Proposed sweeping new safety requirements for rail transportation of large quantities of flammable liquids, including crude oil, could increase costs significantly.

Since 2013, the Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) and Federal Railroad Administration (FRA) have proposed or undertaken a range of regulatory actions aimed at increasing the safety of rail transportation of hazardous materials, including the transportation of crude oil by rail. On July 23, 2014, PHMSA issued a comprehensive Notice of Proposed Rulemaking (NOPR)1 proposing revisions to the Hazardous Materials Regulations that establish requirements for “high-hazard flammable trains” (HHFTs). The NOPR addresses a number of issues primarily impacting the rail transportation of crude oil and ethanol, including proposed enhanced tank car standards, speed restrictions, improved braking controls, and new sampling and testing requirements.

Background -

In the wake of a number of well publicized accidents involving the rail transportation of crude oil, including derailments in Lac-Mégantic, Quebec; Aliceville, Alabama; Casselton, North Dakota; and Lynchburg, Virginia, PHMSA and FRA have greatly increased their regulatory scrutiny over such transportation, particularly with regard to crude oil sourced from the Bakken shale. Beginning in 2013, FRA and PHMSA (either individually or jointly) have issued or initiated the following actions, among others.