United States: Poe Leggette & Alex Obrecht Present On The Safety Concerns That Face Crude-By-Rail Transportation

BakerHostetler's energy group co-head and a member of the energy team recently presented on the safety concerns that confront the transportation of crude oil by rail. Focusing primarily on federal regulation, the team explained the role and powers of the Department of Transportation (DOT), the Federal Railroad Administration (FRA), and the Pipeline and Hazardous Materials Safety Administration (PHMSA). Additionally, the team outlined the regulatory efforts to date and discussed the possible outcomes of the current crude-by-rail rulemaking.

Although no strangers to traditional oil and gas regulation, midstream and upstream companies entering crude-by-rail transportation may find themselves facing new regulators, primarily FRA and PHMSA. These agencies can exercise significant power over crude-by-rail transportation, including unannounced inspections,¹ emergency orders,² and traditional rulemaking. Noncompliance with the agencies' mandates may also result in significant civil, and even criminal, penalties.³

The federal regulators have exercised each of these powers to address crude-by-rail safety concerns. But these efforts have culminated in the current rulemaking that primarily addresses classification and characterization of crude oil, tank car design, and railroad operating procedures.⁴ The rulemaking injects uncertainty as to which tank car design the agencies will adopt, which retrofits will be required for older nonconforming tank cars, and which operating controls will be imposed on high-hazard flammable trains.

For more information on the presentation and the presentation materials, please contact Poe Leggette or Alex Obrecht.  For additional background information on the legal challenges facing crude-by-rail, please see BakerHostetler's previous blog posts: (1) Environmental Groups Ramp-up the Crude-by-Rail Fight in the Courtroom; (2) Transloading Projects Dealt a Setback in California; and (3) Environmental Groups Ask New York to Regulate DOT-111 Tank Cars.

Footnotes

1 See 49 U.S.C. §§ 5121(c), 20107 (authorizing DOT to inspect and investigate rail and hazardous materials facilities).

2 See id. at §§ 5121(d), 20104 (authorizing DOT to issue emergency orders "involving a hazard of death, personal injury, or significant harm to the environment").

3 See id. at §§ 5123–24, 21301–04, 21311 (outlining potential civil and criminal penalties).

4 See generally Hazardous Materials: Enhanced Tank Car Standards and Operational Controls for High-Hazard Flammable Trains, 79 Fed. Reg. 45016 (Aug. 1, 2014).

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