Mass furloughs reported at BNSF Railway operations in 4 states

Noi Mahoney
Fri, March 1, 2024 

BNSF Railway has reportedly furloughed 362 employees across the U.S. in a cost-cutting measure, according to the Transportation Trades Department with the AFL-CIO, the transportation labor federation representing U.S. rail unions and workers. (Photo: Jim Allen/FreightWaves)

BNSF Railway, one of the largest freight railroads in the U.S., has reportedly furloughed hundreds of employees in Kansas, Montana, Nebraska and Texas.

The furloughs were announced Tuesday, with 362 workers reportedly losing their jobs, according to the Transportation Trades Department (TTD) with the AFL-CIO, the transportation labor federation representing U.S. rail unions and workers.

“BNSF Railway callously announced it has furloughed over 362 mechanical department positions at numerous locations across their system,” Greg Regan, president of the TTD AFL-CIO, said in a letter obtained by FreightWaves. “BNSF has said that the slashing of these positions was necessary to realign with their business operations and to respond to business decline.”

Workers at BNSF terminals were reportedly furloughed at rail terminals in Kansas, Montana, Nebraska and Texas, according to posts on social media. While TTD AFL-CIO said the furloughs were in the mechanical department, social media posts indicated positions such as clerks, carmen, pipe fitters and laborers were also affected.

Fort Worth, Texas-based BNSF, whose total revenue in 2023 declined 8% year over year to $23.8 billion, said it is offering transfers and retraining for affected workers.

BNSF representatives issued a statement to FreightWaves about the furloughs:

“While the underlying economy currently lacks clarity, BNSF is pursuing and capturing growth in several areas. We have an imbalance of employees where growth is occurring among some of our mechanical work groups.

“We have team members in locations on the network where there isn’t sufficient work and simultaneously not enough team members where the growth is occurring. Work groups must be readjusted to ensure we have the right people in the right place at the right time to best serve our customers’ current transportation needs and be positioned for future growth.

“BNSF has offered location transfers with incentives targeted to those locations where there are open positions. BNSF has also offered craft transfers for mechanical employees to be retrained for other open positions on the BNSF network. There are currently several hundred open mechanical and engineering positions on our network. Our hope is that we can reallocate personnel through these incentive programs, so BNSF continues to grow with our customers.”

Regan said BNSF has notified the union that 150 mechanical jobs will be made available across the country for furloughed workers to reapply but could require workers to relocate and accept lower pay.

“If mechanical employees were to switch crafts they would be forfeiting their established seniority … by transferring to new locations, different mechanical crafts or the maintenance of way department positions,” Regan said. “They would be effectively starting their railroad careers over, as seniority is the cornerstone of work opportunities within the railroad industry.”

In the wake of the furloughs, the TTD AFL-CIO demanded immediate federal inspections of BNSF locomotives and rail cars.

“We urge the Federal Railroad Administration to immediately conduct unannounced focused inspections of all BNSF owned and leased locomotives and rail cars … and further issue non-compliance orders requiring BNSF to repair any defects before being permitted to utilize their locomotives and rail cars,” Regan wrote. “We have long-held concerns about numerous defects that are intentionally being ignored and neglected by BNSF because managers … are under pressure to perform work with an inadequate number of workers. These problems will only be exacerbated by the extreme mechanical department cuts that were carried out by BNSF.”

BNSF has over 40,000 employees and operates 32,500 miles of rail across the U.S.

Two days, two railroads in the spotlight: Missives flying over Norfolk Southern, Union Pacific


John Kingston
Fri, March 1, 2024 

The fur was flying Thursday and Friday over two class 1 railroads.

 (Photo: Jim Allen/FreightWaves)

Charges, countercharges and the missives were flying back and forth over the future of two Class 1 railroads as February came to an end, with leading government officials that regulate the rails leveling heavy criticism at two distinct players.

In the proxy battle roiling Norfolk Southern (NYSE: NSC), the activist investor group Ancora is recommending the replacement of eight new directors to the Norfolk Southern board. It also wants to replace CEO Alan Shaw with former UPS executive Jim Barber and name Jamie Boychuk, a former executive at CSX, to replace current COO Paul Duncan.

The scorecard for the criticism and the responses over a mere two days went like this:

— Martin Oberman, chairman of the Surface Transportation Board, ripped into Ancora Associates for its proxy battle over Norfolk Southern (NYSE: NSC) railroad. Oberman spoke to the Southeast Association of Rail Shippers 2024 Spring Meeting in Atlanta on Thursday, where he said Ancora “has nothing to say about what it could do better” than current management in running Norfolk Southern, adding, “I think we can assume that if Ancora succeeds in its bid to control NS, its next move will be to put the Brooklyn Bridge on the market.”

— Ancora didn’t have any public response to Oberman’s comments, but on Friday, it sent a letter to the Norfolk Southern board, just a few days after the railroad released its 2024 proxy statement. The proxy revealed that in 2023 — the year when Norfolk Southern labored under the fallout from the derailment in East Palestine, Ohio — NS CEO Alan Shaw had total compensation of $13.41 million, compared to $9.78 million a year before.

— The second blast from a government official aimed at a railroad came from Amit Bose, the administrator of the Federal Railroad Administration. In a letter addressed to UP CEO Jim Vena,

Bose criticized recent furloughs implemented at Union Pacific (NYSE: UNP). “It is imperative that UP prioritizes safety above all else and takes immediate steps to address this issue, an issue disproportionately affecting UP workers since your railroad continues to furlough employees at a rate, based on available data, far outpacing that of any of your Class I peers.” Bose wrote.

— Union Pacific quickly responded to Bose’s comments with a letter from Vena, which said the FRA head was portraying an “inaccurate correlation between natural workforce fluctuations and safety.”

Oberman was harsh in his assessment of Ancora’s motives. “Several weeks ago, Ancora wrote me a letter,” Oberman said, according to a transcript released by the STB. “The essence of their message was that they had taken a $1 billion dollar stake in NS in order for it — quote — ‘to become a safer railroad.’ Really? What hedge fund raises $1 billion to promote safety anywhere?”

Oberman, as he has done before, criticized railroad focus on its operating ratio (OR), with the STB head expressing concern that a goal to reduce OR can come at the expense of both safety and performance.

“Ancora principally and repeatedly focuses on a rapid lowering of the OR to drive cash payouts and raise its stock price, harshly criticizing present NS management for not making a lower OR the objective,” Oberman said. “We now know that this is wrong-headed thinking. Making OR the corporate objective is what led to elimination of thousands of workers which caused the service crisis.”

The reference to the service crisis was from earlier in his speech when he recapped STB actions to force service improvements during the enormous system backups of 2022.

Ancora’s Friday letter was addressed to Amy Miles, the non-executive chair of the NS board. The letter said that Ancora — which as an activist investor has previously trained its sights on Forward Air (NASDAQ: FWRD) and C.H. Robinson (NASDAQ: CHRW) — said Shaw has “presided over industry-worst operating results, sustained share price underperformance and an ineffective and tone-deaf response to the preventable derailment in East Palestine.” It said Anchor had “offered viable solutions in the form of exceptional people with a strategic vision.”

Norfolk Southern’s stock price in the last 52 weeks is up about 14%. During that time, its fierce rival for business east of the Mississippi, CSX (NASDAQ: CSX), is up about 23.7% while Union Pacific is up 21.5%.

Focusing in on Shaw’s pay package from 2023

On the issue of Shaw’s pay, the Ancora letter said shareholders were “baffled” at the decision to give the CEO a raise in the same year as the East Palestine derailment and the fallout from it.

“We challenge the Board’s determination that it had to adjust executive compensation in 2023 to ‘retain key talent,’” Ancora said, quoting a board statement. “We do not see how the Board could have actually viewed Mr. Shaw as a flight risk. In addition to being a more than 30-year insider at Norfolk Southern, he was a relatively new, unproven CEO off to an extremely rocky start. The fact that this decision was made suggests deference to management and a lack of respect for shareholders and stakeholders.”

UP furloughs at issue

In the back-and-forth surrounding Union Pacific, Bose said UP’s decision to furlough some worker is a sign that the railroad “has again chosen to prioritize cost-cutting measures over ensuring safe operations, jeopardizing the well-being of both UP’s workers and the public.”

“Furloughing maintenance of equipment workers puts a strain on workers across the railroad, leading to fatigue and potential errors that could have severe ramifications for both workers and the public,” Bose wrote.

In a letter signed by Vena, UP responded to Bose’s criticism with several key rebuttals.

— It cited several statistical points about derailments, that “serious” derailments were down 26% in 2023 from 2019 levels, track-related derailments had declined 28% in the past 10 years, and that UP had recorded an 8.7% improvement in mainline derailments in 2023 versus 2021.

— The Vena letter said “fluctuations in workforce needs are a natural component of operating the railroad … normal, cyclical and vary from year to year based on business needs, capital projects and weather.”

To support its criticism that Bose was not making distinctions among types of workers and railroad needs, Vena’s response said the Bose letter “combines different types of workers (Mechanical employees and Engineering employees) and work done on the railroad (equipment maintenance and capital projects), and therefore paints an incorrect and incomplete picture of the natural role workforce fluctuations play in operating a railroad year-round.”

“We’ve already begun seeing an increase in demand and have more employees working in January and February of this year,” Vena wrote.

The letter also said workers impacted by furloughs and layoffs can apply for other positions at Union Pacific.

BAD BNSF
Judge orders railway to pay Washington tribe nearly $400 million for trespassing with oil trains


This photo provided by the Washington Department of Ecology shows a derailed BNSF train on the Swinomish tribal reservation near Anacortes, Wash. on March 16, 2023. A federal judge on Monday, June 17, 2024 ordered BNSF Railway to pay nearly $400 million to a Native American tribe in Washington state after finding that the company intentionally trespassed when it repeatedly ran 100-car trains carrying crude oil across its reservation.

 (Washington Department of Ecology via AP)

BY GENE JOHNSON
June 17, 2024Share

SEATTLE (AP) — BNSF Railway must pay nearly $400 million to a Native American tribe in Washington state, a federal judge ordered Monday after finding that the company intentionally trespassed when it repeatedly ran 100-car trains carrying crude oil across the tribe’s reservation.

U.S. District Judge Robert Lasnik initially ruled last year that the railway deliberately violated the terms of a 1991 easement with the Swinomish Tribe north of Seattle that allows trains to carry no more than 25 cars per day. The judge held a trial earlier this month to determine how much in profits BNSF made through trespassing from 2012 to 2021 and how much it should be required to disgorge.

“We know that this is a large amount of money. But that just reflects the enormous wrongful profits that BNSF gained by using the Tribe’s land day after day, week after week, year after year over our objections,” Steve Edwards, chairman of the Swinomish Indian Tribal Community, said in a statement. “When there are these kinds of profits to be gained, the only way to deter future wrongdoing is to do exactly what the Court did today — make the trespasser give up the money it gained by trespassing.”

The company based in Fort Worth, Texas, said in an email it had no comment.

The tribe, which has about 1,400 members, sued in 2015 after BNSF dramatically increased, without the tribe’s consent, the number of cars it was running across the reservation so that it could ship crude oil from the Bakken Formation in and around North Dakota to a nearby refinery. The route crosses sensitive marine ecosystems along the coast, over water that connects with the Salish Sea, where the tribe has treaty-protected rights to fish.

Bakken oil is easier to refine into the fuels sold at the gas pump and ignites more easily. After train cars carrying Bakken crude oil exploded in Alabama, North Dakota and Quebec, a federal agency warned in 2014 that the oil has a higher degree of volatility than other crudes in the U.S.

Last year, two BNSF engines derailed on Swinomish land, leaking an estimated 3,100 gallons (11,700 liters) of diesel fuel near Padilla Bay.

AP correspondent Jackie Quinn reports on a massive damage award to a Native American tribe that accused a rail company of trespassing.

The tribe pointed out that a corporate predecessor of BNSF laid the tracks in the late 19th century over its objections. The tribe sued in the 1970s, alleging decades of trespassing, and only in 1991 was that litigation settled, when the tribe granted an easement allowing limited use of the tracks.

The easement limited rail traffic to one train of 25 cars per day in each direction. It required BNSF to tell the tribe about the “nature and identity of all cargo” transported across the reservation, and it said the tribe would not arbitrarily withhold permission to increase the number of trains or cars.

The tribe learned through a 2011 Skagit County planning document that a nearby refinery would start receiving crude oil trains. It wasn’t until the following year that the tribe received information from BNSF addressing current track usage, court documents show.

The tribe and BNSF discussed amending the agreement, but “at no point did the Tribe approve BNSF’s unilateral decision to transport unit trains across the Reservation, agree to increase the train or car limitations, or waive its contractual right of approval,” Lasnik said in his decision last year.

“BNSF failed to update the Tribe regarding the nature of the cargo that was crossing the Reservation and unilaterally increased the number of trains and the number of cars without the Tribe’s written agreement, thereby violating the conditions placed on BNSF’s permission to enter the property,” Lasnik said.

The four-day trial this month was designed to provide the court with details and expert testimony to guide the judge through complex calculations about how much in “ill-gotten” profit BNSF should have to disgorge. Lasnik put that figure at $362 million and added $32 million in post-tax profits such as investment income for a total of more than $394 million.

In reality, the judge wrote, BNSF made far more than $32 million in post-tax profits, but adding all of that up would have added hundreds of millions more to what was already a large judgment against the railway.

The tribe said it expects BNSF to appeal the ruling.

 

Denver, Colorado, BNSF worker killed in rail yard accident

Erik Schreiber

WSWS.ORG

A BNSF worker was killed in a rail yard accident in Denver, Colorado, on Wednesday, February 9. The worker, whose name has not been released, died after being struck by a train at the company’s Globeville yard, which is north of Coors Field. The National Transportation Safety Board (NTSB) is investigating the accident.

This tragedy took place one day after US District Judge Mark T. Pittman extended a restraining order that forbids BNSF workers to strike over the company’s new Hi-Viz attendance policy. The policy, which the company imposed unilaterally on February 1, allots each worker 30 points and deducts points for every time that a worker takes off from work, regardless of the reason. To earn points back, workers must be on call 24 hours per day for at least two weeks straight. The policy is being used to discipline or fire workers who lose their points and to ensure that workers are available for duty at almost all times.

BNSF Corwith rail yard with downtown Chicago in background (Photo by Richard Hurd, distributed under a CC-BY 2.0 license)

Even before the new policy was enacted, many BNSF workers did not have predictable schedules or assigned days off. The new policy will exacerbate workers’ difficulties in scheduling doctor’s appointments, spending time with their families or even getting needed sleep. An inevitable consequence of the policy will be an increase in workers’ fatigue, which will in turn increase the risk of serious accidents and deaths.

Three BNSF workers have died in the past year alone. In April 2021, conductor Buddy Strieker died in a switching accident while working at a customer facility in Louisiana, Missouri. Strieker was 56 years old and had worked for the company for more than 24 years.

In March, 2021, a worker was killed while working at the La Mirada rail yard near Los Angeles, California. Emergency personnel determined that two trains had converged and crushed the worker. Both deaths became the subject of NTSB investigations.

In 2021, four BNSF workers died on duty. This was half of the total worker fatalities for the entire railroad industry last year.

Many factors contribute to these accidents and fatalities. One factor is the relentless cost-cutting that the railroads, like every other industry, carry out to increase profits for their owners and shareholders. Another contributing factor is the increased deregulation of the industry. One turning point in this process was the 1996 dissolution of the Interstate Commerce Commission (ICC), which had been established in 1887 to regulate the railroads.

This deregulation has abetted an increase in mergers within the industry. BNSF itself is the product of a merger of the Burlington Northern Railroad and the Atchison, Topeka and Santa Fe Railway. This merger was completed in 1996—the year that the ICC was dissolved. BNSF is majority owned by billionaire Warren Buffett.

By requiring workers to be at the company’s beck and call, BNSF’s new Hi-Viz attendance policy will dramatically increase their stress, overwork, and fatigue. These conditions will only make fatal accidents more likely. Data compiled by a BNSF worker indicated that resignations had increased to an average of 31 per week shortly after the policy was introduced, with 57 workers resigning last week. Workers are seeking other jobs, and some are openly expressing thoughts about suicide.

Most BNSF workers are members of the Sheet Metal Air Rail Transportation-Transportation Division (SMART-TD) union or the Brotherhood of Locomotive Engineers and Trainmen (BLET). Opposed to any serious mobilization of workers to the Hi-Viz policy, the unions are enforcing the restraining order that BNSF obtained. Not only are the unions forbidding workers to strike, they also have instructed them not to make any comments at all to the press, essentially stripping workers of their right to free speech.

In addition to acting as policemen for the company, SMART-TD and BLET are diverting workers’ attention to the courts. The unions are filing legal appeals that they know will be fruitless, since the company is “overseen” by the Railway Labor Act of 1926. This act has made strikes illegal, for all practical purposes, for nearly a century. Indeed, in its latest legal filings, BNSF gloated that the courts routinely decide in favor of the railroads and that its victory in this dispute is a foregone conclusion.

To further distract workers’ attention from their treachery, SMART-TD and BLET have appealed to the Biden administration for help. The unions have argued that the company’s new policy compromises worker safety, knowing full well that Biden has subordinated workers’ safety, and even lives, to the interests of profit. His administration is ending the few remaining public health measures put in place to control the pandemic and has even ended its requirement that hospitals report daily COVID-19 deaths to the Centers for Disease Control and Prevention.

The conduct of SMART-TD and BLET during this struggle clearly illustrates that these organizations are engaged in a pantomime to cover up their activity as agents of BNSF. Even if workers’ opposition pushed the unions into declaring a strike, the unions’ leadership would quickly isolate and suffocate the strike to protect the company’s profits. For workers to conduct a genuine struggle, they must form independent rank-and-file committees, controlled democratically by workers themselves, to mobilize BNSF and all railroad workers in a common fight to end these conditions of exploitation.

If you are a railroad worker at BNSF or another company, contact the WSWS with your comments.

 

BNSF, Caterpillar, Chevron to Pilot Hydrogen-Powered Locomotive

Written by Marybeth Luczak, Executive Editor

BNSF, which has tested LNG-fueled and battery-electric locomotives, will now run a hydrogen fuel cell-powered unit on its lines.

BNSF, Caterpillar, Inc. and Chevron U.S.A., Inc. have teamed on a locomotive pilot to “confirm the feasibility and performance of hydrogen fuel for use as a viable alternative to traditional fuels for line-haul rail.”

The companies, which made the announcement on Dec. 14, have signed a memorandum of understanding (MOU) for the project.

Progress Rail, a Caterpillar company, will design and build a prototype hydrogen fuel cell-powered locomotive for line-haul and/or other rail service; Chevron will develop the fueling concept and infrastructure; and BNSF will make available its lines for prototype testing.

BNSF Vice President of Environmental John Lovenburg

“The proposed demonstration project is subject to the negotiation of definitive agreements with customary closing conditions, including regulatory approval,” the companies said. “If established, additional details about the hydrogen locomotive demonstration, including where the initial pilot will take place and its timing, will be released at a later date.”

The partnership follows Caterpillar and Chevron’s Sept. 9 report that they would jointly develop hydrogen demonstration projects in both transportation and stationary power applications.

Caterpillar Group President of Energy and Transportation Joe Creed

“BNSF is pleased to collaborate with Chevron and Progress Rail in piloting locomotives powered by hydrogen fuel cells,” BNSF Vice President of Environmental John Lovenburg said. “This technology could one day be a lower-carbon solution for line-haul service, as it has the potential to reduce carbon emissions and remain cost competitive.”

“Working with Chevron and BNSF will allow us to advance hydrogen technology across the industry,” Caterpillar Group President of Energy and Transportation Joe Creed said.

Chevron New Energies President Jeff Gustavson

“Our work with Progress Rail and BNSF is an important step toward advancing new use cases for hydrogen in heavy-duty transport, as we seek to create a commercially viable hydrogen economy,” Chevron New Energies President Jeff Gustavson said. 

BNSF has also tested LNG (liquified natural gas)-fueled and battery-electric locomotives.

In other developments, Union Pacific’s EMD 710 and 645 series locomotives can now run with a higher biodiesel fuel blend content. The Class I railroad reported on Aug. 19 that Progress Rail approved using up to 20% biodiesel blend in its units. Previously, the EMD 710s and 645s were approved to operate at 5%.

Following are more Railway Age articles on alternate technology-powered locomotives:

PHL to Test Progress Rail EMD® Joule

Southern Railway of BC Going ‘Green’ With Switcher Retrofit

Wabtec, GM Team on New Locomotive Power Systems

SERA To Build Hydrogen-Powered Switcher

BNSF/Wabtec BEL Pilot: The Results Are In and BNSF/Wabtec BEL Pilot Under Way

Zero-Emission Locomotives on U.S. Railways?

Fuel Cells and Batteries: The Future of Mobility?

The ‘H’ Factor

CP Embarks on Hydrogen Locomotive Pilot (With more information here: 2021 Railroader of the Year: Keith Creel, Canadian Pacific; CP Hydrogen Locomotive Pilot Powered by Ballard; First Look: CP’s Hydrogen Zero Emissions Locomotive; and CP: Green ‘Gas ’n Go’ Gets Grant.

Hydrogen Strategy for Canada’s Railways

OptiFuel Producing Natural Gas Switchers

Cummins QSK95 for Freight

Clean Diesel Options, Hydrogen, and the Future Of Cummins Rail – RAIL GROUP ON AIR

New From Cummins: QST30 Repower Module

Federal board sides with Navajo coal company, says BNSF Railway must ship to Canadian port


Tue, June 27, 2023 
HELENA, Mont. (AP) — A federal board has sided with one of the largest coal producers in the United States in a contract dispute with a major freight railroad, ordering BNSF Railway to transport at least 4.2 million tons of coal this year for overseas use.

The U.S. Surface Transportation Board’s 3-2 order last week said BNSF has the ability to fulfill the contract and still meet the needs of other shippers.

The Navajo Transitional Energy Co. sought the order in April. The company had filed a lawsuit late last year saying that major shortcomings in BNSF service cost it $150 million in lost revenue this year and another $15 million in charges when coal wasn’t loaded in a timely manner onto ships destined for Japan and Korea.

The transportation board said NTEC was highly likely to succeed on the merits of its claim.

“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,” Chairman Martin Oberman said in a statement Friday.

The Navajo Nation-owned energy company runs three coal mines in the Powder River Basin of Montana and Wyoming and another near Farmington, New Mexico — making it the third-largest coal company in the country.

The board also said NTEC was likely to suffer damage to its reputation as a dependable coal supplier, and that the order meets the public good because NTEC plays a critical role in the Navajo Nation’s economy.

BNSF Railway and NTEC did not immediately respond to emails Tuesday seeking comment about the board's decision or the status of the coal company's lawsuit.

The board says BNSF must move 23 trains of coal per month for NTEC beginning immediately, and another six trains per month when additional trains and crew become available. The additional capacity would total 1 million tons, the board said.

Like other freight railroads, BNSF struggled to deliver products on time and handle all the shipments that companies want to move because of worker shortages coming out of the coronavirus pandemic.

One of the dissenting board members, Patrick Fuchs, said NTEC didn’t meet its contracted tonnage requirements with BNSF in 2020 and that the company then sought a contract with BNSF without tonnage requirements.

The coal company's lawsuit, filed in December in federal court in Montana, alleged the railroad breached its 2022 contract to transport 5.5 million tons of coal. According to the lawsuit, BNSF said in the spring of last year that it could commit to delivering only 3.1 million tons of coal.

BNSF has said the 2022 contract called for transporting up to 5.5 million tons but did not set a minimum guarantee, Fuchs said in his dissent.

The lawsuit also alleged BNSF favored other coal companies that ship on the railroad.

The Associated Press

Canadian Pacific-Kansas City Southern merger to face environmental review

By Bill Stephens | November 12, 2021

Projected increase in train traffic prompts regulatory decisio


WASHINGTON – Canadian Pacific and Kansas City Southern will have to study the environmental impacts of their proposed merger, the Surface Transportation Board said today.

The railways will have to prepare an environmental impact statement partly due to projected increases in rail traffic on several line segments, most notably on CP’s former Milwaukee Road line from Sabula, Iowa, to Kansas City, Mo., the board said in its decision.

The board’s office of environmental analysis will host six online public scoping meetings from Nov. 30 to Dec. 9 to hear feedback from the public, communities, state and local agencies, and environmental groups regarding the potential impact of the merger.

A projected rise in rail traffic in CPKC lines was among the factors that triggered the need for an environmental review, the board said. The threshold for an environmental review is a 100% increase in gross ton miles over a particular line segment or an increase of at least eight trains per day.

CPKC main lines in Illinois, Iowa, Missouri, Kansas, Oklahoma, Arkansas, Louisiana, and Texas would exceed the threshold, the STB noted.

The environmental review must be completed before the board issues a decision on the merger.

BNSF and CN raise issues over CP-KCS merger

BNSF seeks more time regarding Mexico traffic; CN claims merger application filed too early

A train of auto racks with BNSF power meets Kansas City Southern locomotives at Robstown, Texas. BNSF is asking the Surface Transportation Board for more time to consider the impact of the CP-KCS merger on U.S.-Mexico rail traffic. (Bill Stephens)

WASHINGTON – BNSF Railway and Canadian National have raised issues with federal regulators’ timeline for review of the proposed Canadian Pacific-Kansas City Southern merger.

BNSF, in a filing posted today on the Surface Transportation Board’s website, said the 90-day comment period was insufficient given the ramifications of how the merger would affect traffic moving between the U.S. and Mexico.

The CP-KCS combination will create the first railroad to link Canada, the U.S., and Mexico. KCS is an important interchange partner for BNSF traffic moving over the Laredo, Texas, gateway, the busiest rail border crossing in North America.

“Notwithstanding the central importance of Mexico to the proposed transaction, the Application contains virtually no analysis of market conditions in Mexico, competition in Mexico involving cross-border movements, commercial and regulatory factors governing rate-setting for the Mexican portion of these cross-border movements, or future regulatory conditions that will affect access to Mexico,” BNSF wrote. “Based on the information in the Application about competitive conditions in Mexico, it is impossible to assess potential harm to U.S. shippers that compete with Canadian shippers for movements into and out of Mexico, or to assess the impact of the proposed transaction on shippers located on different U.S. rail lines. As far as the Application is concerned, conditions in Mexico are in a black box.”

BNSF asked the board to extend the comment period by 60 days, with a 60-day extension of all following deadlines on the merger review schedule.

The additional time would allow BNSF, other parties, and the STB to fully evaluate the merger’s cross-border impact and help regulators determine whether conditions should be imposed to ensure that three KCS Texas interchange locations — Laredo, Robstown, and Brownsville — will remain open on “reasonable rate and service terms.”

“Absent such conditions, shippers may be forced to use less efficient and more costly routes, and BNSF’s ability to provide fully competitive service over those gateways to and from points in Mexico pursuant to the UP/SP merger conditions will be at risk,” BNSF wrote.

CN claims CP and KCS filed their merger application too early in an attempt to “short circuit the public interest review process.” Under STB guidelines, CP and KCS should have to wait until between Dec. 15 of this year and Feb. 15, 2022 to file their merger application, CN argues.

“Applicants’ rush to file an application in violation of the rules also has serious implications for the Board’s public interest review in this merger proceeding. For example, the Application projects that the proposed transaction would generate increased train volumes that exceed the Board’s environmental review thresholds over wide ranges of Applicants’ networks stretching from Laredo to Chicago,” CN wrote in its filing. “Yet the Application fails to address the potential consequences of such traffic shifts for affected communities or identify any planned mitigation.”

The board has since ordered CP and KCS to prepare an environmental impact study for their merger.

 Commentary

BNSF Desperate for an Inflection

Written by Rick Paterson, Managing Director, Loop Capital Markets

• March 15, 2024
 
• Class I

• 
  

The Smokehouse Creek wildfire in Texas, which severed BNSF’s Transcon route on February 27, was the latest in a series of problems that have significantly slowed BNSF’s network and impacted service. After running well as recently as December, BNSF now finds itself in a hole.

We were hoping for an inflection in network velocity in the week following the wildfire effect, ending March 8, but instead we saw another sequential deterioration, from 25.1 to 24.8 mph. Within this number, Manifest service average speed fell from 22.3 to 21.7 mph, and Intermodal from 30.1 to 29.5 mph. All these speeds are materially lower than where they bottomed during the Arctic Blast in the third week of January, and except for Manifest you need to go back to June 2022—in the depths of the service crisis—to find comparable numbers.

Just as worrisome is the recent increase in cars on line. From a weekly average of 248,000 in 2023, it rose to 256,000 in January, 261,000 in February, and hit 263,326 the week of March 4, which is a high we haven’t seen since November 2019. Part of this is simply due to higher volumes as BNSF handily leads the industry in terms of YTD volume growth (+5.5%), but there’s also no doubt a worrying congestion element that threatens the speed at which the network can get back in sync.

A good way to adjust for volumes and sanity check car congestion is to look at “cars per carload,” which is basically a ratio of rolling stock relative to the loads they’re transporting. In the chart below, we’ve divided weekly intermodal units by two to account for double-stacking, and added that count to non-intermodal loads to get total “carloads.” We then divide cars on line by this number to generate cars per carload, with the lower the ratio the better. If we look at BNSF’s recent history, this averaged 1.6 in 2017 and 2018, then between 1.8-1.9 in each year between 2019 through 2023. You can see by the green columns that it sometimes spikes above two times, and it was 2.1 the week of March 4 (red circle). So even after adjusting for the current strength in intermodal volumes, there’s still some evidence of car congestion. Our assumption of a two-week bounce back from the wildfire effect now looks too optimistic, and it may be more of a slower grind higher.

In terms of critical resources, trains holding for crews and power also both deteriorated sequentially the week of March 4: crews from 31 to 39 per day, and power from 13 to 17 per day. To put this in perspective, these topped out at 167 (crews) and 38 (power) during the service crisis, so thankfully we’re nowhere near those levels. Also notice we haven’t yet used the “M word” (meltdown) because BNSF has ample crews; albeit there are some crew districts with too few and others with too many, so there are imbalances to iron out. This, of course, isn’t unique to BNSF.

The bottom line is that BNSF needs to be careful here, because after what we all went through in 2022 there will be no tolerance from its stakeholders and Washington D.C. for another bout of extended service failures from a major railroad. We’re at least assured that BNSF is a quality organization that fully understands the urgency of the situation.

Tags: BNSF, Loop Capital Markets, Opinion

BNSF Railway says it didn’t know about asbestos that’s killed hundreds in Montana town

WARREN BUFFET'S CHOO CHOO


- In this April 27, 2011, file photo, the entrance to downtown Libby, Mont., is seen. BNSF Railway attorneys are expected to argue before jurors Friday, April 19, 2024, that the railroad should not be held liable for the lung cancer deaths of two former residents of the asbestos-contaminated Montana town, one of the deadliest sites in the federal Superfund pollution program. 

(AP Photo/Matthew Brown, File)

- Dr. Lee Morissette shows an image of lungs damaged by asbestos exposure, at the Center for Asbestos Related Disease, Thursday, April 4, 2024, in Libby, Mont. BNSF Railway attorneys are expected to argue before jurors Friday, April 19, 2024, that the railroad should not be held liable for the lung cancer deaths of two former residents of the asbestos-contaminated Montana town, one of the deadliest sites in the federal Superfund pollution program.

 (AP Photo/Matthew Brown, File)

- Environmental cleanup specialists work at one of the last remaining residential asbestos cleanup sites in Libby, Montana, in mid-September. BNSF Railway attorneys are expected to argue before jurors Friday, April 19, 2024, that the railroad should not be held liable for the lung cancer deaths of two former residents of the asbestos-contaminated Montana town, one of the deadliest sites in the federal Superfund pollution program.

 (Kurt Wilson/The Missoulian via AP, File)

BY MATTHEW BROWN AND AMY BETH HANSON
 April 18, 2024


HELENA, Mont. (AP) — BNSF Railway attorneys are expected to argue before jurors Friday that the railroad should not be held liable for the lung cancer deaths of two former residents of an asbestos-contaminated Montana town, one of the deadliest sites in the federal Superfund pollution program.

Attorneys for the Warren Buffett-owned company say the railroad’s corporate predecessors didn’t know the vermiculite it hauled over decades from a nearby mine was filled with hazardous microscopic asbestos fibers.

The case in federal civil court over the two deaths is the first of numerous lawsuits against the Texas-based railroad corporation to reach trial over its past operations in Libby, Montana. Current and former residents of the small town near the U.S.-Canada border want BNSF held accountable for its alleged role in asbestos exposure that health officials say has killed several hundred people and sickened thousands.

Looming over the proceedings is W.R. Grace & Co., a chemical company that operated a mountaintop vermiculite mine 7 miles (11 kilometers) outside of Libby until it was closed 1990. The Maryland-based company played a central role in Libby’s tragedy and has paid significant settlements to victims.

Asbestos victims in Montana want Buffett’s railroad company held responsible

U.S. District Court Judge Brian Morris has referred to the mining company as “the elephant in the room” in the BNSF trial. He reminded jurors several times that the case was about the railroad’s conduct, not W.R. Grace’s separate liability.

Federal prosecutors in 2005 indicted W. R. Grace and executives from the company on criminal charges over the contamination in Libby. A jury acquitted them following a 2009 trial.

How much W.R. Grace revealed about the asbestos dangers to Texas-based BNSF and its corporate predecessors has been sharply disputed.

The railroad said it was obliged under law to ship the vermiculite, which was used in insulation and for other commercial purposes, and that W.R. Grace employees had concealed the health hazards from the railroad.

Former railroad workers said during testimony and in depositions that they knew nothing about the risks of asbestos. They said Grace employees were responsible for loading the hopper cars, plugging the holes of any cars leaking vermiculite and occasionally cleaned up material that spilled in the rail yard.

Former rail yard worker John Swing said in previously recorded testimony that he didn’t know asbestos was an issue in Libby until a 1999 newspaper story reporting deaths and illnesses among mine workers and their families.

Swing also said he didn’t think the rail yard was dusty. His testimony was at odds with people who grew up in Libby and recall dust getting kicked up whenever the wind blew or a train rolled through the yard.

The estates of the two deceased plaintiffs have argued that the W.R. Grace’s actions don’t absolve BNSF of its responsibility for knowingly exposing people to asbestos at its railyard in the heart of the community.

Their attorneys said BNSF should have known about the dangers because Grace put signs on rail cars carrying vermiculite warning of potential health risks. They showed jurors an image of a warning label allegedly attached to rail cars in the late 1970s that advised against inhaling the asbestos dust because it could cause bodily harm.

BNSF higher-ups also should have been aware of the dangers because they attended conferences that discussed dust diseases like asbestosis in the 1930s, attorneys for the plaintiffs argued.

The Environmental Protection Agency descended on Libby after the 1999 news reports. In 2009 it declared in Libby the nation’s first ever public health emergency under the federal Superfund cleanup program.

The pollution in Libby has been cleaned up, largely at public expense. Yet the long timeframe over which asbestos-related diseases can develop means people previously exposed are likely to continue getting sick and dying for years to come, health officials say.

Family members of Tom Wells and Joyce Walder testified that their lives ended soon after they were diagnosed with mesothelioma. The families said the dust blowing from the rail yard sickened and killed them.

In a March 2020 video of Wells played for jurors and recorded the day before he died, he lay in a home hospital bed, struggling to breathe.

“I’ve been placed in a horrible spot here, and the best chance I see at release — relief for everybody — is to just get it over with,” he said. “It’s just not something I want to try and play hero through because I don’t think that there’s a miracle waiting.”
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Brown reported from Billings, Mont.

BNSF

Asbestos victim's dying words aired in wrongful death case against Buffet's railroad

AMY BETH HANSON and MATTHEW BROWN
 Mon, April 15, 2024 


 Environmental cleanup specialists work at an asbestos cleanup site in Libby, Montana, on Sept. 13, 2018. A lawsuit being tried in federal court alleges BNSF Railway knew the vermiculite it was hauling through Libby from a nearby mine was tainted with asbestos. The railroad denies the allegations. 

(Kurt Wilson/The Missoulian via AP, File)

HELENA, Mont. (AP) — Thomas Wells ran a half-marathon at age 60 and played recreational volleyball until he was 63. At 65 years old, doctors diagnosed him with mesothelioma, a rare and aggressive lung cancer linked to asbestos exposure.

“I’m in great pain and alls I see is this getting worse,” the retired middle school teacher from Oregon said in a video deposition recorded in March 2020, four months after his cancer diagnosis. He died a day later.

Portions of Wells' deposition were replayed Monday in a federal courtroom for a jury hearing a wrongful death case against Warren Buffett’s BNSF Railway.

The estates of Wells and a second mesothelioma victim accuse the railroad and its corporate predecessors in a lawsuit of polluting Libby, Montana, with asbestos-contaminated vermiculite from a nearby mine that was transported through the remote town’s rail yard in boxcars for much of last century.

BNSF attorneys have denied the claims and are scheduled to lay out their defense beginning Tuesday. They've said that railroad officials were unaware the shipments were hazardous.

A cleanup of the contaminated rail yard in downtown Libby was largely completed in 2022.

The trial is the first alleging BNSF exposed community members in Libby to asbestos fibers that can cause lung scarring and mesothelioma. It comes almost 25 years after federal authorities arrived in the community not far from the U.S.-Canada border following news reports about toxic asbestos dust causing widespread deaths and illnesses among mine workers and their families.

Numerous other lawsuits from asbestos victims have been filed against BNSF.

The W.R. Grace & Co. mine that operated on a mountaintop outside Libby produced contaminated vermiculite that health officials say has sickened more than 3,000 people and led to several hundred deaths.

The U.S. Environmental Protection Agency in 2009 declared the first-ever public health emergency during a Superfund cleanup in Libby. It’s one of the deadliest sites under the federal pollution program. The agency banned remaining industrial uses of asbestos last month.

Wells said in the 2020 deposition that he believed he was sickened while working for the U.S. Forest Service in the Libby area for about six months each in 1976-78 and again in 1981. He never went to the vermiculite mine, he said, but described wind kicking up dust along the railroad tracks at the rail yard.

“It was dusty. You know, you’d wash the car and pretty soon you have to wash the car again,” Wells said.

The second plaintiff, Joyce Walder, played in the same area in her youth before dying of mesothelioma at 66.

Mine operator W.R. Grace repeatedly told the railroad’s corporate predecessors that the product it was shipping through Libby was safe, according to BNSF attorney Chad Knight. Local officials also believed the vermiculite was safe, and the railroad couldn’t legally reject the loads, he said.

“You have to go back and look at what the information was at the time,” Knight told jurors during opening statements last week. “The materials coming from the mine were being used all over town. No one suspected there was anything unsafe about the products.”

Knight has also sought to cast doubt on whether the BNSF rail yard was the source of the plaintiffs’ medical problems, since asbestos dust was prevalent in the Libby area when the mine was operating.

Tainted vermiculite was used in Libby's high school track, a baseball field next to the rail yard, as a soil amendment in home gardens and as insulating material in homes across the U.S.

The plaintiffs’ attorneys showed jurors several insurance claims for tons of asbestos that leaked out of rail cars in the 1970s and did not make it to its destination, and an example of a placard that was put on a rail car in the late 1970s saying it contained asbestos fibers and to avoid creating dust.

Residents of Libby have described encountering vermiculite along BNSF tracks where children in the community often played.

When kicked up by wind or a passing trains, asbestos fibers from that vermiculite “can remain airborne for hours if not days depending on conditions,” said plaintiffs expert Steven Compton, who directs the private laboratory MVA Scientific Consultants in Georgia.

Thomas Wells' son Sean Wells described his father during Friday testimony as a “wonderful teacher” and “just the best dad,” who he could talk to about anything and coached their sports teams.

“There’s not a day that goes by that I don’t think about my dad and wish I could pick up the phone and call him,” Sean Wells said. “He wasn’t only our dad. ... He was our best friend. We did everything together.”

Walder died in October 2020 — less than a month after her diagnosis.

She grew up in Libby and could have been exposed to the microscopic, needle-shaped asbestos fibers while fishing and floating on a river that traveled past a spot where a conveyor belt loaded vermiculite onto train cars, according to court records. Additional exposure may have also come from playing around a baseball field near the rail yard, walking along the railroad tracks and spending time at the home of a friend who lived near the rail yard. She also returned to Libby to visit family.

After her diagnosis Walder underwent chemotherapy and surgery. In a follow-up appointment Walder's family was told the cancer had come back even worse.

“I hope no one has to see the light of hope pass from a parent’s or loved one’s eyes, because that is something you will never forget,” Walder’s daughter, Chandra Zechmeister, testified Monday.

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Brown reported from Billings, Mont.