INSIGHT-Buffett's BNSF helped lead fight to delay train safety technology

By David Morgan and Nick Carey
WASHINGTON, Nov 4 (Reuters) - 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 Co, 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 Corp (N:NSC) NSC.N and Canadian
Pacific Railway CP.TO , 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
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.
"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 Exxon Mobil (N:XOM),
Chevron (N:CVX), Cisco Systems (O:CSCO), General Electric (N:GE), 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.