March 01, 2016

Up Around the Bend: The Next Generation of Crude-by-Rail Legal Issues

Sean T. Dixon

“In the face of continued uncertainty about the prospects for additional pipeline capacity, and as a quicker, more flexible alternative to new pipeline projects, North American crude oil producers are increasingly turning to rail as a means of transporting crude supplies to U.S. markets.” Congressional Research Service, Report R43390: U.S. Rail Transportation of Crude Oil: Background and Issues for Congress (Dec. 4, 2014), (CRS Report). Over the past seven years, the transport of crude oil over railroads (crude-by-rail or CBR) has risen sharply—an estimated fifty-fold increase from 9,500 tank car loads of oil in 2008 to 493,126 loads in 2014. Much of the growth in oil traffic has originated in the tight oil (also known as shale oil) fields of the Bakken formation in the Great Plains, the heavy oil (also known as tar sands) deposits in Canada, and the shale oil fields in Texas and the Rocky Mountains. This oil is bound largely for refineries along the nation’s coastlines. In some cases, CBR oil is exported by way of tanker vessels of ocean-going barges.

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