Bickering Mars Oil Rail Safety Discussions

Spurred by a series of fiery train crashes, a push by U.S. government and industry to make safer tank cars used for shipping crude oil and ethanol has bogged down in squabbling and finger-pointing over whether they’re needed and if so, who should pay.

The Department of Transportation, worried about the potential for catastrophic accidents involving oil and ethanol trains that are sometimes as many as 100 cars long, is drafting new tank-car regulations aimed at making the cars less likely to spill their contents in the event of a crash. But final rules aren’t expected until late this year at the earliest, and it is common for such government rulemaking to drag on for years.

The freight railroad industry proposed tougher tank-car standards last fall, and recently upped its proposal another notch. The government and the Association of American Railroads say oil being shipped from the booming Bakken region in the states of North Dakota and Montana may be more volatile than previously thought.

But oil companies – which own or lease the tank cars, and would have to bear much of the cost of tougher standards – want to stick to voluntary standards agreed to by both industries three years ago unless it can be shown that new standards are needed, American Petroleum Institute officials said. The railroads, they say, are refusing to share the “scientific basis” for their proposal.

The petroleum institute wants “a comprehensive examination” of changes proposed by the rail industry, including whatever computer-modeling was used to support tougher standards so that it can be peer-reviewed, said Brian Straessle, a spokesman for the institute. “So far, no data has been provided,” he said.

The railroads are “pulling this out of thin air,” said Eric Wohlschlegel, another petroleum institute official.

The government, however, says it’s the oil industry that’s not sharing its data. Transportation Department officials complained recently that the agency had received only limited data from a few oil companies on the safety characteristics of Bakken oil, despite requests made in January by Secretary Anthony Foxx. Hundreds of oil producers, shippers, and brokers operate in the region.

So far, only seven oil companies have responded, and several of those provided only sparse information, Foxx said in an interview. The government wants to know what is in the oil so regulators can decide what types of protections are needed for shipping, he said.

“One of the most fundamental questions that cuts across everything in crude oil by rail is how it is classified,” Foxx said. “If it is not classified correctly at the beginning, then it is not packaged correctly and the emergency response needs aren’t understood by the communities through which this material is moving.”

The oil industry is using every tank car available to keep up with the exponential growth in Bakken oil production since hydraulic fracturing, or “fracking,” made it possible to extract more oil from the ground. Freight railroads transported 434,032 carloads of crude in 2013, up from just 9,500 in 2008. Three years ago, the U.S. became a net exporter of petroleum products for the first time since 1949. Ethanol production has also escalated dramatically, creating competition for available rail cars. About 69,000 carloads of ethanol were shipped on rails in 2005. Last year, it was about 325,000 carloads.

In July, a runaway oil train derailed and exploded in Lac-Megantic, Quebec, near the Maine border. Forty-seven people died and 30 buildings were incinerated. Rail and safety officials said they were surprised by the ferocity of the fire. They were used to dealing with sludge-like crude that doesn’t ignite easily, but Canadian investigators said the combustibility of the 1.3 million gallons (4.9 million liters) of light, sweet Bakken crude released in Lac-Megantic was more comparable to gasoline.

There have been eight significant accidents in the U.S. and Canada in the past year involving trains hauling crude oil, including several that resulted in spectacular fires, according to a presentation by crash investigators at a two-day National Transportation Safety Board forum this week on the transport of crude oil and ethanol. Most of the accidents occurred in lightly populated areas, although one derailment and fire in December occurred less than two miles (3 kilometers) from the town of Casselton, North Dakota.

Canadian authorities announced Wednesday that they will require a three-year phase out or retrofit of older cars like the ones that ruptured in Lac-Megantic. But oil industry consultant Lee Johnson, testifying for the petroleum institute, told the safety board that U.S. oil companies need the “flexibility” to continue to use the older cars, and any decision on retrofits should be “data-driven.”