Apprehension and frustration lingered over the crude-by-rail sector shortly before the USDOT issued its safety rule

By Jeff Stagl, Managing Editor

(Editor's note: This article was wriiten before the USDOT issued its final safety rule on the transportation of flammable liquids — mainly crude and ethanol — on May 1.)

On April 17, the U.S. Department of Transportation (USDOT) announced a series of actions the Federal Railroad Administration (FRA) and Pipeline and Hazardous Materials Safety Administration (PHMSA) will undertake to address some of the safety concerns pertaining to recent train accidents involving crude oil and ethanol.

An emergency order, two safety advisories and several "notices to industry" call for lower train speeds in high-threat urban areas, more accurate brake and mechanical inspections, better tank-car wheel integrity, and the dissemination of more detailed information to emergency responders and investigators.

In a prepared response, U.S. Rep. Bill Shuster (R-Pa.) noted the federal actions would help improve crude-by-rail (CBR) safety, but not to the necessary degree. The chairman of the House Transportation and Infrastructure Committee had hoped for a different announcement from the USDOT.

"I wish the administration had released the long-overdue comprehensive crude oil-by-rail final rule," Shuster said.

That was a sentiment expressed by many CBR constituents in April. As of press time, the USDOT was preparing to release a final safety rule on transporting flammable materials by rail, particularly crude and ethanol.

Expected to be issued May 1, the rule takes aim at train operating speed, new tank-car standards, a retirement plan for older type DOT-111 tank cars and enhanced car braking systems, such as a possible requirement for electronic-controlled pneumatic brakes (ECP).

The USDOT has been crafting the rule to address 23 crude train accidents that have occurred in the United States since 2013, including serious derailments involving BNSF Railway Co. near Casselton, N.D., and Galena, Ill., and CSX Transportation near Mount Carbon, W.Va.

Heading into May, railroads, tank-car builders and lessors, shippers, refiners and other crude supply-chain members were awaiting the rule with great anticipation. Not knowing what the rule will require created anxiety among them, particularly regarding ramifications to rail operations, tank-car fleets — in part because the lead time to build a new car exceeds two years — and emergency-response procedures.

For example, Vertex Rail Technologies LLC delayed plans to begin building tank cars and hoppers at a new Wilmington, N.C., plant until the rule is issued and the implications are digested. If regulators add more tank-car features and requirements, the cost to build and buy the cars would rise, says Stifel Financial Corp. analyst John Larkin, who follows the rail industry.

The uneasiness in the CBR sector also was amplified by a series of bills introduced in Congress this year — from the Tank Car Safety and Security Act of 2015 (H.R. 1789) to the Crude-By-Rail Safety Act (H.R. 1804) to the Crude-By-Rail Safety Act of 2015 (S. 859) — that call for a host of safety enhancements.

In addition, a number of states continued to take actions to appease their residents' "not in my backyard" objections to crude trains. Among them: Virginia, where a gubernatorial task force was seeking better ways to prevent and respond to derailments, and Washington, where a law enacted in late April requires railroads to regularly notify state emergency responders about oil shipment contents and routes.

The angst mostly was caused by frustration with the USDOT for not making enough progress with releasing the rule, said U.S. Rep. Jeff Denham (R-Calif.), who chairs the House Subcommittee on Railroads, Pipelines and Hazardous Materials, during an April 14 hearing on rulemakings.

"I have heard too many times from industry and safety advocates that the USDOT needs to move more quickly to implement the safety provisions Congress has passed," he said. "The reality is companies can't invest in new equipment, in new employees and in new ventures without regulatory certainty."

Waiting for USDOT's final rule

And certainty is exactly what the crude marketplace needs now, which is why the federal rule is so crucial, says Association of American Railroads (AAR) President and Chief Executive Officer Ed Hamberger.

"They're all just waiting to see what they will be dealing with," he says. "When the rule comes out, they'll have that sense of what needs to get done, and they can move on."

For railroads and tank-car fleet owners, moving on will be made easier if the rule doesn't call for a restrictive train speed limit or the addition of ECP brakes on tank cars, says Hamberger. The USDOT was considering a 40-mph speed restriction in all areas, in high-threat urban areas or in areas with populations exceeding 100,000, as well as a 30-mph speed restriction for hazmat trains that don't comply with enhanced braking requirements.

"We have had 30 customer groups all say a speed limit beyond 40 mph would conflict with their velocity needs," says Hamberger, adding that the groups represent such commodities as steel, grain and other agricultural products.

The chosen speed limit is worrisome to railroads because it could depress capacity or impair network balance, says Stifel's Larkin.

"What happens to intermodal traffic that needs to move at truck-like velocity?" he asks.

AAR: Electronic brakes are expensive

Meanwhile, ECP brakes — which PHMSA believes would help dissipate kinetic energy and reduce a train accident's severity — would cost fleet owners several billions of dollars to install on all tank cars, the AAR estimates. To justify the ECP requirement, the USDOT relied heavily on a nearly decade-old study that doesn't accurately portray current costs and benefits, Hamberger wrote in a letter to the USDOT in late March.

The AAR contends the brakes wouldn't provide significant safety or business benefits, and would impact fluidity. Association data shows ECP-equipped trains are 3.2 times more likely to be delayed because of mechanical problems than other trains, and on average the delays are 3.7 times longer.

The USDOT should follow the lead of Transport Canada, which originally planned to include braking requirements in its tank-car safety rules issued in March, but instead opted to address ECP brakes in separate regulations, says Hamberger. Transport Canada's rules call for adding jackets, thermal protection and other safety features, and phasing out DOT-111 cars built before 2011 within three years. The USDOT final rule and Transport Canada's regulations will need to be harmonized as much as possible after "we see what the differences are," says Hamberger.

For National Transportation Safety Board (NTSB) members, more robust and fire-resistant tank cars are a must. On April 6, the board issued four urgent recommendations calling for an aggressive schedule of replacing or retrofitting the current tank-car fleet with better thermal protection, such as a ceramic thermal blanket. Numbering more than 100,000, the current fleet of DOT-111 cars rupture too quickly when exposed to a pool fire caused by a derailment or other accident, the NTSB claims. And based on a series of recent accidents, the industry's enhanced CPC-1232 tank car isn't satisfactorily performing under those conditions, either, board members believe.

But revamped or new-generation tank cars, such as a "tank car of the future" developed by the Greenbrier Cos., won't be enough to bolster CBR safety. Improved track maintenance also is key to reducing the frequency of crude train derailments, Brotherhood of Maintenance of Way Employes Division (BMWED) officials say.

FRA data shows track conditions are a leading cause of U.S. train derailments and account for one-third of all accidents, according to a BMWED press release issued in late March.

"The key to reducing track caused derailments is maintaining the tracks to a higher safety standard," said BMWED President Freddie Simpson. "The technology, the skilled workers and the higher track standards already exist."

Ditto, say officials at American Fuel & Petrochemical Manufacturers (AFPM), a trade association representing producers of various fuels, including gasoline and diesel. In a March 16 letter to the USDOT, AFPM President Charles Drevna cited the department's failure to adequately address track integrity as a cause of crude train derailments.

"We continue to be disappointed that nothing in the [August 2014] PHMSA tank-car and rail operations proposal required railroads to buy one more piece of track inspection equipment, hire one more qualified inspector or inspect one more mile of track," Drevna wrote.

There are three legs in the CBR safety stool — prevention, mitigation and response — and the rail industry is very light on prevention, says AFPM VP of Regulatory Affairs David Friedman.

"They can make the tank car safer, but the point is not to have it go off the rails in the first place," adds AFPM General Counsel Rich Moskowitz.

BNSF takes action — voluntarily

However, Class Is claim they're taking steps to improve track integrity for crude trains. In some cases, the large roads have implemented their own measures ahead of the USDOT rule and beyond what they agreed to take on in February 2014 via an AAR/USDOT agreement on voluntary operating practices.

BNSF on March 30 sent a letter to industrial products customers that outlined several voluntary measures. On April 1, the Class I increased rail detection testing frequencies along critical waterways from two times the FRA frequency to two-and-a-half times.

To increase the detection of defective wheel bearings, BNSF on March 25 spaced hot bearing detectors (HBDs) 10 miles apart on crude routes that parallel critical waterways instead of a 40-mile spacing that took effect in July 2014. The railroad also now sets out cars at a lower wheel-defect tolerance detected by a HBD and treats certain defects identified by a wheel impact load detector with a higher priority level.

In addition, BNSF on March 25 reduced crude train speed from 40 mph to 35 mph through municipalities with populations exceeding 100,000. According to the railroad's calculations, a train moving at 35 mph has 51 percent less kinetic energy (KE) than a train traveling at 50 mph and 23 percent less KE than a train operating at 40 mph.

"Instead of waiting [for the rule], we decided to take action," says BNSF Assistant VP of External Communications Mike Trevino. "This is a comprehensive package that addresses speed, the rail itself and equipment."

CN reduces train speed

CN similarly has implemented a variety of voluntary measures. In early March, the railroad instituted a 35 mph speed limit for "key trains"— including loaded crude trains — in major metropolitan areas in Canada, said spokesman Mark Hallman in an email. Transport Canada on April 23 issued an emergency directive requiring railroads to slow crude trains to a maximum speed of 40 mph in highly urbanized areas, but both CN and Canadian Pacific already had restricted their speeds to 35 mph in those regions.

CN also increased the frequency of rail testing with mobile ultrasonic rail-flaw detection equipment; installed an optical track inspection system on a geometry car that uses imaging to identify defects; added dedicated joint-bar inspection vehicles; installed additional controlled signaling on certain sidings in the most heavily used corridors to alert crews and dispatchers about broken rails; and installed more wayside inspection devices to spot potentially unsafe or dragging equipment on moving trains.

"Our comprehensive ‘Safety Management System' builds on extensive plant inspection practices, dense wayside detection technology and targeted speed restrictions across our rail network that consistently exceed minimum regulatory requirements in both Canada and the United States," said Hallman.

Meanwhile, CSX has advanced efforts to improve communication with and training for first responders to crude train and other incidents. Since May 2014, CSX's Safety Train has visited dozens of communities and trained more than 2,000 first responders from more than 350 organizations. Featuring a rolling classroom and rail cars, the train provides insights into rail-car operations and responses to rail-related incidents.

The Safety Train is in addition to hazmat training offered to first responders in other parts of CSX's network at the Transportation Technology Center Inc. (TTCI) in Pueblo, Colo. In late March, the AAR and American Petroleum Institute announced the availability of a new CBR safety course for first responders via the Transportation Community Awareness and Emergency Response program that augments a CBR safety program launched last year at TTCI's Security and Emergency Response Training Center.

Public best served by collaboration, CSX says

To provide local responders crucial post-incident information in more a user-friendly and easy-to-access format, CSX in late 2014 launched a mobile application. A graphically displayed train list enables responders to quickly locate and identify the contents of rail cars carrying hazardous materials.

"We're continuing to look for opportunities to improve safety in close partnership with government officials, oil producers, receivers, tank-car owners and other transportation providers," said CSX spokeswoman Melanie Cost in an email. "We believe the public is best served by collaborative processes that encourage innovation, address all facets of safety and public confidence, and create consistent operating procedures."

While crafting the final rule, the USDOT and PHMSA witnessed the power of a collaborative process by the sheer number of comments submitted. PHMSA received 30,000 comments and is trying to evaluate them all, which takes time, said Acting Administrator Timothy Butters during the April 14 railroad subcommittee hearing.

But as the calendar flipped to May, CBR supply-chain participants didn't want to wait any longer for the rule. The only consolation prize for their patience was the notion that most of the proposed CBR safety bills eventually would vanish since they primarily called for measures addressed by the USDOT. For the AAR's Hamberger, there was little chance the measures would be enacted as proposed.

"The legislation was born out of frustration," he says. "We will see what the rules are, and then perhaps the legislation will be adapted or dropped."

Email questions or comments to jeff.stagl@tradepress.com.