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U.S. DOT Issues Emergency Orders Regarding Shipments of Bakken Crude Oil

Beveridge & Diamond, P.C., May 8, 2014

In response to continued concerns over the safety of bulk rail shipments of Bakken crude oil, the U.S. Department of Transportation (“USDOT”) yesterday issued two emergency orders.  One is designed to promote better coordination between carriers and state emergency agencies.  The other strongly encourages carriers to take voluntary precautionary measures by selecting certain railroad tank cars for the shipment of these materials.

First, the Office of the Secretary ordered all railroad carriers that ship in a single train 1,000,000 or more gallons of Bakken crude oil to notify the State Emergency Response Commission in each state it operates of the expected movement of trains through counties in that state.  Emergency Order No. DOT-OST-2014-0067 takes effect immediately and requires carriers to provide specific information within 30 days, including:  (1) reasonable estimates of the number of trains, per week, expected to move through each county in the state; (2) identification of the type of oil being shipped, and (3) the expected routes over which the material will be transported.

The Secretary based this Emergency Order on a finding that an “unsafe condition or an unsafe practice is causing or otherwise constitutes an imminent hazard to the safe transportation of hazardous materials.”  He concluded that a series of recent accidents involving the shipment of Bakken crude being shipped by rail and subsequent USDOT investigations confirmed the presence of an “imminent hazard.”

Second, the Federal Railroad Administration (“FRA”) and the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) issued Safety Advisory No. 2014-01 urging carriers to “use the tank car designs with the highest level of integrity reasonably available within their fleet” for shipments of Bakken crude oil.  This is strictly a voluntary recommendation advising carriers to avoid the use of older tank cars “to the extent reasonably practicable.”  Like the Emergency Order, this action was based on the “demonstrated recent propensity for rail accidents” involving the rail shipment of Bakken crude oil and the sense that high demand for this resource throughout the U.S. could increase the risk of accidents.

These actions represent the latest in a series of aggressive regulatory and administrative steps taken by the USDOT to address safety concerns over the rail shipment of crude oil.  It is likely that both FRA and PHMSA will take additional actions to minimize perceived risks, both independently and in continued coordination with the railroad industry.

About Beveridge & Diamond

Beveridge & Diamond helps companies in a wide range of industries ensure that the movement of products, raw materials, intermediates, wastes, and other materials is in accordance with the Hazardous Materials Regulations issued by the USDOT.  For more information on these agency orders and their expected impact on the shipments of crude oil resources, please contact Fred Wagner at fwagner@bdlaw.com or (202) 789-6041, Aaron Goldberg at agoldberg@bdlaw.com or (202) 789-6052, or Peter Schaumberg at pschaumberg@bdlaw.com or (202) 789-6043.

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