Alliance for Chemical Distribution (ACD) member Richard Erstad, Vice President, General Counsel, and Secretary for Hawkins, Inc., testified before the Surface Transportation Board (STB) about recent trends in the freight rail industry and the growing concerns about recent changes to insurance liability requirements. As freight rail service continues to decline and customers face significant challenges in obtaining comprehensive insurance coverage, ACD appreciates the opportunity to bring attention to these issues. 

In his testimony, Erstad underscored the role of the freight rail industry to the chemical distribution industry.

“Many ACD members rely on freight rail to move and receive chemicals, as rail can be efficient and is the safest way to transport hazardous materials. In addition, rail is the only viable method to transport certain products, such as chlorine gas.”

Erstad continued by examining the recent, unreasonable changes to insurance requirements regarding hazardous material shipments by Class I rail carriers and their impacts on businesses. 

“These changes have tremendously increased insurance costs and shift the liability away from those best situated to control the risk and onto shippers, who have no control over the car movements. Also, continued poor and unreliable service from rail carriers serves as an additional disincentive to expansion.”

Erstad concluded, “The consistent issue of poor rail service combined with the alarming trend of liability shifting and extreme insurance requirements is making freight rail unsustainable for the average shipper and receiver. The Class I carriers must abide by their common carrier obligations and implement reasonable insurance requirements for hazardous shipments for there to be any future freight rail growth in this critical area. Also, the railroads must invest more in improving their service so customers can rely on freight rail and make material investments in its continued growth.”

To read the full testimony click here.