Friday, March 19, 2010

UP and USM to Settle

In the continuing saga of disagreements between U.S. Magnesium (USM) and the Union Pacific Railroad (UP) about the cost of shipping railcars of chlorine gas, we seem to have reached a point where the two sides have decided to go back to two-party talks to resolve the issue. The Surface Transportation Board (STB) announced today that, on two separate action before it, Board Proceedings are (on Docket #’s NOR 42115 0 and NOR 42116 0) being held in abeyance pending settlement talks between the two parties. These actions were requested jointly by both parties on March 11th. USM originally filed complaints with the STB on June 25th, and October 9th, 2009 challenging the reasonableness of rates for the shipment of chlorine gas from the USM plant in Rowley, UT to customers in California and Nevada. Two other complaints (UP v USM and USM v UP) over similar issues (to different customer locations) had both been resolved by the Board in favor of USM. While this may allow for a resolution of these particular rate disputes (that remains to be seen) it still does not provide any guidance to the hazmat shipping community or railroads on how the Board intends to handle the issue of TIH shipment rates. This issue will need to be addressed in the near future as many railroads maintain that they need to recover substantial portions of the costs for the installation of Positive Train Control (PTC) systems from the TIH shippers. This is due to the fact that the current FRA rules require installation of PTC systems on freight-only Class 1 mainlines only if TIH shipments are made on those lines. As part of this stay ruling, the Board will require a status report on the two-party talks be filed on May 18th and every 30 days there after until the problems are formally resolved. The issues may yet have to be resolved by the STB.

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