en history, once again, has shown us when the heavy hand of the federal government gets involved in a free and vibrant market, bad things happen. >> thank you, mr. blum. first of all i'd like to identify with you as one entrepreneur to another. i, too, have been a small businessman. i've started a half a dozen companies, some worked, some didn't. >> that happens. >> you understand that experience as well, i'm sure. >> and for a decade before i took this job i was a venture capitalist who was investing in early stage internet protocol based companies. and so i know both personally from my own enter practice neural experience as well as from my investing experience, that openness is key. if the companies that i had

invested in did not have open access to the distribution network, it would have been an entirely different story. this the difference -- this is what you can tell your constituents, that it is openness that is the core of creativity. because there should be nobody acting as a gateway and saying mm, you're only going to get on my network if you do it on my terms. and the key then as we go to the previous discussion, what you want to do is make sure you have that gateway, not blocking the openness of entrepreneurs. at the same time that gateway, not being retail price regulated so that it can continue to invest, that's the kind of balance we were trying to do. but if i -- i would urge you to tell your constituents, the opportunity for innovation and

the opportunity for the scaling that is required of innovation has never been greater because the networks are open. >> with all due respect, many people back in iowa would say you're trying to solve a problem that doesn't exist. today. and i have a specific question for you. during an interview at consumer electronics show in january -- >> yes, sir. >> -- you had you had an a-ha moment in the summer of that year when you realized the telecommunications act of '96 applied title 2 classification to wireless phone providers, but exempted them from many of its provisions. later -- later in the year, house communication subcommittee chair greg walden said that he met with you in november of 2014 to reiterate congressional republicans' concern with title 2 regulation of the internet. in that meeting chairman walden said you assured him that you were committed to net neutrality without classification of broadbrand under title 2. sounds to me like a flip-flop. can you explain that difference? >> i respect mr. walden greatly.

and i'm going to are testifying before him on thursday. i saw that he made that statement. i went back to the con contemporaneous notes from that meeting. and we have a completely different set of recollections and, in fact, the notes. because my notes say that say that we would use light touch title 2 and section 706. you know i don't know what's going on. all i'm saying is that those are what my notes are sir. >> thank you. i yield my time. >> thank you. now recognize the gentleman from georgia, mr. carter, for five minutes. >> thank you, mr. chairman. thank you, mr. chairman. thank you, mr. wheeler for being here today. we appreciate it very much. in the short five minutes i have, i want to try to get a better understanding of two

things. first of all it just -- throughout the process today and through my reading and through listening, it just appears that the whole process, there was more attention paid to the white house than there was to congress. and i just don't understand why that would be the case in an independent body like yours. did you serve on the transition team for the obama administration? >> yes, sir. >> you did, that is correct. so, it's safe to say, and true to say you have a very close relationship with the president, is that right? >> i'm not sure i have a close relationship with the president. i know the president. >> well, you served on his transition team. i don't think he'd have somebody that wasn't close to him on his transition team, agreed? okay, okay. >> i'm not going to -- >> fair enough. fair enough. >> okay. >> well, he didn't ask me to be on his transition team, let's put it that way, okay? well, after the rule the day after the rule was after the

vote for the rule, did it strike you as being interesting at all that a fellow commissioner of yours called the new rules obama's plan? >> everybody's entitled to their own opinion. and, you know, i think it's appropriate to state something very clearly, response to what you're saying. since taking this job, i met once with the president in the oval office. it was the first week on -- first couple of days on that job. it was congratulations, welcome to the job. >> i understand that. >> but in that meeting sir, in that meeting he said to me you need to understand, i will never call. you are an independent agency. >> then why do you think a fellow commissioner made the comment that this is president obama's plan for the internet? why do you think someone would make that -- >> he has been good to his word

sir. i have no idea why somebody would want to make that kind of profound -- >> why do you think the democratic national committee made the statement that it's president obama's plan? >> i've noticed occasionally over time that both committees will engage in hyperbole. >> so, you just think it's hyperbole? >> sir -- >> do you agree with the dnc's statement? >> i believe that this is a plan that was put together by the fcc. >> so, you do not agree with the dnc's statement that this is president obama's plan? >> well let's get specific. one, he didn't have section 706 in he sent when he sent something in. secondly, he didn't cover interconnection, which we cover. thirdly, he talked about forebearing from rate regulation, not the 26 other things we do. i think we produced a plan that

is uniquely our plan. and is a plan that is based on the record that was established before us and that when the president joined the 64 democratic members of congress and the millions of people and said, he too, thought this made sense, that he was piling on rather than being definitive. >> all that's fine but let me ask you, through the process of this evolution of the plan, did your thought process change at all? you had in mind hybrid 706 plan. >> you used the right word there. hybrid plan. i started out with pure 706 and then i realized, as i said in my testimony, that that wouldn't work because of the commercially reasonable test, so i started exploring title 2 kinds of -- >> did anyone lead you in this exploration?

>> yes, sir. all kinds of commenters and a lot of work -- >> do you think any of those commenterses were influenced by the white house? >> i have no idea. >> one final question. do you feel that you paid as close attention to the white house as you paid to congress? >> sir, i believe that i have, frankly, spent more time discussing this issue with members of congress than -- than with the administration and -- >> then ultimately do you feel like you listened to the input of congress more so than the white house? >> i paid full attention to the record that was established in this proceeding. and it included members of congress saying, no don't do title 2, and it included members of congress saying do do title 2. >> again do you feel like you paid as close attention to congress as you did to the white house? >> i think my responsibility is to be responsive to all of the

people who are -- >> i can't tell whether that's a yes or no. >> i think i was very responsive to congress. >> thank you very much. >> thank the gentleman. the chair is prepared to rule he has only been outdone by the gentleman from wisconsin who clearly is wearing his colors today and will now recognize that gentleman from wisconsin, mr. grothman for five minutes. >> thanks for hanging around so long. last month "the wall street journal," you maybe saw, had an article reporting that the white house had spent months in a secretive effort in efforts to change the fcc course. did this news come as a surprise to you? when you heard about it, what was your reaction? >> so there is a standard process, i believe where the white house works on developing their position. i was not a part of it.

>> did it surprise you? >> it's not a surprise when something like that goes on. >> okay. last spring and summer you had various meetings with white house officials. did you become aware at that time that the white house was working on alternative to your original proposal? >> i had had -- had i heard rumors that the white house was looking at this, as i say, like they look at all other issues. to develop an administration position. >> okay. the white house apparently in formulating this alternative had dozens of meetings with online activists, startups, traditional telecommunication companies. participants were told not to -- or we believe participants were allegedly told not to discuss the process. were you aware of these meetings at the time? >> i knew that there was a process, that there were -- this group. i did not know who they were meeting with. >> okay. i yield the rest of my time.

>> thank you. now recognize the gentleman from maryland, mr. cummings. >> i want to thank you for your testimony. i think so that there will -- you know when decisions are made by various by these commissions, quite often people are in disagreement with those decisions. and i don't think there's anything wrong with looking behind the curtain to try to figure out what the process was because one of the things we've been pushing very hard on in this committee is the whole idea of transparency. and so your testimony has been voe enlightening. i think we need to keep in mind, you know that these decisions

are made by people who come to government, and they don't have to do that, but they come to government trying to bring about their own experiences to the table, their concerns and their hopes of bringing us more and more to that and more perfect union we talk about. and so i want to thank you for all that you've done and continue to do. and i want to thank the other commissioners and your employees. i think a lot of times in these circumstances, we forget that there are employees who have worked very hard on these issues and trying to do it right. and so that's very important. i hope that you'll take that back to your commissioners and the employees.

and i'm hopeful that we can move forward here. again, i've listened to you very carefully. there was a moment, i mentioned to my staff that, kind of touched me a bit, is when you were asked whether you were backtracking on your decision. and the passion that you responded. and saying absolutely not. this is a decision that you all made and that you are proud of it and that is something that's very important to you. you can't fake that. you can't fake it. as a trial lawyer, i used to watch people testify and another thing that you said, and you were very clear, is that you

adhere to the rules. and i appreciate that. and i believe you. and so we look forward to continuing to work with you. again, i want to thank you for your testimony. >> thank you mr. cummings. >> mr. chairman, i appreciate you being here today. we were made aware that the inspector general has opened an investigation of this process. are you aware of that investigation? >> no. >> it's my understanding it's not an audit, but an actual investigation. would you be willing to cooperate with this investigation? >> of course. of course. >> i think one of the key things -- it was brought up on both sides is the process of openness and transparency. my personal opinion, there could have been a lot more done to maximize the transparency and openness. the rules do allow you latitude to give it more transparency than you did.

i think one of the things our bodies should look at is compelling that openness and transparency rather than making it simply discretionary. that's something we'll have to take back, because there are rulings that go under, some people are happy some people aren't, but the idea that the public could say -- have a 30-day opportunity to see the final rule, i think rings true with a lot of people. this notion that right up until the time you voted for it nobody outside that commission is allowed to see the final product, does not -- does not lend itself well to maximizing openness and transparency. and that's just my comment. it's not a question. but i do think a 30-day window would do that. i also think that the interactions with those who have an opinion is. it's a healthy one.

but the lack of disclosure about those, overly redacting e-mails does lead one to believe that there was a bit more secret type of communication going on there. and i think you can understand at least i hope that you can appreciate why some people would come to that conclusion, particularly given the dramatic change in the policy you took. nevertheless, i think this is a good and healthy hearing. we appreciate your participation. that's what this process is about. it's -- there are fact-finding things we engage in. i appreciate your participation here today. we have a number of outstanding requests from the fcc that we would appreciate you providing that information to this committee. some take longer in time. some are fairly easy. we appreciate your staff that have to go a lot of this work and thank them for their efforts. this committee now stands adjourned adjourned.

we will show you this hearing with the house oversight committee again tomorrow morning at 10 a.m. eastern. with live coverage of the u.s. house on c-span and the senate on c-span2, here on c-span3 we complement that coverage by showing you the most relevant congressional hearings and public affairs events. and then on weekends, c-span3 is

the home to american history tv, with programs that tell our nation's story including six unique series. the civil war's 150th anniversary, visiting battle fields and key events. american artifacts touring museums and historic sites to discover what artifacts reveal about america's past. history bookshelf with the best known american history writers. the presidency looking at the policies and legacies of our nation's commanders in chief. lectures in history with top college professors delving into america's past. and our new series real america, featuring archival government and educational films from the 1930s through the '70s. c-span3, created by the table tv industry and funded by your local cable or satellite provider. watch us in hd, "like" us on facebook and follow us on twitter. institute obama administration said today it's requiring companies that drill for oil and natural gas on federal lands to disclose chemicals used in

hydraulic fracturing operations a rule to take effect in juppe june also updates well construction and disposal of water and other fluids used in fracing, as the drilling method is more commonly known. reaction to the rule was immediately and industry group announced it was filing a lawsuit to block the regulation. and the republican chairman of the senate environment and public works committee announced legislation to keep fracing regulations under state management. house speaker john boehner is headed to israel to visit newly elected israeli prime minister benjamin netanyahu. speaker boehner announced his travel plans today. a congressional aide tells the associated press the trip was planned before this week's israeli election and before netanyahu's address to congress, criticizing the u.s. negotiations with iran. as part of our road to the white house coverage, we'll head to davenport, iowa, to hear from former maryland governor martin o'malley. he's speaking at the scott

county democratic party dinner. c-span will have live coverage tonight at 9 p.m. eastern. both the house and senate have wrapped up legislative business for the week. they return to capitol hill monday. both plan to take up their different federal budget plans next week. the senate bill contains an $89 billion special war funding account. the house bill doesn't. you can see live house coverage on c-span, the senate on c-span2. that budget debate in the senate is going to delay the loretta lynch nomination for attorney general. here's more on that. good morning. >> good morning, how are you? >> good. thanks for joining us this morning. just want to first start with the latest on the timing and the current vote count for loretta lynch possible confirmation. >> yes. so, it's going to be pretty close, but she does have support from four republicans jeff slak of arizona jeff hatch of utah,

susan collins from maine, and also lindsey graham from south carolina. but as we get closer, you know there's always a chance that support can lessen. seems like they're devoted to voting on her but they also agree with mcconnell they need to bring up -- bill before they continue to vote on loretta lynch. >> with this vote on a confirmation possibly delayed until april, after a two-week recess next week in the senate, how much pressure there will be during that time to try to pick off a flake or a hatch or graham or collins, to try to pick off that republican support over the next couple weeks? >> well, i'm sure there will be some movement to do so. we're already trying to see gun advocacy groups on republicans. we've seen in the past that can have a big influence on capitol hill. so, i think it's very difficult

to say exactly how much pressure these lawmakers are going to get, especially from outside groups who would prefer that loretta lynch not be the president's nominee, but we have to remember that, you know for every day that she isn't confirms, eric holder, who republicans have a very aggressive relationship with with -- -- is not -- he continues to serve as attorney general. >> and is part of the efforts by republicans right now a specific strategy to try to buy time for that pressure to build? one republican rand paul, who's obviously come out with his statement against the confirmation of leroretta lynch. his tweets, president obama's executive amnesty is illegal but loretta lynch. is is there a specific strategy to buy time to get republicans who have said they would vote for her to come back? >> it's very unclear whether or not the republicans are trying

to buy time here or whether they're just trying to get some leverage toing bill. you know, they want to prove they can govern and i think so there's a little frustration that this is a bipartisan bill that's stuck and they can't seem to unstick it. i think that's part of the trick here, is they're trying to use lynch as a way to move forward. >> and can you bring us the latest on the trafficking bill and what's going to happen next week before the senate goes on that two-week recess? the trafficking bill is stuck until after the budget. mitch mcconnell reversed the order, moved it until after the trafficking bill. one of the things we have to remember is there is some bipartisan compromise coming up. heidi height camp and susan campbell announced one yesterday. collins has bun. so trafficking bill continues to be stuck here as well. >> lauren fox, staff correspondent for the national journal. thanks for joining us on "the

washington journal" this morning. >> thank you. i appreciate it. have a good day. >> this weekend the c-span cities tour has partnered with media com to learn about the history and literary life of columbus columbus, georgia. >> right here inside the museum is remains of a confederate iron clad, the css jackson, an iron clad built here in columbus during the war. those oval shapes you see are actually the gun ports of the jackson. and the jackson is armed with six brook rifles. the particular brooke rifle we're firing today is one of the guns built specifically for the "jackson." it was cast at the selma naval works in selma, alabama, and completed in january of 1865. the real claim to fame is directly connected to the fact there are only four ironclads from the civil war we can study right now. and the "jackson" is right here.

this is why this facility is here. it's first and foremost to tell the story of this particular iron clad and to show people that there are more than one or two ironclads. there were many. >> watch all of our events from columbus saturday on c-span, on book tv. and sunday at 2:00 on american history tv. the senate commerce subcommittee on service transportation and merchant marine infrastructure, safety and secure held a hearing about the efficiency of the u.s. supply chain. officials from the food and freight industries talked about challenges presented by infrastructure weakness and stymied portd productivity. this is about an hour and a half.

the hearing will come to order. . good morning. i am pleased to convene the senate subcommittee on surface transportation and merchant marine infrastructure safety and security for a second hearing which is entitled "keeping goods moving." to grow the economy and create new jobs we need an efficient and reliable intermodal transportation network. today's hearing allows us to explore this issue with a particular focus on infrastructure and maintaining

operations at our nation's ports. america's intermodal transportation network is the foundation upon which u.s. businesses along all segments of the supply chain produce goods and get them to market. at our last hearing, cabela's outlined how disruptions or inefficiencies along our nation's just-in-time shipping network cost companies through lost sales increased costs and poor customer service. deep water ports represent a key element of the u.s. transportation network and are vital to our economic growth. in fact, america's sea ports often serve as the key connection point for all modes of transportation. our west coast ports alone move 12.5% of u.s. gdp per year. a shutdown of america's west

coast ports, even for a short period of time, would have devastating economic consequences. according to a recent report by the national retail federation and the national association of manufacturers, in the most severe case a 20-day west coast ports closure would disrupt 4 405,000 jobs, reduce u.s. gdp by almost $50 billion and cost the u.s. economy $2.5 billion per day. i've heard from businesses and consumers in my state expressing grave concerns about service disruptions at west coast ports. just last week my office heard from an omaha based company that manufactures electric conductors with inputs from asia. this company is seeing its import time frame double and costs triple because of current slowdowns. for many businesses changing shipping routes or modes is cost

prohibitive. unfortunately, whether they export agricultural goods or import retail, businesses are being forced to opt for air freight or are rerouting projects to avoid losing market share due to missed shipments. port congestion affects truckers and freight rail, as well as the competitiveness of the ports themselves. everyone has a stake in seeing the ongoing negotiations between pma and ilwu resolved quickly. members of congress and the administration must pay close attention to the ongoing negotiations and the economic impact of service disruption at our ports. this is particularly important as we face the potential for ports on both coasts to be negotiating simultaneously in 2018, which is when the current east coast labor contract expires. i'm pleased that today's panel will represent a wide array of

perspectives on the effect of recent disruptions in our nation's supply chain. i'm eager to hear further details from our panelists on the challenges that slowdowns at our nation's west coast ports have posed to their industries and their consumers. i'm also looking forward to hearing about opportunities for congress, state and local governments an the private sector to work toward modernizing and enhancing our nation's ports, infrastructure for businesses, workers and consumers. we need to explore the policy options to support port growth sand future volumes of freight to keep goods moving. i'd like to now invite my colleague senator blumenthal to make any opening remarks. senator. >> thank you, madam chairwoman, senator fischer, thanks to our witnesses for being here today, coming lons long distances and credibilitying your insights to

one of the critical challenges that our country faces. not always the most glamorous or noticed, but one of the most profoundly important to our economy, to jobs and to our quality of life. so we thank you for being here. in the next remainder of this decade, the department of transportation estimates that freight will grow at least 10% in volume. not to mention the value of that volume to our economy. so far from diminishing, the importance of moving goods, a topic which brings us here today will only increase dramatically, and that estimate, in my view, is a conservative one. no individual part of the country, no city or town, and certainly no region is an island.

they all depend on transportation working together to move goods. we tend to focus on passengers as we did last week in the tragic collision in valhalla new york a tragedy that was preventable and avoidable with proper safety procedures. the same is true in moving goods and in moving freight. safety has to be made number one priority. but we're all dependent on freight transportation just as we are on moving people, moving goods is equally important. we all depend on all of the modes of transportation, all of the types of transit, whether it is roads and bridges, rail, water, all working together and all fulfilling their vital functions. so, i join in the hope that the parties to the west coast ports dispute can find a reasonable

mutually-agreeable solution as fast as possible. time is not on our side. by the slowdown, including many in connecticut, are able to weather this time and the impact economically. but looking beyond this immediate issue are the broader challenges of investing and making sure that we build the infrastructure that is vital to moving goods and people. just as one example, connecticut has a freight infrastructure that is very much in need of that investment, upgrading certain sections of our freight rail network to accommodate 268,000 pound weights in moving goods and services by rail which is the north american rail network standard is very, very

important. most freight railroads in the country are able to sustain freight cars weighing 286,000 pounds and this weight limit includes the weight of the car plus about 110 tons of cargo or 220,000 pounds. if connecticut doesn't upgrade its weight limits, then our state could become a freight island. but of course, if we are a freight island, the rest of america can't reach us moving goods. and that is just one example of how clogged arteries can styme economic progress and job creation. so i'm very much looking forward to the testimony that we're going to hear today and to hopefully the initiatives that it will enable us to take in the

interest of all of america. thank you, again, for being here. >> thank you, senator blumenthal. welcome to the panel today. i appreciate you taking time out of your schedules to be here at this hearing and to provide the senators with more information on this very important topic. i would like to get right to it. so our first witness is mr. norman bessac, the vice president of international sales of cargo. of cargill. so, welcome. >> thank you, chairman fischer and members of the committee and subcommittee for inviting me to testify. trade maximizes the retail ranchers and farmers produce and we are able to sell them to the domestic and international markets where they have the most value. this creates the best opportunities for cargill, our customers, our farmer and rancher suppliers, our hard-working employees, and the communities where we operate. ports are an integ rl part of a

dependable supply chain. let me outline the beef and pork supply chain i work with every day, and detail, the problems that occur when there are problems with. cargill processed fresh beef and pork in our plants located predominantly in nebraska, kansas, texas, iowa pennsylvania, illinois, colorado and california. customers from around the world depend on high-quality fresh u.s. beef and pork to sell in supermarkets, restaurants and food processing plants. fresh meat has a relatively short shelf life. it must be quickly packaged and shipped in temperature-controlled trucks, rail cars or containers to ensure product integrity and safety and to allow enough shelf life to sell or process once the product arrives. under normal circumstances, a container of fresh pork destined

for asia usually arrives with more than 25 days' shelf life. the industry is currently experiencing delays of two to three weeks on chilled product due to the congestion in west coast ports. with this delay, our asian customers cannot count on a dependable supply of u.s. beef and pork, so they're cancelling orders and are looking to suppliers in chile, australia, in european union to meet their needs. yesterday, japanese customers canceled next week's chilled pork shipments. i assume many of our competitors are facing similar cancellations. needless to say, the current situation has created a tremendous amount of uncertainty. today the industry is faced with three choices. first, continue to ship product despite the current uncertainty. this can result in shorter shelf life, an increased risk of potential spoilage and even complete product loss.

second, we can air freight the product at a tremendous expense. often three to five times the normal cost. or third, don't manufacture export products and adjust operations and procurement accordingly. if you take nothing else away from my testimony today, understand that any of these choices result in negative effects to everyone in the chain. in particular farmers, ranchers, customers and plant employees. today about 10% of u.s. beef and 25% of u.s. pork is exported. the u.s. meat export federation estimates that the global demand for u.s. beef and pork will reach 17.6 billion pounds and in 2024. that's up 50% for beef and 42% for pork. with most of that growth coming from the pacific rim. future growth to serve these

markets depends on an effective efficient and reliable supply chain capable of moving 162,000 incremental containers per year. for reference, this is enough to provide 29.2 billion more four-ounce servings of beef or pork. our nation's advantage has always been having a fair, robust competitive transportation system that ensures we can compete in the global market. we must look at our situation not simply as manufacturers, shippers, labor and capital, but through the lens of global competition. we ignore it at our collective peril. ports where the goods we make are loaded and exported for the world's consumers, functioning ports are imperative from both a labor and operational perspective. when ports don't operate, the supply chain backs up, causing long-term problems for us, our industry, our farmer and rancher suppliers, our customers and our

employees. we ask you to take the steps needed to address the challenges i've outlined today so that we can continue to help the world thrive by meeting the needs of consumers around the globe. i look forward to your questions. thank you. >> thank you, mr. bessac. miss katie farmer. miss farmer is the vice president of consumer products at bnsf. welcome. >> thank you. good morning, chairman fischer and members of the subcommittee. thank you for the opportunity to be here to discuss bnsf's perspective on the importance of our nation's ports to the u.s. supply chain. i'd like to begin by explaining rail's role in the international supply chain. intermodal is the movement of shipping containers and trucks by rail combined with a shorter truck movement at one or both ends. its growth over the last decade is attributable to a number of factors, including fuel efficiency, highway congestion, trade growth and truck driver shortages. there are two kinds of

intermodal movement on a freight railway. the first is domestic intermodal which is the movement of 50 foot long trailers within the u.s. the second is international intermodal in which goods manufactured overseas are shipped in 20 and 40-foot long containers. these containers arrive on a container ship at a port and those that are not distributed locally, are loaded onto trains on dock or trucked a short distance to an off-dock or near-dock intermodal yard where they are sorted and moved for movement to markets in the interior of the country. the containers are owned by the steamship lines and we work together to balance the flow of east-bound traffic and match back the empties with full loads of u.s. goods westbound to a ship destined for asia or other international markets. last year on our railroad we handled post-recession record volumes of freight. our service was challenged and we did not deliver the service that customers have come to expect from bnsf. we have moved quickly to add capacity and implemented a record $4 billion capital

program in 2013, followed by a $5.5 billion program in 2014, and we have announced a $6 billion capital budget this year. with this investment we have permanently expanded the capacity of our network, which we believe will continue to maintain the u.s. supply chain advantage. the san pedro pay los angeles and long beach is the busiest container port complex in the western hemisphere and top gateway for u.s. trade with asia. bnsf ships half that go out of these ports and about 75% of these units carried by bnsf are loaded on dock. the remaining are handled off-dock at bnsf's yard at hobart yard in east los angeles. the facility is 24 miles by highway from the ports. bnsf has been working for well over a decade to build a near-dock facility only four miles from the ports called the southern california international gateway, which would be the greenest

intermodal rail facility ever constructed and ee millions of truck miles on the i-10 freeway between the ports and downtown los angeles. oush efforts to permit and build this have been challenged foreyears and permit is tied up in the courts. we think this will create operational efficiency for the ports. west coast ports are facing challenges due to congestion. and growing freight concerns are not the whole story since freight have not returned to levels since seen before the recession. there are several factors that are contributing to growing congestion at these ports including inadd qualt port infrastructure needed to handle the larger ships, limited infrastructure adjacent to the ports, operating restrictions from local communities as well as operating inefficiencies. but by far and away, the most disruptive aspect to the supply chain over the last several months has been the reduction in port productivity as a result of the ongoing negotiations between the pma and the ilwu.

port productivity has declined by as much as 50% during this period. the result is year-over-year 4 reduction by bnsf of as much as 20 to 30 trains per week carrying a minimum of 250 containers that are not being processed through the supply chain. this also impacts the return movement of freight westbound for exports. this is causing significant delays and increased costs for our customers. bnsf has taken numerous actions to serve its customers and ensure the fluidity of our network in the face of these challenges including establishing controls at our intermodal facilities and equipment management. during the 11-day shutdown of port operations that occurred in 2002, freight permanently migrated away from the west coast. this is certainly a potential long-term consequence from the current situation. congress can play a role in keeping goods moving through sound infrastructure policy and

reform. my written testimony details bnsf's thoughts in those areas. thank you and i look forward to your questions. >> thank you, miss farmer. next we have dr. walter kemmsies the chief economist at moffett and nico. welcome. >> good morning. is that right? okay. so, good morning. it is well recognized that international trade is increasingly important to the u.s. economy. and that this trade mostly utilizes ocean-going vessels, particularly container vessel, due to the versionty of containers for handling a range of cargos from dry goods to refrigerated goods refrigerated perishables to liquids and gases. and ports have an important rule in the movement of overseas freight because they are major

intermodal exchange points, transferring cargo between ships, trucks and rail. they are essentially the very embodiment of intermodalism. ocean liners are adapting to growing trade volumes, and i would agree with senator blumenthal that the estimates for trade volume growth are probably low, and we should likely see much higher growth rates provided that the infrastructure is there. the ocean liners are responding to this by -- to not only the larger trade volumes but also to rising fuel costs and to stricter environmental impact regulations by investing in larger vessels. the larger vessels mean more cargo on fewer ships and in fewer ports because the time it takes to load and unload the ships is time that vessels do not earn revenues. and given the cost of these very large ships it is important that they minimize the time that

they spend stationary, particularly sitting in ports. the ports are adapting to this change in the global ocean vessel fleet. they are investing in dredging the access channels, investing in dredging the berths and removing air draft restrictions. they have been acquiring larger ship-to-shore cranes that have greater reach and much greater lift capacity. they are densefying their terminals so you can stack the containers higher and also by automation. the investments made by the ocean liners in the ports are often not matched by the landside investmented outside the port gates. increasing capacity at ports has created congestion in port gateways around the world and in some parts of the u.s.

in locations where land side planning and investing is not exactly in line with what is happening on the water side being the ports and what is happening in the access channels and the global fleet of vessels. so the shorter term issues, such as the severe weather last year and the transition of ocean carriers moving away from providing chassis to their customers and allowing the financial sector to step in and lease these, has not been very smooth. and to some extent, this has impacted the effect of the larger vessels on congestion issues. and so that we would include the productivity losses that have occurred at the ports during the contract negotiations. but from my perspective, we see the shorter term issues as masking some of these longer

term trends driven by the larger vessels, and, therefore causing concern about the long-term congestion problems that we would expect to see in the u.s. supply chain. it is likely that foreign ports in locations where intermodalism characterizes freight movement and planning will be gaining at the expense of u.s. ports and, therefore, the u.s. logistics industry. and to sum up we believe that failure to cut costs across u.s. ports, by which i do not mean not just cutting costs in ways that create competition between u.s. ports, but, rather, cutting costs for the -- for the entire port system is required, otherwise u.s. ports will not be the winners in competition with the foreign ports. the spotlight on this is on the inland segment of the product flow path o railroad lines to

provide service to market close to the port and truck freightway to provide access to markets further away. to defend our exports and imports, we need to focus our attention on the inland segments of the product flow path on the railroad lines, the great crossings, the container transfer facilities and for trucks we need to start thinking about dedicated freightways. these types of investments will make u.s. exports more competitive. thank you. >> thank you, dr. kemmsies. next we have mr. john grueling. mr. grueling is a board member of the coalition for america's gateways and trade corridors. welcome, sir. >> thank you, madam chairwoman and members of the sub-committee, thank you for this opportunity. today i'm representing the will county center for economic development and the coalition for america's gateways and trade corridors which is a diverse group of 60 public and private

organizations dedicated to increasing federal investment in america's multi-modal freight infrastructure. 7 i'm also here as ceo for the will county economic development. and our responsibility today is marketing the largest inland international container port in north america. will county is crossed by six class 1 ral rides, several interstate highways, several commercial waterways and last year we transported $65 billion worth of goods that are grown and delivered throughout the united states and the world. our first and last mile infrastructure requirements today total $3.6 billion of new investment just in our county and that does not include bringing our existing road infrastructure up to a state of good repair. our needs extend far beyond

roads. increased utilization of freight by rail as we've heard is resulting in more at grade rail crossings and impacting public safety and commerce. we need at the local level more grade separation structures and first and last mile interstate connectors to accommodate the freight of the future. the growth of freight has been stated. we believe by 2035 -- 2045, that increase will be about 45% putting more pressure on both existing and future infrastructure for freight. meanwhile, 95% of the international consumers are now outside of the united states. so being at the beginning and the end of the -- of a major global supply chain, u.s. companies have to understand and the government needs to understand that we need good infrastructure to reach those markets. u.s. government infrastructure investment as a percentage of

gdp is currently less than 2%. our trade partners -- our biggest ones -- canada, china, mexico -- are spending two to five times more than that in infrastructure. and it can't just be mode that we look at when we talk about infrastructure. we need to look at all modes and make those modes work better together. rail, air, truck, and water are today the key components of the global supply chain. the global situation is getting worse in a lot of respects but we have the opportunity to take advantage of what is going on internationally in the economy. the coalition for america's gateways and trade corridors asks congress to take the following steps in the upcoming surface transportation authorization. first, we would like you to establish a freight program containing dedicated and flexible funding. freights should not compete with other mobility needs.

its integral to other mobility needs. freight movement occupies a special place in our transportation system as the elements supporting commerce, competitiveness and that all-important word -- jobs. it should -- we should have a dedicating funding such as a freight trust fund that is committed to stoking our economic engine by approving efficiency, safety, reliability and speed at which goods are moved. second, fund at a minimum level of $2 billion a year. a development of multi-cultural grant programs needed to prioritize federal funding of projects to advance economic goals of this country. by prioritizing projects, we can identify important public benefits as well and non-federal support. a $2 billion grant program could

leverage many times that amount in private investment and infrastructure. third, ensure robust economic investment in all modes. where public benefit is derived, public investment must be made. because often where modes come together the public assistance is needed to close the funding gaps. examples include highway rail grade crossings logistics or transfer facilities, tunnel and bridges for port access, and border crossing capacity enhancements. finally modify the national freight transportation poll toycy to make it multi-modal. make it a policy in the d.o.t. secretary's office and give it the attention it needs in this country to keep our economy healthy. thank you. >> thank you very much. we'll begin with a first round of questions, five minutes. i will start.

mr. bessac, you talked about competing in a global market and the effect that has and being with cargill and the emphasis that you have with port, can you tell me what percentage of pork in this country goes for exports? >> certainly. senator, the pork is much larger than beef. 20%, 25% depending on the year. and about 10% of beef is exported. 7 >> and when you are looking at delays at our ports and you see other countries stepping forward and being able to fulfill some of those orders, do you know what share of the market your company has lost and how you see that rippling effect throughout the industry?

>> well, i guess going to cargill's share gets to be a bit difficult. if you look at the u.s. pork or u.s. beef industry, we certainly has been the largest exporter around the globe. but as we have dealt with the congestion in the ports also issues like currency and other forces in play in the market we've seen a substantial increase just in the past year to countries the eu chile and i think certainly in the last couple of months have seen a substantial decline in our volumes. >> do you think that will be a permanent decline? will we be able to get the market back once these customers are used to having new trading partners? >> i think any time you disappoint a customer it takes time to build trust back.

and as i referred to in my testimony, there is a tremendous amount of potential for both beef and pork exports on the global scale. we have a product that the world is looking for and values. i certainly believe that growth potential remains. but there is no doubt that we've disappointed our customer-base, primary japan, korea and in china over the last couple of months and that will take some time to rebuild trust. >> and in disappointing our customer base, what has been the loss in dollars to pork producers and the economy here in this country? >> well i don't know that i would be the best one -- i think north american meat institute estimated $40 million to $50 million per week. i could probably give you a better example. just this morning we have about

15 containers of chilled pork product en route to japan that our customers are either asking, can you guarantee us it will arrive in a useful form with shelf life or not? and so for me, that is about a million dollars i have to decide whether i'm going to put that into a port system, and either slow down or potentially close, close being a complete loss. so i hope that gives you some perspective. >> yes, thank you. and miss farmer with bnsf, i'm sure you have to look at the possibilities of a shutdown and a shutdown that would last for a possibly extended period of time. how does that affect the

railroad in planning and what impact does that have on your customers and on your thousands of employees that you have? >> sure. so an example of this would be this weekend we were notified by the pma that vessel gains would not be working. and so what that -- the effect that has on our railroad is that in an average week during this period of the year, we would be moving somewhere in the neighborhood of 60 trains off of our docks in southern california. that number has been reduced to 30 trains per week. the impact that has is that we cannot move the freight that wants to move off of the west coast so we'll move a limited amount off of the west coast into the interior of the u.s. it will then limit the ability for us to accept freight at our inland hubs so we will have to turn freight away at those inland hubs that wants to move back to the west coast. in addition to this, i talked about our capital expenditures that we've made.

we are now having to store locomotives and commitment that we have added to our fleet to be able to handle this country's supply chain growth, store that across our railroad because we can no longer continue to send this volume out to the port. when we do that, it sits on the main line and it causes ripple effects across our network which impact our customers in addition to our intermodal customers. so the impact for us really, senator fischer, is that we cannot move the freight through it and we are not using the valuable resources that we have. >> and that impact, when you see the freight migrate from the west coast, what impact does that have on a local community? >> absolutely. i think when we look back at history and we know that during 2002 freight has permanently migrated away from that, to canada and to mexico. and we know that because of that, the local freight is not ending up in those communities and additional expenditures need to be made somewhere else that

when a port is there it could be upsed for that freight to be moved through country. >> thank you very much. senator blumenthal. ed for that freight to be moved through country. >> thank you very much. senator blumenthal. sed for that freight to be moved through country. >> thank you very much. senator blumenthal. >> thank you, madam chair. there seems to be no doubt among any of our panel members that solving this threatened impasse or crisis on the west coast is necessary to america's near-term and longer-term competitiveness, is that correct? >> uh-huh. >> but moving on to the broader issue, let me go to mr. grueling's excellent testimony about our ongoing failure, and it is a kind of slow-motion implosion of american competitiveness, the ongoing failure to spend more than 2% of our gdp on infrastructure investment, which is compared to 9% by china, 8% in india, 5% in

europe, and even in mexico, 4%. and it extends not only to roads and bridges which are crumbling and decaying and de decrepit decrepit, but also to areas of our infrastructure as simple as rail grade crossing. in valhalla, new york, days ago, we saw the consequences of possibly -- we don't know the causes yet -- but possibly a rail grade crossing that could have have been made safer and could have prevented the deaths and injuries that occurred there. the fact of the matter is that there are more than 2,000 crashes and collisions every year at our rail grade crossings causing more than 230 deaths, and more than 700 injuries not to mention the economic costs of those collisions, which are very

difficult or impossible to calculate. that is just one failure to invest in infrastructure. and let me ask you as the $2 billion that you recommend for a fund for investment. would it make sense to do it through a public financing authority or infrastructure bank, such as has been proposed and advocated by myself or other members of this committee, a very bipartisan proposal that would make available not just $2 billion, but very possibly more. >> i think the concept of a set-aside through a public infrastructure bank, broader utilization of public and private activity bonds, along with some other finance mechanisms, i think we need to bundle these together. anything that costs a lot of money these days will take more

than one source or resource to make it happen. and back in illinois, we don't like to talk about gas tax but we think in illinois to solve some of the state road and infrastructure problems, a gas tax is something we should be looking at. but i do believe that loan guarantees, broader use of the some of the existing bonding programs -- tifia and rif both i think would help in meeting this demand that we have. and i do believe that the multiple solutions are gring to be necessary. >> my understanding is that both tifia and rif are under-utilized and billions of dollars have been left on the table in terms of internal problems highlighted by the inspector general recently, would you agree with that. >> i would agree with that. i think the time it takes to process, going through the pre-application, going through that review the uncertainty,

quite frankly, that comes about when there's long delays in public financing tools. all of a sudden the hot project becomes not-so-hot a proekt j ektekt ektject and they start looking at other pieces of infrastructure to accomplish. but broadling of the utilization of those funds and making sure we are using our full complement every year would go a long way. i think better utilization of existing programs makes sense. >> and rif is a multi-billion dollar opportunity that is lost, literally every day, to american intermodal transportation and i welcome the emphasis that all of our panel have put on intermodal transportation because as you've expressed it is the transportation growth process of the future. >> that is right. >> do any of you have any

difference withes points that mr. grueling has just made? >> >> i would say from bnsf's perspective, certainly, as you know, we are privately funded but we certainly have a vested interest if making sure that the supply chain runs efficiently. therefore we fully support a federal focus on freight so we think that is a good thing. >> through an infrastructure bank? >> again, we don't necessarily want to drive that decision but we certainly want to be part of the conversation. >> thank you. my time has expired. thank you all. >> thank you, senator blumenthal. senator daines. >> thank you, madam chair. i get to represent the state of montana. in montana, our number one industry is agriculture. it's a $5 billion industry. just last year. as we know in ag, you have to be able to export. like senator fischer, we don't

have a lot of oceanfront property in montana. i don't think nebraska does either, and so the supply chain becomes critically important. in fact, 80% of montana's wheat is exported. it's nearly $1 billion in 2013 and primarily through the west coast ports. we're very proud of our ranchers and our farmers who not only feed america, they feed the world now. miss farmer, i heard concerns from our producers in montana about the backlog we had, nearly 3,400 cars passed through the region. can you tell us what the current status of the rail backlog is now in montana? >> as i have responsibility for intermodal, i'd be happy to follow up with specific statistics around the backlogs, but what i can tell you is that

like any measurement on a year-over-year basis, because of the capital that we've invested, because of the milder winter that we've had, by any metric that you look at, we are far improved where we were last year. we are making significant progress from delivering the service that your constituents in montana have come to expect from us and we will continue to make progress along those lines. what i would say is concerning to us is one of the ways that agricultural products get to the west coast as we discussed is through the use of containers that can move in hopper cars or containers. what i can say is that as we limit the inbound flow of containers into the interior of the country, it makes it more difficult for me to be able to move that product for export. so that's certainly of concern to us. >> well, i can tell you, too, last summer our montana ag producers were not so concerned about the rail backlog, it was the issues going on with the

west coast ports. i used to be a supply chain guy myself. i worked for procter & gamble for 12 years, was in the supply chain, and have an appreciation that the chain is only as good as its weakest link. if we can't get the harvest to market, then we really cannot realize the great potential of our ag industry. the port of vancouver and the labor dispute we had going on there that now we see going on in long beach and in l.a. it is having a great impact in creating dwindling confidence on, i think, our global markets, the ability for us to deliver. in thinking about our global opportunity as our competitors continue to improve their products, the differentiator for us long-term to win will be in excellent customer service. that will ensure that we say the product is going to be there, it will be there. and as has been said, when we

lose, a senator fischer mentioned, when we lose ability to deliver our customers will look elsewhere to find those same products. in fact, i got a rather haunting e-mail from the president of an outdoor products company that manufactures in montana. they have leading global market share. they're the only producers of some of these products that are still produced in the united states. the rest are produced in china. this u.s. manufacturer, the president of the company e-mailed me about his concerns what's going on as we speak today about the west coast port slowdowns, the international long shore and warehouse unions are putting their interests, he says, ahead of their customers and he said this. if something doesn't happen soon, we'll have no choice but to reduce our current hiring plans and potentially lay off some of our current staff. in your view, what, if anything, can be done as we look at these challenges right now with these west coast ports being virtually

either slowed down or shut down? >> you know, certainly we're not party to the negotiations between the pm p.a. and the ilwu. but it is clear to us that there needs to be some speedy resolution of this. the biggest opportunity that i think is in front of us is that it is going to take us several weeks to work off the backlogs that exist once some type of resolution comes to bear. we have an opportunity in front of us, and that is that chinese new year is upon us. that will give us several weeks of reduced freight inbound on the west coast that will allow us to catch up. i couldn't agree with you more that it is very concerning. we need to find a way to be able to resolve this but, again, we're not party to those negotiations and as such, you know, we just -- the urgency is really where we're focused. >> thank you. i'm out of time, madam chair. >> senator clovochar.

>> thank you very much. i'm losing my voice here but i want to thank everyone for coming. especially mr. bessac from cargill, which is a great minnesota company. biggest private company in the country. we have worked extensively with them on these transportation issues, so thank you for being here. i am very glad that we were able to pass the user fee increase from the river act and i appreciated all the work that people who transport on the river did to get that bill done. as you know, it was part of the able act. can you talk please about what the increased revenue will mean for upgrading locks and dams on our nation's systems waterways? >> senator, i'm sorry, my area of expertise is in pork exports. i know cargill is very interested in building a strong infrastructure so that we can compete on the global scale. i'd be happy to get you a

written answer from our corporate affairs staff so we can answer that. >> okay. you're glad that we passed the bill so you can get more infrastructure improvements? >> yes. >> that was supposed to be an easy question. that's okay. could you talk about how this works and why it is such a problem if you're able to get things out, as mr. daines points out? we're on lake superior so the port matters so much. i was once placed on the ocean subcommittee of the commerce committee and i remember frank lautenberg giving me a note when i told him i was the only senator that didn't have an ocean on the ocean subcommittee. he came back and said, well next year just come back and ask for one. in any case, can you talk about how inland states depend more on this river traffic? >> absolutely. as you know, the demand for safe wholesome food products around the world continues to increase

as population increases and we need very effective, reliable modes of transportation whether it be a river, railroad, truck or ocean vessel, to efficiently move those products to their best value consumer, and our farmer and rancher suppliers depend upon us to be able to take those crops and move them efficiently and get the best value so we can, in turn, pay them pay a strong value for hard work that they do raising those crops and that livestock. >> thank you. can you talk about the ports and the rail and the intermodal we do have the lake superior port. >> over the last 15, 20 years the number of hours of outage --

unscheduled outage at america's locks and dams, particularly on the mississippi waterway has increased substantially. it has made barge traffic less predictable and agricultural shippers have been finding alternative routes. and perhaps the easiest way to see this is when you look at the port of new orleans share of u.s. agricultural exports, it it used to be close to 65% ten, 15 years ago. and today it's about 45%. it is an impediment for farmers to get product down the river reliably and loaded onto the handy max vessels. this does create permanent damage. rather than look at threats of job cuts or not making investments, there are actual quantitative facts that can be assessed here. under a free trade agreement there are quotas for the trade of agricultural goods, corn, soy, and other grains and oil seed. if a shipment is delayed beyond a calendar year, then the quota for that year is made.

the importer on the other side of the trade is normally allowed some small growth rate say 2% to 3%. but if they don't make their quota the year before, the 2% to 3% growth rate is applied to a lower base rate. the excess amount is actually filled by other countries that do have reliable systems. >> exactly, it will hurt us competitively. internationally. one last question on public/private partnerships. there's the exporting of the goods to our neighbors to the north and the south and bringing goods in from mexico and canada is really important. canada's the biggest trading partner that we have and people don't always seem to realize that. we are having some huge problems at the borders with delays in places like international falls minnesota. there is an issue with a bridge that i'm not going to get into which we hope is soon solved.

i've been working on this as head of the interparliamentarian group with canadians. we started to do a lot of public/private partnerships. and so do you think this is a smart way to go? i want to get it rolled out on the northern border as well. >> we definitely think it's a smart way to go. in our own case, we're looking at privately built bridges connecting modes of transportation, highway with rail highway with water ports knowing that the users will pay their way, their fair share, knowing that that money is being invested in to that specific infrastructure. we can't afford to build, you know, $150 million bridges without some infusion of private equity. it's being used in north africa. . in canada. we have a great example down in the ohio river of a toll bridge that was built with private equity funding. one of the construction companies actually paid part of the bill. keep their people employed. so it is a good way -- a good

approach to these. >> thank you. just to be clear, this project is more about the customs process. >> right. >> you know, it's to try to speed up the back and forth between the countries with the new dawn in north america. so thank you. >> thank you. thank you, senator. senator cantwell. >> thank you, madam chair, and thanks for having this important hearing on the movement of freight. when i think of this issue think so much of washington state and all the products that come through on their way to asia. we have in a short period of time seen something like a doubling in the size of the ships over last five years. so yes, we have a lot more capacity. and we obviously have a rising middle class in asia that want more u.s. product. so the question is what are we going to do to meet that demand as it relates to our infrastructure. one of the things that's occurred is the recommendations

of the freight mobility board which was chaired by mort downey. i think some of you are familiar with mr. grueling. i think, miss farmer somebody from the railroad association at least participated in that. the question is, how do we move forward on those recommendations and would you support a dedicated funding source to freight so that we can raise the importance of why moving this product is so critical to our economy and infrastructure and that tiger loan isn't going to get it done. >> are you asking me? >> yes. ms. farmer and mr. greuling. anybody else who wants to jump in on that. >> certainly we support anything to make our ports more competitive. we're excited about the working together of seattle and tacoma so we will certainly stand together to work with them. we believe that the tiger grants were a good thing, that we need more funding around those kinds of issues and so from our perspective, anything we can do to make them more competitive we're certainly in favor of that as well.

>> senator, certainly our four points with the coalition that number one is to establish a fully funded dedicated freight program, and we believe that that needs to be at least $2 billion a year. and this is not a program that's going to pick winners and losers in the transportation field. this money should be spent on what makes the most economic sense in terms of performance for the entire system. and we believe that setting priorities on a national scale for the projects of national regional significance is one of the mechanisms to do that, but -- and also the establishment of a separate freight office within the usdot to again strictly focus on these multi-modal needs nationally. >> what do you think we need to do to get people to understand this from either an economic impact or some of the things

that your organization has done in studying the economic development associated with this? >> in all -- a lot of what we do at the center and through the coalition is education. you may see this brochure that we recently produced through the coalition, follow that on, and it shows the supply chain of an almond from a california grower to the port of hamburg in germany delivering almond butter. and we'll have more of those in the future. i think that helps. i also think that local jurisdictions and state jurisdictions need to understand and look at freight more on a national level and think in terms of interconnectivity, not just what's good for elm street or what's good for my river. but look at the whole national system and make sure that they're aware that what we do at the national level and the local level interconnect and we really need to make sense of that when it comes to funding. >> mr. bessac, did you have something you wanted to add to that? >> the only -- i guess more of a comment, senator.

you hear lots of numbers talked about, $2 billion for infrastructure. i go back to the numbers senator fischer mentioned in a port. if the ports were closed today, it would be $2.5 billion per day to the u.s. economy. and i would submit we're very close although they're not officially closed, i think we're very close to that at this moment. and so i guess my comment is simply it seems like a very wise investment in an expense that the u.s. taxpayers and consumers are paying today daily because we don't have the free flow of goods. >> well, i think, you know, we learned the lesson in washington because we're at the tip of the spear and so that congestion caused so many problems that we learned that if we were going to be competitive and not lose that business, that we had to make the improvements. now we need the improvements made all along the system, not

just right there. we just have to prioritize for people to understand that we will actually lose the economic impact. it is not just the up side. from is huge up side, but there is a downside if we don't act as well, and that is that people will go to other ports or start buying products from somewhere else just because they can get more predictable time frames for its delivery. we really need to make this investment. thank you, madam chair. 7 >> thank you, senator cantwell. i believe we have some more time and i know members have more questions so we're going to do a second round. take a big sigh here. but i'm interested, mr. bessac and ms. farmer, when we look at freight transportation systems and we look at the midwest and some of the challenges that we have with containers. how would you address those challenges? where we have that lack of

containers to move our product. and other members of the panel if you would like to jump in on that as well. . >> certainly. i'll go ahead and start, chairman fischer. i think that what you'll see is that we've proven in normal times that we have sufficient containers to be able to move the product that wants to move export. in fact, last year we moved 236,000 units of grain in a box back to the west coast. we worked very closely with the ocean carriers and the trucking companies and they are able to scale relatively quickly to be able to meet the demands. what bnsf has been very focused on is improving our velocity, because as you well know, when we look at the speed with which we can turn these assets, we can create more capacity for the supply chain in the market. if we invest in our infrastructure, if we have expansion in our infrastructure so we have a thoughtful approach to investing to get us the velocity we need which will generate the capacity for the midwest to have the containers they need.

>> anyone else? >> there is a structural deficiency in that for the exports and our exports tend to be agriculture, large-scale capital goods and energy products. these come from places where not a lot of people live and therefore not a lot of containers arrive full of importing goods. so there is a structural gap that has to be addressed. and from where i sit and what i see in the data, i don't think it will be addressed very simply by trying to match or reposition containers because every time you have these congestion issues, things do get paralyzed. it may be necessary to pursue an alternative solution, such as using 53-foot domestic containers and then doing cross dock operations like we do with the imports, but in reverse so we can compress these on to the container ships. >> thank you. >> senator, the demand is there. empty containers, quite frankly,

are at a premium in certain locations. in our case we are receiving grain and dried distiller's grain and corn and soybean meal from six different states that are being trucked in, trans loaded in this containers, and shipped out on the bnsf and the u.p. to the west coast. when you think about the cost to that transportation just to get to an empty container shows clearly that we've got this very high demand. and really we can't afford to build more ports, we just need to use the existing ports as efficiently as we can. that applies to both inland ports and water ports. that's going to be the solution. and tie it all together with highways and railroads and we've got a winning situation. >> that ties in to what i want to ask dr. kemmsies with making our ports efficient. what role do you see for automation? is that going to help make our ports more efficient, more competitive and what success do you see us having in that

regard? >> well, i don't think it's possible to operate the ports with the larger vessels coming without some degree of automation. if not eventually full automation. these ships, as i've mentioned, in testimony earlier, they have to be on the water as much as possible, not sitting at ports. so if you were to look at an 18,000 teu vessel, which is the largest size that's really currently operating, it takes 4 1/2 days if you can do 35 gross moves an hour on the 24/7 basis. to maintain productivity like that without some form of automation i think is impossible. i have yet to see it demonstrated, so we seem to have to move in that direction. if we do that, then i do see u.s. ports being able to maintain an ability to compete

with foreign ports, particularly those to our north and to the south. >> thank you, doctor. senator blumenthal. >> thank you. what is the cause of the shortage of container cars in this country? i'll ask that question to whomever or all of you if you want to answer it. >> senator, i think from our perspective, i'm not sure there's a net shortage. i think the real issue is where the empty containers are versus where the demand for the containers is. >> and what accounts for that imbalance? >> well, a lot of it has to do with the system that we have set up, the intermodal system today. we can handle over 3 million containers at our yard. 1.5 million coming in, and 1.5 million going out. places in downstate illinois, minnesota, indiana don't have

that kind of inbound capacity, therefore, they don't have the available containers to ship out. it's a market balance to some degree. i'm not sure that's fixable in the short term. building more containers is not necessarily the answer and i would defer to my rail colleague here to maybe respond to that. >> senator blumenthal, what i would say is i don't believe that there's a net shortage of containers. what we need to challenge ourselves with is how do we efficiently get them into the interior of the country. with that, what bnsf and the western roads have done is that we have found ways to find the ability to load those containers containers consolidate grain loading around our intermodal hubs around the country. so where there's a surplus that is naturally made by the goods that come off the west coast, for example, at our logistics park kansas city facility. the majority of grain or very large percentage of the grain that gets loaded out comes from the state of kansas. so as we can draw that closer to our logistics park, we then have

the empty containers there that can then be loaded out. in addition to that, we have to keep continuing to invest so our velocity is good so the containers are there. i don't think in total there is a net shortage. the issue is how do we stay competitive through the ports, over the railroads into the right places to get those containers into the interior of the country. >> but the ports are just one key to a multi-modal system. >> absolutely. >> where rail is obviously very important to moving a lot of those containers to the right places so they can be there at the right times? >> absolutely.. >> absolutely. >> let me ask you, you know, going back to the infrastructure investment issue, and mr. bessac mentioned this figure of $2 billion, the possible loss of $2 billion if this impasse or crisis continues, which would be very, very, very unfortunate,

but it strikes me as an example of how possibly there are costs to lack of recognizing the importance of investment and smart policy. so what somewhat perplexes me is why the folks who run our transportation system, including your railroad and others who are here, have not been more vociferous or vehement advocates of specific solutions to the infrastructure problems in the way that maybe will move policymakers, including folks who are sitting on this panel, to take some action. in other words, we'd welcome you to be more vigorous advocates for the system that is your responsibility and trust to run and ultimately your shareholders have very significant investments. >> absolutely. as i mentioned earlier, senator

blumenthal, we agree from the standpoint that we absolutely have to continue to manage our network, invest in capital expenditures that make sense going forward. we also want to -- we have a vested interest in remaining engaged in that conversation. we believe that a national transportation policy is a good thing with a focus on freight and so i think that we've been very active relative to those discussions and participation in national transportation policy planning. >> thank you. thank you all for being here today. >> thank you, senator blumenthal. senator daines. >> a follow-up question and thank you, madam chair. senator blumenthal, i completely agree that we need to continue to invest here if we are going to maintain our global competitiveness. i think, ms. farmer, you mentioned about some of the roadblocks of proposed export facilities we're experiencing on

the west coast. i was out at one of those proposed facilities last summer. the gateway pacific terminal. i was standing there with a member of the rail union from montana. i was standing with a tribal member from montana that would benefit from expanded exports. we see both the jobs as well as the tax revenues that would be created by expanding exports, and yet delay after delay after delay in trying to get this port built, and it sits literally right in between two existing ports. it's zoned properly. it's environmentally sound, and yet there's great concern that how in the world are we ever going to move forward here in infrastructure investment with endless delays and uncertainty. i'm looking for help here around what we can do to try to -- i'm not suggesting there's not a thorough review process but one that provides some degree of

certainty and reasonability in that process. ms. farmer, any comments on that thought? >> i would say, senator, we certainly agree. we are working very closely, as you know, with the state of montana to put together our export platform. we, like you, are anxious to have the ability to continue to grow, to be able to export. you know, we believe that there needs to be some improvement, whether it's around permitting reform. we've talked about that multiple times in the past. we believe that extending the environmental review position of mat 21 to the railroads would be helpful and, you know, further expediting the process, looking at these things concurrently. basically reducing the timeline that these things take, but in general what i would say is that we completely agree that we are anxious to export product to continue to grow, to improve the competitiveness of the u.s. supply chain, both your exports and what we've talked about here as well as imports as well.

>> we've talked about the need for the state of the art productivity and automation and so forth. this proposed port would be exactly that. mr. greuling, what are your thoughts? you're somewhat of an expert on this issue. >> senator i think much like we suffer from multiple jurisdictionitis with three, four, five different governmental units controlling roads and infrastructure, the federal government has the same issue you for these major projects, the number of agencies that these projects have to touch. the time it takes to go through the nepa process, the environmental review. in fact, i would comment that we have actually seen some improvement on that under leadership from congress and the administration. and we applaud that. it shouldn't take 10, 12 years to do an eis statement on a bridge. clearly, that is an issue. so multiple agencies maybe working a little closer together

on collaboration and, again, we think a national freight office could help sort of quarterback that initiative, especially for these major important freight projects. >> i think what's highlighted today in some of the testimony is what's happened with these choke points on our west coast ports allowing more optionality and so forth to resolve these issues when they come up. if we only have one way out, it's nice to have multiple choices to ensure we protect our economic interests and compete globally. thank you. that's all the questions i have. >> thank you, senator daines. we've been joined by the chair of the committee, senator thune. do you have questions, please? >> thank you, madam chair. senator blumenthal, thank you for holding this hearing. it's an important subject. i appreciate the fact that your subcommittee is focused on this. reliable and efficient supply chain is critical to our global competitiveness and our economy. and the ports are an absolutely

vital link in that chain. what's frustrating are things you can't control and these things are i guess i would say self-imposed problems. they're really unforced errors. they are if you try and quantify this, it's having profound impact on the economy. i know some of you in the panel have already testified to that effect. and cargill, 40 million a week, i've talked with tyson's in my state in south dakota and they've shared with me that we've got beef and pork sitting in in freezers sitting in the ports instead of asian markets. while we've got these ships waiting to export our nation's products. that affects jobs. tysons employs 41,000 people. the usda estimates there are that number of people employed. it affects people all across the country.

workers in south dakota and other places that are dependent on, like i said, a reliable supply chain. outdoor gear, inc., family-owned business in south dakota. they're a wholesaler receives 95% of its inventory from west coast ports. has been forced to miss deadlines, pay for late delivery penalties and pass up important sales opportunities, including in december, which is the -- of course the holiday peak season. so this is an issue that just really needs our focus, and it's a huge drain on the economy. and i just urge all sides to come to a resolution in this dispute to find a solution as soon as possible. we just can't afford to drag this on and have this kind of -- have our economy pay this kind of price. and if we can get this behind us, we can start focusing our energy and creativity on a lot of the other long-term infrastructure challenges that desperately need our attention as well. in that light i wanted to ask a question.

i know that i think all of you have attempted to quantify what some of the financial and economic impacts of this have been, but the question i'd like to pose is once this is resolved, how long will it take to unwind this and to get those networks working in an efficient way again and where things are sort of normalized. what are we talking about once we get a -- hopefully which will be very soon -- a resolution to this issue? >> so, senator, i'd answer from our side as the exporter. i think it's an excellent question. our best estimate is on chilled shipments, it will take at least a month to get back into a normal flow when we can get those products moving through to the high-value markets in japan and korea. at least a month. if you move over to the frozen side, the products that we would send to japan, korea, china

middle east -- all around the globe -- our best estimate is three to four months before we're back to a normal flow. we've moved through backlog of goods we have and that number continues to increase every day. >> senator thune from our perspective at the railroad, we certainly stand ready to be able to help the backlog. but i would say with the challenges we face not being payable to move freight, we've had to store location motives and equipment across our network so there will be some period of time that will will take for us to go and get those assets reposition them to the port be able to be in position to handle that. but what i would tell you is we are anxiously awaiting the ability to do that. we will be ready to do that. we have a unique opportunity, as i mentioned earlier before you stepped in, in that chinese new year is coming and when chinese new year, hits, we will see less vessels that will be headed

towards the west coast. it would give us an opportunity if there was a speedy resolution to this current pma/ilwu negotiations that we could use the time then to work off the backlog that exists at the ports. >> i guess i would reiterate, madam chair, again, thank you for having this hearing, that this is not something that's confined to the west coast. this is a -- this has a ripple effect throughout our entire economy. having a -- an efficient transportation system is really one of the keys to our advantage, our competitive advantage in the global economy. when you see this kind of thing happen and recognize the impacts that it has, i would just again encourage all the parties to create a new sense of urgency and build some intensity behind coming to a resolution. we just can't continue to keep this going on and not expect that it's going to have some very, very detrimental and adverse impacts on a whole range of sectors of our economy.

and on all the jobs that go with it. madam chair, thank you. thank the panel for your great testimony today. zblr thank you, chairman thune. >> thank you for holding this hearing. you and senator blumenthal are joining us on this issue. i know a lot of questions have already been asked. doctor, in your written testimony, you mentioned that the underinvestment in the mississippi ports, the inland ports, indicates that we've been more import-oriented than export-oriented. would you just expand for few minutes on the significance of the inland ports particularly with the panama canal development and agriculture opportunities and trade, as well as manufacturing? >> most of the growth in trade was on the import side and when we look at the various segments of the freight movement industry in the u.s., the larger projects

that were done by rail, by highway and at the port level, they were focused on being able to handle the imports more efficiently. a lot of the dredging, for instance, is not really done because we were trying to export more goods. our goods are very heavy. they require deeper draft vessels, but the motivation when you read the economic analysis or the cost/benefit analysis was essentially focused on the import side. and maybe you can look at it from that side to say, well, this is an import bias but when we look at the projects and where we haven't had funding for infrastructure, you get the same message. that's what i meant in the testimony about the mississippi waterway. we have seen a chronic and consistent underfunding and we've seen a deterioration of the infrastructure there.

>> i think from the locks to the ports themselves, obviously i would be focused on the mississippi river because of where i live and where i've grown up and where we are today. but the inland ports also serve a geographic area, gee logically twice as big as the coastal ports. because you carry both ways. i hope we could begin to focus more on those ports. the other question i have for ms. farmer, i think you all have trying to be in bnsf for a long time to do a california project. the california international gateway. permitting delays have been a big problem. i'm working on some legislation now to try to streamline permitting for railroad projects. do you want to talk about how the kind of problems you've had trying to serve that market in a better way? >> absolutely. so southern california international gateway would be,

as i've mentioned, the greenest intermodal facility in the world when built. we've been working for a decade to try to do this. we've faced local opposition and what i would say is that that is indicative of projects that we see across our network. so it's not just the south, southern california international gateway project. we really are in favor of permitting reform. i know and i appreciate your leadership in this area. as i spoke to earlier, we really believe that extending the environmental review position of mat 21 to the railroads would be a great first step. we believe it's important to shorten the time frames. we know that we're not trying to eliminate the review process, we're just asking that there be a reasonable time. we need to shorten the time frame that the agencies could possibly look at this concurrently as opposed to sequentially and so it's just important for us that we are able to move forward. the projects that will add capacity to the supply chain.

>> may i make a comment on that? we're the program managers for the jasper ocean terminal on the savannah river, and the report that we gave the board last year we pointed out that if we were to start the application process then it would be 13 years before the port could become actually, you know, turnkey operational. and then we have to justify this on the basis of analysis, so i had the unfortunate position of having to forecast what volumes will go through a port that doesn't exist in 13 years. so i think this is an example of how far the process has gotten off kilter. >> would you like to comment on that? >> i would, senator. thank you. what's interesting about this discussion about freight movement and the problems we have in this country, it's all about choke points, whether it be a problem at the ports, whether it be congestion on the highways, whether it be at grade closing for a rail crossing,

whether it be an extended period of time to get permitted for a project, those are all choke points. what's unfortunate about that is america has a distinct and very unique advantage in this global marketplace and to think that our transportation system is one of the primary reasons why we're being held back on imports, more importantly exports, it's almost criminal. it's a shame. i think there's a lot to do better to help with that situation. >> thank you. thank you, chairman. >> thank you, senator blunt. any other questions from senators? so with that, i would say this hearing record will remain open for two weeks and during this time senators are asked to submit any questions for the record. upon receipt the witnesses are requested to submit their written answers to the committee as soon as possible. with that i conclude the hearing.

i thank the witnesses for just great responses here and the information you provided us today. thank you so much. the hearing is closed.

the process of the open internet rule making was one of

the most open and expansive processes the fcc has ever run. we've heard from start-ups from isps, from a series of public round tables. we were from 750 different ex partes. over 140 members of koungcongress. we heard from the administration both in the form of the president obama's very public statement on november 10th and the formal submission. but here i would like to be really clear. there were no secret instructions from the white house. i did not as ceo of an independent agency, feel obligated to follow the president's recommendation. but i did feel obligated to treat it with the respect that it deserves just as i have treated with similar respect the input both pro and con from 140 senators and representatives.

and most significantly as has been pointed out we heard from 4 million americans. we listened and learned throughout this entire process and we made our decision based on a tremendous public record. >> that was some of the questions and answers from tuesday's hearing. we'll show the entire hearing saturday morning at 10:00 eastern on c-span.

>> let's see if we can emulate the senator's example and keep this stuff as comprehensible and as useful as he just was. that will be terrific. we've got an outstanding panel for the third panel of the day. we want to talk a little about the reality of school choice, how it works, what are some of the obstacles, how do the numbers work. sitting next to me, we have former senator, state senator of louisiana. she's president of louisiana federation for children where she partners with local and national policy leaders to promote educational options.

she continues to work full time while she does this as senior vice president of liberty bank of new orleans. oh, she's also chair of louisiana state board of supervisors. following hurricane katrina, it was ann who authored a bill that allowed the state to take over the majority of schools in new orleans parish, which led to the thriving charter school movement you see in new orleans today. next to ann is kevin, a founding board member and executive council for american federation for children and alliance of choice, noted author and national education reform leader. he helped shepherd charter school movement into the nation's capital. he's chair of d.c. council education committee, creating most prolific charter school distribute in the country. next up, legal officer of success academy public schools, which operates 32 schools in new york city. she also heads a litigation team

that has led the way in defense of the charter school movement in new york. before joining success academy, she practiced litigation in new york city and taught high school english. finally back with us, you'll recognize from the second panel is bob enlo, good friend and president of the friedman foundation for educational choice. kevin, you've been doing this stuff in d.c. a long time. let me start with you, as you all were pushing to give kids the opportunity to attend charters in d.c., wondering if there's one or two moments where politics were especially tough or you were especially nervous about how this would work and how you guys addressed that. >> thank you, rick. it's good to be here. i want to thank senator scott. let's give him another hand for putting this together. [ applause ] i'm impressed with him and his commitment to kids and young people are able to ask questions in this process. it's really important.

when we started the charter movement back in the late '90s in d.c., that's when i learned firsthand the politics of education, which i think is the biggest barrier to our children learning. where i heard some of these great ideas for innovative and creative schools like those who came to me and said they wanted to start a residential school where kids could go and live and some came from home that didn't serve them well. i said that's a great idea. some of the people part of the status quo said, no, that's a bad idea because we're not controlling it. folks came to me and talked about hospital high school, math and science, cesar chavez some of those folks here. all these folks can with these innovative ideas. my thinking was why don't we give these new and innovative and creative ideas a chance to

succeed when the politics of education has been the biggest barrier to what works for kids. so i adopted a simple strategy, rick, and that is will this help a child learn? if the answer is yes, i'm for it. if the answer is no, i'm against it. i think that is the yardstick, frankly, which we should discharge our responsibilities as adults, either as public officials or advocates, advocates or parents or policymakers. we should embrace any and all things that will help a child learn. the politics of education, i think, has been a big barrier. one other thing that's been a big barrier, which i think is equally as troubling as the politics, that is the fact when you hear all this talk about even debates on standards, debates on early childhood education, debates on all these

policy thrusts, they are not grounded in practical reality of parents today. when i had a debate with randy wine gardener, i asked a question, randy, what do you say to the low income parent making less than $30,000 a year in harlem or the bronx or southeast d.c. or crenshaw, l.a., pick a city whose parents -- the parents knows their child is going to enter a middle school or high school next year where 85 or 90% of the kids are failing? what do you say to that parent waking up every day knowing they have limited option because of the zip code, they have to send their kid to a certain place, what do you say to that parent who wants something different? the problem with approach and responsibility we have to the kids is there is no sense of

urgency with respect to the needs of that parent. it's all like numbers on a page. but all of these stories, all of these individual stories, these individual challenges, the individual frustrations to these parents, they matter. and for us to act like that it's okay for us to plan the plan and study the study and debate the debate, that doesn't work for parents on a practical basis. so one thing that i think we should do, the reason why educational choice is so important, it gives us an opportunity to meet parents where they are today, deal with the sense of urgency, the urgency of needs the parents have today as opposed to waiting for the system to right size itself for everyone to get it, whenever that is supposed to happen. so i think the big option as i see or the politics of education and the fact everything we do in terms of talking about education and learning is a long range plan and there's nothing that deals with the immediacy of these parents needs and that's