Intel’s Troubles Run So Deep Even Bulls Are Wary

Jeran Wittenstein and Ian King
Thu, March 9, 2023 

(Bloomberg) -- With the most sell ratings in the Nasdaq 100 Stock Index, Intel Corp. is running ever lower on fans. Things have gotten so bad that even analysts brave enough to recommend buying are striking a cautious tone.

One of those, Srini Pajjuri at Raymond James, reasons that the chip designer’s “many problems” are unlikely to get much worse in the near term.

“We believe that the 2023 bar is low enough and expect the company to benefit from cyclical tailwinds and aggressive cost cuts,” Pajjuri wrote in a note last week, resuming coverage with an outperform recommendation.

Another advocate, Gus Richard at Northland Securities, is sticking to his outperform rating, even after saying that buying the stock in the wake of January’s ugly earnings report would likely make investors “physically ill.”

The root of Intel’s woes stems from ceding its leadership position in the crucial area of manufacturing technology to Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. Those companies provide outsourced production to Intel’s competitors such as Advanced Micro Devices Inc., allowing rivals to field better products and grab market share.

Of the 45 analysts tracked by Bloomberg who cover Intel, just nine have a buy equivalent rating on the stock. That’s after the shares slumped 45% in the past 12 months, putting the Santa Clara, California-based company on the verge of falling below $100 billion in market value for the first time in a decade.

With 11 sell ratings, Intel is in a league of its own in the Nasdaq 100, where more than 95% of recommendations are buy or hold. Tesla Inc. and Cognizant Technology Solutions Corp., the companies with the second-highest number of sell ratings in the gauge, have just six each.

Rarer still is a company of Intel’s size that has more sell ratings than buys. Only two other Nasdaq 100 members — Cognizant and Fastenal Co. — are in this position, and their market values are less than a third as big.

Chief Executive Officer Pat Gelsinger is spending heavily on new plants and products to try to reassert Intel’s dominance, a plan that’s costing billions in increased spending as his company’s revenue and cash flow shrink. The consequences of that strategy were made evident last month when Intel slashed its dividend by 66% to the lowest level in 16 years.

Those analysts standing by the company are telling investors they’ll need to be patient and wait for new products built with better production techniques to come to the rescue. No one is predicting a near-term upswing.

For Daniel Morgan, senior portfolio manager at Synovus Trust Co., the current loathing of Intel is reminiscent of the aftermath of the dotcom bubble in 2002 that proved to be a nadir for the stock.

“We’re not going to abandon the stock,” said Morgan, whose firm holds more than 400,000 Intel shares. “We’re going to see if over time they can get through this tough space. Eventually you find a bottom when it gets so oversold and everyone gets too negative on it.”

WORKERS CAPITAL
New York City’s Pension-Fund System Plagued by Inefficiencies



Martin Z. Braun
Thu, March 9, 2023 

(Bloomberg) -- New York City’s pension fund system for retired city workers is plagued by ballooning costs stemming from redundancies.

The cost to administer benefits to about 340,000 retirees and beneficiaries, has grown by more than 40% to about $270 million since 2018, according to an analysis of the funds’ financial reports by Bloomberg. A member of the city audit committee brought attention to the funds’ spending and inefficiencies at a recent meeting.

There’s five retirement funds — one for teachers, non-teaching staff, police officers, firefighters and civil servants — and each have separate offices, staff and computer systems. And two of those funds are in the middle of multimillion-dollar technology upgrades.

New York pays employees out of one payroll system, but “as soon as they retire, we need five different systems to figure out how to pay them their pension benefit,” said Bud Larson, a former senior city budget official who recommends streamlining operations, at a Jan. 23 city audit committee meeting. Created in 2009, the committee reviews financial statements and approves the city’s hiring of auditors and actuaries.

In 2018, the city’s Independent Budget Office estimated that consolidating the five pensions into three, could save $20 million in the first year, and then $41 million two years later. The police and firefighter funds, which have similar retirement plans, could merge into one system, IBO said in a report. And employees covered by the fund for school employees, like crossing guards and cafeteria workers, could be transferred to the civil servants’ or teachers’ pension.

Last month, New York City Comptroller’s Brad Lander called on the state’s Department of Financial Services to review the pension fund for schools’ non-teaching staff, where spending has grown about 170% in five years. New York City’s Board of Education Retirement System’s $35 million budget exceeds the budget of the police pension, which has almost twice the membership. Thomas Sheppard, co-chair of BERS, didn’t immediately respond to an email request for comment, while co-chair Donald Nesbit hung up the phone on a Bloomberg reporter.

Last year, the city contributed $9.6 billion to the funds, which have about $250 billion in assets. Employees contributed about $2.5 billion, according to the funds’ financial statements.

The five funds, independent entities created by state law, have more than 1,100 employees who work out of their own offices. The teachers’ pension, for instance, spends $8.6 million a year to rent space in a lower Manhattan tower that’s owned by Alabama’s retirement system. The police fund leases offices for $6.7 million in the Woolworth Building, a national landmark designed by Cass Gilbert.

While administration is a big contributor to costs, investment management remains the primary expense for pensions. Investment expenses rose to $1.5 billion for the year ending June 30, Those fees are deducted from pension contributions and earnings.

More than a decade ago, former New York City mayor Michael Bloomberg, the majority owner of Bloomberg News parent Bloomberg LP, and then Comptroller John Liu proposed consolidating the investment management of the five pensions into a single independent investment board. Managing money internally would save the city $1 billion a year, they said. That proposal was pulled because some unions wouldn’t be represented on the new board and individual pensions wanted to maintain control over investment decisions.

Mayor Eric Adams has championed efficiencies and promised to reduce bureaucratic bloat, but like previous administrations has to win over each pension’s board to kick off any overhaul. Although the mayor and comptroller are members of the pension boards, power resides with trustees representing politically formidable public employee unions.

Elected officials “aren’t too interested in upsetting the apple cart,” said Larson, who as of Feb. 16 is no longer a member of the audit committee. “Unions like the fact they get to control something.”

So rather than pursue a consolidation of pensions, which would require a change in state law, the funds could take gradual steps to spur efficiency, like centralizing tech operations, Larson added.

Deb Stewart, a spokesperson for the $80 billion civil servants pension, the New York City Employees’ Retirement System, or NYCERS, declined to comment about any potential consolidation of tech or staff. The fund has already embarked on a $230 million upgrade of its 1980s-era mainframe computer system, spending about $40 million so far.

Meanwhile, the $49 billion police pension is overhauling its software, which it estimated in 2018 would cost between $57 million and $76 million over six years. Nicole Giambarrese, general counsel at the New York City Police Pension Fund, declined to comment.

In an email, Lander said his office carefully reviews all five pensions’ budgets, particularly on tech projects.

All expenses undergo extensive layers of review, according to Jonah Allon, a spokesperson for Adams. “In our capacity as trustees of the funds, we heavily scrutinize every purchase,” Allon said.

Egypt withdraws from UN grain treaty prompting sadness and concern

A farmer tends wheat at a field in the El-Menoufia governorate, north of Cairo

Thu, March 9, 2023 
By Aidan Lewis and Sarah El Safty

CAIRO (Reuters) - Egypt, one of the world's largest wheat importers, has given notice it will withdraw at the end of June from a decades-old U.N. grains treaty, causing consternation among some other signatories to the convention.

Egypt's departure from the multinational Grains Trade Convention (GTC), which promotes market transparency to further trade cooperation, follows a period of turmoil in grains markets linked to the war in Ukraine and concerns about global food security.

Egypt signed the GTC, the only international treaty covering trade in grains, at its inception in 1995, and has been a member of the council that governs it since 1949. In February it submitted a request to withdraw with effect from June 30, 2023.

"This came without prior information. Several delegations within the IGC are surprised and sad about the decision," Arnaud Petit, executive director of the International Grains Council, which administers the treaty, told Reuters.

Several members would ask Egypt to reconsider its decision, he added.

Egypt's foreign ministry told Reuters in a statement that the decision was made after an assessment by the ministries of supply and trade concluded Egypt's membership in the council delivered "no added value".

Other signatories to the GTC include major grain importers and exporters such as the United States and the European Union.

Two sources familiar with the matter, who asked to remain anonymous, told Reuters that Egypt owed the IGC membership fees. The foreign ministry did not respond to a question about fees.

Traders told Reuters they did not expect an impact on the grains market, but one diplomatic source said that symbolically, Egypt's departure from a multinational organisation could be seen as concerning.

The war in Ukraine disrupted Egypt's wheat purchases last year and the government held talks with countries including India as it tried to diversify from Black Sea supplies.

Despite those efforts, Egypt relied on competitive Russian imports to boost its reserves through traditional tenders, some funded by the World Bank, as well as non-traditional direct offers.

The economic impact of the war also exacerbated a foreign currency shortage in Egypt, leading to a slowdown in imports, a backlog of goods in ports, and a $3 billion financial support package from the IMF.

In January, Egypt's government instructed ministries to curb non-essential spending until the end of the fiscal year.

(Reporting by Sarah El Safty and Aidan Lewis; Additional reporting by Nigel Hunt and Nafisa El Tahir; editing by Barbara Lewis)

I'm an Amazon employee who's worked remotely since 2021. Now that we're returning to the office soon, I worry I'll lose the productivity and work-life balance I perfected during the pandemic.

Sarah Jackson
Thu, March 9, 2023

An Amazon program manager who has never set foot in the office says she dreads the enforcement of Andy Jassy's return-to-office mandate come May.

Amazon will require that employees return to the office at least three days a week starting in May.


One employee who has worked remotely worries what will happen if her military family has to move somewhere without an office site.


"The biggest issue employees have with this is we want to understand how the decision was made, but we're not getting any answers," she said.

This as-told-to essay is based on a conversation with an Amazon program manager and military spouse who has worked remotely since joining the company. Insider has verified their employment, but isn't naming them in order to protect their career. This essay has been edited for length and clarity.

My husband has been active duty for 20-plus years. He's gone on multiple deployments, which meant moving every two years, so it was hard for me to keep my jobs. Every time we moved, I was starting over — always at the bottom again.

Raising my daughter while my husband was deployed, I was always lectured that I needed a backup plan whenever I had to call out because my daughter got sick. In one job interview, I was told, "Oh, you're a military spouse, you're going to be gone soon; we need somebody permanent."

Eventually, I found work in federal contracting, but I got out in anticipation of my husband looking to possibly retire. My work there couldn't be done remotely, so if my husband retired, I wouldn't have been able to take it with me.

At the time, Amazon was remote due to COVID, and I'd also heard that the company worked with military spouses when they had a change in duty station.

I joined Amazon in 2021, and they've let me work fully remotely as a military spouse; I haven't gone into the office once.

With Andy Jassy's return-to-office announcement, I'm concerned what it will mean for me. Will I be able to get an exception? My family will probably have to move this summer, and I don't know what will happen if we have to move somewhere that doesn't have an Amazon corporate site. My managers are supportive, but they don't know what this will look like yet. Amazon touts itself as being military-friendly, but when they roll out these policies, are they really thinking through how a blanket policy like this could affect us?

My particular team is all spread out, so my return to an office feels kind of pointless. If we're working well the way that we're doing it now, why change that?

I'm also more productive working from home — there's more noise and distraction in the office versus when I'm at home and can focus solely work.

I can flex my schedule for doctor's appointments or if a global partner I'm working with needs something. Working in the office will make these things more challenging.

Employees are wondering whether there will be enough room for everyone since Amazon hired a lot during the pandemic. Are people going to be assigned desks? I don't want to fight over desk space 3 days a week.

Amazon prides itself on being data-driven, so when you make a policy like this without numbers backing it up, it goes against our leadership principles. People are speculating that they're doing this because they want employees to quit without having to fire them, or because of tax breaks.

We want to understand how the decision was made, but we're not getting any answers. Leadership hasn't come out with any policies or procedures beyond the announcement.

I don't feel like there was any empathy or forethought of how this affects their entire workforce. We just went through two rounds of job cuts, so employee morale is down from the layoffs. People are already on edge, and now they're adding this, too. It's like, what else will they throw at us? I think there's been a loss of trust.

To say in 2021 that "there is no one-size-fits-all approach for how every team works best," and then to turn around and give us exactly that is a huge misdirection.

I love my job. I'm calling this return-to-office plan a speed bump, and I hope leadership will do the right thing to accommodate everyone, but it's going to be a waiting game to see how everything is rolled out.

Sanders introduces bill to raise minimum teacher pay to $60,000 a year


Stephen Neukam
Thu, March 9, 2023 

Sen. Bernie Sanders (I-Vt.) introduced legislation on Thursday that would make the minimum pay for public school teachers in the U.S. $60,000 a year, following calls from President Biden to give teachers a raise last month.

The Pay Teachers Act of 2023, co-sponsored by a number of lawmakers including Sens. Elizabeth Warren (D-Mass.) and Ed Markey (D-Mass.), would provide states with federal funds to establish minimum teacher salaries of at least $60,000 a year. It would also triple the funding of the Title I-A program, which provides funding to schools with a high percentage of students that come from low income backgrounds.

“It is simply unacceptable that, in the richest country in the history of the world, many teachers are having to work two or three extra jobs just to make ends meet,” Sanders said in a statement. “No public school teacher in America should make less than $60,000 a year.”

The bill would also triple funding for rural education programs and prop up programs to diversify the teacher workforce.

The push from Sanders to boost public teacher pay comes after Biden included a call for raises for public educators in his State of the Union address last month.

“Any nation that out-educates is going to out-compete us,” Biden said in the speech. “Let’s give public school teachers a raise.”

Sanders has blasted the pay of public school teachers in the U.S. in the past, and cited rising levels of stress and increasing trends of teachers quitting as the reason why the federal government needed to support them.

The legislative push by Sanders has garnered the support of the National Education Association, the largest labor union in the country.

Lawmakers in the House introduced legislation late last year to increase the minimum wage of teachers in the U.S. to $60,000. The American Teacher Act, sponsored by Reps. Frederica Wilson (D-Fla.) and Jamaal Bowman (D-N.Y.), would encourage states to raise their minimum salaries for teachers through a federal grant program.

Hiring is so hard for a Montana builder that it's flying in construction workers on a private jet

Zinya Salfiti
Thu, March 9, 2023 

Construction workers.Visoot Uthairam/Getty Images

A Montana builder finds it so hard to hire locally that it's flying in workers on a private jet instead.


It's more economical to rent the jet, it told the Federal Reserve's Beige Book survey.


The tight labor market is a target of the Fed as it tries to bring down inflation by hiking interest rates.

A Montana building company is finding it so hard to hire locally that it's flying in workers on a private jet instead.

That's what it told the latest Beige Book survey, which gathered information on economic activity from the Federal Reserve's regional branches up to late February.

"A Montana construction firm has found it economical to rent a jet to fly workers into one of its plants to fill operational needs," the report published Wednesday read.


The firm said hiring locals "would be our first choice, but we had to adjust when we could not staff that way."

It's yet another sign of a tight labor market, where openings outstrip the number of workers available to fill them. It won't please the Fed, which wants to see the market ease so that wage pressures won't drive inflation.

At the same time, though, the Beige Book showed a large drop of construction projects in Montana, likely the fallout from the Fed's aggressive interest-rate hikes, which have helped drive up borrowing costs.

Some companies could be "hoarding" workers — hiring them even though they don't have a current need for them, as the market is so tight, analysts have said.

Official figures showed the US added far more jobs than expected in January, coming in at 517,000 compared with predictions for 185,000.

The Fed has raised interest rates at a historically fast pace over the past year to try to cool high rates of inflation.

Friday will bring the February reading on jobs growth, and investors will watch for it for clues on what the Fed will do next in interest rates. A hot labor market tends to fuel inflation, as it puts upward pressure on wage growth.

Investors now expect the Fed to keep hiking for longer following Chair Jerome Powell's hawkish testimony before Congress this week. Expectations for a 50-basis-point increase in March helped drive a selloff in stocks in the wake of his comments.

Read the original article on Business Insider

Dangerous 'forever chemicals' were found in turf at the Philadelphia Phillies' old stadium after six former players died of same cancer, investigation finds

Aaron McDade
Thu, March 9, 2023

Veterans Stadium, where the turf used in the stadium may have contained dangerous "forever chemicals" for decades.

MLB via Getty Images

"Forever chemicals" were found in turf that was used in the Philadelphia Phillies' old stadium.


The chemicals were revealed as part of an investigation by the Philadelphia Inquirer.


The Inquirer was researching whether there was a link between the turf and ex-Phillies dying of brain cancer.

An investigation into the deaths of six former Philadelphia Phillies players from the same type of brain cancer has found that the artificial turf where they played for years contains dangerous compounds commonly referred to as "forever chemicals."

Following former Phillies relief pitcher David West's death last year, reporters from the Philadelphia Inquirer purchased pieces of the AstroTurf available for sale online to have them tested for chemicals. The artificial turf was used for years and replaced several times at Veterans Stadium, where both the Philadelphia Eagles and Phillies played from 1971 to 2003.

The Inquirer hired a lab to test for 70 different per- and polyfluoroalkyl substances, which are commonly referred to as PFAS or "forever chemicals." The Centers for Disease Control and Prevention considers them dangerous because they do not break down easily in the environment and can contaminate drinking water.

The tests performed by Eurofins Lancaster Laboratories Environmental Testing found 16 PFAS in the turf samples, including perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS), according to the Inquirer. PFOA and PFOS are two of the most-studied PFAS, as they have been produced and used the most.

The American Cancer Society says studies in animals and humans have linked the chemicals to certain types of cancer, but further research is required to clarify a definitive link.

The labs that performed the tests told the Inquirer that the levels present in the turf would be concerning if they were found in drinking water, but less is known about the effects of repeated skin contact with the chemicals.

The turf used in the stadium, where recorded temperatures were regularly over 100 degrees during summer Phillies games, also could have released chemical vapors that were inhaled by the players, according to the Inquirer.

The Phillies responded to the report, saying several brain cancer experts have told the organization there is no proven link between the turf and the deaths of the six players, who all died before the age of 60.

However, the Inquirer reported that other experts cited studies finding PFAS in brains — one by Chinese researchers that found the chemicals in brain tumor tissue, and another by Italian scientists that found PFAS in the brains of people who drank water contaminated with the chemicals.

The Phillies played their last game at the stadium in September 2003 and it was demolished in March 2004.

The six former Phillies — Tug McGraw, Darren Daulton, John Vukovich, John Oates, Ken Brett, and David West — all died of glioblastoma, an aggressive form of brain cancer. The tumor is most common among those in their demographic: white men between the ages of 40 and 70, a neurologist told the Inquirer.

But the rate at which it was found in the over 500 Phillies who played on the turf for years is about three times higher than the average rate, according to the Inquirer.

Feds looking into Norfolk Southern's handling of additional reported hazmat concern weeks after East Palestine

LUCIEN BRUGGEMAN
Thu, March 9, 2023

Federal regulators are looking into a previously unreported incident involving Norfolk Southern potentially mishandling a conductor's concern on a train carrying hazardous material just weeks after a similar defect precipitated the derailment in East Palestine, Ohio.

According to a complaint obtained by ABC News, on the morning of Feb. 27, a Norfolk Southern train was lurching through Stoneville, North Carolina, when a safety official manning a hot-box detector desk in Atlanta radioed the crew to alert them that car number 32 was "trending hot," but not hot enough to trigger an alarm, and that the nearly two-mile train should proceed.

The conductor of the train checked his manifest and made a startling discovery: Car 32 was carrying ethanol, and five cars away, another was carrying propane. Both were labeled as "dangerous" on the train's manifest, according to the complaint, which was filed with the Federal Railroad Administration.

MORE: NTSB to open special investigation into Norfolk Southern following recent derailments

The complaint alleges that the conductor, now concerned that the "trending hot" warning could lead to an overheated wheel, radioed the desk back and suggested that they stop the train and inspect it. But the dispatcher overruled the crew and urged them onward.

Meanwhile, a maintenance worker in the train's vicinity allegedly overheard the radio chatter and offered to observe the train as it passed by. The complaint states that when the worker reported that he hadn't witnessed any smoke, the crew was told to keep going some 40 miles south to Winston-Salem, North Carolina.

Crew members were "shocked," according to the complaint. To continue into a heavily populated area after being notified that a car carrying hazardous materials was "trending hot" could potentially pose a profound threat not only to the crew, but to adjacent communities, crew members feared.

Ultimately, the train was able to complete its trip without further incident. But the Federal Railroad Administration is now looking into the previously unreported Feb. 27 incident as part of a broader "safety assessment" of Norfolk Southern, a spokesperson confirmed. The agency said in a press release this week that its assessment would scrutinize "operational control center procedures and dispatcher training," among other things.

A spokesperson for Norfolk Southern did not immediately respond to a request for comment on the record.

PHOTO: Workers continue to clean up remaining tank cars, Feb. 21, 2023, in East Palestine, Ohio, following the Feb. 3, Norfolk Southern freight train derailment. (Matt Freed/AP, FILE)

The reported incident on Feb. 27 raises fresh safety and accountability concerns regarding Norfolk Southern and the rail industry at large, three weeks after a wheel bearing overheated on a Norfolk Southern train carrying hazardous materials through East Palestine, derailing the train and causing an environmental crisis for nearby residents.

Over the past two decades, major rail carriers and trade groups have spent more than $650 million lobbying in Washington, often advocating against stricter government oversight of its safety procedures, according to the federal watchdog OpenSecrets.

In the wake of the East Palestine derailment, a bipartisan group of lawmakers led by Ohio Sens. Sherrod Brown, a Democrat, and J.D. Vance, a Republican, introduced legislation that would tighten government-backed safety requirements for trains carrying hazardous materials.

But some Senate Republicans have balked at the bill, leaving its fate in question. Sen. John Thune, R-S.D., has said that "an immediate quick response heavy on regulation needs to be thoughtful and targeted."

Norfolk Southern, for its part, has already taken steps to self-regulate. Earlier this week, CEO Alan Shaw laid out a six-point plan to "immediately enhance the safety of its operations," the company said. The initiative will improve its defect detector network, pilot next-generation hot bearing detectors, and generally support a more stringent safety culture, according to officials.

MORE: NTSB on East Palestine toxic train derailment: '100% preventable'

On Wednesday, the Association of American Railroads, a trade group representing major freight railroad companies, announced its own list of new measures, including a commitment "to stopping trains and inspecting bearings whenever the temperature reading from a [hot bearing detector] exceeds 170° above ambient temperature" -- a lower threshold than previously required.

But federal regulators aren't waiting around. In addition to the Federal Railroad Administration safety assessment, the National Transportation and Security Board has taken the extraordinary step of opening a special investigation into Norfolk Southern.

The agency said Tuesday it would scrutinize the company's "organization and safety culture" after a series of incidents, including the derailment in East Palestine and another derailment in Springfield, Ohio, earlier this month. A press release did not list the reported Feb. 27 incident in North Carolina.

"The NTSB will conduct an in-depth investigation into the safety practices and culture of the company," the agency said in a statement. "At the same time, the company should not wait to improve safety and the NTSB urges it to do so immediately."

Rail unions are also pressing for more government oversight. After the death of a Norfolk Southern conductor earlier this week near Cleveland, Eddie Hall, president of the Brotherhood of Locomotive Engineers and Trainmen, called for "significant improvements in rail safety for both workers and the public."

MORE: East Palestine derailment: Timeline of key events in toxic train disaster

"All railroad accidents are avoidable," Hall said.

Shaw, the Norfolk Southern CEO, said in a statement Tuesday that Norfolk Southern would "cooperate fully" with the NTSB and continue to find new solutions to improve the company's safety practices.

"We are going to invest more in safety," Shaw said. "This is not who we are, it is not acceptable, and it will not continue."

Shaw is scheduled to testify Thursday on Capitol Hill before the U.S. Senate Environment and Public Works Committee.

Feds looking into Norfolk Southern's handling of additional reported hazmat concern weeks after East Palestine originally appeared on abcnews.go.com

Ohio senators blast Norfolk Southern business practices at East Palestine hearing



Zack Budryk
Thu, March 9, 2023

Both of Ohio’s senators took aim at the Norfolk Southern railway’s handling of an East Palestine, Ohio, derailment Thursday as CEO Alan Shaw testified before the Environment and Public Works Committee.

Sen. J.D. Vance (R-Ohio) and Sen. Sherrod Brown (D-Ohio), were present as witnesses rather than members of the Senate panel.

Vance criticized both Norfolk Southern and the federal response, and specifically invoked the railway safety reform bill he and Brown have co-sponsored. The measure would, among other provisions, give the federal government rather than railroads oversight over the heat sensors on railroad tracks.

A heat sensor registered as severely overheating just before the East Palestine derailment.

Vance said his GOP colleagues have discussed the bill “in complete good faith” but blasted a “particular slice of people” within the conservative movement “who seem to think that any public safety enhancement for the rail industry is a violation of the free market.”

Vance called such claims a “farce,” pointing to the federal subsidies and legal carve-outs the rail industry receives and the bipartisan measure Congress passed in December to block rail unions from striking.

“You cannot claim special government privileges and then resist basic public safety,” the freshman Ohio Republican said, going on to suggest that Republicans could not sincerely present themselves as aligned with the working class if they “do the bidding of a massive industry that is in bed with big government.”

Brown took aim at Norfolk Southern’s safety record, noting multiple accidents involving the company since December 2021, three of which resulted in worker deaths.

The railroad, Brown said, has “followed the Wall Street business model” by hoarding profits at the expense of safety measures, spending billions last year on stock buybacks alone.

“If Norfolk Southern had paid a little more attention to safety and a little less attention to profits, had cared a little more about the Ohioans along its tracks and a little less about its executives and shareholders, these accidents would not have been as bad for maybe not happened at all,” Brown said.

Norfolk Southern CEO Alan Shaw, who agreed to testify at the same hearing, issued an apology earlier Thursday morning. The Environmental Protection Agency (EPA) has asserted its authority under the Comprehensive Environmental Response, Compensation, and Liability Act to require the company to cover all costs associated with recovery and cleanup.



Norfolk Southern CEO refuses to support rail safety bill in Senate testimony

Norfolk Southern CEO refuses commitment to give all employees 7 days paid sick leave


Christopher Wilson and Rebecca Corey
Thu, March 9, 2023 

Norfolk Southern CEO Alan Shaw refused to endorse bipartisan rail safety legislation Thursday in his first congressional testimony since last month’s toxic train derailment in East Palestine, Ohio.

During the Senate Committee on Environment and Public Works hearing, Chairman Tom Carper, D-Del., asked Shaw if he would support the Railway Safety Act.

“We are committed to the legislative intent to make rail safer,” Shaw said. When asked if there were provisions he did support, Shaw cited tighter standards on tanker cars, more funding for first responders and an increase in the number of railside detectors that monitor trains.

Carper was relaying a question from Sen. John Fetterman, D-Pa., who did not appear at the hearing as he continues treatment for clinical depression.

Norfolk Southern president and CEO Alan Shaw testifying at a Senate Committee on Environment and Public Works hearing on Thursday. (Brendan Smiakowski/AFP via Getty Images)

Sen. Sherrod Brown, D-Ohio, and Sen. J.D. Vance, R-Ohio, introduced the Railway Safety Act last week with co-sponsors from both parties. The bipartisan bill would establish new safety measures for railroads, including setting nationwide requirements for devices “designed to automatically detect wheel bearing and other mechanical issues” as well as require railroads to create disaster plans and inform emergency response commissions of any hazardous materials going through their states.

It also increases fines for safety violations, and aims to address questions arising in the aftermath of the East Palestine incident, such as why Ohio wasn’t informed of the train’s hazardous cargo.

Early in the hearing, Vance called on his Republican colleagues to side with the people of East Palestine over the rail company. Prior to Shaw’s testimony, Brown said he was seeking a promise to support the bill.

“If this company is serious in its commitment to preventing more East Palestines in Ohio and across the country,” Brown said, “I hope today Mr. Shaw will endorse our common-sense bipartisan plan. Sen. Vance and I come from different parties, different philosophies, but on this we’ve come together for the people of our state, and I appreciate his work on this.”

Sen. Sherrod Brown. (Anna Moneymaker/Getty Images)

In an exchange with Sen. Ed Markey, D-Mass., Shaw said his company had already made major investments in safety: “Our safety stats, senator, continue to improve, and I am committed to making Norfolk Southern safety culture the best in the industry.”

“You’re not having a good month,” replied Markey. “It seems like every week there’s another accident that Norfolk Southern is a part of in our country.”

Hours before the hearing began, a Norfolk Southern train derailed in Alabama, with authorities saying there were no injuries and no hazardous materials present. On Saturday, a Norfolk Southern train derailed in Springfield, Ohio, in at least the fifth derailment the company has had in the state since October.

The company has seen an increase in both profits and accidents in recent years, as it runs longer and heavier trains while cutting its workforce; Politico reported Wednesday that Norfolk Southern had the biggest increase in its accident rate over the last decade among major freight carriers. ABC News reported Thursday that federal regulators were looking into a complaint alleging that Norfolk Southern ignored an incident last month regarding one of the company’s trains carrying hazardous materials in North Carolina.

In advance of the hearing, Norfolk Southern on Monday announced a six-point safety plan meant to address overheated bearings, which the National Transportation Safety Board said was the likely cause of the Feb. 3 derailment.

During Shaw's tenure, Norfolk Southern has seen an increase in both profits and accidents. (Brendan Smialowski/AFP via Getty Images)

Carper concluded the hearing by observing that Shaw had given few direct answers during questioning.

“I’m not a big fan, Mr. Shaw, of ‘yes’ [or] ‘no’ answers. That’s not usually my style,” Carper said. “But I didn’t think we heard as many unequivocal ‘yesses’ as I might like to have, and we might want to revisit that at another time.”

Earlier during the hearing, Vermont Sen. Bernie Sanders accused Shaw of sounding “like a politician” after Shaw refused to guarantee “at least seven paid sick days” to all of his employees, some of whom Sanders said currently have no paid sick leave — underscoring the exhaustion of a depleted workforce that employees have been describing in the aftermath of the disaster. Last week, a union official accused Norfolk Southern of endangering workers who were doing the cleanup.

“Paid sick days is not a radical concept in the year 2023. I am not hearing you make that commitment to guarantee that to all of your workers,” Sanders said after asking for a yes or no response.

“I’m committed to continuing to speak to our employees about quality of life issues that are important to them,” Shaw replied.

Sanders also pressed Shaw about covering the health care needs of residents affected by the train derailment. Residents have already reported a host of symptoms in the days and weeks after the disaster, including painful and difficult breathing, fatigue and rashes.

“You talked about covering the needs of the people of East Palestine,” Sanders said. “Does that include paying for their health care needs? All of their health care needs?”

“Everything is on the table, sir,” Shaw responded.

Sen. Bernie Sanders speaking on Thursday during a Senate hearing on the Norfolk Southern train derailment. (Anna Moneymaker/Getty Images)

Shaw was also pushed on the company’s previous lobbying against safety measures. “Since 2002, the rail industry has spent more than $650 million on federal lobbying, with another $60 million spent on state lobbying,” Sen. Sheldon Whitehouse, D-R.I., said, adding that Norfolk Southern was the fifth-biggest spender among rail companies. The company said it had “opposed additional speed limitations and requiring [upgraded electronic] brakes” in a 2015 lobbying disclosure.

Norfolk Southern says it has provided more than $21 million to East Palestine in the weeks since the crash. (The company had initially pledged $25,000 to support “the efforts of the American Red Cross and their temporary community shelters” and offered affected residents $1,000 “inconvenience fees.”) In 2021 and 2022, the company spent billions on stock buybacks and had announced intentions to spend billions more.

Scrutiny over the company came after one of its trains derailed minutes from the Ohio-Pennsylvania border on the evening of Feb. 3, with the governors of both states issuing a joint evacuation order for a roughly one-mile radius, since 11 of the cars contained hazardous materials.

On Feb. 6, Norfolk Southern burned off five tankers full of vinyl chloride in what it said was an effort to avoid a catastrophic explosion, but it resulted in images of a giant toxic smoke plume that quickly circulated on social media. Two days later, residents were urged to return home, despite a lingering smell in the air and reports of such symptoms as dizziness, headaches and rashes.

Norfolk Southern’s call to burn derailed train cars ‘jaw-dropping’, Senate hears

Chris Stein
Thu, March 9, 2023 

Photograph: Rex/Shutterstock

Norfolk Southern’s decision to call for the burning of five derailed train cars in East Palestine, Ohio, was “jaw-dropping” and a consequence of poor communication by the railroad, a local emergency management official told a Senate panel on Thursday.

Eric Brewer, director and chief of hazardous materials response for the emergency services department in Beaver county, Pennsylvania, just over the state line from East Palestine, described to the chamber’s environment and public works committee an initially chaotic response to the 3 February derailment.

Related: ‘No one is coming to save us’: residents of towns near toxic train derailment feel forgotten

“The boots on the ground crews were great to work with. It seems as bosses or management gets there, that’s where the communication failures start,” Brewer said.

The derailment of the train carrying vinyl chloride – used to produce PVC plastic – in the small town has left its more than 4,700 residents complaining of health effects like headaches, and fearing long-term pollution of the area. An interim report released last month by the National Transportation Safety Board (NTSB) noted the train’s crew received an alert about an overheating wheel bearing and tried to slow the train before it came off the tracks.

Brewer, whose agency was among those responding to the accident, described how Norfolk Southern initially raised concerns that one of the derailed tank cars was “starting to heat up” and could explode, leading to local officials creating an evacuation zone around the site of the accident. The railroad then suggested destroying that tank car in a controlled detonation, he said.

“We were assured this was the safest way to mitigate the problem,” he said. Then, Norfolk Southern asked to burn five cars, rather than just one.

“This changed the entire plan, as it would now impact a much larger area. I think this confusion was probably a result of the lack of communication from Norfolk Southern and the fact that they they weren’t present during these planning meetings,” Brewer said.

He later added: “The decision to go from the one tank car to the five was jaw-dropping,” and “that’s probably why we’re here today”.

His critique was echoed by Anne Vogel, director of Ohio’s Environmental Protection Agency, who said: “I do believe there were quite a few gaps in communication and missteps in the very eye hours following the derailment … things could have been handled better in the beginning hours.”

However, both Brewer and Vogel agreed that the communication issues had been ironed out since then. “I do believe that those gaps in communications have been addressed. I believe that teams are working well together on the ground today.”

The Democratic-led committee’s hearing featured the first appearance before Congress by Norfolk Southern’s CEO, Alan Shaw, who was pressed by lawmakers on how far his company would go to take care of Ohio and Pennsylvania residents affected by the derailment.

“I’m terribly sorry for the impact this derailment has had on the folks of that community. And yes, it’s my personal commitment and Norfolk Southern’s commitment that we’re going to be there for as long as it takes to help East Palestine thrive and recover,” Shaw said.

He also said that though the NTSB report found that the train’s crew was operating in a safe manner, “it is clear the safety mechanisms in place were not enough.”

Shaw was more taciturn about whether he would support the Railway Safety Act of 2023, proposed by Democratic and Republican lawmakers from Ohio and Pennsylvania, which would levy financial and regulatory consequences on railroads involved in accidents.

“We are committed to the legislative intent to make rail safer. Norfolk Southern runs a safe railroad and it’s my commitment to improve that safety and make our safety culture the best in the industry,” Shaw said.

Another topic of concern for senators was the extent of pollution in East Palestine and the surrounding communities. Environmental Protection Agency regional administrator Debra Shore said indoor air monitoring had not yet turned up any sign of widespread vinyl chloride contamination.

“As of March 4 approximately 600 homes have been screened through this program and no detections of vinyl chloride or hydrogen chloride have been identified,” Shore said, adding that air monitors haven’t detected any organic compounds “above levels of health concerns” since the derailed cars were extinguished.

The EPA’s assurances were not enough for East Palestine resident Jessica Conard, who traveled to Washington for the hearing.

“I think that what they’re saying is true. I think that the reports are true, I think that the tests are accurate. But I just think that it’s a matter of time before our groundwater is contaminated,” she told the Guardian.

Both of Ohio’s senators testified before the committee, and said they were determined to make sure the town’s long-term needs weren’t forgotten as public attention recedes.

“These communities have been abandoned too many times before,” said the Democratic senator Sherrod Brown. “My job, our job, is to hear their voice and to demand corporate accountability to bring this town back to the vibrant community we know that it can be again.”

‘Time for Choosing’: J.D. Vance Urges Fellow Republicans to Back Crackdown on Rail Industry

Jeff Zymeri
Thu, March 9, 2023

During a Thursday hearing of the Senate Committee on Environment and Public Works, Ohio senator J.D. Vance accused fellow Republicans of setting up roadblocks in his attempt to hold the rail industry accountable.

Vance and fellow Ohio senator Sherrod Brown are proposing the Railway Safety Act, which would boost safety requirements for trains carrying hazardous materials, call for more frequent inspections of rail cars, increase fines for safety violations, and greenlight $27 million to examine possible other safety improvements.

“Are we for big business and big government or are we for the people of East Palestine? It’s a time for choosing. Let’s make the right one,” explained Vance.


The committee gathered to hear testimony from those involved in responding to the derailment of a Norfolk Southern train in East Palestine, Ohio, where toxic chemicals were spilled and residents complain of health issues. One of them was under-fire Norfolk Southern CEO Alan Shaw.

While Vance explained he was frustrated at first with Norfolk Southern’s response, he has since been placated. However, for Vance, it’s too little too late for the industry at large.

Vance argued that free-market Republicans who are opposed to regulating the rail industry more tightly are hypocritical.

“This is an industry that enjoys special subsidies that almost no industry enjoys. This is an industry that enjoys special legal carve-outs that almost no industry enjoys,” said Vance. “This is an industry that just three months ago had the federal government come in and save them from a labor dispute. It was effectively a bailout and now they’re claiming before the Senate and the House that our reasonable regulation, our reasonable legislation, is somehow a violation of the free market. Well pot, meet the kettle, because that doesn’t make an ounce of sense.”

“Do we do the bidding of a massive industry that is embedded with big government or do we do the bidding of the people who elected us to the Senate into the Congress in the first place?” Vance asked.

Some Republicans have expressed concern that the legislation goes too far and many of the details are left to the Department of Transportation.

“We’ll take a look at what’s being proposed, but an immediate quick response heavy on regulation needs to be thoughtful and targeted,” explained Senator John Thune (R., Sd.) to The Hill. “Let’s define the problem. Let’s figure out what the solutions are and if there are things we need to fix, we’ll fix them.”

Thune added that he was “uncomfortable” giving “much more power” to Transportation Secretary Pete Buttigieg, who has come under intense criticism for his response to the East Palestine derailment.

For Vance, holding the rail industry accountable is something a Republican party that has experienced a profound realignment should champion.

“We are the party of working people in this country…We are the party of firefighters, of police officers, of the people who go to work pay their taxes, fight our country’s wars and keep our community safe,” Vance said. “We’re proud of that.”

Regarding East Palestine, the Ohio senator also expressed concern that the people there were not only overlooked in favor of big business, but also because of who they are.

“I think that our leadership, our media, and our politicians were slow to respond to this crisis in part because a certain segment of our leadership feels like the people of East Palestine are a little out of style,” he said.

“They have the wrong politics, they’re a little too rural, maybe a little too white,” Vance explained.

Shaw, who as chief executive Norfolk Southern leads one of the nation’s largest rail companies, expressed his deep apologies at the hearing for what had occurred and repeated over and over again that he’s committed to “doing the right thing.”

But Shaw had to contend with the symbolism of another train derailment in Alabama on the same day as his testimony, underscoring the crisis that has blanketed the rail company. The NTSB took the unusual step of opening a broader, special investigation into Norfolk Southern’s safety practices after a train conductor was killed in Cleveland earlier this week.

Senators pressed Shaw to make specific commitments in their allotted time, but the chief executive often broadened out to his larger commitment to doing the right thing. This led Senator Bernie Sanders (I., Vt.) to remark to Shaw: “With all due respect, you sound like a politician.”

Norfolk Southern's accident rate spiked over the last decade


Gene J. Puskar/AP Photo

Mike Lee and Ellie Borst
Wed, March 8, 2023 

The country’s major freight railroads were becoming more dangerous even before the train wreck in East Palestine, Ohio, that sparked a chemical fire and weeks of political controversy.

Norfolk Southern Corp., whose train derailed in East Palestine a month ago, had the biggest increase in its accident rate over the last 10 years, rising nearly three times as fast as the industry average, according to an analysis by POLITICO’s E&E News of Federal Railroad Administration data.

"Clearly, more commonsense regulations are needed to prevent disasters from happening,” said Mike Schade, a leader of the advocacy group Toxic-Free Future, which advocates for safer chemicals policies. “And we now have a major environmental disaster on our hands as a result."

Norfolk Southern's accident rate jumped 80.8 percent between 2013 and 2022, to 3.658 accidents per million miles traveled, from 2.023. Norfolk is one of seven "Class 1" railroads. Overall, the group had 27 percent more accidents, a rate of 3.067 accidents per million miles traveled, up from a rate of 2.415 in 2013.

The increased accident rate comes as the chemical industry predicts a rise in the amount of chemicals that will be shipped by rail, trucks and other forms of transportation.

Meanwhile, on Tuesday the National Transportation Safety Board announced a special investigation into Norfolk Southern’s "safety culture" after the railroad had its third serious accident in just over a month.

Another Norfolk Southern train derailed Saturday in Springfield, Ohio, and a conductor for the railroad was killed Tuesday by a dump truck as a train was moving through a steel mill in Cleveland, the company said.

The conductor, 46-year-old Louis Shuster, was a father and an Army veteran who had worked at the railroad since 2005, according to the Brotherhood of Locomotive Engineers and Trainmen.

“The NTSB is concerned that several organizational factors may be involved in the accidents, including safety culture,” the safety board said in a news release.

The American Association of Railroads argues that the safety data E&E News reviewed includes minor collisions that happen in train yards and that the number of “main line” incidents like the one in East Palestine has been dropping.

“If you were going to look at the main line accidents … 2022 was the lowest year in history overall,” Mike Rush, the trade group’s senior vice president of operations and safety, said in an interview.

Norfolk Southern, whose CEO is due to testify in a Senate hearing Thursday, declined to comment on the federal safety data but said in a prepared statement that the company is committed to safety.

“We diligently monitor our trains and infrastructure to identify potential hazards, and we invest approximately a billion annually into maintaining our infrastructure every year,” the statement said.

About 19 percent of U.S. chemical output travels by rail, according to AAR. The bulk — 57 percent — moves by truck, and the remainder by ships, barges and pipelines.

Trucks by far have the highest incident rate.

Of all transportation incidents involving hazardous materials in 2022, trucks were responsible for nearly 94 percent, according to Bureau of Transportation statistics. Trains were responsible for a little more than 1 percent.

Truck accidents have been rising, along with other road accidents, for a variety of reasons, including speeding and distracted driving, according to the Federal Motor Carrier Safety Administration.

"The road safety is nowhere near as good as rail safety,” said Nicholas Little, the director of railway education at Michigan State University. “There's less chance of a vehicle-to-vehicle accident … and, also, there's less habitation around the tracks, because it's not just freeways that the trucks will be going on, they'd be going on local roads, as well."

But not every chemical is suitable for rail transportation.

How chemicals are transported usually depends on the quantity needed and location of its final destination, Little said. And when rail accidents do happen, the potential for greater environmental damage is larger because trains can carry much bigger quantities of chemicals than trucks, he said.

"Even the biggest highway truck only carries a quarter of the volume that a railcar can carry,” Little said.

The FRA data includes derailments, collisions between trains and other on-rail problems. The numbers cover only the first 11 months of 2022.

Looking strictly at on-rail accidents, three of the freight railroads — Norfolk Southern, CSX Corp. and Union Pacific Corp. — had higher rates over the last 10 years.

Norfolk Southern had one of the lowest accident rates in 2013 and now has the second highest behind Union Pacific, which averaged 4.359 collisions per million miles last year.

The accident rate didn't appear correlated to the amount of freight on Norfolk Southern's system. The company's revenue ton mileage, a metric based on the revenue from one ton of freight shipped over one mile, rose from 2013 to 2018, before falling during the pandemic and bouncing back in the last two years, according to securities filings. Overall, the company had about an 8 percent drop in revenue ton miles over the last decade.

The accident rates at Union Pacific, CSX and Norfolk Southern are far lower than they were in the 1970s and '80s. But they also show a stark contrast to the other four Class 1 railroads — BNSF, Canadian National, Kansas City Southern and Canadian Pacific — where accident rates fell between 5 percent and 65 percent over the last decade.

Political oversight

To date, the bulk of the congressional investigations and other political fallout have focused on the Transportation Department and Environmental Protection Agency, not on the rise in accident rates across the industry.

Politicians from both parties have called for stricter safety standards, although it’s unclear if the proposals would have prevented the Ohio wreck.

The 149-car train derailed shortly before 9 p.m. on Feb. 3 just outside East Palestine, a town of about 4,700 that sits near the Ohio-Pennsylvania border. An automated system detected an overheated wheel bearing on one of the cars, which triggered an alarm.

The crew was trying to stop the train when a section of it derailed. Thirty-eight cars left the tracks and several of them caught fire.

Some of the cars contained hazardous chemicals, including vinyl chloride and other chemicals. Vinyl chloride, which is used to make common types of plastic, is a carcinogen that creates poisonous gases when it burns, and it also poses an explosion risk.

Three days after the train derailed, local and state officials decided to release the vinyl chloride into a trench and conduct a controlled burn, rather than risk a larger explosion. No one was killed or seriously injured, but the fire sent up a plume of black smoke that left residents complaining about lung irritation and foul odors.

EPA has tested air quality in more than 500 homes, while state officials test the local water system; they have found no hazardous chemical levels. Independent tests by Texas A&M University found high levels of chemicals in the air, which could lead to health problems if the levels persist.

Norfolk Southern announced a series of safety improvements Monday, including assessing how frequently its hot bearing detectors are spaced and testing a new type of hot bearing detector and a new type of acoustic sensor. The company is also developing new technology to search for track defects and is working with the rest of the rail industry on setting standards for when hot bearing detectors should trigger an alarm.

Norfolk Southern and the other six major railroads announced last week that they’re joining a program that allows employees to confidentially report close calls among trains without fear of retaliation.

Safety advocates have used the wreck to call for tighter regulations on rails, calls that have been echoed by several officeholders and by Transportation Secretary Pete Buttigieg.

Since the accident, DOT has announced "targeted track inspections" for routes known to carry hazardous materials and issued a safety advisory for certain aluminum tank car covers, a part that is now known to have melted during the Ohio crash.

Republicans on the House Oversight and Accountability Committee have announced hearings into Buttigieg’s handling of the wreck, including when he knew about the derailment. Democratic Sen. Joe Manchin of West Virginia asked Buttigieg for information about the adoption of a more modern braking system, known as electronically controlled pneumatic brakes.

The system allows engineers to activate the brakes simultaneously on every car in a train, which could help trains stop more quickly and smoothly. The conventional air brakes on most trains use an air hose that connects the locomotive to the freight cars, so it transmits the braking signal more slowly than an electronic signal.

Republican Sens. J.D. Vance of Ohio and Marco Rubio of Florida sent a letter to Buttigieg asking about both the length of the train and the number of crew members on board. Last week, the two senators were part of a bipartisan group that introduced a railroad safety bill.

Long trains, short crews

The Federal Railroad Administration defines a train with 150 or more cars as “very long” — one more than the train that derailed in East Palestine.

A 2019 report by the Government Accountability Office said the number of long trains on the rails was increasing and said crew training “is particularly important for their safe operation.”

The FRA is currently writing rules that would require two-person crews on more freight trains. The industry has resisted the idea, saying that personnel decisions should be made by the companies and arguing that automation can safely reduce the number of crew members.

Automated trains have been operated safely in other countries, including in Australia, where they’re used to transport long trains of iron ore, said Allan Zarembski, a professor of civil engineering at the University of Delaware who specializes in railroads.

All the proposed solutions come with benefits and drawbacks, Zarembski said. Using electronically controlled brakes would improve a train’s stopping power, but it costs more than conventional air brakes. And the system would have to be widely adopted because railroads often haul carloads of hazardous materials mixed with other freights cars.

Electronically controlled braking systems “are at the top of the list” for suggested safety improvements on freight trains, said Little, of Michigan State University. “But when you're dealing with over 1.6 million rail cars that are in operation, it's a very, very big task."

Michael Gorman, a rail consultant and faculty at University of Dayton’s school of business administration, echoed industry concerns, warning of “unintended consequences of poorly thought-out legislation."

Expensive rail safety improvements would create a higher cost of shipping and could turn businesses away from trains and toward the more accident-prone trucks, Gorman said.

“Right now, we're in reaction mode, and overreaction is likely to be the results,” Gorman said.

In a 2015 report on rail safety that was written to help the Pennsylvania Department of Environmental Protection cope with an influx of trains carrying crude oil, Zarembski made a series of recommendations.

Some of the steps are mundane, including slower speeds through populated area, while others are high-tech, such as more frequent use of automated track inspections. None of them were new ideas at the time, Zarembski said.

“I haven’t seen anything revolutionary coming down the pike … that’s being ignored by the railroad industry that’s an obvious no-brainer,” he said.

“I think the process is going to continue to be evolutionary rather than revolutionary.”