Three months before one of his railroad’s trains derailed and burned in Ohio, Norfolk Southern chief executive Alan Shaw shared a picture of him and Transportation Secretary Pete Buttigieg smiling together after a meeting in Washington.
“Every time we shift freight from highway to rail, we reduce carbon emissions, ease congestion, and reduce wear on the nation’s publicly funded highway infrastructure,” Shaw wrote in a LinkedIn post.
But the meeting also had another purpose, according to a memo drafted later by a Transportation Department lawyer: It was an opportunity for Norfolk Southern to raise concerns about a proposed federal rule that would require trains, in most cases, to have two crew members. Federal regulators have argued that two workers could better respond to derailments and other emergencies, but the industry has pushed back against the proposal.
The meeting illustrates the two faces of Norfolk Southern and the railroad industry at large. It presents itself as a backbone of the nation’s economy — a safe and relatively green way to transport freight. At the same time, labor leaders and federal officials say, it aggressively resists proposed regulation by Washington, opposing new safety standards while searching for loopholes through existing rules.
Norfolk Southern, the nation’s fourth-largest railroad with a record $12.7 billion in revenue last year, is now on the defensive, tied to images of black plumes of burning vinyl chloride over East Palestine, where a 149-car train derailed Feb 3. As the National Transportation Safety Board investigates the cause of the derailment, the railroad has become the target of anger from residents in the small Ohio town and scrutiny from lawmakers and regulators in Washington.
While the NTSB is likely a year away from issuing safety recommendations, the federal government itself is facing questions over its response to the derailment and oversight of the railroad industry. Biden administration officials say they have been trying to tighten regulations after years of relatively lax federal oversight in the Trump era and will examine what changes might be needed after the derailment.
On Friday, leaders of the Senate committees for Commerce and the Environment and Public Works asked for a briefing from federal agencies in the next week on the investigation and the role of regulators. Commerce Committee chairwoman Sen. Maria Cantwell (D-Wash.) wrote to Shaw and other railroad bosses on the same day seeking details on their safety practices.
Norfolk Southern referred questions about federal safety rules to the Association of American Railroads, an industry group. In a statement, the organization said it was too soon to discuss what rule changes might be warranted.
“Immediate pushes for legislative or regulatory action absent of NTSB results and in response to the accident is premature at best — and opportunistic at worst,” the association said.
Sarah Feinberg, who headed the Federal Railroad Administration under President Barack Obama, said the derailment points to a systemic breakdown in the federal safety regulatory process. She said federal safety officials have faced challenges for decades in getting new rules through a vetting process, where critical safety measures can be subject to long delays and are routinely watered down by industry influence or bureaucratic struggles over costs and benefits.
That process is “broken and makes it incredibly challenging for safety regulators to finalize even common-sense safety regulations,” Feinberg said. “No matter which president you’re operating under, it has always been a challenge.”
Railroads spend heavily while lobbying in Washington, according to records analyzed by the transparency organization Open Secrets. Norfolk Southern is among the biggest spenders, paying $1.8 million last year for the services of 36 lobbyists.
At Shaw’s November meeting in Washington, federal officials “did not specifically respond” to concerns Norfolk Southern raised about the minimum crew rules, according to the Transportation Department attorney’s memo. Company leaders met with agency lawyers again in December to discuss the issue further, according to another federal memo.
Before the derailment, the railroad’s leadership had wanted to focus this year on its recent financial success and safety record, touting a 22 percent decline in injuries last year, according to data the railroad shared during a recent earnings call.
“Every conversation will begin with safety in 2023 and beyond,” Norfolk Southern executive vice president and chief operating officer Paul Duncan told analysts. “Operating safely is the right thing for our employees, customers, shareholders and the communities that we serve. This is an area where we have made great strides, but even one serious incident is too many.”
Duncan didn’t discuss a chart in his presentation showing an upward trend in train accidents, which railroad officials say can vary from minor incidents in rail yards or trespassing incidents, to collisions and derailments. The rate per million miles for such incidents was 3.89 last year, up from 3.87 in 2021, 3.59 in 2020 and 3.11 in 2019.
Railroad officials point to safety improvements on the main rail line, where the rate of incidents is far lower. Last year’s rate, however, was still higher than a decade ago, when the railroad covered millions more miles each year, FRA data shows.
At least 20 Norfolk Southern trains that have derailed since 2015 had chemical releases, according to FRA records.
In 2016, a derailment in Chautauqua County, N.Y., prompted evacuation orders and a massive effort to contain thousands of gallons of ethanol. In October 2020, a coal train derailed at a river trestle in Roanoke, leaving coal and debris in the stream. The Virginia Department of Environmental Quality ordered Norfolk Southern to pay a $27,300 fine for environmental damage.
In May 2022, a Norfolk Southern train carrying petroleum distillates went off the rail in Harmar Township, Pa., dumping the liquid into a creek. A train hauling hazardous materials derailed Thursday near Detroit, but none spilled, officials said.
Labor leaders have warned that adoption of a service model known as “precision scheduled railroading” — which relies on reducing costs by using fewer staff and longer trains — could put safety at risk.
Christopher Hand, director of research at the Brotherhood of Railroad Signalmen — which represents about 10,000 workers, including more than 800 at Norfolk Southern — said safety concerns have long been raised by railroad workers. He pointed to risks from job cuts in key positions, including track maintenance crews, in recent years.
Hand said that three years ago, Norfolk Southern cut five positions in the East Palestine area that oversaw maintenance of equipment detectors that issue alerts if something is wrong in the track, including hot boxes that measure wheel bearing temperatures. The NTSB identified an overheated wheel bearing as a potential factor in the derailment.
“These incidents and instances have been happening more frequently,” Hand said. “Union workers have been saying this for the last three years, that something like this will happen soon as we continue to go down this model where we don’t have enough employees.”
As railroads have sought to reduce costs, labor leaders say federal safety rules also have been a target. Greg Hynes, national legislative director for SMART Transportation Division, a union, said the focus for railroads has been cutting back regulations “all in the name of profit.”
“All these regulations, these railroad regulations, they were written in blood,” Hynes said. “All of these came about because of bad behavior by railroads.”
Under the Obama administration, transportation officials sought to advance safety rules after the 2013 explosion of an oil train in Canada killed 47 people. But railroads found that regulators in the Trump administration were receptive to their arguments of rolling back rules.
When the administration announced that paring back rules would be a focus, Norfolk Southern wrote to the Transportation Department in 2017 with a list of priorities.
“NS appreciates the opportunity to participate in this wide-sweeping, and necessary, review of the regulatory burdens imposed on our industry and our company,” the company wrote in a 23-page submission that included rules and federal guidance it would like to see removed.
Among them: blocking efforts begun in the Obama administration that would have set rules on minimum crew sizes and rolling back a requirement on new electronic braking technology on trains carrying large volumes of hazardous flammable liquids.
Both measures ultimately were scrapped in the Trump era. While the proposed crew rule has been revived, federal officials said Friday they are facing challenges in pursuing a rule on new brakes after it failed a cost-benefit analysis, which showed that under a range of scenarios, the costs would be hundreds of millions of dollars more than the benefits the changes would bring over 20 years.
The new technology would ensure that all rail cars brake at the same time, rather than running into each other and creating the telltale “accordion effect” seen in aerial images of major derailments.
Had the Obama-era rule remained in place, it still would not have applied to the train that derailed in Ohio because it contained too few cars carrying especially dangerous flammable liquids.
“Losing four years of progress on developing a safety regulation is devastating,” Feinberg said. “The braking system that was in place on that Norfolk Southern train is a Civil War-era braking system.”
In 2007, Norfolk Southern boasted about running the nation’s first train fitted exclusively with the new braking technology, saying it could reduce stopping distances by 60 percent.
Norfolk Southern did not respond to questions Friday about its interest in the technology. The Association of American Railroads said in a statement that the newer-style brakes have proved unreliable and that long repair times made them impractical. The group said railroads have instead used locomotives placed throughout their trains to have better control over braking.
In the meantime, Biden administration officials say they are taking steps to tighten oversight and could pursue penalties against Norfolk Southern if investigators find it broke rail safety rules. FRA administrator Amit Bose is scheduled to visit the derailment site in the coming week to inspect rail cars.
Officials say they hope the derailment will spur Congress to beef up rail safety rules. Questions about rail safety have often broken along party lines, with Republicans more skeptical of increased regulation. But in a letter to Buttigieg this week, Sens. J.D. Vance (R-Ohio) and Marco Rubio (R-Fla.) questioned whether even the three crew members on the derailed train were enough, given its length.
In the aftermath of the derailment, Norfolk Southern is facing added expenses after a previously rosy financial outlook. The company’s stock is down about 10 percent compared with the day before the derailment. The Environmental Protection Agency warned in a “General Notice of Potential Liability” letter to Norfolk Southern on Feb. 10 that the carrier may be responsible for cleanup costs.
The company this week sought to reassure residents about remediation efforts and expanded the geographic area for which it would offer assistance to residents. Norfolk Southern said it was distributing more than $1.5 million to more than 1,000 families to cover costs tied to the evacuation and setting up a $1 million community fund. The company was required to complete more than 400 in-home air tests and provide drinking water.
A J.P. Morgan analysis found the derailment “continues to weigh on the (railroad’s) share price after an increasing amount of critical commentary from unions, elected officials, regulators, and the White House.”
The financial firm estimated the railroad is likely to underperform competitors until initial cleanup and remediation is complete. Its analysis projected costs to the company of between $30 million and $50 million, based on similar incidents, including the Hamar spill last year.
Whatever steps the government might take to hold Norfolk Southern accountable, the analysis concluded that, at least in the short term, the stock market already had rendered a judgment worth billions of dollars.
