As we reported earlier, consideration of proposed federal rulemaking concerning crude oil-by-rail transportation recommended by the Pipeline and Hazardous Material Safety Administration and Federal Railroad Administration is underway, and, after receiving more than 3,000 submissions, the comment period closed on September 30.  Nevertheless, and despite the possibility of preemption challenges in litigation, state governments in Minnesota and North Dakota have proceeded to bolster their own regulatory requirements. 

During the last legislative session, Minnesota lawmakers considered numerous proposals related to oil-by-rail.  New legislation produced from the session took effect earlier this fall, and included requirements for submission of disaster prevention plans, new safety measures such as at-grade rail crossing improvements, and funding for three additional state rail inspectors.  Minnesota state law now also requires railroad to provide local emergency response training every three years, and railroad personnel must be available by phone within one hour and on-site within three hours of any accident.  The legislation secured funding for these initiatives, in part, by assessing new fees on railroads.

In response to safety concerns stemming from train derailments in Casselton, North Dakota, and elsewhere, the North Dakota Industrial Commission (NDIC) is considering new regulations on operating standards for oil conditioning equipment.  A working draft of Order No. 25417 would require operators to condition Bakken crude oil to a Reid Vapor Pressure (RVP) of no more than 13.7 pounds per square inch (PSI), a lower threshold than the federal standard.  The order would also require operators to separate Bakken crude oil from light hydrocarbons and prohibit blending light hydrocarbons back into crude oil supplies prior to transport.  The NDIC held a hearing on the proposed oil conditioning rules on September 23, and the draft order was presented to the NDIC on November 13.  At that time, the comment period was extended to November 19, and the NDIC has yet to reconsider the draft.  The updated case file is available here.

At the same time, pressure on the rail infrastructure has resulted in freight and passenger rail delays, particularly in Minnesota.  Industries from agriculture to energy to taconite mining have experienced significant delay as a result of the increased volume of rail traffic throughout the state and the Upper Midwest.