A series of accidents in the booming North American crude-by-rail business has forced regulators and the industry to re-examine the safety of tank cars that carry oil.
But the different segments of this business hold divergent views on what standards should be adopted to ensure the aging fleet can safely handle the new and growing demand. This factbox compares positions held by railroads, the lobbying group representing tank car builders and the group representing oil producers and shippers when it comes to tank car design.
Train cars known as DOT-111s are at the heart of the recent growth in crude by-rail shipments. Last year they ferried more than 780,000 barrels of oil a day, or about 10 percent of U.S. production, according to the Association of American Railroads (AAR).
Yet railroads, shippers and regulators had long recognized that DOT-111s, which also carry ethanol, often fail during accidents. The cars are more likely to spill their hazardous cargo and catch fire, according to documents dating back to the early 1990s, when the U.S. National Transportation Safety Board (NTSB) noted their repeated failure.
In March 2011, AAR submitted a petition (P-1577) to the U.S. Department of Transportation with design standards that would ensure these train cars could survive accidents without releasing hazardous materials.
The petition made recommendations on many aspects of tank car design, from the material for their outer shells to protective shields and covers for “top fittings” through which liquid cargo is loaded and unloaded.
In August 2011, the association went a step further and issued a circular (CPC 1232) that required the adoption of these standards for all cars ordered after October 2011 that would carry crude oil and ethanol.
However, AAR’s recommendations did not apply to the existing fleet of tank cars that were carrying the same hazardous cargo. The industry balked because of the high cost of retrofits and the weight the new design could add to the cars.
But that changed last summer when an unattended freight train carrying oil from the Bakken shale in North Dakota derailed and exploded in Lac-Megantic, Quebec, killing 47 people and decimating much of the small town.
In September, the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a rulemaking document to revise its hazardous materials regulations as they apply to shipping crude by rail.
The document, called an Advance Notice of Proposed Rulemaking, was the regulator’s first step to revise its existing rules on DOT-111 cars. Besides outlining eight industry petitions and four NTSB recommendations, it solicited comments from interested parties.
In response, the railroads called for even more stringent standards than those in effect since 2011.
Less likely to shoulder the costs, they stressed the need to retrofit or phase out all cars that do not meet those standards.
The Railway Supply Institute, which represents tank car manufacturers and lessors, agreed to some of the retrofits AAR suggested but said owners should be able to modify, repurpose or retire cars over a 10-year period. The institute estimates only a third of the nearly 39,000 DOT-111 tank cars that carry crude oil meet the Association of Railroad’s 2011 standards.
On behalf of oil producers and shippers, the American Petroleum Institute (API) requested more studies into retrofit options before final rules are in place.
The comment period on the PHMSA’s rule making document ended on Dec. 5. (Reuters)