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API wants 7 years to bring tankcars into compliance with PHMSA proposed requirements

Oct. 6, 2014
Federal officials need to take a reasonable approach regarding rail shipments of crude oil, according to Jack Gerard, American Petroleum Institute president and chief executive officer. Federal officials should focus on areas good science and data indicate would yield the greatest safety improvements.

Federal officials need to take a reasonable approach regarding rail shipments of crude oil, according to Jack Gerard, American Petroleum Institute president and chief executive officer. Federal officials should focus on areas good science and data indicate would yield the greatest safety improvements.

“In recent years, railroads have played a significant role in delivering the oil and natural gas from America’s energy renaissance to market, helping our industry to create and support millions of jobs around the country, Gerard said during a recent press briefing in which he addressed API comments related to new tankcar and crude oil shipment rules proposed by the Pipeline and Hazardous Materials Safety Administration. “North America’s rail network moves hazardous materials without incident 99.998% of the time. The challenge for both industry and regulators is to address and eliminate the remaining .002%.

“Safety is a core value for America’s oil and natural gas industry, and our goal is always zero incidents. Reaching this goal of zero incidents requires a comprehensive approach. We define this as a three-legged stool that focuses on preventing accidents before they happen, mitigating any that occur, and enhancing emergency response. That is the approach our industry follows when working to enhance safety, and it is the path regulators should take as well with the rules that govern shipping crude oil by rail.”

Looking at accident prevention--the first leg of the stool--API supports the use of enhanced braking capabilities for trains that carry large volumes of flammable liquids. The association also encourages regulators to evaluate whether the development of new standards or processes could reduce the number of accidents that occur.

Another leg of the stool is accident response. PHMSA currently does not provide railroad companies the clarity they need to develop comprehensive and consistent plans for spill response, according to Gerard. This is a gap that should be filled.

“We encourage PHMSA to provide detailed guidance in this area so the railroads can assess their current plans and ensure they meet or exceed the desired standards,” he said. “The oil and natural gas industry has worked closely with the EPA, the Department of the Interior, and the Coast Guard on these issues for decades. There is a wealth of knowledge and experience from which PHMSA can pull, and we will gladly make our experts in spill response planning available to PHMSA to aid in this work.

 In parallel with DOT’s regulatory efforts, the oil and natural gas industry and the rail industry are also working to engage directly with emergency responders to help ensure they have the training and information they need. “API has devoted the bulk of our efforts to the area where we have the most to offer—mitigation,” he said. “This leg of the stool encompasses proper testing and classification as well as tankcar design. As shippers, this is where the oil and natural gas industry can lead the way and make the greatest impact on safety enhancement.”

On September 30, API published a new Recommended Practice to provide guidance for anyone shipping crude oil by rail on procedures for sampling, testing and classifying crude. The development of standards is a major part of API’s ongoing work to lead safety enhancement throughout our industry. The API program is accredited by the American National Standards Institute (ANSI), the same body that accredits programs at several national laboratories. The ANSI process ensures transparency and accountability in standards development, and more than 100 of our standards have been incorporated into federal regulations.

“Our new standard for rail, Recommended Practice 3000, was developed in just a few months by experts from the oil and natural gas industry, the railroad industry, PHMSA, and Transport Canada,” Gerard said. “It represents the best thinking of both the private sector and regulators on the procedures that should be used to ensure proper classification of crude oil for rail shipment.

 Development of a standard on the scale of RP 3000 usually takes about two years, but given the value we place on safety, API and its colleagues prioritized resources and completed the work in about seven months. “We encourage PHMSA to incorporate this new industry standard into its regulations to ensure the greatest possible safety enhancements.

For tank car design, API worked closely with the Association of American Railroads to develop joint comments. “Our commitment to safety has led us to build tank cars since 2011 to voluntary standards that exceed current requirements, and we support additional upgrades to the tank car fleet that will yield meaningful safety benefits,” he said. “We believe all existing cars should be retrofitted with advanced pressure relief valves and added protection for the valves on top and bottom. Full-height head shields, jackets, and thermal blankets should also be added to non-jacketed cars. With the retrofits we’ve outlined, cars in the existing fleet should remain in service for their full useful lives.”

For new construction, API supports a car with these same features and a 1/2" thick shell. “API has carefully considered one of PHMSA’s proposals to require a 9/16” shell, and our conclusion is that the unintended consequences would negate any additional safety benefit by requiring more trains to pull the same volume of crude.”

One of the biggest concerns for the petroleum industry is the retrofit timeline proposed by PHMSA. It is simply not feasible. In fact, PHMSA’s timeline could harm consumers by disrupting the production and transportation of goods that play major roles in our economy, including chemicals, gasoline, crude oil, and ethanol, according to Gerard. 

A study by ICF International estimates that the consumer cost impact could reach $22.8 billion over 10 years, but that assumes approval of the Keystone XL pipeline. Without Keystone XL, the constraints are even more severe and could cost consumers upwards of $45.2 billion.

“It is no exaggeration to say that, given the shop capacity limitations that exist, PHMSA’s current proposals could stifle North America’s energy renaissance and curtail substantial volumes of US and Canadian oil production,” Gerard said. “We have instead proposed an aggressive yet achievable program for retrofitting the crude oil fleet to get stronger cars onto the tracks as fast as possible while limiting the most adverse economic consequences for consumers.

Under the API proposal for the crude oil tankcar fleet, manufacturing facilities would have six to 12 months to ramp up capacity for handling retrofits. The legacy DOT-111 fleet moving in unit trains of crude oil would then be retrofitted or replaced within three years. Retrofits of the stronger, non-jacketed cars constructed since 2011 would be completed after an additional three years, allowing these cars to continue delivering energy to consumers during the retrofit period for the legacy fleet.

“In our discussions with the railroads, we also recognized that if DOT (US Department of Transportation) addresses other commodities simultaneously, shop capacity limits would require this schedule to be extended,” Gerard said. “While tankcars are an important part of the comprehensive approach to safety, there are limits to what tankcar design can achieve. Getting to zero incidents will take an equal effort to prevent accidents and improve accident response.

“API supports a rule that ultimately improves the safety of rail transportation in North America through a holistic approach while allowing for the continued growth of the energy renaissance that has created and supported millions of jobs across the United States and Canada.

“We are working cooperatively with regulators and the railroad industry in both countries to find the best path forward, as evidenced by the collaborative development of our new industry standard, our joint oil and rail program to train firefighters, and API’s joint development with AAR (Association of American Railroads) of comments related to tank car design. If all stakeholders continue to work from a strong foundation of science and data, I am confident that our joint efforts to better prevent, mitigate and respond to accidents will enhance the safety of shipping crude oil by rail.”