[Senate Hearing 114-378]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 114-378

                     INTERMODAL AND INTERDEPENDENT:
                     THE FAST ACT, THE ECONOMY, AND
                   OUR NATION'S TRANSPORTATION SYSTEM

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

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON SURFACE TRANSPORTATION
                  AND MERCHANT MARINE INFRASTRUCTURE,
                          SAFETY AND SECURITY

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 12, 2016

                               __________

    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

                             SECOND 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
                       Nick Rossi, Staff Director
                 Adrian Arnakis, 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
                                 
                                 ------                                

      SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE 
                  INFRASTRUCTURE, SAFETY AND SECURITY

DEB FISCHER, Nebraska, Chairman      CORY BOOKER, New Jersey, Ranking
ROGER F. WICKER, Mississippi         MARIA CANTWELL, Washington
ROY BLUNT, Missouri                  CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
JERRY MORAN, Kansas                  RICHARD BLUMENTHAL, Connecticut
DAN SULLIVAN, Alaska                 BRIAN SCHATZ, Hawaii
RON JOHNSON, Wisconsin               EDWARD MARKEY, Massachusetts
DEAN HELLER, Nevada                  TOM UDALL, New Mexico
STEVE DAINES, Montana
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 12, 2016....................................     1
Statement of Senator Fischer.....................................     1
    Prepared statement...........................................     2
Statement of Senator Booker......................................     3
    Prepared statement...........................................     3
Statement of Senator Blumenthal..................................    35
Statement of Senator Klobuchar...................................    37
Statement of Senator Daines......................................    39
Statement of Senator Moran.......................................    41

                               Witnesses

Patrick J. Ottensmeyer, President and Chief Executive Officer, 
  Kansas City Southern Railway Company...........................     4
    Prepared statement...........................................     5
David Eggermann, Supply Chain Manager, BASF Corporation..........    15
    Prepared statement...........................................    16
Major Jay Thompson, Arkansas Highway Police and President, 
  Commercial Vehicle Safety Alliance.............................    19
    Prepared statement...........................................    21
Stephen J. Gardner, Executive Vice President, Infrastructure 
  Investment Development, Amtrak.................................    26
    Prepared statement...........................................    28

                                Appendix

Response to written question submitted by Hon. Amy Klobuchar to 
  Stephen J. Gardner.............................................    43

 
                     INTERMODAL AND INTERDEPENDENT:
                     THE FAST ACT, THE ECONOMY, AND
                   OUR NATION'S TRANSPORTATION SYSTEM

                              ----------                              


                         TUESDAY, JULY 12, 2016

                               U.S. Senate,
         Subcommittee on Surface Transportation and
            Merchant Marine Infrastructure, Safety, and Security,  
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:32 p.m., in 
room SR-253, Russell Senate Office Building, Hon. Deb Fischer, 
Chairman of the Subcommittee, presiding.
    Present: Senators Fischer [presiding], Moran, Daines, 
Booker, Klobuchar, and Blumenthal.

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

    Senator Fischer. I am pleased to convene the Senate 
Subcommittee on Surface Transportation and Merchant Marine 
Infrastructure, Safety and Security for today's hearing 
entitled ``Intermodal and Interdependent: The FAST Act, the 
Economy, and Our Nation's Transportation System.''
    This hearing will explore diverse stakeholder perspectives 
on the implementation of the FAST Act and its role in improving 
our Nation's infrastructure, increasing safety, and enhancing 
economic growth. We also plan to cover emerging economic and 
policy opportunities and challenges for freight and passenger 
transportation providers, shippers, and transportation safety 
officials.
    I am pleased that today we'll hear from a wide array of 
participants in our transportation network. We're fortunate to 
have the incoming CEO of one of our nation's leading freight 
railroads. We also welcome representatives from the world's 
largest chemical manufacturer, America's passenger railroad, 
and a motor carrier law enforcement official to speak with us 
this afternoon. I look forward to our discussion on the FAST 
Act and the impact it will have on our transportation system 
and the economic growth of the United States.
    I would ask that my opening remarks, in total, will be 
included in the record, without objection.
    [The prepared statement of Senator Fischer follows:]

   Prepared Statement of Hon. Deb Fischer, U.S. Senator from Nebraska
    Good afternoon. I am pleased to convene the Senate Subcommittee on 
Surface Transportation and Merchant Marine Infrastructure, Safety and 
Security for today's hearing entitled ``Intermodal and Interdependent: 
the FAST Act, the Economy, and Our Nation's Transportation System.''
    This hearing will explore diverse stakeholder perspectives on the 
implementation of the FAST Act and its role in improving our Nation's 
infrastructure, increasing safety, and enhancing economic growth.
    We also plan to cover emerging economic and policy opportunities 
and challenges for freight and passenger transportation providers, 
shippers, and transportation safety officials.
    Transportation is critical to our Nation's economy. Safe and 
reliable infrastructure facilitates commerce across the United States 
and with our global trading partners.
    As I've stated before in this Subcommittee, time is money.
    Efficient supply chains are key to reducing costs for both 
businesses and consumers.
    America's economy relies on our vast multi-modal transportation 
network consisting of railroads, highways, ports, maritime vessels, 
automobiles, and airplanes.
    According to the Federal Railroad Administration, our Nation's 
140,000 miles of freight railroads, ``move more freight than any other 
freight system worldwide.''
    A recent report from Towson (TAOW-SON) University found that class 
I freight railroads generated $274 billion in economic activity in 
2014.\1\
---------------------------------------------------------------------------
    \1\ ``Economic and Fiscal Impact Analysis of Class I Railroads,'' 
Towson University, May 2016.
---------------------------------------------------------------------------
    Nearly 31 million passengers boarded Amtrak's passenger trains last 
year.\2\
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    \2\ Amtrak, National Fact Sheet 2015, https://www.amtrak.com/ccurl/
998/601/Amtrak-National-Fact-Sheet-FY2015.pdf.
---------------------------------------------------------------------------
    On the Nation's highways, commercial truckers carried almost 10 
billion tons of freight in 2014, representing 69 percent of all 
domestic freight hauled in the U.S.\3\
---------------------------------------------------------------------------
    \3\ ATA, Truck Tonnage Index Increased 2.7 percent in May, http://
www.trucking.org/article.aspx?uid=a18944c4-2a28-4c47-9dd6-1dfefafbec2a.
---------------------------------------------------------------------------
    Across our skies, America's aviation system transported an all-time 
high of nearly 897 million passengers and carried 66 billion revenue 
ton miles of cargo.\4\
---------------------------------------------------------------------------
    \4\ Revenue Ton Miles is a shipping/transportation industry metric, 
usually reported by train companies, measuring the amount of freight 
the company transports. It is calculated by multiplying the weight in 
tons of the shipment being transported by the number of miles that it 
is transported. Bureau of Transportation Statistics, 2015, http://
www.transtats.bts.gov/Data
_Elements.aspx?Data=1.
---------------------------------------------------------------------------
    The overall success of the transportation sector is often 
considered a key indicator for activity in the financial markets. Many 
investors and economists believe that transportation sector trends can 
indicate broader market directions, often referred to as ``Dow 
Theory.''
    As the Wall Street Journal explains, ``Dow Theory holds that any 
lasting rally to new highs in the Dow Jones Industrial Average must be 
accompanied by a new high in the Dow Jones Industrial Transportation 
Average--[this is] the 20-stock index that tracks some of the largest 
U.S. airlines, railroads, and trucking companies. When the transport 
average lags, it can presage (PRESS-AGE) broader stock declines.'' \5\
---------------------------------------------------------------------------
    \5\ WSJ, June 7, 2015, Dow Theory Has Investors Skittish on 
Market's Next Leg, http://www.wsj.com/articles/dow-theory-has-
investors-skittish-on-markets-next-leg-1433713438.
---------------------------------------------------------------------------
    Unfortunately, the transportation sector currently faces economic 
challenges. In general, rail, maritime, air cargo, and trucking carrier 
volumes are down because of a variety of factors. These include a dip 
in commodities, such as agriculture and certain energy products.
    I understand that many carriers are turning to intermodal shipments 
as a growing area of business, including household goods and 
manufactured products, as they seek to address current downturns in 
commodities. It is my hope that the FAST Act's robust national freight 
policy will help to enhance the flow of intermodal freight across our 
country.
    I'm proud that this Congress accomplished the passage of a long-
term highway bill. It will increase safety on our roads, highways, and 
railways. It will also provide certainty to states and localities, and 
ultimately, bolster our economy.
    But our work to strengthen America's transportation network is not 
done. Traffic is rising and, according to the National Highway Traffic 
Safety Administration (NHTSA), highway fatalities increased by 7.7 
percent in 2015.\6\
---------------------------------------------------------------------------
    \6\ PoliticoPro, July 1, 2016, U.S. Traffic Deaths Up Last Year, 
https://www.politicopro.com/transportation/whiteboard.
---------------------------------------------------------------------------
    As I mentioned, the FAST Act includes a new national strategic 
freight program, which will help our states prioritize freight traffic 
and increase safety. The program provides states with the discretion to 
direct new funds to rural and urban freight corridors with higher 
commercial traffic.
    Increased investment will also be available for first and last mile 
connectors for freight at airports, trucking facilities, and railyards 
under this national freight program.
    Meanwhile, members of this Committee have worked with carriers and 
law enforcement to reform the Federal Motor Carrier Safety 
Administration to increase transparency and stakeholder participation. 
The FAST Act streamlines motor carrier safety grants, enhances the 
safety of hazardous materials transportation, and includes a 
comprehensive rail safety title.
    I'm pleased that today we'll hear from a wide array of participants 
in our transportation network. We are fortunate to have the incoming 
CEO of one of our Nation's leading freight railroads. We also welcome 
representatives from the world's largest chemical manufacturer, 
America's passenger railroad, and a motor carrier law enforcement 
official to speak with us this afternoon.
    I look forward to our discussion on the FAST Act and the impact it 
will have on our transportation system and the economic growth of the 
United States.
    I would now like to invite Senator Booker to offer his opening 
remarks.

    Senator Fischer. And I would now invite my Ranking Member, 
and good friend, Senator Cory Booker from New Jersey for any 
opening comments he may have.

                STATEMENT OF HON. CORY BOOKER, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Booker. I thank the Chairwoman for helping to lead 
on convening this very important committee. I realize that we 
have a vote looming in the near future, so I'm going to ask 
that my opening remarks be submitted for the record and we get 
to hearing from this esteemed panel as quickly as possible.
    Thank you.
    [The prepared statement of Senator Booker follows:]

  Prepared Statement of Hon. Cory Booker, U.S. Senator from New Jersey
    Thank you, Chairman Fischer for holding this important hearing on 
the implementation of the FAST Act and the impact that transportation 
has on our economy.
    I am proud of the work that we did on the FAST Act to bolster 
America's infrastructure.
    But the sad truth is--it's not nearly enough.
    We need to do more to fix America's crumbling infrastructure. The 
lack of investment threatens our global competitiveness and impairs the 
safety of our vital transportation systems.
    It's also costing hardworking Americans thousands of dollars a 
year.
    Americans have some of the longest commute times. They are stuck 
sitting in traffic rather than spending times with their families. We 
know this all too well in New Jersey.
    The main rail tunnel in between New Jersey and New York is over a 
century old. When there is a problem in current tunnels, it's a problem 
for everyone. We saw this nearly one year ago when one tunnel was 
closed for urgent repairs to overhead electrical wires.
    If one train shuts down, there are delays up and down the Corridor. 
This means that commuters are left standing at the station--and that's 
bad for the economy, bad for our families, and bad for the country.
    I'm afraid the frequency and severity of these kinds of delays and 
repairs will only increase in the years ahead.
    That's why we desperately need to build the Gateway Project to add 
additional capacity into New York.
    And we're not alone in New Jersey. States around the country are 
facing serious problems from a lack of investment in our 
infrastructure.
    The American Society of Civil Engineers gave America's 
infrastructure a grade of D+. If this was my house, we'd all be 
grounded for showing up with these kinds of grades. That doesn't even 
include our grades on safety.
    Fatalities on our highways went up nearly 8 percent in 2015--that 
equates to more than 35,000 lives lost on our highways in just one 
year.
    With these staggering numbers, you'd think we be doing everything 
possible to bring these numbers down.
    Instead, we continue to see our safety regulations undermined.
    But we can fix this. It's not going to be cheap or easy, but we can 
do it. And the results will absolutely be worth it.
    So while the FAST Act was an important step in the right direction, 
we can't rest.
    I look forward to hearing from our witnesses about how investments 
in our infrastructure can help drive our economy, improve safety, and 
advance the critical projects our country needs to be competitive.

    Senator Fischer. Thank you, Senator Booker.
    With that, I would ask our witnesses to give their opening 
statements. We will begin with Mr. Patrick Ottensmeyer, the 
Chief Executive Officer of the Kansas City Southern Railway 
Company.
    Welcome.

         STATEMENT OF PATRICK J. OTTENSMEYER, PRESIDENT

       AND CHIEF EXECUTIVE OFFICER, KANSAS CITY SOUTHERN

                        RAILWAY COMPANY

    Mr. Ottensmeyer. Madam Chairman, Ranking Member Booker, 
members of the Subcommittee, my name is Pat Ottensmeyer. I am 
President and CEO of Kansas City Southern, which owns the 
Kansas City Southern Railway, Kansas City Southern de Mexico, 
and a 50 percent partner in the Panama Canal Railway. Thank you 
for the opportunity to appear here today.
    While I'm here on behalf of KCS, my testimony is applicable 
to all U.S. freight railroads. I have provided more extensive 
written testimony for the record.
    A June 2016 study from Towson University's Regional 
Economic Studies Institute found that, in 2014 alone, the 
operations and capital investment of America's Class 1 freight 
railroads supported approximately 1.5 million jobs, nearly $274 
billion in economic output, and $88 billion in wages. Railroads 
also generated nearly $33 billion in tax revenues.
    Railroads make substantial private investment in their 
infrastructure, and are privately owned and operated. From 1980 
to 2015, railroads spent more than $600 billion of their own 
funds, not taxpayer funds, on equipment and infrastructure.
    Rail is environmentally friendly. On average, railroads are 
four times more fuel efficient than trucks, reducing energy 
consumption, pollution, and greenhouse gases. A single train 
can carry the freight of several hundred trucks, reducing 
highway gridlock, construction, and maintenance.
    About 170,000 freight railroad employees are among 
America's most highly paid workers. In 2014, the average earned 
wages and benefits of Class 1 employees was just over $119,000.
    The rail industry as a whole is safe, and getting safer. 
Railroads today have lower employee injury rates than most 
other major industries. Special thanks to this committee, 
Senators Blunt and McCaskill, for last year's extension of the 
PTC implementation deadline. This was badly needed to ensure 
PTC could be done safely and within the limits of technology 
that we have today and are developing.
    Your interest today is in the implementation of the FAST 
Act. It's very broad, and its impacts not fully realized, but 
let me focus just on the rail title. Major rail expansion 
projects today undergo comprehensive environmental and 
historical preservation reviews before permits are issued. The 
FAST Act includes provisions to shorten the time it takes while 
not adversely affecting quality. Thanks, to Subcommittee Chair, 
Ranking Member, and to Senator Blunt, for their work on these 
provisions.
    In 2015, USDOT released the final rule setting tougher 
standards for tank cars carrying hazardous materials, including 
crude oil. The railroads had advocated for tougher standards, 
so we are pleased with many aspects of the new rules. And while 
this was a good start, the standards were not stringent enough. 
We commend policymakers for including provisions in the FAST 
Act requiring increased thermal blanket protection, 
restrictions of the use of older cars moving flammable liquids, 
and requiring top-fitting protection on retrofits.
    The rules also mandated the use of technology called 
Electronically Controlled Pneumatic, or ECP, brakes in certain 
trains carrying hazardous materials. Widespread use of EC 
brakes would not provide a meaningful safety benefit compared 
to existing braking systems. They would substantially impair 
the fluidity of the network and impose very large costs for 
small benefit.
    The FAST Act asked the GAO and the National Academy of 
Sciences to conduct an independent, evidenced-based evaluation 
of ECP brake systems. USDOT has until December of 2017 to 
determine if the ECP mandate is justified or should be 
repealed.
    Finally, the FAST Act established a National Highway 
Freight Program to improve freight mobility on highways, 
intermodal connections, and at ports. This program recognizes 
the integrated nature of transportation.
    In closing, let me make a couple of comments on some of the 
challenges we face. Rail traffic is affected by economic 
conditions. Growing threats to trade agreements could 
significantly worsen economic conditions in the future. 
Railroads today are suffering from the lack of demand in 
energy-related markets like coal. Conversely, railroads are 
benefiting from strong U.S. auto sales, and new and expand 
petrochemical facilities are being built in the U.S.
    This illustrates that economies are constantly evolving, 
requiring flexibility and efficiency. Policymakers should be 
cautious when considering actions that would limit railroads' 
ability to adapt or undermine their ability to invest. For 
example, forced reciprocal switching would significantly harm 
terminal efficiencies, compromise service improvements, and 
raise rail costs. As America's economy and population grow, 
freight movement will grow. Railroads need to maintain their 
ability to make sufficient private investments and to adopt so 
they can help grow America's economy in the future.
    Thank you again for the opportunity to be here today.
    [The prepared statement of Mr. Ottensmeyer follows:]

   Prepared Statement of Patrick J. Ottensmeyer, President and Chief 
        Executive Officer, Kansas City Southern Railway Company
    Thank you for the opportunity to appear before you today. I'm here 
on behalf of Kansas City Southern, but much of my testimony is 
applicable to U.S. freight railroads in general. I suspect that my 
counterparts at other railroads would agree with all or most of what 
follows.
    Kansas City Southern has two primary subsidiaries. The first, 
Kansas City Southern Railway Company, is one of seven large ``Class I'' 
railroads operating in the United States. Like the other Class I 
railroads, we operate in many different states over thousands of miles 
of track--in our case, on the Gulf Coast and up into the Midwest (see 
Figure 1). Through our connections with other railroads, we serve 
customers located in each of the 49 states that has freight rail 
service. In this regard, KCS is similar to other major U.S. railroads.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Our second primary subsidiary is Kansas City Southern de Mexico, 
which is one of two large regional freight railroads in Mexico.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    KCS's combined North American network comprises approximately 6,600 
route-miles that link commercial and industrial markets in the United 
States, Canada, and Mexico. KCS is proud to be part of a nearly 
140,000-mile U.S. freight rail network and an approximately 180,000-
mile integrated North American network. Railroads in Canada, Mexico, 
and the United States provide the world's safest, most productive, and 
most cost-effective freight rail service.
Railroads Are the Transportation Backbone of America
    The benefits associated with freight rail are difficult to 
overstate:

   A June 2016 study from Towson University's Regional Economic 
        Studies Institute found that, in 2014 alone, the operations and 
        capital investment of America's Class I freight railroads 
        supported approximately 1.5 million jobs (1.1 percent of all 
        U.S. workers--nearly nine jobs for every railroad job), nearly 
        $274 billion in economic output (1.6 percent of total U.S. 
        output), and $88 billion in wages (1.3 percent of total U.S. 
        wages). Railroads also generated nearly $33 billion in tax 
        revenues. These impacts include direct, indirect, and induced 
        effects across the U.S. economy. In addition, millions of 
        Americans work in industries that are more competitive thanks 
        to the affordability and productivity of America's freight 
        railroads.

   Freight railroads expand existing markets and open new ones 
        by connecting producers and consumers across the country and 
        the world. The rail share of intercity ton-miles is in the 
        neighborhood of 40 percent, more than any other transportation 
        mode.

   Coal from Wyoming, wheat from Kansas, cement from Missouri, 
        construction materials from Texas, steel from Pennsylvania--the 
        types of freight railroads carry are almost limitless. In a 
        typical year, KCS and America's other railroads haul 1.6 
        million carloads of agricultural products plus another 1.6 
        million carloads of countless other food products. The 
        approximately 2.2 million carloads of chemicals America's 
        railroads carry in a typical year help clean our water, 
        fertilize our farms, package our food, build our cars and 
        homes, and protect our health. Railroads haul approximately 70 
        percent of new cars sold in the United States, and the parts 
        and accessories used to build them. And just about everything 
        you find on a retailer's shelves may have traveled in a 
        shipping container or truck trailer carried hundreds of miles 
        on an intermodal train.
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
        
   Railroads' scale enables efficiency elsewhere in the 
        economy. One railcar of coal, for example, is enough to produce 
        enough electricity for 21 households for a year; one railcar of 
        wheat is enough to produce some 258,000 loaves of bread; one 
        railcar of corn is enough to provide the lifetime corn 
        requirements of 37,000 chickens; and one railcar of ammonia 
        fertilizer is enough for 770 acres of grain. By enabling their 
        customers to take advantage of their own economies of scale, 
        railroads promote lower cost production and distribution while 
        enhancing economic growth throughout the economy.

   Unlike trucks, airlines, and barges, which operate on 
        highways, airways, and waterways financed mainly by taxpayers, 
        KCS and America's other freight railroads are privately owned 
        and operate overwhelmingly on infra-structure they own, build, 
        maintain, and pay for themselves.\1\ From 1980 to 2015, they 
        spent more than $600 billion--their own funds, not taxpayer 
        funds--on capital spending and maintenance expenses related to 
        locomotives, freight cars, tracks, bridges, and other 
        infrastructure and equipment. That's more than 40 cents out of 
        each revenue dollar. Freight railroads have been spending more 
        in recent years than ever before--including $28 billion in 2014 
        and $30 billion in 2015--to keep our economy moving.\2\
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    \1\ Unlike other freight transportation modes, railroads pay 
substantial property taxes on their infrastructure--Class I railroads 
paid more than $1.1 billion in 2015 alone in property and use taxes to 
localities across the country. A few small railroads are owned by 
various government entities such as ports or economic development 
authorities. The Alaska Railroad is owned by the state of Alaska.
    \2\ To put the $30 billion that U.S. Class I railroads spent in 
2015 on their infrastructure and equipment in perspective, it's 
approximately equal to the combined salaries and prize money for all 
U.S. professional athletes for two years.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

   Railroads are, on average, four times more fuel efficient 
        than trucks. That means that moving freight by rail helps our 
        environment by reducing energy consumption, pollution, and 
        greenhouse gases. And because a single train can carry the 
        freight of several hundred trucks, railroads cut highway 
        gridlock and reduce the high costs of highway construction and 
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        maintenance.

   Thanks to competitive rail rates--45 percent lower, on 
        average, in 2015 than in 1980 (when Congress largely 
        deregulated the railroad industry)--freight railroads save 
        consumers billions of dollars every year, making U.S. goods 
        more competitive here and abroad while improving our standard 
        of living.

   The approximately 170,000 freight railroad employees are 
        among America's most highly paid workers. In 2014, the average 
        U.S. Class I freight railroad employee earned wages of $86,200 
        and fringe benefits of $33,400, for total average compensation 
        of $119,600. By contrast, the average wage per full-time U.S. 
        employee in 2014 was $57,100 (66 percent of the comparable rail 
        figure) and average total compensation was $70,700 (just 59 
        percent of the rail figure).

   Railroads are safe and getting safer. The train accident 
        rate in 2015 was down 78 percent from 1980 and down 38 percent 
        from 2000; the employee injury rate in 2015 was down 84 percent 
        from 1980 and down 47 percent from 2000; and the grade crossing 
        collision rate in 2015 was down 81 percent from 1980 and down 
        42 percent from 2000 (see Figure 4). By all of these measures, 
        recent years have been the safest in rail history. Railroads 
        today have lower employee injury rates than most other major 
        industries, including trucking, inland water transportation, 
        airlines, agriculture, mining, manufacturing, and 
        construction--even lower than food stores (see Figure 5).
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
        
Railroads and the FAST Act
    On December 5, 2015, President Obama signed the Fixing America's 
Surface Transportation Act, commonly known as the FAST Act. The Fast 
Act is the first Federal law in more than a decade to provide long-term 
funding certainty for surface transportation infrastructure planning 
and investment. Members of this committee were instrumental in the 
development and ultimate passage of this crucial legislation, and I 
thank and congratulate you for your efforts.
    The FAST Act includes a number of provisions that are important to 
railroads and for which members of this committee deserve special 
thanks. I describe five of them below.
    First, major rail expansion projects today generally must undergo 
comprehensive local, state, and/or Federal environmental and historical 
preservation reviews before necessary permits are issued. Railroads 
recognize the public interest benefits of a reasonable review process. 
However, the excessive length, scope, and cost of these reviews have 
often led to years-long delays for exceedingly worthy projects whose 
benefits vastly exceed their costs. In some cases, projects have been 
cancelled outright because of the time and expense involved. When 
reviews take too long, the substantial benefits the projects would 
provide to rail customers and to our economy are delayed or lost 
entirely too. The FAST Act, though, includes several useful provisions 
designed to shorten the time it takes for reviews of rail expansion 
projects in ways that do not adversely affect the quality of those 
reviews.
    Second, on May 8, 2015, the U.S. Department of Transportation (DOT) 
released a final rule setting forth new, tougher standards for tank 
cars carrying certain hazardous materials, including crude oil. The new 
standards are known as ``DOT-117'' specifications. KCS and other 
railroads had long been advocating for tougher tank car standards, so 
we were pleased with many aspects of the new rules. However, while a 
good start, the DOT-117 specifications were not stringent enough in 
certain areas, and we commend policymakers for including provisions in 
the FAST Act that address these shortcomings. Specifically, the FAST 
Act goes beyond the May 2015 rules by requiring increased thermal 
blanket protection for tank cars, restricting the use of older tank 
cars moving flammable liquids, and requiring top fittings protection on 
tank car retrofits. Railroads work very hard every day to prevent 
accidents from occurring in the first place, but these enhancements 
will mitigate the consequences of accidents should they occur.
    Third, the May 8, 2015 DOT tank car rules mandated the use of a 
technology called electronically controlled pneumatic (ECP) brakes in 
certain trains carrying hazardous materials. Unfortunately, unlike the 
tank car enhancements discussed above, widespread use of ECP brakes 
would not provide a meaningful safety benefit compared to existing 
braking systems.\3\ ECP brakes would, however, present serious and 
unnecessary operational challenges and would substantially impair the 
fluidity of the rail network. Put another way, ECP brakes would entail 
very large costs for very small benefits. The DOT's Federal Railroad 
Administration (FRA) has itself stated that the use of ECP brakes is 
not justified. In addition, several U.S. railroads have experimented 
with using ECP brakes in recent years, but none of them has been able 
to justify regular use. In fact, nowhere in the world are ECP brakes 
used under conditions similar to what the May 2015 requirements would 
mandate for U.S. railroads.
---------------------------------------------------------------------------
    \3\ ECP brakes issue electronic signals to simultaneously apply and 
release brakes throughout the length of a train instead of each car 
applying brakes individually. Alternative braking systems use 
distributed power (locomotives located in places other than the front 
of a train), as well as end-of-train devices (EOTs) that allow brakes 
to be applied from the head of the train and locations farther back in 
the train, to stop the train quickly.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    The FAST Act includes a provision asking the Government 
Accountability Office and the National Academy of Sciences to conduct 
an independent evidence-based evaluation of ECP brake systems, due in 
the summer of 2017. The DOT has until December 4, 2017, to publish a 
determination that the ECP mandate either is justified or should be 
repealed. KCS and, I'm sure, other railroads will cooperate fully with 
these inquiries.
    The approach to rail safety used by the FAST Act in the ECP brakes 
example--i.e., ensure that railroad safety oversight is fact-based, 
rather than based on perceptions that upon closer inspection may not be 
well founded--deserves much wider application.
    Fourth, the FAST Act is the first time in which passenger rail 
programs have been included in a comprehensive Federal surface 
transportation bill. Freight railroads agree that passenger railroading 
can play a key role in alleviating highway and airport congestion, 
decreasing dependence on foreign oil, reducing pollution, and enhancing 
mobility and safety. I am confident that passenger rail-related 
provisions of the FAST Act will enhance passenger railroading in this 
country. Members of this committee deserve our thanks for that.
    Fifth, Section 1116 of the FAST Act establishes a ``National 
Highway Freight Program'' that will fund projects designed to improve 
freight mobility on the highways and connectors to freight facilities, 
intermodal rail facilities, and ports. This program recognizes that 
freight transportation providers, including railroads, do not exist in 
a vacuum. Rather, they are part of an integrated and interdependent 
system that is only as strong as its weakest link. This freight program 
will help strengthen weak links in our transportation networks, 
especially those associated with the interface between trucks, 
railroads, and waterways. By doing so, firms and consumers throughout 
the country will benefit from improved efficiency and more reliable and 
resilient freight transportation networks.
    This committee also deserves our thanks for something they chose 
not to include in the FAST Act: changes in existing Federal truck 
weight limits. Heavier trucks would mean higher taxpayer costs to 
repair damage to our highways and bridges; more highway gridlock; and 
more harm to the environment. The taxes and fees that heavy trucks pay 
are already far less than the cost of the damage heavy trucks cause. 
This multi-billion dollar annual underpayment--which other motorists 
and the general public have to make up for through higher taxes--would 
become even greater if truck size and weight limits were increased. 
Congress's decision not to change existing Federal truck weight limits 
is consistent with the findings of an April 2016 study from the U.S. 
DOT examining the impacts of increasing current Federal truck size and 
weight limits. The DOT study concluded that no changes to Federal 
policy on truck size and weights should be made at this time.
    It goes without saying that KCS--and, I'm sure, other freight 
railroads--are more than willing to work with policymakers at all 
levels to help ensure that the provisions of the FAST Act discussed 
above, as well as other provisions related to railroads, are 
implemented in ways that lead to enhanced railroad safety and an 
enhanced ability for railroads to meet the transportation demands of 
our Nation.
Challenges Facing Freight Railroads
    I would be remiss if I did not discuss some of the challenges 
railroads are currently facing because of the state of the economy and 
other factors.
    Freight railroads are what economists call a ``derived demand'' 
industry, meaning that demand for rail service is a function of demand 
elsewhere in the economy for the products railroads haul. For example, 
KCS transports large amounts of automobiles and auto parts both within 
the United States and back and forth across the U.S.-Mexico border. 
Automakers' demand for service from KCS depends on how many autos 
consumers are buying. If consumers stop buying cars, automakers stop 
asking KCS to transport them. Likewise, when consumers are buying a lot 
of cars, demand for KCS service from automakers rises too.
    This means, of course, that rail traffic is affected by general 
economic conditions, especially conditions on the ``tangible'' side of 
the economy--e.g., consumer spending on goods (as opposed to services), 
international trade in goods, growth or the lack thereof in 
construction, how well manufacturing and mining are doing, and so on. 
Figure 6 shows that growth on the ``tangible'' side of the economy has 
been negative in recent quarters. Put another way, the sectors of the 
economy that generate the vast majority of rail traffic have, in 
aggregate, been in a recession recently, even if the economy in the 
broadest sense has not been. In addition, current and growing threats 
to existing and future trade agreements could significantly worsen 
economic conditions in the future. Navigating economic forces is always 
a tremendous challenge for railroads.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    A key reason why this is the case is because particular rail 
submarkets are often heavily influenced by factors specific to those 
markets.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Today, for example, railroads are suffering from a lack of demand 
from several key energy-related markets. Coal is the primary example. 
Due to increasingly restrictive environmental restrictions on the use 
of coal, as well as significantly cheaper natural gas that makes 
electricity generated from natural gas much more prevalent than it used 
to be (see Figure 7), demand for coal--and thus demand for the rail 
transportation of coal--is much lower today than it was even a couple 
of years ago. In the first six months of 2016, carloads of coal on U.S. 
railroads were down nearly 800,000 carloads (30.4 percent) from the 
same period in 2015. This comes on top of a nearly 700,000-carload 
decline for coal in 2015 compared with 2014.\4\ At KCS, we have not 
been immune: our coal traffic fell 10 percent in 2015 and is down 
significantly this year too.
---------------------------------------------------------------------------
    \4\ These traffic figures are aggregates from the Weekly Railroad 
Traffic report from the Association of American Railroads. They differ 
from rail traffic totals from other sources.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Likewise, recent slowdowns in crude oil production have led to 
reduced rail carloads of crude oil and associated products such as sand 
used in fracking, steel pipes used at drilling sites, and scrap iron 
and metallic ores used to create steel used in energy industries.
    On the other hand, KCS and other railroads are benefiting right now 
from strong U.S. auto sales and associated rail movements, and are 
working with chemical firms as they build and expand petrochemical 
facilities in the Gulf Coast and elsewhere in the United States to take 
advantage of low-priced natural gas used as a raw material.
    All of this illustrates that the U.S. and global economies are 
constantly evolving. Firms--even entire industries--can and do change 
rapidly and unexpectedly, and railroads must be able to deal with that 
flux. These broad, often unanticipated economic changes are reflected 
in changes not only in the volumes but also in the types and locations 
of the commodities railroads are asked to haul. If the commodities with 
rail traffic declines traveled on the same routes as commodities with 
traffic increases, the challenges these changes presented to railroads 
would have much less impact. However, when traffic changes occur in 
different areas--as is usually the case and has certainly been the 
pattern in recent years--the challenges to railroads become magnified.
The Challenge of Positive Train Control
    As members of this committee are aware, positive train control, or 
PTC, describes technologies designed to automatically stop a train 
before certain accidents caused by human error occur. Specifically, the 
Rail Safety Improvement Act of 2008 mandates that railroads' PTC 
systems 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.\5\
---------------------------------------------------------------------------
    \5\ In this context, a switch is equipment that controls the path 
of trains where two sets of track diverge.
---------------------------------------------------------------------------
    In October 2015, the statutory deadline for PTC installation was 
extended to the end of 2018, with further extensions available up to 
the end of 2020 to allow time for railroads to adequately test their 
systems. PTC development and implementation on U.S. railroads 
constitute an unprecedented technological challenge, on a scale that 
has never been attempted on railroads anywhere in the world.
    Extending the statutory deadline for nationwide PTC installation 
was the right move for Congress to make. Rushing PTC development and 
installation and foregoing a logical plan for sequencing its 
implementation does not make sense. It would sharply increase the 
likelihood that the system would not work as it should. Making the PTC 
implementation deadline more realistic helps ensure that a fully-
interoperable PTC system can be deployed in a logical manner and 
thoroughly tested prior to implementation. The extension is consistent 
with the fact that PTC should be implemented as well as possible, not 
as quickly as possible.
    The extension has not led railroads to become complacent, however. 
In fact, their aggressive implementation of PTC continues unimpeded. As 
of the end of 2015, more than 14,800 locomotives were at least 
partially equipped with PTC, out of more than 18,500 that will require 
it. Nearly 18,200 ``wayside interface units'' (WIUs) have been 
deployed, out of 29,500 that will be required.\6\ And nearly 1,700 out 
approximately 3,600 base station radios were installed. I'm confident 
that the next tally of installations, covering the period through the 
end of June, will show substantial further progress. KCS and other 
freight railroads are committed to PTC and are hopeful that it will 
lead to substantial safety benefits for our employees and the 
communities we serve.
---------------------------------------------------------------------------
    \6\ Wayside interface units provide the mechanism for transmitting 
information from signal and switch locations along railroad tracks to 
locomotives and railroad back office facilities.
---------------------------------------------------------------------------
Reacting to a Changing Market for Rail Services
    Successfully navigating the marketplace and other challenges 
railroads face requires nimbleness, creativity, and constant 
attention--both by railroads and by policymakers and regulators who 
oversee railroads--to the need for flexibility and efficiency. This is 
why KCS and other railroads respectfully submit that members of this 
committee and other policymakers should reject unnecessary legislation 
and regulations that hinder railroads from adopting to changing 
marketplace needs; that make it more difficult for railroads to make 
the massive investments a best-in-the-world, privately owned and 
managed rail network requires; or that impede railroads' adoption or 
best use of new technologies.
    As Lance Fritz, my counterpart at Union Pacific Railroad, explained 
in testimony to this committee in January 2015, the need for efficiency 
helps explain why railroads strongly oppose efforts to reverse existing 
policy under which the Surface Transportation Board (STB) must first 
find that a railroad serving a terminal area is engaged in anti-
competitive conduct before the STB can order the railroad to 
``switch,'' or interchange, traffic to another railroad when such an 
interchange is not necessary for freight delivery.
    Forced reciprocal switching would significantly harm efficiencies 
at rail terminals, compromise the service improvements they have 
created for rail customers, and raise rail costs. The added switching 
activity that would be required, the increased possibility of service 
failures caused by that new switching activity, and the complex 
operations that would be required to bring about the new interchanges 
would disrupt rail traffic patterns, produce congestion in rail yards, 
and undermine efficient service to customers.
    The need for efficiency also helps explain why railroads oppose a 
variety of other proposals that have been proffered in recent years, 
including (but not limited to) forcing railroads to prioritize certain 
types of traffic over other types, the imposition of speed limits on 
certain types of traffic that are not necessary from a safety 
standpoint, and local bans on the transport of certain commodities in 
certain areas. When considering these and similar proposals, 
policymakers should take great care in weighing the supposed benefits 
of the proposals with the substantial harm they would cause to railroad 
efficiency and, consequently, to our Nation's economic well-being. It's 
also crucial that policymakers remember that railroads are integrated 
and interconnected networks: what happens in one location could easily 
have ramifications in locations hundreds or even thousands of miles 
away.
Conclusion
    As America's economy and population grow, the need to move more 
freight will likely grow too. Speaking for KCS, as I look ahead I'm 
optimistic (changes in the transportation marketplace and an unsettled 
economy notwithstanding) that the future for freight railroads remains 
bright. I'm confident in the abilities of our highly skilled and 
dedicated employees. I'm confident that our investments in new 
infrastructure and equipment will lead to a stronger, more reliable, 
and safer network that will help our customers and our economy to 
prosper. And I believe that, by working with members of this committee 
and other policymakers in Washington and elsewhere, we can together 
make sure that our freight railroads remain the best in the world.

    Senator Fischer. Thank you, sir.
    Next, we have Mr. David Eggermann, who is the Supply Chain 
Manager at BASF.
    Welcome, sir.

   STATEMENT OF DAVID EGGERMANN, SUPPLY CHAIN MANAGER, BASF 
                          CORPORATION

    Mr. Eggermann. Thank you. Chairman Fischer, Ranking Member 
Booker, and members of the Committee, thank you for inviting me 
to testify here today and offer my views regarding the Fixing 
America's Surface Transportation Act, or FAST.
    I am pleased to speak on behalf of BASF Corporation and as 
a member of the American Chemistry Council. As Supply Chain 
Manager at BASF, I am responsible for ensuring the safe 
movement of materials from production sites to our customers 
throughout North America.
    BASF has over 15,000 employees in the U.S., with facilities 
in more than 30 states, including our North American 
headquarters in Florham Park, New Jersey. Through our wide-
ranging product portfolio, we continue--we contribute to the 
conservation of resources, the enhancement of nutrition, and 
more. BASF cares greatly about ensuring the safe transportation 
of the products of chemistry and in meeting the needs of 
society.
    With chemical industry materials used in more than 96 
percent of manufactured goods, we are among the largest 
consumers for many modes of transportation, which is why 
ensuring that the right policies are in place to support the 
safe and efficient movement of materials is of top importance 
to BASF and the ACC. Fortunately, through the hard work of 
many, a strong foundation around transportation safety is 
already in place, anchored by the Responsible Care Program, 
TRANSCAER, and CHEMTREC. Responsible Care is the chemical 
industry's health, safety, and security initiative that works 
to enhance safety practices and communications specifically 
with our transportation partners. TRANSCAER is a voluntary 
national training effort that works to help communities prepare 
for and respond to incidents, ensuring that emergency 
responders are equipped with the knowledge that they need. 
Finally, in the event of an incident, ACC's CHEMTREC service 
provides 24/7 assistance to emergency responders, providing 
guidance to determine the best way to handle each specific 
incident.
    The FAST Act strengthens these anchors. And I would like to 
thank the members of the Committee and their staff for their 
tireless efforts to move the Act across the finish line. It 
means a great deal to U.S. manufacturers, and I would like to 
take a moment to highlight a few key provisions.
    To begin with, TRANSCAER has received Federal railroad 
administration and DOT grants supporting community programs 
across the U.S. Increased funding and greater accountability as 
provided for in the FAST Act will further improve the 
effectiveness of these programs.
    Regarding rail tank cars, the FAST Act found common ground 
among all stakeholders by directing the DOT to place the 
highest priority on upgrading cars that will deliver the 
greatest safety benefit to the public while concurrently 
providing a realistic and workable time frame for car owners 
and shippers.
    Finally, we support the FAST Act requirement for the DOT to 
conduct a study on the levels and structure of insurance for 
railroads transporting hazardous materials. A workable 
liability framework is necessary to support the safe and 
efficient rail transportation of essential products.
    Beyond the current foundation and beyond the FAST Act 
enhancements, challenges remain, in my view, which, if attended 
to, would further enhance the good work that has been done.
    First, the most important way to reduce hazardous releases 
is to prevent accidents from occurring in the first place. Rail 
hazardous movements have a strong safety record, but when 
accidents do occur, primary causes include equipment defects, 
track defects, and human error in rail operations. My hope is 
that Federal policymakers will continue to address these root 
causes.
    Next, while we understand and respect the concern of 
individual communities, we believe that hazardous 
transportation safety cannot be effectively advanced through a 
patchwork of individual State and local policies. It is a 
national issue, and needs an effective and uniform national 
regulatory program.
    Finally, the Association of American Railroads, through its 
Tank Car Committee, has, in the past, attempted to unilaterally 
impose requirements on tank car owners. If unimpeded in the 
future, this approach has the potential to usurp the DOT's 
regulatory authority and threaten to undermine collaborative 
efforts that will drive further tank car safety advances.
    To conclude, we appreciate your efforts and willingness to 
work with the chemical industry to ensure the U.S. has a robust 
and safe network to deliver our products where they are needed. 
We look forward to working closely with the committee, 
Congress, and the Department of Transportation on successfully 
implementing the FAST Act and other policies that will enhance 
our Nation's transportation infrastructure.
    Thank you.
    [The prepared statement of Mr. Eggermann follows:]

     Prepared Statement of David Eggermann, Supply Chain Manager, 
                            BASF Corporation
    Chairman Thune, Ranking Member Nelson, Subcommittee Chairman Deb 
Fischer, Members of the Committee, thank you for inviting me to testify 
today and offer my views regarding the Fixing America's Surface 
Transportation (FAST) Act.
    I am pleased to testify on behalf of BASF and as a member of the 
American Chemistry Council, a trade association representing America's 
leading chemical companies. As Supply Chain Manager at BASF 
Corporation, I am responsible for ensuring the safe storage and 
movement of materials from production sites to our customers throughout 
North America.
    I appreciate the opportunity to appear before you today to talk 
about the importance of transportation to BASF's operations here in the 
U.S. and the passage of the FAST Act, particularly the provisions that 
will further advance the safe transportation of hazardous materials.
About BASF
    BASF Corporation is the North American affiliate of BASF Group, the 
world's leading chemical company, which is headquartered in 
Ludwigshafen, Germany. BASF has approximately 15,500 employees in the 
U.S. and facilities in more than 30 states, with our North American 
headquarters located in Florham Park, New Jersey. Key U.S. 
manufacturing locations for BASF include Freeport, Texas; Geismar, 
Louisiana; and Wyandotte, Michigan. Our major research & development 
sites in the U.S. include Research Triangle Park, North Carolina; 
Tarrytown, New York; and Iselin, New Jersey. As the world's leading 
chemical company, BASF cares greatly about ensuring that the products 
of the business of chemistry are transported safely and ensuring that 
we can meet the needs of our customers and society. Our portfolio 
ranges from chemicals, plastics, performance products, and crop 
protection products to oil and gas. Our products and solutions 
contribute to conserving resources, ensuring nutrition, and improving 
quality of life.
Transportation
    The nation depends on the chemical industry every day for the 
building blocks that are necessary for safe drinking water, life-saving 
medications and medical devices, and a safe and plentiful food supply.
    To meet this constant demand, the business of chemistry shipped 881 
million tons of chemical products in 2015 by a variety of 
transportation modes. Our industry ships a wide range of materials from 
plastic pellets to commodity chemicals that are used to produce more 
than 96 percent of all manufactured goods. Considering this output it 
should come as no surprise that the chemical industry is one of the 
largest customers for many modes of transportation including rail, 
truck, and barge.
    Furthermore, our industry is in the midst of unprecedented growth 
here in the United States. With 267 new projects and expansions 
announced, representing a cumulative total of $163 billion in capital 
investments, our transportation needs, and challenges, are expected to 
grow significantly over the next decade. That is why ensuring that we 
have the right policies in place to support the safe and efficient 
movement of materials is of top importance to BASF and ACC. I would 
like to thank this Committee for recognizing our industry as a 
principal stakeholder when it comes to developing policies that can 
help keep our economy moving.
FAST Act
    I would also like to thank the members of this Committee and their 
staff for their tireless efforts and working in a bipartisan fashion to 
get the FAST Act across the finish line. As you know, passing the Act 
was no small feat, and it means a great deal to U.S. manufacturers.
    There are several aspects of the FAST Act that are important to our 
industry that I would like to highlight in my testimony. A small but 
important segment of chemical shipments involve hazardous materials, 
and several provisions in the Act will help enhance the safety of 
transporting these indispensable materials.
Hazmat Transportation
    Our daily lives rely on the transport of hazardous materials. 
Hazardous materials, including some chemicals, are crucial for the 
production of many essential products that protect our health and 
safety and drive our economy. Americans expect clean, safe water from 
our taps, access to life-saving medications and medical devices, a safe 
and plentiful food supply, energy-saving solar panels, and more. 
Hazardous materials help fulfill these expectations, and often, there 
are no acceptable, non-hazardous substitutes that ensure equal safety 
and performance.
    Typically, the production of chemicals and other hazmat requires a 
combination of resources, raw materials, and an abundant supply of 
affordable energy. Manufacturing facilities generally are located where 
these resources are readily available, but customer facilities that use 
hazmat are often located somewhere else.
    For example, ethylene oxide is a versatile industrial chemical used 
to make fiberglass, synthetic fibers, and anti-freeze, among other 
important products. It is also used to sterilize medical equipment and 
instruments when they are manufactured and, again, in hospitals. But it 
is made in only in a limited number of domestic facilities and must be 
transported to thousands of customer facilities for a myriad of uses.
    As you can see, transportation issues are crucial to our ability to 
produce and transport goods. That is why BASF and ACC member companies 
are committed to pursuing safety enhancements for every aspect of the 
transportation process through Responsible Care. Responsible Care is 
the chemical industry's world-class environmental, health, safety, and 
security performance initiative. Working with our transportation 
partners, we have invested billions of dollars in training, technology, 
and tank car safety, and we will continue to do so in the future.
    We are also strong supporters of the comprehensive set of Federal 
programs that currently regulate all aspects of safety when it comes to 
transporting hazardous materials, particularly by rail. These programs 
have been successful; for example, according to the Association of 
American Railroads more than 99.99 percent of rail hazmat shipments 
reach their destination without incident. Building on this safety 
record will require a cooperative and comprehensive approach focused on 
three primary areas:

   First and foremost, preventing railroad accidents

   Second, strengthening tank car design

   Third, emergency response preparedness
Accident Prevention
    While there is no doubt that shippers have a vital and important 
role to play when it comes to mitigating the impact of a potential 
accident, the most important way to reduce hazmat releases is to 
prevent accidents from occurring. Despite their strong safety record, 
when rail accidents do occur, the primary causes include track defects, 
equipment defects, and human error in rail operations. Federal 
policymakers must continue to address these root causes and identify 
actions that will yield the greatest overall safety benefits.
    Additionally, while we understand and respect the concerns of 
individual communities, we believe that hazmat transportation safety 
cannot be effectively advanced though a patchwork of individual state 
and local polices. It is a national issue and needs an effective and 
uniform national regulatory program to ensure a workable and safe 
solution.
Rail Tank Cars
    Chemical companies are responsible for acquiring and maintaining 
their rail tank car fleets and have partnered with railroads, rail car 
manufacturers, and the Department of Transportation (DOT), to develop 
science-based standards that prioritize and focus on the greatest risks 
to further enhance safety performance.
    To this end, BASF and ACC strongly supported provisions in the FAST 
Act that address tank car standards for flammable liquids. These 
provisions ensure that all flammable liquid tank cars meet stringent 
new DOT standards and help prevent potential disruptions of shipments 
that are essential to the U.S. economy. The FAST Act found common 
ground among all stakeholders by directing DOT to place the highest 
priority on upgrading rail tank cars that will deliver the greatest 
safety benefits to the public and provide a workable timetable for rail 
tank car owners to complete safety upgrades.
    Of remaining concern, however, is the potential recurrence of past 
attempts by the Association of American Railroads, through its Tank Car 
Committee, to unilaterally impose additional requirements on tank car 
owners. If unimpeded, such actions have the potential to usurp DOT's 
regulatory authority and threaten to undermine collaborative efforts 
that will drive future tank car safety advances.
Emergency Response
    BASF and ACC support national programs to help communities prepare 
for potential hazmat incidents. BASF, like all hazmat shippers, pays an 
annual registration fee that supports DOT's Hazardous Materials Grant 
Program.
    Together with the railroads and other stakeholders, we developed 
TRANSCAER (Transportation Community Awareness and Emergency Response), 
a voluntary national training effort that helps communities prepare for 
and respond to possible hazardous material transportation incidents. 
TRANSCAER was created to help make sure emergency responders are 
equipped with the knowledge they need to provide a rapid and effective 
response to an incident. Working with its network of volunteers, 
TRANSCAER offers events across the United States and Canada that 
include training on actual rail and truck equipment, live release 
drills, and tabletop exercises to discuss possible emergency 
situations. Having access to this type of training and expertise is 
incredibly important to communities, especially in small communities 
where resources can be limited.
    TRANSCAER has received Federal Railroad Administrations grants to 
support hands-on training, webinars and training materials, allowing us 
to reach more emergency responders. In addition, DOT's Hazardous 
Materials Emergency Preparedness (HMEP) grants, which are supported by 
annual registration fees paid by hazmat shippers and carriers, have 
been utilized to support TRANSCAER efforts in many communities across 
the U.S. The FAST Act provides increased funding and greater 
accountability to ensure these funds are used effectively to improve 
local communities' emergency response capabilities.
    Last year alone, the program helped more than 50,000 emergency 
responders through hands-on training, emergency planning assistance, 
support for community drills and exercises, technical information and 
references, and training materials. The program has been going strong 
since 1986 and is celebrating its 30th anniversary this year. In honor 
of this important milestone, Congress recently passed a resolution 
introduced by Senator Capito (R-WV) that recognized TRANSCAER's long-
standing commitment to keeping emergency responders and the communities 
they serve safe.
    Emergency responders also have access to a wide variety of experts 
through ACC's CHEMTREC (Chemical Transportation Emergency Center) 
service. When an incident does take place, responders can contact 
CHEMTREC's state-of-the-art, 24/7 emergency center to determine the 
best way to handle a wide range of chemicals and other hazardous 
materials.
Rail Liability Study
    ACC also supports the FAST Act requirement for DOT to conduct a 
study on the levels and structure of insurance for railroads 
transporting hazardous materials. A workable liability framework is 
necessary to support the safe and efficient rail transportation of 
essential products throughout the economy. This study should provide 
useful new data to inform future policy discussions.
Conclusion
    Again, we appreciate your efforts and willingness to work with the 
chemical industry to ensure the U.S. has a robust and safe network to 
deliver our products where they are needed. We look forward to working 
closely with the Committee, Congress, and Department of Transportation 
on successfully implementing the FAST Act and other policies that will 
enhance our Nation's transportation infrastructure.

    Senator Fischer. Thank you very much.
    Next, we have Major Jay Thompson from the Arkansas Highway 
Police and also President of the Commercial Vehicle Safety 
Alliance.
    Welcome.

 STATEMENT OF MAJOR JAY THOMPSON, ARKANSAS HIGHWAY POLICE AND 
         PRESIDENT, COMMERCIAL VEHICLE SAFETY ALLIANCE

    Major Thompson. Thank you. Well, good afternoon, Chairman 
Fischer and Ranking Member Booker, members of the Subcommittee. 
On behalf of the Commercial Vehicle Safety Alliance, we 
certainly appreciate the opportunity to participate in this 
important hearing.
    The Alliance represents the men and women responsible for 
enforcing commercial motor carrier regulations in the U.S., 
Canada, and Mexico. The FAST Act includes a number of 
provisions that will improve motor carrier safety, and CVSA 
looks forward to working with Congress, DOT, industry, and 
other stakeholders on implementation.
    FMCSA was tasked with a number of responsibilities in the 
FAST Act, and I would personally like to take the moment to 
commend Administrator Darling and his team for their swift 
response. A number of directives are already completed, with 
many others well under the way.
    First, the consolidation and reorganization of the Motor 
Carrier Safety Assistance Program will help ease the 
administrative burden for both the States and FMCSA. It will 
also provide the States with more flexibility to meet the ever-
growing program needs.
    Because the changes impact every facet of the program, it 
is imperative that CVSA, the States, and FMCSA work together to 
identify potential issues and the best working solution for all 
parties. CVSA looks forward to continuing our dialogue with the 
agency and will report back to the committee as implementation 
progresses.
    In addition, the petition and guidance reform will help 
improve the clarity of the safety regulations, ensuring that 
those subject to the regulations understand their 
responsibilities and that those tasked with enforcing them can 
do so effectively and uniformly.
    Another critical component of the FAST Act that should be 
implemented as quickly as possible is the hard coating and 
smart logic requirement in Section 5224. Motor carrier 
violation data is used to help prioritize enforcement and shape 
State safety programs. It is imperative this data be as uniform 
and accurate as possible. While the vast majority of roadside 
inspection data being collected is sound, implementing the hard 
coating and smart logic requirements will help eliminate errors 
and further ensure uniformity in the data collection process.
    While most of the FAST Act has been positive, one issue has 
come up that I would like to make the committee aware of. The 
FAST Act included many exemptions. And, while CVSA may not have 
a specific opposition to many of the exemptions on an 
individual basis, complications have already surfaced regarding 
their implementation. Putting exemptions into place takes time. 
DOT has to develop guidance, and States need time to train 
inspectors. There is also an issue related to the adoption of 
exemptions. States do not enforce Federal laws; instead, States 
adopt Federal requirements into their own rules and laws. Many 
States can only do so during a legislative session, and not all 
States meet every year. Making an exemption effective 
immediately, from a practical standpoint, simply is not 
possible. And it only serves to unnecessarily create tension 
between enforcement and industry.
    This lack of understanding surrounding the adoption and 
implementation process is just one of the reasons CVSA 
typically discourages exemptions in legislation. We recognize 
that there may be instances when it is necessary to include an 
exemption in legislation. However, consideration must be given 
to how those exemptions are put in place. FMCSA, for example, 
has a policy that allows the States 3 years to adopt changes to 
regulation. Moving forward, when considering exemption requests 
from constituents, CVSA encourages members to first consider 
whether that exemption truly is necessary and to ensure that 
there will be no negative impact to safety.
    We understand the exemptions are intended to provide relief 
to the industry, and that industry understandably wants that 
relief as soon as possible. But, if the exemption cannot be 
enforced correctly and consistently, industry and enforcement 
both suffer. We look forward to working with you and our 
industry partners to find a solution to this issue.
    In closing, I would truly like to thank the members of this 
committee and the committee staff for your tireless work on the 
FAST Act. A number of our concerns were addressed in the bill, 
and we believe the changes enacted will dramatically improve 
the MCSAP program and commercial vehicle safety.
    I appreciate the opportunity to participate today, and 
certainly look forward to answering your questions.
    Thank you.
    [The prepared statement of Major Thompson follows:]

         Prepared Statement of Major Jay Thompson, President, 
                   Commercial Vehicle Safety Alliance
Introduction
    Chairman Fischer, Ranking Member Booker, and Members of the 
Subcommittee, thank you for holding this important hearing and for 
inviting the Commercial Vehicle Safety Alliance (CVSA) to discuss the 
Fixing America's Surface Transportation (FAST) Act.
    My name is Major Jay Thompson, with the Arkansas Highway Police, 
and I am testifying today in my role as the president of CVSA. CVSA is 
a nonprofit association comprised of local, state, provincial, 
territorial and Federal commercial motor vehicle safety officials and 
industry representatives. We represent the 13,000 men and women 
responsible for the administration and enforcement of commercial motor 
carrier safety laws in the United States (U.S.), Canada and Mexico. We 
work to improve commercial motor vehicle (CMV) safety and uniformity by 
bringing truck and bus regulatory, safety and enforcement agencies 
together with industry representatives to solve problems. Every state 
in the U.S., all Canadian provinces and territories, the country of 
Mexico, and all U.S. territories and possessions are CVSA members.
    The topic of today's hearing is the FAST Act and our Nation's 
economy and transportation system. My testimony will cover CVSA's 
perspective on implementation of the FAST Act to date, as well as 
future challenges.
    The Federal Government entrusts the states with the responsibility 
of enforcing the Federal Motor Carrier Safety Regulations (FMCSRs) and 
the Hazardous Materials Regulations (HMRs). States receive funding 
through the Motor Carrier Safety Assistance Program (MCSAP) to help 
support those efforts. The states use MCSAP funds to conduct 
enforcement activities, train enforcement personnel, purchase necessary 
equipment, update software and other technology, and conduct outreach 
and education campaigns to raise awareness related to CMV safety 
issues. The funds are used, in part, to pay the salaries of 13,437 
full-and part-time CMV safety professionals. These people conducted 3.4 
million CMV roadside inspections, 31,951 new entrant safety audits and 
15,417 reviews in 2014.\1\ The goal of these programs, which are 
administered by the Federal Motor Carrier Safety Administration 
(FMCSA), is to reduce CMV-involved crashes, fatalities and injuries 
through consistent, uniform and effective CMV safety programs. The 
programs seek to identify vehicle safety defects, driver deficiencies 
and unsafe motor carrier practices, and remove dangerous vehicles and 
drivers from the Nation's roadways.
---------------------------------------------------------------------------
    \1\ ``2015 Pocket guide to Large Truck and Bus Statistics.'' 
Federal Motor Carrier Safety Administration. April 2015. http://
www.fmcsa.dot.gov/safety/data-and-statistics/commercial-motor-vehicle-
facts
---------------------------------------------------------------------------
    The good news is the program works. The benefits of MCSAP are well 
documented, and every dollar invested in the state programs yields a 
big return for taxpayers. According to research and figures from FMCSA, 
CVSA estimates that MCSAP has an estimated benefit to cost ratio of 
20:1. Every roadside inspection conducted yields an estimated $3,281 in 
safety benefits. And, of course, effective enforcement of the FMCSRs 
and HMRs helps save lives every day, keeping dangerous vehicles and 
unqualified drivers off the Nation's roads.
    In 2001, the number of registered large trucks and buses was just 
over 8.6 million. Since then, that number has grown 35 percent, to 11.6 
million in 2010. Despite this increase, the number of fatalities due to 
crashes involving large trucks and buses has gone down 27 percent. The 
number of CMV crash-related injuries also decreased over that time 
frame by 30 percent.\2\ These improvements in CMV safety were achieved, 
in large part, through investments made by the states and the Federal 
Government.
---------------------------------------------------------------------------
    \2\ ``Large Truck and Bus Crash Facts 2010: Final Version,'' FMCSA-
RRA-12-023. Federal Motor Carrier Safety Administration. August 2012. 
http://www.fmcsa.dot.gov/facts-research/LTBCF2010/
LargeTruckandBusCrashFacts2010.aspx#chap1
---------------------------------------------------------------------------
    While the program is effective, there are a number of challenges 
the states are dealing with that diminish the effectiveness of the 
program. The FAST Act, however, included a number of requirements that, 
once completed, will improve motor carrier safety and CVSA looks 
forward to working with Congress, DOT, industry and other stakeholders 
on implementation.
Implementation of the FAST Act
Motor Carrier Safety Assistance Program Consolidation
    A major provision within Title V of the FAST Act is the 
consolidation and reorganization of the Motor Carrier Safety Assistance 
Program. The bill completely rewrites Sections 31102, 31103, 31104 and 
31313 of Title 49 of U.S. Code (USC), which are the sections dealing 
with MCSAP, making a number of organizational and programmatic changes. 
The goal of the consolidation and reorganization is to reduce the 
administrative burden for both FMCSA and the states by reducing the 
number of grant programs and focusing the bulk of the program in the 
formula grant, which is more quickly administered and more stable than 
competitive grants. Fewer grant programs means fewer applications for 
the states to submit and report on and for FMCSA to review and 
administer, cutting down on unnecessary paperwork and streamlining the 
grant process.
    CVSA strongly supported the changes to MCSAP implemented in the 
FAST Act. The changes, most of which are effective beginning in Fiscal 
Year 2017, will provide states with additional flexibility in how they 
spend their MCSAP grant funds, streamline the grant application 
process, eliminate redundancies between overlapping programs, and 
reduce the administrative burden on states, allowing them to spend more 
time doing the work of the program and less time on administrative 
activities. This flexibility is critical, giving states the ability to 
design a comprehensive CMV safety program that utilizes creative 
solutions to address issues unique to each state, while also meeting 
all program requirements.
    Implementing these changes is going to be a long and involved 
undertaking. FMCSA has already begun making the necessary changes in 
preparation for Fiscal Year 2017, notifying the states of the new 
configuration and program requirements at the 2016 MCSAP Planning 
Meeting in March. Because the changes are so significant and impact 
every facet of the program, it is imperative that CVSA, the state 
jurisdictions and FMCSA work together to identify potential issues as 
they arise and identify the best working solution for all parties. CVSA 
looks forward to continuing our ongoing dialogue with the agency and 
will report back to the Committee as implementation progresses.
MCSAP Formula Working Group
    In addition to the major changes to the MCSAP structure, the FAST 
Act included a requirement that FMCSA convene a group to evaluate the 
current MCSAP allocation formula. The group is tasked with recommending 
a new formula that will better allocate MCSAP funds to where they are 
most needed.
    Members for the MCSAP Grants Working Group were selected in March 
and the agency has since held two meetings, with a third in-person 
meeting scheduled for August. The Working Group's goal is to finalize 
recommendations for the Secretary by the end of the year, in an effort 
to meet the deadline set by Congress in the FAST Act. Once the 
Secretary has reviewed the recommendations, the new proposed formula 
must also be published in the ``Federal Register'' for public comment.
Petition Reform
    Section 5204 of the bill makes changes to the petitions process at 
FMCSA. The section requires the agency to publish petitions received 
publically, as well as set up a process for responding to and 
prioritizing those petitions. This provision will add a new level of 
transparency to the petition process at FMCSA, allowing CMV 
stakeholders the opportunity to follow the requests FMCSA is receiving 
prior to the agency initiating a rulemaking. This will result in better 
communication among the CMV community and will allow interested parties 
to weigh in with the agency, either in support of or in opposition to a 
certain recommendation earlier in the process, giving the agency more 
information with which to make a rulemaking determination.
    FMCSA quickly responded to the requirements of this section. The 
agency's website has been updated to include a page for tracking 
petitions and processes have been put in place that will allow the 
agency to respond more quickly to petitioners.
Guidance Reform
    FMCSA has also initiated work addressing the requirements in 
Section 5203, which directs the agency to reform its regulatory 
guidance process. At times, the agency issues guidance documents to 
correct technical errors in published rules or to clarify vague 
regulatory language within the safety regulations while improvements to 
the regulations make their way through the rulemaking process. However, 
the number of full rulemakings that can make it through the agency in 
any given year is limited by staff and funding, and a number of higher 
profile rules tend to push simple technical changes back in the queue. 
As a result, a disconnect has developed between written regulation, 
regulatory guidance and interpretations. To help address these 
inconsistencies, the FAST Act requires FMCSA to conduct a regular 
review of active guidance documents and routinely incorporate 
appropriate guidance into the regulations in a timely manner.
    In June, FMCSA held a meeting of the Motor Carrier Safety 
Assistance Committee and tasked the group with reviewing existing 
regulatory guidance and making recommendations on which documents 
should be incorporated into regulation, what can be eliminated and what 
other guidance may be necessary. This process, once complete, will help 
clarify a number of inconsistencies in regulation, helping those 
subject to the Federal Motor Carrier Safety Regulations to better 
understand their responsibilities and allowing those tasked with 
enforcing the regulations to do so effectively. This, in turn, will 
help improve the quality and uniformity of the more than four million 
roadside inspections conducted annually throughout North America.
Inspector Certification
    Currently, FMCSA develops a set of roadside inspector certification 
standards that conflict with CVSA's standards. This creates an issue 
for inspectors who now have two separate, but similar standards they 
have to try to meet. To address this issue, Section 5205 directs FMCSA 
to adopt by reference inspector certification standards set by CVSA, 
which will help eliminate redundant work being conducted by FMCSA and 
eliminate confusion. Following passage of the FAST Act, FMCSA acted 
quickly to meet this requirement and in December 2015 issued a memo 
addressing the certification policy.
Beyond Compliance
    Section 5222 of the bill calls for the creation of a Beyond 
Compliance Program, which would provide carriers with recognition for 
investments in safety technology, implementation of safety programs and 
other standards set by the Secretary that are deemed improvements to 
safety.
    FMCSA has already begun work on this requirement. Earlier this 
year, the agency issued a proposed Beyond Compliance framework and has 
held several listening sessions to receive stakeholder input. CVSA 
looks forward to reviewing the agency's final recommendation, once 
complete.
FAST Act Studies
    The FAST Act included a number of studies and reports of interest 
to CVSA, including issues like school bus safety; information 
technology and data quality; Compliance, Safety, Accountability (CSA); 
the New Entrant Safety Audit Program; and motorcoach safety.
    Work has already begun on a number of the studies and is being 
conducted by a number of entities, including FMCSA, the Government 
Accountability Office and the Office of the Inspector General.
Hardcoding and Smart Logic
    Another critical component of the FAST Act that should be 
implemented as quickly as possible is the hardcoding and smart logic 
requirement in Section 5224. Motor carrier violation data is used to 
help prioritize enforcement and shape state safety programs. It is 
imperative that the roadside inspection and enforcement data be as 
uniform and accurate as possible. While the vast majority of the 
roadside inspection data collected is sound, implementing the 
hardcoding and smart logic requirements will help eliminate errors and 
further ensure uniformity in the roadside inspection and enforcement 
data collection process. The bill directs FMCSA to develop the 
necessary functional specifications in consultation with the states. 
This includes implementing both hard coding of violations and smart 
logic within FMCSA's data programs. The specifications must be made 
available to both public and private developers and must utilize 
uniform data standards. CVSA looks forward to working with the agency 
to implement this provision as quickly as possible.
Looking Ahead to Future Challenges
    While the FAST Act includes many provisions that will have a direct 
impact on improving CMV safety and enforcement, there is still more 
work to do.
Statutory Prohibition
    One provision included in the FAST Act that CVSA has concerns with 
is Section 5302--Statutory Rulemakings--which requires FMCSA to 
prioritize completion of rules required by legislation, such as the 
Entry-Level Driver Training Rule, prior to initiating other 
rulemakings. While CVSA understands the need to complete outstanding 
rulemakings, it is possible that this section may inadvertently prevent 
the agency from completing work on other important, but less high-
profile issues. Often CVSA and other industry stakeholders petition the 
agency to make small, technical changes to the regulations, either to 
update them to better reflect the state of the industry or to correct 
discrepancies or unclear language. Section 5302 could be interpreted to 
prohibit the agency from completing other smaller, more technical and 
noncontroversial rules that would have a direct impact on improving the 
clarity and enforceability of the FMCSRs. Rules mandated by statute are 
often very large issues that can be controversial and, therefore, time 
consuming. CVSA encourages the Committee to consider clarifying that 
FMCSA can and should continue to respond to stakeholder petitions in a 
timely manner, while also addressing the larger scale initiatives.
Exemptions
    CVSA is generally opposed to the inclusion of exemptions in 
legislation. We recognize that there may be instances when exemptions 
could be appropriate and not compromise safety; however, overall, CVSA 
believes that exemptions have the potential to undermine safety, while 
also complicating the enforcement process. Every new exemption is an 
opportunity for confusion and inconsistency in enforcement, diverting 
scarce resources from other activities and undermining the program's 
effectiveness. The FAST Act contained a number of legislative 
exemptions. While CVSA has no specific opposition to many of the 
exemptions on an individual basis, complications have already surfaced 
regarding the implementation of the exemptions.
    First, there is an issue with the adoption of exemptions. While the 
exemptions were made effective at the Federal level upon enactment of 
the bill, that is not necessarily the case on the state level. The 
states cannot enforce Federal laws and regulations, and instead adopt 
Federal policy into their own state law and code. Some states adopt 
Federal rules by reference, allowing them to automatically adopt and 
reflect Federal changes. However, many states do not adopt by reference 
and must go through either a legislative or regulatory process to make 
the Federal changes effective at the state level. This process takes 
time, especially in states where the legislature does not meet every 
year.
    Even in states where adoption is automatic, there is still a delay 
in the practical implementation of an exemption. First, jurisdictions 
must be made aware of the change and its impacts. In many cases, 
interpretations and guidance from the Federal agency on the parameters 
and definitions of the exemption are necessary. For example, a number 
of the exemptions to CMV size and weight limits included in the FAST 
Act required guidance from the Federal Highway Administration (FHWA). 
FHWA worked quickly to provide the guidance to the states, but even so, 
the document was not circulated until February of this year, which left 
industry and enforcement wondering how the exemptions would work in the 
meantime.
    Finally, once the exemption has been analyzed and guidance has been 
provided, state enforcement personnel must be trained on the new 
exemptions. Inspectors have to be pulled off the road into the 
classroom to be trained on the changes. Practically speaking, this 
takes time. This guidance and the subsequent training is critical to 
ensuring the exemption is interpreted and enforced uniformly.
    Recognizing these challenges, FMCSA has a policy in place that 
allows states three years to adopt changes to the FMCSRs. While states 
work hard to adopt the changes as quickly as possible, the three-year 
window allows enough time for the states to go through their process 
and for inspectors to be properly trained. Moving forward, CVSA 
encourages Congress to consider including an implementation window or 
some other mechanism that allows the Federal agencies enough time to 
provide any necessary guidance on the exemption and the states enough 
time to adopt the changes and train inspectors. We understand the 
exemptions are intended to relieve industry of a certain burden, but if 
the exemption cannot be enforced correctly and consistently, industry 
and the enforcement community both suffer. CVSA looks forward to 
working with Congress and our partners in the motor carrier industry to 
identify a solution to this issue that meets the industry's needs while 
also allowing for clear, uniform enforcement of the regulations.
Motorcoach Safety
    One issue that was not addressed it the FAST Act pertains to 
motorcoach safety. With any given trip, the carrier and, more 
importantly, the driver are responsible for the safe delivery of the 
vehicle's cargo, which in the case of a passenger-carrying CMV can be 
as many as 80 passengers. The state agencies responsible for overseeing 
the passenger-carrying industry need to have at their disposal as many 
effective tools as possible. Passenger-vehicle certified inspectors are 
specially trained commercial vehicle enforcement personnel equipped to 
inspect both the vehicle and the driver, while also taking 
responsibility for the safety of passengers. However, passenger-vehicle 
certified inspectors are presently restricted on when and where they 
can examine a passenger-carrying CMV. Currently, inspections can only 
be conducted at a scheduled, planned stop and en route stops are 
prohibited. This restriction allows those seeking to avoid scrutiny and 
circumvent safety requirements to plan around inspections. Furthermore, 
because of current restrictions, there is an entire segment of the 
industry, known as ``curbside carriers,'' that is largely out of the 
reach of inspectors.
    CVSA respects that the motorcoach industry operates on a tight time 
schedule and that a stop en route has the potential to delay schedules, 
inconveniencing passengers; and, certainly, the comfort of passengers 
is a necessary consideration. However, it is important that the 
enforcement community be able to reach the entire industry to ensure 
motor carriers are operating in compliance with the Federal 
requirements set by Congress. CVSA is looking forward to working with 
Congress and our industry partners to identify a solution to this 
issue.
Funding
    Finally, the FAST Act included an increase in funding for MCSAP, 
which will help the states better meet the growing demand of the 
program and industry. However, given the focus of this hearing, ``The 
FAST Act, the Economy, and Our Nation's Transportation System,'' it is 
necessary to say a word about the need for adequate, reliable funding. 
According to FMCSA, the agency regulates 532,024 motor carriers, 5.7 
million commercial drivers and 11.5 million commercial motor 
vehicles.\3\ The state and local agencies that receive MCSAP funding 
are responsible for ensuring those motor carriers, vehicles and drivers 
operate safely.
---------------------------------------------------------------------------
    \3\ ``2015 Pocket guide to Large Truck and Bus Statistics.'' 
Federal Motor Carrier Safety Administration. April 2015. http://
www.fmcsa.dot.gov/safety/data-and-statistics/commercial-motor-vehicle-
facts
---------------------------------------------------------------------------
    Furthermore, the CMV enforcement landscape is constantly evolving 
and changing as Congress and FMCSA work to refine and improve the 
FMCSRs and HMRs. Despite these challenges, MCSAP, as administered by 
the states, has been successful in reducing crashes, injuries and 
fatalities on our Nation's roadways, in spite of a steady increase in 
the number of CMVs operating on those roads. However, MCSAP will only 
continue to be successful if it is adequately funded. New and expanded 
responsibilities mean improvements in safety, but only to the extent 
the states have the resources to effectively implement those policies. 
It is critical that Congress and FMCSA ensure that, as new programs are 
created and new responsibilities are assigned, funding is provided to 
the states, avoiding any unfunded mandates. Otherwise, funds are spread 
thinly across programs, reducing effectiveness across the board.
    We recognize the issue of funding for the Federal transportation 
program is a complicated one, with no easy solutions. Future funding 
for MCSAP is directly tied to the long-term solvency of the Highway 
Trust Fund. CVSA supports ongoing efforts to identify sustainable, 
long-term revenue sources to address the Highway Trust Fund solvency in 
order to ensure stability for MCSAP. Failure to identify a long-term 
funding solution could result in a reduction in MCSAP funding in the 
future. When states see a reduction in their MCSAP funding, jobs are 
lost, programs are reduced, and fewer inspections, compliance reviews 
and safety audits are conducted, reducing the safety benefit of 
previously mentioned activities and undermining years of improvement in 
CMV safety.
Conclusion
    The motor carrier portion of the FAST Act included a number of 
provisions that will improve motor carrier safety. Increased funding 
means states can improve their programs and reach more in industry. 
Changes to MCSAP will cut out unnecessary administrative burdens and 
help focus funds where they will be most effective. Changes to the 
regulatory process will help streamline the regulations, providing 
additional clarity and transparency. Improvement to data quality and 
information technology systems will ensure states and FMCSA have the 
information they need to continue to improve the effectiveness of 
MCSAP.
    However, we still have work to do. A long-term funding mechanism 
must be identified to ensure MCSAP continues to grow with the industry. 
Enforcement and industry must come together to identify a responsible, 
practical approach to exemptions and we must address deficiencies 
related to passenger carrier enforcement in order to keep our roadways 
safe for the people traveling on them. CVSA commends the Committee and 
staff for their work on the FAST Act and we look forward to continuing 
to work on CMV safety issues moving forward.

    Senator Fischer. Thank you, Major.
    Next, we have Mr. Stephen Gardner, Executive Vice President 
and Chief of NEC Business Development with Amtrak.
    Welcome.

        STATEMENT OF STEPHEN J. GARDNER, EXECUTIVE VICE

    PRESIDENT, INFRASTRUCTURE INVESTMENT DEVELOPMENT, AMTRAK

    Mr. Gardner. Good afternoon, Chairwoman Fischer, Ranking 
Member Booker, and members of the subcommittee. On behalf of 
our chairman, Tony Coscia, and our CEO, Joe Boardman, I'm 
honored to appear today to represent the men and women of 
Amtrak and the 30 million annual passengers they serve.
    The FAST Act is a historic step forward for intercity 
passenger rail, and I congratulate this subcommittee for 
including rail in the service reauthorization for the first 
time. Today, I'll discuss Amtrak's progress in carrying out the 
various FAST Act provisions and how we believe this bill can 
help strengthen Amtrak and the economy.
    As you know, Amtrak serves 46 states and three Canadian 
provinces, and provides an essential travel option for many 
Americans. Overall, Amtrak and its passengers generate 7.9 
billion in annual economy impact, making our network a true 
economic engine, as well.
    Our national network consists of 26 short-distance routes 
we run in partnership with the states and 15 long-distance 
routes we operate for the Federal Government that, together, 
provide roughly 62 percent of Amtrak's ridership and 45 percent 
of our system revenue.
    Augmenting this core system is the Northeast Corridor. The 
Northeast Corridor connects Boston and Washington, D.C., and 
provides essential infrastructure for eight commuter railroads, 
four freight carriers, and Amtrak's own trains. Here, Amtrak 
has a unique dual role, where we operate our trains and 
maintain most of the infrastructure necessary to support over 
2,000 daily commuter and freight trains and some roughly 250 
million passenger trips annually.
    Amtrak's ridership and revenue has followed an impressive 
trajectory of growth since roughly 2003. Amtrak experienced 10 
years of record ridership over the past 15 years. Ticket 
revenues have doubled since 2000. And debt has been cut to one-
third of the 2004 levels. Although FY 16 started slowly due to 
significantly lower gas prices, weather events, and other 
factors, our ridership through July is up slightly over last 
year. However, overall revenues are slightly lower and below 
budget, indicating some slowing of demand. In response, we are 
exploring new ways to grow revenue and control costs to 
strengthen our financial performance.
    Despite these headwinds, Amtrak remains a desirable 
transportation choice, in part because of recent strong 
operating performance. For instance, our customer satisfaction 
scores hit an alltime high in January, helped by a roughly 9 
percent increase in on-time performance across our network 
compared to last year.
    Turning to FAST Act implementation, I'm glad to report 
that, so far, Amtrak has complied with all of the requirements 
and is making good progress toward upcoming mandates. Among the 
Act's most significant changes for Amtrak is the alignment of 
Federal funding and Amtrak's revenues and expenses into two 
separate accounts to support the national network and the NEC. 
Additionally, the bill provides a single funding level for each 
account rather than separate operating and capital 
authorizations for the entire company.
    These important changes will provide Amtrak with needed 
flexibility to use our Federal dollars to support each of our 
network's most pressing priorities, and incentivizes improved 
transparency, planning, and operational performance. In 
collaboration with the FRA, we're progressing implementation of 
this new framework for its use next year.
    Among other important provisions, the Act's created a new 
State-supported Route Committee to enhance cooperation for 
these services, and we commend the USDOT for promptly standing 
up this new group.
    Furthermore, the FRA and the Southern Rail Commission and 
Amtrak have made progress in their study of intercity service 
restoration on the Gulf Coast. And we are working to study our 
route and service planning methodologies, generally.
    At this time, I would also like to recognize the leadership 
of Ranking Member Booker and Senator Blunt for their respective 
efforts to improve the RRIF program and the environmental and 
permitting process for railroads. These provisions have the 
potential to greatly improve our ability to undertake major 
projects, whether for a new bridge on the NEC or for the 
national network's future fleet needs. We also appreciate the 
Act's affirmation of the NEC Commission's role in bringing 
together the corridor's owners and users and advancing a new 
cost-allocation policy. Amtrak's working with the other NEC 
railroads to implement this policy, with mixed results, so far. 
We hope this goal can be met soon with our commuter partners.
    Amtrak also strongly supports the new Federal grant 
programs in this Act. It's our hope that Congress will provide 
robust funding for these programs, whenever possible, along 
with fully funding the grants to Amtrak for the National 
Network and the NEC at the authorized levels.
    Finally, PTC is in service on our portion of the NEC 
mainline and our Michigan and Keystone lines, making us an 
industry leader in meeting this mandate.
    I'd like to speak now about Amtrak's most significant risk 
related to the FAST Act, our continued reliance on 
discretionary funding through the annual appropriations process 
to deliver the authorized levels in this bill. Many of Amtrak's 
assets and infrastructures are at, or past, the end of their 
useful life. The only way to maintain the level of performance 
and service we achieve today is for these assets to be replaced 
or improved, which requires stable and substantial funding.
    Nowhere is the peril of under-investment more apparent than 
in the NEC. This subcommittee is already is well versed with 
the plight facing our Hudson River Tunnel connecting New York 
and New Jersey. Since 2012, we've made strides in launching our 
Gateway Program to address this looming crisis, including 
forming a new partnership between Amtrak, the states of New 
York and New Jersey, and the USDOT. Today, I'm glad to say 
we've begun the environmental, engineering, and planning work 
necessary to begin construction of a new tunnel, but the key to 
further progress is the ability of the Federal Governments and 
the states and Amtrak to come up with the necessary funding.
    FAST Act made meaningful changes to give us greater tools 
than ever before to advance major improvements, but there's no 
substitute for predictable, dedicated Federal funding. We ask 
for your continued support to achieve these levels and for your 
assistance in using these new tools you've given us so that we 
can stabilize and improve our entire system. Our future and the 
Nation's economy depends on it.
    Thanks very much, and I look forward to your questions.
    [The prepared statement of Mr. Gardner follows:]

  Prepared Statement of Stephen J. Gardner, Executive Vice President, 
             Infrastructure Investment Development, Amtrak
    Good morning Madam Chairman, Ranking Member Booker, and members of 
the Committee. I am Stephen Gardner, Executive Vice President of 
Infrastructure and Investment Development at Amtrak. On behalf of our 
Chairman, Mr. Coscia, and our CEO, Mr. Boardman, I am honored to appear 
today to represent the men and women who maintain and operate our 
21,000-mile intercity passenger rail system, which serves over 30 
million passengers annually.
    The FAST Act is a historic step forward for intercity passenger 
rail and I'd like to begin my testimony by congratulating the full 
Committee and this Subcommittee for its role in drafting many of the 
law's most important elements. By including Amtrak and intercity 
passenger rail programs in the surface transportation reauthorization, 
Congress, for the first time, set forth a path for a true multimodal 
transportation policy--and for this, we particularly applaud this 
Committee and your Senate colleagues.
    Today, I'll discuss Amtrak's progress in carrying out the FAST 
Act's relevant provisions and how we believe the policies advanced 
through this legislation can help strengthen Amtrak and drive our 
economy.
About Amtrak
    Amtrak serves 500 communities in more than 46 states and three 
Canadian provinces via our network of high speed, state-supported, and 
long distance trains. Today, Amtrak serves 90 percent of the top 50 
major metropolitan areas in United States, the three largest cities in 
Canada, and more than 40 percent of our Nation's rural population. 
Amtrak connects communities of all sizes with major urban centers and 
provides an essential travel option for those seeking an alternative to 
driving or flying. Overall, Amtrak and its passengers generate $7.9 
billion in an annual economic impact (exclusive of fares) to the 
Nation's economy.
    The FAST Act characterizes Amtrak's system as two interconnected 
networks--our National Network and the Northeast Corridor (NEC). Our 
National Network consists of 26 short distance, ``city to city,'' 
routes we run through a cooperative partnership with 18 states or 
regional authorities and the 15 long distance routes that we operate on 
behalf of the Federal Government to link our regions together, 
including connecting rural areas with major cities. The National 
Network provides roughly 62 percent of Amtrak's ridership and 45 
percent of our system revenue.
    The 457-mile Northeast Corridor (NEC) connects Boston to 
Washington, D.C., providing essential infrastructure for eight commuter 
railroads, four freight carriers and Amtrak's own Acela Express, 
Regional, and various long distance trains. As an owner of much of this 
Corridor, Amtrak has a unique dual role: operating our own trains over 
this route and maintaining the vast infrastructure necessary to support 
the over 2,000 daily commuter and freight trains that rely on the NEC. 
Amtrak's NEC train services provide 55 percent of our system revenue 
and Amtrak also receives additional compensation from commuter and 
freight railroads for the use or improvement of the NEC.
Performance
    System-wide, Amtrak ridership and revenues have followed an 
impressive trajectory of growth over the past decade.
    Amtrak has experienced ten years of record ridership over the past 
15 years; ticket revenues have doubled since 2000; and debt has been 
cut to one-third of 2004 levels. At a network level, state-supported 
ridership has nearly doubled since 1998 and the NEC set a ridership 
record in Fiscal Year (FY) 2015.
    Although FY 2016 started slowly due to significantly lower gas 
prices, our ridership through July is up slightly over the same period 
last year. However, overall revenues are slightly lower than FY 2015. 
The resulting fiscal challenge we face is partially offset by lower 
costs for locomotive fuel and control of headcount and associated 
benefits costs. We remain focused on exploring new ways to grow revenue 
and control costs to strengthen this year's financial performance.
    However despite these headwinds, Amtrak remains a desirable 
transportation choice. Ridership on our long distance trains is up 3.4 
percent over last year and our customer satisfaction scores hit an all-
time high in January at 85 percent; they are above 80 percent year-to-
date.
    Improved on-time performance (OTP), experienced across all three 
train service lines, is a key component of customer satisfaction 
scores. On related note, Amtrak is engaged with the ongoing the Surface 
Transportation Board (STB) processes regarding OTP to ensure that this 
critical aspect of our performance isn't jeopardized by any changes 
under STB authority. We have submitted comments to the STB recommending 
it withdraw its proposed policy statement on preference as it would 
undermine Amtrak's statutory right to preference over freight trains 
and negatively impact performance and customer satisfaction.
FAST Implementation
    While Amtrak is busily working on opportunities to improve our 
business, we are also working diligently to fulfill FAST Act 
requirements. I'm glad to report that, so far, Amtrak has complied with 
all requirements to date, and is making good progress towards the major 
requirements due in the coming year. We'll keep this Committee and 
others apprised of our efforts throughout this process.
    Among the Act's most significant changes is aligning Federal 
funding and Amtrak revenues and expenses into two separate National 
Network and NEC accounts to support their associated services and 
business activities. This will provide new levels of transparency and 
clarity, allowing Amtrak to better articulate the value proposition of 
each network and clearly establish the needs, opportunities, and 
challenges each face.
    An important related change was creating a single funding 
authorization for each account rather than the traditional operating 
and capital grants. This provides Amtrak with flexibility to use our 
Federal dollars to support each network's most pressing needs and 
incentivizes improved operational performance by tying net revenue 
outcomes to capital investment levels.
    Collaborating with the Federal Railroad Administration (FRA) to 
establish this new account structure, we have also begun modifying our 
internal accounting processes and business practices to support this 
new framework. As FY 2017 approaches, we are working hard to apply 
these changes in anticipation that the new account structure will be 
implemented through our appropriation at some point during the Fiscal 
Year. We also expect to submit our FY 2018 grant request in compliance 
with the new account structure and associated planning requirements, 
including the 5-year business line plan requirements under Section 
11203.
    Amtrak is also pleased that the Secretary and Administrator 
Feinberg have formally established the State-Supported Route Committee 
required under Section 11204. With participation by the states, Amtrak, 
and the FRA, this new forum will strengthen the cooperative arrangement 
between all three groups to improve and expand short distance, 
intercity service between city pairs across the Nation.
    Similarly, the FRA and the Southern Rail Commission have made 
progress in their study of opportunities for intercity service 
restoration on the Gulf Coast, required under Section 22304. We expect 
to have an idea of the infrastructure, station, and equipment 
requirements needed to return service to the route in mid-August and 
subsequently begin the conversation about necessary investment levels 
and possible funding sources. Meanwhile, Amtrak has procured a 
consultant to study route and service planning methodologies to 
complete recommendations for submission to this Committee in December 
to meet requirements under Section 11206.
    I would also like to take this time to thank, in particular, 
Ranking Member Booker and Senator Blunt for the important provisions 
they sponsored to improve the Railroad Rehabilitation and Improvement 
Financing (RRIF) Loan program and the environmental review and 
permitting process, respectively. Reforms to the RRIF program include 
new authority for Master Credit Agreements, loan terms set from 
substantial completion of a project, eligibility for planning costs, 
and clarifications regarding using project revenue streams to fund loan 
repayments.
    These changes have the potential to greatly improve the usability 
of this program, particularly for major infrastructure investments, 
whether they be for a bridge on the NEC, improvements to Chicago's 
Union Station, or for the National Network's future fleet needs. 
Likewise, the FAST Act provisions relating to the railroad 
environmental regime help provide clarity and align railroads with the 
similar requirements found in other modes. We now await action by USDOT 
to implement these new provisions and request the Committee continue 
its work with USDOT to ensure the benefits anticipated from these 
provisions materialize.
    We also appreciate the Committee's affirmation, through Sections 
11305 and 11306, of the Northeast Corridor Commission's important role 
in bringing together the Corridor's owners and users and its work to 
establish a method for fairly allocating NEC operating and capital 
costs. Since the cost allocation policy was adopted last September, 
Amtrak has been working with the other NEC railroads to implement the 
policy this Fiscal Year through the various access and usage 
agreements. While we've made some progress--agreements are executed 
with three commuter agencies--several major agreements remain 
outstanding. While we recently petitioned the STB to enforce the 
policy's implementation on one NEC commuter agency, the situation may 
require further action. However, we hope STB consideration won't be 
necessary and we will keep the Subcommittee informed on this matter.
    I would like to also mention Amtrak's strong support for the three 
Federal grant programs authorized in the FAST Act targeted at 
infrastructure investment and service restoration and enhancement. 
These programs offer a great opportunity for Amtrak to build on the 
success of the HSIPR and TIGER programs, which have helped make 
critical investments across the Amtrak system. In particular, the 
Federal-State Partnership for State-of-Good-Repair program is a much-
needed vehicle to drive investment to restore and improve the NEC. It 
is our hope that Congress will provide robust funding to these new 
grant programs for FY 2017, along with funding the grants to Amtrak for 
the National Network and Northeast Corridor at authorized levels.
    Finally, I'd like to provide the Subcommittee with an update on 
Amtrak's efforts to complete Positive Train Control (PTC) installation 
on our system. PTC is in service on the portion of the Northeast 
Corridor main line we own (save for some segments of low speed trackage 
in terminal areas) and is in service on the Amtrak-owned Michigan Line 
and Keystone Corridor. Work is underway to complete PTC equipment 
installation for use by the freight railroads when they implement their 
systems. We also plan to begin our PTC installation on the Springfield 
Line in FY2017.
Risks and Challenges
    As Mr. Coscia observed when he testified before this Committee in 
December, 2014, the improvements in Amtrak's financial performance are 
not accidental, but rather a product of growing demand, significant 
demographic shifts, changes in consumer preference and steady 
management. Although we'd prefer to have forgone this experiment, the 
recent weakness in demand demonstrates that despite major shifts in 
huge market drivers like the price of gasoline, travelers still turn to 
rail in significant numbers when they have a safe, convenient 
alternative to driving or flying.
    Rail is also a key component in the growing system of innovative 
intermodal connections that have arisen in many areas to respond to 
demographic shifts, such as movement of millennial populations into 
urban areas. The demand for investment to accommodate these shifts is 
projected to grow, but the existing network's condition is cause for 
serious concern.
    This brings us to Amtrak's most significant risk related to the 
FAST Act--our continued reliance on discretionary funding through the 
annual appropriations process to deliver the authorized level set forth 
by this Committee.
    After 45 years of operation, many of Amtrak's assets and 
infrastructure are at, or past, the end of their useful lives. The only 
way to maintain the level of performance and service that we've 
achieved is for these assets to be systematically replaced over time.
    This is an expensive proposition, but one that must occur if Amtrak 
is to avoid the distress seen elsewhere in the transportation sector 
when state-of-good-repair investment and modernization are deferred. 
Programs of such scope and duration require certainty that is only 
possible through dedicated, multi-year funding, which I know many on 
this Subcommittee support. Until that is achieved, ensuring full 
appropriations of amounts authorized is our most significant request of 
this Subcommittee.
    Nowhere is the peril of underinvestment more apparent than on the 
NEC, where continuing our ridership and revenue success requires 
restoring and enhancing a rail system reliant on infrastructure that is 
over a century old and, in some cases, dates back to the Ulysses S. 
Grant administration.
    Epitomizing this situation is Amtrak's North River Tunnel under the 
Hudson River between Manhattan and Newark New Jersey, which carries 450 
train movements per day and some 200,000 passengers. As the 
Subcommittee has heard before, this 106-year old tunnel was inundated 
with millions of gallons of brackish water during Super Storm Sandy in 
2012. This means each tube must be closed for more than a year to 
completely rehabilitate the tunnel. Without a new tunnel, capacity will 
be reduced by 75 percent, effectively devastating mobility throughout 
the region and significantly impacting the local and national economy.
    Since 2012, Amtrak has made real strides in launching our Gateway 
Program to address this looming crisis. The program aims to increase 
track, tunnel, bridge, and station capacity, eventually creating four 
mainline tracks between Newark, NJ, and Penn Station, New York, 
including a new, two-track Hudson River Tunnel and a completely 
rehabilitated North River Tunnel.
    While only limited funding has been available in recent years, we 
used this time to build a new partnership between Amtrak, the states of 
New York and New Jersey, through the Port Authority of New York and New 
Jersey and NJ Transit, and USDOT to advance the Gateway Program.
    Together, we've started environmental and preliminary engineering 
work on a new Hudson Tunnel and worked towards creating a new entity to 
lead the Program on our collective behalf. In addition, we applied to 
enter the FTA planning process for the Tunnel and Portal North Bridge, 
thanks to clarification in the FAST Act that ensures projects 
supporting both intercity rail and transit services are eligible.
    We've also made targeted investments to advance program elements 
that can be addressed now. Thanks to supplemental funding from USDOT 
following Super Storm Sandy, we are nearing completion on the first two 
phases of our project to secure the future right-of way for a new 
tunnel through the Hudson Yards development site on the West Side of 
Manhattan.
    Design is also complete for the Portal North Bridge. Funding is the 
only remaining obstacle to addressing this critical reliability risk 
and invest in the future of this region. A $1.2 billion investment to 
build a new Portal North Bridge would support 19,000 jobs.\1\
---------------------------------------------------------------------------
    \1\ The Northeast Corridor Commission. Northeast Corridor Capital 
Investment Plan: Fiscal years 2017-2021. April 2016. Print.
---------------------------------------------------------------------------
Looking Ahead
    The outstanding challenge is to obtain the necessary funding and 
financing mechanisms to carry out multi-year, multi-billion dollar 
projects, whether for future projects like the Gateway Program or for a 
new diesel fleet to power our National Network trains. The FAST Act 
made meaningful changes to give us greater tools than ever to advance 
such major projects, but there is no substitute for reliable Federal 
investment and we ask for your continued support to achieve it.
    And although infrastructure projects in the Northeast or other 
regions of the country might seem impossibly distant to many Americans, 
these investments benefit the entire system with positive economic 
impacts far and wide. Research by the Northeast Corridor Commission 
found that funding the Northeast Corridor Five-Year Capital Investment 
Plan would support jobs in as many as 22 states.\2\
---------------------------------------------------------------------------
    \2\ Ibid.
---------------------------------------------------------------------------
    Amtrak is grateful for the contributions made by this Committee and 
all of Congress as we work to implement the FAST Act.
    While the Act requires significant changes at Amtrak, we are 
working hard to fulfill the various mandates and fully embrace the new 
paradigm it creates. Most significantly, the decision to include Amtrak 
in FAST was a major achievement that now sets the stage for a truly 
integrated, performance-based surface transportation program that can 
meet the needs of the 21st Century. While Amtrak's highest priority 
remains elusive--a dedicated and predictable funding stream to 
efficiently design, engineer, and deliver equipment and critical 
infrastructure--I hope we can continue to work with you in the coming 
years to secure support to make these investments for the benefit of 
the entire nation.
    Thank you and I look forward to your questions.

    Senator Fischer. Thank you very much.
    I will begin the round of questions. We'll have a 5 minute 
round.
    Mr. Ottensmeyer, as you think about the future 
opportunities and challenges that the KCS is--and the freight 
industry as a whole are facing, what do you think are the, 
maybe, current and also future regulatory impediments that 
concern you the most?
    Mr. Ottensmeyer. Madam Chairwoman, as I mentioned in my 
testimony, the forced reciprocal switching is an issue that 
we're very concerned about as it relates to efficiency and 
capacity for the broader rail network. And I think the permit 
reforms are also a very significant challenge. We're very 
enthusiastic about the steps in the FAST Act. But, I know some 
of our larger industry colleagues who spend way more every year 
on capital expenditures than we do have stated that one of the 
largest impediments for them achieving their capital goals is 
actually permits--obtaining permits for projects that they want 
to complete.
    Senator Fischer. I know this committee's going to be paying 
close attention to the Board's activities at--as it relates to 
that competitive switching case in the future.
    Major Thompson, in your testimony, you noted that Section 
5302 of the FAST Act will prohibit the FMCSA from making 
technical, less controversial rules until outstanding 
rulemaking is completed. That was a section that I worked on 
really carefully to ensure that the Secretary of Transportation 
has that certain level of discretion. I think it's important in 
issuing the rulemakings that are not mandated by Congress. Do 
you believe that the Secretary's authority within this 
provision sufficiently would address your concerns?
    Major Thompson. Absolutely, Senator Fischer. I'd---- the--
what I mentioned, though, was, as far as the hard coating, our 
roadside inspectors are using pretty much the same roadside 
inspection program. And, within that program, which FMCSA 
developed, there are some issues that need to be tweaked to 
where the officers on the roadside are selecting the exact 
correct reference number from the Federal regs. At times, the 
reference numbers that they're selecting, or are able to 
select, don't quite fit the violation, if you will, and then 
we're looking at that data to determine whether a carrier is 
safety-ready.
    So, there is some work ongoing in that. We have been 
working with the agency, but would certainly like that one 
little piece of hard coating and smart logic to be expedited. 
And we feel like the data will just be that must more stronger.
    Senator Fischer. OK. Let us know if you need any 
clarification from this committee on that. We would be happy to 
provide that.
    Major Thompson. Thank you very much.
    Senator Fischer. Yes. Thank you.
    Also, some of the challenges that you face with law 
enforcement really deals with the increase we're seeing in 
traffic flows as we have more accidents. Would you agree with 
that? And how do you think you're going to be able to respond?
    Major Thompson. Well, obviously our data across the 
Nation's highways has certainly pointed to the increasing crash 
relating to driver error. And let's be realistic, it's not 
always the driver error of the commercial motor vehicle. We 
have certainly started increasing our enforcement on 
noncommercial vehicles, our distracted-driving efforts. We've 
worked with the agency to increase the percentage of our MCSAP 
grant from a 5 percent to a 10 percent time frame to recoup 
some cost. But, again, most States, if not all States, spend a 
lot more than 10 percent of their time enforcing traffic laws.
    But, to answer your question directly, we have got to focus 
on what's causing the accidents, and it's driver error.
    With that said, we cannot lose focus on the vehicle 
inspection component of it. We just recently had our 
international road check, and there are still commercial motor 
vehicles out there traveling our Nation's highways that do have 
faulty equipment and equipment violations. Then it, in turn, 
could make accidents more severe.
    So, we can't lose focus on that, but you are certainly 
correct, we have got to be diligent in this distracted driving 
and the accidents that they're causing.
    Senator Fischer. And in the FAST Act, there was some 
consolidation with the Motor Carrier Safety Assistance Program. 
Do you think that those policy issues that we're looking at, 
then, is that going to help you to be able to access more 
funding in the future for that--for those safety provisions?
    Major Thompson. Absolutely. And we appreciate, appreciate, 
appreciate this committee's work on that.
    Senator Fischer. You appreciate it.
    [Laughter.]
    Major Thompson. Yes. We certainly thank you. And it's going 
to provide the State--or the agency heads more flexibility in 
arranging their state safety program to focus on what's truly 
causing the accidents. And we appreciate that.
    Senator Fischer. Well, we appreciate your commitment to 
safety on our roads for our traveling public, as well, thank 
you, sir.
    Senator Booker.
    Senator Booker. Thank you, Senator Fischer.
    The Chairwoman has been tremendous. This has been an area 
of a lot of bipartisan activity, where we've been able to get a 
lot done and really create great balance between a host of 
interests that are here. But, this is just really an area, 
especially in freight and passenger rail, a great part of our 
economy, where there are a lot of urgencies, in my opinion, in 
creating a robust vision for freight and passenger rail.
    And, Mr. Ottensmeyer, I think you said this in your 
remarks, that, when it comes to our highways and our roads, 
which gets the bulk of our steady investment, many of the rail 
companies are making tremendous infrastructure investments 
independent of government. Is that correct?
    Mr. Ottensmeyer. Well, Senator, in my written testimony----
    Senator Booker. You are having serious mic problems today.
    [Laughter.]
    Mr. Ottensmeyer. OK. Does that work?
    Senator Booker. Yes, sir.
    Mr. Ottensmeyer. OK. Yes, Senator Booker. In my written 
testimony, I give some statistics about the amount of money, 
the percentage of revenue that the railroads have spent over 
the last 25 or 30 years. And the numbers are generally in the 
area of 18 to 20 percent of revenues go into capital spending, 
and another probably 15 to 20 percent go into maintenance. So, 
a statistic that was provided in my written testimony was that, 
since 1980, the railroads have spent about 40 percent of every 
revenue dollar on either capital or maintenance for their 
infrastructure.
    Senator Booker. And so, what is the role of government? In 
other words, you see us with--actually, in some ways, you're a 
competitor--you see us making tremendous investments in roads 
and bridges, but yet we don't have a permanent sort of funding 
source for rail. Do you see that as a--as trying to get out of 
your position of bias, perhaps, but do you see that as 
problematic, in terms of investments--government investments 
per growth of economy? Should we be balancing that differently?
    Mr. Ottensmeyer. My answer, Senator, would be that 
certainly permit reform is a critical--as we add infrastructure 
just to be able to complete the projects and get them ready for 
service and available to add capacity to the network, and then 
maintaining a regulatory framework that permits the railroads 
to earn the kind of returns that they have been earning for the 
last few years, which supports the capital investment and the 
access to capital to allow us to continue to invest this 
heavily.
    Senator Booker. Thank you very much.
    And maybe, Mr. Gardner, I can switch to you on the 
passenger side of this. It's stunning to me that the Northeast 
Corridor, which you misspoke when you said it connects Boston 
to D.C. It really connects Boston and D.C. to Newark, is the 
way you should be looking at that.
    [Laughter.]
    Senator Booker. But, the reality is, more people travel 
along the Northeast Corridor by rail than they travel along the 
Northeast Corridor by air. Is that correct?
    Mr. Gardner. That's right.
    Senator Booker. It's a critical artery--in our country, in 
perhaps the most economically productive region of our Nation, 
but yet we're having real issues along the Northeast Corridor 
with congestion, with failures and delays. And a lot of that is 
a lack of investment in this critical infrastructure. Would you 
say that that's a correct statement?
    Mr. Gardner. I would, Senator. I think--again, the FAST Act 
makes a major improvement in this respect, which is to insert 
the passenger rail program as part of the overall service 
transportation program. But, generally, the passenger rail 
program is being considered separately and apart from, and 
outside of, our Federal investments in surface transportation. 
And the Northeast Corridor is a prime example. But, I could 
give you examples, all across our network, of under-investment, 
which has resulted in higher operating costs, lower levels of 
service and reliability.
    Senator Booker. No, I appreciate that, because I'm 
suddenly, because of Deb Fischer, very concerned about the 
Midwest, as well.
    [Laughter.]
    Senator Booker. And so, to that extent, you and I have had 
to manage things. I had to manage a city, and you obviously are 
managing significant rail infrastructure. Stable funding--
reliable, stable funding, when it comes to budgeting, when it 
comes to capital--it's very critical, if you're trying to 
manage something, to have a stable funding source, correct?
    Mr. Gardner. Absolutely. And it is our number one priority. 
I mean, the challenge we face is that typically we start a 
Fiscal Year, we don't know, actually, how much funding we even 
have. Because of the timing of the appropriations process, it 
may be several months before we even know what our investment 
levels are. This is to run a, you know, several-billion dollar 
company handling 30 million folks a year. So, we're in a 
situation where we are having to anticipate and guess, frankly, 
what our levels of investment will be for projects that take 
many years, require us to procure and hire folks well in 
advance of available funding. It's, frankly, a incredibly 
inefficient way of----
    Senator Booker. And when you say that----
    Mr. Gardner.--to execute----
    Senator Booker. I'm done with my time, but I just wanted to 
say that--it actually creates inefficiency----
    Mr. Gardner. Absolutely.
    Senator Booker.--and often makes us make more costly 
decisions because you can't anticipate----
    Mr. Gardner. Absolutely.
    Senator Booker. My time is expired, Chairwoman. Thank you 
very much.
    Senator Fischer. Thank you, Senator Booker.
    Senator Blumenthal.

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

    Senator Blumenthal. Thanks, Madam Chair.
    Mr. Gardner, as you know, the FAST Act authorizes billions 
of dollars to improve our rail network, particularly in the 
Northeast, where you have an important say. And, in fact, the 
Senate transportation appropriations bill makes a downpayment 
on the FAST Act, providing a significant increase in Amtrak's 
funding, $30 million more than last year, all focused on 
building and reinvigorating an aging railroad that really 
requires this investment. It's not just spending, it's an 
investment, and it moves the economy, creates jobs, as well as 
improving transportation. So, for the first time ever, money 
that's earned by Amtrak is going to stay in the Northeast 
Corridor, which just happens to be the only profitable section 
of the entire network. And it should be put toward repairs and 
new building. Do we have your commitment that it will be?
    Mr. Gardner. Absolutely, Senator. The way that the FAST Act 
structures this is that we will use our ticket revenues, our 
other ancillary revenues, plus the Federal dollars that are 
provided for the Northeast Corridor, for investments in the 
Northeast Corridor. One of the important changes was to also 
allow us to use those dollars for both operating and capital 
expenses so that we can increase maintenance, when necessary, 
and we can also increase investment in capital infrastructure. 
So, we absolutely intend to comply with the FAST Act and use 
those dollars for investments there. And our focus is both on 
achieving and getting closer to a state of good repair and then 
improving and expanding capacity where we can.
    Senator Blumenthal. And can we get your commitment that you 
will work with us on a plan--right now, there is none--so that 
this rebuilding will be in a way that best serves our region?
    Mr. Gardner. Absolutely. We work on the capital program and 
plan--5-year plan and 1-year plan--through the NEC Commission, 
which includes the representation from all the States, the 
USDOT, and Amtrak. Together, we're building that plan that will 
guide our investments along with the investments of the other 
commuter railroads and States in that network.
    Senator Blumenthal. The Federal Railroad Administration has 
started a massive multi-million--maybe multi-billion dollar 
undertaking called NEC Future. You're familiar with it.
    Mr. Gardner. I am, sir.
    Senator Blumenthal. And the purpose is to develop a vision 
that will meet passenger rail needs going into 2040. 
Unfortunately, some of the ideas that we've seen proposed are, 
frankly, half-baked, harebrained notions that will never come 
to fruition, including rerouting Amtrak straight through the 
community of Old Lyme, Connecticut, and other shoreline 
communities, where there is strong, understandable, and well-
merited opposition. The FRA's time and money, in my view, would 
be better spent improving rail rather than on plans that have 
no realistic notion. I hope you'll agree with me that the 
tracks of Amtrak would never go through Old Lyme, Connecticut.
    Mr. Gardner. Well, Senator, I think--I can't speak for the 
FRA, who is leading the effort, but I do know that they are 
working closely with Old Lyme and with the state on addressing 
what I understand the community's concerns are as they consider 
a final environmental impact statement. We obviously will be 
subject to their outcome, but I know they are still in the 
process of undertaking it. And, even when that plan is done, 
there are several other hurdles about what would happen next.
    So, Amtrak will be guided by their work and others, but, at 
the moment, we, like everyone, is waiting for them to complete 
their work. They've certainly made it clear to us that they 
intend to find a workable solution in Connecticut.
    Senator Blumenthal. I hope, speaking for Amtrak, as you do 
now, that you would never go through a community like Old Lyme 
or any other where there was such strong and well-merited 
opposition, regardless of what the FRA's plan might be.
    Mr. Gardner. I think, from our perspective, the EIS, at 
this stage, is setting out a system view. They'd have to--to 
plan any kind of actual improvements, we'd have to go through a 
subsequent environmental process, which----
    Senator Blumenthal. Well, just----
    Mr. Gardner. Yes.
    Senator Blumenthal.--to interrupt you for a moment. I 
realize that you have a process and an environmental review and 
so forth, but you also have customers.
    Mr. Gardner. Absolutely.
    Senator Blumenthal. And if your customers are telling you 
they don't want that route, I would hope that you would follow, 
or at least heed and respect, your customers' views. And 
they're not just customers in Old Lyme or the shoreline 
communities; they would be customers throughout the state of 
Connecticut.
    Mr. Gardner. Senator, yes. Our--the process we would have 
to use to build anything, to change the location of our tracks, 
would be a very detailed environmental process, where we engage 
the communities that are impacted, and we listened to them, and 
took their views into consideration. So, we would always go 
through that process and be subject to it, and make sure we end 
up with a solution that works. So, you have our commitment to 
always do that at every step.
    Senator Blumenthal. Thank you. I appreciate your being 
here, and appreciate your very forthcoming answers.
    Thank you.
    Mr. Gardner. Thank you.
    Senator Fischer. Thank you, Senator Blumenthal.
    Senator Klobuchar.

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

    Senator Klobuchar. Well, thank you very much.
    I've sort of--I'll start out with something of a Midwest 
question, here, since Senator Booker was mentioning Deb Fisher 
in the Midwest. So, like Nebraska, we have a huge amount of 
freight rail, some because of North Dakota and oil production 
there, some because of Canada, and some because of agriculture. 
We're the fifth biggest ag state in the country. And so, of 
course, I've heard a lot of concerns from communities that 
simply don't have the capacity to prepare for a spill or any 
kind of a derailment. And they're very concerned about that. 
We've obviously had a number of them in our state.
    Mr. Eggermann, what more can be done to ensure that our 
transportation infrastructure and the rail tank cars that 
travel on it are as safe as possible?
    Mr. Eggermann. The transportation infrastructure---- we 
want the safest infrastructure, we want the safest rail tank 
cars. The routing authority really is out of our hands. This is 
in the railroad's desk to make their views of what's the most 
efficient and most safest, so we'll follow their lead. In terms 
of tank cars, likewise, we think the FAST Act enhancements have 
done a great deal to improve. We think to have, in the future, 
a risk-based focus so that any future changes are pointed 
toward those areas that would yield the greatest benefit. We 
think that's important. And, you know, it's--we are anxious to 
be a partner in continuing to grow these areas, going forward.
    Senator Klobuchar. OK. Thank you.
    As we know, PTC holds great promise to reduce the number of 
train incidents caused by human error. And, according to the 
FRA, from 2005 to 2014, there were an average of more 1600 
derailments and 176 collisions per year, and that actually 
doesn't even include the highway rail crossings.
    Mr. Gardner, what do you think the biggest challenges that 
passenger railroads face in implementing PTC?
    Mr. Gardner. Senator, thank you. I think our---- we've, of 
course, as you know, worked hard to implement our own system 
here.
    Senator Klobuchar. Yes.
    Mr. Gardner. But, we are, frankly, beholden to the 
timetable of the rest of the national network and our host 
freight railroads in advancing the remainder of PTC across our 
system. We've worked to upgrade and prepare our equipment for 
that system. But, there is significant work ahead. And I think, 
obviously, the committee has provided additional time for that 
work to be undertaken.
    Senator Klobuchar. And, Mr. Ottensmeyer, do you see any 
obstacles for freight rail to meet the new PTC implementation 
deadline?
    Mr. Ottensmeyer. I'm having technical problems.
    Senator Klobuchar. Just maybe borrow one----
    Mr. Ottensmeyer. OK.
    Senator Klobuchar.--from your neighbor.
    Mr. Ottensmeyer. Senator, we, again, appreciate the work 
that the committee did in extending the deadline to make it 
possible for us to implement the technology that is still 
evolving. The short answer to your question is technology and 
making sure that the technology, as we implement it and test 
it, that it works properly. We are confident that--at our 
railroad, that we will be able to comply with the current 
deadlines for our own implementation. Testing is going well at 
this point, but we are very dependent and reliant on outside 
vendors and technology that is obviously very new. And then the 
issue of interoperability, which affects Amtrak and the other 
railroads across the network, is also going to be a challenge 
to get everything done under the current deadlines.
    Senator Klobuchar. OK. Well, I'll follow up with you maybe 
more in writing on that, but--obviously, we really want to get 
this implemented.
    Mr. Ottensmeyer. As do we.
    Senator Klobuchar. OK.
    Major Thompson, just one last question on distracted 
driving, which you briefly mentioned. I've been working this 
issue for quite a while, and we got some provisions in the FAST 
Act. But, what more can we do to reduce distracted driving by 
operators of commercial vehicles?
    Major Thompson. Thank you, Senator, for your question. I 
truly believe that what we're seeing is, the distracted driving 
issue is more on noncommercial vehicle drivers versus the 
commercial vehicle. We do still have a small percentage of 
commercial vehicle drivers that are utilizing devices that they 
shouldn't. But, we have got to reach out to the younger 
generation, to schools, Share the Road, you know, just----
    Senator Klobuchar. Yes, you probably know eight--and again, 
it's more passenger, you're right. And I don't know the exact 
figures on commercial. Maybe you do. But, eight people die a 
day, and more than 1,000 are injured a day in crashes involving 
distracted driving. So--and, of course, you--I mean, you know--
--
    Major Thompson. Sure. And I can tell you just one issue--
one small thing that we're doing--it's just a small thing--one 
life matters, every lives matter--so, we're actually putting 
officers in undercover vehicles, driving in buses and 
commercial motor vehicles, driving up and down the road, 
identifying those people that are texting and talking instead 
of paying attention. And so, we've got to make a difference, 
we've got to make our point that, when you're driving, you need 
to be paying attention to what you're doing.
    Senator Klobuchar. Thank you very much.
    Major Thompson. Thank you.
    Senator Fischer. Thank you, Senator.
    Senator Daines.

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

    Senator Daines. Thank you, Madam Chair.
    And thank you for testifying today. I come from the State 
of Montana. We have an extensive transportation system. It's 
truly the pillar of our economy, allows our residents, 
visitors, freights, and energy resources to traverse our vast 
State. We don't have a port on any of our borders. The 
transportation sector, in fact, moving people and goods, 
directly employs about 20,000 Montanans. It allows 14,000 
Montanans who were employed in the energy sector to get their 
products to market. It also allows tourists to come out to 
Montana. In fact, as a avid outdoorsman, myself, our beautiful 
mountains, our streams, it supports about 53,000 Montanans.
    A question, though, first for Mr. Ottensmeyer. You 
mentioned decreasing demand for coal in your industry. This 
hits close to home. It impacts the livelihoods of a lot of 
Montanans. The state of Montana has the largest recoverable 
coal reserves of any state in these United States. We've got 
vast potential for energy production, for job growth. However, 
we've seen the volume of coal on trains decrease over 30 
percent in the first quarter of the year. How has the 
administration's attack on the coal industry affected Kansas 
City Southern's business? And how has it impacted rail 
infrastructure investment and jobs?
    Mr. Ottensmeyer. Senator, our coal business, as the rest of 
the industry, is down considerably. Our coal business is 
smaller than the other railroads. We do not originate any coal. 
All of the coal that we handle is originated in Wyoming and 
Montana on the BN and the UP systems, and then comes to us in 
Kansas City, where we deliver it to utilities that are 
located--powerplants that are located on our network primarily 
in the Gulf--Texas, Louisiana, and--in that part of our 
network.
    There are a lot of factors that have caused the decrease in 
coal. Certainly, low natural gas prices are one of the larger 
factors. Certainly, environmental--new environmental 
regulations as we are hearing from our customers. I'd say it's 
a combination of factors.
    With the low price in our market--with the abundance of 
natural gas and the low price of natural gas, the economics of 
producing electricity from coal in this market are not 
compatible or adequate to support the investment that would be 
required to comply with environmental regulations.
    Senator Daines. You know, on another energy commodity 
recently, Washington Governor Inslee called for the FRA to 
mandate that a rail inspector physically walk every mile of 
rail carrying Bakken oil. Let me say that again. Every mile of 
rail, to walk it. Just across Montana, that's 700 miles. To put 
that in perspective, you can put Washington, D.C. in one corner 
of Montana and Chicago in the other. It's vital that we move 
these commodities. It's vital we move them safely. While you 
don't carry Bakken oil, is this idea from the Governor 
achievable or a prudent use of safety resources?
    Mr. Ottensmeyer. Senator, I would say it's impractical to 
expect that every mile of track would be inspected by a person 
walking the track and keeping the rail network moving 
efficiently and fluidly.
    Senator Daines. Mr. Gardner, your testimony, you 
highlighted that Amtrak serves 40 percent of our Nation's rural 
population. The Empire Builder provides this critical 
connectivity across Montana's high line. That's how my Montana 
ancestors came out from Minnesota, Norwegians, on the Empire 
Builder to Shelby. But, you talked about an opportunity to 
expand service to the city of Culbertson. You've been involved 
in the development process of Chicago's Union Station. What has 
this process taught you about station development in the 
communities which are in between urban centers?
    Mr. Gardner. Thank you, Senator, for the question.
    You're correct, we've been working with Culbertson and the 
city there to look at opportunities. We've been involved at a 
series of efforts to look at Amtrak's assets out of the 
stations we own, primarily, and explore opportunities to both 
grow patronage and improve performance at those facilities 
while also making use of our assets to help generate additional 
capital so that we can invest that capital back into our 
network.
    I think the work we've done at our major facilities have 
shown us just how important stations can be, in terms of both 
creating valuable economic nodes in a community and also 
growing the kind of business and ridership that we need over 
the long term.
    So, while we've been primarily focused on these major 
stations that we own, I think, generally, the--what we have 
seen--and we've seen this throughout our network at smaller 
stations--is that investments in these facilities pay off. They 
pay off in many respects for the communities that take a 
leadership there, in terms of growing the communities, access 
to transportation, and creating new economic opportunity.
    Senator Daines. You know, I was struck that a previously 
completed Amtrak feasibility study indicated that reinstating 
service to Culbertson would have a net positive financial 
impact for Amtrak.
    Just last follow-up question there. How will the route 
planning study incorporate these previous feasibility studies?
    Mr. Gardner. So, we will certainly look at--as we work with 
any community, we look at the feasibility work of establishing 
a station stop, of the potential capital costs and other 
elements to actually provide the infrastructure necessary. And 
we do revenue and ridership analysis. We will always look at 
the work we've done preceding any analysis. And I think our 
focus now is working with the community to find possible 
avenues of grant funding or other ways to make improvements 
there and to working with the host railroad, BNSF, on funding a 
complementary suite of investments that could work with their 
system.
    Senator Daines. Thank you.
    Thanks, Madam Chair.
    Senator Fischer. Thank you, Senator Daines.
    Senator Moran.

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

    Senator Moran. Madam Chairman, I know you want to conclude 
by 3:30, and I have no questions.
    Senator Fischer. Thank you.
    If there's no objection, I'm going to ask just a couple of 
questions, in case there are members out there who are trying 
to get to the hearing before the votes. And, Mr. Eggermann, 
you're the lucky guy who gets to answer them.
    [Laughter.]
    Mr. Eggermann. Thank you.
    Senator Fischer. I would ask you--in your written 
testimony, you referenced the Transcare Hazardous Material 
Transportation Training Program that we put in place for our 
emergency responders. And could you provide the subcommittee 
with more information how this program does prepare our 
emergency responders with tools to better help them handle 
those incidents with HAZMAT emergencies, please?
    Mr. Eggermann. Absolutely. So, Transcare has volunteers 
across the country. Their focus is on training local community 
leaders, running drills, and so on, actually bringing tank cars 
in that have supplemental leaks, and so on, to put them through 
what they would go through in real-life incidents. So, it's 
really to communicate, inform, and enhance the ability of 
communities, along with CHEMTREC, to react to incidents as they 
come up. And the FAST enhancement that--by the way, that also 
provides for railroads to furnish train consist information. We 
think that will definitely further that end.
    Senator Fischer. OK. And also, you are the world's main 
manufacturer of chemical products. And I would ask, What are 
some of the challenges that your company faces when you look at 
being able to transport the materials that you produce?
    Mr. Eggermann. Right. Well, thank you for that. Again, I 
think, as I highlighted in the testimony, some of the 
improvements of FAST specifically around the tank car 
structure, the safety enhancements, very positive. But, in the 
future, changes like that and any other proposals--again, if 
they could be risk-based--so, if we--rather than a general 
view, if we have a series of incidents, and those incidents are 
focused around one commodity, for example, we would ask that 
careful oversight take that into account, that there isn't a 
generalized movement forward when new rules are put in place. 
And again, as incidents--unfortunately, as they occur, that the 
root causes, beyond simply tank cars, be more carefully taken 
into account, as I'd hinted at.
    Senator Fischer. OK. Thank you very much.
    Mr. Eggermann. Thank you.
    Senator Fischer. Senator Booker, did you have any further 
comments?
    Senator Booker. No further comment.
    Senator Fischer. With that, I would like to thank all of 
our panel for coming today for this hearing.
    And the hearing record will remain open for 2 weeks. During 
this time, Senators are asked to submit any questions for the 
record. Upon receipt, the witnesses are requested to submit 
their written answers to our Committee as soon as possible.
    Again, thank you, gentlemen, for being here today.
    We are adjourned.
    [Whereupon, at 3:30 p.m., the hearing was adjourned.]

                            A P P E N D I X

    Response to Written Question Submitted by Hon. Amy Klobuchar to 
                           Stephen J. Gardner
    Question. The Winona Amtrak Station is a critical component of 
Southeastern Minnesota's transportation network. With more than 20,000 
boardings and alightings annually, the station is the second busiest in 
the state behind only the St. Paul-Minneapolis station. I recently 
wrote a letter signed by Senator Franken and Representative Walz urging 
reconsideration of Amtrak's proposed closure of the Winona Amtrak 
station. I am pleased to see the station will remain open, but am 
hopeful that full service can be restored to this important regional 
hub.
    Mr. Gardner, what plans does Amtrak have to ensure quality services 
for its passengers at regional stations like the one in Winona, 
Minnesota?
    Answer. Senator Klobuchar, thank you for your support. Amtrak 
contacted the City of Winona well in advance of the change in staffing. 
We worked closely with them to provide an orderly transition. We wanted 
to make sure they understood the reasons for the change and that it in 
no way puts this stop in jeopardy. Staff from both Senate offices and 
one of the local congressmen attended one of the meetings.
    Amtrak is making extensive upgrades to the Amtrak station in 
Winona, Minnesota. These upgrades will allow for an ADA-compliant path 
of travel from parking lot to station to train and other improvements 
valued at just over $992,000. We understand the particular importance 
of such upgrades to a community like Winona, which sees significant 
traffic to and from the Mayo Clinic, located in Rochester, Minnesota.
    In Winona, Amtrak agreed to institute a ``Caretaker+'' service in 
the short term in place of a ticket agent. Under ``Caretaker+'', 
employees of a temporary employment service open and close the station 
an hour before and an hour after train arrival and departure and 
provide train information and answer others questions from passengers 
or visitors. In addition, since this is a crew change point there will 
be uniformed personnel at the station in addition to the caretaker. 
Train-side checked baggage is still available at Winona Station.
    While the need of an Amtrak ticket agent at most stations 
materially and permanently changed with the advent of electronic 
ticketing, we aim to appropriately staff those stations when passenger 
volume makes such staffing necessary and our funding levels permit it. 
In order to facilitate this outcome, earlier this year Amtrak brought 
to Winona a volunteer from Kirkwood, Missouri to present their 
experience and community plan. Kirkwood's response when their ticket 
agent left was to develop a successful station host and volunteer 
program. We know that nobody can represent a station better than the 
communities the station serves. Amtrak stands ready to assist any of 
our 500+ communities in their development of a station host and 
volunteer program, and we will continue to assist Winonans to develop 
such a program for their community.

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