Tuesday, March 16, 2010

Chlorine shippers fear PTC overcharge, seek revised rule

Written by 

The Chlorine Institute, Inc. (CI) fears that the Positive Train Control (PTC) rule, which the Federal Railroad Administration published Jan. 14, "drastically underestimates the rule’s benefits," and it has asked the FRA to re-issue the rule with a corrected cost-benefit analysis.

"This faulty analysis could foster a situation that would allow railroads to impose on shippers of chlorine and other toxic inhalation hazard (TIH) chemicals an unfairly large share of the costs of applying PTC technology," the CI told the FRA in a petition filed Tuesday.

"The railroads have already announced that they will attempt to recover their investment in PTC from those shippers offering TIH materials for rail movement,” CI President Arthur Dungan wrote. “These efforts will have a direct and substantial impact on prospective TIH rail shippers and a strong incentive to move TIH shipments from the safer rail mode to the less-safe highway mode of transportation. Certainly, TIH shippers also will be negatively impacted by the railroads rolling their PTC investments on regulated shipments into their regulatory rate base, thereby leading to a double recovery of PTC costs well into the future…”

But Thursday the Association of American Railroads disputed CI's interpretation of the PTC rule. “The truth is that in weighing all the factors involved in PTC implementation, FRA's examination of the costs versus the benefits of PTC clearly shows that there are no present business benefits to the railroads. In fact, the cost-benefit carries an inverse relationship of 20 to one. The FRA estimates the costs of installing PTC to be $10 billion to $13 billion over 20 years with about a $500 million safety benefit,” said AAR President and CEO Edward R. Hamberger.

“The Chlorine Institute is attacking the FRA’s cost-benefit analysis of PTC as a smoke screen to hide the fact that their shipments will raise the cost of rail transportation for all customers. The high cost of the PTC mandate is a direct result of the toxic nature of chlorine shipments,” noted Hamberger. “Instead of bashing the FRA cost benefi tanalysis, the Chlorine Institute should join AAR in improving the safety and efficiency of rail transportation, as well as reducing the exposure of the American public to toxic-by-inhalation (TIH) hazardous materials, through product substitution and other means of reducing the transportation of TIH.”

CI based its appeal on a CI-commissioned follow-up cost-benefit study by L.E. Peabody & Associates, Inc., Alexandria, Va.

CI said this analysis “found that the final rule underestimated the net direct and indirect benefits of implementing PTC by $12 billion-plus. In addition to safer operation, key benefits to railroads, shippers, and the public afforded by the PTC rule include:

“• Fuel savings for railroads from better fuel monitoring and more efficient operations;

“• Increased rail-line segment capacities;

“• Improved rail equipment reporting, monitoring and utilization;

“• Improved rail dispatching operations leading to greater efficiency;

“• Reduced total cost for all rail shippers resulting from improved rail transit times and reliability, and

“• Decreased highway crashes, congestion, maintenance costs and truck emissions, all of which would result from fewer trucks on roads as shippers take advantage of better rail service (and/or reduced rail rates), and shift freight shipments from truck to rail.”