Stung by derailments, U.S. and Canada rewrite crude-by-rail regs

By Blake Sobczak | 05/01/2015 01:13 PM EDT

U.S. and Canadian officials unveiled regulations today that would effectively overhaul the entire fleet of U.S. crude oil tank cars in five years.

The crude-by-rail safety rule — jointly developed by the U.S. Department of Transportation and Transport Canada — marks the most significant regulatory action since a runaway train hauling oil derailed and exploded killing 47 people two years ago in Lac-Mégantic, Quebec.

"We can never undo the damage that took place in Lac-Mégantic or in any other railway accident, but we can and must learn from those events and improve our system," Canada’s Minister of Transport Lisa Raitt said during a press conference yesterday in Washington, D.C.

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The final rule creates a new North American tank car standard, dubbed the DOT-117, with thicker steel and redesigned bottom outlet valves, among other improvements over the type that shred open and burst into flames in Lac-Mégantic. U.S. shippers will have until 2018 to scrap or upgrade those older, more puncture-prone type DOT-111 tank cars, while Canada will phase all of those cars out of crude service by May 1, 2017.

The rule would also require companies hauling crude and ethanol to retool or get rid of a newer, industry-developed tank car model by 2020. That so-called CPC-1232 type of tank car — thousands of which have been manufactured since 2011 — has been criticized for exploding in a string of other oil train derailments across the United States and Canada in the past year and a half.

A spate of oil train accidents in West Virginia, North Dakota, Virginia and Illinois caught the attention of U.S. lawmakers on both sides of the aisle, who had hounded DOT on the pace of the rulemaking finalized today.

Last year, nearly a half-million tank cars laden with flammable crude oil moved across the United States, up from practically no traffic eight years ago, according to data from the Association of American Railroads.

The AAR, which represents oil-by-rail giants BNSF Railway Co. and Canadian Pacific Railway Ltd., welcomed the rule in a statement yesterday but came out swinging against a provision to add advanced and costly electronically controlled pneumatic (ECP) braking systems to "high-hazard" oil trains.

Ed Hamberger, AAR’s president and CEO, called the braking mandate "imprudent."

Regulators "couldn’t make a safety case for ECP but forged ahead anyhow," he said.

U.S. Transportation Secretary Anthony Foxx defended his department’s attention to ECP brakes, which would be required by 2021 on only the largest crude oil trains carrying 70 or more cars.

ECP brakes engage simultaneously across an entire train and can stop a string of tank cars several seconds faster than conventional braking systems, according to analyses.

"The bottom line is that ECP brakes in this context of transporting flammable liquids can be the difference between a contained fire and a catastrophe," Foxx said.

Reactions

The oil and refining industries cautiously welcomed the rule in statements today, even as they criticized the five-year deadline for scrapping or upgrading the vast majority of the U.S. crude oil tank car fleet.

Brendan Williams, executive vice president for the American Fuel and Petrochemical Manufacturers, a leading trade group for refiners, warned that the "aggressive retrofit schedule is unrealistic and may be disruptive to transporting crude oil to markets across the country."

The American Petroleum Institute, which represents major oil producers such as Exxon Mobil Corp. and Chevron Corp., voiced similar concerns.

"The railcar manufacturing industry’s own calculations show it does not have the shop capacity to meet the retrofit timeline announced today, which will lead to shortages that impact consumers and the broader economy," API’s President and CEO Jack Gerard said.

Politicians gave a warmer reception to the rule, which was nearly two years in the making and attracted heavy interest from lobbyists, environmentalists and the broader public.

Rep. Peter DeFazio (D-Or.), the ranking member for the House Committee on Transportation and Infrastructure, said that "at first glance, this rule will provide certainty to manufacturers, shippers and railroads and better protect the American public."

Environmentalist and public advocacy groups were more skeptical. The rule didn’t significantly change the way communities interact with railroads that pass through them and would require individual towns to request information on hazardous materials shipments rather than receive such details automatically.

DOT also fell short of meeting environmentalists’ calls to immediately ban the oldest, riskiest model of tank car. Regulators also did not issue any requirement to "strip" light Bakken crude oil of its more volatile gaseous components, a step many have said would make moving it by rail less dangerous.

Tyson Slocum, energy program director for Public Citizen, called the rule a "necessary first step" but noted that it "does little to minimize the magnitude of any explosion that occurs after an oil train derails and explodes."

Foxx and Raitt emphasized that they would continue to consider new crude-by-rail safety actions in the future. DOT recently announced it would team up with the Department of Energy to investigate Bakken Shale crude volatility in what could lay the groundwork for future regulations.

Still, Foxx called today’s rule "a big step, and it shouldn’t be understated."

His Canadian counterpart sought to pre-empt industry criticism that could see its day in court if the rule is challenged.

"I know that the safety measures that we have outlined today will not be easy, and quite frankly they will not be cheap," Raitt said. "But the financial losses and the costs of cleaning up after such an event like Lac-Mégantic would, in the long run, be far more burdensome."

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