Crude bulls pause as Chinese…
Oil prices increased slightly after…
America’s largest energy trade association is suing the US government, contending that its timeline for upgrading oil tank cars for freight trains isn’t realistic and, in some cases, is too expensive.
In its suit filed on May 11 in the US District Court of Appeals for the District of Columbia, the American Petroleum Institute (API) asked the panel to block the new regulations, issued May 1 by both Canada and the United States, that would require reinforcing the tank cars and fitting them with advanced braking systems.
The companies that build the cars, or those that have already leased them, were given between five and ten years to retrofit cars, called DOT-111 tank cars, that carry crude oil and other flammable liquids, depending on the nature of their intended cargo and each car’s current set of safety features.
Related: Saudi Arabia Continues To Turn Screws On U.S. Shale
The API said that timeline doesn’t give them enough time to make the upgrades. It also said the cost of installing new electronic braking systems of the cars exceeded their benefits. API spokesman Brian Straessle argued that “retrofit timelines, braking systems and other actions must all be based on facts and science to maximize the safety impact of this rule.”
But Straessle added, “[w]e definitely support upgrades to the fleet. It’s a matter of timing.”
The rail industry’s principal trade group, the Association of American Railroads, also opposed the braking requirement, though it is less critical of the timeline for retrofitting. Perhaps this is because railroads don’t own the cars, and so the cost and effort needed for retrofitting falls on the companies that build or lease the tank cars.
Related: Here Is Why Predictions For Lower Oil Prices Are Wrong
Named in the API’s suit were US Transportation Secretary Anthony Foxx, Attorney General Loretta Lynch and Tim Butters, acting chief of the Pipeline and Hazardous Materials Safety Administration, which enforces such rules.
Responding on behalf of the government, Transportation Department spokeswoman Suzi Emmerling said it was “disappointing” that the API had filed the suit. “We believe the rule will stand up to challenge in court,” she said, “and remain hopeful that industries impacted by these changes will accept their safety obligations and follow the new regulations.”
Related: Alberta Election Result Changes Little For Oil Industry
There have been several derailments, oil spills and explosions on oil trains over the past two years, most of them involving oil being transported east from the Dakotas, home of the vast Bakken shale. The worst of them involved a runaway oil train that exploded in the Quebec Township of Lac-Mégantic on July 6, 2013, killing 47 people. None of the others was fatal.
In announcing the new rules, Foxx and Canadian Transport Minister Lisa Raitt said they would go a long way to improving safety. But the plan immediately drew criticism not only from the energy and rail industries but from elsewhere as well.
Safety advocates said the new regulations didn’t go far enough to prevent rail catastrophes. And even environmentalists complained that the timeline for retrofitting the tank cars is far too long to wait to ensure safe rail transport of oil.
By Andy Tully of Oilprice.com
More Top Reads From Oilprice.com:
Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com