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Rail transport of anhydrous may soon end

Illinois Correspondent

WASHINGTON, D.C. — The Fertilizer Institute (TFI) is awaiting the U.S. Surface Transportation Board’s (STB) upcoming decision concerning whether to release railroads from their “common carrier” obligation to transport toxic-by-inhalation (TIH) substances such as anhydrous ammonia and chlorine.

The STB has indicated it would rule on the issue, called before them by the Assoc. of American Railroads (AAR), by early November.

At stake is whether Midwest farmers will pay even higher input prices for items such as fertilizer, as a result of the request.
“We’re still awaiting the STB’s decision, and we’ve been consistently told that a decision – if one is to be issued – will be announced around the first of November,” said Pam Guffain, a TFI spokesperson.

Agriculture groups, including the National Corn Growers Assoc., have linked with TFI, the Illinois Chemical and Fertilizer Assoc. and allied farm input retailers to denounce the railroads’ request, saying approval of AAR’s plea to relinquish responsibility for transporting TIH materials – or charging ag interests higher fees to cover their liability insurance costs – is unfair and places a huge financial burden on the shoulders of Midwest farmers and ag retailers.

The STB will have to decide whether century-old common carrier wordage still applies to today’s rail carriers. “Common carrier is out of old English law, but was reaffirmed in the Commerce Act and again in the Staggers Act,” said Guffain.

The notice in the Federal Register notes that: “The common carrier obligation refers to the statutory duty of railroads to provide transportation or service on reasonable request” (49 USC 11101(a)).

On July 22, a hearing on Capitol Hill addressed concerns the railroads had with this obligation, pertaining to the transportation of TIH materials. The railroads claimed that extremely high liability costs should exclude them from having to transport anhydrous ammonia, which Midwest farmers count on to ensure successful crops.

“Even if the STB rules against the railroads, soon after the 111th Congress convenes next year, the railroads will be back at it again,” said Guffain, citing lobbying efforts by the AAR to influence key Capitol Hill legislators after July’s STB hearing.

“The railroads are asking Capitol Hill for indemnification similar to what they asked the STB for. No actual legislation was proposed at the time, and TFI was asked to come to Capitol Hill to offer our side of the situation to the Senate Commerce Committee.”

‘Railroading’ ag
retailers, farmers?

Guffain said the railroads’ true motivation is to quit transporting ammonia and other TIH substances altogether and their offer to share liability costs with shippers and retailers is a smokescreen.
“They want to stop transporting (TIH materials) altogether. After the chlorine accident in Graniteville, South Carolina (Jan. 6, 2005), and the publicity after the nine deaths it caused, they really stepped up their efforts to ask TIH shippers to go to safer alternatives and have Congress release them from their common carrier obligation due to liabilities they face,” she said.

“They would rather be relieved of their responsibility to carry these products than to have to insure against lawsuits.”

Other recent rail incidents concerning TIH substances include an ammonia spill in Minot, S.D., and a chlorine spill in Texas, but according to Guffain, all of the incidents were the fault of the railroads.

“There hasn’t been a recent accident involving TIH materials that has been the fault of the commodity or the shipper,” Guffain said. “They tend to blame the product they are carrying rather than looking at their own issues internally.”

To try to force ag retailers and farmers out of the market for rail transportation of ammonia, railroads have begun charging higher transportation fees and surcharges in recent years, with more new fees just around the corner.

“Shipping rates have gone up somewhere between 400 and 600 percent since 2005, and it doesn’t seem to be stopping,” Guffain said. “And we’ve just received word that new ancillary charges for ammonia shipments by the railroads are coming.

“They will be pretty hefty charges. They’re going to find any way they can to drive us away from the railroads.”

Next up in the fight

“Be prepared to either find alternative shipping or pay the price,” Guffain advises shippers, suppliers and retailers, “but TFI’s standpoint is to fight this every way we can.”

Challenging the railroads’ request of the STB – and the larger issue of their monopoly on rail transportation – will include reporting all unreasonable transportation practices and rates to the STB or Capitol Hill.

“Everybody’s pretty fed up,” Guffain said.

During the July STB hearing, railroad representatives suggested that Midwest farmers could survive without rail transport of anhydrous ammonia. TFI and others attending the hearing refuted that suggestion.

“We don’t have the truck drivers or the alternate modes of transportation that can step in and carry the 3.9 million tons of ammonia we transport by rail every year,” said Guffain. “We have to find a way to deal with this that allows us the continued ability to use the railroads.” After the STB rules on the matter, she said, “we will regroup and figure out where to go from there.”