Exploring the Fallout of Precision Scheduled Rail: The Origin Story

Introduction to Precision Scheduled Rail

If you really want to understand the scale and scope of Hunter Harrison’s Precision Scheduled Rail (PSR) grand experiment you can’t do any better than sitting down with a rail worker to understand the concept and its actual implementation, impacts, and fallout in the wake of the Norfolk Southern East Palestine, Ohio, disaster. I was first put in touch with 17-year Union Pacific engineer Michael Paul Lindsey by a member of Rail Workers United who I met at one of several convenings inside the auditorium and gymnasium at East Palestine High School in the days and weeks following the disaster and the removal of the evacuation notices that covered much of the region.

Paul started in the rail industry in California working primarily north to south routes, but when the Financial Crisis hit in 2008, he moved to Pocatello, Idaho where he began working with Union Pacific across Nevada, Colorado, Wyoming, Oregon, and Texas. In addition to being an engineer in the industry, Paul is also a historian of the industry. Paul spoke of the industry’s halcyon days during the early 1900s followed by intermittent insolvencies industry-wide following the War Era and an industry who constructed its own regulations which contributed to the cartelization of rail across North America. Rail began to hemorrhage market share to the trucking industry immediately after the completion of the interstate highway system, resulting in higher and higher operating ratios, which is a company’s operating expenses as a percentage of revenue. This was discussed extensively in a prior piece where we looked at Hunter Harrison, the man that formulated PSR. In the 80s, rail was gripped by several massive mergers, bouts of insolvency, or bankruptcies including Rock Island, Milwaukee Road, Penn Central, New York Central. Simultaneously, the rail industry managed to get the Staggers Rail Act passed in 1980, which deregulated the industry allowing them to control pricing and decide what customers they serve resulting in massive mergers and acquisitions of the Class I rail space that resulted in the Big Four we have today: Union Pacific and BNSF to the West and CSX and Norfolk Southern to the East. It was also at this time that Harrison began to implement and experiment with aspects of his Precision Scheduled Rail at larger and larger scales.

PSR Goes Off the Rails

According to Lindsey, PSR went “off the rails” because there were two kinds of senior executives in the industry, as well as  an increasing influence from Wall Street:

“…those that wanted to make rail better for the future and there’s the people that want to absorb and extract every dollar of profit they can out of the railroad in a short period of time regardless of how much it hurts because these financial firms don’t care if there’s even a railroad in 10 years just as long as they’ve gotten their return out of it…Railroads are obsessed with extracting as much capital as they can even at the expense of the general public thats why their running trains at obnoxious lengths…they don’t care about blocking crossings they don’t seem to care that they are conducting essentially unregulated experiments on the general public and they don’t care about the safety of these trains and they don’t want to invest in their infrastructure and they definitely don’t want to grow…drive customers away to trucks…trucks serve a different market…for the most part trucks serve from the factory to the consumer. The railroads are usually business to business or goods that aren’t consumer goods like coal from the mine to the power plant or hauling anhydrous ammonia from the producer to the fertilizer plant or the vinyl chloride or chlorine that was implicated in the East Palestine derailment.”

Lindsey spoke of an industry that, ever since the implementation of PSR, has focused on cutting all but the most necessary costs. As a result, the industry has cut into the bone, leaving a fragile and degraded network of tracks, yards, and train cars strewn across North America. Meanwhile, the industry fashions itself as the purveyor of a premium product that they can charge a premium rate for while pushing more and more customers to trucks so they can focus on only the heaviest and most profitable commodities like vinyl chloride and many of the refined and finished products from the petrochemical industry along the Gulf Coast. PSR by way of the industry’s corporate offices and Wall Street has morphed from a helpful framework  to something they use to strip rail of the kinds of people and redundancies that could have prevented East Palestine all in an effort to curry favor with investors that had moved to the next shiny objects being floated in the form of Silicon Valley IPOs.  Rail workers everywhere know that their industry needs to be brought back into compliance with safety replacing share buybacks and CEO bonuses.

PHOTO: ANGIE VALLIER/U.S. COAST GUARD

Events like East Palestine are going to continue to happen because the railroads insist on running trains that are too big for the infrastructure. They’re not focused anymore on their common carrier obligations which is to say rail industry has been “entrusted with serving the wider public…requir[ing] railroads provide reasonable service for a reasonable rate upon a reasonable request from a shipper.” However, the word reasonable is problematic to say the least and it’s even more so when considering the impact of PSR with the USDA suggesting the rail industry may be using PSR “to elude their CCO [Common Carrier Obligation].”

Instead the rail industry has “focused on cutting regulations that would make their industry safer” and what Lindsey suggests would address some of the current predicament we find ourselves in would be for our federal government to treat rail like the interstate highway system and airlines. He contends that it is no longer appropriate for our vital rail infrastructure to be built, maintained, owned, neglected and abused by private companies. If this sounds like socialism, Lindsey makes the analogy that no one would suggest a handful of trucking companies should own the interstate highway system. This would fuel competition and open access and we would rid ourselves of the days when rail companies could just say “we don’t want your business through embargoes…because now those customers could own their own rail.” It is a matter of phrasing to Lindsey who suggests the term “publicly owned” because nationalization is such a dog whistle here in the US:

“How many times the rail industry has been bailed out and you cannot claim the free market is what we live and die by if you don’t allow these businesses to go bankrupt and if you don’t like that quit trying to play the capitalist card…trying to be immune to all law and regulatory structure they can’t have it both ways…They love taking state money.”

Train Engineering and Physics 101

Lindsey suggested that we can’t truly understand East Palestine until we understand Track Train Dynamics which he outlined as a complex interaction of forces which he suggests is best thought of as a “giant slinky” with the crew’s primary goal being to make sure the entire train is operating at the same speed at the same time. Obviously the complexity of all the forces described below needs to be understood in the age of PSR with longer and heavier trains manned by smaller and smaller crews preceded by shorter and short inspection times. Ipso facto we get what we had in East Palestine, Ohio, a little more than a year ago.

“PSR did cause East Palestine because they were not running trains at that length prior to PSR. The reason why that train derailed was because of length not that the length of the train was dangerous but because when trains are that long terminals get congested they don’t find the faulty bearings whereas if the trains were shorter the bearings would have been found and if it had happened it would’ve been on a shorter train and maybe only a couple cars would’ve derailed…terminals are forced to cut staff specifically inspection staff and the trains are longer coming in so there is a lot more pressure to get the train out of town. Whereas before you would have a couple of minutes of inspection on each car now you are getting a couple seconds of inspection per car under threat of discipline.”

To hear Paul Lindsey describe the complexity of Track Train Dynamics is to hear how parts of the train might be going uphill and another might be going down hill with loaded cars, empty cars, locomotives on the head end or in the rear with longer trains resulting in more “end train forces” and at the end of the day PSR is really about metrics such as car dwell time (i.e., time spent by individual cars in hump yards or otherwise stationary) and locomotive utilization rates because the PSR practitioners emphasize above everything else velocity or the train speed from point of origin to their endpoint and while all these benign sounding metrics sound good the problem is all rail network’s terminals are competing with each other to meet their own metrics even if it hurts the next terminal down the line.

“There’s not really any consideration when you have 200 cars that need to leave a terminal to keep your dwell time down but no one is considering people being delayed at crossings longer…or mechanical problems that it runs into later…or it blocks an entire town because it’s waiting to make a meet because that’s the only track that is long enough for two 13,000 foot trains to pass each other. They don’t take any consideration on this stuff and they are just concerned with the metrics.”

According to Lindsey when you run trains that size when something does go wrong it has the potential to go catastrophically wrong with broader catastrophic impacts like Lac Megantic in 2013 and the East Palestine derailment last year. The combination of longer trains carrying more and more volatile petrochemical products and feedstocks is an increasingly dangerous gamble being played with the lives of millions of Americans living in close proximity to Class I rail lines all across the nation. Lindsey doesn’t have any sympathy for the rail industry and their claims that it was an unforeseen Black Swan event. It was in their control and when they run trains that big and that amount of slack “runs in” even though one car derailed it caused an accordion-like effect because of all the buffered force or compression which if excessive “can cause run-ins and even pile up derailments.”

Cutting Costs to Increase Profit

Another aspect of PSR that is troubling, and Lindsey suggests played no small part in East Palestine, is the fact that increased speed and lower car dwell times means that inspection times have gone from five-and-a-half minutes to less than one minute per car. As a result, East Palestine will not be an outlier in the future even though labor has been telling companies about what is being sacrificed for decades at this point. However, because companies retaliate against those that speak out against them online like Lindsey, there are fewer and fewer willing to speak up. Unfortunately, there are relatively robust Whistleblower protections for federal employees by way of the Whistleblower Protection Act of 1989 but nothing comparable for private sector employees. According to the US Government Accountability Office (GAO) and Labor Notes, railroads cut as much as 35% of their labor force between 2015 and 2021 while at the same time moving 30% “more tonnage in 2020 than in 2000.” When the Biden administration intervened to avert the most recent potential rail strike, his Emergency Board issued a report that spoke to profits and railroad stocks having increased by 676% and 1,250% since 2004, respectively.

Meanwhile, so many workers have been laid off at this point that the mental and physical well-being of the existing workforce is extremely worrisome with some considering the work environment unbearable at this point. To put a finer point on it, in a 2020 survey conducted by MoneyWise, three of the top five worst companies to work for were Class I rail operators CSX (#5), Norfolk Southern (#2), and Union Pacific (#1).

“I care about the industry and I care about my country! Rail is more vital than people realize. I love my job and I love running trains and they may permanently fire me but I will fight for it!”

Lindsey points out that for all the bluster from both sides of the aisle in aftermath of the East Palestine disaster one thing that got lost in all the noise was the fact that the Trump administration’s USDOT repeal of the Electronically Controlled Pneumatic (ECP) Brake Mandate absolutely did play a role in events like East Palestine. ECP was capable of reducing stopping distances as well as the Buff and Draft Forces which “can cause couplers to brake and can also cause string line derailments when created on sharp curves.” The aforementioned complexities train crews must constantly manage and balance are a function of the strains and stretching imposed by five primary focuses when “slowing, stopping or navigating a territory.” Those buffer and draft focus but also: a) Lateral Force or the side to side force exerted on rail, b) Vertical Force which is the downward pressure on rail and if the lateral force “exceeds vertical force the wheels will hop over the rail or cause the rail to turn over,” and c) Centrifugal Force or the outward pushing force created when trains move around a curve.

In an ideal scenario engineers modulate the throttle and use the natural topography of the landscape they are traversing to anticipate speed reductions and use the natural “curves, hills, sags and grades” of the landscape to their advantage. In the event of an emergency brake application where the train comes apart like East Palestine, “every single brake on the car would set instantly all at once instead of that delay where cars are setting up through the train but not all at once.” Lindsey suggested that those that minimized the potential assistance provided by ECP during the East Palestine disaster suggesting it would’ve only been a few seconds are wrong and that those few seconds are “the difference between your train staying on the rail and the train piling in a giant smoking wreck!” If ECP had been in place, there is no doubt one car would have ended up on its side followed by a couple more but that would have been it. Again, we hear cries of poverty from the industry suggesting out of one side of their mouth that installing ECP fleet-wide would be cost prohibitiv,e while out of the other awarding CEO’s exorbitant bonuses and implementing massive share buybacks simultaneously inflating the value of the remaining shares and pacifying Wall Street benefactors like Black Rock, Blackstone, State Street, and Vanguard. Working in concert with Wall Street, which knows next to nothing about rail, we’ve seen the Big Four Class I operators Norfolk Southern (NS) and CSX in the east and Union Pacific (UP) and BNSF in the West extract capital out of ancient infrastructure over and over again.

However, if ECP were to just be applied to hazmat cars like the ones that were detonated in East Palestine, that would at least force operators like Class I rail operators to consolidate trains which would’ve produced shorter and safer trains. Rail workers have been pleading with federal regulators that a hard cap must be placed on train length based on what they are transporting and as Lindsey said “They set safe lengths for trucks so why not trains? And then the industry would not have the temptation to play experiments!” As it stands there is no cap on train length and the industry is running longer and longer trains by adding engines on the front, middle, and tail-ends with trains routinely reaching nearly three miles in length.

While ECP is a genius system, it does have its limitations and those limitations are naturally exposed with longer trains given that service only extends at a rate of 540 feet per second and therefore a 10,000 foot train would see a difference of nearly 19 seconds between when brakes release from the head-end to the rear of the train and this disparity increases at lower temperatures given that it takes more air to fill the same volume and they take longer to set and longer to release.

In addition to PSR’s impact on train length, it has had an equal if not greater impact on labor headcount and most rail workers believe that there needs a cap on cutting crews even in the face of massive propaganda campaigns by Class I operators and their Wall Street benefactors. Lindsey suggested that anyone that was watching and paying attention to how the East Palestine disaster played out needs to know that it could have been worse. The conductor at risk of his own life walked back and made a cut and separated more hazmat cars from the rest of the train and pulled it forward and if there had only been one person on that train that never would’ve happened and the cars that were on fire would have just kept lighting more and more cars on fire. The conductor at the risk of his own life did what he needed to do! They were taking their lives in their hands going back to that derailment. The only time that one person is acceptable is in terminals according to Lindsey.

How Not To Negotiate with Big Rail Operators

In this past fall’s midterm elections the City of Cincinnati voted narrowly (51.56 to 48.44%) to sell the 382 mile Cincinnati Southern Railway to Norfolk Southern for $1.62 billion which it currently leases $25 million per year. This small sliver of rail happens to be a strategic chokepoint for Norfolks Southern given that it connects northern routes to the company’s Chattanooga yard. Lindsey wrote in an op-ed in the Cincinnati Enquirer that this vote would affect “rail industry policy across America and into the future…[either reigning] in the power of unaccountable rail monopolies, or to instead grant them more power and industry consolidation.”

Cincinnati chose the quick cash and as a result overlooked the “value of land development around those rails and the possibility of building high-value communities and walkable transit oriented developments that actually contribute to the tax base and make the city wealthier.” Cincinnati had all the leverage in this negotiation and could have gotten itself a windfall that it could then have plowed into making Cincinnati a more walkable city.

This type of opportunity doesn’t come along very often and, if they were going to sell, they should have realized their leverage and held out for way more than the $1.62 billion they eventually settled for given the critical nature of the line as Norfolk’s primary north/south connector. Lindsey suggested that Norfolk Southern would have paid whatever lease price the city charged it “because it would cripple their network not to do so.” Contrast Cincinnati’s $74 thousand per mile valuation of their Cincinnati Southern Railway spur with the city of Los Angeles which generates $97 million per year from the 10 mile long Alameda Corridor or $9.7 million per mile. It is true that multiple operators use the Alameda Corridor but the point here is that The Queen City is not squeezing nearly enough revenue out of Norfolk Southern and to turn around and outright sell the line for a measly $1.62 when the fair market value for the line is likely closer to multiple hundreds of billions is yet another example of corporate welfare and share buybacks coming at the expense of the public good.

Time and time again cities like Cincinnati hold all the cards only to allow themselves to be browbeaten into handing over the public’s assets for pennies on the dollar. These are not victories for current and future generations as NS spokesperson proclaimed last Fall but rather instances that expose the faults and fissures throughout laissez faire Capitalism and public-private partnerships.

Minimizing the Probability of Another East Palestine

There are several ways we should go about lowering the probability that East Palestine disasters and even less dramatic and harmful events happen again. First among those might just be the newly emboldened Federal Trade Commission (FTC) and its use of antitrust, which is on the rebound under its young and courageous Chairwoman Lina Khan who was even praised by Railway Safety Act coauthor Ohio Senator J.D. Vance recently in a significant break from his Republican brethren as he recently advocated for the breakup of Google among other oligopolies and monopsonies.

“A lot of my Republican colleagues look at [Khan] … and they say, ‘[Khan] is engaged in some sort of fundamentally evil thing,’” Vance told attendees. “I guess I look at Lina Khan as one of the few people in the Biden administration who I think is doing a pretty good job.” Ohio Senator J.D. Vance at the RemedyFest, February 27th, 2024

The best example of how the rail industry has flaunted antitrust law in Lindsey’s opinion is the recent branch line fight between Union Pacific and BNSF in Utah. In this case UP announced that it wanted to reactivate a 1.04 mile length of rail line that had been abandoned since 1983 only to hold hostage other company’s access to a proposed new industrial park. To put this in terms layman can understand this would be like if a private trucking company owned an offramp from an interstate and only allowed their trucks to use the offramp to get to a proposed facility in close proximity to their offramp. Utah is an example of an absence of antitrust in another very important way and that is that as rail operators became larger and larger we ended up with some states like Utah where the entire rail network is owned by one operator, which in this case is UP, with the exception of a few short lines.

With respect to share buybacks, Lindsey suggests legislation that would stop share buybacks outright or prevent companies from buying back shares in excess of capital and labor investment. Many in the Environmental Justice space would also suggest that we include costs like those incurred by Houston taxpayers who will have to fork over $5 million to move residents of a historically black neighborhood that have been chronically impacted by Union Pacific’s massive rail yard. Instead, we have the Houston Mayor proclaiming that Houston has a “moral obligation” to help these residences and, while there is no doubt there is a moral obligation to get these people out of harm’s way immediately, it stretches the imagination to convince anyone that this obligation isn’t at the doorstep of Union Pacific and not Houstonians:

“The railroads have done it [PSR] by cutting less-profitable routes; closing and consolidating railyards, repair barns, and other facilities; running fewer, longer trains; and laying off tens of thousands of workers while demanding the remaining workers do more.”

In addition to the health and safety of neighbors having been made worse in the Age of PSR the morale, health, and safety of railworks is at an all-time low resulting in more and more people getting their years in and leaving. The Biden administration, usings its powers under the Railway Labor Act, threw labor under the bus in the rail workers’ recent 2022 strike threat and as they negotiate contracts they can’t even seem to get the Class I Duopolies to concede basic requirements such as paid leave mostly because the large rail operators are unified while rail labor is fragmented. The industry knows that rail and airline unions can’t strike unless “released” by the federal government to do so and neither party, when push comes to shove, has shown an interest in siding with rail unions in such instances which means operators have all the leverage in negotiations:

“So, I must ask, how much downside risk do you truly think you have? I would say that it is not really as big as you think. Labor has been the one group to make continuous and faithful sacrifices to support your downside risk, and by callously ignoring us, you have lost the loyalty of an entire generation of skilled, experienced workers.” former UP Engineer Paul Lindsey in Railway Age, August 24th, 2022

Largely as a result of PSR rail workers “have fewer days off and even more irregular schedules than” prior to PSR and unlike then they’re operating increasingly longer trains which have much less margin for error. Conductors work “on call” and it is not unheard of for them to work many days in a row at dramatically different times and find it difficult to use paid time off.

“In a September speech, STB Chairman Martin Oberman criticized railroads for their “pursuit of the almighty OR” and estimated that U.S. railroads have paid out $196 billion in stock buybacks or dividends to shareholders since 2010. In comparison, over that same period according to Oberman, railroads spent $150 billion actually maintaining the physical rail and equipment they need to run their railroad.” Surface Transportation Board Chairman Martin Oberman speech, September 8th, 2021

Subsequently the rail industry is not only seeing significant layoffs and attrition but there is a large chunk of the workforce that is just getting out, which was unheard of decades ago, and this is worrying to engineers like Lindsey because these losses also result in a severing of institutional knowledge mostly because people are sick of being marginalized but also because labor is sick of hearing the carriers “maintain that capital investment and risk are the reasons for their profits, not any contributions by labor.”

Lindsey suggests we actually allow the larger Class I carriers to go bankrupt facilitating a clearing of the markets but we agree that if we didn’t let the financial markets clear in the aftermath of the 2008 financial crisis and the TBTF Bank Bailouts it is unlikely either party in DC has the stomach for a bankruptcy in the rail industry. However, if we don’t allow Capitalism’s beloved “market forces” to play out we’re not casting any punishment that firms can understand or respect!

“If these people that claim to love free markets and capitalism so much want to save their free market they had better start returning some accountability and opportunity to fail to these businesses otherwise all legitimacy for their system is out the window. You have to have an opportunity for failure which the railroads don’t believe they have!”

Rail workers like Lindsey are also adamant that something on the regulatory front needs to be done about “hot box detectors” as well as train length even though rail industry will disagree and will sue any state that tries to impose length restrictions. Nevada attempted to do just that just months after the East Palestine train disaster with Nevada’s AB 456 which would have placed limits on train length and penalized operators from $5,000 to up to $25,000 for deploying trains exceeding 7,500 feet in length. The bill would have also “set hours-of-service provisions for yardmasters, and requires traffic-control devices at any grade crossing where there has been a collision or near-miss between a train and motor vehicle.” This bill even contained an amendment that would have required “wayside detectors every 10 to 15 miles, with trains limited to 10 mph or less when traveling in areas not so equipped, and outlines the procedures crews must follow if notified of a defect.”

Unfortunately Nevada Governor Joe Lombardo vetoed this bill on June 1, 2023, even as he acknowledged the intent of the bill to decrease the probability of another East Palestine he contended that the bill was “another policy overreach from the Legislature [that would likely not be] upheld in court…[and stood in opposition to the] Court’s firm opposition to laws that affect interstate commerce where the state interest is outweighed by the nation’s interest.”

Industry pushes back on all manner of state and federal efforts to make it safer including limiting train length with UP representative Peggy Ygbuhay pushing back on Nevada’s AB 456 saying that that bill “would restrict the flow of commerce into and out of Nevada and impact customers and consumers who rely on a robust supply chain to deliver needed commodities. Increased train length did not occur overnight and it is the result of significant work and technological learning over the past decade.”

“Union Pacific fired me for the videos I made on the detectors role in the East Palestine disaster even though there were several news sites that reported the same thing. It came out that I was exactly right that there was one person on the entire NS monitoring the trains and that he was taking care of three other instances simultaneously and didn’t see the temperature rise. I was proven right and that was upheld by the arbitrator. The point I would take out of that is that the industry is unified! These big Class I railroads are unified and if you try to say something about East Palestine they will try to destroy you!”

Several other ideas Lindsey explained to me that he felt would go a long way towards addressing the numerous externalities of PSR include the enforcement of something called “forced reciprocal switching” for which the STB just closed a public comment period last November. This process would require that customers are allowed to tell Class I rail operators that they don’t want to use their services. PSR regardless of the propaganda spewed by companies like UP about dwell time and all their metrics about speed and scheduling results in worse customer service but “if Forced Reciprocal Switching was a thing then they couldn’t get away with drives for efficiencies and crank up their drives for business growth.” However, Lindsey cautioned that just like most efforts to push back on these Duopolies rail will fight tooth and nail against the enforcement of FRS because they know that with it would come the very competition they worked so hard and for so long to rid themselves of by way of mergers and acquisitions throughout the PSR era. The good news with FRS is that it doesn’t even need legislation to be passed because the STB can do this on their own.

Finally, Lindsey and others have begun to advocate for the Public Ownership of the North American rail network and means that we would be treating the railroads like our interstate highway system which is not necessarily relied upon to show a profit or a dividend each quarter. Private companies can operate and compete on these lines but ultimately the US taxpayer would own this vital transportation infrastructure. Congress could do this given that they do all kinds of stuff they don’t have the authority to do under the guise of interstate commerce using identical circular logic.

“You cannot run trains competitively. Railways — like agriculture or the mail — are at one and the same time an economic activity and an essential public good. Moreover, you cannot render a rail system more efficient by placing two trains on the same track and waiting to see which performs better: railways are a natural monopoly. . . . Trains, like buses, are above all a social service.” Professor of History at the University of Cambridge Tony Judt in a speech titled “What is Living and What is Dead in Social Democracy?”

The interstate highways are subsidized and if the rail industry is intentionally not investing in their infrastructure and driving away customers to trucks because certain products aren’t profitable enough the taxpayers are actually paying for share buybacks because they’re having to subsidize this increased highway wear and tear. Presently rail operators “think that they are living in a financial vacuum like railroad profits are all there’s to keep so they need to run an efficient railroad because those are private profits for a private corporation and they have every right to do so. I would say that authority to do that ends where you create a burden on the public interest!”