NATIONAL TRANSPORTATION SAFETY BOARD

UNION PACIFIC PUBLIC HEARING

Springfield Hilton
6550 Louisdale Road
Springfield, Virginia
Wednesday, March 18, 1998
9:00 a.m.

NTSB Board of Inquiry Members

Technical Panel Members

United Transportation Union Representatives

Brotherhood of Locomotive Engineers Representatives

Union Pacific Railroad Representatives

Federal Railroad Commission Representatives

Texas Railroad Commission Representatives

A G E N D A

AGENDA ITEM

Afternoon Session

Adjournment

P R O C E E D I N G S
-----------------------------

9:00 a.m.

Introductions and Call to Order

CHAIRMAN GOGLIA: Good morning, ladies and gentlemen.

This public hearing has been convened by the National Transportation Safety Board under the authority of Section 304(b) of the Independent Safety Board Act of 1974.

This hearing is part of the Safety Board's investigation of 15 accidents that have occurred on the Union Pacific Railroad since October 4th, 1996. As a result of these 15 accidents, there were 23 passengers and 16 employees injured. There were two trespassers and five employees fatally injured. The total damage from these accidents were estimated to be in excess of $27 million.

I am John Goglia, a member of the National Transportation Safety Board, and chairman of these proceedings.

Other members of the Board of Inquiry from the National Transportation Safety Board in Washington, D.C., are Mr. James Dunn, Hearing Officer. He's the Chief of the Regional Investigation Branch of the Office of Railroad Safety. Mr. Robert C. Lauby, Director, the Office of Railroad Safety. Ms. Julie Beal, Chief Safety Accomplishments -- Chief of the Safety Accomplishments Division, Office of Safety Recommendations. Mr. Vern Ellingstad, Director of Office of Research and Engineering.

The 15 accidents mentioned above have been investigated by the National Transportation Safety Board. We have been assisted in some of the field investigations by representatives of the parties in this hearing.

The purpose of this hearing is to (1) go beyond our field investigation tests and interviews to develop a record for determining the cause or causes of these accidents; (2) to report the facts, conditions and circumstances relating to these accidents; and (3) to assist the National Transportation Safety Board in making recommendations to prevent similar accidents.

We plan on concluding this hearing on Friday after taking testimony for three days. This hearing is an administrative fact-finding proceeding with no adverse interests and no adverse parties. It is not our purpose to assign blame or to determine the legal rights and/or liabilities of persons or organizations, and the Safety Board will not make any attempt to do so. Matters directly related to such rights and liabilities will be excluded from these proceedings.

Pursuant to the Safety Board rules, a pre-hearing conference was held in Washington, D.C., three weeks ago. The hearing conference was attended by the members of the Board of Inquiry, the members of the Technical Panel, and the parties to the hearing. The witnesses for the hearing and the areas in which they are to be questioned were discussed and agreed upon by the parties. The issues to be addressed at this hearing were also discussed and agreed upon.

In addition, exhibits to be introduced into evidence were identified. Copies of the witness lists developed for this hearing have been made available. Ms. Shelly Hazel, a Safety Board public affairs officer, is here to assist the press and the public and can furnish a copy of the witness lists and provide access to the exhibits.

A public docket will contain the exhibits and the transcript of the testimony will be taken and any other related materials. The docket will be available for inspection at the Safety Board's Washington, D.C., Headquarters. Copies of the transcripts, exhibits, individual documents and photographs introduced during this hearing may be obtained for a fee from the court reporter.

The conduct of this hearing will be governed by the Safety Board's Rules of Practice. Under these rules, the witnesses will be first questioned by the Technical Panel, then by a spokesman for each party, and finally by the Board of Inquiry. Cross examination in the legal sense will not be permitted.

After one round of questioning by the parties, I may go around a second time with any follow-up questions and/or clarifications. However, I expect follow-up questions to be limited to those necessary to clarify the record or to address a new matter that has been raised.

The formal issues which will be addressed in the public hearing and to which testimony and questioning will be limited are as follows:

(1) the Union Pacific Railroad Management Safety Oversight;
(2) state and federal safety oversight of the Union Pacific Railroad; and
(3) the role of organized labor in the safe operation of the Union Pacific Railroad.

The parties to this hearing will have the opportunity to submit proposed findings of facts, conclusions and recommendations to the Board of Inquiry after the close of this hearing. I strongly encourage the parties to make use of this opportunity.

If you decide to submit proposed findings, conclusions and/or recommendations, please send them to the National Transportation Safety Board within 60 calendar days after the close of this hearing. You should also send copies of any such submissions to each of the other parties.

Any proposals will be made part of the public docket of the investigation and will receive careful consideration during the Safety Board's analysis of evidence and preparation of the final report of these accidents.

At this time, I would like to introduce the members of the Safety Board's Technical Panel. Mr. James S. Dunn, Chairman of the Technical Panel; Mr. George E. Cochran, Investigator-In-Charge; Mr. Jay Kivowitz, Investigator-In-Charge; Dr. Gerald Weeks, Human Performance Specialist; Mr. Rick Narvell, Human Performance Specialist; Mr. Patrick Sullivan, Signal Specialist; Mr. Ruben Payan, Signal Specialist; and Dr. Mitch Garber, Medical Officer.

Also present here Ms. Shelly Hazel from the Safety Board's Office of Public Affairs; Mr. Kevin Peterson and Ms. Linda Jones and Mr. Michael Bartran from my staff; and Ms. Evelyn Hemingway from the Office of Railroad Safety for administrative assistance.

I will now call the parties to the hearing and ask each spokesperson to stand and identify themselves, their affiliation with the party they represent, and introduce those other persons at their table.

Union Pacific Railroad?

MR. JERRY DAVIS: I'm Jerry Davis, President, Union Pacific Railroad. At our table, I have Dennis Duffy, who is Vice President, SACP; Mr. John Klaus; Mr. Roby Brown; Mr. Mike Baker, who is consultant for Union Pacific; and our attorney, Ray Hasiak.

CHAIRMAN GOGLIA: The Federal Railroad Administration? You don't have to stand.

MS. MOLITORIS: Mr. Goglia, I'm Jolene Molitoris. I'm the Administrator of the Federal Railroad Administration, and we have a large team of participants who will be part of the proceedings over the next days.

I'd like to introduce the Deputy Administrator, Don Itzkoff; Dan Smith from our Chief Counsel's Office; Norma Krayem, who is here at the table, our Chief of Staff; George Gavalla, Associate Administrator of Safety; and Ed Pritchard, Hazardous Materials Director in our Office of Safety.

CHAIRMAN GOGLIA: Thank you, Administrator Molitoris.

Texas Railroad Commission?

MR. MARTIN: Good morning, Chairman. My name is Jerry Martin. I am the Director of the Railroad Division for the Railroad Commission of Texas, and with me at the hearing is Leonard Gray, Operating Practices Inspector in Houston, Texas.

CHAIRMAN GOGLIA: Thank you, Mr. Martin, and you will be the spokesperson?

MR. MARTIN: Yes, sir.

CHAIRMAN GOGLIA: Thank you.

The Brotherhood of the Locomotive Engineers?

MR. WALPERT: Good morning. I'm Bill Walpert, Vice President, Brotherhood of Locomotive Engineers, and I will be the spokesperson.

With me, I have George Hucker, Vice President and Canadian National Legislative Representative. I have Jim Bradford, Special Representative; John Tolman, Special Representative; and Raymond Holmes, Texas State Legislative Board Chairman.

CHAIRMAN GOGLIA: Okay. And for the United Transportation Union?

MR. BOYD: Good morning. I'm Byron Boyd, Assistant President of the United Transportation Union, and with us this morning is Vice President Larry Davis; Local Chairman Tom Sullivan from North Platte, Nebraska; and Scott Belden, our Staff Coordinator in our Washington office, and I will be the spokesman here.

CHAIRMAN GOGLIA: Thank you, Mr. Boyd. Thank you all, ladies and gentlemen.

Today, we are pleased to have with us the Federal Railroad Administrator, Administrator Molitoris, and who has agreed to make a statement on the record concerning these accidents.

Administrator Molitoris?

STATEMENT OF JOLENE M. MOLITORIS
FEDERAL RAILROAD ADMINISTRATOR

MS. MOLITORIS: Chairman Goglia, I want to thank you very much for deciding to have this important hearing. Perhaps you know but perhaps our audience does not that we believe this is the first time that a Federal Railroad Administrator has appeared to make a statement before an inquiry such as this, and I think it is important because it indicates the focus and the level of importance that we are giving to this hearing, but certainly most importantly to the subject of safety in the railroad industry.

I want to thank all of your staff who have worked hard to prepare this event, and on behalf of all of the professional staff at the Federal Railroad Administration, I want to extend my thanks for having a hearing on the issue which really embodies the mission, the vision and the function of our agency and, of course, that issue is safety.

I'd like to talk for a few moments about the context in which we all have to look at rail safety because if we look at rail safety in a narrow sense, we're going to miss the real issues which provide the opportunity for us to reach zero tolerance of any safety hazard which is, I know, your goal, the NTSB goal, and the goal of the Clinton Administration.

The rail industry in the United States has changed dramatically in just the past few years. We know if we look back at the early '80s the Staggers Act gave the rail industry a de-regulated environment and an opportunity to compete which generated vast sums of capital investment. In fact, since 1990 -- since 1990, over $90 billion in capital investment private dollars have gone into the infrastructure of the railroad systems.

Consequently, the improvement in those years between 1980 and 1985 was great, actually a 70-percent decrease in train accidents, but between '86 and '93, the train accident rate essentially flattened out with human factors becoming the greatest cause for tragedies, and mergers and spin-offs beginning to create a whole new kind of industry for FRA to oversee.

We must oversee over 500 short-line railroads and, beginning in '95, mega-railroads with the appearance of merger companies, BNSF, then Union Pacific-Southern Pacific, and soon to be decided by the STB the acquisition of Conrail by NF&CSX, and already on the horizon the proposal to merge CN and IC.

At the very same time that this tremendous change in the architecture of the railroad industry was going on, traffic increased by over 30 percent, and employment levels were at the lowest in this century.

If you put all of those factors together, you really see a dramatically-new railroad industry. These changes in the railroad industry have posed significant challenges for FRA. The growth in the traffic, the rise of the mega-railroads, some of them covering two-thirds of the United States and affecting more than six of our regional areas, plus the proliferation of smaller carriers impose a significant challenge to the FRA's safety enforcement program.

Our 400 safety professionals, plus a dedicated group of state inspectors, must oversee safety of the nationwide industry composed of 1.2 million freight cars, 20,000 locomotives, 220,000 miles of track, 265,000 employees, and thousands of facilities.

The Clinton Administration has increased safety investment in FRA significantly over the first term, with a budget growth in the Office of Safety of 24 percent, plus adding eight grade-crossing managers and three safety project coordinators.

But it was clear to me when I came to FRA in 1993 that if FRA was to precipitate real and sustained increases in rail safety, that is, get the train accident rate going down consistently and to achieve safety increases in every other element that we measure, that real change in the safety program had to occur.

Also, we recognized that by 1994, human factors were the greatest cause of injury and death, and that meant we had to deal with issues never traditionally dealt with by FRA or by regulation. For example, fatigue, an underlying cause of injury and death in all transportation industries, staffing levels, communication and training.

To meet these safety challenges, FRA looked to the principles espoused by the Clinton Administration's National Performance Review and the Government Performance and Results Act enacted by Congress in 1993. Our primary focus became safety results, and we developed strategic plans to achieve those results and the performance goals necessary to measure their success.

The basis for a new safety initiative, we felt, was a collaborative process, and we believed that that was important because all parties had to take responsibility for reaching zero tolerance, that such a process could leverage FRA's small resources, and that an opportunity existed to go beyond regulations to actually achieve the levels of safety necessary to reach zero deaths, zero injuries and zero incidents.

Mr. Goglia, we had no manual to follow. We were creating a whole new process out of whole cloth. Of course, we used best practices garnered from other industries, but clearly the rail industry had to have a process designed for its unique history and culture. Change is never easy, and because fundamentally changing a safety culture demanded changing the attitudes, the behaviors, and the relationships that had been ingrained for over a hundred years, there were many skeptics about our chance for success.

But I will say to you on this record that the leadership of courageous individuals is labor and management and among FRA's professionals truly has created a process which is a whole new way of communicating and working together to achieve safety results.

And I think, and I want to express gratitude to you, sir, for taking the time and the effort to go to Omaha, to meet with the real people who are doing this every day, and I think that you saw and heard the kind of hope, the kind of excitement, the kind of confidence that these new coalitions have in their ability to really reach zero.

A couple of comments about the safety assurance and compliance process which is what we call this work, about what it does. The safety assurance and compliance process or SACP includes outreach through listening sessions to railroad employees, supervisors, labor representatives and managers. After all, no one knows about where the safety problems are more than the men and women who sit behind the throttle, pound the spikes and carry out railroad operations day in and day out.

This SACP has created a new entity through which labor, management and FRA focus on root causes and solutions across whole railroad systems. The first step in the process has an FRA team analyzing the information gathered at these listening sessions, site inspections, team inspections, and from FRA's own statistical database to identify systemic safety issues and appropriate counter-measures.

FRA presents its findings to senior railroad management who then become responsible for devising a safety action plan to address the safety concerns raised by FRA, labor and management themselves. In this way, FRA obtains the commitment of rail management who have the authority to allocate the necessary resources to improve safety.

Within the past two years, FRA has helped facilitate joint labor-management-FRA safety committees on most of the major railroads, including the Union Pacific, and may I say you are going to hear today from Jerry Davis, who is a really stellar example of that railroad management leadership, who has taken the responsibility from his position as president to make this process work, and I think all of the people that you'll hear from over these days or at least a significant portion of them will tell you about their role and their responsibility in creating new opportunities for more safety.

This safety action plan, which includes both long-term and interim safety measures, is subject to FRA approval. FRA conducts follow-up safety inspections to ensure that the plan is properly implemented, and that it's effective in mitigating the safety hazard.

Let me emphasize SACP has not replaced our traditional safety enforcement techniques and tools. FRA still conducts tens of thousands of inspections in any given year. We continue to issue civil penalties as appropriate.

The SACP is a complementary and enhancing safety process, which provides an effective way to assure that labor, management and FRA are finding system-wide solutions to safety hazards and implementing them as soon as possible, and I think it's worth mentioning, Mr. Goglia, that one of my personal goals, excuse me, is to get the investment to the front lines as soon as possible, where it's going to protect the lives and limbs of men and women who risk their lives the most.

The enforcement process is very important. The fines are very important, but we need to realize that those fines go to the general treasury. The kinds of investment that SACP leverages is dollar-for-dollar going to investments, capital investments, signaling, dispatching improvements, across the board, all the things we're dealing with that actually protect the lives of people right now.

So, I think that partnership of putting the enforcement-finding process together with leveraging new dollars and increased dollars for protecting the employees in the railroad industry is to me crucial.

With this as the background, sir, I'd like to address the specific issue of safety on the Union Pacific Railroad and the incidents that NTSB is reviewing over the next days.

My colleagues, who you will hear throughout these days, will provide an incident-by-incident review. My purpose at this time will be to address the overall safety record on the Union Pacific from '93, the tragedies of '97, and the progress made since the SACP took hold on the Union Pacific.

Before I detail the safety record of the Union Pacific, I would like us all to remember the nine employees that lost their lives in '97 in the line of duty, five with the collisions, four yard fatalities, doing their jobs as safely as possible in an industry where safety is a constant challenge.

As you know, Mr. Goglia, the NTSB and the FRA are usually the first on the scenes at these tragic collisions, and you all know too well the devastation that evolves when trains collide.

Our thoughts go to the families of those employees whose lives were tragically cut short last year. It is the memory of these individuals and the memory of all employees, passengers and those lost at grade crossings and on railroad property that motivate us at the FRA to dedicate our every effort in the pursuit of reaching zero tolerance, and I look forward to the time when we can come to a meeting like this to talk about the fact that we have reached it.

One of the FRA's earliest SACP efforts occurred on the UP in 1995. It's crucial to realize that the Union Pacific was a vastly-different railroad at that time. It was approximately two-thirds smaller than it is today. Neither the Chicago Northwestern nor the Southern Pacific were yet a part of that system.

The FRA identified regulatory compliance issues. They were essentially regional in character, and the Union Pacific responded. We should also look at the situation in 1995. Accident rates were on the decline on the UP system as a whole. UP was following the trend that characterized the rail industry in general. Traffic was rising, the size of the work-force and infrastructure declining, and safety was showing steady improvement.

Between '95 and '97, inclusive, the train accident rate on the combined UP system dropped from 3.88 to 3.36. That's with 10 months of final data. The total number of train accidents from 694 to 476, and this trend held true for every major accident cause factor.

The human factor accidents declined by 39 percent while track-caused accidents fell 24 percent over this period. Even in Texas, where four major train collisions occurred in 1997, the overall number of train accidents on the combined UP system fell by 25 percent, and the number of human factor accidents fell by 13 percent in '97.

Safety progress was measurable until an eight-week period, beginning in June 22nd, 1997, when five major train collisions over that period caused the deaths of five employees and two trespassers.

These tragic collisions in mid-summer marked a sharp reversal of the positive safety trends that the UP had experienced. In August of that year, realizing that we were dealing with something that was different, we decided to send the largest single force of inspectors we had ever used on a single property. In fact, 25 percent of our inspection workforce was sent out on the Union Pacific to stop these deadly series of collisions and find out what caused this deadly trend.

An FRA team set up a command center at UP's corporate headquarters in Omaha. Commencing on August 23rd, FRA sent more than 85 federal and state safety inspectors to conduct a two-week 24-hour-a-day team inspection across the entire system. This sweep was followed up by a five-day system-wide team inspection involving 87 inspectors starting on November 3rd to verify that the changes that we had identified were being taken place.

Between the two sweeps, the FRA held literally hundreds of listening sessions with rank-and-file railroad workers to gain a ground-level perspective of UP's safety problems. I myself, Mr. Goglia, went to the -- went to Omaha twice to speak with management and labor over very long days to assure myself that I understood the issues that we had to address and that Union Pacific had to address.

Based on the information developed through our investigations and these very intense SACP activities, the FRA issued a series of safety advisories to immediately address several safety critical topics.

They were Advisories 97.1, .2 and .3. 97.1 recommended safety practices for certain locomotives equipped with emergency emule fuel line cut-off. 97.2 were safety practices to reduce the risk of casualties from runaway locomotives, cars and trains caused by a failure to properly secure, and 97.3, safety practices to reduce the risk of accidents arising from authorization of train movements past stop indications of absolute signals, and these safety advisories have been submitted for your record as Exhibit 7-A.

Furthermore, beginning in September, joint labor-management-FRA safety committees were formed to address the issues that had been found and identified by FRA through the entire process.

As we crystallized our findings and recommendations, we have maintained a very close contact with labor and management to actively seek solutions to the problems.

Let me identify four inter-related problems that we felt permeated all of the issues. Number 1, under-staffing; Number 2, fatigue; Number 3, insufficient levels of supervision; and Number 4, dispatching deficiencies.

FRA found insufficient staffing levels particularly among train and engine service personnel, supervisors and dispatchers. Long hours, unpredictable work schedules, many consecutive days of service, excessive time waiting for transportation to and from assignments, all combined to create high levels of both acute and cumulative fatigue among the UP workforce.

Although FRA found little evidence of UP employees exceeding statutory hours of service limitations, the fatigue problem was evident.

A third major concern was insufficient levels of supervision. FRA found that UP supervisors were inundated with paper work due to a cutback in clerical personnel.

Also, as the railroad began experiencing service problems, all qualified supervisors and managers were pressed into service running trains. The result was that the supervisory workforce was unable to perform fully its intended safety functions of over-sight, planning and coordination.

Finally, the deficiencies at the Harriman Dispatching Centers. There were simply too few dispatchers causing many of the positions to be burdened with too much work, and the level of supervision was not sufficient. We also found that the training of both dispatchers and managers were -- was deficient.

I'd like to talk now about the kind of comprehensive steps that the Union Pacific has taken to address all of these crucial issues.

In February, FRA conducted another senior management meeting with senior representatives from Union Pacific, rail labor and the FRA. We talked about the root causes of the safety problems that led to the collisions and derailments of the previous six months and identified recommendations to prevent their recurrence.

Let me emphasize all during that period, we had been working and UP had been working to change issues related to the findings of our sweeps, but this was the formal action plan comprehensively identifying everything across the whole system.

The UP formally presented its action plan developed with the input of rail labor and FRA's guidance detailing both long-term and interim measures to correct and increase safety.

The results of these actions, Mr. Goglia, are significant. Under the plan, staffing levels are being increased at a rate three to four times greater than in previous years. The Union Pacific projects hiring more than 4,300 railroad workers this year, at least 1,200 of which are train and engine service personnel.

Even more significant, the Union Pacific has formed a team to evaluate staffing needs and assumptions through the year 2015, and it has invited labor representatives to review its staffing plans to make sure there is a reality check to the plans that are on the table.

To address the critical shortage of safety supervisors, the Union Pacific has hired or is in the process of hiring approximately 134 supervisors.

In addition, the fatigue counter-measures. I want to emphasize these, Mr. Goglia, because I think it identifies for you and your staff that FRA recognizes it must be involved in areas where no FRA has been involved before because the issue of fatigue under-girds so many safety hazards.

In addition, it is a transportation safety hazard across all modes of transportation. You know well the issues of fatigue as relates to the aviation industry and many others.

We identified this problem early with Union Pacific, and they took a very courageous step. They have hired a leading fatigue management expert who you will hear from later in this process, Dr. Mark Rosekind, who is formally a fatigue consultant to NASA. With this expert guidance, the Union Pacific plans to develop and implement a comprehensive fatigue management program addressing a broad spectrum of fatigue mitigation measures, including work-rest cycles that permit time off, calling windows, a napping policy, improved work assignment predictability, improved rest facilities, and reducing dead-heading time.

These are issues, Mr. Goglia, that we heard from -- directly from hundreds of Union Pacific employees who called us, wrote us, or faxed us or e-mailed us when I offered that avenue of communication to them through a video that President Davis and I made for consumption by all of the employees of Union Pacific.

As an interim measure, the Union Pacific has already instituted a system-wide policy that provides train and engine service personnel with guaranteed right to receive a day off after working seven days, seven consecutive days.

While we recognize this is just an interim step to address fatigue, I think it emphasizes their real commitment to the issue, and I want to note that the Union Pacific is the first railroad in this country to have this system-wide policy of guaranteed day off after seven consecutive days.

At the Harriman Dispatching Center, which was a place I spent a good deal of time in talking to the employees, and I was very, very touched by (a) their commitment to doing a safe job, and (b) their frustration and concern that they couldn't do all of the things that they were being asked to do.

As a result of our work with Union Pacific, they have hired 46 new dispatchers since last year. They have reduced the workload of 11 dispatchers already there. They have tripled the number of dispatcher managers, and they will soon add two new dispatcher desks.

They've also implemented a new training program to benefit both dispatchers and their supervisors.

The SACP approach has provided FRA the opportunity to address issues unprecedented in this industry. We are aware that the safety action plans in and of themselves won't make the Union Pacific safer, but the fully-implemented plans and implemented in a timely manner, we believe, will bring around the enormous safety and safety culture change that is required to reach zero tolerance.

The FRA is fully committed to ensuring that sufficient follow-up is conducted of the UP safety action plan, to monitor the plan's implementation and effectiveness.

Mr. Goglia, last summer was really a tragic one, not only for the families who lost their loved ones but for all of us, because these issues really do affect the whole railroad industry and the FRA in a very significant way.

It would be another tragedy if we did not learn from these experiences. Ever since last summer, we at the FRA have asked ourselves over and over again why would a railroad with a proven safety record, almost up to a certain point in time, have such a tragic change? How can we prevent them from ever happening again? Was there something else, some pointers, some predicate, which could have warned us of these tragedies?

After eight months of analyzing this turn of events, I can honestly say to you that clear indicators weren't there. I've already told you that the statistics collected through our process showed a clear safety improvement, and actually a dramatic safety improvement.

Do we have, Jim, the statistics on -- or the -- on Union Pacific, if you look at their actual reductions, and I think we have those, you will see that overall, the improvement in safety between '96 and '97 was actually more dramatic than even the years before.

Now, what we learned from that is that statistics alone simply can't get you there. We must have the on-going presence on the properties with this continuous, constant communication with labor and management because I believe, Mr. Goglia, that with the appearance of mega-railroads in this country, whole new ways of doing business, of managing companies, of regulating companies, are necessary for these companies to run safely and achieve the zero tolerance that they want and we want.

We have to have a process, and I think SACP is that process, to give us quicker means of prevention because prevention is what we want.

I believe that because the communication lines are so much stronger, because there are relationships that have never been there before, and I think you will hear from our inspectors the dramatic change in being able to find an open door from Jerry Davis through Dennis Duffy and all the way through the organization as soon as anything jumps up as a hazard that must be corrected immediately.

All of the statistics from our safety programs and data provided by the industry show that rates and numbers of train accidents were continuing to decline. Class 1 railroads were undergoing what appeared to be successful consolidation where increasing traffic volume, shrinking workforce and physical plant, steadily improving safety all were going hand-in-hand.

The events on the Union Pacific this past summer marked a sea change. We have learned from this experience that a paradigm shift in the railroad industry can occur suddenly, and with only traditional ways of dealing behind us, we cannot stop them. We cannot prevent them before they hurt or kill people.

We have the ability now to identify and quickly respond to fundamental changes that affect railroad operating safety. In fact, as you know, we have taken the unprecedented step this year for the first time in history to file with the STB a filing which says that these mega-mergers must have detailed safety implementation plans in order for such mergers or combinations or acquisitions to really be evaluated fully.

As you know, in the past, the competitive issues were the real issues of consideration before the STB. We have learned that mega-railroads demand other kind of considerations before those decisions are made, and STB and the Federal Railroad Administration will do a joint rulemaking to make this -- which will propose

-- of course, we have to go through the rulemaking process, to make this mandatory in any future merger or acquisition.

The Union Pacific experience demonstrates that SACP provides FRA with new tools to expand our reach, identify and address critical safety issues that have traditionally been outside the realm of our regulation.

Our response to the events on the UP went well beyond the SACP process with implications for the entire industry. We now recognize that a pro-active preventative approach to safety is absolutely essential to the railroad industry, particularly when railroads are engaged in consolidations, mergers and acquisitions.

In closing, Mr. Goglia, I'd like to say that at the FRA, we are constantly re-examining our rail safety programs to ensure that they keep pace with the evolution of this dramatically-changing railroad industry.

We try to learn from the problems we encounter, and we seek new ways to make our safety programs more effective. Our experience with the UP was certainly no exception. That experience has enabled us to further refine and improve our own SACP process so that we can effectively take safety in the railroad industry to new levels.

The SIP, the Safety Improvement Plan, process that I mentioned with regard to our filing to the STB will provide the railroad industry itself with new tools to become more pro-active in anticipating safety concerns and preventing safety problems before they occur.

Armed with these tools and working in concert with rail labor and management, we are convinced that we can move even closer to our goal of zero tolerance for railroad accidents, injuries and fatalities, and, Mr. Goglia, to respect everyone's time, I will not review the ripple effect that this SACP process has had throughout the country.

I will mention one item just to give you an idea. Yesterday, I spoke to a very large number, 50 or 60 people, who were sitting together in a new organization called NARAP, the North American Rail Alertness Partnership.

This is a group of individuals from railroad management, labor, suppliers and FRA, who decided that rail industry fatigue was something beyond what any single railroad can do enough about, and they decided to come together in this historic new national partnership to attack the problems of fatigue and solve them.

I think that that is only one indicator, I could mention many more, and perhaps should submit some of those things for the record, of the kind of implication for safety partnerships that have come out of working on a whole new way of doing business with FRA, rail management and rail labor.

I can say to you that the FRA was challenged because we didn't have a boilerplate or a manual. We had to create it out of whole cloth, and our staff had to create in themselves through training and hard work skills that were never ever before called for in the work at FRA, but if we all, NTSB, FRA, together are going to achieve our goals, which is zero tolerance for any safety hazard, I believe that all of us must really do a self-assessment on how we're doing business and how we can not only stop but prevent the kinds of tragedies that we're discussing today.

Again, my thanks for giving me the opportunity to talk about a safety story that has achieved much and that can achieve much more.

Thank you, Mr. Goglia.

CHAIRMAN GOGLIA: Thank you very much, Administrator Molitoris.

We have -- I have a number of questions, and I'm sure, based upon the way I notice everybody writing here, I think that we all may have some, and I will go around and give everybody at the head table here the opportunity.

I just would like to just say one thing before I forget it, is that I would like to have for the record those high points that you just talked about, and with that, I'll start with Ms. Beal. Do you have any questions?

MS. BEAL: I do. Good morning, Ms. Molitoris.

Can you tell me what plans will be implemented up until the joint rulemaking that you spoke of to ensure that future large mergers don't result in similar safety problems?

MS. MOLITORIS: Is it Ms. Beal?

MS. BEAL: Hm-hmm.

MS. MOLITORIS: Thank you. The STB accepted our recommendation with regard to the proposed acquisition of Conrail by Norfolk Southern and CSX, and those plans were filed with the STB.

We have worked with the railroads practically daily. We have a team on the -- at the FRA who's working on nothing but this, and once they were filed, we were not at all finished because we continued and are continuing, present tense, to work with them to develop a level of detail committed to paper which in a sense becomes an action plan and a contract which we will hold these railroads to and will monitor closely their implementation of same.

We believe that the joint rulemaking could be completed by the end of this calendar year and consequently would be in place to require these things for future merger considerations, but if, for some reason, it was not, we would do the same thing that we have done with this proposed acquisition, and that is to file to say that these kinds of mergers and acquisitions cannot be fully evaluated without that kind of safety consideration.

MS. BEAL: One other question. In talking about SACP, could you give us a concrete example of how the SACP process has actually come about to implement a change that you feel is noteworthy?

MS. MOLITORIS: That I feel is -- I didn't hear the end.

MS. BEAL: Noteworthy.

MS. MOLITORIS: Well, I would suggest to you that all of the items that I identified in my testimony with regard to the decisions by Union Pacific came out of the working partnership at the table.

I know Jerry Davis himself has gone to meetings himself to listen firsthand to the concerns about fatigue, about under-staffing, about lack of enough supervision. They are dealing with things like train line-ups which, in terms of the kind of input we got from the hundreds of individual employees who wrote or called or e-mailed or faxed, was one of their most crucial concerns because they were expressing extreme fatigue, and the issues revolved around crew calling, around train line ops, were at the heart of their frustration, and right now, there are -- there is both an interim and a longer-term plan in place by Union Pacific, and perhaps one of their testifiers or one of ours will go into detail, but it has to do with the software development which will assure that when employees call up, they get a real reading on how many hours or how many trains out they are or might be to -- to getting called.

This gives them an opportunity to get some real rest and rest that will not be disturbed. There are issues around computer systems actually where there was a glitch, and the computer system kept calling. So, the person's trying to sleep and continues to be awakened. This is a very, very frustrating thing.

The one thing I want to mention about the large majority of people who contacted us personally and reports from what I -- the reports I received from my people on the property is that the Union Pacific employees are dedicated to this railroad. They want it to be the best. They have a tradition and a history of feeling that they are the best, and they want these things fixed so they can perform their best and operate at peak performance.

I think and would be happy to submit for the record, in fact, we have an action plan that we can give you which identifies all of the initiatives. The fatigue mitigation and the hiring of Dr. Rosekind alone is an investment of some $4 million, which is focused directly on the problems that employees say are leading to catastrophe.

So, I think these kinds of investments coming out of the SACP process are extremely worthy, and we'd be happy to submit, you know, -- I will tell you truthfully it is almost difficult to capture all that is going on because they have actually had 339 meetings across the entire system of the Union Pacific listening, gathering, identifying ways to make things better.

This is a huge amount of work with hundreds of people over a period of six months.

MS. BEAL: Thank you. No further questions, Mr. Chairman.

MS. MOLITORIS: Thank you.

CHAIRMAN GOGLIA: All right. Mr. Ellingstad?

MR. ELLINGSTAD: Thank you, Mr. Chairman.

Ms. Molitoris, you had indicated that -- or you had claimed that there were no clear indicators of the pending problems that appeared on the Union Pacific.

I assume that you're talking about your routine monitoring of -- of statistical indicators of accidents, etc. Could you comment on -- on other indicators that -- that -- that might have been available to -- to assess these under-staffing issues, the fatigue problems and this kind of a thing, and apart from -- from the development of these particular plans, does the FRA have data systems and data monitoring activities in place that are sufficient or that have been improved by this experience to avoid these kinds of problems in the future?

MS. MOLITORIS: That's a long question, Mr. Ellingstad. I'll try and answer its parts.

MR. ELLINGSTAD: Okay.

MS. MOLITORIS: Let's go back to 1995 because that was one of our first SACP efforts. Clearly we were not as expert at probing questions, but the things that we found were primarily regional in nature, and they were addressed by the Union Pacific.

Again I want to emphasize it was not the same Union Pacific as 1997, and I think that's a crucial issue. They were two-thirds smaller than they were in 1997.

We continued to get good information through the normal thousands of inspection processes that we continue to do, and it's a very crucial part of our database.

What we know is that that database isn't -- I mean that collection process isn't fast enough because obviously we have hundreds of inspectors across the country, each of them is covering hundreds, sometimes thousands, of miles, and since some of the mega-systems now cover two-thirds of the United States, putting all of these together in a way that shows the trend takes too much time.

Adding to the normal process, the SACP process gives us a timeliness, gives us a quick response component that is absolutely essential in this day and age of our railroad industry, and I think our best weapon, prevention weapon, is the kind of communication avenues that are now in place so that if I, a signal employee or BMWE or a locomotive engineer, have a problem and identify this as a safety hazard that's going to hurt somebody or kill somebody, I have a way of getting action now.

(A) I can go to my supervisor. In the best of all worlds, that supervisor is going to realize that safety's first. The safety culture is going to be so in place that they will not rest until that is solved. (2) Say that doesn't happen, they have our regional people that they can go to, and with our reorganization, we are identifying specific FRA people at the properties, because one of the things we realized as the whole architecture changed is that we as an organization were more structured for the railroads of the '60s than we were for the railroads of the '90s, and, so, we needed more people at the headquarters and heartbeat of the railroad as well as we needed more people in listening sessions.

Let me give you one example which may clarify. This is an example on the Burlington Northern Santa Fe, where one of -- two of our inspectors went to a listening session. The engineers there identified a frustration and a worry. They said signals were dropping red just as they got to an interchange, and they said we've got two choices, and they're both bad. We either go through it and risk our certification or we throw it into emergency, and we risk derailment.

Those are not two choices anybody wants to have. As a result of that, we went to the headquarters. We worked with the NSF. We began to dig. We found a glitch in the software system. This glitch was doing exactly what these employees said.

Not only at the places they told us but at 400 places on the railroad, and, so, that communication opportunity and the cooperative working partnership that exists was enabling that problem to be fixed at 400 locations.

Now, I think that gives you an order of magnitude and time that these processes together can prevent rather than having to go with you to places where tragedy happened.

MR. ELLINGSTAD: Okay. Thank you.

Does the FRA have sufficient authority to -- to deal in all of the safety areas, for example, with respect to fatigue, with respect to hours of service regulations, these kinds of things?

MS. MOLITORIS: Mr. Ellingstad, we have the responsibility for safety, and I consider that a very broad and a very serious responsibility.

As I tried to illuminate in my comments, SACP gives us the opportunity to work with companies and employees on issues where there is no regulation right now. It gives us, as I have said to some people, an opportunity where those before me have feared to tread because there was no specific mandate on specific supervisory levels, specific hiring levels, specific implications from cutback decisions, whether it be dollars or people.

What SACP gives us the opportunity to do is to work with companies on those areas which leverage safety beyond regulation, and I believe that's the only way we're going to get to zero, because you can't have a regulation that covers every single safety hazard that could be.

We have very good regulations in many areas. We have many, many more coming through the pipeline, and I think you'll hear about that from Mr. Itzkoff when he talks about the RSAC process. We've tried to bring some of these best practices into the regulatory arena as well.

I believe we've had good response from the railroads because at least as expressed to me, and you'll have to ask them directly, there is a realization that this kind of cooperative effort helps them.

We in a sense, FRA in a sense, has become a bridge, a facilitator, between labor and management where, for many, many, many years, over a hundred years, collective bargaining issues have set up a hostile environment.

Safety is not anything that can be negotiated. Safety is Number 1 priority for all people, especially the employees whose risk is the highest. So, I think that although specific legislative written authority to cover every single instance that you might be alluding to is not in place, the overall mandate to achieve safety in the rail industry is the one we follow.

MR. ELLINGSTAD: So, you're saying you do not need any additional regulatory authority?

MS. MOLITORIS: No, I'm not saying that, because obviously we have many, many regulatory initiatives coming through the pipeline. What I'm saying is we will not wait for each of the regulatory processes to be completed. We must simultaneously work this other process as we move the regulatory process forward.

I sort of see it as a pincher movement with all of the methods to increase safety working simultaneously.

MR. ELLINGSTAD: Thank you. No further questions, Mr. Chairman.

CHAIRMAN GOGLIA: Mr. Dunn?

MR. JAMES P. DUNN: Thank you. Good morning, Ms. Molitoris.

MS. MOLITORIS: Good morning, Mr. Dunn.

MR. JAMES P. DUNN: In your remarks, you mentioned that there were not clear indicators or the statistics did not give you clear indicators of what was about to happen on UP.

Do you think the FRA is adequately staffed to -- and that's against the background also of indicating the need for the strong presence on the property. Is the FRA adequately --

MS. MOLITORIS: Did you say what kind of presence? Smaller?

MR. JAMES P. DUNN: No. Strong.

MS. MOLITORIS: Stronger.

MR. JAMES P. DUNN: I believe you indicated

--

MS. MOLITORIS: Yes, that's right.

MR. JAMES P. DUNN: -- you need a strong presence.

MS. MOLITORIS: That's right.

MR. JAMES P. DUNN: And the question I have is do you think the FRA is adequately staffed to maintain that strong presence on the property and also go forward with SACP? Is staffing an issue for you at the agency?

MS. MOLITORIS: As you know from my remarks and the President's '99 budget, the President has recommended 32 new inspectors and professionals to help us with this effort. I've also mentioned that there was a 24-percent increase over the Clinton Administration so far with 11 new staffing until the '99 budget.

I would say to you, Mr. Dunn, that addressing an industry of our size, and I have that in my comments, how many thousands of miles and employees and vehicles and facilities, is a tremendous challenge.

I have to say to you I have a respect, a personal respect for our staff that exceeds anything I ever knew I could have because I see how they give of themselves, how committed they are to this mission, and how much they have to stretch themselves because you can even take the example of the first sweep in August. 25 percent of our inspection workforce was out there on one project, and that doesn't count all the people in Headquarters and the regional offices that are supporting, trying to support this effort.

We had Regooch, who I believe you will hear from, who was three months in Omaha with staff and support. These people are giving up a lot with their families. It's not only as you so much do with the response to tragedies that you go out to and sometimes you have to miss the graduation or the birthday dinner or whatever it is, but this is going on constantly, and the other part that I will say to you is that we under-stand more fully than we ever have what really has to be done to get to zero. It's enormous.

What I do know, I'm very grateful that the SACP process has helped us leverage a very small workforce because, for example, in the regulatory arena, we have over 500 active participants, labor, management, FRA.

Now you don't get that kind of investment if you operate sort of on your own, and that's the challenge we face all the time. I am very, very proud of my people because not only have they given of themselves in terms of time and effort and commitment, they have learned. They've had to learn new skills. They've had to learn not to be afraid to go to Jerry Davis's office.

You know, in the old paradigm, an inspector from the FRA would never have the idea that they could possibly go to Jerry. Now Jerry would say he's always the open door guy, and I can verify that he is, but just in general, with our organizational structure and our traditions, people saw themselves at certain levels, and, you know, who would they be to -- to go to a high-ranking official of a railroad or even in the FRA?

I think what is happening is that our work-force, and I think you're going to hear from our inspectors, and in talking to them, I think all of them have told me stories of how they are empowered because they realize the weight of safety is as much on them as is on everybody.

So, we individually and collectively are taking tremendous responsibility for this. We appreciate the kind of support and guidance and help the NTSB gives us because we know we need all the help we can get from every place.

MR. JAMES P. DUNN: Thank you. In the safety assurance assessment that FRA released in February, there was a conclusion that we have discussed at the Safety -- that staff has discussed, and that was that FRA concluded on UP that a fundamental breakdown existed in some of the basic railroad operating procedures and practices essential to maintain a safe operation.

Was -- was that conclusion discussed with Union Pacific, and, if so, what was their response to that?

MS. MOLITORIS: Well, I think Jerry Davis and I had almost daily conversations during those tragic times, and I -- I know that is -- is a statement that's been pulled out.

I think it's accurate, Mr. Dunn, and I think the fact is that one of the reasons the Union Pacific welcomed us was that they were terribly frustrated and startled by this terrible turn of events, too.

There's no way to specifically and scientifically make a lot of these connections, but I will say to you that in my own mind, as I listened to employees and talked to Jerry and Dennis Duffy and so many of the professionals at Union Pacific, as well as, let me say, Burlington Northern and CSX, too, that I believe there is a point where the growth escalates to such a level that the old systems just don't work any more, and because of the tradition of safety that Union Pacific always was proud of and always had, sort of the venerable Union Pacific, they expected and anticipated that the systems would continue to work.

I think what we've all learned is in order to get bigger, so that railroads can be competitive in a very competitive transportation world, that new systems, fundamental new systems, have to be in place to manage it, to operate it, to communicate with it, and to keep it safe.

MR. JAMES P. DUNN: Thank you, Ms. Molitoris. That's all the questions I have.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: Thank you.

MS. MOLITORIS: Thank you.

MR. LAUBY: Always a pleasure, Ms. Molitoris. I had a basic question. I listened very carefully to your presentation, and I had a basic question concerning how we measure safety on the railroad, and I heard you discuss that in 1995, we started a SACP with the Union Pacific, but with a railroad that was entirely different from the form it took today, and that even though the statistics did not indicate a problem, we ended up with -- with a railroad that was under-staffed, that we had severe fatigue problems, that we had supervisors inundated with paperwork and could not provide the supervision that they needed to, and we had problems at a dispatching center with too few employees and inadequate training, and again this is -- this is with the back-ground that the statistics continue to improve.

My question for you is how can we measure rail safety when the statistics are -- are not giving us a good read?

MS. MOLITORIS: Mr. Lauby, first of all, Mr. Goglia, I want to compliment Mr. Lauby because Mr. Lauby, of all your people, has been most involved with our SACP process. He has welcomed our staff to discuss ways to improve the way that we both work together on safety. So, I want to recognize that, Mr. Lauby, and thank you very much.

One thing I would answer to your question, Mr. Lauby, is that we don't measure it one way. There is not a silver bullet for measuring safety. Clearly the statistics that we collect on an on-going basis are very, very important, but what I see is that the timeliness -- I mean, for example, the statistics I was giving you were 10 months final from '97. We still have the last two months to finalize. It's a huge industry. Getting them all in, checking everything.

So, there's a time issue, a time gap involved there.

I believe, first of all, the Number 1 way that you measure is how close to zero are they? Zero injuries, zero incidents, and zero deaths. How close are they? I mean Jerry checks that every day. We check it every day.

Number 2. The results gained by the SACP are a very timely way of measuring success. I'll just mention a little story to you because I think it's sort of a common sense way of measuring. When I first got to the FRA, which was in 1993, one of my most unattractive times for me was when I had to do the mail, Mr. Lauby, because the mail to the FRA in 1993 was not a pleasant thing. Lots and lots of people wrote to us about our deficiencies. We weren't fast enough. We weren't quick enough. We didn't listen well enough. We didn't do enough.

It was very depressing because I saw lots and lots of people working very, very hard at the FRA, and, so, the first 10 to 12 months, we spent a lot of time, as you well know, bringing lots of people in from every part of our industry to listen so that I could hear and see them firsthand, what can we do better, and what I said to my colleagues is we will know that we're doing better in lots of ways. How fast our letters go out, all kinds of traditional measurements, but one way we'll really know is when our mail changes.

We're going to know that we're starting to do better when the response from the American public and our customers comes in in a different way. That has happened.

I think the same kinds of measurements come out of the SACP process because management and labor are talking together. FRA is there. It's a firsthand understanding of what's really happening day-to-day on the railroad.

So, what I expect is that we will never stop recognizing and using our data for long-term trends, for ways of evaluating things throughout the industry, but we have to have SACP as that right-on-the-spot important communication and results entity that can, with a snap of a finger, get something to happen to save a life. That's to me what is so crucially important and also bring information to management that under other -- without that entity, they might not know.

MR. LAUBY: I have one final question along those same lines. Do -- do you believe that the SACP process, along with the statistics, have the ability to detect the types of problems that occurred on UP before they get to the extent that we had last summer?

MS. MOLITORIS: Yes, I do.

MR. LAUBY: Thank you very much.

CHAIRMAN GOGLIA: Administrator Molitoris, two issues or two items I would like you to submit for the record, and you mentioned it earlier. One was the SACP process, the entire package, and if you have it electronically, you don't have to cut down half a forest, and the other is we'd like to have a copy of your filing, the joint filing or if you're both going to file separately, that's okay, but for the safety improvement plans, and now I know why Jim Hall, the Chairman of the NTSB, always asks his questions first, because everybody has asked mine.

So, with that, on behalf of the Board and also a personal thank you for appearing here today.

MS. MOLITORIS: Thank you very much, Mr. Goglia.

CHAIRMAN GOGLIA: We will now take a short break. I think coffee is up on everybody from the squirming I noticed in front of me. 15 minutes sharp.

(Whereupon, a recess was taken.)

CHAIRMAN GOGLIA: Okay. We will go back on the record, and at this point, the Hearing Officer, James P. Dunn, will introduce the exhibits to be used in the hearing and then begin the calling of witnesses and the taking of testimony.

Mr. Dunn?

MR. JAMES P. DUNN: Thank you, Member Goglia.

Pre-hearing conference was held at the Safety Board Headquarters on February 27th. At that pre-hearing conference, the witness list and all the exhibits were gone over and agreed to by the parties to the investigation. So, we won't go over each of them individually at this time.

However, since that time, the Safety Board has received exhibits, additional exhibits from the Union Pacific and the Federal Railroad Administration. Those exhibits are 6-A, B and C and 7-A, B and C, respectively. Copies of those exhibits have been sent to the parties.

There is one change to the witness list. Mr. John Megary, Witness Number 10, is unable to attend the proceedings due to a serious illness in his immediate family, and please send our message that we hope everything turns out well for Mr. Megary.

At this time, the National Transportation Safety Board calls James S. Dunn. Mr. Dunn, would you stand and raise your right hand, please?

Whereupon,

having been first duly sworn, was called as a witness herein and was examined and testified as follows:

MR. JAMES P. DUNN: Thank you.

STATEMENT OF JAMES S. DUNN
NTSB, CHAIRMAN OF THE TECHNICAL PANEL

MR. JAMES S. DUNN: Good morning, ladies and gentlemen.

On October 29th, 1997, the Navasoto, Texas, accident occurred. The National Transportation Safety Board launched a team of investigators to begin a special investigation of the Union Pacific Railroad. The Navasoto accident represented the latest in a series of accidents that the National Transportation Safety Board has had under investigation in the past year.

In all, there were 15 accidents that resulted in seven fatalities, 39 injuries and over $27 million in damages. Included in these 15 accidents are 10 collisions, three derailments related to equipment, and two derailments related to track, one of which resulted in a derailment of an Amtrak train.

At this time, I would like to give you a brief overview of those 15 accidents.

On October 11th, 1996, in Cheyenne, Wyoming, a series of collisions occurred when a run-away cut of cars with an unmanned locomotive collided with a Union Pacific westbound freight train. The crew of the west-bound train saw the run-away cars and jumped from the train sustaining minor injuries. An eastbound Union Pacific freight train traveling on the adjacent track derailed when it struck a set of wheels from the derailed equipment.

On January 12th, 1997, in Kelso, California, 68 cars of a Union Pacific freight train derailed when an engineer inadvertently activated the engine shut-down switch, eliminating the train's dynamic braking capability and caused the train to run away. Speeds reached 75 mile per hour. Luckily there were no fatalities or injuries in this accident.

Then on January 13th, 1997, in Granite, Wyoming, Amtrak Train Number 25 derailed at the second and third locomotive units in all nine cars. The derailment occurred at a welded area for the track which broke under the train. 20 passengers, three on-board service personnel, and one operating crew member sustained minor injuries.

On February 7th, 1997, in Gurney, Illinois, a southbound Union Pacific freight train derailed the 34th through the 47th head cars. The 14 loaded freight cars derailed as a result of a draw bar that broke in the 32nd head car.

February 13th, 1997, Wellington, Kansas, a Union Pacific freight train was traveling about 40 mile per hour on the main track when the crew observed a switch improperly aligned for a siding. The engineer made an emergency brake application, but the train continued into the siding, derailing and striking track equipment that was in the siding.

February 21st, in Odem, Texas, a Union Pacific freight train collided with the rear car of a stopped Union Pacific freight train. The post-accident investigation revealed that the crew of the standing train received an incorrect computerized car count and left 32 cars south of the yard limit sign following the main track. The two-man crew of the striking train were injured when they had to jump from the train.

March 16th, Pinter, Arizona, nine cars of a Union Pacific freight train derailed while the train was traveling at 40 mile an hour when the brakes applied into emergency. A truck on one of the derailed cars was found to be defective.

May 27th, Marshall, Missouri, 27 cars of a 102-car coal train derailed when a piece of defective rail broke under the train.

June 22nd, Devine, Texas, two Union Pacific freight trains collided head-on, derailing five locomotives and 11 cars. As a result of the collision, two crew members were fatally injured and two sustained injuries. Two passengers -- trespassers riding in one of the locomotive units were also killed.

July 2nd, Delia, Kansas, two Union Pacific freight trains derailed when the lead locomotive of the westbound train collided with the sixth car of an east-bound train. A total of 18 cars and two locomotives were derailed. The engineer on the striking train was killed and the conductor was injured.

August 20th, Fort Worth, Texas, a four-unit Union Pacific locomotive consist traveling eastbound in an unoccupied condition and an estimated speed of 60 mile per hour collided with the lead locomotive unit of a westbound UP freight train. An engineer and an engineer pilot were fatally injured. A conductor was also injured.

August 23rd, Shawnee Junction, Wyoming, a Union Pacific-loaded coal train collided with the rear car of a standing Burlington Northern Santa Fe coal train. The locomotive engineer and the conductor from the Union Pacific train sustained minor injuries.

August 31st, Barstow, California, a Union Pacific freight train struck the rear car of a Burlington Northern Santa Fe freight train.

October 25th, 1997, Houston, Texas, a Union Pacific intermodal stack train collided head-on with a Union Pacific freight train at West Junction in Houston, Texas. The engineer on the intermodal train stated that the train had received an initial terminal air test about 10 miles from the accident. He said that he received an approach signal to West Junction, and when he applied the brake, the train was not responding the way he felt it should. He said he made a full service reduction of the automatic brake and then placed the train into emergency braking.

He stated that he and the conductor saw a headlight of an approaching train on the same track, and that the conductor called out on the radio and told the crew on the approaching train to jump. All four crew members from both trains were injured when they jumped from their trains.

October 29th, 1997, Navasoto, Texas, accident, a Union Pacific freight train collided with the rear car of a standing Union Pacific freight train. The crew of the striking train told investigators they had fell asleep on the train prior to the collision. The engineer's post-accident blood test was positive for alcohol. There was one injury as a result of the collision, and that concludes my overview of the 15 accidents.

MR. JAMES P. DUNN: Thank you, Mr. Dunn.

The National Transportation Safety Board calls Jerry R. Davis.

Whereupon,

having been first duly sworn, was called as a witness herein and was examined and testified as follows:

MR. JAMES P. DUNN: Thank you. Please be seated.

TESTIMONY OF JERRY R. DAVIS
PRESIDENT AND CHIEF OPERATING OFFICER
UNION PACIFIC RAILROAD

MR. JAMES P. DUNN: For the record, would you please state your name and spell the last name, please?

MR. JERRY R. DAVIS: Jerry R. Davis, D-A-V-I-S.

MR. JAMES P. DUNN: And what is your current position with Union Pacific, Mr. Davis?

MR. JERRY R. DAVIS: I'm President and Chief Operating Officer.

MR. JAMES P. DUNN: And how long have you held that position?

MR. JERRY R. DAVIS: A little over a year.

MR. JAMES P. DUNN: Thank you. I understand you have a statement to -- to open up with?

MR. JERRY R. DAVIS: Yes, I do, and thank you, Mr. Dunn, and thank you, Mr. Chairman, and other members of the National Transportation Safety Board, for inviting me here today to participate in this hearing.

1997 was a year of tragedy for all of us at Union Pacific. Myself and 53,000 other employees of our company felt that. 11 of our fellow employees died in these rail accidents that Mr. Dunn talked about earlier.

As a company, we take full responsibility for those lives and the sorrow of the families and their friends, and as a company, we are absolutely committed to making sure that nothing like this ever happens again on our railroad.

On a personal note, I've worked in the railroad industry for over 40 years. I started as a union telegrapher. I've worked as a train dispatcher. I have worked in many field management responsibilities. I've also worked on three different railroads as chief operating officers, and on each of these railroads, I had overall responsibility for safety.

In all of that time, 1997 was by far, I say again by far, the most turbulent year in my railroad career. I take safety very personally. I take it seriously, and when an employee loses his or her life on our railroad, it is a very, very serious matter.

There is nothing, and I repeat nothing, that I wouldn't do to change what happened last year. But I think now our choice as a company is to learn and learn from the past and focus on the future.

We believe that the seeds of opportunity have been planted by last year's safety and service difficulties, and that's what I want to talk to you about today. Maybe it's best to first set the stage by explaining the operating environment in which these accidents occurred. I think this is important because 1997 was anything but a typical year for Union Pacific.

As you know, last year, we began to implement the largest and most important complex merger in railroad history, the Union Pacific and the Southern Pacific Railroads. Among the principal reasons we decided to merge was to add much-needed resources to Southern Pacific's deteriorating infrastructure and service levels, while at the same time expanding Union Pacific's capacity to handle increased demand.

One of the areas where the merger synergies had the greatest impact is in the Gulf Coast areas of Texas and Louisiana. With the rapid growth in traffic in that area, Southern Pacific's service was significantly hampered by physical plant problems, and Union Pacific was approaching capacity limits.

The merger was really an ideal situation to solve both problems. Unfortunately, before we could implement labor agreements or important systems, two absolutely essential components to a merger, a number of events took place that resulted in some serious congestion in this area.

These ranged from the growth in the plastics business to manpower shortages and capacity constraints and compounding all of that were weather-related interruptions, like Hurricane Danny. So, we were in a situation where we had not physically merged and consequently could not take advantage of the benefits of a merged operation, and without the efficiencies of a merged operation, it's nearly impossible to counter the escalating congestion and service problems that we had.

Ultimately, these service problems affected every aspect of our operation, including safety. Had these events occurred singly or at any other time, we probably would have managed through them. Together and at this particular time, they triggered congestion, problems that were initially isolated in the Gulf area, but later on spread throughout the entire Union Pacific system.

When these problems emerged, we took immediate action, but I have to emphasize that the problems we encountered were truly unprecedented. We certainly never had such severe congestion on Union Pacific. In dealing with it, we spared no expense, in manpower or in dollars, in trying to return service to normal levels as rapidly as possible.

We initially addressed the problem by taking a variety of traditional corrective actions. We diverted locomotives and crews from other locations on the system. We leased every available locomotive available in North America. We created special command centers for managing local traffic. We negotiated new labor agreements, and we instituted an aggressive hiring program.

Since these efforts alone could not stem the congestion spiral, we had to put in place an aggressive recovery plan; in fact, the most far-reaching railroad recovery plan ever. This plan involved turning over substantial volumes of traffic to other railroads or trucks, transferring some switching operations to other railroads, reducing horsepower on our intermodal trains to free up locomotives, and temporarily withdrawing from selected markets where alternate means of transportation were available.

These measures helped us to make some progress, and we were showing that. We sustained a financial loss in the fourth quarter of last year and had to cut our dividend for the first time in this century.

Let me address one other issue that has been raised as a concern, and that's the use of management crews in Texas. If it had not been for the service issues and the crew shortages on the Southern Pacific, we would never have opted to use management crews. As it was, we didn't have much choice.

While other field managers were able to pick up most of the slack in terms of management oversight, it did place additional pressure on our normal processes involving efficiency testing, engineer certification, and qualification.

But even during that time, service did improve, at least for awhile. By the end of last November, train speed was increasing on the railroad, system inventory was dropping, and congestion was being reduced at a rate that had us hoping the problem would be over by the end of 1997.

However, we knew that any long-term solution could not be reached without taking the steps needed to truly merge the Union Pacific with Southern Pacific systems and to achieve the synergies and efficiencies that only a true merger could produce.

This required three actions. Number 1, putting Union Pacific and Southern Pacific operations on the same computerized control systems for car ordering and car management. 2, implementing new labor agreements as required by the merger, which involves realignment of crew territories, and, Number 3, introducing directional running on the Union Pacific and Southern Pacific lines and yards in to and out of eastern Texas and Arkansas.

The long-term impact of these innovations will be hugely positive and essential to finding a permanent solution to our current congestion problems. But each of the three major changes had an initial traumatic effect on our operations. Like any major surgery, they caused additional pain before recovery could begin to take place.

I hope this gives you a bit of a sense of how turbulent 1997 was for Union Pacific. We're trying to juggle two sets of balls with one set of hands, tackling all the tasks that a merger of this size requires while dealing with unprecedented service problems.

But we believe, and our daily review of field operations supports this, that the worst is now behind us. It is far from over, and that the changes that we are introducing and have introduced are beginning to work.

I believe that's enough on safety, but I came here to discuss -- excuse me. I think that's enough on service, and I'm here to talk to you about safety and what our safety plans are.

We want to explain our safety processes, address the main issues raised by the NTSB and answer each and every question that you have. First, I want to answer two questions that I think all of you might be asking yourselves, and that is did our operational problems cause Union Pacific to put a hold on safety? And, secondly, did Union Pacific cut back on its safety efforts?

These questions, we've asked ourselves over and over as we worked through our analysis of last year's accidents in reviewing each and every one of them. I can clearly say that the answer to both of these questions is a resounding no.

I'll begin with train dispatching. We have implemented a number of changes in our dispatch center ranging from training of dispatchers and managers to changes in authorizing track warrants.

Some of these improvements include a revised training curriculum for new dispatchers, annual training for all dispatchers, safety and production briefing sessions prior to each shift, a safety hotline to report dispatching concerns, multiple software improvements, reinforced emphasis on dispatching efficiency testing.

We have 46 new dispatchers brought on in 1997, and we plan to hire 65 in 1998. An increase in our dispatcher quality control and training staff, an analysis of the workload of every dispatching position in our Harriman Dispatch Center. We have modified the workload on 11 positions and as has been spoke earlier, we have added two additional positions in this center.

We have also committed $50 million over the next few years to develop and upgrade our computer-aided dispatching technology.

I want to also say that I personally, having been a dispatcher and understanding the safety-sensitive jobs that these are, I personally talk to every new train dispatcher that we bring on to our railroad, so that they can hear from me as to what I feel the importance of their job and the importance that they have for the safety of our railroad.

Another area that was identified in the reports dealt with mechanical inspections. Right off the bat, I'd like to discuss an exhibit that I saw that shows a 10-minute terminal air test in Houston, Texas. This is not our standard. Our standard is to take whatever time is needed to perform a proper test. This was handled with the individual concerned and with other -- other people in our mechanical department.

Let me go back a bit and talk about those questions of did we take our eye off of safety? I can assure you that at no time did we do that, not even for a minute. Our focus on safety at every level of our company from my office, the chairman's office, to every field operation, large and small, we take it serious.

In fact, we spent significant time comparing Southern Pacific and Union Pacific safety processes to ensure we had a constant approach to safety. We compared about 20 different program elements ranging from safety auditing processes to derailment prevention practices. This was all done before we ever merged our operations. We wanted to make sure that we were completely integrated in our safety management practices.

Fortunately, this was not a particularly difficult task. After comparing two railroad safety processes, we found many similarities between these processes of Union Pacific and Southern Pacific.

What we did fail to recognize is that the safety process that was effective under normal operating circumstances needed to be fortified under the extremes of a complex merger and severe service problems.

Given the merger service difficulties, the weather-related problems, our management structure was significantly challenged and that was a key lesson, the need to set up -- to step up the safety focus in every area and have the resources to do so.

As I said, we conducted some very extensive investigations in each and every accident. While we didn't find any leakages or patterns among these accidents, we did find some specific areas that needed improvement. Those areas have been identified in the specific action plans that have been submitted for your review.

The elements in those action plans, coupled with the assessment recommendations made by the FRA, and our own initial findings, are the basis of the corrective actions that we have implemented.

I'd like to continue summarizing them for you. I have talked to you about our train dispatching, our mechanical design and inspections. I would also like to talk to you about track, what we have done there, our train crew performance, staffing, our management oversight, drug and alcohol testing, and elaborate a bit more on what we are doing about alcohol testing.

In the area of track-related issues, they have been thoroughly addressed. I believe we had a sound and systematic process for scheduling and conducting rail inspections, but as long as we have track-related accidents, we'll continue to evaluate our process to find better methods and technology.

To address the specific track-related derailment issues, we've done a number of things. We have upgraded the 119-pound rail for new a 133-pound rail on our river subdivision in Missouri. We have provided additional training and reissued procedures for welding rail ends. We have conducted a safety blitz with all of our maintenance employees on proper equipment tie-up procedures, and we are purchasing 11 new detector cars with the latest technology.

The next issue, the performance of our operating train crews. This was also raised. Let me tell you what we're doing to ensure our crews are working in the safest manner possible. I'll begin with our locomotive engineers.

We have a comprehensive process that covers the hiring, the certification, the qualification and the training of these engineers. To carry out this process, we have a 165 managers of operating practices, more commonly known as road foremen of engines. These individuals are responsible for supervising, training and evaluating locomotive engineers. These managers utilize a supervisory process called EQMS or Engineer Quality Management System.

This system tracks and records information on each engineer and includes field tests, required written examinations, training, qualifying trips, performance testing, and certification requirements.

In addition to our managers of operating practices, we have put on eight full-time managers of operating technology. Their sole responsibility is to keep our engineers updated on all new technology and new equipment we are bringing on to the railroad.

Closely related to the engineer performance is the performance of the entire train crew. To begin, we have taken steps to correct all of the specific issues noted regarding rule compliance. This is to ensure that train crew employees understand the factors contributing to serious accidents and derailments.

We have implemented numerous testing and awareness synergies and strategies. In addition, we re-emphasized the violated rules in our efficiency tests and locomotive event recorder analysis. Our goal is not only to educate our employees about serious accidents but also to ensure that the education and training is understood and applied.

We have also initiated a new training program for our TE&YE, our Train Engine and Yard Employees. This program is divided into two parts, both of which our TE&Y employees will go through in the next two years.

Part 1 consists of a full day of operating rules training and an examination. Part 2 consists of another full day of critical safety-related training, which includes fatigue management training, developed -- this has been developed by Alertness Solutions, which is our fatigue management consultant, who you will hear from later, instructions on locomotive and train inspections, an update on key rule changes, rules that are frequently violated, and rules related to recent accidents and derailments, and, lastly, crew resource management training, which is a program developed by the airline industry.

This training centers around the concept of building communication between crew members and the cockpit or, in our case, the locomotive cab. The objective is to ensure that employees understand where communication is critical, how communication breakdowns can lead to accidents, and how to be more aware of the operating environment.

As a side note, crew resource management training was one of the safety-related issues brought over from the former Southern Pacific Railroad.

By combining basic rules training with critical safety-related practices, our intent is to have employees that are well-rounded when it comes to safety. Employees that know the rules and can safely respond to the variety of challenges in the operating environment.

There was also a question raised regarding management oversight. I'd like to address this issue in some detail because it cuts across everything that we do from monitoring train crews to ensuring proper mechanical inspections.

We have renewed our emphasis in two specific areas: staffing and accountability. To improve our management staffing levels, we have added approximately 250 new jobs in the field since last summer. This is an increase of about 20 percent to our base 1,200 managers. This increase in field managers will help from two perspectives: management oversight of our operations and the quality of life for our managers.

In terms of accountability, we have a number of on-going incentives and initiatives. First, every manager in every craft has very specific activities spelled out in his or her job agreement regarding operating oversight accountabilities.

Secondly, we have a number of mechanisms that provide feedback to our managers regarding performance in this area. These range from a system of measures that track key management activities to field trips taken by senior managers to address our safety process.

Lastly, through our safety assurance and compliance program, we are tracking various crucial issues dealing with management accountability.

Another issue raised in the exhibits was drug and alcohol testing. Before I begin, I want to make one point. Of all of the incidents that occurred in 1997, including the 15 accidents that Mr. Dunn just reviewed with us, 83 employees were required by federal regulations to be tested for drugs and alcohol. Of this population, there was one individual that tested positive and that was for alcohol.

My point here is only that we do not believe that drug and alcohol use is rampant on our railroad. However, even one case is unacceptable and is cause to continually improve our drug and alcohol detection process.

Later on, when you hear from our drug and alcohol -- about our drug and alcohol detection process, and what we are doing to improve it, I think you'll see that we take our responsibility in this area very serious.

The issue of fatigue was talked about a lot. Over the past few years, fatigue has become an industry-wide issue, and we have come to view it in a very different light.

There are smarter and safer ways of dealing with fatigue, and we're doing just that. But you'll be hearing much more about that later, and now I'll just say that we know the fatigue will require both operational and cultural changes on our railroad, and we're prepared to deal with that in both fronts.

I've already mentioned how we have been dealing with manpower shortages in our field management. We are absolutely committed to eliminating TE&Y staffing issues. Last year, we hired over 1,000 people, and in 1998, we plan to hire about 1,500 additional transportation employees.

In addition to hiring more employees, we have totally revamped our manpower planning and resource process. Our strong intent is to never to get caught in such a manpower shortage again.

The next topic I'd like to address is the safety assurance and compliance program, as Jolene Molitoris, the Administrator of the FRA, has talked so eloquently on.

As you know, the FRA conducted an assessment on Union Pacific last year. One of its recommendations along with many was to initiate SACP. This is a process that brings together all of the key stake- holders in what we do, rail management, the FRA, our labor unions.

I don't know whose concept SACP was, but it is a welcomed addition to Union Pacific. We have a strong safety program when I look at our safety committees, our safety captains, that is down on the ground, its ground root, but the SACP process brings together those elements that are necessary to change the overall major processes on our railroad. Be it fatigue, whatever those broad issues are, this group will come together to solve those.

A number of things have been identified by the SACP process at Union Pacific already. They deal with system-wide safety issues and cultural issues. It was asked earlier what some of these items were. We identified -- we have identified crew management issues, our train line-up accuracy, inspection and testing processes, train dispatcher workload, discipline, and, of course, fatigue reduction.

All in all, we have over 200 people at Union Pacific involved on SACP teams, and I can assure you that all 53,000 of our employees are working towards one end, and that is to make Union Pacific the safest and the best company to work for, and that's why we have left nothing off the table in terms of improving the way we do business. We want to improve, and we will improve.

The entire SACP process is based on a partnership, a united partnership between management, labor and the FRA. Our best hope for sustained progress in safety is for everyone to be in the same camp and working together.

The last thing I want to convey today is that of all the changes and improvements that I've talked about over the past few minutes are part of an on-going long-term plan, and I can guarantee you is not a one-shot deal.

Exhibit 6-B on your record contains several graphs illustrating our performance in three key areas of safety: employee injuries, grade crossing incidents, and derailments.

I'm not going to go over those graphs this morning, but I'd like to point out that we have shown substantial improvements in all three of these indicators over the past several years. I'm pointing this out only for one reason, to assure you that the accidents we experienced last year were not the result of a company that disregards safety. We have always taken safety seriously at Union Pacific, but at a time we know better than anyone else that we have a long way to go to reach our goal of zero accidents.

The costly lessons that we learned last year is a constant reminder that we will never let up on our efforts to improve safety.

Before closing, I would like to personally thank the FRA Administrator, Jolene Molitoris, for her help and cooperation in setting SACP underway and in helping Union Pacific to enhance their safety processes.

I would also like to thank our labor unions and especially the UTU and the BLE for their efforts in our recovery plan and our safety process. We have a long way to go. The Administrator talked about the new program of seven and one. I know we are not a hundred percent on that yet, but we will work towards complying with those agreements and those -- those plans that we have there.

Again, I thank you very much, Mr. Chairman.

CHAIRMAN GOGLIA: Thank you, Mr. Davis.

The Technical Panel, Mr. Dunn, are you prepared to ask questions?

MR. JAMES S. DUNN: Yes. I think Mr. Cochran and Mr. Kivowitz have a few questions of you, Mr. Davis.

MR. COCHRAN: Good morning, and thank you, Mr. Davis.

Mr. Davis, as president and chief operating officer, who reports directly to you regarding safety on a daily basis?

MR. JERRY R. DAVIS: Well, first of all, I'm the one responsible for safety. Reporting directly to me is Dennis Duffy, our Vice President of Safety Assurance Compliance Processes, who reports to me for the SACP process.

In addition to that as the Vice President of Operations, when you look at safety on the railroad, 99 percent of it is in the operating area. The Vice President of -- the Executive Vice President of Operations would report direct to me.

MR. COCHRAN: How long has Mr. Duffy been in that position?

MR. JERRY R. DAVIS: Six months.

MR. COCHRAN: Has there been any changes to his position since he assumed that duty?

MR. JERRY R. DAVIS: Not that I know of.

MR. COCHRAN: And could you tell us was there a pre-merger safety integration plan developed prior to the merger?

MR. JERRY R. DAVIS: The -- I talked about briefly in my testimony about before -- before the merger, that the -- the operating people and safety people got together, looked at the processes, both on Union Pacific and Union Pacific primarily to take the better of the two. So, there was definitely planning in that area that was underway in the safety programs.

MR. COCHRAN: Were all levels of managers that are in safety-sensitive positions included in those plans?

MR. JERRY R. DAVIS: I just can't tell you from the Union Pacific side. I was on the Southern Pacific on -- on the pre-merger discussions.

MR. COCHRAN: Has everyone on the EQMS been fully integrated relative to former SP engineers as well as UP engineers?

MR. JERRY R. DAVIS: It includes both SP and UP engineers.

MR. COCHRAN: Thank you. I have no further questions.

CHAIRMAN GOGLIA: Mr. Kivowitz?

MR. KIVOWITZ: Yes, I do. Thank you, Mr. Davis.

I'd like to ask you, looking back at the merger, the -- specifically the Federal Railroad Administration, the Texas Railroad Commission or any of the state regulatory agencies, were they involved in any of your pre-merger safety planning?

MR. JERRY R. DAVIS: As far as I know, they were not.

MR. KIVOWITZ: Were the unions involved in any of your pre-merger safety planning?

MR. JERRY R. DAVIS: From the Southern Pacific side, I cannot answer that particularly from the Union Pacific side, but I do not believe other than through the safety committees for which they would be involved with. Our safety committees, as I talked earlier, are our ground roots and the foundation of our safety programs. All of our unions are very much involved. As to whether they were -- were included specifically on discussions pre-merger, I cannot answer that. Definitely they were involved with what -- what are the safety processes, what are the better ones that should be implemented.

The Southern Pacific had a strong safety program as well as the Union Pacific prior to merger.

MR. KIVOWITZ: Well, now looking back at the last, say, 16 months since the merger, do you think it would be beneficial to consider a safety integration plan involving all the different parties before a railroad would actually merge?

MR. JERRY R. DAVIS: Yeah. Well, I think indirectly, you know, all of our labor unions are involved in the planning. I mean when you bring to the table what are the safety programs, what are the processes, they are indirectly involved.

Whether it should be done more on a -- on a -- on a process basis or -- or escalated, I -- I don't think that would be a bad idea at all.

MR. KIVOWITZ: Looking at the -- the managers working the first level and third level supervisory positions, performing their normal service functions plus the added responsibilities of the increased service demands and moving traffic to Mexico, the chemical business, etc., when you couple that plus the increased demands on their time, plus operating trains, do you think there was enough time for those managers to really perform their normal oversight functions?

MR. JERRY R. DAVIS: Well, first of all, let me clear up maybe for the record, also, we -- on our manager of operating practices or our road foreman of engines, when we move those people into Texas to help out on the service recovery, all of them from the railroad was not moved into Texas.

I believe at the maximum at any one time, we had only 25 percent of our MOPs in the system in the Texas area, and people filled in behind them. Definitely when we looked at our -- our manning issues and the management positions in the field, we did not have enough. That is why we have added 250 people in the field.

The -- and that is -- you know, we do that based on the activity that we see out there. Do we miss it sometimes? I'm certainly sure we do. We felt with the additional people that we moved into the Texas area and the backfilling of those jobs that they came off of by other managers in those areas that we were adequately covered.

Did we make some mistakes? Certainly we did. But I -- I felt that, you know, with the 250 additional people we are putting on there, that we have definitely addressed this problem.

MR. KIVOWITZ: Thank you. The -- this SACP process which is relatively new in the railroad industry, this process, can you describe for us how you feel it's going to be a positive impact on the safety on your railroad and the other carriers in the country?

MR. JERRY R. DAVIS: Well, as I've said earlier, one thing that the process does is to bring to the table all of the people necessary to make safety happen, and -- and I believe the Administrator testified earlier that -- that one -- one group of those -- those people cannot make it happen by themselves, and by having those three -- three groups to the table discussing what are the safety needs out there, what changes are necessary, particularly in the areas of culture and fatigue, I think this whole thing of culture -- I mean I'm not sure what the definition of that is, but I do know that -- that things have to change.

The way we work people, the workforce that is out there, it's a much different workforce out there today than what was there in 1957 when I went to work. Just the values of people and the values of work.

I've talked to my managers many times, and it's hard for me to understand these young people today not wanting to work seven days a week, 24 hours a day, 365 days a year the way I did. I mean what's wrong with them? I know what's wrong with them. It's a different lifestyle today. There are demands on family. There are demands on time off. They're much, much different.

I understand that, and I understand that if we are going to succeed as a railroad in the future, and to take care of the demands of our customers, and that is to move their freight on a seven-day-a-week, 24-hour-a-day, 365-day-a-year basis, we have got to change.

I am willing to do that, and I am willing to listen to our labor unions, the FRA, our management people, wherever I can get information that will help me understand what is it going to take to change that culture on the railroad, I stand ready to do that, and I believe this process heads us in that direction.

Is it the answer to all ends? I'm sure it's not. But I'll tell you it's the best thing I've seen come along in a long time.

MR. KIVOWITZ: Thank you very much, Mr. Davis. I have no further questions.

CHAIRMAN GOGLIA: Okay. To the parties, Texas Railroad Commission.

MR. MARTIN: Mr. Davis, if I can just ask you one question. It's kind of a follow-up on Mr. Kivowitz's question.

You talked about hiring a thousand people in 1997, and you're proposing to hire 1,500 in 1998, and you indicated that you -- your company did get caught short on a number of employees directly at the time of the merger and these incidents, and you talked about the fact that the service aspect does have an impact on safety.

My question to you is, as you said, your company was not going to be caught short again, and, so, my question is, is how -- how do you intend to -- to not be caught short again?

MR. JERRY R. DAVIS: Well, let me tell you -- let me back up just a little bit why -- why we got short or why we got caught short. When we did the merger planning, there was a number of things that we looked at.

We had taken into consideration the new labor agreements that we were -- we were negotiating at the time with our labor unions, what we called the hub and spoke agreements, where crews have different seniority -- the seniority has changed. The routes that they operate on are changed.

The timing on that, we missed, and it wasn't because of any of our labor unions refusing to negotiate. That -- that was not the case. We missed the timing on that. We also missed the impact that that would have on the retraining of our crews.

We also figured we would have excess crews in various parts of the railroad that we would loan out into the Texas area or into the areas that we were short of crews. That did not happen.

In addition to that, I believe that our process that we were using at the time in looking at -- at our crew demands possibly had some flaws. We have completely revamped our process in looking at crew needs.

Another issue that I think is pretty obvious that caused crew shortages also was this congestion that we talked about in the Gulf Coast area. When we had this congestion, unfortunately our federal tie-ups go up, what I call we burn crews. Instead of using one crew to go from Houston to Lafayette, we may use three. That takes a much larger demand on our -- on our crew base than we had anticipated.

So, with this new process in looking at the crews and the way we hire, we are looking at it much more aggressively than we ever had in the future, and I am very confident that this process is much better than we ever had in the past.

MR. MARTIN: Thank you. That's all I have.

CHAIRMAN GOGLIA: Federal Railroad Administration?

MR. GAVALLA: Mr. Davis, you mentioned UP service recovery plan. Is this service recovery plan still underway?

MR. JERRY R. DAVIS: Yes, it is. We still have areas of service on our railroad that has to be -- has to be improved, and primarily in the -- in the Gulf Coast areas.

MR. GAVALLA: You also mentioned the use of management crews in Texas. Is this still occurring? Are they still being used to run trains?

MR. JERRY R. DAVIS: On a very limited basis, and I might add, Mr. Gavalla, it is done with a collective bargaining agreement with our unions.

MR. GAVALLA: You have mentioned the efforts that the UP has undertaken to improve dispatching practices, including hiring 46 new dispatchers with 90 -- with 65 slated for hiring in '98, additional desks, $50 million improvement to, I believe, would it be the CAD-3 system?

MR. JERRY R. DAVIS: Yes.

MR. GAVALLA: Were any of these issues subject of the SACP working group regarding dispatcher safety?

MR. JERRY R. DAVIS: Yes. A number of them have been. A number of them, as you well know, were on some inspections and -- and audits that were made by Union Pacific and the FRA on our Harriman Dispatch Center.

MR. GAVALLA: Sir, you also mentioned increased levels of management staffing and processes in place to ensure accountability of managers in regards to their safety oversight functions.

Do you recall if this was also an issue in one of the SACP working groups with FRA, UP and labor?

MR. JERRY R. DAVIS: I believe it was addressed, although I think after the FRA audit and our discussions with the FRA and internal management discussions, it was decided that we would do that, although to my knowledge, it was not one of the major SACP processes.

MR. GAVALLA: You also mentioned the issues undertaken by Union Pacific to address fatigue, and I realize we're going to have a presentation on that later on, but is that also an SACP initiative regarding the labor and management people?

MR. JERRY R. DAVIS: Yes, very much so, it is.

MR. GAVALLA: Sir, do you have any sense on how the SACP process has affected the communications between UP management and its workforce and labor representatives?

MR. JERRY R. DAVIS: Well, I think needless to say, when you're all setting at the table trying to -- trying to solve a very common problem, I think it helps communications. I think we have a lot of work yet to do on the railroad to communicate what is going on in the SACP process throughout our organization, and we have plans to enhance that.

I could go over it in some detail with you how we intend to do that, but I think that -- that end of the process has to be strengthened a bit.

MR. GAVALLA: Do you have -- are you prepared to discuss in any general terms some plans to increase communications?

MR. JERRY R. DAVIS: Let me say in -- in -- in -- we have various ways of communicating on the railroad. We have what we call our Info Magazine, which is a quarterly magazine that has had articles and talked about the SACP process, had a three-pager, I believe, in the last update that we had.

We have what we call on-line. It's a summary of progress that we make each month. It's -- it's an on-line daily electronic newsletter that any of our employees can -- can access.

We have information television that we have at many locations across our railroad that has news flashed on a 24-hour basis throughout our system. We also have, as you well know, what we call a SACP bulletin. It is a bulletin that was put out strictly to talk and communicate the SACP process. It's put out monthly. It's an informational bulletin, and it's also transmitted electronically to all of our field managers.

We have our union newsletters. We also have our -- our division newsletters that communicate SACP and what is going on. In addition to that, we have what we call business television. It transmits television broadcasts throughout our system. I give quarterly updates on the B tv. We also have monthly safety captains meetings and videos that are -- that are communicated throughout our railroad.

But I think the big thing, Mr. Gavalla, is the communication -- the one-on-one communication that we have with our people. I have town hall meetings with the people. I visit many locations throughout our railroad talking about SACP, talking about safety.

The other managers have this same process, call it an overlapping process or whatever, but I think that is one of the better ways to communicate throughout our -- throughout our railroad and to get the SACP tentacles throughout all of our organization at Union Pacific.

MR. GAVALLA: Thank you, Mr. Davis. No further questions.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes. Yes, I have a few questions. Can you hear me? Yes, I have a few questions.

Mr. Davis, you mentioned in your opening remarks a training program for TE&Y employees. You also mentioned that the program would be two parts, one day for new rules, training exams, discussion of rule violations which led to accidents. Then a second day of safety-related issues, such as fatigue, locomotive inspection, rules, and you also mentioned the crew resource management training.

My question to you is -- is do you think two days is a sufficient amount of time to cover all that?

MR. JERRY R. DAVIS: My people seem to think it is. I mean what is sufficient? I -- I'm not sure. I think that covers the basics, and what we're talking about here is retraining, also. We're talking about training experienced professional people that we are retraining in these classes.

MR. WALPERT: Okay. In regard to the promotion and/or hiring of locomotive engineers, you've indicated how many operating employees that you intend to hire. Can you break that down specifically for locomotive engineers?

MR. JERRY R. DAVIS: I don't have that available to me. I can get that for you, but I do not have that readily available.

MR. WALPERT: Okay. If you could provide that, I'd ask the Board if we could have -- be provided that information?

CHAIRMAN GOGLIA: I believe we plan on asking that question ourselves a little bit later.

MR. WALPERT: All right. Thank you.

The safety assurance and compliance program report issued by the FRA also mentioned the -- made a recommendation that UP adopt labor management safety partnerships.

Can you tell if any -- can you tell me if any progress has been made in developing those partnerships?

MR. JERRY R. DAVIS: The -- I can't talk in specifics, although we are willing to do that, to set down with any of our labor unions to what I -- what I would call safety partnerships.

I think we have always had on the railroad and in our industry partnerships with our labor unions. In some years, they have worked better than others, you know, and we struggle with those. We have quality processes that we work with our labor unions on. I call these partnerships.

Whatever partnerships are necessary to strengthen and -- and -- and to bring together on the railroad, we are willing to do that.

MR. WALPERT: Okay. Can you speak to the crew management service and train line-ups? Has any effort been made to improve the crew management services and train line-ups?

MR. JERRY R. DAVIS: Yeah. Let me -- let me say you bring up a very sensitive subject for me. One thing that I haven't talked about today, and part of my discussions with Jolene Molitoris, the Administrator of the FRA, she recommended to me that I put in a safety hotline that would come directly to my office.

What she felt in talking with a lot of our people on the railroad and also when I talked with them, they felt that sometimes I was being shielded by my own management as to what the safety problems were throughout the railroad, and she had recommended to me that I put in a safety hotline, which I did.

It was put in last September. I can't remember the exact numbers, but I received approximately 2,200 phone calls on that safety hotline. 28 percent of those calls have dealt with your question right there. Crew management, what we call equals TL or our train line-ups and what can we do to improve them? What -- what can you do for the crews out there to improve their quality of life in trying to identify as to when they will be going to work?

We have a number of fronts open on that. That is one of the Number 1 things involved with SACP. We have both the BLE involved with this as well as the UTU. We have one group that is doing nothing but looking at what can we do to enhance these line-ups.

We have put on a desk in the Harriman Center with four people manned 24 hours a day to help improve the quality of these line-ups. I look at a report on a daily basis as to the accuracy of train line-ups for every district on our railroad, and I review that with Dennis Duffy and his people as to what are we doing to improve that?

The crew management. We put on, I believe, four new crew balancers. This is another issue with our crews out there, that we sent away from home too long, that why aren't we dead-heading, why aren't we balancing these crews? We are putting people on to look at that.

In addition to numerous other things that I won't elaborate on today, but I can tell you it is one of our primary focuses out there. When I hear that 28 percent of our employees who call on that hotline have an issue with that, it -- we take it very seriously.

MR. WALPERT: Thank you. One -- one final question. Also in the SACP program report, there is a mention that some employees felt that there were some intimidation and harassment tactics by some management people on UP in regard to, for example, not reporting -- emphasis on not reporting possible accidents or injuries to keep the reporting low on UP.

Has any effort been made to address those alleged intimidation and/or harassment tactics?

MR. JERRY R. DAVIS: Yeah. Let me -- let me elaborate a little bit on that. I -- I hear that, you know, maybe not so loud and clear today, that the railroads cover up accidents. They conceal them from the FRA. They're not reporting them truly.

I -- I open up to the Administrator and the FRA, and I tell them audit us at any time. One thing that we do on the Union Pacific, and I might add that most other railroads do in this country, is that they look at the accident report that the employee has filed and compare that against a report filed with the claim department.

If the injury is serious enough to be reported and to have a claim filed, that -- those files are cross-referenced. In addition to, any employee has the opportunity to turn in any accident at any time.

I open Union Pacific's records for audit at any time.

Now, to answer your question specifically, I do also get those remarks on the safety hotline, that I am being intimidated by a manager. Let me assure you each and every one of those calls that come in where they feel they have been harassed by a manager, I have personally talked to that employee, and I have personally talked to that manager about what are the issues here, and why does that employee feel they have been harassed?

I might add I have never had a follow-up call after discussing that with both employees. Most of the harassment that I hear on that -- on the safety hotline has to do with crew management, and that why -- why are you calling me when I'm not rested? Why are you calling me not in accordance with my agreement? Why are you calling me to go to work, you know, today? I want to lay off. I mean those type of issues.

Let me add one other thing. My discussions with managers on Union Pacific when it has to deal with covering up injuries, my conversation with them goes something like this, that if you harass an employee or ask them to cover up an injury and not report it, you have put your job on the line.

In my railroad career, as an operating vice president, I have always had that policy. In my railroad career, there have been three managers that have put their jobs on the line doing that, who are no longer railroad managers today.

MR. WALPERT: Okay. Thank you, Mr. Davis. That's all I have.

CHAIRMAN GOGLIA: United Transportation Union?

MR. BOYD: Thank you, Mr. Chairman. First, Mr. Chairman, on behalf of UTU, I'd like to thank the Transportation Board for having these hearings, and my questions to Mr. Davis will be based on his tenure.

We can't do a lot about the past. We need to start addressing the future, and I think one of the best indications of that was this morning when I was talking to one of the widows at breakfast from one of these incidents, and that was her expression to me, that she wanted to see something good come out of this that may help somebody in the future, and my questions are based on that spirit.

I might add for the Board's edification, I've dealt with Mr. Davis for about 25 years or maybe a little longer, and we've had some bad days, more than not we've had good days, and I do appreciate having to work with you, and I -- I agree with what the Administrator said with regard to your openness in dealing with people, and it's been a pleasure to work with you over those years.

Now I've got some tough questions for you, though, Mr. Davis.

MR. JERRY R. DAVIS: Yes, sir. I would expect nothing else from you, Mr. Boyd.

MR. BOYD: Thank you. I believe we've -- we all accept the fact that fatigue is accumulative, and the longer it exists, the worse it is. With that in mind, you could have a staffing level of what you think would be a needed level. If that level is subjected to prolonged periods of fatigue, it will diminish its ability to serve you, the level will, with the number of people.

When you look at the number of people needed to staff the trains, is the number of days of rest or the number of days of ability put into that formula that you use within the corporation and through the SACP process?

In other words, do you count what -- how much rest is needed in addition to how much work is needed from an employee?

MR. JERRY R. DAVIS: Yeah. Most certainly, Mr. Boyd, and, you know, whether that formula is right, I don't know. For some people, -- and, you know, fatigue is an interesting thing to me. I mean it's something that is not unique to this industry. I mean any trucking company, airline, space, NASA, whoever, that deal with -- with 24-hour-a-day, seven-day-a-week issues, deal with fatigue and the people that are involved with that.

I understand that. I'm trying personally to understand more about fatigue, but one thing I'm sure of is that people are different. Now when you try to put that number in your computer, what is that number? We have employees out there as you well know, if I restricted them to working five days a week, they'd be pounding on my desk and yours, too. They want to work seven days a week. Then we have a lot of people who do not want to do that. I know that.

So, what is the right number? We'll continue to play with that. We'll continue to have that in our formula. I understand people need rest. Some people need more than others. But it is definitely part of our formula in figuring our manpower numbers.

MR. BOYD: Thank you. It was stated earlier that in 1997, UP was approximately two-thirds larger than it was in 1996 because of the C&W and SP acquisitions.

That being the case, and I'll confine myself to SP, the former SP territory, that being the case, do you see part of the problem being related to the former practices regarding safety of the Southern Pacific and managing practices or the adoption of the UP safety and managing practices over the former SP territory as being part of the problem for, you know, the great number of incidents that occurred on Southern Pacific or do you not see that being a factor at all?

MR. JERRY R. DAVIS: Well, Mr. Boyd, when I look at those accidents and the 15 that were looked at and the safety problems that we had across the railroad, I did not see a pattern related to the Southern Pacific at all.

When I looked back on the safety numbers of both Union Pacific and Southern Pacific prior to merger, let's say two years prior to merger with Southern Pacific for which I am more familiar, they were showing the same rate of improvement that the Union Pacific was showing, not only in personal injuries to our employees but also in the derailment numbers. So, they were showing big improvements.

But as far as looking at -- at the safety concerns across the railroad that we talked about earlier, I did not see that it was specific to the Southern Pacific over the Union Pacific. To the contrary, most of the accidents did happen on the old Union Pacific territory.

MR. BOYD: Couple more questions. You stated that UP was hiring additional managers, I think approximately 250, over the approximately 1,200 you now have?

MR. JERRY R. DAVIS: Yes, sir.

MR. BOYD: Where are most of those managers coming from?

MR. JERRY R. DAVIS: Most of them will come from the ranks of the railroad.

MR. BOYD: Will a substantial part come from outside the crafts?

MR. JERRY R. DAVIS: Not -- hopefully not. We have -- let me say on some of those numbers, on the Union Pacific, our train dispatchers are non-agreement. There are a number of train dispatchers coming into our company who are hired off the street, but I would say they are a small percent of the total number.

The majority of those new managers and manager positions will come from -- from outside the ranks. Let me say the first-level managers will come from the ranks.

MR. BOYD: The managers that will manage the TE, the trains and engine service people, will they come from primarily outside the ranks or from within the ranks? And when I say crafts, I'm not talking about union representation, I'm talking about the actual operating crafts, who are represented, but that's not what I'm talking about.

MR. JERRY R. DAVIS: Yes, they will.

MR. BOYD: Okay. The new operating managers that will be brought on board, do you have any knowledge about their experience in relation to the employees they will be supervising? In other words, are they fairly new employees or are they people who have some tenure with the company?

MR. JERRY R. DAVIS: Well, I hope I can offer some of these -- these employees who have some tenure with the company, and let me say, you know, the majority of management on the railroad have always come from within the ranks, from the union ranks of our company, and as well as I said here, I have to say that, you know, we have a pretty good failure rate, and let me say where the failure rate comes from is that normally you look at an individual, their technical skills. They have great technical skills, but I think where we have made a lot of mistakes in the past is that we have not -- we have viewed more on the technical skills more than the -- what I call people-handling skills, and I would like to lean more to the people-handling side of this business.

We have a lot of good technicians out there. They're all great professionals. But our failure rate is not -- is a little higher than I would like to see it, and I hope that either one way to incite these people to take these management jobs that we can get some experienced managers coming in there. It's always a challenge, Mr. Boyd.

MR. BOYD: In response to one of the questions you were asked earlier, the problems with crew management and crew management system really are directly related to the number of employees that are available for service, and that compounds the problem not only with the availability of employees but the availabilities of your managers within the crew management system to -- to utilize those employees, and -- and the infrastructure will implode upon itself if that isn't adjusted.

You've said you're taking some steps there, but I think that's -- would you agree that that's the primary cause for most of the CMS problems?

MR. JERRY R. DAVIS: The number of employees?

MR. BOYD: Yes.

MR. JERRY R. DAVIS: The -- I think in some areas, it could be, but I -- I believe what the majority problem has been is the congestion that we've experienced across the railroad in what I call burning crews, using way too many crews to get trains across the railroad than is needed, and I think that has been the primary reason.

MR. BOYD: Okay. Thank you, Mr. Chairman.

CHAIRMAN GOGLIA: Union Pacific, no guts. No guts at all. I thought you would ask at least what your performance review was going to look like.

Okay. To the Board of Inquiry, Ms. Beal?

MS. BEAL: Good morning, Mr. Davis. I appreciate that you've said that you're the highest-ranking safety official within your organization, but next to you, would Mr. Duffy be the highest-ranking safety official within the organization now?

MR. JERRY R. DAVIS: With that title, you know. When I talk about my Executive Vice President of Operations, I hold him responsible for safety in the operating department. Under him, he has a safety staff.

What -- what I -- what I would like to penetrate through our organization is that the management is responsible for safety. I mean I -- I accept that responsibility, and I want each and every manager to pick that up.

When I talked of a safety department, they're very, very important, and their -- their role is to be an asset and to help the managers in managing safety and manage their responsibility, the same as you would reach out to get a CPA to help you in the financial end. I'm going to reach out and get a safety expert to help me manage as an operating manager.

So, you know, how that reporting takes place, the head of our safety department reports to our Executive Vice President of Operations. Dennis Duffy is -- is -- is our chief safety officer on the railroad. He deals with SACP. He deals with the operating department. He deals with the safety department. But I want our managers to accept that responsibility.

If it's the superintendent in Houston, Texas, you are responsible for that safety, and I want them to feel that. I talk to them. I want them to have that

-- that burning feeling in their stomach for safety, the way I know that your chairman here has, the way I know that Jolene Molitoris has, and the way I know I have, for the sensitivity of the people in the railroad. I want them to feel that.

MS. BEAL: So, in your corporate structure, would you say that Mr. Duffy's position is of an equal rank to your chief financial officer in reporting directly to the top of the organization?

MR. JERRY R. DAVIS: I probably deal with Duffy more.

MS. BEAL: And who is -- does Mr. Duffy actually sit on the SACP programs and actually participate in those meetings regularly?

MR. JERRY R. DAVIS: Yes, he does.

MS. BEAL: Is that part of his job description?

MR. JERRY R. DAVIS: That is correct. He leads the process from the UP management side.

MS. BEAL: And when he reports the progress and ideas that have arisen in the SACP programs, does he report that directly to you?

MR. JERRY R. DAVIS: Yes, he does.

MS. BEAL: And how -- how are you accountable for those suggestions that come from the SACP programs?

MR. JERRY R. DAVIS: Well, let me say the suggestions that have came to me, there has not been one of them I have turned down yet. I think the first thing that came to me with, and it wasn't -- they hadn't even met for but a couple of hours, they wanted me to put out a letter to the Union Pacific employees about intimidation and safety responsibility, and I put that letter out in five minutes.

The next thing they come to me, they wanted to hire one of the foremost experts on fatigue. You know, this is a new area for us. We don't understand that. We need some help. I didn't hesitate to give them the authority to do that.

Now are there things that they discuss in those SACP meetings that they're not bringing to me? I don't think so because I'll tell you, when these general chairmen, these legislative representatives of our unions come in to Omaha for a SACP meeting, they normally stop by and say hello because I know them.

I sat yesterday morning for one hour with one of those representatives from the Pacific Northwest who was coming in to attend a SACP meeting. So, I don't think Duffy's hiding anything from me. If he does, one of these general chairmen is going to damn well -- is going to tell me very quickly.

MS. BEAL: Does UP have any incentive programs set up to encourage workers who identify problems on the day-to-day job? Are there any incentive programs set up for them to bring those programs -- problems forward?

MR. JERRY R. DAVIS: Their incentive is their own safety. Is there -- is there an incentive award that go out to different people on the railroad? Yes, there is.

We -- we have -- and I only mention this because we do have an annual safety conference in Omaha, lasts three-four days. We recognize an awful lot of people there, and I wish you could have been there this year to listen to some of our safety captains and the way they were recognized for safety on our railroad.

It -- it gives -- it gives me the warm feeling that we're headed in the right direction. I know we're not there yet, but it gives me the confidence that we're headed that way, and it's done through recognition of these people.

MS. BEAL: Okay. Mr. Chairman, I just have two more questions.

As the accidents during your tragic year last year started to unfold, at what point -- was it after the first, second, third, fourth, fifth, what programs did you have in place to take a look at this unfortunate chain of events that was happening to see what you could learn from those accidents, and what system do you have in place now to review accidents as they occur to determine if improvements can be made?

MR. JERRY R. DAVIS: Yeah. Well, it's kind of hard to describe when these accidents were unfolding. I think, first of all, a little bit of frustration set in. I mean in that our safety processes were still in place. Our safety procedures.

The trouble we were all having with it is where is the linkage? When you listen to those accidents, Mr. Dunn described those accidents this morning, and when you look at a map of where they were happening, what was happening, where was the linkage? I mean I had a hard time seeing that.

What was causing this? Was it because of congestion we were experiencing? Was it because of moving managers, which I know has been questioned? One thing we knew, we had to get back down to basics of keeping our people focused. I think that is so important in any safety program. I mean you can -- you can do a lot of things, but if people aren't focused on what they're doing, they're going to have accidents.

An example I use to our people is that if you ever went down then at 70 miles per hour, say how did I ever get by that accident? How did I get down there? Railroading is not dangerous because you are professionals. You're well-trained. You know what you're doing out here. Railroading is not dangerous, but if you lose your focus on what you are doing and where you're at and what's around you, something's going to happen, and that is so important to get our people back focused on safety and running the railroad and not be focused about maybe some congestion we're having here or something else that's going on over here. Get focused back on safety, and that's what we did. We -- we went -- went out to our people. We talked to them. We had meetings with them. A lot of other things to bring their attention back.

The accident in Texas at Devine, one of the worst tragedies I've ever seen in my railroad career. Having been a train dispatcher and understanding lap orders, never in my railroad career did I see a lap order put out that caused an accident like this. Never. We went back into our dispatching office with intense training, redid some of our programs, redid some of our -- our software to get our dispatchers back focused on safety and running a safe railroad.

The numbers that we look at today are not different. We look at personal injuries. We look at incidents. I think that's important. I have managers out there that ask me questions about how do I manage safety with no accidents? Gosh, what a problem to have. But how do you do that? And what I tell them is get down to incidents, get down to close calls, and I think that's what we have to continue looking at, get down to the safety committees on the ground running our railroad, and what do they need? What do they need to help our people be -- I can give them training. I can throw dollars at it. I can buy new technology, but you know, and I think about it many times, we have a train crew out here that we give the best training in the world, that we buy the best equipment for, we have the best track to run on, and there's always a time when we say go forth and do the job that I've taught you and taught you well to do and do it safely.

There is nothing out there that fully automates people and human beings into what they do, and I think that is so important to work hard on getting people to remain focused where they're at and what they're doing for their safety and everyone else's safety.

MS. BEAL: One final question, Mr. Chairman. Given the fact that human error will undoubtedly always be the cause of some accidents down the road, and this is switching gears a little bit here, can you tell me what programs UP has to look at positive train separation and what your future plans are in that regard?

MR. JERRY R. DAVIS: Well, as you well know, Union Pacific and Burlington Santa Fe has been one of the leaders in developing these systems. We have some test systems underway at this time in the Pacific Northwest. We have also just recently agreed with the AAR for which Union Pacific and BN Santa Fe are two of the biggest contributors to that, along with the Illinois DOT, for a test section on the old spizzle line, as we call it, coming up through Illinois to be developed. We want to look at those systems. We're not there yet. There is nothing -- that technology is not available to us today, but we are committed as a railroad and through the AAR to develop those systems, to see if they can be developed, and then look at the business case to see if we can implement those.

MS. BEAL: Thank you, Mr. Davis.

CHAIRMAN GOGLIA: Mr. Ellingstad?

MR. ELLINGSTAD: Thank you, Mr. Chairman.

Mr. Davis, I'd like to follow up on a couple of Ms. Beal's inquiries regarding the Union Pacific corporate safety culture, if you will.

Now you had indicated that your -- your top explicit safety official is your Vice President for Safety Assurance Compliance Process, Mr. Duffy, and he has been on the job for about six months?

MR. JERRY R. DAVIS: Yes, sir.

MR. ELLINGSTAD: Was that -- how -- how old is the position?

MR. JERRY R. DAVIS: About six months. It was a new position that we put on. Prior to that time, our safe -- our top safety officer with that title was in the operating department reporting to the Executive Vice President of Operations. But we did want to put a new greater emphasis on safety, be it -- be it for communication purposes or whatever, when that job was established at Union Pacific.

MR. ELLINGSTAD: Okay. So, it would be safe to say that the creation of that position represents kind of an escalation of safety consciousness at the Union Pacific in response to this accident experience?

MR. JERRY R. DAVIS: Yes, it would.

MR. ELLINGSTAD: What specific functions are assigned to -- to Mr. Duffy's position? You had mentioned participation in -- in the safety review process. Are -- are accident data monitoring and related functions resident there?

MR. JERRY R. DAVIS: Yes. He certainly would do that as part of the SACP responsibility. His -- his primary responsibility and function, of course, is to lead the SACP effort. That -- I mean that's how seriously Union Pacific feels that this SACP process is, and that is that we need a top executive in our company leading that effort.

Part of his responsibility would be to monitor that safety -- those safety numbers and certainly discuss those with the SACP committees and -- and the process as to what necessary changes were necessary.

MR. ELLINGSTAD: In a related kind of an issue, Ms. Molitoris had -- had indicated earlier that there were no clear indicators of impending safety problems for the Union Pacific before the accidents of last year, and we'd had some discussion of -- of the -- the delay in reporting accidents and this kind of a thing, and -- and a few minutes ago, you had indicated that we need to, I quote, "get down to incidents and close calls", etc.

What are you doing with respect to monitoring incidents, recording incidents? Do you have incident and close-call databases, and, if so, who takes care of them for you?

MR. JERRY R. DAVIS: First of all, let me make sure I understand. You said the delay in reporting accidents?

MR. ELLINGSTAD: Ms. Molitoris had indicated when we were talking about the -- the difficulties in there being leading indicators of problems, had indicated that --

MR. JERRY R. DAVIS: Oh, oh.

MR. ELLINGSTAD: -- the accident data took awhile to -- you know, to -- to develop, and I think you -- you also indicated that that may not be sensitive when you talked about measuring incidents.

Specifically what I'd like to ask is what is the Union Pacific doing with respect to recording incidents and close calls as well as accidents, and what do you do about it?

MR. JERRY R. DAVIS: First of all, we do record incidents. We -- we look at severity of injuries. As far as the -- as close calls from -- from an Omaha level or from my level of the company, I do not look at those. They do look at those on a shop basis, like one of our mechanical shops, one of our work areas, our divisions. Those -- those committees look at all incidents. I mean whether it's a bandaid, a close call or what have you.

I'm sure that some of them keep good databases. I do not look at that. I deal with -- I look at more of the broad issues. The -- as far as the -- the other part of your question was the reporting of them or --

MR. ELLINGSTAD: Yes. Well, one of the issues is who -- is there a Union Pacific accident and incident database?

MR. JERRY R. DAVIS: Oh, yes, there is. Certainly. That is held within our safety department. Mr. Kenyon would have that database under his responsibility.

MR. ELLINGSTAD: Okay. And where does -- does his office fall with respect to --

MR. JERRY R. DAVIS: He would report --

MR. ELLINGSTAD: -- Mr. Duffy?

MR. JERRY R. DAVIS: He would report to the Vice President -- the Executive Vice President of Operations.

MR. ELLINGSTAD: And that's separate from many of Mr. Duffy's responsibilities?

MR. JERRY R. DAVIS: That is correct, although he would review the data and look at the data. That department also has the responsibility for reporting accidents and injuries to the FRA.

MR. ELLINGSTAD: Is -- is there, to your knowledge, a problem with delay in the Union Pacific reporting data to the FRA?

MR. JERRY R. DAVIS: To my knowledge, we have never had a problem.

MR. ELLINGSTAD: On -- on another issue dealing specifically with fatigue, again Ms. Molitoris described a new Union Pacific system-wide policy that would give a day off after seven consecutive days on duty.

Do you consider that a significant safety accomplishment?

MR. JERRY R. DAVIS: Well, I -- irregardless of what I think of it personally, I think, you know, in the fact that the SACP committees and that our labor unions thought it was significant, I think it's significant.

I want to clarify there also that -- that I understand that we may not be living up to that 100 percent, but I am committed to live up to that 100 percent.

MR. ELLINGSTAD: Are you satisfied that the railroad industry is appropriately regulated with respect to hours of service?

MR. JERRY R. DAVIS: I think the hours of service that we have today are adequate.

MR. ELLINGSTAD: Thank you. No further questions, Mr. Chairman.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: Thank you, Mr. Chairman.

Mr. Davis, I had a couple of questions related to your statement and some of the activities of the merger.

You talked about some of the unprecedented problems that occurred in the last year, and what I wanted to know is, is in the planning process for a merger, your dealings with STB, how do you determine how to handle unprecedented problems?

MR. JERRY R. DAVIS: Well, I'm not sure there's a phase in there, unprecedented problems. Let me tell you. Any time that you have something arise on your railroad, be it congestion or shortage of crews or what have you, I mean there's standard things that you -- you've done in the past, and that's what you -- what you go by, what have you done in the past, such as the congestion that we were experiencing in Texas and Louisiana.

We threw resources at it. We threw locomotives at it. We threw crews at it. We threw management people at it. That's what we knew in the past to do.

MR. LAUBY: But when you -- when you put a merger application in to the Surface Transportation Board, do you have a worst case scenario that you -- you use, one that maybe has projected growth figures in it or -- or, you know, extra capacity requirements? Is that part of the consideration?

MR. JERRY R. DAVIS: You probably should ask a lawyer that, just what does go into the application, but I do know we talk about capacity. The directional running was very much discussed in the operating plan of the merger application on what that would do in freeing up capacity. Those items are discussed in the -- in the operating plan as far as I know.

MR. LAUBY: At the time you were -- you were going into -- into this merger, what -- what capacity did you have, excess capacity, on the Union Pacific or the Southern Pacific? Were you -- were you at a hundred percent at that time?

MR. JERRY R. DAVIS: We were over -- let me say we had need for -- in a number of areas of the railroad need for additional capacity. Let me say our central corridor, from the Powder River Basin east through North Platte. We run about a 130 trains a day through that area of our railroad.

There's another -- an additional three-year program to add capacity in that part of our railroad because it is needed. The Sunset corridor. We identified those areas in the merger application. The KP line, the Kansas-Pacific line, between Denver and -- and Topeka, Kansas, was discussed, additional sidings, additional capacity needed because of coal trains coming down through that area.

The Tookem carry line, the old Rock Island line, Tookem carried El Paso up towards Harrington, Kansas, and Topeka was talked about, the additional sidings that were needed, you know, and I can elaborate and go on and on.

The directional running. If I recall, the directional running in -- in -- in eastern Texas and Louisiana was discussed, that it would add additional capacity. After the directional running was put into effect, all of the yards along that route would be operating at below capacity.

So, it was discussed, and in what detail, I just can't recall what -- what exactly was all in the merger application.

MR. LAUBY: So, it's going to be a question of site specific what capacity limitations there are or what need to be improved?

MR. JERRY R. DAVIS: Sure. I know it also talked about the need of a new yard in Roseville, which is underway today. A $140 million yard is being constructed in Roseville, California, to take care of that capacity need.

MR. LAUBY: Jolene, the Administrator, Jolene Molitoris, described some fundamental problems with the UP, and she talked about there being under-staffed, fatigued train crews, supervisors that were inundated with paper work, problems in the dispatching center, and in listening to some of your answers to the other questions, what I wanted to ask before was what -- what basic thing did you think led to these conditions?

But after hearing you talk about focus, is this -- is this focus on safety? Is that what you feel led to these safety problems?

MR. JERRY R. DAVIS: Certainly some of it. I think the -- I think certainly the FRA and the Administrator had reason for concern. I mean when these accidents occur, I mean something has happened out there. I mean it perplexed all of us. When we looked at the performance of the past few years, of the safety record of Union Pacific and Southern Pacific, we were perplexed by it, and I -- and I -- I certainly can't -- if they did not come in and make the audit that they made on us, I would wonder what was wrong with them.

I mean I think it was fully justified. Whether I agree with every word of that audit report, it was very, very helpful to us. Whether I agreed with all of it, maybe not, but it -- it was very helpful to Union Pacific.

MR. LAUBY: One final question. You talked about the need for safety to be fortified when you're going under adverse conditions or different conditions, mergers, different difficult situations.

What specifically steps -- what steps need to be taken to -- to fortify safety under those conditions? And the background of this is what -- what have you learned going through this process? What would you have done differently to make sure that these -- these items were addressed?

MR. JERRY R. DAVIS: Well, it's always good to come back and second-guess yourself. I mean certainly that's why you learn from the past.

MR. LAUBY: Well, that's the NTSB's job here.

MR. JERRY R. DAVIS: That's -- yeah. The -- I think if I had to do it -- do over again, I would -- I would take a much keener look at this whole manpower need.

One thing -- one thing, and I didn't elaborate on it to Mr. Boyd, one thing that caused us to be off on those numbers also is that the Southern Pacific Railroad had an acute shortage for locomotives, and on Day 1, we at Union Pacific put a 150 additional locomotives on the Southern Pacific in Texas to take care of their locomotive shortage.

What that was doing was masking a crew shortage. If we had the locomotives, you couldn't run them anyway, you didn't have the crews, and we didn't know that. That was not part of our scenario in looking at -- at manpower shortages.

So, I would take a keener look on that. I would step up my efforts to work with our employees to keep them focused on safety and running the railroad in a safe way. I mean I would try to devise new programs to do that, to keep them focused, and I would caution anyone going into this radical change to do that.

Change has a tendency to get people's attention off of where it should be, and I think that's very important.

MR. LAUBY: Thank you very much. No further questions for Mr. Davis, Mr. Chairman.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: I am Mr. Lauby.

CHAIRMAN GOGLIA: Are you sure? Mr. J.P. Dunn?

MR. JAMES P. DUNN: Thank you, Mr. Chairman.

Good afternoon, Mr. Davis. Mr. Davis, we've talked about a safety integration plan pre-merger. I think it's been mentioned by the Technical Panel, and I'm not sure I have it clear.

Was this -- was there a safety integration plan for the merger before the merger was consummated physically?

MR. JERRY R. DAVIS: Yes, there was.

MR. JAMES P. DUNN: Okay. Is that a document? I mean is there a document that came along with that?

MR. JERRY R. DAVIS: I don't recall an official document. I'm sure that we could find -- you know, search through the records, the items that were discussed between the Southern Pacific and the Union Pacific management teams, as to what are the safety processes in place? What are the safety programs? What are the best, and which ones should be implemented as a combined system?

I'm sure we could find that documentation for you, but it's not in an official document that I know of.

MR. JAMES P. DUNN: Okay. I ask that question against the background of looking to the future of, you know, there are other mergers on the horizon, and I'm sure everybody would like to learn.

MR. JERRY R. DAVIS: We're always looking for best practices.

MR. JAMES P. DUNN: Exactly. And now the process that you went through, the safety integration plan, I think you just mentioned in response to Mr. Lauby that the manpower shortage on the Southern Pacific, you were unaware of that. If I understood it correctly, it was masked by what you thought to be a shortage of locomotives.

MR. JERRY R. DAVIS: A number of things. Well, that was only part of it. In our planning on the integration of the UP-SP seniority and the hub and spoke agreements came later than we had anticipated. The congestion that we were having, the burnt crews, was not anticipated. So, there was a number of factors that went into that.

MR. JAMES P. DUNN: Okay. I guess what I'm driving at then is a -- possibly a safety integration plan for pre-merger, it appears from what you're saying, should be wider in scope to cover manning and traffic volumes?

MR. JERRY R. DAVIS: I think it definitely should be looked at.

MR. JAMES P. DUNN: Okay. Would you, from -- from your experience, recent experience in this merger, would you recommend to your counterparts wherever that they have a formal safety integration plan prior to a merger?

MR. JERRY R. DAVIS: I already have.

MR. JAMES P. DUNN: Okay. Should the STB -- I kind of figured you had. Should the STB be involved in that, the Surface Transportation Board?

MR. JERRY R. DAVIS: I hadn't thought about that.

MR. JAMES P. DUNN: In -- with the benefit of hindsight, do you think they should be?

MR. JERRY R. DAVIS: I think that you have -- in the mergers I am thinking of have fairly -- very responsible management there, and I think that will be done without being mandated by the STB or anyone else.

MR. JAMES P. DUNN: Okay. In your remarks, you talked about a comprehensive process covering the hiring, certification, qualification and training of engineers. You indicated that Union Pacific now has that, and I was just unclear if -- if that comprehensive process, is that new? Is that since the accidents occurred? Is it after the merger?

MR. JERRY R. DAVIS: We have always had one, but our process now has been enhanced, and I think that will be elaborated later on with some of the Union Pacific's witnesses.

MR. JAMES P. DUNN: Okay. In the area of management oversight, you talked about that in your remarks, and that 250 new jobs would be added, 250 management jobs in the field would be added to the UP's management force.

Is this a direct result of the series of accidents? Let me reword that. A direct result of the operational and safety problems?

MR. JERRY R. DAVIS: It certainly -- it certainly incited us to take another look at the needs on -- in management needs in the field. If I recall, prior to the accidents, we -- we still had a demand out there of hiring some additional field managers, but it certainly caused us to take another look at it and re-evaluate our requirements.

MR. JAMES P. DUNN: Okay. And once again in that same area of management oversight, accountability. You talked very specifically that you have initiatives to spell out accountability in their job agreement.

MR. JERRY R. DAVIS: Right.

MR. JAMES P. DUNN: Now, is this something new with your managers or had that been in place?

MR. JERRY R. DAVIS: The idea of job agreements, as I call them, and I'm sure there's other formal names for them, has been around at Union Pacific, I know of, for at least 12 years, and the process to me is rather simple.

I mean even though it is formalized, it's kind of like you and I, you know, you're my boss, you and I sit down, and we have an agreement as to what do you expect of me. How do you want me to -- you know, how are you going to evaluate me as a good manager? And they -- they will rate that, you know.

All right. If I am going to evaluate you as a top manager or as a lower manager, I'm going to rate you as 40 percent of my evaluation is going to be for safety, 15 percent is going to be on your financial performance, how you work your locals, how you spend your money, 30 percent of it's going to be on service. That's what we sell.

I mean so on down the line, and you and I would have that agreement and what you expect. That process has not been new.

MR. JAMES P. DUNN: It's not new?

MR. JERRY R. DAVIS: It is not.

MR. JAMES P. DUNN: It was pre-merger?

MR. JERRY R. DAVIS: Pre-merger.

MR. JAMES P. DUNN: Okay. We talked quite a bit or we've heard quite a bit about the operational problems that the property was faced with, increased traffic and so forth.

Do you believe that the operational problems became intertwined with what became the safety problems? Did one begin to drive the other?

MR. JERRY R. DAVIS: I think that some of the service congestion and service problems -- congestion problems that we had on our railroad certainly caused some of our people to become not as focused on safety as I would like.

MR. JAMES P. DUNN: Okay. A question. I know you talked about the -- what you had seen or -- the year-long accidents, the 15 accidents prompted you to -- or helped prompt the hiring of 250 additional managers. We talked with Ms. Molitoris this morning about her staffing.

Do you believe the FRA is adequately staffed to achieve their mission?

MR. JERRY R. DAVIS: Some days, I think they have way too many. I -- I have to agree with what the Administrator said this morning. She has asked, I understand, for additional inspectors and field inspectors for next year.

They also work in conjunction with a lot of our states. Texas is very active in inspections, California and numerous other states. I feel that they are adequately staffed. I think they, like any organization, they have to continue to work on the professionalism, the training of their people, as well as looking at the staff -- their staffing needs.

They -- they -- they look at that, I'm sure, the same as any company would look at -- or any organization would look at staffing needs as to -- related to what the work is out there. So, I guess I would have to give you a yes.

MR. JAMES P. DUNN: Okay. The safety assurance assessment that the FRA did in the Summer of 1997 and then came back in the Fall, I think it was November, they put that out as one report in February of this year. Have you had a chance to look at that?

MR. JERRY R. DAVIS: Yes, I have.

MR. JAMES P. DUNN: Okay. There is a conclusion there that -- that I would like to get your response to. Basically, it states that "the FRA concluded that a fundamental breakdown existed in some of the basic railroad operating procedures and practices essential to maintain a safe operation. The railroad did not appear to have a uniform safety culture and lacked an effective safety hierarchy. Safety policies applauded by senior management were not effectively implemented in the field by first-line supervisors."

Do you agree with that conclusion by the FRA?

MR. JERRY R. DAVIS: The -- I agree that they made the statement. The -- I think when I look back on the data, the data I was looking at, prior to these accidents happening, I would say that was not true. But after these accidents and -- and even after they made an assessment on the railroad, and we continued to have them, definitely it was showing something was wrong. Whether it's a complete breakdown, I -- you know, I'm not sure.

I think that you're talking to a company here that has always taken safety very serious. The numbers have shown it, you know, in reduced reportable injuries to our people, reduced derailments, reduced crossing accidents. I don't think any railroad in this country has done more to reduce crossing accidents than Union Pacific. That's the data we were using.

As I have said earlier, I think that the FRA would have been remiss had they not came on our railroad and made that safety audit that they made because definitely something and some change had to take place. Whether it was a complete breakdown in our safety processes, culture, etc., I might dispute that a bit.

MR. JAMES P. DUNN: Okay. Thank you, Mr. Davis. That's all the questions I have.

CHAIRMAN GOGLIA: Okay. I have a couple of questions, but before we get to mine, since this discussion was long, I'd like to return to the Technical Panel and all the parties to make sure that no one else has additional questions because of the information.

MR. JAMES S. DUNN: The Technical Panel has no further questions of Mr. Davis.

CHAIRMAN GOGLIA: Texas Railroad Commission?

MR. MARTIN: No further questions.

CHAIRMAN GOGLIA: FRA?

MR. GAVALLA: Just a couple of points of clarification.

You mentioned the efforts that were taken to improve crew management and crew balancing. Are you aware of whether or not these were issues based on recommendations or discussions of an SACP working group?

MR. JERRY R. DAVIS: It was part of SACP, yes.

MR. GAVALLA: Likewise, you talked about intimidation and harassment, particularly in regards to injuries. Are you aware of any recommendations from an SACP working group to address that very point?

MR. JERRY R. DAVIS: No, I am not.

MR. GAVALLA: I have no --

MR. JERRY R. DAVIS: One thing, too, Mr. Gavalla, maybe I should make it clear for the record, just like the fatigue, it is a part of an SACP group which I think is exactly where it belongs, but it isn't that Union Pacific had not recognized that was a problem beforehand.

Certainly in the crew management side, a number of efforts were underway, which it is also a very big issue in the SACP process. We think that the SACP process will enhance that and -- and get to resolution a lot quicker than we could have done as a stand-alone management.

MR. GAVALLA: Thank you. No further questions.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes, just a couple of quick questions.

Mr. Davis, first of all, I want to applaud your commitment to the SACP process and also state that the BLE is -- has also that same commitment to the process and will continue to work with you in any way we can.

But the question arises that once all the SACP committees are concluded, and the work has been done, do you have a plan, maybe a Plan 2 for lack of a better term, that would involve all the parties in a safety program for UP?

MR. JERRY R. DAVIS: Well, let me say, first of all, I hope that SACP does not come to an end. I hope that we're able to continue this process. I think we can build on it. I think we can enhance it and make it better.

But I hope that the SACP process in the -- in the FRA, railroad management and our labor unions can go down this road together for a long time to work on these safety processes and improvements.

Where we do have to work on, and I am committed to do that, is there again to get those feelers of SACP and that process down through our organization, get it out into the field, let them understand what these SACP groups are working on, make sure that they understand the commitment that all three of these parties have to correct these safety issues.

So, we have a lot of work to do on that, but we're committed to do that, but I hope SACP -- there is no Plan B right now. The Plan B is to continue SACP and continue working with the parties who are interested -- that are interested and have the stake in safety to correct these problems.

MR. WALPERT: Okay. Thank you. The other question that arises is one of the major areas of safety concern, at least from the eyes of the BLE, is the fact that some accidents on UP may have been caused because of the huge size of the railroad and the fact that some locomotive engineers may have not been familiar with the territory.

Can you tell me if there's a program in place that requires familiarity with the territory for locomotive engineers?

MR. JERRY R. DAVIS: Well, you know, relating back to the accidents, there is not one comes to mind where I could definitely say the engineer was not familiar with the territory.

As far as familiarizing engineers with the territory, as you well know, under our directional running, we have a number of engineers out there who -- who are on new territory.

What our process and what our procedures call for is that that engineer will be ridden with either by another engineer pilot or a manager of operating practices, a road foreman of engines, until they are comfortable that they understand the territories and are familiar with it.

MR. WALPERT: Okay. Thank you. That's all I have.

CHAIRMAN GOGLIA: UTU?

MR. LARRY DAVIS: Yes. Let me ask just -- just one quick question, Mr. Davis. Mr. Boyd's out of the room at the moment.

Awhile ago, when -- when you started to use the word "culture" or you did use "culture", you used that with some -- some reservation, and I share your reservation with respect to what does it mean?

But I do know that the industry has a history of being quasi-military, as you know, that you do what you're told, and you grieve later.

MR. JERRY R. DAVIS: Yes, sir.

MR. LARRY DAVIS: And -- and the consequences of that, I think, perhaps manifest itself in some of our difficulties today, one of which is we don't know how to talk to each other. We don't know how to communicate. We don't have the comfort level that you can say to a manager or a supervisor I don't agree with that or that's a safety issue without some fear.

Would you -- would you address your concerns on that, please?

MR. JERRY R. DAVIS: Yeah. That -- I -- I definitely feel that is a need or a change on the part of our culture. I believe we are militaristic, and you go back in history of railroads, most railroads early on were managed by military people. They set their structure up that way. We talk about general officers. I mean we have that -- that culture in our background.

One thing -- and it's always amazing to me that we do that. You know, one thing that Mr. Boyd asked me earlier as to where do managers come from on the railroad? I come up through the ranks, and if I'm down there as a telegrapher or a switchman or what have you, and I don't like the way management's working, why don't I change it when I get an opportunity to change it?

That's one reason I like the change. I darn well didn't like the way I was managed as a young train master. I didn't like some of that militaristic stuff that I had back then. I've committed to change that. I would like to see more of our management people who we bring up from the ranks, who have dealt with that militaristic style of management, change that.

I think in my view, in my 40 years of railroading, I have seen a lot of change in getting away from that militaristic style of management. That is one reason when you look at Union Pacific and some of these title changes that they made over the years, that was one reason they made those changes, trying to get away from some of these militaristic-type titles as such.

But I think it's going -- it's going to take some work to do that. I -- it makes me feel bad, you know, to hear what you say when one of our people out there are afraid to come up to a manager and tell them what's wrong. That bothers me. It bothers me when I go out on the railroad here to hear that someone's afraid to talk to me. I guarantee you there's a lot of them who aren't. They'll pretty well let you know what's going on.

But my only commitment to you is I know that exists. I think it is far better today than it ever was, but I think we have a ways to go, and I can only say to you that Union Pacific stands ready to change that culture and change that militaristic style of management, be it, that you talk about.

MR. LARRY DAVIS: Well, let me just make one comment for your response perhaps. I can say on behalf of UTU that we've enjoyed our participation in the SACP process. My first involvement was on the BN Santa Fe, and maybe that's one of the forums with which we'll learn to communicate, share ideas, and I trust that your managers will share your view with respect to the need to communicate, the need to trust, and -- and if we can build a foundation of trust and communications, I think there's potential for all kinds of good things.

MR. JERRY R. DAVIS: I -- I think it is absolutely necessary to do that, to establish the future of this industry.

MR. LARRY DAVIS: That's all.

CHAIRMAN GOGLIA: Okay. Ms. Beal, any follow-up?

MS. BEAL: No.

CHAIRMAN GOGLIA: Mr. Ellingstad?

MR. ELLINGSTAD: No questions.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: Just one follow-up question for Mr. Davis. I wanted to remind him he's under oath.

Will the assignment of additional inspectors on your property enhance safety in your railroad? FRA inspectors?

MR. JERRY R. DAVIS: Well, I think if it's done in the right area.

MR. LAUBY: But that could be a possible way to -- to address some of these safety problems?

MR. JERRY R. DAVIS: I hope we don't need inspection. I hope -- I hope that we run a railroad that we don't need inspecting.

MR. LAUBY: Okay. Thank you very much.

CHAIRMAN GOGLIA: Mr. Dunn?

MR. JAMES P. DUNN: No questions.

CHAIRMAN GOGLIA: I have just two areas that I want to talk about briefly. Earlier when I visited with you in Omaha, you talked to me about a substantial investment that the railroad was making in track and improvements in the process. Do you recall what that number was? My memory says $500 million. Was that right?

MR. JERRY R. DAVIS: The -- of our capital budget this year, Mr. Chairman?

CHAIRMAN GOGLIA: Yes.

MR. JERRY R. DAVIS: Yeah. Our capital budget this year, over half of it, 1.2 billion, will be spent on just track-related programs, rail ties and ballasts.

CHAIRMAN GOGLIA: And of that --

MR. JERRY R. DAVIS: Locomotives is about 600 million. Our capacity increases are about 350 million for additional sidings, additional main lines, etc.

CHAIRMAN GOGLIA: Is any of that money earmarked for additional signaling?

MR. JERRY R. DAVIS: Yes, it is.

CHAIRMAN GOGLIA: To reduce the back territory?

MR. JERRY R. DAVIS: One -- one project that is underway today that will be completed by the end of the year is Laredo to San Antonio.

CHAIRMAN GOGLIA: Do you know off the top of your head, and I know this is unfair because we didn't talk about this, but do you know off the top of your head how much of your 36,000 miles of track is dark?

MR. JERRY R. DAVIS: No, I do not.

CHAIRMAN GOGLIA: Okay. Is the investment to reduce dark territory, is that going to be on-going?

MR. JERRY R. DAVIS: It is where the capacity is such on those lines that we can justify that.

CHAIRMAN GOGLIA: And can you give me a guesstimate of -- of, you know, is it going to be 10 percent of the lines or --

MR. JERRY R. DAVIS: No, I cannot.

CHAIRMAN GOGLIA: Okay. I know it's not a fair question.

All right. One last comment that I would like to make, and it involves the SACP process. I had considerable experience in these partnership programs in my prior life, prior to the Board, and I am firmly convinced that they work. It's not theory. I've seen it in action.

The one stumbling block is middle management. Now I mentioned that to you just a few weeks ago. Have -- have you and your management team, senior management team, developed a process of program or even thought about how you're going to deal with convincing the middle management that this program is worthwhile?

MR. JERRY R. DAVIS: We have a number of processes underway. The fact of the matter is if you wish, I could submit to you what that process is to get that down to the middle management of the railroad. I -- I -- I believe what you say was correct to me. We talked about that in Omaha, Mr. Chairman. I -- I agree with you. It is absolutely essential, and we do have a process to get that down there.

CHAIRMAN GOGLIA: I would appreciate it if you submitted that for the record.

MR. JERRY R. DAVIS: All right.

CHAIRMAN GOGLIA: The SACP process is far too important to let it get away, to let any of it escape.

MR. JERRY R. DAVIS: Yes, sir, I agree.

CHAIRMAN GOGLIA: Okay. That is the final question. Mr. Davis, you are released.

(Whereupon, the witness was excused.)

CHAIRMAN GOGLIA: And it is now 1:00, and it's time for lunch. We will return at 2:00, and for logistics for everybody, we will go through our witness list today, the scheduled witnesses, to the end, and if that means that we stay here a little late, then we will stay here a little late.

(Whereupon, at 1:00 p.m., the hearing was recessed, to reconvene this same day, Wednesday, March 18th, 1998, at 2:00 p.m.)

A F T E R N O O N   S E S S I O N
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2:10 p.m.

CHAIRMAN GOGLIA: Okay. We will go back on the record, and our next witness to be called will be called by Mr. Dunn.

MR. JAMES P. DUNN: The National Transportation Safety Board calls Jimmy Carter.

Whereupon,

having been first duly sworn, was called as a witness herein and was examined and testified as follows:

MR. JAMES P. DUNN: Please be seated.

TESTIMONY OF JIMMY CARTER
MANAGER OF OPERATING PRACTICES
UNION PACIFIC RAILROAD

MR. JAMES P. DUNN: Would you please state for the record your full name and spell your last name, please?

MR. CARTER: Jimmy E. Carter, C-A-R-T-E-R.

MR. JAMES P. DUNN: And, Mr. Carter, what is your current position with the Union Pacific Railroad?

MR. CARTER: I'm a Manager of Safety and Rules temporarily, and I carry a Manager of Operating Practices as a permanent assignment.

MR. JAMES P. DUNN: When you say temporarily, are you doing that full time right now?

MR. CARTER: It's a temporary assignment that I do along with my Manager of Operating Practices duties.

MR. JAMES P. DUNN: Okay. And how long have you been in this current position?

MR. CARTER: I've been a Manager of Operating Practices since -- in Houston since November of '95, and the Manager of Safety and Rules, the new position added the first of this year.

MR. JAMES P. DUNN: Okay. Would you please identify the person who's to your left?

MR. HASIAK: I'll just identify myself, if that's all right. My name is Raymond Hasiak. I'm from Union Pacific Railroad Law Department.

MR. JAMES P. DUNN: Okay. We will begin the questioning with the Technical Panel. Mr. Cochran?

MR. COCHRAN: Good afternoon, Mr. Carter.

MR. CARTER: Good afternoon, Mr. Cochran.

MR. COCHRAN: Could you please describe your duties and responsibilities as a Manager of Operating Practices and Safety?

MR. CARTER: Yes, sir. I'm -- my primary responsibility is for the education, training and promotion of locomotive engineers and to assist the service unit in testing and training of other employees and to ensure safety for everyone.

MR. COCHRAN: Are you a certified locomotive engineer?

MR. CARTER: Yes, sir, I am.

MR. COCHRAN: And did you previously work in the craft prior to being promoted to supervision or assigned to supervision?

MR. CARTER: Yes, sir. I was promoted. I came from the TP MP, Texas Pacific Missouri Pacific Railroad, where I was a trainman and then a locomotive engineer.

MR. COCHRAN: In the previous two years, have you been assigned to operate locomotives as part of your duties?

MR. CARTER: Yes, sir.

MR. COCHRAN: Were you exclusively used as an engineer or were you assigned to other train crew duties?

MR. CARTER: I've been used as a conductor.

MR. COCHRAN: During that period, was your ability to conduct your normal duties as a Manager of Operating Practices inhibited in any way due to you being required to work in train service?

MR. CARTER: I wouldn't think so. It gave me more opportunity in one sense.

MR. COCHRAN: Who performed your duties while you were operating trains?

MR. CARTER: My duties as far as engineer licensing or efficiency tests were done by me. There were other managers on the service unit who did stop tests of locomotive engineers or rules classes or something like that, if I wasn't available.

MR. COCHRAN: Was your ability to conduct efficiency tests in a normal manner in any way inhibited, such as stop tests or --

MR. CARTER: It somewhat was. Some of the tests that I would normally do, I could not do as a locomotive engineer simply because like a Fuse-E test or a torpedo test, if you're running a locomotive, I can't run down the track to put them out, but you would -- as far as like a signal test or something like that, you could take those.

MR. COCHRAN: Were you relieved of your efficiency test duty or were the -- your quotas reduced in any way?

MR. CARTER: No, sir.

MR. COCHRAN: And did you maintain your quotas for that period of time?

MR. CARTER: Pretty much so, except for the month of December, I was off with pneumonia. I did not document all of the tests that I did. I was doing some tests with the FRA in November that I didn't get all those in as far as documenting.

MR. COCHRAN: Could you give us a brief description of what you do when you perform efficiency tests?

MR. CARTER: You go out, and you have basically like two standards. One is the one where I might intervene with the crew, set up the circumstances. I might call the dispatcher and have them hold the signal. I might put out torpedoes or Fuse-Es or any of those number of things, and then the other portion is I might simply just go out to observe, go out into a yard and watch a switch crew switch, a normal meet, listen to people on the radio, watch them do their work, unannounced.

MR. COCHRAN: I have no further questions at this time. Mr. Kivowitz?

CHAIRMAN GOGLIA: I think we're in the wrong room.

MR. KIVOWITZ: While you were operating trains, did all your critical stop tests get done that you normally would do if you weren't operating the trains? Say the approach signal checks or stop signal or those type of checks?

MR. CARTER: I couldn't do an approach signal test because an approach signal test would require me to be at the signal and to observing, and if I'm at a meet, I couldn't do an approach signal test.

But as far as the stop tests for an absolute signal, if it was at a meet, I could notice that.

MR. KIVOWITZ: Did the -- any other members of your service unit or system supervisors accompany you when you were performing efficiency tests?

MR. CARTER: Yes, sir. James Robinson, who's another MOP, Rick McDowell, who's another MOP. I've been out with some of the MTOs and MYOs as part of my duties. I'm a more experienced manager in testing, and I try to help them to understand or know where the signal locations are or what -- how to set up a proper test.

MR. KIVOWITZ: The -- the Federal Railroad Administration accompany you when you were doing your efficiency tests?

MR. CARTER: Yes, sir. I've had Russell Williams, the Manager of Operating -- Operating Practices Specialist, Art Smallwood, Operating Practices Specialist, Leonard Gray from the Texas Railroad Commission have all accompanied me.

MR. KIVOWITZ: Did they just accompany or did they actually participate in performing the checks?

MR. CARTER: They're participants.

MR. KIVOWITZ: Can you recall if you had any failures while they were with you?

MR. CARTER: Yes, sir. I know of for a fact, I've been two failures with Russell Williams and about, I think, five with Mr. Smallwood, and to the best of my recollection, two with Leonard Gray.

MR. KIVOWITZ: Can you describe what type of -- what type of failures they were?

MR. CARTER: The one -- one of the ones with Russell Williams would have been an engine tie-down, securing an unattended locomotive. Mr. Smallwood, we actually had several. We had one on a Tex-Mex crew at West Junction for failure to inspect a spring switch, one on a BNSF crew for failure to make initial terminal air brake test, one on a UP crew for getting on and off a locomotive wrong and not having proper eye protection, one for failure to inspect the passing train.

MR. KIVOWITZ: Thank you. As part of your normal duties, do you visit outpost locations from the main terminal where you operate out of?

MR. CARTER: My normal assignment, the farthest I would normally go would be like Eureka or Galveston, Texas, but as a -- because of the running as a locomotive, I would end up in Hearn or Palestine or wherever, which kind of gave me a wider stance.

MR. KIVOWITZ: So, were you required to visit outpost locations under normal conditions?

MR. CARTER: Yes, sir. In my district, yes, sir.

MR. KIVOWITZ: And what would you normally do when you visited these locations?

MR. CARTER: Like if it was Galveston, I would pull tapes. I'd make a specific reason to go down there and grab all the tapes for grain trains or the local or the switch engine. I'd meet the crews. Sometimes announced, sometimes unannounced.

MR. KIVOWITZ: What were some of the things you might have discussed with the crews when you saw them?

MR. CARTER: If there was something new in the rule book, like when we got the new head-in devices, rules compliance failures, whatever might be a topic of new concern.

MR. KIVOWITZ: When you were operating trains and to help out the service, were you then able to make visits to these locations and do those functions that you just described?

MR. CARTER: Yes, sir. I pulled a few tapes when I would like end up in Hearn or some place. Actually it was kind of nice because you were -- if I had an agreement conductor, we'd be talking the whole way, and then when we got there, you know, everybody said, well, what did you think of this or blah-blah-blah. So, we always had an opportunity to meet and in one sense discuss things in a different light.

MR. KIVOWITZ: When you would check on the crews, would you check for their fitness for duty?

MR. CARTER: Yes, sir.

MR. KIVOWITZ: Can you tell us how you would do that?

MR. CARTER: Walk up and talk to you. Are your eyes blurry? Do you smell of alcohol? Are you coordinated? Are you properly attired? Do you have an appearance of maybe a personal injury or something wrong with you that may not be drug or alcohol-related?

MR. KIVOWITZ: Have you received training on how to do this?

MR. CARTER: Yes, sir, I have.

MR. KIVOWITZ: What type of training? What did that consist of?

MR. CARTER: It's a day-long class. If I remember right, I think Chuck Varvel, who's here today, was the one who gave me the class, and we talk about what are evidence, what are indicators of drug and alcohol use, which were some of those same things that I just talked about.

MR. KIVOWITZ: As a supervisory locomotive engineer, are you responsible for certifying the people in your service unit?

MR. CARTER: Yes, sir. FRA certification is my requirement.

MR. KIVOWITZ: How many engineers come under your perusal?

MR. CARTER: I have 79 Class 1 engineers.

MR. KIVOWITZ: Were you able to perform your normal check rides and skilled performance examinations within, even though you were having to be used to operate trains?

MR. CARTER: I was well in advance. My certification before we started running trains, we didn't actually start running trains till like July, and I'm kind of an eager beaver-type person. So, I was -- I had my certification done before I actually started running trains. All my engineers that needed a rules class or a cert ride were already done before I started running trains.

Now I helped out with -- with other managers in the pilot service which gave me a good opportunity to -- to be with people.

MR. KIVOWITZ: How long did a check ride last with an engineer?

MR. CARTER: Certification or performance?

MR. KIVOWITZ: Well, let's talk with the certification once every three years ride.

MR. CARTER: A certification ride's going to be a long enough distance in a territory or -- and I had a lot of terminal or yard engineers, which is going to be totally different from road engineers. It's going to be long enough that I know as your supervisor and a responsible person for your -- if you're my engineer, I'm responsible for your activities and your actions. If you break a train in half or you run a red block, I'm responsible along with you because you are my engineer. I take that kind of personal.

So, you're going to demonstrate that knowledge, whether that be two hours or 12 hours, whatever it's going to take for you, depending on your hours or years of service, and how old you are or if you're a newly-promoted engineer or an experienced engineer.

So, it's going to be a sufficient distance that -- that I'm comfortable with your abilities.

MR. KIVOWITZ: Previous testimony of Mr. Davis, he indicated that he's hiring 250 additional managers, and what I was wondering is if you believe that this would help take up the slack and all the duties that you normally do?

MR. CARTER: Yes, sir. We've got a new MOP in Hearn, Texas, two other managers in Hearn, and we've got three -- three new MOPs in Houston on top of what we already had.

MR. KIVOWITZ: So, how many is the total of new positions you personally have in your service unit?

MR. CARTER: In Houston alone for MOPs, we have three new MOPs, and in Hearn, we have a new MOP there. So, there's -- as far as my job responsibilities or my area, we have four new MOPs.

MR. KIVOWITZ: Do you feel that there was any time in your typical work schedule during the year of 1997 where you could have assumed the duties of other managers? Just overlaying that on your normal work schedule.

MR. CARTER: I don't guess I understand.

MR. KIVOWITZ: Well, in your daily schedule, there were times when you were operating as an MOP, and there were times you were operating trains.

The times that you were just operating on your normal schedule, if other supervisors were being taken away to operate trains, did you find yet enough time to do all the work that you normally had to do, plus their work?

MR. CARTER: If I understand your question right, I'll answer it like this. James Robinson is my partner. We are twins in a sense. We have the same territory. His people are my people, my people are his people, and they -- they view us as that.

So, if James was running trains, and James had a person that needed to be a cert ride, I'd go do it, if that's what you're asking.

MR. KIVOWITZ: Okay. Thank you. I have no further questions.

CHAIRMAN GOGLIA: We will go to the parties. Texas Railroad Commission?

MR. MARTIN: Mr. Carter, you talked about efficiency testing. Over the past year, would you say that -- I'm sorry. Mr. Carter, over the past year, would you say that UP managers in your general area conducted a normal amount of efficiency testing or less than a normal amount of efficiency testing, and -- and you mentioned that some of it was documented and some of it was not? Can you talk about that a little bit more?

MR. CARTER: My own knowledge would be just of my -- you know, what I did personally. I know we had a lot more MOPs and other managers down there. I know they took tests while they were riding. If someone else was short or someone else would kick in to pick up those tests. But when you have, I don't know, 20 or 30 MOPs down running trains, all of those people's eyes are out and open. Does that answer your question?

MR. MARTIN: Okay. Well, if -- if you -- if you're saying -- I'm hearing you say you did more efficiency testing, and, so, then, my question is are those documented tests?

MR. CARTER: My tests are what I did not document. It's my personal failure for paper work. I think Roger Larkin could probably answer your question more precisely.

MR. MARTIN: Okay. Well, we can visit that later on. Let me ask you this. When you worked as a locomotive engineer or conductor, did you fill out a daily hours of service report?

MR. CARTER: Yes, sir. I either tied up electronically or I called my tie-up in, and we have a little paper form that we sign and fill in.

MR. MARTIN: Okay. And did you send in those reports to -- to your home office?

MR. CARTER: At first, we sent them in to Spring, to the Director of Operating Practices, and then we send them in to Carol Peterson in Omaha.

MR. MARTIN: Thank you, Mr. Carter. That's all the questions I have.

CHAIRMAN GOGLIA: Okay. Federal Railroad Administration?

MR. GAVALLA: Mr. Carter, are you familiar with federal safety regulations as they relate to locomotive engineer certification and efficiency testing?

MR. CARTER: I believe so.

MR. GAVALLA: Does the UP efficiency testing program encompass measures that are above and beyond the requirements of federal regulations?

MR. CARTER: Yes, sir.

MR. GAVALLA: You mentioned some specific instances where FRA safety inspectors observed you in the performance of your efficiency testing, and that they noted some failures. Did all these failures involve federal regulations or were some of these specific to the UP's efficiency testing measures?

MR. CARTER: They're general code failures in the sense that our rule book is written to cover federal law and our operating practices, which all the -- basically the Western railroads agree to, and our efficiency test program is based off of that, which may or may not be -- well, I know it is. It's more stringent than the federal laws require.

MR. GAVALLA: Okay. What remedial action did Union Pacific take in response to the failures noted when our inspectors were present?

MR. CARTER: We had disciplinary hearings and either discipline or corrective action, based off of upgrade, was performed.

MR. GAVALLA: Sir, does the -- do the operating practices inspectors from the Federal Railroad Administration actually conduct or participate in the tests or do they evaluate UP managers in the performance of their efficiency tests?

MR. CARTER: I'll answer it this way. They're in the truck with me. They don't tie the shunts down. Is that -- I mean I would not ask an operating practice person to walk a shunt, but he's there, and he might tell me okay, the signal's down. So, they would -- they would see it happen. They might talk to the crew. I guess it's kind of semantics whether you call that participation or observation.

MR. GAVALLA: Okay. Thank you. No further questions at this time.

CHAIRMAN GOGLIA: Okay. Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes, we have a few questions. Yes, we have a few questions.

Mr. Carter, we have reports of engineers spending long hours on locomotives after the expiration of the hours of service, sometimes as much as 20 hours on duty.

Can you tell me what Union Pacific is doing to alleviate this problem, and why it is allowed to happen?

MR. CARTER: Well, the only thing I could tell you is -- would be my personal experience, and I know we have people that are doing that. I don't know how else to answer your question. I don't perform those activities myself. I know there's a group in Omaha, part of it's based off of SACP, that are doing those activities.

MR. WALPERT: Okay. How many engineers are under your jurisdiction?

MR. CARTER: I have 79 Class 1 engineers.

MR. WALPERT: And what period of time would you have personal contact with all of the engineers under your jurisdiction?

In other words, I'm asking how long does it take you to talk to each and every one of those engineers?

MR. CARTER: Well, our requirement in the Union Pacific EQMS is two rides and a tape with each engineer. So, I'm going to see those people twice a year, minimum. Was that what you're asking?

MR. WALPERT: Yes, that's what I'm asking. Thank you.

Can you tell me what is UP policy for qualifying engineers who are unfamiliar with their territory?

MR. CARTER: If you're using the word "qualify" to mean familiarize, --

MR. WALPERT: Yes, I am.

MR. CARTER: Okay. I can tell you what I do, and I take in the directional running now, I'm responsible for a large number of the engineers running from Houston, Texas, to Longview, Texas, which is a fairly aggressive territory.

That person has to tell me when he's ready to be cut loose, and if you're -- if you want to use the word "qualify", I use the word "cut loose". When he's ready, now if that's two trips or seven trips or whatever it is, we're going to work that through me and an engineer because not every engineer is going to need the same amount of time. A mountain engineer is not going to take as much time as a flat-land engineer.

MR. WALPERT: Do -- do all of the MOPs on UP use that principle?

MR. CARTER: I can just talk for me. I know what I do.

MR. WALPERT: So, it's not policy to do that, is that correct?

MR. CARTER: As far as I know, it is. All I can tell you is in Houston, we tell the engineer you tell us when you're ready to go.

MR. WALPERT: Okay. Are engineers ever required to -- to run trains over territory over which they are not familiar?

MR. CARTER: No, sir.

MR. WALPERT: Why is UP in your opinion having so much trouble relieving and transporting crews after the expiration of the hours of service, 12 hours on duty?

MR. CARTER: I don't manage that. I mean ask me about how to qualify an engineer or certify one, I can tell you, but I -- you know, you're asking me stuff that's out of my realm.

MR. WALPERT: Okay. Thank you. That's all I have for now.

CHAIRMAN GOGLIA: United Transportation Union?

MR. BOYD: Thank you, Mr. Chairman.

Mr. Carter, are you familiar with the crew hauling vans that haul crews around Texas?

MR. CARTER: I've ridden in them, if that's what you're asking.

MR. BOYD: Does the term "control number" mean anything to you?

MR. CARTER: It's something that I guess they get paid by. I mean I'm really not --

MR. BOYD: To your knowledge, does it take a control number before a crew van will pick up a crew?

MR. CARTER: No, sir.

MR. BOYD: They don't need a control number?

MR. CARTER: I know I've told a van to pick a crew up without a control number or anything. I just walked up and said get these guys. So, I mean I can only speak for what I know.

MR. BOYD: Can a crew get a van to pick them up without a control number, to your knowledge?

MR. CARTER: No, sir.

MR. BOYD: They cannot?

MR. CARTER: I don't think a crew can just call somebody -- well, I -- we have vans parked right outside, and you can walk right out there and say take me to this train or do this. I don't know how a crew could call a van out in line and get one to them.

MR. BOYD: Do you know of any instance where a crew's been on line and asked for relief after dying under the hours of service and a crew van has -- driver has told them that he would not pick them up because he did not have a control number?

MR. CARTER: No, sir, not personally.

MR. BOYD: Okay. In your duties as an MOP, do you have discussions with -- with your crews occasionally, more than twice a year?

MR. CARTER: Yes, sir, quite often.

MR. BOYD: In those discussions, have crews ever related fatigue issues to you?

MR. CARTER: Yes, sir.

MR. BOYD: Could you explain?

MR. CARTER: They just say they're tired or -- my engineers would say you work more than I do, and I'm tired.

MR. BOYD: What -- what action do you take or have you been told to take if a crew member tells you he's tired?

MR. CARTER: If -- if the engineer is -- is tired, I say are you ready, can you go, meaning I think it's not that they're not capable of performing that trip, I think what they're actually saying is they're tired of where they want some quality time off, not necessarily time to be rested to operate the train, which I think is a different deal.

I can be able to run a train which is a totally different concept of rest than quality time with my wife and kids.

MR. BOYD: And you make that determination?

MR. CARTER: No. I'm just telling you what they -- I cannot speak for what a guy truly means when he tells me that. I'm telling you what my perception is of what he's saying.

MR. BOYD: Without perceptions, specifically has anybody -- do you have discussions with people that say I'm really tired, and I don't feel like working?

MR. CARTER: I've never had anybody tell me that they weren't able to go.

MR. BOYD: Have you ever been asked by crew management or anyone else to have discussions with people who've asked to lay off because -- for reasons other than sickness?

MR. CARTER: No, sir.

MR. BOYD: You've never been asked to talk to employees under your jurisdiction regarding requests to lay off for any reason?

In other words, would CMS call you and say Engineer Jones wants off, and we told him he can't get off unless he gets permission from you?

MR. CARTER: I haven't had the -- the -- the requirement for that. I think that's somebody else's opportunity or -- or duties. They don't call me to say can this guy lay off.

Now I may call CMS and say let this person off or, you know, you come to me and say, you know, my wife's going to have surgery. I might call and intervene with CMS and say this guy's going to lay off, it's okay by me, if that's what you're asking.

MR. BOYD: Could a conductor or engineer call you up and say I'm tired, I want to lay off, and would you intervene and get him off or her off?

MR. CARTER: Yes, sir.

MR. BOYD: Okay. When you testified regarding -- you used the words "my people". You're talking about the people under your jurisdiction?

MR. CARTER: The people in Houston.

MR. BOYD: Under your --

MR. CARTER: Both train and engine.

MR. BOYD: Under your jurisdiction?

MR. CARTER: Yes, sir.

MR. BOYD: Okay. One question I have to ask. Who tests the MOPs?

MR. CARTER: Other MOPs, the FRA.

MR. BOYD: Within the carrier?

MR. CARTER: Well, I've been out with the FRA and tested other MOPs.

MR. BOYD: Okay. Is there any oversight regarding your hours of service, other than your reporting your hours of service when you're out actually running a train?

MR. CARTER: I don't guess I understand what you're -- you mean --

MR. BOYD: Who supervises your hours of service, other than yourself?

MR. CARTER: We tie up through CMS, just like everybody else.

MR. BOYD: You do? So, you would make the same reports that a --

MR. CARTER: Equal T.

MR. BOYD: -- regular assigned engineer or conductor would make?

MR. CARTER: We tie up in the computer with Equal T, just like a regular engineer.

MR. BOYD: Well, --

MR. CARTER: Is that what you're asking?

MR. BOYD: No. Let me ask it again. You tie up in the same manner that the operating crew, the regularly-assigned operating crew would sign up, whether it be a regular crew or an extra crew?

MR. CARTER: Yes, sir.

MR. BOYD: There's no difference in how you operate when you're working as an officer versus working as an engineer?

MR. CARTER: If I'm operating as a covered hours of service, I tie up just like any TE&Y guy does.

MR. BOYD: Same procedure?

MR. CARTER: Yes, sir.

MR. BOYD: Okay. Thank you, Mr. Chairman.

MR. COCHRAN: Okay. To the head table, Ms. Beal?

MS. BEAL: Hi, Mr. Carter. If your engineers identify a safety problem in the line of duty, what are the procedures in place for those concerns to be addressed?

MR. CARTER: If the person brought it to me, we're going to handle it right there, if it means a phone call from me or me going out and picking it up personally. We also have safety hotlines, a CMS hotline, a van hotline, Mr. Davis's hotline.

If it's something that, you know, is larger than scope than me going out and picking something up out of the right-of-way.

MS. BEAL: Do you have direct-line communication with Mr. Duffy's office?

MR. CARTER: If I need it, yes, sir. Yes, ma'am.

MS. BEAL: Thank you. That's all.

CHAIRMAN GOGLIA: Mr. Ellingstad?

MR. ELLINGSTAD: Thank you.

I believe you had mentioned that when you're recertifying an engineer, you will ride long enough to do the job, and I think you'd indicated if it took two hours or 12 hours, whatever.

Do you have -- have sort of -- some kind of an average that --

MR. CARTER: Not really. What -- we have a standardized check form, so to speak, an EQMS sign-off sheet, so to speak. Bell, horn, whistle, about 24 items. I'm going to be with you till you prove to me that you can meet those requirements, and it takes a lot less time to take somebody on a hump switch engine versus chemical trains on the Palestine corridor.

MR. ELLINGSTAD: Okay. So, your applications of those procedures are -- are basically your judgment with respect to the requirement for the particular --

MR. CARTER: Yes, sir.

MR. ELLINGSTAD: -- engineer that you're certifying, and -- and you can't give me an average there, close than the two to 12 hours?

MR. CARTER: An average for me is going to be less in a sense because out of my 79 engineers, I probably only have 20 something road engineers.

MR. ELLINGSTAD: Okay.

MR. CARTER: So, two or three hours or four hours with a guy in a terminal, maybe six for a belt, which is the Houston belt and terminal or the -- it's going to be a lot different than somebody who's got a long district.

MR. ELLINGSTAD: Okay. Just clarifying a couple things that you had -- had responded to Mr. Cochran, I believe.

What was this period when you were -- or are you still -- are you still operating trains in addition to these duties?

MR. CARTER: Yes, sir, I still occasionally -- the 12th was my last trip as an engineer.

MR. ELLINGSTAD: Okay. And you again indicated that you were, during that period of time, doing all of the other certification duties, that -- that all of those tasks remained when you were doing this extra duty?

MR. CARTER: Yes, sir. We didn't take our -- our standards or our policies or anything in setting it that way.

MR. ELLINGSTAD: Okay. Thank you. No further questions.

CHAIRMAN GOGLIA: All right. Mr. Lauby?

MR. LAUBY: Mr. Carter, just one clarification question. When you're doing these certification check rides, you indicated that you may take as much time as needed, depending on what the job is, whether it's on the hump yard or whether it's on the road, is that correct?

MR. CARTER: Yes.

MR. LAUBY: What -- what procedure do you use when an engineer bids a different job? Do you go out -- I mean if someone is to bid from the yard and go out on the road, do you recertify him before you allow him to do that?

MR. CARTER: I happen just now, I've got some of my guys that run east who've never been east before. They make their student trips just like anybody else.

MR. LAUBY: Just like a new employee or a new engineer?

MR. CARTER: Well, a new engineer makes student trips which are a little bit different. Promoted Class 1 engineer is only becoming familiar with the territory. A student engineer is learning to run a train, if you understand what I mean, and, so, that familiarization trip for already-promoted engineers is going to be based off what's his feedback to me when he's ready to mark up.

MR. LAUBY: Okay. Thank you very much.

CHAIRMAN GOGLIA: Mr. Dunn?

MR. JAMES P. DUNN: Mr. Carter, how long have you been manager with Union Pacific or its predecessor railroad?

MR. CARTER: 10 years.

MR. JAMES P. DUNN: Okay. And what railroad were you with prior to the merger?

MR. CARTER: I was a Missouri Pacific-Union Pacific person, if that answers your question.

MR. JAMES P. DUNN: Okay. You didn't work for the SP then?

MR. CARTER: No, sir.

MR. JAMES P. DUNN: Okay. And how long have you been in the Houston terminal?

MR. CARTER: I came in November of '95.

MR. JAMES P. DUNN: Okay. So, you had a year there before the merger or thereabouts?

MR. CARTER: Yeah.

MR. JAMES P. DUNN: Whatever it was. What -- could you give us just a general idea of what your duties and responsibilities were like prior to the merger?

MR. CARTER: Same as they are now.

MR. JAMES P. DUNN: Okay. Let me reword that. What was the day like for you prior to the merger?

MR. CARTER: Prior to the merger, depending on what my certification or ride list was or if I decided we were going to go out and team test or something like that or if I had a rules class, I would base those activities off of what formal activities I might have scheduled for that day, be it a safety meeting or whatever, and then I would go out, and if I'm going to be in a safety meeting all day, I might run by, say, Lloyd Yard, which we have our safety, which is very similar to what SACP is, except now we're adding the FRA and -- and formal participation from the union chairman.

I might run grab a bunch of tapes at Lloyd Yard, go to the safety meeting, leave there and that would be my day.

MR. JAMES P. DUNN: Okay. Now after the merger took place, and I guess against the background of what you heard Ms. Molitoris and Mr. Davis talk about the turbulent times on the Union Pacific, what was your days like then, let's say, in Year 2 down in Houston?

MR. CARTER: Longer.

MR. JAMES P. DUNN: Can you expand on that a little bit? More challenging?

MR. CARTER: You had more that you really needed to take hold of or if it was piloting or qualifications of engineers on new territories or familiarization. We as the -- I guess you could say, a team.

After the merger, James Robinson and I were -- were the -- paired together or twins.

MR. JAMES P. DUNN: Is he -- is he an MOP, also?

MR. CARTER: Yes, sir.

MR. JAMES P. DUNN: Okay.

MR. CARTER: He's a new MOP that -- that came on January of '96, and, so, we worked together for a year. Now we have John Kovach and Rick McNall along with Gil Stovall and two more folks that are coming in. So, as the merger progresses, we try to blend our abilities or experiences, so that I might know how to do this better than somebody else. They might know how to do this better than that.

So, what we do is we kind of move the ball or, if --

MR. JAMES P. DUNN: Okay. But what I was interested in, when the merger came to your terminal, your day-to-day activities changed?

MR. CARTER: Yes, sir.

MR. JAMES P. DUNN: Even if your duties and responsibilities didn't, your day-to-day activities did, and then -- is that correct?

MR. CARTER: Yes, sir. That's a fair statement.

MR. JAMES P. DUNN: Okay. At that point in time, I think you said it was July when additional duties of operating trains were -- you assumed those duties. Was that then again another change?

MR. CARTER: Yes, sir.

MR. JAMES P. DUNN: Okay. Do you think that affected your ability as far as -- not ability, but your being able to provide management oversight? These changes, the merger, the turbulence that brought, and then operating trains?

MR. CARTER: It made for longer days. Where I might not have been able to do scheduled events, so to speak. We had a locomotive improvement team or something like that that I would go to, and if I was gone running a train, I would have to rely on those people.

MR. JAMES P. DUNN: Okay. Did your basic management oversight duties -- were you able to carry those out once you start operating trains?

MR. CARTER: I think so. I think they're actually enhanced.

MR. JAMES P. DUNN: Could you expand on that a little bit for me, how they were enhanced?

MR. CARTER: When I'm sitting with like an agreement conductor, --

MR. JAMES P. DUNN: Hm-hmm.

MR. CARTER: -- he doesn't see me as his supervisor. He sees me as his engineer. So, there's -- the conversation -- much like Mr. Davis talked about, where maybe we were a little more militaristic at first.

When -- if I'm sitting with you on the cab of a locomotive at 1:00 in the morning waiting for a train meet, you don't see me as Jimmy Carter, MOP, you see me as Jimmy Carter, engineer. So, there's a different communication level.

So, my supervisory role in a sense becomes more of a mentor and peer as opposed to just a flat supervisor.

MR. JAMES P. DUNN: Okay. I had a few questions on efficiency testing and particularly what you talked about working with the FRA.

How often did the FRA -- were they with you on these efficiency testing? Let's talk percentage-wise when you would do it. What percentage time were you -- was the FRA present?

MR. CARTER: Russell Williams and I and Leonard Gray and I have a very good working relationship, and I would say at least once a month, we would go out and do something.

MR. JAMES P. DUNN: Okay. Those are FRA persons?

MR. CARTER: FRA or Texas Railroad Commission.

MR. JAMES P. DUNN: Okay.

MR. CARTER: Mr. Smallwood was there during a blitz specifically for, I guess, an evaluation of our operations.

MR. JAMES P. DUNN: Okay. And then the question as far as did they evaluate your efficiency testing or did they participate. My understanding was you believed they participated in the efficiency test?

MR. CARTER: Well, I guess that's kind of a fine line. To me, if you're in the truck with me, and I'm using you to say tell me when this signal drops red. Okay. Now, granted, they're not out there setting up the crew. They're not going to go testify in an investigation. None of that stuff.

So, yeah, technically, I guess they don't participate, and they do evaluate whether I know where -- where I am, how to do a test, am I fair and honest with that, how I handle the crew if there's a failure, meaning an Act 1, an Act 2 or an Act 3.

MR. JAMES P. DUNN: Okay. In -- other than those occasions when they accompanied you, did they evaluate the other 29 days or the other percentage of time that you performed efficiency testing?

MR. CARTER: They evaluate our records.

MR. JAMES P. DUNN: And how do they do that?

MR. CARTER: They take our efficiency test records from the computer, and they pick through them and say these guys are testing at this time of day or this location or this type of test. Russell Williams, I know, does that.

MR. JAMES P. DUNN: And you get feedback from the FRA people on that?

MR. CARTER: I've had feedback from Russell.

MR. JAMES P. DUNN: Okay. Do you participate in the SACP program?

MR. CARTER: In the sense that we've rolled out the upgrade process. There's -- the two latest things that we've had is a change in upgrade, which is reduction in the periods for which discipline's held and return to work discipline, and we've had a harassment/intimidation policy letter that was sent out to everyone.

The rest, I think, is -- is something that's come out of SACP, and I would roll that out to the crews, like go to Lloyd Yard and say, you know, guys, this is -- this is the process we're going to work through, and as Mr. Davis said, people's own judgment or own choices have a lot to do with that because the first time I rolled out, you know, if you work 14 days, you could have two days off, I had a conductor mouth me like, you know, what are you doing taking money out of my pocket? He said, "I'll lay off when I want to lay off", and I said, "No, this isn't mandatory. This is an option that you have." So, there's -- sometimes there's mis-communication or misunderstandings.

MR. JAMES P. DUNN: Okay. All right. Is Hearn Terminal or Hearn Yard, is that part of your territory?

MR. CARTER: It wasn't, and it's not.

MR. JAMES P. DUNN: Okay. I heard you mention that there's now a MOP or an MOP there?

MR. CARTER: Yes, sir, that's correct.

MR. JAMES P. DUNN: Okay. Is that a new position?

MR. CARTER: Yes, sir.

MR. JAMES P. DUNN: Had there been a resident MOP there prior to this position being put on?

MR. CARTER: No, sir, there wasn't. There was an MTO at Hearn.

MR. JAMES P. DUNN: There -- I'm sorry?

MR. CARTER: There was just an MTO prior -- when the merger happened, the -- what we would call the central, which was the former SP, was a rather low-density, low number of trains. So, they just had a train master there.

MR. JAMES P. DUNN: Okay. But there was a resident train master at Hearn, to your knowledge?

MR. CARTER: Yes. Mr. Hobbs.

MR. JAMES P. DUNN: Who was that?

MR. CARTER: Mr. Hobbs.

MR. JAMES P. DUNN: Okay. That's all the questions I have.

CHAIRMAN GOGLIA: Okay. Does anybody at the Technical Panel have anything that they'd like to follow up with?

MR. JAMES S. DUNN: I just have one question, Mr. Carter. Have you ever called Mr. Davis's hotline?

MR. CARTER: I haven't personally, no.

MR. JAMES S. DUNN: Do you know of any of your engineers, these 79 engineers, have used that new function?

MR. CARTER: I think I've had -- I know some people have called it, and I -- I'd have to go back and look at it because we get feedback. If you call Mr. Davis's hotline, you're going to get feedback or you're going to have a response. I mean it's like the same day, and, for an example, you called Mr. Davis's hotline and say I want to know about this or I think this is wrong or whatever, then that's going to come right back to our service unit or our area, and if that was your area, then someone in the office is going to track you down for a response and a correction, if that answers your question.

MR. JAMES S. DUNN: That did. Thanks. That's all the questions I have.

CHAIRMAN GOGLIA: Any of the parties? Texas Railroad Commission? FRA?

MR. GAVALLA: I have a couple of questions. Mr. Carter, are you familiar with the FRA report issued last month regarding specific safety concerns identified on the Union Pacific Railroad?

MR. CARTER: Are you talking about the SACP report?

MR. GAVALLA: That's correct.

MR. CARTER: I've read through it.

MR. GAVALLA: Are you aware of issues that FRA identified regarding concerns about compliance with the requirements for locomotive engineer certification, operational observation and efficiency testing?

MR. CARTER: Just to the point that I read through it. I mean I'm not party to -- to doing that, I mean, as far as, you know, discussing with the SACP group.

MR. GAVALLA: But you are familiar that we did raise the issues, we did have concerns along those lines with UP?

MR. CARTER: I read it in the report.

MR. GAVALLA: Thank you. Are you also aware that we raised concerns regarding train crews receiving sufficient qualifying runs over unfamiliar territories?

MR. CARTER: Yes, sir. It's in the report.

MR. GAVALLA: Okay. How many familiarization trips on a new territory does an otherwise-qualified and certified locomotive engineer receive in accordance with UP's certification program?

MR. CARTER: Okay. Certification is -- is a ride. If you're talking about familiarization and being qualified on a new district, it's going to be consistent with what that engineer gives me feedback.

MR. GAVALLA: So, there's no set number of qualification rides?

MR. CARTER: No, sir. If you're a 45-year veteran engineer from a large territory that you're working on, it may be a piece of cake for you to learn, and if you're somebody who's a new engineer in a new aggressive territory, it may be 10-15 trips, you know. I'm going to do what that person tells me he needs.

MR. GAVALLA: Okay. Thank you. No further questions.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes. Mr. Carter, I have a couple of questions.

One. Do you have anything to do with implementing the new UP policy of allowing an employee, an operating employee, one day off after they have worked seven consecutive days?

MR. CARTER: No, sir. That's CMS.

MR. WALPERT: Okay. Are you familiar at all with the policy in regard to how it's working?

MR. CARTER: Just from what I heard today.

MR. WALPERT: Okay. So, the -- the locomotive engineers under your jurisdiction don't -- have never said anything to you one way or another about the policy?

MR. CARTER: I have not had an engineer call me and say he couldn't get off, if that's what you're asking.

MR. WALPERT: Okay. Let me ask you this about the policy. Is it automatic that you're allowed off after seven days under any circumstances or conditions?

MR. CARTER: I don't guess I understand where you're headed.

MR. WALPERT: Well, I guess where I'm headed is if there are -- if there are six vacancies on -- on the pool jobs, and there are five employees on the extra board, would you allow an employee off at that -- the extra employee off at that time?

MR. CARTER: I don't -- I don't mark employees up or off. So, I mean you're asking me to answer something for CMS.

MR. WALPERT: Okay. Thank you. You have indicated in prior testimony that there will be or have been new MOPs hired, is that correct?

MR. CARTER: I know of four personally, and as a matter of fact -- well, two of my employees are now MOPs or MTOs or -- excuse me -- MOT. Mike Burkleson and Wesley Holloway are two MOPs that were my engineers.

MR. WALPERT: Okay. Can you tell me if these are new positions or do they replace other MOPs who have quit or left for other reasons?

MR. CARTER: The one at Hearn is brand new. Steve Maxell is brand new. Harrison is brand new. Wesley Holloway is -- is a replacement for Al Peacock, and Al Peacock's position in Houston was brand new.

MR. WALPERT: Okay. You also said, Mr. Carter, that -- that the engineers, I believe you used the word "conductor", under your jurisdiction does not see you as -- as a supervisor but as an engineer.

MR. CARTER: No, I didn't say that. I said if I was on the engine with you, and we're parked out in the middle of no where waiting on a train, I tend to lose my title as MOP and tend to be more your engineer.

In other words, if you started to walk out the door or you were outside the door smoking a cigarette and coming in, because we don't smoke in the cab of the locomotives if both people agree, I'm not going to take a failure on you or threaten to write you up or say, you know, that's an Act 2, you know, you know better than that.

I'm your engineer, and our crews are supposed to regulate themselves, and that's how I see myself. Now I'm not going to turn a blind eye to something that's -- that's a rule violation, but I'm going to talk and counsel you as two people of a member of a crew.

MR. WALPERT: Okay. What -- can -- can you briefly walk me through the procedure of what would happen if an engineer failed an efficiency test that you conducted?

MR. CARTER: If it was a substantial failure, as an example, a signal that required stop, and you didn't stop, we're going to take you from the train. We're going to do drug testing, and we'll have a disciplinary hearing.

If it was something that was not grievous in nature, let's say that you blew a little short or maybe you didn't blow proper 15, in other words, instead of two one and one, you blew three one and one, I'm going to counsel you. I say, look, you know better than this. You can do a better job than this. This is how we need to do your job or if you were train handling, and you got some slack, it wasn't something that would tear the train up, but it's something that's not conducive to good train handling or -- or to damage to the grading or whatever, we're going to talk about that, and I'm going to try to get to you in a sense that you understand what you did wrong, and how we're going to do better in the future.

MR. WALPERT: Okay. You also used a term that I'm not really familiar with what you meant, but you said in regard to the SACP process, your only involvement is that you have rolled out the upgrade policy.

Would you explain what you mean by "rolled out"?

MR. CARTER: I didn't mean roll out. We have a change to the upgrade discipline policy that was BTB'd to all employees. Now obviously not all employees could see the BTB, and I deal a lot with local chairmen in disciplinary matters or in hearing matters and a lot with the agreement employees.

So, we explained the differences of what -- what the changes have been. In other words, a Level 1 doesn't stay a year, and the reductions in those time limits, if that's what you're asking.

MR. WALPERT: Yeah. So, I guess what I'm understanding you're saying is that you explained to the employees what the change in upgrade policy was, but you were not actually involved in the -- in the changes that took place in the --

MR. CARTER: No, sir. That was SACP. That was the BLE and the UTU and the company, Lee Roach and I can't remember the two people from the union. They were all there on a BTB, and then, of course, not everybody gets to see that, and it's my responsibility or I take it as my responsibility to help people understand what the changes are.

MR. WALPERT: Okay. One final question. It's somewhat of an anecdotal question, but it is. If -- if there were an FRA penalty defect on a train or engine in the yard that was departing under your jurisdiction, and that engineer brought to your attention that there was in fact a penalty defect, but it would delay the train to correct that penalty defect, what would be your course of action?

MR. CARTER: I'm going to set it out.

MR. WALPERT: Okay.

MR. CARTER: I would not ask any of my employees to do anything illegal, immoral, against the rules or against the law or anything I wouldn't do myself.

MR. WALPERT: Okay. Thank you, Mr. Carter. That's all I have.

CHAIRMAN GOGLIA: UTU?

MR. BOYD: Just a couple, Mr. Chairman.

Mr. Carter, have you ever been asked by a conductor or engineer for you to intervene on their behalf to get time off --

MR. CARTER: Yes.

MR. BOYD: -- for any reason?

MR. CARTER: Yes.

MR. BOYD: What -- what procedure do you follow when that request is made?

MR. CARTER: We talk about it. An example. One of my engineers was going to have -- his wife was going to have surgery, called me, said can you get this for me? I have an access line to CMS that the normal crew members don't have, and I would use that right now to get that person off.

MR. BOYD: What if the engineer or conductor doesn't have immediate access to you to get that done?

MR. CARTER: There are other managers or they can call the CMS manager.

MR. BOYD: Is it your testimony then that there's always somebody available when they want to request to get off?

MR. CARTER: There's a manager in CMS 24 hours a day, seven days a week.

MR. BOYD: That's available to the employees?

MR. CARTER: All they have to do is call them.

MR. BOYD: Okay. I believe Mr. Dunn asked you if your duties were different pre-merger to post-merger, and you said that there were more duties post-merger.

That being the case, when you -- when you were done operating a locomotive as an engineer, performing duties as an engineer, as a manager, did you get your required rest at the completion of that duty or did you perform managerial duties?

MR. CARTER: I couldn't perform any managerial duties, and that's part of the reason I didn't get all my efficiency tests in. If I'm hog, I'm hogged.

MR. BOYD: You were done, and you went home, and you got your rest?

MR. CARTER: Go to bed.

MR. BOYD: With all duties? Okay. And you counted your time in the same way as -- as an operating crew would?

MR. CARTER: Yes, sir.

MR. BOYD: Okay. One thing I'm confused about, and I don't want to sound argumentative here, but I think it's important that we -- we talk about it. There was, you indicated, some discretion in rule compliance or non-compliance. That was based on substantial failures which would indicate or one would assume that there were non-substantial failures.

What is the criteria used to determine what's substantial and what is, my term, non-substantial?

MR. CARTER: Okay. What I was trying to describe is in efficiency testing, we have three very different -- three areas of either you passed it, which is an Act 1, you almost passed it in the sense that it's called an Act 2, which is verbal counseling. In another sense, it would not be something that would warrant a formal handling, formal discipline, and in an Act 3, it's something that warrants formal discipline.

MR. BOYD: This is something that's formalized?

MR. CARTER: Yes, sir. It's -- every manager goes through a testing training. Roger Larkin's here, and he can explain how each manager goes through their efficiency test training, but an example would be you lived up to and you just slightly -- the technicalities maybe of the rule as opposed to 15L, blowing it across. You know, you blew too much, and you -- and you have a history of that. Then I might say look, you know, you're just trying to make these people mad in town or whatever, do right, and I would document that as an Act 2, so that there's documentation that on this date, I talked to you about this activity, whatever it might be, and if you continue that activity, you'll suffer discipline.

Does that answer your question?

MR. BOYD: No. Maybe I can ask the Chairman if -- if -- you say this is a formalized --

MR. CARTER: It's part of our exhibits, our efficiency test program.

MR. BOYD: Because we have it as part of the record?

CHAIRMAN GOGLIA: We can also get to this through some other witnesses.

MR. BOYD: Okay. Fine. Thank you, Mr. Chairman. I'm done.

CHAIRMAN GOGLIA: The head table has no further questions, although I have one -- one area, maybe more than one question on it.

You stated that you reported to work in Houston around November '95, is that correct?

MR. CARTER: Yes, sir.

CHAIRMAN GOGLIA: Can you recall, say, January or February of '96, how long your work day was?

MR. CARTER: January or February of '96?

CHAIRMAN GOGLIA: Right.

MR. CARTER: 12-16 hours.

CHAIRMAN GOGLIA: And you mentioned in answering somebody's question about -- I believe you said it was an engineer who commented that you work more hours than the engineers do. What did your day grow to, if it started with a 12-to-16-hour day?

MR. CARTER: There were days that I was on duty -- not on duty per se. I would be on the railroad property for 20 hours or plus, you know. It's just one of those deals that I take -- nobody tells me I have to stay that long. I have a philosophy and a process that whatever it's going to take for me to make sure that we have a safe railroad. I'm not going to walk away and have something that needs to be done.

CHAIRMAN GOGLIA: Boy, that's a tough work schedule.

All right. Mr. Dunn has one follow-up question.

MR. JAMES P. DUNN: Mr. Carter, were you ever tested?

MR. CARTER: Yes.

MR. JAMES P. DUNN: Were you -- while you were operating a train?

MR. CARTER: Yes, sir. I can -- the last test I had was Lafayette Sub, Dayton, and Liberty, which would be about less than a week ago.

MR. JAMES P. DUNN: Okay. Do you get notified of that, that you were tested, and the results thereof?

MR. CARTER: Well, when I saw the Fuse-E, I knew I was tested.

MR. JAMES P. DUNN: That would be a good clue. That's all I have.

CHAIRMAN GOGLIA: Okay, Mr. Carter. You are released.

MR. CARTER: Thank you.

(Whereupon, the witness was excused.)

CHAIRMAN GOGLIA: The next witness is Mr. Greg Garrison.

MR. JAMES P. DUNN: The National Transportation Safety Board calls Mr. Greg Garrison.

Whereupon,

having been first duly sworn, was called as a witness herein and was examined and testified as follows:

MR. JAMES P. DUNN: Thank you. Please be seated.

TESTIMONY OF GREG GARRISON
SUPERINTENDENT, UNION PACIFIC RAILROAD

MR. JAMES P. DUNN: For the record, would you provide your full name and spell your last name, please?

MR. GARRISON: My name is Gregory N. Garrison. Garrison is spelled G-A-R-R-I-S-O-N.

MR. JAMES P. DUNN: And what is your current position with Union Pacific Railroad?

MR. GARRISON: I'm a superintendent in our Command Center in Omaha, Nebraska.

MR. JAMES P. DUNN: And how long have you held that position?

MR. GARRISON: For three months.

MR. JAMES P. DUNN: And what was your position prior to that?

MR. GARRISON: Prior to my new assignment, I was a superintendent in Houston, Texas, for the year of 1997.

MR. JAMES P. DUNN: Okay. And can you just briefly tell us what other positions you have held in the railroad industry?

MR. GARRISON: Yes. I started with Union Pacific Railroad in 1986 in the management trainee program. I was hired out directly out of college. I participated in that program and assumed duties as Manager of Train Operations at Popular Bluff, Missouri, and North Platte, Nebraska.

I held a title of Manager of Terminal Operations in North Little Rock, Arkansas, Director of Intermodal Train Operations in Omaha, Nebraska. I was Union Pacific's Superintendent in Fort Worth, Texas, at merger time, at which time I was moved to Houston.

MR. JAMES P. DUNN: Thank you. And for the record, will you identify the person to your left or would you please do it yourself again?

MR. HASIAK: I'm still Ray Hasiak from the Union Pacific Railroad Law Department.

MR. JAMES P. DUNN: Very good. Thank you.

We will begin the questioning of Mr. Garrison with the Technical Panel, Mr. James S. Dunn.

MR. JAMES S. DUNN: Mr. Garrison, I asked if you could get something for me just so we have it on the record, and that was could you tell me of the 15 accidents that I described earlier this morning, how many of them were on prior Union Pacific property and how many were on prior SP property?

MR. GARRISON: There were three on the prior SP property.

MR. JAMES S. DUNN: Of those 15?

MR. GARRISON: Of the 15. Yes, sir.

MR. JAMES S. DUNN: Thank you very much.

MR. KIVOWITZ: Good afternoon, Mr. Garrison. In reference to your previous assignment in Houston, can you describe what your geographical area consisted of?

MR. GARRISON: Well, in the last six months of the year, my geographical area of responsibility was basically a circle around the Houston, Texas, complex itself, say in a 50-mile radius.

MR. KIVOWITZ: And for the first six months?

MR. GARRISON: I think in the first six months, my territory was extended east over to Iowa Junction in Louisiana and also south down to Bloomington, Texas.

MR. KIVOWITZ: Can you tell us why the change of territory occurred?

MR. GARRISON: Most of it's to put more management emphasis on some of the service situations that we were going through and also give a little more management, upper management oversight of some of the safety issues that we thought we had at the time.

MR. KIVOWITZ: Concerning the supervisors that work for you, can you give me some of the general areas that you worked with them on?

MR. GARRISON: You're talking of my supervisors?

MR. KIVOWITZ: Yes.

MR. GARRISON: My basic role as superintendent was, first, safety of the entire territory that -- that I was in charge of, and, secondly, I viewed my role as a leader and manager of

-- leading and managing of the employees that worked under me, both of the supervisors and the TE&Y employees that worked out there. That would include the managers and the safety aspects, their testing records, how much they were getting out with the employees.

It might extend to the way they handled themselves with employees and basically what I expected of them and the way they dealt with employees. It would go to how well they were taking care of their customers on their territory. So on and so forth.

MR. KIVOWITZ: Was the Union Pacific's efficiency testing program one of the things you worked with with your other supervisors?

MR. GARRISON: Yes.

MR. KIVOWITZ: Can you describe what was your task in working with other supervisors concerning the efficiency testing program?

MR. GARRISON: Well, basically, I ensured that all of the managers that worked under my jurisdiction were, first of all, they were getting proper training in how to conduct efficiency tests. I then reviewed our efficiency testing records of which they put input through the computer system in to ensure that -- that they were doing their tests, that they were spreading their tests out over the entire territory, the various times of day, days of week, the quality of the tests they were doing, the emphasis we were putting on our engineers, not stop-tested list which was a program to ensure that all of our locomotive engineers were stop tested at least once every 90 days, and also any other areas that in our conference calls and staff meetings that we might determine as a team that needed some extra emphasis.

MR. KIVOWITZ: Did you find any exceptions concerning your supervisors in their performing the efficiency tests in the Houston service unit?

MR. GARRISON: You're asking me through the year of 1997, did I take exception to any of my managers' testing records?

MR. KIVOWITZ: Yes.

MR. GARRISON: Is that -- on occasion, I would have a manager that would require some counseling based on a certain situation.

MR. KIVOWITZ: Could you elaborate a little bit on that?

MR. GARRISON: Well, if I had a manager that was displaying that they were not getting the proper amount of tests, which they were required to do 30, and if a manager were not getting his 30 tests, his or her 30 tests, then I might sit down and counsel with that manager.

MR. KIVOWITZ: The -- I have no further questions.

MR. COCHRAN: During 1997, -- during 1997, Mr. Garrison, I'm sorry, did you accompany all of your transportation supervisors at least once while they were doing their testing?

MR. GARRISON: Throughout the year, yes, I did make it to all managers.

MR. COCHRAN: At any time, were you relieved or did the general manager relieve you of -- of meeting a quota as far as efficiency tests were concerned?

MR. GARRISON: No, he did not.

MR. COCHRAN: Did you monitor the test results to ensure that everyone was doing their testing and that the managers varied their tests, time and date, and etc.?

MR. GARRISON: Yes, I did.

MR. JAMES S. DUNN: The Technical Panel has no further questions.

CHAIRMAN GOGLIA: To the parties. Texas Railroad Commission?

MR. MARTIN: Thank you, Mr. Chairman.

Mr. Garrison, let me ask you. You heard Mr. Carter's testimony about the work day in response to Chairman Goglia's question. Is -- would you consider that a pretty typical work day for the -- for the managers under your supervision in the past year or so or the past several years that you were there in Houston?

MR. GARRISON: Well, the managers that work for me, understand my past years were actually in Fort Worth and some in Houston, basically put in a 12-hour day, was a pretty typical day, and under emergency situations, derailments, what have you, I mean we might all be out there extra hours, but a typical day for a manager was 12 hours.

MR. MARTIN: And I believe that was what he testified to as before the -- the problems resulting from the merger, and after that, it was substantially longer. I mean do you agree with that?

MR. GARRISON: Well, to my knowledge, most of the managers were putting in 12-hour days. Now if Jimmy or any other manager chose to or felt like he needed to work longer to accomplish whatever tasks they felt like they were doing, I guess they were doing that of their own choice, but to my knowledge, most of the managers were putting in a 12-hour day, even post-merger.

MR. MARTIN: To your knowledge, Mr. Garrison, were managers that operated trains in some capacity, did they comply with the hours of service, federal hours of service laws for train crew operators?

MR. GARRISON: To my knowledge, they did. Yes, sir.

MR. MARTIN: That's all the questions we have right now, Mr. Chairman.

CHAIRMAN GOGLIA: Federal Railroad Administration?

MR. GAVALLA: Sir, when you were in Houston, were you responsible for implementation of the service recovery plan that UP had implemented?

MR. GARRISON: I participated in some of the planning of that and also responsible for its implementation. Yes, sir.

MR. GAVALLA: When the service recovery plan was put into effect, did that take any of your attention away from your safety responsibilities?

MR. GARRISON: No, it didn't. It certainly, with all of the challenges we had in Houston area, and you'd have to say in the Gulf Coast region, there was certainly room for more challenges to take place, it did make it more challenging to accomplish all the goals, but in terms of taking away from safety, we still viewed safety as the most important thing we were doing on a day-to-day basis.

MR. GAVALLA: Thank you. Have you noticed any changes in your area of responsibility or operations since the FRA had their safety sweeps in the Summer and Fall of 1997 and since the SACP process has been up and running?

MR. GARRISON: Well, I think once the FRA started coming in to the Houston area, it certainly helped raise our awareness throughout all levels of the organization. It made us rethink a lot of the things that we were doing. I mean we were coming through years of success or what we felt like we were having was good success at Union Pacific, and through some of the incidences that started happening, it started making us all think, and certainly the FRA's presence added to that awareness and heightening of our awareness in the area.

MR. GAVALLA: No further questions at this time.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes. Yes, we have some questions.

Mr. Garrison, Mr. Davis earlier stated that many of his managers/supervisors came from the ranks of the craft employees. Did you come from the ranks?

MR. GARRISON: No, I did not.

MR. WALPERT: What is your background?

MR. GARRISON: My background in railroading simply was taken from -- personally from the management training program. My father was a train dispatcher for the Missouri Pacific for 35 years. So, I did grow up in a railroad family and grew up hearing about railroading all my life.

MR. WALPERT: Okay. I asked Mr. Carter earlier. I pointed out to him that we have reports of engineers spending the long hours on locomotives after the expiration of the hours of service, and in some cases, as much as 20 hours.

Can you answer the question as to what UP is doing to alleviate this problem, and why it would be allowed to happen?

MR. GARRISON: Let me first say that I can only speak for Houston, Texas, itself. Secondly, why we would allow it to happen is certainly not something that anyone or any manager at Union Pacific wanted to or allowed to happen. Certainly a lot of the processes that we had in place for getting crews off trains, as time went by, we soon saw that those processes weren't working and were in line for a change.

Some of the things we did in the Houston, Texas, area alone was added several vans. I'd have to go back to get the exact count, but we did put on more limos, and we have added managers that we call managers of asset utilization in the Houston, Texas, area that are specifically there to work with the limo companies. In our command center in Houston, for instance, we've added a representative from the limo company itself to work with this manager of asset utilization and help get those crew members off the trains quicker. I mean nobody wants that crew member out there any longer than they have to be, and we certainly want to get them off and let them get their rest.

MR. WALPERT: Since you have made these changes, has there been an improvement in getting the crews off the trains?

MR. GARRISON: I feel like there has been. I don't have exact documentation present with me right now to prove that, but I can certainly sense in communicating with the employees and visiting with the crew members around the terminal that we did not get near as many complaints from the employees as we were, say, in the mid to late Summer/early Fall area about that issue, and, so, based on the feedback I'm getting from the employees, I would say it's -- it is working.

MR. WALPERT: Mr. Goglia asked this question of Mr. Carter, and I thought it was a good one. So, I'll ask it of you.

How many hours a day while you were in Houston would you work?

MR. GARRISON: My work day was typically 12 hours, also.

MR. WALPERT: Okay. And when you felt that you were exhausted or needed some time off, who would you go to or did you go to anyone to request time off?

MR. GARRISON: Well, I was basically given free realm to work my territory as I felt necessary. If I needed a day off, I had a person there to relieve me called a Director of Quality and Transportation, and I would certainly arrange with him to cover the territory while I was away. So, I guess basically that was of my own choice.

MR. WALPERT: Okay. Can you speak as to the policy for the familiarization of engineers who are working territory over which they are not familiar?

MR. GARRISON: And these are engineers that are qualified for the certified engineers taking familiarization trips?

MR. WALPERT: That's correct.

MR. GARRISON: Basically, that was determined between the MOPs whom those engineers worked for and the engineer himself. At a point in time when the MOP was comfortable with that engineer operating the train over a territory, then they gave them the right and, if you will, the qualification to run a train over that territory, and that was basically based on the feeling of the locomotive engineer himself and the MOP.

MR. WALPERT: Do you have an indication then which engineers who are required to operate trains over territory on which there are none?

MR. GARRISON: Personally not.

MR. WALPERT: That's all.

CHAIRMAN GOGLIA: United Transportation Union?

MR. LARRY DAVIS: Yes, sir, Mr. Chairman, just a couple of questions.

Mr. Garrison, have you ever personally conducted any kind of a test, signal test yourself with respect to the qualification of an operating crew?

MR. GARRISON: You mean have I ever performed an efficiency test on a train crew?

MR. LARRY DAVIS: Yes, sir.

MR. GARRISON: Yes, I have.

MR. LARRY DAVIS: Okay. I assume then you've also participated in and you have a clear understanding of that -- that process of testing and qualifying. So, when you get a report from somebody, you have a clear understanding based on personal experience of what's being -- what's involved?

MR. GARRISON: Yes.

MR. LARRY DAVIS: Are you familiar with the history, and I trust you are, the history of assessing discipline as a form of rule compliance or requiring rule compliance with the technique that's historically been if we assess 30 days for some particular rule infraction, that that somehow was the tool for rule compliance, so the individual would know and pay the price through suspension of service, that he -- he would be expected from then on to know the rules?

Do you agree that's pretty much been the history of the industry?

MR. GARRISON: In terms of how we get compliance with rules?

MR. LARRY DAVIS: Yes. Yes, sir.

MR. GARRISON: I would say that discipline is a part of the process. It's not the only part of the process. I mean efficiency testing in itself is -- is a method to gain 100 percent rules compliance but also an educational tool that we as managers use to set certain situations up for our crew members out there and maybe put them through a situation that they won't see very often or hopefully very often in their careers out there.

So, it's a -- it's an awareness issue for the crews, also, and an educational thing. So, I wouldn't necessarily agree that that's the only method in use, but certainly it's a part of the process.

MR. LARRY DAVIS: All right. Do your subordinates have the authority, discretionary authority to look to remedial training in lieu of suspensions from service as a technique for rule compliance?

MR. GARRISON: We have on occasion used forms of remedial training in -- in lieu of discipline. Yes, we have.

MR. LARRY DAVIS: Okay. Thank you.

CHAIRMAN GOGLIA: Okay. Union Pacific. Did I miss you the last time around?

MR. JERRY R. DAVIS: That's quite all right, Mr. Chairman. We had no questions.

CHAIRMAN GOGLIA: Well, the purpose of me having you go last is so you can pick up anything that was changed, and if I did miss you, I'm sorry.

MR. JERRY R. DAVIS: Thank you, Mr. Chairman.

CHAIRMAN GOGLIA: Are there any further questions from the head table? Oh, we haven't started yet. Okay. The liquids at lunch are beginning to work. I'm getting anxious.

Ms. Beal?

MS. BEAL: I have no questions.

CHAIRMAN GOGLIA: All right. Mr. Ellingstad?

MR. ELLINGSTAD: Just a couple. One -- one clarification. How many supervisors work for you?

MR. GARRISON: Well, that was a target that was moving throughout the year. I can say that since September of '97, that number has doubled in Houston, Texas. So, to say exactly how many worked for me, that was not a number that was -- you could just quote, so to speak.

MR. ELLINGSTAD: Okay. At the moment, how many report to you?

MR. GARRISON: I believe -- well, at the moment, I'm in -- working in the command center in Omaha, Nebraska, but in Houston, Texas, --

MR. ELLINGSTAD: Okay.

MR. GARRISON: -- I believe there's 64 now.

MR. ELLINGSTAD: Okay. Thank you. Mr. Davis had indicated when we were talking about safety indicators and monitoring the -- the health and potential problems in the industry, that -- that that was a management responsibility.

Do you -- do you record incidents or monitor incidents, close calls, accidents, etc., in terms of exercising your oversight responsibilities?

MR. GARRISON: Well, in our systems, in our computer systems, we record down to the incident level, and that's not to say that a close call doesn't get the same consideration and concern from the local managers that any incident or reportable injury might.

Most of our close calls are reported back up through me by my managers, maybe an employee speaking to his or her manager, and that manager coming up through me, at which time we might have to put in some action plan in place or some actions to correct that -- that situation from happening in the future.

But in terms of recording those close calls, no, we do not.

MR. ELLINGSTAD: What kind of interaction is there between you as a supervisor and your safety office with respect to monitoring these kinds of safety indicators?

MR. GARRISON: Could you repeat the question? I'm sorry.

MR. ELLINGSTAD: What kind of communication or interaction typically exists between -- between you and your safety office? Is this an active kind of a -- of a process there for -- for monitoring situations in your territory?

MR. GARRISON: You're referring to the safety office in Omaha?

MR. ELLINGSTAD: Yes.

MR. GARRISON: Okay. The interaction between the service unit and the safety office in Omaha was more that -- more in the sense that they were a resource for me in times when we might have an issue that I didn't feel like we maybe had the tools or resources needed to correct the problem.

They were a source of information, so that when an incident or a close call might have occurred up in, let's say, the Seattle area, we could get that information in the Houston area through our accident alerts, we call them, and be able to pass that along to our employees out there working in the Houston area, also, and therefore feed off of each other's activities.

They brought all of the service units together at times with system-wide conference calls that do take place today weekly and that bring together all the service units and also allow us to share ideas and experiences from each other as they've gone through their day-to-day activities for the previous week.

MR. ELLINGSTAD: How much interaction do you have with Vice President Duffy's office?

MR. GARRISON: Well, I don't speak to Mr. Duffy daily, but when it's needed, and I feel a need to contact Mr. Duffy, I certainly know that the door is always open and the same for Mr. Davis.

MR. ELLINGSTAD: Okay. Thank you.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: I just got a couple of easy questions here. You stated at the beginning that three of these accidents occurred on former SP lines. Would you -- for the record, would you identify which -- which three occurred on former SP lines?

MR. GARRISON: I think it was the Kenner, Arizona, the Navasoto, Texas, and the West Junction derailment in Houston.

MR. LAUBY: Okay. And my other question had to do with -- with your role in safety. First of all, do you personally participate in the SACP process?

MR. GARRISON: Personally, we feel like we have been participating in two-thirds of the SACP process in the sense that we've had the labor support in years past and participated close one-on-one with any issues that might have come up in the territory.

I think the addition that the SACP process is going to give to the overall dealings locally in, let's say, the Houston area is the introduction of the FRA into that process and to gain from their knowledge and expertise. So, I think they will be the final link in tieing all that together into a group that can really solve some problems.

MR. LAUBY: Thank you. One other question. We've talked a little bit about your role in safety, and I just wanted to get more of a personal feeling on -- on how you interact with safety on your property.

How do you find out about safety problems that maybe your supervisors report that the engineers are having or the conductors? Do you find out from the supervisors or do you find out from the conductors? Do you have that channel of communication?

MR. GARRISON: Well, there's a variety of ways that I personally find out about it, and let me say, first of all, that I consider safety on my service unit my personal responsibility, and, so, I want every vehicle humanly possible to find out about any safety issues that were going on on the territory.

The first thing that we told all of our train and engine crews, if they discover something out there that's unsafe, to use a piece of equipment that's unsafe to use and certainly take the switch out of service.

I mean we use the model if it's not safe, don't do it. So, oftentimes, I would find out when something was out of service that it had been taken out by an employee.

Secondly, we had our safety hotline which was a vehicle for the employees to call in and place on the hotline from anywhere on the service unit, anywhere there was a phone, a particular safety defect, that that hotline was then monitored each morning by my secretary at which time if she found an employee reporting a track problem, for instance, she would contact the Director of Track Maintenance and pass that along to him to get the problem corrected as quickly as possible.

We found out a lot of information by just going out and visiting with employees. I mean in 1997, for instance, I did spend a lot of time out in the terminals around the Houston area trying to solve some of the service issues we were going through. So, consequently, it was very easy to have contact with the employees themselves, and they were certainly not shy in my opinion about coming up and telling me about any problems they might have. It was actually very enlightening for me to see that.

So, not only were my managers out there and involved, certainly I got feedback from them, but there was a variety of ways in which you could gain information.

MR. LAUBY: One final question. With this safety hotline that you have, do you close the loop? Do you get back to the person reporting the problem and provide them with some type of closure on the process?

MR. GARRISON: What we wanted to do was post our safety hotline on our bulletin boards around the terminal so that other employees could see the results of somebody putting something on the hotline and how it was resolved. It was not only a method to report it but also a way to show all employees what was done to correct the issue.

MR. LAUBY: But do you go back to the -- the person who initiated the complaint about safety, and do you go back directly to that person to close the issue?

MR. GARRISON: In some cases, yes. Now I can't say that every time that was done, but in some cases, yes.

MR. LAUBY: Thank you very much.

CHAIRMAN GOGLIA: Mr. Dunn?

MR. JAMES P. DUNN: Thank you. Mr. Garrison, I -- I have some questions, and I'd like to direct them against the background of the -- the 12- or 13-month period of the 15 accidents that we looked at this morning, and I think you heard Mr. Davis -- were you present this morning when Mr. Davis testified?

MR. GARRISON: Yes, I was.

MR. JAMES P. DUNN: Okay. He indicated, I believe, that this was the most turbulent year in his career. I'm curious what it was like for you as a superintendent down in Houston. How -- how would you assess that period of time?

MR. GARRISON: Well, I would rate Houston, Texas, in 1997 as the most challenging year of my career, also. Certainly.

MR. JAMES P. DUNN: How about from the safety perspective?

MR. GARRISON: From a safety perspective, I would say that we felt like at Union Pacific and in my coming from the Fort Worth, Texas, area, that we pretty well had good processes in place for safety, and I guess what the accidents did for us all is made us all step back and take a look at what we were doing and asking ourselves a lot of questions. Are we doing all the right things?

I mean it seemed that everything we were doing in the past was -- was the right thing. Our numbers indicated it, and if anything those accidents did, it made us step back and take a look at ourselves.

MR. JAMES P. DUNN: Did you change anything you were doing during that year?

MR. GARRISON: Well, we did increase the amount of time that we were dedicating to getting out with the employees. We found early on that we weren't doing a very good job in Houston, Texas, of getting out with the employees in terms of recognition.

We had well over a thousand employees working in and out of the Houston area. A lot of those employees, we would say, had -- would work for another territory but would work in and out of Houston, and we wanted to make sure we were getting out and covering those employees, also.

So, we -- we did strengthen our -- our process of creating teams that could go out and visit with the employees, meet them in the crew rooms, hold town hall meetings, safety blitzes, safety stand-downs weekly, where we would simply stop our entire operation, bring everybody in and have a safety meeting based on the topic that had been presented through upper management, maybe an issue that was taking place in another area of our railroad, and communicate those issues to the employees.

MR. JAMES P. DUNN: Did you give any specific guidance to people on your staff as far as changing safety processes or duties or responsibilities?

MR. GARRISON: Well, we didn't change our basic duties. I mean we -- we all take the stand that we're all responsible for the safety -- for the safety on the service unit. I mean we actually pass that down to all the employees working on the territory. We -- we emphasize to the employees that we're all responsible for our own safety, but in terms of changing anything that we were doing in terms of our emphasis on safety, other than emphasizing getting out and touching all of the road crews and every crew working in and out of Houston and trying to get that word out that, look, guys, we got to have everybody in the ball game, there were a lot of issues going on in the Houston area, a lot of cut-overs, a lot of the merger process starting to happen in the Houston area that did have a tendency to distract from one's concentration on the job. So, we did step up that process.

MR. JAMES P. DUNN: Did you receive guidance from your superiors, any guidance or any changes during this period of time?

MR. GARRISON: Well, certainly through the year, as the accidents happened, we did as a region, meaning my general manager and all the superintendents, sat down and take a look at what we were all doing, and certainly a lot of -- a lot of the increases in being out with the troops and being as visible as possible and getting the word out that we've got to keep our minds on what we're doing out there was certainly brought out from those meetings, if that's what you're driving at.

MR. JAMES P. DUNN: You received that from your superiors?

MR. GARRISON: Yes.

MR. JAMES P. DUNN: Okay. Do you believe the operational problems became intertwined with the safety challenges?

MR. GARRISON: I believe the operational problems made the entire management process in Houston extremely challenging in 1997. I mean as Mr. Davis alluded to earlier, the merger between the Union Pacific and the Southern Pacific was one of the more complicated in the history of the United States, and certainly Houston, Texas, was right in the heart of that -- that complexity.

I would view Houston, Texas, alone as a merged railroad terminal now, as probably one of the most complicated in the United States. So, certainly there were challenges that made everything, every aspect of railroading more difficult in Houston,

Texas.

MR. JAMES P. DUNN: Okay. Have you reviewed the FRA safety assurance assessment that was issued in February?

MR. GARRISON: Just briefly. I basically received that just prior to coming to this meeting.

MR. JAMES P. DUNN: Okay. That's all the questions I have.

CHAIRMAN GOGLIA: Okay. I have one question. You work 12 hours a day. How many days a week?

MR. GARRISON: Well, basically, I work a 12-day on, two-day off rotation. So, I guess you could basically say I was off two to four days per month.

CHAIRMAN GOGLIA: I could have a smart comment for that, but I won't. Boy, that's a difficult work schedule. Wow.

Do we have any questions from the Tech Panel? Any --

MR. JAMES S. DUNN: No, sir.

CHAIRMAN GOGLIA: FRA?

MR. GAVALLA: Sir, you mentioned that you believe that at least in your portion of the Union Pacific, you had been actively involved in some labor-management safety initiatives.

Can you describe those in a little bit more detail?

MR. GARRISON: Well, the -- the local chairmen at all levels of the organization, we consider in Houston anyway, we considered the safety team or -- or I should say our overlapping safety committee process as a major part of our overall safety plan in Houston, and certainly the local chairmen participated in those meetings.

We would also have local chairmen meetings between several of my managers, myself and the local chairmen, and general chairmen were also invited, and we would basically set around and look at all of the safety aspects that were going on around the service unit, make sure that it was just another vehicle to communicate what my expectations were to all of the people out here and ask for their help in getting those expectations out to the people.

So, I feel like in my tenure as a manager at Union Pacific, I've had very good relationships all over the railroad, not just in Houston, but in other places where I've worked in the field, having the local chairmen participate in our safety processes. A lot of them are safety captains at times or have been.

MR. GAVALLA: Are these safety teams still in place?

MR. GARRISON: Yes, they are.

MR. GAVALLA: Prior to the FRA getting involved in the SACP process, are you aware of any labor-management safety initiatives that address systemic safety issues? System-wide issues?

MR. GARRISON: I don't know that I would be the person to answer that. None come to my mind right off the top of my head, but I might be forgetting some things, too.

MR. GAVALLA: Okay. Thank you.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineer?

MR. WALPERT: Yes. Mr. Garrison, just a couple of quick questions. Was there a shortage of engineers in Houston in 1997?

MR. GARRISON: Yes.

MR. WALPERT: And how did you deal with that shortage?

MR. GARRISON: Well, certainly we talked all through the day today that we did use some officer crews and officer engineers, especially officer engineers, in the Houston area.

MR. WALPERT: Was -- because of that shortage, was there a problem with the morale of the existing employees, operating employees?

MR. GARRISON: Well, certainly it helped when we did start hiring people. I think on the SP side, it had been several years since people had been hired in the Houston, Texas, area. So, I think it was, so to speak, a breath of fresh air to see new people hired and to see that commitment to that -- that situation was going to be resolved.

I mean I heard a few issues with people feeling like they were having to work all the time. The basic issues of -- were spending more time away from home than we are at home and all those concerns. Certainly there was a sense that something needed to be done there.

MR. WALPERT: How -- how widespread was it through your territory that -- that managers were used to operate trains?

MR. GARRISON: Well, I think during my time there, I can remember maybe 20 to maybe 30 managers at the time or MOPs at the time down there running the locomotive. That compares -- I can't quote the exact amount of engineers I had, but there were well over a thousand people working in and around the Houston area.

So, it's hard to -- hard to say exactly a percentage of how widespread that was, but --

MR. WALPERT: Okay. Thank you, Mr. Garrison. That's all.

CHAIRMAN GOGLIA: UTU?

MR. BOYD: No questions. Thank you.

CHAIRMAN GOGLIA: Anybody back at the head table? No? Okay. That -- you're free to go, Mr. Garrison.

MR. GARRISON: Thank you.

(Whereupon, the witness was excused.)

CHAIRMAN GOGLIA: And we'll take a 15-minute break.

(Whereupon, a recess was taken.)

CHAIRMAN GOGLIA: Mr. Larkin and Mr. Roach, if you could make your way to the front, we can get ready to start.

MR. JAMES P. DUNN: Mr. Larkin, would you raise your right hand, please?

Whereupon,

having been first duly sworn, was called as a witness herein and was examined and testified as follows:

MR. JAMES P. DUNN: Thank you.

Mr. Roach, would you raise your right hand, please?

Whereupon,

having been first duly sworn, was called as a witness herein and was examined and testified as follows:

MR. JAMES P. DUNN: Thank you. Please be seated.

TESTIMONY OF ROGER LARKIN
DIRECTOR OF TRAIN OPERATIONS/TESTING
UNION PACIFIC RAILROAD, AND
TESTIMONY OF LEE ROACH
DIRECTOR OF OPERATING PRACTICES/FRA COMPLIANCE
UNION PACIFIC RAILROAD

MR. JAMES P. DUNN: Mr. Larkin, would you state for the record your full name and spell your last name, please?

MR. LARKIN: My name is Roger Larkin,

L-A-R-K-I-N.

MR. JAMES P. DUNN: There's a button on top.

MR. LARKIN: My name is Roger J. Larkin,

L-A-R-K-I-N.

MR. JAMES P. DUNN: And what is your present assignment with Union Pacific?

MR. LARKIN: I am Director of Train Operations, specializing in efficiency testing.

MR. JAMES P. DUNN: And how long have you held that position, Mr. Larkin?

MR. LARKIN: I've held this position for 11 years.

MR. JAMES P. DUNN: And briefly, what other assignments have you had in the railroad industry?

MR. LARKIN: I started in 1961 in the maintenance, went into engine service in 1967, and then from progressed into management as a road foreman of engines and a superintendent for 10 years before going on this position.

MR. JAMES P. DUNN: Thank you.

Mr. Roach, what is your present position with the Union Pacific Railroad?

MR. ROACH: I'm Director of Train Operating Practices/FRA.

MR. JAMES P. DUNN: Okay. And how long have you held that position?

MR. ROACH: About eight years.

MR. JAMES P. DUNN: And can you briefly tell us what other positions you've held in the railroad industry?

MR. ROACH: Prior to coming to Omaha and that assignment, my career was in the field as a field operating officer, about 10 years as a train master and about 10 years as a division superintendent.

MR. JAMES P. DUNN: Okay. And were those assignments with the Union Pacific or Southern Pacific?

MR. ROACH: With the Union Pacific and former Missouri Pacific.

MR. JAMES P. DUNN: Okay. Mr. Larkin, same question. The --

MR. LARKIN: I was with Union Pacific Railroad, sir.

MR. JAMES P. DUNN: Your entire career?

MR. LARKIN: Yes, sir.

MR. JAMES P. DUNN: Okay. Questioning will be by the Technical Panel and Mr. Kivowitz will start out.

MR. KIVOWITZ: Good afternoon, Mr. Larkin. What are your responsibilities as Director of Train Operations?

MR. LARKIN: My primary responsibility's in the area of efficiency testing. There's five of us on the system. We monitor and audit the efficiency testing process at the manager and service unit level.

MR. KIVOWITZ: Can you tell us when and how did the efficiency testing program become finalized? We're talking about the one that's in use today.

MR. LARKIN: The one that includes the Southern Pacific? Is that the question?

MR. KIVOWITZ: Your -- your program that's in effect today. So, if that's the case, yes.

MR. LARKIN: The program that's in effect today started in February of 1996.

MR. KIVOWITZ: Okay. And how did it become finalized? Did you merge it from the SP and the UP or is it a whole new program?

MR. LARKIN: We brought the Southern Pacific managers into the Union Pacific program in May of 1997.

MR. KIVOWITZ: Could you kind of give us a chronology of how you did that? How you merged the two together?

MR. LARKIN: We looked at the two programs and determined that they were not compatible at all. So, we kept the Southern Pacific program, trained their managers across the system on our program and then slowly eased them into our program. In fact, for a month -- one period of a month there, they had to enter efficiency tests in both the Southern Pacific system side and the Union Pacific side, and then we turned off the Southern Pacific side May 1st, 1997.

MR. KIVOWITZ: Did you have sufficient number of managers performing efficiency testing once you put your program together and what your plan would have been?

MR. LARKIN: Yes, we did.

MR. KIVOWITZ: Who reviews the monthly results of the efficiency testing program?

MR. LARKIN: Monthly results of the efficiency testing program are reviewed by the superintendent of each service unit.

MR. KIVOWITZ: Did the FRA audit the efficiency testing program during 1997?

MR. LARKIN: The FRA has done audits on our efficiency testing program by service unit and by manager. Yes, sir.

MR. KIVOWITZ: Did they advise you or the Union Pacific of their findings?

MR. LARKIN: They may have advised Union Pacific. They did not advise me.

MR. KIVOWITZ: Do you know what their findings would have been or --

MR. LARKIN: No, I'm not aware of their findings. They would have reported that to the division superintendent who's responsible for the efficiency testing program.

MR. KIVOWITZ: Mr. Cochran has some further questions. I'm through with my questions at this time.

MR. LARKIN: Thank you.

MR. COCHRAN: Good afternoon. I'd like to direct my questions to Mr. Roach.

Mr. Roach, were you involved in the use of managers to operate trains in the past two years?

MR. ROACH: Yes, sir. In the sense that from October of '97 through the end of the year, I was involved in scheduling managers into the Texas area, you know, basically recruiting and scheduling managers into the Texas area for service in the train and engine service.

MR. COCHRAN: And did you maintain a list of those managers that were used to operate trains?

MR. ROACH: Yeah. A list was maintained. I did not maintain that personally, but it was maintained by the -- by the group that was actually calling those managers for the jobs.

MR. COCHRAN: And when did that practice begin?

MR. ROACH: That log was begun, I -- I believe, in late July or early August.

MR. COCHRAN: And we had some testimony today that it was still in effect. Is that so?

MR. ROACH: The keeping of that log?

MR. COCHRAN: No. The -- the use of managers to operate the trains.

MR. ROACH: On a very limited basis, there are some managers in train service and engine service in Texas today. Yes, sir.

MR. COCHRAN: Was there prior discussion with the Federal Railroad Administration relative to the use of managers to operate trains?

MR. ROACH: I don't know.

MR. COCHRAN: Who selected the managers that would be used on these assignments?

MR. ROACH: Well, the managers were selected basically by working with their own superintendents to determine who was available. In the early stages of these managers being used, they themselves had to be qualified on certain territories and so on when they first arrived, those that worked as locomotive engineers, and then as it continued, we -- we simply worked with the superintendents for who was available and then tried to assign those people in areas where they were qualified.

MR. COCHRAN: Did all who served as locomotive engineers have certificates?

MR. ROACH: Yes, sir.

MR. COCHRAN: And who reviewed their -- their certificate -- certification to make sure that it was current?

MR. ROACH: I can't answer that. I believe it was done principally by Mr. Larry Breeden, who's the Director of Train Operating Practices for that Southern region, but I'm -- there were undoubtedly others involved as well.

MR. COCHRAN: Could you find out who that was for us --

MR. ROACH: Yes, sir.

MR. COCHRAN: -- and supply us with that name?

Were managers subject to efficiency testing the same as normal train service employees?

MR. ROACH: Yes, they were.

MR. COCHRAN: And are you aware of any violations?

MR. ROACH: Well, no efficiency test violations. There was a rules infraction that occurred involving a manager.

MR. COCHRAN: And --

MR. ROACH: That was reported by the crew.

MR. COCHRAN: -- what -- what occurred in that instance?

MR. ROACH: It was an instance on the Baird subdivision in West Texas, where there was between the manager and the agreement conductor that was working with him, they misread a -- a track warrant, and there was an unauthorized track occupancy by a matter of about a couple hundred feet.

MR. COCHRAN: Was there a formal hearing held in regards to that?

MR. ROACH: Well, there was -- the -- the management engineer when that came to light was de-certified as required by the regulation. As it happened, by the time that was reported, certain agreement time limits had expired, and there was no investigation held on that agreement conductor.

MR. COCHRAN: Were any of the managers used from other carriers, such as the CSX, Norfolk Southern or Conrail?

MR. ROACH: Yes, sir, there were. There were 10 road foremen of engines from CSX that were used for an extended period of time through a contract arrangement with CSX. Likewise, there were five road foremen from Norfolk Southern.

MR. COCHRAN: And how were they familiarized with the railroad?

MR. ROACH: By making familiarization trips just as any other engineer would.

MR. COCHRAN: Do you have any -- have any information that you could inform us of relative to how the manager's normal duties were supplemented or -- or was it necessary to supplement?

MR. ROACH: No, sir, I really can't answer that.

MR. COCHRAN: I have no further questions at this time. Mr. Dunn?

MR. JAMES S. DUNN: Mr. Roach, I have one question. Do you know of an agreement that was made between the Brotherhood of Locomotive Engineers and the Union Pacific to allow the -- the managers to operate trains?

MR. ROACH: I believe there was an agreement. I'm not familiar with the specifics of it.

MR. JAMES S. DUNN: Okay. I guess I can save that for the Brotherhood. Thank you.

MR. COCHRAN: I have no further questions, Mr. Chairman.

CHAIRMAN GOGLIA: Okay. To the parties. Texas Railroad Commission?

MR. MARTIN: Thank you. Would you agree with Mr. Carter's statement that during 1997, that there may have been about 20 or so managers operating in train service at any one time? I believe that's what he said. Do you agree with that number?

MR. ROACH: Well, I don't -- I don't remember Mr. Carter saying that, but -- but at times, the number was somewhat higher than that. There were -- I think at the peak, as far as MOPs operating an engine service at the peak period, it was in the 40 to 45 range at any -- at any given time.

MR. MARTIN: That's all. Thank you.

CHAIRMAN GOGLIA: Federal Railroad Administration?

MR. GAVALLA: Mr. Roach, are you aware of any accidents under review here in which a manager operating a train was involved either as a conductor or a locomotive engineer?

MR. ROACH: No, sir.

MR. GAVALLA: No, you're not aware, or no, you know that none were involved?

MR. ROACH: There were none involved.

MR. GAVALLA: Thank you. Does UP have a policy regarding the action that your managers should take if they witness a locomotive engineer failing to comply with an FRA safety requirement or regulation, particularly in regards to the efficiency testing?

MR. LARKIN: Yes, we do.

MR. GAVALLA: And could you explain what that is?

MR. LARKIN: Could you give me that question again, please? I thought you were talking to Mr. Roach. I apologize.

MR. GAVALLA: Can I direct the -- my questions to the panel, and let the appropriate --

CHAIRMAN GOGLIA: Sure.

MR. GAVALLA: -- party answer?

CHAIRMAN GOGLIA: Of course.

MR. GAVALLA: Does UP have a policy regarding mandatory actions that should be taken if, during an efficiency test, a locomotive engineer is witnessed violating a federal regulation?

MR. LARKIN: Yes. We have the policy, and the policy meets the FRA requirements. The crew is immediately taken out of service and drug tested, and an investigation is conducted.

MR. GAVALLA: Are they drug tested in every situation regarding a failure to comply with every FRA regulation?

MR. LARKIN: No, not a regulation. I mis-understood you. I thought you said an FRA mandatory rule violation, such as running a red block.

MR. GAVALLA: We realize that there are several specific violations that require mandatory de-certification. However, there are a number of other FRA regulations that speak to the duties of a locomotive engineer.

Specific to those duties, outside of mandatory certification, does UP have a policy of what course of action should be taken if an engineer is witnessed failing to comply with those regulations?

MR. LARKIN: If a witness fails to -- or if an employee fails to comply with any of our operating rules, disciplinary action is taken, either formal or informal.

MR. GAVALLA: No further questions at this time. Thank you.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes. Mr. Roach, you spoke of managers being used to operate trains, and you also said that managers from other railroads were used to operate trains.

Were others -- any one other than managers used to operate trains, in other words, to supplant the agreement engineers?

MR. ROACH: Managers used to operate locomotives as engineers were managers. They were in the sense that they were -- the CSX and Norfolk Southern were MOPs, contracted and borrowed from -- from those railroads.

There were some contract engineers that were hired as well and put through a brief training program and then qualified on -- these were engineers who already held Class 1 certificates. They were then hired by Union Pacific as temporary MOPs. So, they were in the capacity of managers while they were working as -- as locomotive engineers.

MR. WALPERT: Where did these contract employees come from?

MR. ROACH: They came from an organization called Transportation Certification Services, headquartered, I believe, in Chicago, but they -- they function as -- as a reference point for any organizations that need to hire certified locomotive engineers.

MR. WALPERT: And you -- you mentioned that these employees went through a brief training session. Would you expound on that, how brief?

MR. ROACH: Well, of course, they were already qualified locomotive and certified locomotive engineers. They went through a two-week training program in -- at our tech training center in Salt Lake City on the General Code of Operating Rules and other rules that the Union Pacific employs that they might not be familiar with coming from other railroads, and then they went to the Texas area and then took a number of student familiarization trips before they were marked up as engineers.

MR. WALPERT: Mr. Dunn asked you a question about an agreement between the Brotherhood of Locomotive Engineers and the carrier that allowed managers to operate trains, and you indicated that you are familiar with that agreement?

MR. ROACH: I indicated that it's my under-standing there is such an agreement. I am not familiar with it. I have not read it.

MR. WALPERT: Okay. Do you know if it were in fact an agreement or a letter of understanding?

MR. ROACH: I cannot -- I do not know.

MR. WALPERT: Do you know if it was -- had system application or applied to only one part of the railroad?

MR. ROACH: I do not know.

MR. WALPERT: Okay. This is for the entire panel, either one of you. In regard to the requirements for efficiency testing, can you tell me how frequently -- is there a policy as to how frequently the tests would occur, and what you may be testing for and that sort of information?

MR. LARKIN: In our efficiency testing program, we have 15 basic tests that's broke down into 23 subsections of tests that managers to conduct. We have a basic requirement of 30 tests per month for a manager with the option that a superintendent can raise that number and a general manager can lower that number.

We try and base the number of tests that each manager conducts upon the number of crews that would be operating in that territory. So, a manager who has 30 tests per month, we would -- we expect him to in essence test 30 different crews in that month's period of time.

We don't expect him to do 30 tests in one day and none the other 29 or 30. We want to see them spread out through the week, through the month, through the six period of times during the day, and we also give a copy of that efficiency testing pamphlet to every TE&Y employee. I think we're the only railroad in the country that does that.

MR. WALPERT: And again what kind of things are tested for?

MR. LARKIN: We start out with just straight torpedo tests. We have torpedoes with a red flag, a red light test. We have restricted speed tests. We have various kinds of red block tests, yellow block tests. Other than a yellow or red block test, hot box test, road crossing test, any kind of a test that would -- anything that would apply around the road crossing, be it whistles, park -- where you park your cars or your train, such things as that.

Three specific air brake tests, and then any other kind of a test that may come out of the air brake book or the safety book or the hazardous material books. We test on rule. Our system runs by the rules that the employees are governed by more than they do by the test numbers.

MR. WALPERT: Mr. Martin indicated earlier that, depending on the flagrancy of the violation when an engineer should fail a test, that he may in fact simply counsel that individual. Is -- is that the policy?

MR. LARKIN: Are you referring to Mr. Carter's testimony?

MR. WALPERT: Yes. Excuse me. Mr. Carter.

MR. LARKIN: There's -- there's three actions that we have on an employee. An Act 1 is a pass. An Act 2 means you're going to, what we used to call in the old Union Pacific, handle on the ground or a miscellaneous exception. You discuss it with the employee and that's as far as it goes, and an Act 3 is a serious violation where formal discipline will be issued.

MR. WALPERT: And an Act 1 violation, when counseling occurs, is a record kept of that occurrence?

MR. LARKIN: There's a record kept of the Act 1 test, but the counseling would only occur in an Act 2.

MR. WALPERT: I see. Okay. That's all I have. Thank you.

CHAIRMAN GOGLIA: UTU?

MR. BOYD: Yes, Mr. Chairman. Mr. Roach, you're general director over the entire UP system, including Southern Pacific, former Southern Pacific, lines?

MR. ROACH: Well, sir, I'm not general director. I'm Director of Train Operating Practices, but, yes, I have system responsibilities.

MR. BOYD: Okay. I didn't mean to promote you. I have one question that maybe should have been asked earlier, but do you know anything about train line-ups?

MR. ROACH: I don't really understand your question.

MR. BOYD: In your duties, do you have anything to do with train line-ups?

MR. ROACH: No, sir. My duties do not entail anything to do with train line-ups.

MR. BOYD: Do you know the policy behind train line-ups?

MR. ROACH: No, sir, I can't say that I do.

MR. BOYD: Would you know if there has been a coordination of -- of line-ups or traffic coming off Southern Pacific to Union Pacific where those line-ups would reflect that traffic flowing?

MR. ROACH: I don't have any direct knowledge of how those line-ups are handled.

MR. BOYD: Mr. Larkin, would you --

MR. LARKIN: No knowledge whatsoever.

MR. BOYD: That's all I have.

CHAIRMAN GOGLIA: Okay. To the head table. Ms. Beal?

MS. BEAL: UP.

CHAIRMAN GOGLIA: Oh, UP. Yeah.

MR. GAVALLA: Thank you, Mr. Chairman. No questions.

CHAIRMAN GOGLIA: I'm going to have to put this up here in big letters. Ms. Beal?

MS. BEAL: Hm-hmm. Mr. Roach, if I'm looking at the papers here, you're a second-line supervisor to Mr. Carter?

MR. ROACH: No, ma'am. I have no direct relationship to Mr. Carter.

MS. BEAL: Mr. Larkin?

MR. LARKIN: No.

MS. BEAL: I have no questions.

CHAIRMAN GOGLIA: Okay. Mr. Ellingstad?

MR. ELLINGSTAD: Mr. Larkin, you indicated that the monthly efficiency testing results are reviewed by the superintendent of each of the service units?

MR. LARKIN: That's correct.

MR. ELLINGSTAD: Is that correct?

MR. LARKIN: Yes.

MR. ELLINGSTAD: Would you consider the data that are provided from the efficiency testing for program to be an important safety indicator for Union Pacific?

MR. LARKIN: Yes. I think it's a -- certainly a part of the reduction that Union Pacific has had in not only their derailments and road crossing accidents but in their safety performance.

MR. ELLINGSTAD: Prior to February of '96, when I think you said that the current UP efficiency test program had been established, was -- is that correct?

MR. LARKIN: Well, it was updated in February of '96. We've had this program for 11 years.

MR. ELLINGSTAD: Okay. As -- as a safety indicator, what -- who monitors these data? Does your office provide an overall monitoring to -- to kind of measure the -- the health of your personnel on a -- do you have an overall responsibility for monitoring these results, in addition to whatever is happening in the individual service units?

MR. LARKIN: Well, what I and the other directors do in efficiency testing is audit the process that the manager uses, and we'll spend a day with him looking at the time of day he's conducting his tests, the day of the week, what kind of weekend tests he's making, what type of tests is he making. Is he making all of the types of tests that he should be making considering the territory that he operates on? What subdivisions he's testing on, what mile posts he tests on, where -- we usually look in about a 10-mile increment across his territory.

We look at his equipment, the type of foreign crews that he might be testing, and what kind of tests he's conducting on the foreign crews on our railroad, and that's put together in a package report for the superintendent and the general manager.

MR. ELLINGSTAD: With respect to the testing performance of that individual?

MR. LARKIN: That's correct.

MR. ELLINGSTAD: Do you maintain a database of efficiency testing overall? Are performance indicators generated? Can you tell us on a monthly basis, how many Act 1, 2 and 3 resulted have been produced?

MR. LARKIN: Yes, we can.

MR. ELLINGSTAD: And do you use this to monitor, to create some kind of a lead indicator of any safety concerns?

MR. LARKIN: Not specifically, just the 1, 2 and 3s. No, we don't.

MR. ELLINGSTAD: Do you do this on a -- on a system-wide basis?

MR. LARKIN: It's done on a system-wide basis. It's done on a division basis. It's done by an individual basis. It's one of the things that we do look at when we're out with the individual manager. Yes, sir.

MR. ELLINGSTAD: Okay. And what kind of reporting is done? You're monitoring this. Do you use this as an indicator to go in and do some specific kind of a review for individual superintendents?

MR. LARKIN: It's an -- it is a review for the individual superintendent. I'm not sure I understand your question. If we have a problem with a manager, that concern would be directed to the superintendent in that report.

MR. ELLINGSTAD: Okay. How many -- in -- in the last -- in the last year, for example, how many Act 3 outcomes have there been?

MR. LARKIN: In 1997, there was 594 Act 3s, I believe.

MR. ELLINGSTAD: And these required the crews to be taken out of service? How many decertifications?

MR. LARKIN: They did not -- no. No, sir. Those required discipline.

MR. ELLINGSTAD: Required discipline.

MR. LARKIN: May not have been taken out of service, but they required discipline.

MR. ELLINGSTAD: Okay. Thank you. No further questions.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: No questions at this time.

CHAIRMAN GOGLIA: Mr. Dunn?

MR. JAMES P. DUNN: I think it was Mr. Larkin. We talked about the two programs, that the SP program was not compatible with Union Pacific's program, therefore the Union Pacific program was used.

Can you tell us a little bit about the incompatibility of the program?

MR. LARKIN: Well, we had the -- the 23 efficiency tests where the Southern Pacific had 33 efficiency tests. Their program was actually run by an outside concern, IBM. So, they didn't have the computer capability that we have with our program.

With our program, we look at six time frames on when a manager's conducting his tests. The Southern Pacific only looked at two, daylight and dark. So, we really just felt that their program was -- wasn't up to what ours was and decided we wanted to keep our own program.

MR. JAMES P. DUNN: Okay. What is the purpose of efficiency testing? Why do it?

MR. LARKIN: The first thing is we're required by the FRA to conduct efficiency tests.

MR. JAMES P. DUNN: Okay.

MR. LARKIN: But it's certainly a major part on Union Pacific in our safety process.

MR. JAMES P. DUNN: Given that, that it's a major part of the safety process, going back to this period of time the Safety Board is looking at, October '96 to October '97, and we've heard a lot of comments about it, about that period of time, the 15 accidents, the FRA's assessment of that period of time, Mr. Davis and Ms. Molitoris, did this program prove as an indicator of the level of safety effectiveness on Union Pacific?

MR. LARKIN: I'm not sure I can answer that question. I may not understand the way you're really giving it to me. I guess I would have to say no, it did not.

MR. JAMES P. DUNN: The program did not reflect the effectiveness --

MR. LARKIN: If you're -- if you're asking me did the program show that there was a catastrophe coming in '97, no, it did not.

MR. JAMES P. DUNN: Okay. That's what I'm asking.

MR. LARKIN: No, no.

MR. JAMES P. DUNN: Do you think it should have?

MR. LARKIN: I don't -- I don't know how it would, I guess, is the best way I can answer that. I don't know what that sign would be to see that coming. The -- the failure rate was about the same. The number of tests was about the same. We had increased our tests by almost 3,000 a month with the SP coming into our program. So, I don't know what the indicator would have been.

MR. JAMES P. DUNN: That's really the question I'm driving at here. We've talked about statistics this morning that did not provide a warning that there were problems on the property.

We talked about how to measure the statistics, and from what you're telling me then, this efficiency testing program won't give you an accurate reflection if things are starting to erode out there?

MR. LARKIN: You know, I guess I have to agree with that. I don't know once again what that indicator would look like. 1997, even with the SP coming in, looked just like any other year on Union Pacific. It was just more tests into the program.

MR. JAMES P. DUNN: Okay. I think you've answered my question.

Do you do the banner test? Is that part of the efficiency testing program?

MR. LARKIN: No, sir, we do not do the banner test. We have a test. I personally feel that if you've got a problem where crews are getting through a banner, you've got some problems. I don't think there's a crew on Union Pacific that could get through a banner. We do put up red flags. We put up red lights for crews that are moving at a restricted speed. We have some very tough tests in that area. We expect our crews, if they have to, to stop their train and walk around the corner and look for such things when they're moving at a restricted speed.

MR. JAMES P. DUNN: Okay. You may have given the elements of this answer already. Who analyzes the results of the efficiency testing? The reason I ask that, I heard that some of the results go to the division superintendent or do all of -- is that where they go?

MR. LARKIN: They go --

MR. JAMES P. DUNN: Is that the only --

MR. LARKIN: They go to the superintendent, yes. He would get one. The general superintendent gets a copy. The general manager gets a copy. Send copies to quite a few people.

MR. JAMES P. DUNN: Is there any analysis done system-wide on the efficiency testing program and its results?

MR. LARKIN: There is -- well, I'm not sure what you mean by analysis. I look at the overall system numbers, but we each have our territories. Like I say, the five of us. There's four of us assigned to each region, and one of us, the fifth person, has the dispatchers in the Harriman Center, and they do their own analyses of those respective territories.

MR. JAMES P. DUNN: I guess just as an example, let's say Hearn, Texas, we talked about that a little bit, the terminal you have down there, if the employees reporting for duty there were not being tested, not being looked at, not being efficiency tested, is there a provision in the program for anybody to pick up on that? Would an analysis show that that group of employees is -- maybe the tests are at a level acceptable, the number's okay, but the people at Hearn are not being looked at.

MR. LARKIN: The superintendent has a weekly call with his people, and on that weekly call, they go through the efficiency testing program. We've got a program in there to show them exactly how many tests each manager is making each month. They can look at that and would pick up very quickly anybody that was not conducting tests.

We also have the -- what we call the 90-day stop test. You're required by the FRA to conduct what we call a stop test once a year. We try and get that done every 90 days. So, that's a continual list that once a week, those service units are watching to try and keep that number as low as they can get it. Some are at zero, some are not quite there yet.

MR. JAMES P. DUNN: Okay. Do the results go to the safety office? Does Mr. Duffy -- is he on the list of people that get -- his office?

MR. LARKIN: No, he's not. They go to -- we work under the Executive Vice President of Operations. A copy goes to him and a copy goes to the Vice President of Transportation. Both of them.

MR. JAMES P. DUNN: Okay. Does the FRA provide you analysis or evaluation of your program? Not the program, of your monthly testing?

MR. LARKIN: They -- they give that kind of a thing to the superintendent when they come out and do some type of analysis, no -- or, yes, but they don't -- they don't give me anything.

MR. JAMES P. DUNN: Okay. Thank you very much. That's all the questions.

CHAIRMAN GOGLIA: Any additional questions from the parties? Texas Railroad Commission? FRA? Brotherhood? UTU?

MR. BOYD: One, maybe two.

CHAIRMAN GOGLIA: You're pushing your luck.

MR. BOYD: Be patient, Mr. Chairman.

In answer to Mr. Dunn's question, and I really mean this in a positive note and for either one of you, if the statistics don't indicate that there's a warning or problem occurring or going to occur, and you had -- I think you testified that 594 Act 3 violations were found or incidents were found, what positive steps are you taking to make those issues that improve the operation of Union Pacific Railroad rather than just the administration of discipline? That's all the questions I have.

MR. LARKIN: In our efficiency testing program, since the problem, we've completely rebuilt the dispatcher's efficiency testing program. He now has 15 primary tests, 18 total tests. Out of that, we developed two tests that are corresponding between the field and the dispatchers, one for track warrant territory and one for cab signal territory.

We now do team testing. The concept was established on both -- all the service units, and then some of the service units have their own individual action plans that they have developed that are a part of -- a stem of our efficiency testing program.

MR. BOYD: Thank you.

CHAIRMAN GOGLIA: Okay. Back to the head table one last time. Mr. Lauby?

MR. LAUBY: I just have one question that has to do with when managers were transferred into the Houston area to -- to run trains.

Do you have any personal knowledge of how the difference in the amount of tests was made up or what personnel made up the difference in the amount of efficiency tests that were needed? Do you know who did that work?

MR. LARKIN: Are you talking about any in that Houston area?

MR. LAUBY: Yes. Who made up for the -- for the managers that would normally do the efficiency tests that were on the trains? Who made up the difference in the efficiency tests?

MR. LARKIN: It had to come from the managers on the territory in which they left. They had to take up the -- the slack for them in that area, and once again that would drive you back to that engineers not stop-tested list and did that number increase or did it -- or -- or did it stay the same?

MR. LAUBY: Based on the -- the numbers that you've seen, do you see any difference in -- in the level of efficiency testing during this period when we did have managers operating trains?

MR. LARKIN: I did. The level increased, but like I said, it increased by 3,000 tests a month because of that same period of time, we brought the Southern Pacific into our program.

MR. LAUBY: Thank you.

CHAIRMAN GOGLIA: Okay. That's it. You are free -- both free to go.

MR. LARKIN: Thank you.

(Whereupon, the witnesses were excused.)

CHAIRMAN GOGLIA: And we'll call our next witness.

MR. JAMES P. DUNN: The National Transportation Safety Board calls Mr. Robert Pugmire and Mr. Robert Isham.

Mr. Pugmire, would you raise your right hand, please?

Whereupon,

having been first duly sworn, was called as a witness herein and was examined and testified as follows:

MR. JAMES P. DUNN: Thank you.

Mr. Isham, would you raise your right hand?

Whereupon,

having been first duly sworn, was called as a witness herein and was examined and testified as follows:

MR. JAMES P. DUNN: Thank you. Would you both be seated, please?

TESTIMONY OF ROBERT PUGMIRE
DIRECTOR OF OPERATING RULES
UNION PACIFIC RAILROAD, AND
TESTIMONY OF ROBERT ISHAM
DIRECTOR OPERATIONS TRAINING
UNION PACIFIC RAILROAD

MR. JAMES P. DUNN: Mr. Pugmire, would you state for the record your full name and spell your last name, please?

MR. PUGMIRE: Yes. My name is Robert L. Pugmire. Last name is spelled P-U-G-M-I-R-E.

MR. JAMES P. DUNN: And what is your present position with the Union Pacific Railroad?

MR. PUGMIRE: My position is Director of Operating Rules.

MR. JAMES P. DUNN: And how long have you held that position?

MR. PUGMIRE: I've held that position about nine years.

MR. JAMES P. DUNN: And can you briefly tell us what other positions you have had in the railroad industry and with what carrier?

MR. PUGMIRE: My entire time has been with Union Pacific. I started out in 1977, first employed as a trainman, transferred to engine service, then became an instructor with locomotive engineer training, senior instructor, supervisor of engineer training, manager of operations training, entered the operating department as Director of Advanced Train Control Systems, and then took the position I'm currently at now.

In 1991, with the implementation of CFR Part 240, we established an engineer certification group which reports through me.

MR. JAMES P. DUNN: Mr. Isham, what is your present position with the Union Pacific Railroad?

MR. ISHAM: I'm Director of Operations Training, also Director of the Technical Training Center.

MR. JAMES P. DUNN: And how long have you held that position?

MR. ISHAM: About the last two and a half years.

MR. JAMES P. DUNN: And can you briefly tell us what other positions you have held in the railroad industry and what carrier they were with?

MR. ISHAM: I am a Union Pacific employee, have been all my career. Started in 1974 with the signal department, transferred to engine service, became an engineer, went into training when the training center was at Cheyenne, have been with training since then.

In 1984, became manager of the train dynamics analyzer. In 1987, became manager of the engineer training, and in 1991, became Director of Operations Training and Technical Training, and have been doing very similar since then, although some of the job responsibilities changed about two and a half years ago.

MR. JAMES P. DUNN: Thank you. We'll begin the questioning with the Technical Panel. Mr. George Cochran will lead off the questions.

MR. COCHRAN: Good afternoon, Mr. Pugmire and Mr. Isham.

Mr. Pugmire, could you give us a brief description of your responsibilities as Director of Operating Rules?

MR. PUGMIRE: As Director of Operating Rules, my responsibilities include basically ensuring that our operating rules encompass all the federal requirements that we have, the operating rules, air brake and train-handling rules, and so on, to safely operate our railroad.

Part of my responsibility is to ensure that we have on-going training for train engineers and yard employees, and as I said, with engineer certification, to ensure that we keep our engineers certified in accordance with federal regs.

MR. COCHRAN: As part of the action plan, it was stated that the rule books would be combined -- Southern Pacific and Union Pacific rule book would be combined some time this year. Is that a work in progress now?

MR. PUGMIRE: Yes, sir, it is. The way we did that, both Union Pacific and Southern Pacific had adopted the General Code of Operating Rules, which all your major Western railroads did. So, the majority of our rules, it wasn't a problem to consolidate. We did have some unique rule differences.

Last May, we consolidated all of the special instructions, and we're currently in the process now of rewriting some of the air brake chapters and having everybody fall under the same -- the same rules.

MR. COCHRAN: And my understanding is the completion date is August of '98, is that correct?

MR. PUGMIRE: We're actually shooting for the special instructions in June of '98 and a consolidated time table in October of '98.

MR. COCHRAN: Could you describe the role of the supervisors of locomotive engineers in the certification process?

MR. PUGMIRE: The supervisor's role in the certification process, the MOP or the DSLE, I guess you could consider one and the same, the Manager of Operating Practices is the one who ultimately certifies the student engineer to be a promoted engineer.

MR. COCHRAN: And does he report to an operating rules officer on each service unit?

MR. PUGMIRE: The MOP reports directly to the superintendent of the service unit, and there's a dotted line to the Directors of Train Operating Practices of which we have four on the -- on the four regions who kind of monitor their DSLE functions.

MR. COCHRAN: And are the supervisors of locomotive engineers audited as to their performance in the certification processes?

MR. PUGMIRE: Yes, they are. They're monitored by the directors.

MR. COCHRAN: And I might have missed that. There is a director for each service unit then?

MR. PUGMIRE: There is a director for each region. There's four Directors of Train Operating Practices.

MR. COCHRAN: All right. Thank you very much.

Mr. Davis said in his opening statement that he has hired additional management people. Are you going to get any new managers in the Operating Rules --

MR. PUGMIRE: No, sir.

MR. COCHRAN: -- staffing?

MR. PUGMIRE: I did get -- I did get a new manager at the merger.

MR. COCHRAN: How are the records maintained of certifications? Is that maintained by your office?

MR. PUGMIRE: It is. I have a staff that works for me directly and exclusively with engineer certification.

MR. COCHRAN: Is that done electronically or is it done on a form that is submitted by the certifier?

MR. PUGMIRE: That's all recorded electronically. The information comes from a number of different sources in order to get the information you need to certify a person. For example, your medical director supplies part of the information provision in here. We have a contract with DAC to get the state motor vehicle records. We get records back from National Driver Register. Those are entered by my staff, and then the MOP enters rules and rights.

MR. COCHRAN: Is that part of the EQMS process?

MR. PUGMIRE: Yes, sir, it is.

MR. COCHRAN: And it's all done -- it's all entered through that process?

MR. PUGMIRE: That's correct.

MR. COCHRAN: Mr. Isham, would you briefly describe your duties as the Director of Operations Training?

MR. ISHAM: Yes. What my job entails is to basically supervise and maintain the training programs for both engineers and new hires, switch and brake men, and also their promotion from one to the other, and make sure that those programs are continually updated and done in a timely manner.

MR. COCHRAN: Could you give us a brief description of how long the process takes to go from candidate to certified engineer?

MR. ISHAM: Do you mean from the time we want an engineer?

MR. COCHRAN: From the time you have -- from the time you have a candidate to become a certified engineer, what are the processes he goes through?

MR. ISHAM: From -- if I'm hearing you right, when we need some engineers, we will -- manpower planning determines how many we'll need in an area, and from that, we'll put out a bulletin for that area or areas, depending on how many people we need for in-house people from the switch and brake men ranks to bid on those jobs.

Once we have established the completed list, then they start a program of 30 days formal training out in the field, OJT, with senior engineers. After that, 30 days minimum, they come back to Salt Lake for a three-week training program, formal classroom training program, and after that is successfully completed, they go back into the field for OJT up to about a little over four months. The entire program averages right around six months from the time we determine we need new engineers.

MR. COCHRAN: Is there a -- is there a score plateau that they have to reach as far as testing's concerned?

MR. ISHAM: During the formal training, classroom training, they are required to take five final examinations along with some simulator work. All phases have to be passed 85 percent or higher to be successful.

MR. COCHRAN: I have no further questions at this time. Mr. Kivowitz, do you have any questions?

MR. KIVOWITZ: No questions.

CHAIRMAN GOGLIA: Technical panel is done?

MR. JAMES S. DUNN: Yes, sir.

CHAIRMAN GOGLIA: Okay. To the parties. Texas Railroad Commission?

MR. MARTIN: We have no questions, Mr. Chairman.

CHAIRMAN GOGLIA: Federal Railroad Administration?

MR. GAVALLA: Mr. Isham, the training that's under your jurisdiction, does that deal with equipment-specific training? In other words, do you train engineers on how to operate specific types of locomotives?

MR. ISHAM: Only to the extent -- it's basically generic. We talk -- we train on train handling, application of the rules on the simulator. We have simulators at the training center, 105 control stand, and two of them are the North American cabs.

We also have that training that we do to make sure that they qualify under our training program for engineers, but as far as every specific type of equipment that's out there in the field, we do not train equipment-specific at this time. They do that when they get back out to OJT.

MR. GAVALLA: Does the UP have any department or division that's responsible for providing equipment-specific training to locomotive engineers?

MR. PUGMIRE: Yes, we do. We have a position called MOT, who goes around instructs, for example, on -- on DPU power, distributive power. They do the training for that. Typically they come from MOP ranks originally.

MR. GAVALLA: Has the Union Pacific modified its training procedures since 1997?

MR. ISHAM: The training program for engineers?

MR. GAVALLA: That's correct.

MR. ISHAM: We are always modifying. We're not satisfied if it worked a year ago, that it will work this year. To answer your question, we've modified slightly with the acquiring of the Southern Pacific in that we incorporated the rules necessary, the things they did necessary to make sure that our training program stayed updated. In that sense, we have modified, and we are constantly in that process to look for better ways all the time.

MR. GAVALLA: Have you modified your training program based on any lessons learned from any of the accidents that are the subject of discussion here today?

MR. ISHAM: That's done also. I think both of us can talk about that. We -- we're in constant contact. The Rules Department and the Training Department are all in the same building, and we're in contact, Mr. Pugmire and myself and my staff are constantly in contact and getting feedback to make sure our programs stay updated.

We use the -- the efficiency test program data that occurs in the field, and we tie that in to our training and make sure that we're staying up with that.

We talk to MOPs. We talk to different managers in the field, former students. We are continually getting feedback so that we constantly keep our program at the highest level we possibly can.

MR. PUGMIRE: Could I possibly add to that?

MR. GAVALLA: Please.

MR. PUGMIRE: That's the student training. We also conduct on-going training on a bi-annual rotation. Part of the way we identify what the subject matter's going to be each year is to get feedback from derailment prevention experts, the efficiency testing directors.

We look through revocations, get the information from a number of sources on where we're having our heavy hit issues and identifying what the problem areas are, and that's what we base our training on.

MR. GAVALLA: Are either of you familiar with the FRA's SACP report that was issued in February?

MR. ISHAM: I've read bits and pieces. I'm not that familiar with it. I haven't seen -- I haven't read the entire thing.

MR. PUGMIRE: And I'm basically the same. I'm familiar with it.

MR. GAVALLA: Are you familiar with the FRA recommendations that spoke specifically to training of locomotive engineers and train crews?

MR. ISHAM: At this -- just barely. Just -- just as a cursory glance to look over it. I have not studied it in detail.

MR. GAVALLA: Does part of the training that either of you are responsible for encompass familiarization trips for locomotive engineers on new territory?

MR. PUGMIRE: I'm responsible for setting the policy on familiarization trips. I'm not directly involved with -- with individual engineer familiarization trips.

MR. GAVALLA: Could you please speak to that policy on familiarization trips, and are there -- has it been recently modified or are there any plans to modify it in the near future?

MR. PUGMIRE: The answer is yes to all your questions.

MR. GAVALLA: Okay.

MR. PUGMIRE: Our -- our familiarization trip policy basically has been covered in Item 7-A of our time table, which is required both of our operating managers to be familiar and also our TE&Y crews. That sets the basic guidelines on when -- when and how they get familiarization trips.

Because of the SACP process and the incidents that we've had, I had a meeting with -- with two FRA regional administrators, Mr. Megary and Mr. McCann. They had some concerns about -- at least accusations that we had forced engineers out on new territories without familiarization trips, and although not substantiated, they wanted to make sure it was not a systemic problem, and, so, we did draft up a new qualification policy on familiarization trips which we implemented as part of our submission for engineer licensing in February of this year.

MR. GAVALLA: Are you aware of any FRA efforts to monitor compliance with that policy, specifically when you went to directional operations in the Southern tier?

MR. PUGMIRE: I'm not personally aware of it, no.

MR. GAVALLA: No further questions at this time.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes. Mr. Pugmire, would you explain what would be the procedure to certify an engineer for FRA requirements in order for him to obtain a certificate, and are those over and above the general training requirements to become an engineer?

MR. PUGMIRE: To get his initial certification?

MR. WALPERT: That's correct.

MR. PUGMIRE: To get his initial certification, Rob kind of alluded to the training that they go through, which consists basically of -- of three weeks of formal classroom training in Salt Lake City, plus the balance of effectively six months of on-the-job training.

During that time, there's -- there's basically six requirements that we need to satisfy under federal regulations to get the engineer -- prospective engineer a license. That is that he has to pass hearing and visual acuity examination. He has to supply his motor vehicle driving records from the state in which he has a license, plus supply information back from the National Driver Register.

He has to have taken a rules examination with -- within the 12 months immediately before certification. He has to have had a certification ride, and I'm missing one.

MR. WALPERT: All those requirements, though, are under federal regulations, right?

MR. PUGMIRE: They are. I'm sorry. He has to have had an efficiency test also within the immediate 12 months. Yeah. They're all under federal regulations.

MR. WALPERT: To recertify an engineer who has already received a certificate, what are the requirements there?

MR. PUGMIRE: Those same requirements apply which we perform every third year.

MR. WALPERT: All right. Does he require any additional training? Is he required to -- to go to the Salt Lake City school?

MR. PUGMIRE: No, sir, he doesn't go to the Salt Lake City school. He is required to go through a rules class in the year -- within the 12 months just prior to recertification.

MR. WALPERT: Okay. Mr. Isham, the three-week formal training program at Salt Lake, what is covered during the various phases of the classroom training?

MR. ISHAM: There's simulator work for application of those rules.

MR. WALPERT: All right. When you say simulator work, are -- must an engineer pass a simulated run as part of the program?

MR. ISHAM: Not -- not necessarily a pass. He must show proficiency. He must show an understanding of the rules. That's part of the final testing, along with the written test, that says that he does understand what this rule means.

MR. WALPERT: Okay. For either one of you, when a new type of locomotive is introduced, what sort of training is given to the engineer?

MR. ISHAM: Well, from our part, at first, when we have a new locomotive, we will develop job aid pamphlets which we have done with different types of equipment that have come out, and I'm just talking about what we do with those pamphlets.

We have mailed those directly to both the MOPs in the field and to the engineers themselves to help them understand with this new equipment, and --

MR. PUGMIRE: Typically, we'll -- we'll also implement it in by territories where we'll take, for example, when we got AC power, take the AC power into where we first expected to run train engineers on the physical equipment, using the MOTs and MOPs, and then work our way across the system.

MR. WALPERT: Okay. During either one of the training phases, either for initial training of an engineer or the refresher training that is undergone periodically, does that cover inspection of locomotives and specifically FRA regulations?

MR. PUGMIRE: Yes, it does. In fact, we've covered the locomotive daily inspection in the last three or four rounds of -- of annual rules exams. Recently, the one -- the bi-annual rotation, 1996-97, we used the video actually that was -- was generated with -- in a joint effort between the FRA and BLE as part of our training package.

MR. WALPERT: All right. Mr. Pugmire, you also stated that you have set the policy for the -- the familiarization of engineers over new territory, is that correct?

MR. PUGMIRE: Yes, sir, that's correct.

MR. WALPERT: I'm not sure I understood exactly. Would you explain again what that policy entails?

MR. PUGMIRE: The policy is if an engineer has never been over the territory before, that he will either be assigned a pilot or go with an MOP on familiarization trips. The number of trips is determined -- the average number of trips, I should say, is determined by the director's training operating practices and the MOPs jointly, depending a lot on -- on the physical characteristics, if we've got heavy grades, if we've got undulating territories, fairly flat, and that number can move either up or down depending on the proficiency of the engineer and his prior experience.

MR. WALPERT: In a case where an engineer or where an MOP has said that he felt the engineer was familiar with the territory, and the engineer said that he felt that he was not, what is the governing factor in that case?

MR. PUGMIRE: Well, usually you try to get consensus. The MOP talks with the engineer or rides with the engineer and determines the skill level of the engineer. Far and away, the majority of the time, the engineer and MOP both agree that the engineer is ready to run solo.

If the engineer gets to a point where he does not feel like he's qualified, then in all cases, the MOP must ride with him on a qualification run.

MR. WALPERT: Did you investigate the allegations that there had been cases where engineers were forced to -- to operate over territory over which they were not familiar?

MR. PUGMIRE: I did not investigate the allegations nor did the FRA that I'm aware of. We didn't even try to substantiate it. What we did is we -- we formalized our policy and committed it to writing based on the accusations.

MR. WALPERT: Okay. Thank you. That's all I have.

CHAIRMAN GOGLIA: UTU?

MR. BOYD: No questions.

CHAIRMAN GOGLIA: To the head table? I did it again, and I wrote myself a note so I wouldn't forget.

MR. JERRY R. DAVIS: Mr. Chairman, we have no questions.

CHAIRMAN GOGLIA: Okay.

MS. BEAL: Yes. Just quickly. Does your on-going training for engineers include the MOPs?

MR. PUGMIRE: Yes, it does. The -- all the operating managers receive training. However, they receive the training from rules managers, and then in turn they provide the training to TE&Y employees.

MS. BEAL: And does anybody -- this is to both of you. Does anybody -- do you or anybody on your immediate staff attend the SACP meetings?

MR. PUGMIRE: No.

MR. ISHAM: Not at this time. We're -- that's -- those processes are in -- in start-up for our site.

MS. BEAL: And, so, how do you come to get the information that comes out of the SACP meetings?

MR. PUGMIRE: End up being involved indirectly. One of the worker bees. In the example of the napping policy, which they're currently working on, I'm involved in, through conference calls, with the unions and the service unit that we're testing that on and developing the policy, getting it put out as a general notice.

MS. BEAL: Thank you.

CHAIRMAN GOGLIA: Mr. Ellingstad?

MR. ELLINGSTAD: I have no questions, Mr. Chairman.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: Yes, I have a few questions regarding training. Since this is for the UP's engineer training program, this is -- this is for either one who would like to answer.

With the UP's engineer training program, is this part of your engineer certification process?

MR. PUGMIRE: Yes.

MR. ISHAM: It is.

MR. PUGMIRE: They fit hand-in-glove.

MR. LAUBY: Okay. And this is something that the engineer certification process has to be basically approved by the FRA, is that correct?

MR. ISHAM: That's correct.

MR. LAUBY: Okay. You talked about how you made many changes to the engineer training program. What do you do as far as getting approval for that from -- from the FRA when you do make changes?

MR. PUGMIRE: Our submission isn't so technical that it says we will conduct a 113 questions on the operating rules. Therefore, if we change a question, we don't have to notify the FRA by changing our submission to them.

MR. ISHAM: Just to add to that, the modifications that we make and adding to it are basically those type. We may emphasize with more questions an area in the rules or error or operating practices from one year, from one month to the next, but it's within the confines of the submission.

MR. LAUBY: So, it is accurate to say that unless these are major changes, that there's -- there's no need to resubmit to the FRA for approval?

MR. ISHAM: Correct.

MR. PUGMIRE: Right.

MR. LAUBY: How do you get feedback on the changes that you do make in the engineer training program?

MR. ISHAM: Well, as I said before, to do any of the modifications at all, we're never satisfied, and we're talking to the rules department, and as I said, the MOPs, the people in the field, former students, and we continue that process with evaluations, with follow-up, with audits, which we're now doing in the field, to follow up with students to see how well that we are meeting the needs, both at the local level and with the students themselves, and we, with that information, we use that to determine what we need to do.

MR. LAUBY: Do the unions that represent your operating folks, do they participate in and give you any feedback on those programs?

MR. ISHAM: There's -- there's --

MR. LAUBY: Formally?

MR. ISHAM: Well, I would say mostly informally. It's mostly through when we talk to them, if they call on the phone saying we had somebody that said this and you did this and are you actually doing this. We -- we talk it out, and we discuss what the area of concern is, and if it's warranted, we will make the modification.

MR. LAUBY: You discussed a little bit about your program. You said it takes six months to basically get someone certified so that he can operate as a locomotive engineer on his own, and part of this process included OJT or on-the-job training.

How does the on-the-job training segment work?

MR. ISHAM: After they are done with the formal classroom training, then they're sent back into the field to be supervised by the local MOPs, and that certification process has been discussed earlier, but the MOPs handle it from that point on. I think Mr. Pugmire can even go further with that.

MR. PUGMIRE: Basically, we have instructor engineers who have identified as -- I hate to say our better engineers, but good instructors, and we assign the students to an instructor engineer to take student trips under his guidance, and the MOP or supervisor of the locomotive engineers monitors that.

MR. LAUBY: So, basically, during this on-the-job training phase, he will be supervised by a certified engineer who has been selected for either his desire or his abilities to provide mentoring or as a teacher for that OJT engineer?

MR. PUGMIRE: Yes, sir, that's correct.

MR. LAUBY: Okay. Thank you very much.

CHAIRMAN GOGLIA: Mr. Dunn?

MR. JAMES P. DUNN: I only have one question. At the outset, I neglected to ask the third member of your panel to identify himself. So, for the record?

MR. HASIAK: Ray Hasiak, the Union Pacific Railroad Law Department.

MR. JAMES P. DUNN: Thank you very much, Ray. No more questions.

CHAIRMAN GOGLIA: Okay. Tech Panel? Texas Railroad Commission? FRA?

MR. GAVALLA: Mr. Pugmire, you indicated that you're not aware of FRA efforts to investigate allegations that locomotive engineers did not receive sufficient qualifying runs.

Are you aware that that was an issue raised in the SACP report?

MR. PUGMIRE: Yes, I'm aware it was, and I'm not trying to say that you didn't investigate it. What I'm -- what I'm saying is rather than even take the time to try to substantiate or verify that it was a true story or not, the directors -- the administrators came to me, and we worked up a formalized policy.

MR. GAVALLA: No further questions.

CHAIRMAN GOGLIA: Brotherhood?

MR. WALPERT: No more questions.

CHAIRMAN GOGLIA: UTU? UP?

MR. JERRY R. DAVIS: No questions.

CHAIRMAN GOGLIA: All right. Gentlemen, you are released.

(Whereupon, the witnesses were excused.)

MR. JAMES P. DUNN: The National Transportation Safety Board calls Jim Hardstead and Tom Russell.

CHAIRMAN GOGLIA: And while these witnesses are setting up, these will be the last two witnesses of the day. Don't everybody cheer at once.

MR. JAMES P. DUNN: Mr. Hardstead, will you raise your right hand?

Whereupon,

having been first duly sworn, was called as a witness herein and was examined and testified as follows:

MR. JAMES P. DUNN: Thank you. Mr. Russell, will you raise your right hand?

Whereupon,

having been first duly sworn, was called as a witness herein and was examined and testified as follows:

MR. JAMES P. DUNN: Thank you. Please be seated.

TESTIMONY OF JIM HARDSTEAD
GENERAL DIRECTOR LOCOMOTIVES
UNION PACIFIC RAILROAD, AND
TESTIMONY OF TOM RUSSELL
GENERAL DIRECTOR MECHANICAL CAR
UNION PACIFIC RAILROAD

MR. JAMES P. DUNN: Mr. Russell, would you state for the record your full name and spell your last name, please?

MR. RUSSELL: It's Thomas P. Russell,

R-U-S-S-E-L-L.

MR. JAMES P. DUNN: And what is your present position with the Union Pacific Railroad?

MR. RUSSELL: I'm General Director Mechanical on the Car side.

MR. JAMES P. DUNN: And how long have you held that position?

MR. RUSSELL: Approximately a year and three months.

MR. JAMES P. DUNN: Okay. And very briefly, what other positions have you held in the railroad industry, and with what carrier?

MR. RUSSELL: I began in August 1964 as a carman apprentice. I went through the ranks of journeyman. I held 14 different positions.

MR. JAMES P. DUNN: Who's that with?

MR. RUSSELL: Southern Pacific Railroad. And different positions in the mechanical and operating department, until I came to UP.

MR. JAMES P. DUNN: Okay. Mr. Hardstead, what is your present position with the Union Pacific Railroad?

MR. HARDSTEAD: General Director of Locomotives on the Northern Region.

MR. JAMES P. DUNN: And how long have you held that position?

MR. HARDSTEAD: Approximately two months.

MR. JAMES P. DUNN: And what other positions have you held in the railroad industry, and with what carrier?

MR. HARDSTEAD: With Southern Pacific, my career has been until the merger. All of my career is on the Southern Pacific for 27 years, serving as a scheduler and a quality control and a manager and in charge of locomotives on the Southern Pacific lines.

MR. JAMES P. DUNN: I see. And I notice you have a member of the panel, a third member of the panel. Could you identify yourself, please?

MR. HASIAK: Happily, Mr. Dunn. Ray Hasiak from the Union Pacific Railroad Law Department.

MR. JAMES P. DUNN: Thank you very much. We'll turn the questioning over to the Technical Panel, and it will start out by Mr. Jay Kivowitz.

MR. KIVOWITZ: Good afternoon, Mr. Russell and Mr. Hardstead.

MR. RUSSELL: Good afternoon.

MR. HARDSTEAD: Good afternoon.

MR. KIVOWITZ: Reference to Mr. Davis's opening statement this morning, he mentioned the air test that was done in the Houston, Texas, Englewood Yard, for the October 25th accident there at West Junction.

I have some technical questions concerning the incident and accident. I'd like to move on. I believe this might be for Mr. Hardstead, but, Mr. Russell, if you want to move in on it, you may do that.

Mr. Hardstead, can you describe for us what your investigation disclosed?

MR. HARDSTEAD: First, let me start out. I got into the investigation approximately 10 to 12 days after the accident took place at West Junction. I was -- I was brought into it when we had questions on the event recorder tapes showed discrepancies in the initial terminal air test and the accident itself. I was not involved in the investigation when the wreck took place.

My investigation, along with -- with the NTSB, Jay, yourself, FRA, and the air brake specialist or air brake expert out of Salt Lake for the Union Pacific, came to the conclusion, and I'll go right to the conclusion, that based on the event recorder tapes, there was a restriction -- we believe there was a restriction in the fourth unit of a four-unit consist that may have contributed to not allowing the train to slow down properly or operate properly.

MR. KIVOWITZ: Now I understand through the investigation that there are procedures that are done at the engine house terminals.

Can you describe what your review of the incident disclosed as far as the pre-departure locomotive inspection procedures for the consist?

MR. HARDSTEAD: Yes. The consist was originally a three-unit consist put together at what we call Hardy Street. It was tested there by the mechanics and brought to the yard at Englewood, and at that time or some time later, in the neighborhood of three to four hours later, it was determined that a fourth unit was needed. The fourth unit was added at approximately 3 to 4 a.m. in the morning on the 26th, and a supervisor who was in charge made the air brake test when they put the fourth unit on to the three-unit consist.

After that, the air brake test was made. The consist departed for the train, and it was put on the train in the same yard about, I think, a mile-mile and a half away.

MR. KIVOWITZ: Could you describe if all the procedures were followed in that pre-departure locomotive consist test?

MR. HARDSTEAD: The director of the facility, the manager, plant manager, if you will, made subsequent to our finding of the restriction, made a complete investigation of the people involved, and the supervisor making the test testified that he made a complete test with -- with exception of one portion, and that of the -- of the air brake test per the UP policy and that was the last test where the consist is put into emergency from the rear end, from the rear unit.

MR. KIVOWITZ: As part of your conclusion, if the test would have been completely done, and if the blockage was present at that time, would that test -- would that have shown it at that time?

MR. HARDSTEAD: If the blockage was present at the time the test was done, the test should have shown it. Yes, sir.

MR. KIVOWITZ: Now is there an action plan developed to ensure that the procedures are followed that you require throughout the whole system?

MR. HARDSTEAD: Yes. The answer is very definitely yes. The policy regarding an air brake departure test has been in existence for many, many years on the SP as well as the UP, and the two systems, although we use different pieces of paper, were identical in functions of -- of the -- of the air brake consist departure test.

Subsequent to this serious situation, we put together a training video, a 20-minute video, on the air brake departure test itself, which we didn't have before. There was a process very well spelled out and very -- very simple, but we didn't have a video on it.

In addition to the 20-minute video, we put together an hour and a half video that was an employee co-action video, where the employee interacts -- an interaction video is what I should say, interacts with the video. That was shown across the system to all of our facilities, and all of our facilities also got the 20-minute tape.

We have shown that tape to my knowledge to everybody that works air brake departure consist on the UP system.

MR. KIVOWITZ: In conjunction with the new training procedures and the video, which you did supply us, and it's a matter of the record. We did have opportunity to look at it.

We noted this morning and Mr. Davis additionally commented that again he was hiring new managers, and I was wondering if you're going to be getting any of these positions for the locomotive side of the mechanical department.

MR. HARDSTEAD: We are getting some positions. The position for locomotive utilization to help with the distribution of locomotives throughout the system. We found a need in the Houston Basin as well as the L.A. basin and some other locations, like Chicago and North Platte, where mechanical management in determining what needs to be done on the units, when they should be taken off the train, brought over to the shop, brought across the service tracks so they can be lubricated, properly tested as to defects, we found that is -- there's a need there, and we're filling that.

As far as supervision goes on the ground, on the service tracks or in the shop, we feel we have ample supervision. It's -- it's very definitely controlled. We are not like -- like the transportation. We have a controlled workforce that have scheduled rest days, even though we are, as you know, a 24-hour operation, seven days a week. We have a captive workforce, so to speak.

So, we -- we have much better access to training and counseling and meeting with employees on

-- on, Number 1, safety, and, Number 2, quality and so on, productivity and finance and budget.

MR. KIVOWITZ: Was there any resistance in your department to implement the additional efficiency testing that was required by the action plan to ensure these tests would be done?

MR. HARDSTEAD: No, no. Not at all. That -- you know, for the most part, I have never met a person that didn't -- that fought being trained. People fight changes, and we all do that to a degree, but never training, and -- and I -- I would like to say something about what my experience has been on the SP. I can speak to the SP and what we did from the mechanical standpoint, and I can speak pretty -- pretty assuredly on it.

I know one thing, and that's that this company, Union Pacific, is much stronger in terms of employee involvement, employee welfare, employee training, and safety than -- than SP ever was, and I'm not -- SP was not a bad company for safety. We had, as Mr. Davis said, we had as good a record in the locomotive side. I think we're just a little better than the UP. In fact, I know we were because I was in charge. That's not why we were. That's why I know it.

But we did not have the field support, the resources for -- for education, training, quality assurance. We've got 14 people in the locomotive side specifically full time assigned to quality assurance, and they take additional people and peer trainers that work for them to -- to move the -- the process. We have processes. We have -- we have field support much more than I've ever seen in any other company.

MR. KIVOWITZ: Mr. Hardstead, thank you for giving us this overview of that situation, that accident.

Mr. Russell, I'd like to ask a few questions of you along the same lines.

MR. RUSSELL: Sure.

MR. KIVOWITZ: Were you present at Englewood at the time of the accident?

MR. RUSSELL: Well, Mr. Kivowitz, as we have discussed previously, I, unfortunately, was moving from Colorado to Spring, Texas, and I was snowed in in Denver at the time. So, I was not available to attend to the derailment.

MR. KIVOWITZ: Were you aware of the short initial terminal air brake test? By your records, it said 10 minutes, and by the vehicle performance laboratory report, they had it at three minutes. Could you comment on that for me.

MR. RUSSELL: Well, I reviewed the records. I've also talked to the carmen involved. I've talked to the supervisors involved, and you're right. There's a number of different times.

All I can say is that if it was a 10-minute air brake test, it certainly wasn't adequate.

MR. KIVOWITZ: If a member of management would have been present at the time that initial terminal air brake was performed, do you believe it would have been that short a period of time?

MR. RUSSELL: I don't see how it would have been. No, sir.

MR. KIVOWITZ: Were you adequately staffed at the time at Englewood Yard to be able to perform all these types of tests?

MR. RUSSELL: Yes, we were. In fact, we had received authority to put on 15 carmen, and that was, oh, I think in July or August, at the time, and even as we speak, we're hiring 12 carmen right now. So, we -- we have plenty of staff, supervisors and officers to handle our operation.

MR. KIVOWITZ: But at the time, were you sufficiently staffed?

MR. RUSSELL: Yes, sir.

MR. KIVOWITZ: I have no further questions at this time.

CHAIRMAN GOGLIA: Technical Panel? From the parties? Texas Railroad Commission?

MR. MARTIN: Yes, I have one question. Commission -- the Railroad Commission inspectors, and I believe FRA inspectors, while conducting post-interviews with -- with employees, were told a number of times that train crews had felt that they were not receiving proper initial terminal brake tests, and I'm wondering if you are aware of this complaint and/or if you're not, was the -- the video that you came up with -- is that a result of that incident? Is that why -- what prompted you to do that?

MR. HARDSTEAD: If I may, the video I was referring to is the air brake departure test for the consist, not -- not the initial terminal air brake test that's done on the train.

MR. MARTIN: Okay.

MR. RUSSELL: I can speak to that. Yes, I was aware of it. I have held rather close conferences with the Director of Train Operating Practices, Larry Breeden. He and I work together cross-functionally, and over a period of time, he feeds me different pieces of information that may come to him from an engineer or -- or a crew.

As a result of that, we have changed our processes, the written processes, instructions, and we've done a significant amount of training. For instance, just to categorize a few, on the Southern Pacific, we were using a one-part form, which was an air brake certificate, and it wasn't very comprehensive in terms of the information it required.

Following this incident, we immediately went to the two-part form. The engineer is given one. We keep one on file for 90 days, and we review that to ensure that all the information is filled out.

There was also a question about information regarding the in-bound and out-bound trains and the times that they were set and the air tests were performed and so forth, and as you know, the rail yard manager program was down that day.

We have standardized on a form. Unfortunately, at the time of the occurrence, they found an old Southern Pacific form which kept different information than the form that the UP uses. We have standardized on that.

We have developed a job process in terms of identifying all of the CFRs and company rules regarding an initial terminal air brake test and the duties to be performed.

Larry Breeden was instrumental in -- I believe it was Lavoy Little or -- I'm sorry. I can't think of the other FRA officer that was present at the time, but they put on some training classes, and we reviewed all of the complaints and the different requests that the engineers had that would -- that we could better serve them as a customer, and some of the things we changed, we used to have problems communicating in the train yard between the carmen making the air brake test and the engineer. So, we would go through the tower mechanical supervisor.

It was felt that the engineer would feel more comfortable if he talked directly with the carman making the air brake tests. So, we purchased new radios, and the carman now directly communicates with the engineer.

The carman also provides information as to the last car on the train, leakage and so forth when he gives it to the -- to the engineer.

We have talked about the CFR. We reviewed it with all of the carmen, with the FRA, with Larry Breeden and mechanical officers, and we have held other classes impromptu. I've been involved in quite a few of them involving the FRA and the Texas Rail Commission when we were having our safety stand-downs following the accident that occurred.

That, with other training that's going on, I think we're pretty well covering the bases. So, yes, we do communicate, and as a matter of fact, on April 1st, we're rolling this program out in Fort Worth.

MR. MARTIN: Well, certainly that's a most adequate response, and I appreciate that. Let me ask you. Have -- do you feel that -- that these -- that these procedures that you have put in place are effective or let me ask you another way? Are you continuing to get those sort of complaints?

MR. RUSSELL: I personally ask for them. I asked Larry to pass on all comments that he hears from the engineers. He tells me he's getting some good comments now, that they feel much more assured that -- that they are getting proper air brake tests.

We do a significant amount of training. Last year, we, I think, trained in excess of a hundred hours, maybe a 120 hours, per employee. This year, we have a rather aggressive plan of a 132 hours. That's 16 and a half days of training. Really, we're going to be accomplishing more than 15 percent of straight-time training, which is very significant, and a lot of that involves air brake tests.

MR. MARTIN: That's all the questions I have. Thank you, Mr. Russell.

MR. RUSSELL: Sure.

CHAIRMAN GOGLIA: Federal Railroad Administration?

MR. GAVALLA: Mr. Hardstead, you referred to a joint investigation of the West Junction accident, and you mentioned the conclusion that it appears -- there appeared to have been a blockage, at least a temporary blockage in the fourth locomotive.

Was that UP's conclusion or was that a joint conclusion reached by all the parties?

MR. HARDSTEAD: It was a joint -- it was a joint conclusion reached by the NTSB and the UP. There was an FRA representative there at the -- at the meeting, and he concurred to my knowledge with the -- with the conclusion. I do not believe he was at the site when we made the -- the tests on the trailing locomotive, but he was in the -- in the final review when we all met with Larry Breeden, the road foreman and Jay Kivowitz, myself and the air brake expert. Yes, sir.

MR. GAVALLA: Did you ever get any formal confirmation from FRA regarding that finding?

MR. HARDSTEAD: No, I did not. I'm not aware of any anyway.

MR. GAVALLA: Did we understand you to say that prior to the train leaving the terminal, the one involved in the West Junction accident, that a rear end device emergency test was not performed? Specifically 232.25 test?

MR. HARDSTEAD: No, I did not say that. I didn't comment on it. I wasn't -- I wasn't involved in that part of the investigation. There were people that were.

MR. GAVALLA: You mentioned that an emergency test was not done on the rear end, a test that would have shown the blockage. What type of test do you believe was not done?

MR. HARDSTEAD: Okay, okay. Excuse me. When I was talking about the test, I was talking about the consist brake test, the consist departure brake test, not the initial terminal air brake test.

The part that was not done, that the individual that did the test states that he didn't do, and that was that he didn't get in the unit and put it in the emergency on a trailing -- a trailing unit into emergency.

In other words, simulate the train going into emergency from the rear end. He -- he did it from the head end. He put the emergency brake valve into emergency, put the consist in emergency, got out, states he saw sand coming out of each one of the wheels to indicate that the units had in fact gone into emergency, but he did not do the last test per his testimony, which was to dump it from the rear of the consist. This was not on the train. This is the consist test.

MR. GAVALLA: Prior to the West Junction accident, are you aware of the FRA raising issues with the UP regarding initial terminal air brake tests? Particularly, are you aware if we've raised issues that we had concerns that employees were being required or permitted to conduct those tests in a hurried manner?

MR. RUSSELL: I presume you're directing that question to me, and, no, I'm not.

MR. GAVALLA: To the panel.

MR. RUSSELL: I'm sorry. No, I'm not. I'm not familiar with that.

MR. GAVALLA: And the same question to you, Mr. Hardstead.

MR. HARDSTEAD: And I can't speak to that either. I -- I was speaking -- when I speak to the consist air brake test, not the initial terminal air brake test.

MR. GAVALLA: Are you aware of any action plan developed by the UP as a result of recommendations from the SACP committees regarding initial terminal tests?

MR. RUSSELL: I can speak to that. I just recently received the report, and I reviewed that, and, yes, there are a number of action plans. Part of what I described is being done.

There's also training that Union Pacific has committed to to provide a five-day class, a mechanical class, including air brake tests, to virtually all of our carmen between Salt Lake City and North Little Rock, and we'll schedule so many per year in there until we're all through.

MR. GAVALLA: No further questions.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes. Thank you.

Mr. Hardstead, you have -- you indicated earlier that your involvement in the West Junction accident came a few days after the accident and was precipitated on the read-out of an event recorder.

Would you explain what you mean by event recorder?

MR. HARDSTEAD: Well, the event recorder -- of course, the first thing we do when we have an accident or derailment is -- is download the event recorder to -- to try to get as much information quickly as we can on what happened for whatever -- for any type of an accident or derailment.

In this case, I was not in charge of the Houston facility. That was not my responsibility at the time. I was in Omaha on a staff position, the quality assurance job, and when the tapes were read, they got sent up to Omaha and read again, and the second reading from the derailment prevention team came up with some questions on two of the tapes.

We had a tape from the third unit. We had a tape from the fourth unit. They didn't agree. There was -- there was -- there was direct opposition in what one said went into emergency, the other one said it didn't. In other words, straightforward to the point it showed a blockage, and we went through that for many, many hours and with several people.

MR. WALPERT: Okay. Thank you. There seems to be a little bit of confusion in regard to the 20-minute video. Now was that video created for mechanical employees, and for what purpose?

MR. HARDSTEAD: For the purpose of assuring that we have the best possible communication on how to make a proper air brake departure test. It's a relatively simple test, and I'm not talking about initial terminal brake tests. I'm talking about the consist itself.

We wanted to make sure that there was no question in anybody's mind on how to do that, and although it -- it probably -- you could argue the value of that, it -- there's always value to training. It's a simple test that's been done for years. There's no change in it. It's not a -- it's -- it's not a different procedure than it was 10 years ago, but we felt that a video would be a very good thing to do, in addition to what we already had in place, and that was a plastic card and -- and training on the job and training in video -- other videos.

In addition to the 20-minute, I was -- the interactive video, I thought, was a great idea, and this company is doing more and more of that, where -- where you have to -- almost forces me to learn because I have to react with the computer and push a button yes or no, and it -- and it feeds you right through. It really -- it's -- I think it's a very great training aid, and I'm not -- I'm not a trainer, but I appreciate education.

MR. WALPERT: Is there any kind of video or training for employees, specifically the operating employees, on initial air brake tests?

MR. HARDSTEAD: I can't speak to that. It's not in my -- unfortunately. I could sure find out very quickly.

MR. RUSSELL: I can't speak for operating training either. Sorry.

MR. HARDSTEAD: We can sure find out and get back to you. It's --

MR. WALPERT: Okay. Thank you. That's all I have.

MR. HARDSTEAD: Yeah. In fact, Bob Pugmire or somebody that was just up here probably could have answered that.

CHAIRMAN GOGLIA: UTU?

MR. LARRY DAVIS: No questions.

CHAIRMAN GOGLIA: UP?

MR. JERRY R. DAVIS: No questions, Mr. Chairman.

CHAIRMAN GOGLIA: I have three people prodding me and reminding me.

Okay. Up to the head table. Ms. Beal?

MS. BEAL: No questions.

CHAIRMAN GOGLIA: Mr. Ellingstad?

MR. ELLINGSTAD: Just real quickly. Do you maintain a database of brake tests, other inspection activity? I'm back to either of you. I'm back on this search for performance indicators of safety.

MR. RUSSELL: The rail yard manager is a means of recording that data, and that's -- I'm not sure that it's in all terminals across the system.

MR. HARDSTEAD: We have something that shows what type of -- of a -- of a maintenance we gave it, whether it was a service or a trip or a run-through, a fuel only or a -- the high-level service. That's fed into a database so that when a consist has departed from an originating terminal, there would be a record that the service was done indicating --

MR. ELLINGSTAD: But this is a maintenance database?

MR. HARDSTEAD: That's correct.

MR. ELLINGSTAD: Is that correct?

MR. HARDSTEAD: That's correct.

MR. ELLINGSTAD: Is -- is there a database maintained of the testing activity itself? Is there somewhere that you capture all of the tests that you do?

MR. HARDSTEAD: Well, the test is the maintenance. I mean it's -- it's --

MR. ELLINGSTAD: Okay.

MR. HARDSTEAD: -- part of the maintenance program. It's a part of the servicing that's done on a service track. It's fuel and water and sand and an FRA daily inspection, put together with an out-bound test taken to a train. That's all part of a maintenance function of the service track.

So, I think the answer really is yes, it is in the database, but it isn't in a database specifically under tests.

MR. ELLINGSTAD: Okay.

MR. RUSSELL: From a train standpoint, the rail yard manager would capture information as to when the train was set, when the carmen put on the blue flag, when they completed their work, whether there were two cuts involved that work separately or the entire train. They would have an area for comments. They'd have an area for completion of the air brake test. So, I presume that is the database that you may be referring to.

MR. ELLINGSTAD: Okay. Who -- who is the custodian of -- of that database?

MR. RUSSELL: I'm sorry. I can't answer that. But I have seen some of the reports on it, and they're pretty comprehensive.

MR. ELLINGSTAD: And there -- are these -- these -- who -- who receives the reports? Is there --

MR. RUSSELL: I know some of my mechanical managers do review it, and I believe transportation does, but I can't speak to that for sure.

MR. ELLINGSTAD: Can you add anything?

MR. HARDSTEAD: Yeah. From a maintenance standpoint, and that is the test, we review it on a regular basis for -- for all types of indicators. If we have problems -- an air brake restriction -- I've -- I've been around for 27 years. I've never seen one happen, but I believe it did happen in this case. It's very rare. We do -- we do -- we think we do around 500 air brake tests a day on the UP system, and that's a 180,000 a year, and if you multiply that by 10 or 20, you can see the magnitude here. It's rare.

But we do have databases where we -- where we watch the -- for indicators that -- that may indicate that we weren't getting proper lubrication in the gear cases that -- that caused a unit to derail because the gear case was dry or other areas. It's -- it's a maintenance function to feed back from a safety standpoint where we may have a deficiency or a need to change the policy or improve the auditing or improve the training.

MR. ELLINGSTAD: Okay. Just one last question. Is -- I appreciate the utility of those -- those data to -- to inform your maintenance function.

Is it used to inform the operational function with respect to how well the tests are being conducted or how thoroughly or whether they're --

MR. HARDSTEAD: No. No, it is not. We -- we do have an audit that we perform, that the service track managers perform four times a week now, but this is subsequent to the -- this is one of our action plans we put together in response to -- to covering every possible aspect of the operation, and that was an audit for the service track supervisor or manager to do on air brake tests on the service tracks.

MR. ELLINGSTAD: Thank you. No further questions, Mr. Chairman.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: Yes, I have a few questions here. I'd like to start with the -- Mr. Hardstead and the situation we had with the locomotive consist.

You said that -- that a test was -- was done, but that the units were not put in emergency from the last unit, and this is according to the workmen who -- who -- the mechanical person who worked on -- on the consist, is that correct?

MR. HARDSTEAD: Yes, that's correct.

MR. LAUBY: This consist we're talking about, this was the three units at the time or the four units?

MR. HARDSTEAD: Four units.

MR. LAUBY: Okay. So, this was done after the consist was -- was -- after the fourth unit was added, and the consist was at Englewood Yard, is that correct?

MR. HARDSTEAD: That is correct.

MR. LAUBY: Did the mechanical workman who -- who did this, did he give any reason why he didn't conduct that -- that final piece of the test?

MR. HARDSTEAD: No, he didn't. He -- he -- he stated he was familiar with it, but he didn't have -- he didn't have a -- a real good reason why he didn't do it. He was -- he was counseled on the value of doing it and briefed in the -- in the total aspects of the accident and the -- and the importance, but I cannot say he came up with -- there was no reason. He should have done it.

MR. LAUBY: Okay. Now moving over to the initial terminal brake test, we already had talked about that the consist test, and I believe, Mr. Hardstead, you stated that if a -- if a proper test had been done, and the blockage had been there, it should have been picked up by that test, is that correct?

MR. HARDSTEAD: That's correct.

MR. LAUBY: Now, what about an initial terminal brake test? I want to move over to Mr. Russell. Would an initial terminal brake test have picked up a blockage if it existed in that locomotive and if the initial terminal brake test was conducted?

MR. RUSSELL: No, because after the carman called for a set, the brakes did set.

MR. LAUBY: But would a -- a test -- would a properly-done initial terminal brake test, and this is -- this is based on the fact that we have a three-to-10-minute test here, and your statement is that this is really not a proper test.

Under those -- that situation, are you going to detect a blockage in the third or fourth unit of the locomotive if -- if it exists?

MR. RUSSELL: I can't speak to what effect the blockage would have in the locomotive with the initial terminal air brake test. All I can attest to the fact is that the brakes did set and release, and there are three times that were identified. There were 10 minutes and as high as 20 minutes.

MR. LAUBY: Okay. And my final question is the individual who conducted the initial terminal brake test, who did the 10-minute test, does he have any explanation of why he did a 10-minute test rather --

MR. RUSSELL: Well, he denies --

MR. LAUBY: -- than --

MR. RUSSELL: He denies making a 10-minute test. He told me personally that -- that he felt that it was 15 minutes or longer.

MR. LAUBY: Okay.

MR. RUSSELL: I'm just repeating what he told me.

MR. LAUBY: Final question. That was my final question. What would you like to add?

MS. BEAL: The person who performed this test, was he subject to these 12-hour days that we've been hearing about?

MR. RUSSELL: Well, carmen can work overtime, certainly. They're not required to, and while he has worked overtime in the past, he hadn't worked a substantial amount. So, I don't believe that he had worked overtime that particular day.

MS. BEAL: Or in the days immediately leading up to that day?

MR. RUSSELL: I believe on that half, he told me that he had worked one extra shift.

MS. BEAL: Thank you.

MR. LAUBY: I do have one additional question here. For the mechanical department, for -- for your inspectors, for the people that work on locomotives on the fuel pad, how do you ensure that they're doing their job?

MR. HARDSTEAD: Direct supervision, that the supervisor on service tracks, most of them have eight to 10 people to supervise. They supervise them all the time. I mean they're -- they're out there with them all the time. There are training programs, like I was saying, and video tapes, and there's cards, but the direct supervision assures that the persons know what they're doing, and if they get a new person, they put them with somebody that -- that does know, so you have OJT that some of our people were talking about earlier.

MR. LAUBY: All right. Thank you very much.

CHAIRMAN GOGLIA: Mr. Dunn?

MR. JAMES P. DUNN: Just a couple general questions. Mr. Russell, I think you said that if it was a 10-minute initial terminal air brake test, it would be considered inadequate?

MR. RUSSELL: I would consider it inadequate. Yes, sir.

MR. JAMES P. DUNN: Did your investigation -- let me reword that. We're told that UP investigated all the accidents. Was the air brake test done that day inadequate?

MR. RUSSELL: In terms of follow-up, could you explain that a little bit more, please? I'm not sure what you're getting at.

MR. JAMES P. DUNN: Did you determine that the air brake test was inadequate?

MR. RUSSELL: Well, I didn't personally determine that. I understand that the FRA and the NTSB and our mechanical department did inspect that train after the fact to see that everything was okay, and I understand all the brakes were operative.

MR. JAMES P. DUNN: Okay. But I'm talking about the brake test. Did UP consider it a problem with the brake test?

MR. HARDSTEAD: You're talking about the consist now?

MR. JAMES P. DUNN: No, no. The initial terminal air brake.

MR. RUSSELL: I -- I don't see how the air brake test could have been made in 10 minutes for that size of train.

MR. JAMES P. DUNN: Okay. The only reason I ask those questions, going to the larger issue we've been discussing all day. If we've got the consist that comes out, and we don't get that done correctly, and the initial terminal air brake test isn't done correctly, and this is on the same train, and it's one of our 15, what -- what do you gentlemen think is the answer to -- how do we increase the effectiveness of the safety oversight in this situation?

MR. RUSSELL: Personally, I think more training is required. I don't think you can train enough. The gentleman involved in this had -- had 24 years of experience all in the train yard. I calculated with him conservatively that he has performed over 5,000 air brake tests in his tenure with the company.

We need to train, monitor, coach, train, monitor.

MR. JAMES P. DUNN: Do you think efficiency testing is the answer?

MR. RUSSELL: We do efficiency testing. Yes, sir.

MR. JAMES P. DUNN: Okay. How about you, Mr. Hardstead?

MR. HARDSTEAD: Same -- same thing. Efficiency testing, audits, regularly enforcing what it is we do, and we don't have -- we -- like I said, we have direct supervision. So, that's assuring that the -- that the people are monitoring and auditing and testing.

MR. JAMES P. DUNN: Okay. That's all the questions I have. Thank you.

CHAIRMAN GOGLIA: Okay. Quickly around the table again. Tech Panel?

MR. KIVOWITZ: Mr. Russell, could you describe for us why the communication process while doing an initial terminal air test has been changed?

MR. RUSSELL: Well, yes. As I explained before, that there was a period of time when the communications for various reasons were bad in the yard, and the carmen using a handset could not communicate directly with the engineer on -- on the road channel, and it may have been a function of the age of the radios. I'm not sure. But to ensure that the tests were performed properly, the carmen use his carman's channel to a supervisor bold tower who in turn talk to the engineer, and that kind of got the two that were really important to the test out of the loop.

So, as a result of that accident, as a result of comments from Mr. Breeden, we decided to purchase the radios, and that was one of the things we did. We upgraded the radios, and we have the two talking directly together now.

MR. KIVOWITZ: And in reference to the two talking, what departments are talking to who now?

MR. RUSSELL: The carman is talking directly to the engineer on the locomotive.

MR. KIVOWITZ: Thank you.

MR. RUSSELL: Hm-hmm.

CHAIRMAN GOGLIA: Texas Railroad Commission?

MR. MARTIN: No additional questions. Thank you.

CHAIRMAN GOGLIA: FRA?

MR. GAVALLA: No questions.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: No questions.

CHAIRMAN GOGLIA: UTU?

MR. JERRY R. DAVIS: No questions.

CHAIRMAN GOGLIA: UP?

MR. JERRY R. DAVIS: No questions, Mr. Chairman.

CHAIRMAN GOGLIA: Any additional questions from the head table?

MR. JAMES S. DUNN: No questions.

CHAIRMAN GOGLIA: Okay. I have -- it's been brought to my attention that I have made -- may have subjected one of our own here to some cruel and unusual treatment, and I would like to apologize to Ray, a distinguished member of the Bar that I've required to sit there without opening his mouth for three hours, and I would like to offer you the opportunity to say anything you want at this time?

MR. HASIAK: Well, Mr. Chairman, thank you very much for your kind attention. But given the hour of the day, I think it would be much more appreciated if we just went to adjournment.

CHAIRMAN GOGLIA: Okay. We will recess until 9 a.m. tomorrow morning, and this hearing is in recess.

(Whereupon, at 6:00 p.m., the hearing was adjourned, to reconvene tomorrow morning, Thursday, March 19th, 1998, at 9:00 a.m.)

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