Wednesday, November 28, 2018

Shale Law in the Spotlight - PHMSA Amends Regulatory Requirements for Crude Oil Trains

Written by Chloe Marie - Research Specialist                

Shale development is dependent upon having a means to transport that oil and gas to market. Using pipelines to transport shale oil and gas is often the most cost-efficient means of doing so. In light of the many impediments to the development of a reliable pipeline infrastructure, the use of trains to transport oil remains a primary means of connecting the oil fields with the refineries and other users. Because of the heavy use of crude oil trains, these trains have been the subject of much regulatory activity within recent years. On September 25, 2018, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published in the Federal Register a Final Rule amending and repealing certain provisions of the Hazardous Materials Regulations relating to the requirement for certain High Hazard Flammable Unit Trains (HHFUT) to operate using electronically controlled pneumatic (ECP) braking systems.


In May 2015, PHMSA issued a Final Rule entitled “Enhanced Tank Car Standard and Operational Controls for High-Hazard Flammable Trains” to regulate speed restrictions, braking systems and routing for trains carrying large quantities of flammable liquids, including crude oil. The drafting of this Final Rule is based on a series of recorded rail accidents in recent years. PHMSA noted that crude oil and ethanol represent approximately 68% of the flammable liquids transported by railroad.
The Final Rule requires HHFUT trains to be equipped with ECP brake systems, as an alternative to conventional air brakes, for the purpose of reducing in-train derailments. ECP brake systems are designed to send an electronic signal to all equipped cars in the train, thus providing the driver with instant control over the entire train and improving speed of car brake operations.

Section 7311 of the Fixing America’s Surface Transportation (FAST) Act - enacted in December 2015 - required the U.S. Department of Transportation (DOT) to conduct tests on ECP brake systems during emergency situations relative to other braking systems. In addition, the Act required DOT to work with the National Academy of Sciences (NAS) to update the original Regulatory Impact Analysis (RIA) of the PHMSA Final Rule regarding the costs and benefits of the applicable ECP brake system requirements.

On October 16, 2017, DOT announced the availability of the updated RIA, which contains “new testing and analysis the National Academy of Sciences (NAS) reviewed, recommendations from two U.S. General Accountability Office (GAO) audits, and updates to the costs and benefits of the provision of the Final Rule based on current economic conditions.” DOT found that the use of ECP braking systems for HHFUT trains is not justified anymore from a cost-benefit perspective based on two major changes that occurred between the 2015 Final Rule and the updated RIA. First, DOT assessed that both safety and business benefits have decreased since 2015 because the number of HHFUT carloads have diminished and also due to the fact that there has been an increased use of dynamic braking on locomotives. Interestingly, DOT suggested that “any future surge in oil prices may have effects on numerous assumptions of this analysis” before adding that “changes in these assumptions would change the number of carloads needed and therefore also affect the estimated safety and business benefits.”

Consequently, DOT announced on December 13, 2017, its intent to repeal the ECP brake requirements contained in PHMSA 2015 Final Rule based on a final determination that the expected benefits of the ECP brake requirements do not exceed the expected costs.

Repeal of PHMSA 2015 Final Rule’s ECP Brake Requirements

The Final Rule entitled “Hazardous Materials: Removal of Electronically Controlled Pneumatic Brake System Requirements for High Hazard Flammable Unit Trains” repeals the requirements in section 174.310 to equip HHFUT with ECP brake systems, to obtain approval of the use of alternative brake systems, and to mandate retrofit status reports on ECP brake system readiness and use. In addition, DOT also removed ECP braking capability requirements in section 179.102-10 for DOT-117 specification tank cars, performance standard requirement in section 179.202-12 for DOT-117P tank cars, retrofit standards in section 179.202-13 for existing non-pressure DOT-117 tank cars.
DOT announced that the Final Rule became effective on the day of its publication i.e. September 25, 2018 and explained that “good cause exists to publish this rulemaking without a notice of proposed rulemaking and opportunity for public comment and to make the regulations effective prior to 30 days after publication” DOT further added that “this rule simply implements the determination of the Department … therefore, PHMSA would be unable to adjust the text of the rule to account for any public comment.”

This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

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