Top Story, Transportation Regulation

Shippers Liable for Coal Dust Costs

By Steven Johnson | ECT Staff Writer Published: December 26th, 2013

Federal regulators have handed freight railroads a victory, saying they can require shippers to pay for specific steps to control coal dust from rail cars.

Shippers must adhere to costly railroad rules to control coal dust from rail cars, regulators say. (Photo By: iStockphoto)

Shippers must adhere to costly railroad rules to control coal dust from rail cars, regulators say. (Photo By: iStockphoto)

In a Dec. 13 decision, the Surface Transportation Board ruled that shippers failed to prove that BNSF Railway Co.’s coal-loading rules were unreasonable, though it struck down one provision relating to shipper liability.

At the STB, customers must file a complaint if they feel a railroad rule is unreasonable. The customer has the burden of proving the rule is unreasonable.

“Carriers may require shippers to undertake certain loading requirements at their own expense,” the board said.

The ruling culminates a four-year battle in which shippers, including electric cooperatives, have fought railroad efforts to make them pay millions of dollars each year to reduce coal dust discharge. The railroads claim the dust can damage tracks.

Steve Sharp, president of Consumers United for Rail Equity, a shippers coalition, said the group was disappointed with the overall decision, though it was pleased that the board invalidated language regarding shipper liability as too broad and ambiguous.

“However, the practical effect of this decision is to enable railroads to pass along their maintenance costs to customers who were already paying for maintenance through their contracts,” said Sharp, director of fuels for Arkansas Electric Cooperative Corp. in Little Rock, which was among the plaintiffs.

Coal must now be loaded on to cars in a “bread loaf” shape and treated with an approved topping agent to limit coal dust emissions.

Those treatments could add as much as 75 cents a ton to the price of coal from the Powder River Basin centered in Wyoming. The cost to shippers and ultimately electric consumers could run into tens of millions of dollars annually.

Shippers complained that spraying topping agents onto every carload of coal might not be the most cost-effective solution. But the board said it was swayed by BNSF tests that showed the agents reduce coal dust by 85 percent.

Also, shippers argued that railroads are requiring customers to pay all the costs while the railroads will reap all the benefits through a reduction in maintenance costs.

“We understand that shippers are concerned about BNSF’s incentives to consider the costs of compliance, but as discussed above we believe that the cost of spraying these selected topper agents is not unreasonable because the measure is designed to promote reliable rail transportation services,” the board said.

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