A proposed rule to prevent freight rail cars produced by Chinese entities from being used in the U.S. freight rail network is earning praise from the heads of the Rail Security Alliance (RSA) and the Railway Supply Institute (RSI), who view such rail cars as a potential threat to national security.
What would it mean for national security “if we don’t have the capability to build and manufacture these types of vehicles that not only carry grain and lumber, but also carry nuclear waste and tanks and Blackhawk helicopters and personnel?” RSA’s executive director Erik Olson told FreightWaves.
The Federal Railroad Administration is proposing that new freight rail cars in the U.S. must prove that they have been manufactured in a country that’s not on U.S. watchlists for raising U.S. national security concerns or allegedly violating U.S. intellectual property laws.
The notice of proposed rulemaking, published in the Federal Register on Friday, calls for new freight rail cars operating in the U.S. to be manufactured or assembled by a “qualified manufacturer in a qualified facility.” The proposed rule would also require sensitive technology that would be located on the rail car to be sourced from a country not on U.S. watchlists.
According to the proposed rulemaking, China would be the only country that would be on all the U.S. watchlists.
RSA was founded in 2015 in response to concerns that state-owned enterprises in China expressed intentions to dominate the global market for passenger and freight rail cars. The creation of RSA was to curb that influence in North America, although CRRC, a state-owned rolling stock manufacturer, managed to successfully win four contracts from transit authorities in Boston, Philadelphia, Chicago and Los Angeles, Olson said.
“Freight rail really is the cyclical market and the opportunity to continue to build every year,” as opposed to transit contracts, which don’t have that same cycle, Olson told FreightWaves. “And so our members were concerned that [the manufacturing of] passenger [rail cars] would leak into freight, and then you’d start to see cost-cutting measures there [as well as] a degradation of freight rail, the builder market and the manufacturing market.”
Under the proposed rule, rail car manufacturers would need to electronically certify to FRA that each freight car complies with the rule before it can operate on U.S. railroads. However, rail car manufacturers would not have a continuing obligation to certify their assets on a regular basis, nor would the rule apply to those involved in aftermarket activities, such as those performing repairs or maintenance.
RSA worked with members and other stakeholders involved in rail car manufacturing, such as RSI, American Iron and Steel Institute, United Steelworkers and others, to press Congress to consider placing restrictions on the manufacturing origins of freight rail cars. The group also in 2018 expressed concern about interest from Chinese companies to invest in the manufacturing of rolling stock.
Sens. John Cornyn, R-Texas, and Tammy Baldwin, D-Wisc., introduced the SAFE Trains Act, which sought to address the issue of national security and freight rail car production. Language from that bill eventually made its way to the Infrastructure Investment and Jobs Act of 2021, which calls upon FRA to issue a rulemaking on the manufacturing origins of freight rail cars.
FRA’s proposed rule would amend existing federal code on freight rail car standards. There is also a similar legal framework in the trade agreement between the U.S., Mexico and Canada, according to the Federal Register notice.
Along with RSA, RSI is lending its support to the proposed rule, based on an initial reading.
“The Railway Supply Institute strongly supports protecting the freight rolling stock supply chain from bad actors and unfair competition,” RSI President Patty Long said in a Friday statement to FreightWaves. “We applaud the FRA for its work to ensure our freight rail network is secure and are encouraged by our initial review of the proposed rule. We are hopeful that the final rule will mirror congressional intent of the SAFE TRAINS provision in the Infrastructure Investment and Jobs Act.”
Olson agreed, saying that the proposed rule appears to be close to the intent of Cornyn and Baldwin’s bill, which sought to put policies and procedures “to ensure that in the future, Chinese state-owned enterprises like CRRC — which have clearly said they want to dominate the market and take over this market — are barred from building rail cars for the U.S. interchange system touches Canada and Mexico.”
The idea of certifying rail cars’ manufacturing origins is also pertinent because rail cars are becoming more technologically complex and could hold sensitive information through their use of sensor systems, GPS technology and transmission technology, Olson said.
“They’re not the dumb boxcars that we see in the movies. These are highly interconnected vehicles that have a lot of data and will increasingly have more. Not only will they have some automated features, whether it’s for opening and closing doors and release valves and other things, but also monitoring software,” Olson said.
Freight rail cars will also be part of a system or network collecting and transmitting data to wayside detectors, and that information on what the train is carrying, where it’s going and how fast it’s moving could all be sensitive information, he said.
Indeed, other U.S. lawmakers are wary of using certain technological tools from China to monitor supply chain data because of national security concerns, with the U.S. House of Representatives recently approving a defense spending bill that included a provision limiting China’s ability to monitor the flow of ocean containers into and out of the U.S.
“It’s one thing to have to protect the system from outside intrusion. It’s another to let the intruders into the system,” Olson said.
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