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BNSF Responds To Pacific Northwest Legislation Targeting Crude-By-Rail

BNSF Responds To Pacific Northwest Legislation Targeting Crude-By-Rail


As state legislatures react to the growing volumes of crude oil being transported by rail in the Pacific Northwest, their responses will continue to bump up against the freight railroads' federally mandated obligation to move goods, including hazardous materials.

Washington state's Senate Bill 5579, which seeks to establish a vapor pressure limit on crude oil shipments, could face scrutiny in the courts should the bill get signed into law, while Oregon has several pieces of legislation addressing crude-by-rail activities in the state.

Oregon House Bill 2209 requires railroads owning or operating routes for trains carrying highly hazardous materials to have oil spill contingency plans that have been approved by Oregon's Department of Environmental Quality. The state will also collect fees on these plans and also on tank cars, and these fees will be collected for an oil spill safety fund.

Oregon Senate Bill 99 and House Bill 2858 direct Oregon's Environmental Quality Commission to adopt rules that pertain to high-hazard trains and address oil spills and emergency response planning. Those rules could include additional insurance and fees.

Proponents of the Oregon bills say their passage would put Oregon's laws governing crude-by-rail shipments on par with California and Washington state.

But BNSF (NYSE: BRK) says the rules would make it harder for the railroad to comply with the common carrier obligation, a federal mandate requiring a railroad to provide transportation to all parties and for all goods, including hazardous materials.

"We are currently working with state officials on possible implementation plans that meet both BNSF's and Oregon's common goals that are focused on safety and at the same time, that are not in conflict with our common carrier obligations," BNSF spokesperson Courtney Wallace said.

"BNSF remains concerned about new tax and fee proposals that could disproportionately burden common carriers and, in doing so, shift transport of hazardous materials to less safe modes of transportation," Wallace said.

The various pieces of legislation in Oregon are in response to an emergency order issued by the U.S. Department of Transportation on June 2016, in which rail carriers transporting 1 million gallons or more of Bakken crude oil must provide volume information to state emergency response commissions so that local first responders can coordinate a response to a hazardous materials spill. (The Bakken Formation covers about 200,000 square miles of the subsurface of the Williston Basin, underlying parts of Montana and North Dakota and the Canadian provinces of Saskatchewan and Manitoba. Shale oil is being shipped from oil fields in those areas.)

Also in June 2016, a 96-car train carrying crude oil derailed in Mosier, Oregon, resulting in the evacuation of 100 residents and a fire that burned for 14 hours. The cause of the derailment was worn or damaged track infrastructure, according to a staff report by the Oregon legislature.

Wallace said BNSF has invested in new technologies deployed along certain routes that monitor potential problems that could cause premature equipment wear or failure, and it has a track inspection program that can identify defects or problems that can be undetected by the human eye.

The railroad industry as a whole has also ramped up its production of DOT-117 tank cars. The design of these tank cars make them harder to puncture. The cars comply with a 2015 rule regulating tank car standards and operational controls for high-hazard flammable trains.

These state bills responding to increasing crude-by-rail movements also come at the same time that another federal rule addressing crude-by-rail has taken effect.

Effective April 1, the Pipeline and Hazardous Materials Safety Administration mandates that freight railroads share information about high-hazard flammable train operations with state response commissions to coordinate local preparedness plans.

HIgher volumes of crude-by-rail in the northern U.S. are a result of increased crude oil production in North Dakota. Because production is outpacing the installation of pipelines – and also because pipelines are facing regional and environmental hurdles – crude-by-rail has become a viable option for companies in North Dakota seeking to transport Bakken crude to points in the Pacific Northwest.

Estimated current rail volumes of crude oil exported from North Dakota are higher than the second half of 2017 but significantly lower than 2013 to 2015. The North Dakota Pipeline Authority estimates that crude-by-rail volumes were roughly 250,000 barrels per day in February 2019, compared with about 290,000 barrels per day around October 2018. In contrast, crude-by-rail volumes were between 700,000 and 800,000 barrels per day in the second half of 2013 through February 2015.

Image sourced from Pixabay

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