[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
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PUBLISHING OFFICE
21-940 PDF WASHINGTON : 2016
________________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
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\
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\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
---------------------------------------------------------------------------
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.
[all]