Monday, June 15, 2009

STB Decision on UP Petition

Last week I briefly noted that the Surface Transportation Board (STB) had issued a declaratory order in response to the Union Pacific petition that I have been following in this blog. That order clarified the requirement that UP has an “obligation to quote common carrier rates and provide service for the transportation of chlorine for the movements at issue in this case” (pg 1). Board Discussion STB starts off their discussion of the petition by noting that this declaratory order is being issued “to provide guidance concerning the extent of the common carrier obligation to transport hazardous materials by rail under the facts presented here [emphasis added]” (pg 3). In a footnote (footnote 12) to that comment the Board further notes that they have the authority to “determine whether the terms and conditions under which railroads transport TIH materials are reasonable”. The Board also notes that there “is no dispute that USM made a request for common carrier rates and that UP did not provide requested rates” (pg 4). They further note that “the common carrier obligation requires a railroad to transport hazardous materials where the appropriate agencies have promulgated comprehensive safety regulations”. Finally they note that while carriers may seek the imposition of stricter safety standards, the burden of proof lies on the carrier to show that those “regulations are unsatisfactory or inadequate in their particular circumstance”. Having established the standards that UP would have to sustain to prevail in their petition, the Board looks at the actual petition. The Board notes that while UP alleged that there were adequate closer supplies of chlorine available for the destinations listed in their petition, they failed to substantiate those claims while industry comments indicated otherwise. UP raised safety issues in their petition but, according to the Board, failed “to establish that the transportation at issue is unsafe” (pg 5). In fact, the Board noted that UP had “moved chlorine for USM to two of the denied destinations in the last 2 years”. Finally, UP suggested that honoring “USM’s requests may conflict with TSA and FRA [security and safety] policies”. The Board notes that comments filed by the Transportation Security Administration in this case stated that “the risks of transporting chlorine by rail are appropriately mitigated and such movements can take place without posing unnecessary safety and security risks” (pg 6). Having that statement on the record, the Board refused to substitute their “safety and security judgments for that of DOT and TSA” in this case. In short, the Board found that “UP has not shown that USM’s requests for rates and service are unreasonable.” This was the basis for their decision against the UP petition. Practical Affects of Ruling This certainly does not end the controversy about surrounding the common carrier obligation to carry TIH chemicals. It does establish the standards that will be used to examine future claims similar to ones filed in the UP petition. One claim that the Board specifically did not include in their ruling was the liability issue raised by the American Railroad Association in their comments on the petition. In a footnote (footnote 21) the Board noted that claim and wrote: “The Board recognizes that the issue of liability and indemnification exists with regard to the transportation of chlorine and other TIH materials” (pg 5). Since UP did not raise the issue in their petition, the Board could not consider it in their ruling. These issues, liability and indemnification, will be the next major fight in the ongoing conflict between railroads and shippers on common carrier obligation of carriers to provide transportation of TIH chemicals like chlorine and anhydrous ammonia.

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