Discussion Paper - Belfer Center for Science and International Affairs, Harvard Kennedy School
Rail Transportation of Toxic Inhalation Hazards: Policy Responses to the Safety and Security Externality
This discussion paper was also published by the Mossavar-Rahmani Center for Business & Government at Harvard Kennedy School as a Regulatory Policy Program Working Paper: RPP-2010-01.
Toxic inhalation hazard (TIH) chemicals such as chlorine gas and anhydrous ammonia are among the most dangerous of hazardous materials. Rail transportation of TIH creates risk that is not adequately reflected in the costs, creating a TIH safety and security externality. This paper describes and evaluates policy alternatives that might effectively mitigate the dangers of TIH transportation by rail. After describing the nature of TIH risk and defining the TIH externality, general policy approaches to externalities from other arenas are examined. Potential risk reduction strategies and approaches for each segment of the supply chain are reviewed. The paper concludes by summarizing policy options and assessing some of the most promising means to reduce the risks of transportation of toxic inhalation hazards. Four policy approaches are recommended: internalizing external costs through creation of a fund for liability and claims, improving supply chain operations, enhancing emergency response and focusing regulatory authority. It is further suggested that the Department of Transportation convene a discussion among stakeholder representatives to evaluate policy alternatives.
Hazardous materials — industrial materials that are flammable, corrosive, toxic, explosive, or infectious — play a vital role in the U.S. economy. They are used by industries from farming and mining to manufacturing and pharmaceuticals, in the form of fertilizers, raw materials, fuels, and other essential inputs. Of all hazardous materials, toxic inhalation hazards (TIH) may be among the most dangerous.1 Chlorine gas and anhydrous ammonia are the most common TIH chemicals; others include sulfur dioxide, ethylene oxide, and hydrogen fluoride, and a variety of other products that are important manufacturing inputs.2
After the terrorist attacks of September 11, 2001, the security of hazardous materials became increasingly salient in public concern and political debate. Release of toxic inhalation hazards, whether the result of attack or accident, could result in devastating consequences. Many hazardous chemicals are transported over long distances by rail, during which they are particularly vulnerable.3
Safety from accidents as well as security against attack are of concern. Toxic inhalation hazards were involved in a number of deadly rail accidents in the early part of this decade. They could have been far worse: all of the TIH accidents we describe in this paper occurred at night in areas of relatively sparse population, limiting the number of people exposed to the effects of the chemicals. A daylight TIH release in a densely populated area could have catastrophic consequences.
Movement of TIH materials through the supply chain creates risk for shippers, rail carriers, and the general public that is not quantified and is not adequately reflected in the costs, leaving a significant portion of the risk as an externality. Our focus, therefore, is on the TIH safety and security externality, that is, the consequences associated both with accidents and with deliberately perpetrated attacks. Improving "safety" means reducing the accident risk; improving "security" means reducing the terrorist risk. Accidents and deliberate attacks may result in similar consequences. Therefore many safety regulations and policies will also mitigate, to some degree, the consequences of a security breach. The domains of safety and security overlap with respect both to mitigation and to consequence.
This study focuses on potential means of reducing the risk of TIH rail transportation by developing a better understanding of the safety and security externality and proposing a more comprehensive approach to the way that TIH materials are handled. The risk mitigation actions of individual stakeholders, while positive, may not be enough. A focus on incorporating the safety and security externality into the entire TIH supply chain would allow the participants in that supply chain to assess risks more effectively and to make better plans for the safe transport, storage, and delivery of TIH....
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