DOT, EPA To N-S: Fool Around and Find Out

By Jim Mathews / President & CEO

Secretary of Transportation Pete Buttigieg blasted Norfolk Southern CEO Alan Shaw over the weekend in a formal letter warning that DOT, the Federal Railroad Administration, and the National Transportation Safety Board are all taking a good hard look at everything that led to N-S’s disastrous derailment earlier this month in East Palestine, Ohio.

Buttigieg castigated N-S, and the Class I railroads generally, for putting up “vigorous resistance...to increased safety measures,” noting that over the past five years N-S has paid shareholders twice as much as the railroad has invested in its own infrastructure and operations. “The arithmetic suggests Norfolk Southern can remain extremely profitable while also complying with a higher standard of safety regulation and offering better consideration to its workers.” (You can read the full text of Secretary Buttigieg’s letter here.)

Just up the street, however, the Environmental Protection Agency has already moved to take a big bite out of those Norfolk Southern profits, this afternoon issuing a binding unilateral order requiring N-S to pay 100 percent of the clean-up and restoration costs for East Palestine, including any costs EPA incurs to bring in independent contractors to clean and test affected facilities. (You can read the full text of EPA’s order here.)

“Let me be clear: Norfolk Southern will pay for cleaning up the mess they created and for the trauma they’ve inflicted on this community,” says EPA Administrator Michael S. Regan. “I’m deeply grateful to the emergency responders, including EPA personnel, who’ve been on the ground since day one and ensured there was no loss of life as a result of this disaster. As we transition from emergency response, EPA will continue to coordinate closely with our local, state, and federal partners through a whole-of-government approach to support the East Palestine community during the remediation phase. To the people of East Palestine, EPA stands with you now and for as long as it may take.”

Given the history of Superfund sites, that could take years and years.

There’s been a lot of criticism accusing Buttigieg, the DOT, and FRA for a weak response to Norfolk Southern’s actions. That criticism, however, ignores the reality that the freight rail industry – indeed, American business across all sectors – has spent hundreds of millions of lobbying dollars in the past 40 years systematically dismantling regulatory authorities designed to protect Americans from this kind of disaster.

DOT and the modal agencies, including FRA, have been kneecapped repeatedly over decades. Today the maximum possible fine for Norfolk Southern, even for an egregious violation involving hazardous materials and even if it resulted in fatalities (which so far it hasn’t), is $225,455. DOT notes that “this is a rounding error for a company that reported an astonishing record annual operating income in 2022 of $4.8 billion and has posted operating margins approaching 40%.”

“Major derailments in the past have been followed by calls for reform – and by vigorous resistance by your industry to increased safety measures,” Buttigieg wrote to N-S’s Shaw. “This must change.”

Citing a litany of serious and deadly derailments in 2011, 2012, and 2013, in his letter Buttigieg pointed to several specific changes in rules and laws proposed to address the issues in those derailments. But “rather than support these efforts to improve rail safety, Norfolk Southern and other rail companies spent millions of dollars in the courts and lobbying members of Congress to oppose common-sense safety regulations, stopping some entirely and reducing the scope of others.”

As I said last week, it seems that whenever there’s a choice between saving a little money and doing the right thing for customers or the general public, more often than not the freight rail industry opts for saving money.

Made a profit? We could invest it in making the railroad more fluid with more capacity and sidings...or we could pay out bonuses to executives and stockholders.

Building trains? Well, we can run more trains to more places to take better care of our shippers...or we can run thinly staffed three-mile long trains that frustrate shippers, clog up passenger traffic, and exhaust our small number of remaining employees.

Better braking technology? Sure, we could adopt electronic braking to stop trains more effectively or in a shorter distance...but we could also not spend that money and instead give it to our executives and stockholders. In the case of Norfolk-Southern, that’s $18 billion over five years through stock buybacks and dividends.

Market theorists will tell you that private industry won’t allow terrible conditions to persist because they’re bad for business. Market signals will tell managements when they’re off course.

Nope. Precision Scheduled Railroading is a way to run the cheapest possible railroad, safety and employee health be damned. And lobbyists have spent the past four decades de-fanging regulatory agencies like FRA and EPA so that they have fewer options for correcting wayward companies.

Yesterday, Buttigieg unveiled a whole package of measures aimed at tackling some of the worst safety issues in railroading in a comprehensive way. The list falls into three categories – things DOT can control, things Congress needs to step in and do, and things that DOT can only request or encourage private industry to do.

Under the heading of things DOT is allowed to do right now, the Department flagged:

1. Advancing the Train Crew Staffing Rule, which will require a minimum of two crewmembers for most railroad operations. This rule is intended to keep workers and communities safe. Research indicates that an increase in physical tasks and cognitive demands for a one-person crew could potentially lead to task overload or a loss of situational awareness that could cause an accident. Despite two-person train crews being industry standard, the rail industry has resisted being regulated on this front and pushed for crews of less than two people. Rail Passengers Association is influencing this process through our membership on FRA’s Rail Safety Advisory Committee and various specialist RSAC Working Groups.

2. Initiating a focused safety inspection program on routes over which high-hazard flammable trains (HHFTs) and other trains carrying large volumes of hazardous material travel.

3. Initiating a focused inspection program of legacy tank cars and the shippers and railroads who have chosen not to upgrade to the safer tank cars (DOT 117).

4. Deploying the resources from the Bipartisan Infrastructure Law under programs including the the Consolidated Rail Infrastructure and Safety Improvements (CRISI), the new Railroad Crossing Elimination Program and the Railroad Rehabilitation & Improvement Financing (RRIF) program among others to fund projects that modernize and improve rail tracks, eliminate at-grade rail crossings and improve rail safety.

5. Pursuing further rulemaking, to the extent possible under current statute, on high-hazard flammable trains (HHFT) and electronically controlled pneumatic brakes (ECP).

Congress also needs to step in and do its part. DOT urged Congress to:

1. Increase the maximum fines that USDOT can issue to rail companies for violating safety regulations well beyond the existing $225,455 maximum.

2. Follow through on new bipartisan support to expand and strengthen rules governing high-hazardous shipments, including high-hazard flammable trains (HHFT), pushing past industry opposition.

3. Follow through on new bipartisan support to modernize braking regulations and increase the use of electronically controlled pneumatic brakes (ECP).

4. Speed up the phase-in of safer (DOT 117) tank cars to carry hazardous materials. Congress established a phase-in schedule under the 2015 FAST Act which gives owners of tank cars until 2029 to fully adopt stronger (DOT 117) tank cars. The original 2015 HHFT Rule required the phase-in by 2025. Congress can act now to speed, rather than slow, this important safety measure.

5. Increase funding to expand hazardous materials training for first responders.

And then there are things DOT can only request and has little to no authority to push forward. Here, DOT urged Norfolk Southern and all of the freight railroads to:

1. Protect workers who spot safety issues from reprisal, by joining FRA’s Confidential Close Call Reporting Program. This program allows railroads and their employees to report unsafe events and conditions without fear of negative consequences from the FRA or reprisal from their employers. To date Amtrak, many commuter rail and short line companies are part of this program, but not a single Class I railroad participates. This must change immediately. I was named in November to an FRA working group working to implement this program more broadly.

2. Deploy new inspection technologies without seeking permission to abandon human inspections. The removal of human inspections has been a top priority for the rail lobbyists. Recent waiver requests around technology like Automated Track Inspection (ATI) have been framed by industry to set up a false choice between technology and human oversight. We need both to keep our nation’s railroads safe.

3. Expedite the phase-in of safer (DOT 117) tank cars in advance of the Congressionally mandated 2029 deadline.

4. Provide proactive advance notification to state emergency response teams when they are transporting hazardous gas tank cars through their states instead of expecting first responders to look up this information after an incident occurs. USDOT is also pursuing further requirements in this area, but railroads should not wait. As a person who spent 13 years in the Fire Service, I can attest to the chaotic nature of responding to hazmat scenes like a derailment, and how much vital time is wasted as responders try to assess and contain the hazard in an appropriate way.

5. Provide paid sick leave. A healthy and well-supported workforce is a safer workforce. This doesn’t have to wait for national negotiations—companies can come to terms individually with their labor unions. DOT pointed to CSX as one example. This Administration believes that all workers deserve paid sick leave.

After years of complaints from shippers and delayed rail passengers alike about the pitfalls of Precision Scheduled Railroading, it seems that now the stockholders who benefited so handsomely from PSR’s most-draconian practices are now going to have to engage in some payback. But no matter what, the residents of East Palestine will have had their lives upended for good. And no amount of testing or remediation is going to take them back to where they were before February 3rd.

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