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 In a Sept. 3 letter to the Senate Commerce Committee, U.S. Surface
Transportation Board Chairman Daniel Elliott says the common carrier
obligation requiring freight railroads to honor reasonable requests
for service from shippers "is not absolute, and railroads can
suspend service for various reasons, including safety."
The letter, reviewed by Reuters, presents the most tangible sign yet
of what could lie ahead for rail carriers and their customers, if
Congress fails to extend its Dec. 31 deadline for railroads to
implement positive train control, or PTC.
The National Transportation Safety Board, which has been calling on
railroads to adopt PTC since the late 1960s, says the technology
would prevent major rail accidents such as the May 12 Amtrak
derailment that killed eight people and injured more than 200
others.
The approaching deadline has prompted at least one major railroad
company to look seriously at suspending service: billionaire
investor Warren Buffett's BNSF Railway Co <BRKa.N>, the No. 2
freight railroad operator and the leading carrier in the $2.8
billion U.S. crude-by-rail market.
"BNSF confirmed that it will not meet the deadline and offered the
possibility that neither passenger nor freight traffic would operate
on BNSF lines," Elliott said in the letter, which was addressed to
the committee's Republican chairman, Senator John Thune of South
Dakota.
In a July 24 letter provided to Reuters by BNSF, railroad president
and chief executive Carl Ice informed Elliott that BNSF is analyzing
the possibility of a service shutdown and actively consulting with
customers.
CSX Corp <CSX.N>, the No. 3 U.S. freight handler, also told the
board that it would not meet the PTC deadline but did not discuss
possible decisions on whether to continue service, Elliott said.
A CSX spokeswoman said the company was working diligently to
implement PTC but that a "seamless, safe operation is imperative to
maintain the fluidity of the national rail network."
Railroad officials in June raised the possibility of shutting down
service as a way to avoid potential legal liabilities and fines for
operating outside the law.
Elliott told Thune it was unclear whether railroads would be exempt
from their obligation to provide freight service for cargo,
including hazardous materials, under federal rules that say service
cannot be denied simply because it is inconvenient or unprofitable
for the carrier.
The Surface Transportation Board, a regulatory agency charged by
Congress with resolving rail disputes over rates and service, had no
immediate comment, nor did the Federal Railroad Administration, the
main U.S. railroad regulator.
Up to now, the board has mainly handled common carrier obligation
cases involving services that have complied with federal safety
rules. "A carrier-initiated curtailment of service due to a failure
to comply ... would present a case of first impression," Elliott
wrote. "I cannot predict the outcome of such a case."
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PTC can avoid accidents by using a complex network of sensors and
automated controls to slow or stop a train under dangerous
conditions.
In 2008, Congress mandated that railroads implement the technology
by the end of 2015. But only a small number of U.S. passenger,
commuter and freight railroads will meet the deadline, according to
an Obama administration report released last month. [ID: L1N11A275].
The report named BNSF as one of only three railroads that have
provided regulators with a PTC implementation plan.
Railroad officials have complained about the cost and complexity of
adopting PTC and have produced freight and commuter rail estimates
showing full implementation could cost the industry nearly $13
billion.
A six-year transportation bill approved by the Senate last month
would allow the Obama administration to extend the deadline for up
to three years.
"The administration requested authority to extend the deadline for
positive train control and the Senate subsequently advanced a
bipartisan proposal to create accountability and set realistic
deadlines," said Frederick Hill, Republican spokesman for the Senate
Commerce Committee.
"This provision in the surface transportation bill will address the
concerns summarized in Chairman Elliott's correspondence," he added.
But the Senate measure is not expected to be taken up by the House
of Representatives when lawmakers return from their summer break
this week. Republican staff with the House Transportation Committee
were not available for comment.
(Reporting by David Morgan; Editing by Nick Zieminski)
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