Union Pacific CEO Sees Rail-Crash Systems as ‘Terrible Waste’

Crash-avoidance technology being imposed on U.S. railroads will be a “terrible waste of money,” and President Barack Obama should junk the idea, Union Pacific Corp. (UNP) Chief Executive Officer Jim Young said.

Forcing adoption of the systems at carriers such as Union Pacific, the biggest in the U.S. by sales, could strand goods on tracks and in terminals, Young said yesterday in an interview at Bloomberg’s headquarters in New York. The technology “is not proven to work,” he said.

The Obama administration decided last month to scale back a Federal Railroad Administration rule on so-called positive train control technology, which is designed to automatically apply brakes when engineers miss a signal. Amending the rollout was part of a regulatory overhaul intended to save U.S. business $10 billion over five years.

For railroads, the administration’s projected $1 billion in savings over 20 years is “a token amount,” Young said. Omaha, Nebraska-based Union Pacific will spend $285 million on positive train control this year and $300 million to $350 million in 2012, he said.

“It’s like I’m going to charge industry $10 billion to put investment in and roll back $1 billion of it,” Young said. “That’s a cost that will be borne by every customer that uses the railroad.”

Positive train control was mandated in a 2008 law after a fatal crash between a Union Pacific freight train and a commuter train in Los Angeles. The National Transportation Safety Board said the commuter engineer was sending and receiving text messages seconds before the accident.

2015 Deadline

Railroads must install the technology by the end of 2015 on routes shared by passenger trains or where freight carriers haul chemicals that are toxic when inhaled.

Young also reiterated that Union Pacific would reduce capital investment if the U.S. Surface Transportation Board forces competitive service to customers whose only shipping outlet is a single railroad line.

The STB, the railroad industry’s economic regulator, held hearings in Washington in June on whether to require carriers serving those so-called captive shippers, which include manufacturers such as Dow Chemical Co. (DOW), to share tracks with competitors. Young testified at the hearing against a system.

Young said he doesn’t expect the board to require competitive access.

“I quite honestly don’t see it,” he said. “I think there’s too much at risk to get it wrong. The STB talked about doing an experiment. Well, it’s not going to be an experiment to me. It’s going to be a real issue in terms of what we do.”

To contact the reporter on this story: Bernard Kohn in New York at bkohn2@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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