The United States Federal Railroad Administration (FRA) announced in a July 29 letter to the American Petroleum Institute that it is investigating the safety of transporting crude oil by rail, citing potential safety issues related to improper classification of crude oil being shipped by rail, the determination and selection of proper tank car packaging, and the overloading of tank cars.

The investigation was announced in the wake of a recent accident in which parked 72-car train with crude oil from North Dakota’s Bakken derailed and exploded in the town of Lac-Megantic in Quebec, killing 47 people. The incident thrust into national and international focus the rapidly expanding practice of shipping crude oil by rail from North Dakota and Texas due to the lack of pipeline infrastructure as the Keystone XL pipeline awaits approval from the United States State Department.

Among the FRA’s specific concerns is an increasing frequency of severe corrosion to the internal surfaces, valves and fittings of tank cars due to the failure to properly identify and equip for the presence of corrosive elements and compounds at loading. The FRA cited contamination of the transported oil with hydraulic fracturing chemicals as a potential cause. Demonstrating another misclassification issue, the FRA states that, in one case, it found that a company was shipping flammable crude in a tank car that was not designed for flammable material.

Accordingly, the FRA recommends that shippers “evaluate their processes for testing, classifying and packaging the crude oil” that they transport to determine that shipments of crude are properly classified. To further its investigation, the FRA will be requesting analytical data supporting the current classification of shippers’ crude oil, and if unavailable, may compel testing through the Pipeline and Hazardous Materials Safety Administration’s Hazardous Materials testing program.

The need for more robust shipping oversight perceived by the FRA may foreshadow FRA and United States Department of Transportation rulemaking affecting both oil and gas shippers and producers. This blog will monitor any legislative or administrative developments as the investigation proceeds.

Further coverage of the FRA investigation can be located here and here.