With Increased Federal Scrutiny, State Governments Look To Expand Oil-By-Rail Oversight


With the federal Department of Transportation’s recent emergency order impacting those who transport crude oil by rail, state governments are likewise considering additional regulatory oversight that could affect the industry in the wake of recent train derailments such as the one yesterday in Virginia.

In Minnesota, where more than 800 tank cars carrying oil from North Dakota pass through daily, the state legislature has held hearings on the volatility of  Bakken crude and is considering several proposals related to rail safety.  These initiatives include employing more state rail inspectors and making improvements to rail crossings, particularly those that have a high frequency of trains carrying crude oil and other hazardous substances.  Other proposals call for training and response preparedness for derailments, discharges, and spills from trains carrying crude oil or hazardous substances.  With the regular end of the annual legislative session just weeks away, it remains to be seen what specific rail safety provisions the Minnesota legislature will ultimately adopt, but increased scrutiny is all but assured. 

North Dakota, on the other hand, has long left rail inspections to federal authorities.  But after the trail derailment and explosion last December in Casselton, North Dakota, the state has begun to take a closer look at expanding state rail regulation, including employing its own rail inspectors.

And in New York, Governor Andrew Cuomo ordered a full review of safety procedures and emergency preparedness plans in January, and, in March, ordered rail inspections designed to enforce safety regulations and urge changes to spill response plans.

These moves by individual states follow in the footsteps of Canadian regulators, who moved quickly after an accident involving rail cars carrying crude oil derailed in Quebec.  Last week, Canada’s transportation minister announced measures requiring rail carriers to establish emergency plan for responding to catastrophic explosions, and force the use of stronger models of tank cars within the next three years.


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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