The U.S. Department of Transportation (DOT) on May 1 released its long anticipated final rule requiring a phase-out or retrofit of all legacy DOT-111 rail cars transporting crude oil and ethanol over the next eight years (by May 2023).

The final rule, developed by the Pipeline and Hazardous Materials Safety Administration and the Federal Railroad Administration, was broadened, extended and harmonized with Canada.

Specifically, the 395-page rule requires a phase-out or retrofit of all unjacketed CPC-1232 railcars used to ship ethanol by July 2023. Additionally, new tank cars constructed after Oct. 1 are required to meet the new DOT-117 design or performance criteria for shipping crude oil and ethanol.

As a result of the aggressive, risk-based approach, the final rule “will require replacing the entire fleet of DOT-111 tank cars for Packing Group I, which covers most crude shipped by rail, within three years and all non-jacketed CPC-1232s, in the same service, within approximately five years,” according to the DOT in a statement.

The new DOT-117 rail car will include a nine-sixteenths-inch steel hull, roll-over protection, full height head shields, top fitting protection and jacketing with thermal protection.

The rule also requires a new braking standard for certain trains that will offer a superior level of safety by potentially reducing the severity of an accident, and the “pile-up effect”; designates new operational protocols for trains transporting large volumes of flammable liquids, such as routing requirements, speed restrictions and information for local government agencies; and provides new sampling and testing requirements to improve classification of energy products placed into transport.

“Safety has been our top priority at every step in the process for finalizing this rule, which is a significant improvement over the current regulations and requirements and will make transporting flammable liquids safer,” U.S. Transportation Secretary Anthony Foxx was quoted as saying.

“Our close collaboration with Canada on new tank car standards is recognition that the trains moving unprecedented amounts of crude by rail are not U.S. or Canadian tank cars—they are part of a North American fleet and a shared safety challenge,” Foxx said.

The rule addresses several recommendations made previously by the National Transportation Safety Board (NTSB), including: requiring enhanced safety features for tank cars carrying ethanol and crude oil and an aggressive schedule to replace or retrofit existing tank cars; requiring thermal protection and high-capacity pressure relief valves for tank cars in flammable liquid service, expanding hazardous materials route planning and selection requirements for trains transporting flammable liquids; inspecting shippers to ensure crude oil is properly classified and requiring shippers to sufficiently test and document both physical and chemical characteristics of hazardous materials; and providing a vehicle for reporting the number of cars retrofitted.

The NTSB first warned in 1991 that DOT-111 cars are inadequate for transporting hazardous materials. The newer CPC-1232 tank cars have been the rail industry’s standard since 2011. However, at least six major oil train accidents over the last 16 months have involved the newer cars.

Industry Reaction

The rule, which inspired more than a year of furious lobbying by the railroad and energy industries, comes at a time when the U.S. and Canada continue to rely on railroads shipping large volumes of crude oil—notably out of the Bakken Shale in North Dakota—and ethanol out of the U.S. Midwest to key refining and terminal hubs.

“We are in the process of reviewing the [DOT] Enhanced Tank Car Standards and will have more to say once our analysis is completed. AFPM [American Fuel & Petrochemical Manufacturers] members, however, have demonstrated a commitment to improved crude-by-rail safety; voluntarily investing more than $4 billion to upgrade tank cars in advance of this regulation,” AFPM Executive Vice President Brendan Williams was quoted as saying.

“We intend to work with DOT to implement today’s mitigation-focused rulemaking to the greatest extent possible, but caution that this aggressive retrofit schedule is unrealistic and may be disruptive to transporting crude oil to markets across the country.

“Now that tank car specifications have been addressed, AFPM suggests that it is long overdue for DOT to show similar concern for the root causes of train derailments: track integrity and human error. Keeping the trains on the tracks should be of the highest priority for DOT. The best way to mitigate an incident is to prevent it from happening,” Williams said.

Like the oil sector, the ethanol industry has also been adamant about safety requirements transporting its product by rail.

“Based on an initial review of the final rule, the [DOT] should be commended for issuing a final rule that reflects public comments and takes a comprehensive approach to rail safety, including accident prevention, mitigation, and response. Secretary Foxx appears to have struck a fair balance in setting comprehensive standards while at the same time being sensitive to the limitation of retrofit capacity by giving less hazardous flammables—like ethanol—additional time to retrofit railcars,” Bob Dinneen, president and CEO of the Renewable Fuels Association, was quoted as saying.

“The U.S. ethanol industry is committed to the safe transport of our product and is proud of our safety record. The additional requirements we face will be costly, but the additional time to comply is certainly welcome. Today’s final rulemaking is a huge step forward in rail safety and the [DOT] should be recognized for taking a practical and realistic approach,” Dinneen noted.

Senate Bill ‘Curveball’

Meanwhile, prior to the DOT’s release of the rule, Sens. Ron Wyden (D-Ore.), Chuck Schumer (D-N.Y.), Dianne Feinstein (D-Calif.), Bob Casey (D-Penn.), Jeff Merkley (D-Ore.), Sherrod Brown (D-Ore.) and Mark Warner (D-Va.) on April 30 introduced legislation, dubbed “The Hazardous Materials Rail Transportation Safety Improvement Act of 2015”—aimed at reducing risks to communities near railroad tracks by speeding up the phase-out of older DOT-111 tank cars and encourages companies to replace them with new, safer cars.

The bill also would place a $175-per-shipment fee on older tank cars with widely known safety risks that are used to ship crude oil and other hazardous materials and would make available a tax credit for companies that upgrade the newer cars to the highest required safety standard.

The bill would use the revenue raised by the fee to help communities and first responders be better prepared in the event of a rail accident. It would establish a dedicated fund for clean-up costs of oil train accidents, advanced training for first responders, and grant money for states and cities to reroute rail tracks carrying large volumes of hazardous materials away from highly populated areas.

“It’s time for the [DOT] to push faster and more aggressively to make oil-by-rail transportation safer,” Wyden was quoted as saying. “This legislation takes a market-based approach to get unsafe cars off the tracks and safer cars on the tracks more quickly.”

The senators pointed to five accidents in the past four months—including fiery explosions of tank cars—in Iowa, Illinois, West Virginia and Ontario, Canada, that have added to the sense of urgency to address the safety of oil-by-rail transportation.

The proposed bill also would require the DOT to implement recommendations from the National Transportation Safety Board to give first responders real-time information on rail transportation, update track maintenance standards and study first responder preparedness for rail accidents involving large amounts of flammable liquids.

Contact the author, Bryan Sims, at bsims@hartenergy.com.