In the wake of the terrorist attacks of September 11, 2001, concerns have been raised that the nation's shipments of hazardous materials by rail may be vulnerable to terrorist attack. Millions of tons of hazardous materials are shipped yearly across the United States. Serious incidents involving these materials have the potential to cause widespread disruption or injury. GAO was asked to examine recent steps taken by industry and government to improve the safety and security of these shipments and steps taken by local jurisdictions to prepare to respond to hazardous material rail incidents. After the response to the September 11, 2001, terrorist attacks, industry and government took steps to improve the safety and security of hazardous material rail transportation. The railroad and chemical industries assessed their facilities' exposure to attack and developed a security plan to address their risks. The Department of Homeland Security's Transportation Security Administration has begun to address non-aviation security by starting development of an overall intermodal transportation system security plan, but has not yet developed specific plans to address the security of individual surface transportation modes, including rail. Such a plan is needed to determine the adequacy of security measures already in place to protect rail shipments and identify security gaps. Officials from local jurisdictions that GAO visited, as well as other government and private sector experts, identified several unresolved issues pertaining to the safety and security of transporting hazardous materials by rail. These include the need for measures to better safeguard hazardous materials temporarily stored in rail cars while awaiting delivery to their ultimate destination and the advisability of requiring companies to notify local communities on the type and quantities of such materials stored or passing through their communities. While no standardized tool exists to gauge local preparedness, officials from nine of the ten cities that GAO visited said that they are generally prepared to respond to hazardous materials incidents. By the end of 2004, the Department of Homeland Security plans to determine the response capabilities of the nation by developing an assessment tool for use by states in performing assessments of their local communities' emergency response capabilities. [ABSTRACT FROM AUTHOR]