North Dakota on Wednesday asked the federal government to step in amid a dispute with Washington state over a new law there that places restrictions on shipments of oil by rail.
Attorney General Wayne Stenehjem submitted a petition to the Pipeline and Hazardous Materials Safety Administration requesting that the agency overturn Washington’s law, which places a cap on the vapor pressure allowed in oil unloaded from trains.
“We think that it was intended only to make it impossible to ship our oil to those refineries,” Stenehjem said at Wednesday’s meeting of the North Dakota Industrial Commission.
More than 160,000 barrels of oil make their way from North Dakota to refineries in Washington by rail each day. That equates to about 11% of North Dakota's daily oil production.
Washington’s Legislature passed the law in question this spring, requiring oil unloaded from trains to have a vapor pressure under 9 pounds per square inch. That falls below North Dakota’s limit of 13.7 psi, which is based on an industry standard.
Existing refineries have a two-year window to comply once the volume of oil they receive grows 10% above 2018 levels. Washington can fine up to $2,500 per tank car in violation of the law.
Trains carrying Bakken crude have come under scrutiny in recent years following derailments, including a crash in 2013 that resulted in a fiery explosion and killed 47 people in Quebec. Supporters of Washington’s new law argue it’s needed to reduce the risk posed by the volatility of Bakken oil.
North Dakota officials counter that claim, arguing that Washington’s new limit lacks a scientific basis, and they dispute that Bakken crude is more volatile than oil produced elsewhere.
Montana’s attorney general joined North Dakota’s petition. In it, the states argue that Congress granted the agency authority to ensure a uniform set of national regulations for transporting of hazardous materials.
“If other states follow Washington’s lead and set their own idiosyncratic hazardous-material transportation requirements, the patchwork effect of those laws and regulations could ironically make the nation less safe, not more,” the petition says. “This is PHMSA’s bailiwick, not Washington State’s, and PHMSA must step in.”
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Regulations took effect in North Dakota in 2015 that require oil to go through a conditioning process to meet the 13.7 psi limit. Oil must be heated at the well pad to remove certain amounts of propane and butane before it’s shipped by train, according to the petition.
It argues that it will be more complicated and expensive to comply with Washington’s new requirement for a lower vapor pressure. Shippers will need to remove more liquid petroleum gases and other “light ends.”
“It requires the movement of un-conditioned oil by truck or pipeline to facilities amounting to mini-refineries, infrastructure well beyond what currently exists in North Dakota, to transport and process the lighter compounds,” the petition says.
It also suggests that Washington’s law will reduce the value of Bakken crude because it would require the removal of more butane, which makes up a key component of winter gasoline blends. Refineries would have to purchase butane if it’s removed from the oil they receive from North Dakota.
Stenehjem said the next step in the petition process is for the Pipeline and Hazardous Materials Safety Administration to file a notice in the Federal Register, which would trigger a public comment period. The agency did not immediately return a request for comment.
Stenehjem's office has also been crafting a potential federal lawsuit against Washington alleging a violation of interstate commerce law.
A spokeswoman for Washington Gov. Jay Inslee on Wednesday said the state would defend its law in court. Inslee is seeking the Democratic nomination for president and has made addressing climate change central to his campaign.
“Every governor has a responsibility and a right to protect the health and safety of their communities and environment,” spokeswoman Jaime Smith said. “As Washington has experienced an enormous spike in the numbers of oil trains traveling through our state, this legislation is a reasonable approach to anticipated increased volumes of volatile crude oil.”
Oil-by-rail shipments out of North Dakota peaked in 2014, then dropped significantly as more pipelines were built. But the state’s oil production is near a record high, and oil train traffic has been growing over the past two years.