OMB Approves PHMSA LNG by Rail NPRM

Yesterday the OMB’s Office of Information and Regulatory Affairs (OIRA) announced that it had approved, ‘consistent with change’, the notice of proposed rulemaking (NPRM) from DOT’s Pipeline and Hazardous Material Safety Administration (PHMSA) on modifying the Hazardous Materials Regulations (HMR) to allow the rail shipment of liquefied natural gas (LNG) by rail. The NPRM was sent to OMB for review in May, 2019.

The Rulemaking

The Spring 2019 Unified Agenda describes the rulemaking this way:

“Liquefied natural gas (LNG) is a critical energy resource for the 21st century. Currently, the Hazardous Materials Regulations (HMR) do not authorize the bulk transport of LNG in rail tank cars. PHMSA, in collaboration with the Federal Railroad Administration, believes this is a potential area for industry innovation to support infrastructure development while maintaining a high level of safety. This deregulatory rulemaking action would develop a framework for the safe transport of LNG in rail tank cars.”

Commentary

There are some subtle differences in that description and the one published in the Fall 2018 Unified Agenda. First, the second sentence in the earlier version read: “Currently, the Hazardous Materials Regulations (HMR) do not contain the necessary provisions to allow for the bulk transport of LNG in rail tank cars.” The change might be interpreted to mean that the Administration feels PHMSA has the necessary authority to approve a special permit for the rail transportation of LNG under the existing regulations.

Second, the earlier version does not call this a ‘deregulatory rulemaking action’; simply calling it ‘rulemaking action’. The term ‘deregulatory’ implies a loosening of restrictions. The current HMR does not restrict the transportation of LNG by rail, it simply does not provide authority to do so. Does this mean that there would be fewer restrictions on the approved shipment of LNG than on other flammable cryogenics? It is too early to tell.

The increased use of LNG in the energy sector is a priority for this Administration. I suspect that that will translate into a relatively rapid publication (for this Administration) of this rulemaking in the Federal Register, perhaps in the next week or two.