With the Nov. 6 election doing little to change the power structure at the nation's capital, the major U.S. freight railroads are unlikely to face major regulation risks in the coming year.
Any attempts to change the rail regulatory framework aren’t expected to go far in Congress, as a divided body “suggests there is little to no chance” of such legislation passing both houses, according to a Morgan Stanley report. The biggest threat to railroads is that Sen. John Rockefeller, D-W.Va., allows shippers to complain about carrier’s pricing power during a hearing, much like he did in 2010, the report authors wrote.
The Surface Transportation Board, the industry’s regulatory agency, won’t likely deliver any “controversial or far-reaching findings” regarding the elimination of paper barriers and a long-delayed decision on reciprocal switching, either.
Under the Obama administration, the Department of Transportation isn’t projected to make rail regulatory or safety issues a priority, even if Secretary Ray LaHood leaves the position. But Federal Railroad Administrator Joe Szabo is expected to stay on and continue his push for positive train control, a roughly $12 billion unfunded mandate to implement crash-avoidance technology. The National Transportation Safety Board on Wednesday named PTC one of its top 10 priorities for 2013, suggesting the railroads can at best postpone the 2015 deadline.
“The mandate and implementation of PTC is an unprecedented undertaking and, despite nearly a decade of research and development, still faces significant hurdles to deployment,” said Ed Hamberger, president and CEO of the Association of American Railroads. “Implementing a technology like this, with so many players, has never been done before
Railroads have already spent $1.5 billion on PTC technology, according to the AAR. Although the railroads have had some success in reducing the mandate requirements, the costs of implementation have risen.
“With the FRA supportive of legislation to delay implementation deadlines, we expect Congress to be open to pushing back the deadline,” according to the Morgan Stanley report.
Unless there is a summary judgement, the class action lawsuit against the four largest U.S. major railroad “could stretch into 2014 and, with appeals, into 2015." Eight shippers accuse BNSF Railway, Union Pacific Railroad, Norfolk Southern Railway and CSX Transportation of conspiring to fix, raise, maintain or stabilize prices from mid-2002 until 2008. The next step in the lawsuit will be railroads' rebuttal of expert reports in mid-January.