami to grow from just under a million 
TEU containers to 4 million, there's no way to move that 
product. The success for PortMiami and the billions of dollars 
that have been invested without rail, you don't need a billion-
dollar port tunnel, you don't need 50 feet of water.
    The ability in this Nation to move the product through, if 
you will, an intelligent road system and a rail system is 
vital; whether it's the Port of LA in Long Beach, whether it's 
the Port of Miami. Without that interconnectivity, you cannot 
connect your port to America and then globally. And this is a 
global, obviously, trading environment we live in. So rail is 
really the heart of it all.
    And Senators, you know I made it very well-known, the 
linchpin was securing Federal support, which we did through 
TIFIA with former Secretary of Transportation LaHood. It was, 
in fact, that ability to again partner with Washington with our 
state government, Governor, and of course local and our private 
sector partner, FEC. A true win for my port and I think it's a 
win for America; interconnectivity through rail.
    Senator Nelson. And by the way, I might point out to my 
colleagues, that was a part of the much maligned appropriations 
bill that was trying to give an economic jolt to the country 
from the depths of the recession back in 2009.
    Mr. Brown, I have been out on a couple of your railroads 
and given the fact that we've got some real problems with fiery 
crashes, with oil tankers, on the Class I and then you passed 
that over to your short line railroads, what are these 
challenges of transporting the crude for the short lines in 
addition to the Class I?
    Mr. Brown. I would suggest that it is somewhat unique in 
the short line world. We certainly support enhanced tank car 
safety standards that are currently underway. We have, over all 
of the G&W-owned properties, we've established some safety 
protocols and precautions based upon the type of hazardous 
materials that are transported over those unique properties; 
their volume as well as the existing level of maintenance of 
the infrastructure.
    So it is unique in the sense that our railroads do vary in 
that level of maintenance of the infrastructure depending on 
traffic density, car weights. We talked about, I mentioned, 
rail conditions as well as bridge structures, so we look at 
where those were, say, crude-by-rail might be operating across 
a G&W-owned railroad and we enhance our infrastructure 
maintenance as well as apply operating protocols and procedures 
for safety.
    Senator Nelson. Thank you.
    The Chairman. Thank you, Senator Nelson.
    I have, in the following order, Senators Blunt, Cantwell, 
Gardner who is no longer with us, and McCaskill. So Senator 
Blunt and then Senator Cantwell and then the double shot from 
Missouri, Senator McCaskill.

                 STATEMENT OF HON. ROY BLUNT, 
                   U.S. SENATOR FROM MISSOURI

    Senator Blunt. All right.
    So Ms. Teel, thank you for being here again. I think this 
is the second time we've had you testify on a couple of 
different issues in the last year and we all appreciate you 
being here. And Senator McCaskill and I particularly do.
    On the Amtrak route in Missouri that is state-sponsored, 
what's the status of Positive Train Control now as it relates 
to the Department of Transportation?
    Ms. Teel. So right now we operate that service on mostly 
Union Pacific's rail line. So Union Pacific, being a Class I 
railroad, is installing the PTC at their cost.
    Where we're running into a situation is with the terminal 
railroads, and they're in a tough spot. You know, we are great 
partners with the terminal railroads. In fact, Mike McCarthy, 
the President of St. Louis, The Terminal Railroad Association, 
is here today. And we're also great partners with the Kansas 
City Terminal. They're in a tough situation because were it not 
for the passenger rail activity they would not be required to 
install PTC. So they host us and we don't have a funding source 
to pay for PTC.
    In fact, every year it's a challenge just to get the $9 
million that we need to operate Amtrak because we don't have 
any dedicated funding in the state of Missouri for passenger 
rail. So to come up with an additional 20-plus million in 
capital on additional on-going maintenance for just that small 
section in both of those terminal railroads is going to be a 
real concern for the state of Missouri and possibly impact the 
future of passenger rail. So we're really concerned about that, 
in particular, in regards to those terminal railroads.
    Senator Blunt. And has the Department of Transportation 
given you any guidance on what you can or can't do or what the 
terminal railroads have to do?
    Ms. Teel. You know, Amtrak is actually working very close 
with those terminal railroads. We contract with Amtrak then 
Amtrak contracts with the railroads. And they've been working 
closely on trying to figure out how to pay for this, but 
ultimately the way the law and the interpretation is today 
those responsibilities are going to fall on the passenger rail 
portion because of the Class III railroad exemption of passing 
PTC.
    Senator Blunt. So the responsibility would fall on the 
terminal railroad or the state as the sponsor of Amtrak?
    Ms. Teel. The state and Amtrak.
    Amtrak has some national routes that flow through both St. 
Louis and Kansas City terminals and then we obviously have the 
state-sponsored route that goes back and forth between St. 
Louis and Kansas City. So breaking those into a proportion that 
each Amtrak and the state of Missouri would have to pay their 
fair share for the portion of PTC that is impacted in those 
terminals.
    Senator Blunt. OK.
    Mr. Lonegro, on this topic in general, I know you can tell 
from Senator Nelson's comments and Senator Thune's comments and 
many others on this panel that we've been concerned that the 
Government itself has been one of the obstacles to meeting the 
deadline. Where will railroads generally be by the end of 2015 
and what would be a reasonable deadline to, now that hopefully 
the FCC and others are working with railroads, to actually get 
this accomplished?
    Mr. Lonegro. So a couple of questions embedded within that, 
I'm sure you know.
    In terms of the Government, certainly the FCC and the tower 
issue that we confronted last year in and going back from about 
mid-2014 to mid-2013, certainly was a major obstacle that we've 
since overcome. We are working closely with the FCC on what we 
call the tower or the antenna height waiver, which we are 
working closely with them. We need that to get through the FCC.
    And then, there are some cross border issues between the 
United States and Canada that have to get resolved also. In 
other words, if a train is coming in from Canada, in order for 
it to be PTC-enabled when it hits the boundary between Canada 
and the United States, it has to begin to converse with PTC 
while it's still in Canada. Right, so we have to get through 
that cross border issue.
    At the FRA level, we meet with them quarterly and discuss 
issues. I think the dialogue has been very candid. At the same 
time, as you all know, when the Congress passed the Rail Safety 
Act, about one page of that legislation was Positive Train 
Control and it has turned into, you know, hundreds if not 
thousands of pages of regulation which became final in August 
of last year. So some six years after the legislation was 
initially passed, we finally have the recipe, so to speak, from 
the regulatory perspective on what we're required to do.
    Senator Blunt. On the tower-siting issue at FCC, your 
railroad particularly is impacted by that. Am I right on that?
    Mr. Lonegro. We are impacted by it, but the industry has 
about 20,000 towers that have to go through that process. The 
majority of those are in the Western U.S. We certainly have our 
fair share, but it pales in comparison to what the western 
railroads have to put through the process.
    Senator Blunt. My last question as my time runs out, is the 
FCC now doing what they need to be doing for tower-siting to 
happen or are we still looking at an obstacle there?
    Mr. Lonegro. We're still looking at an obstacle only 
because every tower has certain documentary requirements; so we 
have to do field surveys, put documentation together get it to 
the FCC, the state preservation societies and the American 
Tribes in order for them to review it. So every tower, every 
one of those 20,000 sites has probably 100 days or so, you 
know, review process that it has to go through. So there still 
will be obstacles there based on the streamline process.
    Senator Blunt. OK.
    Now, the question I didn't get answered, it may have been 
unfair for everybody, but how long do you think it'll take your 
railroad to comply with PTC?
    Mr. Lonegro. If everything goes well, and that's a huge 
caveat I know to the answer, our plans take us to 2020.
    Senator Blunt. Thank you, Chairman.
    The Chairman. Thank you, Senator Blunt.
    Senator Cantwell.

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Mr. Chairman, and thank you 
for holding this important hearing. Earlier, I was looking at 
the members and attendants and I always think, save the Senator 
from Florida, I bet you Washington ports export products from 
every single state that was represented here this morning; and 
from fossil fuel products to agricultural products, we're the 
second largest port now with the combined Seattle Tacoma 
alliance. And so, ports are us and freight and freight movement 
is critically important for us to keeping our competitive 
advantage and it's also very important for us as it relates to 
the growing market outside the United States. And doubling of 
the middle class around the globe in the next 15 years is a 
great economic opportunity for the United States.
    I do want to make one note to your comments earlier. My 
viewpoint on the rail car issues is that we should go faster. 
The administration should get those new recommendations 
implemented. I say that because with the 44 percent increase in 
the number of rail cars carrying crude in the last 6 years.
    My constituents who are now seeing these trains through 
every major city in our state, just because of the way they 
enter the state and go out to the refineries, they're literally 
hitting Spokane through the tri cities, through Vancouver, up 
through Tacoma, Seattle, Everett, and then up to the 
refineries. So these rail cars are going through every major 
population center.
    In fact, Seattle is now debating whether they want to make 
some new requirements, keeping the commuter trains and these 
rail trains which go into these same tunnels at various points 
in time, make rules regarding that. So it's a very big issue 
for us. So I'm anxious for them to act and I just wanted to 
make that a point.
    But for our panel today, and I would say, Mr. Chairman, I 
hope that we do play, the Commerce Committee, a very big role 
in surface transportation issues as that debate happens on, 
throughout the Senate and throughout the House. I feel like our 
committee has some very important role to play on safety and 
security on those. And so, we'll look forward to that.
    But I wanted to ask our witnesses, again, because freight 
is so important, Mr. Johnson or Mr. Lonegro, about 
implementation of the freight mobility board recommendations 
and how we--what would your recommendations be on how will we 
move to get those recommendations adopted by Congress so that 
we can improve our competitiveness of the infrastructure?
    Mr. Johnson. Typically, your ports are going to approach it 
with their rail partners. So we in part, for example, at the 
Port of Miami we really work closely with Florida East Coast 
Rail because, truly, they are our partner. So we're looking for 
their advice, their input. We have our governmental folk, of 
course, who work with us on issues here in Washington, but we 
are concerned in terms of implication of cost, delay.
    So the big thing for us is making sure that on the 
regulatory side that things obviously don't become over 
burdensome but also that there's a focus on really supporting 
the necessary dollars for the infrastructure. That really is 
the key for us. And the programs that have happened 
historically, and Senator Nelson hit on that.
    The TIGER program was really, really instrumental, 
particularly for our ports, and that linkage between rail. We 
secure 23 million out of TIGER too for rail. And without that 
TIGER Grant that project would not have happened. Of course, 
the State of Florida pumped in 11 million, my private partners 
from Florida East Coast put in money. So to me as a former port 
director, really the focus, the regulatory stuff, is very 
important, but we're really sort of focused on that 
infrastructure plan and how we make those funding decisions 
happen. And I think that's true probably for most ports in 
America.
    Senator Cantwell. So getting those recommendations 
implemented, Mr. Lonegro?
    Mr. Lonegro. Yes, ma'am.
    I think in terms of the partnership that we talked about, 
certainly the short lines are major partners for the Class I 
railroads. About 20 percent of our freight either originates or 
terminates on a short line. CSX serves 70 East Coast and Gulf 
ports. And so, certainly the ports are big customers and 
partners for us as well.
    Certainly the funding on both of those constituents is 
going to be really important. Our job, by and large, is to work 
with our customers to develop properties where they can site 
new rail-served facilities whether they be at the port or 
inland ports or simply manufacturing as that comes back onshore 
which is a wonderful thing for us. And then, to provide great 
service.
    And one of things that certainly was a challenge in 2014 
was doing exactly that. We've hired thousands of people that 
can run trains, we have invested over a billion dollars in 
locomotives. So we believe we have a good line-of-sight into 
good service this year. Certainly regulatory certainty is an 
important thing for us. The balance and the balanced regulation 
on the economic side will certainly keep that in balance.
    So, thank you.
    Senator Cantwell. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Cantwell.
    Senator Gardner.

                STATEMENT OF HON. CORY GARDNER, 
                   U.S. SENATOR FROM COLORADO

    Senator Gardner. Thank you, Mr. Chairman, and I apologize 
for my absence as I attended a small business committee hearing 
upstairs.
    Great to have you all with us today.
    In your testimony today and the written testimony, you've 
talked about the need to improve safety on our rail systems of 
which Congress, we passed the law for that purpose, and you've 
talked about the effort made to respond to that law. We've also 
heard about a number of the technical barriers, though, that 
have delayed the rail company's ability to fully test and 
implement this technology by the end-of-the-year deadline. 
Obviously, all of us are in strong support of railroad safety 
and the safe freight, safe rail system. And I know everyone 
here is as well.
    What I didn't hear too much about today and I'd like to get 
into it a little bit more is another type of safety and that 
deals also with our national security, and that concern being 
the issue of cybersecurity. Safety technology requirements from 
the law basically allows a computer to overrule human error 
when operating a train, as I understand. When this happens, 
then the system or the rail line shuts down until the problem 
is solved. As we hear more about cyber attacks on our country, 
I'm concerned that not giving enough time for this technology 
to operated could me we unnecessarily open our rail lines up to 
cyber attacks and other concerns.
    In the name of safety, is there an issue that we are not 
addressing that could in fact make our rails less safe?
    Mr. Lonegro.
    Mr. Lonegro. Thank you, Senator.
    I believe that we are working on cybersecurity in the realm 
of PTC. We have one of the most well-known national labs that's 
looking at it from an independent, third-party perspective to 
make sure the cybersecurity challenges are accounted for. As I 
know you are aware, cybersecurity is always a defensive 
measure; right? And so, every day there are new ways that 
either nation--states or individuals can attempt to infiltrate 
whether it's governmental or business or personal, you know, 
accounts and technologies.
    I think the important thing in the PTC realm is that the 
data transmissions and the communication's networks are 
encrypted with state-of-the-art encryption; so certainly the 
messages and the data transmissions are secure as anything else 
we're able to transmit today.
    The other thing, and I think again it's important to note 
where you talked about the technology coming in and taking over 
control of the train, the only interface of PTC is to the 
breaking system. Right? There is no throttle control by the 
system for Positive Train Control. So, you know, the failsafe 
mode for Positive Train Control is to bring the train to a 
stop.
    Senator Gardner. To a stop. OK.
    And in your opinion--and anybody else would like to address 
the question, please feel free to.
    In your opinion, is there adequate time, though, to provide 
the kind of testing that you're carrying out?
    Mr. Lonegro. No is the answer. Certainly not against a 
December 31, 2015 deadline. You know, the security elements, 
the safety elements, of being able to test all of this and, you 
know, to hire smart people to try and break into it, are 
certainly things that we will do. But you can't actually do 
that until the system is complete.
    Senator Gardner. Yes. Thank you.
    Mr. Chairman, I yield back.
    The Chairman. Senator McCaskill.
    Thank you, Senator.

              STATEMENT OF HON. CLAIRE McCASKILL, 
                   U.S. SENATOR FROM MISSOURI

    Senator McCaskill. As you can tell, my voice is not what it 
should be which is a cause for rejoicing in many places around 
the country and in this complex. So I will not spend a lot of 
time questioning today. I want to associate myself with 
comments and questions of my colleague, Senator Blunt. And I 
have a number of questions I'll submit for the record about 
issues, such as the transporting of crude which is one of the 
reasons I support the pipeline. I'm one of many but it's one of 
the major ones that the transportation of crude across my state 
is an everyday occurrence and something that we're concerned 
about in terms of overall safety.
    This issue with the Kansas City Terminal Railroad is 
complex, it's hard and I just want to state for the record that 
it is unacceptable that we would disrupt passenger service in 
Missouri over this issue. It's unacceptable. We have tens upon 
thousands of people that rely on the trains in Missouri. It 
isn't like the Northeast quarter, but it's essential in my 
state.
    And so, I would like to see--everyone knows that Congress 
is going to probably adjust this deadline and I would like 
there to be a more realistic target for the deadline, which 
gives us time to try and work this out among the various 
players that need a way in and help here. This can't be all on 
Amtrak, it can't be all on MoDOT and frankly the question is 
whether or not this is the right way to put all of that 
responsibility there because of what the rule currently states.
    So I hope we can get quick action on the PTC delay bill in 
order to give some more certainty to the environment in 
Missouri so we can make sure that we have and continue 
passenger rail service.
    I apologize for my voice and I'll submit the rest of the 
questions for the record.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator McCaskill.
    Senator Fischer.

                STATEMENT OF HON. DEB FISCHER, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Fischer. Thank you, Mr. Chairman.
    Everybody up here has some health issues today. So I would 
apologize as well.
    Mr. Lonegro, could you talk a little about your overall 
capital investment plan and what might happen to that plan if 
government did things to either restrict your revenue or change 
your regulatory structure based on how much revenue that you 
generate?
    Mr. Lonegro. Thank you, Senator.
    Certainly all Class I railroads are spending at record 
levels both because of the growth that we've seen as well as 
making sure that we run a safe and efficient rail network. And, 
as luck would have it, we just released the details of our CSX 
Capital Plan to our customers. One of the things that we've 
done in the last few months is truly open up a transparent 
dialogue with our customers around service as well as around 
the capital expenditures.
    And so, you know, rail as you know is a very capital 
intensive business. We're going to put in 3 million tons of 
ballast, 3.2 million crossties, we're going to rebuild 95 
locomotives, buy 200 new ones, and spend $100 million on 
technology. In the $2.5 billion capital plan that we have, and 
I think it's important to note that $300 million of that is for 
Positive Train Control. Additional regulation generally costs 
money and certainly having some balance there and being able to 
look at what I'll call the aggregate weight of all the 
regulation, I think is an important thing. And certainly, as 
you get into reregulation topics, anything that constrains the 
topline will ultimately constrain the ability for us to 
reinvest in the railroads.
    Senator Fischer. So, when we look at the STB revenue 
adequacy standard, that will affect your ability to invest in 
the future?
    Mr. Lonegro. It could. It depends on certainly all 
railroads meeting that revenue adequacy test and certainly 
looking at the future growth opportunities that we have. If 
we're unable to build capacity in order to hand, you know, 
handle that additional growth, then, yes, it could.
    Senator Fischer. And then, just one question on the PTC 
that you've been asked about on the regulations there. What are 
the challenges that you see in getting it installed? We've 
heard some that Congress has highlighted, but what do you see 
as that and, when it's finally deployed, what are the 
challenges that you will be facing?
    Mr. Lonegro. So a fair interpretation of that question 
would be: What have we been doing?
    And certainly designing the requirements we----
    Senator Fischer. And how are going to do it in the future?
    Mr. Lonegro. Absolutely.
    We literally started from scratch. Now, many people have 
testified that Positive Train Control in theory has been around 
for a long time and it has. It certainly did not, you know, it 
wasn't able to comply with the requirements that we've received 
as part of this. And so, the most mature piece of software was 
the onboard system and yet we haven't received the final 
version of that to be able to comply with these requirements. 
So the software has been a challenge.
    You know, every railroad's information technology 
infrastructure is slightly different. Right? The dispatching 
systems, for example, are all different. And those have to be 
integrated in such a way that they can speak the language of 
PTC.
    The railroad signaling infrastructure, which runs a very 
safe railroad, has to be replaced to get up to the modern 
technology that PTC represents. And so, we're investing, 
literally, billions of dollars in replacing prematurely, in 
many respects, the signaling system.
    The communications infrastructure; we've literally have 
built as an industry our own brand new radio network. You know, 
we're all blessed with cellular technology but as you know, 
especially, you know, in more rural parts of the country and 
out West, cellular is not a ubiquitous, you know, 
communications vehicle. So we had to invest in our own radio 
frequency in order for that to happen; you know, making sure 
that is safe and secure, to the earlier question that we had, 
is an important thing from an IT perspective.
    Moving forward, what are the challenges; right?
    The challenges are technical in scale, right, because of 
the reasons that I just mentioned and certainly some of the 
regulatory hurdles that we've had, and may likely encounter in 
the next handful of years.
    The care and feeding of the system will be expensive. You 
know, when you, for example, for us at CSX, we'll spend at 
least $1.9 billion on PTC; right? The majority of that is in 
the new signaling system and in the technology and the 
retrofits of locomotives. Much of that is hardware and 
software; right? That has to be replaced every so many years. 
Right? And the support of the systems that we procure from 
other people have a maintenance cost every year. So, you know, 
hundreds of millions of dollars of incremental cost every year 
will come to the railroads in order to continue to support this 
technology going forward.
    Senator Fischer. Do you think it is wiser to look at seeing 
the implementation of this on a regional basis or do you think 
we're going to reach a point where we're going to be able to 
flip a switch and have the whole country lined up?
    Mr. Lonegro. I absolutely don't believe we'll flip a switch 
and do what we call a hot cutover. This technology needs to be 
phased in. There are people that need to be trained. So 
specifically crew bases that run our trains, the engineering or 
what we call ``maintenance of way,'' and communications and 
signals workforce in the field, all have to be trained on this. 
We have about 32,000 people in our company and 80 to 90 percent 
of those folks will have to be trained on Positive Train 
Control. So the training element of things. You know, all of 
the time tables, what we use to run the railroad, will have to 
be updated. The dispatching system runs the railroad by 
segments. And so, those segments have to be cutover into PTC.
    So we see, you know, a very methodical phase-in to this, 
hopefully starting with, I'll say, some of the easier 
territories or less dense traffic territories first and 
ultimately getting up to place, you know, where 
interoperability will be, you know, of a significant magnitude. 
Think of places like Chicago where you have so many railroads 
that are coming together. Washington, D.C. and Northern 
Virginia will be similar in that thing.
    Senator Fischer. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Fischer.
    Very quickly, Mr. Brown--Mr. Lonegro, you said 2020 for 
PTC.
    Mr. Brown, when do you see your railroad being----
    Mr. Brown. Yes, well, in our situation of course, we have 
to work with all the Class Is. So every Class I has some unique 
qualities to what they're developing. Although, very similar 
but some unique qualities. So it depends upon the Class I's 
completion of their projects.
    So I really can't give a date without having every Class I 
come to the table with a, you know, how they see their, as Mr. 
Lonegro mentioned, the phase-in of their systems. Everywhere 
that we interface with a Class I as it is phasing-in its system 
we will then phase-in our system. So it very much depends upon 
the Class I timetable.
    The Chairman. OK, thank you.
    I have Senator Daines, Markey and Moran.

                STATEMENT OF HON. STEVE DAINES, 
                   U.S. SENATOR FROM MONTANA

    Senator Daines. Thank you, Mr. Chairman, and thank you for 
holding this hearing today.
    I represent the state of Montana. We are home to over 3,000 
miles of railroad track and we move a lot of products. In fact, 
we heavily depend on our railroads for our ag industry. 
Agriculture is our number one industry in Montana; it's a $5 
billion a year industry. For example, 80 percent of our wheat 
crop is exported overseas. And so, it's our connection from the 
rails to the ports that allows us to grow our businesses back 
home.
    We've had a lot of success and growth certainly in the 
energy industry as well. Certainly, we see a lot of coal trains 
going by, we see the growth now with the Bakken. It's not just 
a North Dakota experience, the Bakken spills into Montana as 
well.
    In fact, today I met with the Montana grain growers. I 
literally just came from meeting with them to this hearing. 
They ship over 130 million bushels of wheat to the Pacific 
Northwest Terminals each year. And we've had some constraints 
and been working with our rail carriers, but it should be known 
to you.
    And today, we're going to be having the Keystone Pipeline, 
some more amendment votes and hopefully get this Keystone 
Pipeline passed in the Senate. Just some quick math, the 
Keystone Pipeline, there will be oil coming into an onramp in 
Baker, Montana. What that means overall for the supply chain is 
the equivalent of 4,000 rail cars a month. And that's just the 
Montana/North Dakota oil that would come into the Keystone 
Pipeline to be one more avenue in the overall complex supply 
chain to allow us to maybe reduced some of the constraints that 
we see right now in rail.
    So it's yet another argument for the need for the Keystone 
to allow us to more efficiently transport our goods to market.
    Mr. Lonegro, I really see you do not have operations in 
Montana but I was a supply chain guy back in my days at Procter 
& Gamble and the complicated nature of logistics in forecasting 
and so forth. We've had some capacity constraints in Montana. 
It's a byproduct of economic growth, which better to have 
constraints probably than excess capacity but known the less 
constraints.
    How have you addressed rail capacity issues in other 
regions of the country when you look at solving some of these 
challenges?
    Mr. Lonegro. Thank you, Senator.
    And you're right, we don't serve Montana but we certainly 
take interchange from many railroads which do serve Montana.
    You know, again, 2014 was a situation where winter hit us 
first and for essentially the first 3 months of last year we 
were a bit under siege because of the weather, yet the volumes 
that we experienced in the first quarter really didn't drop off 
which told us there was a lot of demand there. In the second 
quarter, literally the first day the sun came out and the snow 
stopped falling we began to get significant growth. And, you 
know, when we plan for, say, three percent growth and we get 
six or eight or 10 percent growth, that's a significant uptick 
for our business.
    The other thing we experienced last year was bit of a 
geographic shift in our business. We saw a lot more traffic 
that went between, say, Chicago and St. Louis into the mid-
Atlantic and into the Northeast. So you know, not only did we 
have abnormally and un-forecasted growth, we also had it twice 
that much on that Northern part of our railroad. So what are we 
doing about it?
    When we got to the point in the second quarter of last year 
where we believed that this growth was going to be sustained 
rather than simply penned up demand from the harsh winter, we 
began to pull a lot of levers. The first of those levers was to 
hire more people. You know, our train crews take between six 
and nine months to go from somebody that you hire off the 
street to get qualified to actually run a train and operating 
service. And so, that length of time, that lead time on that 
particular resource, was pretty significant.
    We hired about 2,000 people last year and we still have 
about half of them. A little less than half of them are still 
on the pipeline which will come out of our training and on-the-
job training qualification in the first four months of this 
year. So train crews are really an important thing.
    The locomotives are also an extremely important part of the 
equation. We brought 400 more locomotives into our fleet last 
year; a combination of leases plus what we had in storage. 
Again, as the seasons ebb and flow, you have locomotives that 
might be in service or storage. So we took all of those out of 
storage. And then, we issued a purchase order for 300 new 
locomotives at, you know, in the high two point something 
million per copy. And so, we pulled that----
    Senator Daines. What's the lead time on a locomotive?
    Mr. Lonegro. Upwards of a year.
    Right, so we're just beginning. We've got the first two 
locomotives that came out of that purchase order literally 
today. And so, we'll see the first 75 of those ratably 
throughout the first five or six months of this year. The rest 
or the remaining 125 we'll get in the second half of the year. 
A hundred next year and then we also have a rebuild program 
which is pretty significant; 100 more units out of that. And, 
150 units out of what we call ``the heavy repair program.'' So 
we literally will have another three or 400 locomotives in 
service this year on top of the incremental 400 locomotives 
that we put into service last year.
    Senator Daines. What metrics do you use to measure customer 
service?
    Mr. Lonegro. Well, J.D. Power is certainly a measure that 
we look at both internally as well as allowing the customers to 
have verbatim comments. So J.D. Power, being an independent 
agency, helps us understand both quantitatively as well as in 
narrative form what are customers are saying. And, you know, 
candidly our local service, so that First Mile/Last Mile that 
Mr. Brown talked about in his opening statement, was one of the 
highest scores that we saw. Certainly the network, because of 
all the factors that we've already mentioned, we saw some 
degradation in the----
    Senator Daines. I imagine you have some internal metrics so 
too you're using there?
    Mr. Lonegro. Absolutely.
    Senator Daines. Yes.
    Mr. Lonegro. Absolutely.
    Senator Daines. Yes.
    Mr. Lonegro. So things like what we call ``CTA,'' Committed 
Time of Arrival, on-time arrivals, on-time departures, line of 
road velocity, you know, the number of cars on line, we have a 
measure called ``LSM,'' local switching----
    Senator Daines. What has been the biggest challenge in the 
last, say, 12 to 24 of achieving your customer service goals?
    Mr. Lonegro. It has truly been resources.
    Again, if the growth hadn't been as great as it was and 
we're all very thankful that the economy is growing, at the 
same time when we poll our customers and we do this all the 
time, we poll our customers: What do you guys see? And how 
much----
    Senator Moran [presiding]. The gentleman's time has 
expired.
    Senator Daines. OK.
    Senator Moran. Thank you.
    Senator from Massachusetts, Senator Markey.

               STATEMENT OF HON. EDWARD MARKEY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Markey. Thank you, Mr. Chairman, very much.
    In Massachusetts there is nearly 1,000 miles of freight 
track which supports millions of dollars of goods that move in 
and out the commonwealth each year, and we need to clearly 
continue to invest in our aging infrastructure and modernize 
our systems for the twenty-first century.
    Safety in our rails is also paramount. Passenger trains 
often also share the same tracks as freight trains. Certain 
trains carry hazardous materials through our communities and 
pass our backyards. Rail lines and roads cross off in creating 
dangerous intersections. For all these reasons, safety is most 
sacrosanct. And, I look forward to working with the members of 
the Committee on the important safety issues that are under the 
jurisdiction of the Commerce Committee.
    Unfortunately, the increase in oil shipments by rail has 
come with an increase in horrible accidents; 2014 was a record 
year for spilling oil on railways with 141 reported 
unintentional releases. These accidents resulted in explosions, 
polluted groundwater, destroyed property and city-wide 
evacuations. In 2013, a train derailed and exploded in a small 
Canadian town just miles from the Maine and New Hampshire 
boarders killing 47 people, destroying much of the town. And we 
need to make sure that we do everything to avoid another 
catastrophe like this.
    So I am very concerned about the Department of 
Transportation's failure to adopt new rules that address the 
retiring of old DOT-111 tank cars that clearly pose a danger to 
our citizens and our communities. Secretary Foxx announced a 
rulemaking for the safe transport of crude oil in July 2014. 
We're still waiting for those final rules, but the longer we 
delay, the more that lives are actually in danger. And those 
standards call for tank cars both for retrofitting old cars and 
building new ones for tank car thickness, the length of time, 
how long the shippers have to refurbish or build new cars, and 
the speed and the routes which these trains take. All of this 
is in this rulemaking. I think it's critical for us to get some 
servitude in terms of what the new rules are going to be.
    So Mr. Brown and Mr. Lonegro, just a question to the two of 
you. About a year ago, Genesee & Wyoming train carrying 2.7 
million gallons of crude oil derailed in Alabama igniting and 
spilling oil all over the surrounding wetlands. I'm going to 
ask you two to tell us what your company is now doing to make 
sure that that does not happen again.
    And Mr. Lonegro, last year a CSX train derailed in Virginia 
and spilled 30,000 gallons of crude oil into the James River. 
What is your company doing to make sure that the safety of oil-
carrying rail cars has been made more safe and we can give 
assurance to those neighborhoods?
    Mr. Brown.
    Mr. Brown. Yes, sir.
    So as I mentioned earlier we have established some safety 
precautions and protocols that we've applied across, not just 
where we handle crude-by-rail, but all hazardous materials on 
our various railroads. So those protocols include things like 
enhanced infrastructure testing, rail flaw detection testing. 
It includes track geometry testing, that has been enhanced. 
We've increased the number of inspections we do. We've changed 
the visual inspection protocols so we're actually inspecting 
our infrastructure more frequently. We have--and often we do 
that just in advance of a crude oil train if that particular 
commodity is being handled on one of our railroads where we 
have several that do that.
    So with a whole slate of initiatives, precautions and 
protocols, we believe we've far enhanced the safety of the 
operation and therefore our focus on prevention of future 
incidents of that type.
    Senator Markey. Thank you.
    Mr. Lonegro.
    Mr. Lonegro. Mr. Senator, understanding the volatility, the 
product clearly is part of this equation. We look forward to 
continuing to work with the regulators in order to reach a 
balance in the tank car standards. We do worry about the tank 
car builders and the freight car builder's capability to build 
those and the impact that that will have on the building of 
other cars which are currently in their portfolio that would 
have impact on other commodities.
    There is the homogenization between the Canadian possible 
rules and the U.S. possible rules in making sure that the 
international travel of crude-by-rail can be supported. We have 
a heavy increase on what we call ``train securement rules.'' So 
making sure that any train that is stopped is; a, not left 
unattended and; b, is securely tied down to prevent accidents 
like you referenced in the Canadian incident a couple of years 
ago that was very tragic.
    The routing and making sure that we have an appropriate 
balance of the safety and the security that PHMSA has put 
forward; the 27-factor test, in making sure that we are routing 
them through that set of standards. We have reduced the speeds 
on crude-by-rail voluntarily to a maximum speed of 50 miles an 
hour on the network and 40 miles an hour through high threat, 
urban areas. However, the modeling work that we've done 
indicates that going much below that could cause dramatic 
impacts on service more broadly.
    Train first responders is an important thing. If an 
incident unfortunately does occur; making sure that everyone 
understands the commodities that we're dealing with as well as 
how to handle a freight rail situation versus, say, a house 
fire or something that might happen on the roadways.
    To go farther on Mr. Brown's points around the track 
standards, the level of inspections that we have is very 
important and certainly the time-frame between finding 
something and fixing something. We have shrunk that 
dramatically and made sure that we immediately issue a slow 
order so that all trains have to slow down if they happen to go 
over a piece that has been detected by that inspection 
technology.
    Thank you.
    Senator Markey. Mr. Chairman, I appreciate your indulgence. 
The witnesses had important information but I did go over and I 
apologize.

                STATEMENT OF HON. JERRY MORAN, 
                    U.S. SENATOR FROM KANSAS

    Senator Moran. Thank you, Senator.
    In my new-found status as Chairman Pro Tem, I was anxious 
to rule you out-of-order and move forward and----
    [Laughter.]
    Senator Moran. But, I am anxious to do that because it is 
now my turn to ask questions.
    [Laughter.]
    Senator Moran. Apparently, because I went to Senator Markey 
first, they're suggesting that I now call on Senator Manchin 
who was to be ahead of the gentleman from Massachusetts.
    Senator Manchin.

                STATEMENT OF HON. JOE MANCHIN, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Manchin. Thank you very much, Mr. Chairman.
    And thank you all for being here today.
    West Virginia, as you know, is quite a rail state and if it 
wouldn't for rails we might not be there; to be honest with 
you. But we have 2,200 miles of rails and it's some of the 
best-paying jobs so we appreciate the opportunities; and the 
ancillary jobs that come from that. Very much so. With that 
being said, I start looking at different things going on with 
debating the XL Pipeline; we've talked a good bit. Senator 
Markey just mentioned some things concerning that and the 
concerns we have; the dangers of hauling that and how to make 
it safer.
    With the XL Pipeline, I believe and I think everyone here 
believes it will be built. We just don't know exactly when, but 
it will probably be built. With that being said, how is that 
effecting the railroads? Because I know you're upgrading your 
systems to be able to handle 800,000 barrels a day and the 
pipeline will take that tonnage away from you, or that revenue, 
and you'll be building up infrastructure for that. Is that your 
model or your plan? How do you all prepare for that? So if I 
could ask anybody to chime in here.
    Start with CSX since they're one of the bigger carriers 
in----
    Mr. Lonegro. Thank you, Senator.
    Senator Manchin.--West Virginia. Norfolk Southern.
    Mr. Lonegro. Yes, we're proud supporters of West Virginia, 
as you know.
    The rail industry by and large is growing, and one of the 
opening remarks that the Ranking Member made at the beginning 
was that rail freight would grow nearly 100 percent by 2035. So 
there is ample growth in many different markets in order to 
handle the capacity that we're building. We're certainly 
forecasting growth in many markets not simply in the crude 
business. Crude represents somewhere between two and 3 
percent----
    Senator Manchin. Right.
    Mr. Lonegro.--of the rail volumes.
    Senator Manchin. You don't see that as a threat to your 
model or your plan and your investments that you're making 
anyway?
    Mr. Lonegro. Correct.
    Senator Manchin. Do all of you feel the same way, what 
you're seeing and analyzing it?
    Mr. Brown. Yes. I mean I think in the short line where, 
very similarly, we see some growth in some market segments. We 
see diminished volumes in other market segments over time and 
we're preparing for----
    Senator Manchin. So we don't have the railroad pitted 
against the oil, the pipeline.
    Mr. Brown. No.
    Senator Manchin. OK. You think it's basically they work 
together?
    Mr. Lonegro. Certainly, we would like to move most of it by 
rail but----
    Senator Manchin. I understand.
    Mr. Lonegro.--there are refineries on the East Coast, which 
I'm sure will still need crude-by-rail and we look forward to 
continuing to serve them.
    Senator Manchin. The other thing, infrastructure such as 
highways and waterways, projects for infrastructure, we've been 
able to streamline that through legislation. For some reason, 
we weren't able to streamline the permitting process for rails 
for projects. And they're still very, very costly, very time-
consuming. Do you all have, I mean, a way that you can try to 
give us some help here that we can help you all to streamline 
the needs that we have for infrastructure including rails in 
this country?
    Mr. Brown. Well I think, and from my perspective, a 
critical part of doing that is the short line tax credit being 
extended over a period of time and just a two week extension at 
the end of 2014 that leaves a lot of potential investment.
    Senator Manchin. So then, shortening the tax code gives you 
some insurance?
    Mr. Brown. Right.
    So it leaves a potential return on investment in hanging in 
the balance when you know how the tax credit may apply or not 
apply.
    Senator Manchin. What kind of cost are you incurring 
because of the permitting process; basically, the time 
consumption in permitting process? Is it 1 percent, five 
percent or more? I mean, do you have any idea that it's adding 
significant cost to you?
    Mr. Lonegro. It's certainly adding a lot of opportunity 
cost. A lot of the infrastructure that we build, we're building 
because customers need that infrastructure to generate 
additional capacity so that we can handle their additional 
volumes. And so, the length of time that it takes, the amount 
of money that we end up paying consultants and lawyers in order 
to help us through the process, any reduction in time and the 
amount of documentation and review process that it has to go 
through will help us put that infrastructure in the ground more 
quickly.
    Senator Manchin. PTC would be the next. The Positive Train 
Control, I think you've talked--I had to go to other meetings. 
If anyone can chime in on that. I know you're not going to make 
the 2015 deadline; correct?
    Mr. Lonegro. Correct.
    Senator Manchin. And you all spent, what? Five billion so 
far?
    Mr. Lonegro. Correct.
    Senator Manchin. OK.
    Tell us, and if you're repeating, I'm sorry. But, any quick 
solution to that or resolve to that, and what time extensions 
do you need?
    Mr. Lonegro. There aren't any quick solutions, 
unfortunately. We, to your point, have invested $5 billion so 
far. We'll invest another $4 billion as an industry before we 
are all said and done. I was asked a question by the Chairman 
about how long it would take CSX in order to complete Positive 
Train Control and I suggested that with a large caveat; and 
that is that everything goes well from here on out, that our 
plans take us through the end of 2020. And so, we're certainly 
looking forward to working with this committee in introducing 
legislation very similar to what was introduced in the last 
session.
    Senator Manchin. Thank you, Mr. Chairman.
    Senator Moran. You're welcome.
    Senator Klobuchar.

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you very much. I appreciate it.
    Thank you to all the witnesses.
    Just as Senator Manchin was talking about his state, the 
State of West Virginia, Minnesota also has a lot of train 
service, a lot of freight service. In fact, we hit a record: 
$6.8 billion in agricultural exports in 2012, which is actually 
a 13 percent increase over the previous year and it's 
continuing to go up. We are the fourth largest agriculture 
exporting state in the country. So you can imagine we care a 
lot about the freight rail issue. We are proud of the work 
that's going on next door to us in North Dakota and it has 
helped to bring down the cost of oil and it has helped to bring 
down the cost of manufacturing. So it has been good, but we 
also have a lot of needs for rail. And so, I think it has been 
a balance with all of that as well as our increasing 
agricultural market.
    And I'm truly one to believe that the way we have gotten 
out of this downturn and the way we now expand our economy is 
by bringing more goods to market by exporting to the world. 
We've learned we're not--we have a steady domestic economy, but 
the way we truly expand is by getting these goods to other 
markets and making things in America again. So that's why I 
care so much about this.
    Our farmers have traditionally held a competitive advantage 
over foreign producers like Brazil and Argentina due to the 
reliability and the cost effectiveness of our rail. And because 
agriculture is the largest user of freight transportation in 
the U.S., the rail service delays we saw last year resulted in 
a lot of cost increases. And, obviously, you know, it's 
damaging. But, what I'm concerned about, it starts making us 
less competitive with these other food producers.
    So Mr. Jahn, what do you think the impact would be on 
domestic agriculture from American export markets turn to 
producers like Brazil and Argentina?
    Mr. Jahn. It would be significant. As you said, agriculture 
is in some ways leading the economy and we're very quickly 
going from a world that has 7 billion people to, in the year 
2050, we're going to have 9 billion people and they're all 
going to want to eat. They're going to need agriculture to help 
provide that for them, and certainly fertilizer.
    And so, we're very concerned that while the significant 
investments that have been talked about today, the railroads 
are spending billions of dollars, but we see that 
unfortunately, they're not adequate in many areas to meet the 
demand. And, whether it is grain, intermodal frac sand, and a 
number of different areas, we'd like to see more focus on the 
ag space. And that's why last year the Surface Transportation 
Board, as you know, required sort of a reporting----
    Senator Klobuchar. And has that been helpful? We worked on 
that too----
    Mr. Jahn. Absolutely.
    Senator Klobuchar.--members of this committee.
    Mr. Jahn. And we appreciate that. And it's interesting how 
effective sunshine in transparency can be in terms of 
motivating productivity.
    And you mentioned in terms of peak capacity. One thing I'd 
like to note is in 2014, we're very close to peak carload 
volume and everybody expects growth again this year. So we're 
looking at a network that is strained. And, any time there's 
any kind of a challenge or a shock whether it be weather, 
record harvest, et cetera, it's very tough for that network to 
respond. And so, that's why we're supportive of efforts to try 
to address that ahead of time rather than after the fact.
    Senator Klobuchar. Thank you and we have seen, I will say, 
some of our markets, we've seen some improvement and we want to 
keep that up. We had got some help with some of our iron ore 
shipments that had to go out and some of the issues up in 
Northern Minnesota because as you know the lakes freeze at some 
point and we weren't going to be able to get the things to the 
shipments to the ports. And we also had some improvements with 
propane, which we were worried about. So I know that the rail 
companies are trying to improve this, but it's just been a 
growing problem. We want to make sure that ag people understand 
the importance of ag as we go forward.
    Another challenge to the implementation, I know some of my 
colleagues asked about the PTC implementation, is that the FCC, 
as you all know, must approve the siding construction and 
replacement of the 25,000 communication towers and antenna 
structures. I know Senator Blunt, I wasn't here for his 
questions because we have a little confirmation hearing going 
on for the Attorney General in Judiciary, but I wanted to 
follow up on something he touched on with you, Mr. Lonegro.
    And that is: following the FCC's announcement last year, 
that the Class I freight railroads could begin using previously 
constructed poles, something that we advocated for, do you 
think a batching will help streamline the approval process?
    Mr. Lonegro. I appreciate the support for the streamlining 
efforts and the exemption for existing towers. That was 
certainly very helpful and brought that number down to that 
20,000 that you referenced. My sense is that the batching will 
help streamline the process. There is a limit to the amount of 
batching. For example, we can't send all 20,000 through at one 
time. And so it will certainly help and, at least in the pre-
program comment and the post-program comment timeframes that we 
saw, we are seeing the approval process in essence reduce by 
upwards of half. So I think it has been helpful. I think it's a 
magnitude problem now.
    Senator Klobuchar. Right, very good.
    My last question, just to you Mr. Johnson, coming from the 
port perspective. We have a little different port than your 
port, but up in Duluth we have a major port. And obviously part 
of this has been trying to, with the increase rail usage, to 
coordinate it in a multi-modal way with the ports. Can you talk 
about the importance of connecting freight rail and the ports 
and how do you think we better align planning from the Federal 
Government among the states, ports and local communities to 
address those choke points and what has been going on?
    Mr. Johnson. Thank you, Senator.
    My testimony really focused on the importance of 
connectivity. Clearly global trade is a huge part of the driver 
of the U.S. economy and will continue to do so, including the 
agriculture.
    The ports, to be successful, I stated that no port today, I 
believe, can be successful without having rail and intermodal. 
And so, for us, at the end--in Miami, at the end of a long 
peninsula, it's very important that we have partners like CSX, 
FEC and Norfolk Southern because they are the ability for us to 
go from a million TEU containers to 4 million. We have the 
other infrastructure, but without the ability to move the 
product--you can't move it on your nation's highway system. I 
can't grow double, triple volume just by moving to up I-95.
    So it has to get into the Heartland of America and that's 
where FEC connecting to CSX up in Jacksonville; Norfolk 
Southern, that's the vital link. The policy and, again, I think 
over the last few years--I will say this: I've notice more of 
an interest on the part of U.S. DOT and all of this, I think, 
focused partly on the TIGER grant. A number of ports, including 
mine, received TIGER funding.
    Senator Klobuchar. So did ours.
    Mr. Johnson. Mine was, again, for rail intermodal. But, you 
know, I think you won't find at any port, large or small--the 
entire system of ports in the United States believes in the 
importance of connectivity not just within our country, but 
clearly the ability to connect to the globe; globally to the 
world.
    And rail is essentially there. Not just deepwater; water is 
important, dredging is important, harbor maintenance is 
important. But oftentimes rail is the missing link. Excuse the 
pun there but it is, in fact, the vital piece. And as I've 
stated, the billions we've invested in Port of Miami would have 
been for not. A billion-dollar port tunnel, 50 feet of water, 
make no difference whatsoever without having that rail 
connection.
    Senator Klobuchar. All right.
    Mr. Johnson. Thank you.
    Senator Klobuchar. Does anyone want to add?
    Thank you very much. I'm going to go back to the Judiciary 
hearing.
    If you have any questions you want me to ask, Senator 
Moran, let me know?
    Senator Moran. I trust your judgment.
    Senator Klobuchar. OK.
    Senator Moran. Let me start with Mr. Brown.
    Mr. Brown, I introduced the 45G tax credit in the year 2003 
as a House member.
    Mr. Brown. Yes, sir.
    Senator Moran. I apologize for our inability to reach 
decisions in regard to its extension, other tax code provisions 
in any kind of timely fashion that would provide a level of 
certainty in an ability to make better decisions about 
investments.
    This hearing and this committee is generally focused on 
rail transportation and the safety aspect of rail. What does 
45G do that allows you and other short line railroads to be 
more safe in your operations? It's thought of as an 
infrastructure investment but I assume there are consequences, 
the money that you spend on infrastructure as a result of 45G, 
means that there is an ability to support other efforts within 
your company in regard to rail safety. Is that a fair 
assumption and would you describe that to me?
    Mr. Brown. Yes, sir.
    Senator Moran. Why does this matter?
    Mr. Brown. Thank you, Senator.
    It's actually very critical. It just allows--we have a 
limited amount of capital that we can invest in properties. 
Some of the railroads are challenged because of low density. 
They serve important customers but often it's a very low 
density customer. It's often a customer in a rural area who 
otherwise would not have the ability to have a rail service 
provided to them. So it allows our capital, our limited capital 
dollars to be spread further. And certainly those capital 
dollars are invested based upon the important upgrading of 
infrastructure from a safety perspective.
    So as we prioritize our investments each year in our 
infrastructure, we're certainly basing that upon improved 
safety through improved infrastructure integrity. Maybe it is 
bridge upgrades; it might be taken from 263,000 weight limits 
to 286,000 weight limits for cars. Things that make it more 
economically viable for our customers to safely and 
efficiently, over those short lines and often again in rural 
areas, over those short lines link to the Class I networks and 
therefore throughout the entire transportation network.
    Senator Moran. Well, what I wanted to make certainly that 
we get on the record is that while 45G is an important tool for 
providing greater efficiency, it also has a significant 
consequence to the ability to provide safety. Is that true?
    Mr. Brown. Yes, sir.
    I mean, the vast majority of what we are investing in is 
crossties, rail, upgraded bridges; things that improve the 
integrity of our infrastructure and that absolutely goes to 
safety first.
    Senator Moran. Well, the intention is that I think Senator 
Wyden, Senator Crapo and I and others, will introduce the 
extension of 45G here in the next few days. And I look forward 
to educating and encouraging our colleagues to continue to the 
practice of utilizing that provision of the tax code for the 
benefit of safety and efficiency.
    Mr. Brown. Yes, sir.
    Senator Moran. Certainly matters in places like Kansas 
where short line rail has become such a significant component 
of how we get agriculture goods and products to market.
    Ms. Teel, in an effort to be--it's easier to be bipartisan 
here than it is to be Kansan supporting Missouri.
    [Laughter.]
    Senator Moran. But I just wanted to make the offer to you 
and to Senator Blunt and Senator McCaskill that those trains 
that operate in Kansas City are also the trains that operate in 
Kansas. And so, if I and my staff can be of help to you and to 
the terminal circumstance in Kansas City, please ask us to help 
in ways that we can. Kansas City is a major terminal for what 
transportation occurs in our state. It's growing. BNSF on the 
Kansas side, its intermodal facility, but what happens at your 
terminal is critical to us and I'd be glad if you have 
something you want to tell me this morning that we ought to be 
focused on or remind me of its importance of what you do to 
Kansas.
    Ms. Teel. Thank you. I appreciate your support very much, 
Senator.
    Senator Moran. You're welcome.
    Ms. Teel. I look forward to working with you.
    Senator Moran. Great.
    Let me ask some questions about circumstances that we found 
in Kansas. Our utility companies have expressed some concerns 
about access to coal. Our grain elevators have expressed, 
particularly a year or so ago, a concern about access to rail 
cars for pollen grain. And the culprit, at least in the 
explanations that we're often provided, is that rail cars are 
being used for the transportation of petroleum for oil and 
therefore less available for grain and coal. Is that--and I 
assume the suggestion is that there is more money to be made in 
hauling oil than there is in hauling either one of those 
products. I'm interested in knowing if that is an either/or 
situation is true.
    This is probably, again, a Mr. Brown question for the kind 
of things that you're hauling. But is there a decision that's 
made based upon the most profitable return based upon the 
commodity being hauled? And I would guess that there's a 
consequence now to declining oil prices such that the 
circumstance that you may have been in with a shortage of rail 
cars is less of a problem today than it was. Maybe the benefit 
of Mr. Jahn's customers, fertilizer prices may be slightly 
lower and you will be hauling more fertilizer. But any thoughts 
about how the change in oil price structure effects your 
ability to provide services otherwise to Kansans and others and 
agriculture and utility states that utilize coal?
    Mr. Brown. Well, in terms of the various commodities that 
you've mentioned, often in most of the cases they're in 
different types of equipment. So coal is handled in coal cars 
and oil is handled in tank cars and agricultural commodities 
generally are in covered hoppers. So it's different types of 
equipment. We certainly endeavor to have the available supply 
of cars either through our Class I partners or those that we 
provide ourselves for our customers to be able to move the 
amount of commodity that they would wish to ship. And, as that 
grows, we try to keep pace with additional equipment throughout 
the various market segments.
    And in terms of the oil business, you know, we know that as 
prices reduce the volume has lessened greatly. So in some cases 
we have some of those cars in a storage status. But maybe Mr. 
Lonegro deals with it on a much larger scale than I do.
    Mr. Lonegro. Thanks.
    David is right. They all move in different pieces of 
equipment. And in the crude situation specifically, the grand 
majority of those are privately owned by the shippers not by 
any of the railroads. So we don't allocate those cars to any 
particular customer.
    You know, there are different prices depending on different 
commodities and ultimately what the market will bear based on 
alternative means of transportation, risk, et cetera. You know, 
the service equation, there are multiple networks within the 
broader freight rail network. Right? So we look at the coal 
network and the grain network and things of that nature. But 
they all utilize the same crew base, the same locomotives and 
the same track infrastructure.
    So it is very difficult if not impossible to give priority, 
you know, to any one particular commodity over another because, 
you know, if, for example, you have one commodity that wants to 
move at 50 or 60 miles an hour and you have another commodity 
that might move a little bit slower, it actually degrades your 
network capacity, you know, for everybody. So we try very, very 
hard to balance under our common carrier obligation to balance 
the way that we treat all of our customers and make sure that 
we have the equipment and the resources necessary to handle 
today's demand and tomorrow's demand.
    Senator Moran. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman [presiding]. Thank you, Senator Moran.
    That era of Kansas-Missouri good feeling will end when the 
first basketball game comes up I'm guessing.
    Senator Moran. It doesn't exist any more.
    [Laughter.]
    The Chairman. Yes, right.
    Senator Peters.

                STATEMENT OF HON. GARY PETERS, 
                   U.S. SENATOR FROM MICHIGAN

    Senator Peters. Thank you, Mr. Chairman.
    And thank you, for the witnesses and your testimony today 
about the freight system. I appreciate it.
    As a new member of the Committee, I've enjoyed learning 
more about this wonderful freight system that we have here in 
the country and ways that we can improve it. And I just have a 
couple of questions; one for Mr. Lonegro and Mr. Brown, related 
to Michigan specifically.
    My understanding is Michigan presents somewhat of a 
challenge to the railroad industry because we are a peninsula, 
basically two peninsulas. So, in terms of cycle time, it's a 
little bit more problematic particularly in Northern Michigan.
    I know, Mr. Brown, your short lines are up in the Central 
Michigan and Northern Michigan and servicing just a few 
customers, as I know is your bread and butter, as you take 
their products and try to get them into markets and then it has 
to get into the broader stream, that CSX and the other national 
railroads go. So if you could, both of you, maybe start with 
you, Mr. Brown, kind of comment on cycle time? And, I know 
you're the interconnectivity with CSX and other rail lines that 
service Michigan. Has that been a challenge? Is it something we 
need to be aware of and does it perhaps impact Michigan more 
than other states as a result of the fact that geographically 
we're a peninsula?
    Mr. Brown. Yes, sir. Thank you, Senator.
    Certainly last winter with our Class I interchange 
partners, that's primarily Norfolk Southern and CSX in 
Michigan, we saw cycle times increased as they did over the 
entire national network. Our Michigan short lines are a very 
good example of the G&W sort of niche where we have lighter 
density lines that are well connected to Class I partners and 
they're very fluid. I mean, as we've talked throughout the 
testimony, there was a period of time in 2014 where fluidity 
was challenged and it started in the winter and it was 
exacerbated by additional volumes that came into the Class I 
networks, in particular. And certainly we shared in that growth 
as well.
    So we've seen a marked improvement in overall velocity and 
fluidity over those interchanges in Michigan, to the point 
where we've seen additional traffic come to those railroads and 
we see demand increasing, because of the improved service 
product and overall equipment utilization through fluidity.
    Mr. Lonegro. Thank you.
    Michigan has revitalized, as I know you're well aware of, 
and used to be the mainstay of our automotive business and 
obviously that has been disaggregated to other locations. You 
know, we waited for the economy in Michigan to come back and 
it's nice to see that it has. And so, we are putting 
investments in the Grand Rapids in Plymouth subdivisions, which 
we have there.
    I think the overall service levels you'll see in Michigan 
will improve as the broader network improves; certainly the 
cycle times will be instrumental in that. We have I think some 
new business that has interchanged between some of the Canadian 
railroads in CSX, which will flow through the lower peninsula 
in Michigan. So we look forward to having our traffic run 
through the crew bases there and continuing to invest in both 
the resources as well as the infrastructure in Michigan.
    Senator Peters. Right. Well, thank you.
    And Mr. Brown, one final folk question. You mentioned in 
your opening comments the impact of the Positive Train Control 
systems and the cost associated with that because of your kind 
of unique customer base, very small customer base. And I know 
the travel I mentioned to you before the hearing, some great 
elevators, and they've got the--you know, you're their lifeline 
to get to markets but just maybe a few customers. Could you 
kind of flesh out and elaborate a little a bit: you talked 
about how the requirements really disproportionately impact 
your small lines and the customers that you service 
particularly in Northern Michigan?
    Mr. Brown. Yes, sir.
    Well, most of the G&W-owned railroads do not require PTC to 
be installed overall. There are literally, though, hundreds of 
interactions with Class Is where there will be PTC installed on 
their lines; maybe we cross their line or it's a point where we 
operate across, over the Class I line for some distance. So 
those are the areas where there is still not much clarity on 
exactly what we will be required to do in terms of equipping 
locomotives, in terms of other infrastructure requirements that 
may fall to one of our short line properties; to the point 
that, you know, it's possible that just that capital intensive 
requirement on a particular short line pushes it into an 
economic situation that's not viable. So, I mean, it's that 
critical.
    In terms of Michigan, it's relatively a minor issue. And 
again, it just centers around interactions with Class I, PTC 
installed routes.
    Senator Peters. OK, great.
    Thank you.
    Mr. Brown. Yes.
    Senator Peters. Appreciate that.
    Thank you. Yield back, Mr. Chairman.
    The Chairman. Thank you, Senator Peters.
    Senator Johnson.

                STATEMENT OF HON. RON JOHNSON, 
                  U.S. SENATOR FROM WISCONSIN

    Senator Johnson. Thank you, Mr. Chairman.
    Certainly in the State of Wisconsin, we've experienced some 
of these service disruptions from a number of factors; weather, 
the increase in the freight required for transporting oil. The 
result of those service disruptions has been, in some quarters, 
a call for greater involvement by the Surface Transportation 
Board, other potential government intervention. I could just 
kind of like go down the panel. Personally, as somebody who, 
you know, utilized rail services for 31 years in my plastics 
company, I would have a great deal of concern for the Federal 
Government getting involved and starting to allocate the, you 
know, who should get what. But I just kind of wanted to get all 
of the witnesses, their opinion in terms of the pros or 
potentially cons of greater involvement by the Federal 
Government as opposed to just the private sector taking care of 
it.
    And I'll start with you, Mr. Lonegro.
    Mr. Lonegro. The railroads produce, prior to the October 
temporary order that came from the STB, we produce measures 
through the AAR to the STB which go to the fluidity of the rail 
network and those are published on a weekly basis. And so you 
do have a good understanding already prior to the temporary 
order and the rulemaking about the fluidity of the rail 
network.
    That said, most of those are going to give you a snapshot 
and a retrospective on how the railroads have performed. As I 
mentioned earlier in the hearing, we've invested literally 
billions of additional dollars based on where we saw service 
and where we saw volumes in 2014 months ahead of the temporary 
order. So, in terms of spurring action by the railroads, we had 
already taken the action; we had already recognized that we 
need to invest more in order to deliver service for our 
customers.
    Senator Johnson. Let me quick interject.
    My concern is if the Government got involved, is the 
incentive for investment might be reduced. Would you be 
concerned about that as well?
    Mr. Lonegro. I think the challenge is if the government 
begins to pinpoint where that investment should occur. Right? 
Again, as I mentioned earlier, it's a network of networks so 
it's very difficult to say the investment should go to a 
specific location or to favor a specific commodity when we're 
trying to serve, you know, a multitude of commodities and 
literally have hundreds of thousands of rail cars on the system 
every day.
    Senator Johnson. It's hard enough for a business who is 
fully aware of the customer base to make those capital 
investment decisions efficiently much less a bureaucracy?
    Mr. Lonegro. Absolutely.
    Senator Johnson. OK.
    Mr. Jahn, as a customer, what are your thoughts on that?
    Mr. Jahn. I'm sorry?
    Senator Johnson. Mr. Jahn.
    Mr. Johnson. Well, from my perspective, having been inside 
government for 35 years, what I've learned is at the, and being 
an infrastructure person, what I've seen and what I've learned 
is that the successes really come through our partnership at 
private sector. And having run a port for 8 years, which is a 
$30 billion economic engine to my community, one of the things 
that, in order to make our port successful and to move things 
forward, we try to get government out of the way.
    And one of the problems, whether it's at the national level 
up here with Washington or at the state level or local, the 
success comes where you're able to truly partner with your 
private sector partner and with all levels of government. And 
really to understand, what are the rules and try--one of the 
frustrations I find in government is that there is way too much 
bureaucracy and we tend to get weighed done and we lose our 
way. We can't find our self out of the forest for all the rules 
and regulations.
    So I think it's a problem at all level, including within my 
own local government, but the State of Florida I think has 
taken a lot of advances over the last 4 years regardless of 
political affiliation; democrat or republican. One of things 
that Florida is focused on: How can we be more business-
friendly; how do we create that environment in the state of 
Florida?
    Now mind you I'm stepping in as the top salesman for the 
State; my new role as the, you know, the head of the Secretary 
of Commerce for the State. So my job is to sell the state. But 
one of the things we will sell is the fact that we're a 
business-friendly state. So we are concerned about the 
environment, we're concerned with, obviously, the importance of 
education, but we're also concerned making sure that we don't 
overregulate. And that's a big way to sell your community, sell 
your state.
    Senator Johnson. OK.
    Mr. Brown.
    Mr. Brown. I would just kind of echo what Mr. Lonegro said 
as well as say, you know--for example, Mr. Chairman's state 
where we started a new railroad operation called the Rapid 
City, Pierre and Eastern Railroad in 2014 it was a startup 
operation; it was formerly a Canadian Pacific operation. The 
STB did require that Canadian Pacific conduct regulator 
communications with STB about the fluidity that specifically 
required they say how many locomotives and how many cars are 
interchanged to RCP&E from CP over the new interchange. It was 
the point where we began operating.
    We, as a part of that process, we voluntarily established 
an STB regular communication ourselves so that we could make 
sure that they understood the level of communication that was 
happening between the two companies. They understood the amount 
of cooperation that was required and was occurring in order to 
successfully begin that operation and that we were all talking 
about the same facts. So that process occurred over a period of 
a few months until it got to the point where there really 
wasn't much to talk about. So it was a 15-minute how's-it-
going-this-week call and we ended that process.
    So that can be helpful. I think it more informs STB so that 
as shippers come to them about a specific operation, whether it 
be congestion or whether it be a startup operation as in our 
case, they have the information they need to respond and 
helpfully we are successful in how we do that and it's a 
positive story. And in this case, it turned out to be extremely 
positive. So that's a good involvement in my opinion.
    Senator Johnson. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Johnson.
    And I would just say, too, I'd certainly agree with the 
Senator from Wisconsin when it comes to the Government 
mandating investment. I do think that what we saw last year 
with some of the bottlenecks is a need for greater transparency 
about where those were, car supply, power, those sorts of 
things which was very helpful because we have literally 
millions and millions of dollars at stake in our economy when 
you can't get rail transportation in a timely way.
    And so, we've introduced a bill which we passed out of 
this--or will introduce a bill which we passed out of this 
committee last year that would basically focus on process 
reforms at the STB and allow board members to discuss pending 
business and address service and rate issues on the frontend 
rather than waiting until it becomes a crisis. So I look 
forward to working with our colleagues on this committee on 
something that makes sense.
    Senator Blumenthal.

             STATEMENT OF HON. RICHARD BLUMENTHAL, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Blumenthal. Thank you, Mr. Chairman, and thank you 
for holding this hearing on a really critical issue that is 
unappreciated by a lot of the public who focus on passengers 
and commuters, but we know how critical freight is and how 
important safety and reliability of freight transportation is. 
And so, I want to thank all of you for being here today.
    And focus, for a moment, on the safety issue as it concerns 
folks who work on the tracks; our workers who are out there and 
whose safety can be at issue and even at risk so often. Late 
last fall, the National Transportation Safety Board issued an 
in-depth report on the tragic loss of 15 workers in 2013 alone: 
11 on railroads and 4 on transit systems. And the NTSB made 
recommendations, as you know, across the industry to the 
Federal Railroad Administration as well as other agencies like 
OSHA.
    These recommendations urged the agencies and the industry 
to do more to protect the employees on the railroads, ensuring 
that they're given proper briefings and sufficient information 
and devices that will protect them in the course of their work. 
The death of Robert Luden little more than a year ago in West 
Haven, Connecticut. Tragic death, fully preventable, 
unnecessary, leaving his family and his colleagues without him, 
just shows how this issue can be a matter of, literally, life 
and death.
    So I'd like to ask each of you: What can be done to make 
sure that regulators like the FRA, it's an agency of 
government, act on recommendations from the NTSB especially for 
workers who are often the most in danger?
    And my view is that there should be consequences for the 
failure of the FRA to act in protecting workers. This issue is 
national in scope and so I'd like to ask each of you beginning 
with Mr. Lonegro. What can be done to compel the FRA to follow 
recommendations of the NTSB and other commonsense measures that 
should be taken?
    Mr. Lonegro. Thank you, Senator.
    We opened up a dialogue with NTSB as part of the Positive 
Train Control mandate and have met with them several times both 
in terms of the departing chairperson as well as the new 
chairman. And as part of that, I think it has been a healthy 
dialogue around what training requirements are necessary to 
protect railroad workers both in the cab of the locomotive and 
on the, what we call, the wayside or trackside, and one of the 
four main pillars of Positive Train Control is to protect the 
track workers when they haven't established authority along the 
main line. That territory will be sacrosanct in the Positive 
Train Control world where that, the head worker in charger 
there, the foreman or the employee in charge we call them, will 
have the authority to allow a train to pass through or not and 
at what specific speed.
    So I do think Positive Train Control will significantly 
address that, certainly on the process side, the training side, 
the safety briefing piece and the communication. And additional 
technologies like the cameras, which are both inward facing and 
outward facing, will help us understand the true root cause of 
many of these accidents.
    In terms of the interworkings between the NTSB and the FRA, 
I have to leave that one to this committee. I will tell you 
that we look at the NTSB's most wanted list that they've 
published for a number of years and determine whether or not 
those make sense for us to deploy. And, this inward-facing 
camera, which has been apart of a number of the investigations 
that NTSB has put forward, makes a lot of sense to us.
    Senator Blumenthal. Thank you.
    I've been an advocate of Positive Train Control as well as 
a number of the measures that you just mentioned, such as 
cameras, alerters and redundant signal protection. I think 
they're vital, but Positive Train Control certainly is critical 
to the safety strategy. And many of the really tragic 
incidences, most recently Spuyten Duyvil, could have been 
prevented with Positive Train Control. Wouldn't you agree?
    Mr. Lonegro. I would.
    Senator Blumenthal. And let me ask all the witnesses: Isn't 
it unfair to the railroads that have made advances and are on a 
path to meet the deadline to potentially postpone the Positive 
Train Control mandate?
    Mr. Lonegro. With all due respect, I would be very 
surprised if any railroad makes the 2015 deadline. You may 
remember that the California delegation had proposed a 2012 
deadline as part of the deliberations and clearly that was a 
reaction to the tragic accident in Chatsworth, California. At 
the same time, that agency, Metrolink, had committed at that 
time, which was 2008, to be finished with Positive Train 
Control by 2012. They have just recently announced that they 
will only be in testing in 2016.
    So we are all working as diligently as possible. And 
companies can show their will and their commitment by the 
number of dollars that they spend and the number of people that 
they allocate to Positive Train Control, in the thousands of 
people that are working on it every day at CSX and in the 
industry, in the billions of dollars that we're spending in 
order to deliver it just as quickly and safely and efficiently 
as possible, I think is testament to that.
    Senator Blumenthal. My time is expired.
    I don't know whether any of the other witnesses have 
answers to that question but I thank you, Mr. Chairman.
    The Chairman. Thank the Senator from Connecticut.
    And I want to thank, again, our panelist for all your great 
responses today. We'll keep the record open for a couple of 
weeks but appreciate everybody being here today and 
participating in this.
    And we'll inform our discussions and decisions with regard 
to how we deal with and manage the rail issues under this 
committee's jurisdiction. So thank you, again.
    And with that, this hearing is adjourned.
    [Whereupon, at 12:11 p.m., the hearing was adjourned.]

                            A P P E N D I X

                National Association of Railroad Passengers
                                  Washington, DC, February 12, 2015

Committee on Commerce, Science, and Transportation,
Subcommittee on Surface Transportation,
Dirksen Senate Office Building,
Washington, DC.

    Following upon the January 28 hearing on freight rail safety, 
please consider the following policy recommendations from the National 
Association of Railroad Passengers regarding the implementation of 
Positive Train Control.
    Accepting that compliance with the December 31, 2015, statutory 
deadline is not feasible, NARP recommends that any new law which 
changes that deadline should:

  (1)  Grant authority to the Secretary of Transportation, on an 
        individual company basis, to give up to three, consecutive 18-
        month extensions, bringing the latest possible date of 
        compliance 4-1/2 years after the current deadline, or June 30, 
        2020.

  (2)  Change the law so that heavily traveled mainlines are not exempt 
        because they happen to be owned by other than a Class 1;

  (3)  Explicitly require the prevention of low-speed, rear-end 
        collisions--of which there have been fatal ones within the past 
        four years [see below]. The system as currently being installed 
        does not know the length of trains and therefore cannot prevent 
        low-speed, rear-end collisions.

    Point #1 would be preferable to legislatively forcing the gift to 
the entire industry of a blanket 5-year extension. It would enable the 
Secretary to treat with appropriate differences railroads which have 
worked hard on PTC vs. those who have not.
    Point #2 would protect the railroads from a tragic accident that 
also would be a public relations disaster for the industry--how to 
explain having installed PTC all across rural America but having taken 
advantage of a legal loophole either to avoid installation in populated 
areas like the cities of Kansas City and St. Louis. [Some states may 
come up with the money to save their passenger trains; other states 
already choking on the big run-up in Amtrak-related costs under Section 
209 of the 2008 law may let the service die and leave PTC absent where 
most needed.]
    Point #3 would make explicit what most people thought the law 
already meant--train-to-train collisions must be prevented; there is no 
exception for low-speed, rear-end collisions. The NTSB April 24, 2012, 
report on the April 17, 2011, fatal collision at Red Oak, Iowa, stated 
that ``the PTC designs that are being deployed and the FRA's final rule 
on the application of PTC are unlikely to prevent future restricted 
speed restricted speed rear-end collisions similar to the 58 rear-end 
collisions reported to the Federal Railroad Administration over the 
last 10 years or the collision at Red Oak because train speeds at the 
upper limit of restricted speed are allowed.''
    FRA's April 25, 2012, advisory in response to the NTSB's report 
detailed six rear-end collisions over the past year that caused four 
employee fatalities (the other two were at Mineral Springs, NC, on CSX 
on May 24, 2011, and DeWitt, NY, on CSX on July 6, 2011), six employee 
injuries and property damage exceeding $6 million. Thankfully, no 
passenger trains were involved.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                             Frank Lonegro
    Question 1. Flammable liquids proposed rule. You described your 
experience with the implementation challenges of positive train control 
(PTC)--including issues with component supply, employee training, and 
interoperability--and the significant operational complexities.

    a. Given your experience and expertise, could you provide insights 
into the potentially similar implementation challenges with another 
safety proposal: the requirement for electronically-controlled 
pneumatic (ECP) brakes under the flammable liquids unit train proposed 
rule (also known as the crude-by-rail rule)?
    Answer. A mandate for ECP brakes cannot be justified. ECP brakes do 
not provide a significant safety benefit, are very costly, and such a 
mandate could severely disrupt railroad service.
    The ECP brake proposal could substantially impair network fluidity. 
AAR understands that a stringent speed limit is being contemplated by 
DOT for unit trains of flammable liquids where ECP brakes are not 
utilized. Railroad service for freight and passenger traffic would be 
significantly impaired, as all trains behind a slow moving train 
containing flammable liquids would also be forced to reduce speeds--
both freight and passenger trains. Furthermore, there would be delays 
attributable to immature ECP brake technology. For example, delays with 
the few ECP trains currently in service are experiencing operational 
problems much more frequently than with trains operating with 
traditional air brakes, and these delays are lasting much longer. 
Examples of the problems that occur are poor cable connections and 
depleted batteries. Note also that when locomotives and rail cars are 
used only sporadically in ECP service, the functioning of the ECP 
equipment becomes problematic, with the problems only evident when the 
equipment is put back in ECP service.
    Finally, it would cost industry billions to install ECP brakes. 
Yet, the safety benefit would be insignificant. DOT is claiming that 
ECP brakes would mitigate the effects of an accident, but DOT is not 
claiming that ECP brakes would actually reduce the number of accidents. 
A study by the Technology Transportation Center, Inc., shows that ECP 
brakes would, at most, result in reducing the number of cars being 
derailed by an average of 1.6 cars--that is the number of cars being 
derailed, not the number of cars releasing product.

    b. To what extent would the flammable liquids unit train proposed 
rule create additional operational complexities within the rail system, 
including through increasing congestion (through a speed limit), 
decreasing the interchangeability of rail cars (through the ECP brake 
requirement), or creating a tank car shortage (through an accelerated 
deadline)?
    Answer. A drastic speed limit, such as 30 mph, on unit trains that 
are not utilizing ECP brakes, would have a dramatic effect on railroad 
capacity, adversely affecting the railroads' ability to provide 
efficient railroad service. Think of a vehicle traveling 30 mph on a 
highway with only one lane in the direction of travel, where the speed 
limit is much higher. The slow-moving vehicle affects all of the 
traffic behind it.
    AAR understands that to avoid a stringent speed limit, ECP brakes 
would have to be utilized on unit trains with flammable liquids, i.e., 
trains with 70 or more cars of flammable liquids. If a railroad were 
tendered tank cars without ECP brakes, the carrier might need to take 
those cars out of trains to avoid the speed limit, requiring increased 
handling of the cars and delays in getting the cars to destination.
    To ensure that locomotives with ECP brakes were available, 
railroads would have to equip most of their locomotives with ECP 
brakes--at a cost of almost $90,000 per locomotive, that is a $1.7 
billion price tag for approximately 20,000 locomotives. Equipping just 
a small number of locomotives with ECP brakes would not work because 
locomotives travel widely on the railroad network (locomotives are even 
interchanged between railroads) and since locomotives do break down, 
replacement locomotives would have to have ECP capability.
    As noted in the response to the first question, the lack of 
reliability with ECP equipment would present operational problems. 
Network fluidity would be adversely affected, resulting in less 
satisfactory service for railroad customers.
    AAR has called for legacy tank cars to be retrofitted or replaced 
on an aggressive schedule. Of course, the timeline for retrofits should 
not be so stringent that shippers will be unable to secure an adequate 
supply of tank cars.

    c. To what extent would ECP brakes generate business benefits, such 
as fuel savings, wheel defect reductions, and brake inspection savings? 
What has the railroad industry learned from trial runs of ECP brakes?
    Answer. In 2006, FRA commissioned a study by Booz Allen Hamilton 
that postulated enormous business benefits from ECP brakes. Of course, 
if there were such business benefits to be realized, the industry would 
long ago have transitioned to ECP brakes.
    The Booz Allen study is predicated on the heavy use of air brakes 
as a benchmark. However, railroads today primarily use dynamic brakes 
(akin to downshifting in a car), using air brakes (or ECP brakes in the 
few trains that are equipped with ECP capability) only when necessary. 
Dynamic braking lowers fuel consumption and reduces wear on wheels and 
brake shoes.
    That is not to say dynamic brakes are the only way of achieving 
these business benefits. For example, since the Booz Allen report was 
published, the railroads have done much to reduce fuel consumption, 
using, for example, idling reduction technologies to a greater extent 
and onboard energy management software that provides the engineer with 
information to optimize operation of a train from a fuel consumption 
perspective.
    Regarding brake inspection savings, FRA regulations already provide 
railroads with the opportunity to increase the distance between brake 
inspections through the use of ECP brakes. This has been utilized to a 
very limited extent. The regulation allows for fewer planned 
maintenance events, but because ECP brakes have significantly more 
unplanned failures, the proposed safety benefits are moot.

    Question 2. Positive train control. You discussed the possibility 
of system failure with PTC and emphasized the difficulty of inventing a 
technology as you are implementing it.

    a. To what extent does the current statutory and regulatory 
framework adequately address PTC failures, and what, if any, policies 
could ensure rail network fluidity, while protecting public safety, 
during such possible failures?
    Answer. The regulations restrict the speed at which trains can 
operate in the event of a PTC failure, which would adversely affect 
network fluidity. Having said that, the initial proposed PTC 
regulations would have imposed operating restrictions which had the 
potential to slow railroad operations down to a crawl. FRA, to its 
credit, revised the regulations so that while reduced speeds are 
required where there are PTC failures, the effect will not be as 
drastic as would have been the case under the original regulations.
    It should be emphasized that PTC is designed to be an overlay 
system. PTC ``failures'' do not mean accidents will occur.
    Finally, regarding the safety of railroad operations where PTC 
``fails,'' the railroads operate very safely today. The last three 
decades have shown continuous improvement in the safety of railroad 
operations, with railroads today operating at record safety levels. 
Where PTC does fail, the railroads will still operate at very safe 
levels.

    b. Understanding recent progress at the Federal Communications 
Commission (FCC), do you expect any additional bureaucratic hurdles 
moving forward, and aside from funding, how could the Federal 
government better assist railroads with administrative burdens in 
implementing PTC?
    Answer. There remain numerous administrative steps that must be 
completed. At the FCC, certain technical waivers related to spectrum 
need to be finalized, in addition to the railroads completing the 
historic preservation, Tribal, and environmental review for the antenna 
poles needed for PTC.
    Under its regulations, FRA must still approve all railroad PTC 
safety plans. AAR is concerned about the ability of FRA to complete 
these approvals with its current staffing levels. Attached for your 
reference is a copy of a January 27, 2015 letter from FRA to the rail 
industry regarding the FRA's procedure for certifying PTC safety plans, 
which may add additional uncertainty to the certification process. [See 
letter below.]
    Most importantly, the Congress should set a realistic and 
responsible deadline for PTC implementation, beyond December 2015.
                          U.S. Department of Transportation
                            Federal Railroad Administration
                                   Washington, DC, January 27, 2015
Mr. Edward R. Hamberger,
President and CEO,
Association of American Railroads,
Washington, DC.

Mr. Michael Melaniphy,
President and CEO,
American Public Transportation Association,
Washington, DC.

Ms. Linda Bauer Darr,
President and Treasurer,
American Short Line and Regional Railroad Association,
Washington, DC.

                   Re: Positive Train Control Certification

Dear Mr. Hamberger, Mr. Melaniphy, and Ms. Darr:

    The Rail Safety Improvement Act of 2008 requires Federal Railroad 
Administration (FRA) approval and certification of Positive Train 
Control (PTC) systems \1\ for compliance with the approval process of 
Title 49 Code of Federal Regulations (CFR) Part 236, Subpart I, 
Positive Train Control Systems. PTC System Certification requires 
submitting an acceptable PTC Safety Plan (PTCSP) to FRA.\2\ The PTCSP 
presents the safety case appropriate to a specific railroad and the 
type of PTC system \3\ that reliably and safely provides the required 
PTC functions.\4\
---------------------------------------------------------------------------
    \1\ See 49 USC Sec. 20157(h).
    \2\ See 49 CFR Sec. 236.1009(d)(l).
    \3\ See 49 CFR Sec. 236.1015(e).
    \4\ See 49 CFR Sec. 236.1005(a).
---------------------------------------------------------------------------
    Given the number of PTCSPs, their size, and the need to facilitate 
timely certification to support the deadline for PTC installation, FRA 
will only audit critical elements of a railroad 's PTCSP submission. 
FRA's expectation is that the railroads will exercise complete 
responsibility for ensuring that the PTCSP and all associated 
documentation is complete consistent, current, and accurate. FRA will 
not provide quality control of a PTCSP, nor will it make a 
determination of the legal and factual sufficiency of the PTCSP safety 
case in the event of civil or criminal litigation.
    FRA will continue preliminary PTCSP reviews to help ensure 
appropriate regulatory information is included in PTCSP submissions and 
to gain an understanding of the railroad's intended meaning of the 
document text. Ultimate responsibility for presenting a complete, 
consistent, current, and accurate safety case lies with the system 
developer and the host railroad. Consequently, if FRA discovers a 
significant issue during a review of a PTCSP after formal submission 
for approval, FRA will immediately stop its review and return without 
any further review the PTCSP to the submitting railroad for correction 
and resubmission. To assist FRA in determining the readiness of a PTCSP 
for review, we have enclosed a list of issues that would initiate a 
return and require resubmittal. The enclosed list is not exhaustive; 
rather, it provides examples of typical errors in completeness, 
consistency, and accuracy. Although FRA expects that there will be 
significant similarities between different PTCSPs submitted by the 
railroads , the uniqueness of each railroad's operations will 
necessitate differences in the focus of the reviews and audit 
conducted.
    In lieu of FRA conducting a full audit, FRA will accept an 
independent third-party reviewer \5\ finding that an integrated PTC 
system and all of its subsystems, as well as the development and test 
processes and associated documentation: (1) has no or minimal critical 
issues (2) supports the level of ce1iification requested by the 
railroad; and (3) is complete, consistent, current, and accurate. This 
review must be consistent with the requirements of 49 CFR 236, Appendix 
D, Independent Review of Verification and Validation, and Appendix F, 
Minimum Requirements of FRA Directed Independent Third-Party Assessment 
of PTC System Safety Verification and Validation, with a final report 
addressing each element of 49 CFR 236, Appendix D and Appendix F. Upon 
receipt of the independent assessor's findings and, assuming there are 
no unresolved negative findings, FRA will precertify the PTC system 
with operational restrictions if required to ensure safe system 
operations pending FRA review and acceptance of the third-party 
reviewer report. If a railroad elects this option, FRA will hold the 
independent reviewer equally responsible with the railroad in the event 
of discovery of misrepresentations and liable for civil or criminal 
sanctions as appropriate.
---------------------------------------------------------------------------
    \5\ Third-party reviewer is as defined in 49 CFR Sec. 236.1017.
---------------------------------------------------------------------------
    If FRA, or the independent assessor, determines that the safety 
case provided in a PTCSP does not support certification of the system 
at the originally requested level of functionality, but does support 
certification at a lower level of functionality, FRA will deny the 
request for the certification at the submitted level of functionality 
without prejudice, and may issue a certification at a lower level of 
functionality.\6\ For systems certified at a lower level of 
functionality, FRA will consider new requests for certification at the 
higher level of functionality upon presentation of new safety evidence.
---------------------------------------------------------------------------
    \6\ A certification request for approval of a PTC system as a 
standalone system would automatically be considered for certification 
as a mixed , vital overlay or non-vital overlay system; a certification 
request for approval of a PTC system as a mixed system would be 
automatically be considered as a vital overlay or non vital overlay ; 
and a certification request for approval of a PTC system a vital 
overlay would be considered as a non-vital overlay. FRA will grant 
certification of the PTC system at the highest level consistent with 
FRA's evaluation of the safety case provided in the PTCSP submitted for 
approval.
---------------------------------------------------------------------------
    I would appreciate it if you would share this information with your 
member railroads that are installing PTC systems.
    If you have any questions regarding certification, please feel free 
to contact Mr. David Blackmore, Railroad Safety Program Manager for 
Applied Technology, at David.Blackmore@dot.gov.
            Sincerely,
                                           Robert C. Lauby,
                       Associate Administrator for Railroad Safety,
                                              Chief Safety Officer.
Enclosure
                                 ______
                                 
                               Enclosure
Examples of Basis for Immediate Return of Submitted Positive Train 
        Control Safety Plan (PTCSP) Formally Received by the Federal 
        Railroad Administration

   1.  Document or portions of the document are marked ``Draft.''

   2.  Analysis does not explicitly cover all four subsystems (Office, 
        Onboard, Wayside, Communications) with supporting evidence that 
        shows the vitality of each subsystem and its role in and how it 
        supports overall claimed system vitality.

   3.  Any part of a PTCSP has negative findings, but no corrective 
        action taken, or full justification as to why an action is not 
        been taken and its impact on the level of system vitality.

   4.  Indications of incomplete tests or tests in progress.

   5.  Claims of interoperability without supporting test records that 
        show cross system interoperability has occurred.

   6.  Existence of a single point failure.

   7.  Incomplete list of mal-actors/system safety.

   8.  Incomplete or missing reliability analysis.

   9.  Human factors analysis/mitigation missing for each component.

  10.  Inconsistent hazard rates between multiple locations in the 
        document and appendices.

  11.  Operating rules do not include PTC specific requirements.

  12.  Inadequate forward plan for replacing marginally acceptable 
        short-term functional behaviors with long-term functions.

  13.  Incomplete emergency and planned rerouting management plan that 
        does not address all subsystems.

  14.  Incomplete process or procedure for data recovery of missing 
        data.

  15.  Mismatch between software versions tested.

  16.  Missing licensing information.

  17.  Functions not used by the railroad are listed in railroad-
        specific documents.

  18.  Configurable items not assigned railroad-specific values.

  19.  Mismatch between as found functionality and PTCSP functionality.

  20.  Unsupported or not fully justified assertions.

  21.  Satisfaction of subsystem assumption about required behaviors 
        not positively identified as having been satisfied.

  22.  Lack of uniformity of safety assurance concepts between 
        different vendors' equipment.

  23.  Verification and validation activities reported as not being 
        complete.

  24.  Different versions of what should be the same version are used.

  25.  Failure rates and reliability do not support assertion of 
        reliable system type.

  26.  Incomplete PTC product vendor list or PTC vendor list missing 
        suppliers.

  27.  Warning labels not provided for all subsystems.

  28.  Only abbreviated explanation in hazard log of what were the 
        specific actions that were taken to closeout a hazard.

  29.  Certification request made before all elements of subsystems 
        available to justify vital certification.

    Question 3. Other technologies. Highly precise track measurement, 
laser-based clearance scanning, and track database collection and 
management systems have been critical to reducing cost and improving 
the safety of track expansion, maintenance, and operations.

    a. What other advanced technologies contribute to optimizing 
railway safety and availability?
    Answer.

   Wayside detectors identify defects on passing rail cars, 
        including overheated bearings and damaged wheels, dragging 
        hoses, deteriorating bearings, cracked wheels, and imbalanced 
        loads. The number and types of detectors with Internet data 
        access capability has grown rapidly in North America as new 
        technologies come on line. At the latest count, the North 
        American railroads have 136 wheel impact load detectors (WILD), 
        25 truck performance detectors (TPD), 7 wheel profile 
        measurement (WPMD) systems, and 13 acoustic bearing detector 
        systems (ABD). These detectors installed on the trackside on 
        each railroad send actionable information regarding the health 
        of equipment owned by the railroads and private car owners over 
        the Internet. The following provides a list of wayside detector 
        systems used by the North American railroads:

     WILD measures vertical impact wheel loads as the car 
            passes across the site. Their primary function is to 
            measure vertical impact loads to identify wheels with slid 
            flats and shells, as well as out-of-round wheels for 
            removal. Many have subsequently been adapted to function as 
            overload and imbalanced load detectors.

     Because a relatively small percentage of freight cars 
            cause a higher percentage of track damage and may have a 
            higher than usual propensity to derail, the railroad 
            industry is using truck performance detectors and hunting 
            detectors to identify poorly performing freight cars.

     Wheel profile detectors use lasers and high speed 
            video cameras to determine if wheel tread or flanges are 
            worn and, consequently, when the wheels need to be removed 
            from service.

     Wheel temperature measuring devices are used to detect 
            when brakes are not applying when they should be braking 
            (the temperature of the wheels would be colder than they 
            should be in such an event) and brakes that are applied 
            when they should not be (the wheels would be hotter than 
            they should be in such an event).

     Trackside acoustic detector systems use ``acoustic 
            signatures'' to evaluate the sound of internal bearings to 
            provide advance warning for those nearing failure. These 
            systems supplement or replace systems that measure the 
            overheated bearings.

     Internal defects that are not visually detectable are 
            one of the major causes of wheel-related derailments. 
            Cracked wheel detectors provide early detection and removal 
            of cracked wheels. These detection systems can inspect 
            wheels without removing them from service and prevent 
            impending derailments due to internal wheel defects.

     Machine vision and other available or emerging 
            technologies are being actively developed by the 
            Transportation Technology Center, Inc. (TTCI), in 
            partnership with suppliers worldwide. These are laser and 
            high speed video inspection systems to 1) assess the 
            condition of a railcar's safety appliances (ladders, hand 
            holds, sill steps, etc.); 2) evaluate the condition of the 
            railcar's underframe and related structural members; and, 
            3) and scan the top, sides, and undercarriage of every car 
            at speeds up to 40 mph.

   Onboard track inspection systems measure track geometry and 
        monitor rail integrity, including track surface, track gage and 
        alignment defects, marginal track support conditions, and rail 
        internal defects which occur due to fatigue.

     Defect detector cars detect internal flaws in rails 
            using advanced ultrasonic or electro-magnetic sensors. A 
            prototype of the world's first phased-array ultrasonic 
            system, which uses hundreds of sensors, is being developed 
            and tested at TTCI.

     Advanced track geometry cars use sophisticated 
            electronic and optical instruments to inspect track 
            alignment, gauge, curvature, and other track conditions. 
            This information helps railroads determine when track needs 
            maintenance.

     Structural health monitoring systems and diagnostic 
            measurements are used on bridges.

     Vehicle Track Interaction measurement systems applied 
            to locomotives--give real time performance measurements 
            that allow rapid repair of track defects.

     Ground-penetrating radar is being used to help 
            identify problems below the ground (such as excessive water 
            penetration and deteriorated ballast) that may hinder track 
            stability.

   New systems--including remote monitoring capabilities--are 
        being developed and tested to ascertain the structural health 
        of bridges. Slide sensors and flood sensors are used to monitor 
        track integrity and improve safety.

   Improved track components such as fatigue and wear resistant 
        rail steels

   Improved car components such as advanced wheel steels, 
        roller bearings, and car joining systems provide longer 
        component lives and fewer failures in revenue service

   Improved car suspension systems used on many higher capacity 
        freight cars have helped reduce the dynamic loads generated in 
        curves and tangent tracks due to track geometry variations. 
        Currently, TTCI is working with suppliers worldwide to develop, 
        test, and evaluate the next generation suspension systems, 
        which will be available soon.

    b. Have you found that advanced software-enabled services--such as 
engineering maintenance management, real-time remote diagnostic 
monitoring, in-service performance planning, and component condition 
monitoring--help improve freight rail reliability and availability?
    Answer. Yes, these technologies can help improve freight rail 
reliability and availability. Some industry initiatives along these 
lines include:

   Storing wayside detector data in a database, developed by 
        TTCI and referred to as InteRRISTM, TTCI's 
        Integrated Railway Remote Information Service. This tool set 
        provides users with the capability to make predictive, 
        condition-based maintenance decisions rather than having to 
        rely solely on visual inspection. It also makes data available 
        to a wider range of stakeholders than possible before.

   Currently, InteRRIS collects data from wheel impact load 
        detector systems (which identify wheel defects by measuring the 
        force generated by wheels on tracks) and detectors that monitor 
        the undercarriage of rail cars (which identify suspension 
        systems that are not performing properly on curves).

   InteRRIS gathers detector data over the Internet and feeds 
        actionable readings to Railinc's Equipment Health Management 
        System (EHMS) for dissemination to railroads and other car 
        owners. The EHMS uses the Automatic Equipment Identification 
        (AEI) data acquired from detector sites to determine vehicle 
        location, direction of operation, and load condition. This 
        information can be utilized to determine optimal maintenance 
        locations. A Car Repair Billing database currently reports 
        repairs made on off-line cars operating in interchange.

   Advanced Technology Safety Initiative (ATSI), a predictive 
        and proactive maintenance system designed to detect and report 
        potential safety problems and poorly performing equipment 
        before they result in accidents or damage. In addition to 
        reliably detecting cars that exhibit high levels of stress and 
        reduce derailments, one of the purposes of ATSI is to work with 
        freight car owners to develop efficient methods to proactively 
        maintain the freight car fleet and keep out-of-service time to 
        a minimum.

   Rail industry safety is also enhanced by the Asset Health 
        Strategic Initiative (AHSI), a multi-year rail industry program 
        initiated by the AAR in December 2011 that applies information 
        technology solutions and processes to improve the safety and 
        performance of freight cars and locomotives across North 
        America. AHSI aims to improve safety and reduce costs across 
        the rail industry by addressing mechanical service 
        interruptions, inspection quality, and yard and shop efficiency 
        at a network level. It is based on the recognition that 
        improving asset health means more than just focusing on railcar 
        and locomotive repair. Rather, it encompasses the entire 
        rolling stock health cycle, incorporating prevention, 
        detection, planning, movement, and repair.

   AHSI aims to improve safety and reduce costs across the rail 
        industry by addressing mechanical service interruptions, 
        inspection quality, and yard and shop efficiency. It 
        encompasses the entire rolling stock health cycle, 
        incorporating prevention, detection, planning, movement, and 
        repair.

   The Comprehensive Equipment Performance Monitoring (CEPM) 
        program, which is just one part of the AHSI initiative, is a 
        web-based application that captures data for railcar equipment 
        components, including repair histories, the mileage the freight 
        cars incorporating the components have traveled, and the 
        current and past health status of the equipment. CEPM will make 
        it much easier to track the health of individual railcar 
        components and will provide crucial information on the health 
        of entire classes of components, making early identification of 
        potential safety problems much more likely.

   U.S. railroads use a variety of track infrastructure 
        maintenance and renewal information management systems. These 
        systems are used to store management information regarding 
        surfacing, undercutting, track geometry and rail inspection, 
        tie and rail renewal operations, as well as track component 
        inventory, to improve track condition and improve safety.

   Bridge management systems are used for tracking inspections, 
        bridge capacity ratings, and prioritizing bridge capital and 
        maintenance spending.

    c. Could U.S. passenger rail also benefit from the expanded use of 
such innovative solutions?
    Answer. Yes, they already are. All railway operations will benefit 
to varying degrees. These technological innovations generally are 
available to freight and passenger railroads alike. Railroad research 
conducted at the Transportation Technology Center, Inc. helped develop 
and test many of these technologies.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                               Chris Jahn
    Question. Flammable liquids proposed rule. In discussing the 
potential effects of the flammable liquid unit train proposed rule 
(also known as the crude-by-rail rule), you stated that rail car 
maintenance facilities would be inundated by crude oil and ethanol tank 
retrofit orders required within an unreasonably short span of time, and 
that would crowd out facility capacity for other tank cars.

    a. Could you provide more detail on the proposed rule's crowding-
out effect for tank cars carrying other commodities, including the 
scale and costs of increased out-of-service time and the broader 
effects on the economy?
    Answer. The Fertilizer Institute (TFI) and its members have 
concerns with the shop capacity necessary to service rail cars carrying 
non-flammable materials at the same time shops will be dealing with the 
requirements for flammable liquids under the proposed requirements when 
final. The Pipeline and Hazardous Material Safety Administration 
(PHMSA) has proposed a very aggressive transition period that will tax 
rail car construction and retrofit capacity. It is already a difficult 
task for shippers to keep their rail cars repaired, maintained, and in 
compliance because of existing backlogs at shops. This transition 
period will make it even more difficult for shippers of non-``High-
Hazard Flammable Train'' commodities to inspect and repair their rail 
cars.
    According to a study prepared by The Brattle Group for the Railway 
Supply Institute's Committee on Tank Cars (RSI-CTC),\1\ even if one 
were to assume that these modifications began on January 1, 2015 (an 
assumption that RSI-CTC members did not believe was realistic, given 
the ramp up period that would be required to order parts and components 
and hire and train the necessary workforce), it would not be feasible 
to achieve PHMSA's timeline because doing so requires that the 
modifications be carried out at a rate of over 1,400 tank cars per 
month. Further, during the initial years of the program when the most 
complex modifications are being carried out on the nonjacketed legacy 
DOT-111 tank cars, the RSI-CTC does not believe that it will be 
possible to process more than 550 cars per month. While it may be 
reasonable to assume some increase in throughput rates as shops become 
more familiar with the process, the RSI-CTC does not believe that under 
any realistic scenario it will be possible to approach anything close 
to the rates assumed in PHMSA's analysis and instead would take years 
beyond what PHMSA anticipates.
---------------------------------------------------------------------------
    \1\ Neels, Kevin, and Mark Berkman. A Review of the Pipeline and 
Hazardous Materials Safety Administration's Draft Regulatory Impact 
Analysis Docket No. PHMSA-2012-0082 (HM-251). Rep. N.p.: Brattle Group, 
2014. Print.
---------------------------------------------------------------------------
    To avoid crowding out shop capacity and potential losses due to 
out-of-service time, TFI would recommend that PHMSA extend the period 
for compliance with the new tank standards to help mitigate this 
concern.

    b. To what extent is the proposed rule scoped appropriately? To 
what extent could the high hazard flammable train definition be 
improved to better capture or target the risk posed by hazardous 
materials rail transportation?
    Answer. The Fertilizer Institute (TFI) members are very concerned 
that the proposed definition of a ``High-Hazard Flammable Train'' 
(HHFT), and the proposed restrictions upon such trains, will have 
severe negative consequences for all other traffic that depends upon a 
fluid national rail network. Accordingly, we have an interest in this 
rulemaking due to its general impact on rail operations and possible 
future impact on non-HHFT DOT-111 tank cars.
    The safety concerns that are driving the need for enhanced safety 
standards for flammable liquids have arisen in the context of unit 
trains of crude oil or ethanol, which typically consist of 50 or more 
tank cars usually tendered by a single customer for transportation to a 
single final destination. But the Pipeline and Hazardous Material 
Safety Administration (PHMSA) has proposed to classify as an HHFT any 
train with as few as 20 tank cars of flammable liquids. Consequently, 
far more trains will be designated HHFTs than are warranted by the 
risks that these rules are designed to address. We have encouraged 
PHMSA to fully consider the impact and unintended consequences of such 
a broad HHFT definition which will impact the entire rail network.
    For example, speed restrictions for HHFTs are a concern because 
they will have impacts on the rail network far beyond any single HHFT 
by slowing down and congesting the larger network. The more trains that 
fall within the definition of an HHFT, the greater the potential 
impact. With the severe service issues experienced by fertilizer 
shippers, and shippers overall last winter, PHMSA's proposal will 
affect all commodities with longer transit times and increased 
congestion. Speed restrictions and overall operational restrictions 
will compound the service issues all railroads and shippers have 
experienced. Fertilizer shippers depend on efficient rail service in 
order to deliver essential crop nutrients in a timely manner to 
American farmers and service issues are a top priority for our members.
    It is also important to note that shippers have no control over how 
train consists are made up after they release the cars to the railroad. 
What may seem like a compliant shipment may ultimately turn out to be 
part of an HHFT due to the railroad's handling of that shipment. The 
HHFT definition may also lead to railroads making a decision between 
expedient handling of railcars when determining the makeup of trains, 
which could lead to an HHFT, and sitting on loaded cars to avoid 
creating an HHFT train, both of which can be a detriment to overall 
rail service.
    TFI suggests that PHMSA modify the definition of an HHFT to better 
target the risks associated with movement of crude and ethanol by only 
including unit trains, which typically consist of 50 or more tank cars, 
of either product.

                                  [all]
```