Today’s U.S. freight railroads are the envy of the world — but that was not always the case. Government policies led to over-regulation, driving the industry to the edge of ruin by the 1980s. Two legislative items currently under review by the Surface Transportation Board — open access and a revenue adequacy cap — could take the railroads back down that path, fundamentally changing the industry for the worse.
Union Pacific has been very clear that providing open access to customers on another railroad would diminish efficiency and likely create unintended consequences.
A revenue adequacy cap restricting the ability of railroads to earn adequate returns would limit the opportunity to charge reinvestable prices, which are required so railroads can funnel money back into their capital intensive operations and support high replacement costs. Revenue adequacy was originally adopted as part of the Staggers Act, which partially deregulated the industry and enabled railroads to charge fair prices for services and improve productivity, contributing to the industry’s operational and financial turnaround. This generated unprecedented capital investments: between 2004 and 2013, Union Pacific invested more than $30 billion in its infrastructure. Along with that came better service for our customers, helping them remain competitive in their respective industries.
Another important issue relates to proposed changes to the tank cars used to haul the crude oil supporting America’s energy renaissance. The rail and petroleum industries collaborated to develop enhanced tank car standards, jointly urging the Department of Transportation to increase tank car safety by requiring all tank cars that transport certain types of hazardous materials be built to a higher standard, and require all existing cars be retrofitted to this higher standard or be phased out of service. Adopting these tank car changes would enhance safety for employees, customers and communities.
Jack Koraleski, Chairman and CEO, Union Pacific