[Senate Hearing 114-91]
[From the U.S. Government Publishing Office]
S. Hrg. 114-91
IMPROVING THE PERFORMANCE OF
OUR TRANSPORTATION NETWORKS:
STAKEHOLDER PERSPECTIVES
=======================================================================
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
FIRST SESSION
__________
JANUARY 29, 2015
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri MARIA CANTWELL, Washington
MARCO RUBIO, Florida CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin TOM UDALL, New Mexico
DEAN HELLER, Nevada JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado GARY PETERS, Michigan
STEVE DAINES, Montana
David Schwietert, Staff Director
Nick Rossi, Deputy Staff Director
Rebecca Seidel, General Counsel
Jason Van Beek, Deputy General Counsel
Kim Lipsky, Democratic Staff Director
Chris Day, Democratic Deputy Staff Director
Clint Odom, Democratic General Counsel and Policy Director
------
SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE
INFRASTRUCTURE, SAFETY AND SECURITY \1\
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
\1\ On March 3, 2015 the Committee finalized Member assignments for
its subcommittees. The list below reflects March 3, 2015 assignments.
When this hearing was held, on January 29, 2015, formal assignments had
not yet been made.
C O N T E N T S
----------
Page
Hearing held on January 29, 2015................................. 1
Statement of Senator Fischer..................................... 1
Statement of Senator Blumenthal.................................. 2
Statement of Senator Klobuchar................................... 39
Statement of Senator Booker...................................... 41
Report entitled ``An Analysis of Truck Size and Weight Phase
I--Safety''................................................ 43
Statement of Senator Markey...................................... 48
Statement of Senator Moran....................................... 51
Witnesses
James Mullen, Executive Vice President and General Counsel,
Werner Enterprises............................................. 5
Prepared statement........................................... 6
Lance M. Fritz, President and Chief Operating Officer, Union
Pacific Railroad............................................... 14
Prepared statement........................................... 16
Douglas Means, Executive Vice President and Chief Supply Chain
Officer, Cabela's.............................................. 27
Prepared statement........................................... 28
Hon. Edward Rendell, Co-Chair, Building America's Future......... 30
Prepared statement........................................... 33
Appendix
Commercial Vehicle Safety Alliance (CVSA), prepared statement.... 59
Letter dated February 12, 2015 to the Committee on Commerce,
Science, and Transportation, Subcommittee on Surface
Transportation from the National Association of Railroad
Passengers (NARP).............................................. 62
Ross B. Capon, Consultant, American Association of Private
Railroad Car Owners, prepared statement........................ 62
Response to written question submitted to Douglas Means by:
Hon. John Thune.............................................. 63
Hon. Kelly Ayotte............................................ 64
IMPROVING THE PERFORMANCE OF
OUR TRANSPORTATION NETWORKS:
STAKEHOLDER PERSPECTIVES
----------
THURSDAY, JANUARY 29, 2015
U.S. Senate,
Subcommittee on Surface Transportation and
Merchant Marine Infrastructure, Safety, and Security,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:04 a.m. in
room SR-253, Russell Senate Office Building, Hon. Deb Fischer,
presiding.
Present: Senators Fischer [presiding], Wicker, Moran,
Johnson, Gardner, Blumenthal, Klobuchar, Markey, and Booker.
OPENING STATEMENT OF HON. DEB FISCHER,
U.S. SENATOR FROM NEBRASKA
Senator Fischer. Good morning. The hearing will come to
order.
I am pleased to convene the 114th Congress's first hearing
of the Subcommittee on Surface Transportation and Merchant
Marine Infrastructure, Safety, and Security, which we have
titled ``Improving the Performance of our Transportation
Networks: Stakeholder Perspectives.''
It is an honor to serve as Chairman of this subcommittee,
and I want to thank Chairman Thune and my colleagues for
entrusting me with the responsibility to do so. Transportation
safety and infrastructure development are issues that I care
deeply about, and I am grateful for the opportunity to further
engage on these matters.
I look forward to working with all members of this
committee in the 114th Congress on issues that I see as
bipartisan and core to the role of the Federal Government.
I would also like to acknowledge the hard work and
achievement of Senators Blumenthal and Blunt, who served as
Chair and Ranking Member of this subcommittee last Congress.
They have laid a solid foundation and worked tirelessly
together on this subcommittee with a degree of substance and
attention to detail that is rarely seen.
It is my hope to carry on the standard that these two
Senators have set, and I look forward to working with our new
Ranking Member when that person is announced. Senator
Blumenthal will be serving in that position today.
The goal of today's hearing is to explore ways in which to
expand and improve the Nation's transportation networks.
This subcommittee's broad jurisdiction stretches from
transportation safety regulations to incentivizing and
regulating infrastructure development. With such expansive
authority comes great responsibility to govern appropriately.
For too long, Washington-centric policies have impeded
progress and frustrated citizens across this country.
Repeatedly, I have heard from Americans who are dismayed by the
Federal Government's tendency to tell communities, both large
and small alike, what they will receive without ever asking
what is needed. Nebraskans and all Americans deserve to have
their voices heard when Congress considers how transportation
policies will impact their states and their local communities.
In the Nebraska Unicameral, I served as Chairman of the
Transportation and Telecommunications Committee. My father also
served as the Director State Engineer of the Nebraska
Department of Roads, so transportation is in my blood. And I
have seen how hard work, good policies, and a good attitude can
lead to favorable results. Unfortunately, I have also witnessed
the waste and harm that can result when proper oversight is not
exercised.
Congress should develop policies that address the unique
challenges and the opportunities that have arisen across this
Nation. These goals cannot be satisfied by a one-size-fits-all
approach. Rather, input and consultation from a variety of
stakeholders will be required to develop dynamic strategies to
respond to these diverse circumstances.
To that end, it is important that we include stakeholders
from across the country in our decisionmaking process. Their
varied and extensive expertise will be invaluable to this
subcommittee.
The panel before us today represents just a few of the many
stakeholders from private industries. What these individuals
lack in shared backgrounds they make up for in common
interests--namely, fostering sensible policies that ensure the
highest safety standards while also promoting economic growth.
We have asked our witnesses to share their high-level views
on transportation--what is working, what is not working, how we
can improve, and how we can better prioritize our resources. It
is also a chance for members of this committee to raise the
issues that they care about, and I hope they will continue to
do so throughout this Congress.
I am optimistic that cooperation and consultation between
the Federal Government and private enterprise will result in
more effective and efficient policies.
I would also now invite my colleague Senator Blumenthal to
deliver some opening remarks.
STATEMENT OF HON. RICHARD BLUMENTHAL,
U.S. SENATOR FROM CONNECTICUT
Senator Blumenthal. Thank you very, very much, Madam
Chairwoman. Thank you for your interest and your passion on
this subject, which I think is well-warranted by the challenge
that we face as a country. None of the challenges faced by our
Nation today are more important, long term, than the need to
rebuild our critical infrastructure, whether it is roads,
bridges, airports, and, of course, railroads.
And we are fortunate to have with us this morning leaders
in this industry and one of our Nation's very distinguished
public servants, Governor Rendell, who knows better than anyone
about the need to rebuild the infrastructure.
Literally just yesterday, in Grand Central Station in New
York, a train derailed. More than a minor inconvenience, this
incident recalled the even more serious derailments that caused
injuries and deaths over the past 2 years and reminded us that
safety and reliability continue to be in question on our
Nation's railroads and in our infrastructure.
We face enormous challenges as a country to maintain trust
and confidence in our railroads and in our roads and bridges.
And I am enormously excited to continue on this subcommittee,
even though I won't be its Ranking Member, because I think that
it offers a forum and a means of creating even more momentum
behind this cause.
The fact of the matter is that passenger rail is a vital
lifeline for this country, as is freight, in delivering people
and goods and services. We have learned that the failure of a
single bridge or the derailment of a single line can literally
paralyze rail transportation up and down the East Coast. The
outage of a single bridge in Norwalk, Connecticut, the Walk
Bridge, can cripple passenger traffic, as well as freight, on
the busiest railroad artery in the country. And that is why
rebuilding those bridges and our roads and other critical
infrastructure is absolutely critical.
Resources will have to be devoted because that
infrastructure is a critical prop for our entire economy. It is
the foundation for the vital lifelines, economic lifelines,
that are critical to our Nation. And so I look forward to
supporting investment--and it is investment--it is not
spending. It really is investment that is vitally important to
making sure that trust and confidence is restored and
sustained.
That is ultimately the lesson of a derailment like the one
that occurred yesterday. It threatens not only the movement of
people to their homes and businesses, it threatens trust and
confidence in the ability of that kind of lifeline to function
well.
So I look forward to today's testimony and to the
continuing oversight and scrutiny that this subcommittee will
impose. Because, ultimately, the task is not only one of
private industry, it also is one of our government agencies--
the Federal Railroad Administration, the National
Transportation Safety Board, etc.
And the failure of those agencies to properly oversee what
is happening on the rails and roads is, itself, a jeopardy to
safety and reliability. What we have seen is a failure to
implement more than 100 critical recommendations from the NTSB
on rail safety. And part of our task on this subcommittee will
be to make sure that we oversee and scrutinize what those
critical government agencies do to make sure that trust and
confidence is sustained and enhanced.
Thank you, Madam Chairwoman. And I look forward to the
testimony today.
Senator Fischer. Thank you, Senator Blumenthal.
With that, I would like to introduce our witnesses today on
the panel.
Mr. James Mullen is the Executive Vice President and
General Counsel for Werner Enterprises.
Werner is a member company of the American Trucking
Association, and it is among the five largest truckload
carriers in the United States. Based in Omaha, Nebraska, Werner
was founded in 1956. It is a prime transportation and logistics
company with coverage throughout North America, Asia, Europe,
South America, Africa, and Australia.
Mr. Mullen joined Werner Enterprises in 2006, and he is
ultimately responsible for the safety and risk departments
within his company.
Mr. Lance Fritz is the President and Chief Operating
Officer at Union Pacific Railroad, which is a Class I freight
railroad headquartered in Omaha, Nebraska. As many of you know,
Union Pacific links 23 states in the western two-thirds of the
United States, providing freight solutions and logistics
expertise to the global supply chain.
Mr. Fritz has been responsible for operations, marketing,
and sales, information technology, continuous improvement,
supply, and labor relations at Union Pacific. As someone with
such broad experience with the rail industry, Mr. Fritz is very
familiar with UP's capabilities, safety and capital programs,
and network planning.
Mr. Douglas Means has served as the Chief--or is Executive
Vice President and Chief Supply Chain Officer for Cabela's
since April 2010.
Cabela's is a Nebraska success story. It was founded around
a kitchen table in 1961. Now headquartered in Sidney, Nebraska,
Cabela's has become a global retailer of outdoor recreation
merchandise, shipping its catalog to all 50 states and over 120
countries.
Mr. Means joined Cabela's after an 18-year career with
Jones Apparel Group, and he is now responsible for overseeing
Cabela's global supply chain.
We see a pattern here.
But we are also very, very pleased to welcome the Honorable
Ed Rendell. He is Co-Chair of Building America's Future
educational fund, which is a bipartisan coalition working to
enhance our Nation's prosperity and quality of life through
investment in infrastructure.
As everyone here knows, Mr. Rendell served two terms as
Pennsylvania's 45th Governor, from 2003 to 2011. Governor
Rendell also served as the Mayor of Philadelphia and as
District Attorney of the city. He is now lending his talent and
energy to promoting Federal infrastructure support to keep the
United States competitive with our global partners.
We are pleased to welcome all of you here. We look forward
to your testimony.
And, Mr. Mullen, if you would begin, please.
STATEMENT OF JAMES MULLEN, EXECUTIVE VICE PRESIDENT AND GENERAL
COUNSEL, WERNER ENTERPRISES
Mr. Mullen. Chairman Fischer, members of the Subcommittee,
thank you for the opportunity to testify today about the
performance of our transportation networks and, more
specifically, on ways to improve commercial motor vehicle
safety.
I am Jim Mullen, Executive Vice President and General
Counsel for Werner Enterprises, which is one of the five
largest truckload carriers in the United States and
headquartered in Omaha, Nebraska.
The trucking industry is justifiably proud of its
commitment to safety. Together, Werner and approximately
500,000 other carriers invest over an estimated $7 billion in
safety annually. At Werner alone, we spend $40 million annually
on safety, much of it on voluntary initiatives and crash-
prevention technology.
As the industry continues to invest time and resources into
safety, there has been a noted drop in the large truck fatality
rate by 37 percent over the last decade. At Werner, preventable
reportable crashes dropped 22 percent from 2007 to 2014.
Contributing to this accomplishment are strategies that go
beyond minimum regulatory requirements, including the use of
driver training simulators and the adoption of onboard safety
technologies.
To continue this long-term trend requires a commitment on
the part of the government and the industry to focus on the
primary causes of crashes and effective countermeasures. The
vast majority of crashes, close to 90 percent, are the result
of driver error. It is quite logical, then, for FMCSA to focus
on driver behavior and means to impact it.
Now I would like to discuss some of the current regulatory
issues impacting Werner and the industry.
Electronic logging devices. In 2012, Congress mandated that
FMCSA require the use of electronic logging devices, ELDs, to
monitor hours-of-service compliance. Werner is a strong
advocate of this mandate and was an early pioneer of ELD use.
In 1998, Werner became the first motor carrier in the country
to implement electronic logs. Though FMCSA is making progress
on this issue, congressional oversight is still needed to
ensure a timely final rule that includes reasonable
requirements.
The hours of service and the restart rule. Last month,
Congress temporarily suspended the restart restrictions,
pending additional FMCSA research. The GAO is also conducting a
review of FMCSA's previous restart field study. Congress should
provide close oversight of these studies and, if warranted,
permanently vacate the restart restrictions.
Entry-level driving training requirements. Requirements
should be based on performance, not hours-based. No responsible
trucking company has a place for drivers who have completed a
minimum number of hours but have failed to master the necessary
skills to safely operate a truck.
Compliance, safety, and accountability, CSA. Werner
supports the objectives of FMCSA's CSA program. However, we
have serious concerns about CSA's ability to accurately
identify the least safe motor carriers and the impact on safe
motor carriers who are erroneously labeled otherwise.
Issues with CSA that are of importance to Werner include
the disparate enforcement amongst the states, the flaws in the
mileage utilization factor, and flaws in the unsafe driving and
the hazmat BASICs. All of these create an uneven playing field
for certain motor carriers under CSA.
Inaccurate scores can have serious implications. Werner is
deeply bothered by FMCSA's use of crash data to measure fleet
safety performance. Specifically, the CSA Safety Measurement
System uses all crashes, including those that truck drivers
neither caused nor could have prevented, to assess a carrier's
performance. A truck driver who is the victim in a crash is
scored the same as one who causes a crash.
This is a significant point. At Werner, the most common DOT
reportable crash involving a Werner truck is being struck from
behind by another vehicle, yet that is scored the same as if we
caused the accident. FMCSA has avoided correcting this issue
for 5 years. Hence, Werner supports the industry's call and its
legislative efforts to remove CSA scores from public view until
necessary improvements are made.
Last, I would like to comment on the infrastructure
investment. A commitment to infrastructure investment is needed
to provide for the safe and efficient flow of commerce and the
foundation for economic growth. Congestion on the interstate
system alone cost the trucking industry $9.2 billion in 2013
and wasted more than 141 million hours. Further, congestion
wastes fuel and increases the output of emissions. And last but
certainly not of the least importance, sitting in traffic adds
stress to drivers, which limits their compensation and leads to
unsafe driving conditions.
Werner Enterprises and the trucking industry have a strong
commitment to safety and an impressive record to show for it.
Continued improvement will require a focus on the primary
causes of crashes, especially driver behavior, and incentives
for the voluntary adoption of progressive safety programs.
Werner looks forward to continue to work jointly with you,
policymakers, FMCSA, and stakeholders to find innovative ways
to fund and improve our transportation networks and commercial
motor vehicle safety.
Thank you again for the opportunity to share our industry's
perspective this morning, and I look forward to answering any
of your questions. Thank you.
[The prepared statement of Mr. Mullen follows:]
Prepared Statement of James Mullen, Executive Vice President and
General Counsel, Werner Enterprises
Introduction
Chairwoman Fischer, Members of the Subcommittee, thank you for the
opportunity to testify today about the performance of our
transportation networks and, more specifically, on ways to improve
commercial motor vehicle safety. My name is Jim Mullen, and I am the
Executive Vice President and General Counsel for Werner Enterprises,
headquartered in Omaha, Nebraska. Founded in 1956, Werner is now among
the five largest truckload carriers in the United States, with a
diversified portfolio of transportation services that includes
dedicated; medium-to-long-haul, regional and local van; expedited;
temperature-controlled; and flatbed services. Werner also provides
value-added services such as freight management, truck brokerage,
intermodal, and international logistics.
Madam Chairwoman, today I will speak about Werner's and the
trucking industry's commitment to safety, our safety record, and
measures we support to continue this long-term trend. I will also talk
about opportunities that the Federal Motor Carrier Safety
Administration (FMCSA) has to improve safety, the need to sharpen the
agency's focus, and the unnecessary regulatory burdens that have been
placed on Werner and companies like ours. Finally, I will touch briefly
on the investment our country must place in its infrastructure to
ensure the safe and efficient flow of commerce and much needed economic
growth.
The Industry's Commitment to Safety
The trucking industry is justifiably proud of its commitment to
safety. Together, Werner Enterprises and the approximately five hundred
thousand other carriers who comprise the industry invest over an
estimated $7 billion in safety annually. At Werner alone we spend $40
million on safety, some of it to meet a myriad of regulatory
requirements, but much of it on voluntary, progressive safety
initiatives. This includes the adoption of emerging crash prevention
technology such as forward collision warning and lane departure
devices. During 2015, Werner will spend an approximately $6.0 million
on these systems, and approximately half of our fleet will be equipped
with this technology.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
These investments in safety have yielded impressive dividends for
the industry. Over the past decade the number of large truck-related
fatalities has dropped 21 percent and the large truck fatality rate has
dropped 37 percent. At Werner, we have experienced a 22 percent
decrease in preventable Department of Transportation (DOT) reportable
crashes from 2007 through the end of 2014. We use 2007 as the baseline
because a change in Werner's data systems in 2007 makes previous years'
data unreliable.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Much of this improvement is due to progressive safety initiatives
supported by Werner and fellow industry members. For example, in
addition to the aforementioned crash prevention technologies, Werner
has invested in state of the art driver training simulators, critical
event recording, predictive modeling, and other items. It is the motor
carrier's responsibility to put the professional driver in the best
position to be as safe as possible. Technology, training, and placing
safety as a company core value are vital to providing the driver with
the tools and culture to drive safely.
Necessary Steps for Continued Improvement
To continue this long term trend requires a commitment on the part
of the government and industry to focus on the primary causes of
crashes and effective countermeasures. The data on these factors are
very clear and compelling; the vast majority of crashes, close to 90
percent, are the result of driver error. It is quite logical, then, for
FMCSA to focus on driver behavior and means to impact it. However, the
agency's plans and priorities suggest a much different focus.
For example, because speeding is the greatest single contributor to
truck crashes, the industry petitioned FMCSA and the National Highway
Traffic Safety Administration in 2006 to establish a rule requiring the
use of speed limiters on all trucks over 26,000 lbs. Yet, to date,
neither agency has issued a proposed rule to this end. We understand a
proposal is in the works, but have yet to see it. The industry and
FMCSA must work together to focus on efforts that have a direct impact
on driver safety, as opposed to issues that may be driven by political
or economic issues. We owe that to the motoring public.
FMCSA's use of enforcement funding and resulting activity
demonstrates a similar need to redirect the agency's focus. For
example, FMCSA's Safety Program Effectiveness Measurement Report, shows
that on-road traffic enforcement activity is far more effective at
preventing future crashes than standard roadside inspection activity.
The latter typically involves a vehicle inspection to detect component
defects and a review of the driver's paper work (e.g., hours of service
records of duty status) and credentials (e.g., license and medical
examiner's certificate). The former, traffic enforcement, consists of
on-road monitoring of driver behavior (e.g., moving violations) coupled
with some form of inspection activity (e.g., a ``walk-around''
inspection of vehicle components).
FMCSA's aforementioned report reflects that for every 1,000 traffic
enforcements 12.05 crashes are prevented compared to 2.7 crashes per
1,000 standard roadside inspections. Similarly, .41 lives are saved per
1,000 traffic enforcements compared with only .09 lives per 1,000
roadside inspections. In other words, traffic enforcements are more
than four times more effective at preventing crashes and saving
lives.\1\
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\1\ FMCSA Safety Program Effectiveness Measurement: Intervention
Model Fiscal Year 2009, FMCSA, April 2013.
---------------------------------------------------------------------------
The table below, taken from the FMCSA effectiveness report, shows
the breakdown of crashes and injuries avoided and lives saved by
roadside inspections and traffic enforcements respectively.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Given this compelling data, it is logical to place more emphasis on
traffic enforcements than on roadside inspections. However, figures
available on FMCSA's website indicate that traffic enforcements only
comprise a small portion of field enforcement interventions (e.g., 10
percent) and suggest that this percentage has been dropping over the
past seven years. The agency should find this trend both alarming and
compelling.
FMCSA's program effectiveness document points out that the
``evaluation provides FMCSA and State MCSAP partners with a
quantitative basis for optimizing the allocation of safety resources in
the field.'' This statement is true, but it appears as though FMCSA and
its state partners have not actually used the evaluation for this
purpose. If the agency and states had done so, we would have observed
an increase in traffic enforcement activity, not a decline. This
troubling decline begs the question: ``How many lives would not have
been lost if FMCSA had devoted greater resources to traffic enforcement
over the past several years?''
Faced with this data, FMCSA recently announced its plan to train
other law enforcement officers (e.g., municipalities)--not those funded
under its commercial motor vehicle (CMV) enforcement program--to
conduct traffic enforcement on large trucks. While we appreciate
FMCSA's acknowledgement and the need to focus on driver behavior, their
actions miss the mark. The training of non-CMV enforcement personnel
appears to be an attempt to deflect the criticism of FMCSA's management
of its CMV enforcement program. To be clear, the agency has not
announced any steps to ensure that the funds spent in its Motor Carrier
Safety Assistance Program (MCSAP) are used more efficiently by devoting
a greater percentage of these funds to traffic enforcement.
The plan to train non-CMV enforcement officers to conduct traffic
enforcement on CMVs is flawed for a number of reasons. First, FMCSA's
Program Effectiveness Report points out that traffic enforcement
coupled with some vehicle inspection activity is four times more
effective than vehicle inspection activity alone. The non-CMV officers
conducting traffic enforcement will not be conducting vehicle
inspections. Second, the traffic enforcement data (e.g., violations,
citations) will not be captured and uploaded into FMCSA's Motor Carrier
Management Information System, which feeds the agency's safety
monitoring and measurement system. This is a critical flaw since
FMCSA's research shows that data on driver behavior (e.g., moving
violations) has the strongest correlation to crash risk and provides
the best means for identifying unsafe fleets. Finally, training non-CMV
officers to conduct CMV enforcement activity raises the strong
potential that some time and resources will be shifted away from
passenger vehicle enforcement as a result.
In addition to focusing its research, regulatory, and enforcement
programs on the primary cause of crashes, FMCSA should consider ways to
promote voluntary safety initiatives embraced by the industry. Werner
and other motor carriers like us have found that several emerging, non-
mandated, safety technologies hold tremendous promise for reducing
crashes. However, the government lacks data on their efficacy given
their relatively limited use. By providing incentives to fleets like
ours to use such technologies, the agency can promote broader adoption
and, as a result, gather data to better understand their safety
benefits. FMCSA has indicated their interest and willingness to
consider such incentives; we look forward to collaborating with the
agency on future efforts to this end.
Views on Current Safety Issues
I want to take this opportunity to offer the industry's views on a
number of current safety issues, with the hope that Congress will
provide greater oversight of them.
Electronic Logging Devices
The most recent highway reauthorization legislation, Moving Ahead
for Progress in the 21st Century Act (MAP-21), mandated that FMCSA
complete a rulemaking to require the use of electronic logging devices
(ELDs) to monitor hours of service compliance. Such a mandate is
logical and appropriate. Previous FMCSA research has shown a strong
correlation between compliance with the hours of service regulations
(in place at the time, 2010) and safety outcomes. For this reason, the
call for a mandate had broad support from industry, law enforcement,
and consumer advocacy groups.
Werner is a strong advocate of an ELD mandate and was an early
pioneer of ELD use. In 1998, Werner became the first motor carrier in
the country to implement electronic logs for recording drivers' work
and driving hours. Six years later, in 2004, Werner became the first
carrier granted an exemption by DOT from the requirement to complete
and maintain paper records of duty status.
Werner, like much of the industry, is pleased to see that FMCSA is
making progress on this issue and is on track to issue a final rule
later this year. However, Congressional oversight is still needed in
this area. First, Congress should watch carefully to ensure that the
publication of the final rule mandating ELDs is not further delayed.
Though the MAP-21 deadline for this final rule was October of 2013,
FMCSA does not project publication of it until the end of September,
2015. Second, Congress should be alert to the potential that the rule
could include some unreasonable requirements, especially with respect
to the grandfathering of existing devices. It is important that early
adopters of such devices should not ultimately be penalized for the
investments they have made in safety by having their devices declared
obsolete by regulation.
Entry Level Driver Training
Werner and the trucking industry believe that the current CDL
safety training requirements can be, in some instances, insufficient to
properly prepare new drivers for the rigors of the road. At Werner, we
hire a large number of drivers directly out of truck driving school and
have very close relationships with the largest schools in the Nation.
Therefore, we have first-hand knowledge of the current system's
limitations. Werner and the trucking industry as a whole support an
entry-level driver training rule. Such a rule should map to the safety
skills all drivers should possess. Its requirements should be
performance-based rather than hours-based. Neither Werner nor any other
responsible trucking company has a place for drivers who have completed
a minimum number of hours, but failed to internalize the necessary
skills to safely operate a truck.
A previous attempt at promulgating an entry-level driver training
rule failed cost-benefit analysis and had to be withdrawn. Werner
supports FMCSA's current proposed negotiated rulemaking process. It is
the industry's hope that the process reaches a consensus
recommendation, one which has benefits that exceed its costs.
Hours of Service
In December 2011, FMCSA issued a final rule making changes to the
hours of service regulations for truck drivers. This action on the part
of the agency represents government overreach of the worst kind.
Operating under the previous hours of service regulations, the number
and rate of truck involved crashes, injuries, and fatalities all
declined dramatically. Nonetheless, FMCSA elected to revise them.
The result was a set of rules that were unjustified and harmful
both to highway safety and the economy. In the rulemaking process,
FMCSA acknowledged that the modest safety benefits of the changes would
come nowhere near to offsetting their huge costs to productivity. To
justify these revisions, the agency relied on the speculative theory
that drivers working under the new rules would use additional off-duty
time to get rest, would then become healthier, and would live longer
lives as a result. By monetizing this theoretical benefit, and
understating the negative economic impacts, FMCSA was able to convince
the White House Office of Management and Budget that the new rules met
the required cost-benefit test.
Subsequent experience with the new hours of service rules
demonstrated that FMCSA's estimate of the impact to drivers, trucking
companies, and the economy was substantially off the mark. For example,
FMCSA predicted that new restrictions it imposed on driver use of the
hours of service weekly ``restart'' provision would result in a net
societal benefit of $133 million. However, a subsequent analysis
conducted by the American Transportation Research Institute, after the
``restart'' restrictions went into effect, found that the rules were
resulting in a net cost to the industry of between $95 million and $376
million annually.
One of the restrictions FMCSA imposed in July 2011 was that driver
weekly ``restart'' rest periods must include two consecutive nighttime
segments of 1-5 a.m. However, the results of Congressionally-mandated
FMCSA research released in January of last year showed that drivers
meeting this restriction were more likely to operate in the daytime
when the risk of crashes is greater. FMCSA later admitted that it did
not take this safety impact into account when the agency calculated the
net safety benefits of the new rules.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
FMCSA Large Truck and Bus Factbook 2012, page 48, June 2014.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Assessment of the FMCSA Naturalistic Field Study 5 on Hours-of-
Service Restart Provisions, American Transportation Research Institute,
Page 10, April 2014.
Given this elevated risk of increased daytime traffic and the
disparity between the real-world impacts of the rules and FMCSA's
projected impacts, Congress recently suspended the ``restart''
restrictions pending additional research. The agency quickly began this
research to meet a 12 month deadline. At the same time, the Government
Accountability Office (GAO) is also conducting a review of FMCSA's
previous ``restart'' field study. The industry sincerely hopes Congress
provides close oversight of these studies and, unless they surprisingly
demonstrate compelling reasons to the contrary, takes action to
permanently vacate the ``restart'' restrictions that have been
suspended only temporarily.
Compliance, Safety, Accountability
Werner Enterprises, like much of the industry, strongly supports
the objectives of FMCSA's Compliance, Safety, Accountability (CSA)
program. Such a data-driven approach to identifying the least safe
operators and targeting them for intervention is laudable. Further, a
prioritization approach of this type is necessary, given FMCSA's
limited resources and ability to audit only a small percentage of the
industry each year.
However, we have grave concerns about CSA's ability to accurately
identify the least safe motor carriers, and the impact on safe motor
carriers who are erroneously labeled otherwise. Many of Werner's
concerns were highlighted by a GAO report, Modifying the Compliance,
Safety, Accountability Program Would Improve the Ability to Identify
High Risk Carriers.\2\ The study confirmed many shortcomings of the
program including: a dearth of data which results in a great majority
of motor carriers not being scored; a lack of a statistical correlation
between the vast majority of regulatory violations and crash risk, and
the fact that carriers' scores are often unreliable indicators of
future crash risk. Moreover, GAO found that CSA is an imprecise tool
that cannot accurately identify an individual fleet's crash risk, and
until deficiencies are addressed, it is inappropriate to pursue a
rulemaking to tie safety fitness determinations to CSA Safety
Measurement System (SMS) scores. Issues with CSA that are of importance
to Werner and other industry members also include the disparate
enforcement among the states, the flaws in the mileage utilization
factor to the detriment of fleets with teams and high productivity, and
flaws in the scoring system in Unsafe Driving BASIC and Hazmat BASIC.
All of these create an uneven playing field for carriers under CSA.
---------------------------------------------------------------------------
\2\ Modifying the Compliance, Safety, Accountability Program Would
Improve the Ability to Identify High Risk Carriers, Government
(Washington, D.C.: Government Accountability Office, February 2014),
http://www.gao.gov/assets/670/660610.pdf.
---------------------------------------------------------------------------
These limitations are of great concern to the trucking industry
because third parties (e.g., shippers, brokers, insurers, banks, etc.)
use publicly available CSA SMS scores to make important business
decisions. In these cases, inaccurate scores can have serious
implications. As such, Werner supports the industry's call to remove
CSA scores from public view until peer reviewed research confirms a
strong statistical correlation between individual fleets' scores in
each measurement category and future crash risk.
Werner is also deeply bothered by FMCSA's use of crash data to
measure fleet safety performance. Specifically, the CSA Safety
Measurement System (SMS) uses all crashes, including those motor
carriers neither caused nor could have prevented, to assess their
safety performance. As a result, a truck driver who is the victim in a
crash (e.g., rear-ended by a drunk driver) is scored the same as one
who causes such a crash. This is significant, since the most common DOT
reportable crash involving a Werner driver is being struck from behind
by another vehicle.
The trucking industry has long held that it is patently illogical
to use obvious not-at-fault crashes to measure fleet safety
performance. The ill-effect of doing so is two-fold. First, carriers
involved in such crashes are erroneously labeled as being unsafe.
Second, these carriers are then more likely to be targeted for agency
interventions, a waste of FMCSA's limited enforcement resources.
FMCSA has responded to this concern not by removing such obvious
crashes from the system, but by conducting a multiyear study of the
efficacy of using police accident reports (PARs) to make crash
accountability determinations. Just recently, FMCSA released this
report and contended that PARs were not sufficiently reliable for this
purpose and that a process to make such crash accountability
determinations would not be cost-beneficial.
FMCSA issued the results of this study a full five years after the
industry urged the agency to remove crashes where it is plainly evident
that the truck driver did not cause the crash. For example, the
American Trucking Associations suggested that FMCSA address crashes
such as when a motorist driving the wrong way on a divided highway
strikes a truck head-on, or when a passenger vehicle rear-ends a truck
stopped at an intersection. Rather than taking the appropriate action
to address these crashes, FMCSA is obfuscating the issue by conducting
lengthy research on the ability to make determinations on all crashes.
In addition, now that the research is complete, the agency is still not
proposing any specific action, but soliciting suggestions for next
steps, instead.
Recognizing the inequity of scoring fleets based on crashes they
did not cause, and how targeting fleets for enforcement action based on
such crashes wastes Federal enforcement resources, Congress should take
action. FMCSA should be required to immediately erect a process to
remove from consideration those crashes where it was plainly obvious
the truck driver did not cause the crash.
Infrastructure Investment
Much like the rest of the industry, Werner is deeply concerned
about the state of our national infrastructure. Underinvestment in the
highway system has caused transportation arteries to deteriorate,
producing significant inefficiencies for the trucking industry and
disrupting supply chains. Congestion on the Interstate System alone
cost the trucking industry $9.2 billion in 2013 and wasted more than
141 million hours.\3\ This was equivalent to 51,000 drivers sitting
idle for a full working year. Furthermore, congestion wastes fuel and
increases the output of emissions. In addition, sitting in traffic adds
stress to drivers and may limit their compensation, exacerbating the
challenges associated with hiring and retaining employees.
---------------------------------------------------------------------------
\3\ American Transportation Research Institute, Cost of Congestion
to the Trucking Industry, April 2014.
---------------------------------------------------------------------------
Interestingly, 89 percent of Interstate System congestion occurred
on just 12 percent of the network,\4\ suggesting that focused attention
on the most problematic locations can resolve much of the gridlock that
plagues trucking companies and their drivers. To address this fact, the
trucking industry recommends dedicating Federal revenue toward
addressing major freight bottlenecks.
---------------------------------------------------------------------------
\4\ Ibid.
---------------------------------------------------------------------------
It is also important to note that highway congestion does not just
affect truck deliveries. The intermodal movement of freight by
railroads, barges, ships and aircraft often relies on trucks for part
of the delivery. Any disruption to truck travel can severely affect the
efficiencies of these other freight modes. Due to these
interdependencies, the trucking industry has joined with other
interested parties in a Freight Stakeholders Coalition. The coalition
has released a platform of recommendations for reauthorization,\5\ many
of which are of interest to this Committee. The coalition recommends
establishment of a new multimodal freight fund outside of the Highway
Trust Fund to address the many infrastructure challenges that hamper
delivery of goods. In addition, the coalition believes that
establishment of a freight office within the Office of the Secretary of
Transportation would raise the profile of goods movement within DOT and
help to coordinate efforts across modal administrations. Finally, the
coalition believes that Congress should continue to encourage states,
metropolitan planning organizations, and localities to develop freight
planning expertise to address multi-modal freight mobility as part of
their planning processes.
---------------------------------------------------------------------------
\5\ https://www.intermodal.org/assets/private/
2014freightstakeholderscoalitionplatform.pdf
---------------------------------------------------------------------------
Summary and Conclusion
Chairwoman Fischer, as I have explained, the trucking industry has
a strong commitment to safety and an impressive record to show for it.
Continued improvement will require a focus on the primary causes of
crashes, especially driver behavior, and incentives for the voluntary
adoption of progressive safety programs. It will also require close
Congressional oversight of FMCSA's current activities. For instance,
Congress should ensure that the final rule mandating ELD use is issued
in a timely fashion. A future entry level driver training proposal must
be reasonable, appropriate and effective. The agency's CSA SMS must be
improved so that motor carriers' scores reliably and accurately reflect
their safety performance and, until then, these scores should be
removed from public view. Congress should carefully evaluate FMCSA and
GAO studies of the hours of service rules and, unless the studies can
demonstrate that the true net safety benefits outweigh the real
impacts, permanently suspend the ``restart'' restrictions implemented
in 2011. Finally, a commitment to infrastructure investment is needed
to provide for the safe and efficient flow of commerce and a foundation
for economic growth.
Senator Fischer. Thank you, Mr. Mullen.
Mr. Fritz?
STATEMENT OF LANCE M. FRITZ, PRESIDENT AND CHIEF OPERATING
OFFICER, UNION PACIFIC RAILROAD
Mr. Fritz. Thank you. Thank you, Chairman Fischer and
members of the Subcommittee. Thank you for the opportunity to
testify today about how to improve the performance of the
transportation network.
My written testimony goes into much more detail, but in
just a few words, the best way to improve performance in the
rail industry is to ensure we have policies that support
safety, service, and efficiency. These three things---- safety,
service, and efficiency--complement and are foundational to one
another.
Let me give you several examples of what I am talking
about.
First and foremost, our industry must be able to earn
sufficient revenues that allow us to invest in and grow our
infrastructure. This is really the key to everything. Unlike
other transportation modes, we must build and maintain our own
networks. This takes huge amounts of capital and more than any
other industry as a percentage of revenue.
At the same time, we are publicly traded companies that
must provide a return to our shareholders that entices them to
invest in our companies. The ability to make these investments
allows us to improve safety, provide the service levels our
customers demand, and create the efficiencies we need to ensure
our economy is competitive on the world stage.
Unfortunately, the Surface Transportation Board is
considering proposals that would create a new economic
regulatory scheme that would cap our rates and limit our
revenues to some level set by regulation as part of a revenue
adequacy proceeding.
Those shippers who advocate this do so even though all the
Class I railroads' average return on invested capital is below
the average of companies in the S&P 500. Moreover, Union
Pacific has allocated a larger portion of cash to capital
expenditures than the average of companies in the S&P 500, and
we lag these same companies in returning value to shareholders
in the form of dividends and stock buybacks. Yet we must
compete with these same companies for investment dollars.
Capping returns would be a terrible mistake, as it would
prevent us from being able to grow our networks, as our
investors would seek other more favorable returns on their
money. This would ultimately hurt all shippers and our
country's economic vitality.
Second, we must ensure we have fact-based safety
regulation. Safety is of paramount importance to our industry
and to Union Pacific. We are absolutely dedicated to safely
serving our customers and communities. Our goal is that each
and every one of our employees goes home safely and secure at
the end of their shifts.
An example of what I mean by ``fact-based safety
regulation'' is proposals that require two people in the cab of
a locomotive. There is no safety data to back this up. Commuter
railroads and Amtrak only have one person in the cab. Now,
Union Pacific is not attempting to go to one person in the cab,
but someday technology may allow us to get to that, and we
believe legislation or regulations that prevent us from using
technology to become safer and more efficient would be a
mistake.
Another way to address safety in the rail industry is to
get away from the command-and-control type of regulation that
is in place today and, instead, adopt a performance-based
regulatory system. This would empower the FRA and the railroads
to drive down accidents and improve safety using best practices
rather than a cookie-cutter approach.
In order to meet our customers' demands and changing
markets, environmental streamlining or permitting reform is
also important. The amount of time and energy it takes to get
projects from the drawing board to construction and completion
is growing longer every day. Congress should look at ways to
make this process work more quickly, and I outline some of
those ideas in my written testimony.
The last thought I want to leave you with is that we are a
network, and because we are a network, actions in one place
create ripples in another. We have seen this in the service
issues our industry had experienced over the past year.
Congestion or extreme weather in one place can cause impacts
throughout the system.
So when contemplating laws or regulations, policymakers
shouldn't do things that balkanize the industry--that is,
provide service requirements to one segment of customers that
would happen if the STB implemented some form of forced access
proposal, or have environmental or safety regulations in one
area but not in another, as many states and localities would
like you to do. That would be just a prescription for
inefficiency and poor service.
Again, thank you for the opportunity to testify, and I
would be happy to answer any questions.
[The prepared statement of Mr. Fritz follows:]
Prepared Statement of Lance M. Fritz, President and Chief Operating
Officer, Union Pacific Railroad
On behalf of Union Pacific Railroad (UP) and the Association of
American Railroads (AAR), thank you for the opportunity to appear
before you today to discuss ways to improve the performance of
America's freight transportation network.
Union Pacific, like the other Class I freight railroads that
operate in the United States, relies on its own funds, not taxpayer
funds,to pay for its infrastructure, and the rail industry provides a
critical link in the global supply chain. UP's 10,000 customers depend
on us to deliver their products in a safe, reliable, and
environmentally responsible manner.
Serving 23 states over 32,000 miles in the western two-thirds of
the country, we are proud to be part of a 140,000-mile U.S. freight
rail network that is part of an integrated North American rail network
that provides the world's safest, most productive, and most cost-
effective freight rail service. Union Pacific and other freight
railroads work hard every day to help keep our Nation moving on the
right track.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
There is a tremendous amount of strength and flexibility in our
Nation's freight transportation systems--more so, in fact, than in any
other country. It's also clear, however, that our Nation faces
significant challenges in maintaining the freight-moving capability we
have today and improving it to meet the even greater needs of tomorrow.
Indeed, as America's economy and population grow, the need to move more
freight will grow too. Forecasts vary--for its part, the Federal
Highway Administration recently projected that total U.S. freight
shipments will rise from an estimated 19.7 billion tons in 2012 to 28.5
billion tons in 2040, a 45 percent increase (see Figure 2)--but it's
clear that, as a nation, we need to prepare now.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Union Pacific and America's other freight railroads are trying to
do just that. Through massive, record private investments in
infrastructure and equipment, the development and implementation of
innovative technologies, and operational enhancements, we are working
to help make sure that railroad performance meets our customers'
current and future needs.
Policymakers, including members of this committee, can help or
hinder railroads in this effort. I respectfully suggest that you and
other policymakers, when thinking about freight railroads, should keep
foremost in mind the need for railroads to be able to earn enough to
maintain their existing networks and create the substantial new
capacity that will be needed to transport the additional freight our
economy will generate in the years ahead. You should ensure that rail-
related regulation and legislation do not hinder railroads' ability to
serve their customers as efficiently as possible. And you should work
to make sure that railroad safety oversight is fact-based, rather than
based on perceptions that upon closer inspection may not be well
founded.
At Union Pacific, our goal is to provide service to our customers
that is as safe, efficient, and cost effective as possible. I know that
other railroads share these goals. Below I will address some of the
actions we think policymakers should take--and, just as importantly,
steps policymakers should refrain from taking--to help make this
happen. Taking these steps would serve the public good by providing our
Nation's producers and consumers with a stronger, more capable
transportation option.
Railroads Are the Transportation Backbone of America
The public benefits associated with freight rail suggest that it is
in the public interest for policymakers to enact policies that result
in as much freight as possible moving by rail:
America's freight railroads are privately owned and operate
almost exclusively on infrastructure that they own, build,
maintain, and pay for themselves. When railroads reinvest in
their networks--which they've been doing in record amounts in
recent years--it means taxpayers don't have to.
Railroads are, on average, four times more fuel efficient
than trucks. That means that moving freight by rail helps our
environment by reducing energy consumption, pollution, and
greenhouse gases.
Because a single train can carry the freight of several
hundred trucks--enough to replace a 12-mile long convoy of
trucks on the highways--railroads cut highway gridlock and
reduce the high costs of highway construction and maintenance.
Thanks to competitive rail rates--42 percent lower, on
average, in 2013 than in 1980 \1\--freight railroads save
consumers billions of dollars every year, making U.S. goods
more competitive here and abroad and improving our standard of
living.
---------------------------------------------------------------------------
\1\ Based on inflation-adjusted revenue per ton-mile.
Railroads are safe and getting safer. Recent years have been
the safest in rail history. Preliminary data suggest that 2014
---------------------------------------------------------------------------
saw the lowest train accident rate in history.
America's freight railroads sustain 1.2 million jobs,
including 180,000 high-paying jobs in the freight rail industry
itself. Millions of other Americans work in industries that are
more competitive in the global economy thanks to the
affordability and productivity of America's freight railroads.
Of course, no one, and certainly not railroads, disputes that motor
carriers (and other freight transportation modes, for that matter) are
indispensable to our economy and quality of life, and will remain so
long into the future. But because of the enormous cost involved in
building new highways, as well as environmental and land use concerns,
it is highly unlikely that sufficient highway capacity can be built to
handle expected future growth in freight transportation demand.
Fortunately, freight rail represents a viable and socially
beneficial complement to highway freight movement. This does not mean
we should stop building highways or that we should no longer recognize
the importance of trucks and highways, but it does mean that
policymakers should be doubly aware of the role railroads can play in
providing the freight transportation our Nation needs.
Investing for the Future
As noted above, as America's economy and population grow, the need
to move more freight will grow too. All transportation modes have key
roles to play. But whereas trucks, airlines, and barges operate mainly
on highways, airways, and waterways that are publicly funded, Union
Pacific and America's other freight railroads are privately owned and
operate overwhelmingly on infrastructure that they own, build,
maintain, and pay for themselves.\2\ From 1980 to 2014, U.S. freight
railroads spent $575 billion--of their own funds, not government
funds--on capital expenditures and maintenance expenses related to
locomotives, freight cars, tracks, bridges, tunnels and other
infrastructure and equipment. That's more than 40 cents out of every
revenue dollar. In recent years, despite the recession, freight
railroads have been spending more than ever before, an estimated $26
billion in 2014 and, mostlikely, even more in 2015--back into a rail
network that keeps our economy moving (see Figure 3).
---------------------------------------------------------------------------
\2\ A few small railroads are owned by port authorities, economic
development agencies, or other governmental entities. The Alaska
Railroad is owned by the state of Alaska.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
One of the reasons railroads reinvest so much is that railroading
is among the most capital-intensive of all industries. The average U.S.
manufacturer spends about 3 percent of its dsrevenue on capital
expenditures. The comparable figure for Union Pacific and other U.S.
freight railroads is around 18 percent, or about six times more. As
members of this committee are well aware, building and maintaining an
infrastructure network is very expensive whether done with public or
private funds.
Because U.S. freight railroads are overwhelmingly privately owned
and must finance the vast majority of their infrastructure spending
themselves, these investments are accompanied by substantial financial
risk. Back in 2006, the Government Accountability Office correctly
noted that, ``Rail investment involves private companies taking a
substantial risk which becomes a fixed cost on their balance sheets,
one on which they are accountable to stockholders and for which they
must make capital charges year in and year out for the life of the
investment. A railroad contemplating such an investment must be
confident that the market demand for that infrastructure will hold up
for 30 to 50 years. This is in sharp contrast to other modes such as
highway infrastructure, which is paid for largely by public funds.''
\3\
---------------------------------------------------------------------------
\3\ Government Accountability Office, Freight Railroads: Industry
Health Has Improved, but Concerns About Competition and Capacity Should
Be Addressed, October 2006, p. 56.
---------------------------------------------------------------------------
Accordingly, at Union Pacific, as at other railroads, capacity
investments must pass appropriate internal railroad investment hurdles.
That means that investments will be made only if they are expected to
generate an adequate return over a long period of time. For this
reason, adequate rail earnings--again, over the long term--are critical
for capacity investment. As the Congressional Budget Office (CBO)
noted, also in 2006, ``As demand increases, the railroads' ability to
generate profits from which to finance new investments will be
critical. Profits are key to increasing capacity because they provide
both the incentives and the means to make new investments.'' \4\
---------------------------------------------------------------------------
\4\ Congressional Budget Office, Freight Rail Transportation: Long-
Term Issues, January 2006, p. 11.
---------------------------------------------------------------------------
The GAO's and CBO's comments are just as valid today as they were
when first made. If Union Pacific or any other railroad is not
financially sustainable over the long term, it will not be able to make
capacity investments to maintain its existing network in a condition to
meet reasonable transportation demand, or make additional investments
in the replacement or expansion of infrastructure required by growing
demand.
Major freight railroads face additional constraints because they
are either publicly traded or are subsidiaries of publicly traded
companies. As such, they must provide their shareholders a return
commensurate with what those shareholders could obtain in other markets
with comparable risk. I spend a considerable amount of my time
interacting with members of the investment community, and I can tell
you that they are well aware that no law or regulation can force
investors to provide resources to an industry whose returns are lower
than what the investors can obtain elsewhere. If railroads are viewed
as returning less to shareholders, for whatever reason, than comparable
alternatives, then capital will flee the rail industry or will only be
available at much higher costs than we see today, as evidenced by the
cost of capital to the rail industry in the recent past when our
financial performance was much less robust. The capital markets will
have it no other way.
These points--that railroads must be able to earn sufficient
revenue that we can invest in and grow our networks, and that, as
public companies, we must provide our shareholders with a return that
will entice them to invest their money with us--are foundational. The
ability to invest in our networks allows us to improve safety, provide
the levels of service that our customers demand, and create the
efficiencies we need to help ensure that our economy is competitive in
global markets.
Now, it is true that freight railroad financial performance in
recent years has been much improved compared to earlier years. I'm
proud that, at Union Pacific, we announced last week that 2014 saw
record operating revenue and operating income. But statements about
railroads' ``record profits'' often ignore the fact that, until
recently, rail profitability was generally relatively poor. Thus, an
improvement from earlier years may be a ``record,'' yet may still be
only about average compared with the earnings achieved by most of the
other industries against which railroads compete for capital.
Just one example to illustrate this point: return on equity (ROE)
is a well-known measure of profitability. It reveals how much profit a
company generates with the money shareholders have invested. Figure 4
shows that the ROE for the rail industry has much improved over the
past few years, but is still only about average compared to the Fortune
500.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Make no mistake, Union Pacific is encouraged by our improvements in
our financial condition in recent years, and by the rail industry's
overall progress. At Union Pacific, we will continue to work very hard
every day to see that those improvements continue so that we can return
more value to our shareholders. But it would be a tremendous mistake
for policymakers to view these improvements as a reason to cap rail
earnings through price controls, artificial competitive constraints, or
by other means. This would cause capital to flee the industry and
severely harm railroads' ability to reinvest in their networks. Figure
5 shows that, as rail industry profitability has risen in recent years,
so has our spending back into our networks. You can't have one without
the other. Indeed, if the American freight railroad industry is to
fully deliver its potential benefits to the economy, its current
financial performance should only be regarded as one step along the
path toward sustainability, not as a final destination.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
At a time when the pressure to reduce government spending on just
about everything--including transportation infrastructure--is enormous,
it makes no sense to enact public policies that would discourage
private investments in rail infrastructure that would boost our economy
and enhance our competitiveness. Improvements in rail profitability
reflect the fact that the current system of rail regulation is working.
After all, long-term sustainability through higher earnings is
precisely what Congress meant for railroads to achieve when it passed
the Staggers Act in 1980.
The Need for Efficiency
America's freight railroads, along with their Canadian
counterparts, are the most productive and efficient in the world, and
their productivity has skyrocketed since the Staggers Act instituted a
system of balanced regulation in 1980. Today, U.S. railroads generate
approximately double the freight volume they had in 1980, but they use
far fewer miles of track, employees, locomotives, and gallons of fuel.
These efficiency gains have largely been passed on to rail customers in
the form of lower average rates--as mentioned earlier, down an average
of 42 percent from 1980 through 2013 in inflation-adjusted terms.
Future rail efficiency gains will require continued significant
expenditures on infrastructure and equipment (including large amounts
of new capacity) and innovative new technologies, but they will also
require appropriate public policies.
For example, the need for efficiency helps explain why railroads
strongly oppose efforts to reverse existing policy under which the STB
must first find that a railroad serving a terminal area is engaged in
anti-competitive conduct before the STB can order the railroad to
``switch,'' or interchange, traffic to another railroad when such an
interchange is not necessary for freight delivery. Adding an
interchange to a movement that is currently handled in single-line
service adds substantial time, complexity, and costs to that movement.
Over the years, railroads have invested tens of billions of dollars and
enormous effort into concentrating traffic onto routes that are the
most efficient for rail customers as a whole; part of this effort has
been the development of very efficient and streamlined terminal
switching. The result? Sharply higher productivity, reliability, and
asset utilization, and lower freight rates for most rail customers.
Forced reciprocal switching would destroy these terminal efficiencies,
compromise the service improvements they have created for rail
customers, and raise rail costs. The added switching activity that
would be required, the increased possibility of service failures caused
by that new switching activity, and the complex operations that would
be required to bring about the new interchanges would disrupt rail
traffic patterns, produce congestion in rail yards, and undermine
efficient service to customers.\5\
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\5\ For more on reciprocal switching, see https://www.aar.org/
BackgroundPapers/Reject%20
Calls%20For%20Mandatory%20Reciprocal%20Switching.pdf.
---------------------------------------------------------------------------
Likewise, one of the major reasons why railroads oppose changes in
existing ``bottleneck'' policy at the STB is the sharply negative
effect such changes would have on the efficiency of rail operations.\6\
Requiring ``bottleneck'' service on demand could substantially change
the physical routing of rail cars, forcing railroads to use routes and
connecting points chosen by shippers, rather than by the railroads
themselves. If bottleneck policy were reversed, efficiency and
predictability would be lost, with potentially negative effects on rail
safety as well. Rail traffic could by forced through little-used and
physically inadequate connections and rail lines. Railroads would have
to make costly new investments to support the new routings (at the
expense of investments in more deserving areas), yet shippers could
change their minds about those routes on a whim.
---------------------------------------------------------------------------
\6\ In ``bottleneck'' situations, one railroad can move freight
from an origin to an intermediate point, and from that intermediate
point on to a final destination, and at least one other railroad can
also move the freight from that intermediate point to the final
destination. For a more detailed explanation of the bottleneck issue,
see: https://www.aar.org/BackgroundPapers/Bottle
neck%20Policy%20%20Dont%20Fix%20What%20Isnt%20Broken.pdf.
---------------------------------------------------------------------------
Changes to existing terminal switching and bottleneck policies
would introduce an enormous amount of uncertainty into the rail system.
Over the years, we've been working extremely hard to remove uncertainty
from the rail system, because it detracts so much from the provision of
reliable and cost effective service. Adding more can't possibly help
railroads improve the performance of their networks, especially as
railroads face increasing capacity constraints due to higher volumes
associated with economic growth and changing shipping patterns.
The need for efficiency also helps explain why railroads oppose a
variety of other proposals that have been proffered in recent years,
including (but not limited to) forcing railroads to prioritize certain
types of traffic over other types, the imposition of speed limits on
certain types of traffic that are not necessary from a safety
standpoint, and local bans on the transport of certain commodities in
certain areas. When considering these and similar proposals,
policymakers should take great care in weighing the supposed benefits
of the proposals with the substantial harm they would cause to railroad
efficiency and, consequently, to our Nation's economic well-being. It's
also crucial that policymakers remember that railroads are integrated
and interconnected networks: what happens in one location could easily
have ramifications in locations hundreds or even thousands of miles
away.
Fact-Based Safety Regulation
For our Nation's railroads, including Union Pacific, pursuing safe
operations is not an option, it's an imperative. We have an obligation
to operate safely for the benefit of our employees, our customers, and
the communities we serve. The rail industry's strong and pervasive
commitment to safety is reflected in its excellent safety record. In
fact, as Figure 6 shows, recent years have been the safest in history
for railroads. Preliminary data indicate that railroads had the lowest
train accident rate in history in 2014.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Virtually every aspect of rail operations is subject to strict
safety oversight by the Federal Railroad Administration (FRA). Among
many other areas, railroads are subject to FRA regulation regarding
track and equipment inspections; employee certification; allowable
operating speeds; and the capabilities and performance of signaling
systems. Hundreds of FRA personnel perform regular inspections of rail
facilities and operations throughout the country, and in many states,
FRA safety inspectors are supplemented by state safety inspectors.
It makes no financial sense to operate an unsafe railroad, so even
if the FRA did not exist, I submit to you that railroads would have
very strong incentives to operate safely. That said, railroads agree
that some level of rail safety regulation is necessary--reasonable
people can disagree over what that level should be--if for no other
reason than to instill public confidence in the safety of railroads.
But I also submit that, whatever the level, it is critical that rail
safety oversight should be well grounded in evidence-based, scientific
understanding, rather than in unsubstantiated claims or perceptions.
Two-Person Crews
The current debate over the number of crew members inside a freight
train's locomotive cab is a case in point. Legislation has been
proposed that would mandate that all over-the-road freight trains must
operate with a certified locomotive engineer and a certified conductor
in the locomotive cab. Railroads respectfully, but strongly, oppose
this legislation.
Existing FRA regulations do not mandate minimum crew staffing
requirements. Some non-Class I railroads have long operated with just
one person in the locomotive cab, and thousands of Amtrak and commuter
passenger trains, carrying hundreds of thousands of passengers, operate
every day with just one person in the locomotive cab. On Union Pacific
and other Class I railroads, the subject of crew size has typically
been addressed as part of the collective bargaining process with rail
labor. For Class I railroads, industry practice to date has been to
have two-person crews (and in a few areas three-person crews) for over-
the-road mainline operations. That said, it is important for Class I
railroads to retain the flexibility to seek agreement with labor, at
the appropriate time, to operate over-the-road mainline trains with one
crew member.
The major reason offered by proponents of a two-person crew mandate
is that it would enhance rail safety. Yet no one--not the FRA, not
sponsors of the legislation in Congress, not rail labor--can point to
hard data that support this contention. In fact, an AAR review of the
FRA train accident database going back many years can find no evidence
that trains with oneperson crews have accidents at a higher rate than
trains with two-person crews. Put another way, there is no demonstrated
correlation between the number of crew members in the cab and train
safety. The FRA itself, after its own review, stated in 2009 that it
found no ``factual evidence to support the prohibition against one-
person operations.'' \7\
---------------------------------------------------------------------------
\7\ From a 2009 FRA letter rejecting a rail labor request to
prohibit one-person crews.
---------------------------------------------------------------------------
Railroads believe that the forthcoming implementation of positive
train control (PTC) potentially presents an opportunity to move to one-
person crews with no degradation of safety. PTC describes technologies
designed to automatically stop a train before certain accidents caused
by human error occur. Specifically, the Rail Safety Improvement Act of
2008 (RSIA) mandates that railroads' PTC systems must be designed to
prevent train-to-train collisions, derailments caused by excessive
speed, unauthorized incursions by trains onto sections of track where
maintenance activities are taking place, and the movement of a train
through a track switch left in the wrong position.\8\
---------------------------------------------------------------------------
\8\ In this context, a switch is equipment that controls the path
of trains where two sets of track diverge.
---------------------------------------------------------------------------
When fully operational, railroads' PTC systems will be able to
determine the precise location, direction, and speed of trains; warn
train operators of certain potential problems; and take immediate
action if the operator does not respond to the warning provided by the
PTC system. For example, if a train operator fails to begin stopping a
train before a stop signal or slowing down for a speed-restricted area,
the PTC system would apply the brakes automatically before the train
passed the stop signal or entered the speed-restricted area.\9\ As
such, PTC advances rail safety through the use of advanced technology,
while at the same time eliminating any need for ``a second set of
eyes'' in locomotive cabs.
---------------------------------------------------------------------------
\9\ For more detail on PTC, see the June 19, 2013 testimony of
Edward Hamberger, President and CEO of the Association of American
Railroads, to the Senate Commerce Committee.
---------------------------------------------------------------------------
Neither Union Pacific nor other Class I railroads seek the ability
to impose one-person crews unilaterally or haphazardly. Rather, we seek
the flexibility to continue to work with rail labor under the existing
collective bargaining framework to identify when the presence of PTC
allows a reduction in the number of crewmembers in a locomotive cab
without jeopardizing rail safety. It is very clear to me, as it is to
my industry colleagues, that it is in no one's best interest--certainly
not a railroad's--to take steps that degrade safety.
Safety Performance Standards
Moving beyond one particular safety-related issue, I respectfully
suggest that it's time to consider a change in the broad focus of rail
safety oversight.
There are two general approaches to workplace safety regulation.
The first, so-called ``design-based standards,'' is the method most
commonly used by the FRA. Design-based standards specify the precise
characteristics of workplace facilities, equipment, and processes a
firm must use in the manufacture and delivery of its product or
service. For example, the FRA regulation mandating the interval between
certain types of locomotive inspections is a designbased standard.
``Performance-based standards,'' on the other hand, define the
desired result rather than mandating the precise characteristics that a
workplace must exhibit. The point of a performancebased goal is to
focus attention and effort on the outcome, not the method.
Some of the old regulations would be replaced under a performance
standard regime. That said, risk-based performance standards are a
reform, not an abandonment, of safety regulation. Railroads would
remain accountable. Except in emergencies or after continued failure to
meet targets, the FRA would no longer specify how a railroad would
achieve its safety goals. Instead, the FRA would oversee and validate
the goal-setting process, ensure that the measures and data used are
accurate, and impose any necessary sanctions. The use of performance
standards would recognize that railroads and their employees are in the
best position to know how to improve safety and reduce the costs of
injuries and accidents.
There is little evidence that rigid design-based standards have a
positive impact on railroad safety. They are, however, very costly for
both railroads and the FRA to administer and maintain. They also tend
to impede innovation because they ``lock in'' existing designs,
technology, and ways of thinking. Reliance on a performance-based
approach would allow the FRA the best opportunity to ensure the
attainment of desired safety rates at lower cost for the FRA as well as
for railroads.
Performance standards have been encouraged elsewhere in the U.S.
government. For example, the 1990 Amendments to the Clean Air Act
directed electric utilities to limit their emissions of sulfur dioxide
and nitrogen oxide, but did not tell the utilities how to meet those
standards. In the area of meat and poultry inspection, scientific
practices for identifying and reducing microbial contamination have
partly displaced strict regulations that prescribe in detail how food
safety objectives are to be achieved. The National Highway Traffic
Safety Administration (NHTSA) sets and enforces safety performance
standards for motor vehicles and equipment, and the Pipeline and
Hazardous Materials Safety Administration (PHMSA) has developed and
issued regulations that address risk analysis and integrity management
programs for pipeline operators that largely utilize a performance
standard process.
Capacity Enhancement Through Permitting Reform
Under existing law, state and local regulations (other than local
health and safety regulations) that unreasonably interfere with freight
rail operations are preempted by Federal regulations. These Federal
regulations protect the public interest while recognizing that freight
railroads form an integrated, national network that requires a uniform
basic set of rules to operate effectively.
Nevertheless, rail expansion projects often face vocal opposition
from members of affected local communities or even larger, more
sophisticated special interest groups from around the country. In many
cases, railroads face a classic ``not-in-my-backyard'' problem, even
for projects for which the benefits to a locality or region far
outweigh the drawbacks. This means that the amount of time and energy
it takes to get projects from the drawing board to construction and
completion is growing longer every day.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
In the face of local opposition, railroads try to work with the
local community to find a mutually satisfactory arrangement, and these
efforts are usually successful. When agreement is not reached, however,
projects can face lawsuits, seemingly interminable delays, and sharply
higher costs.
A number of major rail intermodal terminal projects that yield
tremendous gains for the overall logistical system, for example, have
been and continue to be unduly delayed. Just one of the many examples
involves the modernization and expansion of an intermodal terminal UP
has been planning for years in San Joaquin County, California. UP
participated in reviews of projected environmental benefits and less
favorable impacts of the project in a process following California's
Environmental Quality Act (CEQA) guidelines with the county. CEQA is
the California statute that is very similar to the National
Environmental Policy Act (NEPA), requiring transparency and public
participation in certain projects. Unlike NEPA, CEQA requires
mitigation of environmental impacts. UP and the county, with input from
other agencies, identified suitable mitigation of the unfavorable
impacts. However, even though the county has been a proponent of the
project and UP has now obtained its permit, delays resulting from
various agencies' lack of resources or outright challenges have stalled
UP's progress and ultimately required UP to postpone its investment in
this facility.
Some of the ways that policymakers can streamline rail-related
environmental permitting include:
Extend environmental review provisions of MAP-21 to
railroads. MAP-21 contains a number of provisions to facilitate
the construction of transportation projects, such as timelines,
but the relevant statute is written in a way that excludes rail
projects.
The U.S. Department of Transportation (DOT) should have a
single, uniform set of categorical exclusions. A uniform set of
categorical exclusions for all DOT agencies would lead to
better coordination of project review.
Extend highway exemption in Section 106 of the National
Historic Preservation Act to railroads. In 2005, the DOT
generally exempted Federal agencies from the Section 106
requirement of having to take into account the effects of their
undertakings on the interstate highway system. This exemption
should be extended to rail rights-of-way.
Railroads are not asking policymakers to allow railroads to
wantonly harm the environment. They do want policymakers to help
improve the movement of freight by taking steps to shorten the time it
takes for reviews of rail expansion projects in ways that do not
adversely affect the quality of those reviews.
Extending the Statutory Deadline for Positive Train Control
I spoke earlier in this testimony about the potential for positive
train control to help ensure that a train will be able to be safely
operated with one person in the locomotive cab. Before that day comes,
however, railroads must finish developing and installing PTC systems on
their networks.
Frank Lonegro from CSX provided testimony to the full Senate
Commerce Committee yesterday on PTC. I won't repeat everything he said
here. For the purposes of this testimony, I simply want to reiterate
his point about the need to extend the existing December 31, 2015
statutory deadline regarding PTC implementation.
As Mr. Lonegro stated, freight railroads have been working
tirelessly, and spending tremendous amounts of money, to meet the PTC
mandate. As of the end of 2014, UP has invested more than $1.5 billion
on PTC, and we expect to spend close to $400 million this year. Our
current estimate for the total cost of PTC on our railroad is
approximately $2 billion.
Despite these huge expenditures, PTC's complexity means that more
time is needed so that a logical plan for sequencing PTC's
implementation can be instituted. Under the existing statute, however,
there are no provisions that allow for a phased roll out, including
comprehensive testing, of the technology. That's an extremely risky
approach. In the technology world, major technology projects typically
involve ``beta versions'' or their equivalent in which the technology
is introduced in a deliberate fashion so that the inevitable bugs are
identified and addressed. We need that for PTC. Adjusting the
implementation deadline would more accurately reflect railroads'
tremendous efforts to design, install, and properly test this
incredibly complex technology.
The freight railroad industry is fully committed to PTC, but it
must be done correctly and we must make absolutely certain that the
system will work as it should. That's simply not possible by the end of
this year.
Conclusion
America today is connected by the best freight rail system in the
world. Looking ahead, our Nation cannot prosper in an increasingly
competitive global marketplace if we do not maintain our best-in-the-
world freight rail system.
That's why we cannot afford to be complacent. To be viable and
effective, especially in the face of projected increases in freight
transportation demand over the next 20 years, railroads must be able to
both maintain their existing infrastructure and equipment and build the
substantial new capacity required to handle the additional traffic they
will be called upon to haul. They must be allowed to find the most
efficient ways possible to meet their customers' needs. And they must
use the best possible techniques and processes to ensure that rail
safety continues to improve.
I'm sure I speak for the other freight railroads when I say that we
will continue to work with you, other policymakers, our employees, our
customers, and others to ensure that America's freight railroads retain
their best-in-world status.
Senator Fischer. Thank you, Mr. Fritz.
Mr. Means?
STATEMENT OF DOUGLAS MEANS, EXECUTIVE VICE PRESIDENT AND CHIEF
SUPPLY CHAIN OFFICER, CABELA'S
Mr. Means. Chairman Fischer and members of the
Subcommittee, thank you for inviting me to testify before you
today.
My testimony will specifically address some of the
challenges Cabela's experiences today in today's supply chain
and suggests some solutions to ensure that our nation's
transportation system remains reliable and efficient for the
movement of goods.
Shippers are facing a unique set of challenges in today's
climate. Managing inventory and operating a just-in-time
network is essential to the health of any retailer and requires
a predictable and efficient transportation network. When the
efficient system fails to exist, significant costs are added to
the supply chain. These actual costs also impact the selection
of gateways to the U.S. and decisions on the locations of
domestic distribution centers.
As we make significant long-term investments in our own
facilities, there must be an assumption that the transportation
infrastructure will support those decisions far into the
future. Presently, Cabela's and many of our suppliers are
experiencing a number of inefficiencies as a result of the
infrastructure not keeping pace with demand.
We are all aware that the current congestion at the West
Coast ports is causing significant negative impacts to our
supply chain. Besides the increased costs being incurred, we
have added anywhere between 5 and 15 days of lead time to our
supply chain. An important factor to remember is that those
additional days of lead time are unplanned time, which in
today's just-in-time environment will likely result in lost
sales, increased costs, and poor customer service.
A cohesive national freight policy that concentrates on
improving all services in a cooperative manner must be part of
the next transportation authorization bill. The efficiency of
our supply chain is compromised if any of those services are
interrupted or become unpredictable. A strong and integrated
transportation system is vital to our industry.
We support surface transportation reauthorization
legislation that focuses on improving the fluidity and
flexibility of our Nation's transportation system. Congestion
leads to increased travel times, which increases cost and
negates the efficiencies developed in a retailer's supply
chain, including our sustainability initiatives.
Along with volume, customer expectations of shorter
delivery times, improved visibility to product, and more
reliable service requires the transportation infrastructure to
support these needs. Without a high level of confidence in the
reliability of the network, we lose our ability to satisfy our
customers.
As the driver shortage issues continue to impact capacity,
alternatives must continue to be assessed. First and foremost,
a national intermodal structure is needed. We must have a
national system that places priority on connectivity and
accountability if we are to confront our transportation needs
and wants, while keeping in mind that our choices affect this
Nation's economic growth.
It is a vital necessity that Congress take into
consideration the impact that last-mile connectors have on the
viability of the supply chain. It is critical to have a smooth
transition between the highway system, freight facilities, and
our distribution centers. Any weak link in the supply chain
negatively impacts the entire chain, raising costs and lowering
productivity.
A multimodal, efficient, predictable, and fluid
transportation network is essential to the success of
retailers. The long-term health of the entire network is
critical to protecting our investments and to being
competitive. With this kind of network in place, we can utilize
all of its assets to support the specific needs of our customer
and our many customers.
Senators, thank you again for the opportunity to address
the topic of a need for a comprehensive national transportation
policy. And I would be pleased to respond to any additional
questions you may have.
[The prepared statement of Mr. Means follows:]
Prepared Statement of Douglas Means, Executive Vice President and Chief
Supply Chain Officer, Cabela's
Chairman Fischer, Ranking Member and members of the Subcommittee,
thank you for inviting Cabela's to testify before you today. Thank you
for giving us this opportunity to provide a retailer's perspective on
improving the performance of our Nation's transportation network. My
name is Douglas Means, and I am responsible for overseeing Cabela's
global supply chain. My testimony will specifically address some of the
challenges Cabela's experiences in today's supply chain and our
suggested solutions to ensure that our Nation's transportation system
remains reliable and efficient for the movement of our goods.
Background
For background, Cabela's is a leading specialty retailer and the
world's largest direct marketer of hunting, fishing, camping, and
related outdoor merchandise. Since our founding in 1961, Cabela's has
grown to become one of the most well-known outdoor recreation brands in
the world and has long been recognized as the World's Foremost
Outfitter. Through our established direct business and our growing
number of destination retail stores, we offer a wide and distinctive
selection of high-quality outdoor products at competitive prices, while
providing superior customer service. We also issue the Cabela's CLUB
Visa credit card, which serves as our primary customer loyalty reward
program.
We are headquartered in Nebraska with 64 stores, 5 customer contact
centers, 4 Distribution centers, and 1 Returns Center in 33 states and
Canada. Our supply chain relies on a well-connected and fluid
transportation network. As a retailer, we are a customer of the entire
system with more than 6,500 vendors in the US. This is not limited to
the U.S. infrastructure. To support our private labels, we import goods
directly from 20 countries to be distributed to either stores or direct
to customers, supporting our E-Commerce and Catalog channels. We
utilize U.S. ports, and the surface transportation corridors, both
truck and rail. My supply chain team works hard deliver goods to our
customers efficiently, so that we can guarantee the lowest possible
cost while also ensuring the best service to meet our customer
expectations. Congestion or lack of capacity at any point in the supply
chain greatly increases the risk of disappointing our customers by
either not providing the merchandise our customers expect or not
meeting our customer delivery expectations.
Current Environment
Shippers are facing a unique set of challenges in today's climate.
Managing inventory and operating a just in time network is essential to
the health of any retailer and requires a predictable and efficient
transportation network. When an efficient system fails to exist, then
significant costs are added to the supply chain. For example, take into
consideration the congestion and substantial slowdown issues that are
currently taking place at the ports, driver shortages that are leading
to trucking capacity issue, and the congestion complications at various
intermodal yards; significant costs are being added to the supply
chain. Besides the obvious higher transportation costs from these
developing circumstances, delivery lead times are also being increased,
adding to the costs of managing inventory. Actual results also impact
the selection of gateways to the U.S. and decisions on the locations of
domestic distribution center locations. As we make significant long
term investments in our own facilities, there must be an assumption
that the transportation infrastructure will support those decisions far
in to the future. Presently, Cabela's and many of our suppliers are
experiencing a number of inefficiencies as a result of infrastructure
not keeping pace with demand.
We are all aware that the current congestion at the West Coast
Ports is causing significant negative impacts to our supply chain.
Besides the increased costs being incurred, we have added anywhere from
5-15 days of lead time to the supply chain. An important factor to
remember is that these additional days of lead time are unplanned time,
which in today's just in time environment will likely result in lost
sales, increased costs, and poor customer service.
Compounding the port issues are capacity issues for over the road
drivers; capacity which is needed to make up time. Bottlenecks and
delays at the intermodal rail yards also forces this volume onto trucks
that should have moved on the intermodal rail network.
The Importance of a National Freight Policy
Retailers use all modes of transportation to deliver our products
from factory to store including planes, trains, ships, and trucks. A
cohesive national freight policy that concentrates on improving all
services in a cooperative manner must be part of the next
transportation authorization bill. Retailers have maximized the
efficiency of moving goods through the supply chain in part by ensuring
our transportation decisions reflect the multitude of services that
exist. The efficiency of our supply chain is compromised if any of
those services are interrupted or become unpredictable. A strong and
integrated transportation system is vital to our industry. We support
surface transportation reauthorization legislation that focuses on
improving the fluidity and flexibility of our Nation's transportation
system.
For the future of our economy and to maintain our global
competitiveness, it is critical that a national freight policy be
developed. As freight volumes increase, so will the strain on the
transportation network. Congestion leads to increased travel times,
which increase costs and negates the efficiencies developed in
retailer's supply chains, including sustainability initiatives.
Along with volume, customer expectations of shorter delivery times,
improved visibility to product, and more reliable service requires the
transportation infrastructure to support these needs. Without a high
level of confidence in the reliability of the network, we lose our
ability to satisfy our customers.
As a comprehensive transportation policy is developed, safety must
be a primary consideration throughout the entire system. A national
policy that enables the free flow of commerce is essential. Investments
in vital infrastructure are necessary to remain competitive in a global
economy.
Key Initiatives
A National Intermodal Structure
As the driver shortage issue continues to impact capacity,
alternatives must continue to be assessed. First and foremost, a
national intermodal structure is needed. While making decisions, the
flow of freight across all modes needs to be taken into account. We
must have a national system that places a priority on connectivity and
accountability if we are to confront our transportation needs and
wants, while keeping in mind that our choices affect our Nation's
economic growth.
Support For Last Mile Connectors
It is a vital necessity that Congress take into consideration the
impact that last mile connectors have on the viability of the supply
chain. It is critical to have a smooth transition between the highway
system, freight facilities, and our distribution centers. Any weak link
in the supply chain negatively impacts the entire supply chain, raising
costs and lowering productivity.
Reduce Regulatory Burdens On Transportation
Truck size and weight regulations should be reconsidered by
Congress. Increasing these standards would enable fleets to be more
efficient, moving more product with fewer trucks. This would also
improve sustainability, using less fuel, thus reducing greenhouse gas
emissions. Changes to current standards would allow us to deliver the
same amount of goods by making fewer trips either between distribution
centers or from distribution centers to the stores.
The impact of the Hours of Service rules that were suspended in
September for one year should be reviewed with results from more
detailed studies. It is critical to give carriers the ability to craft
specific solutions to support the business needs in a more efficient
manner. Any regulations should be developed with an eye towards
practical solutions to specific problems.
Innovative Broad Based Funding
Cabela's is well aware that the improvement of our transportation
system is costly and that integrating key policy decisions into the
next surface transportation legislation requires additional revenue.
Our transportation system is vital to our economy and must be protected
by adequate Federal funding.
Innovative funding methods must be considered where there are
dedicated funding sources for transportation needs. Revenue sources
should be fairly assessed against all users and should not single out a
small portion of users of the system. We believe everyone benefits from
an efficient transportation network.
Conclusion
A multimodal, efficient, predictable, and fluid transportation
network is essential to the success of retailers. The long term health
of the entire network is critical to protecting our investments and to
being competitive. With this kind of network in place, we can utilize
all of its assets to support the specific needs of our company and our
customers.
Senators, thank you again for the opportunity to address the topic
of a need for a comprehensive national transportation policy, and I
would be pleased to respond to any additional questions you may have.
Senator Fischer. Thank you, Mr. Means.
Governor Rendell?
STATEMENT OF HON. EDWARD G. RENDELL, CO-CHAIR, BUILDING
AMERICA'S FUTURE
Mr. Rendell. Madam Chairman, thanks for the opportunity to
testify.
I am here representing Building America's Future, which is
a nonprofit organization dedicated to the proposition that we
need to revitalize America's infrastructure before it is too
late. And I am here to report to you that it is almost too
late.
My co-chairs in this venture were Mayor Bloomberg of New
York and Governor Schwarzenegger from California. Governor
Schwarzenegger has withdrawn to go back to the movie industry,
but he left us with the most endearing description and
definition of ``infrastructure.'' When asked by his 8-year-old
son, ``Daddy, what's infrastructure?'', he said, ``What Daddy
used to blow up in the movies.'' He has been replaced by Ray
LaHood, former Secretary of Transportation, as one of our co-
chairs.
Building America's Future wants to be clear about one
thing: Our infrastructure is deteriorating. It is falling
apart, and we are falling behind. Just 10 years ago, the World
Economic Forum ranked our infrastructure best in the world.
Last year, we were ranked 12th best in the world. We are
falling behind. It is endangering public safety. It is ruining
quality of life. And as these gentlemen have testified, it is
hurting the American economy.
One example: we have 12 major Atlantic Coast ports. As the
Panama Canal gets dredged deeper and deeper, these supertankers
they call Panamax tankers are coming to the East Coast. Only 2
of the 12 Atlantic ports are dredged sufficiently to receive
them, so they are going to go to Canada to unload their cargo,
and Canada is going to get the longshoremen jobs and trucker
jobs that pay $60,000, $70,000 a year.
Congress talks about middle-class jobs; those are middle-
class jobs that pay a family-sustaining income. And because we
don't have a sufficient infrastructure, because we have raided
the Harbor Maintenance Trust Fund, something that WRDA finally
corrected, we don't have the money to dredge sufficiently and
we are losing those jobs.
Metallurgical coal is highly in demand in China. You find
it in Australia and the United States. Labor costs to mine it
are about the same in both countries, but because it is four
times as expensive to get the metallurgical coal in the U.S. to
the ports as it is in Australia, China buys from Australia
first and only comes to us when the Australian coalmining can't
meet the demand.
We are losing dollars in every way we look. We are losing
jobs everywhere we look.
The answer, as Ranking Member Blumenthal said, is one
single word. And you know that to be true, Madam Chairman--it
is ``investment''--because you invested in fixing the roads in
Nebraska with L.B. 84, something that was highly praised and
has spurred the Nebraska economy. We have to invest.
There are three ways to invest: by bringing private capital
to bear, by having the states invest, and having the Federal
Government invest.
I am happy, as a former Governor, to tell you that the
states are doing their job. In 2014, red states and blue states
alike raised their gas tax or increased their sales tax.
Governor McConnell did it in Virginia. Governor Corbett, with a
Republican legislature, did it in Pennsylvania. Wyoming, with
an all-Republican cast of characters, raised their gas tax 10
cents. Pennsylvania actually raised it 28 cents over 5 years.
Blue states did it. This year, South Carolina, South Dakota,
Minnesota, Michigan, and Missouri are proposing significant
increases in gas taxes.
But they cannot do it alone. I will give you one example.
I-95, the Nation's busiest highway, goes through Philadelphia
for 18 miles. There are 26 bridges that support I-95 in
Philadelphia. Nineteen of them are structurally deficient. To
fix those bridges alone, to make them safe--and one of them
almost buckled in 2008. To fix those bridges alone would cost
$3.2 billion. The city and the state alone can no way, no how
meet that demand.
The American infrastructure is crumbling, and the time to
do something about it is now. When Ronald Reagan raised the gas
tax--and, yes, for our Republican members, Ronald Reagan raised
the gas tax--when he raised the gas tax, he said, why would we
put off for 5 or 10 years doing something that we need to do
today, because it is going to be twice as expensive in 10
years. President Reagan was right. The time to act is now.
On the private sector, BAF recommends that the Congress do
a series of things. In MAP-21, you raised TIFIA from about--the
limit--from $220 million to $1 billion. Still doesn't meet the
demand for TIFIA. We propose to raise it to $2 billion.
Lift the cap, the volume cap, on private activity bonds.
The qualified public infrastructure bonds that the president
recommended in his State of the Union are also a very good step
in the right direction because it shields the PABs from the AMT
tax, which makes it a very good investment vehicle. Let's get
the private sector involved.
Create a Federal infrastructure bank. Create a Federal
infrastructure bank funded with $5 billion. You will get it
back. The European infrastructure bank makes money every year
because they loan the money out and the money is returned with
interest. They make money. That $5 million would not be spent;
it would generate a lot of activity, and you would make the
money back.
Remove the Federal ban on tolling interstates. That is one
of the greatest disincentives. If we want the private sector to
get involved, we have to give them a reasonable return on their
investment. Tolling is one way for states to do that.
We used to be able to toll freely. In, I think, the late
1990s, Congress put a bar on tolling Federal interstates. It
makes no rhyme or reason. People say, well, we don't want to
pay for it twice. Well, when you buy a car, you pay for it
once, and then you pay to maintain it. And we need to do the
same thing.
Lift the ban on tolling. If you are unwilling to do the job
federally, give the states the power to do it. And tolling is
an important vehicle to give a rate of return on private
investment.
So the states will do their part; you can do things to free
up private capital. But, in the end, it is inescapable that the
Federal Government must invest more in our infrastructure. You
knew that in Nebraska. Senator Klobuchar knows it in Minnesota.
We all know that that is the only way to do it. It costs money
to repair roads, to build new roads. It costs money to repair
bridges.
The Federal Government ought to invest money. The best
vehicle for doing it, for the time being, is the Corker-Murphy
bill. It raises the gas tax 10 cents and then adjusts it for
inflation going forward.
As you all know, the last time the Federal Government
raised the gas tax was in 1994 when President Clinton was in
office. The Federal gas tax is now 18 cents, but if you adjust
it for inflation, it is now worth 11 cents a gallon--11 cents a
gallon--because it hasn't been raised in 20 years.
We need to raise the gas tax. We need to adjust it for
inflation on a yearly basis. It is absolutely the least you can
do. That 10-cent increase for a driver who drives 12,000 miles
a year, which is the average American driver, who has a vehicle
that gets 24 miles a gallon, will cost less than $2 a week,
less than $100.
The Texas Transportation Institute did a study and found
the cost of inaction. We always talk about how much it is going
to cost if we act, but we never talk about how much it is
costing when we don't act. The cost of inaction --and the
gentleman from the trucking industry talked about repairs and
accidents to the trucks that come from bad roads and inadequate
bridges. The cost of idling in traffic because we have
congested roads, the cost of damage to our vehicles averages
$818 a year for every driver. Raising taxes: less than $100.
Cost of inaction: $818.
There is no way out. It is inescapable. Do your jobs. Raise
the gas tax. The Chamber of Commerce and the AFL-CIO, who
probably couldn't agree that today is Thursday, they agree that
we need to raise the gas tax.
We will support you. The American people will grumble for a
little bit, but after a while they won't even have any idea
that you raised the gas tax.
I would like to ask----
Senator Fischer. That is only because, Governor, you are
saying it over and over again.
Mr. Rendell. I would like to ask your staff a question.
How many of you know what the Federal gas tax is per
gallon? Raise your hand if you know exactly what the Federal
gas tax is per gallon.
Not the Senators, the staff.
Senator Fischer. Oh.
Mr. Rendell. I don't want to embarrass the Senators.
Two out of 20 staff members.
Senator Fischer. No, no.
Well, if you could wrap up, Governor, please.
Mr. Rendell. I am done. And we are done if we don't do
something.
[The prepared statement of Mr. Rendell follows:]
Prepared Statement of Hon. Edward G. Rendell, Co-Chair,
Building America's Future
Chairman Fischer and Members of the Subcommittee, thank you for the
opportunity to testify before you on the need for investment in the
Nation's transportation network. This hearing could not be more
important as I believe this is one of the most urgent issues facing our
country.
I am here today as a co-chair of Building America's Future, an
organization that I co-founded with former New York Mayor Mike
Bloomberg and former California Governor Arnold Schwarzenegger. We have
been pleased to have former U.S. Secretary of Transportation Ray LaHood
join as a co-chair last year.
Building America's Future represents a diverse and bipartisan
coalition of state and local officials working to advance
infrastructure investment to promote economic growth, global
competitiveness and better quality of life for all Americans.
America's infrastructure is falling apart and we as a nation are
falling behind.
For too long, Washington has ignored the warning signs. Whether it
be the D+ grade that the American Society of Civil Engineers assigned
to the Nation's infrastructure or the 25 percent of America's bridges
that are in need of major repair or upgrade, policymakers have hid
their heads in the sand and have not taken any meaningful action to
modernize our transportation network.
If we continue as a nation to put off critical infrastructure
investment, we risk falling behind the rest of the world. In fact, it's
already happening. In 2005 the World Economic Forum ranked the economic
competitiveness of U.S. infrastructure number one in the world. Now, 10
years later, we are ranked at number 12. We are getting beat by France,
Iceland and Singapore.
America's railroad network has been neglected and under financed
for decades. Once the premier system in the world, U.S. rail
infrastructure ranks 15th in the world behind Malaysia and Luxembourg.
Because our rail network is riddled with choke points and outdated
crossings and bridges that require slow speeds for safety, passenger
trains in the U.S. run at slower speeds today than they did in the mid-
20th century.
America's fastest train, the Acela Express running between Boston
and Washington reaches a top speed of 150 miles per hour--most of the
time it averages speeds closer to 70 or 80 miles per hour.
In Chicago, the Nation's biggest rail center, congestion is so bad
that it takes a freight train longer to get through the city's limits
that it does to get to Los Angeles. Delays like this inhibit the
efficient movement of people and goods and are a drag on our economic
competitiveness.
Other countries understand that port innovation and capacity is key
to competitiveness in the global economy. Since 2000, China has
invested over $3.5 trillion in its ports. Brazil has invested over $250
billion since 2008. And as a result, China is now home to six of the
world's ten busiest container ports while the U.S. has none in the top
ten. Shanghai's port now moves more container traffic in a year than
the top eight U.S. ports combined. A portion of Brazil's investment has
gone into its Acu Superport, larger than the island of Manhattan, with
state-of-the-art highway, pipeline and conveyor-belt capacity to ease
the transfer of raw materials onto ships heading to China.
Here at home, and despite a large surplus in the Harbor Maintenance
Trust Fund, the busiest U.S. harbors are under-maintained. The U.S.
Army Corps of Engineers estimates that full channel dimensions at the
Nation's busiest 59 ports are available less than 35 percent of the
time. Only two of our East Coast ports are deep enough to accommodate
the post-Panamax ships that will become the norm when the newly widened
Panama Canal opens.
The situation on our roads is not much better. The Texas
Transportation Institute's 2012 Urban Mobility Report states that
traffic congestion had Americans wasting time and 2.9 billion gallons
of fuel at a cost of $121 billion--that equates to $818 per commuter.
And it's no wonder. From 2000 to 2012 the Nation's population grew by
11.6 percent and the vehicle fleet increased by 10.7 percent but the
road system has only grown by four percent.
Although the Federal Government represents roughly 25 percent of
transportation and water infrastructure spending, it has provided much
of the funding for operating and maintaining the Nation's air traffic
control system. Despite that, the United States is living with an
outdated aviation system that doesn't serve the needs or expectations
of 21st century travelers or cargo shippers. As a result, the World
Economic Forum ranks U.S. air transportation infrastructure 9th in the
world--behind Panama and Norway.
All of these deficiencies have made our Nation's transportation
network less reliable and efficient. And this means higher costs for
businesses and consumers. Other sectors of our economy understand this
and are eager for action.
Building America's Future recently partnered with the National
Association of Manufacturers to survey the NAM membership on their
views regarding the state of America's infrastructure.
The survey found that 65 percent of those polled believe that U.S.
infrastructure is not positioned to respond to the competitive demands
of a growing economy over the next 10 to 15 years.
Additionally, 70 percent believe that America's infrastructure
needs either ``quite a bit of improvement'' or ``a great deal of
improvement.''
The nation's governors have grown weary of waiting for Washington
to act.
Consequently, actions at the state level have been gaining momentum
as governors from red and blue states alike have proposed or signed
legislation to increase the gas tax, replace the gas tax with a sales
tax on fuels, or referenda allowing voters to increase local sales
taxes. States where this has occurred include Wyoming, Virginia, New
Hampshire, Massachusetts, Rhode Island, Maryland, Pennsylvania,
Delaware, Iowa, Kentucky, Utah, Washington; New Mexico, Georgia, South
Dakota, Vermont and Minnesota.
In 2013, Oregon Governor John Kitzhaber signed legislation to
establish a 5,000 person pilot program to test the feasibility of
transitioning to a system where motorists are charged by miles instead
of paying a gas tax.
More states are approving legislation to give them the authority to
pursue public private partnerships. 33 states now have such authority.
The success rate for local ballot initiatives that increase revenue
or funding for transportation have enjoyed high success rates in recent
years. In 2014, 72 percent of such referenda were approved by voters.
Already in the past two months, several governors have either
signed legislation to increase revenue or urged their legislatures to
approve such proposals during the 2015 session.
Michigan Governor Rick Snyder signed a bill in December that would
authorize a ballot initiative on May 5 to allow voters to decide
whether or not to increase the sales tax by one percent with revenue
going towards transportation. Just last week, South Carolina Governor
Nikki Haley said she would sign legislation to increase the gas tax by
10 cents a gallon over three years if it was coupled with a cut in the
state's income tax. In his State of the State Address, Missouri
Governor Jay Nixon urged his legislature to consider raising the gas
tax as way to generate transportation revenue.
While it is encouraging to see such actions at the state level, we
must not lose sight of the fact that there is a clear and abiding
Federal role in setting the Nation's transportation policy. Without an
overriding national vision and network, America's transportation
infrastructure would resemble a patchwork of disconnected roads and
rails; our aviation system would be untenable; goods movement would be
greatly hindered. And all of this would cost businesses and consumers
billions of dollars.
It is vital that all modes of transportation from roads to ports to
rail to aviation work together to strengthen and modernize America's
transportation network.
To regain America's economic status as a world leader, Building
America's Future recommends:
Creating a commission charged with producing a ten-year
critical infrastructure plan--covering transportation, water,
energy and broadband--that makes significant new investments.
The Congressional Budget Office has concluded that an annual
investment of $185 billion would be economically justified.
Passing a long-term transportation bill.
Identifying a long-term and sustainable source of revenue
for the Highway Trust Fund. BAF supports increasing the gas tax
by 10 cents and indexing it to inflation.
Further increasing the authorization for TIFIA and raising
or lifting the cap on Private Activity Bonds.
Eliminating the Federal restrictions on tolling interstates.
Targeting Federal dollars to economically strategic freight
gateways and corridors.
Investing more strategically in projects of national or
regional significance and that will deliver real economic
returns.
Establishing a National Infrastructure Bank.
Creating a new type of municipal bond called Qualified
Public Infrastructure Bonds as proposed by President Obama
earlier this month.
Making the TIGER program permanent.
Upgrading our airport infrastructure by modernizing the
Passenger Facility Charge to $8.50
Getting NextGen up and operational as soon as possible.
The other option is to let the status quo prevail. We can continue
to underinvest in our critical infrastructure. We can continue to sit
on the sidelines and watch countries like France, Brazil and Malaysia
make the investments in 21st century transportation networks and
infrastructure. We can continue to fall apart and fall behind.
Infrastructure is an economic driver and has the added benefit of
creating long-term quality jobs. It improves the quality of our lives
and it enhances our economic competitiveness. There is no better time
to invest in America's future. We have seen interest rates at record
lows thereby making it more attractive to build. But as the economy
continues to recover, those rates will begin to rise and so will the
costs to build and repair our Nation's infrastructure. We must act now.
I urge you to work with your colleagues in the House and with the
President to make the hard choices that are necessary to craft a
serious long-term infrastructure investment strategy for the future.
Our nation's continued economic prosperity depends on it.
Thank you Chairman Fischer. I look forward to answering the
Subcommittee's questions.
Senator Fischer. OK. Thank you very much, sir.
We do have a vote. I believe it begins at 11 o'clock. And
so we will try to get through our questions here in a fairly
expedient manner. I will begin, and then our ranking member
will follow me with questions. We will have a 5-minute round.
Mr. Mullen, when you talk about Werner's commitment to
safety and you tell us the number one thing that FMCSA could do
to improve fact- or data-driven safety regulations, what do you
think that would be?
Mr. Mullen. Well, on the commitment to safety, Chairman,
there are 5-million-plus drivers out there on the roads every
day, and they take commitment to safety very, very seriously.
That is their number one priority.
When I talk inside of Werner, we kind of put it in three
different buckets. We talk about training, we talk about
technology, and we talk about culture.
So if you talk about training, just to kind of give you
some idea of where we are spending dollars and resources now,
it is on simulation. So driver simulation is a big issue, and
it is improving year over year.
And so we have simulators. We work on new hires. We hire a
lot of drivers that come in straight from CDL schools and just
have their license, and so we train those folks with the
simulators. And we have seen a very marked decrease in accident
frequency from those that use the simulators.
And technology, those onboard technology devices I talked
about in my opening remarks, whether it is forward-collision-
warning devices or lane-departure devices, we have seen marked
improvement in accident frequency from that, as well. And that
is a spend that is going to be about $6 million, $7 million
annually, just on that technology alone. So we are very
committed, and we are putting the dollars behind that
commitment.
And then, most importantly, culture. The drivers need to
know that safety is their top priority. And we talked about the
electronic logging devices. And, again, Werner started in the
late 1990s to make sure that we dispatched every load knowing
that the driver could deliver that load legally and safely. And
I think ELDs is where we ought to be going, spending time on
ELDs, versus some of the peripheral issues that don't really
attack the core.
With regard to the FMCSA and data, I guess I would have two
things to say. Look at the data without any political lens.
Let's focus on the core factors that cause crashes, speed and
those sorts of things, as opposed to things more on the
periphery. That might even get into labor issues.
And it is not so much the integrity of the data; it is just
the manner in which we are looking at it and what data we are
looking at to make sure we are providing the biggest bang for
the buck on improving the highway safety.
Senator Fischer. OK. Thank you.
Mr. Means, we have heard a lot over the past few months
about congestion at our Nation's ports. You alluded to that in
your testimony, on the effect that that is having on the supply
chain. Can you tell us how acute this problem is for Cabela's?
Mr. Means. Sure.
Senator Fischer. How do you manage that situation?
Mr. Means. Sure.
You know, we started to see the problem arise last summer.
And, as you know, just like most retailers, the fourth quarter,
there is a substantial amount of volume for us that comes
through as we prepare for a very busy shopping season. You
know, as I stated in my testimony, it is critical for us,
because we run as just-in-time as we possibly can and we try to
keep our investment in inventory to a minimum. So even a day or
2 of delay can create a big problem for us, especially in those
busy times of the year.
We literally took people out of role from their jobs at our
corporate headquarters and moved them to Seattle just simply to
manage every single container that was coming out of that port.
So we had two people there full-time for, really, the 6 weeks
leading up to Christmas that simply their job was to manage the
containers coming out of the port, manage equipment on our own,
because we wanted to make sure that we could have equipment
available when those containers came free.
It was far, far beyond, I think, what anybody would expect
just to get our goods and an extremely inefficient process for
us.
Senator Fischer. Thank you.
Mr. Fritz, in my opening statement, I mentioned my interest
in trying to get away from the Washington-centric prescriptions
to various transportation challenges.
In your testimony, you compared design-based standards with
performance-based standards for safety. Could you share a
little bit about that view?
Mr. Fritz. Thank you. I would love to.
Senator Fischer. Yes.
Mr. Fritz. I would also like to start by saying, out of
this conversation, it is such a pleasure to tell the Committee
that your freight-rail network is the envy of the world and we
are part of the solution. We are self-funding; you don't have
to raise a tax in order to have us invest in our railroads. And
the railroads are in the best condition they have ever been in.
So from a standpoint of safety regulation, when we see a
cookie-cutter approach applied to us, a prescriptive mandate,
we tend to experience significant dislocation that creates
service problems and sometimes even increases safety issues for
our customers and for our employees and the communities we
serve.
If you think about a current mandate, PTC, PTC has a very
specific definition and a very specific, targeted benefit. The
PTC mandate is costing the industry $10-billion-plus. We are
unsure as to whether or not it is going to be effective. We
will miss the mandated date. And we are doing everything in our
power to get it installed and working and tested, and that is
probably going to take us till 2020.
As an industry, we are dedicated to safety. It is in our
DNA. If, instead, Congress had said, Industry, we want you to
figure out how you are going to reduce the incidents and
severity of incidents that are targeted by PTC, I guarantee you
we would come up with a solution that would be less costly and
would be implemented in a more timely fashion. We are doing
that across the board in how we run our railroads today.
So that is just a small example, Chairman, about how
prescriptive safety can be very costly and disruptive.
Senator Fischer. Thank you.
Senator Blumenthal?
Senator Blumenthal. Thank you, Madam Chair.
Again, thank you for your testimony.
Let me begin, Mr. Fritz, by pursuing the line of inquiry
that Senator Fischer initiated on safety. You mentioned
technology as a critical element of safety, and, in fact, your
railroad has been one of the leaders in using some of that
technology--cameras, for example.
How important are additional measures, such as--and I have
advocated them--methods like redundant signal protection,
alerters, close-call reporting? Are these measures that you
have adopted, and would you recommend them for railroads in
general?
Mr. Fritz. Senator, I am so thankful for you asking that
question. We are very aggressive, both as an industry but
specifically Union Pacific, at using technology investment and
process improvement to improve safety, both for the communities
that we serve and our employees.
So you mentioned inward-facing cameras. Without any
mandate, we have been working for about a year and a half, on
developing a technology, a use, and an understanding with our
labor force, our craft professionals, on how to implement
inward-facing cameras.
The whole intent is so that we can understand behaviors in
the cab of a locomotive and address whatever those behaviors
are. We have invited our labor leadership to work with us to
try to understand what those issues are and address them.
I view that as a cultural issue that needs to be addressed.
That strikes me as a much better way of getting at the issue
than some prescriptive target that really doesn't have the
reality of the working situation in mind.
You had asked about close-call reporting. In conjunction
with our Federal regulator, the Federal Railroad
Administration, and our labor again, our craft professionals,
we entered into an agreement 6 or 7 years ago at our largest
terminal to get into a close-call reporting system called C3RS,
which allows employees to report into an anonymous database
staffed by both craft professionals and management that they
either did get into an issue or almost got into an issue, and
they are protected from both discipline ramifications and FRA
ramifications for that reporting. In turn, that team is
expected to debrief completely, to investigate the issue, and
find safety improvements through process, investment, training,
et cetera.
It has been a home run. It has been praised by the FRA. We
love it, as a management team, and we are taking it across our
system. So we are committed. We advocate everything you just
said.
Senator Blumenthal. I would invite you, since our time is
limited here, to come and meet with us and share perhaps in
greater depth that experience, which I think would be
enormously valuable in helping to shape this committee's
perspective on the safety issue. Because a lot of the pushback
that we have received isn't practical, it isn't affordable, but
I think you can really bring a story that will help us move the
ball forward on safety.
I want to shift to Governor Rendell.
I detected, I think, a modicum of support for the gas tax
increase on your part, but I would like to raise some
alternatives. Because I agree with you, absolutely, completely,
on the urgency and immediacy of these investment needs.
And so there have been discussions and proposals. Senator
Blunt and I have a proposal for a public financing authority,
also known by some as an infrastructure bank. I have supported
this idea. I am hoping that I can be part of its reintroduction
in this session of Congress. Senator Bennett has been a leader,
Senator Warner. Really, both sides of the aisle have backed
this idea, at least in concept, and I think there is a growing
consensus and a coalition behind it.
So let me invite your views on that idea.
Mr. Rendell. Well, we strongly support an infrastructure
bank. It is the best vehicle, we think, for getting capital,
private capital, into play for projects of regional and
national significance.
Interestingly, TIGER, as part of the stimulus, did just
that. TIGER allowed states to combine and make requests for
money for regional projects.
I don't mean to quarrel with Mr. Fritz, but two of the
nation's biggest eastern freight railways, CSX and Norfolk
Southern, both came to me when I was Governor, and they had
projects called National Gateway and Crescent Corridor; went
through six states. They asked me to get all six states'
Governors to agree to put money in. And we all did, all the
states did. We went before for TIGER grants, and we got TIGER
grants from the Federal Government.
Those projects radically improved freight in the eastern
half of the country. But there was private capital, state
capital, and Federal capital. And an infrastructure bank can be
the best vehicle for private capital.
Senator Blumenthal. Thank you very much.
This panel is really enormously valuable. And my time is
over, unfortunately, and we will have votes coming up. I don't
know whether we will be able to return for another round of
questioning. But I want to extend the same invitation to other
members of the panel that I did to Mr. Fritz, that, speaking
only for myself, I would really value an opportunity to pursue
some of these issues, and, Governor Rendell, particularly the
infrastructure bank idea.
Thank you, Madam Chair.
Senator Fischer. Thank you, Senator.
Senator Klobuchar?
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Thank you very much, Madam Chair.
Thank you to the panel.
And thank you, especially, Governor Rendell, for coming
back and not giving up on this cause. I think it is a cause
whose time has come, when you look at what has been going on
around the states and the fact that there have been changes
made to state laws that have allowed for more investment.
I hope that we will start to see some changes here, because
this is one of the top areas that Democrats and Republicans
have agreed we can make some bipartisan progress. Senator
Boxer, in her last 2 years here, I don't think she is going to
exactly back down; I think she is ready to work again on a
transportation bill.
And, as we all know, that money is running out. That needs
to get done by, I think it is, May. And we have a shortfall in
that even going forward beyond what I think we would like to
see up here and on your panel, which is more investment.
Our story from Minnesota, Governor, is interesting. It is
true that Governor Dayton has now proposed a gas tax increase
and some major changes. The state did increase the gas tax
after the 35W bridge fell down in the middle of the Mississippi
River on a summer day. It is eight blocks from my house, an
eight-lane highway. Thirteen people died, 17 cars submerged in
the water, 111 people injured. It was a tragedy. And it was
because of decaying infrastructure, and we all know that.
The interesting political side of that was that the
legislature then went in and passed a gas tax increase.
Governor Pawlenty vetoed it. Then the votes got there to
override his veto, and there were five or six Republicans that
joined the Democrats in that effort. They were pretty much--
there was actually a ``Wanted'' sign put out against them in
their own party. One of them changed parties and is now a
Democrat. One remained a Republican and got elected, but the
rest were not reelected or either kicked out of their party.
That is the true story of what happened in Minnesota. What
do I see now? I see a change. I think you see more Republicans,
like Senator Corker, being able to talk about this issue. And I
just think we are going to need support from the Chamber and
other organizations that are willing to have people's back and
are willing to stand up for them and not run--you know, fight
off negative ads when people are willing to talk about
investment.
And I think that is our real problem here. It is not really
a policy problem, in that we all know we have to make this
investment. It is really a political problem and having the
political will to get this done.
My question is just on some of these solutions. And I guess
I would start with you, Governor Rendell, and anyone can chime
in.
We have obviously talked about the gas tax idea. As you
know, Senator Murphy and Senator Corker's proposal, while it is
not written, does take the money, I think, out of other parts
of the budget.
And so the second proposal that we have out there is the
infrastructure bank, the financing authority, as we call it,
which Senator Warner and others have put together. I am on that
bill. And the issue still is financing it.
One of the ideas out there is repatriation. There is some
bipartisan support for that. Or doing some kind of
international tax reform and then requiring that a certain
amount of that money go into infrastructure financing to
supplement the Highway Trust Fund. And I just wonder what
people think of that idea.
I guess I would start with you, Governor.
Mr. Rendell. First of all, one of the points I want to make
is, to finance the infrastructure bank, you have to put money
in. It is more of a scoring problem for Washington than
anything, because if that money gets loaned out, you are going
to make money on it. You are not going to lose the $5 billion.
It shouldn't be scored as money taken and increasing the
Federal deficit, because it is essentially like a loan
guarantee program. You only lose the money if--you have to pay
off the guarantee. You only lose the money if the loans aren't
repaid.
If you look at the European infrastructure bank's history,
they make money on the loans that they loan out, and it is a
hugely important vehicle for improving the EU infrastructure.
So that is number one.
The repatriation bill for initial funding for the
infrastructure bank, good idea. As a permanent solution, you
can't use repatriation----
Senator Klobuchar. Yes. It is just the one shot----
Mr. Rendell. It is a one shot, right.
Senator Klobuchar. Yes. Exactly. But it could be a big
shot.
Mr. Fritz. America's freight railroads support the user pay
systems that are in place right now. So, a gas tax, an
infrastructure fund, so long as it is funded by users of the
infrastructure, we would support that for sure.
And to the Governor's point, the freight railroads support
public-private partnership projects where there is benefit
across a spectrum of constituents and the project otherwise
would not be done by any one constituent.
Senator Klobuchar. Have you looked at what they have done
in Canada? Senator Blunt and Senator Stabenow and I and others
went there, and they are doing a huge amount of work there. And
that is kind of a public-private partnership.
Mr. Fritz. Yes. Union Pacific has enjoyed a public-private
partnership project recently in Fort Worth, Texas, and it made
sense. We paid about a third of the project; our counterpart,
BNSF, paid about a third; and public moneys paid about a third.
And the division was predicated on who gets what benefit. That
was negotiated up front, and then funding was divvied up based
on who got what benefit.
Senator Klobuchar. Yes.
Mr. Mullen. Senator, from the trucking industry, we agree
that the user fee is the right way to go, and we think the
cleanest and the most efficient way is to increase the gas tax.
So we have been an advocate for that for some time.
As far as other proposals that we have heard at Werner, you
know, changing the structure and taxing at the barrel, and then
you would refund the diesel tax--you would eliminate the gas
tax, gasoline tax, and then tax at the barrel. And then on the
diesel, you would still pay it at the barrel, but then we would
get a refund for that.
So the stats that I saw, it made some sense. It had some
tail to it that could withstand things other than the
repatriation issue.
So something does have to be done. The Governor is
absolutely correct that the numbers are staggering as to what
it is costing the industry and the economy and the safety. And
the gas tax increase, although not all that attractive, is the
best solution, as far as we are concerned.
Senator Klobuchar. Yes.
Now I have a happy ending to my story, and then I will let
someone else go. Basically, then, the Democrats who had voted
for that, you know, did fine in the election, and we, I think,
turned around in the next election even stronger, which I have
heard happen in other states.
But I do think the reality of it is that it is a difficult
thing, and the only way to do it is bipartisan, and so people
agree--something Senator Fischer is pretty good at doing.
Anyway, thank you very much.
Senator Fischer. Thank you, Senator Klobuchar.
Senator Booker?
STATEMENT OF HON. CORY BOOKER,
U.S. SENATOR FROM NEW JERSEY
Senator Booker. Thank you very much, Chairwoman.
Real quick, Governor Rendell--and I want to just say for
the record you are a phenomenal leader. When I was a young
mayor coming up, you were one of my mentor mayors and shaped my
early career. And I am really grateful for that, and I just
want to be able to say that now.
Mr. Rendell. Thank you.
Senator Booker. Just really quickly, because you have
already made your point, but I just want to highlight
something. There is about a $3 trillion deficit, infrastructure
deficit, in America. Is that true? Yes?
Mr. Rendell. It is anywhere between $2 trillion and $3
trillion. The American Society of Civil Engineers estimated it
at about $2 trillion.
Senator Booker. OK. So let's call it $2 trillion. Let's be
conservative with our numbers.
The president's proposal, President Obama's proposal, which
is just about $300 billion over, I think, 4 years, if I am
correct----
Mr. Rendell. Right.
Senator Booker.--that seems to be an anemic, paltry,
inadequate sum to meet the needs. Would you agree with that
characterization?
Mr. Rendell. Well, remember, when we talk about
infrastructure deficits, we are talking about more than just
transportation. We are talking about water and sewer, we are
talking about broadband. The President's investment is not
sufficient, but I wouldn't call it anemic. I would call it, in
light of what past congressional history has been, it is
significant.
Should it be more? Building America's Future, a bipartisan
organization----
Senator Booker. Sir, forgive me for interrupting one of my
mentors. I just want to get to the point, because I have very
little time.
If history conspired to make you President of the United
States right now, you would be having a much bolder proposal
with a lot more investment in infrastructure, correct?
Mr. Rendell. Sure. I would spend about $100 billion a year
additional. The CBO in 2008 said we could sustain spending as a
country $180 billion a year more than what we are doing now.
Senator Booker. So, in other words, the number is probably
closer to what Bernie Sanders is putting forth, when he called
for $1 trillion over 5 years. Would that be correct?
Mr. Rendell. No question.
Senator Booker. No question that he is more in the right,
as far as meeting our needs, fueling our economy, improving job
creation, and, frankly, getting a return for taxpayers that
more than meets that investment.
Mr. Rendell. Right. And we all talk about creating middle-
class jobs, both parties. Well, DOT says 25,000 jobs created
for $1 billion of infrastructure investment. And that is pretty
close to correct; we tracked it in Pennsylvania.
Think about what that would mean in jobs, that type of
investment. It would mean about 4 million additional jobs that
pay $50,000, $60,000, $70,000, $80,000.
Senator Booker. I am happy to hear Ed Rendell and Bernie
Sanders in agreement. That is a wonderful day.
Real quick, to Mr. Means and Mr. Mullen, I just want you
all to know I respect what you all do. You are phenomenal
business leaders, producing incredible jobs. I read a little
bit about both your companies and just have a lot of respect.
So please understand that I am not quibbling with the kind
of Americans you are and what you are doing for our country. I
just have a lot of concerns. My highways are a lot more
congested than the highways of your home state, and I have a
lot of concerns about truck safety.
And you taught me something today, because I didn't know--
and I agree with you. I have seen cars do very dumb, or, I
should say, unfortunate things around trucks, causing truck
driver accidents. And I think you are right, they shouldn't be
scored the same way, and that is something that I agree with
you on.
But I have a lot of problems with the--and I do disagree
with you, sir. The evidence from the U.S. Department of
Transportation Federal Motor Carrier Safety Administration is
that truck accidents are going up in a startling and
unfortunate way between 2009 and 2012.
And I would like to put in for the record ``An Analysis of
Truck Size and Weight: Phase I--Safety'' summary of findings, a
report that was done about the really--when these trucks are
involved in accidents, the severe consequences they have.
And so I guess the two questions----
Senator Fischer. Without objection.
Senator Booker. Well, thank you very much, Chairwoman and
friend.
[The information referred to follows:]
An Analysis of Truck Size and Weight: Phase I--Safety
Summary of Findings
Commercial motor vehicles carrying heavier loads or employing
multiple trailers present significant concerns regarding the impact of
their use in terms of increased accidents, accident severity and
fatalities. In 2011, the most recent year for which data is available,
3,757 people were killed in crashes involving large trucks and 88,000
more were injured--absent any increase in truck size and weight.\1\
---------------------------------------------------------------------------
\1\ http://www.fmcsa.dot.gov/documents/facts-research/CMV-
Facts.pdf. Retrieved May 13, 2013.
---------------------------------------------------------------------------
Several proposals have been made in recent years to increase limits
for truck size and weight yet significant disputes exist about the
safety of heavier and longer truck configurations. The Multimodal
Transportation and Infrastructure Consortium (MTIC) performed a
critical evaluation of available crash rate data, prominent safety
claims and operating characteristics. Our findings are presented below.
Assessment of Crash Data
National crash rate data, though limited in several respects, show
disturbingly higher crash rates for trucks that are longer or heavier
than the current standard 80,000-pound, five-axle truck.
For our analysis, we used average annual fatality data from the
Trucks in Fatal Accidents (TIFA) dataset for 2005-2009 and vehicle
miles traveled (VMT) estimates from the Federal Highway Administration.
TIFA is the most accurate and complete dataset of fatal truck crashes
available. It includes reliable information on the number of trailers
and axles of trucks involved in fatal accidents. It does not, however,
contain the relevant length or weight information needed to calculate
crash rates for specific configurations. Nevertheless, existing data
shows significantly higher crash rates for multi-trailer configurations
and single-trailer trucks with six or more axles relative to the rate
for all singles.
Multi-Trailer Configurations
The raw data show a 13 percent higher fatal crash rate for
double-trailer configurations compared with single-trailer
trucks. When the data are normalized to compare similar nation-
wide operation, the gap increases. In nation-wide operation
similar to single-trailer combinations, double-trailer trucks
are likely to have a fatal crash rate 15.5 percent higher than
single-trailer trucks.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
This finding is consistent with the results of the 2000 U.S.
DOT Comprehensive Truck Size and Weight Study, which found an
11 percent higher fatal crash involvement rate for multi-
trailer configurations.
The same raw data show that triple-trailer trucks have a
higher fatal crash involvement rate than both doubles and
singles. The average number of annual fatalities involving
triples and the percentage of VMT attributable to triples are
too small to yield a scientifically reliable fatal crash rate
finding for triples. However, the data suggest that the finding
for doubles is illustrative for longer combination vehicles
generally.
Single-Trailer Configurations with Additional Axles
Single-trailer combination trucks with six or more axles--
presumably the heaviest trucks--have dramatically higher crash
rates than five-axle singles. An analysis of TIFA data
indicates that single-trailer combination vehicles with six or
more axles have a fatal crash involvement rate 867 percent
higher than the rate for all single-trailer trucks.
Here, too, the relatively small population of six or more
axle trucks traveling the Nation's highways precludes a
scientifically reliable finding. Further, we have significant
concerns about the quality of underlying data, especially VMT
estimates for sub-classes of vehicles. Many data collection
problems exist, and the smaller the class of vehicles
considered, the larger the potential sources for error.
Even if more reliable data were to show a fatal crash rate
increase even a fraction of that above, the negative
implications for highway safety would be vast. It would seem
unwise to allow expanded operation of six-plus-axle trucks
without further serious consideration of the possible impact on
fatality rates.
Operating Characteristics
Serious safety concerns about the relative operating
characteristics of heavier and longer truck configurations have been
documented in both government and independent studies conducted over
the past 30 years. Our review of existing research leads us to conclude
that in many cases, credible new research does not exist to dispel
these concerns. In some cases, new concerns have arisen in recent
years. Among the concerns over the operating characteristics of heavier
and longer configurations are:
State safety inspections suggest that brake maladjustment
and equipment defects continue to be widespread issues among
current truck operations. Heavier loads require more braking
capacity and can exacerbate braking issues.
Heavier vehicles are likely to increase accident severity as
they have more kinetic energy at any given speed. This may be
exacerbated as autos become smaller and lighter to meet ever
more stringent fuel efficiency standards.
Increases in allowable vehicle weight may mean higher
trailer loadings and a higher center of gravity thus increasing
the risk of rollover and cause compensatory heavy vehicle
operator behavior that will result in greater interference with
other vehicles.
Heavier and longer configurations can cause greater
interference with other traffic (including longer acceleration
times and increases in speed for trucks traveling up and down
hills) that could exacerbate conflicts with other motorists.
Non-Federal Studies
Proponents of increases in truck size or weight often cite state-
specific studies or statistics from other nations to support their
claim. Our analysis of prominent studies leads us to conclude that
these studies have little applicability to nationwide operation of
heavier or longer configurations in the US. For example, the VMT and
crash exposure findings from a recent Wisconsin study are insufficient
for a national analysis that would require more precise truck and rail
diversion assumptions. In Idaho, the Transportation Department was
unable to make a statistically significant finding about the safety of
long doubles because they represent such a small percentage of truck
traffic in the State, preventing the application of the Idaho study
results nationally. Also, statistics from the United Kingdom showing
decreased truck crash rates cannot be distinguished from a decrease in
crash rates for all vehicles, have been criticized by the UK Department
of Transport for significant underreporting and should not be
considered applicable to U.S. operations because of significant
geographical, infrastructure and regulatory policy differences between
the U.S. and the UK.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Professional Experience
Concerns over the quality of available data and the lack of
substantiated claims of safety improvements led RTI to conduct
interviews with law enforcement officers with expertise conducting
truck safety inspections and accident investigations and to conduct a
survey of truck drivers themselves.
20 of the 21 officers interviewed indicated flatly that
heavier and longer trucks would be ``more dangerous'' because
the additional weight and length would add new factors to an
already complicated chain of events.
Officers offered real world observations reinforcing many of
the concerns about the operating characteristics of longer and
heavier trucks raised in the literature.
With specific regard to crash severity, officers often noted
that larger trucks almost always increase the severity of the
crash remarking that it was a simple physical equation of
kinetic energy with the potential for significantly more
damage.
Similarly, surveyed truck drivers are consistent in their
opinion that heavier and/or longer trucks raise significant
concerns over the impacts of these configurations on safety.
Full results can be seen in the charts below, but the overall
conclusions are that:
90 percent of those surveyed believed that increased
use of 97,000-pound, six-axle trucks would negatively
impact highway safety, and
88 percent believed that greater use of longer
combination vehicles would negatively impact highway
safety.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Conclusion
The existing literature, research, interviews and statistics
provide clear, if not conclusive, evidence. With confidence, we can say
that additional axles, vehicle length and weight place pressure on the
equipment, maintenance and drivers, which ultimately increases the
potential for error, accident and fatality. Further, existing data,
though limited, suggests that heavier and longer trucks are likely to
have higher fatal crash rates than the most common trucks on the road
today. To better assess the safety impacts of future proposals to
increase truck size or weight will require information not currently
available. To that end, we make the following recommendations.
1. Improve data collection efforts. Data on fatal accidents by
configuration and reliable VMT estimates will be required to
fully answer questions about the safety of specific truck
configurations. Federal agencies should work to require the
collection and reporting of more specific information
(including weight and configuration) for vehicles involved in
fatal accidents and should significantly improve the collection
of VMT data.
2. Conduct off-road operating characteristic testing. Industry
states that technology has enhanced the operating
characteristics of commercial motor vehicles yet there is no
research directly comparing the operating characteristics of
proposed vehicles. This analysis should be completed on a test
track to avoid experiments involving the motoring public.
Senator Booker. So just two points I want to make in the
remaining seconds that I have.
If truck fatalities are increasing, why is there an attempt
to roll back sleep regulations and increase the size of trucks?
It seems to me counterintuitive that if the problem is getting
worse, why would we let them push further into the endurance
levels of human beings, when we know there is a strong
correlation, as you admitted in your testimony that these are
truck driver mistakes.
And then the second point I would love for you to comment
on, and then I am done, is that the cost of these accidents is
being borne by my state. Because the annual costs to society
from crashes involving commercial motor vehicles is estimated
at $99 billion. Minimum insurance levels for trucks are just
set at $750,000.
And so a fatal multi-vehicle truck accident, for example,
can cost over $20 million to compensate for injured care for
families and, more importantly, to our infrastructure--or, not
``more importantly,'' excuse me--also with our infrastructure,
to pay for the destruction of the highways that incur.
So those are the two points that I just have, that it seems
like the truck industry is pushing for a rollback of
commonsense sleep regulations and they have an inadequate
investment because the cost right now of those accidents is
being borne--it is an externality that is being borne by
taxpayers.
Mr. Mullen. Senator, we absolutely agree that driver error
is the top cause of accidents. What I don't think is true is to
contribute a percentage of that to fatigue, a large percentage
of that to fatigue.
So I would disagree that the industry is trying to roll
back the sleep requirements, the restart provisions. You know,
we had the restart pre-July of 2013 for a long period of time,
and that is when you saw an improvement in accident frequency,
and you have seen that improvement over the last decade.
And you hear discussion about the 80-hour workweek. That
only happens in a perfect, perfect freight world where the
freight is the right freight and the driver has just the right
timing to pick up and deliver and to take the 34-hour restart.
So, in the real world, the 80-hour-a-week just doesn't really
occur.
And so it is not so much the hours of service and the
regulations that is causing the accidents, that we should be
focused on. It is other things, like speed, that we talked
about. So, for instance, the industry has been asking to have
speed limiters. I mean, again, how often do you ask for
regulations? We have been asking for speed limiters. And most
of the industry govern their trucks at 68 miles per hour or
below. Werner governs their trucks at 63 miles an hour because
that is the right things to do.
So we just have a difference of opinion on how to go about
attacking the safety problem and even the fatigue issue. We
just don't believe changing the hours-of-service restart was
the answer. We believe that took away from flexibility of the
driver. It put more traffic in congestion times, such as 5 in
the morning, after the restart, 1 to 5, 1 to 5.
So we have the same goal, which is to have a less fatigued,
safer driver, but we have a difference of opinion on how to get
there. Our opinion is that the science that the FMCSA relied
upon that changed the rules back in July of 2013 was flawed. We
think that it contradicted, in fact, the science that FMCSA
relied on when they had the previous rule. So just a difference
of opinion on that sort of thing.
As far as the insurance minimums, I understand where you
are coming from. $750,000 being the minimum--has been for some
time--is being looked at. The FMCSA has asked for opinions; we
will weigh in on it. It is something that ought to be looked
at, as an industry, and hopefully FMCSA will have enough data
to make a meaningful decision.
Senator Booker. All right.
My time has expired because Governor Rendell gave such long
answers.
Senator Fischer. Because, Senator Booker, he is your
mentor.
Senator Booker. Yes.
Senator Fischer. Thank you, Senator Booker.
Senator Markey?
STATEMENT OF HON. EDWARD MARKEY,
U.S. SENATOR FROM MASSACHUSETTS
Senator Markey. Thank you, Madam Chair.
And this panel is very good. I mean, it is an A list panel.
They did a fantastic job here today.
Governor, you said that passenger trains today are slower
than they were 50 years ago.
Mr. Rendell. Yes.
Senator Markey. Which is just a stunning statement. What is
slower today than it was 50 years ago, except for passenger
trains, huh? Everything else is faster.
Mr. Rendell. Nothing I can think of.
Senator Markey. Just amazing. And even in Massachusetts, in
Boston, the trains can average 150 miles per hour going into
the Boston terminal, but they average only half of that.
Mr. Rendell. Right.
Senator Markey. OK? So that is just a statement of how much
we have gone backward over the last 50 years.
Mr. Rendell. No question.
Senator Markey. Can you talk a little bit about that and
what you believe to be kind of the two-point program to get us
out of that----
Mr. Rendell. Myself, Governor Pataki, former Secretary of
Transportation Mary Peters, we rode a train in Japan, a maglev
train, 47 miles. It went 314 miles an hour. It levitated 6
inches above the ground. Governor Pataki, who is a very tall
man, stood up, took a pad and a pen and wrote, and his hand
didn't move. You ride the Acela when it goes 150 miles an hour,
and you take your life in your own hands if you stand up.
Our rail system, passenger rail system, in the United
States is a joke. It is a joke compared to European and Asian
rail systems. We can build it in California and the Northeast
Corridor, where I think there is enough quantity of potential
riders to make it feasible, we can build high-speed rail.
We should build it with a combination of private and public
funding. The Japanese government is so interested in
introducing maglev technology, they are willing to put up $5
billion to build a first leg between Washington and Baltimore.
And, by the way, if they build it, you will get to BWI from
Washington, D.C., in 6 minutes.
Senator Markey. And that is not a fantasy; it is possible.
Mr. Rendell. It exists in Japan.
Senator Markey. For anyone that has ridden a train in Japan
or China or, you know, France, it is possible.
But you have to basically get out of this old mentality
that we have in the United States and realize that, in a lot of
ways, there was greater dedication to rail back 50 years ago
and 100 years ago than there has been today. But if we upgraded
it at the same rate that we have other technologies--for
example, when the president says that fuel-economy standards
can go to 54.5 miles per gallon by 2025, make that the law,
which it is now, all of a sudden we are not averaging 25 miles
per gallon anymore. Now we have hybrids and all-electric cars,
and we are about a third of the way through the whole process,
but America is ready to go. They love this new technology that
is available to them in the showrooms. And we have to have the
same attitude about rail.
So let me turn to you, Mr. Fritz, and ask you about the
Federal Communications Commission and the 20,000 towers that
they have to work through in order to put them along the tracks
of the rail system in America to make sure that this new safety
system can be implemented in a timely, telescoped time-frame
process.
Can you talk a little bit about that and what your
commentary is on the FCC process?
Mr. Fritz. Sure.
About a year ago, year and a half ago, we ran--as part of
implementing PTC, we have to install radio towers on our right-
of-way. We ran into a problem where one set of Federal
regulations administered through the FCC created a bottleneck
for us being able to actually install those towers, to the
extent that towers were not installed for about a year until
that bottleneck could be resolved.
The FCC worked diligently on trying to find a solution.
They have found a solution, and we are back installing towers.
But that is just a great example of how disjointed regulation
can take a project that has been mandated to us through
Congress, PTC, and make it an impossibility to actually fulfill
that mandate.
So a little bit more diligent coordination and
thoughtfulness would be of value.
Senator Markey. So back when we passed the 1996
Telecommunications Act, for example, we had to put together a
whole system of towers across the country so that people could
talk to each other.
And it was interesting, because the people in wealthier
communities did not want cell phone towers in their
communities, although when they went to work in the blue collar
parts of town, the downtown areas, they wanted their cell
phones to work.
But we needed a law, we needed a way of getting that done.
And, all of a sudden, everyone could talk on their cell phones,
no matter where they were. There are some exceptions, but it is
pretty good.
So what would you say today has to happen in order to move
at the same pace here along an already-established route in
order to accomplish that goal?
Mr. Fritz. In terms of----
Senator Markey. Yes.
Mr. Fritz.--radio towers?
Senator Markey. Getting the cell towers up, making it
possible to make rail more safe. What do we have to do? I mean,
we did it before, 20 years ago. Why can't we do it right now?
Mr. Fritz. So I think there is a solution in place now and
we are back up to speed in terms of installing radio towers.
Right now, the heavy lift on PTC is the fact that it is
unproven technology; we are installing it as we invent it.
Union Pacific is going to be largely installed and starting to
test, let's say, sometime in 2017; the industry, to varying
degrees because of the availability of product and expertise.
What needs to be appreciated from a PTC perspective is it
is not an off-the-shelf technology. We have invented a radio,
we have built a radio company, we have built a spectrum
company--this is as an industry--and we have invented this
back-office system that will be able to, on anyone's railroad,
anyone's equipment, stop any train prior to one of four
different catalysts. That is a hell of a lift, and I am very
proud of our industry for having done as good as it has.
It is still unknown as to whether or not it is going to
work and what kind of impact it will have on service for our
customers, on safety for our communities----
Senator Markey. Mr. Fritz, my time has expired. Can you
tell the Committee maybe in writing what you need in order to
telescope the time-frame to determine whether or not it is
going to work?
Because I think we have to put----
Mr. Fritz. Sure.
Senator Markey.--this under a microscope, because it just
can't go on and on and on and on. We need a system in place
that has all parties accountable, to bring everyone to the
table, to say: What is the problem? Why can't we invent this?
Or can we bring in new people? You know, maybe we have to bring
in Silicon Valley just to say, let's just get this done fast,
get the----
Mr. Fritz. Senator, I----
Senator Markey.--smartest people in order to get it done
and save money. The longer it goes is the more it is going to
cost us.
Mr. Fritz. Senator, I think at this point the freight rail
industry is implementing PTC as quickly as it can possibly be
implemented. We support Senator Thune's bill and the concept of
giving us an extension, to recognize both our effort and the
fact that it is an extremely heavy lift.
And I think that is enough said on that.
Senator Markey. OK. Good.
Thank you, Madam Chair.
Senator Fischer. Thank you, Senator Markey. The record will
be open for 2 weeks, Senator, if you want to submit questions,
and then the witnesses can respond.
Senator Markey. That would be great.
Senator Fischer. Thank you.
Senator Moran?
STATEMENT OF HON. JERRY MORAN,
U.S. SENATOR FROM KANSAS
Senator Moran. Madam Chairman, thank you. And
congratulations on chairing the Subcommittee, and I look
forward to working with you. Perhaps once in a while we will
have some Kansas witnesses as well as Nebraskans.
Mr. Mullen, let me start with you.
And thank you all for being here.
On trucking, I was interested in your testimony in regard
to Senator Booker's questions. And what I take from that is
that it may be that the regulators are focused on perhaps the
things that are slightly less important than things that are
more important, that they are not finding necessarily the
solutions to the problems that are out there.
And so my question is, what is it that this committee, this
subcommittee can do to make certain that FMCSA is focused on
the things that would have the most consequence for improving
safety, better protecting the public, better protecting your
drivers and your trucks, and still being able to operate an
efficient trucking system that allows us to be competitive in a
global economy? What is missing? Why do we not have the things
focused the way they should be?
Mr. Mullen. Well, I think first they need to prioritize
what it is that has the greatest impact on safety. And our
position is the hours-of-service restart was not the way to go
about doing it. They spend a lot of time and money and
resources in the industry quarrelling over whether it was the
right thing to do or the wrong thing to do. When they----
Senator Moran. So how does the agency get headed down the
path of that issue as compared to--is there just disagreement
as to what is the most important?
Mr. Mullen. So they haven't told me why they went down that
path. My suspicion is that perhaps it was more politically
motivated than it was otherwise. So I think it was just
misguided to spend that much time on that thing.
First is, for instance, mandating compliance with the
existing rules, buy the electronic logging devices, right? So,
again, Werner has been on ELDs for over a decade. You have
absolute 24/7 view into what your driver is doing; you know
when he is complying with the lie, and, in the event he tries
not to, you can prevent that from happening.
So it just doesn't seem to be a good use of time to quarrel
on the fringe of the restart.
And, by the way, for instance, on the restart, since July
2013, the 12 months rolling preceding July 1, 2013 versus the
next 12 months, there has been no improvement in accident
frequency. So the data would suggest that that was a misguided
effort. Again, put the science aside; just the data after the
fact would suggest that was misguided.
Things you could perhaps do is incentives. Perhaps have FMC
having incentives for folks that will do nonregulated measures
such as onboard recorders--little too late for the LDs--things
of that nature, to have incentives for trucking companies to go
above and beyond the regulations to make sure that the roads
are safe. That is where we would like to see them go.
And, to some extent, level that playing field. You know,
CSA has done some good things for the industry, and certainly
anytime you talk about the issue of safety more than you did
before, that in itself has some benefit. But let's make it
fair.
The stated purpose was to have focused audits. Well, it has
gone well, well beyond that. They are now trying to regulate
things that have nothing to do accident frequency or accident
severity. The hazmat BASIC is a perfect example. You can get a
violation because your placard is off-kilter on your truck.
Let's not spend time on things like that.
Let's spend time on things like traffic enforcement versus
inspections. The data suggests that money spent on traffic
enforcement versus roadside inspections has a four-to-one rate
of return better than a roadside.
So, again, just focusing on those types of things--
enforcement versus inspection, root cause like speed versus
peripheral things like the restart--and I think you are going
to have time that is better spent and your results are going to
be better.
Senator Moran. Again, Mr. Mullen, tell me about--in a time
in our country in which employment is such an important issue
and jobs matter, there is a tremendous need for drivers. What
is the industry able to accomplish? What are the impediments
that we might look at that prevent those who need a job who
have the capabilities of driving a truck from finding a job?
Mr. Mullen. Yes. So it is a tremendous need. That is
probably the strongest headwind for trucking right now, is the
driver shortage, and there doesn't seem to be any relief in the
near future.
And so folks in our industry are doing what they can to
make it a more attractive job, whether it is a better way of
life, you are getting home more frequently, better amenities
and technology in their truck. You know, we work all the time
with truck stops to make sure they are adding amenities at a
good clip. And, of course, compensation. Compensation has been
going up in the industry lately. At Werner alone, the last 12
months, we have had over a 10 percent pay raise across our
fleet.
So those are the types of things we need to do to make it
attractive. We need to stop calling them bad people. We need to
stop picking on them as if they are the root cause of
everything that happens bad on the roadway and just need to
have a more positive image of a truck driver. You know, folks
that used to want to get into the industry and be a truck
driver, they are not interested anymore because it has that
black eye. And a lot of it is our own doing.
So it is going to be a problem for some time. And we do all
that we can. We are hiring more veterans. We hire about 168
veterans on a weekly basis to drive our----
Senator Moran. Is there a program by which somebody who is
licensed within the military has the capability of easily
transitioning to the private sector?
Mr. Mullen. There is. There is. Some states will allow,
whether the transition--if you operated a heavy vehicle in the
military, you can get a CDL virtually automatically. Candidly,
we are a little skeptical of that, and so that is why we put
those types of folks in our finishing school the minute they
get to our company.
So, yes, there are programs out there to alleviate the
transition from military life into private sector and in
trucking specifically.
Senator Moran. Madam Chairwoman, thank you very much.
Incidentally, we do see the Werner trucks in Kansas, and,
certainly, Union Pacific is prevalent in our state, as well. So
there is a sense of Kansas to those couple of Nebraskans here.
Thank you.
Mr. Mullen. Thank you, Senator.
Senator Fischer. Thank you, Senator Moran.
There is just a few of us here yet, and the votes have not
been called, so I would suggest we can each ask one question.
Senator Moran won't be able to do that, but, Senator
Booker, would you be interested in doing that?
Senator Booker. Yes. Since Senator Moran is leaving, can we
ask one and a half questions?
Senator Fischer. You may. You may. Thank you.
Governor, you had talked about the harbor imports and the
fund there and money being stolen from that in the past.
Mr. Rendell. I don't think I said ``stolen.''
Senator Fischer. Well, that is why you are a Governor. But
the diversion of funding at the Federal level I think has been
a great cause of concern.
Mr. Rendell. Huge problem.
Senator Fischer. I personally would like to see the Highway
Trust Fund used for roads and bridges. There is much in there
that is taken out for other areas that I think needs to be put
back in to meet our responsibilities. It is a priority.
I would just be interested in your thoughts on that and if
you think that is an area that we can look at to see if we
would be able to, I guess, recoup some of that funding so we
can meet our obligations.
Mr. Rendell. So I think, in theory, I would support the
idea of making the Highway Trust Fund just limited to roads and
bridges. But I think the effort to expand other modes of
transportation are very, very important because they take cars
off the road.
One of the questions--I am sorry Senator Markey isn't here.
The Northeast Corridor by 2030 will increase our population by
40 percent, and there is not enough I-95 to support that. We
have to get people riding trains.
So we have to find alternate modes. In urban centers, bike
paths, green paths, walking trails, those things are valuable
in getting people out of their cars and off the roads and
helping with congestion. So maybe----
Senator Fischer. Is it fair to be able to increase the gas
tax that you promote, a user fee of people who are on highways,
and divert that money for mass transit, beautification, trails?
Should we be looking at another funding source for those?
Mr. Rendell. Well, first of all, for transit itself, we
need to continue to support that out of the gas tax, because
transit is crucial to keeping our highways in some noncongested
condition. And ``noncongested'' is probably an oxymoron these
days. So we ought to be doing more for transit.
For other forms, these alternative forms that have cropped
up, I would agree with you, but I would urge Congress to find
an alternative source of money, because they are valuable. They
are valuable.
One of the things we have seen in American cities--and now
I am putting my mayor hat on--is young people coming back to
live in cities. And one of the reasons they come back to live
in the cities is because they are bicycle-friendly, because
there are trail paths, because you can ride along the river.
Senator Booker knows what I am talking about because Newark is
experiencing that to some degree. And that is a great thing for
cities, to have young people. They add vitality.
So, yes, if you want to make the Highway Trust Fund for
transit, roads, and bridges exclusively, that is OK and it
makes sense, but we should find an alternate vehicle for other
modes of transportation. Because they all help us do it. And
urban needs are different than rural needs, and I think we have
to consider that.
Senator Fischer. Thank you very much.
Senator Booker?
Senator Booker. Thank you very much.
I will not be asking any questions to Governor Rendell. But
when I was mayor, I had--and this is why I love talking to
businesspeople. When I was mayor, I had a saying that in God we
trust, but, everybody else, bring me data. And if you get away
from the politics, as you were saying, and just focus on the
data, they should educate your decisions.
And so I just want to go back, because I think you were
giving me some insights that have been valuable about where to
focus regulation to get the best in highway safety. But I just
want to stick for a second with the fatigue-to-driver issues.
And let's put aside the restart rule, which you said might be
forcing--that was the argument that was made --might be forcing
more traffic on the road at 5 a.m. or other odd hours and just
stick to the idea that, should truckers be driving 82-hour
weeks versus driving what the rollback was until this temporary
halt, just to 70 hours a week?
Now, I don't have the exact data that I quoted in a floor
speech that I gave about the large percentage of our accidents
that are specifically linked to fatigued drivers. It is a
significant percentage. And I can get that for you from the
research.
And the data, this wasn't just something thrown together.
The research was--and I am not exaggerating the number--
hundreds and hundreds of independent studies that showed about
what the human limits are before you start going into a very
dangerous fatigue in which you are more susceptible to your
reaction time being slowed down, toward your focus and
concentration being slowed on the roads.
And so, when we see consistently in New Jersey a raising of
truck driver accidents, some very high-profile accidents in
which people have pushed past that 70 hours a week and were now
upwards of 80 and more, whether this is the most bang for your
buck on the regulations you need, don't you think it is just
common sense that we study and know that there are limits,
indeed, for any of us towards human endurance?
And why should we allow people on the roads driving these
large vehicles that become like guided missiles should a person
lose control? Shouldn't we limit those in a common sense way so
that human beings don't push into that danger zone in which
their reaction time and their focus makes them more prone to
accidents?
Mr. Mullen. Yes. So there is a lot to cover there.
On the rollback, as you described, so what happened in 2013
was we changed the restart, that 34-hour restart. You could
take it whenever you wanted it, as long as you took the 34-hour
restart and you reset your clock. In 2013, we changed that,
that you had to have a 1-to-5, 1-to-5.
We didn't change the 11-hour driving, 14-hour on-duty
driving a day, 70-hour and 8 days--none of that was changed. So
all we really changed was the restart.
And it is our position and we believe the data supports
that the change wasn't warranted as it relates to safety. In
fact, we believe it is not possible that there could be more
traffic on that 5 o'clock to 7 o'clock a.m. time period. That
is a fact. As an industry member, we have seen that. We had to
accommodate, and so more of our trucks were coming out 5
o'clock a.m. to 7 o'clock a.m. on a Monday morning. That is a
fact. And we believe that had, actually, a detrimental impact
on safety versus a beneficial impact on safety from the other
aspects of the change.
So, again, we are talking about the same thing, Senator. We
absolutely want a less fatigued driver. Just a different way of
going about it.
Senator Booker. So let's put, again, the restart rule aside
for a second. You and I, then, both agree that a driver who is
driving 80-plus hours a week--I am sure all of us are working
80-hour workweeks, but at that amount of time behind a wheel,
you would agree, then, that the reams of studies--and I can
present them to you if you want--that show that, at that point,
a driver has lower focus, a slower reaction time, and is more
prone to accidents.
Mr. Mullen. So my suspicion is the data would support that
80 hours a week on a regular basis does have a detrimental
impact on fatigue and your ability to keep watch. But, in
practice, Senator, that just doesn't happen with any
regularity. Talking about just getting----
Senator Booker. And so, then, why would the trucking
industry--if it doesn't happen with regularity, why doesn't the
trucking industry just concede to that 70 hours a week then, 72
hours a week?
Mr. Mullen. Because we are talking about different things.
The 70-hour was never changed. What changed was the restart.
So, under the old restart, if, again, in that perfect
freight atmosphere that I tried to describe to you earlier
where you have the right loads at the right time, the traffic
doesn't impede you and you get the restart at the exact right
time, you can get over that 70 hours. But it is in a perfect
world.
And so when the whole idea of changing the restart came
about, we did our own study internally. We did not have drivers
getting past 70 hours. It just doesn't happen. It might happen
in some small areas, but it just doesn't happen as a routine
matter or even a prevalent matter.
So that 80 hours that you keep referring to, that is a
perfect world. The rules don't say you can drive 80 hours in 8
days. The rules say 70 hours in 8 days, but the restart can
allow you to get over that 70.
So I hear you. And the 80 sounds very compelling when you
talk about it, but it just doesn't happen. And what we would
prefer is you talk about circumstances that actually are more
common and you can actually drive down the frequency at a
greater rate than quarrelling about all these other issues.
Senator Booker. Right. And I will conclude just by saying
that, A, it does happen where drivers--we had a very--you know
the accident in New Jersey that got a lot of national
headlines. That was somebody that was past 80 hours. So it
factually does happen that somebody drives more than 80 hours a
week. That is an incontrovertible fact.
You and I can argue about different ways of getting there,
but if you and I are in agreement with the fact that in one
workweek to get 80 hours endangers people on highways, we
should find a way to prevent that. Both industry should want
that as well as those who are in charge of trying to keep our
highways safe.
Mr. Mullen. Senator, if we could talk later, that would be
fantastic, because I think we have the same passion, just going
about it in different ways.
And the tragedy you referred to--again, tragedy. He was
within his hours of service. Bad decisions--you can't regulate
bad decisions out of the marketplace. He was within his hours
of service, but he made personal decisions on his personal time
that contributed to the fatigue, unfortunately, which led to
that accident.
Thank you for your questions.
Senator Booker. No, sir, thank you. And, again, I
appreciate the business you do for our country.
Mr. Mullen. Thank you. I appreciate that.
Senator Fischer. Thank you, Senator.
The hearing record will remain open for 2 weeks, and during
this time Senators may submit any questions for the record.
Upon receipt, the witnesses are requested to submit their
written answers to the Committee as soon as possible.
With that, I will conclude the hearing. I thank the
witnesses for being here. I think we had a great panel today.
Thank you so much.
We are adjourned.
[Whereupon, at 11:32 a.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of the Commercial Vehicle Safety Alliance (CVSA)
The Commercial Vehicle Safety Alliance (CVSA) submits Comments for
the Record regarding the hearing held on January 29, 2015 by the Senate
Committee on Commerce, Science, and Transportation's Subcommittee on
Surface Transportation and Merchant Marine Infrastructure, Safety, and
Security, entitled: ``Improving the Performance of our Transportation
Networks: Stakeholder Perspectives.'' In these comments, CVSA will
address a number of issues raised during the hearing related to
commercial motor vehicle (CMV) enforcement and the States' CMV safety
programs, which receive funding through the Motor Carrier Safety
Assistance Program (MCSAP), as well as remarks related to the Federal
Motor Carrier Administration's (FMCSA) pending Safety Fitness
Determination (SFD) rulemaking.
Traffic Enforcement
A portion of the remarks made by Mr. Jim Mullen, Executive Vice
President and General Counsel, Werner Enterprises, focused on the
concept of improving efficiency from State safety programs by focusing
efforts on inspection activities coupled with traffic enforcement. In
his remarks, Mr. Mullen cites data that indicates a decline in the
number of traffic enforcement activities associated with an inspection
and expresses concern on behalf of the trucking industry that this is
negatively impacting roadway safety.
There are two issues that need to be addressed. First, the
perceived decrease in traffic enforcement through the MCSAP and second,
whether or not requiring States to focus their efforts on increased
traffic enforcement will provide an overall safety benefit. Before
examining these issues, however, it is important to clarify that the
``traffic enforcement'' activity referred to in Mr. Mullen's testimony
includes a North American Standard Inspection in the numbers, and not a
simple ``walk-around'' inspection as suggested. This means that the
traffic enforcement data being cited includes both the traffic
enforcement activity AND all the aspects that occur with a ``standard
roadside inspection''--``a vehicle inspection to detect component
defects and a review of the driver's paper work (e.g., hours of service
records of duty status) and credentials (e.g., license and medical
examiner's certificate).''
Therefore, the benefits accrued from the traffic enforcement
activity included in the data being referenced also include benefits
resulting from roadside inspections. Essentially, we are comparing the
effectiveness of traffic enforcement coupled with an inspection versus
an inspection only. It's not surprising, then, that the more rigorous
activity, traffic enforcement and an inspection, delivers more safety
benefits.
However, there is a lot of traffic enforcement activity on both
CMVs and non-commercial motor vehicles (non-CMVs) operating in the
vicinity of CMVs that is not being reported to FMCSA. States are not
required to report this information under the MCSAP. The fact is the
data being reported is incomplete, and so we are not able to quantify
the totality of the MCSAP and non-MCSAP funded traffic enforcement
activities being conducted, or the associated benefits, while NOT
coupled with a roadside inspection. The dataset required for this
proper evaluation and analysis just doesn't exist.
It should also be noted that, according to ATA's own analysis of
Federal crash data,\1\ the large truck fatality crash rate has fallen
significantly over the last decade. This decrease coincides with the
reported decrease in MCSAP-funded traffic enforcement, indicating that
States have, in fact, been successful in delivering comprehensive
programs that help reduce crashes and fatalities associated with
commercial motor vehicles. These fatality reductions have also came at
a time when Federal and State resources for CMV safety and enforcement
have been essentially flat-lined, while truck registrations and traffic
increased by about 30 percent.\2\
---------------------------------------------------------------------------
\1\ ``ATA Pleased with Improvement in Truck Crash Rate,'' American
Trucking Associations (ATA) press release, February 2, 2015, on ATA
website, http://www.trucking.org, accessed February 4, 2015.
\2\ Budget Estimates, Fiscal Year 2016, Federal Motor Carrier
Safety Administration, U.S. Department of Transportation.
---------------------------------------------------------------------------
There are a number of reasons why traffic enforcement coupled with
an inspection has reportedly decreased. First, recently FMCSA stopped
requiring that a traffic enforcement violation documented by a MCSAP-
funded inspector be accompanied by a roadside inspection report in
order for the State to receive MCSAP reimbursement for the activity.
Because MCSAP inspectors can now conduct traffic enforcement on CMVs
without also completing an inspection, traffic enforcement coupled with
an inspection has declined. However, that does not mean that traffic
enforcement on CMVs is no longer occurring. Unfortunately, because that
activity is not associated with an inspection report, the traffic
enforcement dataset is incomplete. In addition, and perhaps most
significantly, many State MCSAP agencies have made an effort to share
their responsibilities for CMV traffic enforcement activities with non-
MCSAP law enforcement officers, asking those officers to increase their
traffic enforcement on CMVs. This is not, as Mr. Mullen's testimony
suggests ``an attempt to deflect the criticism of FMCSA's management of
its CMV enforcement program'' but rather an effort by States and FMCSA
to manage resources and responsibilities as efficiently and effectively
as possible. In addition, some State agencies have focused on
enforcement of non-CMVs operating around CMVs, as the enforcement
community, like industry, understands that not all CMV crashes are the
fault of the CMV driver.
Furthermore, as resources at the State level continue to shrink,
many sworn law enforcement officers who several years ago were
conducting traffic enforcement coupled with inspections (under the
MCSAP) have been pulled off of those activities for other law
enforcement duties, including strictly traffic enforcement.
Because traffic enforcement is no longer required to be conducted
along with an inspection, and because in all States non-MCSAP officers
are conducting traffic enforcement, the dataset is incomplete. We
currently cannot capture traffic enforcement conducted by non-MCSAP
officers on CMVs, traffic enforcement conducted by a MCSAP inspector
that is not coupled with an inspection, or traffic enforcement on
private vehicles operating around CMVs. Because the dataset is
incomplete, it is difficult to quantify the benefits of each individual
activity. The combined result of these efforts is that we know the
States are doing more traffic enforcement, focusing on driver behavior,
while continuing to conduct the necessary vehicle inspections. And, as
recent data from DOT indicates, crash rates and fatalities are
declining.
We agree that traffic enforcement is a critical piece of each
State's commercial vehicle safety program. However, it is just that, a
piece of their program. Under the MCSAP, States are tasked with meeting
the requirements of a comprehensive commercial motor vehicle safety
program. FMCSA has established five national program elements, of which
traffic enforcement is one. In addition, the requirement to enforce
traffic laws is only one of more than twenty specific components
established for the MCSAP program under 49 U.S. Code Sec. 31102(b)(2)
and promulgated by regulation in 49 CFR Part 350. As an example, in
addition to enforcing traffic laws, States are required to ensure
registrants of commercial motor vehicles ``demonstrate knowledge of
applicable safety regulations, standards, and orders of the Government
and the State.'' \3\
---------------------------------------------------------------------------
\3\ 49 U.S. Code Sec. 31102(b)(2)(l)
---------------------------------------------------------------------------
To meet the goals established under MCSAP, a State's commercial
vehicle safety program is comprised of a number of aspects, including
roadside inspections, traffic enforcement on commercial vehicles,
compliance reviews, safety audits, targeted strike forces, educational
activities and even traffic enforcement on non-commercial vehicles--the
private citizens operating dangerously around commercial vehicles. The
appropriate level for each activity varies from State to State and will
change over time within any given State. We firmly believe that the
Commercial Vehicle Safety Plan (CVSP) is the appropriate place to
evaluate programmatic effectiveness and effect change, not through
statute. The CVSP is a living document that dynamically changes from
year to year based on a variety of factors. The CVSP is submitted to
and approved by FMCSA each year prior to funding being appropriated to
the States, so there are checks and balances in place to ensure crash
reduction targets and goals are being met.
When developing a CVSP, States must look at all the
responsibilities required of them under MCSAP and align those
activities with the personnel and funding made available to them under
MCSAP. The fact is that MCSAP inspectors and investigators are
specially trained to enforce the Federal Motor Carrier Safety and
Hazardous Materials Regulations. They've been trained to evaluate
regulatory compliance, such as reviewing log books, inspecting
vehicles, and interacting with motor carriers, vehicles and drivers,
all with the goal of identifying and removing dangerous motor carriers,
drivers, and vehicles from the road.
The volume of regulations, exemptions, and exceptions is only
getting increasingly complicated and complex, which is demanding more
of the personnel conducting these activities. Meanwhile, any law
enforcement officer can conduct traffic enforcement, and those assigned
traffic enforcement duties do so each day. In addition, the states
continue to get inundated with unfunded mandates either through
Congressional direction or through policy changes by FMCSA. These
unfunded mandates have hampered the ability of the states to do the
work that has been asked of them, and take time and energy away from
program delivery.
Forcing states to focus more of their efforts on traffic
enforcement coupled with an inspection could negatively impact safety.
For example, Mr. Mullen notes in his testimony that research indicates
a strong correlation between compliance with hours of service
regulations and safety. Traffic enforcement coupled with an inspection
takes more time, and requires the presence of a traffic violation,
reducing the number of inspections a MCSAP-trained inspector can
conduct. This means fewer log books will be reviewed. It also means
fewer traffic enforcement activities, as the officer has to then
conduct an inspection along with issuing the traffic citation. In order
to be the most effective and interact with the highest number of motor
carriers, vehicles, and drivers it makes sense to allow the specially-
trained MCSAP inspectors and investigators to focus on their area of
expertise and allow non-CMV trained officers to focus on traffic
enforcement, reaping the benefits of both activities. There are grant
programs to help facilitate this activity available through the
National Highway Traffic Safety Administration (NHTSA), in which many
States participate to varying degrees. And while it's true that MCSAP
and non-MCSAP traffic enforcement NOT coupled with an inspection does
not currently make its way into the Motor Carrier Management and
Information System and thus not accounted for in the CSA algorithm,
that does not mean that the activity is not happening and that safety
benefits are not accruing. They are simply not being captured in the
CSA model. However, we strongly agree that this is a hole in the
dataset and we look forward to working with industry and FMCSA on
finding a way to collect this data, so a motor carrier's CSA scores can
more accurately reflect their drivers' behaviors.
States need more flexibility in how they spend their resources, not
more restrictive parameters. Rather than prescribing a ``one size fits
all'' format for State programs, Congress and FMCSA should focus on
setting broad parameters, program elements, goals, and expected
outcomes for a program. This will allow each State to develop their own
CVSP, tailored to the state's needs, with the goal of ensuring that
crash reduction targets are being met. Simply saying states should
focus more on traffic enforcement ignores the complexity and diversity
of each state's CMV safety and enforcement program.
Safety Fitness Determination
Mr. Mullen's written testimony also addresses FMCSA's forthcoming
rulemaking on the agency's Safety Fitness Determination, arguing that
FMCSA should not move forward with the rulemaking until issues with CSA
have been addressed. CVSA strongly disagrees with this argument.
We agree that improvements to the CSA program are necessary.
However, the underlying issue is that the CSA program is not being used
as it was originally designed or intended and the program is still
incomplete. It is our understanding that the CSA program as it has been
designed by FMCSA was intended to be a screening tool for enforcement,
helping inspectors and investigators to identify the carriers most in
need of an intervention and to identify the ``bad actors'' in industry,
NOT to tell shippers which motor carriers are ``safe''. Further, the
BASIC SMS scores as we understand them were not meant to serve as an
absolute assessment of a motor carrier's safety culture. The
forthcoming SFD rule will help to define what that assessment will look
like.
Because CSA is not being used as it was intended, issues like crash
accountability, the relative nature of the SMS, and lack of full
implementation present real challenges and inequities that need to be
addressed. The best way to address these issues is to complete the CSA
program, and by moving forward with the SFD rulemaking. When complete,
the SFD, which will have undergone a public notice and comment process,
will provide for a more complete picture of a motor carrier's safety
fitness.
______
National Association of Railroad Passengers
Washington, DC, February 12, 2015
Committee on Commerce, Science, and Transportation,
Subcommittee on Surface Transportation,
Washington, DC.
Following upon the January 29 hearing on improving the performance
of U.S. transportation networks, please consider the following policy
recommendations from the National Association of Railroad Passengers
regarding the implementation of Positive Train Control.
Accepting that compliance with the December 31, 2015, statutory
deadline is not feasible, NARP recommends that any new law which
changes that deadline should:
(1) Grant authority to the Secretary of Transportation, on an
individual company basis, to give up to three, consecutive 18-
month extensions, bringing the latest possible date of
compliance 4-1/2 years after the current deadline, or June 30,
2020.
(2) Change the law so that heavily traveled mainlines are not exempt
because they happen to be owned by other than a Class 1;
(3) Explicitly require the prevention of low-speed, rear-end
collisions--of which there have been fatal ones within the past
four years [see below]. The system as currently being installed
does not know the length of trains and therefore cannot prevent
low-speed, rear-end collisions.
Point #1 would be preferable to legislatively forcing the gift to
the entire industry of a blanket 5-year extension. It would enable the
Secretary to treat with appropriate differences railroads which have
worked hard on PTC vs. those who have not.
Point #2 would protect the railroads from a tragic accident that
also would be a public relations disaster for the industry--how to
explain having installed PTC all across rural America but having taken
advantage of a legal loophole either to avoid installation in populated
areas like the cities of Kansas City and St. Louis. [Some states may
come up with the money to save their passenger trains; other states
already choking on the big run-up in Amtrak-related costs under Section
209 of the 2008 law may let the service die and leave PTC absent where
most needed.]
Point #3 would make explicit what most people thought the law
already meant--train-to-train collisions must be prevented; there is no
exception for low-speed, rear-end collisions. The NTSB April 24, 2012,
report on the April 17, 2011, fatal collision at Red Oak, Iowa, stated
that ``the PTC designs that are being deployed and the FRA's final rule
on the application of PTC are unlikely to prevent future restricted
speed restricted speed rear-end collisions similar to the 58 rear-end
collisions reported to the Federal Railroad Administration over the
last 10 years or the collision at Red Oak because train speeds at the
upper limit of restricted speed are allowed.''
FRA's April 25, 2012, advisory in response to the NTSB's report
detailed six rear-end collisions over the past year that caused four
employee fatalities (the other two were at Mineral Springs, NC, on CSX
on May 24, 2011, and DeWitt, NY, on CSX on July 6, 2011), six employee
injuries and property damage exceeding $6 million. Thankfully, no
passenger trains were involved.
______
Prepared Statement of Ross B. Capon, Consultant, American Association
of Private Railroad Car Owners http://aaprco.com/
Thank you for holding the hearing on this important subject and for
the opportunity to submit these comments.
Clearly, the U.S. has under-invested in intercity passenger rail.
However, the appropriate steps forward should be based on a firm
understanding of the current facts and not on criticism of Amtrak's
service. The top priority for investment in the Northeast Corridor must
be rehabilitation and expansion of the existing railroad, not
development of a new mode of transportation (maglev) that cannot use
existing infrastructure. It is vital to avoid the economic disruption
that would result from failure of one or more key elements of the
commuter rail network or Amtrak service. Such failure, besides
reflecting bad policy and threatening the economy, would exact a heavy
political price from officials who appeared neglected the existing
railroad due to the distraction of creating a brand new infrastructure.
A major strength of the French TGV service is that trains can use
existing tracks where needed--whether in the approach to the heart of a
congested city or in serving a remote, singletrack branch line such as
that to Annecy. A maglev train could only use brand-new, purposebuilt
infrastructure.
Similarly, it is important to be able to utilize key elements of
the new railroad Amtrak has proposed as soon as meaningful segments
have been completed, rather than be forced to wait until an entire new
technology has been extended from Washington to New York or New York to
Boston.
The investment needs of course are not confined to the Northeast,
as illustrated by the passenger train TIGER grant applications which
U.S. DOT has received. Much criticism directed at the Administration's
high speed rail program results from the fact that there is no
conventional rail program. Less ambitious projects are what many states
want and can support. Federal grants which have extended service to
Freeport and Brunswick, Maine, improved service within North Carolina,
the Midwest, the Pacific Northwest and elsewhere have met important
needs.
As Congress grapples with transportation funding issues, it is
important to bear in mind that changing demographics are associated
with changing demands for transportation. As Secretary Foxx said in a
February 11 House hearing, millennials and following generations are
moving closer to cities and ``we should not plan to return to 1956''
[in terms of near-exclusive focus on automobiles]. He also noted
that getting people out of cars produces a major benefit for highway
users.
Thank you for considering our views.
The mission of the American Association of Private Railroad Car
Owners ``is to promote the operation, ownership and enjoyment of the
private passenger railcar.'' Amtrak's Federal operating grant
requirement is reduced because of the profit that Amtrak makes from
handling private cars. We have a special interest in the viability and
development of Amtrak's longdistance train network. Our cars also
operate on several of Amtrak's state-supported routes. We have about
600 dues-paying members, including 75 members who own cars which have
passed Amtrak's stringent safety certification process for operation on
Amtrak trains. These members own about 200 Amtrak-certified cars, as
some members own more than one car.
______
Response to Written Question Submitted by Hon. John Thune to
Douglas Means
Question. West Coast port delays. You stated that the West Coast
port labor disputes have caused Cabela's to incur significant costs,
and your company has added five to 15 days of lead time to its supply
chain as a result of the increased port congestion.
a. Considering the continued failure to reach a much-needed and
urgent long-term solution, what are the potential effects--for
Cabela's and other retailers--of a complete work stoppage
within the affected West Coast ports?
b. Once the dispute is resolved, how long will it take to unwind the
congestion and to alleviate the lingering effects of this
unnecessary situation for Cabela's and other retailers?
Answer. Although a tentative agreement has been reached, this does
not resolve the long term issues associated with the West Coast Ports.
Cabela's like many other retailers will continue to develop options to
reduce the amount of import freight destined to the west coast.
Long term we cannot be in a position of our entire supply chain
being threatened due to a work slow down at either the west coast or
the east coast. The current tentative agreement does not bring
resolution to the larger long-term issues at the West Coast ports. Port
productivity is lower there than either at the East Coast or at other
ports around the world. The overall congestion issues and productivity
issues were not addressed.
As such we will review options to shift a certain portion to either
East Coast, Canadian or Mexican ports. Sourcing locations will also be
reviewed to look at near sourcing locations where we can rely on
consistent supply chain predictability.
Regarding the current situation, we anticipate that it will take 6-
8 weeks for the ports to work through the current backlogs.
Furthermore, the industry is guessing it will take 3-6 months until the
backlogs in the entire supply chain are resolved and normal sailing
schedules and unloading cadences are back to normal. This timeline
includes the railroads clearing up their backlogs and correcting their
imbalance situation that this work disruption has caused.
Long term, the framework for resolving disputes such as these, need
to be reviewed. The port slowdown cost the economy and retailers a
significant amount of money. The ability of the congress or the
administration to intercede sooner in a dispute that has such a dire
consequence to the entire economy must be enabled.
______
Response to Written Question Submitted by Hon. Kelly Ayotte to
Douglas Means
Question. In your written testimony you describe the regulatory
burdens on the transportation industry, specifically the Federal Motor
Carrier Safety Administration's Hours of Service regulations. I have
heard concerns regarding these regulations from not only truckers but
also numerous industries along the supply chain where commerce has
slowed. C&S Wholesale Grocers, the largest food wholesaler in the
United States, has expressed to me serious concerns regarding the
negative impact these regulations have had on the productivity and
efficiency of their operations. In what ways have these regulations
impacted Cabela's business? In your experience, how have these
regulations impacted consumers?
Answer. There are many challenges within the transportation
industry. One of the largest has been the issue of driver shortages,
which has led to capacity issues. This has been a concern for a number
of years and only continues to worsen.
When regulations are implemented such as new hours of service
regulations which reduces the number of hours that drivers can be on
the road only tends to worsen the driver shortage and capacity issue.
Trucking rates have increased and predictability of shipping has been
challenged as a result of lack of capacity. These ultimately impact our
customers either in unreliable service or higher costs.
Safety on the roads is a high priority for us. However, when
regulations are implemented in the name of safety without supporting
studies to validate these rules, this has a negative impact to the
shipping community. Capacity issues adds costs to all segments of the
supply chain and ultimately the consumer.
The Hours of Service bill was suspended for one year as part of the
Cromnibus Appropriations Bill. We ask that this suspension be made
permanent. In addition, increases to size and weight of trailers should
be considered nationwide as long as the safety concerns are addressed.
A comprehensive National Freight Policy, which addresses these
subjects and the overall infrastructure issues, should be a priority
for this congress.
Thank you for the opportunity to address you regarding these
important concerns.
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