Buffett's BNSF helped lead fight to delay train safety technology
WASHINGTON -- When an Amtrak passenger train derailed in Philadelphia in May, killing eight people and injuring scores more, the railroad industry's campaign to delay a Dec. 31 deadline to install technology to prevent such disasters appeared to ...
WASHINGTON -- When an Amtrak passenger train derailed in Philadelphia in May, killing eight people and injuring scores more, the railroad industry's campaign to delay a Dec. 31 deadline to install technology to prevent such disasters appeared to be finished.
Not, as it turned out, if billionaire investor Warren Buffett and Sen. John Thune, a South Dakota Republican, had anything to do with it. Thune chairs the Senate Commerce Committee, which oversees the rail industry.
Last week, under pressure from companies including Buffett's BNSF Railway, which has spent more money lobbying Congress this year than any other railroad, U.S. legislators passed, and President Obama signed, a law that delays the so-called positive train control mandate for at least three years, with the possibility of an additional two-year delay.
That means railroad operators can put off having to buy and install equipment that safety advocates say would have prevented accidents that have claimed more than 245 lives and caused over 4,200 injuries since the National Transportation Safety Board began calling for the technology in 1969.
Railroad advocates presented a blunt argument: Unless the mandate to install positive train control technology was delayed, the railroads would attempt to cripple the economy. Railroads that missed the deadline to install systems that automatically slow or stop a train under dangerous circumstances claimed that they would face heightened liabilities by operating outside of federal law, and that therefore they would decline to carry passengers, including commuters. They wouldn't deliver commodities that are classified as hazardous, but are also vital to the economy – including chemicals like chlorine and ammonia needed to run city water treatment plants, refine oil and keep farms and factories running.
BNSF, at $3.9 million, was the biggest spender among individual rail operators as railroads and allies including unions and regional transit authorities spent almost $25 million lobbying Congress on PTC and other issues, according to Senate documents.
BNSF, along with Norfolk Southern and Canadian Pacific Railway, referred questions for comment to the Association of American Railroads.
"We commend Congress for passing the extension," said AAR spokesman Ed Greenburg. "We have been warning for years that the deadline was unworkable because the technology had to be developed from scratch." Railroads have spent $6 billion on PTC up to now and expect to spend another $4 billion before implementation is complete, according to the AAR.
Opponents of the deal, including Senators Diane Feinstein of California, Chuck Schumer of New York, Ed Markey of Massachusetts and Richard Blumenthal of Connecticut, all Democrats, found themselves outmaneuvered by the rail industry, aided by Thune and a regulator's favorable interpretation of an obscure law.
"It is entirely inappropriate that the railroad industry would make hostages of America's passenger rail services and chemical shippers in order to secure their favored legislative outcome," Feinstein said in a statement for the Congressional Record. "It is offensive that only when a railroad could face full liability for an accident that they find operation without PTC to be unacceptably dangerous."
Lobbying by shippers and other interests, including the U.S. Chamber of Commerce, drove total spending to almost $113 million over the course of the year. Records show that lobby spending jumped from about $18.5 million in the first quarter to $70 million in the third quarter as the push intensified.
Thune said he realized early on that the New Year's Eve deadline could have dire consequences for the economy and for railroads, which were reporting problems with positive train control systems.
But after May's Amtrak disaster, "when they announced that this could have been prevented if they'd had positive train control, there was a real spotlight on why we weren't there and what we could do to get there faster," Thune told Reuters in an interview.
Meanwhile, the railroads were hampered by anti-trust considerations that prohibited operators from talking directly with each other to launch a collaborative effort.
That changed in August after Thune sent letters to the regulatory Surface Transportation Board and individual railroads asking what would happen if the PTC deadline was not extended. His committee then publicized their responses.
"That was sort of the seminal moment," Thune said. Now the railroads had a channel for their views.
Then on Sept. 3, Surface Transportation Board Chairman Daniel Elliott wrote a letter to Thune stating that railroads could be exempt from their federal obligation to provide service to shippers due to issues involving safety. The board is an economic regulatory agency charged by Congress with resolving railroad rate and service disputes and reviewing proposed railroad mergers.
Less than a week later, major U.S. and Canadian railroads including BNSF, Norfolk Southern and Canadian Pacific began informing Thune that Congress' failure to act on a PTC extension would lead to crippling disruptions for shippers and rail passengers beginning Jan. 1.
"Everybody thought they were hyping this or overreacting," Thune said. Then letters started coming in from shippers, farmers and cities alarmed by the potential disruptions. Railroad executives also raised the issue in quarterly calls with investors.
Soon, members of Congress were hearing from a host of industries -- automakers, oil companies, high-tech firms, farmers, water treatment facilities and even the makers of bullet-proof vests. The American Chemistry Council, the National Association of Manufacturers and the U.S. Chamber of Commerce weighed in on the railroads' behalf.
Household names and giant employers including ExxonMobil, Chevron, Cisco Systems, General Electric, Cargill Inc and Land O' Lakes joined the fray.
"I started having members coming up to me and saying, What are we going to do about this and how are we going to fix this? Democrats and Republicans," Thune said.
That left it to four members of Congress -- all of them big beneficiaries of rail industry campaign contributions -- to work out a deal that could win bipartisan support in both the Senate and the House of Representatives. They then pushed to attach it to a must-pass short-term extension to the Highway Trust Fund.
The four were Thune and the Senate Commerce Committee's top Democrat Bill Nelson of Florida, the House Transportation Committee's Republican chairman Bill Shuster of Pennsylvania and that panel's top Democrat, Peter DeFazio of Oregon.
Together, the four have received $1.2 million rail industry campaign contributions during their Capitol Hill careers, with about two-thirds of that sum going to the two Republicans, according to the nonpartisan Center for Responsive Politics.
The measure passed both chambers on simple voice votes that meant individual lawmakers didn't have their positions recorded. Supporters said that showed near universal support for the measure.