Summary
A committee of companies, the Union Pacific Railroad, Union Tank Car, and Dow Chemical, representing their respective industries, agreed to a procedure under the auspices of the Federal Railroad Administration (FRA), to address the safety issues relating to tank cars, especially those handling Toxic Inhalation Hazardous (TIH) Gases. The announcement was overshadowed by the news of a derailment on CSX that resulted in a massive fire and release of hazardous gases. What was not said was that the railroads, mainly the Union Pacific, had relented and abandoned their demand that tank car owners replace all pre-1989 TIH cars within five years.
Analysis
After nine deaths resulted from the Graniteville derailment on NS lines in 2001, the railroad industry, but mainly the Union Pacific Railroad, argued that all pressurized tank cars built with non-normalized steel should be removed from service within five years. Normalized steel was made mandatory for pressurized tanks in 1989 and most pressurized tank cars built before that date did not meet the new specification. The tank car owners (it should be noted that the railroads own very few tank cars) would have had to replace a large portion of their fleet (perhaps as many as 37,000 cars out of a fleet of 256,000 cars) and would not be compensated for the losses they incurred. Opposition to the railroad proposal was led by Union Tank Car, a privately held company founded in 1866 by John Rockefeller. Trinity Industries (TRN), GATX Corporation (GMT), and General Electric (GE) are three other major tank car lessors in the
Since the 2001 Graniteville derailment did not involve pre-1989 equipment, the FRA was slow to condemn the older cars until more studies were completed to determine if there was a safety hazard. The delay gave the car owners, many of whom are also car builders, some relief and assistance in battling the increasingly hostile railroads. The latter pointed out that they bear all the liability for accidents involving the cars and should have control over the car standards. Railcar builders and freight car owners are usually insulated from contingent liabilities and are only responsible for cost associated with the damage to the railcars involved in derailments if a manufacturing or maintenance defect can be proven to have contributed to the accident.
The tank car owners would have been between a rock and a hard place if they would have had to choose between contingent liabilities or replacing a large portion of their fleet. The chemical industry, which either leases or owns most of the tank cars, was not totally indifferent, since the lessors might have tried to cover some of their losses and since it would have been very costly to replace older tank cars with new cars at today’s exceptionally high prices.
Not to long ago it was agreed that only TIH cars (estimated to total only 7,000 of the original 37,000 cars) needed to be replaced, and that the replacement period was extended to 12 from the originally proposed 5 years. This will allow the 1988 built cars to have a service life of 29 years, enough to amortize the original investments, but less than the cars might have served without the replacement ruling.
The announcement that it might take until 2010 before new standards are adopted and new cars designed means that the replacement will not begin for a few more years. Not all of the railroads favored the proactive stance of the Union Pacific, and the involvement of the FRA in the inter-industry agreement means that more rational minds are controlling this matter.
