Trucking Could Gain Hazmat Business Under New DOT Rail Shipment Rules
By Rip Watson, Senior Reporter
This story appears in the April 28 print edition of Transport Topics. Click here to subscribe today.
Railroads are facing new federal regulations for shipments of highly hazardous materials, such as chlorine, that could drive more business to trucks.
The Department of Transportation’s April 16 rule ordered railroads to collect more information about moving shipments of chlorine, ammonia and explosives over the safest possible route by Sept. 1, 2009. The rules could change the economics of moving that sensitive cargo by increasing the cost, travel time and distance traveled.
The rash of rules, including a proposal to make tank cars stronger, followed rail accidents in 2002, 2004 and 2005 with hazardous materials releases that killed 13 people.
“We expect the rerouting of these materials to increase costs for rail shipments, which could result in a decision to move more of these materials by truck,” said Richard Moskowitz, vice president and regulatory counsel for American Trucking Associations. “Although this rule applies only to rail, it may provide insight into the agency’s thinking on whether to revise DOT’s rules applicable to the highway routing of highly hazardous materials.”
Others questioned the potential for a business shift.
“We don’t see any major shift” from the new routing rules that are effective June 1, said Marty Durbin, managing director, federal affairs, American Chemistry Council. “We are pleased to see DOT take a holistic approach to safety. You can’t just take one piece of the puzzle.”
The Fertilizer Institute’s Pam Guffain, vice president of member services, agreed that she didn’t expect freight diversions. However, she said the added paperwork could give railroads a new excuse to raise rates that already have quadrupled in some cases.
“Our industry has been concerned with the market leverage of railroads,” Durbin said. “If you add the ability for the railroads to pick and choose what they move, that adds to their leverage.”
“Transportation and distribution patterns tend to be well-established,” DOT’s April 16 rule states. “The current fleet of cargo tank motor vehicles is insufficient to handle a significant shift.”
In a related move, the railroads are pressing their case to be relieved of the 122-year-old common carrier obligation that requires them to carry the most highly hazardous materials, such as chlorine, unless there is a liability cap and a risk-sharing pool. If the railroads are successful in that campaign, truckers also could benefit if there is enough available cargo tank equipment.
“The revenue that highly hazardous materials generate does not come close to covering the potential liability to railroads associated with this traffic,” said the Association of American Railroads’ written testimony filed at the Surface Transportation Board in advance of hearings on April 24 and 25. “Every time railroads move one of those shipments, they face potentially ruinous liability.”
Shippers such as Dow Chemical Co. are concerned. The company projected a possible increase of 250,000 trucks on the road solely from its own traffic if the common carrier obligation is removed.
“The increased number of shipments would have a cascading risk effect,” Cindy Elliott, global supply chain sourcing director at Dow, said in a written STB filing. “There are simply not enough trucks on the market to absorb this demand. The new truck volume would compound practical concerns around highway congestion, accident prevention and lack of available specialized tank truck and driver capacity,” she said.
“The efforts of the railroads to get out of their common carrier obligation to haul certain ‘high hazard’ materials could have a significant impact on trucking capacity and the entire distribution chain,” John Conley, president of the National Tank Truck Carriers told Transport Topics on April 23.
“There is enough trucking capacity to absorb increased loads of some of the materials, such as anhydrous ammonia, and we already are seeing some of that impact. Some of the other products such as chlorine would present a much bigger challenge,” he said.
Durbin said the agency can’t make a change in the common carrier obligation because it is a statute that must be changed by Congress. The rail group said in its written statement that it wants the STB to re-examine its power to enforce the obligation and recommend legislative changes that Congress could adopt.
Earlier this month, DOT published a separate set of requirements that would force the introduction of tank cars that are five to 10 times stronger than the current fleet that carries those materials listed as toxic inhalation hazards, or TIH.
The DOT’s proposal regarding tank cars, published April 1 in the Federal Register, affects tank cars made before 1989. Older models would be phased out in an effort to prevent releases of highly hazardous materials when a cargo tank is punctured.
Still more rail regulations are in the works.
The Transportation Security Administration, a part of the Department of Homeland Security, is writing its own set of rules to assess safety risks and enforce compliance, especially in 46 urban areas. The TSA hasn’t yet published its final rule. Routing in urban areas, including Washington, D.C., has sparked suits by municipalities that want highly hazardous cargo to avoid their cities.
