Oil train sector has work to settle safety concerns - trade group
WASHINGTON - The U.S. refining industry has not agreed to a deal reached by oil producers and railroads on improving the safety of oil tank cars, it said on Tuesday, suggesting a key piece of anticipated reforms remains unsettled.
On Monday, several industry sources said the American Petroleum Institute, a leading voice for oil producers, and the Association of American Railroads, the political arm of the rail industry, had reached a breakthrough on oil tanker safety.
Specifically, the two groups were said to have agreed on a schedule for retiring older tank cars and a toughened design for newer cars that carry most of the fuel out of North Dakota's Bakken shale oil fields.
But it is the refining industry that most relies on tank cars to reliably deliver crude oil, and it was not part of any such deal, said the American Fuel & Petrochemical Manufacturers, an industry trade association.
"Our members own or lease the lion's share of rail tank cars used to transport crude oil," said Rebecca Adler, a spokeswoman for the group.
"AFPM members have not yet considered the API/AAR specification car and have not seen the data showing the costs and benefits."
The API and the AAR did not respond to several requests for comment on Tuesday.
The U.S. Transportation Department is expected to outline a comprehensive plan for oil train safety in the coming weeks. Officials have said issues such as tank car design, speed and routing could be addressed.
Still, the oil train industry can build credibility with the Transportation Department, said Lawrence Bierlein, a veteran transportation lawyer in Washington, by setting its own rules prior to release of the plan.
"Whatever the industry can settle on its own, that's one less thing that regulators have to tackle," he said. "That might explain these maneuvers."
The deal between the AAR and API would order older tank cars, model DOT-111, off the tracks or into workshops for safety upgrades.
There are approximately 94,000 DOT-111s used to transport crude and other flammable liquids, according to data from the Railway Supply Institute.
About 39,000 DOT-111s are being used to carry crude, less than one-third of which are built to a toughened safety standards in effect since 2011.
Bierlein said that the practical obstacles and costs to upgrade so many cars are enormous.
"The cheapest thing, in most cases, might be to scrap the older car and order a new one."
For new tank cars, rail operators and tank car manufacturers have been pushing for a shell 9/16th inch thick, while the oil industry has said 7/16th inch is sufficient.
AAR and API agreed to split the difference and settle on a 1/2 inch tank car thickness, said two industry sources.