UPDATE 2-Oil industry balks at sharing crucial rail data -U.S. regulator

Tue Apr 1, 2014 5:37pm EDT

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(Recasts with background on Lac-Megantic explosion and other fiery crashes)

By Patrick Rucker

WASHINGTON, April 1 (Reuters) - The U.S. oil industry is not sharing important data on oil-by-rail shipments that may help prevent accidents, a top regulator said on Tuesday, adding pressure to an industry already being scrutinized in the wake of several fiery derailments.

Regulators have sought help from oil shippers and others as they seek answers about why derailments of some trains carrying crude oil have also led to dramatic explosions.

Most notably a 74-car runaway train carrying crude oil from North Dakota's Bakken region detonated in Lac-Megantic, Quebec, last July, killing 47 people.

The same type of Bakken crude has been involved in several other fiery derailments, and officials have warned that the fuel might be particularly volatile.

Cynthia Quarterman, chief of the Department of Transportation's Pipeline and Hazardous Materials Safety Administration, or PHMSA, specifically cited the American Petroleum Institute, the industry's top lobbying group, for not keeping its promise to share data about oil-by-rail shipments.

"More than two months ago, we received assurances from industry that the safe transport of crude oil across the country was a top priority and, to that end, API would begin sharing important testing data," she said in a statement.

"To date, that data has not been shared."

Eric Wohlschlegel, an API spokesman, said the trade group was sharing information with regulators, but he did not provide details.

Lawmakers in Washington as well as state and local officials have turned to the Department of Transportation to get precise information about the possible dangers of moving oil by rail.

Tuesday's statement from Quarterman, who is due to testify to a transportation panel on Capitol Hill on Wednesday, is likely to add pressure on the industry.

In February, Quarterman's agency fined three shippers for failing to classify oil-by-rail cargo properly and she oversees ongoing spot inspections of safety procedures in North Dakota.

"That we're even having this debate about access to information only heightens our concerns about the safety of crude oil trains," said Basil Seggos, a deputy secretary for the environment to New York Governor Andrew Cuomo.

A large share of Bakken fuel moves through New York on its way to refineries, and state officials are scrutinizing the work of refiners and shippers.

DISPUTED LETTER

The spat between API and regulators may boil down to the meaning of a January letter in which the oil and rail sectors promised to make hauling oil on the tracks safer, several industry sources said.

The American Association of Railroads, a voice for the industry, ordered slower speeds for some oil cargo, a new routing protocol and other steps before March as agreed in the letter.

But officials say API has done practically nothing to fulfill its promise to "share expertise and testing information" with officials or collaborate with PHMSA "on improving its analysis of crude oil characteristics" by the end of February.

"If there is data Administrator Quarterman or anyone else at DOT thinks needs to be shared that is not, please let us know so we can provide it," API's Wohlschlegel said.

Industry lawyers say API might have over-promised by saying it could quickly gather data from its members.

"They seem to have created their own problem by agreeing a deadline and getting the regulator's hopes up for something concrete," said Lawrence Bierlein, a veteran transportation lawyer in Washington.

While it might be politically awkward, Bierlein said, it might be time for API to have a frank conversation with its regulator about what it can deliver.

It can be a challenge for trade groups to present individual companies' data to regulators but it can be done, lawyers said.

The American Fuel & Petrochemical Manufactures, the voice for the refining sector, in February told Quarterman that to sidestep any legal perils it would use a third-party contractor to collect industry information about shipments.

"While this may seem like a cumbersome process, due to the confidential nature information PHMSA requested, this layered approach is necessary," association President Charles Drevna wrote.

Gathering data at arm's length, the trade group wrote, should allow it to satisfy regulators without running afoul of the law.

The running dispute between regulators and the oil industry is likely to draw more scrutiny from lawmakers.

Democratic Senator Charles Schumer of New York said on Tuesday that the lack of industry data should weigh on the minds of officials considering the risks of oil-by-rail shipments.

"This lack of cooperation from the energy industry confirms all of our worst fears of their failure to prioritize safety," said Schumer. (Reporting by Patrick Rucker; Editing by Ros Krasny, Jim Loney, Peter Cooney and Lisa Shumaker)

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