Tuesday, April 15, 2008

Public Meetings about Proposed PIH Railcar Regulations

There was a notice in Monday’s Federal Register about public meetings that will be held next month about the recently released notice of proposed rule making (NPRM) about new construction standards for railcars used to transport Poison Inhalation Hazard (PIH) chemicals (see: "DOT Proposed Rule Touches on IST"). The meetings will be held May 14th and 15th and May 28th and 29th. To ensure that there is an adequate chance for people to be heard on all facets of the proposed rule, different portions of the rule will be covered on each day.

Most of this rule has little to do with Chemical Facility Security as opposed to transportation security. As I mentioned in my earlier blog, I felt that this would have an impact on discussions of IST implementation, particularly with respect to Chlorine and Anhydrous Ammonia. This feeling has been reinforced by the release of this notice.


Is PHMSA Calling for IST?

Two of the specific questions that the Pipeline and Hazardous Materials Safety Administration (PHMSA) wants to have answered during these meetings directly relate to replacements for Chlorine and Anhydrous Ammonia. Those questions are:

"How many governmental jurisdictions that meet the Small Business Administration's (SBA) definition of small entity own water treatment systems that utilize chlorine in their processing? What would be the expected impact of this proposed rule on such entities? Of small government jurisdictions currently utilizing chlorine in their water treatment systems, how many entities could feasibly substitute a non-dangerous or less lethal material (e.g., bleach) for chlorine?" (Italics Added)

"How many agricultural operations that meet the SBA definition of small entity utilize anhydrous ammonia in their operations? What would be the expected impact of this proposed rule on such entities? Of small agricultural operations currently utilizing anhydrous ammonia in their operations, how many entities could feasibly substitute less dangerous materials (e.g., urea, urea ammonium nitrate, or ammonium nitrate) for anhydrous ammonia?" (Italics Added)

The railroad industry has been very vocal in their support of mandatory substitution of safer chemicals for PIH chemicals where ever possible. It would not be unusual for a regulatory agency to look favorably on their regulated industry’s favored solution to a problem. It certainly looks like PHMSA is lining up with the railroad industry in this case. It will be interesting to see who has the bigger political guns; the railroads or agriculture.


Will Speed Restrictions Cause Increased PIH Inventories?

There is another question that the PHMSA would like to see addressed at these meetings. It deals with the consequences of marshaling PIH cars to limit speed restrictions to ‘key trains’. The actual question asked in the notice is:

"To the extent that tank cars containing PIH materials are not currently transported in `key trains,' but would be as a result of the proposed speed restriction (assuming carriers would marshal PIH cars into key trains to avoid the speed restriction on other trains), to what extent, if any, would this ``marshalling'' cause a delay in the delivery of PIH materials (or other hazardous or non-hazardous materials) in the train? What would be the cost of the delay?"

If only the railroads are answering questions at these meetings, the nearly inevitable answer to the last question would be that there would only be minimal costs associated with marshalling delays. Seldom do railroads guarantee delivery dates or times so full PIH tank cars sitting on sidings garner little extra cost.

There is currently an agreement with DHS to reduce PIH tank car hold time to avoid them becoming a terrorist target. This is a voluntary agreement that can easily be voided to meet a regulatory requirement. The question needs to be asked about the security costs of protecting PIH tank cars while they are waiting to be grouped into key trains.

The users of the PIH chemicals, faced with an increased uncertainty of delivery, will be forced to keep more inventory on site. Typically, the easiest way to do this is to park full PIH tank cars on a rail siding on the plant site. Security for these mobile storage tanks will be more costly because of the transitory nature of the potential target. The chemical industry needs to insure that the inventory carrying costs and increased security costs associated with uncertain delivery are taken into account during these public meetings.


These Regulations Will Encourage IST.

It certainly appears that these regulations are a reasonable response to the hazards of shipping PIH chemicals via railroads. If they go into force in their current form, they are certainly going to influence the IST debate. The speed restrictions on trains will increase the amount of marshalling of PIH train cars into key trains. This will increase supply chain uncertainty and probably increase inventory carrying costs (cost of inventory and cost of security will both increase).

Anything that increases the cost of using PIH chemicals will make it easier for companies to come to the financial decision to implement IST. Any time that it becomes financially beneficial to implement a lower risk process companies will start to switch to the lower cost alternative. Their shareholders will require it.

The meetings on the 14th and 15th will deal specifically with chlorine and anhydrous ammonia. As the notice mentions, these two chemicals account for about 80% of the PIH shipments by railroad in this country. These will probably be the two days with the biggest guns on either side of the IST debate showing up to make their points.

1 comment:

Unknown said...


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