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STB Threatens to Fine Railroads

The Surface Transportation Board is so angry with the nation’s four largest railroads because they failed to meet orders requiring them to submit performance data reports and service improvement plans that it is threatening fine them.

“We are in the middle of a rail service crisis and the board continues to receive reports about persistent, acute and dramatic problems in rail transportation, disrupting critical supply chains and shutting down companies.” said STB Chairman Martin Oberman on June 13.

“The freight rail industry is currently struggling to provide adequate rail service, yet the service recovery plans we received are woefully deficient and do not comport with the spirit or the letter of the board’s order,” he added.

Hearings held earlier this year by the STB and Congress laid bare a national rail system in near total disarray. Fall elections are under threat because of failure to deliver paper used for ballots. Dairy cattle and other livestock face starvation because the disruption of feed shipments.

Much of the blame for these service failures stems from the major railroads’ extreme cost cutting – including firing tens of thousands of workers, who cannot easily or quickly be replaced, and then overworking the remaining staff until many leave.

Almost every corner of the economy has been impacted by service failures, including agricultural commodities, fertilizers and chemicals used for the production of drinking water to fuel. Top railroads executives blamed the Covid 19 pandemic, but the one Class 1 railroad that did not embrace extreme cost cutting, Kansas City Southern, was able to offer crews to railroads who were short staffed.

STB ordered the railroads to file regular performance data reports along with detailed action plans outlining how they intend to return to acceptable levels of service. Orders were directed at BNSF Railway, CSX Transportation, Norfolk Southern Railway and Union Pacific Railroad.

It was these railroads’ failure to turn in acceptable data and detailed plans that outraged the STB. “The plans simply failed to instill confidence that the carriers have a serious approach to fixing a problem caused by their own lack of preparedness to respond to external shocks and fluctuations in demand, including especially short-sighted management of labor forces and other resources,” Oberman charged.

“While the railroads must always comply with board orders, it is particularly disturbing that the railroads failed to comply with the order requiring them to file adequate service recovery plans. Under circumstances where service is not meeting customers’ needs, this is not too much to ask from highly sophisticated companies with important public responsibilities.”

The railroads omitted important information needed to assure the board and rail industry stakeholders that the largest “are addressing their deficiencies and have a clear and measurable trajectory for doing so,” Oberman said. Of particular concern was that UP and NSR did not provide six-month targets for achieving their performance goals.

The STB chairman also informed the railroads that they could face fines. “I had expected a better response from the carriers to the board’s previous order, and now with more explicit instructions, which should not have been needed, there will be no excuse for continued lack of compliance.”

The board hopes its threatened fines will work. However, this seems unlikely when you consider that failure to comply could lead to the imposition of fines of up to $8,736 per day. This may sound mighty impressive until you realize that it amounts to a grand total of $3,188,640 over a 365-day year.

This amounts to little more than chump change for these giant corporations. For 2021, BNSF’s annual revenue totaled $23.3 billion, Union Pacific’s was $23.5 billion, CSX’s $12.5 billion, and Norfolk Southern’s $11.14 billion. Each probably could pay the fines out of their petty cash.

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