July 14, 2014

Railroads And Energy Companies Argue Over New Safety Proposals

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The recent spate of oil-carrying rail accidents, derailments and spills has spurred a campaign to influence how the government responds to calls for more stringent safety rules, according to the Associated Press this weekend.

The monetary stakes are high for all involved and consequently 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. Both the railroad industries and the energy companies believe the other party should be responsible for any increased costs.

The Association of American Railroads, for example, is pushing for tougher safety standards for tank cars, requiring that the tank cars have a thicker shell making them less likely to rupture in an accident. The oil and ethanol industries that own the cars want to stick with the voluntary standards, as it would cost about $3 billion to retrofit or replace the industry’s 30,000 tank cars.

The chemical industry, which ships both flammable and nonflammable liquids in tank cars, argues that if a new tank car standard is adopted it should only be for oil shipments at first. The oil and ethanol industry argues that regulators should be turning their attention to derailments, and, if these could be prevented, there would be no ruptured tank car problem.

This would involve reducing train speeds and the railroads have already have voluntarily lowered speeds from 50 mph to 40 mph in urban areas. Lowering rail speed even further would slow overall freight traffic by about 10 percent, and reduce capacity accordingly, according to Edward Hamberger, head of the Association of American Railroads.

BNSF (Burlington Northern-Santa Fe) Railway Co. 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. Also, shippers may decide to move to trucks rather than the railroads, Hamberger cautions.

The railroads had already been reticent to share any information about trains carrying millions of gallons of crude oil from the Bakken oil fields of North Dakota, possibly because they thought this would also hurt their business.