Thursday, August 7, 2014

Fast Action on Flammable Railcars Rule

After a brief Twitversation yesterday about an article calling for swift action on crude oil railcar safety rules Terry Hardy made the point that the discussion called for more than 140 character snippets of information. He is correct, so here is my take on the issue.

Crude Train Safety Issues

The crude oil rail safety problem is not really new; the tendency towards catastrophic failure of the DOT 111 rail car in high-speed (by freight railroad standards) derailments has a well-documented history. What has brought it to the foreground of public debate has been the stringing together of large numbers of these cars hauling crude oil out of the Bakken reserve. The failure of a single car containing flammable liquids is seldom noticed outside of the immediately affected community, but the fire spreading to multiple failed cars and the subsequent bleve of undamaged cars suddenly makes for impressive evening news clips.

PHMSA and the FRA have been taking increasingly dramatic actions under existing regulations to lower the accident rate that leads to these catastrophic incidents since the first crude oil train catastrophe last year in Canada. The oil industry and the railroad industry have been responding generally positively to these actions and have agreed to take some voluntary measures suggested by Federal regulators to lower those risks. These actions while incomplete and of a stop-gap nature, need to be acknowledged by everyone taking part in the discussion of new regulations for railroad safety.

No one disagrees that in longer term more effective regulations will be needed to control the risks associated with the shipment of this volatile crude oil to refineries (and other volatile flammable liquids to other destinations) located across the country. PHMSA is in the process of two rulemaking actions now to address the railcars safety issues and the emergency response issues related to this problem.

Regulatory Process

Emergency orders and negotiated voluntary actions can take place fairly quickly and provide a rapid and flexible response to an immediate problem. And, they have the added benefit of being able to be changed, adopted to changing circumstances and even canceled with equal dispatch. Unintended consequences can be dealt with fairly rapidly when they are recognized.

Regulations, on the other hand, take on a life of their own and are relatively resistant to change. So there is a very strong incentive to get them done right the first time. This is one of the reasons that regulatory process is so involved and time consuming. Everyone involved (all of the industries, advocacy groups and the public) needs to have a chance to have their input heard an thoughtfully considered before regulations are put into their final form.

An Already Accelerated Process

PHMSA has taken steps to accelerate their regulatory process. They removed a number of unrelated petition responses that were in the ANPRM from the NPRM. This will not help the people that wanted regulatory relief for those other problems, but the crude oil train accident problem is arguably a larger societal problem and the others are essentially ‘local issues’.

PHMSA also expanded the coverage of the NPRM to include more than just the DOT-111 upgrade issue. This means that those topics have not had the amount of detailed discussion that they would have undergone had they been in the original ANPRM.

PHMSA has offered in a couple of separate instances in the NPRM a couple of different options that might achieve their regulatory purpose. This type of regulatory discussion is normally found in an ANPRM not an NPRM, but this was done because it is not yet clear which of the options will truly be cost effective. Again, this was done because PHMSA changed the scope of the rulemaking due to political pressures to get things done quickly. But it could have the effect of putting language into the final rule that has not yet had a chance to be considered in public debate upon the rule. This could leave the final rule open to legal challenge.

The Next Step

PHMSA has provided for just a 60-day comment period. There will certainly be a number of petitions for extending that comment period. I also expect there to be a call for public meetings to address the issue more completely. These will both have to be considered carefully before PHMSA accepts or rejects the decision. Politically, I don’t think that PHMSA will have any choice but to extend the comment period by 30-days (given the introduction of new regulatory proposals and the complexity of the issues). Likewise, I think that there will have to be a series of regional meetings to address the complex issues in a public setting.

After all of the comments are in (and I expect that there will be a very large number of comments on this rulemaking) PHMSA will have to go through and read and analyze each of the comments and take the ideas contributed under advisement. Usually these things tend to coalesce around a couple of viewpoints, but it is going to be more complicated than that in this case. Instead of the typical business vs activist dichotomy found in these debates we are going to see four different public interest groups (railroads, crude producers, shippers, and emergency response personnel) that have a major stake in the issue. More importantly they all want the other guys to take the heat for the problem.

PHMSA will not be able to win on this issue. If they take their time, get lots of input, do the hard work of getting a comprehensive approach to the whole problem, it will take a year or more to get the final rule into the Federal Register and even longer for it to take actual effect. One major accident (in a town or city) during that time and PHMSA will be crucified for ‘taking too long’.

If they take short cuts and get a half-way acceptable DOT-111 replacement/upgrade schedule on the books and leave it at that, they will be in the courts fighting opponents from three viewpoints that think the final rule is unfair or does not address the ‘real issue’ (and that issue will be different from each perspective). Oh, and some US District Court will tell PHMSA that the rule needs to be rewritten.

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