News & Reviews News Wire FRA Administrator cautions Norfolk Southern on ‘backsliding’ on safety

FRA Administrator cautions Norfolk Southern on ‘backsliding’ on safety

By Trains Staff | February 22, 2024

Letter comes as investor group seeks to replace CEO

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Man in suit speaking at conference
FRA Administrator Amit Bose speaks at the National Railroad Construction and Maintenence Association Conference on Jan. 6, 2023. Bose has written Norfolk Southern CEO Alan Shaw to caution against “backsliding” on safety efforts as the railroad faces a management proxy fight. David Lassen

WASHINGTON — Federal Railroad Administrator Amit Bose, in a Wednesday letter to Norfolk Southern CEO Alan Shaw, has cautioned against “backsliding, as a result of a change in leadership or otherwise, on the safety-oriented path” the railroad has established since the February 2023 East Palestine derailment.

Bose’s letter comes in response to an effort by activist investor group Ancora to unseat Shaw, replacing him with former UPS President Jim Barber Jr. and installing former CSX head of operations Jamie Boychuk as chief operating officer [see “Activist investor seeks to install former UPS president …,” Trains News Wire, Feb. 20, 2023].

In his letter, Bose notes several NS safety initiative, and writes that he particularly commends “your commitment to investing in safety as those investments are imperative for continuing the unique progress your railroad has made; early data for 2023 suggest that NS was the only Class I railroad to achieve significant reductions in the rate of mainline derailments this past year.” The steps NS has taken, he writes, are “often in notable contrast to industry peers.”

But in cautioning that such progress continue, Bose concludes that backsliding “will likely attract renewed oversight attention from my office as we pursue our safety mission.”

Notably, the Bose letter was released not by the FRA, but by the Surface Transportation Board. STB Chairman Martin J. Oberman expressed concerns about the planned proxy fight at Norfolk Southern in an interview with Trains News Wire earlier this month, wondering if the investor’s goal was “to reinstate the bad old days when the marching orders in the C-suite were to cut, cut, cut? That would be bad.” [See “Activist investor’s plans to oust Norfolk Southern’s CEO alarm Surface Transportation Board chairman,” News Wire, Feb. 1, 2024].

9 thoughts on “FRA Administrator cautions Norfolk Southern on ‘backsliding’ on safety

  1. With the comments from the STB and its warning I would say Shaw should just continue on as he is doing. While the FRA is toothless the STB is not although it does have limits. But its comments could be heard in the house and senate.

  2. I think Bose should stay in his lane. I doubt anyone is concerned about a strongly worded, non-binding letter from the FRA. They didn’t do anything to NS over their failed training program they have been working on to correct for over 2 years. Bose can’t even get any regulations on train tonnage & length or detectors. He probably should have written the letter to the hedge fund group instead of Shaw. The FRA treats the RRs as partners, not companies they have oversight of.

  3. This is the kind of manipulation that led to the Interstate Commerce Act in 1887. It needed strengthened over the decades but eventually brought economically stable railroad companies until trucking became a more flexible competitor.

  4. To activist investors, “the future is now”. And, their lures of quick and easy wealth to a naive -and increasing- population of retirees dependent on shrinking 401K accounts enables things like this to happen. Time was, having investment portfolios with six -and seven- figure balances were for the few. Now, it’s seemingly anyone. That “democratization” of Wall Street brings a volatility that was last seen in railroading back in the 1990’s with CSX battling the Children’s Investment Fund. CSX won. But, it cost them a ton of cash.

    What Ancora’s “success” will bring is more regulation. And, likely more legislation on the industry. The damage will not just be to NS, but the industry as a whole. The returns they seek will indeed be short-term. The government response to their behavior could bring regulation back to the 1950’s-1970’s era.

    While I disagree with Alan Shaw’s profligate spending in East Palestine after the accident there, I largely like his investments in the people of NS… with the exception of the recently announced layoffs.

  5. Activist investors will grow richer while the employees and the public will suffer. Hey its the American way is it not? The rich get richer and the rest of us pay. As I have stated before, the railroads and any other industry that provides necessary services as well as national security should never be a play thing for Wall Street.

  6. Shaw probably best head honcho in a very long time…too bad the money train (investors group) doesn’t see it that way.

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