Customer concerns prompt BNSF to withdraw plan to buy tank cars

BNSF Railway Co. has dropped an earlier announced plan to acquire up to 5,000 next-generation crude-oil tank cars, the Class I said in a recent letter to customers.

Last year, the Class I indicated it would purchase new tank cars to help settle marketplace concerns over crude-by-rail safety. But conversations with customers in recent months convinced BNSF executives to change direction.

"While this step was initially received positively, subsequent conversations with you, our customers, indicated many of you had concerns and BNSF owning or leasing tank cars was not viewed as useful," stated the letter, which was signed by Executive Vice President and Chief Marketing Officer Steve Bobb and Executive Vice President and Chief Operations Officer Greg Fox.

BNSF had issued a request for proposals last year to major rail-car manufacturers to submit bids for construction of 5,000 tank cars that would exceed stronger standards that the rail industry voluntarily adopted in October 2011. The RFP was considered unusual at the time because Class Is usually don't own tank cars.

The decision to drop that plan comes two weeks after the U.S. Department of Transportation (USDOT) announced its final rule on crude-by-rail safety. The rules require that tank cars built after Oct. 1 must meet design and performance requirements for a new class of tank car, the DOT-117, while existing cars must be retrofitted to meet the new standards. The rule also calls for the replacement of DOT-111 tank cars.

In their letter, Bobb and Fox said BNSF would work with customers to make the transition to the next generation of cars or retrofit cars into shale crude service as soon as practicable.

"We continue to believe that DOT-111 tank cars should be removed from BNSF shale crude service in one year," they wrote. "Also, we believe that unmodified CPC-1232 tank cars should be removed from BNSF shale crude service in three years."

The executives added that they have concerns about USDOT's mandate for electronically controlled pneumatic brakes.

"While the industry continues to work through these issues, we advise customers who plan to acquire tank cars to have the cars fit with the structural elements for a dual-braking system to be added at a later date," the letter stated.