FRA's Bose to Norfolk Southern: Stay focused on safety

Federal Railroad Administration Administrator Amit Bose yesterday advised Norfolk Southern Railway to stay focused on running a safe railroad even as activist investors seek to overhaul the company's board and top management.

In a letter to NS President and CEO Alan Shaw, Bose wrote that "the only avenue to ensure NS's immediate and long-term success is through a relentless focus on safety." Bose referred to the FRA's findings and recommendations from a 60-day safety assessment of the railroad after the February 2023 derailment of an NS hazmat train in East Palestine, Ohio.

"Any backsliding, as a result of a change in leadership or otherwise, on the safety-oriented path you have laid out and communicated to us will likely attract renewed oversight attention from my office as we pursue our safety mission," Bose's letter warned.

Earlier this week, investor group Ancora Holdings Group LLC, which holds a large equity stake in NS, announced the nomination of eight independent candidates for election to the NS board. The group also announced two proposed new leaders at NS: former United Parcel Service Inc. executive Jim Barber Jr. as CEO and former CSX executive Jamie Boychuk as chief operating officer.

In a press release, Ancora cited the NS board's "poor decisions with regard to the company’s leadership, safety priorities and strategy" in explaining its decision to pursue changes at the Class I. Under Shaw's leadership, NS has delivered "industry-worst operating results, sustained share price under performance and a tone-deaf response" to the derailment in East Palestine, the group claimed.

In his letter to Shaw, Bose cautioned the railroad from straying from its path to improve the safety of its operations. He cited a letter Shaw recently sent to U.S. Transportation Secretary Pete Buttigieg outlining the progress made in response to the FRA's directives post-East Palestine.

"The commitments you make in your letter [to Buttigieg] are important and demonstrate the ability to make progress when railroads make safety a priority," Bose stated. "I particularly commend 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."

But the railroad's efforts to improve safety are not complete, Bose added.

"Safety is an ever-evolving task, and, while FRA remains committed to our goal of improving rail safety, achieving improvements requires the commitment of industry including its most senior leadership," Bose wrote. "While I recognize NS for the meaningful steps and results seen so far, often in notable contrast to industry peers, I want to emphasize the importance of a durable and lasting path forward that continues to prioritize safety."

The Surface Transportation Board posted Bose's letter on its website, available here.