Fee Proposed on Rail Cars That Haul Oil, Other Flammables

U.S. senators from six states on Thursday proposed that the government charge companies a special fee to ship oil, ethanol and other flammable liquids in older railroad tank cars that have been involved in fiery explosions.

The proposal would be paired with tax breaks for new tank cars built to better withstand derailments. Democratic Sen. Ron Wyden of Oregon told The Associated Press the intent is to offer “market-based” incentives for companies to improve safety.

On Friday, federal transportation regulators were expected to announce new rules calling for up to 155,000 flammable liquid tank cars to be retrofitted or replaced.

Industry representatives have said it could take more than a decade to get that work done – far longer than safety officials want.

Accidents involving the older tank cars, known as DOT-111s, include 47 people killed when a train carrying North Dakota crude crashed in the town of Lac-Magantic, Quebec, and one person killed during a 2009 ethanol-train derailment in Rockford, Illinois.

The fee would start at $175 and increase to $1,400 per car by 2018. It would raise an estimated $600 million to train first responders, clean up spills and relocate rail tracks around populated areas.

“The idea is to speed up the phase-out of older tank cars,” Wyden said. He added it “allows us to move in a much faster and more aggressive fashion to make oil by rail transportation safer.”

Co-sponsoring the fee legislation were six Democrats: Senators Diane Feinstein of California, Charles Schumer of New York, Sherrod Brown of Ohio, Bob Casey of Pennsylvania, Mark Warner of Virginia and Jeff Merkley of Oregon.

Tank cars often are owned not by railroads but by the companies that produce oil, ethanol and other fuels moved by rail. There are roughly 55,000 older DOT-111s that would be subject to the fee.

The tax breaks would apply to cars constructed since 2011 under a voluntary industry standard meant to improve safety that has proved insufficient. It would cover up to 15 percent of the expense of upgrading cars.

A study commissioned last year by the Railway Supply Institute, which represents tank-car owners and manufacturers, said modifying the flammable-liquids-tank-car fleet would cost more than $4 billion.

BNSF Railway recently imposed a $1,000 fee on older tank cars used to carry crude, drawing a lawsuit from fuel and chemical refiners who contended the surcharge is illegal. Diana Cronan, of the American Fuel and Petrochemical Manufacturers, said her group was reviewing the fee proposal offered Thursday.

This article appeared in print in the May 1st, 2015 edition of Hamodia.