A new order by the federal government requiring rail companies to report Bakken crude shipment details to state emergency agencies has set off requests to ensure those records are kept confidential.
The U.S. Department of Transportation, DOT, issued an executive order on May 7 that each railroad hauling 1 million gallons or more of Bakken crude must provide State Emergency Response Commissions, SERC, with estimates of how much of the oil it moves through each county weekly, and give updates whenever those volumes change by more than 25 percent. The information was to be provided within 30 days of the order.
On June 9, North Dakota’s Department of Emergency Services, the state SERC office, had received reports from Canadian Pacific, CP, and BNSF Railway. BNSF had requested the state to sign a confidentiality agreement to protect proprietary information from getting into the hands of the general public, but due to state open records laws, that may be asking too much.
“Our position is that we’re not going to sign it because we don’t feel we can guarantee the confidentiality of the information that they are submitting to us,” Cecily Fong, spokeswoman for the North Dakota Department of Emergency Services, NDDES, told Petroleum News Bakken. However, Fong said the agency is also not releasing the content of those reports until after it has a chance to discuss the order at its general meeting on June 25 in Bismarck. Fong said she doesn’t believe the information should pose a problem, as she doesn’t anticipate it to be extremely specific.
“I think the intent of the order is to gauge how much oil and how often, not necessarily what time is a particular train going through a particular town,” Fong said. “I don’t think anybody wants to get that detailed.” She said emergency responders need some basic information to plan for a disaster, but doesn’t feel non-specific information would pose any threats if it were shared with the general public.
“From a homeland security perspective, we don’t want a whole lot out there in real defined detail because then some bad character knows that at exactly 12:04 there’s a crude train passing through Bismarck, North Dakota, and given this knowledge he uses it as some sort of incendiary device to commit an act of domestic terrorism,” Fong said.
What rail companies think
BNSF is more concerned about releasing information due to propriety business practices. In a statement issued on June 6, BNSF said it provided all the required information to each state covered by the order, asking recipients to “comply with federal regulations which indicate this type of shipment data is considered security sensitive and confidential, intended for people who have a need-to-know for such information, such as first responders and emergency planners.”
CP did not request the SERC offices to sign a non-disclosure agreement because it takes the position that state emergency officials, by accepting the notification, are acknowledging and agreeing to the non-disclosure of the information and providing it only to first responders at state and local levels, as well as other appropriate emergency response planners.
“It has always been important for CP to work closely with first responders in communities on our network,” CP spokesman Ed Greenberg told Petroleum News Bakken. “This approach has included sharing security-sensitive information with officials for emergency preparedness and planning purposes.”
Union Pacific requests confidentiality, too
Six states have already denied railroad companies’ requests for confidentiality agreements. North Dakota, Wisconsin, Montana, Illinois, Idaho and Washington are not on board, citing public record laws. In Washington state, BNSF and Union Pacific Railroad sent officials agreements to sign but Mark Stewart, a spokesman for the Washington Military Department’s Emergency Management Division, said his office sought legal advice and determined the agreements “require us to withhold the information in a manner that’s not consistent with the state public records act.”
Instead, the office presented alternative agreements to the railroads, making them aware that the information may be subject to disclosure but a state official would notify the railroad if the public asked for information. BNSF is reviewing the proposal, but Union Pacific seems less concerned as it does not transport Bakken crude at the order’s reporting threshold of one million gallons.
Wyoming is an exception and signed the agreement, promising to only share the information with local emergency responders and withholding it from the public. Wyoming Director of Homeland Security Guy Cameron says he considers the reports to be sensitive security information, and therefore exempt. “Should there be a sense of concern for a terroristic act, the law gives us the appropriate and lawful ability to deny a request, based on that concern,” Cameron said.
Notification of a 25 percent change
Railroads would only need to submit a new report if volumes fluctuated by 25 percent, so Fong does not foresee the new order to be onerous to her office’s workload.
“At this point, we’re not anticipating it being a problem,” she said. “But it’s in the early days, so if it changes 25 percent all the time, and they are reporting to us once or twice a week, that could be a little more problematic.”
BNSF spokeswoman Roxanne Butler told Petroleum News Bakken that the company currently operates an average of eight crude oil unit trains per day across all shale plays, not just the Bakken. “The crude by rail traffic is 4 percent of all commodities that BNSF transports,” she said. As far as how often the information would fluctuate by 25 percent, Butler said, “I would not anticipate it being very often.” She noted that BNSF reported its volumes as a range, so submitting a new report would only be a result of significant developments in the industry.
Tough penalties for non-compliance
The DOT order states that a railroad that fails to make the notification is prohibited from hauling the crude oil, is subject to civil penalties of up to $175,000 per day and any person willfully or recklessly violating the order is also subject to criminal prosecution which could result in fines, 10 years of imprisonment, or both.
The order was put in place to assist emergency responders in the event of an accident involving Bakken crude oil trains. Besides providing expected train traffic and how much oil is transported, the rail carriers must also provide a point of contact in order for responders to quickly communicate with the railroad when necessary.
“With the rising demand for rail carriage of petroleum crude oil throughout the United States, the risk of rail incidents increases along with the increases in the volume of crude oil shipped,” the order states. “There have been several significant derailments in the U.S. and Canada over the last ten months causing deaths and property and environmental damage that involved petroleum crude oil shipments. These accidents have demonstrated the need for emergency action to address unsafe conditions or practices in the shipment of petroleum crude oil by rail.”
The 1 million gallon threshold, which equates to just under 24,000 barrels of oil, was made based on the fact that all the recent train accidents consisted of more than 70 tank cars, or well above the 1 million gallons on a single train.
“This threshold amount of Bakken crude oil ensures that DOT is not unnecessarily imposing safety-related burdens on lesser risks that have not, to date, proven to represent the same safety and environmental concerns,” the order said.
Crude-by-rail continues to rise
More oil was delivered by rail in the United States during the first four months of the year than in any other period in history, according to the Association of American Railroads. More than 110,000 carloads of crude oil traveled the U.S. rail network during the first quarter of 2014, equating to approximately 870,000 barrels per day. About 700,000 of those are shipped by rail out of the Bakken each day due to a lack of pipeline infrastructure. Federal regulators are also addressing tank car design to ensure greater safety in transporting crude oil. U.S. DOT Secretary Anthony Foxx sent a proposed plan to the White House’s Office of Management and Budget in early May outlining improvements to tank car standards for trains carrying highly flammable materials, but details of those improvements have not been publicized. New rules are not likely to surface until the end of the year.
