By R. Bruce Striegler
On July 6, an unattended train carrying 1,875 barrels of crude oil in 72 tanker cars owned by the Chicago-based Montreal, Maine & Atlantic Railway separated from its engine, rolled seven kilometres, derailed and exploded in Lac-Mégantic, a picturesque Quebec town of 6,000. The fiery blast killed 47 people and obliterated the town centre. Nothing in the town’s 129 year history could have prepared it for this disaster despite Lac-Mégantic’s long history with railways. Founded in 1884 after the Canadian Pacific Railway began construction of the final segment of its transcontinental line linking Montreal with Saint John, the town was originally just called Mégantic, a meeting place of two railroads, CPR and Quebec Central Railway.
Not surprisingly, the July 6 catastrophe has made Lac-Mégantic the focus of fierce discussion, both within industry and the public across North America, about transporting hazardous materials and petroleum products by rail. In Canada, there were six main-track derailments involving dangerous materials from January to May of this year, below the 2008-2012 average of eight such accidents for the same time period. Derailments involving hazardous goods on secondary tracks stood at 34 for January to May this year, below the 2008-2012 average of 37 for these months.
Oil-by-rail is increasing at a dramatic rate in both Canada and the U.S., with the Railway Association of Canada estimating that this year about 140,000 tanker cars of crude oil will move around Canada, a vast increase from the 500 carloads in 2009. This is only expected to increase, and while currently only about three per cent of Canadian crude moves by rail, industry estimates show the figure rising as high as 25 per cent by 2035. Rising crude production from North Dakota’s Bakken fields and Eagle Ford in Texas are the largest contributors to the American growth. The Association of American Railroads reports that close to 356,000 carloads of crude oil and refined petroleum products moved across the U.S. during the first half of 2013, up 48 per cent from the same period last year.
Transport Canada institutes ‘emergency directive’ following the disaster
Although the cause of the accident in Lac-Mégantic remains unknown as up to nine separate investigations proceed, Transport Canada held a news conference 17 days after the tragedy in Lac-Mégantic to issue a series of ‘emergency’ changes to rail safety regulations. This announcement followed a series of recommendations issued by the Transportation Safety Board days earlier.
The six emergency rules include banning one-man crews for rail operators moving dangerous goods and puts mandatory measures in place to ensure trains left unattended on major rail lines are locked and immobile. The emergency directive will be in place until December, when railways are expected to have incorporated the new regulations into their own rules.
During the news conference, Transport Canada acknowledged that most of its emergency directives were common in the industry already. Luc Bourdon, Transport Canada’s Director General, Rail Safety, told reporters that there is almost “full compliance” with rules on correct hand-brake application. He added that 248 of 250 trains inspected in the last three months were using hand brakes appropriately, which is a compliance rate of better than 99 per cent.
And having more than one qualified crew person on board a train carrying dangerous goods also appears to be the industry standard. A month earlier, Transport Canada representatives said only two railways in Canada operate with one-person crews: Montreal, Maine & Atlantic Railway and Quebec North Shore and Labrador Railway. Transport Canada ended the emergency rules news conference after reporters pressed officials whether the department had failed to act on previous warnings about oversight weakness, which had been raised in an audit by the federal environment watchdog in 2011, as well as an internal Transport Canada audit done five years earlier.
Canadian National Railways is one carrier that presumably will be watching regulatory developments closely. Earlier this year, CN released details of its “Pipeline on Rails” initiative, designed as a transformative strategy to use rail transportation to move oil sands production more quickly and cheaply to North American markets, and by extension, the Asian market. CN calculates that the cost of building pipelines to ship four million barrels per day from Alberta’s oil sands at US$24.7 billion, with another $4 billion for a proposed increase in west coast capacity of 600,000 barrels. CN believes that, although its rail operating costs will be higher than those of pipelines, it will be able to compete effectively with pipelines because its capital expenditures required to move these volumes will be quite modest by comparison. Not long from now, CN will begin shipping 10,000 barrels daily from oil sands producers, delivering the Alberta bitumen using insulated and heatable rail cars, or by reducing its viscosity by mixing it with various chemical diluents. Part of CN’s strategy is ‘scalability’ and its plan envisages transporting up to four million barrels per day, just by adding rail cars.
Who is really making the rules?
In Canada, the Railway Safety Act implemented in 1989 and amended several times since, governs rail operations and safety. It’s based on the principle that railway company managements must be responsible and accountable for the safety of operations but the government, the regulator, has the power to protect public and employee safety. Critics, however, argue the government isn’t doing its job. While Transport Canada claimed at the time that the new Act reflected a ‘spirit of cooperation between industry and government’ and a move away from a prescriptive regulatory regime, others feel that Transport Canada has merely become an auditor rather than regulator.
The Railway Safety Act also allowed Canada’s two major railways, CN and CP, to sell sections of track that weren’t profitable for them and the 1996 Canada Transportation Act prompted development of many short lines. CP originally sold the Quebec line in 1995 and Montreal, Maine & Atlantic Railway’s parent company Rail World Inc. acquired it in 2003.
The Lac-Mégantic accident site contained a siding and derail (a device to derail cars in situations where there is unauthorized movement of trains, or when significant risk to life or equipment exists), but federal rules don’t require companies to use them. Nor do federal rules dictate how many hand brakes must be used to provide a fail-safe, should other brakes fail. Companies may set out those numbers in their specific operating instructions, or they may not. Nevertheless, rail safety by every indicator – accidents, derailments and fatalities – show safety has been improving over the last decade.
Statistics from the Transportation Safety Board show that runaway trains occur about ten times a year. To put it differently, a 10-mile stretch of track transited by 1,000 trains a year would experience such an event about once every thousand years. Large-scale derailments, which are trains of more than ten cars, happen with more frequency, or about once in every five million train miles and fires or explosions happen with nearly the same frequency.
Although the statistics show improved safety, the railcar most used for transport of oil and other hazardous materials has known flaws. The tanker car known in the U.S. as DOT-111 (CTC-111A in Canada) has been under close observation from safety experts since 1991 due to its tendency to split open in derailments and other major accidents. The tanker cars involved with the Lac-Mégantic explosion were DOT-111. In the U.S., the Obama administration has been working to improve safety of rail tanker cars, however, the attempts have run into opposition from oil companies and U.S. railroads. Industry groups say it is impractical to retrofit tens of thousands of existing tank cars used to haul oil, even as they have adopted voluntary standards to ensure that cars ordered after October, 2011 meet tough requirements recommended by federal transportation experts following a deadly ethanol train derailment and explosion in Illinois two years earlier.
The proposed U.S. rule to beef up rail car safety was initially scheduled to be put in place last October, but it has been delayed until late this September at the earliest. Officials blame the delay on the time it has taken to seek and review petitions from industry groups and the public, and a final rule isn’t expected until next year. The rail industry estimates that retrofitting older cars would cost at least $1-billion (U.S.), not including lost-service time for cars removed from the fleet for repairs. The Association of American Railroads said in a 2011 petition to the federal government that, by comparison, derailment costs totalled approximately $64 million over the past five years, adding that the extra weight from retrofitting the cars might cause overloads, potentially making them even more unsafe. The American Petroleum Institute, the Renewable Fuels Association, the American Chemistry Council and other groups said that requiring retrofits could increase compliance costs significantly.
At Transport Canada’s news conference announcing the ‘emergency directives’, department officials noted that one of the regulations currently under review is related to the use of CTC-111A tanker cars, following a Transportation Safety Board report some years earlier. Transport Canada representatives said it can take as many as five years to develop new standards since the government works with industry and with the U.S. government to ensure uniform standards.
The public reacts to the Lac-Mégantic crash
The public reaction following the Lac-Mégantic crash was swift and universal. A Forum Research poll conducted two weeks after the accident showed that 62 per cent of Canadians believe rail companies should not be allowed to transport dangerous cargo through populated areas. Seventy-one per cent of older Canadians and 73 per cent of lower-income Canadians said they were against transporting hazardous materials by train through towns and cities. In good news for the pipeline companies, 62 per cent of Canadians said they believe pipelines are safer than rail when transporting crude oil, 16 per cent favouring rail and another 13 per cent wanting to find another way entirely to transport oil.
Going a little deeper, the poll found that preferences for pipelines over rail varied by political party. Conservative Party supporters backed pipelines by 81 per cent compared to eight per cent for rail. Liberal supporters preferred pipelines to rail by 62 to 17 per cent, while 14 per cent preferred “some other way.” Green and NDP supporters were least likely to support the use of pipelines over rail, with 41 per cent of Green supporters and 48 per cent of New Democrats in favour of pipelines.
Rail was the choice for 21 per cent of both Green and New Democrat supporters. Both were also most in favour, (17 per cent for NDP, 25 per cent for Green) of “some other way”. In Quebec, 71 per cent were against dangerous cargo travelling by train through cities and towns.
Guess who pays – but why does it have to be this way?
While the current negative public sentiments have an obvious cause, the reality is that our economy cannot function without transportation. Every community, no matter how small or how large, is served by one or more transportation modes because it is in those communities that businesses produce or consume products that need to be transported. Removing the transportation of hazardous goods from roads and rails that pass through communities, or from pipelines, is not an option. What is an option, however, is for the federal government to substantially beef up its safety regulations, where needed, and to ensure that any carrier of hazardous goods, in order to be licensed as a carrier of hazardous goods, must be able to demonstrate the availability of “substantial” liability insurance to ensure that, when accidents do occur, they can be dealt with by the carrier without representing a financial assault on provincial or federal taxpayers. The aftermath of the accident in Lac Megantic will be measured in numerous ruined lives and perhaps as much as a billion dollars in costs for cleaning up and rebuilding. Does MM&A have the financial backing to hold Quebecers harmless? Let’s not hold our breath – we all know where these funds will eventually come from: once again, from our collective pockets.