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 July 24, 2014
US Department of Transportation proposes stricter oil train safety rules.

 The Obama administration called Wednesday for a "new world order" in how the U.S. regulates the trains that carry crude oil across the country, addressing a series of fiery derailments that have inspired fears about the dark side of the North American energy boom.

The proposed rules include mandates for phasing out older, less-sturdy rail tank cars during the next two to five years, tightened speed limits, improved brakes, permanent requirements for railroads to share data with state emergency managers and steps to address concerns that crude oil produced in North Dakota's Bakken region is unusually prone to ignite. The rules also include provisions affecting ethanol, another flammable liquid frequently shipped by rail.

The proposal doesn't include some steps that safety advocates have called for, such as a requirement that oil producers remove the most volatile gases from their crude before shipping it. But the Department of Transportation said it was open to making changes in the rule before it becomes final.

"We need a new world order on how this stuff moves," Transportation Secretary Anthony Foxx told reporters in making the announcement, which his department issued roughly two weeks after the first anniversary of a horrific derailment and explosion that killed 47 people in Lac-Mégantic, Quebec.

"More crude oil is being shipped by rail than ever before," Foxx said. "If America is going to be a world leader in producing energy, our job at this department is to ensure that we're also a world leader in safely transporting it."

He declined to say when the rule will become final, though it's clear that lawmakers expect it next year.

Environmentalists repeated their call for an immediate ban on the use of the oldest, most spill-prone tank cars. "The public demands that the federal government crack down on automakers where there is a serious safety risk," said Patti Goldman, an attorney for the group Earthjustice, which filed a petition with Foxx last week on behalf of clients including the Sierra Club. "We should do the same for the oil industry."

Wednesday's rollout followed months of interim steps and voluntary agreements with the railroad and energy industries, and came unusually quickly considering that DOT submitted it to the White House Office of Management and Budget for review in late April. It also followed a yearlong series of oil train crashes in communities from Quebec and North Dakota to western Pennsylvania, rural Alabama and Lynchburg, Virginia.

So far in 2014, incidents involving oil trains have shattered records for property damage, based on review of federal data, with a toll exceeding $10 million as of late May --- nearly triple the damage for all of 2013.

The details of the proposal had been the subject of fierce lobbying by the oil industry, which maintains that Bakken crude doesn't pose unusual dangers, and by the railroads, which have long called for tougher tank-car standards but objected to suggestions for reduced speed limits. DOT's draft includes something for practically all sides to dislike but also offers incentives for the industries to go along. For instance, oil trains meeting toughened standards for crash worthiness and brakes could travel as fast as 50 mph in all areas, while those that don't could be limited to 30 mph or 40 mph.

Groups representing the railroad and oil industries said they would review the proposal.

"The fact that the proposed rule incorporates several of the voluntary operating practices we have already implemented demonstrates the railroad industry's ongoing commitment to rail safety," Ed Hamberger, CEO of the Association of American Railroads, said in a statement Wednesday. "We look forward to providing data-driven analyses of the impacts various provisions of the proposal will have on both freight customers and passenger railroads that ship millions of tons of goods and serve millions of commuters and travelers across the nationwide rail network every day."

On the other hand, the American Petroleum Institute blasted out a statement rejecting "speculation by the Department of Transportation" about the safety of transporting Bakken crude.

"Multiple studies have shown that Bakken crude is similar to other crudes," API CEO Jack Gerard said. "DOT needs to get this right and make sure that its regulations are grounded in facts and sound science, not speculation."

But Foxx released new data based Wednesday on the department's tests of Bakken oil, which the department says has a "higher gas content, higher vapor pressure, lower flash point and boiling point and thus a higher degree of volatility than most other crudes in the U.S., which correlates to increased ignitability and flammability." However, the testing also showed that the hazard classification applied to Bakken crude is "accurate under the current classification system," a point the energy industry has made to support its stance.

"This is an ongoing effort, but what we've confirmed so far is that Bakken crude oil is on the high end of volatility compared to other crude oils," Foxx said. "And not only is it on the high end of volatility, its production is skyrocketing."

Meanwhile, a group representing the ethanol industry objected to having its fuel lumped into the oil trains restrictions. "Ethanol is a low volatility, consistent commercial product with a 99.997 percent rail safety record," said Bob Dinneen, CEO of the Renewable Fuels Association.

The DOT proposal drew initial praise from lawmakers, along with calls to go further.

Senate Finance Committee Chairman Ron Wyden (D-Ore.), whose home state has been embroiled in controversy about oil train safety, urged Foxx's department to expand its requirements for railroads to notify state emergency managers about the shipments moving through their communities, which now apply only to Bakken oil.

Railroads have objected to spreading information about the shipments too widely, arguing that it would pose a security risk. But leaders of some communities have said they had no idea oil was rolling through their streets until after an accident happened --- including Lynchburg Mayor Michael Gillette, whose city was the site of an April 30 derailment and explosion that spilled crude into the James River.

Sen. Chuck Schumer (D-N.Y.) urged DOT to see that the rules are "finalized, implemented and enforced as soon as possible."

"These desperately needed safety regulations will phase out the aged and explosion-prone ... tanker cars that are hauling endless streams of highly flammable crude oil through communities across the country and New York," Schumer said in a statement Wednesday.

Sen. John Hoeven (R-N.D.) said the proposal "appears to be comprehensive," adding that "we will continue to review these proposed standards to ensure they are workable and will keep our communities safe."

But Sen. Patty Murray (D-Wash.), who chairs the Appropriations subcommittee overseeing DOT, said in a statement that "there is still more work to be done, by both regulators and industry."

"I'm pleased that the proposed regulations address issues I outlined in the 2015 transportation spending bill, like enhanced rail tank car standards and improved classification of flammable liquids, that are much-needed steps to improve the safety of our rail system," Murray said.

Based on DOT's standard rule-making timeline, Wednesday's tank car proposal had not been expected to be released until 2015, but Foxx promised lawmakers it would be finished this year --- a prediction that drew not a little skepticism. More recently, a reported agreement between oil and railroad interests about tank car standards may have helped grease the skids for this week's rollout.

Foxx has also prodded the industries to come together, writing in a July 11 letter to Hamberger that "I am disappointed ... that a consensus has not yet been reached on these very important issues." By coincidence, the railroad group and API met with OMB officials the same day to present a joint position on tank car standards.

DOT didn't say when the rule will become final, but Foxx said he doesn't want the rule's comment period to drag on past the 60-day window that began Wednesday. "Given the urgency of the safety issue we're addressing, I currently have no intention of extending [it]," he said.

"I would like to see this happen yesterday," Foxx said.

The heart of the rule is a new definition of a "high-hazard flammable train" --- one carrying 20 or more tank cars of flammable liquids, including ethanol and all kinds of crude oil. Oil trains frequently contain as many as 100 cars, stretching more than a mile.

The rule proposes three potential speed restrictions for any such train that doesn't meet enhanced tank car standards: a 40-mph maximum speed in all areas, a 40-mph limit in "high threat" urban areas, or a 40-mph limit in areas with more than 100,000 residents. In contrast, tank cars meeting the new safety standards could speed up to 50 mph in all areas.

James Hall, a former chairman of the National Transportation Safety Board, told The Wall Street Journal that a 20-mph limit is in order --- noting that that's a common speed limit for cars in school zones.

The rule also proposes enhanced brake requirements, including options such as electronically controlled pneumatic braking systems that the railroad company CSX warned OMB against in June, saying the technology is "expensive and only works if the entire train is equipped." The rule contemplates a 30-mph speed limit for oil or ethanol trains lacking enhanced brakes --- a speed that railroads told OMB would cause "severe" impacts for all kinds of shipments, including both oil and grain.

Railroads with "high hazard" trains would have to do studies examining 27 safety and security factors before selecting a route for the trains. That could address worries about the trains traveling through the hearts of major cities like Philadelphia.

The most hotly debated provision of the rules has been the design standards of the tank cars themselves. The department's proposal would phase out the oldest, least-safe cars used for carrying crude oil --- widely known by the designation "DOT-111" --- and could go beyond even the requirements for the newer model that the industry agreed to in 2011, the CPC-1232. In April's Lynchburg crash, the single car that breached was a CPC-1232, according to preliminary data from the National Transportation Safety Board.

The rule proposes a menu of possibilities for increasing the design standards after Oct. 1, 2015. It floats three options: a tank car with 9/16th-inch-thick steel walls; a car with 9/16th-inch-thick steel walls, electronically controlled pneumatic brakes and rollover protection; or a CPC-1232 tank car with existing 7/16th-inch steel. API and the railroad industry had agreed to an 8/16th-inch-thick shell, Bloomberg reported earlier this month.

DOT's proposal offers a phased-in, five-year process for ending the use of DOT-111 tank cars to transport crude oil, requiring older cars to be phased out or retrofitted. The deadline would be two, three or five years, depending on the hazard classification of the shipment.

"It's phased out by risk," Cynthia Quarterman, chief of DOT's Pipeline and Hazardous Materials Safety Administration, told reporters. "We want to get the worst stuff off the road ASAP."

Separately, PHMSA and DOT's Federal Railroad Administration published a notice that it's seeking comment on expanding comprehensive oil spill response plans, now required of vessels and some oil facilities, to high-hazard trains.

The FRA said it plans to issue new rules related to train operations --- primarily related to train crew size, risk reduction and system safety.

The new DOT rule also attempts to crack down on the classification and testing of "mined gases and liquids," including a new sampling and testing program that's intended to be more frequent and more accurate. It also proposes to make permanent a DOT emergency order from this spring requiring railroads to give state emergency commissions more frequent information about how much oil is moving through their areas and where it's going.

Without the rule in place, DOT suggested, about 15 derailments could occur on main-line railroads next year, and accidents could cause multiple billions of dollars of damages over the next 20 years.

By 2034, the rule predicts that main-line derailments would fall to five per year, along with an additional 10 "safety events of higher consequence." Of those 10 events, nine would result in environmental damages and costs associated with injuries and fatalities of more than $1.15 billion per event, and one would exceed $5.75 billion.