UPDATE 4-Canada to phase out old railway oil tankers; won't wait for U.S.

Wed Apr 23, 2014 4:52pm EDT
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(Recasts with official announcement and reaction from industry, U.S. government)

By Randall Palmer

OTTAWA, April 23 (Reuters) - Canada will require that older rail cars used for carrying crude oil be phased out by May 2017, the government said on Wednesday, moving ahead of the United States to ban the controversial cars in light of burgeoning oil-by-rail traffic and a deadly accident last year.

The unilateral move is in response to recommendations made by the country's Transportation Safety Board following last July's fiery rail-car derailment in Lac-Megantic, Quebec, which killed 47 people.

The phase-out was among a series of measures outlined by the government on Wednesday that are aimed at improving the safety of transporting crude oil by rail, an increasingly common practice in North America, where a shortage of pipeline capacity has forced shippers to find alternatives.

The faster phase-out in Canada raises the possibility that these older cars will be diverted for use exclusively in the United States if Washington does not move with similar speed.

"We understand the necessity of harmonizing with the United States on these matters," Transport Minister Lisa Raitt told reporters.

"But on this one, we can move faster and we will move faster, and we want to ensure that since we're seeing this increase in crude on the rail, we want to ensure that we have the safest system in place."

The U.S. and Canadian railway associations applauded Ottawa's move, conscious of the fact that they can be liable for accidents involving unsafe cars that they haul but do not own.   Continued...