Pluralistic: Big Train managers earn bonuses for greenlighting unsafe cars (15 Nov 2023)

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A 1927 photo of a train derailment near Heads, MS, in which a train car protrudes over empty space with a collapsed bridge beneath it. It has been altered to add an image of an impatient, suited man looking at his watch while holding some papers, looming over the train.

Big Train managers earn bonuses for greenlighting unsafe cars (permalink)

Almost no one knows this, but last June, a 90-car train got away from its crew in Hernando, MO, rolling three miles through two public crossings, a ghost train that included 47 potentially explosive propane cars. The "bomb train" neither crashed nor derailed, which meant that Grenada Railroad/Gulf & Atantic didn't have to report it.

This is just one of many terrifying near-misses that are increasingly common in America's hyper-concentrated, private equity-dominated rail sector, where unsafe practices dominate and whistleblowers face brutal retaliation for coming forward to regulators.

These unsafe practices – and the corporate policies that deliberately gave rise to them – are documented in terrifying, eye-watering detail in a deeply reported Propublica story by Topher Sanders, Jessica Lussenhop,Dan Schwartz, Danelle Morton and Gabriel Sandoval:

It's a tale of depraved indifference to public safety, backstopped by worker intimidation. The reporting is centered on railyard maintenance inspectors, who are charged with writing up "bad orders" to prevent unsafe railcars from shipping out. As private equity firms consolidated rail into an ever-dwindling number of companies, these workers face supervisors who are increasingly hostile to these bad orders.

It got so alarming that some staffers started carrying hidden digital recorders, so they could capture audio of their bosses illegally ordering them to greenlight railcars that were too unsafe for use. The article features direct – and alarming – quotes, like supervisor Andrew Letcher, boss of the maintenance crews at Union Pacific's Kansas City yard saying, "If I was an inspector on a train I would probably let some of that nitpicky shit go."

Letcher – and fellow managers for other Tier 1 railroads quoted in the piece – aren't innately hostile to public safety. They are quite frank about why they want inspectors to "let that nitpicky shit go." As Letcher explains, "The first thing that I’m getting questioned about right now, every day, is why we’re over 200 bad orders and what we’re doing to get them down."

In other words, corporate rail owners have ordered their supervisors to reduce the amount of maintenance outages on the rail lines, but have not given them additional preventative maintenance budgets or crew. These supervisors warn their employees that high numbers of bad orders could cost them their jobs, even lead to the shutdown of the car shops where inspectors are prone to pulling dangerous cars out of service.

It's a ruthless form of winnowing. Gresham's Law holds that "bad money drives out good" – in an economy where counterfeit money circulates, people preferentially spend their fake money to get it out of their hands, until all the money in circulation is funny money. This is the rail safety equivalent: simply fire everyone who reports unsafe conditions and all your railcars will be deemed safe, with the worst railcars shipped out first. A market for lemons – except these aren't balky used sedans, they're unsafe railcars full of toxic chemicals or explosive propane.

When cataclysmic rail disasters occur – like this year's East Palestine derailment – the rail industry reassures us that this is an isolated incident, pointing to the system's excellent overall safety record. But that record is a mirage, because the near-misses don't have to be reported. Those near-misses are coming more frequently, as the culture of profit over safety incurs a mounting maintenance debt, filling America's rails with potential "bomb cars."

Rail mergers and other forms of deregulated, anything-goes capitalism are justified by conservative economists who insist that "incentives matter," and that the profit motive provides the incentive to improve efficiency, leading to lower costs and better service. But the incentive to externalize risk, kick the can down the road, and capture regulators rarely concerns the "incentives matter" crowd.

Here's an incentive that matters. Rail managers' bonuses – as much as a fifth of their take home pay – are only paid if the trains they oversee run on time. Inspectors have recorded their managers admitting that they have quotas – a maximum number of bad orders their facility may produce, irrespective of how much unsafe rolling stock passes through the facility.

Inspectors have caught their managers removing repair order tags from cars they've flagged as unsafe. Inspectors will log orders in a database, only to have the record mysteriously deleted, or marked as serviced when no service has occurred. Some inspectors have seen the same cars in their yard with the same problems, and repeatedly flagged them without any maintenance being performed before they're shipped out again.

Former managers from Union Pacific, CSX and Norfolk Southern told Propublica that they operated in an environment where safety reports were discouraged, and that workers who filed these reports were viewed as "complainers." Workers furnished Propublica with recordings of rail managers berating them for reporting persistent unsafe conditions to the Federal Railroad Administration. Other workers from BNSF said that they believed that their bosses were told when they called the company's "confidential" work-safety tipline, setting them up for retaliation by bosses who'd falsified safety reports.

Whistleblowers who seek justice at OSHA are stymied by long delays, and while switching their cases to court can win them cash settlements, these do not get recorded on the company's safety record, which allows the company to go on claiming to be a paragon of safety and prudence.

The culture of retaliation is pervasive, which explains how the 47-cars worth of propane on the "bomb train" that rolled unattended over three miles of track never made the news. There is a voluntary Close Call Reporting System (operated by NASA!) where rail companies can report these disasters. Not one of America's Class 1 rail companies participate in it.

After the East Palestine disaster, Transport Secretary Pete Buttigieg pushed the rail companies to join, but a year later, none have. It's part of an overall pattern with Secretary Buttigieg, who has prodigious, far-reaching powers under USC40 Section 41712(a), which allow him to punish companies for "unfair and deceptive" practices or "unfair methods of competition":

Buttigieg can't simply hand down orders under 41712(a) – to wield this power, he must follow administrative procedures, conducting market studies, seeking comment, and proposing a rule. Other members of the Biden administration with similar powers, like FTC chair Lina Khan, arrived in office with a ranked-priority list of bad corporate conduct and immediately set about teeing up rules to give relief to the American public.

By contrast, Buttigieg's agency has done precious little to establish the evidentiary record to punish the worst American companies under its remit. His most-touted achievement was to fine five airlines for saving money by cancelling their flights and stranding their passengers. But of the five airlines affected by Buttigieg's order, four were not US companies. The sole affected US carrier was Spirit airlines, with 2% of the market. The Big Four US airlines – who have a much worse record than the ones that were fined – were not affected at all:

Rather than directly regulating the US transportation sector, Buttigieg prefers exacting nonbinding promises from them (like the Tier 1 rail companies' broken promise to sign up to the Close Call Reporting System). Under his leadership, the Federal Railroad Agency has proposed weakening rail safety standards, rescinding an order to improve the braking systems on undermaintained, mile-long trains carrying potentially deadly freight:

The US transportation system is accumulating a terrifying safety debt, behind a veil of corporate secrecy. It badly demands direct regulation and close oversight.

If you are interested in rail safety, I strongly recommend this episode of Well There's Your Problem, "a podcast about engineering disasters, with slides" – you will laugh your head off and then never sleep again:

Hey look at this (permalink)

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Colophon (permalink)

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