Railroad to Texas officials: Releasing oil train reports could enable insider trading

By Curtis Tate
McClatchy Washington Bureau
Originally published Jan. 7, 2015

In the latest attempt to keep states from publicly releasing information about crude oil trains, one railroad argues that the disclosures could facilitate insider trading.

In a Dec. 29 letter to Texas Attorney General Greg Abbott, Kansas City Southern wrote that the state “should not disclose information to individuals that creates the potential for investment activity by individuals having non-public information.”

Other railroads had attempted to block the release of oil train information by arguing it would pose a security risk or compromise trade secrets. McClatchy obtained such data, however, from 22 states between June and December.

The Texas Department of Public Safety referred McClatchy’s July 9 open records request to the state attorney general’s office. Abbott was elected governor in November and will be sworn in later this month, leaving the decision to his successor, Ken Paxton.

In a Dec. 10 letter to McClatchy, the department said, “we believe some or all of the records may be excepted from required public disclosure at this time.”

In its Dec. 29 letter, Kansas City Southern, based in Kansas City, Mo., wrote that the oil train reports are exempt from disclosure under the Texas Public Information Act section that applies to trade secrets and commercial or financial information.

But Missouri and Kansas shared a Kansas City Southern oil train report with McClatchy in September and December, respectively. The document shows the route of the trains through Missouri, Kansas, Oklahoma, Arkansas, Louisiana and Texas.

In the Aug. 22 letter to officials in Kansas and Missouri, the railroad said it planned to operate one to five oil trains a month between Kansas City and a terminal in Nederland, Texas, between Beaumont and Port Arthur.

In an emailed statement, Doniele Carlson, a spokeswoman for Kansas City Southern, said the company “joins the rest of the U.S. rail industry, numerous security experts and others in opposing making public the routing of certain trains for security and other confidentiality reasons as articulated in its letter to the Texas Attorney General.”

Last May, the U.S. Department of Transportation required railroads to notify state officials of large shipments of crude oil so emergency responders could be aware of how much was moving through their communities. The railroads asked states to keep the information confidential, but many determined that doing so would violate their open-records laws.

In October, the Federal Railroad Administration published guidance in the Federal Register that the oil train reports were neither commercially nor security sensitive.