Amid oil-by-rail profit bonanza, safety and climate concerns loom large

In Canada, CN and CP reported first quarter profits in 2014 of $254 million and $623 million, increases of 17 per cent and 12 per cent, respectively, over the same quarter last year. But new changes to railway transportation regulations in Canada could cause some headaches for the future transport of Alberta's bitumen in North America.

On April 23, Canada’s minister of transport, Lisa Raitt, announced changes to railway transportation regulations in Canada that she says will make safe the rapidly growing transport of crude oil and Alberta tar sands bitumen in North America.

Raitt’s changes come in response to citizen pressure following a string of spectacular oil train crashes in the past nine months, most particularly the crash in Lac Mégantic, Quebec on July 6, 2013 that killed 47 people.

Raitt proposed two measures of substance: speed limits of 80 kilometers per hour must be followed henceforth by trains containing 20 or more wagons of dangerous goods (that speed can be lowered in populated or ecologically sensitive areas), and the most dangerous of the DOT 111 rail wagons used to transport oil—those without continuous crash shields along the bottom, numbering 5,000 or so—be withdrawn from carrying dangerous cargo within 30 days.

Otherwise, the minister says that Canada’s estimated fleet of 65,000 older DOT 111s must undergo modifications within three years to improve crash resistance, and better emergency response plans must be in place when crashes of trains carrying oil and other dangerous goods occur.

Until now, modifications to DOT 111s have been voluntary in the U.S. and Canada. As for emergency response, Canada already has a required ‘Emergency Response Assistance Plan’ (ERAP) system on its railways for the transport of chorine, liquid petroleum gases, explosives and other exceptionally dangerous cargo. That dates from the fallout of a 1979 rail crash and explosion of chlorine and propane in a Toronto suburb that forced the evacuation of 2oo,000 people from their homes. ERAPs will now be required for any train carrying crude oil or other liquid fossil fuel.

Raitt’s announcement creates for the first time a divergence between Canadian and U.S. railway regulations. Cross-border harmonization has been previously assured by Canada simply following any U.S. regulatory lead. Now, for the first time, several distinct, Canadian regulations may come into place for trains that U.S. railways and shippers wish to bring across the border.

This could become a real headache in three years time if U.S. shippers and carriers take longer to modify or phase out older DOT 111s. And since Lac Mégantic, they are showing few signs of any hurry. At a recent National Transportation Board hearing, a representative of the American Petroleum Institute said that older rail cars will be needed for at least ten more years.

Two measures that the federal government is refusing to take, responding to railway insistence, is advance notification by the railways to municipalities of the movement of dangerous cargos through their jurisdictions, and more extensive ‘route planning’ that would direct trains carrying dangerous cargos around populated areas. The latter measure would be costly for the railways and not logistically possible in many cases.

Of continuing note is the failure of the federal government to convene a judicial inquiry into the cause of the Lac Mégantic disaster. For the railways, oil shippers and the federal government, such a proceeding would be very uncomfortable. It would shed light on the string of circumstances that produced the disaster, and that might shed further light on criminal wrongdoing or liability in such areas as:

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