On May 2, 2014, the U.S. Department of Transportation (USDOT) announced that three oil and gas companies voluntarily provided testing data on the crude oil that they ship from North Dakota’s Bakken Shale. This data was supplied in response to the USDOT’s call for action in January 2014, asking that oil companies, shippers, railroads, and industry stakeholders focus on ways to improve accident prevention and mitigation.

The USDOT’s announcement follows months of evaluation and discussions relating to recent train derailments of tanker cars carrying Bakken crude oil, including incidents in Minnesota, Maryland, Pennsylvania, North Dakota, and at three sites in Canada, including Lac-Mégantic (where 47 people were killed). Since the Lac-Mégantic accident, both Canadian and U.S. agencies have urged rail safety and have issued several alerts and rules regarding the shipping of crude oil.

  • On September 6, 2013, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a proposed rule concerning “Hazardous Materials: Rail Petitions and Recommendations to Improve the Safety of Railroad Tank Car Transportation (RRR).” This proposed rule imposes requirements for DOT Specification 111 tank cars used to transport Packing Group (PG) I and II hazardous materials.
  • In November 2013, PHMSA and the Federal Railroad Administration (FRA) issued a joint safety alert to reinforce “the importance of proper characterization, classification, and selection” of the hazardous materials being transported. PHMSA issued a safety alert on January 2, 2014, “to notify the general public, emergency responders, and shippers and carriers that recent derailments and resulting fires indicate that the type of crude oil being transported from the Bakken region may be more flammable than traditional heavy crude oil.”
  • On February 21, 2014, the USDOT and the Association of American Railroads (AAR) announced a rail safety initiative to institute new voluntary operating practices for moving crude oil by rails. 
  • On February 25, 2014, the U.S. Department of Transportation (DOT) issued an emergency order requiring rail shippers of crude oil to test the crude’s makeup before shipping it and to classify the crude as Packing Group I (high danger) or Packing Group II (medium danger) hazardous material until further notice.
  • In April 2014, Canada’s Ministry of Transport issued Protective Direction No. 34 requiring the immediate phase out of the least crash-resistant DOT-111 tank cars from dangerous goods service. Along with Protective Direction, the Ministry issued an Emergency Directive and a Ministerial Order outlining further requirements, including maximum speeds for trains carrying one or more cars of crude oil and ordering a risk assessment for each train route.

With the dramatic increase of shipments of crude oil by rail (from 9,500 carloads in 2008 to more than 400,000 carloads in 2013, according to the AAR), there will undoubtedly be more safety and security regulations, orders and directives to protect the public and the environment.

For additional information on the transportation of crude oil by rail, click here and here.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright’s Energy Practice Group.