By Daniel Niepow, Associate Editor of 

A decrease in demand and overall volumes in several sectors, including a sharp decline in coal traffic, offset the positive impact of core pricing gains in the second quarter, Union Pacific Railroad reported this morning.

The railroad's net income for the quarter fell 3 percent to $1.2 billion versus $1.3 billion in the same quarter last year. Earnings per diluted share decreased to $1.38 from $1.43 in the year-ago period.

Volume fell 6 percent to 2.3 million units as coal traffic plunged 26 percent to 309,000 units, industrial products carloads tumbled 13 percent to 306,000 units and agricultural products volume declined 7 percent to 225,000 units.

Despite several headwinds, the railroad "made meaningful progress by right sizing our resources to current volumes, and I am encouraged to report that we made these improvements while posting strong safety performance," UP President and Chief Executive Officer Lance Fritz said in a statement.

The railroad's operating ratio of 64.1 rose 0.6 points while operating revenue decreased 10 percent to $5.4 billion. By commodity group, coal revenue plummeted 31 percent to $679 million, industrial products revenue fell 14 percent to $970 million, ag products revenue declined 7 percent to $867 million, intermodal revenue decreased 5 percent to $1 billion, chemicals revenue slipped 1 percent to $905 million and automotive revenue inched up 1 percent to $560 million.

Both operating expenses and income fell during the quarter: the latter decreased 11 percent to $1.95 billion, while the former decreased 9 percent to $3.48 billion.

The U.S. Department of Transportation (DOT), including the Federal Railroad Administration (FRA) and the Pipeline and Hazardous Materials Safety Administration (PHMSA), has made enhancing the safety of rail transportation of crude oil one of its top priorities. And we have improved safety by convening the railroad and energy industries, undertaking and completing a comprehensive rulemaking, and executing multiple safety advisories and emergency orders.  
In all of these efforts, we have worked closely with all of you, the energy industry, Congress, and other stakeholders. When accidents have occurred, we have partnered with you, local first responders, states and others to respond quickly, provide resources, and lead or support investigations that hold many lessons and solutions to increase safety. FRA firmly believes that safety is a shared responsibility. That is why we have engaged, and will continue to engage, with your company and all stakeholders to raise the bar on safety.
In addition to establishing stronger tank car standards and requiring 21st century electronically controlled pneumatic (ECP) brakes, one of our efforts has been to ensure that critical information is provided to first responders and other local and state officials about the shipment of hazardous materials, including crude oil, through their states. Responsibly sharing this information is crucial for first responders to act quickly and to allow state and local officials to develop accurate, quality emergency plans. While federal, state, local, and tribal laws may place certain limitations on the nature and extent of information that can be shared with the public, we strongly support transparency and public notification to the fullest extent possible. And we understand the public’s interest in knowing what is traveling through their communities.
As you will remember, on May 7, 2014, DOT issued an Emergency Order requiring railroads to notify State Emergency Response Commissions (SERCs) and Tribal Emergency Response Commissions (TERCs) of the expected movement of 1,000,000 gallons or more of Bakken crude oil in a single train through the state. The emergency order required that railroads update SERCs and TERCS when a significant increase or decrease—25 percent or more in the number of trains per week—in an estimate occurs. Although the preamble to the May 2015 final rule contemplated that the Emergency Order would end in early 2016, the Department has since announced that the Emergency Order will remain in full force until DOT makes the notification requirements permanent through rulemaking. To be clear: railroads transporting crude oil must continue to provide the information required by the Emergency Order to SERCs. These notifications should also be updated in a timely manner, as specified in the order and subsequent frequently asked questions. FRA will continue with random spot checks and regular compliance audits to ensure that states, local communities and first responders have the information necessary to respond to a possible accident. FRA will take enforcement actions as necessary to ensure compliance.
I look forward to continuing to work with you to ensure that state, local and tribal officials and emergency responders have all the information they need to be prepared for and respond to any accident involving crude oil and other hazardous materials.
If you require additional information, please contact me or Karl Alexy, hazardous materials division staff director, at (202) 493-6245 or via email at: john.alexy@dot.gov.
Sincerely,
 
Sarah Feinberg
Acting Administrator
Federal Railroad Administrator
U.S. Department of Transportation

The U.S. House of Representatives approved a five-month, $8-billion extension of surface transportation programs on July 15. The new extension would give lawmakers until Dec. 18 to find a longer-term solution.

 

House Transportation and Infrastructure Committee Chairman Bill Shuster (R-Pa.) and House Ways and Means Committee Chairman Paul Ryan (R-Wis.) released a joint statement on the bill, H.R. 3038, and said, "This country needs a long-term plan to fix our roads, bridges and other infrastructure, and this bill gives us our best shot at completing one this year. By providing resources through the end of the year, we can ensure construction continues while we work toward a package that could close the trust fund's shortfall for as many as six years. We urge all members who want some long-sought stability in our highway and transit programs to support this critical extension."

Meanwhile, Rep. Alcee Hastings (D-Fla.) had a different view saying, "If kicking the can down the road were an Olympic sport, here in the United States Congress we would...win aluminum."

The bill will now head over to the Senate, where the Committee on Commerce, Science, & Transportation approved its own version of a multi-year transportation bill, S.1732.

Commerce Committee chairman, U.S. Sen. John Thune (R-S.D.) said, "The committee incorporated important bipartisan safety enhancements and approved a bill that enacts critical regulatory reforms. We worked hard to include input from both sides of the aisle, and we now have a bill that can move forward towards enacting a multi-year transportation reauthorization bill versus passing additional short-term extensions."

S. 1732 includes an extension of Positive Train Control implementation to 2018 for most freight and passenger railroads.