Exploding Oil Trains Push States to Create Response Plans

States from California to Maine are hiring rail inspectors and oil-spill experts as they draw up emergency plans after trains carrying crude derailed and burst into fireballs, including a crash in Quebec that killed 47.

In California, Governor Jerry Brown is proposing a 15 percent funding boost for his response agency. New York Governor Andrew Cuomo last week ordered five departments to create spill disaster plans and wants to double the number of train inspectors. The July derailment in the Canadian town of Lac-Megantic was followed in December by BNSF Railway Co.’s 400,000-gallon explosion in North Dakota.

Crude on the Move

Oil shipments by train have grown 400 percent since 2005, the American Railroad Association says. Crude pumped from North Dakota’s Bakken formation and Texas’s Eagle Ford shale is set to propel the U.S. past Saudi Arabia as the world’s largest supplier in 2015. Even if TransCanada Corp. (TRP)’s Keystone XL pipeline is completed, hundreds of thousands of barrels will still need to travel by rail to refineries and ports.

“I don’t think anyone really realized how quickly this Bakken oil plume would have grown and how quickly the private rail market would grow to deliver it,” Joan McDonald, commissioner of New York’s transportation department, said in an interview in Albany. “It’s important that we look at it and do everything we possibly can.”

Chicago, Philadelphia

Only the federal government can set rail standards. As states and localities prepare for disaster, they’re pressuring U.S. regulators to write rules to prevent them. Chicago’s Rahm Emanuel and Michael Nutter of Philadelphia, both Democrats, are leading a call by U.S. mayors for a “hazardous materials freight fee” for companies that extract crude oil and those who consume it. The funds would be used to upgrade rail infrastructure, Emanuel said.

At Cuomo’s direction, state agencies sent a letter on Jan. 28 to federal officials asking for new tank-car standards and routes away from populated areas.

Last month, the U.S. National Transportation Safety Board and the Canadian Transportation Safety Board issued recommendations as part of a probe into the Lac-Megantic derailment. The accident sent a fireball through the center of the town of 6,000 early on July 6, turning a crowded pub into a deadly inferno.

The oversight authorities said crude oil needs to be hauled in stronger tank cars and on safer routes. Neither board can enforce standards, which are overseen by agencies such as the U.S. Transportation Department and Transport Canada. (ENT) Modifying the tank cars may cost leasing companies and shippers about $5.2 billion, according to estimates by Bloomberg Government.

‘Insufficient’ Plans

U.S. Transportation Secretary Anthony Foxx last month met with officials from the railroad and oil industries, who agreed to spend 30 days examining steps to improve safety.

“Voluntary efforts are insufficient to tackle this growing problem,” McDonald and three other New York agency chiefs said in the letter to Foxx and other officials. “The residents of New York cannot wait for the federal government to address these issues in an unsynchronized manner.”

Casey Hernandez, a U.S. Transportation Department spokeswoman, said the department welcomes proposals.

“There is not one action that will solve this issue, and we need to make sure the focus of our wide-ranging approach is on prevention, mitigation, emergency response and stakeholder outreach,” Hernandez said by e-mail.

Napalm River

Crude-by-rail accidents climbed to 108 last year from nine in 2010, according to data from the Pipeline and Hazardous Materials Safety Administration, an arm of the Transportation Department. On Jan. 2, the department issued a safety alert that said the type of oil pumped from North Dakota shale may be more flammable -- and therefore more dangerous -- to ship by rail than crude from other areas.

“This is one of the only crude oils in the world that will touch off with a match,” said Thomas Cullen, who heads California’s Office of Spill Prevention and Response. “In Quebec, it was like a river of napalm.”

Under a budget proposal by Brown, a Democrat, Cullen’s department would get an extra $6.7 million annually and add 38 positions, he said. Historically, the agency’s focus has been on preventing and responding to oil spills at sea. Over the next two years, California is expecting a 28 percent shift to trains from boats for oil deliveries, Cullen said. The agency isn’t ready, he said.

“We aren’t conducting drills and exercises and we don’t have contingency plans on file,” Cullen said in a telephone interview.

Maine Wilderness

Last year, as rail cars carrying crude came rolling in from Canada, emergency planners in Maine traveled the line to map how they could reach spills deep in the wilderness, Jessamine Logan, a spokeswoman for the Maine Environmental Protection Department, said by phone. A state law that went into effect in October requires rail companies to report when and how much crude they’re carrying and pay into a fund to help clean up spills, she said.

The Lac-Megantic explosion took place 10 miles (16 kilometers) from the Maine border.

Bakken crude travels over about 1,000 miles of rail in New York, Cuomo, a Democrat, said in an e-mailed statement. Much of it goes to Albany where about 120 carloads each day are transferred to ships, which then travel down the Hudson River to New York City and beyond.

In his Jan. 28 executive order, Cuomo required five agencies to provide a report by April 30 that shows the state’s ability to respond to an oil-by-rail spill, how that can be improved and what regulatory changes are needed. The budget Cuomo proposed last month adds five rail inspectors, bringing the total to 10.

“We cannot wait for a catastrophic accident to assess and reform the way this crude oil is transported through our state,” Cuomo said.

To contact the reporter on this story: Freeman Klopott in Albany at fklopott@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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