Cities and environmental groups predicted little or no reduction in risk from PHMSA’s routing rule. Railroads and chemical manufacturers questioned whether the TSA rule was cost-effective.
PHMSA estimates that its rule will cost railroads $20 million over 20 years, in 2008 dollars adjusted for inflation. To place the projected cost in context, AAR places the annual revenues of North American railroads at $42 billion.
TSA’s cost projections for compliance with its rule are higher and more a matter of debate among carriers and vendors. TSA estimates that compliance will cost the industry $22 million in its first year, with that figure trailing off to $11.8 million in the rule’s tenth year.
Railroads have charged that TSA is underestimating the rule’s cost. The greatest expenses are likely to result from the personnel demands generated by chain-of-custody and car-attendance requirements, in particular for the country’s smaller Class II regional and Class III “short line” railroads. Many railroads in the latter group operate on a limited schedule, a couple of days each week and do not staff facilities all the time.
Larger railroads have commented that the risk reduction offered by the rules is not worth the cost. Norfolk Southern told the agency that the benefit of the rule will be “minimal.”
While TSA’s parent agency, DHS, assesses programs and policies based on anticipated risk reduction, neither TSA nor PHMSA used a risk-reduction test to assess the value of the new railroad rules.
“Estimating the security benefits of the proposed new requirements is challenging,” PHMSA wrote in its 2006 proposal, later stating that “the probability hazardous materials will be targeted is, at best, a guess.”
The agency concluded that the rules were worth pursuing because “the fact an event is infrequent or has never occurred does not diminish the risk or possibility of such an event occurring.”
Joseph Straw is an assistant editor at Security Management.