NATIONAL TRANSPORTATION SAFETY BOARD

UNION PACIFIC PUBLIC HEARING

Springfield Hilton
6550 Louisdale Road
Springfield, Virginia
Thursday, March 19, 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

A G E N D A

AGENDA ITEM

Adjournment

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

9:00 a.m.

CHAIRMAN GOGLIA: Good morning, everybody.

We will go back on the record for Day 2 of a special hearing into the 15 accidents involving the Union Pacific Railroad.

Mr. Dunn, will you please call the first witness?

MR. JAMES P. DUNN: The National Transportation Safety Board calls Mr. Robert Castiglione. Mr. Castiglione, 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: Please be seated.

TESTIMONY OF ROBERT CASTIGLIONE
MOTIVE POWER AND EQUIPMENT INSPECTOR
FEDERAL RAILROAD ADMINISTRATION

MR. JAMES P. DUNN: Mr. Castiglione, what's your present position with the Federal Railroad Administration?

MR. CASTIGLIONE: It's Castiglione.

MR. JAMES P. DUNN: I apologize.

MR. CASTIGLIONE: I'm a Motive Power and Equipment Inspector.

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

MR. CASTIGLIONE: I have been with the agency for 12 years. During that time, I've also worked as a motive power and equipment specialist.

MR. JAMES P. DUNN: Okay. And at what locations have you worked?

MR. CASTIGLIONE: Chicago, Hearst and Houston.

MR. JAMES P. DUNN: Hearst is in Texas?

MR. CASTIGLIONE: Oklahoma City as well.

MR. JAMES P. DUNN: Okay. And Hearst is in Texas?

MR. CASTIGLIONE: Yes, sir.

MR. JAMES P. DUNN: Okay. And you're presently in Houston?

MR. CASTIGLIONE: I'm located in the Houston area. That's correct.

MR. JAMES P. DUNN: Okay. How long have you been in Houston?

MR. CASTIGLIONE: Five years.

MR. JAMES P. DUNN: Okay. And what other positions have you held in the railroad industry?

MR. CASTIGLIONE: Prior to FRA, I worked with the Texas Railroad Commission. I also -- prior to that, I worked with the Southern Pacific as -- in the corps department.

MR. JAMES P. DUNN: How long were you with Southern Pacific?

MR. CASTIGLIONE: Five years.

MR. JAMES P. DUNN: And what locations did you work?

MR. CASTIGLIONE: San Antonio and -- San Antonio, Texas, and Eagle Pass, Texas.

MR. JAMES P. DUNN: Okay. We'll begin the questioning with the Technical Panel. Mr. Patrick Sullivan.

MR. SULLIVAN: Good morning, Mr. Castiglione.

MR. CASTIGLIONE: Howdy.

MR. SULLIVAN: Could you describe your general duties and responsibilities as a motive power and equipment inspector and list your responsibilities in order of priority?

MR. CASTIGLIONE: Certainly. I enforce the policies and objectives of the agency. I do this through accident investigation, complaint investigation, special investigation, waivers, SACP, site inspections, training for FRA and railroad employees. That's formal and informal training. I also do steam locomotive inspections.

MR. SULLIVAN: What percent of your total activities is spent on regular inspections or site inspections, as you call them?

MR. CASTIGLIONE: I complete a two-week plan and submit that plan in advance, one week in advance of my scheduled activities. It's what's called an alternate work schedule.

On the back side of that form, I will indicate the type of work that I will be engaged in for that two-week period.

I would say that when I'm not doing accident or complaint or any other special assignment, I'm doing site inspections. I can't give you a percentage, but if that answers your question.

MR. SULLIVAN: Okay. Can you tell us what drives the amount of time you spend on site inspections?

MR. CASTIGLIONE: There is a model or plan that the regional administrators use. I believe it's called an annual asset allocation model. I'm not really familiar with how it works. I have a territory, and I'm expected to cover that territory in the most time-efficient manner.

MR. SULLIVAN: Okay. Were you involved in the SACP on the Union Pacific Railroad?

MR. CASTIGLIONE: Yes, I was.

MR. SULLIVAN: And what was your involvement?

MR. CASTIGLIONE: I worked under the direction of the team leader in both instances that happened in a two-week period concurrently, one at North Little Rock, Arkansas, and one at Fort Worth, and in both instances, it was locomotive inspection.

MR. SULLIVAN: Did you inspect any freight cars?

MR. CASTIGLIONE: No, sir, I did not.

MR. SULLIVAN: Okay. Does the SACP process replace your site inspections?

MR. CASTIGLIONE: No, not really. I -- my involvement with SACP has been somewhat limited. The two weeks that I just mentioned to you. I also had another week stint that I did in '96 on the KCS, and other than the blitzes that we did in September and in November, if you want to include that in SACP, well, that would make it about a total of five weeks.

But my involvement really has been limited in SACP. So, no, it hasn't.

MR. SULLIVAN: What was that initial SACP you were talking about, where you were in -- was it Little Rock?

MR. CASTIGLIONE: That's correct.

MR. SULLIVAN: What time period was that around?

MR. CASTIGLIONE: That actually was just recently, the last part of January.

MR. SULLIVAN: Okay.

MR. CASTIGLIONE: I want to say maybe the third week.

MR. SULLIVAN: Okay. What does your inspection territory encompass?

MR. CASTIGLIONE: I have essentially half of Houston on a line south of Houston to Freeport, down along the coast to Seadrift, coming up north to College Station, Bryan College Station, and back towards Houston.

I also, as I said earlier, I do steam locomotive inspections, which takes me to Arkansas, Fort Worth, Austin, New Orleans, and I believe that's it.

MR. SULLIVAN: Okay. How many railroads do you inspect?

MR. CASTIGLIONE: Right now, I have two Class 1s. I believe a half a dozen smaller lines, regionals and -- and smaller roads.

MR. SULLIVAN: Is the Union Pacific one of those Class 1s?

MR. CASTIGLIONE: That's correct.

MR. SULLIVAN: Okay. Do you know how many total inspections you made, you performed during 1996 and 1997?

MR. CASTIGLIONE: I made a total of 71 in '96 and a 121 in '97.

MR. SULLIVAN: Do you know how many inspections you made on the Union Pacific for that same time period?

MR. CASTIGLIONE: 51 was on the -- what is now the Union Pacific in '96 and 81 in '97.

MR. SULLIVAN: Okay. I notice that your inspections have been going up. When you do these SACPs, are you also writing inspection reports for those?

MR. CASTIGLIONE: Well, in '96, I worked approximately six months as a -- as the acting motive power and equipment specialist, which, by my -- which is the reason why my reports were somewhat lower, but when we do team inspections or SACP inspections, we work -- typically work in teams, and it is possible that -- that the inspector that I'm working with may fill out the report or I'll fill out the report. So, we'll have our total defects or exceptions on one report, and then there are instances when we both make out reports.

MR. SULLIVAN: Do you know how many violations you wrote during 1996 and 1997?

MR. CASTIGLIONE: I wrote two in 1996 and five in 1997.

MR. SULLIVAN: Do you know how many of those were on the UP?

MR. CASTIGLIONE: One in '96, and all five were on the UP in '97.

MR. SULLIVAN: Do you recall what those violations were for?

MR. CASTIGLIONE: I think with one exception, they were all locomotive-related. The other was, I believe, something on the freight car standards.

MR. SULLIVAN: Do you know what your defect ratio was on the Union Pacific for '96 and '97?

MR. CASTIGLIONE: If I can break it out for you, locomotives for '96 was 43 percent, '97 for locomotives was 48; for freight car, and I'm talking about freight car standards, which is typically stuff associated with the running gear, it was 2.5 in '96, stayed the same in '97. Safety appliances in '96, it was three percent, and in '97, it was 3.5.

MR. SULLIVAN: Okay. So, it seems like your defect ratio has gone up slightly in '97.

MR. CASTIGLIONE: A little bit. Yes, sir.

MR. SULLIVAN: Okay. Thank you.

MR. PAYAN: Good morning, Mr. Castiglione.

MR. CASTIGLIONE: Howdy.

MR. PAYAN: As you know, the Safety Board is investigating 15 accidents which occurred on the Union Pacific between October '96 and October '97.

MR. CASTIGLIONE: Right.

MR. PAYAN: Five of these accidents occurred in Texas. During your regular or site inspections or any work you did out there, did you notice any change in the level of safety in -- on the Union Pacific during this time frame?

MR. CASTIGLIONE: No, I can't say that I did.

MR. PAYAN: Did you observe an increase in the accidents during this time period?

MR. CASTIGLIONE: Yes, obviously I did. We had a series of unfortunate accidents that actually hit pretty close to home, but I think if you look at a little bit wider time band, the data will indicate that accidents were actually going down for that same time period overall.

MR. PAYAN: Were -- were you -- as far as FRA, were you provided any information on the other accidents outside of your regions?

MR. CASTIGLIONE: I saw the summaries, and that was -- that was the extent of it. I didn't really get too involved with -- with the accidents outside of the region.

MR. PAYAN: Did you participate in any -- either one of the two safety assurance assessments on the UP?

MR. CASTIGLIONE: Yes, I participated in both.

MR. PAYAN: What role did you play in those?

MR. CASTIGLIONE: Again, I was an inspector in the first -- the first assessment we did was I inspected locomotives in Fort Worth at Centennial Yard. The more recent one was at Englewood. I inspected cars, observed brake tests, things of that nature.

MR. PAYAN: And what were your findings?

MR. CASTIGLIONE: We had non-compliance with locomotives at Fort Worth in the August blitz, somewhere in the order of, I want to say, around 70 percent ball park. I know we've submitted several violations in the November blitz that we did. Again, I just did cars. I want to say it was around -- it was less than five percent, maybe -- maybe around six- percent defect ratio for cars. No violations, and we did not take exception to any brake tests.

MR. PAYAN: Okay. Did you make your supervisor aware of any findings or did you communicate any concern about --

MR. CASTIGLIONE: Certainly.

MR. PAYAN: -- the safety conditions?

MR. CASTIGLIONE: Certainly. That report was forwarded to the team leader, and actually it went through the supervisor and then to the team leader, who was Mr. Ralph Forney in the Portland Region.

MR. PAYAN: Were all the motive power and equipment inspectors involved in the safety assurance and assessment?

MR. CASTIGLIONE: In Region 5?

MR. PAYAN: Yes.

MR. CASTIGLIONE: I think -- I -- I do believe that all state and federal motive power inspectors participated in -- in those audits.

MR. PAYAN: Were you provided any specific guidance between October '96 and October '97 that modified the inspection activity on the UP?

MR. CASTIGLIONE: Yes. Right after the Devine accident, the regional administrator provided an e-mail, and I think I remember a verbal directive to increase our presence and inspections on the UP.

MR. PAYAN: Did the SACP process provide any guidance that changed your inspection activity?

MR. CASTIGLIONE: As I said, I wasn't that involved with the SACP process. I am somewhat familiar with how it works, but since I didn't get really involved with the process, I have to say no.

MR. PAYAN: So, were you aware of the topics that were being discussed?

MR. CASTIGLIONE: Oh, absolutely. Sure. In that regard, yes. Yes, I was aware of the things that were problematic in nature specifically with locomotives.

MR. PAYAN: That's all I have.

MR. JAMES S. DUNN: Good morning. I'm interested in -- in the SACP process a little bit more. You were on -- on a team in January, is that correct?

MR. CASTIGLIONE: Yes, sir.

MR. JAMES S. DUNN: And how do you get picked to be on -- on the team or --

MR. CASTIGLIONE: That's at the discretion of the motive power and equipment specialist.

MR. JAMES S. DUNN: So, he places you on a team?

MR. CASTIGLIONE: That's correct.

MR. JAMES S. DUNN: And -- and this one that you went to Little Rock in January, --

MR. CASTIGLIONE: Yes, sir.

MR. JAMES S. DUNN: -- who was on that team with you?

MR. CASTIGLIONE: My partner, an inspector by the name of Erwin Blair.

MR. JAMES S. DUNN: And was there -- was there union people and UP people or -- on that team, also?

MR. CASTIGLIONE: For the most part, it was

-- I know -- I believe the union folks were cut in prior to our arriving on the property, but when we actually arrived on the property, it was -- it was us and management, FRA, that is, and management.

MR. JAMES S. DUNN: And you -- you inspected the cars?

MR. CASTIGLIONE: I inspected locomotives, and again what my role in that -- in that effort was strictly site inspection. Whatever went on before I arrived and after I left, I wasn't a part of. So, I really can't speak of it, but my role in those efforts were strictly just making -- making site inspections, and that was it.

MR. JAMES S. DUNN: Now, you were personally making the inspections or were you observing employees making the inspections?

MR. CASTIGLIONE: Well, in the sense we were doing both. We weren't actually standing over employees making inspections, but we tried to concentrate our inspections at times on equipment that were being serviced and offered for service off the service ramp at North Little Rock, which gives us an indication of the quality of work performed by the employees.

MR. JAMES S. DUNN: What took place -- let's say it this way. Did you find violations during this process?

MR. CASTIGLIONE: I took one violation personally, and I know there were additional violations submitted in connection with that -- with that effort.

MR. JAMES S. DUNN: And what -- what's done with that? I know what you do if you were by yourself as an FRA inspector. What happens in -- in the SACP if you find a violation?

MR. CASTIGLIONE: They're transmitted through the normal procedure/protocol through the regional -- to the regional office, and it's my understanding that the regional motive power and equipment specialist will prepare a cover letter for the deputy regional administrator's signature designated as top priority because it is in connection with the SACP effort.

MR. JAMES S. DUNN: Okay. I have no further questions.

CHAIRMAN GOGLIA: Thank you. Texas Railroad Commission?

MR. MARTIN: Mr. Chairman, we have no questions.

CHAIRMAN GOGLIA: The Union Pacific?

MR. JERRY R. DAVIS: No questions, Mr. Chairman.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes, we have a couple of questions.

Mr. Castiglione, would you explain to me what you mean by violations? You said you found five violations in 1997 on Union Pacific. What were those violations again?

MR. CASTIGLIONE: Well, I believe they were locomotive violations. I know I had one freight car standard-type violation in that bunch. I don't recall exactly where or what the circumstances were.

MR. WALPERT: Once you note a violation, then what is the course of action? What happens with that violation?

MR. CASTIGLIONE: I submit the -- I gather the evidence, submit it on a -- on a form, and it's processed to the regional office to determine if it's technically correct, and from there, it goes to Washington, to the Office of Chief Counsel, for collection.

MR. WALPERT: And what happens in Washington once it's collected there?

MR. CASTIGLIONE: I really can't speak of that. That's sort of out of my bailiwick.

MR. WALPERT: Okay. You spoke of the blitz in Fort Worth where you found several locomotives that were in, the term you used, "non-compliance". What do you mean by non-compliance?

MR. CASTIGLIONE: They were locomotives that did not meet all the requirements of 229. Bear in mind that some of those defects could be what I would characterize as minor in nature. For instance, stenciling. Regulations require the letter F to be stenciled on a locomotive which to my knowledge I've never heard of anybody getting hurt with stenciling being missing, but those -- we're compelled to report anything we see.

MR. WALPERT: Okay. And then once those reports were made, what happened to those reports?

MR. CASTIGLIONE: They were transmitted in routine fashion, gathered and assembled. A cover sheet is prepared and forwarded to the regional office.

MR. WALPERT: Is there any oversight to see that these locomotives then become in compliance?

MR. CASTIGLIONE: For locomotives that are -- that are found or submitted -- a violation is -- is filed, regulation requires the carrier to provide us notification within 30 days.

MR. WALPERT: You also said that you observed employees inspecting engines. What -- what craft of employees did you observe inspecting engines?

MR. CASTIGLIONE: In the Little Rock effort, it was typically mechanical folks, machinists, electricians.

MR. WALPERT: And you also said that you observed the quality of their inspections. What was your evaluation of the quality of the inspection of the employees?

MR. CASTIGLIONE: Well, it's my understanding that they -- that they're doing a better job. Some inspections had been made by the -- by the local inspector prior to our actual team effort in January, and in talking with -- with the local inspector, it's my understanding that they had made some pretty good improvements.

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

CHAIRMAN GOGLIA: United Transportation Union?

MR. LARRY DAVIS: No questions.

CHAIRMAN GOGLIA: To the head table. Ms. Beal? Oh, FRA.

MR. GAVALLA: No questions at this time.

CHAIRMAN GOGLIA: Thank you.

MS. BEAL: Good morning.

MR. CASTIGLIONE: Hi.

MS. BEAL: I'm sorry. You may have said and I missed. How many railroads are there in your region that you have responsibility for?

MR. CASTIGLIONE: Two Class 1s and about a half dozen smaller roads.

MS. BEAL: And how many inspectors are there in your region?

MR. CASTIGLIONE: Total? I think there's somewhere on the order of 60. Somewhere around there.

MS. BEAL: Okay.

MR. CASTIGLIONE: I'm not including state. It may be state, but I'm not sure. I'm not really -- I don't keep track of that, to be honest with you.

MS. BEAL: Well, we'll ask later. So, then what would be the frequency of your visits to, for example, a carrier as large as UP?

MR. CASTIGLIONE: Several times a year, as evidenced by the number of inspections total versus the number of inspections on the UP in '97.

MS. BEAL: Okay.

MR. CASTIGLIONE: Large percentage.

MS. BEAL: And you said that you don't -- I think when you were talking about the defect ratio, that you didn't know how that -- theirs compared to, say, carriers in other regions, is that correct?

MR. CASTIGLIONE: I'm not sure I understand the question.

MS. BEAL: You said you don't get data from other regions, so that you really don't know how the defect ratio that you found in your region compares to other regions?

MR. CASTIGLIONE: I don't recall saying that, but --

MS. BEAL: Is that true or --

MR. CASTIGLIONE: I do see -- at the end of the year, there is information that's provided by the statistical staff that we have in Washington. So, I have an idea of what's going on elsewhere.

The locomotives -- for instance, my locomotive defect ratio is pretty consistent with -- with what's going on in the rest of the country, and I would say the same for cars.

MS. BEAL: Well, that's what I'm getting at.

MR. CASTIGLIONE: Yeah.

MS. BEAL: So, you would --

MR. CASTIGLIONE: I have an idea.

MS. BEAL: Okay. You would make that comparison. You say annually you get those statistics. That would be your indicator?

MR. CASTIGLIONE: Probably more than that. I talk to -- I have friends throughout the country that we correspond e-mail. We exchange ideas frequently. So, it's -- we have an idea what's going on on a regular basis.

MS. BEAL: But that would be something you would be motivated to do; it's not done at headquarters and provided --

MR. CASTIGLIONE: Well, they provide -- headquarters provides the information to the regional office, the regional office provides it to us. We get hit with all sorts of numbers on a regular basis.

MS. BEAL: Okay. Thank you.

MR. CASTIGLIONE: You're welcome.

CHAIRMAN GOGLIA: Mr. Ellingstad?

MR. ELLINGSTAD: Thank you. Following up on this inspection workload a little bit, you indicated that in '97, you did a 121 inspections, and I think when Mr. Sullivan had -- had tried to inquire as to what your weekly workload is, you had a problem with estimating a percentage of time.

But with a typical inspection, how -- how much time are you spending?

MR. CASTIGLIONE: On a daily -- for instance, --

MR. ELLINGSTAD: On a particular.

MR. CASTIGLIONE: Well, when I'm doing a site inspection, it's -- it's an all-day affair. Eight hours on the property and perhaps another hour or two preparing the reports.

MR. ELLINGSTAD: Okay. Thank you. And you had -- you indicated you did a 121 of these in 1997?

MR. CASTIGLIONE: Yes, sir.

MR. ELLINGSTAD: Following up on -- on a couple questions that Mr. Walpert had asked having to do with observation of railroad employees performing inspections, could you elaborate a little bit in terms of -- of what -- how regular of an activity this is?

MR. CASTIGLIONE: It's more frequent than not. Typically in a train yard, when I'm inspecting a train, it could be right on the heels of -- of the car department making their inspection. I -- generally I attempt to look at equipment that's previously inspected. I do make in-bound inspections when I want to gauge the level of compliance of outside points. So, I'm typically looking at something that somebody's looked at somewhere.

MR. ELLINGSTAD: What kind of reporting is there with respect to your observations of these railroad employees' performance doing that inspection?

Is that recorded somewhere? Do you keep a database of -- of these observations?

MR. CASTIGLIONE: No, sir, I do not.

MR. ELLINGSTAD: Is there any specific feedback that is made to the railroad?

MR. CASTIGLIONE: Absolutely. If I -- if I observe people, what I term as, doing a good job, I tell the individuals themselves as well as their supervisor.

MR. ELLINGSTAD: Okay. So, this isn't just an exception reporting of --

MR. CASTIGLIONE: Absolutely not.

MR. ELLINGSTAD: -- problems?

MR. CASTIGLIONE: No, sir.

MR. ELLINGSTAD: With respect to the overall inspection activity that you do, what kind of record-keeping/data-reporting responsibilities do you have?

MR. CASTIGLIONE: Well, we have an electronic reporting where I can keep inspection activity and databases on my personal laptop. So, I can generate defect ratios, frequency of inspections, things of that nature on my own laptop. So, I can -- that's readily available to me at any time.

MR. ELLINGSTAD: That database concerns your inspections?

MR. CASTIGLIONE: That's correct.

MR. ELLINGSTAD: Okay. Are these transferred on and uploaded to --

MR. CASTIGLIONE: Uploaded --

MR. ELLINGSTAD: -- a central system?

MR. CASTIGLIONE: Uploaded weekly to a -- to a contractor in Washington, who can make that information available to -- to anyone upon request, and there are plans to post a bulletin board in the very near future where anybody can call in and access that -- that information.

MR. ELLINGSTAD: Is the access to that information of a voluntary one on the part of the inspector or are there regular feedback mechanisms from -- from the contractor or from FRA headquarters?

MR. CASTIGLIONE: Well, yes. As I said earlier, they -- headquarters and the regional office provides us with numbers on a regular basis that we can -- accident incident data, inspection efforts, things of that nature.

MR. ELLINGSTAD: How long is your typical work week?

MR. CASTIGLIONE: Lately, it's been rather long. You looking for hours?

MR. ELLINGSTAD: Yes, I'm looking for hours.

MR. CASTIGLIONE: 50-55.

MR. ELLINGSTAD: Thank you. No further questions.

MR. CASTIGLIONE: You're welcome.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: Thank you. I just have a couple follow-up questions to some of the questions that Mr. Ellingstad raised.

I'd like to understand a little bit better the on-site inspection procedure.

MR. CASTIGLIONE: Okay.

MR. LAUBY: And I think you've answered part of this, but I need a little bit of clarification in my own mind.

How -- how do you decide when and where to do an on-site inspection?

MR. CASTIGLIONE: If I'm not assigned a complaint or a special investigation, if I'm not inspecting steam locomotives or preparing to present -- do a class or any type of formal training, that's when I do a site inspection. If -- again, I'm given a territory to cover, and I cover it in the most efficient manner that I can.

MR. LAUBY: So, it's basically your decision where to go next and what railroad to look at or --

MR. CASTIGLIONE: Not really. As I said, I submit a weekly plan of -- or it's a two-week plan of what I'm going to do in that -- and that report is submitted a week in advance of the work to the regional office. If my supervisor thinks that that report needs to be tweaked, he'll contact me, e-mail, verbally, page me, whatever, and I'll be assigned elsewhere.

MR. LAUBY: Does the -- does your supervisor -- does he often change your -- your inspection plan?

MR. CASTIGLIONE: Well, I wouldn't characterize it as often, but it does happen.

MR. LAUBY: Well, typically, how -- how many times a year is your plan going to be changed?

MR. CASTIGLIONE: Well, the last couple of years, it's -- I guess I should say it's happened on a relatively regular basis, maybe once monthly or twice monthly, something along --

MR. LAUBY: Okay.

MR. CASTIGLIONE: -- those lines.

MR. LAUBY: These are one-week -- these are one-week plans?

MR. CASTIGLIONE: They're two-week plans.

MR. LAUBY: Two-week plans?

MR. CASTIGLIONE: Hm-hmm.

MR. LAUBY: Okay. So, that would be about 50 percent of the time?

MR. CASTIGLIONE: Somewhere around there, I suppose.

MR. LAUBY: Okay. Do you discuss with your supervisor the need to go to one area or another --

MR. CASTIGLIONE: Certainly.

MR. LAUBY: -- as part of this decision-making?

MR. CASTIGLIONE: Yes, I do.

MR. LAUBY: Once you're out and doing your site inspection, how do you report back to your supervisor on -- on your activities?

MR. CASTIGLIONE: Well, if it's unusual in nature, I will prepare either a formal memorandum. I'll jot an e-mail to him, identifying my concerns. Otherwise, it will be on a typical inspection report, reporting what my observation and defects.

MR. LAUBY: So, if you were to stumble across a safety problem that you felt required additional attention, your method would be to go directly to your supervisor with the memo, is that correct?

MR. CASTIGLIONE: Something that I felt was systemic in nature, yes, sir.

MR. LAUBY: Day-to-day, how -- how is the relative safety measured based on your inspections?

Is it violations or is it -- how -- how -- how do you keep your finger on the pulse of safety on a particular property?

MR. CASTIGLIONE: Well, I -- there are several -- under -- under the Appendix 209 -- 49 CFR, Part 209, Appendix A, there's some guidelines that -- that we're required to use in our discretion, but generally since I'm intimate with -- with my inspection points, I have an idea of -- on a regular basis of what's going on at any given point. So, I have firsthand knowledge of where -- where the problems are, if there are problems, and what needs more attention.

MR. LAUBY: When you do report a problem to your supervisor, what kind of response do you get?

MR. CASTIGLIONE: If it -- if it requires a team effort, he'll ask me to prepare a -- a plan of attack.

MR. LAUBY: Are you satisfied with -- with how these -- these problems are taken care of as far as are they fully addressed?

MR. CASTIGLIONE: Sure. Yes, they are.

MR. LAUBY: Okay. Thank you very much.

MR. CASTIGLIONE: You're welcome.

CHAIRMAN GOGLIA: Mr. Dunn?

MR. JAMES P. DUNN: Thank you. Mr. Castiglione, going back to Mr. Sullivan's questioning, I don't think I was clear on the percentage of -- of your activities that are spent on site inspections, and I understand the two-week schedule, but I'm looking more for what -- what you believe a ball park figure would be of your activities spent on site inspections.

MR. CASTIGLIONE: If -- if the information is requested, I believe our -- my work schedule could be analyzed and that figure could be narrowed down to exactly what it is. I -- I can't tell you off the top of my head.

MR. JAMES P. DUNN: I understand you don't have it here with you, but what would you say -- and I understand it's not a hard figure, but what do you think your -- the percentage of your activities is spent on site inspection?

MR. CASTIGLIONE: Somewhere around perhaps 40 percent, maybe 45, something like that.

MR. JAMES P. DUNN: Okay. Thank you. In the period of time that encompasses these 15 accidents, October '96 to October '97, did you notice an erosion of safety on the Union Pacific property?

MR. CASTIGLIONE: No, sir, I did not.

MR. JAMES P. DUNN: Okay. And I believe you indicated that you participated in the safety assurance assessments that were conducted by the FRA on Union Pacific in the Summer of '97 and in the Fall of '97, I believe began in November?

MR. CASTIGLIONE: Yes, I did.

MR. JAMES P. DUNN: Okay. And then again in response to Mr. Lauby, you said that you have a method for keeping your finger on the pulse of safety, that you are intimate with the properties you inspect. You know what's going on, and you know where the problems are, is that correct?

MR. CASTIGLIONE: I feel that's an accurate statement.

MR. JAMES P. DUNN: Okay. And you do inspect the Union Pacific in Texas?

MR. CASTIGLIONE: Yes, sir, I do.

MR. JAMES P. DUNN: Okay. In this period of time, October '96 to October '97, do you believe there was a fundamental breakdown in some of the basic railroad operating procedures and practices on the Union Pacific Railroad?

MR. CASTIGLIONE: In hindsight, I would agree with that statement.

MR. JAMES P. DUNN: Okay. You believe that now, but -- but you didn't see an erosion of safety at the time?

MR. CASTIGLIONE: In hindsight, I believe that's an accurate statement. That's correct.

MR. JAMES P. DUNN: Okay. In this period of time again, October to October, '96 to '97, do you believe UP had a uniform safety culture?

MR. CASTIGLIONE: At my level, I believe that it was uniform. Yes, sir.

MR. JAMES P. DUNN: Okay. Once again in this same time frame, do you believe the safety policies of the Union Pacific were effectively implemented in the field by first-line supervisors?

MR. CASTIGLIONE: Yes, sir.

MR. JAMES P. DUNN: Okay. Couple questions on guidance you received in this time from your supervisors. I'm going back to the period of October '96 to October '97.

MR. CASTIGLIONE: Hm-hmm.

MR. JAMES P. DUNN: Could you expand on that a little bit?

MR. CASTIGLIONE: Other than what I said earlier, Mr. Dunn, it was a statement to spend -- to increase your inspections and presence on Union Pacific properties.

MR. JAMES P. DUNN: Okay. And did you do that?

MR. CASTIGLIONE: Yes, sir, I did.

MR. JAMES P. DUNN: Okay. Did you investigate the Navasota accident?

MR. CASTIGLIONE: No, sir, I did not.

MR. JAMES P. DUNN: Are you familiar with air tests on the Union Pacific property in Texas?

MR. CASTIGLIONE: In general. I'm more familiar with the sites that I inspect. I have a general knowledge of some of the other points.

MR. JAMES P. DUNN: Okay. Did -- during your inspections in this 12-or-13-month period, was there any occasion where you took exception to air tests on the Union Pacific, initial terminal air brake tests?

MR. CASTIGLIONE: I believe I took issue with one initial terminal brake test, and that was at Settigus Yard in Houston.

MR. JAMES P. DUNN: Okay. Was there a violation or a memorandum prepared as a result of that?

MR. CASTIGLIONE: I noted a deficiency, and I believe I indicated that I handled it for correction with the individual and his supervisor.

MR. JAMES P. DUNN: Do you recall what that deficiency was in that initial terminal air brake test?

MR. CASTIGLIONE: As I recall, the -- it was the -- it was a piston travel that was in excess of the required limits. One car.

MR. JAMES P. DUNN: Okay. Were you present for yesterday's proceedings?

MR. CASTIGLIONE: Part of it.

MR. JAMES P. DUNN: Okay. Do you -- were you present when we talked about the three-minute or 10-minute air test --

MR. CASTIGLIONE: No, sir, I was not.

MR. JAMES P. DUNN: Okay. That's all the questions I have at this time.

CHAIRMAN GOGLIA: Okay. Technical Panel, any follow-up?

MR. JAMES S. DUNN: Yes, sir. I'm going to try a few more.

MR. CASTIGLIONE: Okay.

MR. JAMES S. DUNN: When you do these inspections, either in the -- in the SACPs or when you do alone, how are the hours? Do they vary or is it mostly all daylight?

MR. CASTIGLIONE: No, sir. It -- the -- both the -- both blitzes that I was involved with and SACP were 24-hour efforts, two-man, sometimes three-man, teams, 24-hours around the clock.

MR. JAMES S. DUNN: And your hours would vary, too, then?

MR. CASTIGLIONE: Well, I was assigned to a night shift work, I think, at Little Rock, and in Fort Worth as well.

MR. JAMES S. DUNN: How about when you're not on the SACPs, and you yourself are -- you know, you go out on your own inspections?

MR. CASTIGLIONE: Yes, sir. I change my hours frequently.

MR. JAMES S. DUNN: Okay.

MR. CASTIGLIONE: I also work weekends.

MR. JAMES S. DUNN: Very good. Besides UP, what's the other Class 1 railroad that you -- you have -- you're in charge of or --

MR. CASTIGLIONE: BN Santa Fe.

MR. JAMES S. DUNN: BN Santa Fe?

MR. CASTIGLIONE: Hm-hmm.

MR. JAMES S. DUNN: Is there a comparison -- can you compare their equipment problems?

MR. CASTIGLIONE: No, sir, I cannot.

MR. JAMES S. DUNN: Do the two -- does one have higher than the other?

MR. CASTIGLIONE: I don't know. I would say they're about the same. I think the inspection data will -- will show that locomotives and as well as cars, I would say that the compliance and defect ratios are rather -- probably pretty close.

MR. JAMES S. DUNN: Okay.

MR. CASTIGLIONE: Speculating.

MR. JAMES S. DUNN: Did you also do inspections before the merger on the SP and the UP?

MR. CASTIGLIONE: Sure.

MR. JAMES S. DUNN: Was there a comparison there that -- that you could give me?

MR. CASTIGLIONE: No, sir, there's not. I would say I didn't see any trends one way or the other. Southern Pacific, UP, Missouri Pacific, Okadee Railroad, they're all about the same.

MR. JAMES S. DUNN: Were you able to inspect the SP maybe a year before the merger?

MR. CASTIGLIONE: I inspected the SP at one site in the Houston area. Englewood Yard is not my inspection point. So, I didn't typically go to Englewood Yard, and it still isn't my inspection point.

MR. JAMES S. DUNN: Okay. What I was getting at was the relationship and the power or the locomotives between those two railroads. Did one appear to be better than the other?

MR. CASTIGLIONE: Well, I think some would characterize the UP's power to be better than the SP simply because the UP had a paint program or they were painting locomotives where SP wasn't. I would say they were relatively the same, even though they didn't appear to look in the same condition.

MR. JAMES S. DUNN: As far as running, operating?

MR. CASTIGLIONE: Yes, that's correct.

MR. JAMES S. DUNN: Thanks. I have no further questions.

CHAIRMAN GOGLIA: Thank you. Texas Railroad Commission?

MR. MARTIN: No, sir.

CHAIRMAN GOGLIA: Union Pacific?

MR. LARRY DAVIS: No questions, Mr. Chairman.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes, I have a couple more questions. Prior to an on-site inspection, do you notify the carrier that you are going to do an inspection?

MR. CASTIGLIONE: Almost never.

MR. WALPERT: Okay. And when you are performing an inspection, are you accompanied by either someone from the carrier or from labor?

MR. CASTIGLIONE: Both almost always.

MR. WALPERT: Okay. We have heard reports that there will be up to 300 additional locomotives in the fleet in Texas. Are there any plans to -- or let me ask it this way. What are your plans to inspect those additional locomotives?

MR. CASTIGLIONE: I would imagine I would include those in my normal inspection efforts. Whatever the region or headquarters has planned, I'm sure they'll let me know at the appropriate time.

MR. WALPERT: Okay. Thank you.

MR. CASTIGLIONE: You're welcome.

CHAIRMAN GOGLIA: UTU? Anybody at the head table? FRA? Yeah, FRA. I wrote a note, and I didn't follow my own note.

MR. GAVALLA: Mr. Castiglione, do you perform your inspections primarily or solely within your inspection territory?

MR. CASTIGLIONE: For the most part.

MR. GAVALLA: So, would you be familiar with the conditions of the UP locomotive fleet throughout Texas, outside of your inspection territory?

MR. CASTIGLIONE: No, not really.

MR. GAVALLA: Are you aware of whether any of the accidents that occurred within your inspection territory were related to mechanical failure?

MR. CASTIGLIONE: Not specifically. I've -- I have information that one within my territory was attributed to a mechanically-related cause, but there's still critical evidence that we haven't received to be able to adequately determine if in fact that was the cause.

MR. GAVALLA: So, you testified initially as to the priorities of your duties, and you started with accident investigations. During an accident investigation, would you fill out inspection reports?

MR. CASTIGLIONE: Sometimes I would. I -- I would inspect equipment. Post-accident inspection is -- is typical. If I -- if I feel that an inspection is warranted, I'll make out -- inspect the equipment and

-- and make out an inspection report. Yes, sir.

MR. GAVALLA: And would you find defects and tape violations?

MR. CASTIGLIONE: I could, depending on the circumstances.

MR. GAVALLA: And if you did so, would you submit that into the database that you referred to?

MR. CASTIGLIONE: Yes, sir. It all feeds into the same place.

MR. GAVALLA: You also mentioned complaint investigations. Would you also fill out inspection reports in regard to complaint investigations?

MR. CASTIGLIONE: Almost always.

MR. GAVALLA: Likewise, would that information include defects and violations?

MR. CASTIGLIONE: Yes, it would.

MR. GAVALLA: And would that feed into the national database?

MR. CASTIGLIONE: Yes, sir.

MR. GAVALLA: You also mentioned that you do special investigations. For example, waivers and other activities. Also, would you fill out an inspection report for that?

MR. CASTIGLIONE: Yes, sir.

MR. GAVALLA: Would you take violations and defects?

MR. CASTIGLIONE: Typically wouldn't take violations. Might take defects, but, yes, it would all feed into the same location.

MR. GAVALLA: Okay. So, your immediate supervisor, would that be the motive power and equipment specialist?

MR. CASTIGLIONE: Yes, sir.

MR. GAVALLA: Is there one in each FRA region?

MR. CASTIGLIONE: To my knowledge, yes, sir.

MR. GAVALLA: Do you know if they meet periodically, all the specialists get together for a specialist meeting several times a year?

MR. CASTIGLIONE: I think they meet quarterly, and they also have conference calls every first Monday of the year -- of the month.

MR. GAVALLA: Are you aware if they are provided with databases, inspection data, defect data, accident data relative to the railroads under their jurisdiction?

MR. CASTIGLIONE: I'm sure they are. When I was a specialist, that information was part of the -- part of the agenda, and I also would add that the minutes of -- of the conference call is -- is forwarded to each inspector at least in Region 5.

MR. GAVALLA: No further questions.

CHAIRMAN GOGLIA: Ms. Beal?

MS. BEAL: Prior to this time and in hindsight, you missed some of the indicators that UP may be having some problems prior to these accidents.

What would you look for differently now having had this experience as indicators?

MR. CASTIGLIONE: Well, I think I need to be more involved with -- with direct conversation and communication with railroad employees, both in training engine service and in mechanical, exchange more information, be -- make myself more available.

I have already made that attempt to make myself more available in the past. On my business cards, I have my personal pager number and my e-mail address where they can contact me directly on a daily basis 24 hours a day, and I intend to expound on that or enhance that.

MS. BEAL: So, you've actually implemented those changes?

MR. CASTIGLIONE: Yes. Yes, ma'am.

MS. BEAL: Do you know if that information in your experience has been shared with the people of your level in the other regions that are overseeing carriers that are undergoing mergers and a lot of rapid growth?

MR. CASTIGLIONE: I couldn't speak to that.

MS. BEAL: Thank you.

MR. CASTIGLIONE: Okay.

CHAIRMAN GOGLIA: Mr. Ellingstad?

MR. ELLINGSTAD: Just one follow-up. It was pointed out that one of your duties -- and I guess we didn't identify your involvement with accident investigations so much. How many accidents -- accident investigations did you do in 1997, and how much of your time did you spend doing them?

MR. CASTIGLIONE: I did one accident, and it consumed -- happened at West Junction, October 25th, 1997, and it essentially consumed most of my time for the remainder of the year till I went on annual leave.

MR. ELLINGSTAD: Okay. Thank you.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: No questions.

CHAIRMAN GOGLIA: Mr. Dunn?

MR. JAMES P. DUNN: Yes, just a couple follow-up. Mr. Castiglione, have you read the safety assurance assessment put out by the FRA in February?

MR. CASTIGLIONE: Yes, sir, I have.

MR. JAMES P. DUNN: Okay. Have your duties and responsibilities changed at any time since October of '96?

MR. CASTIGLIONE: Other than -- other than trying to make my presence more available on the UP, I guess, yes, they have.

MR. JAMES P. DUNN: But that is in -- you indicated that having not seen the indicators, you believe that it might be a good idea to make yourself more available. As I understood it, that was a personal choice, is that correct?

MR. CASTIGLIONE: It's -- yes, sir, I believe that's fair to say.

MR. JAMES P. DUNN: Okay. Has there been any change in your duties and responsibilities from the agency? I'm talking officially now.

MR. CASTIGLIONE: Well, I know there are official policy or we have -- one of the tools that we try to encourage compliance is SACP. Again, I say my involvement with SACP has been somewhat limited.

MR. JAMES P. DUNN: Okay. But have your duties and responsibilities changed officially at any time since October '96?

MR. CASTIGLIONE: No, I can't say that they've changed officially.

MR. JAMES P. DUNN: Okay.

MR. CASTIGLIONE: I'm doing more than I have in the past when I first hired out. Again, I do steam inspections which takes up some of my time. I'm devoted to that a great deal.

MR. JAMES P. DUNN: And you do that outside the state of Texas? I think you talked about going to Arkansas and Louisiana.

MR. CASTIGLIONE: That's correct.

MR. JAMES P. DUNN: Okay. And I have to apologize. Somebody has told me up here that I neglected to ask you to spell your name for the record, and I apologize for that. If you'll do that?

MR. CASTIGLIONE: Certainly.

C-A-S-T-I-G-L-I-O-N-E.

MR. JAMES P. DUNN: Okay. That's all the questions I have.

CHAIRMAN GOGLIA: Mr. Castiglione, you are released. Thank you very much.

MR. CASTIGLIONE: Thank you, Mr. Chairman.

(Whereupon, the witness was excused.)

CHAIRMAN GOGLIA: Mr. Dunn, would you call the next witness, please?

MR. JAMES P. DUNN: The National Transportation Safety Board calls David H. Green and Cindy Gross.

Mr. Green, would you raise your right hand, please?

Whereupon,

DAVID H. GREEN

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

MR. JAMES P. DUNN: Thank you. Ms. Gross, would you raise your right hand, please?

Whereupon,

CINDY GROSS

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 DAVID H. GREEN
OPERATING PRACTICES SPECIALIST
FEDERAL RAILROAD ADMINISTRATION, AND
TESTIMONY OF CINDY GROSS
OPERATING PRACTICES SPECIALIST
FEDERAL RAILROAD ADMINISTRATION

MR. SULLIVAN: Good morning.

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

MR. GREEN: My name is David H. Green, and my last name is spelled G-R-E-E-N.

MR. JAMES P. DUNN: And what is your present position with the Federal Railroad Administration?

MR. GREEN: I'm a Railroad Operating Practices Specialist for FRA's Region 5. I'm headquartered in Hearst, Texas.

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

MR. GREEN: About six years.

MR. JAMES P. DUNN: And could you briefly tell us what other positions you have held in the railroad industry?

MR. GREEN: I started in the industry with Southern Pacific Railroad as a switchman, and I've worked as a switchman, brake man, conductor, locomotive engineer. I've been an operating officer, railroad rules examiner, train master, and terminal superintendent, all with Southern Pacific.

MR. JAMES P. DUNN: What general location did you work in the -- with the Southern Pacific?

MR. GREEN: I worked in Tucson, Phoenix, Houston, Luffkin, Texas, and San Antonio, Texas.

MR. JAMES P. DUNN: And what were your -- what positions did you hold in Houston?

MR. GREEN: In Houston, I was a division train master, and later a rules examiner.

MR. JAMES P. DUNN: Okay. Ms. Green, what is your present position with the Federal Railroad Administration?

MS. GROSS: I like being with him, but it's Gross.

MR. JAMES P. DUNN: Oh, I apologize, Ms. Gross.

MS. GROSS: We're close, but we're not that close. I'm sorry. Could you repeat the question you just asked me?

MR. JAMES P. DUNN: What is your present position with the Federal Railroad Administration?

MS. GROSS: I'm the Operating Practices Inspector at Omaha, Nebraska.

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

MS. GROSS: I've been with the FRA since approximately the last of June of this past year or July of this past year.

MR. JAMES P. DUNN: And what other positions have you held in the railroad industry?

MS. GROSS: In the railroad industry?

MR. JAMES P. DUNN: Yes, ma'am.

MS. GROSS: Prior to coming to the FRA, I spent 19 years on the Southern Pacific Railroad, and I spent three years in light rail and mass transit.

MR. JAMES P. DUNN: Okay. Could you tell us what you did with the Southern Pacific?

MS. GROSS: Yes, sir. I began my career as a crew caller and a train order operator, yard office-type extra work clerk, went to traffic department and worked as a recompilation clerk for a period of time, went back to the mechanical department and the yard, worked as a chief mechanical clerk at the locomotive shop and the car shop.

In 1984, I was promoted yard office supervisor in Los Angeles, California, and became an assistant train master on the Coast District for the Los Angeles Division, then became the regional agent for the Southern Pacific in Los Angeles, went back to the Midwest as a train master, then as a safety officer for the Midwest Region, and then a safety officer for the Eastern Region when I resigned in 1994.

MR. JAMES P. DUNN: Okay. And I believe I have not asked you to state your full name and spell your last name. Could you do that, please, for the record?

MS. GROSS: Surely. My name is Cynthia Sue Gross, G-R-O-S-S.

MR. JAMES P. DUNN: Thank you. We will start the questioning with the Technical Panel, Mr. Patrick Sullivan.

MR. SULLIVAN: Good morning. Mr. Green, we just heard what the duties and responsibilities are of an inspector. I was wondering if you could tell us what the duties and responsibilities are of an operating practices specialist?

MR. GREEN: Well, my responsibility is to ensure uniform implementation of FRA's policies and practices for conducting accident investigations, complaint waiver investigations and special investigations and inspections and regular and site-specific inspections for both the federal operating practices inspectors and for the state participation program operating practices inspectors.

I provide technical and interpretative guidance for the railroad industry, for labor and management, for the general public, to the regional administrator and his staff, and to the operating practices inspectors.

MR. SULLIVAN: Okay. So, you basically oversee all the duties and responsibilities of an inspector to see that they perform the duties uniformly?

MR. GREEN: That's correct.

MR. SULLIVAN: Okay. Do you make regular inspections yourself?

MR. GREEN: Occasionally. Not regularly. It's not one of my regularly-assigned activities.

MR. SULLIVAN: Okay. Ms. Gross, what would you say the percentage of your time is spent on site inspections?

MS. GROSS: A good deal of my time. My primary responsibility is to the Union Pacific Headquarters and to the Harriman Dispatch Center and the Council Bluffs Service Unit, basically.

MR. SULLIVAN: So, you don't perform site-specific inspections?

MS. GROSS: Yes, sir, I do. Quite frequently, all the time. I have -- I'm there so often, I have a vendor badge. I don't even sign in anymore.

MR. SULLIVAN: Approximately what percentage of your time is spent doing that?

MS. GROSS: A very large percentage of my time.

MR. SULLIVAN: And, Ms. Gross, could you tell us what drives the amount of time you spend on regular inspections?

MS. GROSS: I submit every week a work schedule to my specialist. The activities that are going on in my region would sometimes dictate or always dictates my activities, and I'm overseen by my specialist.

MR. SULLIVAN: And I asked Mr. Castiglione if there's any program that determines the amount of time he spends, and he talked about some type of asset -- an annual asset model -- annual asset allocation model.

I was wondering, can you describe that?

MS. GROSS: I -- I really couldn't. I'm too new at the agency, and it's sort of above -- it's -- that's -- I leave those things to my specialist and my superiors.

MR. SULLIVAN: Mr. Green, could you answer that question?

MR. GREEN: I believe I can. The annual allocation analysis model is the program that Robbie referred to, and it replaces our old national inspection planner. It's the current evolution of the national inspection planner.

The model is used to develop historical data and direct -- not direct but to give us guidance on the distribution of our human resources and the allocation of our inspection time to the railroads within the region.

MR. SULLIVAN: Okay. Ms. Gross, were you involved in the SACP process?

MS. GROSS: Yes, sir.

MR. SULLIVAN: And what did you -- what did

-- what type of inspections or functions did you have in that process?

MS. GROSS: I took place in both the assessment done in August and early September and then again in November, and my activities would include the Harriman Dispatch Center, with two different teams at the Harriman Dispatch Center in August and September, and in November securement inspections, train rides, listening post as well as handling e-mails and phone calls for the project manager.

MR. SULLIVAN: Mr. Green, did you participate in that SACP process?

MR. GREEN: Yes, I have.

MR. SULLIVAN: And what was your functions?

MR. GREEN: I was an operating practices team leader in both of the -- or in the development of information about the Union Pacific Railroad, worked with the field inspectors in conducting listening post -- listening post sessions with railroad labor and management and in conducting field inspections.

MR. SULLIVAN: Could you tell me what the findings were of the team, the operating practices team?

MR. GREEN: We found problems with timely relief train crews at the end of tour of duty because of congestion problems and because of the shortage of transportation, carry-all transportation.

We had identified problems in radio communication. We found some problems with -- or anecdotal reports of harassment, intimidation of employees, in relationship to reporting employee injuries, and in relationship to the railroad's efforts to get traffic moving, where they would ask employees or -- or influence the employees to work faster.

We found some problems with crew management systems and the line-ups for crews that they used to plan their rest that impacted cumulative fatigue on the railroad.

MR. SULLIVAN: And my last question in this area. Does the SACP process replace on-site inspections?

MR. GREEN: Is that directed to me, Mr. Sullivan?

MR. SULLIVAN: Yeah. Mr. Green.

MR. GREEN: No, it does not. It enhances our field inspection activities, and it gives us the ability to make contacts that we traditionally didn't use, and that's by communicating with rail labor and rail management to identify areas that they are concerned about in rail safety that are not traditionally regulated by the agency.

MR. SULLIVAN: Okay. How many operating practices are there in your region?

MR. GREEN: How many operating practices inspectors?

MR. SULLIVAN: Yes.

MR. GREEN: There are currently 10 operating practices inspectors positions in Region 5. There are five positions with the Railroad Commission of Texas, and one in the state of New Mexico. Two of the employees at the Railroad Commission of Texas are currently in training, and the New Mexico state inspector is in training.

MR. SULLIVAN: Do you know how many operating practices inspections were conducted on the Union Pacific in '96 and '97 for all the inspectors combined?

MR. GREEN: For Region 5, there were 2,732 inspection reports filed.

MR. SULLIVAN: I'm sorry. I didn't hear your answer.

MR. GREEN: I said within Region 5, there were 2,732 operating practices inspections.

MR. SULLIVAN: Was that for '96 or '97?

MR. GREEN: I didn't break the numbers out by year. I think I can give it to you, though. For 1996, we had 1,290 within Region 5, and in 1997, we had 1,442.

MR. SULLIVAN: Okay. At the beginning of our conversation, you said that you monitor inspectors' activities, and I was wondering, how do you monitor the activity?

MR. GREEN: Through their AWS or their alternative work scheduling plans that they provide to me, and also through their inspection reports and then the -- the analysis of the -- what our computer database reports on their inspection activity.

MR. SULLIVAN: And what do you look for when you're monitoring their inspection activity?

MR. GREEN: Essentially I look for broad coverage, full coverage of the inspection territories, the amount of time that they -- the amount of their efforts that are dedicated to inspections and other activities.

MR. SULLIVAN: Do you know how many operating practices violations were written on the Union Pacific during '96 and '97?

MR. GREEN: There were 15 completed actions recorded in the Office of Chief Counsel. Some of those actions were multi-count actions, and we have some that have been initiated by inspectors but not worked through to completion.

MR. SULLIVAN: And is that 15 the total for '96 and '97?

MR. GREEN: Yes, sir.

MR. SULLIVAN: Do you have that broken down by the two years?

MR. GREEN: No, I don't.

MR. SULLIVAN: Okay. Did you notice an increase in operating practices defects of Union Pacific during '96 and '97?

MR. GREEN: There was a substantial increase in defects during 1997. A good part of that increase occurred during the latter months of '97.

MR. SULLIVAN: Was that due to those blitzes that you had?

MR. GREEN: In part, and to our increased activities prior to the blitzes, in between the blitzes and after them. So, we have increased activity on UP, and then as a result, we saw an increase in defects.

MR. SULLIVAN: Thank you.

MR. PAYAN: Good morning. You say you participated in the two safety blitzes?

MR. GREEN: Yes, I did.

MR. PAYAN: What role did you play in those two blitzes?

MR. GREEN: I was a team leader in the -- for the operating practices inspectors for both of the blitzes, organized their activities and gathered their data, the information that they gathered, assimilated that into a report that I passed through our region to the FRA's headquarters and to the overall project coordinator for the UP SACP effort.

MR. PAYAN: And were you in the state of Texas or for the whole safety blitz?

MR. GREEN: I was -- worked in Texas, gathered reports during the safety blitz, the second one in November, from all the OP activities across the railroad. In the first one, I gathered only the Southwestern Region.

MR. PAYAN: What were your findings on the two safety blitzes that were conducted?

MR. GREEN: Much the same as our listening post activities. We had some concerns particularly with the managers who had been relocated to the Houston area to operate as train crews. We found some problems in their hours-of-service recordkeeping. We found some problems with drug and alcohol pre-employment testing for those managers who had not performed recovered service prior to that relocation, and we found some defects in their -- in their standards for locomotive engineer certification.

MR. PAYAN: Okay. Can you describe what criteria was used to determine that the two safety blitzes were required?

MR. GREEN: Well, it was clearly in response to the -- the accidents, the accident trends that occurred in early Summer of '97, and in the second round, we were going back to look at the progress that had been made to take the temperature of the railroad to see where we stood and what we needed to do next.

MR. PAYAN: Were the findings from the two safety blitzes, were they incorporated into the SACP or were they handled separately?

MR. GREEN: They were incorporated into our SACP efforts, yes, and then there would have been some cases where we had some independent enforcement action that grew out of it, that by and large went into the SACP effort.

MR. PAYAN: You mentioned you noticed an increase in the defects in '97. Did you communicate any concern about safety to anyone?

MR. GREEN: Well, we had constant communication within the agency on -- on our findings, and we -- we did, of course, talk about our findings during the safety activities that we carried on, starting before the first blitz.

Prior to our activities in '97, I don't know that we had any outstanding issues that we were taking exception to, but, of course, all of our findings were communicated throughout the FRA.

MR. PAYAN: Did this increase -- did you notice it was an indicator that the safety was eroding on the Union Pacific?

MR. GREEN: I didn't note that. No, I didn't.

MR. PAYAN: Were you provided any guidance from October '96 to October '97 that modified your operating practice inspection activity on the Union Pacific?

MR. GREEN: Could you give me the time frame again, please?

MR. PAYAN: October '96 to October '97.

MR. GREEN: Not that would change how we did our inspection activity, no.

MR. PAYAN: So, you didn't -- you -- did you provide any guidance to your inspectors?

MR. GREEN: We were -- we elected, I guess, throughout FRA and throughout the Western United States to increase our activities, and our regional administrator did communicate to us that we needed to increase our emphasis on the Union Pacific, and -- and I guess that would be the kind of guidance you were looking for, but it didn't change how we do our inspections or how we approached them, other than to be sure that we included our contacts with labor and with management through our listening post sessions and activities.

MR. PAYAN: And this guidance came from your regional administrator?

MR. GREEN: That's how I got it, yes.

MR. PAYAN: Okay. How do you incorporate the Texas Railroad Commission's factors into your inspection activity?

MR. GREEN: The Railroad Commission inspectors -- excuse me. The Railroad Commission inspectors are -- are co-equal with the federal inspectors, and they're well-qualified, well-trained individuals. I work closely with the Railroad Commission's managers and their -- my counterpart in the Commission, their lead inspector for the OP section to provide them the same kind of guidance, technical interpretations that I provide to the FRA inspectors.

I've utilized Railroad Commission inspectors to provide training for new FRA inspectors, and, of course, we do the same for them.

MR. PAYAN: Do you review their inspection reports?

MR. GREEN: Yes, I do.

MR. PAYAN: That's all I have.

MR. JAMES S. DUNN: Mr. Green, do you set up the work schedules for the inspectors?

MR. GREEN: No, I don't. The inspectors generally plan their own activities, other than team inspections or -- or some other special project. Their routine activities or team- or site-specific inspections are presented in their AWS scheduling in the two-week increment. I overview that, review it, and talk to the inspector if I see that they're planning something that I think they should be doing differently or if I have some other activity that I'd like them to be involved with, like a complaint investigation, or some special project. But I don't specifically plan their daily activities, other than special project assignments or complaint or accident investigation assignments.

MR. JAMES S. DUNN: But you do review to see that they're going out at different shifts?

MR. GREEN: Yes, I do.

MR. JAMES S. DUNN: Okay.

MR. GREEN: And that the types of inspections they're planning, if they're planning to do records inspections as opposed to train-riding inspections.

MR. JAMES S. DUNN: Okay. And you stated that during the audit or the assessment is when you found out that crews weren't being relieved on time, is that true?

MR. GREEN: That's not exactly true. We -- we confirmed that it was still a problem during the special assessments. We had identified that through our listening post activities, through complaint work that we -- complaints we'd received from the labor organizations prior to a special investigation.

MR. JAMES S. DUNN: Okay. That was my question because I was wondering if labor --

MR. GREEN: It was not a surprise to us when we hit the ground during the special assessments, no.

MR. JAMES S. DUNN: Well, what -- what were you doing with these complaints prior to the assessment, I mean as they were coming in?

MR. GREEN: That was an issue that's a non-traditional problem for the railroad, from our enforcement standpoint. The timely relief of crews, while it's a problem, is not statutorily prohibited.

We did talk to the railroad, and I believe it was communicated at the railroad's headquarters, but I -- I wasn't there. I didn't participate in that, but we handled it as best we could locally.

MR. JAMES S. DUNN: Okay. How many Class 1 railroads are you responsible for?

MR. GREEN: Within Region 5, there are -- presently, there's five Class 1 railroads and about 90 smaller railroads and short-line operations.

MR. JAMES S. DUNN: Can you give me a comparison between the five as far as rating them or are they all about the same as far as your inspection failures?

MR. GREEN: They're roughly the same. The non-compliance issues are -- are very similar between the different properties, generally speaking.

MR. JAMES S. DUNN: That's -- that's all the questions I have.

CHAIRMAN GOGLIA: We will go to the parties. UTU?

MR. BOYD: Mr. Green, in your duties and review capabilities, do you look at the safety appliances? I'm speaking specifically of lights.

MR. GREEN: Lights?

MR. BOYD: Lights as in headlights or ditch lights, things like that.

MR. GREEN: That regulation is under the Motive Power and Equipment discipline, although our inspectors have been familiarized with the requirements for locomotive head lamps, and they'll look at that as a part of the train-riding inspection along with other features.

MR. BOYD: Have you done any studies as to which type of lighting is -- is safer from an operating standpoint from one train being able to identify another train at a farther distance, let's say?

MR. GREEN: I don't believe that there's been any study that -- let me rephrase that. I have not participated in any study of that feature.

MR. BOYD: Ms. Gross, do you know of any?

MS. GROSS: No, sir, I do not.

MR. BOYD: Do you have any practical experience or knowledge that would -- would -- you would tend to characterize one lighting system being better than another? And the point I'm getting at, would ditch lights versus oscillating lights or oscillating lights and ditch lights, in addition to headlights, be a safer way of providing lighting on locomotives?

MR. GREEN: Oscillating lights were a feature that was -- was only used on railroad locomotives, to the best of my knowledge. Oscillating lights would clearly identify a railroad locomotive to another railroader from a distance.

To say that they were better would be difficult for me, except for in the scenario where you were trying to identify the source of light from a distance, and an oscillating light would clearly do that.

Oscillating lights at the same time presented their own problems because as they oscillated, if you were running parallel to a roadway, you blinded traffic going in the opposite direction.

We created some safety hazards for the public through that, you know, that feature of an oscillating light. Oscillating lights were also difficult and expensive to maintain as is any moving equipment as opposed to something that stays fixed.

So, there are -- are clear advantages in my mind and my opinion. There are some clear disadvantages as well.

MR. BOYD: That's all the questions I have.

MR. GREEN: Thank you.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes. Ms. Gross, did -- during the safety assurance review on the UP, did you do any inspections of the Harriman Dispatching Center?

MS. GROSS: Yes, sir.

MR. WALPERT: What results, what findings did you have after you did the inspection?

MS. GROSS: The first -- the first group I was with at the end of August, we were doing a check for compliance with 97-1, which they were in compliance with 97-1 on our inspections.

We looked at corridor manager qualifications and their training as dispatchers and found that some of the corridor managers were not qualified dispatchers and were supervising dispatchers.

We found that 83 percent of the errors that had been committed by rules infractions by the dispatchers were on just a few positions, and generally they were dispatchers with five years or less seniority. It indicated that we needed to come back and quickly do a workload study, which we did.

The next group that I took part was the second -- about the first-second week of September, and we identified that there was excessive workload on quite a few of the UP dispatcher desks.

MR. WALPERT: Are you aware of any changes have been made as a result of your findings?

MS. GROSS: Yes, sir. They've made quite a few changes at the Harriman. They've responded to quite a few of our recommendations. They have decreased the workload on 11 dispatcher positions. They've established a train verification desk and train line-up territory. They've developed a new training program, an extended training program for the dispatchers that includes trips under their territory which we suggested.

They've also come up with a new training program for the corridor managers, so that they will become qualified dispatchers had they not been dispatchers.

We requested that they provide a method for us to be able to monitor dispatcher communications, and they did that down in the CAD room. We can go down in the CAD room now, and we can listen to dispatchers' live transmissions with the crews without them knowing they're being observed.

MR. WALPERT: Were there any discrepancies that you noted during your inspections that they have not been addressed to date?

MS. GROSS: Well, it's -- the Harriman Dispatch Group, there were a lot of places that we wanted to go, and we formed a working group for the Harriman Dispatch Center, and that's a work in -- you know, it's an on-going project.

As -- as they look at the workload study, they've developed a workload model now to use. There's just a whole lot of projects going on at the Harriman that the working group has become involved in. So, it's -- it's an evolving process to improve. It's not where we can say we stopped and start.

MR. WALPERT: All right. Mr. Green, you indicated that during the safety assurance review, you were informed of problems with timely relief of train crews.

Can you give us some anecdotal examples of the failure to timely relieve crews?

MR. GREEN: Yes, I can, and this information came to us largely in our listening post sessions with railroad employees.

I think one example that jumps to mind immediately is a crew that reported that they were in -- in dog-catch service, relieving trains that had died on the law, had expired under hours of service, and they had moved five trains during their tour of duty, and every time they finished one move, it was time to move to the next train, there was a carry-all waiting for them, and at the end of their hours of service when they died on the law, the carry-all was gone, and they waited about five hours for a carry-all to pick them up, transport them to the terminal.

There have been some pretty egregious abuses in that area reported to us, some we confirmed, some we were unable to, where a crew finally was able to get a ride after sitting in a siding for eight and nine hours, and when they were -- when they pressed for a reason why they stayed there that long, it was -- there just simply wasn't a carry-all available. The railroad was using its carry-all assets, the contractors, to transport crews who had time to work to other trains before they had enough assets available to pick up the crews that were dead on the law.

MR. WALPERT: And did I understand you to say that you have no enforcement power to correct some of these problems because this in and of itself is not a violation of any federal regulation?

MR. GREEN: It's not a violation of the federal statute governing hours of service. The time spent waiting for -- for dead-head transportation as interpreted by the courts, by the U.S. Supreme Court as a matter of fact, is the same as time being in dead-head transportation, which is neither time on duty nor off duty.

MR. WALPERT: Okay. Do you know that if -- if any efforts have been made to improve the relief of crews timely?

MR. GREEN: Substantial efforts have been made to -- by the railroad to improve that timely relief. It hasn't been fully effective everywhere on the railroad. I can attest in our region that they're still having substantial problems in and around Hearn in Central Texas and in some of the other locations, but I believe that the railroad is making a concerted effort to get better control of that.

Perhaps Ms. Gross would like to respond as well.

MS. GROSS: I would. We recognized early on in the SACP process as all the partners discussed the problems on the UP railroad that this was a very high- priority situation related to fatigue as well as to hours of service, and we formed a crew utilization committee or hours-of-service committee as an offshoot, which sprang out of some of the Harriman HDC working groups.

Originally when the HDC group started, and we started to recognize fatigue and this on-going problem with establishing responsibilities and accountability for the relief of crews, we thought it could be solved in a 30-day project. Oh, well, we didn't get it done.

So, it off-shooted into a full-grown working group. Now we selected one of the Northern regions because it had been unaffected by any merger activity or seniority hub agreements, and what we -- we have done is we identified quickly, along with the UP and partnership and the organizations, BLE, UTU, and the TCU, and we quickly identified lines of accountability for different people involved in crew relief process because, you know, to dog-catch a crew involves different people with accountabilities as it does when you initiate a crew going on duty.

So, we established that, and as we got into the project, we began to notice that coordination in the field became somewhat of a problem, and, so, the Union Pacific committed to establishing 89 positions called managers of asset utilization, and they're put in command centers across the country, major terminals, hubs if you will, that, along with a dispatcher from the limo vendor companies.

They are to work in coordination with each other to help get the crews not only out of the terminal but back into the terminal. It -- we -- we changed the philosophy. It's a way of thinking. In traditional terms, whenever you relieved a crew, you waited till the relief crew was there to send the carry-all out to go get the other crew, and then you brought him back.

So, we don't -- we don't let them do that anymore. We double the hill now. If we don't have a relief crew, the limo people and the manager of asset utilizations know they're under running orders to go out and get that crew, get them off the train, try to get them in as quickly as possible, and then take the relief crew out to the train.

We've asked the vendor to leave on their radios all the time to help monitor activities, so that they can be utilized fully. We've provided maps with more readily-accessible sidings to the dispatchers as well as to the taxicab drivers so that they know where they're going and no longer get lost.

As a result of some of these activities, after two months of data-gathering and the third month just to be sure because we had Christmas thrown in there, we saw a 22-percent reduction in re-crews in that area.

So, we knew we were on to something. We've continued to refine it, and I'm happy to state here that as of Monday, this past week, we've started the process down in Texas.

Simeron, who is the primary limo vendor for the Houston area, has even committed a dispatcher -- limo dispatcher to the Woodman Building and also one for the Houston Terminal, so that we can make sure we get that relief out there.

The Union Pacific has assured us that by June of this year, they will have a software package developed that will monitor the limo vendor's performance, i.e. the utilization of their vans. Do they have enough vans? If they don't have enough vans, then you don't wait until you have one available. You get a commercial carrier to relieve that crew like you committed to when you signed the agreement to do business with them.

They will monitor the expenditure for the UP so it's a win-win. We'll be able to monitor the hours that the drivers of the vans are on duty and how they're utilized. We'll be able to tell in real time where those taxicabs are and how effectively they're being used, and then we'll be able to measure everyone's performance and the response that they give. How quickly did the dispatcher respond to that train hogging on line? How quickly did the corridor manager call crew management to get that crew on duty?

So, it's -- there's a lot going on in that area, and it's showing good signs of improvement.

MR. WALPERT: Thank you, Ms. Gross, for that real true answer.

Mr. Green, you also indicated that they are trying to review harassment and intimidation, and let's address that question.

MR. GREEN: I'm trying to think of a good, clear example, and I'm drawing a blank. Sorry. But there was some general allegations that if an employee reported an injury at the local level with local managers, that the local managers would counsel the employee about the effects on his career if he pursued filing the report, and then there was always substantial pressure to suppress lost time counts and all the other features that make an injury reportable.

A lot of that was -- I guess it was more prevalent in '96 than it was in '97 when the FRA passed the regulation amendment to our accident/incident regulation and intimidation and harassment to suppress an injury report or to interfere with medical treatment was made a violation of federal regulation.

The problem, I believe, has substantially improved. I'm not sure that -- that it will ever be resolved completely because of the differences in perception by the manager and the employee.

MR. WALPERT: So, in your opinion, the -- the regulation that went into effect concerning harassment has had an effect?

MR. GREEN: Positive effect.

MR. WALPERT: Oh, positive. Okay. In regard to the problems that you heard about crew management systems, can -- can you detail some of those problems?

MR. GREEN: Some of the problems were calling employees during their period -- their off-duty periods, statutory off-duty periods for service before they were rested for that service. Crew managers couldn't keep -- apparently couldn't keep track of when the employee had gone off duty and when he'd be available to return to duty, and there was other problems with employees being called for service on territory that they were outside their seniority districts or outside their areas of qualification for locomotive engineers and in particular territories they were not familiar with, and then some problems with the crew managers or crew dispatchers actually instructing an engineer, for example, to take a train on territory the engineer says I am not familiar on that territory. I'm not qualified to operate that, and the crew managers say take the call, take the train.

MR. WALPERT: Has there been any resolution to your knowledge of -- of some of these matters that were brought to your attention?

MR. GREEN: Yes, I believe there has. The railroad has done several things to resolve some of the problems. I know that they've added crew management, added crew management training. We've amended -- the railroad's amended its locomotive engineer certification program, the features that have pertained to an otherwise-qualified and certified locomotive engineer who's operating on new territory, changed its interpretation of its existing familiarization policy and amended the policy itself to provide for qualified persons to pilot locomotive engineers over new territory, and also given some good solid guidance apparently to the crew management system because now I understand when an engineer asks for a pilot, crew managers don't overrule him.

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

CHAIRMAN GOGLIA: Union Pacific?

MR. JERRY R. DAVIS: Yes. Thank you, Mr. Chairman. Just one clarification.

Getting back to the allegations that you heard on intimidation and harassment in covering up injuries, did you investigate any of those allegations to find out whether they were true and -- and to what manager was doing that?

MR. GREEN: We have investigated a few cases that came to us as a formal complaint. We're in the process of investigating a few more, and, Mr. Davis, I have to state that some of the -- some of the formal complaints that we received contained allegations of harassment that fell outside our regulatory authority, where a claims department or an operating department manager would write to an employee who'd been off duty, off injured for some time, asking for a medical update, and the employee perceived that as harassment and interfering with his ability to obtain medical treatment, and that I don't believe is what the intent of the regulation is.

Some of the cases, we have -- have some difficulty, I should say, trying to resolve because there are only two parties involved. There's no documentable evidence.

MR. JERRY R. DAVIS: Of the 15 exceptions that you took on Union Pacific in 1996 and 7, did any of these involve harassment of employees in covering up injuries?

MR. GREEN: I don't believe so. I don't have that figure or fact in front of me, but I don't believe it did.

MR. JERRY R. DAVIS: Thank you.

MR. GREEN: Yes, sir.

CHAIRMAN GOGLIA: Texas Railroad Commission?

MR. MARTIN: Yes. Mr. Green, let me ask you one question. You have considerable experience. You're an inspector along with our inspectors. Were those found uniformly across the -- the UP system or do you think that they were concentrated in the Gulf Coast area and specifically in Texas?

MR. GREEN: I believe that -- that we found some features of these problems across the entire system. The problems were more pronounced in some cases in the Gulf Coast region and in Texas, but, generally speaking, we found the problems with carry-all relief at the end of tour of duty was a widespread systematic problem.

MR. MARTIN: Thank you.

MR. GREEN: Yes, sir.

CHAIRMAN GOGLIA: Federal Railroad Administration?

MR. GAVALLA: Mr. Green, earlier you discussed the interface between yourself and your inspectors in regards to allocation of duties.

Are there inspection manuals or manuals for each discipline within the FRA to --

MR. GREEN: Yes, sir, there are.

MR. GAVALLA: Do inspectors receive training, periodic training, regarding the performance of their duties?

MR. GREEN: Inspectors receive substantial technical training and quite a bit of on-the-job training with experienced inspectors and specialists.

MR. GAVALLA: Within the manuals and in the training programs that they attend, is there any discussion of how they might -- the factors and criteria that they would use to allocate their time towards inspections?

MR. GREEN: I beg your pardon. Could you repeat?

MR. GAVALLA: Certainly. Within the manuals that you referenced and within the training that the inspectors receive, is there any discussion regarding some of the criteria that they would use in deciding how to allocate their time towards inspections?

MR. GREEN: Yes, there is.

MR. GAVALLA: You also referenced violations, completed violation reports regarding -- at least your knowledge of them regarding the Union Pacific in 1997, is that correct?

MR. GREEN: Yes, I did.

MR. GAVALLA: Are you aware of the total number of counts that have been assessed against the UP in 1997 or the total number of -- total dollar value of the fines assessed?

MR. GREEN: I can't provide information about the dollar value of the violations completed.

MR. GAVALLA: Okay. Thank you.

MR. GREEN: And we can talk to the number of counts, if you like, and in 1997, we had a total of 3,213 counts in the violations that were presented by the inspectors. Substantially most of those 3,000 counts were in areas of electronic recordkeeping hours- of-service records that were improperly or incompletely completed, in drug and alcohol pre-employment testing for managers working in train service in the Texas area, and in hours-of-service records not available for inspection for managers, and some of those multi-count issues.

MR. GAVALLA: And those were counts and violations for the -- for Texas?

MR. GREEN: From Region 5.

MR. GAVALLA: From Region 5?

MR. GREEN: Yes, sir.

MR. GAVALLA: Okay. Ms. Gross, you described the activities that you were involved in to address issues with crew management and crew fatigue, and you used the term "we" repeatedly. Can you explain who you mean by "we"?

MS. GROSS: Yes, sir. It's a partnership with Union Pacific, labor organizations and the FRA.

MR. GAVALLA: And did this occur under the SACP program?

MS. GROSS: Yes, sir.

MR. GAVALLA: Can you elaborate a little bit on how that -- that group was formed?

MS. GROSS: After the safety assessments, the groups came together, after Jolene's visit to Omaha, and worked on what were the major areas of concern that needed to be addressed that were -- that were system problems, and the group came to a consensus of areas that relate to fatigue and the Harriman hours of service, training, discipline, culture, those sort of things.

MR. GAVALLA: You specifically mentioned some of the activities that have taken place in the Harriman Dispatch Center, particularly it's been mentioned that there have been an increase in the number of dispatchers.

Is -- is there any federal regulations which stipulate the number of dispatchers that a railroad must have?

MS. GROSS: No, sir, there is not.

MR. GAVALLA: You mentioned that -- it has been mentioned that there was a re-balancing of the workload of dispatchers. Are there any federal regulations which address the workload of dispatchers?

MS. GROSS: No, sir, there is not.

MR. GAVALLA: There was mention of upgrades to the computerized dispatching system, the CAD system. Do you know if there's any federal standards or regulations regarding dispatching software or computer systems?

MS. GROSS: Not to my -- not to my knowledge.

MR. GAVALLA: The changes that have taken place in the Harriman Dispatch Center, based on your experience, your long experience in the railroad and with railroad operations, in your opinion, have these been beneficial to safety?

MS. GROSS: Oh, yes, sir.

MR. GAVALLA: Mr. Green, yesterday, there was testimony to the issue of qualification rides for locomotive engineers.

Have you had any experience in that issue in Texas?

MR. GREEN: Yes, sir, I have.

MR. GAVALLA: Did you find any problems or did you -- did FRA raise any concerns that dispatchers may not -- excuse me -- locomotive engineers may not be receiving qualification runs before they're ordered to take trains out in certain circumstances?

MR. GREEN: During our activities in 1997, that was a strong concern of ours. We found some indications that the railroad managers transported into Houston and for some of the regular locomotive engineers, they were not getting -- either not getting familiarization trips at all or that the trips that they did get were inadequate.

As an example, we had anecdotal information that railroad managers making a familiarization trip would run maybe a third or a half or a quarter of the district and end up stuck in a siding and die on the law and that was counted as a complete familiarization trip over the territory.

MR. GAVALLA: Overall in your investigation of the -- that issue, did you find that the UP's program was in compliance with the letter of the law or generally in compliance with the letter of the regulations?

MR. GREEN: Yes, it was.

MR. GAVALLA: But did you have concerns that the enhancements were needed above and beyond those regulations?

MR. GREEN: Yes, we did.

MR. GAVALLA: And were you able to do anything about that?

MR. GREEN: Yes, sir. We worked with the railroad and with the organizations and the information that they provided to us to bring this problem on familiarization standards, particularly for engineers who had not been over a territory in the past, to the railroad's attention.

The railroad's familiarization program and the add-on in time table Special Instruction 7-A provided that an engineer who had not been over a territory in the past 12 months would have to be either given a trip with a pilot or could talk with his manager of operating practices about any changes in the -- in the lay-out of the -- of the subdivision or the territory, any rules applications changes or signaling changes, and after a discussion with a manager of operating practices could be allowed to run on the territory without a familiarization trip.

The railroad's local managers in Texas interpreted that provision of the time table Special Instructions, which is a part of their program, to apply to an engineer who had never seen a territory as well as an engineer who had been on the territory but had been absent from that territory for 12 months or more.

MR. GAVALLA: And the changes that took place at the end of all this, could you --

MR. GREEN: That changes that took place were that the -- the railroad reordered and reorganized that portion of the familiarization to provide for familiarization trips based on the engineer's capabilities and the territory that he was qualifying on to establish at least a minimum number for each territory of familiarization trips that would be made by an engineer on new territory.

MR. GAVALLA: Since that change has been made in the program, has FRA had the opportunity to go into the field and verify that particular issue on any occasion?

MR. GREEN: Yes, sir. We were -- we were particularly concerned about this issue toward the end of 1997 and early 1998 because the railroad was about to implement directional running between Houston and Poplar Bluff and Dexter, Missouri, which would put roughly one-half of the engineers in that geographic territory running one direction on new railroad because the Union Pacific would run -- would operate in one direction, and the Southern Pacific would operate in the other, and the two engineers' boards would be merged into one.

So, everyone on the district would have to run on -- on new territory in the initial stages of that start-up. We were concerned that the engineers would be put on the territory without sufficient familiarization.

We were also concerned that conductors as well would be operating without sufficient familiarization, and they fall outside our -- clearly fall outside our regulation, but we addressed specifically the railroad's program for familiarizing its engineers in order to ensure that the engineers would have an opportunity to familiarize themselves or have qualified pilots when the start-up occurred. That occurred on February 1.

The railroad went to great lengths to get as many qualified people as they could familiarized with the territory before the start-up date on February 1. They incorporated cooperative efforts of their labor organizations to help organize the qualification process, familiarization process, and to manage the piloting that took place when the start-up took off.

There was a lot of effort on the part of the railroad put in to making sure that these folks had an opportunity to qualify, and there was substantial support from the labor organizations for the railroad's efforts in that regard.

MR. GAVALLA: Did FRA have inspectors in the field to monitor this process?

MR. GREEN: We put inspectors at all of the major on-and-off-duty points throughout that territory from Memphis, Pine Bluff, Little Rock, Poplar Bluff, Dexter, Missouri, Longview, Shreveport and down into Houston.

MR. GAVALLA: No further questions at this time.

CHAIRMAN GOGLIA: Thank you. To the head table. Ms. Beal?

MS. BEAL: No questions.

CHAIRMAN GOGLIA: Mr. Ellingstad?

MR. ELLINGSTAD: Thank you. Mr. Green, how many reports of excess service incidents under the hours-of-service act did the Union Pacific make to FRA in 1997?

MR. GREEN: I don't have that figure, Mr. Ellingstad. I couldn't respond to that accurately.

MR. ELLINGSTAD: Could -- could you or someone in the FRA provide that for the record?

MR. GREEN: Yes, we could.

MR. ELLINGSTAD: You had indicated as one of the results of the safety assurance assessments that there were hours-of-service recordkeeping problems.

First of all, could you elaborate on what those hours-of-service recordkeeping problems were?

MR. GREEN: The Union Pacific Railroad, like most of the railroads, is in the process of developing an electronic recordkeeping system for both payroll and for federal hours-of-service records.

We have been working with them for some time to help support their efforts, to simplify and stream-line the methods of gathering the hours-of-service recordkeeping data.

The regulation as it stands right now, in order to comply with the law, is to gather a hard paper copy signed by either the employee or the ranking crew member hours-of-duty report.

The railroads are running a parallel electronic recordkeeping system for both payroll purposes and hours-of-service purposes, and they use the electronic recordkeeping system to generate the hard paper copy that's signed by the ranking employee and put on file.

What we've experienced is that this is -- this is a very difficult developmental process for the computer programmers because there are so many intricacies in both the hours-of-service law and in the labor agreements across the railroads on how to gather this data, separate payroll from hours-of-duty and then generate an hours-of-service report.

We've had -- we've taken exception several times. We've had several inspection activities to see what progress the railroad's making in gathering the hard copy data required by the regulation. We find that there was -- in this particular activity, we found that there was a substantial number of hard copy documents missing because they were improperly filed or improperly gathered and transmitted to the railroad, the railroad wasn't able to produce them for inspection, and in some cases, the data collected was improperly filled out in the form, in the hard copies.

Those are the kinds of defects we were taking, records missing, records improperly filled out.

MR. ELLINGSTAD: So, your -- your comments here pertain to what could be characterized as a recordkeeping problem?

MR. GREEN: That's correct.

MR. ELLINGSTAD: Ms. Green, when you are conducting an inspection of whatever kind of operating personnel we're talking about, could you explain to us what you do with respect to examining hours-of-service as an issue in that inspection? What -- what -- what are you looking at? Are you -- are you sorting through these hard copy pieces of paper exclusively?

MR. GREEN: Is that directed to me or Ms. Gross?

MS. GROSS: I think he --

MR. ELLINGSTAD: Ms. Gross. I apologize.

MS. GROSS: That's all right. We're going to do something about that.

MR. GREEN: I'm wearing a tie.

MS. GROSS: Generally whatever those kind of complaints, they come to me usually in the form of a complaint from my specialist, and the first thing I would do is call the complainant and try to establish what happened during the incident in question, and then I would go back and -- and establish whether or not the facts are as the complainant alleges, and I do that by going to and visiting on site crew management timekeeping, and most of them I've been involved in so far, they still involve the manual time slip.

I have been involved in some with other railroads so far that -- that -- but not with the Union Pacific, other than with the manual time slip. So, that basically would be what I would do first.

MR. ELLINGSTAD: So, most of your indications of a concern in this area would initiate from -- from some kind of a complaint rather than some -- from some more global review of -- of hours-of-service records?

MS. GROSS: Not necessarily. We -- during the safety assessment, there was a team that came to Omaha to -- and that was -- their sole function was to -- to examine the hours-of-service and timekeeping records, and they did that, and then also during listening posts, if we pick up on an incident that might be a violation of the regulations and the law, then we take the initiative to go ahead and document that and investigate that incident.

MR. ELLINGSTAD: But is there any regular process at any level within the FRA with respect to examining hours-of-service, of routinely examining these databases?

MS. GROSS: We have -- I'm not quite sure I know how -- what he's asking, David.

MR. GREEN: I think I may be able to respond to that better, Mr. Ellingstad.

The FRA has found with railroads this size, the Burlington Northern Santa Fe and some of the other big carriers, that systematically inspecting records for the entire property has become very nearly impossible.

We do routinely inspect the records that are available at division levels before they're transmitted to the recordkeeping locations. We've conducted system inspections at the recordkeeping locations.

But it's our firm belief that handling that paper is an undue burden on the industry, and it's an undue burden, and it's unduly time-taking -- time-consuming for the FRA.

If we are able to -- and I clearly believe it's a doable project. If we're able to establish electronic recordkeeping systems, the kind of systematic inspection that you're talking about will be greatly simplified, where the inspector at any location on the system can sit down at a computer terminal and scroll through computer database records for hours-of-service exceptions or hours-of-service generally.

MR. ELLINGSTAD: Is there any activity underway at FRA to encourage or require that kind of an automated system?

MR. GREEN: We don't require it, but we have a substantial effort to encourage the development of these systems, yes, and we have had for a number of years.

The CSX currently holds a waiver on the signature requirement for signed hard-copy hours-of-service reports. They're the only railroad in the United States that's fully developed a -- a program that's been given a waiver on the signature requirement, which, by the way, is all we waive. That enables the railroad to keep the data electronically rather than in a hard copy, signed copy.

The Southern Pacific did receive a waiver on its program not long before the merger took place. I believe it was in 1996. That program was incompatible with the overall computer database systems in use on the Union Pacific and therefore was dropped by the merged companies, and the Union Pacific fell back to its developmental project for electronic recordkeeping for its system.

We've been working with the folks in that project for a number of years, and we have a dedicated headquarters specialist who does nothing other than development of electronic recordkeeping systems and hours-of-service compliance.

MR. ELLINGSTAD: Let me ask the same general set of questions with respect to the inspector responsibilities for drug and alcohol testing and compliance.

MR. GREEN: In drug and alcohol testing, we have an on-going project, periodic review conducted in concert with our drug and alcohol headquarters specialist and our contractor MRO functions provider, and we'll meet at a railroad's headquarters or inspection location with Mr. George Ellis from our contractor and with our headquarters specialist and the local specialists and inspectors to conduct a system review of the drug and alcohol control program of the railroad.

We also do routine inspection activities on drug and alcohol compliance at the inspector's level and the regional level, and we respond, of course, to complaints about improper drug collection procedures.

So, there are several levels at which we -- we evaluate those programs on all railroads.

MR. ELLINGSTAD: Okay. Thank you.

MR. GREEN: Yes, sir.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: Thank you. I have a couple questions. First, I'll start with Mr. Green.

MR. GREEN: Thank you.

MR. LAUBY: Then I'll go to Mrs. Green. No. Mr. Green, do you ever accompany your inspectors on their site inspections?

MR. GREEN: I do as much as I can. I don't have a lot of opportunities to do that, as I'm primarily an administrative-type, and I have a tremendous workload. I also participate in several headquarters projects and committees and training assessments and planning sessions.

So, I don't get the opportunity to inspect in the field with my inspectors as much as I'd like, but I do as much as I can.

MR. LAUBY: So, I assume that you rely heavily on the input of your inspectors to -- to have a feeling of what's going on and --

MR. GREEN: Yes, sir, I do.

MR. LAUBY: -- the safety of the railroads, etc.?

How many inspectors do you have?

MR. GREEN: There -- currently, I have nine assigned and one vacancy in the federal program, five in the Railroad Commission of Texas program that I work with closely, and then the young man in New Mexico who's in training.

MR. LAUBY: So, that's 16 inspectors, I believe?

MR. GREEN: Well, 15, and I'll have 16 when we fill the vacancy in Houston.

MR. LAUBY: Okay. And all of these inspectors provide you with -- with reports on their inspections, is that correct?

MR. GREEN: Yes, sir.

MR. LAUBY: Even Texas Railway Commission inspectors?

MR. GREEN: Yes, sir.

MR. LAUBY: Do the Texas Railway Commission inspectors act as -- just like an FRA inspector? Is there a difference in what they provide you?

MR. GREEN: In the operating practices discipline, the Railroad Commission of Texas inspectors inspect all of the regulations and standards of the federal program.

I understand that the Railroad Commission does have standards in other disciplines, such as track and the walkway standards, and I believe MPNE has -- has locomotive and caboose toilet standards that -- that the FRA inspectors don't have. So, they do inspections in some parts of their programs that they don't do -- that our inspectors don't do, but, generally, they do operating practices discipline exactly the same inspections, and they get the same guidance materials, training, that our inspectors get.

MR. LAUBY: Okay. With the information that's provided to you by your inspectors, what do you look for in these reports? And what I'm getting at is how do you -- how do you again keep your finger on the pulse of -- of railroad safety? What is it you look for? Violations? Number of inspections? Special memos with problems?

MR. GREEN: I suppose I really rely less on reviewing the inspection reports than I do in close communication with the inspectors in either telephone, verbal, face-to-face communications, e-mail reports.

If the inspectors are seeing problems on the railroad in their local area, I'll query the other inspectors in the region and the other specialists across the country to determine if anyone else is seeing the same kinds of problems, to see if there's a developing pattern or trend or a systematic problem across one railroad that needs to be addressed.

MR. LAUBY: Do you have an example of a problem that was handled in that --

MR. GREEN: In that fashion?

MR. LAUBY: -- way? Yeah.

MR. GREEN: A good example would be the familiarization trips for locomotive engineers. That was actually surfaced as a substantial concern by an inspector who was investigating a train accident outside this area of our inquiry here today that occurred at Appleby, Texas, and involved a Burlington Northern Santa Fe manager of operating practices and a certified locomotive engineer, who are operating on joint track owned by the Union Pacific Railroad, and what we found in that accident investigation, which, by the way, I believe was a track-caused accident, was not attributed to the handling of the train by the manager of operating practices or locomotive engineer in any case.

We found that the engineer had not had any familiarization trips over that railroad and was not provided the pilot by the Union Pacific. The pilot for that engineer was a BNSF manager of operating practices, and he had only qualified on 42 miles of a 212-mile territory.

Of course, that constitutes a violation of our Part 240 locomotive engineer standards, and we prosecuted Union Pacific for -- for that non-compliance. But that's when these kinds of features come up to us through these accident investigations or other inspection activities, and I didn't look for that from an inspection report. That came to me directly through communication with my inspector.

MR. LAUBY: You talked a little bit about listening posts, and -- and I think you indicated that you have -- you had an early indication that fatigue or a fatigue situation may be developing on the UP from the listening posts, is that correct?

MR. GREEN: Yes, sir, that's correct.

MR. LAUBY: Okay. What time frame are we talking about?

MR. GREEN: I don't ever recall going on a railroad that the train service employees and engine service employees didn't talk about working too much and being fatigued, but the real problem, what I would characterize as this, what, disaster that was building really started in 1997, where the problems were just constantly getting -- seemed to be getting worse, and that was the reports and anecdotal information that was provided to us.

MR. LAUBY: Well, what the listening posts -- is this a formal activity with -- with the FRA?

MR. GREEN: Yes, it is, and it's a part of the information-gathering process for our safety assurance compliance program.

MR. LAUBY: How -- how would it work in this case?

MR. GREEN: Well, we -- we have several avenues to initiate a listening post session. Probably the most common is to contact the local -- local labor organizations and invite ourselves to a labor organization meeting and set up perhaps a formal listening post session in a hotel room, a hotel meeting room, and announce or ask the labor organization local leaders to publicize our -- our planned activity and invite all of the organization members to participate.

Frequently they're conducted with multiple organizations represented or participating. We've also had listening post sessions with as few as one or two railroad managers, ad hoc meetings on the railroad property, where we had a few minutes to sit and talk and drink a cup of coffee and find out what their perceptions were.

Listening post sessions occur in train register rooms, while you're in there to do other inspection activity, the railroad bulletin boards and

-- and notices to its employees, and a crew or two comes in or goes out. The inspector will initiate a listening post session right there right then and visit with the crews and see what their perceptions are.

MR. LAUBY: And how long has -- has the listening post program been in place?

MR. GREEN: We started to formalize the process under SACP probably in 1995, as I best recall, but I don't think I ever worked that I didn't do that, and I've been with FRA 10 years, five years or six as a specialist in several locations, and every inspector that I trained with, worked with, and every time I was on the property, I talked to the people.

But to formalize the process, that probably started in 1995, to the best of my recollection.

MR. LAUBY: So, as -- as we moved up towards the Summer of '97, were you seeing increased complaints about fatigue or --

MR. GREEN: Yes, I was.

MR. LAUBY: Are these complaints -- would you characterize them as -- as tired engineers having to go to work or were they actual hours-of-service violations?

MR. GREEN: We rarely get allegations of an actual hours-of-service violation. When we do, that's generally proven to be true, and we take enforcement action.

But what I'm talking about hearing are people who are tired because they're working too many days in a row, and that they're working too many hours because they're stuck in a siding somewhere waiting for dead-head transportation to pick them up. When they do get in, they get their statutory rest, and they go back to work and work their statutory limitation on hours, and then they repeat the cycle. That's the kind of thing we were talking about, and it falls outside our laws and regulations but not outside our interests.

MR. LAUBY: So, other than a -- a violation of the hours-of-service, there's really not too much that you can do in those situations?

MR. GREEN: Not without SACP, there isn't.

MR. LAUBY: Okay. Let me move over to Ms. Gross. I wanted to talk a little bit about some of the problems that were detected at the Harriman Center through the final safety assessment report.

I know that Ms. Molitoris, the Administrator, mentioned a couple items yesterday, talked about too few dispatchers and some training problems.

Could you just give me -- give me your feeling of, in a nutshell, what some of the problems are at the dispatching center?

MS. GROSS: Well, first of all, we had a manpower shortage. So, hiring and the training of new people to give some relief to the senior dispatchers became a priority. A lot of the senior dispatchers were working their rest days and then could not receive comp time later because of personnel shortage.

The training. We felt that the training, of course, was not long enough, and the workload, when we analyzed the number, the different types of authority and the number of track warrants, for instance, that a dispatcher may handle in his eight-hour shift along with his ave tech time, that he became multi-tasked. He didn't have think time, appropriate think time.

Basically I'd say that's probably the two most important issues, were training issues that were brought up, manpower issues, and just excessive workload.

MR. LAUBY: Were these issues specific to dispatchers working in any one section of the country? I mean were the dispatchers from Texas -- were they having these problems and dispatchers in other -- that had other territories not?

MS. GROSS: Well, one of the things that we -- we found initially on our first visit was that the day shift seems to be the heaviest shift, and, so, quite a few of the senior people, when they could, would move to the second and third shift, which left our junior people on the first shift handling the bulk of the workload.

MR. LAUBY: What authority does the FRA have in the area of dispatching?

MS. GROSS: Could you be a little more specific?

MR. LAUBY: Well, engineer certification's a good comparison. Engineers are certified. There's programs that are submitted to the FRA. They have input on training and other things through that process.

Let's take training. What -- what authority do you have or input do you have on dispatcher training?

MS. GROSS: Basically, it would be -- I -- I would assume, it would be that they would be tested and qualified on the book of rules and radio communications under 217.

MR. LAUBY: And that would be an FRA requirement that that's done?

MS. GROSS: I'm sorry?

MR. LAUBY: Would that be an FRA requirement that that's done?

MS. GROSS: Yes, sir, I believe it is. I'm new with the organization. I feel it's my mission in life.

MR. LAUBY: Mr. Green, can you -- can you --

MS. GROSS: Thank you.

MR. LAUBY: -- expand on that or --

MR. GREEN: Yes. Our regulations specifically address rules and training requirements, and that the railroad prepare its employees to perform within the context of its rules. We also have radio standards for communication of train orders.

But to address, I think, your specific question, is do we set standards for the training for dispatchers the way we do in our Part 240 locomotive engineer certification regulations, no, sir, we do not.

We allow the railroad to develop its own program of training in order -- in compliance with our Part 217 requirements. If I may?

MR. LAUBY: Go ahead.

MR. GREEN: I'd like to add to that. We do, and we have for many years, conduct system inspections of train-dispatching offices, and we develop recommendations for the dispatching managers and for the railroad senior management on problems that we perceived with their train-dispatching centers.

That process has been in existence since I came to work for the agency, and I know that it went on before I came here because I was on the railroad on the receiving end of some of that, and it worked much like our SACP process works today, where the FRA and the state participation program reaches into areas of the railroad industry that aren't regulated.

MR. LAUBY: Do any of your activities include looking at dispatcher operations to determine dispatcher errors or error rates, anything like that?

MS. GROSS: Is that addressed to me?

MR. LAUBY: Either one.

MS. GROSS: One -- one of the first assessment teams that I was on, we looked at the rules violations that had taken place in the previous year for dispatchers. Yes, sir. Is that your question?

MR. LAUBY: Is that a normal -- yes. Is that a normal activity for you? Is that --

MS. GROSS: Yes, sir, it is.

MR. LAUBY: -- something special?

MS. GROSS: Yes, sir, it is. Yes, sir, it is. We -- we frequently -- when I frequent the Harriman, discuss with the supervisors rule infractions that have taken place, discipline that is followed up on it and training as a result of -- of those errors.

MR. LAUBY: Have you seen any increase over the course of 1996-1997 in the number of errors?

MS. GROSS: Electronic organizational management from my reference prevents us from being in the area, somewhat decreases in -- maybe Mr. Green can answer that.

MR. GREEN: Well, I haven't participated in Union Pacific's dispatching center assessments or inspections, so that I'm really not qualified to answer your question about that period.

MR. LAUBY: Okay. Well, we can ask somebody else that.

MR. GREEN: Okay.

MR. LAUBY: Just -- just to wrap up, the problems that -- that you found at the Harriman Center, do you have any feeling -- and this is -- this is for either one on the panel. Do you have any feeling on what the root cause of these problems would be? What triggered -- what triggered them?

And let me give you an example. We're talking about workload, workloads increasing, not enough manpower. Is this something that's developed over a number of years or has it developed in the short term or what?

MR. GREEN: Maybe I'd be better prepared to address that than Ms. Gross. Several factors conspired on the railroad to create the problem that they were facing that resulted, in my opinion, in the Devine train accident as an example, which was attributed to dispatcher error, one of which was the consolidation of the train-dispatching centers from the Southern Pacific into Omaha, moving dispatchers from Denver to Omaha, and many of those dispatchers were originally from train-dispatching offices across the southern tier of the states on the Southern Pacific, and they were reluctant to make another move into cold country.

At the same time, the Burlington Northern Santa Fe merger had taken place, and they were consolidating a dispatching center from Schaumburg, Illinois, down to Texas.

So, a good many of the railroad's train dispatchers who could left Union Pacific and went to -- went to the dispatching center in Fort Worth, Texas, with BNSF. Some of them, I think, retired out of the railroad industry.

Those kinds of things were going on throughout this period leading up to the Summer of '97 and the tragic events of that year that resulted in work overloads, stress levels that impacted the dispatcher's ability to comply with all of the standards that the railroad has set to ensure safe train dispatching, safe transmission of track warrants by radio, train order by radio, that resulted in -- in the error that occurred.

I think that it was an overall workload/work stress problem that was the root cause rather than a simple train dispatcher who didn't comply with the railroad's rules for some personal reason.

MR. LAUBY: So, would it be accurate to say that you -- you would consider this to be related to the merger and the changes that took place as part of the merger?

MR. GREEN: It would be related to this merger and others, yes.

MR. LAUBY: Yes. One final question. I know my panel is happy to hear that. One more -- one more question, and this relates to training.

Do you see any -- any effect that the merger had on -- on the problems that you experienced with the training or was this a pre-existing condition?

MR. GREEN: I -- I don't have the ability to respond to that on a training issue.

MR. LAUBY: Maybe Ms. Gross.

MS. GROSS: Well, I'm not sure I could respond to it in detail. I think that there's always a sense of urgency to get qualified people on the job as quickly as possible and sometimes that happens.

MR. LAUBY: Thank you very much.

CHAIRMAN GOGLIA: The Chairman has been threatened with mutiny if we don't take a facilities break. So, given that, we'll take a 15-minute break.

(Whereupon, a recess was taken.)

CHAIRMAN GOGLIA: Okay. We will go back on the record, and the questioning will continue with -- with Mr. Dunn for Mr. Gross -- see, now I slipped -- Mr. Green and Ms. Gross.

MR. JAMES P. DUNN: Mr. Green and Ms. Gross, I would remind you you're still under oath.

MR. GREEN: Thank you.

MR. JAMES P. DUNN: Mr. Green, in some of the questions from Mr. Gavalla, he asked you about allocation of the inspectors' duties, and are there manuals that address that.

Could you expand on that a little bit?

MR. GREEN: Each of our disciplines has a manual or the guidance for the inspectors that governs all of the aspects of the regulations that we inspect for and enforce as a discipline and also has general guidance on accident investigation procedures to be followed and for complaint waiver investigations that are general across the board for all disciplines, and we also have, of course, our enforcement policies covered in our manuals, and those stretch across all disciplines.

MR. JAMES P. DUNN: Okay. Specifically allocation of duties. Is that addressed in these manuals?

MR. GREEN: Yes, it would be or I guess it would be addressed in that guidance is there for prioritizing your inspection complaint investigation/ accident investigation activities.

MR. JAMES P. DUNN: And according to the manuals, what percentage of an inspector's duties should be spent on or dedicated to site inspections?

MR. GREEN: There's not a hard, firm guideline or a bright line to follow on how much or what percentage of time should be dedicated to routine or site inspections.

MR. JAMES P. DUNN: Okay. Absent a bright line, is there any line? Is there any guidance about what percentage of an inspector's duties should be dedicated to site inspection?

MR. GREEN: No, sir, there is not.

MR. JAMES P. DUNN: Is that monitored? In other words, the percentage of time that is sent -- spent in site inspection, is that monitored at any level within the agency?

MR. GREEN: We had at one time a program called the Quality Improvement Program. That program was a method of gathering inspection data or data about all of an inspector's activities, including inspections, accident investigations, special projects, waivers and complaints, travel, administrative duties, and the inspector was responsible for allocating the amount of time he spent during the course of his day for each of those activities.

We recorded that data in tens of hours in 60-minute increments. Normally you would spend an hour or an hour and a half on administrative duties during the course of the day, and that's what you would report, 1.5 hours.

That program ran for several years and became the basis of a statistical database that gives us the ability to, over this history that we collected, to say approximately or the average time the inspector spends doing a blue signal protection inspection.

From that, we can extract if an inspector reports today that he did one blue signal inspection, that that inspection took an average of 20 minutes, and we can attribute 20 minutes to that inspection, and from that, over the course of a year, we could say how much or an average percentage of time that was attributable -- that was spent doing regular inspections by accumulating totals for all of the inspections done and using the average time expended.

When we were keeping that database as closely as we did, and during the period we were collecting data, the operating practices inspection or operating practices discipline averaged about 28 percent of its time on regular inspection, and I don't believe that significantly changed over the year.

MR. JAMES P. DUNN: 28 percent --

MR. GREEN: Yes, sir.

MR. JAMES P. DUNN: -- may be the average time spent on site inspection?

MR. GREEN: I think that was what we were running in during the time we were very carefully collecting data before we started just using the average on the history. What we saw was an average time of 28 percent of an inspector's time during the course of the year would be spent on regular and site-specific inspections.

MR. JAMES P. DUNN: Okay. And the last question in this area just for clarification. Then as I understand it, there is no policy about what percentage of the inspector's time should be dedicated to site inspections?

MR. GREEN: No, there isn't.

MR. JAMES P. DUNN: Thank you.

MR. GREEN: Yes, sir.

MR. JAMES P. DUNN: Another area I have a couple questions on is you talked about an anomaly you discovered in qualifications rides for locomotive engineers and qualified on the physical characteristics, and I think you discovered that particular anomaly through a listening post, is that correct?

MR. GREEN: Through a series of listening post sessions, and there's a difference between qualification trips, which we would apply to an engineer being qualified for the first time, and familiarization trips for an engineer who's qualified and certified as a locomotive engineer but is familiarizing himself with new territory.

The problem that came to light was the familiarization trips over new territory, not qualification for a new engineer.

MR. JAMES P. DUNN: Well, that's what I'm -- when I say qualification, I'm talking about on the physical characteristics.

MR. GREEN: All right, sir.

MR. JAMES P. DUNN: Okay. Who in the railroad did you bring that anomaly to their attention?

MR. GREEN: We started with local managers.

MR. JAMES P. DUNN: Who was that?

MR. GREEN: Let's see. We -- I believe Jimmy Carter was one. There was a director of operating practices in the Houston area, and I'm drawing a blank on the gentleman's name.

MR. JAMES P. DUNN: Okay.

MR. GREEN: And we escalated that up in the system until we finally were able to reach a resolution.

MR. JAMES P. DUNN: And was the -- was the issue that the employee was not provided enough trips?

MR. GREEN: Yes. Well, the trips that he were -- he was provided were not adequate for the familiarization or that he wasn't able to complete all the trips that he was given credit for.

MR. JAMES P. DUNN: And do you recall what Mr. Carter's response when you brought this to his attention?

MR. GREEN: The response we got from all of the railroad managers at the local level was that the railroad interpreted its program to -- to indicate that the engineer could be qualified either by making trips with a qualified pilot or by discussion with the manager of operating practices or the director of operating practices at the local level to discuss the features of the territory, that it was an either or program, and it was more or less at the option of the local manager and the local employee.

It was not a single case, but there were several throughout the -- that came to our attention throughout the listening post sessions.

MR. JAMES P. DUNN: Was anybody in the railroad management group that you discussed this with surprised that this was -- this practice was looked at as an anomaly by either/or you and the employee?

The reason I ask that, the testimony we had from Union Pacific officials yesterday is that their qualification program, they had felt, was proper, and the employees were satisfied with it.

MR. GREEN: In that period, there was -- they -- well, they strongly disagreed with us that our interpretation of their program was not their interpretation, and that they I don't think were as surprised as they were just in disagreement with us.

MR. JAMES P. DUNN: Was there a resolution of that disagreement?

MR. GREEN: Eventually. It took some time and some negotiating with steadily-escalating railroad managers, I've been told. I understand what transpired finally was that our -- two of our regional administrators, one of them, who sits as chair on our Locomotive Engineer Review Board, met with the railroad senior program manager to discuss the issues and reach resolution, and that was where the resolution finally took place.

MR. JAMES P. DUNN: Thank you. I have a couple questions on the issue of the subject of the Texas Railroad Commission's participation in the FRA program.

I believe you talked in your previous testimony about the communication that you had with your inspectors, the FRA inspectors, and that quite a bit of your feedback is obtained through verbal communication, e-mails, that sort of thing, almost more than reviewing their inspection reports, is that correct?

MR. GREEN: That's correct.

MR. JAMES P. DUNN: Is that same sort of method of communication of feedback, would you say that is the same with the Texas Railroad Commission or is there a different way you get feedback from them?

MR. GREEN: There is not a great difference, but there is some difference. FRA and the Railroad Commission have both adopted the same Internet system or e-mail system for our -- our quick communications, and I have the ability to send and receive e-mail to all of the inspectors and staff of the Texas Railroad Commission.

The difference is that the Railroad Commission has its management chain in their chain of command. If I'm going to communicate with their inspectors out of protocol and courtesy, I also communicate that information through Mr. Martin and the other managers and supervisors at the Railroad Commission, so that I'm not going through or by them or around them to talk directly to their inspectors.

If we make work assignments that involve Texas Railroad inspectors, we do that through Mr. Martin and his staff. We don't go directly to the inspectors.

With that difference, there's no difference in our communications between myself and my inspectors and myself and Mr. Martin's inspectors.

MR. JAMES P. DUNN: Okay. And if I have the numbers correct, I believe at the beginning of your testimony, you said you have about 15 inspectors under your jurisdiction?

MR. GREEN: Well, under my guidance.

MR. JAMES P. DUNN: Guidance?

MR. GREEN: Yes. The Railroad Commission employs five of those 15, and they are under Mr. Martin's supervision.

MR. JAMES P. DUNN: Okay. But the staff of 15 includes five Texas Railroad Commission --

MR. GREEN: Yes, sir, that's correct.

MR. JAMES P. DUNN: Do they -- do you believe they freely provide you with feedback about what they're seeing out on the properties?

MR. GREEN: I'm absolutely confident that they do.

MR. JAMES P. DUNN: Okay. Do you get feedback from Texas Railroad Commission personnel, other than the inspectors, moving up the chain now?

MR. GREEN: Yes, I do.

MR. JAMES P. DUNN: We've talked quite a bit in the last couple days about the time frame of October '96 to October '97. Did you get feedback from the Texas Railroad Commission about conditions on the Union Pacific Railroad?

MR. GREEN: Yes. We -- we were all concerned. We were talking back and forth about some of the things that were developing and watching the railroad and its compliance during -- especially during the early Summer of '97, when this was starting to -- to go bad for the railroad. We were in constant and frequent communication, yes.

MR. JAMES P. DUNN: Can you characterize the tone of the communication reference UP you received from the Texas Railroad Commission?

What I'm asking here is were they alarmed? Did they -- did they see some signals that there was problems out there?

MR. GREEN: I think they detected the same things we did when we did. I don't --

MR. JAMES P. DUNN: And what would those be?

MR. GREEN: The -- in late -- early -- early Summer of '97, we were all becoming aware of the congestion problems and other problems that were enveloping the railroad.

MR. JAMES P. DUNN: Okay. I have a few questions on -- in the area of efficiency testing. We've talked quite a bit about that, also.

MR. GREEN: Hm-hmm.

MR. JAMES P. DUNN: Does the FRA participate in carrier efficiency testing?

MR. GREEN: We evaluate carrier railroad efficiency testing programs. Our guidance to our inspectors is that we're not a participant in efficiency testing of crews.

What we do is we join with the railroad's managers when they do their efficiency testing, and we monitor the railroad's managers as well as the railroad's crews for compliance with railroad standards for both performing the test and for compliance with rules.

We report on that to the railroad, to the managers involved and their supervisors and up through the FRA.

MR. JAMES P. DUNN: Okay. Now when you say you evaluate, and you report back to the railroad and then up through the FRA, what elements does that evaluation contain? And what I'm asking here is, is it simply the numbers of efficiency tests or do you evaluate the quality or -- well, rather than go on, I guess you can see what I'm looking for.

MR. GREEN: Right. I think so.

MR. JAMES P. DUNN: Could you give me a feedback on what -- how you evaluate their efficiency testing?

MR. GREEN: What we generally do -- it might help if I just went through our -- our general protocol briefly.

MR. JAMES P. DUNN: Sure.

MR. GREEN: We start with the division-level records for the efficiency testing program, and we evaluate the distribution tests, the types of tests that are being done, whether or not the testing managers are meeting their objectives set for them by the railroad in their program, and we use that analysis of the records to determine if there are testing managers who appear to be testing outside the guidelines of the program.

We also evaluate the railroad's program and review it for any changes in it and bring ourselves up current on if there have been any changes in the types of tests to be conducted under the guidance published by the railroad to its managers and -- and -- and put on file with FRA.

Then we do field work with the testing managers to observe the capable -- the capabilities of the testing managers to do the tests prescribed in the railroad's program, their competency in performing the tests, how they select trains to be tested, if there are any trains that are systematically excluded from testing because of their high-priority stature in the railroad, you know, the train movement.

Sometimes what we found in the past is that a railroad will not test its -- its very sensitive -- time-sensitive trains. They'll exclude them from the program. We look specifically for that. Sometimes railroads have excluded passenger trains because of their time-sensitive nature.

We look exclusively or specifically for those kinds of exclusions from the testing program, and then we do the evaluation of their overall program and the individual managers who are performing tests to see if they are able to do the tests properly and capably and that the testing program is effective.

MR. JAMES P. DUNN: Continuing on with this evaluation that you provide the railroad and up through the FRA, is that a document? How do you communicate that?

MR. GREEN: If there are defects or problems that we identify, the inspectors would normally get with me pretty quickly, call me and talk it over with me.

MR. JAMES P. DUNN: I'm sorry. I didn't hear you.

MR. GREEN: I said there are problems found, the inspectors will communicate directly with me by telephone or by e-mail, and they'll also file an inspection report showing any deficiencies. I rarely see any violations because our regulation is written such that the railroad will generally be in compliance,

if they have a substantial and sound program, which the Union Pacific does, but we'll -- we'll -- we will occasionally take defects or deficiencies on -- on the activities that we saw or the distribution of tests or the numbers of tests reported by officers, and those will be reported in a conventional inspection report showing the deficiencies or the lack thereof.

MR. JAMES P. DUNN: Okay. But then as I understand it, there's not a -- there doesn't appear to be an actual evaluation report on a regular basis provided to the company and upper management of FRA?

MR. GREEN: Not routinely. We have done system assessments, and when we do that, we formalize the document and present it to the senior management of the railroad.

MR. JAMES P. DUNN: Okay. Do you know if there's any of these official evaluations between October '96 and October '97? And I'm not referring to the safety assurance assessment.

MR. GREEN: We have had regular inspection activity in the efficiency testing arena. We have not assessed --

MR. JAMES P. DUNN: I'm talking evaluation now.

MR. GREEN: The routine inspection evaluation. We've done that, and we did that throughout the period we're talking about. We haven't conducted a system assessment in the period we're talking about on UP, and I don't think we have in -- on any of the railroads in the country during that period.

MR. JAMES P. DUNN: Okay. Could you provide the Safety Board any evaluations of Union Pacific's efficiency testing that you provided to -- well, any that the FRA has?

MR. GREEN: The inspection reports? I know I have inspection reports on file that I can provide to you.

MR. JAMES P. DUNN: Okay. For the period October '96 to October '97?

MR. GREEN: Yes, sir.

MR. JAMES P. DUNN: And these, as I understand it, would also have been provided up through the chain to the FRA?

MR. GREEN: Yes, sir, and we'd leave a copy with the railroad at the completion of our inspection activity.

MR. JAMES P. DUNN: Okay. Staying with the period October '96 to October '97, I think you have alluded to it, but I will ask you directly. Did you observe an erosion in safety on the Union Pacific Railroad in that period of time?

MR. GREEN: Later on in that period of time, yes.

MR. JAMES P. DUNN: Could you be more specific, please?

MR. GREEN: Starting with the early Summer, the string of accidents that occurred, some of the other problems that came to the surface or developed in the early Summer of '97, I would say yes. Prior to that, in that period from October to probably June or July of 1997, I didn't. I did not.

MR. JAMES P. DUNN: Okay. I got -- you -- you saw the erosion beginning in the early Summer of '96 and then --

MR. GREEN: '97.

MR. JAMES P. DUNN: '97?

MR. GREEN: '97, but prior to that unfortunate series of accidents, I -- I did not see this coming. No, I didn't.

MR. JAMES P. DUNN: Okay. When you -- when you say, and I know it's my term, "erosion of safety", what specifically did you see that made you conclude there was an erosion of safety? And I ask that against the background of was it the accidents themselves or were there other events or circumstances?

MR. GREEN: There was a lot of other events and circumstances, and primarily among those was the sudden influx of business in the railroad industry generally and the Gulf Coast region specifically. A sudden increase in business in the Gulf Coast region, all down into the Houston corridor, with the resulting congestion.

I think Mr. Davis referred to it as burning crews, trying to get trains across the railroad. Those kinds of issues started to bubble up and come to my attention in the Spring of 1997.

MR. JAMES P. DUNN: Okay. Did this erosion continue after you initially saw it?

MR. GREEN: Yes, it did.

MR. JAMES P. DUNN: Did you take any steps to change your activities?

MR. GREEN: We increased our concentration of inspection activity on Union Pacific. We initiated several safety bulletins and safety directives to the industry and to the railroad specifically to address what we perceived to be problems that needed immediate corrective action.

We started or ended up doing the sweeps that took place in August and again in November. We initiated as much action as we could as we saw it was needed.

MR. JAMES P. DUNN: Did you receive any guidance from your superiors about this subject that we're talking about now, the erosion of safety on the Union Pacific?

MR. GREEN: Yes. We were actually somewhat limited. The inspector's prosecutorial discretion. We were told that if we found non-compliance with federal safety standards or regulations, that we were to take violation action and bring it to the attention of the railroad as forcefully as we could, and normally an inspector on an isolated case would have more discretion in making a determination whether a violation was necessary, and that was somewhat limited by the direction we got from headquarters, and -- and it was specifically toward Union Pacific.

MR. JAMES P. DUNN: Okay. Did you participate in the two safety assessments conducted in the Summer of '97 and then again in the Fall of '97?

MR. GREEN: Yes, I did. I was operating practices team leader during both.

MR. JAMES P. DUNN: Okay. Have you read the safety assurance assessment report that the FRA produced in February of this year?

MR. GREEN: Yes, I have.

MR. JAMES P. DUNN: Do you agree that there was a fundamental breakdown in some of the basic railroad operating procedures and practices on the Union Pacific?

MR. GREEN: I would agree with that, yes.

MR. JAMES P. DUNN: That's all the questions I have at this time. Thank you.

CHAIRMAN GOGLIA: Okay. Thank you, Mr. Dunn. We will return for a revisit to the Tech Panel and the parties.

MR. JAMES S. DUNN: Yes, I have a few questions. First, Mr. Green, along the lines of the efficiency testing, if I -- did I get this right or let's -- let's say this. Do your inspectors accompany -- let's talk UP -- accompany Union Pacific officials on their efficiency tests to see they're doing them according to their rules and doing them correctly?

MR. GREEN: Yes, we do. We do it on a -- on a -- not routinely, but we do it on an inspection or site-inspection-type basis, yes.

MR. JAMES S. DUNN: And did any of your inspectors take exceptions to any of the -- the manner they were doing they were doing their efficiency tests?

MR. GREEN: Not in the manner that the testing managers did their tests. We did take some exceptions to the distribution of tests in territory. Our San Antonio FRA inspector did an evaluation of the testing that took place on UP's Austin subdivision, which runs essentially from Fort Worth to -- to Laredo, and there was -- what he found was concentrations of tests in the major terminals and in the switching yards at each end or in the middle and a very sparse distribution of tests between the major switching points, and I think that would be explained by the fact that most of the managers in that territory were congregated in these terminals, and because of their other responsibilities and duties to the railroad, it was -- would have been difficult for them to leave the railroad yard and go out into the in-between parts of the railroad to do tests out in the country.

There were tests being done in the country by the road train masters and the managers of operating practices, and I have to say that in FRA's guidance, the focused inspection program is one of the things we use to help direct inspectors on where they should conduct inspections, the kinds of things they should inspect for, and that's a method we use to -- to review the railroad's accident history for train accidents and employee injuries, and it points out the areas where those most common accident causes occur, and most common accidents and injuries occur in terminals, and that's where the railroad was focusing its testing activity.

The accidents that were occurring early on especially were not in terminals. The big ones, the bad ones were out in the country. So, you have a balance that you have to reach in a testing program, and UP in my opinion was focused more in terminals than it should have been, and that was an exception or a type of an exception that we took.

The tests that were performed, the ones we observed, our inspectors observed, were done well.

MR. JAMES S. DUNN: That was my question, whether they were doing them right.

MR. GREEN: Legitimate.

MR. JAMES S. DUNN: Okay. You answered it.

MR. GREEN: Legitimate, valid tests, and they were well done.

MR. JAMES S. DUNN: Thank you. Thank you. I've got a few questions for Ms. Gross. I got it right.

How -- I want to go to the SACP. How were you placed on to that group?

MS. GROSS: Well, my -- my position in Omaha is a little bit unique in that I have been sort of assigned to the Union Pacific as my primary responsibility. I think because of my background and the close proximity of where I'm at to the activity, I've been drafted into the program.

MR. JAMES S. DUNN: Okay. How would -- how would one get on to a SACP group? I mean could I volunteer to be on one or how -- how -- how does one get on to it?

MS. GROSS: Well, we'll take all the help we can get. Basically, the project manager. We have an oversight committee, and they kind of designate members that they would like to head up the working groups and the subgroups.

MR. JAMES S. DUNN: Okay. Your group at the Harriman Center, who was the leader?

MS. GROSS: A fellow named Tom Keane from the agency.

MR. JAMES S. DUNN: Okay. And then did you have members from -- I guess from the UP?

MS. GROSS: Oh, yes, sir.

MR. JAMES S. DUNN: And from the dispatchers union? Were they in the group?

MS. GROSS: They're non-union at the Harriman Center.

MR. JAMES S. DUNN: Does that --

MS. GROSS: They're non-agreement. We have what we call Jerry's kids. They're a group of dispatchers that -- and the reason why we call them that is when we had meetings in Omaha, the Administrator and Mr. Davis met with the dispatchers because of fatigue and morale after the recent event that had happened was of importance to both of them, and they had personal meetings with them, and out of that came a group of volunteers. They were not selected. They volunteered, and they're on -- they're an active part of the safety group as well as the working group.

MR. JAMES S. DUNN: The dispatchers do get into the group, though?

MS. GROSS: Oh, yes, sir.

MR. JAMES S. DUNN: Okay. And now what you learned from this group was, I think I wrote down the three things, manpower shortage, training, workload problems.

Were you able to take this to other railroads, such as CSX in Jacksonville, such as Fort Worth, BNSF, to say, hey, here's what we found? Is it going on down there? Was there -- was there SACPs there or did individual investigators go look at the other -- the major railroads?

MS. GROSS: Since I'm so focused on Union Pacific, I can't accurately answer what's going on in CSX or on the Santa Fe, but I can address this part of that question, and that is that Tom Keane is -- has tried to formalize and is establishing the way to analyze the workload on a dispatcher's position, and it will come out of this group that that will be formalized.

MR. JAMES S. DUNN: But there's nothing done today as far as going -- go ahead.

MS. GROSS: I really don't know, unless you know, David.

MR. GREEN: May I interrupt?

MS. GROSS: Go for it.

MR. GREEN: We have an active SACP program working on Burlington Northern Santa Fe. I believe there's one on CSX, but I'm not involved in it, and we've spread this -- our findings from our efforts here on to the other initiatives, and our findings there on to this initiative.

So, we do cross-pollinate, if you will, between -- through FRA between the different SACP efforts.

MR. JAMES S. DUNN: Okay. I've got two more questions for Ms. Gross. Would -- would inspectors go to the Harriman Center, let's say prior to the assessment, prior?

MS. GROSS: Yes, sir.

MR. JAMES S. DUNN: Would inspectors go in and look around and, I guess, inspect like the mechanical people described and the operations people? Would -- would you have an inspector and an operation person go in and observe the dispatch center for a day?

MS. GROSS: Oh, yes, sir.

MR. JAMES S. DUNN: That would be going on? How often? Do you know?

MS. GROSS: Well, I -- like I said, I joined the agency in late July, but just since I've been there, I've taken other three inspectors from other parts of my region in there, so that they can become acquainted with their dispatcher for their area, and what goes on in that area, meet the corridor manager and do inspections while we're at the Harriman.

MR. JAMES S. DUNN: Prior to the assessment, prior -- probably prior to your -- you started in July?

MS. GROSS: Yes, sir. I started in late July.

MR. JAMES S. DUNN: Do you know, was there inspectors assigned to go in and look at the dispatch center prior?

MS. GROSS: I think it was a shared responsibility. I think, this is my opinion, my impression, that it was a shared responsibility on the region that -- that the Harriman was part of their responsibility. There was another operating practice inspector in Omaha, and I believe that was part of her activity.

MR. JAMES S. DUNN: Okay. And am I correct then that the manpower shortage and the -- and the training and the workload wasn't brought forward until the assessment?

MS. GROSS: I really couldn't answer that. I -- I don't know what happened in past history before my arrival.

MR. JAMES S. DUNN: Okay. Thank you. No further questions.

CHAIRMAN GOGLIA: Anybody else on the Tech Panel? UTU?

MR. BOYD: Thank you. I've just got a couple of questions, Mr. Green.

I believe you stated earlier on the hours-of-service regarding management employees operating trains, is that correct?

MR. GREEN: Yes, sir, it is.

MR. BOYD: Could you detail those problems?

MR. GREEN: What we found were, as I said earlier, missing records or incomplete records. We found that the railroad wasn't able to produce the records for inspection for a substantial number of the -- of the work tours for which they had a document to show the managers had been called, but they didn't have the hours-of-service report to match up to that record.

MR. BOYD: Well, yesterday, we had testimony that indicated the hours-of-service reporting for management people operating trains was identical as it was for the -- the regularly-assigned operating crews.

Your testimony would indicate that may not be correct.

MR. GREEN: I believe that's correct now. I don't believe that was correct in July of 1997.

MR. BOYD: Do you know when that was corrected?

MR. GREEN: I'm not certain, but I think it was in response to our -- our actions on the railroad in the late Summer of 1997. I think that the change-over took place in probably September, but I'm not certain.

MR. BOYD: Do you know why they originally were not reconciled?

MR. GREEN: I think that it may have had something to do with -- with claims or grievances from rail labor for managers being used in place of crafts conductors and engineers, but I'm not certain.

MR. BOYD: Again, when do you think the situation was corrected?

MR. GREEN: My perception is it was corrected in the Fall of '97, probably some time early after our activities in August.

MR. BOYD: Okay. There was some discussion regarding qualifications, and the term "familiarization" came up a number of times.

MR. GREEN: Yes, sir.

MR. BOYD: Based on your knowledge and experience, what does the term "familiarization" mean?

MR. GREEN: From our context, and when we're dealing with -- with train and engine crews, that's when an employee who is otherwise qualified on the operating rules and is certified as a locomotive engineer is assigned to new territory on a railroad, operations where he has not worked before, or if he's been absent from a territory for a substantial length of time, say one year, and then returns to that territory, that he needs to be brought up to current on any changes that have taken place in the territory in his absence.

MR. BOYD: Would that definition by nature equate to qualification or is there a difference between familiarization --

MR. GREEN: In my mind, there's a difference. You can be a qualified conductor, certified locomotive engineer, passed all of your rules exams and training requirements, and still not be familiar with a segment of track or a subdivision.

MR. BOYD: Okay. My question goes more to the point. If you're qualified because of certification or taking promotion exams or whatever the requirements are, you're qualified, I would guess, by carrier, but you're not familiarized on certain territories? Is that the difference?

MR. GREEN: That would be my -- my belief on the difference, yes. That's what I understand it to be.

MR. BOYD: Okay. You testified, I believe, in answer to -- I think it was Mr. Dunn, that you noticed that the safety conditions were deteriorating early in the Summer of '97?

MR. GREEN: Hm-hmm.

MR. BOYD: What -- what's -- to your knowledge, what's the FRA's definition of deteriorization? When do you -- when do you -- when do the bells go off?

MR. GREEN: When do the bells go off? Well, our traditional indicators didn't set off the bells because our inspection activities didn't indicate the kinds of problems that we were seeing develop and rapidly develop.

The bells started going off when we started seeing one after another serious tragic accident, and when we started seeing reports of congestion, seeing the effects of congestion on the railroad, when we got communication from our -- our close associates and friends in the labor organizations and from management about the problems that they were experiencing.

Some of the features of those communications brought to our attention the problems that were besetting the railroad, and that's when the bells started going off.

MR. BOYD: I believe the term "fundamental breakdown" was used.

MR. GREEN: Yes.

MR. BOYD: Could you define what -- what you consider a fundamental breakdown to be?

MR. GREEN: The context here was that the railroad was apparently unable to manage its traffic levels and its safety programs in such a manner that the railroad was able to operate the trains in a safe manner reliably, and that's what I'm talking about there.

When decisions were being made to operate a train with an engineer that was less than fully familiarized with his territory, and the engineer asked for relief, and the railroad wouldn't give it to him, those kinds of things, and it was broad, widespread.

MR. BOYD: Going on the theory that we're trying to resolve this for the future, and you have to have some understanding of the past in order to do that, and I mean it in that nature, and I don't mean to be bashing you, but if -- if it was your world, what do you think in retrospect the FRA could do -- could have done and it didn't do? And I'm not trying to place blame here. I'm trying to see what we should look at in the future.

MR. GREEN: In the future, I think what we need to do is -- is in an operation like this, when there's a merger going to take place on this magnitude, especially on this magnitude, the FRA and the Surface Transportation Board needs to demand a systematic safety implementation plan that requires the railroad to step back and look at factors other than those economic factors that are driving the merger and to determine what direction they need to take, what prior planning has to take place to ensure that the safety of its operations don't deteriorate in the process of the merger.

MR. BOYD: Okay. One -- one final question. With regards to hours-of-service and the -- the managing of crews, do you think there may be any need for regulation regarding the -- the times crews are transported by limo services or a better -- I guess is there a regulation called for --

MR. GREEN: A regulatory need --

MR. BOYD: Yes.

MR. GREEN: -- for that? Unfortunately, we don't have the statutory authority to initiate a regulatory action. I think that perhaps a regulatory need is there to ensure that this kind of problem doesn't build up.

But more than that, I think that the railroad industry, both labor and management, needs to come to this problem and resolve it within the industry because I don't know that we would ever be able to formulate a regulation that meets every railroad's needs all the time, and I think we'd probably end up with a regulation that no one was really happy with. I think you folks need to solve this problem.

MS. BEAL: Thank both of you for your testimony.

MR. GREEN: Thank you, sir.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes. Thank you. Ms. Gross, has the policy changed at the Harriman Center as a result of the FRA audit in regard to the dispatchers being physically familiar with the territory over which they dispatch trains?

MS. GROSS: Yes, sir. After -- after the safety assessment was done, that was part of the one particular facet of the training that was brought to the Union Pacific's attention, was the lack of familiarization trips for the dispatchers over their territory, and we've been assured that in this new training package, that dispatchers will be afforded familiarization trips over the territory they dispatch, and that dispatchers that are presently on the job will be given familiarization trips on their territory.

MR. WALPERT: Okay. Do you know how often those would take place?

MS. GROSS: In the past or in the present?

MR. WALPERT: In the present, under the current policy.

MS. GROSS: Oh, no, sir, I -- I haven't checked back on it recently.

MR. WALPERT: Okay. Thank you.

Mr. Green, I have a few questions for you. Early on in your testimony, you talked about the safety blitzes that occurred, and you also mentioned the fact that managers were relocated to Houston for the purpose of operating trains, and you also said, I think, that you noted some problems with the relocation of these managers, and one, I think, was the pre-employment testing for drug and alcohol.

Can you comment on that?

MR. GREEN: Federal regulation under Part 219 has a standard for pre-employment drug testing before an employee of the railroad enters service covered by the hours-of-service act or safety-sensitive service.

We asked for the pre-employment drug testing records for the employees and managers who were -- who were relocated to Houston to operate trains. Some of those managers had been prior service employees in covered service and had been pre-employment tested before they were managers and then relocated, and they qualified. That was a qualifying event or test for them.

We found some of the managers who had worked at headquarters or in other departments that were not covered by hours-of-service who were transferred in to work as conductors and brakemen who had not been given a pre-employment drug test before they were relocated.

In the railroad's -- from their point of view, I guess, in the railroad's opinion, most of those managers were in a random drug-testing program under railroad authority, and they considered that to have qualified the managers as -- as a pre-employment drug test, but that did not satisfy our federal standard for pre-employment drug test under federal regulation.

MR. WALPERT: Okay. Thank you. You also commented that there may have been some problems with their certification. What were those problems?

MR. GREEN: What we observed were engineers who were working as managers, who were properly certified and -- and qualified locomotive engineers who had been relocated to Houston and were placed in service, some of them without having made any familiarization trips over the territory to which they were assigned or the familiarization trips they had made were not sufficient to qualify over the entire -- familiarize with the entire territory.

A train would go out of the terminal to the first siding, and the crew, including the manager, would die on the law on the siding, and that counted as a familiarization trip.

MR. WALPERT: Have steps been taken to correct those problems?

MR. GREEN: Yes, sir, they have. My under-standing that they have.

MR. WALPERT: Okay. In regard to the issue of fatigue, has the policy that apparently was negotiated between UP and FRA that allows operating employees one day off after they work seven alleviated the problem of fatigue on UP?

MR. GREEN: It's a step in the right direction. Okay. I don't think that it's eliminated the problem. I'm not certain that our science on fatigue countermeasures supports an arbitrary day off after seven tours of duty. I don't think that our -- our -- the current science in this arena supports that as a solution to a fatigue problem. It's a part of a solution to a fatigue problem, but I think there's much more to be done.

MR. WALPERT: Okay. I have a few questions in regard to familiarization. Did FRA and -- let me ask it this way. When did FRA and UP reach a resolution to the existing familiarization policy for locomotive engineers?

MR. GREEN: I believe that took place in January 1998.

MR. WALPERT: And is that policy in effect today?

MR. GREEN: Yes, it is.

MR. WALPERT: Can you briefly describe what your understanding of the policy is?

MR. GREEN: My understanding of the policy is that an engineer who is otherwise qualified and certified and is then subsequently assigned to a new territory over which he's never run, he'd be afforded a sufficient number of familiarization trips to -- to qualify or familiarize on the new territory where he would be confident and running.

It was encouraging to hear in this meeting that the railroad has put a lot of that determination, responsibility for making that determination, on the local manager of operating practices and the individual locomotive engineer, giving him a stronger voice in when he's ready to operate by himself without the assistance of a pilot.

MR. WALPERT: Are you aware of any anomalies to this policy since it has gone into effect?

MR. GREEN: I've heard some anecdotal information. I've had some discussions with the director of operating practices in North Little Rock and with some of the representatives from the craft about a few cases where the locomotive engineer was in the directional running that started up on February 1 between Houston and Dexter, Poplar Bluff.

An engineer who is reviewed to be a -- a very professional, highly-qualified locomotive engineer had been given his -- what the director of operating practices determined was an appropriate number of familiarization trips, I believe it was three, and the manager -- the director of operating practices determined the engineer was qualified or familiarized, and the engineer disagreed, and I'm not sure quite how that's played out. That's a very recent event.

My advice is that -- to the labor organization, to the railroad, is that they need to resolve this issue and find out -- find some way to mediate this out to get the guy where he's fully familiar and confident, and from what I heard from Mr. Pugmire, that that's the intent of the railroad, is to get the engineer up to the speed where he's confident that he can safely operate his train. That's our intention, your intention and the railroad's.

MR. WALPERT: Good. Thank you. One -- one final question, and maybe the toughest question for -- for you to answer.

What do you and/or the agency attribute as the root cause of the "erosion of safety" during the Spring and Summer of '97?

MR. GREEN: As in most instances like this, there's no one root cause. I think there's a multitude of things that fed into this. Certainly the -- the merger played a role. More importantly, I think the increased traffic levels played a major role. Some of the other features were the -- the congestion problems that accrued out of the increased traffic. The relocation of the dispatchers from Denver to Omaha and the consolidation of the dispatchers' office played a role, and -- and many more features of this took place.

One of the things that perhaps would have impacted this was the change in management structure from the two separate railroads into one management structure on the new railroad and how the management resources were distributed, and I suspect that there were managers from the SP who might have seen some of the early warning signs of the congestion build-up in the Houston area that weren't working in Houston at the time that it happened. Had they still been there, maybe they could have averted some of the congestion problems in the Gulf Coast.

So, I don't think that there's any one single root cause, and I think that's a mistake to try to attribute all of this to one cause. The causes were multiple, and they were hard to see in some cases.

THE WITNESS: Very good. Thank you. That's all I have.

MR. GREEN: It's my pleasure.

CHAIRMAN GOGLIA: Thank you. Mr. Davis?

MR. JERRY R. DAVIS: Thank you, Mr. Chairman.

We had a lot of discussion this afternoon about the qualification and familiarization, as you say, Mr. Green. Were any of the accidents that we're talking about in this hearing, were they caused by engineers who were unfamiliar with their territories?

MR. GREEN: Not to my knowledge. I don't believe so.

MR. JERRY R. DAVIS: Were any of these accidents caused by managers operating trains?

MR. GREEN: No, sir.

MR. JERRY R. DAVIS: Thank you, Mr. Chairman.

CHAIRMAN GOGLIA: Texas Railroad Commission?

MR. MARTIN: No questions.

CHAIRMAN GOGLIA: FRA?

MR. GAVALLA: Just one point of clarification. Mr. Green, you testified that FRA inspectors ride with railroad managers to monitor efficiency testing. Do FRA inspectors also ride with train crews when no managers are present?

MR. GREEN: Yes, sir, they do.

MR. GAVALLA: And is the purpose of that essentially to monitor compliance with operating rules?

MR. GREEN: Yes, sir, that's correct.

MR. GAVALLA: And is that separate and apart from efficiency testing?

MR. GREEN: Yes, sir, it is.

MR. GAVALLA: Thank you. No further questions.

CHAIRMAN GOGLIA: Okay. To the head table here. Ms. Beal?

MS. BEAL: No.

CHAIRMAN GOGLIA: Mr. Ellingstad?

MR. ELLINGSTAD: Just a couple clarifications while we're on efficiency tests.

I believe that you had indicated to Mr. Dunn that in terms of evaluating efficiency tests programs, that you basically -- the -- the only recording of the results of those evaluations were some kind of an exception report; if there was a problem, you wrote a memo?

MR. GREEN: No, that's not exactly right. I need to clarify that. What we do is we write an inspection report for the inspection activity. In that report, we might include deficiencies or defects if we found any or took it on the performance of the efficiency testing officers or their program.

If we were doing a system assessment, there would be a formal memorandum report prepared on the system assessment, but there isn't one done on a routine daily inspection.

MR. ELLINGSTAD: Including the evaluation of the efficiency tests?

MR. GREEN: That's correct.

MR. ELLINGSTAD: You had also indicated in -- in response to another of Mr. Dunn's questions that there was a statistical database of inspection activity that was kept closely, I think was your words, for some period of time, and I inferred from that that this -- this isn't an on-going data collection activity.

Would you clarify what period of time you're talking about?

MR. GREEN: Well, the -- what I was referring to there is the collection of data about the number of hours by the tenths of an hour that the inspectors spent in each of their activities, and that was under the quality improvement program.

I believe that that program was suspended in 1995, and it seems to me it was started in about 1991. I'm not certain.

MR. ELLINGSTAD: So, it had -- it had been operating during that four-year or so period of time --

MR. GREEN: Three-or-four year period.

MR. ELLINGSTAD: -- routinely?

MR. GREEN: Yes, sir.

MR. ELLINGSTAD: Okay. And, finally, with respect to the bells going off kinds of questions, you've indicated, I think maybe for the first time an indication, that there were some -- some indicators that -- that were observable, increases in traffic, increases in congestion, and these kinds of things.

Were these indicators principally anecdotal kinds of things, things that you just happened to notice from being familiar with the properties or did you exercise some kind of a more systematic monitoring activity or did the FRA more generally exercise a systematic monitoring activity that had to do with these kinds of -- of volumes use kinds of -- of data?

MR. GREEN: We didn't initiate a formal action within the region where I worked. Now that's entirely possible that the FRA headquarters, headquarters staff, did, and I don't know that. If they did, I'm not aware of it.

We didn't do that on the grassroots level with the inspectors and the specialists.

MR. ELLINGSTAD: You're not aware of any -- of any --

MR. GREEN: System --

MR. ELLINGSTAD: -- FRA system-wide monitoring of -- of traffic and these kinds of things or a search for those -- those kinds of indicators?

MR. GREEN: No, I'm not aware of any.

MR. ELLINGSTAD: Thank you.

MR. GREEN: Thank you, sir.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: I have no additional questions.

CHAIRMAN GOGLIA: Mr. Dunn?

MR. JAMES P. DUNN: I only have one, Mr. Green. So that I have it exactly clear, each and every time the FRA accompanies a railroad manager on efficiency testing, you would make out an inspection report that contains the evaluation of that efficiency testing activity. Is that about right?

MR. GREEN: We would make out an inspection report --

MR. JAMES P. DUNN: Each time?

MR. GREEN: -- for each time that we conducted an inspection. If that inspection revealed any defects, we'd include an inspection -- a defect report in the inspection report.

Now there's several parts to that inspection activity. One is the records inspection at the division level. That would be covered in an inspection report, and if there was any defects found there, they'd be pointed out in that inspection report.

When we do field activity, then there'd be another inspection report to cover that with any defects noted/included in that report.

MR. JAMES P. DUNN: Okay. And I guess I already asked you for it, but I'll reiterate it. This process, this written process that you just described, would you provide that to the Safety Board and provide us written prose how to interpolate your recordkeeping activities reference evaluating efficiency testing for the Union Pacific between October '96 and October '97?

MR. GREEN: Yes, sir, I will.

MR. JAMES P. DUNN: Thank you very much. That's all the questions I have.

CHAIRMAN GOGLIA: Okay. Ms. Gross and Mr. Green, thank you. You are released.

(Whereupon, the witnesses were excused.)

CHAIRMAN GOGLIA: And I think we'll take this opportunity to go to lunch and return at 2:00, and we'll start with Mr. Gavalla. So, would you please just come up before we start?

MR. GREEN: Thank you, Mr. Chairman.

MS. GROSS: Thank you.

(Whereupon, at 12:45 p.m., the hearing was recessed, to reconvene this same day, Thursday, March 19th, 1998, at 2:00 p.m.)

A F T E R N O O N S E S S I O N

2:00 p.m.

CHAIRMAN GOGLIA: We're back on the record, and, Mr. Dunn, will you please call the next witnesses?

MR. JAMES P. DUNN: The National Transportation Safety Board calls George Gavalla and Eric Kutch.

Mr. Gavalla, will you raise your right hand, please?

Whereupon,

GEORGE GAVALLA

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. Kutch, would you raise your right hand?

Whereupon,

ERIC N. KUTCH

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

MR. JAMES P. DUNN: Thank you.

TESTIMONY OF GEORGE GAVALLA
ACTING ASSOCIATE ADMINISTRATOR
FEDERAL RAILROAD ADMINISTRATION, AND
TESTIMONY OF ERIC N. KUTCH
DEPUTY REGIONAL ADMINISTRATOR
FEDERAL RAILROAD ADMINISTRATION

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

MR. KUTCH: Full name is Eric Neil Kutch. The last name is spelled K-U-T-C-H.

MR. JAMES P. DUNN: And what is your present position with the Federal Railroad Administration?

MR. KUTCH: Currently, I'm assigned as Project Manager and have been for the past six months.

MR. JAMES P. DUNN: And what other positions have you held with the Federal Railroad Administration?

MR. KUTCH: Prior to that, back to 1989, I was the Deputy Regional Administrator. Prior to that, I was a signal specialist for two years. Prior to that, I was an inspector for two years.

MR. JAMES P. DUNN: Okay. And where did you hold those positions geographically?

MR. KUTCH: Chicago, Minneapolis, Kansas City.

MR. JAMES P. DUNN: So, you're the Deputy Administrator in Chicago?

MR. KUTCH: Deputy Administrator in Kansas City, Mr. Dunn.

MR. JAMES P. DUNN: Okay. And how about the other positions?

MR. KUTCH: I was a signal specialist in Kansas City, also, and an inspector assigned out of the Minneapolis office.

MR. JAMES P. DUNN: Okay. And what other positions have you held in the railroad industry?

MR. KUTCH: Okay.

MR. JAMES P. DUNN: You can be brief. We don't need every single one, just a general overview.

MR. KUTCH: All right. From current times, starting in '84, one year lapse from '83, then back to 1976 for Conrail. I was in the signal department the whole time, starting out as a signal man all the way up to supervisor.

MR. JAMES P. DUNN: Okay. Thank you.

Mr. Gavalla, what's your present position with the FRA?

MR. GAVALLA: I'm the Acting Associate Administrator for Safety.

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

MR. GAVALLA: Since October 20th, 1997.

MR. JAMES P. DUNN: Okay. And I'm sorry, I have been told I neglected to ask you to state your name for the record and spell your last name.

MR. GAVALLA: My name is George Gavalla. The last name is G-A-V-A-L-L-A.

MR. JAMES P. DUNN: Thank you. And you said you've been the -- in your present position since October 20th, 1997?

MR. GAVALLA: That's correct.

MR. JAMES P. DUNN: What other positions have you held with the FRA?

MR. GAVALLA: I started with the FRA in October 1995 as a safety project coordinator.

MR. JAMES P. DUNN: And then you were promoted to your present position?

MR. GAVALLA: That's correct.

MR. JAMES P. DUNN: And what other positions have you held in the railroad industry?

MR. GAVALLA: I started my railroad career in 1976 in the signal department for Conrail. I worked in signal construction and maintenance. I started out on the tracks.

In the end of 1984/beginning of 1985, I became assistant general chairman for the Brotherhood of Railroad Signaling. I represented rank and file employees in all the BRS-represented properties in the Northeast and included all of New England and New York State. I was actively involved in policing safety matters with the FRA on behalf of the rank and file workers.

In 1991, I went up to the National Headquarters of the Brotherhood of Railroad Signaling. I became Director of Research for the BRS, and I held that position till I came to FRA.

MR. JAMES P. DUNN: Thank you.

We will begin our questioning with the Technical Panel. Mr. Patrick Sullivan.

MR. SULLIVAN: Before we get started, I'd just like to note that your next witness was supposed to be Mr. John Megary, who is Regional Administrator in Hearst, Texas, Region 5, and due to an illness in the family, he couldn't be here, but we have some areas of questioning that we wanted Mr. Megary to answer at the regional level, and, so, we'd like the FRA to make him available for some testimony some time later in the future for the record.

MR. GAVALLA: That's fine.

MR. SULLIVAN: Okay. The FRA Administrator touched on the first question that I'm going to ask, and I'd just like for you to maybe expand on it, and basically what -- and like I say, it's been answered to some degree, whether system-wide inspections on the Union Pacific indicated any trend from October '96 to October '97, and -- and the answer was that it really didn't. It didn't set off any bells or anything like that, and maybe if you could just expand on -- on that?

MR. GAVALLA: Well, it's difficult to expand on the Administrator's remarks, but I will try.

Specific to inspection data, it's true we did not see any indicators of the dramatic occurrences, string of accidents, that began in June of 1997. We track many areas of inspection activity. We track a whole variety of defect codes in every one of our inspection disciplines, which includes track, signal, motive power and equipment, let's see, operating practices and, of course, grade crossings.

What we did notice within a very short period of time in railroad terms, within an eight-week period, we had a series of head-on collisions, not -- excuse me. We had a series of collisions. They weren't all head-on collisions, but they were main-line train collisions. That right there was a very serious indicator.

However, the inspection data prior to that time gave no indication of that -- that those -- that situation could occur.

MR. SULLIVAN: Also, I believe you used accident -- accident data that also drives some of your inspection and trends and things like that, and I was wondering if you observed an increase in accidents between October '96 and '97 on the Union Pacific or nationwide as relates to the national average.

MR. GAVALLA: Actually the trends that we observed, and we submitted them for the record as Exhibit 7-C, indicated that the safety trends were moving in a positive direction.

We looked at a variety of accident data, and again our accident data is also broken up into many specific categories and subcategories. When we look at an accident-cause code, it's not just broken up into track-related or operating practices-related or mechanical-related.

Within that, we have many subcategories and specific codes for those cause codes. For example, -- excuse me. For example, in the track-caused code, a track-caused derailment can be due to wide gauge. It can be due to deviations in cross levels. It can be due to a broken rail, and a broken rail can be further subdivided into a broken rail head, a broken rail base, so forth and so on.

We have many ways that we measure these types of data. There's many ways that we compile the indicators, separate them out, you know, bring them together. We look at all these factors.

Again, based on the trends that we looked at, we didn't see any indicators, but beyond that, we measure our safety program not just by these factors alone. We also look at -- at the outcomes. We don't just look at the data that we submit into the record. We look at an overall accident history.

If you look at the accidents that are listed here as part of this hearing, we look at some of the trends here, prior to the Devine, Texas, accident, on June 22nd, 1997, we see that they are related to a wide variety of different causal factors. A couple were derailments. One of them had to do with the train entering into the same work limits as a piece of maintenance equipment. One was a run-away train. Another was a jack-knifed train, and another one had to do with a rail defect. There was one collision.

However, what we noticed in June of 1997, beginning June 22nd, 1997, which coincidentally and perhaps not coincidentally but was around the same time that the UP started experiencing service problems, at that point in time, the nature of the more serious, more major accidents had changed.

We realized within a very short period of time that we had five collisions, train collisions within an eight-week period. That was certainly an indicator, and we took very strong action. We launched a wide-scale, intensive safety assessment of the UP system.

More than a quarter of our inspection work-force was devoted for two solid weeks, 24 hours per day, on an intensive site inspection of the UP system. That was -- at the same time, we intensified our SACP efforts to make outreach to railroad employees and to railroad managers to get a clear indication from the people who were out there in the field what was going on.

MR. SULLIVAN: Okay. Since you said, you know, there were no apparent trends leading up to these accidents, and the five accidents, you said, happened in -- in an eight-week period, do you think that this was just an isolated case, and that it was somehow related to the service interruptions?

MR. GAVALLA: In terms of was it an isolated case, definitely not. That's why we took the strong action that we did.

Was it related to the -- to the service interruptions? In hindsight, based on the information we've developed over -- through the SACP process and our outreach with labor and also our outreach with management, based on some of the testimony that I heard here regarding the nature of some of the causal factors or some of the underlying systemic root causes that we identified through the SACP process, it appears that certainly some of the issues having to do with the service interruptions were certainly very significant in this process.

MR. SULLIVAN: Okay. I'd like to ask a question about -- tell me if I'm correct, that the two safety assurance assessments, is that similar to what people have been referring to as blitzes?

MR. GAVALLA: That's correct.

MR. SULLIVAN: Okay. Could you discuss the safety assurance assessments and separate them from the SACP and describe does one drive the other? Does one come before the other, and how they're inter-related?

MR. GAVALLA: I understand. The SACP is essentially a process. It's a very wide-ranging process. All the safety data that we collect, including that data that's collected through on-site inspections, accident investigations, special inspections, all that goes into our database, and we come out with various safety statistics and data.

That is all reviewed by a SACP team, but we go beyond that. We realize that data alone is not enough. We realize that we have to get real world indications from the people that are out there, the men and women that are out there every day.

If you look at some of -- one of the charts that we have over there, particularly the one, the second from the end, that says U.S. Railroad System, we have 400 safety professionals. That includes inspectors and specialists, people that get involved in active on-site inspection and data-gathering. That's for an industry of 265,000 employees, a nationwide industry of 265,000 employees.

We have 1.2 million freight cars, 20,000 locomotives, nearly 9,000 pieces of passenger equipment. We have 220,000 miles of track. You can see it's all there for you. It's a huge task.

Based on the number of people that we have, based on the resources that we have, we can only do a small statistical sampling of what's going on. So, statistics are not enough. We realize that. We've realized that for some time.

What we endeavor to do with the SACP process is to leverage our resources. We actually go out to the men and women who are out there every day. We try to make them our eyes and ears. We try to develop lines of communication with them. We try to let them know that if they see things, they should bring them to our attention. That's part of the SACP process.

Once we get all this information together, we analyze this. We do coordination amongst FRA regions. What we've done is we have a project manager for the major SACPs. What we've done relatively recently, since November? December?

MR. KUTCH: November.

MR. GAVALLA: Since November, we appointed a full-time project manager. Prior to that time, Mr. Kutch was the project manager for the UP, also had other duties within FRA.

We've appointed full-time project managers to coordinate all the sharing of information, all the outreach efforts, all the coordinate -- better coordinate our inspection activities within the major railroads.

The Administrator pointed out the changing nature of the industry. There was no UP railroad system a few years ago. The mega-carrier that we've seen grown up just recently over the last few years didn't exist years ago. We've seen a steady stream of consolidations since de-regulations, but the scope -- there's never been anything on this scope before.

What we're trying to do, what we realize we have to do, is find a way to coordinate all this information, and it's not just data. We also have to be able to do the outreach and coordinate the real world inputs. That's what this process is about.

Now, you asked are the safety assessments part of the process. They certainly are part of the process, and when we see a need to do that, we won't hesitate to order a large-scale assessment to go beyond the -- the normal outreach activities I described to the SACP process.

MR. SULLIVAN: Mr. Payan is going to ask some questions about the SACP process. So, I don't want to steal his questions, but it's my understanding through that, there's a safety plan developed by the railroad, and then the FRA monitors the outcome of that.

But is there any separate outcome or conclusions that come out of the safety assessment that's separate from the SACP or is it all -- all part of the same process?

MR. GAVALLA: Our approach to -- our response to railroad accidents is multi-faceted. Certainly the major underlying themes, the systemic issues, the root causes, were spelled out in the SACP report that we issued in February and for which the carrier issued a safety action plan.

But we take other responses as well. We've already talked about how we issue fines and violations. That certainly goes on while this SACP process is going on.

But we also do more than that in response to specific accidents. We don't wait until we have under-lying causes. We don't wait until we find systemic issues. If we see issues develop before that time, we respond to them more quickly.

The Administrator alluded to some of the safety advisories and safety bulletins that we issued. I think she listed three in her presentation. Actually from the period of 19 -- from 1997, the period in question, we issued five safety bulletins and advisories specifically related to events that occurred on the Union Pacific, particularly the train collisions.

So, we do this, you know, in conjunction with our findings of root causes. It's not enough to address safety on any one particular level. Again, we have to have a multi-faceted approach. We have to identify the underlying root causes if we're going to be preventative, but we also have to identify specific safety programs and procedures on -- that can exist in specific disciplines, and beyond that, we have to look at specific locales in the railroad and address those issues, local issues, more appropriately with fines, where that's appropriate, or through direct outreach.

MR. SULLIVAN: And I would like to ask a question about inspection activity. I got a few different answers, and I'm just going to assume -- so that you -- you don't have to get it out, and this is a report that FRA put together for Congress, and it's called "Enhancing Rail Safety Now and Into the 21st Century", and it was dated October 1996, and in it, it says, "SACP initiatives complement FRA's existing enforcement program. Team and individual inspector-based inspections still comprise about 80 percent of FRA's safety program", and then further on in the report, it says, "Between 1994 to '95, about 20 percent of the agency's resources were involved in the transformation from site-specific to railroad system assessments and related activities."

And I was just wondering what the relationship is between on-site inspections and system assessments, and it says "other related activities", and that may be the SACP. I'm not exactly sure. But if you could just talk about the relationship between inspections, the percentage of site inspections as opposed to assessments, and the SACP process.

MR. GAVALLA: The -- what you were describing was basically an empirical observation. What we observed since the institution of the SACP program is that essentially 20 percent of the time appeared to be spent on issues other than just site inspections, and again site inspections is only one small portion. It's one important portion, but it's only one portion of our inspection activities. We already mentioned accident investigations, special inspections, complaint investigations.

However, we do much more than that, and one thing that hasn't been elaborated on yet is that our inspectors are involved more than -- in more than just field work. They also support our rulemaking process. They do inspections to develop data to feed into the rulemaking process.

We bring them down to Washington to actually get their input in writing the rules. It's not just written by people in an ivory tower in Washington. We bring people in who have real-world experiences on a day-to-day basis to get their input into this process.

So, these activities also account for that 20 percent.

One thing we also seem to focus on is inspections as -- inspections are inputs into our system. What we've tried to focus on in the Federal Railroad Administration are the outcomes of our safety program.

This was a requirement of the Government Performance and Results Act of 1993, and it was also a directive of the Administration under their National Performance Review.

What they told us was, is that government agencies have to become more efficient and more effective, and one way to do that is to focus on performance. Stop -- you know, the main focus is not on measuring how much input you do, how many inspections you do, how many investigations you do, although those are factors. We continue to measure that, and we continue to use that. They're just tools.

The main -- the -- the real indicator of the success or failure of our safety program is the results. The only results we have are accidents, injuries, fatalities. What we do is we set goals. We set goals out for the year 2002 on the percent of injuries and accidents and fatalities that we want to achieve reductions in in specific program areas, including train accidents, including employee on-duty casualties, including grade-crossing accidents and fatalities, including trespasser accidents and fatalities.

We set measurable goals. Then we design a program designed to help us reach those goals. This all feeds into that process.

MR. SULLIVAN: Thank you. I have no further questions at this time.

MR. PAYAN: Good afternoon. Aside from requiring a safety integration plan, what does the FRA follow or as far as guidelines, what do they look at before, during and after a merger?

MR. GAVALLA: Well, we're going to have Deputy Administrator Don Itzkoff testify into some detail into the safety integration plans.

However, as you know, this is a relatively new concept. The Administrator, Jolene Molitoris, testified before the Surface Transportation Board about the importance and need for planning in the merger process.

On November 3rd, the Surface Transportation Board issued an order requiring safety integration plan be submitted as a condition as part of the environmental impact statement in regards to the Conrail acquisition.

What FRA did then at that point in time was we developed criteria, specific areas where the railroads should look to plan for the changes that are going to take place when CSX and NS acquire certain portions of the railroad.

Again, Administrator Itzkoff can speak on that in more detail, but, in essence, we look at virtually every area of railroad safety. We look at -- we told the railroads that they have to look at, and they have to develop a plan that looks at every discipline within the railroad industry.

They have to look at the policies and procedures that they have in place on the existing carrier and compare them with the same policies and procedures that exist on the carrier being acquired, and they have to integrate those -- those programs. They have to look at issues, such as staffing. They have to look at issues, such as management. They have to look at issues, such as resource planning and allocation, and they have to develop a plan that addresses all these issues.

Then the FRA and other parties are allowed to review these plans, and in fact, FRA has worked very closely in the development of these plans. We've been working with the industry to monitor the development of these plans, and we do also, once submitted, we do a very thorough analysis of those plans.

MR. PAYAN: How about internally? Is guidance provided to your inspectors to step up inspections during that period or at any period?

MR. GAVALLA: Well, what we did specifically in regards to the Conrail acquisition is prior to that time, we did launch an intensive assessment of the CSX-Conrail-NS systems. We've issued a report, and we can provide that for the record.

MR. PAYAN: Okay. Going back to the safety assurance and compliance program, what -- what determines to form a SACP, and who makes this determination?

MR. GAVALLA: Again, the process is in place on the major railroads. It's -- it's there all the time. The process is always there. The process and principles of outreach, the process and principles of seeking root causes of coordinated team-based inspections, they're part of the way that we do business now, these elements that always existed or had existed for some time in the agency on an ad hoc basis.

What the SACP does is it systematizes all those elements, but beyond that, we realize we need to do more on the major carriers in particular. We need to have a full-time project manager in place to assure that this process takes place on a daily basis.

We've done that on the Union Pacific. We've done that on the BN Santa Fe. We also have project managers on the CSX and Amtrak that are there, and they don't change.

On the smaller railroads, we've assigned project managers. They have other duties as well, though. For example, I was a project manager on the Long Island Railroad at the same time that I was a safety project coordinator involved in other railroads.

MR. PAYAN: So, all Class 1s have a SACP in place right now?

MR. GAVALLA: Right. And the BN Santa Fe and the Union Pacific Railroad, those are exclusively their duties. The other major railroads, particularly CSX, we've had one who a vast majority of his duties have been devoted exclusively to CSX.

With the Conrail acquisition, CSX and NS, we may very well have full-time managers doing nothing else but that -- but being project managers.

MR. PAYAN: Can you give us a run-down on which programs have been implemented specifically on the Union Pacific Railroad in regards to safety assurance and compliance program?

MR. GAVALLA: Have been implemented?

MR. PAYAN: Yes.

MR. GAVALLA: Earlier today, we've distributed a summary profile of the -- of FRA's SACP report and the Union Pacific Action Plan. It's titled "Summary of FRA-UP SACP Report", and it goes step-by-step through each of our recommendations, and the Union Pacific Action Plan response.

If you'd like me to go through this, I can, or if you'd like me to read the actual 19-page report, 30-page action plan, and 20 attachments, I could do that, but let me summarize some of the major issues that have not already been covered.

MR. JAMES P. DUNN: Can I interrupt you for just a minute, Mr. Gavalla?

MR. GAVALLA: Please.

MR. JAMES P. DUNN: Are these the items that you brought up this morning?

MR. GAVALLA: That's correct.

MR. JAMES P. DUNN: And are you -- do you wish to enter them into the record as exhibits?

MR. GAVALLA: I'm certainly -- I -- perhaps that would be beneficial. This is just a summary of the information that's already been entered into the record and identified as the SACP Report and Action Plan.

But, yes, let me -- let me enter -- introduce those into the record, if that's appropriate.

MR. JAMES P. DUNN: Okay. Do the parties have copies of these documents?

MR. GAVALLA: Yes, they do.

MR. JAMES P. DUNN: Does every -- all the parties have a copy of the items we're referring to here? Texas Railroad Commission, do you have them?

MR. MARTIN: We can't seem to identify it. I think we may have been given them.

MR. JAMES P. DUNN: All right. Well, we get Railroad Commission straightened away. How about Union Pacific? Do you have a copy of these documents?

MR. JERRY R. DAVIS: Yes, we do.

MR. JAMES P. DUNN: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes, we have them.

MR. JAMES P. DUNN: United Transportation Union? Do you have any more copies, Mr. Gavalla? The Board of Inquiry only has two copies, I think.

(Pause)

MR. JAMES P. DUNN: For the record, these will be given Exhibit numbers, and before the close of the proceedings, I will or the Chairman will advise how they are designated.

MR. PAYAN: Just one last question. Were you going to give us a summary or --

MR. GAVALLA: Well, let me touch upon some of the major points. We have other people here that are more expert in some of the particulars, have been more involved in putting together some of the particulars of this plan, including Mr. Jim Phelan, who will be on a panel later, and also Mr. Eric Kutch.

We've already had some testimony from Ms. Cindy Gross and Mr. Dave Green regarding specific elements of this plan.

Let me just touch upon some of the elements, and one of the key things I think you mentioned was would I touch upon the items that have been implemented.

What we have here is a safety action plan, and we regard it as just that. It's a plan. It's a very thorough planning document, touching upon all the issues raised, all the concerns that we raised in our SACP report.

What we realize is the real key to this whole process is implementation of these plans system-wide at the rank and file level. That's where safety lives. That's where safety occurs, is on the tracks, in the dispatching centers, in the signals, and amongst the people that operate those things.

The 56,000 employees of the Union -- of the Union Pacific Railroad --

MR. JERRY R. DAVIS: 53.

MR. GAVALLA: 53,000 employees. Do we believe that this plan has been -- is implemented in the field amongst all those 50,000 -- 53,000 people today? No, we don't. The plan itself indicates that there are milestones and mile posts as to when implementation will take place.

Some of the things have been implemented already. Some of the -- some interim steps have been implemented, and other things are proposed in the future and need to be developed over time.

I will say this much. We are certainly working very hard to ensure that the time tables will be adhered to. We'll continue to monitor them throughout this process to make sure that they're implemented effectively, and that they're effective in addressing the issues.

So, with that qualifier, let me talk about some of the major issues that we have raised here and some of the things that are being done and being implemented.

We talk about safety culture in general, and specifically we focus on the need to have the commitment that senior UP management has displayed to safety, to get it filtered through all levels of the organization.

I believe it was stated earlier in this hearing that one of the -- one of the key factors is to get middle management to buy into this safety process and buy into this safety program.

Specific steps have been outlined here. There's various lines of communication. There are managers who have been put into place charged with safety responsibility. But the real key will be the follow through in all this.

Now, FRA and the railroad employees-rail labor plays a key role in this whole process because when we see areas where we're concerned that the safety message is not filtering down, where the safety commitment is not taking hold, we don't hesitate to go back to senior management and point that out. That's a key to this whole process. Everyone has to be involved, not just FRA, not just the Union Pacific, not just the employees. We all have to be involved in this process.

One of the issues that we've touched upon was the shortage of qualified train crews. Shortages of railroad employees in general, particularly qualified train crews. What has been implemented is UP established a new manpower planning team. They've projected their hiring needs, and they've shared their projections with us in how they go about the planning process throughout the year 2015.

They've developed for us detailed hiring plans and what specific crafts they intend to hire, how many employees they intend to hire, and what regions they intend to put them in.

Beyond that, they've invited labor into the process. They get a reality -- a reality check from the people who are in the field, and the people who know railroading, who know where the safety concerns are, to see if this is going to be an effective approach.

This is unheard of in my career in the railroad industry to have a railroad sharing this type of information and inviting labor and management into this process here.

Typically these types of decisions were considered business decisions. They were considered corporate decisions. They weren't considered safety decisions. Now they're being brought into the safety process.

We've already given testimony as to the number of hiring that has occurred in the train and engine service ranks, and the number projected for this year. This year's projections are anywhere from 1,200 to 1,500, depending on traffic and circumstances. We calculated that to be a seven-percent increase above and beyond attrition.

CHAIRMAN GOGLIA: George, can you share with us the thoughts on how SACP impacted on that hiring?

MR. GAVALLA: Okay.

CHAIRMAN GOGLIA: Hiring is normally like, as you said a minute ago, a corporate decision, and maybe the group could benefit from hearing if and how SACP benefitted that process.

MR. GAVALLA: Okay. And I'll invite Mr. Eric Kutch to jump in here at any point in time since he was actively involved in establishing the safety assurance and compliance committees. There are six major working groups --

MR. KUTCH: Yes, there is.

MR. GAVALLA: -- in those committees, and if you'd like to mention that process, I'd certainly be glad to do that.

MR. KUTCH: Well, I'd be glad to go through the process, but in regard to the hiring issue, one of the assessment efforts we had, I was tasked with reviewing the hiring on the Union Pacific, and part of that hiring reflected that 93 percent of all attrition represented a large scale of the numbers, and as a matter of fact, represented only showing an increase of seven percent.

Now that sounds belittling in itself. However, it reflects more hiring than they had done in the five years previous to that point in time. Also as part of the working groups when they started to get involved in review at the oversight committee level, we had representatives from Human Resources come in and identify what their hiring plans were, and it was discovered through that process that one of the elements was that they didn't look enough into the future.

So, there was some more hierarchy changes, and they pointed to a gentleman by the name of Mr. Jim Young to head a new initiative which is outlined in the final report. Now they plan all the way through the year 2015. So, that's how it elevated from the SACP as part of the recommendations.

MR. GAVALLA: And I'd also like to point out that there was a specific working group devoted to crew management and systems that addressed manpower issues, and prior to the formation of these working groups and this steering committee, it was the SACP process that allowed us to identify the deficiencies in staffing.

Basically through the outreach we did with the rank and file employees, talking to the train crews, finding out about the excessive work schedules, the long hours that they worked, finding out how many runs they had, finding out how difficult it was to get time off, finding out about how many managers were running trains, that's where we developed the issue, and I -- and I really have to also mention the role of management because when we went to them with these concerns, they essentially opened up their books to us. They showed us their planning process.

You know, we're safety professionals. We're safety analysts. We don't have the capability or the expertise to determine how many people a railroad needs to run, how many people they need to have to run their service. They did share that information with us. They showed us the projections that they had. They showed us where they believed they were deficient, and they showed us what they're doing to change it. They shared it with us. They got our input into it, and they also invited labor into that process to review that information.

To me, that's unprecedented. It would not have occurred through any other process than this one that we have in place, the SACP, where we make a systematic effort to do this outreach.

CHAIRMAN GOGLIA: Thank you.

MR. PAYAN: One more question, my final one. Do you feel the FRA has enough inspectors to perform site inspections as well as cover all the additional activities, such as SACP, RSAC, the listening sessions, the technical resolution committees?

MR. GAVALLA: What a question to ask a government bureaucrat. Do you have enough people? Do you have enough resources? Especially a safety guy. I mean as long as there's one accident out there, one injury, one fatality, I could always ask for more people, but the reality is this.

In this year's budget that we released, we have asked for additional resources. We have asked for more field people, 32 to be exact, which is about an eight-percent increase, and let me anticipate the next question. Is that going to be enough?

I spoke a little bit earlier about the Government Performance and Results Act, how we have to base our safety program on results. What we do is we focus on the results and the goals we could reasonably expect to achieve, and then we base our budgeting on achieving those results.

We've looked at the changes that are under -- that the industry is undergoing. We look at the increase in traffic and the decrease in employees, and we -- we assess the impact that that's going to have on railroad safety. We look at the creation of these mega-carriers. We look at the safety integration planning process and what that's going to impact on -- on our ability to do our jobs, and from that, we do an analysis of how many people we need. That's how we arrived at the figure of 32 people.

Is that going to be enough? Well, we're confident at this point in time, based on the information that we have, we think so, but we also must point out that we review this every year. We submit a budget every year. We review our performance indicators. We review our action plans, and we look at the changes taking place in the industry, and if we see that we're going to need more, we'll certainly ask for more.

MR. SULLIVAN: I just have two follow-ups. First, did you say you were going to submit to the Safety Board for the record the filing that you submitted to the Surface Transportation Safety Board regarding mergers?

MR. GAVALLA: We'd be glad to do that, yes.

MR. SULLIVAN: I would like to see a copy of that, and also the STB's response to that filing.

MR. GAVALLA: That's fine.

MR. SULLIVAN: Okay.

CHAIRMAN GOGLIA: And if that's available electronically, it would be better, and I assume you have it on disk.

MR. GAVALLA: We'll give you what we've got. If we've got it on disk, we will.

MR. SULLIVAN: And my last question was, I was wondering who gets a copy of the -- if it's the safety plan or the SACP report or what I -- I -- I guess it's Exhibit 5-H. It's a safety assurance and compliance program report, Union Pacific Railroad, February 1998, and I ask because yesterday, the BLE asked for -- wondered how many engineers they were going to hire in 1998.

So, I assumed you didn't have a copy of it prior to today. If you did have a copy, it said in that, I believe it was 800 TE&Y employees for 1998.

MR. GAVALLA: I'd gladly explain who we distribute these reports to.

MR. SULLIVAN: Okay.

MR. GAVALLA: Certainly the report goes to the railroad management, and also it goes to every rail labor organization that's involved on that property. We send it to the presidents of the rail labor organizations.

Internally, within FRA, it goes to all the regions. It goes to all -- everyone in the Office of Safety or all the -- the program heads, and it's a public document. Anyone else who requests it is given a copy.

We distribute it amongst the working groups, the people who are actively involved in this. Copies have gone to the National Transportation Safety Board.

MR. JAMES S. DUNN: Yeah. I have a -- I have a couple. SACPs. Is the Texas Railroad Commission on any of those?

MR. GAVALLA: The Texas Railroad Commission is a vital player in our safety program. Certainly they -- on a field level, their input into the SACP process is vital.

MR. JAMES S. DUNN: They're on one of the committees then? Do you know? I can ask them when they come up.

MR. KUTCH: They don't have an actively-assigned person to one of the working groups, no.

MR. JAMES S. DUNN: Okay.

MR. GAVALLA: And the committees are headquartered in Omaha.

MR. JAMES S. DUNN: Okay. And I want to go back to a question that I asked Ms. Gross on the Harriman Dispatch Center, where you did your assurance assessment and found that they were lacking in three areas of over-work, overload, whatever.

Is it -- is it the job of an inspector before -- before the blitz or whatever you want to call that, the assurance assessment program or thing that you did with them -- is it the job of an inspector to go into that Harriman Center and -- and look at the performance of the train dispatchers and things like that?

MR. KUTCH: Yes, it is, and prior to Ms. Gross's arrival, we had two assigned OP inspectors in Omaha. Since that point in time, there's been some changes and that's how Ms. Gross ended up there.

But as support to all the other regions that the UP operates in, any time there's any incident or accident or any follow-up work that needs to be done, those local people are there and available to them at all times. But on a routine basis, the way their duties are divided between those two parties up there, one of those inspectors is full-time assigned to the Union Pacific property. So, therefore, they're in and out of there on a regular basis.

MR. JAMES S. DUNN: Okay. So, at any time prior to that assessment, did the indicate there was any kind of problem that was found when you sent your full team in there?

MR. KUTCH: Not that I'm aware of.

MR. JAMES S. DUNN: Okay. Now, what you learned, and I had asked her this, and I maybe was unfair for me to ask her, but do you take the findings from that Harriman Center to the other railroads to make sure the same thing isn't happening there?

MR. GAVALLA: Yeah. We have -- we regularly share information from our SACP process with the other railroads. We have several mechanisms to do this. One is internally within FRA, all the regional administrators meet periodically with me and my senior staff to discuss railroad issues, and particularly we focus on SACP findings and system-wide issues.

Within FRA, we have multi-regional conferences where members from throughout the agency meet through the specialist meetings, the quarterly specialist meetings. Specialists are kept apprised -- apprise each other of their findings within their disciplines, so that there's a sharing of this information throughout the industry.

Also, we pointed out some of the safety bulletins and advisories that we issue. These are issued on an industry-wide basis. We send them to railroads. We send them to labor, and, of course, internally, we distribute. So, there's very many mechanisms for sharing these issues throughout the industry.

MR. KUTCH: I would like to add to that, Mr. Dunn. Also as part of the SACP process, we have an open-door policy between FRA, labor and -- and the carrier, the Union Pacific. Also, we do a weekly conference call among the FRA folks every Monday morning, and minutes are generated from every oversight committee meeting that we have and distributed to all stakeholders that are involved. That's -- normally, it -- they're transcribed and mailed out within five to seven days after the occurrence of an oversight meeting.

In that, it identifies all the issues addressed, the working group reports, any issues that were resolved, any implementations that transpired.

MR. JAMES S. DUNN: Didn't the Union Pacific, from what you just described the SACPs, already have something like that in place before the SACP started?

In a description that Mr. Davis gave, it sort of -- they did have meetings between union and management and tried to work things out on their own railroad.

MR. GAVALLA: Well, I'm certain they had meetings between union and management. As a former union representative, I had plenty of meetings with management.

I think what's different about this process, it's a systematic process. It's system-wide as well, covering all the crafts on the industry within a particular railroad, and FRA is actively involved, and that's a big difference between local labor-management safety committees.

MR. JAMES S. DUNN: Okay. I got one final question. I noticed -- is the SACP process, this -- this summary report, sort of turning you into a recommendation, into giving recommendations instead of regulatory responsibilities? I see a lot of recommendations.

MR. GAVALLA: The recommendations are issued to the SACP report, but that -- again, we -- we respond to safety issues in a multi-faceted level. We talked about the safety bulletins, advisories, and directives that -- that we -- we release, and again there are five of them.

I can -- I can go into them, if need to, but that's another approach. But it has not in any way turned this away from our traditional inspection, finding of defects, and issuing of violations.

You know, we looked at -- I saw information that had been entered into the record regarding the number of violations. That was only the number of violation reports.

There are many counts within a report, and that has no -- and there's no way you can judge based on that information the actual amount assessed in railroad fines and penalties.

I can give you an example. For 1997, on the Union Pacific Railroad, we have assessed in the last 12 months, I believe, $2.9 million. That is not particularly out of line with a railroad of that size. It is probably more to some extent than the previous 12 months but not a lot.

Of that, 1.3 million was assessed prior to the accidents that occurred in the -- in the Summer, beginning in -- in -- in -- prior to July, 1.6 million afterwards. So, there was not a lot there in terms of fines.

Most interesting in regards to the safety sweeps or the safety blitzes, thus far, only a 159,000 was associated with those activities, although there are still some pending, particularly the hours-of-service ones.

What I'm trying to say is what we did through the sweeps and assessments and the blitzes, we found issues outside of the realm of regulation, and we addressed it through the SACP process. We find other issues routinely through inspections, and we address them through the fine process. It's not an either or proposition. We do it all.

MR. JAMES S. DUNN: Thank you. I have no further questions.

CHAIRMAN GOGLIA: Okay. We'll go to the parties.

MR. JAMES P. DUNN: I've got just one before we start. Mr. Gavalla, before we go to the parties, we had talked about the petition to the STB that you'd provide to us. It seems we just happen to be in the Washington area. Could we get that at the proceeding before we close tomorrow?

MR. GAVALLA: We'll do our best. We can certainly -- we can certainly submit the --

MR. LAUBY: I believe that we do have some of the documents. Some of them were -- were submitted as information before. What we would need to make sure is that we have the full set of documents, and probably we need to sit down with your staff for a few minutes before this hearing is convened to make sure that we have the documents.

MR. GAVALLA: I'll promise you that what we have available in our office, we'll make available to you tomorrow morning.

MR. JAMES P. DUNN: Thank you very much.

CHAIRMAN GOGLIA: Okay. To the parties. UTU?

MR. BOYD: Thank you, Mr. Chairman. Mr. Gavalla, in listening to your testimony and answers, what improvements do you think are needed to make the SACP process work better?

MR. LAUBY: Would you make sure your microphone's switched on, please?

MR. BOYD: Is it on? Hello?

MR. GAVALLA: That's a good question. We asked ourselves that same question. What we've done is we formed an internal SACP review team. Essentially I like to think of it as we're conducting a SACP of our SACP process, and we've -- it's -- it's a wide-ranging team. We brought in people from various aspects of the Office of Safety. Some of those who are involved in the SACP, some of who are not directly involved but just work off of the information that's produced, and we charged them with saying what can we do to do things better? What can we do to make it more effective?

Some of the things that we've done recently, as I've pointed out, within the -- since November, we've -- major railroads have SACP managers devoted to doing nothing but SACP process.

I think what's really going to improve the process is by having the parties, particularly labor and management, and also FRA people, just get more experienced in the process and become more involved in the process, and not just at the leadership level.

We've got good participation at the leadership levels. We've got to get the buy-in at the middle management levels, and also the middle levels of -- of union management representation, and also at the rank and file level. We're still working through this. We're still -- we're still growing in this process.

I'm a firm believer that you can learn about things by reading about them and studying them, but you only learn how to do something by actually doing it. The more we do this SACP process, we think, the better we're going to -- we're going to get at it.

MR. BOYD: Well, George, I was going to as you another question, but you mentioned one area here that I'd like to ask about first.

What seems to be the problem at the middle management level with SACP?

MR. GAVALLA: Well, I didn't mean to lay the burden at just the -- the doorstep of middle management, but -- but --

MR. BOYD: George, let me -- let me ask -- I'll ask you the two questions I was going to ask with this one in mind and --

MR. GAVALLA: Okay.

MR. BOYD: -- maybe we'll cut some of this short.

MR. GAVALLA: Yeah.

MR. BOYD: I was going to ask you secondly what does -- what more does labor need to do to make it work, and then what more does management need to do to make it work, and let's couple that with the problem with middle management? Maybe it will all sort itself out in your answer.

MR. GAVALLA: Okay. All right. This whole process of labor-management-FRA cooperation is relatively new to the industry. Now, most people, they may think something you started in 1995, you know, have pretty much three-four years of experience, is not new, but contrast that with a labor -- a railroad culture that goes back approximately a 150 years.

The nature of that culture, and I can -- I mean I was one of them -- was -- was contentious, to say the least. It's one of the most -- more contentious industries that we have, railroading, in terms of labor-management relationships.

The challenge before us is to get people, to convince people that it's fruitful to work together, to try to put their differences aside. We realize differences are not going to be put aside in every aspect. There's going to be still areas where there's going to be contention, but safety does not have to be one of them.

Safety is one area where there are a commonality of interests. Everybody's got an interest in it. Amongst the rank and file employees, hey, it's their lives. They're the ones who are losing their lives, can lose legs, can suffer injuries. I know, I was out there. Some of my friends were killed in the industry.

With management, it's the same thing. Virtually or vast majority came through the ranks. They care about their people. They don't want to see them die. They also realize it makes good business sense. The safer you are, the more profitable you are.

Also, what we're finding is safety and service go hand-in-hand. If you improve your safety, generally you're improving your service as well, and if you're improving service, you're usually improving safety, and, of course, for FRA, it's our very reason for being. So, this is one area where we really do have the opportunity to -- to work in partnership.

What's it going to take to do that? Well, the people who've been doing it, the people at the senior levels, I think, understand that now because we've had this opportunity. It just takes time to get it focused at the lower levels.

We need the firm support of senior management. We need the firm support of senior labor to get -- get the people to work in this process, and once you get those middle levels involved, we also need their support to get it down amongst the rank and file employees and the first-line supervisors, and we believe FRA could play a major role in that. We're certainly going to be there at the doorstep, and where we see areas that things aren't moving fast enough, I've been on the phone many times with Dennis Duffy and Jerry Davis over the last few months, bringing those issues to their attention.

MR. BOYD: One more. Stepping away from the SACP process, in forming your opinions and recommendations, you first need information. In gathering that information, I'm talking about for the entire mission of FRA, not just SACP or -- or any other particular project, what's the best way that you see to gather information?

MR. GAVALLA: Byron, again it's -- there -- there is no best way. If we're looking for the best way, I think we're asking the wrong question.

It's got to be a multi-faceted approach. We still need to do inspections. We still need to do a lot of inspections. We still do a lot of inspections. About -- let's see. I want to say about -- I think we submitted it for the record. Total inspections for the first 10 months alone on the Union Pacific was over 10,258. That's just inspection reports. Within an inspection report, there can be many, many units inspected and recorded.

For the first 10 months, that was 526,774 units inspected. This is again -- look at the size of our workforce and figure that about 20 percent of them should be devoted to the Union Pacific, if that's -- if it's a statistical breakdown. That's a lot of inspections.

That, of course, isn't enough. We also have to do -- we -- we review accident trends, but that's not enough either. We need to get there. We need to have the input of the rank and file employees and the first-line supervisors and the managers and senior managers and senior labor officials who see things on a broader, more global perspective.

It all has to be there. I can just think of my experiences as a signal man. We had FRA inspectors come on the property. I never saw them, not because they weren't there, they were there a lot, but when they'd show up here, supervision would send us some place else so we never got a chance to talk to them. They did find things wrong, but they never -- they only could see a small percentage of the issues out there.

Again looking at the size of our workforce and the size of the industry, we can -- we figure we can monitor about two-tenths of one percent of railroad activities.

If our -- if our railroad -- if our inspection force was 10 times its size, and we spent 10 times as much money, it's still only two percent. What we can do, though, is if we have the outreach, if we have these vehicles of communication with the labor employees, we can see where the problems are much more quickly.

There's been some talk about inspections have fallen off. Yeah. They have fallen off some, not a significant amount. The other side of the coin, though, what we really focus on, is since we started doing this program, safety has improved more than before we were doing this.

When we were looking at the nip, and we had statistical data to drive quota systems for inspections, because that's essentially what the nip was, sort of a quota plan, we looked at -- we looked at the accident trends in the industry. While the nip was going on, our safety performance flattened out.

The Administrator touched on this. Essentially from '86 to '93, our safety performance had flattened out. We were getting marginal improvements in safety but not -- not that much.

Since we've gone to this new approach, we've enhanced safety. Our improvements have been greater. I've got the chart all the way there on the end. I can't see it from here. Maybe your eyes are better, but we've submitted that for the record.

As a matter of fact, all these charts are submitted for the record as Exhibit 7-B, and just comparing the improvements since we started this approach to the same period prior to that, let me give you an indication.

Total railroad fatalities, '93 through '97, because we began the process prior to '95 in a small way. It really became effective and rolled out in a systematic manner in '95. We started the -- working around the edges to this in '93. '93 through '97, 17 percent -- 17.6 percent decline in total railroad-related fatalities as opposed to 3.4 percent for the same five-year period prior to that.

Employee on-duty casualties declined 45.9 percent five-year period that we had this in place, with only 30.7 percent decline prior to putting it in place. You know, that's -- that's the type of information we're looking at here.

The train accident rate, excluding highway rail crossing accidents. Since we put the program in place, 18.3 percent improvement. Prior to that same year period, it was an 8.5 percent improvement. What it's showing us, this is the real measures. This is the only way we can measure safety, is in the decrease in the amount of accidents, decreases in accident rates, decreases in fatalities, decreases in deaths, decreases in injuries. What it's showing us is -- is that's the effective way to go.

MR. BOYD: George, what I was going at more than into the area you went into is about empowerment of people and -- and the culture of a corporation to get down to the lowest level possible, so that the employees feel they're empowered, at the same time the middle and lower management people feel that they're empowered to -- to -- to follow the culture that's being displayed by the senior management.

How -- how do you -- as FRA's mission, how do you -- assuming that's what this is really all about, how do you make that work where you haven't -- I'm not saying it was a failure rate. Where it hasn't worked that well in the past, and this is a new process, and I -- I grant that. How do you make it work in those areas, and I'm not talking about statistics and numbers and programs. I'm talking about people making this work because if you've got two-tenths of the area covered, that's a whole lot of area that's not going to be covered, and I think the best way in my opinion to get it covered is -- is some kind of empowerment and some kind of push-down of the -- of the corporate culture that sponsors and promotes that empowerment.

MR. GAVALLA: Byron, obviously you've been reading the SACP report. That --

MS. BEAL: They send more stuff that I can ever read.

MR. GAVALLA: Those are some of the first -- those were the first issues addressed in the report. How do we -- how do we promote safety empowerment? It's got to start at the rank and file level. It's got to start at people -- at the level of the people who are out there and the first-line supervisors.

Union Pacific presented an action plan. They talk about lines of authority. President Davis went out -- frequently goes out and meets with his management, meets with the rank and file employees, send out a letter indicating a policy of empowerment where employees are empowered to act unilaterally in matters of personal safety.

This is all part of the process. Again, that's a process, and we recognize it. It's a plan. The real key is going to be the implementation of this plan. We're certainly going to be involved, and where we see areas where it's not happening or not happening fast enough, that's when we go back to the railroad, and that's when you folks have to get involved and go back to the railroad and demand that there be a commitment, that the commitments are fulfilled.

MR. BOYD: That's all I have, Mr. Chairman. Thank you.

CHAIRMAN GOGLIA: Okay. Mr. Davis, the question of middle management again that you sat and listened to, I believe it to be the most important piece of this process today. I have seen other programs fail because of the middle management, the threat, because of the empowerment of the people below who this type of process always seems to catch fire with, and it also catches fire with senior management because they see the benefits, but if you don't do a good job of convincing these directors of operations and MOPs and all the rest of it, if you don't do a good job of -- of convincing them that this is not going to coerce their jobs, it is not career-threatening for them, this effort will fail, and we will all lose.

MR. JERRY R. DAVIS: I can't agree more, Mr. Chairman.

CHAIRMAN GOGLIA: BLE?

MR. WALPERT: Yes, thank you. Mr. Gavalla, yesterday, I asked a question of Mr. Davis, which was something to the effect of should the SACP process end, does UP have in place another safety plan.

So, my question to you is more of the theory and structure of the SACP process. Is it intended this process would last indefinitely once the committees have concluded their reports and findings have been made?

MR. KUTCH: I'd like to answer that, if I could. I've been assured by the -- our folks at the Union Pacific that they are convinced that this process will go on forever, whether FRA backs out, and it's left to labor and management to handle by themselves or whether we stay actively involved at all times.

MR. WALPERT: Okay. Thank you. There was some other questions that in my mind have been left unanswered, and I want to refer to those briefly, if I may.

Again yesterday or today, I guess, I asked a question of Mr. Castiglione, that if -- that I believe he was unable to answer, and that had to do with the FRA violations that occurred in 1997.

I asked what happened to those reports once they were sent to Washington, and he said that he wasn't really sure. So, could you answer that question? What happened to those violations?

MR. GAVALLA: Certainly better have been sent to Washington. I mean I -- I -- to those specific violations, I couldn't answer that.

MR. WALPERT: Well, in general then, what happens when a violation is sent to Washington? What is the process?

MR. KUTCH: My understanding of the process, and I'm dealing -- we're talking about attorneys now. My understanding of the process is that a technical -- a violation is generated in the field by an inspector. It is reviewed by his or her specialist. It goes through a deputy administrator, now that we do have those, and ultimately signed off by one of those two, either the two deputies or a regional administrator.

Then it is forwarded to Washington, and it's also reviewed for technical merit, and if there's any questions or any issues that have to be resolved as to the circumstances surrounding that event, then it will be sometimes referred back or there could be phone calls between the specialist and the attorney that's assigned to that railroad, and ultimately it will reach a review for civil penalty and will be discussed at the Washington level between the attorneys and the representatives from that carrier, and it eventually will have a settlement hearing. That's my understanding of the process.

MR. WALPERT: Well, what takes place at the settlement hearing?

MR. KUTCH: Well, it's the opportunity for the carrier to come forth with any mitigating circumstances they may feel that are pertinent to the resolution of that violation.

MR. WALPERT: So, what's the bottom line? Once the settlement hearing is concluded, what -- what kind of repercussion may be enforced upon the carrier?

MR. KUTCH: Well, there's a dollar amount pre-assessed before they go to the settlement, based on number of --

CHAIRMAN GOGLIA: Eric, are you -- are you intimately involved with this process that you can answer these questions? It seems to me you may not be the appropriate person.

MR. KUTCH: From a deputy administrator point, yes, but as a project manager of the SACP, no. Currently, I'm project -- I'm -- this is my interpretation or my understanding of that process. Other than that, I probably shouldn't go any farther. That's a good point.

CHAIRMAN GOGLIA: Bill, would these questions be better suited for Don Itzkoff in a little bit?

MR. WALPERT: That would be fine.

CHAIRMAN GOGLIA: Okay.

MR. WALPERT: I'll withhold those questions till that time. I'd like to get an answer to them, though.

Okay. I've got just a couple of other questions in regard to the SACP report. The first one. Is positive train separation addressed in the SACP report?

MR. GAVALLA: No, it's not.

MR. WALPERT: Can you tell me, is there -- was there a reason for it not being addressed?

MR. GAVALLA: Well, we're looking at systemic issues that have to do with safety causes, causes of accidents, causes of injuries. Positive train separation, positive train control is not identified as a causal factor.

We recognize the value of such technology. FRA has been -- the industry has been the leader in the industry in trying to promote the development of this type of technology, but those aren't the types of issues that can be addressed on a railroad basis. This is an industry-wide effort that we're promoting at -- on the -- as you probably well know, including the RSAC committee.

We have RSAC working groups. I believe there's three working groups devoted to the positive train control issue.

MR. WALPERT: Okay. Thank you. So, -- so, can I conclude from -- from that answer then that only issues that have a causal nexus to the accidents in question on UP were addressed in the report and plan?

MR. GAVALLA: No. Issues dealing with railroad safety, issues that are involving railroad safety on a railroad-wide basis, on an industry-wide basis. Again, this has to do with safety assurance of existing railroads, existing railroad systems.

Positive train control is development of a new technology, something that really there's no place we can really point to and say there's a positive train control system in revenue service, and we know how it's going to work. This is a new concept. It's being addressed in an entirely different level.

MR. WALPERT: Okay. Thank you. In -- in regard to the SACP report again, was engineer familiarization or qualification addressed in the report?

MR. GAVALLA: Yes, it was.

MR. WALPERT: Can you tell me if any conclusions were reached?

MR. GAVALLA: Well, I found Mr. Green elaborated on that very well. Would you like me to reiterate that, the points Mr. Green made?

MR. WALPERT: Well, no. I mean it was talked about that the policy that was in place on UP, but I don't know that we ever talked about what the recommendations of FRA were.

MR. GAVALLA: Our recommendation was assure that train crews receive sufficient qualifying runs over unfamiliar territories. Mr. Green elaborated on what the UP's response was, how there was a differentiation based on our efforts, and again when I say our efforts, we certainly had the support of the Brotherhood of Locomotive Engineers and the United Transportation Union, virtually all the operating employees out there, developing that issue with us.

We brought that to the Union Pacific Railroad. They have since that time amended their policy to differentiate between engineers who've never had a run over a territory and those that had been qualified on a territory, however had not been over that territory for a portion of time, I believe it was a year.

MR. WALPERT: It's been said during the course of this hearing that the -- that engineer familiarization may not have caused any of the accidents on UP during the time in question in '96 and '97. Do you agree with that assessment?

MR. GAVALLA: I was not in this position at the time all the accidents occurred. So, I don't have a detailed understanding of all the findings.

I'm trying to look. I believe it was addressed in one of our safety advisories or bulletins, and I'm referencing that right now.

(Pause)

MR. GAVALLA: I'm sorry. I can't answer your question.

THE WITNESS: Okay. Thank you very much. That's all I have for now.

CHAIRMAN GOGLIA: UP?

MR. JERRY R. DAVIS: No questions, Mr. Chairman.

CHAIRMAN GOGLIA: Texas Railroad Commission?

MR. MARTIN: Thank you, Mr. Chairman. Just a couple of quick questions, Mr. Gavalla.

Dealing with specific violations and violation reports filed by -- filed by the various states, are you aware as to whether or not states are -- are routinely advised as to the disposition of violations that were generated by various state inspectors?

MR. GAVALLA: I don't know. I couldn't answer that question. Perhaps that's more appropriately put to Mr. Megary.

MR. MARTIN: Okay. And the other thing, and maybe this is just a clarification, when you talked about the fine assessment, the $2.9 million, that wasn't what was reported to me anyway. Could you go through that again?

MR. GAVALLA: That's what I stated. I believe 1.3 million was assessed the first six months of '97, 1.6 million since that time.

MR. MARTIN: And is all of that or is any of that probated or held in abeyance? Is any of that amount held in abeyance pending future investigations or anything?

MR. GAVALLA: That's the amount that's been assessed. I think I -- well, let me see if I understand where you're going. In terms of enforcement discretion or holding items in abeyance, occasionally we do that, particularly as part of the safety assurance and compliance program, where it's appropriate.

What we're asking the -- both labor and management to do is open up to us, tell us what's going on, let us see where, for lack of a better term, the -- I don't want to say where the bodies are buried, certainly not in this industry, but let's see what's really going on out there, and in order to encourage that, we say that we'll exercise discretion on our enforcement.

If we see violations that we consider serious or have the potential to cause accident or injury, we

-- we don't hesitate to issue fines, as I've pointed out. But sometimes we promise to hold things in abeyance pending a particular outcome or a suitable outcome, and let me give you a very good illustrative example of that.

There have been considerable discussion about our investigation involving hours-of-service record-keeping. We found over -- I believe it's over a thousand recordkeeping violations. Now just the time and energy and resources that we would have devoted to putting each one of these recordkeeping violations into a format that Chief Counsel could use would have cost us hundreds of man hours just to process recordkeeping violations. There was no indication that there were actual hours-of-service violations, but the records were not -- were not proper, and recordkeeping is an important part of the process.

What's the best way to address that? Well, we looked at that, and we said, you know, we've been taking violations against hours-of-service record-keeping ever since there's been recordkeeping in hours-of-service. Is there a better way? Well, we thought so.

There's been -- there's been some mention of Mr. Dan Norris, who's our expert in electronic hours-of-service recordkeeping. We went to the UP, and we said, look, we believe your program is deficient. We believe that it's going to be impossible for us to monitor your hours-of-service effectively, and certainly you can't do it effectively if you don't have the records, and there's a way of -- a way around this.

We -- we can do better. We can go to an electronic system. CSX already has it. SP had it. Let's do that. So, Dan Norris sat down with the Union Pacific. He sat down with their programmers, with their managers who were in charge of that issue. They developed an electronic hours-of-service recordkeeping system, and what I understand of this, not only is it going to be -- allow us to access the data and compile it much more effectively, what it's going to do essentially is make it very difficult, probably impossible, to mis-report, shall I say, because what it does is when -- when a train engine service employee enters information into the system, first he enters in his -- his information regarding timekeeping. How much -- how much time he spent. If he wants to get paid, he has to enter his time card.

That information -- with this system, that information is automatically combined with the hours-of-service. The two are coordinated. So, if you're -- if you're -- if you short yourself on your time, maybe you can short yourself on your hours-of-service, but you can't -- you can't do -- you can't do one without the other. It's all one system now. That's going to ensure that we've got some very accurate data in there.

Beyond that, when an employee sits down at the computer terminal, he can't back-date the record. I mean if you've got your train tied up at -- if you outlawed on the train at 7 p.m., and you didn't get in to your tie-up point at 10 p.m., you enter in -- you sit down at the computer at 10 p.m., you can't go back to 7 p.m. and show yourself off the clock. You've got -- you can only go back five minutes.

So, you have to account for that time, you know, when you started and when you got off, and you've got to show, so you're going to show when you outlawed and when you were in limbo time or in dead-head time.

This is -- this is a very effective system. My understanding UP is in the process of submitting a waiver to us, but before that, we figure before we go through the waiver process, let's go to the employees, let's go to the rank and file employees and the general chairmen and explain the system to them because if we introduce this process, if UP applies for the waiver, and they don't understand it, they'll have the opportunity to delay the waiver, to ask for hearings, to contest the waiver.

Let's show them how it's going to benefit them. Let's show them how it's going to make their lives simpler, more -- more -- and safer, and we're doing that. We're doing that up front. FRA's involved in that. Then once we do that initial outreach, then we're going -- then I understand UP is going to go forward with the waiver request, and we've promised to give it expedited handling.

MR. MARTIN: That's all the questions I have.

MR. GAVALLA: The answer was, though, that's why -- that's where we exercise enforcement discretion. This all comes about. That's a much more effective use of our time and energy than trying to pursue those -- those violations.

MR. MARTIN: I understand.

CHAIRMAN GOGLIA: FRA?

MR. PRITCHARD: Yes, Mr. Chairman. Mr. Gavalla, you had entered one exhibit into the record just recently. Did you care to enter the other exhibits into the record, and would you like to discuss anything about those exhibits while you're there?

MR. GAVALLA: Yes, I would. The Administrator in her testimony referenced the -- some safety statistics on the Union Pacific system.

Previously entered into the record were data tables of -- of accidents, accident-cause codes, so forth and so on, and a graph was compiled of those. I believe it was Exhibit 5, I'm not sure if it was 5-A or 5-B, by the National Transportation Safety Board. Those graphs focused on the number of accidents, reportable FRA accidents, system-wide, on the -- what was identified as the Union Pacific Railroad, the company identified by the Union Pacific.

What FRA looked at is the entire railroad system that now encompasses Union Pacific Railroad. In -- in the 1995 through 1997, the railroad tripled in size. So, you saw a spike in the accidents attributed to the Union Pacific Railroad in 1997. That was caused by the fact that they were a three-times-the-size railroad now.

What we've done with these graphs, and we've distributed them earlier, they're identified as UP System, FRA Reportable Accidents/Incidents, All Disciplines, and Union Pacific Train Accidents in Texas, 1990 through 1997, we looked at the entire railroad system that is now the Union Pacific, and we went back in time before Union Pacific, and we compiled that data into graphs to show the trend, the safety trend overall on that system now identified as UP. That way, statistically you could see the changes brought about when it became Union Pacific.

We'd like to enter that into the record. I know -- no need to talk about -- discuss it because the Administrator referenced it in her testimony.

CHAIRMAN GOGLIA: Is that it for the FRA?

MR. PRITCHARD: No, sir. Can I just --

CHAIRMAN GOGLIA: Any other hints? Are you entering these into the record, these exhibits?

MR. GAVALLA: We'd like to enter them into the record as exhibits.

CHAIRMAN GOGLIA: I will move all three of those documents into the public docket.

MR. GAVALLA: We have one last document that we distributed. It's UP-SACP Partnership Organization. It shows -- it starts with a flow chart that shows the SACP -- SACP Oversight Committee on the Union Pacific, the six working groups, and the various subgroups, I believe there's 34 subgroups, under each working group, and that document also has flow charts to depict the -- the decision-making process under the -- under the SACP on Union Pacific. Also been distributed, and we'd like to enter that into the record as well.

MR. PRITCHARD: Mr. Gavalla, there's been a lot of discussion about penalties, enforcement discretion and regular inspections yesterday and today.

How do all of these fit into FRA's program?

MR. GAVALLA: I thought I answered that.

CHAIRMAN GOGLIA: Before he goes through that again, is there one specific area that you're concerned with?

MR. PRITCHARD: Quite a few specific areas, yes.

CHAIRMAN GOGLIA: Well, let's get to the specifics. I have a mutiny pending up here for a facilities break.

MR. PRITCHARD: Are you suggesting that we go to a facility break?

CHAIRMAN GOGLIA: I want you to finish, and then we're going.

MR. PRITCHARD: What about -- on resource allocation methods, how does FRA determine how to allocate inspection resources?

MR. GAVALLA: We pointed out some of the changes that have evolved in our agency. Previously, we talked about the National Inspection Plan, which is essentially -- was essentially a quota-type system based on statistical indicators.

It wasn't a strict quota system because what we would do is we would look at accident data, inspection data, traffic data, break it down by FRA region, by railroad, by state, and based on that, we determine how many -- what percentage of time or how many hours should be spent in inspections in each -- in each area, and then we sent it to the regions, and the regions would allocate the number of hours their inspectors spent on each -- on each discipline on each railroad.

What we saw from that was that it was a great system. It was a great tool. The problem is, is it wasn't improving our safety program. The numbers showed that we weren't getting the increases in safety.

We still maintain that information. We still do the databases. We still do the modeling, and we still send it to the regions, to the regional administrators, to the specialists.

However, that's only one tool that they use now. They also are required to get the information based on the outreaches that they have, based on the things that they're seeing. We expect them to communicate. We expect the specialists and inspectors to communicate, and the issue of judgment enters into the picture.

We have to rely on our people's ability. We have people who are experts. We also have the outreach now. We also have -- we also have as our eyes and ears the employees and front-line supervisors that all feeds into the -- that all feeds into the picture, and that's how we base our -- our allocation of -- of inspectors' time.

MR. PRITCHARD: Mr. Gavalla, when you talked about your safety advisories and directives and bulletins, is there anything that you want to add as to what took place as a result of the accidents in 1997 as to what FRA did to deal with those?

MR. GAVALLA: Let me just briefly -- I mentioned that there were five safety directives and bulletins that we issued that were related to issues on -- with the Union Pacific accidents being discussed here today.

In addition, there were at least three others that we issued, and these were all issued industry-wide.

Safety Bulletin 97-1 and 97-2 regarded the Kelso, California, accident. We recommended safety practices for certain locomotives equipped with emergency MU fuel line cut-off devices located inside the locomotive control compartment at a location which enables the cut-off device to be activated unintentionally.

We -- Safety Bulletin 97-2 recommended safety practices to stop trains on heavy descending grades by initiating emergency application of air brakes when the speed of the train -- train speed exceeds a maximum authorized speed by five miles per hour or more.

In reference to the Devine, Texas, accident, which occurred on June 22nd, within five days, we issued Safety Directive 97-1, which addressed safety practices to evaluate the integrity of railroad programs for operational testing and inspection and to ensure that safety-critical information is accurately conveyed and acknowledged for the operations of direct train control or indirect train control territory.

CHAIRMAN GOGLIA: Filibuster.

MR. GAVALLA: Okay. And we had two others.

CHAIRMAN GOGLIA: Just for the record.

MR. GAVALLA: Actually we already have. It's Exhibit 7-A, and there's two others. 97-2 and 97-3 are safety advisories.

MR. PRITCHARD: Mr. Gavalla, would you please address the FRA's efforts to address fatigue issues?

MR. GAVALLA: This could take awhile.

CHAIRMAN GOGLIA: We have got some folks coming in. In fact, I'm going to recall Cindy, it's a good point to put this in, because in our previous discussions, fatigue countermeasures and discipline, we had a long conversation in Omaha about which I want to get on the record.

MR. GAVALLA: We were prepared to have Mr. Phelan testify about --

CHAIRMAN GOGLIA: Mr. Phelan's going to be up here in a little while.

MR. GAVALLA: Yeah. I would like to address the fatigue issue, though, because of comments that I -- that I had heard made throughout these hearings.

CHAIRMAN GOGLIA: Briefly.

MR. GAVALLA: Never done that before, but I'll give it a try.

There was reference to hours-of-service and reference to the amount of time that crews spend waiting dead-head. Those are just two facets of the fatigue issue. There's a whole complex of issues that have to be addressed to combat fatigue, and you can't just look at one.

If you're trying to fix one, you're not going to get at the problem at all. It's all related. For example, it has to do with the predictability of work schedules. It doesn't matter how much time you have off if you don't know when you're going to be called to go to work. You can be off for five days straight, but if you don't know when in those five days you're going to be called, you're not going to be able to plan your rest.

Those issues don't speak to the quality of rest. What kind of facilities do you have at your -- at your away-from-home terminals? Basically what you need is a comprehensive fatigue countermeasures plan. UP has spent $4 million to hire the nation's leading fatigue expert. They've got their employees, FRA, and everyone involved in putting that program together. They have SACP working groups. That's the way we think it needs to be solved, not by fixing hours-of-service, not just by fixing crew, you know, crew utilization. It's all got to be done together.

CHAIRMAN GOGLIA: Okay. And we're going to hear from Dr. Rosekind and others in -- I thought in a little while. Maybe not quite a little while.

We -- are you through?

MR. PRITCHARD: I am through for this round, sir.

CHAIRMAN GOGLIA: Thank you. For now. Are you a lawyer? Are you an attorney?

MR. PRITCHARD: No, I'm not.

CHAIRMAN GOGLIA: Good thing. You'd be speared.

All right. We're going to -- we'll take a -- a 15-minute facilities break and get back. It's my intention to run all the witnesses scheduled today today.

(Whereupon, a recess was taken.)

CHAIRMAN GOGLIA: Okay. We'll go back on the record and continuing with the questioning of Mr. Gavalla and Mr. Kutch, and it is now back to the head table, and first on our list is Ms. Julie Beal.

MR. JAMES P. DUNN: Before we start, I'd just remind both Mr. Kutch and Mr. Gavalla that you are still under oath.

MS. BEAL: Thank you, Mr. Chairman. Good morning, gentlemen. Good afternoon, gentlemen.

My first questions are for Mr. Kutch, please. Mr. Kutch, how many SACP meetings are typically held in a week at UP?

MR. KUTCH: Are you talking about the oversight committee level or the working groups, Ms. Beal?

MS. BEAL: Yes.

MR. KUTCH: Both?

MS. BEAL: Yes.

MR. KUTCH: Virtually almost every day of the week, there's some connection to a working group transpiring on the Union Pacific. Since we began the process, fully began it, which was September 23rd, and actually got organized and got our flow charts and the things that Mr. Phelan, according to the Chairman, will illustrate here later, we conducted oversight meetings on a bi-weekly basis, and that was because of the urgency.

Everybody involved felt a severe amount of urgency to get things up and running and address those issues. Since that point in time, there's been 239 meetings conducted to date.

MS. BEAL: Okay. And how does the information generated from those meetings get transmitted to the people in the position to actually make some changes? Could you briefly just tell me how the information flows?

MR. KUTCH: That's what the Chairman wants Mr. Phelan to do, but I'll gladly tell you. What we have is an oversight committee with working group, and then there's subgroups assigned under them to address specific issues. Each of those subgroups must complete a task force -- a task force initiative chart.

In so doing, they identify who the responsible party is, the subject matter, the date they're going to start the work, the date the work's to be completed by, the date it's to be reviewed by, and comments, and then it escalates back up through the targets, one of the hand-outs we gave you, and it is up being at the top for the oversight committee to make either recommendations or refer it back for further follow-up.

MS. BEAL: So, in addition to the oversight, is there any screening of the recommendations that come through?

MR. KUTCH: It is screened from all the working groups. There's a consensus process that takes place in each one of them. For example, we determine what an issue is at the oversight level, assign it to a working group, who assigns it to a subgroup. The sub-group among themselves looks into the issues and prepares recommendations, and they have a consensus process. They have to agree.

MS. BEAL: And could you give me just a ball park figure of how many recommendations have come out of the SACP process since it's begun? I mean is it tens or hundreds or thousands or --

MR. KUTCH: I can give you an example of what you get into, the degree of what you're asking me in that question. When you look at the discipline upgrade initiative workgroup, they had 25 concerns alone under that that they were making recommendations on. To break down each one of them, I'd have to go back and review files, --

MS. BEAL: Right.

MR. KUTCH: -- but there's been a large amount.

MS. BEAL: Okay. So, given the volume of recommendations that are being generated through the SACP process, I'm wondering now how does -- how do all those recommendations get managed into a doable amount of recommendations?

MR. KUTCH: Once again, we're back into this -- this -- this chart that you're looking at here. Those groups, as I said, they make recommendations. Pending coming forward with the recommendation for resolution, at each SACP meeting, each working group prepares an update, a status report, of where they're at on that particular initiative.

So, all the members of the oversight committee are currently being kept up-to-date on the progress and the progression toward resolution. Once it is to the point where it comes to us and a recommendation is made, and we agree with it, and it is implemented, then it goes through a process by which it's communicated out.

MS. BEAL: Okay. Now bear with me here. So, it comes through you. Does it then go to headquarters or does it go directly to Mr. Davis or --

MR. KUTCH: That's -- that's the greatest feature of this. Everybody that is a member of this oversight committee has full empowerment. Once the decision is made, it's made, and it's implemented on the system.

MS. BEAL: Okay.

MR. KUTCH: If I might, I'll put a part of the process up on the board here.

(Pause)

MR. KUTCH: I can give you the short version of this, I hope. At the top there, you'll -- at the top, you'll notice that oversight group. That oversight group in the beginning was made up of labor, management and FRA, and there was five labor organizations involved.

Through progression, we now have 12 labor organizations in conjunction with the rail and FRA people. On each of these groups that you see under there, there are six working groups that were identified to address all these issues below.

In order to keep the process, if Mr. Phelan will turn to the issue resolution process overhead -- yes. Okay. You'll see there that there's coming three -- three circles inside there, the SACP partnership oversight.

When I said it's -- the issue is identified and put into formal process at the working group, that's where it goes there.

If it is approved and recommended by the partnership, it goes down -- straight down to the communications stage, and it is communicated through different departmental briefings, through the chairman's newsletter, through the business tv and ITV, which I believe is Information Tv, CO reports, department heads, and it's put out in notices, and it also -- where it is distributed to is through the organizations, labor organizations, FRA, UP field operations, state and local agencies, and then we go down through, and we follow up on it to see that these things are -- are working as intended.

If it comes to the SAC -- going back up to the top, if it comes to approval of the SACP committee, and there's, through review of those members that set on what we refer to as our board of directors, if there's some reason something there doesn't appear right or doesn't seem to be functional, we recommend it back to the working group for follow-up review, and the process begins again.

One feature, if Mr. Phelan will go down to the next one, is a local issue resolution chart or process. I think that's one of the most important features of what we have in our process in that it brings the rank and file level in at a local level. There you go. That's it.

That gives the opportunity for people to determine whether they have a problem that needs to be addressed at a local management level or whether it's systemic in nature. It helps us further identify other systemic problems as they arise.

If, for example, you get up to the point where -- I'm losing my voice. Hold on.

(Pause)

MR. KUTCH: For example, if it gets up to where it has to be determined whether it's local or systemic, if it is not systemic, it goes to local management. If they can resolve it, it's over. If not, it goes to a higher degree of management. If they can't resolve it, it normally ends up being a formal complaint submitted to FRA for further handling. That's for a specific localized issue.

However, if it's a safety issue that is systemic, it goes up to the oversight committee, and it will go back to the original chart that you saw there, and it can come by two means, through that issue brought from the local level or it can be something that is brought from an FRA assessment or from a concern of rail labor, concern of the railroad, and be introduced into the partnership then, and once again, it goes through the assignment of going to a working group.

MS. BEAL: Okay. Now, the -- the issues I'm specifically asking about, and we can just assume if I ask the question, I'm talking about safety issues --

MR. KUTCH: Okay.

MS. BEAL: Let's say there's no resolution within the working group to what they think is the safety issue, and they cannot come up with an agreed-upon recommendation.

MR. KUTCH: then we -- then we internally among the oversight group determine whether or not there's a bad make-up of personnel involved. We don't have the right experts on a working group. That could be part of it. There can be some human factors involved that the group just doesn't get together. We'll re-develop a new group and put them to work on it again.

MS. BEAL: So, if one group can't come to consensus, you'll form another group to -- until you --

MR. KUTCH: Re-evaluate the situation. So far, we have not had that happen.

MS. BEAL: Okay. Now as I --

MR. KUTCH: I was just going to tell you this is probably one of the greatest partnerships I've seen in all the SACPs I've been involved in.

MS. BEAL: Now as I understand it, UP's participation in SACP is completely voluntary?

MR. KUTCH: Anyone's participation is voluntary, yes. Ours is mandatory.

MS. BEAL: Okay. Can you give me an example of a safety concern that has not been able to be resolved at the SACP level?

MR. KUTCH: At this particular time, everything has either been -- that we have resolved is in a state of where we need to follow up on it or things are pending and still under review. We haven't had that -- had to cross the road yet.

MS. BEAL: I guess what I'm wondering now is if you come up -- if -- if a safety issue is addressed and cannot be resolved at SACP, what authority does FRA have to step in and do something about it, seeing as this is a completely voluntary program?

MR. GAVALLA: If you are referring to issues that are subject to regulation, we certainly have our traditional enforcement authority, and as I think I've pointed out, we haven't hesitated to use that.

Beyond issues subject to existing regulation, we have broad enforcement authority for safety matters, and we've exercised this many times in the past. We've issued emergency orders where they have been appropriate, compliance orders if they're appropriate.

These are tools that we've had existing to us for many years, and we continue to use them.

MS. BEAL: Well, that brings me right to my next question, Mr. Gavalla. I'm glad you brought that up because I'm concerned now about issues that are as far-reaching as the hours-of-service regulations, and I'm wondering if, after a 150 years in the industry, management and union has not been able to come to any resolution on these issues, how you're hoping to come to a resolution on this in the SACP program.

MR. GAVALLA: Well, I think the Administrator pointed out that the SACP is just one vehicle. We're attacking this issue on an industry-wide basis through the North American Rail Alertness Partnership.

Virtually every major railroad, every segment of the railroad industry, all major labor organizations, the NTSB, the Volpe Transportation Center, Transport Canada, are all involved in this effort.

But let's talk about the issue of fatigue in the railroad industry. It's only recently that it's been identified as a safety concern, a significant safety concern. It's been a part of the industry for a 150 years.

Back in my day, it was just something that was accepted as a condition of employment. Also, we talked about how the nature of the industry has changed. Look at a graph there that shows how traffic is up and employment is down. What that shows is that there's less of a safety redundancy built-in.

Issues that weren't terribly critical to safety then are much more critical now. When you had a five-man crew, I think there may have been some opportunity for rest along the trip when you had two people in the cab. When you had every signal maintainer had a helper with him, there may have been a little more opportunity. It's not there now. It's being identified as a much more safety-critical issue now.

MS. BEAL: Thank you, Mr. Gavalla. The Safety Board, as you know, as a most-wanted list of safety recommendations. One of the -- there are two rail items on that most-wanted list. One is positive train control, and I have assumed now that that's not really -- this isn't the forum to discuss that.

However, the other issue is the hours-of-service rules as they apply to all modes of transportation. Our recommendation to the Secretary of Transportation was made 10 years ago after the Safety Board identified several, maybe many, rail accidents in which fatigue was found to be causal in those accidents.

So, I might take exception that this is a new issue of safety for the FRA.

MR. GAVALLA: As I tried to point out, hours-of-service is just one aspect of the problem. To try to address the fatigue issue through the hours-of-service we don't think is going to get us there. We need a comprehensive fatigue countermeasures plan.

MS. BEAL: And does the FRA plan to support any of the findings of the SACP with a review and possibly revision over the hours-of-service regulations, knowing that they don't solve the problem but knowing that they can certainly provide a structure and support the solution?

MR. GAVALLA: We're certainly looking at every aspect of the hours-of-service issue, including the -- of the fatigue issue, including appropriate hours-of-service recommendations in terms of legislation.

MS. BEAL: Can I maybe follow up with over the past few days, I think we've heard quite a bit of testimony regarding the work hours of the railroad industry.

Can you tell me in the -- in the 10 years since the Safety Board made its recommendation what the FRA has done to date, and what you plan to do in the near future?

MR. GAVALLA: In regards to the fatigue issue in general?

MS. BEAL: Yes, sir.

MR. GAVALLA: The Administrator, I think, touched upon the North American Rail Alertness Partnership. Beyond that, we had made -- I believe -- and this was before my time. So, perhaps I should not -- perhaps we should submit some information for the record, but it's my understanding that at one point in time, it was a subject of a reauthorization where we sought to have the authority to allow FRA to deal with hours-of-service through regulation, take it out of statute and put it into regulation.

However, we were not successful. The Congress maintained that authority, statutory authority.

MS. BEAL: If we hear later today, and I've heard Dr. Rosekind's presentations in the past, that there is enough information with scientific footing, good solid scientific footing to support rulemaking, is the FRA committed to following through with that?

MR. GAVALLA: We're certainly committed to following through on seeking an effective comprehensive fatigue countermeasures program in this industry.

MS. BEAL: Thank you.

CHAIRMAN GOGLIA: Mr. Ellingstad?

MS. SWEENEY: Thank you. Mr. Gavalla, in 1997, how many incidents of excess service related to the Hours-of-Service Act reported to you by the Union Pacific Railroad?

MR. GAVALLA: I don't have that information in front of me. I could certainly submit it for the record. I believe there's been testimony on that issue, though.

MR. ELLINGSTAD: I don't believe -- I have asked the question before and not gotten an answer.

MR. GAVALLA: I don't -- my -- my reference was I believe the question was raised with Mr. David Green, and we said we'd submit that information for the record.

MR. ELLINGSTAD: And I believe that 49 CFR Part 228.19 concerning monthly reports requires those reports to be made to the Associate Administrator for Safety.

MR. GAVALLA: They come to our office. I do not get to review every hours-of-service report. I will gladly submit that information for the record, sir.

MR. ELLINGSTAD: Okay. Thank you. To clarify these documents that you gave us this afternoon, this summary of FRA-UP SACP Report, is that just a summary of Exhibit 5-H?

MR. KUTCH: The final report?

MR. ELLINGSTAD: The Safety Assurance and Compliance Program Report, Union Pacific Railroad, February 1998.

MR. GAVALLA: That's correct, sir.

MR. ELLINGSTAD: And it does not contain any -- any information not contained in that report?

MR. GAVALLA: It is, I believe, every recommendation contained in the SACP report is reflected in the summary.

MR. ELLINGSTAD: The point I'm trying to make is has that -- has anything changed since the February report that we do have in the exhibits and in the docket in this document or is it safe to use this as a summary?

MR. GAVALLA: This summary is a summary of the report that you have there. Any developments since that time would not be reflected in the summary.

MR. ELLINGSTAD: Okay. If I can use this summary report that you've given us and ask you a couple of questions having to do again with hours-of-service.

On Page 8 of this summary report that you've given us today, you have an FRA recommendation that states, "Ensure compliance with hours-of-service law and recordkeeping requirements. The UP action response is instituting electronic recordkeeping by January 27th, 1998, expected to be fully implemented by 4/1/98."

Is that -- is that your understanding of the -- of -- of what commitment has been reached between FRA and UP?

MR. GAVALLA: That's correct. I -- I reference the efforts to develop that. This was the plan. As we pointed out, it would require a waiver of our regulations, and we felt it most appropriate and to expedite the process was to go to do outreach --

MR. ELLINGSTAD: That's fine.

MR. GAVALLA: I'd like to explain -- if you're -- if you're looking at the dates here, those dates were target dates.

MR. ELLINGSTAD: Okay. That's fine. I'll get to that later, and I'll ask about the waiver in a minute. Right now, what I'd like to do is -- is ask what the FRA role is in the development of this electronic hours-of-service system. You had indicated that your Mr. Norris was working with UP people and programmers to develop this -- this -- this system.

Is he providing some kind of consultant services? Is FRA certifying this system?

MR. GAVALLA: He did act, and it's my understanding, and we can certainly make additional testimony available for the record, it's my under-standing that he did act in a consulting capacity. He indicated the various types of information that is required to be in the system.

He also made recommendations as to some appropriate types of screens and software development based on his knowledge of similar systems on other railroads, and he's also been very involved in taking this message to the employees who are going to use this and preparing them so they'll have an understanding of this prior to the issuance of the waiver or prior to the application for the waiver. Excuse me.

MR. ELLINGSTAD: So, FRA is -- is actively participating in the development and design of this system?

MR. GAVALLA: That's correct.

MR. ELLINGSTAD: Is this a usual practice with the industry?

MR. GAVALLA: This is somewhat ground-breaking. Again, this is part of the principles of the SACP. Rather than just going to the railroad and saying, you know, we don't like what you've got, we try to work with them and move them in a direction to do something more effective, something that we think would be a more effective approach.

MR. ELLINGSTAD: At some point when this is completed, will there be an explicit approval or certification of this system by the FRA?

MR. GAVALLA: That would be required as part of the waiver process. UP will be required to submit a waiver petition. It will go before our safety board for review, and then it will need to be approved by FRA before it can be put into place.

MR. ELLINGSTAD: Okay. And what does the waiver specifically imply? Is -- it waives the hard copy records? Is that the gist of it?

MR. KUTCH: Basically it waives the signature requirement as outlined by -- the law requires a signature by the employee, a personal signature. This is a waiver to have signature lists.

MR. ELLINGSTAD: Okay. Is there a plan in place that you're aware of either with respect to the -- the Union Pacific Railroad or the FRA to invoke some particular process of review of these hours-of-service data that now exists or now will exist electronically on a regular basis?

MR. KUTCH: Mr. Ellingstad, since this project started, Mr. Norris has worked hand-in-hand with the programmers and with an individual by the name of Doug Wills, who was familiar with this process, who came from the SP. They jointly developed the electronic recordkeeping system on the SP some years back.

Mr. Norris is one of the authors of the -- of what FRA refers to as the gizmo, which is the outline for a computer network which provides a screen specific for FRA people to come in and set down and review the records that are on file of an individual.

MR. ELLINGSTAD: Okay. And this -- this technology will be made available to your inspectors?

MR. KUTCH: Yes. They receive training on how to go in and call it up. They actually get assigned a PIN number, so they can go right into the system and review it.

MR. ELLINGSTAD: And the intent then is to actually review the substance of hours-of-service reports rather than just whether or not the paper's in the file?

MR. KUTCH: Exactly. It actually shows you a real-time event. Before, it was just a paper maintenance.

MR. ELLINGSTAD: And that's pretty much -- what exists now is -- is the paper trail?

MR. KUTCH: Right.

MR. ELLINGSTAD: And the inspections as I have gathered from our discussions previously mostly focus on whether the paper's filed rather than a very detailed review of whether the hours-of-service law has been complied with?

MR. KUTCH: No. That's part of that inspection effort, first to see if the record is available, then the content of the record. There's certain criteria that's outlined in 228 that has to be on those documents. It's a multi-faceted-type investigation they do.

MR. ELLINGSTAD: Mr. Gavalla, in -- in the position that you occupy now, what is your responsibility for maintaining and performing analyses of FRA accident databases? Are you the -- are you the custodian of the accident data that are submitted to FRA?

MR. GAVALLA: We have an accident analysis branch. We have a safety analysis branch, an accident investigating division within the Office of Safety, and I provide program direction. I don't get involved into the day-to-day details of their --

MR. ELLINGSTAD: Those branches report to you?

MR. GAVALLA: They report to me through an office director and through a deputy associate administrator.

MR. ELLINGSTAD: What about the inspection databases and other kinds of indicators of -- of safety? Are those within your realm of responsibility, FRA?

MR. GAVALLA: Again, I don't get involved in the day-to-day operations or development. We have an Office of Safety Analysis under Director John Leeds, who would be in charge directly for that.

MR. ELLINGSTAD: Does he report to you?

MR. GAVALLA: He reports through the deputy associate administrator who reports to me. However, I consider him part of our senior management staff, our senior staff in the Office of Safety.

MR. ELLINGSTAD: Where in your organization, if there is a place, are other kinds of indicators of railroad activity maintained, the business? Where -- where would you pick up increases in traffic on some particular property or -- or the kinds of indicators that we heard about this morning? Is there an active program under the supervision of -- of the safety program at FRA that -- that is responsible for those kinds of things?

MR. GAVALLA: We have an Office of Policy that tracks many aspects of the industry outside of safety. However, as part of our safety statistics, we do look at traffic figures, and we use them in computing accident rates.

We have an Office of Policy that goes into many other areas of the railroad industry, and I can't speak on -- on that with any authority.

MR. ELLINGSTAD: What kind of interaction is there between all of these sorts of data analytic processes and, for example, the SACP process? Is the SACP process besides all of the meetings and -- and the discussions that go on data-informed?

MR. GAVALLA: One of our program directives in the SACP, and I believe it's discussed in the report, the 1995 report to Congress that's been submitted for the record, has to do with a safety profile or a package of data that is provided to the program managers periodically and any time upon request. That is a compilation of accident data going back a number of years.

We suggest at least five years. We can go back more. We can go back less. And it's basically all the safety indicators, all the previous inspection reports, defects found, violations, accidents based on every cause code that we keep, injuries based on every cause code that we keep. This is submitted to the project manager and his team, his team leaders, for analysis in helping plan their SACP activities. It's a plan to --

MR. ELLINGSTAD: And that's done at their request?

MR. GAVALLA: It's a requirement of the program. It's provided periodically and upon request. We can generate that any time upon request, but we also provide it periodically.

MR. ELLINGSTAD: Okay. Thank you. No further questions.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: Thank you, Mr. Chairman. I want to put my questions in perspective a little bit. I remember in Chicago in a speech that your predecessor Jim Schultz gave, he told about how when accidents occurred, he took them personally because he was one of the people in this country responsible for accidents and railroad safety in this country, and -- and when an accident did occur and someone got killed, he took it personally, and I assume you feel the same way about that, Mr. Gavalla?

MR. GAVALLA: Yes, sir. I assume there's a lot of people in this room that feel the same way as well.

MR. LAUBY: Well, I think that's -- that's correct, and -- and I feel the same way from my perspective in NTSB when we have accidents. I think that we feel that this is -- this is a failure of something that we're doing, something we're not picking up, but it is a tragedy, and I also believe very much that past is prologue, and as the Administrator said in her opening statement, that the tragedy of these accidents is if we don't learn from them and put something in place that's going to prevent them in the future.

In 1997, during the Summer, the Union Pacific had an erosion of safety. This erosion was characterized by the Administrator of the FRA as a complete breakdown in safety and in safety processes that were on the UP, and despite different programs that we've talked about, and I just want to summarize some of the things we've talked about. We've talked about SACP. We talked about SACP, I guess the '95 version that was -- was in place before the run of accidents. We've talked about listening posts, site inspections, databases where we look at accident trends and accident statistics, outreach programs.

Are there other -- other -- other elements that I'm leaving out here that I should include in this list, Mr. Gavalla?

MR. GAVALLA: I think there is considerable testimony about the elements of our inspection program beyond just site inspections, including accident investigations, including special inspections, including complaint investigations. There's an entire variety of issues we've discussed.

MR. LAUBY: And on top of that, I think we -- we discussed, whether everybody in this room agrees or not, we -- we discussed that the merger of the Union Pacific and the Southern Pacific Railroad may have had a role in this accident trend that we were seeing.

Do you -- do you believe that -- that merger had any effect on -- on this series of accidents?

MR. GAVALLA: Based on some of the testimony here, it certainly appears that it was -- may have been a factor in causing some of what we identified as the underlying and systemic issues.

One thing I'd like to guard against, though, I don't think we should be too complacent in assuming that these factors can only occur in the instances of mergers.

We're looking at issues of staffing. We're looking at issues of management oversight. We're looking at investment in human resources. Any large organization, if it doesn't pay attention to those issues, can find itself in -- in -- facing these types of problems.

So, I don't think we should focus just on the merger issue.

MR. LAUBY: Well, that's a very good point because I -- you know, I don't think that these -- all these problems developed just because of the merger or that they developed, you know, overnight just during the summer. I think a lot of them were there growing, becoming worse and probably some of the things that went wrong may have magnified them during the summer and caused them to critical mass.

MR. GAVALLA: Is that -- is that a question that you'd like me to respond to?

MR. LAUBY: I'm agreeing -- I'm agreeing with -- with you, and I wanted to see is -- is that your feeling?

MR. GAVALLA: I think the --

MR. LAUBY: That's the question.

MR. GAVALLA: I think the Administrator tried to point out the dramatic changes that have been taking place in the railroad industry, and what we looked at on the Union Pacific Railroad was essentially a paradigm shift.

The history of the railroad going back to de-regulation has been one of constant and steady down-sizing. It's been one of constant and steady traffic growth. Thus far, up until what we saw on the Union Pacific in mid-Summer 1997, was that the railroad industry had been very successful in handling all those factors and still improving safety.

At times, it wasn't improving as quickly as we thought it should be. When we developed our safety -- new safety programs, we improved the pace of change, but still all this was going on. During this time, there was more traffic. There were less employees. But the accident -- there was no causal nexus between those factors and safety problems.

Suddenly, we saw that things went too far on that particular railroad, and things that had not been -- where there had been no causal nexus to down-sizing and traffic growth and safety, now we saw there was, and we -- and it startled us at how quickly things changed.

MR. LAUBY: The -- the items we just talked about, the accident statistics, the accident rates, the information picked up by the inspectors, the number of violations, the information that went back through memos or whatever to be discussed, essentially none of these gave an early warning that there was a problem at UP?

MR. GAVALLA: Nothing that would address the string nature of the accidents that we experienced. One thing, though, I'd like to point out is that we try to learn from our experience as well. Just because we didn't have any indicators that would -- that would give us any predictive indicators of what would happen, that's not to say that now that we see how things have changed, maybe we're -- there's some things we can look at, things that would never would have occurred to anyone to look at before.

In November of this year, shortly after I assumed my position and shortly -- and -- and we had two accidents at West Junction and Navasoto, I went to Omaha and met with Mr. Jerry Davis, and we talked about that very issue.

We looked at the impact of the service disruptions, and we said are there indicators, service indicators, that we can look at and try to measure and see if there's any modeling we could do, things like the number of crews being held for -- and the number of trains being held for crews, the number of recrews, the traffic count on a particular section of the railroad. Can we look at these and see if these correlate to any safety factors?

We're exploring that. We have our research and development staff exploring that. Mr. Jerry Davis has assigned some of his people to talk to us. We're trying to see if maybe we can develop some indicators.

Thus far, they don't exist in the industry. Maybe there's something we'd like to do, and we're looking down to see if we can do that.

MR. LAUBY: Do you feel that the indicators that we have historically been using are not serving us?

MR. GAVALLA: They had been serving us well. They did not serve us in that specific instant to identify the root causes that we had looked at, the systemic root causes regarding staffing levels, overall management oversight and the fatigue issues.

MR. LAUBY: Let's just -- just for a minute take any one of the graphs that -- that you've provided on the Union Pacific during this period that shows the accident rate dropping, dropping, dropping, and I accept those -- those figures for what they are.

However, during the same time period, we did get into the situation where we had this erosion in safety. Does that mean that these -- these statistics don't mean anything?

MR. GAVALLA: Surely it doesn't mean they don't mean anything, but it just shows us that statistics alone aren't -- aren't the indicators. We have to go beyond that, and we don't --

MR. LAUBY: But do we know what the other indicators are at this point?

MR. GAVALLA: To --

MR. LAUBY: As we go beyond the statistics, what else -- what else do we need to grasp there?

MR. GAVALLA: I tried to point out that crucial to this is to get the input from the men and women who are in the industry, the people who are out there and see what's going on on a daily basis. We have to develop that. We have to improve upon that.

Basically, this -- as the Administrator pointed out, this SACP process, this systematic outreach, did not really exist in -- in FRA and in this industry prior to her establishing this program.

As we go on through this, we hopefully -- I always hope that we're going to be better next year than we were last year.

MR. LAUBY: Do you have any -- any opinion on exactly what happened last summer? And I know that's a -- I know we've talked about it one way or the other, but that's really the question of this hearing. What happened, and what can we do to prevent it from occurring again?

MR. GAVALLA: I think the information outlined in our report is a good indicator of -- of my position on this. I know it is because I was very much involved in this.

I'll reiterate what's been said before. What we saw was that traffic had increased. Staffing levels had declined to a level that could not accommodate that. There were some extenuating circumstances having to do with weather-related problems. I think --

MR. LAUBY: Can I interrupt you for just a second?

MR. GAVALLA: Yeah.

MR. LAUBY: Would those now be two indicators that you'd want to track in the future?

MR. GAVALLA: Certainly -- these are certainly things we're looking at. The -- all these led to the issue of congestion, and I -- and I don't think you could take any one of them alone. I think it all works in conference -- in -- in -- in conjunction.

Fatigue was also a factor, and again if you have tired employees but you have enough employees, there's always -- there's always opportunities for rest. If you have traffic congestion, but again you have enough employees, then again there's opportunities to mitigate that.

When they all come together at one time, it reached a critical mass, and again we've pointed out the -- the problems with the Harriman Dispatch Center related to staffing as well. All these things came about at one time, and it reached a critical mass, and we believe they manifested themselves as the root cause of a number of these collisions.

MR. LAUBY: You've heard the Chairman here and some of the others talk about SACP. You've heard the UP, Mr. Davis, talk about how impressed he is with SACP, and that if he has his way, it will go on forever.

I think what -- I think I could categorize the unions feel that this is an important process, also.

Do you think that that's the keystone for -- for future safety?

MR. GAVALLA: I certainly do.

MR. LAUBY: Railroad safety?

MR. GAVALLA: I certainly do.

MR. LAUBY: We talked a little bit about SACP processes on other railroads, and you indicated that you have SACP processes on all of the Class 1 railroads, is that correct?

MR. GAVALLA: That's correct.

MR. LAUBY: Does that include Norfolk Southern?

MR. GAVALLA: The program is not as well developed on Norfolk Southern. We do not have the labor-management committees.

As I pointed out, this process has evolved. If you look at our program directives as portrayed in our 1995 report to Congress, there was no mention of FRA labor-management committees. This is something that evolved first on the BN Santa Fe, then on the CSX, and now on the UP.

MR. LAUBY: The railroads that are coming up in the future, I -- I understand there's -- there's a merger on the horizon with the Illinois Central. Are you aware of that?

MR. GAVALLA: Yes, I am.

MR. LAUBY: Who -- who's involved in that merger? Do you know?

MR. GAVALLA: Canadian National and Illinois Central.

MR. LAUBY: The Canadian National and the Illinois Central. Do you have any SACP programs with the Canadian National?

MR. GAVALLA: I believe there is. Mr. Rich McCord, if I'm not mistaken, has been involved in that, and we also have one on the Illinois Central. Mr. Larry Haslow, I know, is the -- the project manager on that, and Mr. James Phelan, who's here, has also been involved as a facilitator on the Illinois Central.

MR. LAUBY: CSX. I know that we have a SACP there, and that you've recently issued a report. What about Conrail?

MR. GAVALLA: Conrail, yes, we issued a report. I don't have the date. May have been 1995, I believe, the first -- the first one. Mr. Lusfield Lorenzo is the project manager for that.

MR. LAUBY: Now are these SACP activities? Are these as detailed as -- as what you're doing on UP?

MR. GAVALLA: I don't think any of them are as detailed as what we're doing on the UP.

MR. LAUBY: I saw Mr. Kutch shaking his head there. Is it not as detailed or can you -- can you give me a feeling of --

MR. KUTCH: Well, we've -- we've come a long way, Mr. Lauby, on this -- this subject, and one of the reasons Mr. Shultz called me in Thursday night and said I need you to go do this is because he knows I'm a nuts and bolts person, and we have great detail. We have grant charts. I worked with the Union Pacific's programmers, and as a matter of fact, FRA adopted their program that they use in their computer network, and our administrative help that I have also mirrors their input in that. So, we both generate the same information. We document, and then we document, and then we document.

MR. LAUBY: Hm-hmm. Resource-wise, what -- can -- can you kind of rank the -- your different SACP processes? I think obviously UP is probably at the top of the list.

MR. GAVALLA: Yeah. Dealing with the issues and the complexity of the SACP has to do with the issues that we find on the railroad and the complexity of the railroad.

The Union Pacific is the largest. So -- and there's more issues there. So, that's -- essentially the Union Pacific is -- is the most thorough and complex. BN Santa Fe would be second and so forth and so on.

MR. LAUBY: The SACP process that we're talking about that was in place on UP from 1995 on, is that program still alive on other railroads of that magnitude?

MR. GAVALLA: I'm not sure I understand the question.

MR. LAUBY: Well, -- well, I'm looking at -- in 1995, we had a SACP on the UP that -- that did not handle the questions, the situation that we're handling now with this larger, more expanded SACP program, and

-- and when you say that we have SACP on all the Class 1 railroads, I'm trying to -- I'm trying to determine is it closer to the UP model or is it closer -- in 1998 or is it closer to the UP model in 1995?

MR. GAVALLA: I'm not sure it's fair to characterize the two as -- as models or as the two extremes. It varies from program -- from railroad to railroad, based on the types of issues that we find and based on -- on the complexity that we find.

It's safer to say that most of the -- particularly for the major railroads, they're closer to the UP model. Now remember that the first one we did was on -- one of the first ones that we've done was on the UP back in '90, when we were just getting started. We did not have the concept of the labor-management committees at that point in time.

MR. LAUBY: The -- you know, I think one thing is that after listening to Jolene Molitoris's presentation and some of the discussions in here, I believe that all of us are impressed at -- at the scope of SACP. The Chairman has stated that a couple of times.

But the bottom line is -- is that one role of the NTSB is to assess the level of oversight and the quality of oversight that the -- the railroads, the aviation industry, and other transportation industries receive from -- from their federal regulatory counterpart. You're aware of that requirement?

MR. GAVALLA: I'm not an authority on the -- the jurisdiction or scope of the NTSB activities, all the areas of your authority.

MR. LAUBY: Well, let me just point out that's -- that's one reason why the NTSB was moved out of the Department of Transportation and made an independent agency, was so that they could exercise that function, and this is -- this is -- really the purpose of this hearing is to look at the safety assessment, not only from FRA but also UP, taking care of their own -- their own property.

Texas Railway Commission also comes into that, but the bottom line, is that something that we are -- we are to do? One of our -- our requirements as NTSB officials, and putting that aside, you know, as a taxpayer personally, as a taxpayer as a private citizen, what -- what should I feel about these new mergers coming up? Should I -- is there -- should I feel confident that we're not going to have the same problem when Norfolk Southern and Conrail and CSX get together or should I feel confident that when CN and IC get together, that we're not going to have this -- this type of what's been categorized as a meltdown?

MR. GAVALLA: I think the Administrator spoke to the issue. I tried to speak to the issue. One thing was we try to learn from the experiences. One of the things we thought would have improved the situation on the UP would be better planning foresight, particularly in terms when there is a merger.

We've got the Surface Transportation Board agreed with the Administrator's recommendations to require this as a condition of the Conrail acquisition, and we're now working with the Surface Transportation Board on rulemaking to require this on all major mergers.

We're hopeful that this process will prove successful, and that the level of confidence that you're looking for will be there.

MR. LAUBY: One last question, and I don't want you to take this personally, but it's a question that we -- we've been beating around the whole time. Do you feel that the FRA could have done anything else to -- to prevent this or that they dropped the ball in any way on this Union Pacific problem last summer?

MR. GAVALLA: Again, I don't believe anyone saw this coming. Certainly not the FRA, certainly not the Union Pacific, who's close to it, and with all due respect, I don't -- I'm not aware of any recommendations from the NTSB or any other agencies that may look into this issue.

We regard this essentially as a paradigm shift, as a sea change. There were -- there were things that happened, issues that had not historically in our experience had not a causal nexus to overall safety all of a sudden did.

We pointed out the transformation of the industry, and it's basically moved to a place that it never had been before. We're aware of that now, and we're looking to -- to -- to address those issues based on what we've learned.

MR. LAUBY: Thank you very much.

CHAIRMAN GOGLIA: Mr. Dunn?

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

We have talked on numerous occasions today to the various witnesses about the Federal Railroad Administration's allocation of resources. The record will indicate we have had a couple different answers. So, I'll ask you directly, Mr. Gavalla.

What percentage of the FRA's activities is devoted to site inspection and site inspections or, as I've seen in some of your documents, traditional enforcement activities?

MR. GAVALLA: Site inspections are just one sub-element of traditional enforcement activities.

MR. JAMES P. DUNN: Okay. Let me just -- we can expand on that, but if you could just answer me what percentage of FRA's activities is devoted to site inspections?

MR. GAVALLA: if you're referring to the random inspections that -- that inspectors with consultation and the specialists organize, I think there was testimony that it was approximately 20 percent.

What we tried to point out, though, that's just one element of the overall inspection process. We have to --

MR. JAMES P. DUNN: Okay. I understand that. If I could just follow this point up, and I think we can both be on the same page by looking at Exhibit 5-J, which is entitled -- Mr. Sullivan brought this up earlier, "Enhancing Rail Safety Now and Into the 21st Century: The Federal Railroad Administration's Safety Programs and Initiatives, A Report to Congress", and on Page 35 of 52, Item 7, says, "SACP's use of safety partnerships and teaming does not suggest that FRA has de-emphasized enforcement tools. SACP initiatives complement FRA's existing enforcement program. Team and individual inspector-based inspections still comprise 80 percent of FRA's safety program. This traditional approach to safety allows the FRA to enter and examine rail facilities, equipment, rolling stock, operations and pertinent records to ensure compliance with railroad safety regulations."

MR. GAVALLA: I'm trying to point out that when you reference the term "regular inspections", that's one subset of that 80 percent. We have people out there in team-based inspections. These are coordinated directed inspections which comprise a large part of our work.

We have people out there in complaint investigations where they're out on there on the property. They're performing inspections. That comprises a large part of our work. We have people out there in accident investigations also doing inspections.

We have people out there in special inspections. When we refer to regular inspections, we're just referring to one subset of that entire 80 percent. That's, I believe, an accurate statement.

MR. JAMES P. DUNN: For the purposes of our discussion, then is it -- does the FRA still have as a policy that 80 percent of your program is dedicated as it is written here?

MR. GAVALLA: This was not an indication of our policy. This was an empirical observation, sir.

MR. JAMES P. DUNN: Could you help me with that? I'm -- the reason I asked that, the reason we are so interested in that, is that the document is a report to Congress, as we understand it. So, is it --

MR. GAVALLA: That's correct.

MR. JAMES P. DUNN: -- an observation of what you're doing now?

MR. GAVALLA: It is an observation of the transformation of our rail safety program since the institution of the SACP process.

MR. JAMES P. DUNN: Well, then if 80 percent of your activities were devoted to entering the property to conduct these traditional inspections in October of '96, is that still the case or has there been a policy change?

MR. GAVALLA: There's been no policy change. I'm trying to point out that 80 percent was not a number. It is not a target that we shoot for. If we do the final analysis, we may find out that perhaps more than 80 percent of the time may have been spent or may have been a little bit less, but it was not -- it's not an indication. It's not an indicator of -- of what it is that we -- we try to do in terms of our inspection activities.

MR. JAMES P. DUNN: Okay. I'll ask the question in a different way. What do you, from your position, your position of responsibility in the FRA, believe to be the percentage of time your inspectors spend on the property conducting site inspections?

MR. GAVALLA: Sir, as I have tried to point out and perhaps I didn't make myself clear, inspections are inputs into the safety program. To set a statistical number, we've tried that in the past. We had --

MR. JAMES P. DUNN: Maybe my question wasn't --

MR. GAVALLA: Please allow me to finish because it's been asked several times, and I -- I'm trying to make myself clear on this.

We tried that in the past. We had the NIP program, which set quotas for inspection activities. It was very detailed right down to the railroad level, the state level, the regional level.

What we found out when we measured that program in terms of our safety performance is that statistical method of determining resource analysis was not effective in enhancing safety. We were only getting marginal improvements in safety.

So, we don't use that as -- we don't have a number that we say this has got to be it. We certainly compile that information. We make that a tool, an analysis tool, but it's not the guiding principle any more. It's -- it's one tool that helps us in that analysis.

We rely on what our people see in the field. We rely on what's going on in the field.

MR. JAMES P. DUNN: Okay. Do you know what percentage of time your inspectors spend on site inspections?

MR. GAVALLA: Off the top of my head, I could not give that information to you.

MR. JAMES P. DUNN: Would your database be able to provide that to us?

MR. GAVALLA: Yeah. We can give you an indication on -- on amount of days, I believe. I'm not -- I don't really have the answer for you. I mean I can perhaps look and provide that for the record.

Again, we have gone down this road before in our previous inspection program. We found out it was not a good indicator of how we should spend our -- our resources. We're focusing again on the outputs of our program.

MR. JAMES P. DUNN: Yeah. And I want you to understand the purpose of my question is not to question what you believe is the -- you know, I understand you have to put your resources where you think they are -- are best, but I'm just trying to get factual information where they are in fact now, and if that matches up with what I believe to be clearly stated in this report to Congress. That was the background to my question.

We've talked a lot about efficiency testing, both with the Union Pacific and with the FRA, and as I understand it, your role in efficiency testing is to evaluate the carrier on their level of efficiency testing, is that correct?

MR. GAVALLA: We evaluate the carrier's efficiency testing program. That's correct.

MR. JAMES P. DUNN: Okay. One of the reasons we were so interested in that, Mr. Gavalla, is that in the safety assurance assessment that the FRA put out in February of 1998, one of the conclusions was that the safety policies were not effectively implemented in the field by first-line supervisors.

MR. GAVALLA: That's correct.

MR. JAMES P. DUNN: Did your activity of evaluating the carrier's efficiency testing program lead you to that conclusion? Were you seeing that before you went to the -- before you went to the 1997 blitzes?

If I can put it in a more simple way, did the sweeps that you conducted with 80 people at a time, is that what drove you to this conclusion or could you have reached that conclusion by your day-to-day activities of monitoring the efficiency testing program of the Union Pacific?

MR. GAVALLA: Our SACP report that addressed that issue was a reflection of what we found through the sweeps. There's been testimony here that one of the underlying factors in the problem with efficiency testing had to do with management crews being diverted from their safety oversight responsibility and used to run trains which was caused by the traffic congestion.

That occurred around mid-summer at the same time coincidental or at the same time as the string of train collisions that we saw there.

MR. JAMES P. DUNN: Mr. Gavalla, I was looking at some of the exhibits you brought up this morning, I guess Mr. Pritchard did, and according to these, if you only looked at the graphs, at the FRA graphs and stats, 1997 appears to be the safest year on the Union Pacific Railroad. Would you agree with that?

MR. GAVALLA: I'd like to point out that the 1997 figures are based on the information requested for the record, which we realize is 10 months of data. Projected out over 12 months, it still looks like in terms of the total number of train accidents, that is the lowest. It's not the only measure that we use for safety.

When we see train collisions, main-line train collisions, we realize there's a safety problem. I don't mean to intimate that that's our sole measure of safety, sir.

MR. JAMES P. DUNN: Yeah. And I would certainly agree, and the point I'm trying to make here, not make, but I believe it's been brought out since Ms. Molitoris gave her comment, her opening remarks, the statistics that we all historically have looked at have not given us an indication of the true state of safety on a property. Would you agree with that?

MR. GAVALLA: I agree that safety is much more than a matter of statistics.

MR. JAMES P. DUNN: Okay. Well, what I -- and I think everybody in the room would agree that it's much more than statistics, but what -- the issue I'd like to discuss with you is that, for example, all the graphs that you have brought up for the group to look at, if we were not talking about the 15 accidents, if we didn't all know what occurred particularly on the Union Pacific property in 1997, we may all be led to the conclusion that 1997 was the safest year ever on the Union Pacific, is that correct?

MR. GAVALLA: If that were the only measure of safety, that may be where you want to go. Again, we look at many measures of safety, and I'd like to distinguish between measurements of safety and predictive indicators. They're not necessarily one and the same. Just because we had a safe year last year in terms of the statistics, in terms of the number of employees that were -- were not hurt or killed, accident rates, that alone is not a predictive indicator. We realize that.

The train accident rates is only one measure of safety performance we look at. We look at the severity of collisions. We look at fatalities. We look at employee-on-duty injuries. We also look at grade-crossing and trespasser accidents and injuries. They're all taken together are measures of safety performance, and there's no one magic number that we can use. There's no one report card grade that we can give to a railroad or to an industry and say, well, this is safe, and this is not safe. Safety is a goal. Safety's a direction.

When we get to zero, then we'll know we're there. Until then, it's a goal, and it's a direction.

MR. JAMES P. DUNN: I would agree. However, if I understood your testimony to other members of the Board of Inquiry, you felt you were alerted about the conditions on the Union Pacific Railroad when five collisions occurred in eight weeks, is that correct?

MR. GAVALLA: That was certainly a very serious indicator to us. I tried to point out that we took action. You know, we take action as appropriate. Prior to that time, in other accidents as well, but that certainly is a very strong indicator to us. It certainly caused us to take notice and launch aggressive action.

I'd like to point out that, for example, in regards to the accident in Kelso, California, which occurred prior to mid-summer, that we did issue two safety bulletins, 97-1 and 97-2.

MR. JAMES P. DUNN: Okay. I only have a couple more questions, but they actually drive to the heart of why we are at this public hearing, and as you know, the NTSB called a public hearing to develop facts concerning the effectiveness of safety oversight on the Union Pacific Railroad, and one of the sub-issues of that was the effectiveness of safety oversight by federal and state agencies.

As we prepared for this proceeding, we looked through your safety assurance assessment very closely, and there was a finding and a conclusion that we were very impressed with, and I'd like to read it now for the record.

"FRA concluded that a fundamental breakdown existed in some of the basic railroad operating procedures and practices essential to maintain the 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."

Given that statement by the FRA, given the fact that the FRA is responsible for safety on the nation's railroads, do you think the FRA's safety oversight was effective during this period of time?

MR. GAVALLA: Sir, as I pointed out, if the period in time that we're referring to began in mid-summer of 1997, we saw a dramatic shift occur at that point in time.

Prior to that point in time, we did not see the same causal factors, the same factors that had been present after that point in time.

MR. JAMES P. DUNN: Thank you very much. I have no more questions at this time.

CHAIRMAN GOGLIA: Okay. We have a -- any additional questions from the Board of Inquiry?

MR. JAMES S. DUNN: I think I should only have about one.

Safety integration, safety plan, for Norfolk Southern, Conrail, and CSX has been developed?

MR. GAVALLA: I believe the railroad -- have the railroads submitted -- I'm not certain. I believe they've submitted safety integration plans. They're required to by the Board, yeah.

MR. JAMES S. DUNN: If this would have been done for the UP, do you think we might not be here today?

MR. GAVALLA: That is/was the basis of our going before -- the Administrator going before the Surface Transportation Board and raising that issue. We certainly think that planning, better planning and foresight, certainly could have -- we hope could have mitigated the factors.

Again, the plan is only one part of the process. The implementation of the plan is certainly another part of the process.

MR. JAMES S. DUNN: So, there wasn't one done for the UP, right?

MR. GAVALLA: That's correct.

MR. JAMES S. DUNN: That's all the questions I have.

CHAIRMAN GOGLIA: All right. Quickly back to the parties. UTU?

MR. LARRY DAVIS: No questions.

CHAIRMAN GOGLIA: Now, do I -- before we go on, do I understand that the UTU has just volunteered to fetch coffee for anybody that we need up here? Huh? Okay. So, any of the parties that would like a cup of coffee, just wave your hand at the UTU.

Brotherhood of Locomotive Engineers?

MR. WALPERT: I have only one question. Mr. Gavalla, you spent a great deal of time discussing the role that mergers may play in safety, but there's one question that remains unanswered in my mind.

You said that the UP-SP merger may have been a factor, if I may paraphrase, in some of the underlying systemic safety issues that surfaced on the UP. Then you went on to say that the merger alone did not cause a fundamental breakdown of safety.

Given that some of the elements of a merger, such as the changes in traffic pattern, the subsequent shifting and relocation of manpower, and the general expansion of territory that goes with a mega-merger, the question then comes to my mind, if there had not been a merger, would the fundamental breakdown of safety occurred on UP?

MR. GAVALLA: Sir, I certainly cannot predict what would have happened. I tried to point out that we shouldn't focus solely on mergers alone regarding the issues we've been talking about.

What we're looking at is planning, coordination, investment in human resources. You have to have enough people. You have to have sufficient management oversight.

I want to point out that we're concerned that these -- these factors, if not -- if you don't pay attention to them, they can occur not just with a merger, but they can occur at any point in time if we don't pay attention to those issues.

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

CHAIRMAN GOGLIA: Union Pacific?

MR. JERRY R. DAVIS: No questions.

CHAIRMAN GOGLIA: Texas Railroad Commission?

MR. MARTIN: We have no questions, Mr. Chairman.

CHAIRMAN GOGLIA: Federal Railroad Administration?

MR. PRITCHARD: Just one for clarification, Mr. Chairman.

CHAIRMAN GOGLIA: Okay.

MR. PRITCHARD: And that was the request earlier for the Surface Transportation Board's filings as well as the SIPS for both railroads, and that gets back to Mr. Dunn's question. That will be furnished tomorrow morning, a good part of it. The rest will be furnished on Monday of next week.

CHAIRMAN GOGLIA: Okay. That's fine.

MR. PRITCHARD: And we do have some electrons but not all of the electrons. So, that's the update.

CHAIRMAN GOGLIA: Okay. Thank you.

MR. PRITCHARD: And I have no further questions of the panel.

CHAIRMAN GOGLIA: Okay. Any further questions from the head table? Any here? Wow. Okay.

Mr. Gavalla and Mr. Kutch, you are released.

(Whereupon, the witnesses were excused.)

CHAIRMAN GOGLIA: The next item on our agenda is lunch. I think something's wrong. Cindy, my intention was to recall you, and some of the -- some of the subject areas were covered. Do you have anything to add to those that I missed earlier? We talked about fatigue and discipline.

All right. Thank you.

MR. JAMES P. DUNN: The National Transportation Safety Board calls Jerry Martin and Leonard Gray.

Mr. Martin, 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: Mr. Gray, could 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. Be seated, please.

TESTIMONY OF
JERRY MARTIN
DIRECTOR OF RAILROAD DIVISION
TEXAS RAILROAD COMMISSION, AND
TESTIMONY OF
LEONARD GRAY
OPERATING PRACTICES INSPECTOR
TEXAS RAILROAD COMMISSION

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

MR. MARTIN: Yes, sir. My name is Jerry L. Martin, M-A-R-T-I-N.

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

MR. GRAY: Yes, sir. Leonard E. Gray,

G-R-A-Y.

MR. JAMES P. DUNN: Thank you.

Mr. Martin, what is your present position with the Texas Railroad Commission?

MR. MARTIN: Presently, I am employed as Director of the Rail Division for the Railroad Commission.

CHAIRMAN GOGLIA: And how long have you been in that position?

MR. MARTIN: I've been the Rail Division Director since the inception of that division for approximately two years. Prior to that, I was Division Director for the Transportation Gas Utilities Division of the Railroad Commission. That takes me back about 10 years, and then prior to that, I have been in various management positions with the Commission since 1984 or 5, something like that.

MR. JAMES P. DUNN: Have you held any positions in the railroad industry?

MR. MARTIN: No, sir. I do not have a background in the railroad industry.

MR. JAMES P. DUNN: Okay. Mr. Gray, what is your present position?

MR. GRAY: Operating Practices Inspector for the State of Texas. I've held that position since June 19th of 1997. Prior to that, I have 18 years' railroad experience as a locomotive engineer with the Union Pacific Railroad.

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

MR. SULLIVAN: Mr. Martin, what is your oversight authority to inspect railroads in the state of Texas, both state and federal authority?

MR. MARTIN: The Railroad Commission is authorized by the Federal Rail Safety Act to be a participating state with the approval and with the authorization of the -- of the Texas Legislature, which they have given. There are several articles of the Texas Civil Statute, 6448(a) and (b), that authorize the Commission to participate as authorized by the Federal Railroad Safety Act.

MR. SULLIVAN: Do you enforce other than federal regulations that are in the Code of Federal Regulations? Are there also state regulations that you enforce separately?

MR. MARTIN: Yes, there are a few, and just by way of explanation, if I could indulge, I might just say that the Railroad Commission is -- is a state agency of about 850 employees, and only 20 -- presently 22 employees are in our division.

So, while -- while the Commission is concerned about rail safety issues, the predominant force of the Commission is -- is involved in oil and gas regulation as with several other industries.

But as it relates to your question of -- of railroad safety, yes, there are certain state laws that are enforced by the -- by the Railroad Commission, such as -- such as clearance laws, visual obstruction laws, things that do not necessarily have direct operational impact on railroad safety, but they do have some relationship to safety as it relates to the interaction between railroads and the public.

MR. SULLIVAN: When you say visual obstruction laws, are you talking about grade crossings or roadway signals?

MR. MARTIN: What I'm talking about is grade crossings. The Commission does have a regulation which requires that for unprotected crossings, that there be no visual obstruction on railroad property for 250 feet from the -- from the center line of that -- of that crossing.

MR. SULLIVAN: And how many state inspectors are there in the state of Texas? You can provide like their discipline and location. How many you have in each discipline.

MR. MARTIN: Okay. Fine. Currently, we have 15 inspector positions in the state of Texas. As it relates to the total -- total national effort, I suspect we're small potatoes, but in the -- in the context of state programs, our state is one of the larger programs. In fact, I think we probably are the second or third largest state program with California being the largest. I think they have probably 22 or more inspectors.

Presently, we have 15 positions. At the time of the -- the time period that this Board of Inquiry is looking at, we had 13 positions, and as a result of some of the -- some of the issues that we're here to talk about, the Commission authorized two additional inspectors.

So, currently we have 15 positions. We do have two vacancies, and as has been alluded to earlier, we do have several trainees, but when we're fully staffed, we have 15 inspectors that will be certified inspectors.

MR. SULLIVAN: And what disciplines are they in?

MR. MARTIN: I'm sorry. I didn't -- we have -- we have five operating practices inspectors positions. We have three motive power and equipment inspection positions. We have three track inspector positions. We have three hazardous material inspector positions, and we have one signal and train control inspector position.

Within those numbers, we have three supervisors. We have a -- we have an operating practices discipline supervisor. We have a track supervisor, and we have a hazardous material inspector supervisor. We had an MP&E supervisor who is now a Federal Railroad Administration employee.

We do -- let's see. I didn't -- the -- the distant -- I mean the -- the places where these people are. We -- we organize pretty much by -- by discipline, so that the supervisor of a particular discipline will -- even though he is not in the same location, that's the way that we -- we supervise our employees.

So, we have four inspectors in our Amarillo office, and they are each one from a different discipline. We have several inspectors in the Fort Worth or in our Dallas-Fort Worth area office. We have them in Houston and Corpus, San Antonio, and -- and now Austin, and I'll be glad to give you a breakdown of the individuals, if you would care to, but basically we have different inspectors around the state in each discipline.

MR. SULLIVAN: Okay. That's fine. I'd like to ask a few questions about your assessment of the 12-month accident period from October '96 to October '97, and it's to be basically along the lines of questioning I asked before, but I would like to see if you saw anything different at the state level, and the first one being, did your -- did the state inspections on the Union Pacific indicate any -- any trend for that time period? The inspectors for the state of Texas.

MR. MARTIN: I would have to say that like some of the people that preceded our testimony, we did not through the statistical information. We didn't see any trend. I think that the accident rates were as has already been testified to probably at least, if not in a decline, they were at least stable, and, so, the first -- the first hint of problems that we had were not -- were not statistical in nature. They -- they were more anecdotal, people expressing problems, and they -- and they began to -- to appear in the early Summer, probably in maybe April, probably really May, and then in June.

They were -- for the most part, they were service-related, and then they also became what we concerned about safety-related as well in the fact that there were a lot of crew people that were beginning to call us and complain.

MR. SULLIVAN: Is there a -- do you believe that there's any correlation between the -- the service problems that they were having and the safety problems?

MR. MARTIN: I heard the previous testimony, and I would have to agree that it's very difficult to have a cause and effect relationship, but -- but I believe that -- that there clearly is -- seemed to be some sort of a relationship, that as the Union Pacific began to -- to fall deeper into their service-related problems, I think that these other problems began to appear or at least -- at least be voiced ever stronger to the -- to the point that the Commission, after the Fort Worth incident, that the Commission determined have a number of hearings around the state, they -- they convened seven different hearings around the state, all over the state, to address service and safety issues.

So, I think my answer is yes, I think that there is a relationship, and I think it's very hard to -- to pinpoint.

MR. SULLIVAN: Okay. Did you -- were you involved in those two safety assurance assessments that they had in the mid-Summer and the one in the beginning of Fall? Were your state inspectors involved in that?

MR. MARTIN: Our state inspectors were involved in both of those. In the -- in the -- in the initial assessment, we had five different employees, two MP&E inspectors and two operating practices inspectors. We also had a track inspector that -- that probably technically was not part of the assessment because he was looking at an accident, at the Fort Worth incident, as a matter of fact. But we did take part in -- in that assessment.

MR. SULLIVAN: And did you have any findings that were different from what the FRA has already talked about?

MR. MARTIN: I don't believe that they -- that they were different. Our MP&E inspectors did take exception or did cite defects on -- on locomotives. I think that's been -- I think that's already been covered somewhat.

We were concerned, and I may preface this by saying, even though most of the defects were relatively minor in nature, such as inoperative engine room compartment and walkway platform lights or -- or small oil leaks or that sort of thing, things that would be tripping or fire hazard issues, but not -- not really operational -- railroad operational issues.

So, that was what most of the defects were, but I guess our concern was, is that we found -- or the FRA reported about 57 to 60 percent of the defect ratio, and we had like 74 percent in Texas. So, that concerned us some.

But I don't know that there was anything different. We did cite some number of deficiencies, both in -- in the equipment categories and in the operating practices category. Through the interviews that our inspectors participated in, I think that we found the same things that they've already reported, crew management issues, territory familiarity issues, worker fatigue issues, and excess hours waiting for crew pick-up, that sort of thing.

But I think those probably are not different. I think that they've already been testified to.

MR. SULLIVAN: Okay. Thank you very much.

MR. PAYAN: Just a few questions. Could you provide the number of total state inspections that were performed for 1996 and 1997?

MR. MARTIN: Would you ask me that again? I didn't quite hear you. I can't quite hear you.

MR. PAYAN: I'm sorry. Could you provide the number -- total number of state inspections that were performed for 1996 and 1997?

MR. MARTIN: Yes. I guess we can in two different -- in two different ways. The total number of inspections by Railroad Commission employees for '96 was 5,740. Now that's not all UP. Of that, --

MR. PAYAN: If you have a number for UP, you can provide it, also.

MR. MARTIN: Give me just one minute.

MR. PAYAN: Sure.

(Pause)

MR. MARTIN: I think that number would be -- for '97, it would be about 668, I think is what -- and I think that we're getting that from the FRA documents that have been filed as far as the UP statistics.

MR. PAYAN: Okay. Do you have a number of violations that were issued by the State of Texas for 1996 and '97?

MR. MARTIN: Yes, we do. We have 33 in 1997, and approximately 15 of those were on the UP or the UP-SP properties.

MR. PAYAN: How about '96?

MR. MARTIN: 16, I think, is all we had in '96.

MR. PAYAN: Total?

MR. MARTIN: And none -- none of those were on the UP or SP properties, and then I think in '95, I think it's even lower. I think we only had one or two in '95.

MR. PAYAN: Okay. Violations issued by state inspectors concerning federal regulations. Who processes those violations?

MR. MARTIN: I'll just tell you about the process, and that was one of the reasons for my -- one of my questions to -- to Mr. Gavalla, and I'll try to be very brief, but at the initial -- at the inception of the safety assurance and compliance program in '95, perhaps probably erroneously, we -- we understood that the FRA didn't want us to write any more violations, and consequently we had very few violations in '95 and '96.

Subsequent to -- to that, those -- those first conversations, we become to understand that that probably isn't correct, that we were, you know, not asked to not write violations.

But then as far as the violation process itself, when a state inspector cites a violation, then they're handled -- I think Mr. Green testified to this, they're handled the same way as federal inspectors are, with the exception that they -- that they come to the Austin office, that we see them. They -- they come through me, and then we forward them on to the regional -- Hearst Regional Office. The -- the Federal Railroad operating practices inspector, if that's the case, or whatever discipline it is, that specialist will review them, and then Mr. Megary, who's the regional administrator, will look at them, and then they'll be forwarded to Washington.

Again one of my questions -- I'm not sure that we have -- and it may be our fault, but I'm not sure that we've had real good understanding of -- of what the disposition of those violations were after we submitted them, but I think that we are in the process of trying to -- to resolve some of those things.

MR. PAYAN: If -- if the FRA elects not to proceed with the violation, does the State of Texas have a way of handling that?

MR. MARTIN: Certainly I don't profess to be a lawyer at all, but it's my understanding that the federal -- the federal law provides that if violations are referred by state authorities to the Federal Railroad Administration, that if they choose to not prosecute them, they can allow the state to go ahead and seek some -- some remedy through -- through a state -- through civil court or something.

But -- but what that boils down to is they basically have to say yeah, it's a violation, but we're not interested, if you want to prosecute it, go ahead, and I'm not aware that that's happened.

MR. PAYAN: Okay. Could you clarify what you mentioned earlier concerning violations were not written, were not being issued for a certain period of time?

MR. MARTIN: Yeah. When -- when the -- when the safety assurance and compliance program first came known -- became known to Commission employees, my inspectors reported to me that they were instructed, they were told, they were asked, however you want to phrase that, not to write violations, that this was a new partnership approach, and that we weren't going to be writing violations.

And I believe that we perhaps misunderstood or -- or, you know, maybe there was just poor communication, my suspicion is it's some of both, but I don't believe that that was the -- the initial instructions or the thrust of it. I think that's just probably the way we got it.

But as a result of that, we did not write new violations in 1995 or even in '96.

MR. PAYAN: Okay. From your answer, my next question was going to be, did you participate in any SACPs?

MR. MARTIN: Yes, we have, and I want to be clear about this. I agree with -- and I appreciate the testimony of the Federal Railroad Administration specialist that talked, and some of the other individuals that talked.

I believe that our inspectors, our field inspectors are -- are treated equally with federal inspectors, and I think they're very deserving of that because I think that we have a good program in Texas. We -- we hire very good employees, and we train them adequately. The FRA is very instrumental in that process, and the reason I know that they like our program is because they try to hire every person that we -- that we hire just about.

So, -- so, from -- from a field level, I think that there's not a problem. They ask through our supervisory personnel if they want somebody to participate. Currently -- earlier, we talked about the -- the Burlington Northern Santa Fe. They're involved in a SACP operation right now, and our track inspector, Eugene Montalvo, is -- is -- is a part of one of those teams.

So, having said that, I still -- I feel that there is some problem as far as state management being involved as much as it should be, and I'm sensitive to the fact that the Union Pacific Railroad operates in many, many states, and it's a tremendously large organization, and it may be very difficult to -- to bring all states in that have all sorts of varying programs in size and ability and that sort of thing.

It may be difficult to bring them in, but at least for Texas, I think that we would like to -- to be involved a little bit more in the planning and the -- and the initial stages of -- of these processes, and I don't know that the -- I do know or I do believe that there's not a concerted effort to keep -- to keep us out.

I think there's a little bit of tyranny of the urgent. There's just so many things to do, that sometimes it's -- it's hard to get everything done that you want to do.

MR. PAYAN: How -- how many of your inspectors are involved right now with -- within the SACP?

MR. MARTIN: Well, we have had different inspectors participate in various teams, but as far as I know, Mr. Montalvo's involved in the SACP right now, and I'm -- and I'm not aware of -- I think that we're in the process of concluding the Texas-Mexican joint assessment, but I think that's substantially concluded. So, that's -- he's the only one that I'm aware of that right now is involved.

MR. PAYAN: Okay. You mentioned earlier the Commission held hearings because of service issues and safety issues. What were some of the safety issues that were identified by the Commission?

MR. MARTIN: Yes, the Commission -- the Commission convened seven different hearings around the state, and -- and -- and they were -- they were substantially service-oriented hearings.

However, each -- each hearing had -- had a little different flavor, I would say. There were Fort Worth hearing. There were several neighborhood associations. Safety was a big issue. Community -- community safety is and its relationship with -- with the railroad property being in neighborhoods.

There was some testimony about that. The Houston hearing was substantially service-related from shippers. However, the El Paso hearing, there again were community issues, and there were a number of UP employees that testified in front of the Commission concerning some of the -- some of their problems.

Corpus Christi, again employee-related issues, and Harlingen community concerns, San Antonio, there was a large safety concern. These were private citizens that testified in front of the Commission. I certainly would -- would not be opposed to making our record a part of this record, if you want to. The Commission did transcribe those -- those proceedings, and we have witness identification and all that sort of thing. But I'm giving you the thrust of it. So, the safety --

MR. PAYAN: Were -- were any of those issues provided to the FRA where it concerned a big merger in general?

MR. MARTIN: Well, I don't know that we provided -- Mr. Megary and I talked, and his deputy regional administrators, Mr. Sapp, Mr. Elston, we've all communicated with each other about some of the things that the Commission -- that the Commission was hearing from people.

Now, as far as some of the concerns, yes, we did. We -- as I -- as I said, in the initial August assessment that we participated in, certainly all of the information that our inspectors came across went through the FRA, and the second one, and I didn't really talk too much about that when Mr. Sullivan asked me awhile ago, but in the second assessment, which -- which was begun right at the first part of November, we did -- we did furnish all the information that we had and the conclusions that we came up with -- with the Federal Railroad Administration, and they -- and I think there's been some discussion about this before.

The -- the inspection reports that inspectors fill out, they go to the -- to the -- to the regional office, just the same as the federal inspectors do.

MR. PAYAN: Okay. That's all I have.

MR. JAMES S. DUNN: I have no questions.

CHAIRMAN GOGLIA: Okay. To the parties. UTU?

MR. LARRY DAVIS: No questions.

CHAIRMAN GOGLIA: BLE?

MR. WALPERT: Yes, I have a few questions. Mr. Martin, you mentioned that during the time frame in question, people were calling the Commission registering complaints in regard to safety violations on the UP.

Can you -- well, first of all, let me ask. Did you -- did any of these reports come from UP locomotive engineers?

MR. MARTIN: Yes. I know that I did talk to some locomotive engineers personally. They testified in the Commission proceedings, and I think that I said at the inception that we began to get a lot of complaints and perhaps that was an over-statement. We got some complaints, and some of those were from -- from railroad employees complaining about these things that I've testified to.

MR. WALPERT: Well, once again, could you give me an idea of the types of complaints that you would hear from individuals?

MR. MARTIN: Yes. They -- they complained about the -- the tremendous amount of time that they were left on trains after their hours-of-service had expired. They complained about being asked to -- to run in territory that they didn't feel familiar, which has been testified to.

There were some -- there were other complaints. I'm not aware. Maybe one or two, but I'm not aware of any complaints of intimidation. I think some of our inspectors alluded or at least told me that, but I'm not aware of any -- of any substantial amount of that sort of thing.

There were other -- there were some complaints that are not necessarily safety-related complaints. There were complaints about the locomotive conditions, you know, some of that sort of thing. Crew line-ups, not getting enough rest. I think all of the things that have been testified before, we were hearing, too.

MR. WALPERT: Okay. One of the things you said that due to the '95 version of SACP, you were under the impression that you were not to issue violations. That was the impression that you were under anyway, that your inspectors were not.

During 1995 and '96, did -- did in fact you find any violations during 1995 and '96 that you did not turn -- turn in?

MR. MARTIN: Well, that's a difficult question to answer. We -- I'm certain that we found deficiencies that were taken that possibly could have been violations. When the inspector -- and you're -- quite frankly, you're asking some of the same questions that I asked. Why are we not writing violations? And I wasn't real satisfied with the answer, and we are writing violations, again is the federal inspectors, I believe, writing violations as they're -- as they're warranted.

But, no, we didn't have -- I have no record that says this should be a violation, but I'm not going to submit it. They just didn't submit violations. Our inspectors.

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

MR. MARTIN: Yes, sir.

CHAIRMAN GOGLIA: UP?

MR. JERRY R. DAVIS: No questions.

CHAIRMAN GOGLIA: Thank God. FRA?

MR. GAVALLA: First of all, I'd like to thank Mr. Martin and Texas Rail Commission for the invaluable contribution that -- and their important role in our safety inspection program, particularly in the state of Texas.

I'd just like to clarify a couple issues. You mentioned defect ratios in the state of Texas, that the Texas Rail Commission found. Does that include violations of any state requirements, state railroad safety requirements?

MR. MARTIN: Not that I'm aware of, Mr. Gavalla. That was -- and those were -- those were Region 5 numbers. So, --

MR. GAVALLA: Okay.

MR. MARTIN: -- that included yours, too, and it would be more than just Texas, but since it was predominantly -- that assessment was predominantly done in -- in Fort Worth and other Texas cities, it's pretty much a Texas issue.

MR. GAVALLA: You say it was Region 5, though?

MR. MARTIN: That's -- that's correct. That's right.

MR. GAVALLA: Which encompasses much more than Texas. Okay.

MR. MARTIN: That's right.

MR. GAVALLA: Also, there was reference to the safety sweeps. Were you aware of a planning conference call involving all the state participating agencies with the senior staff in the Office of Safety prior to the second sweep, where we invited their input? We invited them into the planning process and invited their participation on the teams that were conducting these sweeps?

MR. MARTIN: That was the second sweep that took place in November?

MR. GAVALLA: That's correct.

MR. MARTIN: Yes, I'm aware of that, and -- and we -- Mr. Gavalla, I would like to think that we certainly cooperated, and our inspectors worked hand-in-hand with federal inspectors.

MR. GAVALLA: Yes, they did.

MR. MARTIN: But we did not choose to participate in quite the same manner at that time as we did the first time, in the fact that we established pretty much our own directives and our own goals, and we -- we had our own report issued to us, which we certainly forwarded on to you, and I think that we found the same things that you did.

But, yes, I am aware that we were invited to -- to participate, and we -- I guess I would say we sort of did, just did it in sort of in our own fashion.

MR. GAVALLA: I understand. No further questions. Thank you.

CHAIRMAN GOGLIA: Mr. Martin, do you have any questions for Mr. Martin?

MR. MARTIN: I don't know enough to ask very much questions.

CHAIRMAN GOGLIA: Okay. To the head table? Vern?

MR. ELLINGSTAD: Just a couple. Do your inspectors have the same kind of a role as the FRA inspectors in terms of examining hours-of-service records?

MR. MARTIN: Yes, sir. We have the same -- we have the same authority, and I would suspect that we handle it very similar. In fact, Mr. Gray, I think, has been involved in some of that. He might be better to answer your question than I am.

MR. GRAY: We do have the same authority as the FRA inspectors.

MR. ELLINGSTAD: Have you had any involvement with the FRA and UP in the development of this new electronic system that they're working on?

MR. GRAY: Only in -- while I was still in training, I attended a meeting between the UP and the FRA in Shreveport, Louisiana, and a planning session.

MR. ELLINGSTAD: Is there any requirement in Texas law that exceptions stem throughout the service of real reporting that they miss the period reported to the FRA by the carrier?

MR. GRAY: Not to my knowledge. Only to the FRA, the Federal Government.

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

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: Yes, Mr. Chairman, I have a few questions.

Mr. Martin, from your own personal perspective, what tools do you use to -- to measure rail safety in Texas?

MR. MARTIN: Sir, I would have to say that I still look at the number of inspections that we do. Our legislature requires that we report to them on the number of inspections and the number of deficiencies that we cite, the number of inspection units that our inspectors cite.

So, we -- we are somewhat -- and I appreciate what -- what has been said before, but -- but at least in Texas, we are still somewhat driven by numbers, and, so, I still -- I still look at that. I -- and I don't have a hard and fast rule, but -- but we like to have a certain amount of time on the property, and ours is about 50 percent of what I call random inspection time on the railroad property, and -- and again as -- as the FRA pointed out in their testimony, that's not the only inspection time that we're there.

When our inspectors are engaged in complaint investigation or accident investigation, some special investigations that may be assigned for a particular purpose, those are also site inspections, and they also -- the inspectors would be generating inspection reports with those activities.

But -- but we break down our -- our sort of work by -- by routine inspections, and I look at about 50 percent. The other -- about 20-25 percent travel time, and the remaining time would be divided between complaint and accident investigations, report-writing, some of those -- some of those type issues. But I still look at -- at numbers.

MR. LAUBY: Do you -- do you get any direct feedback back from your inspectors as far as what they're seeing or whether they're concerned about a particular problem or something they're seeing in their inspections?

MR. MARTIN: Yes, I do. I rely heavily upon the -- the discipline supervisors. As I have testified, I am not a railroad -- I do not have a railroad background. I have -- I have currently three supervisors that are exceptionally talented people that have a great knowledge of the -- of the federal rules that we enforce as well as our state laws and rules, and -- and I rely on them to periodically come to Austin, review the records of the employees that are under their supervision, and plus -- plus we have conference calls, and we -- we have -- try to have semi-annual meetings at least with all of the supervisors and at least annual meetings with the inspectors to try to ensure uniformity in inspection coverage, that sort of thing.

MR. LAUBY: I believe you -- you testified earlier that you did see some indications of things going wrong a little bit earlier maybe in April-May-June time frame. Were these -- were these coming out of the statistics for Texas or what triggered that knowledge?

MR. MARTIN: They were -- they were -- and maybe I didn't make that clear. Maybe a little bit in April, but really in -- in May and in June, I think, is when it started, and it's -- and I would have to say it's more anecdotal. People complaining. People calling the Railroad Commissioners themselves, calling me. Our inspectors, while they are doing their -- their -- their routine inspections or whatever facet of -- of interaction that they have with the railroad carrier employees, complaints were beginning to be generated.

Shipper complaints started picking up at almost exactly the same time. We went from, quite frankly, March and in early April, from zero. We -- we heard no problems until probably by the end of May, we were receiving calls, you know, daily, complaining.

MR. LAUBY: Who do you interface with at the FRA personally?

MR. MARTIN: Probably -- probably through the -- through the e-mail with the FRA discipline specialist and with the -- the deputy regional administrators, Mr. Sapp and Mr. Elston, now being he's under another assignment, probably his temporary replacement, Mr. Barber. Some with Mr. Megary. He and I do talk to each other quite -- quite frequently. He's -- he's very busy, as I am. So, we don't talk but probably every week or two.

MR. LAUBY: You also report to the Railway Commissioners in Texas, is that correct?

MR. MARTIN: Yes, I do report to the three Railroad Commissioners.

MR. LAUBY: Were they asking questions about that time, June '97?

MR. MARTIN: Yes. As -- as I indicated, they -- they were very interested. They were -- their phones were ringing, and -- and, quite frankly, the Railroad Division got -- got more notoriety than probably we ever have before at the agency.

As I told you earlier, it's predominantly an oil and gas regulatory agency, but suddenly they became very interested in railroad issues, and this -- and there is -- you know, going back a previous year to the -- to the merger and the position that the Railroad Commission took, I think that there was sort of a natural depository for complaints, you know. People -- people knew that they could -- their complaint would be heard and probably received by the Railroad Commission.

MR. LAUBY: Was most of their interest the service end or the -- or the safety end?

MR. MARTIN: I would say that most -- most of the complaints were -- were -- were -- not safety-related, but were service-related from shippers.

MR. LAUBY: Did you offer your -- your board members any explanation of what was going on at the time?

MR. MARTIN: No. I have to say the -- and I hope that you'll understand. I'm not being evasive, but the -- but the Railroad Commission's responsibility and authority that was granted is -- is in safety as a federal participating state, as a participating state in a federal program.

We have -- we recognize that we were pre-empted by the Staggers Act in -- in economic regulation of railroads. So, -- so, we didn't intend to do that. However, as a result of the merger, the governor of the State of Texas requested that the Railroad Commission engage in following that and taking a position on that, and as I'm saying, after the merger was approved, I think that we backed away and said we got beat and leave it alone, and I don't think anybody heard anything out of us for six months until all of these problems started coming up, and then that's when it was -- as I told you, it was just natural for us to come back into it.

The reason I'm saying that is we really don't have a staff -- I mean that's just not what we do. We have a planner, and we have a crossing safety education employee and myself. We have a very limited staff to deal with this, but we do and have been doing the best we can do.

MR. LAUBY: Did you raise any safety issues at the time the merger was being approved?

MR. MARTIN: No, I do not believe that we did. No, sir.

MR. LAUBY: The -- you mentioned a couple times some reports. Are there Texas Railway Commission reports on -- on safety that were issued to the FRA or are these just the standard inspection reports?

MR. MARTIN: Well, now what I'm -- what I'm referring to are reports that -- that I -- in one case, that I gave to the -- to my commissioners, to my superiors, or report on the second assessment was from the -- the two inspectors that were in charge of that, which is Mr. Haggard and Mr. Applegate, a track inspector and a -- and an OP supervisor. I'm alluding to their reports to me.

MR. LAUBY: Can we get copies of -- of those reports for the record?

MR. MARTIN: Certainly. Certainly. Glad to do it.

MR. LAUBY: Thank you very much.

CHAIRMAN GOGLIA: Mr. Dunn?

MR. JAMES P. DUNN: Just a couple questions.

MR. MARTIN: Yes, sir.

MR. JAMES P. DUNN: Union Pacific and FRA indicated that they are expanding their workforce, hiring people for a variety of reasons.

Does the Texas Railroad Commission plan to expand the Railroad Division?

MR. MARTIN: Since this time period that is the focus of this inquiry, we have -- we have increased our staff by three -- by three employees. We have increased by two inspectors, two OP inspectors, and just last month, the Commission reassigned an individual to our division that is going to probably be engaged in a lot of statistical analysis.

There's been some testimony earlier about -- about shipping volumes and patterns and how that relates to -- to safety, and, so, you know, we -- we're concerned about that, too. So, we are intending to -- to get the Surface Transportation Board detailed data that -- that they furnish on those types of -- on that type of information, and we have an agreement in principle to purchase a software package to help us analyze traffic patterns and that sort of thing to make sure -- or to try to do a better job of predicting some of these things.

MR. JAMES P. DUNN: Okay. So, you just hired three, you say?

MR. MARTIN: Well, we have -- we have increased our division by three people during this time period, in the last six months.

MR. JAMES P. DUNN: Okay. How many inspectors did you have in this October '96 to October '97 that we keep referring to?

MR. MARTIN: Well, we had -- we had 13 positions that were approved by the Commission. We -- I think that we only had 12 on staff for the most part.

We -- we have one position, and I think that those -- certainly in the Federal Railroad Administration can understand. We have a signal and train control position. That position is very difficult to fill. It's just very hard to find those type people at what we -- at what we offer in the way of compensation, and, so, that -- that position has been vacant for some time. So, that's why we haven't been fully staffed, but we were fully staffed at 13, and now we will be at 15.

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

CHAIRMAN GOGLIA: Okay. Any --

MR. PAYAN: No questions.

CHAIRMAN GOGLIA: No questions. UTU, no questions. BLE?

MR. WALPERT: One quick question. Mr. Martin, does the Texas Railroad Commission have the authority to issue fines or penalties in any circumstances as relates to the Railroad Division?

MR. MARTIN: I do not believe in a general sense. They do not in the fact that -- in the sense that we have to refer violations to the FRA. If they choose not to prosecute a violation, but basically remand it back to us, then there is a provision that we could seek civil remedy or something. We could ask the Attorney General to file suit in our behalf for some -- for -- for state, such as clearance law violations or whatever that -- those are -- that's a state law, and we possibly could prosecute some company for violating the clearance laws in the state.

But -- but, generally speaking, no, we are precluded from any sort of -- of independent penalty assessment.

MR. WALPERT: Okay. Thank you.

CHAIRMAN GOGLIA: UP?

MR. JERRY R. DAVIS: No questions.

CHAIRMAN GOGLIA: FRA?

MR. GAVALLA: Is the -- are you aware of FRA having a program coordinator for our state participation program?

MR. MARTIN: Yes, I am.

MR. GAVALLA: Would that be Mr. Mike Calhoun?

MR. MARTIN: Yes, sir.

MR. GAVALLA: And have you had regular contact with Mr. Calhoun?

MR. MARTIN: Yes, I would say regular. Mike and I are -- are friends for 25 years.

MR. GAVALLA: Is that an avenue of communication between the state -- the Texas Rail Commission and FRA?

MR. MARTIN: It is. It is a very, very valuable avenue. Mr. Calhoun -- in fact, we've had several discussions about that. He has been very instrumental in -- in having our voice heard, I think, by your office in Washington.

MR. GAVALLA: Thank you very much.

CHAIRMAN GOGLIA: Any questions from the head table?

(No response)

CHAIRMAN GOGLIA: Hearing none, Mr. Martin, do you have any questions for yourself? Do you want to clarify anything? Want to ask Mr. Gray something?

MR. MARTIN: No, sir.

CHAIRMAN GOGLIA: Okay. You are released.

(Whereupon, the witnesses were excused.)

CHAIRMAN GOGLIA: I think we all should take a stretch and a break for 15 or so minutes, and we'll come back and finish up the last two witnesses.

(Whereupon, a recess was taken.)

CHAIRMAN GOGLIA: Okay. Let's go back on the record.

Mr. Dunn, would you call the next witness, please?

MR. JAMES P. DUNN: Yes, sir. The National Transportation Safety Board calls Charles Varvel. Mr. Varvel, will 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 CHARLES VARVEL
MANAGER OF DRUG AND ALCOHOL TESTING
UNION PACIFIC RAILROAD

MR. JAMES P. DUNN: Mr. Varvel, would you please for the record indicate who is at the witness table with you?

MR. VARVEL: Would you like him to introduce himself or -- Ray Hasiak?

MR. JAMES P. DUNN: Yes, I would like him to introduce himself and spell his last name for the record.

MR. HASIAK: Thank you, Mr. Dunn. Raymond Hasiak, H-A-S-I-A-K, Union Pacific Railroad Law Department.

MR. JAMES P. DUNN: Very good. Good to see you again, Ray.

MR. HASIAK: Good to see you, Mr. Dunn.

CHAIRMAN GOGLIA: We're getting loose.

MR. JAMES P. DUNN: Mr. Varvel, what is your present position with Union Pacific?

MR. VARVEL: My present position is Manager of Drug and Alcohol Testing for the Union Pacific.

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

MR. VARVEL: I've been in this position since 1993.

MR. JAMES P. DUNN: And I apologize, Mr. Varvel, I've just been admonished I did not ask you to spell your last name for the record.

MR. VARVEL: All right. My last name is spelled V as in Victor A-R-V as in Victor E-L.

MR. JAMES P. DUNN: Thank you. What other positions have you held in the railroad industry?

MR. VARVEL: I started my career in North Platte, Nebraska, as an electrician on a diesel locomotive electrician. I was a supervisor of locomotive maintenance. I was an engineer of diesel locomotive design, and in 1975, I believe, I was asked to go into the personnel department to head up managing the shop craft training for the Union Pacific Railroad.

In 1980, I was transferred to Omaha, Nebraska, as a senior manager of training for the non-OPS on Union Pacific Railroad. At that point in time, I inherited a little program of Mr. Davis's on drug awareness for supervisors, which we put on for the -- all the supervisors on the old Union Pacific.

In 1984, I became -- I was appointed the trainer for the drug and alcohol testing by Mr. Baker along with my job as senior manager of technical training, and then after 1990 and subsequent to that, 1993, that drug-testing job became a full-time job, and I've been there ever since.

MR. JAMES P. DUNN: Thank you.

We will begin the questioning with the Technical Panel. Dr. Weeks.

DR. WEEKS: Thank you, Mr. Dunn.

Good evening, Mr. Varvel. Would you please describe your duties as Manager of Drug and Alcohol Testing?

MR. VARVEL: Yes, Dr. Weeks. I'm -- my responsibilities are to administer the FRA random testing program, the FHWA random testing program. By the way, we have about 8,000 truck drivers on the Union Pacific Railroad.

The random testing program for Union Pacific managers. The reasonable cause/reasonable suspicion testing program for all safety-sensitive employees, and, lastly, to administer the post-positive follow-up programs for those who have tested positive on a previous occasion, those people in the follow-up pool.

I've been involved in the drug and alcohol testing, as I said, since 1984, and I've been -- I've been involved in writing all the policies and the procedures, the reference documents and the training programs for Union Pacific under the direction of the medical director's department, and the operating department.

I have trained over 5,000 Union Pacific managers. I've been trained by Union Pacific's medical review officer. I've been trained by Union Pacific's lab, and the FRA might know the individual that trained me was Dr. Michael Pete, an internationally-known toxicologist, and currently, I'm a faculty member on the National Railway Labor Conference for Drug and Alcohol Testing. In other words, I teach other railroads in the labor conference meetings about drug testing.

DR. WEEKS: Would you tell me how many staff members you have to support your various activities in carrying out the administration of the plan?

MR. VARVEL: Currently, excluding my truck driver section, I have myself and two administrators in Omaha, in the centralized location. However, Dr. Weeks, I do have 28 field administrators that have basically a dotted line to me, that report to me and administer my random testing program.

DR. WEEKS: Are your field administrators working at that full-time or is that their only duty and responsibility to support you?

MR. VARVEL: No. It's about 10 or 15 percent of their jobs. In fact, most of these field administrators are right under the service unit superintendents. They're their right-hand people.

DR. WEEKS: My next question refers to Exhibit 6-A, labeled "Union Pacific Drug and Alcohol Testing Summary". It consists of the two pages of testing data that was submitted by Union Pacific at our pre-hearing conference, and I note that the first page of that data is portrayed on the slide that you have behind you.

Would you present those data, please, and give us your interpretation of what they portray?

MR. VARVEL: I'm going to comment a little bit, if I can, Dr. Weeks, about that information because it was surprising information to us, is that when we developed the drug and alcohol testing program, it was designed to be unimpeachable. It was designed to be fair and impartial, evenly distributed, and we wanted it to be unpredictable. We wanted it to be the best there was, and if you've ever -- I've got two of the architects in here, Dr. Richlin and Mike Baker. They were the architects of this, and -- and what we came up with was a plan to test 365 days a year, 24 hours a day, and we thought we probably had the best-developed program in the country, let alone any other railroad.

In 1990, when we got our test results back, we looked up, and -- and we didn't notice anything at first because we got a 1.4, I believe, percent positive rate on our random testing program for drugs, and a little over 1.4, and about six to nine months later, the FRA brought out their statistics for the railroad industry, and, gee, they were closer to one.

So, it looked like we were 50 percent higher than anybody else. At that point in time, basically I worked with a drug and alcohol steering committee, and that steering committee is comprised of the Law Department, the Operating Practices Department, which I'm in, and my boss, the medical director, Dr. Richlin, and some of his staff, employee assistance people, the labor relations and numerous amount of labor relations -- well, not numerous, but for labor relations, two is too many there, but -- and the Human Resources Department.

We're a steering committee that gets together once a month and evaluates all the data -- more than once a month if need be, but we evaluate all the data that comes in. We look at all the testing we've done. We look to see if we're in compliance. We look to see if we need to change that policy any way.

Well, they looked at this and -- and about tripped off the line. Why are we so much higher than anybody else? Do we have a drug problem? What should be -- what avenue should we take to knock this off? We can't do this. We can't have half again as many people as anybody else positive.

So, what we did is we went to our employee assistance people, and -- and we were thinking about trying to figure out why we had more drug users, but one of the -- somebody came up with the idea that maybe we ought to look at our random testing program.

So, we hired a consultant, a nationally-known statistician out of the University of Nebraska, Dr. Jennifer Meyers. She came in, took a look at our -- our random testing process, and that random testing process, it had a few tweaks in it, but she evened that out and said you're catching more people because you have a more random testing program than any other industry I've ever seen. You test 365 days a year. You test 24 hours a day. That's why you're catching more people. It's not the fact that you've got more drug users.

So, we were fairly satisfied with that answer and continued our program as approved by the FRA, and that program still remains much the way it is when we designed it. So, even though I want you to take a look at -- at that, it looks like Union Pacific has more drug users on it than anybody else, that is not in fact the case.

We're just sure of that. It's just -- and we -- we see that our trend's going down using that same methodology of selection for random testing, and I just want to point that out.

So, that is for a fact, I guess, trying to tell you, Dr. Weeks, that we really truly believe we have about as good a random testing program as you could have.

DR. WEEKS: Okay. And as I recall, there was a chart of data as well. Do you have a slide of that?

MR. VARVEL: Yeah. I hope you can see this, but this was -- and I -- I threw this up there just so that you can see our 1997 drug testing results, and I thought you might have some questions about those. DR. WEEKS: Yes. In reviewing the exhibit, as I said, submitted at the pre-hearing conference, I

-- it did raise a number of questions in my mind and perhaps others.

Firstly, in the top line of the chart, labeled "Random Non-AGM", who are the people, and what does that abbreviation stand for? Who are those people in that testing category?

MR. VARVEL: Dr. Weeks, that is random managers, and all safety-sensitive managers, Mr. Davis included, is in the random -- and his senior staff, and all managers under the direction of the vice president or executive vice president of operations are in a safety-sensitive pool.

We don't have -- we don't have the human resource managers and that people in that pool, but we do have the people that are safety-sensitive in that pool, and we do -- we had a random testing program for them.

It is not under FRA's authority. However, I would point out that we use the same -- we use the same testing methodology. We test for the same drugs. We test at the same level for everybody.

So, that is our own program. As you noticed, we shouldn't -- we're not too proud of that. We caught two of them last year. Two managers. I won't say which ones.

DR. WEEKS: It's probably nobody in this --

MR. VARVEL: It was -- it wasn't anybody setting in here.

DR. WEEKS: When you say under your own authority, that means that it's not mandated that -- it's not mandated by FRA that you test managers in the safety-sensitive positions?

MR. VARVEL: Pardon?

DR. WEEKS: When you say you're testing under your own authority, am I to assume that's because you're not required by FRA to test managers, is that correct?

MR. VARVEL: That is correct. We're not allowed to.

DR. WEEKS: Okay. And given that they're managers in safety-sensitive positions, with that figure of what, 280-281, also include those managers who were assigned to run trains?

MR. VARVEL: That's a good question. We had those safety-sensitive managers in a testing pool, and some of those managers that ran trains down in Texas, we thought that this was probably a good pool to say that they had been drug tested before, and when we went to check on that, I was admonished by Lamar Allen of the FRA that that in fact was not a federal test and did not count.

So, as soon as he told me that, we immediately had all those managers take an FRA pre-employment/transfer drug test. I don't -- there is no manager working down in the Texas area now that hasn't had that FRA pre-employment/transfer drug test.

DR. WEEKS: When was that disparity brought to your attention; that is, that random -- the random non-agreement pool was not acceptable to FRA?

MR. VARVEL: I think it was in October.

DR. WEEKS: Okay. So, they, at this point, have all been given the pre-employment/covered service transfer test?

MR. VARVEL: Yes, and I have something set up that the only way those -- a manager can go to work down there in Texas on an hours-of-service job is if he calls my office and gets cleared. I will check to see if he in fact has had a pre-employment/transfer test. If he hasn't, he'll have to have that test before he can perform those hours-of-service duties.

DR. WEEKS: And when the managers are serving in covered service, are they then put into the random FRA pool?

MR. VARVEL: Yes. Our random FRA pool, we select trains. So, if they're on a train that is selected, they will be tested.

DR. WEEKS: Okay. To your knowledge, have any of them in fact been tested as a consequence of that situation?

MR. VARVEL: Yes. I think there's one or two in here that have been tested.

DR. WEEKS: And we know the ones in here didn't come up positive, so to speak.

MR. VARVEL: Yes.

DR. WEEKS: Were there any -- seriously, were there any positive findings amongst those that were tested?

MR. VARVEL: No.

DR. WEEKS: Okay. My next question goes to about the middle of the table, there's two categories, reasonable suspicion FRA and reasonable cause/suspicion UP, and specifically my question is why is the number in the first category, the reasonable suspicion FRA, so small relative to the numbers of tests that were conducted under UP authority in what seems to be the same kind of category?

MR. VARVEL: All right. Yeah. That looks like a pretty high rate. In fact, it is. The reasonable suspicion on the FRA, I've -- I've warned my field managers that -- that their job wasn't to harass anybody, and -- and to stick a breathalyzer in the mouth just because they didn't like their looks or they're late for work.

What the FRA regulation says in this, Dr. Weeks, and -- and they say that breath test alcohol testing is required if a supervisor makes the decision based on specific articulable observations concerning the appearance, the behavior, speech or body odors of the hours-of-service employee, and I've emphasized that to our field managers, that those things better be there. If you can articulate those things, then go ahead and give them a reasonable suspicion test. Otherwise, don't be harassing anybody.

So, those have been the -- the points that I've made in my training and my -- when I advise people over the phone. That's why there's so few that are -- our managers are pretty darn sure somebody's been drinking before they test them under FRA reasonable suspicion authority.

DR. WEEKS: Okay. Then with respect to the reasonable cause/suspicion test under the UP authority, those some 4,000 tests, are those also suspicion or does reasonable cause embrace other reasons for testing?

MR. VARVEL: That would be reasonable cause, and it might also include reasonable suspicion for a -- just a safety-sensitive person that was not hours-of-service, and that -- the reasonable cause would be if somebody violated a rule, ran through a red block, violated a safety rule, something like that.

If in fact, they had violated a rule, that might in fact initiate some discipline. They would be reasonably-caused drug tested and alcohol tested.

DR. WEEKS: Okay. Could you describe for me what -- what is the mandatory FRA test? I thought random testing was also mandatory. What is -- what is that category that's called out as mandatory FRA?

MR. VARVEL: That is after an accident that qualifies under the FRA as a major train accident, an impact accident, a fatality or there's different categories, and we've had too many of those this last year, but we did have -- and Mr. Davis brought this out, last year, we had, after these 15 train incidents and accidents, we were required to do a mandatory post-accident test on those crews.

The mandatory is a little bit different because you have to take somebody to a hospital. You have to draw blood. You have to collect urine, and that is done. That's sent to the FRA's toxicological laboratory in Salt Lake City. It can't be tested by our laboratory or anybody else. It's got to go to FRA's laboratory, and we have to do it under FRA authority.

It's really drawing blood and getting the urine of anybody involved in one of these major accidents. So, you'll see that we did have 83 people that were tested under mandatory testing in 1997.

DR. WEEKS: Why, if there are -- aren't they tested also for drugs and alcohol? So, if there were 83 in drug, why only 39 for alcohol?

MR. VARVEL: That's a good point. The 83 were tested. Their urine was tested for drugs. Those same 83, their blood was tested for alcohol, and then we did a breathalyzer test, besides that, on those 39 of those.

The federal regulations say that they want a breathalyzer test on all these post-accident tests if it does not interfere with the collection of the urine and the blood, and apparently, and I've been corrected on this, too, and we're trying to do better, is that the FRA means they want a breath alcohol test as soon as possible after the incident, and then before you get them to the hospital, and we really hadn't been doing that.

DR. WEEKS: What is the average time from the time of an accident until an employee has been tested?

MR. VARVEL: The average time is probably about six hours. Might be plus. Usually these are very traumatic incidents. Usually they don't happen in downtown Omaha. We can't get them -- usually we have to get the supervisors, superintendents to investigate that, the reasons for. We have to attend to any injuries. That's -- you have to make a decision on how much time damage has occurred. Does it qualify as a mandatory post-accident test, and then and only then that we take them in and test them.

DR. WEEKS: Okay. Circling back to that mandatory FRA drug, as I understand your explanation then, that -- that test consists of both a blood alcohol test and a urine drug test, is that correct?

MR. VARVEL: Yes. I think FRA has some other options, but I think that's normally the way it's done.

DR. WEEKS: And, so, I guess my question is, does the 83 represent 83 different people or is it a sum total of 83 tests?

MR. VARVEL: No. 83 different people.

DR. WEEKS: Okay. So, it is 83, and then the disparity between the two figures is that in the case of 44, 44 of them weren't also breathalyzed, only 39 of the 83 were breathalyzed?

MR. VARVEL: That's correct.

DR. WEEKS: Looking across the trend of the data, both in the bar chart and here at the smaller table at the bottom, it did appear to be a gradual decline in the positive rate in the early 1990s, but the percent of positive random test rates for the last three years, that is 1995, '96 and '97, appears to be a nearly constant one percent, give or take a tenth of a percent. That's about the same rate as found in post-accident tests.

My question to you is what changes are needed to current drug and alcohol programs or perhaps what new management practices are needed to make further progress towards the goal of zero drug and alcohol use by employees in safety-sensitive positions?

MR. VARVEL: I would -- I have some thoughts on that. I don't want to get those too long, but it seems like it's plateaued out, is what you're saying.

DR. WEEKS: Exactly.

MR. VARVEL: And what are we doing to -- I think on the Union Pacific, one thing that's very successful on the Union Pacific is we need to -- to educate, to get out and beat -- we have a red block program that probably -- the red block program was started on the Union Pacific, and that's a program that I think needs new emphasis. I think Mr. Davis has placed new emphasis on the red block program.

That's the only way. The people referring themselves, the people to employee assistance, that's the only way we're -- we're going to get that down to zero. I don't think increasing the rate of testing or anything else would -- would slow that down. It's more of an education and a peer-pressure situation than anything else. That's just my opinion.

DR. WEEKS: Thank you. That concludes my questions for the moment. I believe Dr. Garber has some questions.

DR. GARBER: Mr. Varvel, could you briefly describe the medical supervision of the Union Pacific's drug and alcohol program?

MR. VARVEL: Would I briefly describe the medical supervision?

DR. GARBER: For instance, how many -- how many physicians do you have evaluating the program, and do they have any specific training in the areas of substance abuse and dependency?

MR. VARVEL: We have a medical review officer. We have an assistant vice president of health service that's a medical review officer. We have a medical director that's a medical review officer, and we contract out the evaluation of and the medical review process to a service in Philadelphia, Pennsylvania.

DR. GARBER: So that's three people looking after drug testing. So, it's actually getting into the program and telling the physicians their specific needs in those areas, in the areas of substance abuse and dependency.

MR. VARVEL: Yes, they are all medical review officers.

DR. GARBER: Can you be more specific as to exactly what their training is then to be a medical review officer? What kind of background do they have in substance abuse and dependency?

MR. VARVEL: No. They have to go up through -- and I don't know their qualifications.

DR. GARBER: Okay.

MR. VARVEL: They're doctors.

DR. GARBER: Okay. Thank you. Can you tell me currently with regards to timing of the drug and alcohol screens, what percentage of those drug and alcohol screens are currently conducted at the beginning versus the end of each shift?

MR. VARVEL: Currently, about 20 percent of the drug and alcohol tests are done at the beginning of the shift for hours-of-service employees. 80 percent are done at the end of the trip, and those are all people that are on the run-through freights.

We only test run-through freights, excuse me, at the -- where they tie up, and FRA has filed an exception to that, and we're working on that now.

DR. GARBER: What are the changes that are planned to that?

MR. VARVEL: They say enough tests aren't being done at the -- those people are -- even though our program is, I think, good, those people are pretty sure that they're not going to be tested, if you're on a run-through train when you get -- when you get to work. However, they are subject to reasonable suspicion testing, and they are subject to reasonable cause testing, all that.

However, they're pretty sure they're not going to be randomly alcohol tested when they get to work, and we're going to fix that.

DR. GARBER: Okay. Can you describe briefly again what the typical actions would be in a case where a screen came up positive? What would happen to that employee?

MR. VARVEL: First of all, and I won't go into it too much, but he would have to be declared by the MRO, even if it was a Union Pacific test of their own authority, that MRO would tell me that he was in fact positive.

I would then see what violations he has. I would see his past testing record, and I would notify his supervisor to remove him from service. At that point in time, that individual would be scheduled for a hearing, whether he be a manager or not. We give them the same opportunities, and if he wishes to waive that hearing, we'll give him another opportunity. We'll put him through the employee assistance program. We'll get him any help he needs. We'll get that individual back as quickly as we can.

We give everybody two strikes before you're -- before you're out on the Union Pacific, and as Mr. Davis has put in, you get to start over every 10 years. So, if you stay clean for 10 years, then we'll -- we'll let you start over. Then you get maybe three strikes in your whole career, but that does happen every once in awhile.

DR. GARBER: Has the Union Pacific ever had an employee identify him or herself as having a substance abuse or substance dependence problem?

MR. VARVEL: Yes.

DR. GARBER: And how did the company's actions in that kind of case differ from positive screen?

MR. VARVEL: That is strictly -- that is a self-referral. We -- last year, we had 734 self-referrals, 300 -- almost 300 were for alcohol, almost 300 were for drugs. That is something -- I only know those numbers, and that is something that -- that -- that's handled. That's not a discipline problem.

DR. GARBER: I have one last question. You described testing of safety-sensitive management positions as being a testing -- a program that was not required by the FRA. Does the Union Pacific have any other drug and alcohol abuse or dependence detection awareness or treatment programs that are not mandated by federal requirements?

MR. VARVEL: Yes. We have our regular employee assistance programs. The self-referral, the supervisory referral, the -- the - we have bypass agreements. It's the same as a federal co-worker referral. We've got all those types that are -- do not include discipline, and they are a part of our red block program.

DR. GARBER: Those are all the questions that I have. Thank you.

CHAIRMAN GOGLIA: Okay. To the parties. UTU?

MR. LARRY DAVIS: Yes, sir. Mr. Chairman, I'd like to just ask -- I'd like to just ask a question or two.

Mr. Varvel, when did you first hire out on the railroad or when did you first enter the railroad industry?

MR. VARVEL: 1970, I believe it was.

MR. LARRY DAVIS: 1970. Well, that was -- that was certainly during the era of the "code of silence" that we all had to deal with, I think, historically, that both the industry and the employees didn't want to acknowledge the fact that we had perhaps in those days an alcohol problem. Would you agree with that?

MR. VARVEL: I agree.

MR. LARRY DAVIS: Operation Red Block represented a people empowerment program in the sense that we allowed workers to deal with one another by breaking down the code of silence. They had the ability to refer without necessarily putting the employee's job in jeopardy. Wouldn't you say that's correct?

MR. VARVEL: That's correct.

MR. LARRY DAVIS: The product of which is that we can now take pride in the fact UP's a pioneer, as you've suggested, pride in a program that probably makes us, if not the soberest industry in the world, one of the soberest. Would you agree?

MR. VARVEL: I believe it is, yes.

MR. LARRY DAVIS: Yes, sir. I think so, too. When we think about safety, and we think about a safety-sensitive industry, it certainly speaks to the idea that if you empower people in this arena, and you can show this level of success, wouldn't it only make sense that if you empower employees in the whole arena of safety, that you could have the same end product, that you would allow the employees to function in an environment where we could break down the code of silence on safety, that if one employee had difficulty with another in a safety-sensitive situation, that he would have the ability to deal with him in the same manner?

MR. VARVEL: I would comment on that, if that was my area. I really would. But my area's in drug and testing -- drug and alcohol testing.

MR. LARRY DAVIS: You certainly have had the experience --

MR. VARVEL: Absolutely.

MR. LARRY DAVIS: -- that says in effect that if you empower people, you can have positive results?

MR. VARVEL: It works in Operation Red Block.

MR. LARRY DAVIS: Right. And my only concern, and I understand your field of expertise, but -- but I only wanted to bring, you know, to the attention of the panel the fact that it's people empowerment that counts, that what really works in this industry, and if SACP represents legitimate empowerment of people, then the world of safety can change because we'll have the people functioning in the same manner that they have historically or that they do with red block, that if you have a fellow worker who's not a safe worker, you have the ability to dispatch him, for example, without putting his job in jeopardy.

I thank you. I realize your level of expertise.

CHAIRMAN GOGLIA: Brotherhood of Locomotive Engineers?

MR. WALPERT: Yes, thank you. I have a couple of questions. Mr. Varvel, can you -- I know you've touched on this somewhat, but can you briefly describe the selection process for those that are selected for random testing?

MR. VARVEL: The -- what type -- the collection process?

MR. WALPERT: No. The selection process. How -- how do you determine who is -- is selected for random testing?

MR. VARVEL: The selection process is done by a computer, and it's based on the past four weeks of history. What events have occurred in the past four weeks? We predict those events will in fact then happen in the next four weeks, and I mean I don't predict it, the computer does, and then it selects the days, and if -- if most of the events have occurred in North Platte, Nebraska, that's where most of the testing is going to be. If most -- if some of the events happen in -- in Salt Lake City, you know, that's where it is.

The computer does all that selection. I don't have to worry about that at all. It does it for me, and then I notify the field managers on when an -- when a train should be tested. If that train doesn't come in that day, it isn't tested. If it comes in that day, it is tested.

MR. WALPERT: Okay. You spoke briefly or explained to us why the percentages for Union Pacific as to positive tests are higher than the average for the rail industry.

One thing is puzzling to me. I'm not a statistician, but statistically it seems to me that regardless of whether you did 10,000 tests or a 100,000 tests, the percentage of positives should remain about the same, is that not correct?

MR. VARVEL: Yeah. I -- I believe even FRA believes that.

MR. WALPERT: Well, then explain to me then -- run by me again the explanation that you used as to why the number of tests on Union Pacific is higher than the national average.

MR. VARVEL: No. I attributed that to our random testing methodology. That's why it was higher, and when I say higher, if you see that 1.48 percent up there, I'm only talking about 62 people out of 4,186. We weren't that much higher than anybody else. I'm talking about several people.

MR. WALPERT: Percentage-wise, you were, as you stated, nearly a half again as much as the rail industry average. That -- that to me a significant number, and that is explained by the method of your random testing, is that right?

MR. VARVEL: We believe it is, yes.

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

CHAIRMAN GOGLIA: UP?

MR. JERRY R. DAVIS: No questions.

CHAIRMAN GOGLIA: FRA?

MR. GAVALLA: First of all, I'd like to commend you for your comments in support of the red block program and specifically your mention of UP's efforts to enhance that program. We certainly think that's a valuable component of any overall drug and alcohol enforcement program.

Just a couple of questions to clarify the record. You mentioned conversations that you had with Mr. Lamar Allen, a drug and alcohol expert of FRA, that you thought took place in October regarding concerns about the pre-employment-type testing for managers performing covered service?

MR. VARVEL: No. What had happened is I think a federal inspector from down there had raised some issues, and some of our managers had called me, and as I looked into it, I wasn't too sure, but I wanted to count their past tests, if they had been in the pool before.

So, I immediately got on the phone with Lamar Allen. He's my guru. He's my expert. He's my partner with the FRA to say how do you interpret this, and he says, "Well, to be on the safe side, let's give those guys pre-employment tests. Even if they had a test four years ago, let's get it now." So, I did.

MR. GAVALLA: Are you aware that we raised the issue with the UP, I believe it was in September, after the first safety sweep?

MR. VARVEL: It might have been September.

I was just guessing October.

MR. GAVALLA: There also was some questioning here regarding the -- what appeared to be relatively small numbers of employees who had positive tests under your reasonable suspicion testing program.

Are you aware of FRA raising those same questions with UP?

MR. VARVEL: Yes.

MR. GAVALLA: No further questions at this time.

CHAIRMAN GOGLIA: Texas Railroad Commission?

MR. MARTIN: We have no questions, Mr. Chairman.

CHAIRMAN GOGLIA: All right. To the head table. Ms. Julie Beal?

MS. BEAL: Thank you. Do you rely on your line managers to identify crews that are about to go on duty for random testing based on probable cause?

MR. VARVEL: Based on what?

MS. BEAL: On reasonable cause.

MR. VARVEL: Yes.

MS. BEAL: And at the time -- are you hearing me? At the time that the -- shortly after the merger, when the managers were being pulled off the line and put on the trains to drive the trains, were you concerned that the lack of managers at the sites would in any way be detrimental to that program?

MR. VARVEL: No, I didn't even think about it.

MS. BEAL: So, there were no provisions put into place to have somebody else there to potentially identify impaired crews going on duty?

MR. VARVEL: That wasn't something that I was concerned with, no.

MS. BEAL: Okay. Thank you.

CHAIRMAN GOGLIA: Dr. Ellingstad?

MR. ELLINGSTAD: Just one quick clarification on your random procedures. You said you've got a computer-based selection of trains that are -- whose crews are tested?

MR. VARVEL: That's correct.

MR. ELLINGSTAD: Is that done at the conclusion of that particular trip?

MR. VARVEL: Clarify that.

MR. ELLINGSTAD: When you selected a train whose crew is going to be tested, when during the course of their trip are they tested?

MR. VARVEL: Oh, they are tested on a run-through train. They are tested at -- where they arrive.

MR. ELLINGSTAD: Okay.

MR. VARVEL: At the end of their trip.

MR. ELLINGSTAD: Okay. Thank you.

MR. VARVEL: Hm-hmm.

MR. ELLINGSTAD: No further questions.

CHAIRMAN GOGLIA: Mr. Lauby?

MR. LAUBY: Just a couple questions to get this in perspective. The random non-agreement program that you have, this -- there's -- there's no requirements for -- this is something UP does voluntarily?

MR. VARVEL: I don't know if they do it voluntary, but it was the president said that's what we're going to do.

MR. LAUBY: Okay. And were -- of the 53,000 employees of UP, how many of them are non-agreement?

MR. VARVEL: Oh, I haven't -- I haven't the foggiest idea. But how many are non-agreement safety-sensitive? A couple of thousand.

MR. LAUBY: A couple of thousand?

MR. VARVEL: Hm-hmm.

MR. LAUBY: So, the numbers that you have here, the 280-281, that would be what, 10-15 percent on an annual basis?

MR. VARVEL: That's correct.

MR. LAUBY: And my final question is the two positives on the -- in the random non-agreement tests, were either of these positives in the Law Department?

MR. VARVEL: I take the Fifth on that.

MR. LAUBY: Thank you.

CHAIRMAN GOGLIA: You know, that raises an interesting point. Since we all know that it's almost impossible for lawyers to keep their mouths shut, and you have been up there for two days with your mouth shut, I think, Jerry, we ought to put him on the -- we ought to give him a bottle at least.

MR. HASIAK: Mr. Chairman, with all due respect, I have to tell you that they don't consider lawyers important enough to be in the same safety-sensitive pool.

MR. VARVEL: We're not too sure they have anything to do with running the railroad.

CHAIRMAN GOGLIA: You knew you weren't going to get away.

Mr. Dunn?

MR. JAMES P. DUNN: Just one very brief question. Ray, will we be seeing you again during these proceedings?

MR. HASIAK: I think this is my finale.

MR. JAMES P. DUNN: I thought so. So, I'd like to say good-bye. That's the only question I have.

CHAIRMAN GOGLIA: Okay. Anybody from the table, from the parties, have any other questions? Tech Panel? No? And the head table? Okay.

You can -- you are going to get a get-out-of-jail-free card.

MR. VARVEL: All right. Thank you very much, sir.

(Whereupon, the witness was excused.)

CHAIRMAN GOGLIA: Ray, it's been a pleasure.

MR. HASIAK: Thank you, Mr. Chairman.

CHAIRMAN GOGLIA: All right. We are going to postpone the fatigue issue since I think we're all fatigued until tomorrow morning.

What we will do is start at 8 a.m., and we will take the UTU witness and the Brotherhood of Locomotive Engineers witnesses first, witness first, and then bring on our fatigue people and then finish up as scheduled previously, and we will recess until tomorrow morning.

(Whereupon, at 7:15 p.m., the hearing was adjourned, to reconvene tomorrow morning, Friday, March 20th, 1998, at 8:00 a.m.)

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