1. AASHTO Standing Committee on Rail Transportation Denver, Colorado September 2014

2. Railroads Help Keep Coal- Based Electricity SLIDE 1 ASSOCIATION OF AMERICAN RAILROADS Freight Railroads in North America

3. ASSOCIATION OF AMERICAN RAILROADS SLIDE 2 Railroad Spending on Infrastructure and Equipment* ($ billions) Record Investments in Recent Years Despite the Economy *Capital spending + maintenance expenses. e – estimate Data are for Class I railroads. Source: AAR

4. ASSOCIATION OF AMERICAN RAILROADS SLIDE 3 Until the Recession, A Steady Increase in Rail Traffic (trillions of ton-miles) Data are for Class I railroads. Source: AAR Up 95%

5. ASSOCIATION OF AMERICAN RAILROADS SLIDE 4 *Intermodal is estimated; some intermodal revenue is included in individual commodities Source: AAR (FCS report) Coal - $14.3 bil Chemicals - $9.9 bil Grain - $4.7 bil Motor vehicles & parts - $5.5 bil Food - $5.6 bil Lumber & wood - $1.8 bil Steel and other metal products - $2.7 bil Pulp & paper - $2.3 bil Stone, clay & glass prod. (e.g., cement, ground minerals) - $1.8 bil Sand, gravel, & other nonmetallic minerals - $3.2 bil Intermodal* $15.5 bil Total gross freight revenue in 2013: $72.1 billion America’s Railroads Carry Just About Everything

6. ASSOCIATION OF AMERICAN RAILROADS SLIDE 5 U.S. Crude Oil Production Source: Energy Information Administration (millions of barrels per day)

7. ASSOCIATION OF AMERICAN RAILROADS SLIDE 6 What’s This? Shale containing oil or gas

8. ASSOCIATION OF AMERICAN RAILROADS SLIDE 7 What’s This?

9. ASSOCIATION OF AMERICAN RAILROADS SLIDE 8 U.S. Crude Oil Production e – Energy Information Administration estimate Source: EIA (millions of barrels per day) 7.45 million in 2013

10. ASSOCIATION OF AMERICAN RAILROADS SLIDE 9 U.S. Crude Oil Production by State: 2004-2013 *Federal offshore Gulf of Mexico Source: EIA (millions of barrels per day; % = % change from 2004-2013)

11. ASSOCIATION OF AMERICAN RAILROADS SLIDE 10 Domestic Energy Renaissance Means Huge Benefits for U.S.  Reduced reliance on oil from countries that are not secure and whose interests do not necessarily correspond to our own.  Thousands of new and better jobs and economic development opportunities all over the country.  Higher tax revenue, lower trade deficit.

12. ASSOCIATION OF AMERICAN RAILROADS SLIDE 11 A lack of refineries in areas of new production like ND means crude oil has to be trans- ported to where it can be refined. U.S. Oil Refineries Source: Government Accountability Office based on EIA data as of 1/1/13

13. ASSOCIATION OF AMERICAN RAILROADS SLIDE 12 What’s This?

14. Why Move Crude by Rail?  Geographical flexibility  Responsiveness  Efficiency  Underlying infrastructure  Isolation of commodity ASSOCIATION OF AMERICAN RAILROADS SLIDE 13

15. ASSOCIATION OF AMERICAN RAILROADS SLIDE 14 Source: AAR Originated Carloads of Crude Oil on U.S. Class I Railroads

16. Still a Very Small Portion of Railroad Traffic ASSOCIATION OF AMERICAN RAILROADS SLIDE 15 Crude oil is such a small share of total rail traffic, it’s not plausible to claim it “crowds out” other rail traffic to a significant degree.

17. Crude by Rail Safety: Three Key Facets  Accident prevention  Accident mitigation  Emergency response ASSOCIATION OF AMERICAN RAILROADS SLIDE 16

18. ASSOCIATION OF AMERICAN RAILROADS SLIDE 17 Accident Prevention  Reinvestments  Technological advancements  Defect detectors  Routing model  Inspections  Speed restrictions  Train braking

19. ASSOCIATION OF AMERICAN RAILROADS SLIDE 18 Accident Mitigation Focus on making tank cars used for crude oil safer:  March 2011: Rail industry asks PHMSA to adopt tougher requirements for new tank cars.  July 2011: AAR Tank Car Committee adopts proposal to PHMSA as basis for new industry standards (“CPC-1232”) for tank cars ordered after Oct. 1, 2011.  Nov. 2013: Rail industry calls on PHMSA to adopt standards more stringent than CPC-1232, including retrofitting existing tank cars or phasing out if not modified.

20. ASSOCIATION OF AMERICAN RAILROADS SLIDE 19 High Capacity Pressure Relief Valves Top Fittings Protection Steel Tank Head ShieldsBottom Outlet HandlesJacket and Thermal Protection TANK CAR STANDARDS

21. Emergency Response Training

22. ASSOCIATION OF AMERICAN RAILROADS SLIDE 21 Long-Term Demand for Freight Transportation Will Surge Billions of Tons of Freight Transported in the U.S. p – projected Source: FHWA - Freight Analysis Framework, version 3.4 The U.S. DOT expects total U.S. freight movements to rise from around 17.6 billion tons in 2011 to 28.5 billion tons in 2040 – a 45% increase.

23. Freight by Rail ASSOCIATION OF AMERICAN RAILROADS SLIDE 22

24. New and Improved: www.aar.org ASSOCIATION OF AMERICAN RAILROADS SLIDE 23