[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
         PERSPECTIVES FROM USERS OF THE NATION'S FREIGHT SYSTEM

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

                                (113-36)

                                HEARING

                               BEFORE THE

                                PANEL ON
                  21st-CENTURY FREIGHT TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 1, 2013

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         ELEANOR HOLMES NORTON, District of 
JOHN J. DUNCAN, Jr., Tennessee,          Columbia
  Vice Chair                         JERROLD NADLER, New York
JOHN L. MICA, Florida                CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey        EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California           ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri                 RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan          TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California            MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York           JOHN GARAMENDI, California
DANIEL WEBSTER, Florida              ANDRE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida       JANICE HAHN, California
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky              DINA TITUS, Nevada
STEVE DAINES, Montana                SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina             ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma           LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas                CHERI BUSTOS, Illinois
TREY RADEL, Florida
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
                                ------                                7

              Panel on 21st-Century Freight Transportation

                JOHN J. DUNCAN, Jr., Tennessee, Chairman
GARY G. MILLER, California           JERROLD NADLER, New York
ERIC A. ``RICK'' CRAWFORD, Arkansas  CORRINE BROWN, Florida
RICHARD L. HANNA, New York           DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida              ALBIO SIRES, New Jersey
MARKWAYNE MULLIN, Oklahoma           JANICE HAHN, California


                                CONTENTS

                                                                   Page

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

                               TESTIMONY

Tom Kadien, Senior Vice President, Consumer Packaging, IP Asia 
  and IP India, International Paper..............................     4
F. Edmond Johnston, III, Transportation Policy Leader, DuPont....     4
Rob Roberson, Materials and Logistics Manager, Nucor Steel 
  Berkeley--a Division of Nucor Corporation......................     4
Bill J. Reed, Vice President, Public Affairs, Riceland Foods, 
  Inc............................................................     4

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Tom Kadien.......................................................    39
F. Edmond Johnston, III..........................................    44
Rob Roberson.....................................................    51
Bill J. Reed.....................................................    55

                       SUBMISSIONS FOR THE RECORD

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

    Slide component to prepared statement........10, 12, 14, 16, 18, 20
    Response to infrastructure funding and bridge maintenance 
      questions from Hon. Corrine Brown, a Representative in 
      Congress from the State of Florida.........................    29
Tom Kadien, Senior Vice President, Consumer Packaging, IP Asia 
  and IP India, International Paper, response to request from 
  Hon. John J. Duncan, Jr., a Representative in Congress from the 
  State of Tennessee, for specific suggestions to modernize and 
  increase the competitiveness of the U.S. freight network.......    36

                         ADDITION TO THE RECORD

Edward R. Hamberger, President and CEO, Association of American 
  Railroads, written statement, including prepared statement from 
  the June 26, 2013, hearing of the Panel on 21st-Century Freight 
  Transportation.................................................    60


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         PERSPECTIVES FROM USERS OF THE NATION'S FREIGHT SYSTEM

                              ----------                              


                        TUESDAY, OCTOBER 1, 2013

                  House of Representatives,
      Panel on 21st-Century Freight Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The panel met, pursuant to call, at 2:02 p.m., in Room 
2167, Rayburn House Office Building, Hon. John J. Duncan, Jr. 
(Chairman of the panel) presiding.
    Mr. Duncan. We will go ahead and call this meeting to order 
here. And I apologize for the delay, but as everyone can 
understand, everybody's schedule has been changed. And on the 
Republican side, we are having a conference at this time that 
Mr. Hanna and I have been a part of. But we won't have as many 
Members, I don't believe, as we usually do at these hearings, 
but we are certainly honored to have our distinguished panel 
here. And I want to welcome everyone to this hearing before the 
Panel on 21st-Century Freight Transportation of the Committee 
on Transportation and Infrastructure.
    This special panel was created at the request of Chairman 
Shuster and Ranking Member Rahall of the full committee to 
examine the current state of freight transportation in the 
United States and how improving freight transportation can 
strengthen the U.S. economy. As everyone knows, we have a lot 
of competition from around the world that many years ago we 
didn't have. And we have always got to be looking at ways to do 
more and do it better and more efficiently, if we are going to 
remain globally competitive as all of us want.
    The purpose of this panel, of course, is to modernize the 
freight network and, as I said, make the U.S. more competitive. 
We have been working hard toward this goal, and we plan to 
issue our report to the full committee by the end of this 
month.
    The purpose of today's hearing is to hear from those who 
are actually producing and growing the goods that are shipped 
on the Nation's freight transportation system. The 
manufacturing and agriculture industries represent almost one-
fifth of the Nation's annual gross domestic product. Both of 
these industries rely on a highly functioning, efficient, and 
safe freight transportation network. For manufacturing and 
agriculture businesses to be successful and remain competitive 
with international competitors, we must maintain and improve 
our infrastructure to keep pace with growth in these very 
important sectors.
    I am glad that we have this opportunity to discuss the 
specific freight transportation needs of these two parts of our 
economy. We have an excellent panel of witnesses before us 
today. I am confident that they will be able to help us 
understand the unique freight transportation challenges facing 
urban areas and how those issues impact the rest of the Nation. 
We have Tom Kadien, who is the senior vice president for 
consumer packaging at International Paper; Eddie Johnston, who 
is the sustainability manager at DuPont; Rob Roberson, who is 
materials and logistics manager at Nucor Steel Berkeley; and 
Bill Reed, vice president of public affairs for Riceland Foods. 
Four very important companies. I thank the witnesses for being 
here, and I look forward to your testimony.
    I now recognize Ranking Member Nadler for his opening 
statement.
    Mr. Nadler. Thank you, Mr. Chairman. And Mr. Chairman, 
thank you for scheduling this hearing to hear testimony from 
major manufacturing and agriculture industries that rely on the 
Nation's freight transportation system to move their goods to 
market. Whether transporting steel, rice, chemicals, or paper, 
each of our witnesses today will testify about the importance 
of a safe, efficient, and reliable freight transportation 
network to their business's ability to remain competitive and 
successful in the global marketplace. We will learn of the 
logistics analysis that these businesses use to determine which 
mode of transportation is best for their bottom line and long-
term growth.
    Our witness testimony on the importance of rail to DuPont's 
$500 million investment in Charleston, South Carolina, and 
barge transportation to Riceland Foods at New Madrid, Missouri, 
on the Mississippi River illustrate the critical role that 
infrastructure plays in the growth of these businesses. These 
businesses and the United States more generally continue to 
reap the benefits of past infrastructure investments. However, 
these industries recognize that the Nation's current failure to 
invest adequately in our Nation's infrastructure is ceding our 
advantage for our global competitors. A recent survey of U.S. 
manufacturers found that the Nation's infrastructure is not 
keeping pace.
    According to this survey, 70 percent of manufacturers 
believe that our infrastructure is in fair or poor shape and 
needs improvement, 65 percent do not believe that our 
infrastructure's position to respond to the competitive demands 
of a growing economy over the next 10 to 15 years, and none of 
the manufacturers surveyed believe that our freight 
infrastructure is in good shape and needs no improvement. With 
freight transportation measured by tonnage expected to increase 
by 88 percent by 2035, it is clear that the crisis facing our 
freight transportation network will worsen unless we begin to 
make the necessary investments in our infrastructure to ensure 
safe, efficient, and reliable transportation and to enable 
these major industries to continue to compete and grow.
    Finally, I hope the irony is not lost on my colleagues that 
these witnesses are testifying about the importance of the 
Federal Government in the middle of a Republican Government 
shutdown. These witnesses discuss the importance of the Army 
Corps of Engineers and the Service Transportation Board while 
those agencies are now shutting down because of the Republican 
leadership's insistence on stopping the Affordable Care Act at 
the expense of everything else.
    This committee has been one of the brightest spots in this 
Congress, working together in a bipartisan manner again 
including on this panel. But all of the work of this committee 
will be for nothing unless these political shenanigans stop and 
we get back to doing the business of the American people.
    I would like to thank the witnesses for coming here today 
under difficult circumstances. I look forward to your testimony 
and hope that some day, perhaps hopefully soon, the Government 
will not just reopen but will return to creating jobs and 
investing in infrastructure upon which you and we all rely. I 
thank you and yield back the balance of my time.
    Mr. Duncan. Thank you very much. I understand Mr. Crawford 
wants to further introduce one of our witnesses. And, Mr. 
Crawford, you have the floor.
    Mr. Crawford. Thank you, Mr. Chairman. It is my honor to 
introduce vice president of corporate communications and public 
affairs of Riceland Foods, Bill Reed. Riceland is probably the 
most important farmer-owned cooperative in my district, 
providing marketing services for tens of thousands of farmers 
in Arkansas and throughout the rice-producing region. Bill has 
a distinguished career entirely dedicated to American 
agriculture. He started at Riceland more than 30 years ago, and 
Riceland's success can be attributed in large part to Bill's 
leadership. Riceland not only markets agricultural products all 
over the country, but throughout the entire globe.
    It goes without saying that freight transportation is a 
critical aspect of getting agricultural products to market. And 
I look forward to Bill sharing his story about the success of 
Riceland and the need for improvements to freight 
infrastructure so that American agriculture will continue to 
lead its competitors in a global economy.
    Mr. Duncan. Thank you very much.
    Mr. Lipinski, you have any statement?
    Mr. Lipinski. I am looking forward to hearing the testimony 
of--of all our witnesses today. Again, thank the chairman and 
ranking member for putting together this--this hearing. It is 
certainly important to hear from those who are--who are doing 
the--the shipping, about what needs to be done. We all know 
it--what it really comes down to in the end is how are we going 
to pay for this. We know that we certainly need the--the 
investment.
    So if--I know that is not specifically the topic here, but 
if any of our witnesses want to address that in their opening 
statements, I would certainly appreciate that because that is 
what we are all here struggling with. But that is it. Thank you 
and yield back.
    Mr. Duncan. Thank you very much. Mr. Hanna.
    All right. Ms. Hahn.
    Ms. Hahn. Thank you. Thank you, Mr. Chairman. Looking 
forward to the testimony of our witnesses. Thanks for being 
here.
    You would think with this Government shutdown we might shut 
down this air conditioning a little bit.
    Mr. Duncan. Thank you.
    Mr. Webster.
    Mr. Webster. Thank you, Mr. Chairman. Just glad you are 
having this hearing and look forward to hearing what everyone 
has to say. Have questions later.
    Mr. Duncan. Thank you, Mr. Mullin.
    Mr. Mullin. Thank you. And thank you, panel, for being 
here. Unfortunately, you are here at a, I would think a pretty 
historical time. But we do have something important facing us, 
and that is our infrastructure needs. We all know to keep this 
country moving forward, of course, it takes Government to put--
you know, move forward, but at the same time it is our 
infrastructure. And I think it is a great opportunity that we 
have to get true opinions, bipartisan approach that we are 
going to move the ball forward. I think T&I has shown that they 
are willing to do that. And Chairman Duncan has done a 
wonderful job putting this panel together. So, as I would say, 
let's roll and let's get this thing moving forward.
    Mr. Duncan. Thank you very much.
    Previously, in my opening statement, introduced the very 
distinguished panel that we have, and so we will start with our 
first witness, Mr. Tom Kadien of International Paper.
    Mr. Kadien.

   TESTIMONY OF TOM KADIEN, SENIOR VICE PRESIDENT, CONSUMER 
PACKAGING, IP ASIA AND IP INDIA, INTERNATIONAL PAPER; F. EDMOND 
   JOHNSTON, III, TRANSPORTATION POLICY LEADER, DUPONT; ROB 
    ROBERSON, MATERIALS AND LOGISTICS MANAGER, NUCOR STEEL 
 BERKELEY--A DIVISION OF NUCOR CORPORATION; AND BILL J. REED, 
      VICE PRESIDENT, PUBLIC AFFAIRS, RICELAND FOODS, INC.

    Mr. Kadien. Thank you, Chairman Duncan and all the other 
committee members. I am Tom Kadien.
    Mr. Duncan. Get a little closer to the mic.
    Mr. Kadien. My name is Tom Kadien. I am a 35-year employee 
of International Paper and a senior vice president. And I am 
responsible for our consumer packaging businesses here in North 
America as well as our Asia business, our India business, and 
our North American transportation organization. IP is the 
largest paper and packaging company in the world. We have 
70,000 employees around the world, and here in the United 
States, we have 38,000 employees who work at over 300 
facilities in 43 States. And many of the members of this 
committee have district--excuse me, have International Paper 
facilities in your districts. I know a number of you have 
visited, and you are all certainly welcome.
    IP is a leader in--of major consumer of freight and 
logistics here in North America. We spend about $2 billion. We 
are the number one shipper of boxcars on the rail system. We 
export almost 4 million tons of product outside of North 
America. Two million tons goes out in containers and over a 
million goes out breakbulk. So ports are very important to us. 
And we also ship products over 155 million miles around the 
North America system by truck. So we are here to ask for your 
help in addressing the freight transportation needs here in 
North America. I am going to cover two areas of competitiveness 
for truck and ports. I am not going to talk about rail, but 
we--it is very important to us, and I know some of my 
colleagues on the panel will.
    Paper is heavy. Our trucks typically weigh out before we 
cube out. And with 300,000 trucks going over the road, it does 
not make a lot of sense to us to ship trucks with 10 feet of 
empty space when there are safe alternatives to increased 
truck--truck weight here in the United States. So we are here 
to--I am here to talk about SETA, the Safe and Efficient 
Transportation Act, which would allow trucks with a sixth axle 
and braking system to increase the truck weight up to 97,000 
pounds at the option of the States on interstate highways. That 
would enable us to take about 20 percent of our trucks off of 
the road as well as make us more competitive.
    International Paper, like my colleagues at DuPont, safety 
is very, very important to us. And the research supports that 
97,000-pound trucks equipped with a sixth axle and brake system 
stop in the same distance as an 80,000-pound truck with five 
axles. This has been proven over years in the U.K., it has been 
studied here in the United States. And shippers like IP are 
willing to pay higher over-the-road fees. Annual permits can go 
up from $550 per truck per year to $800 per year, per truck. 
And we would gladly pay that if we could use the full capacity, 
to safely use the full capacity of the trucks.
    I will give an example. For our mill in Valliant, Oklahoma, 
in Representative Mullin's district, if the Oklahoma DOT opted 
in, we could reduce our truck trips by over 5,000 trucks a 
year, reduce vehicle miles by 1.8 million miles, and CO2 
emissions by 6.8 million pounds annually.
    So we are very much in favor of this. It is not a rail-
versus-truck issue. Those are two different fact patterns. 
Trucks are for, in our case, under 400 miles; rail averages 
over 800 miles. So we simply want to make trucking more 
competitive.
    I would like to move on to the issue of cargo going out of 
ports. We ship 70 percent of our exports out of the ports of 
Charleston and Savannah. And in 2015, the Panama Canal will be 
reopened and be able to handle wider ships. And both of these 
harbors have to be dredged to accommodate the draft of the 
larger ships, they have to pick up an extra 3 to 7 feet. Both 
are important to us, with over 2 million tons. If we cannot use 
these harbors, we are going to have to put product on rail and 
truck and ship further, either to Miami in the south or Norfolk 
in the north.
    And harbor deepening is important to the health of the U.S. 
economy as well as the movement of goods. And it is important 
to industry who wants to export out of the United States. So we 
urge the panel to support the harbor dredging projects at those 
ports.
    And that is it for me, Chairman Duncan.
    Mr. Duncan. Well, thank you very much. And let me just ask 
you, I was told that you pronounce your last name Kadien, but 
sounded like you said Kadien.
    Mr. Kadien. My mother said Kadien, yes.
    Mr. Duncan. Well, I like to try to get people's names as 
close as possible. Thank you very much.
    Next, we will hear from Mr. Edmond Johnston from DuPont.
    Mr. Johnston. Good afternoon, Chairman Duncan and Ranking 
Member Nadler. My name is Eddie Johnston. I have worked for 
DuPont for 33 years, the first 8 of which were in the State of 
Tennessee, where two of my children were born. I am here to 
testify today on behalf of DuPont, a leading science company, 
and as a member of the American Chemistry Council. I appreciate 
the opportunity to appear before you today.
    DuPont has been bringing market-driven science to the 
global marketplace in the form of innovative products, 
materials, and services since 1802. The company serves markets 
as diverse as agriculture, electronics, automotive, aerospace, 
and defense. DuPont operates more than 70 manufacturing 
facilities in the United States, and employs thousands of 
Americans while purchasing $550 million in transportation 
services each year. The chemical industry employs 800,000 
Americans and produces 12 percent of U.S. exports. The chemical 
industry and its associated suppliers are major users of our 
Nation's freight system and some of the largest customers for 
many modes of transportation. The industry ships a wide variety 
of materials that are used to produce more than 96 percent of 
all manufactured goods.
    I would like to address three critical freight 
transportation issues. First, funding for infrastructure. Much 
of our transportation infrastructure is old. If America's 
manufacturers are to continue to move goods safely and reliably 
over the country's freight infrastructure, upgrades are sorely 
needed. I want to thank this committee for the work you did to 
pass the Water Resources Reform and Development Act. I commend 
you for addressing a major transportation issue. I appreciate 
that this is an era of tight budgets with competing priorities. 
But a robust and reliable transportation infrastructure is the 
cornerstone to healthy U.S. economy.
    Second, hazardous materials transportation. A small yet 
important share of chemical shipments involves hazardous 
materials. According to the Association of American Railroads, 
rail HAZMAT accident rates have declined 91 percent since 1980 
and more than 99.99 percent of rail HAZMAT shipments reached 
their destination safely. However, DuPont and ACC members 
acknowledge that even one incident is too many. And our 
industry is committed to continuous improvement.
    Working with our transportation partners, DuPont and ACC 
member companies have invested billions of dollars to improve 
safety, and we will continue to do so in the future. ACC and 
its member companies also have worked hard to establish a 
strong partnership with the emergency response community.
    The Federal Government continues to play an important role 
through the Hazardous Materials Transportation Act. This 
legislation has been extremely effective in establishing 
uniform national rules. Reauthorization of the Act will ensure 
that important progress continues. Third, rail policy reform. 
Congress last undertook comprehensive rail legislation 33 years 
ago with the Staggers Act. In 1980, America's railroads were 
struggling to maintain a viable business, and the Staggers Act 
has been effective in helping the industry not only survive but 
thrive. In fact, the policy embodied in the Act has been so 
successful that the question in 2013 is not whether America 
will have a viable transportation system, but whether that 
system will threaten the competitiveness of the railroad's 
customers and become an inhibitor of economic growth.
    An unintended consequence of the Staggers Act has been 
virtual elimination of rail-to-rail competition. Chemical 
producers report that 73 percent of their facilities with 
inbound and 65 percent with outbound transportation are captive 
shippers, meaning they are only served by one railroad. Our 
industry is not asking for more regulation of the rail 
industry, but for more robust competition in the rail industry 
so that American farmers and manufacturers are more competitive 
on the world stage. It is time to re-examine decades old policy 
to meet the needs of the 21st century.
    In conclusion, I respectfully request that the panel 
consider the following recommendations: First, Congress should 
support improvement of our Nation's transportation 
infrastructure. Second, Congress should reauthorize the 
Hazardous Materials Transportation Act. And, third, Congress 
should reform Federal rail policy to promote greater access to 
rail competition and improve the efficiency and effectiveness 
of the surface transportation board. Thank you again for the 
opportunity to speak today.
    Mr. Duncan. Thank you very much.
    Next we have Mr. William Roberson from Nucor Steel. Mr. 
Roberson.
    Mr. Roberson. Chairman Duncan and Ranking Member Nadler, 
thank you for the opportunity to testify before you today. I am 
William Roberson, materials and logistics manager for Nucor 
Steel Berkeley, a division of Nucor Corporation. Nucor 
Corporation is the Nation's largest steel manufacturer and 
recycler, operating 23 scrap-based steel mills. Nucor has the 
capacity to produce more than 27 million tons of steel 
annually. Last year, our company recycled more than 19 million 
tons of scrap steel. Nucor also has several wholly owned 
subsidiaries, including Harris Steel, the David J. Joseph 
Company, and Skyline Steel. Together we are a company of over 
22,000 teammates, primarily in the U.S. and Canada.
    The freight transportation system is vitally important to 
Nucor's success. We rely on water, rail, and truck 
transportation to move millions of tons of scrap steel and 
other raw materials to our steel mills and finished products to 
market. For this reason, disruptions in the freight 
transportation system can have significant negative economic 
impacts on our business. Waterways play a particularly 
important role for a number of our Nucor divisions. We have 
several steel mills located on rivers, and some of these mills 
bring in more than 90 percent of their raw materials by river. 
Nucor scraps steel business, the David J. Joseph Company, 
transports approximately 3,500 barges per year of scrap steel. 
When assessing our waterways system, we believe that more 
frequent maintenance dredging is needed to maintain adequate 
drafts. Unfortunately, inadequate drafts levels are becoming an 
all too common occurrence. For every 1 inch decrease in draft, 
you lose 17 tons of cargo on a barge. This forces companies 
like ours to use more costly alternatives.
    Barges are a safe, efficient, environmentally friendly, and 
cost-effective way to move goods. Each barge moves 15 to 1700 
tons of cargo compared to 80 to 100 tons on railcars or 20 to 
22 tons on trucks. Considering the importance of our waterways 
system, we are encouraged to see both Houses in Congress 
advance the Water Resources Development Act. Nucor supports 
this legislation, particularly dedicating more revenue in the 
Harbor Maintenance Trust Fund for the purpose of maintaining 
our Federal navigation channels.
    We hope that Congress will also strengthen revenues for the 
Inland Waterways Trust Fund to make necessary investments in 
this critical component of our U.S. supply chain by advancing 
the industry-supported user fee increase. Like our waterways, 
our roads and bridges are in serious need of investment. The 
Interstate Highway System, built after World War II, is aging, 
and we need a new, long-term commitment to invest in our roads 
and bridges. The gas tax is not providing adequate revenue to 
further this goal. We need to look for new alternatives, 
including more public-private partnerships. Also enacting 
legislation giving States the option to increase the weight of 
six-axle trucks operating on select Federal interstates would 
allow more cargo to be moved safely and efficiently over our 
Nation's railways.
    With regard to our Nation's rail system, the biggest 
challenge that we face is that we are served by a single major 
railroad. Several Nucor facilities are captive shippers in that 
they pay a premium to move their products because of the lack 
of rail competition. In recent years, the rail industry has 
seen significant private investment. However, these investments 
are often passed on to the rail industry's customer base, 
resulting in higher premiums and costs for our captive shippers 
who are still without the ability to choose which rail carrier 
we use.
    We cannot pass these increased costs on to our customers. 
We have to absorb them because we compete in a steel market 
that is being flooded with illegally subsidized foreign 
products that are often already sold below cost. While it is 
true that we have the ability to use less costly modes of 
transportation, it is not always feasible logistically.
    Given these circumstances, we support action to address the 
need for more rail competition for rail service in many parts 
of the country. The creation of this special panel acknowledges 
that our freight infrastructure works collectively as one 
system. We cannot look at each in isolation. Businesses across 
the country rely on all modes of transportation working 
together to get products to market.
    Keeping American businesses globally competitive requires 
investment in the entire system. Businesses succeed when there 
is certainty. We can create certainty by providing the proper 
funding for maintenance and much-needed upgrades. We must also 
streamline the permitting system so projects do not drag on for 
years in endless reviews. For example, we support legislation 
that would exempt routine highway safety and transportation 
upgrades that already exist within the current right-of-ways 
from costly Federal permitting requirements. As the National 
Association of Manufacturers recently noted, manufacturing 
produces 12 percent of America's GDP, but the U.S. is only 
investing about 1.7 percent of our GDP back in infrastructure. 
Many of the countries we compete against are investing between 
5 to 10 percent of GDP in their infrastructure. In short, 
others are modernizing while we are struggling to maintain a 
failing system that is decades old. However, with the proper 
investment and governance, we can give American businesses the 
tools they need to remain globally competitive. Thank you.
    Mr. Duncan. Thank you very much, Mr. Roberson.
    Next we have Mr. Bill Reed of Riceland Foods.
    Mr. Reed. Thank you, Mr. Chairman and members of the panel. 
I appreciate the opportunity to offer our perspective on the 
freight transportation system. I am Bill Reed, vice president 
of public affairs at Riceland Foods, a cooperative of family 
farmers headquartered at Stuttgart, Arkansas.
    U.S. rice is produced in three primary areas: California; 
the Texas and Louisiana Gulf Coast; and the Midsouth, which 
includes parts of Arkansas, Missouri, Mississippi, and 
Louisiana.
    [Slide 1 follows:]

    [GRAPHIC] [TIFF OMITTED] T5056.004
    
    And, we do have 600 to 800 acres of rice in west Tennessee, 
Mr. Chairman.
    [Slide 2 follows:]

    [GRAPHIC] [TIFF OMITTED] T5056.005
    
    Half of the Nation's rice crop is produced in the Midsouth, 
where farmers plant about 1\1/2\ million acres each year.
    After struggling to find a viable market, a group of 
farmers met in Stuttgart in 1921 to form a co-op to market 
their rice. Riceland farmer-members today number about 6,000 
and account for about half of the rice produced in the 
Midsouth.
    [Slide 3 follows:]

    [GRAPHIC] [TIFF OMITTED] T5056.006
    
    Each fall, Riceland members harvest their crops and deliver 
them to local grain elevators, where the crops are dried and 
stored until transported to processing facilities for milling 
and packaging. Storage facilities are scattered throughout the 
region, as are our processing facilities, which are indicated 
by the red stars on the map. Riceland is the largest rice 
miller and marketer. The co-op also markets soybeans, corn, and 
winter wheat that our farmers produce. Each year we handle 100 
to 125 million bushels of grain.
    Our rice products are sold across the country in retail and 
club stores and to food service establishments and food 
companies. Riceland is a direct exporter, selling rice to 50 
foreign destinations. In our last fiscal year, we moved more 
than 9 billion pounds of products, commodities, and supplies. 
We did this with nearly 140,000 truck and intermodal shipments, 
6,300 rail shipments, more than 1,000 export containers, and 
more than 200 river barge loads.
    With the Nation's focus on a fresh, safe, and abundant food 
supply, we must have a reliable and efficient transportation 
system. I know members of the committee and this panel are well 
aware of the challenges of maintaining our Nation's highway 
system. So are Arkansans. In 2011, Arkansas voters supported a 
$575 million bond program for interstate improvements. And in 
2012, they approved a half cent sales tax to fund $1.8 billion 
in additional highway improvements.
    Of course, these efforts aren't enough. It was reported in 
September that 156 bridges in Arkansas had been found 
structurally deficient. Many are in east Arkansas where our 
Riceland farmers grow food.
    Railroads focus on long hauls now, and they are certainly 
important to us. We ship railcar loads of rice all over the 
country and unit trains of wheat to Mexico. River 
transportation is critical to our export business.
    [Slide 4 follows:]

    [GRAPHIC] [TIFF OMITTED] T5056.007
    
    Our New Madrid, Missouri, facility, on a good day, can 
receive rice from our farmers, mill the rice, and convey it 
directly to a barge for shipping down the Mississippi River.
    In 2011, however, flood waters on the Mississippi made it 
impossible to load barges.
    [Slide 5 follows:]

    [GRAPHIC] [TIFF OMITTED] T5056.008
    
    In fact, water was within a foot of entering the processing 
facility. In 2012, and again this year, it is a whole different 
story.
    [Slide 6 follows:]

    [GRAPHIC] [TIFF OMITTED] T5056.009
    
    With silt naturally flowing into the harbor and displacing 
water, we can load less rice into each barge. The harbor now 
looks more like a mud puddle than a harbor.
    The New Madrid harbor is not scheduled to be dredged this 
year. We expect low water levels in the harbor next summer to 
eliminate practically all of the economic benefit of using the 
facility for bulk barge shipments. We export from that facility 
to the Caribbean and will be under pressure from suppliers of 
rice out of Asia to fill those orders.
    I have one more example. As corn harvest was underway in 
early August last year, we had thirty 18-wheelers carrying corn 
scheduled to unload directly into barges at the Port of Yellow 
Bend, Arkansas. Then we learned that silt had filled the 
harbor, making it unusable. The dredge was heading from upriver 
at Rosedale, Mississippi, down to Lake Providence, Louisiana, 
without stopping at Yellow Bend, Arkansas.
    Building temporary corn storage and forfeiting sales 
contracts would have cost our Riceland farmers at least $1 
million. As many as 200 farm families would have been impacted, 
15 port employees would have lost their jobs, and the port 
would lose $500,000 in revenue.
    Thanks to Congressman Rick Crawford and Senators John 
Boozman and Mark Pryor of Arkansas, the Army Corps of Engineers 
redirected the dredge to Yellow Bend. In just a few days, the 
harbor was open and those corn barges were filled.
    I share these examples to illustrate the importance of 
keeping all segments of our transportation system, highway, 
railroads, and rivers operating in efficient and effective 
manner. The U.S. transportation system is critical to U.S. 
competitive advantage in moving agricultural and food products 
across the country and around the world. It benefits every 
American. And I appreciate the panel's focus on this important 
issue.
    Mr. Duncan. Well, thank you.
    I want to thank all of the panel for a very helpful and 
informative testimony. And let me say, I mentioned earlier that 
we are in sort of an unusual situation here. It is a very busy 
day for everyone. And so I am amazed that--and very pleased 
that 9 of the 11 members of this panel are here at this point. 
And I know several probably have to leave shortly. The first 
one that has told me that he needs to leave is Mr. Mullin. By 
he wants to ask a question before he goes, so I will go to Mr. 
Mullin. I yield to Mr. Mullin at this time.
    Mr. Mullin. Thank you, Chairman. And I will try not to take 
up my whole 5 minutes so I can be respectful to everyone else's 
time.
    What I want to focus on is the truck weights. Tom, you and 
I have had an opportunity to visit a little bit about this. And 
this is something that is pretty close to my heart, considering 
I got a CDL in my back pocket. I was driving just not too long 
ago--I mean, when I say not too long ago, in the last few 
weeks--had to go through the whole poke and prod, get my 
medical card. That is an embarrassing situation. But I had to 
go through that process because its required. And now we are 
talking about something else. And increasing truck weights.
    And obviously the more trucks we can take off the road, 
honestly, the safer it is. But how are we going to be able to 
go past one concern from FMCSA and move forward on the truck 
capacity weights? We have talked about direct routes, we have 
talked about the placement of where the sixth axle should be. 
And, Tom, I would like to get kind of your perspective of where 
we are going with this and then also understand that I truly 
believe that this is a State's issue, not a Federal issue, this 
is a State's issue. I don't think we need the Federal 
Government stepping in any farther than what they already have 
over States rights. So, Tom, I am going to throw that question 
out to you then we will have a conversation, hopefully.
    Mr. Kadien. Sure. Thank you. I couldn't agree more that it 
is a State's issue. And that is what we are advocating and what 
SETA's all about is to give States the choice to opt in. And 
they can opt in on some or all or none of the interstate 
highways in their State. So the idea is that they will pick the 
roads that make the most sense, that would make the best 
utilization of the heavyweight trucks and be the safest for 
that State. You know, the law is written so that it doesn't 
dictate whether the axle goes on the front or the back. To me, 
that is where the State DOTs have to weigh in on what they want 
to do in their particular locale.
    Mr. Mullin. Which this is something that I have interjected 
in before, is that right now the discussion is putting it on 
the trailer if we were to increase the weights. As a driver, I 
can tell you the first place typically you lose brakes is on 
the trailer. So if we are talking about safety here, we would--
and my opinion, Chairman, we would be--need to be talking about 
moving that underneath the rig itself. Not to mention we had 
the capacity there to build a--raise that axle when we are not 
needing it, when we are able to bring it off the ground. But 
when we are really talking about stopping, I would say--I don't 
know the statistics, but I am just going to go by my own self, 
90 percent of the time if I were to lose brakes it would be on 
the trailer.
    Mr. Kadien. And I--I don't have my license. I am not going 
to take issue with anything you said. I will say on the 
statistics, the State of Maine has done a pilot and the 
statistics say that there are fewer fatalities since they have 
gone to a sixth axle allowing up to 97,000 pounds. The U.K. has 
got this. This is not a new issue. We have 15 States that allow 
heavyweight trucks on 5-axle configurations right now. And this 
gives the States the right to configure those trucks, to 
configure which roads are on or not allowed to do this in their 
Interstate Highway System. In the U.K., over a 5-year period, 
fatalities were down 35 percent.
    So I think I should let the engineers decide where the 
load--based on where the load is in the truck, where the axle 
belongs. But it has been proven to be a safe way to make 
trucking more efficient.
    Mr. Mullin. Right. And just to clarify, with me wanting to 
see the States have an opinion on this, once again I am going 
to refer back to the fact that I drove these trucks and I have 
hit the exits that I shouldn't have hit. And if we do this as a 
Federal--we let the Federal Government come in, and let's say 
they do raise them. And you are driving down the interstate and 
you hit an exit by mistake. I mean, all of us have taken wrong 
turns. I know most of us guys, we wouldn't admit to it, but 
truth is it is true. But you hit the exit and all of a sudden 
you find yourself on a county road. It is not easy to turn 
these things around. And the States know their systems better 
than the Federal Government does.
    I understand what the opposition is about this too. But the 
fact is that if we are really going to listen to what FMCSA 
says, and they are fine the word of ``safety,'' then the best 
way to do that is to look at the truck weights, understand that 
that actually works, work with intermodal system, work with the 
rail, work with the ports, and find out what is the best 
option. If one of those options--Tom, and you and talked 
about--was having a direct route, like they to in Louisiana. 
Where it is a designated route if we want to take product from 
point A to point B.
    So, Chairman, I appreciate the opportunity that you have 
given me. And thank you for jumping over to me because I know I 
am the bottom of the barrel here.
    Mr. Duncan. Thank you very much.
    Mr. Nadler.
    Mr. Nadler. Thank you, Mr. Chairman.
    Mr. Roberson, in your testimony, you specifically support a 
user fee increase for the Inland Waterways Trust Fund to make 
the necessary investments in this critical component of our 
U.S. supply chain. You are a shipper advocating for an increase 
in fees that you will have to pay. Could you explain why it is 
important to your business for the Inland Waterways Trust Fund 
to have more revenue, why you are willing to pay a larger fee?
    Mr. Roberson. Yes, sir, Mr. Nadler. We just feel that at 
Nucor, the return on that additional cost far outweighs 
whatever liabilities will be associated.
    Mr. Nadler. I can't hear you. Is what?
    Mr. Roberson. I apologize. Can you hear me now? Yes, sir.
    We at Nucor are willing to support the increase, even if it 
means an increase in our costs because of the return is 
reasonable and provides value to our company.
    Mr. Nadler. OK. Thank you.
    Mr. Kadien, in your testimony, you advocate for dramatic 
increase in truck weights to 97,000 pounds. Now, we know that 
interstate bridges cannot withstand the stress that 97,000 
pounds will cause, even with the addition of a sixth axle. 
These trucks will accelerate the depreciation of and further 
worsen the condition of our Nation's bridges. Your testimony 
mentions a mill in Valliant, Oklahoma. I would like to recall 
comments made at a field hearing in 2011 by Oklahoma DOT 
Secretary Ridley and former Oklahoma Secretary McCaleb. They 
each made the point that we must proceed with caution in higher 
truck weights because the potential damage to bridges. To quote 
Secretary McCaleb, ``No matter how many axles you put under 
that essential point, loading will increase the stress 
repetition and the rate of stress repetition and will reduce 
the life of the bridge. I am an advocate of heavier loads,'' he 
said, ``but you have to design for those heavier loads. You 
can't just superimpose those heavier loads on a system that 
wasn't designed for them.''
    According to the Federal Highway Administration, Oklahoma 
has 5,382 bridges that are structurally deficient.
    Do you dispute the fact that heavier trucks will cause 
accelerated damage to bridges?
    Mr. Kadien. Absolutely don't dispute that. And that is why 
this is really a States rights issue. It is for the States to 
decide which roads and which bridges will handle the 97,000 
pounds.
    Mr. Nadler. So you agree that it will--it will increase the 
stress to bridges, and that you think it is a State's issue?
    Mr. Kadien. I think the bridges have to be designed for the 
97,000-pound weights.
    Mr. Nadler. But the existing bridges haven't been designed. 
So you only allow this on new bridges?
    Mr. Kadien. Not in all cases. In the cases you have 
identified, that is probably the case. But, you know, in the 
State of Maine, they found no evidence of bridge fatigue or 
steel fatigue due to the heavier weight trucks. That is why I 
think it depends, really is a States rights issue.
    Mr. Nadler. Do you believe--let me just comment. I find it 
very difficult to accept that any of these questions are 
primarily States issues, given the fact the Federal Government 
spent--paid 90 percent of the cost of the construction of the 
interstates and pays a very large proportion of the ongoing 
maintenance costs of the interstate. So I think it is certainly 
a Federal as well as a State's issue.
    Now, do you believe the citizens of Oklahoma and elsewhere 
across the country are willing to accept the risk that heavier 
trucks pose to these already troubled bridges, most of which in 
the country were not designed for 97,000 pounds?
    Mr. Kadien. I don't believe any State should accept higher 
risk associated with the 97,000--97,000-pound limit, no. If 
there is a risk, we shouldn't be doing that.
    Mr. Nadler. So you think that the 97,000-pound truck should 
only be allowed on bridges specifically designed for 97,000-
pound trucks?
    Mr. Kadien. Yes.
    Mr. Nadler. OK. What percentage of the bridges in the 
United States were specifically designed for 97,000-pound 
trucks?
    Mr. Kadien. I don't know the answer to that question.
    Mr. Nadler. It is rather small, I would assume.
    Mr. Kadien. Thank you. Fifteen States allow the heavyweight 
trucks right now.
    Mr. Nadler. But the fact that a State follows a foolish 
policy doesn't mean that we should. Because I asked what 
percentage of the bridges were specifically designed for 97,000 
pounds.
    Now, in the--the truck safety study in Vermont, the pilot 
study shows that applying Vermont truck weight added to the 
national average cost, it was determined that a fully loaded 
80,000-pound, five-axle combination truck incurs 21.5 cents of 
pavement cost per mile on the interstate system and 32.9 cents 
per mile on other highways. A typical 99,000--this is 99, not 
97, but I don't know that there is much difference--a typical 
99,000-pound, six-axle pilot vehicle requires pavement 
expenditures of 34\1/2\ cents per mile of travel on the 
interstate system compared to 21\1/2\ cents for 80,000 pounds, 
and about 53.6 cents per mile of travel on noninterstate roads. 
In other words, this is about 63 percent more per vehicle mile 
and 32 percent more per ton-mile than a fully loaded five-axle 
vehicle.
    Do you think that we should up the--the 97,000-pound truck 
should pay a 34\1/2\ cents--I am sorry--a 63-percent more tax 
than an 80,000-pound vehicle? And if not, why not?
    Mr. Kadien. Mr. Nadler, I am not familiar with the study. 
But, no, I don't think so.
    Mr. Nadler. Well, if you are not familiar--why--assuming 
the study is correct, assuming that the cost imposed on the 
roads is 63--just is 63 percent more than--than an 80,000-pound 
vehicle, then why shouldn't they pay a 63-percent higher tax, 
if that is--if the underlying fact were to be correct?
    Mr. Kadien. I understand your point. But I don't believe 
that--I don't understand the basic premise of why it would be 
so much more expensive if the weight is more evenly distributed 
on the 97,000-pound truck.
    Mr. Nadler. The study in Vermont, which you say you are 
unfamiliar with, which I assume you are unfamiliar with, says 
it is. Let's assume for the sake of argument that the study is 
correct--let's assume it is not correct. My question is--let's 
assume it is only 50 percent or 40 percent. Should a 97,000-
pound truck that imposes a heavier burden on--a heavier cost 
burden on maintaining that highway pay a proportionate extra 
tax, whatever that proportion might be? And if not, why not?
    Mr. Kadien. I think you have to balance the proportional 
increase you are speaking of with making the truck 
uncompetitive versus the 80,000-pound truck.
    Mr. Nadler. Well, if it is uncompetitive, that would argue 
that you shouldn't allow it.
    Mr. Kadien. That is correct.
    Mr. Nadler. OK. So maybe we shouldn't allow it. But my 
question is, if we do allow it, why shouldn't it pay its fair 
share? If it imposes an extra cent higher cost on the highway 
maintenance than the 80,000-pound truck, why shouldn't it pay 
an X-percent higher tax so it is paying its own way in that--to 
the same extent as the existing trucks?
    Mr. Kadien. I think paying its fair share makes sense.
    Mr. Nadler. Yes. But would that be a fair share?
    Mr. Kadien. Well, depends on the statistics, I guess.
    Mr. Nadler. Again, whatever the statistic is, if we do the 
study and find the statistic is 20 percent or 40 percent or 60 
percent, that would be fair, then, to impose an extra tax of 20 
percent or 40 percent or 60 percent if those are the facts?
    Mr. Kadien. If those are the facts and you propose that 
kind of proportional increase, I suspect the math will say that 
you will never have a 97,000-pound truck on the road and you 
will have 20 percent more trucks on the road than you do if you 
allowed it.
    Mr. Nadler. Well, that may be. And maybe that the market is 
telling us something in that in that case.
    I thank you. I yield back.
    Mr. Duncan. Thank you very much.
    Mr. Crawford.
    Mr. Crawford. Thank you, Mr. Chairman. I appreciate that. I 
would just again like to thank the panelists for being here. I 
know you came here on your own dime, on your own time, and I 
appreciate that.
    Mr. Reed, I would direct my first question to you. You 
mentioned in your testimony we--and I remember we had some 
serious trouble securing the dredging for Yellow Bend, Yellow 
Bend Port, and I am glad we were able to resolve that 
situation. But there was a supplemental disaster funding from 
the 2000 flood where that came from. Can you comment on, speak 
to the level of uncertainty that--that exists over annual 
dredging of our ports and how that impacts Riceland farmers?
    Mr. Reed. Yes, Mr. Crawford. I would say that it is 
critically important to be able to rely on the ports. And, I go 
back to the New Madrid, Missouri, example. We know that we will 
not be able to load barges; certainly not full. We don't know 
how much we will be able to load in them this coming year, but 
we know it is certainly going to be complicating our export 
operations. So we will be making arrangements to try to shift 
production to other facilities in order to accommodate that 
situation in the harbor.
    Mr. Crawford. Transportation costs are obviously one of 
most significant factors that impact a farmer's bottom line. 
And I know that other countries are making significant 
investment in infrastructure. Have you noticed, are we losing 
our edge globally with respect to our freight system here in 
the United States, and are the international competitors 
closing the gap?
    Mr. Reed. Well, that is certainly a fear of U.S. 
agriculture. We are seeing, as you know, rice from Asia moving 
into this hemisphere, into Central America, the Caribbean, even 
into the United States. And that is a concern because of their 
lower cost of production. We are also watching South America. 
If those fellows had the opportunity to have the type of 
delivery system that we have in the U.S., American agriculture 
would be in trouble. As you know, the production in Brazil is 
just amazing. But where we have the advantage is in our 
transportation system. But we are going to have to continually 
improve it and, hopefully, enhance it in order to stay 
competitive and keep our farmers in business.
    Mr. Crawford. Thank you, sir.
    I am going to direct this question to Mr. Roberson. In your 
testimony, you made the point that many of the Nucor facilities 
only have access to a single major railroad and that results in 
higher costs. Is there currently an effective remedy at the 
Surface Transportation Board for bringing those rates down to a 
more affordable level?
    Mr. Roberson. Mr. Crawford, not currently. Think there is a 
redress that needs to occur based on the current criteria used 
to make rate cases. So if we could relook at that, I would 
think that we would be better.
    Mr. Crawford. What would you suggest or how might the STB 
be strengthened to help address that issue?
    Mr. Roberson. Again, just relooking at the criteria 
associated with rate cases and reciprocal switching and access 
to multiple railroads.
    Mr. Crawford. Thank you. I don't have any further 
questions. Again, I just want to extend my appreciation to each 
of you in recognizing you contributing your time to help us 
make the case for improving, enhancing, and investing in our 
freight transportation infrastructure. I appreciate each of you 
being here. Thank you.
    Mr. Duncan. Thank you very much.
    Mr. Crawford. Ms. Brown.
    Ms. Brown. Thank you, Mr. Chairman.
    Mr. Kadien, I have a question as far as States rights is 
concerned. I am a bit confused. What do you mean by States 
rights when the Federal Government pays 90 percent of the 
bridge--building the bridge and the maintenance and the State 
put up 10 percent. And in 2012, 6,749 bridges rated as 
structurally deficiency?
    Mr. Kadien. What I mean by States rights is to allow the 
State to decide based on the traffic and the industry in that 
State, and the studies of their own departments of 
transportation is to choose which State highways that they 
would allow the 97,000-pound, six-axle truck to travel on.
    Ms. Brown. So you don't think the Federal Government should 
play a part in deciding?
    Mr. Kadien. No, I think--I think H.R. 612 is a Federal 
decision to allow the States that flexibility. I am not saying 
it is one versus the other. But I think the States are in the 
best decision, or in the best position to decide which roads 
and bridges should or should not be part of the program.
    Ms. Brown. Do you think they should make that decision 
without the input of the Federal Government? The Federal 
Highway Administration?
    Mr. Kadien. No, I don't.
    Ms. Brown. So it should be a joint decision?
    Mr. Kadien. Yes. I would agree with that.
    Ms. Brown. You mentioned something about, I guess, trucks 
in Europe. And in many of the places that I have gone to Europe 
where trucks is concerned, they make them piggyback, they put 
them on trains and take them different places.
    Mr. Kadien. Yes, ma'am. I was referring to a 5-year study 
in the U.K. that allowed six-axle, 97,000-pound trucks and saw 
35-percent reduction in fatalities. I wasn't referring to 
piggyback or other truck configurations that exist elsewhere in 
Europe.
    Ms. Brown. I see. I have other questions for other members 
on the committee.
    Mr. Johnston, you mentioned that DuPont made a $500 million 
investment in the Cooper River facility, and their freight 
travel has doubled. Why did you all decide to Cooper River 
facility?
    Mr. Johnston. Congresswoman Brown, our investment at Cooper 
River is a significant investment here in the U.S.----
    Ms. Brown. Thank you.
    Mr. Johnston [continuing). That has created jobs for 
American workers and provides materials that are important to 
the defense industry and to police and other folks who we rely 
on for our safety and security every day. This was the best 
place to make that investment is the short answer to your 
question.
    Ms. Brown. Was it the logistical location? I mean, that is 
great. I mean, we----
    Mr. Johnston. Logistics did not drive the decision.
    Ms. Brown. It was just the best place to make the 
investment, the workforce and other factors?
    Mr. Johnston. That is correct.
    Ms. Brown. Thank you.
    Mr. Roberson, you mentioned that because of the lack of 
competition, shippers pay a higher premium. And that you 
thought how those boards should be set up to resolve the 
issues. Can you expand on that a little bit?
    Mr. Roberson. I am sorry. I couldn't hear the last part of 
your question.
    Ms. Brown. As far as coming up with solutions to solve the 
competition question, the shippers are sometimes captive, you 
know, it is only one line and they don't have a choice.
    Mr. Roberson. Thank you, ma'am. As my colleagues on the 
panel mentioned, having access to multiple major railroads 
provides the competition. There is always an alternative for us 
to ship other modes, but there is not an alternative to ship 
the railroad A versus railroad B, and that is what we are 
advocating.
    Ms. Brown. Thank you. As we meet today, one of my bridges 
has been taken out because of a ship that hit it. So the 
question about bridges is a major question: How are we going to 
maintain them? How are we going to keep them safe? And how are 
we going to fund the infrastructure? Do you all have any ideas 
as to how we can fund the infrastructure as far as those kinds 
of investments? And, of course, those are the kinds of 
investments that would actually put American people to work.
    Just briefly. How do you recommend funding the bridges that 
are structurally damaged?
    Mr. Kadien. I will take a crack at that. There is a fair 
amount of money that is collected for the gas tax that goes 
into the Highway Trust Fund. And not all of those funds are 
actually used on infrastructure. That would be an opportunity.
    Mr. Johnston. Congresswoman, I don't have a specific 
recommendation on this. I understand the dilemma here. DuPont 
and the chemical industry would be happy to work with this 
committee in thinking through ideas that--that might promote 
the exact thing that you are talking about.
    Ms. Brown. Thank you.
    Mr. Roberson. Congresswoman, we would echo those comments. 
We would be glad to work with this committee on solving that 
issue, but we don't have the answer today. I think that is why 
we are here and having this good discussion.
    Ms. Brown. We don't have it either.
    Yes, sir. Mr. Reed.
    Mr. Reed. Yes, Congresswoman. You raised an interesting 
point. The rehabilitation of those bridges would be part of the 
highway system funding. But I would have to work on that some 
to come up with a better answer for you.
    [The information follows:]

        Most projects are funded by a combination of Federal 
        funds (80 percent) and State funds (20 percent). Under 
        MAP-21, our Arkansas Highway and Transportation 
        Department doesn't have more money to spend on 
        projects, including bridges, but the State has more 
        flexibility in using Federal funds.

    Ms. Brown. Thank you. Thank you, Mr. Chairman.
    Mr. Duncan. Thank you, Ms. Brown.
    Mr. Hanna.
    Mr. Hanna. Thank you, Mr. Duncan.
    I would suggest that the problem of paying for it belongs 
to this committee and this Congress. Since 1993, we haven't 
raised the gas tax, haven't raised the diesel tax. We have had 
lots of opportunities to do that.
    I would also like to thank everyone here because to the 
person you have all indicated that you are willing to pay more 
for what you get. And I would also like to point out that 
lighter truck weights create more repetition of travel, not 
less.
    So that the small points of how much or what percentage or 
how all of that works out, all of that adds to the greater good 
of the entire economy. All of us depend on trucks. And it 
shouldn't necessarily fall on the individual trucker to pay the 
full freight of the use of the highway. I mean, it trickles 
through the entire economy and we all benefit.
    I wanted to speak to you, Mr. Kadien. You indicated that 
this wasn't a rail-versus-truck issue. And, you know, I think 
in many ways it is. And I don't mean it in a pejorative way, 
necessarily. It is more about the simple nature of competition. 
A railroad would allege that if you were to pay the full cost 
of what it costs to build, buy, and maintain roads that your 
cost per gallon would be substantially more. I have heard 
upwards of a dollar.
    Is that right, Mr. Nadler?
    Mr. Nadler. Right.
    Mr. Hanna. He is my facts guy over here.
    So that someplace we realize that it is probably entirely 
impractical. We also know that, everyone here has indicated 
that monopolies, or oligopolies, if you will, are part of what 
railroads have going for them, just the nature of the business. 
Everybody says you would like to fix that. Maybe someone here 
could tell me what that would look like and how much that adds 
to your cost. Because clearly, if someone has the ability to 
cost push and they don't stop and you just keep paying the 
bill, there is no end. So if you would like to talk to anyone 
about that, I would be interested to hear.
    Mr. Kadien. Well, for International Paper up to about 40 
percent of our locations in the U.S. are, quote, ``captive'' to 
one Class I railroad. And we have very good relationships with 
all of the Class I's, and I think for the most part we would 
say we are fairly treated. On the other hand, we do see more, I 
will say, more frequent and higher increases on the 40 percent 
where we are captive.
    Mr. Hanna. So the higher weight limit would necessarily 
give you a little bit of an opportunity, roughly 20 percent 
lower average cost to help you offset that, if you will, 
advantage.
    Mr. Kadien. Our fact pattern would be different than that. 
We are not trying to get our rail shipments to compete with our 
truck shipments. We just want competitive rail increases where 
we have captive carriers. Our truck shipments are 400 miles or 
less. Our rail is 800 or more. Our trucks usually have to be 
there next day or second day. It is really two entirely 
different customer destinations that we are shipping to, and we 
don't often mix or compete rail versus truck.
    Mr. Hanna. Sure. And I live in a State, New York, where 
they don't have the sixth axle, but we do have the higher 
weight without that. So in my State's case, to add that axle 
would actually make our roads safer, not less safe. And by your 
own study, and I have read the studies, there is every 
indication to believe that it is a marginal thing, add the 
weight and add the axle.
    And I think it is proper to assume that States have the 
ability--they all have engineers and DOTs--to decide what 
roads, what routes, and what is safe and what is not and where 
to invest money to fix those bridges appropriately that will 
allow for whatever they decide. I know that is what they do in 
New York.
    So I am not sure it is really a States rights issue in your 
case. Isn't it just a matter of allowing them to decide?
    Mr. Kadien. Yes, I would agree with that 100 percent.
    Mr. Hanna. Mr. Reed?
    Mr. Kadien. But I do think, if I could add, I do think, you 
know, a benefit maybe to the cost issue that was brought up 
earlier, I think the reduction in accidents, truck traffic and 
the improvement in safety is worth something in this argument 
as well.
    Mr. Hanna. So to Mr. Nadler's point, and I respect all of 
his opinions, I enjoy listening to him, tell you the truth, 
that reducing trips, reducing repetitiveness over bridges, 
lowering the average cost per trip because of the additional 
percentage of weight benefits more than just the trucker. It 
has to ultimately make the product you sell marginally less 
expensive and make you more competitive, to repeat the obvious.
    Mr. Kadien. Yes, I would agree with that.
    Mr. Hanna. Thank you. My time is expired.
    Mr. Duncan. Thank you very much.
    Mr. Webster.
    Mr. Webster. Thank you, Mr. Chairman. I have enjoyed the 
questions and responses here. I appreciate you doing this.
    I had a similar question. Maybe I will ask it of Mr. 
Johnston, I think your point three was the fact that there were 
certain areas where there was a monopoly of sorts, and you gave 
a large number of your shipments, I don't recall what they 
were, inbound and outbound, but it just seemed like the 
percentage was pretty high.
    Is there a specific recommendation where we would start? I 
wouldn't want to steal somebody else's infrastructure, if you 
put two different types of freight trains on the same route. 
Somebody owns those and somebody would not. But is there a 
specific recommendation you have in that area?
    Mr. Johnston. Thank you for the question, Congressman. As 
you may know, the Surface Transportation Board has held 
hearings off and on over the last 2 years, or thereabouts, to 
consider ways to increase competition in the rail industry. A 
variety of proposals have been presented to the Board by 
industry. At present, the Board is still taking those matters 
under consideration.
    But I would highlight just a few things, and then I will 
come to one specific. In 1980, when the Staggers Act was 
passed, there were 26 Class I railroads in the United States. 
Today there are seven, and four of those carry 90 percent of 
the traffic in the United States. Two of those are dominant 
east of the Mississippi River and two of them west of the 
Mississippi. And so those are the dimensions of the issue here.
    Furthermore, the premise under which the Surface 
Transportation Board acts, even today, is the same premise that 
was actually true in 1980 but is no longer true in 2013. And 
that is that the railroads stand on the brink of bankruptcy. 
They simply don't any longer. They are healthy. They are making 
money. And, frankly, we want them to be that way. I don't want 
there to be any misunderstanding about that. We need them to be 
healthy and profitable.
    One of the impediments that the Surface Transportation 
Board is simply that because of the fact that there are only 
three Commissioners, they can't confer with one another and 
discuss matters that are before them for consideration. A 
simple solution to that might be to increase the number of 
Commissioners at the Surface Transportation Board. That might 
be one specific idea that I would leave with you today.
    There are a number of other proposals that DuPont and the 
American Chemistry Council have that, I won't take time now, 
but we would be delighted to sit with you and your staff, other 
members of this panel, or members of the full committee and 
review those specific policy recommendations with you.
    Thank you.
    Mr. Webster. OK. Well, I would love to get some pre-
information if you have. It if you can get it to me, that would 
be awesome.
    Mr. Johnston. Yes, we will.
    Mr. Webster. Thank you. I yield back.
    Mr. Duncan. All right, thank you very much.
    Mr. Kadien, MAP-21 included very significant environmental 
streamlining provisions, shortening the project delivery times 
for highway and transit projects, and Mr. Roberson mentioned 
approvals for projects within the established or existing right 
of ways. Do you believe that similar provisions should be 
codified for all other modes of transportation as well?
    Mr. Kadien. I am sorry, I am not familiar with MAP-21.
    Mr. Duncan. Well, what we are talking about, you don't have 
to be familiar with MAP-21, what I am asking, has your company 
seen delays because of environmental rules and regulations and 
red tape, and would it make any difference to your company if 
we could speed up some of these approval projects?
    Mr. Kadien. Thank you for the explanation. Absolutely, and 
yes. Permitting is, you know, the schedule on a return on any 
investment severely impacts, schedule delays severely impact 
the returns, and we see long scheduling delays, getting 
approvals on construction, engineering, building projects here 
in North America, and that would be very helpful if we could 
expedite those.
    Mr. Duncan. Are you familiar with any particular examples 
of that, of projects that have been delayed or taken longer. Or 
you said in North America----
    Mr. Kadien. I meant the United States of America, 
primarily.
    Mr. Duncan. Can you do things faster in some of these other 
countries?
    Mr. Kadien. Yes. In some of these countries you can. That 
doesn't mean they are better and there aren't other issues 
there as well. Environmental permits for a new pulp and paper 
facility in North America is a multiyear process. I am familiar 
with investments that were not made in this country because of 
the environmental process, and it often lacks clarity, it is 
often combative, and it is often just easier to go ahead and 
produce the project in another country.
    All that said, I think we also have the best set of 
environmental regulations from around the world that I am 
familiar with. So I think we end up at a right place in terms 
of, you know, the laws that we pass. But just as an example, we 
just went through MACT, which took several years to get to a 
conclusion and, you know, I think it probably took us 4 years, 
and if we could have done that a lot quicker we would have been 
able to get the environmental benefit and plan our capital 
spending a whole lot better and more efficiently.
    Mr. Duncan. Thanks very much.
    Mr. Johnston, you talked about the competition within the 
railroad industry or the lack of competition, but it seems to 
me it is something that is easy to say, but difficult to 
achieve because you also testified you don't want to increase 
the regulations on the railroad industry. So do you have any 
ideas or suggestions about how we go about that since these 
companies, you know, take care of their own tracks and it is 
difficult, if not almost impossible, to lay new tracks in some 
places? So what do you have to say about all that? How do we go 
about achieving what you want to achieve, more competition 
within the railroad industry?
    Mr. Johnston. Thank you, Mr. Chairman. It is not an easy 
problem and we don't want people building new railroads 
necessarily. That is expense that is not going to be 
beneficial. So that is not the solution, as you clearly know 
and point out there.
    However, giving railroads who don't have immediate access 
to one of my plants, for example, but might be only a short 
distance away and allowing them to use a portion of another 
railroadsystem, or interchanging traffic at the closest point 
available from one railroad to another are some simple sort of 
ideas that would create additional competition if you look at 
the full route that the traffic carries on the railroads.
    Mr. Duncan. You mentioned the four Class I railroads that 
carry 90 percent of the rail traffic in this country, but there 
are a much larger number of short line railroads. Are you able 
to make much use of the short line railroads?
    Mr. Johnston. Short line railroads do serve some of our 
facilities. They are generally hooked into a single Class I 
railroad, as I am sure you are aware.
    Mr. Duncan. Yes, sir.
    Mr. Johnston. And so that really doesn't solve the problem. 
It is simply another railroad that we are dealing with on the 
front end of the transaction.
    Mr. Duncan. All right.
    Mr. Roberson, you mentioned that Nucor uses several 
different modes of transportation. I think just about all of 
you on the panel have said that. In which ways do you think 
current transportation funding can be better used, or what area 
of transportation do you feel is the most neglected or the most 
underfunded at this time? Where does Nucor have its biggest 
problems?
    Mr. Roberson. Well, I think it is a, Mr. Chairman, I think 
it is a very comprehensive issue. It is all modes. If you look 
at our inbound supply chain, clearly that is heavily leveraged 
on the waterways for a lot of our mills. However, if you were 
to flip that over to our outbound shipments, those go about 60 
percent rail, 40 percent truck for many of our facilities. So 
it is really all modes. It is not one particular one that would 
make a big difference.
    Mr. Duncan. Mr. Reed, what do you say about that? You know, 
the government, both at the Federal and State levels, really 
first got into transportation primarily to help farmers to get 
their products to market. Where do you see the biggest 
chokepoints or the biggest impediments to freight 
transportation?
    Mr. Reed. Well, Mr. Chairman, you are absolutely right, and 
much of the transportation system was built to move products to 
market. In fact, our facilities were located on rail lines, and 
at one time the crops were actually railed to processing 
facilities from the grain storage facilities out in the 
countryside. None of that is done today because of the emphasis 
on the long hauls.
    As far as our largest concern, we have learned to cope with 
trucking grain from the farm to our facilities. Our farmers are 
responsible for doing that. It is fast, and that is important 
for them during harvest when they are facing weather issues. We 
move products in all forms.
    But I would say our biggest concern is those harbor 
situations where we just cannot load barges to move rice into 
the export market. That is done by barge down the Mississippi 
River to New Orleans and then put on the large oceangoing 
freighters, but we have got to get the product out of the port. 
In the case of our New Madrid facility, which is the only 
processing facility we have on a river, we have no storage for 
a processed product. So it is one of those situations where you 
got to keep it flowing, and so that becomes a key bottleneck 
for us if we can't move the product out.
    Mr. Duncan. All right. Well, thank you very much.
    Just out of curiosity, you know, I meet with people all the 
time from every business, every industry. I met, I guess last 
week or a couple of weeks ago, with some car dealers from 
Tennessee, and they said that while they are doing good 
business right now, it all seems to be pent-up demand, that 
people are driving cars now 100,000, 200,000 miles, not trading 
as often, and that they went for several years during the 
downturn without trading in a car. In other words, they are 
saying they don't think the economy is as strong as current 
sales might indicate.
    And I read all these business publications and, you know, 
you can find some articles saying that things are going pretty 
good. You can find many that say they are not going pretty 
good. Our unemployment is too high. Our underemployment is 
much, much higher.
    Mr. Kadien, what about International Paper? How are you 
doing? What do you see in the near term for your company and 
the overall economy?
    Mr. Kadien. You know, we are in several lines of businesses 
that are pretty good barometers of economic activity. We are 
the largest producer of corrugated packaging that moves goods, 
consumables, durables around the country, and typically runs 
about half of the GDP rate of the country. And right now we 
would say that the economic activity is pretty underwhelming, 
that, you know, we are looking at 0.5 to 1 percent kind of 
growth rates across the industry, and that is really not 
reaching our potential. I have got a consumer packaging 
business, you know, food processors are seeing, you know, flat 
to no growth in their business. We are a big supplier to 
restaurants. They are seeing slow traffic compared to prior 
years.
    So it is, I would say, it feels like we are moving sideways 
right now instead of gaining any momentum.
    Mr. Duncan. Mr. Johnston.
    Mr. Johnston. Yes. DuPont also is in a wide variety of 
businesses. Our agriculture-related businesses are very strong 
today, both here in the United States and around the world. I 
would say many of our chemical businesses are seeing slow but 
steady growth here in the United States, but we are not seeing 
those same trends in other parts of the world, particularly in 
Europe and in Asia where their economies are simply in the 
doldrums and have not shown signs of recovery yet.
    Mr. Duncan. Mr. Reed, how much of Riceland's, how much of 
your rice goes to other countries? How much is export?
    Mr. Reed. Mr. Chairman, we export about a fourth to a third 
of our rice production every year at Riceland. For the U.S. 
industry as a whole, about half of the crop is exported each 
year to about 75 countries. Rice is a staple for at least half 
of the world's population. They eat it every day if they have 
it. We have all seen the numbers of population growth. By 2050 
we may expect about 9 billion people, which are a lot of mouths 
to feed, and rice does that very efficiently.
    So we have seen a period of several years here of good 
prices for agricultural commodities really across the board. We 
certainly hope that continues. But there is always competition 
from other countries. Asia, for instance, had been deficit of 
rice. Now, many of the Asian countries are exporting rice. In 
fact, when I started with the co-op we were the number one 
exporter, we as in the U.S. were the number one exporter of 
rice. Today that spot would be filled by India, and followed by 
Vietnam and Thailand and other southeast Asian countries which 
have picked that up.
    Many of those are moving rice around the world at heavily 
subsidized prices, which makes it very difficult to compete. 
And, again, our transportation infrastructure is one thing that 
keeps us in the hunt for some of that business, especially the 
higher valued business.
    Mr. Duncan. I have gone way over my time and I apologize. 
You probably didn't notice, but I said in my opening statement 
that we are facing competition that we never had before because 
for many, many years so many other countries were following 
Socialist and Communist governments and were very weak 
economically. And now in many countries around the world, even 
some former Communist countries, they are allowing almost more 
free enterprise than we are in this country.
    Mr. Nadler, any other questions?
    Mr. Nadler. No, I have no other questions.
    Mr. Duncan. Any other questions?
    All right. Well, thank you very much. You have been very 
helpful. If you think of anything, we are looking for specifics 
to go in this report. We don't have much time left in the time 
limit that was imposed, the special rule that we are operating 
under, so if you have some specific suggestion that you think 
might be helpful to us, then get in touch with us here in the 
next week or two.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T5056.010
    
    [GRAPHIC] [TIFF OMITTED] T5056.011
    
    Thank you very much. That will conclude this hearing.
    [Whereupon, at 3:25 p.m., the panel was adjourned.]
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