RAILWAY GROUP ESTIMATES COST OF IMPLEMENTING PROPOSED RAIL TANK CAR RULES

By TONI ELLINGTON

A report commissioned by the Railway Supply Institute found that the U.S. Department of Transportation and Pipeline and Hazardous Materials Administration’s proposed new rules for rail tank cars carrying crude oil could cost the U.S. economy as much as $60 billion.

The proposed rules were issued as a Notice of Proposed Rulemaking on September 9, 2014, by the Department of Transportation (“DOT”).  The rules affect the transportation of crude oil and hazardous materials by rail.  The proposed rules would require that railroad cars containing crude oil and hazardous materials not be left unattended on main rail lines or side tracks outside of rail yards unless certain brake safety protocols are followed.  In addition, a speed limit of 50 mph will apply to any trains with 20 or more cars carrying flammable liquids, and a 40 mph speed limit will apply to trains with DOT-111 cars. DOT-111 tank cars are unjacketed cars which are allegedly more prone to puncture and spill in an accident or derailment.  The new rules are being proposed in response to recent derailments of trains carrying crude oil in Casselton, North Dakota, Aliceville, Alabama, and Lac Megantic, Quebec. According to DOT, because of increased production in the Bakken shale in particular, the number of carloads of crude oil originating from the area has increased from 10,800 in 2009 to over 400,000 in 2013.

In September 2014, the Sierra Club filed a lawsuit seeking an immediate ban on the transportation of crude oil in any unsafe and outdated cars.

According to the report, which was done by the Brattle Group, an economic research firm, approximately two-thirds of rail tank cars may need to be idled for some period of time awaiting modification.  In addition, shifting some shipments to trucks over rail cars would lead to additional expenses.  Without modification and shifts to trucking resources, up to 300 million barrels of crude oil and 100 million barrels of ethanol could be stranded.

The Railway Supply Institute tank car committee is seeking to create an industry proposal to be submitted to the U.S. Pipeline and Hazardous Materials Administration by February of next year.

For more information, stay tuned to this blog, or contact Toni Ellington at (504) 599-8500.