[Senate Hearing 115-41]
[From the U.S. Government Publishing Office]
S. Hrg. 115-41
MOVING AMERICA: STAKEHOLDER PERSPECTIVES ON OUR MULTIMODAL
TRANSPORTATION SYSTEM
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SURFACE TRANSPORTATION
AND MERCHANT MARINE INFRASTRUCTURE,
SAFETY AND SECURITY
of the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 15, 2017
__________
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 FIFTEENTH CONGRESS
FIRST SESSION
JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri MARIA CANTWELL, Washington
TED CRUZ, Texas AMY KLOBUCHAR, Minnesota
DEB FISCHER, Nebraska RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska EDWARD MARKEY, Massachusetts
DEAN HELLER, Nevada CORY BOOKER, New Jersey
JAMES INHOFE, Oklahoma TOM UDALL, New Mexico
MIKE LEE, Utah GARY PETERS, Michigan
RON JOHNSON, Wisconsin TAMMY BALDWIN, Wisconsin
SHELLEY MOORE CAPITO, West Virginia TAMMY DUCKWORTH, Illinois
CORY GARDNER, Colorado MAGGIE HASSAN, New Hampshire
TODD YOUNG, Indiana CATHERINE CORTEZ MASTO, Nevada
Nick Rossi, Staff Director
Adrian Arnakis, Deputy Staff Director
Jason Van Beek, General Counsel
Kim Lipsky, Democratic Staff Director
Chris Day, Democratic Deputy Staff Director
Renae Black, Senior Counsel
------
SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE
INFRASTRUCTURE, SAFETY AND SECURITY
DEB FISCHER, Nebraska, Chairman CORY BOOKER, New Jersey, Ranking
ROGER F. WICKER, Mississippi MARIA CANTWELL, Washington
ROY BLUNT, Missouri AMY KLOBUCHAR, Minnesota
DEAN HELLER, Nevada RICHARD BLUMENTHAL, Connecticut
JAMES INHOFE, Oklahoma TOM UDALL, New Mexico
RON JOHNSON, Wisconsin TAMMY BALDWIN, Wisconsin
SHELLEY MOORE CAPITO, West Virginia TAMMY DUCKWORTH, Illinois
CORY GARDNER, Colorado MAGGIE HASSAN, New Hampshire
TODD YOUNG, Indiana
C O N T E N T S
----------
Page
Hearing held on February 15, 2017................................ 1
Statement of Senator Fischer..................................... 1
Statement of Senator Booker...................................... 3
Statement of Senator Nelson...................................... 4
Statement of Senator Cruz........................................ 5
Statement of Senator Peters...................................... 6
Statement of Senator Blumenthal.................................. 34
Statement of Senator Inhofe...................................... 36
Statement of Senator Young....................................... 38
Statement of Senator Gardner..................................... 40
Statement of Senator Hassan...................................... 42
Statement of Senator Klobuchar................................... 44
Statement of Senator Udall....................................... 46
Statement of Senator Duckworth................................... 48
Witnesses
Matthew K. Rose, Executive Chairman, BNSF Railway Company........ 7
Prepared statement........................................... 9
Dr. Christopher B. Lofgren, President and Chief Executive
Officer, Schneider National, Inc............................... 22
Prepared statement........................................... 23
Tom Gurd, Vice President, Integrated Supply Chain, The Dow
Chemical Company............................................... 25
Prepared statement........................................... 27
Wick Moorman, President and Chief Executive Officer, Amtrak...... 28
Prepared statement........................................... 30
Appendix
Response to written questions submitted to Matthew K. Rose by:
Hon. Deb Fischer............................................. 55
Hon. Maria Cantwell.......................................... 58
Hon. Maggie Hassan........................................... 61
Response to written questions submitted to Dr. Christopher B.
Lofgren by:
Hon. Deb Fischer............................................. 62
Hon. Richard Blumenthal...................................... 64
Hon. Maggie Hassan........................................... 64
Response to written questions submitted to Tom Gurd by:
Hon. Deb Fischer............................................. 65
Hon. Maggie Hassan........................................... 67
Response to written questions submitted to Wick Moorman by:
Hon. Deb Fischer............................................. 68
MOVING AMERICA: STAKEHOLDER
PERSPECTIVES ON OUR MULTIMODAL TRANSPORTATION SYSTEM
----------
WEDNESDAY, FEBRUARY 15, 2017
U.S. Senate,
Subcommittee on Surface Transportation and
Merchant Marine Infrastructure, Safety and Security,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:31 p.m. in
room SR-253, Russell Senate Office Building, Hon. Deb Fischer,
Chairman of the Subcommittee, presiding.
Present: Senators Fischer [presiding], Nelson, Cantwell,
Klobuchar, Blumenthal, Booker, Udall, Peters, Duckworth,
Hassan, Wicker, Blunt, Cruz, Inhofe, Moore Capito, Gardner, and
Young.
OPENING STATEMENT OF HON. DEB FISCHER,
U.S. SENATOR FROM NEBRASKA
The Chairman. Good afternoon, everyone. And welcome to the
Surface Transportation Subcommittee. I thank you for being here
today for our first hearing of the 115th Congress.
Today's hearing, entitled, ``Moving America: Stakeholder
Perspectives on our Multimodal Transportation System,'' brings
together an esteemed panel of transportation leaders.
As many of you are aware, President Trump mentioned
strengthening and renewing our Nation's transportation
infrastructure in his inaugural address. I'm encouraged to see
the President making transportation infrastructure a top
priority.
As Congress and this new administration seek to develop
infrastructure solutions, my hope is that we address future
infrastructure funding challenges. Like many of my colleagues,
I am proud of the bipartisan work Congress did to enact the
Fixing America's Surface Transportation, or the FAST Act.
However, our work is not done. According to the latest
projections by the Congressional Budget Office, the Highway
Trust Fund will face a deficit of over $100 billion in the next
5 years, following the expiration of the FAST Act. The Highway
Trust Fund serves as a fair and equitable source of
transportation funding for all states.
To address this funding shortfall, I've introduced the
Build USA Infrastructure Act, modeled on Nebraska's successful
transportation funding efforts. This bill would divert a
portion of the revenues collected by the Customs and Border
Patrol on freight and passengers at ports of entry to cover the
projected deficit. In addition, the bill would establish
measures to offer states greater flexibility in initiating
critical transportation infrastructure projects.
Certainty in Federal highway funding and project
flexibility for states should be key elements of any major
infrastructure package. I also suggest that Congress build off
of the successful freight programs established in the FAST Act.
The multimodal freight program provides dedicated formula
funding to states for critical urban and rural corridors.
It's important that our work to make America's
transportation system more reliable and efficient also
addresses the challenging regulatory environment. In 2015, I
authored the TRUCK Safety Reform Act. This bill reformed the
controversial and obscure regulatory process at the Federal
Motor Carrier Safety Administration, and it was included in the
FAST Act. Because of this measure, the FMCSA now needs to
conduct a more transparent, inclusive, and responsive
regulatory process with stronger cost-benefit analysis.
The FMCSA's ``entry level driver training'' negotiated
rulemaking is a good example of stakeholders coming together
with the agency to produce positive outcomes and increased
safety.
I hope to work closely with Transportation Secretary Elaine
Chao, my colleagues here in Congress, and stakeholders to
address similar regulatory process challenges across agencies
at the DOT.
For example, in the previous administration, the Federal
Railroad Administration's electronic braking rule represented a
multibillion dollar mandate without clear safety benefits. In
fact, several railroads had tested and then abandoned these
systems, a fact effectively disregarded by the FRA. This effort
was followed by an ideological ``government knows best'' PR
campaign that criticized operators opposed to the mandate.
In reviewing this rulemaking, the Government Accountability
Office found that, ``DOT's modeling lacked transparency as the
information published may not be sufficient for a third party
to replicate . . .''
With new leadership at the FRA, we hope the agency will
improve, but we cannot rely on that alone. Congress must act to
improve the use of data, risk-based analysis, transparency,
collaboration, and objective-based rules at the FRA.
As we examine how the FRA conducts its regulatory process,
we must consider the cumulative impact of regulations across
the government on a freight rail industry that is projected to
infuse $22 billion in private investment in our Nation's
transportation system. We should all applaud this tremendous
investment in our transportation network.
Today, I look forward to hearing how Congress can work to
strengthen our Nation's transportation infrastructure while
enhancing safety, reliability, innovation, and efficiency
across the entire network.
I would now recognize the Ranking Member of the Commerce
Committee, Senator Nelson, for any statement he wishes to make.
Senator Booker. No, you go ahead.
Senator Nelson. Well, I always want the Ranking Member of
the Subcommittee to go first. So would you, please?
Senator Booker. Sir, your wish is my command.
The Chairman. Ranking Member Booker, great to have you.
Senator Booker. Thank you. Thank you very much.
STATEMENT OF HON. CORY BOOKER,
U.S. SENATOR FROM NEW JERSEY
Senator Booker. I actually first want to give some
acknowledgement and gratitude to the Chairperson of this
committee. One of the things I feel most excited about in my
time as a Senator has been the partnership I've had with the
Chairperson of this committee. We have found a good way to work
together in a bipartisan fashion to actually move some very
positive things forward. When I'm talking to friends of mine, I
often describe this relationship as a bipartisan Batman and
Robin, and I'll say here for the record just in case you have
heard about that, I am Robin, you are Batman.
[Laughter.]
Senator Cruz. Nice tie.
Senator Booker. Thank you very much. You should see the
full gear.
[Laughter.]
Senator Booker. But I do want to say that I still believe
even with the progress that we've made, we're at a point in our
Nation where we're in a crisis, we are in an infrastructure
crisis. The American Society of Civil Engineers ranks American
infrastructure now at D-plus. Literally in a generation, my
father's generation, we had the number one ranked
infrastructure on the planet Earth, and now our infrastructure
in this country is not even in the top 10.
Nothing about our country, we are a phenomenal gift to
humanity in so many ways, nothing about our country should be a
D-plus. We should lead the globe in infrastructure, and that's
in particular because having a great infrastructure is a
critical ingredient to having a great economy.
That's why I use the word ``crisis'' very purposefully,
because the Chinese symbol--and the Chinese obviously spending
5 percent of their GDP on their infrastructure, us spending 1
percent or less--the Chinese symbol for a crisis is danger and
opportunity. There is a tremendous opportunity here to help
infuse our economy with strength, to put people back to work--
Americans back to work--to give industries a boost through Buy
America provisions. All of these things give us an opportunity
that is especially important now because the cost of capital is
so low.
For those of us who are concerned about debt-to-GDP ratio,
we understand that every dollar invested in infrastructure
growth actually grows our economy by two dollars, making that
debt-to-GDP ratio even better.
We are a nation that can and must do better, and there is
bipartisan space for us to work together to get it done. One of
the areas I'm obviously most concerned about is the Northeast
corridor in which I live and reside and represent. One of the
worst chokepoints in the Nation in terms of the value of this
piece of real estate, the greater--I call it the greater Newark
metropolitan area, but some people call it the greater New York
metropolitan area, is one of the most economically productive
regions on the planet Earth, it has one of the most inadequate
infrastructures there are. The chokepoint that exists there is
literally strangling our national economy, and that's one of
the reasons why the Gateway Project has been so important to
me, and I value my partnerships again with Republican
colleagues like the Ranking Member, like Senator Roger Wicker.
I would be remiss if I don't speak finally, Chairwoman,
about one very important thing, which is just this idea of
safety. It doesn't have to be an either/or. We can find ways to
control regulations. I've actually learned a lot from Senator
Fischer's approach, but we can also do things to emphasize the
safety and security of our highways, of our airways, and more.
And we should have that balance.
Right now, we're seeing a startling increase of traffic
fatalities on our highways specifically involving large trucks.
That does not have to be the case. We can and must do better to
elevate human life.
So I'm excited about this Congress. I'm excited about under
the leadership of my Chairman that we've put forth, Democrats
put forth, a trillion dollar proposal for improving our
infrastructure. I think it's a solid proposal, it's a fiscally
wise proposal, and those investments will help to really make
our economy boom, but not just for today, for tomorrow.
Remember, we got an inheritance from our grandparents, the
best infrastructure on the globe, we've now trashed that
inheritance. It's time for our generation to step up and do the
right thing, make the investments so that our children and
grandchildren can again be number one on the planet Earth, not
just for the quality of our infrastructure, but because that
infrastructure ensures we will continue to be the dominant
economy and innovators on the globe for the future.
Thank you very much, Chairman.
The Chairman. Thank you, Senator Booker.
And now I would like to recognize the Ranking Member of the
Full Committee, Senator Nelson.
STATEMENT OF HON. BILL NELSON,
U.S. SENATOR FROM FLORIDA
Senator Nelson. Thank you. I want to point out Senator
Peters and Senator Cantwell, along with the Ranking Member of
this subcommittee, we really got some terrific Members assigned
on this side, Amy Klobuchar, Richard Blumenthal, Tom Udall,
Tammy Baldwin, Tammy Duckworth, and Maggie Hassan. So you can
see this subcommittee has a lot of interest.
Now, for example, you need a tunnel. There is a chokepoint.
There are one or two tunnels there between New Jersey and New
York. Right here, coming across the Potomac River from the
south there's a chokepoint. We've got to shore these up.
Dr. Lofgren is concerned with the roads and bridges. There
are 56,000 structurally deficient bridges in this country. In
Florida alone, there are 200 that are determined by the Florida
Department of Transportation as structurally deficient. And, of
course, we remember the very tragedy that we saw in Minneapolis
with the collapse of an interstate bridge.
I can go on and on, whether it's the bottleneck at our
ports or the congestion on our roads, this aging infrastructure
goes on and on. Now, there is going to be a lot of consensus
around here for spending on infrastructure, but then you're
going to get to the question, How are you going to pay for it?
All of your industries--and I assume, Mr. Gurd, you are one
of the shippers, so you've got the freight railroad, you've got
the passenger railroad, you've got the trucks right here at the
table. Tell us what we need to know so that we can light a fire
under these folks that keep sticking their heads in the sand to
not fix this national security issue of a tunnel going into New
York, et cetera, et cetera.
Thank you, Madam Chairman.
The Chairman. Thank you, Senator Nelson.
At this time, I would like to recognize Senator Cruz, from
Texas, who will be introducing the BNSF Executive Chairman.
Senator Cruz.
STATEMENT OF HON. TED CRUZ,
U.S. SENATOR FROM TEXAS
Senator Cruz. Thank you, Madam Chairman and Ranking Member
Booker, for holding this important hearing. And it's a
privilege to join you this afternoon and have the opportunity
to introduce my fellow Texan, Matt Rose, who's the Executive
Chairman of the Burlington Northern and Santa Fe Railway
Company, otherwise known as BNSF.
As many of you know, Matt has a long history working within
the rail industry, which includes having served 13 years as
Chief Executive Officer and 11 years as Chairman of BNSF. In
this role, Matt has led one of North America's leading freight
transportation companies, which has a rail network of 32,500
route miles in 28 states and three Canadian provinces--you've
always got to be careful traveling to Canada--and which
transports millions of shipments each year, thanks to the
dedication and commitment of 41,000 employees.
As all of you know, this is no easy task. Over the past few
years, the rail industry has experienced declines in
commodities such as coal and crude oil moving across rail
networks, has faced challenges from environmental advocacy
groups opposing the construction of facilities, and must still
ultimately operate within one of the most regulated industries
in the United States.
In addition to his leadership at BNSF, Matt and his wife,
Lisa, are very active within the Fort Worth community in Texas,
where they started Gatehouse, a supportive living community
where women and their children in crisis can discover a new
path for permanent change.
Matt also dedicates his time to Read Fort Worth, a
coalition of businesses, civic, education, philanthropic,
nonprofit, and volunteer leaders working to ensure that 100
percent of Fort Worth third graders are reading on grade level
by 2025.
In short, Matt brings a wealth of knowledge about the rail
industry as well as the communities in which they serve. I look
forward to his testimony before this subcommittee this
afternoon as we explore both the challenges and the
opportunities facing the rail industry, as well as the steps
that this subcommittee can take to help ensure American
competitiveness today and beyond, for our nation's
transportation sector.
The Chairman. Thank you, Senator Cruz.
And now I would like to recognize Senator Peters, who will
introduce Dow Chemical's Tom Gurd.
STATEMENT OF HON. GARY PETERS,
U.S. SENATOR FROM MICHIGAN
Senator Peters. Well, thank you, Chairman Fischer and
Ranking Member Booker, for having this very important hearing.
And I would like to introduce Mr. Tom Gurd to the
Subcommittee today, another fellow Michigander.
Mr. Gurd is the Vice President of Integrated Supply Chain
for the Dow Chemical Company and is also a member of the
American Chemistry Council. And I am pleased that he has taken
the time to be with us to share his thoughts on how we can
develop policies that foster growth in the manufacturing sector
and grow our economy.
Our state of Michigan, which we're very proud to live in,
has a long history of being a leader in scientific and
engineering advancements, and Dow Chemical Company is certainly
an excellent example of my state's talented and innovative
companies in today's global workforce.
Founded and headquartered in Midland, Michigan, Dow has
grown to be one of the world's largest chemical companies, in
part, due to its commitment to continually pushing scientific
boundaries of plastics, chemicals, and agricultural products.
These products reach consumers across the United States and in
nearly 160 countries around the world, and they reach those
locations by efficiently using our multimodal transportation
system.
Companies like Dow depend on a well-maintained, safe, and
efficient transportation system to move their goods to market.
However, our transportation infrastructure is falling behind
the rest of the developed world. I believe that we have to
invest in 21st century infrastructure that focuses on new and
emerging technologies, which is one reason why I'm a huge
proponent of connected and automated vehicles, which will
revolutionize the way that we move people and goods in the next
10 to 20 years.
But I'm honored to have had the opportunity to work with
Tom in Dow Chemical on a range of critical policy issues, and I
believe that Tom's understanding of our nation's transportation
needs will be of great benefit to this Subcommittee and to the
Committee as a whole.
Thank you for being with us.
The Chairman. Thank you, Senator Peters.
And it's my pleasure to introduce Dr. Christopher Lofgren,
who has been the Chief Executive Officer and President of
Schneider National, Incorporated, since August 2, 2002. Dr.
Lofgren served as the Chief Operating Officer of Schneider from
2000 to 2002, and served as its Chief Information Officer and
Chief Technology Officer.
He holds a Bachelor's degree--a Bachelor of Science and
Master of Science degrees in industrial and management
engineering from Montana State University, and a Ph.D. in
industrial and system engineering from the Georgia Institute of
Technology.
We are also joined today by Wick Moorman. Welcome. The
Amtrak Board of Directors appointed Charles W. ``Wick'' Moorman
IV, President and Chief Executive Officer effective September
1, 2016. Mr. Moorman is the tenth executive to lead America's
railroads since the company began operations in 1971. Prior to
coming to Amtrak, Mr. Moorman spent approximately 4 decades at
Norfolk Southern Corporation and its predecessor, Southern
Railway. He retired as Chairman and CEO of NS in 2015.
Mr. Moorman earned a Bachelor of Science in Civil
Engineering from the Georgia Institute of Technology in 1975
and a Master's of Business Administration at Harvard
University.
So welcome to all of you gentlemen. We will now begin with
your opening statements. And I would ask Mr. Rose if you would
please begin with yours. Thank you.
STATEMENT OF MATTHEW K. ROSE, EXECUTIVE CHAIRMAN, BNSF RAILWAY
COMPANY
Mr. Rose. Thank you, Senator Fischer, Senator Booker,
members of the Subcommittee, for inviting me here to appear
before you today on our perspective as a stakeholder in the
U.S. supply chain.
I would like to start by thanking the Committee for its
good work last Congress on a number of matters important to the
rail industry.
The U.S. supply chain is changing under our feet. The rail
industry is going through a transition driven by shifts in the
energy landscape, our customers' ever-changing supply chain,
our competitors, and, yes, public policy, such as how our
Nation's highway infrastructure is funded and whether railroads
will be constrained from innovating.
Rail volume in recent periods are lagging the already
lethargic U.S. manufacturing and economic growth. Over the past
5 years, GDP has grown about 2 percent in our United States,
while rail volumes have declined actually by two-tenths of 1
percent.
So the big game changer for the industry is the loss of the
coal business. The cumulative impact of environmental policies,
the price of natural gas, and the incentives provided to
renewables has resulted in about a 50 percent decline in coal's
historic volumes. Weak consumer demand and changing consumer
habits has also impacted our international intermodal markets.
There is softness in other segments as well.
We do believe that 2017 will be a better year, but we still
will not reach historic peak volumes. We're hopeful that
Congress will enact policies that help stimulate the economy,
like corporate tax reform, sensible regulatory reforms, coupled
with growth-oriented trade policies.
We will also be focused on the rail industries national
labor negotiations, which we are now in the final stages. A
work stoppage would negatively impact rail volumes and the
entire U.S. economy.
For railroads in 2017 and beyond to remain competitive will
require a level playing field across competing freight
transportation modes. For our part, we will continue to focus
on cost control in all areas of the operation and make
significant investments in our track, equipment, and new
technologies consistent with this evolving business
environment.
My written testimony discusses the many operating practices
in technologies and use being developed which promote necessary
efficiencies and also increase safety. By all measures, recent
years have been the safest in rail history. In 2016, reportable
train accidents on BNSF were at historic lows, down more than
16 percent when compared to 2015. This reflects the increased
leverage of data from our expansive trackside detector network
and other technologies as well as the effectiveness of our
annual maintenance and ongoing employee training and rules
compliance program.
BNSF's ability to earn adequate returns becoming
increasingly more efficient supports these continuous safety
improvements and our efforts to consistently meet our customer
service needs and their expectations.
BNSF's risk management goes beyond compliance with
government regulations. We're already transitioning to the next
level of safety through technology-driven data integration
provides a comprehensive view into how various conditions on
the railroad interact with each other, identifying issues well
before problems can occur. We think regulations should
incentivize these efforts in contrast to which some which we
believe currently discourage it.
Over the last 130 years, unique legal and regulatory
schemes have developed that govern nearly every facet of the
rail industry. I believe I can affirm that the railroads are
one of the most ``command and control'' regulated industries in
the United States. We believe that regulation can be improved
to take into account a railroad safety record and the
successful risk management activities. Neither the Congress nor
the FRA has taken a comprehensive look at the cumulative impact
and the effectiveness of the totality of railroad regulation.
My written testimony details recommended steps for
improving the regulatory process. They include improving
procedures for granting waivers, ensuring rules provide
benefits that outweigh their costs, and avoiding or removing
potential redundancies.
Congress should also direct the FRA to account for the rail
industry's exceptional safety record, which would support
movement toward a more balanced, collaborative, and transparent
approach to performance-based regulatory policies.
Turning to surface transportation policy, we support
additional investments in highways. We know it's necessary. The
General Fund's transfers to the Highway Trust Fund, now
totaling some $140 billion since 2008, is not a sustainable
model for the future, and unfairly tilts the playing field
against privately funded freight railroads. Congress must find
a new way to at least increase the commercial user's
contribution to the infrastructure that they use through
increased fuel taxes, a weight/distance fee, or similar proxy.
This isn't something that must happen eventually; it's time to
look at it now. The trucking industry, to its credit, also
recognizes this.
In closing, whether the issue is highway funding, truck
weights, regulatory policy, or taxes, I would ask policymakers
to carefully consider freight rail's public benefits, including
environmental, supply chain efficiencies, and reduced highway
congestion, and maintenance costs.
Whatever policy you enact, will it result in more or less
freight on the privately funded freight railroads? That's the
important question. And more is better for us and the country.
Thank you very much.
[The prepared statement of Mr. Rose follows:]
Prepared Statement of Matthew K. Rose, Executive Chairman,
BNSF Railway Company
Introduction
Thank you Senator Fischer, Senator Booker and Members of the
Subcommittee for the opportunity to submit testimony and appear before
the Subcommittee to provide our perspective as a stakeholder in the
U.S. supply chain. It is a privilege to discuss with you the challenges
and opportunities that may affect our outlook. As we look at 2017, we
see a time of change and uncertainty. As a railroad, understanding the
future is critical; we make long-term decisions and it is crucial to
match our capacity--manpower, track, equipment and facilities--with
demand. If we have too little capacity, then we can suffer service
issues, like those in 2013-2014, with which the Committee is familiar.
If we overestimate and have too many assets, our ability to continue to
make strong investments could be jeopardized, which also negatively
impacts our customers, and the economy.
The U.S. supply chain is changing under our feet. The rail industry
is going through a transition that is the largest we have seen in the
twenty years that I have been in leadership at BNSF. It is being driven
by shifts in the energy landscape, our customers' ever-changing supply
chains, our competitors and, yes, public policy, such as how our
Nation's highway infrastructure is funded, and how railroads will be
permitted to innovate. The railroad industry must become more efficient
in order to remain competitive, and since we pay for our own
infrastructure, we need a level playing field as we compete with other
modes for freight. We ask that policymakers consider the public
benefits that freight rail transportation provides--energy and
environmental benefits, supply chain efficiencies, reduced highway
congestion and maintenance costs--and how they are affected by public
policy.
At the outset, I would like to commend this Committee on enactment
of an extraordinary amount of good legislation related to railroads in
the last Congress, including an extension of the Positive Train Control
(PTC) implementation deadline, passing a range of railroad-related
provisions in the Fixing America's Surface Transportation (FAST) Act,
as well as reauthorizing the Surface Transportation Board (STB) for the
first time since 1995. In this Congress, we look forward to working
closely with the Committee on a proactive agenda that provides for
updating and improving regulation and ensures that infrastructure
investment and policy treats railroads equitably. BNSF and the freight
rail industry hope to be a resource to the Committee as it addresses
these important issues.
Economic Update and Outlook
Over the past five years, GDP has produced more than two percent
growth, while rail volumes have declined by two-tenths of a percent due
to a change in consumer buying habits, the service sector attracting a
larger portion of GDP, and the decline in the coal sector. BNSF moved
more than 9.7 million units in 2016, half a million fewer units than in
2015, representing five percent decline in our total business. We
experienced declines in three important commodities that are at the
core of the railroad's business-energy, namely coal and crude oil, and
international intermodal containers.
In 2016, BNSF handled about 480,000 fewer units of coal than in
2015, and finished the year with our lowest coal volumes since the
Powder River Basin (PRB) mine expansion in 2002-2003. Our utility
customers are in the midst of a long-term transition of their
generation assets, moving away from coal and toward natural gas and
renewables due to the low price and abundant supply of natural gas,
regulatory pressures on coal, and tax policies that incentivize
renewables.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The U.S. freight rail industry as a whole has experienced a similar
trend related to coal. In 2008, the peak year for U.S. rail coal
traffic, Class I railroads originated 7.5 million carloads of coal. In
2016, coal carloads totaled just 4.1 million carloads, or 3.4 million
fewer carloads than in 2008. The revenues and profits lost by railroads
because of coal's decline will be extremely difficult to replace. Many
of railroads' coal assets have or will become ``stranded,'' meaning
their revenue-generating potential is lost or greatly reduced even
though the costs of most of these assets will remain on railroads'
balance sheets for years to come. The loss of railroads' coal traffic
combined with the market volatility of other commodities hauled by
railroads means that the market outlook for railroads has become
inherently less stable. Typically, coal provided a base revenue load
for many rail lines that helped keep costs down for other lines of
traffic. For many rail lines, that base is gone.
BNSF's crude oil volumes declined with domestic U.S. oil production
due to the long-term drop in the world price of oil and increased
pipeline competition. In 2016, we handled almost 130,000 fewer units of
crude than in 2015, which is a decline of about 40 percent.
International intermodal volumes from west coast ports on BNSF were
down by more than 60,000 units in 2016 as compared to 2015, and will
continue to face headwinds, as volumes have been flat or down the past
several years. Domestic intermodal continues to grow, but at a slower
pace than we would like. Trucks are our customers and our competition.
They have benefited from consistently low fuel prices and truck over-
capacity which contributes to flat near-term forecasts for railroad
domestic intermodal.
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BNSF's primary area of growth was in the agricultural sector. The
U.S. had record corn and soybean volumes in 2016 due to several
factors, including strong harvests, but also due to Asian buyers
purchasing more U.S. corn when Brazilian supplies were reduced by
summer droughts. This, in tandem with a stronger Brazilian currency,
helped enhance U.S. corn and soybean export sales and also contributed
to all-time record volumes and shuttle sales on BNSF in the fall.
However, agriculture represents just ten percent of our annual volumes.
In general, rail volumes have been linked to the performance of the
broader economy; when the economy is suffering, most rail traffic
categories suffer too. However, it is less true now that when the
economy does well, most segments of rail traffic do better. Rail
volumes for commodities like grain and energy products often vary
significantly year-to-year for reasons that have little to do with the
state of the economy (e.g., the price of natural gas can have a big
effect on coal volumes; droughts, exchange rates and worldwide weather
patterns can affect grain volumes).
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Consumers are changing their buying patterns. In recent years,
changes in consumer spending have also reduced rail volumes as a larger
percent of GDP moves to technology, like smart phones, and to services
and entertainment. Consumer staples, such as clothing and household
goods, appear to be moving down on the list of consumer spending,
resulting in fewer containers of imported goods destined to the big box
retailers. There will likely always be growth in freight volumes
associated with consumer goods spending related to population growth,
but the future may bring less of it than in previous cycles, and
railroads must compete hard for every load. This means that the rail
industry must continue to become ever more efficient.
At BNSF, and throughout the industry, our focus has been on
reducing variable costs wherever possible, including shrinking the size
of our active equipment and locomotive fleets to match volumes. Given
the drop in volumes and the resulting financial impact, we also need to
address fixed costs and ensure our workforce is sized to our needs.
Unfortunately, non-seasonal furloughs of scheduled employees peaked at
about 5,000 early in 2016; these numbers dropped to about 2,700 by the
end of the year. In 2016, we also reduced salaried headcount by about
nine percent and significantly restructured our operating teams. As we
continue into 2017, our attention to cost control and efficiency across
our operations will continue to be intense. We need to be able to
continue to provide excellent service and invest where demand does
exist. BNSF's infrastructure maintenance and investment remains strong
relative to volumes and market demand and I believe our network has
never been in better overall condition.
BNSF's business model is predicated on a ``virtuous cycle,'' where
we actively grow our markets and volumes, which allows us to continue
to invest in and expand our system, improve our service, and continue
to grow. We believe 2017 will be a better year but we will not grow
past peak volume levels. Volumes have the potential to grow if policy
changes stimulate the economy through corporate tax reform and
infrastructure investment, as long as other policies like trade--which
impact roughly one-third of our economy's GDP--are still growth-
oriented. Additionally, the rail industry is in final stages of labor
negotiations. If a related work stoppage occurred, rail volumes would
be impacted.
In sum, for railroads in 2017 and beyond, remaining competitive
will require stringent attention to cost control in all areas of
operation and continued significant levels of rail investment in
infrastructure, equipment, and new technologies, consistent with the
evolving business environment. Many of the operating practices and
technologies being developed and used promote necessary efficiencies
and increase safety.
Safety Overview
The laws of physics that make railroads the most efficient mode of
surface transportation are also unforgiving; however railroading has
been made incredibly safe. The industry's most recent safety statistics
demonstrate the trend of continuous safety improvement. Preliminary
Federal Railroad Administration (FRA) data indicates that the train
accident rate in 2016 was down 80 percent from 1980 and down 45 percent
from 2000; the employee injury rate in 2016 was down 84 percent from
1980 and down 49 percent from 2000; and the grade crossing collision
rate in 2016 was down 80 percent from 1980 and down 40 percent from
2000. By all of these measures, recent years have been the safest in
rail history.
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At BNSF our safety vision is a workplace free of injuries and
incidents. We believe that we can achieve this goal, and that is the
reason safety continuously improves. But we have not yet achieved our
vision; incidents and accidents do occur. However, we believe that they
are outliers; operating safely every day is our normative behavior. We
are committed to the work of continuous safety improvement, because
derailments and other significant safety failures, which pose risks to
employees and communities, are not an acceptable cost of doing
business, nor are they morally acceptable.
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In the freight rail industry, safe operations supported by the
industry's continuous safety improvements are not achieved through just
compliance with FRA regulations. It requires a comprehensive risk based
safety program, many elements of which go well beyond Federal mandates.
And perhaps most importantly, it requires earning adequate revenues for
the significant reinvestment necessary to safely operate the freight
rail network and serve customers.
Railroad Technology and Operational Innovation
Technology has been an essential element of the improvements in
safety seen by the rail industry over the last decade. In 2015, BNSF
testified before the Subcommittee about the technologies being applied
to railroad operations that allow us to detect safety standard
deviations in real time so that we can respond before something
happens. BNSF has increased the pace with which we install and utilize
technologies, helping to transform the railroad's efficiency, while
making it smarter and safer.
In 2016, reportable train incidents on BNSF were at historic lows,
down 16.6 percent year-over-year, which reflects the increased leverage
of data from our detector network to resolve issues before they become
problems, as well as the effectiveness of our annual maintenance and
on-going employee training and rules compliance programs. Derailments
caused by human error, a significant subset of these incidents, also
declined on BNSF in 2016. Below is a review of the technologies being
implemented and developed on BNSF.
Track Inspection:
Track geometry inspections employ high-speed laser and
inertia test systems to collect track condition data on
main line routes, a minimum of three times per year. Track
geometry cars measure the track's surface under load for
gauge, cross-level, alignment and vertical acceleration;
data indicating any detected flaws is communicated to BNSF
personnel for remediation.
BNSF utilizes a fleet of manned and unmanned track
geometry cars, track measurement trucks and strength
testing and reporting (STAR) cars to test several geometric
parameters of the track.
Rail defect detection systems utilize ultrasonic
technology to detect internal flaws in rail. Minimum
intervals between inspections are determined by tonnage
moved; heaviest traffic routes are inspected every 18 days.
Mechanical Wayside Detectors:
Wheel temperature detectors, using infrared
technology, are used to identify braking issues. BNSF
currently has approximately 260 detectors located at over
190 sites along our network.
Acoustic and Hot Bearing Detectors are used to
identify wheel bearing fatigue. On BNSF, there are over
1,200 hot bearing detectors and 16 permanent and 3 portable
acoustic bearing detectors.
Machine Vision systems inspect freight cars for
defects in passing trains at track speed with over ten
different technologies used through 64 detectors on BNSF's
network.
BNSF is using Unmanned Aircraft Systems (UAS)--or drones--
for supplemental visual track and bridge inspections in a
variety of conditions. As part of the Federal Aviation
Administration's (FAA) Pathfinder Program, we are a partner to
the agency on developing rules, procedures and technology for
extended range (beyond visual line of sight) track integrity
flights. Since 2015, BNSF has expanded the use of both short
range and long range aircraft as well as computer vision and
data analytics to provide our engineering staff with bridge and
structure change detections, track integrity analysis and yard
measurement capability. In 2017, BNSF's UAS team (in
partnership with the FAA), will continue to expand our areas of
long range flight research and enhancement of detection
capabilities to include non-visual conditions.
Train Operations and Control
As you know, the industry is engaged in installing
PTC. BNSF will have the physical installation completed by
2017 and it will be operational by the 2018 deadline. We
are currently operating PTC on 47 of the 90 mandated
subdivisions and have already run PTC on over 200,000 trips
and have trained over 22,000 employees.
BNSF is the largest user of energy management systems
(Trip Optimizer or TO) with over 3,300 locomotives
equipped. TO serves as an automated train operations
control which was designed to reduce fuel use, and our
carbon footprint, by requiring the most fuel-efficient
operation of the locomotive. It also considerably reduces
the potential for operating rules violations, particularly
in a non-PTC environment.
Movement Planner (MP) is a tool in development that
plans train operations and optimizes use of the network's
capacity. Current computer aided dispatching is being
augmented with a system to auto-route a train's most
efficient movement, coordinate movements along a corridor,
and provide for better human dispatch management. PTC will
overlay MP, so that it can utilize real time location
information. Ultimately, the integration of PTC, MP, and
other planning tools will increase efficiency and
visibility into train operations by operations and
maintenance personnel.
These innovations demonstrate our commitment to leveraging
technology in the continuous pursuit of more safe and efficient
operations for our employees and the communities we serve.
Railroad Regulation Review and Improvement
It is well known to this Committee that, as one of the country's
oldest industries, nearly every facet of the rail industry is governed
by unique legal and regulatory schemes that have been developed over
the last 130 years. Freight railroads' business interactions are
governed by the Interstate Commerce Act. Our employees receive Railroad
Retirement benefits instead of Social Security. Labor negotiations with
unions representing our employees are governed by the Railway Labor
Act. Railroads do not have insurance-based Workman's Compensation;
instead, we operate under a nearly 110 year old statute called the
Federal Employee Liability Act (FELA), established long before
Workman's Compensation. FELA is a tort-based system that requires
employees to litigate injury claims against railroads under a
comparative fault system. Railroad operations are governed by the
Federal Rail Safety Act and more than a century of design-based
regulation where safety compliance can only be achieved by executing
mandated step-by-step processes or activities against which regulators
inspect and enforce.
There are very few exceptions to this ``command and control''
regulatory paradigm. Therefore, railroads are one of the most regulated
industrial activities in the U.S. Between 2008 and 2013, Congress
mandated 49 percent of all prescriptive, economically significant
regulations that were promulgated by regulatory agencies. These
mandates have been a product of Congressional action--and in recent
years are a common ``reaction'' to an incident.
I attach to my testimony a 1982 Chicago Tribune article that
demonstrates the process of regulatory change. It is about how the
Class 1A 500 mile brake inspection standard, which was based on old
steam engine stops was finally updated to a 1,000 mile brake
inspection. It highlights for the Committee that the process for
updating standards may have marginally changed, but not fundamentally.
In 2017, notwithstanding the tremendous advances in locomotive, brake
and detection technology, railroads have been unsuccessful in updating
the brake inspection standard originally based on steam engine
technology, which was last changed more than thirty years ago through
negotiation with labor unions.
There are a multitude of internal and external incentives for
railroads to operate safely, in addition to regulation, which is why
railroads have well-developed risk management plans. As the railroad
industry develops new technologies, they are overlaid upon railroads'
existing regulatory compliance activities. We find that these
activities in some cases no longer fit an operating environment
increasingly supported by technology. At BNSF, our maintenance
standards meet and even exceed FRA regulations. For example, BNSF
inspects our densest lines both visually and technically at a rate at
least twice the FRA requirement, in many ways rendering the
prescriptive inspection activity requirements moot.
Advances in locomotives, signal systems, grade-crossing warning
devices, and track inspection made possible by technology in some ways
are marginalized for purposes of regulatory compliance because they
exist outside of the current regulatory construct, which recognizes
only the safety value of prescribed practices. Existing regulations
which prescribe physical inspection at specific intervals for equipment
and facilities now make less sense because of the advances in
equipment, which is itself continuously self-diagnostic and self-
reporting in the event of defects. Technology-based inspection can also
reduce the safety exposures related to frequently putting people in,
under and between equipment or out on the line of road to perform
physical inspections for the same conditions. Technology-driven
operational advancements, like electronic delivery of mandatory train
orders and directives in lieu of required paper versions which will
enable other technologies, should be incentivized.
Granting waivers is a measured approach to bridging past with
present and help make regulatory evolution possible. The FRA's waiver
authority is appropriately very broad. The regulations provide that,
``the Secretary may waive compliance with any part of a regulation
prescribed or order issued under this chapter if the waiver is in the
public interest and consistent with railroad safety.'' Waivers
represent industry and the regulator's best opportunity to modify FRA
regulatory directives in light of changed circumstances, with
appropriate regulatory oversight. However, implementation of the
existing waiver process has been difficult and the timelines for even
the simplest of waivers are measured in months or years, and quite
often come with conditions that sub-optimize the value of the waiver or
innovation being sought.
Waivers are important to allow the industry to demonstrate new
technologies and practices that might--or might not--work to enhance
safety. As the regulatory mandate to implement electronically
controlled pneumatic (ECP) brake mandate demonstrates, some
technologies are determined by the industry after demonstration to
simply not be ready for prime time or could be disruptive if integrated
into operations. Mandating a demonstrated technology after it has been
shown to not be suitable for implementation will chill this kind of
important experimentation. Nonetheless, waivers help create common
understanding between the regulator and the regulated about railroad
operations, and waiver-generated data can lay the predicate for
updating regulations.
New rules should only be adopted when the rule's benefits clearly
outweigh its costs. The cost-benefit analysis process for imposing
costly new mandates will rarely work when the industry is already so
safe. Regulators recently have resorted to tortured cost-benefit
calculations to justify proposed mandates. One of the most glaring
examples, which required legislation by this Committee, was the recent
ECP brake mandate where the FRA averaged the cost-benefit analysis
across the tank car safety rule to justify mandating ECP brakes.
Neither Congress nor the FRA has taken a comprehensive look at the
cumulative impact and effectiveness of the body of railroad
regulations, or how they can be changed to reflect the current state of
operations practices and ensure that they incentivize technology, or at
least do not discourage it. We believe that regulation can be improved
to take into account a railroad's safety record and their successful
risk management activities.
Regulatory requirements for prescriptive activities is not the best
way to improve safety if measuring safety outcomes can provide better
incentives and flexibility. We believe that PTC is one of the best
examples of how a technology mandate could have been more performance-
based, which we believe could have achieved better safety outcomes
sooner. As you may recall, the PTC regulations as originally adopted by
the FRA had a cost of approximately $20 for every dollar of benefit.
Had Congress and the FRA required performance standards for the types
of incidents prevented by PTC, then railroads could have identified and
implemented the best way to achieve those goals. This would have
included PTC; in 2008, BNSF was in the process of implementing a
version of PTC called Electronic Train Management System (ETMS). But
given more flexibility to develop it, it could have been implemented in
a more efficient and cost effective manner, possibly in tandem with
some of the recent operationally beneficial technologies outlined,
above.
Going forward, Congress needs to create a process that directs the
FRA to, in more cases, embrace collaboration and transparency toward
identifying the optimal performance targets and more formally aligning
regulator and the regulated entities around incentives for continuous
safety improvement. We believe that currently deployed and in-
development safety and detector technologies combined with advanced
data analytics has allowed us to achieve a level of safety that makes
regulatory development and oversight of performance standards
supportable.
There is a pending risk reduction regulation (FRA-2009-0038),
required by Congress in the Rail Safety Improvement Act of 2008 which
may have been, in fact, an effort by Congress to move the FRA towards a
more performance-based regulatory paradigm. However, when the
Congressional directive became a proposed rule by the FRA, the rule
moved in the direction of imposing extensive reporting requirements,
mandating risk reduction activities and applying regulation to
technology innovations to prescribe design and maintenance
requirements--all layered on top of existing mandates, and not in lieu
of them. In the FRA's approach to implementation of this rule,
railroads see detailed requirements for reporting their risk management
plans, accompanied by related ``paperwork violation'' enforcement
opportunities without the tradeoff of performance based regulation.
Furthermore, any requirement for detailed safety evaluation and risk
management disclosures must be closely accompanied by information
protections which railroads believe must be improved in this rule. If
required railroad operational review and mitigation data is not
protected, then the ``lottery''-like recoveries we increasingly see in
courts will impede innovation and even possibly challenge compliance.
Railroads, and the public for that matter, need forward-thinking
Federal railroad safety regulators and appropriate regulations. In a
technologically and operationally complex and increasingly data-driven
railroad industry, the existing ``inspect and enforce'' paradigm may
not allow regulators to best understand the evolving technology-based
railroad operating environment. Regulatory ``reform'' does not happen
overnight, and it is especially hard when there are more than 100 years
of how ``it has always been done.'' But there is payoff, as well as a
role, for all stakeholders involved in achieving near-, mid- and long-
term goals for the Administration, Congress and the industry. A
framework for that is outlined below.
Near-Term Goal--Improve the Waiver Process
The Secretary of Transportation and FRA Administrator should
review existing waivers, streamlining them as appropriate, and
making some permanent in order to provide certainty to the
industry and stakeholders. Typically waivers are granted for no
longer than five years.
Expeditiously consider and act on pending waivers,
especially those that promote innovation, demonstrate
technology or proof of concept, or allow operating practices
that are more efficient and consistent with railroad safety,
and promptly grant them when appropriate.
The FRA should reform the process for granting new waivers
with a focus on efficiency, prioritizing technology and
collaboration.
Shorten the waiver review period to six months; the
current process requires that waiver requests be presented
to the FRA Safety Board which in turn has up to nine months
to act on the request;
Conduct an ongoing evaluation of waivers to determine
whether and how they become permanent rule changes
consistent with their grant;
Include a railroad/industry representative on the FRA
Safety Board, even as a non-voting member;
Prioritize waivers that provide technology
demonstration;
Ensure that waivers are not conditioned with
unreasonable or unrelated operating restrictions; and
Ensure that waiver reporting requirements are
reasonable and related to helping achieve performance based
regulatory treatment.
With process improvements, the FRA and railroads would be able to
more quickly address and implement waiver applications, especially
those demonstrating innovation and technology.
Mid-Term Objective--Regulatory Rationalization and Administrative
Procedures Act Reform
Although prescriptive, activity-based regulation is likely to
continue in certain areas, the rail industry's extraordinary safety
record should allow for movement toward a balanced approach that also
includes performance based regulation, with the goal of achieving
greater safety and operational benefits. As Congress reviews how
railroads are regulated and considers needed improvements, the
following guidelines should be kept in mind:
Regulations should be based on a demonstrated need, as
reflected in current and complete data and sound science. They
should have a well-defined and measurable objective, and be
regularly evaluated as to their effectiveness in achieving it.
All components of an agency's decision-making should be
transparent to the public and subject to meaningful analysis
and comment before the rule is finalized.
Non-prescriptive regulatory tools, like performance-based
regulations, should be deployed wherever possible to align the
interests of the regulator and the industry, and to foster and
facilitate innovation to achieve well-defined policy goals.
Regulations should provide benefits outweighing their costs,
and the potential redundancies and general interplay with other
existing regulations should be considered in every rulemaking.
Use of ``guidance'' should be limited to appropriate
situations and time periods.
While these comments are focused on the FRA, many of these
principles can and should be adopted by all agencies with railroad
oversight, like the STB.
Long-Term Objective--FRA Implementation of Performance Standards for
Compliant Railroads
After creating a statutory framework that allows the FRA to develop
performance based regulations, Congress should oversee FRA's progress
in achieving it. The FRA should be empowered to set up a standard for
identifying precursors to accidents. Specifically, the FRA could
develop a targeted standard that is as safe, or safer, than current
operations, and apply a different level of mandated requirements if the
railroad met the standard. In that event, the FRA would maintain a
broad review of a railroad's safety performance plan, including the
railroad's track and equipment safety practices and technology, along
with its operating practices such as training and employee engagement.
Done correctly, regulation would incentivize railroads to achieve
safety performance standards. Acknowledging that creating such a
framework will be complex, we believe that it is possible and will
benefit all stakeholders.
Infrastructure Investment and Policy
Modal Equity
There has been a lot of discussion about additional infrastructure
investment on both sides of the aisle, but it is important to point out
that during the last Congress, this Committee provided opportunities to
the transportation community by helping to enact the FAST Act.
Railroads supported the FAST Act. Except, that it was not entirely paid
for by users, which I will discuss further.
While BNSF and the Nation's Class I freight railroads are almost
entirely funded with private capital, we have a strong vested interest
in ensuring adequate investments are made in public infrastructure like
ports and highways, which, when combined with rail, make up the
Nation's integrated freight supply chain. The U.S. has achieved today's
efficient supply chain with each mode of transportation doing what it
does best--railroads move freight long haul, often in partnership with
trucking company customers; trucks handle the bulk of shorter haul and
local delivery; and ocean carriers, dock workers and freight owners all
come together to help create an efficient intermodal freight
transportation network.
In order to sustain a strong and efficient supply chain to handle
future freight growth, we must all work to ensure the necessary
capacity is in place across all modes. The investment looks a bit
different for each stakeholder. For rail and BNSF, this means expanding
our line haul and terminal capacity to keep trains moving and avoid
congestion or delay. As rail volumes grew over the past 25 years, the
industry invested a massive amount into infrastructure maintenance and
expansion to create capacity. BNSF's recent investments are evidence of
our commitment to increase capacity. In fact, since 2000, we have
invested more than $55 billion in our network to ensure we are
positioned to grow with our customers.
With respect to federally funded capacity investments in public
road and bridge infrastructure, the U.S. has historically relied upon a
``user pays'' system, which until recently worked extremely well.
However, the user pays model has experienced significant erosion as
Highway Trust Fund (HTF) revenues, generated through fuel taxes and
other static user fees, have failed to keep up with investment needs
and have been supplemented with general taxpayer dollars and other non-
traditional funding sources.
General fund transfers to the HTF, now totaling some $143 billion
since 2008, amounts to more than three years' worth of non-user, or
``free'' taxpayer money for those who benefit from federal-aid highway
programs, assuming FAST Act levels of budget authority. Further, the
Congressional Budget Office (CBO) projects that under FAST Act funding
levels the gap between dedicated surface transportation user-based
revenues and spending will average $21.2 billion annually from Fiscal
Year 2021 to 2026.
The heaviest of trucks already underpay their share of the wear and
tear on Federal highways. According to the U.S. Department of
Transportation's Highway Cost Allocation Study released in 2000,
80,000-pound, five-axle combination trucks cover just 80 percent of the
damage they cause to our highways; six-axle, 97,000-pound trucks cover
just 50 percent of their cost responsibility; and trucks weighing more
than 100,000 pounds cover only 40 percent. Underpayments on state taxes
are also significant and are in addition to the Federal underpayment.
Recent studies suggest that, adjusted for inflation, the DOT findings
mean that 80,000-pound trucks currently underpay their Federal cost
responsibility by around 27 cents per gallon of fuel. For some truck
size and weight configurations, the Federal underpayment could be as
high as $1.17 per gallon. Many states already have exemptions to allow
heavier trucks on state roads, and in recent years, a number of Federal
truck size and weight exemptions have passed, without any related
increase in fees. Last Congress, the trucking industry supported an
increase in the fuel tax.
Some of BNSF's biggest customers and valued supply chain partners
are trucking companies, and they are also in many cases intense
competitors. Railroads have a significant cost advantage over all-truck
long-haul freight moves, but this is eroded by the ongoing infusions of
General Funds into the HTF without appropriate increases in the fees,
taxes and other charges paid by truck users of the infrastructure. As I
like to say, if you subsidize something, you get more of it. Moving
away from the trucking industry paying its fair share in usage taxes
will result in more trucks on the highway system and shifts modal
equity from more fuel efficient and environmentally-friendly freight
rail. Even public policy support for development and testing of truck
automation could tilt the playing field away from intermodal freight
rail, especially if railroads' own automation, both within facilities
and along the line of road, is not also a public policy priority.
Congress should strengthen the ``user pays'' requirement. It could
be done by increasing the fuel tax and/or moving toward a weight
distance/vehicle-miles-traveled tax system for trucks. The FAST Act
established the Surface Transportation System Funding Alternatives
grant program to fund projects testing the design, implementation and
acceptance of user-based alternative revenue mechanisms. The program
has awarded over $14 million in grants to the following state
transportation departments: California, Delaware, Hawaii, Minnesota,
Missouri, Oregon and Washington. Congress should be aware of these and
other opportunities for demonstrating ways to determine and assess a
fair fee for commercial use of highway infrastructure.
Permitting Reform
Turning back to the FAST Act, there were many things to like,
especially in terms of freight transportation policy. The law calls for
development of a national freight strategy and prioritizes freight
projects in a way no previous surface transportation authorization bill
has. Below are highlights of the law from the railroad perspective, as
well as additional recommendations where appropriate.
The FAST Act continued and expanded upon project delivery and
permitting reforms enacted as part of the reauthorization bill's
predecessor legislation, MAP-21. For example, FAST directs the DOT to
review all previously enacted highway permit reforms and project
streamlining procedures and apply them to railroad projects. The bill
also expands on the types of rail projects that can be categorically
excluded from extensive review requirements, and further mandates that
the DOT, in consultation with the Advisory Council on Historic
Preservation, create a process to mirror that of the Federal highway
system, which would exclude railroad rights-of-way from unnecessary
historic reviews. Careful implementation of these reforms by the DOT
and the Advisory Council on Historic Preservation will be important to
ensuring that the intended benefits are fully realized.
While project delivery reforms at the Federal level have been an
important focus, improved permitting processes remain a critical need
at all levels of government. Almost weekly, negative decisions from
courts or permitting authorities at the local and state level
demonstrate to BNSF and its customers that our growth, especially at
origins and destinations, is limited by the inability to secure
required permits. Over the past few years, facility expansion on the
West Coast for both BNSF and our customers has been severely challenged
by the regulatory process and environmental advocacy groups opposed to
facility construction. These decisions effectively cut the rest of the
U.S. off from valuable access to the Pacific Ocean.
In some cases, local permitting processes are used as a means to
target and prevent interstate transportation, particularly of fossil
fuels. Under the Interstate Commerce Commission Termination Act
(ICCTA), many state or local regulations are preempted with respect to
rail transportation--including zoning and land use regulation,
construction and environmental permitting of rail facilities and
regulation of railroad operations. When it comes to interstate
commerce, Federal agencies, including the STB, must not be reluctant to
intervene and provide clear direction that using such regulations to
block these projects is preempted. Strong direction is necessary to
ensure that important rail projects are not shelved or abandoned
altogether, and that the flow of interstate commerce is not impeded.
Additional permitting reform recommendations include:
Statutorily prioritize project permitting for international
commerce.
Review the scope of state implementation of Federal statutes
to ensure consistency with Federal regulators for projects in
interstate commerce.
Expand Federal Communications Commission regulatory
streamlining to expedite the deployment of technologies that
improve safety and efficiency in the railroad industry
FASTLANE and Other Grant Programs
The FAST Act provides dedicated freight funding both by formula to
the states as well as through a competitive FASTLANE grant program for
addressing critical freight needs including, among other things,
intermodal connectors, port facilities, highway-rail grade separations
and certain rail projects. Below are several examples of FASTLANE grant
projects which demonstrate the intermodal significance of the program.
The CREATE Project in Chicago makes improvements including
grade separations along four rail corridors that handle
passenger and freight traffic reducing train and vehicle delays
throughout the Chicago area, the busiest rail hub in the
country. A pending $160 million FASTLANE grant for the 75th
Street Corridor Improvement Project will eliminate the most
congested chokepoint in the Chicago Terminal, Belt Junction,
where 30 Metra trains and 90 freight trains cross each other's
path each day. In total, the CREATE partnership has committed
$1.4 billion in funding for the Chicago Region's freight
network.
The Terminal Railroad Association of St. Louis's (TRRA)
Merchants Bridge across the Mississippi River, which was
originally constructed in 1890, requires replacement of the
east approach and main spans, a $222 million project. The
Missouri DOT has applied for a $75 million FASTLANE grant to
help pay for an upgrade of the bridge's seismic resilience, as
part of the project which will be otherwise funded by the TRRA.
The bridge is one of the busiest rail bridges across the
Mississippi River, facilitating Amtrak service as well as the
efficient movement of freight.
The Tennessee DOT has applied for an approximately $100
million FASTLANE grant as part of a more than $300 million
project to improve critical roadway infrastructure in a key
freight corridor through Memphis. Roadway capacity improvements
in the corridor will benefit a large number of freight
transportation companies and their customers, including helping
facilitate efficient truck flows in and out of BNSF's Memphis
intermodal facility, in which BNSF invested $200 million for
expansion in 2010. The project will have significant traffic
congestion and delay savings, environmental benefits from
improved vehicle flows and reduced idling, and improved roadway
safety.
The FAST Act also importantly provided a funding increase for the
Railway-Highway Crossings Program (``Section 130 program'') from $230
million in 2017 to $245 million in 2020--funding that should be fully
utilized by states but often is not. The Section 130 program provides
apportioned funds to states for the elimination of hazards at highway
grade crossings, with 50 percent of a state's apportionment dedicated
to installation of protective devices at crossings and the remainder
for any hazard elimination project. Section 130 is a critically
important program, and while it does allow for some funding to go
towards highway-rail grade separation projects, it does not come close
to meeting the pressing needs that states and local governments have to
increase funding toward projects that separate their roadways from
railroad operations. The FAST Act prioritized grade separations in ways
previous highway bills did not by making them eligible grade separation
projects across multiple funding programs, but if the legislative
opportunity to assist state and local governments with additional
funding for this important roadway investment presents itself,
railroads would continue to participate and support those projects.
As Congress considers additional infrastructure-related
legislation, we believe the project grant eligibilities developed by
Congress in the FAST Act provide an excellent framework. However, we
also recommend that Congress consider providing additional funding for
commuters and Amtrak to implement PTC, and to provide funding for track
and other improvements on the Amtrak national route system.
Conclusion
I always like to remind Members of Congress about their important
role in designing and paying for a transportation network to facilitate
American competitiveness. Many of the more than 150 million Americans
who go to work every day rely on their employers to be able to compete
in the global competitive marketplace. Congress provides Federal
funding for the highway network which is key to this ability for the
American worker to compete. Our supply chain is also enormously blessed
with the most efficient freight rail network in the world. This freight
rail network participates in almost 40 percent of all of the intercity
gross ton miles that move in our country. It is privately funded and
Congress does not have to debate the funding levels for these networks
because their maintenance, expansion and operations are fully paid for
by the railroads. These well-maintained and efficient networks benefit
our customers but these investments are also an important part of why
railroads are setting new safety records. They also provide key public
benefits by mitigating the impacts of highway congestion and wear and
tear.
By increasing the cost of compliance, preventing efficiency or
adequate returns through regulation, or creating a playing field that
is not level for railroads vis-a-vis their competitors, Congress and
the Administration ``control the dial'' on how much of the railroad
industry's benefits we can afford to deliver. However, we know that
Congress and especially this Committee understand the role of railroads
in the economy, and in each of your states, and we appreciate that we
are heard and able to remain engaged in dialogue with you about these
issues and others related to strengthening freight movement in our
Nation.
Attachment
http://archives.chicagotribune.com/1982/01/10/page/67/article/ancient-
rail-rules-getting-an-update
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Rose.
And next, Dr, Lofgren. Welcome.
STATEMENT OF DR. CHRISTOPHER B. LOFGREN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, SCHNEIDER NATIONAL, INC.
Dr. Lofgren. Chairman Fischer, Ranking Member Mr. Booker,
distinguished members of the Subcommittee, thank you for the
opportunity to be here today.
Schneider National was founded in 1935 by Al Schneider when
he sold the family car and bought the truck. Since then, we've
grown to become one of the largest truckload and intermodal
transportation companies in North America. We employ more than
19,000 associates across the country, with strong presence in
many states represented on this subcommittee.
Trucking companies like Schneider are the backbone of
America's economy. The trucking industry transports more than
80 percent of the Nation's freight tonnage and employs
approximately 7 million workers in trucking-related jobs. In
addition to moving goods into and out of the U.S. ports, we
also provide essential lifeline to communities across the
country, delivering supplies and essential commodities.
In order to meet the current and projected future demand
for freight movement, Congress and the new administration
should promote policies and regulations that ensure safety,
support innovation, and increase productivity.
At Schneider, safety is our number one core value. This
commitment stems from our founding common sense observation
that nothing we do is worth hurting others or ourselves. We are
constantly striving to put safety first and always, which is
why we've established industry-leading policies, practices, and
technologies. This includes significant investments in safety-
enhancing equipment and technology, including roll stability,
collision avoidance, forward-facing cameras, training
simulators, and real-time truck sensor monitoring.
We were the first to install game-changing in-cab
communication devices back in 1985, and have continued to adopt
cutting edge technology since then. A more recent technological
investment, making our trucks, our drivers, and highways safer
every day is the OnGuard collision mitigation system. Installed
in every new tractor, this forward-looking, radar-based system
monitors the distance, speed, and deceleration of the vehicle
ahead.
Since our deployment of the collision mitigation technology
in 2012, Schneider has experienced a 69 percent decrease in
rear-end accidents and a 95 percent reduction in rear-end
accident claim costs. While Schneider has excelled as an
industry leader in safety, innovation, and technology, we still
draw concern from a range of critical issues impacting our
business and the future of our industry.
As you seek input on these matters in order to shape policy
for the 115th Congress, I would like to highlight the
following. We operate in a highly regulated industry. While
some regulations have merit and will successfully increase
safety within our industry, these things, such as hours of
service, requirements for electronic logging devices, hair
follicle testing, and speed limiters, we've also experienced a
general trend of restrictive and complex regulations, which
impact the overall supply of trucks and drivers in the
industry.
We're also subject to regulation at the State level, where
new laws and litigation threaten our efficiency and the ability
to conduct business in a uniform manner. Although Congress
provided for the express preemption of State laws related to
the prices, routes, and services of motor carriers through
legislation in 1994, that preemption has recently been
challenged. State laws regarding drivers' meals and rest
breaks, payment agreements, and more have evolved into a new
patchwork of rules and regulations at the State level. The lack
of consistency on this and other issues governing interstate
trucking have created unintended consequences that actually
decrease safety and hurt the environment.
In the area of cybersecurity, while the application of
innovative technologies around information, automation, and
communication optimizes our operations and increases safety, it
also makes our businesses more dependent upon uninterrupted and
secure networks. Infrastructure investment is crucial, as
you've highlighted. Underinvestment in our Nation's surface
transportation infrastructure produces inefficiencies in ways
that we move our goods, it wastes fuel, and increases operating
costs.
Chairman Fischer, Ranking Member Booker, and other
distinguished members of the Committee, thank you for the
opportunity to testify and provide Schneider's perspective on
increasing safety and efficiency for the trucking industry. As
the Committee continues to work, we stand ready to support your
efforts and offer insights about our industry and policies that
pertain to your jurisdiction.
Thank you.
[The prepared statement of Dr. Lofgren follows:]
Prepared Statement of Dr. Christopher B. Lofgren, President and Chief
Executive Officer, Schneider National, Inc.
Introduction
Chairman Fischer, Ranking Member Booker and distinguished members
of the subcommittee, thank you for the opportunity to testify about
``Moving America with our Multi-modal Transportation System.'' My name
is Chris Lofgren and I am President and Chief Executive Officer of
Schneider National, Inc., headquartered in Green Bay, Wisconsin. Today,
I would like to offer you my insights about the trucking and
transportation logistics industry and share with you the best practices
that Schneider National has deployed that increase the efficiency,
effectiveness and safety of our Nation's multimodal transportation
system. I hope that it will inform the Committee's agenda in the 115th
Congress.
Schneider National was founded by Al Schneider in 1935 when he sold
his family car to buy the company's first truck. Since that time,
Schneider National has grown to become one of the largest truckload and
intermodal transportation companies in North America. Our business
consists of approximately 10,800 company and 2,800 owner-operator
trucks, 38,400 trailers and 18,000 intermodal containers. Schneider
National employs 19,300 associates across all 48 of the contiguous
United States, with a strong presence in many of the states represented
on this subcommittee such as New Jersey, Wisconsin, Washington and
Nebraska.
We serve a diverse customer base, which includes multiple
industries represented by approximately 10,000 customers, including
more than 200 Fortune 500 companies. Each day, our freight moves more
than 8.8 million miles, equivalent to circling the globe approximately
350 times. Our logistics business manages over 20,000 qualified carrier
relationships and, in 2015, managed approximately $2 billion of third-
party freight. Our portfolio diversity, network density throughout
North America, and large fleet allows us to provide an exceptional
level of service to our customers and consistently excel as a reliable
partner, especially at times of peak demand.
Schneider National is driven by our uncompromising values to
deliver the goods that enhance the lives of people everywhere. Core to
these values is our commitment to safety, integrity, respect and
excellence. These principles are guiding tenants of our business at
every level of the company.
Trucking companies like Schneider National are the backbone of
America's economy. The trucking industry transports more than 80
percent of our Nation's freight tonnage and employs approximately 7
million workers in trucking-related jobs.\1\ In addition to moving
goods into and out of U.S. ports, we also provide an essential lifeline
to communities across the country, delivering supplies and essential
commodities.
---------------------------------------------------------------------------
\1\ American Trucking Associations, American Trucking Trends 2016
(August 2016)
---------------------------------------------------------------------------
Our nation's ability to compete in global markets, and to meet the
needs and expectations of consumers and businesses, depends on a robust
freight system driven by the trucking industry. In order to meet
current and projected future demand for freight movement, Congress and
the new Administration should promote policies and regulations that
ensure safety, support innovation and increase productivity.
Safety, Innovation and Technology
At Schneider National, safety is our number one core value. This
commitment stems from our founding common sense observation that
``nothing we do is worth hurting others or ourselves.'' Today, our
culture of safety starts with our people and layers in training,
processes and technology. We are constantly striving to put safety
first and always, which is why we have established industry-leading
policies, practices and technologies.
Our relentless focus on safety not only enables us to better uphold
our responsibility towards our employees, customers and the community,
but also provides a critical competitive advantage in an industry with
increasingly stringent safety and regulatory requirements, resulting in
lower operating risk and insurance costs.
I would like to share some of the policies, practices and
technologies we at Schneider National have adopted that may serve as
best practices in the eyes of the Committee as it seeks to increase the
safety of our multi-modal transportation system.
Safety through Innovative Technology: At Schneider National,
we have made significant investments in safety-enhancing
equipment and technology, including roll stability, collision
avoidance, forward facing cab cameras, training simulators and
realtime truck sensor monitoring. We were the first to install
game-changing in-cab communication devices back in 1985 and
have continued to adopt cutting edge technology since that
time. A more recent technological investment making our trucks,
drivers and highways safer every day is the
OnGuardTM collision mitigation system. Installed on
every new tractor, this forward-looking, radar-based system
monitors the distance, speed and deceleration of the vehicle
ahead. OnGuard alerts the driver to possible collision risks
and actively works to eliminate, or at worst mitigate the
severity of, any impact. Since our deployment of the collision
mitigation technology in 2012, Schneider National has
experienced a 69 percent decrease in rear-end accidents and a
95 percent reduction in rear-end accident claims cost.
Additionally, Schneider National was an early adopter of
Electronic Logging Devices (ELDs) and supports the Federal
Motor Carrier Safety Administration (FMCSA) final rule
requiring the installation of ELDs by December of this year. We
recommend the Committee continues to advance policies that
encourage the development and implementation of innovative
technologies that can improve safety.
Practices that Promote Health and Safety: As a company that
is strongly committed to safety, Schneider National is
constantly seeking ways to protect the traveling public and the
communities in which we operate. This includes our investments
in cutting edge technology as well as our pursuit of additional
opportunities to enhance health and safety, such as mandatory
pre-employment drug tests that surpass U.S. Department of
Transportation standards by requiring hair samples. Under
current FMCSA regulations, truck drivers are required to
undergo mandatory pre-employment urine testing for drugs and
alcohol. While urine testing has been somewhat effective in
identifying drug use, Schneider National has recognized that
there are alternative routes to urinalysis, such as hair
follicle testing that can better identity drug users.
Specifically, hair testing can detect drug use for a period of
up to 90 days, while urine testing only detects usage over a
much shorter period of time (48-72 hours). At Schneider
National, we believe there is no place for drug use in a
safety-sensitive environment such as the trucking industry.
That is why we have voluntarily opted to utilize the more
reliable and comprehensive hair follicle testing, despite its
increased cost. We recommend the Committee encourage the
voluntary adoption of practices that promote health and safety
by allowing companies like Schneider National to substitute
proven practices in lieu of less stringent U.S. DOT
requirements.
Critical Issues and Future Challenges
While Schneider National has excelled as an industry leader in
safety, innovation and technology, we still draw concern from a range
of critical issues impacting our business and the future of our
industry. As you seek input on these matters in order to shape policy
for the 115th Congress, I would like to highlight the following:
Federal Regulations: We operate in a highly regulated
industry. While some regulations have merit and will
successfully increase safety within our industry and across the
system--like Hours of Service rules, requirements for ELDs,
hair follicle testing and speed limiters, we also have
experienced a general trend of restrictive and complex
regulation, which impacts the overall supply of trucks and
drivers in the industry. Furthermore, the use of guidance
rather than rulemakings creates an unintended sense of
uncertainty within the industry while also increasing liability
exposure.
State Regulations: In addition to Federal regulations, we
are subject to regulation at the state level where new laws and
litigation threatens our efficiency and ability to conduct
business in a uniform manner. Although Congress provided for
the express preemption of state laws related to the prices,
routes and services of motor carriers when it passed the
Federal Aviation Administration Authorization Act (FAAAA) of
1994, that preemption has recently been challenged. State laws
regarding drivers' meal and rest break periods, payment
agreements and more has evolved into a new patchwork of rules
and regulations at the state level. The lack of consistency on
this and other issues governing interstate trucking have
created unintended consequences that decrease safety and hurt
the environment.
Cybersecurity: While the application of innovative
information, automation and communications technologies
optimizes our operations and increases safety, it also makes
our business more dependent on an uninterrupted and secure
network. If the stability or capability our technologies is
compromised, it could adversely affect our revenue, customer
service, driver turnover rates and data preservation.
Additionally, if any of our critical information or
communications systems fail or become unavailable, we would be
required to perform certain functions manually, which could
temporarily affect the efficiency and effectiveness of the
supply chain.
Infrastructure Investment: Underinvestment in our Nation's
surface transportation infrastructure produces inefficiencies
in the way we move goods, wastes fuel and increases operating
costs. Current freight bottlenecks and interstate congestion
already challenges our operations. With U.S. freight volume
anticipated to increase 45 percent by the year 2040 \2\, the
system must be updated and prepared for this surge. Otherwise,
our environment and economy will suffer.
---------------------------------------------------------------------------
\2\ U.S. Department of Transportation, Beyond Traffic 2045: Trends
and Choices
---------------------------------------------------------------------------
Conclusion
Chairman Fischer, Ranking Member Booker and other distinguished
members of the subcommittee, thank you again for the opportunity to
testify and provide Schneider National's perspective on increasing
safety and efficiency for the trucking industry. As the Committee
continues its work in the 115th Congress, we stand ready to support
your efforts and offer insight about our industry and policies that
pertain to the jurisdiction of this committee.
The Chairman. Thank you, Dr. Lofgren.
Mr. Gurd, welcome.
STATEMENT OF TOM GURD, VICE PRESIDENT,
INTEGRATED SUPPLY CHAIN, THE DOW CHEMICAL COMPANY
Mr. Gurd. Good afternoon. I'm Tom Gurd, Vice President of
Integrated Supply Chain for the Dow Chemical Company. I would
like to thank Chairman Fischer, Ranking Member Booker, and
members of the Subcommittee for inviting Dow to testify at this
hearing. I'm here to testify on behalf of Dow and also a member
of the American Chemistry Council, a trade association
representing America's leading chemical companies.
I would like to thank the Subcommittee for recognizing that
the chemical industry is a principal stakeholder in developing
policies that can keep our economy moving. We welcome the
opportunity to work closely with the Subcommittee to develop
infrastructure and transportation policies that further drive
investment and manufacturing growth in the U.S.
Dow's products help address many of the world's most
challenging problems, such as the need for fresh food, safer
and more sustainable transportation, clean water, energy
efficiency, more durable infrastructure, and increasing
agricultural productivity.
Dow is one of the largest chemical and plastic shippers in
North America. Our operations continue to grow, most
significantly in the U.S. Gulf Coast. In 2016, we made over 1
million shipments from over 60 production facilities. This
represented over 40 billion pounds of product being shipped;
over 16 billion pounds shipped by rail, 13 billion pounds by
road, and over 11 billion by marine.
We contract with over 200 different third-party carriers to
transport our products. Two of them are here with me today.
We have over 160 third-party warehouses, terminals, and
transloading facilities. We operate a fleet of 18,000 railcars,
including 7,500 tank cars for the transportation of chemicals.
Approximately 20 percent of our shipments are hazardous
material shipments. Transportation of chemicals, including
hazardous materials, is vital to U.S. competitiveness in the
global marketplace as well as to the health, safety, and
welfare of the American public.
Safety is Dow's top priority. We strive to ensure safe
operations at our production facilities. We collaborate with
our logistics service providers to ensure safe, secure, and
compliant transportation of our products. We work with our
customers at their locations for the safe handling of our
products.
Dow is committed to Responsible Care, the chemical
industry's world-class environmental, health, safety, and
security performance initiative. Our transportation partners
demonstrate the same safety commitment through the Responsible
Care Partnership program.
Dow has an extensive risk management program, but we're
also committed to ensuring communities are aware and prepared
if an incident does occur. We support this commitment through
TRANSCAER and CHEMTREC, which provide the training, support,
and information necessary for effective and timely emergency
response.
Dow is fully committed to transportation safety and
security advancements and to the reduction of risk to people,
communities, and the environment. This requires close
collaboration with all industry stakeholders. An example of
this is Dow's participation as the ACC member representative on
the Advanced Tank Car Collaborative Research Program to improve
tank car safety.
Dow supports the Federal Government's comprehensive
regulatory framework to mitigate safety and security risks. We
encourage the government agencies to further collaborate with
industry stakeholders to ensure that current and proposed
regulations are designed to improve safety and reduce
unnecessary burdens.
In advance of the Commerce Committee's recent hearing on
``Reducing Unnecessary Regulatory Burdens,'' ACC identified a
number of regulatory actions by the DOT that impose burdens
without advancing safety. These actions include regulatory
provisions and interpretations that directly impact Dow. We
welcome further discussion on these issues.
The DOT serves a critical role in establishing uniform
national standards for the safe transportation of hazardous
materials. The DOT must maintain this exclusive role. Any new
requirements imposed on the regulated community must be
developed through an appropriate Federal rulemaking process,
and supported by a cost-benefit analysis. If regulations are
adopted with an unsubstantiated cost-benefit analysis, the
regulated community will incur significant costs, yet without
increased safety.
I conclude my testimony by acknowledging your efforts and
willingness to work with the chemistry industry and our
integrated transportation partners to ensure that the U.S. has
a safe, secure, sustainable, and competitive network to deliver
our products when and where they're needed.
We look forward to working closely with the Subcommittee,
our transportation partners, and the DOT to further collaborate
on policies and programs that will enhance our Nation's
transportation infrastructure.
Thank you.
[The prepared statement of Mr. Gurd follows:]
Prepared Statement of Tom Gurd, Corporate Vice President,
Integrated Supply Chain, The Dow Chemical Company
Good afternoon. I am Tom Gurd, Vice President of Integrated Supply
Chain for The Dow Chemical Company. I would like to thank Chairman
Fischer, Ranking Member Booker and Members of the Subcommittee for
inviting Dow to testify at this hearing. I am here to testify on behalf
of Dow and also as a member of the American Chemistry Council
(``ACC''), a trade association representing America's leading chemical
companies.
I would like to thank the Subcommittee for recognizing that the
chemical industry is a principal stakeholder in developing policies
that can keep our economy moving. We welcome the opportunity to work
closely with the Subcommittee to develop infrastructure and
transportation policies that further drive investment and manufacturing
growth in the U.S.
Dow's products help address many of the world's most challenging
problems, such as the need for fresh food, safer and more sustainable
transportation, clean water, energy efficiency, more durable
infrastructure, and increasing agricultural productivity.
Dow is one of the largest chemical and plastics shippers in North
America. Our operations continue to grow, most significantly in the
U.S. Gulf Coast. In 2016, we made over 1 million shipments from over 60
production facilities. This represented over 40 billion pounds of
product. Over 16 billion pounds shipped by rail, over 13 billion by
road, and over 11 billion by marine. We contract with over 200
different third party carriers to transport our products. Two of them
are here today. We have over 160 third party warehouses, terminals and
transloading facilities. We operate a fleet of 18,000 railcars,
including 7,500 tank cars for the transportation of chemicals.
Approximately 20 percent of our shipments are hazardous materials
shipments. Transportation of chemicals, including hazardous materials,
is vital to U.S. competitiveness in the global marketplace, as well as
to the health, safety, and welfare of the American public.
Safety is Dow's top priority. We strive to ensure safe operations
at our production facilities. We collaborate with our logistics service
providers to ensure safe, secure and compliant transportation of our
products. We work with our customers at their locations for the safe
handling of our products.
Dow is committed to Responsible Care, the chemical industry's
world-class environmental, health, safety, and security performance
initiative. Our transportation partners demonstrate this same safety
commitment through the Responsible Care Partnership program.
Dow has an extensive Risk Management Program, but we are also
committed to ensuring communities are aware and prepared if an incident
does occur. We support this commitment through TRANSCAER and
CHEMTREC, which provide the training, support, and information
necessary for effective and timely emergency response.
Dow is fully committed to transportation safety and security
advancements and to the reduction of risk to people, communities and
the environment. This requires close collaboration with all industry
stakeholders. An example of this is Dow's participation as the ACC
member representative on the Advanced Tank Car Collaborative Research
Program to improve tank car safety.
Dow supports the Federal Government's comprehensive regulatory
framework to mitigate safety and security risks. We encourage the
government agencies to further collaborate with industry stakeholders
to ensure that current and proposed regulations are designed to improve
safety and reduce unnecessary burdens.
In advance of the Commerce Committee's recent hearing on ``Reducing
Unnecessary Regulatory Burdens,'' ACC identified a number of regulatory
actions by the DOT that impose burdens without advancing safety. These
actions include regulatory provisions and interpretations that directly
impact Dow. We welcome further discussion on these issues.
The DOT serves a critical role in establishing uniform, national
standards for the safe transportation of hazardous materials. The DOT
must maintain this exclusive role. Any new requirements imposed on the
regulated community must be developed through an appropriate Federal
rulemaking process, and supported by a cost-benefit analysis. If
regulations are adopted with an unsubstantiated cost-benefit analysis,
the regulated community will incur significant costs, yet without
increasing safety.
I conclude my testimony by acknowledging your efforts and
willingness to work with the chemical industry and our integrated
transportation partners to ensure that the U.S. has a safe, secure,
sustainable and competitive network to deliver our products when and
where they are needed. We look forward to working closely with the
Subcommittee, our transportation partners and the DOT to further
collaborate on policies and programs that will enhance our Nation's
transportation infrastructure.
Thank you. I look forward to your questions.
The Chairman. Thank you, Mr. Gurd.
And, Mr. Moorman. Welcome.
STATEMENT OF WICK MOORMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER, AMTRAK
Mr. Moorman. Thank you, Chairman Fischer, Ranking Member
Booker, members of the Subcommittee, and my fellow witnesses.
Good afternoon, everyone. I am Wick Moorman. And it's a
privilege for me to be here today to testify on behalf of
Amtrak.
As you've heard, I joined Amtrak in September 2016, after a
40-some-year career with Norfolk Southern Corporation that
culminated in my service as President, CEO, and Chairman of the
Board. I retired from those positions in 2015, with the idea of
enjoying time with my family and absolutely no idea of working
full-time again.
However, I've followed Amtrak since its creation in 1970. I
have a deep appreciation for its mission. And to my wife's
dismay, I was ultimately persuaded to come on board as
President and CEO with really two responsibilities: one is to
build on the progress that Amtrak has seen over the past
decade, and then to lead the search for the right long-term
CEO.
First, let me express my gratitude to the Committee for the
passage of the FAST Act, which recognizes the critical role
Amtrak plays in our Nation's transportation network. 2016 was a
strong year for our company. We tick at revenues of $2.2
billion in more than 31 million passengers. We set another
record. And additionally and importantly, we reduced our need
for Federal operating grants to cover our operating loss by
covering 94 percent of our operating costs through ticket sales
and other revenues, a first for us and an achievement matched
by few, if any other, passenger railroads worldwide.
As strong as that performance was, I know that we can get
better first by working on our safety culture. Amtrak is a safe
company today, but we can get better. And then modernizing and
upgrading our products and strengthening our operational
efficiency and our project delivery.
We streamlined our organizational structure. We have a
consolidated senior executive team to provide focused
leadership. And with this change, Amtrak is organized now like
most freight railroad companies and, in fact, most major
corporations, which is entirely appropriate because that's what
Amtrak is, it's a corporation.
And while our business model is somewhat different than the
typical publicly held for-profit company, at the end of the
day, Amtrak is a business and will operate like a business on
par with all of the other companies that rely largely on
government funding as part of their business model. Our job is
to deliver the services and run the network that you, our
principal stakeholders, believe is in the public interest and
warrants Federal investment.
With our new structure in place, I think we're well
positioned for future growth opportunities and for delivering
more value to the American public. However, for us to truly
seize the opportunities before us, we need to begin a new era
of investment in the critical assets that are central to our
operations: our infrastructure, our fleet, and our stations.
This brings me to my core message today--now is the time to
invest in our aging assets. The infrastructure challenges that
plague our National Highway System, our ports, our inland
waterways, and transit systems are in many ways similar to the
problems facing Amtrak today. More than ever, our Nation and
the traveling public rely on Amtrak for mobility, but our
future depends on whether we can renew the cars, locomotives,
bridges, tunnels, stations, and the other infrastructure that
will allow us to meet these growing demands. Our list of needs
are long, and several are included in my written testimony
submitted for the record.
We applaud the growing consensus in Congress and certainly
the work of this committee and the administration that the time
is right for major infrastructure investments, and we urge you
to consider the many ways in which the Federal Government can
help bring this to fruition, from direct funding for projects
to the streamlining of things like the environmental review
process and the removal of unneeded regulation and red tape.
Additionally, public-private partnerships and innovative
financing mechanisms should be part of this mix, and they will
be good options for us. But if we're serious about maximizing
the value of our investments and advancing them quickly, direct
Federal funding to entities such as Amtrak should also play a
major part.
Finally, I would be remiss if I didn't emphasize the
important nature of our relationships with the 21 states and
the various commuter agencies that we partner with. The growth
of our State services is a testimony to the strength of these
routes and the demand for passenger rail traffic. They now
account for about half of our total ridership.
Likewise, in the Northeast Corridor and the other parts of
the United States where Amtrak owns significant infrastructure,
we host hundreds of millions of annual commuter trips, and now
we're seeing significant investments from these agencies toward
our common cause. We're very focused on identifying ways to
work even more collaboratively with these states and agencies
on our long list of important needs, many of which I've
discussed today.
I look forward to your questions. Thanks for the
opportunity to appear before you.
[The prepared statement of Mr. Moorman follows:]
Prepared Statement of Wick Moorman, President
and Chief Executive Officer, Amtrak
Chairman Fischer, Ranking Member Booker, members of the
Subcommittee, and fellow witnesses, good afternoon. My name is Wick
Moorman, and it is my privilege to be here today on behalf of Amtrak to
discuss our integral role in America's multimodal transportation
system.
Introduction
As most of you know, in September of 2016, I joined Amtrak after a
forty-two year career with Norfolk Southern Railway that culminated in
my service as President, CEO and Chairman of the Board. I retired from
those positions in 2015, with the idea of enjoying time with my family
and had absolutely no intention of working full-time again. However, I
was then approached by the Amtrak Board about the possibility of
leading Amtrak. Having followed Amtrak since it was created in 1970, I
have a deep appreciation for the company's mission and ultimately was
persuaded to serve as President and CEO, with the goal of building upon
Amtrak's progress of the past decade and leading the search to find a
long-term CEO that can lead the company into the future.
I come to Amtrak at an important time in our history, as intercity
passenger rail service has reemerged as a vital and growing part of our
national transportation network in the new century. In recognition of
this, Congress passed the FAST Act in December 2015, the first surface
transportation bill to include a reauthorization of Amtrak and the
first to bring the Federal Government's rail, highway and transit
programs together into one legislative package. I'd like to thank the
members of this Subcommittee for your leadership of that effort and
applaud steps like today's hearing that look at ways to further
integrate Federal policy and programs for the benefit of mobility,
safety and efficiency.
The FAST Act recognizes the critical role Amtrak plays in our
Nation's transportation network. I am pleased to report to you that
Fiscal Year 2016 was a strong year for the company. With ticket
revenues of $2.2 billion and more than 31 million passengers, it was
another record year. Additionally, we reduced the need for our Federal
grant to fund operations, by covering 94 percent of our operating costs
through ticket sales and other revenues--another first. This is an
achievement matched by few, if any, other passenger railroads
worldwide.
Corporate Reorganization
As strong as our FY16 performance was, I'm certain that we can get
even better by first relentlessly improving our safety culture,
modernizing and upgrading our products, and strengthening our
operational efficiency and project delivery. The first step we took
towards these goals was streamlining our organizational structure,
creating a consolidated senior executive team to provide focused
leadership and to work with our Board of Directors to drive long-term
value. With this change, Amtrak is now organized like most freight
railroads and major corporations, which is entirely appropriate because
that is just what Amtrak is--a corporation.
Although we have a somewhat different history, in that the core of
our business and mission was established by Congress, we are a business
and that business is moving people by rail and serving our main
stakeholders, the Federal Government and the American taxpayer. Our
business model is different than that of a typical, publicly held, for-
profit company. But we have a lot in common with other businesses, from
defense contractors to highway builders, who are in business to serve
government and to support public purposes. Highway builders, for
instance, design and build essential road infrastructure projects for
our government and in support of the national economy, charging the
public for these services at levels sufficient to generate adequate
returns for their owners. Similarly, Amtrak receives funds from the
Federal Government to augment the more than $2 billion in revenue we
generate directly through ticket sales every year. In that way, we also
provide infrastructure and services that produce public benefit and
promote the Nation's economy.
Federal funds are what allow us to meet the operational and capital
needs of our 46-state national network of trains and our infrastructure
that serve more than 500 communities, urban and rural, across America.
We serve these communities and operate these routes because Congress,
various Administrations, and the public generally have recognized the
unique value that intercity passenger rail service can provide to these
communities and the Nation. Our job is to deliver the services and run
the network that you, our principal stakeholders, believe is in the
public interest and that provides sufficient value to warrant the
investment. In doing so, my pledge to you is to operate Amtrak as
safely, efficiently, and effectively as possible. From better project
delivery to greater operational excellence, we are working on ways to
deliver even greater value from your investments in our mission.
Let me also take a moment to answer a question I receive from a lot
of people about whether the government needs to fund passenger rail
service at all, and whether or not private entities or the freight
railroads could just take over the operation of this network. I began
my career with the Southern Railway, a Norfolk Southern predecessor
that chose not to join Amtrak in 1971 and operated some of the last
privately funded, regularly scheduled intercity service in the U.S.
until 1979. Eventually, dwindling revenues and the cost of equipment
improvements led the Southern to turn over operation of passenger
service to Amtrak, just as every other private freight railroad has
done. Having led Norfolk Southern, and as a student of the industry for
many years, it is clear to me that the fundamentals of the rail
passenger business remain the same today. If the Nation wants a
passenger network of any significant size and impact, like the one we
operate today, it will take public support to make it happen, just as
it does everywhere across the globe.
Passenger Rail Investment Opportunities--Northeast Corridor
and National Network
With a new corporate structure in place and with a renewed focus on
strengthening safety, operational excellence, and the quality of our
product, we are well-positioned for future growth opportunities and for
delivering more value to the American public. However, for us to truly
seize the opportunities before us, we need to begin a new era of
investment in the critical assets that are central to our operations--
our infrastructure, fleet, and stations.
This brings me to the core message that I want to share with you
today--now is the time to advance initiatives to provide funding and
investment opportunities for our aging assets. The infrastructure
challenges plaguing our National Highway System, ports, inland
waterways, and transit systems are similar to some of the problems
Amtrak is facing in these major areas:
(1) Northeast Corridor: Amtrak's Northeast Corridor is North
America's busiest railroad, with 363 miles of Amtrak-owned
infrastructure and 2,200 daily high-speed, commuter, and
freight trains operating on an underlying infrastructure built
between 80-110 years ago. While the track and signal systems
are reasonably sound, they need improvement, and many major
bridges, tunnels and stations must be replaced and expanded to
preserve current service levels and permit future growth.
(2) National Network: Outside of the Northeast Corridor and across
the National Network, Amtrak is a tenant operating over the
20,000 miles of freight and commuter railroads--including Mr.
Rose's railroad, BNSF. While the condition of the freight
railroad infrastructure is generally very good, we still
encounter capacity constraints that limit and delay both
passenger and freight volumes.
(3) Rolling Stock and Stations: Much of our current equipment has
reached or exceeded the end of its useful life. In order to
meet the current requirements and growing demands of our
passengers, we must replace these assets. The depots that
Amtrak inherited are old and in significant need of repair and
modernization.
More than ever, our Nation and the traveling public rely on Amtrak
for mobility, but the future of Amtrak depends on whether we can renew
the cars, locomotives, bridges, tunnels, stations, and other
infrastructure that allow us to meet these growing demands. Amtrak
already has begun to face this challenge. Enabled by the RRIF loan
program championed by this Committee, and using our own ticket revenue,
we are purchasing new electric locomotives and new trainsets for our
second generation Acela Express. But we need the help of Congress, if
we are to make a serious dent in the massive backlog of deferred
investment in right-of-way infrastructure and rolling stock that
constricts growth and reliability today. As Congress and the
Administration develop and advance a multimodal transportation
investment program to rebuild assets and spur job growth, it is
imperative that significant funds for Amtrak and passenger rail capital
investments be included in that package.
Our list of needs is long, but each item offers the country a
chance to invest in long-term assets with big benefits to the
travelling public and the national economy. A few specific examples
include:
Construction of the Portal North Bridge and new Hudson
Tunnels, both parts of the larger Gateway Program that will
ensure that 450 daily Amtrak and NJ Transit trains can continue
to serve New York City from the south;
Construction of a new Baltimore & Potomac Tunnel and
replacement of the 110-year old Susquehanna Bridge in Maryland
to improve reliability, expand service, and lower trip time;
Construction of fleet of new or rebuilt diesel locomotives
and passenger cars to support Amtrak's National Network;
Construction of track, signaling, and other improvements to
remove chokepoints on our host railroads or restore service in
key underserved markets, such as along the Gulf Coast; and
Expansion and improvement of Chicago and Washington Union
Stations to improve accessibility, expand capacity, spur local
development and enhance safety.
We applaud the growing consensus in Congress and in the
Administration that the time is right for major infrastructure
investments. We urge you to consider the many ways in which the Federal
Government can help bring this to fruition, from direct funding for
projects to streamlining of the environmental review process and
removal of red tape. In that regard, I want to thank this Committee for
including the provisions in the FAST Act that help streamline
environmental reviews and project delivery for railroad projects. I am
also aware of the President's recent executive order directing agencies
to streamline and expedite high priority infrastructure projects. These
are important steps that can help reduce time and expense for both
freight and passenger rail projects across this country, and we look
forward to working with our partners to identify additional steps to
further expedite these critical rail projects.
Additionally, public-private partnerships and innovative financing
mechanisms should be part of this mix and will be good options for some
projects. But if we are serious about maximizing the value of these
investments and advancing them quickly, direct Federal funding to
entities such as Amtrak should also play a major part of a multi-
pronged investment strategy to jumpstart the American economy. Rail
infrastructure investments stimulate job growth in construction,
manufacturing, and professional services. Rail cars, locomotives,
steel, concrete, machinery, signals, and track are all sourced from
across the Nation. Investments in these sectors can help spur the
rebirth of America's passenger rail manufacturing and supply sector
which largely has been dormant and overtaken by international firms.
Amtrak stands ready to work with each of you and all of Congress to
seize this opportunity to make smart investments and help make
America's transportation network the greatest in the world for
generations of Americans to come.
I look forward to your questions. Thank you.
The Chairman. Thank you very much.
I would like to begin by posing a question to all of our
panelists. As we look at major infrastructure initiatives in
this Congress and with the new administration, I think we need
to be strategic in how we invest in our transportation system.
For example, the multimodal freight program in the Highway Bill
offers dedicated funding and incentivizes investment in
critical urban and rural freight corridors.
I would like to know if any of you believe that that
freight program might be a model on how we move forward? Is
that something we could build off of so that we can look
strategically and be focused in an infrastructure proposal?
Mr. Rose.
Mr. Rose. So, I think the FAST Act that you all passed, is
undoubtedly the most important freight policy structure that's
ever been passed up here. And so I think it has great bones for
the future.
Whether we think about projects of national significance,
TIGER funding, intermodal connectors, all of those things,
they're all vitally important. And the way we think of it, from
the railroad industry, is that every ton of freight that we can
take off the national highway system to create more capacity
for the passengers and the traveling public is a ton of freight
that you don't have to maintain. And so those individual
categories that you listed and I listed are really important to
facilitate things like permit reform, things like investment
reform, investments, and how we look at those things, at the
end of the day really achieve the goal of creating the most
efficient supply chain in our country that we can have.
The Chairman. Thank you.
Dr. Lofgren.
Dr. Lofgren. Our heritage, as a company, was long-haul
random one-way trucking. If you look at our business today,
close to $1 billion of our revenue actually comes in
partnership with Matt's company and our partner in the eastern
half of the United States where for those long distances, it's
effective and efficient for us to put our equipment onto the
train and to take that first and last mile and run it by road.
So clearly, we have opportunities, and, frankly, we have
opportunities here in this country that are beyond what exists
anywhere else to take advantage of multimodal transportation,
and technology and appropriate structures, where they
interface, are really critical to effectively moving the goods
of this country.
I think the actions that we have taken recently are
important. I think there's more to come. And I think that the
challenge is, is that oftentimes the infrastructure that's
required to connect large population centers run through rural
areas, and so we have to keep in mind what those look like and
how they're maintained in order to keep a connected network
together, which is really where the competitive advantage that
allows this country in total to participate in the economy.
The Chairman. Thank you.
Mr. Gurd.
Mr. Gurd. As mentioned, we continue to have growth in the
U.S. Gulf Coast and many of our other production facilities, so
anything that would support safe transportation of our
materials as we grow in order to get product to our customers
is something that's very important to us.
Multimodal is something that we continue to look to for
opportunities. Where we can ship rail as our safest mode of
transportation, we'll continue to do that; where we can't,
we'll be shipping with truck. Multimodal is something that we
continue to support.
So I would say anything with regards to infrastructure that
would help with the safe transportation of those materials we
would be supporting.
Thank you.
The Chairman. Thank you.
Mr. Moorman.
Mr. Moorman. Let me echo what Matt said in two ways. First,
the importance of the FAST Act for the entire transportation
network. The second thing I would say is that as you look at
that model and you look at the impact on the freight railroads,
the important thing for Amtrak is we're part of the railroad
industry, and our strength--we're only as strong as the freight
railroads. Seventy percent of our train mileage is on freight
hosts, such as BNSF. So I think that it's an important
framework and something that will be good not only for the
transportation of freight, but ultimately for the
transportation of people as well.
The Chairman. Thank you all very much.
Senator Booker.
Senator Booker. Chairwoman, Senator Blumenthal has a
pressing obligation, so I'm going to pass my time to him if
that's okay with you.
The Chairman. That would be fine.
Senator Blumenthal.
STATEMENT OF HON. RICHARD BLUMENTHAL,
U.S. SENATOR FROM CONNECTICUT
Senator Blumenthal. Thank you very much, Senator Booker. I
really appreciate that courtesy.
I have a couple of brief questions, beginning, Mr. Moorman,
with yourself. You may recall that I wrote you just a few weeks
ago concerning the noise generated by Amtrak trains going
through Stonington, and, in particular, I've been in contact
with the town, and I understand perhaps you have been as well.
I would like your commitment that you will work with the town
to resolve these concerns, which are extremely pressing to the
town of Stonington and people who live in the region generally.
Mr. Moorman. Well, you absolutely have the Amtrak
commitment on that. And as I wrote the town, and I think you
saw a copy of the letter, there's a process for the town to go
through primarily driven by the Federal Railway Administration.
And so we will assist in any way that we can in helping the
town through that process.
Senator Blumenthal. I hope that that process can be
expedited and that any sort of bureaucratic delay can be
avoided. I know you'll give it your personal attention.
Mr. Moorman. Yes, sir.
Senator Blumenthal. Thank you.
All of the witnesses may be aware that there are ports in
Connecticut: Bridgeport, New Haven, and New London. My
colleague from New Jersey has ports as well in his state. When
we talk about rail, we talk about delivering freight that may
come through our ports. Would you agree with me that increasing
the reliability and capacity of our ports is essential to
delivering more freight, more readily, more speedily to the
places and people who need them?
Mr. Rose. We would agree with that totally, Senator, and go
on to say that our ports are really national treasures. And if
we go back 30 or 40 years ago, trade was not that big of an
impact to our country, GDP. Today, arguably, it represents
almost 40 percent of our GDP, inbound, outbound trade, going
through those specific ports.
And when we don't have the right funding for the ports, two
bad things happen. One is I believe you have more environmental
concerns at the ports themselves. But you also have congestion
at those ports. And then that freight is going to come into our
country another way versus the most efficient port. So it will
come through Canada, it will come through Mexico, it will come
through another port.
And so the ports--we've got to--and part of the programs,
the legislation you all passed, and some of the things you're
talking about doing, is money that can go directly to ports,
and we're very, very supportive of that.
Senator Blumenthal. I appreciate those very well-stated
comments. Thank you.
I also want to ask about Positive Train Control.
Mr. Rose, you have really done yeoman's work in this
regard. Do you have guidance for other railroads that may be
behind yours in implementing Positive Train Control and perhaps
some comments about its importance to rail safety?
Mr. Rose. So Positive Train Control will not be the be-all/
end-all for rail safety. It is a very important risk
mitigation, and it will, without a doubt, reduce injuries,
fatalities, and derailments. We're very excited about the
progress that we're making and that the rail industry is
making. Last month, for instance, we ran 35,000 Positive Train
Control segments at 85 percent that went through the entire
system without having a defect.
So we've still got another year and a half on our
implementation schedule through 2018. We feel very, very
confident that we will have our entire network outfitted. And
we think that all the work that we're doing at BNSF is getting
rid of a lot of the challenges, a lot of the problems, that
some of the other railroads maybe that are not as far along as
we are, that they will face, and we're working with the same
suppliers. And so we hope that our hard-knock lessons will help
the rest of the industry.
The final thing is there are a lot of passenger commuter
rails that still have not had the--they just don't have the
money to implement Positive Train Control, and it doesn't
escape me that the main reason that Congress passed the law in
2009 was because of a passenger/freight accident.
And so as a freight railroad, it may sound out of line, but
I actually urge Congress to fund passenger/commuter rail
funding for Positive Train Control. I can't imagine a more
difficult train wreck for us to have to go to where we have the
Positive Train Control on the freight rail, and the passenger
or the commuter didn't because of lack of funding. It is
technology that will work, and we're excited to be leading the
charge.
Senator Blumenthal. Thank you. My time is expired, but I
hope that railroads around the country, including commuter
railroads, Metro-North being one of them, will take your
guidance seriously. Some of them may have the resources or
access to the funds to implement Positive Train Control, but
still have not implemented this life-saving technology, which
is hardly novel or new. It has been around for a long time, and
I thank you for your commitment to it.
Thank you, Mr. Chairman--Madam Chairwoman.
The Chairman. Thank you, Senator Blumenthal.
Senator Inhofe.
STATEMENT OF HON. JIM INHOFE,
U.S. SENATOR FROM OKLAHOMA
Senator Inhofe. Thank you, Madam Chair.
Dr. Lofgren, in your remarks, you mentioned something
that's very obvious, and that is that a patchwork of State-
level laws negatively impacts what you're able to do, and
that's one of the reasons way back when the National Highway
System started, we wanted uniformity, particularly not just
truckers, but everyone going across the country.
Now, I was here in 1994 when we established the Federal
standards for prices, routes, and services of motor carriers.
Then along comes California, and they established that State
meal and rest break requirements are in violation of this law,
but in 2014, the Ninth Circuit said, ``no, it's not in
violation.''
So I would ask you, what kind of impact is this having on
your business?
Dr. Lofgren. Well, I think as it relates to interstate
commerce, which we're involved in, we can have a driver who
starts in one state, travels across multiple states, and will
finish his day or her day in another state. And as these things
start to creep up, with all of the best of intentions, you can
find yourself violating one or the other because they don't
take into account how a driver works through their day.
And that's the challenge, and that was really what was
driving the legislation back in 1994, was a recognition that
interstate commerce had people moving, and it was the ability
to freely move around this country to transport goods was
giving us a competitive advantage.
And so the challenge is, is that they don't recognize the
very work that's being done and how they impact, and it
essentially can create discontinuities in terms of doing that
and operating consistent with the regulations.
Senator Inhofe. Yes, and you agreed with me that you were
probably somewhat surprised in 2014 when the Ninth Circuit came
out with their ruling on this.
Dr. Lofgren. Well, I think, look, when you operate within a
state, and we have some of our drivers who operate within just
one state or, frankly, one municipality, and in those
circumstances, we can certainly design the work, design the pay
programs, and ensure compliance to that and serve customers.
And so the issue isn't one where it's operating within a
state, it is absolutely around interstate commerce. And so
that's the part that I guess seems strange to me.
Senator Inhofe. It's a little strange, yes.
And, Mr. Rose, first of all, thank you for all your help
and cooperation in our tank car efforts. You've been a big, big
help. The BNSF is part of the FAA's Pathfinder Program to
perform research aimed at expanding the drone system and their
capabilities. This is something that I successfully pushed in
the FAA bill when we had the language--and I was actually
aiming at pipelines, an obvious exception that should have been
made.
Now, do you want to share with us any kind of benefits that
you see in that expansion?
Mr. Rose. Sure. So we're pleased that we have a partnership
with the FAA, and we were the first company to get non-line-of-
sight, which really opens up a whole different world for us.
We're using it in some cases out in New Mexico to fly drones
ahead of trains. We're using it to take videos of track
conditions. We're using it to inspect bridges instead of having
to hang an individual in a very precarious situation over a
bridge to look at the structural ability of a bridge.
So I think we're just in the first inning of seeing
everything that is out there for us with drones. We're working
with IBM in terms of looking at big data. We're getting just
millions of pieces of information coming from these drones, and
now creating the information set that will allow us, quite
frankly, to improve our operation reliability and improve our
safety greatly----
Senator Inhofe. Yes, I was going to say every example you
used, it's a matter of safety that it addresses.
Mr. Rose. Right.
Senator Inhofe. Not just efficiencies.
Mr. Rose. Correct.
Senator Inhofe. Safety. That's good. Let me--the Chair,
when she opened up, was talking about our bill that we passed,
the FAST Act, and the fact that we had for the first time a
national freight program, and I was chairing that committee at
that time. And the reason that she is bringing it up and the
reason I want to bring it up also is because we're going to be
starting to work right away on the next one. And since this is
the first time we had a national freight program, I just want
to get into the record that it's something that is really
desired, something that's helpful.
Any comments, Mr. Rose, or anyone else that you have on
that program, other than what you've already responded to?
Mr. Rose. Yes. We're very, very supportive. I served on the
last time the surface transportation network in this country
was studied through the SAFETEA-LU legislation back in 2009,
and we looked at what happens. At that time, our population in
this country, we had 312 million people. We actually modeled
the highway network, the port network, and the railroad network
when we get to 330 million people, when we get to 350 million
people.
And the only way to stay up and remain our competitiveness
from an infrastructure supply chain as a percent of GDP is,
quite frankly, to handle this freight. And freight is a vital
link to our Nation's economy.
And so I think really for the first time through the FAST
Act, we've actually seen a freight program. It's not fully
fleshed out. The bones, I would call it, it has good bones to
be able to build on, like you're talking about, and we want to
participate in terms--specifically for things like intermodal
connection; freight collection areas; overpasses; underpasses;
grade crossing safety, which I know Senator Gardner is very,
very interested in; rail relocation; port enhancements; all
these things that at the end of the day make freight move more
efficiently because when freight doesn't move efficiently, you
get massive congestion costs, and massive congestion of
commuters on the Nation's highways.
Senator Inhofe. OK. Thank you very much.
The Chairman. Thank you, Senator Inhofe.
Senator Young.
STATEMENT OF HON. TODD YOUNG,
U.S. SENATOR FROM INDIANA
Senator Young. Madam Chair, thank you for holding this
hearing. I want to thank our Ranking Member and all our
witnesses here today.
Indiana is the hub for several major interstate highways.
It's earned us the moniker ``The Crossroads of America,'' in
addition to ``Paradise.'' You may not have heard that one, but
it's popular back home.
[Laughter.]
Senator Young. Dr. Lofgren, you spoke to, in response to a
question by my colleague from Oklahoma, the impact and
enterprise level of this Ninth Circuit Court decision
pertaining to the preemption of Federal law related to
interstate commerce by state laws, and the impact it's had at a
company level. Could you sort of translate that down to the
worker level and the consumer level, please?
Dr. Lofgren. Sure. So, for example, where that law really
started was to make sure that agricultural workers were getting
the opportunity to take their breaks and get rest. That's where
it started, had its roots, and appropriately so.
The challenge can be when you look at applying it the way
that the state of California would like us to do it, and,
frankly, the way which we do, do it now. But what it requires
is, is that when a driver has to take a 15-minute rest break,
our drivers are not going to pull off on the side of the road.
It's a safety hazard. It creates issues. So they're going to
find the best place where they can move that vehicle off, they
can park it safely, and take their break.
The challenge is the way that that restriction is, is that
you have to do it like now. So it doesn't really account for
the work. And the issue that we have is we want our drivers to
take breaks, to do things safely, we encourage them to do that,
and we want them to do it when it's safe, at appropriate times,
and those regulations just put us at odds, and it frankly makes
it difficult.
And so just recognizing how freight moves, how the industry
works, it's not about being safe, it's about recognizing how it
works and making sure that the requirements align up with that.
Senator Young. So in your estimation, this actually--this
could decrease safety among those who work for trucking
companies like yours, and we certainly don't want that. That's
a correct characterization, right?
Dr. Lofgren. That's correct.
Senator Young. Right. Yes. Let me transition to regulatory
reform. It's my sense, informed by conversations with people
back home, that the need for regulatory reform, whether it's in
the manufacturing sector or services or in the logistics
industry, has never been greater. And in your testimony, you
speak to the unintended sense of uncertainty within the
trucking industry by rulemakings. I maintain concerns that in
recent years well-intended regulations have been issued without
a firm basis in the facts, without the supporting data.
Some industry groups point to the inadequate data from
Federal Highway Safety regulators when they issue proposed
rules, such as mandatory speed limit requirements and sleep
apnea screenings. We can all support, I know, everyone in this
hearing and beyond, everyone throughout the country, improved
safety standards for your industry and others, and we're
looking for ways to remove obstacles to that happening.
Could you speak to the need to require our Federal Highway
Safety regulators to ground their rules in rigorously supported
data, preventing the sort of uncertainty you spoke to?
Dr. Lofgren. Well, certainly. And, actually, we got
involved, were asked--I think the industry stands ready, or a
number of people who are committed to safety, because I'll just
give you one example. The great competitors that we have in the
industry have said safety is not going to create competitive
advantage, so we do benchmarking sharing best practices because
we believe it in the industry, and therefore each of our
company's, best interest to do that.
I think that we recently were asked by FMCSA to help give
real data on the day of a driver. And, I mean, we're pulling
all of this information off the truck all of the time, and we
said, ``Sure. Here. Here's some data.''
I think there is a willingness, I think there is an
awareness, and I think the way we get to the right kinds of
answers is to engage the people doing the work with the people
regulating the work with the people legislating the work
because I think there are real answers.
There is more data available today coming off of our trucks
and interfacing with our drivers to get to the right answer,
and I think there is a willingness and commitment that we get
to the right answer because nothing is worth having somebody
injured. And I think you will find my best competitors would
line right up along with that.
So I think there's a pathway. We just have to get on the
pathway to do it.
Senator Young. And I want to play a constructive role as we
look to improve the rulemaking process, so perhaps we can work
together in that regard.
Mr. Rose. We would be delighted.
Senator Young. Thank you, Madam Chair.
The Chairman. Thank you, Senator Young.
Senator Gardner.
STATEMENT OF HON. CORY GARDNER,
U.S. SENATOR FROM COLORADO
Senator Gardner. Thank you, Madam Chair.
And, Senator Young, I didn't realize that Colorado and
Indiana shared the same slogan.
[Laughter.]
Senator Gardner. It's fantastic. So thanks to all the
witnesses----
Senator Young. Are you the crossroads, too? You're the
crossroads, paradise part, yes.
Senator Gardner. Right, yes.
I want to thank you all for being here and the opportunity
to hear what's on your mind. And just a couple quick questions
as we've gone through and heard some of our other colleagues
ask questions.
Mr. Rose, 10 years or so when we saw the auto industry
starting to see its decline, we saw a number of car carriers
that were off the tracks and resting. And later on, we saw oil
tankers. That was a pretty good indication of what was
happening in the economy, so really sort of the indicator of
what's happening, what's moving.
Is there anything that we should be concerned about that
you're seeing right now in business, economic leaders,
indicators, that we ought to be aware of?
Mr. Rose. So last year, when we ended the year, we looked
at 22 businesses on the railroad, and only half a dozen of them
were positive, the rest were all negative. So that's a bad
sign. We should be at least 50-50, if not a few more being
positive.
I do believe there's a sense of things are getting better,
and for us, in the railroad industry, and to some degree with
Chris's business, it all is going to depend on consumer
confidence and the U.S. manufacturing footprint. And the
investments that Dow Chemical is making on the chemical coast,
it's enormous. I mean, there are probably $150 billion being
invested in the entire chemical coast of our country today, and
it's due to one thing--well, several things, but one thing
mainly, it's low natural gas prices.
And so low-cost, affordable, reliable energy goes through a
thread of our society, it's goes through the railroads, it goes
through the trucking company, and it goes through the consumer.
And so we're real bullish that with sustained domestic
production, diversification of fuel, that the consumer is
enjoying that and the consumer is going to keep spending money,
because we've got a hole, as I said in my testimony, we've got
a hole to dig out of with what has happened in the coal
business for the railroads.
The railroads used to account for about 20 percent of all
their units from coal, and that's going to be somewhat less
than 10 percent. So it's a big commodity to replace, and that's
why we need to rely on people, partnerships we have with
Schneider National, UPS, Federal Express, and all these
trucking partners, to really achieve what is a great public
policy destiny of bringing trucks, trailers, containers, to the
railroad, taking them off the highway, preventing that highway
damage, we have a great environmental footprint, and then
taking them to a destination and letting them redeliver it back
into the consumer supply chain.
Senator Gardner. Thank you. And the issue came up in your
testimony, or at least you answered or responded to a question,
about the issue of crossings, the train horn rule currently
being discussed by the Freight Rail Administration. What is the
FRA--what is--the Federal Railroad Administration, excuse me--
what is your idea perhaps of a better balance between the
safety of grade crossings as well as train noise?
Mr. Rose. That's a tough situation, Senator, because in our
country we have almost 240,000 grade crossings. On BNSF alone,
we have almost 30,000 of them, and about half of them are non-
signalized or non-gated crossings. And I think we're early on
to this question of quiet zones, but, unfortunately, I do think
that we will have the unfortunate information that accidents
per million train miles through grade crossings that do not
sound the horn have higher incident rates of injuries and
fatalities. And so I think we have to walk cautiously down this
path.
There is some new technology like directional horns that
would be placed on the actual crossing themselves that would
lower the decibel, instead of having a locomotive hitting the
entire spray of the noise if you will. So those types of things
I'm encouraged about, but we really, I think, would walk
cautiously down before we would ask the FRA to revert the rules
that have been in place since about 1998.
And the challenges that communities have is that these are
expensive technologies to put in these grade crossings. You can
easily spend $400,000, $500,000, $600,000 per crossing to go to
a whistle-free zone, but you've got to make a big investment to
replace that reliability that that locomotive horn provides.
Senator Gardner. Thanks, Mr. Rose.
Just a couple of questions related to Mr. Moorman, I wanted
to talk a little bit about--thank you for the Winter Park Ski
Train and the incredible opportunities that it presents. It's
paradise there. And if we could expand a little bit about that.
I know we have some maintenance employees that may be moving,
some concern was raised in Colorado about that and what that
means for Ski Train. Obviously, Southwest Chief is very
important to southeastern Colorado, and what that means.
And I'm going to get one last question in here before--my
time has already run out. Somebody mentioned the ports. I think
Senator Nelson mentioned, or Blumenthal mentioned, the ports
issue. In a few years, we have a situation, the East Coast and
West Coast ports that could lead to a similar slowdown,
shutdown, like we saw in the West Coast port just a couple of
years ago, cost our economy dramatically.
Maybe somebody could address the impact if that were to
happen, what would happen to our economy if that happens again
on the East Coast and West Coast at the same time?
Mr. Rose. Yes, I think we saw it in 2000, we saw it again
in 2012, where a relatively few number of ports can have an
outsized impact to our economy, and the challenge is, is that
those ports are not under the same labor act or same
negotiating act like the airlines or the railroads or anything
else are. And it's very, very unfortunate, but we literally,
when we have a big port strike, we're changing the nature of
supply chains in this country, and we are definitely hurting
our commerce.
So I would just urge that there would be a process in
place, whether it's baseball arbitration or some sort of
mediation, that could at least be imposed because there are a
lot of Americans that depend on their jobs for the
competitiveness of these ports. And these are enormously well-
paying, high-paying jobs. And when the West Coast or the East
Coast decides to go out, the hundreds of millions and billions
of dollars of economic impact are felt for literally weeks and
months. And we back up trains all the way to Chicago, and it
creates conditions that take us out of our normal pace, that we
don't like the risk of that as well.
The Chairman. Thank you, Senator.
Senator Hassan.
STATEMENT OF HON. MAGGIE HASSAN,
U.S. SENATOR FROM NEW HAMPSHIRE
Senator Hassan. Thank you, Chairwoman Fischer and Ranking
Member Booker, and thanks to all of you for being here today.
I'm sorry I wasn't here to hear your testimony, but I will be
well briefed on it.
I wanted to start with a question to you, Mr. Lofgren. The
trucking industry obviously plays a critical role in our
country, it certainly does in New Hampshire, where we have
about 27,000 jobs that are related to the trucking industry,
and not only is New Hampshire paradise, we're small, so from
1.3 million people, 27,000 jobs is quite a lot.
We all know how hard our drivers work, often in really
rigorous weather conditions. And some of the roads aren't very
well kept up. You know, we've all had our infrastructure
challenges over the last couple of decades really. The American
Society of Civil Engineers has deemed one in nine U.S. bridges
structurally deficient, clearly posing a risk to travelers,
including truckers, all around our country.
So I think we all talk about the need for more
infrastructure investment and that it's very, very clear. It
seems to me it's always how we do it that's the question,
right? Some are good for tax breaks and public-private
partnerships. Others maintain direct Federal spending will be
needed if we're going to really develop a 21st infrastructure
that lasts.
As an industry expert and a business leader, do you believe
we can reach infrastructure goals with tax cuts alone, or do
you think we need to take an all-of-the-above approach to
tackle this challenge?
Dr. Lofgren. Well, you're really putting me on the spot,
aren't you?
Senator Hassan. I know.
Dr. Lofgren. Well, I will tell you that the trucking
industry recognizes that we have to pay our fair share, and we
realize that the mechanism for doing that has to be created.
Now, there's a lot of debate here in this city as to how that
should happen.
Senator Hassan. Right.
Dr. Lofgren. I'll just go back, when Eisenhower started the
effort that said we're going to build an interstate system that
will connect this country, he talked about a usage fee, and it
was really a recognition that as people gained benefits from
this infrastructure that was put in place, they should
contribute to both its growth and its maintenance. I would say
our industry is more than willing to do it because it is
fundamental to successfully and safely executing what it is
that we do.
So I think there is an absolute willingness for us to pay
more. We want it to be effectively deployed to address the
need. And I think that's why we send all of you here, is to
figure out what's the best way for that to happen.
[Laughter.]
Senator Hassan. Well, thank you. Now you've put me on the
spot, so we're even, right?
[Laughter.]
Senator Hassan. Well, thank you very much.
And, Mr. Rose, I wanted to just talk a little bit about
some of the innovations, and as I came in, you were talking
about some of them, some of the uses of drones. As a former
Governor, I got to appreciate the importance of technology,
especially for particular safety functions. It is my
understanding that BNSF has successfully been utilizing UAS or
drone technology to assist, as you were talking about. And
certainly the use of technology can save on your bottom line
and increase safety.
So I guess it's an open-ended question. What can we do here
to make sure that companies like yours have a regulatory
framework in place that will allow businesses to innovate and
experiment as new technologies emerge?
Mr. Rose. Yes, so in my statement, I talk about doing a
full comprehensive review of the FRA, Federal Railroad
Association, undertaking that. I could point to a lot of rules
in the railroad industry that go back to the steam locomotive.
Senator Hassan. Yes.
Mr. Rose. Literally. I mean, we set up our crude districts
on that, we set up our inspections. And so things like the
command and control structure of railroad regulations go back
to a time when we had steam locomotives, and here we are, fast-
forward, we've got the technology we have in these locomotives
today now with Positive Train Control are going to totally
change the face of that.
So the problem is that we don't have a good process in this
country for looking at old regulations and the cumulative
impact on regulations. And so I think we just need to take a
holistic view and find where technology has replaced that old
command and control, activity-based, regulatory oversight
structure and start peeling them off.
Senator Hassan. OK. All right.
Mr. Rose. And while I've got my mic open, I just want to
comment briefly on the highway system because I've studied it a
lot and I just--Chris is exactly right on a user-based system.
You know, long term, the gas tax doesn't work. The hybrids, the
alternative issues, the inflation that comes into the gas tax.
We all have studied it, know that we've got to come up with a
different issue.
The ideal perfect issue is some sort of vehicle miles
travel. We know that there are all sorts of public sensitivity
around that. The information is already there in these cars.
Senator Hassan. Yes.
Mr. Rose. The information is there in our cell phones. And
the faster we get that, I truly believe the faster we'll find a
sustainable methodology to pay for our nation's highway, which,
quite frankly, the railroads rely on.
Senator Hassan. OK. Well, thank you.
And I see that I'm over my time. I would love to follow up
with you all separately about the issue of Twin 33s on our
highways, and now my office will do that. Thank you very much.
The Chairman. Thank you.
Senator Klobuchar.
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Thank you very much, Chair Fischer and
Senator Booker. Thank you for this important hearing. I was
very proud of the work that was done on the FAST Act last year,
and was one of the early Senators to support it. I think you
know why we need it, but for me, that's a floor, and I hope we
can do even more in the years to come.
I did want to thank Mr. Rose. We have some rail projects in
Minnesota in the metro area, including Southwest and Bottineau
light rail projects. And I really appreciate the work that he
has been doing to work with the Governor and others. So thank
you so much.
We had a little snow out in the western states, and I'm not
going to get into that, but thank you for responding. I know
it's not easy. Mr. Moorman knows that we had to stop some
planes and some trains from running during that time.
But I thought I would lead with just some of the issues. I
know, Mr. Rose, that Burlington Northern makes long-term
capacity decisions and must anticipate changes in market demand
years in advance. This planning can be difficult. In 2016, you
handled about 480,000 fewer units of coal than in 2015, while
at the same time, you saw high U.S. corn and soybean export
sales, and many from my state, contribute to an all-time record
volume in shuttle sales and BNSF in the fall.
How do you adjust to better accommodate these variations?
You know, we had that one year where it was really difficult
because of oil coming in from North Dakota and other places,
and because of the commodities at the same time. Since then,
things have been pretty even keeled from my perspective, and I
want to thank you for that.
But can you talk about how you accommodate things?
Mr. Rose. Yes, well, it helps when you start with spending
a lot of money. And unfortunately sometimes those massive
investments like we made on the Northern line at $1 billion,
sometimes markets do change, and we know that that's just the
nature of the business that we're involved in. It wasn't
literally 7 or 8 years ago when FERC--we were being called into
FERC, a railroad. We were like, ``Why are we going into FERC?''
That's not our territory. We like FRA, NTSB, STB, you all, T&I,
but----
Senator Klobuchar. You're really fast with those initials.
That's very impressive.
[Laughter.]
Mr. Rose. And we were being call in there because they
thought that there was going to be a massive expansion in the
coal business. And so, you know, that's just the nature of
these networks.
And I really am serious, though, we've spent enormous
amounts of money. The industry will spend--we'll spend about
$115 billion in this country on the highway system--that's
Federal, State, and local--and the railroads are spending about
$25 billion.
So what we've got to do is to make sure that the railroads
can continue to spend that money and then we've got to have the
best insight by working with our customers, such as Dow and
Schneider, to see where their needs are going to go because, as
you know, building--once you have a market and once you have
the money, the ability to build it out because of the
challenges of permitting are really significant.
And we feel like we literally, in some cases, need to be
out 5 years, and when we think about our vision of going out 5
years and understanding where Chris's business is going to be
in 5 years, it's sometimes hard to see that.
Senator Klobuchar. How about rail crossings? Any
developments with those? I know we've worked on those together
before.
Mr. Rose. Yes. Again, I think that--we call it--you all
call it section 130 money, we call it that, too. That's a good
thing. You've increased the funding of that to I think about
$225 million a year. Quite frankly, it probably needs to be
closer to a billion dollars a year. That allows communities to
draw into that, do separations, overpasses, underpasses,
increase the level of safety, go to flashers, grade gates,
those types of things.
As I said earlier, we have about 250,000 grade crossings in
this country. Probably half of them have absolutely no
mechanized devices at all. They're traditionally out in the
middle of the country. We call them crossbuck-protected
crossings.
But when you look at these metropolitan areas like
Minnesota and Saint Paul-Minneapolis, where we start getting--
the urban sprawl is going out further and further, a great way
to relieve congestion is to separate that crossing, but they're
really expensive to do.
And so I would just urge more money, more programmatic
reform, like you all have already started to do, that will
allow states to draw down.
Senator Klobuchar. OK. Thank you.
Just one quick question at the end, Mr. Moorman. I led the
bill with Senator Cornyn on human trafficking last year, and
then we actually, this committee, passed through a bill with
the airlines and flight attendants to improve training of
workers on the front end to catch human trafficking. We've been
amazed at the cases that can come in.
I was just wondering, I know that Amtrak is interested in
this issue. Could you just very briefly tell me about your
efforts? Because I've run out of time here.
Mr. Moorman. We have done a lot of education across the
entire company with all of our field people, exposed them to
the issues, given them training on them. We keep a lot of
information displayed still to make sure that information
remains timely and that they're aware of it. I think there is
the Blue program, which Amtrak participates in as well.
So it's an issue that we continue to educate our people
about and deal with, but we're very involved with that.
Senator Klobuchar. Thank you very much. Thank you, all of
you. Thanks.
The Chairman. Thank you, Senator.
Senator Udall.
STATEMENT OF HON. TOM UDALL,
U.S. SENATOR FROM NEW MEXICO
Senator Udall. Thank you very much, Chair Fischer and
Ranking Member Booker. Welcome. Good to see all of you today.
Had an opportunity to watch you from my office, but good to be
here today in person with you.
A WalletHub study recently ranked my home state number four
on the list of states that could be hardest hit by a trade war
with Mexico. In 2016, New Mexico exported $1.5 billion in goods
across the southern border, significant transportation
investments in Santa Teresa, for example, to help facilitate
trade and increase economic opportunity in southern New Mexico.
But President Trump seems to be leading us to a trade war
with Mexico. He has proposed a 35 percent tariff on goods
coming from Mexico. Mexico's economic minister has recently
reported that if a border tax like that is put on Mexican
goods, they would immediately seek retaliation.
So I would ask Mr. Rose and Dr. Lofgren, is this saber-
rattling on trade good for the transportation industry? Would a
trade war with Mexico be good for your businesses? And are
other transportation companies concerned about this from what
you're hearing from your colleagues in the industry?
Mr. Rose. So I would like to just brag for a minute on my
largest competitor, Union Pacific, who really is responsible
for Santa Teresa.
Senator Udall. You bet. You've got it.
Mr. Rose. I sit on the Dallas fence, and we watch all of
your state as well as Texas. And Santa Teresa is a great
example of how a large rail logistics park can go in and create
enormous economic commerce and create jobs for a community and
facilitate the flow of goods across our country.
Senator Udall. You're absolutely right on that.
Mr. Rose. And I let my favorite customer and colleague, Dr.
Lofgren, answer the question on the trade war.
Senator Udall. You're going to punt.
[Laughter.]
Senator Udall. Mr. Rose, you're punting then on me. You're
passing it off, the hot potato.
Mr. Rose. We do not believe in trade wars.
Senator Udall. The hot potato. OK. Good. That was good. You
put it on the record, we don't need trade wars.
[Comment off microphone.]
Senator Udall. For the record.
Dr. Lofgren. Yes, I know. This is an example--this is an
example of Matt's great sophistication and time spent here in
this fine city, how he handled that. He will pay for that one
way or another.
[Laughter.]
Dr. Lofgren. Clearly, we have significant operations that
move freight both into Mexico and out of Mexico, and clearly,
these kinds of issues are not going to be helpful to our
business in terms of reducing the flow of goods. Now, I know
that a lot of our customers have significant manufacturing
facilities that bring component parts or build component parts,
which they need to finalize here in the U.S. So I'm pretty sure
that it's not going to go to zero, but there is no doubt that
if the path that we're on here continues, we'll see reductions
in the amount of business that we're going to conduct between
the United States and Mexico.
Senator Udall. Yes, and the reduction in business means
reduction in jobs, and that's what we're really worried about
in New Mexico.
Now, I very much support investing in infrastructure, but
there is one massive infrastructure project proposed by
President Trump I'm not very excited about, and that's a border
wall with Mexico. This wall could cost $21.6 billion, and
that's with a ``B,'' $21.6 billion. That's according to a news
report quoting Department of Homeland Security cost estimates.
And now we know that American taxpayers, not Mexico, will pay
for the wall. Business leaders in southern New Mexico are also
worried about the economic costs to their companies once
Trump's taxpayer-funded wall is built.
And Jerry Pacheco, President and CEO of the Border
Industrial Association, explained that building a border wall
would hamper cross-border partnerships. In my view, building
this wall could send a message to foreign companies that the
border is closed for business.
Mr. Rose, how would a border wall impact our trade
relationship with Mexico? And, specifically, how would a border
wall impact the rail business in places like Santa Teresa along
the southern border?
Mr. Rose. I'm really not sure how a border wall would be
impacted. I think, you know, right, wrong, or indifferent,
we'll probably haul a lot of the product going into if there is
a wall being built. But I really don't know how that wall will
impact our business. We, quite frankly, haven't thought a lot
about it.
Senator Udall. Yes. One of the things that I'd want to put
on the record, this area that I'm talking about that Jerry
Pacheco--many people think that Albuquerque is our biggest
economic area. It's actually the border area, where you're
across border, have huge amounts of activity, and then in New
Mexico, it's growing, it's booming, and they're very worried,
they're very worried about it. So it's something that concerns
me a lot. And the whole issue here is jobs, as you know.
Could I ask one more question? I want to get to Amtrak,
which we love in New Mexico. You know, all the Boy Scouts,
whenever you run into Boy Scouts around the country, they're
headed to New Mexico on Amtrak to go to the Philmont Ranch,
premier area to go. So we want to make sure that Amtrak
continues running. And, as you know, New Mexico, Kansas, and
Colorado have worked together successfully to get TIGER grants
that help support track safety improvements for the Southwest
Chief line. Do you agree with me that rail projects should
continue to be eligible for TIGER grant support?
Mr. Moorman. Well, absolutely. And I think that the model
you cite is a classic example of communities and states
understanding the importance and desirability of passenger rail
transportation. We see that in a lot of other parts of the
country as well. So I certainly agree that the accessibility of
TIGER grants is an important tool for them to use.
Senator Udall. Great. Thank you very much.
Thank you, Madam Chair, for your courtesy.
The Chairman. Thank you.
Senator Udall. I really appreciate it. Take care.
The Chairman. Thank you, Senator.
Senator Duckworth.
STATEMENT OF HON. TAMMY DUCKWORTH,
U.S. SENATOR FROM ILLINOIS
Senator Duckworth. Thank you, Madam Chair, and thank you to
the Ranking Member, for convening this important hearing on the
Nation's multimodal transportation system. You know, the people
of Illinois sent me here with a clear message: Americans are
ready, willing, and eager to rebuild our Nation's
infrastructure.
Whenever I travel across Illinois, whatever else is
happening that's dysfunctional in this country, one of the
things that unites people, whether I go into a rural community
or an urban center, is an agreement that we need to finally
come together and work to modernize our country's aging roads,
railways, and bridges.
It doesn't matter where I go, whether I am in El Paso,
Illinois, or whether I am in Chicago, Illinois, people are
deeply concerned. They're ready for us to place a big bet on
America, and they want to invest in American workers and
American companies as part of a multiyear rebuilding effort for
our infrastructure using American workers, using American steel
in particular.
Mr. Rose, as BNSF knows well, any serious efforts to
upgrade our Nation's freight rail system must prioritize
Illinois. Our great state is proud to be home to more than
9,000 miles of railroad tracks and the 41 railroads that travel
on them. Chicago is the busiest rail hub in America, and East
St. Louis is another major rail center. Millions of tons of
freight rail travel across Illinois every single year. And, in
fact, we're almost like the arteries in your body when it comes
to the railroad, and if you just have one artery that gets
clogged, the entire Nation does suffer.
I'll give you an example. Right now, today, a train can
ship freight from Los Angeles to Chicago in under 48 hours,
closer to about 35 hours, but it takes that same train 30 hours
just to get from one side of Chicago to the other. And that
reverberates up and down the supply chain.
So, Mr. Rose, would you agree with me that this status quo
must be improved and upgrades increasing rail capacity and
reliability to combat congestion in Illinois would both improve
supply chain efficiency and strengthen our entire economy?
Mr. Rose. Senator, when we think about Chicago, it really
is the textbook example of a project of national significance.
All freight railroads, six of the seven big-class ones, touch
Chicago, Amtrak, Metra, hundreds and hundreds of passenger
trains. And we agree with you about Chicago really being at the
epicenter of the entire freight railroad network. We have
looked at it over the years. I will tell you I share many of
your frustrations.
There is a significant effort, as you know, CREATE. It has
made progress for improving the connectedness of the freight
rails. The next stage of it is additional funding. Projects
like the 75th Street overpass we know are vitally important to
the passenger commuter side of Chicago. We will continue to be
supportive in those efforts. But if we were going to place one
big bet on a project of national significance for the freight
railroad industry, it would come back to Chicago.
Senator Duckworth. Thank you. I thank you for highlighting
CREATE. Could you describe a little bit, just take a moment to
describe, how the FASTLANE grant for this vital project and--
well, FASTLANE grants for both the 75th Corridor Improvement
Project, as well as the Merchants Bridge project, would be
absolutely vital to the transportation of goods and services as
you were mentioning?
Mr. Rose. Yes. So, again, I think that the FASTLANE program
has great bones. It's going to need more funding for the first
time, multimodal projects, intermodal projects. The Merchants
Bridge is a great example of where that money could be applied
to that, lower the financing costs of that. Chicago, CREATE, a
lot of multimodal projects in Chicago that would be eligible
for FASTLANE.
So we're real excited about the program. I know it's going
to come under funding constraints, but, again, I said earlier,
I think for the first time ever what you all have done is by
really highlighting the necessity of a freight program and
having those freight plans, will give people a better pathway
to justify the funding that you all will eventually have to
come up with.
Senator Duckworth. Thank you.
Mr. Moorman, do you want to talk a little bit about
Amtrak's role in this? Because as the Merchants Bridge is
concerned, Amtrak also goes over that bridge and I believe has
agreed that we need to really prioritize the improvements
there.
Mr. Moorman. We have. We have a very strong interest
obviously in the Merchants Bridge and in the Chicago area as
well. Amtrak is a participant in CREATE and certainly has
stepped up I think to support all of the freight industry in
Metra, in the 75th Street project, the application for the
grant there.
Anything, as I've said before, anything that improves the
rail infrastructure of this country in those places where
Amtrak operates is something that we strongly support and
believe in and want to work with you and the Congress as well
as our partners in the freight industry to further those
initiatives.
Senator Duckworth. Thank you. Thank you, Mr. Rose.
Thank you, Madam Chair.
The Chairman. Thank you.
Senator Booker.
Senator Booker. Thank you very much, Chairman.
Mr. Moorman, you heard me in my opening comments talk about
the Gateway chokehold, and obviously we have two tunnels there,
about 107 years old, that probably, given on whose estimates
you look at, have 10 to 15 years left in life. The last
Congress, the administration ranked that as like the number one
infrastructure urgency in the United States of America. What's
going to happen if the Federal Government doesn't continue what
we've seen in the last Congress and really step up to partner
on the project?
Mr. Moorman. Well, we're already seeing increased
reliability issues through the tunnels, primarily are driven
largely by the recent flooding of Hurricane Sandy, which
flooded not only the two tunnels under the Hudson, but the four
tunnels under the East River, and they are creating lots of
electrical problems, signal problems. Those problems will just
continue to get worse. And at some point, if it's 10 years or
15 years, we'll have to shut one of them down.
Senator Booker. And what's the economic impact of shutting
one of those tunnels?
Mr. Moorman. Well, it's extraordinarily difficult to
calculate. If you look at our peak service through those
tunnels in the morning and the evening, we put about 24 trains
an hour through them.
Senator Booker. You're moving literally hundreds of
thousands of people a day.
Mr. Moorman. Absolutely. There are several hundred thousand
people a day. Once one tunnel goes out, and it would go out for
well over a year to rebuild, you're down to six trains an hour,
and it would be nonfunctional.
Senator Booker. Am I overly dramatic to say you would have
a traffic ``Armageddon'' in that region?
Mr. Moorman. You would. No, I don't think it's
overdramatic. It would freeze that side of the river I think in
terms of people getting in and out of the city.
Senator Booker. Yes. So I'm a little frustrated because I
think that in the beginning of your remarks, you talked about
bringing business sense and practices, and I really just--I'm
excited about your leadership with that.
But one of the biggest problems it seems is that your
funding is not in any way regular or reliable and it's not a
part of the overall Transportation Trust Fund. Could you
address the challenges that that brings to the way you're
trying to run this Amtrak like a business?
Mr. Moorman. Well, it obviously creates a lot of problems.
Now, but one thing let me applaud the Committee for is that the
FAST Act, under the provisions of the FAST Act, the
authorization is at least for a known amount of money over the
next few years, so we can make better plans as a result. The
only issue with that is that while that's sufficient to keep
the network certainly operating and to do some modest
improvements, these major projects that you're describing are
far beyond the funding that's committed to Amtrak, and that's
where my real concern comes in about the Northeast corridor and
about the long-term needs we have in terms of locomotives and
rolling stock. So----
Senator Booker. Mr. Moorman, I hate to interrupt you, but
anytime you want to applaud this subcommittee, you should go
right ahead and do it, literally or figuratively.
[Laughter.]
Senator Booker. Just for the Committee as a whole--and, Mr.
Gurd, I really feel bad, like you have not been grilled
sufficiently in this hearing, and so I'm going to allow you to
answer this as well--direct government investment in
infrastructure, a lot of talk about infrastructure by our
President and by Congress.
I believe that you need to have a direct investment by
government in addition to like we did through the FAST Act,
making the RRIF program and other loan programs.
How do you feel about direct government investment? Is that
necessary in terms of the economic growth strategy for our
country?
Mr. Gurd?
Mr. Gurd. Thank you.
Senator Booker. Yes, sir.
Mr. Gurd. I would say so, yes. With regards to
infrastructure and our ability to be able to ship products to
our customers, every day customers are continuing to get more
demanding in what they need, when they need it, and our ability
to connect with our carriers. Our ability to make sure that we
get products to get products to our customers safely and on
time when they require them is something that is very important
to us and our ability to be competitive. And being able to have
the infrastructure in place in order to make sure that that
happens as it comes outside of our fence line is extremely
important.
Senator Booker. So you would be in support of direct
government spending on infrastructure?
Mr. Gurd. Yes.
Senator Booker. And, Dr. Lofgren, the man with more degrees
than the month of July, sir, yes or no, when an infrastructure
package comes down, would you like to see a big robust part of
that being direct government spending?
Dr. Lofgren. Yes, I would.
Senator Booker. And, Mr. Rose, by any other name?
[Laughter.]
Mr. Rose. Yes, so if you think about our nation's
infrastructure, it's really a weapon of competitiveness for the
U.S. worker.
Senator Booker. I love that, a weapon of competitiveness.
Mr. Rose. Yes. And investments in this network are going to
enable that worker to be more competitive. I'm fine with direct
government investments with the caveat that we don't change the
balance of modal equity. OK? What you should want--I'm sorry, I
interrupted.
Senator Booker. No, I was just saying modal equity meaning?
Mr. Rose. Between the highway and the railroads. OK? We pay
for 100--99.3 percent of our own infrastructure in the railroad
industry, and clearly I hope I've made the point today, what
you should want is for the next ton of freight that's moved on
the surface of this network in this country, that somehow it
gets off the highway and gets put to the railroad industry
because of our efficiency, our environmental impact, and the
fact that then you don't have to pay for that next road
pavement on that highway system.
And if we lose the economic tilt, if you will, of how these
networks are funded--and I'll say Chris has been--he has
advocated that the trucking industry needs to pay their fair
share, and as long as we go down that pathway and that the
trucks continue to pay for their use of the highway network,
it's great.
If we just move away from this user pay system and end up
where all the money that goes into the Highway Trust Fund is
paid through general revenues or some of the creative things
that had to get passed in this last bill, then what will happen
over time, because you'll be subsidizing the railroad's largest
competitor, and our largest customer, and what will happen over
time is that you'll get more and more trucks to the highway
network, and I don't think that that's what anybody in this
town wants.
Senator Booker. No, sir. I appreciate that. And I want the
record to show that as I looked at Dr. Lofgren's face, that he
took no umbrage to that comment whatsoever, none.
OK. And I am over my time. I only have one more sort of
question for us, but I've learned to defer to my senior Senator
and the chairperson of this committee.
The Chairman. No, go ahead.
Senator Booker. Go ahead. OK.
So I just want to say first of all that, Mr. Rose and Dr.
Lofgren, you guys are really leaders, amongst the leaders, in
industry when it comes to safety issues, and I'm just grateful
for the commitment you both have made, Mr. Rose, you all are
ahead of schedule in your industry for putting in Positive
Train Control, and I'm really grateful for the sincere effort
you all are making to meet the Congressional mandates, but
also, as you said in your testimony earlier, that it's not a
be-all and end-all to train safety, and you all are innovating
in ways to find other ways to ensure safety, and that means I
speak at least as one Senator that really appreciates that
work.
Dr. Lofgren, the same thing goes for you all. You know that
I'm a guy that has been harping on truck safety, you may have
heard that, sir, but I just want to say that you and your
company, really again, amongst industry leaders and what you're
doing to try to lead in safety innovations and technology, and
I'm one Senator, I just want to say publicly, I am deeply
appreciative of the work that you all do. I know how seriously
your company takes it. So I really want to have that on the
record.
I do, though, just have the concern, Dr. Lofgren, if I can
focus, on what the trend is out on our highways. And, again,
the preliminary data that's come from the National Safety
Council released in a report found that these preliminary
estimates, as many as 40,000 people died just last year in
vehicle crashes, it's yet another year where we're seeing a 6
percent increase over 2015 and a 14 percent increase over 2014.
That's a 2-year increase, the most dramatic 2-year increase in
50 years.
And I say that to say--and I talk to truckers now all the
time and they rightfully point out that cars act whacky around
trucks and often are the ones causing the so-called truck
accidents. So I don't want to pin this on the trucking
industry, the level of carnage we're having on our highways,
but, as someone who I afford a lot of respect to because I know
how seriously you take this, could you just give me just some
thoughts that you have about, how can we deal with what I think
is a major crisis, one of the leading causes of death in our
country, destroying so many families?
I'm wondering if you have some thoughts and input and
advice. That's really my last request, my last question here,
if you could just sort of talk to me specifically about what
your industry could be doing or should be doing to make us more
safe out there, because the gravity of the carnage and injury
and loss of life, loss of property, is just stunning.
Dr. Lofgren. Do you want me to answer?
Senator Booker. Yes, sir. I'm done.
Dr. Lofgren. OK. You are right. With forward-facing
cameras, some of the video that we can show you of behaviors of
the motoring public, you would think we had maybe created a
comedy. It's not comedy, but the reality is, is that if you
look at vehicle miles traveled on the road today, the real
growth is in passenger vehicles versus trucks. That's not to
say that we haven't at times really messed things up and very,
very horrific things have happened.
What I find interesting, as we think about putting in
regulations, the reality is, is if you look at the dramatic
improvement in rear-end accidents that we've had at the company
since we have put the OnGuard technology in, it speaks for
itself. The reality is, is that there is no requirement that a
truck coming off the manufacturing line today, Class 8 vehicle,
have that equipment on it as standard.
So when you look at some things where you say there are
regulations that could have massive impact, the reality is, is
that you cannot reverse engineer that back into a piece of
equipment, it has to be a new vehicle.
So I think some of the things like that, I mean, there are
regulations that I don't think are productive that we operate
under in the industry, that would be one that there is so much
evidence to say this needs to be a part of what is coming on
and hauling freight today.
So I think there are things that are going to emerge over
time where there ought to be incentives to get people to do
that and to invest the incremental money because of the
paybacks. So that would be one area where I think there is
opportunity.
Senator Booker. So let me just say thank you because the
data in your testimony was stunning about the rear crash, and
that you all are doing that, not as an industry mandate, but--
--
Dr. Lofgren. And there are others of our competitors who
are doing it as well, so I don't want to stand up and say we're
the only ones.
Senator Booker. But now at the risk of being kicked by my
Chairperson here, I do want to note for the record that an
industry leader just called for some more regulation. Thank you
very much.
[Laughter.]
Dr. Lofgren. The right regulation.
Senator Booker. The right.
The Chairman. Thank you, Senator Booker.
And I would like to thank the panel for being here today. I
think this has been an important hearing where we talk about
moving people and moving freight, seeing our economy grow,
provide jobs. We move America, but as you can tell from the
questioning, there are differing views on how we're going to do
that. And we need, I believe, to look outside the box.
Earlier--I'm going to go on since the Ranking Member went
on for a while.
[Laughter.]
The Chairman. I think earlier we heard about the issues we
have with the fuel tax. It is not sustainable. I would propose
to you that it hurts lower income people. It, in many cases,
can limit job opportunities. But as we move to new
technologies, a fuel tax is not going to grow our
transportation system, in my opinion.
So I think it is important that we look outside the box.
And I thank you, Dr. Lofgren, for being willing to step up and
assume more of the cost of roads, but that's hard for a trucker
who has one truck and is trying to take care of his family. I
heard that when I was in New Hampshire. There are many small
truckers in that state, and they were worried about it.
I come from a state that has small truckers, but also has a
number of very, very big companies, and I have always
appreciated the support of truckers when I am trying to work on
financing for infrastructure at the State level and now at the
level here that we're looking at nationally. So I thank you as
we move our freight.
Mr. Gurd, I appreciate the consideration that you have to
give for transporting materials that are needed for our economy
but are also difficult to transport, and you do that with care
and you do that with a sense of responsibility to your drivers,
to the public, to our country. So I thank you.
And, Mr. Moorman, when you are moving people in this
country, especially in the Northeast Corridor, where my Ranking
Member, he just wants more and more and more----
[Laughter.]
The Chairman--but we do appreciate the services that you
provide as well. And I think there should be a way that we can
provide for the needs that you face in a creative way in the
future.
And, Mr. Rose, I know that Ted Cruz claims you in Texas,
but we claim Burlington in Nebraska. I have family ties to
Burlington. As I think if you go back far enough to the people
in Nebraska, somewhere in our history, our family history,
there is a connection to a railroad. You folks have grown and
built this country.
So I thank you all for being here today. I appreciate it.
The hearing record will remain open for 2 weeks, and during
this time, Senators are asked to submit any questions for the
record. Upon receipt, I would ask the witnesses to please
submit your written answers to the Committee as soon as
possible.
With that, I thank you all, and the hearing is adjourned.
[Whereupon, at 4:22 p.m., the hearing was adjourned.]
A P P E N D I X
Response to Written Questions Submitted by Hon. Deb Fischer to
Matthew K. Rose
Question 1. Mr. Rose in your testimonies you each discussed reforms
in the FAST Act that streamlined the environmental review process and
removed some of the red tape on routine infrastructure and asset
maintenance. Would you please elaborate on the types of challenges your
railroads face when attempting to build or improve its infrastructure?
Are there ways that Congress can improve on the work within the FAST
Act?
Answer. Congress has recognized the difficulty of project
permitting, including projects related to railroad operations, which
the rail industry appreciates. There are areas where additional
Congressional action would be helpful, in both the railroad-specific
context and in ways that benefit all permitted projects. Congressional
oversight of the implementation of items that Congress has already
addressed is also important.
As noted in my testimony over the past few years, facility
expansion on the West Coast for both BNSF and our customers has been
severely challenged by the regulatory process and environmental
advocacy groups opposed to facility construction. In some cases, local
permitting processes are used as a means to target and prevent
interstate transportation, particularly of fossil fuels. Under the
Interstate Commerce Commission Termination Act (ICCTA), many state or
local regulations are preempted with respect to rail transportation--
including zoning and land use regulation, construction and
environmental permitting of rail facilities and regulation of railroad
operations. When it comes to interstate commerce, Federal agencies,
including the STB, must not be reluctant to intervene and provide clear
direction that using such regulations to block these projects is
preempted. Strong direction from Congress could ensure that important
rail projects are not shelved or abandoned altogether, and that the
flow of interstate commerce is not impeded.
An area of needed reform common to many projects, including
railroad projects, relates to reviews under the Endangered Species Act.
In some cases both the U.S. Fish and Wildlife Service (USFWS) and the
National Marine Fisheries Service must be consulted before a permit or
clearance can be issued. Neither agency has a speedy consultation
process. It is imperative that Congress consider time limits after
which, if the Service cannot articulate an adverse impact on a species
that is likely to occur from the project, then the project is deemed
``not likely to have an adverse effect'' by the Service under the
Endangered Species Act. Many times, particularly for most fish species,
the Service knows the appropriate time windows when work should and
should not proceed, and knows the best management practices that will
protect the species of concern. However, instead of promulgating
regulations or agreements that would streamline projects that agree to
use the standard fish windows and best management practices, the
Services go through long, laborious processes to recommend the same
windows and practices. In some cases, we have seen the Services use
this process to make comments regarding the lead agency's scope of
review under NEPA.
Lengthy consultations between Federal agencies are also a challenge
under section 404 of the Clean Water Act. The process for the U.S. Army
Corps of Engineers (USACE) to initiate a consultation with the USFWS to
examine impacts to fish and wildlife needs to be streamlined and
expedited. There should be a hard deadline for the USACE to initiate
the consultation process.
When it comes to mitigating environmental impacts of projects, we
concur with the USACE that mitigation banks and in-lieu fee programs
are usually the right answer from an environmental standpoint. However,
the process that allows a person or group to create a mitigation bank
is overly burdensome. There are some watersheds where no banks are
available, and this is at least in part because of the onerous, years
long process that must be undertaken before a bank can sell credits.
Congress should encourage the USACE to study its process and streamline
it to the maximum extent practicable for both public and private
mitigation banks.
Congress can make additional improvements to the FAST Act to ensure
the timely delivery of much needed infrastructure projects.
Statutorily prioritize project permitting for international
commerce.
Review the scope of state implementation of Federal statutes
to ensure consistency with Federal regulators for projects in
interstate commerce.
Expand Federal Communications Commission regulatory
streamlining to expedite the deployment of technologies that
improve safety and efficiency in the railroad industry.
Expand FAST-41 to railroad projects.
The FAST Act (under Title 41 or ``FAST-41'') creates a
new initiative to expedite permitting and environmental
review for complex infrastructure projects. The FAST-41
provisions make fundamental changes in project delivery by
setting timetables for review which can be modified under
limited circumstances, creating accountability through
performance metrics, and limiting judicial review.
Unfortunately there are a number of limitations on projects
that are covered under FAST-41, including rail projects.
Rail projects are increasingly complex, with multiple
agency reviews and uncertain timelines. The benefits of
this new permitting structure should also include large
rail projects.
Require that permitting authorities at all levels of
government use technology for streamlining.
Public and Private Geographic Information System tools are
widely available and make relevant, scientific, environmental,
cultural and other data easily accessible to facilitate project
siting. Congress should statutorily prioritize the use of GIS
tools for NEPA analysis instead of costly on-the-ground studies
to help reach conclusions in a timely manner.
Congress should exercise careful oversight of the FAST Act rail
project delivery/permit reform provisions to ensure they are
implemented in a fashion to deliver their intended efficiency benefits.
As I covered in my testimony, the FAST Act directs the U.S. DOT to
apply, to the extent feasible, previously enacted highway-related
environmental streamlining to railroad projects. The rail industry
stands ready to work with the Department to determine how best to apply
these roadway project efficiencies to railroad and intermodal projects.
The FAST Act also mandates that the DOT, in consultation with the
Advisory Council on Historic Preservation (ACHP), establish a Section
106 exemption for railroads rights-of-way consistent with the exemption
currently in place for the Nation's Interstate system. At the time of
transition to the new Administration, the Department had not completed
action on a draft proposal for submittal to the ACHP. The Department
had also began but did not conclude the process called for in the FAST
Act to survey the Federal Railroad Administration's use of NEPA
categorical exclusions and a rulemaking for new exclusions to
facilitate rail projects. Finally, the Act exempts from Section 4(f)
review the use of railroad and rail transit lines that are in use or
that were historically used for the transportation of goods or
passengers.
Question 2. Mr. Rose, in your written testimony, you mentioned that
FRA data indicates a drop in employee injuries by a remarkable 80
percent from 1980. At BNSF, what would you say are the major elements
of this drastic increase in safety on our Nation's railroads? And, as a
follow up, how is technology and innovation enhancing safety on our
Nation's railroads?
Answer. Government data shows that for the freight rail industry,
the train accident rate has fallen 43 percent since 2000 and 79 percent
since 1980, and the rail employee injury rate has fallen 46 percent
since 2000 and 83 percent since 1980. Continued robust investment in
infrastructure has played a direct role in this success, along with the
deployment of technology and safe operating practices, which involve
rules compliance and a commitment to safety by our employees. According
to the Association of American Railroads (AAR), the industry has spent
on average close to $25 billion annually over the last five years and a
total of $600 billion since 1980. Since 2000, BNSF has invested more
than $55 billion in its network, and our infrastructure is in the best
shape it has ever been to meet customer needs and operate safely.
While railroading has become extremely safe, it remains a very
unforgiving environment. The scope and complexity of the Nation's rail
operations, operating over a 140,000 mile outdoor production line,
means that infrastructure and equipment will sometimes fail or that
human error can occur. In response, BNSF employs a broad-based risk
reduction framework to reduce risk in all aspects of our operations.
Infrastructure investment, intense focus on fostering a safety
``Culture of Commitment'', along with risk countermeasures including a
combination of critical safety processes and technology, have produced
tremendous safety results. Our vision and ultimate goal is to operate
completely accident and injury free and so we recognize and are
committed to the fact that there is more work to be done.
BNSF recognizes that effective safety programs include the
engagement of every employee. BNSF's employee safety training
initiative, ``Approaching Others About Safety,'' (AOAS) is a training
program for all BNSF employees that focuses on confident and effective
peer interaction. AOAS launched in 2013 and is the single largest
training program BNSF has ever undertaken. The idea is simple: If you
care about someone, you'll approach them when you see them working
safely and let them know. At the same time, if you see them putting
themselves at risk, you will approach them and recommend a safer way.
AOAS was created with the involvement of many BNSF employees, including
focus groups with union employees within our Transportation,
Mechanical, Engineering, Intermodal and Telecom groups. The program
encourages attention to behaviors that, when done safely, reduce the
level of risk. Training focuses on the exposures that result in 97
percent of injuries, specifically the critical or primary exposure
areas, including: line of fire/release of energy, pinch points,
ascending/descending, walking/path of travel, and life-saving
processes. We believe Approaching Others has fundamentally changed our
safety culture.
Technology continues to play an important and growing role in
improving safety. BNSF and the freight rail industry deploy a range of
safety technologies and operational innovations across the North
American rail network, a considerable amount of which was developed in
cooperation with the Transportation Technology Center, Inc. (TTCI) in
Pueblo CO, and in coordination with the FRA and backed by support from
the U.S. Congress. These technologies include:
Wayside detectors that identify defects on passing rail cars
Wheel profile monitors which use lasers and optics to
capture images of wheels
Wheel Impact Load Detectors (WILD), which measure vertical
wheel forces on the rail. Algorithms help identify wheels that
have experienced a recent traumatic event and wheels with low-
level long-term defects that could negatively affect the
bearing or wheel life and rail health over time.
Trackside detector systems that use ``acoustic signatures''
to evaluate the sound of internal wheel bearings
Wheel temperature detectors, using infrared technology, to
identify wheel bearing fatigue
Rail inspection systems using induction or ultrasonic
technology to detect internal flaws in the rail
Track geometry vehicles that use sophisticated electronic
and optical instruments and ground-penetrating radar to monitor
all aspects of our track infrastructure
Machine Visioning systems which use camera-based technology
to identify defects like worn truck components, worn brake
shoes and missing bolts in the coupler carrier plate. These
systems can identify defects of equipment in motion at over 70
mph, day or night, rain or shine.
BNSF is also now in its third year of piloting Unmanned
Aircraft Systems (UAS)--drones--for visual right of way and
supplemental track inspections in a variety of conditions. We
are one of three companies partnering in the FAA Pathfinder
Program which will allow BNSF to perform extended track
integrity flights.
Positive Train Control (PTC) is an unprecedented ``system of
systems,'' bringing together advanced analytics, wireless
communications networks, GPS, trackside and locomotive hardware
and software and a back office computer system. BNSF is
committed to the technology and will ultimately invest more
than $2 billion to deploy it, which will be important to help
prevent the extremely rare but potentially catastrophic human
error-caused accidents, like head-on collisions.
The future potential for technology's role in improving safety
remains tremendous provided we have a regulatory environment that
encourages innovation. Policy makers and the FRA should support
movement toward a more balanced, collaborative and transparent approach
to a performance-based regulatory paradigm, one that focuses on safety
outcomes and not necessarily the specific means by which to achieve
them. The old ``command and control'' paradigm simply cannot keep up
and doesn't make sense in the modern and rapidly evolving world of
technology and data analytics. The rail industry will continue to
innovate to support our culture of safety and sound operating
practices--ensuring railroads can continue to earn the revenues
necessary to invest adequately in infrastructure, maintenance and
technology will be one of the most significant things that Congress can
do.
Question 3. As we enter into a new administration and a new
Congress, how can we improve the regulatory process at agencies to move
towards outcome, or performance-based regulations with better data? As
you are aware, in the FAST Act, I authored measures to reform the
Federal Motor Carrier Safety Administration to ensure more
participation and a stronger cost-benefit analysis. Are there specific
changes you would hope to see across the DOT to improve the regulatory
process?
Answer. My written testimony outlined near-, mid- and long-term
improvements that Congress, the Administrator and railroad safety
stakeholders should consider. While the underlying framework of
regulations between the FMCSA and the FRA are different, the regulatory
process improvements in the FAST Act informed aspects of those
recommendations.
Neither Congress nor the FRA has taken a comprehensive look at the
cumulative impact and effectiveness of the body of railroad safety
regulation, or how safety and operating technology can be incentivized
by regulatory processes. In particular, moving towards measuring
outcomes, rather than activities, guided by better data would represent
a change not only for railroads, but for regulators. Moving to more
data driven oversight of outcomes does present certain risks for rail
carriers, if not implemented cooperatively and if data is not
adequately protected.
Many other industries in this country and across the globe now
participate in the performance based regulatory model. The foundation
of this model is a mature industry with a good safety record and
appropriate incentives to be safe, like adequate returns and the
ability to easily implement technologies. There are a multitude of
internal and external incentives for railroads to operate safely.
We believe that the cost and efficiency of regulatory compliance
can be improved, and that the safety gains we have achieved can be
enhanced. That is always our goal; it is part of our corporate vision
and drives how we operate. We look forward to working with the
Committee on the details of its proposals, and thank you for opening
the discussion.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Matthew K. Rose
Question 1. Support for Freight Funding
Should there be robust Federal freight investment in a
future infrastructure package?
Do you support lifting the current $500 million cap on
multimodal projects in the FASTLANE program?
How have state freight plans and the National Freight Plan
guided BSNF's capital investment decisions?
Answer. The Fixing America's Surface Transportation (FAST) Act is
an important step in developing a national freight policy structure,
and can serve as a good template to build upon for any additional
infrastructure legislation that Congress might consider in the future.
With one exception--it continues the regular and sizable infusion of
General Funds into the Highway Trust Fund (HTF). This cannot continue
in the future because it not only puts necessary transportation
investments in budget competition with many other Federal funding
priorities, it represents a national freight policy of subsidizing one
mode over another and incentivizing the very road and bridge damage
that Congress struggles to find the funding to mitigate.
Job one of a Federal highway program is to reinvest in the
maintenance of the existing system and bring it to a state of good
repair. Basic maintenance and operations of key infrastructure are
critical to capacity and fluidity. Congress, the Administration and the
users of the highway network need to be working aggressively now to
strengthen the user based foundation of the HTF. This key principle has
experienced significant erosion as HTF revenues have failed to keep up
with investment needs and have been supplemented with general taxpayer
dollars and other non-traditional funding sources.
Fortunately, the FAST Act contained provisions for demonstrating
alternatives to the gas tax in a number of states and there are pilot
programs underway. However, as the U.S. Department of Transportation
(DOT) and states oversee how the private sector develops automated
vehicle development and testing, driver assisted trucks and platooning,
and even the requirement to maintain electronic logs for trucking
fleets, they should explore how these technologies will contribute to a
future with sustainable, user derived fees for maintaining the
highways.
One of the most notable elements of the FAST Act is the ``Fostering
Advancements in Shipping and Transportation for the Long-term
Achievement of National Efficiencies'' (FASTLANE) grant program. This
program is intended to help states, localities, and other entities
overcome funding barriers to complete projects of national or regional
significance. The program is funded at $800 million annually,
increasing to $1 billion annually by 2020. Eligible projects must be
highway freight projects on the National Highway Freight Network,
highway or bridge projects on the National Highway System (NHS),
intermodal facilities or railroad grade crossings, although intermodal
projects are capped at a total of $500 million over the life of the
bill. It would be beneficial to the national freight system to lift the
$500 million cap on multimodal projects in the FASTLANE program, given
that a significant amount of funding is generated by the General Fund.
The competitive FASTLANE grant program should be just that,
competitive. While there are a finite number of public-private
partnerships in the freight rail segment, the demand for grants is
strong as many communities seek to work with railroads to realign
tracks through or around urban areas to change development patterns,
want to separate more highways from rail rights-of-way or improve
terminal railroads that serve key industrial areas. These multimodal
projects could help ease congestion across the U.S. and improve the
efficiency of our national highways. In addition, port projects are
excellent candidates for FASTLANE grants.
As Congress considers additional infrastructure-related
legislation, there should be continued eligibility and funding for the
Railway-Highway Crossings Program (``Section 130 program'')--funding
that should be fully utilized by states but often is not. Section 130
is a critically important program, and while it allows for some funding
to go towards highway-rail grade separation projects, it does not come
close to meeting the pressing needs that states and local governments
have to increase funding toward projects that separate their roadways
from railroad operations. The FAST Act prioritized grade separations in
ways previous highway bills did not by making them eligible projects
across multiple funding programs. If the legislative opportunity to
assist state and local governments with additional funding for these
critical roadway investments presents itself, railroads would continue
to participate and support those projects.
Regarding state and national freight plans, BNSF believes they have
been useful in identifying, prioritizing, and positioning important
freight projects that provide substantial public and private benefits
but have not traditionally fit within past transportation funding
mechanisms. These plans are critical to securing the necessary public
funding and benefits in cases where these important projects align with
BNSF's interest in providing a safe, reliable, and efficient U.S.
supply chain. This influences BNSF private funding decisions in three
primary ways:
Allows BNSF to plan and commit its private funding
commensurate with its benefit in projects that also have public
benefits and public funding (PPPs), such as Tower 55 in Fort
Worth, Texas, the Willmar Wye project in Willmar, Minnesota, or
Sound Transit projects in Washington State.
Provides funding for public infrastructure which enables
BNSF to unlock latent capacity or justify investment in
parallel projects, such as intermodal connectors and
collectors. This also encourages BNSF (and our customers) to
make investments in intermodal facilities or warehouses
dependent on those roadways, such as the investments in the
roadways and highways around BNSF's Logistics Park, Kansas City
in Edgerton, Kansas.
Providing funding for ports, industrial parks, and other
major freight demand generators drives BNSF's investment
decisions which support network capacity and performance to
serve those facilities.
Question 2. Port of Quincy
Why has BNSF not renewed service at the Port of Quincy for
refrigerated cars?
Will you commit to working with the Port of Quincy to
restore cold train service?
Answer. BNSF is always looking for ways to be responsive to market
demands and bring innovative rail solutions to our customers that make
economic sense for us and our customers. We are always open to working
with the Port of Quincy or any other port or customer to explore new
market opportunities and provide service products that are in demand in
the marketplace.
Question 3. Port of Bingen
Why does BNSF believe that these grade crossings need to be
closed?
Has BNSF worked to understand the Port of Klickitat?
Will you commit to ongoing discussion with Bingen to resolve
this issue?
Answer. BNSF is engaged with Washington's Department of
Transportation (WSDOT) as it looks to provide a grade separation to
support access to the Port of Klickitat and Bingen Point. WSDOT
believes an improved rail crossing will reduce potential backups on SR
14 while increasing mobility and safety in order to support future
economic growth in the area. BNSF remains engaged with stakeholders
including the Port of Klickitat and the City of Bingen at regular
project development meetings and has offered to meet separately with
the Port.
Question 4. Short-Line Railroads
How will investment in last-mile projects benefit short-line
railroads?
How can freight investment be combined with the short-line
tax credit to better improve freight infrastructure?
Answer. BNSF connects with approximately 200 shortlines who perform
local and gathering activities (first-mile/last mile) for BNSF. In
2016, shortlines originated or terminated about one third of BNSF's
agriculture and industrial products traffic. Shortline investments
improve safety and service to our mutual customers and supports growth
with existing and new customers.
The Shortline Tax Credit leverages private sector investment in
rail infrastructure by providing a tax credit of 50 cents for every
dollar spent on track improvements. The tax credits help shortlines
make necessary investments in their infrastructure, ensuring these
lines will continue to provide service to our shared customers.
Question 5. Viability of West Coast Ports. According to a recent
article in the Journal of Commerce, West Coast ports' market share of
Asian import cargo has declined from 78.3 percent in 2005 to a new low
of 67 percent last year, a reduction of 12 percent. Additionally, the
article goes on to say that the increasing intermodal rail rates we are
seeing are the single biggest reason for this decline in market share.
As a stakeholder and an important service provider for the Pacific
Northwest trade gateway--and one that has the ability and flexibility
to set prices--what are your plans for ensuring its viability as far as
the cost of your product is concerned?
Answer. A fair and comprehensive review of what considerations
determine shippers' corridor and gateway utilization would include
multiple factors such as commodity, time and distance to port and
inland markets, capacity, port capabilities and perceived reliability.
Rail cost is merely one component of the total cost of doing business
through a particular port. Some perceived advantages in the Canadian
supply chain include greater labor stability, strategic terminal
expansions, a robust defense of industrial land to serve the global
market, no Harbor Maintenance Taxes and alignment in support of serving
Canada's product and commodity spectrum at the Federal, Provincial, and
Local levels.
2015 was a pivotal year for U.S. Cargo diversions due to the
cumulative effect of U.S. West Coast port congestion resulting in
severe disruption and financial harm to shippers' supply chains. All
major U.S. West Coast container ports contributed to the disruption. At
one point in 2015, there were forty one ships anchored off the coast of
Los Angeles, Long Beach, Oakland and the ports of Seattle and Tacoma.
Although the congestion has improved, the long-term effect to the
supply chain--and shippers' diversions to mitigate risk--is still being
felt today. Canadian ports in particular have benefited by ensuring
stakeholders that they can be a reliable routing alternative.
As the largest rail intermodal provider in North America, BNSF
continues to invest to ensure that it offers needed capacity, service
and value to its customers. BNSF has committed to transforming and
enhancing our Northern Corridor between the Pacific Northwest and
Chicago into a rail superhighway, just as we have with our Southern
Transcon route between Southern California and Chicago. Since 2013,
BNSF has invested more than $5 billion to maintain and expand the
Northern Corridor. We have added more than 135 miles of double track to
our network with over 1,000 miles of centralized traffic control
technology and 32 new or extended sidings. With this investment, we
have permanently expanded the capacity of our network, which we believe
will contribute to maintaining the U.S. supply chain advantage and
supporting the Pacific Gateway Ports competitiveness.
The West Coast ports' market share is extremely important to BNSF.
We offer our customers optionality by serving a broad Pacific gateway
with multiple origin/destination options, thus giving customers the
power and flexibility to decide where best to direct their freight
movements. We will continue to work closely with our customers,
understanding their proprietary needs and preserving their
confidentiality as we offer the value needed to win their business.
There is robust competition in the marketplace--at each port, and
between ports--and a wide range of factors driving customer decisions.
There are also challenges at West Coast Ports that must be
addressed if they are to maintain their current market share, much less
grow it. A recent study entitled ``Unleashing Washington's Maritime
Potential: Identifying challenges to Port Competitiveness and
Recommending Solutions'' released in October 2016 highlighted the need
to invest in maritime facilities in the state and the difficulty in
doing so related to local land use decisions on waterfront property,
related funding decisions and difficulty in permitting port and trade
related projects for which funding and public and private support does
exist. This includes local waterfront development in the Puget Sound
area which must consider potential long-term conflicts with freight
movement in the region.
We have and will continue to make investments in service innovation
through line and facility capacity expansion, technology
implementation, improved service design and by focusing on operating
efficiency. Continued growth on BNSF's Northern Tier is essential and
we have been fully committed to helping grow imports and exports of all
kinds through Washington state, but achieving growth has been
difficult. We will continue to work closely with the Washington ports,
Washington DOT and other stakeholders to understand and support how to
fully utilize Washington's gateways.
Question 6. Competition from Canadian Ports. The Canadian
Government, ports and railroads appear to be doubling down on the
strategy of increasing their share of U.S. cargo. Where before Canadian
ports handled mostly Canadian cargo, today 24 percent of Vancouver's
cargo and fully two-thirds of Prince Rupert's is bound for or
originates from the US. In recent years the ports of Seattle and Tacoma
have lost market share, associated jobs and export capacity to these
Canadian ports.
What is your perspective on the cost advantage by Canadian
railroads in terms of why they can offer lower rates and how it
will affect your business strategy?
Are you aware of incentives from the Canadian government
that allows them to charge lower rates than those in the
Pacific Northwest?
Answer. The Canadian Federal and provincial governments, ports and
key stakeholders have developed an effective long-term collaboration
focused on growth and reliability, especially in advancing
infrastructure and adding capacity to meet the changing needs of the
ocean container industry. For example, all three major Canadian ports
have extensive and expanding on-dock rail facilities. Ongoing support
and effective policies by government have made the Port of Prince
Rupert and the Port of Vancouver attractive routing alternatives to
U.S. West Coast ports. There is also alignment between interior and
coastal Provinces on projects that benefit the Port of Vancouver and
Rupert as both recognize the importance of exports to the viability of
their local and national economies. This collaborative and aligned
effort extends to permitting and approvals for key projects. In Canada,
the combination of a strong effort to ensure port competitiveness
between governments at all levels and key stakeholders has created a
largely stable, cost efficient and achievable environment to attract
growth. In contrast, U.S. West Coast ports have lagged in developing a
comprehensive approach that results in long-term infrastructure
investments to attract more volumes.
For West Coast container ports competing with Canada, the U.S.
Harbor Maintenance Tax creates a competitive disadvantage. Not only are
ports disadvantaged because of the added cost of the tax, they receive
little or no benefit from the authorized use of the tax. In addition,
Canada has a long-standing successful national port infrastructure and
corridor program that not only assists with port development but finds
projects in the corridors connecting the ports. At BNSF, we stand ready
to work with Federal, State and local public policy makers to similarly
support our port partners.
______
Response to Written Question Submitted by Hon. Maggie Hassan to
Matthew K. Rose
Question. One area that I know has repeatedly come before this
Committee and the full Senate is the issue of increasing the size of
trucks by allowing for a massive tractor-trailers, known as Twin 33s.
While these larger trucks may drive decently on long stretches of
highway in sparsely populated swaths of our country, I worry about how
they would fare travelling through busy small and medium-sized towns
and on winding mountainous roads like the ones in New Hampshire. I want
to keep our truck drivers and travelers on the roads with them safe. Do
you agree that the industry, state, and Federal governments must
meticulously study the potential impacts of these larger trucks--
specifically on the types of communities I've described--before making
decisions that could harm people in our communities?
Answer. BNSF agrees that the impacts of any change in truck
configuration must be studied carefully, and that direct consequences,
such as pavement and bridge damage, must be remediated as part of any
such change. In addition, the longstanding underpayment of heavier
trucks must be taken into account when any configuration change is
considered. Regarding the safety consequences of proposed changes to
existing truck configurations, we leave that to public safety experts,
Members of Congress and the Administration to carefully consider.
______
Response to Written Questions Submitted by Hon. Deb Fischer to
Dr. Christopher B. Lofgren
Question 1. As we enter into a new administration and a new
Congress, how can we improve the regulatory process at agencies to move
towards outcome, or performance-based regulations with better data? As
you are aware, in the FAST Act, I authored measures to reform the
Federal Motor Carrier Safety Administration to ensure more
participation and a stronger cost-benefit analysis. Are there specific
changes you would hope to see across the DOT to improve the regulatory
process?
Answer. I would like to thank you for your leadership and
dedication to ensuring that the regulatory process engages stakeholders
and relies on quality data. At Schneider National, Inc. we depend on
data every day to navigate a host of complex logistic, strategic and
tactical challenges, make business decisions, and more importantly,
ensure safety in our operations.
From our experience I can confidently say that decisions (or
regulations) rooted in data, are only as good as the data upon which
they rely. Therefore, I would like to offer four key themes for you and
the Committee to consider in your pursuit of better data to guide the
regulatory process.
First, there should be increased transparency when data is
presented to ensure it is clearly understood by stakeholders,
lawmakers and regulators;
Second, stakeholders should be engaged earlier in the
regulatory process since they have the best understanding of
what data is available and what assumptions and behaviors need
to be understood when using specific data elements;
Third, any data, research or cost-benefit analysis used by
regulators should include an adequate (not selective)
representation of the industry; and
Fourth, data consistency is critical. For example, using a
standard crash report form that can be completed e by all
states would allow for the gathering of critical data elements
and provide for a better understanding of a rule's impact and
benefit.
As for improving the overall regulatory process, I would like to
emphasize my earlier point about the importance of early engagement of
stakeholders either through advanced notice of proposed rulemakings or
more use of the negotiated rulemaking process.
Finally, I would like to encourage the Committee, Congress and
regulators to explore opportunities to improve safety outside of the
regulatory rulemaking process. For example, the U.S. Department of
Transportation should work with the U.S. Treasury Department to reduce
or eliminate the Federal excise tax on new tractor and trailer
equipment, such as collision mitigation technology. I believe this
effort could be accomplished within the regulatory process through
administrative guidance and would incent carriers to invest in the
newest equipment with the most advanced safety technologies, best fuel
efficiency, and most up-to-date emissions systems.
Question 2. As we enter into a new administration and a new
Congress, how can we improve the regulatory process at agencies to move
towards outcome, or performance-based regulations with better data? As
you are aware, in the FAST Act, I authored measures to reform the
Federal Motor Carrier Safety Administration to ensure more
participation and a stronger cost-benefit analysis. Are there specific
changes you would hope to see across the DOT to improve the regulatory
process?
Answer. Please see my response to Question 1.
Question 3. Many stakeholders in the trucking industry have
applauded the FMCSA's entry-level driver training rule, which is based
on consensus recommendations from stakeholders and will increase
safety. Would you please talk about the positive aspects of this
rulemaking process and how this process could be replicated in the
future at FMCSA?
Answer. While Schneider was not a member of the Committee that
participated in the entry-level driver training rulemaking process, we
did follow the rule closely and would recommend the process be
replicated in the future by the Federal Motor Carrier Safety
Administration and other regulatory agencies.
Because of the benefits I noted in my response to Question 1, we
support any rulemaking process in which input from the major
stakeholders is gathered as early in the process as possible. While the
use of a notice of proposed rulemaking also seeks early input from
stakeholders, we believe the negotiated rulemaking process used in the
entry-level driver training rulemaking allows for a greater level of
dialogue and idea generation between stakeholders and regulators.
Specifically, the face to face meetings allow for the feedback loop
to be expedited to real-time, which is beneficial since the rulemaking
process tends to be lengthy by nature. Additionally, we appreciate that
the structure guiding the process ensures the negotiated rulemaking
committee is fair and balanced in points of view, and that all parties
are willing to negotiate in good faith to reach consensus.
Finally, the process also allows for relationships to be formed
between stakeholders and regulators, and for education to occur for all
parties. Even if consensus is not reached through the process, value is
still gained by the experience.
As you look to expand the use of negotiated rulemaking, I would
suggest considering the application of the process for pending
rulemakings such as the Speed Limiter, Obstructive Sleep Apnea and
Safety Fitness Determination rules. Although these rules are already
occurring under the standard rulemaking process, we believe the
industry and regulators would benefit greatly from applying the guiding
structure and principles of the negotiated process.
Question 4. One issue we have heard a lot about in the trucking
industry is the driver shortage. In your opinion, what do you believe
are the major contributing factors that have led to this shortage? How
is your company seeking to address this challenge?
Answer. A key contributing factor to the driver shortage is the
aging nature of the industry's workforce, which has resulted in more
drivers retiring and leaving the industry. Additionally, we have
identified a change in workforce demographics that also contributes to
driver supply. Specifically, driving candidates now prefer to be home
weekly, or even nightly, and are willing to work jobs that provide them
with that opportunity even if it pays less. As a result, fewer driving
candidates are willing to accept jobs that require them to be away for
long periods of time.
While some trucking companies may choose to combat the driver
shortage by lowering their hiring standards, Schneider and other
quality carriers are unwilling to compromise our commitment to
protecting the motoring public and remain steadfast in our mission to
find qualified drivers that meet training, safety and drug testing
standards. This makes the driver shortage more challenging for
companies like ours but we continue to be dedicated to our safety
practices, such as Schneider's hair follicle drug testing program, and
pursue other options for recruiting drivers that meet our standards.
At Schneider, we are addressing the driver shortage in numerous
ways, including through the use of technology. Automated manual
transmissions and safety technology, such as collision mitigation
systems, make the truck easier and safer to drive. This makes our
positions more attractive to the top flight professionals who
understand that our investments make them safer. We are also continuing
to improve our value proposition to existing and candidate drivers by
increasing pay, changing the way we move freight to allow for more
regional movements (which allows drivers to be home more frequently)
and enhancing our overall benefits package. Finally, we offer tuition
assistance to truck driving schools for new candidates entering the
industry.
Schneider also recognizes the value of separated military personnel
and the trouble many of them have in finding good paying jobs when
adjusting to civilian life. We have a Military Apprenticeship program
through the U.S. Department of Veterans Affairs (VA), in which new
Schneider drivers can earn a monthly educational benefit from the VA in
addition to their Schneider paycheck during their first year--up to
$1,266 per month. Schneider further recognizes military experience and
credits it toward Schneider driving experience to increase starting
pay. Extended benefits and differential pay is also provided if Guard
or Reserve personnel are deployed for up to 18 months and we offer
guaranteed home time for weekend drill and annual military training--no
time off is required.
______
Response to Written Questions Submitted by Hon. Richard Blumenthal to
Dr. Christopher B. Lofgren
Question 1. Issue: Trucking industry support for a rule mandating
speed limiters--The faster large vehicles travel, the deadlier they can
become. Large vehicles already take longer to stop than smaller
passenger vehicles. And just a small increase in speed leads to an
exponentially large increase in kinetic energy, which can cause far
greater damage and destruction in a crash--especially to those
traveling nearby in much smaller, lighter passenger vehicles.
Crashes involving large vehicles kill around 4,000 people each year
and injure more than 100,000. Speeding has been identified as a
possible factor in as many as 23 percent of these crashes. A vehicle
with a functioning speed limiter is only half as likely to be involved
in a crash as a vehicle without an operating device.
Mr. Lofgren, your testimony notes the importance and potential of
speed limiters. I have been very supportive of the use of speed
limiters and want to see the finalization of a rule begun by President
Obama to require these devices.
What safety benefits can be realized through their use? At what
speed do you set the devices your company uses?
Answer. Schneider National Inc. has supported the use of speed
limiting devices for decades and has utilized these devices within its
fleet since they were first made available by manufacturers. It is well
documented that there is a strict correlation between the speed of a
truck and the severity of the injuries in a trucking accident;
accordingly, the higher the speed of the truck, the more severe the
injuries. Additionally, trucks traveling at a lower speed incur less in
heavy vehicle fuel. These factors contributed greatly in Schneider's
decision to implement speed limiting devices and why our company
continues to utilize this equipment. These devices currently have our
trucks governed at 63 mph for solo drivers and 65 mph for team drivers
(meaning that there is more than one driver present in the vehicle).
Question 2. Should all trucks operating in the U.S. be equipped
with this type of technology?
Answer. Schneider supports speed limiters on those vehicles with a
gross vehicle weight rating (GVWR) of more than 26,000 lbs. Schneider
recommends not only requiring speed limiting devices for newly
manufactured equipment but also requiring the technology for any
vehicle currently in-use with a GVWR of more than 26,000 lbs that is
equipped with an electronically controlled engine.
Question 3. You also have installed collision avoidance technology.
Can you explain the importance of this technology?
Answer. A collision mitigation system (CMS) is an active technology
that uses a front bumper-mounted radar to detect slower moving or
stopped vehicles ahead. These systems can determine when a potential
crash may occur and assist the driver in quickly slowing down the
truck. In some instances, the system works faster than the driver is
able to recognize the situation and react. This is especially important
because many motorists do not understand the size and weight of a
tractor trailer and ``cut in front'' and slow down without an
appreciation for the true stopping distance of a vehicle that is of
much greater size than their own. Since beginning our initial
deployment of CMS on newly purchased trucks in 2012, we have
experienced a 69 percent reduction in rear-end accidents and a 95
percent reduction in the claims costs (proxy for accident severity)
associated with these accidents.
We believe the industry should be provided with an incentive to
purchase this type of technology and suggest that Congress, the Federal
Motor Carrier Safety Administration, and National Highway Traffic
Safety Administration work with the U.S. Treasury Department to reduce
or eliminate the Federal excise tax on new tractor and trailer
equipment. Doing so would incent carriers to invest in the newest
equipment with the most advanced safety technologies, best fuel
efficiency, and most up-to-date emissions systems.
______
Response to Written Question Submitted by Hon. Maggie Hassan to
Dr. Christopher B. Lofgren
Question. One area that I know has repeatedly come before this
Committee and the full Senate is the issue of increasing the size of
trucks by allowing for a massive tractor-trailers, known as Twin 33s.
While these larger trucks may drive decently on long stretches of
highway in sparsely populated swaths of our country, I worry about how
they would fare travelling through busy small and medium-sized towns
and on winding mountainous roads like the ones in New Hampshire. I want
to keep our truck drivers and travelers on the roads with them safe. Do
you agree that the industry, state, and Federal governments must
meticulously study the potential impacts of these larger trucks--
specifically on the types of communities I've described--before making
decisions that could harm people in our communities?
Answer. Schneider is familiar with the Twin 33 equipment, however
it would not be part of our freight hauling model. For Schneider,
safety is always our top priority. With any new endeavor Schneider
pursues, we believe it is prudent to evaluate and ensure that allowable
equipment (including size and length) is safe and compatible with
existing infrastructure. We encourage Congress to make the same sort of
evaluation for new types of equipment it considers allowing on our
Nation's infrastructure.
______
Response to Written Questions Submitted by Hon. Deb Fischer to
Tom Gurd
Question 1. As we enter into a new administration and a new
Congress, how can we improve the regulatory process at agencies to move
towards outcome, or performance-based regulations with better data? As
you are aware, in the FAST Act, I authored measures to reform the
Federal Motor Carrier Safety Administration to ensure more
participation and a stronger cost-benefit analysis. Are there specific
changes you would hope to see across the DOT to improve the regulatory
process?
Answer. Safety is Dow's top priority. Dow is one of the largest
chemical shippers in North America. Our business model is based on the
ability to ship large volumes, long distances over land by rail. Rail
is the safest, most efficient way to transport our high volume raw
materials and products.
Dow supports continuous improvement in rail safety and security
within a holistic risk management framework. This includes full
consideration of operational and infrastructure improvements to prevent
train accidents, along with tank car design. Advancements can only be
achieved with further close collaboration amongst all industry
stakeholders. Continuous improvement under this framework must improve
safety to further mitigate risk to the public and the environment,
without placing unnecessarily economic and operational burdens upon
industry stakeholders.
The DOT alone, not any other entity, is authorized to establish
uniform national standards for the transportation of hazardous
materials, including standards for tank cars. To this extent, Dow
supports the joint shipper petition submitted to the DOT on August 12,
2016 (Petition Number P-1678). The petition asks DOT to clarify that
while stakeholders may recommend changes to tank car standards for DOT
consideration, no other entity should be permitted to impose its own de
facto regulations on shippers and tank car owners. Any new regulations
imposed on industry stakeholders can and must be developed through an
appropriate Federal rulemaking process, and supported by a sound cost-
benefit analysis.
Dow supports improving the Federal Government's use of risk
assessment to prioritize actions with the greatest potential to advance
safety, and ensuring that regulations are based on sound cost-benefit
analysis. We call on DOT to implement Office of Management and Budget
guidance in these areas, and specific directions in Executive Orders
12866 Regulatory Planning and Review and 13563 Improving Regulation and
Regulatory Review.
At the Surface Transportation Board (``STB''), it is necessary to
improve the timeliness and the effectiveness of large rail rate case
review procedures. Last year, the National Academy of Sciences'
Transportation Research Board (``TRB'') issued a report, Modernizing
Freight Rail Regulation, developed by an independent panel of
transportation experts and economists with input from a broad range of
stakeholders. The TRB report concluded that the STB's rate review
procedures ``lack a sound economic rationale and are unusable by most
shippers.'' The STB should fully consider TRB's recommendations and
work on the methods to resolve large rate case disputes.
Question 2. Mr. Gurd, in your written testimony you mentioned the
advanced security and safety initiatives that Dow is undertaking. Would
you further elaborate on these emergency response programs and Dow's
coordination with DOT and local emergency responders? How can Congress
and the administration help support these partnerships, particularly as
it relates to relaying information and data and on the ground
coordination with responders?
Answer. As stated in my testimony, Dow has an extensive Risk
Management Program, but we are also committed to ensuring communities
are aware and prepared if an incident does occur. We support this
commitment through TRANSCAER and CHEMTREC.
TRANSCAER (Transportation Community Awareness and Emergency
Response) is a voluntary national outreach effort that focuses on
assisting communities prepare for and respond to a possible hazardous
material transportation incident. Since its inception in1986,
TRANSCAER has trained hundreds of thousands of participants, free of
charge. Hundreds of training events are offered annually. In 2015, over
50,000 participants were trained. Dow alone has trained almost 11,000
participants since 2007. We have received the TRANSCAER National
Achievement award in the last 8 consecutive years, which is given in
recognition of extraordinary achievement by an individual person,
individual company, individual organization, or a team (of individuals,
companies, or organizations) in support of the initiative. TRANSCAER
fosters collaboration and partnerships between shippers, carriers,
communities, emergency responders, and the DOT for effective,
coordinated and timely emergency response.
In addition to the DOT partnering with TRANSCAER, it also develops
the Emergency Response Guide (``ERG'') for publication every four
years. The ERG is critical for emergency responders to initiate
emergency response in the event of a hazardous material incident.
Emergency responders also have access to a wide variety of experts
through CHEMTREC (Chemical Transportation Emergency Center) service.
When an incident does take place, responders can contact CHEMTREC's
state-of-the-art, 24/7 emergency center to determine the best way to
handle a wide range of chemicals and other hazardous materials.
Dow, and on behalf of the American Chemistry Council (``ACC''),
appreciates your interest in further strengthening partnerships to
support emergency response capabilities. While training programs such
as TRANSCAER are available, local emergency responders face a number
of challenges that limit their ability to utilize these programs.
Congress and the administration should look for ways to provide further
support to communities, including:
Resources for travel, time away and backfilling positions to
attend training;
Addressing technology constraints, such as computer
equipment and high-speed Internet access, to facilitate more
robust, interactive remote online training; and
Increased recognition and incentives for responders who
attend the industry-sponsored training.
In addition, DOT could help facilitate the development of more
robust standards for Emergency Response Information Providers
(``ERIPs'') such as CHEMTREC. We believe that elevating the
expectations on ERIPs would help ensure that emergency responders
receive reliable, accurate, timely information.
Question 3. You mentioned Dow's massive supply chain with hundreds
of third party operators and providers. Would you elaborate about the
impact or burden regulations can have on your supply chains?
Answer. Dow shares the DOT mission ``to protect people and the
environment by advancing the safe transportation of energy and other
hazardous materials that are essential to our daily lives.'' However,
unnecessary regulatory burdens can have a significant impact on our
global supply chain.
Dow supports the ACC submission to the Commerce Committee for its
February 1 hearing, ``A Growth Agenda: Reducing Unnecessary Regulatory
Burdens.'' ACC identified a number of regulatory actions by the DOT
that add unnecessary regulatory burdens without advancing safety. We
would like to take this opportunity to provide two additional
significant actions that have arisen since that submission.
Harmonization with the international regulatory bodies and Canada
for cross-border shipments is vital to the U.S. economy and Dow's
position in the global marketplace. Dow applauds and supports the work
underway under the U.S.-Canada Regulatory Cooperation Council. Some of
this work has been completed specific to the safe transportation of
hazardous materials, and is included in DOT's rulemaking entitled
Harmonization with International Standards (HM-215N). The final rule
pre-publication was published in the Federal Register on January 18,
2017, but then a week later it was withdrawn for review by the new
administration. As of this response, it is still not published in the
Federal Register. This rulemaking is critical for the uninterrupted,
harmonized transportation of hazardous materials not only across the
border, but by water and air around the world.
In the rulemaking, DOT is introducing new regulations for
polymerizing substances. These are materials which, without
stabilization, are liable to undergo an exothermic reaction resulting
in the formation of larger molecules or resulting in the formation of
polymers under conditions normally encountered in transport. Dow ships
a number of these materials, primarily Monomers. Monomers are vital to
the American public, for applications such as water treatment,
adhesives, paints, caulks and sealants, and paper coatings. While Dow
supports the need for further regulation of these materials in the U.S.
and around the world, in viewing the pre-publication of the final rule,
there are two specific regulations DOT is not harmonizing with the
international regulatory bodies that will result in undue economic
impact on U.S. shippers while not improving safety, as follows:
Sec. 172.102(c)(1), Special Provision 387
DOT will require a different temperature (50+C versus
internationally required 45+C) for these materials that when
transported in a portable tank, such as an ISO container, and
when chemical stabilization is employed, the level of
stabilization is sufficient to prevent a dangerous
polymerization.
Sec. 173.124(a)(4)(i)
DOT will require a UN Test Series E, or equivalent test method
with the approval of the Associate Administrator, be performed
on these materials when transported in certain packaging types,
whereas the international bodies do not require such a test.
Dow urges DOT to publish the HM-215N final rule as soon as
possible, including fully harmonizing the aforementioned regulations to
avert undue burden on U.S. shippers.
Another rulemaking published by the DOT since December is an
Advance Notice of Proposed Rulemaking entitled Volatility of Unrefined
Petroleum Products and Class 3 Materials (HM-251D). DOT is considering
establishing vapor pressure limits for unrefined petroleum-based
products and potentially all Class 3 flammable liquid hazardous
materials for transportation by all modes. The comment period was
extended until May 19, 2017. For the reasons to be outlined in our
comment submission, as well as our industry member association
submissions, namely the ACC and the Dangerous Goods Advisory Council,
Dow believes establishing a vapor pressure limit to encompass all Class
3 flammable liquids by any mode of transportation would not improve the
safe transportation of our chemicals and would cause undue economic and
operational burdens.
In closing, the U.S. needs sound policies and a comprehensive
strategy for a robust transportation sector and investment in its
infrastructure if we are to improve the global competitiveness of the
U.S. manufacturing sector. These policies must keep upstream and
downstream manufacturing businesses competitive to create the kind of
long term job growth our company needs. For example, significant
railroad consolidation has been allowed since Congress passed the
Staggers Rail Act of 1980, achieving a desired result of well-
capitalized, revenue adequate railroads. It is now time to establish a
greater balance between competition and revenue adequacy in our
Nation's rail regulatory policy. A competitive transportation system is
vital to American manufacturing growth that creates new investment and
job opportunities. Competitive switching is one step that will help
bring us closer to promoting competition for shippers in rail
transportation, and promises to improve rail service, provide better
routing options, and establish competitive rates, all of which are
important for American manufacturers to be competitive in a global
marketplace.
Thank you once again for recognizing the chemical industry as a
principal stakeholder in developing policies that can keep our economy
moving. We welcome the opportunity to further collaborate with the
Subcommittee, the DOT and all industry stakeholders to develop
infrastructure and transportation policies that further drive
investment and manufacturing growth in the U.S. We must ensure our
Nation has a safe, secure, sustainable, and competitive network to
deliver our products when and where they are needed not only within our
borders but around the world. Please let me know if you should have any
additional questions.
______
Response to Written Question Submitted by Hon. Maggie Hassan to
Tom Gurd
Question. One area that I know has repeatedly come before this
Committee and the full Senate is the issue of increasing the size of
trucks by allowing for a massive tractor-trailers, known as Twin 33s.
While these larger trucks may drive decently on long stretches of
highway in sparsely populated swaths of our country, I worry about how
they would fare travelling through busy small and medium-sized towns
and on winding mountainous roads like the ones in New Hampshire. I want
to keep our truck drivers and travelers on the roads with them safe. Do
you agree that the industry, state, and Federal governments must
meticulously study the potential impacts of these larger trucks--
specifically on the types of communities I've described--before making
decisions that could harm people in our communities?
Answer. Safety is Dow's top priority. Dow is one of the largest
chemical shippers in North America. We support continuous improvement
in transportation safety and security to protect the American public
and the environment. This includes full consideration of operational,
infrastructure, technological, and sustainable advancements. Dow is
committed to Responsible Care, the chemical industry's world-class
environmental, health, safety, and security performance initiative. Our
carriers, including our road carriers, demonstrate this same safety
commitment through the Responsible Care Partnership program.
With any legislative or regulatory actions, Dow believes they must
be data-driven and supported by a sound cost-benefit analysis. There
appears to be data available in support of a safe and sustainable shift
to the Twin 33. We referenced a study commissioned by Americans for
Modern Transportation entitled ``Twin 33 Foot Truck Trailers: Making
U.S. Freight Transport Safer and More Efficient'', which cites data
published in the Federal Highway Administration's 2015 study entitled a
``Comprehensive Truck Size and Weight Limits Study''.
Based on the Americans for Modern Transportation study, it appears
there would be benefits to the U.S. freight system, economy and the
American public. Dow understands a Twin 33 would supplant a Twin 28
currently utilized on our Nation's highways, and would not supplant
trucks currently traveling though busy small and medium-sized towns and
winding mountainous roads like the ones in New Hampshire.
Safety benefits include fewer trucks, fewer trips, better
enforcement to ensure the safety of other trucks, improved high-speed
dynamics compared to a Twin 28, and leading safety technology. Dow
understands that mileage exposure is the single biggest factor driving
year-to-year changes in crashes, injuries and fatalities associated
with motor vehicle travel, including truck travel. Fewer trucks on our
roads could also reduce effects on our transportation infrastructure.
In 2016, Dow launched our 2025 Sustainability Goals. Sustainability
benefits of the Twin 33 include better fuel efficiency and
environmental benefits, saving 255.2 million gallons of fuel, and
reducing carbon and nitrous oxide emissions by nearly three million
tons and one billions grams, respectively. These emissions reductions
would be equivalent to taking 551,000 cars off our Nation's roads.
Operational and societal benefits include increasing volume
capacity by 18.6 percent without a maximum weight increase, reduced
traffic congestion, and alleviating the driver shortage while providing
higher-quality and more stable jobs for drivers. These benefits would
allow Dow to make our supply chain more efficient, while making
transportation safer and more sustainable.
Thank you once again for recognizing the chemical industry as a
principal stakeholder in developing policies that can keep our economy
moving. We must ensure our Nation has a safe, secure, and sustainable
network to deliver our products when and where they are needed. Please
let me know if you should have any additional questions.
______
Response to Written Questions Submitted by Hon. Deb Fischer to
Wick Moorman
Question 1. Mr. Moorman, in your testimonies you each discussed
reforms in the FAST Act that streamlined the environmental review
process and removed some of the red tape on routine infrastructure and
asset maintenance. Would you please elaborate on the types of
challenges your railroads face when attempting to build or improve its
infrastructure? Are there ways that Congress can improve on the work
within the FAST Act?
Answer. We appreciate the efforts of Congress, and specifically
this Committee, to streamline the environmental review process,
providing rail parity with other modes of transportation. While we have
a multi-step process for building and improving infrastructure, our
greatest challenge remains our access to direct Federal funding for
critical infrastructure projects throughout our system that require
dedicated funding to help move these processes along. In some cases,
even with a streamlined process for environmental review, the long
absence of Federal support for a project will allow the assessment to
lapse and require us to restart permitting and reviews that expire. We
continue to request additional predictable and dedicated funding for
our critical infrastructure investments as I outlined in my testimony.
Question 2. As we enter into a new administration and a new
Congress, how can we improve the regulatory process at agencies to move
towards outcome, or performance-based regulations with better data? As
you are aware, in the FAST Act, I authored measures to reform the
Federal Motor Carrier Safety Administration to ensure more
participation and a stronger cost-benefit analysis. Are there specific
changes you would hope to see across the DOT to improve the regulatory
process?
Answer. In general, we support improved regulatory processes and
better data. However, each proposal much be carefully weighed for its
potential benefit to improved safety of the passengers and workers in
our rail system, based on new and proven technologies available to the
rail industry, and the funding to support such changes to the
regulations that guide our daily action. We are happy to work with
Congress and FRA to identify potential improvements. Better data will
always be a welcome addition and criteria for our decision making in
identifying these improvements.
Question 3. Mr. Moorman, I greatly appreciate the depth of private
sector railroad experience you bring to Amtrak. Would you please talk
about some of the positive reforms you are making at Amtrak's corporate
structure, operations, and business objectives? For example, in early
January you took efforts to consolidate the leadership structure at
Amtrak.
Answer. It is vital for us to capitalize on the success of Amtrak
over the past 10 years. We have an opportunity to build an even more
efficient and effective company that can facilitate, organize and
operate best-in-class passenger rail services throughout the United
States. To do so, we needed to be structured properly and I streamlined
and improved our reporting structure to reflect that desired outcome.
We have a new organizational structure for Amtrak that will enable
us to create greater product and customer focus, along with
strengthening accountability and decision making throughout our
company. This new structure aligns with our focus to improve the way we
do business, modernize and enhance the customer experience, and invest
in our future. These changes are a necessary first step to driving the
five key objectives that we believe are critical to our long-term
success:
Building a world-class safety culture with a relentless
focus on training, risk-reduction, positive reinforcement and
personal accountability;
Developing and consistently providing competitive products
and services;
Creating the teams and processes necessary to serve and grow
our customers across all business segments;
Gaining support for and delivering on investments that
sustain, improve and grow our business; and
Harnessing innovation, technology and partnerships to
enhance and accelerate our business.
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