Companies want seven years to fix oil tank cars

Oil and railroad companies want federal regulators to give them as much as seven years to upgrade existing railroad tank cars that transport highly volatile crude oil, a top oil industry official said Sept. 30. Tanker cars have ruptured and spilled oil in accidents, leading to intense fires.

According to Jack Gerard, president of the American Petroleum Institute, his group and the Association of American Railroads have asked the Transportation Department for six months to 12 months for rail tank car manufacturers to gear up to overhaul tens of thousands of cars and another three years to retrofit older cars.

They also want three more years after that to upgrade tank cars manufactured since 2011, known as 1232 cars, Gerard said. Tank-car makers time to expand their operations while still producing new tank cars, he said.

The Transportation Department has been considering tougher safety regulations for rail shipments of crude that could include stronger tank cars, slower train speeds and more advanced braking systems. In July, the department proposed that older cars be retrofitted within two years.

The government’s more aggressive timeline could hurt consumers by disrupting the production and transportation of goods, including chemicals, gasoline, crude oil and ethanol, Gerard said. All are shipped in the same type of tank cars under government regulations.

Oil and railroad companies have agreed on a safer design for new tanker cars that includes thermal blankets between the shell of the tank car and an outer jacket. In a fire, the blanket would help prevent oil in tank cars that have not ruptured from overheating and exploding. The design, however, doesn’t include a thicker shell previously sought by the railroad industry.

The American Petroleum Institute initially 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 also opposes a proposal to require oil trains to have electronically-controlled brakes, a key concern for railroads. Electronically-controlled brakes stop all 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 say safety benefits would be minimal and cost $12 billion to $21 billion, according to a CSX estimate.

Rail shipments of crude oil have grown from a few thousand carloads a decade ago to 434,000 carloads in 2013. Much of the increase resulted from the oil boom in the Bakken region of North Dakota, Montana and southern Canada.

Since 2008, there have been 10 significant derailments in the U.S. and Canada where crude oil spilled from ruptured tank cars, often igniting and creating in huge fireballs, according to the National Transportation Safety Board.