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BNSF Chief Warns of PTC Mandate’s Unintended Consequences

May 11th, 2010

BNSF Railway President Matt Rose warned of some “unintended consequences” as the industry works toward meeting a costly government mandate to implement positive train control (PTC) systems by 2015.

PTC will “crowd out” other capital investments, said Rose, who delivered the keynote address at last week’s American Short Line and Regional Railroad Association 97th Annual Convention in Orlando. The audience was packed with rail industry suppliers, contractors and shippers in addition to other executives from Class I, II and III railroads.

Despite the worst recession in decades, Class I railroads will invest about $9 billion in capital this year and a similar amount in 2011, Rose said.  About $700 million of this year’s $9 billion in capital expenditures will pay for the first phases of PTC implementation and railroads will have to cut other items to pay for that portion, Rose noted. He asked, “what will fall out of the budget when the PTC spend is $1.2 billion in 2011?”

He noted that expansion and some track work may be among the first capital items to go. “Something has to give,” he added.

Rose predicted that the path to PTC implementation will not be smooth and called on Congress to assist with the unfunded PTC mandate, which is expected to cost about $10 billion by 2015. PTC is the single-largest regulatory cost ever imposed on the industry by the Federal Railroad Administration, according to the Association of American Railroads. PTC covers technologies designed to automatically stop or slow a train before certain accidents caused by human error occur.

The Rail Safety Improvement Act of 2008 mandates that PTC be installed by the end of 2015 on railroad main lines used to transport passengers or certain hazardous materials.

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