Tank cars' toughness is questioned in crude-by-rail crash

Updated at 11:30 a.m. EDT.

As U.S. officials weigh tightening standards for crude-hauling rail cars, one point looms large in the debate: Could a sturdier car have made difference in the July 6 deadly oil-train derailment in Quebec?

For North American rail car manufacturers and lessors such as Trinity Industries and General Electric Railcar Services Corp., that's a billion-dollar question. The U.S. Pipeline and Hazardous Materials Safety Administration has accelerated its efforts to revamp outdated tank car standards in the wake of the Quebec crash and explosion, issuing an advance notice of proposed rulemaking earlier this month after nearly a year of delays (EnergyWire, Sept. 5).

If PHMSA decides to take safety agencies' suggestions to heart and force rail car owners to upgrade older tankers, it could cost $1 billion, according to industry estimates.

For more than 20 years, the U.S. National Transportation Safety Board and its Canadian counterpart have warned of design flaws in the DOT-111 tank cars involved in the derailment, which leveled dozens of buildings in the town of Lac-Mégantic and claimed 47 lives. The Canadian TSB renewed its criticism of the model in a letter to PHMSA last Wednesday, writing that the investigation had brought "into question the adequacy of Class 111 tank cars for use in transporting large quantities of low flash-point flammable liquids" such as crude from North Dakota's Bakken Shale play.


But the TSB's preliminary findings also indicate the runaway train was moving much faster than the 10-mph speed limit in the Lac-Mégantic area when it jumped off the tracks. According to unofficial estimates based on the distance, slope and weight, the 73-car Montreal, Maine & Atlantic Railway train may have exceeded 60 mph during its ill-fated descent.

Civil engineers and metallurgy experts have noted that even highly puncture-proof tank car designs would have likely failed at those speeds.

Still, others have argued that even a marginally better design could have saved lives.

"The tank cars were wholly inappropriate for the type of flammable and explosive materials that were being carried," said Montreal-based attorney Jeff Orenstein, who is representing victims of the derailment in a class-action lawsuit through Consumer Law Group Inc. in conjunction with several other firms.

Last month, the class proceedings were amended to include tank car lessors Union Tank Car Co., Trinity and GE Railcar. The suit alleges that the companies knowingly provided non-reinforced older models of DOT-111 cars.

Contracts linking the companies to lessee Western Petroleum Co. are not publicly available. A spokeswoman for GE Railcar did not respond to requests for comment about the company's exposure to the Lac-Mégantic incident.

Orenstein's suit is one of dozens to have emerged in the aftermath of the tragedy. Civil litigation related to the crash has roped in everyone from Canadian Pacific Railway Ltd., which contracted the now-bankrupt railroad MM&A to carry the crude, to World Fuel Services Corp., which owned the crude, en route to an East Coast refinery, and whose subsidiary leased the tank cars.

The number of companies implicated in the crash reflects the complexities of shipping crude by rail, a method nearly unheard of just a few years ago. The sudden rise of hydraulic fracturing in remote shale plays lacking pipelines led many U.S. oil producers and refiners to take to the tracks. Freight giants such as Warren Buffett's BNSF Railway Co. hauled a record 108,605 carloads of crude oil in the second quarter of this year, more than double levels in the same period in 2012, according to the Association of American Railroads, an industry group.

The billion-dollar question

The AAR has staunchly opposed retrofitting older tank cars on the grounds that it would cost more than $1 billion and do little to boost railways' already-improving safety record.

But if PHMSA decides to mandate retrofits, analysts predict lessors such as Trinity and GE Railcar will bear the brunt of the upfront costs.

The AAR estimates that there are roughly 240,000 DOT-111 tankers in service, hauling everything from ethanol to vegetable oil. Since 2011, the group has imposed tougher standards for DOT-111s hauling hazardous materials such as oil, but about half of the tank cars used for crude today aren't built to the new specifications.

Depending on the outcome of PHMSA's rulemaking, "there could be tens of thousands of cars that would require some sort of retrofit," said Richard Kloster, senior vice president of business development and technical services at rail management and consulting firm AllTranstek LLC.

"In some cases, it won't make sense to put that kind of money into a car, so it could be pushed into a different service or retired altogether," Kloster said.

A retrofit requirement would even hit crude producers, Kloster said, as many oil companies have opted to buy their own tank cars rather than lease them. He estimated that about 80 percent of tank cars are owned by leasing companies with shippers owning the remaining 20 percent of the fleet.

Steel decisions

Manufacturers can build tank cars out of a limited number of steels, including carbon or "high alloy" types, according to standards determined by the AAR's Tank Car Committee alongside the U.S. Department of Transportation.

But critics say all the approved alloys have been around for about a century and don't reflect the strongest raw materials available.

"Advancements have been made in these products, and there are huge benefits in terms of strength, but [manufacturers] can't use them without asking for an exception on a case-by-case basis," said Ken Grantham, executive vice president and director of technical services at Baton Rouge-based metals company Crompion International.

Holly Arthur, a spokeswoman for the AAR, said in an email that the group’s Tank Car Committee “is always examining new materials for cars and has a long-proven system for approving new materials,” consulting technical engineering and metallurgy experts.

Part of the challenge in approving new raw metals, Arthur explained, is ensuring that they remain weldable and formable while performing up to existing standards.

Arthur noted that the AAR has not yet taken a position in response to the latest expected changes to federal tank car regulations.

Grantham said his company, which often furnishes steel for tank car manufacturers, would participate in the PHMSA rulemaking process "to make sure that the metallurgy involved ... is given serious consideration along with the designs."

Although he acknowledged that the "extraordinary" circumstances of the Lac-Mégantic crash would have tried even the toughest metal, he said he sees no reason for his company's newest steels to be kept unavailable.

"The DOT-111 design is old; they've come up with a new one," Grantham said. "But guess what? The materials list hasn't changed."

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