Oil lobby: Rail tank car phaseout could cost $45.2B

The federal government’s proposed timeline for taking older rail tank cars out of crude oil service could cost consumers $45.2 billion, the American Petroleum Institute (API) said.

That estimate is based on a study by ICF International on the Pipeline and Hazardous Materials Administration’s (PHMSA) new proposed rules to increase the safety of trains carrying crude oil and ethanol.


“Due to the limits of shop capacity and other resources … the timeline proposed by PHMSA for completing these retrofits is not feasible,” API president Jack Gerard told reporters Tuesday.

“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,” he said.

The rules unveiled in July focus primarily on the DOT-111 tank car standard that has been involved in a string of train derailments and explosions in North America since last year. Federal regulators were spurred by those disasters, along with a large increase in oil transport by rail due to the domestic oil production boom of recent years.

PHMSA and the Federal Railroad Administration, both components of the Transportation Department, want the old cars phased out of oil service in two years and replaced with cars with thicker sides and possibly rollover protection and better brakes.

Comments on the proposal are due Tuesday, and API said it planned to file its feedback later in the day.

API proposed a phaseout period that would last up to four years for the oldest cars. Newer cars would have longer timelines.

The oil group also asked that regulators adopt the voluntary standards it released last week on oil testing and classification and enforce them for the entire industry.

A coalition of environmental groups including Forest Ethics, the Sierra Club and the Natural Resources Defense Council submitted its comments Tuesday, telling regulators to immediately ban the older tank cars for oil service.

“DOT proposes an inexcusably long time frame for phasing out DOT-111 and other unsafe tank cars from trains,” the groups wrote, estimating that 15 rail accidents could happen each year of the phase out resulting in one or two disasters.

The environmentalists also want newer tank cars that are still unsafe to be phased out, a prohibition on using the old cars for oil sands transport and a requirement that spill planning and information be shared with emergency response agencies.

“DOT has the statutory and moral responsibility to step in and protect communities from rail disasters and to counter the private sector incentives to grow the crude-by-rail fleet despite the safety risks,” the groups said.