Legislation has been approved by the Washington State Legislature that could restrict the movement of crude oil via railroads. The bill is sitting on the desk of Gov. Jay Inslee (D).
Senate Bill 5579, which defines vapor pressure limits for the rail transport of crude oil, seeks to address the growing volumes of crude oil being transported via rail through the state. The bill comes as energy producers grapple with regulatory and regional hurdles to build pipelines to transport crude oil. Companies are turning to crude-by-rail as an option to deliver the crude to West Coast ports.
But accidents such as the July 2013 incident at Lac Mégantic in Quebec, Canada, in which an unattended train carrying Bakken crude oil derailed, killed 42 people and destroyed the town center, have put communities on edge. Some are also concerned about the environmental impacts that could occur as a result of an oil spill or accident.
The legislation states that a facility that has been constructed or permitted after January 2019 cannot load or unload crude into or from a rail tank car unless the crude oil has a vapor pressure of less than nine pounds per square inch. For older facilities, that vapor pressure limit applies once crude volumes increase by more than 10 percent above that facility’s volumes for 2018.
Facilities must also report to the state in advance when they will receive a railcar carrying crude oil, providing in advance data such as routes, volume, scheduled times and vapor pressure. This information would also get passed to emergency responders and to state utilities and transportation commissions.
While the bill does not prohibit crude-by-rail, the bill addresses the transport of Bakken crude, which is more volatile than other crude types. Facilities might also find pre-treating crude to lower its vapor pressure to be cost-prohibitive.
The bill passed by a vote of 27-22 in the state Senate on April 22, while the bill passed the state House of Representatives by a vote of 53-40 on April 12. Both the Senate President and the Speaker of the House signed the bill on April 24 before sending it to Governor Inslee.
Freight railroads moved 16.8 million barrels of light and heavy crude oil in the fourth quarter of 2018, according to Washington state’s Department of Ecology. Of that, 90.7 percent originated in North Dakota, while the remainder came from the Canadian province of Alberta. Light crude represented 94.4 percent, while heavy crude constituted the remainder. A total of 24,693 rail cars moved crude in the fourth quarter, at an average rate of 1,860 cars per week.
In comparison, freight railroads moved 13.1 million barrels of crude in the fourth quarter of 2017, with 85.8 percent originating in North Dakota, 10.1 percent coming from Alberta and 4.1 percent coming from the Canadian province of Saskatchewan. A total of 19,243 rail cars moved the crude at an average rate of 1,480 cars per week.
Whether Inslee signs the bill into law or not, the issue of vapor pressure limits for crude oil and other flammable products could still enter the debate nationally, whether through federal legislative bodies or via the courts. The Pipeline and Hazardous Materials Safety Administration (PHMSA) put out an advanced notice of proposed rulemaking on the topic in January 2017 before U.S. President Donald Trump began his presidency. That docket is still open but has been inactive.
“Neither the Federal Railroad Administration (FRA) nor PHMSA require oil conditioning or stabilizing of crude oil prior to shipment to meet vapor pressure thresholds, but both statutes governing FRA and PHMSA unquestionably regulate the safety of interstate hazardous material transportation by rail,” said Rachel Meidl, an energy and environment fellow at the Center for Energy Studies at Rice University. Meidl is also a former associate administrator for PHMSA, and she penned an issue brief in March 2019 discussing whether there is any correlation between vapor pressure and accident severity with crude-by-rail incidents.
If the Washington state legislation is signed into law, it “could be susceptible to legal 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,” Meidl said.