Canada orders safer crude oil-tank cars within 3 years

The Canadian government ordered that nation's rail shippers Wednesday to use sturdier tank cars for crude oil and ethanol trains within three years, putting pressure on U.S. regulators to address the same problem.

Canadian Transport Minister Lisa Raitt said older tankers, known as DOT-111s, carrying hazardous liquids must be phased out or retrofitted to meet new safety standards within three years. She also put new speed limits on such trains. "I am committed to making our country a model of world-class safety," Raitt said at a news conference in Ottawa.

The announcement came eight months after a runaway train loaded with North Dakota crude oil crashed and exploded in Lac-Mégantic, Quebec, killing 47 people and destroying part of the city's downtown. Three subsequent oil train crashes, including one near Casselton, N.D., in December, produced fires and explosions, but no deaths.

As Raitt spoke, the U.S. National Transportation Safety Board heard the second day of testimony in Washington on the same issue. The board has been warning federal regulators for years that DOT-111's aren't sturdy enough. Frustration at the lack of stricter U.S. rules was evident in NTSB Chairwoman Deborah Hersman's comments.

"I have seen too much of a tombstone mentality," she said. "If we do not have the body count to justify the cost of the rule to show the benefit, we have not been getting rules through."

Board member Robert Sumwalt said Canadian communities will soon be better protected than American railroad towns.

"So when can we expect the U.S. Department of Transportation to raise the bar, to up the ante?" he asked.

"That's really not acceptable to me as a safety advocate," he complained. "We're going to get left behind.''

The U.S. Department of Transportation, which recently announced that it intends to finalize its tank car regulations in September, said in a statement that it applauded Canada's actions and has been working closely with its government on regulations that include "the possibility of an even more advanced tank car than is currently in use."

The United States has taken some actions already, including orders or agreements to reduce speeds, increase inspections, use new brake technology and invest in emergency training, the department said in an e-mailed statement.

In Minnesota, Rep. Frank Hornstein, DFL-Minneapolis, whose oil train response bill has passed the state House, said the United States shouldn't be left behind on tank car safety. "The Canadians are taking this very seriously, and it is a message that needs to be heard on the southern side of the border," he said in an interview.

Oil companies in North Dakota and elsewhere have shipped increasing amounts of crude oil on trains, creating a crude-by-rail industry that didn't exist six years ago. In 2013, about 400,000 tank cars were loaded with crude oil in the United States. Each tank car carries 25,000 to 30,000 gallons of oil.

On Tuesday, the U.S. rail and tank car industries told the NTSB that older, less-robust tank cars have a one-in-four risk of leaking in accidents. Tank cars built since late 2011 have thicker steel and more safety features than older tankers.

Retired Twin Cities locomotive engineer Dave Riehle said it is "mathematically obvious" that if Canada bans older tank cars, more of them will land on U.S. railways. "The only way this can be resolved is for the U.S. to set a definite date for retiring them," said Riehle, whose job at Union Pacific included running ethanol trains through the Twin Cities.

BNSF Railway Co., which hauls the most crude oil through Minnesota, told U.S. officials in March that it was concerned that older tankers would end up on U.S. routes because Canadian railroads had established pricing ­policies to discourage using them.

BNSF declined to comment Wednesday, but the Association of American Railroads, an industry group, said "Transport Canada has indeed recommended an aggressive timeline and we are confident that the industry will do all it can to meet it."

Canadian Pacific, whose U.S. headquarters is in Minneapolis, said in a statement that it welcomed Transport Canada's announcement on tank cars. But the railroad expressed disappointment that the Canadian government didn't support crew-monitoring cameras in locomotive cabs to address human safety issues and didn't launch a program to reduce grade crossings in Canada.

"We believe that cars purchased in good faith should stay in service for ethanol transport without retrofit in the absence of solid data demonstrating that it would improve overall safety," said Bob Dinneen, CEO of the Renewable Fuels ­Association, an industry trade group.

U.S. oil shippers use about 23,000 of the legacy tank cars. The oil industry also has called on U.S. regulators to demonstrate the benefit of ordering costly upgrades.

Sandy Fielden, an analyst for RBN Energy in Houston, said oil shippers already face two-year backlogs on orders for new tank cars. Most tank cars are leased by shippers. If the United States waits while Canada imposes tanker regulations, it could affect the leasing market, he added.

"The newer models will attract a higher leasing price and given that they don't have an alternative, Canadian shippers will have to pay those higher lease costs," he said.

Bloomberg News contributed to this ­report. david.shaffer@startribune.com • 612-673-7090 • Twitter: @shafferstrib jim.spencer@startribune.com • 202-383-6123