October 02, 2014

02/10/2014: NGFA urges USDA to reconsider and revamp proposed rules for rail cars hauling crude oil and ethanol

The National Grain and Feed Association (NGFA) and 29 other major national and state agricultural organisations have urged the US Department of Transportation (DOT) to reconsider and revamp proposed new rules for rail tank cars hauling crude oil and ethanol to avoid exacerbating already significant disruptions to rail service.


The groups voiced support for "practical, feasible and economically viable steps" proven to be effective in further enhancing the safety of rail transport of crude oil and other flammable liquids in tank cars.  But they said several elements of the proposed rules issued by DOT's Pipeline and Hazardous Materials Safety Administration (PHMSA) would be "contrary to these principles" and would risk exacerbating "an already challenging rail service environment and adversely impact the fluidity and efficiency of the national freight rail network." 

The PHMSA proposed rule would establish new standards and operating controls for trains and tank cars transporting certain flammable liquids.

The agricultural groups argued that the proposed rule would have the unintended consequence of "exacerbating already degraded rail service to agriculture and other rail users, (as well as) threaten to increase rail congestion, strain the capacity of rail tank car builders and repair shops, and impose major costs not accounted for in PHMSA's flawed cost-benefit analysis."

Specifically, the organizations urged PHMSA to:
Reconsider its proposed speed-restriction options by more carefully comparing anticipated safety benefits with the significant adverse rail service, rail network fluidity and economic impacts that would result.  For instance, the groups argued that it made little sense to impose in sparsely populated rural areas the same 40 mile-per-hour (or lower) speed limit that currently applies to trains hauling flammable liquids through densely populated urban areas.  In addition, the organizations stated that the proposed railroad routing protocol and speed restrictions would cause more circuitous routes and longer transit times, resulting in the need to purchase more tank cars to move the same volumes, as well as higher rates.

Reconsider and modify the proposed schedule for retrofitting or replacing by Oct. 1, 2018 the 30,000 tank cars currently in ethanol service.  The organizations said existing shop capacity would be insufficient to handle the maintenance and retrofit work, and that it could take up to 10 years and cost up to $65,000 per car to retrofit.  Most of the current ethanol car fleet was built in 2007-08, with a 50-year lifespan.  A more practical approach, the organizations stated, is to grandfather existing ethanol cars, allowing them to remain in service and rely on shipper and tank car owners to phase out the use of older cars when new ones reasonably can be obtained.

Consider taking a more comprehensive, risk-based approach to the issue of safe rail transportation of flammable liquids by addressing the impact on derailments of such factors as substandard track conditions, inadequate track and/or roadbed maintenance, and human error.  "The proposed rule's failure to address railroad track inspection and maintenance is particularly egregious, and should be rectified as part of a more 'holistic' approach to rail safety," the groups wrote.  

Reconsider the proposal to require electronically controlled pneumatic (ECP) brakes on certain flammable fuel trains.  As recently as 2008, the Federal Railroad Administration had concluded it could not justify imposing an ECP brake requirement that carried an estimated $10,000 cost per car that would be borne by rail carriers and car lessors.  

Further, the agricultural organizations noted that from an operational standpoint, ECP brakes do not work unless every car in a train is converted to this technology.  In addition, they wrote, the majority of locomotives would require installation of ECP equipment to ensure adequate and available power for such trains.
For a more in-depth look at the organizations' analysis of the DOT proposal, see thefull letter.

National agricultural producer and agribusiness associations co-signing the letter were:

  • Agricultural Retailers Association
  • American Farm Bureau Federation
  • American Soybean Association
  • Corn Refiners Association
  • National Association of Wheat Growers
  • National Barley Growers Association
  • National Corn Growers Association
  • National Council of Farmer Cooperatives
  • National Grain and Feed Association
  • National Oilseed Processors Association
  • National Sunflower Association
  • U.S. Canola Association
  • U.S. Dry Bean Council
  • USA Dry Pea & Lentil Council

In addition, state agribusiness associations affiliated with NGFA that co-signed the letter were:

  • Agribusiness Council of Indiana
  • Grain and Feed Association of Illinois
  • Michigan Agri-Business Association
  • Michigan Bean Shippers
  • Kansas Grain and Feed Association
  • Minnesota Grain and Feed Association
  • Missouri Agribusiness Association
  • Montana Grain Elevators Association
  • Nebraska Grain and Feed Association
  • North Dakota Grain Dealers Association
  • Northeast Agribusiness and Feed Alliance
  • Oklahoma Grain and Feed Association
  • Pacific Northwest Grain and Feed Association
  • South Dakota Grain and Feed Association
  • Texas Grain and Feed Association
  • Wisconsin Agri-Business Association

The U.S. agricultural sector began experiencing severe rail service disruptions early in the fall of 2013 resulting from a combination of factors.  These included dramatic increases in the volume of coal, crude oil and intermodal shipments transported by rail, a large and compressed U.S. grain harvest, and a lack of capacity within the rail industry in terms of available locomotives and crews.  Severe weather during the 2013-14 winter season exacerbated the deteriorating service.

The service disruptions reached such a level that the Surface Transportation Board (STB) conducted a hearing on agricultural rail service issues in April.  The STB subsequently issued an order directing the BNSF and CP Railways to report on shipments of fertilizer this past spring due to severe backlogs to facilitate the planting of the spring crops, and launched an ongoing proceeding on grain-rail-service issues that requires weekly reporting of service metrics by the BNSF and Canadian Pacific Railways.  The STB followed those actions with a subsequent public meeting on rail service issues conducted earlier this month in Fargo, N.D., as well as numerous private meetings with individual agricultural shippers in the northern plains states.

In addition, severe strains on rail capacity and resulting service levels are expected to continue this fall, as the United States harvests and transports a record or near-record grain and oilseed crop.  Meanwhile, there continues to be strong demand for freight rail service from other sectors of the agricultural and non-agricultural segments of the U.S. economy.

The NGFA, established in 1896, consists of more than 1,050 grain, feed, processing, exporting and other grain-related companies that operate more than 7,000 facilities and handle more than 70 percent of all U.S. grains and oilseeds. Its membership includes grain elevators; feed and feed ingredient manufacturers; biofuels companies; grain and oilseed processors and millers; exporters; livestock and poultry integrators; and associated firms that provide goods and services to the nation's grain, feed and processing industry. The NGFA also consists of 26 affiliated State and Regional Grain and Feed Associations, and has strategic alliances with Pet Food Institute and North American Export Grain Association.

Read more HERE.

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