1. Association of American Railroads On Track to Greener Railroads for California October 22, 2009

2. Railroads in the West  Railroads are common carriers – must move any container that meets the basic requirements  If a container lands at any of the 5 major port facilities (Los Angeles, Long Beach, Oakland, Portland, Seattle/Tacoma), the railroads can move that container in the most efficient manner available  Container/freight movement is very competitive and price sensitive  Railroads are port-neutral  Railroads do not determine at which port the container should or will arrive 2 Prepared by the Association of American Railroads

3. Inherent Efficiencies of Rail Fuel Efficiency Trains are 2-4 times more fuel efficient than trucks on a ton-mile basis; If 10% of national long-haul freight were diverted to rail, over one billion gallons of fuel would be saved annually NOx Emissions Trains are 2-3 times cleaner than trucks on a ton-mile basis versus Capacity 1 double-stacked train equals up to 280 trucks GHG Emissions Trains emit 1/3 the GHG emissions of trucks on a ton-mile basis 3 Prepared by the Association of American Railroads

4. Impacts of Recession on Locomotive Fuel Use 4 Source: Figure 5, p12 of the ARB’s Recommendations to Implement Further Locomotive and Rail Yard Emission Reductions Prepared by the Association of American Railroads 2020: Most Likely Year to Return to 2006 Levels

5. 60-Day Movement of One Class 1 Line-haul Locomotive Mexico 5 Prepared by the Association of American Railroads

6. Partnership Between the CA Freight Railroads and the Air Resources Board over the Past Decade 1998 – Signed MOU with ARB to ensure on average the cleanest and best locomotives would operate in Southern California by 2010 2000 – Created a $5 million end-user research & development program for new particulate trap research at Southwest Research Institute 2005 – Signed MOU with ARB estimated to reduce particulate emissions 20% by 2008 at rail yards statewide 2008 – Supported EPA’s more stringent standards for new and re- manufactured locomotives 2009 – ARB determined that the Railroads have fully complied with all requirements of 2005 MOU Prepared by the Association of American Railroads 6

7. South Coast Fleet Average from 1998 MOU % Reduction in loco. NOx Reductions when Loco. Tier 0 added to Tiers 1 and 2 … continental US 67% NOx reduction from South Coast Fleet Average Program in Southern California! Reductions from EPA Loco. Tiers 1 and 2 only … continental US 20052010 2000 Southern California commitment from the Railroads 7 Prepared by the Association of American Railroads

8. How the ARB Described the 1998 MOU “ This compliance requirement would be met by the use of only the cleanest engines within the SCAB non-attainment area by an aggressive phase-in of these engines over five years. In essence, this fleet average requirement represents the most aggressive scrappage and replacement program of any transportation source in the SCAB (in effect, 100 percent scrappage/replacement with the latest, low-emitting locomotives over 5 years from 2005-2010). It would lead to an overall emission reduction of 67 percent by 2010.” [bold emphasis added] California State Implementation Plan for Ozone, Vol. II: The Air Resources Board's Mobile Source and Consumer Products Elements, Appendix B, at B-20 (Nov. 15, 1994) 8 Prepared by the Association of American Railroads

9. 2005 CARB/Rail MOU - Outcome: 20% Reduction of Rail Yard PM by 2008  Over 400 intrastate locomotives have been equipped with automatic shutdown devices with 15 minute idling limitation  At least 80% of California fueling is low-sulfur  Six years earlier than required by federal regulation  CARB estimates over 95% of CA fueling is low-sulfur  At least 99% of all locomotives comply with stringent smoke regulations– a much higher rate than any other mobile source  Health risk assessments completed at the 16 major rail yards throughout CA  Mitigation plans drafted and in public review  ARB projects rail yard emissions and risk will be reduced by about 75% by 2020 9 Prepared by the Association of American Railroads

10. New US EPA Locomotive Standards  Aggressive new standards from the EPA adopted March 2008  Tier 3 Line-haul: 69% reduction in PM and 58% reduction in NOx from uncontrolled levels effective in 2012  Tier 4 Line-haul: 90% reduction in PM and NOx from uncontrolled levels effective in 2015 The technology to comply does not yet exist  Technologies for compliance still under development  Selective Catalytic Reduction (SCR): fueling infrastructure if urea-based  Diesel Particulate Filter (DPF): maintenance and replacement 10 Prepared by the Association of American Railroads

11. Tier 3Tier 2Tier 4 200520122015 Uncontrolled (Pre-2000) EPA Line-haul Locomotive Standards (% Reduction from Uncontrolled Levels) 11 Prepared by the Association of American Railroads

12. Uneditable (jpg) 12 Prepared by the Association of American Railroads

13. 13 There is Good News about CA Freight Railroads  Union Pacific and BNSF are on track to meet obligations under the 1998 MOU to reduce NOx by 67% on average in the South Coast Air Basin  Several on-the-rails technology demonstrations projects are underway  Union Pacific & CARB: Low emissions retrofit for existing medium horsepower locomotives  BNSF Railway &US DOE: Fuel cell locomotive  New Tier 3 and Tier 4 locomotive emissions standards going into effect in 2012 and 2015  Manufacturers may deliver some beta units for testing in California earlier than required UPRR Ultra Clean Diesel SD40-2- 3,005 horsepower, Caterpillar clean- diesel engine BNSF and US DOE Fuel- Cell Locomotive Prepared by the Association of American Railroads

14. Railroad Investments in New Clean Technology  Switch Locomotive Purchases  Today, approximately 55% of switch units in Southern CA will emit at the Ultra Low Emissions Level (ULEL), determined by CARB. Mostly, new “Gen-set” switch engines using truck engine technologies  Also, some hybrid switch locomotives (“Green Goats”)  Niche market for Spark Ignited LNG technologies  Line-haul Locomotive Purchases  As of July 2009, the Western Class 1 railroads have purchased 2600 Tier 2 locomotives. 14 Prepared by the Association of American Railroads

15. Railroad Investments in New Clean Technology  Research & Development  Hybrid & Fuel Cell line-haul locomotives  Oxidation Catalysts on 3800 hp line-haul units  Low emission retrofits of medium Hp locomotives  Emission Reductions at rail yards  Fume Hood Evaluation Program at Roseville  Cargo handling equipment: LNG hostlers  Accelerated installation of idling control devices  Remote Sensing Feasibility evaluation to spot locomotives not operating as desired performance levels 15 Prepared by the Association of American Railroads

16. Gen-set Switcher Locomotive  New “Gen-set” switcher engines using truck engine technologies  EPA Tier 3 off-road Engines 6-Axle sustainable horsepower diesel Gen-sets  16-37% reduction in fuel use and green house gas emissions  Surpasses Tier 2 standards by 63% for NOx and 50% for PM 16 Prepared by the Association of American Railroads

17.  Railroads have been co-funding a $5 million R&D project investigating performance durability and applicability of DPF to older switching locomotives  R&D work being performed by Southwest Research Institute (“SwRI”) through AAR  Field testing of two (one UP and one BNSF) 1500 HP switchers equipped with DPFs in Southern CA is currently underway Diesel Particulate Filter (DPF) R&D 17 Prepared by the Association of American Railroads

18.  A joint investment partnership between BNSF, Vehicle Projects Inc. and the Department of the Army  As far as we know, it’s the only fuel cell locomotive in the world  Currently undergoing testing at the Transportation Test Center in Pueblo, CO  To be put into field test service in the LA Basin in the Fall of ‘09 2009 BNSF Hydrogen Fuel-Cell Switch Locomotive

19.  Tier 2 line-haul locomotive retrofitted with advanced emission control technology  NOx emissions are reduced by more than 90% from original 1970s vintage engines  Currently undergoing a six month durability and endurance testing period  Initial field testing service runs between San Antonio and Fort Worth UPR Ultra Clean Diesel SD40-2- 3,005 horsepower, Caterpillar clean- diesel engine 2009 Union Pacific Ultra Clean Diesel SD40-2 Prepared by the Association of American Railroads 19

20. Comparative Markets: Locomotives & Trucks  Diesel engine technology is driven by over-the-road truck market. For every locomotive sold, there are 220 heavy duty trucks sold  Engine technologies “cascade down” through normal market forces:  Automotive  Truck  Locomotive, Stationary, and Marine  Example: Electronic Fuel Injection  Introduced into the auto market in early 1980’s  Entered truck market in late 1980’s  Entered locomotive market in 1994  Engine technologies cannot be quickly and simply “scaled up” 20 Prepared by the Association of American Railroads

21. 21 Sources Emissions (tpy) & Reductions 2005 (Base)20102020 % Reduction by 2020 Strategy Through Trains 58502753%’98 MOU Switcher Locomotives 54352554% ’98, ’05 MOU, CARB Diesel Service/Test Locomotives 2317961% ’98, ’05 MOU, CARB Diesel Cargo Equipment 2692.690%CARB Rule Container Trucks 33135 85% CARB Rule, Bond Funding TRUs 1350.497%CARB Rule Other2.721.544% - Total21013171.8*66% Source: Table A-2 pg154 of the ARB’s Technical Options Document released on 9/1/2009 *Actual total varies from numbers shown due to rounding ARB Staff Conclusions Concerning Diesel PM Reductions at Rail Yards Based on Existing Regulations & Agreements (2005-2020) Prepared by the Association of American Railroads

22. 22 Tons/Year Estimated Total DPM Emissions from 18 Major Rail Yards with Implementation of Existing Regulations and Agreements Source: Figure 2, pg 5 of the ARB’s Recommendations to Implement Further Locomotive and Rail yard Emission Reductions

23.  Unquestioned benefits of greenhouse gas reductions from increased use of rail “Rail should be a key element of any federal response to climate concerns…Improving surface transportation offers both immediate and long-term benefits by decreasing traffic congestion, helping to mitigate rising energy costs and reducing emissions related to global warming. We hope Congress will move quickly on these critical issues.” Peter Lehner, Executive Director of the Natural Resources Defense Council at the One Rail Coalition Press Conference, January 2009 23 More Freight Rail Will Help Reduce Greenhouse Gases Prepared by the Association of American Railroads

24.  3X more fuel efficient than trucks  35% more fuel efficient than marine  Railroads reduce congestion: a single train can take 280 trucks off the highway 2008 data shows freight rail is now averaging 457 ton miles per gallon; a 94% fuel improvement over 18 years Every Ton-Mile of Freight that Moves by Rail Instead of Truck Reduces GHG Emissions by Two-Thirds or More Prepared by the Association of American Railroads 24

25. CO2 Emissions per Ton Mile of Freight California Statewide 25 Prepared by the Association of American Railroads Source: Abacus Technology Corporation, “Rail vs Truck Fuel Efficiency: The Relative Fuel Efficiency of Truck Competitive Rail Freight and Truck Operations Compared in a Range of Corridors,” April, 1991. (as applied to California)

26. Contact Information Brenda Douglass Sierra Research 1801 J Street Sacramento, Ca 95811 (916) 273-5135 bdouglass@sierraresearch.com Kirk Marckwald California Environmental Associates 423 Washington, 3 rd Floor San Francisco, CA 94111 (415) 421-4213 x 12 Kirk@ceaconsulting.com 26