I am happy to be able to report that the retrofit effort is now moving toward completion. All 112 and 114 tank cars now have shelf couplers designed to resist vertical disengagement. As of January 1, 1980, 13,341 cars had received tank head protection. That is a completion rate of over 75 percent for the application of head protection to cars in flammable gas and anhydrous ammonia service. Application of thermal protection is also proceeding as planned. By the first of this year, well over 75 percent of those cars requiring thermal protection had received it. Given the present pace of retrofit, it is clear that most of the remaining cars will be equipped with head protection or thermal protection well before the end of this year. A strict deadline of December 31 of this year will be enforced for all cars subject to the retrofit program. Throughout the progress of the retrofit, the Department and fertilizer, or by those few who contended that the job could not be done and that extra time was essential. As a result, the majority of tank car owners and lessees, who wanted to do a quality retrofit in an expeditious but orderly manner, have responded positively to the accelerated schedule. Safety and Profitability Although the deterioration of railroad safety performance is a symptom of fundamental railroad problems such as operating discipline and maintenance of plant and equipment, the large increase in the train accident rate over recent years that can be attributed to defects in way or structure compared with other causes, provides clear evidence of an undermaintained and deteriorating rail plant. A study, conducted as a part of the System Safety Plan development, shows a definite correlation between individual carriers profitability and their respective accident rates. The railroad industry faces a capital shortfall over the decade 1976-1985 of $13 to $16 billion; the return on invested capital is among the lowest of major industries. The industry's difficulties in earning an adequate return on existing investment stem 66-493 0-80--2 in part from Federal regulation which has constrained management ability to adjust rates, merge corporate entities, provide new services, and abandon obsolete facilities and services. In addition, the Government has provided rightof-way facilities for highways and waterways that - in cases where adequate user charges are absent - have subsidized the railroad industry's principal competitors. The Administration supports the effort of this Committee to free the industry from the outmoded constraints that keep the railroads from using innovative marketing techniques which they need to compete effectively. While FRA agrees that the financial condition of the railroad industry is a basic problem behind the poor safety performance of many carriers, the poor financial condition of the industry makes all the more important FRA's insistence that minimum safety conditions be met. Otherwise the industry is tempted to put its money in areas with a higher shortterm revenue benefit and rely on good luck to keep down the number of accidents. The financial penalties which FRA assesses for non-compliance with its safety standards help to provide the railroad mechanical and engineering departments, which are responsible for repairs, with justification for increased maintenance budget allocations. Civil Penalty Enforcement When I last appeared before this Committee to testify on railroad safety, I reported a record year in safety enforcement. FY 1977 saw an increase in civil penalty collections to over $3.4 million, more than twice the previous record. I can now report two more record years, in each of which FRA more than doubled the amount collected in FY 1977. In FY 1978, FRA collected $7,543,439 in civil penalties through settlements, administrative assessments and court judgements. While heavy litigation related to Emergency Order No. 11 held collections in FY 1979 below record levels, our total collection for the twelve months comprising Calendar Year 1979 set a new twelve-month record of $7,551,132. In fact, just since October of 1977, FRA has collected $5 million more in civil penalties than it did in the first ten years of its existence. Although these civil penalties included increases in the amounts collected under the older safety statutes and under the Federal Railroad Safety Act of 1970, the most impressive achievement has been in the area of hazardous materials. Prior to January 3, 1977, our sole means of enforcing the Department's Hazardous Materials Regulations was to seek the imposition of criminal penalties in the courts. Due to the already strained resources of the Department of Justice and the courts, the fines collected were nominal. Following FRA's issuance of procedures for handling these claims administratively, FRA attorneys greatly increased both the number of claims handled and the amounts assessed. In FY 1978, the first twelve month period for which civil penalties were an available enforcement tool, FRA handled 115 violations of the Hazardous Materials Regulations, collecting a total of $237,200. In FY 1979, we assessed a total of $489,655 for 159 violations. Computed on a calendar year basis for the twelve months of 1979, we collected $634,020 for 258 violations. This is over twice the amount of all fines and penalties for violations of the Hazardous Materials Regulations in the previous twelve years of FRA history. Last year, the first adjudicatory hearing was held under |