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Bakken conditioning regulation could loom: Update

06 Mar 2015 19:39 GMT
Bakken conditioning regulation could loom: Update

Updates with NDIC comment in paragraph 10.

Houston, 6 March (Argus) — Federal involvement in how Bakken crude is treated before shipping by rail may be on the horizon following revelations that the oil in the fiery 16 February CSX unit train derailment near Mount Carbon, West Virginia, was only slightly more volatile than what soon will be allowed by North Dakota regulators.

An Intertek analysis of a 9 February sample taken of the cargo showed a vapor pressure of 13.93 psi, above the 13.7 psi level that will be mandated as of 1 April by the North Dakota Industrial Commission (NDIC). The derailment resulted in several breached tank cars, evacuations and at least one airborne fireball.

It also has resulted in renewed calls for federal involvement.

"While North Dakota has attempted to address this issue on a state level, it seems apparent that their regulation did not go far enough," senator Chuck Schumer (D-New York) said this week in a letter addressed to transportation secretary Anthony Foxx. Schumer, whose state has two major crude terminals at Albany, called for the Department of Transportation and the Department of Energy to regulate stabilization.

Meanwhile, a pipeline-focused law firm has opined that the NDIC order could be vulnerable to a challenge that it unlawfully preempts federal authority, even though the US government has chosen to sit on the sidelines of the issue so far.

The firm, Hunton and Williams, noted that both the Hazardous Materials Transportation Act (HMTA) and the Federal Rail Safety Act (FRSA) prohibit preemption by state laws. HMTA forbids states from passing laws that differ from it on subjects such as classification, labeling and packaging of hazardous materials, the firm said, while FRSA allows state action on local matters that "do not unreasonably burden interstate commerce."

"Neither FRSA nor HMTA require oil conditioning prior to shipment, but both statutes unquestionably regulate the safety of interstate hazardous material transportation by rail," the firm said. "As a result, the order could be susceptible to a challenge if it can be established that it imposes practices that interfere with the federal regulation of rail safety and that unduly burden the interstate shipment of crude oil."

The firm notes that a lawsuit challenging California's oil train spill response requirements covers similar ground.

The NDIC today said the rule was specifically written to jibe with federal safety standards, which would comply with the preemption clauses of both US laws. As for Schumer's concerns, the commission said that conditioning is only part of the safety puzzle that also involves federal issues such as railroad regulation and tank car design.

Separately, the Illinois Environmental Protection Agency has not immediately responded to a request for information on the crude that burned in a derailment yesterday at Galena, near the Wisconsin border. It was the eighth fiery crude-by-rail accident since July 2013.


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