Phone: (216) 228-9400

Fax: (216) 228-0411
Department Email: news_td@smart-union.org

“Any time a monopoly is broken up, and competition is emphasized in the workplace, American workers win. SMART-TD stands behind today’s announcement by the Surface Transportation Board. It is a clear result of this administration’s dedication to railroad workers and workers in general over the insatiable appetite of the railroad companies to feed their bottom lines to the detriment of all else. SMART-TD, on behalf of the hardworking conductors, engineers, and yardmasters we represent, are thankful for the leadership of Martin Oberman, chair of the STB, and of the Biden administration for their courage in breaking the stranglehold the railroads have had on their customers since 1850. Our hope is that introducing the spirit of capitalism into our industry will force the railroads to run their companies more responsibly, starting with demonstrating more respect for their greatest asset, OUR MEMBERS.”

— SMART-TD President Jeremy Ferguson

This morning, the U.S. Surface Transportation Board (STB), following a unanimous vote by the board, announced a Notice of Proposed Rule Making (NPRM) that represents a tidal shift in the way railroads provide service in this country. Since the golden spike was ceremonially driven in 1869, connecting this country from coast to coast with rail service, our country’s railroads have had a unique business model. This model has always hinged on the fact that if they owned the track your factory or company was adjacent to, you were locked into their services no matter the level of their pricing or the quality of that service.

In recent years, the STB has been flooded with complaints regarding the Precision Scheduled Railroading (PSR) era from shippers who are no longer satisfied with the results of the one-sided partnerships they have with American rail barons. These shippers have been “railroaded” into paying inflated rates for severely inadequate service. The STB has ruled numerous times that rail carriers are obligated to honor their contracts and provide regular service to our country’s most-pivotal industries.

Recently, the STB asserted its power to insist that Union Pacific (UP) service a large-scale poultry farm in California whose livestock was suffering from that carrier’s inability to consistently deliver the feed necessary to keep their animals alive. Currently, the Navajo Nation has engaged the STB in a dispute with BNSF over its inability to deliver on its contractual obligation to get coal to market produced by a subsidiary of the Nation . The idea that railroads can service who they want when they want does not mesh with their obligations to provide adequate service.

Martin Oberman, the Biden administration, and the STB today said they will no longer allow this mentality to continue. The STB is holding the railroads’ collective feet to the fire so that the supply chain for critical goods, like energy and food supplies, delivers on time.

The NPRM announced today provides three basic standards of service railroad companies must abide by. If they refuse to do so, their previously locked-in customers will have the right to contract with another railroad that will. As the press release from the STB points out, this will be a complex process of negotiating trackage rights; however, the STB shows no sign of backing down from the task.

Chairperson Martin Oberman specifically noted, “One of the principal goals of the rule is to incentivize carriers to maintain sufficient resources — specifically workforce and locomotives.”

This NPRM is open to public comments until October 23, 2023. If it is adopted as proposed, this nation’s railroads are, for the first time, forced to recognize a direct correlation between their staffing levels and their ability to retain customers. This puts these carriers in a unique position where retention of their workforce, as well as attracting new talent, will force itself to be their top priority.

SMART-TD is proud to stand with Chairman Oberman, the STB, and President Biden as they make this bold and decisive move to level the playing field and assert the ideals of capitalism into the railroad industry.

Railroad workers, heavy industry, and “mom-and-pop” shops across this country will benefit from adopting this proposed rule-making. As SMART-TD President Ferguson stated, “When monopolies are disrupted by capitalism, our country’s workers and the economy itself win, and win big.”

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If you’re interested in speaking more about the union’s stance on this issue and the changes SMART-TD is calling for, we’d be happy to connect you with:

SMART Transportation Division President Jeremy Ferguson

President Jeremy Ferguson, a member of Local 313 in Grand Rapids, Mich., was elected president of SMART’s Transportation Division in 2019.

President Ferguson, an Army veteran, started railroading in 1994 as a conductor on CSX at Grand Rapids, Mich., and was promoted to engineer in 1995. Ferguson headed the recent national rail negotiations for the Union with the nation’s rail carriers.

SMART Transportation Division National Legislative Director Gregory Hynes

Greg Hynes is a fifth-generation railroader and was elected national legislative director in 2019.

Hynes served on the SMART Transportation Division National Safety Team that assists the National Transportation Safety Board with accident investigations, from 2007 – 2014.

In 2014, he was appointed to the Federal Railroad Administration’s Railroad Safety Advisory Committee (RSAC), which develops new railroad regulatory standards.

Hynes was appointed the first chairperson of the UTU Rail Safety Task Force in 2009 and served in that capacity until being elected SMART Transportation Division alternate national legislative director at the Transportation Division’s 2014 convention.

SMART Transportation Division Alternate National Legislative Director Jared Cassity

Jared Cassity was elected by his peers in 2019 and currently serves as the Alternate National Legislative Director for the SMART Transportation Division, which is comprised of approximately 125,000 active and retired members who work in a variety of different crafts in the transportation industry. These crafts include employees on every Class I railroad, Amtrak, many shortline railroads, bus and mass transit employees, and airport personnel.

In addition to his elected roles, Cassity has also been appointed as the Union’s Chief of Safety, serves as the Director for the SMART TD National Safety Team (which assists the NTSB in major rail-related accident investigations), is SMART TD’s voting member on the Federal Railroad Administration’s C3RS Steering Committee, and is the first labor member to ever be appointed to the Transportation Security Administration’s Surface Transportation Safety Advisory Committee.

By a 3-2 majority June 23, the Surface Transportation Board (STB) ruled in favor of Navajo Transitional Energy Co. (NTEC), ordering BNSF to fulfill its common-carrier obligation to serve the Powder River Basin energy producer and transport 4.2 million tons of coal.

NTEC filed a complaint April 14 seeking an emergency service order to move coal from a facility in Big Horn, Wyo., to a Canadian terminal.

As a result, BNSF must move 23 trains per month of NTEC’s coal beginning immediately, and an additional six trains per month when additional train sets and crew become available. Both parties will be providing weekly service updates, the STB said in a news release announcing the decision.

STB Chairman Martin Oberman

“The common carrier obligation is a core tenet of the Board’s regulation of the freight railroad industry and is a pillar of the railroads’ responsibility to our country’s economy,” STB Chairman Martin Oberman, who will be a guest at the SMART Leadership Conference in Washington, D.C., said in the release. “Today’s decision reflects the majority’s finding that the common carrier obligation requires a railroad to provide service on a customer’s request that is within the railroad’s capacity to provide.”  Further, Oberman noted, as the STB has previously held: “The common carrier duty reflects the well-established principle that railroads ‘are held to a higher standard of responsibility than most private enterprises.’”

Board members Patrick Fuchs and Michelle Schultz dissented with the ruling.

The STB decision is below.

On June 13, Greg Regan, president of the AFL-CIO Transportation Trades Department (TTD), of which the SMART Transportation Division is a member, sent a letter to President Joe Biden regarding recent attacks on Surface Transportation Board Chairman Martin Oberman. The text of the letter is reproduced below.


The Honorable Joseph R. Biden
President of the United States
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear President Biden:

On behalf of the Transportation Trades Department, AFL-CIO (TTD) and the totality of rail labor as represented by our affiliated unions, I write to reaffirm our strong support for Surface Transportation Board (STB or Board) Chair Marty Oberman and Board Member Robert Primus. We vehemently object to the sentiments expressed by Freedom Bloc, Revolving Door Project, and RootsAction (the coalition) in a May 17th letter urging you to relieve Chair Oberman and replace him with Member Primus. We firmly believe that removing Chair Oberman or failing to reappoint him would undermine the significant progress the Board has made during his tenure.

Surface Transportation Board Chairman Martin Oberman

The coalition’s request for Chair Oberman’s removal is in direct response to the Chair’s authorization of a merger between Canadian Pacific Railway (CP) and Kansas City Southern Railroad (KCS). The Chair’s vote in favor of the transaction is no reason to remove him from his position or to not re-nominate him. Compared to the four railroads that dominate the U.S. freight rail network, CP and KCS are comparatively minor players. It must be recognized that the merger was literally “end-to-end”; CP and KCS had one point of connection and they did not compete head-to-head for business. There was no compelling evidence of a real decrease in competition. Further, rejection of the transaction would not have enhanced competition or decreased concentration in the industry in any significant way.

The primary issue plaguing the freight rail industry is not corporate concentration, but rather the implementation of an operating business model known as Precision Scheduled Railroading (PSR). PSR prioritizes profits above all other goals, including rail safety, reliable freight rail service, and workplace dignity. Recent high-profile derailments like the one in East Palestine, Ohio are a direct consequence of rail operations under the PSR model. Simply put, PSR is well on its way to destroying the freight rail industry and poses a direct threat to the safety of our communities and economic well-being of our country.

Chair Oberman recognizes the scope of these problems and champions real solutions to them. The call for his removal over the CP and KCS merger is not only unjustified but would be counterproductive to creating a safer, more effective freight rail system. To be clear, our objection to replacing Chair Oberman in no way diminishes our support for Board Member Primus. Mr. Primus has been an aggressive critic of the industry’s practices and we fully support his continued service on the Board as well.

The actions and approach of the current Board are a refreshing change from its predecessors, and Chair Oberman is due much credit for that change. We look forward to the Board’s continued attention to freight rail service issues exacerbated by the scourge of PSR.

Sincerely,
Greg Regan
President

This morning (March 15), the U.S. Surface Transportation Board (STB) announced its decision to allow the merger of two of our nation’s seven Class I railroads.

The Canadian Pacific Railway Limited (CP) has now been given the federal clearance needed to finalize its agreement to acquire the Kansas City Southern (KCS) Railway Company.

The merger of the two corporate giants has been in the works since the fall of 2021 and has included an extensive amount of analysis by the STB on the ripple effects of the merger through the industry and for the supply chain as a whole. In short, the board found the net result of this merger to be a positive both economically and environmentally.

Expectation from the STB is that this merger will result in an addition of 800 new operating positions in the U.S.

In addition to that, the board also put language into their approval that imposes New York Dock labor protective conditions for applicable workers (Member Portal login required to view link).

The merger goes into effect April 14, 2023, and the company will now be know as Canadian Pacific Kansas City (CPKC). There will be an unprecedented seven-year oversight period allowing government regulators to ensure that all parties are living up to the agreed-upon stipulations.

To get more details on this development please follow the link to the STB’s press release from this morning’s announcement.

A bill introduced by leaders in the U.S. House on Aug. 2 and endorsed by the SMART Transportation Division seeks to address complaints levied against the Class I rail carriers brought by customers and echoed by rail unions in hearings in the spring before the Surface Transportation Board (STB).

See a recap of that testimony here.

The Freight Rail Shipping Fair Market Act (H.R. 8649) reauthorizes the STB, the federal agency that oversees the economic regulation of freight rail in the country.

Among the bill’s purposes, according to a release from the U.S. House Transportation Committee: 

  • Strengthening STB’s authority to address rail service emergencies;
  • Requiring rail contracts to include service delivery standards and remedies, while leaving details to be privately negotiated between parties;
  • Providing STB with clear direction to resolve common carrier obligation complaints;
  • Creating financial incentives for both railroads and their customers to efficiently move railcars;
  • Supporting freight railroad efforts to identify where freight is located on their systems while in transit; and
  • Adequately funding STB to allow for quicker dispute resolution when petitioned. 

“I am proud to introduce the Freight Rail Shipping Fair Market Act with Chair DeFazio, Chair Scott, and Chair Costa to improve rail shipping nationwide,” Rail, Pipeline and Hazardous Materials Subcommittee Chair Donald M. Payne Jr. said. “The freight rail companies have focused on profits instead of performance and it has led to delays and problems in how we transport commodities to farms, factories, and stores across the country. My bill gives the Surface Transportation Board the power to prohibit rail rate increases during a rail emergency and resolve rail emergencies when they occur. This bill will improve the speed and reliability of rail service and guarantee that freight rail shipping continues to improve in the future without unnecessary regulations.” 

On the heels of his testimony before the STB in April, SMART-TD President Jeremy Ferguson testified in June before Payne’s subcommittee discussing labor’s concerns with rail operating tactics under Precision Scheduled Railroading (PSR).

U.S. Rep. Peter DeFazio of Oregon, chair of the House Transportation and Infrastructure Committee, who was critical of the railroads’ PSR tactics in a May appearance before the rail subcommittee, lent his support to the legislation.

“I am pleased to join Chair Payne on the Freight Rail Shipping Fair Market Act, which will hold the freight rail industry accountable for their appalling service to shippers and ultimately help American families burdened by the increased price of goods,” DeFazio said. “It is imperative that our rail network is reliable, and yet consolidation and Wall Street pressures on railroads to cut costs and increase profits have made that near impossible. This bill will level the playing field and provide railroad customers—many of which are transporting key food and energy products—the service they deserve. This bill will also provide the tools and guidance the Surface Transportation Board needs to fulfill its mandate and better regulate disputes among Class I railroads and their customers, weed out unfair practices, and incentivize efficient operations. I look forward to putting these policies into action, empowering the Board, and boosting competition in the freight rail industry.” 
 
“Whether carrying inputs to our farmers or moving their products to market, rail is a vital tool in the American agriculture industry. This fact has become increasingly apparent as rail service issues have created challenges for our farmers, grain elevators, and ethanol producers and resulted in increased costs for producers and consumers alike,” Agriculture Chair David Scott said. “I want to thank Chair DeFazio and Chair Payne for their work on this legislation, particularly their work with the agriculture community to address their concerns. I am proud to join as an original cosponsor of the Freight Rail Shipping Fair Market Act.”
 
“The pandemic has wreaked havoc on every segment of our economy. It has disrupted our supply chain, both in terms of imports and exports and has put our agricultural community at great risk. The time is now to sit down with rail carriers to fix this broken supply chain system. I support this legislation to improve freight rail service, reduce inflation, and ensure our shippers and suppliers are confident in the ability of our nation’s rail system to efficiently move goods and services. This is the only way to give consumers confidence in fair pricing and consistent access to products in grocery stores and on shelves,” House Subcommittee on Livestock and Foreign Agriculture Chair Jim Costa said.
 
To better understand why rail service delivery problems persist, the Railroad Subcommittee held hearings in March and in May 2022, and the Surface Transportation Board held a hearing on urgent issues in freight rail service in late April 2022. All three hearings documented serious problems in the freight rail industry stemming from years of Wall Street focus on increasing railroad operating profits to allow for stock buybacks and dividends, rather than investing those profits in expanding critical freight rail service to more places and serving more industries. Despite these hearings and actions undertaken by the Surface Transportation Board, severe service issues continue to hamstring rail shipments across the country. This bill seeks to stem that tide.

Captured freight rail customers who stand to benefit from provisions in H.R. 8649 have signed on to support the Freight Rail Shipping Fair Market Act. They include: 

  • Agribusiness Association of Iowa
  • Agribusiness Council of Indiana
  • Agricultural Council of Arkansas
  • Agricultural Retailers Association
  • AgTC — Agriculture Transportation Coalition
  • Amcot
  • American Agri-Women
  • American Bakers Association
  • American Chemistry Council (ACC): 
  • American Cotton Producers
  • American Cotton Shippers Association
  • American Farm Bureau Federation
  • American Feed Industry Association
  • American Sheep Industry Association
  • American Soybean Association
  • American Sugar Cane League
  • Arkansas Rice Federation
  • Association of California Egg Farmers
  • California Association of Wheat Growers
  • California Cattlemen’s Association
  • California Grain and Feed Association
  • California Pork Producers Association
  • California Poultry Federation
  • Consumer Brands Association
  • Corn Refiners Association
  • Cottonseed and Feed Association
  • Freight Rail Customer Alliance
  • Georgia Agribusiness Council
  • Grain and Feed Association of Illinois
  • Growth Energy
  • International Dairy Foods Association
  • International Fresh Produce Association
  • Iowa Institute for Cooperatives
  • Kansas Association of Wheat Growers
  • Kansas Grain and Feed Association
  • Kansas Agribusiness Retailers Association
  • Laughlin Cartrell Inc.
  • Midsouth Grain Association
  • Minnesota Crop Production Retailers
  • Minnesota Grain and Feed Association
  • Minnesota Wheat Research & Promotion Council
  • Mississippi Feed and Grain Association
  • Montana Agricultural Business Association
  • Montana Grain Elevators Association
  • National Aquaculture Association
  • National Association of State Departments of Agriculture
  • National Association of Wheat Growers
  • National Cattlemen’s Beef Association
  • National Corn Growers Association
  • National Cotton Council of America
  • National Cotton Ginners Association
  • National Cottonseed Products Association
  • National Council of Farmer Cooperatives
  • National Grain and Feed Association
  • National Grange
  • National Industrial Transportation League
  • National Milk Producers Federation
  • National Oilseed Processors Association
  • National Sorghum Producers
  • Nebraska Agri-Business Association
  • Nebraska Cooperative Council
  • Nebraska Dry Pea and Lentil Commission
  • Nebraska Wheat Board
  • Nebraska Wheat Growers Association
  • New York State Agribusiness Association
  • North American Meat Institute
  • North American Millers’ Association
  • North Carolina Agribusiness Council
  • North Dakota Grain Dealers Association
  • Northeast Agribusiness and Feed Alliance
  • Northwest Chicken Council
  • Ohio AgriBusiness Association
  • Oklahoma Grain & Feed Association
  • Oklahoma Wheat Growers Association
  • Oregon Feed & Grain Association
  • Oregon Wheat Growers League
  • Pacific Egg & Poultry Association
  • Pacific Northwest Grain & Feed Association
  • Pet Food Institute
  • Plains Cotton Growers, Inc.
  • Portland Cement Association
  • Private Railcar Food and Beverage Association
  • Roquette
  • South Dakota Agri-Business Association (SDABA)
  • Soy Transportation Coalition
  • Specialty Soya and Grains Alliance
  • Tennessee Feed and Grain Association
  • Texas Ag Industries Association
  • Texas Grain and Feed Association
  • Texas Wheat Producers Association
  • The Fertilizer Institute
  • USA Rice
  • Wisconsin Agri-Business Association
  • Wyoming Wheat Marketing Commission

The full bill text and a fact sheet are available by following the links.

U.S. Rep Peter DeFazio (D-Ore.) testifies before the House Rail and Pipelines Subcommittee on May 12.


Following up a hearing in late April on freight rail problems caused by Precision Scheduled Railroading (PSR), members of the Surface Transportation Board appeared before the U.S. House Rail and Pipelines Subcommittee on May 12 to further discuss steps to be taken to heal the nation’s supply chain.

U.S. Rep. Peter DeFazio delivers his statement on PSR.

“We are at a point of crisis, and we have to deal with that crisis meaningfully,” U.S. House Transportation and Infrastructure Chairman Peter DeFazio (D-Ore.) said. “Freight service in the United States in America, we used to have the best freight rail in the world, is abysmal.

“The evil ghost of Hunter Harrison lives on. The legacy of this man is disgusting, what he did he has addicted the CEOs of the rail industry to watching the ticker on Wall Street and using their resources to benefit their shareholders and not run railroads like railroads.”

DeFazio mentioned an unlikely alliance — shippers, energy and chemical companies, oil companies, big agriculture and rail labor — coalescing as Class Is’ service-averse PSR scheme continues to rake in record profits and benefit shareholders and CEOs.

“We’ve got to act more decisively and more quickly,” DeFazio told the STB members. “We’re going downhill here really quickly. You’re not there to protect the bottom line of these railroads and the CEOs’ bonuses. You’re not there even for the shippers’ bottom line. But are there to make this system work better, keep costs lower and be competitive.

“I want freight railroads to be successful … but that success should be defined by the amount of freight they move across the nation, the amount of greenhouse gas they prevent and the safety of their employees and the communities they traverse. Stock buybacks, dividends can’t be the measure of success for freight rail in this country.”

Surface Transportation Board Chairman Martin Oberman was appointed by President Biden in January 2021 after 29 percent workforce cuts that began before the COVID pandemic’s start — a total of more than 45,000 employees — these cuts can be linked to the current deteriorated service.

Surface Transportation Board Chairman Martin Oberman testifies before the subcommittee on May 12.

“The railroads could not possibly have screwed up this stuff anymore than they are doing on their own. There’s nothing we could do to make it worse right now. It is in terrible shape as has been indicated by members of the committee and at our hearing,” Oberman said. “They’ve cut labor to below the bone, really. They have thousands of locomotives that they’ve mothballed … That’s the big picture. That’s the overview that concerns me most. In order to make up for their shortage of labor, they’re overworking and abusing the workforces they have. Long-term employees are literally leaving. So you’re not only [dealing with] a shortage of workers but you’re losing a tremendous amount of institutional knowledge.

“Rail labor reports particular difficulty directly caused by increased job uncertainty, worsening working conditions and insufficient incentive,” he said. “I am not optimistic about significant improvement in service in the near term.”

The STB’s April 26 hearing resulted in a unanimous rulemaking mandate made days later that Class I carriers be required to detail on-time performance for first- and last-mile service, submit recovery plans and provide frequent updates to the board. A notice of proposed rulemaking also would provide emergency relief for rail customers in urgent need of rail service.

U.S. Rep. Steve Cohen asks about the BNSF “Hi-Viz” policy.

U.S. Rep. Steve Cohen, a Tennessee Democrat, brought up the “Hi-Viz” attendance policy that BNSF enacted in February, noting a letter he received from a 13-year retired veteran engineer that talked about the new challenges the punitive points-based attendance policy had given him in facing his medical challenges.

“Demands on employees have only increased,” Cohen said. “These unreasonable expectations are driving people out of the industry. They’re doing the minimum, which the federal government requires on FMLA and some other things, but they ought to be doing more than the minimum to bolster the workforce, care for their employees and bolster the rail industry in general.”

The low workforce levels are making it harder for service to recover, these “irresponsible” business cuts and layoff decisions by the railroads have also made people not want to come back, Oberman said.

“What could not be more clear is that the railroads do not have significant redundancy. It’s quite clear to me that they don’t have a cushion. As I have said many times, you wouldn ‘t send a football team out on the field without a backup quarterback. But what the railroads have done is just that,” he said. “They have set the rail crew levels at levels when they have no backup. So when there was COVID, when there’s a vortex, when there’s any disruption of workers getting to the job, the trains stopped running.

“Remember, when you lay off an experienced engineer or conductor and there’s no assurance they’ll come back and many of them did not — they went into other industries. To replace that person under FRA restrictions and just general common sense requires six months of training.”

U.S. Rep. Troy Nehls gives incorrect information about rail workers’ salaries.

U.S. Rep. Troy Nehls (R-Texas), railing against inflation and union density in the rail industry, himself produced some inflated and inaccurate estimate of the average Class I rail employee’s salary as being $137,000.

“At the hearing we had two weeks ago, the railroads came in and proudly proclaimed that they were trying to hire new conductors at $52,000 a year, not $137,000, and when I asked them how they were going to compete with Wal-Mart hiring truck drivers at $110,000, they didn’t have an answer,” Oberman countered.

U.S. Rep. Stephen Lynch of Massachusetts clears up misinformation by U.S. Rep. Troy Nehls about salaries of rail workers.

Nehls’ inaccurate statement also was later corrected by Rep. Stephen Lynch of Massachusetts, who also noted that rail workers were not rewarded for working through the pandemic and that nation rail contract negotiation have dragged on for more than two years.

“You can see the attention that the railroads have given to labor when you look at how much they’ve cut the labor force and how much they’re not respecting and looking out for their best interest, you can see that. They’re giving more money to their shareholders. There hasn’t been one major bonus or pay raise in those couple years that they’ve been working us out of COVID. No hint towards that,” STB member Robert Primus said.

STB Member Karen Hedlund also referred to the longer trains PSR uses that frequently dwarf the sidings on the lines, causing congestion and obstructing passenger rail’s on-time service and suspects that STB will need to address it.

“There’s one long-distance line that was above 80 percent,” she said. “Some of the shorter lines perform over 80 percent, but the long-distance lines do not perform well. When there’s a three-mile-long train in front of a little Amtrak train, the three-mile-long train may not be able to get out of the way for many, many miles.”

The federal Surface Transportation Board issued the following statement on Friday, May 6:

The Surface Transportation Board today announced that it will require certain railroads to submit service recovery plans as well as provide additional data and regular progress reports on rail service, operations, and employment.  These measures are meant to inform the Board’s assessment of further actions that may be warranted to address the acute service issues facing the rail industry and to promote industry-wide transparency, accountability, and improvements in rail service.

This decision follows extensive testimony on severe rail service issues reported by a wide range of witnesses — including agricultural, energy, and other shippers, as well as government officials, rail labor, and rail experts — during the Board’s April 26 and 27, 2022 public hearing in Urgent Issues in Freight Rail Service. The Board has also continued to review and monitor weekly rail service performance data, which indicate trends in deteriorating service. The decision focuses on the adequacy of recovery efforts involving BNSF Railway Company (BNSF), CSX Transportation (CSX), Norfolk Southern Railway Company (NS), and Union Pacific Railroad Company (UP), and it requires more comprehensive and customer-centric reporting of all Class I railroads’ service metrics.

“Our freight rail service hearing highlighted the grave concerns of shippers and others regarding freight rail service,” said Chairman Martin J. Oberman. “While the railroads have faced certain challenges over the last few years, the evidence produced at last week’s hearing is overwhelming that the railroads’ longstanding practice of reducing operating ratios by cutting employment levels, mothballing locomotives, and eliminating other essential resources are the central reasons  why farmers have been hours away from depopulating herds, manufacturing facilities have reduced operating hours, and shippers cannot get their products to market on time or receive essential raw materials for their companies. These failures are harming the nation’s economy and, in my view, are contributing to the inflationary forces affecting food and fuel in particular.”

“Requiring additional reporting from railroads may not be the final result of our hearing on service issues. Today’s decision is an immediate step the Board can take to enable needed monitoring of the improved efforts the railroads have been promising for months, and to determine if additional regulatory steps are necessary to promote reliable service.”

Today’s decision requires all Class I carriers to submit several specific reports on rail service, performance, and employment.  In addition, BNSF, CSX, NS, and UP are required to submit service recovery plans, progress reports, historical data, and participate in bi-weekly conference calls with Board staff.

A recording of the Board’s April 26 and 27, 2022 hearing in Urgent Issues in Freight Rail Service, may be viewed on the Board’s YouTube page.  Today’s decision in Urgent Issues in Freight Rail Service—Railroad Reporting, Docket No. EP 770 (Sub-No. 1), may be viewed and downloaded here.

Class I railroad officials have a two-day-long hearing before the federal Surface Transportation Board (STB) to prepare for later this month.

Reports from shippers to STB regarding poor service — the latest being a letter directly from the National Grain and Feed Association, a group representing more than 8,000 facilities — as well as a letter from Transportation Division President Jeremy Ferguson regarding precision scheduled railroading (PSR) and the self-inflicted worker shortages that have come with it have led up to the April 26 and 27 hearing.

The board, an independent and bipartisan federal agency charged with the economic regulation of various modes of surface transportation, primarily freight rail, announced the meeting April 7 in the light of indications of poor performance data.

“Rail network reliability is essential to the Nation’s economy and is a foremost priority of the Board. In recent weeks, the Board has heard informally from a broad range of stakeholders about inconsistent and unreliable rail service. The Board has also received reports from the Secretary of Agriculture and other stakeholders about the serious impact of these service trends on rail users, particularly with respect to shippers of agricultural and energy products. These reports have been validated by the Board’s weekly rail service performance data.”

Board Chairman Martin Oberman went into additional detail about how job cuts in particular have hampered the carriers.

“I have raised concerns about the primacy Class I railroads have placed on lowering their operating ratios and satisfying their shareholders even at the cost of their customers.  Part of that strategy has involved cutting their work force to the bare bones in order to reduce costs,” he said. “Over the last six years, the Class Is collectively have reduced their work force by 29% – that is about 45,000 employees cut from the payrolls.

“In my view, all of this has directly contributed to where we are today – rail users experiencing serious deteriorations in rail service because, on too many parts of their networks, the railroads simply do not have a sufficient number of employees.”

Carriers summoned to appear include BNSF Railway Company, CSX Transportation, Inc., Norfolk Southern Railway Company, and Union Pacific Railroad Company. Executive-level officials from the other three Class Is also were invited to attend, as were labor organizations and shippers.

The hearing will take place at the Board’s headquarters in Washington, D.C., with each session beginning at 9:30 a.m.

On Friday, April 1, the SMART Transportation Division sought Surface Transportation Board Administrator Martin Oberman’s intervention in ending the precision scheduled railroading (PSR) onslaught that has caused continual havoc in the United States’ supply chain and gutted the rail workforce.

SMART-TD President Jeremy Ferguson detailed the anti-worker attendance policies implemented by the nation’s largest freight rail carriers while echoing concerns expressed March 24 by the head of the National Grain and Feed Association (NGFA), a group representing more than 8,000 facilities and firms that provide goods and services to the nation’s grain, feed, and processing industries.

“We believe intervention from the STB is critically warranted and necessary to right the ship,” Ferguson wrote. “Simply put, the railroads cannot sustain the same level of production they had to prior to the advent of PSR given the number of drastic cuts they’ve made across their systems.”

Railroads have cut thousands of workers since the onset of PSR in 2017, placed thousands of locomotives in storage and have been running longer and slower trains to drive down their operating ratios (OR). NGFA President Mike Seyfert said this has led to “significant service disruptions,” for its represented companies served by BNSF, Union Pacific and Norfolk Southern, in particular.

“The service issues that our member companies are raising indicate that the problem is a network problem affecting entire regions of the country,” Seyfert said. “NGFA members have done as much as possible to keep animals fed, but the ability to stretch resources is exhausted.”

Rail carriers such as the Warren Buffett-owned BNSF, the Union Pacific and Norfolk Southern enjoyed record profits in 2021, even as rail traffic and carloads fell short of previous high marks. A main source of this revenue has been through tens of thousands of workforce cuts implemented well before and during the COVID-19 pandemic. With the service difficulties reported by NGFA, rail carriers have been doing less with less and reaping higher rewards at the expense of customers and workers.

“Not only has morale dropped to an all-time low, but employees are leaving the industry in unprecedented numbers,” Ferguson wrote to Oberman. “The freight rail network is at a breaking point. It cannot sustain any more reductions. Substantial changes must be made and they must be made quickly.”

According to union-collected data, Ferguson wrote, more than 500 employees have quit the industry since BNSF implemented a points-based policy Feb. 1. The “Hi-Viz” policy requires workers to be available to work 29 out of 30 days a month in order to avoid punitive deductions on their attendance records that eventually would lead to suspension and dismissal.

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The SMART Transportation Division is comprised of approximately 125,000 active and retired members of the former United Transportation Union, who work in a variety of crafts in the transportation industry.

Rep. DeFazio

WASHINGTON – Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-Ore.) sent a letter to the Surface Transportation Board (STB) opposing the approval of a trust for the proposed merger of the Canadian National (CN) and Kansas City Southern (KCS) railroads. In his letter, DeFazio stated that approving the trust is not in the public interest and would reduce competition.
“A single holding company responsible for this traffic would likely change rail traffic patterns in the significant areas of parallel service overlap and that would reduce the rail service options these 300 customers currently enjoy,” Chair DeFazio wrote in his letter. “I am also troubled that this combination of Class I railroads serving all three nations in North America will exacerbate U.S. job losses from cross-border trade agreements that prioritize profits over people and inflict harm on worker’s rights, consumer safety, and the environment.”
In April 2021, Chair DeFazio issued a statement after Canadian Pacific (CP) and CN each made separate multi-billion dollar offers to buy KCS, warning that the bidding war that ensued for the railroad threatened to usher in a new round of consolidations in the rail sector, ultimately threatening jobs and affecting shipping in the U.S.
DeFazio’s full letter to STB can be found below and here.
 


 
July 26, 2021
Ms. Cynthia Brown
Chief, Section of Administration
Office of Proceedings
Surface Transportation Board
395 E Street, S.W.
Washington, DC 20423
Re: Finance Docket No. 36514, Canadian National Railway Company, et al. – Control – Kansas City  Southern Railway Company, et al.
Dear Ms. Brown:
I am writing to express opposition to the voting trust proposed by Canadian National Railway Company (CN) in its proposed merger with Kansas City Southern Railway Company (KCS). I am concerned that this proposed trust is not in the public interest. The trust would reduce competition and prejudice the outcome of the Surface Transportation Board’s merger proceeding.
In its May 14, 2021, submission to this docket, the Antitrust Division of the U.S. Department of Justice explained how voting trusts reduce competition both in general for railroad mergers and in particular to the consideration of a voting trust for CN and KCS. In general, putting two formerly competitive businesses under a single holding company immediately reduces the parties’ incentives to engage in competition. While the Surface Transportation Board regularly allowed railroad trusts throughout the many railroad consolidations of the 1980s and 1990s, the board has made the requirements to approve a voting trust more stringent since 2001 as part of an overall reform of merger rules. Now, according to 49 CFR 1180.4(b)(4)(iv), applicants must demonstrate that trusts would be in the public interest. Approving a CN-KCS trust would signal to the rest of the rail industry that the STB is engaging in business as usual, despite the requirement to consider the public interest, and could launch a new round of mergers.
Specifically with regard to the potential for a CN-KCS trust, I am concerned that approximately 300 current customers overlap on the CN and KCS networks. A single holding company responsible for this traffic would likely change rail traffic patterns in the significant areas of parallel service overlap and that would reduce the rail service options these 300 customers currently enjoy. I am also troubled that this combination of Class I railroads serving all three nations in North America will exacerbate U.S. job losses from cross-border trade agreements that prioritize profits over people and inflict harm on worker’s rights, consumer safety, and the environment.
I trust that the Surface Transportation Board will look at the specific facts of this action and conclude that approving a trust is too much, too soon. Too much authority in one company to somehow keep two companies competing against each other that have significant service overlap and too soon because allowing the trust creates a new floor purchase price for any other potential competitive bidders for KCS railroad. 
Sincerely,
Peter A. DeFazio