DOT Modifies Latest Crude Oil Emergency Order

Last week the Department of Transportation modified an emergency order that they issued last month concerning the shipment of crude oil by train. The new version of the order requires that (pg 16):

1) Persons covered by this Amended Order shall ensure that prior to offering bulk quantities of UN 1267, petroleum crude oil, Class 3, into transportation in commerce by rail in tank cars, such petroleum crude oil is properly tested and classed in accordance with the requirements of 49 CFR parts 172 and 173. For purposes of this Amended Order, testing must have been conducted within the reasonable, recent past to determine flash point and boiling point in order to assign a proper PG.

2) Persons covered by this Amended Order shall ensure that shipments by rail of UN 1267, petroleum crude oil, Class 3, PG III are transported according to the requirements for UN 1267, petroleum crude oil, Class 3, PG I or PG II. PG III materials may continue to be described as PG III for the purposes of hazard communication.

3) Persons covered by this Amended Order who ordinarily offer petroleum crude oil for shipment as UN 1267, petroleum crude oil, Class 3, PG I, II, or III shall not reclassify such petroleum crude oil with the intent to circumvent the requirements of this Amended Order.

Testing Clarification

This new order provides some measure of clarification about the requirements to test the crude oil. The older order included the phrase: “conducted with sufficient frequency and quality” to describe the testing requirements. Not only has that language been removed, but additional explanation of the new phrase “testing must have been conducted within the reasonable, recent past” has been provided.

The order explains that if “an offeror has existing test data that the offeror knows to a reasonable degree of certainty is representative and continues to be representative of the petroleum crude oil to be offered for shipment by rail, the offeror may rely on that test data”. It then goes on to say that “the offeror must continue to test with sufficient frequency to ensure data regarding the characteristics of the petroleum crude oil subsequently offered for shipment remain accurate and current”.

The order specifically does not require testing of every carload. Instead it sets a standard that the “offeror must determine when it has sufficient data available to reliably classify the characteristics of petroleum crude oil that it intends to offer for bulk shipment by rail and must ensure that the data remains representative of the petroleum crude oil over time”.

PG III Packaging Still Disallowed

This order continues to disallow the use of packagings (rail cars) that were considered adequate for the shipment of low flamability crude oil (Packing Group III). The new order does clarify that the shipping papers can still use the PG III designation in the proper shipping name for ‘hazard communications’ purposes.

No Reclassifying Petroleum Crude Oil

A completely new requirement was added to this version of the order. It now specifically prohibits anyone that “ordinarily offer(s) petroleum crude oil for shipment as UN 1267, petroleum crude oil, Class 3, PG I, II, or III” from using some other classification to get around the PG III requirements set forth in the order.

I would think that somewhere someone from DOT caught someone doing just this, but there is no mention of that happening in the justification for this order. I would have thought that if DOT inspectors did detect something like this, particularly with Bakken Crude, they would have cited the company and publicly posted it. Even if the penalty was overturned later by a court (which probably would have happened, depending on how well the shipper had their justification for the reclassification prepared), the citation and the associated Notice of Proposed Violation would have had an immediate impact on the actions of others in the industry considering such reclassification actions.

Simi-Public Emergency Order

This order was issued last week without any real public fanfare. It certainly was not published in the Federal Register and even finding on the DOT site required going back and looking at the corrected press release for the earlier emergency order. I’m not sure why DOT is being so hush-hush about the whole thing, especially with the politicians screaming for immediate action.