CORRECTED-Rail industry tussles over U.S. tank car regulations

Fri Nov 22, 2013 4:59pm EST
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(Corrects paragraph 7 to clarify cost estimates are according to RSI evaluations)

By Edward McAllister and Selam Gebrekidan

NEW YORK Nov 21 (Reuters) - Disagreements over new safety standards for U.S. rail cars could delay design changes as trains haul more flammable liquids like crude oil across the country.

A series of accidents on trains transporting oil in North America prompted the Association of American Railroads last week to propose strict guidelines for new cars and the phasing out of old ones.

But opposition is emerging to the AAR proposals, making an industry consensus that has sped up recent changes seem unlikely. Without its own agreed standards, the industry would have to wait on regulations from the U.S. Department of Transport (DOT), which could take another year at least.

"I'm not optimistic that we will get consensus, but we might," said AAR president Edward Hamberger on the sidelines of a rail conference in New York on Thursday.

The cost of an overhaul is the main reason behind the differences. Railroads own very few tank cars but often bear the cost of accidents. But investing in new cars or retrofitting older ones is likely to fall on the shoulders of shippers or tank car owners.

The Railway Supply Institute (RSI) and the American Petroleum Institute, which represent tank car owners, manufacturers and shippers, are offering less stringent changes that they say would be sufficient to meet the challenges of a growing crude-by-rail trade.

The average cost to modify some legacy cars that do not meet the latest standards proposed by RSI could be from $30,000 to $40,000 per car, said Tom Simpson, president of the Railway Supply Institute, at the rail conference on Thursday.   Continued...