Democrats want look at precision scheduled railroading’s impact

Democratic leaders with the U.S. House Committee on Transportation and Infrastructure want the U.S. General Accountability Office (GAO) to examine the impacts that precision scheduled railroading (PSR) has had on shippers and freight and passenger rail operations.

PSR is an operational model that all of the Class I railroads except BNSF (NYSE: BRK.B) have publicly embraced. The model seeks to streamline operations and cut costs. Proponents say PSR enables greater network efficiency, which will help the industry overall compete against trucks. But detractors say PSR is more for the financial benefit of investors and shareholders and less about the improvement of rail service.

A Wednesday letter from Reps. Peter DeFazio, D-Ore., and Donald Payne Jr., D-N.J., asked GAO to review the Class I railroads’ deployment of PSR from the perspective of long-term capital investment, operational and workforce impacts. DeFazio is committee chair while Payne is the chair for the subcommittee on railroads, pipelines and hazardous materials.

The letter asked GAO to study at least 10 issues surrounding PSR:

Train size, including the use of longer trains, and the corresponding safety and service effects.
Safety impacts associated with reductions in workforce, including occupational injury rates, impacts to inspection frequencies, inspection adequacy, repair quality and changes in workforce levels.
Elimination or downsizing of yards, repair facilities and other operational facilities.
Increases in demurrage or accessorial charges or other costs to shippers.
Capital expenditures for rail infrastructure.
Changes to dispatching practices and locations of dispatching centers.
Increases to the size of signal territories.
On-time performance of passenger trains.
Quality, availability and reliability of service to freight shippers within a range of industries, particularly shippers that are small and/or geographically remote.
Railroads’ ability to respond to changes in demand or market conditions, particularly in light of reductions in capital asset and workforce levels.

The letter also asked for recommendations on how to address impacts on labor, freight shippers, passenger railroads and railroad safety.

“PSR in practice means the bottom line drives the decisions,” DeFazio said in a Thursday release. “Longer trains, unhappy shippers and a workforce pushed to do more with less is not a model to chase after – unless you’re on Wall Street. But we can’t let hedge fund managers write the rules of railroading.

“Last Congress, my committee heard from various stakeholders concerned for the immediate and long-term impacts of PSR,” he continued. “This study, passed by the House last year in my surface transportation reauthorization bill, the INVEST in America Act, will help us find ways to address the impacts this railroad management strategy has on workers, freight shippers, passenger railroads and rail safety.”

Labor group Transportation Trades Department of the AFL-CIO applauded the request for GAO to study PSR.

“Freight rail workers and their unions fear that the combination of a less-than-bare-bones workforce, endemic fatigue, dangerous equipment, longer trains and an overall disregard for safety threatens both rail workers and the long-term viability of the industry,” said Greg Regan, the group’s president.

Regan cited a 25% decline in Class I rail employment over the last several years as PSR was implemented across almost all of the Class I railroads.

“A study by the GAO elevating these concerns is a good first step in reining in this out-of-control business model and returning safety to the freight rail industry,” he said.

Labor groups have previously testified before the House committee on their concerns about working conditions and workforce cuts amid the railroads’ deployment of PSR.

Meanwhile, DeFazio also recently expressed his concerns about Canadian Pacific’s (NYSE: CP) and CN’s (NYSE: CNI) bids to acquire Kansas City Southern (NYSE: KSU), saying a merger could trigger additional mergers among the Class I railroads.

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