As the U.S. economy faces historic challenges, railroads will not be immune to the impact of this slowdown. While the lower volumes will create temporary excess capacity in certain lanes, we know that long term, given even modest economic growth, we will need to focus on policies that will allow the rail networks to continue to expand. Everyone who studies the interface of the highway and the rail networks, fuel policy and the impact of carbon, comes to the same conclusion: We need rail to provide additional capacity to facilitate growth of our economy, and the result will be tremendous societal value.
With change in the Congress and the administration and the timing of the new transportation bill and carbon legislation, policymakers will need to focus on what has worked to allow the railroads to survive during the past several decades and to continue to incent unprecedented investment levels.
While some users of the current system would like to see change in the regulation of railroads, I believe there is overwhelming evidence, backed up by independent studies, that the existing regulation model laid down in the Staggers Act is reasonable and has led to much-needed investment in rail infrastructure. Users of the rail system agree that there is a critical need for further investment, and most agree that the current regulatory model will help meet that need.
2009 will also begin the implementation of the historic safety bill that was passed in 2008. I say historic because the implementation of train-control technology will forever change the rail industry. While we have been working hard on this technology at BNSF, it will take a major company effort to begin to prepare for final implementation in 2015. At the top of the list of preparations will be how to integrate train-control technology into our current capital forecasts without sacrificing any of the other critical safety investments in rail, ties and ballast and to ensure that the public funds passenger rails’ share of the cost of this large-scale technology deployment.