WASHINGTON -- In an appearance Wednesday before the Senate subcommittee on surface transportation, Union Pacific Railroad Chairman Richard K. Davidson said the line is "once again strong and healthy," with traffic increasing by 11 percent over the last two years and new services being offered, according to the Lincoln Journal Star.

Davidson said the railroad invests more than 20 percent of its revenue back into the system, but the company is still losing ground. He blamed high fuel costs and the inability to get an adequate rate of return on investment, along with the problem of "government regulation." Congress deregulated the railroad industry in 1980.

As an example of how the railroad reinvests, Davidson cited the construction of a third line between North Platte and Gibbon. He said the "triple tracking" cost $327 million.

But, he said, it was money well-spent: Now 107 trains a day travel that stretch - a 30 percent increase in trains and a 54 percent increase in speed.

Subcommittee member Jay Rockefeller, D-W.Va., was less than sympathetic, saying he has sat on the subcommittee for 17 years "listening to the railroads cry poverty, rail against government interference and making requests for government subsidies."

Rockefeller and Davidson sparred over Rockefeller's demand that Davidson justify why Union Pacific won't tell shippers what specific charges they will pay to go from point A to point B. Davidson never did answer the question, so Rockefeller offered his own: by refusing to set a price from A to B, the railroad would force shippers to send their products to point C, where there was not a link to a competing railroad.

But, in response to subcommittee chairman Gordon Smith, R-Ore., Davidson said things may well get to the point where Congress will have to provide financial support to a deteriorating rail network unless the railroads have the right to charge for their services as they see fit.

Appearing with Davidson was Matthew Rose, president of the Burlington Northern Santa Fe Corp. He said that while productivity and volume have increased steadily since the railroads were deregulated by Congress in 1980, revenues are down. He also said railroading is America's most capital-intensive industry.