(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.
Steel jackets represent one of the most expensive alterations, he said, adding that he supported cars with and without protective jackets.
The RSI, API and a number of other groups are expected to file their own counter-proposals to the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) by a Dec. 5 deadline.
PHMSA has so far received nearly 80 comments on its September “Advance Notice of Proposed Rulemaking” on the safety of rail tank cars. The government is not expected to make recommendations until the spring of 2014.
About 92,000 tank cars are moving flammable liquids on U.S. railroads, with about 78,000 of those requiring retrofit or phase out, the AAR said in its filing to PHMSA.
RSI estimates, however, show only 68,000 older cars that do not meet the latest standards are transporting crude oil and ethanol today.
Safety of crude-carrying trains has become a major talking point in the rail industry since one derailed in the Quebec town of Lac-Megantic this summer, killing 47 people.
Earlier this month, another train transporting crude derailed in western Alabama, causing a number of cars to explode and spill oil into a nearby wetland area.
Now, with a backlog of train car orders, manufacturers are struggling to keep up. It could take ten years to have all the cars changed over, Simpson said.
Others, like Hunter Harrison, chief executive of Canadian Pacific Railway, are more optimistic.
“If all of us in the industry that have the technical expertise and shop capacity and knowledge and labor at our disposal, if we allocated those resources to assist the typical car builders those that would do most of the conversions, we could fix the situation much quicker,” Harrison said. (Reporting By Edward McAllister; Editing by Tim Dobbyn)