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Accidents spur U.S. to mandate tests of oil moving by train

By Patrick Rucker

WASHINGTON (Reuters) - U.S. regulators issued an emergency order on Tuesday requiring oil from North Dakota being loaded onto trains to be tested and properly labeled to reflect its volatile nature after a series of explosive train derailments over the past year.

U.S. Department of Transportation warned last month tha fuel produced out of the North Dakota's Bakken region could be more flammable and explosion-prone than previously thought.

"If you intend to move crude oil by rail, then you must test and classify the material appropriately," Department of Transportation Secretary Anthony Foxx said in a statement.

Hazardous material rules still permit any crude oil to be carried on older DOT-111 tank cars that make up the majority of the crude-by-rail fleet. Regulators say that older DOT-111s, which have been involved in recent derailments, are prone to puncture during accidents.

Officials have acknowledged that improvements are needed to the national tank car fleet and they are considering new safety standards, but improved tank car standards were not addressed in Tuesday's order.

The order states that all crude oil shipments must be labeled in Packing Group 1 or 2, not the less strict Group 3, the DOT said.

On Wednesday, DOT officials will join oil and rail executives at a Congressional hearing to discuss safe shipments, following accidents including a derailment in July in the Canadian town of Lac Megantic that killed 47. That mishap and two more fiery derailments of oil-by-rail from the Bakken have sparked more regulatory scrutiny.

Following the Canadian rail disaster, the DOT began an operation it dubbed "Bakken Blitz," which includes spot inspection of oil shipments aboard trains in North Dakota.

Earlier this month, the DOT said it had fined three oil companies for wrongly classifying crude shipments from the Bakken.

While shippers have always been required to attest to their cargo, industry officials have said testing of Bakken crude has been lax. U.S. refiners have raised issues about the sampling of crude oil being delivered from the Bakken.

Phillips 66, the nation's third-largest refiner that moves inland crude via rail to its New Jersey refinery and aims to do the same at its Washington state refinery late this year, said the company already labels all crude shipments as Packing Group 1, the designation for the most dangerous cargoes.

Also, all crude tank cars bound for Phillips 66 plants are inspected at each loading and unloading facility to ensure compliant shipments, spokeswoman Monica Silva said.

(Reporting by Patrick Rucker in Washington; Additional reporting by Ayesha Rascoe in Washington, Kristen Hays in Houston and Edward McAllister in New York; Editing by Peter Cooney, David Gregorio and Lisa Shumaker)

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