FACTBOX-Accidents in North America draw attention to safety of oil tank cars

Jan 31 (Reuters) - A series of accidents in the booming North American crude-by-rail business has forced regulators and the industry to re-examine the safety of tank cars that carry oil. But the different segments of this business hold divergent views on what standards should be adopted to ensure the aging fleet can safely handle the new and growing demand. This factbox compares positions held by railroads, the lobbying group representing tank car builders and the group representing oil producers and shippers when it comes to tank car design. Train cars known as DOT-111s are at the heart of the recent growth in crude-by-rail shipments. Last year they ferried more than 780,000 barrels of oil a day, or about 10 percent of U.S. production, according to the Association of American Railroads (AAR). Yet railroads, shippers and regulators had long recognized that DOT-111s, which also carry ethanol, often fail during accidents. The cars are more likely to spill their hazardous cargo and catch fire, according to documents dating back to the early 1990s, when the U.S. National Transportation Safety Board (NTSB) noted their repeated failure. In March 2011, AAR submitted a petition (P-1577) to the U.S. Department of Transportation with design standards that would ensure these train cars could survive accidents without releasing hazardous materials. The petition made recommendations on many aspects of tank car design, from the material for their outer shells to protective shields and covers for "top fittings" through which liquid cargo is loaded and unloaded. In August 2011, the association went a step further and issued a circular (CPC 1232) that required the adoption of these standards for all cars ordered after October 2011 that would carry crude oil and ethanol. However, AAR's recommendations did not apply to the existing fleet of tank cars that were carrying the same hazardous cargo. The industry balked because of the high cost of retrofits and the weight the new design could add to the cars. But that changed last summer when an unattended freight train carrying oil from the Bakken shale in North Dakota derailed and exploded in Lac-Megantic, Quebec, killing 47 people and decimating much of the small town. In September, the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a rulemaking document to revise its hazardous materials regulations as they apply to shipping crude by rail. The document, called an Advance Notice of Proposed Rulemaking, was the regulator's first step to revise its existing rules on DOT-111 cars. Besides outlining eight industry petitions and four NTSB recommendations, it solicited comments from interested parties. In response, the railroads called for even more stringent standards than those in effect since 2011. Less likely to shoulder the costs, they stressed the need to retrofit or phase out all cars that do not meet those standards. The Railway Supply Institute, which represents tank car manufacturers and lessors, agreed to some of the retrofits AAR suggested but said owners should be able to modify, repurpose or retire cars over a 10-year period. The institute estimates only a third of the nearly 39,000 DOT-111 tank cars that carry crude oil meet the Association of Railroad's 2011 standards. On behalf of oil producers and shippers, the American Petroleum Institute (API) requested more studies into retrofit options before final rules are in place. The comment period on the PHMSA's rule making document ended on Dec. 5. The table below compares the different positions taken by the railroads, in 2011 and last year, as well as changes proposed by RSI. The API declined to clarify its position beyond what was outlined in a Dec. 5 letter it submitted to regulators.

AAR position as stated in AAR position Nov. 2013 RSI position Dec 2013

P-1577 and CPC-1232

Tank car material-- Tank car heads and shells No change

No change

shells and heads must be made of

normalized steel (TC 128 Grade B steel or A5l6-70 steel).

High-pressure relief No provision Cars must be equipped with

a Similar to AAR Nov 2013

devices reclosing

position high-pressure-relief valve.

Top-fitting protection Top fittings must be No change

No change covered with a protective structure as tall as the tallest fitting.

Puncture resistance-- Metal jackets are Metal jackets are mandatory

RSI supports both

jackets optional. for all tank cars.

jacketed and non-jacketed designs.

Puncture resistance-- Half-height head shields Full-height head shields

are Trapezoidal or

head shields allowed mandatory.

conforming half-height head shields

Thermal protection No provision Thermal protection needed,

None. RSI says thermal

(fire resistance) no specific recommendations

protection is already provided by new features that protect tank cars in the event of a crash and by the added high capacity pressure relief valves.

Bottom outlet handles No provision Configure bottom outlet

Similar to AAR November handle to prevent opening in 2013 position the event of an accident

Existing fleet built Regulations apply to new Cars can remain in service

Similar to AAR November

after October 2011 fleet built after October for their full operational

2013 position

2011. lives so long as they are

retrofitted with high flow capacity pressure relief devices and bottom outlets that do not open in the event of an accident.

Existing fleet built Does not apply Aggressive retrofitting and

Car owners should have

before October 2011 phasing out schedule for

option to modify,

cars that cannot meet the repurpose or retire cars retrofit requirements over a 10-year period.

Retrofitting program includes trapezoidal/ conforming half-height head shields, modified top fittings protection, pressure relief valves, and Blowoff Valve (BOV) handle modification.

New tank car Does not apply Differentiate between

No provision

classification baseline DOT-111 cars and

new tank car specifications

(Writing by Selam Gebrekidan; Editing by Lisa Von Ahn)