Introduction- Joe Conner, Founder/ President

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2 Introduction- Joe Conner, Founder/ President 2

3 High Profile Derailments July 2013 Lac Megantic, Canada A train carrying crude oil derailed and exploded, resulting in 47 deaths October 2013, Alberta, Canada A train carrying crude oil derailed and exploded December 2013, North Dakota, USA A train carrying crude oil derailed and exploded January 2014, New Brunswick, Canada A train carrying crude oil derailed and exploded January 2014, Philadelphia, PA, USA A train carrying crude oil derailed on a busy bridge February 2014, Western Pennsylvania, USA A train carrying heavy crude oil derailed and spilled In 2015, there were fiery derailments recently in Mount Carbon, West Virginia, and Galena, Illinois 3

4 Summary US crude oil production has risen sharply in recent years In 2008, U.S Class I railroads originated 9,500 carloads of crude oil verses 493,146 carloads in 2014 American Association of Railroads Immediate action by railroads and the FRA to enhance the safety of crude oil transportation Updating operating practices oselection of routes otrain speeds otrack and equipment inspections Training additional emergency responders 4

5 The Department of Transportation (DOT) introduced new federal standards for tank cars used to transport crude oil on May 8, Electronically controlled pneumatic (ECP) brakes Thermal protection requirement for tank cars 5

6 1. From 2000 to 2014 more than 99.9 percent of those carloads arrived at their destination without a release caused by an accident. 2. However, several recent accidents involving crude oil have led some to question railroads ability to operate safely. 3. Railroads and Shippers are committed to restoring full faith and confidence and have devoted enormous resources to enhance safety. 4. Rail actions fall in the following three broad categories: A. Accident Prevention B. Accident Mitigation C. Emergency Response Let s discuss them in more detail 6

7 Accident Prevention The Federal Railroad Administration (FRA)-measures the overall safety records for railroads 2014 Train Accident Rate down 80% from 1980 and down 44% from Employee Injury Rate down 84% from 1980 and 46% from Grade Crossing Collision Rate down 80% from 1980 and 38% from The Goal is 0 accidents This motivates railroad investments in the following areas : 1. Reinvestments in the rail network 2. Technological Advancements including sophisticated detectors and vehicle condition reports 3. Hot Box Detectors every 40 miles along routes carrying 20 or more cars of crude oil (these are referred to as HHFTs High Hazard Flammable Trains 4. Routing Model to determine the safest route possible for HHFTs 5. Inspections 6. Speed Restrictions 50 mph for HHFTs and 40 mph for DOT 111 in high threat urban areas designated by the Dept of Homeland Security 7. Train Braking distributed power or end-of-train (EOT) devices 7

8 Accident Mitigation: Steps to mitigate the consequences of accidents should they occur. Focus on increased federal tank car safety and design standards. U.S. federal regulations pertaining to tank cars are set by the Pipeline and Hazardous Materials Safety Administration (PHMSA) Transport Canada, the Canadian equivalent of DOT, performs a similar role in Canada. In addition, the AAR Tank Car Committee (TCC) sets rail industry standards regarding how tank cars used in North America are designed and constructed. 8

9 May 8, 2015, when DOT released a final rule setting forth new, tougher tank car standards. The new DOT rule generally applies to high hazard flammable trains (HHFTs), which the rule defines as trains with either a continuous block of 20 or more tank cars loaded with a flammable liquid or at least 35 tank cars loaded with a flammable liquid dispersed throughout the train. According to the final DOT rule, rail tank cars built after October 1, 2015 used to transport flammable liquids, including crude oil and ethanol, in HHFTs must have: 9/16 th inch thick cylinder or shell Thermal Protection 11 gauge or stronger jacket ½ inch thick Head Shields Improved Pressure Relief Valves Better protection for Bottom Outlet Valves 9

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11 In addition to the tank car standards, recent PHMSA rule requires HHFTs to have a functioning two way end of train device or distributed power braking System. High hazardous flammable unit trains (HHFUT) defined as 70 or more loaded Cars must be equipped with ECP brakes. Railroad s case against ECP: ECP Brakes would not provide a meaningful safety benefit Cost Benefit Analysis Without ECP 100 car unit train derails 20 cars With ECP 100 car unit train derails 19 cars 11

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13 Thank you again for your time. I welcome your questions and feedback! 13