Oil train (copy)

Montana and North Dakota have won a dispute with Washington State that centered on whether states can require stricter vapor pressure limits than the federal government for crude oil transported by rail. 

The state of Washington cannot impose its own, stricter vapor pressure limit on crude oil loading or unloading in its state, a federal agency has ruled in a dispute between Washington and North Dakota and Montana.

The U.S. Department of Transportation’s Pipeline and Hazardous Material Safety Administration ruled on Monday, May 11, that federal law governs the transport of hazardous materials, and would preempt any stricter, state-imposed vapor pressure limit for crude oil loaded or unloaded from rail tank cars within a state’s borders.

Allowing states to set their own vapor pressure limits would lead to the kind of “patchwork state regulation Congress had sought to avoid when it enacted the HMTA (Hazardous Materials Transportation Act)” in 1975, the agency said.

National standards for crude oil transportation require crude oil to be conditioned to 14.7 psi. North Dakota, meanwhile, requires its operators to condition Bakken crude to 13.7 psi before transporting it from the state. That already exceeds federal transportation requirements.

Washington subsequently passed a law requiring crude oil to be at 9 psi Reid Vapor Pressure. That would have effectively blocked Bakken crude from the Pacific Northwest.

North Dakota and Montana jointly petitioned PHMSA last July to overturn the Washington law. Not only is it a violation of the interstate commerce clause, Gov. Doug Burgum argued in the petition, but the Washington law would significantly reduce the value of Bakken crude without any proven safety benefit.

At the time Washington’s law was implemented, North Dakota was sending about 186,000 barrels per day of crude oil by rail to Washington, according to Washington’s Department of Ecology. Burgum said that about 10 percent of the state’s crude oil is transported to Washington.

The decision by PHMSA on the dispute followed a Department of Energy report submitted to Congress last week that found Bakken crude is no more volatile than any other crude oil. That study was conducted by Sandia National Laboratories.

North Dakota’s Congressional delegation, which has been actively pressing federal agencies for a favorable ruling in the case, issued a joint statement praising PHMSA’s decision.

“We thank the Administration for doing the right thing by putting sound, scientific evidence above partisan politics. We also appreciate the tireless advocacy of Governor Doug Burgum and Attorney General Wayne Stenehjem. Today’s decision is much-needed good news for North Dakota’s oil producers as they battle the COVID-19 pandemic and the global oil price war. Washington’s legislation was an obvious example of overreach, not scientifically founded, and could have ultimately driven their state refineries to foreign sources of crude oil, further harming America’s energy dominance.”

Burgum also praised the decision.

“We deeply appreciate the Administration and PHMSA for basing this decision on sound science and preserving our state’s constitutionally protected right to interstate commerce,” he said. “Washington state’s law was based on an unsupported, erroneous assumption that Bakken crude oil poses a higher transport risk than other crude oils, when in fact it is shipped in a manner that’s even safer than what federal standards require. We’re grateful to Senators Hoeven and Cramer, Congressman Armstrong and our fellow Industrial Commission members, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring, for their determined efforts to block this unfair and arbitrary limitation on Bakken crude. Today’s action supports U.S. energy security and is a much-needed win for North Dakota oil producers, who need access to the West Coast market, especially as they deal with the dual challenges of a global oil price war and slumping demand caused by the COVID-19 pandemic.”

Load comments