Norfolk Southern CEO to suggest changes — for another industry

BY: TANYA SNYDER | 03/21/2023 01:00 PM EDT | UPDATED 03/21/2023 02:18 PM EDT

Norfolk Southern CEO Alan Shaw will appear before Congress again Wednesday, where he will praise aspects of a bipartisan rail safety bill — but mostly those parts that don’t require major new mandates on his own industry.

According to prepared testimony he plans to make before the Senate Commerce Committee, in his second appearance before Congress Shaw will say that House and Senate bills on the matter, H.R. 1633 (118) and S. 576 (118), could both help improve safety. But he reserves most of his strongest support for stiffer requirements for companies that own the tank cars that transport hazardous materials, and for first responder training and updates to rail car inspection rules.

Shaw will say “Congress could go further” than what the bill contains with “even stricter standards for tank car design.” Railroads generally don’t own those tank cars and would not bear the cost of replacing or retrofitting them to higher standards.

The industry’s stance so far — mostly narrowly-targeted improvements related to the likely cause of the derailment, rather than macro safety changes — is an indication of the headwinds lawmakers and regulators face as they try to coalesce around a response to the derailment. Wednesday’s hearing will also be a major test of the bipartisan rail safety coalitions that are pushing legislative changes in both chambers.

Although six Republicans in the House and three in the Senate have signed onto the rail safety bills, the general mood in the GOP conference has been to go slow on new regulations and to wait for the investigation to take its course to target any potential regulatory mandates.

Sen. J.D. Vance (R-Ohio), one of the Republicans behind the Senate rail safety bill, on Wednesday will appear before the committee and push his colleagues for action — something he’s already started doing.

In a memo circulated to Republican Commerce Committee legislative staff Monday, Vance urged GOP senators to press Shaw on whether he supports a provision in the bill that would raise the cap on penalties from $225,455 to 1 percent of annual operating income. In the case of Norfolk Southern, which made $4.8 billion in 2022, the maximum penalty would be $48 million under Vance’s proposal.

Vance also made a plea for Republicans to support imposing stricter regulations on more trains carrying hazardous materials — such as the flammable gas that was carried on board the train that derailed.

Shaw’s prepared testimony does not mention those hazardous train regulations or the fines for railroad companies.

He will again apologize for the damage his railroad has caused, tick off the progress made to date with environmental cleanup and other remediations, and talk up commitments the railroad has already made to enhancing safety. That includes new standards and technology for the sensors on the track that detect overhearing wheels.

Other aspects of the legislation Shaw will say has the railroad’s support “in principle.” That includes creating standards for early warning detectors, as well as new standards for the kinds of information first responders should get about what kinds of hazardous materials are being carried on trains moving through their communities.

Shaw will support increased fines for people who tamper with railroad facilities and equipment but his prepared testimony does not address penalties for railroads with safety violations.

Several other witnesses, including first responders and rail unions officials, will offer praise for the House and Senate rail safety bills.

Ohio Gov. Mike DeWine will testify that he agrees with both bills and will “urge the Senate and the House to swiftly act to effect meaningful change and improve the safety of our railroads.” DeWine also told Shaw in a letter Tuesday “it is our expectation that you will champion all good faith efforts to improve rail safety,” including “by fully supporting these legislative efforts until they are enacted.”

Jennifer Homendy, chair of the National Transportation Safety Board, also will testify Wednesday, where according to her prepared testimony she will call for upgrading tank cars, stricter standards for trains carrying hazardous materials, and new rules for data recorders on board trains.

Since Norfolk Southern “put the locomotive immediately back in service following the accident, data was overwritten and only [provides] about 15 minutes of data before and 5 minutes following the derailment,” she’ll say.