August 5, 2014
Practice Groups:
Public Policy and
Law; Environmental,
Land and Natural
Resources; Energy,
Oil & Gas;
Infrastructure/
Transportation;
Global Government
Solutions
Rules for Rail Transport of Crude Oil and Ethanol
Still a Work in Progress
By: Pamela J. Garvie, Cliff L. Rothenstein, David J. Raphael, and Stephen J. Matzura
In response to rail accidents over the past several years involving crude oil and ethanol, the
U.S. Department of Transportation (“DOT”) has been working with industry stakeholders and
the National Transportation Safety Board (“NTSB”) to improve safety standards for
transporting hazardous materials by rail. The most significant step to date is the notice of
proposed rulemaking released on July 23, 2014, by the Pipeline and Hazardous Materials
Safety Administration (“PHMSA”), called the “Enhanced Tank Car Standards and
Operational Controls for High-Hazard Flammable Trains” (the “Rules”). 1 The Rules propose
to revise the Hazardous Materials Regulations (“HMR”) 2 by adding two major components:
•
Additional safety requirements for trains carrying 20 or more carloads of Class 3
flammable liquids, particularly crude oil and ethanol (called “high-hazard flammable
trains” or “HHFTs”); and
•
A sampling and testing program for classification and characterization of mined
gases and liquids that are offered for all types of transportation (not just by rail).
The three primary safety requirements for HHFTs include: (1) a new specification for rail tank
cars, (2) enhanced brake signal propagation systems, and (3) reduced operating speeds.
The new specification for tank cars, called “DOT Specification 117” (“DOT-117”), could be
satisfied by meeting one of three different options that PHMSA proposed. The only
differences between the three options relate to shell thickness, top fittings, and braking.
Most stakeholders will agree that an improved specification is needed, although the features
of each proposed option will likely provoke further commentary.
All stakeholders should be aware that braking and speed requirements could have a ripple
effect on railroad capacity and performance across the rail network. The Rules would set the
maximum speed for HHFTs at 50 mph. But PHMSA is considering three different options to
restrict the maximum speed to 40 mph for HHFTs that transport flammable liquids in tank
cars that do not meet DOT-117. The most restrictive option limits such trains to 40 mph in all
areas, at all times. PHMSA is also considering a further restriction to 30 mph in all areas, at
all times, for HFFTs that do not meet proposed braking standards. These restrictions have
the potential to adversely impact the entire rail network, because all trains, not just HHFTs,
would be forced to operate at lower speeds. In turn, this would reduce track capacity,
lengthen freight and passenger train schedules, and increase railroad costs.
The Rules will also impact other stakeholders who depend on railroads, such as exploration
and production (“E&P”) companies that extract oil and gas, shippers, and manufacturers that
construct and retrofit tank cars to meet industry standards. The Rules have many moving
parts. They are complicated and ambiguous, likely due to PHMSA’s efforts to provide
stakeholders with flexibility and options for further comment. The interrelated pieces should
1
Rules for Rail Transport of Crude Oil and Ethanol Still a
Work in Progress
be streamlined to fit together more clearly. Comments to the Rules must be received within
60 days from publication in the Federal Register.
Additional Safety Requirements for High-Hazard Flammable Trains
In February 2014, the Association of American Railroads (“AAR”) and its members
voluntarily agreed to implement safety measures for “Key Crude Oil Trains” (the “Voluntary
Standards”). 3 The Rules expand on a number of these requirements and, using the
threshold definition for “HHFT,” apply them to trains carrying high volumes of both crude oil
and ethanol.
Definition of HHFT. The proposed definition of HHFT is “a single train carrying 20 or more
carloads of a Class 3 flammable liquid.” This definition is broader than the definition of “Key
Crude Oil Trains” used in the Voluntary Standards because it includes any Class 3
flammable liquid (e.g., ethanol, gasoline, and acetone), as opposed to just crude oil. 4
PHMSA and the Federal Railroad Administration (“FRA”) are considering whether the
definition of HHFT should also incorporate Division 2.1 flammable gas and combustible
liquids. As proposed, PHMSA expects that the HHFT definition will only cover crude oil and
ethanol because they are the only known Class 3 flammable liquids transported in single
trains carrying 20 or more carloads of such liquids. The additional safety standards will not
apply to trains that remain under the 20-car threshold, even if they carry crude oil and
ethanol.
The definition of HHFT is critical because it triggers the requirements described below,
including those related to:
•
Phase-out periods for DOT Specification 111 (“DOT-111”) tank cars, which have
typically been used to carry crude oil and ethanol, but are prone to failure in the
event of a derailment;
•
The new DOT-117 specification, performance standards, and retrofits;
•
Enhanced brake signal propagation systems;
•
Reduced operating speeds; and
•
Other safety measures, including route analysis and notification to state emergency
responders.
Phase-Out of DOT-111 Tank Cars for HHFT Service. The Rules propose to phase out
existing DOT-111s “for use in [HHFT] service” by October 2020. The phase-outs will
primarily affect manufacturers, purchasers, and lessors of tank cars. The timetable for the
phase-outs is “risk-based” because the applicable deadline depends on the packing group
(“PG”) of the materials. It reflects an effort to first phase out DOT-111s for transport of
materials posing the greatest hazard (PG I first, followed by PG II, and then PG III):
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Rules for Rail Transport of Crude Oil and Ethanol Still a
Work in Progress
Proposed phase-out timetable of DOT-111 tank cars for HHFT service
Packing Group I
(high hazard)
Packing Group II
(medium hazard)
Packing Group III
(low hazard)
October 1, 2017
October 1, 2018
October 1, 2020
In mid-July, environmental groups petitioned DOT to issue an emergency order within 30
days that immediately bans shipments of crude oil in legacy DOT-111s. As that petition
indicates, while industry stakeholders have generally voiced their support for enhancing
safety standards, establishing a consensus on the standards and a realistic timetable for
implementation is a different matter.
As a practical matter, use of DOT-111s for transport of ethanol and crude oil in HHFTs would
be restricted by October 1, 2018, because ethanol is assigned to PG II and, typically, crude
oil is packaged as PG I or II. In response to the proposed timetable, stakeholders will need
to consider how to best utilize the aggregate fleet of approximately 72,000 DOT-111s used in
the United States. For example, they may choose to use DOT-111s to transport crude oil
and ethanol in smaller trains which do not meet the 20-car threshold for HHFTs. They may
repurpose DOT-111s to carry other types of materials. They may also retrofit DOT-111s to
meet the new DOT-117 standard described below. PHMSA estimates costs for retrofits to
be in excess of $30,000 per car.
DOT-117 Tank Cars. PHMSA proposed the new DOT-117 standard, as well as
corresponding performance standards to encourage design innovation in meeting the
equivalent of the DOT-117 standard. If a tank car meets the performance standards and is
adopted, it will be assigned to “DOT Specification 117P” (“DOT-117P”). Tank cars
manufactured for use in an HHFT after October 1, 2015 must meet either the DOT-117
standard or the DOT-117P performance standard.
The Rule also encourages retrofits of existing tank cars to be used for HHFT service,
including for legacy DOT-111s that are proposed to be phased out. Although the text of the
Rules is not clear, PHMSA indicated that the DOT-117P performance standards are intended
to apply to retrofits. Retrofits and innovative designs that rely on the DOT-117P performance
standards require FRA approval for the design, testing, and modeling results before
construction begins. Other than the approval requirement, the DOT-117 and DOT-117P
standards are virtually the same within each of the three proposed options.5 For simplicity,
we refer to DOT-117 and DOT-117P as “DOT-117” below.
Three Options for DOT-117. Aware of the significant economic impact of the proposal for
new tank cars, PHMSA proposed three different options to meet the DOT-117 standard and
will consider comments on each of the options:
1. DOT-117 Option 1: PHMSA and FRA Designed Car. Option 1 is a new standard
proposed by PHMSA and FRA that, most notably, would require each tank car to be
equipped with Electronic Controlled Pneumatic (“ECP”) braking systems.
2. DOT-117 Option 2: AAR 2014 Recommended Car. Option 2 is based on AAR’s
recommended new standard and, therefore, might be in line with the expectations of
many stakeholders.
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Rules for Rail Transport of Crude Oil and Ethanol Still a
Work in Progress
3. DOT-117 Option 3: Enhanced Jacketed CPC-1232. Option 3 alters the current
standard for CPC-1232 tank cars by, among other things, improving the bottom outlet
handle and pressure relief valve, requiring a certain steel type, and reinforcing the
car with a jacket. PHMSA assumes this type of tank car would be built for HFFT
service, absent any regulation, based on voluntary efforts by the regulated
community to date.
It is unclear whether PHMSA will adopt more than one option in the final rule.
Standards Common to All Three DOT-117 Options. All three options for DOT-117 focus
on improving the tank shell and head to minimize punctures; adding thermal protection to
prevent intact tanks from failing during exposure to fires; enhancing top fittings to survive
during accidents; and providing bottom outlet protection so that the valve does not open
during an accident. Each of the three options has identical requirements with respect to the
following:
•
Head Shield: The full-height head shield must be a minimum of 1/2 inch thick.
•
Tank Material: The material used must be TC-128 Grade B, normalized steel.
•
Thermal Protection System: The thermal protection system must be designed to
prevent a release of contents from the tank car, except release through the pressure
relief device, when subjected to a pool fire for 100 minutes or a torch fire for 30
minutes (in accordance with 49 C.F.R. § 179.18).
•
Pressure Relief Valve: A reclosing pressure relief device is required in accordance
with 49 C.F.R. § 173.31 (as part of the thermal protection system).
•
Jacket: A minimum of 11-gauge thickness, weather-tight jacket constructed from
A1011 steel or equivalent must cover the entire thermal protection system.
•
Bottom Outlet Handle: The bottom outlet handle must be removed prior to train
movement or designed to prevent unintended actuation during a train accident.
•
Gross Rail Load (“GRL”): The GRL is up to 286,000 pounds.
These standards are common to all three options and are less likely to be points of
contention moving forward.
Differences between the Three DOT-117 Options. Commentary in response to the Rules
will likely focus on the differences between the three proposed DOT-117 options. The only
differences between the three options relate to shell thickness, top fittings, and braking:
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Rules for Rail Transport of Crude Oil and Ethanol Still a
Work in Progress
Differences between DOT-117 options
DOT-117 Option 1
DOT-117 Option 2
DOT-117 Option 3
9/16 inch
9/16 inch
7/16 inch
Protection system
and a nozzle capable
of sustaining, without
failure, a rollover at 9
mph based on certain
criteria
AAR Specifications for
Tank Cars (appendix
E, paragraph 10.2.1)
AAR Specifications
for Tank Cars
(appendix E,
paragraph 10.2.1)
ECP brakes for tank
cars manufactured
for use in an HHFT
after October 1, 2015
Either two-way end
of train (“EOT”) or
distributed power
(“DP”) braking
systems
Either EOT or DP
braking systems
Shell Thickness
Top Fittings
6
Braking
Braking. As indicated above, DOT-117 Options 2 and 3 mandate EOT or DP systems.
Generally, rail carriers already use EOT or DP systems and, therefore, comply with the
proposed minimum braking requirements.7 In contrast, Option 1 requires installation of ECP
brakes for tank cars manufactured for use in an HHFT after October 1, 2015. After October
1, 2015, HHFTs “comprised entirely” of DOT-117s meeting Option 1 (except for required
buffer cars) must be operated in ECP brake mode (i.e., the entire train must use an ECP
brake system). The Rules do not require ECP brake mode for HHFTs that include non-DOT117 cars.
Reduced Operating Speeds. The Rules set a 50-mph maximum speed limit for HHFTs at
all times, in all areas. This is consistent with the limit in the Voluntary Standards for Key
Crude Oil Trains. In addition, PHMSA is considering the following three options to further
restrict the maximum speed to 40 mph for HHFTs that use at least one non-DOT-117 car to
carry any “flammable liquid” (not just ethanol or crude oil):
Proposed speed-limit options for HHFTs using at least one non-DOT-117 car to carry
flammable liquid
40-mph Option 1
40-mph Option 2
40-mph Option 3
All times, in all areas
Only while the HHFT operates
in an area with a population
of 100,000-plus people (based
on municipal boundaries and
census data)
Only while the HHFT travels
within the limits of an any
high-threat urban area
The 40-mph options do not apply to HHFTs which transport all flammable liquids in DOT117-compliant tank cars. PHMSA will likely select just one of these options, which should
not be confused with the DOT-117 options for tank cars described above. 40-mph Option 1
applies in all areas and, therefore, has the greatest potential to cause backlogs in the rail
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Rules for Rail Transport of Crude Oil and Ethanol Still a
Work in Progress
network. In contrast, the 40-mph Options 2 and 3 would require HHFTs to slow down to 40
mph through certain high-risk areas. The 40-mph Option 3 is the most similar to the 40-mph
speed restriction in the Voluntary Standards for Key Crude Oil Trains.
Additionally, PHMSA has proposed a further restriction to 30 mph in all areas, at all times, for
HFFTs that do not meet the braking standards described above.
Other Safety Standards. In addition to the above, the Rules require rail carriers operating
HHFTs to comply with existing routing regulations that currently apply only to certain
security-sensitive hazardous materials, such as those that are radioactive or poisonous by
inhalation. Rail carriers previously agreed to Voluntary Standards which, by July 1, 2014,
required them to apply industry protocols to meet certain components of the existing routeanalysis requirements for Key Crude Oil Trains. The Rules expand on the Voluntary
Standards by proposing to amend 49 C.F.R. § 172.820 to apply it, in its entirety, to all
HHFTs. Notably, this means that FRA may review and scrutinize the route analysis and
require rail carriers to resolve deficiencies or use an alternative route. 8
The Rules also propose to codify and expand upon a requirement to notify State Emergency
Response Commissions (“SERCs”) that was included in a prior DOT emergency order. 9 The
Rules trigger the notification requirement where a single HHFT carries 1,000,000 gallons or
more of UN 1267 Petroleum crude oil, Class 3, that is sourced from the Bakken shale
formation in the Williston Basin (i.e., approximately 35 cars of Bakken crude oil). 10 The
Rules propose that the notification must be made within 30 days of the effective date of the
final version of the rule. The contents of the notifications relate to the amount of traffic
passing through counties and are the same as those in DOT’s emergency order. Although
rail carriers may have already provided notice to comply with the emergency order, both the
order and the proposed Rules require updates prior to any “material changes” in the
estimated volumes or frequencies of train traffic through a county. The text of the Rules
does not directly answer several important issues, some of which were addressed in the
DOT order and a guidance document, including for example:
•
The definition of “material change,” which triggers the requirement to provide an
update;
•
Whether rail carriers may use Fusion Centers for the notification;
•
Whether notice should be provided to Tribal Emergency Response Commissions;
•
Whether information submitted should be treated as confidential or “Sensitive
Security Information”; and
•
The procedures for distinguishing Bakken crude oil from other types of crude oil in
shipments.
Program for Classification and Characterization of Mined Gases and Liquids
The Rules require offerors to implement a sampling and testing program for “mined gases
and liquids.” PHMSA did not propose a definition for “mined gases and liquids,” but the
preamble suggests that the term includes natural gas condensate or liquid. The program
must meet minimum standards, including selecting sampling points and frequencies that
consider the potential variability of the material. The Rules require the offeror to certify
compliance with this program when mined gases and liquids are offered for shipment. 11 This
6
Rules for Rail Transport of Crude Oil and Ethanol Still a
Work in Progress
requirement will affect handlers of extracted oil and gas that offer it for any mode of shipment
(e.g., highway, rail, water, etc.). 12 The offeror responsible for implementing the program
must do the following:
•
Document the program in writing;
•
Review the program at least annually;
•
Revise and update the program as needed to reflect changing circumstances;
•
Retain the most recent version for as long as it remains in effect;
•
Make the most recent version or its relevant portions available to the employees
responsible for implementing it;
•
Notify the employees responsible for implementation of updates or revisions to the
program;
•
Make the program documentation accessible from the principal place of business (at
least in electronic form); and
•
Make the program documentation available to DOT upon reasonable request (i.e.,
reasonable in time and location).
Conclusions and Additional Considerations
The proposed Rules represent a collaborative effort between federal agencies, stakeholders,
and the public to address a recognized safety concern. More of the same should be
expected as PHMSA finalizes the rulemaking, particularly because PHMSA set forth several
options for potential regulation and is expecting meaningful comments.
Among the issues that bear watching is what, if anything, happens to PHMSA’s proposal to
further limit trains to a maximum of 30 mph unless they meet the proposed Rules’ braking
requirements. This is an area of great concern to the railroad industry because a 30-mph
restriction on HHFTs would impact the entire rail network. The restriction would force all
trains to operate at slower speeds, including those carrying grain, autos, merchandise, and
other essential commodities, as well as passengers. The industry estimates that a blanket
requirement would reduce railroad track capacity by roughly 7 percent. Such a reduction
would seriously harm shippers and the economy. Moreover, the reduction in capacity
coupled with slower service would force many shippers to shift to trucks at a time when the
highway system already is overcrowded and struggling to keep up with maintenance costs.
The Rules merely scratch the surface of potential regulation related to transport of hazardous
materials. As PHMSA finalizes the rulemaking, stakeholders should not lose sight of other,
related potential regulations and issues, including for example those described below.
Oil Spill Response Plans. On the same day the Rules were announced, PHMSA released
an advanced notice of proposed rulemaking, titled “Oil Spill Response Plans for High-Hazard
Flammable Trains.” This notice solicits comments on a proposal to require comprehensive
oil spill response plans for HHFTs based on thresholds of crude oil transported by the
HHFTs. PHMSA is seeking comment on the appropriate threshold. Comments must be
received within 60 days from publication in the Federal Register.
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Rules for Rail Transport of Crude Oil and Ethanol Still a
Work in Progress
Operating Procedures for Securement. In the preamble of the Rules, PHMSA noted that it
is seeking comment on a forthcoming notice of proposed rulemaking that would set
additional operating procedures for hazardous materials transport related to securement,
attendance, crew size, and security. PHMSA will use recommendations from the Railroad
Safety Advisory Committee to draft the proposed rulemaking.
State and Local Requirements. Stakeholders should be attentive to current state and local
actions and how states might respond to fill any perceived gaps in regulation. Additional
federal regulations, such as the Rules, may preempt standards at the state and local levels
pursuant to the Federal Railroad Safety Act and Hazardous Materials Transportation Act,
among other statutes.
Enforcement Actions related to Accidents. Because accidents happen, no matter how
stringent the regulation, stakeholders should be prepared to address enforcement issues.
This includes environmental enforcement actions under state and local laws, which are
generally not preempted by federal statutes.
International Law. PHMSA represents the United States with respect to the United Nations
Recommendations on the Transport of Dangerous Goods, which attempt to harmonize
regulation internationally. Stakeholders should consider whether Canada’s applicable
regulations are inconsistent with those in the United States and, if so, how they might be
harmonized in the future.
Authors:
Pamela J. Garvie
Partner
pamela.garvie@klgates.com
+1.202.661.3817
Cliff L. Rothenstein
Government Affairs Advisor
cliff.rothenstein@klgates.com
+1.202.778.9381
David J. Raphael
Partner
dave.raphael@klgates.com
+1.717.231.4574
Stephen J. Matzura
Associate
stephen.matzura@klgates.com
+1.717.231.5842
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Rules for Rail Transport of Crude Oil and Ethanol Still a
Work in Progress
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1
The pre-publication version of the Rules and a DOT summary are available at
http://www.dot.gov/briefing-room/us-dot-announces-comprehensive-proposed-rulemaking-safetransportation-crude-oil.
2
49 C.F.R. pts. 171-180.
3
The agreement is commemorated in a letter from DOT to AAR. Letter from Anthony R. Foxx, Secretary
of Transportation, to Edward R. Hamberger, AAR President and Chief Executive Officer (Feb. 21, 2014),
available at http://www.dot.gov/briefing-room/letter-association-american-railroads.
4
This definition is a variation of the broader term “Key Train” in AAR Circular No. OT-55-N, which
includes a train with “20 car loads or intermodal portable tank loads of any combination of hazardous
material.” AAR, Recommended Railroad Operating Practices for Transportation of Hazardous Materials,
Circular No. OT-55-N (Aug. 5, 2013), available at http://www.boe.aar.com/CPC-1258%20OT-55-N%2085-13.pdf.
5
The performance standards for meeting DOT-117P are virtually the same for each of the three respective
DOT-117 options. The standards for DOT-117P additionally specify a performance standard for puncture
resistance, including a minimum side impact speed and a minimum head impact speed when impacted by a
rigid 12-by-12-inch indenter with a weight of 286,000 pounds.
6
Top fittings are not required for retrofits of existing cars under any of the three options because, according
to PHMSA, the costs exceed the potential benefits. The existing cars may continue to rely on top-fittings
equipment that was installed when manufactured, but must otherwise meet DOT-117P.
7
Rail carriers that agreed to the Voluntary Standards would have installed either EOT or DP systems by
April 1, 2014.
8
49 C.F.R. §§ 172.820(f), 209.501.
9
On May 7, 2014, DOT issued an emergency order requiring rail carriers that transport 1,000,000 gallons
or more of Bakken crude oil in a single train (i.e., approximately 35 cars of Bakken crude oil) to provide
written notification within 30 days to the SERCs in each state where such trains are operated. U.S. DOT,
Emergency Restriction/Prohibition Order, Docket No. DOT-OST-2014-0067 (May 7, 2014), available at
http://www.dot.gov/briefing-room/emergency-order.
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Rules for Rail Transport of Crude Oil and Ethanol Still a
Work in Progress
10
The Williston Basin includes areas in North Dakota, South Dakota, Montana, Saskatchewan, and
Manitoba. PHMSA indicated that it could expand this requirement in its final rule to apply to crude oil
extracted from other locations.
11
See 49 C.F.R. § 172.204.
12
See id. § 173.1.
10