By David Gambrel
On November 5, 2010, the Surface Trans-portation Board (STB) denied Arkansas Electric Cooperative Corp.’s (AECC) petition to enjoin BNSF Railway from enforcing dust control tariff provisions until the STB resolves the Petition for Declaratory Order in the same proceeding. This decision to deny injunction was based on the failure of AECC to show it would be “irreparably harmed” in the absence of the requested relief. The STB also denied a similar request by Coal Shipper Organizations to issue a housekeeping stay, which would have stayed the effective date of coal dust items in BNSF Tariff 6041-B pending further order of the STB.
The AECC Petition—What is it About?
In May 2005, BNSF derailed two coal trains in the Powder River Basin (PRB) within a short period of time. BNSF engineers determined the derailments were probably caused by a weakened track structure, which they attributed to two conditions: plugged ballast and excessive rainfall. They decided coal dust had, over a period of several decades, plugged the gaps between ballast rock that are essential to normal drainage and integrity of the rail bed. They believed excessive rainfall had turned the ballast and coal dust combination to soft muck, which in turn had weakened the rail bed and allowed the track to give way under load.
Following these derailments BNSF began studying the nature and scope of the coal dust problem. It eventually tried to identify coal dust emission standards that would minimize the accumulation of coal dust on the roadbed. Those efforts resulted in the coal dust emission standards (BNSF Tariff 6041-B, Items 100 and 101) that BNSF has established for coal trains operating on the Joint Line and on BNSF’s Black Hills subdivision.
Since the average PRB train contains about 125 cars, an application of 15-16 gallons per car would require 1,875-2,000 gallons of chemical solution per train. It has been estimated that compliance with Items 100 and 101 could cost shippers $100 million per year. However, if one includes the cost of providing a constant source of water for the chemical solution, and of installing chemical tanks and application facilities, this cost estimate could be low by several orders of magnitude. Furthermore, it does not address the complexities of providing a constant source of water in all weather at numerous coal mines in the PRB.
To their credit many of the PRB coal mines voluntarily changed over to the required “flying nun” loading chute configuration without duress or compensation. A serious question is this, “If a mine meets the dust standards and load-out configuration standards specified by the BNSF tariff, can it still be held liable for coal flying off the coal cars?” At what point would the railroad take responsibility? What if the rail cars were of the bottom-dump type?
This is what the AECC petition is about: On October 2, 2009, AECC filed a Petition for Declaratory Order seeking to have the STB declare that BNSF Tariff 6041-B, Items 100 and 101 issued by BNSF on May 27, 2009, constitute an unreasonable rule or practice, and any refusal to provide service for non-compliance with these Tariff provisions is a violation of BNSF’s common carrier obligation. On November 30, 2009, the STB instituted a declaratory order proceeding under 49 USC 721 and 5 USC 554(e). The STB Finance Docket Number is 35305.
Progress of the Case
A public hearing on the merits of this case was held on July 29, 2010, in the STB’s hearing room in Washington, D.C. Thirty-minute presentations were scheduled for both AECC and BNSF attorneys. UPRR, which had sought intervener status, was given a 15-minute slot. Four attorneys representing shipper interests were given 10 minutes each. As of December 9, the STB had not yet published its decision in the Petition for Declaratory Order.
In a pre-emptory move to forestall implementation of the dust mitigation provisions, AECC on September 30, 2010, filed a petition to enjoin BNSF from enforcing Tariff Items 100 and 101 until the STB resolves the underlying Petition for Declaratory Order. Coal Shipper Organizations followed suit
October 1, 2010, with a Motion for Housekeeping Stay on those same provisions. The aforementioned denials of injunctive relief followed on November 5, 2010.
Where Do the Parties Go from Here?
Presumably, BNSF is empowered to implement Items 100 and 101 until the STB decides the merits of the case. However, since BNSF stated it has not established any enforcement measures, and would not do so without 60 days’ notice, BNSF may find it difficult to obtain compliance except through the good intentions of the coal companies and utilities.
Upon first reading the STB’s quick and decisive denial of injunction one might be led to believe the STB was impatient with AECC and Coal Shipper Organizations. However, the STB also had something to say to BNSF about the absence of an enforcement provision. “Should BNSF, contrary to statements in this proceeding, attempt to impose penalties for violating the tariff without giving 60 days notice, the Board would act quickly to enjoin such actions upon a petition for injunction from the penalized shipper,” the STB said. “If BNSF were to take enforcement measures after giving 60-days notice, the penalized party would have sufficient time to petition the STB to enjoin the measure upon a showing of irreparable harm.”
While the term “irreparable harm” may not be involved in the decision, it could clearly become a point of contention again. Does it mean that no matter how much money or time is applied to a corrective action, the harm cannot be repaired? Does it mean the cost of compliance will cost the penalized party enough money to put him out of business? Does it stop at some arbitrary “line in the sand” such as $100 million or $250 million? Does it require an analysis of how the electric ratepayers, the ultimate payers of compliance, would be affected? The term seems to be in the same category as force majeure—worthy of a case of its own.
However fuzzy “irreparable harm” may be, it would appear the STB has made a very clear statement to both parties: wait until the STB decides this case before even trying to take a forceful action. While absence of an enforcement provision may have prevented injunctive relief, it may now be difficult for BNSF to force compliance. The injunctive relief sought by AECC and Coal Shipper Organizations may not be needed after all, but it is clear the issues before the STB are very complicated and may require more time than expected to decide.
Coal Cars and Other Stumbling Blocks
Utilities traditionally buy coal at the mine. They are the Shippers of record, and they are the Shippers referred to in this case. For years many utilities have owned fleets of rail cars. The railroads also own rail cars, and the mix between railroad and private ownership is in constant flux. Thus, a coal shipment from the southern PRB may involve shipper-owned coal cars, or it may involve railroad-owned coal cars. They also may be rotary dump cars or bottom dump cars.
It has been argued bottom dump cars drop the greatest amount of coal on the rail bed. This has not been proven to a scientific certainty, but the casual observer would certainly expect coal dust to sift through the cracks that exist in bottom dump cars, even if the top of the coal were shaped and treated with a surfactant. It seems that if the bottom-dump rail cars dropping a significant amount of coal on the rail bed were owned by BNSF, could Shippers be forced to pay for the dust leakage problems caused by BNSF’s own rail cars?
Perhaps the key issue the STB will have to decide in this case is the limit of BNSF’s authority to write tariffs that could ultimately affect every coal-carrying railroad and all their shippers. Do the railroads have an authority that trucks and barges do not have? Do they have the right under the law to force compliance with their dust control provisions, regardless of the cost to third parties, and regardless of their own complicity? These will not be easy issues to resolve.
If as we suspect both sides’ attorneys believed “the more pages we put into evidence, the better our chances of winning,” they may have made it impossible for sitting commissioners to decide the case before they leave office. That, in fact, seems to be a certain result. STB Commissioner and former Chairman Charles D. Nottingham has said he will not seek a second term on the STB when his current term expires December 31. Ecce signum. Could this be a case that drones on ad infinitum as commissioners resign and new commissioners have to be brought up to date from scratch? Stay tuned. It should be interesting, if not frustrating for some parties.
Dave Gambrel is the president of Logisticon, a coal transportation consultancy. He was senior transportation executive of a major mining company for 15 years. He was responsible for rail shipments from the Powder River Basin, and was once president of the Western Coal Transportation Association. He was a member of the Commercial Panel of the American Arbitration Association. He may be reached at david.gambrel@gmail.com or at bunkgambrel@earthlink.net.
