Rail Transportation of Crude Oil and the FAST Act: An Update

Rail Transportation of Crude Oil and the FAST Act: An Update

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September 7, 2017
Rail Transportation of Crude Oil and the FAST Act: An Update
Introduction
One cause of this fall is the diminishing price of imported
After a multiyear boom, the volume of crude oil carried by
oil versus the domestic price. As this price gap narrows,
U.S. railroads has fallen to the lowest level since 2012. This
coastal refineries switch to importing oil by tanker, which
decline may have implications for efforts by the U.S.
entails much lower transport costs per barrel than rail
Department of Transportation (DOT) to finalize regulations
transport. Also, pipeline capacity from the Williston Basin
concerning the safety of rail transportation of crude.
has gradually increased. Pipelines, including the recently
opened Dakota Access Pipeline, now have the capacity to
Increased oil drilling in North Dakota’s Williston Basin
carry all of the Williston Basin’s current production at
(also known as the Bakken), made possible by new drilling
lower cost than rail.
methods such as hydraulic fracturing and directional
drilling, led to a sharp rise in the movement of crude oil by
According to the North Dakota Pipeline Authority, at the
railroads beginning about 2010 (see Figure 1). Large-scale
peak of crude-by-rail volumes during fall 2014, railroads
oil production was new to the region, which lacked pipeline
were carrying away 60% of the Williston Basin’s
capacity to handle the volume. As an alternative, oil
production, while pipelines transported about 35%. In June
producers began shipping more oil to refineries by railroad.
2017, railroads carried 7%, while pipelines carried 78%; the
Some of these trains derailed, leading to oil spills, fires, and
remaining 15% was refined locally or trucked to Canada.
explosions. Several incidents required emergency
An oil train with 100 tank cars carries 70,000 barrels, so as
evacuations of nearby residents, and one resulted in
volume declined by more than 800,000 barrels per day, the
fatalities. (For further background, see CRS Report
required number of trains has fallen from approximately 14
R43390, U.S. Rail Transportation of Crude Oil:
per day in the fall of 2014 to about three per day at present.
Background and Issues for Congress.)
Railroads Still Used for West Coast Shipments
DOT issued emergency orders requiring new safety
As Figure 2 indicates, most of the decline in rail volumes
measures for oil trains in 2014 and 2015. Congress enacted
has occurred in movements of North Dakota oil to East
or modified many of these measures in the Fixing
Coast refineries. Movement of North Dakota oil by rail to
America’s Surface Transportation Act (the FAST Act; P.L.
West Coast refineries has remained relatively steady, as
114-94, Title VII, Subtitle C) in December 2015. These
there is no pipeline available. The United States continues
measures include use of stronger tank cars, more frequent
to import Canadian oil by rail, most of which is destined for
safety inspections, speed limits for oil trains, and enhanced
refineries on the Gulf Coast.
emergency response preparations.
Figure 2. Selected Crude by Rail Routes
Pipelines Replace Rail Movements
A substantial fall in the volume of crude oil carried by
railroads has taken place since summer 2015, as shown in
Figure 1.
Figure 1. Domestic Crude Oil Movements by Railroad

Source: CRS presentation of EIA data; Movements of Crude Oil and
Selected Products by Rail.

Issues for Congress
The FAST Act, enacted at a time when crude by rail
Source: CRS presentation of Energy Information Agency (EIA) data;
volumes were three times greater than they are today, set
Movements of Crude Oil and Selected Products by Rail.
deadlines for DOT to issue a number of regulations
affecting transportation of oil by rail. Some of these

proposed regulatory changes are still pending, and the
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Rail Transportation of Crude Oil and the FAST Act: An Update
decline in volume could lead to further discussion of DOT’s
Oil Spill Response Plans
plans.
In the FAST Act (§7307), Congress urged DOT to complete
a rulemaking requiring more comprehensive oil spill
Older Tank Car Phase-Out Schedule
response plans from railroads. In 2016, DOT issued a
The FAST Act requires shippers to stop using older, less
proposed rule that would require response resources to be
robust tank cars when transporting oil beginning in 2018;
located within 12 hours of any point along an oil train route.
when transporting ethanol, however, the older cars can be
State agencies filed comments seeking a shorter, four- to
used until May 2023. As Figure 3 illustrates, there has been
six-hour mobilization time frame instead. They also sought
no falloff in the movement of ethanol by railroad; ethanol
to have the plans made available to state emergency
volumes are now about three times greater than those of
response commissions (see Docket no. PHMSA-2014-
crude oil. Moreover, ethanol rail movements traverse much
0105).
of the national rail network, moving from the corn belt to
every coastal region. Derailments of ethanol trains have
Crude Oil Volatility
caused fires and evacuations, but Congress decided on a
Section 7309 of the FAST Act requires the Departments of
comparatively slow phaseout schedule for older cars due
Energy and Transportation to advise how the chemical
partly to concern about how quickly railcar manufacturers
characteristics of crude oil might be made safer for rail
could ramp up production of the stronger cars. With the
transport, once they have finished a study on the matter.
falloff in crude oil volumes, there may be a sufficient
Whether the characteristics of Bakken oil pose a greater
number of the new cars for ethanol service, allowing the
risk when transported by rail compared to other oils has
May 2023 deadline to be moved up.
been debated. The oil industry asserts that a DOT proposal
to limit the vapor pressure of oil transported by rail by
Figure 3. Crude Oil and Ethanol by Railroad
pretreating it will not reduce the likelihood of fires or
explosions at derailment sites (see Docket no. PHMSA-
2016-0077). Oil producers contend that almost any
flammable liquid, no matter the vapor pressure, will catch
fire and explode when subjected to the physical forces and
circumstances of a train derailment, and that pretreatment
of oil from the Bakken therefore is unnecessary.
Preventing Derailments
By far, the leading cause of train derailments is defective
track. Much of the time these defects are invisible fractures
within the interior of a piece of rail. A secondary cause is
rolling stock defects such as a broken axle or wheel.
Railroads have deployed detection technologies such as
ultrasonic probes or acoustic and temperature sensors that
Source: CRS presentation of EIA data; Movements of Crude Oil and
are intended to spot equipment defects long before they
Selected Products by Rail.
advance to a point where they can cause a derailment.
Railroads also evaluate equipment failure history and
Reporting of Hazardous Material Trains
operational and environmental factors to pinpoint track
The FAST Act (§7302) requires railroads to provide cargo
segments and railcars that are at higher risk and warrant
details for trains carrying hazardous materials to fusion
more frequent inspection.
centers, established to coordinate responses to disasters and
terror incidents. This information is needed by firefighters
Congress funds a rail safety research and development
when responding to a train incident involving railcars
program under DOT’s Federal Railroad Administration
carrying a multitude of hazardous materials. Firefighters
(FRA) at about $35 million per year, and typically provides
state that they and the railroads have already developed a
direction as to how these funds should be spent. This
software application, “AskRail,” which provides this
program seeks to advance technologies and methods for
information in real time; they argue that fusion centers are
detecting rail defects. The program was recently evaluated
not needed as a conduit and are not suitable for this task
by an independent review panel convened by the
since they do not operate 24 hours a day. (See Docket no.
Transportation Research Board of the National Academies:
PHMSA-2016-0015, http://www.regulations.gov).
Evaluation of the Federal Railroad Administration
Research and Development Program, Special Report 316,
While the frequency of oil trains has declined significantly,
2015. One of the panel’s recommendations was for
domestic oil and natural gas booms are expected to
Congress to give more flexibility to FRA in deciding how
stimulate chemical manufacturing, which could increase the
to spend research funds.
volume of other hazardous materials carried by rail. Rail
movement of propane, for example, a by-product of
John Frittelli, Specialist in Transportation Policy
domestic gas drilling used in the chemical industry, among
other sectors, has doubled since 2013 to 10 million barrels
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in January 2017. Thus, hazmat train reporting, despite the
smaller number of oil trains, could be increasingly
important for emergency responders.
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Rail Transportation of Crude Oil and the FAST Act: An Update

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
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reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
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