Changes in the Role of US Railroads as Haulers of Coal and Crude: Causes and Consequences

See generally James B. Stewart, “King Coal, Long Besieged, Is Deposed by the Market,” New York Times, August 6, 2015, http://www.nytimes.com/2015/08/07/business/energy-environment/coal-industry-wobbles-as-market-forces-slug-away.html?action=click&contentCollection=DealBook&module=RelatedCoverage&region=EndOfArticle&pgtype=article, and Michael Corkery, “As Coal’s Future Grows Murkier, Banks Pull Financing,” New York Times, March 20, 2016, http://www.nytimes.com/2016/03/21/business/dealbook/as-coals-future-grows-murkier-banks-pull-financing.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region&region=top-news&WT.nav=top-news Alex R. Scattered and dissonant: the Clean Air Act, greenhouse gases, and implications for the oil and gas industry. Environmental Law. 2013;43:461–516. Dallas Burtraw, Joshua Linn, Karen L. Palmer, and Anthony C. Paul, “The Costs and Consequences of Clean Air Act CO2 Regulation from Power Plants,” American Economic Review, 104 (2014): 557–62. On the last point, see U.S. Energy Information Administration, “Analysis and Projections: Analysis of the Impacts of the Clean Power Plan,” May 22, 2015, http://www.eia.gov/analysis/requests/powerplants/cleanplan/. National Academy of Sciences, Coal: Research and Development to Support National Energy Policy. Washington: National Academies Press; 2007. Argonne National Laboratories, “Coal-by-Rail: A Business-as-Usual Reference Case,” Energy Systems Division, February 2015; and Peter Hansen, “Coal: A Twisted Future -- With coal no longer the rock-solid traffic it once was, railroads look elsewhere,” Trains Magazine, March 2016, 40–47 (Both of these sources provide detailed discussions of the factors behind changes in the coal industry and their implications for the railroads, with an emphasis on geographical issues.) Note the change in circumstances vis-à-vis Meghan Busse and Nathaniel O. Keohane, “Market Effects of Environmental Regulation: Coal, Railroads, and the 1990 Clean Air Act,” RAND Journal of Economics 38 (2007), 1159–1179, who found that railroads shipping low sulfur coal were able to charge higher rates because of environmental restrictions on coal-fired generation plants. See, for example, David Timmons, Jonathan Harris, and Brian Roach, The Economics of Renewable Energy, Tufts University, Global Development and Environmental Institute, 2014, and Chris Mooney, “This huge change in how we get energy is coming much faster than expected,” Washington Post, March 21, 2016, https://www.washingtonpost.com/news/energy-environment/wp/2016/03/21/this-huge-change-in-how-we-get-energy-is-coming-much-faster-than-expected/?hpid=hp_hp-more-top-stories_ee-naturalgass-925am%3Ahomepage%2Fstory --> U.S. Energy Information Administration. Today in energy: U.S. coal exports declined 23% in 2015, as coal imports remained steady. 2016. http://www.eia.gov/todayinenergy/detail.cfm?id=25252. Klass AB, Danielle M. Transporting oil and gas: U.S. infrastructure challenges. Iowa Law Review. 2015;100:948–1053. and Fred Frailey, “All Oiled Up: How Railroads Got Back in the Oil Business, and Why They Aren’t Going Away -- Ever,” Trains Magazine, March 2014, 26–37 (a fact-filled and wide-ranging discussion, rich in geographic detail). For similar discussions related to Canadian oil production, see Kenneth P. Green, “An Overview of Oil Transportation in Canada,” in Gerry Angevine, The Canadian Oil Transport Conundrum, Fraser Institute: Studies in Energy Transportation, September 2013 and IHS Energy, Crude by Rail: The new logistics of tight oil and oil sands growth, Special Report: Canadian Oil Sands Dialogue, Ottawa, December 2014. Russell G, Chester D. Dangers aside, railways reshape crude market: shipping crude by rail expands as new pipelines hit headwinds and train companies reap revenue. Wall Street Journal. 2014. http://www.wsj.com/articles/dangers-aside-railways-reshape-crude-market-1411353150; Phil Davies, “Work on the Railroad: Ninth District Railroads Have Invested Heavily to Increase Capacity, But Matching Rail Supply to Demand Remains a Work in Progress,” Federal Reserve Bank of Minneapolis, fedgazette, April 2015, https://www.minneapolisfed.org/publications/fedgazette/working-on-the-railroad; Marnie Werner, “The state of rail: Untangling the Issues,” Mankato, MN: Center for Rural Policy and Development, 2015, http://www.ruralmn.org/publications/the-state-of-rail-untangling-the-issues/. Thorough discussions of the Lac-Mégantic and Mount Carbon accidents are available at https://en.wikipedia.org/wiki/Lac-Mégantic_rail_disaster and https://en.wikipedia.org/wiki/2015_Mount_Carbon_train_derailment Jack H. Exploding trains in the wake of the crude-by-rail boom: the distribution of liability in crude train derailments. Wisconsin Law Review. 2016. Olufolajumi Oke, Daniel Huppmann, Max Marshall, Ricky Poulton, and Sauleh Siddiqui, “Mitigating environmental and public-safety risks of United States crude-by-rail transport,” Berlin: Deutsches Institut fur Wirtschaftsforschung, DIW Discussion Paper 1575, 2016 (This is a thoughtful and detailed modeling exercise, examining the policy options relevant to the crude-by-rail debate); James Conca, “Pick Your Poison for Crude -- Pipeline, Rail, Truck, or Boat,” Forbes , April 26, 2014, http://www.forbes.com/sites/jamesconca/2014/04/26/pick-your-poison-for-crude-pipeline-rail-truck-or-boat/#697d9adf5777 ; and Ralph Vartabedian, “Why are so many oil trains crashing? Track problems may be to blame,” Los Angeles Times , October 7, 2015, http://www.latimes.com/nation/la-na-crude-train-safety-20151007-story.html . DOT announces final rule to strengthen safe transportation of flammable liquids by rail, U.S. Department of Transportation, May 1, 2015, https://www.transportation.gov/briefing-room/dot-announces-final-rule-strengthen-safe-transportation-flammable-liquids-rail-0 Amy H, Bob T. U.S. lays down strict railcar rules. Wall Street Journal. 2015. http://www.wsj.com/articles/u-s-tank-car-rule-to-require-electronic-train-brakes-1430487467; Jad Mouawad, “New Oil Train Rules Are Hit From All Sides,” New York Times, May 1, 2015, http://www.nytimes.com/2015/05/02/business/energy-environment/us-sets-new-rules-for-oil-shipments-by-rail.html?_r=0. NTSB. Derailment of CN freight train U70691-18 with subsequent hazardous materials release and fire, Cherry Valley, Illinois, June 19, 2002. Washington: National Transportation Safety Board; 2012. https://en.wikipedia.org/wiki/DOT-111_tank_car. Fred F. The war over electric brakes. Trains Magazine. https://en.wikipedia.org/wiki/Electronically_controlled_pneumatic_brakes; http://cs.trains.com/trn/b/fred-frailey/archive/2015/05/06/the-war-over-electric-brakes.aspx. U.S. Department of Transportation, Federal Railroad Administration, “Positive Train Control (PTC) Overview (Railroad Safety),” http://www.fra.dot.gov/Page/P0621 U.S. Government Accountability Office. Railroad safety: U.S. Federal Railroad Administration should report on risks to the successful implementation of mandated safety technology, GAO-11-133. 2010. http://www.gao.gov/new.items/d11133.pdf. Association of American Railroads. Freight railroad capacity and investment. 2015. Oliver W. Analysis of North American freight rail single person crews: safety and economics, Association of American Railroads. 2015. I thank Victor Aragones for directing me to the report. “After Calamitous Year for Coal, U.S. Consumers Hold Key for Rail,” Reuters, September 28, 2015, http://www.reuters.com/article/usa-railways-idUSL1N11X0J620150928 Russell P. The economics of railroad ‘Captive Shipper’ legislation. Administrative Law Review. 2010;62:919–36. Pittman, “Against the stand-alone-cost test in U.S. freight rail regulation,” Journal of Regulatory Economics 38 (2010), 313–326; and Gerard McCullough, “Constrained Market Pricing and Revenue Adequacy: Regulatory Implications for Shippers and Class I U.S. Freight Railroads,” Department of Applied Economics, University of Minnesota, Staff Paper P15-5, August 2015. See the sources cited in footnotes 6–8 of Pittman, “The Economics of Railroad ‘Captive Shipper’ Legislation,” ibid William B. Environmental concerns in the Marcellus Shale. Business and Society Review. 2014;119:125–46. Joanna Glowacki and Christoph Henkel, “Hydraulic Fracturing in the European Union: Leveraging the U.S. Experience in Shale Gas Exploration and Production,” Indiana International & Comparative Law Review 24 (2014); and Mark Fischetti, “Groundwater Contamination May End the Gas-Fracking Boom,” Scientific American, September 1, 2013, http://www.scientificamerican.com/article/groundwater-contamination-may-end-the-gas-fracking-boom/. John Kemp notes that the Burlington Northern Santa Fe Railroad recently furloughed about ten percent of its workforce in response to lower demand. “Shale gas hits U.S. railroads and diesel demand,” Reuters News, April 1, 2016, http://www.reuters.com/article/usa-coal-kemp-idUSL5N1743K7. See also Bill Stephens, “NS, CSX confirm further cuts: Speed reductions, jobs, and yard operations in the works for the two eastern Class I railroads,” Trains Magazine, June 9, 2016, http://trn.trains.com/news/news-wire/2016/06/09-ns-csx-cuts?utm_source=SilverpopMailing&utm_medium=email&utm_campaign=News0_TRN_160613_000000_Final&utm_content=&spMailingID=25725442&spUserID=MjE0NTc1NDQ0NDc2S0&spJobID=821932410&spReportId=ODIxOTMyNDEwS0 Furtchgott-Roth D, Green KP. Intermodal safety in the transport of oil. Fraser Institute: Studies in Energy Transportation; 2013. It argues forcibly for the environmental superiority of pipelines over rail and other modes of transporting crude oil.