Freight Trains - Are They Safe?

August 21, 2014| Von Bill Baumann | General Liability | English

According to the National Transportation Safety Board, there has been a significant increase in freight train derailments in the U.S. and Canada involving trains carrying crude oil and ethanol. This provides an opportunity to discuss both the tank cars that carry oil and the safety measures that have been implemented since the train derailment in Lac-Megantic, Quebec, Canada.

In July 2013 the derailment of a 74-car freight train in Lac-Megantic resulted in a fire and explosion of 63 oil tank cars. The derailment resulted in 47 fatalities and the destruction of 30 buildings. The Chaudiere River was contaminated by an estimated 26,000 gallons of oil. The ongoing environmental cleanup costs are estimated at $200 million.

The operator of any railroad in the U.S. or Canada has a legal “common carrier” obligation to haul cargo, no matter how hazardous, provided it conforms to applicable regulations. Transportation carriers, such as air, marine and trucking, can limit their liability as a condition of transporting the cargo. But in the case of transportation by rail, the railroad operator is liable for all costs in the event of an accident. Once the railroad obtains the tank cars from a shipper, all the risks and exposure associated with the tank cars is transferred to the railway.

The increase in freight train derailments may be due, in part, to trains carrying oil from the Bakken shale region of North Dakota and Montana. Because of the lack of pipelines there, energy companies have turned to railroads to move their product to refineries.

The oil is being hauled by thousands of DOT-111 tank cars, many of which may be outdated. About 92,000 of the 106,000 oil tank cars currently in service were built before 2011 when stricter regulations mandated a new design. Tank cars manufactured after 2011 require thicker tank shells, pressure relief valves and heat resistant jackets. Each of the tank cars can carry up to 30,000 gallons of oil. The cost to retrofit the older DOT-111 tank cars is estimated at $1 billion.

Investigators in the U.S. and Canada have focused on a wide range of potential causes of freight train derailments, including:

  • Condition of the tracks
  • Speed of the train
  • Single engineer operating the train
  • Train size
  • Incorrectly labeled tank cars regarding the volatility of the oil
  • Use of the older DOT-111 tank cars

The National Transportation Safety Board has issued several recommendations jointly with the Canadian authorities. The three most significant recommendations are:

  • Expanded hazard material route planning for railroads so that trains avoid populated areas and other sensitive regions.
  • Improvement by hazardous materials of tank car safety standards to make the cars more puncture resistant.
  • Audits of shippers and rail carriers to ensure that they properly classify the flammability of crude and have adequate response capabilities for the worst case accidents.

Since the accident in Lac-Megantic, freight rail companies have improved the safety practices associated with moving crude oil by rail. Refer to the Association of American Railroads article, "Crude by Rail: One Year Later," to review the safety measures that have been implemented.

Clients who are looking to cover this type of exposure, and would like additional insights and information, should give us a call.


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