Metrolink case study
Read the Metrolin" rel="nofollow">ink case study begin" rel="nofollow">innin" rel="nofollow">ing on page 342 of the text as well as the Reuters article on train" rel="nofollow">in safety rules: Buffett May Benefit as Train" rel="nofollow">in Lobby Bids to Weaken Safety Rule.
In your post, consider the followin" rel="nofollow">ing questions:
What was the cause of the Metrolin" rel="nofollow">ink accident and could it have been avoided?
Is the high cost of train" rel="nofollow">in control justified by the likely safety gain" rel="nofollow">ins for passengers?
Is the money spent to regulate railroad safety bein" rel="nofollow">ing spent in" rel="nofollow">in the most efficient way to reduce the risks of death and in" rel="nofollow">injury in" rel="nofollow">in society?
If you had been a lobbyist wishin" rel="nofollow">ing to in" rel="nofollow">influence safety legislation after the crash, what would your strategy have been?
INSIGHT-Buffett may benefit as train" rel="nofollow">in lobby bids to weaken safety rule
David Morgan
WASHINGTON, July 14 (Reuters) - Billionaire in" rel="nofollow">investor Warren Buffett is set to be a chief beneficiary of a bid by Senate Republicans to weaken new regulations to improve train" rel="nofollow">in safety in" rel="nofollow">in the $2.8
billion crude-by-rail in" rel="nofollow">industry, a key cog in" rel="nofollow">in the development of the vast North American shale oil fields.
A series of oil train" rel="nofollow">in accidents, in" rel="nofollow">includin" rel="nofollow">ing the July 2013 explosion of a train" rel="nofollow">in carryin" rel="nofollow">ing crude in" rel="nofollow">in Lac-Megantic, Quebec, that killed 47 people, led U.S. and Canadian regulators to announce sweepin" rel="nofollow">ing
safety rules in" rel="nofollow">in May. Among other thin" rel="nofollow">ings, U.S. oil train" rel="nofollow">ins are required to in" rel="nofollow">install new electronically controlled pneumatic (ECP) brakes.
But in" rel="nofollow">in late June, the Republican-controlled Senate Commerce Committee approved a measure to drop that requirement, and order years of new research to confirm the safety benefits of ECP brakes.
On Wednesday, the panel will decide whether to send the measure to the full Senate, settin" rel="nofollow">ing the stage for a fight with Democrats who say the repeal would delay the use of feature that can help
avoid catastrophic derailments and min" rel="nofollow">inimize the consequences of accidents that do occur.
The loomin" rel="nofollow">ing debate pits Democrats, federal regulators, safety advocates and environmentalists again" rel="nofollow">inst the crude-by-rail in" rel="nofollow">industry, which claims that in" rel="nofollow">installin" rel="nofollow">ing the brakes would slap an unnecessary
$3 billion cost on railroads, oil refin" rel="nofollow">iners and other owners of rollin" rel="nofollow">ing stock, and potentially jeopardize safety.
BNSF Railway Co, the No. 2 U.S. railroad, which Buffett owns through his Berkshire Hathaway Inc holdin" rel="nofollow">ing company, is the leadin" rel="nofollow">ing U.S. railroad for crude oil shipments, controllin" rel="nofollow">ing three-quarters of
the carload volume in" rel="nofollow">in 2013. Along with CSX Corp, it's also associated with the most oil train" rel="nofollow">in accidents, accordin" rel="nofollow">ing to a Reuters analysis of in" rel="nofollow">incident reports.
Environmental groups estimate that 25 million Americans live near tracks traversed by crude oil shipments, makin" rel="nofollow">ing ECP brakes and other federal requirements essential to ensurin" rel="nofollow">ing safety. Because the
brakes act simultaneously on all cars and locomotives, they give train" rel="nofollow">in operators greater control and allow train" rel="nofollow">ins to stop more quickly than conventional air brakes, which slow rail cars in" rel="nofollow">in
succession, advocates say.
"To walk away from what we know to be the best technology is pretty crazy," said Sean Dixon, an attorney with clean water advocacy group Riverkeeper.
Democrats will try to strike out the ECP amendment by offerin" rel="nofollow">ing a measure of their own when the committee meets on Wednesday, accordin" rel="nofollow">ing to an aide. If the attempt fails, Democrats expect to fight
the amendment on the floor of the Senate.
But the rail in" rel="nofollow">industry says the equipment is unreliable and could jeopardize safety, while further erodin" rel="nofollow">ing the competitiveness of transportin" rel="nofollow">ing oil by rail, which is already $5 to $10 a barrel more
expensive than pipelin" rel="nofollow">ine transmission.
ECP brakes are made main" rel="nofollow">inly by two U.S.-based manufacturers -- New York Air Brake, the U.S. unit of Germany's Knorr-Bremse AG, and Wabtec Corp. While a New York Air Brake official said ECP
technology is reliable, the company has said that ECP brakes aren't a solution for oil train" rel="nofollow">ins because most derailments are caused by a broken track, wheel or axle, and ECP brakes can't stop an
accident once a train" rel="nofollow">in starts to derail.
"It's the wrong solution for the problem," company president Mike Hawthorne told Reuters.
Wabtec officials did not return phone calls.
Rail Lobbyin" rel="nofollow">ing in" rel="nofollow">in Full Swin" rel="nofollow">ing
The most forceful lobbyin" rel="nofollow">ing again" rel="nofollow">inst ECP brakes has come via the Association of American Railroads, a trade group that represents more than 20 freight railroad companies, in" rel="nofollow">includin" rel="nofollow">ing BNSF and CSX,
Congressional staff said.
AAR's aim "is anythin" rel="nofollow">ing that results in" rel="nofollow">in delayin" rel="nofollow">ing, dilutin" rel="nofollow">ing or ultimately overturnin" rel="nofollow">ing the regulation," one Democratic Senate aide said.
AAR has spent $14.5 million sin" rel="nofollow">ince 2012 lobbyin" rel="nofollow">ing Congress and the admin" rel="nofollow">inistration, in" rel="nofollow">includin" rel="nofollow">ing topics related to the crude-by-rail busin" rel="nofollow">iness, accordin" rel="nofollow">ing to Senate records reviewed by Reuters.
Among in" rel="nofollow">individual railroads, BNSF was the top lobbyist, havin" rel="nofollow">ing spent $12.7 million sin" rel="nofollow">ince 2012. Buffett also has a small stake in" rel="nofollow">in oil refin" rel="nofollow">iner Phillips 66, an owner of oil tank cars that has spent
$6.4 million lobbyin" rel="nofollow">ing Congress.
BNSF's closest lobbyin" rel="nofollow">ing rival is Union Pacific Corp at $7.5 million. Canadian National Railway Co, CSX, and Norfolk Southern Corp have each spent between $3 million and $4 million durin" rel="nofollow">ing the same
period. Union Pacific is the biggest U.S. railroad, while CSX is third and Norfolk Southern is fourth.
The records don't break down how much these companies spent specifically on oil train" rel="nofollow">in regulations and related issues.
BNSF lobbies the government on a range of issues, and crude-by-rail represents a small part of those efforts, spokesman Michael Trevin" rel="nofollow">ino said. He also said the company supports the study and testin" rel="nofollow">ing
of ECP brake technology before implementation.
Berkshire Hathaway did not immediately respond to a request for comment. A Phillips 66 spokesman said the refin" rel="nofollow">iner is committed to bein" rel="nofollow">ing a "safety leader" and will comply with the new oil train" rel="nofollow">in
standards.
AAR has asked the U.S. Department of Transportation to throw out the brake requirement and enhance other security measures in" rel="nofollow">involvin" rel="nofollow">ing tank cars. AAR President and Chief Executive Officer Edward
Hamberger declin" rel="nofollow">ined to comment because the group's appeal is pendin" rel="nofollow">ing. An AAR official said the group made sure lawmakers had "pertin" rel="nofollow">inent in" rel="nofollow">information" about the issue.
Crude by Rail Boom
The series of oil train" rel="nofollow">in explosions in" rel="nofollow">in recent years follows a boom in" rel="nofollow">in U.S. shale oil production, notably in" rel="nofollow">in the Bakken region of North Dakota. Bakken crude has helped reduce U.S. dependence on
foreign oil but is also considered more volatile and flammable than heavier crudes.
Because the landlocked Bakken region is not easily accessed by oil pipelin" rel="nofollow">ines, rail provides the main" rel="nofollow">in transportation route. The result has been a bonanza in" rel="nofollow">in the crude by rail busin" rel="nofollow">iness. Shipments
surged to more than 350 million barrels in" rel="nofollow">in 2014 from less than 680,000 barrels in" rel="nofollow">in 2008, accordin" rel="nofollow">ing to in" rel="nofollow">industry data.
BNSF has been the biggest beneficiary. In 2013, the railroad hauled 324,206 carloads of crude oil, about three quarters of the in" rel="nofollow">industry's total volume of 435,560 carloads, accordin" rel="nofollow">ing to data
provided by the company and AAR.
But BNSF also has been in" rel="nofollow">involved in" rel="nofollow">in six of the 18 U.S. oil train" rel="nofollow">in derailments sin" rel="nofollow">ince the Lac-Megantic disaster, second only to CSX, which has had seven. The latest BNSF derailment was in" rel="nofollow">in Heimdal,
North Dakota, on May 6. Ten cars left the rails. The crude caught fire, forcin" rel="nofollow">ing the town of 40 to evacuate.
The Transportation Department disputes the in" rel="nofollow">industry's claim that the new regulations would cost $3 billion: over 20 years, officials say the cost would be $492 million, offset by $426 million to
$1.7 billion in" rel="nofollow">in benefits.
Without the ECP brake and other new federal safety rules in" rel="nofollow">includin" rel="nofollow">ing thicker tank car hulls, damages from "high consequence events" could reach $12.6 billion over the next 20 years, the department
says.
Senator John Thune of South Dakota, who chairs the Senate Commerce Committee and authored the ECP repeal measure, was not available to comment. Frederick Hill, the committee's Republican spokesman,
said the measure would still require railroads to equip oil train" rel="nofollow">ins with ECP brakes begin" rel="nofollow">innin" rel="nofollow">ing in" rel="nofollow">in 2021 should new research demonstrate the technology's benefits.