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U.S. orders oil-by-rail shippers to test North Dakota cargo

Shippers moving crude oil by rail out of North Dakota must test the fuel for dangerous volatility before loading it onto the tracks, the U.S. Department of Transportation said Tuesday.

Last month, officials warned that fuel produced out of the Bakken Formation could be more flammable and explosion-prone than previously thought after a number of explosive derailments over the past year.

"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.

Tuesday's order, which follows other moves to improve safe handling over the past few months, also requires fuel classed 'crude oil' be carried in a "more robust tank car," officials said.

But hazardous material rules still permit any crude oil to be carried on DOT-111 tank cars - the workhorse of oil-by-rail shipments out of North Dakota that regulators say 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.

Sen. Heidi Heitkamp, D-N.D., issued a statement late Tuesday calling the announcement a good step forward but emphasizing the need to understand all of the facts before acting. PHMSA is working on a study the volatility of Bakken crude and the results have not yet been released.

“Additionally, some of the testing standards and requirements in the new rule aren’t very clear, and I hope the agency will work with industry to help clarify them so we can get this regulation right,” Heitkamp said. “Improving rail safety is absolutely needed, but we shouldn’t jump to conclusions about how to achieve it before receiving all the facts.”

Heitkamp and other officials have been calling for improvement to rail shipments of crude oil after the Dec. 30 derailment and explosion near Casselton, N.D.

On Wednesday, DOT officials will join oil and rail executives at a Congressional hearing to discuss safe shipments.

While shippers have always been required to attest to their cargo, industry officials have said testing of Bakken crude has been lax.

In June, an executive with Canadian refiner Irving Oil told an industry conference that sampling protocols for oil-by-rail deliveries were weak.

In July, a crude oil delivery bound for the Irving refinery derailed in the town of Lac Megantic, Quebec, killing 47. That mishap and two more fiery derailments of oil-by-rail from the Bakken sparked more regulatory scrutiny.

Forum News Service contributed to this report.

(Reporting by Patrick Rucker and Ayesha Rascoe; Editing by Peter Cooney and David Gregorio)