A danger to our citizens and our communities. Secretary fox announced the rule making for the safe transport of crude oil in july of 2014. Were still waiting for those final rules but the longer we delay, the more that lives are actually in danger. And those standards call for tank cars both retro fitting old cars and building new ones for tank car thickness the length of time how long the shippers have to refurbish or build new cars and the speed and routes which these trains take, all of this is in this rule making. I think its critical for us to get some certitude in terms of what the new rules are going to be. So mr. Brown, and mr. Lonegro, just a question to the two of you. About a year ago, jenese whoa eming train carrying 2. 7 million gallons of crude oil derailed in alabama, derailed and spilled oil all over the wet lands. I want to ask to see what your company is doing to make sure that is not happening again. And last year a scx train auto derailed in virginia and spilled 30,000 gallons of crude oil into the james river. What is your company doing to make sure the safety of oil carrying cars what is your company doing to make sure we can give safety to those neighborhoods. Mr. Brown. Yes, as i mentioned earlier, we have some safety precautions and protocols that we have applied all Hazardous Materials on our various railroads. So those protocols kpluinclude things like enhanced infrastructure testing rail fall detection testing it includes track geeometry testing. We changed the visual inspection protocols so were actually inspecting our infrastructure more frequently. We have often we to that just in advance of a crude oil train if that particular commodity is being handled on one of our railroads. We have several that do that. So with a whole slate of initiatives, precautions and protocols, we believe weve far enhanced the safety of the operation and therefore are focused on prevention of future incidents of that type. Thank you. Mr. Lonegro. Yes, mr. Senate joor. Or. Understanding the volatility of the product is part of the equation. The tank car standards. We look forward to continue to work with the regulators to reach a balance in the tank car standards. We do worry about the tank car builders and the freight car builders capability to build those and the impact it will have in the building of other cars which are currently in their portfolio that would impact other commodities. Theres the homogenization between the u. S. Rules and canadian rules and making sure the International Travel of crude by rail can be supported. We have a heavy increase in what we call train securement rules. So making sure that any train that is happened is is not left unattended and b is securely tied down to prevent accidents like you referenced in the canadian incident a couple of years ago that was very tragic. The routing and making sure we have a appropriate balance of the safety and security you know that pimsa has put forward. The 27 factor test in making sure were routingeing them through that set of standards. Weve reduced the speed of oil by rail voluntarily to a maximum speed of 50 miles an hour on the network and 40 miles an hour through high threat urban areas. However the modeling work that weve done indicates that going much below that could cause dramatic impacts on service more broadly, training First Responders is an important thing if an incident unfortunately does occur making sure that everyone understands the commodity thats were dealing with as well as how to handle a freight rail situation versus say a house fire or something that might happen on the roadways. To go farther on mr. Browns point around the track standards, the level of inspections that we have is very important. Certainly the time frame between tiend r findtime frame between finding something and mixing something. We have shrunk that dramatically and make sure we immediately issue a slow order if all trains happen to go over a piece that is detected by that inspection technology. Thank you. Mr. Chairman, i appreciate your indulgence. The witnesses had important information. I did go over. I apologize. Thank you senator. As my new found status as chairman pro tem, i was anxious to rule you out of order and go forward. I am anxious to do that because its now my turn to ask questions. Apparently because i went to senateor marquee first they are now suggesting that i call on senator mansion who is to be supposed to be ahead of the gentleman from massachusetts. Thank you senator. West virginia as you know is quite a rail state. If it werent for rails we might not be there. We have 2,200 miles of rail. Its some of the best paying jobs. So we appreciate the opportunities. With that being said, i start looking at different things. And we go on and debate the keystone pipe line, we talked about it a bit and the concerns we have and the how to make it safer. With the xl pipe line, i believe and i think everyone here believes it will be built. We just dont know exactly when but it will probably be built. With that being said how is that affecting the railroads because i know youre upgrading your systems to be able to handle 800,000 barrels a day. The pipe line will take that tonnage away from you or that revenue. Youll be building up infrastructure for that. Is it your model or plan . How yall prepare for that . So if i could ask anybody who wants to chime in here. Start with csx. Since they are one of the bigger carriers. Thank you senator. Were proud supporters of West Virginia as you know. The Rail Industry by and large is growing and one of the opening remarks that the Ranking Member made at the beginning was that rail freight would grow nearly 100 by 2035 so theres ample growth in many different markets in order to handle the capacity that were building. Were certainly forecasting growth in many markets not simply in the crude business. Crude represents somewhere between 2 and 3 of the railroad. You dont see that being a threat or model to your plan or investments that youre making anyway . Correct. Do all of you feel the same way in what youre seeing and analyzing . I think in the short line were very similar. We see growth in some Market Segments. We see diminished volumes in other Market Segments over time. So we dont have the railroad pitted against the oil pipe line. No. You think they basically Work Together . Certainly we would like to move most of it by rail but, you know, there are refineries on the east coast which im sure will still need crude by rail and we look forward to continuing to serve them. The other thing infrastructure such as highways and waterway products for infrastructure, weve been able to extreme line that through legislation, for some reason we werent able to stream line the ner still very costly and time consuming. Do you you all have a way that you can try to give us some help that we can help you all to stream line the needs that we have for infrastructure including rails in this country. From my perspective, the critical part of doing that is the smorhoreline tax credit being skpeer extended over time. Just a two week extension at the end of 2014 leaves a lot of potential investment. So the uncertainty in the tax code gives you constraints. It leaves potential return on investment when you dont know how the tax credit may apply or not apply. What type of cost are you occurring because of the permitting process and time consumption. Is it 1 , 5 or more. Do you have any idea of the cost to you . It certainly is adding a lot of opportunity cost. A lot of the infrastructure that we build, were building because customers need that infrastructure to generate additional capacity so that we can handle their additional volumes. And so the length of time that it takes, the amount of money that we end up paying consultants and lawyers in order to help us through the process. Any reduction in time and the amount of documentation and review process that it has to go through will help us put that Infra Infrastructure in the ground more quickly. Ptc will be would be. The positive train control. If anyone can chime in on that. I know youre not going to make the 2015 dead line, correct . Correct. And you spent 5 billion so far. Correct. If youre repeating but any quick solution to that and resolving to that. What kind of time extensions do you need . There arent any Quick Solutions unfortunately. To your point, weve invested 5 billion so far. We will invest another 4 billion as an industry before were all said and done. I was asked about how long it would take csx in order to complete positive train control. I suggested with a large caveat that our plans would take us through the end of 2020 so were certainly looking forward to working with this committee in introducing legislation very similar to what was introduced in the last session. Thank you mr. Chairman. Youre welcome. Senator. Thank you very much. Appreciate it. Thank you to all the witnesses. Just as senator mansion was talking about his state, the state of West Virginia, minnesota also has a lot of train service, freight service. In fact we hit a record 6. 8 billion in agricultural exports in 2012 which is an increase over the previous year. Its continuing to go up. Were the fourth largest agricultural exporter state in the country. You can imagine we care a lot about the freight rail issue. Were proud of the work thats going on next door to us in north dakota. Its helped to bring down the cost of oil and it has helped to bring down the cost of manufacturing. So it has opinion good but we also have a lot of needs for rail. I think its been a balance with all of that as well as our increasing agricultural market. Im truly one to believe that the way we have gotten out of this down turn and the way we now expand our economy is by bringing more goods to market. By exporting to the world. Weve learned were not we have a steady domestic economy but the way we truly expand is by getting these goods to other markets and making things in america again. So thats why i care so much about this. Our farmers have traditionally held a competitive advantage over foreign producers like brazil and argentina due to the reliability and cost effectiveness of our rail and because agriculture is the largest user of freight transportation in the u. S. , the rail service delays we saw last year resulted in a lot of cost increases. Obviously its damaging but what im concerned about is it starts making us less competitive with these other food producers. Mr. John what do you think the impact would be on domestic agriculture of american export markets turn to producers like brazil and argentina. It would be significant. As you said agriculture in some ways is leading the economy. Were very quickly going from a world that has 7 billion people to in the year 2059 billion people and they are all going to want to eat and they are going to need agriculture to provide that for them and certainly fertilizer so were concerned that the railroads are spending billions of dollars but we see that unfortunately they are not adequate in many areas to meet the demand and whether its in a number of different areas, wed like to see more focus on the ag space. Thats why last year the Surface Transportation Board as you know required reporting has that been helpful. We worked on that. Absolutely. We appreciate that. Its interesting how affective sun sunshine and transparency could be in terms of motivating productivity. You mentioned in terms of peak capacity, one thing id like to note is in 2014 were very close to peak car load volume. Everybody expects growth again this year so were looking at a net worth thats strained. Any time theres any kind of challenge or shock whether it be weather, record harvest et cetera, its very tough for that network to respond so thats why were supportive of efforts to try to dressaddress that ahead of time. Thank you. We have seen some of the markets that weve seen some improvement in. We want to keep that up. We got some help with some of the our iron ore shipments that had to go out and some of the shipments up in northern minnesota. As you know lakes freeze at some point and we werent going to be able to get the shipments to the ports. We also had some improvements with propane that we were worried about. So i know the Rail Companies are trying to improve this but its been a froinggrowing problem. We want to make sure that people understand the importance of ag as we go forward. Another challenge to the implementation, i know some of my colleagues asked about the ptc implementation is the fcc as you all know must approve the citing construction and replacement of the 25,000 towers. I know senator i want here for his question but we have a confirmation hearing going on for the attorney general in judiciary. I wanted to followup with something. That is following the fccs announcement last year that the class 1 railroads to begin using previously constructed poles, something that we advocated for. Do you think that will help stream line the approval process. I appreciate the support for the stream lining efforts and the exemption for existing towers. That was certainly very helpful and brought that number down to that 20,000 that you referenced. My sense is the batching will help stream line the process. Theres a limit to the amount of batching. For example we cant send all 20,000 through at one time. So it will certainly help. At least in the preProgram Comment and post Program Comment we are seeing the approval process in essence reduced by upwards of half. I think it has been helpful. I think its a magnitude problem now. Very good. My question is coming from the port perspective. But in deluth, we have a major part. Obviously part of this has been with the increased rail usage to coordinate it with the port. Can you talk about the importance of connecting freight rail and the ports and how do you think we better align planning from the federal government among the states ports, and local communities to address those choke points and whats been going on . Thank you senator. My testimony really folked on the importance of the connectivity. Clearly, global trade is a huge part of the driver of the u. S. Economy and will continue to be so, including agriculture. The ports to be successful, i stated that no port today i believe, can be successful without having rail and intermodel. For us in miami at the end of a long peninsula its very important that we have partners like csx because they are the ability to go from 1 million to 4 million. We have the infrastructure but without the ability to move the product. You cant move it on your nations highway system. I cant grow double triple volume by moving it up i 95. It has to get into the heartland of america. Thats the vital link. The policy and again i think over the last few years, i will say this, i have noticed more of an interest on the part of ustot. A lot of it is focused partly on the tiger grant. A number of ports including mine received tiger funding. I think you wont find any port, large or small, the entire system of ports in the United States believes in the importance of connectivity. Not just within our country but clearly the ability to connect globally to the world. Rail is essential, not just deep water. Dredging is important. Harbor maintenance is important but often times, rail is the missing link, excuse the pun but it is in fact the vital piece. As i have stated the billions that i have invested a billion dollar port tunnel, 50 feet of water would make no difference whatsoever without having that rail connection. Thank you. Thank you very much. I am going to go back to the judiciary thing. If you have any questions you want me to ask. I trust your judgment. Let me start with mr. Brown. Mr. Brown i introduced the 45 g tax credit in the year 2003 as a house member. I apologize for our inability to reach decisions in regard to its extension, other tax Code Provisions in any kind of timely fashion that would provide a level of certainty and an ability to make better decisions about investments. This hearing and this committee is generally focused on rail transportation and the safety aspect of rail. What does 45 g do that allows you and other short line railroads to be more safe in your operations . How its thought of as an Infrastructure Investment but i assume there are consequences, the money that you spend on infrastructure as a result of 45 g, means that theres an ability to support other efforts within your company in regard to rail safety is that a fair assumption and would you describe that to me . Yes, sir. Why does this matter. Thank you senator. Yes, its actually very critical. We have limited amount of capital that we can invest in properties. Some of the railroads are challenged because of low density. They serve important customers but often its a very low density customer. Its often a customer in a rural area who otherwise would not have the ability to have rail Service Provided to them. So it allows our limit capital dollars to be spread further and certainly those capital dollars are invested based upon the important upgrading of infrastructure from a safety perspective so as we prioritize our investments each year in our infrastructure, were certainly basing that upon improved safety through improved infrastructure integrity integrity, maybe bridge updates, maybe uping the weight limits. Things that make it more economically viable for our customers to safely and efficiently over those short lines and often in rural areas link to the class one networks and therefore throughout the entire transportation network. Well, what i wanted to make certain that we get on the record that while 45 g is an important tool for providing greater efficiency, it also has a significant consequence to the ability to provide safety, is that true . Yes, sir. The vast majority of what were investing in is rail upgraded bridges, things that improve theinfrastructure. The intention is to introduce the extension of 45 g here in the next few days. I look forward to educating and encouraging our colleagues to continue the practice of utilizing that provision in the tax code for the benefit of safety and efficiency. Yes, sir. Certainly matters in places like kansas where short line rail has become such a significant component of how we get agricultural goods and products to market. In an effort to be its easier to be bipartisan here than it is to be a kansian supporting missouri but i just wanted to make the offer to you and senator blunt that those trains that operate in kansas city, are also the trains that operate in kansas. And so if i and my staff can be of help to you in