Fee proposed on older tanker cars to encourage railroads to upgrade
Older, puncture-prone tankers hauling crude oil would be taxed to pay for new rail safety measures under a bill backed by Sens. Mark Warner and Tim Kaine.
The bill, announced Thursday on the anniversary of Lynchburg’s downtown derailment, attaches a fee to the controversial DOT-111 tankers used to move crude oil, ethanol and other flammable liquids across the country.
The fee wouldn’t extend to newer CPC-1232 cars — the model that ruptured and caught fire in Lynchburg — but it would be used to help companies upgrade to safer tankers.
“We were fortunate that no one was killed or injured in that April 30, 2014 derailment” in Lynchburg, Warner, D-Va., said in a joint statement with Kaine.
“It’s critical that we get outdated and risky tank cars off the tracks, ensure that rail cars are as safe as possible for the surrounding communities, and provide local first responders with the resources they need in the event of an accident.”
U.S. and Canadian authorities are holding a news conference in D.C. this morning to announce new tanker standards and other requirements for trains hauling flammable liquids.
These high-hazard trains have come under scrutiny amid a string of fiery derailments, including a 2013 oil train derailment in Lac-Megantic, Quebec, that killed 47 people.
The Lac-Megantic train was carrying a highly volatile form of crude oil drilled from the Bakken shale in North Dakota. The same oil was on the 105-car CSX train that derailed in Lynchburg, sending three tankers into James River and sparking a huge fire on the water.
The bill co-sponsored by Warner, Kaine and five other senators would levy a $175-per-car fee on every shipment of DOT-111s hauling flammable liquids. The National Transportation Safety Board has been heavily critical of these cars and said they rupture easily in pileups.
The newer CPC-1232s are under fire as well, after failing in several derailments. This morning’s announcement in D.C. is expected to include new federal standards for stronger tank cars.
The oil-by-rail industry has been slowly phasing out DOT-111s since 2011, but they still account for about 80 percent of the nation’s tank car fleet and two-thirds of the cars used to transport crude oil, according to estimates presented at an NTSB forum last year.
Thursday’s fee proposal, designed to get tanker owners to act faster, would escalate each year until it reached $1,400 per car in 2019. The money raised would go toward tax credits for companies upgrading tankers, derailment cleanups, first responder training, hiring more state rail inspectors and grants to help reroute flammable liquid lines.
“One year after an oil train derailed in downtown Lynchburg — luckily not resulting in fatalities — this is a common-sense bill that pushes trains to get safer and helps communities be better prepared to deal with oil car incidents when they occur,” Kaine, D-Va., said.
This type of financial deterrent has been considered by other stakeholders in the oil-by-rail debate. Earlier this year, BNSF Railway Co. introduced a $1,000 surcharge on shipments of unjacketed DOT-111s loaded with crude oil.
Tanker cars typically are owned by oil producers or third-party leasing companies, not railroads. BNSF Railway is the largest shipper of crude oil in North America. It’s owned by Warren Buffett’s Berkshire Hathaway Inc. BH Media Group, a Berkshire Hathaway subsidiary, owns The News & Advance.
BNSF’s surcharge — expected to add $1.50 per barrel to crude oil transport costs — sparked a lawsuit from the industry group American Fuel & Petrochemical Manufacturers. The suit, filed in March, argues the surcharge violates BNSF’s “common carrier obligation” to accept all tank cars that meet federal standards.
On Thursday, in response to calls for stronger tank cars, the American Fuel & Petrochemical Manufacturers sent an open letter urging federal officials to take a broader view of the oil-by-rail safety debate. Faulty tracks and human error cause the majority of train derailments, said the industry association.
“Preventing derailments in the first place and focusing on the root causes of accidents still provides the greatest tool in enhancing crude-by-rail safety,” association President Charles Drevna wrote.
“When making safety recommendations for air transport, the NTSB doesn’t recommend that the FAA require indestructible planes. Instead, the focus is on preventing errors like mid-air collisions, runway incursions and pilot error.”
The Federal Railroad Administration said in April it’s believed the Lynchburg derailment was “track-caused.” The NTSB, which is investigating the derailment, declined to comment on the suspected cause.
In addition to creating a federal fee, Thursday’s bill would raise track inspection standards, make more information available to emergency responders, and require a series of studies and reports on rail shipments of flammable liquids.
Pat Calvert, an environmental advocate with the James River Association, said he found the legislation encouraging, but he’d like to see a broader proposal that extends to CPC-1232s and takes a stronger stance on the environmental risks of these high-hazard trains.
The bill on the table now is “not ideal,” he said. “But it’s a step in the right direction.”
STATE TASK FORCE
The final report from Virginia’s rail safety task force wasn’t released Thursday as expected. Officials said the report was being finalized and may be released as early as today.
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