U.S. looks to retire older rail tank cars
Thousands of older rail tank cars that carry crude oil would be phased out within two years under U.S. regulations proposed Wednesday in response to a series of fiery train crashes during the past year, including the runaway oil train that exploded in the Quebec town of LacMegantic, killing 47 people.
Accident investigators have complained for decades that the cars are too easily punctured or ruptured, spilling their contents, when derailed.
The phase-in period for replacing or retrofitting the DOT-111 tank cars is shorter than the Canadian government’s three-year phased plan, announced in April.
However, U.S. regulators left open the question of what kind of tank car will replace the old ones, saying they’ll choose later from among several proposals.
Besides oil, the proposed regulations would also apply to the transport of ethanol and other hazardous liquids.
The regulations also apply only to trains of 20 or more cars, which would include most oil shipments.
The proposal would also require improved braking systems and testing of oil before being loaded as well as thicker tanker walls.
It leaves open how fast oil trains may travel through urban areas rather than lowering it. Tank cars have ruptured in several accidents at speeds as low as 38 km/h. Regulators said they’re considering lowering the speed limit to 30 mph (48 km/h) for some trains not equipped with more advanced braking systems.
Calgary-based Canadian Pacific Railway said it welcomes the move to take older tank cars off the tracks. Spokesperson Ed Greenberg pointed out the railroad had been calling for the removal of DOT-111s months be- fore the Canadian federal government announced its own phase-out timeline.
“It has been this railroad’s position that stricter federal tank car safety standards is the single most important step toward improving rail transport of dangerous goods,” Greenberg said.
However, Greenberg said the other proposed regulations are more complex, and will require a closer look by railroads, shippers and crude producers.
Greenberg did not comment specifically on the prospect of lower speed limits, but prior to Wednesday’s announcement, the freight railroad industry had met privately with department and White House officials to lobby for keeping the speed limit at the 40 mph (60 km/h) they voluntarily agreed to effective July 1. Railroad officials said a 30 mph speed limit would tie up traffic across the United States because other freight wouldn’t be able to get past slower oil trains, which are often 100 cars or longer.
When Canada’s new rail safety measures were announced in April, CP CEO Hunter Harrison was critical of the requirement for trains carrying dangerous goods to slow to 50 mph (80 km/h) or less when passing through populated areas or other routes deemed to be higher risk.
Harrison said at the time that while CP will comply with the order, it believes reducing train speeds is not a solution for rail safety.
“Human behaviours are a significant factor and should be the focus if the goal is to truly improve safety,” he said.
The proposed regulations — now subject to 60 days of public comment — are designed to update standards to account for an increase in the use of trains to carry flammable liquids, particularly crude from places like North Dakota’s Bakken field where production is soaring beyond the capacity of pipelines. U.S. carloads of oil surged to 415,000 last year from 9,500 in 2008, according to the U.S. Transportation Department.
“Today’s proposal represents our most significant progress yet in developing and enforcing new rules to ensure that all flammable liquids, including Bakken crude and ethanol, are transported safely,” U.S. Transportation Secretary Anthony Foxx said in Washington.
Lower train speeds, new braking requirements and the phase-out of older tank cars will drive up expenses, although the impact is difficult to calculate accurately, David Vernon, a New York-based railroad analyst with Sanford C. Bernstein, said in a note Wednesday.
“As those costs get passed through to refiners and producers, it will eat into the arbitrage opportunity of moving crude by rail and all else equal require a higher spread to maintain current volumes,” Vernon said.
The Transportation Department also said Wednesday that its studies found Bakken crude is more volatile and potentially flammable.
“We’ve confirmed so far that Bakken crude oil is on the high end of volatility compared to other crude oils and not only is it on the high end of volatility, it’s production is skyrocketing,” Foxx said.
The American Petroleum Institute, in a statement, disputed that characterization, saying multiple studies have shown Bakken oil is similar to other crudes.