John D. Boyd | Apr 27, 2010 3:53PM EDT
The railroad industry handed rail safety regulators a new study that contradicts one offered by chlorine shippers, arguing that the high costs to railroads of installing federally mandated crash-avoidance systems will far outweigh any benefits.
The study, commissioned by the Association of American Railroads and filed with the Federal Railroad Administration, asserts that the value of business and safety benefits to carriers from installing positive train control equipment in locomotives, dispatch centers and trackside will total $853 million over 20 years, compared with the government’s own estimated costs of $9.55 billion.
The Chlorine Institute had earlier asked the FRA to detail all eventual benefits in fuel saving, capacity expansion and productivity that will come with PTC. The institute filed its own study in March to make that case.
That came as rail industry leaders were sharply criticizing the cost, calling on Congress and the administration to help cover it, and warning rail customers would need to help pay for it.
Shippers of chlorine and other highly toxic gases have said they think railroads will target them with sharply higher freight rates to offset the PTC costs, because Congress cited risks from their cargoes in ordering freight railroads to install the systems before 2016. The law also orders PTC deployed on rail lines used by passenger trains.
“This is the single largest regulatory cost ever imposed on our industry by the FRA, and as such, we take the mandate very seriously,” said AAR President and CEO Edward R. Hamberger. “There are many broad and general assertions out there on business benefits from PTC, so it was important to get an independent analysis and clear up any misconceptions that might exist.”
The AAR-submitted study was prepared by Oliver Wyman while that offered by the Chlorine Institute was done by L. E. Peabody & Associates. The shippers’ study said the FRA has underestimated PTC’s net direct and indirect benefits by more than $12 billion.
But the AAR said the shipper analysis ignored how much railroads already put into advanced gear to capture many potential operational benefits, without the added costs of PTC. The rail study rejected ideas that PTC would improve train dispatching, capacity or train speeds.
Contact John D. Boyd at jboyd@joc.com.
