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West Virginia Rail Cars Carrying Bakken Crude Crash, Burn as Feds Study New Regulations

It was still unclear Tuesday exactly how much oil had spilled from a 109-car CSX Corp. train that derailed in a fiery crash on Monday in southern West Virginia, state regulators said.

Local, federal and state agencies were still working to assess the damage in one of the region's worst rail disasters involving the shipment of Bakken Shale crude oil. CSX said in a statement issued late Monday hours after the crash occurred that the crude oil tankers involved were all CPC 1232 models, not the weaker version that the U.S. Department of Transportation (DOT) has been working to phase-out in recent years following a spate of similar derailments involving crude-by-rail shipments across the country (see Shale Daily, July 25, 2013). 

Monday's incident came just two days after a Canadian National Railways train carrying oil from Alberta derailed in Ontario and caught fire. No injuries were reported in that accident. The West Virginia derailment prompted the evacuation of about 1,000 people in the Mount Carbon area -- roughly 35 miles southeast of Charleston -- and forced a water treatment plant that serves 2,000 customers to close after oil was thought to be leaking into a nearby river.

No serious injuries were reported, and CSX said it was working with federal and state regulators. Gov. Earl Ray Tomblin also declared a state of emergency for Fayette County, where the crash occurred, and nearby Kanawha County as well.

In the United States, the number of rail cars carrying crude oil has increased sharply from 10,000 in 2008 to 415,000 last year, according to the Association of American Railroads (see Shale Daily, May 21, 2014). For years now, the DOT has been at work on a series of proposed regulations aimed at strengthening tanker cars that carry crude, making tracks and equipment safer and improving maintenance and operating practices.

Earlier this month, DOT submitted a long-awaited rulemaking package to the Obama administration for review in the final step of implementing stronger regulations. Lowell Rothschild, senior counsel at the Washington, DC-based law firm Bracewell & Giuliani LLP, said Monday's accident is not likely to speed up the regulatory process.

"I think the administration is aware of the urgency of the rulemaking and are moving forward as quickly as they can," Rothschild told NGI's Shale Daily. "It is a complex question they are trying to answer. They want to do it right, rather than fast."

Rothschild said questions remain about the standards for new rail cars, the timing of retrofitting older cars and how the industry will pay for such upgrades, among other things. He expects the new rules to go into effect within 90 days of the administration's approval. Rothschild added that just because the West Virginia incident involved the newer, stronger tank cars that are less prone to rupture, doesn't mean the DOT's proposed rules won't go far enough to prevent similar incidents in the future.

"They're still looking into that. I mean, there was a snow storm; what were the track conditions and speed of the train? It's not like an accident occurs as a result of one thing," he said. "That's apart of the complexity that the administration is looking at and it's another reason that this incident won't necessarily cause a rush on the rulemaking. An investigation is still being done and the administration is looking at a holistic package of enhancements."

But Clearview Energy Partners LLC analyst Timothy Cheung said the latest incidents could prompt action from lawmakers in Congress. 

“...We do anticipate greater Congressional pressure on the DOT to complete its railcar rule on time in mid-May (if not sooner)” he wrote in an email, referring to the department’s tentative deadline for tighter regulations. “We would also suggest that the West Virginia incident may make it politically harder for DOT to finalize a regulation that is pragmatic in all three dimensions (tank car design, composition/classification and operational guidance).”

At least 10 of the cars involved in the West Virginia derailment reportedly ruptured. West Virginia Department of Environmental Protection spokeswoman Kelley Gillenwater said Tuesday that the agency has personnel on the scene, but she added that there's "no estimate yet on how much oil was spilled."

DOT said late Monday that investigators from the Federal Railroad Administration and the Pipeline and Hazardous Materials Safety Administration were also en route to the accident. A house caught fire after the blast, and one person was treated for respiratory problems.

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