Market Matters Blog

Possible Rail Shutdown Threatened if Safety Law Extension Not Granted

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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BNSF train heading east through Randall, Minnesota. (DTN photo by Mary Kennedy)

MINNEAPOLIS (DTN) -- The deadline for U.S. railroads to install a new federally mandated system of safety measures is only a few months away. But with most railroads still a year or more away from implementing the new system, some members of Congress and agriculture groups are concerned that if the deadline isn't met, railroads will stop rail service and cease hauling commodities and other products.

The Rail Safety Improvement Act of 2008 mandated that positive train control (PTC) be implemented across a significant portion of the nation's rail industry by Dec. 31, 2015. PTC are integrated command, control, communications and information systems for controlling train movements with safety, security, precision and efficiency. Now, as that deadline looms, some in Congress are concerned if railroads don't meet the deadline they will stop rail service and/or cease hauling certain commodities affected by the PTC rule, which would be detrimental to agriculture. https://goo.gl/…

Besides agriculture, passenger rail service could also be negatively affected if the PTC rule deadline stands. Positive train control is required by federal law to be in place on all Class I railroads and other railroads carrying passengers by the end of the year. Some railroads are already warning they will stop service due to the deadline.

Sen. Claire McCaskill, D-Mo., said on her website, "Amtrak has notified the Kansas City Terminal Railway of its intention to discontinue passenger service into and out of Kansas City starting next year if the matter of how to pay for PTC on the railway's 85 miles of track is not resolved. Last year more than 737,000 people traveled on Amtrak in Missouri." McCaskill added, "There's no way Amtrak or Missouri can pay $30 million for this."

In a Jan. 28 hearing, U.S. Senator John Thune, R-S.D., chairman of the Senate Committee on Commerce, Science and Transportation, said, "Although the PTC deadline is quickly approaching, it remains unattainable. Through the end of 2014, railroads have invested over $5 billion in PTC, and they expect to spend billions more in the coming years," according to his website.

"They have begun installation of the radio towers, locomotive technology, and other PTC infrastructure, but full compliance with the statutory requirements cannot be achieved by the end of this year. The FRA and the Government Accountability Office have documented the immense technical and programmatic challenges with implementing PTC," said Thune.

Then, during a Senate committee hearing held September 15 for Sarah Feinberg's nomination as administrator of the Federal Railroad Administration (FRA), Thune and other members of his committee told Feinberg that some railroads have already said they will shut down service on January 1, 2016, unless a compromise is reached. According to various news sources, Feinberg has been clear that the FRA will enforce the current deadline and will fine railroads that are not in compliance.

In a letter to Thune, Carl R. Ice, president and CEO of BNSF said, "Despite our strong commitment to this technology, BNSF has faced significant technical, regulatory and operational obstacles to meeting the PTC implementation deadline imposed, the RSIA and will not meet the RSIA deadline for deployment. As a result, BNSF believes that Congress must move the PTC deadline in order to achieve successful PTC implementation and to avoid potential significant and unnecessary congestion and shipper service impacts.

"We have analyzed what train operations could continue if operations are halted on mandated subdivisions without PTC installed and believe that operations across our entire network will likely be compromised by congestion and effectively shut down. BNSF would do whatever is reasonably possible to mitigate this impact, but the consequences for the economy and for our company would be substantial," said Ice. http://goo.gl/…

Mike Steenhoek, executive director of the Soy Transportation Coalition told DTN in an email, "This is an issue that is causing concern among agricultural shippers. Once the calendar turns to 2016, will railroads be able to fully accommodate soybeans and grain produced from the 2015 harvest? Moreover, as we know, many cooperatives have made/are making plans to receive and distribute fertilizer for spring of 2016. In order to conduct this planning, cooperatives require a predictable forecast for rail service. The lack of resolution to the PTC debate is creating uncertainty.

"There are a number of significant headwinds currently confronting U.S. agriculture -- from low commodity prices to the strengthening of the U.S. dollar. This is certainly not the time to add insult to injury by allowing such a self-imposed problem to materialize," Steenhoek added.

GAO STUDY FINDS RAILROADS WILL NOT BE READY ON DECEMBER 31

On Sept. 4, the U.S. Government Accountability Office (GAO) released a study on the issue, finding that, "Most railroads in GAO's review (20 of 29) estimate that they will implement positive train control (PTC) -- a communications-based system designed to prevent certain types of train accidents -- one to five years after the statutory deadline of Dec. 31, 2015 (three did not have an estimated completion date). Of the remaining six railroads, one was exempted from installing PTC based on limited speeds on its track, and four commuter railroads and one small freight railroad estimate they will have PTC operational on their own tracks by the deadline.

"However, the ability of these five railroads to fully operate with PTC may be affected because other railroads that operate equipment on their tracks -- known as tenants -- or that own tracks that they operate on -- known as hosts -- may not be equipped with PTC. In addition, the ability of railroads to meet the deadline may be affected by the interoperability of their PTC system with those of other railroads and whether they can obtain final system approval from the Federal Railroad Administration (FRA). Railroads GAO interviewed said they continue to face implementation challenges." http://goo.gl/…

The report added, "GAO recommends that FRA develop a plan that outlines how the agency will hold railroads accountable for making continued progress toward the full implementation of PTC by, among other things, collecting any additional information needed to track progress of individual railroads. DOT agreed with the recommendation."

While there are some who feel the railroads have had enough time to implement PTC, there are others who know some railroads could hold true to their threats. Farmers and grain shippers are concerned if rail service slows or stops on some lines as of Jan. 1, 2016, there could be another economic disaster similar to 2014 if the PTC deadline is not extended.

Mary C. Kennedy can be reached at mary.kennedy@dtn.com

Follow her on Twitter @MaryCKenn

(AG/CZ/ES)

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Dale Paisley
9/24/2015 | 1:05 PM CDT
Once again our government is creating laws that are not attainable, either because the technology is not there or the cost of implementation is so high that it is not feasible. It sure would be nice if these people making the laws had some degree of knowledge about the mater before passing the laws. Just because someone has the idea does not mean it can happen. I understand that it has been some time since the law was written and therefore lots of time to make it happen but the money is just not there for the railroads to spend and they are already trying to keeps costs down to stay in business but this would require a huge rise in prices and hurt the country as a whole since higher prices for shipping would result in lower prices for the porducer or higher prices in the stores.
David Kessler
9/22/2015 | 8:23 AM CDT
There is no problem government can't create or make worse.
Bonnie Dukowitz
9/21/2015 | 9:05 PM CDT
Like in many other areas of industry, sounds like more government overkill.