Transportation

Railroads Wrangle With States to Keep Oil Shipments Secret


Railroads Wrangle With States to Keep Oil Shipments Secret

Photograph by Eddie Seal/Bloomberg

(Ammends second paragraph to reflect railroads’ willingness to comply with the DOT's emergency order, and clarifies their concern with making the information public. )

Last month, the Department of Transportation ordered railroads to start giving state emergency response teams basic information about trains hauling crude oil through their cities and towns. The idea is that if state emergency teams are armed with at least some details on these shipments—when they’re arriving, how much oil they’re hauling—they can be better prepared in case something happens. Such as a train derails. Or a giant, fireball-inducing explosion erupts.

But railroads aren’t so keen on making that information public. As the Associated Press has reported, companies such as BNSF (BRK.B), CSX (CSX), and Union Pacific (UNP) are asking states to sign strict non-disclosure agreements promising not to make the information public. Some states are complying. Others aren’t.

Officials in Wisconsin, Montana, Illinois, North Dakota, Idaho, and Washington have all declined to sign the agreements, AP reported, while California, Louisiana, and New Jersey have agreed to keep the information secure. Colorado, South Dakota, Iowa, Oregon, and New York are reviewing the requests.

At issue is whether the non-disclosure agreements violate state sunshine laws governing open access to public records. Officials in Wisconsin and Washington say that they clearly do. Under the agreements, the information that railroads provide states would be shielded from Freedom of Information Act requests and rendered unavailable to citizens and journalists. For its part, the DOT says it has no problem with railroads asking for these protections.

In some cases, states are crafting specific arrangements with railroads that get around FOIA laws. Under an agreement with Virginia, CSX must mark documents as proprietary when submitting them to state emergency officials. “Any information that CSX has not deemed proprietary can be released outside of emergency services,” Dawn Eischen, a spokeswoman with the Virginia Department of Emergency Management, wrote in an e-mail. That way, since state officials aren’t themselves marking the data for non-public use, they are presumably still in compliance with FOIA laws. Seems semantic, though perhaps acceptable.

When a CSX train derailed in downtown Lynchburg, Va., exploding and spilling 30,000 gallons of oil into the James River, no one was hurt, but emergency crews were caught unprepared. City officials admitted to having had no idea that crude oil was traveling through town on that day in April.

A week later, the DOT issued an emergency order requiring railroads to tell state emergency response teams how much crude they’re hauling, along with the exact route they intend to take. Railroads must also provide local officials with contact information for at least one person familiar with the load. The order pertains only to trains carrying more than 1 million gallons of crude from the Bakken region of North Dakota.

The deadline to comply passed on June 7. Railroads that missed it were supposed to be banned from hauling Bakken crude while facing fines up to $175,000 a day. It appears that neither is happening yet. Kevin Thompson, a spokesman at the Federal Railroad Administration, said that the DOT has granted railroads a “period of discretion” in some cases while they negotiate with a handful of states. The period would last a “few days,” he said. As of Monday, no fines had been levied.

Yet, according to Virginia officials, CSX is already in violation of the order. Despite the state’s agreement with CSX, Dawn Eischen said that as of Monday afternoon, the state still had not gotten any transport notifications from CSX. Thompson, the FRA spokesman, said he was unaware of this. CSX did not reply to questions as to whether it was still shipping crude through the state or if it had been notified by the DOT that it was in violation of the emergency order. (In an earlier e-mail, a CSX spokesperson said that it had provided oil train information to all states it operates in as required under the emergency order.)

Meanwhile in Wisconsin and Washington state, emergency officials have received routing and shipment info from BNSF despite having balked at signing the railroad’s non-disclosure agreement. So while states that played hardball and refused to sign the non-disclosure agreement are getting the info they need, those that played along are getting stiffed.

Why all the fuss to begin with? Why are railroads fighting so hard to keep this information out of the public domain? For one thing, the railroads are often bound by strict non-disclosure agreements with the oil companies whose crude they’re hauling.

Railroads often say that making their oil activities public would expose them to security and competitive risks, but this seems overstated and beyond the point. Over the past four years there’s been a triple-digit increase in the amount of oil being hauled by rail across the U.S. It’s no secret that the vast majority of it comes out of North Dakota. Putting that information in the public domain would no more increase the risk of an attack than keeping it secret. And competitive risk shouldn’t even be an issue if the point is to improve public safety.

One risk that railroads could be worried about is the possibility of greater regulation. Oil is not subject to the same strict routing standards as other hazardous chemicals. While a train filled with toxic chlorine has to be routed away from populated areas—often via a competing company’s rail network—an oil train can chug right through downtown in the middle of the day. That could change in July, when new rules take effect that subject oil trains to tougher routing standards.

Citizen groups in several states are already starting to mobilize and station watch parties to count passing oil trains. Once more people realize just how close they are to millions of barrels of crude oil every day, it’s safe to say that the push to keep a better eye on it will only grow more intense.

UPDATE ON JUNE 11: Wisconsin officials confirm they have also received pertinent information from railroads as required under the emergency order, without having signed non-disclosure agreements. Also adds that new tougher routing rules for oil trains will take effect on July 1.

Philips_190
Philips is an associate editor for Bloomberg Businessweek in Washington. Follow him on Twitter @matthewaphilips.

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