Billions of dollars are riding on how these rules are written, and lobbyists from the railroads, tank car manufacturers and the oil, ethanol and chemical industries have met 13 times since March with officials at the White House and the Pipeline and Hazardous Materials Safety Administration.
Their universal message: Don’t make us pay for increased safety because that’s another industry’s problem.
The pitches illustrate why government officials, who must show that safety benefits outweigh the economic costs of rules, often struggle for years, only to produce watered-down regulations.
The Association of American Railroads, for example, is pushing for tougher safety standards for tank cars than the current, voluntary standards agreed to by industry in 2011. Railroads, though, typically don’t own or lease tank cars and so wouldn’t have to buy new cars or retrofit existing ones. The oil and ethanol industries that own the cars want to stick with the voluntary standards, also known as “1232” tank cars.
The railroads argue that better tank cars are needed because the kind of crude oil being produced in the oil boom Bakken region of North Dakota and Montana and in some other parts of the country is more likely to ignite if a tank car is punctured or ruptured in an accident. They want regulators to require that cars for crude have a thicker shell, an outer layer to protect from heat exposure, an outer “jacket” on top of that, and a better venting valve, among other changes.
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 resulting in huge fireballs. A year ago this month, a runaway train with 72 tank cars of crude en route from the Bakken to a refinery in Canada hurtled into the Quebec town of Lac-Megantic, exploded and killed 47 people.
The American Petroleum Institute, however, says Bakken crude is no different from other light, sweet crude oils and doesn’t need special containers. The institute wants the government to adopt what are now the voluntary standards even though “1232” tank cars have ruptured in several accidents.
“We have billions invested in tank cars,” said Bob Greco, a senior official with the American Petroleum Institute. “Every day new, modern 1232 tank cars are coming into service.” By the end of next year, about 60 percent of the oil industry’s 74,000 tank cars will be 1232s, each bought with the expectation that they would be in use for decades, he said.
The ethanol industry faces a similar quandary. It would cost about $3 billion to retrofit or replace the industry’s 30,000 tank cars to make them tougher, said Bob Dinneen, head of the Renewable Fuels Association.
From 2006 to 2012, there were seven train derailments in which tank cars carrying ethanol ruptured. Several crashes caused spectacular fires that emergency responders were powerless to put out, including one near Cherry Valley, Illinois, that consumed a van with a family inside. A woman was killed, her husband suffered burned and their pregnant adult daughter miscarried.
The ethanol industry, including agribusiness giant Archer Daniels Midland, has told regulators that if tank car standards must be strengthened, the new requirements should apply only to crude oil, Dinneen said. He blamed poor communication by railroads for the Cherry Valley accident.
The chemical industry, which ships both flammable and nonflammable liquids in tank cars, has told regulators that if they propose a new tank car standard, it should be phased in, starting with oil shipments. Deadlines for chemical shipments would come later. The industry also questions whether the safety benefits justify the cost of upgrading existing tank cars to meet new standards.
Rather than new rules for tank cars, the oil and ethanol industries want regulators to turn their attention to whether railroads should do more to prevent accidents. “Keep these cars on the tracks and nobody has a problem,” Dinneen said.
The government may try to do just that.
Edward Hamberger, head of the Association of American Railroads, said he is dismayed that regulators are considering lowering oil train speeds to 30 mph. Railroads already have voluntarily lowered speeds from 50 mph to 40 mph in urban areas, he said.
Lowering the speed of oil trains, some of which are 100 cars long, would slow overall freight traffic by about 10 percent and reduce the capacity of the nation’s freight network by the same amount, Hamberger said. That’s because 83 percent of the network is single track, with passing tracks located from 5 miles to 50 miles apart. Virtually every industry that ships freight by rail would be affected, he said, along with Amtrak, which widely uses freight tracks.
Burlington Northern-Santa Fe estimated that reducing speeds to 30 mph on just one portion of its network — its Aurora, Illinois, to Spokane, Washington, line — would cost the company $800 million.
Shippers that use a combination of trains and trucks to move products may switch to trucks, Hamberger said, putting more of those on the road.
Railroads also worry that regulators will require trains to have electronically controlled brakes that would cost the industry $12 billion to $21 billion, according to a CSX estimate.
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