MR. ROSE:

 

Good morning, everybody and welcome to our Commerce Mechanical Facility. I'm Matt Rose, president, CEO and chairman of BNSF Railway. It's my pleasure to host you to showcase this great environmental progress that's being made by BNSF and the rail industry in cooperation with the state of California.

I'd certainly like to welcome Governor Schwarzenegger and thank him for being here today. He's been a visionary leader, obviously, for California's environment and truly a big proponent of alternative fuels. We're honored to have him here with us today. And I'd also like to welcome the many state and local officials with us. Your interest and support are very important to us.

Through a unique partnership with California the railroads have embarked on a very aggressive program to substantially reduce emissions from locomotives in rail yards. California communities are (Inaudible) and cleaner air as a result of this cooperative relationship. Finally, I want to thank our partners in the Hydrogen-Fuel Locomotive Project from the United States Department of Defense and from Vehicle Projects Incorporated.

Many of you know that rail is a very environmentally friendly way to move lots of freight and lots of people. BNSF trains now can move a ton of freight 470 miles on a single gallon of diesel fuel. So just think about that -- 470 miles on one gallon of fuel. If you think about just 10 percent of all the long-distance freight currently moving on the highway, if we could switch that to the rail our national fuel savings would exceed a billion gallons a year and the annual greenhouse gases would fall by some 12 million tons. A single intermodal train, which you probably see coming out of the ports down here, can take 280 to 300 trucks off the highway, or an equivalent of almost 1,100 cars off our crowded highways.

In a typical day BNSF operates more than 75 freight trains in the L.A. Basin, many on the tracks we share with Amtrak and MetroLink. Whether freight or passenger operations, rail is a primary partnership between public and private sectors.

Governor Schwarzenegger and his administration understand the benefits of rail and have worked closely with us to build upon the environmental advantages of rail to reduce emissions and improve air quality. Despite these tough economic times that we're in, BNSF invested $2.7 billion in capital during 2009 and we just announced our 2010 capital plan of almost $2.5 billion.

Included in last year's number was acquiring 300 of the cleanest locomotives available. We've also been testing many ultra-low emission locomotives in the last few years to reduce emissions and improve fuel efficiency, including the GenSet Locomotive which is behind me, LNG locomotives, Smart-Burn Locomotives and battery-hybrid locomotive technologies. Hydrogen, of course, is another technology we're exploring.

BNSF, through the partnership with the United States Defense Department, built this prototype switch locomotive you see behind me, powered by a hydrogen fuel cell. As far as we know, this is the first hydrogen fuel cell locomotive in the world. While it's still experimental, we are very excited to be able to take a leadership role in developing this cutting edge technology. The benefits of hydrogen are its low emissions and that it can be produced from a variety of sources.

We look forward to continuing our relationship with the state of California and expanding rail capacity to keep California's economy competitive in an increasingly interdependent global economy.

We appreciate you joining us today. It's now my honor to introduce Governor Arnold Schwarzenegger. (Applause)

GOVERNOR SCHWARZENEGGER:

Thank you very much, Matt, for your nice introduction and also for having us down here. Today I'm here with two pieces of good news -- and I love good news, because so many times when we turn on the television these days you always hear bad news.

And so let me first talk about the first good news, which is what you see right here behind us. As I have always said, how efficiently and quickly we move people and goods around, this is what is economic power, in the end. And if it is through trains or cars, airplanes, ships, or if it through trucks, whatever means it is, it's about how quickly we move people and goods.

But also what is important is how do we do it in a way that we reduce our greenhouse gas emissions. So how do we combine the two? And I think what you see here today is really proof that we can do it. Forty percent of California's greenhouse gases come from transportation, so that is a big area where we can reduce. And that's why in California we have challenged the business community, we have challenged the entrepreneurs and the innovators to develop alternative fuels and cleaner modes of transportation.

And I think that we have seen some great action here in California and it is because we have passed tough laws -- AB 32, for instance, where we made a commitment to reduce our greenhouse gases by 25 percent by the year 2020 and an additional 85 percent by the year 2050 and our Low-Carbon Fuel Standards, our Tailpipe Emission Standards and the list goes on and on. So our state is way ahead of any other state and we are a model to the rest of the world.

And it's amazing what we have seen, the kind of action that we have seen here in California. There has been an explosion in clean cars here in this state and in clean trucks. We have seen hydrogen-powered big rigs, we have seen electric Hummers and hydrogen Hummers and we have seen the hybrid tugboats in our ports and the list goes on and on. And so soon we will -- and we also have seen, which is really incredible, that the Navy now is using biofuel to power its ships, a lot of its ships and it's right from Solazyme here, from a California company that develops fuel from algae.

So there is great, great action.

And today we are seeing here a great demonstration, as you have heard from Matt, saying that this is the first locomotive that is hydrogen powered. So again, California is out there in front. Believe me, the world is watching this right now. They will be talking about it in Europe, about this technology. They will be talking about it in China and Japan, all over the world. Because one thing we know for sure and that is that the railroad and locomotives and trains have a huge, huge comeback and we have seen this because now I think it's more needed than ever.

So we are very happy that Burlington Northern Santa Fe, also known as BNSF, is doing a great, great job. And I'm so happy that my friend Warren Buffet bought the company. I wish I had that kind of money, where I can just dish out, you know, $30-plus billion for a company like this. But anyway, it just shows how futuristic thinking he is. And I talked to him right after the purchase and one of the things that he talked about most was to make it as clean as possible, moving goods around in the United States, so I think this is really terrific.

The most exciting thing, of course, is that this is hydrogen fuel. And what you see back there is the beginning stage of the technology, obviously and it's not really even a locomotive. It's a small locomotive which we call a switcher and that's responsible for moving the train cars around and to connect them and to assemble them, so then there is the big locomotive then can pull it. And eventually the technology will go also to the big locomotive. So this is the beginning stage, that's where it always begins. But it's beginning right here, so we are very happy about that.

So this is the great, great news and we want to thank Matt Rose for his great leadership and for having us out here today. And so that's good news number one.

Good news number two is, since we are talking about trains, we have to switch over to high-speed rail, because we just were told by Washington that we are getting from Washington $2.3 billion for our high-speed rail. (Applause) Now, this is federal money. This is great, great news. And so we want to thank the Obama Administration, we want to thank Vice President Biden, who was very instrumental in the negotiations and we want to thank Secretary of Transportation LaHood and our congressional delegation of California, everyone working together and doing such an outstanding job.

And I also want to thank Curt Pringle, Mayor Curt Pringle, who is standing here to my right, who has been a great leader for the high-speed rail here in California. He has taken over just recently and has really shown great, great leadership. And I just want to let you know -- and I didn't even share that with you -- but Secretary LaHood yesterday when he called me about this news, he said, "You guys in California had the best application form and the greatest details and the most organized. You're way ahead of everyone else." So he complimented me for five minutes straight about what a great job that you guys are doing here with high-speed rail and how aggressively we're moving forward and how great our application was. And that's why we, with the $2.3 billion, we are getting the most money of any state in the United States, so let's give a big hand to them for that great, great news. (Applause)

So this makes the federal government, of course, a great partner with our high-speed rail and we are very happy about that. And, of course, with the federal government being a partner, I think that this moves our agenda forward really aggressively. As you know, as you have heard already before, by building this system, this high-speed rail system, it's going to save us up to 12 billion pounds of greenhouse gases per year. So this is why I say what's good for the economy also can be very good for the environment.

And also, here's another thing -- I've been traveling up and down the state the last three weeks talking about jobs, jobs, jobs. This, building the high-speed rail will create 600,000 jobs in California, so this is really terrific.

And, of course, the first leg will be built from Anaheim all the way up to the Bay Area and then the second leg to San Diego and up to Sacramento and so on but Curt Pringle is going to talk more about that. So I'm very excited about both of this news, of what we heard here. And so with that I want to bring out Curt Pringle to say a few words about the high-speed rail and about the money that we have gotten. Please welcome Curt Pringle. (Applause)

MAYOR PRINGLE:

Well, thank you, Governor, very much. And it is a pleasure to be here with Matt Rose in this BNSF facility. As a city that sees really the progress of commerce coming through it every day with many BNSF trains, I will tell you on behalf of my residents and those that are near rail tracks, we thank BNSF's commitment to really look to ways to continue to clean up our environment. And it's a commitment made by a company that doesn't necessarily have to take those steps but makes that level of investment because you care about the broader community. And we know of your commitment in the Southern California basin and very much appreciate that.

On behalf of the high-speed rail, I will tell you, Governor, we are very pleased and want to thank again the Obama Administration, our congressional delegation and our members in the United States Senate, Senators Feinstein and Boxer, as well as you, Governor, for really being a champion of high-speed rail. I hope you all see that excitement of high-speed rail, to be able to travel from Anaheim to Los Angeles in 20 minutes, through the Central Valley and to San Francisco in 2 hours and forty minutes.

High-speed rail, which is a commonplace occurrence in Europe and in Asia, is not here on this continent and in fact California will be the first state that provides high-speed rail. Being the largest recipient of federal money -- out of $8 billion, the president and his team awarded California $2.3 billion -- that shows a great deal of confidence in what we have been putting together over the last decade in California to ensure we have a high-speed rail system.

We sent in a proposal that referenced funding to four segments in this state -- the Anaheim to L.A. segment, two segments in the Central Valley and a segment from San Jose to San Francisco. The administration awarded us those funds without designating a segment and it in fact will allow us to continue with the environmental process to continue that review and put those funds where those projects are most readily available and ready to move forward.

We in California made a pledge that, for every dollar that would be spent from this federal stimulus funds, we would match it dollar for dollar for the state bond funds that the voters authorized in Prop 1A in 2008. Therefore, when the federal government suggests $2.3 billion is being awarded to California, that's over $4.5 billion of investment in construction jobs, in bringing people forward with greater mobility.

And in fact, the first phase of this segment, if you think about high-speed rail from Anaheim to San Francisco, that's the equivalent of moving people on 3,000 miles of freeway lanes. That's what that will bring. So as we are looking to build a segment, an 800-mile segment in this state, that is the equivalent of building that many freeway lanes. And we are taking those cars off the road for our future.

So, in fact, this is a very special day and a day that we celebrate. And again, I want to thank you all for being here and welcoming us to the BNSF facility. But most importantly, Governor, I want to thank you for taking the leadership on high-speed rail. As the chairman of the California High-Speed Rail Authority, I know we would not be in this position today without your leadership, so thank you very much. (Applause)

GOVERNOR SCHWARZENEGGER:

 

Thank you very much, Curt. But I think we also should give credit to another governor, which was Governor Davis, because this whole high-speed rail started under his administration already, so I'm not the only governor that has been pushing that. But the great thing about California is, if you're a Democrat or a Republican, we have a vision for the long term. So if it is a university or if it high-speed rail or whatever it may be, governors after governors continue on supporting those projects, so this is the great thing. We maybe have a lot of other things where we have great obstacles in order to manage the state but there's one thing we do really well in this state.

If there are any questions about that, please -- I think we have a microphone so I can even hear it, the questions that you have. So please, if you'll give the microphone over. Thank you.