ACC report shows rail shutdown could cost $30 billion

A broad rail service disruption lasting one month would cost the U.S. economy $30 billion and would increase the unemployment rate with a loss of 700,000 jobs, according to a study released by the American Chemistry Council (ACC), Washington.

The study, “Assessment of the Economic and Social Impacts of the Failure of Congress to Extend the Compliance Deadline for Positive Train Control (PTC)," outlines how most Americans would be affected by a rail shutdown unless Congress steps in to extend the PTC deadline. A disruption of this scale would strand commuters across the country and prevent the flow of goods that are vital to everyday life, putting the entire economy and public health at risk, according to the ACC.

 

PTC is a sophisticated GPS-based system that is designed to prevent train collisions and derailments. Under the Rail Safety Improvement Act of 2008, railroads are required to implement PTC on lines that ship certain hazardous materials and carry passengers by rail by Dec. 31, 2015.

“The United States is staring down the tracks of an unprecedented shutdown of freight rail service that could seriously harm our entire economy unless Congress acts quickly to extend the PTC deadline,” says Cal Dooley, president and CEO of the ACC. “A prolonged shutdown would be truly catastrophic, likely resulting in a recession. We cannot afford to let this self-inflicted crisis happen; Congress must act now.”

According to the ACC’s study, a transportation disruption of this magnitude would have cascading impacts that would threaten the nation’s food, energy and water supplies, as well as nearly every sector of the U.S. economy, including manufacturing and construction. As the report details, a disruption of rail service lasting only one month would result in a 2.6 percentage reduction to U.S. real GDP (gross domestic product) growth during the first quarter of 2016, which would put a major chill on just about every leading indicator in the first quarter, including:

 

 

In addition to the broad negative economic impact on the nation’s economy, the rail shutdown could have far-reaching health consequences, the ACC says. Since water treatment facilities rely on the routine delivery of chlorine-based water disinfectants, the U.S. could experience drinking water shortages if shipments were disrupted, putting public health at risk, the ACC says. A group of associations representing the nation’s water utilities recently sent a letter to Congress warning that a rail shutdown caused by a failure to extend PTC “could risk a public health disaster for communities across the country.”

The Association of American Railroads, Government Accountability Office and Federal Railroad Administration have stated that the railroads will not be able to implement PTC by the deadline. Furthermore, despite their common carrier obligation to provide service, the ACC says most major railroads have declared that they will shut down large portions of their rail lines unless the deadline is extended.

Even allowing the deadline to approach will have severe consequences, according to the ACC, as companies need time to adjust transportation plans in the face of a shutdown of freight rail service.

The ACC says Congress should act immediately to provide a reasonable, workable extension for PTC to avoid a massive disruption to freight rail service and the potentially dire consequences for the U.S. economy that would come with such a shutdown. The association says it urges the U.S. House and Senate to pass an extension this month.