UPDATE 2-U.S. moves to enhance safety of oil-by-rail shipments

Wed Jul 23, 2014 3:49pm EDT
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By Edward McAllister and Joshua Schneyer

NEW YORK, July 23 (Reuters) - The U.S. Department of Transportation on Wednesday proposed new safety rules for hauling crude oil by rail after a string of explosive accidents, in a move that could impact railroads, drillers, refiners and railcar makers amid an energy boom.

The draft rules, which are subject to a 60-day public comment period, come as regulators respond to a 50-fold hike in crude-by-rail cargoes since 2008, and more than a dozen accidents that have tarnished the lucrative new shipping trend.

Among the proposed rules released by the DOT are new speed limits for trains carrying oil, enhanced safety features for new railcars to carry oil and ethanol, and a quick phasing-out of older cars deemed unsafe. Other measures include advanced braking systems for trains, and expanded oil flammability testing before cargoes are shipped.

"We need a new world order on how this stuff moves," Transportation Secretary Anthony Foxx told reporters after the release of the draft rules.

The regulator's move has been widely anticipated by safety advocates and industries involved in energy shipments, including drillers and refiners who are wary that restrictions could hamper their shipments, and tank car manufacturers, who may benefit from big new tank car orders. Since the rules also affect shipments of ethanol, another flammable liquid, they could also impact the giant agribusiness industry.

Over the last 18 months, at least a dozen trains carrying crude oil have derailed, six of which led to oil spills and major fires and one of which caused the death of 47 people in Quebec, Canada.

Most of the incidents have involved crude from the shale oil revolution of the past three to fours years in the Bakken region of North Dakota and Montana, which makes up the bulk of crude-by-rail shipments that now surpass 1 million barrels per day.   Continued...