Railroad Transportation of Nuclear Waste and Other Hazardous Materials

The Electricity Journal, Vol. 21 Issue 3 pp.55

April 2008

By Michael McBride

Railroads continue to have duties to shippers and the public, and they may not take the law into their own hands. Except for emergencies – and then only for the duration of the emergency – they must carry all commodities without regard to whether they are dangerous, unless the proper agency of the federal government has relieved them of that obligation.

I. Introduction

Railroads are common carriers.  As common carriers, railroads have a duty to carry all commodities, even if they are dangerous, unless the federal government has relieved them of the duty to carry a particular commodity.

The government has relieved railroads of their duty to carry only a few commodities. To invoke the obligation on the part of the railroads to carry as common carriers, shippers must tender commodities for transportation by railroad in conformance with all applicable governmental regulations. If they do, courts have consistently held that railroads may not absolutely refuse to carry them. Railroads may, however, establish reasonable terms for the carriage of a commodity, subject to the review of the Surface Transportation Board.

The U.S. Department of Transportation has authority to establish regulations for the safe transportation of goods by railroad.  Other agencies may also have authority in certain instances (such as the U.S. Nuclear Regulatory Commission in the case of radioactive materials). If a railroad or a shipper does not agree with those regulations and thinks that they should be changed or that new regulations should be adopted, it (or any other member of the public, for that matter) may file a petition for rulemaking with the applicable agency. In doing so, the petitioner may propose a particular rule or simply call an alleged problem to the agency’s attention and ask it to propose and adopt rules to address the problem.

Many dangerous but important commodities are produced and used in this country every day. Chlorine, for example, is used to purify drinking water and perform other useful tasks, but it is highly toxic. Anhydrous ammonia is used for pollution control purposes in coal-fired power plants. Radioactive materials are produced and transported by railroad by the Department of Defense for use in submarines and in other national defense circumstances. Radioactive materials are also produced and used by private industry for medical and energy needs, among others. Fertilizer and fuel oil can be combined to make a powerful bomb, as happened at Oklahoma City in 1995, but they continue to be produced and transported in large quantities for use on farms and in other industries. Many of these and other dangerous, or potentially dangerous, commodities move by railroad.

It is in the public interest that railroads be obliged to carry these dangerous but essential substances because the rail mode generally has been found to be the safest mode for that transportation.

Railroads are no longer required to maintain tariffs, let alone to file them with any governmental agency as most regulated entities are required to do. Railroads are required, however, to maintain rates and other service terms and to provide them promptly to shippers who request them. Generally speaking, rates and other service terms for the carriage of any commodity are subject to regulation by the Surface Transportation Board, but they are not generally regulated in fact unless the railroads have ‘‘market dominance’’ and the rates exceed a reasonable maximum. Increases in rates or other service terms may not be imposed until 20 days have elapsed if a shipper has requested such rates or service terms, or if the shipper has made an arrangement for transportation that would be subject to those rates or service terms.

Since the Staggers Rail Act of 1980, Congress has allowed railroads also to act as contract carriers. As contract carriers, railroads are subject only to the obligations and liabilities set forth in the contract. Contracts are not regulated, but instead are enforceable in state or federal court in accordance with the terms of the contract. Most dangerous commodities move in accordance with contracts in order to permit carriers and shippers to cooperate in the safe transportation of such commodities.

There are times, however, whether lawfully or not, when railroads refuse to carry certain commodities. In the past, for example, railroads refused to carry radioactive materials, but the Interstate Commerce Commission found that their refusal was unlawful and required them to publish rates for their transportation. The ICC also struck down an effort on the part of the railroads to impose wasteful and unnecessary ‘‘special train service’’ on shipments of radioactive materials. The courts upheld the ICC. These ICC and judicial determinations remain the law today.

In 2001, railroads embargoed certain toxic chemicals due to concerns about terrorism. It is unclear whether the DOT sanctioned that embargo. During emergencies such as wash outs due to weather, railroads have on occasion been allowed to impose an embargo, but only to the extent required by the emergency. Such circumstances may not justify the permanent refusal of railroads to carry commodities, even dangerous commodities, unless the government so permits. Very recently, the Association of American Railroads urged that the manufacture of ‘‘extremely dangerous chemicals’’ no longer occur where supposedly safer chemical substitutes are available.1 AAR’s statement appears to have been addressed specifically at chlorine, but AAR is wrong about the need for chlorine and that supposedly safer substitutes are available. Obviously, it is not within a railroad’s authority to determine what is to be manufactured by its customers.

Before such embargoes are considered or imposed again, it would be well if the railroads’ customers were consulted and informed of the railroads’ intentions, and if the proper agencies of the government were involved to determined if the overall impact of the railroads’ actions was in the public interest.  If, for example, such an embargo caused dangerous chemicals to be shipped by highway, the railroads’ actions could create a safety problem rather than solve one.

II. Railroads Are Common Carriers

It is indisputable that railroads are common carriers. 49 U.S.C. § 11101; Akron, Canton & Youngstown RR Co. v. ICC, 611 F.2d 1162, 1166 (6th Cir. 1979), cert. denied, 449 U.S. 830 (1980).2 As such, they must carry virtually all commodities tendered to them upon reasonable request (id., § 11101(a)),3 and must maintain rates and other service terms for such transportation. Id., § 11101(b). They may not increase rates or service terms in less than 20 days if (a) a shipper has requested such rates or service terms, or (b) if a shipper has made arrangements for transportation that would be subject to the increased rates or other service terms. Id., § 11101(c).

Aside from its duty to carry all commodities tendered in accordance with governmental regulations, a carrier may impose other reasonable terms and conditions on the transportation of any commodity. What is ‘‘reasonable’’ may be challenged at the STB if no agency otherwise has jurisdiction. Generally, the STB has jurisdiction over all unreasonable ‘‘practices,’’ 49 U.S.C. § 10704(a)(1), but it has jurisdiction over rates only if a railroad is ‘‘market dominant.’’ Even if the railroad is found to be market dominant, the STB may prescribe a maximum reasonable rate only if rate exceeds the standard for reasonable rates established by the STB. 49 U.S.C. § 10707(c).4

A railroad may not be found to have violated its common carrier duty if it first fulfills its obligations entered into under lawful contracts pursuant to 49 U. S. C. § 10709. 49 U.S.C. § 11101(a).  However, ‘‘[c]ommitments which deprive a carrier of its ability to respond to reasonable requests for common carrier service are not reasonable.’’ Id.

The ‘‘common carrier obligation,’’ then, is a matter partly of statute, partly of the common law before enactment of the Interstate Commerce Act, and partly a matter of what the STB or the courts say it is. But there is no doubt that railroads are common carriers (as well as contract carriers and private carriers), that their status as common carriers imposes obligations on them to shippers and the public, and that they may not assert unilaterally a right not to carry certain commodities unless the law permits.

III. Limitations on Embargoes

Railroads do impose embargoes on transportation over portions of their lines. See, e.g., ICC v. The Baltimore and AnnapolisRR. Co., 398 F. Supp. 454 (D.D.C. Md. 1975), aff’d, 537 F.2d 77 (4th Cir. 1976). Some such embargoes have not been the subject of litigation. For example, in the early 1980s there was a washout of a substantial coal-carrying rail line in Utah’s Wasatch Mountains. The washout was so substantial that there was serious question whether, if the matter was litigated, the ICC would order reinstatement of the line or permit abandonment. As the court stated in Baltimore and Annapolis, ‘‘the determination as to whether an injunction should issue should be viewed as one of equity, i.e., ‘whether it would be equitable to require substantial expenditures when shortly the commission may approve the railroad’s abandonment application.’’’ 398 F. Supp. at 464, citing ICC v. Chicago, Rock Island & Pac. RR, 501 F.2d 908, 914 (8th Cir. 1974). Also, during the ‘‘500-year flood’’ of 1993 along portions of the Mississippi and the Missouri Rivers, certain railroads were required to reroute trains for weeks due to flooding of vast segments of their systems. Spring floods, and sometimes hurricanes, cause temporary embargoes on many rail lines.

It was the legendary 1972 storm Hurricane Agnes, in fact, which gave rise to the embargo in Baltimore and Annapolis, supra. The court held that ‘‘abandonment’’ is defined as ‘‘a permanent or indefinite cessation of rail service,’’ citing Meyers v. Jay Street Connecting RR, 259 F.2d 532, 535 (2nd Cir. 1958); ICC v. Chicago, Rock Island & Pac. RR, 501 F.2d 908, 911 (8th Cir. 1974). The court also held that if the cessation of operations began and continues because of conditions over which the railroad had no control, no abandonment within the meaning of the Act would be established. Baltimore and Annapolis, 398 F. Supp. at 462 (citing cases). The court went on, however, to say that ‘‘[a]bandonment should be distinguished from the term ‘embargo,’ which is issued by the carrier alone and which will justify a cessation of service as a temporary emergency measure when for some reason the carrier is unable to perform its duty as a common carrier.’’ Id., citing Chicago, Rock Island & Pac. And ICC v. Maine Central RR, 505 F.2d 590, 593 (2nd Cir. 1974).5

The test, therefore, requires the carrier to be ‘‘unable to perform’’ its duty as a common carrier, not where the carrier may be unwilling to do so.

Because of the court’s holding, quoted above, with regard to the equitable factors applicable to issuance of an injunction, the court in Baltimore and Annapolis held that neither the shipper nor the ICC ‘‘is entitled as of right to an injunction against B & A’s unlawful abandonment.’’ Id. However, after considering all the relevant factors, including the costs of repairing the line in question, the court held that the embargo was in fact an unlawful abandonment and issued an injunction requiring the railroad to restore service.

A railroad that adopts an embargo when it is not unable to perform its duty as a common carrier has violated the Act.6 A fortiori, if a railroad has adopted an unlawful embargo and does not need to expend capital to restore service, a court would be very likely to issue an injunction requiring the carrier to cease its embargo and perform its common-carrier obligations.

This is true even if the chemicals in question are dangerous. Certainly, the radioactive materials at issue in the Akron, Canton and Trainload Rates on Radioactive Materials cases were dangerous (although the container in which they were being transported is virtually impregnable and makes the transportation quite safe). DOT (and sometimes other agencies, such as the NRC) regulates such transportation so that it is safe. If railroads, which have been recognized as the safest mode for transportation of dangerous commodities, Akron, Canton, 611 F.2d at 1168, wish to impose new restrictions on such transportation in the rate and service schedules, they may be allowed to do so, subject to the authority of the STB over ‘‘unreasonable practices.’’ 49 U.S.C. § 10704(a)(1). Moreover, they may seek to have DOT or other agencies with statutory authority over the particular transportation or commodities establish further restrictions by rule. Akron, Canton, 611 F.2d at 1168-70; Conrail v. ICC, 646 F.2d 642.

But the railroads may not determine that a commodity is absolutely too dangerous to carry, if the applicable governmental regulations for the transportation of that commodity are met. As the Sixth Circuit held in Akron, Canton (611 F.2d at 1169): ‘‘a carrier may not ask the [STB] to take cognizance of a claim that a commodity is absolutely too dangerous to transport, if there are DOT and NRC regulations governing such transport, and these regulations have been met. Such a claim is properly made before the agencies entrusted with promulgating these minimum safety obligations (footnote omitted).’’7

IV. Conclusion

The lessons of the embargo cases are clear. An embargo must be temporary, and last only so long as a railroad is unable to perform its common-carrier duty over the line at issue. An embargo is unlawful if it either constitutes a de facto abandonment with authority of the STB or it constitutes an absolute refusal to carry a commodity for which there are applicable regulations governing its transport and those regulations have been met.

In other words, railroads continue to have duties to shippers and the public, and they may not take the law into their own hands. Instead, except for emergencies (and then only for the duration of the emergency), they must carry all commodities without regard to whether they are dangerous, unless the proper agency of the federal government has relieved them of that obligation. The government has relieved the railroads of the obligation to carry only a few commodities, for example money, gold, and silver (and perhaps circuses upon request of the circus), for reasons other than the hazards involved in transporting the commodities. Accordingly, the railroads must carry all commodities, regardless of how hazardous they are, unless Congress determines otherwise.

Endnotes:

1. See http://www.aar.org/.

2. The duties of a common carrier were, prior to the passage of the Interstate Commerce Act, established on a case-by-case basis. While the Act codified the common-law obligations of railroads as common carriers, American Trucking Ass’n v. Atchison, Topeka & Santa Fe. Ry., 387 U.S. 397 (1967), the Act also created purely statutory duties on railroads. Akron, Canton 611 F.2d at 1166. It is true that railroads may engage in ‘‘activities which lie outside the performance of their duties as common carriers and are not subject to the provisions of the Act.’’ Kansas City So. Ry. v. United States, 282 U.S. 760, 764 (1931) (citations omitted). ‘‘But a common carrier dealing with transportation that is subject to the act cannot escape its statutory obligations by calling itself a private carrier as to the transportation.’’ Akron, Canton, supra.  As the Akron, Canton court put it so well: ‘‘in the almost 100 years since the passage of the act there has developed a new ‘common’ law of transportation under which the public duty of railroads has been broadened beyond that extant under the common law of carriers. It is not only ‘common carriage’ but transportation which is subject to the act and to the commission’s statutory powers.’’  611 F.2d at 1168. It concluded by stating ‘‘[a] carrier’s duties run not to shippers alone but to the public,’’ citing Brotherhood of Ry. Clerks v. Florida E. C. Ry., 384 U.S. 238 (1966), and that ‘‘[t]herefore, public needs must shape the boundaries of these duties.’’ Id.

3. The Akron, Canton decision stated that ‘‘[t]here are exceptions to the general statutory common-carrier obligations of railroads,’’ but recognized that they ‘‘are limited.’’ Id. Among those commodities subject to the exception are money, ‘‘sterling and gold silverware,’’ Emporium v. New York Cent. R.R., 214 I.C.C. 153 (1936), and circus trains where the shipper has requested ‘‘limited and special services.’’ Transportation of Circuses and Show Outfits, 229 I.C.C. 330 (1956).

4. For nearly all commodities, the standard is ‘‘stand-alone costs’’ (SAC).  Coal Rate Guidelines – Nationwide, 1 I.C.C.2d 520 (1985), aff’d sub nom.  Conrail v. ICC, 812 F.2d 1444 (3rd Cir. 1987). Under the SAC formula, the STB determines the replacement costs of a hypothetical, ‘‘stand-alone’’ competitor, which may include as much current traffic as the shipper chooses, and as much of a network as the shipper chooses. The SAC rate for the captive shipper is derived from the revenue needs of the hypothetical railroad after taking into account the revenues from the existing traffic and that railroad’s overall costs. At times in the past, the SAC rate was below the ‘‘jurisdictional threshold’’ of 180 percent of variable costs, and so the SAC rate is prescribed at that threshold. However, for radioactive materials the ICC set a different standard, which was actually above the 180-percent threshold because the shippers were willing to pay it, and that standard was upheld over railroad objections. Trainload Rates on Radioactive Materials, Nationwide, aff’’d sub nom. Conrail v. United States, 646 F.2d 642 (D.C. Cir.), cert. denied, 454 U.S. 1081 (1981). Also, the STB has the authority to set a rate standard different than SAC for small shipments, i.e., those for which the amount in dispute is disproportionate to the costs of litigating the matter. 49 U.S.C. § 10701(d)(3). The Board’s ‘‘small-shipment’’ standards have never been applied, but one shipper (DuPont) now has complaints pending against CSX.

5. The court then went on to hold: ‘‘Because both abandonment and embargo entail a cessation of service, the question of whether an embargo has been transmuted into an unlawful abandonment revolves largely around the length of the cessation and the intent of the railroad.’’ Id., citing the same cases and Williams v. Atlantic Coast Line RR., 17 F.2d 17, 22 (4th Cir. 1927).

6. Of course, by definition a carrier would be ‘‘unable’’ to perform its common-carrier duty if the government had ordered it not to carry certain commodities, for whatever reason. If the embargo adopted for a few days in Oct. 2001 on transportation of ‘‘toxic inhalants’” and, apparently, many other chemicals, had been ordered or urged upon the railroads by the DOT, a court would almost certainly not enjoin the embargo.

7. Part of the reason railroads did not fare well in Akron, Canton is clear from the footnote omitted in the above quotation: ‘‘We cannot refrain from noting at this point that none of the petitioner railroads has availed itself of opportunities to comment upon the safety regulations of DOT and NRC concerning the rail transport of nuclear materials.’’

Reprinted with permission from Elsevier.