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States must be warned of oil-by-rail cargoes, U.S. says

By Patrick Rucker

WASHINGTON (Reuters) - U.S. companies moving crude oil via rail must tell state officials when a cargo is moving across their regions, the U.S. Transportation Secretary said on Wednesday, the latest response to a string of fiery and sometimes deadly derailments.

Transportation Secretary Anthony Foxx, at a hearing of the Senate Commerce Committee, also said DOT-111 tank cars, the workhorse of the fast-growing oil-by-rail sector, should be avoided or reinforced wherever possible.

Officials have been under pressure to respond to a series of oil-by-rail mishaps in which tank cars derailed and then caught fire or exploded. The latest such incident was a week ago in Lynchburg, Virginia.

Shipments from North Dakota have come under particular scrutiny since the state's Bakken energy patch has been the origin of many of the doomed trains.

"We have been pushing as hard as we can and as fast as we can to respond to this emerging set of issues around the transport of Bakken oil," Foxx said on Wednesday.

Officials have warned that Bakken fuel could be more volatile than crude oil produced elsewhere. In February, the Department of Transportation ordered shippers to more thoroughly test their shipments.

Wednesday's move, though, is the first time that federal officials have asked the oil industry to answer to communities that have complained that they know little about cargoes snaking through their cities and towns.

Each railroad operating trains containing more than one million gallons of Bakken crude - about 35 tank cars' worth - would need to provide notification about which counties such trains would travel through.

The separate safety alert discouraging the use of the older DOT-111 tank cars lacks the force of an order, but that kind of "jawboning" has been used in the past as a way to reach industry with official concerns.

The alert may also push the oil-by-rail sector to begin retiring older tank cars while a comprehensive rule works its way through a bureaucratic process that could take several months. A proposal on tank car standards is now under review at the White House's Office of Management and Budget.

Tom Simpson, president of the Railway Supply Institute, which represents tank car owners, said Wednesday's steps did not go far enough to get older tank cars off the tracks.

"We are frustrated that the secretary is taking these kinds of steps when we have a proposal that would begin immediately to remove the risk of moving crude and ethanol in the legacy cars," Simpson said.

But Senator Charles Schumer, who last week called on the DOT to require railroads to share information about hazardous cargoes, said the move was a good first step.

"These outdated tank cars are ticking time bombs, and local first responders need to know when they are coming and what they are carrying so they can be adequately prepared for any scenario," said Schumer, a New York Democrat.

(Additional reporting by Eric Beech in Washington and Edward McAllister in New York; Editing by Ros Krasny, Sandra Maler and Ken Wills)

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