Who’s to Blame for the Exploding Oil Trains?

Railroads and oil companies bicker over the cost of new rules

The Feb. 16 explosion near Mount Carbon, W.Va.

Photographer: Steve Keenan/The Register-Herald/AP Photo

A week after a CSX train hauling crude oil derailed and exploded 30 miles southeast of Charleston, W.Va., on Feb. 16, its mangled, charred tank cars were still being hauled from the crash site. Of the 27 cars that derailed, 19 had been engulfed in flames. The wreckage burned for almost three days. “It’s amazing no one was killed,” says John Whitt, whose home is one of a handful clustered near the crash site, along the banks of the Kanawha River. Some were within 30 yards of the site. One home was destroyed.

Exploding oil trains—this was only the latest in a series—have emerged as a dangerous side effect of the U.S. energy boom. A lack of pipelines connecting new fields in North Dakota and Texas to refineries and shipping terminals has led to an almost 5,000 percent increase in the amount of oil moved by trains since 2009. Much of it is carried in tank cars designed a half-century ago that regulators have long deemed inadequate for hauling the highly flammable types of crude coming out of North Dakota.

The West Virginia accident came less than a month after the U.S. Department of Transportation sent a proposal for new safety standards to the White House for approval. The rules were supposed to have been submitted at the end of last year but were delayed amid lobbying from railroads, oil producers, and tank car manufacturers. Part of the problem has been crafting regulation that’s broad enough to address a range of safety issues—including speed limits, braking systems, and track maintenance—but that can also withstand potential legal challenges from the affected industries. “All the stakeholders have their opinions, and they are aggressive in protecting their turf,” says Joe Szabo, who stepped down as head of the Federal Railroad Administration in January.

The type of tanker involved in the West Virginia incident has been built since 2011. Outfitted with a reinforced body and tougher valves, to keep oil from leaking during a wreck, the CPC-1232 was supposed to be an improvement on the tank car designed in the 1960s that’s still prevalent on the tracks today.

The Transportation Department is pressing the industry to make further improvements. Under the latest version of the draft regulation, tank cars would have to have even thicker shells and better brakes and valves. Even then, analysts say, risks will remain. “You could make tank cars resemble Army tanks, and it still isn’t going to stop accidents,” says Brigham McCown, a former administrator at the Pipeline and Hazardous Materials Safety Administration. Last summer the Transportation Department predicted that trains hauling crude or ethanol could derail 10 times a year over the next 20 years, causing $4.5 billion in damage.

Despite those forecasts, the industry’s lobbyists appear to have extracted some concessions. U.S. regulators had initially called for a two-year phaseout of oil tank cars—both the old and the improved version. The revised proposal maintains the phaseout schedule for the old cars but extends the deadline for some of the newer tankers to as long as a decade, according to three people familiar with the document who weren’t authorized to speak on the record. Executives from the Railway Supply Institute, a trade group representing companies that make tank cars, argued there isn’t enough manufacturing capacity to turn over the fleet in a couple of years. The institute’s president, Tom Simpson, says too aggressive a deadline would force oil producers to dial down production or move more of their crude in trucks, which come with their own safety hazards: “The option is we don’t have it, or we use highways.”

Sarah Feinberg, the acting administrator of the Federal Railroad Administration, says the rule-making process has been slow because of the need to craft comprehensive regulations that go beyond mandating new tank cars. “A new tank car is not a silver bullet,” she says. “If the product you put into transport is safer, then a lot of these other issues are easier to solve.”

Under regulations adopted last year, oil companies in North Dakota will have to remove volatile gases such as propane from their crude before pumping it into a rail car, starting in April. According to the North Dakota Department of Mineral Resources, that will raise costs by an estimated 10¢ per barrel for the energy industry, which says it’s already bearing too much of the burden of tougher regulation. Based on the draft proposed last summer, the Railway Supply Institute has estimated the new safety requirements for tank cars would add about $13.6 billion in shipping costs in the first year; oil companies and refiners anticipate they will foot some of the tab in the form of higher lease rates for rail cars. “It’s time we focused attention on the root cause of the problem and get the railroads to keep their trains on the tracks,” says Charlie Drevna, president of the American Fuel & Petrochemical Manufacturers.

It will likely be months before the cause of the West Virginia crash is known. One thing that doesn’t appear to be an issue is speed. The train was traveling at only 33 mph, below the speed limit of 50 mph. Jim Hall, former National Transportation Safety Board chairman, would like to see the trains go even slower. “We don’t have short-term adequate protection to prevent these events other than slowing the trains down,” he says.

The bottom line: The latest oil train explosion raises questions about how effective proposed rule changes would be in reducing disasters.

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