Canada moves to phase out old rail cars; won't wait for U.S

Wed Apr 23, 2014 1:10pm EDT
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By Randall Palmer

OTTAWA (Reuters) - Canada will require that the use of older rail cars for carrying crude oil be phased out within three years, even though the United States has yet to make such a rule change, according to documents seen by Reuters on Wednesday.

The unilateral move is a response to recommendations that followed an investigation into a fiery rail-car derailment in Lac-Megantic, Quebec, last July that killed 47 people.

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

Norfolk Southern Corp Chief Executive Charles Moorman said on Wednesday that if U.S. regulators also order a fast phase-out, it could have a "limiting impact" on the shipment of crude by rail and "would probably present some problems for us".

The change will be among a series of measures the Canadian government will announce later on Wednesday to improve 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.

Within 30 days, the government will also prohibit use of the most dangerous of the older tank cars for carrying crude oil or ethanol. The cars are considered dangerous because they lack continuous reinforcement of their bottom shells.

Transport Minister Lisa Raitt suggested earlier this year that Canada would act in concert with the United States to improve rail safety, but appeared now to have decided that a rapid phase-out cannot wait.

"As North America's integrated market necessitates close cooperation, it is important that in the longer term, Canada harmonizes with the U.S. to the greatest extent possible," Canada's Transport Department said on Wednesday in a document seen by Reuters.   Continued...

First responders fight burning trains after a train derailment and explosion in Lac-Megantic, Quebec early July 6, 2013 in this file picture provided by the Transportation Safety Board of Canada. REUTERS/Transportation Safety Board of Canada/Files