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STB Considers Indemnification Provisions for Transport of TIH Commodities

December 14th, 2011

The Surface Transportation Board has begun a proceeding to determine the reasonableness of tariff provisions that require shippers to indemnify Union Pacific Railroad (UP) against future liabilities, other than those resulting from UP’s negligence or fault, when the railroad transports toxic by inhalation hazardous (TIH) commodities.

In a petition filed on April 27, 2011, UP asked the board for a declaration that the indemnification provisions (Items 50 and 60 of UP Tariff 6607) — which include liabilities resulting from shipper negligence or fault, the negligence or fault of third parties, or acts of God — are reasonable. The request came in the context of a dispute with Olin Corporation and SunBelt Chlor Alkali Partnership. Norfolk Southern filed a notice of intent to participate as well, and Canadian Pacific filed a statement in support of UP.

Responses opposing the petition were filed not only by Olin and SunBelt, but also by Dyno Nobel, Inc. (DNI), and (jointly) The Fertilizer Institute (TFI), The Chlorine Institute (CI), and American Chemistry Council (ACC). The shippers contend that the case “lacks a sufficiently active controversy to support the institution of a declaratory order proceeding” because no shipper has yet filed a complaint regarding the tariff provisions, but the board noted that such a proceeding may also be used to eliminate uncertainty, such as surrounds the reasonableness of UP’s tariff provisions.

The STB thus has decided to institute a proceeding, with the burden of proof on UP because it is the party seeking the declaratory order. The board will open the proceeding to public participation as well. Details regarding requirements for participation are discussed in the board’s decision in Union Pacific Railroad Company-Petition for Declaratory Order, STB Docket No. FD 35504.

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