JULY 25, 2014
TRANSPORTATION UPDATE
PHMSA and FRA Issue Proposed New Rules Regarding the
Transport of Crude Oil and Ethanol by Rail and Seek Comments
Regarding Oil Spill Response Plans
The U.S. Department of Transportation (“USDOT”) recently took two steps to address the safe transport of crude
oil and ethanol by rail. First, it proposed new rules regarding the transportation of crude oil and ethanol by rail,
and the rail cars in which those commodities are shipped. Second, USDOT seeks comments on a proposal to
expand application of comprehensive Oil Spill Response Plans (“ORSPs”) to trains carrying large quantities of
these commodities.
On July 23, 2014, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), in coordination with
the Federal Railroad Administration (“FRA”), issued a Notice of Proposed Rulemaking regarding Enhanced
Tank Car Standards and Operational Controls for High-Hazard Flammable Trains (“NPRM”). The NPRM
contains three significant proposals: (1) new operational requirements for certain trains transporting a large
volume of Class 3 flammable liquids (which the rule refers to as “high-hazard flammable trains”); (2) changes in
tank car standards for “high-hazard flammable trains;” and (3) revision of the general requirements for offerors
to ensure proper classification and characterization of mined gases and liquids. See PHMSA Docket No. 20120082 (HM-251). PHMSA indicated that a primary impetus for the NPRM was the significant growth in rail
transport of large quantities of flammable liquids such as crude oil and ethanol, as well as recent incidents
involving trains transporting large volumes of flammable liquids. PHMSA cited recent derailments of unit trains
carrying crude oil in Casselton, N.D., Aliceville, AL, and in particular, the deadly derailment in Lac Mégantic,
Quebec, in July 2013.
PHMSA’s proposed rules establish requirements for “high-hazard flammable trains” (“HHFTs”), which the rule
defines as trains comprised of 20 or more carloads of a Class 3 flammable liquid. In practice, this rule is
expected primarily to affect unit train shipments of ethanol and crude oil and the rail carriers, tank car
manufacturers and owners and shippers involved in such shipments. The primary intent of the rulemaking “is to
propose revisions to the [Hazardous Materials Regulations (“HMR”)] that update and clarify the regulations to
prevent and mitigate the consequences of a train accident involving flammable liquids.”
The primary regulatory changes include:
•
New operational requirements for HHFTs: PHMSA proposes to enact rules requiring rail carriers to
make four changes to the operation of trains falling under the definition of an HHFT. First, rail carriers will
be required to perform a routing analysis that considers 27 safety and security factors for all HHFTs. The
proposed analysis for HHFTs is the same as the analysis currently required for trains carrying certain
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TRANSPORTATION UPDATE
Page 2
volumes of Toxic-by-Inhalation Chemicals (e.g., chlorine), and other highly hazardous materials, known as
“Key Trains.” Second, PHMSA proposes to codify the recent emergency order that required carriers to notify
State Emergency Response Commissions (“SERCs”) of the operation of trains containing one million gallons
or more of Bakken crude oil through their states. Third, PHMSA proposes that all HHFTs be restricted to a
speed of 50 mph. PHMSA requests comments on a proposal to further restrict HHFTs to 40 mph along the
entire route of movement, or in limited areas such as High-Threat Urban Areas, or areas with a population
over 100,000 (defined using municipal borders). Finally, rail carriers would be required to equip all HHFTs
with enhanced braking systems. PHMSA proposes that these trains be operated with electronically
controlled pneumatic brakes (“ECP”), a two-way end of train device (“EOT”), or distributed power (“DP”).
•
Changes to Tank Car Standards: PHMSA requests comments on three options for a new tank car design
for use in connection with crude oil and ethanol service. The proposed tank car design would replace the
DOT-111 Specification tank car commonly used for crude and ethanol transport. The new tank car, DOT
Specification 117, would be mandatory for tank cars constructed after October 1, 2015. The three options
PHMSA is considering are:
o
FRA and PHMSA Designed Car, or equivalent
o
AAR 2014 Tank Car, or equivalent
o
Jacketed CPC-1232, or equivalent
Each of the proposed options would be a 286,000 pound car constructed with normalized steel and
equipped with full-height, ½ inch thick head shields; reclosing pressure relief devices; minimum 11-gauge,
weather tight jackets; bottom outlet handles that can be removed or are designed to prevent unintended
actuation during a train accident; thermal protection capable of withstanding a 100-minute pool fire; top
fitting protection; and enhanced braking. The only differences among the three PHMSA options are the type
of enhanced braking (ECP, DP, or EOT devices) and the shell thickness. The CPC-1232 enhanced tank car
would require a shell thickness of 7/16 inch, while the PHMSA/FRA and AAR 2014 tank car designs provide
for a 9/16 inch minimum shell thickness.
PHMSA proposes that existing tank cars be retrofitted to meet the new tank car standards (except for top
fittings protection). Those cars not retrofitted would be retired, repurposed or operated under speed
restrictions of 40 mph (30 mph absent enhanced braking capabilities) for up to five years. PHSMA proposes
to phase out the DOT-111 tank car as follows:
Timeline for Continued Use of DOT Specification III Tank
Cars in HHFT Service
•
Packing Group
DOT 111 Not Authorized After
I
October 1, 2017
II
October 1, 2018
III
October 1, 2020
Classification and Characterization of Mined Gases and Liquids: PHMSA would require all
offerors and shippers of mined gases and liquids to comply with a written sampling and testing program that
would address (1) the frequency of sampling and testing; (2) sampling at various points along the supply
chain; (3) sampling methods that ensure a representative sample of the entire mixture; (4) testing methods
TRANSPORTATION UPDATE
Page 3
to enable complete analysis, classification, and characterization of material; (5) statistical justification for
sample frequencies; and (6) duplicate samples for quality assurance. Offerors would be required to certify
that such a program is in place, document the testing and provide information to DOT upon request.
In addition to the NPRM, PHMSA also issued an Advance Notice of Proposed Rulemaking (“ANPRM”) seeking
comment on potential revisions to its regulations that would expand the applicability of comprehensive ORSPs
to include HHFTs. PHMSA specifically seeks comment on the appropriate threshold volume of crude oil in a
train that would be required in order to trigger a comprehensive OSRP.
Finally, USDOT issued an update regarding “Operation Safe Delivery,” which included “Operation
Classification,” an investigation into the proper classification of crude oil produced from the Bakken Shale
Formation. The investigation found that “crude oil analyzed from the Bakken region displayed characteristics
consistent with those of a Class 3 flammable liquid, PG I or II, with a predominance to PG 1, the most dangerous
class of Class 3 flammable liquids.” The report concludes that Bakken crude oil has a higher degree of volatility
and therefore presents “an increased risk of a significant incident.” USDOT intends to continue its sampling and
analysis of Bakken crude oil through the summer and fall of 2014.
PHMSA will accept public comments on both the NPRM and the ANPRM for 60 days from the date of
publication in the Federal Register. (The NPRM and ANPRM have not yet been published as of the date of this
update, but they will likely be published very soon.).
If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work or
Paul Moates
Partner
[email protected]
+1.202.736.8175
Ray Atkins
Partner
[email protected]
+1.202.736.8889
Terry Hynes
Senior Counsel
[email protected]
+1.202.736.8198
Hanna Chouest
Associate
[email protected]
+1.202.736.8395
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