Guest Op-Ed: Railroads, Shippers Butting Heads on Tank Car Regs

Guest op-ed by Michael Kennedy, Kennedy Law and Policy.

The friction between railroads and shippers continued on August 12, when a coalition of shipper organizations submitted a Petition to the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) asking for them to adopt rules that would reinforce its authority to set uniform national tank car standards. This move may have a chilling effect on railway tank car safety. If implemented, the rules would raise costs for shippers, which is the main source of transportation for oil, chemicals and fertilizers affecting the community at large.

Procedurally, this raises a number of administrative law and policy questions. Do we let private committees comprised of shippers and railroads, such as the Tank Car Committee (TCC) under the Association of American Railroads (AAR), guide policy? Or is it best placed in a more transparent, yet cumbersome, federal rulemaking arena?

While the TCC serves an important role in developing consensus recommendations for improving tank car safety, it is the Department of Transportation’s statutory role to establish safety standards.  This petition comes as the AAR continues its attempt to get the tank car standards it wants through its majority control of the Tank Car Committee. AAR’s proposed requirements often are at odds with federal regulations and, in some cases, have been specifically considered and rejected by USDOT.

The coalition requested that the PHMSA amend 49 C.F.R. Part 107 and 49 C.F.R. Part 179: “to commence a rulemaking proceeding to modify existing rules and to adopt new rules that explicitly prohibit any person from requiring compliance with tank car specifications that are different from those in applicable regulations, except as authorized by a special permit”.

The coalition of shippers includes some big names in oil and gas, fertilizer and the chemical industry, including members of the American Chemistry Council, American Fuel & Petrochemical Manufacturers, American Petroleum Institute, Chlorine Institute, National Association of Chemical Distributors, National Industrial Transportation League, the Fertilizer Institute and others.

The shippers contend that such proposed rules would:

“. . .remove any doubt that PHMSA has fully exercised its statutory authority to establish national tank car safety standards to the exclusion of all other entities, including the AAR, which has in the past and may in the future attempt to impose standards that deviate from PHMSA’s regulations. The overarching purpose of this Petition is to establish unequivocally that DOT, not AAR, has been vested with the exclusive authority to determine what tank car standards are in the public interest and that the AAR has no authority to require compliance with different standards”.

In response, the AAR-recommended requirements have been considered and rejected by USDOT, the press release stated. But for decades, the TCC has “worked closely with shippers and other representatives to make tank car transportation in this country even safer,” according to AAR spokesman Ed Greenberg.

In rebuttal, “Our petition simply requests that DOT adopt clear rules that ensure that the responsibility for establishing tank car specifications remains in the hands of federal regulators,” shipper coalition officials said in their press release.

Originally, the TCC was created to develop a consensus on tank car standards and advise regulators for tank car specifications that meet DOT regulations. Now the committee is encroaching on setting requirements that would be outside of the federal rulemaking process. This would set a chilling and damaging precedent that would greatly diminish the USDOT’s authority to regulate safety.

Overall, we are seeing what happens when a well-intended advisory committee designed for a particular purpose finds itself entangled in politics and power struggles. Unlike highways, airways and waterways, America’s freight rail networks are both owned and operated by the same oligopoly and are keenly subject to abuse.

This proves to be yet another example of the rift between two parties who might want to seek some type of relationship counseling. Will USDOT grant the shipper’s petiiton and allow these standards to go through an open and transparent rulemaking process? Or will this can be kicked down the road for the next administration?

Michael Kennedy is an administrative law attorney specializing in federal rules and regulations. Prior to opening his own practice, he worked for the National Association of Regional Councils and has counseled business on the administrative rule making process. His views are his own and do not necessarily reflect those of the Eno Center for Transportation.


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