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Rail News Home Union Pacific Railroad

September 2008



Rail News: Union Pacific Railroad

Railroads, Chemical Shippers Home in on Haz-Mat Safety and Security Concerns, Hash Out Liability Differences



By Jeff Stagl, Managing Editor

Collaborative and divisive. That sums up railroads’ and chemical shippers’ two-fisted relationship these days on major hazardous-materials transportation issues.

Railroads and shippers are working together to improve haz-mat safety by coordinating a new design for tank cars that carry Toxic by Inhalation (TIH) materials, and pushing for an interim TIH tank car until the final design is approved and tested. They’re also on the same page regarding a new U.S. Department of Transportation (USDOT) rule that requires railroads to conduct a comprehensive safety and security risk analysis of a haz-mat shipment’s primary route.

But railroads and shippers are miles apart when it comes to agreeing on what constitutes reasonable rates, the implications of roads’ federal common-carrier obligation to transport the materials and the liability railroads should take on to cover the cost of any accident involving TIH cargo, such as chlorine or ammonia.

Railroads are asking shippers to share TIH-related liability risks, and develop alternative chemicals that would be safer to transport or ship products in a diluted or otherwise less-toxic form. Shippers say they’re transporting the products their customers want, there are no viable alternatives for many chemicals — such as anhydrous ammonia, a primary nitrogen-producing ingredient in most phosphate fertilizers — and rate increases are high enough that they should cover a portion of insurance costs.

The parties are discussing the issues to some degree. The Fertilizer Institute (TFI), which represents fertilizer shippers’ interest, is gathering feedback from Class Is on a liability/rate relief proposal involving TIH materials, and the Surface Transportation Board (STB) is conducting hearings on the common-carrier and liability issues during which both sides are sharing their views.

Yet, railroads and shippers aren’t close to any resolutions. It could be up to Congress to settle the differences while the parties continue to work together on several safety-improving initiatives.

“If there is any change in the railroads’ common-carrier obligation (or any cap on liability, as the railroads have proposed) ... neither the board nor the railroads are empowered to take such actions,” wrote Michael McBride in testimony submitted in July to the STB on behalf of the Edison Electric Institute, an association of U.S. electric companies. “Rather, Congress would need to do so because the existing statutes require railroads to carry all hazardous commodities tendered in conformance with all applicable governmental regulations, and the STB has no authority to preempt state liability law.”

Insurance claims

The liability issue came to a head on July 22, when the STB held a common-carrier obligation hearing. The board, which previously conducted hearings on the issue in April, is determining whether to issue a policy statement addressing caps on railroads’ liability for TIH moves.

During the hearings, chemical shippers stressed that railroads provide the safest way to move highly hazardous materials — 16 times safer than trucks — are well compensated to handle the cargo and should assume responsibility for any catastrophic accident-related claims.

Railroads have control over operations, so liability should be placed on them, says Tom Schick, senior director for distribution for the American Chemistry Council (ACC), which represents U.S. chemical firms’ interests.

“If you have market power, and railroads have that, don’t force customers to indemnify you,” says Schick, who testified at the July 22 hearing.

If the STB were to “wave a magic wand” and issue a policy statement affecting liability caps, it would turn American law on its head, says Bruce Carlton, president of the National Industrial Transportation League (NITL), a shippers’ organization that counts a number of chemical producers among its 600 members.

“If you cause harm, you pay — it’s a foundation stone of American law,” he says. “You know what will happen if you get your hand caught in the cookie jar.”

Risky business

Railroads agree that hazardous materials need to be moved safely and rail is the best way to do that.

But there is an extraordinary risk associated with transporting TIH materials and that risk “needs to be shared with whoever ships the products,” says CSX Transportation Vice President of Public Safety and Environment Skip Elliott.

Although haz-mat shipments account for 1 percent or less of Class Is’ total traffic, railroads are not asking to be let out of their common-carrier obligation, says Association of American Railroads (AAR) President and Chief Executive Officer Edward Hamberger.

However, railroads “have no leverage at all” with liability and face potentially billions of dollars in costs if a catastrophic accident causing many fatalities occurs, he says.

“We just want some leverage,” says Hamberger. “We shouldn’t have to go into bankruptcy because of moving these materials. We need stability at some level.”

TFI’s recent proposal could provide that. Under the institute’s plan, railroads would cover the first $500 million in indemnification, fertilizer manufacturers would cover the next $1 billion, and either railroads or the government would cover costs exceeding $1.5 billion. In return, TFI is “asking for some relief on rates,” says Hamberger.

“They are approaching each railroad individually to discuss it,” he says. “We will go to the Hill if the industry comes together on their proposal.”

If the STB were to cap railroads’ liability at $500 million or $800 million in the meantime, that would be a “lot of skin in the game,” says Hamberger.

However, the liability issue isn’t the top haz-mat concern; improving safety is, says NITL’s Carlton.

On that subject, the railroads agree. Although 99.99 percent of all haz-mat shipments arrive at their destination safely, derailments continue to occur because of broken rails, burnt-off journals and human errors.

“We need to reduce derailments, especially those that could lead to catastrophic failures,” says Mark Stehly, BNSF Railway Co. assistant VP of technology research, development and environmental. “The rate of improvement for derailments has slowed.”

The Class I is counting on breakthrough technologies to help prevent accidents. An Electronic Train Management System BNSF is piloting to assess the benefits of positive train control is showing promise and the railroad is working on new ways to detect rail defects, says Stehly.

In addition, BNSF has established a “super site” featuring numerous wayside detectors to identify problems with journals and other components, and has developed a network of warm bearing detectors to obtain multiple readings.

CSXT has created a network of hot-box detectors, as well, to obtain temperature readings and other data in real time, and analyze readings between detectors.

The Class I also has created six super sites, and expects to add a seventh in November and an eighth in 2009.

“You won’t find things that need immediate fixing, but things that need to be fixed the next ‘X’ thousand miles,” says CSXT VP of Service Design and Advanced Technology Alan Blumenfeld.

A tougher tank car

Perhaps the biggest technological breakthrough still is several years away. Railroads, shippers, tank-car builders and government agencies are developing a design for a “next-generation” tank car, which would become the federal standard for cars carrying highly hazardous materials. Union Pacific Railroad, Union Tank Car Co. and Dow Chemical Co. — with the help of feedback from many railroads and chemical shippers, and several government agencies, including USDOT, the Federal Railroad Administration (FRA) and Transport Canada — are working to develop a car that would better resist puncturing and content releases during a serious accident.

However, it could take car builders up to five years to design, produce and test the cars in revenue service, so chemical shippers will be hesitant to purchase new cars, says Hamberger. Therefore, the AAR and ACC have petitioned the FRA to incorporate a new interim car design into a tank-car rule the USDOT and Pipeline and Hazardous Materials Safety Administration are developing in conjunction with the FRA. In March, the USDOT proposed what it termed the “most sweeping and revolutionary” rule in decades.

The rule would require TIH-carrying cars to be puncture-resistant enough to prevent penetration at speeds up to 25 mph for side impacts and 30 mph for head-on collisions (more than double existing speed stipulations), and set a maximum speed of 50 mph for any train transporting a TIH car.

The interim car could be produced right away and sold to shippers until the next-generation car is available. The interim car would offer a long service life (the AAR and ACC are requesting 20 years), and provide a 63 percent improvement in resisting punctures and releases vs. current TIH-carrying tank cars, says Hamberger.

Meanwhile, another USDOT haz-mat rule already is set in stone. In effect as of June 1, the rule requires railroads to conduct a comprehensive safety and security risk analysis of primary haz-mat routes and practicable alternative routes. Supported by the ACC and developed by the pipeline administration in consultation with the FRA, the rule covers TIH cargoes, carloads containing more than 5,000 pounds of various explosives and certain high-level radioactive materials. The analyses must consider information provided by local communities and incorporate 27 risk factors, such as trip length, volume and haz-mat type. Railroads must establish routes based on the analyses by September 2009.

The rail industry has contracted Visual Risk Technologies Inc. to develop a software model all railroads can use to assess risks in the same manner.

“We want to do it in a common way so there’s no debate if one railroad assesses a risk at a greater value than others,” says CSXT’s Elliott.

Visual Risk Technologies has completed a first-phase model that can analyze the Chicago area so the AAR and railroads can “see how the technology works,” says Hamberger, adding that the first phase was funded by $5 million in federal funding, including U.S. Department of Homeland Security monies.

“We’re looking to get extra money from the feds to make a nationwide model,” he says. “That might be done at the end of the year.”

Variability in variables

In the meantime, the Class Is are revamping their information technology systems to conduct the risk analyses. The 27 variables are difficult to incorporate into a routing decision, says CSXT’s Blumenfeld, adding that the railroad never would have considered some of the variables before, such as “proximity to an iconic target.”

“What is considered an iconic target?” he asks.

Choosing a route that meets all the criteria most likely means some transit times will increase, says Blumenfeld.

“It will take cars longer to get to their destination, so customers will need to inventory more product,” he says.

The modeling tool might not necessarily choose the shortest route, which usually is between population centers, says BNSF’s Stehly.

“So, you could use a longer route that doesn’t have the same rail quality as our major and shorter routes,” he says. “Some things should be up to us to define. We need flexibility and guidance to have a practical system.”

It likely will take quite a bit of flexibility from shippers, railroads and government agencies to work out the kinks in the haz-mat supply chain. It’ll also require a lot more teamwork — and a lot less clashing — to ensure highly toxic materials are loaded, transported and unloaded as safely and securely as possible.

“Things need to be well coordinated, like a ballet, to come together,” says NITL’s Carlton. “We need to be perfect with safety, and all sides are trying for perfection.”



Keywords

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