September 25, 2015

Positive Train Control (PTC) Deadline Threatens to Disrupt US Rail Service, Critical Agricultural Shipments

The Rail Safety Improvement Act of 2008 mandated that U.S. railroads install Positive Train Control (PTC) technology by December 2015, but delays in implementation threaten to disrupt rail service—and agricultural shipments—as the deadline draws near. Unless Congress extends the deadline, agricultural companies could face a troubling start to 2016.

PTC is a series of advanced communications technologies that monitor and control train movements to prevent accidents and enhance railroad safety. According to a Government Accountability Office (GAO) report issued in mid-September, most railroads, including major Class I freight railroads, will not be able to meet the implementation deadline and could require 1-5 years to comply in full. While the PTC requirements apply only to lines that carry passengers or “toxic inhalation hazards” (TIH), the latter specification could create major headaches for the agricultural industry.

Anhydrous ammonia, a major nitrogen fertilizer used in crop production, is classified as a TIH. The Federal Railroad Administration has indicated that it will enforce the December deadline, so any non-compliant railroad used to transport anhydrous ammonia would be suspended beginning January 2016—potentially throwing a wrench into the spring planting season. And while some freight railroads may be able to operate at a reduced level by eliminating certain hazardous substances, other railroads, because of the make-up of their network, believe they would be forced to suspend all rail service. A broader suspension could potentially disrupt grain transportation to export locations and domestic end-users, which would very negatively impact grain and oilseed markets.

There are many reasons for delays in implementation, including cost. The American Association of Railroads (AAR) claims that railroads had spent more than $5 billion implementing PTC as of the end of 2014. The technologies are complicated, and obtaining radio spectrum for communications along the entire rail network has proven difficult.

Even though a failure to extend the deadline could have adverse economic effects, this issue has not yet received the “must pass” attention in Congress that may be required to get lawmakers to pass a deadline extension. Passing legislation of any kind is difficult in this political climate, and Congress’s legislative agenda already includes a number of items that must be passed before the end of 2015, including a spending bill, a highway bill to avoid a shutdown of construction projects at the end of October and a vote to increase the debt limit. An extension of the PTC deadline will need to be attached to one of the larger bills that will be approved by Congress before the end of the year.

Businesses, especially agricultural businesses, need to be aware of this possible market disruption if Congress does not act to extend the deadline. 

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