Out of disaster comes a solution: The oil boom and railroad safety

I’m going to write about a plane crash that changed the way the aviation industry does an important part of its business. Why, you ask, am I writing about the loss of an aircraft in a blog meant for people are interested in railroads? The reason is simple: There’s a parallel going on between what happened in one industry almost 20 years ago and what is transpiring in another today.

The air disaster was the 1996 crash of a ValuJet DC9 in the Florida Everglades. The horrific crash claimed 110 lives and was blamed on the improper handling of hazardous materials in the cargo hold. The crash led to changes in the way that airlines handle hazmat and led to the installation of smoke detectors and fire suppression systems in cargo holds.

Now, let’s leap to last week when BNSF Railway announced highly unusual plans to purchase 5,000 new tank cars to carry crude oil. Railroads traditionally don’t supply tank cars. They supply the track, the locomotives, and the crews, but shippers usually provide the tank cars. It’s the latest development in the weeks and months since the July 6, 2013 crash of a Montreal, Maine & Atlantic crude oil train in Lac Megantic, Que., that claimed 47 lives and wiped out half the town.

The railroad industry is concerned about the standard DOT-111 tank car, so much so that the Association of American Railroads wants to replace or retrofit the fleet, estimated at about 92,000 cars. This typically involves strengthening hulls and protecting fill and discharge fittings to minimize the chance of leak or rupture in an accident. AAR estimates that only about 14,000 of the current active DOT-111 fleet meets or exceeds the new standards.  Recent federal regulatory actions point at soon-to-be-mandated increased safety and construction standards in both the United States and likely corresponding action in Canada. BNSF is getting out there ahead of any such mandate.  Other reports indicate that major crude shippers such as Tesoro and Valero are similarly considering greatly accelerated and/or increased volume purchase programs for the new standard cars.

Now is a good time for the industry to act. Both the public and government are more aware of crude oil traffic and its potential problems. Local communities are asking for a greater voice in what is allowed to pass through or even tax or impose fees on hazardous traffic. While federal interstate commerce rules are highly unlikely to allow this, clearly both railroads and shippers are aware that they need to do all they can to increase the safety of transport of this vital, and for railroads, highly profitable, commodity.  As a privately owned firm, BNSF enjoys somewhat greater ease in making capital purchases in a rapid fashion than is the case with companies that are publicly held, and have directors representing a wide array of interests.  For BNSF to commit to such a large purchase shows just how seriously the industry is taking the newly increased level of concern.

Watershed events, unfortunately often quite tragic, have the ability to change business practices. That’s why those of us who follow the transportation industry will look at railroading’s response to the crude oil situation and recall an airline disaster.  While we are still in the early days following the Lac Megantic disaster, its effects so far give every sign of potentially being as important to the rail industry as the Valujet disaster was to air transport.