Believe it or not, this is not an uncommon sight on railways world-wide. In Britain this is what we call a "wet bed." It is caused by poor drainage initially. The wooden sleepers then grind the ballast into a paste which - in hot, dry weather sets like concrete. Believe me, when you're riding on the loco, you know when you've hit one. Concrete sleepers are 10 times worse for causing these types of problems too.
The whole track bed needs to be dug out for about 5 yards either way and the ballast replaced. However, that's only going to be a temporary measure because the polythene membrane underneath the trackbed has most likely been pierced and until it is sealed again there will be constant problems with water and drainage. As usual, money will be the common denominator dictating how soon this might be undertaken. If it's a busy route, the problem will get worse very quickly - especially after a period of rain. If it's not a busy route they could get away with it for a year or more.
Dave