North Dakota has taken a significant step toward making crude oil movement by railroad safer. The Industrial Commission this week approved a rule that gives the industry reasonable flexibility to achieve a reasonable volatility standard. In unanimously imposing the rule, the three commissioners sent the right message to the industry and to communities along the tracks.
Without getting into the high weeds of
crude oil characteristics and the methods employed to remove volatile substances from Bakken crude, it appears the commission has ordered a standard that will achieve the desired result: lowered volatility in oil moving through the state by rail. Companies will not be badgered about the specific methods used to reduce crude volatility. They will be regulated for results. That’s a win-win for the industry and for pragmatic regulation.
Not every company is happy with the rule, although many operators already have equipment in place to reduce crude volatility before it’s loaded for transport. For others, there will be significant costs to upgrade. And upgrade they should.
One argument from oil producers is that the volatility problem is the railroads’. Preventing derailments should be the focus, said Ron Ness, of the North Dakota Petroleum Council. He’s right, but the railroads’ responsibility does not diminish oil producers’ responsibility. It’s not one or the other. It should be a seamless regulatory regime that results in the safest possible system for treating and moving Bakken crude. Assigning blame to the other guy is not helpful or credible.
The Industrial Commission’s next challenge is enforcement. The new standards won’t go into effect until April, giving the industry time to tool up. That’s acceptable. But the rule will be meaningless if the state lacks the personnel and/or determination to make the rule stick. On that score, the jury is out.
Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board.
