In the 200 pages of the new proposed oil-by-rail regulations the American Petroleum Institute (API) is mentioned 31 times. The mentions include everything from comments the API submitted during the last public comment period to the reality that the regulators writing these new regulations are relying on the API to develop new testing standards for Bakken crude oil.
While the new regulations are supposed to address the need for proper testing of the Bakken crude for classification purposes, they fail to address several important concerns. And when it comes to creating an industry standard for testing crude oil, the Pipeline and Hazardous Material Safety Administration (PHMSA), who wrote the proposed regulations, are actually relying on the API to do that for them. From the regulations:
PHMSA is encouraged by the development of such an industry standard and API’s continued work in the standard and beyond to improve the accuracy of classification of materials and the overall safety or operational rail requirements. Once finalized PHMSA may consider adoption of such a standard and in addition those in the regulated community may petition for the incorporation of such standard through the processes outlined in section 106.95 of the HMR.So, the API is developing an “industry standard” for testing crude oil and PHMSA “may consider adopting it” in the future or the “regulated community”, which includes the API, could petition to have that standard adopted. But there is no proposed standard in the current regulations.
The lack of any standards for sampling or testing Bakken crude has been crucial to the success of the API’s efforts to say that Bakken crude oil is no different than any other and thus it is safe to be transported in the current DOT-111 tank cars. As reported by Reuters,the industry’s testing that they use to support their claims is “incomplete and out-of-date.”
“...the industry findings hinge on incomplete and out-of-date methods for determining vapor pressure, an important indicator of volatility, that may miss the true dangers of Bakken fuel, according to several industry officials.”And now the government is not only relying on API to develop the standards, they are not proposing any sampling or testing standards in the current proposed regulations.
In one final nod to the API and the oil industry, the proposed regulations are sure to note that while they are going to require the industry to test the oil, they don’t require those test results to be retained.
It should be noted the while the sampling and testing program is required to be documented in writing and retained while it remains in effect we are not require[sic] a specified retention requirement for the actual testing records.So no history of actual testing records will be required. This from regulators who say they are looking to get more information on Bakken crude oil so they can better understand it.
In the proposed regulations they specifically mention that prior to 1990, it was required to test the vapor pressure of materials to properly classify them in order to be able to choose the safest and most appropriate tank car.
The older regulations recognized that those flammable liquids that exhibited high vapor pressures, such as those liquids with dissolved gases require additional care in packaging.
High vapor pressure is one of the characteristics that has been noted as making the Bakken crude more dangerous. At a National Transportation Safety Board hearing about oil-by-rail safety in April, Robert Fronczak of the American Association of Railroads (AAR) stated that thehigh vapor pressureled them to believe that a pressure car was necessary to transport Bakken crude.
“We are just not sure what we’re handling,” Fronczak said. “We’ve done some minor sampling, you know a few samples that indicate that the crude oil does have a high vapor pressure and a fairly high amount of dissolved gas and so we feel a pressure car is more appropriate.”And yet the new proposed regulations do not require vapor pressure testing. But once again, PHMSA says they will consider including it if the “regulated community” requests they do.
We are not currently proposing any regulatory changes related to vapor pressure of a material. However, PHMSA seeks comments from the regulated community on the role of vapor pressure in the classification, characterization, and packaging selection process for a flammable liquid and whether regulatory changes to establish vapor pressure thresholds for packaging selection are necessary.However, the API has been quite clear that they don’t think Bakken crude is any different than other crude oil based on statements by their CEO Jack Gerard.
“It is essential to separate fact from fiction as we work to enhance the safe transportation of crude oil. Multiple studies have now debunked the idea that Bakken crude is meaningfully different than other crudes.”So the likelihood of the API or any other industry members lobbying to strengthen regulation of their industry is next to none.
API Encourages Regulation of Rail Companies
Just as the AAR has said the think Bakken crude is more dangerous and deserves to be regulated since that doesn’t affect their rail industry members, the API is quite vocal about the need to regulate the rail industry. This public display of showing concern for the public’s safety when it doesn’t require your own industry to do anything has been a constant in the many hearings and meetings on oil-by-rail safety in the past year. However, as shown by the content of the industry meetings with OIRA held in private, this concern is reserved for public comments.
When it comes to the antiquated braking systems used on most trains, the API’s opinion on this included in the new proposed regulations goes so far as to “encourage” PHMSA to do their job and require modern braking systems. From the proposed regulations:
API encourages PHMSA to evaluate DP [Distributed Power braking] and the development of a mid-train signaling device.And they don’t stop there. When it comes to rail safety, the API also is concerned about track maintenance. The proposed regulations include the following API comment:
“broken rails or welds caused more major derailments than any other factor. According to task force 87.6, broken rails or welds resulted in approximately 670 derailments between 2001 and 2010.”So the API is concerned about the railroads making safety enhancements. As the AAR is concerned about the oil industry doing the same. Which, if it was anything more than political kabuki, would appear to make these two industries adversaries. However, the week before the release of the new regulations, they were in complete agreement on two things.
The two groups said they would oppose lower train speeds and mandatory stabilization for some crude oil deemed more volatile.
The two things that could do the most to make the public safer, but that would cut into industry profits, are the two things that the API and AAR agree can’t happen. Slower trains are safer. And if the Bakken crude was stabilized, there would be no more “bomb trains” because the oil would no longer be explosive.
Interestingly enough, if the Bakken crude was stabilized it might be able to be shipped in the DOT-111’s under the new regulations, an option that is mentioned in the proposed regulations.
But with the API against “mandatory stabilization”, it is likely the bomb trains will be around in one form or another as long as there is Bakken flowing from wells in North Dakota.
Formalized Self Regulation
The next best thing for an industry to self regulation is to be directly involved in writing any regulations. The American Petroleum Institute is likely to be the most influential group regarding the finalized new regulations for the transportation of oil by rail.
From defining the borders of the debate by taking stabilization of Bakken crude off the table for discussion to actually being in charge of creating the “industry standards” for testing and classifying Bakken crude, the American Petroleum Institute will effectively make these new regulations exactly what they need. The politicians will take credit for making the public safer, the expansion of the oil-by-rail boom will continue unabated and industry profits will be protected.