U.S., Canada Agree on Oil Train Safety Mandates

Almost two years after an unattended oil train derailed and exploded in Quebec, killing 47 people, the U.S. and Canadian governments jointly set new rules designed to reduce the risks of hauling crude by rail.

Newly built tank cars must have thicker steel walls, more protection at the ends, and thermal blankets designed to reduce the risk of explosion. Tankers now in use would have to start being replaced or retrofitted in 2017. Four years later, electronically controlled brakes would be required in some cases when U.S. trains are pulling 70 or more cars of the most hazardous cargo.

The final rules are a “significant improvement over the current regulations,” and will make hauling crude by rail safer, U.S. Transportation Secretary Anthony Foxx said in a statement.

While regulators had advanced interim measures like speed restrictions, the rules announced last Friday are more sweeping in scope and tougher on the industry, particularly for companies that own the tank cars, including oil producers and leasing businesses like GATX Corp. The government estimated it will cost $2.5 billion for companies to comply with the rules.

The American Petroleum Institute reacted warily, saying in an e-mail that it welcomed the release of the new rules but they need to be “carefully examined.”

“The key question is whether science and data show each change will make a meaningful improvement to safety,” Jack Gerard, president of the trade association, said in a statement.

He singled out the brake requirements in particular, saying the safety impact of them is “marginal at best.” He also warned that the rail car industry may lack the capacity to meet the retrofit timeline.

The long-anticipated rules primarily come in response to the Lac-Megantic, Quebec, disaster, in which a train broke from its moorings late one night in July 2013 and rolled into the city’s downtown, sparking an explosion that sent massive fireballs hundreds of feet in the sky. Other fiery accidents in both Canada and the U.S. that didn’t cause fatalities further underscored the risks of hauling crude by rail.

Government efforts to impose new standards sparked a lobbying campaign by various groups: the railroads that haul the oil, the companies that build and own the tank cars, and the oil producers that have increasingly relied on railroads to ship crude to market.

They are defending a crude-by-rail business that has grown along with U.S. oil production in places like the Bakken formation in North Dakota where pipelines are lacking or don’t offer access to the right market.

Shipments of crude oil by rail have increased by more than 4,000 percent since 2009, though have leveled off recently as a decline in oil prices has curtailed the oil production boom.

Accidents — including four this year in the U.S. and Canada — have shaken the towns and cities bisected by the trains, which can stretch for over 100 cars filled with more than 3 million gallons of oil.

“This stronger, safer, more robust tank car will protect communities on both sides of our shared border,” Canadian Minister of Transport Lisa Raitt said in a statement.

The new standards “will not be cheap” but are necessary, given the risks, she said.

The rules have an estimated cost of $2.5 billion. The benefits associated with damage avoided once the rules are implemented range from $912 million and $2.9 billion, according to the U.S. government.

Safety investigators have known for years that older tank cars known as DOT-111s are prone to rupture even in low-speed accidents. The new rules require the DOT-111s to be replaced or retrofitted by Jan. 1, 2018, in the U.S. and by May 1, 2017 in Canada.

Spills in West Virginia, Illinois and in the Canadian province of Ontario also showed flaws with newer model CPC-1232s, that the industry began building in 2011. Those cars face retrofit deadlines starting in April 2020 under the new rules.

In total, the U.S. expects almost 99,000 tank cars will be retrofitted, including more than 16,000 DOT-111s by the first deadline.

Some U.S. lawmakers said the phase-out of the existing fleet comes too slowly under the rules.

The rule is “just like saying let the oil trains roll,” Senator Maria Cantwell, a Washington Democrat, said in a statement.

Cantwell has introduced legislation to require regulators to set a volatility threshold for the oil loaded into the cars, which isn’t addressed in the regulation released Friday.

The Railway Association of Canada applauded the announcement, though said rail customers and leasing companies own the vast majority of tank cars — not the railways themselves.

“Harmonization and consistency between Canadian and U.S. tank car requirements is important to ensure a safe and efficient rail transportation system in North America,” Michael Bourque, the president and CEO of the association, said in a statement. “A speedy transition to a safer means of containment” is most important.

The rules also require electronically controlled brakes that stop cars simultaneously rather than sequentially be added by 2021 to trains with 70 or more cars of flammable liquids, with at least one carrying the particularly volatile type of crude that’s produced in North Dakota. Cars that don’t comply face a 30 miles per hour speed limit.

Trains with 20 or more carloads of crude linked together, or 35 in total, but less than 70, have until after 2023 to add the brakes.

Raitt said Canada would continue to work to “find a Canadian solution that harmonizes with a final U.S. braking rule.”

Gerard of API said the rules for electronically controlled pneumatic brakes, or ECP, adds constraints to meeting the governments deadlines for retrofitting existing tank cars.

“It is concerning that regulators did not select one of several alternative braking technologies that have much clearer benefits for safety,” he said.

Foxx said at a news event that the ECP brakes “offer a much higher level of safety than the current system.”

Canada’s Transportation Safety Board, an independent investigator and safety watchdog, said it was pleased to see the standards announced Friday, noting it has called for years to boost tank car standards. The rules “are important steps in addressing outstanding recommendations” from the TSB, including those from the Lac-Megantic derailment, it said in an e-mail.