On Friday, May 1, the U.S. Department of Transportation (“DOT”) issued a final rule establishing new requirements for transporting flammable liquids in a continuous block of 20 or more tank cars or 35 or more tank cars loaded with a flammable liquid that are dispersed throughout a longer train (such trains are known as High-Hazard Flammable Trains (“HHFTs”)). The recent growth of domestic crude oil production has caused a sharp increase in the number of these trains, and the rule significantly impacts those companies shipping crude oil, refined petroleum products and renewable fuel by rail. The rule was announced alongside new Canadian tank car standards, which align with the U.S. requirements.

To date, U.S. regulators have generally not targeted the owners and shippers of product involved in some of the large-scale crude-by-rail incidents that have occurred over the past two years. This may be due in part to the ambiguity existing in the current rules applicable to such shipments. With the increase in specificity that comes with this final rulemaking, a new enforcement paradigm could arise—particularly in the event of large-scale incidents involving loss of life. Regardless of actual enforcement by regulators, the new rules fundamentally change the liability exposure profile for those engaged in shipping oil and renewable fuel by rail.

The rule establishes a new specification, DOT-117, for tank cars built after October 1, 2015, and used in an HHFT. Compared to current DOT-111 and CPC-1232 tank cars, new DOT-117 cars are required to have thicker walls, improved thermal protection systems and accident-resistant outlet handles. The rule also establishes a schedule for retrofitting existing tank cars used as part of an HHFT. Under this schedule, all DOT-111 tank cars used to transport Packing Group I flammable liquids must be retrofitted by March 1, 2018. Unjacketed CPC-1232 tank cars used to transport Packing Group I flammable liquids must be retrofitted by April 1, 2020.

In addition to the requirements for new and retrofitted tank cars, the rule creates several other operating requirements for HHFTs. HHFTs are restricted to speeds of 50 MPH in all areas regardless of tank car design. HHFTs containing unretrofitted tank cars and traveling in certain high-risk urban areas are limited to speeds of 40 MPH. The rule also requires HHFTs to have enhanced breaking systems. Railroads operating HHFTs are required to perform a routing analysis that considers a variety of safety and security factors and provide state, local and tribal officials with a point of contact for HHFT routing information.

The rule also requires sampling and testing of unrefined petroleum-based products by shippers to ensure that hazardous materials offered for transport are assigned the proper hazardous materials designation. Sampling must be made before offering the material for transportation and after any changes (e.g., blending) that may affect the properties of the material. The sampling and testing must account for “any appreciable variability” of the material, including temperature, extraction method, location, time of year and other factors. Shippers are required to develop a program to meet these requirements, certify the program’s implementation, maintain documentation of the sampling and testing conducted under the program, and be able to provide this information to the DOT upon request.