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While we all impatiently wait for the Federal government to issue new tank car standards and operating rules to address safety concerns regarding crude by rail shipments, the State of North Dakota and at least one Class I railroad are taking steps of their own to improve the safety of these operations. Effective today, the State of North Dakota will require all crude oil from its Bakken region to go through a conditioning process before being loaded into tank cars for shipment. This process is intended to reduce the levels of ethane, propane and other natural gas liquids contained in the crude so as to reduce the pressure and volatility of the product before it is loaded into tank cars. It has been argued by many that Bakken crude oil is different than other types of crude being transported today, with significantly more heat, pressure and volatility. Stories have circulated of steaming and bubbling Bakken crude oil resembling a witches cauldron of dangerous chemicals. In the absence of Federal regulations, this new measure adopted by North Dakota will likely become the standard and may be adopted by other states.

BNSF also announced new safety measures this week to reduce the risks of derailments involving crude oil trains. BNSF has agreed to reduce its train speeds to 35 mph in more populated areas (with populations in excess of 100,000), to increase its inspections of these crude by rail routes near waterways and to increase its inspections of wheel sets involved in crude service.

Although both of these measures should help to reduce the risks of crude by rail movements, ultimately both the oil and rail industries are waiting on the DOT to announce its comprehensive rules. It has been more than 9 months since the DOT announced its Notice of Proposed Rulemaking for new tank car standards and operating rules to impact crude by rail shipments. Neither industry group is pleased with the proposed rules – the oil industry believes the tank car standards will be too costly to implement and will not significantly improve safety, and the rail industry believes the changes to the operating rules will severely impair operations across the network. PHMSA is now targeting a deadline of May 12 for the release of the new rules.

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