Rules for Rail Transport of Crude Oil and Ethanol Still a Work in Progress

by K&L Gates LLP

In response to rail accidents over the past several years involving crude oil and ethanol, the U.S. Department of Transportation (“DOT”) has been working with industry stakeholders and the National Transportation Safety Board (“NTSB”) to improve safety standards for transporting hazardous materials by rail. The most significant step to date is the notice of proposed rulemaking released on July 23, 2014, by the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), called the “Enhanced Tank Car Standards and Operational Controls for High-Hazard Flammable Trains” (the “Rules”).

[1] The Rules propose to revise the Hazardous Materials Regulations (“HMR”) [2] by adding two major components:

  • Additional safety requirements for trains carrying 20 or more carloads of Class 3 flammable liquids, particularly crude oil and ethanol (called “high-hazard flammable trains” or “HHFTs”); and
  • A sampling and testing program for classification and characterization of mined gases and liquids that are offered for all types of transportation (not just by rail).

The three primary safety requirements for HHFTs include: (1) a new specification for rail tank cars, (2) enhanced brake signal propagation systems, and (3) reduced operating speeds. The new specification for tank cars, called “DOT Specification 117” (“DOT-117”), could be satisfied by meeting one of three different options that PHMSA proposed. The only differences between the three options relate to shell thickness, top fittings, and braking. Most stakeholders will agree that an improved specification is needed, although the features of each proposed option will likely provoke further commentary.

All stakeholders should be aware that braking and speed requirements could have a ripple effect on railroad capacity and performance across the rail network. The Rules would set the maximum speed for HHFTs at 50 mph. But PHMSA is considering three different options to restrict the maximum speed to 40 mph for HHFTs that transport flammable liquids in tank cars that do not meet DOT-117. The most restrictive option limits such trains to 40 mph in all areas, at all times. PHMSA is also considering a further restriction to 30 mph in all areas, at all times, for HFFTs that do not meet proposed braking standards. These restrictions have the potential to adversely impact the entire rail network, because all trains, not just HHFTs, would be forced to operate at lower speeds. In turn, this would reduce track capacity, lengthen freight and passenger train schedules, and increase railroad costs.

The Rules will also impact other stakeholders who depend on railroads, such as exploration and production (“E&P”) companies that extract oil and gas, shippers, and manufacturers that construct and retrofit tank cars to meet industry standards. The Rules have many moving parts. They are complicated and ambiguous, likely due to PHMSA’s efforts to provide stakeholders with flexibility and options for further comment. The interrelated pieces should be streamlined to fit together more clearly. Comments to the Rules must be received within 60 days from publication in the Federal Register.

Additional Safety Requirements for High-Hazard Flammable Trains
In February 2014, the Association of American Railroads (“AAR”) and its members voluntarily agreed to implement safety measures for “Key Crude Oil Trains” (the “Voluntary Standards”). [3] The Rules expand on a number of these requirements and, using the threshold definition for “HHFT,” apply them to trains carrying high volumes of both crude oil and ethanol.

Definition of HHFT. The proposed definition of HHFT is “a single train carrying 20 or more carloads of a Class 3 flammable liquid.” This definition is broader than the definition of “Key Crude Oil Trains” used in the Voluntary Standards because it includes any Class 3 flammable liquid (e.g., ethanol, gasoline, and acetone), as opposed to just crude oil. [4] PHMSA and the Federal Railroad Administration (“FRA”) are considering whether the definition of HHFT should also incorporate Division 2.1 flammable gas and combustible liquids. As proposed, PHMSA expects that the HHFT definition will only cover crude oil and ethanol because they are the only known Class 3 flammable liquids transported in single trains carrying 20 or more carloads of such liquids. The additional safety standards will not apply to trains that remain under the 20-car threshold, even if they carry crude oil and ethanol.

The definition of HHFT is critical because it triggers the requirements described below, including those related to:

  • Phase-out periods for DOT Specification 111 (“DOT-111”) tank cars, which have typically been used to carry crude oil and ethanol, but are prone to failure in the event of a derailment;
  • The new DOT-117 specification, performance standards, and retrofits;
  • Enhanced brake signal propagation systems;
  • Reduced operating speeds; and
  • Other safety measures, including route analysis and notification to state emergency responders.

Phase-Out of DOT-111 Tank Cars for HHFT Service. The Rules propose to phase out existing DOT-111s “for use in [HHFT] service” by October 2020. The phase-outs will primarily affect manufacturers, purchasers, and lessors of tank cars. The timetable for the phase-outs is “risk-based” because the applicable deadline depends on the packing group (“PG”) of the materials. It reflects an effort to first phase out DOT-111s for transport of materials posing the greatest hazard (PG I first, followed by PG II, and then PG III):

Proposed phase-out timetable of DOT-111 tank cars for HHFT service

Packing Group I
(high hazard)

Packing Group II
(medium hazard)

Packing Group III
(low hazard)

October 1, 2017

October 1, 2018

October 1, 2020

In mid-July, environmental groups petitioned DOT to issue an emergency order within 30 days that immediately bans shipments of crude oil in legacy DOT-111s. As that petition indicates, while industry stakeholders have generally voiced their support for enhancing safety standards, establishing a consensus on the standards and a realistic timetable for implementation is a different matter.

As a practical matter, use of DOT-111s for transport of ethanol and crude oil in HHFTs would be restricted by October 1, 2018, because ethanol is assigned to PG II and, typically, crude oil is packaged as PG I or II. In response to the proposed timetable, stakeholders will need to consider how to best utilize the aggregate fleet of approximately 72,000 DOT-111s used in the United States. For example, they may choose to use DOT-111s to transport crude oil and ethanol in smaller trains which do not meet the 20-car threshold for HHFTs. They may repurpose DOT-111s to carry other types of materials. They may also retrofit DOT-111s to meet the new DOT-117 standard described below. PHMSA estimates costs for retrofits to be in excess of $30,000 per car.

DOT-117 Tank Cars. PHMSA proposed the new DOT-117 standard, as well as corresponding performance standards to encourage design innovation in meeting the equivalent of the DOT-117 standard. If a tank car meets the performance standards and is adopted, it will be assigned to “DOT Specification 117P” (“DOT-117P”). Tank cars manufactured for use in an HHFT after October 1, 2015 must meet either the DOT-117 standard or the DOT-117P performance standard.

The Rule also encourages retrofits of existing tank cars to be used for HHFT service, including for legacy DOT-111s that are proposed to be phased out. Although the text of the Rules is not clear, PHMSA indicated that the DOT-117P performance standards are intended to apply to retrofits. Retrofits and innovative designs that rely on the DOT-117P performance standards require FRA approval for the design, testing, and modeling results before construction begins. Other than the approval requirement, the DOT-117 and DOT-117P standards are virtually the same within each of the three proposed options. [5] For simplicity, we refer to DOT-117 and DOT-117P as “DOT-117” below.

Three Options for DOT-117. Aware of the significant economic impact of the proposal for new tank cars, PHMSA proposed three different options to meet the DOT-117 standard and will consider comments on each of the options:

  • DOT-117 Option 1: PHMSA and FRA Designed Car. Option 1 is a new standard proposed by PHMSA and FRA that, most notably, would require each tank car to be equipped with Electronic Controlled Pneumatic (“ECP”) braking systems.
  • DOT-117 Option 2: AAR 2014 Recommended Car. Option 2 is based on AAR’s recommended new standard and, therefore, might be in line with the expectations of many stakeholders.
  • DOT-117 Option 3: Enhanced Jacketed CPC-1232. Option 3 alters the current standard for CPC-1232 tank cars by, among other things, improving the bottom outlet handle and pressure relief valve, requiring a certain steel type, and reinforcing the car with a jacket. PHMSA assumes this type of tank car would be built for HFFT service, absent any regulation, based on voluntary efforts by the regulated community to date.

It is unclear whether PHMSA will adopt more than one option in the final rule.

Standards Common to All Three DOT-117 Options. All three options for DOT-117 focus on improving the tank shell and head to minimize punctures; adding thermal protection to prevent intact tanks from failing during exposure to fires; enhancing top fittings to survive during accidents; and providing bottom outlet protection so that the valve does not open during an accident. Each of the three options has identical requirements with respect to the following:

  • Head Shield: The full-height head shield must be a minimum of 1/2 inch thick.
  • Tank Material: The material used must be TC-128 Grade B, normalized steel.
  • Thermal Protection System: The thermal protection system must be designed to prevent a release of contents from the tank car, except release through the pressure relief device, when subjected to a pool fire for 100 minutes or a torch fire for 30 minutes (in accordance with 49 C.F.R. § 179.18).
  • Pressure Relief Valve: A reclosing pressure relief device is required in accordance with 49 C.F.R. § 173.31 (as part of the thermal protection system).
  • Jacket: A minimum of 11-gauge thickness, weather-tight jacket constructed from A1011 steel or equivalent must cover the entire thermal protection system.
  • Bottom Outlet Handle: The bottom outlet handle must be removed prior to train movement or designed to prevent unintended actuation during a train accident.
  • Gross Rail Load (“GRL”): The GRL is up to 286,000 pounds.

These standards are common to all three options and are less likely to be points of contention moving forward.

Differences between the Three DOT-117 Options. Commentary in response to the Rules will likely focus on the differences between the three proposed DOT-117 options. The only differences between the three options relate to shell thickness, top fittings, and braking:

Differences between DOT-117 options


DOT-117 Option 1

DOT-117 Option 2

DOT-117 Option 3

Shell Thickness

9/16 inch

9/16 inch

7/16 inch

Top Fittings [6]

Protection system and a nozzle capable of sustaining, without failure, a rollover at 9 mph based on certain criteria

AAR Specifications for Tank Cars (appendix E, paragraph 10.2.1)

AAR Specifications for Tank Cars (appendix E, paragraph 10.2.1)


ECP brakes for tank cars manufactured for use in an HHFT after October 1, 2015

Either two-way end of train (“EOT”) or distributed power (“DP”) braking systems

Either EOT or DP braking systems

Braking. As indicated above, DOT-117 Options 2 and 3 mandate EOT or DP systems. Generally, rail carriers already use EOT or DP systems and, therefore, comply with the proposed minimum braking requirements. [7] In contrast, Option 1 requires installation of ECP brakes for tank cars manufactured for use in an HHFT after October 1, 2015. After October 1, 2015, HHFTs “comprised entirely” of DOT-117s meeting Option 1 (except for required buffer cars) must be operated in ECP brake mode (i.e., the entire train must use an ECP brake system). The Rules do not require ECP brake mode for HHFTs that include non-DOT-117 cars.

Reduced Operating Speeds. The Rules set a 50-mph maximum speed limit for HHFTs at all times, in all areas. This is consistent with the limit in the Voluntary Standards for Key Crude Oil Trains. In addition, PHMSA is considering the following three options to further restrict the maximum speed to 40 mph for HHFTs that use at least one non-DOT-117 car to carry any “flammable liquid” (not just ethanol or crude oil):

Proposed speed-limit options for HHFTs using at least one non-DOT-117 car to carry flammable liquid

40-mph Option 1

40-mph Option 2

40-mph Option 3

All times, in all areas

Only while the HHFT operates in an area with a population of 100,000-plus people (based on municipal boundaries and census data)

Only while the HHFT travels within the limits of an any high-threat urban area

The 40-mph options do not apply to HHFTs which transport all flammable liquids in DOT-117-compliant tank cars.  PHMSA will likely select just one of these options, which should not be confused with the DOT-117 options for tank cars described above. 40-mph Option 1 applies in all areas and, therefore, has the greatest potential to cause backlogs in the rail network. In contrast, the 40-mph Options 2 and 3 would require HHFTs to slow down to 40 mph through certain high-risk areas. The 40-mph Option 3 is the most similar to the 40-mph speed restriction in the Voluntary Standards for Key Crude Oil Trains.

Additionally, PHMSA has proposed a further restriction to 30 mph in all areas, at all times, for HFFTs that do not meet the braking standards described above.

Other Safety Standards. In addition to the above, the Rules require rail carriers operating HHFTs to comply with existing routing regulations that currently apply only to certain security-sensitive hazardous materials, such as those that are radioactive or poisonous by inhalation. Rail carriers previously agreed to Voluntary Standards which, by July 1, 2014, required them to apply industry protocols to meet certain components of the existing route-analysis requirements for Key Crude Oil Trains. The Rules expand on the Voluntary Standards by proposing to amend 49 C.F.R. § 172.820 to apply it, in its entirety, to all HHFTs. Notably, this means that FRA may review and scrutinize the route analysis and require rail carriers to resolve deficiencies or use an alternative route. [8]

The Rules also propose to codify and expand upon a requirement to notify State Emergency Response Commissions (“SERCs”) that was included in a prior DOT emergency order. [9] The Rules trigger the notification requirement where a single HHFT carries 1,000,000 gallons or more of UN 1267 Petroleum crude oil, Class 3, that is sourced from the Bakken shale formation in the Williston Basin (i.e., approximately 35 cars of Bakken crude oil). [10] The Rules propose that the notification must be made within 30 days of the effective date of the final version of the rule. The contents of the notifications relate to the amount of traffic passing through counties and are the same as those in DOT’s emergency order. Although rail carriers may have already provided notice to comply with the emergency order, both the order and the proposed Rules require updates prior to any “material changes” in the estimated volumes or frequencies of train traffic through a county. The text of the Rules does not directly answer several important issues, some of which were addressed in the DOT order and a guidance document, including for example:

  • The definition of “material change,” which triggers the requirement to provide an update;
  • Whether rail carriers may use Fusion Centers for the notification;
  • Whether notice should be provided to Tribal Emergency Response Commissions;
  • Whether information submitted should be treated as confidential or “Sensitive Security Information”; and
  • The procedures for distinguishing Bakken crude oil from other types of crude oil in shipments.

Program for Classification and Characterization of Mined Gases and Liquids
The Rules require offerors to implement a sampling and testing program for “mined gases and liquids.” PHMSA did not propose a definition for “mined gases and liquids,” but the preamble suggests that the term includes natural gas condensate or liquid. The program must meet minimum standards, including selecting sampling points and frequencies that consider the potential variability of the material. The Rules require the offeror to certify compliance with this program when mined gases and liquids are offered for shipment. [11] This requirement will affect handlers of extracted oil and gas that offer it for any mode of shipment (e.g., highway, rail, water, etc.). [12] The offeror responsible for implementing the program must do the following:

  • Document the program in writing;
  • Review the program at least annually;
  • Revise and update the program as needed to reflect changing circumstances;
  • Retain the most recent version for as long as it remains in effect;
  • Make the most recent version or its relevant portions available to the employees responsible for implementing it;
  • Notify the employees responsible for implementation of updates or revisions to the program;
  • Make the program documentation accessible from the principal place of business (at least in electronic form); and
  • Make the program documentation available to DOT upon reasonable request (i.e., reasonable in time and location).

Conclusions and Additional Considerations
The proposed Rules represent a collaborative effort between federal agencies, stakeholders, and the public to address a recognized safety concern. More of the same should be expected as PHMSA finalizes the rulemaking, particularly because PHMSA set forth several options for potential regulation and is expecting meaningful comments.

Among the issues that bear watching is what, if anything, happens to PHMSA’s proposal to further limit trains to a maximum of 30 mph unless they meet the proposed Rules’ braking requirements. This is an area of great concern to the railroad industry because a 30-mph restriction on HHFTs would impact the entire rail network. The restriction would force all trains to operate at slower speeds, including those carrying grain, autos, merchandise, and other essential commodities, as well as passengers. The industry estimates that a blanket requirement would reduce railroad track capacity by roughly 7 percent. Such a reduction would seriously harm shippers and the economy. Moreover, the reduction in capacity coupled with slower service would force many shippers to shift to trucks at a time when the highway system already is overcrowded and struggling to keep up with maintenance costs. 

The Rules merely scratch the surface of potential regulation related to transport of hazardous materials. As PHMSA finalizes the rulemaking, stakeholders should not lose sight of other, related potential regulations and issues, including for example those described below.

Oil Spill Response Plans. On the same day the Rules were announced, PHMSA released an advanced notice of proposed rulemaking, titled “Oil Spill Response Plans for High-Hazard Flammable Trains.” This notice solicits comments on a proposal to require comprehensive oil spill response plans for HHFTs based on thresholds of crude oil transported by the HHFTs. PHMSA is seeking comment on the appropriate threshold. Comments must be received within 60 days from publication in the Federal Register.

Operating Procedures for Securement. In the preamble of the Rules, PHMSA noted that it is seeking comment on a forthcoming notice of proposed rulemaking that would set additional operating procedures for hazardous materials transport related to securement, attendance, crew size, and security. PHMSA will use recommendations from the Railroad Safety Advisory Committee to draft the proposed rulemaking.

State and Local Requirements. Stakeholders should be attentive to current state and local actions and how states might respond to fill any perceived gaps in regulation. Additional federal regulations, such as the Rules, may preempt standards at the state and local levels pursuant to the Federal Railroad Safety Act and Hazardous Materials Transportation Act, among other statutes.

Enforcement Actions related to Accidents. Because accidents happen, no matter how stringent the regulation, stakeholders should be prepared to address enforcement issues. This includes environmental enforcement actions under state and local laws, which are generally not preempted by federal statutes.

International Law. PHMSA represents the United States with respect to the United Nations Recommendations on the Transport of Dangerous Goods, which attempt to harmonize regulation internationally. Stakeholders should consider whether Canada’s applicable regulations are inconsistent with those in the United States and, if so, how they might be harmonized in the future.

[1] The pre-publication version of the Rules and a DOT summary are available at

[2] 49 C.F.R. pts. 171-180.

[3] The agreement is commemorated in a letter from DOT to AAR. Letter from Anthony R. Foxx, Secretary of Transportation, to Edward R. Hamberger, AAR President and Chief Executive Officer (Feb. 21, 2014), available at

[4] This definition is a variation of the broader term “Key Train” in AAR Circular No. OT-55-N, which includes a train with “20 car loads or intermodal portable tank loads of any combination of hazardous material.” AAR, Recommended Railroad Operating Practices for Transportation of Hazardous Materials, Circular No. OT-55-N (Aug. 5, 2013), available at

[5] The performance standards for meeting DOT-117P are virtually the same for each of the three respective DOT-117 options. The standards for DOT-117P additionally specify a performance standard for puncture resistance, including a minimum side impact speed and a minimum head impact speed when impacted by a rigid 12-by-12-inch indenter with a weight of 286,000 pounds.

[6] Top fittings are not required for retrofits of existing cars under any of the three options because, according to PHMSA, the costs exceed the potential benefits. The existing cars may continue to rely on top-fittings equipment that was installed when manufactured, but must otherwise meet DOT-117P.

[7] Rail carriers that agreed to the Voluntary Standards would have installed either EOT or DP systems by April 1, 2014.

[8] 49 C.F.R. §§ 172.820(f), 209.501.

[9] On May 7, 2014, DOT issued an emergency order requiring rail carriers that transport 1,000,000 gallons or more of Bakken crude oil in a single train (i.e., approximately 35 cars of Bakken crude oil) to provide written notification within 30 days to the SERCs in each state where such trains are operated. U.S. DOT, Emergency Restriction/Prohibition Order, Docket No. DOT-OST-2014-0067 (May 7, 2014), available at

[10] The Williston Basin includes areas in North Dakota, South Dakota, Montana, Saskatchewan, and Manitoba. PHMSA indicated that it could expand this requirement in its final rule to apply to crude oil extracted from other locations.

[11] See 49 C.F.R. § 172.204.

[12] See id. § 173.1.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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