DOT’s Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a Final Rule titled “Oil Spill Response Plans and Information Sharing for High Hazard Flammable Trains.” Among other requirements, certain rail trains carrying petroleum oil will be required to prepare comprehensive oil spill response plans to address a worst case discharge.  Modifications to the existing rules become effective 180 days after publication in the Federal Register (including development of new spill response plans), but incorporation of certain publications by reference is approved within 30 days.  The rule is promulgated in coordination with the Federal Railroad Administration (FRA) and is intended to implement directives in the Fixing America’s Surface Transportation Act of 2015 (FAST Act) and other mandates.

Under the rule, Comprehensive Oil Spill Response Plans (COSRPs) must address a ‘worst case discharge’ (WCD) and will be required for any train that has more than 20 continuous cars carrying petroleum oil, or 35 cars spread throughout any one train.  A WCD is defined as an incident with potential to release 300,000 gallons or more of petroleum oil, or 15% of the amount of oil on the largest train consist carrying oil in a given response zone.  The COSRP requirement expands upon oil spill response requirements already established in both the Clean Water Act of 1972 and the Oil Pollution Act of 1990.  Since 1996, COSRPs have been applicable to railroads transporting oil greater than 1,000 barrels or 42,000 gallons per package, but because the typical rail tank car has a capacity around 30,000 gallons, no rail carriers currently transport petroleum oil subject to the 42,000 gallon packaging threshold.  In addition to expanding the COSRP requirement, the final rule also “modernizes” the COSRP requirements by requiring that plans establish geographic response zones and ensure that personnel and equipment are prepared to respond to an accident.  In addition, the Final Rule requires “high hazard flammable trains” (also called HHFTs and defined as more than 20 continuous cars carrying Class 3 Flammable liquids or 35 cars spread throughout any one train) to share COSRPs and related information with State Emergency Response Commissions, Tribal Emergency Response Commissions, or other appropriate State designated entities.

This rule was first proposed in a Notice of Proposed Rulemaking (NPRM) issued on July 29, 2016, proposing both additions and revisions to 49 CFR Part 130.  The NPRM was prompted both by the 2015 FAST Act and National Transportation Safety Board (NTSB) Recommendation R-14-005 following the Lac Megantic train derailment in Quebec.  Both the proposed and final rules cite to 13 derailment accidents involving trains carrying crude oil, between 2013 and 2016 (the most recent incident occurred on June 2016 in Mosier, Oregon).  Following the July 2013 multiple fatality crude oil train derailment and explosion in Lac Megantic, the NTSB and DOT issued Advisories.  The NTSB then issued its 2014 recommendation, with DOT issuing an Emergency Order on May 7, 2014, requiring trains carrying more than one million gallons of Bakken crude to notify local emergency planning entities along their route.  Then on August 1, 2014, PHMSA issued a NPRM (HM-251) to explicate and define the Emergency Rule, which was finalized in 2015 and added new design, speed restrictions, braking systems and routing requirements to HHFTs. Congress followed in 2015 with oil train response plan mandates in the FAST Act.  In addition, in March of 2018 (in the Consolidated Appropriations Act), Congress directed DOT to “issue a final rule to expand the applicability of comprehensive oil spill response plans.”

The final rule in large part tracks the NPRM, but adds some clarifications and increased flexibility to railroads that must submit COSRPs.  PHMSA rejected comments suggesting that COSRPs should be required for lower quantities of oil or fewer numbers of cars in trains, citing to a prior conclusion in a related rulemaking that at lower thresholds “relatively few tank cars would be breached on average in the event of an incident.’  The definition of ‘petroleum oil’ does not change from its current definition at 49 CFR Part 130.5, and the burden remains on the offeror of oil for transport to make that determination.  Under the current rule, ‘petroleum oil’ includes mixtures of at least 10% (so diluted wastewater would not meet the test, nor would E95 ethanol, although E85 ethanol would meet the test and require a COSRP if sufficient numbers of cars are in a train).

In terms of increased flexibility, the rule allows railroads to submit plans that meet State requirements under certain circumstances and implements a 12 hour response time in all areas (as opposed to a smaller timeframe).  Further, CORSP plans will be approved by PHMSA (not the FRA) and response and mitigation requirements align with PHMSA’s pipeline Facility Response Plan requirements under 49 C.F.R. Part 194.  A railroad must also certify in its plan that it has conducted training and that the plan includes requirements for equipment testing and exercises, with recordkeeping required for both (Parts 130.135 and 130.140).  Railroads must update and resubmit their plans every 5 years (Part 130.145), or within 90 days of implementing any significant changes or new routes.  Finally, the new Final Rule also provides for an alternative hazardous liquid classification testing method based on initial boiling point (per industry best practice ASTM D79000).

PHMSA estimates that the new rule will apply to 73 railroad operators at time of issuance, and that it should take roughly 180 hours to prepare an initial plan.  Although not noted in the Final Rule, the number of crude by rail incidents has declined significantly since 2016 (the last incident cited in the Final Rule).  The reason for that is that the amount of crude shipped by rail has also declined significantly since 2016.  When new sources of shale oil were developed a decade ago, pipeline proximity and capacity was limited, thus increasing amounts of crude were shipped by rail.  From 2012 to 2013, the amount of crude oil shipped by rail more than doubled, then continued to increase in 2014 and 2015.  In 2016, however, the amount of crude shipped by rail began to drop, and it has now fallen below the levels shipped in 2012.

Although the market need for use of transporting oil by rail has declined overall, to the extent an increase arises as a result of the Permian Basin activity and/or additional high profile rail incidents occur in the future, there may be an increased focus on rail shipments.

Hurricane season is upon us, with Hurricane Florence making its way towards landfall in the Carolinas, currently expected to reach the coast by early Friday morning, September 14, 2018.  Tropical storm force winds and heavy rain will reach the coastal areas even before that, and the storm is forecast to bring high winds, torrential rain, power outages and flooding over a multi-state area in the mid-Atlantic and Southeastern regions for several days.  Many of these areas have experienced unseasonable amounts of rain this year, and that has already contributed to several pipeline incidents caused by earth movement.  As pipeline operators prepare for potential impacts of this “monster storm,” operators should look to their own emergency response preparedness plans, known or suspected risks to their systems, as well as to PHMSA’s prior Advisories that provide guidance to the industry under these circumstances.

States of emergency have been declared for North Carolina, South Carolina and Virginia, with mass evacuations ordered on the coast.  The wide swath and strength of the storm, however, will be of most concern as the storm comes inland and drops very large amounts of rain over the Southeast and Mid-Atlantic regions, which encompass considerable pipeline mileage.  In anticipation of the impacts, PHMSA has already announced that it is “prepared to provide any necessary regulatory relief from the Hazardous Material regulations and waive certain pipeline Operator Qualifications/and pre-employment requirements in support of hurricane response and/or recovery.”  And it is likely that the Agency will issue or reissue a version of its prior Advisories regarding potential impacts of hurricanes to oil and gas pipelines, as it did in the aftermaths of Harvey and Irma in 2017.

In advance of the storm’s arrival, PHMSA’s prior Advisories provide some interim guidance to pipeline operators.  Past Advisories have addressed the potential for damage to pipeline facilities caused by hurricanes, warning of adverse effects on operations such as increased risks of earth movement (including landslides), exposed pipe, loss of electricity and access, disruption in service, etc.  The Advisories remind operators that any of these developments may trigger obligations to take appropriate corrective measures, such as increased surveillance or repairs (49 C.F.R. Parts 192.613, 195.401(b)) and underwater inspections (49 C.F.R. Parts 192.613, 195.413).  Further, while the most recently issued Advisories in 2017 largely focused on areas in the Gulf Coast, they also included guidance more generally applicable to pipelines on the East Coast, by encouraging pipeline operators to:

  • Bring offshore and inland transmission facilities back online after a disruption, and check for structural damage to piping, valves, emergency shutdown systems, risers, and supporting systems.
  • Aerial inspections of pipeline routes should also be conducted to check for leaks in transmission systems.
  • Take action to minimize and mitigate damages caused by flooding to gas distribution systems, including the prevention of overpressure of low and high-pressure distribution systems.

Although Agency guidance such as this is not legally binding or enforceable, the Agency refers to the ‘general duty’ provisions in its regulations (such as 192.613 and 195.401).  PHMSA could rely on those general provisions in future enforcement actions if operators fail to take the actions recommended in the Advisory.  There have been instances in the past where the Agency has cited its general duty regulations as the basis for enforcement where operators failed to discover or correct conditions caused by natural forces that could potentially affect safe operations on their pipeline systems.  See, e.g.,  In re Natural Gas Pipeline Company of America, CPF No. 3-2005-1011 (failure to address exposed pipeline at a river crossing); In re ANR Pipeline Company, CPF No. 2-2008-1005W (failure to address undercutting of concrete matting over a pipeline).

As pipeline operators prepare for the hurricane season, and Hurricane Florence in particular, operators should look to their emergency response plans, relevant system characteristics, and consider the recommendations in prior PHMSA Advisories.

In the wake of Hurricane Irma, PHMSA issued a press release regarding hurricane preparedness and response.  As operators implemented hurricane preparedness plans to minimize the impact of the storm, PHMSA noted several significant allowances for pipeline systems impacted by the hurricane including the following:

  1. Temporarily suspending enforcement for noncompliance with pipeline operator qualification or pre-employment and random drug testing requirements associated with the use of pipeline personnel for response and recovery activities.  The enforcement stay is limited to Florida, Georgia, North Carolina, South Carolina, and Puerto Rico.  It does not relieve operators of their responsibility to use trained, non-impaired workers to perform operations and maintenance tasks.
  2.  Acknowledging that some operators may need to extend the hours of service for pipeline controllers.
  3.  Reminding operators that the Agency is prepared to respond to requests for emergency special permits to assist in disaster relief efforts conducted in response to Hurricane Irma, whether to waive requirements or permit the use of innovative technologies not yet accommodated under the hazardous materials or pipeline safety regulations.
  4.  Delay and rescheduling of planned inspections for interstate operators affected by the storm;

In addition, PHMSA issued 2 emergency waivers of the hazardous materials regulations with respect to persons conducting operations under the direction of the EPA Regions 2 or 4 or the United States Coast Guard (USCG) 7th District within Hurricane Irma emergency and disaster areas of Florida, Puerto Rico, South Carolina, the United States Virgin Islands, and certain counties in Georgia.  The waivers are intended to support EPA and USCG actions to prepare for, respond to, and recover from threats to public health, welfare, and the environment caused by the actual or potential oil and hazardous materials incidents resulting from Hurricane Irma.  In addition, EPA approved emergency fuel waivers under the Clean Air Act for 38 states and Washington, DC due to continued impacts caused by Hurricane Harvey to Gulf Coast refineries and large scale evacuations in response to Hurricane Irma.  Specifically, EPA waived requirements for reformulated gasoline through September 26 and low volatility gasoline through September 15, 2017.

Similar to the precautions operators have taken in advance of other catastrophic events, precautions should be taken before initiating restart of refineries, terminals, offshore and inland pipelines, and other manufacturing facilities.  In its response to Irma, PHMSA highlighted prior advisories it has issued in response to hurricanes, flooding, and other emergency situations.  These advisories include recommendations for (among other things) bringing assets back online, including review for structural damage and aerial inspections to check for leaks.  Operators are required to report incidents and accidents to PHMSA that meet reporting thresholds, and the Agency encourages close communication on other damage caused by hurricanes.  Careful damage assessment and restart of assets is critical.

As the waters begin to recede from our nation’s energy capital following Hurricane Harvey’s unprecedented rainfall in the state of Texas, the full impacts of Hurricane Harvey are beginning to become more apparent.  Beyond the incredible toll on the residents of the state, the daily damage estimates continue to rise.  Significantly, nearly one-third of the U.S. refining capacity in the U.S. has been affected.  The nation’s two largest refineries have closed, and many others are shut down or operating on a limited basis.  One chemical plant suffered from several explosions, while another reported a release from a pipeline, and at least one of the country’s largest liquid transmission pipelines is shut down.  While the full extent of damage to the energy industry is not yet known, the importance of good planning, preparedness and response is central to minimizing damage.  These efforts, by both emergency responders and the private sector, can substantially limit the amount of damage to both the public and the environment.

Continue Reading Impacts of Hurricane Harvey: Underscoring the Importance of Planning, Preparedness & Response