Wednesday, January 30, 2013

STB Publishes Notice with Potential Chem Security Implications

Yesterday the Surface Transportation Board (STB) published a notice in the Federal Register (78 FR 6173) announcing that it would be conducting a ‘declaratory order proceeding’ to move forward with a resolution of a petition filed with the Board back in August of last year. The petition filed by seven private citizens in Upton, MA asked the STB to declare that operations at a local rail transloading station do not constitute ‘transportation by a rail carrier’. Currently the facility is claiming that it is not subject to local regulation since the STB federal preemption applies.

The Dispute

The petitioners argue that the operations at the facility operated by the Grafton and Upton Railroad do not meet the definitions of ‘transportation by a rail carrier’ established by regulation and actions by the STB. If the facility does not meet the definition then its operation would not be regulated by the STB and there would be no federal preemption that would stop local authorities from regulating the facility.

Briefly the issues revolve around who does what to the material that is being transferred from rail cars to ground transportation. Materials that are being handled at this particular facility include wood pellets that are being removed from bulk railcars, put into 40-lb bags and loaded on truck for transport off site. Additionally bulk chemicals are being transferred from railcars to tank trucks for further transportation to customers.

As is to be expected in this type of dispute the two sides disagree in the facts and the interpretations that are central to the case. A total of nine legal documents have been filed in the back in forth over the last six months (STB Docket FD 35652) and more will undoubtedly be filed before the principles appear before the Board.

Chemical Security Implications

There is nothing in the initial petition that describes the specific chemicals that are being transloaded at the facility. If the facility handles chemicals included in the list of DHS chemicals of interest (COI) in Appendix A of the CFATS regulations and those chemicals are put into ‘storage’ at the facility, then the STB ruling could have repercussions with regards to the facility’s status with regard to the CFATS regulations.

When the final interim rule for the CFATS regulations was published it included language in the preamble to the rule that indicated that DHS was going to allow TSA to conduct security regulation of railroad. Specifically the document stated (72 FR 17699) that:

“DHS presently does not plan to screen railroad facilities for inclusion in the Section 550 regulatory program, and therefore DHS will not request that railroads complete the Top-Screen risk assessment methodology.”

So if the STB rules that this particular facility is ‘transportation by a rail carrier’ then it would not be regulated under the CFATS regulations; DHS would rely on the less stringent and more narrowly focused (in terms of materials covered) TSA security rules. On the other-hand, if STB rules that this is not a railroad operation, then the unofficial TSA exemption for the facility would no longer apply. The facility might then have to submit a CFATS Top Screen to determine if it is a high-risk chemical facility under the definition of that regulation.

Implications for other Facilities

In reading the original petition it does not seem that the petitioners are breaking any ground here in the terms of why they are claiming that the facility should not be regulated by the STB. However, case law frequently pivots on minor changes and interpretations. That being the case this petition could have implications for other transloading facilities around the country that are operating on the boundary between being railroad operations and being some other sort of processing or transportation facility.

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