Think rail traffic is congested now? Regulations to make crude-by-rail safer will slow things down even more.

U.S. OIL AND GAS PRODUCTION has surged in the past few years, resulting in estimates that the country will become energy independent before 2025. This is an exciting development for economic, security and political reasons, and the Pacific Northwest will play an important role. Oil extracted from the Bakken shale formation in North Dakota and Montana is being shipped by railroad for processing at terminals and refineries in Washington. An increase in domestically produced crude-based petroleum products like gas and diesel will benefit businesses and residents in the region and throughout the country.

Alongside the benefits, safety and environmental concerns have accompanied the dramatic increase in crude-by-rail transport. While 99.997 percent of such shipments arrived without incident, according to the rail industry, several highly visible accidents in Canada and the United States involving Bakken crude oil and ethanol have prompted stakeholders and federal agencies to make a number of operational and regulatory changes to further improve rail safety.

Last month, the Pipeline and Hazardous Materials Safety Administration, part of the U.S. Department of Transportation, published proposed rules to enhance rail safety. This is of great importance to local business as further developments could have a far-reaching impact on Washingtons transportation system. In particular, speed restrictions could reduce railroad freight capacity and delay freight and passenger trains.

Similar to voluntary measures already instituted by railroads and other stakeholders, the rules focus on prevention of derailments, mitigation of risks posed by hazardous contents of tank cars and responses to accidents to contain potential damage. The rules include two major proposals: The first is a sampling and testing of the program to ensure proper classification and characterization of mined gases and liquids offered for all types of transportation (not just by rail). The second, and one of note, proposes additional safety requirements for high-hazard flammable trains, including a new standard for rail tank cars, enhanced braking systems and speed restrictions. The rules affect companies that extract oil and gas, rail carriers, shippers and tank-car manufacturers, but could have a broader impact on the business community.

Safety Requirements for High-Hazard Flammable Trains

These trains are a single train carrying 20 or more carloads of a Class 3 flammable liquid. In effect, the safety requirements will apply only to trains carrying crude oil and ethanol because they are the only such liquids currently transported using 20-plus tank cars in one train. The definition of these trains triggers these requirements: a new specification for safer tank cars; enhanced braking systems; speed restrictions; route analyses; and notification to state emergency responders.

New Specification for Tank Cars. This aims to improve the tank shell and head to minimize punctures, adding thermal protection to prevent intact tanks from failing during exposure to fires, enhancing top fittings to survive during accidents, and providing bottom outlet protection so that the valve does not open during an accident.

Speed Restrictions and Routes. The rules set a 50-mph speed limit for high-hazard trains. Three options are being considered to impose a 40-mph limit for high-hazard trains that use at least one non-DOT-117 car to carry any flammable liquid (not just crude oil or ethanol). The first option would limit such high-hazard trains to 40 mph in all areas. The other options would apply the 40-mph limit only while the high-hazard trains operate in certain highly populated areas (one of these imposes the 40-mph limit in the 10-mile radius around the Seattle-Bellevue and Portland-Vancouver areas). This option and the 50-mph maximum speed are consistent with voluntary limits implemented by railroads.

The rules also require rail carriers to analyze and select safe routes for high-hazard trains and notify State Emergency Response Commissions about high-hazard trains carrying approximately 35 cars or more of Bakken crude.

What Does This Mean Locally?

While the rules arent final comments are due at the end of the month the final version could cause major disruptions in the transportation system. A 30-mph limit on these high-hazard trains would force many other trains to operate at lower speeds, including those carrying commodities such as grain and other agricultural goods, automobiles, wood products and merchandise. This would reduce track capacity, lengthen freight and passenger train schedules and increase railroad and shipper costs. A reduction in capacity, coupled with slower service, could force many shippers to shift to trucks at a time when the highway system is already overcrowded and struggling to keep up with maintenance costs. It could also encourage development of additional pipeline capacity to Pacific Coast refineries and terminals.

We can only expect more regulations to come for crude-by-rail and local businesses should remain fully informed of the potential burdens and benefits.