Issue Date: August 18, 2014
U.S. Seeks Tighter Rail Safety Rules
After a spate of fiery derailments, the Obama Administration is moving to strengthen safety standards for trains hauling large amounts of crude oil, ethanol, and other flammable liquids. But ethanol producers, who potentially face billions in costs if those standards are toughened, say regulators addressing rail safety need to distinguish between transporting biofuel and transporting petroleum.
Regulations proposed late last month by the Department of Transportation (DOT) would affect tens of thousands of DOT-111 tank cars, which were designed in the 1960s. Under the department’s plan, they would have to be either retrofitted to meet new safety standards or phased out and replaced with a sturdier model.
The department’s proposed upgrades to tank cars include thicker, more puncture-resistant shells, enhanced braking systems, and rollover protections. DOT’s proposal, which will take several months to finalize, would apply to freight trains carrying 20 or more tank cars loaded with flammable fuels. It has become common for oil trains to consist of at least 100 railcars, effectively operating as a pipeline on wheels.
Crude-carrying tank cars would need to be strengthened by 2017. The ethanol industry would have until 2018 to improve or replace tank cars that carry that fuel. The deadline for railcars used to transport other flammable liquids that pose less of a hazard than oil or ethanol would extend to 2020.
But the Administration’s broad proposal has unfairly drawn the ethanol business into the rail safety debate, says Bob Dinneen, chief executive officer of the Renewable Fuels Association (RFA), the industry’s main trade group. Recent derailments, including a deadly crash in Canada in 2013, involved tank cars carrying crude oil, not ethanol, he points out.
Ethanol is less volatile than crude oil, is biodegradable, and has a 99.997% rail safety record, according to the trade group.
RFA estimates that it would cost ethanol producers more than $3 billion to upgrade or replace the 30,000 tank cars they own, nearly all of which are DOT-111s. About 85% of their fleet is less than nine years old.
“These tank car fleets were purchased in good faith and with the expectation that, with regular maintenance, they would be in service for at least 50 years,” Dinneen says.
The industry lobbyist suggests that safety regulators should address the root cause of recent train derailments—substandard track conditions and human error—instead of focusing on tank car design standards. “You keep the railcar on the tracks, and there is no safety issue,” Dinneen asserts.
Transportation Secretary Anthony Foxx says the need to better safeguard rail shipments of crude oil, particularly the large quantities of petroleum extracted from North Dakota’s Bakken shale formation, is the driving force behind the proposed changes. Technological advancements in horizontal drilling and hydraulic fracturing, commonly called fracking, have allowed industry to access petroleum in shale formations that was previously out of reach. As U.S. oil production soars, especially at drilling sites in North Dakota and other states that lack sufficient pipeline capacity, shipments of oil by rail have skyrocketed.
The number of railcars carrying crude oil in the U.S. jumped from about 6,000 in 2007 to more than 400,000 in 2013, according to the Association of American Railroads, an industry group. And over the past 18 months, at least a dozen trains carrying U.S. crude oil have derailed. Six of those accidents led to large-scale spills and major fires, including the one that caused the death of 47 people in Lac-Mégantic, Quebec, in July 2013.
“We need a new world order on how this stuff moves,” Foxx says. “More crude oil is being shipped by rail than ever before. If America is going to be a world leader in producing energy, our job at this department is to ensure that we’re also a world leader in safely transporting it.”
When the final rule is issued, DOT regulators are unlikely to treat the ethanol industry differently than the oil industry, say analysts at ClearView Energy Partners, a Washington, D.C.-based consulting group. “Ethanol accidents were the progenitors of the policy discussion that we’re having now,” says Kevin Book, the firm’s managing director.
For instance, a train hauling ethanol derailed and exploded in Cherry Valley, Ill., in 2009. The blast and fire killed a passenger in one of the automobiles stopped at a nearby crossing, injured seven other people, and caused $8 million in damage.
The National Transportation Safety Board blamed that accident on railroad operating practices. But it concluded that the severity of the accident was due to design flaws in the DOT-111 tank car.
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