[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
GETTING BACK ON TRACK: EXPLORING RAIL SUPPLY CHAIN RESILIENCE AND
CHALLENGES
=======================================================================
(118-16)
HEARING
BEFORE THE
SUBCOMMITTEE ON RAILROADS, PIPELINES,
AND HAZARDOUS MATERIALS
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
MAY 11, 2023
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
______
U.S. GOVERNMENT PUBLISHING OFFICE
52-653 PDF WASHINGTON : 2023
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
Sam Graves, Missouri, Chairman
Eric A. ``Rick'' Crawford, Rick Larsen, Washington,
Arkansas Ranking Member
Daniel Webster, Florida Eleanor Holmes Norton,
Thomas Massie, Kentucky District of Columbia
Scott Perry, Pennsylvania Grace F. Napolitano, California
Brian Babin, Texas Steve Cohen, Tennessee
Garret Graves, Louisiana John Garamendi, California
David Rouzer, North Carolina Henry C. ``Hank'' Johnson, Jr., Georgia
Mike Bost, Illinois Andre Carson, Indiana
Doug LaMalfa, California Dina Titus, Nevada
Bruce Westerman, Arkansas Jared Huffman, California
Brian J. Mast, Florida Julia Brownley, California
Jenniffer Gonzalez-Colon, Frederica S. Wilson, Florida
Puerto Rico Donald M. Payne, Jr., New Jersey
Pete Stauber, Minnesota Mark DeSaulnier, California
Tim Burchett, Tennessee Salud O. Carbajal, California
Dusty Johnson, South Dakota Greg Stanton, Arizona,
Jefferson Van Drew, New Jersey, Vice Ranking Member
Vice Chairman Colin Z. Allred, Texas
Troy E. Nehls, Texas Sharice Davids, Kansas
Lance Gooden, Texas Jesus G. ``Chuy'' Garcia, Illinois
Tracey Mann, Kansas Chris Pappas, New Hampshire
Burgess Owens, Utah Seth Moulton, Massachusetts
Rudy Yakym III, Indiana Jake Auchincloss, Massachusetts
Lori Chavez-DeRemer, Oregon Marilyn Strickland, Washington
Chuck Edwards, North Carolina Troy A. Carter, Louisiana
Thomas H. Kean, Jr., New Jersey Patrick Ryan, New York
Anthony D'Esposito, New York Mary Sattler Peltola, Alaska
Eric Burlison, Missouri Robert Menendez, New Jersey
John James, Michigan Val T. Hoyle, Oregon
Derrick Van Orden, Wisconsin Emilia Strong Sykes, Ohio
Brandon Williams, New York Hillary J. Scholten, Michigan
Marcus J. Molinaro, New York Valerie P. Foushee, North Carolina
Mike Collins, Georgia
Mike Ezell, Mississippi
John S. Duarte, California
Aaron Bean, Florida
Subcommittee on Railroads, Pipelines, and Hazardous Materials
Troy E. Nehls, Texas, Chairman
Brian Babin, Texas Donald M. Payne, Jr., New Jersey,
David Rouzer, North Carolina Ranking Member
Mike Bost, Illinois Frederica S. Wilson, Florida
Doug LaMalfa, California Seth Moulton, Massachusetts
Bruce Westerman, Arkansas Troy A. Carter, Louisiana
Pete Stauber, Minnesota Andre Carson, Indiana
Tim Burchett, Tennessee Mark DeSaulnier, California
Dusty Johnson, South Dakota Marilyn Strickland, Washington
Lance Gooden, Texas Valerie P. Foushee, North Carolina,
Tracey Mann, Kansas Vice Ranking Member
Rudy Yakym III, Indiana Grace F. Napolitano, California
Thomas H. Kean, Jr., New Jersey Steve Cohen, Tennessee
Eric Burlison, Missouri Henry C. ``Hank'' Johnson, Jr., Georgia
Brandon Williams, New York, Jared Huffman, California
Vice Chairman Jesus G. ``Chuy'' Garcia, Illinois
Marcus J. Molinaro, New York Robert Menendez, New Jersey
John S. Duarte, California Rick Larsen, Washington (Ex Officio)
Sam Graves, Missouri (Ex Officio)
CONTENTS
Page
Summary of Subject Matter........................................ vii
STATEMENTS OF MEMBERS OF THE COMMITTEE
Hon. Troy E. Nehls, a Representative in Congress from the State
of Texas, and Chairman, Subcommittee on Railroads, Pipelines,
and Hazardous Materials, opening statement..................... 1
Prepared statement........................................... 2
Hon. Donald M. Payne, Jr., a Representative in Congress from the
State of New Jersey, and Ranking Member, Subcommittee on
Railroads, Pipelines, and Hazardous Materials, opening
statement...................................................... 3
Prepared statement........................................... 4
Hon. Rick Larsen, a Representative in Congress from the State of
Washington, and Ranking Member, Committee on Transportation and
Infrastructure, opening statement.............................. 24
Prepared statement........................................... 25
WITNESSES
Ian Jefferies, President and Chief Executive Officer, Association
of American Railroads, oral statement.......................... 27
Prepared statement........................................... 29
Chuck Baker, President, American Short Line and Regional Railroad
Association, oral statement.................................... 34
Prepared statement........................................... 36
Chris Jahn, President and Chief Executive Officer, American
Chemistry Council, oral statement.............................. 42
Prepared statement........................................... 44
Marc Scribner, Senior Transportation Policy Analyst, Reason
Foundation, oral statement..................................... 47
Prepared statement........................................... 49
Greg Regan, President, Transportation Trades Department, AFL-CIO,
oral statement................................................. 54
Prepared statement........................................... 56
SUBMISSIONS FOR THE RECORD
Submissions for the Record by Hon. Donald M. Payne, Jr.:
Article entitled, ``Collision Course: `They just don't care':
Trains blocking roads can be deadly. It's only getting
worse,'' by Mike Hendricks, Kansas City Star, December 13,
2022....................................................... 5
Letter of May 12, 2023, to Hon. Martin Oberman, Chairman,
Surface Transportation Board, from Hon. Thomas J. Vilsack,
Secretary, U.S. Department of Agriculture.................. 93
Statement of Jennifer C. Gibson, Vice President, Regulatory
Affairs, National Association of Chemical Distributors..... 94
Submissions for the Record by Hon. Troy E. Nehls:
Letter of May 11, 2023, to Hon. Sam Graves, Chairman, and
Hon. Rick Larsen, Ranking Member, Committee on
Transportation and Infrastructure, and Hon. Troy E. Nehls,
Chairman, and Hon. Donald M. Payne, Jr., Ranking Member,
Subcommittee on Railroads, Pipelines, and Hazardous
Materials, from Herman Haksteen, President, Private Railcar
Food and Beverage Association.............................. 11
Letter of May 11, 2023, to Hon. Sam Graves, Chairman, and
Hon. Rick Larsen, Ranking Member, Committee on
Transportation and Infrastructure, and Hon. Troy E. Nehls,
Chairman, and Hon. Donald M. Payne, Jr., Ranking Member,
Subcommittee on Railroads, Pipelines, and Hazardous
Materials, from Corey Rosenbusch, President and Chief
Executive Officer, The Fertilizer Institute................ 13
Letter of May 11, 2023, to Hon. Sam Graves, Chairman, and
Hon. Rick Larsen, Ranking Member, Committee on
Transportation and Infrastructure, and Hon. Troy E. Nehls,
Chairman, and Hon. Donald M. Payne, Jr., Ranking Member,
Subcommittee on Railroads, Pipelines, and Hazardous
Materials, from E. Nancy O'Liddy, Executive Director,
National Industrial Transportation League.................. 15
Statement of the National Mining Association................. 17
Letter of May 11, 2023, to Hon. Sam Graves, Chairman, and
Hon. Rick Larsen, Ranking Member, Committee on
Transportation and Infrastructure, and Hon. Troy E. Nehls,
Chairman, and Hon. Donald M. Payne, Jr., Ranking Member,
Subcommittee on Railroads, Pipelines, and Hazardous
Materials, from Ann Warner, Spokesperson, Freight Rail
Customer Alliance.......................................... 20
Article entitled, ``What's on the trains? Nevada's Cortez Masto,
Titus call for common-sense safety measures,'' by David Charns,
8NewsNow.com, May 5, 2023, Submitted for the Record by Hon.
Dina Titus..................................................... 84
Letter of May 11, 2023, to Hon. Troy E. Nehls, Chairman, and Hon.
Donald M. Payne, Jr., Ranking Member, Subcommittee on
Railroads, Pipelines, and Hazardous Materials, from Sean
O'Neill, Senior Vice President, Government Affairs, Portland
Cement Association, Submitted for the Record by Hon. Sam Graves 91
APPENDIX
Questions from Hon. Rick Larsen to Ian Jefferies, President and
Chief Executive Officer, Association of American Railroads..... 97
Questions from Hon. Robert Menendez to Greg Regan, President,
Transportation Trades Department, AFL-CIO...................... 98
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
May 5, 2023
SUMMARY OF SUBJECT MATTER
TO: LMembers, Subcommittee on Railroads, Pipelines,
and Hazardous Materials
FROM: LStaff, Subcommittee on Railroads, Pipelines, and
Hazardous Materials
RE: LSubcommittee Hearing on ``Getting Back on Track:
Exploring Rail Supply Chain Resilience and Challenges.''
_______________________________________________________________________
I. PURPOSE
The Subcommittee on Railroads, Pipelines, and Hazardous
Materials will meet on Thursday, May 11, 2023, at 2:00 p.m. ET
in 2167 of the Rayburn House Office Building to receive
testimony on ``Getting Back on Track: Exploring Rail Supply
Chain Resilience and Challenges.'' The Subcommittee will
examine the freight railroad industry's role in supporting the
supply chain. The Subcommittee will also discuss current
challenges to the industry in meeting supply chain goals and
future steps to address these issues. At the hearing, Members
will receive testimony from Ian Jefferies, President and CEO of
the Association of American Railroads (AAR); Chuck Baker,
President and Chief Executive Officer (CEO) of the American
Short Line and Regional Railroad Association (ASLRRA); Chris
Jahn, President and CEO of the American Chemistry Council
(ACC); Marc Scribner, Senior Transportation Policy Analyst of
the Reason Foundation; and Greg Regan, President of the
Transportation Trades Department, AFL-CIO (TTD).
II. BACKGROUND
The Committee on Transportation and Infrastructure
previously examined the impacts of COVID-19 on supply chains,
including at a February 1, 2023, hearing entitled ``The State
of Transportation Infrastructure and Supply Chain Challenges,''
and at a November 17, 2021, hearing entitled, ``Industry and
Labor Perspectives: A Further Look at North American Supply
Chain Challenges.'' \1\ A supply chain is defined as a network
of making and selling commercial goods, from the supply of
materials and manufacture of goods through their
transportation, distribution and sale.\2\ A well-managed supply
chain results in the efficient use of resources, reduced costs,
and a faster production cycle.\3\ In contrast, supply chain
disruptions cause inefficiencies that may contribute to
economic inflation as producers experience challenges sourcing
and obtaining necessary materials.\4\
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\1\ The State of Transportation Infrastructure and Supply Chain
Challenges, Hearing Before the H. Comm. on Transp. and Infrastructure,
118th Congress (Feb. 1. 2023); see also Industry and Labor
Perspectives: A Further Look at North American Supply Chain Challenges,
Hearing Before the H. Comm. on Transp. and Infrastructure, 117th
Congress (Nov. 17, 2021).
\2\ Jason Fernando, Supply Chain Management (SCM): How It Works and
Why It Is Important, Investopedia, (July 7, 2022), available at https:/
/www.investopedia.com/terms/s/scm.asp.
\3\ Jack Grimshaw, What is Supply Chain? A Definitive Guide, Supply
Chain Digital, (May 17, 2020), available at https://
supplychaindigital.com/supply-chain-2/what-supply-chain-definitive-
guide.
\4\ Anna Maria Santacreu and Jess LaBelle, Global Supply Chain
Disruptions and Inflation During the COVID-19 Pandemic, Fed. Reserve
Bank of St. Louis (Apr. 21, 2022), available at https://
research.stlouisfed.org/publications/review/2022/02/07/global-supply-
chain-disruptions-and-inflation-during-the-covid-19-pandemic.
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Due to the COVID-19 pandemic, businesses across the world
scaled back or shut down operations in anticipation of reduced
demand for goods.\5\ It was also anticipated that many
producers would switch their manufacturing to COVID-19-related
products, such as personal protective equipment.\6\ Congress
and the Executive Branch took extraordinary measures to provide
financial relief in response to the pandemic.\7\ At the same
time, demand for goods during the pandemic was stronger than
anticipated, as consumers altered their spending from paying
for services to consumer goods.\8\ Despite the substantial
progress made to return to pre-COVID-19 life, supply chain
management and resiliency will be an ongoing challenge for
shippers.\9\
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\5\ Lazaro Gamio and Peter S. Goodman, How the Supply Chain Crisis
Unfolded, N.Y. Times, (Dec. 5, 2021), available at https://
www.nytimes.com/interactive/2021/12/05/business/economy/supply-
chain.html [hereinafter How the Supply Chain Crisis Unfolded].
\6\ Id.
\7\ Gabe Alber, A breakdown of the fiscal and monetary responses to
the pandemic, Investopedia, (Feb. 28, 2023), available at https://
www.investopedia.com/government-stimulus-efforts-to-fight-the-covid-19-
crisis-4799723.
\8\ How the Supply Chain Crisis Unfolded, supra note 5.
\9\ Jennifer Williams-Alvarez, CFOs Focus on Building Resilient
Supply Chains, Even as Pandemic Disruptions Fade, Wall St. J., (Apr.
26, 2023), available at https://www.wsj.com/articles/cfos-focus-on-
building-resilient-supply-chains-even-as-pandemic-disruptions-fade-
8192831f?page=1.
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Over the past year, supply chain pressures have eased due
to a reduction in overall transportation demand. For example,
warehousing metrics are on a downward trend due to increased
costs of wages and materials, warehouse development
moratoriums, and customer cancellations.\10\ The Logistics
Management Index (LMI) is a tool used to measure the
performance of logistics and transportation supply chains. It
is calculated based on various factors such as inventory
levels, transportation costs, order cycle time, customer
service, and other metrics that impact the overall efficiency
and effectiveness of a supply chain.\11\ As of March 2023, the
LMI was 51.1, which is the lowest level since its development
in 2016, and far below a peak of 76.2 in March 2022.\12\
Several LMI sub-indexes support this decrease.\13\ For example,
the warehouse cost subindex has been declining for most of last
year, while the March 2023 warehouse capacity subindex was at
its highest level since February 2020.\14\ Inventory levels are
close to being at their lowest point since the onset of the
pandemic.\15\
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\10\ Press Release, Logistics Managers' Index, March 2023 Logistics
Manager's Index Report, (Apr. 4, 2023), available at https://www.the-
lmi.com/march-2023-logistics-managers-index.html.
\11\ Id.
\12\ See Trading Economics, United States LMI Logistics Managers
Index Current (last visited May 4, 2023), available at https://
tradingeconomics.com/united-states/lmi-logistics-
managers-index-
current#: :text=Lmi%20Logistics%20Managers%20Index%20Current%20in
%20the%20United%20States%20averaged,points%20in%20March%20of%202023.
\13\ Id.
\14\ See Trading Economics, United States LMI Warehouse Prices
Current (last visited May 4, 2023), available at https://
tradingeconomics.com/united-states/lmi-warehouse-prices-.
\15\ Id.
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III. FREIGHT RAIL INDUSTRY OVERVIEW AND CURRENT CHALLENGES
Freight railroads carry nearly one-third of the Nation's
freight.\16\ The rail share of the Nation's freight movements
decreased from 2012 to 2018 according to the most recent data
available from the Bureau of Transportation Statistics.\17\
While rail freight carloads have declined over the last twenty
years, intermodal rail freight traffic has increased.\18\ Rail
intermodal is the long-haul movement of shipping containers and
truck trailers by rail, combined with truck or water
movement.\19\
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\16\ DOT, Pocket Guide to Transp. 2022 at 19 (2022), available at
https://rosap.ntl.bts.gov/view/dot/59823.
\17\ Id.
\18\ Id. at 3.
\19\ Fed. Highway Admin., Background and Definitions--The Role of
the National Highway System Connectors--FHWA Freight Management and
Operations (2023), available at https://ops.fhwa.dot.gov/freight/
freight_analysis/nhs_connectors/role_nhs_conn/role_sys_conn_2.htm.
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Class I rail carriers have reduced their workforce. In
2015, the Class I workforce averaged 169,478 workers.\20\ By
2019 and pre-COVID, roughly 29,000 jobs had been eliminated--a
17 percent decrease.\21\ By the end of 2021, the workforce had
decreased by nearly one-third of the total workforce in 2015,
and additional cuts continued through the COVID-19
pandemic.\22\
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\20\ STB, Employment Data, available at https://www.stb.gov/
reports-data/economic-data/employment-data/ [hereinafter STB,
Employment Data].
\21\ Id.
\22\ See STB, Employment Data, supra note 20; see also Union
Pacific Corp., Form10-K Annual Report Pursuant to Sec. 13 or 15(D) of
the Securities Exchange Act of 1934 at 55, (Feb. 7, 2020), available at
https://www.up.com/cs/groups/public/@uprr/@investor/documents/
investordocuments/pdf_up_10k_02072020.pdf; see also Norfolk Southern,
2019 Annual Report at 3, available at http://www.nscorp.com/content/
dam/nscorp/get-to-know-ns/investor-relations/annual-reports/annual-
report-2019.pdf.
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More than 40 percent of freight rail carloads and
intermodal units involve international trade.\23\ This market
accounts for approximately 35 percent of United States rail
revenue and more than a quarter of United States rail
tonnage.\24\ In late 2020 and the first half of 2021, United
States freight railroads were handling more than 300,000
containers and trailers per week.\25\ This was an increase from
the first half of 2019.\26\ During this same six-month period
in 2021, the Class I railroad workforce averaged 114,909
workers compared to 144,346 workers during the same six-month
period in 2019.\27\ To correct the imbalance of volumes and
staffing levels, railroads have attempted to re-hire some
furloughed workers and began hiring and training new
employees.\28\ According to the Surface Transportation Board's
(STB) employment data, Class I freight carriers have been
increasing their employees monthly, from a low of 112,207 total
workers in January 2022, to 120,668 persons in March 2023,
though this growth has not been consistent across all
crafts.\29\
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\23\ Docket N. DOT-OST-2021-0106, Comment letter from AAR to DOT
(Oct. 18, 2021), available at https://www.regulations.gov/comment/DOT-
OST-2021-0106-0370 (commenting on DOT's Notice of Request for
Information related to the Executive Order, ``America's Supply
Chains,'' and the transportation industrial base).
\24\ Id.
\25\ Id.
\26\ Id.
\27\ STB, Employment Data, supra note 20.
\28\ Id.
\29\ Id.
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RAIL INTERMODAL VOLUMES
According to the Association of American Railroads (AAR),
in the last year United States rail intermodal volume has
significantly decreased. In the week ending April 22, 2023,
freight rail traffic was down 3.5 percent compared to the same
time one year earlier.\30\ The United States weekly intermodal
volume was also down 10.8 percent from a year ago.\31\
Moreover, for the first 16 weeks for 2023, freight carriers
reported a drop in intermodal units of 10.9 percent (3,723,234)
from one year earlier.\32\ Total combined United States traffic
between that period decreased by 5.6 percent.\33\ Per AAR,
several factors contributed to intermodal downturn this year,
including less robust consumer spending, decreased port
activity, retailers maintaining higher inventory levels, and
lower truck rates making all-truck moves more cost-
competitive.\34\
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\30\ Press Release, AAR, Weekly Rail Traffic for the Week Ending
Apr. 22, 2023, (Apr. 26, 2023), available at https://www.aar.org/news/
weekly-rail-traffic-for-the-week-ending-april-22-2023/.
\31\ Id.
\32\ Id.
\33\ Id.
\34\ AAR: March Rail Carloads and Intermodal Decreased Year-over-
year, Calculated Risk, (Apr. 7, 2023), available at https://
www.calculatedriskblog.com/search?updated-max=2023-04-07T17:51:00-
07:00&max-results=10.
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IV. BIDEN ADMINISTRATION ACTIONS TO ADDRESS THE SUPPLY CHAIN CRISIS
President Biden issued Executive Order (EO) 14017,
``America's Supply Chain.'' \35\ The EO directed Federal
agencies to conduct a 100-day review of and report on the
supply chain vulnerabilities associated with key imports.\36\
The Department of Transportation's (DOT) report, Supply Chain
Assessment of the Transportation Industrial Base: Freight and
Logistics, was released on February 22, 2022.\37\ On the same
day, the Biden Administration announced additional plans to
build long-term resilience in supply chains based on findings
from the reviews and reports.\38\
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\35\ Exec. Order 14017, 86 Fed. Reg. 11849, (Feb. 24, 2021),
available at https://www.govinfo.gov/content/pkg/FR-2021-03-01/pdf/
2021-04280.pdf [hereinafter EO 14017].
\36\ Id.
\37\ DOT, Supply Chain Assessment of the Transp. Industrial Base:
Freight and Logistics (Feb. 2022), available at https://
www.transportation.gov/sites/dot.gov/files/2022-03/EO%2014017%20-
%20DOT%20Sectoral%20Supply%20Chain%20Assessment%20-
%20Freight%20and%20Logistics_FINAL_508.pdf.
\38\ EO 14017, supra note 35.
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Additionally, on June 8, 2021 the White House announced the
establishment of a Supply Chain Disruption Task Force (Task
Force) led by the Secretaries of Commerce, Transportation, and
Agriculture.\39\ The Task Force is directed to focus on a
whole-of-government response to address short-term supply chain
bottlenecks, with an emphasis on ``homebuilding and
construction, semiconductors, transportation, and agriculture
and food.'' \40\ Managed by the National Economic Council, the
Task Force coordinated inter-agency and stakeholder
meetings.\41\ The data collection function was transferred to
the DOT in March 2022.\42\
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\39\ The White House, Fact Sheet: Biden-Harris Admin. Announces
Supply Chain Disruptions Task Force to Address Short-Term Supply Chain
Discontinuities, (June 8, 2021), available at https://
www.whitehouse.gov/briefing-room/statements-releases/2021/06/08/fact-
sheet-biden-harris-administration-announces-supply-chain-disruptions-
task-force-to-address-short-term-supply-chain-discontinuities/.
\40\ Id.
\41\ Id.
\42\ Id.
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In April 2022, the STB held a two-day public hearing to
discuss pressing issues in rail service.\43\ The STB heard
testimony from several freight rail shippers, government
officials, rail labor, and various experts on ways Class I rail
carriers could better meet shipping needs.\44\ Following the
hearing, the STB announced that it would require the four
largest Class I rail carriers to submit performance data to the
STB in an effort to promote improvements in rail service over
six months, which was then extended another six months, and
again for another eight months.\45\ According to the STB, data
from recent weeks show that the Class I rail carriers are
uneven in meeting their one-year targets for service
improvement.\46\ Overall the data for key performance
indicators such as velocity, terminal dwell, first-mile/last-
mile service, operating inventory and trip plan compliance show
that railroad operations remain challenged generally.\47\
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\43\ Press Release, STB, STB Requires Additional Service Reporting
From Railroads, (May 6, 2022), available at https://www.stb.gov/news-
communications/latest-news/pr-22-28/.
\44\ Id.
\45\ STB, Decision--Urgent Issues in Freight Rail Service--Railroad
Reporting, (51681), (May 2, 2023), available at https://www.stb.gov/
proceedings-actions/decisions/.
\46\ Id.
\47\ Id.
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V. FREIGHT RAILROADS SERVICE IMPROVEMENT EFFORTS
According to the AAR, freight railroads have taken steps to
improve supply chain movements, including by:
Lincreasing coordination between railroads and
with the trucking industry;
Loffering incentives to customers for weekend or
off-hour loading/unloading of containers;
Lre-routing traffic away from busier terminals to
less crowded ones;
Lreopening closed terminals to add storage
capacity;
Lincreasing available storage capacity and staging
space in and outside of terminals;
Lcreating additional railroad-to-railroad
interchanges to limit demand on trucks; and
Lloading containers onto any chassis brought in to
help reduce containerless/deadheading trips for truckers.\48\
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\48\ Industry and Labor Perspectives: A Further Look at North
American Supply Chain Challenges; Hearing Before the H. Comm. on
Transp. and Infrastructure, 117th Congress (Nov. 17, 2021) (statement
of Ian Jefferies, President and CEO, AAR), available at https://
docs.house.gov/meetings/PW/PW00/20211117/114233/HHRG-117-PW00-Wstate-
JefferiesI-20211117.pdf.
Moreover, while some carriers limited shipments through
congestion embargoes in 2022, freight carriers invest
approximately $25 billion per year in private capital,
including for safety and network improvements.\49\
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\49\ Id.
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VI. WITNESSES
Ian Jefferies, President & CEO, AAR
Chuck Baker, President & CEO, ASLRRA
Chris Jahn, President & CEO, ACC
LMarc Scribner, Senior Transportation Policy
Analyst, Reason Foundation
Greg Regan, President, TTD, AFL-CIO
GETTING BACK ON TRACK: EXPLORING RAIL SUPPLY CHAIN RESILIENCE AND
CHALLENGES
----------
THURSDAY, MAY 11, 2023
House of Representatives,
Subcommittee on Railroads, Pipelines, and Hazardous
Materials,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 2 p.m. in room
2167 Rayburn House Office Building, Hon. Troy E. Nehls
(Chairman of the subcommittee) presiding.
Mr. Nehls. The Subcommittee on Railroads, Pipelines, and
Hazardous Materials will come to order.
I ask unanimous consent that the chair be authorized to
declare a recess at any time during today's proceedings.
Without objection, so ordered.
I also ask unanimous consent that Members not on the
subcommittee be permitted to sit with the subcommittee at
today's hearing and ask questions.
Without objection, so ordered.
As a reminder, if Members wish to insert a document into
the record, please email it to us.
I now recognize myself for the purpose of an opening
statement for 5 minutes.
OPENING STATEMENT OF HON. TROY E. NEHLS OF TEXAS, CHAIRMAN,
SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS
Mr. Nehls. The consequences of the COVID-19 pandemic
continue to ripple through supply chains and transportation
modes, including freight railroads. The supply chain situation
boiled over into a full-blown crisis last year as the Biden
administration sat idle and helpless to fix the problem.
This committee has closely followed the supply chain crisis
and reviewed ways to address the problem and provide Americans
with some much needed relief. The full committee previously
examined the impacts of COVID-19 on supply chains, including in
our first hearing this Congress.
The committee also held hearings on the Surface
Transportation Board proposals and activities aimed at
addressing rail service challenges. In his testimony before the
committee last year, Chair Martin Oberman advised that the
Board has the tools and authorities necessary to address rail
service issues, and we look forward to tracking those
initiatives.
I also believe it is important to highlight how some of the
current administration's policies have contributed to ongoing
supply chain challenges.
Vaccine mandates, which just today the White House finally
sunset; excessive Government transfer payments that incentivize
people not to work--we hear it, people aren't going back to
work--and an infrastructure law that prioritizes green projects
over those that add real capacity to transportation modal
networks, continue to impact the supply chain.
Our hearing today will examine the state of freight
railroad transportation networks and ongoing supply chain
challenges.
As examined in the previous supply chain hearings, freight
rail remained comparatively resilient. However, it still
encounters many challenges that are both unique to and common
across all freight transportation modes.
Our freight railroads are integral to our Nation's economy,
carrying nearly one-third--that is right--one-third of the
Nation's freight. Freight also makes up a significant part of
our international trade portfolio, carrying over 40 percent of
freight railcars and intermodal units, which accounts for more
than one-quarter of United States rail tonnage.
Railroads are in the process of rehiring furloughed
employees and are actively training new employees to expand
freight capacity.
Today, the subcommittee will hear from our witnesses about
the current challenges to the freight rail industry in meeting
supply chain goals and ongoing efforts to address these issues.
[Mr. Nehls' prepared statement follows:]
Prepared Statement of Hon. Troy E. Nehls, a Representative in Congress
from the State of Texas, and Chairman, Subcommittee on Railroads,
Pipelines, and Hazardous Materials
The consequences of the COVID-19 pandemic continue to ripple
through supply chains and transportation modes, including freight
railroads. The supply chain situation boiled over into a full-blown
crisis last year as the Biden Administration sat idle and helpless to
fix the problem.
This Committee has closely followed the supply chain crisis and
reviewed ways to address the problem and provide Americans with some
much-needed relief. The full Committee previously examined the impacts
of COVID-19 on supply chains, including in our first hearing this
Congress.
The Committee also held hearings on Surface Transportation Board
(STB) proposals and activities aimed at addressing rail service
challenges. In his testimony before the Committee last year, STB Chair
Martin Oberman advised that the Board has the tools and authorities
necessary to address rail service issues, and we look forward to
tracking those initiatives.
I also believe it is important to highlight how some of the current
Administration's policies have contributed to ongoing supply chain
challenges. Vaccine mandates, which just today the White House finally
sunset, excessive government transfer payments that incentivized people
not to work, and an infrastructure law that prioritizes green projects
over those that add real capacity to transportation modal networks,
continue to impact the supply chain.
Our hearing today will examine the state of freight railroad
transportation networks and ongoing supply chain challenges. As
examined in previous supply chain hearings, freight rail remained
comparatively resilient.
However, it still encounters many challenges that are both unique
to and common across all freight transportation modes. Our freight
railroads are integral to our Nation's economy, carrying nearly one-
third of the Nation's freight.
Freight also makes up a significant part of our international trade
portfolio--carrying over 40 percent of freight rail carloads and
intermodal units, which accounts for more than a quarter of United
States rail tonnage.
Railroads are in the process of re-hiring furloughed workers and
are actively training new employees to expand freight capacity. Today,
the Subcommittee will hear from our witnesses about the current
challenges to the freight rail industry in meeting supply chain goals
and ongoing efforts to address these issues.
Mr. Nehls. And now I recognize my dear friend, Ranking
Member Payne, for 5 minutes for an opening statement.
OPENING STATEMENT OF HON. DONALD M. PAYNE, JR., OF NEW JERSEY,
RANKING MEMBER, SUBCOMMITTEE ON RAILROADS, PIPELINES, AND
HAZARDOUS MATERIALS
Mr. Payne. I would like to thank the gentleman, Chairman
Nehls, for calling today's hearing. I am glad that we have an
opportunity to examine freight rail service and learn what can
be improved.
Of course, we can't neglect the importance of the freight
rail workforce to the safe and reliable operation of these
railroads. For the last decade, freight railroad workers have
been asked to do more with less. Since 2015, the freight rail
workforce has been cut by one-third. Despite record profits, it
has only been in the last year that the Class I railroads have
been willing to bargain with their workforce for paid sick
leave.
This morning, I introduced the Freight Rail Workforce
Health and Safety Act to guarantee 7 paid sick days for all
freight railroad workers. Sick leave is a right.
We Members of Congress have paid sick leave ourselves. Our
staff has paid sick leave. Executives at the railroads have
paid sick leave. Freight rail workers deserve paid sick leave
as well.
As the workforce shrunk, trains grew in length, with some
trains today reaching up to 3 miles long. These trains are too
long to fit into rail yards and sidings, so, they block
crossings and stop people from getting to school and to work.
More worrisome, these trains can stop first responders from
getting to people who need them.
Mr. Chairman, I would like to ask unanimous consent to add
the December 2022 article from The Kansas City Star into the
record.
Mr. Nehls. Without objection, so ordered.
[The article immediately follows Mr. Payne's prepared
statement.]
Mr. Payne. It shows the human toll of blocked crossings.
A grandfather, Gene Byrd, died while the crossing to his
neighborhood was knowingly blocked by a BNSF train and
emergency responders could not get to his house in Noble,
Oklahoma. In the Houston suburbs, a tiny baby died for the same
reason. His mom was a nurse and she performed CPR for 52
minutes while a Union Pacific train blocked the entrance to her
neighborhood.
I am pleased that our Senate counterparts advanced
bipartisan rail safety legislation yesterday which addresses
both blocked crossings and long trains. This bill is so
bipartisan, both Senator Schumer and former President Trump
support it.
I am hopeful we can move similar legislation here in the
House, and I look forward to working with my Republican
colleagues on this.
We need to improve rail safety and rail service.
Last summer's rail meltdown made it clear that this
industry needs resiliency.
In response to service disruptions, I introduced the
Freight Rail Shipping Fair Market Act, which puts shippers and
the railroads on a level playing field. It requires freight
rail contracts to contain service delivery standards while
allowing railroads and customers to determine what those
standards should be. It clarifies that common carrier service
should mean efficient, timely, and reliable rail service. It
allows railcar owners to charge fees if railroads are slow to
pick up or return their cars--the same way railroads are
allowed to charge these fees to their customers.
These ideas are supported by rail customers and rail labor.
They will improve service for rail customers and for all who
depend on freight railroads to bring food to the market and
keep our country running.
I look forward to hearing from our witnesses today about
rail service and how the rail workforce is handling these
recent challenges.
And with that, Mr. Chairman, I yield back.
[Mr. Payne's prepared statement follows:]
Prepared Statement of Hon. Donald M. Payne, Jr., a Representative in
Congress from the State of New Jersey, and Ranking Member, Subcommittee
on Railroads, Pipelines, and Hazardous Materials
Thank you, Chairman Nehls for calling today's hearing. I'm glad
that we have an opportunity to examine freight rail service and learn
what can be improved.
Of course, we can't neglect the importance of the freight rail
workforce to the safe and reliable operation of these railroads. For
the last decade, freight rail workers have been asked to do more with
less.
Since 2015 the freight rail workforce has been cut by a third.
Despite record profits, it has only been in the last year that the
Class I railroads have been willing to bargain with their workforce for
paid sick leave.
This morning, I introduced the Freight Rail Workforce Health and
Safety Act to guarantee seven paid sick days for all freight railroad
workers. Sick leave is a right.
We Members have paid sick leave.
Our staff has paid sick leave.
Executives at these railroads have paid sick leave.
Freight rail workers deserve paid sick leave as well.
As the workforce shrunk, trains grew in length, with some trains
today reaching up to three miles long.
These trains are too long to fit into rail yards and sidings, so
they block crossings and stop people from getting to school and work.
More worrisome, these trains can stop first responders from getting
to people who need them.
Mr. Chairman, I would like to ask unanimous consent to add this
December 2022 article from the Kansas City Star into the record.
It shows the human toll of blocked crossings.
A grandfather, Mr. Gene Byrd, died while the crossing to his
neighborhood was knowingly blocked by a BNSF train and emergency
responders could not get to his house in Noble, Oklahoma.
In the Houston suburbs, a tiny baby died for the same reason. His
mom was a nurse and she performed CPR for 52 minutes while a Union
Pacific train blocked the entrance to her neighborhood.
I'm pleased that our Senate counterparts advanced bipartisan rail
safety legislation yesterday, which addresses both blocked crossings
and long trains.
This bill is so bipartisan both Senator Schumer and former
President Trump support it.
I'm hopeful we can move similar legislation here in the House, and
I look forward to working with my Republican colleagues on this.
We need to improve rail safety and rail service.
Last summer's rail meltdown made clear that this industry needs
resiliency.
In response to service disruptions, I introduced the Freight Rail
Shipping Fair Market Act which puts shippers and the railroads on a
level playing field.
It requires freight rail contracts to contain service delivery
standards, while allowing the railroads and customers to determine what
those standards should be.
It clarifies that common carrier service should mean efficient,
timely, and reliable rail service.
It allows rail car owners to charge fees if railroads are slow to
pick up or return their cars--the same way railroads can charge these
fees to their customers.
These ideas are supported by rail customers and rail labor.
They will improve service for rail customers and for all of us who
depend on freight railroads to bring food to market and keep our
country running.
I look forward to hearing from our witnesses today about rail
service and how the rail workforce is handling these recent challenges,
and I yield back the balance of my time.
Article entitled, ``Collision Course: `They just don't care': Trains
blocking roads can be deadly. It's only getting worse,'' by Mike
Hendricks, Kansas City Star, December 13, 2022, Submitted for the
Record by Hon. Donald M. Payne, Jr.
Collision Course: `They just don't care': Trains blocking roads can be
deadly. It's only getting worse
by Mike Hendricks
Kansas City Star, updated December 13, 2022
https://www.kansascity.com/news/business/article268879922.html
Noble, OK.--You never knew when or how long a train might block the
Maple Street crossing, the only way in or out of the neighborhood where
Gene and Linda Byrd lived on the edge of town.
``You couldn't go to the store to get a gallon of milk for dinner,
because you didn't know when you would come back,'' Linda said. ``I
mean, it could be 30 minutes, it could be two hours.''
More troubling, their son Chad said in a 2015 TV news interview:
What if a train was parked at that crossing and prevented an ambulance
from helping someone who was gravely ill on the other side?
Five years later, that's what happened when 66-year-old Gene Byrd
got out of bed with chest pains and collapsed around 1 a.m. on Sept. 6,
2020. The EMTs who responded to the 911 call were blocked by an idling
BNSF freight train, and when a cop pleaded with the conductor to move
the rig, he refused.
Several minutes passed before the train finally moved and the
ambulance arrived at the Byrds' house, Linda said recently, fighting
back tears as she recalled the night she lost her husband of 48 years.
``They put him on the board,'' she said. ``I don't know if he was
breathing at that point.''
Medical treatment has come too late for countless others when
parked or plodding trains blocked ambulance crews from getting people
the help they needed in time, The Star found in a months-long
investigation. Delayed at blocked crossings, fire trucks have arrived
too late to save people's houses from burning to the ground.
Much of the blame rests on congressional inaction and a series of
court rulings over the past 20 years that have stripped from state and
local officials the authority they once had to limit how long trains
could block crossings. Only Congress can restrict a train's movement,
the courts have ruled in state after state.
Yet Congress has failed repeatedly to pass laws giving regulators
the authority they'd need to address a problem that has only grown
worse due to operational changes within the railroad industry.
``We don't have explicit authority to prohibit a train from
occupying a crossing for any length of time,'' said Karl Alexy, chief
safety officer for the Federal Railroad Administration.
The U.S. Supreme Court so far also has refused to weigh in. Ohio is
now waiting to learn whether the high court will hear the appeal it
filed last month of a state supreme court ruling that nullified Ohio's
blocked crossings law.
That railroad companies can block crossings indefinitely is one of
the more egregious examples of the wide latitude railroads have been
given to operate as they see fit, dating all the way back to when the
first tracks were laid in the U.S. in the early 1800s.
And the problem has only gotten worse in recent years for many
communities across the country as the rail industry's practices have
made blocked crossings more common. According to one government report,
there were nearly 1,800 reported instances in 2020 of trains blocking
crossings for more than an hour, and sometimes for an entire day.
Officials in the communities that are hardest hit, many of which
are predominantly minority or economically vulnerable, have grown
increasingly frustrated and concerned for the safety of their citizens
and the health of their local economies.
In 2017 in Forest Park, Georgia, outside Atlanta, Kate Brown and
her 1-year-old son lost limbs--she a leg and he an arm--as Brown, on
her way home from the bus stop, crawled under a train blocking a
crossing with her baby in her arms after her two older children had
crawled to safety.
``Stalled trains continue to be a tremendous burden on our
residents, first responders and especially our local business owners,''
Marc-Antoine Cooper, the city manager of Forest Park, told The Star.
``Drivers and pedestrians in the area are forced to detour their
routes, all while a large number of trains stay idle on the railway
track for hours at a time.''
Tragic Delays
Most of the time blocked rail crossings are merely an
inconvenience. Kids are late getting home from school because a train
delayed their bus. Adults can't get to work on time. Appointments are
missed, reservations canceled.
Little recognized is that these delays can turn emergencies into
tragedies.
Arvid Eliason was 82 in 2017 when he hit his head and suffered a
brain bleed. The ambulance taking him to the hospital was blocked for
20 minutes by a train near his home in Woodhaven, Michigan. Had he
gotten treatment sooner, his son believes he might have survived.
Baldevbhai ``Bobby'' Patel, 46, of Wartrace, Tennessee, succumbed
to a heart attack in May 2021 when trains at multiple crossings delayed
an ambulance's arrival by 12 to 15 minutes, according to the deputy
emergency medical services director in the county where Wartrace is
located.
Medical treatment for K'Twon Franklin of Leggett, Texas, also came
too late when rescue workers were delayed by a train blocking a
crossing near his home in 2021, according to the wrongful death lawsuit
his family filed in March against Union Pacific Railroad.
K'Twon was just 11 weeks old when his mother, a nurse, found him
unresponsive a half hour after putting him down for a nap on Sept. 30,
2021. Finding the crossing blocked to the dead-end road where the
family lived, an EMT climbed through a parked train to get the child
and carry him back to the ambulance.
But before he could get back across the tracks to the vehicle, the
train had begun to move. Nearly an hour passed between the 911 call and
when the baby was finally loaded into the ambulance. K'Twon was
pronounced dead in the hospital three days later.
``That train was always blocking the track for hours on end,''
K'Twon's mother, Monia Lee Ann Franklin, told The Star. ``That morning,
it was on the track for an hour, 19 minutes. And I was doing CPR for
49.''
She called her son's death ``tragic and life changing,'' but hopes
his passing might get someone to fix the problem so some other family
can be spared her grief.
How often these tragic delays occur, no one knows for sure. No
agency--local, state or federal--keeps track. But fears that it could
happen in their communities have some cities and counties with heavy
train traffic mounting cameras at problem rail crossings so emergency
responders and the public can know in advance that they need to find
another route. If there is one.
Also unknown is the number of pedestrians who are killed or maimed
each year doing what that EMT in Texas did under less desperate
circumstances. Weary of waiting for parked trains to move so they can
get to work, school or the store, people on foot or bicycle often climb
between rail cars or crawl under them at or near rail crossings all
across the country.
Pedestrians Maimed
Normally, no one gets hurt while putting themselves at such
enormous risk. But sometimes, without warning, the trains lurch forward
or backward, pinching off people's arms and legs.
Two people were grievously injured in 2017 in Waterloo, Iowa, in
separate, gruesome incidents at blocked crossings that often hem in one
of the city's most disadvantaged neighborhoods. Oneida Cosby lost both
legs, while Jovida Owens was ``degloved,'' which is as awful as it
sounds. Nearly all of the skin, along with muscle, was ripped from her
neck and down her back.
``When the train's on the tracks, it blocks the whole east side
crossing,'' Waterloo resident Essoria Greer told The Star.
``When the train stops, people are walking--a lot of people don't
have transportation. When they're walking and the train just sits there
for 30, 45 minutes, they have to go underneath the train, or jump the
tracks with their bikes--pushing their bikes underneath just to get
across the street. Anything to get across the street.''
Forty states and the District of Columbia have laws that limit how
long trains can block public crossings, anywhere from five to 20
minutes, according to the Congressional Research Service. But over the
past two decades railroads have successfully challenged the
constitutionality of those laws, rendering them unenforceable
nationwide.
State and federal courts have sided with the railroads, ruling that
because Congress granted rail carriers special legal status 25 years
ago, only the federal government has authority to set rules on a
railroad's operations.
Yet that same federal government has set no limits on how long a
train can block a crossing. And whenever such a law is proposed in
Congress, the railroad industry's lobbyists go to work and the bill is
killed.
That last happened in 2021. Rep. Jim Cooper, a Democrat from
Tennessee, managed to get a blocked crossing limitation inserted into
the infrastructure bill, arguing that his constituents ``should not
suffer because railroads think they own the world.''
But when it was all over, the blocked crossing rule was stripped
from the bi-partisan infrastructure bill at the urging of the railroad
industry.
``Each of the nation's 200,000 grade crossings are different,'' the
Association of American Railroads said in arguing against a 10-minute
limit on blocked crossings that passed the House but not the Senate.
``This proposed one-size-fits-all solution will lead to unintended
consequences, including network congestion and reductions in service.''
In place of a law limiting how long a train can block a public
crossing, proponents were forced to accept a compromise. The
infrastructure bill created a federal grant program to eliminate
problem railroad crossings by building viaducts over the tracks or
tunnels under them.
The program will cost American taxpayers hundreds of millions of
dollars--and the railroads nothing. And when money from the competitive
Railroad Crossing Elimination Grant Program has run out, not every
community that needs help will have gotten it.
Longer Trains
Blocked crossings are increasingly creating hardships and danger
for communities across the United States. Much of the blame for that
rests on changes within the railroad industry over the past decade.
All of the nation's seven largest railroads have slashed their
workforces, while initiating work-rule changes that have led other
workers to quit. When train crews exceed the number of hours that by
law they can work, a relief crew is not always immediately available.
That means a train can sit on a siding for hours, blocking access
to homes and businesses, until a fresh engineer and conductor show up
for work.
Trains also have gotten longer as the railroads have looked for
ways to cut operating costs and please Wall Street investors. The labor
costs to operate a two-mile train are the same as what it costs to
operate a train that is one mile long.
But this can lead to crossings being blocked, as the existing rail
infrastructure isn't always sufficient to support these longer trains.
At 10,000 feet or more, they're too long to park on a siding that is
8,500 feet while letting other trains pass.
So they stop on the main line, which means those other trains have
to stop, too, sometimes blocking rail crossings.
Likewise, many rail yards weren't built to accommodate these long
trains. It takes more time to break trains apart when they arrive.
``If there is a log jam at point A coming into your yard, it
creates a bottleneck for the whole railroad,'' said Ty Dragoo, Kansas
legislative director for SMART Transportation Division, a union that
represents railroad workers. ``And it's just the cascading effect where
we see now trains are setting on top of crossings left and right.''
While data on train length is not publicly available, two of the
country's largest railroads told the Government Accountability Office
that the average length of their trains had grown 25 percent between
2008 and 2017, now averaging more than a mile long.
But some stretch as long as two to three miles and can block
multiple crossings at once, as Clint McBroom, mayor of Newton, Kansas,
can attest.
``We have five crossing points in Newton,'' he said. ``The trains
are so long that all five of them can be blocked at one time.''
While Newton has alternative routes for emergency crews to get from
one side of town to the other, people on foot or bicycle sometimes take
the shortcut through stopped trains.
``We've had situations where kids (in Newton) are crawling
underneath our trains in the morning and after school,'' Dragoo said.
``It scares the hell out of us. Because we don't know, if we start to
pull, if we're going to cut a kid in half.''
Train crews can disconnect cars and break trains in two to make
crossings passable. But often they don't because the process of
reconnecting can take a couple of hours due to federal train brake
safety regulations, and time is money.
The outcry over blocked railroad crossings has grown so much in
many communities that the federal government created an online portal
three years ago where people can report problem crossings.
The Federal Railroad Administration, which enforces the laws
Congress does pass to regulate railroads, says it uses the data to
identify problem areas and assess the causes and impact of blocked
crossings.
So far the FRA has issued no public report on its findings,
although it's not clear how useful a report would be. The portal only
measures how often people complain about a blocked crossing, not which
crossings are blocked the most.
After a while, people quit filing reports through the portal and
try other tactics that they hope might produce results.
Held Hostage
Allen Watts finds it more effective to make a pest of himself. He
and his neighbors along Gander Slough Road outside Kingsbury, Texas,
have felt like prisoners since the Union Pacific expanded a siding
there to park trains, sometimes for hours, while letting other trains
pass on the main line from San Antonio to Houston.
``Our emergency response comes from the west, and that's where
we're blocked,'' Watts told The Star. ``I've harped on it (with
railroad employees) and say, `Hey, we're cut off from the fire
department and ambulance and they (the railroad) say, `Well, they can
go around.'
``I said, `So are you going to take credit for someone's house
burning? Or are you going to if someone dies, because you know that 30
minutes could mean life or death, right?' ''
Watts sometimes calls the railroad dozens of times in a day when
the crossing is blocked. Not until he got the phone number of a top
Union Pacific executive at the company's headquarters in Omaha,
Nebraska, did relief come.
The Gander Slough Road crossing also has its own Facebook page to
call attention to the problem.
Denise Wheeler-Mayo administers a similar page dedicated to a
couple of crossings outside Birmingham, Alabama, calling attention to
the problems the Norfolk Southern railroad causes in her neighborhood.
``We're held hostage by the train company, you know, over and over
and over again,'' she told The Star. ``We've had people die from heart
attacks. We've had people's houses burned because the fire truck
couldn't get to us.''
JoAnna Chamberlain of New Boston, Michigan, a suburb of Detroit,
also has taken her campaign against blocked crossings online, where she
promotes a change.org petition that asks that Congress step in because
states are powerless to act on their own anymore.
``Michigan has legislation that says that trains can't block for
more than 15 minutes,'' she said. ``However, I know federal courts have
said, you can't cite trains for blocking tracks because it's interstate
commerce. So now local law won't enforce the legislation because
federal courts won't uphold it.''
Congress needs to put people's rights ahead of the business needs
of railroads, she said.
``There are towns just like ours all across our nation experiencing
the same problems,'' she said. ``Something must change.''
`They just don't care'
For more than a century, Kansas had a law on its books much like
the one in Michigan. It forbade trains from blocking railroad crossings
for more than 10 minutes, without leaving an opening at least 30 feet
wide so vehicles can get through.
Passed in 1897 at a time when the Populists controlled state
government and were trying to rein in the monopoly power of the
railroads, the blocked crossing statute was one of the few of those
restrictions that survived. The fines for violating the law were last
updated in 2004: $100 to $600 for the first half hour a crossing is
blocked and $600 for each 30 minutes thereafter.
But by then, the railroads had already begun a campaign to overturn
blocked crossing laws nationwide. The BNSF Railway Co. was successful
in getting the Kansas law nullified four years ago when the state court
of appeals ruled the state's blocked crossing law unenforceable.
That case grew out of one county sheriff's frustration with BNSF
for habitually blocking two crossings in a sparsely populated corner of
the Flint Hills.
The Chase County Sheriff's Department was constantly getting calls
from residents who felt trapped by the trains that kept them from
getting to the nearest town--or anywhere else, for that matter. One of
those calls came in around 6 o'clock on a cold December morning in
2016. For what seemed like the hundredth time, a train was blocking the
crossings at Norton Creek Road and county road T.
Only a few people were affected by the trains there. But for the
farmers and ranchers who lived nearby, the blocked crossings had been a
constant hassle. The trains would sometimes sit there for days, and
there was no alternate route, only dead ends.
What if there was an emergency?
``I've got a half a dozen residences out there,'' Sheriff Richard
Dorneker said in late August as he was about to retire after 27 years
with the department, 17 of them in the top job. ``People are in their
80s. Got another gal that was pregnant.''
When her husband called the railroad a few years back to ask what
would happen should the crossings be blocked when his wife went into
labor, Dorneker said, ``Their answer to him was, `You'll have to leave
a truck parked on the other side, and she'll have to either crawl over
the top of the train or under the train.' ''
On that December morning at the center of the appeals court ruling,
Dorneker drove out around 8 to find the train still sitting there two
hours after the call had come in. A conductor walking alongside it said
he had to check the train and offered no explanation on why it was
stopped or for how long.
Dorneker asked someone back at his office to call BNSF and insist
that the train be moved. When it hadn't budged after three phone calls,
Dorneker wrote BNSF a ticket and hoped that might get someone's
attention at the railroad's headquarters in Fort Worth, Texas.
Yet rather than pay the $4,200 fine for trapping Chase County
residents in their homes for much of that morning, the railroad owned
by billionaire Warren Buffet's holding company--the BNSF would go on to
make a $3.6 billion profit in 2016--chose to appeal its conviction at
the district court level.
The railroad argued that states had no power to regulate its
operations, and the Kansas Court of Appeals agreed. That was strictly a
federal responsibility.
State laws restricting a railroads' practices, according to the
2018 ruling, were ``preempted,'' a legal term that has come up again
and again when it comes to state and local governments' attempts to
regulate the railroads.
So trains continue to block those crossings in Chase County for
hours and hours, and there's nothing to be done about it.
``When it comes to BNSF, they're just gonna block what they need to
block when they want to block it,'' Dorneker said. ``And they just
don't care. I mean, they're not concerned about the common person that
has to work or try to get to, you know, anywhere.''
The Byrd Case
Two things happened that year after Gene Byrd died of a heart
attack in Noble, Oklahoma.
The city of Noble, with no help from the railroad, extended the
dead-end blacktop road along which Linda Byrd and her two adult
children live in separate houses in a sort of family compound.
That extra half mile of asphalt now stretches to Cemetery Road,
where there's another rail crossing providing access to the homes. The
project had been in the planning stages for years.
``We were paving that thing not long after Mr. Byrd's death,''
assistant city manager Robert Porton said, ``so the timing was
unfortunate.''
The other development was that Linda Byrd filed a wrongful death
lawsuit against BNSF.
The railroad tried to get the case thrown out by having it moved
from the state court where it was filed to federal district court,
where the company felt it had better luck getting it dismissed. BNSF's
hope was that the federal judge would rule that Linda Byrd's claims
were preempted by a law that gives the federal government sole
authority to regulate railroad operations.
But Judge Stephen P. Friot did not rule on that point, but rather
returned the case to the state court for a full hearing on the issues
because Byrd's attorney had not argued that the BNSF had blocked the
crossing longer than state law allowed--a law that was ruled
unconstitutional a month after Byrd's death.
Rather Byrd's Kansas City-based attorney, Timothy Gaarder, argued
that the railroad was guilty of negligence for refusing to move the
train when informed that an emergency existed. The railroad and its
employees, he said in a court filing, ``were negligent when they
permitted Train #5628 to block the Maple Street Crossing when
Defendants knew, or should have known, that this could prevent a member
of the public, specifically Mr. Byrd, from receiving emergency medical
services.''
That's a matter more properly heard in state court, the judge
ruled, and so the case continues. While it might seem like a fine legal
point, the judge's ruling could help others navigate around the
railroad's preemption defense and successfully file negligence claims
in civil cases involving blocked railroad crossings.
``There is a very real chance of having legal precedent set in this
case that will either open the door to justice, or further close it,''
Gaarder said.
Ultimately, it may be up to the U.S. Supreme Court to decide, if
the case goes to trial, as both sides would likely appeal that initial
verdict.
Which means years might pass before the final outcome is known in a
lawsuit that might never have been filed in the first place, had that
conductor radioed his dispatcher to say he was backing up the train 150
feet to let the ambulance pass through.
They just might have gotten there in time to save a life, Linda
Byrd says.
``I mainly feel like the conductor, engineer, whatever, didn't have
a right to make that call whether Gene had a chance,'' she said. ``I
mean, when you have a heart attack there's only minutes that there's a
window there and he decided that he didn't have to give that to Gene,
and I just don't understand.''
The Star's Eric Adler and Kevin Hardy contributed to this article.
This story was originally published December 11, 2022, 5:00 AM.
Mr. Nehls. Thank you, Ranking Member Payne.
I ask unanimous consent to enter into the record the
following statements from the Private Railcar Food and Beverage
Association, The Fertilizer Institute, the National Industrial
Transportation League, the National Mining Association, and the
Freight Rail Customer Alliance.
Without objection, so ordered.
[The information follows:]
Letter of May 11, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick
Larsen, Ranking Member, Committee on Transportation and Infrastructure,
and Hon. Troy E. Nehls, Chairman, and Hon. Donald M. Payne, Jr.,
Ranking Member, Subcommittee on Railroads, Pipelines, and Hazardous
Materials, from Herman Haksteen, President, Private Railcar Food and
Beverage Association, Submitted for the Record by Hon. Troy E. Nehls
May 11, 2023.
VIA EMAIL
The Honorable Sam Graves,
Chair,
House Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Rick Larsen,
Ranking Member,
House Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Troy Nehls,
Chair,
Railroads, Pipelines, and Hazardous Materials Subcommittee, House
Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Donald M. Payne, Jr.,
Ranking Member,
Railroads, Pipelines, and Hazardous Materials Subcommittee, House
Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
Dear Chairs Graves and Nehls, and Ranking Members Larsen and Payne:
The Private Railcar Food and Beverage Association (PRFBA), thanks
you for holding today's subcommittee hearing, ``Getting Back on Track:
Exploring Rail Supply Chain Resilience and Challenges.''
PRFBA, founded in 2016, is comprised of 21 global food and beverage
companies and manufacturers headquartered in North America, who own or
lease their own rail cars. They are all major rail shippers that rely
on the railroads to produce and distribute their food and beverage
products that are vital to the health and welfare of our nation.
In debating what steps Congress needs and should take to strengthen
our nation's freight rail network, PRFBA asks that your Committee also
address the continued and systemic freight rail service problems that
shippers are still experiencing, regardless of size, geographical
location, or commodity. Rail-dependent or captive shippers are
especially vulnerable to these problems.
As described in further detail in Appendix 1, PRFBA's members and
their customers continue to suffer economic harm due to unreliable rail
service delivered at unreasonable rates.
Thanks in large part to this Committee's past efforts, Congress
passed the Surface Transportation Board (STB) Reauthorization Act of
2015, P.L. 114-110, which expired on September 30, 2019. PRFBA
recommends you build upon the basic reforms, process enhancements, and
added transparency instilled in this law by:
Clarifying the Common Carrier Obligation (CCO) statutory
provision and providing the STB with both the direction and flexibility
when determining if a railroad is meeting its CCO, especially in view
of the industry's continued, systemic, freight rail carrier service
failures.
Allowing private rail car owners or lessors to obtain
compensation from railroads for improper use or delay of their rail
cars, such as when railroads are slow to deliver or pick up rail cars.
The railcar ownership market has changed during the past few decades,
and shippers own or lease two-thirds of the freight rail cars in use
today. In addition to the costs incurred in owning or leasing the
railcars, these shippers are also responsible for the repair and
maintenance of these railcars.
Increasing the STB's civil penalty authority. For the
current 2023, the maximum amount allowed is under $10,000 for each
knowing violation, per day. With the continued profits enjoyed by the
rail carriers and their shareholders, this level of penalty is clearly
insufficient to deter wrongful behavior. Furthermore, the Board has
used this existing authority only once in the last ten years.
Removing commodity exemptions that were established
several decades ago, based on the economic and regulatory conditions
that existed at the time. Those conditions no longer exist in today's
consolidated freight rail transportation marketplace. These exemptions
not only make it more difficult, time consuming and costly, but in
reality, block shippers from utilizing existing regulatory procedures
available to other shippers in seeking redress or relief from the STB,
including from service problems.
Prohibiting railroads from imposing increased rates
during a STB-declared Emergency Service Order.
Providing a five-year reauthorization for the STB, with
an initial minimum annual authorization level of $48.184 million, along
with annual increases commensurate with inflation, to enable the Board
to fulfill its statutory responsibilities and to continue to meet the
needs of stakeholders and the public.
Thank you for your consideration.
Sincerely,
Herman Haksteen,
President, Private Railcar Food and Beverage Association.
cc: Members of the House Transportation and Infrastructure Committee
appendix 1
Private Railcar Food and Beverage Association
Shippers Snapshots of Poor Railroad Service and Added Costs
January 2023-Present
PRFBA Member A
Snapshot #1
This PRFBA member is reliant on one Class I railroad and its yard
operations in Minneapolis, MN.
Over the last six months it has experienced missed
switches and a drop off in communication, in many cases, coming close
to shutting down its plant for lack of switching empty cars for
loading.
It monitors dwell time on its cars in the yard once they are
released to the railroad. Currently there are over 10 cars over that
are 100 hours delayed still in the yard. These delays create gaps in
the rail pipeline for its downstream plant operations. This has
required it to order trucks, reduce production, or eliminate production
plans in some cases.
One of the customers could not access its contracted
lease track for the last 12 months because the railroad did not have
the employment resources to make needed repairs to allow its customer
access to the track.
The railroad managers continue to call out lack of crews
for normal switch jobs and ongoing maintenance.
Snapshot #2
The PRFBA member is experiencing a service drop on the St. Paul, MN
and Chicago, IL interchanges which involve three Class Is. Service is
now five days vs. the initial 24-48 hours. The negative effects of this
include:
Created big gaps in rail pipeline--in many cases trucks
are not an option, or, come at a huge premium because of the one way
miles.
Increased origin yard dwell time and destination yard
dwell time.
Created the need/perception that more private cars are
needed.
Forced it to consider what options it might have to keep
running which all involve an expensive capital investment whether it
be: 1) acquiring and using TrackMobile--equipment to move railcars; 2)
leasing tracks on property to store more cars; or, 3) adding extra
shift employees/operations to cover self-switching activities.
PRFBA Member B
Snapshot #1
The PRFBA member is experiencing adverse impacts on delivering its
Finished Goods to customers originating out of Muscatine, IA with one
Class I. This railroad then ships these Finished Goods to multiple
destinations involving three other Class Is. The adverse impacts
include:
Service
+ Multiple weeks with poor service in filling our weekly system
car order allotment from one Class I.
Supply Chain Impact
+ Required to change shipping modes to trucking and intermodal
in order to get product downstream to service customers
+ Estimated cost impact for this year has been $76k in order to
support service.
Waste
+ Continue to see damage on loads outbound from Muscatine, IA
involving one originating Class I and ending on a different Class I.
+ Over the last six months have incurred $314,080.35 in damaged
product.
Snapshot #2
The PRFBA member experiencing adverse impacts related to shipments
of its Raw Materials which are needed to process its food products.
There is a particular problem with as supplier's product
originating in Hastings, MN arriving in the PRFBA member's Champaign,
IL plant involving two Class Is and one short-line railroad. The
transit time has increased from 14 days to 18 days, which the PRFBA
member learned only after repeated efforts in seeking an explanation--
caused by the short line limiting its train sizes into Chicago, IL.
The PRFBA member uses three to five rail cars daily in processing
just one of its products. The negative impacts of this longer transit
time include:
Higher railcar inventory in Champaign, IL rail yard which
will increase the PRFBA member's demurrage costs.
Reduced asset utilization for the supplier which puts
increased pressure on the PRFBA member to turn cars faster and limits
the supplier's shipments.
Loss productivity among employees at the Champaign, IL
plant. For instance, the daily monitoring of this one product has
become necessary work for at least one full time Materials Planner when
this same planner is responsible for 100 other products.
Increased costs on back-up materials when the supplier's
product does not arrive on time.
Letter of May 11, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick
Larsen, Ranking Member, Committee on Transportation and Infrastructure,
and Hon. Troy E. Nehls, Chairman, and Hon. Donald M. Payne, Jr.,
Ranking Member, Subcommittee on Railroads, Pipelines, and Hazardous
Materials, from Corey Rosenbusch, President and Chief Executive
Officer, The Fertilizer Institute, Submitted for the Record by Hon.
Troy E. Nehls
May 11, 2023.
The Honorable Troy Nehls,
Subcommittee on Railroads, Pipelines, and Hazardous Materials,
U.S. House of Representatives, Washington, DC 20515.
The Honorable Donald M. Payne, Jr.,
Subcommittee on Railroads, Pipelines, and Hazardous Materials,
U.S. House of Representatives, Washington, DC 20515.
The Honorable Sam Graves,
Chairman,
Committee on Transportation and Infrastructure, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Rick Larsen,
Ranking Member,
Committee on Transportation and Infrastructure, U.S. House of
Representatives, Washington, DC 20515.
Via Electronic Mail
Re: Hearing on ``Getting Back on Track: Exploring Rail Supply Chain
Resilience and Challenges''
Dear Chairmen Graves and Nehls and Ranking Members Payne and
Larsen:
Thank you for holding today's hearing entitled ``Getting Back on
Track: Exploring Rail Supply Chain Resilience and Challenges.'' The
Fertilizer Institute (TFI) appreciates the opportunity to share
information on what has been a challenging couple of years for
fertilizer shippers.
TFI represents companies that are engaged in all aspects of the
fertilizer supply chain in the United States. The fertilizer industry
ensures that farmers receive the nutrients they need to enrich the soil
and, in turn, grow the crops that feed our nation and the world.
Fertilizer is a key ingredient in feeding a growing global population,
which is expected to surpass 9.5 billion people by 2050. Half of all
food grown around the world is made possible through the use of
fertilizer, hence its importance to farmers and food production. The
U.S. fertilizer industry generates more than $130 billion in economic
benefit each year and supports approximately 487,000 American jobs.
On a ton-mile basis, over 60% of fertilizer moves by rail year-
round throughout the United States.
Rail safety has understandably received a great deal of attention
in recent months. Rail safety has long been a top priority for the
fertilizer sector (more at https://
thefertilizerinstitute.sharepoint.com/:b:/g/EbWEtgucTqJPn1_VSLnke48BBQ
loTehyg5qA6ehCOhvJfA?e=izn9nq). Moreover, rail carriers have also done
a lot in recent years to boost rail safety. As it pertains to rail
safety, TFI supports any regulatory and legislative changes that boost
freight rail safety while maintaining the viability of rail networks
and their critical role to ensure U.S. farmers have the fertilizers
they need.
In addition to rail safety, the timeliness and reliability of
fertilizer shipments is absolutely critical. Since 2017, severe rail
carrier cost-cutting decisions have made rail service unreasonably
poor. TFI has repeatedly urged rail carriers to hire more employees, so
they can reasonably comply with their common carrier obligation (CCO).
To their credit, carriers are trying to hire more employees, but they
need to establish operational reliability and consistency throughout
economic cycles. Rail metrics are improving, albeit during last year's
economic slowdown and consequent declines in shipping volumes.
Moreover, since 2000, rail carriers have been shifting costs to
rail customers. From 2005 to 2017, rail rates for carloads of anhydrous
ammonia, the building block of all nitrogen fertilizers and one of the
most efficient sources of nitrogen for farmers, increased 206%, over
three times more than the increase in the system-wide average rail rate
per car.
Congress should work with the Surface Transportation Board (STB) to
clarify that reasonable rail service standards are part of the common
carrier obligation (CCO). The STB is the primary regulatory agency
responsible for rail rate and service matters. In addition to the CCO,
practical regulatory reforms that improve STB oversight of the rail
marketplace are needed. This includes reciprocal switching, final offer
rate review, arbitration, emergency service, and enhanced first-mile
last-mile data. STB modernization can help promote competitive freight
rail service and this will boost our economy for all Americans.
Thank you again for holding today's hearing and for the opportunity
to submit this statement. TFI looks forward to continuing to work with
you and your colleagues. Should you have any questions, please reach
out to Justin Louchheim of my staff.
Sincerely,
Corey Rosenbusch,
President and CEO, The Fertilizer Institute.
Letter of May 11, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick
Larsen, Ranking Member, Committee on Transportation and Infrastructure,
and Hon. Troy E. Nehls, Chairman, and Hon. Donald M. Payne, Jr.,
Ranking Member, Subcommittee on Railroads, Pipelines, and Hazardous
Materials, from E. Nancy O'Liddy, Executive Director, National
Industrial Transportation League, Submitted for the Record by Hon. Troy
E. Nehls
May 11, 2023.
VIA EMAIL
The Honorable Sam Graves,
Chair,
House Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Rick Larsen,
Ranking Member,
House Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Troy Nehls,
Chair,
Railroads, Pipelines, and Hazardous Materials Subcommittee, House
Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Donald M. Payne, Jr.,
Ranking Member,
Railroads, Pipelines, and Hazardous Materials Subcommittee, House
Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
Dear Chairs Graves and Nehls, and Ranking Members Larsen and Payne:
The National Industrial Transportation League (NITL), whose members
spend billions of dollars shipping freight annually thanks, you for
holding today's subcommittee hearing, ``Getting Back on Track:
Exploring Rail Supply Chain Resilience and Challenges.''
In debating what steps Congress needs and should take to strengthen
our nation's freight rail network, NITL asks that your Committee also
address the continued and systematic freight rail service problems that
shippers are still experiencing, regardless of size, geographical
location, or commodity. Rail-dependent or captive shippers are
especially vulnerable to these problems.
As described in further detail in Appendix 1, NITL's members and
their customers continue to suffer economic harm due to unreliable rail
service delivered at unreasonable rates.
Thanks in large part to this Committee's past efforts, Congress
passed the Surface Transportation Board (STB) Reauthorization Act of
2015, P.L. 114-110, which expired on September 30, 2019. NITL
recommends you build upon the basic reforms, process enhancements, and
added transparency instilled in this law by:
Removing commodity exemptions that were established
several decades ago, based on the economic and regulatory conditions
that existed at that time. Those conditions no longer exist in today's
consolidated freight rail transportation marketplace. These exemptions
not only make it more difficult, time consuming and costly, but in
reality, block shippers from utilizing existing regulatory procedures
available to other shippers in seeking redress or relief from the STB,
including service problems.
Clarifying the Common Carrier Obligation (CCO) statutory
provision and providing the STB with both the direction and flexibility
when determining if a railroad is meeting its CCO, especially in view
of the industry's continued, systemic, freight rail carrier service
failures.
Increasing the STB's civil penalty authority. For the
current 2023, the maximum amount allowed is under $10,000 for each
knowing violation, per day. With the continued profits enjoyed by the
rail carriers and their shareholders, this level of penalty is clearly
insufficient to deter wrongful behavior. Furthermore, the Board has
used this existing authority only once in the last ten years.
Allowing private rail car owners or lessors to obtain
compensation from railroads for improper use or delay of their rail
cars, such as when railroads are slow to deliver or pick up rail cars.
The railcar ownership market has changed during the past few decades,
and shippers own or lease two-thirds of the freight rail cars in use
today. In addition to the costs incurred in owning or leasing the
railcars, these shippers are also responsible for the repair and
maintenance of these railcars.
Prohibiting railroads from imposing increased rates
during a STB-declared Emergency Service Order.
Providing a five-year reauthorization for the STB, with
an initial minimum annual authorization level of $48.184 million, along
with annual increases commensurate with inflation, to enable the Board
to fulfill its statutory responsibilities and to continue to meet the
needs of stakeholders and the public.
Thank you for your consideration.
Sincerely,
E. Nancy O'Liddy,
Executive Director, National Industrial Transportation League.
cc: Members of the House Transportation and Infrastructure Committee
appendix 1
National Industrial Transportation League Member
Shipper Snapshot of Poor Railroad Service and Added Costs
April 2023-Present
The following relays a series of bad decisions on the part of the
railroad that not only resulted in misroutes and service delays on our
cars, but also exacerbated the congestion:
1. When six private cars released empty on April 13 sat idle in
Wisconsin for more than a week, we contacted the railroad. We were told
the problem was congestion at the Clearing, IL yard in Chicago. When we
talked with our railroad sales reps, we emphasized that empties are
equally important to loaded cars, because the empties are the next
loads, and we needed the cars to fill orders.
2. Three times, we were told the cars would move to Clearing that
night, but that did not happen. In the meantime, four more cars were
released. Finally, after about ten days, cars started to move to
Clearing. Four of the original group moved correctly on an outbound
train to the rail customer in the Joliet, IL area; however, six cars
were put on an outbound train to Galesburg, IL (out-of-route). From
what we were told, we concluded that the train to Galesburg had
capacity to get the cars out of the way to relieve congestion at
Clearing Yard.
3. Galesburg was also congested so the railroad reacted by putting
the cars on an outbound train to Hastings, NE as part of the ``clean
up'' efforts at Galesburg.
4. All the cars sent to Hastings are at various stages, enroute
back to Galesburg. Around May 1, we were told the cars would be
constructively placed at our plant on May 4:
One car was just released from bad order at Lincoln,
NE, on May 4, but there is no trip plan.
A second car arrived at Lincoln on May 3; revised
Estimated Time of Arrival (ETA) May 7.
Four cars did make it to Galesburg and departed May 4:
projected arrival, May 4.
Costs Incurred
In addition to the service delays and potential opportunity costs
outlined above, we, the rail shipper and rail customer, is incurring
additional car costs.
We alerted the railroads to mitigate any potential charges for
mileage equalization for these excess empty miles. Below is a high-
level summary of the related cost components; of course, these costs
are in addition to the freight rates. These estimates are based on the
projected ETA of May 4, so there will be additional costs for the two
lagging cars.
1. Car Costs Total: 143 Car Days
Two cars released on April 13, routed to Galesburg
and Hastings, NE; return move Nebraska-Galesburg-Joliet, 22 days.
One car released April 13, placed at Lorenzo April
27, 8 days.
Three cars released April 13, placed at Lorenzo
April 25, 10 days.
Three cars released at origin April 19, routed to
Galesburg and Hastings, NE; return move Nebraska-Galesburg-Joliet,
sixteen car days each.
One car released at origin April 22, routed to
Galesburg and Hastings, NE; return move Nebraska-Galesburg-Joliet,
thirteen car days.
2. Total 8,076 Excess Miles
We are not including potential mileage equalization
charges in the cost calculations because we have already
taken action to mitigate those charges with the railroad.
However, if included in the calculation, the cars that
moved to Hastings have involved:
4,188 excess miles for the moves Milwaukee
Galesburg-Hastings.
3,888 excess miles for the returns Hastings-
Galesburg-Joliet.
Not good for a railroad that is short of capacity.
Statement of the National Mining Association, Submitted for the Record
by Hon. Troy E. Nehls
The National Mining Association (NMA) appreciates the opportunity
to provide input to the Committee on Transportation and Infrastructure
regarding the state of freight rail transportation resilience and
supply chains. The NMA's members support and conduct mining operations
throughout the United States and rely on Class I rail carriers to
transport mined products, including metallurgical coal for steelmaking
and critical infrastructure, thermal coal for heating and energy both
at home and to our allies abroad, and hardrock minerals such as copper
that support renewable energy technologies, healthcare, and more.
The NMA is the only national trade organization that serves as the
voice of the U.S. mining industry and the hundreds of thousands of
American workers it employs before Congress. We work to ensure America
has secure and reliable supply chains, abundant and affordable energy,
and the American-sourced materials necessary for U.S. manufacturing,
national security and economic security, all delivered under world-
leading environmental, safety and labor standards. The NMA has a
membership of more than 275 companies and organizations involved in
every aspect of mining, from producers and equipment manufacturers to
service providers.
Background
Coal is a reliable and abundant energy resource--making up nearly
90 percent of U.S. fossil energy reserves on a Btu basis. The demand
for coal, especially coal exports, has remained steady and even
increased. Russia's invasion of Ukraine has severely shaken global coal
markets and last year triggered a spike in U.S. thermal coal exports to
help alleviate Europe's tight energy supply and low natural gas
reserves.
Key infrastructure, including roads, railways, buildings, stadiums,
bridges, airports and other structures are all supported by steel--a
material dependent on metallurgical coal. Seventy percent of the
world's steel requires coal for its production. The U.S. is one of the
largest metallurgical coal exporters in the world and demand is
expected to increase 20 percent by 2030 to keep up with the pace of
aging infrastructure.
American coal producers are almost entirely reliant on U.S.
railroads to get products to market. For example, coal produced in the
Powder River Basin can be transported over 1,000 miles, and as far away
as Georgia, Oregon, Texas, and Canada. These operations run 24 hours a
day, seven days a week and 365 days a year to meet the needs of
consumers. According to the EIA, trains transport nearly 70 percent of
coal deliveries in the United States at least part of the way from
mines to consumers.\1\ Additionally, coal accounts for more rail
tonnage for railroads than any other commodity.
---------------------------------------------------------------------------
\1\ U.S. Energy Information Administration, Mining and
Transportation of Coal, accessed Jan. 2023; https://www.eia.gov/
energyexplained/coal/mining-and-transportation.php
---------------------------------------------------------------------------
Hardrock mined materials, including copper, nickel and lithium are
widely recognized as commodities for which the demand will
exponentially increase over the next several decades--in some cases
between 500 and 1,000 percent. Key western mining states, such as
Nevada, Arizona and Utah are all expected to play a pivotal role in
securing our domestic supply chains for these and other minerals that
are needed for renewable energy technologies, defense purposes and
electric vehicles.
Impacts to Hardrock and Coal Shippers and Energy Utilities from Rail
Transportation Supply Chain and Reliability Issues
Coal and hardrock producers throughout the United States have
experienced unpredictable and unreliable freight service for several
years. Many coal producer operations are located in regions where the
geography of the surrounding areas prevents expansion of storage areas
for their product. Once coal storage areas are full, an operator must
find alternative and costly means to move this product or stop mine
production until rail service resumes.
Several reliability issues with the rail transportation sector were
raised in an oversight letter to the Surface Transportation Board
(STB). U.S. Senators Kevin Cramer (R-N.D.) and Tammy Baldwin (D-Wis.)
led a group of 19 bipartisan colleagues in a letter urging the STB to
ensure reliable, consistent rail service for American industries and
shippers.\2\ Several commodity specific issues were highlighted,
including many specific to mining and energy utilities:
---------------------------------------------------------------------------
\2\ Senator Kevin Cramer, Letter Presses Surface Transportation
Board on Rail Disruptions, May 24, 2022; https://www.cramer.senate.gov/
news/press-releases/sens-cramer-baldwin-colleagues-press-surface-
transportation-board-on-rail-disruptions-urge-reliable-service-for-
american-industries-shippers
Energy producers have had to curtail production due to
consistently delayed arrival of railcars, citing delays of
roughly two weeks or more.
To illustrate this, a NMA member and coal producer in the
eastern U.S. quantified lost operational hours over the past
several years due to poor rail service. In 2021 the operator
lost over 600 hours of operating time, over 750 hours in 2022,
and if the trend continues in 2023, it will amount to over 370
hours of lost operating time by year end. These curtailed coal
shipments reduce weeks of local worker wages and create
unnecessary operating uncertainty for shippers and power
generating facilities.
In Wyoming, coal mines increased production in 2022, but
estimates show that about 50 million tons of production failed
to happen because of a lack of rail service to get the coal
from the mines in Wyoming to power plants across the country.
The state of Wyoming is estimated to have lost about $100
million in revenues because of unrealized severance taxes from
that lost production in 2022.\3\
---------------------------------------------------------------------------
\3\ Cowboy State Daily, Lack Of Trains Cost Wyoming $100 Million In
Coal Revenue In 2022, Jan. 2023; https://cowboystatedaily.com/2023/01/
22/rail-service-cost-wyoming-100-million-in-coal-revenue-in-2022/
Energy producers and manufacturers are facing repeated and
unpredictable lack of service.
In 2022, the Navajo Transitional Energy Company (NTEC) saw
train performance at its Montana Spring Creek Mine fall well
short of required and historic levels. The rail carrier claimed
that the lack of service was part of the widely reported
service challenges all Class I rail carriers were experiencing.
Despite these broader challenges, rail carrier service in the
adjacent areas improved over prior years. Simultaneously, the
rail carrier significantly reduced the percentage of trains
available to NTEC and significantly increased the percentage of
train service to NTEC's competitors on this route. These supply
challenges and reliability issues caused NTEC to lose over $150
million in revenue and incur $15 million in demurrage penalties
for 2022.\4\
---------------------------------------------------------------------------
\4\ NTEC, Navajo Transitional Energy Company Files Lawsuit Against
BNSF For Breach Of Contract, Dec. 20, 2022; https://navenergy.com/
navajo-transitional-energy-company-files-lawsuit-against-bnsf-for-
breach-of-contract/
Missed switching of railcars and reduced service days can force
manufacturers to use additional railcars to maintain the same
level of business, leading to increased cost for the shipper
and further strain on the rail network overall.\5\
---------------------------------------------------------------------------
\5\ Senator Kevin Cramer, Letter Presses Surface Transportation
Board on Rail Disruptions, May 24, 2022; https://www.cramer.senate.gov/
news/press-releases/sens-cramer-baldwin-colleagues-press-surface-
transportation-board-on-rail-disruptions-urge-reliable-service-for-
american-industries-shippers
---------------------------------------------------------------------------
With coal consumption rebounding, energy utilities have
increased drawdowns of their coal stockpiles. In 2021, coal
inventories hit their lowest levels since the 1970s. Because of
these historically low inventories, some railroads like Union
Pacific anticipate continued demand for coal shipped by rail in
2023.\6\ The EIA finds that the cost of rail transport as a
share of the total delivered cost of coal to electric utilities
has increased from 36.6 percent in 2009 to 48.4 percent in
2020.\7\ During the same period, coal transport costs as a
percentage of total delivered cost by both truck and barge have
remained relatively stable.
---------------------------------------------------------------------------
\6\ Argus Coal Daily, Issue 23-15, P. 2, Jan. 24, 2023.
\7\ U.S. Energy Information Administration, Coal Transportation
Rates to the Electric Power Sector; https://www.eia.gov/coal/
transportationrates/pdf/Table%201_Real.pdf
Similar issues were again raised by coal shippers during an April
2023 meeting of the Surface Transportation Board's Rail Energy
Transportation Advisory Committee (RETAC). During the meeting, coal and
energy shippers highlighted that while some market conditions
fluctuate, service is not consistent and there is little recourse for
poor rail service. In some cases, shippers can be held captive with no
viable alternative shipping methods due to what is effectively a
monopoly over rail transport in some regions of the U.S. The shippers
specifically highlighted the following gaps in service reliability and
accountability: \8\
---------------------------------------------------------------------------
\8\ STB, RETAC Shipper Update, April 26, 2023; https://www.stb.gov/
wp-content/uploads/RETAC-Shipper-Statement-04262023-PDF.pdf
The railroads continue to employ Precision Scheduled
Railroading to squeeze margins from shippers and reduce costs.
Precision Schedule Railroading is a business model employed
by the Class I railroads to increase shareholder return and
dividends by squeezing and sometimes eliminating surge capacity
resources--including labor capacity and railcars--that would
serve to address fluctuations in demand. Whenever a weather
event, surge in demand, service interruption or labor issue
occurs, rail service is impacted. The rail carriers often blame
lack of service on their own labor force or events related to
the COVID-19 pandemic. While all industries have and are still
experiencing labor issues because of the pandemic, an update
provided to STB by the rail industry shows that total freight
rail employment in 2019 was near 148,000, with a majority of
the decline in employment occurring before 2020.\9\
---------------------------------------------------------------------------
\9\ Association of American Railroads, ``Railroad Update,'' April
26, 2023; https://www.stb.gov/wp-content/uploads/RETAC-April-26-2023-
Railroad-Statement-PDF.pdf
Shippers remain exposed to demurrage and other charges for
issues beyond their control.
Shippers invest millions in rail equipment and infrastructure
at no cost to the railroads to enable fast and efficient
deliveries and loading of commodities to and from their
facilities. However, there is no standard of reciprocity
between carriers and shippers when the carriers fail to provide
service. In one case, a NMA coal producer had to pay an extra
$4.1 million in demurrage fees due to a Class I railroad's
failure to load and transport coal to a shipping terminal for
nearly four months. In 2023, rail service delays almost caused
one hardrock mine processing plant to curtail production. To
avoid production curtailment, the mine had to find an offsite
storage solution for the ore at an added cost of $600,000. The
carriers remain effectively unaccountable for their service
problems.
Service metrics that are being collected from the carriers do
not effectively illustrate the issue and therefore reporting
metrics should be expanded.
The metrics do not include first and last mile data, except
for unit trains and intermodal movements, and such data can be
critical for the overall shipper experience. It does a shipper
little good if its cars move reasonably well from terminal to
terminal, but then sit at the terminal before they are
delivered, if local delivery switches are missed, or if a
shipper needs, say, five days a week service and receives only
three days of service. The overall volume of deliveries
requested by shippers can be critical.
Additional feedback from NMA members through regular surveys to
solicit feedback further illustrates the above findings included in the
bipartisan congressional letter and RETAC shipper statement.
Conclusion
Following an April 2022 STB hearing on ``Urgent Issues in Freight
Rail Service,'' the STB ordered certain Class I railroads to submit
service recovery plans and provide additional data to support
improvement. The NMA appreciates this effort to hold Class I carriers
accountable. However, rail service has not improved to the point where
our members are guaranteed consistent and reliable service, as
evidenced by STB's own data provided by the railroads, and NMA members'
candid feedback on service issues. Further, on May 2, 2023, the STB
ordered the extension of its temporary service metrics and employment
reporting period for the Class I's to Dec. 31, 2023. This is a strong
indicator of the current situation.
The NMA urges Congress to use its authority to take additional
action to confront these ongoing service issues that hinder U.S. energy
and mineral supply chains. We must be able to move responsibly sourced
domestic coal to the utilities that power communities and heat and cool
our homes. We must be able to transport metallurgical coal to the
industries that repair roads, bridges and buildings to keep our
infrastructure safe. We must ensure efficient delivery of hardrock
minerals to market that underpin nearly every U.S. industry and enable
technological innovation.
The NMA appreciates the committee's attention to these issues, and
we look forward to engaging and supporting the committee in its effort
to address these issues.
Letter of May 11, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick
Larsen, Ranking Member, Committee on Transportation and Infrastructure,
and Hon. Troy E. Nehls, Chairman, and Hon. Donald M. Payne, Jr.,
Ranking Member, Subcommittee on Railroads, Pipelines, and Hazardous
Materials, from Ann Warner, Spokesperson, Freight Rail Customer
Alliance, Submitted for the Record by Hon. Troy E. Nehls
May 11, 2023.
VIA EMAIL
The Honorable Sam Graves,
Chair,
House Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Rick Larsen,
Ranking Member,
House Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Troy Nehls,
Chair,
Railroads, Pipelines, and Hazardous Materials Subcommittee, House
Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Donald M. Payne, Jr.,
Ranking Member,
Railroads, Pipelines, and Hazardous Materials Subcommittee, House
Transportation and Infrastructure Committee, U.S. House of
Representatives, Washington, DC 20515.
Dear Chairs Graves and Nehls, and Ranking Members Larsen and Payne:
The Freight Rail Customer Alliance (FRCA)--an umbrella organization
including trade associations representing more than 3,500
manufacturing, agriculture, chemical and alternative fuels companies,
electric utilities, and their customers--thanks you for holding today's
subcommittee hearing, ``Getting Back on Track: Exploring Rail Supply
Chain Resilience and Challenges''.
In debating what steps Congress need and should take to strengthen
our nation's freight rail network, FRCA asks that your Committee also
address the continued and systematic freight rail service problems that
shippers are still experiencing, regardless of size, geographical
location, or commodity. Rail-dependent or captive shippers are
especially vulnerable to these problems.
As described in further detail in the attached Utility Members'
Statement presented at the meeting of the Surface Transportation
Board's (STB) Rail Energy Transportation Advisory Committee held on
April 26, 2023 (Appendix 1) and the 6th On Time Performance Utility
Survey (Appendix 2) conducted by FRCA, National Coal Transportation
Association, and National Rural Electric Cooperative Association, our
nation's utilities and their ratepayers continue to suffer economic
harm due to unreliable rail service delivered at unreasonable rates.
Thanks in large part to this Committee's past efforts, Congress
passed the STB Reauthorization Act of 2015, P.L. 114-110, which the
authorization expired on September 30, 2019. FRCA recommends you build
upon the basic reforms, process enhancements, and added transparency
instilled in this law by:
Clarifying the Common Carrier Obligation (CCO) statutory
provision and providing the STB with both the direction and flexibility
when determining if a railroad is meeting its CCO, especially in view
of the industry's continued, systemic, freight rail carrier service
failures.
Allowing private rail car owners or lessors to obtain
compensation from railroads for improper use or delay of their rail
cars, such as when railroads are slow to deliver or pick up rail cars.
The railcar ownership market has changed during the past few decades,
and shippers own or lease two-thirds of the freight rail cars in use
today. In addition to the costs incurred in owning or leasing the
railcars, these shippers are also responsible for the repair and
maintenance of these railcars.
Prohibiting railroads from imposing increased rates
during a STB-declared Emergency Service Order.
Increasing the STB's civil penalty authority. For the
current 2023, the maximum amount allowed is under $10,000 for each
knowing violation, per day. With the continued profits enjoyed by the
rail carriers and their shareholders, this level of penalty is clearly
insufficient to deter wrongful behavior. Furthermore, the Board has
used this existing authority only once in the last ten years.
Removing commodity exemptions that were established
several decades ago, based on the economic and regulatory conditions
that existed at the time. Those conditions no longer exist in today's
consolidated freight rail transportation marketplace. These exemptions
block shippers from utilizing existing regulatory procedures available
to other shippers in seeking redress or relief from the STB, including
from service problems.
Providing a five-year reauthorization for the STB, with
an initial minimum annual authorization level of $48.184 million, along
with annual increases commensurate with inflation, to enable the Board
to fulfill its statutory responsibilities and to continue to meet the
needs of stakeholders and the public.
Thank you for your consideration.
Sincerely,
Ann Warner,
Spokesperson, Freight Rail Customer Alliance.
cc: House Transportation and Infrastructure Committee Members
About FRCA
The Freight Rail Customer Alliance (FRCA), www.railvoices.org, is an
umbrella membership organization that includes large trade associations
representing more than 3,500 electric utility, agriculture, chemical,
and alternative fuel companies, and their consumers. The mission of
FRCA's growing coalition of industries and associations is to obtain
changes in Federal law and policy that will provide all freight
shippers with reliable rail service at competitive prices.
appendix 1
Utility Shipper Members' Statement
Surface Transportation Board
Rail Energy Transportation Advisory Board
Spring Meeting
April 26, 2023
Surface Transportation Board Offices
Washington, DC
Distinguished STB Board Members and RETAC members,
The shippers on this committee appreciate the opportunity to meet
with you to voice our concerns regarding what continues to be
unpredictable and unreliable railroad service for utilities, biofuels
producers, energy groups and rail car owners. We wish for this
statement to present the Board with the perspective of these shipper
groups of the primary issues driving the rail service problems and the
issues we see with the railroad reporting metrics requested by the
Board.
While some market conditions have fluctuated in recent months,
there are still many key service issues that more than warrant Board
attention. We have prepared a detailed written appendix, but in the
interest of time, we will simply identify them.
Railroad performance should consider not only the metrics
of trains and cars that do arrive, but also the requested and required
volume demand that goes unmet.
The railroads continue to employ PSR to squeeze margins
from shippers and reduce costs, rather than meet shipper needs and
maintain the surge capacity needed to overcome disruptions in service.
The railroads also continue to suffer from a labor shortage.
Shippers remain exposed to demurrage and other charges
when things go wrong on their end, or for things beyond their control,
while the carriers remain effectively unaccountable for their ongoing
service problems.
Continued lack of communication to customers from
railroads
Service metrics that are being collected from the
carriers should be enhanced.
Service metrics will not provide a complete picture when
they omit first/last mile data.
Shippers remain unable to obtain adequate information
from railroads. Automated and generic chat features are no substitute
for being able to speak to a knowledgeable and experienced railroad
rep.
In summary, the shippers of RETAC respectfully request the
railroads and the Board continue to engage in real data-driven
discussions in these committee meetings. We hope that the railroads
will be prepared to present data that addresses the gap between volume
nominations and actual deliveries. As we have stated before, we believe
this committee should focus on the relationship between forecasts and
deliveries, including how forecasts compare to volumes, the accuracy of
the customer's forecast, railroad feedback sent back to the shipper,
and railroads performance versus the forecast. And we look forward to
the work done by the Board and this committee to address enhancement of
the rail carrier and shipper forecasting communication effort.
Thank you for your engagement and concern of rail service and
shipper issues.
Appendix to Shipper Summary Issues:
Communication to Customers from Railroads.
The railroads' electronic customer interfaces rely heavily on one-
size fits all on-line menus that are a poor fit for shipper needs.
There may be an alternative ``chat'' feature for shippers to submit
more individualized questions, but the operators are often unfamiliar
with an individual shipper's needs, or shipper needs in general.
Railroads use this feature to manage or track each request or issue
characterized as ``cases.'' Too often, there are too many cases
submitted that can be responded to in a reasonable time. And local
railroad operating officials have verified they are not able to respond
to every case. The railroads also point to the use of the case
management system to deny shipper invoice claims. If you neglected to
create a case for an issue, the claim may be treated with less
credibility. Often the drop down menus are inadequate to cover unique
situations that exist or simple requests that used to be handled via a
phone call or email to an individual on the carrier's coal desk or
dispatch center who knew the facility and its location and specific
needs. The systems appear designed to manage shippers, not address
shipper needs.
Service Metrics.
The Board should continue to request key metrics from the
railroads. Shippers believe the data could be improved to match more
closely what shippers are experiencing in terms of service, and not
just selective metrics such as velocity and dwell time. Shippers
believe that reliance on averages fails to capture variations in
service. The metrics could be broken down more by region and commodity
type and possibly even car type. Shippers need consistency of service
for planning and reliability purposes.
Also, the metrics do not include first and last mile data, except
for unit trains and intermodal movements, and such data can be critical
for the overall shipper experience. It does a shipper little good if
its cars move reasonably well from terminal to terminal, but then sit
at the terminal before they are delivered, if local delivery switches
are missed, or if a shipper needs, say, five days a week service and
receives only three days of service. The overall volume of deliveries
requested by shippers can be critical.
Delivery Volumes.
The reported data focuses on trains and cars that actually arrive,
but largely ignores the additional volumes that shippers needed and
required, but the railroads were unable to even attempt to move. Over
the past couple of years, energy shippers have experienced the
railroads parking train sets or cars to relieve congestion on the
system. No existing reporting metric attempts to address this issue.
Parking trainsets may have some helpful impact on velocity or dwell
time information that gets reported, but it may also reduce the volume
of ultimate deliveries, which means that shippers are not getting the
volume of product that they require. There are many shippers that
require regularity in deliveries and pickups, but other shippers are
able to stockpile deliveries. In essence, the railroads get to grade
themselves on a curve of their own choosing in terms of the trains that
are running, not the additional trains that may be needed. It may be
helpful to see in the metrics how many cars or trains were parked
against what volumes were not shipped per commodity group. A related
problem is that much of the data is reported as averages, which
conceals the variation inherent in the average. As noted, shippers vary
in their ability to tolerate variations. A measure such as a standard
deviation would help to indicate the representatives of the average.
Precision Scheduled Railroading.
The majority of the Class 1's continue to use Precision Scheduled
Railroading (PSR) to enhance railroad shareholder revenues at the
expense of the customer base. The railroads have fixated on reducing
railroad operating ratios, largely by squeezing increased operating
margins out of shippers, rather than to improve service, pass savings
on to shippers, strengthen resiliency, or grow volumes.
Shippers and railroads worked together in the past to manage
fluctuations in demand driven by forces beyond our control. However,
with the advent of PSR, shippers have noted the railroads have
eliminated resources to respond to surges in demand. They used to be
able to gather forces and respond to variances in demand that occurred.
Now, they seem to have taken all surge capacity away. Whenever there is
any weather event, surge in demand, service interruption or labor
issue, rail service is impacted. The carriers often point blame for
lack of service on their own labor force, as if the railroads have no
control over their headcounts. Shippers know from experience that rough
weather did not used to have such an adverse effect on rail service. In
fact, we have been told former CNW (now UP) actually used to have a
sign that read, ``Rough winters are no excuse.'' The railroads also
appear to have no ability to make up deficits. Shippers may try to
shift forward missed shipments or defer nominations to future periods.
Often these shipments must be canceled if they cannot be delivered at
all and then the entire supply chain suffers.
Accountability for Service Failures.
While shippers have continued to rack up additional costs for
undelivered and delayed volumes, there appears to be no accountability
for the railroads. Shippers invest millions in rail equipment and
infrastructure at no cost to the railroads to enable fast and efficient
deliveries and loading of commodities to and from their facilities.
However, there is no standard of reciprocity between carriers and
shippers when the carriers fail to provide service. Poor rail service
continues to have massive cost impacts for shippers who have no means
of penalizing the carrier for lack of or missed deliveries. Meanwhile,
the rail carriers are able to issue demurrage and other invoices
penalizing shippers based on some computer algorithm that requires time
and expense for the shipper to review and dispute, and in many cases
may be found unjustified.
appendix 2
Freight Rail Customer Alliance
National Coal Transportation Association
National Rural Electric Cooperative Association
6th Utility On-Time Performance Shipper Survey
National Coal Transportation Association (NCTA), Freight Rail
Customer Alliance (FRCA) and National Rural Electric Cooperative
Association (NRECA) have worked together since 2019 to collect data
from shipper members of their perspective of railroad performance.
The data is provided on a voluntary basis by shipper members. The
identity of shippers is not disclosed but we do include the individual
railroads and mine regions in the results. The data shows the different
shipper experiences with their respective transit time service metrics.
The data has become a useful tool in regard to logistics and planning
for shippers, and has been used in comments submitted to the Surface
Transportation Board and the Rail Energy Transportation Advisory
Committee and Government Accountability Office.
The results from the latest survey effort from July 2022-December
2022 (and also in comparison with the first half of 2022) represents 31
plants (45 plants from the first half of 2022), 6 coal supply regions,
Class 1 railroads, multi-line and shortline movements, mine to plant
transit time per serving railroad and coal mines.
[Editor's note: The 19-slide presentation of the On-Time
Performance Shipper Survey is retained in committee files and is
available online at http://railvoices.org/wp-content/uploads/FRCA-
Submitted-Statement-House-Railroad-Sub-May-11-2023-SUBMITTED.pdf.]
Mr. Nehls. It is good to see you, Mr. Larsen, the ranking
member of this full committee. I recognize you for 5 minutes,
sir.
OPENING STATEMENT OF HON. RICK LARSEN OF WASHINGTON, RANKING
MEMBER, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
Mr. Larsen of Washington. Thank you, Chair, and thank you,
Ranking Member Payne, for holding this hearing.
Today, we will hear from witnesses about how to improve
rail service. But it has been more than 3 months since the
Norfolk Southern derailment in East Palestine, Ohio, which
occurred on February 3, and this committee has yet to hold a
hearing to examine what happened.
While the Norfolk Southern derailment in East Palestine
focused the Nation's attention on rail safety, it was not
isolated or rare. Since that derailment, a Norfolk Southern
train conductor was killed in a rail accident in Cleveland,
Ohio; the town of Raymond, Minnesota, had to be evacuated due
to the derailment of a BNSF train carrying highly flammable
material; and a BNSF derailment on the Swinomish Reservation in
Skagit County, in my district, spilled 3,500 gallons of diesel
fuel near Padilla Bay in my district.
Chairman Graves and Chairman Nehls, I just, again, urge you
to hold a hearing on rail safety and to schedule consideration
of rail safety legislation. Just yesterday, as we know, the
Senate Commerce Committee acted on bipartisan rail safety
legislation. This committee should do the same.
I commend the Department of Transportation for using its
authority to issue interim safety advisories, as I urged in a
letter that Ranking Member Payne led and was signed by 70 of
our House colleagues. But we can and must do more.
Over 400 local elected officials from across the country
sent a letter to our committee in March asking for action on
rail safety.
Specifically, we need to focus on long trains and the
impacts they have on our communities. I have heard from the
leaders of more than 12 communities in Washington State,
including Mayor Nehring of Marysville, Mayor Boudreau of Mount
Vernon, and Deputy Mayor May of Blaine, all in my district,
about how first responders have difficulty reaching individuals
in need of emergency care due to long trains blocking
crossings.
The trends in rail safety and rail service go hand in hand.
While safety has been in the forefront lately, employees and
shippers have complained of fewer resources and poor rail
safety for many years.
The Surface Transportation Board took the extraordinary
step of requiring service recovery plans from the four largest
Class I railroads--Union Pacific, BNSF, CSX, and Norfolk
Southern--to address chronic problems last year, and just
extended the requirement last week.
The agriculture and energy sectors have been particularly
hard hit with irregular rail service. This is impacting
communities across the country and our overall economy.
Yesterday, the STB held a hearing to determine if a Tribal
company in New Mexico should receive an emergency rail service
order to ensure that it is able to deliver their product to
their customers.
After years of letting rail workers go, including doubling
down on furloughs during the pandemic, Class I railroads relied
on congestion embargoes to compensate for having gutted their
own workforce. The railroads issued over 1,000 congestion
embargoes last year alone, and every one of those large
railroads continue to use this practice, except Canadian
Pacific.
We can't expect more freight to move by rail in more
places--which I support as part of a cleaner, greener, surface
transportation network--if railroads continue with congestion
embargoes, which effectively tell customers to temporarily stop
shipping by rail.
I urge the railroads to focus on the customers, the
communities they pass through, and their employees. The long-
term health and resiliency of the supply chain and the economy
depends on a stable and functioning freight rail system. As we
have seen over and over, a stable and functioning freight rail
system depends on hard-working railroaders. Class I railroad
performance on both safety and service in recent years has
shown that business as usual is not working.
A stark example of the dysfunction occurred last year when
after years of cutting the workforce to the bone, Class I
railroads were unable to negotiate contracts with their own
workers, and Congress had to step in to keep freight rail
service running.
Class I's have to hire and retain more workers, return
locomotives and rail yards to service, and increase training
for workers, especially the new, inexperienced ones, so they
can provide more and safer service across the country.
The Bipartisan Infrastructure Law is providing historic
investments in our Nation's infrastructure, and much of the
material to build that infrastructure--roads, bridges,
airports, transit systems, and rail systems--will be
transported by rail. The need for rail service will continue to
grow as Bipartisan Infrastructure Law dollars flow to States,
to cities, and to counties over the next 4 years.
So, I look forward to hearing from all of our witnesses
today on their suggestions to shore up our supply chain and
improve rail service to move America forward.
With that, I yield back.
[Mr. Larsen of Washington's prepared statement follows:]
Prepared Statement of Hon. Rick Larsen, a Representative in Congress
from the State of Washington, and Ranking Member, Committee on
Transportation and Infrastructure
Thank you, Chairman Nehls and Ranking Member Payne, for holding
this hearing.
Today we will hear from witnesses about how to improve rail
service.
It has been more than three months since the Norfolk Southern
derailment in East Palestine, Ohio--which occurred on February 3--and
this Committee has yet to hold a hearing to examine what happened.
While the Norfolk Southern derailment in East Palestine focused the
nation's attention on rail safety, it was not an isolated or rare
incident. Since that derailment: a Norfolk Southern train conductor was
killed in a rail accident in Cleveland, Ohio; the town of Raymond,
Minnesota had to be evacuated due to the derailment of a BNSF train
carrying highly flammable material; and a BNSF derailment on the
Swinomish Reservation in Skagit County spilled 3,500 gallons of diesel
fuel near Padilla Bay in my district.
Chairman Graves and Chairman Nehls, I urge you to hold a hearing on
rail safety and to schedule consideration of rail safety legislation.
Just yesterday, the Senate Commerce Committee acted on bipartisan rail
safety legislation, and this Committee should do the same.
I commend the Department of Transportation for using its authority
to issue interim safety advisories, as I urged in a letter led by
Ranking Member Payne and signed by 70 of our House colleagues. But we
can and must do more.
Over 400 local elected officials from all across the country sent a
letter to our Committee in March asking for action on rail safety.
Specifically, we need to focus on long trains and the impacts they
have on our communities. I have heard from leaders of more than 12
communities in Washington, including Mayor Nehring of Marysville, Mayor
Boudreau of Mt. Vernon, and Deputy Mayor May of Blaine in my district,
about how first responders have difficulty reaching individuals in need
of emergency care due to long trains blocking crossings.
The trends in rail safety and rail service go hand in hand--while
safety has been in the forefront lately, employees and shippers have
complained of fewer resources and poor rail service for many years.
The Surface Transportation Board took the extraordinary step of
requiring service recovery plans from the four largest Class I
railroads--Union Pacific, BNSF, CSX and Norfolk Southern to address
chronic problems last year, and just extended the requirement last
week. The agriculture and energy sectors have been particularly hard
hit with irregular rail service.
This is impacting communities across the country and our overall
economy. Yesterday the STB held a hearing to determine if a Tribal
company in New Mexico should receive an emergency rail service order to
ensure it is able to deliver their product to their customers.
After years of letting rail workers go, including doubling down on
furloughs during the pandemic, Class I railroads relied on ``congestion
embargoes'' to compensate for having gutted their own workforce. The
railroads issued over 1,000 congestion embargoes last year alone, and
every one of the large railroads continue to use this practice except
Canadian Pacific.
We can't expect more freight to move by rail in more places--which
I support as part of a cleaner, greener surface transportation
network--if railroads continue with congestion embargoes, which
effectively tell customers to temporarily stop shipping by rail.
I urge the railroads to focus on their customers, the communities
they pass through, and their employees. The long-term health and
resiliency of the supply chain and economy depends on a stable and
functioning freight rail system. As we've seen over and over, a stable
and functioning freight rail system depends on its hard-working
railroaders. Class I railroad performance on both safety and service in
recent years has shown business as usual is not working.
A stark example of the dysfunction occurred last year when after
years of cutting its workforce to the bone, the Class I railroads were
unable to negotiate contracts with their own workers and Congress had
to step in to keep freight rail service running.
Class I railroads have to hire and retain more workers, return
locomotives and rail yards to service, and increase training for
workers, especially the new and inexperienced ones, so they can provide
more and safer service across the country.
The Bipartisan Infrastructure Law is providing historic investments
in our nation's infrastructure and much of the material to build that
infrastructure--roads, bridges, airports, transit systems, and rail
systems--will be transported by rail.
The need for rail service will continue to grow as Bipartisan
Infrastructure Law dollars flow to states, cities, and counties over
the next four years.
I look forward to hearing from the witnesses today on their
suggestions to shore up our supply chain and improve rail service to
move America forward.
Mr. Nehls. Thank you, Ranking Member Larsen.
I would like to now welcome our witnesses, and thank you
all for being here today. Briefly, I will take a moment to
explain the lighting system in front of you. Three lights:
Green, you are good to go, yellow means you are running out of
time, and red means [stop gesture], yeah.
I ask unanimous consent that the witnesses' full statements
be included in the record.
Without objection, so ordered.
And as your written testimony has been made part of the
record, the subcommittee asks that you, again, limit your oral
remarks to 5 minutes.
And with that, Mr. Jefferies, you are recognized for 5
minutes for your testimony.
TESTIMONY OF IAN JEFFERIES, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, ASSOCIATION OF AMERICAN RAILROADS; CHUCK BAKER,
PRESIDENT, AMERICAN SHORT LINE AND REGIONAL RAILROAD
ASSOCIATION; CHRIS JAHN, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
AMERICAN CHEMISTRY COUNCIL; MARC SCRIBNER, SENIOR
TRANSPORTATION POLICY ANALYST, REASON FOUNDATION; AND GREG
REGAN, PRESIDENT, TRANSPORTATION TRADES DEPARTMENT, AFL-CIO
TESTIMONY OF IAN JEFFERIES, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, ASSOCIATION OF AMERICAN RAILROADS
Mr. Jefferies. Thank you.
Good afternoon, and thank you for the opportunity to be
here today on behalf of America's freight railroads. Railroads
are proud to serve the Nation's economy, enabled by our
dedicated employees, sustained investments, and an unwavering
commitment to safety. Through economic ups and downs, our
industry steadfastly works to deliver goods Americans rely on,
and today we are positioned for growth.
Taking stock of 2023 so far, volumes reflect economic
conditions. We have seen a decrease in container traffic,
driven by import declines and inventory gluts. However, the
intermodal system is fluid and primed for a rebound.
Carload traffic is mixed. Two examples: Auto volumes are up
10 percent as chip shortages have eased, while chemical
shipments are down 6 percent. Overall, carload traffic is
slightly higher than it was a year ago.
Servicewise, we do continue to see some improvements, but
more progress is necessary to get predictability and
reliability for all customers across the network to expected
levels.
Working with partners to better process cargo in and out of
terminals, increasing shipment transparency, and reducing dwell
time will further these gains.
The outlook is strong for continued improvement and future
growth, which is a consistent theme across the industry, but it
hinges on four interrelated factors.
First, safety, which is an overall strength, but also a
continuous opportunity for this industry. Absolutely, accidents
still happen, and we understand fully the impact even one
accident can have on a community. That is why we continue to
work to drive accident numbers lower.
To be clear, rail is by far the safest way to move goods on
land, especially hazardous materials. Per carload, the hazmat
accident rate is down 78 percent since the year 2000, and 2022
saw the lowest number of hazmat incidents in the industry's
entire history. Additionally, FRA data show that the mainline
accident and employee injury rates for 2022 continued an era of
all-time lows. And still, railroads continue proactive action,
such as installing more wayside detectors, lowering alert
thresholds, and developing next-gen technologies to reduce risk
in the system and drive down incidents even further.
Our track record is undeniable. We invest in safety because
it is the right thing to do. Because a well-maintained railroad
is a safe railroad, the industry continues to spend heavily on
its physical network, the Nation's highest rated infrastructure
by the American Society of Civil Engineers.
Capital spending, as a percent of revenue, was 18.4 percent
in the past 10 years, six times that of the average U.S.
manufacturer. In 2022, spending totaled $24 billion. That is $1
billion more than the combined investments Congress made this
year in rail and multimodal programs in the IIJA and omnibus
combined. Ongoing permanent efforts in Congress would enable
more efficient and effective investments, particularly to
upgrade and expand the network.
Next, key to all aspects of our business, but especially
safety and service, is an appropriately staffed railroad
comprised of our highly skilled and dedicated workforce.
Railroad is demanding work, and it should be appropriately
rewarded. The historical deals reached last year with
employees, carrying the largest pay increase in 50 years, and
provisions to address quality-of-life matters and schedule
predictability, reflect this. Post-pandemic hiring continues
with our employee base at the highest it has been in over 3
years. Building workforce resiliency is a primary theme amongst
rail leaders to more easily manage economic ups and downs.
Class I railroads continue to strike new leave agreements
across all crafts by sticking to the fundamentals of local
collective bargaining.
Finally, the last leg of the chair of ensuring rail can
continue to thrive as a key part of the supply chain is
sensible public policy. In short, policies emanating from
Congress, DOT, or the Surface Transportation Board should be
true to their stated goal.
Perhaps overly simplistic, policies should be designed to
meet a specific and identified problem. To that end, whether
tackling rail safety, supply chain, or economic regulation, the
fundamentals are the same. Policies should be evidence based
and pressure tested to ensure it is properly supported by sound
data. If you can't answer what problem a policy is fixing, then
it probably shouldn't be included in a piece of legislation.
But if we collectively follow these guidelines, there are
countless issues we can tackle together. Let's build on that
and not go backwards.
And thank you for your time today.
[Mr. Jefferies' prepared statement follows:]
Prepared Statement of Ian Jefferies, President and Chief Executive
Officer, Association of American Railroads
Introduction
On behalf of the members of the Association of American Railroads
(AAR), thank you for the opportunity to testify on the supply chain
challenges the rail industry and the nation are working diligently to
overcome. AAR's members account for the vast majority of America's
freight railroad mileage, employees, and traffic. Together with their
Mexican and Canadian counterparts, U.S. freight railroads form an
integrated, continent-wide network that provides the world's best rail
service.
Supply chains are complex systems driven by a variety of global and
domestic stakeholders, including railroads. For freight to be delivered
safely and efficiently, all participants must take timely, appropriate
actions in a precisely coordinated sequence. Freight railroads provide
an indispensable, 24/7 link, connecting raw material suppliers,
manufacturers, processors, ports, retailers, wholesalers, and consumers
across the country and with markets overseas over a network spanning
close to 140,000 miles. The operations and capital investments of
America's major freight railroads support a million or more jobs and
several hundred billion dollars in nationwide economic activity, wages,
and taxes.
Unprecedented events in 2021 and 2022 caused major global supply
chain dislocations that impacted every business, industry, and family
in the United States and the rest of the world. While those pressures
have mostly abated, U.S. freight railroads continue to face three
primary, inextricably linked opportunities: furthering safety
advancement, improving employee relations, and providing strong service
to our customers. In this testimony, I will review each opportunity and
outline proactive steps that railroads are taking to meet them.
Finally, I will discuss the potential impact of certain policies being
considered by Congress on railroads and overall supply chain
performance.
Freight Railroads' Efforts to Further Improve the Safety of Their
Operations
Let me make absolutely clear at the outset: for freight railroads,
pursuing safe operations is not an option; it's an imperative.
Railroads are proud of their current safety record. However, earlier
this year, we all saw the impact a train derailment can have on a
community, and we are committed to continuing our industry's efforts to
prevent what happened in East Palestine from happening elsewhere. Every
rail accident is one too many, and railroads' ultimate goal is to
eliminate accidents altogether.
FRA Data Shows the Past Decade is the Safest in Rail History
Newly released data from the Federal Railroad Administration (FRA)
confirms that 2022 was the safest year ever for incidents involving
hazardous materials and for mainline derailments:
The overall train accident rate was 28 percent lower in
2022 than in 2000.
The accident rate for trains traveling on railroad
mainlines--that is, outside of rail yards--was 44 percent lower in 2022
than in 2000. For Class I freight railroads, the mainline accident rate
was down 49 percent from 2000 and set a new record low in 2022.
The overall train derailment rate fell 31 percent from
2000 to 2022.
The rate of train accidents caused by track defects fell
55 percent from 2000 to 2022 and set a new record low in 2022.
The rate of accidents caused by equipment defects (mainly
locomotives and freight cars) fell 21 percent from 2000 to 2022.
Based on preliminary data, the hazardous materials
accident rate in 2022 was 78 percent lower than in 2000 and set at an
all-time record low.
From 2000 through 2022, the employee injury rate was down
49 percent. For Class I railroads, the decline was 63 percent, with
2022 setting a new record low. According to data from the Department of
Labor, railroads have lower employee injury rates than most other major
industries, including trucking, airlines, agriculture, mining,
manufacturing, and construction--even lower than grocery stores.
Railroads also acknowledge room for further improvement remains.
Today, over 95 percent of rail-related fatalities are due to
trespassing or occur at grade crossings. The combined total of
trespasser and suicide fatalities for 2022 increased by 4 percent from
2021. Grade crossing collisions were down 23 percent last year compared
to 2000, but along with trespass incidents, these preventable accidents
remain persistent challenges across the rail industry.
However, FRA data makes clear that our employees' strong safety
culture, paired with the industry's sustained, disciplined investments
in maintenance and technologies that target the primary causes of
accidents, deliver meaningful safety results. Every train accident is
one too many, and the need to make progress in the march to zero
accidents is ever present.
Railroads are Taking Proactive Steps to Further Improve Safety
Freight railroads do not need any additional incentive to be safe--
it is core to all that we do. As such, when investigation into the
recent derailment in East Palestine demonstrated areas where additional
work was necessary to drive down risk and enhance safety, railroads
took voluntary, proactive, data-driven steps to ensure a similar
accident would never happen again.
Railroads have already announced a set of actions they are taking
to deploy the tools available today, with a keen focus on detectors.
Railroads are installing approximately 1,000 additional wayside hotbox
detectors on the national network, standardizing critical alert
thresholds for these systems, and analyzing and adopting new industry
standards for trending analysis protocols to preempt potential
problems.
Railroads will also continue to invest in modern technologies and
equipment, such as automated track inspection, implement safety
protocols, and prioritize safety training for their employees. The next
great leap forward in safety will depend on the ability of railroads to
innovate and deploy new technologies, but achieving the maximum benefit
from these new technologies will require regulatory flexibility.
Railroads will also train roughly 20,000 first responders this year
in local communities across the country on accident mitigation. In
addition, the industry will facilitate the training of 2,000 first
responders at the Security and Emergency Response Training Center
(SERTC) in Colorado, which offers an immersive experience with full-
scale training scenarios that prepare first responders for real-world
surface transportation emergencies. Finally, the industry is expanding
its efforts to get AskRail into the hands of every first responder by
directly targeting outreach to all 50 state fire associations and
emergency communication centers to promote broader access versus
relying solely on individual downloads. This app provides first
responders with immediate access to accurate, timely data about what
type of material a railcar is carrying so they can make an informed
decision about how to best respond to a rail emergency. Congress and
DOT can play a key role in promoting both SERTC and AskRail, including
through expanded outreach to states and counties.
Freight railroads recognize they must restore confidence and
demonstrate that nothing is more important to them than the safety of
their employees, their customers, and the communities in which they
operate. Railroads must keep improving in all aspects of rail safety,
but the progress made demonstrates that the industry will do what it
takes to meet that challenge.
Freight Railroads' Efforts to Improve Service for their Customers
During the pandemic, freight railroads, their freight
transportation partners, and businesses throughout the country and
world faced supply chain disruptions, labor challenges, extreme weather
events, and rapidly shifting consumer demands. There are metrics
indicating that the most severe supply chain problems are behind us.
For example, rates to ship a container from China to Long Beach are
back down to pre-pandemic levels. U.S. production of new cars and light
trucks has also rebounded as supply chain constraints, including severe
parts shortages, such as semiconductor chips, have eased.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Additionally, U.S. port volume at the beginning of 2023 was far
lower than in 2021 and 2022. For example, the ports of Long Beach, Los
Angeles, Oakland, and Seattle-Tacoma combined had 2.68 million loaded
TEUs in the first two months of 2022.\1\ In the first two months of
2023, that was down to 2.03 million loaded TEUs, a 24 percent decline.
That's not to say that all elements of the supply chain are operating
perfectly or that the work of supply chain participants is done, but
improvements are clear and widespread.
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\1\ A TEU is a ``20-foot equivalent unit,'' a metric used to
standardize a ship's capacity and container volumes.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Rail volumes are being impacted by these and other broader economic
trends, including slowdowns in industrial output, high inventory levels
at many retailers, lower port activity, and consumer spending that is
not as robust as it was during most of the last three years. To date
this year, while intermodal traffic is down due to depressed imports,
carload traffic continues to show bright spots. Total U.S. carload
traffic for the first four months of 2023 was 3,930,129 carloads, up
0.6 percent, or 23,161 carloads, from the same period last year; and
3,968,876 intermodal units, down 10.9 percent, or 484,228 containers
and trailers, from last year. Total combined U.S. traffic for the first
17 weeks of 2023 was 7,899,005 carloads and intermodal units, a
decrease of 5.5 percent compared to last year.
Railroads' Efforts to Address Service Challenges and Work with Supply
Chain Partners
Railroads are working to ensure that supply chains are fluid and
able to meet present and future freight transportation demand.
Railroads know their service over the past year has not been what they
or their customers want or deserve and are fully committed to restoring
service to a consistently high level.
Freight Railroads are Making Massive Investments in Their
Infrastructure
Railroads continue to reinvest massive amounts back into their
networks each year because they want to grow with their customers and
provide a safe, fluid, and reliable network. Unlike trucks, barges, and
airlines, America's privately-owned freight railroads operate almost
exclusively on infrastructure they own, build, maintain, and pay for
themselves. Rail spending in 2022 was markedly higher than in 2020 and
2021. Over the last 15 years, freight railroads have invested, on
average, $23.9 billion of their own capital into improving and
maintaining their networks every year. To put this into perspective,
that is $1 billion more than the historic investments Congress made
this year in rail and multi-modal programs in the Infrastructure
Investment and Jobs Act (IIJA) and the fiscal year 2023 Omnibus
combined. For example, one railroad recently announced a $1.5 billion
state of the art rail facility to enhance the efficient movement of
cargo between ship and rail. A project like this will reduce truck
traffic congestion, air pollution, and adverse quality of life
conditions associated with goods movement, while supporting a robust,
efficient, and resilient supply chain.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
These investments are the reason that rail infrastructure today is
the highest-rated infrastructure by the American Society of Civil
Engineers. These investments improve service and help railroads and
their customers better weather service disruptions. Furthermore, these
record investments in infrastructure, equipment, and technology have
made railroads much safer.
These investments were made possible by the improvements in
profitability that railroads have seen since passage of the Staggers
Rail Act of 1980. Policymakers should consider the impact of proposals
on railroads' abilities to make these investments in the future and
weigh potential consequences to safety, capacity, efficiency, and
service reliability.
Freight Railroads are Working with Supply Chain Partners to
Increase Fluidity
Freight railroads continue to partner with their customers to find
constructive ways to maintain network fluidity, especially at rail
terminals. For railroads, their biggest supply chain challenge in 2021
and 2022 was the inability of many rail customers to effectively
process the flow of traffic, especially intermodal containers, into and
out of rail terminals. This is problematic because rail terminals are
focused on throughput; they are neither designed for, nor physically
capable of, long-term storage of substantial amounts of freight. If
rail terminals are not able to move freight out, trains back up on
mainlines and soon impact rail operations hundreds (and potentially
thousands) of miles away.
Fortunately, these problems have been greatly reduced in recent
months, thanks to cooperative efforts between railroads and their
supply chain partners. Specific steps taken vary railroad to railroad
but have included:
Increasing coordination between railroads to better
manage the flow of traffic and with the trucking industry to take
shipments as soon as warehousing capacity is available.
Offering incentives to customers for weekend or off-hour
in-gating at facilities near ports and for out-gating a container when
they in-gate a container at facilities.
Re-routing traffic away from busier to less crowded
terminals.
Re-opening closed terminals to create additional storage
capacity.
Increasing available storage capacity and staging space
in and outside of terminals.
Creating additional railroad-to-railroad interchanges to
limit demand on truck drayage.
Mounting containers onto any chassis brought in to help
reduce dead-miles for truckers.
Railroads have also made a variety of online tools, apps, and other
technologies available to their customers. These tools help rail
customers trace shipments in real time, prioritize retrieval of
containers, and minimize time spent in rail facilities. Boosting
visibility into network shipments, while also maintaining greater
resiliency in the system, will only help deliver the reliable and
efficient transportation services customers expect and deserve.
To summarize, America's freight railroads have been doing their
part through significant investments in their private infrastructure
and equipment, development and implementation of innovative
technologies, cooperation with their customers and supply chain
partners, and operational enhancements to maintain and improve supply
chain fluidity and to ensure sufficient capacity to deliver the goods
our economy needs. The progress railroads have made in restoring
service is unquestionably good news and the work to build upon that
improvement is continuing.
Freight Railroads' Efforts to Improve Relations with Its Workforce
Railroads have always relied on and greatly respect the skill and
professionalism of their employees. These extremely talented men and
women work incredibly hard every day to keep our economy going.
Unfortunately, over the past couple of years, railroads, along with
virtually every other industry, have faced major challenges with hiring
and retaining a sufficient number of workers to meet the demand of
their customers. The pandemic turned labor markets upside down. When
rail traffic collapsed, railroads deployed a long-standing method of
temporarily furloughing some employees. As the economy recovered faster
than anyone expected and demand for rail service surged, far fewer
furloughed employees chose to return than historical patterns would
suggest, leaving railroads without a sufficient workforce. Railroads'
single-biggest ongoing service-related challenge remains finding and
keeping employees.
The recent round of collective bargaining created additional
complications for railroads. The round ended with more acrimony than
anyone would have preferred, and rail management and unions clearly
have work to do to restore trust. The joint goal is a more positive
work environment, increased job satisfaction, and higher employee
retention.
Railroads are making real progress. Beyond pay and health care
benefits that rank in the top 10 percent of all industries, railroads
are working to build stronger relationships with their employees. Every
Class I railroad, for example, has recently announced agreements with
many of their unions on ways to improve quality of life, such as more
predictable work schedules and additional paid sick leave. Additional
discussions in these areas remain underway, and momentum seems to be
compounding.
These efforts help explain why rail employment is growing. In March
2023, Class I freight railroad employment was up 7.5 percent (nearly
8,500 employees) over January 2022 and is at its highest level since
April 2020. Train and engine (T&E) employment (the locomotive engineers
and conductors who operate trains) was 11.5 percent (nearly 5,300
employees) higher in March 2023 than in January 2022. March 2023 was
also the 14th straight month in which total T&E employment grew.
Railroads are confident they will continue successfully recruiting the
next generation of railroad workers to meet the nation's rail freight
demand.
Congress Can Help Ensure Well-Functioning Supply Chains
Policymakers have key roles to play in ensuring our nation's
railroads, and supply chains more broadly, operate safely and
effectively. Railroads are willing to engage in good faith, cooperative
negotiations on these matters and encourage policymakers to take an
objective, data-driven approach that includes meaningful dialogue with
railroads and other interested parties.
Policymakers should be wary of proposals motivated by politics or
uninformed by data as they are unlikely to achieve meaningful safety or
efficiency benefits and could have a wide range of unintended economic
and environmental consequences, such as increased costs for shippers,
and a negative impact on the safe movement of goods, including
hazardous materials. Policymakers should also ensure proposals do not
``lock in'' existing technologies; encourage the use of innovative
technologies to enhance safety and efficiency; are based on
performance-based standards; and avoid undermining railroads' ongoing
efforts to collaborate with stakeholders to keep the national rail
network fluid.
Environmental Reviews and Permitting
Congress should ensure that environmental regulations do not unduly
inhibit the expansion, development, or construction of rail facilities
that would meet supply chain needs and rail customers' freight
transportation demand. Railroads appreciate that Congress included
project permitting provisions in the IIJA. If properly implemented,
these reforms could help ensure that federal dollars and railroads'
investments for infrastructure projects go farther and unnecessary
delays will be minimized. Unfortunately, railroads are finding that
unnecessary permitting delays continue to impede rail projects. The
industry respectfully urges Congress to continue to address this issue
and the Biden Administration to follow Congressional intent on recent
and future statutory streamlining efforts.
Conclusion
Railroads remain confident in their ability to meet our nation's
growing freight transportation demand. Railroads reduce emissions and
the overall environmental impact of transportation; provide good-
paying, stable careers to millions of Americans; enable domestic
manufacturing, agriculture, and other industries to continue expanding;
and enhance America's competitiveness in the global economy. Railroads
are committed to collaborating with all stakeholders--the FRA, the
Surface Transportation Board, their customers, their employees, elected
officials, and many others--to attain the common goal of enhancing rail
safety and keeping the goods that power our economy moving.
Mr. Nehls. Thank you, Mr. Jefferies.
And now, Mr. Baker, you are recognized for 5 minutes.
TESTIMONY OF CHUCK BAKER, PRESIDENT, AMERICAN SHORT LINE AND
REGIONAL RAILROAD ASSOCIATION
Mr. Baker. Thank you.
Good afternoon, Chairman Nehls, Ranking Member Payne,
Ranking Member Larsen, and members of the subcommittee. My name
is Chuck Baker, and I am president of the American Short Line
and Regional Railroad Association. I represent the Nation's 600
small Class II and III freight railroads, commonly known as
short lines.
Short lines are essentially the first and last miles of the
freight rail network. We play a critical connector role in the
country's freight supply chain, moving all sorts of industrial,
agricultural, and energy products from factories, farms, and
mines, to and from the Class I railroads where they can bring
the goods to and from national and global markets.
Short lines are the retail branch of a wholesale business,
if you will. They are largely what used to be the unloved and
unprofitable branch lines of the larger railroads. Luckily,
following the partial deregulation of the Staggers Act way back
in 1980, rather than abandon those lines and rip up the track,
the Class I's sold or leased those lines to local entrepreneurs
who turned them into short lines.
Typically, those lines didn't have much traffic at the time
and weren't in great shape, but the smalltown local folks who
took over these lines were excited to make a go of it. They
would focus all their time and energy on getting just one more
new customer or one more carload from an existing customer.
They would bend over backwards to do anything and everything
their customers needed, and they sometimes got both local and
Federal help to invest in their infrastructure. And it worked.
They saved those lines and maintained crucial freight rail
service for smalltown and rural America. Over time, short lines
have emerged as a unique American success story.
Short lines are still pretty small. The average one employs
about 30 people, operates about 80 route-miles, and earns about
$8 million in annual revenue. But collectively they play an
important role in the supply chain. They manage one-third of
the freight rail network, touch one-fifth of all carloads,
provide excellent service to their customers, and do it while
still only accounting for about 6 percent of the industry's
total revenue.
The title of the hearing today is ``Supply Chain Resilience
and Challenges,'' and that is what we think about every day.
Short lines are the epitome of resilience, doing more with
less, hustling and scrapping to serve our customers, and
bringing more freight to rail. And we certainly face
challenges. When the supply chain struggles, we typically act
as shock absorbers for shippers, blunting the impact of service
issues for our customers.
Going forward, there are a number of ways that Congress can
help short lines and, therefore, the supply chain, thrive. One,
support the CRISI program which short lines depend on for major
infrastructure upgrades. This is a win-win for both the supply
chain and for short line safety. Congress could simply increase
the funding provided to CRISI or direct the FRA to focus the
program more tightly on freight rail supply chain and safety.
Ninety-seven Members of the House, including Chairman
Nehls, Ranking Member Payne, and Ranking Member Larsen,
actually have already signed a letter requesting fiscal year
2024 appropriations funding for CRISI at the fully authorized
level. So, a huge thank you for that.
Two, support short line disaster relief. There is currently
no Federal program that supports short line recovery after
natural disasters, which can hamper our ability to help
communities recover after those disasters.
Three, avoid any efforts to increase truck size and
weights, which would divert more freight to our roadways, lead
to greater wear and tear on already worn-out roads, worsen
highway congestion, increase air pollution, and lead to a
litany of safety problems. Congress has rejected this concept
repeatedly over the years, but this ``zombie'' proposal keeps
reappearing, so, Congress might need to reject it once more.
Four, ensure that regulations allow room for innovation and
progress. The inability of our Class I friends to get FRA
approval to transition to primarily automated track inspection
programs is a good example of this not working.
Five, support railroad workers by supporting the REEF Act,
which would remove railroad unemployment and sickness benefits
from sequestration cuts. This would help with hiring and
retention, which is good for the supply chain.
I am going to skip six.
Seven, do no harm. With all the discussion about rail
safety, it is important to only pass new regulations that are
narrowly targeted to fix real problems and that won't raise
railroad costs and degrade service and end up
counterproductively pushing freight onto the more dangerous
highways instead.
And finally, eight, support the Short Line Safety
Institute, which is a voluntary program funded by the FRA to
enhance the safety culture of short line railroads.
In conclusion, short lines are critical pieces of the
supply chain, particularly for shippers in small towns and
rural America. Congress' actions can help determine whether we,
and the small communities we serve, grow and flourish or
stagnate and fail.
Thank you for the opportunity today.
[Mr. Baker's prepared statement follows:]
Prepared Statement of Chuck Baker, President, American Short Line and
Regional Railroad Association
Introduction
As president of the American Short Line and Regional Railroad
Association (ASLRRA), the trade association representing the nation's
600 small Class II and III freight railroads (commonly known as short
line railroads or short lines), and hundreds of their contractors and
suppliers, I submit this testimony for inclusion in the record of this
committee's hearing.
The Short Line Freight Rail Industry
Short line railroads and the national network. Short lines have
been in existence for well over a century and today play a critical
role in the country's freight supply chain. Short lines provide first
mile and last mile freight rail service, touching one in five railcars
on the system. They ensure that businesses in small towns and rural
communities that would otherwise be cut off from the North American
freight rail network have the access they need to the global supply
chain.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Short lines are nearly all small, entrepreneurial businesses. The
average short line employs about 30 people, operates about 80 route
miles, and earns about $8 million in revenue per year.
The short line industry as we know it today is the product of the
Staggers Act of 1980, which made the sale or long-term lease of light
density, unprofitable lines from Class I railroads to local
entrepreneurs possible and avoided the abandonment of those lines,
preserving rail service for thousands of customers nationwide.
However, those sold-off lines came with high hurdles to continuing
business operations--decades of deferred maintenance and few remaining
customers along the lines. These lines needed significant investment
from the moment they became short lines, and that's still the case
today, with these small businesses using up to a third of their
revenues for maintenance and improvements, making short line
railroading one of the most capital-intensive industries in our nation.
Despite those challenges, the short line industry has emerged as
one of the great American success stories. Short lines have not only
kept those marginal lines they inherited viable, but have turned them
into small thriving enterprises in many cases. The short line industry
now manages one-third of the freight rail network and touches one-fifth
of all carloads while still only accounting for 6% of the total
revenue. Short lines pride themselves on doing more with less and
making it work.
The country's short line freight rail industry is a vital part of
the North American supply chain. Short line railroads provide first-
and last-mile rail service. They are the face of railroading for
thousands of customers who need to move and receive critical goods. Our
members provide this first and last mile connection in many key
industries critical to our country's economic health, particularly the
industrial, manufacturing, agricultural, energy, and chemical sectors.
We also frequently partner with the trucking industry to offer
transload and intermodal opportunities for bulk and heavy products
throughout the country, everything from paper to rock, potatoes to
lumber, metals to minerals, sand to liquids.
As challenges to the supply chain have arisen in recent years,
short lines have acted as critical ``shock absorbers'' for the freight
rail network, blunting the impact of supply chain challenges on our
customers through our flexible, friendly, responsive, and customized
service.
Shippers want to use rail because it is generally less expensive,
and sometimes far less expensive, than trucking. Rail can offer
capacity for large volumes of freight, and rail helps shippers meet
their environmental commitments. Rail however has not always had the
reputation of being the easiest or simplest mode to access--it is
incumbent on us as a freight rail industry to change that perception
and offer consistent, predictable, reliable, easy-to-access service to
our customers, and short lines are committed to leading the way on that
front.
Short lines are economic engines for localities, particularly in
small-town and rural America. Our members are critical links in the
nation's freight supply chain and are vital engines of economic
activity. Together, our members are tied to 478,000 jobs nationwide,
$26.1 billion in labor income and $56.2 billion in economic value-add
\1\--providing a service that 10,000 businesses nationwide rely upon to
get goods and products to market.
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\1\ The Section 45G Tax Credit and the Economic Contribution of the
Short Line Railroad Industry, prepared by PWC for ASLRRA (2018).
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At the local level, the availability of rail service provided by
short lines is often the tipping point for manufacturers and shippers
deciding to locate in the area, driving new, well-paying jobs
particularly in rural and small-town America.
We live and work in the communities we serve. Short lines are
owned, managed and staffed by individuals who are part of the fabric of
their local communities. Because short lines run short distances,
employees live and work in the communities they serve. Many short lines
are family-run businesses and safety and service is personal. When
they're not moving goods and freight, short line personnel are mixing
with their customers at the local grocery store, at the PTA meeting, on
the ballfield, and in their houses of worship. Our customers rely upon
us to keep their businesses competitive and we take that responsibility
very seriously.
We have an impressive safety story to tell. According to Federal
Railroad Administration (FRA) data, train accident and hazardous
material accident rates for short lines are down 42 percent and 71
percent, respectively, since 2000.
From 2019 to 2022, the overall freight rail industry experienced
only 51 derailments with a hazardous material release, and only four of
those occurred on a short line railroad. Of the 86 cars carrying
hazardous materials that experienced a release in those derailments,
only four of those cars were on a short line.
During the same time frame, short line railroads ran an average of
approximately 122 million train miles per year. Over that four-year
period, derailments have declined from 298 to 254, derailments
involving hazardous material cars have declined from 64 to 43, and as
noted above, only four derailed cars released hazardous materials in
those four years.
Our industry is committed to getting these numbers--all
derailments, especially derailments with releases of hazardous
materials, and reportable incidents--to zero and to keeping them there,
but this overall safety context is important to understand before
enacting potentially counterproductive regulations or legislation in
the name of safety, which I will discuss later in this testimony.
One indication of short lines' safety performance and focus is
ASLRRA's annual Jake Safety Award program honoring railroads that have
had better than industry-average injury frequency rates per person-
hours worked. Since 2000, an increasing number of short lines have
received the ``Jake with Distinction'' designation, indicating zero
reportable injuries for the calendar year--a remarkable 71% of our
members had zero reportable incidents in 2021.
In addition to our awards program, ASLRRA provides an exhaustive
offering of programs and training for short line railroad members.
Training in topics ranging from regulatory compliance to best practices
in environmental sustainability is offered throughout the year via
webinars, our Learning Management System, and at our conferences.
Importantly, thanks to grants provided by the U.S. Department of
Transportation (USDOT), short lines are supported in their efforts to
improve safety culture by the Short Line Safety Institute (SLSI). When
looking at safety culture evaluations nationwide, FRA described SLSI's
method as ``the most robust model for assessing safety culture in the
U.S. railroad industry.'' \2\ SLSI also provides hazardous materials
training for railroads and emergency responders in the communities they
serve via grants from the Pipeline and Hazardous Materials Safety
Administration.
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\2\ FRA Office of Research, Development, and Technology, RR 19-15,
June 2019 https://railroads.dot.gov/sites/fra.dot.gov/files/fra_net/
18759/SLSI%20Model%20for%20Assessing%20Safety
%20Culture.pdf
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Short lines' environmental stewardship is strong. The rail industry
is a sustainable, environmentally friendly mode of transportation. U.S.
Environmental Protection Agency data show freight railroads account for
only 0.6 percent of total U.S. greenhouse gas emissions and only 2.1
percent of transportation-related sources (e.g., trucking, air, etc.).
On average, U.S. freight railroads move one ton of freight 480 miles,
approximately four times as far as our over-the-road competition, on a
single gallon of diesel fuel. Short line service alone keeps 31.8
million heavy trucks off highways and public roads, preventing costly
wear and tear, relieving congestion, and reducing the number of deadly
motor vehicle crashes.
Short lines are committed to doing their part, by continuously
seeking ways to reduce their environmental impact with the
implementation of technology and operating practices that reduce
emissions. For example, the ASLRRA is currently partnering with the FRA
and short line railroads to test locomotive emissions by studying fuel
injectors and additives. Products like these that increase fuel economy
may also yield emissions benefits. This is a two-year project that will
give us a better understanding of how small railroads can utilize cost
effective methods for reducing their impact on the environment.
Short lines are small enterprises with limited resources. The
federal government can provide crucial and impactful help to short
lines, but at the same time efforts to regulate problems in the rail
space can impose outsized burdens and demands on these railroads. It is
crucial that any new regulatory requirements be directly relevant to a
safety benefit and realistic for a small business to implement.
A longstanding body of law, including the Regulatory Flexibility
Act (RFA) and the Small Business Regulatory Enforcement and Fairness
Act (SBREFA), requires that agencies exercise utmost care and
discretion in evaluating how regulations they promulgate affect small
businesses. Congress should similarly heed the wisdom of these laws
before crafting prescriptive updates to the current complex and highly
technical regulatory framework. Many small railroads are unable to
comply with costly ``one size fits all'' requirements that are written
with larger entities in mind. Each small railroad has a unique
operating environment that can differ dramatically from others related
to drivers of risk and operating characteristics, such as train length,
speed and distances traveled. A Congress that ignores this fact could
inflict extreme duress and economic harm on a critical piece of the
supply chain--without providing any attendant safety benefit.
Short Lines and the Supply Chain: What Congress Can Do
There are eleven areas in which Congress could act that would both
enhance the supply chain and advance safety in our industry:
1. Support important funding opportunities that help short line freight
railroads invest in infrastructure.
Rail rehabilitation and improvement is critical to both safety AND
supply chain fluidity.
Investment drives safety improvements. The largest cause of short
line derailments is bad, worn-out track, and the best way to address
that challenge is to invest in upgrading that track. Finding the
funding is the hard part though. Short line railroading is one of the
most capital-intensive industries in the country. As noted above, Short
lines invest on average 25 percent to 33 percent of their annual
revenues in maintaining and rehabilitating their infrastructure. Short
lines are often the custodians of expensive bridges and tunnels that
were originally built by much larger railroads years earlier and are
now reaching the end of their useful lives.
Federal funding opportunities like the Consolidated Rail
Infrastructure and Safety Improvements (CRISI) grant program provide
short lines with an opportunity to meet these challenges. As the
Infrastructure Investment and Jobs Act (IIJA) is implemented and its
critical resources are made available, we encourage both the Biden
Administration and Congress to prioritize funding for the many projects
for small freight railroads that improve safety AND reduce supply chain
bottlenecks. These projects also have enormous environmental benefits
and are often the biggest ``bang for the buck'' available in surface
transportation.
CRISI is the one grant opportunity where short lines are directly
eligible applicants. ASLRRA appreciates the strong support of so many
on this Committee for CRISI and the work it does. In our view, the
program should be even more focused on freight rail safety and supply
chain improvements than it is today. At the very least, CRISI should
not be subject to carve outs for intercity passenger rail as it has
been over the past few years and certainly should not be opened up to
new entities such as commuter railroads. Commuter and passenger
railroads have significant other federal, state, and local funding
streams available that are closed to short lines. CRISI should be
funded at the fully authorized appropriations levels.
Ensuring critical resources are made available through CRISI and
other important USDOT grant efforts (like RAISE, INFRA, the Railroad
Crossing Elimination grant program, and the Port Infrastructure
Development Program (PIDP)) will allow our members to make safety and
supply chain enhancing investments in track upgrades throughout the
country.
Investment in infrastructure allows for a more flexible and
efficient supply chain. For example, due to legacy track and bridge
conditions, many short lines have stretches of track and bridges that
cannot accommodate national-network standard 286,000-lb. railcars.
CRISI-funded rail upgrades allow short lines to offer the most economic
and efficient rail service to shippers from first mile to last with
throughput on the same track standard.
CRISI funds can also be used by short lines for network
enhancements. Many short lines have legacy track layouts that present
challenges in the face of current operational and customer demands. On
a short line, relatively modest CRISI investments can add sidings,
reconfigure railyards and improve connecting interchange points in ways
that are transformative for the operation of the railroad and customer
service. CRISI can also be used by short lines to upgrade or replace
older locomotives to improve fuel efficiency, reduce maintenance costs,
and improve reliability, which benefits operational efficiency and
fluidity while reducing emissions.
2. Support short line disaster relief.
As climate change continues to impact the movement of freight, we
encourage members to consider new programs to assist in rebuilding
after a natural disaster. In September 2022, Hurricane Ian devastated
Florida and destroyed short line railroad infrastructure. A Class III
railroad in Fort Meyers, Florida had estimated damages exceeding $30M.
Current insurance policies and federal programs are not able to meet
the needs of small railroads who experience damages of this magnitude.
As disaster recovery begins, short lines may play a critical role in
moving goods in and out of the affected areas, but only if they can
themselves recover quickly.
ASLRRA appreciates the efforts of members like Rep. Byron Donalds
(R-FL) to advance legislation that would provide emergency assistance
to Class II and class III railroads to rebuild critical infrastructure
and restore the movement of freight following natural disasters. A bill
to this effect was introduced late in 2022 (117th Congress, H.R. 9581,
Short Line Railroad Relief Act) and we are expecting a similar bill to
be introduced shortly in this Congress.
3. Avoid any effort to increase the size and weight of commercial
trucks.
ASLRRA cautions against any action that could lead to an increase
in truck length and weights. Heavier and longer trucks will divert more
freight to our roadways and lead to greater wear and tear on already
worn-out roads, worsen roadway congestion, increase air pollution and
truck GHG emissions, and lead to a litany of hazardous conditions
endangering all roadway users.
Moreover, rail is a far more efficient way to move goods and
freight. One train can take hundreds of truckloads off our nation's
highways.
Recently introduced proposals, however, would undermine these
efficiencies. The SHIP IT Act (H.R. 471) proposes a 10-year pilot
program to increase the weight of trucks from 80,000 lbs. to 91,000
lbs. This misguided pilot program has been suggested many times over
the years and lawmakers have rejected this concept repeatedly,
recognizing the danger these larger trucks would cause to the motoring
public, the environment and infrastructure. Raising weight limits would
not improve the supply chain--studies have shown that the effect of
this action would be more (and bigger) trucks on the roads, as freight
was diverted from rail to road.
A 2020 study found that 91,000-pound trucks would divert up to 20
percent of rail carload traffic over a five-year period. The diverted
traffic--including hazardous materials, which is particularly
concerning--would end up on our highways, adding more trucks to the
road, causing more pavement and bridge damage, and creating more risk
for Americans.\3\
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\3\ Estimating the Rail-to-Truck Traffic Diversions Attributable to
Increased Truck Size and Weight, Mark L. Burton, Appalachian
Transportation Institute, Marshall University, June 2020, http://
www.cabt.org/wp-content/uploads/2020/07/DIVERSION-STUDY-FINAL.pdf
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4. Support RailPulse and future initiatives that improve visibility and
management of resources.
RailPulse is a rail industry initiative to improve fluidity and
transparency for customers across the country. RailPulse is a coalition
of railcar owners, railroads, rail technology providers, and the
Pennsylvania DOT who have joined together to facilitate and accelerate
the adoption of GPS and other railcar-level telematics across the North
American rail network fleet. It will put short lines on a level playing
field with other modes of transportation in their ability to locate and
manage shipments, correspondingly enabling improved shipper visibility
of the location and condition of their rail freight in transit.
RailPulse technologies being explored include asset health monitoring
of the mechanical elements of railcars which can support reliability
and safety, and which will allow for more efficient asset management. I
would consider RailPulse to be in the same vein as the USDOT FLOW
initiative and the Federal Maritime Commission's Maritime
Transportation Data Initiative.
RailPulse is one of many examples of CRISI grant program-funded
initiatives that holds the promise of transformational change for our
industry. Congressional support of the CRISI grant program at the
highest funding levels will allow for many more of these transformative
projects to move forward.
5. Encourage regulations to keep pace with modern operational
practices.
Technology development and best practice implementation have led to
safety improvements over time, but some of those developments, such as
Automated Track Inspection (ATI), still require permitting or waivers
which are not always forthcoming. Congress should support the
railroads' move towards ATI rather than letting the FRA mandate the use
of potentially outdated manual inspections in all circumstances. This
would free up scarce time and personnel resources and improve the
supply chain.
ATI technologies can dramatically improve a railroad's awareness
and understanding of the condition of their track assets, enable
predictive analytics to optimize preventive and proactive maintenance
strategies, and detect flaws, such as internal rail defects, or trends
in conditions over time, that can be missed by traditional visual
inspections. ATI is a way to improve safety and the efficiency of the
rail network. Congress should encourage the development and deployment
of ATI technologies as important tools that can enhance and leverage
the work of railroad maintenance-of-way teams.
6. Support railroad workers by providing steady federal benefits.
The recently introduced bipartisan, bicameral Railroad Employee
Equity and Fairness (REEF) Act would remove sequestration constraints
on the railroad unemployment insurance program for railroad employees
and ensure that they get the benefits they are entitled to.
While a temporary version of the REEF Act was passed in December
2020, that measure actually expired yesterday (May 10, 2023). Without
the REEF Act, sequestration will likely result in a 5.7% reduction in
railroad unemployment and sickness benefits through Fiscal Year 2030.
Being able to attract and retain talent is critical to our
industry; and robust unemployment and sickness benefits are critical in
that effort. While regular unemployment compensation for other
industries is exempt from sequestration, the Railroad Unemployment
Insurance Act (RUIA) is not. This means that the funds railroaders and
employers pay into the RUIA for unemployment and sickness benefits are
used to offset federal spending instead of going back to the hard-
working individuals who pay into it. REEF would remedy this situation.
7. Allow the rail industry to hire back retirees more easily to help us
quickly staff to appropriate levels.
Last year, Representative Rick Crawford (R-AR) introduced the
Retirees to Rail Act, H.R. 8608. The bill would temporarily permit
retired railroad employees to render compensated services to an
employer without a suspension or deduction of the retired railroad
employee's retirement annuity.
Railroads sometimes need to be able to quickly add railroaders into
the network while new employees are being trained. This legislation
would allow railroads to rehire experienced railroad retirement
recipients without the Railroad Retirement Board suspending the payment
of their annuity, which the current law requires. This action would
benefit the supply chain.
8. Maintain federal primacy and pre-emption on rail regulation.
Whether it is a rash of state-level legislation and regulation on
crew size mandates and blocked crossing, or the stunning overreach of
the California Air Resource Board's recent locomotive regulation, state
regulation of freight railroading threatens to undermine the efficiency
of the world's premier freight rail network. The interconnected nature
of the rail network seems to be the most clear and obvious case of
interstate commerce that one could imagine--we urge Congress to not let
its federal role in rail be usurped by the states, which would create
an unworkable and inefficient patchwork of rail regulation and lead to
more future supply chain instability.
The California in-use locomotive rule for instance would ban any
locomotive older than 23 years old beginning in 2030--a completely
unworkable proposal for a short line industry that regularly relies on
40- and 50-year old locomotives to keep sometimes barely marginal
railroads viable.
9. Support permitting reform.
In a concern that is far broader than just the rail industry, short
lines believe that widespread permitting reform is important for the
continued economic growth of the United States. It is simply too time-
consuming and burdensome to get projects done. Whether the projects are
new renewable energy installations, major rail terminals, or sometimes
even relatively simple track upgrades, a disjointed permitting process
is a major hindrance.
We support the efforts by major groups like the U.S. Chamber of
Commerce and the National Association of Manufacturers to improve the
nation's permitting laws and procedures.
10. Support advancing new regulations only if they are laser-focused on
safety problems that warrant further action.
ASLRRA supports efforts to address recognized safety hazards.
However, the February derailment incident in East Palestine, Ohio has
brought forward many legislative proposals that have no relationship to
the derailment, no relevance to safety, and are unrealistic for short
lines to implement. One such example is the call for requiring
railroads to hire additional personnel when no hazard has been
identified that would be mitigated through the hiring of those
personnel. Support for mandating crew size for the first time in the
195-year history of railroading is untethered to any actual safety data
that show how expanded locomotive crewing requirements improve safety,
and it is out of step with domestic short line, passenger rail and
commuter rail, and international freight rail, experience.
As discussed, short line railroads are critical to supply chain
fluidity, to local and regional economic growth, to businesses
requiring access to markets at a competitive cost, and to reducing the
environmental footprint of industry. Policymakers should be mindful of
these far-reaching beneficial impacts as they consider new legislation
that would compel additional regulations that may cause unintended and
negative impacts on short lines' ability to be part of the supply chain
solution.
Legislative and regulatory responses to an accident or incident
should be responsive to the event, relevant to safety, and provide
reasonable and realistic requirements for small businesses to
implement. Legislators should take care to consider that all the facts
are in hand, including the results of National Transportation Safety
Board (NTSB) investigations.
If proposals that require unnecessary equipment, personnel, and
operating practices were to be enacted, they could lead to greater
hazards on the rail network as finite resources would be diverted from
where they are needed (typically track) to areas where they aren't. We
strongly caution against any measures that are unrelated to the recent
derailment, redundant with regulatory action already underway,
unresponsive to the preliminary NTSB report, and premature before the
NTSB investigation concludes.
We appreciate the leadership of many on this committee who--like
us--would like to see the NTSB continue its important work and fact-
finding before new rules are proposed.
The railroading industry is already one of the nation's most highly
regulated industries, and collectively, safety is our number one
priority. Safety is good for business, it's good for the companies we
serve and the localities we operate in, and it's good for our railroad
families.
11. Support the Short Line Safety Institute (SLSI).
The Short Line Safety Institute (SLSI) is a critical resource for
enhancing the safety culture of short line railroads. ASLRRA urges
Congress to continue to support the FRA's efforts to provide resources
for the SLSI to continue to improve safety culture and training for
short line railroads, including efforts to improve the safe
transportation of hazardous materials. New funds will also allow for
enhanced hands-on field training through obtaining and maintaining two
modern safety trains, which would bolster training for emergency
responders in the event of a release of hazardous materials.
Conclusion
There are many areas where Congress can act to ensure that we
continue to offer an integrated supply chain that is the envy of the
world.
ASLRRA's short line members are the critical connection between
shippers in small towns and rural areas across the country and the
Class I railroads. Our unique and varied operating environments enable
us to provide high-touch, personalized service in a safe and dependable
way. Congress can help us, and the small communities we serve across
rural and small-town America, grow and flourish, or stagnate and fail.
We urge Congress to wield their pen with precision in order to
avoid unintended consequences to the supply chain.
We appreciate the committee's close attention to the items we have
noted in our statement, and we welcome future opportunities to work
together to craft good public policy.
Mr. Nehls. Thank you, Mr. Baker.
Mr. Jahn, you are recognized for 5 minutes.
TESTIMONY OF CHRIS JAHN, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
AMERICAN CHEMISTRY COUNCIL
Mr. Jahn. Thank you, Mr. Chairman, Ranking Member Payne,
Ranking Member Larsen, and members of the subcommittee. I
appreciate the opportunity to talk to you----
Mr. Nehls [interrupting]. Pull the mic a little closer to
you, buddy.
Mr. Jahn. Closer. Sorry.
Mr. Nehls. Thank you, sir.
Mr. Jahn. Is that better?
Mr. Nehls. Some of us can't hear very well up here, you
know.
Mr. Jahn. All right. Is that better?
Mr. Nehls. Thank you.
Mr. Jahn. So, I appreciate the opportunity to talk to you
on behalf of the American Chemistry Council, our members, and
the members of the rail shipper coalition. I also want to thank
the members of this committee for helping prevent what would
have been a catastrophic strike last year impacting all of our
Nation's supply chain.
So, I want to leave you with three key points today from my
testimony. Number one, transporting chemistry is a crucial part
of the Nation's supply chain; number two, structural and
serious problems remain that undermine the utility and the
effectiveness of our transportation network; and number three,
Congress can help get that system back on track.
So, our industry is one of the largest freight rail
customers, and we are growing. We need a resilient and
responsive freight rail network to support chemical
manufacturing in the United States. And it is important to
everyone in this country and everyone in this room because the
products we make and transport by rail are essential for
growing food, for producing energy, for delivering safe
drinking water, and making life-saving medicines and equipment.
None of that happens without chemistry.
So, our industry is at the headwaters of the manufacturing
economy. Problems that impact our industry reverberate
throughout and cascade throughout the supply chain, which
ultimately impacts customers in the form of shortages and
inflation. Chemical manufacturing is also important to our
national priorities, like energy independence, by competing
with other countries in critical technologies such as world-
class semiconductors.
Quite simply, if we want to make things in the United
States of America rather than in places like China, we must
manufacture and move more chemicals in the United States. For
that to happen, we have to fix our Nation's transportation
supply chain and make it stronger than ever.
Now, railroads have made some progress and recovered from
some of the pandemic-related issues because of eased demand,
but many rail service problems continue to negatively impact
our members and, thus, the country.
So, in our most recent supply chain survey of our members,
we found that while conditions improved in the second half of
last year, our freight transportation problems are far from
over. And in fact, nearly all of our members say that supply
chain and freight transportation disruptions are impacting
their manufacturing operations today.
If you remember nothing else about what I say today, please
remember this: More than 80 percent of our members report that
despite recent improvements, conditions remain worse than prior
to the pandemic. So, we are still having significant issues
shipping.
And unfortunately, the situation is even bleaker when it
comes to freight rail. Our survey found that 30 percent of our
member companies said rail service problems were worse in the
second half of last year, and more than three-quarters reported
worse service than before the pandemic. So, these are real
problems with real consequences.
As I detailed in my written testimony, our members continue
to face a range of service challenges from delays and
reductions in service days to extended service embargoes. These
service problems disrupt the supply of raw materials and
customer deliveries and force companies to reduce production
here in the United States. They put producers at a disadvantage
versus imports from China that ship from port terminals that
are served by multiple railroads.
The history has shown that we can't rely on the railroads
to fix these problems on their own. In short, as someone has
said, hope is not a strategy. Rather, policymakers need to
adopt reforms and incentivize railroads to make their networks
more resilient and help prevent a future crisis.
For example, there have been reforms languishing at the
Surface Transportation Board for 7 years, like reciprocal
switching, which would help provide greater access to
competitive rail service. Despite what you may hear from others
on this panel, it isn't a radical idea. It is something that
has been used in Canada for over 100 years, and, in fact, two
of North America's largest railroads continue to use it to
thrive and grow.
So, access to competitive rail service is very important to
chemical manufacturing. It is a key driver in determining where
our members expand and invest. For example, we have a member
company that recently decided to invest in the Houston area and
picked one congressional district over another because of the
access to competitive rail service. This project created 2,500
construction jobs, 75 full-time jobs, and created an economic
impact in that community of $100 million.
So, Congress can help us address these issues, support the
STB, and hold railroads accountable for their poor service.
I look forward to answering your questions.
[Mr. Jahn's prepared statement follows:]
Prepared Statement of Chris Jahn, President and Chief Executive
Officer, American Chemistry Council
Chairman Nehls, Ranking Member Payne, Chairman Graves, Ranking
Member Larsen and Members of the Subcommittee, I am Chris Jahn, the
President and Chief Executive Officer of the American Chemistry Council
(ACC). Thank you for holding this hearing and for the opportunity to
discuss the importance of a resilient freight rail network to our
industry and to the thousands of our downstream customers that support
nearly every aspect of the nation's supply chain.
About ACC
The American Chemistry Council is an industry trade association
that represents more than 190 of America's leading chemical companies.
Our members produce a wide variety of chemicals, polymers, and related
products that make our lives and our world healthier, safer, more
sustainable, and more productive. The business of chemistry is a $517
billion enterprise that supports over 25% of the U.S. gross domestic
product, generates 10% of all U.S. goods exports, and directly provides
more than half a million good-paying American jobs.
The products we make are essential for growing food, delivering
safe drinking water, and making life-saving medicines and equipment.
They also help America to become energy independent and to compete
globally in critical technologies, for example, producing world-class
semiconductors.
A robust and responsive freight rail network is vital to the
continued growth of U.S. chemical manufacturing. Our industry is one of
the largest freight rail customers, shipping 2.3 million carloads in
2022. And the expansion of U.S. chemical manufacturing means our
transportation needs are growing. With announced investments of more
than $200 billion and over 350 chemical manufacturing projects, we
expect to add 122,000 railcar shipments per year by 2030.
Rail Customer Coalition
Because of the importance of freight rail issues to chemical
manufacturing, ACC is a member of the Rail Customer Coalition (RCC).
Members of the coalition include trade groups representing automobile
manufacturers, farmers, steel manufacturers, investor-owned electric
companies, and rural electric cooperatives, among others. Collectively,
the coalition members represent industries that provide more than 7
million jobs and contribute $4.8 trillion in economic output.
The members of RCC are major transportation stakeholders and the
largest users of freight rail. They account for more than half of the
total volume of cargo shipped by rail and generate more than three
quarters of the revenues collected by the railroads.
RCC members have faced unprecedented challenges over the past
several years, including service failures, rising costs, and even the
threat of a catastrophic shutdown of the entire rail network. Railroads
have made progress and recovered from the worst of the crisis. But rail
service problems continue to disrupt supply chains and inflate prices
for consumers. These problems will not fix themselves. Policymakers
need to adopt reforms that incentivize railroads to make their networks
more resilient and help prevent a future supply chain crisis.
Supply Chain Challenges Continue to Impact Our Industry
For several years, supply chain and freight transportation problems
have disrupted U.S. chemical and plastics manufacturing operations. ACC
has conducted surveys of our member companies to better understand and
detail the persistent challenges they face in moving freight in the
U.S. by rail, truck, and water. The latest survey showed that while
conditions improved in the second half of 2022, freight transportation
challenges are far from resolved.
Overall, nearly all companies (93%) say supply chain and freight
transportation disruptions are impacting their US manufacturing
operations. Two-thirds noted improvements in the second half of 2022.
However, 83% of companies report that despite this recent progress,
conditions remain worse than they were prior to the pandemic.
Unfortunately, chemical manufacturers report that they have not
seen the same level of improvement for rail shipping as they have for
truck and ocean shipping. In fact, 30% of companies said rail service
problems were worse in the second half of 2022, and more than three
quarters reported worse service than before the pandemic.
These findings are not surprising. Last year, in addition to facing
delays and reductions in service days, companies were increasingly
subjected to railroad embargoes. All but one Class I railroad
implemented embargoes in 2022. One class I railroad increased their
number of embargoes from 5 in 2017 to more than 1,000 in 2022. Another
Class I announced an embargo in late June on certain shipments into
California. It was originally announced for one month but was extended
until Labor Day, leaving companies unable to ship more than a fraction
of normal volumes for several months. Embargoes ration rail service,
favoring certain customers and commodities while limiting or denying
service to others. They impose significant burdens on shippers and
force some sites to reduce production and shift traffic to trucks.
While rail embargoes are necessary in some circumstances,
particularly in response to weather emergencies, ACC is concerned that
railroads will increasingly turn to embargoes to manage long-term
congestion problems. This is particularly troubling when this
congestion was at least partially created by the railroad industry's
own decisions to cut jobs, mothball equipment, and delay infrastructure
investments.
Our members continue to report examples of rail service problems
into 2023. A lack of crews leads to frequent missed switches at both
production facilities and customer sites. One ACC member facility in
the Mid-Atlantic was unable to make 30 shipments to close out the first
quarter due to lack of service. Another company highlighted that a key
production facility in Virginia has frequently received less than 2 out
of 3 scheduled switches per week. This disrupts raw material supply and
customer deliveries. And because the facility has no choice in its rail
carrier, the company is disadvantaged versus imports that ship from
port terminals that are served by multiple railroads.
Members also report congestion at the New Orleans interchange, with
trains being held there for up to two weeks. This impacts customers on
multiple railroads. Furthermore, when railroads send additional crews
and locomotives to clear up congestion in one location, it often
creates problems in other areas.
Promoting Competition Would Strengthen Rail Supply Chains
Policies that promote greater competition within the rail industry
can spur innovation, increase efficiencies, and drive healthy growth--
just as it does throughout all sectors of the U.S. economy.
Rail competition impacts communities around the country. When ACC
member companies evaluate where to expand and invest, one of the key
decision criteria is competitive rail access. For example, a company
recently decided to invest in one Houston location versus another, and
the lack of rail competition at one of the locations was a major
factor. This investment at the site with competitive rail access
created 2,500 construction jobs, 75 full-time jobs, and is expected to
create an estimated economic impact of $160 million in tax benefits for
the local taxing district over a 10-year period.
Unfortunately, many ACC members and other rail customers have no
competitive transportation options. Approximately 75% of our member
companies are captive to one Class I railroad--that means only one
railroad services their facility. Many also do not have the ability to
move many of our materials to other modes of transportation because
railroads remain the safest means for moving hazardous materials over
land and the infrastructure of many of our facilities is built around
rail service. Therefore, shippers have no market remedies when a
railroad fails to provide adequate service. For them, the Surface
Transportation Board (STB) is the only recourse.
The STB Plays a Crucial Role for ACC Members and Other Shippers
Congress created the STB to help foster a healthy, efficient, and
competitive freight rail system, and it gave the Board sole authority
to resolve commercial issues between railroads and shippers. The
Staggers Rail Act of 1980 sets a course for the STB that has helped the
rail industry not only to recover but to thrive. This success story
should give the Board the confidence to follow through on the other
important objectives mandated by Staggers, including ``to ensure
effective competition among rail carriers.'' Fulfilling this mission
requires a balanced approach, relying on market forces and greater
transparency wherever possible.
In its recent quarterly report to Congress, the STB provided an
extensive list of pending reforms that are critical to supporting a
resilient, efficient and competitive rail sector. Some of these issues
have languished for years without resolution.
In particular, the Board has yet to complete work on its 2016
proposal to modernize its overly restrictive rules on reciprocal
switching. Reciprocal switching allows a shipper served by a single
railroad to request to have its freight transferred to another major
railroad at an existing interchange point, offering a market-based
solution when a railroad fail to deliver quality service and
competitive rates. By finalizing this reform, the STB would finally
provide greater access to competitive rail service as envisioned by
Congress more than 40 years ago.
Congress must exercise its oversight and encourage the Board to
address freight rail issues and complete proceedings in a timely
manner.
Congress Must Also Act on Freight Rail Reform
Congress must also act on freight rail reform. As part of the
Committee's role in promoting efficient and reliable rail supply
chains, ACC urges you to act on the following recommendations:
Establish minimum service delivery standards. Railroads
have a statutory obligation to provide ``transportation or service on
reasonable request.'' However, the STB has never defined how this
common carrier obligation applies to the level and quality of service a
railroad provides to its customers. At a hearing before this
Subcommittee last year, STB Chairman Oberman welcomed the opportunity
to work with Congress to further define railroad service obligations.
To hold railroads accountable for service failures, Congress should
either require the Board to establish minimum rail service standards or
require railroads to allow such standards in its service contracts.
Improve data on competitive vs. non-competitive rail
rates. Congress should commission the Transportation Research Board to
develop a new economic model that uses real world data to compare the
rates paid by captive shippers to the rates paid for similar shipments
in competitive markets. This would help the STB meet its mandate to
maintain reasonable rates in the absence of effective competition.
Currently, the Board has no way to measure how much extra a rail
shipper pays solely because it lacks competitive transportation
options. Creating a new model could serve as a more accurate and
realistic starting point for evaluating whether a rate is
``reasonable.''
Level the Playing Field on Demurrage Charges. Shippers
continue to own a larger and larger percent of their fleet, currently
approximately 73% of railcars in service today, which should result in
an update in who can charge premiums to fulfill the national need
related to efficient freight car use and distribution. When delays
occur, or when the freight railroad delivers too many or too few
railcars, there is little recourse for the railcar owner. Assessing
demurrage and accessorial charges on freight railroads for those
privately owned railcars would enable private railcar owners to protect
their own investments. Railroads, private car owners and lessees should
all report demurrage income quarterly to the STB.
Provide better access to the STB. Congress should direct
the STB to eliminate outdated exemptions and allow shippers to seek
review of unreasonable rates and unreliable service for shipping of
certain products such as automobiles, food, building materials and
metals.
Ensure the Board has adequate funding and staff to
complete its work. The STB must fulfill a broad range of
responsibilities, including review of rate and service issues, merger
approvals and oversight of Amtrak service. Congress must provide the
Board with the necessary resources to meet its ongoing obligations and
to keep pace with changes to the rail network.
Conclusion
A resilient and responsive freight rail network is vital to the
continued growth of U.S. chemical manufacturing and other important
sectors of the economy. Policymakers must address one of the central
problems undermining the freight rail network and the nation's supply
chain--lack of competition amongst carriers. Adopting market-based
reforms will boost efficiency and reliability while minimizing the need
for STB involvement.
We appreciate the interest this Committee has shown on this
important issue, and we look forward to working with you on legislation
and regulatory oversight to address ongoing freight rail service
challenges and to promote a more competitive rail industry.
Mr. Nehls. Thank you, Mr. Jahn.
Mr. Scribner, you are recognized for 5 minutes.
TESTIMONY OF MARC SCRIBNER, SENIOR TRANSPORTATION POLICY
ANALYST, REASON FOUNDATION
Mr. Scribner. Good afternoon, Chairman Nehls, Ranking
Member Payne, Ranking Member Larsen, and members of the
subcommittee. Thank you for the opportunity to testify before
you today.
My name is Marc Scribner. I am a senior transportation
policy analyst at Reason Foundation, a national nonprofit and
nonpartisan public policy research and education organization.
Throughout our 45-year history, transportation innovation
has been a major area of focus. My testimony focuses on the
growing role and benefits of automation technologies and
surface transportation generally, and freight rail
specifically, as well as policy barriers to the development and
deployment of these technologies, and the potential
consequences of failing to address these barriers.
After decades of excessive economic regulation nearly
destroyed the railroad industry in the United States, Congress
responded by enacting deregulatory measures that culminated in
the Staggers Rail Act of 1980. The Staggers Act helped reverse
U.S. freight rail's terminal decline and has encouraged
hundreds of billions of dollars in private investment since its
enactment.
The gains enjoyed by customers and carriers in the decades
that followed are large and unambiguous. Estimated inflation
adjusted average freight rates have declined by nearly half,
while freight volume grew by more than 50 percent.
Even though the Staggers Act concerned economic regulation,
it also facilitated large safety gains. A 2016 study published
in the Review of Industrial Organization found that, quote,
``Staggers may be responsible for most of the reduction in the
accident rate from its 1978 high,'' unquote, and that, quote,
``FRA regulatory restrictions that have been adopted since the
Staggers Act, however, are not associated with improved
safety,'' unquote.
Despite this impressive turnaround, near- and long-term
threats to freight rail's ongoing success have emerged. The
COVID-19 pandemic threw supply chains into chaos, and freight
rail was not spared. The pandemic's impact was multifaceted
with large shocks to both supply and demand.
During the worst of the pandemic, total consumption
remained on trend due in part to generous Government assistance
that kept personal incomes high. Consumers instead shifted
their spending from services, many of which were shuttered to
mitigate public health risks, to durable and nondurable goods.
Coupled with capacity constraints, this large spike in goods
consumption quickly overwhelmed every supply chain link.
None of these problems could be resolved quickly, absent
perhaps a major economic recession, which most would say is
undesirable. Only subsiding goods demand or long-term
investment and additional logistics capacity to serve these new
normal demand patterns could ease congestion. However, emerging
automation technologies could have improved logistics
efficiency and blunted some of the negative effects experienced
over the last few years.
In the broader transportation automation landscape,
applications for road vehicles have received the most
attention. Advanced driver assistance systems, such as
automatic emergency braking and lane-keeping assistance, are
available in cars marketed to consumers today. Extensive
testing and limited commercial deployments of fully automated
passenger and freight road vehicles have also occurred in
recent years. Truck automation technologies are currently being
developed by numerous companies.
While achieving fully automated commercial trucking
operations at scale is years away, the industry has good reason
to continue these technology investments. According to the
American Transportation Research Institute, truckdriver wages
and benefits accounted for 44 percent of operating costs on a
per-mile basis in 2021, roughly double the cost of fuel, the
next highest cost category.
The potential productivity gains from reducing labor costs
and increasing asset utilization would have dramatic
competitive implications for the broader surface transportation
market.
Freight rail automation technologies to improve safety and
efficiency are also being pursued. Given the potential cost
savings from trucking automation, automating rail will be
necessary to compete in the transportation sector of the
future, particularly for higher value traffic such as
intermodal, for which railroads already compete intensely with
truck carriers.
Regulations that would reduce development and deployment of
new rail technologies needed to compete in the freight
transportation marketplace would have negative consequences for
shippers and consumers. But there are also social consequences
worth considering.
A 2011 GAO report estimated truck accidents result in 6
times as many fatalities per billion ton-miles as rail and
nearly 17 times as many injuries. Thus, a shift in freight
traffic from rail to truck can be expected to have a negative
impact on overall transportation safety.
Similarly, a modal shift from rail to truck is likely to
worsen environmental outcomes. According to the EPA, when
compared to freight rail, trucks produce approximately 10 times
as much carbon dioxide, more than 3 times as much fine
particulate matter, and 2\1/2\ times as much nitrogen oxides
per ton-mile.
Thank you for the opportunity to testify before the
subcommittee, and I welcome your questions.
[Mr. Scribner's prepared statement follows:]
Prepared Statement of Marc Scribner, Senior Transportation Policy
Analyst, Reason Foundation
Chairman Nehls, Ranking Member Payne, and Members of the
Subcommittee, thank you for the opportunity to testify before you
today. My name is Marc Scribner. I am a senior transportation policy
analyst at Reason Foundation, a national 501(c)(3) public policy
research and education organization with expertise across a range of
policy areas, including surface transportation.\1\
---------------------------------------------------------------------------
\1\ My biography and writings are available at https://reason.org/
author/marc-scribner/.
---------------------------------------------------------------------------
Throughout its 45-year history, Reason Foundation has conducted
research on emerging surface transportation technologies and their
interactions with public policy. My testimony focuses on the growing
role and benefits of automation technologies in surface transportation
generally and freight rail specifically, policy barriers to the
development and deployment of these technologies, and the potential
consequences of failing to address these barriers.
I. Introduction
After decades of excessive economic regulation nearly destroyed the
railroad industry in the United States, Congress responded by enacting
deregulatory measures that culminated in the Staggers Rail Act of 1980.
The Staggers Act helped reverse U.S. freight rail's decline and has
incentivized hundreds of billions of dollars in private investment
since its enactment.
The gains enjoyed by customers and carriers in the decades that
followed are large and unambiguous. Inflation-adjusted average freight
rates (revenue per ton-mile) have declined by nearly half while freight
volume (ton-miles) grew by more than 50%.\2\ Even though the law only
concerned economic deregulation, the Staggers Act also enabled large
safety gains through system investment, with a 76% decline in train
accident rates and an 85% decline in employee injuries and occupational
illnesses since enactment.\3\ A 2016 study published in the Review of
Industrial Organization found that ``Staggers may be responsible for
most of the reduction in the accident rate from its 1978 high'' and
that ``FRA regulatory restrictions that have been adopted since the
Staggers Act, however, are not associated with improved safety.'' \4\
---------------------------------------------------------------------------
\2\ Association of American Railroads, Railroad Facts 2021 Edition
(Washington: Association of American Railroads, 2021). 34. Bureau of
Transportation Statistics, National Transportation Statistics, Table 1-
50.
\3\ Association of American Railroads, Railroad Facts 2021 Edition.
62-63.
\4\ Jerry Ellig and Patrick A. McLaughlin, ``The Regulatory
Determinants of Railroad Safety,'' Review of Industrial Organization 49
(Sep. 2016). 371-398.
---------------------------------------------------------------------------
Despite this impressive turnaround, near- and long-term threats to
freight rail's success have emerged. The COVID-19 pandemic threw supply
chains into chaos and freight rail was not spared. The pandemic's
impact was multifaceted with large shocks to both supply and demand.
During the worst of the pandemic, total consumption remained on-
trend due in part to generous government assistance that kept personal
incomes high. Consumers instead shifted their spending from services--
many of which were shuttered to mitigate public health risks--to
durable and nondurable goods. This shock was exemplified by the massive
e-commerce boom.
This sudden shift in consumption overwhelmed every segment of the
logistics industry. Warehouses stocked with goods meant to cater to
pre-pandemic consumer demand became extremely congested as businesses
sought to reorient inventory around new demand patterns. The lack of
warehouse capacity led to delays in unloading shipping containers, many
of which remained full, sitting on truck chassis in parking lots and
loading docks outside warehouses--essentially as overflow storage
capacity.
With warehouse parking lots and loading docks at capacity, rail and
maritime shipping customers were not picking up their full containers
from or returning their empty containers to ports and rail ramps on
time. Carriers could then not return empty containers and chassis to
repeat this transportation cycle, increasing congestion and compounding
delays. This situation generated headline-grabbing news coverage of
container ships floating off the California shore, waiting for days or
even weeks to unload their cargo.
None of these problems could be resolved quickly absent a major
economic recession--only subsiding goods demand or long-term investment
in additional logistics capacity to serve these ``new normal'' demand
patterns could ease congestion. However, emerging automation
technologies could have improved logistics efficiency and blunted some
of the negative effects experienced over the last few years. These
include cargo handling equipment used at ports and warehouses, as well
as transportation automation technologies for trucks, trains, ships,
and aircraft.
While many are in their infancy, all of these automation
technologies offer great promise that could benefit freight carriers,
shippers, and consumers in the decades ahead. In addition to enhanced
efficiency, road and rail safety would also be improved by removing the
human factors responsible for most accidents. The main challenge for
policymakers going forward is ensuring that the development and
deployment of transportation and logistics automation technologies is
not unduly encumbered by obsolete or counterproductive new policies.
II. Surface Transportation Automation
In the broader transportation automation landscape, applications
for road vehicles have received the most attention. Advanced driver
assistance systems such as automatic emergency braking and lane-keeping
assistance are available in cars marketed to consumers today. Extensive
testing and limited commercial deployments of fully automated--often
called ``driverless''--passenger and freight road vehicles have also
occurred in recent years.
Truck automation technologies are currently being developed by
numerous companies. Some, such as Aurora, TuSimple, and Waymo, are
focused on automating the long-haul Class 8 tractor-trailer market
segment, and testing is taking place in the southwest United States.
Others, most notably Gatik, are focused on automating short-haul, less-
complex operations with smaller trucks.\5\
---------------------------------------------------------------------------
\5\ Marc Scribner, ``The Short and Long Views of Automated
Trucking,'' Surface Transportation Innovations (10 Apr. 2023). https://
reason.org/transportation-news/hydrogen-fuel-cells-automated-trucking-
more/#c.
---------------------------------------------------------------------------
While achieving fully automated commercial trucking operations at
scale is years away, the industry has good reason to continue these
technology investments. According to the American Transportation
Research Institute, truck driver wages and benefits accounted for 44%
of operating costs on a per-mile basis in 2021--roughly double the cost
of fuel, the next highest cost category.\6\ The potential productivity
gains from reducing labor costs and increasing asset utilization would
have dramatic competitive implications for the broader surface
transportation market.
---------------------------------------------------------------------------
\6\ Alex Leslie and Dan Murray, ``An Analysis of the Operational
Costs of Trucking: 2022 Update,'' American Transportation Research
Institute (Aug. 2022). 17. https://truckingresearch.org/wp-content/
uploads/2022/08/ATRI-Operational-Cost-of-Trucking-2022.pdf.
---------------------------------------------------------------------------
The freight rail industry in the U.S. is also pursuing automation
technologies to improve safety and efficiency. Given the potential cost
savings from trucking automation, automating rail will be necessary to
compete in the transportation sector of the future, particularly for
higher-value traffic such as intermodal for which railroads already
compete intensely with truck carriers.
One form of rail automation is occurring in infrastructure
inspection. Manned track geometry cars have been in service for nearly
a century after rail networks grew too large and dense for manual
visual track inspections alone. While the parameters measured may vary,
the general purpose of geometry cars is to examine tracks for defects
to ensure compliance with industry and government standards, as well as
inform and prioritize future maintenance actions. Today, automated
track inspection vehicles may be hi-rail trucks (modified highway
trucks with rail wheels that can be lowered to operate on tracks) or
railcars with inspection equipment that can be added to trains in
revenue service.
The benefits of automated track inspection (ATI) include more
reliable defect detection, more robust maintenance data analysis and
planning, redeployment of visual inspectors to higher-need areas and
for infrastructure that cannot be inspected by ATI equipment, reduced
human exposure to safety hazards in the field, and reduced delays to
trains in revenue service. While it has long acknowledged the benefits
of ATI, the Federal Railroad Administration (FRA), since 2021, has
reversed course by denying multiple ATI waiver requests. The
Committee's ongoing investigation will hopefully yield answers as to
what motivated FRA's reversal, but continued oversight from both
Congress and the courts is necessary to ensure FRA has not abandoned
its rail safety mission. Congress should also examine better ways to
permanently integrate ATI use into the track inspection regulatory
framework that do not require case-by-case waivers.
A more ambitious application of rail automation is automating train
operations. Train automation is likely to be incremental as functions
are gradually automated and personnel are relieved from certain tasks
as safety is assured. Energy management technologies save fuel through
automated control of throttling and braking, much like cruise control
in cars, and could be leveraged to automate additional tasks.\7\
---------------------------------------------------------------------------
\7\ William C. Vantuono, ``On Board with TALOS at TTCI,'' Railway
Age (3 Dec. 2019). https://www.railwayage.com/cs/ptc/on-board-with-
talos-at-ttci/.
---------------------------------------------------------------------------
The gradual adoption of train automation could result in sizeable
cost savings. For instance, an incremental automation phase-in could
allow for reducing train crew-sizes from two to one, which consultancy
Oliver Wyman in 2015 estimated could save U.S. railroads up to $2.5
billion per year by 2029.\8\ That same analysis, conducted at the
request of the Association for American Railroads, found no evidence
that two-person train crews are safer than one-person crews by
analyzing European rail operations where single-person crews are
common.\9\
---------------------------------------------------------------------------
\8\ ``Analysis of North American Freight Rail Single-Person Crews:
Safety and Economics,'' Oliver Wyman (3 Feb. 2015). 48. https://
www.reginfo.gov/public/do/eoDownloadDocument?
pubId=&eodoc=true&documentID=1014.
\9\ Ibid. 36.
---------------------------------------------------------------------------
Certain lower-risk operations, such as shunting in railyards, are
likely to see automation technology deployed sooner. But international
experience suggests fully automating at least some long-distance
freight trains in the U.S. may be on the horizon.
In 2019, mining giant Rio Tinto Group successfully launched its
AutoHaul fully automated train operations in Western Australia.\10\
AutoHaul involves the simultaneous operation of up to 50 unmanned
trains, each 1.5 miles long and carrying 240 cars of iron ore from
mines to ports on an average 500-mile, 40-hour journey. Loading and
unloading is completely automated, although crews still get on board
and manually operate the trains as they approach ports. Rio Tinto's
nearly $1 billion effort took over a decade of planning, development,
and testing, but reductions in travel time, fuel consumption, and track
and locomotive wear-and-tear have already been realized.
---------------------------------------------------------------------------
\10\ Kevin Smith, ``Rise of the machines: Rio Tinto breaks new
ground with AutoHaul,'' International Railway Journal (9 Aug. 2019).
https://www.railjournal.com/in_depth/rise-machines-rio-tinto-autohaul.
---------------------------------------------------------------------------
While sparsely populated Western Australia is a significantly less
challenging environment than the U.S., given fewer potential conflicts,
train automation in more urbanized areas will soon be taking place
internationally. For example, Belgian startup OTIV announced earlier
this year that it had signed a multi-year contract to deploy automated
and remote-controlled freight train technology on a rail line between
the Netherlands and Germany.\11\
---------------------------------------------------------------------------
\11\ Nick Augusteijn, ``OTIV announces multi-year contract for
running remotely controlled freight trains,'' RailTech.com (13 Jan.
2023). https://www.railtech.com/infrastructure/2023/01/13/otiv-
announces-multi-year-contract-for-running-remotely-controlled-freight-
trains/.
---------------------------------------------------------------------------
III. Policy Barriers to Freight Rail Automation
There are two major emerging economic and operational regulatory
threats related to automation that would reduce the ability of
railroads to compete in the freight transportation marketplace over
time and likely negatively impact the economy and consumers.
Return on Investment. Despite the success of the Staggers Act, new
forms of direct economic regulation of freight railroads may be on the
horizon, which could impact railroad innovation and long-run
competitiveness.
The Surface Transportation Board (STB) is currently considering a
re-regulatory proposal that would make it easier to require competing
Class I railroads to interchange each other's traffic and impose
service mandates.\12\ Proposed regulations governing reciprocal
switching may negatively impact railroads' return on investment, which
would have negative long-run effects on shippers and consumers.
---------------------------------------------------------------------------
\12\ Petition for Rulemaking To Adopt Revised Competitive Switching
Rules; Reciprocal Switching, Notice of Proposed Rulemaking, Surface
Transportation Board, Docket No. EP 711 (Sub-No. 1), 81 Fed. Reg.
51,149 (3 Aug. 2016)
---------------------------------------------------------------------------
Reciprocal switching arrangements occur voluntarily between
carriers but can also be mandated by the STB to promote
competition.\13\ Among other requirements, current rules stipulate that
anticompetitive conduct on the part of a rail carrier must be
established in order for the STB to prescribe mandatory reciprocal
switching as a remedy.\14\
---------------------------------------------------------------------------
\13\ 49 U.S.C. Sec. 11102(c).
\14\ 49 C.F.R. Sec. 1144.2.
---------------------------------------------------------------------------
In Feb. 2022, the STB held a public hearing on revisions to
reciprocal switching regulations first proposed in 2016.\15\ Most
significantly, the STB's proposal would eliminate the anticompetitive
conduct requirement and allow the STB to mandate reciprocal switching
under diminished evidentiary standards because of ``[t]he sheer dearth
of cases brought.'' \16\ In fact, since the mid-1980s when the
anticompetitive conduct requirement was established, the STB and the
Interstate Commerce Commission (ICC) before it have found precisely
zero instances of anticompetitive conduct on the part of the rail
carriers.
---------------------------------------------------------------------------
\15\ Reciprocal Switching, Notice of Public Hearing, Surface
Transportation Board, Docket No. EP-711 (Sub-No. 1), 87 Fed. Reg. 62 (2
Jan. 2022).
\16\ Petition for Rulemaking To Adopt Revised Competitive Switching
Rules; Reciprocal Switching. 51,152.
---------------------------------------------------------------------------
Weakening the evidentiary standards for mandatory reciprocal
switching has long been a priority of some industrial shippers, who
presumably hope to enjoy below-market rates that may result. While it
may provide temporary private benefits to select shippers in the form
of below-market rates, the potential operational complexity and
resulting delays (as well as reduced rail productivity) may offset
those temporary benefits.\17\
---------------------------------------------------------------------------
\17\ Joanna Marsh, ``No simple swap: Ins and outs of reciprocal
switching on US railroads,'' FreightWaves (1 Oct. 2021). https://
www.freightwaves.com/news/no-simple-swap-ins-and-outs-of-reciprocal-
switching-on-us-railroads.
---------------------------------------------------------------------------
More concerning is the long-run impact of capriciously mandated
reciprocal switching. In response to restrictions on market pricing
that would reduce earnings and thereby reduce shareholder willingness
to tolerate significant reinvestment of profits, rail carriers are
likely to adopt strategies to minimize the costs and risks associated
with this regulation in ways that harm shippers, such as reduced
investment in new capacity and abandonment of low-demand lines.
Most significantly for this discussion, the STB's proposed
reciprocal switching regulatory changes would likely reduce investment
in new technologies that are needed for freight rail to compete with
increasingly automated trucking in the decades ahead.\18\ A 2017 study
published in Transportation Research Record surveying railroad managers
and transportation engineers on freight rail automation found
``significant concern that the industry will be unable to fund the
development of new technology.'' \19\
---------------------------------------------------------------------------
\18\ Ibid.
\19\ James D. Brooks, et al., ``Survey of Future Railroad
Operations and the Role of Automation,'' Transportation Research
Record: Journal of the Transportation Research Board 2608 (2017). 17.
---------------------------------------------------------------------------
Train Automation. Arbitrary labor requirements would also reduce
the incentive of rail carriers to invest in and deploy automation
technologies necessary to compete with increasingly automated trucking
in the years ahead, which could produce a variety of economic, safety,
and environmental impacts. In 2016, when the Federal Railroad
Administration (FRA) first proposed a minimum crew-size regulation, it
conceded that ``FRA cannot provide reliable or conclusive statistical
data to suggest whether one-person crew operations are generally safer
or less safe than multiple-person crew operations.'' \20\
---------------------------------------------------------------------------
\20\ Train Crew Staffing, Notice of Proposed Rulemaking, Federal
Railroad Administration, Docket No. FRA-2014-0033, 81 Fed. Reg. 13,917
(15 Mar. 2016). 13,919.
---------------------------------------------------------------------------
This admission of FRA's lack of data to support its proposed rule
did not originate from FRA. Rather, it came from the White House Office
of Management and Budget's Office of Information and Regulatory Affairs
(OIRA). A review of the docket indicates that the draft notice of
proposed rulemaking that FRA originally sent to OIRA for review instead
incorrectly claimed, ``Studies show that one-person train operations
pose increased risks by potentially overloading the sole crew member
with tasks.'' \21\
---------------------------------------------------------------------------
\21\ ``NPRM Crew Staffing OIRA Edits,'' Federal Railroad
Administration, Docket No. FRA-2014-0033 (8 Mar. 2016). 7. https://
www.regulations.gov/document?D=FRA-2014-0033-0003.
---------------------------------------------------------------------------
Despite the absence of evidence, FRA continued forward on the
proposed crew-size rule until it was withdrawn in 2019. In its
withdrawal notice, the agency concluded, ``FRA's statement in the
[proposed rule] that it `cannot provide reliable or conclusive
statistical data to suggest whether one-person crew operations are
generally safer or less safe than multiple-person crew operations'
still holds true today.'' \22\
---------------------------------------------------------------------------
\22\ Train Crew Staffing, Notice of Proposed Rulemaking;
Withdrawal, Federal Railroad Administration, Docket No. FRA-2014-0033,
84 Fed. Reg. 24,735 (29 May 2019). 24,737.
---------------------------------------------------------------------------
The 2019 withdrawal notice also contained a nationwide preemption
order that was aimed at overriding several state crew-size laws, which
had been enacted in recent years. This was challenged in federal court
by two railroad unions and three states. In Feb. 2021, the U.S. Court
of Appeals for the Ninth Circuit ruled in favor of the challengers,
finding that FRA had failed to meet procedural requirements in issuing
the preemption order.\23\ The court remanded the matter to FRA to
reconsider the underlying issues and FRA has since issued a new
proposed rule on train crew size.
---------------------------------------------------------------------------
\23\ Transp. Div. of Int'l Ass'n-SMART v. Federal Railroad
Administration, No. 19-71787 (9th Cir. 2021).
---------------------------------------------------------------------------
Like the 2016 notice of proposed rulemaking (NPRM), FRA concedes in
its latest NPRM from July 2022 that it does not possess ``any
meaningful data'' to support the conclusion that two-person train crews
are safer or that one-person crews are less safe.\24\ Despite the lack
of a safety basis supporting a two-person crew-size minimum,
legislation introduced in the U.S. Senate in response to the recent
derailment in East Palestine, Ohio, would impose such a mandate in
statute.\25\ Significantly, the East Palestine train had three
crewmembers on board at the time of the derailment.\26\
---------------------------------------------------------------------------
\24\ Train Crew Size Safety Requirements, Notice of Proposed
Rulemaking, Federal Railroad Administration, Docket No. FRA-2021-0032,
87 Fed. Reg. 54,564 (28 July 2022). 45,571.
\25\ Railway Safety Act of 2023, S. 276, 118th Cong., 1st Sess.
(2023). Sec. 6.
\26\ Eric Boehm, ``After the East Palestine Derailment, Congress Is
Trying To Force Unrelated, Costly Regulations on Railroads,'' Reason
(24 Mar. 2023). https://reason.com/2023/03/24/after-the-east-palestine-
derailment-congress-is-trying-to-force-unrelated-costly-regulations-on-
railroads/.
---------------------------------------------------------------------------
As was noted previously, truck automation may be able to reduce
truck operating costs by nearly half. A two-person crew-size mandate
would impose a perpetual rail labor cost floor, thereby disadvantaging
freight rail to its increasingly automated trucking competitors and
cause some shippers to substitute trucks for rail.
IV. Potential Consequences of Unaddressed Policy Barriers
Since partial deregulation of the railroad industry under the
Staggers Act, the fastest growing traffic segment has been intermodal--
the shipping containers and trailers that can be moved between rail,
truck, and waterborne carriers--where intermodal rail traffic increased
by nearly 340% between 1980 and 2020.\27\ Intermodal rail traffic in
2020 accounted for 9.4% of total tons originated and 17% of gross
revenue, which would constitute the largest revenue share of any
commodity group if intermodal traffic was grouped together. Much of the
future growth of intermodal traffic on rail is likely to depend on how
adequately rail can compete with and complement over-the-road trucking.
---------------------------------------------------------------------------
\27\ Association of American Railroads, Railroad Facts 2021
Edition. 29.
---------------------------------------------------------------------------
Automated trucking would be a boon to shippers. Certain
applications of truck automation, such as platooning formations of
``road trains'' consisting of multiple trucks, could create new
dimensions of surface transportation competition where rail currently
has a strong advantage over trucks. To compete in this increasingly
automated transportation marketplace, rail will also need to harness
automation technologies.
However, if the aforementioned policy barriers to rail automation
are left unaddressed, rail will increasingly be at a competitive
disadvantage to trucking. This would cause some rail customers to
choose truck carriers instead and have safety and environmental
consequences as well.
With respect to safety, trucks are involved in far more accidents
than rail. Rail's safety advantage becomes apparent when accounting for
the volume of freight moved, with a 2011 Government Accountability
Office report estimating that truck accidents produce more than six
times as many fatalities per billion ton-miles moved than rail
accidents and nearly 17 times as many injuries.\28\ Thus, a shift in
freight traffic from rail to truck can be expected to have a negative
impact on overall transportation safety.
---------------------------------------------------------------------------
\28\ ``A Comparison of the Costs of Road, Rail, and Waterways
Freight Shipments That Are Not Passed on to Consumers,'' Government
Accountability Office (Jan. 2011). 27. https://www.gao.gov/assets/gao-
11-134.pdf.
---------------------------------------------------------------------------
Similarly, a modal shift from rail to truck is likely to worsen
environmental outcomes. According to the Environmental Protection
Agency, when compared to freight rail, trucks produce approximately 10
times as much carbon dioxide (CO2), more than three times as
much fine particulate matter (PM2.5), and two-and-a-half
times as much nitrogen oxides (NOX) per ton-mile.\29\ If
automated trucking leads rail customers to shift their traffic to
highways, it can be expected that the emissions intensity of the
transportation sector will increase.
---------------------------------------------------------------------------
\29\ ``2022 SmartWay Online Shipper Tool: Technical
Documentation,'' U.S. Environmental Protection Agency (Oct. 2022). 28,
Appendix A. https://www.epa.gov/system/files/documents/2022-10/
420b22046.pdf.
---------------------------------------------------------------------------
V. Conclusion
The fallout from the COVID-19 pandemic raised the profile of issues
related to freight transportation efficiency and resilience. While the
supply chain chaos experienced during the last few years has moderated,
Congress should continue to monitor these trends. Emerging automation
technologies are expected to reshape the transportation sector in the
coming decades. To encourage innovation, outdated prescriptive rules
should be replaced with performance-based regulations.
In the case of freight rail, Congress should ensure existing
regulations and new policies do not unduly hamper freight rail's
ability to adapt to the evolving competitive landscape. A failure to do
so would not only harm America's consumers, who benefit greatly from
robust competition between freight modes of transportation, but would
have negative safety and environmental consequences as well.
Thank you for the opportunity to testify before the Subcommittee,
and I welcome your questions.
Mr. Nehls. Thank you, Mr. Scribner.
I now recognize Mr. Regan. You have 5 minutes, my friend.
TESTIMONY OF GREG REGAN, PRESIDENT, TRANSPORTATION TRADES
DEPARTMENT, AFL-CIO
Mr. Regan. Thank you, Chairman Nehls, Ranking Member Payne,
Chairman Graves, and Ranking Member Larsen, for having me
today. I am Greg Regan, president of the Transportation Trades
Department, AFL-CIO. TTD is a federation of 37 unions whose
members design, build, operate, and maintain America's
transportation network. We proudly represent the totality of
rail labor whose members work on those front lines across the
entire passenger and freight rail industry. These workers see
firsthand the service, safety, and staffing challenges in
freight rail, and we know the negative consequences for
workers, customers, and communities when the system is not
operating properly.
Today, I am reminded of the last time I testified before
this committee, just 2 days before the derailment in East
Palestine, Ohio. This derailment traumatized a community and
drew national attention to safety deficiencies in the freight
rail network.
The East Palestine derailment is the embodiment of the fact
that rail workers have warned about for years: that safety,
customer service, and workforce morale at the Class I freight
railroads have been subverted by a business model that
prioritizes profits and shareholder returns above all.
I want to emphasize two points today. First, that safety
and service issues are directly connected and are the result of
management decisions. Second, the only way this industry will
improve is through intervention by Congress. The industry will
not meaningfully reform itself, and core safety and service
improvements should not be left for the bargaining table.
Any service industry should be responsive to the demands
and needs of its consumers. Instead, the Class I railroads
adopted an operating model known as Precision Scheduled
Railroading, which fundamentally seeks to generate the highest
possible profits to the lowest possible operating ratios.
A key element of this business model is stripping rail
networks of their physical and human capital. Since 2015, Class
I railroads reduced their total workforce by 30 percent. They
slashed their private investments in physical infrastructure
and sold off or sidelined essential equipment. In making these
cuts, the railroads have made a choice to simply not provide
adequate rail service.
The actions of the Class I's came to a head during the
pandemic when freight rail service issues marred the supply
chain. Throughout the pandemic, the railroads imposed service
embargoes, limiting the amount of freight a railroad accepts
from a customer. The embargoes led to massive backlogs of
freight, including ships and containers at the Port of L.A. and
Long Beach, among others.
The Surface Transportation Board has taken unprecedented
steps in recent years to monitor and direct the Class I
railroads to improve their service. One year after the STB held
watershed hearings on rail service issues, the Board found
earlier this month that rail service had not meaningfully
improved and that at least three of the big four freight
railroads failed to meet their own self-improvement benchmarks.
The railroads' issues also extend to safety. Unfortunately,
East Palestine was not an anomaly. The industry averages over
1,000 derailments a year. That is nearly three a day. Contrary
to the railroads' rhetoric, the industry's safety record is
getting worse, not improving. According to Federal data, the
accident and incident rate has actually increased over the last
decade at the four biggest Class I railroads.
Labor unions, shippers, and the Class I's all agree that
the first step to a better freight rail service is to hire more
workers. Yet the railroads have made little progress in
increasing their workforce numbers as well. As of March 2023,
the total Class I employment level remained below pre-pandemic
levels. It also is still significantly lower than the pre-PSR
high watermark.
On an individual Class I railroad basis, only Canadian
Pacific and CSX have gotten back to their pre-pandemic
employment levels.
It is no surprise that Class I railroads have struggled to
retain and hire the workforce they need to meet demand. While
they talk about the importance of rebuilding their workforce,
they still have not resolved the quality-of-life issues, like
draconian attendance policies and lack of access to leave, that
are driving workers out of the industry. Until they do so,
employee hiring and retention rates will be insufficient, and
rail service will suffer.
It will take action from Congress, Federal regulators, and
the railroads themselves to resolve the core staffing, service,
and safety issues that threaten not only our country's freight
rail supply chain but our overall economy. Rail labor and
shippers are united around many of the proposed solutions,
which doesn't actually happen very often.
Congress should further strengthen and define the existing
Federal common carrier obligation that rail carriers serve a
shipper on a reasonable request. That reasonable request
language is not defined in Federal statute, making it difficult
to enforce.
The Surface Transportation Board has made admirable efforts
to get the railroads to improve service, but they need more
enforcement tools to ensure that the railroads are meeting
their common carrier obligations.
Rail can be the greenest and most effective way to move
cargo over land, but only if we have a well-kept infrastructure
and well-trained workers in place to meet the existing demands
and future demands of our shipping communities, and expand the
market share of goods safely shipped by rail.
We have a unique opportunity to get freight rail back on
track by passing meaningful rail safety and service improvement
legislation and harnessing the investments of the
infrastructure law in concert with greater investments from the
railroads themselves. It is time for everyone to act.
Thank you for the opportunity. I look forward to your
questions.
[Mr. Regan's prepared statement follows:]
Prepared Statement of Greg Regan, President, Transportation Trades
Department, AFL-CIO
Introduction
On behalf of the Transportation Trades Department, AFL-CIO (TTD),
and our 37 affiliated unions, I thank Chairman Nehls and Ranking Member
Payne for inviting me to testify before the Committee today on the
current state of our rail supply chain. By way of background, among the
many unions who affiliate with TTD, we proudly represent the totality
of rail labor, whose members work on the front lines across the entire
passenger and freight rail industry. That includes the rail workers
directly engaged in freight transportation at railroads and ports who
see first-hand the effects of a broken freight rail industry mired by
self-inflicted service, safety, and staffing issues.
Freight rail is of vital importance to the U.S. economy, accounting
for around 40 percent of long-distance ton-miles and hauling one-third
of U.S. exports.\1\ When freight shipping demand soared during the
pandemic, the freight rail network's service, staffing, and safety
issues severely hamstrung the supply chain. The Class I railroads
missed a massive economic opportunity to grow the system and become
more competitive with other freight industries. By working
collaboratively with government--and yes, the unions that represent
their workers--to reform their current operating model, Class I
railroads can improve service and safety; move more freight in a
greener, more efficient way; and improve U.S. economic competitiveness.
The status quo, however, is unsustainable.
---------------------------------------------------------------------------
\1\ https://www.aar.org/wp-content/uploads/2021/03/AAR-Integrated-
Rail-Network-Fact-Sheet.pdf
---------------------------------------------------------------------------
Class I Freight Railroads Have Spent Years Undermining the Supply Chain
The Class I railroads have strayed from the traditional operating
model of a service industry that responds to the demands and needs of
its customers. Instead, the Class I railroads began pursuing an
operating model known as Precision Scheduled Railroading (PSR) in 2015.
Fundamentally, PSR seeks to generate the highest possible profits
through the lowest possible operating ratios. To achieve these profits,
railroads have stripped rail networks of their physical and human
capital.
Since 2015, the Class I railroads have reduced their total
workforce by 30 percent and slashed their private investments in
physical infrastructure, like rail yards, and sold off or sidelined
essential equipment such as rail cars and locomotives. Collectively,
the four largest freight railroads in the United States--BNSF, Union
Pacific (UP), Norfolk Southern (NS), and CSX--have slashed $32 billion
in private capital expenditures since 2015, not accounting for
inflation.
Due to these cuts, the railroads do not have the necessary
equipment to provide adequate rail service. For example, since 2015, UP
has reduced its rail locomotive fleet by 11% and the number of freight
cars by 21%; it only managed to keep 62% of its remaining locomotives
and 80% of its freight cars in service in 2021.\2\
---------------------------------------------------------------------------
\2\ UP: Annual Reports
---------------------------------------------------------------------------
In January 2023, BNSF had 1,000 locomotives that were sidelined
waiting for full inspections and BNSF stated that they ``do not have
the necessary manpower and shop capacity available on the property to
address the unusually high out of service count and backlog of
scheduled maintenance events.'' \3\ After they closed maintenance shops
and decreased or furloughed the maintenance workforce. There are now
much fewer locomotives to serve shippers and the remaining locomotives
wear down more quickly. That has led to equipment availability problems
for BNSF and its shippers.
---------------------------------------------------------------------------
\3\ February 2023 Rail Unions Lawsuit against BNSF. Accessed at
https://www.businesswire.com/news/home/20230307005934/en/IBEW-IAM-
SMART-MD-Unions-File-Outsourcing-Suit-Against-BNSF-Railway (see items
49 and 54 on pages 11 and 12 respectively)
---------------------------------------------------------------------------
The rail industry's decline in their private capital investment is
in stark contrast to the record $66 billion federal investment the
Infrastructure Investment and Jobs Act (IIJA) provides for passenger
and freight rail. In addition, the bill invests $2.2 billion in the
Port Infrastructure Development Program, offering a lifeline to the
nearly half of U.S. ports that state that better rail access could
increase throughput capacity by more than 25 percent.\4\
---------------------------------------------------------------------------
\4\ https://aapa.files.cms-plus.com/PDFs/
State%20of%20Freight%20III.pdf
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As policymakers and the private sector consider strategies to
expedite the flow of goods at major ports, it is essential that federal
funds are maximized to become an economic force multiplier throughout
the supply chain.
These federal investments are essentially designed to increase
economic opportunities for the railroads; however, the railroads must
also do their part to seize these opportunities for their own good and
the good of the country by making an equal investment in their own
infrastructure, safety operations, and service levels.
Freight Rail Service is a Supply Chain Challenge
Freight rail service issues severely hamstrung the supply chain
during the pandemic. Throughout the pandemic, the railroads imposed
service embargoes, limiting the freight a railroad accepts from a
customer.\5\ These service embargoes led to massive backlogs of freight
waiting to move by rail, including ships and containers at the Ports of
Los Angeles and Long Beach, among others.
---------------------------------------------------------------------------
\5\ https://www.bnsf.com/news-media/customer-notifications/
notification.page?notId=limited-embargo-of-certain-shipments-destined-
for-california and https://www.trains.com/trn/news-reviews/news-wire/
union-pacific-asks-customers-to-meter-traffic-or-face-embargoes/
---------------------------------------------------------------------------
The Surface Transportation Board (STB), the independent federal
agency that serves as the economic regulator of the freight rail
industry, has taken unprecedented steps in recent years to monitor and
direct the Class I railroads to improve their service. Last year, the
STB held a series of watershed hearings on the rail industry's service
issues. On May 1, 2022, the STB ordered the four biggest Class I
railroads--BNSF Railway, Union Pacific, CSX, and Norfolk Southern--to
submit service recovery plans. One year later, rail service has not
meaningfully improved. In fact, on the anniversary of its May 1st
order, the Board unanimously issued a decision finding that at least
three of the four railroads (BNSF, Norfolk Southern, Union Pacific)
were not complying with the service plans and targets that the
railroads themselves submitted to the STB detailing how they were going
to improve service.
The STB's May 1 decision was bipartisan, with all three Democratic
members and two Republican members unanimously agreeing that freight
railroads are not providing adequate service. With a few exceptions,
the STB's actions over the last year have been supported by all five
members, demonstrating that the state of rail service is not a partisan
debate. Democrats and Republicans both believe the Class I railroads
are performing quite poorly.
Likewise, members of Congress from both parties and both Chambers
have repeatedly raised how the railroads' poor service is negatively
impacting their constituents and a wide array of businesses in
practically every sector of the American economy, including
agriculture, energy, mining, and chemicals.\6\
---------------------------------------------------------------------------
\6\ See Finstad Leads Letter Urging Action on Union Pacific Rail
Service Delay--Press Releases--United States Congressman Brad Finstad
(house.gov); https://www.cramer.senate.gov/news/press-releases/sens-
cramer-baldwin-colleagues-press-surface-transportation-board-on-rail-
disruptions-urge-reliable-service-for-american-industries-shippers;
Rep. Ralph Norman & Rep. Jim Costa Lead Bipartisan Effort Concerning
Deficient Rail Service's Role in Fertilizer, Grain and Feed Shortage
Affecting American Farmers--U.S. Representative Ralph Norman
(house.gov)
---------------------------------------------------------------------------
Labor unions, federal regulators, and Members of Congress are not
alone in calling attention to poor rail service. The shippers who rely
on freight rail service are also sounding the alarm. In fact, rail
customers have sought ``emergency service orders'' from the STB to
address immediate and acute service problems. The threshold to obtain
an emergency service order is quite high:
``Emergency service orders are designed to preserve rail
service where there has been a substantial rail service issue
or failure that requires immediate relief. Under 49 U.S.C.
11123(a), the Board may issue an emergency service order where
there exists `an emergency situation of such magnitude as to
have substantial adverse effects on shippers, or on rail
service in a region of the United States, or that a rail
carrier . . . cannot transport the traffic offered to it in a
manner that properly serves the public' ''.\7\
---------------------------------------------------------------------------
\7\ https://www.federalregister.gov/documents/2022/05/02/2022-
09005/regulations-for-expedited-relief-for-service-emergencies (page
25609, quoting 49 U.S.C. 11123(a))
In December 2022, the STB held an emergency hearing involving Union
Pacific and one of its customers, Foster Farms, because Union Pacific
was not providing adequate rail service to deliver the corn feed Foster
Farms needs to feed its chickens and prevent millions of them from
dying.\8\ It took two emergency service orders from the STB to improve
the situation. Foster Farms was not the only rail customer who suffered
from poor rail service.
---------------------------------------------------------------------------
\8\ https://www.wsj.com/articles/poultry-farm-says-millions-of-
chickens-could-starve-from-rail-delays-11673054052
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In 2022, UP had more than 1,000 service embargoes, a ten-fold
increase from the 27 service embargoes it had in 2017.\9\ 98 percent of
the service embargoes in 2022 were attributed to congestion on UP's
rail network, which is something entirely within the railroad's
control.\10\
---------------------------------------------------------------------------
\9\ See the November 22nd, 2022 Notice issued by the Surface
Transportation Board entitled: ``Oversight Hearing Pertaining to Union
Pacific Railroad Company Embargoes'', Docket No. EP 772. Accessed at
https://www.stb.gov/proceedings-actions/search-stb-records/.
\10\ Ibid 9
---------------------------------------------------------------------------
Similar to Foster Farms, Navajo Transitional Energy Company (NTEC),
which is part of the Navajo Nation, on April 14th of this year filed
for an emergency service order from the STB alleging that BNSF was not
providing adequate service to NTEC's coal mine in Wyoming and BNSF's
lack of service is putting NTEC's business at risk.\11\ The STB heard
oral arguments in the case on May 10th and should issue a decision
soon.\12\
---------------------------------------------------------------------------
\11\ https://www.railwayage.com/regulatory/stbs-latest-service-
case-ntec-v-bnsf/
\12\ Surface Transportation Board May 5th Decision, Docket No. NOR
42178: Navajo Transitional Energy Company, LLC--Ex Parte Petition for
Emergency Service Order. Accessible at https://www.stb.gov/proceedings-
actions/decisions/
---------------------------------------------------------------------------
The bottom line is that railroads are failing their customers by
not providing the level of service their customers need and that is
required by the federal ``common carrier'' law. And the railroad CEOs
admit that.\13\
---------------------------------------------------------------------------
\13\ ``I was a customer for a couple decades. Our customers don't
really love us.'' New CSX CEO Joe Hinrichs, September 26th 2022. See
https://www.trains.com/trn/news-reviews/news-wire/new-csx-ceo-pledges-
to-improve-service-and-company-culture/
---------------------------------------------------------------------------
Freight Rail Safety is a Supply Chain Challenge
This hearing is not the first venue where freight rail's
intertwined service and safety problems are being examined. On February
1 of this year, I testified before the full Committee about supply
chain challenges--a mere two days before the Norfolk Southern
derailment in East Palestine, Ohio that traumatized a community and
drew national attention to safety deficiencies in the freight rail
network. The February 3rd East Palestine derailment tragically
demonstrated a truth that rail labor unions have been vocal about for
years: the freight rail industry has a fundamental disregard for the
safety of workers and the general public.
Unfortunately, the East Palestine derailment is not an anomaly. The
wide-reaching breadth of safety failures in the freight rail industry
contributes to more than 1,000 freight rail derailments a year--nearly
three a day. And contrary to the railroads' rhetoric, the industry's
safety record is worsening, not improving. In fact, according to data
from the Federal Railroad Administration, the accident and incident
rate has gotten worse over the last decade at the four biggest Class I
railroads: BNSF Railway, Union Pacific, CSX, and Norfolk Southern.\14\
In rail yards, the accident and incident rate almost tripled for
Norfolk Southern.\15\
---------------------------------------------------------------------------
\14\ Data accessible here: https://safetydata.fra.dot.gov/
officeofsafety/publicsite/query/TenYearAccidentIncidentOverview.aspx
\15\ Ibid 14
---------------------------------------------------------------------------
Safety failures are pushing the system to the breaking point and
this breakdown is negatively affecting shippers. For example, the
railroads have cut back on capital investments in their infrastructure.
That means they haven't lengthened rail sidings to accommodate the
length of trains that they are running. The Association of American
Railroads' (AAR) own fact sheet on train length notes that the
railroads are running trains up to 14,000 feet, a 40 percent increase
from 2010.\16\ As a result, when trains break down, they get stuck on
the main line. That causes congestion and backups throughout the entire
system. So even if a shipper doesn't have products on the train that
broke down, they are affected.
---------------------------------------------------------------------------
\16\ https://www.aar.org/wp-content/uploads/2023/03/AAR-Train-
Length-Fact-Sheet.pdf
---------------------------------------------------------------------------
Despite dismal rail service and safety, rail corporations are
financially rewarding their shareholders. The Class I railroads have
achieved record profits--more than $146 billion in the last decade.
Since 2015, the Class I railroads have collectively spent more than
$165 billion to buy back their own stock, which is at least $46 billion
more than they invested in safety. The priority of the rail companies
is clear: returning as much money to their shareholders as possible,
not running a safe rail system. That's why TTD launched a public safety
campaign demanding that rail corporations halt all stock buybacks until
they properly invest in safety.
Freight Rail Staffing is a Supply Chain Challenge
Between 2015 and 2021, the Class I railroads collectively laid off
45,000 workers, which is the equivalent of 30% of their total
workforce. Those layoffs affected every rail craft, from train
engineers and conductors, to maintenance of way of employees and
signalmen, to the shop-craft employees that inspect, repair, and
maintain rail cars.
Labor unions, shippers, and the Class I railroads all agree that
the first step to better freight rail service is to hire more workers.
It is not physically possible to move the same or greater volume of
goods with 30% fewer workers. Unfortunately, contrary to their
rhetoric, the railroads have not made much progress in increasing their
workforce numbers.
As of March 2023, which is the latest data available from the STB,
the total Class I employment level was 120,668 employees.\17\ That
still remains below pre-pandemic levels and it's also still
significantly lower than the pre-PSR high watermark of 174,122
employees in April 2015.\18\ Most rail crafts are also below their pre-
pandemic levels, with maintenance of equipment and stores employees
more than 18% below pre-pandemic levels and train and engine
transportation employment levels currently 1.5% below pre-pandemic
levels. The one exception is executives and staff assistants, which are
5% above their pre-pandemic levels.\19\
---------------------------------------------------------------------------
\17\ Data accessible at https://www.stb.gov/reports-data/economic-
data/employment-data/
\18\ Ibid 17
\19\ Ibid 17
---------------------------------------------------------------------------
On an individual Class I railroad basis, only Canadian Pacific and
CSX have gotten back to their pre-pandemic employment levels in March
2020.
Insufficient workforce training also has ramifications for rail
safety and service. Over the last several years, NS has reduced the
amount of training for new train conductors from 16 weeks to 6 weeks
before putting these workers into service because they desperately need
more conductors.\20\ That means these conductors don't have the proper
training to do their jobs, which includes identifying and potentially
fixing mechanical problems when a train breaks down. The lack of
training puts these conductors at risk of death or severe injury,
increasing the likelihood of safety incidents. Shippers served by NS
are harmed because the increase in safety incidents can lead to further
delays in shipments.
---------------------------------------------------------------------------
\20\ https://www.trains.com/trn/news-reviews/news-wire/fra-letter-
warns-norfolk-southern-about-conductor-training-safety-deficiencies/
---------------------------------------------------------------------------
Solutions
It is going to take action from Congress and federal regulators
such as the STB and the Federal Railroad Administration (FRA) to
resolve the core staffing, service, and safety issues that threaten not
only our country's freight rail supply chain, but our economy as a
whole.
Rail labor and shippers are united around many of the solutions
here, which has not always been the case.
Strengthen the Common Carrier Obligation
The ``common carrier obligation'' is a requirement that rail
carriers serve a shipper ``on reasonable request''. It was put into
federal law to ensure that the railroads didn't discriminate and refuse
service to shippers they didn't want to serve. Right now, the term
``reasonable request'' is not defined in federal statute and so it is
hard to enforce. The Surface Transportation Board has been doing an
admirable job trying to get the railroads to improve rail service, but
they need more tools to do their job and ensure that the railroads are
living up to their common carrier obligation.
Congress should strengthen and better define the existing federal
common carrier obligation the railroads have to serve their
customers.\21\ Senator Tammy Baldwin introduced legislation last
Congress that all rail labor unions and shipper groups from a wide
array of industries, including the American Chemistry Council (ACC)
endorsed.\22\ Senator Baldwin's legislation would strengthen and better
define the common carrier obligation of the railroads by spelling out
what ``reasonable request'' means and allow the STB to take into
consideration items like workforce levels and the availability of
equipment when determining whether the railroads are living up to their
common carrier obligation.
---------------------------------------------------------------------------
\21\ Codified in Section 11101(a) of title 49, United States Code
\22\ https://www.baldwin.senate.gov/news/press-releases/baldwin-
introduces-legislation-to-improve-freight-rail-service-for-american-
businesses
---------------------------------------------------------------------------
Similarly, then House T&I Railroad Subcommittee Chairman Donald
Payne and House T&I Chairman Peter DeFazio introduced legislation last
Congress to reauthorize the STB that would also strengthen and better
define the common carrier obligation along with several other important
provisions.\23\ We urge this Congress to pass similar legislation.
---------------------------------------------------------------------------
\23\ https://www.congress.gov/bill/117th-congress/house-bill/8649/
text?s=4&r=1
---------------------------------------------------------------------------
Hire More Workers
The poor working conditions on Class I railroads today are some of
the biggest challenges in hiring and keeping workers. TTD's rail unions
have reported on the phenomenon of rail employees with upwards of ten
or fifteen years of experience resigning from well-paying jobs and
giving up stable retirements. Workers face a lack of paid sick leave
\24\, draconian attendance policies \25\, increased safety issues \26\,
and an inability to get time off for medical appointments that risks
workers' health.\27\
---------------------------------------------------------------------------
\24\ For Rail Workers, Anger Persists Over Sick Leave--The New York
Times (nytimes.com)
\25\ Railroads' workplace attendance policies at the heart of labor
dispute: NPR
\26\ https://www.kansascity.com/news/business/article268941917.html
\27\ In rail strike showdown, death of worker helped stoke anger--
The Washington Post
---------------------------------------------------------------------------
The ongoing exodus of highly-skilled and experienced rail workers
who have decades of knowledge and the resulting consequences greatly
outweighs the limited amount of new hiring the railroads have done.
The Federal Railroad Administration (FRA) did an analysis in
December 2022 of the Class I's training data for the last eight months
of 2022, and found for the four largest Class I railroads (BNSF, UP,
CSX, NS), they only had more new employees graduate training than
existing employees leave the railroads in November and December of
2022.\28\ In the other six months, the number of employees graduating
from training programs did not keep up with the number of employees
separated from the railroads. Additionally, a large percentage of those
employees separating from the railroads in the last eight months of
2022 did so on their accord. On BNSF, at least 50% of the employees
that separated from the railroad in those eight months did so
voluntarily. On UP and CSX, at least 25% of the workers that separated
left voluntarily. On NS, it was at least 20%.
---------------------------------------------------------------------------
\28\ The Surface Transportation Board started requiring these 4
Class I railroads to report this data in April 2022
---------------------------------------------------------------------------
We have proof that railroads can hire workers if they create a good
working environment. Amtrak, which is trying to hire many of the same
type of workers that the Class I's are claiming they are trying to
hire, has hired over 2,300 employees since the beginning of the fiscal
year with a net attrition of 1,400 employees. Those additions include
significant numbers of track, signal, and mechanical employees.
Class I railroads must address quality of life issues in order to
hire and retain the sufficient number of employees necessary to
sustain, and hopefully one day grow, the system.
Provide Paid Sick Leave
Perhaps realizing the box they had put themselves in amid the
nation's outcry over the treatment of rail workers and the anger and
low morale among their workforce, the Class I railroads at the
beginning of this year started to negotiate on paid sick leave. Many of
TTD's rail unions have reached agreements with the Class I railroads
providing four days of sick leave and the ability to convert up to
three personal days (if workers have that many) to paid sick days.
TTD and its rail unions will continue to fight to address the
horrific conditions for rail workers, including fighting for paid sick
leave for all rail workers. Rail workers deserve paid sick leave--that
is the morally right and just thing to do. TTD and our unions are
forever grateful to the 221 House members and 52 Senators last Congress
who stood with the rail workers in their fight for paid sick leave. We
are especially grateful to Ranking Member Payne for his legislation
providing 7 days of paid sick leave to all Class I rail workers and to
Senator Sanders and Congresswoman DeLauro for their upcoming
introduction of the Healthy Families Act, which would give all workers,
including rail workers, paid sick leave. We urge Congress to pass this
legislation.
Conclusion
Rail can be the greenest and most effective way to move cargo on
land, but only if we have well-kept infrastructure and well-trained
workers in place to meet the existing demands of our shipping
communities and expand the market share of goods safely shipped by
rail.
We have a unique opportunity to get freight rail back on track by
passing meaningful rail safety and service improvement legislation and
harnessing the IIJA's historic funding in concert with greater
investment from the railroads; we must achieve a combination of good
government, good management, and good investment from the railroads to
successfully grow the system.
It is time for Congress and the railroads to act.
Mr. Nehls. Thank you, Mr. Regan.
And I thank you all for your testimony.
We will now turn to questions from the panel, and I will
recognize myself for 5 minutes.
Like every mode of transportation, the pandemic took a toll
on the efficiency of the freight system. Mistakes were made by
Government and businesses, and I think that is beyond dispute.
However, having traveled extensively to some of our largest
railroads, the short lines, the shippers, the manufacturing
facilities, I am happy to say that the men and women I engaged
with were hard-working, patriotic, and laser-focused on
improving safety and efficiency.
We have assembled a diverse set of experts to testify here
today. They are some of the brightest in their respective
fields, and it is my hope that we can educate ourselves on the
problems facing the industry and discuss solutions that are
proven to increase safety.
And I would be remiss if I didn't mention the tragic
derailment that occurred in East Palestine to everybody in the
room. Everybody in the room understands that Norfolk Southern
must stay as long as needed to make that community whole, and
then some.
From my perspective, it seems clear that our major
railroads are taking safety seriously. I welcome the proactive
steps undertaken by Class I's to make additional investments in
wayside hot box detectors, standardizing alert thresholds for
stopping trains and inspecting bearings, adopting new industry
standards for analysis protocols, and increasing awareness
about AskRail. AskRail. I don't know how many of you heard of
it. We are going to hear about it today.
The NTSB investigation of the Norfolk Southern train
derailment in East Palestine is ongoing, and I look forward to
their final report to offer more guidance and facts.
Got a question, Mr. Jefferies, Mr. Baker, either one, pipe
in. There has been some criticism of freight railroads' service
quality and ability to accommodate shippers. The Surface
Transportation Board recently extended the reporting period for
Class I railroads to provide service metrics through December
31st of this year.
So, why has the service suffered, what are the freight
rails doing to fix the problem, and when do you feel it can be
resolved?
Mr. Jefferies?
Mr. Jefferies. Well, thank you, Mr. Chairman. Service,
absolutely, in certain areas of the country is not where it
needs to be and not where it historically has been. Certain
areas are showing demonstrable improvement, and I am confident
that will continue to be the case.
But your question is, how did we get here, how did these
challenges emerge. The pandemic flipped the supply chain, the
workforce not only of the Nation, but of the globe, on its
head. And when we saw traffic drop upwards of 30 percent in the
depths of the pandemic, railroads employed what was a time-
tested practice of about probably 100 years or more of when the
traffic is not there, temporarily furloughing employees and
bringing them back when the traffic comes back. And
historically the return rate has been 90-plus percent.
We had a pretty dramatic snapback on consumer goods,
container goods. My colleague mentioned the shift in consumer
spending away from services to products, and we started calling
folks back, didn't have that return rate.
Mr. Nehls. Mr. Baker, what do you feel, how do you feel?
Mr. Baker. There is no question that it has been 4 or 5
years of struggling service. I do think that we can say today,
I am hearing from my short lines that they are seeing green
shoots of improvements. I certainly wouldn't dispute what Mr.
Jahn is saying that some customers remain frustrated, but short
lines view the rail network largely from a shipper's
perspective also, and I think we are seeing improvements.
I have no doubt that our Class I friends would do the last
few years differently if they could, but I think it is starting
to get better.
Mr. Nehls. Sure. Mr. Jefferies, can you explain, in laymen
terms, the AskRail--I bring up this AskRail--what it is, and
will AAR commit to expanding the program to allow the short
lines and the commuter rail to participate if they aren't
already? AskRail.
Mr. Jefferies. Absolutely. So, to answer the second portion
of your question first, we absolutely want to include the short
lines, and I believe we are in process with bringing our
largest short line on board.
So, AskRail is a mobile app for first responders that
allows, as the train goes by or in the unlikelihood of a
derailment, a first responder can enter a car number from any
car on the train. It will give the entire consist of the train,
whether there is hazmat located on the train. If there is, how
to respond and who to contact. And so, it is a very helpful
tool for first responders to know what is in their community
and how to respond and who to contact.
Our biggest challenge is, how do we get it out to broader
folks. We have been going individual by individual case, but we
have shifted to an emergency operations center-based process to
cover more ground, and certainly would love to work with anyone
on this committee to spread its use.
Mr. Nehls. I am certainly more interested in the AskRail,
and I hope that this committee will take some time, and we
should look into this app and see how this could help our first
responders, because we have heard from both sides that they are
concerned about, when you have a derailment, can first
responders respond accordingly, things of that nature. So, I
think that is great.
And the IIJA roughly provided $500 million a year for the
Railroad Crossing Elimination Program, and I am very supportive
of the policy. The FRA Administrator is supportive of the
program. I am interested in it.
I mean, when these trains--I think Ranking Member Larsen
was talking about trains covering intersections, blocking
intersections. You mentioned a story [to Mr. Payne]. I think we
should provide a lot more funding and support to try to think
about how we can support this program, and it is going to
require more resources than just $500 million. So, I want to
learn more about that program and how we can expand to increase
safety.
So, I will now recognize the ranking member of the full
committee, Mr. Larsen, for 5 minutes.
Mr. Larsen of Washington. Thank you. And I want to thank
the chair and the ranking member for accommodating my schedule.
I appreciate that. I have got some other meetings I have got to
get to, but I will jump to questions.
Mr. Regan, trains have been getting longer and longer, some
as long as 5 miles out West, which is, in my view, anywhere
west of the DC line. But I mean farther out, I'm sure.
Two weeks ago, the Federal Railroad Administration issued a
safety advisory on how long trains block crossings and create
braking challenges. How do employees handle longer trains? Are
rail workers told to consider the impact of blocked crossings
when building trains?
Mr. Regan. Thank you for the question, Ranking Member. The
long trains are increasingly a problem, from our members'
perspective, that we have seen, as these trains have doubled or
tripled in size over time. If there is a problem on board a
train--and you have two people working there, one engineer, one
conductor--to identify the problem on a 3-, 4-mile-long train,
you have to have someone walk the entire length to identify
what that problem is, radio it back up, then figure out a way
to deal with the issue.
And currently we do not have sidings that can accommodate
most of these large trains. So, if there is a problem, it is
going to create a backlog on the system. And if that happens to
be in the middle of a community, then they are kind of out of
luck here, and they are going to have to deal with some blocked
crossings.
So, it creates real headaches in a community, but certainly
our ability as workers to deal with the problems in quicker,
more effective time is much hampered by the fact that these
trains are getting so long.
Mr. Larsen of Washington. Thanks.
Mr. Jahn, you talked about the impact of the rail
congestion embargo on shippers, but I wanted to ask you if it
is feasible to ship your goods another way if rail service is
unreliable from--maybe just from ACC, and maybe just speak to
the broader shipper coalition on that, too.
Mr. Jahn. Sure, happy to do that. So, in regards to what
our members--how they ship and how their infrastructure is set
up, so, we are talking about bulk shipments of chemistry that--
so, for example, four tank cars is the same as one railcar. And
so, when you are shipping things like chlorine that provides
for clean drinking water that we need all across this country,
those facilities are set up specifically for rail. And so, they
are not easily able to switch to truck to ship those products
as an alternative.
That is just not structurally how both our facilities are
set up, as well as the facilities that receive those inbound
shipments. So, we are not able to pivot in the way that maybe
some other products would be able to do.
Mr. Larsen of Washington. Any other examples? You mentioned
chlorine. Any other examples of bulk cargo that are not easily
transferable?
Mr. Jahn. So, it is--again, we are one of the very largest
shippers of commodities on the rail system. So, almost
everything that our members make at petrochemical facilities go
into the rail system. So, it is everything from the products
that go into electric vehicle batteries or solar panels or
semiconductors. They are very small piece of chemistry that
goes into a semiconductor. But our members predominantly move
product through the rail system.
Mr. Larsen of Washington. Yes, sure. Thanks.
Mr. Regan, you and others have discussed how rail safety
and rail service are related. Do you have any suggestions for
legislation that we should pursue that help us get a twofer on
that deal?
Mr. Regan. Yes. I think the Railway Safety Act is certainly
an important piece of legislation. They just moved out of the
Senate Commerce Committee yesterday. But also, the Surface
Transportation Board reauthorization language that I know was
introduced last year and that has been discussed by this
committee would both address the economic concerns as well as
the safety concerns that we are seeing on the railroads.
Mr. Larsen of Washington. OK. Mr. Jefferies, we have talked
in the past about first responders, and you mentioned the
program there. Does that program allow for notifying responders
before the train gets to the community or is this just one
where you are looking at the train as it is going by and then
checking the app?
Mr. Jefferies. So, the app is real time. On the
notification in advance, that is something generally we work
more through State fusion centers and State security apparatus
to let them know, in general, these are the types of things
moving through your community. But the app is real time itself.
Mr. Larsen of Washington. The app is real time, but not
in--thanks. That is good to know. I think that is good.
I appreciate the time, and I will yield back, Mr. Chair.
Mr. Nehls. Thank you, Mr. Larsen.
I will now yield 5 minutes to my great colleague out of the
great State of Texas, Mr. Babin.
Dr. Babin. Thank you very much, Mr. Chairman.
And I want to thank all the witnesses, all of you, for
being here today and giving your testimony.
I represent Texas' 36th Congressional District, which
stretches basically from southeast Houston all the way over to
the Louisiana border. The region is home to the largest
concentration of refineries and petrochemical plants in the
entire country, as well as contains the Port of Houston, which
in terms of tonnage moved, is the busiest port in the country.
Rail is far and away the most efficient, cost effective,
and safest way to move these critical products over long
distances. It is this combination, great manufacturing plus the
safe and efficient movement of goods utilizing ports and rails,
that made southeast Texas and the Greater Houston region a
national economic engine. So, I want to thank all of you for
your part of work that you and your members represent.
This question is for Mr. Jahn. Thank you for your remarks
and your presence today on this critical topic.
Ninety-six percent of manufactured products rely on the
business of chemistry, and with a large industry presence in my
district, this topic really hits home. For many of these
companies in Texas 36, rail is the only cost-efficient, safe
way to move these products over long distances.
I want to ask you if you could dive deeper and talk about a
few supply chain disruptions that the industry has faced since
the beginning of the pandemic, and the impact on not only
Texas, but on the entire U.S. economy, and how might future
supply chain disruptions impact consumers across the country,
and how it would impact your industry as well.
Mr. Jahn. Thank you. I appreciate that, Congressman.
Dr. Babin. Yes, sir.
Mr. Jahn. Our industry supports 25 percent of U.S. GDP.
Again, the manufacturing supply chain starts with us. As you
said, 96 percent of all finished products have a component of
chemistry in them.
So, when we are looking at things like rail service
embargoes that we have had, 1 railroad had 5 in 2017, and they
had over 1,000 last year.
But it is not just the number of embargoes. They are using
embargoes to manage congestion on their network. It is also
looking at the impact of those embargoes. So, for example, one
railroad had one embargo on all the traffic going into
California. The impact of that was massive. California, by
itself, is the fifth largest economy in the world, right? It
also is home to our Nation's largest ports.
So, that is an example of how railroads are using that,
embargoes, which are intended to be for crisis events like a
weather event. We would argue that that is an appropriate thing
to do. But they have used this to manage their congestion on
the network.
And I will give you some other examples that are not in
California. For example, we have got a company who is only
getting about two-thirds of its shipments--or less than two-
thirds of its shipments. It is competing against companies in
China bringing in product to a port that has multiple railroads
that goes out from there.
So, when I talk about how important this supply chain
crisis that we have is, that is what I am talking about. It is
hard for our members to compete globally against competition in
China that does not, frankly, face the same transportation
challenges that we have here domestically.
Dr. Babin. Absolutely. Well, my next question is for Mr.
Jefferies and Mr. Baker. Late last year, the threat of a labor
strike had much of the country prepared for a complete
standstill. Unfortunately--fortunately, I should say, that
crisis was averted when Congress intervened to prevent what
appeared to be a total shutdown of our rail network.
Chemical companies in my district were particularly
concerned about a potential strike given safety concerns unique
to some of their products that are moved via rail.
Can you explain the impact of a rail labor strike, that it
would have had on our supply chain, and are there any
suggestions for avoiding that situation in the future and a
repeat of it?
Thank you.
Mr. Jefferies. Well, certainly it would have been a
devastating impact to the economy and one that, I think,
frankly, every--well, we may--as evidenced today, we may not
see eye to eye on every issue. Certainly, it was one where most
of our customer groups were fully aligned with the need to
ensure that there was no work stoppage. And I certainly
appreciate the hard work of not only the administration, the
Congress, and the 12 labor unions, the majority of which we got
voluntary agreements with, 9 out of 13 contracts. Majority of
employees voted yes. We fell short on a few. And fortunately,
Congress chose to follow the pattern and avoid that.
Dr. Babin. Thank you.
Mr. Baker?
Mr. Baker. I appreciate the question. Short lines are
typically not part of the national labor bargaining, but I
think it is probably the understatement of the year to say that
a national rail strike would be completely catastrophic to the
economy. I think Congress did the country a great service by
stepping in.
And you did also ask a question about what can be done
going forward to avoid it, and I think sort of at the risk of
stating the obvious, there is a lot of work to do in the rail
industry on repairing relationships with employees.
It can be hard work. It is challenging, but they have been
making that work for 195 years now, and I have a lot of
confidence that it will be OK going forward.
Dr. Babin. Thank you. And I yield back, Mr. Chairman.
Mr. Nehls. Thank you, Mr. Babin.
I now yield 5 minutes to the ranking member, Mr. Payne.
Mr. Payne. Thank you, Mr. Chairman.
Mr. Regan, we have heard for years that railroading is a
well-paying job, but despite the good pay, the Class I's are
finding it harder to attract and retain workers. Can you please
share with us some additional details about the low morale
among freight rail workers, and what are the leading causes of
the morale issues?
Mr. Regan. Thank you for the question. I think we can go--
the cause of all the morale issues boil down to the reduction
of workforce levels. And thank you for your introduction of the
sick leave legislation this morning. But that also, I agree,
is--I believe is a symptom of sort of the impact on individual
workers of those drastic reductions in workforce.
We have people who are required to be on-call constantly
that may not have access to their granted leave that was agreed
to in the contract. We got rid of overboards, which are
basically redundancy within the system that allowed the
railroads to continue to operate when people do need to take
time off, for whatever reason it may be.
And then, of course, the attendance policies that were put
in place to essentially discourage anyone from actually taking
the leave that is available to them. These are all issues that
contributed to the fight that we had last year, where, let's be
honest, despite the largest wage increase in 45 years, that was
agreed to in that Presidential Emergency Board and that was
agreed to by the unions and the carriers, I think it goes to
show you how bad the morale is when so many of the workers
voted against that, despite the economic benefits of that
agreement.
Mr. Payne. Yes, I was amazed by it. Thank you for your
answer.
Now, as your testimony mentioned, paid sick leave is a top
priority for your members. Can you please share more about
railroad attendance policies that make it so important to
guarantee and protect paid sick time?
Mr. Regan. Yes. I mean, a lot of times what had been agreed
to traditionally was a bank of personal leave days that could
be used for any number of purposes. During the pandemic when
people were expected to go to work, again, in a public health
emergency, and they were not able to get access to those leave
days, it really put a premium on the sick leave policy and why
that is so important moving forward.
And I think the idea that we should have Congress sort of
establishing a bare minimum of what should be expected for this
vital workforce, a workforce that is so critical to our
economy, is an important step that should be taken.
I do appreciate the efforts that have been taken so far by
the Class I's to negotiate proactively with my unions, and we
have a number of agreements that are in place, but I do think
that this is something that the Federal Government is
rightfully interested in when it comes to making sure these
workers are safe and able to do their job effectively.
Mr. Payne. Absolutely. As I stated in my testimony, I mean,
we Members have sick days, our staffs have sick days, the
gentleman has sick days. What is it about this workforce that
they shouldn't be allowed to benefit what most Americans in the
workforce do? Just kind of baffling to me.
Mr. Jefferies, could you please direct your attention to
the video screen.
What we are seeing here is footage from a recent ProPublica
investigation. Children have to crawl underneath parked freight
trains just to get to school.
[Video shown.]
Mr. Payne. Mr. Jefferies, a simple yes or no question. Are
images like these, or the stories of the grandfather and the
baby unable to get emergency care, necessary for freight rail
to function? Yes or no.
Mr. Jefferies. I am sorry?
Mr. Payne. Are images like these, or the stories of the
grandfather and the baby that died, unable to get emergency
care, necessary for freight rail to run, to function?
Mr. Jefferies. Absolutely not. Those are unacceptable
images.
Mr. Payne. Well, as has been stated, this is quite a
problem across the country, and it is our obligation to try to
have you and your colleagues visualize what we are talking
about. I know we have been talking about rail crossings being
blocked, and it seems people kind of get it, but nothing
changes. So, we figured we would give a visual.
The word that best comes to me after looking at these
images, after ``worry,'' is ``arrogance.'' Freight railroads
think that there won't be any consequences for blocking towns
for hours or for offering increasingly poor service to their
customers.
It is past time for some accountability.
But it looks like I won't have time to ask my question, so,
I will yield back. But I think we all need to keep this image
in our minds as we have these discussions. And I yield back.
Mr. Nehls. Thank you, Mr. Payne. And earlier in my
testimony, I talked about the IIJA in my opening statement
about the Railroad Crossing Elimination Program, $500 million
going to this. I don't think that is enough. I think if you
look at some of this--the bill that the Senate come by, they
are talking about $4 million for 10 States to look at some of
the worst crossings. We don't need to spend that $4 million.
States have identified where the problems are. We need to go
out there and fix the problems, and I am with you, and I would
like to work with you on that, Mr. Payne, but thank you.
I now yield 5 minutes to Mr. Rouzer.
Mr. Rouzer. Thank you, Mr. Chairman.
And thank you, gentlemen, for being before the subcommittee
today.
Supply chain issues are a big, big topic. Supply chain
challenges were with us before the pandemic, but certainly
magnified and, of course, created a lot more disruption post-
pandemic.
North Carolina, we are a grain-deficit State. We have a lot
of animal agriculture. And I have heard more than once from
some of my integrator friends who have had a difficult time
getting the grain that they need in a timely manner.
So, Mr. Jefferies or Mr. Baker, I am just curious if that
has risen to your level and attention and things that can be
done to help alleviate that.
In North Carolina, you have about 2 days' worth of feed,
so, it really is a just-in-time situation. And, of course,
these animals don't get fed, that creates other issues. And
talk about a domino effect. And, of course, we see domino
effects with these supply chain issues across the board. But it
could get quite dire there.
So, I am just curious if this is something that has been
discussed and what remedies we have available to us.
Mr. Jefferies. Well, thank you for that, Congressman. And
certainly the poultry industry is one, and livestock more
generally is one that is of critical importance to North
Carolina, and we want to make sure we are serving that and
supporting that appropriately.
Certainly it is on my radar. It has been brought to my
level and to the executives in your State of the railroads. And
I know steps have been taken adding more high-capacity hopper
cars. We are seeing some quicker turn times, are seeing a
higher import of corn to the State. But certainly it is
something we need to stay in close contact on.
To your point, a couple days' supply isn't very much, and
so, we need to make sure that pipeline is continuing to run
strong, so, we want to work with you on that.
Mr. Rouzer. How much of the issue is lack of labor, or are
there other key components to that that are creating that
problem?
Mr. Jefferies. So, I can't speak to whether or not we are
adequately sourcing that particular region, but hiring
continues across the network. We are up over 10 percent year
over year, but something that we want to keep working with you
on to make sure we are addressing it.
Mr. Rouzer. Sure. Mr. Baker, do you have any comment on
that?
Mr. Baker. Yes. It would be fair to say that the problems
in North Carolina and elsewhere are at our level literally
every day. It is the dominant topic of conversation over the
last few years. I think the entire industry is, frankly,
probably a little embarrassed about bad service over the last
few years. I do think that there are real green shoots looking
forward, and it is starting to get better.
As far as to what can be done to help, without boring
people and repeating my whole testimony, at least for short
lines, for what Congress can do, the CRISI grant program is
critically important. There are quite a few short lines in
North Carolina that have used that program very successfully.
And I would also say regulationwise, whether it is track
inspection or broader rail safety regulation, it is important
that regulation not be too burdensome and not harm our ability
to serve customers.
Mr. Rouzer. Yes. As some of you may know, Angie Craig,
Colin Allred, myself, Dusty Johnson, we formed the Supply Chain
Caucus. At an event a few weeks ago, the short line rail was
part of the discussion there.
For each one of you, is there a particular topic or a
particular focus you would like that Supply Chain Caucus to
have, if you had to pick one?
I will just go down the line. Mr. Jefferies?
Mr. Jefferies. Well, if I had to pick one, it would be
permitting reform, which I know you are very focused on when it
comes to both Clean Water Act issues, One Federal Decision
issues, those things. I know you are a leader on legislation
that was included in stuff moved by the House recently, so that
is spot on.
Mr. Rouzer. Mr. Baker?
Mr. Baker. You identified employment as a huge challenge,
and I think there are opportunities, whether it is the REEF
Act, which we actually are in strong agreement with Mr. Regan
on, or whether it is the ability to hire back retirees without
them losing their railroad retirement benefits. There are quite
a few policies that could help railroads hire people.
Mr. Rouzer. Mr. Jahn?
Mr. Jahn. We would support the call for permitting reform,
but also it is for the STB moving forward on reciprocal
switching, as well as establishing minimum service delivery
standards in the contracts we have with rail.
Mr. Scribner. I would say technology and innovation,
particularly automation, which, over the coming decades, it is
going to dramatically reshape every mode of transportation.
Mr. Regan. I think you should rightfully be focused on
freight rail in the supply chain as overall, and, from my view,
it is boosting workforce levels and improving the quality of
life for workers.
Mr. Rouzer. Thank you much.
Mr. Nehls. Thank you, Mr. Rouzer.
I now recognize Mr. Moulton for 5 minutes.
Mr. Moulton. Great. Thank you very much.
And thank you, gentlemen, for being here.
There is a lot of interest in rail safety right now because
of some of the high-profile derailments. We don't need to
belabor that point. But I think it is important to keep this in
context. To begin with, there are a lot of achievements that
the railroads have made, which should be noted by the public
and by this committee as we make policy and contemplate
additional regulations.
In 2021, there were 22,831 hazardous material incidents on
highways, compared to 391 freight railway hazmat incidents.
Railroads have approximately 10 percent of the hazmat accidents
that trucks have, despite approximately equal tonnage. And from
2012 to 2022--so, basically over the last decade--there have
been 71 fatalities on the highways with hazmat, zero on the
railways.
So, I think it is really important as we contemplate
regulations and think about what the second- and third-order
effects are going to be of those regulations, that we keep in
mind that we want materials, including hazmat, to be carried by
the railroads.
Having said that, we don't want any accidents on the rails.
And, frankly, if you can make the case that you are improving
safety, then that is all the more reason for shippers to choose
rail, especially for these kinds of sensitive shipments.
Now, in early March, I wrote a letter on rail safety
recommendations to this committee, the Senate Commerce
Committee, and Secretary Buttigieg. And I was pleased to see
that the Senate rail safety bill included provisions on defect
attention and length of trains were two topics that were in my
letter, although I think there is some work that could be done
on the details of how those are implemented.
Trains have gotten longer and longer in the last decade,
increasing roughly 25 percent since 2008 on average. Some of
the longest trains have gotten particularly long. And one of
the things that we learned in doing research on this issue is
that, in the past, many railroads followed an informal
operating practice of limiting the length of a train carrying
hazardous materials to about 100 cars or fewer.
We haven't found any evidence that this was sort of put on
the books, but we have talked to numerous railroad officials
who said that this was common operating practice. And the
reason is just basic physics. Longer trains experience greater
forces on their cars, making them more likely to derail and
making the derailments more disastrous if they occur.
So, one of the things we want to investigate is whether or
not we should regulate train length when it comes to hazardous
materials. Obviously when a car derails, the cars behind it are
connected. And I was wondering if, Mr. Jefferies, you could
speak to the basic physics here, why derailments of longer
trains are harder to contain and tend to be more disastrous
than having shorter derailments with shorter trains.
Mr. Jefferies. Well, I can make a couple comments. One,
median train length right now is about 5,400, 5,700 feet. About
90 percent of trains that start every day are under 10,000
feet. I know there was a reference to 5-mile-long trains. I am
not familiar with any 5-mile-long trains, but not that----
Mr. Moulton [interrupting]. Nor am I. Well, what about for
trains that include hazmat, though, do you know what the
average length of trains that include hazmat is?
Mr. Jefferies. So, I will say our longest trains are
typically intermodal and auto trains, average merchandise train
that is mixed merchandise. That is probably more towards the
7,500 to 10,000 feet. I will say 30, 35 percent of our traffic
used to be coal cars----
Mr. Moulton [interposing]. Right.
Mr. Jefferies [continuing]. Fifty feet long; intermodal
cars, 150 feet long. So, 100-car coal train is a lot shorter
than a 100-car intermodal train, but----
Mr. Moulton [interposing]. Right.
Mr. Jefferies [continuing]. I am just observing there. But
I know the National Academies of Sciences is doing a train
length study as a requirement of the IIJA. Very engaged with
the railroads, with other stakeholders. And they will make
recommendations on their views coming out of that, and
certainly we are attuned to that. And I know the FRA is
following the NAS lead there.
Mr. Moulton. I mean, it is interesting when you say--you
bring up 5,400 feet. I mean, what we have been advocating for
in our proposal here is capping the length of trains carrying
hazmat to 7,500 feet, so, 1.42 miles, which is significantly
longer. It makes me think maybe that might be too long. But how
difficult would it be for the railroads to comply with a
regulation like this?
Mr. Jefferies. Well, we want to make sure regulations are
going to be data driven and result in a demonstrable safety
benefit. And so, I would be happy to continue the conversation
or work with you on this. I can't say if there is a right
length and what that is, but I can say we are wide open to
following the data. And that is something NAS is looking at.
If there is some sort of safety conduit to a certain
length, we have not seen it in our operations. When you look at
our mainline derailments, while they are the best they have
ever been, to your opening point, derailments still happen. So,
that is too frequent. So, we need to be looking at ways to
drive that number down.
Wayside detection is a big way of doing that, something we
are doing voluntarily. I know we get criticized for doing it
because there aren't regulations, but, we are voluntarily doing
things for safety. But it is something we should keep working
on together, I would ask, and let the data drive us to the
right outcome. And whether that is some sort of impact on train
lengths, I would let the data play that out. It is not what we
are seeing, but I don't want to put the cart before the horse
and end up with unintended consequences----
Mr. Moulton [interposing]. Right.
Mr. Jefferies [continuing]. That gum up the network.
Mr. Moulton. Mr. Chairman, thank you for your indulgence.
We are also very interested in following the data here, so,
thank you, Mr. Jefferies, very much.
Mr. Nehls. Thank you, Mr. Moulton.
I yield 5 minutes to Mr. Stauber.
Mr. Stauber. Thank you, Mr. Chair.
Mr. Jefferies and Mr. Baker, you both mentioned in your
testimony that permitting delays can unduly inhibit the
expansion and development of rail facilities that could help
with supply chains.
Mr. Jefferies, first, can you describe in more detail and
perhaps give us an example of the permitting delays that are
holding the rail industry back?
Mr. Jefferies. Sure. So, as you have probably heard me say
before, we are proud of the fact that we are almost entirely
privately owned and maintained. We do most of our own
investment. We do certainly take advantage of some multimodal
programs. But what we run into, we do have challenges on the
local and State levels, which we deal with accordingly.
But even with the good work that has been done at the
Federal level, whether it is One Federal Decision, for example,
that only applies to DOT-sponsored projects. We do a lot of
work with the Army Corps. We do a lot of work with the Coast
Guard. And so, those are still stuck in the old process where
it is just a--kind of a never-ending, no shot clock situation.
Local decisions, when it comes to Clean Water Act
decisions, again, what we are looking for is just certainty and
timelines and sensibility when it comes to putting our dollars
to work, because a key part of the supply chain is making the
investments necessary to keep goods moving. And so, we know
that is an interest. Of course it has to be balanced against
sensible environmental reviews. We just want to be predictable
and--so, we know what we are dealing with.
Mr. Stauber. Mr. Baker, same question.
Mr. Baker. Short lines don't do a lot of big, massive
terminal projects. But, nonetheless, we find ourselves with
permitting problems all of the time, even on----
Mr. Stauber [interrupting]. Give us a couple examples.
Mr. Baker [continuing]. Even on small CRISI projects, which
might be a $10 million track upgrade over 8 miles just to get
something that is called a FONSI, the Finding of No Significant
Impact, that can be months and months, sometimes years of
delay.
And then, of course, because we move the whole economy, we
are not just interested in our own permitting problems. If our
energy and manufacturing customers have problems building----
Mr. Stauber [interposing]. Right.
Mr. Baker [continuing]. Giant new facilities, that is a
huge problem obviously for short lines, but for the entire
economy. So, we strongly support all sorts of permitting
reform.
One Federal Decision is a great example. Section 106,
historical preservation, is a big challenge. Also, I think
there is a lot of room there for Congress to make improvements.
Mr. Stauber. So, both of you testified you need permitting
reforms. So, do both of you support H.R. 1?
Mr. Jefferies. I certainly support the permitting efforts
in there.
Mr. Stauber. Mr. Baker?
Mr. Baker. I would--I agree with that. I am not--I can't
speak to the entire----
Mr. Stauber [interrupting]. Because that is--that
permitting is--and you had mentioned, Mr. Jefferies, you had
mentioned certainty and timeliness. That is exactly what it
does, exactly what it does. And that is going to help with the
supply chain. And you look at the opportunity to help with the
supply chain, the permitting, the timeliness and certainty.
That is what all industries have asked. And that is exactly
what H.R. 1 does.
And so, I look forward to having your industry and your
folks work on our Senators on the other side of the House, so
to speak, to get that across the finish line, to get it past 60
votes in the Senate. And then it may have to come back to
conference, but it is a good piece of legislation. In fact,
probably the best piece of permitting legislation in a
generation. It would forward our economy and certainly forward
your endeavors as well.
So, with that, Mr. Chair, I yield back.
Mr. Nehls. Thank you, sir.
I would now recognize Mrs. Foushee for 5 minutes.
Mrs. Foushee. Thank you, Mr. Chairman, and thank you to the
witnesses for being here today.
The topic of today's hearing is exploring rail supply chain
resilience, and I don't believe that we can truly discuss this
issue without first addressing our rail workforce.
Railroad jobs are challenging. Employees are outside in all
kinds of weather; on call 24 hours a day, 365 days a year; on
uneven surfaces and lifting heavy items. We know that railroads
have been cutting staff, starting before the pandemic, and
doubling down during the pandemic. Since 2015, railroads have
cut nearly one-third of their workforce.
Mr. Regan, you noted earlier that the lack of sufficient
employees has led to strict attendance policies and little
flexibility on sick leave. Employees have been made to feel
that they would lose their jobs if they took leave, even at the
height of the COVID-19 pandemic.
So, if you could, please, Mr. Regan, could you share more
of some of what the scheduling practices that freight workers
have had to deal with?
Mr. Regan. Sure. Thank you. And I do think that there are
ways that we have seen some progress on scheduling recently. I
think when you look at the attendance policy aspect, that was
the one that really got the greatest ire out of the members
that I represent, where, instead of taking the time off that
you want or need or have earned, there are point values
assigned to certain days.
So, for example, if you are at a high-impact day, it could
take away one-third of your bank, and that is for your entire
year's worth of leave. And, if you go underneath that bank, you
are going to get disciplined. And those high-impact days, by
the way, were not days with necessarily more freight. There are
things like Mother's Day, Father's Day, Christmas Eve, Super
Bowl Sunday.
So, in other words, ``high impact for your family'' days.
And that is designed to keep people working even when there may
be personal things happening in their lives. That wasn't the
case when there was a workforce that was ample enough to be
able to allow for people to take the time they needed when they
wanted, and there were still going to be people there to do the
work for them.
Mrs. Foushee. Are these practices leading some workers to
leave the industry, and can you discuss some of the other
reasons that we are seeing mid-career employees leaving the
rail industry?
Mr. Regan. Yes. We are seeing an alarming number of people
leave the industry, and this is a industry where--I know a lot
of people that are third-, fourth-, fifth-generation railroad
workers. They are proud to be railroad workers. We want to see
this industry grow.
But at a certain point, that cost benefit of a good wage
and benefits was outweighed by the demands on their quality of
life, the work-life balance, and people are saying it is not
worth it anymore. I am going to go work in another industry.
And that has become really alarming for us, because it used
to be one that people, when you got that job, you were going to
stick with it. You have good retirement. You've got good
benefits. And at this point, we are seeing a trend away from
what has traditionally been a very stable workforce.
Mrs. Foushee. Thank you for that response.
Mr. Jahn, turning to you, the Fourth Congressional District
of North Carolina has over 800 chemistry jobs, so, it is
imperative to my district that you all have the resources
necessary to succeed.
Can you discuss the economic cost of your companies for
rail service delivery problems?
Mr. Jahn. Absolutely. And I appreciate that question. So,
as I had said in my written testimony, the economic cost is the
opportunity cost of lost manufacturing jobs here in this
country. So, for example, we have a member that in the first
quarter of this year lost 30 shipments--business that we would
like to give to the railroads. We would like to do more with
the railroads. These are manufacturing jobs and manufacturing
opportunities that, if we do not produce here, it does not
happen. And we bring that in from overseas, most often from
China, which is the dominant player on the global level.
So, this has a significant impact not only for the economy
and jobs in the United States. We employ in our industry alone
over 500,000 people. On behalf of the rail shipper coalition,
we employ 7 million people all across the country who rely on
rail. And, again, we would like to be giving more business to
the railroads so we can produce more in this country.
Mrs. Foushee. Thank you. Mr. Chair, I yield back.
Mr. Nehls. Thank you. Just to let the panel know that we
will most likely have votes here in the next few minutes. So,
before calling my next witness, we will have votes. At that
point in time, we will have to recess temporarily, I am
thinking maybe for about an hour--we have got five votes, very
important votes--and then we will come back. So, don't go too
far.
But I will now introduce Mr. LaMalfa for 5 minutes.
Mr. LaMalfa. Thank you, Mr. Chairman. I appreciate it.
Sorry. Back and forth between committees here.
But let me go to Mr. Baker. Your testimony earlier on said
most short line railroads are family-run businesses. I know one
of those families in northern California, and there are others
that run that Sacramento Valley as well, so, we appreciate it.
So, in the infrastructure world, trucking is also another
mode that has a lot of mom-and-pop small businesses. Yesterday,
we heard from the Owner-Operator Independent Drivers
Association about how regulations can drive them right out of
business.
So, how about as far as railroads, especially short line,
what can you say about how the broad one-size-fits-all regs out
of DC or our mighty State of California might hit you
differently for short line than for maybe the bigger outfits?
Mr. Baker. Thank you for the question. I do remember the
family you knew up there quite well, Jalene Forbis. I spent a
lot of time on the Hill with her. She was one of my favorites.
Mr. LaMalfa. Enjoyed a lot of time on that railroad too
there, so----
Mr. Baker [interposing]. Right.
Mr. LaMalfa. Yep.
Mr. Baker. We are obviously extraordinarily concerned about
regulation that we simply can't afford and that doesn't fix an
actual problem.
It is not really on Congress' plate at the moment, but
since you brought it up, the CARB--the CARB locomotive
regulation is--in my 19-year career, it is the most stunning
piece of regulation I have ever looked at. For one of the
things it does, starting in 2030, it simply says, no locomotive
older than 23 years old can be used in California, period.
I have short lines that only have locomotives that are
older than about 40 years old. I mean, it is--and they write in
their own regulation that some short lines might not be able to
comply and might go out of business. And they don't actually
include the shrug emoji, but that is essentially the point. It
is--I thought it was really wild.
Mr. LaMalfa. I agree. A bunch of my tractors, combines--I
just had to buy another truck here recently to have something
that was 2011 or newer so I would have at least two trucks to
cover the amount of miles, which isn't a lot for what my
farming operation needs.
I have a beautiful 2003 model Peterbilt, the square nose,
nice red fenders, all that. I can't use that but 1,000 miles
per year, and just to run maybe 7,000 miles at most. It is
completely unreasonable, and I hear what you are dealing with.
So, are there Federal regs that are holding you back on
efficiency or things that are--maybe you are not being able to
take advantage of technology because there is a Federal
intervention that is stopping that?
Mr. Baker. At the Federal level, the biggest regulation
that we are--well, there is a whole set of them in the Senate
rail safety bill that we are worried are too prescriptive and
burdensome, but there is also an existing regulation in the
works at the FRA mandating two-person crews on trains. And that
sweeps up hundreds of short line railroads in that that today
have one person in the cab and then largely a second person on
the ground, generally in a following pickup truck, which short
lines find to be a more efficient and safer way to do it and
better service for our customers.
Mr. LaMalfa. You might like to see a carveout for short
lines in their route for that one-on-one deal instead of two in
the cab?
Mr. Baker. That would make sense to us.
Mr. LaMalfa. Yes. Yes. OK. And you did touch on the
California situation. I mean, I just--unbelievable to me that
we think we are going to electrify everything and do it
economically.
And I remind everybody, our previous panel, I asked them
how much of the atmosphere is CO2. And nobody was even close.
It is 0.04 percent. So, we are going to be moved into caves to
eat crickets and berries in the dark because CO2 has moved from
0.03 to 0.04 percent since 1960, OK? And I am not popular
making this assertion a lot, but I am going to keep making it.
So, these regulations coming down the pike are not even
realistic as they pull hydroelectric dams out of my district,
and we barely got our nuclear powerplant for an additional 5--
only 5 more years in California, which is 9 percent of our
California grid.
We are going to run out of electricity. And the people that
love to put in new windmills and solar panels have a different
group of people that sues to stop you from building the array,
OK? It is ridiculous.
So, I don't see how they are going to reach it. I don't see
how you get the efficiency. So, I am going to run out of time
here.
But one thing. We don't have to bag on the truckers, you
know? They've got their piece, all right? They are not zombies.
If they need to raise their weight limit on there because they
have to now run electric trucks, which weigh 8,000 to 10,000.
So, we have all got to work together, because they are after
all of us, OK? They are after the trucks, the trains, the
ships, the planes, with all this ridiculousness. So, let's all
work together.
Thank you. I will yield back.
Mr. Baker. Yes, sir.
Mr. Nehls. Yes, sir.
I now recognize Mrs. Napolitano for 5 minutes.
Mrs. Napolitano. Thank you, Mr. Chairman.
Mr. Jefferies and Mr. Regan, for three decades I have heard
from railroads, railroad workers, and railroad customers on the
shortage of railroad workers having a negative impact on
railroad efficiency, on-time scheduling, safety, and the
fatigue of current workers being overworked.
What is the current status of the railroad workforce? Have
these issues been resolved? Are there enough workers and
trainees in the pipeline? And how about women?
Mr. Regan. Thank you for the question, Congresswoman. The
current state is not really much improved than it was last year
when there was the threat of a work stoppage. I think there are
some improvements being made. I think that we will start to see
some quality-of-life improvements in the railroads.
But I do think that, at its core, we need to start hiring
with a much greater frequency. Not only that, but retain
workers. So, the net gain of workers on the railroads has
really not increased much, because we are seeing so many people
leave the industry. And many of them are mid-career. It is not
retirements. And for us, again, that is an alarming trend.
Mr. Jefferies. So, a couple different points there.
One, hiring efforts continue. We have increased workforce
by over 10 percent in just the last year.
And, two, I think we all recognize that railroading is a
very challenging job. That is why it is compensated, it is
compensated at the level it is. But it is not all about--and my
colleague and friend, Greg, has made this point. It is not all
about the money. And that is why it is important that we have
made progress on creating a more scheduled work environment for
some of our employees. And those agreements are starting to
happen.
On the sick leave front, every single Class I railroad now
has a sick leave agreement in place with the majority of the
unions that it operates. Not all of them. I am counting 37
different agreements so far. And so, there is progress being
made on that front. And that is being done through local
bargaining, just as we committed to doing so at the end of the
round last year.
And so, I just want to make clear that the committee
understands that we are making progress on these issues. We are
not there yet, got more work to do, but we are seeing results.
And that is the important thing. And I think, quite frankly,
that Greg and I could be working together a lot more to promote
the benefits of this industry----
Mrs. Napolitano [interrupting]. So, why don't you?
Mr. Jefferies. Well, I would love to, and I think we do in
certain areas. For example, the REEF Act, we both worked
together. We are support. We come in fully bipartisan, and that
is a good opportunity for expanded joint work.
Mrs. Napolitano. Thank you, sir.
Mr. Jefferies. Thank you.
Mrs. Napolitano. Mr. Jahn, there is concern from a business
in my district being charged demurrage fees due to
circumstances outside their control, such as delayed pickups or
deliveries from railroads; however, railcar owners do not have
the ability to charge the same fees when railroads are slow to
deliver or pick up.
If you had the ability to add this fee to your service
contract, would it improve your rail service?
Mr. Jahn. We do believe that if we had those in minimum
service delivery standards that would address that. So, you are
right that in terms of demurrage fees, unfortunately they
become a source of revenue for railroads rather than an
incentive for our members to have their part ready to ship. And
we are glad that the STB has stepped in to partially help
address that. But we need more fundamental, broader reaching
reforms to address this long term.
For example, somebody mentioned the Staggers Act that
passed in 1980. A lot has changed since then. Back in the day,
the railroads owned all the railcars. Now, our members own--
three-quarters of the railcars are now owned by the shippers.
And so, this is a situation that needs to go both ways. And so,
if the railroad is late, then we should have the ability to act
in kind. And I think we think that that would clean up a lot of
the problems that we are having right now.
So, we would look forward to working with Congress and the
STB to address this going forward.
Mrs. Napolitano. Thank you for the answer.
The last is just a statement for Mr. Payne.
Ranking Member Payne, I want to associate myself with your
comments regarding long trains, which I have been working on
for a long time, and the challenges our communities face with
blocked crossings. My constituents experience this challenge
every day on their walk to school, drive to work, and local
businesses trying to get their goods to market. They wait too
long at blocked crossings, which cause safety problems,
congestion, and health risks.
Thank you, Ranking Member Payne, for your continued work on
this issue, and I yield back.
Mr. Nehls. Mrs. Napolitano yields.
I now will call upon Mr. Kean. You have 5 minutes.
Mr. Kean of New Jersey. Thank you, Mr. Chairman. Thank you
to all of our witnesses.
Mr. Baker, I understand that the CRISI grant program is
essential to helping short line railroads update their
infrastructure, which I think ought to help with both sides--
both the supply chain and any safety concerns at the same time.
Is that correct, and can you elaborate how CRISI is
essential to short line railroads?
Mr. Baker. Yes, sir. Thank you for the question. CRISI is a
hugely successful grant program run out of the FRA. I think
maybe unlike all Federal spending, it seems to have widespread
bipartisan and bicameral support. Short lines use it
extensively to simply help us afford infrastructure investments
that you otherwise couldn't justify on a short line. It helps
us maintain service to small towns in rural America and kind of
do what we do best to help serve our shippers. We very much
appreciate your support, this committee's support.
And I think there is more Congress could do, too. I think
it could, again, simply increase the funding, but could also
ask or direct the FRA to focus particularly on freight rail
safety and freight rail supply chain. FRA has a lot of options
with CRISI, but we think a little more focus could be a huge
improvement without spending any more pennies.
Mr. Kean of New Jersey. OK. Thank you.
Mr. Jefferies, the main rail lines are critical for the
ability to move products to market. This is especially true for
construction material industries whose products are needed to
build infrastructure and to improve communities. Service
disruptions and delays may hamper construction of critical
projects.
What is your industry doing to address these challenges and
to work with industries to ensure that materials get to market
on time so that we can build?
Mr. Jefferies. Well, first, it starts with investment,
making sure we have a network that is ready to move goods and
keep that volume moving timely.
Second, equally as important, adequately sourced workforce.
Hiring efforts continue. I don't think there is any secret, and
I won't shy behind the fact that we got caught short coming out
of the depths of the pandemic, calling in furloughed employees
back. We have been digging out from that. A lot of progress has
been made, more progress to go.
But really third is making sure that the regulatory
structure that surrounds us encourages innovation, encourages
use of technology, discourages unintended consequences that
would unknowingly or knowingly provide more complexity, more
touches, gum up the network, and increase friction in goods
movement where it otherwise wouldn't occur.
Mr. Kean of New Jersey. Thank you.
Mr. Regan, in your written testimony, you mentioned the
issue of staffing. You talk about the need for conductors to
have the ability to fix mechanical problems when a train breaks
down. How can TTD partner with the freight carriers to attract
workers?
Mr. Regan. Thank you. And I think this is a good followup
to the point that the Congresswoman made earlier.
I think there are a lot of ways where we can work with the
freight railroads to actually deliver on better service and, I
think, the responsible deployment of technology. I think that
there is this perception that we are opposed to technology. In
fact, that is not true. Our workers want those tools to help
them do their jobs. We want to actually deploy more automated
track inspection technology, but not at the expense of their
own jobs.
We think that is an important tool that helps them do the
job more effectively and more safely. They both have different
things they offer to track inspections. If there is a way that
we can do it together, then I think there is a really important
pathway forward that will improve service for everybody.
Mr. Kean of New Jersey. In your testimony, you mention that
the Nation's freight rail system is fundamentally broken. What
are some specific recommendations that we can do together to
restore a healthy freight rail system that will promote safety,
innovation, and continue competitiveness with other
transportation modes? What do you recommend?
Mr. Regan. As I mentioned earlier, I think we do need to
pass a rail safety legislation. The Senate made the first step
this week over in Senate Commerce. I think we do need to see
strong standardized safety across all of the freight rail
systems; that we are not relying on happenstance, different
models for different railroads and different technology uses in
different areas. I think we do have to have a Federal standard
for that regard.
And from economic regulation, we are dealing with--and I
think my friends in the shipping community would tell you that
there is real ambiguity about what does the common carrier
obligation mean? It is in law, but what does it mean? And,
also, how do we make sure that the regulator, the Surface
Transportation Board, has the tools it needs to actually
enforce that definition?
So, I think those are two important policy areas where
Congress can be very helpful here.
Mr. Kean of New Jersey. OK. Great. Thank you.
Mr. Chairman, I yield back.
Mr. Nehls. Thank you.
I now recognize Mr. Cohen for 5 minutes.
Mr. Cohen. Thank you, Mr. Chair.
We are looking at rail supply issues, supply chain issues,
and that is important to get the goods to market. If they don't
go by Federal Express, there is no better way to do it. Still
can go through Memphis as well.
The train derailment in East Palestine, Ohio, in February,
followed closely by another derailment and toxic spill in
Raymond, Minnesota, stark reminders of the importance of proper
regulation and enforcement for railroad safety.
Just this morning, there was another train derailment in
Mason, Tennessee, right near Memphis. No reported injuries or
hazardous material involved, but the train car in the water and
damaged bridge to contend with.
I support the important work that must be done to repair
and support supply chains, but this work cannot come at the
expense of health and safety of rail workers and vulnerable
communities across the country.
I voted for giving rail workers paid sick leave in
December, and I am proud to again support 7 days of paid leave
in the Freight Rail Workforce Health and Safety Act introduced
today by Ranking Members Larsen and Payne.
If the U.S. guaranteed paid sick leave to all workers like
every other industrialized nation, American rail workers
wouldn't even have to be in this situation. But they are, and
we were in the problem we were in last year, but we kind of got
it done with the President, at least got us away from having a
strike.
We must correct this injustice. Rail workers doing
essential work to keep our economy running should not be forced
to choose between their health and a paycheck. The consequences
of an understaffed and overworked rail industry will not just
be carried by the workers, and this committee should be
proactive in reducing the chances of accidents through work-
centered solutions.
Mr. Jefferies, your name was rather anodyne to me before
yesterday. And yesterday I ran into Jerry Costello, and he had
some very nice things to say about you. I am not quite sure
where that comes from, but all of a sudden, your name came up.
Then I come here, and I look down, and I went, wow, where did I
see that name? And I thought, it was Costello.
In your written testimony, you mentioned the challenges
that rail companies are currently facing in finding and keeping
employees. You wrote that Class I railroads have announced
agreements with many of their unions on ways to improve quality
of life, such as more predictable work schedules and additional
paid sick leave.
Do you think that 7 days of paid sick leave for rail
workers is a good industry standard?
Mr. Jefferies. Well, when the bargaining agreement was
reached last fall and the sick leave discussion was left
unresolved, at that time, I said that sick leave matters were
best left between railroads and their unions. And I was
confident that the matter would be taken up locally between
each railroad and their unions.
I am very pleased to announce that every Class I has
reached a sick leave agreement with the majority of its unions,
and those are not all a monolith. Different agreements have
different shapes and sizes. But I am pleased that we have
followed through on that commitment.
Related to that, there were provisions in the agreement
that would require the operating crafts, the folks out on the
rail line, to work with the railroads to develop a model that
creates a more scheduled work environment. It is not
unreasonable for an engineer to want to have a better
understanding of when they are going to work, when they are
going to be home.
And I am very pleased that, while those are more complex
negotiations, one of our railroads just announced an agreement
with SMART-TD just about a week ago that they had reached just
such an agreement, and that should be a model moving forward.
There is a lot of progress being made there. I am sure folks
would like to see it moving more quickly, but I am personally
very pleased and gratified that we are seeing this progress
done in the bargaining process.
Mr. Cohen. So, most of the angst that we had last fall has
been relieved, I presume, now. Everybody has kind of agreed to
7 days?
Mr. Jefferies. I am sorry?
Mr. Cohen. Everyone has agreed to 7 days, all the railroads
and their unions?
Mr. Jefferies. I don't have--in some way, shape, or form,
everybody has gotten an agreement. So, every union has at least
an agreement with one Class I, except one union, which there
hasn't been any progress yet, but hopefully we will get there.
Mr. Cohen. Thank you, sir.
Mr. Jefferies. Absolutely.
Mr. Cohen. Mr. Reagan--is it Reagan or Regan?
Mr. Regan. It is Regan.
Mr. Cohen. Regan. I am sorry.
We have heard from freight railroads they are committed to
growing their workforce. Norfolk Southern's CEO said in a
recent interview that his company is on a hiring spree. What
are some of the ways railroads can improve their recruitment,
training, and retention of workers?
Mr. Regan. Well, I thank you for the question. I think the
retainment is another key factor here, because if you look at
the actual active employment levels, they haven't increased the
way that we would like to see. And I think Ian and I agree that
we want to see the workforce growing. We want to see the
industry growing. And so, I think these local agreements that
are being made are important steps to ensuring that, when
people get on the job, when they are hired on, that they are
going to want to stick with it and make this their career. So,
I do applaud them for proactively reaching out to unions and
trying to find agreements on these.
Mr. Cohen. And this last union that hadn't agreed yet, is--
--
Mr. Regan [interrupting]. I know that they are talking. I
would like to see an agreement there. I would like to see some
of their specific needs met by the railroads. Again, I
represent 13 different unions, and that is all different crafts
and classes on the railroads, and they do different jobs and
have different responsibilities. So, I recognize that a lot of
these things, when it comes to attendance or sick leave or
other policies, are indeed best left to local bargaining so we
can address the needs of that workforce.
I think where there was a lot of frustration in the last
national round was that those specific work-life balance
complaints weren't being addressed at that level, and it has
kind of forced all of those questions to the national
bargaining, so that when we should be talking about wages and
benefits and economics on national bargaining, instead we had a
lot of other stuff that was being thrown in there and actually
made their negotiations quite difficult.
Mr. Cohen. Thank you, sir.
And I yield back the balance of my time.
Mr. Nehls. Thank you, sir.
I am going to Mr. Burlison, you have 5 minutes.
Mr. Burlison. Thank you, Mr. Chairman.
Mr. Scribner, most industries are benefiting because of
automation and finding ways to cut costs, improve efficiency,
and reduce time through automation.
How could this possibly benefit the freight system, the
rail system?
Mr. Scribner. Well, thank you for the question. I think
with railroads of the United States--I mean, it is different
abroad because we have vertically integrated railroads that own
the infrastructure and operate over those lines. It is not
separate, and that is sort of the truck comparison that I made
in my opening statement. They are not also covering
infrastructure there, whereas in the U.S., the freight
railroads are. That is infrastructure and operations over the
infrastructure.
So, I think you could see benefits on both the
infrastructure side, but also--so, with automated track
inspection, but also, further in the future, automation of
train operations as well.
So, automation technology can benefit inspection. ATI is
one example. But the use of emerging aviation technologies--
drones in bridge inspections and things like that, keeping
people out of harm's way, reducing costs, all the benefits of
automation that we see in other domains, in other industries.
Mr. Burlison. So, do you see that if--with the advent of
automation, the advent of more things that are available, some
of the proposals that are being suggested are requiring more
people to be on the train. Is that counter to where technology
is advancing?
Mr. Scribner. Yes. Mandating a permanent labor floor is not
a good way to encourage investment in automation or deployment
of automation. It destroys the business case, or at least
certainly substantially weakens it.
So, policies that would discourage it, they will discourage
automation, and that has broader competitive implication and
the implications to the long-term health of the industry and
perhaps the existence of the industry.
Mr. Burlison. Yes. Whenever I ran for office, what I heard
from the community was supply chain, supply chain, what are you
going to do to fix the supply chain?
Some of these proposals I am hearing are--you can correct
me if I am wrong, but I think that anything that we do that
would actually make it more difficult to operate and move
product, this is not going to benefit the supply chain.
Mr. Scribner. Yes. I absolutely agree. I think, first, if
we are talking about regulation, identify a market failure, and
then show that the remedy for that--the benefits outweigh the
costs.
We have seen many examples where that is not happening, and
that is where I think we can go back in history and look at the
pre-Staggers environment, and that was a story of decades and
decades of well-meaning but counterproductive policy
accumulating until we almost had the collapse of the industry
in the 1970s. I hope we don't repeat that again.
Mr. Burlison. We don't go back to being overly regulatory
and end up harming the industry.
Thank you, Mr. Scribner.
Mr. Jefferies, to that end, we are hearing a lot of
proposals about--where we are going to try to tell your
industry how to be safer, what you ought to be doing.
I have got to think, don't you already have an--your
clients, the people you represent, don't they have an inherent
desire to not have accidents?
Mr. Jefferies. Absolutely. There is no benefit to anybody
to have a derailment.
Mr. Burlison. Right.
Mr. Jefferies. And so, any notion that railroads aren't
laser-focused on operating safely is completely off base.
Mr. Burlison. Yes.
Mr. Jefferies. And I know there is some chatter about a
lack of regulatory overstructure of this industry. All I would
say to that is ask your staff to get the Code of Federal
Regulations for the rail industry, and it is about this tall.
So, there is ample opportunity there.
Mr. Burlison. Now, you guys, if you have a derailment, you
face litigation, right, cleanup? Just all of the costs are a
punishment in and of itself or an incentive to not have that
happen.
Mr. Jefferies. Well, absolutely. And to be clear, when an
incident does occur, a railroad is going to take full
accountability, full responsibility for the cost of cleanup, et
cetera, but the incentive is there to operate safely and to
operate seamlessly and to be good partners.
All the example you need, there is discussion about a need
for regulations around our network of wayside detectors. Well,
the only reason those are there is because of voluntary
investment that has occurred over decades. We could have sat
and not done anything. We are being criticized because there
aren't regulations over wayside detectors now.
But, again, those were steps and those were significant
investments that were made to make a safer railroad, without
waiting for a Federal bureaucrat to tell us it needed to be
done. And so, absolutely, there is a laser focus and a top-line
priority to run a safe railroad.
Mr. Burlison. Thank you. Thank you, Mr. Chairman.
Mr. Nehls. Thank you.
I have been notified there will be a series of votes
occurring on the House floor, and the committee will stand in
recess subject to the call of the chair.
[Recess.]
Mr. Nehls. The Committee on Transportation and
Infrastructure will reconvene the previously recessed hearing.
I now yield 5 minutes to Ms. Titus for questioning.
Ms. Titus. Well, thank you very much, Mr. Chairman, and
thank you for letting me sit in on this hearing. I was on the
Railroads, Pipelines, and Hazardous Materials Subcommittee, so,
I have a real interest in this.
Before I begin, I would like to ask unanimous consent to
enter this into the record. It is a story from Las Vegas CBS on
the hazmat trains.
Mr. Nehls. No objection. So ordered.
[The information follows:]
Article entitled, ``What's on the trains? Nevada's Cortez Masto, Titus
call for common-sense safety measures,'' by David Charns, 8NewsNow.com,
May 5, 2023, Submitted for the Record by Hon. Dina Titus
What's on the trains? Nevada's Cortez Masto, Titus call for common-
sense safety measures
by David Charns
8NewsNow.com, posted May 5, 2023, 5:16 p.m. PDT; updated May 5, 2023,
6:09 p.m. PDT
This article is copyrighted and may not be published, broadcast,
rewritten, or redistributed. It is available online at https://
www.8newsnow.com/investigators/whats-on-the-trains-nevadas-cortez-
masto-titus-call-for-common-sense-safety-measures/
Ms. Titus. Thank you.
Mr. Jefferies, when we were together last time--I think it
was during a hearing last year--I expressed some concerns for
the potential for environmental catastrophe over long trains.
And in response, you said, ``I think, when you look at train
length versus incident, there has not been any correlation
there. . . . [O]ver 90 percent of trains operating on any given
day are under 7,500 feet long.''
Well, considering the length of the East Palestine train
was 151 cars, or 9,300 feet long, which is over that 7,500
threshold, have your opinions changed or attitudes changed or
any evidence changed of that effect?
Mr. Jefferies. Well, thank you for that question,
Congresswoman.
When you look at mainline derailments, we actually are at
an all-time low for 2022. And I know that the NTSB has
indicated that train length was not a factor in that incident.
That doesn't mean that there aren't other factors at play, and
that is why the investigation is occurring.
And while we are proud of our safety record, we still have
accidents, and accidents can have major impacts on communities.
And we have got to further improve, because even one accident
can have a devastating impact. And so, we have got to learn,
apply lessons learned, and continue to improve.
Ms. Titus. OK. Well, I appreciate that, because, like you
say, even one accident is too many. And if 10 percent of the
trains are over that length, it could lead to potentially more
accidents. So, thank you for that.
But speaking of accidents and environmental concerns and
lack of transparency, I wanted to ask you about how you notify
State and local governments if a train is carrying some
considered hazardous material.
Mr. Jefferies. So, there are really two different methods
that we employ. One is a notification coordination with State
fusion centers, so, the State security organizations that
really gives a forecast of ``these are the types of products
that are moving through your State, here is who to contact.''
We also, at the responder level, have developed a mobile
application that allows a first responder to put in a car
number for a car on any train that will provide the entire
consist of the train; if hazmat is on the train; if there is
hazmat, how to respond to it and who to contact. And so, we
have taken a multipronged approach there, and we are always
looking to maximize availability.
We want to make sure first responders are prepared and have
the information they need and the equipment they need, because
as rare as an incident is, they do occur, and we want to make
sure folks are prepared to mitigate the impacts.
Ms. Titus. Well, thank you.
The fusion center in Las Vegas is in my district. Those
train lines go right down the strip, right behind the strip,
right through the heart of town.
But I hear from Las Vegas that maybe you are notifying the
State, and they have a person at the fusion center, but they
don't seem to be getting that information.
How can we improve that?
Mr. Jefferies. Well, that is something that I would love to
sit down and talk more with your office about, because we want
to make sure the right people are getting it. And while there
are certain limitations, those involved in emergency response
and security, those are the right folks, and they need to have
that information, because they are going to be in the middle of
any sort of response. So, we want to make sure the right people
have that. And if they are not getting it, let's work and make
sure that is going to occur.
Ms. Titus. Thank you.
One more question along those lines. Do you give that
information to them if it is just 1 car, or does it have to
have the 20 cars to qualify for the hazardous train status?
Mr. Jefferies. Well, on the real-time information, that's
the consist and contents of any cars moving through. On the
prenotification, it is more of a ``these are the types of
products that move through and here are the general volumes of
such that are moving through.''
And I would, again, be happy to sit down and make sure that
the right folks in your State are getting that info, because
they need it. It is important if anything ever happens. We
don't want it to, and we certainly work to make sure it
doesn't, but if something did happen, we want to make sure that
the right folks are ready and prepared.
Ms. Titus. I appreciate that, because, like I said, it does
go right through town.
And I know this isn't directly related, and when you talk
about transporting nuclear waste, a whole bunch of other
agencies are engaged in that. But I have concerns about this,
because we have been fighting Yucca Mountain for decades, and
it is never over till it is over. If that should be transported
by rail as well as by truck, that is going right through Las
Vegas, right through the heart of Congressional District One.
And we just want to be sure everything is being done to keep
that transport as safe as possible with whatever kind of
hazardous material.
Mr. Jefferies. One hundred percent agree with you on that.
And rail is by far the safest way to move that, and so, we want
to maximize all safety precautions regarding things along those
lines. One hundred percent agree.
Ms. Titus. Well, let's work together on that to be sure our
folks are notified. Thank you so much.
And thank you, Mr. Chairman.
Mr. Nehls. Yes. Ms. Titus yields.
I now recognize Mr. Molinaro for 5 minutes.
Mr. Molinaro. Thank you, Mr. Chairman.
And thank you all for your testimony today.
I know that some of this has been covered, and I want to
just return to a couple items.
I come from a part of New York where rail has been
significantly important to the conversation Mr. Jefferies was
having. I would say that our emergency responders coordinate
response pretty well, and the communication is good. Certainly
always opportunity to build on that.
But, in particular, in my corner of New York, short line
railroads are really vital and have a very significant
presence.
Mr. Baker, in your testimony, you speak a little bit about
the cause of short line derailments having more to do with bad,
worn out, or insufficient infrastructure tracks in particular.
I know that we have discussed the CRISI grant program. I want
to just return there.
I certainly support making investments in our
infrastructure and understanding the importance of
strengthening our supply chain. And that is one of the reasons
I join others in prioritizing an appropriations request for the
full funding of the CRISI grant program to improve rail safety
and infrastructure.
Mr. Baker, can you just speak a bit more with some detail
about how the short line rail industry utilizes these
particular grants?
Mr. Baker. Yes, sir. And thank you for the question. One of
the interesting things with short lines and Class I's, short
lines have plenty of derailments, far more than we would like
and, actually, at a slightly higher rate than the Class I's,
but they tend to be very different. They have different causes.
Typically, we run our trains much slower, so, there is also
sort of--they tend to make the news less.
But as you noted, the cause tends to be track, right? And
it is basically because it is extraordinarily expensive to
maintain and upgrade rail track, and short lines don't have
enough money all the time.
And so, the CRISI grant program has been extraordinarily
useful in doing that. And a lot of what we do with CRISI is
very basic blocking and tackling, kind of rail 101, right?
Upgrade the ties, upgrade the track, invest in the track,
inspect it, invest in it. CRISI helps us do that with bridges,
too. And we have used that to great effect in New York. And we
are really excited for the first round of CRISI grants that are
going to be funded by the new infrastructure bill coming out in
a few months, and very much appreciate your support on CRISI
going forward.
Mr. Molinaro. Well, I appreciate that. And certainly the
folks, in particular Binghamton in Broome County, New York, are
particularly interested in that ongoing investment. We look
forward to partnering.
Yesterday, rail workers' unemployment and sickness benefits
were cut. I am a cosponsor of the REEF Act, which will protect
rail employees and mandated cuts to benefits. Of course, we all
understand that benefit cuts deter employees to continue work
and seek out work in the first place. So, we want to confront
obviously the workforce issues.
The REEF Act will improve workforce and supply chain
constraints. The best part of these benefits is that these
benefits are funded solely by the railroads, so, it doesn't
cost taxpayers, which we like, of course.
Mr. Regan, I am glad to see you again, and I would love you
just to speak a little bit about the value of the REEF Act, and
be as specific as you like.
Mr. Regan. Thank you, Congressman. And thank you for your
support of this legislation.
In my view, this should be a commonsense, bipartisan win to
make sure that workers who have paid into this program--that it
does not receive any Federal subsidies. It does not come out of
the general fund. It has been unfairly subjected to sequester.
And we temporarily got relief from that during the national
health emergency, but now these people are having their
benefits reduced by nearly 6 percent.
This has the support not only of the unions, but of also
the railroads, both short lines and Class I's. This is a win to
give people their earned benefits, and we hope that this
Congress will pass it as soon as possible.
Mr. Molinaro. Well, universal support around here generally
leads to continued delay, so, we are hopeful that--Mr.
Jefferies, if you would like, go ahead.
Mr. Jefferies. Sure. I just want to reiterate everything my
colleague said and be on the record saying railroads, both--I
will speak for Chuck--well, short lines, Class I's support the
effort as well. It is something that we all think makes sense,
and look forward to getting it done.
Mr. Molinaro. Well, we certainly do as well. And, if
anything, during the pandemic, what we said when we compelled
the President to roll back those emergency orders was, frankly,
what we should have been doing is identifying what worked
during the pandemic and what didn't. Never return to that which
didn't work. But those things that did, we ought to consider
enacting as either law or policy.
So, thank you very much. I look forward to working with all
of you.
Mr. Chairman, I yield back.
Mr. Nehls. The gentleman yields.
Five minutes for Mr. Van Orden from the great State of
Wisconsin.
Mr. Van Orden. Thank you, Mr. Chairman, I appreciate it
greatly.
Hey, just some general comments about rail. It is one of
the key components of the intermodal movement of goods, and I
understand that perfectly. I live in a town called Prairie du
Chien. It is along the Mississippi River. If you do not like
trains, you don't live there. We have got probably 60 trains
going through every day.
You are well aware that we recently had a derailment from
the BNSF railroad a little farther north, about 45 minutes up
from that, from where I live. We immediately coordinated with
the BNSF railroad, FEMA, NTSB, the FRA, our local county
officials, Crawford County officials, Congresswoman Ashley
Hinson from across the river, but more importantly with
Chairman Nehls--and I really appreciate your support. He also
made several members of his staff available to us.
Here is part of the issue. Leading up to this derailment,
we had record flooding on the Mississippi River, and I called
the BNSF railroad and told them that I was distinctly
uncomfortable with the conditions of the track.
BNSF railroad told me, in a rather condescending manner,
that, don't worry, Congressman, we have been working on these
railroads for over 100 years, everything is fine.
Six days later, there was a railroad car floating down the
Mississippi River containing paint, towards a dam. If that dam
had been collapsed, or if it had been damaged and it collapsed,
that could lead to a catastrophic cascading failure of the
locks and dams along the Mississippi River. So, needless to
say, I was uncomfortable with their approach to this.
One of the immediate things that I want to tell you about,
Mr. Jefferies, is that I understand that you have AskRail, and
I think that that is a fantastic, long-term, digital solution.
I would like you to think about using a short-term analog
solution. Because one of the problems was, when our guys on the
ground, these train cars were ripped apart. They don't have
AskRail, or they had AskRail, but they didn't quite know how to
use it yet because they weren't fully trained, and they
couldn't tell what was in the carts because the placards I
don't think are spaced enough on the side.
So, if you only have four placards per car, whatever the
minimum requirement is, if you just doubled those placards, it
would have granted a lot of relief to our emergency workers on
the ground. So, if you could maybe take a note of that, that
would be great.
Mr. Jefferies. Absolutely.
Mr. Van Orden. So, one of my concerns is this, is that the
general public is losing confidence in the railroad. And I
think that that is a terrible thing to do, because if the
railroads stop, the country stops, and that is just clear. If
our trucks stop, the country stops also.
And I think part of the problem is that we are not able to
turn around these investigations fast enough, and there are
several different Government agencies that should be able to
message this better.
I understand, I have read all of your detailed testimony
from everybody on the panel, I appreciate it greatly, and I
know that the rail safety is actually increasing. But the
public confidence in the rail is decreasing at a reciprocal
rate.
So, what I think one of the things is--and I spoke to NTSB
again yesterday, and I am going to introduce some legislation
to increase the amount of rail inspectors that we have--and,
Mr. Chairman, I would like your support on this.
Mr. Nehls. Certainly.
Mr. Van Orden. OK. So, we will be introducing some
legislation to increase our rail inspectors to make sure that
we can turn around these investigations faster and that we can
do some better messaging, both from Congress and then from the
private industries and also the Government agencies. And I just
want to know, is that something that you would support?
Mr. Jefferies. I think the sooner we can get the results of
investigations, the better, and if this helps, which it sounds
like it would, turn investigations around more quickly,
absolutely.
Mr. Van Orden. And then do you have confidence in these
private companies to conduct the types of inspections, even
when they have some external stimulus from maybe, I don't know,
like a Member of Congress who lives right next to the railroad
tracks and whose grandchildren are three blocks away from
that--do you have confidence that maybe in the future these
folks will start listening to outside sources?
Mr. Jefferies. Well, I think it is in railroads' best
interest to operate as safely as possible and that we are
taking steps every day to do that. And if an incident occurs,
we have got to take lessons learned from that incident and
apply them so it doesn't happen again.
Mr. Van Orden. OK. Well, your industry across the board,
and I know Mr. Regan and I have talked to each other before--
but you are probably not related to Ronald Reagan, let's just
say that--but you guys have my support. And so, if there is
anything we can do from my office, please reach out.
And with that, I yield back, sir.
Mr. Nehls. I thank you. The gentleman yields back.
Are there any further questions from any members of the
subcommittee who have not been recognized?
I see none.
Seeing none, that concludes our hearing for today.
Listen, I would like to thank all of you for being here. I
know that we had to take that break. I appreciate your
patience, but I believe that this is a step in the right
direction. I thought this was a very fruitful, beneficial
hearing, and hopefully we will have another one, one day again
soon.
With that, we are adjourned.
[Whereupon, at 5:10 p.m., the subcommittee was adjourned.]
Submissions for the Record
----------
Letter of May 11, 2023, to Hon. Troy E. Nehls, Chairman, and Hon.
Donald M. Payne, Jr., Ranking Member, Subcommittee on Railroads,
Pipelines, and Hazardous Materials, from Sean O'Neill, Senior Vice
President, Government Affairs, Portland Cement Association, Submitted
for the Record by Hon. Sam Graves
May 11, 2023.
The Honorable Troy Nehls,
Subcommittee Chair,
Railroads, Pipelines, and Hazardous Materials Subcommittee, Washington,
DC 20515.
The Honorable Donald Payne,
Subcommittee Ranking Member,
Railroads, Pipelines, and Hazardous Materials Subcommittee, Washington,
DC 20515.
Dear Subcommittee Chair Nehls and Subcommittee Ranking Member
Payne:
The Portland Cement Association (PCA), which represents the
majority of U.S. cement manufacturers, appreciates the opportunity to
submit a statement for today's subcommittee hearing entitled ``Getting
Back on Track: Exploring Rail Supply Chain Resilience and Challenges.''
We welcome the opportunity to share the perspective of the cement
industry on the rail shipping challenges and how these are impacting
the cement industry efficiently getting our product to market.
Portland cement is a manufactured powder that is the primary
ingredient in concrete. Portland cement acts as the bonding agent in
concrete, similar to the role of flour in cake mix. As an essential
construction material and a basic component of our nation's
infrastructure, portland cement is utilized in virtually all
construction applications, including highways, bridges, sidewalks,
transit, airports and runways, water and sewer infrastructure, dams,
high-rise buildings, homes, floors, and driveways. The durability and
resilience of portland cement ensures concrete remains one of the
nation's most essential and widely used construction materials.
In 2021, 92 million metric tons of cement were produced in the
United States and 109 million metric tons were consumed.\1\ The top two
cement producing states in the United States in 2021 were Texas and
Missouri.\2\ In Texas, there are 11 plants and 33 terminals. In
Missouri, there are five plants and eight terminals. In Washington,
there are two plants and six terminals. In New Jersey, there is one
plant and three terminals. Last year, cement consumption in the United
States increased 2.9 percent over 2021 levels, which was also a strong
year. We anticipate continued demand for cement to increase with the
implementation of infrastructure projects funded in part by the
Infrastructure Investment and Jobs Act. The cement and concrete
industry prides itself on employing approximately 600,000 people
nationwide.
---------------------------------------------------------------------------
\1\ https://pubs.usgs.gov/periodicals/mcs2022/mcs2022-cement.pdf
\2\ https://pubs.usgs.gov/periodicals/mcs2022/mcs2022-cement.pdf
---------------------------------------------------------------------------
The majority of bulk cement shipments are from manufacturing plants
to the more than 300 regional distribution terminals. More than half of
the bulk cement shipped in the United States is shipped by Class I
railroads. Therefore, it is critically important to our members that
the railroads provide reliable, efficient, and cost-effective service
to meet the widespread and growing demand for our product.
The average cement shipments range between 250 and 300 miles. Truck
transportation is not economically viable beyond 100 to 125 miles. As
such, the cement industry relies on the railroads to deliver our
product to the marketplace beyond the economical range of trucks. The
cement plants that have access to water transportation for domestic
shipments look to a combination to barge and rail to transport their
product. In summary, domestic cement manufacturers have historically
relied heavily on rail transportation to move the majority of shipments
between cement plants and distribution terminals, and that reliance has
only grown in recent years.
When the Class I railroads started using precision scheduled
railroading (PSR), our members experienced a decline in rail service.
Specifically, with cement producers already experiencing logistics
challenges related to consistent rail service, the shift to PSR caused
a significant increase in missed switches and increased demurrage
billings. This led to increased costs to cement producers not only
through increasing demurrage, but also producers have been forced to
hold rail cars ready for shipment longer. All of this has led to
increased costs to cement manufacturers not only through increased
demurrage but lost sales. Our members experienced a further decline in
rail service when the Class I railroads reduced service at the
beginning of the COVID pandemic. This came at the same time as cement
manufacturing was deemed an essential industry and our members
continued to produce cement as market demand continued.
Critical to meeting that market demand is timely and dependable
rail service both for the shipment of cement as well as the receipt of
shipments of energy sources to power the kilns needed to produce cement
and the chemicals used to maintain environmental compliance. Any
legislation seeking to address transportation supply chain challenges
must address what needs to be done to improve rail service of the wide
range of commodities that rely on the Class I railroads to ship their
products.
Cement is also exempt from Surface Transportation Board (Board)
oversight, preventing cement producers direct access to the Board to
address poor rail service, unreasonably high rates, and unfair business
practices. Our members cannot work with the Board directly to address
their concerns related to the decline in rail service they are
experiencing. We appreciate that the Board, over the past year, has
sought to bring attention to the challenges facing commodities shipped
by the Class I railroads and have asked each of the Class I railroads
to develop Service Recovery Plans. With the attention the Board has
given to improving the rail service, unfortunately, our members have
not seen a dramatic improvement. Additionally, actions taken by the
Board have not helped our members in their interactions with the
railroads due to the lack of Board oversight.
In the 28 years since cement was exempted from Board oversight,
much has changed as it relates to the shipment of cement and the
railroads. At the time the Board exempted cement from Board oversight,
the Board indicated that there was sufficient intra- and intermodal
transportation, including numerous Class I freight railroads and
sufficient competition between a range of transportation modes to ship
cement efficiently to market. Since that time there has been
significant consolidation in railroads with just five Class I railroads
serving rail customers across the country. Nearly all cement producers
are now captive to one Class I railroad.
Since 2011, PCA has been part of a case before the Board
considering revocation of the exemption of cement from Board oversight.
As we have previously highlighted since the Board case started the rail
service for cement producers has further declined. In the case of
cement, since the exemption of Board oversight of cement is being
shipped longer distances making truck transportation a less competitive
mode of transportation. This comes at the same time as there has been a
consolidation in the number of Class I railroads servicing cement
producers. As a result, almost all cement shipped by rail is captive.
Additionally, most cement shipped by rail is shipped manifest. We would
not be surprised if what we have described about the shipment of cement
is similar to other exempt commodities since their exemption was first
put in case.
We believe this example demonstrates the need for legislation
addressing transportation supply chain challenges must review the
policy enabling specific commodities to be exempt from Board oversight
by eliminating the ability to exempt commodities from Board oversight
or establishing a mechanism by which the Board must review these
exemptions on a cyclical basis to determine if there is still
sufficient intra- and intermodal competition among different modes of
transportation.
Additionally, as we have highlighted, the decline in rail service
has impacted our members ability to efficiently move our product to
market as well as the shipment of products needed to produce cement. As
a result, it is important that transportation supply chain legislation
ensure railroads are meeting their common carrier obligation. This is
critical to ensuring shippers receive their products in a timely and
cost-effective basis. As part of this it is important to provide
clarity on whether a Class I railroad has provided reasonable
transportation service. As part of this, it is important that steps
taken to address common carrier obligation extend to all commodities
shipped by rail in the same way the Board did with the guidelines for
demurrage billings.
In conclusion, PCA and our members are committed to working with
this committee to ensure our transportation network and the supply
chains that are so critical to our nation's infrastructure are
operating in a manner that grows our economy and meets future demands.
If you have any questions, please do not hesitate to reach out to Sean
O'Neill.
Sincerely,
Sean O'Neill,
Senior Vice President, Government Affairs, Portland Cement
Association.
Letter of May 12, 2023, to Hon. Martin Oberman, Chairman, Surface
Transportation Board, from Hon. Thomas J. Vilsack, Secretary, U.S.
Department of Agriculture, Submitted for the Record by Hon. Donald M.
Payne, Jr.
May 12, 2023.
The Honorable Martin Oberman,
Chairman,
Surface Transportation Board, 395 E Street, SW, Washington, DC 20423.
Dear Chairman Oberman:
Following up on my letter from a year ago, I would like to express
my sincere appreciation for the Surface Transportation Board's (STB or
Board) efforts over the past year and share my continued encouragement
for immediate and continued action.
When I wrote the Board about rail service issues in March 2022,
rail service was, in many ways, as poor as it had ever been. I was
pleased to see the Board act swiftly by hosting our Deputy Secretary at
a hearing on rail service deterioration, opening a proceeding to revise
its procedures for expedited relief for service emergencies, and
considering rules around railroads' use of private cars. I was also
encouraged by the Board's collection of more service data, your
December hearing on Union Pacific Railroad's (UP) increased use of
embargoes, and especially the Board's final rules to streamline rate
review in small cases. I know this work was done under your existing
limited resources and I commend the Board and its staff for this
incredible volume of work.
Unfortunately, while rail service has improved from its worst
levels last year, it remains inadequate and unreliable for many
agricultural shippers. There is more work to be done.
The delays and unpredictability seen in rail service are partly the
result of the railroads' embrace of precision-scheduled railroading
(PSR) and its drastic reductions in workforce and assets to reduce
operating ratios at the expense of service. As USDA has long expressed,
the PSR operating model does not leave sufficient buffer in labor and
assets for railroads to be able to handle unexpected spikes in demand,
such as those seen over the past few years. And, as we've seen
recently, this way of operating leaves the door open to unsafe working
conditions which are harmful to workers themselves, and further
increase the likelihood of catastrophic events like derailments when
the skeleton staff has as little as a few minutes to inspect each rail
car.
It is of utmost importance that the STB moves quickly to strengthen
our rail system overall and specifically to improve service to
agricultural shippers before railroad capacity again becomes an urgent,
national issue. This work must also ensure the safety of rail workers
and communities.
Specifically, I encourage the board to urgently and expeditiously:
Move forward on the open proceedings on private railcar
use and emergency service orders. The shipper petition on private rail
car use would improve incentives and restore balance around the
railroads' use of private cars and demurrage. The Board's proposed
changes to the emergency service rules will help provide relief in
times of severe disruptions, which have become more frequent.
Move forward on reciprocal switching. Following the
Board's approval of the merger between Canadian Pacific Railway and
Kansas City Southern Railway, ensuring adequate industry competition is
more important than ever. The Board's ongoing oversight of the highly
consolidated rail industry is key to this objective.
Provide clarity on the railroads' common carrier
obligation. The railroads must provide reasonable service upon
reasonable request. However, without clarity on what these terms mean
and how the policy will be enforced, railroads are able to make
unilateral decisions, with little regard for shipper needs. For
example, a few observations raise important questions about whether
railroads are meeting their obligation: first, UP's use of embargoes to
manage congestion and, also, the multiple cases brought to the Board
where a shipper's service was cut from 5 to 3 days per week.
Collect additional first-mile/last-mile (FMLM) service
data. USDA appreciates the additional data the Board has been
collecting as part of its monitoring. However, USDA encourages STB to
significantly expand that data collection to cover additional
commodities and provide more granular geographic data. Agricultural
shippers have continually reported, to USDA, distinct service issues
affecting specific regions of the country. More granular commodity and
geospatial FMLM data will significantly improve visibility into those
issues.
More broadly, the railroads should not be able to continue to
operate without buffer for unexpected demand, make historic profits,
and engage in enormous stock buybacks, all while providing subpar
service to agricultural shippers and disregarding safety. STB can and
should counteract these negative trends in rail transportation by
increasing competition and improving oversight with enhanced data. The
Board should also ensure the railroads balance their focus on
shareholders with their duty to provide high-quality common carrier
rail service to the Nation.
Sincerely,
Thomas J. Vilsack,
Secretary, U.S. Department of Agriculture.
Statement of Jennifer C. Gibson, Vice President, Regulatory Affairs,
National Association of Chemical Distributors, Submitted for the Record
by Hon. Donald M. Payne, Jr.
The National Association of Chemical Distributors (NACD)
respectfully submits these comments in response to the U.S. House of
Representatives Committee on Transportation and Infrastructure's
Subcommittee on Railroads, Pipelines, and Hazardous Materials public
hearing ``Getting Back on Track: Exploring Rail Supply Chain Resilience
and Challenges.'' NACD appreciates this subcommittee's leadership
regarding the issue of rail supply chain issues. While problems within
the country's supply chains have received increased attention since the
COVID-19 pandemic and the tragic East Palestine, Ohio, derailment,
these issues have existed for over a decade. In particular, freight
rail service has declined considerably, disrupting efficient deliveries
of raw materials and finished goods, especially after the adoption of
precision scheduled railroading (PSR). Numerous NACD members have
experienced unreliable rail service for years, and these issues have no
sign of ceasing. Indeed, for many members the situation continues to
worsen. NACD urges Congress to work with freight rail regulators and
the freight rail industry to establish standards to improve service and
safety.
NACD, established in 1971, is an international association of
chemical distributors and their supply-chain partners. Member companies
process, formulate, blend, re-package, warehouse, market, and transport
chemical products for over 750,000 customers across the U.S. The
industry that NACD represents is a major economic engine that generates
$7.5 billion in tax revenue. NACD's members range from small family-
owned businesses to large national and international organizations.
They meet the highest standards in safety and performance through
mandatory participation in NACD Responsible Distribution, the
association's third-party-verified environmental, health, safety, and
security program. Through Responsible Distribution, NACD members
demonstrate their commitment to continuous improvement in every phase
of chemical storage, handling, transportation, and disposal operations.
Transportation is critical to the chemical distribution industry.
NACD members make millions of shipments, moving tens of millions of
tons of product each year. In 2020, NACD members delivered product
safely every 13.2 seconds. The chemical industry is one of the largest
customers of freight rail in both volume and revenue, and many NACD
members rely heavily on rail to ensure the timely shipment of product
used in nearly every industry in the U.S. Unfortunately, railroads'
implementation of PSR resulted in substantial workforce reductions and
a significant decline in service. This has resulted in delayed
shipments, supply chain disruptions, and unnecessary costs which are
borne not exclusively by shippers but also by the American public.
The U.S. Government Accountability Office (GAO) released a report
in December investigating the impacts of PSR, confirming some of the
practice's disastrous impacts on the rail supply chain that our members
have been experiencing for years. The report's primary findings were a
reduction in staff, an increase in train length, and a reduction in
assets resulting from the implementation of PSR.
Specifically, the report found that the number of extremely long
freight rail trains have increased substantially. Of the Class I
railroads surveyed in the report, one reported a more than eight times
increase (three percent to 25 percent) in the percentage of trains over
10,000 feet long and another Class I reported a more than 20 times
increase (0.2 percent to about five percent).\1\ These trains are
nearly two miles in length, making it exceedingly difficult for
crewmembers to identify problems that may arise while trains are in
service. These longer trains also experience a variety of additional
issues related to reduced breaking performance, difficulties in
communication between crewmembers, and more. The Federal Railroad
Administration recently acknowledged the dangers of these extremely
long trains in a safety advisory released just last month, urging
railroads with these longer trains to take extra precautions and revise
various operations related to these trains.
---------------------------------------------------------------------------
\1\ Government Accountability Office, ``Freight Rail: Information
on Precision-Scheduled Railroading,'' https://www.gao.gov, GAO, https:/
/www.gao.gov/products/gao-23-105420
---------------------------------------------------------------------------
An additional concern confirmed by the GAO report is a significant
reduction in railroad staff members. The report found at least a 20
percent decrease in staff in every employment classification
category.\2\ Moreover, when examining the classifications that include
those responsible for train maintenance, transportation related to the
train and engine, and transportation not related to the train and
engine, this decrease is even more alarming, being 39.8 percent, 26.7
percent, and 29.6 percent, respectively. This not only creates service
concerns, as there are fewer employees to oversee the fluid transport
of trains, but there are also significant safety concerns, as there are
fewer crewmembers to notice issues while the train is in transit and to
conduct inspections before trains leave the yard. Freight rail
employees have reported that inspections that used to take roughly five
to eight minutes have been cut to a fraction of that, now only lasting
30 seconds to one minute, with employees fearing retaliation if they
take too long during inspections.\3\ This is both a safety and
logistical concern as reducing the quality of these inspections
increases the risk of derailments, endangering the surrounding
communities and preventing goods from getting to their destinations on
time.
---------------------------------------------------------------------------
\2\ Ibid
\3\ Wall Street Journal, `` `Hurry Up and Get It Done': Norfolk
Southern Set Railcar Safety Checks at One Minute,'' https://
www.wsj.com, WSJ, https://www.wsj.com/articles/railroads-are-a-lot-
more-efficient-are-they-also-less-safe-7c5d2a60
---------------------------------------------------------------------------
Moreover, NACD's concerns with the employee exodus at Class I
railroads is compounded by the railroads' efforts to lobby against
regulations that would require at least two crewmembers for the
majority of train operations. Allowing single member crews during
freight rail operations is dangerous and could result in additional
derailments, supply chain disruptions, and employee turnover.
Due to the rail supply chain disruptions and safety concerns
created by the implementation of PSR, NACD urges this committee to
support freight rail regulators, such as the Surface Transportation
Board (STB), in their efforts to improve transparency, oversight, and
fluidity of freight rail. The STB, in particular, has led important
initiatives, investigating the use of unnecessary embargoes,
considering the adoption of reciprocal switching, and requiring four
Class I railroads to provide information to the board describing their
efforts to improve rail service. The work being done by the STB must
continue and be fully supported in order to strengthen the rail supply
chain.
NACD also strongly supports several legislative efforts to improve
freight rail service and safety. The bipartisan Reducing Accidents In
Locomotives (RAIL) Act (H.R. 1633) would create various new
requirements for railroads to improve safety and freight rail service.
NACD supports this bill, particularly its provisions that would update
regulations for train inspections, update regulations for wayside
detectors, and require two-person crews in almost all circumstances.
NACD has also supported the Reliable Rail Service Act, which has been
introduced by Senator Baldwin in previous Congresses. This bill would
define the common carrier obligation that freight railroads are
expected to fulfill. The definition as it stands is ambiguous, allowing
freight railroads to charge higher costs and provide inadequate service
without necessary accountability.
While recent years have been extremely good for railroad profits,
rail customers have greatly suffered. Currently there are about three
freight rail derailments each day, creating supply chain and safety
issues. While railroads have continued to operate under the status quo,
accepting these incidents as a cost of doing business, NACD urges
Congress to act and make the freight rail industry safer and more
efficient. Poor rail service has been a significant contributor to the
severe supply chain problems that have plagued American businesses and
consumers in recent months and years. NACD members, their customers,
and our entire nation depend on the freight railroads to deliver
essential products in a timely, efficient, and cost-effective manner.
These include chemicals needed for water treatment, food production,
pharmaceuticals, energy, and numerous other materials essential to
public health and well-being. Disruptions in the rail supply chain
caused by unreliable rail service have caused delayed shipments of
these products, which can have severe consequences, such as a lack of
chlorine that municipalities need to treat water for their communities.
NACD commends the Railroads, Pipelines, and Hazardous Materials
Subcommittee for investigating these critical issues. In order to
develop a well-functioning freight rail network that meets the public's
needs for clean water and other critical products for modern life, the
rail supply chain needs to be improved and the underlying reasons for
poor service must be addressed.
NACD members need reliable, efficient, and affordable rail service
to run their businesses successfully and serve their customers. NACD
looks forward to the work being done by the Railroads, Pipelines, and
Hazardous Materials Subcommittee to investigate rail supply chain
issues. The problems referenced above must be addressed to create a
more favorable rail service environment for the thousands of customers
who depend on this critical transportation mode to move products and
our economy forward.
Appendix
----------
Questions from Hon. Rick Larsen to Ian Jefferies, President and Chief
Executive Officer, Association of American Railroads
Question 1. What is the longest train each of the Class I
railroads, by railroad, operated in each of the last five years, 2018-
2022?
Question 2. What percentage of trains were longer than 7,500 feet
for each of the last five years, 2018-2022? Please answer this question
for each of the Class I railroads.
Answers to questions 1 & 2. The Association of American Railroads
(AAR) does not receive data that identifies trains by individual
railroad, but the chart (below) summarizes the requested information on
an industry-wide basis. In 2022:
50 percent of all trains were less than 5,350 feet.
75 percent of all trains were less than 7,590 feet.
90 percent of all trains were less than 9,710 feet.
Fewer than 1 percent of all trains were longer than
13,820 feet. Effectively, this was the maximum train length for 2022.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
AAR continues to participate in the Transportation Research Board's
ongoing study of the ``Impacts of Trains Longer than 7,500 Feet,''
which is being conducted pursuant to section 22422 of the
Infrastructure Investment and Jobs Act (P.L. 117-58). This study is
expected to be completed in June 2024.
For additional information on issues related to train length,
please visit: https://www.aar.org/issue/freight-train-length/.
Questions from Hon. Robert Menendez to Greg Regan, President,
Transportation Trades Department, AFL-CIO
Question 1. Your testimony shed light on some of the issues
impacting rail service. One of the biggest takeaways from your
testimony is that adequate training and safe working conditions can
begin to improve the service railroads provide to consumers and
ultimately strengthen our supply chain. We know that railroading is not
an easy job. I want to shed some light on the experiences these
critical workers face.
Can you describe some of the challenges and working conditions rail
workers face in their day to day, and how they are compounded by
inadequate labor policies?
Answer. Railroading jobs have always been tough, physical jobs that
take a toll on one's health while also requiring many workers to spend
days away from home and family at a given time. In the past, the wages
and compensation were high enough to make those sacrifices worth it.
However, working conditions have deteriorated significantly in the
last decade as a result of the industry's Precision Scheduled
Railroading (PRS) operating model, which decreased the workforce by 30%
and increased burdens on the remaining workers. Rail workers lacked
paid sick leave during the pandemic despite decades-long pleas for sick
time consistent with what is granted to railroad managers. Workers face
draconian attendance policies where they are disciplined or fired for
missing work, even if they are using leave they have collectively
bargained for.\1\ Workers have also been unable to get time off for
medical appointments, jeopardizing their health and even leading to
deaths in some cases.\2\
---------------------------------------------------------------------------
\1\ https://www.vice.com/en/article/5dgezn/the-worst-and-most-
egregious-attendance-policy-is-pushing-railroad-workers-to-the-brink
\2\ https://www.washingtonpost.com/business/2022/09/17/railroad-
strike-attendance-workers/
---------------------------------------------------------------------------
The rail industry's refusal to address these quality of life,
health, and safety issues created a phenomenon of senior rail
employees, some with upwards of ten to fifteen years of experience,
resigning from well-paying jobs and foregoing stable retirements. This
exodus from the rail industry is a direct consequence of unsafe working
conditions, including the lack of sick leave and the perpetual threat
of furlough or termination. These issues have severely hindered the
rail industry's ability to attract new workers, many of whom are
quitting even before their first training classes are complete once
they learn how bad the working conditions are.
Labor unions, shippers, and the Class I railroads all agree that
the first step to better freight rail service is to hire more workers.
It is not physically possible to move the same volume of goods with 30%
fewer workers. Until these long-standing quality of life issues are
addressed the railroads will not be able to maintain their current
workforce or hire the workers needed, which will only exacerbate the
existing problems within the industry.
Question 2. It's important to note that these conditions don't just
impact individual workers--they have a broader impact on our supply
chain.
Question 2.a. How do these conditions effect our supply chain in
the long run?
Question 2.b. What can Congress do to support these workers and
stabilize our supply chain?
Answers to questions 2.a. & 2.b. The supply chain crisis
spotlighted components of the freight network that were particularly
ill-prepared for the demand shock during the pandemic. The leading
causes of the supply chain crisis were poor rail service and an
inability to meet demand. These problems continue in the freight rail
industry today because of the inherent flaws in the industry's
Precision Scheduled Railroading (PSR) operating model, which
prioritizes railroad profits over any other goal, including reliable
rail service.
The supply chain challenges that arose from the backlog of ships
and containers at ports like the Ports of Los Angeles and Long Beach or
the Port of New York and New Jersey were largely due to capacity issues
in the freight rail system. Throughout the pandemic, many railroads
self-imposed ``service embargoes'' to limit the freight they would
accept from customers. These service embargoes led to massive backlogs
of freight waiting to move by rail, including containers that the
railroads were supposed to move at ports.\3\
---------------------------------------------------------------------------
\3\ https://theloadstar.com/now-us-intermodal-rail-yards-clog-up-
as-port-congestion-and-delays-continue/
---------------------------------------------------------------------------
The end result is that businesses across every sector of the
economy, including agriculture, energy, mining, and chemicals, were
unable to get the goods or inputs they needed to function. That backlog
contributed to inflation, which hurt every single American as
businesses raised their prices because of the disparity between supply
and demand.
To address these issues, Congress should pass legislation to give
additional tools to the Surface Transportation Board, the federal
economic regulator of the rail industry, so they can obligate the
railroads to provide reasonable service. This legislation should
strengthen the definition of the rail industry's existing common
carrier obligation to provide ``reasonable service'' at ``reasonable
rates'' so those terms are better defined in law as proposed in the
Freight Rail Shipping Fair Market Act (H.R. 8649) from the last
Congress.
Question 3. Mr. Regan, your testimony also highlighted that during
the pandemic, ports suffered huge backlogs because of the freight rail
service issues.
Question 3.a. Can you further explain how the ongoing issues in the
freight rail industry negatively affect ports like the Port of New York
and New Jersey and undermine the record federal investment from the
IIJA into ports?
Question 3.b. Can you further expound on how the freight rail
safety issues and service issues are linked together back to the Class
I railroads' core operating model? How would passing a rail safety bill
improve rail service?
Answers to questions 3.a. & 3.b. The historic Infrastructure
Investment and Jobs Act (IIJA) provides record public investment into
our country's infrastructure system. This investment includes a $17
billion investment in ports such as the Port of New York and New Jersey
(PANYNJ), through programs such as the Port Infrastructure Development
Program.\4\
---------------------------------------------------------------------------
\4\ https://www.maritime.dot.gov/about-us/bipartisan-
infrastructure-law-maritime-administration
---------------------------------------------------------------------------
Ports like PANYNJ are also making investments in freight rail
service through comprehensive programs like ExpressRail and projects
like the Waverly Loop and Southbound Connector rail project. They want
to move more goods from their port facilities by rail and less by
truck. However, these port infrastructure investments cannot be
effective without equal investments from the Class I railroads. Today,
that is not happening. Instead, Class I railroads are slashing their
capital investments and providing poor service, driving shippers to
switch their shipments to trucks instead of rail.\5\ Collectively, the
four largest railroads in the United States (BNSF, UP, NS, CSX) have
cut $32 billion in capital expenditures since 2015 versus their
expected 2015 baseline. These decreases do not account for the
inflation that has happened since that time, which makes the decline in
investment even worse. With respect to rail service, the Surface
Transportation Board recently found that the service issues with three
of the four largest Class I railroads had not gotten any better despite
the Board's unprecedented hearings and attempts over the last year to
get the railroads to improve their service.
---------------------------------------------------------------------------
\5\ https://www.joc.com/article/ny-nj-rail-lifts-fall-low-rates-
entice-shippers-truck_20220805.html
---------------------------------------------------------------------------
Current-day issues in the freight rail industry undermine the
economic competitiveness of ports, which are significant economic
drivers for regions like the New York Metropolitan Area.
Additionally, the horrific Norfolk Southern train derailment in
East Palestine, Ohio on the evening of February 3, 2023, highlighted a
truth that rail labor unions were vocal about for years: the freight
rail industry has a fundamental disregard for safety. These safety
issues also have a direct negative effect on rail service, since a less
safe system means more problems for rail shippers.
Unfortunately, the East Palestine derailment is not an anomaly. The
wide-reaching breadth of safety failures in the freight rail industry
contributes to more than 1,000 derailments a year--nearly three a day.
And contrary to the railroads' rhetoric, the industry's safety record
is getting worse, not better. In fact, according to data from the
Federal Railroad Administration, the accident and incident rate has
increased over the last decade at the biggest Class I railroads. The
rate notably increased in rail yards, where the accident and incident
rate almost tripled for Norfolk Southern.
The railroads' safety deficiencies are pushing the system to its
breaking point, driving up accident and incident rates and negatively
affecting the supply chain. As noted above, the railroads have
decreased capital investments in their infrastructure. For example,
they haven't lengthened rail sidings to accommodate longer and longer
trains. The American Association of Railroads' own fact sheet on train
length notes that railroads are running trains up to 14,000 feet, which
is a 40% increase from 2010. As a result, the trains get stuck on the
main line when they break down, which is happening more frequently
because of the cuts in maintenance and inspections. This, in turn,
causes congestion and backups throughout the entire system. So even if
shippers don't have products on the train that broke down, they are
impacted.
The bottom line is that the rail industry's service and safety
problems are not two separate issues. They are both connected to the
same fundamental problem: Precision Scheduled Railroading (PSR). If we
fix the problems with PSR, we can fix both the service and safety
issues plaguing the railroads.
Congress has the power to help solve the problems caused by PSR by
passing a comprehensive rail safety bill that directly addresses the
issues that rail workers have warned about for years. Congress must act
because the railroads have repeatedly demonstrated that they refuse to
do it themselves.
[all]