Speed of Oil Tank Cars ‘An Issue': DOT Secretary

Bloomberg BNA —The speed of rail tank cars used in crude-by-rail shipments “is an issue” that the Transportation Department may address in an upcoming safety rule, Secretary Anthony Foxx said.

“It has to be dealt with comprehensively,” Foxx said July 21 of the rule, which is still being crafted, during remarks at the National Press Club. New standards for tank cars are “one piece of it, but speed is an issue.”

The Transportation Department has begun a series of rulemakings in response to mounting concern over the shipment of crude oil by rail, after a series of high-profile derailments that have accompanied increased domestic energy development and growing use of rail to transport this product.

“I think it is undeniable that we are in a country that has a chance to build a new economy on our energy production,” Foxx said during the question-and-answer portion of his remarks. “But one of the things we recognize as an agency, and has had my full attention since I came in, is that in order to realize that future we also have to step up our game on the safety front.”

Among the regulations being crafted by the Pipeline and Hazardous Materials Safety Administration (PHMSA) is a proposed rule under review at the White House Office of Management and Budget that would establish new design standards for rail tank cars, known as DOT-111 cars, that are used to transport crude oil. The cars were designed in the 1960s.

Foxx said he hoped to publish that rule for public comment “very soon.”

In addition, PHMSA sent a separate “pre-rule” on rail transport oil-spill response and prevention to the Office of Management and Budget for review July 17.

Soaring Oil Shipments

Hydraulic fracturing and horizontal drilling techniques have led to soaring U.S. oil production at formerly impenetrable sites, like shale formations in Texas and North Dakota, making the U.S. the largest producer of oil in the world, accompanied by an increase in oil-by-rail shipments.

In 2013, the country's major railroads shipped 408,000 carloads of crude, or about 800,000 barrels per day—11 percent of U.S. crude oil production—“up from virtually nothing just a few years ago,” according to Edward R. Hamberger, president of the Association of American Railroads (AAR). The AAR represents major U.S. railroads such as BNSF Railway Co, owned by Warren Buffett's Berkshire Hathaway Inc.

The Washington-based AAR opposes proposals to lower oil train speeds to 30 miles per hour, saying it would slow service on the entire network and require more tank cars on the tracks to haul the same amount of oil, Bloomberg News reported.

Hamberger and others have said that the oil produced from some shale formations like the Bakken in North Dakota are more volatile and contain large amounts of highly flammable natural gas liquids such as methane and butane. The American Petroleum Institute, whose members include shippers such as Exxon Mobil Corp., have opposed classifying crude oil from the Bakken region as more flammable than other types of crude oil.

Stabilization Requirement?

Foxx declined to say whether the rule would require oil producers to take measures to make the oil less volatile before it is transported, though he said “the question of stabilization is an issue that is at the forefront of my mind.”

The PHMSA tank car rule would update tank car design standards for transport of crude and ethanol and would establish operating controls for trains transporting hazardous, flammable liquids.

But Fred Millar, an independent rail safety consultant who has previously done work for the environmental group Friends of the Earth, said he doubted the rule would result in any significant changes such as “significantly improved” tank cars, lowered speed limits and rerouting around large population centers.

“I remain convinced that there has been ample signals from the industry that they are going to make it difficult for any major improvement,” Millar said in an interview. “The tank car we are going to get is a modification of the existing tank car.”

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