PHMSA Publishes LNG by Rail Final Rule

On Friday the DOT’s Pipeline and Hazardous Material Safety Administration (PHMSA) published a final rule in the Federal Register (85 FR 44994-45030) for “Hazardous Materials: Liquefied Natural Gas by Rail”. The rule was sent to OMB’s Office of Information and Regulatory Affairs (OIRA) for approval on May 1^st and was approved by OIRA on June 19^th, 2020. The notice of proposed rulemaking (NPRM) for this action was published in October 2019.

According to the summary provided in the rulemaking:

“PHMSA, in coordination with the Federal Railroad Administration (FRA), is amending the Hazardous Materials Regulations (HMR) to allow for the bulk transport of “Methane, refrigerated liquid,” commonly known as liquefied natural gas (LNG), in rail tank cars. This rulemaking authorizes the transportation of LNG by rail in DOT-113C120W specification rail tank cars with enhanced outer tank requirements, subject to all applicable requirements and certain additional operational controls. The enhancements to the outer tank are indicated by the new specification suffix “9” (DOT-113C120W9).”

Changes in Final Rule

PHMSA received 445 comments on the NPRM for this rulemaking (see my series of blog posts about those comments here). In the preamble to this final rule PHMSA addresses those comments and notes the changes that were made as a result of those comments. Those revisions include:

• Changes to DOT-113 outer shell specification,

• Changes to maximum filling density,

• Removes inappropriate reference to ‘Mylar’ in insulation description,

• Adding additional breaking requirement for unit trains (similar to HHFT requirements), and

• Adding route planning requirements,

The Final Rule

PHMSA provides a summary of the changes being made to the HMR:

• §172.101,

• §172.102,

• §172.280,

• §173.319,

• §174.200,

• §179.400-5,

• §179.400-8,

• §179.400-26,

• §180.515

Effective Date

The effective date for this final rule is August 24^th, 2020.

Commentary

As I noted in an earlier post, the House is attempting to require PHMSA to cancel this rule via §8202 of HR 2, the INVEST in America Act that passed in the House on June 26th. While it is unlikely that the Senate will take up this bill it does provide some insight into how a Democratic controlled Congress would view this rulemaking. It is very likely that a Democratic 117^th Congress would introduce legislation to negate this rulemaking. As President, Biden would likely sign such legislation.

This is an important consideration. While it will be legal to ship LNG by rail as of August 24^th, none of the approved DOT-113C120W9 railcars yet exist. It will take time to scale-up production of these railcars to begin significant transportation of LNG by rail. With the uncertainty about the continued existence of this shipping approval because of the uncertain outcome of the November election, I would suspect that large orders for these new railcars will not be placed until after the election.

The big question will be how much control (if any) the Democrats have in the Senate. Under current rules (subject to change) a simple majority only provides a limited measure of control of that body. A 60-vote majority would be necessary (again under changeable current rules) to be able to ensure that debate could be closed on bills with substantial opposition. A Democratic majority in the 117^th Congress is certainly a possibility, but supermajority control is almost impossible.