October 30, 2018

Transportation of LNG by Rail Keeps Chugging Along

Holland & Knight Energy and Natural Resources Blog
Dianne R. Phillips

As described in previous blog posts on May 7, 2018 and March 13, 2018, regulatory changes are needed before liquefied natural gas (LNG) can be transported by rail tanker cars under applicable Hazardous Materials and Carriage by Rail regulations, 49 C.F.R Parts 172, 173 and 174, absent a special permit.

The Association of American Railroads (AAR) filed a petition for rulemaking with the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) in January 2017, and PHMSA responded on May 7, 2018. The petition sought revisions of Sections 172.101 and 173.319 of Title 49 to allow LNG to be treated the same as other cryogenic liquids transported in tank cars under the Hazardous Materials regulations. AAR has also weighed in on Special Permit Applications which sought permission to transport LNG in commerce via rail tank cars. In formally accepting the petition, PHMSA concluded that it had assessed the petition and determined the request merits consideration in a future rulemaking.

The Office of Information and Regulatory Affairs, housed in the Office of Management and Budget, has issued the Fall 2018 Unified Agenda of Regulatory and Deregulatory Actions to be taken by federal executive departments and agencies. PHMSA's plan, in collaboration with the Federal Railroad Administration (FRA), is included at the proposed rule stage. Finding this is a potential area for industry innovation while maintaining a high level of safety; this rulemaking intends to develop a framework for the safe transport of LNG in rail tank cars.

Publication of a Notice of Proposed Rulemaking is expected in May 2019. After years of work by AAR's Tank Car Committee it appears transportation of LNG by rail is on the right track.

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