Rail Industry Eager for a New Trump Era Light on Safety Rules

Elaine Chao

The policy landscape in Washington, D.C., dramatically shifted on Election Day…” 

While clearly not news to anyone, it was part of Edward Hamberger’s address to a conference in New York a week after Trump’s presidential victory. Hamberger is CEO of the rail industry lobbying group, the Association of American Railroads (AAR). The rail industry — along with many others — has seized upon the Trump victory as an opportunity to push a “free market” approach to avoid future regulations — and roll back existing ones. 

Hamberger and the rail industry see an opportunity to tip the scales in industry’s favor with the Surface Transportation Board (STB), which along with the Department of Transportation (DOT) has regulatory authority over railroads.

As DeSmog reported, the STB recently made a decision that blocked an oil-by-rail terminal in Benecia, California. The AAR has requested that the STB hold off on any new regulations until the open seats on the board are filled, which is estimated to be some time in the second half of 2017. And since President Obama did not fill the two open seats on the board (of five total), the AAR is lobbying the Trump administration to install “railroad friendly” board members.

Michael K. Friedberg, senior policy advisor on transportation for law firm Holland & Knight, writes, “The new members will have a huge impact on rail transportation issues that arise over the next two years.” 

The AAR isn’t wasting any time trying to stop or roll back other safety regulations in the industry either, and is even working with a traditional “competitor,” the trucking industry, to make this happen. A recent article in the Wall Street Journal quotes Chris Spear, CEO of the American Trucking Association, as saying, “We want to see industry included in developing regulations,” as if this isn’t exactly what is happening now. 

The article specifically mentions the AAR’s desire to repeal the regulation requiring oil trains to have electronically controlled pneumatic (ECP) brakes as of 2021. This is reiterated by Friedberg, who lists rules requiring two-person crews on trains, as well as the just-announced proposed rule to limit the volatility of oil moved by rail, as additional regulations the rail industry wants to halt. 

Another potential gift to the rail industry under the new administration would be further extending the deadline for the safety technology known as Positive Train Control (PTC). First recommended by the National Transportation Safety Board in 1970, the industry has been fighting the implementation of this technology ever since. The National Transportation Safety Board says that since 1969, PTC could have prevented 145 accidents, avoiding 288 deaths and 6,574 injuries.

In 2008 Congress mandated that PTC be implemented by 2015. As the deadline approached, the rail industry threatened to shut down if the deadline wasn’t extended — so Congress extended it through 2018. 

Friedberg reports that some railways may be looking for even more time before implementing this safety technology.

The 2018 deadline for implementing PTC also came up in Elaine Chao’s confirmation hearing for Secretary of Transportation, and the rail industry must have liked her response. 

Elaine Chao: Industry Ties and Conflicts of Interest?

Secretary of Transportation nominee Elaine Chao is a Washington, D.C., insider to the core, which is good news for industry. Her husband, Senate Majority Leader Mitch McConnell, receives large amounts of money from some of the industries that the Department of Transportation regulates, including Berkshire Hathaway and ExxonMobil. 

Berkshire Hathaway owns Burlington Northern Sante Fe (BNSF), the railroad leader in oil-by-rail movements, which has lobbied against safety measures such as electronically controlled pneumantic braking and two-person crews, and for a deadline extension for implementing Positive Train Control. And since the Pipeline and Hazardous Materials Safety Administration (PHMSA) is part of the Department of Transporation, ExxonMobil is subject to its regulations for both the company's pipelines and its oil-by-rail operations. 

Chao also has potential conflicts of her own, as she has been on the board of Wells Fargo since 2011, for which she received approximately $1.2 million. According to its own website,Wells Fargo “operates the largest, most diverse, privately owned rail fleet in North America.” In addition, Chao is set to recieve up to $5 million in total payments from Wells Fargo through 2021, and she sits on the board of Rupert Murdoch’s News Corp, which is known to champion its leader's free market, anti-regulatory ideology.

In her Senate confirmation hearing, Chao stated, “First and foremost, safety will continue to be the primary objective.”

According to CNN, however, when she was asked if she would enforce the deadline for Positive Train Control, Chao said, “if there's a deadline I'd look at it seriously.” CNN reported that Chao would not commit to taking action if the deadline was not met, which is not exactly the approach of someone making safety the primary objective.

Chao’s family ties to power and corporate interests don’t stop with her husband. Her sister Angela runs the family’s international shipping company, is a member of the think tank Council on Foreign Relations, and is married to hedge fund manager Jim Breyer, who is worth over $2.5 billion. The Chao family’s wealth is significant, as evidenced by its $40 million donation to Harvard in 2012.  

Swamp Things: Lobbyists and Industry in Charge of Transition

In what seems like an understatement, Railway Age recently wrote, “Railroads seem well positioned to enjoy favorable nominations by the Trump administration.” And this was before Chao was in the picture.

Railway Age reports that the person in charge of advising on the STB board nominations as well as the Federal Railroad Administration nominations is Robert Martinez, vice president of Norfolk Southern railroad. That means a railroad executive will be selecting the new regulators for its industry. It doesn’t get much more “railroad friendly” than that. 

Working with Martinez will be Martin Whitmer. Whitmer is a classic example of the revolving door in the swamp of D.C. politics. Most recently he has worked as a lobbyist in which his firm had a $130,000-a-year contract to lobby for the AAR. He got his start working on the Bush-Quayle campaigns and then worked for several Republican lawmakers. Next he was a lobbyist for the American Road and Transportation Builders Association. From there, Whitmer received an appointment by President George W. Bush to become deputy chief of staff for the Department of Transportation, before he started his current lobbying firm.

There certainly are many reasons for the rail industry to welcome the next four years.  

A System Fundamentally Broken

As the rail industry appears poised to take over its regulatory agencies, it’s important to note that it will be taking over an already broken regulatory system previously captured by industry. Rep. Jackie Speier (D-CA) has been trying for years to get new pipeline regulations from PHMSA. She has expressed her frustration with this process multiple times in Congressional testimony, at one point stating that “the system is fundamentally broken” and that “PHMSA is actually a toothless kitten, a fluffy industry pet that frightens absolutely no one.”

While industry certainly hasn’t been frightened by regulators or the threat of enforcement during the eight years of the Obama administration, it now appears that the enthrallment of regulators at the Department of Transportation will be complete — and safety will likely be far down on the list of priorities. 

Main image: C-SPAN.org