**Opening Statement of Commissioner Buttrey**

**Hearing, STB Ex Parte No. 677 (Sub-No. 1),**

**"COMMON CARRIER OBLIGATION OF RAILROADS ─**

**TRANSPORTATION OF HAZARDOUS MATERIALS"**

**July 22, 2008, Washington, D.C.**

The common carrier obligation requires rail carriers to provide
transportation or service upon reasonable request. That's what the
statute says. But the trick is to figure out what those seemingly simple
words mean, against the backdrop of today's constrained global
transportation marketplace.

Take the question of whether railroads are obligated to transport the
most extremely toxic "TIH" hazardous materials without sufficient
recognition of the massive liability exposure that could ensue. That's a
problem. It is of concern to this Board because of our responsibilities
to ensure a safe, efficient and economically sound rail transportation
system, as set out in the National Rail Transportation Policy. There is
a tension between the common carrier obligation, as interpreted by some
to be practically without limits, and the goal of an economically sound
railroad industry. That is the reason we are holding this hearing today.

The Board has authority over the economics of interstate rail transport,
and as such is properly responsible for dealing with issues of possible
economic damage resulting from carriage of a commodity. Our sister
agency, the Federal Railroad Administration, has jurisdiction over rail
safety. FRA recently issued a new rule known as " HM-235." It requires
that railroads handling certain categories of extremely hazardous
materials must file a route analysis and alternate route analysis with
FRA in certain circumstances. This FRA rule is aimed at rail safety
matters, as appropriate to FRA's jurisdiction. But it does not address
the economic issues that railroads are exposed to because of the
potential liability of transporting these extremely hazardous materials.
These economic issues fall under the jurisdiction of the Board.

This potentially devastating railroad liability exposure is a problem
that the U.S. Congress could address by putting in place a liability cap
for TIH hazmat transport. But Congress does not appear to be poised to
address this issue soon. Therefore I believe that it falls to the Board.

I personally believe that rail carriers may well be within their rights
to refuse to carry the most extremely toxic hazmats without
indemnification. As a businessman, that's the decision I would make. I
simply do not feel that it is a "reasonable request" for a shipper to
ask a railroad to transport these types of commodities without some kind
of meaningful protection from the unreasonably high,
"bet-the-company"-type liability exposure.

For rail traffic that falls under the Board's regulatory authority, by
which I mean rail traffic that moves under tariffs, not contracts, I
believe that it could well be found to be a reasonable practice today if
railroads were to add liability ceilings to their tariff terms as a
condition of their carriage of TIH commodities, or require execution of
an indemnification agreement prior to carriage. Of course, under this
approach, the amount and the terms of such liability ceilings or
indemnification agreements would need to be such that they would be
found to be reasonable.

I do not envision that it would be a "one-size-fits-all" exercise, or
that a single solution or approach would fit all carriers and all
situations. These protections against excessive liability for tariff
shipments of these dangerous but important commodities would need to be
carefully tailored. They would need to reflect specific facts and
circumstances including the commodity, the transportation to be
provided, the route and equipment to be used, the specific carrier and
shipper involved, etc., in order that the record would be found to
support the reasonableness of the tariff term if it were challenged.

For contract traffic that falls outside the Board's jurisdiction, of
course, the parties can deal with liability caps and indemnification
matters in any way that they agree is appropriate.

This is only one idea. I am sure there are other approaches that we
should explore and consider. I'm here to listen, and I am very much
looking forward to hearing the testimony of the witnesses.