Kyle Potter, Published February 01 2014
The Crude Frontier: Oil on the rails raises old risks, new worries
Heller stops her car farther back from the train tracks now, cringing as she watches others pull right up to the crossing arm and counting down the minutes until the chain of 100-plus cars pass.
“The sooner this gets by, the more comfortable I’ll be,” she tells herself.
Hundreds of railcars carry black gold east through North Dakota and Minnesota towns every day on rails that just five years ago were an afterthought for shipping crude oil. But as the booming Bakken has pumped an unprecedented amount of oil across our nation’s railroads, little has changed in the regulations, rules and practices meant to keep those hazardous shipments safe.
The fleet of tank cars with much-maligned – but often-ignored – safety issues are still loaded with oil and sent onto the tracks, where increased traffic didn’t draw increasing numbers of federal inspectors. And they’re hauling a type of oil that may be more flammable than traditional black crude.
“The large-scale shipment of crude oil by rail simply didn’t exist 10 years ago, and our safety regulations need to catch up with this new reality,” National Transportation Safety Board chairwoman Deborah Hersman said in a recent statement.
Among some of the issues federal regulators and lawmakers are scrambling to address:
• A tank car designed in the 1960s and known for decades to easily rupture in crashes is still the go-to car for shipping oil – making up more than two-thirds of the fleet, according to industry estimates. Federal investigators have concluded these cars, called DOT-111s, “can almost always be expected to breach in derailments.”
• Despite the marked increase in crude-by-rail traffic, the number of federal regulators inspecting railroad and oil-loading operations in the region has changed little. The main regulatory body overseeing the transport of hazardous materials has no dedicated staff in North Dakota.
• The Federal Railroad Administration highlighted several problems after inspections at Bakken oil-loading facilities in 2011 and 2012: Several cars went unchecked for loose valves or hatches before being cleared for shipment; some shippers improperly classified their oil as being less flammable – and thus less dangerous – than it truly was; and several companies were caught using cars without safety appliances required by federal regulations.
“The pressure to ship those cars,” the inspection report concluded, “was more than the risk of failure in transportation or discovery by FRA.”
To some, the crash in Casselton and others before it are proof that oil development and transportation has grown faster than the measures to keep it safe. To others, a catch-up period is an unfortunate but unavoidable part of the process.
“Whether it’s here or in the Middle East or in Texas: Booms happen first and then infrastructure catches up,” North Dakota Rep. Kevin Cramer said. “That’s just the formula.”
But solutions won’t be easy. Regulators, railroad companies and oil magnates all have different ideas about what changes may be necessary.
Keeping up is ‘their job’
For 14 years, Roger and Candy Norgard have lived just 100 yards from the freight tracks that cut through Casselton. One, sometimes two trains pass by each hour, shaking their house and rocking their recliners.
But little has changed for the retired couple since they watched black smoke and fireballs fill the sky a month ago, just a half-mile west of their home. It made them uneasy even before crude oil tankers joined grain and coal cars on the tracks, Candy Norgard said.
“It’s more old hat now,” Roger Norgard said.
A train hauling Bakken crude east collided with a derailed soybean train just west of Casselton on Dec. 30, belching a thick cloud of black smoke into the air and putting the small town of 2,400 on front pages and news broadcasts across the country.
Including the estimated 450,000 gallons released in the Casselton collision, about 1.2 million gallons of crude oil burned or spilled on our nation’s railroads in 2013 – well more than the preceding four decades combined, according to an analysis of a Pipelines and Hazardous Materials Safety Administration database. In 2012, less than 3,800 gallons of oil spilled on railroads, according to PHMSA data.
Of the 1.2 million gallons spilled in 2013, all but 10,000 came from the Bakken oilfields in western North Dakota.
That figure is inflated by huge accidents like the one in Casselton and a larger spill in Alabama in November – the No. 2 and No. 1 largest crude oil spills on the rails, respectively, since federal regulators began keeping the data in 1971. It doesn’t include the 1.5 million gallons released in Quebec last summer, fueling a fiery blast that killed 47 people and leveled much of the small town of Lac-Megantic.
Most of the crude-by-rail spills in the U.S. last year were a gallon or less – small leaks caused by loose bolts or valves that were caught by inspectors. Seven others were recorded in North Dakota in 2013. Just two spills were reported in Minnesota last year, including a March derailment in Parkers Prairie, where about 10,000 gallons spilled.
“It would be hard for any company to keep up with the increases going on out there,” said John Hiatt, an investigator for Bremseth Law Firm, which represents injured railroad workers. “But you know what? That’s their job.”
Even the smallest changes and updates are complicated by a tangled web of stakeholders – railroad companies and oil companies, shippers, tank car producers, contractors, subcontractors and more – each with skin in the growing crude-by-rail game, and each pointing fingers at one another.
“It’s a complicated business,” said John Goglia, a member of the National Transportation Safety Board from 1995 to 2004.
Other than using his “bully pulpit” to put pressure on industry and regulators, North Dakota Gov. Jack Dalrymple and state lawmakers are hamstrung from making changes on their own. Federal railroad law preempts states from passing regulations.
But North Dakota lawmakers say they’re confident things are moving in the right direction. Some fixes may be coming fast.
Railroad companies are mulling lower speed restrictions and routing changes to move trains through less-populated areas. Oil and shipping companies are considering another set of voluntary improvements to their tank car fleet. In March, a revamped set of federal regulations governing track inspections will take effect.
And though accidents like the Casselton wreck and the tragic crash in Quebec last July that killed 47 people grab headlines, they’re also rare. More than 99 percent of trains carrying hazardous material arrive at their destinations safely, and the number of accidents has dropped 91 percent since 1980, according to industry statistics.
So, while crude-by-rail traffic out of North Dakota and across the nation has increased, “we have not seen a corresponding … increase in accidents,” said Brigham McCown, former administrator of the Pipelines and Hazardous Materials Safety Administration. “That’s the good news.”
“I think we need to keep in mind that increasing volume does not necessarily make the system less safe,” McCown added.
Hiatt spent most of his life as an engineer for BNSF. He looks at the recent push for new rules – prompted by the Casselton and Quebec accidents – as evidence that the railroad industry as a whole is built around being reactive.
Jim Hall, who chaired the NTSB from 1993 to 2001, said, “This was unprecedented, what was being done with the transport of crude – what we now know is a very hazardous fuel – without really any adequate attention until these disasters.”
“There’s really no excuse anyone can offer why we have been so asleep on the switch on providing public safety in this area.”
A 20-year interim
In 1991, federal investigators started highlighting the inadequacy of what remains the workhorse of today’s oil tank car fleet.
Even then, the design flaws in the DOT-111 cars had “been evident for many years,” the NTSB said in a safety recommendation. After studying other accidents involving those cars, the NTSB concluded DOT-111s were twice as likely to rupture and release dangerous chemicals as some newer, hardier models.
As a federal rulemaking process to boost car standards stalled, the NTSB expressed its concern that, “in the interim, many hazardous materials that pose severe threats to public safety will continue to be transported in tank cars with inadequate protection.”
That interim period has stretched more than two decades. Even the government agency that set tank car rules was replaced with PHMSA, which was created in 2005.
But little has changed with the DOT-111 standards themselves. The railcar industry voluntarily began building a more puncture-resistant car in 2011. Still, more than 65,000 of the out-of-date cars are shipping flammable liquids such as crude oil and ethanol today, according to the Railway Supply Institute.
The DOT-111’s head ends and shell – generally just seven-sixteenths of an inch – make it prone to splitting open during collisions, and it doesn’t have a metal shield at its front for extra protection, as modern cars do. The DOT-111 also has a valve on its bottom that has “proven prone to failure in derailment accidents,” according to the NTSB.
The NTSB has cited the DOT-111 in several accident reports since 1991, most recently in a 2009 train derailment outside of Rockford, Ill. In that accident, 13 of the 15 derailed cars were punctured, spilling ethanol and fueling an eventual explosion that killed one person and injured nine others.
“Clearly, the heads and shells of DOT-111 tank cars … can almost always be expected to breach in derailments that involved pileups or multiple car-to-car impacts,” the NTSB concluded.
The NTSB acknowledges – and the oil companies and shippers who own the cars emphasize – that the cars themselves don’t cause accidents. Oil companies counter that regulators should instead focus on preventing derailments in the first place.
Hall laughed at that defense.
“In a perfect world, I guess that’s a pretty good defense,” he said. “We’ve had derailments in the rail industry since the rail industry began. I don’t know how you comment on something that is that absurd.”
Had the cars in Rockford been built to stronger standards, “the release of hazardous materials likely would have been significantly reduced, mitigating the severity of the accident,” the NTSB found.
The same, older cars were involved in the Casselton wreck. Of the 20 cars that derailed after striking another train, 18 were punctured, according the NTSB’s preliminary report. DOT-111s were involved in at least two other high-profile accidents last year, in Quebec and Alabama.
The recent string of accidents has renewed a push to retrofit all DOT-111s with stronger features or phase them out entirely.
“Regulations have not kept up with what’s happening in the transportation of shale oil development,” Cramer said.
So how have these tank cars stayed on the rails this long?
For years, oil companies – and the shippers who rent out tank cars to them – have pushed back against calls to weed out the weaker DOT-111 cars.
PHMSA is considering changes to tank car standards that would largely codify the improvements industry made on its own in 2011. If approved, new DOT-111s would need to be built with thicker shells and metallic head shields. They would also need valves that release as pressure builds to avoid a fiery explosion.
But regulators are also considering whether to retrofit the remaining cars shipping hazardous materials over a period as long as 10 years, or move them out of service altogether. The rulemaking process won’t conclude until 2015 at the earliest.
It would be expensive – at $15,000-plus each to fit with stronger hulls, head shields and more, it could cost more than $1 billion, according to the Railway Supply Institute – with little evidence, oil industry officials say, of a corresponding benefit. The extra features would add weight to the cars and decrease each tank’s volume, adding more costs.
And removing the older DOT-111s – for upgrades or scrap – could worsen a growing backlog of tank cars on order, oil companies say, snaking the nation’s hose of oil supply.
“This would have the broadest-reaching consequences that the rail industry has ever faced,” The American Petroleum Institute wrote to PHMSA in a brief.
“Do we really want the rail industry to impede the progress of the oil renaissance that is taking place in this country by creating a shortage of tank cars?” GLNX Corp., which leases its fleet of about 2,500 tank cars, wrote in a response to the proposed changes.
Goglia, the former NTSB member, said he thinks that argument has kept a mandated phase out at bay.
“How can you take a large portion of your fleet of tanker cars at a time when they’re needed the most?” he asked. “They don’t punch these (newer cars) out like Necco Wafers.”
And while he agrees the older cars are riskier, Goglia said he isn’t sold on the idea of a mandated retrofit: “At the end of the day, you have an old product.”
It’s not just oil companies that have resisted the call to remove weaker cars from the rails.
“Rather than focusing exclusively on railcar design,” the Renewable Fuels Association wrote to PHMSA last year, “a more prudent approach would be to invest in initiatives that address” track issues that cause derailments. The trade association for the ethanol industry disputed claims that DOT-111 cars are flawed and claimed a mandated retrofit would cost at least $2.6 billion.
McCown, too, said he’s not sold on weeding out the older DOT-111s. Instead, he said it would be more effective for regulators to improve the inspections process and consider limiting train speeds as well as the number of oil cars a locomotive can haul.
“Ultimately, I think we all need to keep in mind those costs are passed along to the consumer in the form of higher energy prices,” the former PHMSA administrator said.
Without a mandated retrofit or phase out, the railcar industry will continue churning out upgraded models. There should be about 50,000 on the rails by 2015, Railway Supply Institute President Thomas Simpson said, making up more than half of the fleet. Simpson said he thinks that will be coupled with retiring at least some of the older DOT-111s.
But to allow any of the older models to remain on the rails, alongside newer models, the NTSB said, “ignores the safety risks posed by the current fleet.”
Federal safety officials announced they were stepping up inspections of North Dakota crude-by-rail shipments after an unattended oil train hurtled into Lac-Mégantic, Quebec last summer.
Dubbed the “Bakken Blitz,” the Federal Railroad Administration and PHMSA would conduct unannounced inspections to ensure shippers were properly classifying oil based on the temperature at which it would ignite. The Bakken crude that exploded in Quebec had reportedly been labeled as less volatile than it should have been.
That was one of several issues FRA inspectors found at western North Dakota oil-loading facilities – where oil is pumped into tank cars and pushed onto the rails – according to an inspection report obtained by The Forum titled “North Dakota – The Next Hazardous Material Frontier,” from 2012.
Inspectors caught several new companies shipping crude in a lower “packing group” than was required based on its volatility, according to the report. Different packing group levels, the FRA noted, can affect emergency response plans and change what kind of tank car a chemical can be shipped in.
The FRA’s inspection report highlighted a handful of other problems after visits to facilities across the Bakken region, first in 2011 and then again in 2012:
• FRA inspectors speculated that a railcar shortage exacerbated shippers using cars without the required safety specifications.
• Cars overloaded with crude oil were a “major problem” in 2012, not discovered for hundreds of miles after being shipped.
• Companies are required to inspect every tank car before sending it out on the rails – even brand new tank cars. But the FRA found several companies did not properly inspect their newer cars.
The report does not name facilities where problems were discovered, nor does it indicate how often those problems were cited.
Several rail-loading facilities turned down requests for interviews or tours.
Steve Magness, managing director with the Bakken Oil Express facility near Dickinson, said federal inspectors come “very often.” All Bakken Oil Express workers are trained in safety and are “responsible for knowing the standard operating procedures and knowing what to do if something goes wrong,” Magness said.
Though federal regulators have an eye on loading facilities, the railroad companies are largely left to inspect their own track.
North Dakota lawmakers have pointed to the slew of train derailments around Casselton in the last decade – four in a two-mile stretch – as evidence that railroad companies and their regulators need to boost track inspections. Late last month, the FRA announced it was retooling track inspection regulations.
“We can’t just be talking about the tanker cars and think that we’re solving the problem,” Sen. Heidi Heitkamp, D-N.D., said in a recent interview.
Federal regulations spell out how often inspections need to be performed based on the tonnage that moves on a yearly basis. For most stretches of major freight railroad in the Midwest, that means twice-weekly inspections.
“We take that and double that frequency,” said Craig Rasmussen, assistant vice president for structures at BNSF, the largest freight railroad in the region.
Rasmussen said BNSF supplements its four-a-week walking inspections with a fleet of several different kinds of high-tech railcars, which check rails for geometric issues and can catch internal defects in the steel “at the first sign” of possible defects.
Last summer, the company cut speeds and increased inspections for its crude shipments, spokeswoman Amy McBeth said. BNSF pumped a record amount of money into track and equipment improvements last year, including $220 million in North Dakota alone.
But the Bakken inspection report also sheds light on what’s become a major concern for federal lawmakers: an unmet need for more federal inspectors in western North Dakota.
Resources too few
“Due to the magnitude and the number of new start-ups and expansions, additional (hazardous material inspectors) are required in this area,” the FRA’s inspection report noted in 2011. Until then, it noted, “inspection of cars at facilities will be limited at best.”
And yet the presence of FRA inspectors in the area has remained unchanged since 2008, according to a spokesman. Today, six inspectors, each in charge of different aspects of train traffic and operations, work out of Bismarck. Another two inspectors work from Minot.
PHMSA has added two inspectors to its Central Region since 2008, but that team of 11 inspectors rotates between 11 other states. In response to some of the concerns raised after the Casselton crash, the hazardous materials agency is considering adding permanent inspectors in the Bakken region, according to a spokesman.
It’s been an issue since at least 2009, Cramer said. He saw it when he was on North Dakota’s Public Service Commission before he won his seat in the House in 2012.
“It was clear even then that PHMSA was understaffed and under-resourced to provide the oversight,” he said. And as crude-by-rail traffic has increased, it’s only gotten worse.
North Dakota Sen. John Hoeven helped secure funding in the Department of Transportation’s budget for an extra 10 FRA inspectors to examine routes and cars, according to his office, and plans to push for extra PHMSA manpower in next year’s appropriations bill.
In an interview, Hoeven said he’s confident he can secure support from his colleagues in the Senate to pass funding for those new inspectors into law.
“This is a national issue. It’s an international issue,” he said.
Forum News Service reporter John Hageman contributed to this story.
Readers can reach Forum reporter Kyle Potter at (701) 241-5502