Three independent companies that transport North Dakota crude oil by train have not been properly labeling the oil as it goes en route from cargo tanks to the actual train, investigators for the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) said Tuesday.
PHMSA has proposed a total of $93,000 in combined fines for Hess Corporation, Whiting Oil and Gas Corporation, and Marathon Oil Company for not using proper “hazard classes” to label crude oil. PHMSA said the offense “could result in material being shipped in containers that are not designed to safely store it.”
Though a $31,000 is probably not a huge dent for a company like Hess, which in 2012 made $37.6 million in revenue and $12.7 million in gross profits, U.S. Department of Transportation Secretary Anthony Foxx is hoping the fines will represent a larger message for the oil industry.
“The fines we are proposing today should send a message to everyone involved in the shipment of crude oil: You must test and classify this material properly if you want to use our transportation system to ship it,” Foxx said in a statement.
Concerns about the safety of transporting crude by rail have ballooned in the last year, most infamously characterized by the deadly derailment in Lac-Mégantic, Quebec this past summer. The derailment caused a 1.5 million gallon oil spill, and an explosion which killed 47 people. Federal regulators recently reported that more oil has spilled from rail cars in 2013 than in the last four decades combined, which is in line with how much the practice itself has increased.
PHMSA’s investigation is part of a larger study of the crude oil that comes from North Dakota’s Bakken shale, which regulators have warned could be especially flammable due to either particular properties of the oil or added chemicals from the fracking process used to extract it. Because of the Bakken, North Dakota is currently at the height of America’s fossil fuel boom, recently announcing record oil production of almost 1 million barrels per day, or approximately 5 percent of total U.S. oil consumption. 90 percent of that oil is transported on rails, according to the state’s Mineral Resources Department.
After PHMSA performed selected testing of the cargo tanks that were carrying crude to the trains, it found that eleven of the eighteen tanks were labeled incorrectly.
“These initial findings remind us how important it is to follow the hazardous materials regulations and to do it in the proper sequence,” PHMSA Administrator Cynthia Quarterman said of the fines. “The process begins by testing, characterizing and then properly classifying the hazard and putting it in the kind of container that will offer the highest level of safety.”