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Rail service shutdown could cost economy $30 billion, group says

Oct 02, 2015 at 01:12 PM CST

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— A looming shutdown of the nation’s rail system could have a bigger economic impact than the 2013 government shutdown and could even trigger a recession, according to a new report.

Railroads have warned that they will suspend freight and passenger operations on Jan. 1 if Congress does not extend a year-end deadline for them to install a collision-avoidance system called positive train control.

The American Chemistry Council calculated that a month-long rail service disruption could cost the economy $30 billion. By comparison, the Standard & Poor’s credit ratings service estimated that the government shutdown two years ago cost $24 billion.

Cal Dooley, the chemistry council’s president and CEO and a former congressman from California, said in a statement that a freight service shutdown could harm the entire economy.

“A prolonged shutdown would be truly catastrophic, likely resulting in a recession,” he said. “We cannot afford to let this self-inflicted crisis happen.”

The top-ranking leaders of the House Transportation and Infrastructure Committee have introduced a bipartisan bill to give railroads until 2018 to complete the installation of the system, which Congress mandated in 2008.

“Railroads must implement this important but complicated safety technology in a responsible manner,” said Rep. Bill Shuster, R-Pa., the panel’s chairman, “and we need to give them the necessary time to do so.”

Executives from the country’s largest railroads wrote Sen. John Thune, R-S.D., chairman of the Senate Commerce, Science and Transportation Committee, in early September that they could not meet the Dec. 31 deadline for positive train control.

Absent an extension, they concluded that their only legal alternative would be to curtail operations, in some cases before Thanksgiving.

Ordinarily, railroads see higher shipping volumes in October ahead of the holiday season. Railroads serve major container ports on the East and West coasts through which consumer goods manufactured overseas enter the U.S. market.

UPS and FedEx, often thought of as truck and air shippers, are major rail shippers as well.

Grain producers, coal-fired power plants, auto manufacturers, chemical companies and oil refineries rely on rail service to transport raw materials and finished products.

Millions of passengers use Amtrak and commuter railroads, and a suspension of rail service could force train riders onto crowded roadways or to just stay home.

Amtrak carries about 1.2 million passengers a month, while commuter railroads move about 38.5 million, according to recent figures from Amtrak and the American Public Transportation Association.

Amtrak and some commuter railroads have said they will be finished with their positive train control systems by the current deadline. According to the Government Accountability Office, however, most commuter railroads need another three to five years.

Outside the Northeast, Amtrak and commuter railroads generally operate over lines owned by freight carriers. If those companies shut down their operations, no passenger trains will operate, either.

A head-on collision between a commuter train and a freight train near Chatsworth, Calif., in 2008 prompted Congress to pass the Rail Safety Improvement Act, which required the installation of positive train control on passenger train routes by Dec. 31, 2015.

The system has proved to be expensive and complicated to install. But the National Transportation Safety Board has recommended it for decades and has noted that it could have saved dozens of lives in accidents over the years.

The system can prevent trains from running past stop signals. In the Chatsworth crash, the commuter train’s engineer was texting and missed a stop signal, crossing into the path of the freight train. The engineer and 24 others were killed.

The system also can prevent trains from exceeding speed limits when approaching curves or when railroad maintenance workers are present. In Philadelphia in May, an Amtrak train sped into a 50 mph curve at 106 miles per hour and jumped the tracks. Eight people were killed.

Curtis Tate: 202-383-6018, @tatecurtis