01/22/2021 - Regulatory Rollback

LNG by Rail Rule

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Why it Matters

The United States has recently become a major producer and net exporter of liquefied natural gas (LNG)—natural gas that has been cooled to a liquid state. Historically, LNG has been transported by pipeline, ships, or trucks. Transportation by rail is new. The Pipeline and Hazardous Materials Safety Administration (PHMSA) and the Federal Railroad Administration (FRA), both within the U.S. Department of Transportation (USDOT), have shared regulatory authority over the transportation of hazardous materials, such as LNG, by rail. The two agencies previously considered the bulk transport of LNG in rail tank cars to be too dangerous to permit on a categorical basis, though rail transport of LNG was allowed ad hoc under a PHMSA special permit or in a special portable tank with FRA approval. LNG is combustible and very cold, and any release from a tank car could result in fires that are difficult to extinguish, boiling liquid expanding vapor explosions (BLEVEs), and releases of methane, among other risks.

Despite the significant safety and environmental concerns raised by commenters and Members of Congress, PHMSA finalized the LNG by Rail regulation, which amended the Hazardous Materials Regulations to allow for bulk transport of LNG by rail.

Current Status

PHMSA, in coordination with FRA, published a final rule allowing for the bulk transport of LNG in rail tank cars on July 24, 2020. The decision was challenged in the D.C. Circuit by environmental groups as well as numerous states. The D.C. Circuit consolidated these two cases in State of Maryland v. DOT, No. 20-1218 (D.C. Cir.) on Aug. 24, 2020.

History

Oct. 2015 FRA approves the Alaska Railroad Corporation to transport LNG in multimodal tank containers between Anchorage and Fairbanks—the first time USDOT approves such transport.

March 3, 2016 FRA writes a letter noting the next steps and concerns of the agency involved in approval of Florida East Coast Railway’s request to transport LNG by rail.

Trump Era

Jan. 17, 2017 The Association of American Railroads submits a petition for rulemaking to PHMSA to allow LNG to be transported in rail tank cars. The petition opens by arguing that LNG is “missing from the list of commodities authorized for rail transportation simply due to the historical lack of interest in transporting LNG by rail,” and goes on to argue that transportation of LNG by rail is “undeniably safe[]”.

Feb. 24, 2017, President Trump releases Executive Order 13777, Enforcing the Regulatory Reform Agenda, which directs agencies to evaluate existing regulations, and make recommendations for their repeal, replacement, or modification.

March 2017 FRA approves Florida East Coast Railway’s request to transport LNG by rail.

March 28, 2017 President Trump releases Executive Order 13783, Promoting Energy Independence and Economic Growth, which directs agencies to review existing regulations and agency actions that potentially burden the development or use of domestic energy resources.

Oct. 2, 2017 The USDOT announces a review of its existing regulations and other agency actions, inviting the public to provide input regarding things the agency could repeal, replace, suspend, or modify.

Nov. 28, 2017 The USDOT receives a comment from Interested Parties for Hazardous Materials Transportation—a large group of trade associations on the regulatory review, suggesting the agency authorize transportation of LNG by rail.

March 20, 2019 PHMSA releases its Risk Assessment of Surface Transport of LNG.

April 10, 2019 President Trump releases Executive Order 13868, Promoting Energy Infrastructure and Economic Growth, which directs USDOT to propose for notice and comment a rule to permit LNG to be transported in approved rail tank cars.

Oct. 24, 2019 PHMSA, in coordination with FRA, publishes a proposed rule to allow for the bulk transport of LNG in rail tank cars that meet certain standards. PHMSA argues that preventing widespread, bulk transport of LNG impedes transportation of the significant amount of new LNG in the United States. The rule garnered 456 public comments, including one from the National Transportation Safety Board—an independent agency responsible for investigating transportation accidents and making safety recommendations to transportation agencies—calling the rule “detrimental to public safety.”

Dec. 5, 2019 PHMSA issued a special permit to Energy Transport Solutions, LCC authorizing LNG transport in rail tank cars between Wyalusing, PA, and Gibbstown, NJ.

July 24, 2020 PHMSA, in coordination with FRA, publishes the final rule allowing for the bulk transport of LNG in rail tank cars that meet certain standards.

Aug. 18, 2020 A group of environmental plaintiffs, represented by Earthjustice, filed a petition for review of the rule in the D.C. Circuit.

Aug. 18, 2020 Maryland, New York, California, Delaware, the District of Columbia, Massachusetts, Michigan, New Jersey, Pennsylvania, Vermont, Rhode Island, and Washington jointly filed a petition for review of the rule in the D.C. Circuit.

Aug. 24, 2020 The D.C. Circuit consolidates the two cases in State of Maryland v. DOT, No. 20-1218 (D.C. Cir.).