Unions warn regulators cost cuts at BNSF are risky

WASHINGTON — Recent cutbacks totaling $105 million in BNSF’s 2024 capital maintenance plan have raised major safety and service concerns from the railroad’s unions.

In a statement filed with the Surface Transportation Board, Tony Cardwell, president of the Brotherhood of Maintenance of Way Employes Division (BMWED) of the Teamsters Union, contends that BNSF’s decision to defer the maintenance and infrastructure projects is being done “in pursuit of a lower operating ratio” to satisfy the railroad’s owner, Berkshire Hathaway (NYSE: BRK-B).

Cardwell’s statement, published by the STB on Thursday, included an internal email from Justin Lopez, general director of BNSF’s Montana Division, to division employees detailing the areas where management planned to eliminate or postpone maintenance work.

As part of the cutbacks, Lopez notified employees that BNSF was furloughing two track lifter/undercutter gangs and two surface crew/high-speed tamping gangs.

“I cannot stress how important managing your Division Capital now becomes as well as unit costs on the remaining plans,” Lopez said in the email. “There is no room for adding to our capital plan this year so if overruns need to be covered, it will be done through offsetting.”

The cutbacks, Cardwell warned the STB, reflect a “disturbing trend” in the rail industry.

“While short-term financial results may appear improved, the long-term consequences of such decisions are detrimental to the rail network’s safety, reliability, operational efficiency, and capacity for increased traffic,” according to Cardwell. “Maintenance of way work is not discretionary; it is an ongoing requirement that should not be compromised for short-term financial gains.

“The proposed cuts demonstrate that BNSF is prioritizing immediate cost savings over the necessary and continuing maintenance program that is fundamental to safe and effective railroad operations as well as the railroad’s capacity for growth.”

Lopez acknowledged in his email the risks of the maintenance cuts to seven programs along the BNSF rail system, with cost savings ranging from $2 million to $35.9 million depending on the project.

For example, deferring controller system enhancements at BNSF’s Alliance Yard in Alliance, Texas, could mean “longer dependency on outdated systems,” which could result in “longer service disruptions.” And eliminating 1,200 miles of high-speed surfacing and shoulder ballast cleaning along its system could lead to “deterioration of surface conditions [that] could result in increased slow orders,” Lopez noted.

Caldwell’s statement was submitted on behalf of BMWED along with six other rail unions ahead of a two-day hearing at the agency next week to examine the railroads’ ability to continue to grow their business.

BNSF: Safety concerns overstated

In responding to the unions’ concerns, BNSF said its commitment to safety is reflected in the company setting a record last year for workplace safety, and that it continues to lead the industry in safety in 2024.

“When making any planning decisions, both during the planning phase and throughout the year as adjustments are made, BNSF leaders carefully consider the potential effects on safety and service,” the company told FreightWaves in an email, addressing the recent maintenance cutbacks.

“This is part of our culture, and the e-mail the unions reference reflects that commitment. Ultimately, we determined that neither safety nor service would be substantially affected by the reductions.”

In addition, the suggestion that the changes were in pursuit of a lower operating ratio “is just wrong,” the company asserted. “This plan reflects capital expenditures, which are not operating expenses.”

According to data submitted by the railroad ahead of the hearing, overall investment in rail operations, including in BNSF’s core network, increased 24% to $3.67 billion in 2022 and 8% to $3.92 billion 2023. Investment planned for 2024 will remain unchanged at $3.92 billion.