Oil, rail industries want 7 years to fix tank cars

WASHINGTON -- The oil and railroad industries are urging federal regulators to allow them as long as seven years to retrofit existing tank cars that transport volatile crude oil, a top oil industry official said Tuesday. The cars have ruptured and spilled oil during collisions, leading to intense fires.

Jack Gerard, president of the American Petroleum Institute, said the institute and the Association of American Railroads were jointly asking the Transportation Department for six months to 12 months for rail tank car manufacturers to gear up to retrofit tens of thousands of cars and another three years to retrofit older cars.

The two industries, which were at odds until recently over how best to prevent oil train collisions and fires, also want three years after that to retrofit newer tank cars manufactured since 2011, known as "1232 cars," he said.

The transportation department is weighing tougher safety regulations for rail shipments of crude, including stronger tank cars, slower train speeds and more advanced train braking systems. In July, the department proposed older cars be retrofitted within two years.

The longer retrofit timeline reflects the need to allow tank car manufacturers time to expand their operations while still producing new tank cars, Gerard said.

The government's more aggressive timeline "could harm consumers by disrupting the production and transportation of goods that play major roles in our economy, including chemicals, gasoline, crude oil and ethanol," he said. All those products are shipped in the same type of tank cars under government regulations.

The oil and railroad industries each have made concessions to reach agreement on a safer design for newly-manufactured cars. The design adds several features to the current 1232 car, including "thermal blankets" between the shell of the tank car and an outer jacket. In the event of a fire, the blanket is aimed at preventing oil in tank cars that have not ruptured from overheating and causing the car to explode. But the design doesn't include a thicker, 9/16th-inch shell previously sought by the railroad industry.

The petroleum institute initially had opposed changing the 1232 car's design, while the railroad industry sought extensive changes. Shippers such as oil companies will bear most of the cost of tank car retrofits and design changes because they lease or own tank cars, not the railroads.

The oil industry is also now opposing a proposal that oil trains be required to install electronically-controlled brakes, a key concern for railroads. Electronically-controlled brakes stop all the cars on a train at the same time rather than sequentially, which safety officials say can reduce the number of cars that derail in an accident. Railroad industry officials, who oppose requiring the brakes, say the safety benefits would be minimal and the cost huge: $12 billion to $21 billion, according to a CSX estimate.

"We're pretty close to being on the same page," said Ed Hamberger, head of the railroad association. The joint position on tank cars was the result of months of discussions between the industries, he said.

Rail shipments of crude oil have skyrocketed from a few thousand carloads a decade ago to 434,000 carloads last year. Thanks to an oil fracking boom, the Bakken region of North Dakota, Montana and southern Canada now produces over 1 million barrels of crude per day, and production is increasing.

Bakken crude oil shipments typically travel more than 1,000 miles from point of origin to refineries on the coasts. Most of the oil is shipped by "unit trains" that are 100 tank cars or more long.

Since 2008, there have been 10 significant derailments in the U.S. and Canada in which crude oil has spilled from ruptured tank cars, often igniting and resulting in huge fireballs, according to the National Transportation Safety Board. The worst was a runaway oil train that exploded in the Quebec town of Lac-Megantic just across the U.S.-Canada border in July 2013, killing 47 people.

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