A Landmark Initiative, but One With Loopholes

Last week, a bipartisan group of US senators proposed the Railway Safety Act, which limits train lengths, requires two-person crews on freight trains, strengthens transparency requirements for hazmat trains, sets standards for infrastructure maintenance, and increases the maximum fines for safety violations.

It’s an unusual piece of federal legislation because it is opposed by a major industry but still has some chance of passing a divided Congress with bipartisan support.

On the Senate side, at least three Republicans are backing the legislation — senators Josh Hawley (MO), Marco Rubio (FL), and J. D. Vance (OH) — suggesting that it may be able to reach the nine Republican votes needed to overcome a filibuster, assuming all fifty-one Senate Democrats support it.

Senate majority leader Chuck Schumer (D-NY) pledged last week that he would move quickly on the legislation, saying that the bill was “precisely the kind of proposal we need to see in Congress“ and that he would do “whatever I can” to pass the bill.

Still, major rail unions are pushing for a stronger bill, warning that in its current form, the legislation grants broad discretion to the transportation secretary to write safety rules, rather than spelling out regulatory specifics.

“You can run a freight train through the loopholes,” said Eddie Hall, national president of the Brotherhood of Locomotive Engineers and Trainmen, the largest rail union, about the bill’s two-person crew provision.

For years, rail unions have been pushing back against the industry’s desire to run trains with one-man crews. While the legislation requires two-person crews on many freight trains, it includes carve-outs for short-distance trains as well as the potential for waivers.

A two-person crew rule proposed last year by Secretary Pete Buttigieg’s Department of Transportation would similarly allow railroads to seek exemptions.

The Lobbyist in Senator’s Clothing

Even in its current form, the proposed Railway Safety Act will have to overcome significant legislative obstacles. Thune, in particular, could pose a problem.

“We’ll take a look at what’s being proposed, but an immediate quick response heavy on regulation needs to be thoughtful and targeted,” Thune told the Hill on Monday.

Thune sits on the Senate Commerce, Science, and Transportation Committee and is the second-most-senior Republican after Texas senator Ted Cruz. (Cruz has said he supports “congressional inquiry” into the East Palestine derailment but has not commented on the legislation.)

Thune served as the railroad director of South Dakota from 1991 to 1993, before getting elected to Congress. For some of his time in the House, Thune sat on the Transportation and Infrastructure Committee.

He retired in 2003 after a failed Senate run and quickly became a lobbyist for the Dakota, Minnesota and Eastern (DM&E) Railroad, which he had previously regulated as a state official. He continued lobbying for the company — which is now a subsidiary of the Canadian Pacific Railway — during his successful Senate campaign in 2004.

As part of his advocacy work for the railroad, Thune helped the company procure a $230 million loan from the Federal Railroad Administration. Upon joining the Senate in 2005, Thune attempted to help the company obtain a $2.3 billion federal loan it was seeking to expand coal freight operations.

That year, Thune convinced his colleagues to expand the loan pool for railroads from $3.5 billion to $35 billion — and increase the pool for small railroads from $1 billion to $7 billion — making his former client far more likely to win its loan.

The Thune provision allows the Dakota, Minnesota and Eastern Railroad and the Iowa, Chicago and Eastern Railroad to apply for a loan package totaling $2.5 billion to build or rehabilitate over 1,300 miles of rail, the majority of which would be spent in South Dakota,

his office said in a press release after the bill passed. “If approved, the loan would finance South Dakota’s largest railroad infrastructure program.”

A fellow senator called Thune’s loan pool expansion “the most despicable special-interest deal I’ve ever seen in all my 30 years in government.”

Ultimately, Thune’s former client was rejected for the loan, after intense scrutiny of Thune’s lobbying background for the railroad company and opposition from a hospital along the proposed route due to DM&E’s record of hazmat train derailments. Had DM&E obtained the loan, it would have been the largest private loan guarantee in US history.

In 2015, Thune reprised his advocacy for the rail industry, leading an effort to repeal an Obama administration regulation requiring improved, electronic braking systems on some hazmat trains. The following year, he received the first-ever “Railroad Achievement Award” presented by the Association of American Railroads, the industry’s main lobbying group.

Thune is the third-largest recipient of cash from the railroad industry in the Senate and raked in nearly $70,000 in the past election cycle alone.

Meanwhile, the highest-ranking Republican in the Senate, minority leader Mitch McConnell (KY), has not said whether he will back the legislation. McConnell’s wife, Elaine Chao, served as transportation secretary during the Trump administration and repealed numerous rail safety rules.

House Chairman Is Top Recipient of Rail Industry Cash

Even if the Railway Safety Act makes its way through the Senate, there are also substantial barriers to passage in the House, where Republicans hold a majority and have been raking in railroad cash.

The legislation could face its first major roadblock in the House Transportation and Infrastructure Committee. Chairman Rep. Sam Graves (R-MO) was the top recipient of railroad industry campaign cash in Congress last election cycle and has been a longtime enemy of efforts to regulate his donors.

Graves has held his solidly red seat since 2001, and he easily won his most recent election last fall with 70 percent of the vote. Even so, the railroad executives and their political action committees poured $107,000 into his campaign coffers last cycle.

In July 2021, Graves sent a letter to the Surface Transportation Board — the other federal agency that regulates railroads — warning that Biden’s recent executive order calling for a “whole-of-government approach” to address antitrust issues could “decrease the freight railroads’ efficiency or limit their ability to reinvest in their infrastructure.”

Speaking on Fox News about the East Palestine derailment on February 16, Graves noted that the federal government’s “accident investigation continues, so instead of speculating about all the potential factors, I want to fully understand the facts involved. When we have the facts, Congress can consider what next steps may be necessary.”

The Rail Safety Act could also run into trouble in the House Transportation Subcommittee on Railroads, Pipelines, and Hazardous Materials. Subcommittee chair Rep. Troy Nehls (R-TX), told Politico about the proposed legislation, “The rail industry has a very high success rate of moving hazardous material — to the point of 99-percent-plus. Let’s not have more burdensome regulations and all this other stuff.”

A $54 Million Lobbying War Chest

Nehls’s defense of the rail industry was a near word-for-word recitation of rhetoric from the railroad industry’s lobbying group, the Association of American Railroads, which has been touting its “99.9 percent” success rate in the wake of the East Palestine derailment, including in recent Politico advertisements.

The Association of American Railroads brought in $55 million in revenue in 2020, according to the group’s most recent tax filings, the majority of which came from membership dues. Members include the major class I freight railroads, some smaller railroads, and Amtrak.

In the wake of the new Senate rail legislation, the Association of American Railroads has similarly argued that policymakers should wait to issue new safety rules until the government has completed its investigation into the East Palestine derailment.

The organization’s top lobbyist is a former staffer for Thune, and its president and CEO was previously a staffer on the Senate Transportation Committee.

There are currently 265 people registered to lobby the federal government on behalf of the railroad industry, 208 of whom previously held jobs in the federal government according to data from OpenSecrets. The rail industry as a whole spent $25 million directly lobbying the federal government in 2022.

Norfolk Southern Employs a Former NTSB Official

Railroads like Norfolk Southern have one other way to potentially avoid new safety crackdowns: by being granted regulatory waivers.

The Federal Railroad Administration (FRA) has authority to allow rail companies to bypass any safety rule, regulation, or order “upon a finding that doing so is ‘in the public interest and consistent with railroad safety.’” The Senate legislation’s two-person crew provision explicitly gives the Transportation Secretary the authority to grant such waivers for trains to operate with fewer than two people.

Norfolk Southern’s current point person for requesting waivers from safety rules and regulations is especially well positioned for the role, since he was formerly acting executive director and managing director of the NTSB.

Thomas Zoeller, Norfolk Southern’s current general counsel for markets and regulation, served in executive roles including acting executive director of the NTSB when the board recommended that the Obama administration expand the definition of high-hazard flammable trains (HHFT) to include flammable gases like those on board the train that derailed in East Palestine.

Before heading Norfolk Southern’s legal department, he made a brief stop at the US Chemical Safety and Hazard Investigation Board, where he was senior policy advisor and acting general counsel, according to his LinkedIn Profile.

In his capacity at Norfolk Southern, Zoeller sought a waiver in March 2021 to exempt Norfolk Southern from manual track geometry inspection requirements, insisting an automated inspection system was sufficient. Automated track inspections is something the Association of American Railroads, the top lobbying group for rail companies, has been pushing for as it expedites the required inspection process and ultimately reduces staffing demand.

The FRA denied the request, citing the Brotherhood of Maintenance of Way Employes Division/IBT (BMWED), which argued that if the waiver was granted it would “adversely affect railroad safety.”

Zoeller’s transition from the public sector to private industry is one of many examples of regulators going through the revolving door to corporations they formerly helped regulate.

“Intimate knowledge of bureaucratic intricacies includes knowing how to exploit the process,” said Dylan Gyauch-Lewis, a researcher with the Revolving Door Project. “Former regulators know the chokepoints in the regulatory process and seek to use those bottlenecks to block or delay regulation,” he told us.

That makes Zoeller well positioned to help his rail employer skirt potential safety rules.

“Zoeller, coming from the NTSB, will know exactly how to skirt the boundaries of laws and regulations and can leverage his personal ties to regulators to try and get Norfolk Southern out of trouble,” Gyauch-Lewis said.