Thursday, June 11, 2009

UP ordered to quote disputed chlorine rates

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The Surface Transportation board issued a decision Thursday intent on "clarifying" that Union Pacific has a common carrier obligation to quote rates for the movement of chlorine to three disputed destinations.

The case has been closely watched at a time of rising concerns that moving potentially lethal materials through certain areas poses a threat to national security.

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STB made these findings:

"In January 2009, US Magnesium LLC (USM) requested that UP establish common carrier rates for the transportation of chlorine from Rowley, UT, to 35 different destinations. UP established rates for most of the traffic, but replied that it would not publish rates from Rowley to four destinations in or near Houston and Dallas, TX, and Allemania and Plaquemine, LA because: (1) although UP previously published rates for these destinations, USM never shipped to them; and (2) it was not a reasonable request to expect UP to transport chlorine over 1,000 miles through multiple High Threat Urban Areas (HTUAs), as defined by the Transportation SecurityAdministration (TSA) ... when there is an abundant supply of chlorine located closer to the denied destinations....

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"Many shippers and receivers filed comments in opposition to UP’s petition, and railroads and associations of railroads filed comments in support, while other interested parties filed comments noting their various concerns. ... USM, North America’s sole producer of magnesium, explains that chlorine is a co-product of its magnesium production process. The volume of chlorine produced by USM in a given year varies directly with the demand for magnesium. USM asserts that increased demand for magnesium led USM to ship chlorine via UP to Allemania in 2007 and to Houston in 2008. USM points out that, if it is unable to reach a market for its chlorine, then it must release it into the air, which is not cost-effective and may cause it to decide to stop producing magnesium in the U.S. Several shippers also dispute UP’s claims and assert that the supply of chlorine in the Gulf Coast region is inadequate, requiring customers in the region to have chlorine delivered from over 800 miles away, including from Canadian sources.

"[W]e find that UP has an obligation to establish rates and service terms in response to USM’s request, and subsequently to provide service under the rates offered.

"UP alleges safety concerns in arguing that USM’s requests are unreasonable, but it fails to establish that the transportation at issue is unsafe. Indeed, the record shows that UP has moved chlorine for USM to two of the denied destinations in the last 2 years."