[Senate Hearing 114-386]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 114-386

                         KEEPING GOODS MOVING 
                         IN AMERICA'S HEARTLAND

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

                              FIELD 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

                               __________

                              MAY 2, 2016

                               __________

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

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                   JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
DEAN HELLER, Nevada                  JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               GARY PETERS, Michigan
STEVE DAINES, Montana
                       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 May 2, 2016......................................     1
Statement of Senator Fischer.....................................     1

                               Witnesses

Kyle Schneweis, Director, Nebraska Department of Roads...........     4
    Prepared statement...........................................     6
Donald E. Overman, Chairman of the Board, Airport Authority, 
  County of Scottsbluff, Nebraska................................     9
    Prepared statement...........................................    10
Deb Cottier, Executive Director, Nebraska Northwest Development 
  Corporation; Member, Board of Directors, Heartland Expressway 
  Association; and Member, Ports-to-Plains Alliance..............    11
    Prepared statement...........................................    13
David Freeman, Senior Vice President, Transportation, BNSF 
  Railway Company................................................    27
    Prepared statement...........................................    28
Kevin Kelley, President, Kelley Bean Company.....................    37
    Prepared statement...........................................    39
Richard B. Brent Holliday, Jr., Chief Executive Officer, Nebraska 
  Transport Company..............................................    40
    Prepared statement...........................................    42

                                Appendix

Addendum to Statement of Deb Cottier on Behalf of Nebraska 
  Northwest Development Corporation, a member of the Heartland 
  Expressway 
  Association and the Ports-to-Plains Alliance...................    63

 
                   KEEPING GOODS MOVING IN AMERICA'S HEARTLAND

                              ----------                              


                          MONDAY, MAY 2, 2016

                               U.S. Senate,
         Subcommittee on Surface Transportation and
            Merchant Marine Infrastructure, Safety and Security,   
        Committee on Commerce, Science, and Transportation,
                                                   Scottsbluff, NE.
    The Subcommittee met, pursuant to notice, at 10:01 a.m. in 
the Plex Room, the Harms Advanced Technology Center, 2620 
College Park, Western Nebraska Community College, Hon. Deb 
Fischer, Chairman of the Subcommittee, presiding.
    Present: Senator Fischer [presiding].

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

    Mrs. Fischer. Good morning, everyone. I am so pleased to be 
here in beautiful Scottsbluff, Nebraska for today's Surface 
Transportation and Merchant Marine Infrastructure, Safety and 
Security field hearing.
    Our hearing is entitled ``Keeping Goods Moving in America's 
Heartland.'' I am grateful to the Senate Commerce Committee 
Chairman, John Thune, our neighbor in South Dakota, for 
providing me with the opportunity to convene this hearing and 
bring the U.S. Senate here to Scottsbluff.
    Western Nebraska values safe, efficient, and reliable 
infrastructure, which is critical to the local economy. A 
robust transportation system requires well-maintained roads, 
bridges, railways, and highways to bring our goods to market. 
Without it, manufacturers, agriculture producers, and 
businesses of all sizes cannot offer their products 
domestically or around the world.
    As many of you are aware, Congress passed an important 
five-year highway bill at the end of last year known as the 
Fixing America's Surface Transportation, or the FAST Act. I was 
proud to work with my colleagues on this bipartisan legislation 
and usher in the first multi-year transportation bill in over a 
decade. Accomplishing a long-term highway bill was one of my 
key goals since joining the United States Senate, and I am 
proud to see this victory achieved for the American people.
    The common theme regarding the highway bill is certainty. 
For nearly a decade, Congress was forced to pass 36 short-term 
extensions. Congress kicked the can down the road for 8 years, 
leaving infrastructure projects across the country in limbo. 
With the passage of the FAST Act, states and localities will 
now have certainty to plan and implement projects for the next 
5 years.
    Since my time in the Nebraska Unicameral, I have made 
funding of transportation infrastructure a top priority. Two of 
my accomplishments in the Unicameral were the Build Nebraska 
Act and the State/Federal Dollars Buy-Back Program. Both of 
these laws have led to increased investment for Nebraska's 
infrastructure and have helped local communities start and 
complete vital transportation projects such as the Heartland 
Expressway.
    I brought those Nebraska commonsense solutions with me to 
help craft the Senate's highway bill. I was pleased that 
Nebraskans played a strong role by providing important guidance 
to my office. I have also encouraged key stakeholders from 
Washington to visit Nebraska. Last year I welcomed U.S. 
Transportation Secretary Anthony Foxx to Lincoln, where we 
convened a roundtable at the University of Nebraska Lincoln's 
Transportation Research Center. We were joined there by local 
transportation stakeholders representing the railroad, highway, 
construction, trucking, passenger automobile, and aviation 
industries.
    At this important meeting and at my many listening sessions 
across the state, the message from Nebraskans was loud and 
clear: Our businesses, consumers and families wanted a long-
term highway bill. They advocated for legislation that reduces 
regulatory burdens, strengthens safety, and increases 
flexibility for our state and our local officials.
    I was pleased to be appointed as a member of the Highway 
Bill Conference Committee, which worked to combine the House 
and the Senate versions in order to craft that final bill. The 
bill includes several provisions which I was proud to author 
and enact in the final legislation. For example, as Chairman of 
the Surface Transportation Subcommittee, I drafted provisions 
to reform the regulatory framework at the Federal Motor Carrier 
Safety Administration, or the FMCSA, which has jurisdiction 
over commercial vehicle safety and operations.
    Commercial carriers and businesses across our state will 
benefit from increased participation, clarity, and also 
transparency within the obscure and the often controversial 
regulatory process at the FMCSA.
    The FAST Act, it also corrected a flawed FMCSA truck safety 
scoring program that stakeholders, including law enforcement 
organizations, were sharply criticizing. Erroneous scores had 
prompted frivolous litigation and caused carriers to lose 
longstanding business contracts.
    Another provision will provide more career opportunities 
for military veterans. Under a new commercial driver pilot 
program, younger returning veterans with commercial driver's 
licenses, those CDLs, will be allowed to operate commercial 
freight vehicles across state lines. This will help to address 
our Nation's serious truck driver shortage while also providing 
work opportunities for those who have served our Nation.
    The FAST Act also offers regulatory relief for agriculture 
producers who transport diesel fuel for equipment. It offers an 
exemption for agricultural retailers, employees, and producers 
from obtaining a hazardous materials driver's license. They 
will no longer require this license when transporting 1,000 
gallons or less of diesel fuel if the container is clearly 
marked ``diesel fuel.''
    Nebraskan families, workers and businesses will soon see 
new highway projects up and running at a faster pace as well. 
This is due to provisions that I championed in the FAST Act 
that will enable stronger coordination between the Nebraska 
Department of Roads and the Federal Highway Administration. In 
key elements of our infrastructure such as rail at grade 
crossings and bridges, they will also see increased investment 
at a faster pace.
    Under this legislation, rural communities in our state will 
have additional opportunities for resources to maintain bridge 
infrastructure through a new streamlined discretionary freight 
grant program. It includes a 20 percent rural and small-project 
set-aside. According to the Department of Roads, Nebraska has 
nearly 3,000 rail grade crossings eligible for public funding. 
The FAST Act will strengthen the resources flowing to states 
like Nebraska to enhance the safety of at-grade rail crossings. 
The FAST Act will assist our railroads and rail workers by 
providing additional oversight of the Federal Railroad 
Administration, or the FRA, as it works with railroads on 
positive train control implementation. The FRA will also be 
required to clarify the safety benefits of the multi-billion-
dollar electronic braking mandate that was released last year.
    The FAST Act will provide vital transportation resources 
for localities throughout our country, including our rural 
communities here in Western Nebraska. Specifically, it includes 
a new national strategic freight program which will help our 
state prioritize freight traffic and increase safety. The 
program provides states with discretion to direct new funds to 
rural and urban freight corridors with higher commercial 
traffic.
    As states work to develop their freight plans and designate 
corridors, local public and private transportation stakeholders 
across all modes will have the opportunity to participate and 
to provide that valued feedback. First and last mile connectors 
for freights at airports, trucking facilities and rail yards 
will also be eligible for increased investment under this 
national freight program.
    There is still much more work ahead for us as the FAST Act 
takes effect. During our hearing this morning, we will focus on 
the implementation of the highway bill. I hope we can spend 
time focusing in particular on rural transportation and the 
multimodal freight policy program.
    I'm eager to hear your ideas about how Congress can 
continue to strengthen our Nation's transportation system not 
only for our cities and our urban areas but also for rural and 
small communities.
    I would like to thank each member of our panel for taking 
the time out of your work week to be here at this Senate 
hearing. It is an honor to have you before this committee to 
discuss these important matters.
    Our strong panel includes public and private-sector 
representatives from the infrastructure, trucking, agriculture, 
and railroad sectors. We will hear from Nebraska's Director of 
the Department of Roads, Kyle Schneweis--I never get that 
right--Director Schneweis. Mr. Schneweis has worked on a number 
of key initiatives to strengthen Nebraska's transportation 
system. I would also like to point out that the Director and 
his team were critical in guiding my staff as we worked on the 
FAST Act. Thank you.
    We also welcome Deb Cottier, who is currently the Director 
of the Northwest Nebraska Development Corporation in Chadron. 
She has been a strong advocate of completing the Heartland 
Expressway in Western Nebraska, and I am grateful for the 
advice she has provided to my office. We've enjoyed a strong 
working relationship, particularly in developing the highway 
bill. Thank you.
    Grant Holliday is the Chief Executive Officer of the 
Nebraska Transport Company in Gering, Nebraska, which is a 
member of the American Trucking Association. In 1973, the 
Nebraska Transport Company was started with one truck. Today it 
operates with terminals across the Midwest and elsewhere, and I 
look forward to hearing from Mr. Holliday this morning 
regarding the challenges and opportunities facing the trucking 
industry. Thank you.
    Don Overman is the Chairman of the Scottsbluff Western 
Nebraska Regional Airport, and I want to thank Don for his 
crucial insight as we worked on the Senate's bill to 
reauthorize the Federal Aviation Administration. That 
legislation passed the Senate last month. Thank you. Together, 
we were able to secure critical funding for Nebraska's rural 
airports, including a vital provision to ensure that 
Scottsbluff continues to receive airport improvement program 
dollars despite downturns in the annual enplanements. I look 
forward to hearing Don's perspective regarding the airport's 
economic impact for passengers and cargo movements.
    Agriculture stakeholders are being represented today by Mr. 
Kevin Kelley, the President of Kelley Bean Company. Kelley Bean 
was founded in 1927 and sells dry edible beans to global 
markets. Reliable and efficient transportation is critical to 
the company's business model, and it is a privilege to hear 
your perspective as a client of our nation's freight 
transportation system. So, welcome.
    The railroad industry is represented this morning by David 
Freeman, Senior Vice President for Transportation at Burlington 
Northern Santa Fe Railway. Railroads are integral to Nebraska's 
heritage and critical to both the national economy and our way 
of life in this country. We are truly blessed to have the 
world's finest freight rail network. With two major freight 
railroads operating here in Nebraska, I am especially glad to 
hear your remarks about the state of railroads today. Thank 
you.
    Thank you all again for your attendance, and with that I 
would like to begin with your testimonies.
    And we will begin with you, Mr. Director. Welcome.

            STATEMENT OF KYLE SCHNEWEIS, DIRECTOR, 
                  NEBRASKA DEPARTMENT OF ROADS

    Mr. Schneweis. Thank you, Senator Fischer. I am Kyle 
Schneweis, Director of the Department of Roads here in 
Nebraska. Thank you for the opportunity today to testify 
regarding the impact of freight transportation on rural 
economies.
    As I traveled Nebraska in my first year as director, I 
heard a lot of excitement about the FAST Act, and this 
legislation really puts America's surface transportation on 
sound footing for the next 5 years. It's a real testament to 
our congressional leaders and a commitment to infrastructure in 
our country.
    Here in Nebraska we are particularly proud of your tireless 
efforts on the Commerce, Science and Transportation Committee 
and the Environment and Public Works Committee. So, thank you, 
Senator Fischer.
    We also appreciate Chairman Thune's interest in promoting 
freight improvements by holding the Subcommittee field hearing 
here in Nebraska today.
    The FAST Act is truly significant in that for the first 
time, formula funding for state DOT freight programs will be 
provided. Over $1 billion is being distributed annually to 
states by the Federal Highway Administration. Here in Nebraska, 
we will receive $8.2 million this Fiscal Year alone. In 
accordance with Federal regulations, these new funds will be 
applied to a wide range of projects and improvement on our 
highway system, including highway and rail grade separations, 
bridge improvements, other capacity projects, and operational 
needs.
    The FAST Act also provides discretionary funding with the 
Nationally Significant Freight and Highway Projects program, 
dubbed ``FASTLANE'' by USDOT. This provides further 
encouragement to us here in Nebraska of Congress's commitment 
to improving our infrastructure, and we at NDOR have taken the 
necessary steps to try to benefit from these advancements.
    These national advancements come at a time where, in 
Nebraska, NDOR is working to improve its strategic approach to 
how infrastructure advancements are made at the state and the 
local level. The Build Nebraska Act, the Transportation 
Innovation Act, both of these include increased emphasis on 
innovation and finding ways to link economic development and 
improve partnerships to positively impact customer satisfaction 
here in Nebraska.
    For the first time we are incorporating public input and 
economic impacts into our project prioritization process. In a 
way, we are rewriting the book on project selection to ensure 
that there is local buy-in, which specifically helps draw out 
the rural concerns that can impact the flow of freight in our 
communities.
    As you know, Senator Fischer, everything is local in 
Nebraska, and most of these local concerns are impacted by the 
challenges in our rural communities. And when it comes to 
freight challenges, we don't have the same sorts of challenges 
that some of our friends in more urban and coastal states face. 
We don't have the congestion and the bottleneck issues. What we 
have are access issues and activity issues. Safety is always a 
concern. We have the challenge of preserving a very large and 
extensive transportation network.
    So we are in the process of developing a freight plan for 
our state that will help provide a way forward and guide us as 
we look to improve our freight network to better meet these 
challenges. We don't need a freight plan, though, to know how 
important Nebraska is to the nation's transportation network 
with our geographic central location and our resources. We play 
a key role in the movement of freight in our country. We have 
I-80 running east and west for the length of states providing 
coast-to-coast travel for trucks and commodities. UP, the Union 
Pacific and BNSF Railroad main lines serve the nation, with 
arteries right through our state. We have an extensive highway 
network outside of I-80 and short-line rail networks that 
provide connectivity. We have barge terminals on the Missouri 
River and Eastern Nebraska that connect to the Mississippi 
River system. We have inland waterways and ports. And finally, 
we have the headquarters of major freight companies, like the 
Union Pacific and Werner Enterprises Trucking, and many other 
transportation companies.
    For a state where agriculture is our number-one industry 
and the manufacturing sector has over 1,800 establishments, 
transportation flow and commodity mobility are at the heart of 
our economic growth. As our economy grows, we must be able to 
handle the new demands on transportation. National freight 
tonnage is projected to grow by 42 percent by 2040. Preparing 
for this growth will take a thoughtful and focused approach.
    Thanks to the FAST Act and the recent state initiatives 
like the Build Nebraska Act, the Transportation Innovation Act, 
we are really laying the pavement for exciting new advancements 
in freight mobility.
    The emphasis on access and connectivity really stresses our 
understanding of the rural landscape here in Nebraska and the 
commitment to growth through partnerships and economic 
opportunities.
    So thank you again, Senator Fischer, to the Subcommittee on 
Surface Transportation and Merchant Marine Infrastructure, 
Safety and Security, and my fellow stakeholders, for the 
opportunity to share NDOR's path forward with regard to the 
FAST Act. As we move forward, we are confident that our unique 
assets will align well with the key national networks such as 
the primary highway freight system and the national highway 
freight network.
    The Nebraska way is to take a right-sized approach to 
involving all of our partners from industry, agriculture, 
state, local, and Federal partners, and we look forward to 
implementing the FAST Act and other policies as we move 
forward. So, thank you for the opportunity.
    [The prepared statement of Mr. Schneweis follows:]

            Prepared Statement of Kyle Schneweis, Director, 
                      Nebraska Department of Roads
    Senator Fischer, members of the Committee, thank you for the 
opportunity to testify today regarding the impact of freight 
transportation on rural economies.
    As I traveled Nebraska in my first year as Director of the Nebraska 
Department of Roads (NDOR), I heard excitement from Nebraskans about 
the recent enactment of the Fixing America's Surface Transportation 
Act, or FAST ACT. This legislation put America's surface transportation 
on sound footing for five years. It's a real testament to our 
Congressional leaders' commitment to infrastructure. Here in Nebraska 
we are particularly proud of Senator Deb Fischer's tireless work on the 
Commerce, Science and Transportation Committee and the Environment and 
Public Works Committee. We also appreciate Chairman Thune's interest in 
promoting freight improvement by holding this Subcommittee field 
hearing in Nebraska today.
    The FAST Act is truly significant in that for the first time, 
formula funding for State DOT Freight programs will be provided. Over 
$1 billion is being distributed to States annually by the Federal 
Highway Administration. The NDOR will receive $8.2 million in Fiscal 
Year 2016. In accordance with Federal regulations, these new funds will 
be applied to a wide range of improvements to our highway system, 
including railway-highway grade separations, bridge improvements and 
many other freight capacity and operations enhancements.
    The FAST Act also provides discretionary funding through the new 
Nationally Significant Freight and Highway Projects program, dubbed 
``FASTLANE'' by U.S. DOT. Nebraska is encouraged by Congress' 
commitment to improving our Nation's infrastructure and is taking the 
necessary steps to benefit from these advancements.
    These national advancements come at a time where NDOR is also 
working to improve its strategic approach to how infrastructure 
advancements are made at the state and local level. The Build Nebraska 
Act and the Transportation Innovation Act both include increased 
emphasis on finding innovative ways to examine how economic development 
and partnership alliances can positively impact stakeholder and 
customer satisfaction. For the first time, we are incorporating public 
input and economic impacts into our project prioritization process.
    In a way, we are rewriting the book on project selection to ensure 
there is local buy-in which specifically helps draw out rural concerns 
that can impact the flow of freight within our communities. As Senator 
Fischer knows, everything is local in Nebraska and most of those local 
concerns are impacted by rural challenges.
    When it comes to freight challenges, we don't face the congestion 
and bottleneck issues that more urban coastal states face. Our 
challenges are related more to access, connectivity, safety, and 
preservation of an expansive transportation network. NDOR is in the 
process of developing a state freight plan that will provide a guide 
forward as we look to improve our freight network to better meet these 
challenges.
    A freight plan isn't required, however, to recognize that Nebraska, 
with our geographically central location and resources, plays a key 
role in the movement of freight in our country. For example:

   Nebraska has the I-80 corridor running east-west through the 
        length of the state for coast-to-coast trucking and travel.

   The Union Pacific and BNSF railroads' main lines likewise 
        serve the Nation with arteries through Nebraska.

   We also have important north-south highway and rail service 
        as well, along with short-line rail networks.

   Barge terminals on the Missouri River in eastern Nebraska 
        connect to the Mississippi River System's inland waterways and 
        ports.

   Finally, Nebraska features the headquarters of major freight 
        companies like the Union Pacific, Werner Enterprises trucking, 
        and many other transportation and logistics companies.

    For a state where agriculture is our number one industry and the 
manufacturing sector has over 1800 establishments in the state, 
transportation flow and commodity mobility are at the heart of our 
economic growth.\1\ As our economy grows, we must be able to handle new 
demands on transportation. National freight tonnage is projected to 
grow 42 percent by 2040--preparing for this growth will take a 
thoughtful, focused approach.\2\ Thanks to the FAST Act and recent 
major state initiatives like the Build Nebraska Act and the 
Transportation Innovation Act, Nebraska is laying the pavement for 
exciting new advancements in freight mobility. The emphasis on access 
and connectivity stresses Nebraska's understanding of its rural 
landscape and commitment to growth through partnerships and economic 
opportunity.
---------------------------------------------------------------------------
    \1\ Nebraska Department of Economic Development, 2014 General 
Manufacturing Statistics
    \2\ National Freight Strategic Plan (Draft), U.S. DOT (2015)
---------------------------------------------------------------------------
    Thank you again to Senator Fischer, the Subcommittee on Surface 
Transportation, Merchant Marine Infrastructure, Safety, and Security, 
and my fellow transportation industry stakeholders for the opportunity 
to share NDOR's way forward in regards to the FAST Act. As we move 
forward, we are confident that Nebraska's unique assets will align well 
with key national networks such as the Primary Highway Freight System 
(PHFS) and the National Highway Freight Network (NHFN). The ``Nebraska 
way'' is to take a right-sized approach and to involve our partners 
from industry, agriculture, academia and state and local government.
                               Background
FAST Act Freight Funds
   Nebraska will have $8.2 million in FY16, the first year of 
        this on-going program. These new funds can be applied to a wide 
        range of improvements to our highway system, including railway-
        highway grade separations, bridge improvements and many other 
        freight capacity and operations enhancements.

   The Act directs States to have a State Freight Plan in place 
        by December 2017.
FASTLANE Application
   NDOR filed an application on April 12, 2016 for FASTLANE 
        funding for grade separations along the Union Pacific mainline 
        in Columbus, a thriving industrial and commercial center in 
        northeast Nebraska that is served by expanding expressways 
        along US-81 and US-30.

   This application falls under the Small Projects category of 
        FASTLANE and the improvements will resolve safety issues and 
        bottlenecks on local thoroughfares in Columbus. Even though the 
        State Highway System won't be the beneficiary, we at NDOR are 
        proud to partner with the city and the railroad to bring about 
        those improvements for the benefit of the community, the region 
        and the freight network.
State Freight Plan
   In general; Nebraska must have a freight plan to receive 
        various freight formula funds. A plan also increases possible 
        eligibility for freight grants. A freight advisory committee is 
        not required but encouraged. The State Freight Plan will be in 
        place by December 2017 to comply with FAST Act mandates.

   Nebraska has and continues to be proactive in the 
        transportation industry. I am looking forward to building upon 
        our team's base of freight policy knowledge as we move forward 
        with drafting and implementation of the plan.

   Requirements for a freight plan include:

     Freight system trends, needs, and issues

     A description of the freight policies, strategies, and 
            performance measures that will guide the freight-related 
            transportation investment decisions of the State

     A description of how the plan will improve the ability 
            of the State to meet the national freight goals

     Consideration of innovative technologies and 
            operational strategies

     Description of improvements that may be required to 
            mitigate the deterioration of roadways that are projected 
            to substantially deteriorate due to heavy vehicles 
            (including mining, agricultural, energy cargo or equipment, 
            and timber vehicles)

     An inventory of facilities with freight mobility 
            issues, such as truck bottlenecks, and a description of the 
            strategies to mitigate.
Nebraska Department of Economic Development
   Is a strong partner to NDOR's efforts. Looking ahead, NDOR 
        and its partners will soon take a more coordinated approach to:

     Statistically profiling Nebraska's freight 
            infrastructure across modes

     Defining our core state-level freight network

     Generating state-level information on key commodity 
            flows and forecasts

     Developing state goals, objectives, strategies and 
            performance measures

     Mapping ideas for enhanced policies and programs to 
            support freight, and

     Developing an overall implementation plan for those 
            activities.
                               Witnesses
Michael Smythers, Assistant Vice President, Federal Government Affairs, 
        BNSF
    Smythers most recently served as Special Assistant to the President 
in The White House Office of Legislative Affairs. From April 1999 
through February 2004, when he joined The White House, he was assistant 
vice president, Federal Affairs, in the Washington office of CSX 
Corporation. He worked in the U.S. Senate from August 1994 through 
April 1999. Smythers is a graduate of the College of William and Mary. 
Andersen comes to BNSF from the Gallatin Group, which he joined in 
February 2005 as a principal after working for eight years with U.S. 
Sen. Max Baucus (D-Mont.). He was the senator's legislative director 
from September 2000 through October 2002 and chief of staff from 
December 2002 through January 2005. A Montana native, Andersen is a 
graduate of the University of Montana.
Kevin Kelley, Kelley Bean
    Kelley Bean traces its roots back to the founding of the Chester B. 
Brown company in 1927 where Robert L. Kelley Sr. was plant manager of 
the Morrill, Nebraska facility. In the early 1940s, Robert Kelley was 
promoted to President of the company, a position he held until 1969. In 
1970, Robert L. Kelley Sr. left Chester B. Brown to form Kelley Bean 
Company. His son's Gary, and later Bob, joined him to help run the 
family's new business. In 1982, under Gary Kelley's leadership, the 
Kelley Bean and Chester B. Brown companies merged to form a reunited 
Kelley Bean Co., Inc. In 2006, under Bob Kelley's leadership, Kelley 
Bean acquired ConAgra's dry bean operations. Eleven other acquisitions 
over the years have formed one of the largest originators and 
processors of dry beans in the U.S. Today, a third generation led by 
Kevin Kelley, is in place and poised to grow the company well into the 
future. Ask any of the Kelley's and they will tell you that none of 
this would have been possible without the dedication and hard work of 
the world's best group of employees and growers.
Brent Holliday, Chief Executive Officer
    When my father, Richard B. Holliday Sr., acquired Nebraska 
Transport Company in 1973, he was determined to give our customers the 
best freight service possible at competitive rates and provide the 
employees with the knowledge and incentives to work toward that goal. 
Today, we operate NTC based on those same principles, committed to 
operating only top quality equipment and employing the finest people 
available--committed enough to be the first Nebraska-based LTL carrier 
to achieve the ISO 9000 Certification. I'm proud of the effort ``Team 
NTC'' puts forth every day to consistently provide our customers with 
the best transportation service anywhere. We have a great team, a team 
of winners, who all understand what our team has to do to grow and 
continue to be a leader in our industry, all the while remembering that 
the single-most important part of their job is--and always will be--to 
serve you, our valued customer.
David Freeman, Vice President, Engineering/Transportation, BNSF
Deb Cottier, Executive Director, NW Nebraska Development Corporation

    Mrs. Fischer. Thank you, Director.
    Mr. Overman?

STATEMENT OF DONALD E. OVERMAN, CHAIRMAN OF THE BOARD, AIRPORT 
           AUTHORITY, COUNTY OF SCOTTSBLUFF, NEBRASKA

    Mr. Overman. Well, first of all, Senator Fischer, I want to 
thank you for coming to Western Nebraska to hold this important 
hearing. I want to thank you also for your leadership in 
securing passage of the FAA reauthorization bill. As you have 
so well stated, it is critical to the rural airports across the 
United States, and it allows us to continue to receive our $1 
million funding for safety improvements that we so badly need. 
The fact that you put an amendment in that would allow us to 
receive that for the next 2 years because of the number of 
hours pilots have to have now, that creates great improvement 
for not only Scottsbluff but North Platte and Kearney and 
Alliance.
    It is important to know that Western Nebraska Regional 
Airport is a diversionary airport for DIA in Denver, very 
important to us, and to them too. We support airlines such as 
United, Delta, Alaska and Southwest. We have had as many as 
seven diversions of 727s and 737s on our tarmac at one time in 
a line. It is quite a sight.
    I have been associated with rural transportation issues for 
the past 42 years, including the Heartland Expressway from the 
very, very beginning, as well as being a national spokesman for 
the national EAS program, having appeared before the Senate 
Commerce Committee twice in Washington, D.C., as I was the 
national spokesman for essential air service throughout the 
country.
    Scottsbluff is a true regional transportation center, and 
we need that airport. Our regional airport is a host to major 
corporations to provide air and ground deliveries of products 
throughout this entire trade area. FedEx is based on airport 
property and has one airplane per day into our airport, and 
sometimes two, as well as one semi-truck per day for ground 
FedEx. They serve an area that stretches up to 150 miles in 
every direction. UPS has one plane per day, along with UPS 
Ground, which serves an area of 120 to 150 miles in every 
direction.
    Good roads are essential for the economic development of 
our area, and we are happy to have Kyle here from the 
Department of Roads today to show us his input and what has 
happened at the state level.
    We also have at our airport an air ambulance company, 
EagleMed, that has served over 1,000 patients in this past 
year, sending patients to advanced hospitals in Wyoming, 
Colorado, and Nebraska.
    Not to be forgotten, of course, is the United States Postal 
Service, which needs safe roads for their trucks that deliver 
mail all over this area. Our local area trucking company, NTC, 
is here to support that issue.
    We want to thank you again for your leadership in the 
Nebraska Unicameral, on the roads, and in surface 
transportation, and now in the U.S. Senate, providing improved 
road funding for the state of Nebraska, and certainly most 
recently the FAST Act, which gives us five years of receiving 
$1.5 billion to Nebraska's highways, railroads, and bridges. 
The figure is monumental, and what you have done for 
transportation in the state of Nebraska is fantastic, and we 
thank you for your leadership. Thank you.
    [The prepared statement of Mr. Overman follows:]

Prepared Statement of Donald E. Overman, Chairman of the Board, Airport 
               Authority, County of Scottsbluff, Nebraska
    Good morning Senator Fischer, my name is Donald E. Overman. I am 
the Chairman of the Board of the Airport Authority of the County of 
Scottsbluff. I thank you for holding this United States Senate Commerce 
hearing on transportation in Scottsbluff, Nebraska.
    I also thank you for your leadership in securing passage of the FAA 
Reauthorization Bill in the Senate. This bill is so critical for rural 
airports across the country and it allows us to continue to receive $1m 
in funding for airport safety improvements for each of the next two 
years.
    It is important for all to know that Western Nebraska Regional 
Airport is a diversionary airport for DIA in Denver and we support 
airlines such as United, Delta, Alaska and Southwest. We have had as 
many as seven diversions on our tarmac at one time.
    I have been associated with rural transportation issues for the 
past 42 years including the Heartland Expressway from its inception, as 
well as being the National spokesman for the EAS program. I know how 
important transportation is to the economic development of our area. 
Scottsbluff is a true regional transportation hub for Western Nebraska 
and Eastern Wyoming.
    Our regional airport is host to major corporations that provide air 
and ground deliveries of products in our entire trade area.
    FedEx which is based on airport property has one plane per day into 
our airport and sometimes two, as well as one semi-truck per day for 
Fedex ground. They serve our area that stretches up to 150 miles in 
each direction. UPS has one plane per day and along with UPS ground 
which serves an area of 120 to 150 miles in each direction.
    Good roads are essential for the economic development of our entire 
area. We are pleased that the Director of Roads for the State of 
Nebraska has joined us today.
    We also have based at our airport an air ambulance company, 
EagleMed, that served over 1,000 patients sent to more advanced 
hospitals in Wyoming, Colorado and Nebraska in the last year.
    Not to be forgotten, the United States Postal Service. Which needs 
safe roads for their semi's that deliver our mail throughout our entire 
region. Our local area trucking company (NTC) is here also to support 
safe roads.
    Thank you again, Senator Fischer for your leaderships both in the 
Nebraska Unicameral and now in the United States Senate providing 
improved road funding for the State of Nebraska and now the entire 
country.

    Mrs. Fischer. Thank you.
    Ms. Cottier?

         STATEMENT OF DEB COTTIER, EXECUTIVE DIRECTOR,

          NEBRASKA NORTHWEST DEVELOPMENT CORPORATION;

        MEMBER, BOARD OF DIRECTORS, HEARTLAND EXPRESSWAY

       ASSOCIATION; AND MEMBER, PORTS-TO-PLAINS ALLIANCE

    Ms. Cottier. Hi. I'm Deb Cottier. I'm the Executive 
Director of the Nebraska Northwest Development Corporation, 
which is in Chadron, Nebraska, about 100 miles north of here, a 
beautiful morning to drive in here this morning.
    I want to start by adding my appreciation and my thanks to 
Senator Fischer for all of her work, not only in the Nebraska 
legislature but also for holding a hearing here in Nebraska and 
giving us a chance to come share our views on rural 
transportation. We also want to thank her for leading the 
effort in the Senate to include a robust freight program in the 
recently enacted FAST Act.
    I'll be testifying today on behalf of NNDC, but also on 
behalf of the Heartland Expressway, which is also part of a 
larger organization called the Ports-to-Plains Alliance. This 
alliance is actually a grassroots effort of communities, over 
275 communities and businesses whose mission it is to advocate 
for international transportation infrastructure, and by 
international we're speaking specifically of the four routes 
that come together that create this corridor.
    The Ports-to-Plains corridor comes from the Texas/Mexico 
border to Denver, the Heartland Expressway, which comes through 
the entire state of Nebraska north to south, through Chadron, 
through Scottsbluff. That's the Heartland Expressway. The Teddy 
Roosevelt Expressway, which goes from Rapid City north through 
the Bakken oil fields up to Canada, as well as the Camino Real, 
which connects Canada through existing interstate systems.
    Freight movement across rural North America is critical to 
connecting the natural resources of agriculture and energy to 
the urban populations and the economy of the United States. I 
have submitted a written record which is much more in-depth, 
but my comments today will actually highlight three points.
    First, the prosperity of America's heartland depends on 
four-laneing critical rural freight corridors like the Ports-
to-Plains corridor. Northwestern Nebraska is effectively 
isolated from interstate highways. The closest to the north is 
110 miles; to the south it's 137 miles. Moreover, there is only 
one way to get to interstates from Chadron, Nebraska, and 
that's on two-lane roads. There is nearly a 500-mile-wide gap 
between I-25 in the west in Wyoming and the I-29 corridor in 
Iowa in the east, between which there are no four-lane, north-
south highways that fully traverse the state of Nebraska. This 
is a missing link in our national highway network.
    As a result, our two-lane roads carry a large agriculture 
and energy business. Other business trucks, local cars and 
delivery vans, and a lot of out-of-state tourists who find 
themselves mixed in with that whole variety of utility vehicles 
are all on narrow two-lane roads, which actually limits the 
ability for the safe movement of people to and from places like 
the Black Hills of South Dakota.
    Upgrading the Ports-to-Plains corridor to a four-lane 
divided highway would create significant benefits for America's 
heartland and is critical for the efficient movement of goods 
and people, the economic development of the region, and for the 
safety of the traveling public. Furthermore, the corridor 
provides an uncongested alternative to I-35 coming out of Texas 
and to I-25 to the west. If four lane, the Alliance corridor 
would provide a cost-effective alternative for trucks to avoid 
that urban congestion.
    And that brings me to my second point, upgrading the 
critical rural freight corridors, especially the multi-state 
corridors that we've been speaking of, and this requires a 
strong Federal partner, as we've heard the Senator say numerous 
times. Both in terms of leadership and resources, the states 
and localities cannot do the job alone.
    As Congress was considering the transportation bill, you 
and your colleagues were often under pressure from some to 
devolve the transportation programs back to the state and local 
governments. Devolution would have a devastating effect on our 
national service transportation system, and we commend Congress 
for rejecting the idea.
    We would sound, however, one note of caution. If the 
Federal Government is to continue to be the strong partner in 
the future, Congress must find a permanent fix to the Highway 
Trust Fund, and it should not necessarily wait until the next 
transportation bill to do so. It should seize the first 
opportunity, which could come in the next Congress in the form 
of a budget initiative and tax reform.
    My third and final point is that the new freight programs 
within the FAST Act are a huge step forward, but they will 
require careful oversight to ensure that the adequate resources 
are made available to upgrade the critical rural freight 
corridors.
    With respect specifically to the FAST Act, it says that 
critical rural freight corridors are eligible for both freight 
planning and funding opportunities. Whether a particular route 
such as the Heartland Expressway is designated will depend on 
how FHWA and the states interpret the implementation of the 
FAST Act requirements, and there is some reason for concern.
    The guidance, which was just put out, basically says that 
the first and last mile connectivity is essential to an 
efficiently functioning freight system, and that it encourages 
the states to consider first or last connector routes for the 
high-volume freight corridors. The language itself is a little 
troubling, for if the guidance or FHWA forces or leverages 
states into following just that piece of it, then much of the 
funding that's available for critical rural freight corridors 
would be directed to a series of spurs off high-volume 
corridors rather than to the entire rural freight corridor like 
the Heartland Expressway. Based on our initial review of the 
guidance of the FAST Act, this does not appear to be what 
Congress intended, and we urge Congress to closely monitor the 
implementation.
    In conclusion, we want to thank you for the opportunity to 
appear today and for your effort to bring together those people 
who can speak about transportation on this level, and we 
appreciate the opportunity to be included. Thank you.
    [The prepared statement of Ms. Cottier follows:]

    Prepared Statement of Deb Cottier, Executive Director, Nebraska 
    Northwest Development Corporation; Member, Board of Directors, 
 Heartland Expressway Association; and Member, Ports-to-Plains Alliance
    Chairwoman Fischer--Honored members of the Senate Committee on 
Commerce, Science and Transportation, thank you for allowing me to 
testify on an issue as important to Nebraska, the Heartland Expressway 
and the states included in the Ports-to-Plains Alliance as rural 
transportation and intermodal freight policy.
    For the record, my name is Deb Cottier, Executive Director of 
Nebraska Northwest Development Corporation and a member of the Board of 
Directors for the Heartland Expressway Association, a member of the 
Ports-to-Plains Alliance.
    The Ports-to-Plains Alliance is a grassroots alliance of over 275 
communities and businesses, including alliance partners Heartland 
Expressway, Theodore Roosevelt Expressway and Eastern Alberta Trade 
Corridor Coalition, whose mission is to advocate for a robust 
international transportation infrastructure to promote economic 
security and prosperity throughout North America's energy and 
agricultural heartland including Mexico to Canada. In the United States 
the primarily rural Alliance includes four congressionally designated 
High Priority Corridors on the National Highway System. The Ports-to-
Plains Corridor connects the Texas/Mexico border to Denver, CO via 
Interstate 27 in Lubbock and Amarillo, TX. The Heartland Expressway, 
which includes my home community of Chadron, NE, connects Denver, CO to 
Rapid City, SD and to the Camino Real (Interstate 25) in Wyoming via 
Scottsbluff, NE. The Theodore Roosevelt Expressway connects Rapid City, 
SD to the Montana/Canada border at the Port of Raymond via Williston, 
ND. The Camino Real Corridor from its connection with the Heartland 
Expressway at Interstate 25 west of Torrington, WY continues north the 
Montana/Alberta Canada border at the port of Sweetgrass.


    This entire nationally significant rural freight corridor provides 
an uncongested alternative to Interstate 35 with its chokepoints at San 
Antonio, TX, Austin, TX, Dallas/Fort Worth, TX, Oklahoma City, TX and 
Kansas City, MI and to Interstate 25 through the Colorado Front Range 
and Cheyenne, WY for the movement of critical natural resources from 
rural areas to domestic and international markets.
    My statement today focuses on three items:

  1.  Importance of Transportation System to Rural Economic Development

  2.  Strong Federal Role Required in Improve Movement of Freight

  3.  Building Rural Economies Together through the FAST ActrURA

    Freight movement across rural North America is critical to 
connecting the natural resources of agriculture and energy to the urban 
populations and the economy of the United States. The interstate system 
provided significant impacts serving an economy that primarily moved 
freight east and west. Growing population centers along that interstate 
system are now creating significant chokepoints along the system and 
continuing the same transportation policies, adding to the congestion, 
results in increased transportation costs and environmental impacts.
Importance of Transportation System to Rural Economic Development
    Chadron, NE is an excellent example of a rural community currently 
served by only two-lane highways. Chadron is located 102 miles south of 
Interstate 90 at Rapid City, SD and 148 miles north of Interstate 80 at 
Kimball, NE. Research shows that economic strength of communities is 
strongly affected by proximity to an interstate highway or at minimum a 
four-lane highway.
    POLICOM Corporation is an independent economic research firm which 
specializes in analyzing local and state economies. From its research, 
it determines if an economy is growing or declining, what is causing 
this to happen, and offers ideas and solutions to improve the 
situation. A recent evaluation of the role of highway infrastructure on 
economic strengths of the top 50 Strongest and Weakest Micropolitan 
areas was made by POLICOM and presented to the Ports-to-Plains 
Alliance. Micropolitan Statistical Areas are typically quasi rural 
areas. A Micro must have an urbanized area (city) with a population of 
at least 10,000 but less than 50,000 population and must be at least 
one county and most are.

------------------------------------------------------------------------
                Top 50 Micropolitan Area                   Strong   Weak
------------------------------------------------------------------------
Located on an Interstate                                       31      7
------------------------------------------------------------------------
Located on a four-lane limited access                          10      5
------------------------------------------------------------------------
Located near a four-lane within the area                        0     11
------------------------------------------------------------------------
Not Located on a four-lane roadway                              9     27
------------------------------------------------------------------------

    Forty-one of the Top 50 Strongest Micropolitan Areas in the United 
States are located on an interstate or four-lane divided highway. 
Twenty-seven of the Top 50 Weakest Micropolitan Areas in the United 
States are not located on an interstate or four-lane highway.
    In case the nine strong Micropolitan Areas that are not located on 
a four-lane roadway, there is a unique reason for their success that is 
not available to most rural communities. Two are in Alaska--Ice Roads; 
one is an island; one is a wealthy tourist destination, two are related 
to energy (Williston and Dickinson, ND); one is a town with livestock 
slaughter facilities as its main economic driver (Garden City, KS) and 
one is a military base.
    The development of four-lane rural freight corridors is a positive 
economic impact to communities like Chadron, Alliance and Scottsbluff, 
NE as well as rural communities from Texas to North Dakota and Montana 
along the Ports-to-Plains Alliance corridor. This conclusion is further 
supported by recent studies that evaluate economic benefits within the 
ten-state region.
    Beginning with Nebraska, the Heartland Expressway Corridor 
Development and Management Plan, Final Report (2014), published by the 
Nebraska Department of Roads summarized significant economic national 
benefits from the development of this primarily rural corridor to a 
four-lane profile. It stated:
    ``The Heartland Expressway Corridor will provide many national, 
regional, and local benefits. Some of the most noteworthy national 
benefits include:

   Connection of metropolitan cities and regional trade centers

   Develops a significant North American Free Trade Act (NAFTA) 
        corridor

   Provides an alternative to avoid urban congestion and delay 
        along Interstate 25

   Completes an integral segment of the PTP Alliance Corridor, 
        a trans-national corridor

   Enhances the national freight network and freight movements

   Provides safer travel

   Provides a north/south high speed corridor

   Enhances delivery capacity and efficiency to Great Plains 
        markets

   Provides essential economic development infrastructure to 
        the Great Plains

   Develops a significant tourism corridor''
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    In 2004, the Ports-to-Plains Corridor Development and Management 
Plan, evaluating the rural corridor in Texas, Oklahoma, New Mexico and 
Colorado, found similar results.
    In November 2015, the Texas Department of Transportation published 
the Initial Assessment Report for the Extension of I-27/Ports to Plains 
Corridor. The Assessment was an initial look at the opportunities 
presented by the expansion of the existing corridor in Texas to an 
interstate profile. The report stated:

    ``The I-27/P2P corridor is viewed as a gateway for commerce with 
the potential to redirect traffic from congested corridor across Texas. 
Planned and programmed projects aim to:

   Increase corridor capacity and enhance safety;

   Reduce congestion at ports of entry along the Texas-Mexico 
        border by dispersing freight to multiple border crossings (in 
        addition to the heavily-used Laredo crossings);

   Provide travel alternatives to the state's most congested 
        corridors located through major metropolitan areas (e.g., I-
        35);

   Provide alternatives to other congested north-south 
        corridors that run through major metropolitan areas (e.g., I-
        25);

   Help to facilitate trade between the U.S., Mexico and 
        Canada; and

   Provide facilities that can effectively meet the traffic 
        volumes and vehicle types that are traversing the corridor.''
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        
Strong Federal Role Required in Improve Movement of Freight
    Our rural communities support modernizing our Nation's surface 
transportation network, including the upgrading of multi-state rural 
highway corridors, to meet the challenges of the 21st century.
    Given the urgency and magnitude of this undertaking, it is 
imperative that the Federal Government be the strong partner that it 
has been in the past. From the First Congress' support of lighthouses, 
buoys and public piers to make navigation ``easy and safe;'' to Henry 
Clay's support for internal improvements; to President Lincoln's 
support for the transcontinental railroad; to President Teddy 
Roosevelt's support of the Panama Canal; to President Franklin 
Roosevelt's support for a cross-country, high-level road system; to 
President Eisenhower's support of the Interstate Highway System and the 
Federal Highway Trust Fund; and to President Reagan's support for 
increased motor fuel user fees to preserve and modernize the Federal-
aid highway network; the Federal Government has been instrumental in 
the development of our Nation's surface transportation system.
    This system unifies our country by providing for the easy movement 
of people and goods. As President Eisenhower noted, without it, ``we 
would be a mere alliance of many separate parts.'' The Federal 
Government must provide the leadership and resources to help preserve 
and modernize the national surface transportation network for the 21st 
century.
    With a few minor exceptions, the federal-aid highway program 
targets Federal highway investment on the network of roads most 
important to regional and interstate travel. There are four million 
miles of roads in the United States. Only 25 percent of these roads are 
eligible for federal-aid highway funding. This network of roads is 
known as the federal-aid highway system. It carries 85 percent of the 
total vehicle-miles travelled in the United States annually. The 
remaining seventy-five percent of the Nation's roads (roughly 3 million 
miles) are the responsibility of state and local governments.
    Even more importantly, the vast majority of federal-aid highway 
investment (about 75 percent) is dedicated to the National Highway 
System (NHS), a portion of the federal-aid highway system.
    The NHS, which includes the Interstate Highway System, makes up 
only 5 percent (about 220,000 miles) of the Nation's road mileage but 
carries 55 percent of total vehicle-miles traveled and over 90 percent 
of truck miles. It is the backbone of the federal-aid highway system as 
well as America's intermodal transportation network. The Ports-to-
Plains Corridor, the Heartland Expressway, the Camilo Real and the 
Theodore Roosevelt Expressway are part of the NHS.
    By fostering an interconnected network of roads in uniformly-sound 
condition, the federal-aid highway program serves an important national 
purpose. This purpose can only be achieved by a certain amount of 
redistribution, which the federal-aid highway program achieves through 
its structure and formulas.
    Without redistribution, certain states--typically large, sparsely-
populated states--would not be able to develop and maintain their 
portion of the network. A network is only as strong as its weakest 
links.
    It is also important to note that modernizing the federal-aid 
highway system, especially the major highways that make up the National 
Highway System, will require significant, sustained investment over a 
considerable period of time. The investment level needed is 
considerably higher than current levels of funding.
Multi-state Rural Freight Corridors Are a Federal Interest
    A critical part of the national network is the multi-state rural 
highway corridors that are essential to the development of America's 
energy and agricultural resources. The antiquated two-lane highways 
that currently serve most of these corridors were not designed to carry 
the number of trucks, especially heavy trucks, currently being 
experienced up and down these corridors.
    Moreover, these roads are not geometrically designed to accommodate 
the large trucks being used today by the energy and agricultural 
industries.
    Nowhere is this more evident than in the Ports-to-Plains Alliance 
Corridor. The north-south movement of goods and persons through this 
ten-state economic region relies on an existing 3,088-mile network are 
two-lane highways. The good news is that almost 54 percent of this 
corridor has been upgraded to four-lane or better.
    To promote economic security and prosperity throughout America's 
energy and agricultural heartland, the Ports-to-Plains Alliance 
Corridor must be upgraded and modernized. Other multi-state rural 
highway corridors important to energy and agricultural production must 
also be improved.
    Only in this way will the United States be able to realize the full 
potential of its energy and agricultural resources. By doing so, it 
will take an important step toward energy self-sufficiency and 
increased international competitiveness of U.S. agriculture.
Overview of the Agriculture Regional Economy
    As indicated in the Texas Freight Mobility Plan agriculture is the 
largest user of freight transportation in the United States. Nebraska 
agriculture reflects the importance of agriculture to the economy of 
the ten-state Ports-to-Plains region. The Nebraska Agriculture Fact 
Card, a cooperative effort of the Nebraska Department of Agriculture, 
USDA, NASS, Nebraska Field Office, and the Nebraska Bankers Association 
highlights Nebraska's Top National Rankings. The state ranks first in 
the Nation in beef and veal exports, 2014 ($1,128,700,000); cash 
receipts from meat animals, 2014 ($13,885,411); commercial red meat 
production, 2015 (7,470,600,000 lbs.); commercial cattle slaughter, 
2015 (6,575,100 head); all cattle on feed, January 1, 2016 (2,520,000 
head); Great Northern bean production, 2015 (763,000 cwt.); popcorn 
production, 2012 53,711,118 lbs.); and irrigated acres of cropland, 
2012 (8,225,973 acres).
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Nebraska ranks as the second state in the Nation for All cattle and 
calves, January 1, 2016 (6,450,000 head); Pinto bean production, 2015 
(1,878,000 cwt.); Proso millet production, 2015 (3,298,000 bushels); 
Light red kidney bean production, 2015 (298,000 cwt.); and Bison, 
December 31, 2012 (23,152 head).
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    For corn for grain production, 2015 (1,692,750,000 bushels); cash 
receipts from all farm commodities, 2014 ($24,942,122,000); and corn 
exports, 2014 ($1,212,400,000), Nebraska ranks as the third state in 
the Nation.
    Nebraska agriculture relies on the nationwide transportation system 
for both inputs and outputs of its agriculture production. Interstate 
and international commerce is critical to Nebraska agriculture and that 
is a reflection of the entire Ports-to-Plains Region. This ten-state 
region produces over $111 billion of agricultural goods, or 28.22 
percent of the U.S. total. The region boasts three of the top ten farm 
states: Texas, Nebraska and Kansas.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Movement of agriculture products from the primarily rural areas 
across the Ports-to-Plains region to urban domestic markets and to 
export markets on the coasts requires infrastructure investments that 
connect production to consumers. Canada and Mexico are the second and 
third top export markets for U.S. farm products. The agriculture 
production regions in the U.S. often are not located near major urban 
areas or coastal export facilities. A strong Federal interest is 
required to ensure the agriculture resources can safely and efficiently 
reach domestic and global markets.
Overview of the Energy Regional Economy
    While agriculture has been and will continue to be the economic 
base for Nebraska and the entire ten-state Ports-to-Plains region, 
energy has emerged as a significant economic driver across the region. 
Energy production, including conventional resources like oil and 
natural gas, combined with strong renewable energy including wind 
development, use resources in rural areas to meet the growing needs of 
urban areas and a global market.
    The Ports-to-Plains Alliance tagline says ``Securing the Benefits 
of Commerce to North America's Energy & Agricultural Heartland.'' The 
highway system connects a region that includes significant conventional 
and renewable resources. Energy security is provided by North America's 
energy development and the Ports-to-Plains region provides the 
connections needed to develop those resources including world class 
oil, gas and wind resources.
Oil and Natural Gas
    From an oil and gas viewpoint the corridor connects Alberta, Canada 
and Texas, both the production and reserve leaders in the world. The 
highway system moves the people and equipment needed to develop these 
resources. The Bakken in North Dakota, Montana, Saskatchewan and South 
Dakota; the Niobrara in Wyoming, Colorado and Nebraska; and the Barnett 
and Permian in Texas; and the Eagle Ford in Texas are connected by the 
Ports-to-Plains Corridor. The Corridor provides the connection between 
the Houston, Denver and Billings. To summarize the oil and gas role of 
the region:

   Seven of top ten and eight of the top fifteen oil producing 
        states, producing over 1.667 billion barrels annually in 2013

   Alberta ranks third, after Venezuela and Saudi Arabia, in 
        terms of proven recoverable global crude oil reserves

   Five of the top eight and seven of the top fifteen natural 
        gas producing states that produced over 57.5 percent or 
        13,966,836 million cubic feet in 2012

   Oil and natural gas accounts for three million jobs or 35.8 
        percent of the Nation in the region, generating incomes of over 
        $208.5 billion or 40.5 percent of the entire nation's oil and 
        gas jobs and income
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        
    There are those who will point to a bust in the U.S. energy boom. 
They cannot wait to share stories of job losses and bankruptcies, but 
while the boom has stopped, the reality is that the production 
continues. The following from North Dakota shows that energy will be 
returning to its boom days. ``North Dakota's top oil regulator had a 
message for Williston leaders this week: Get ready . . . When--not if--
oil prices increase, drilling crews will be back in the Bakken eager to 
make up for lost time,'' said Director of Mineral Resources Lynn Helms. 
``The industry is preparing for the world's oil supply to come into 
balance by the end of 2016 or the first half of 2017,'' Helms said. 
``He anticipates that once that happens, the price could double 
`virtually overnight.' ''
    Energy development is reliant upon moving employees and large 
equipment across the north-south region, often on narrow two lane 
highways and bridges. As an example, U.S. Highway 85 of the Theodore 
Roosevelt Expressway saw 72,000 permits for oversize and overweight 
trucks in 2014. Energy security for the United States is dependent upon 
a transportation system that again connected rural America where the 
resources are located and the labor force, the technology and ultimate 
markets for U.S. energy. A strong Federal role is required to provide 
the resources needed to build and maintain infrastructure from lower 
population areas to urban areas.


Renewable Energy/Wind
    Renewable wind resources are also abundant throughout the region.

   Four of the top ten and seven of the top twenty U.S. States 
        for Installed Wind Capacity

   The region accounts for 48.9 percent of the total current 
        wind generation in the U.S.

   Top six nationwide, eight of the top 10 U.S. states for 
        Potential Wind Energy Generation, nearly 76.9 percent of the 
        U.S. potential
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        
    These wind resources are resulting in the addition of manufacturing 
facilities for nacelles (turbines), blades and towers in Texas, 
Colorado, Kansas, Wyoming and North Dakota. Production and 
manufacturing creates jobs and tax base for many of our communities.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    The electricity being generating is being transmitted to urban 
areas for primary use of urban populations. Once again a strong Federal 
interest will be required to support the needed infrastructure across 
the rural production areas.
Rural Corridors: An Alternative to Freight Chokepoints
    One largely unexplored role of rural freight corridors requiring a 
strong Federal interest is the opportunity presented by multi-state 
rural corridors like the Heartland Expressway and its partners in the 
Ports-to-Plains Alliance to address congestion and its accompanied 
environmental impacts in urban areas. State departments of 
transportation are often forced to look only at the expensive solutions 
of expanding already congested urban highway corridors. Historically, 
these expansions have only provided temporary relief.
    The National Strategic Freight Plan indicates that this trend will 
continue.

        The U.S. economy is expected to double in size over the next 30 
        years. By 2045, the Nation's population is projected to 
        increase to 389 million people, compared to 321 million in 
        2015. Americans will increasingly live in congested urban and 
        suburban areas, with fewer than 10 percent living in rural 
        areas by 2040 (compared to 16 percent in 2010 and 23 percent in 
        1980).

    The question looking for an answer is: can primarily rural multi-
state freight corridors provide a safe, cost-effective opportunity to 
address growing congestion in urban areas? The maps below reflect the 
current peak period congestion using 2011 data and then projected to 
2040.
    Within the Ports-to-Plains region, peak period congestion, creating 
freight choke points, existed in 2011 along Interstate 25 along the 
Colorado Front Range and along Interstate 35 including San Antonio, 
Austin and Dallas/Fort Worth in Texas, Oklahoma City, OK and Kansas 
City, MI.
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    The peak period congestion, and thus freight choke points, grows 
significantly by 2040 based on current policy and investments combined 
with doubling the economy, significant population increase and shifts 
from rural to urban areas.
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    The Interstate Highway System, especially in the west addressed 
east-west movement of people and goods. It was an economic driver of 
great proportion. In the West the interstate system included 
Interstates 15, 25 and 35. As you can see, each of these corridors is 
growing significant congestion.
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    The Ports-to-Plains Corridor, with its target of a minimum 
development of four-lane divided highway can assist rural communities 
becoming more economically competitive and reducing the number of 
trucks creating freight choke points on the congested existing 
interstates.
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    Agriculture, energy and alternative corridors will require a strong 
Federal interest to guide a future that does not result in those shown 
in the 2040 projections.
Building Rural Economies Together through the FAST Act
    As a rural economic developer and advocate for improved rural 
freight infrastructure, I would like to join the Heartland Expressway 
Association and the Ports-to-Plains Alliance in appreciation of the 
National Freight Policy included in the Fixing America's Surface 
Transportation Act. It provides an opportunity for an improved future 
in both rural and urban communities. The question that remains is how 
the FAST Act is implemented.
    I and my partners in the Ports-to-Plains Alliance believe that the 
implementation of Critical Rural Freight Corridors under the FAST Act 
is a key to the opportunity for an improved future. USDOT/FHWA posted 
the guidance on designating and certifying Critical Rural Freight 
Corridors on April 27, 2016. USDOT/FHWA guidance now moves the 
implementation to state department of transportation. The USDOT/FHWA 
guidance did result in one concern about how USDOT/FHWA will view 
Critical Rural Freight Corridors for eligibility for both freight 
planning and funding opportunities offered by the FAST Act. The 
guidance includes the following statement:

        First and last mile connectivity is essential to an efficiently 
        functioning freight system. These public roads provide 
        immediate links between such freight generators as 
        manufacturers, distribution points, rail intermodal and port 
        facilities and a distribution pathway. FHWA encourages States, 
        when making CRFC designations, to consider first or last mile 
        connector routes from high-volume freight corridors to key 
        rural freight facilities, including manufacturing centers, 
        agricultural processing centers, farms, intermodal, and 
        military facilities.

    As our partners review the FAST Act, the emphasis on ``first and 
last mile connectivity'' seems to be a priority of USDOT/FHWA and not 
Congress. Our review of the FAST Act results in the only place that 
``first and last mile'' appears in the legislation is as a portion of 
one twelve items to be considered by the Secretary in designating or 
re-designating the National Multimodal Freight Network. Even that 
consideration was described as ``major distribution centers, inland 
intermodal facilities, and first-and last-mile facilities. ``First and 
last mile connectivity'' is not mentioned in relationship to Critical 
Rural Freight Corridors in the FAST Act. We wish to be sure that 
``first and last mile'' is not prioritized above corridors in future 
decisions under the FAST Act.
    Below, I will outline the relationship of Critical Rural Freight 
Corridors to two planning networks and two funding programs.
    Congress had the foresight to finalize the National Highway Freight 
Network including 41,518-mile Primary Highway Freight System identified 
during the designation process under MAP-21, Critical Rural Freight 
Corridors, Critical Urban Freight Corridors, and the portions of the 
Interstate System were not designated as part of the primary highway 
freight system. Once a Critical Rural Freight Corridor is designated 
and certified it is added to the National Highway Freight Network.
    In addition to the National Highway Freight Network, Congress also 
required the designation of the National Multimodal Freight Network. 
The stated purposes of the National Multimodal Freight Network includes 
assisting States in strategically directing resources toward improved 
system performance for the efficient movement of freight on the 
Network; to inform freight transportation planning; to assist in the 
prioritization of Federal investment; and to assess and support Federal 
investments to achieve the national multimodal freight policy goals and 
the national highway freight program goals.
    Included in the goals of this program are to strengthen the 
contribution of the National Multimodal Freight Network to the economic 
competitiveness of the United States; reduce congestion and eliminate 
bottlenecks on the National Multimodal Freight Network; to improve the 
short-and long-distance movement of goods that travel across rural 
areas between population centers; travel between rural areas and 
population centers; and to improve the flexibility of States to support 
multi-State corridor planning and the creation of multi-State 
organizations to increase the ability of States to address multimodal 
freight connectivity. These are clear goals that certainly address the 
rural freight opportunities and importance described earlier in the 
statement above.
    The FAST Act requires the Interim National Multimodal Freight 
Network to be established by June 1, 2016 and a Final Network of the 
National Multimodal Freight Network to be designated by December 4, 
2016. The Under Secretary of Transportation for Policy is responsible 
to establish an Interim National Multimodal Freight Network not later 
than 180 days after the passage of the FAST Act. The second deadline, 
within the FAST Act, states that the Final Network of the National 
Multimodal Freight Network be established by the Undersecretary not 
later than one (1) year after passage of the Act. This Final Network is 
established after soliciting input from stakeholders, including 
multimodal freight system users, transportation providers, metropolitan 
planning organizations, local governments, ports, airports, railroads, 
and States, through a public process to identify critical freight 
facilities and corridors, including critical commerce corridors, that 
are vital to achieve the national multimodal freight policy goals. 
Critical Rural Freight Corridors need to be considered throughout this 
process. This National Multimodal Freight Network will not be re-
designated for up to five (5) years after the establishment of the 
Final Network. Once again, designated Critical Rural Freight Corridors 
are eligible components of this Network.
    With the guidance provided by USDOT/FHWA for the designation and 
certification of Critical Rural Freight Corridors, the process of state 
departments of transportation is able to move forward. If state 
departments of transportation act quickly, Critical Rural Freight 
Corridors may be considered by the Undersecretary for the Interim 
National Multimodal Freight Network. As of this date, that window of 
opportunity is very narrow. After June 1, 2016, Critical Rural Freight 
Corridors will have up to six months to engage in the stakeholder 
process for the establishment of the Final Network of the National 
Multimodal Freight Network. The opportunity to include Critical Rural 
Freight Corridors as a component of the National Multimodal Freight 
Network now rests with the state departments of transportation.
    Critical Rural Freight Corridors within the FAST Act seem designed 
to address the need to connect the importance of agricultural 
production to the domestic and global markets requiring food and fiber. 
Congress recognizes the Critical Rural Freight Corridors provide access 
or service to grain elevators; agricultural facilities; and intermodal 
facilities including connections to international ports of entry.
    Critical Rural Freight Corridors within the FAST Act also seem 
designed to address the importance of access or service to energy 
exploration, development, installation, or production areas to the 
domestic and global markets requiring energy resources. The Heartland 
Expressway in Nebraska is one link in the infrastructure required to 
safely make those connections. Implementation of Critical Rural Freight 
Corridors by state departments of transportation will be a major factor 
in the region remaining competitive economically.
    The National Highway Freight Program provides for the first-time 
formula funds to states to improve the efficient movement of freight on 
the National Highway Freight Network. Nebraska is authorized for $58.8 
million over the five years of the FAST Act. This amount is above what 
has already been distributed to Metropolitan Planning Organizations for 
the same purposes. States are allowed to obligate these formula funds 
to Critical Rural Freight Corridors. The April 27, 2016 guidance on 
designating and certifying Critical Rural Freight Corridors indicates 
that National Highway Freight Program can be authorized once the FHWA 
Division Office verifies that the certification from the state 
department of transportation is valid.
    Additionally, the FAST Act established a Nationally Significant 
Freight and Highway Projects program as a competitive grant process 
(FASTLANE) with dedicated funding specifically for freight projects. 
The competitive grant program includes $4.5 billion nationally from 
2016 through 2020, an annual average of $900 million. Each fiscal year, 
at least 25 percent of all Nationally Significant Freight and Highway 
Projects funds are reserved for projects--either large or small 
projects--in rural areas, defined as an area outside a U.S. Census 
Bureau designated urbanized area with populations over 200,000. 
Eligible projects include a highway freight project carried out on the 
National Highway Freight Network. In relationship to Critical Rural 
Freight Corridors, the April 27, 2016 guidance indicates that 
designated and certified Critical Rural Freight Corridors will be 
eligible for funding under the Nationally Significant Freight and 
Highway Projects program (FASTLANE).
    Congress through the FAST Act provided a framework and funding to 
assist with improved freight movement and especially rural freight 
movement in the United States. Congressional oversight, however, will 
be important as individual state departments of transportation like 
Nebraska Department of Roads, and the administration of USDOT/FHWA have 
been given major decision-making authorities on how the funding of 
freight programs are allocated.
Conclusions
    As I conclude, let me summarize. There is significant importance of 
the transportation system to rural economic development. Research shows 
that economic strength of communities is strongly affected by proximity 
to an interstate highway or at minimum a four-lane highway. Significant 
economic national benefits from the development of primarily rural 
corridors to a four-lane profile is demonstrated through benefit/cost 
analysis in the Corridor Development and Management Plans for the 
Heartland Expressway in Nebraska and the Ports-to-Plains Corridor in 
Texas, Oklahoma, New Mexico and Colorado.
    Second, if improvements are to be made in the rural movement of 
freight, it will require a strong Federal role. Historically, that has 
been the case. A critical part of the national network is the multi-
state rural highway corridors that are essential to the development of 
America's energy and agricultural resources. A strong Federal interest 
will be required to improve existing corridors but also to implement 
programs which look to alternatives to the already congested interstate 
system.
    Finally, the FAST Act has provided a policy and funding framework 
for Building Rural Economies Together. At the very core of that 
framework for multi-state rural corridors is the role of Critical Rural 
Freight Corridors. State departments of transportation hold the reins 
to the timing and priority of Critical Rural Freight Corridors.
    Thank you, Chairwoman Fisher. I ask that a copy of this statement 
be included in the hearing record.

    Mrs. Fischer. Thank you very much.
    Mr. Freeman, welcome.

      STATEMENT OF DAVID FREEMAN, SENIOR VICE PRESIDENT, 
              TRANSPORTATION, BNSF RAILWAY COMPANY

    Mr. Freeman. Good morning again, Senator Fischer. My name 
is David Freeman, and I am the Senior Vice President of 
Transportation for BNSF. Thank you for inviting me to testify 
today.
    Congress has enacted several significant pieces of 
legislation that affect the supply chain. BNSF is pleased to 
have this opportunity to thank the members of the Committee for 
the balanced and effective approach in passing these 
transportation laws which are particularly important to the 
rural economy.
    The economic value of rail is well known in Nebraska, and 
railroads are the workhorse of the economy. They deliver 
approximately 40 percent of inner-city freight volume, more 
than any other mode of transportation, and shippers pay less 
because of rail's efficiency.
    BNSF is wholly owned by Nebraska-based Berkshire Hathaway. 
It has approximately 42,000 employees, including more than 
5,000 here in Nebraska. We operate about 1,200 trains per day, 
and our total volumes last year were about 10.3 million units, 
the most of any railroad.
    BNSF operates major rail facilities at Alliance, Lincoln, 
McCook, Omaha and Haslett, and operates more than 1,400 miles 
of track in Nebraska. We move more than 2 million carloads of 
freight through the state annually. Much of it is coal from the 
Powder River Basin, which drives rail employment and investment 
here in Nebraska. More than 1,000 employees in Alliance 
inspect, repair, and overhaul equipment mostly associated with 
coal transportation.
    Rail volumes are a good indicator of how the economy is 
performing. While my written testimony details concerns about 
the current freight outlook, particularly with respect to coal, 
the good news is that BNSF has the capacity to grow with our 
customers. Volumes peaked for NBSF in 2006. Then we lost 20 
percent of the units by 2009 to the Great Recession. After 
that, freight volumes grew twice as fast as the economy through 
2014, and the industry struggled to handle that.
    Throughout this period, the rail freight industry, 
especially BNSF, increased investment with volumes. Since 2000, 
BNSF has invested more than $53 billion in its network. 
Unfortunately, volumes in 2016 are now trending downward. By 
January, volumes had fallen by about 9 percent. We do not see a 
lot of growth in the near to mid-term outlook. At the moment, 
BNSF has about 4,500 transportation employees on furlough and 
more than 1,800 locomotives in storage. My written testimony 
contains more detail about volumes across BNSF business units.
    The economy is running on two tracks. The consumer economy 
is stable but not growing quickly, and the industrial economy 
is slowing, if not in recession. A strong U.S. dollar, changes 
in energy markets, and regulation are a drag on growth. There 
is no better place to see that than coal volumes. This year, 
coal traffic in the U.S. has decreased more than 30 percent 
year over year. Markets are at work here. Falling demand has 
reduced coal utilization, but EPA regulations will ensure that 
coal will not likely grow again.
    Coal's steep decline means a significant downshift for 
investment in infrastructure, manpower, and other resources 
that support coal movements. BNSF, of course, must match costs 
to reduce volumes, and we are working on that. But cost is not 
the only element in the equation. We are also committed to 
generating growth.
    Turning to freight policy, from BNSF's perspective, the 
extension of the PTC deadline was one of Congress' most 
significant legislative accomplishments. BNSF expects that by 
the end of 2018 PTC will be installed as required on its 
network.
    Enactment of the FAST Act was a significant legislative 
achievement that will benefit the Nation's supply chain. The 
law prioritizes freight projects in a way no previous highway 
bill has done, and provides more Federal funding to mitigate 
public roadway conflicts with railroads' rights of way.
    Significantly, the FAST Act streamlined environmental and 
historic preservation reviews for railroad projects. Almost 
weekly at BNSF, negative decisions from courts or permitting 
authorities at all levels of government demonstrate that our 
growth is limited by permitting processes.
    Finally, Congress does not authorize or appropriate 
railroad capital budgets. However, Federal economic regulatory 
policy directly impacts investment decisions. BNSF appreciates 
the bipartisan effort to achieve balanced regulatory oversight 
in the reauthorization of the Surface Transportation bill. The 
virtuous cycle of growth in volume, revenues and reinvestment 
has brought us to where we are now. BNSF infrastructure is in 
the best shape it has ever been to meet customer needs, and its 
safety record is at an all-time best. The Nebraska division is 
amongst the top three safest on our network. Nowhere is 
efficient freight rail more important than places like Western 
Nebraska, and Senator Fischer and members of the Senate 
Commerce Committee have understood that.
    Thank you, and I look forward to answering any questions 
you may have.
    [The prepared statement of Mr. Freeman follows:]

      Prepared Statement of David Freeman, Senior Vice President, 
                  Transportation, BNSF Railway Company
    Good Morning Chairwoman Fischer. My name is Dave Freeman and I am 
the Senior Vice President--Transportation for BNSF Railway Company 
(BNSF). In this role I have responsibility for all train movement on 
the BNSF network in addition to capacity planning, and service 
performance. Thank you for inviting me to testify today. In addition to 
providing an overview of Nebraska's role in BNSF's business and 
operations, my testimony will discuss BNSF's perspective on the state 
of the freight economy, as well as the importance of good public policy 
for an efficient supply chain.
    Several significant pieces of legislation that affect the supply 
chain have been enacted by this Congress. BNSF is pleased to have this 
opportunity to thank Senator Fischer and the Members of the Senate 
Commerce Committee for the balanced and effective approach undertaken 
in passing these laws on important transportation policy issues, which 
include railroad economic regulation, safety rules and surface 
transportation policy. These laws are particularly important to the 
rural economy, where freight rail and roads play a large role in the 
movement of goods.
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Rail Industry & BNSF Overview and Outlook
    The economic value of rail is well known in Nebraska, where 
generations of family histories are linked to that of the railroads. 
Railroads in the U.S. operate across a nearly 140,000 mile network and 
are the workhorse of the economy. They deliver approximately 40 percent 
of intercity freight volume, more than any other mode of 
transportation. And because railroads do it more efficiently than most 
other transportation modes, shippers pay less for transportation by 
rail.
    Freight rail also lessens the environmental impact of the supply 
chain. For example, BNSF can move a single ton of freight almost 500 
miles on a single gallon of fuel, reducing greenhouse gas emissions by 
75 percent. One double-stack intermodal train of consumer products 
removes more than 250 long-haul freight trucks from the highway, 
helping to reduce traffic congestion and wear and tear on the Nation's 
highways.
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    BNSF is wholly owned by Nebraska-based Berkshire Hathaway, which 
completed its acquisition of the railroad in early 2010. At the time of 
purchase, Berkshire CEO Warren Buffett proclaimed it ``an all-in wager 
on the economic future of the United States.'' BNSF operates one of the 
largest freight rail systems in North America with approximately 32,000 
route miles in 28 states and also operates in three Canadian Provinces. 
BNSF has approximately 42,000 employees and operates about 1,200 trains 
per day.
    Total volume for all types of freight hauled by BNSF last year was 
10.3 million units, the most of any railroad. BNSF is the leading 
intermodal transportation provider, handling millions of shipments 
every year that could travel exclusively by truck but are carried on 
the railroad. BNSF hauled more than 4.8 million containers and trailers 
in 2015, representing close to half of all the freight units that BNSF 
handled for the year. BNSF hauls the most grain and coal and also has a 
large industrial products franchise, which includes crude oil and 
drilling inputs.
    BNSF's network serves all major ports along the west coast and Gulf 
of Mexico. Freight flows through several key transcontinental 
corridors--the Southern Transcon, which connects Southern California 
and Chicago; the Great Northern Transcon, which is the Pacific 
Northwest to Chicago and beyond; and the Midcon Corridor, which 
includes the lines that essentially move freight north and south. 
Nebraska is part of the Midcon Corridor.
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    For more than a century, BNSF and its predecessor railroads have 
played an important role in Nebraska's economy. BNSF's footprint across 
Nebraska dates back to the late 1860s when the Burlington & Missouri 
River Rail Road (B&MR) began planning its westward expansion from Iowa 
across the Missouri River at Plattsmouth. By the summer of 1870, the 
B&MR had built a new railroad from the west bank of the Missouri River 
to the newly designated state capital of Lincoln. By 1882, the new 
Nebraska line had crossed the entire state and into Denver, Colorado. 
Eventually, more railroad was built across the state, running northwest 
to Billings, Montana and beyond.
    BNSF employs more than 5,000 people in Nebraska with an annual 
payroll of almost $385 million, and operates major rail yards in 
Alliance, Lincoln, McCook and Omaha. We also operate shops in Lincoln, 
Havelock and Alliance. BNSF currently owns and operates more than 1,400 
miles of track in Nebraska, moving more than two million carloads of 
freight through the state on annual basis.
    BNSF delivers fertilizer from plants around the country to grow 
yields for Nebraska's crops. It links the state's agricultural 
industry, including its emerging ethanol industry, to markets 
domestically and around the world. BNSF also delivers a wide variety of 
consumer products to Nebraska retailers and businesses along with 
lumber and other building materials from the Northwest and the 
Southeast to satisfy construction demands throughout the state.
    A significant percentage of BNSF's traffic moving across the state 
is cleaner-burning Powder River Basin (PRB) coal from Montana and 
Wyoming, headed not only to Nebraska where its citizens rely on coal 
for their energy needs, but to electricity generators and consumers 
around the country. Coal freight traffic drives much of the rail 
employment and investment in Nebraska. More than 1,000 employees work 
at Alliance, where loaded and empty coal trains, along with mixed 
freight trains, are processed and rail cars and locomotives are 
inspected, repaired and overhauled.
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    Rail volumes are a good indicator of how the economy is performing. 
Freight rail volumes peaked in 2006 and then bottomed out during the 
Great Recession, when freight railroads lost 20 percent of their 
volume. BNSF carried 10.6 million units of freight in 2006 but 
plummeted to 8.4 million units in 2009.
    Coming out of the Great Recession, consistent growth in rail 
volumes did not begin again until 2010. Then, as the economy limped its 
way out of the recession, rail volumes actually grew at double the 2.1 
percent rate of economic growth from 2009 to 2014. The industry 
struggled with handling the volume growth during 2013 and 2014 and, 
while the number of units on the railroad never quite got back to peak, 
BNSF exceeded its peak in gross ton miles which reflected a shift in 
traffic mix to heavier commodities like coal, crude oil and grain. 
Throughout this period, the freight rail industry, especially BNSF, 
increased volume and investment.
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    Since 2000, BNSF has invested more than $53 billion in its network; 
all railroads invested heavily during this period. BNSF had all-time 
record capital programs in 2014 and 2015--totaling more than $11 
billion. We added almost 200 miles of double-track, approximately 1,000 
miles of centralized traffic control, 16 new sidings and more than 20 
extended sidings. In Nebraska last year, BNSF's $245 million capital 
plan for the state included, among other things, construction of two 
double track segments on the Ravenna subdivision between Bradshaw and 
Aurora and Pleasant Dale and Milford totaling 18 miles. These projects 
improve capacity on the Midcon Corridor, currently the heaviest 
trafficked coal route.
    In 2016, BNSF plans to invest approximately $110 million in its 
network in Nebraska, continuing a robust capital program which has seen 
investment of more than $500 million in Nebraska infrastructure over 
the last five years. In 2016 BNSF plans include approximately 1,760 
miles of track surfacing and/or undercutting work, the replacement of 
about 40 miles of rail and more than 160,000 ties, as well as signal 
upgrades for federally mandated positive train control (PTC).
    While my testimony will detail some concerning news in the current 
freight outlook, particularly with respect to coal, the good news is 
that BNSF has the capacity available to continue to grow with our 
customers and facilitate development within the region. These 
investments give us expanded capacity for improved service--our 
performance was strong in 2015 and we are carrying that momentum 
through 2016. BNSF infrastructure is in the best shape it has ever been 
to meet customer needs and operate safely.
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    As BNSF's Executive Vice President for Operations Greg Fox shared 
in testimony before this subcommittee last summer on the role of 
technology in improving safety, BNSF and the rail industry are 
currently experiencing the safest years on record, showing significant 
improvement over the past decade.
    During this time, safety improvements have occurred even as volumes 
increased, including volumes of hazardous materials and the growth in 
crude-by-rail. Continued robust investment in infrastructure has played 
a direct role in this success, along with the deployment of technology 
and safe operating practices, which involve rules compliance and a 
commitment to safety by BNSF's employees.
    I am pleased to report that the Nebraska Division is currently one 
of BNSF's top three safest divisions. Its 2015 reportable employee 
injury frequency ratio, at 0.82 reportable injuries per 200,000 
employee hours, is even better than BNSF's system-wide average of 0.95 
(which would be a best ever measure for any year on the railroad).
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    Unfortunately, volumes in 2016 now are trending well off the recent 
``peak'' volume levels realized in 2014. In 2015, industry volumes 
decreased about three percent versus 2014. The last two months were 
especially challenging as we saw the traffic decline accelerate. In 
December, volumes were down about nine percent versus 2014. This 
downward trend has continued into 2016 and we do not see a lot of 
growth in the near to mid-term outlook. At the moment, BNSF has 4,500 
transportation employees on furlough and 1,800 locomotives in storage. 
All railroads are undertaking efficiency efforts in order to reduce 
costs to match volumes, aligning resources with the current business.
    The economy is running on two tracks--the consumer economy is 
stable but not growing quickly, and the industrial economy is slowing, 
if not in recession. There is a structural change occurring in the 
traditional volume mix of railroad traffic, and the dynamics have been 
changing at a pace that I have not seen in my career. Coal volumes are 
at the heart of it, but volumes related to the industrial economy are 
also suffering. A strong U.S. dollar, changes in energy markets and 
regulation are a drag on growth. The consumer economy--consumer goods 
and automobiles--continues to grow at a modest pace. The ongoing change 
in railroad volume, mix and revenue currently underway will impact the 
freight rail industry for some time to come.
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    There is no better place to see that than coal volumes. At the 
beginning of 2015, we saw strong customer demand focused on rebuilding 
inventories--due to the underperformance in 2014. Continued service 
improvements and a mild winter have driven stock piles to historic 
highs; combined with low prices for natural gas, coal demand is at a 
historic low, as a fundamental shift in electricity generation is 
taking place. The Energy Information Administration is now forecasting 
that 2016 will be the first year that natural gas-fired electricity 
generation will exceed coal generation in the U.S. on an annual basis.
    In 2013, coal was still about 40 percent of tonnage and nearly 20 
percent of rail revenue for U.S. Class I railroads. This year, coal 
traffic in the U.S. has decreased more than 30 percent (31.7) year-
over-year. Markets are at work here; falling demand has reduced coal 
utilization. But Environmental Protection Agency regulations will 
ensure that coal will not likely grow again.
    Coal's steep decline means a significant downshift for the 
investment in infrastructure, manpower and other resources that 
supported coal movements. BNSF, of course, must match costs to reduced 
volumes, and are working on that. But cost is not the only element in 
the equation. We also are committed to generating growth across all of 
our business units in order to diversify Midcon Corridor utilization.
    Agriculture shipments--primarily corn, soybeans and wheat, as well 
as ethanol--represent about 10 percent of BNSF volumes. Approximately 
34 percent of BNSF's annual agricultural shipments are exported outside 
of the U.S. Of BNSF grain shipments, 60 percent move to export markets. 
In 2015, agriculture products made up more than 85 percent of BNSF 
shipments originated in Nebraska, almost half of which were corn and 
ethanol. Of the agricultural units originated in Nebraska, the majority 
are destined for Texas (37 percent), California (23 percent) and 
Washington (16 percent).
    Growth in agricultural products over the last several years has 
been steady due to increased plantings, improvements in crop yields, as 
well as continued expansion of grain facilities. In fact, the last 
three years of U.S. grain production have been the highest on record. 
Planting conditions indicate another big crop year in 2016 and BNSF 
will be ready to meet our customers' needs. As U.S. crop yields have 
increased, BNSF has expanded its capacity and efficiency in kind. 
Railroads are a factor in the U.S. producer's competitive position as a 
least cost producer in the world market. An efficient and low cost rail 
network is particularly important to Nebraska agricultural producers. 
Every load of agricultural products starts in a truck and, then if 
loaded on rail, has the optionality to move to end markets both 
domestic and international.
    For the first quarter 2016, agricultural products on BNSF are up 
1.5 percent, driven by record soybean exports through the Pacific 
Northwest ports and increased ethanol shipments. However, U.S. 
agricultural exports continue to face headwinds from global 
competition, low commodity prices and the strong U.S. dollar, which has 
grown more than 19 percent since July 2014. This is impacting many of 
BNSF's export segments.
    Turning now to industrial products, BNSF volumes in this segment 
for the first quarter 2016 are down 9.2 percent, due mainly to business 
related to crude drilling and production. Year-over-year, industrial 
products were down just under 6 percent (5.9) in 2015 versus 2014; 
crude volumes decreased 10.6 percent in 2015 as a result of lower oil 
prices. In 2014, we were averaging about 750,000 barrels of crude oil 
per day and that volume declined to an average 620,000 barrels per day 
in 2015. This trend worsened throughout 2015 and currently we are 
averaging around 360,000 barrels per day in 2016. Not surprisingly, 
other input commodities such as minerals and frac sand were also down 
in 2015, about 20 percent (21.3) versus 2014, and down in the first 
quarter 2016 over 25 percent (25.3).
    Plastics, on the other hand, are poised to grow given the more than 
$1 billion expansion of the petrochemical and refining complex along 
the Gulf Coast, fueled by low cost American oil. We expect oil-related 
shipments to by cyclical, while coal's downturn appears to be systemic, 
and likely permanent.
    Rounding out a review of BNSF business units, we end on a positive 
note. BNSF's largest business unit is intermodal--consumer products 
that move on trucks and rail, and sometimes also from a ship. BNSF 
intermodal volumes increased slightly in 2015, about 0.5 percent. Those 
volumes are almost 70 percent back from the recessionary trough.
    In 2015, international volumes were down almost 2 percent (1.8) as 
shippers diverted freight from U.S. West Coast Ports, responding to 
disruptions by the International Longshore and Warehouse Union (ILWU) 
labor negotiations. BNSF's Vice President of Consumer Products, Katie 
Farmer, testified before the Subcommittee about those impacts on the 
freight rail network last year. As you know, an agreement was reached 
in late February 2015, and pent-up demand began to clear in March. It 
is hard to tell exactly how much, but we know a certain percentage of 
that freight did not come back. It went permanently to other ports in 
Canada or on the East Coast.
    On a brighter note, BNSF domestic intermodal volumes, converting 
truck to rail, were up 2.4 percent year-over-year. Looking forward, we 
see additional growth potential and opportunities to take more truck 
miles onto the railroad. Looking longer-term, this will continue to be 
one of BNSF's best business growth propositions. We work hard to 
provide the service that converts truck miles to the railroad; trucking 
companies are BNSF's largest customers.
Public Policy Review
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Turning to freight policy, the interests of Nebraska shippers and 
the freight industry were well served by several important pieces of 
legislation that this Congress has passed. From BNSF's perspective, the 
extension of the PTC deadline was one of the most significant of these 
legislative measures. Freight rail traffic was poised to effectively 
stop before the end of 2015 if Congress did not act. The deadline was 
responsibly extended by Congress, and BNSF expects that by the end of 
2018, PTC will be installed as required on its network. BNSF has 
completed more than 80 percent of the necessary signal work and 
equipment of locomotives to support PTC implementation, and as of today 
is running trains in Revenue Service Demonstration (RSD) across 14 of 
its subdivisions. To date, we have operated more than 60,000 PTC trains 
in revenue service. We continue to work through challenges that the RSD 
is helping expose, including overall reliability of a complex system of 
systems, initialization of the locomotive onboard computer system prior 
to train departure, and en route failures and braking performance that 
relies on complex braking algorithms.
    Enactment of the Fixing America's Surface Transportation (FAST) Act 
was a significant accomplishment that will benefit the Nation's supply 
chain. The law prioritizes freight projects in a way no previous 
highway bill has done. It provides funding for not only freight-related 
roadway projects, like intermodal connectors and highway-rail grade 
separations, but also potentially port projects and some freight rail 
projects, such as port facility freight rail access projects, critical 
bridge infrastructure and railroad relocations. Throughout the laws 
various programs and policy provisions, special emphasis is placed on 
providing Federal funding to state and local efforts to reduce road and 
highway conflict with freight railroad rights-of-way.
    Significantly, the FAST Act continued and expanded upon project 
delivery and permitting reforms enacted as part of the reauthorization 
bill's predecessor--MAP-21. Of particular interest to railroads, the 
bill directs the U.S. Department of Transportation (DOT) and Federal 
Railroad Administration (FRA) to streamline and improve rail-related 
environmental and historic preservation reviews, either through 
internal process changes or by rulemaking. Permitting reform is 
critical at all levels of government. At BNSF, almost weekly, negative 
decisions from courts or permitting authorities at all levels of 
government demonstrate to BNSF and its customers that our growth, 
especially at origins and destinations, is limited by the inability to 
receive required permits.
    I would like to point out that the Senate version of the Water 
Resources Development Act (WRDA) contains additional provisions which 
BNSF considers important to continued permit reform. Section 1021 of 
the bill would expand the authority contained in Section 214 of the 
statute to cover railroad projects. Section 214 presently authorizes 
the Secretary of the Army to accept and expend funds from non-federal 
public entities, public utilities and natural gas pipeline companies to 
expedite the evaluation and processing of permit applications that fall 
under the jurisdiction of the Department of the Army. Amending the 
Corps' Section 214 authority to expedite the evaluation and processing 
of permits to include rail initiatives would streamline the industry's 
ability to deliver critical infrastructure projects that benefit the 
communities in which railroads operate and the customers they serve. 
Importantly, the new provision would not make any substantive or 
process changes and all environment rules and protections would 
continue to apply. We encourage enactment of this important provision.
    In addition, there is also a bipartisan legislative effort underway 
in the Senate to provide for a limited railroad exclusion from FCC 
review for safety-related equipment in railroad rights-of-way that rely 
on wireless communications. We strongly support this proposal which 
builds on the reforms established in the FAST Act, and hope it will 
move forward in the legislative process. Permitting reforms like those 
described above are critical to BNSF operations as continued permitting 
delays effectively cap growth and access to markets, which not only 
hurts the railroad but Nebraska's shippers.
    The FAST Act also followed and improved a recently released DOT 
rule related to rail transportation of certain flammable liquids, 
including crude. The DOT's rule established design standards for tank 
cars, along with operating requirements for High Hazard Flammable 
Trains (HHFT), including a mandate for the installation of 
Electronically Controlled Pneumatic (ECP) Brakes. Congress refined 
several important aspects of the rule's provisions, including 
strengthened requirements for new tank cars and calling for a data-
driven analysis for ECP brakes, thereby improving safety outcomes and 
the overall regulatory process.
    Congress does not authorize or appropriate railroad capital 
budgets; however, Federal freight railroad economic regulatory policy 
directly impacts the investment decisions of freight railroads. 
Adequate freight railroad investment, driven by appropriate returns, is 
an important factor in Nebraska's competitiveness in the world economy. 
BNSF and the rail industry did not oppose the passage of S.808, the 
Surface Transportation Board Reauthorization Act, which reauthorized 
the Surface Transportation Board, the agency which exercises economic 
regulatory authority over freight railroads. This legislation made a 
number of important process changes at the Board, and BNSF is carefully 
watching implementation of its provisions. Committee Chairman John 
Thune (R-SD), Chairwoman Fischer and other members of the Commerce 
Committee worked in a bipartisan fashion to craft legislation that 
sought to strike a balance between regulatory oversight of the 
railroads with the industry's need to earn sufficient revenues to allow 
for reinvestment. As we have stated many times since passage of the 
Staggers Rail Act in 1980, balanced regulatory oversight is critical to 
the health of the freight rail industry and its customers who depend on 
us to deliver consistent and cost-effective rail service.
Conclusion
    In conclusion, the freight rail industry has never been more 
prepared to take on freight volume and provide service to customers 
than it is right now. The ``virtuous cycle'' of growth in volumes, 
revenues and reinvestment has brought us to this place. However, 
Congressional action has also been part of this; Congress prioritized 
the supply chain within infrastructure policy, made important project 
delivery reforms and judiciously balanced the needs of supply chain 
participants. Most importantly Congress deftly prevented over-
regulation. It is impossible to overstate how important that is to the 
ongoing availability of necessary capital and the efficiency of 
railroad operations.
    In the current economy, it is difficult to know the ``what'' or the 
``when'' growth will return. But we believe that improvement will come. 
Earlier this year, the DOT released new 30-year freight projections. 
They are showing that freight tons moving on the Nation's 
transportation network will grow 40 percent in the next three decades.
    We have invested to handle it, and we have the workforce--in 
Nebraska and elsewhere--to move the additional freight that America 
will need. The current period is difficult, and BNSF and all the 
Nation's railroads are working to manage it in the most responsible way 
possible.
    Whatever the future brings, BNSF expects to continue to be able to 
support the economy of rural America. We will not just move its grain 
to market, coal to power its electricity generation, consumer goods to 
provide its consumers with the same choices as urban consumers, we also 
will work as a partner to develop and diversify the rural economy. From 
2013 to 2015, BNSF was instrumental in locating 414 new or expanded 
facilities across the network; in Nebraska alone BNSF helped create 
more than $300 million in investments and 100 jobs over that period. 
Nowhere is efficient freight rail more important than places like 
Western Nebraska, and BNSF appreciates that Senator Fischer and Members 
of the Senate Commerce Committee have understood that.

    Mrs. Fischer. Thank you very much.
    Mr. Kelley, welcome.

             STATEMENT OF KEVIN KELLEY, PRESIDENT, 
                      KELLEY BEAN COMPANY

    Mr. Kelley. Again, I'd like to thank you. I'm honored to be 
here today, and thank you for having the hearing here in 
Scottsbluff at WNCC, Senator Fischer. I'm looking forward to 
sharing this with you. I could talk for hours, but I'll keep it 
quick. We are thankful for the opportunity to present testimony 
before this committee.
    Kelley Bean is involved in the organization and marketing 
of dry edible beans. We are tied to both the grower and end 
users. It's our job to move the grower's production into the 
domestic and export markets. In a given year we utilize 
approximately 700 rail cars and 3,000 trucks for shipments that 
we are responsible for the transportation. Transportation 
logistics are crucial to our business.
    With rail transportation, we were classified under 
specialty commodities. We rely on single and small-quantity 
rail car placements at our plants, as opposed to unit trains 
used in grains and coal. This necessitates frequent spotting of 
empty rail cars to keep the flow of production moving during 
times of high-volume shipments.
    We have now been limited to one rail car switch a week at 
many locations. This situation is compounded when an empty rail 
car is delivered that is unsuitable for use and cannot be 
replaced until the next switch. This slows our production flow 
and delays delivery to the end customer. With this limited 
placement of rail cars, we also believe that railroads need to 
address their merged schedules to fit the rail car delivery 
situation.
    As the economy improves and demand for transportation 
increases, we fear that the service level can only suffer and 
that specialty commodities will feel a large impact on service 
levels as railroads focus on their primary high-volume and 
high-profit customers. We have seen and experienced this in the 
past when the railroad capacity was stretched and service 
levels dropped.
    As an example would be 2 years ago with Great Northern bean 
shipments to be exported to the Port of Houston. Service was 
very poor and railroads were not being supplied as needed. Due 
to rail delays, we were forced to ship the product by truck to 
Houston in order to comply with our sales contract terms. This 
was a great expense for our company in higher freight and cost 
and lost sales.
    Railcar Despacho Previo, pre-documentation of railcar for 
export to Mexico, was implemented in the early 1990s to 
alleviate congestion at the border and to comply with Mexican 
customs law requiring documentation and payment of duties prior 
to the railcar entering Mexico. The reason behind the 
implementation was a situation of a lack of engines at the 
border to cross the railcars in an orderly manner, creating a 
5,000 railcar backup that spread through several states, 
sidelining railcars destined for the border crossing.
    That situation does not exist today. Current Despacho 
Previo rules, as spelled out in BNSF Rules Book 6100-A, Item 
3140E, only allow 48 hours from release of the railcar at the 
origin shipping point for delivery to the border of the 
required export documentation. After the expiry of the 48 
hours, a documentation demurrage is charged by the railroad on 
a daily basis. This is an exceedingly short period of time to 
deliver the documents to the border, especially considering 
that a USDA Phytosanitary Certificate must be issued by a 
government agency after the railcar is loaded and released to 
the BNSF. In many cases, the railcar is still sitting alongside 
the shipping warehouse after the 48-hour period expires and has 
not physically moved or has only progressed a short distance in 
transit. This does not lead to congestion at the border.
    With the current situation, this appears to be more of a 
revenue generator than a legitimate mechanization for 
preventing congestion at the border. We would request a longer 
Despacho Previo period to give the shipper adequate time to 
accumulate the needed documents and dispatch those documents in 
an orderly fashion to the forwarding agent at the border. If 
shippers are given at least 96 hours, it would aid the shipper 
and would likely have no impact on border congestion.
    We would also like to say that we support the Highway 
Transportation Bill. It is a step in the right direction for 
funding a highway system that is essential to our industry and 
to the Nation as a whole. We need to have an extensive, safe, 
well-maintained highway infrastructure to convey the commerce 
of the United States for now and into the future.
    In order to accomplish this, we need to allocate greater 
funds than are earmarked to expand the capacity and quality of 
our highway system, not just maintain and patch to keep them 
usable. As the economy expands, the volume of truck freight 
will increase and require more trucks and qualified drivers and 
higher capacity highways. Since the highway system is shared by 
both commercial and private vehicles, highway safety must be a 
major component. This pursuit of highway safety should not be 
based on restrictive rules, regulations, and mandates to create 
a sense of safety, but with actual improvements to capacity, 
quality, and safeguards of the highways themselves.
    I'd like to thank you for allowing me to present today.
    [The prepared statement of Mr. Kelley follows:]

   Prepared Statement of Kevin Kelley, President, Kelley Bean Company
    We are thankful for the opportunity to present a testimony before 
this board.
    Kelley Bean is involved in the origination and marketing of Dry 
Edible Beans. We are tied to both the growers and the end users. It is 
our job to move the grower's production into the domestic and export 
markets. In a given year, we will utilize approximately 700 railcars 
and 3,000 trucks for shipments that we are responsible for the 
transportation. Transport logistics are crucial to our business.
    With rail transportation, we are classified under Specialty 
Commodities. We reply on single and small quantity railcar placements 
at our plants as opposed to unit trains used in grains and coal. This 
necessitates more frequent spotting of empty railcars to keep the flow 
of production moving during times of high volume shipments. We have now 
been limited to one railcar switch a week at many locations. This 
situation is compounded when an empty railcar is delivered that is 
unsuitable for use and cannot be replaced until the next switch. This 
slows our production flow and delays delivery to the end customer. With 
this limited placement of railcars, we also believe that the railroads 
need to address their demurrage schedules to fit the railcar delivery 
situation.
    As the economy improves and demand for transportation increases, we 
fear that the service level can only suffer and that Specialty 
Commodities will feel a large impact on service levels as the railroads 
focus on their primary high volume and high profit customers. We have 
seen and experienced this in the past, when the railroad capacity was 
stretched and service levels dropped. An example would be 2 years ago 
with Great Northern Bean shipments to be exported from the Port of 
Houston. Service was very poor and railcars were not being supplied as 
needed. Due to rail delays, we were forced to ship the product by truck 
to Houston in order to comply with our sale contract terms. This was at 
a great expense to our company on higher freight cost and lost sales.
    Railcar Despacho Previo (Pre-documentation of railcar for export to 
Mexico) was implemented in the early 1990s to alleviate congestion at 
the border and to comply with Mexican Customs law requiring 
documentation and payment of duties prior to the railcar entering 
Mexico. The reason behind the implementation was a situation of a lack 
of engines at the border to cross the railcars in an orderly manner; 
creating a 5,000 railcar backup that spread thru several states 
sidelining railcars destine for the border crossing. That situation 
does not exist today. Current Despacho Previo rules, as spelled out in 
BNSF Rules book 6100-A, Item 3140E, only allow 48 hours from release 
the railcar at origin shipping point for delivery to the border of the 
required export documentation. After the expiry of the 48 hours, a 
documentation demurrage is charged by the railroad on a daily basis. 
This is an exceedingly short period of time to deliver the documents to 
the border especially considering that a USDA Phytosanitary Certificate 
must be issued by a government agency after the railcar is loaded and 
released to the BNSF. In many cases, the railcar is still sitting 
alongside the shipping warehouse after the 48 hours period expires and 
has not physically moved or has only progressed a short distance in 
transit. This does not lead to congestion at the border. With the 
current situation, this appears to be more of a revenue generator for 
the railroad than a legitimate mechanization for preventing congestion 
at the border. We would request a longer Despacho Previo period to give 
the shipper adequate time to accumulate the need documents and dispatch 
those documents in an orderly fashion to the forwarding agent at the 
border. If shippers are given at least 96 hours, it would aid the 
shipper and would likely have no impact on border congestion.
    We would also like to say that we support the Highway 
Transportation Bill. It is a step in the right direction for funding a 
Highway System that is essential to our industry and to the Nation as a 
whole. We need to have an extensive, safe, well maintained highway 
infrastructure to convey the commerce of the United States for now and 
into the future.
    In order to accomplish this, we need to allocate greater funds than 
are earmarked to expand the capacity and quality of our highway system, 
not just maintain and patch to keep them usable. As the economy 
expands, the volume of truck freight will increase and require more 
trucks and qualified drivers and higher capacity highways. Since the 
highway system is shared by both commercial and private vehicles, 
highway safety must be a major component. This pursuit of highway 
safety should not be based on restrictive rules, regulations, and 
mandates to create a sense of safety, but with actual improvements to 
capacity, quality and safeguards of the highways themselves.

    Mrs. Fischer. Thank you very much.
    Mr. Holliday. 

 STATEMENT OF RICHARD B. BRENT HOLLIDAY, JR., CHIEF EXECUTIVE 
              OFFICER, NEBRASKA TRANSPORT COMPANY

    Mr. Holliday. Good morning again, Senator Fischer.
    Mrs. Fischer. Good morning.
    Mr. Holliday. I'd like to thank you and the Committee for 
hosting this hearing today and for the opportunity to testify.
    My name is Richard B. Brent Holliday, Jr., and I am the 
owner and the CEO of Nebraska Transport Company based here in 
Nebraska. My son Phillip represents the third generation of our 
family owned business. We serve greater Nebraska and the 
Midwest, and most of our revenue sources derive from our less 
than truckload or LTL operations, and supplemental income 
supplied through our truckload brokerage and expedited 
services. We operate 10 terminals nationally, six of which are 
located in Nebraska, and we currently have 225 employees.
    I want to begin my testimony today with a quote from a man 
that I've admired all my life, one of my heroes. He once told 
me--and this is a true statement--``Brent, sometimes it's 
better to be a pup on the porch than a big dog out in the 
street.'' That man was Richard B. Holliday, Sr. He was my 
father. He ended up in Scottsbluff because this is where he ran 
out of gas and money when he was 18 years old, and he worked 
odd jobs until he secured a job on a freight dock and later 
became a truck driver. He went on to work for a local company 
with numerous promotions in his 26-year tenure at that company. 
He ultimately held the title of VP of Operations. The company 
he worked for sold to a national carrier, and shortly 
afterwards he bought the ICC authority of a dormant company, 
and the story of NTC started in 1973.
    Now, that doesn't have a lot to do with what we're doing or 
talking about today, but trucking has been a family business, 
and most of the carriers that serve Nebraska are small 
carriers. It's very important to the future of our network.
    In Nebraska, there are 13,500 interstate carriers 
registered. That makes us second only to Texas, and per capita 
we are actually first. That does not include private or 
intrastate carriers. The majority of these carriers are small 
carriers. Eight-hundred-fifteen-thousand pieces of equipment 
over 26,000 pounds are registered in the state of Nebraska. The 
local and regional economic impact is evident.
    Regardless of the different modes of transportation 
required to move goods from Omaha to North Platte or Beijing to 
Gering, trucks represent the first and last mile in a worldwide 
freight chain. Much of the last-mile service is provided by 
smaller carriers. For an effective local and regional 
transportation network, we have to have an ample supply of safe 
and financially strong carriers, large and small.
    Regardless of fleet size, regulation has impacted everyone 
financially. The burden for smaller carriers, the carriers that 
serve communities such as Scottsbluff on a regular basis, is 
even more profound. There's not a road in the state of Nebraska 
that one of our trucks has been on, and not everyone is just 
dying to have service to Venango, Nebraska, but it's important 
to the people of Venango, Nebraska.
    Other industry headwinds such as the driver shortage, 
turnover, and escalating equipment costs pose a real threat. 
According to a recent article in Transport Topics, 3,585 trucks 
were sidelined in the first quarter of 2016. That is three-and-
a-half times the amount of trucks removed from operation than 
in the first quarter of 2015. New, revised, and future 
regulation will continue to put pressure on carriers 
financially.
    Now, let me say this: regulation is not a bad thing. It has 
made our industry as safe as it ever has been and ensures our 
drivers are trained and tested to make sure that they are 
physically and mentally fit to share the roads with our 
families. Things such as EOBs and standardized safety scoring 
system for trucking is not only beneficial, it is a must. But 
it has to be consistent state to state and community to 
community when it comes to enforcement and measurement.
    We are not afraid of regulation, and we're not afraid of 
managing regulation. Management of regulatory consistency is 
attainable. However, consistent regulatory changes are not. In 
other words, tell us what you want. We'll manage it. We'll make 
it right. We'll get it right, and we'll train our people. 
Revisions that require network and system changes are expensive 
and confusing to employees, and it affects service to rural 
communities.
    The implementation of the FAST Act is a very good start, 
and we really want to thank you for your work on that. Things 
like requiring the FMSCA to specify how it intends to evaluate 
future rules to measure their intended outcomes using a wider 
scope and selection of motor carriers and its cost/benefit 
analysis, listening to public concern for potential regulatory 
action, and requiring data on how safety initiatives will be 
quantified are all very positive steps.
    The FAST Act hopefully moves us into a more interactive and 
commonsense approach to future regulation. Real world versus 
regulation will never be understood in Washington without an 
interactive and collaborative approach with those being 
regulated. Increased regulation needs to be balanced and 
statistically data based. Thanks again for what you've done.
    The day of the pup staying on the porch where it's safe is 
over. Carriers of all sizes need to be prepared to be in the 
street, and we need to know we can survive when we get there. 
If we don't, the communities we serve will be held hostage to 
``you get it when you get it'' due to a cost structure that 
means extreme efficiency at the expense of service. We need 
your help, Senator Fischer, and we are certainly willing and 
prepared to help you. Thank you again.
    [The prepared statement of Mr. Holliday follows:]

 Prepared Statement of Richard B. Brent Holliday, Jr., Chief Executive 
                  Officer, Nebraska Transport Company
1. The Driver Shortage is Bad and Getting Worse

  a.  The driver shortage is currently 48,000 and growing

  b.  There are many reasons for the driver shortage, including 
        lifestyle and other local job alternatives.

  c.  The biggest reason appears to be driver age. The average driver 
        is 8-10 years older than the average American worker. Hence, 
        retirements will disproportionately affect our industry.

  d.  We need to begin identifying ways to attract more individuals to 
        our industry

2. We Need Stability/Consistent Regulations

  a.  Trucking has struggled to plan and adapt under changing 
        regulations (like hours of service) and the uncertainty of 
        future ones (sleep apnea).

  b.  We appreciate Senator Fischer's regulatory reform language in the 
        FAST ACT which requires FMCSA to prioritize rulemakings.

  c.  We also urge greater Congressional oversight with respect to the 
        necessity of rules (i.e., is there a compelling need and will 
        they have a net safety benefit?).

  d.  Regulation needs to be balanced and statistic based. What is real 
        world vs. Regulation

  e.  A study for George Mason University finds that since 1980 $4 
        Trillion dollars has been lost in economic growth due to 
        growing regulations and our economy would be 25 percent larger 
        if regulation would have been frozen in 1980

  f.  Management of regulatory consistency is attainable, constant 
        regulation changes create hardship to the carrier, drivers, and 
        customers

3.  The New Electronic Logging Device Mandate Should Apply to All

  a.  FMCSA's new ELDs mandate exempts several groups of carriers.

  b.  Those using pre-model year 2000 trucks and those operating 
        locally (i.e., within a 100-mile radius) are generally exempt.

  c.  These exemptions create safety implications and establish an un-
        level competitive playing field.

  d.  FMCSA should correct for this inequity and refuse exemptions for 
        carriers and industry segments that will, inevitably, request 
        them.

  e.  ELD's eliminate a layer of ability to alter actual on duty 
        violations.

4. Highway Investment is Insufficient

  a.  While the FAST Act increased highway funding by about 5 percent, 
        this is not sufficient to make up the $740 billion backlog in 
        needed highway capital investments to improve highway and 
        bridge maintenance and address capacity needs (the Federal 
        share is about half).

  b.  Two-thirds of roads are in poor or mediocre condition and 63,000 
        bridges are structurally deficient.

  c.  Congestion costs the trucking industry $50 billion annually, 
        including more than $200 million in Nebraska.

  d.  In 2014 truck drivers sat idle in traffic for 728 million hours, 
        equivalent to 265,000 drivers sitting in their trucks and not 
        moving for an entire year.

  e.  The best way to address the funding shortfall is to increase and 
        index the Federal fuel tax.

5. Smaller carriers struggle to survive in today's Environment

  a.  National carriers have eroded personal relationships with 
        national pricing and created a commoditized pricing environment 
        at the expense of service.

  b.  3 PLs or National logistics providers have commoditized pricing 
        and compromised regional customer/carrier relationships

  c.  Logistics providers do not have regulatory costs, asset costs, 
        management costs, or risk

  d.  National carriers have a lower proportional costs associated with 
        regulation.

  e.  Small carriers are the first mile and last mile in worldwide 
        freight chain If small carriers can't survive rural America 
        will be at the mercy of a ``you will get it when you get it'' 
        environment

    Mrs. Fischer. Thank you very much.
    Any written testimony that you have will be included into 
the record.
    Now we get to the fun part of the hearing. I'm going to ask 
a number of questions for you folks, and I really hope you'll 
have an open conversation with me so that we can really drill 
down on some of these issues.
    And I'd like to begin with you, Director. Could you 
elaborate on how NDOR is working with the U.S. Department of 
Transportation to develop a statewide freight plan? What are 
some of the opportunities and the challenges that you foresee?
    Mr. Schneweis. Sure. So, the FAST Act requires a freight 
plan be in place in order to get some of the funding. For us 
it's a first-generation freight plan, so the first time we've 
done one, and I think it's long overdue for us to have an 
understanding of the supply chains in our state and understand 
how the network supports freight movement.
    So as a first-generation plan, that's really the approach 
that I think we're taking to it in terms of trying to establish 
that priority freight network and understand how goods move 
across that network. Our partnership with Federal Highway and 
USDOT is critical as we think about the freight plan and 
implementation of whatever recommendations come out of that.
    I think another piece of it, there are a couple of other 
things that we're thinking about. We're such an agriculture-
heavy state, and our network is so large, so how we can get 
those goods to market across what starts as our local network, 
all the way out to the interstate or to the railroad or however 
it ends up getting to market, understanding that local network 
and how it feeds in I think is an important piece. And that 
network is, as you know---- many of our bridges are over 50 
years old, and understanding how that all works together is an 
important part of the freight plan.
    The local bridge piece is an important part of it, and then 
I think just understanding those supply chains work and looking 
for opportunities to understand how our highway network and 
other pieces of the multi-modalities can provide better 
connection, better access, better safety, that's what we're 
after.
    Mrs. Fischer. Agriculture is the economic driver for the 
state of Nebraska, so I appreciate you recognizing the 
importance of setting those priorities to include that.
    Have you looked ahead at trying to determine how you're 
going to make up your group as stakeholders as you look at 
working on a freight plan for the state? Do you have any kind 
of outline on who you're going to reach out to, or if it's 
going to come from the Department or the Administration? Are 
you going to look for any kinds of grassroots input as well?
    Mr. Schneweis. I think the partnerships that we have --in 
my view, we have a responsibility as government to reach out to 
the folks that we're trying to serve, our customers, and that's 
the people of Nebraska. It's the folks who are delivering the 
goods on our network. So we have to involve those folks whether 
they're railroads or shippers, growers. All of these folks need 
to be involved in our thinking and in our freight plan. So, 
absolutely.
    We don't have a freight advisory council like some states 
have. That will be a part of this group, of our freight plan at 
some point. We will engage that sort of group and carry it 
forward. But it is critical that we include those stakeholders.
    Mrs. Fischer. And as you look at stakeholders, I know 
you'll be seriously considering this area of the state and 
local Chambers or local economic development groups. But there 
are a number of small communities in Nebraska that are truly 
disconnected. Senator Davis is here today. He represents a lot 
of those counties that are out there that don't have really a 
connection. There aren't that many highways even going through.
    So how would you try to include them, and what would you 
say to these areas of the state that are looking at losing 
population, about their involvement in trying to stimulate any 
kind of development?
    Mr. Schneweis. Well, we know that transportation plays a 
role in supporting economic growth, and that means all across 
the state. So even just as we think about the Build Nebraska 
Act and some of our capital improvement projects that we're out 
planning for, we very much believe in getting out into the 
communities and talking about what's important to the regions. 
I believe we'll make better decisions in government if we ask 
people what they think, and that's something that I think has 
been a piece that we're trying to improve at the Department of 
Roads. I think it plays a role in everything we do, whether 
it's our state projects or the freight plans that we're working 
with USDOT on. So, absolutely, we need to work with those folks 
and the people that live in Nebraska and that work in these 
communities and that own these companies. They can help us make 
better decisions, and so that's what we're trying to do.
    Mrs. Fischer. Well, thank you, and I'd like to once again 
welcome you to the state. I appreciate the job you're doing and 
the enthusiasm.
    Mr. Schneweis. Thank you.
    Mrs. Fischer. So, thank you, sir.
    Deb, you have always been a tremendous advocate for 
transportation in Western Nebraska. I mean, I remember meeting 
you a long time ago about the Heartland Expressway, and you 
were relentless.
    [Laughter.]
    Mrs. Fischer. Which was a good thing.
    Would you provide more details for everyone here today 
regarding the status of the project for the expressway, the 
timeline and any challenges that you anticipate as the project 
moves forward?
    Ms. Cottier. Well, I appreciate the length of time that 
we've all been involved in this. I can remember when there was 
a group called the Western Nebraska United Chambers of 
Commerce, and former Senator Joyce Hillman and I sat as Chamber 
directors on that committee when we actually held a contest to 
name the Heartland Expressway, so it goes back a year or two.
    So that actually began as an effort from the Scottsbluff-
Gering area to try to figure out how to better connect our 
businesses to the front range of Colorado, frankly, and then 
worked with South Dakota in a joint venture to try to then 
ultimately connect Rapid City with Denver and all of the 
communities in-between that wanted to be a part of this 
process. That includes Alliance, Nebraska. There are folks here 
from Alliance, from Kimball, from the whole region, and so it's 
extremely important.
    The status of that so far is that we have obviously one of 
the promises from the state government to connect I-80 to the 
next town of the largest size, from Kimball to Scottsbluff. It 
has been four lanes for a number of years. We've gotten several 
pieces that help move that traffic around and through 
communities. We're headed east on 26 and 92, about 10 or 12 
miles. Eventually that will be four-laned all the way to 
Highway 385 on what we call the L-62A spur.
    Right now, the Department of Roads is in the process of 
letting bids and doing right-of-way work to try to do the next 
piece of this, which is from that junction--we call it the 
Baird Turnoff in general vernacular terms--on U.S. 385 to the 
city limits of Alliance up to Highway 2. So that will be 
another very important piece which currently has a lot of 
traffic, ag traffic and difficulty with seeing around and 
passing and all of that.
    The piece, of course, that is nearest and dearest to my 
heart is from Alliance through Chadron to the Nebraska-South 
Dakota state line. Those of you that have come from South 
Dakota probably know, they have finished their portion of the 
Heartland Expressway four-lane project, and when you get to the 
Nebraska state border it goes back to two lanes on the Nebraska 
side of that imaginary line. That's a visual that we can all 
see every time we have to go to and from Rapid City, but it 
really is sort of what we're talking about. It then creates 
this bottleneck and this traffic hazard, if you will.
    So the Heartland Expressway Association, withheld from our 
partners at the Federal level, and the Nebraska Department of 
Roads, leading the charge, have actually conducted a number of 
years ago the Corridor Development and Management Plan, which 
literally broke the remainder of the Heartland Expressway into 
four phases to be finished. We are now going to turn dirt on 
the first of those four remaining phases this coming year.
    So I have to say, without the Build Nebraska Act in the 
Nebraska legislature, we would not have had the wherewithal to 
convince the Nebraska Department of Roads that that should be a 
project, and that also allowed us to have better input with the 
Director's direction to say we need to figure out how to best 
use that Build Nebraska Act funding. And now with the 
Transportation Innovation Act, we have even a better 
opportunity to really plan how those work.
    So that's where we are, and we're hopeful that those three 
remaining phases will be finished in my lifetime, I guess is 
the way I put it.
    Mrs. Fischer. Do you have any numbers on the direct 
economic impact that this would have on local communities or 
that you've even seen in the past when this is opened? And I 
would ask you and then open it up to other members of the panel 
if they would like to speak on that.
    Ms. Cottier. In terms of dollars, the best number that we 
have been able to use, which comes from an official study, 
which makes it true, of course, is that this investment would 
bring about a two-to-one payback, if you will. So for every 
dollar invested in road improvements, we would see a two dollar 
return in the economics of it.
    Interestingly enough, back in the day when the Federal 
Highway Administration was requiring quarter development and 
management plans before they would consider earmarking funds, 
there were not a lot of economic development criteria included 
in those RFPs that we had those studies done. We fought, and a 
couple of the members of the Heartland Expressway Association, 
as well as staff from Ports-to-Plains, fought hard to get some 
economic development data included in that study that was done. 
So that's the best number that I have that we use, and 
Department of Roads may have some other criteria.
    Mr. Schneweis. Well, we are studying it. As we think about 
our highway investments and our transportation investments in 
the future, the economic impacts of these investments have to 
be understood, and that's a layer that we've brought into our 
prioritization process in the last year. So not only public 
improvements were stressed but also economic impacts. We also 
understand that economic impacts vary depending on where you 
are. Job creation is what we're after. GDP growth is what we're 
after. But the definition of that and what impact that has on a 
community varies depending on where we are.
    So we're trying to understand what that means, and then 
we're trying to put the project through some sort of economic 
screening so that we can help inform our decisions and make 
better ones. It has always been about engineering, which it 
should continue to be, largely based on engineering, traffic 
and safety, these things. But economic impacts, what they mean 
to communities, that's really how we can make the best 
decisions with our limited resources.
    So we've been working with Deb and her group to try and 
understand the economic impacts of the Heartland, and certainly 
it's going to be a heavy factor in our prioritization process.
    Mrs. Fischer. Have you ever seen any studies, or do you 
plan to look at this on what the impact is? Because it does 
vary across the state. What the impact is of an interchange in 
Scottsbluff County compared to what the impact would be of an 
interchange in more rural areas in the state? Because it is a 
big difference.
    Mr. Schneweis. Yes. I think you have to understand it not 
only in terms of job growth and opportunity and those things, 
but also put it in the context of the situation where you are, 
the geographic location where you are. A job is not a job is 
not a job across our state. So understanding that and 
understanding those differences is critical for us to make 
smart decisions. It's the Build Nebraska Act, not the Build 
Eastern Nebraska Act or Build Western Nebraska Act. It's for 
the whole state.
    Mrs. Fischer. And that was the intent.
    Ms. Cottier. I would point out one thing. In the printed 
statement that we submitted, there are some great statistics in 
there about rural economic development and how locating next to 
an interstate, next to a four lane, next to a two lane, the 
difference in how those micropolitan areas perform, a nice 
chart in there that shows that obviously the strongest 
performance are those on the interstate. The weakest is not 
even on a four-lane highway. But the improvement that you get 
by having a four-lane is significant.
    And the only other thing I would mention about the criteria 
is what we have come to realize and what we hope folks 
understand in Western Nebraska, as I know you do, is that roads 
are not always based on vehicles traveled. The need for roads 
out here is every bit as critical as the really urban congested 
areas, probably more so, because we have so many fewer options. 
But the number, the count of how many wheels go across a little 
ticker tape is not as important as how those interact with the 
types of traffic that's on them.
    Mrs. Fischer. Right. And, Director, would you say that it 
is still the number-one priority of the Department to look at 
safety as the first indicator for any expenditure of taxpayer 
dollars?
    Mr. Schneweis. Yes, absolutely.
    Mrs. Fischer. Thank you.
    And did anyone else have anything to add on that?
    Mr. Overman. I'd like to give a little bit of historical 
perspective on what politics does. We all know that's what 
makes the wheels turn, and you do such a good job of it.
    Mrs. Fischer. Never.
    [Laughter.]
    Mr. Overman. Statewide and nationally.
    But in the early 1990s, I was on the steering committee for 
transportation and communication for the National League of 
Cities for 6 years. We made the Nation's priorities to present 
to Congress. When Deb and I were involved early on with the 
Heartland Expressway, I met one morning with the Chairman of 
our committee. His name was Jim Bell from San Jose, California. 
Over breakfast, on a napkin, I drew the Heartland Expressway, 
and I said we need some money in the upcoming bill. He said let 
me talk to Norm Manetta, who was Chairman of the Committee. He 
said Mr. Manetta is on his honeymoon in Florida, but he's a 
good friend, I'm going to call him. He called him on his 
honeymoon.
    To make a long story short, when the bill came out, we had 
$29.6 million in the highway bill, of which half was to go to 
South Dakota and half to Nebraska. I will tell you, it would 
never have happened if I had not been there, just like you were 
there now to make things happen. That was the first money ever 
received by the state of Nebraska for the Heartland Expressway.
    Mrs. Fischer. Good job.
    Mr. Holliday, if we could talk a little bit about some 
concerns that you expressed in your written testimony, and it 
was with regard to some trucking regulations. I know that you 
said that you can handle regulations, you just need to have 
that consistency that's out there. But in your testimony you 
mentioned the FMCSA, the 2013 revisions to longstanding hours 
of service regulations. You mentioned that briefly again in 
your testimony here.
    The changes essentially mandated that drivers sleep at 
night, and it caused severe disruptions to our nation's supply 
chain and threatened the safety on our roads, I think, by 
pushing more trucks out on the road during the morning commutes 
that we saw.
    So given the supply chain that we have, and time is money, 
what's the cost of that regulatory uncertainty that we see in 
Washington now on your business? What's the cost, and I guess 
what does Washington need to do?
    Mr. Holliday. Sure. I appreciate your question. To put down 
a dollar figure, I can't give that to you today. I could 
certainly do the research on that. But for us, in the LTL 
environment especially, we have to travel at night because our 
trucks are consolidating shipments in places like Kansas City, 
Denver, Chicago, Des Moines during the day. They bring those 
back to the terminal. That freight moves at night so that it's 
in the communities where those consignees are the next morning. 
That's not an option.
    As far as our long haul, our 48-state operation, I would 
just as soon have our drivers operate during the daytime, 
daylight hours only, for obvious safety reasons. We'd like for 
them to go on the same roads all the time. That also is 
impossible.
    So for us, especially with an LTL or regional LTL operation 
like we are, we can adjust to hours of service rule changes a 
lot easier than a truckload carrier, and those truckload 
carriers--and we have a truckload division, but it's smaller. 
But a lot of those truckload carriers are the very carriers 
that Mr. Kelley is relying on at times to get product to the 
end user. The hours of service limit you to a time on the road 
that I believe is safe and I think has been studied to be safe, 
but there are times when it requires a driver to stop when he 
may be 100 miles from destination. So the cost of that is 
another day to the consignee before they can get the product to 
the carrier, because that carrier then has to secure a 
backhaul, so you may miss out. If you can't unload until a 
Friday afternoon, it means that truck is going to sit wherever 
he's at over the weekend until he can get a backhaul, or he's 
going to deadhead home, which means zero revenue to that truck.
    So if you hold the truck, you've just taken a capacity 
situation that's already tight throughout the Nation and you've 
compounded it.
    Mrs. Fischer. When you work with businesses in delivering 
product, do you hear very often from businesses that they're 
concerned with the amount of time it may take to get that 
product--or especially I think with commodities, with ag 
commodities, there is a certain time limit you have to get them 
delivered. But do you hear from businesses where they're 
worried about it, they complain about it, they question it? 
Does it add cost to them, too?
    Mr. Holliday. Every day. You know, it's never there soon 
enough, especially in the LTL environment, once again, which is 
the majority of our revenue stream. We have customers that, 
because of economics today--and this changed probably 10 or 15 
years ago. What you used to hear is these companies operating 
on a just-in-time mode. That was something for the bigger 
companies or warehousing. It's across the board now.
    People don't warehouse stock like they used to. They have 
to have the flexibility of a carrier that can literally get 
freight from Kansas City to Scottsbluff overnight, Chicago to 
Denver in 2 days, and they rely heavily on that because their 
inventory is so low that if a customer comes in and needs 
something or a customer has a furnace go out, they may not have 
that in stock. We hear that all the time.
    Truckload and commodities are somewhat, actually a little 
easier than it is in the LTL environment. If Kelley Bean calls 
us and tells us that they're going to have three loads out of 
their Morel facility that needs to be in Houston, that's 
normally a week ahead of time that they can offer us that 
information, minimum, and we can adjust to that quickly. But in 
the LTL environment, and obviously the expedited environment, 
that becomes a lot harder to do.
    Mrs. Fischer. Thank you very much.
    Mr. Overman, what's the importance of a cargo business at 
the airport? We talk about the passenger business, and the 
cycles go up and down and you're always threatened with losing 
that funding for the essential air service, which I give 
Congressman Smith a round of thanks there. He has been a 
tireless advocate for essential air service for our rural 
communities. But what's the importance of cargo service, not 
just at the airport out here but all over?
    Mr. Overman. The cargo services are tremendously important 
to people in the corridor from all these companies all over the 
United States, and they want tomorrow service. They get it 
through the airport, part of it through FedEx and UPS. Both 
have planes come in every day. And as I stated earlier, FedEx 
goes out 150 miles in every direction from here. We had one 
route that goes to Hyannis from here, and it comes in on a 
plane. Some comes in on a truck. We just built a new truck 
depot at the airport and, of course, we already had the air 
there.
    But at Christmastime, and maybe Thanksgiving, some times 
like that, they may have to send in extra airplanes because 
they have so much coming in from--whether it be Amazon or some 
other major company across the country, and they want it 
overnight. We're an overnight society now, and a lot of it 
comes in by air. The ground transportation is there as well, 
and the UPS doesn't go out quite as far. They go out about 120 
miles, generally speaking. They have a lot of trucks all over 
the panhandle of Nebraska and Eastern Wyoming, and it all comes 
out of that airport.
    Mrs. Fischer. The second hearing that I had last year as 
Chairman of the Subcommittee, it was on our ports, and it 
happened to coincide with the disruption that we were seeing in 
the West Coast ports at the time. We have three folks on here 
that I think were affected by that, our airports, our rail, and 
our trucks. I had a lot of people say to me you're a senator 
from Nebraska, why are you doing this?
    Well, first of all, it's under the jurisdiction of our 
committee. But I think it really drove home that our ports 
affect everyone in this country.
    Would any of you like to just briefly speak to that?
    Mr. Freeman. Just to jump in from a railroad perspective, 
just to give you an idea about the ports of Southern 
California, we typically operate 50-plus trains a week out of 
the ports of L.A. and Long Beach. We have similar lesser-scale 
dynamics at the port of Oakland, the ports in Seattle and 
Tacoma up in the Pacific Northwest.
    When we went through the dynamics a year ago of what was 
going on out there and the impact, the numbers dropped. There 
clearly were many, many less containers of stuff, and you could 
pick your stuff, from furniture to electronics to tennis shoes 
or whatever, that were being moved and therefore, obviously, 
available for consumption at any point in the U.S., which is 
basically where that stuff moves over time.
    Clearly, when it was all settled out, it came back to 
normal. There is today a little bit of a downturn in terms of 
what's actually coming through the ports given some of the 
world economy situations that are out there and things of that 
sort. But when you look at the sheer number of containers, when 
I talk about 50 trains, we average anywhere from 250 to 275 
boxes per train to a high number of up around 350 on some of 
the longer trains we'll run. So clearly you'll understand how 
much stuff comes through the ports that ends up at any place in 
the U.S., and frankly is even bridged to other countries in 
some of the bridge operations that work across the U.S. as part 
of their transportation plan.
    Mrs. Fischer. Any other comments on that?
    Mr. Holliday. Yes. I think from a trucking perspective--and 
I don't do a lot of business out in California, but trucks have 
wheels. As I spoke about earlier, just 13,500 carriers in the 
state of Nebraska alone, most of those guys are small carriers. 
They have truck payments, they have overhead. They can't afford 
to have a truck sitting. So when they hear that there are 
problems with a shipping location, some of that is reacting as 
quick as a storm, but especially in the situation in 
California, they don't send the trucks there because they know 
there's not going to be the freight that they need.
    We see some of that with seasonality out of California with 
produce. When it's the high shipping season for produce, we're 
offered a lot more loads of steel and things like that because 
we don't have any refrigerated trailers. But a lot of the 
carriers out there will switch to refrigerated when produce 
season comes into play.
    Just here again, it shows that smaller carriers need to be 
very agile and very diversified to stay in today's world. I 
often say you'll see some of our t-shirts on a little league 
team here in Scottsbluff, but you'll never see one of my ads on 
the Super Bowl. We are competing with carriers that have ads on 
the Super Bowl. So their resources allow them, I guess, to go 
through slowdowns regionally a little bit easier than what we 
can. It allows them perhaps some engineers taking a look at 
predicting things that we are sometimes not as good at doing. 
So we have to be as agile as we can on any given day and really 
pay attention.
    I think that from a capacity standpoint, it once again 
compounds what's happening here in rural Nebraska when trucks 
are diverted to areas where the grass is greener for a short 
period of time.
    Mrs. Fischer. My question you responded to on the ports 
with things coming in and being able to transport that. What 
about things going out? What about exports? When you see a 
shutdown on the ports, I mean, obviously not only is there a 
backlog there that we can't get things out, but have you seen 
an impact on our markets now? Have we lost export partners 
around the world because of the congestion that happened in the 
shutdown we saw on the West Coast?
    I guess I'll start with you, Mr. Kelley, because I hear a 
lot about it from ag producers, about issues that they had 
really with product just rotting. Has that affected you, and 
has it affected your export dealings now?
    Mr. Kelley. I think Mr. Freeman alluded to it. The railroad 
has a huge responsibility, and we're a small part of that. But 
we rely totally on the railroad in most export situations, 
using trucking as a secondary. Because, as you said, railroad 
has the value, and we appreciate that and recognize that.
    I want to emphasize that my speech sounded like I was 
picking on the BN, and I didn't mean that, to do that. I had 
some help writing my speech and----
    Mrs. Fischer. Railroads get used to being----
    Mr. Freeman. Thick skin. Not to worry.
    [Laughter.]
    Mr. Freeman. I think, just to pile on or add to the point 
of your question on the export side, clearly the flows through 
the ports of exports--as an example, we run traffic from Omaha 
in a modal facility there that goes to the port. We do assorted 
different things from all parts of the U.S. headed for the West 
Coast in various exports. There is no doubt that it has impact 
on export flows of agricultural commodities or industrial 
equipment or whatever. There are clearly impacts.
    Mrs. Fischer. Have we lost partners?
    Mr. Freeman. I don't know that I'm in a position to be able 
to talk about lost partners, but I hear----
    Mrs. Fischer. Have you seen a decrease in moving products?
    Mr. Freeman. Over time, there are clearly impacts by port 
flows on the movement of products, recognizing that the 
strength of the dollar and other economic issues are part of 
the equation as well. But there is no doubt that the 
effectiveness of port operations working in concert with 
truckers, the railroads, et cetera, is a big part of economic 
growth in Nebraska, the U.S. as a whole, and over time we have 
to do things such as, as an example, some of the FAST projects 
with freight corridors, intermodal connectors, things of that 
sort, that clearly are and should be a big part of our economic 
future going forward.
    Mr. Kelley. I thank you, Mr. Freeman.
    We saw a tremendous loss of business as a result--and I'm 
talking about the dry edible bean business, and we're only a 
part of that. But certainly Western Nebraska is one of the 
leaders in exports. And politics is involved, world peace is 
involved, because we used to export 50 percent of our Great 
Northerns worldwide, and that doesn't happen anymore. A lot of 
it has to do with the bean. Consumers have theoretically been 
at war with us through the problems with ISIS and the different 
things that have happened overseas.
    There are so many things that affect us as Americans. But 
the ports themselves, if the Administration in Washington would 
have reacted to the strike, which they didn't call it a 
strike--they played around with the words, because if they 
called it a strike, the President could have reacted and played 
with that. They played it to the tune of billions and billions 
of U.S. dollars were lost in that process, while people were 
asking for a raise on the Coast and not doing their job. It's 
an economic impact that we'll be suffering for generations.
    We saw traffic flow go from the West Coast to the ports of 
Houston, and then the ports of Houston couldn't handle it 
because you've got to predict, you've got to build railroads 
and you've got to build infrastructure. You have to have 
employees and you have to have trucks, and all these things 
just don't happen overnight.
    But in our opinion, the problem started when our 
Administration, primarily the White House, did not react to the 
seriousness of the ports being shut down on the West Coast. It 
rippled for months and it cost our economy billions of dollars, 
and that can be proven. It was probably in the trillions, if I 
had to guess.
    Our country relies on flow of product, and we're such a 
huge, huge economy, and so spread out, that it's so important 
that the government, especially the White House, reacts to 
situations and doesn't try to placate unions. That's exactly 
what was going on.
    Mrs. Fischer. Yes. How do we gain back that lost market 
share? I want to focus on the transportation part. There are a 
lot of other issues out there to deal with when we talk about 
this, but how do we gain that back through transportation?
    Mr. Freeman. I think your earlier question to Director 
Schneweis around inputs from assorted parties and trying to 
understand, first off, what are the requirements that 
businesses, customers, people have in terms of what has to move 
and what has to flow, and taking those inputs, be it highway, 
be it rail, be it ports, be it water, rivers, whatever it 
happens to be, put those together and have a freight policy, if 
you will, that clearly the FAST Act is a step in the right 
direction for some number of years into the future. We'll see 
what comes about with other opportunities that are out there.
    But I think that framework is essentially taken to a bigger 
scale as we try to figure out what will be the growth in our 
state, in our country, the world as a whole, and what markets 
can people play in, Mr. Kelley with the bean market, others who 
obviously are in different businesses and things of that sort. 
We will need to understand what's out there.
    We'll need to make sure that the landscape amongst rail and 
water and trucks and highway are essentially managed 
effectively and appropriately. We'll need to have an effective 
policy around permitting and historic preservation activities 
that is timely and consistent and, to some degree, effective, 
if you will, around understanding that there has to be 
decisions made, what are we going to build, what are we going 
to be part of for the overall system of freight transportation 
going forward.
    And I think starting with the comment that he provided in 
response to your question, I'm taking that to a clearly larger 
scale, be it local, state, Federal, international, I think is 
the direction we have to go.
    Mrs. Fischer. We're going to put a lot of pressure on you, 
Director, and the NDOR to come up with a good stakeholder 
council, then, right?
    Mr. Schneweis. It's critical. You spoke to business and how 
important it is that you're nimble and flexible. That's not 
something you think of when you think of government policy. So 
it's on us to be able to make sure that we have a good 
understanding of supply chains and opportunities and can react 
quickly to the speed of business. I think it's a challenge.
    Then I think technology is changing so fast, and we have to 
be able to understand as government and in partnership with the 
private sector how to invest in things like truck platooning. 
These things are being studied, do we need to have staging 
opportunities here in Nebraska to be able to experiment, 
research, and take advantage of those things. I think if we're 
not doing it and we're not thinking forward, then we are losing 
opportunities to grow.
    Mrs. Fischer. Great. Thank you.
    Don, I wanted to get back to you on the FAA bill. You had 
talked about the importance of the essential service and 
keeping the funding here for Scottsbluff. Can you talk about 
what that means to a rural community like Scottsbluff, and not 
just this community but the region? If I could ask you, do you 
know how the airport is going to use those dollars to update 
infrastructure?
    Mr. Overman. Well, in the past, of course, notwithstanding 
the bank crisis of 2008 and 9/11 and all the things that have 
happened since then, and the change in the law for pilots going 
from 500 hours to 1,500, it has tremendously affected us to the 
effect that at the beginning of 2013 Great Lakes had 300 
pilots, and at the end of 2013 they had 78. That speaks to why 
service is so bad, not only here but all across the country, 
but especially with the rural airports.
    When they get off the airplane, the first thing they see is 
the monument, and they see that this is a vibrant community. 
It's the first impression, whether it's medical people coming 
in here or business people coming in here to set up a new 
business. If you look out the front door of this building, 
across the street there's about a $35 million building sitting 
over there. It would never be there if we didn't have an 
airport. I mean, I was involved in bringing the initial company 
here, and they would not have been here.
    There's another one down on the corner, across from the 
YMCA, which now houses state offices. But it was a KN energy 
company that we got through negotiations with myself and Mr. 
Ruschall, who many of us know and respect, in the background. 
Without the city manager even knowing it, we were negotiating 
to get them to move their corporate headquarters from Hastings 
to Scottsbluff.
    When the smoke cleared, they moved a great number of their 
people out of Hastings to Scottsbluff. Larry Hall was the 
President at that time, and he said that we'd never have done 
it if we didn't have an airport.
    Being a past President of Nebraska Diplomats, of course, I 
understand how all the cities try to get more business in their 
cities. We just have to have that airport from an economic 
development standpoint. We just would not be able to do it.
    Now, you asked where we're going to spend the money. Well, 
this year we had enough money carried over. We can carry money 
over for 2 years, and we needed a new snow blower because we 
had to keep the runways clear for the planes to land from here, 
and also from DIA. I think we got $800-and-some-thousand 
dollars. When you get a new snowplow as big as they are, you've 
got to build a new building. So we needed money this year, and 
we got it from discretionary funds from the DOT, which comes 
from other airports that don't use all their money.
    We're faced with, in the next three to 4 years, our plan 
that the Department of Transportation suggested--actually 
mandates that we do--we've got to re-do both runways. The 
estimated cost is $20 million. The million dollars we get 
cannot be used to run the airport. It can only be used for 
safety purposes, and that's what we used it for, for all the 
years. When the airport authority took over, I think in 2004 or 
something like that, since then we have added $23 million of 
improvements to that airport, and most of that came from 
Federal funding, the million dollars and/or special projects 
that we were able to get back. They don't happen very often 
anymore.
    Anyway, we need that money. If you look at it right now, 
we're faced with $20 million. If we get $1 million and you can 
carry it over 2 years, you've got $2 million. Where are you 
going to get the other $18 million? Not only that, but the DOT 
in their ultimate wisdom recently, last year, we're supposed to 
get 98 percent of the money, and we have to pay 10 percent for 
any safety purpose.
    They changed the rules a little bit, and now they only give 
us 80 percent up front, and then they don't give us the other 
10 percent until the project is completed by the DOT and signed 
off. So we become their banker for 10 percent. It's a mess, and 
it presents terrible problems to all the airports just with 
that one change.
    But the money will be used, as I've said, probably the next 
project is going to be airport runway improvement.
    Mrs. Fischer. I know you've worked on improving that 
airport for many, many years, and I understand that a new 
terminal is going to be named in your honor. Is that correct?
    Mr. Overman. It was in 2004.
    Mrs. Fischer. Oh. I'm slow.
    Mr. Overman. Or 2005.
    Mrs. Fischer. OK.
    Mr. Overman. But it was. I had a brother-in-law that came 
to visit us from Missouri. A couple of months later my wife 
called and said they were going to name that airport the Donald 
A. Overman Terminal. And he said I didn't know he was sick.
    [Laughter.]
    Mrs. Fischer. Thank you.
    Mr. Holliday, you mentioned the driver shortage. I worked 
on language in the highway bill hoping to allow younger drivers 
to be able to drive interstate, between states, which they 
cannot currently do. Even though we have 18 and 19-year-olds 
driving trucks in Nebraska, they can't cross from Omaha, the 
bridge in the Council Bluffs. That's an issue that I think we 
need to keep presenting out there.
    I had some people say they didn't want to be on the road 
next to an 18-year-old driver, and I said, well, you already 
are. If you drive from San Diego to San Francisco, you're on 
the road with an 18-year-old truck driver. These are 
professional people. They're doing their job.
    In the bill we were able to get some language in that would 
allow veterans, younger veterans to be able to drive 
interstate, and hopefully we'll be able to have some data that 
we can work with because there haven't been studies on that.
    But can you tell me how your company is working to meet 
that driver shortage challenge that's out there? Have you felt 
any impact from the shortage?
    Mr. Holliday. Have I felt any? Absolutely. I will say it 
has eased a little bit with some of the layoffs from some of 
the industries around us. We've had some drivers show up, 
especially out here in Western Nebraska, that are going back to 
truck driving, which is something they used to do.
    But we try everything. We use social media, Facebook. We 
have a full-time person in our office that does nothing but 
recruit because we need a vast array of different types of 
drivers. We need drivers that will go to 48 states over the 
road. We need city pick-up and delivery drivers that will stay 
in Omaha or Kansas City. And we have flatbed drivers. All of 
those take a special skill set.
    One thing that I did read in your proposal is that they 
have to have 30 hours of instruction, which I think is good. I 
think after 30 hours you're going to be prepared. I did notice 
that there's no classroom time specified presently, but I think 
most companies, including ours, we have probably eight hours' 
worth of classroom instruction that we mandate from them 
anyhow. So by the time you have a driver out there in a truck 
for 30 hours, he's going to encounter a lot of things; 
certainly not everything. Some weather-related issues may be, 
depending on when that driver trains, something that he hasn't 
encountered, but it's going to prepare him.
    Going back to ancient history, the first time I drove a 
truck across the state I was 18 years old and my cocker spaniel 
and I went to Omaha and back. You know, times were different 
then. But what we have found in the past, especially in rural 
Nebraska, is some of our best drivers, they're kids who started 
driving a truck at 16 years old on their dad's farm. It may be 
a beet truck, what we call a straight truck. But they just have 
that skill set to take somebody that says I'm going to get into 
truck driving because I hear they can make $30,000 to $50,000 a 
year, and they show up at truck driving school. I'd rather have 
that 18-year-old farm kid than perhaps a 25 to 28-year-old guy 
that's gone through a truck driving school.
    Now, truck driving schools are good. There are some good, 
some better. But for us, the 30 hours I think is a good move. I 
think that's going to be adequate training. I don't have a lot 
of fear of that because all good companies and all companies 
that are responsible to the health of the public--my family is 
out there on those roads, too. I've seen what can happen if 
it's not done right. Responsible companies are not going to let 
a driver, regardless of their age, 18 or 48, get behind the 
wheel of their truck and drive down the road because there's 
too much at stake.
    Once again, I stress responsible companies. There are some 
companies that are in such need of drivers right now that, 
unfortunately, I think that maybe their standards aren't quite 
the same.
    Mrs. Fischer. Thank you.
    Mr. Freeman, I have a number of questions for you on some 
rail issues that maybe a lot of folks in the audience here 
haven't heard that much about, but they're very newsworthy on 
the Federal level, and you know what's coming here.
    From what I understand, BNSF is on schedule to be one of 
the first Class I railroads to fully implement its positive 
train control system. Can you share some of the lessons that 
your railroad has learned as that implementation has 
progressed, particularly any technical issues, interoperability 
challenges, workforce training issues that you've seen in 
trying to get this implemented?
    Mr. Freeman. Sure. Just to sort of set a little bit of a 
foundation context in terms of what's going on, we are well 
down the road of essentially what will be a $2 billion project 
over the better part of 10 years from the time we started when 
the mandate was first developed back in the 2008 timeframe. We 
are, as you pointed out with your comment, fully expecting to 
be installed by the end of 2018, per the mandate. At present, 
we are at this point--just numbers--14 subdivisions out of 80-
ish that are mandated under the law, already turned on, 
functional and operating. We are running approximately 600 
trains a week with PTC right now, various parts of our network, 
and expect that to continue growing. We will add three more 
subdivisions between now and the end of May, and we'll be on 
essentially a three to five subdivisions per month plan going 
forward until we're completed.
    From a learning standpoint, I guess I would offer several 
different parts of an answer. First of all, from a software/
hardware standpoint, I think we would admit BNSF, and I frankly 
think our industry colleagues would be the same--it is a very 
hard project. It is essentially new technology from a software 
standpoint. It is a monstrous installation/construction project 
in terms of what has to go in, not only in terms of the back 
office for servers and technology workstation kind of stuff, 
but also with communications towers and all the various pieces 
and parts that have to be in place with our signal system out 
in the field, and it is a significant undertaking by our 
mechanical team working to have the locomotives modified such 
that our roughly 5,000 to 5,500 locomotives will be fully 
equipped to run with PTC as we go forward into the future.
    So a large project, lots and lots of things going on in 
different parts of our world.
    From a people standpoint, we clearly are well equipped in 
terms of people to install signal telecomm. We use a small 
contractor group to supplement our own folks, but we fully 
believe that we are well down the road in terms of the 
capabilities of those folks. They are moving forward on plan. 
Essentially, our construction activities, if you will, in the 
field on the mandated subdivisions will be done by the end of 
2017--I'm sorry, end of 2016 or early 2017. In fact, we'll have 
some additional subs that we are adding to our project, 
activities ongoing during the course of 2017.
    From a train operations standpoint, we have seen what I'll 
call strong success in terms of work with our train crews. I 
daresay that if I wanted to put out a shout-out to our 
Brotherhood of Locomotive Engineers and Trainmen members, and 
our smart TD, the old UTU members, engineers and conductors 
have been marvelously supportive in terms of, one, learning; 
and two, serving as mentors and trainers for their fellow 
employees as we startup the systems on different parts of the 
network. That set of activities will be growing as we move 
forward with many, many more subdivisions over the next couple 
of years.
    So that part is clearly a big deal as well for us, and I 
think has been very positive for us in terms of not only what's 
been accomplished in the project but, frankly, relationships 
with our employees and union and their involvement in getting 
the process going, getting the system up and running.
    From an overall standpoint, I think going forward you 
mentioned interoperability. We are scheduled in the second 
quarter here in the next couple of months to start 
interoperability testing with the Union Pacific and their 
locomotives, and they with ours. We have not yet planned or 
scheduled yet with the CSX, but that will have to take place 
over time in order to set up an interoperable system, if you 
will. We handle trains and locomotives across the different 
carriers, so UP will run with our locomotives and vice versa 
and that sort of thing.
    It's a key part for us, still a significant question, but 
we feel right now that we are on the right path to getting that 
accomplished.
    Aside from that, as I said, hard work, still a lot of 
things to get done, but we are very confident that we are on 
plan for year-end 2018.
    Mrs. Fischer. OK. Thank you. I understand that BNSF has 
conducted a pilot program for the ECP brakes, which are the 
electronically controlled pneumatic brakes. You've done that on 
a limited number of cold trains; is that correct?
    Mr. Freeman. Yes. I'm sorry. I thought----
    Mrs. Fischer. You were banging the table.
    Mr. Freeman. I'm sorry.
    Mrs. Fischer. That's OK.
    Mr. Freeman. My fault. Yes. At this point, there are two 
trains----
    Mrs. Fischer. For the record, he was not banging the table 
in any kind of show of frustration.
    [Laughter.]
    Mr. Freeman. No, no. No meaning of emphasis or frustration.
    Mrs. Fischer. Exactly. But what's been the result of that 
pilot program?
    Mr. Freeman. There are presently two trains operating in 
BNSF, and as I reported earlier in my opening comments, we are 
essentially roughly 1,200 trains on the network in any given 
time with today's business level. So it's a very, very small 
subset of trains. They are both cold sets, so they are 
operating from the Powder River Basin to a particular power 
plant in the Southeast, or two different power plants in the 
Southeast, same company.
    At this point I would tell you that our results would say 
that there are clearly reliability issues with the ECP systems. 
We continue to see service interruptions on our network where 
the reliability issues on those two trains are multipliers of 
what we see on normal cold sets of normal freight trains. In 
other words, 2X, 3X, 5X in terms of actual outages given the 
technology that's on the train. We also see in terms of the 
fixes to those service interruptions--that is to say, trying to 
deal with the reliability issues--that it takes longer to deal 
with those systems than it does with routine service 
interruptions on today's braking technology, if you will.
    Just to give you an idea, these systems have a big plug 
connector type piece of the technology, and it is almost like, 
to take a little bit of liberty, if the Christmas light goes 
out on your string of lights on your tree or on your home, you 
almost have to pull out light bulbs to try to figure out where 
is the disconnect and what is causing the issue.
    So overall reliability, and then the ability to fix the 
issue are clearly concerns of ours.
    All of that said, from a train operating standpoint, I 
don't know that I necessarily can speak to exactly how the 
analytics were done relative to some of the safety statements 
that have been made. I don't think we necessarily see a 
difference in numbers of cars being derailed and that sort of 
thing. We haven't had the incidents to make those sort of 
assessments. So we would be concerned with those sort of 
impacts.
    I think overall we would say significant questions on 
reliability, significant questions working with them, and then 
I think we would compound that with some cost dynamics that we 
view are high relative to the potential benefits as we see them 
in operation.
    Mrs. Fischer. In the FAST Act, you know we included in that 
a requirement for the GAO to have a study on the data and the 
methodology that underlies the Department of Transportation 
rule that requires the ECP brakes on certain unit trains, and 
the FAST Act also required real-world testing of the mandate 
from the National Academies in order to contrive the possible 
safety benefits of the methodology.
    So based on your experience, and you referred to this in 
your previous comments, but I would just like to know your 
insights that you would share to inform the GAO study and the 
Academies' evaluation.
    Mr. Freeman. I think I would, in response to your question, 
essentially repeat some of my comments relative to what we are 
seeing relative to the issues and the specifics of those 
issues. I think we would look forward to the opportunity to, as 
a team--our mechanical group that has to deal with the issues, 
the locomotives that are critical to the operation of ECP, the 
cars and that sort of thing--I think we would look forward with 
that group, as well as our operating group, to be part of a 
study and be part of providing feedback and some of our 
experiences as part of the study going forward.
    Mrs. Fischer. Do you believe that the real-world testing is 
needed instead of data that is brought about based on modeling 
done by the FRA?
    Mr. Freeman. I would not want to push aside modeling, and 
I'm not aware of the models that are being used by the various 
agencies and entities that are part of the study. I clearly 
think we should include everything in the conversation, but 
that the real-world data of what's being assessed over time 
have been party to either as the car owners or as the railroads 
that are operating these types of equipment. We clearly have 
something to offer, and we would want to be part of that, but I 
would not want to necessarily shove aside the modeling as 
something to look at.
    Mrs. Fischer. Thank you.
    This question is for the entire panel. While we recognize 
the need for consistency in our lives, I've heard from many 
Nebraskans all around this state about over-regulation from 
Washington, and that is one of their major concerns. As I said 
in my opening statement, we passed language in the FAST Act to 
make the regulatory process more transparent. I think that was 
of utmost importance.
    So to build on that, I'm interested in hearing about how 
these regulations affect your work, if any of you would like to 
comment on that, if you think of regulations and what you have 
to change or basically just how does it affect what you do.
    Director, I'm going to start with you because my office has 
worked with the Department of Roads on a number of items with 
the categorical exclusions and environmental impact statements. 
Would you like to talk about that a little bit?
    Mr. Schneweis. Thank you for the support you've given the 
Department.
    Mrs. Fischer. No, thank you for all the information you've 
shared with us.
    Mr. Schneweis. Regulations and accommodating regulations 
are a huge part of our delivery timeframe. It takes eight to 
ten years sometimes to deliver on a project, especially when 
we're talking about a new corridor or going from two to four 
lanes, and a lot of that is due to regulation.
    We've seen a growth in the number of regulations, and we 
don't question the intent. I think what we question is the 
level of risk sometimes. We don't necessarily do a good job, I 
think, with our regulators assessing risk when it comes to 
whether or not to delay or whether or not to reassess or 
whether or not to continue working on the regulatory piece. 
That's something that we talk a lot about with our Federal 
partners to try and assess the true risks of the issues that 
we're talking about.
    I talk a lot about flexibility, and I want flexibility in 
the rule because we understand the rule is there for a good 
reason, and we need to understand that intent and then assess 
the risk of whether or not we're going to have any issues with 
that intent. So I want the flexibility to be able to understand 
and appropriately assess risk from project to project. But we 
also need consistency. We need things to be the same in every 
state. So I want the flexibility consistently, and I know 
that's almost impossible. We're asking for two things that are 
diametrically opposed to each other, but I think it's 
important. It's something that we have been talking a lot about 
with all of our Federal partners.
    A partnership is always--if you know the people and you 
trust the people that you're being regulated by, I think you 
have a lot of opportunity to make progress in these areas. So 
that's another area for us, trying to build that trust up so 
they trust us and we trust them, and it takes time to do that. 
It's a continuous challenge for us.
    Mrs. Fischer. Thank you.
    Ms. Cottier. I don't think it's always just about 
regulations that either a Federal agency has perhaps taken 
advantage of or is pushing a little more than others, but there 
are also items relative to road construction that we hear 
anecdotally from people, like why on earth do you have to have 
this gigantic engineered whatever you've done when a simple 
corridor overpass or whatever would do. So the frustration and 
part of the challenge that we have as part of the Heartland 
Expressway Association is trying to educate the public, educate 
even our elected officials.
    We had a conversation with Congressman Smith about why is 
this built the way it is. We could say, well, because Roads 
said it had to be, or we could say because engineering-wise it 
needs this. So there's a high level of knowledge that has to be 
gained either by the people who are paying for it or, at the 
very least, those elected officials and those of us who are 
advocating for it to be able to share that information. I think 
it's really important. We don't want to muddy the waters of the 
United States, and we don't want to impact particular animals 
any more than anyone else does, but we also need to understand 
what it takes to have a safe road as well. So, two pieces, the 
environmental stuff and the engineering stuff.
    Mrs. Fischer. Thank you.
    Anyone else?
    Mr. Freeman. I think from a railroad standpoint, I think we 
would look at a couple of different things. First off, the 
oversight relative to, if you will, the ability to do public-
private partnerships, the things that are needed and frankly 
have to happen if we're going to have economic growth in 
Nebraska, the U.S. as a whole. There's a framework that's set 
up that clearly has moved us forward in terms of where we are 
today relative to economic growth, to being able to do the 
highway/rail interfaces, the intermodal connectors, things of 
that sort that are clearly going to be needed going forward.
    I think the Act has also provided for us some positive in 
terms of the conflicts of highway and railroad relative to road 
crossing interactions and that sort of thing. There are 24,000 
crossings on the BNSF alone, public and private, not to mention 
pedestrian crossings and overpasses and underpasses that we 
deal with, and other interactions and that sort of thing. Those 
dynamics are clearly something we need to be working on, and 
that's part of FAST and some of the things that are going on 
forward.
    So there's a safety piece. There's an economic dynamic that 
we clearly want to be part of. I think the other side for us, 
and I mentioned in my earlier comments about the ability to 
generate growth, working in concert with customers and with 
other modes of transportation to facilitate the move of goods 
and freight and pieces and parts of whatever is moving, 
agricultural goods and things of that sort. Having a 
consistent, timely process around permitting and those kind of 
dynamics, and doing anything you can do to make that a better 
situation than where we are today is a plus.
    To the point that Ms. Cottier made relative to muddy waters 
and that sort of thing, we want to do stuff that is helpful for 
the overall system of business, but at the same time we also 
recognize that there is an effective environmental and economic 
process that needs to take place, and we want to be part of 
that, and I think this has taken another step of improvement in 
that world.
    Mrs. Fischer. Great.
    With that, I would like to thank the panel for being here 
today. I really appreciate the information that you have 
provided to the Committee. I appreciate the extent of the 
conversation that we've been able to have. Thank you very much.
    I would also like to thank members of the community for 
coming and sharing a Senate hearing here in the state of 
Nebraska. It's important that you are here as well.
    For the record, I would say that 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 the 
Committee as soon as possible.
    Again, I thank you, and the hearing is adjourned.
    [Whereupon, at 11:55 a.m., the hearing was adjourned.]

                            A P P E N D I X

 Addendum to Statement of Deb Cottier on Behalf of Nebraska Northwest 
     Development Corporation, A Member of the Heartland Expressway 
              Association and the Ports-to-Plains Alliance
    Chairwoman Fischer--Honored members of the Senate Committee on 
Commerce, Science and Transportation, Again, I would like to thank you 
for the opportunity to submit an additional statement for the record in 
response to your question regarding economic impacts of rural freight 
corridors.
    For the record, my name is Deb Cottier, Executive Director of 
Nebraska Northwest Development Corporation and a member of the Board of 
Directors for the Heartland Expressway Association, a member of the 
Ports-to-Plains Alliance.
    This information is gleaned from two Corridor Development and 
Management Plans that provided a Benefit Cost Analysis for various 
states including Nebraska, Texas, Oklahoma, New Mexico and the southern 
portion of Colorado. In October 2014, the Nebraska Department of Roads 
issued the Heartland Expressway Corridor Development and Management 
Plan. This Heartland Expressway Corridor Development and Management 
Plan (HECDMP) is focused on the portion of the Heartland Expressway 
within the State of Nebraska. The HECDMP was prepared in compliance 
with Section 1118(d) of TEA-21 which is similar to the work previously 
completed for the Port to Plains corridor in 2005. The Ports-to-Plains 
Corridor Development and Management Plan (PTPCDMP) was published in 
2005 complying with the same Section 1118(d) of TEA-21. The PTPCDMP 
covered the multi-state corridor including Texas, Oklahoma, New Mexico 
and the southern portion of Colorado. This Plan was completed in 
partnership between the states of Colorado, New Mexico, Oklahoma, and 
Texas. At the top of the next page is a graphic showing the entire 
Ports-to-Plains Corridor including the High Priority Corridors of 
Ports-to-Plains, Heartland Expressway and Theodore Roosevelt 
Expressway. These studies did not directly include the portions of the 
Heartland Expressway in Colorado, Wyoming and South Dakota or any of 
the Theodore Roosevelt Expressway in South Dakota, North Dakota or 
Montana.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


Ports-to-Plains Alliance Corridor Development and Management Plan
    Of the two Corridor Development and Management Plans, the PTPCDMP 
provided significantly more specific economic impact data. In the 
section below on the HECDMP, the reasons for this will be explained. 
The PTPCDMP provided a Benefit Cost Analysis for several elements that 
improve the transportation network's ability to move people and goods. 
Nearly 1,400 miles long, the corridor consisted of 511 miles of 4- to 
6-lane roadway, 755 miles of 2-lane roadway, and 113 miles of roadway 
in metropolitan areas. The Ports to Plains Corridor includes the 
following construction elements:

   Widening 755 miles of 2-lane roads to 4-lane divided roads;

   Constructing 15 relief routes around larger towns;

   Adding amenities needed by commercial vehicle operators;

   Improving or constructing connective interchanges;

   Improving or constructing overpasses for railroad crossings;

   Replacing obsolete or deficient bridges;

   Installing corridor-specific signs; and

   Integrating an intelligent transportation system.

    In the PTPCDMP there were two major sections addressing the benefit 
of the highway expansion construction elements described above: 
Transportation User Benefits and Economic Benefits. Transportation User 
Benefits addressed the historical engineering basis for evaluating 
infrastructure improvements: travel time savings, vehicle operating 
cost savings, and savings associated with increased safety; that is, 
crashes, including property damage, injuries, and fatalities that are 
avoided. Using these criteria, the PTPCDMP showed the total 
Transportation User Benefits as shown in the table below.

                 Summary of Transportation User Benefits
------------------------------------------------------------------------
                         Benefits (Millions  of   Benefits (Millions  of
     User Benefit            2004 Dollars)          2004 Dollars @ 7%)
------------------------------------------------------------------------
Safety                                   $381.2                   $114.3
------------------------------------------------------------------------
Vehicle Travel Time                      $541.9                   $151.5
------------------------------------------------------------------------
Vehicle Operation Cost                   -$11.1                    -$3.1
------------------------------------------------------------------------
Total                                    $912.0                   $262.7
------------------------------------------------------------------------
Source: AECOM Consult, Inc.

    Using these criteria only, the multi-state Ports-to-Plains Corridor 
in the four-state region would not have met the Benefit Cost Analysis 
threshold required for justification. It was the analysis of the 
economic benefits that justified the improvements to the Corridor and 
that economic analysis identified four potential sources of economic 
benefits. As a result the total economic benefits measured by income to 
residents would exceed the project cost by a ratio of 3.15.
    The economic benefits analyzed include construction benefits, 
roadside services benefits, increased manufacturing and distribution 
benefits, tourism benefits from seasonal travel, and the fiscal 
benefits attributable to the expansion of this economic base.
    Construction Benefits: These are one-time benefits that stem from 
the construction work needed to improve the existing road.
    Roadside Service Benefits: The improved road will attract more 
travelers, increasing the spending at roadside establishments. The 
roadside service benefits analysis examines the hiring and associated 
wage and salary gains generated to meet this increased demand.
    Manufacturing and Distribution Benefits: Given its southern 
terminus at the Port of Laredo, Texas and the Corridor's significance 
as an international trade route, much of the economic development 
potential of the Corridor stems from economic activity related to North 
American Free Trade Agreement (NAFTA) trade, namely manufacturing and 
distribution activities. This analysis projects the potential growth in 
these industries that would occur if development unfolds as it has 
along other more established NAFTA trade routes in the region.
    Tourism: Winter seasonal migration is a growth industry in southern 
Texas and the Corridor lies along a feasible route for travelers from 
the Western U.S. The improved road opens up access to this travel 
market, permitting Ports to Plains communities to compete for a small 
share of this rapidly growing market. The expenditures made by these 
travelers generate demand in the local economy for food, entertainment, 
health and travel services.
    The economic benefit from the 20-year development of the Ports-to-
Plains Corridor was measured across a period ending in 2030. It showed 
an economic benefit of slightly over $4.5 billion and was projected to 
create 43,600 new jobs across the four-state region. It is important to 
recognize that while these job impacts were only measured through 2030, 
these jobs are recurring beyond 2030.

                      Summary of Economic Benefits
          (Millions of 2004 Dollars Discounted at 7.0 Percent)
------------------------------------------------------------------------
                                                          Total Income
              Benefit Category                  Jobs       2006-2030
------------------------------------------------------------------------
Construction (person years)                     1,700                $28
------------------------------------------------------------------------
Distribution & Manufacturing (2030)            39,600             $4,258
------------------------------------------------------------------------
Roadside Services (2030)                        2,000               $216
------------------------------------------------------------------------
Tourism (2030)                                    300                $27
------------------------------------------------------------------------
Total                                          43,600             $4,529
------------------------------------------------------------------------
Source: AECOM Consult, Inc.

    The PTPCDMP also projected that the expansion of the multi-state 
Ports-to-Plains Corridor, based on the original construction elements 
described in page two of this statement, would draw traffic from the 
already congested Interstate 35 and Interstate 25 corridors.
    Adding to the economic benefits described above, the 2030 Build 
travel demand model results indicate that when all improvements have 
been made, additional traffic will be attracted to the Ports-to-Plains 
Corridor from surrounding facilities, including Interstate 35 and 
Interstate 25. The model indicates a twelve percent (12 percent) 
increase in Corridor vehicle miles traveled over the 2030 No-Build 
scenario. In addition to these attracted trips, the 2030 Build forecast 
also reflects a significant shift of travel demand from Dumas, Texas to 
the north. Because of improvements to the U.S. 287 Corridor through 
eastern Colorado and increasing congestion on Interstate 25 south of 
Denver, the model forecasts a shift from I-25 to the improved U.S. 287 
Corridor.
Heartland Expressway Corridor Development and Management Plan
    The HECDMP was faced with a different interpretation of Section 
1118(d) of TEA-21 by the Federal Highway Administration (FHWA) Division 
Office in Nebraska. FHWA determined that the economic benefits that 
played a significant role in the PTPCDMP could not be used in 
identifying a final Benefit Cost Analysis for the Nebraska Heartland 
Expressway Corridor. The FHWA position was that expenditures of Federal 
transportation funds would have the same economic benefit no matter 
where and on what types of projects in the country they were committed. 
Both the Heartland Expressway and the Ports-to-Plains Alliance opposed 
this view.
    In addition to the FHWA policy change on economic benefits, there 
was also a significant policy shift when evaluating the benefits 
associated with Transportation User Benefits. The HECDMP stated:

        ``Typically, these benefits are comprised of travel time 
        savings, which may occur as motorists experience reduced travel 
        times; increased safety, which may occur as the number of 
        accidents that take place on the corridor are reduced; and 
        operating cost savings that may occur as the distances driven 
        by motorists on parallel facilities are reduced . . . ``Because 
        improvements along the corridor, in accordance with the 
        Heartland Expressway Vision, typically involve expansion from 
        two-lane facilities to four-lane facilities, it is assumed that 
        there are no operating cost benefits for travelers. However, 
        there would be operating cost savings associated with reduced 
        maintenance costs for parallel roadways as travelers divert to 
        the Heartland Expressway Corridor, thereby reducing the 
        pavement wear and tear on parallel roadways. As a result, the 
        transportation benefits associated with Heartland Expressway 
        Corridor improvements in Nebraska are comprised of travel time, 
        accident reduction, and pavement cost savings only.''

    Additional economic benefits are that were not allowed in the 
HECDMP included job creation and expanded payrolls from construction, 
operation and maintenance of the proposed improvements as well as 
benefits from purchases of goods and services necessary to operate and 
maintain the project.
    Travel Time Savings included the reduction in travel times for 
autos and trucks that could be expected in 2035 due to the improved 
transportation infrastructure along Nebraska's portion of the Heartland 
Expressway Corridor was calculated for Existing Users--those vehicles 
and passengers currently using the Heartland Corridor roadways without 
the improvements and Diverted Users--those vehicles and passengers 
currently using parallel routes who divert to the improved Heartland 
Corridor roadways.
    Accident Reduction Savings measured another transportation benefit 
of the Heartland Expressway Corridor improvements is the potential to 
reduce the number of accidents that could occur along the corridor due 
to roadway widening and the introduction of Intelligent Transportation 
Systems (ITS) variable message boards for incident management.
    Pavement Cost Savings in Neighboring States evaluated the potential 
reduction in Vehicle Miles Travelled along parallel routes, as 
travelers divert to Nebraska's Heartland Corridor roadways.
    Transportation Efficiency was the one economic indicator allowed in 
the HECDMP. It included road improvements that reduce travel times and 
improve reliability for truck freight improve the productivity of the 
logistics chain through the ability to use truck fleets more 
efficiently resulting in a reduction of inventory cost and organize 
production more efficiently. If shipments are more reliable, then 
distribution facilities can be more centralized and enjoy greater scale 
economies in many cases. Collectively, this allows the economy to be 
more economically competitive. Because of its economic measurement our 
statement points out that the four-lane improvements of the Heartland 
Expressway is projected to create a total inventory savings of $215.4 
million across all alternatives results from applying a discount rate 
of 7 percent.
    As shown in the graphic below, these limited Transportation User 
Benefits resulted in a 1.88 Benefit Cost Analysis for Nebraska for just 
the improvements in Nebraska and reach 1.98 for Nebraska when the 
entire Ports-to-Plains Corridor is improved.


    While FHWA would not allow other economic benefits to be included 
in the Benefit Cost Analysis, the HECDMP did include a section on 
Economic Benefits that summarized construction impacts, roadside 
services impacts and competitiveness impacts. While not added to the 
Benefits Cost Analysis, these economic benefit findings are certainly 
important to the question regarding economic impacts of rural freight 
corridors. These impacts are summaries in the graphic on page 8.

   Construction impacts. Construction of the project would 
        create jobs and expand payrolls for the duration of the 
        project's construction cycle.

    For the four-state Heartland Expressway region the effects of the 
        Nebraska component of the Heartland Expressway Corridor 
        construction would result in $285.3 million in earnings ($2012) 
        and 6,754 person-year jobs for the 2016-2037 construction. 
        These are one-time impacts that last for the duration of the 
        construction period only. One job is defined as a job for one 
        person during a one year's duration. As an example, a job for 
        one person for three years would be defined as three person-
        year jobs.

   Operation and maintenance impacts. Since the project adds 
        new lane miles, there would be hiring associated with the 
        operation and maintenance of these new lane miles as well as 
        the local purchases of goods and services necessary to operate 
        and maintain the project. Unlike the one-time construction 
        impacts, these new operations jobs and local purchases required 
        to operate the project would be recurring impacts.

    For the four-state Heartland Expressway region the effects of the 
        Nebraska component of the Heartland Expressway Corridor 
        maintenance and operations would result in $46.9 million in 
        earnings ($2012) and 1,146 person-year jobs for the 2016-2054 
        analysis period. Similarly, for the Nebraska Heartland Corridor 
        counties, the effects would results in $40.2 million in 
        earnings ($2012) and 1,108 person-year jobs for the 2016-2054 
        analysis period. These jobs and earnings consist of operations-
        related employment in industries whose jobs and services are 
        purchased directly to operate and maintain the new lanes as 
        well as the secondary demand for goods and services across a 
        broader spectrum of industrial sectors that support the 
        industries providing the operations and maintenance services.

   Economic development impacts. Economic development would 
        increase with the market's response to the operation of the 
        improved facility. The improved road will improve travel times 
        and reliability, which improves the productivity of the 
        logistics chain through the ability to use fleets more 
        efficiently. If shipments are more reliable, then businesses 
        can reduce their inventories and organize their production 
        processes to be leaner. Collectively, this allows the Heartland 
        Corridor economy to be more economically competitive. In 
        addition, traffic in the corridor would increase, increasing 
        demand for roadside services in the corridor.

     Roadside services impacts. Since the project attracts 
            new long distance users to the corridor, demand for 
            roadside services, including lodging, food, fuel, and other 
            retail purchases would increase. The increase in demand 
            would result in additional hiring and wages earned along 
            the corridor. These would be recurring impacts.

      Traffic along the Nebraska portion of the Heartland Expressway 
            Corridor is expected to increase by at least 3.6 percent 
            with the completion of the transportation improvements due 
            to the attraction of new users and diversions from parallel 
            routes with slower travel times. The impacts of roadside 
            services are largely a transfer from parallel routes to 
            Nebraska's portion of the Heartland Expressway Corridor. 
            For the Nebraska Heartland Expressway Corridor region the 
            effects of the roadside services expenditures associated 
            with the Heartland Expressway Corridor travel scenario 
            would result in $73.5 million in earnings ($2012) and 3,175 
            person-year jobs for the 2016-2054 analysis period.

      As shown in the graphic on page 8, Roadside Services Impacts were 
            measured for several other scenarios including improvements 
            and impacts outside of Nebraska. These scenarios, however, 
            measured the economic impacts in Nebraska and demonstrate 
            the importance of developing the entire Ports-to-Plains 
            Corridor. Roadside Services expenditures associated with 
            the Heartland Expressway Corridor Heartland and Intensified 
            Energy Resource Development travel scenario would result in 
            $330.9 million in earnings ($2012) and 14,374 person year 
            jobs for the 2016-2054 analysis period.

      For the Entire PTP Corridor the travel scenario would result in 
            $370.8 million in earnings ($2012) and 16,079 person-year 
            jobs for the 2016-2054 analysis period and for the Entire 
            PTP Corridor and Intensified Energy Resource Development 
            travel scenario, travel scenario would result in $655.0 
            million in earnings ($2012) and 28,468 person-year jobs for 
            the 2016-2054 analysis period.
            
            
     Competitive response. It is not possible to predict 
            the exact type of business relocation that might occur in 
            response to the productivity improvement; likely expansions 
            would include food processing manufacturing to take 
            advantage of the corridor's significant agricultural assets 
            and distribution facilities that take advantage of the 
            corridor's low costs and proximity to the larger urban 
            areas.

      This total economic impact was not summarized but gave an 
            estimate for the typical impact of food processing and 
            distribution expansions in the Heartland Expressway 
            Corridor. Based on recent food processing relocations to 
            the region such as KYS Foods and industry trends, the 
            typical food processing plant employs between 20 and 50 
            employees directly. The estimation assumes an average 
            industry wage of $29,000 for food processing, an average 
            wage of $35,000 for distribution activities, and an average 
            wage of $40,000 for other services.

      The impact of a typical relocation of a food processing facility 
            result in $3.431 million in earnings ($2012) and 114 new 
            jobs in Nebraska. Similarly, the impact of a typical 
            relocation of a distribution facility result in $1.425 
            million in earnings ($2012) and 40 new jobs in Nebraska. 
            The initial statement highlighted the importance of a four-
            lane highway in locating these types of facilities.

      The heading Other Services was provided in the HECDMP because 
            over time, as the nearby Denver region continues to develop 
            into the dominant urban economy in this region of the 
            country, industries will increasingly seek lower cost 
            locations with good access to this dense urban market. The 
            expanding manufacturing base, combined with low cost 
            proximity to Denver, offers opportunities to expand the 
            range of services (and employment opportunities) in the 
            corridor over time.

      The relocation of one of these Other Services would result in 
            $1.668 million in earnings ($2012) and 42 new jobs in 
            Nebraska. The completion of the improvements on the 
            Heartland Expressway and the addition of many of these 
            competitive impacts can add significant jobs and earning to 
            the economy of Western Nebraska.
Conclusion
    The potential economic impact of both the four-state Ports-to-
Plains Corridor and the Nebraska portion of the Heartland Expressway 
demonstrate the positive economic impacts presented by rural freight 
corridors. In the Ports-to-Plains region over 43,000 jobs across the 
four-state region with $4.529 billion in earnings is certainly 
significant to a largely rural area of the United States. In Nebraska 
the creation of 10,000 to 36,000 new jobs and $362 million to $943 
million in earnings, without the addition of any specific expansion in 
primary jobs being measured due to FHWA restriction, is equally as 
significant to Western Nebraska.
    Thank you, Chairwoman Fischer. I ask that a copy of this statement 
be included in the hearing record.

                                  [all]

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