The regulation of transporting flammable liquids by rail has picked up steam in the past year thanks to the energy boom enabled by fracking, as companies are increasingly transporting crude oil via rail from remote fields in states such as North Dakota. According to the Pipeline and Hazardous Materials Safety Administration (PHMSA), the arm of the Department of Transportation responsible for regulating the transportation of hazardous materials, the volume of crude oil transported by rail increased37-fold between 2009 and 2013, from 10,800 carloads to over 400,000 carloads. In response to this astronomical growth, the PHMSA issued proposed rules that would codify and expand emergency orders put in place over the past year, while the American Petroleum Institute (API), an industry group, recently issued recommended practices to fulfill the PHMSA’s proposed requirements.
As promised, in July the PHMSA released a notice of proposed rule-making for new regulations covering the rail-transport of “Class 3 flammable liquids,” which generally includes crude oil and ethanol. The regulations would include new tank-car standards, speed and routing restrictions, and a classification and testing program for flammable liquids. The rule proposes three different possible options for tank-car standards for “high-hazard flammable trains” (trains carrying at least 20 carloads of Class 3 flammable liquid), but whichever option is finally adopted, existing DOT-111 cars would have to be retrofitted or phased out for all Class-3 flammable liquids by 2020. This rule may create some controversy in the industry, as groups such as the North Dakota Petroleum Council have maintained that crude oil can be safely hauled in DOT-111 cars.
The PHMSA’s proposed rules also require that the conveyor of crude develop a sampling and testing program to verify the crude’s content and characteristics, due to natural variability between crude based factors including on the means and location of extraction. The program would be required to include sampling at several points along the supply chain, and conveyors have to provide statistical justification for their sampling frequency. The PHMSA’s notice emphasizes that the agency is “encouraged by the development” of the American Petroleum Institute’s voluntary industry standard for testing and sampling, and by the API’s “continued work in the standard and beyond to improve the accuracy of classification of materials.”
As part of those efforts, in late September the API adopted recommended practices for classifying and loading crude oil. The API’s recommended practices flesh out the sampling criteria in the PHMSA’s proposed rules, providing guidance on when and how the crude oil should be tested, and how the process should be documented. The PHMSA could actually incorporate API’s recommended practices into its own rules, as the agency noted in its notice of proposed rulemaking that it may consider adopting the API’s standards. Although the comment period on the PHMSA’s proposed rules closed this week, the agency has not announced a timeline for the promulgation of final rules.