AAR Overview

1. AAR Overview Presentation to:Association of Car Accounting and Car Services Officers May 8, 2008 Chicago, IL Good Afternoon � My name is Jeff Usher, I�m the Assistant Vice President of Business Services for the Association of American Railroads in Washington, DC and it is my pleasure to be able to speak to you today about the AAR, who we are, what we do and where we fit in the very dynamic railroad industry.Good Afternoon � My name is Jeff Usher, I�m the Assistant Vice President of Business Services for the Association of American Railroads in Washington, DC and it is my pleasure to be able to speak to you today about the AAR, who we are, what we do and where we fit in the very dynamic railroad industry.

2. About the AAR Master Car Builders Assoc. formed 1867 The goal was to standardize freight cars Soon after many railroad associations were formed In 1933 the Rail Transportation Act was passed to deal with depression-era problems affecting railroads President Franklin D. Roosevelt recommended railroads unify into one organization. AAR formed on October 12, 1934 Here�s a bit of history on how the AAR came into existence � primarily to add discipline to the industry � to standardize procedures and establish a system of rules and administrative standards to facilitate car interchange, and car and revenue accounting.Here�s a bit of history on how the AAR came into existence � primarily to add discipline to the industry � to standardize procedures and establish a system of rules and administrative standards to facilitate car interchange, and car and revenue accounting.

3. AAR�s Mission & Vision Mission To add value to the North American railroad industry by fostering improved safety, security, service, efficiency and profitability through leadership and coordination on industry issues. Vision To be recognized by industry leaders and valued by public policy decision makers as the definitive voice of the North American rail industry. As you see here the AAR is committed to working with the North American carriers to achieve the goals that support the Mission and Vision. As you see here the AAR is committed to working with the North American carriers to achieve the goals that support the Mission and Vision.

4. AAR Full Members As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs. As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs.

5. AAR Special Members As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs. As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs.

6. AAR Affiliate RR Members Transtar Inc. ISG - Cleveland Works Railway Company Lake Superior & Ishpeming Railroad Co. Metro-North Railroad MG Rail, Inc. Morristown & Erie Railway, Inc. New Orleans & Gulf Coast Railway New York City Transit Northern Plains RailwayRepublic N&T Railroad, Inc. Roberval and Saguenay Railway Company Sidney and Lowe Railroad, LLC As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs. As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs.

7. AAR Associate (Gold) Members Alstom Transport American Railcar Industries, Inc. Amsted Rail Group Chicago Freight Car Leasing Co. CIT Rail Resources Diamond Rail Lease Corporation First Union Rail Corporation FreightCar America, Inc. GATX Rail General Electric Railcar Services Corp. GE Transportation The Greenbrier Companies HDR Engineering HNTB Corporation Lockheed Martin Maritime Systems & Sensors MPL Technology New York Air Brake Corporation As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs. As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs.

8. AAR Associate (Gold) Members (Cont.) Pacer Stacktrain Parsons Brinckerhoff Progress Rail Services Rail CRC Reidler Decal Corporation RESCAR Companies Southern Company Generation Standard Car Truck Company Standard Steel, LLC The Timken Company TransEd, Inc. TranSystems Corporation TrinityRail TTX Corporation Union Switch & Signal Union Tank Car Company Wabtec Corporation As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs. As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs.

9. AAR Associate (Silver) Members AIG Rail Services, Inc. All Capital (US), LLC American Railcar Leasing GLNX Corporation Herzog Contracting Corp. Holland Company JK-CO LLC Specialty Car Repair Kennedy / Jenks Consultants Plasser American / Franz Plasser Procor Limited RailPower Hybrid Technologies Corp. Road & Rail Services, Inc. Salco Products, Inc. Saskatchewan Grain Car Corporation As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs. As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs.

10. AAR Associate (Silver) Members (Cont.) Savage Transportation Management (Formerly CANAC) Science Applications International Corporation (SAIC) Shaw Environmental Inc. Strato Inc. Sunrise Manufacturing Inc. TransCore TRC Companies, Inc. URS Corp. ZTR Control Systems As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs. As you can see, the AAR represents railroads from all across North America. Though the American Short Line and Regional Railroads are not shown, we work very closely with Richard Timmons, President of the Association. In fact they are located on the seventh floor right downstairs.

11. AAR Associate Program The AAR Associate Program is for every business that depends on America�s freight rail system to be the best in the world. �Railroads and suppliers alike have benefited from AAR�s vital role propagating the use of technology. AAR also enables the rail industry to speak with one strong voice on major legislative issues that dramatically impact our business.� Robert P. Haag, President, Wabtec Railway Electronics �Associate membership in the AAR has been very beneficial in providing our staff a communications link with key railroad officials and AAR staff., plus timely news reports about important railroad legislation and events affecting the industry.� Thomas P. Smithberger, Senior VP National Director of Railroads, HDR, Inc.

12. AAR Associate Program Gold Members Can participate in up to three concentration areas: Technical Services Environmental, Hazmat and Tank Car Car Service/Car Hire Damage Prevention and Freight Claims Policy and Communications Invitation to meet with AAR Board of Directors during its annual meeting Link to your company via AAR�s we page Member rates on publications

13. AAR Associate Program Silver Members Can participate in one concentration area: Technical Services Environmental, Hazmat and Tank Car Car Service/Car Hire Damage Prevention and Freight Claims Policy and Communications Member rates on publications Invitation to AAR annual meeting (sans reception with AAR Board of Directors) Listing on AAR�s web page

14. AAR Structure Safety and Operation Government Affairs Communications Administration and Finance Policy and Economics Law

15. TTCI and TTC: Two Different Things TTC: The Facility

16. Transportation Technology Center, Inc. Roy Allen, President TTCI Board Oversees Activities 238 Employees at TTCI Revenues Domestic and international commercial work (59%) AAR for SRI and Task Orders (29%) Government (12%)

17. Transportation Technology Center, Inc. Activities Strategic Research Initiatives Research initiatives, including vehicle track systems, engineering research, heavy axle load research, mechanical research, technology scanning Task Orders for Safety and Operations Technical standards, mechanical inspections, hazardous materials, tank car and spent nuclear fuel cask, communications, railway electronics, car repair billing, AAR scales, locomotive emissions, bolsters, security

18. Railinc Allen West, President Railinc Board Oversees Activities Approximately148 Employees at Railinc Railinc provides transportation utility serving the needs of customers across North America and beyond

19. Railinc Activities Maintains UMLER data base; IRF Files; industry�s legacy files; supports world�s largest electronic data interchange networks (5.8 million messages are transmitted each day); damage prevention/freight claims Operates steelroads.com, the railroad industry�s common web site where rail customers can track information, order equipment, discover shipping options and find pricing information

20. Railroad Research Foundation The Railroad Research Foundation (RRF) is a world-class policy and research organization devoted to fostering in the public interest a safe, secure, technologically advanced and productive marketplace driven railroad industry. RRF undertakes research and education activities in the public interest and for the public good.

21. Railroad Research Foundation The RRF�s funding comes from federally funded cooperative agreements. These cooperative agreements are used for the purpose intended and will fall within the scope of the RRF�s activities as defined under its charter and tax exempt purpose. The RRF, by virtue of its close relationship with the AAR, benefits from the AAR Committees, which is comprised of individuals from its member railroads, the supplier community, sponsoring Federal agencies and other interested industry parties, to provide general direction to the RRF on projects funded through government cooperative agreements.

22. Some RRF�s Federally Funded Projects Freight Rail Security Project Railroad Wireless Communications and Train Control Positive Train Control (PTC) Countermeasure to Reduce Suicides on Railway Rights of Way

23. The AAR Interacts With: - United States Congress - Federal Railroad Administration - Department of Defense - National Transportation Safety Board - Federal Highway Administration - Environmental Protection Agency - Federal Motor Carrier Safety Administration - Surface Transportation Board - Department of Homeland Security - Department of Justice - Department of Energy - Nuclear Regulatory Commission - Federal Communication Commission - Research Special Programs Administration AAR is actively involved with the regulatory agencies as well as the US Congress. AAR is actively involved with the regulatory agencies as well as the US Congress.

24. Committee Structure The AAR Board consists of the CEO�s of the Class 1 railroads. There are three policy committees that report directly to the Board: SOMC: Chief Operating Officers. NEMC: Chief Marketing Officers PAMC: Chief Legal and Policy Officers The AAR Board consists of the CEO�s of the Class 1 railroads. There are three policy committees that report directly to the Board: SOMC: Chief Operating Officers. NEMC: Chief Marketing Officers PAMC: Chief Legal and Policy Officers

25. Policy and Advocacy Mgmt Committee (PAMC) Reports directly to AAR Board Consists of legal and policy representatives from AAR Member Roads Issues Reject proposed currently unnamed and other proposals to re-regulate U.S. Freight Railroads Investment Tax Credit (S. 1125) Clear Skies Initiative Truck Size and Weight

26. PAMC Subordinate Committees - Antitrust Working Committee - Border Policy Committee - Chief Legal Officers - Communications Committee - Economic Regulation Working Committee - Environmental Working Committee - Safety Regulation Working Committee - Spectrum Legal Working Committee - Tax Policy Working Committee - Tort Matters Working Committee - Truck Size and Weight Committee - Washington Representatives

27. Network Efficiency Management Committee (NEMC) To develop and implement strategies that integrate industry and individual railroad business processes into quality services that deliver continuous improvements in customer satisfaction. Consists of chief marketing officers from AAR Member Roads Current Priorities Customer Satisfaction Equipment Asset Management Interline Service Management Interline Revenue Backshop Improvements Trans Border Initiatives

28. NEMC Subordinate Committees Customer Service Standing Committee Addresses customer and customer support issues from an industry perspective Interline Revenue Management Manage data quality and promote business processes to permit accurate communication of price, billing, collection and settlement information Transborder Working Committee Expedite movement of import/export traffic through the promotion of uniform process definitions and simplification of reporting requirements Electronic Commerce Working Committee Facilitate the exchange of information among customers, transportation providers and partners using the best available technology

29. NEMC Subordinate Committees (Cont.) EDI Working Committee Provides an Information technology interface to the �user� community Equipment Assets Management Working Committee Responsible for maximizing inter-railroad car utilization

30. Safety and Operations Management Committee (SOMC) Provides overall authority for industry standards (interchange, safety, environmental, hazmat and communications and signal) and develops strategy and provides direction for new initiatives. Consists of chief operating officers from AAR Member Roads Current Priorities Interline Service Management Interoperable Communications Strategy Chicago Project North American Joint PTC Project Reducing stress and service state of the industry

31. SOMC Subordinate Committees Technical Services Working Committee Responsible for matters relating to the physical assets of the railroad industry. Open Top Loading Rules Committee Quality Assurance Committee Arbitration & Rules Committee Equipment Engineering Committee Wheels, Axles, Bearings & Lubrication Committee Braking Systems Specially Equipped Freight Car Committee Car Repair Billing Committee Locomotive Committee Damage Prevention & Freight Claims Promotes the safe movement of trains carrying commodities in open top cars, trailers and containers. Promotes continuous quality improvement in mechanical components received from all suppliers of railroad products. Develops rules and implements supporting mechanisms that ensure effectiveness and efficiency of freight equipment interchanged among subscribing railroads Ensures all critical freight car components as well as car designs intended for interchange service are compatible, safe, reliable, and efficient for operation Ensures that critical wheel set and truck systems components are designed, manufactured, remanufactured, reconditioned, inspected, and maintained to such a quality level that the risk of failure in interchange service is zero. Promotes enhancements, establishes standards and supports AAR interchange rule requirements with objective of safe, efficient and dependable freight car braking performance under conditions of existing projected service. Develops and maintains mechanical standards and rules for the design and maintenance of special equipment and multi-level equipment. Anticipate needs, develop improvements and maintain effective/efficient mechanisms that govern all prescribed repairs made to freight cars Develop and maintain set of standards, specifications, and certifications that apply to the manufacture, reconditioning and maintenance of freight car cushioning devices, couplers and draft gears. Promotes a locomotive fleet used in interchange service that incorporates features that ensures safe and efficient operations. Promotes interline policies, practices and procedures that improve intermodal service. Promotes the safe movement of trains carrying commodities in open top cars, trailers and containers. Promotes continuous quality improvement in mechanical components received from all suppliers of railroad products. Develops rules and implements supporting mechanisms that ensure effectiveness and efficiency of freight equipment interchanged among subscribing railroads Ensures all critical freight car components as well as car designs intended for interchange service are compatible, safe, reliable, and efficient for operation Ensures that critical wheel set and truck systems components are designed, manufactured, remanufactured, reconditioned, inspected, and maintained to such a quality level that the risk of failure in interchange service is zero. Promotes enhancements, establishes standards and supports AAR interchange rule requirements with objective of safe, efficient and dependable freight car braking performance under conditions of existing projected service. Develops and maintains mechanical standards and rules for the design and maintenance of special equipment and multi-level equipment. Anticipate needs, develop improvements and maintain effective/efficient mechanisms that govern all prescribed repairs made to freight cars Develop and maintain set of standards, specifications, and certifications that apply to the manufacture, reconditioning and maintenance of freight car cushioning devices, couplers and draft gears. Promotes a locomotive fleet used in interchange service that incorporates features that ensures safe and efficient operations. Promotes interline policies, practices and procedures that improve intermodal service.

32. SOMC Subordinate Committees (Cont.) Risk Management Working Committee Develop and guide industry efforts to reduce environmental and safety risks of rail transportation. The following committees report to Risk Management: Hazardous Materials Committee Non-Accident Release Reduction Task Force Environmental Affairs Committee Tank Car Committee Nuclear Waste Transportation Task Force Grade Crossing & Trespass Prevention Committee Committee on Locomotive Emissions & Energy Railroad Geographic Information Systems Committee Formulates industry hazardous materials policy and have oversight for the operations of the AAR Bureau of Explosives in providing publications and the annual AAR Hazmat Seminar Actively work to reduce number of non-accident release of hazardous materials from tank cars (NAR Video recently completed) Assist industry to identify, evaluate and cost effectively manage existing and future environmental risks. Responsible for development and publication of mandatory specifications for the design, construction, maintenance and safe operation of all tank cars used for rail transportation of commodities in North America. Assist AAR to develop policy and responses to DOE, DOT and NRC for regulations on the transportation of spent nuclear fuel and high level waste. Reduce highway-rail grade crossings accidents and trespasser incidents. Foster technology development to decrease locomotive exhaust emissions while optimizing fuel efficiency without adversely affecting reliability. To serve a common need to further the development, enhancement, and interoperability of GIS and to establish a communication forum for practitioners and users both at the industry level (AAR) and railroad level. Formulates industry hazardous materials policy and have oversight for the operations of the AAR Bureau of Explosives in providing publications and the annual AAR Hazmat Seminar Actively work to reduce number of non-accident release of hazardous materials from tank cars (NAR Video recently completed) Assist industry to identify, evaluate and cost effectively manage existing and future environmental risks. Responsible for development and publication of mandatory specifications for the design, construction, maintenance and safe operation of all tank cars used for rail transportation of commodities in North America. Assist AAR to develop policy and responses to DOE, DOT and NRC for regulations on the transportation of spent nuclear fuel and high level waste. Reduce highway-rail grade crossings accidents and trespasser incidents. Foster technology development to decrease locomotive exhaust emissions while optimizing fuel efficiency without adversely affecting reliability. To serve a common need to further the development, enhancement, and interoperability of GIS and to establish a communication forum for practitioners and users both at the industry level (AAR) and railroad level.

33. Conclusion Thank you Questions? Jeff Usher 202-639-2370 jusher@aar.org Provide direction and oversight to the Interline Service Management project. Provide oversight for four subordinate task forces (below). Resolve requirements and technical issues that affect railroads in interline operations where interoperability is required, wireless communications and signal and train control. Wireless Communications Task Force Signal & Train Control Task Force Railway Electronics Task Force AEI Task Force Provide direction on the Chicago project Oversight of initiatives such as wheel/rail interface; vehicle/track performance; vehicle health monitoring; and wheel/rail profile maintenance. Oversight of special track work, track components, bridges, track integrity monitoring and signal research. Oversight of advanced braking system response and performance of freight trains, including faster application and release. Provides direction and guidance to AAR and FRA for the FAST program and Heavy Axle Load program Provides guidance for research and test technology scanning initiatives Provide direction and oversight to the Interline Service Management project. Provide oversight for four subordinate task forces (below). Resolve requirements and technical issues that affect railroads in interline operations where interoperability is required, wireless communications and signal and train control. Wireless Communications Task Force Signal & Train Control Task Force Railway Electronics Task Force AEI Task Force Provide direction on the Chicago project Oversight of initiatives such as wheel/rail interface; vehicle/track performance; vehicle health monitoring; and wheel/rail profile maintenance. Oversight of special track work, track components, bridges, track integrity monitoring and signal research. Oversight of advanced braking system response and performance of freight trains, including faster application and release. Provides direction and guidance to AAR and FRA for the FAST program and Heavy Axle Load program Provides guidance for research and test technology scanning initiatives