The Obama administration’s loosening of restrictions on a costly crash-avoidance technology mandate this month did little to bring great joy to major U.S. railroads.
The $335 million the railroads are expected to save in five years by not having to add positive train control technology to certain lines pales in comparison to the total price tag of some $12 billion. Railroads are expected to save up to $775 million over 20 years by not having to install the technology that automatically shuts down runaway trains on tracks that don’t carry passengers and toxic materials. Congress pushed for the regulation after a commuter train and freight train collided in 2008, killing 25 people near Los Angeles.
The minor relief, granted May 10 as part of the administration’s push to cut burdensome and overly costly government regulation, doesn’t give extra time needed by most railroads to meet the mandate either. There is some hope the Department of Transportation will extend the deadline past the end of 2015 as it draws up its second phase of mandate rules. Or an extension might be included in the final version of the surface transportation bill Congress is hashing out.
While railroads have worked to whittle down PTC requirements, the costs of implementation have grown. CSX Transportation boosted estimates $500 million to $1.7 billion, and Union Pacific plans to spend an additional $600 million, bringing the price tag to $2 billion for its PTC system.
“The largest driver of the increased spending is that, as technology has evolved, we have determined an additional 4,000 miles of track will be compatible with the existing signal systems. In addition, we’ve also seen increased costs associated with system integration and unit cost of various components,” Fredrik Eliasson, CSX chief financial officer, told investors on April 18.
From a shippers’ perspective, the money spent on PTC would be better put toward capital projects that would improve service and capacity. Less costly investments, such as track upgrades and siding extensions, would do more to boost safety than the unfunded mandate to create a wireless signaling system, railroads argue.
The PTC rule is a rare piece of regulation that the strong rail lobbying arm hasn’t been able to stifle. Rail regulation in the form of a safety mandate stands strong and does nothing to relieve, and may even worsen, rate pressure felt by shippers, while attempts to curb rail pricing power in Congress and the Surface Transportation Board falter. When it comes to PTC, shippers and railroads can agree: Government regulation isn’t helping.