April 2014, Vol. 241 No. 4


Rail Transportation Of Oil: A Growing Congressional Safety Concern

Both House and Senate committee leaders with jurisdiction have begun to show impatience with what they view as out-of-date federal regulations on railroads carrying oil produced in the Bakken, Eagle Ford and Marcellus shale regions.

“The shale oil boom has dramatically changed the energy sector in our country,” says Sen. Jay Rockfeller (D-WV), chairman of the Senate Commerce Committee. “While the changes bring opportunities for robust economic development, they also raise serious safety concerns of shipping large amounts of crude on the railroads running through our communities.” The committee held hearings on March 6.

House members, who held their own hearings on Feb.26, and senators quizzed Cynthia Quarterman, administrator of the Pipeline and Hazardous Materials Safety Administration (PHMSA), about the agency’s progress on a number of rulemakings aimed at modernizing regulations related to rail transportation of hazardous liquids such as crude oil. PHMSA is in the midst of revising regulations on such items as rail car strength, and is responsible for ensuring that shale producers take safety measures when shipping liquid hazardous materials.

At both hearings, some legislators and industry officials used the multiple recent shale rail accidents to point up the need for the Keystone XL pipeline, which President Obama is expected to make a decision on soon. One of those recent tank car oil spills caused the loss of 27 lives in Quebec. At House Transportation and Infrastructure Committee hearings on Feb. 26, Rep. Kevin Cramer (R-ND) alluded to a fire in Casselton, ND, inside his district, caused by an oil train when it hit a derailed agricultural products train. Cramer said it stemmed from “the lack of pipeline capacity.”

PHMSA has been conducting an investigation of whether Bakken oil is being tested adequately, and shipped in appropriate tank cars. That is known as Operation Classification. The first notices of probable violations based on that effort were issued in early February to Hess Corporation, Whiting Oil and Gas Corporation and Marathon Oil Co. with fines totaling $93,000. As a follow-up to those notices, on Feb. 26 the agency required all shippers to test product from the Bakken region to ensure the proper classification of crude oil before it is transported by rail, while also prohibiting the transportation of crude oil in the lowest-strength packing group.

Rep. Jeff Denham (R-CA), chairman of the House Subcommittee on Railroads, Pipelines and Hazardous Materials, pressed Quarterman during the February hearings about her agency’s progress in revising standards for what are referred to as DOT Specification 111 tank cars. They are used to carry crude from Bakken and elsewhere. The railroad industry adopted voluntary rail car construction standards in October 2011 which upgrade the DOT 111 standards. But Robert L. Sumwalt, a member of the board of the National Transportation Safety Board, told the House subcommittee that the NTSB is not convinced that these modifications offer significant safety improvements.

“The NTSB continues to assert that DOT-111 tank cars, or tank cars of any successor specification, that transport hazardous materials should incorporate more effective puncture-resistant and thermal protection systems,” he stated. “This can be accomplished through the incorporation of additional protective features such as full head shields, jackets, thermal insulation, and thicker head and shell materials.”

PHMSA last fall published an advanced notice of proposed rulemaking on a series of potential changes to rail car safety standards. Some of those changes would upgrade the DOT 111 rail car standard. Denham pressed Quarterman as to when the agency will finalize the rule. She replied that the agency had received more than 100,000 comments and that the next step was issuing a proposed rule. She said she hoped that would be published “as soon as possible this year.”

EPA Sets Loose Permitting Guidelines For Fracking With Diesel Fuel
The Environmental Protection Agency (EPA) appeared to essentially split the difference between positions held by industry and environmentalists with regard to use of diesel fuel in fracking. The agency issued final guidelines to state and federal officials who administer the underground injection control (UIC) program under the Safe Drinking Water Act. Those guidelines give the officials what appear to be considerable flexibility in the specifics of the permits they issue for fracking with diesel fuels.

Diesel fuel is rarely used in hydraulic fracturing (HF). An EPA analysis posted in 2012 on the chemical disclosure registry website FracFocus found that diesel fuels appeared in fewer than 2% of the wells.

Environmental groups had pressed the agency to ban the use of diesel fuels. The American Petroleum Institute (API) argued there was no justification for requiring permits in the first place. An API spokesman said the group was studying the guidelines and had no comment. Lee O. Fuller, vice president of Government Relations, Independent Petroleum Association of America (IPAA), says the guidelines really only apply to five chemicals, just one of which, kerosene, is still used in fracturing, and there only sporadically.

If a company continues to use one of those five, the EPA theoretically could take enforcement action under authority which went into effect in 2005. “It is hard to see where that authority will be triggered, though it does give environmentalists some leeway to challenge the EPA in some instances,” Fuller says. Clean Water Action National Campaigns Director Lynn Thorp applauded the guidelines but said her group would continue to press for formal rulemaking.

EPA appears to walk down the middle of the road between the two groups by saying it is not establishing “any new permitting requirements.” Rather, it is simply “describing the EPA’s interpretation of existing legal requirements as well as non-binding recommendations for EPA permit writers to consider in applying UIC regulations to HF when diesel fuels are used in fracturing fluids or propping agents.”

The agency adds: “However, permit writers, acting on behalf of the UIC Director have the discretion to consider alternative approaches that are consistent with statutory and regulatory requirements. Decisions about permitting HF operations that use diesel fuels will be made on a case-by-case basis, considering the facts and circumstances of the specific injection activity and applicable statutes, regulations and case law.”

This guidance applies only to permit writers in states where EPA is the permitting authority for the UIC program such as Pennsylvania and New York, although states and tribes with enforcement authority may adopt the recommendations.

Canadian Regulator Critical Of Plains Midstream
The Alberta Energy Regulator has concluded that Plains Midstream didn’t inspect its Rangeland pipeline often enough, didn’t pay enough attention to government warnings, failed to enact adequate mitigation measures once a leak occurred and communicated poorly with hundreds of people affected by the spill in June 2012.

“Plains failed to complete inspections of the pipeline at the required frequency according to its own pipeline integrity management program,” said the regulator’s report released March 4.”Plains failed to apply appropriate mitigation measures according to its own hazard assessment.”

The report came during an overall audit of Plains Midstream’s Alberta operations. The U.S.-based company also experienced a substantial oil pipeline leak in 2011 near Peace River. “We need to be convinced that they can continue to operate safely in Alberta,” said regulator spokesman Darin Barter. “We are not convinced that can be done right now.”

Although the report concluded there were no structural problems with the 50-year-old line, the investigation found the frequency of the company’s inspections met neither provincial rules nor its own guidelines.

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