Center for Progressive Reform

The Essential 13: Crude by Rail

Crude-by-Rail Safety Standards: What's at Stake?

Canadian tar sands and fracked shale deposits in the United States are producing more crude oil than existing pipelines can move to refineries and, as a result, oil companies are using railroads and barges to move their product to refineries. Railroad traffic is booming and with it comes a growing concern about the safety of shipping massive quantities of highly flammable crude.

The destruction wrought on the small Quebec town of Lac-Mégantic in July 2013 exemplifies the threat. A railroad company’s dysfunctional safety management system resulted in an unattended train barreling into town in the middle of the night. The train reached a top speed of 65 miles per hour before it hit a curve and derailed. More than 1 million gallons of crude oil spilled and ignited almost immediately. Tank cars exploded, and fires spread. Forty-seven people died, 2,000 people were forced from their homes, and a huge section of downtown was destroyed. The Lac-Mégantic derailment is the most disastrous incident yet in the nascent crude-by-rail transportation system, but that may be a matter of luck as much as anything. Four months later, an oil train derailed in rural Alabama, resulting in a fire that took days to extinguish. In late December 2013, a collision in North Dakota spilled 400,000 gallons of crude, which erupted into a fireball that forced evacuation of 1,400 people from their homes. Less than a month after that, a train carrying crude oil derailed on a bridge over the Schuylkill River in Philadelphia. Fortunately, the tank cars remained intact, and disaster was averted. But just one month later, a derailment in western Pennsylvania led to a spill of up to 4,000 gallons.[i] Two months after that, on tracks along the James River in Lynchburg, Virginia, another derailment spilled thousands of gallons of crude, some of which erupted into a fireball and some of which floated down the river toward Richmond’s drinking water intake pipes.

Increased domestic energy production is a central piece of President Obama’s national security and environmental agendas. The Bakken Shale play in North Dakota is a key piece of that puzzle—increased extraction of oil from that region correlates very well with decreased imports of light sweet crude from other nations.[ii]

One way to look at this is to consider basic numbers. Crude shipments by rail have jumped from just 9,500 rail-carloads in 2008 to 415,000 rail-carloads in 2013.[iii] And the U.S. Department of Transportation (DOT) notes that “[a]t any given time, shipments of more than two million gallons are often traveling distances of more than one thousand miles.”[iv] More oil spilled from trains in 2013 than in the four previous decades, combined. Preventing derailments and collisions is obviously the best way to limit the damage caused by shipping dirty fossil fuels around the country, but with hundreds of thousands of tank cars full of oil rolling along thousands of miles of track, the sheer scale of the enterprise makes spills pretty much a foregone conclusion.

To be clear, the dangers of transporting crude by rail are not an argument in favor of constructing more pipelines. The oil and gas industry is attempting to use valid safety concerns about the explosive growth of crude-by-rail shipments to justify large-scale oil pipeline projects, including the Keystone XL pipeline. That pipeline would allow for the delivery of some of the dirtiest forms of crude oil to American refineries, such as crude from the Bakken Shale deposit and Canadian tar sands deposits. And it would make those deliveries by traversing thousands of miles of land, including through sensitive ecosystems that risk lasting damage from pipeline leaks or explosions. In any event, the oil and gas industry argument ignores the simple fact that increased crude-by-rail shipments will continue regardless of whether the Keystone XL pipeline is ever built, because the proposed pipeline is insufficient to satisfy industry’s mammoth demands for carrying capacity and because railroads offer greater flexibility to ship crude oil almost anywhere.

After prevention, mitigation is the next step in the risk management process, and one way to mitigate the damage is to force the industry to use sturdier tank cars. The DOT has begun the process of requiring updated tank cars by issuing a multi-faceted proposal to update rules that govern how railroads transport crude oil.[vi]

What’s the Holdup?

The DOT rules have a little something for everyone, and the crude-by-rail industry comprises several industries with differing interests. The railroads are mainly interested in protecting this new revenue stream. Huge new supplies of oil and natural gas—along with new air regulations—make coal less economically attractive as a fuel source. As a result, the railroads’ main source of revenue is crumbling. Domestic crude shipments have the potential to take coal’s place, especially since production is happening in regions that are hundreds or thousands of miles away from refineries and existing pipelines do not have the capacity to deal with all of the new crude being pumped out of the ground. Railroads do not always own the tanker cars—they typically just move them—so they do not raise strong objections to requirements that would make the cars less likely to spill or ignite after a derailment or collision. Railroad companies are self-insured, so changes to tank cars that would limit damages from derailments could help their bottom lines. The railroads are less tolerant of the DOT’s proposed changes on positive train control, risk-based routing, and emergency planning and response, each of which might cost them money.

The shipping and oil companies, likewise, are primarily focused on the pieces of the DOT’s proposal most relevant to their operations—in their case, the proposals to retire and/or retrofit old tank cars. They couch their objections in terms of timing, arguing that the DOT should allow for a multi-year phase-in so that tank car manufacturers have plenty of time to upgrade their operations. This argument has a wolf-in-sheep’s-clothing character to it. Under the DOT’s proposal, which would grandfather in any tanker cars built before 2017, the industry has time to add 61,000 new tank cars to its fleet using the old and flimsy specifications.[vii] Not satisfied, shipping and oil companies are urging the DOT to extend the phase-in for another year.

For a rule of major consequence to U.S. energy production, Congress has been relatively quiet on this one. One subcommittee in the House and one in the Senate have held hearings on the issue, and in neither case did the questions go deeper than timing. Democrats have aligned in favor of speeding up development and implementation of new rules while Republicans are urging a pace dictated more by the shipping and oil industries.

With the public debate on this rule focused on timing, the Administration should be able to finalize it soon. The DOT sent the draft Notice of Proposed Rule Making (NPRM) to the White House’s Office of Information and Regulatory Affairs (OIRA) for review in late April 2014 and while that review was complete in the standard timeframe of 90 days, OIRA staff held 19 meetings with industry representatives and none with public interest groups.[viii] High-level officials from the White House attended some of the meetings, including representatives of the Domestic Policy Council, Council of Economic Advisors, and more.

What Should the Rule Do?

The DOT should use its authority to force quick action to protect the communities and ecological resources between the oil fields and the final destinations. The agency’s proposal covers:

  • Testing and classification of oil;
  • Risk-based routing;
  • Emergency-response preparations; and,
  • Technological improvement to cars.

Technological improvements to the tank cars and railroad operations are key. The best approach would be to force shippers to put crude oil in the safest tank cars available, which have pressurized tanks with thicker walls, special “jackets” for additional protection, stronger defenses for top-valves and fittings (which often shear off in crashes), and no bottom valves. Whether the DOT decides to go with the strongest protections or something less (the agency hinted it might require something less than the ideal in the July 2013 NPRM), it should ensure that the transition happens quickly. Shipping companies may think it a herculean task, but all crude moved by rail should be in safer cars by the end of President Obama’s term. It is a fitting goal for a president who has worked to expand domestic oil and gas production.

The DOT should also stick to its guns and force the railroads to make some changes to their operations, especially on routes that carry crude oil. Positive train control is a system of automatic signals and braking controls that prevent collisions. It has been mandated on certain routes to protect rail passengers, but it could likewise improve safety for hazardous materials such as crude. The DOT should also force railroads to hire additional staff and adopt other practices to keep crude shipment safe. The risk-based routing scheme that the DOT has developed will help, as would a requirement that all crude shipment be on trains staffed by both an engineer and a conductor (some railroads, including major crude mover BNSF, are trying to phase out conductors to cut down on personnel costs). Significantly, the train that derailed and destroyed Lac-Mégantic was crewed by a single operator, and Canada outlawed the one-member crew as a result.

The DOT also has a responsibility to foster improvements in the training and planning for derailments, collisions, spills, and other disasters. Those training requirements should extend to railroad crews, first responders, and the communities that may be affected by a spill.

What’s Next?

Update: In May 2015, DOT issued its final crude-by-rail safety rule. The final rule makes includes several key safeguards, but was not as strong as it should have been. On the plus side, the final rule requires the installation of advanced braking systems that will reduce the risk of train crashes, reduced speed limits for older trains carrying older tank cars, and strong risk-based routing requirements. On the negative side, the final rule incorporates an unacceptably slow phase-in period for replacing older unsafe tank cars, while key concepts such as “high hazard flammable trains” and “high threat urban areas” were diluted to limit the rule’s overall effectiveness in reducing the risks of catastrophic oil train crashes and derailments. In addition, the final rule limits public disclosure requirements regarding rail shipments of crude oil, and it does not require oil companies to process oil to reduce its volatility prior to shipment.

Several industry groups and public interest groups challenged the final rule soon after it was published in the Federal Register. Some of the provisions in the final rule, such as the enhanced braking system requirements, also face legislative threats from conservative members of Congress.

Enforcement of many aspects of this proposal will fall on the Federal Railroad Administration (FRA), an underfunded branch of the DOT.

Next: National stormwater pollution controls

[i] Christina Nunez, Oil Train Derails in Lynchburg, Virginia, Nat’l Geographic (Apr. 30, 2014), http://news.nationalgeographic.com/news/energy/2014/04/140430-oil-train-derails-in-lynchburg-virginia/ (last visited Oct. 27, 2014).

[ii] U.S. Dept. of Energy, Energy Info. Admin., This Week in Petroleum – Rail is Likely Supplying an Increasing Share of East Coast Crude Oil, Sept. 18, 2013, http://www.eia.gov/petroleum/weekly/archive/2013/130918/twipprint.html (last visited Oct. 27, 2014); U.S. Dept. of Energy, Energy Info. Admin., This Week in Petroleum – Crude Oil Imports Continue to Decline, Jan. 23, 2014, http://www.eia.gov/petroleum/weekly/archive/2014/140123/twipprint.html (last visited Oct. 27, 2014).

[iii] Press Release, U.S. Dept. of Transportation, U.S. DOT Announces Comprehensive Proposed Rulemaking for the Safe Transportation of Crude Oil, Flammable Materials (July 23, 2014), available at http://www.dot.gov/briefing-room/us-dot-announces-comprehensive-proposed-rulemaking-safe-transportation-crude-oil.

[iv] U.S. Dept. of Transportation, Operation Safe Delivery Update (July 23, 2014) (on file with authors).

[v] N.D. Pipeline Auth., Rail Transportation, http://northdakotapipelines.com/rail-transportation/ (last visited Oct. 27, 2014).

[vi] Press Release, U.S. Dept. of Transportation, U.S. DOT Announces Comprehensive Proposed Rulemaking for the Safe Transportation of Crude Oil, Flammable Materials (July 23, 2014), available at http://www.dot.gov/briefing-room/us-dot-announces-comprehensive-proposed-rulemaking-safe-transportation-crude-oil.

[vii] Patti Goldman, A Tombstone Mentality on Exploding Oil Trains, Earthjustice Blog, Oct. 10, 2014, http://earthjustice.org/blog/2014-october/a-tombstone-mentality-on-exploding-oil-trains (last visited Oct. 27, 2014).

[viii] Exec. Off. of the President, Off. of Mgmt. & Budget, Off. of Info. and Reg. Affairs, EO 12866 Meetings Search Results – RIN 2137-AE91, http://www.reginfo.gov/public/do/eom12866SearchResults?pubId=201404&rin=2137-AE91&viewRule=true (last visited Oct. 29, 2014).

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