Railroads Ordered to Alert States on Oil Shipments

The U.S. Transportation Department issued an emergency order designed to reduce the risks of transporting crude from North Dakota’s booming Bakken region by rail, a week after an oil train derailed and burned in Virginia.

The order requires railroads to notify state emergency agencies when they haul Bakken crude through communities. A separate advisory discourages carriers from using an older tank car known as the DOT-111 tied to some accidents, though the order doesn’t ban their use.

“The safety of our nation’s railroad system, and the people who live along rail corridors is of paramount concern,” Transportation Secretary Anthony Foxx said in a statement.

Recent accidents have heightened concern about transporting oil by trains. Last year, a train operated by one person that was left unattended overnight rolled into the center of Lac- Megantic, Quebec, and touched off an explosion that destroyed half the town and killed 47 people.

Railroads agreed in February to slow oil trains in urban areas and install sensors on tracks to detect problems. U.S. regulators said last month they planned to require at least two crew members for crude shipments. The proposed rules are being reviewed at the White House, Foxx told a Senate committee today.

Today’s order applies to trains carrying more than 1 million gallons of Bakken crude, the equivalent typically contained in 35 tank cars. Some carriers assemble trains with 100 or more cars filled with oil.

Lynchburg Accident

Foxx issued the order a week after a CSX Corp. train carrying Bakken crude derailed and burned in Lynchburg, Virginia, forcing evacuation of the downtown. No one was hurt in Lynchburg, and the fire was doused in about three hours.

Senator Maria Cantwell, a Washington Democrat, told Foxx that requiring carriers to notify authorities about a train’s route wasn’t sufficient for residents.

“Just knowing that they’re coming through there isn’t going to be enough,” Cantwell told Foxx at a Senate Commerce Committee hearing today.

BNSF Railway Co., the railroad owned by Warren Buffett’s Berkshire Hathaway Inc., said in an e-mailed statement it already provides state agencies and emergency response organizations with route information on hazardous materials upon request. BNSF, which operates mostly west of the Mississippi River, is the main railroad that provides service to the Bakken region, which is centered in North Dakota.

Studier Cars

The railroads, which usually don’t own tank cars, have urged regulators to mandate studier cars and to require that older ones be phased out over a shorter period than the shippers or leasing companies that own the cars want.

“BNSF believes that promulgation of a federal tank car standard will provide much needed certainty for shippers and improved safety and response time for all first responders,” the Fort Worth, Texas-based railroad said in the statement.

Crude-by-rail shipments have soared as drillers employ new technologies to crack open and free oil and gas from shale formations at a faster pace than pipelines can handle.

Railroads moved about 400,000 oil carloads in 2013, dwarfing 2005’s 6,000, according to an estimate by Logan Purk, a St. Louis-based Edward Jones & Co. analyst.

The train that derailed in Quebec included the DOT-111s. Canada ordered a phase out last month of older tank cars over a three-year period.

Brigham McCown, a former head of the Pipeline and Hazardous Materials Safety Administration, said that while the advisory on the tank cars stops short of prohibiting use of older models, the effect could be far reaching.

“Now it becomes a potential legal liability to ship in an old car if there is an accident,” he said in an interview. Regulators should focus on why trains are derailing rather than on the sturdiness of the tank cars, he said.