BNSF Railway knows they can do the hard jobs, they can even do very hard jobs, but they are contending that a looming safety deadline can’t be met because they can’t do the impossible.
With the deadline for installing Positive Train Control (PTC) less than four months away, BNSF Railway and other Class 1 railroads are pressing the U.S. Congress to push back the December 31, 2015 deadline.
Warren Buffett has stated that the cost of installing Positive Train Control will run BNSF $200-$300 million a year.
PTC is a communication-based/processor-based train control technology designed to automatically stop a train in order to prevent accidents.
In a September 9, 2015, letter from Carl R. Ice, BNSF’s President & CEO, to U.S. Senator John Thule, the Chairman of the Committee on Commerce, Science and Transportation, BNSF laid out its case for pushing back the deadline.
“BNSF has invested over $1.5 billion in the testing, development, purchase, and installation of PTC components out of an estimated total exceeding $2 billion. PTC will be deployed on roughly half of our system; these lines host 80 percent of BNSF’s freight density. We expect to have a significant portion of the necessary PTC system implemented on the network by the current December 31, 2015, deadline, but after that date we still require ongoing installation and extensive testing, as discussed below.
PTC deployment is an unprecedented technical and operational challenge that requires the entire U.S. railroad network to develop, test and implement this new safety system, and avoid impacts to network capacity and fluidity as we do. Despite our strong commitment to this technology, BNSF has faced significant technical, regulatory and operational obstacles to meeting the PTC implementation deadline imposed by 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.”
The Threat of Suspending Service
BNSF also laid out the consequences of not pushing back the deadline.
“BNSF has serious questions whether it should operate on subdivisions that have not been equipped with PTC in knowing violation of the federal law that mandated PTC as of January 1, 2016. Enormous congestion could result from efforts to re-route traffic that moves on the PTC lines, which are maintained to handle the most density, to lines on which PTC is not required. These are generally low-density territories where we do not have crews and maintenance resources positioned for those volumes. 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.
Furthermore, if we knowingly operate in violation of the law on mandated portions of the network without PTC and FRA engaged in enforcement against BNSF, it’s unclear what kind of operational choices, and related network impacts, BNSF would face in order to minimize its exposure to enforcement and liability risk.
If Congress does not act to move the deadline and BNSF operations are out of compliance with the PTC statute and regulations, BNSF could be left with few acceptable options. You may be assured that we have, and will continue, to update Congress and our customers on whatever actions we believe we are compelled to take in that circumstance. We are developing potential communications to our customers and passenger rail tenants in the event that no extension is enacted by the end of October, as these stakeholders may need to make preparations or alternative plans well before the current December 31, 2015, deadline.”
The Coming of Positive Train Control
Over the last several years, the Federal Railroad Administration has been reviewing PTC plans from 41 railroads, covering both passenger and freight railroads. The FRA approved 24 plans without conditions. Additional plans were approved provisionally, and two were denied without prejudice.
The Rail Safety Improvement Act of 2008 (RSIA) mandated that Positive Train Control (PTC) be implemented by the Nation’s railroads by December 31, 2015. Railroads requiring PTC are the Class I railroad main lines, which are the rail lines that transport 5 million or more gross tons annually.
As detailed by the Federal Railroad Administration, “PTC refers to communication-based/processor-based train control technology that provides a system capable of reliably and functionally preventing train-to-train collisions, overspeed derailments, incursions into established work zone limits, and the movement of a train through a main line switch in the improper position. PTC systems are required, as applicable, to perform other additional specified functions. PTC systems vary widely in complexity and sophistication based on the level of automation and functionality they implement, the system architecture used, the wayside system upon which they are based (e.g., non-signaled, block signal, cab signal, etc.), and the degree of train control they are capable of assuming.”
BNSF’s approved PTC systems include ETMS (Electronic Train Management System), which is a GPS- and communications-based system.
(This article has been updated since it was first published.)
© 2015 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.