Business magnate Warren Buffett said changes must be made to how railroads, including his own BNSF Railway, moves crude from North Dakota’s Bakken oil fields. Buffett’s statement during an interview on CNBC on March 3 comes as federal regulators and railroads determine how to respond to a recent rash of explosive derailments, including one that killed 47 people in Quebec last July.
At least one crude oil train a day moves through the Flathead Valley, according to BNSF, and that number could grow in the coming months. Late last year, BNSF executive chairman Matthew Rose said his sprawling 32,000-mile railroad would move 1 million barrels of crude oil every day by the end of 2014.
“The oil from the Bakken has turned out to be more volatile than people anticipated and that will require a new kind of tank car,” Buffett said. “There will be changes made and there should be changes made.”
Those changes are already coming down the line. On Feb. 25, the U.S. Department of Transportation issued an emergency order requiring stricter standards on the movement of oil-by-rail. It was the fourth emergency order since July 2013. The order requires that all shippers in the Bakken test oil before it’s loaded into tank cars to ensure it’s properly classified as well as prohibiting the movement of oil in certain types of cars. According to the Association of American Railroads, the emergency order effectively banned 3 percent, or about 1,100 cars, from carrying North Dakota crude.
“Today we are raising the bar for shipping crude oil on behalf of families and communities along rail lines nationwide – if you intend to move crude oil-by-rail, then you must test and classify the material appropriately,” said Department of Transportation Secretary Anthony Foxx. “From emergency orders to voluntary agreements, we are using every tool at our disposal to ensure the safe transportation of crude.”
The AAR and U.S. DOT also announced new voluntary operating practices for railroads moving oil, including BNSF through Northwest Montana. Starting March 25, railroads will perform additional track inspections on rail lines that regularly haul crude; effective April 1, railroads would equip all trains with 20 or more carloads of crude with extra locomotives to allow engineers to stop more quickly; no later than July 1, railroads will start using a Rail Corridor Risk Management System to determine the safest and most secure route to move oil; and starting July 1, railroads will operate crude trains that have at least one of the older DOT-111 tank cars no faster than 40 miles per hour through urban areas. Railroad companies will also start working with communities and first responders on how to react to an oil train derailment and stage more emergency response resources along routes that have oil trains. BNSF is already working on a detailed response plan if an oil train were to derail along Glacier National Park’s southern boundary, according to officials.
The older DOT-111 tank cars were frequently mentioned during a congressional hearing on rail safety last week. According to the AAR, there are roughly 92,000 tank cars currently moving flammable liquids but only 14,000 cars are built to current standards. The older DOT-111 tank cars were involved in a series of accidents and are more likely to rupture in a derailment, which is exactly what happened when a BNSF oil train collided with a derailed grain train in Casselton, N.D. on Dec. 30, 2013. It was one of five explosive oil train derailments in just six months. National Transportation Safety Board member Robert Sumwalt, who testified before the Feb. 26 congressional hearing, said the accidents have created a trend that federal regulators must respond to.
“Quite simply, continued use of these tank cars presents an unnecessary public risk,” he said.
The Federal Railroad Administration and the Pipeline and Hazardous Materials Safety Administration are studying the use of the DOT-111 tank car and administrator Cynthia Quarterman said the agencies would be issuing new rules regarding the car’s use in the coming months. Quarterman said the new rule could also ban the DOT-111 from hauling crude altogether.
When pressed for a firm timeline on when the rules would go into effect, Quarterman said the regulators wanted “to get this right.”
While federal regulators continue to discuss the future of the DOT-111 tank car, railroads are not waiting to make changes. Canada’s two largest railroads announced last month that they would charge shippers more for using older tank cars. And on Feb. 20, BNSF announced it will purchase 5,000 brand new tank cars built to the toughest standards available, according spokesperson Matthew Jones. The tank cars would be made of thicker steel and thermal blanketing.